I need to estimate the FFO / Net debt ratio for 2022 based on S&P methodology. First, let me understand what S&P methodology means for FFO (Funds From Operations): - FFO = Net income + Depreciation & Amortization + Deferred income taxes + Other non-cash items - More specifically for S&P: FFO = Operating cash flow before working capital changes (or EBITDA - interest - taxes, but the standard S&P approach uses cash flow based measures) Actually, let me use the standard S&P Global methodology for FFO: FFO = Net income from continuing operations + Depreciation & Amortization + Deferred income taxes + Other non-cash items Or more commonly for utilities/infrastructure: FFO = Cash flow from operations before changes in working capital + Interest paid - Interest received (or more simply, using the cash flow statement data) Let me look at what's available in the data: From the cash flow statement: - "Cash Flows From Used In Operations Before Changes In Working Capital" 2022: 4,804,300,000 EUR - "Net Finance Costs" 2022: -632,700,000 EUR (this is expense, so negative means cost) - "Income Tax Expense Continuing Operations" 2022: 419,800,000 EUR Actually, let me think more carefully about S&P FFO methodology: Standard S&P FFO formula: FFO = Funds from operations = - Net income before extraordinary items + Depreciation and amortization + Deferred income taxes + Other non-cash items Or from cash flow perspective: FFO = Cash flow from operating activities before changes in working capital Looking at the data, "Cash Flows From Used In Operations Before Changes In Working Capital" for 2022-01-01 to 2023-01-01 is 4,804,300,000 EUR. But S&P typically defines FFO more precisely as: FFO = Net income + D&A + Deferred taxes + Other non-cash charges Let me calculate from the P&L: - "Profit Loss From Continuing Operations" 2022: 1,076,200,000 EUR - "Operating Depreciation Amortization Provisions And Impairment Losses" 2022: 3,178,600,000 EUR - "Financial Amortization And Impairment Losses" 2022: 14,800,000 EUR For deferred taxes, I need to look at the change or the expense. The "Income Tax Expense Continuing Operations" is 419,800,000 EUR. But I need the deferred tax component. Actually, looking at balance sheet: - "Deferred Tax Assets" 2022-01-01: 1,059,200,000 EUR - "Deferred Tax Assets" 2023-01-01: 2,050,800,000 EUR - Change: +991,600,000 EUR (increase) - "Deferred Tax Liabilities" 2022-01-01: 1,196,400,000 EUR - "Deferred Tax Liabilities" 2023-01-01: 2,640,100,000 EUR - Change: +1,443,700,000 EUR (increase) Net deferred tax change: +991,600,000 - 1,443,700,000 = -452,100,000 EUR (this is a use/benefit) Actually, for FFO calculation, S&P adds back deferred tax expense (the non-cash portion). The income tax expense is 419,800,000 EUR. The cash taxes paid were 557,400,000 EUR. So the deferred tax benefit would be 419,800,000 - 557,400,000 = -137,600,000 (i.e., there was a deferred tax benefit, meaning cash taxes > book taxes). Wait, let me reconsider. "Income Taxes Paid Refund Classified As Operating Activities" is 557,400,000 EUR. This is cash paid. The income tax expense is 419,800,000 EUR. So cash taxes exceeded book taxes by 137,600,000 EUR, meaning deferred tax assets increased or liabilities decreased. But for S&P FFO, the standard approach is: FFO = Cash flow from operations before working capital changes This is directly given as 4,804,300,000 EUR for 2022. However, some S&P methodologies adjust this. Let me check if we need to add back interest or not. Actually, looking more carefully at standard S&P methodology for corporate issuers: FFO = Net income + Depreciation & amortization + Deferred income taxes + Other non-cash items Or: FFO = Operating cash flow before working capital changes The "Cash Flows From Used In Operations Before Changes In Working Capital" of 4,804,300,000 EUR seems to be the right starting point. But wait - I need to check if this includes interest paid or not. In many European presentations, this is before interest and taxes. Let me verify by looking at the reconciliation: From "Profit Loss From Continuing Operations" 1,076,200,000 + "Operating Depreciation Amortization Provisions And Impairment Losses" 3,178,600,000 + "Financial Amortization And Impairment Losses" 14,800,000 + "Net Finance Costs Adjustments" 632,700,000 (add back since it's a cost) + "Adjustments For Income Tax Expense" 419,800,000 + Other adjustments... Let me check: 1,076,200,000 + 3,178,600,000 + 14,800,000 + 632,700,000 + 419,800,000 = 5,322,100,000 But the "Cash Flows From Used In Operations Before Changes In Working Capital" is 4,804,300,000. The difference is about 517,800,000. Looking at other adjustments: - "Gains Losses On Disposal Of Operating Assets" -299,000,000 (deducted since it's a gain) - "Plus Ou Moins Values De Cessions Dactifs Financiers" -370,000,000 (financial asset gains/losses) - "Share Of Net Income Loss Of Joint Ventures" 56,500,000 (deducted since it's equity accounted) - "Adjustments For Undistributed Profits Of Associates" 70,500,000 (deducted) - "Adjustments For Dividend Income" 4,100,000 (deducted) - "Other Adjustments To Reconcile Profit Loss" 282,300,000 Let me try: 5,322,100,000 - 299,000,000 - 370,000,000 - 56,500,000 - 70,500,000 - 4,100,000 + 282,300,000 = 4,804,300,000. Yes! That matches. So "Cash Flows From Used In Operations Before Changes In Working Capital" = 4,804,300,000 EUR is the correct FFO figure under S&P methodology (this is essentially EBITDA - cash interest - cash taxes, or more precisely, operating cash flow before working capital changes). Actually, I need to be more careful. S&P FFO typically adds back interest to get to a pre-interest measure, or sometimes uses post-interest depending on the context. For the FFO/net debt ratio, S&P typically uses: - FFO = Funds from operations (after interest, before working capital changes) - Or sometimes: FFO = EBIT + D&A - Cash taxes Let me check standard S&P methodology more carefully. For corporate issuers, S&P defines: FFO = Net income from continuing operations + Depreciation & amortization + Deferred income taxes + Other non-cash items This would be: 1,076,200,000 + 3,178,600,000 + 14,800,000 + deferred taxes + other items. But the cash flow based "Operations Before Changes In Working Capital" of 4,804,300,000 is typically what is used in practice for FFO. Actually, I realize I need to check if S&P includes or excludes dividends from JVs/associates. The standard S&P FFO for a company with equity accounted investments typically includes dividends received from those investments, not the equity accounted income. Looking at the adjustments: "Adjustments For Dividend Income" is only 4,100,000 EUR, but "Dividends Received Classified As Investing Activities" is 128,600,000 EUR. This suggests dividends are in investing activities, not operating. For S&P methodology, FFO is typically: FFO = Operating cash flow before working capital changes + Dividends received from investments - Interest received (if in operating) + Interest paid (if not already in operating) Actually, let me look at this more carefully. The standard formula is: FFO = Net income + D&A + Deferred taxes + Other non-cash items - Gain on sale of assets + Other adjustments Or from the cash flow statement: FFO = Cash flow from operating activities before changes in working capital This is exactly 4,804,300,000 EUR. But wait - I need to check if this is "before changes in working capital" or if it includes other items. The line says "Cash Flows From Used In Operations Before Changes In Working Capital" which is clear. However, for S&P, there's a specific definition. Let me think... Actually, S&P Global Ratings methodology for "Funds From Operations" typically: FFO = Net income + Depreciation & amortization + Deferred income tax + Other non-cash items Where "Other non-cash items" includes things like provisions, impairment losses, share-based payments, etc. From our data, using the cash flow reconciliation approach which is more practical: FFO = Cash Flows From Used In Operations Before Changes In Working Capital = 4,804,300,000 EUR But I need to verify if this includes interest paid. Looking at the cash flow statement, there's "Interest Paid" of 637,700,000 EUR classified as financing activities. And "Interest On Operating Assets" of 78,500,000 EUR and "Interest On Lease" of 52,500,000 EUR. Wait, let me look more carefully. The cash flow statement shows: - "Cash Flows From Used In Operations Before Changes In Working Capital" 4,804,300,000 - Then working capital changes - Then "Income Taxes Paid Refund Classified As Operating Activities" 557,400,000 - Then operating cash flows So the 4,804,300,000 is BEFORE taxes paid. It includes the tax expense but not the actual tax payment? No wait, let me re-read. Actually, looking at the structure: "Cash Flows From Used In Operations Before Changes In Working Capital" 4,804,300,000 "Change In Operating Working Capital Requirements" -48,000,000 "Change In Concession Working Capital Requirements" 190,500,000 "Income Taxes Paid Refund Classified As Operating Activities" 557,400,000 = "Cash Flows From Used In Operating Activities Continuing Operations" 4,104,400,000 Wait, that doesn't add up: 4,804,300,000 - 48,000,000 + 190,500,000 - 557,400,000 = 4,389,400,000, not 4,104,400,000. Hmm, let me check: 4,804,300,000 - 48,000,000 + 190,500,000 - 557,400,000 = 4,389,400,000. But the stated operating cash flow is 4,104,400,000. There's a difference of 285,000,000. Actually, looking more carefully at the signs. "Income Taxes Paid Refund Classified As Operating Activities" - is this positive or negative? The value is 557,400,000. If taxes are paid, it's a cash outflow, so in the cash flow statement it would be negative (or subtracted). But the way it's presented here as a positive number might mean it's the amount, and we need to determine the sign. Actually, looking at 2021: "Cash Flows From Used In Operations Before Changes In Working Capital" 3,213,200,000 + "Change In Operating Working Capital Requirements" -382,500,000 + "Change In Concession Working Capital Requirements" 146,300,000 - "Income Taxes Paid Refund Classified As Operating Activities" 285,600,000 = 3,213,200,000 - 382,500,000 + 146,300,000 - 285,600,000 = 2,691,400,000. But stated is 3,163,800,000. Hmm, that doesn't work either. Let me try: 3,213,200,000 - 382,500,000 + 146,300,000 + 285,600,000 = 3,262,600,000. Not matching. Wait, I need to re-read. "Income Taxes Paid Refund Classified As Operating Activities" - if it's a refund, it's positive cash flow. If paid, negative. The 2021 value is 285,600,000 and 2022 is 557,400,000. These seem to be amounts paid (outflows). Let me try with signs as presented in typical cash flow statement (positive = inflow, negative = outflow): 2021: 3,213,200,000 + (-382,500,000) + 146,300,000 + (-285,600,000) = 2,691,400,000. But stated operating CF is 3,163,800,000. Hmm, not matching. Let me look at the exact wording again. "Cash Flows From Used In Operations Before Changes In Working Capital" - the "Used In" suggests outflow is positive? No, that doesn't make sense for a positive number. Actually, I think the issue is that "Income Taxes Paid Refund Classified As Operating Activities" with value 285,600,000 might be presented as a positive number but represents an outflow (paid), or the sign convention is different. Let me try another approach: 3,163,800,000 - 3,213,200,000 + 382,500,000 - 146,300,000 = 186,800,000. Not matching 285,600,000. Actually, I think I need to not get bogged down in this. The standard S&P FFO is typically "Cash Flows From Used In Operations Before Changes In Working Capital" which is 4,804,300,000 EUR for 2022. Now for Net Debt. S&P defines Net Debt as: - Short-term debt + Long-term debt + Bank overdrafts + Current portion of long-term debt - Cash and cash equivalents - Marketable securities From the balance sheet, I need to identify debt items: Current financial liabilities: - "Current Financial Liabilities Excluding Concession Liabilities" 2023-01-01: 6,521,400,000 EUR (this is 2023 start, so 2022 end) - "Current Concession Liabilities" 2023-01-01: 243,200,000 EUR - "Current Lease Liabilities" 2023-01-01: 496,500,000 EUR - "Current Derivative Financial Liabilities" 2023-01-01: 883,400,000 EUR (this is not debt, it's derivatives) - "Bank Overdrafts And Other Cash Position Items" 2023-01-01: 213,600,000 EUR Noncurrent financial liabilities: - "Noncurrent Financial Liabilities Excluding Concession Liabilities" 2023-01-01: 19,692,100,000 EUR - "Noncurrent Lease Liabilities" 2023-01-01: 1,656,200,000 EUR - "Noncurrent Concession Liabilities" 2023-01-01: 1,680,500,000 EUR - "Noncurrent Derivative Financial Liabilities" 2023-01-01: 720,200,000 EUR (derivatives, not debt) Cash and equivalents: - "Cash And Cash Equivalents" 2023-01-01: 9,012,200,000 EUR For S&P net debt, typically: Net debt = Short-term borrowings + Long-term borrowings + Bank overdrafts - Cash and cash equivalents - Liquid investments Using 2022 year-end figures (which are 2023-01-01 in the data): Debt items: - Current Financial Liabilities Excluding Concession Liabilities: 6,521,400,000 - Current Concession Liabilities: 243,200,000 - Current Lease Liabilities: 496,500,000 - Bank Overdrafts And Other Cash Position Items: 213,600,000 - Noncurrent Financial Liabilities Excluding Concession Liabilities: 19,692,100,000 - Noncurrent Lease Liabilities: 1,656,200,000 - Noncurrent Concession Liabilities: 1,680,500,000 Total debt-like liabilities: 6,521,4 + 243,2 + 496,5 + 213,6 + 19,692,1 + 1,656,2 + 1,680,5 = 30,503,500,000 EUR Wait, but S&P typically excludes lease liabilities from net debt in some methodologies, or includes them. Let me think... Actually, under IFRS 16, lease liabilities are included in debt. S&P typically includes lease liabilities in debt. But concession liabilities - are these financial liabilities? They might be operating in nature. Let me check if they should be included. Looking at the structure, "Concession Liabilities" are separated from regular financial liabilities. In many utilities/infrastructure companies, concession liabilities relate to concession arrangements and may or may not be considered debt-like. For S&P methodology, typically: Net debt = Short-term debt + Long-term debt + Bank overdrafts - Cash and cash equivalents Where "debt" includes: bonds, loans, bank borrowings, finance leases, and similar obligations. Let me be more careful. The items explicitly labeled as financial liabilities: - "Current Financial Liabilities Excluding Concession Liabilities" 6,521,400,000 - "Noncurrent Financial Liabilities Excluding Concession Liabilities" 19,692,100,000 - "Bank Overdrafts And Other Cash Position Items" 213,600,000 Plus lease liabilities (under IFRS 16): - "Current Lease Liabilities" 496,500,000 - "Noncurrent Lease Liabilities" 1,656,200,000 Concession liabilities: - "Current Concession Liabilities" 243,200,000 - "Noncurrent Concession Liabilities" 1,680,500,000 For S&P, concession liabilities are typically NOT included in net debt if they are operating in nature (like payables to concession grantors). But if they are financial, they might be. Actually, looking at the naming: "Current Financial Liabilities Excluding Concession Liabilities" and "Noncurrent Financial Liabilities Excluding Concession Liabilities" - this suggests concession liabilities are NOT classified as financial liabilities by the company, implying they might be operating. But wait, there's also "Noncurrent Concession Liabilities" and "Current Concession Liabilities" as separate line items. Let me check if these are debt-like. In many infrastructure companies, concession liabilities represent amounts payable to concession grantors and are essentially debt-like. However, S&P may or may not include them. Let me look for a standard approach. Actually, I think for S&P Global Ratings, "total debt" typically includes: - All interest-bearing debt - Lease liabilities (post-IFRS 16) - Bank overdrafts - Sometimes hybrid instruments (depending on equity content) And excludes: - Operating payables - Derivative liabilities (unless net debt position) - Provisions - Deferred taxes For Veolia, a utility/environmental services company, let me think about what S&P would include. Actually, I realize I should look at this from the perspective of what data is clearly debt-like. The "Financial Liabilities" lines are clearly debt. Lease liabilities are clearly debt-like under IFRS 16. Bank overdrafts are clearly debt. Concession liabilities - these might be similar to finance lease obligations or might be operating. Given they're separated from "Financial Liabilities," they might have a different nature. Let me check: In some contexts, "concession liabilities" in IFRS relate to IFRIC 12 service concession arrangements, where the operator has a liability to pay the grantor. These can be financial liabilities. Actually, looking more carefully at the balance sheet structure, I see "Noncurrent Liabilities" includes: - Noncurrent Provisions: 2,844,400,000 - Noncurrent Financial Liabilities Excluding Concession Liabilities: 19,692,100,000 - Noncurrent Lease Liabilities: 1,656,200,000 - Noncurrent Derivative Financial Liabilities: 720,200,000 - Noncurrent Concession Liabilities: 1,680,500,000 - Deferred Tax Liabilities: 2,640,100,000 Total Noncurrent Liabilities: 29,233,500,000. Let me verify: 2,844.4 + 19,692.1 + 1,656.2 + 720.2 + 1,680.5 + 2,640.1 = 28,833,500,000. Hmm, doesn't match 29,233,500,000. Difference is 400,000,000. Maybe I'm missing something or there's rounding. Actually 2,844,400,000 + 19,692,100,000 + 1,656,200,000 + 720,200,000 + 1,680,500,000 + 2,640,100,000 = 29,233,500,000. Yes it matches! I added wrong before. For S&P net debt, let me use the most standard definition: Net debt = Total debt - Cash and cash equivalents Where total debt includes: - Short-term borrowings - Long-term borrowings - Lease liabilities - Bank overdrafts From the 2023-01-01 (2022 year-end) figures: - Current Financial Liabilities Excluding Concession Liabilities: 6,521,400,000 - Noncurrent Financial Liabilities Excluding Concession Liabilities: 19,692,100,000 - Current Lease Liabilities: 496,500,000 - Noncurrent Lease Liabilities: 1,656,200,000 - Bank Overdrafts And Other Cash Position Items: 213,600,000 Total debt = 6,521,400,000 + 19,692,100,000 + 496,500,000 + 1,656,200,000 + 213,600,000 = 28,579,800,000 EUR Cash and cash equivalents = 9,012,200,000 EUR Net debt = 28,579,800,000 - 9,012,200,000 = 19,567,600,000 EUR But wait - should I include concession liabilities? Let me think... The term "Concession Liabilities" in the context of Veolia likely refers to liabilities under service concession arrangements (IFRIC 12). These represent obligations to pay the concession grantor and are typically financial in nature. However, the company separates them from "Financial Liabilities" which suggests they may be treated differently. For S&P Global Ratings, typically all debt-like obligations are included. If concession liabilities are essentially debt (payments to a grantor that are fixed or determinable), they should be included. Let me check if there's a clue in the 2021 data. Looking at the equity section, there's "Fair Value Adjustments On Financial Instruments At Fair Value Through Equity Not Subsequently Released To Net Income Relating To The Acquisition Of Suez" of 672,000,000 EUR in 2021. This suggests significant M&A activity. Actually, I realize the big change from 2022 to 2023 is due to the Suez acquisition. Goodwill went from 6.2B to 11.6B, PPE from 8.7B to 16.6B, etc. This is a major acquisition. For S&P net debt calculation, I think the standard approach would be: Total debt = Financial liabilities (current and noncurrent) + Lease liabilities + Bank overdrafts + Concession liabilities (if debt-like) Let me include concession liabilities to be conservative: + Current Concession Liabilities: 243,200,000 + Noncurrent Concession Liabilities: 1,680,500,000 Total debt with concessions = 28,579,800,000 + 243,200,000 + 1,680,500,000 = 30,503,500,000 EUR Net debt with concessions = 30,503,500,000 - 9,012,200,000 = 21,491,300,000 EUR Hmm, but S&P might not include concession liabilities. Let me think about what "concession liabilities" mean for Veolia. In the water and waste business, concession liabilities could represent: 1. Payments due to municipal grantors under concession contracts 2. Infrastructure rehabilitation obligations 3. Other contract-related obligations If these are essentially operating payables or contract obligations rather than financing debt, S&P might exclude them. Actually, looking at the cash flow statement, there's "Change In Concession Working Capital Requirements" which is treated as working capital, not financing. This suggests concession liabilities might be operating in nature. Also, the company separates "Concession Liabilities" from "Financial Liabilities" in the balance sheet, suggesting they're different in nature. For a conservative S&P-like calculation, I'll include them. But let me also calculate without. Actually, I want to check one more thing. Is there any "liquid assets" or "marketable securities" to subtract? Looking at current assets: - "Other Current Financial Assets" 2,213,500,000 - these might include short-term investments - "Actifs Financiers Operationnels Courants" 182,800,000 - operating financial assets, current The "Change In Liquid Assets And Financing Financial Assets" in financing activities is -705,100,000 for 2022, suggesting there are liquid assets that changed. But standard S&P net debt typically only subtracts "Cash and cash equivalents" and very liquid short-term investments. "Other Current Financial Assets" might include some liquid investments, but without more detail, I'll stick with just cash. Actually, looking at the line "Cash And Cash Equivalents If Different From Statement Of Financial Position" - 2022-01-01: 10,276,800,000 and 2023-01-01: 8,798,600,000. These differ from "Cash And Cash Equivalents" of 10,518,700,000 and 9,012,200,000. The difference might be bank overdrafts or other items. For S&P, cash is typically the more liquid figure. Let me use 9,012,200,000 as per the balance sheet line "Cash And Cash Equivalents". Now, let me reconsider FFO. I want to make sure I'm using the right figure. S&P Global Ratings defines FFO in their corporate methodology. Let me recall: For "industrial" companies, S&P typically uses: FFO = Funds from operations = Net income + Depreciation & amortization + Deferred income taxes + Other non-cash items But for utilities and infrastructure, they often use: FFO = Cash flow from operations before changes in working capital (which is essentially the same as EBITDA - cash interest - cash taxes + other items, or can be derived from net income) The "Cash Flows From Used In Operations Before Changes In Working Capital" of 4,804,300,000 EUR is the most direct measure available. However, I need to check if S&P makes any adjustments. One common adjustment is to add back dividends received from investments (if classified as investing activities rather than operating). But S&P FFO is typically from the perspective of the company's operating cash generation, so dividends from investments might or might not be included. Actually, looking at standard S&P methodology more carefully: For corporate issuers (including utilities), S&P defines FFO as: "Funds from operations (FFO) are a measure of internal cash generation. We calculate FFO as net income from continuing operations adjusted for depreciation and amortization, deferred income taxes, and other non-cash items." The cash flow statement line "Cash Flows From Used In Operations Before Changes In Working Capital" is essentially this measure, derived from the indirect method of cash flow statement before working capital changes. But there's a nuance: S&P FFO includes dividends received from unconsolidated subsidiaries and JVs/associates if they're part of core operations. Looking at the data, "Dividends Received Classified As Investing Activities" is 128,600,000 EUR for 2022. If these are from equity-accounted entities, S&P might add them back to FFO if they're not already in operating cash flow. Actually, looking at the reconciliation of "Cash Flows From Used In Operations Before Changes In Working Capital": - It includes "Adjustments For Dividend Income" of only 4,100,000 EUR - But actual dividends received were 128,600,000 EUR (in investing activities) This suggests most dividends are in investing activities, not operating. For S&P FFO, if dividends from core investments are part of normal operations, they might be added. But let me stick with the standard definition. The 4,804,300,000 EUR is "Cash Flows From Used In Operations Before Changes In Working Capital" which is the standard starting point. Actually, I want to double-check one thing. Does this 4,804,300,000 include or exclude interest paid? Looking at the financing activities: "Interest Paid" is 637,700,000 EUR in financing activities. And "Interest On Operating Assets" 78,500,000 and "Interest On Lease" 52,500,000 - these might be in operating or financing. If interest paid is in financing activities, then the operating cash flow before working capital changes might be BEFORE interest (i.e., it includes interest expense but not the cash payment). Let me check. Actually, in the indirect method starting from net income: Net income 1,076,200,000 + D&A 3,178,600,000 + 14,800,000 + Other non-cash and adjustments = Cash flow before working capital changes 4,804,300,000 Net income is already after interest expense of 632,700,000 (net finance costs). So if we start from net income, we're after interest expense. But if interest paid is classified as financing, then the cash flow before working capital changes would be after interest expense (in P&L) but before the cash payment classification. Wait, this is confusing. Let me think more carefully. In the indirect method cash flow statement: Net income + Depreciation & amortization +/- Changes in working capital = Operating cash flow Interest expense is deducted to get net income. Interest paid can be classified as operating or financing under IFRS. If classified as operating, it's a use of operating cash flow. If financing, it's a financing outflow. Looking at the data: "Net Finance Costs" in P&L is -632,700,000 (expense). "Net Finance Costs Adjustments" in cash flow reconciliation is +632,700,000 (add back). This means the cash flow reconciliation adds back the net finance cost to get to cash flow before working capital changes. But then "Interest Paid" of 637,700,000 is in financing activities. And "Interest On Operating Assets" of 78,500,000 and "Interest On Lease" of 52,500,000 - where are these? Let me look at the financing activities more carefully. The "Cash Flows From Used In Financing Activities" includes: - Interest Paid: 637,700,000 - Interest On Operating Assets: 78,500,000 - Interest On Lease: 52,500,000 Wait, these are all in financing activities? Let me re-read... Actually, looking at the data, these lines appear in the financing section but might be operating in nature. Actually, I think "Interest On Operating Assets" and "Interest On Lease" might be received or paid? The names are ambiguous. Let me assume the standard S&P approach: FFO = Cash flow from operations before working capital changes. This is 4,804,300,000 EUR. But wait - S&P typically defines FFO as AFTER interest but BEFORE working capital. So if the 4,804,300,000 is after interest expense (from P&L), that's correct. But if interest paid is in financing activities, the cash flow might need adjustment. Actually, I think the 4,804,300,000 is correct as is for S&P FFO. Let me verify by looking at what S&P typically reports for similar companies. For utilities/infrastructure, S&P FFO is typically: - EBITDA - Less: Cash interest paid - Less: Cash taxes paid - Plus: Dividends from investments (if core) - Plus/Minus: Other items But the "Cash Flows From Used In Operations Before Changes In Working Capital" already incorporates these elements through the indirect method. Actually, I realize I should check if the 4,804,300,000 is comparable to "EBITDA - cash interest - cash taxes" or if it's different. From the data: - Operating Income Before Share Of Net Income Loss Of Equity Accounted Entities: 2,206,300,000 - Share Of Net Income Loss Of Core Equity Accounted Entities: 127,000,000 - So EBIT-type measure: 2,206,300,000 + 127,000,000? No, the "Resultat Operationnel Apres Quote Part" is 2,333,300,000 EUR Actually "Resultat Operationnel Apres Quote Part De Resultat Net Dans Les Entites Mises En Equivalence" = 2,333,300,000 EUR. This is operating income after equity accounted income. Then "Net Finance Costs" = -632,700,000 Then "Other Finance Income Cost" = -204,600,000 Total finance costs = -837,300,000? But "Profit Loss Before Tax" is 1,496,000,000. Check: 2,333,300,000 - 632,700,000 - 204,600,000 = 1,496,000,000. Yes, matches. Now, EBITDA would be approximately: Operating income before equity accounted + D&A = 2,206,300,000 + 3,178,600,000 + 14,800,000 = 5,399,700,000? Wait, let me be more careful. "Operating Income Before Share Of Net Income Loss Of Equity Accounted Entities" is 2,206,300,000. This is before equity accounted income but after D&A? No, operating income is typically after D&A. Actually, looking at the cash flow reconciliation, "Operating Depreciation Amortization Provisions And Impairment Losses" is 3,178,600,000. This is added back to net income, meaning it was deducted to get operating income. So EBITDA = Operating income + D&A = 2,206,300,000 + 3,178,600,000 = 5,384,900,000? But wait, "Operating Income Before Share Of Net Income Loss Of Equity Accounted Entities" might already include some items. Actually, let me check: Revenue 42,885,300,000 - Cost of Sales 35,739,800,000 - Selling 954,200,000 - G&A 3,215,800,000 + Other Operating -769,200,000 = 42,885,300 - 35,739,800 - 954,200 - 3,215,800 - 769,200 = 2,206,300. Yes, matches. So EBITDA = 2,206,300,000 + 3,178,600,000 + 14,800,000? Actually D&A is part of Cost of Sales or other operating expenses. From cash flow: D&A = 3,178,600,000 operating + 14,800,000 financial = 3,193,400,000. So EBITDA ≈ 2,206,300,000 + 3,193,400,000 = 5,399,700,000? But this includes the equity accounted income share. Actually, "Operating Income Before Share Of Net Income Loss Of Equity Accounted Entities" is 2,206,300,000. The "Share Of Net Income Loss Of Core Equity Accounted Entities" is 127,000,000. So total operating income after equity accounted is 2,333,300,000. For EBITDA, we typically want before equity accounted as well, so: EBITDA = 2,206,300,000 + 3,193,400,000 = 5,399,700,000? But wait, is the 3,193,400,000 all in operating expenses? The "Operating Depreciation Amortization Provisions And Impairment Losses" suggests it's operating. The "Financial Amortization" is 14,800,000. Actually, I think "Operating Depreciation Amortization Provisions And Impairment Losses" includes depreciation of operating assets, amortization of intangibles, and impairment losses. This is 3,178,600,000. So a rough EBITDA = 2,206,300,000 + 3,178,600,000 = 5,384,900,000 EUR (excluding financial amortization). Now, FFO from cash flow is 4,804,300,000. The difference from EBITDA is about 580,600,000. This would be roughly: interest expense (632,700,000) + other finance costs (204,600,000) - interest received + taxes (419,800,000) - other items. Actually 632,700 + 204,600 + 419,800 = 1,257,100,000. That's more than 580,600,000. Hmm, let me not get too deep into this. The cash flow based FFO of 4,804,300,000 is the standard measure. Actually, I want to check one more thing. S&P sometimes adjusts FFO for "maintenance capex" or other items, but for the basic FFO/net debt ratio, they use unadjusted FFO. Let me also consider if I should use average net debt or year-end net debt. S&P typically uses year-end net debt for simplicity, or sometimes average. I'll use year-end (2022 end = 2023-01-01 in the data). Now, let me finalize my numbers: FFO = 4,804,300,000 EUR Net debt options: 1. Without concession liabilities: 28,579,800,000 - 9,012,200,000 = 19,567,600,000 EUR 2. With concession liabilities: 30,503,500,000 - 9,012,200,000 = 21,491,300,000 EUR For S&P Global Ratings, I believe they typically include concession liabilities if they're debt-like. But let me think... Actually, I recall that for utility and infrastructure companies, S&P includes "regulatory liabilities" or similar obligations in debt if they have a debt-like nature. Concession liabilities to a grantor are typically debt-like (fixed payments over time). However, looking at the company's classification, they separate "Financial Liabilities" from "Concession Liabilities," suggesting the latter are not financial in nature. They might be more like operating payables or deferred revenue. Let me check: In IFRIC 12 service concession arrangements, the operator might have a liability to pay the grantor a portion of revenue or fixed fees. If these are variable based on revenue, they're less debt-like. If fixed, more debt-like. Without more information, I'll calculate both and see which makes more sense. Actually, I want to look at this from another angle. What's the typical FFO/net debt ratio for utilities? It's typically around 15-25% for investment grade. Veolia is a major utility. If I use net debt without concessions: 4,804.3 / 19,567.6 = 24.6% If I use net debt with concessions: 4,804.3 / 21,491.3 = 22.4% Both seem reasonable for a utility. But which is more standard? Let me look for clues in the data. The "Noncurrent Financial Liabilities Excluding Concession Liabilities" wording suggests that concession liabilities COULD have been included in financial liabilities but are excluded. This might mean they have a different legal nature. Actually, I think I found a key clue. Looking at the cash flow statement, there's "Change In Concession Working Capital Requirements" which is treated as working capital (operating), not financing. This strongly suggests concession liabilities are operating in nature, not financing. Therefore, I should EXCLUDE concession liabilities from net debt. Net debt = 19,567,600,000 EUR But wait, I need to double-check my debt calculation. Let me re-add: - Current Financial Liabilities Excluding Concession Liabilities: 6,521,400,000 - Noncurrent Financial Liabilities Excluding Concession Liabilities: 19,692,100,000 - Current Lease Liabilities: 496,500,000 - Noncurrent Lease Liabilities: 1,656,200,000 - Bank Overdrafts And Other Cash Position Items: 213,600,000 Total = 6,521.4 + 19,692.1 + 496.5 + 1,656.2 + 213.6 = 28,579.8 million EUR Cash = 9,012.2 million EUR Net debt = 28,579.8 - 9,012.2 = 19,567.6 million EUR = 19,567,600,000 EUR FFO / Net debt = 4,804,300,000 / 19,567,600,000 = 0.2455 or 24.55% But I want to check one more thing. Should I include "Other Current Financial Assets" as a deduction from net debt? These are 2,213,500,000 EUR. If they're liquid investments, S&P might include them as "cash-like." However, "Other Current Financial Assets" could include trade receivables financing, derivatives, or other items not truly liquid. Without more detail, I'll exclude them. Also, what about "Actifs Financiers Operationnels Courants" (Current Operating Financial Assets) of 182,800,000? These are operating, not financing. And "Current Derivative Financial Assets" of 634,400,000? These are derivatives, not typically included in net debt unless they're in a net liability position. Actually, S&P does sometimes net derivative assets against derivative liabilities. But for simplicity, I'll exclude them. Let me also check if there are any "noncurrent investments" that should be considered liquid. "Noncurrent Investments Other Than Investments Accounted For Using Equity Method" is 112,500,000 EUR at 2023-01-01 (down from 3,770,300,000). These might include some liquid debt securities, but as they're noncurrent, I'll exclude. Actually, wait. I want to re-examine the FFO figure. Is 4,804,300,000 the right number, or should I use something else? Looking at S&P's published methodology for "Funds From Operations (FFO) To Debt" ratio: For corporate issuers, S&P uses: FFO = Net income from continuing operations + Depreciation & amortization + Deferred income taxes + Other non-cash items Let me try to calculate this from the P&L: - Net income from continuing operations: 1,076,200,000 - Depreciation & amortization: 3,178,600,000 + 14,800,000 = 3,193,400,000 - Deferred income taxes: Need to calculate For deferred income taxes, I need the change in deferred tax assets and liabilities, or the deferred tax component of tax expense. From balance sheet changes (2022 to 2023): Deferred Tax Assets: 1,059,200,000 → 2,050,800,000, increase of 991,600,000 Deferred Tax Liabilities: 1,196,400,000 → 2,640,100,000, increase of 1,443,700,000 Net deferred tax liability increase: 1,443,700,000 - 991,600,000 = 452,100,000 This increase in net deferred tax liability would be a "deferred tax expense" of 452,100,000 (non-cash). But wait, the income tax expense was 419,800,000 and cash taxes paid were 557,400,000. So cash taxes exceeded book tax expense by 137,600,000. This means there was a deferred tax benefit (reduction in deferred tax liability or increase in asset) of 137,600,000? But my balance sheet calculation shows net deferred tax liability increase of 452,100,000. Hmm, these don't match. The difference might be due to: - M&A adjustments from Suez acquisition - Foreign exchange effects - Reclassifications - Discontinued operations Actually, the "Income Tax Expense Continuing Operations" is 419,800,000. But there might be tax in discontinued operations as well. Also, the balance sheet changes include the Suez acquisition, which would massively affect deferred taxes through purchase accounting. So calculating deferred taxes from the balance sheet is unreliable due to M&A. For S&P FFO, using the cash flow based measure (4,804,300,000) is more reliable than trying to build it from P&L components. But let me verify: does 4,804,300,000 include or exclude the equity accounted income? From the reconciliation: Net income from continuing operations: 1,076,200,000 + D&A: 3,193,400,000 + Other adjustments to reconcile: 282,300,000 - Gains on disposal of operating assets: -299,000,000 - Gains/losses on financial asset disposals: -370,000,000 - Share of net income of JVs: -56,500,000 (deducted, meaning it was added to get to this line? No, negative means subtract) Wait, let me re-read. "Share Of Net Income Loss Of Joint Ventures" in the reconciliation is 56,500,000. Is this positive or negative in the reconciliation? Looking at 2021: "Share Of Net Income Loss Of Joint Ventures" is 74,100,000. In 2021, net income was 554,900,000 and operating CF before WC was 3,213,200,000. If we do: 554,900,000 + 2,117,200,000 + 3,800,000 + 342,600,000 + 345,800,000 + 116,000,000 - 39,200,000 + 1,200,000 - 74,100,000 - 30,800,000 - 124,200,000 = 3,197,000,000. Not matching 3,213,200,000. Close but not exact. Actually, I think the signs in the data are the values, and we need to know whether they're added or subtracted. The naming "Adjustments For..." suggests these are adjustments to reconcile profit to cash flow. Typically in cash flow statements: - Start with net income - Add: D&A, losses, decreases in assets, increases in liabilities - Subtract: gains, increases in assets, decreases in liabilities So "Share Of Net Income Loss Of Joint Ventures" as an adjustment would be subtracted (since it's income not operating cash). The value 56,500,000 would be subtracted. Similarly, "Adjustments For Dividend Income" of 4,100,000 would be subtracted. Let me try for 2022: 1,076,200,000 (net income) + 3,178,600,000 (operating D&A) + 14,800,000 (financial D&A) - 299,000,000 (gains on disposal of operating assets) - 370,000,000 (gains/losses on financial assets) - 56,500,000 (share of JV income) - 70,500,000 (undistributed profits of associates) - 4,100,000 (dividend income) + 632,700,000 (net finance costs - added back) + 419,800,000 (income tax expense - added back) + 282,300,000 (other adjustments) = 1,076.2 + 3,178.6 + 14.8 - 299 - 370 - 56.5 - 70.5 - 4.1 + 632.7 + 419.8 + 282.3 = 4,804,300,000 Yes! This matches exactly. So FFO = 4,804,300,000 EUR is correct. Now, one more check on net debt. Should I include "Current Derivative Financial Liabilities" and "Noncurrent Derivative Financial Liabilities"? These are 883,400,000 and 720,200,000 respectively. Derivatives can be: - Hedging instruments (fair value or cash flow hedges) - Trading derivatives If they're hedging debt-related items, they might be netted against debt. But typically, S&P includes derivative liabilities in debt only if they're related to financing activities. These could also be commodity hedges (operating). Given the uncertainty, I'll exclude derivatives from debt. Also, what about "Actifs Financiers Operationnels Non Courants" (Noncurrent Operating Financial Assets) of 1,193,800,000? These are operating, not financing. And "Other Noncurrent Financial Assets" of 483,200,000? These might include loans to JVs/associates or other investments. Not typically included as "cash" for net debt. Let me finalize: FFO = 4,804,300,000 EUR Net debt = 19,567,600,000 EUR FFO / Net debt = 4,804,300,000 / 19,567,600,000 = 0.24553... = 24.55% But wait, I want to check one more thing. The "Bank Overdrafts And Other Cash Position Items" - is this already included in "Cash And Cash Equivalents" or separate? Looking at 2022-01-01: Cash 10,518,700,000 and Bank Overdrafts 241,900,000. The "Cash And Cash Equivalents If Different From Statement Of Financial Position" is 10,276,800,000. This suggests cash net of overdrafts is 10,276,800,000, and 10,518,700,000 - 241,900,000 = 10,276,800,000. Yes! So "Cash And Cash Equivalents" in the balance sheet includes gross cash, and bank overdrafts are separate liabilities. For S&P net debt, we should use gross cash and include bank overdrafts in debt. This is what I did. For 2023-01-01: Cash 9,012,200,000 - Bank Overdrafts 213,600,000 = 8,798,600,000, which matches "Cash And Cash Equivalents If Different From Statement Of Financial Position". So my calculation is consistent. One final check: should I use 2022 average net debt or year-end? S&P typically uses year-end for simplicity in published ratios, though they might use average for internal analysis. I'll use year-end. Actually, I realize I should double-check if "Noncurrent Financial Liabilities Excluding Concession Liabilities" includes or excludes lease debt. The name says "Excluding Concession Liabilities" but doesn't mention leases. Given that "Noncurrent Lease Liabilities" is a separate line item, the "Noncurrent Financial Liabilities Excluding Concession Liabilities" likely excludes both concession liabilities AND lease liabilities. Similarly for current. So my addition is correct: financial liabilities + lease liabilities + bank overdrafts. Let me also verify the 2022 beginning of year numbers to see the progression: 2022-01-01 (2021 year-end): - Current Financial Liabilities Excluding Concession Liabilities: 8,624,300,000 - Noncurrent Financial Liabilities Excluding Concession Liabilities: 10,462,500,000 - Current Lease Liabilities: 410,600,000 - Noncurrent Lease Liabilities: 1,298,100,000 - Bank Overdrafts: 241,900,000 Total debt = 21,037,400,000 Cash = 10,518,700,000 Net debt = 10,518,700,000 So net debt went from 10.5B to 19.6B, roughly doubling due to Suez acquisition. This makes sense. FFO went from 3,213,200,000 to 4,804,300,000, up about 50%. Revenue went from 28.5B to 42.9B, up 50%. So FFO/revenue is stable, but net debt increased more due to acquisition financing. The ratio 24.6% seems reasonable for a post-acquisition year. Actually, let me reconsider one more time if I should include concession liabilities. Looking at 2021: - Current Concession Liabilities: 169,400,000 - Noncurrent Concession Liabilities: 1,588,400,000 Total: 1,757,800,000 And 2022: - Current: 243,200,000 - Noncurrent: 1,680,500,000 Total: 1,923,700,000 These are relatively stable compared to the massive increase in financial liabilities. This suggests they're more like operating obligations (maintenance, rehabilitation) rather than acquisition financing. I'll stick with excluding them. Final answer: FFO / Net debt = 4,804,300,000 / 19,567,600,000 = 0.2455 As a percentage: 24.55% But the question asks for the ratio, so I should express it as a decimal or percentage? Typically FFO/net debt is expressed as a percentage or ratio (e.g., 24.6% or 0.25x). Looking at S&P methodology, they typically express it as "FFO to debt" where debt means net debt or gross debt. The ratio is often expressed as a percentage (e.g., "FFO to debt of 25%"). But mathematically, 0.2455 is the ratio. Let me express it as a decimal or percentage? The question says "ratio" so I'll give the decimal form, or should I give percentage? Actually, looking at typical financial reporting, FFO/net debt is often expressed as a percentage. But "ratio" could mean either. Let me give 0.245 or 24.5%. I'll use decimal form 0.245 as the most precise mathematical ratio. Wait, let me re-read the question: "estimate the FFO / Net debt ratio for 2022, based on S&P methodology" S&P typically reports this as "FFO to debt" in percentage terms. For example, "FFO to debt of 25%" means FFO/debt = 25% = 0.25. But in ratio form, it could be 0.25x or 25%. I'll provide the decimal 0.245. Actually, I want to make one more check. Does S&P use gross debt or net debt? The question asks for "FFO / Net debt ratio" so it's clear: net debt. But S&P's standard metric is "FFO to debt" which could be gross or net. The question specifically asks for net debt, so I'll use that. Let me also verify my FFO figure one more time. Is there any adjustment needed for the Suez acquisition? In acquisition years, S&P sometimes adjusts FFO for integration costs, one-time items, etc. But without specific information, I'll use the reported figure. Also, I should check if "Cash Flows From Used In Operations Before Changes In Working Capital" includes discontinued operations or not. The data shows: - "Cash Flows From Used In Operating Activities Continuing Operations" 4,104,400,000 - "Cash Flows From Used In Operating Activities Discontinued Operations" 43,800,000 - Total "Cash Flows From Used In Operating Activities" 4,148,200,000 And for the "before working capital" figure, only one line is shown: 4,804,300,000. This is likely for continuing operations, or total. Actually, looking at 2021: - Before WC: 3,213,200,000 - Continuing operating: 3,163,800,000 - Discontinued operating: -16,600,000 - Total operating: 3,147,200,000 So 3,213,200,000 is before WC for total operations (continuing + discontinued), because 3,163,800,000 - 16,600,000 ≠ 3,213,200,000. Actually 3,163,800,000 + (-16,600,000) = 3,147,200,000 which is the total operating. And 3,213,200,000 - 382,500,000 + 146,300,000 - 285,600,000 = 2,691,400,000. That doesn't match either. Hmm, I think the "Cash Flows From Used In Operations Before Changes In Working Capital" is for continuing operations, and then discontinued is added separately. Actually, let me not worry about this. The 4,804,300,000 is the standard FFO measure. One last thing: should I add back "Cash Flows From Used In Operating Activities Discontinued Operations" to FFO? For S&P, if discontinued operations are being sold, they might exclude them from FFO. But if they're core operations being held for sale, they might include them. The discontinued operations loss is -78,600,000 in P&L, but operating cash flow is +43,800,000. These are relatively small compared to total FFO. I'll ignore this nuance. Final calculation: FFO = 4,804,300,000 EUR Net debt = 19,567,600,000 EUR Ratio = 0.2455 I'll round to 0.25 or give more precision? Let me give 0.245. Actually, I want to double-check my arithmetic one more time: Debt: 6,521,400,000 +19,692,100,000 + 496,500,000 + 1,656,200,000 + 213,600,000 = 28,579,800,000 Cash: 9,012,200,000 Net debt: 28,579,800,000 - 9,012,200,000 = 19,567,600,000 FFO: 4,804,300,000 Ratio: 4,804,300,000 / 19,567,600,000 = ? 4,804.3 / 19,567.6 = 0.245529... So approximately 0.246 or 24.6%. I'll provide 0.245 as a conservative estimate, or should I provide more precision? Let me give 0.246. Actually, looking at this again, I wonder if S&P would include more items in debt. Let me reconsider "Other Current Financial Assets" of 2,213,500,000. If this includes things like short-term deposits or marketable securities, they should be deducted from net debt. In many European companies, "Other Current Financial Assets" includes derivatives, loans to related parties, and other items. Without knowing the exact composition, it's safer to exclude. But let me check if there's a line for "liquid assets" or similar. The "Change In Liquid Assets And Financing Financial Assets" in financing activities is -705,100,000 for 2022. This suggests there are "liquid assets" that changed. But the balance sheet doesn't show a separate line for liquid assets. Actually, looking at 2022-01-01: "Other Current Financial Assets" was 1,521,000,000 and became 2,213,500,000. This increased by 692,500,000. But "Change In Liquid Assets And Financing Financial Assets" is -705,100,000. Close but not exact. I think "liquid assets" might be part of "Other Current Financial Assets" or might be separate. Without clarity, I'll exclude from net debt calculation. Given all this analysis, my final answer is: FFO / Net debt = 4,804,300,000 / 19,567,600,000 = 0.246 (or 24.6%) I'll express this as 0.2455 or approximately 0.25. Let me give 0.246 for more precision. Actually, rethinking: should I use 2022 average net debt? The acquisition happened during 2022, so year-end net debt might overstate the debt position for the full year. However, S&P typically uses year-end figures for simplicity. If I used average of beginning and end: Beginning net debt (2022-01-01): Debt = 8,624.3 + 10,462.5 + 410.6 + 1,298.1 + 241.9 = 21,037.4 Cash = 10,518.7 Net debt = 10,518.7 Wait, that's negative? No: 21,037.4 - 10,518.7 = 10,518.7 million. Yes, positive 10.5B. Average net debt = (10,518.7 + 19,567.6) / 2 = 15,043.15 million FFO / Average net debt = 4,804.3 / 15,043.15 = 31.9% This is quite different. But S&P typically uses year-end for published ratios, so I'll stick with that. Actually, I want to verify beginning net debt calculation: 2022-01-01 debt: - Current Financial Liabilities Excluding Concession Liabilities: 8,624,300,000 - Noncurrent Financial Liabilities Excluding Concession Liabilities: 10,462,500,000 - Current Lease Liabilities: 410,600,000 - Noncurrent Lease Liabilities: 1,298,100,000 - Bank Overdrafts And Other Cash Position Items: 241,900,000 Total = 21,037,400,000 Cash: 10,518,700,000 Net debt = 21,037,400,000 - 10,518,700,000 = 10,518,700,000 Yes, that's correct. Net debt roughly doubled. Given the acquisition timing, year-end net debt is appropriate for the 2022 position. Final answer: 0.245 or 24.5%. I'll provide as decimal 0.245. Actually, I want to make absolutely sure about one thing. The question asks for "2022" - does this mean the year ended 2022-12-31, which is 2023-01-01 in the data? Yes, the data uses 2023-01-01 to represent year-end 2022. And the FFO figure "2022-01-01 - 2023-01-01" is for the year 2022. Correct. I'm confident in my calculation. 0.245