I need to estimate Moody's adjusted leverage trend for 2022 by analyzing the financial data provided. First, let me identify the key components for leverage calculation: **Debt Components:** - Other Noncurrent Financial Liabilities (2023-01-01): 4,722,263,000 EUR; (2022-01-01): 4,791,979,000 EUR - Other Current Financial Liabilities (2023-01-01): 619,418,000 EUR; (2022-01-01): 285,222,000 EUR - Total Debt 2022 year-end: 4,722,263,000 + 619,418,000 = 5,341,681,000 EUR - Total Debt 2021 year-end: 4,791,979,000 + 285,222,000 = 5,077,201,000 EUR Wait - I need to be more careful. The dates show 2023-01-01 and 2022-01-01, which represent the end of 2022 and end of 2021 respectively in annual reporting terms. Let me recalculate: - Debt at end of 2022 (2023-01-01): 4,722,263,000 + 619,418,000 = 5,341,681,000 EUR - Debt at end of 2021 (2022-01-01): 4,791,979,000 + 285,222,000 = 5,077,201,000 EUR **Equity:** - Total Equity 2022 year-end (2023-01-01): 2,755,243,000 EUR - Total Equity 2021 year-end (2022-01-01): 2,516,420,000 EUR **EBITDA/Operating Performance:** - Profit Loss From Operating Activities 2022: 565,851,000 EUR - Profit Loss From Operating Activities 2021: 581,101,000 EUR - Adjustments For Depreciation And Amortisation Expense 2022: 594,636,000 EUR - Adjustments For Depreciation And Amortisation Expense 2021: 546,626,000 EUR Approximate EBITDA 2022: 565,851,000 + 594,636,000 = 1,160,487,000 EUR Approximate EBITDA 2021: 581,101,000 + 546,626,000 = 1,127,727,000 EUR **Moody's Adjusted Leverage Considerations:** Moody's typically adjusts debt to include: - Reported debt - Pension obligations - Operating lease liabilities (Right-of-use assets suggest leases are capitalized) - Other adjustments From the balance sheet, I can see Right-of-use assets increased significantly from 53,096,000 to 90,397,000, suggesting lease obligations are already capitalized under IFRS 16. **Key Leverage Metrics:** Debt/EBITDA: - 2022: 5,341,681,000 / 1,160,487,000 = 4.60x - 2021: 5,077,201,000 / 1,127,727,000 = 4.50x Debt/Equity: - 2022: 5,341,681,000 / 2,755,243,000 = 1.94x - 2021: 5,077,201,000 / 2,516,420,000 = 2.02x Total Capitalization (Debt + Equity): - 2022: 5,341,681,000 + 2,755,243,000 = 8,096,924,000 - 2021: 5,077,201,000 + 2,516,420,000 = 7,593,621,000 Debt/Total Capitalization: - 2022: 5,341,681,000 / 8,096,924,000 = 65.9% - 2021: 5,077,201,000 / 7,593,621,000 = 66.9% **Trend Analysis:** Looking at the components: 1. Debt increased by about 5.2% (5,341,681 / 5,077,201 = 1.052) 2. EBITDA increased by about 2.9% (1,160,487 / 1,127,727 = 1.029) 3. Debt/EBITDA worsened slightly from 4.50x to 4.60x 4. However, equity increased significantly (2,755,243 / 2,516,420 = 9.5% increase) 5. Debt/Equity improved from 2.02x to 1.94x For Moody's specifically, they focus on: - Gross debt/EBITDA: slightly worse (4.50x to 4.60x) - But also consider retained cash flow, interest coverage, and other factors Looking more carefully at operating performance: - Revenue grew significantly: 5,138,245,000 / 3,972,061,000 = 29.4% growth - But operating profit declined: 565,851,000 vs 581,101,000 (-2.6%) - This is concerning - revenue growth but margin compression However, the increase in "Costi Esterni" (external costs) and operating expenses grew faster than revenue, suggesting cost pressures. For 2022 specifically, we also need to consider: - Cash flow from operations: 726,703,000 in 2022 vs 759,521,000 in 2021 (decline) - Capital expenditures were very high in 2022: 350,085,000 (PPE) + 700,218,000 (intangibles) = 1,050,303,000 vs 626,507,000 + 354,759,000 = 981,266,000 in 2021 The high capex and acquisition activity (-110,108,000 for subsidiaries) suggests growth investments. **Moody's Specific Adjustments:** Moody's would likely add back some items and make adjustments. The key trend indicators: - Debt/EBITDA slightly up - FFO (funds from operations) likely down given lower operating cash flow - Interest coverage: Finance costs increased from 97,388,000 to 111,670,000 while operating profit declined However, looking at the comprehensive picture and the significant equity increase, and considering that some of the debt increase may be related to acquisition/growth (Acea acquired businesses), the leverage trend is mixed. But the critical factor is: Debt/EBITDA worsened slightly, and more importantly, the operating profit margin compressed significantly (from 14.6% to 11.0% of revenue), while debt levels increased. The FFO/debt and debt/EBITDA metrics are key for Moody's, and both show slight deterioration. Given the revenue growth but margin compression, increased debt, and slightly higher leverage metrics, the trend appears to be **Deteriorating** or at best **Stable**. The slight increase in Debt/EBITDA from 4.5x to 4.6x with declining operating margins suggests modest deterioration. However, looking more carefully at the debt composition: current financial liabilities increased significantly (619,418,000 vs 285,222,000), more than doubling, which could indicate refinancing pressures or increased short-term borrowing needs. The combination of: - Higher Debt/EBITDA - Lower operating profit margin - Higher finance costs - Lower operating cash flow Suggests **Deteriorating** leverage trend. Deteriorating