I need to estimate the FFO (Funds From Operations) / Net Debt ratio for 2022 using S&P methodology. First, let me understand S&P's FFO methodology. S&P defines FFO as: - Net income from continuing operations + Depreciation and amortization + Impairment losses + Deferred income taxes + Other non-cash items Or alternatively, starting from operating cash flow and adjusting. Let me look at what we have and calculate FFO for 2022 (period 2022-01-01 to 2023-01-01). **Step 1: Calculate FFO** From the cash flow statement approach, S&P typically uses: FFO = Cash Flows From Used In Operating Activities + Interest Paid - Interest Received + Dividends Received from investments But more commonly, S&P's FFO is: FFO = Net Income + Depreciation/Amortization + Impairment + Deferred Taxes + Other non-cash items - Gain on sale of assets Let me use the standard S&P approach starting from operating cash flow: From the data: - Cash Flows From Used In Operating Activities (2022): 8,586,000,000 EUR - Interest Paid Classified As Financing Activities: 822,000,000 EUR - Interest Received On Cash And Cash Equivalents: -194,000,000 EUR (negative means received, so this is a receipt) - Dividends Received Classified As Investing Activities: 18,000,000 EUR Wait, let me reconsider. In S&P methodology, FFO is typically: FFO = Funds from operations = Operating cash flow before working capital changes + Interest paid + Current income tax expense - Interest received from cash investments Actually, let me use the more standard S&P definition: FFO = Net income before extraordinary items + Depreciation + Impairment + Deferred taxes + Other non-cash items Or from cash flow: FFO = CFO + Net interest expense + Current tax expense Let me look at the data more carefully: From the cash flow data: - Cash Flows From Used In Operations Before Changes In Working Capital (2022): 12,415,000,000 EUR - Income Taxes Paid Refund Classified As Operating Activities: 1,504,000,000 EUR - Increase Decrease In Working Capital: 2,424,000,000 EUR - Cash Flows From Used In Operating Activities: 8,586,000,000 EUR S&P's FFO is typically calculated as: FFO = Cash flow from operations before changes in working capital + Interest expense - Interest income from cash and investments Or more precisely: FFO = Net income + Depreciation + Amortization + Impairment + Deferred taxes + Other non-cash charges Let me try another approach. S&P Global Ratings methodology for FFO: FFO = Funds from operations = Operating cash flow + Interest paid - Interest received (on cash) - Dividends received from unconsolidated affiliates Actually, the most common S&P formula is: FFO = Net income from continuing operations + Depreciation and amortization + Impairment losses + Deferred income taxes + Other non-cash items From the income statement and cash flow adjustments: - Profit Loss From Continuing Operations (2022): -1,793,000,000 EUR - Net Depreciation Amortization Impairment And Provisions (2022): -8,057,000,000 EUR (negative in cash flow means add back, so this is a source) Wait, let me check: "Net Depreciation Amortization Impairment And Provisions" is -8,057,000,000 in the cash flow adjustments. This is added back to net income, so the actual D&A and impairment charge is 8,057,000,000. But we also have separately: - Depreciation Amortization And Provisions (income statement): 5,187,000,000 EUR - Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss: 2,774,000,000 EUR So total impairment + D&A = 5,187,000,000 + 2,774,000,000 = 7,961,000,000. Close to 8,057,000,000 but not exact (difference likely due to other items). For S&P FFO, I should use: FFO = Cash Flows From Used In Operations Before Changes In Working Capital + Interest expense - Interest income from operations Actually, let me use the most standard approach: FFO = Net income + Depreciation + Amortization + Impairment + Deferred tax + Other non-cash items From cash flow adjustments: - Net Depreciation Amortization Impairment And Provisions: 8,057,000,000 (add back) - Adjustments For Income Tax Expense: -83,000,000 (this is the tax expense, but we need deferred taxes) Hmm, let me look at this differently. The cash flow statement already starts from profit and adds back non-cash items. S&P FFO = Cash flow from operations before changes in working capital + Interest paid - Interest received (on cash and equivalents) From data: - Cash Flows From Used In Operations Before Changes In Working Capital: 12,415,000,000 - Interest Paid Classified As Financing Activities: 822,000,000 - Interest Received On Cash And Cash Equivalents: -194,000,000 (this is negative, meaning received) But wait - the 12,415,000,000 already includes adjustments for finance income/cost of -3,003,000,000. Let me check what that includes. Looking at "Adjustments For Finance Income Cost": -3,003,000,000. This is the net financial expense added back (since it's a non-cash or financing item in operating cash flow). Actually, in S&P methodology, FFO is typically: FFO = Operating cash flow before working capital changes + Cash interest paid - Cash interest received But the operating cash flow before working capital changes already has the P&L interest expense added back, not the cash interest paid. Let me use a cleaner approach. S&P's standard FFO formula: FFO = Net income + Non-cash charges (D&A, impairment, deferred taxes, provisions, etc.) From the cash flow statement, the adjustments to get to "Cash Flows From Used In Operations Before Changes In Working Capital" from profit are already calculated. Actually, let me look at this from the standard S&P methodology document: FFO = Funds from operations = - Funds from operations before interest and tax - Less: Cash interest paid - Less: Cash tax paid Or: FFO = EBIT + D&A - Cash taxes paid - Cash interest paid Wait, that's not right either. Let me use the most widely accepted S&P definition: **FFO = Net income from continuing operations + Depreciation + Amortization + Impairment + Deferred income taxes + Other non-cash items** From our data for 2022: - Profit Loss From Continuing Operations: -1,793,000,000 - But this includes many items. Let me trace through. Actually, let me use the cash flow approach which is more reliable: S&P FFO = Cash Flows From Used In Operating Activities + Increase/Decrease in Working Capital (i.e., remove working capital changes) + Interest Paid (financing) - Interest Received (on cash) - Dividends Received (from investments) Wait, that's double counting. Let me think again. Standard S&P FFO: FFO = Net cash from operating activities + Changes in working capital + Interest paid (net of capitalized interest) - Interest received from cash and marketable securities - Dividends received from unconsolidated affiliates From data for 2022: - Cash Flows From Used In Operating Activities: 8,586,000,000 - Increase Decrease In Working Capital: 2,424,000,000 (positive means decrease in working capital, i.e., source of cash) - Interest Paid Classified As Financing Activities: 822,000,000 - Interest Received On Cash And Cash Equivalents: -194,000,000 (negative = received) - Dividends Received Classified As Investing Activities: 18,000,000 So: FFO = 8,586,000,000 + 2,424,000,000 + 822,000,000 - 194,000,000 - 18,000,000 Wait, I need to be careful. "Increase Decrease In Working Capital" of 2,424,000,000 - is this a source or use? In the cash flow statement, if working capital decreases, it's a source of cash. Looking at the data: Cash Flows From Used In Operations Before Changes In Working Capital was 12,415,000,000, and after working capital changes it became 8,586,000,000 (for continuing ops, then 8,586,000,000 total). Actually: 12,415,000,000 (before WC) - 2,424,000,000 (WC increase, use of cash) - 1,504,000,000 (taxes paid) = 8,487,000,000? That doesn't match 8,488,000,000 for continuing ops. Let me check: 12,415,000,000 - 2,424,000,000 - 1,504,000,000 = 8,487,000,000. Close to 8,488,000,000 continuing ops, plus 98,000,000 discontinued = 8,586,000,000 total. Hmm, actually the "Increase Decrease In Working Capital" of 2,424,000,000 is a positive number in the calculation, meaning it's added in the cash flow statement (i.e., decrease in working capital, source of cash). But 12,415,000,000 - 2,424,000,000 doesn't work if it's a source... Actually, looking at standard cash flow presentation: "Increase Decrease In Working Capital" as a positive number typically means decrease in working capital (source). But 12,415,000,000 - 2,424,000,000 = 9,991,000,000, not 8,488,000,000. Wait, let me re-read. The line is "Cash Flows From Used In Operations Before Changes In Working Capital" = 12,415,000,000. Then "Income Taxes Paid Refund Classified As Operating Activities" = 1,504,000,000. Then "Increase Decrease In Working Capital" = 2,424,000,000. If taxes paid are 1,504,000,000 (use of cash), and working capital change is 2,424,000,000 (positive = decrease = source), then: 12,415,000,000 - 1,504,000,000 + 2,424,000,000 = 13,335,000,000? That doesn't work. Actually, I think "Income Taxes Paid Refund" of 1,504,000,000 means taxes paid (positive number = cash outflow). And "Increase Decrease In Working Capital" of 2,424,000,000 - the sign convention in XBRL is that positive means cash inflow (decrease in working capital). But then: CFO before WC = 12,415,000,000. This already includes the add-back of non-cash items to net income. To get FFO, S&P typically uses: FFO = CFO before working capital changes + Interest paid - Interest received from cash - Dividends received from investments Wait, but CFO before WC changes already has the P&L interest expense added back, not cash interest paid. Let me try yet another approach. S&P methodology states: FFO = Net income + Depreciation + Amortization + Impairment losses + Deferred income taxes + Other non-cash items - Gain on sale of assets From our data, using cash flow adjustments: - Profit Loss: 390,000,000 (this includes discontinued operations) - Profit Loss From Continuing Operations: -1,793,000,000 Actually, let me use the comprehensive income or trace through the cash flow. Cash Flows From Used In Operations Before Changes In Working Capital: 12,415,000,000 This equals: Net income + Non-cash adjustments (before working capital and taxes) For S&P FFO, we want: Net income + D&A + Impairment + Deferred taxes + Other non-cash items But the 12,415,000,000 already includes adjustments for: - Undistributed profits of equity method investments: 1,059,000,000 (subtract, as it's equity income not cash) - Dividend income adjustment: -713,000,000 (add back, as dividend income is cash) - Net depreciation amortization impairment and provisions: -8,057,000,000 (this is add-back, so the number is negative in the adjustment column meaning we add it back) - Impact of changes in scope and other non-recurring: -74,000,000 - Gains/losses on fair value of derivatives: -3,661,000,000 - Other adjustments for non-cash items: -157,000,000 - Adjustments for income tax expense: -83,000,000 - Adjustments for finance income/cost: -3,003,000,000 Hmm, the signs are confusing. Let me think of it this way: in the indirect method, we start with profit and add back non-cash items. So "Adjustments For..." with negative values means we're adding back expenses (which were negative to profit). Actually, looking at "Adjustments For Finance Income Cost" = -3,003,000,000. Finance cost was 3,700,000,000 and finance income was 697,000,000, so net financial expense was 3,003,000,000. In the operating cash flow, we add this back (because it's a financing item, not operating). So -3,003,000,000 in the adjustment column means we add 3,003,000,000. Wait, I think I'm overcomplicating this. Let me just use: **FFO = Cash Flows From Used In Operations Before Changes In Working Capital + Interest paid - Interest received on cash - Dividends received from investments** This is because CFO before WC changes already has the net income and non-cash add-backs, but it also has the P&L interest expense (not cash interest) and other items. Actually, no. Let me think more carefully. CFO before WC changes = Net income + D&A + Impairment + Deferred tax + Other non-cash items - Equity earnings + Dividends received + Other adjustments For S&P FFO, we want: Net income + D&A + Impairment + Deferred tax + Other non-cash items So: FFO = CFO before WC changes + Equity earnings - Dividends received + ... This is getting messy. Let me use a simpler approach that S&P often uses: **FFO = Cash Flow From Operations + Interest Expense - Interest Income (from cash) - Dividend Income** But using cash flow numbers, not P&L numbers. Actually, the most practical S&P approach is: **FFO = CFO (as reported) + Changes in Working Capital + Cash Interest Paid - Cash Interest Received on Cash Equivalents - Dividends Received from Investments** From data for 2022: - CFO: 8,586,000,000 - Working capital change: 2,424,000,000 (add back the working capital change to get pre-WC CFO... but wait, if WC decreased, this was already added to CFO) Let me verify: CFO before WC was 12,415,000,000. After WC change of 2,424,000,000 and taxes paid of 1,504,000,000... Actually 12,415,000,000 - 1,504,000,000 (taxes) = 10,911,000,000 for continuing ops before WC? No, the structure is: - CFO before WC: 12,415,000,000 - Income taxes paid: 1,504,000,000 (this is likely already deducted to get "before WC") - Then WC change: 2,424,000,000 Hmm, let me look at the line items again: "Cash Flows From Used In Operations Before Changes In Working Capital" = 12,415,000,000 "Income Taxes Paid Refund Classified As Operating Activities" = 1,504,000,000 "Increase Decrease In Working Capital" = 2,424,000,000 "Cash Flows From Used In Operating Activities Continuing Operations" = 8,488,000,000? Wait, it says 8,488,000,000 or 8,586,000,000 total? Looking again: "Cash Flows From Used In Operating Activities Continuing Operations" = 8,488,000,000? No, let me re-read: "8488000000" = 8,488,000,000. And "Cash Flows From Used In Operating Activities Discontinued Operations" = 98,000,000. Total = 8,586,000,000. But 12,415,000,000 - 1,504,000,000 - 2,424,000,000? = 8,487,000,000 ≈ 8,488,000,000. So working capital change was a use of cash (increase in working capital), not a source. So "Increase Decrease In Working Capital" of 2,424,000,000 represents a decrease? No, if we subtract it to get from 10,911,000,000 to 8,487,000,000, then it's an increase in working capital (use of cash). But the number is shown as positive 2,424,000,000 in the list... Actually, I think in this XBRL format, positive numbers for "Increase Decrease In Working Capital" mean decrease in working capital (source of cash). But then 12,415,000,000 + 2,424,000,000 - 1,504,000,000 = 13,335,000,000, which is wrong. Unless "Income Taxes Paid Refund" of 1,504,000,000 is actually a refund (negative taxes paid, i.e., received)? But then 12,415,000,000 + 1,504,000,000 - 2,424,000,000 = 11,495,000,000, still wrong. Let me just accept the given numbers and use the standard S&P formula directly on the cash flows: **FFO = CFO before changes in working capital + Cash interest paid - Cash interest received - Dividends received** = 12,415,000,000 + 822,000,000 - 194,000,000 - 18,000,000 = 13,025,000,000 Wait, but CFO before WC changes already includes the P&L interest expense added back, not cash interest paid. The adjustment "Adjustments For FinanceP Finance Income Cost" of -3,003,000,000 means we added back 3,003,000,000 of net financial expense. But cash interest paid was 822,000,000 and interest received on cash was 194,000,000, so net cash interest was 628,000,000 paid. The P&L net financial expense was 3,003,000,000. This is a big difference because of accruals, capitalized interest, forex, fair value changes, etc. For S&P FFO, the standard is to use: FFO = Net income + D&A + Impairment + Deferred taxes + Other non-cash items Or equivalently from cash flows: FFO = CFO before WC changes - Equity earnings + Dividends received + ... Actually, let me look at what "Cash Flows From Used In Operations Before Changes In Working Capital" includes. It starts from profit and adds back non-cash items. The equity earnings of 1,059,000,000 were added back (via "Adjustments For Undistributed Profits Of Investments Accounted For Using Equity Method" = 1,059,000,000), and dividends received of 713,000,000 were subtracted (via "Adjustments For Dividend Income" = -713,000,000, meaning we subtract the dividend income that was in profit). Wait, "Adjustments For Dividend Income" = -713,000,000. If this is negative, it means we subtract dividend income from profit to get to operating cash flow. But dividend income is typically not in operating profit, it's in financial income. Let me try a completely different approach. Let me calculate FFO from the P&L directly: S&P FFO = Current Operating Income Including Operating Mtm + Depreciation Amortization And Provisions - Cash taxes + Interest received - Interest paid (operating) + Other items No, that's getting EBITDAR or something else. Let me use the most standard S&P formula I can find: **FFO = Net income from continuing operations + Depreciation + Amortization + Impairment losses + Deferred income taxes + Other non-cash items** From 2022 data: - Profit Loss From Continuing Operations: -1,793,000,000 + Depreciation Amortization And Provisions: 5,187,000,000 + Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss: 2,774,000,000 (this is a loss, so add it back) + Deferred tax: Need to calculate Deferred tax = Change in deferred tax assets + Change in deferred tax liabilities - Deferred Tax Assets 2023: 2,029,000,000; 2022: 1,181,000,000; increase = 848,000,000 (use of tax benefit) - Deferred Tax Liabilities 2023: 6,408,000,000; 2022: 7,738,000,000; decrease = 1,330,000,000 (benefit) Deferred tax expense = -848,000,000 + 1,330,000,000 = 482,000,000? Or the other way around. Actually, increase in DTA means deferred tax benefit (negative expense). Decrease in DTL means deferred tax benefit. So total deferred tax benefit = 848,000,000 + 1,330,000,000 = 2,178,000,000. But "Adjustments For Income Tax Expense" = -83,000,000. This is the income tax expense from continuing operations (-83,000,000, i.e., a benefit). This includes current and deferred. Current tax paid = 1,504,000,000 (from cash flow). So total tax expense = -83,000,000 = current tax expense + deferred tax expense. If cash tax paid was 1,504,000,000, then current tax expense was about 1,504,000,000 (assuming no accruals), and deferred tax benefit was about -1,587,000,000, totaling -83,000,000. Actually, the cash flow shows "Income Taxes Paid Refund Classified As Operating Activities" = 1,504,000,000. If this is taxes paid, then current tax expense is roughly 1,504,000,000 plus change in tax payable. The total tax expense is -83,000,000, so deferred tax benefit is about -1,587,000,000. For FFO, we add back deferred tax benefit (i.e., subtract the benefit, or add the expense). Since deferred tax benefit is negative expense, we add back the benefit? No, we add back the deferred tax expense. If expense is negative (benefit), we add back a negative = subtract. Actually, standard FFO: add back deferred tax expense. If deferred tax expense is negative (benefit), then adding it back reduces FFO. Let me just use the cash flow approach which is cleaner: **S&P FFO = Cash flow from operations before working capital changes + Cash interest paid - Cash interest received on cash and investments - Dividends received from unconsolidated affiliates** From 2022: - CFO before WC changes: 12,415,000,000 - Cash interest paid (financing activities): 822,000,000 - Cash interest received on cash and equivalents: 194,000,000 (negative in data means received) - Dividends received (investing activities): 18,000,000 But wait, CFO before WC changes already has the P&L interest expense of 3,003,000,000 added back, not cash interest. So if I add cash interest paid, I'm double counting. Actually, let me check: "Adjustments For Finance Income Cost" = -3,003,000,000. This is added back to profit. This is the P&L net financial expense. For S&P FFO, we want to add back the cash interest paid, not the P&L interest expense. But actually, S&P FFO is meant to be a pre-interest, pre-tax measure of cash generation. So: FFO = EBIT + D&A - Cash taxes Or: FFO = EBITDA - Cash taxes Wait, that's not standard. Let me check S&P's actual definition. After research, S&P Global Ratings defines FFO as: **FFO = Funds from operations = Net income from continuing operations + Depreciation + Amortization + Impairment + Deferred income taxes + Other non-cash items** But they also use: **FFO = Cash flow from operating activities + Changes in working capital + Interest paid - Interest received - Dividends received from unconsolidated affiliates** This second formula is more practical. Let me use it. For 2022: - Cash Flows From Used In Operating Activities: 8,586,000,000 + Increase Decrease In Working Capital: 2,424,000,000 (this is the working capital change; if it was a source in CFO, we subtract it; if use, we add it) Actually, from above: CFO before WC was 12,415,000,000. CFO after WC was 8,488,000,000 continuing + 98,000,000 discontinued = 8,586,000,000. The difference is 12,415,000,000 - 8,586,000,000 = 3,829,000,000. But taxes paid were 1,504,000,000 and WC change was 2,424,000,000, totaling 3,928,000,000. Close but not exact (109,000,000 difference, possibly due to discontinued ops or rounding). Actually, looking more carefully: "Cash Flows From Used In Operating Activities Continuing Operations" = 8,488,000,000? No, it's 8,488,000,000 or 8,488,000,000? Let me check: 8,488,000,000 = 8,488 million. And 12,415,000,000 - 1,504,000,000 - 2,424,000,000 = 8,487,000,000. Close enough, the 1,000,000 difference might be rounding or I misread a number. Actually re-reading: "8488000000" = 8,488,000,000. Hmm, but 12,415 - 1,504 - 2,424 = 8,487. So there's a 1 million difference. Let me check if "Income Taxes Paid" is actually -1,504,000,000 (i.e., refund)? No, the line says "Income Taxes Paid Refund Classified As Operating Activities" = 1,504,000,000. Wait, I think I need to re-check. The line "Cash Flows From Used In Operating Activities Continuing Operations" might be 8,488,000,000 and "Cash Flows From Used In Operating Activities Discontinued Operations" = 98,000,000, total 8,586,000,000. But 8,488 + 98 = 8,586. Yes. And 12,415,000,000 - 1,504,000,000 - 2,424,000,000 = 8,487,000,000. The 1,000,000 difference with 8,488,000,000 is minor (probably my reading or rounding). So working capital change of 2,424,000,000 was a USE of cash (subtracted). To get FFO, we add this back to CFO: FFO = 8,586,000,000 + 2,424,000,000 + Cash interest paid - Cash interest received - Dividends received = 8,586,000,000 + 2,424,000,000 + 822,000,000 - 194,000,000 - 18,000,000 = 11,620,000,000 Wait, but this gives 11,620,000,000, while CFO before WC was 12,415,000,000. The difference is 795,000,000, which is roughly the tax paid (1,504,000,000) minus something. Actually, I think the formula should be: FFO = CFO before WC changes + Cash interest paid - Cash interest received - Dividends received = 12,415,000,000 + 822,000,000 - 194,000,000 - 18,000,000 = 13,025,000,000 But this seems high. Let me verify with another approach. Actually, standard S&P FFO formula from their methodology: **FFO = Net income + D&A + Impairment + Deferred tax + Other non-cash items - Gain on sale of assets** From cash flow adjustments for 2022: - Net income (Profit Loss): 390,000,000 - Net Depreciation Amortization Impairment And Provisions: 8,057,000,000 (add back) - Impact Of Changes In Scope: 74,000,000 (this is likely gain/loss on sale, add back if loss) - Gains Losses On Change In Fair Value Of Derivatives: 3,661,000,000 (add back unrealized) - Other Adjustments For Noncash Items: 157,000,000 - Adjustments For Income Tax Expense: 83,000,000 (this is the tax expense, add back) Wait, the signs in the data are confusing. Let me assume "Adjustments For..." with negative values are added back to profit (i.e., they represent expenses that reduced profit). From the cash flow statement logic: Profit Loss: 390,000,000 + Adjustments For Undistributed Profits: 1,059,000,000 (equity earnings, subtracted from profit) - Adjustments For Dividend Income: -713,000,000 (dividend income, added? No, negative means...) Hmm, the signs are: "Adjustments For Dividend Income" = -713,000,000. If this is negative, and we're adding adjustments to profit, then -713,000,000 means we subtract 713,000,000. But dividend income is already in financial income, not operating profit. Actually, I think these adjustments are to get from net income to operating cash flow before WC changes. Let me just sum them: 390,000,000 (profit) + 1,059,000,000 (undistributed profits, i.e., equity earnings - subtract these as they're not cash) - 713,000,000 (dividend income - subtract as it's financial not operating? But negative means add?) - 8,057,000,000 (net D&A impairment - this is negative, so add 8,057,000,000) - 74,000,000 (changes in scope - negative, so add 74,000,000) - 3,661,000,000 (fair value gains/losses - negative, so add 3,661,000,000) - 157,000,000 (other non-cash - negative, so add 157,000,000) - 83,000,000 (income tax expense - negative, so add 83,000,000) - 3,003,000,000 (finance income/cost - negative, so add 3,003,000,000) = 390,000,000 + 1,059,000,000 - 713,000,000 + 8,057,000,000 + 74,000,000 + 3,661,000,000 + 157,000,000 + 83,000,000 + 3,003,000,000 = 390 + 1,059 - 713 + 8,057 + 74 + 3,661 + 157 + 83 + 3,003 = 390 + 346 + 8,057 + 74 + 3,661 + 157 + 83 + 3,003 = 15,771,000,000? That doesn't equal 12,415,000,000. So my sign interpretation is wrong. Let me try: negative adjustments mean "add back to profit" (i.e., they were expenses), positive adjustments mean "subtract from profit" (i.e., they were income or need to be removed). 390,000,000 - 1,059,000,000 (positive adjustment = subtract, i.e., remove equity earnings) + 713,000,000 (negative adjustment = add back, i.e., dividend income was subtracted? No, this doesn't make sense) + 8,057,000,000 (add back D&A etc.) + 74,000,000 + 3,661,000,000 + 157,000,000 + 83,000,000 + 3,003,000,000 = 390 - 1,059 + 713 + 8,057 + 74 + 3,661 + 157 + 83 + 3,003 = 15,079,000,000 Still not 12,415,000,000. Hmm, maybe the starting point is not Profit Loss but Profit Loss From Continuing Operations? = -1,793,000,000 -1,793 - 1,059 + 713 + 8,057 + 74 + 3,661 + 157 + 83 + 3,003 = 12,896,000,000 Closer to 12,415,000,000 but not exact. Difference of 481,000,000. Or maybe starting from Profit Loss From Continuing Operations but with different signs... Let me try: all "Adjustments For..." are add-backs (i.e., the values shown are what we add, with their signs): -1,793 + 1,059 - 713 + (-8,057) + (-74) + (-3,661) + (-157) + (-83) + (-3,003) = -1,793 + 1,059 - 713 - 8,057 - 74 - 3,661 - 157 - 83 - 3,003 = -16,482,000,000 No, that's wrong. Let me try yet again. In standard cash flow presentation: Net income + Depreciation (expense, so add back) - Gain on sale (income, so subtract) + Loss on sale (expense, so add back) etc. The "Adjustments For..." items with negative values might represent expenses (which reduce profit, so we add them back as positive numbers). But the data shows them as negative, which would mean... Actually, I think the issue is that in XBRL, "Adjustments For Depreciation" with a negative value means "add back" (i.e., the adjustment is negative because it's reversing a positive expense). But then the total would be: Profit + (-D&A) where D&A is the adjustment... no, that's adding a negative. I think I need to just accept that "Cash Flows From Used In Operations Before Changes In Working Capital" = 12,415,000,000 is the right starting point and it's already correctly calculated. For **Net Debt**, S&P defines it as: **Net Debt = Short-term debt + Long-term debt + Current portion of long-term debt - Cash and cash equivalents - Marketable securities** From 2022 data (as of 2023-01-01, i.e., end of 2022): - Current Borrowings And Current Portion Of Noncurrent Borrowings: 12,508,000,000 - Longterm Borrowings: 28,083,000,000 - Cash And Cash Equivalents: 15,570,000,000 Other current financial assets: 2,394,000,000 (may include marketable securities) Net Debt = 12,508,000,000 + 28,083,000,000 - 15,570,000,000 - 2,394,000,000 (if we include other current financial assets as liquid) = 40,591,000,000 - 17,964,000,000 = 22,627,000,000 Or without other current financial assets: = 40,591,000,000 - 15,570,000,000 = 25,021,000,000 Actually, S&P typically includes "Other Current Financial Assets" as cash-like if they're liquid. But let me check if there are other items. Looking at current assets: "Other Current Financial Assets" = 2,394,000,000 and "Current Derivative Financial Assets" = 15,252,000,000. Derivatives are not typically included as cash. For conservative S&P approach, Net Debt = Total Debt - Cash and Cash Equivalents: = (12,508,000,000 + 28,083,000,000) - 15,570,000,000 = 40,591,000,000 - 15,570,000,000 = 25,021,000,000 Now for FFO, let me use the most standard S&P formula that matches their published methodology: **FFO = Cash flow from operating activities + Changes in working capital + Interest paid - Interest received - Dividends received from equity investments** = 8,586,000,000 + 2,424,000,000 + 822,000,000 - 194,000,000 - 18,000,000 = 11,620,000,000 Wait, I need to be more careful. The "Changes in working capital" here refers to the adjustment to reverse working capital changes from CFO. If working capital increased (use of cash), we add it back. If it decreased (source of cash), we subtract it. From above, working capital change was 2,424,000,000 and it was a USE of cash (since CFO went from 12,415,000,000 to about 8,488,000,000 after taxes and WC). Actually, let me recalculate: CFO before WC: 12,415,000,000 Less: Taxes paid: 1,504,000,000 Less: Working capital increase: 2,424,000,000 = 8,487,000,000 ≈ 8,488,000,000 continuing So working capital was a USE of 2,424,000,000. To get FFO, we add this back: FFO = 8,586,000,000 + 2,424,000,000 + 822,000,000 - 194,000,000 - 18,000,000 = 11,620,000,000 But wait, this includes discontinued operations. For S&P, we typically use continuing operations. Let me adjust: CFO continuing: 8,488,000,000 + WC use: 2,424,000,000 × (8,488/8,586) ≈ 2,424,000,000? Or just use the pre-WC number for continuing: roughly 12,415,000,000 - 98,000,000 × (discontinued portion)? Actually, the "Cash Flows From Used In Operations Before Changes In Working Capital" of 12,415,000,000 likely includes both continuing and discontinued. Let me check if there's a separate number. Looking at the data, there's only one "Cash Flows From Used In Operations Before Changes In Working Capital" = 12,415,000,000, then taxes paid = 1,504,000,000, then WC change = 2,424,000,000, then continuing = 8,488,000,000 and discontinued = 98,000,000. So pre-WC for continuing is approximately 12,415,000,000 - (some discontinued portion). If total after tax and WC is 8,586,000,000 and continuing is 8,488,000,000, discontinued is 98,000,000. The pre-WC for discontinued might be small. Actually, let me just use the total FFO and total Net Debt for simplicity, or use continuing operations. For continuing operations FFO: = CFO continuing before WC + Cash interest paid - Cash interest received - Dividends received But we don't have CFO continuing before WC directly. Let me approximate: CFO total before WC = 12,415,000,000 CFO continuing before WC ≈ 12,415,000,000 - 98,000,000 (discontinued after tax and WC) - some adjustment... Actually, this is getting too complicated. Let me use a simpler approach: **FFO = 12,415,000,000 + 822,000,000 - 194,000,000 - 18,000,000 = 13,025,000,000** This uses total CFO before WC changes, adds cash interest paid, subtracts cash interest received, subtracts dividends received. But wait, CFO before WC changes already includes interest expense added back (the 3,003,000,000 P&L net financial expense). So adding cash interest paid of 822,000,000 and subtracting cash interest received of 194,000,000 gives us net cash interest of 628,000,000. But the P&L already had 3,003,000,000 added back. So we're replacing 3,003,000,000 with 628,000,000, which reduces FFO by 2,375,000,000. Hmm, but that's the point - S&P wants FFO to reflect cash interest, not P&L interest. Actually, I think I'm wrong. Let me re-think. CFO before WC changes starts from net income and adds back non-cash and non-operating items. The "Adjustments For Finance Income Cost" of -3,003,000,000 means we add back 3,003,000,000 of net financial expense. This gets us to a pre-interest, pre-tax operating number (roughly). Then to get FFO, we want to subtract cash interest paid and cash interest received, not P&L interest. But wait, FFO is typically AFTER interest. S&P's FFO is funds from operations available to pay debt, so it's after cash interest but before working capital changes. Actually, looking at S&P's definition more carefully: FFO is meant to be comparable to EBITDA but from a cash flow perspective. It's: FFO = EBIT + D&A - Cash taxes ± Cash interest No wait, let me check. S&P says FFO is "funds from operations" - it's the cash generated from operations before working capital changes but after interest and taxes. Actually no - FFO is typically BEFORE interest and taxes. Let me verify with a reliable source. From S&P Global Ratings corporate methodology: "FFO: Funds from operations. We calculate FFO as net income from continuing operations adjusted for depreciation, amortization, deferred income taxes, and other non-cash items." This is AFTER interest and taxes (since it starts from net income). But then they also use it with net debt, so the interest is already deducted. Wait, if FFO is after interest, then adding back interest would be double counting. Let me re-read. Actually, I think the confusion is between "FFO" and "CFO" or "EBITDA". Let me look at what S&P actually uses for the FFO/Net Debt ratio. From S&P methodology: The FFO to debt ratio is calculated as FFO / Debt, where FFO is funds from operations. Standard S&P FFO calculation: FFO = Net income + Depreciation + Amortization + Impairment + Deferred taxes + Other non-cash items This is from the P&L, not from cash flow. And it's AFTER interest expense and taxes. But then FFO/Net Debt would be after interest, which seems odd for a debt coverage ratio. Unless they use it as a cash flow to debt metric where lower is worse. Actually, for debt coverage, S&P typically uses: - FFO / Debt: measures cash flow relative to debt - EBITDA / Interest: measures interest coverage FFO being after interest means it's the cash available after paying interest, relative to total debt. This makes sense as a solvency measure. But wait, some S&P documents define FFO as: FFO = Cash flow from operating activities + Changes in working capital + Interest paid - Interest received - Dividends received This would be BEFORE interest (since we add back interest paid). Let me check which one is correct. After more thought, I believe S&P's standard FFO for the FFO/Debt ratio is: **FFO = Cash flow from operating activities before working capital changes + Cash interest paid - Cash interest received - Dividends received from equity investments** This gives funds from operations BEFORE interest but after taxes (since taxes are deducted in CFO). Actually, let me verify with the components. If CFO before WC is 12,415,000,000, this is roughly: EBIT + D&A - Cash taxes - Other items Actually, CFO before WC changes is: Net income + D&A + Impairment + Deferred tax + Other non-cash - Equity earnings + Dividends received + ... It's messy. Let me just use the practical formula: **FFO = 12,415,000,000 + 822,000,000 - 194,000,000 - 18,000,000 = 13,025,000,000** Or, if we use the alternative S&P formula that doesn't add back interest (since FFO is after interest): **FFO = 12,415,000,000 - 194,000,000 - 18,000,000 = 12,203,000,000** (but this doesn't add back interest paid, so it's after interest) Hmm, but 12,415,000,000 already has P&L interest of 3,003,000,000 added back, not cash interest. So it's before P&L interest but not before cash interest. I think the correct S&P approach is: 1. Start with CFO before WC changes: 12,415,000,000 2. This already has P&L net interest expense of 3,003,000,000 added back 3. To get to a cash interest measure, we need to: subtract P&L interest add-back, add cash interest paid, subtract cash interest received So: 12,415,000,000 - 3,003,000,000 + 822,000,000 - 194,000,000 = 10,040,000,000 Then subtract dividends received: 10,040,000,000 - 18,000,000 = 10,022,000,000 But this seems too complicated and I'm not sure. Let me try a different approach. Let me calculate FFO from the P&L directly using S&P's definition: FFO = Profit Loss From Continuing Operations + Depreciation Amortization And Provisions + Impairment Loss + Deferred Tax + Other non-cash From 2022: - Profit Loss From Continuing Operations: -1,793,000,000 + Depreciation Amortization And Provisions: 5,187,000,000 + Impairment Loss Reversal: 2,774,000,000 (this is a loss, so add it) + Deferred tax benefit/expense: need to calculate From balance sheet: Deferred Tax Assets: 2022 = 1,181,000,000; 2023 = 2,029,000,000; Increase = 848,000,000 Deferred Tax Liabilities: 2022 = 7,738,000,000; 2023 = 6,408,000,000; Decrease = 1,330,000,000 Deferred tax expense = -(Increase in DTA) + (Decrease in DTL) ... actually, the accounting is: Deferred tax expense = Increase in DTL - Increase in DTA = (6,408 - 7,738) - (2,029 - 1,181) = -1,330 - 848 = -2,178,000,000 (i.e., deferred tax benefit of 2,178,000,000) But the P&L shows "Income Tax Expense Continuing Operations" = -83,000,000 (benefit). This includes current and deferred. If total tax benefit is 83,000,000 and deferred benefit is 2,178,000,000, then current tax expense would be about 2,095,000,000, which doesn't match cash taxes paid of 1,504,000,000. Actually, the cash flow shows "Adjustments For Income Tax Expense" = -83,000,000. This is added back to profit (since it's an expense). But since it's negative, adding it back means we subtract 83,000,000? No, -83,000,000 as an adjustment means we add back -83,000,000 = subtract 83,000,000. Wait, if tax expense is -83,000,000 (i.e., benefit), then to add it back we would subtract 83,000,000 (removing the benefit). But the adjustment shows -83,000,000, which if added to profit gives: profit - 83,000,000. That would reduce profit, not add back the tax benefit. I think the sign convention is that "Adjustments For Income Tax Expense" = -83,000,000 means the tax expense was -83,000,000, and we're adding it back (so we add -83,000,000, which reduces the starting profit). But that doesn't make sense for getting to pre-tax. Actually, I think the adjustments are to get from net income to operating cash flow. If tax expense was a benefit (negative), we need to remove that benefit to get to operating cash flow (since tax benefit is not operating cash flow). So we subtract the benefit. This is getting too convoluted. Let me use a much simpler approach. **Simple S&P FFO approach:** FFO = EBITDA - Cash taxes Or: FFO = EBIT + D&A - Cash taxes From 2022: - Current Operating Income Including Operating Mtm: 4,309,000,000 (this is EBIT roughly) + Depreciation Amortization And Provisions: 5,187,000,000 = EBITDA: 9,496,000,000 - Cash taxes paid: 1,504,000,000 = FFO: 7,992,000,000 But this doesn't include impairment, which is part of operating activities. "Profit Loss From Operating Activities" = 1,127,000,000 includes impairment and other items. Actually, let me look at "Profit Loss From Operating Activities" = 1,127,000,000. This is after D&A, impairment, and other operating items. Current Operating Income Including Operating Mtm = 4,309,000,000 - Impairment Loss = 2,774,000,000 - Expense Of Restructuring Activities = 230,000,000 - Other Income Expense From Subsidiaries = 91,000,000 - Other Non Recurring Items = -1,328,000,000 (negative = income) = 4,309 - 2,774 - 230 - 91 + 1,328 = 2,542,000,000? That doesn't equal 1,127,000,000. Hmm, let me check: 4,309,000,000 - 2,774,000,000 = 1,535,000,000. Then -230,000,000 = 1,305,000,000. Then -91,000,000 = 1,214,000,000. Then +1,328,000,000? No, "Other Non Recurring Items" = -1,328,000,000. If this is negative, it's income. So 1,214,000,000 - (-1,328,000,000)? No, the line shows -1,328,000,000 which might mean expense. Actually, looking at the data: "Other Non Recurring Items" 2022 = -1328000000. The negative sign might indicate income (credit). So: 1,214,000,000 + 1,328,000,000 = 2,542,000,000. Still not 1,127,000,000. Wait, I also need to include "Other Income" of 1,624,000,000? No, that's probably already in Current Operating Income. Let me try: Current Operating Income Including Operating Mtm = 4,309,000,000. This includes "Share Of Profit Loss Of Associates" or not? No, that's separate: "Share Of Profit Loss Of Associates" = 1,059,000,000. And "Current Operating Income Including Operating Mtm And Share In Net Income Of Equity Method Entities" = 5,367,000,000 = 4,309 + 1,059. So operating profit before associates = 4,309,000,000. Then after various items we get to "Profit Loss From Operating Activities" = 1,127,000,000. The difference: 4,309 - 1,127 = 3,182,000,000. This includes: - Impairment: 2,774,000,000 - Restructuring: 230,000,000 - Other subsidiaries/associates: 91,000,000 - Other non-recurring: -1,328,000,000 (income) Total: 2,774 + 230 + 91 - 1,328 = 1,767,000,000. Not 3,182,000,000. Missing: 3,182 - 1,767 = 1,415,000,000. Maybe "Other Income" of 1,624,000,000 is part of this? Or other items. This is too messy. Let me just use the cash flow number directly. **Final approach for FFO:** I'll use the standard S&P formula: **FFO = Cash Flows From Used In Operations Before Changes In Working Capital + Interest Paid - Interest Received - Dividends Received** = 12,415,000,000 + 822,000,000 - 194,000,000 - 18,000,000 = 13,025,000,000 But I need to verify if this is correct. Actually, I realize that "Cash Flows在 Operations Before Changes In Working Capital" already includes the add-back of P&L interest expense (3,003,000,000). So if I add cash interest paid (822,000,000), I'm not correctly adjusting. The correct S&P formula should be: **FFO = CFO before WC changes - P&L interest expense + Cash interest paid - P&L interest income + Cash interest received - P&L dividend income + Cash dividends received** = 12,415,000,000 - 3,003,000,000 + 822,000,000 - 697,000,000 + 194,000,000 - 713,000,000 + 18,000,000? No, the 713,000,000 is "Adjustments For Dividend Income" which might be subtracting P&L dividend income. And 1,059,000,000 is "Adjustments For Undistributed Profits" which is adding back equity earnings. Actually, let me trace through the cash flow adjustments more carefully. Starting from Profit Loss of 390,000,000: 390,000,000 + 1,059,000,000 (remove equity earnings) - 713,000,000 (remove dividend income? But it's negative in data, so +713,000,000?) + 8,057,000,000 (add D&A, impairment etc.) + 74,000,000 (add back changes in scope?) + 3,661,000,000 (add back fair value changes) + 157,000,000 (other non-cash) + 83,000,000 (add back tax expense?) + 3,003,000,000 (add back finance costs) If all these are added (positive): 390 + 1,059 + 713 + 8,057 + 74 + 3,661 + 157 + 83 + 3,003 = 17,197,000,000. Too high. If negative adjustments are subtracted: 390 + 1,059 - 713 + 8,057 + 74 + 3,661 + 157 + 83 + 3,003 = 15,771,000,000. Still too high. Hmm, what if "Adjustments For..." with negative values are already the add-backs (i.e., we add the negative number, which reduces the total)? 390 - 1,059 - 713 - 8,057 - 74 - 3,661 - 157 - 83 - 3,003 = -16,417,000,000. No. What if positive adjustments are added, negative are subtracted (i.e., the number is the adjustment itself): 390 + 1,059 + (-713) + (-8,057) + (-74) + (-3,661) + (-157) + (-83) + (-3,003) = 390 + 1,059 - 713 - 8,057 - 74 - 3,661 - 157 - 83 - 3,003 = -14,299,000,000. No. Let me try starting from Profit Loss From Continuing Operations (-1,793,000,000): -1,793 + 1,059 - 713 - 8,057 - 74 - 3,661 - 157 - 83 - 3,003 = -16,482,000,000. No. -1,793 - 1,059 + 713 + 8,057 + 74 + 3,661 + 157 + 83 + 3,003 = 12,896,000,000. Close to 12,415,000,000! Difference: 12,896 - 12,415 = 481,000,000. Maybe there's another item or the starting point is slightly different. Actually, "Profit Loss From Continuing Operations" = -1,793,000,000. But "Profit Loss" = 390,000,000 includes discontinued operations gain of 2,183,000,000. So continuing is -1,793 and total is 390 = -1,793 + 2,183. For CFO before WC, we want continuing operations. So maybe start from -1,793,000,000 and adjust, but the adjustments include some discontinued items. Actually, looking at the cash flow structure, there are separate lines for continuing and discontinued operations only at the end. The adjustments are likely for total operations. Let me try: starting point might be "Profit Loss From Operating Activities" = 1,127,000,000? No, that's already after some adjustments. Or maybe: "Current Operating Income Including Operating Mtm" = 4,309,000,000? Then add back D&A of 5,187,000,000 = 9,496,000,000. Then add back impairment of 2,774,000,000 = 12,270,000,000. Then add other items... getting closer to 12,415,000,000. 12,270 + other adjustments (fair value, etc.) = 12,415? Difference is 145,000,000. Maybe from other non-recurring or other items. Actually, I think "Cash Flows From Used In Operations Before Changes In Working Capital" is calculated from "Profit Loss From Operating Activities" = 1,127,000,000, not from net income. 1,127 + 8,057 (D&A, impairment, provisions) + 74 (scope changes) + 3,661 (fair value) + 157 (other non-cash) + 83 (tax) + 3,003 (finance) - 1,059 (equity earnings) - 713 (dividends) = 1,127 + 8,057 + 74 + 3,661 + 157 + 83 + 3,003 - 1,059 - 713 = 14,390,000,000. Not 12,415. Hmm, let me try without equity and dividends: 1,127 + 8,057 + 74 + 3,661 + 157 + 83 + 3,003 = 16,162,000,000. Too high. What if "Net Depreciation Amortization Impairment And Provisions" of 8,057,000,000 is the NET amount, and some is already in operating profit? Actually, "Profit Loss From Operating Activities" = 1,127,000,000 is AFTER D&A, impairment, etc. So we add those back. Let me check: Current Operating Income = 4,309,000,000. This is before D&A? Or after? Typically operating income is after D&A. So 4,309 is after D&A of 5,187. Then EBIT would be 4,309 + some items. Actually, "Current Operating Income Including Operating Mtm" - this "current operating income" is likely after D&A. Then "Profit Loss From Operating Activities" = 1,127,000,000 is after more adjustments (impairment, restructuring, etc.). So to get from 1,127 to pre-WC CFO, we add back: - D&A: 5,187,000,000 (but wait, is this already in the 8,057,000,000?) - Impairment: 2,774,000,000 - Other items The 8,057,000,000 "Net Depreciation Amortization Impairment And Provisions" likely includes D&A, impairment, and changes in provisions. So: 1,127 + 8,057 = 9,184,000,000. Then add other adjustments: 74 + 3,661 + 157 + 83 + 3,003 - 1,059 - 713 = 5,206,000,000. Total = 14,390,000,000. Still not 12,415. I think the issue is that "Profit Loss From Operating Activities" includes some items that are not in the starting point for cash flow. Or the cash flow starts from a different number. Let me just accept 12,415,000,000 as given and move on. For **Net Debt** as of end of 2022 (2023-01-01): - Short-term borrowings: 12,508,000,000 - Long-term borrowings: 28,083,000,000 - Total debt: 40,591,000,000 - Cash and cash equivalents: 15,570,000,000 - Net debt: 40,591,000,000 - 15,570,000,000 = 25,021,000,000 Some S&P analysts also subtract other liquid assets. "Other Current Financial Assets" = 2,394,000,000. If we include this: Net debt = 40,591,000,000 - 15,570,000,000 - 2,394,000,000 = 22,627,000,000 I'll use the more standard definition without other current financial assets: **25,021,000,000** Now for FFO. Let me use the formula that gives approximately the right number based on S&P's typical approach: From cash flow: "Cash Flows From Used In Operations Before Changes In Working Capital" = 12,415,000,000 This is roughly equal to: Net income + D&A + Impairment + other non-cash items - equity earnings + dividends received + ... For S&P FFO, the standard is: FFO = Cash flow from operating activities before working capital changes + Interest paid - Interest received - Dividends received from equity investments = 12,415,000,000 + 822,000,000 - 194,000,000 - 18,000,000 = 13,025,000,000 But I'm concerned this double-counts interest. Let me think... Actually, in many S&P methodologies, they define FFO as: FFO = Cash flow from operating activities (as reported) + Changes in working capital + Interest paid - Interest received - Dividends received Where "Changes in working capital" is the amount that was reflected in CFO (so if CFO went down due to working capital increase, we add that back). CFO total = 8,586,000,000 Working capital increase (use of cash) = 2,424,000,000 (approximate, from the difference) CFO before WC = 12,415,000,000 So FFO = 8,586,000,000 + 2,424,000,000 + 822,000,000 - 194,000,000 - 18,000,000 = 11,620,000,000 Or using pre-WC directly: 12,415,000,000 + 822,000,000 - 194,000,000 - 18,000,000 = 13,025,000,000 These give different results. Which is correct? I think the issue is whether "CFO before WC changes" of 12,415,000,000 is before or after interest. Since it includes "Adjustments For Finance Income Cost" of 3,003,000,000 added back, it's before P&L interest expense. But we want to adjust to cash interest. Actually, I think the correct S&P FFO is closer to 13,025,000,000 if we use pre-WC CFO and adjust for cash interest. But let me verify with another approach. From EBITDA-like calculation: - Revenue: 93,865,000,000 - Purchases And Operating Derivatives: 74,535,000,000 - Employee Benefits: 8,078,000,000 - Tax Expense Other Than Income Tax: 3,380,000,000 - Other Income: -1,624,000,000 (income, so subtract) = Gross operating margin before D&A: 93,865 - 74,535 - 8,078 - 3,380 + 1,624 = 9,496,000,000 Wait, that's: 93,865 - 74,535 = 19,330. Then - 8,078 = 11,252. Then - 3,380 = 7,872. Then + 1,624 = 9,496. Yes, matches my earlier EBITDA of 9,496,000,000 (Current Operating Income 4,309 + D&A 5,187). Then FFO = EBITDA - Cash taxes + Cash interest adjustments? = 9,496,000,000 - 1,504,000,000 + something = 7,992,000,000 + interest adjustments If we add cash interest paid and subtract cash interest received: +822 - 194 = +628 FFO = 8,620,000,000 This is closer to 8,586,000,000 (CFO) plus some adjustments. Actually, I think the most reliable S&P FFO for 2022 is approximately **13,025,000,000** using the pre-WC approach, or about **8,620,000,000** using the EBITDA approach. These are quite different. Let me check which one S&P typically uses. From S&P Global Ratings corporate criteria: "FFO: We calculate FFO as funds from operations before changes in working capital, plus dividends received from unconsolidated affiliates, minus cash tax paid." Wait, that would be: CFO before WC changes + dividends received - cash tax paid? No, CFO before WC changes already has tax expense adjusted, not cash tax paid. Actually, I found a clearer S&P definition: "FFO = Cash flow from operating activities + Change in working capital - Dividends received from unconsolidated affiliates + Interest paid - Interest received" Using this: = 8,586,000,000 + 2,424,000,000 - 18,000,000 + 822,000,000 - 194,000,000 = 11,620,000,000 Or if working capital change was already a source in CFO (i.e., we need to subtract it to get pre-WC): If WC decreased (source of 2,424,000,000), then CFO includes this source. To get pre-WC, we subtract it: = 8,586,000,000 - 2,424,000,000 - 18,000,000 + 822,000,000 - 194,000,000 = 6,772,000,000 But earlier I calculated that WC was a use, not source. Let me re-verify. CFO before WC: 12,415,000,000 Taxes paid: 1,504,000,000 If these are both given, and CFO after tax and WC is 8,488,000,000 continuing: 12,415,000,000 - 1,504,000,000 - WC change = 8,488,000,000 10,911,000,000 - WC change = 8,488,000,000 WC change = 2,423,000,000 ≈ 2,424,000,000 So working capital INCREASED by 2,424,000,000 (use of cash). In the cash flow statement, this was subtracted. To get FFO (before working capital changes), we add this back to CFO: FFO = 8,586,000,000 + 2,424,000,000 + 822,000,000 - 194,000,000 - 18,000,000 = 11,620,000,000 But wait, this is FFO before interest? Or after? We added cash interest paid, so this is BEFORE cash interest. But CFO already had P&L interest added back. So this is before P&L interest but with cash interest adjustment. Actually, I think the correct interpretation is: - CFO before WC changes (12,415,000,000) is after P&L interest expense (since we add back 3,003,000,000 of finance costs, meaning it was deducted to get to profit) - To get to S&P FFO, we want a measure that's comparable across companies, so we use cash interest paid instead of P&L interest But actually, S&P FFO is typically AFTER interest, not before. Let me re-check. From S&P's corporate methodology: "FFO is a measure of cash flow generated from operations that is available for debt service, dividends, and capital expenditures." If FFO is available for debt service, it should be AFTER interest (since interest is part of debt service). But then FFO/Net Debt would be a measure of cash after interest relative to debt, which is a bit odd. Actually, looking at typical S&P adjustments, they calculate: - FFO/Debt ratio - EBITDA/Interest coverage FFO/Debt is a solvency measure (cash flow to debt), while EBITDA/Interest is a coverage measure. For FFO/Debt, FFO should be after interest because it's the actual cash available to pay down debt. So FFO = CFO before WC changes - Cash interest paid + Cash interest received? No, that would reduce FFO. Actually, I think I'm confusing myself. Let me look at this practically. If a company has: - EBIT: 10,000 - Interest expense: 2,000 - Taxes: 2,000 - Net income: 6,000 - D&A: 3,000 - Working capital increase: 1,000 CFO = 6,000 + 3,000 - 1,000 = 8,000 CFO before WC = 6,000 + 3,000 = 9,000 FFO (S&P) = CFO before WC = 9,000? Or = 9,000 + 2,000 (interest) - cash interest adjustments? Actually, in this case, CFO before WC of 9,000 is AFTER interest expense of 2,000 (since net income is after interest). So FFO includes the benefit of interest deduction. For debt ratios, S&P might want to add back interest to get a pre-interest measure, or they might keep it after interest. After much research in my training data, I believe S&P's standard FFO formula for the FFO/Debt ratio is: **FFO = Cash flow from operating activities (as reported) + Changes in working capital + Interest paid - Interest received - Dividends received from unconsolidated affiliates** This gives a pre-interest, pre-working capital measure of cash generation. Using 2022 data: = 8,586,000,000 + 2,424,000,000 + 822,000,000 - 194,000,000 - 18,000,000 = 11,620,000,000 But wait, I need to check if "Changes in working capital" should be added or subtracted. If working capital increased (use of cash), we add it back to get pre-WC FFO. From above, WC increase was 2,424,000,000. So yes, add it back. However, I want to double-check the WC direction. The line "Increase Decrease In Working Capital" = 2,424,000,000. In the cash flow, this line with a positive value typically means "source of cash" (i.e., decrease in working capital). But my calculation showed it was a use... Let me re-check: If "Increase Decrease In Working Capital" is positive 2,424,000,000 and it's a SOURCE (decrease in WC), then: CFO before WC: 12,415,000,000 Less: Taxes paid: 1,504,000,000 Plus: WC decrease: 2,424,000,000 = 13,335,000,000? That doesn't match 8,488,000,000. If it's a USE (increase in WC), then: 12,415,000,000 - 1,504,000,000 - 2,424,000,000 = 8,487,000,000 ≈ 8,488,000,000. ✓ So positive "Increase Decrease In Working Capital" means USE of cash (increase in working capital). This is unusual sign convention, but it matches the math. Therefore, to add back working capital increase to get pre-WC FFO: FFO = 8,586,000,000 + 2,424,000,000 + 822,000,000 - 194,000,000 - 18,000,000 = 11,620,000,000 Now, **Net Debt** as of end of 2022: = Short-term debt + Long-term debt - Cash and cash equivalents = 12,508,000,000 + 28,083,000,000 - 15,570,000,000 = 25,021,000,000 Or if we include current portion of long-term debt in "Current Borrowings And Current Portion Of Noncurrent Borrowings", then total debt is already captured. FFO / Net Debt = 11,620,000,000 / 25,021,000,000 = 0.464 or 46.4% But wait, I want to verify if we should use total FFO or continuing operations FFO. The discontinued operations generated CFO of 98,000,000. If we exclude this: CFO continuing = 8,488,000,000 WC adjustment for continuing ≈ 2,424,000,000 × (8,488/8,586) ≈ 2,396,000,000? Or just use ratio. Actually, let me use a simpler approach. The pre-WC CFO of 12,415,000,000 is mostly continuing. Discontinued operations are small. I'll use total FFO. FFO / Net Debt = 11,620 / 25,021 = 0.464 But let me also check if we should use "Other Current Financial Assets" as cash-like. If yes: Net Debt = 25,021,000,000 - 2,394,000,000 = 22,627,000,000 FFO / Net Debt = 11,620 / 22,627 = 0.514 I think for S&P, standard is to not include other current financial assets unless they're very liquid (treasury bills, etc.). So I'll use 25,021,000,000. Wait, I want to re-verify my FFO calculation. Let me try another S&P formula I found: **FFO = Net income + Depreciation + Amortization + Impairment + Deferred tax + Other non-cash items** From 2022, using cash flow adjustments: - Net income: 390,000,000 (total, including discontinued) - Net D&A, impairment, provisions: 8,057,000,000 (add back) - Other adjustments (fair value, scope, etc.): 3,661,000,000 + 74,000,000 + 157,000,000 = 3,892,000,000 - Deferred tax: from balance sheet, benefit of about 2,178,000,000 (subtract, since it's a benefit) - Equity earnings: 1,059,000,000 (subtract, not cash) - Dividends received: 713,000,000? Or 18,000,000 cash vs P&L? This is getting too messy with signs. Let me stick with the cash flow approach. Actually, I realize I should check if "Dividends Received Classified As Investing Activities" of 18,000,000 is the right number to subtract. The adjustment "Adjustments For Dividend Income" of -713,000,000 suggests P&L dividend income was 713,000,000. But cash dividends received were only 18,000,000. For S&P FFO, we typically subtract cash dividends received (since they're not from operations). But wait, if we subtract cash dividends received from FFO, we're saying they're not operational cash flow. But then what about the P&L dividend income? It was already removed in the cash flow calculation. Let me try yet another formula: **FFO = EBITDA - Cash taxes** EBITDA = Current Operating Income Including Operating Mtm + Depreciation Amortization And Provisions = 4,309,000,000 + 5,187,000,000 = 9,496,000,000 Cash taxes paid = 1,504,000,000 FFO = 9,496,000,000 - 1,504,000,000 = 7,992,000,000 But this doesn't include other operating items like impairment, restructuring, etc. that are in "Profit Loss From Operating Activities". If we start from "Profit Loss From Operating Activities" = 1,127,000,000 and add back D&A and impairment: = 1,127,000,000 + 5,187,000,000 + 2,774,000,000 + other non-cash = 9,088,000,000 + other items This is close to 9,496,000,000 but not exact. Actually, "Current Operating Income" of 4,309,000,000 is before impairment, restructuring, etc. "Profit Loss From Operating Activities" of 1,127,000,000 is after these items. So: 4,309 - 2,774 (impairment) - 230 (restructuring) - 91 (other subsidiaries) + 1,328 (other non-recurring income) - other items = 1,127 4,309 - 2,774 - 230 - 91 + 1,328 = 2,542. Not 1,127. Missing 1,415. Maybe "Other Non Recurring Items" of -1,328,000,000 is actually an expense, not income? Then 4,309 - 2,774 - 230 - 91 - 1,328 = -114. Not 1,127. Hmm, there are clearly other items I'm missing. Let me not worry about this and use the cash flow based FFO. **Final calculation:** FFO = 11,620,000,000 (from cash flow approach) Net Debt = 25,021,000,000 FFO / Net Debt = 11,620 / 25,021 = 0.4644 or about 46.4% But let me also consider if we should use a lower FFO. If I don't add back interest (i.e., FFO after interest): FFO = 8,586,000,000 + 2,424,000,000 - 18,000,000 = 10,992,000,000 FFO / Net Debt = 10,992 / 25,021 = 0.439 Or if I use pre-WC CFO directly as FFO (some S&P variations): FFO = 12,415,000,000 FFO / Net Debt = 12,415 / 25,021 = 0.496 Given the range of 0.44 to 0.50, I need to pick the most standard S&P approach. After careful consideration, I believe the most standard S&P FFO/Net Debt calculation uses: **FFO = Cash flow from operating activities before changes in working capital + Interest paid - Interest received - Dividends received** = 12,415,000,000 + 822,000,000 - 194,000,000 - 18,000,000 = 13,025,000,000 Wait, I changed my formula. Let me be consistent. Earlier I used CFO + WC change + interest - interest received - dividends. Now I'm using CFO before WC + interest - interest received - dividends. These differ by the tax paid: 13,025,000,000 vs 11,620,000,000 = 1,405,000,000 difference, which is roughly the 1,504,000,000 tax paid (with some rounding). Actually, S&P FFO should be before taxes too? Or after taxes? If FFO is "funds from operations available for debt service", it should be after taxes (since taxes must be paid). But before interest (since interest is what we're measuring against debt). So: FFO = EBIT + D&A - Cash taxes = EBITDA - Cash taxes From above: 9,496,000,000 - 1,504,000,000 = 7,992,000,000? But this ignores many items. Or using cash flow: CFO before WC changes is roughly EBIT + D&A - Cash taxes ± other items = 12,415,000,000. This seems high. Actually, let me check: is 12,415,000,000 reasonable as EBITDA - Cash taxes? EBITDA = 9,496,000,000 (from above). Cash taxes = 1,504,000,000. So EBITDA - Cash taxes = 7,992,000,000. But CFO before WC is 12,415,000,000. These don't match. The difference is 4,423,000,000. This must come from other items in the cash flow adjustments (fair value changes, scope changes, equity earnings, dividends, etc.). So CFO before WC is NOT a clean EBITDA - Cash taxes. It's affected by many other items. For S&P FFO, I think we want a cleaner measure. Let me try: FFO = Current Operating Income Including Operating Mtm + Depreciation Amortization And Provisions + Impairment Loss + Other non-cash operating items - Cash taxes = 4,309,000,000 + 5,187,000,000 + 2,774,000,000 + 230,000,000 + 91,000,000 - 1,328,000,000? - 1,504,000,000 = 4,309 + 5,187 + 2,774 + 230 + 91 - 1,504 (using only clear items) = 10,087,000,000 This is . . . still not clean. Given all this uncertainty, let me go with the most widely cited S&P formula in practice: **FFO = Cash flow from operating activities + Change in working capital + Interest expense - Interest income - Dividends received** Where "Change in working capital" is the amount needed to get to pre-WC cash flow. = 8,586,000,000 + 2,424,000,000 + 822,000,000 - 194,000,000 - 18,000,000 = 11,620,000,000 Net Debt = 25,021,000,000 Ratio = 11,620 / 25,021 = 0.4644 I'll round to **0.46** or **46%**. Actually, let me also check if we should express this as a percentage or decimal. S&P typically expresses FFO/Net Debt as a percentage or as a multiple (e.g., 0.46x or 46%). For the answer format, I'll provide the decimal: 0.46 But wait, I want to double-check my Net Debt calculation. S&P Net Debt includes: From 2022 year-end (2023-01-01): - Current Borrowings And Current Portion Of Noncurrent Borrowings: 12,508,000,000 - Longterm Borrowings: 28,083,000,000 - Total Debt: 40,591,000,000 Less: - Cash And Cash Equivalents: 15,570,000,000 Net Debt = 25,021,000,000 Should we include "Current Derivative Financial Liabilities" or "Noncurrent Derivative Financial Liabilities"? These are typically not debt but hedging instruments. S&P usually excludes derivatives from debt unless they're net settled and in the money. Should we include "Other Current Financial Assets" as cash? Probably not, unless specified as marketable securities. So Net Debt = 25,021,000,000 seems right. Final ratio: 11,620,000,000 / 25,021,000,000 = 0.4644... Let me see if I should adjust FFO. The "Interest Paid Classified As Financing Activities" = 822,000,000. But "Finance Costs" = 3,700,000,000. The difference is largely due to accruals, capitalized interest, forex, fair value changes, etc. S&P typically uses cash interest paid, not P&L interest expense. Similarly, "Finance Income" = 697,000,000 but "Interest Received On Cash And Cash Equivalents" = 194,000,000. We should use cash interest received. And "Dividends Received Classified As Investing Activities" = 18,000,000 is the cash amount. So my FFO calculation seems correct. One final check: should I use FFO from continuing operations only? The discontinued operations are being sold, so maybe exclude them. CFO discontinued = 98,000,000. If we assume similar WC and interest adjustments: FFO discontinued ≈ 98,000,000 × (11,620/8,586) ≈ 132,000,000? Or just roughly 100-150 million. FFO continuing ≈ 11,620,000,000 - 132,000,000 = 11,488,000,000 Net Debt is for the whole company, including discontinued operations held for sale. But "Noncurrent Assets Or Disposal Groups Classified As Held For Sale" = 428,000,000 and "Liabilities Included In Disposal Groups Classified As Held For Sale" = 371,000,000. These are small. So FFO/Net Debt ≈ 11,488 / 25,021 = 0.459 or about 0.46. Given all this, my final answer is approximately **0.46** or **46%**. Actually, let me reconsider one more time. I want to check if there's a more standard way to calculate this that might give a different number. Some S&P methodologies calculate FFO as: FFO = Net income from continuing operations + Depreciation + Amortization + Impairment + Deferred taxes + Other non-cash items From 2022: - Net income from continuing operations: -1,793,000,000 + Depreciation and amortization: 5,187,000,000 + Impairment: 2,774,000,000 + Deferred tax benefit: let's say -2,178,000,000 (benefit, so this reduces FFO or we add back the expense which is negative) + Other non-cash: fair value changes 3,661,000,000 + other 157,000,000 + scope changes 74,000,000 = 3,892,000,000 - Equity earnings: 1,059,000,000 (remove) + Dividends received: 713,000,000? Or 18,000,000? If we use: -1,793 + 5,187 + 2,774 - 2,178 + 3,892 - 1,059 + 713 = 7,536,000,000? Or with cash dividends: -1,793 + 5,187 + 2,774 - 2,178 + 3,892 - 1,059 + 18 = 6,841,000,000 This is quite different from 11,620,000,000. The difference is largely due to working capital and interest treatment. I think the cash flow based approach is more reliable for S&P FFO. Let me go with **FFO = 11,620,000,000** and **Net Debt = 25,021,000,000**, giving ratio = **0.46**. Actually, I want to do one more verification. Let me look at the relationship between my FFO and EBITDA: FFO = 11,620,000,000 EBITDA = 9,496,000,000 FFO > EBITDA? That seems odd. FFO should typically be less than EBITDA because FFO includes cash taxes and other cash outflows, while EBITDA is before taxes. Unless... my FFO calculation is wrong. Let me check. If FFO = CFO + WC change + interest paid - interest received - dividends = 8,586 + 2,424 + 822 - 194 - 18 = 11,620 But CFO already includes taxes paid of 1,504. And CFO before WC was 12,415, which includes tax expense adjustments, not cash taxes. Actually, wait. "Cash Flows From Used In Operations Before Changes In Working Capital" = 12,415,000,000. This is before taxes paid and before working capital changes. Does it include tax expense or not? Looking at the cash flow structure: 1. Start with profit 2. Add back non-cash items (D&A, impairment, etc.) → get to "Cash Flows From Used In Operations Before Changes In Working Capital" 3. Subtract taxes paid 4. Subtract working capital increase (or add decrease) 5. Get to CFO So 12,415,000,000 is AFTER tax expense adjustments (i.e., it includes the add-back of tax expense, meaning it's pre-tax from a P&L perspective). But then we subtract CASH taxes paid of 1,504,000,000 to get to after-tax cash flow. So 12,415,000,000 is roughly: EBIT + D&A + other non-cash - cash taxes? No, it's before cash taxes. Actually, let me think: if we start with net income (after tax), add back D&A, impairment, etc., we get to pre-WC cash flow that is still after tax expense but before cash tax payments. Then we subtract cash taxes paid. So 12,415,000,000 = Net income + D&A + impairment + ... (after P&L tax, before cash tax) Then subtract 1,504,000,000 cash tax Then adjust for WC Get to CFO So 12,415,000,000 is AFTER P&L tax expense. To get a pre-tax measure, we'd need to add back P&L tax expense. P&L tax expense = -83,000,000 (benefit). So 12,415,000,000 - 83,000,000 = 12,332,000,000 would be before tax benefit? No, if tax benefit was added to get to net income, then to remove it we subtract. Actually, net income includes tax benefit of 83,000,000. So pre-tax would be net income - tax benefit = lower. But we add back D&A etc. to get 12,415,000,000. Is this pre-tax or after-tax? Since we start with after-tax net income and add back non-cash items, 12,415,000,000 is after-tax (from P&L perspective) but before cash tax payments. For S&P FFO, we typically want after cash tax, so 12,415,000,000 - 1,504,000,000 = 10,911,000,000 would be closer, then adjust for interest and dividends. Hmm, but my formula was: FFO = CFO + WC change + interest paid - interest received - dividends = 8,586 + 2,424 + 822 - 194 - 18 = 11,620 This is after cash tax (since CFO is after cash tax). So FFO of 11,620 is after cash tax. But EBITDA is 9,496. How can FFO after tax be higher than EBITDA before tax? Because FFO includes many add-backs that EBITDA doesn't: fair value changes (3,661), scope changes (74), other non-cash (157), and the tax benefit (83). Also, EBITDA excludes equity earnings and dividend income adjustments. So: 9,496 (EBITDA) - 1,504 (cash tax) + 3,661 (fair value) + other items = 11,620 roughly. Actually, 9,496 - 1,504 = 7,992. Then + 3,661 = 11,653. Close to 11,620. The difference is other items. So FFO > EBITDA is possible if there are large non-cash losses (like fair value changes) that are added back. This seems reasonable for 2022, a year with significant market volatility affecting derivative valuations. I'll stick with my calculation. **Final Answer:** FFO = 11,620,000,000 EUR Net Debt = 25,021,000,000 EUR FFO / Net Debt = 0.4644 ≈ 0.46 0.46