I need to estimate Moody's adjusted leverage trend for 2022. Let me analyze the financial data to determine if leverage is improving, stable, or deteriorating. First, let me understand what "2022" means in this data. The dates appear to be point-in-time (balance sheet dates), with 2022-01-01 and 2023-01-01 representing year-ends. The periods 2021-01-01 to 2022-01-01 and 2022-01-01 to 2023-01-01 represent the years 2021 and 2022 respectively. For leverage analysis, I'll look at key metrics: **Debt levels:** - Long-term Borrowings: 2022-01-01: 2,390,852,000 EUR → 2023-01-01: 1,695,362,000 EUR (decreased) - Current Borrowings: 2022-01-01: 375,221,000 EUR → 2023-01-01: 638,944,000 EUR (increased significantly) - Total Borrowings: 2022-01-01: 2,766,073,000 EUR → 2023-01-01: 2,334,306,000 EUR (decreased) Wait, let me recalculate. The 2023-01-01 figures are for the end of 2022, and 2022-01-01 are for the end of 2021. So for year 2022 (comparing 2022-01-01 to 2023-01-01): - Long-term Borrowings: 2,390,852,000 → 1,695,362,000 (decrease of ~695M) - Current Borrowings: 375,221,000 → 638,944,000 (increase of ~264M) - Net change in total borrowings: decrease of ~431M But we also need to look at the special gas price stabilization regime: - Asset: 0 → 1,000,000,000 EUR - Liability: 0 → 1,000,000,000 EUR This is a matched asset and liability, so it doesn't affect net leverage directly, but it increases gross debt-like obligations. **Total Liabilities:** - 2022-01-01: 4,178,686,000 EUR - 2023-01-01: 4,934,062,000 EUR (increase of ~755M) **Total Assets:** - 2022-01-01: 5,588,516,000 EUR - 2023-01-01: 6,451,596,000 EUR (increase of ~863M) **Equity:** - 2022-01-01: 1,409,830,000 EUR - 2023-01-01: 1,517,534,000 EUR (increase of ~108M) **Key Leverage Ratios:** Debt/Equity or Debt/EBITDA are common Moody's metrics. Let me look at debt to equity: Total Liabilities / Equity: - 2021 year-end (2022-01-01): 4,178,686 / 1,409,830 = 2.96x - 2022 year-end (2023-01-01): 4,934,062 / 1,517,534 = 3.25x Or using a more standard debt measure (borrowings): Total Borrowings / Equity: - 2021 year-end: 2,766,073 / 1,409,830 = 1.96x - 2022 year-end: 2,334,306 / 1,517,534 = 1.54x However, the gas stabilization regime adds 1B to both assets and liabilities. If we consider this as a working capital / pass-through item, the economic leverage might be different. Looking at Non-current Liabilities: - 2022-01-01: 3,132,120,000 - 2023-01-01: 2,409,702,000 (decreased) But Current Liabilities: - 2022-01-01: 1,046,566,000 - 2023-01-01: 2,524,360,000 (increased dramatically - mainly due to gas stabilization) If we exclude the gas stabilization regime (which is a pass-through, matched asset/liability): Adjusted Liabilities = 4,934,062 - 1,000,000 = 3,934,062 Adjusted Assets = 6,451,596 - 1,000,000 = 5,451,596 Adjusted Liabilities/Equity = 3,934,062 / 1,517,534 = 2.59x For 2021, no adjustment needed: 4,178,686 / 1,409,830 = 2.96x This suggests leverage improved when excluding the pass-through item. However, looking at total borrowings (long-term + current): - 2021 year-end: 2,390,852 + 375,221 = 2,766,073 - 2022 year-end: 1,695,362 + 638,944 = 2,334,306 Total borrowings decreased by 431M despite the gas regime. EBITDA proxy (Operating profit + D&A): - 2022: 239,721 + 249,276 = 488,997 - 2021: 218,863 + 241,940 = 460,803 Debt/EBITDA improved: - 2021: 2,766,073 / 460,803 = 6.0x - 2022: 2,334,306 / 488,997 = 4.8x But wait - the gas regime liability of 1B is in current liabilities but not in borrowings. If this is considered a debt-like liability (even if matched with asset), total debt-like obligations / EBITDA: - 2022: (2,334,306 + 1,000,000) / 488,997 = 6.8x Actually, for Moody's purposes, they might look at total debt or total debt-like obligations. The gas stabilization regime creates a significant liability even if matched with an asset. Let me also check interest coverage and other metrics: - EBIT: 239,721 (2022) vs 218,863 (2021) - improved - Finance costs: 67,394 (2022) vs 54,356 (2021) - increased - Interest coverage (EBIT/Finance costs): 3.56x (2022) vs 4.03x (2021) - slightly worse But EBITDA/Interest: - 2022: 488,997 / 67,394 = 7.3x - 2021: 460,803 / 54,356 = 8.5x Actually, let me reconsider. The key question is what happened to underlying leverage. Looking at the business: Revenue decreased slightly (824.7M vs 838.4M), but operating profit increased (239.7M vs 218.9M). Net income increased (111.8M vs 97.2M). The main change is the gas stabilization regime. If we look at "economic" leverage excluding this pass-through: - Debt decreased - EBITDA improved - Debt/EBITDA improved from ~6.0x to ~4.8x However, total liabilities increased significantly due to the gas regime. Moody's might view this as increasing obligations, even if matched by assets. But the gas regime is specifically described as "Transitional" and is a regulatory pass-through mechanism. The asset and liability are equal (1B each), meaning there's no net equity impact. This is essentially a working capital timing item, not true leverage. Looking more carefully at the liability side without the gas regime: - Non-current liabilities decreased: 3,132M → 2,410M - Current liabilities excluding gas regime: 1,047M → 1,524M (increase) The increase in current liabilities ex-gas is mainly trade payables (644.7M → 885.4M). For Moody's adjusted leverage, they typically focus on: 1. Debt/EBITDA - this improved significantly 2. Debt/Equity - this improved 3. EBITDA/Interest - this deteriorated slightly (7.3x vs 8.5x) The interest coverage deterioration is due to higher finance costs (67.4M vs 54.4M) despite higher EBITDA. But the overall debt reduction is substantial. Long-term borrowings decreased by ~29%, and even with higher current borrowings, total borrowings decreased by ~16%. Given that: - Total borrowings decreased significantly - Debt/EBITDA improved from ~6.0x to ~4.8x - Equity increased - Profitability improved The leverage trend appears to be **Improving**, despite the one-off gas regime accounting impact and slightly higher interest costs. The gas regime is a matched item that doesn't affect net leverage, and the underlying business has reduced debt while improving profitability. Improving