I need to estimate the FFO / Net debt ratio for 2022 based on S&P methodology. First, let me understand S&P's FFO (Funds From Operations) methodology. S&P typically calculates FFO as: - Net income before extraordinary items + Depreciation and amortization + Deferred income taxes + Other non-cash items Or more commonly for S&P: FFO = Operating cash flow before working capital changes - interest paid + interest received (or more simply, cash flow from operations before working capital changes, sometimes adjusted) Actually, S&P's standard FFO definition is: FFO = Net income + Depreciation & amortization + Deferred tax provisions + Other non-cash items + Minority interest in income - Minority interest in dividends - Equity in earnings of affiliates + Cash distributions from affiliates Let me look at what data I have and use a more practical approach. S&P Global Ratings typically uses: FFO = Funds from operations = Net income + D&A + Deferred taxes + Other non-cash charges - Gain on sale + Minority interest - Equity earnings + Distributions from equity investments A simpler and commonly used S&P approach: FFO = Cash flow from operations before changes in working capital (which is essentially EBIT + D&A - cash taxes, or can be derived from the cash flow statement) From the data, I have "Cash Flows From Used In Operations Before Changes In Working Capital" for 2022: 10,215,000,000 EUR This is essentially: EBIT + D&A - cash taxes paid, or operating cash flow before working capital changes. For S&P FFO, I need to adjust this. Let me think more carefully. S&P FFO typically equals: - Net income: 4,417,000,000 EUR + D&A: 3,613,000,000 EUR + Deferred tax expense: I need to calculate this + Other non-cash items Actually, let me use the more direct approach. S&P often uses "Cash flow from operating activities before changes in working capital" as a starting point, then makes adjustments. From the cash flow data: - "Cash Flows From Used In Operations Before Changes In Working Capital" 2022: 10,215,000,000 EUR But this includes interest paid and taxes paid. For S&P FFO, we typically want to add back interest paid (net of interest received) because we want pre-financing cash flows, or we use a different formulation. Let me try another approach. S&P FFO can also be calculated as: FFO = Profit from operating activities + D&A - Cash taxes + Other adjustments Or more standard S&P formula: FFO = Net income + D&A + Deferred income tax + Other non-cash expenses - Gain/(loss) on asset sales + Minority interest - Equity in earnings of affiliates + Distributions from affiliates Let me gather components: - Net income (Profit Loss): 4,417,000,000 EUR - D&A (Adjustments For Depreciation And Amortisation Expense): 3,613,000,000 EUR - Deferred taxes: Need to estimate. Income Tax Expense Continuing Operations: 1,737,000,000 EUR. Income Taxes Paid: 1,603,000,000 EUR. So deferred tax portion = 1,737 - 1,603 = 134,000,000 EUR (approx) - Minority interest in income: 157,000,000 EUR (positive means minority interest income) - Equity in earnings of affiliates: 22,000,000 EUR (Share Of Profit Loss Of Associates) - Distributions from equity investments: 92,000,000 EUR (Dividends Received From Investments Accounted For Using Equity Method) Wait, let me re-check. "Share Of Profit Loss Of Associates And Joint Ventures Accounted For Using Equity Method" is 22,000,000 EUR (positive = profit). For S&P FFO: - Start with Net income: 4,417,000,000 + D&A: 3,613,000,000 + Deferred income taxes: The tax expense is 1,737,000,000 but cash taxes paid are 1,603,000,000. The difference is 134,000,000. But we need to check if this is deferred tax or timing. Actually, the deferred tax change would be in the balance sheet. Looking at balance sheet: - Deferred Tax Assets: 767M (2022) to 883M (2023), increase of 116M - Deferred Tax Liabilities: 3,225M (2022) to 4,162M (2023), increase of 937M Net deferred tax liability increase = 937 - 116 = 821M. This suggests deferred tax expense of roughly 821M. Actually, let me be more careful. The income tax expense in P&L is 1,737M. Cash taxes paid are 1,603M. The difference of 134M could be deferred tax or other timing differences. But looking at the balance sheet changes, the net deferred tax position changed significantly. Let me try a different, more standard approach for S&P FFO: FFO = Cash flow from operating activities before working capital changes + Interest paid - Interest received Wait, "Cash Flows From Used In Operations Before Changes In Working Capital" is 10,215M. This already includes interest and tax effects in some way. Let me look at the components that build to this: - Profit Loss From Operating Activities: 6,489,000,000 + D&A: 3,613,000,000 + Adjustments for provisions/impairment: 0 + Adjustments for share-based payments: 162,000,000 - Gains on disposal: -68,000,000 - Fair value gains: -236,000,000 + Undistributed profits of equity method investments: 42,000,000 + Net finance costs: 614,000,000 + Finance costs paid classified as operating: 29,000,000 + Interest expense on lease liabilities: 48,000,000 + Income tax expense: 1,737,000,000 Let me verify: 6,489 + 3,613 + 0 + 162 - 68 - 236 + 42 + 614 + 29 + 48 + 1,737 = ? 6,489 + 3,613 = 10,102 + 162 = 10,264 - 68 = 10,196 - 236 = 9,960 + 42 = 10,002 + 614 = 10,616 + 29 = 10,645 + 48 = 10,693 + 1,737 = 12,430 That doesn't equal 10,215. So there are other adjustments I'm missing, or some items are netted differently. Actually, looking more carefully at the cash flow statement structure, "Cash Flows From Used In Operations Before Changes In Working Capital" likely starts from "Profit Loss From Operating Activities" and adds back non-cash items. Let me try from "Profit Loss" (net income) instead: 4,417 + 3,613 (D&A) + 162 (share-based) - 68 (gains on disposal) - 236 (fair value) + 42 (undistributed) + 614 (net finance costs) + 29 (finance costs paid op) + 48 (lease interest) + 1,737 (tax expense) = ? 4,417 + 3,613 = 8,030 + 162 = 8,192 - 68 = 8,124 - 236 = 7,888 + 42 = 7,930 + 614 = 8,544 + 29 = 8,573 + 48 = 8,621 + 1,737 = 10,358 Still not 10,215. Difference is about 143M. Could be other items or the share of profit of associates treatment. Actually, I think "Cash Flows From Used In Operations Before Changes In Working Capital" of 10,215M is the right starting point, and it's already calculated properly by the company. For S&P FFO, the standard definition is: FFO = Funds from operations = Operating cash flow before working capital changes - Interest paid + Interest received (if interest was deducted in arriving at operating profit) Wait, let me think more carefully. The 10,215M already includes: - It starts from operating profit or net profit? - It adds back D&A, taxes, etc. Actually, in S&P methodology, FFO is typically: FFO = Net income + D&A + Deferred taxes + Other non-cash items - Gain on sales + Minority interest - Equity earnings + Distributions from affiliates Or alternatively and more commonly now: FFO = CFO (before working capital changes) + Net interest expense (after tax) - Dividends received from affiliates + Equity in earnings of affiliates Let me use the most standard S&P approach: FFO = Cash flow from operating activities before changes in working capital + Interest paid (net of capitalized interest, if any) - Interest received - Dividends received from investments Actually no - S&P wants to get to a pre-financing, pre-dividend measure. Let me reconsider. Standard S&P FFO formula: FFO = Net income before extraordinary items + Depreciation & amortization + Deferred income taxes + Other non-cash items - Gain/(loss) on asset sales + Minority interest in net income - Minority interest dividends (if consolidated) - Equity in net income of affiliates + Cash distributions from affiliates Let me calculate: - Net income: 4,417,000,000 + D&A: 3,613,000,000 + Deferred income taxes: Need to estimate For deferred taxes: The balance sheet shows: Deferred tax assets: 767M → 883M (increase 116M) Deferred tax liabilities: 3,225M → 4,162M (increase 937M) Net increase in deferred tax liabilities = 937 - 116 = 821M. This is the deferred tax expense. Actually, the P&L tax expense is 1,737M. Cash tax paid is 1,603M. The difference is 134M. But the balance sheet shows a much larger change in deferred taxes. This could be due to acquisitions, FX, reclassifications, etc. Let me use the cash flow approach: tax expense 1,737M - cash taxes paid 1,603M = 134M deferred tax provision. But this might not be pure deferred tax. Actually, for S&P purposes, a common simplified approach is: FFO = CFO before working capital changes - Interest received + Interest paid (gross) - Dividends received from investments Or: FFO = EBIT + D&A - Cash taxes Let me try: EBIT (Profit Loss From Operating Activities) = 6,489M + D&A = 3,613M - Cash taxes paid = 1,603M = 8,499M But this doesn't match the 10,215M "Cash Flows From Used In Operations Before Changes In Working Capital". Let me look at this again. The 10,215M likely starts from net income, not EBIT. From Net income 4,417M: + D&A 3,613M + Net finance costs 614M (added back since it's financing, not operating) + Income tax expense 1,737M (added back since it's tax) + Other non-cash adjustments = 10,215 - 4,417 - 3,613 - 614 - 1,737 = -166M Hmm, that gives negative other adjustments. Let me check if net finance costs is already in net income. Yes, net income is after finance costs and after taxes. So: Net income 4,417 + D&A 3,613 + Tax expense 1,737 + Net finance costs 614 = 10,381. Then other adjustments = 10,215 - 10,381 = -166M. The other adjustments include: share-based payments 162, gains on disposal -68, fair value gains -236, undistributed profits of equity method 42, finance costs paid 29, lease interest 48, provisions/impairment 0. 162 - 68 - 236 + 42 + 29 + 48 = -23. Not quite -166. There's still a difference. Anyway, for practical purposes, let me use 10,215M as the starting point for "Cash Flows From Used In Operations Before Changes In Working Capital" and adjust to S&P FFO. S&P FFO = Cash flow from operating activities before working capital changes - Interest received (if included in operating cash flow) + Interest paid (if not already included, or adjustments) - Dividends received from equity investments ± Other adjustments Actually, looking at the detailed cash flow, "Interest Paid And Interest Received Classified As Operating Activities" is 563M. This is net interest paid (or could be net). "Dividends Received From Investments Accounted For Using Equity Method Classified As Operating Activities" is 92M. For S&P FFO, we typically want to exclude interest and dividend income from operations, and also exclude interest expense. The standard approach is: FFO = Cash flow from operating activities before working capital changes - Interest income/received + Interest expense paid (or gross interest paid) - Dividends received from investments Wait, I'm confusing myself. Let me look up the standard S&P formula more carefully. S&P Global Ratings defines FFO as: FFO = Funds from operations = Net income from continuing operations + Depreciation and amortization + Deferred income taxes + Other non-cash items This is the earnings-based approach. The cash flow-based approach is: FFO = CFO + Net interest expense after tax - Dividends received Actually, the most common S&P formula used in practice is: FFO = Net income + D&A + Deferred taxes + Other non-cash charges + Minority interest - Equity in earnings of affiliates + Distributions from affiliates - Gain on asset sales Let me try to calculate this: Net income: 4,417M + D&A: 3,613M + Deferred taxes: I'll use the balance sheet approach. The net deferred tax liability increased by 821M (from 3,225-767=2,458M to 4,162-883=3,279M, increase of 821M). But this includes FX and other effects. Let me use a simpler approach. Actually, for the tax expense, the P&L shows 1,737M and cash paid is 1,603M. The difference of 134M represents a deferred tax benefit (or provision). Since tax expense > cash paid, there's a deferred tax provision of 134M. But wait, looking at the balance sheet, deferred tax assets increased by 116M and deferred tax liabilities increased by 937M. The net is 821M increase in deferred tax liability. This would suggest deferred tax expense of 821M, not 134M. The discrepancy is likely due to: (1) deferred taxes on items recorded in OCI, (2) acquisitions/disposals, (3) FX translation, (4) reclassifications. For S&P purposes, I'll use the cash flow approach which is cleaner. S&P FFO (cash flow approach) = Cash flows from operating activities before changes in working capital - Net interest received (or + net interest paid) - Dividends received from investments +/- Other items Actually, let me think about this differently. "Cash Flows From Used In Operations Before Changes In Working Capital" of 10,215M is essentially: EBITDA - Cash taxes + Other non-cash adjustments - Interest? No, it's before interest. Let me verify: If we start from Profit Loss From Operating Activities (6,489M) which is EBIT: + D&A (3,613M) = EBITDA 10,102M + Other adjustments to get to 10,215M = 113M The other adjustments include share-based payments (162), gains on disposal (-68), fair value gains (-236), undistributed profits of equity investments (42), and maybe some other items. 10,102 + 162 - 68 - 236 + 42 = 10,002. Then + 29 (finance costs paid) + 48 (lease interest) = 10,079. Still not 10,215. Hmm, let me also add provisions/impairment (0) and share-based payment adjustment (162 vs the expense of 356? No, the cash flow adjustment is 162). Actually I think the 10,215 is correct as given and I should just use it. For S&P FFO from this starting point: - The 10,215 includes interest paid and received, and dividends received, and tax expense (not cash tax) - We need to get to FFO which is typically pre-interest, pre-dividend from investments Standard adjustment: FFO = 10,215 - Interest received (136M from "Interest Income On Cash And Cash Equivalents") - but this may not all be in operating + Interest paid (gross, not net) - need to figure out - Dividends received from equity investments (92M) Actually, looking at the cash flow statement: "Interest Paid And Interest Received Classified As Operating Activities" is 563M. This is NET interest paid (positive means outflow). And "Dividends Received From Investments Accounted For Using Equity Method Classified As Operating Activities" is 92M. For S&P FFO, we typically: - Start with CFO before working capital changes: 10,215M - Subtract dividends received from equity investments: -92M = 10,123M - For interest: S&P FFO is typically after gross interest expense, or we can think of it as the cash flow available to pay debt Actually, I think I'm overcomplicating this. Let me use the most widely accepted S&P formula: FFO = Net income + D&A + Deferred income tax + Other non-cash items - Gain on sale of assets + Minority interest - Equity in earnings of affiliates + Cash distributions from affiliates Components: - Net income: 4,417M - D&A: 3,613M - Deferred income tax: Using the tax expense vs cash tax difference: 1,737 - 1,603 = 134M. But this is a provision, so add it back? Actually, if tax expense > cash paid, the difference is a non-cash charge (deferred tax provision), so we add it back to get FFO. But wait, if deferred tax liability increased, that's a non-cash expense. Let me check: if we add back tax expense and subtract cash taxes, we get the operating cash flow before working capital. Actually, the 10,215 already includes this. Let me use a different approach. The standard S&P FFO can be approximated as: FFO = CFO before working capital changes - Net interest income + Gross interest paid - Dividends received from equity investments Or more practically for this data: FFO ≈ Cash Flows From Used In Operations Before Changes In Working Capital - Interest Income + Interest Expense - Dividends Received from Equity Investments + Other adjustments Actually, the simplest and most accurate S&P approach given the data: FFO = Net income + Total D&A + Deferred tax provision + Other non-cash items - Gain on asset sales + Minority interest - Equity earnings + Distributions from affiliates = 4,417 + 3,613 + (1,737 - 1,603) + 162 - (-68? wait, gains are negative so subtract them)... Let me be careful. The "Adjustments For Losses Gains On Disposal Of Noncurrent Assets" is -68M, meaning gains of 68M. So we subtract gains: -68M (or add -68M to the formula). Actually the formula says "- Gain on sale", so if gain is 68M, we subtract 68M. Let me recalculate: Net income: 4,417 + D&A: 3,613 + Deferred tax provision: 134 (tax expense 1,737 - cash tax 1,603) + Other non-cash (share-based payments in cash flow adjustments): 162 - Gain on disposal: -68 (the adjustment is -68, meaning gain of 68; so we need to subtract 68) + Minority interest: 157 (profit attributable to NCI) - Equity in earnings of affiliates: -22 (share of profit 22) + Cash distributions from affiliates: 92 Wait, I need to be more careful with signs. "Share Of Profit Loss Of Associates" is 22M (positive = profit). This is already included in net income (as income). For FFO, we subtract the equity earnings (since they're not cash) and add distributions received. So: 4,417 + 3,613 + 134 + 162 - 68 + 157 - 22 + 92 = ? 4,417 + 3,613 = 8,030 + 134 = 8,164 + 162 = 8,326 - 68 = 8,258 + 157 = 8,415 - 22 = 8,393 + 92 = 8,485 Hmm, this seems low compared to 10,215. The difference is that we didn't add back net finance costs and tax expense which are in the 10,215. Actually, I think the issue is that "Net income" I'm using (4,417) is after tax and after finance costs. The 10,215 starts from a different point or adds back different items. Let me try yet another approach. S&P FFO from the cash flow statement: FFO = Cash flows from operating activities before changes in working capital - Interest received (from operating activities) + Interest paid (gross, if net is in the CF) - Dividends received from investments From the data: - Cash Flows From Used In Operations Before Changes In Working Capital: 10,215M - Interest Paid And Interest Received Classified As Operating Activities: This is 563M (net outflow, so interest paid > interest received) - Dividends Received From Investments: 92M But we don't have the gross interest paid and received separately in operating activities. We have "Interest Income On Cash And Cash Equivalents" of 136M (this is likely the interest received). For S&P FFO, a common simplification is: FFO = CFO before working capital changes - Interest income + Interest expense - Dividends received from equity investments But we need the interest expense, not net. "Net Finance Costs" is 614M. "Gross Finance Costs" is 750M. Interest income is 136M. So net is 614M = 750 - 136. If 10,215 is before interest and tax (i.e., starts from EBIT), then: FFO = 10,215 - Interest income + Interest expense? No, if it's before interest, we don't adjust. Actually, I think 10,215 is derived from net income by adding back tax and interest and D&A, so it's essentially EBIT + D&A - Cash taxes + other items, or more precisely it's the cash-generating ability before working capital changes. Let me verify by working backwards from 10,215: If 10,215 = Net income + D&A + Tax expense + Net finance costs + other adjustments = 4,417 + 3,613 + 1,737 + 614 + other = 10,381 + other Other = 10,215 - 10,381 = -166 The "other" includes: share-based payments 162, gains on disposal -68, fair value gains -236, undistributed profits 42, finance costs paid 29, lease interest 48, provisions 0 = -23 And -166 - (-23) = -143 difference. Hmm, still not matching. Maybe the net finance costs in the 10,215 is not the full 614, or there's something else. Let me just accept 10,215 as given and think about S&P FFO. Actually, I realize now that S&P's standard FFO formula using cash flow statement data is: FFO = Funds from operations = Cash flow from operating activities before working capital changes + Net interest expense after tax (or + Interest paid - Interest received, if interest was deducted in arriving at CFO) - Dividends received from equity investments +/- Other adjustments But in many European presentations, interest paid is already classified as financing, not operating. Let me check the cash flow statement structure. Looking at the cash flow data: - "Interest Paid And Interest Received Classified As Operating Activities": 563M - "Finance Costs Paid Classified As Operating Activities": 29M This suggests some interest is in operating activities. And "Net Finance Costs" in P&L is 614M. For S&P FFO, the standard is to use: FFO = CFO before working capital changes + Net interest expense (after tax) [if interest is not already added back] - Dividends received from equity investments Actually, I think the cleanest approach is to use the earnings-based S&P FFO formula with the data I have, and accept some approximation. Let me try a practical S&P approach used by many practitioners: FFO ≈ EBIT + D&A - Cash taxes EBIT = Profit Loss From Operating Activities = 6,489M + D&A = 3,613M = 10,102M (EBITDA) - Cash taxes paid = 1,603M = 8,499M But this doesn't include adjustments for gains/losses, equity earnings, etc. Alternatively, using the cash flow based approach that S&P often uses: FFO = Cash flows from operating activities before working capital changes - Dividends received from equity investments + Interest paid (gross, if deducted) - Interest received From the data, if 10,215 already has net interest paid of 563M and dividends received of 92M embedded: Actually, let me look at this more carefully. The 10,215 is "Cash Flows From Used In Operations Before Changes In Working Capital". This is before working capital but after all other adjustments. For S&P, FFO is typically defined as: FFO = Net income + D&A + Deferred taxes + Other non-cash items - Gain on asset sales + Minority interest - Equity in earnings of affiliates + Cash distributions received from affiliates Using this formula with best estimates: - Net income: 4,417M - D&A: 3,613M - Deferred taxes: I'll use the change in net deferred tax position. From 2022 to 2023, deferred tax assets went 767→883 (+116), deferred tax liabilities went 3,225→4,162 (+937). Net increase in deferred tax liabilities = 821M. But this includes FX, acquisitions, OCI items. The pure P&L deferred tax is hard to extract. Let me use tax expense - cash tax = 134M as a rough proxy for the deferred tax provision related to operations. - Other non-cash items: Share-based payments 356M (expense) or 162M (cash flow adjustment). The cash flow adjustment is 162M. Let me use the expense 356M? No, for FFO we add back non-cash expenses. The share-based payment expense is 356M, but the cash flow adjustment is 162M. The difference might be cash settled or other items. Let me use 162M to be consistent with cash flow. - Gain on asset sales: -68M (adjustment is -68, meaning gain of 68) - Minority interest: 157M (profit attributable to NCI) - Equity in earnings of affiliates: 22M (share of profit) - Distributions from affiliates: 92M (dividends received) FFO = 4,417 + 3,613 + 134 + 162 - 68 + 157 - 22 + 92 = 8,485M But this seems low. Let me check if I should add back tax expense instead of deferred tax: If I add back full tax expense 1,737 and subtract cash taxes 1,603, that's equivalent to adding deferred tax 134. Hmm, but actually in the standard S&P formula, we add back deferred tax provision, not full tax expense. The formula is meant to get to a pre-tax, pre-interest measure... no wait, FFO is not pre-tax or pre-interest in the traditional sense. Let me reconsider. S&P FFO is meant to represent cash flow from operations before working capital changes, available to all providers of capital. It's not EBITDA. Actually, looking at S&P's published methodology more carefully, a common simplified formula is: FFO = Net income + D&A + Deferred tax provision + Other non-cash items This gives: 4,417 + 3,613 + 134 + 162 - 68 = 8,258M (before minority and equity items) Or with minority and equity: 8,258 + 157 - 22 + 92 = 8,485M But I can also calculate FFO from the cash flow statement as: FFO = CFO before working capital changes - Interest income + Interest expense - Dividends received from investments If CFO before WC is 10,215, and this includes: - Tax expense (non-cash): 1,737 - Net finance costs: 614 - Dividends received: 92 - Interest paid/received net: 563 Actually, I think 10,215 is constructed as: Start from Net income: 4,417 Add: Tax expense 1,737 Add: Net finance costs 614 Add: D&A 3,613 Add: Other non-cash items (share-based 162, undistributed profits 42, etc.) Less: Gains on disposal 68 Less: Fair value gains 236 = roughly 10,215 Let me verify: 4,417 + 1,737 + 614 + 3,613 + 162 + 42 - 68 - 236 = 10,281. Close to 10,215 but not exact. Difference of 66M could be other items. So 10,215 is essentially: Net income + Tax expense + Net finance costs + D&A + other non-cash adjustments - gains For S&P FFO, we want to get to: Funds from operations available to debt holders and equity holders. This is typically: FFO = EBIT + D&A - Cash taxes + Other adjustments Or: FFO = EBITDA - Cash taxes + Other adjustments EBITDA = EBIT + D&A = 6,489 + 3,613 = 10,102M Cash taxes = 1,603M FFO ≈ 10,102 - 1,603 = 8,499M But this is before other adjustments. With other adjustments for gains, equity earnings, etc.: 8,499 - 68 (gains) - 22 (equity earnings) + 92 (distributions) + 157 (minority) ... wait, minority is already in net income and EBIT. Actually, EBIT (6,489) includes: - Operating profit before tax - Before net finance costs - Includes equity earnings? Yes, "Share Of Profit Loss Of Associates" is 22M, which is typically below operating profit or part of it. Looking at the P&L structure: - Profit Loss From Ordinary Operating Activities: 6,824M - Expense From Sharebased Payment: -356M - Share Of Profit Loss Of Associates: 22M - Other Operating Income Expense Recurring: -9M - Profit Loss From Operating Activities Recurring: 6,481M... wait, let me check: 6,824 - 356 + 22 - 9 = 6,481? But it's 6,481M. Close enough, rounding. Actually: 6,824 - 356 = 6,468; + 22 = 6,490; - 9 = 6,481. But stated is 6,481M. Hmm, 6,490 vs 6,481, difference of 9M. Let me check: 6,824 - 356 + 22 - 9 = 6,481. Yes. Then: + Other Operating Income Expense Non Recurring 8M = 6,489M (Profit Loss From Operating Activities). Yes, 6,481 + 8 = 6,489. So EBIT = 6,489M includes share of profit of associates (22M). For S&P FFO, starting from EBITDA: EBITDA = EBIT + D&A = 6,489 + 3,613 = 10,102M - Cash taxes: 1,603M - Interest paid (gross, if we want pre-interest): But S&P FFO is typically after interest? No, FFO is funds available to service debt, so it's before interest. Actually, I need to clarify: S&P FFO is typically calculated as cash flow from operations before working capital changes but after tax and after interest. Wait, no - that would be too low. Let me look at this from the debt service perspective. FFO / Net debt is a leverage ratio. FFO should represent cash flow available to pay debt. So it should be before interest and before debt service, but after operating costs and after tax. Actually, standard S&P FFO is: FFO = Net income + D&A + Deferred taxes + Other non-cash items - Gain on sales + Minority interest - Equity earnings + Distributions from affiliates This is AFTER interest expense (since it starts from net income) and AFTER tax. But then why is it used for debt service? Because interest is a financing cost, and FFO is meant to show the cash generated by operations that could be used to pay debt. If we start from net income (after interest), we need to add back interest to get to a pre-interest measure? No, the standard formula doesn't add back interest. Hmm, let me reconsider. Actually, looking at S&P's published ratios: - FFO / Debt: FFO is funds from operations, which is after-tax, after-interest cash flow from operations before working capital changes - Debt includes short-term and long-term interest-bearing debt If FFO is after interest, then FFO/Debt measures how much operating cash flow (after paying interest) covers the debt principal. This makes sense as a leverage measure. But wait, some S&P presentations show FFO as pre-interest. Let me check the exact S&P definition. Upon reflection, I recall that S&P's FFO is indeed typically: FFO = Net income + D&A + Deferred taxes + Other non-cash items This is AFTER interest and AFTER tax. It's a conservative measure of cash flow available for debt repayment and dividends. However, for the FFO/Net Debt ratio, S&P sometimes uses a pre-interest version called "Cash flow from operations before changes in working capital" or makes adjustments. Let me use the most standard definition and calculate both ways. Approach 1: Standard S&P FFO (after interest, after tax) = 4,417 + 3,613 + 134 + 162 - 68 + 157 - 22 + 92 = 8,485M But I need to check: is minority interest added or subtracted? In consolidated net income, minority interest is already deducted to get to net income attributable to parent. But "Profit Loss" of 4,417M is total profit, not attributable to parent. Let me check: "Profit Loss" 4,417M, "Profit Loss Attributable To Owners Of Parent" 4,259M, "Profit Loss Attributable To Noncontrolling Interests" 157M. So 4,259 + 157 = 4,416 ≈ 4,417. Yes, "Profit Loss" is total consolidated profit. So if we start from 4,417 (total profit), we don't need to add minority interest - it's already included. We would subtract minority interest portion if we wanted parent-only FFO, but for S&P credit analysis, we typically use consolidated FFO which includes the full operations. Actually, for S&P's FFO, since they rate the consolidated entity or the parent, they typically use: FFO = Net income (attributable to parent or total?) + D&A + Deferred taxes + Other non-cash items - Gain + Minority interest (if using parent NI) - Equity earnings + Distributions If using total consolidated profit (4,417), minority interest is already included, so we don't add it back. Let me recalculate with total profit: FFO = 4,417 + 3,613 + 134 + 162 - 68 - 22 + 92 = 8,328M Hmm, but I need to verify if "Other non-cash items" should include share-based payments (162 or 356?). The cash flow adjustment is 162M, the P&L expense is 356M. For FFO, we add back the non-cash expense, which is the 356M expense. But the 162M cash flow adjustment might already be net of cash settled or other items. Actually, looking at the equity statement: "Increase Decrease Through Sharebased Payment Transactions" is 265M for 2022. This is the equity impact. The P&L expense is 356M. The difference (91M) might be cash settled or deferred. For S&P FFO, I think using the cash flow adjustment of 162M is more appropriate, as it represents the actual non-cash portion added back in the cash flow statement. Approach 2: Using cash flow statement directly FFO = Cash flows from operating activities before working capital changes - Dividends received from equity investments = 10,215 - 92 = 10,123M But this includes interest paid and received, and tax expense (non-cash portion). For S&P FFO, if interest is a financing cost, should we exclude it? Actually, I think the most common S&P practice for FFO from cash flows is: FFO = CFO before working capital changes - Dividends received from investments + Interest paid - Interest received Or simply use the earnings-based formula. Let me look at this from a different angle. What do S&P analysts actually do in practice? They often use: FFO = Net income + D&A + Deferred tax provision + Other non-cash charges With "Other non-cash charges" including items like: - Asset impairment charges - Provision for doubtful accounts - Stock-based compensation - Gain/loss on asset sales And they may adjust for: - Minority interest (if consolidated but not wholly owned) - Equity in earnings of affiliates (subtract) - Distributions from affiliates (add) Let me try a comprehensive calculation: Net income (total): 4,417M + D&A: 3,613M + Deferred tax provision: 134M (tax expense - cash tax) + Share-based payment expense: 356M (from P&L) - Gain on disposal of assets: 68M (from cash flow adjustment) - Fair value gains: 236M? Or is this already excluded? Wait, fair value gains of 236M - is this in net income? The cash flow adjustment is -236M, meaning fair value gains of 236M were included in profit. So we should subtract these for FFO. - Equity in earnings of affiliates: 22M (subtract) + Distributions from affiliates: 92M (add) FFO = 4,417 + 3,613 + 134 + 356 - 68 - 236 - 22 + 92 = 8,286M But I need to check if share-based payment of 356M is already in operating profit. "Expense From Sharebased Payment Transactions With Employees" is 356M. This is part of operating expenses, so it's in EBIT and net income. We add it back as non-cash. Let me verify: Profit Loss From Ordinary Operating Activities 6,824M. This includes share-based payment expense of 356M? Or is share-based payment below this line? Looking at the structure: - Operating Expense: 55,691M (this likely includes share-based payments) - Profit Loss From Ordinary Operating Activities: 6,824M = Revenue - Operating Expense + Other operating income Actually, the structure seems to be: Revenue: 62,265M (contracts) + 249M (other) = 62,514M? Or 62,265 is total revenue? Let me check: "Revenue From Contracts With Customers" 62,265M, "Other Revenue" 249M. Total revenue = 62,514M. Operating Expense: 55,691M Profit from ordinary operating activities: 6,824M 62,514 - 55,691 = 6,823 ≈ 6,824. Yes. Then: - Share-based payment expense 356M → but wait, this would reduce profit. So 6,824 - 356 = 6,468? But then + Share of profit of associates 22M = 6,490, and other items get to 6,481. Actually, I think "Profit Loss From Ordinary Operating Activities" of 6,824M is BEFORE share-based payment expense. Let me re-read the structure. Looking at the labels: "Profit Loss From Ordinary Operating Activities" 6,824M "Expense From Sharebased Payment Transactions With Employees" 356M "Share Of Profit Loss Of Associates And Joint Ventures Accounted For Using Equity Method" 22M "Other Operating Income Expense Recurring" -9M "Profit Loss From Operating Activities Recurring" 6,481M So: 6,824 - 356 + 22 - 9 = 6,481. Yes! So share-based payment is deducted after ordinary operating profit. Then: + Other Operating Income Expense Non Recurring 8M = 6,489M (Profit Loss From Operating Activities, i.e., EBIT) Then: - Net Finance Costs 614M = 5,875M + Other Finance Income Cost 279M = 6,154M? Or is Other Finance Income Cost part of finance costs? Actually, "Net Finance Costs" is 614M, and "Other Finance Income Cost" is 279M. The total finance cost might be 614 + 279 or netted differently. Then: - Income Tax Expense 1,737M = Profit Loss 4,417M (or 6,154 - 1,737 = 4,417? No, 6,489 - 614 + 279 - 1,737 = 4,417. Yes! 6,489 - 614 = 5,875; + 279 = 6,154; - 1,737 = 4,417. Wait, that's not right. 6,489 - 614 + 279 - 1,737 = 4,417? 6,489 - 614 = 5,875. 5,875 + 279 = 6,154. 6,154 - 1,737 = 4,417. Yes, correct. So the P&L structure is: EBIT (Operating profit): 6,489M - Net finance costs: 614M + Other finance income: 279M = Profit before tax: 6,154M? No wait, 6,489 - 614 + 279 = 6,154. But is Other Finance Income Cost income or cost? The label says "Other Finance Income Cost" and value is 279M positive. So it's income. Profit before tax = 6,154M - Income tax expense = 1,737M = Profit (net income) = 4,417M Now for FFO, starting from net income: FFO = 4,417 + 3,613 (D&A) + 134 (deferred tax) + 356 (share-based) - 68 (gain on disposal) - 236 (fair value gains) - 22 (equity earnings) + 92 (distributions) = 8,286M But wait, is fair value gain of 236M in net income? The cash flow adjustment "Adjustments For Fair Value Gains Losses" is -236M, meaning fair value gains of 236M were deducted to get to cash flow. So yes, fair value gains of 236M were in net income. Let me verify: 4,417 + 3,613 + 134 + 356 - 68 - 236 - 22 + 92 = 8,286M Now, what about "Adjustments For Undistributed Profits Of Investments Accounted For Using Equity Method" of 42M? This is the undistributed portion of equity earnings. In net income, we have equity earnings of 22M. The cash flow adjustment adds back 42M for undistributed profits. This suggests that of the total equity earnings, only part is distributed (92M dividends received), and 42M is undistributed and added back. Actually, I think I need to be more careful. The equity earnings in P&L is 22M. But the cash flow adjustment for undistributed profits is 42M. This seems inconsistent. Let me re-read. "Share Of Profit Loss Of Associates And Joint Ventures Accounted For Using Equity Method" = 22M "Adjustments For Undistributed Profits Of Investments Accounted For Using Equity Method" = 42M The 42M adjustment suggests that the equity method income included 42M of undistributed profits that need to be added back to get to cash flow. But the total equity earnings is only 22M. This is confusing. Perhaps the 42M is the total equity earnings, and 22M is after some adjustment? Or perhaps there are multiple layers. For S&P FFO, the standard treatment is: - Subtract equity in earnings of affiliates (the 22M or whatever is in net income) - Add cash distributions from affiliates (the 92M) The undistributed profits adjustment (42M) is part of the cash flow reconciliation, not needed for FFO directly. Let me recalculate FFO more carefully, using the standard S&P formula and checking each item: FFO = Net income + D&A + Deferred income taxes + Other non-cash items - Gain on asset sales + Minority interest - Equity in earnings of affiliates + Cash distributions from affiliates Wait, I need to check if minority interest should be added. If "Net income" is total consolidated profit (4,417M), then minority interest is already included. If "Net income" is attributable to parent (4,259M), then we add minority interest (157M). For S&P credit analysis, they typically want consolidated FFO, so starting from total profit or adding minority interest both work. Let me use total profit 4,417M. Actually, I realize I should double-check: is "Profit Loss" of 4,417M total or attributable? "Profit Loss Attributable To Owners Of Parent" is 4,259M and "Profit Loss Attributable To Noncontrolling Interests" is 157M. 4,259 + 157 = 4,416 ≈ 4,417. So "Profit Loss" is total consolidated profit. For FFO, using total consolidated profit is appropriate for consolidated debt analysis. Now, for "Other non-cash items", what should I include? - Share-based payments: 356M expense (non-cash) - Provisions/impairment: 0M in 2022 (was 206M in 2021) - Other items? Also, for deferred taxes, using 134M (tax expense - cash tax) is a proxy, but the actual deferred tax provision in P&L might differ. Let me use this as reasonable approximation. And for gains on asset sales: the cash flow adjustment is -68M, meaning gain of 68M. This should be subtracted from FFO. For fair value gains: -236M adjustment means 236M gain. Should this be subtracted? S&P FFO formula mentions "Gain on sale of assets" but not fair value gains. However, fair value gains are unrealized and non-cash, so they should be excluded from FFO. I'll subtract them. So: FFO = 4,417 + 3,613 + 134 + 356 - 68 - 236 - 22 + 92 = 8,286M But wait, I need to check if share-based payment of 356M is the right number. The P&L expense is 356M. The cash flow adjustment is 162M. The equity statement shows 265M. These differences suggest some portion is cash-settled or there are timing differences. For S&P FFO, we want to add back non-cash expenses. If 356M is the total expense and 162M is the non-cash portion added back in cash flow, then the non-cash portion is 162M, not 356M. The rest might be cash-settled or other adjustments. Let me use 162M to be conservative and consistent with cash flow. FFO = 4,417 + 3,613 + 134 + 162 - 68 - 236 - 22 + 92 = 8,092M Hmm, but this gives lower FFO. Let me think... Actually, for S&P purposes, the standard practice is to use the P&L expense for share-based payments (356M) as the non-cash charge, because the cash flow adjustment might include other items like changes in liabilities for cash-settled awards. Let me use 356M and accept some approximation. FFO = 4,417 + 3,613 + 134 + 356 - 68 - 236 - 22 + 92 = 8,286M Or, using a simpler approach that S&P sometimes uses: FFO ≈ Cash flow from operating activities before working capital changes - Dividends received from equity investments = 10,215 - 92 = 10,123M But this is higher because it includes interest paid (which is a financing cost) and uses tax expense rather than cash taxes or deferred tax add-back. Actually, I realize now that 10,215 is likely the best starting point, and S&P FFO from this would be: FFO = 10,215 - Interest received (if in operating) + Interest paid (if not already in) - Dividends received But 10,215 already includes "Interest Paid And Interest Received Classified As Operating Activities" of 563M (net outflow) and "Dividends Received" of 92M. For S&P FFO, we want to exclude dividends received from investments (not operating). So: FFO = 10,215 - 92 = 10,123M And for interest, if 563M is net interest paid in operating activities, do we adjust? S&P FFO is typically after interest expense (since it's funds from operations, not funds before interest). So we don't adjust for interest. Wait, let me reconsider. The name "Funds From Operations" suggests cash generated by operations. Interest is a financing decision, not an operating decision. So conceptually, FFO should be before interest. But the standard S&P formula starts from net income (after interest) and adds back non-cash items, not interest. Actually, I think the resolution is that S&P has two related concepts: 1. FFO (Funds From Operations): after interest, after tax, plus non-cash items 2. CFO (Cash Flow From Operations): similar but from cash flow statement For leverage ratios like FFO/Debt, S&P uses FFO as defined, which is after interest. This measures the cushion after paying interest to service debt principal. But for some ratios, they adjust to pre-interest measures. Let me check S&P's exact definition for "FFO to debt" ratio. According to S&P methodology: "FFO includes funds from operations, which is net income from continuing operations adjusted for non-cash items." This confirms FFO is after interest, after tax. So my calculation of 8,286M or 8,092M is in the right ballpark. But let me also consider 10,123M from the cash flow approach. The difference between 8,286M and 10,215M is 1,929M. This is roughly: tax expense 1,737M - deferred tax 134M = 1,603M cash taxes, plus some other differences. Actually, 10,215 - 8,286 = 1,929. And 1,737 (tax) - 134 (deferred) + 614 (net finance costs) - some adjustments = roughly 1,929? 1,603 + 614 = 2,217. Not quite. Let me think about this differently. The 10,215 is "Cash Flows From Used In Operations Before Changes In Working Capital". This is essentially: Net income + All non-cash adjustments + Changes in accrued items The standard S&P FFO is similar but excludes certain items like working capital changes. Both are "before working capital changes". The key difference might be that 10,215 includes the full tax expense (1,737M) as an add-back, whereas FFO uses deferred tax provision (134M). The difference is 1,603M cash taxes. But 10,215 is a cash flow concept, so it should reflect cash taxes, not tax expense. Actually, I think 10,215 is constructed by starting from net income and adding back non-cash items to get to "cash flow before working capital changes". It does NOT add back tax expense; rather, net income is already after tax. The add-back is for non-cash items only. Let me verify: Net income 4,417 + D&A 3,613 + share-based 162 + undistributed profits 42 + finance costs paid 29 + lease interest 48 + provisions 0 - gains 68 - fair value gains 236 + net finance costs 614 + tax expense 1,737 = ? Wait, why would we add back tax expense? We wouldn't, because net income is already after tax. Unless we're starting from a pre-tax measure. I think the construction is: Start from Profit Loss From Operating Activities (EBIT): 6,489M + D&A: 3,613M = 10,102M + Other non-cash adjustments: share-based 162, undistributed 42, etc. = 10,102 + 162 + 42 - 68 - 236 + 29 + 48 = 10,079M +/- Other = 10,215 - 10,079 = 136M difference Hmm, 136M is close to interest income 136M. Maybe interest income is deducted? Actually, let me try: EBITDA 10,102M - Interest received 136M + Interest paid on leases 48M + Other finance costs paid 29M + Share-based 162M + Undistributed profits 42M - Gains 68M - Fair value gains 236M = 10,102 - 136 + 48 + 29 + 162 + 42 - 68 - 236 = 9,943M Not 10,215. Still off by 272M. Let me add tax expense: 9,943 + 1,737 = 11,680. Too high. I think I need to stop trying to reverse-engineer 10,215 and just use it as given, or use the earnings-based FFO formula. Given the complexity, let me use a practical approach that S&P analysts would use: FFO = Cash flows from operating activities before changes in working capital - Dividends received from equity investments = 10,215 - 92 = 10,123M This is simple, consistent, and uses the cash flow statement which is closer to actual cash generation. The only adjustment is to exclude dividends from equity investments, which are not from core operations. Alternatively, some S&P analysts use: FFO = Cash flows from operating activities before changes in working capital = 10,215M (without subtracting dividends) Let me check S&P's treatment of dividends from equity investments. In the cash flow statement, these are typically classified as operating activities under IFRS. For S&P FFO, they should be excluded as they're not from core operations. So FFO = 10,215 - 92 = 10,123M. But wait, I also need to consider if interest received should be excluded. Interest received is from cash investments, not core operations. S&P sometimes excludes it. Interest income on cash and equivalents: 136M. If this is in operating cash flow, should we exclude it? Looking at the cash flow details: "Interest Paid And Interest Received Classified As Operating Activities" is 563M (net). This means interest paid exceeds interest received by 563M. If we want to exclude both, we'd need gross amounts. For S&P FFO, the standard treatment is: - Interest received: typically excluded from FFO (not part of operations) - Interest paid: typically included as a financing cost, so FFO is after interest paid But this is confusing because if FFO is after interest paid, then we don't adjust for the net 563M interest paid. Let me use the most common S&P definition: FFO = Net income + D&A + Deferred taxes + Other non-cash items And calculate it carefully: Net income: 4,417M + D&A: 3,613M + Deferred tax provision: 134M (tax expense 1,737 - cash tax 1,603) + Share-based payment expense: 356M (non-cash) - Gain on disposal of assets: 68M (to exclude non-recurring gain) - Fair value gains: 236M (unrealized, non-cash) - Equity in earnings of affiliates: 22M (non-cash, undistributed) + Cash distributions from affiliates: 92M FFO = 4,417 + 3,613 + 134 + 356 - 68 - 236 - 22 + 92 = 8,286M Now I need to calculate Net Debt. Net Debt = Short-term borrowings + Long-term borrowings + Current portion of long-term debt - Cash and cash equivalents - Current cash management financial assets From the balance sheet: - Shortterm Borrowings: 6,368M - Noncurrent Portion Of Noncurrent Bonds Issued: 20,425M - Noncurrent Portion Of Other Noncurrent Borrowings: 3,205M - Current Lease Liabilities: 522M - Noncurrent Lease Liabilities: 1,580M Total debt = Short-term borrowings + Long-term debt + Lease liabilities = 6,368 + 20,425 + 3,205 + 522 + 1,580 = 32,100M Wait, are bonds and other borrowings the only long-term debt? Let me check if there are other borrowings. Looking at liabilities: - Noncurrent Portion Of Noncurrent Bonds Issued: 20,425M - Noncurrent Portion Of Other Noncurrent Borrowings: 3,205M - Shortterm Borrowings: 6,368M These seem to be the interest-bearing debt items. Lease liabilities are also debt-like. Cash and cash equivalents: 12,578M Current Cash Management Financial Assets: 755M Net debt = Total debt - Cash and cash equivalents - Cash management assets = (6,368 + 20,425 + 3,205 + 522 + 1,580) - 12,578 - 755 = 32,100 - 12,578 - 755 = 18,767M But wait, I need to check if "Current Cash Management Financial Assets" are truly liquid and should be deducted. Also, are there other current financial assets that are liquid? Other Current Financial Assets: 84M Current Derivative Financial Assets: 115M These might not be as liquid. S&P typically deducts cash and cash equivalents and highly liquid investments. Let me also check if there are bank overdrafts or other items included in cash. Actually, looking at the cash flow statement: "Cash And Cash Equivalents If Different From Statement Of Financial Position" shows 10,188M (2022), 11,495M (2023), and 11,426M (2021). This is different from "Cash And Cash Equivalents" of 12,578M (2023) and 11,065M (2022). The difference might be restricted cash or other items. For net debt, we typically use unrestricted cash. But for simplicity, let me use the balance sheet cash figure: 12,578M at 2023-01-01 (which is end of 2022). Actually, I need to be careful about dates. The data shows: "Cash And Cash Equivalents" 2023-01-01: 12,578,000,000 EUR "Cash And Cash Equivalents" 2022-01-01: 11,065,000,000 EUR 2023-01-01 is the end of 2022 (beginning of 2023). So for 2022 year-end, cash is 12,578M. Similarly, debt figures at 2023-01-01 are year-end 2022. So Net Debt at end of 2022: = Shortterm Borrowings (6,368M) + Noncurrent Portion Of Noncurrent Bonds Issued (20,425M) + Noncurrent Portion Of Other Noncurrent Borrowings (3,205M) + Current Lease Liabilities (522M) + Noncurrent Lease Liabilities (1,580M) - Cash And Cash Equivalents (12,578M) - Current Cash Management Financial Assets (755M) = 32,100 - 13,333 = 18,767M Should I include lease liabilities in debt? S&P typically includes lease liabilities in total debt for net debt calculations, especially for IFRS 16 lessees. But let me check if there are other debt-like items: - Current Derivative Financial Liabilities: 440M - Noncurrent Derivative Financial Liabilities: 1,939M These are derivatives, not debt principal. They represent fair value of derivatives, not borrowings. - Trade And Other Current Payables: 13,088M - this is operating payables, not debt - Other Current Liabilities: 20,315M - need to check if any debt-like - Other Noncurrent Liabilities: 894M For S&P net debt, we typically include: - Short-term borrowings - Long-term borrowings - Finance lease obligations - Less: Cash and cash equivalents - Less: Liquid investments So my calculation of 18,767M seems reasonable. But let me double-check the debt components. Are "Noncurrent Portion Of Noncurrent Bonds Issued" and "Noncurrent Portion Of Other Noncurrent Borrowings" the complete long-term debt? Or are there current portions of long-term debt included in "Shortterm Borrowings"? Typically, "Shortterm Borrowings" includes: - Bank overdrafts - Short-term bank loans - Current portion of long-term debt Looking at the labels, there's no separate "current portion of long-term debt" line item. So "Shortterm Borrowings" likely includes the current portion of long-term debt. Also, I should check if there are any borrowings in "Other Current Liabilities" or "Other Noncurrent Liabilities". Without more detail, I'll assume the explicit borrowing lines capture all interest-bearing debt. Now, for FFO/Net Debt ratio: FFO = 8,286M (earnings-based) or 10,123M (cash flow-based) Net Debt = 18,767M Ratio with earnings-based FFO: 8,286 / 18,767 = 0.442 or 44.2% Ratio with cash flow-based FFO: 10,123 / 18,767 = 0.539 or 53.9% Which is more appropriate for S&P? Let me look at this from another angle. S&P's published FFO formula is: FFO = Net income + D&A + Deferred income taxes + Other non-cash items The "Other non-cash items" typically includes gains/losses on asset sales, impairment charges, provisions, share-based compensation, etc. Using a cleaner S&P formula: FFO = Net income + D&A + Deferred taxes + Other non-cash charges - Gain on sale of assets = 4,417 + 3,613 + 134 + (162 + 42 - 68 - 236 + 29 + 48) - 0? The "Other non-cash charges" from cash flow adjustments (excluding D&A, tax, finance costs, working capital): = Share-based payments 162 + Undistributed profits 42 - Gains on disposal -68 (so subtract 68) - Fair value gains -236 (so subtract 236) + Finance costs paid 29 + Lease interest 48 = -23M So FFO = 4,417 + 3,613 + 134 - 23 = 8,141M Then adjust for equity earnings and distributions: - Equity earnings 22 + Distributions 92 = +70M net FFO = 8,141 + 70 = 8,211M? Or do we not adjust? Actually, the standard S&P formula explicitly includes: - Minority interest: if using parent net income, add minority interest. Since I'm using total profit 4,417M, no adjustment needed. - Equity in earnings of affiliates: subtract 22M - Cash distributions from affiliates: add 92M So: 8,141 - 22 + 92 = 8,211M Hmm, this is close to my earlier 8,286M. The difference is in how I treated "Other non-cash items". Let me use 8,286M as it's more carefully calculated with all items. But actually, I want to reconsider the cash flow approach. The 10,215M is "Cash Flows From Used In Operations Before Changes In Working Capital". This is a standard measure that many practitioners use as FFO or close to it. For S&P specifically, they define FFO as: "Funds from operations (FFO): Net income from continuing operations adjusted for non-cash items." The cash flow statement measure 10,215M is essentially this, but constructed from cash flow rather than income statement. However, 10,215M includes "Interest Paid And Interest Received Classified As Operating Activities" of 563M. If we think of FFO as after interest, then 10,215 is already after interest (net). But is it? The 563M is classified as operating, meaning it's deducted in arriving at 10,215. Wait, let me re-read: "Cash Flows From Used In Operations Before Changes In Working Capital" is 10,215M. Then "Interest Paid And Interest Received Classified As Operating Activities" is listed separately as 563M, and then "Income Taxes Paid" is 1,603M, etc. Actually, looking at the structure, these items are all part of the reconciliation. The 10,215M is the subtotal before working capital changes, interest paid/received, taxes paid, dividends received, and other items. Let me trace through: Cash Flows From Used In Operations Before Changes In Working Capital: 10,215M + Increase Decrease In Working Capital: -392M - Income Taxes Paid: 1,603M - Interest Paid And Interest Received: 563M + Dividends Received: 92M + Other Inflows Outflows: 854M = Cash Flows From Used In Operating Activities: 9,387M Let me verify: 10,215 - 392 - 1,603 - 563 + 92 + 854 = 8,603? No, that's not 9,387. Wait: 10,215 - 392 = 9,823 9,823 - 1,603 = 8,220 8,220 - 563 = 7,657 7,657 + 92 = 7,749 7,749 + 854 = 8,603 But "Cash Flows From Used In Operating Activities" is 9,387M. So my calculation is off by 1,784M. Hmm, let me re-check. Maybe the signs are different. "Increase Decrease In Working Capital" is -392M. If working capital increased, this is a use of cash, so -392M is correct (negative means use). Actually, let me re-read: "Increase Decrease In Working Capital" 2022-01-01 - 2023-01-01: -392000000 EUR. The negative sign might mean decrease in working capital (source of cash). In standard cash flow presentation, a decrease in working capital is a positive cash flow. So if working capital decreased by 392M, that's +392M cash flow. Let me recalculate: 10,215 + 392 - 1,603 - 563 + 92 + 854 = 9,387. Yes! 10,215 + 392 = 10,607; - 1,603 = 9,004; - 563 = 8,441; + 92 = 8,533; + 854 = 9,387. Matches! So the 10,215 is before working capital changes, and working capital decrease added 392M. Now, back to FFO. The 10,215M includes: - Net income adjustments (D&A, etc.) - But does it include interest and tax? Let me see. From the reconciliation to operating cash flow, 10,215 is before: - Working capital changes (+392M) - Cash taxes paid (-1,603M) - Interest paid and received net (-563M) - Dividends received (+92M) - Other (+854M) So 10,215 is essentially: Net income + Non-cash adjustments (D&A, etc.) + Accrued interest and taxes (not yet paid) + Other accruals For S&P FFO, we want a measure that's closer to recurring cash generation. The standard approach is: FFO = 10,215 - Dividends received (92M) = 10,123M Or, if we want to exclude interest received and use gross interest paid: We need to know gross interest paid and received. We have "Interest Income On Cash And Cash Equivalents" of 136M. And "Gross Finance Costs" of 750M. But not all finance costs are interest (some are fees, FX, etc.). Net finance costs in P&L: 614M = Gross finance costs 750M - Interest income 136M. In cash flow, "Interest Paid And Interest Received Classified As Operating Activities" is 563M (net outflow). If interest received was 136M, then interest paid was 563 + 136 = 699M? Or is the 136M not all in operating activities? Actually, "Interest Income On Cash And Cash Equivalents" of 136M is the P&L amount. The cash flow amount might differ due to accruals. For S&P FFO, a common adjustment is: FFO = 10,215 + Interest paid (gross) - Interest received - Dividends received But we don't have gross interest paid separately in the cash flow. Given the data limitations, let me use the earnings-based FFO of 8,286M or the simplified cash flow-based FFO of 10,123M. I think for S&P methodology, the earnings-based approach is more standard. Let me refine my calculation: FFO = Net income + D&A + Deferred tax provision + Share-based compensation + Other non-cash items - Gain on asset sales + Minority interest - Equity in earnings of affiliates + Cash distributions from affiliates Using: - Net income: 4,417M - D&A: 3,613M - Deferred tax provision: 134M (tax expense 1,737 - cash tax 1,603) - Share-based compensation: 356M (P&L expense) - Gain on asset sales: -68M (so subtract 68M) - Fair value gains: 236M (unrealized, subtract) - Equity in earnings: 22M (subtract) - Cash distributions: 92M (add) FFO = 4,417 + 3,613 + 134 + 356 - 68 - 236 - 22 + 92 = 8,286M Wait, I need to check if fair value gains should be in FFO formula. S&P standard formula mentions "Other non-cash items" which could include fair value gains/losses. Let me include them as part of "Other non-cash items" to subtract. Actually, let me verify my arithmetic: 4,417 + 3,613 = 8,030; + 134 = 8,164; + 356 = 8,520; - 68 = 8,452; - 236 = 8,216; - 22 = 8,194; + 92 = 8,286. Yes. Now, should I include minority interest? If net income is total profit 4,417M, minority interest is already included. So no adjustment needed. But wait, "Profit Loss Attributable To Noncontrolling Interests" is 157M. This means of the 4,417M total profit, 157M belongs to minority interests. For consolidated FFO, we keep it. For FFO attributable to parent, we'd subtract it. S&P typically uses consolidated FFO for consolidated debt. Now for Net Debt. Let me recalculate carefully: Gross Debt: - Shortterm Borrowings: 6,368M - Noncurrent Portion Of Noncurrent Bonds Issued: 20,425M - Noncurrent Portion Of Other Noncurrent Borrowings: 3,205M - Current Lease Liabilities: 522M - Noncurrent Lease Liabilities: 1,580M Total Gross Debt = 6,368 + 20,425 + 3,205 + 522 + 1,580 = 32,100M Less Cash and Equivalents: - Cash And Cash Equivalents: 12,578M - Current Cash Management Financial Assets: 755M (liquid investments) Total Cash = 13,333M Net Debt = 32,100 - 13,333 = 18,767M But I need to check if there are other debt-like items I missed. Looking at the balance sheet: - Current Derivative Financial Liabilities: 440M - Noncurrent Derivative Financial Liabilities: 1,939M These are derivatives, not principal debt. However, they could represent debt-related derivatives. For conservative net debt, some include derivatives at fair value. But standard S&P net debt typically includes the principal amount of debt, not derivative fair values. Actually, S&P's net debt definition typically includes: - Short-term debt - Current portion of long-term debt - Long-term debt - Less: Cash and cash equivalents - Less: Liquid investments Lease liabilities are included under IFRS 16. So 18,767M seems correct. But wait, I should check if "Shortterm Borrowings" of 6,368M includes the current portion of long-term debt. Looking at the cash flow statement: - Proceeds From Noncurrent Borrowings: 2,786M - Repayments Of Noncurrent Borrowings: 3,653M This suggests there are repayments of noncurrent borrowings, which would be classified as financing activities, not as part of short-term borrowings. Actually, repayments of noncurrent borrowings mean principal repayments on long-term debt. These reduce the noncurrent borrowings balance. The change in noncurrent bonds: 22,212M (2022) to 20,425M (2023), decrease of 1,787M. Change in other noncurrent borrowings: 2,757M to 3,205M, increase of 448M. Net change: -1,787 + 448 = -1,339M. Repayments were 3,653M, proceeds were 2,786M, net repayment 867M. This doesn't match the balance sheet change due to FX, acquisitions, etc. For net debt purposes, the balance sheet figures at year-end are what matter. Now, FFO / Net Debt = 8,286 / 18,767 = 0.4415 or 44.2% Or if I use the cash flow-based FFO of 10,123M: 10,123 / 18,767 = 0.5394 or 53.9% Which is more appropriate? Let me think about what S&P actually publishes for similar companies. For a company like VINCI, S&P would likely use FFO that includes: - Net income + D&A + Deferred taxes + Other non-cash items - Working capital changes? No, FFO is before working capital changes. Actually, I realize I should check if 10,215M is closer to what S&P calls "CFO before working capital changes" or "FFO". In S&P terminology: - CFO (Cash Flow From Operations) = FFO - Interest paid + Interest received - Dividends received + Working capital changes + Other items Actually, S&P doesn't use "CFO before working capital changes" as FFO. FFO is specifically the earnings-based measure. But in practice, many S&P analysts use the cash flow measure as a proxy because it's less subject to accounting adjustments. Given the complexity, let me use a blended approach. The earnings-based FFO of 8,286M is more conservative and aligns with S&P's standard definition. The cash flow-based measure of 10,123M is higher because it includes all cash flow before working capital changes minus dividends. Actually, let me recalculate the cash flow-based FFO more carefully. If 10,215M includes: - Net income 4,417M + D&A 3,613M + Tax expense 1,737M (non-cash add-back, but then cash tax is paid separately) + Net finance costs 614M (non-cash add-back, but then interest is paid separately) + Other adjustments Then 10,215M is essentially EBITDA + Other adjustments - Interest received (if not added back) + some accrual differences. For S&P FFO, if we want after-tax, after-interest: We should subtract tax expense and add back cash taxes, and subtract net finance costs and add back interest paid/received. Actually, I think the cleanest S&P FFO from cash flows is: FFO = Cash flows from operating activities before working capital changes - Dividends received from equity investments = 10,215 - 92 = 10,123M This is because 10,215 already includes the add-back of tax expense (not cash tax) and net finance costs (not cash interest), so it's closer to an accrual-based measure. But wait, it doesn't include tax expense add-back because net income is after tax. Let me reconsider the construction of 10,215. Starting from net income 4,417: + D&A 3,613 = 8,030 + Other non-cash adjustments to get to 10,215 The difference is 2,185M. This includes: + Tax expense 1,737 (since net income is after tax, but we want pre-tax cash flow? No, FFO is after tax) + Net finance costs 614 (since net income is after interest, but FFO is after interest) + Other items Actually, if 10,215 includes tax expense and net finance costs added back, then it's EBIT + D&A + other adjustments, not net income based. Let me verify: EBIT 6,489 + D&A 3,613 = 10,102. Then + other adjustments 113 = 10,215. Yes! This matches. So 10,215 = EBIT + D&A + other non-cash adjustments = essentially EBITDA + other adjustments. For S&P FFO, which is after tax and after interest, we need to subtract tax and interest from this measure. Cash taxes paid: 1,603M Net interest paid (from operating activities): 563M FFO = 10,215 - 1,603 - 563 - 92 (dividends) = 7,957M This is close to my earnings-based FFO of 8,286M. The difference is 329M, which could be due to different treatment of deferred taxes, accruals, etc. Actually, S&P FFO is not meant to subtract cash taxes and cash interest from the EBITDA-like measure. The standard formula starts from net income (after tax, after interest) and adds back non-cash items. So my earnings-based approach is correct: FFO = 8,286M. Let me also consider an alternative: maybe S&P includes working capital changes in FFO? No, FFO is explicitly before working capital changes. Given all this analysis, I'll use FFO = 8,286M and Net Debt = 18,767M. FFO / Net Debt = 8,286 / 18,767 = 0.4415 As a percentage: 44.15% But wait, I want to double-check my net debt calculation. Should I include more items? Looking at liabilities again: - "Other Current Liabilities" 20,315M - this is large. What does it include? It might include accrued expenses, deferred revenue, etc. But could it include short-term debt? Typically, "Other Current Liabilities" would NOT include borrowings if there's a separate "Shortterm Borrowings" line. But let me check if there are any borrowings hidden in other lines. Given the explicit borrowing lines (Shortterm Borrowings, Noncurrent Bonds, Noncurrent Other Borrowings), I think all interest-bearing debt is captured. But I should also check "Current Derivative Financial Liabilities" (440M) and "Noncurrent Derivative Financial Liabilities" (1,939M). These are derivatives, not debt principal. However, if these represent hedges of debt, they don't add to principal amount. For conservative net debt, some analysts include derivatives at fair value. But standard S&P practice is to include debt at principal amount, not fair value. Let me also verify my gross debt by looking at the cash flow statement for debt repayments and proceeds: - Proceeds From Noncurrent Borrowings: 2,786M - Repayments Of Noncurrent Borrowings: 3,653M - Shortterm Borrowings change: 6,368M (2023) vs 5,769M (2022), increase of 599M Net debt change from financing: +2,786 - 3,653 + 599 = -268M (net repayment) But net debt also changes due to operating cash flows, investing cash flows, FX, etc. Anyway, my balance sheet-based net debt of 18,767M should be correct. Let me recalculate with more precise numbers: Gross debt = 6,368 + 20,425 + 3,205 + 522 + 1,580 = 32,100M Cash = 12,578 + 755 = 13,333M Net debt = 32,100 - 13,333 = 18,767M FFO / Net Debt = 8,286 / 18,767 = 0.4415 Or as a ratio: 44.15% Hmm, but I want to check if this is reasonable for VINCI. VINCI is a construction/concession company with significant debt (especially concession debt). An FFO/Net Debt of 44% seems reasonable but perhaps a bit high. Let me see if my FFO is too high or net debt too low. Actually, for concession companies, a lot of debt is non-recourse project debt. S&P might calculate net debt differently, excluding non-recourse debt. But I don't have that breakdown. Given the data, my calculation is the best estimate. But let me also try the cash flow-based FFO of 10,123M: 10,123 / 18,767 = 0.5394 or 53.9% This is higher and might be less conservative. I think for S&P methodology, the earnings-based FFO is more standard. Let me finalize with 8,286M / 18,767M = 0.4415. Wait, I want to re-verify my FFO calculation one more time. Let me use the most standard S&P formula: FFO = Net income from continuing operations + Depreciation and amortization + Deferred income taxes + Other non-cash items Where "Other non-cash items" includes: - Asset impairment charges - Provision for doubtful accounts/receivables - Stock-based compensation expense - Gain/loss on sale of assets - Other non-cash gains/losses And adjustments for: - Minority interest (if using parent net income) - Equity in earnings of affiliates (subtract) - Cash distributions from affiliates (add) Using: Net income (total): 4,417M + D&A: 3,613M + Deferred income taxes: 134M + Share-based compensation: 356M - Gain on sale of assets: 68M - Fair value gains: 236M (non-cash, unrealized) - Equity in earnings of affiliates: 22M + Cash distributions from affiliates: 92M FFO = 4,417 + 3,613 + 134 + 356 - 68 - 236 - 22 + 92 = 8,286M Actually, I want to double-check: should fair value gains be subtracted? They're non-cash gains included in net income. For FFO, we want to exclude non-cash gains. Yes, subtract. And share-based compensation: 356M is the P&L expense. Is this all non-cash? The cash flow adjustment is only 162M, suggesting 194M might be cash-settled or other adjustments. For conservative FFO, should I use 162M or 356M? If 194M is cash-settled, then only 162M is non-cash and should be added back. Using 162M: FFO = 4,417 + 3,613 + 134 + 162 - 68 - 236 - 22 + 92 = 8,092M This gives FFO/Net Debt = 8,092 / 18,767 = 0.431 or 43.1% The difference is small (about 2%). I'll use 356M as it's the total accounting expense and S&P typically adds back the full expense. Final answer: FFO / Net Debt = 8,286 / 18,767 = 0.4415 or 44.2% But wait, I should express this as a ratio or percentage? The question asks for "FFO / Net debt ratio", so a decimal or percentage is fine. I'll provide as decimal. Actually, looking at S&P presentations, they typically express this as a percentage (e.g., "FFO/Net Debt: 44%") or as a multiple (e.g., "Net Debt/FFO: 2.3x"). The ratio FFO/Net Debt as a decimal is 0.44. Let me provide 0.441 or 44.1%. Hmm, but I want to check one more thing. Should I include "Other Finance Income Cost" of 279M in FFO? This is in the P&L and included in net income. It's likely non-operating or non-recurring. For S&P FFO, we typically use net income from continuing operations, which might exclude some non-recurring items. But the 279M is part of "Profit Loss" and I don't have enough detail to exclude it. Also, "Other Operating Income Expense Non Recurring" of 8M is included in EBIT. S&P typically excludes non-recurring items from FFO. But 8M is small and hard to adjust without more detail. Given all this, my estimate of 44.1% or 0.441 should be reasonable. Let me also try a completely different approach: use the cash flow statement's "Cash Flows From Used In Operating Activities" of 9,387M as a proxy for FFO (after working capital changes). But S&P FFO is before working capital changes, so this would be lower and less appropriate. Or: FFO = Cash Flows From Used In Operating Activities + Working capital changes - Dividends received = 9,387 - 392 - 92 = 8,903M? No, working capital decrease was +392M in cash flow terms. Actually, 9,387 = 10,215 + 392 - 1,603 - 563 + 92 + 854 So FFO before WC = 10,215 FFO = 10,215 - 92 = 10,123 (excluding dividends) Or if we want after cash taxes and after interest paid: FFO = 10,215 - 1,603 - 563 - 92 = 7,957M This 7,957M is closer to my earnings-based 8,286M. The difference is 329M, which is about 4%. I think the most standard S&P approach is the earnings-based FFO of 8,286M. But let me reconsider one more time. Actually, I realize that S&P's FFO formula typically does NOT subtract cash taxes or cash interest. It starts from net income (after tax, after interest) and adds back non-cash items. So the resulting FFO is after tax and after interest. My calculation of 8,286M is correct for this definition. However, I want to verify: is "Net income" in S&P's formula total consolidated or parent-only? S&P typically uses consolidated net income for consolidated FFO. So 4,417M is correct. And for "Minority interest": if total net income is 4,417M, minority interest of 157M is already included. We don't add it back. If we started from parent net income of 4,259M, we'd add 157M. Both give the same total FFO. Wait, I need to check my earlier calculation. I used 4,417M and did NOT add minority interest. Let me verify: 4,417 = 4,259 + 158. Yes, total includes minority. So FFO = 8,286M is correct. Now, one final check on net debt. I want to make sure I include all debt-like items. Looking at the balance sheet again: - Current Liabilities total: 47,939M - Current Provisions: 6,599M - Trade And Other Current Payables To Trade Suppliers: 13,088M - Other Current Liabilities: 20,315M - Current Tax Liabilities: 607M - Current Lease Liabilities: 522M - Current Derivative Financial Liabilities: 440M - Shortterm Borrowings: 6,368M - Noncurrent Liabilities total: 34,316M - Other Longterm Provisions: 961M - Noncurrent Provisions For Employee Benefits: 1,149M - Noncurrent Portion Of Noncurrent Bonds Issued: 20,425M - Noncurrent Portion Of Other Noncurrent Borrowings: 3,205M - Noncurrent Derivative Financial Liabilities: 1,939M - Noncurrent Lease Liabilities: 1,580M - Other Noncurrent Liabilities: 894M - Deferred Tax Liabilities: 4,162M For S&P net debt, we include: - Short-term borrowings: 6,368M - Current portion of long-term debt: included in short-term borrowings or separate? I don't see a separate line, so likely in short-term borrowings. - Long-term debt: 20,425 + 3,205 = 23,630M - Finance lease liabilities: 522 + 1,580 = 2,102M Total debt = 6,368 + 23,630 + 2,102 = 32,100M Less: - Cash and cash equivalents: 12,578M - Liquid investments (Current Cash Management Financial Assets): 755M Net debt = 32,100 - 13,333 = 18,767M I could also consider deducting "Other Current Financial Assets" of 84M and "Current Derivative Financial Assets" of 115M if they're liquid. But they're relatively small (199M total) and might not be as liquid as cash. For conservative estimate, I'll exclude them. Final calculation: FFO / Net Debt = 8,286 / 18,767 = 0.4415 Rounding to reasonable precision: 0.44 or 44% Let me provide 0.441 as my best estimate. Actually, I want to do one more sensitivity check. What if I use the cash flow-based FFO of 10,123M? Then ratio is 10,123 / 18,767 = 0.539. What if I use a more conservative net debt that excludes lease liabilities (since they're operating in nature)? Then gross debt = 32,100 - 2,102 = 29,998M, net debt = 29,998 - 13,333 = 16,665M. Ratio = 8,286 / 16,665 = 0.497. But under IFRS 16, lease liabilities are definitely included in debt. What if I include more cash-like assets? Cash + 755 + 84 + 115 = 13,532M. Net debt = 32,100 - 13,532 = 18,568M. Ratio = 8,286 / 18,568 = 0.446. The differences are small (44.1% vs 44.6%). I'll stick with 0.441 or 44.1%. Wait, I want to re-check one thing. In my FFO calculation, I subtracted fair value gains of 236M. Are these definitely in net income? The cash flow adjustment "Adjustments For Fair Value Gains Losses" is -236M, which means fair value gains of 236M were deducted to arrive at cash flow. This implies they were added in net income. Yes, correct. But are fair value gains part of "continuing operations"? Yes, unless specified otherwise. And should I subtract them for FFO? S&P's formula says "+ Other non-cash items" which could mean add back non-cash losses or subtract non-cash gains. The fair value gains are non-cash, so they should be subtracted from FFO. Actually, let me re-read: "Other non-cash items" in S&P's formula typically means add back non-cash expenses or subtract non-cash gains. So -236M is correct. Similarly, gain on disposal of 68M is subtracted. Let me finalize: FFO = 8,286M, Net Debt = 18,767M, Ratio = 0.4415. I'll round to 0.44 or provide more precision as 0.441. Given that this is an estimate based on annual report data, some rounding is appropriate. I'll provide 0.44. But actually, looking at the precision of the inputs (millions of EUR), I can provide more precision. 8,286 / 18,767 = 0.441519... So 0.442 or 44.2% if expressed as percentage. The question asks for "ratio", so decimal form is appropriate. I'll provide 0.442. Hmm, but let me reconsider one more time if my FFO might be missing something. Looking at the comprehensive income and equity sections, are there other non-cash items? Actually, I realize I should check if "Other Comprehensive Income" items affect FFO. S&P FFO is based on net income, not comprehensive income. So OCI items (foreign exchange translation, cash flow hedges, defined benefit remeasurements) are excluded. Correct. One more check: should I include the 92M dividends received in FFO? S&P's formula says "+ Cash distributions from affiliates". Yes, add them. But wait, are dividends from affiliates already in net income? No, net income includes equity earnings (22M), not dividends received (92M). The dividends received are cash flow, not P&L income (under equity method). So adding 92M is correct. However, I need to verify: is the 92M dividends received included in the 22M equity earnings, or separate? Under equity method, the investor recognizes their share of affiliate's profit (22M) in income. Dividends received (92M) reduce the investment carrying amount but are not income (unless they exceed the carrying amount). So 92M is not in net income. Adding it to FFO is correct. But wait, if 92M dividends were received and 22M is the equity earnings, this implies the dividends exceed earnings, which would normally reduce the investment account. Is this possible? Yes, if the affiliate had accumulated earnings or the dividends are from prior periods. Actually, looking at the cash flow statement, "Dividends Received From Investments Accounted For Using Equity Method Classified As Operating Activities" is 92M. And "Share Of Profit Loss Of Associates" is 22M. The 92M > 22M suggests the dividends include prior period earnings. For S&P FFO, we add cash distributions from affiliates regardless of whether they exceed current earnings. OK, I'm satisfied with FFO = 8,286M. Let me do a final verification of net debt. I want to check if "Other Current Financial Assets" and "Current Derivative Financial Assets" should be deducted. Other Current Financial Assets: 84M Current Derivative Financial Assets: 115M These are relatively small. If I include them as liquid assets: Net debt = 32,100 - 12,578 - 755 - 84 - 115 = 18,568M FFO / Net Debt = 8,286 / 18,568 = 0.446 Difference is small. I'll exclude them for conservatism. Also, "Noncurrent Derivative Financial Assets" of 376M - these are noncurrent, so less liquid. Exclude. And "Noncurrent Other Financial Assets" of 2,588M - these are investments, not liquid. Exclude. So final net debt = 18,767M. FFO / Net Debt = 8,286 / 18,767 = 0.4415 I'll provide 0.442 as my answer. Actually, let me see if I can get a more precise FFO using the exact cash flow components. From the cash flow statement, "Cash Flows From Used In Operations Before Changes In Working Capital" = 10,215M. This includes (as add-backs to net income): - D&A: 3,613M - Provisions/impairment: 0M - Share-based payments: 162M - Gains on disposal: -68M - Fair value gains: -236M - Undistributed profits of equity investments: 42M - Net finance costs: 614M - Finance costs paid (operating): 29M - Interest expense on lease liabilities: 48M - Income tax expense: 1,737M Sum of these adjustments: 3,613 + 0 + 162 - 68 - 236 + 42 + 614 + 29 + 48 + 1,737 = 5,941M Net income + adjustments = 4,417 + 5,941 = 10,358M But "Cash Flows From Used In Operations Before Changes In Working Capital" is 10,215M. Difference is 143M. What explains the 143M difference? Let me check if there's something I'm missing. Actually, looking more carefully, "Adjustments For Net Finance Costs" is 614M. But "Net Finance Costs" in P&L is 614M. However, "Other Finance Income Cost" is 279M positive. Is this included in net finance costs? Net finance costs = 614M = Gross finance costs 750M - Interest income 136M. But then what is Other Finance Income Cost of 279M? Looking at P&L: - Gross Finance Costs: 750M - Interest Income On Cash And Cash Equivalents: 136M - Net Finance Costs: 614M (= 750 - 136) - Other Finance Income Cost: 279M So profit before tax = EBIT 6,489 - Net Finance Costs 614 + Other Finance Income Cost 279 = 6,154M. Wait, is Other Finance Income Cost income or cost? The label says "Other Finance Income Cost" and value is 279M. Given it's positive and added to get to profit before tax, it's income. So total finance income = 136 + 279 = 415M Total finance costs = 750M Net finance cost = 750 - 415 = 335M? But stated net finance costs is 614M. Hmm, this doesn't reconcile. Let me re-read: "Net Finance Costs" 614M. "Other Finance Income Cost" 279M. Maybe the P&L structure is: Profit Loss From Operating Activities: 6,489M - Gross Finance Costs: 750M + Interest Income: 136M = 5,875M + Other Finance Income Cost: 279M = 6,154M - Income Tax Expense: 1,737M = Profit Loss: 4,417M So 6,489 - 750 + 136 + 279 - 1,737 = 4,417. Let me verify: 6,489 - 750 = 5,739; + 136 = 5,875; + 279 = 6,154; - 1,737 = 4,417. Yes! So "Net Finance Costs" of 614M is not the net total; it's just one line item. The actual net finance cost is 750 - 136 - 279 = 335M. But the label "Net Finance Costs" is confusing. Actually, maybe "Net Finance Costs" means the net of interest costs and interest income, excluding other finance items. So 750 - 136 = 614M. Then "Other Finance Income Cost" of 279M is additional. In any case, for FFO, I need to add back non-cash finance costs. The cash flow adjustment "Adjustments For Net Finance Costs" is 614M. This adds back the 614M. But what about the 279M Other Finance Income Cost? Is it non-cash or cash? Looking at the cash flow adjustments, there's no separate line for Other Finance Income Cost. It might be included in "Net Finance Costs" or in "Other Inflows Outflows Of Cash Classified As Operating Activities" or elsewhere. Given the complexity, I'll trust the 10,215M as constructed by the company and use my earnings-based FFO. Actually, one more thought: should I use average net debt or year-end net debt? S&P typically uses average debt for some ratios, but for FFO/Net Debt, they often use year-end net debt or average. Without quarterly data, I'll use year-end. Final answer: 0.442 (or 44.2%) Let me express as decimal for the ratio: 0.442 Or should I express as percentage? The question says "FFO / Net debt ratio", which is typically a decimal (e.g., 0.44) or sometimes expressed as a percentage. I'll use decimal. Actually, looking at S&P publications, they often express this as "FFO to debt: 44%" or "FFO/debt: 0.44". Either is acceptable. I'll use 0.442 for precision. Wait, I want to do one more check. Let me see if my FFO of 8,286M is reasonable by comparing to EBITDA. EBITDA = EBIT + D&A = 6,489 + 3,613 = 10,102M FFO = 8,286M FFO / EBITDA = 8,286 / 10,102 = 82% This seems reasonable. FFO is typically lower than EBITDA due to taxes, interest, and other adjustments. Cash taxes are roughly 1,603M, and 10,102 - 1,603 = 8,499M, close to 8,286M. Net debt / EBITDA = 18,767 / 10,102 = 1.86x Net debt / FFO = 18,767 / 8,286 = 2.26x These seem reasonable for a company like VINCI. I'm comfortable with my estimate. 0.442