I need to estimate the FFO / Net debt ratio for 2022 based on S&P methodology. First, let me understand S&P's methodology for FFO (Funds From Operations): - FFO = Net income from continuing operations + Depreciation & Amortization + Deferred income taxes + Other non-cash items For Net Debt: - Net Debt = Short-term borrowings + Current portion of long-term borrowings + Long-term borrowings - Cash and cash equivalents Let me identify the relevant figures from the annual report for 2022 (period 2022-01-01 to 2023-01-01, with balance sheet items at 2023-01-01): **FFO Components:** 1. **Profit Loss From Continuing Operations** (2022): 878,000,000 EUR 2. **Depreciation Amortisation And Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss** (2022): 725,700,000 EUR 3. **Deferred Tax Assets** change: This is tricky. Let me look at deferred taxes. Actually, S&P typically adds back the increase in deferred tax liabilities or subtracts the increase in deferred tax assets. Looking at the cash flow statement, I see "Adjustments For Income Tax Expenses" of 356,700,000 EUR, but this is for cash flow reconciliation. Actually, let me use a more standard S&P approach. FFO is typically: - Net income + D&A + Deferred income taxes + Other non-cash items From the cash flow statement, I can see the operating cash flow reconciliation which helps: - "Adjustments For Depreciation And Amortisation Expense And Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss": 736,100,000 EUR Wait, let me re-read. The income statement shows "Depreciation Amortisation And Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss" of 725,700,000 EUR, while the cash flow adjustment shows 736,100,000 EUR. The difference might be due to impairment losses. For S&P FFO, the standard formula is: FFO = Net income + D&A + Deferred income taxes + Other non-cash items Let me use the cash flow based approach which is often more reliable: - "Cash Flows From Used In Operations Before Changes In Working Capital" = 2,072,700,000 EUR This is essentially EBITDA - taxes paid + some adjustments, or more precisely it's the operating cash flow before working capital changes. Actually, S&P defines FFO more precisely as: FFO = Funds from operations = Net income before extraordinary items + Depreciation & Amortization + Deferred income taxes + Other non-cash items Let me calculate using the income statement approach: - Net income from continuing operations: 878,000,000 EUR - Add: Depreciation & Amortization: 725,700,000 EUR - Add: Deferred taxes (change in deferred tax assets/liabilities) Looking at balance sheet changes in Deferred Tax Assets: - 2023-01-01: 121,000,000 EUR - 2022-01-01: 146,600,000 EUR - Decrease: 25,600,000 EUR (this means deferred tax benefit was recognized, so I need to add back the deferred tax expense or subtract the benefit) Actually, the decrease in deferred tax assets means they were utilized, which would have reduced tax expense, so this is already in net income. The change in deferred taxes for FFO purposes typically refers to the deferred tax expense that was added back to get to operating cash flow. Looking at the cash flow adjustments: "Adjustments For Income Tax Expenses" = 356,700,000 EUR. This seems to be the total tax expense adjustment. Let me try a different approach using the standard S&P formula more carefully: From the cash flow statement: - "Cash Flows From Used In Operations Before Changes In Working Capital" = 2,072,700,000 EUR This includes: - Profit before tax adjustments - Add back D&A, interest, etc. - Less: taxes paid (but actually this is before taxes paid) Wait, let me look more carefully. The cash flow statement shows: - "Cash Flows From Used In Operations Before Changes In Working Capital" = 2,072,700,000 EUR - Then adjustments for working capital, interest received, interest paid, and income taxes paid So "Cash Flows From Used In Operations Before Changes In Working Capital" is essentially: Net income + D&A + other non-cash items + interest expense (net) - this is pre-tax, pre-working capital, pre-interest received/paid Actually, looking at the structure: - It starts from profit, adds back D&A, provisions, finance costs, income tax expenses, etc. Let me verify: Profit Loss From Operating Activities: 1,333,500,000 + Adjustments For Depreciation And Amortisation: 736,100,000 + Accruals To Provisions: 51,700,000 + Adjustments For Gain Loss On Disposals: -6,900,000 + Adjustments For Finance Income Cost: 101,500,000 + Adjustments For Income Tax Expenses: 356,700,000 + Cash Flows From Other Non Cash Movements: -24,100,000 Sum: 1,333,500,000 + 736,100,000 + 51,700,000 - 6,900,000 + 101,500,000 + 356,700,000 - 24,100,000 = 2,548,500,000 Hmm, that doesn't match 2,072,700,000. Let me re-check. Actually "Profit Loss From Operating Activities" might not be the starting point. Looking more carefully at typical cash flow statement structure, the starting point is usually "Profit Loss" (net income) not operating profit. Profit Loss: 857,700,000 + Profit Loss From Discontinued Operations: 20,300,000 (to get back to continuing) = 878,000,000 Actually let me try: Profit Loss From Continuing Operations: 878,000,000 + Depreciation & Amortization: 725,700,000 (from income statement) or 736,100,000 (from cash flow) + Other non-cash items For S&P FFO, a common practical calculation is: FFO = Net income + D&A + Deferred income taxes + Other non-cash items - Gain on sale of assets Or more commonly in practice for utilities: FFO = Cash flow from operations before working capital changes - Interest paid + Interest received (or just use the pre-working capital figure with adjustments) Let me use the most standard S&P approach: FFO = Net income from continuing operations + D&A + Deferred taxes + Other non-cash items Where: - Net income from continuing operations: 878,000,000 - D&A: 725,700,000 (from income statement) - Deferred taxes: I need to estimate. The change in deferred tax assets is 146,600,000 - 121,000,000 = 25,600,000 decrease. But I need the deferred tax expense, not the balance sheet change. Actually, from the income tax reconciliation in cash flows: "Adjustments For Income Tax Expenses" = 356,700,000. This is the total income tax expense added back. "Income Taxes Paid Refund Classified As Operating Activities" = 380,100,000. So the actual tax expense was 356,700,000, but taxes paid were 380,100,000, meaning there was some overpayment or timing difference. For FFO, S&P typically uses: FFO = Net income + D&A + Deferred income taxes Where deferred income taxes = income tax expense - cash taxes paid = 356,700,000 - 380,100,000 = -23,400,000 (but this seems odd, let me check) Actually, the cash flow adjustment "Adjustments For Income Tax Expenses" is added back to get to pre-tax cash flow, then "Income Taxes Paid" is subtracted. So the tax expense was 356,700,000, and taxes paid were 380,100,000. Deferred tax expense = Tax expense - Cash taxes paid = 356,700,000 - 380,100,000 = -23,400,000. This is a deferred tax benefit. But wait, the tax expense in the income statement is "Income Tax Expense Continuing Operations" = 355,400,000. Plus tax on discontinued operations? The total tax expense might be different. Let me use a simpler, more common approach for S&P FFO: FFO = Profit Loss From Continuing Operations + Depreciation Amortisation And Impairment Loss + Other non-cash items Or even more practically for rating purposes: FFO = Cash Flows From Used In Operations Before Changes In Working Capital - Interest Paid Classified As Operating Activities + Interest Received Classified As Operating Activities Wait, actually looking at standard S&P methodology more carefully: S&P FFO = Net income + Depreciation & Amortization + Deferred income taxes + Other non-cash items But for practical purposes from cash flows, FFO is often approximated as: FFO = Cash flow from operations before working capital changes + Interest expense - Interest income (with some variations) Actually, let me look at this differently. The "Cash Flows From Used In Operations Before Changes In Working Capital" of 2,072,700,000 EUR already includes add-backs for interest and taxes. For S&P specifically, FFO is defined as: FFO = Funds from operations = Net income from continuing operations + D&A + Deferred income taxes + Other non-cash items Let me calculate more carefully using the income statement approach: Net income from continuing operations: 878,000,000 + D&A (from income statement): 725,700,000 + Impairment losses (if any in the 725,700,000): need to check Looking at the cash flow adjustment: "Adjustments For Depreciation And Amortisation Expense And Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss" = 736,100,000 The difference between 736,100,000 and 725,700,000 is 10,400,000, which might be impairment losses or other items. For S&P FFO, I should use the cash flow based D&A figure which includes impairments: 736,100,000 Now for deferred taxes: I need to be careful. The standard approach is to add back the deferred tax expense (the non-cash portion of tax expense). From the income statement: Income Tax Expense Continuing Operations = 355,400,000 From cash flow: Adjustments For Income Tax Expenses = 356,700,000 (this is added back, meaning it was subtracted to get net income) From cash flow: Income Taxes Paid = 380,100,000 If taxes paid (380,100,000) > tax expense (355,400,000 or 356,700,000), then there was a use of deferred tax assets or creation of deferred tax assets, not a deferred tax expense. Actually, for FFO purposes, S&P adds back the deferred tax expense. If there's no deferred tax expense (i.e., cash taxes exceed book taxes), then there's nothing to add back, or we might subtract the excess. But in practice, for many European companies, the deferred tax add-back is often small or ignored in quick estimates. Let me use a practical approach. S&P Global Ratings typically calculates FFO as: FFO = Net income from continuing operations + Depreciation & amortization + Deferred income taxes + Other non-cash items For a simplified but reasonable estimate: FFO ≈ Net income from continuing operations + D&A + Interest expense (if not already in operating cash flow) Actually, looking at S&P's published methodology more carefully for corporates: FFO = Net income + D&A + Deferred income taxes + Other non-cash items Where "Other non-cash items" typically includes things like stock-based compensation, gain/loss on asset sales, etc. From the cash flow reconciliation, the "Cash Flows From Other Non Cash Movements" = -24,100,000 But this is already factored into the "Cash Flows From Used In Operations Before Changes In Working Capital". Let me try a different, more direct approach. S&P sometimes uses: FFO = Cash flow from operations before working capital changes - Interest paid + Interest received (to get to a pre-interest, pre-working capital figure, then adjust) Actually, I think the cleanest approach for this data is: FFO = Profit Loss From Continuing Operations + Depreciation Amortisation And Impairment Loss (from income statement) + Adjustments for other non-cash items Or use the cash flow based figure: FFO = Cash Flows From Used In Operations Before Changes In Working Capital - Interest Paid + Interest Received + Income Taxes Paid - Tax expense adjustment... this gets messy. Let me use the most common practical formula for FFO: FFO = Net income + D&A + Deferred taxes With: - Net income from continuing operations: 878,000,000 - D&A: 725,700,000 (or 736,100,000 including impairments) - Deferred taxes: I'll estimate from the change in deferred tax assets and other items Actually, looking at the comprehensive income and equity sections, I see "Gains Losses On Financial Assets Measured At Fair Value Through Other Comprehensive Income Before Tax" = -4,400,000. These are OCI items, not in net income. For a practical estimate, let me use: FFO = 878,000,000 + 736,100,000 = 1,614,100,000 (basic version without deferred taxes) But I need to add back deferred taxes or other items. Let me check if there's a better way. Looking at the cash flow statement again: "Cash Flows From Used In Operations Before Changes In Working Capital" = 2,072,700,000 This figure includes: - Net income (all) - Add back D&A, impairments - Add back finance costs (net) - Add back income tax expense - Other non-cash items To get from this to FFO, I need to: - Subtract the finance cost add-back (101,500,000) because FFO is pre-interest but we want to add back interest paid, not interest expense - Actually, this is getting complicated. Let me use a more standard approach. In S&P methodology for utilities and infrastructure: FFO = EBIT + D&A - Cash taxes paid Or: FFO = EBITDA - Cash taxes - Interest paid (for pre-interest FFO, use EBITDA - Cash taxes) Actually, S&P defines FFO differently. Let me look for the most standard definition: S&P FFO = Net income from continuing operations + Depreciation & amortization + Deferred income taxes + Other non-cash items I'll calculate: - Net income from continuing operations: 878,000,000 - D&A (from cash flow, more comprehensive): 736,100,000 - Deferred income taxes: I'll use the difference between tax expense and cash taxes, but with sign adjustment. Actually, looking at "Adjustments For Income Tax Expenses" = 356,700,000, this is the tax expense added back. Taxes paid were 380,100,000. The difference of -23,400,000 represents a deferred tax benefit or overpayment. For conservative FFO, I might not add anything here, or I could add the deferred tax expense if there was one. Actually, for simplicity and because deferred taxes are often small relative to D&A, let me use: FFO ≈ 878,000,000 + 736,100,000 = 1,614,100,000 But wait - I need to check if "Profit Loss From Continuing Operations" is after tax. Yes, it is. And the cash flow figure "Cash Flows From Used In Operations Before Changes In Working Capital" = 2,072,700,000 is before interest and taxes are adjusted in the cash flow. Let me verify by building up: Profit Loss: 857,700,000 + Discontinued operations loss: 20,300,000 = Continuing operations: 878,000,000 Then add back: + D&A and impairments: 736,100,000 + Other items to get to 2,072,700,000... Actually, let me check: 2,072,700,000 - 878,000,000 = 1,194,700,000 of adjustments. Sum of explicit adjustments: 736,100,000 + 51,700,000 + (-6,900,000) + 101,500,000 + 356,700,000 + (-24,100,000) = 1,215,000,000 Close but not exact. The difference might be due to discontinued operations or other items. For practical purposes, I'll use FFO = Cash Flows From Used In Operations Before Changes In Working Capital - Interest Paid + Interest Received, or some variation. Actually, standard S&P FFO from cash flows is often: FFO = Cash generated from operations before working capital changes - Interest paid + Interest received Wait, I need to check if "Cash Flows From Used In Operations Before Changes In Working Capital" is already after interest or before interest. Looking at the structure: It adds back "Adjustments For Finance Income Cost" = 101,500,000. This is the net finance cost. So the 2,072,700,000 is after adding back finance costs (i.e., it's before finance costs in the cash flow, or after adding them back). Then later in the cash flow: - Interest Received Classified As Operating Activities: 64,200,000 - Interest Paid Classified As Operating Activities: 154,800,000 So the cash flow from operations before working capital is 2,072,700,000, then we adjust for working capital, then interest received/paid, then taxes paid. For FFO purposes, S&P typically wants a figure that's: - After tax expense but before working capital changes - Before interest paid (since interest is a financing cost in FFO context, but actually for FFO/Net Debt, we want pre-interest FFO) Actually, I need to be more careful. S&P's FFO is typically: - After all operating costs including cash taxes - Before working capital changes - Before interest paid (since interest is financing, not operating) - But after tax expense (with deferred taxes added back) Hmm, let me look at this from the net debt perspective. Net debt is a balance sheet concept, and FFO should be comparable - it's a flow measure that should cover the debt service. Standard S&P FFO/Net Debt calculation: - FFO = Funds from operations (after-tax, pre-interest, pre-working capital) - Net Debt = Total debt - Cash For FFO, the most practical calculation from this data: FFO = Profit Loss From Continuing Operations + D&A + Deferred taxes + Other non-cash items I'll use: - Profit Loss From Continuing Operations: 878,000,000 - D&A (from cash flow adjustment, more complete): 736,100,000 - Other non-cash: I'll include some items Actually, let me try to match S&P's typical published approach for European utilities. They often use: FFO = EBIT + D&A - Cash taxes Or from the income statement: EBIT = Profit Loss From Operating Activities = 1,333,500,000 + D&A = 725,700,000 = EBITDA = 2,059,200,000 Then FFO = EBITDA - Cash taxes - Interest paid? No, that would be too low. Actually, for FFO: FFO = Net income + D&A + Deferred taxes + Other non-cash = 878,000,000 + 725,700,000 + deferred taxes + other Let me estimate deferred taxes from the balance sheet change and cash flow data. Looking at the cash flow: "Adjustments For Income Tax Expenses" = 356,700,000. This is added back to net income, meaning the net income was already reduced by this tax expense. Then "Income Taxes Paid Refund Classified As Operating Activities" = 380,100,000 is subtracted. So the cash flow shows: tax expense 356,700,000 added back, then 380,100,000 paid. The difference is -23,400,000, meaning more cash was paid than expense recorded. This could mean deferred tax assets were used or created. For FFO, we add back deferred tax expense (non-cash tax). If there's a deferred tax benefit instead (negative expense), we don't add it. Here, it seems there might be a small deferred tax benefit or just timing differences. I'll use a simplified FFO = 878,000,000 + 736,100,000 = 1,614,100,000, and maybe add some other items. But actually, looking at S&P's more precise definition, they also add back "other non-cash items" which might include things like stock-based compensation, gains/losses on sales, etc. From the cash flow: "Cash Flows From Other Non Cash Movements" = -24,100,000. This is negative, meaning it reduced cash flow relative to net income. Also "Adjustments For Gain Loss On Disposals Property Plant And Equipment" = -6,900,000 (gain, so subtracted from cash flow). For FFO, S&P typically adds back gains on sales (since they're non-operating) or excludes them. Actually, gains on sales are typically excluded from FFO as they're non-recurring. Let me use a cleaner approach. I'll calculate FFO as: FFO = Cash Flows From Used In Operations Before Changes In Working Capital - Interest Received Classified As Operating Activities + Interest Paid Classified As Operating Activities - Income Taxes Paid Refund Classified As Operating Activities + Adjustments For Income Tax Expenses (or just use tax expense) Actually this is getting the pre-tax, pre-interest figure. Let me think... If I start from "Cash Flows From Used In Operations Before Changes In Working Capital" = 2,072,700,000: - This includes: Net income + D&A + provisions + gain/loss adjustments + finance costs + tax expense + other non-cash To get to S&P FFO, I want: Net income + D&A + deferred taxes + other non-cash (but before working capital, and after cash taxes or with tax expense?) Actually, S&P FFO is typically calculated as: FFO = Net income + D&A + Deferred income taxes + Other non-cash items Where "Other non-cash items" includes stock compensation, unrealized gains/losses, etc. From our data, using continuing operations: Net income from continuing operations: 878,000,000 + D&A and impairments: 736,100,000 (from cash flow, or 725,700,000 from income statement) + Other non-cash items: need to estimate Looking at what else is in the cash flow reconciliation: + Accruals To Provisions: 51,700,000 (this is non-cash, should be added back for FFO? Actually, provisions are typically operating, but changes in provisions are working capital. For FFO before working capital, we might exclude this.) Actually, I think the key insight is that "Cash Flows From Used In Operations Before Changes In Working Capital" is very close to S&P's FFO, but we need to adjust for interest and taxes. Let me check: 2,072,700,000 includes add-back of: - Finance Income Cost: 101,500,000 (net) - Income Tax Expenses: 356,700,000 So 2,072,700,000 is essentially: Net income + D&A + provisions + gains/losses adjustments + finance costs + tax expense + other non-cash To get to FFO (which is after-tax, pre-interest): FFO = 2,072,700,000 - 101,500,000 (finance costs) - 356,700,000 (tax expense) + some adjustments for actual cash vs. book Hmm, that gives: 2,072,700,000 - 101,500,000 - 356,700,000 = 1,614,500,000 Which is very close to 878,000,000 + 736,100,000 = 1,614,100,000. Good! So FFO ≈ 1,614,100,000 (using this approach) But wait, I need to check if S&P FFO is after cash taxes or after tax expense. Typically, S&P FFO adds back deferred taxes, meaning: FFO = Net income + D&A + Deferred tax expense + Other non-cash If tax expense = 356,700,000 and cash taxes paid = 380,100,000, then there's a deferred tax benefit of -23,400,000 (i.e., tax expense < cash taxes). This means there was a use of deferred tax assets or creation of deferred tax assets. In this case, deferred tax "expense" is negative (a benefit), so we don't add it back. FFO = Net income + D&A + Other non-cash = 1,614,100,000 approximately. But let me also consider if we should use total net income or continuing operations. S&P typically uses continuing operations or total with adjustments. I'll use continuing operations: 878,000,000. Actually, looking more carefully, total net income is 857,700,000 which includes discontinued operations loss of 20,300,000. For FFO, S&P might use total net income or exclude discontinued operations. I'll use continuing operations for cleaner operational FFO. Let me also check if there are other non-cash items to add back. From the cash flow, "Cash Flows From Other Non Cash Movements" = -24,100,000. This is already included in the 2,072,700,000 and effectively reduced it. If this is truly non-cash and non-recurring, I might adjust for it. For a practical estimate, I'll use: FFO = 1,614,100,000 EUR (or roughly 1.61 billion EUR) Now for **Net Debt**: S&P Net Debt = Short-term borrowings + Current portion of long-term borrowings + Long-term borrowings - Cash and cash equivalents From 2023-01-01 (end of 2022): - Shortterm Borrowings: 444,100,000 - Current Portion Of Longterm Borrowings: 1,909,300,000 - Longterm Borrowings: 8,416,700,000 - Cash And Cash Equivalents: 2,155,100,000 Total Debt = 444,100,000 + 1,909,300,000 + 8,416,700,000 = 10,770,100,000 Net Debt = 10,770,100,000 - 2,155,100,000 = 8,615,000,000 Wait, I need to check if there are other debt-like items. S&P sometimes includes other financial liabilities. Noncurrent Financial Liabilities: 247,200,000 Current Financial Liabilities: 44,900,000 These might be derivative liabilities or other financial obligations. Let me check if they should be included in net debt. Typically, S&P net debt includes: - Short-term borrowings - Current portion of long-term debt - Long-term borrowings - Bank overdrafts - Less: Cash and cash equivalents - Sometimes less: Highly liquid investments Financial liabilities (derivatives, etc.) are sometimes included if they're debt-like. For conservative estimate, I'll include all borrowings and debt-like items: Total Debt = 444,100,000 + 1,909,300,000 + 8,416,700,000 + 247,200,000 + 44,900,000 = 11,062,200,000 But actually, "Noncurrent Financial Liabilities" and "Current Financial Liabilities" might include derivatives, which are typically not included in gross debt for net debt calculations unless they're debt-like. Let me use the standard definition: Gross Debt = Short-term borrowings + Current portion of long-term borrowings + Long-term borrowings = 10,770,100,000 Net Debt = 10,770,100,000 - 2,155,100,000 = 8,615,000,000 But wait, I should check if there are current financial assets that are highly liquid and should be deducted instead of or in addition to cash. Current Financial Assets: 255,300,000 - these might be short-term investments or derivatives. For S&P net debt, typically only cash and cash equivalents are deducted, sometimes plus liquid financial assets if they're readily convertible to cash. Let me use the standard approach: Net Debt = Total Debt - Cash and Cash Equivalents = 8,615,000,000 But I want to double-check the debt figures. Are there any other borrowings or debt-like items? Looking at the balance sheet: - Longterm Borrowings: 8,416,700,000 - Shortterm Borrowings: 444,100,000 - Current Portion Of Longterm Borrowings: 1,909,300,000 Total borrowings: 10,770,100,000 I don't see other obvious debt items like lease liabilities (though they might be embedded in other categories). Now, FFO / Net Debt ratio: FFO = 1,614,100,000 (approximate) Net Debt = 8,615,000,000 Ratio = 1,614,100,000 / 8,615,000,000 = 0.1874 or about 18.7% But let me refine FFO. Should I include the discontinued operations? The loss of 20,300,000 reduces net income. If I use total net income 857,700,000 instead of 878,000,000: FFO = 857,700,000 + 736,100,000 = 1,593,800,000 Ratio = 1,593,800,000 / 8,615,000,000 = 0.1850 or 18.5% Also, should I add back the loss from discontinued operations as a non-cash or non-recurring item? Actually, it's already in net income. For FFO, S&P typically excludes discontinued operations or includes them depending on the context. I'll exclude for cleaner operational measure. Let me also consider if I should use the balance sheet at 2022-01-01 or 2023-01-01. Since we're looking at 2022 performance, typically we use end-of-period debt or average debt. For ratio calculations, end-of-period is common. Actually, for 2022 results, I should check if there's a timing issue. The period is 2022-01-01 to 2023-01-01, so the balance sheet at 2023-01-01 represents end of 2022. Let me also verify my FFO calculation using a different approach. From S&P's typical utility methodology: FFO = EBITDA - Cash interest - Cash taxes Where: EBITDA = EBIT + D&A = 1,333,500,000 + 725,700,000 = 2,059,200,000 Cash interest = Interest Paid = 154,800,000 (from cash flow) Cash taxes = Income Taxes Paid = 380,100,000 FFO = 2,059,200,000 - 154,800,000 - 380,100,000 = 1,524,300,000 Hmm, this is different from my 1,614,100,000. The difference is 89,800,000. Why the difference? Because: - This approach starts from EBIT (1,333,500,000) which is before interest and taxes - Subtracts cash interest and cash taxes But EBIT includes other income/expenses that might not be operating, and the first approach started from net income which is after all revenues and costs. Actually, let me check: EBIT = 1,333,500,000. This is "Profit Loss From Operating Activities". Is this the same as EBIT? It should be close, but might exclude some items. From the income statement build-up: Revenue: 2,898,100,000 Less: Various operating expenses = Operating profit: 1,333,500,000 Then: - Finance Income Cost: 22,700,000 (net, but this is income, not cost - wait, let me check: "Finance Income Cost" = 22,700,000. The name suggests it could be net income or net cost. Looking at "Finance Costs" = 121,800,000 separately. Actually, "Finance Income Cost" of 22,700,000 is positive, meaning net finance income. And "Finance Costs" is 121,800,000. So finance income = 22,700,000 + 121,800,000? No, that doesn't make sense. Wait, "Finance Income Cost" = 22,700,000 might be the net figure (income minus costs), or it might be just income. Looking at "Finance Costs" = 121,800,000 separately, these are likely gross figures. Actually, looking at the cash flow: "Adjustments For Finance Income Cost" = 101,500,000. This is added back, meaning it was subtracted to get net income. If finance income was 22,700,000 and finance costs were 121,800,000, then net finance cost = 99,100,000. But the adjustment is 101,500,000. Close but not exact. Let me not get bogged down. The cash flow reconciliation shows "Adjustments For Finance Income Cost" = 101,500,000, which is the net finance cost added back. So from Net income 857,700,000, adding back finance costs of 101,500,000 gives pre-finance income of 959,200,000. Adding back tax expense of 356,700,000 gives 1,315,900,000. This should equal EBIT or thereabouts. But "Profit Loss From Operating Activities" is 1,333,500,000. Difference of 17,600,000 - might be due to discontinued operations or other items. Actually, 1,333,500,000 - 20,300,000 (discontinued loss) = 1,313,200,000, close to 1,315,900,000. Small difference of 2,700,000, likely rounding or other items. For practical purposes, let me use the EBITDA - Cash interest - Cash taxes approach as it's cleaner for S&P methodology: EBITDA = 2,059,200,000 (from EBIT 1,333,500,000 + D&A 725,700,000) Cash interest = 154,800,000 Cash taxes = 380,100,000 FFO = 2,059,200,000 - 154,800,000 - 380,100,000 = 1,524,300,000 But wait, is this correct? EBITDA is before working capital changes. FFO should also be before working capital changes. But EBITDA - cash interest - cash taxes gives a figure that's closer to free cash flow before working capital, not FFO. Actually, S&P FFO is typically: FFO = Net income from continuing operations + D&A + Deferred taxes + Other non-cash items This is NOT EBITDA - cash interest - cash taxes. That would be a different metric. Let me recalculate properly: Net income from continuing operations: 878,000,000 + D&A: 725,700,000 (from income statement) or 736,100,000 (from cash flow) + Deferred income taxes: ? + Other non-cash items: ? Using cash flow based D&A of 736,100,000: FFO = 878,000,000 + 736,100,000 = 1,614,100,000 (before deferred taxes and other items) For deferred taxes: The tax expense was 355,400,000 (from income statement) or 356,700,000 (from cash flow). Cash taxes paid were 380,100,000. The difference is -23,400,000 to -24,700,000, meaning tax expense < cash taxes. This implies a deferred tax benefit (reduction in deferred tax liabilities or increase in deferred tax assets, or use of deferred tax assets). If there's a deferred tax benefit, we don't add it back - it's already reducing tax expense below cash taxes. So no add-back needed. For other non-cash items: Looking at the cash flow, "Cash Flows From Other Non Cash Movements" = -24,100,000. This reduced the cash flow. If this is truly non-cash and already in net income, I might need to adjust. But it's negative, meaning it was a non-cash gain or similar. For conservative FFO, I might not adjust. Also, "Accruals To Provisions" = 51,700,000. This is typically an expense that doesn't involve cash flow. But in FFO, do we add it back? S&P FFO typically excludes changes in provisions that are related to operating working capital. Actually, provisions for employee benefits and impairments might be added back if they're non-cash. Hmm, this is getting complex. Let me use a practical approach that matches S&P's typical published calculations for European utilities. Actually, I recall that S&P sometimes uses a simplified FFO for quick calculations: FFO = Net income + D&A + Deferred taxes And for net debt, they use: Net debt = Short-term debt + Long-term debt - Cash Let me also check if I should include the "Current Financial Assets" of 255,300,000 as part of "cash-like" items. These might be short-term investments or derivatives. For S&P, cash and cash equivalents typically includes only highly liquid items. "Current Financial Assets" at 255,300,000 might include trading securities or derivatives, which may or may not be liquid. Let me use the conservative approach: Net Debt = Total Borrowings - Cash and Cash Equivalents = 8,615,000,000 Now, let me also consider if I should use average net debt or end-of-period. For annual ratios, end-of-period is common, but average can be more representative. I'll use end-of-period as it's standard for quick estimates. Final calculation: FFO = 1,614,100,000 (Net income continuing 878M + D&A 736.1M) Net Debt = 8,615,000,000 FFO / Net Debt = 1,614,100,000 / 8,615,000,000 = 0.1874 Or as a percentage: 18.74% But wait, I want to double-check if I should include more in FFO. Looking at S&P's detailed methodology, they sometimes add back: - Increase in deferred tax liabilities - Stock-based compensation - Gains/losses on asset sales - Other non-cash items From our data, I see "Gains Or Losses From Translation Of Financial Statements In Currencies Other Than The Euro" = 34,900,000. This is in OCI, not net income. "Gains Losses On Cash Flow Hedges Net Of Tax" = 223,300,000. Also in OCI. These don't affect net income, so no add-back needed. What about "Share Of Profit Loss Of Associates And Joint Ventures Accounted For Using Equity Method" = -1,000,000? This is already in net income (or excluded). Actually, looking at the income statement, this is below operating profit. For FFO, S&P typically excludes equity earnings or includes the cash dividends received. Actually, let me check: "Share Of Profit Loss Of Associates And Joint Ventures" = -1,000,000. This is a loss, so it reduced net income. But was it cash or non-cash? Equity method earnings are non-cash. So for FFO, we might add back the loss (or subtract if it was a gain). If we add back the 1,000,000 loss: FFO = 1,614,100,000 + 1,000,000 = 1,615,100,000. Small difference. Also, looking at "Adjustments For Decrease Increase In Investments In Associates" in cash flow = -2,400,000. This is in investing activities, not operating. For practical purposes, I'll stick with FFO ≈ 1,614,000,000 or about 1.61 billion EUR. Let me also verify my net debt calculation. Should I include "Noncurrent Financial Liabilities" of 247,200,000 and "Current Financial Liabilities" of 44,900,000? These are financial liabilities, likely including derivatives. S&P's standard net debt definition typically includes: - All interest-bearing debt - Bank overdrafts - Finance lease obligations - Less: Cash and cash equivalents - Less: Highly liquid short-term investments Derivatives (unless they're debt-like) are typically excluded from gross debt. "Noncurrent Financial Liabilities" of 247,200,000 and "Current Financial Liabilities" of 44,900,000 might be derivative liabilities. If so, they might not be included in gross debt. However, looking at the increase from 83,700,000 to 247,200,000 in noncurrent financial liabilities, this seems large and might include some debt-like instruments. For conservative estimate, I'll include them: Gross Debt = 10,770,100,000 + 247,200,000 + 44,900,000 = 11,062,200,000 Net Debt = 11,062,200,000 - 2,155,100,000 = 8,907,100,000 FFO / Net Debt = 1,614,100,000 / 8,907,100,000 = 0.1812 or 18.1% But if I exclude financial liabilities: Net Debt = 8,615,000,000 Ratio = 1,614,100,000 / 8,615,000,000 = 0.1874 or 18.7% Let me check S&P's typical treatment. For European utilities, they usually report gross debt and net debt excluding derivatives. So I'll use the standard debt figures. Actually, let me look more carefully at whether "Current Financial Assets" of 255,300,000 should be deducted. These might be liquid investments. If I deduct Current Financial Assets as well: Net Debt = 10,770,100,000 - 2,155,100,000 - 255,300,000 = 8,359,700,000 Ratio = 1,614,100,000 / 8,359,700,000 = 0.1931 or 19.3% But standard S&P practice is to only deduct cash and cash equivalents, not all current financial assets (which might include receivables, derivatives, etc.). Actually, looking at the balance sheet structure: - Current Financial Assets: 255,300,000 (this is separate from trade receivables, so likely short-term investments or derivatives) - Cash And Cash Equivalents: 2,155,100,000 For net debt, S&P typically deducts "cash and cash equivalents" and sometimes "liquid short-term investments". I'll be conservative and only deduct cash and cash equivalents. Let me also check if there are any hybrid bonds or equity instruments that should be treated as debt. I see "Equity Instruments Perpetual Hybrid Bonds" of 989,000,000. These are classified as equity, but for credit analysis, S&P might treat them as debt-like or equity-like depending on the instrument. Looking at the equity section: "Capital Instruments Bonds Hybrid Perpetual" = 989,000,000. This is in equity. For S&P's net debt calculation, hybrid bonds are sometimes treated as 50% debt and 50% equity, or fully as debt if they're debt-like. However, for standard net debt, I'll follow the accounting classification and exclude them from debt (since they're in equity). But for "total debt" or "adjusted debt", S&P might include them. For this calculation, I'll use standard net debt excluding hybrid bonds from debt. Final numbers: FFO = 1,614,100,000 EUR (Net income continuing 878M + D&A 736.1M) Net Debt = 8,615,000,000 EUR FFO / Net Debt = 0.1874 or 18.74% Let me round to a reasonable precision: 0.187 or 18.7%, or as a ratio 0.19. Actually, I want to double-check one more thing. Should I use D&A from the income statement (725,700,000) or from the cash flow adjustment (736,100,000)? The cash flow adjustment of 736,100,000 includes "Impairment Loss Reversal Of Impairment Loss" as noted in the label. The income statement figure of 725,700,000 is "Depreciation Amortisation And Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss". These should be the same, but there's a 10,400,000 difference. The cash flow figure might be more comprehensive or include additional items. For FFO, which aims to add back all non-cash charges, the cash flow based figure is likely more appropriate. Using 736,100,000: FFO = 878,000,000 + 736,100,000 = 1,614,100,000 If I use 725,700,000: FFO = 878,000,000 + 725,700,000 = 1,603,700,000 Difference is about 10M, small in context. Let me also consider if I should start from total net income (857,700,000) instead of continuing operations (878,000,000). Discontinued operations showed a loss of 20,300,000. If this loss was non-cash or related to write-downs, it might be added back. But typically, discontinued operations are excluded from FFO. I'll use continuing operations: 878,000,000. One more check: Does FFO include dividends received from associates? The cash flow shows no explicit dividends from associates. The equity loss was 1,000,000. I'll ignore this small item. Final answer: FFO / Net Debt = 1,614,100,000 / 8,615,000,000 = 0.1874 As a percentage or ratio: 18.74% or 0.1874 S&P typically reports this as a percentage, so 18.7% or 19%. But the question asks for a ratio, so I'll provide the decimal. Wait, let me re-read the question: "estimate the FFO / Net debt ratio for 2022, based on S&P methodology." The ratio could be expressed as FFO/Net Debt (a decimal like 0.187) or as Net Debt/FFO (a multiple like 5.3x). S&P typically reports FFO/Net Debt as a percentage (18.7%) or sometimes as Net Debt/FFO as a multiple. Looking at S&P's typical reporting: They often use "FFO to debt" or "FFO/net debt" as a percentage. For example, "FFO to net debt was 18%". But sometimes they report the inverse as "net debt to FFO" in years (e.g., 5.3x). The question asks for "FFO / Net debt ratio", so I'll provide FFO divided by Net Debt. Let me also do a quick sanity check. For a regulated utility like Terna, FFO/net debt of around 18-20% is reasonable. S&P's median for regulated utilities is often in the 15-25% range for investment grade. Actually, let me refine my FFO one more time. Looking at S&P's published methodology for "Funds From Operations (FFO)": From S&P Global Ratings Corporate Methodology (2018): "FFO is a measure of cash generated from operations before working capital changes. We calculate FFO as net income from continuing operations plus depreciation, amortization, deferred income taxes, and other non-cash items." Key components: 1. Net income from continuing operations: 878,000,000 2. Depreciation and amortization: 725,700,000 (or 736,100,000) 3. Deferred income taxes: Need to calculate For deferred income taxes, I need the deferred tax expense. Looking at: - Income Tax Expense Continuing Operations: 355,400,000 - Cash taxes paid: 380,100,000 If cash taxes > tax expense, then deferred tax expense is negative (i.e., there's a deferred tax benefit). The deferred tax benefit = 355,400,000 - 380,100,000 = -24,700,000 (using income statement tax expense) or 356,700,000 - 380,100,000 = -23,400,000 (using cash flow tax expense). Since there's a deferred tax benefit, not a deferred tax expense, there's nothing to add back. In fact, the tax expense is already lower than cash taxes. But wait, S&P says "plus deferred income taxes". If deferred taxes are negative (a benefit), do we subtract them? Typically, yes - FFO = Net income + D&A + deferred tax expense. If deferred tax expense is negative, it reduces FFO. However, in practice, S&P often uses a simplified approach and just adds back the absolute change in deferred tax liabilities or assets, or uses the cash flow based figure. For practical purposes, the small difference (about 24M) is minor compared to the total FFO of 1,614M. I'll ignore it or use the cash flow based approach. Actually, let me use the cash flow based FFO figure directly. The "Cash Flows From Used In Operations Before Changes In Working Capital" of 2,072,700,000 is essentially: Net income + D&A + provisions + other non-cash + finance costs + tax expense + other adjustments To get to FFO, I need to subtract the finance costs and tax expense add-backs (since FFO is after tax and after interest, but before working capital). Wait, no. FFO is after tax expense (not cash taxes) and after interest expense. So: FFO = Cash Flows From Used In Operations Before Changes In Working Capital - Finance costs add-back - Tax expense add-back + ? Actually, let me think again. The cash flow starts from net income and adds back: - D&A: non-cash, operating - Provisions: non-cash, operating - Gain/loss on disposals: non-cash or non-operating - Finance costs: this is to get to pre-finance cost figure (since net income is after finance costs) - Tax expense: this is to get to pre-tax figure - Other non-cash So "Cash Flows From Used In Operations Before Changes In Working Capital" is essentially a pre-tax, pre-interest, pre-working capital figure. It's like EBITDA plus some other items. To get FFO (which is after-tax, after-interest): FFO = Cash Flows From Used In Operations Before Changes In Working Capital - Finance costs - Tax expense + Cash interest received - Cash taxes paid? No, that's getting to cash flow. Actually, I think I'm overcomplicating this. Let me use the direct formula: FFO = Net income from continuing operations + D&A + Deferred tax expense + Other non-cash items = 878,000,000 + 736,100,000 + 0 + small items ≈ 1,614,100,000 For "Other non-cash items", I might include: - Accruals to provisions: 51,700,000? But these are typically operating and related to working capital or recurring expenses. S&P usually excludes changes in operating provisions from FFO (they're part of working capital or operating cash flow). - Gain/loss on disposals: -6,900,000 (gain, so it increased net income). For FFO, we might subtract this gain as it's non-recurring. - Other non-cash movements: -24,100,000. If negative, it means there was a non-cash gain or similar. We might subtract this. If I adjust for these: FFO = 1,614,100,000 - 6,900,000 (gain on disposals) - 24,100,000 (other non-cash, if negative means gain) = 1,583,100,000 But wait, the -24,100,000 "Cash Flows From Other Non Cash Movements" is already in the cash flow reconciliation. If it's negative, it was subtracted from net income to get to cash flow, meaning it was a non-cash gain in net income. So for FFO, we should subtract it. Actually, let me re-read: "Cash Flows From Other Non Cash Movements" = -24,100,000. In the cash flow reconciliation, this is added to net income. If it's negative, it reduces the cash flow. This means it was a non-cash item that increased net income (like a gain). So yes, for FFO we might subtract it. But S&P's standard FFO formula says "plus other non-cash items". If other non-cash items are negative (gains), we subtract them. So "plus -24,100,000" = minus 24,100,000. Similarly, gain on disposals of 6,900,000 is typically excluded from FFO as non-recurring. So adjusted FFO = 878,000,000 + 736,100,000 - 6,900,000 - 24,100,000 = 1,583,100,000 But I'm not sure if S&P would exclude all of these. Let me check: "Accruals To Provisions" of 51,700,000 - is this non-cash? Yes, but it's typically part of normal operations. S&P usually includes provisions for employee benefits and impairments in FFO add-backs, but excludes changes in operating provisions (like warranty, restructuring) if they're part of working capital. Actually, looking at the label: "Accruals To Provisions Including Provisions For Employee Benefits And Impairment Losses". This includes employee benefits (non-cash expense) and impairment losses (non-cash). These should be added back for FFO. But wait, impairment losses are already in D&A. Let me check if there's double counting. The D&A figure of 736,100,000 includes "Impairment Loss Reversal Of Impairment Loss". So impairments are already included. The 51,700,000 might be additional provisions. Hmm, this is getting too detailed. For a practical estimate, let me use: FFO = 1,614,100,000 (basic) or 1,583,100,000 (adjusted for gains) I'll use the basic version as it's more common for quick estimates, or perhaps slightly adjusted. Actually, looking at S&P's typical published FFO figures for utilities, they often include gains/losses on disposals if they're recurring (like asset exchanges). For a conservative estimate, I'll use the basic FFO. Let me settle on: FFO = 1,600,000,000 (rounded) or 1,614,100,000 (precise) Net Debt = 8,615,000,000 Ratio = 0.1874 or 18.74% I'll provide the more precise calculation: 1,614,100,000 / 8,615,000,000 = 0.1874 Or if I use the slightly adjusted FFO = 1,583,100,000: Ratio = 1,583,100,000 / 8,615,000,000 = 0.1838 Both are close. I'll use 0.187 or 0.184. Actually, let me try one more approach to validate. S&P sometimes calculates FFO as: FFO = Cash Flow From Operating Activities + Interest Paid - Interest Received - Income Taxes Paid + Tax Expense - Working Capital Changes... no, that's circular. Let me use the direct cash flow: Cash Flows From Used In Operating Activities = 2,323,700,000 This is after working capital changes, interest, and taxes. To get FFO, I need to add back working capital changes, interest paid, and adjust taxes. Working capital changes from cash flow: - Inventories: -20,700,000 - Trade receivables: +285,900,000 (decrease, positive for cash) - Trade payables: +604,800,000 (increase, positive for cash) - Other non-current liabilities: -126,100,000 - Other non-current assets: +14,700,000 - Provisions: -36,900,000 Sum of working capital changes (excluding interest and taxes): -20,700,000 + 285,900,000 + 604,800,000 - 126,100,000 + 14,700,000 - 36,900,000 = 721,700,000 Then add back interest paid: 154,800,000 Subtract interest received: 64,200,000 Add back taxes paid: 380,100,000 Subtract tax expense: -355,400,000 (or -356,700,000) FFO = 2,323,700,000 - 721,700,000 + 154,800,000 - 64,200,000 + 380,100,000 - 355,400,000 = 1,717,300,000 Hmm, this is higher than my previous 1,614,100,000. The difference is about 103M. Where does this come from? Let me check: 2,323,700,000 - 721,700,000 = 1,602,000,000 (this is before interest and taxes, but after working capital is removed... wait, I subtracted working capital changes, meaning I removed their effect. If working capital changes were +721,700,000 (positive for cash flow), then removing them gives 1,602,000,000. Then +154,800,000 - 64,200,000 = +90,600,000 (net interest) +380,100,000 - 355,400,000 = +24,700,000 (tax adjustment) Total: 1,602,000,000 + 90,600,000 + 24,700,000 = 1,717,300,000 But this doesn't match my 1,614,100,000. The difference is 103,200,000. Let me check the working capital calculation. The cash flow shows: - "Adjustments For Increase Decrease In Provisions": -36,900,000 - "Adjustment By Increase Or Decrease In Inventories": -20,700,000 - "Adjustments For Decrease Increase In Trade And Other Receivables": +285,900,000 - "Adjustments For Increase Decrease In Trade And Other Payables": +604,800,000 - "Adjustments For Increase Decrease In Other Non Current Liabilities": -126,100,000 - "Adjustments For Decrease Increase In Other Non Current Assets": +14,700,000 Sum: -36,900,000 - 20,700,000 + 285,900,000 + 604,800,000 - 126,100,000 + 14,700,000 = 721,700,000. Correct. But wait, "Adjustments For Increase Decrease In Provisions" of -36,900,000 - is this a working capital item or a non-cash item? Provisions can be both. In the cash flow before working capital, "Accruals To Provisions" of 51,700,000 was added. Then "Adjustments For Increase Decrease In Provisions" of -36,900,000 is the actual change in provisions. The difference is 51,700,000 - (-36,900,000) = 88,600,000... no wait, the signs are confusing. Let me think: "Accruals To Provisions" = +51,700,000 means provisions expense was added to net income (non-cash). "Adjustments For Increase Decrease In Provisions" = -36,900,000 in the working capital section means... if it's negative, does it mean provisions decreased (use of provisions, positive for cash)? Or is it the adjustment to get to cash flow? Actually, looking at standard cash flow presentation: "Adjustments For Increase Decrease In Provisions" as a negative number means provisions decreased, which is positive for cash flow (using provisions reduces liabilities, no cash outflow). But in the indirect method, a decrease in provisions is subtracted from net income (because the expense was added earlier but not paid). Wait, I need to be more careful. In the indirect method: - Increase in provision: add to net income (expense was recorded but not paid) - Decrease in provision: subtract from net income (provision was used, no expense but cash benefit was already in net income? No, actually when provision is used, the expense was already recorded. Hmm.) Actually, for provisions: When you accrue a provision, you record expense with no cash flow. So increase in provision = add to net income. When you use a provision, you record no expense (the expense was already recorded) and no cash flow either. So decrease in provision = subtract from net income? No, that doesn't make sense. Let me not get bogged down in provision accounting. The key point is that my two approaches give different FFO figures: 1,614M vs 1,717M. The difference is about 103M. Looking at the difference: 1,717,300,000 - 1,614,100,000 = 103,200,000. Where could this come from? Let me check if "Cash Flows From Used In Operations Before Changes In Working Capital" includes something different. 2,072,700,000 vs the reconstructed 1,602,000,000 + adjustments. Actually, let me verify: if I start from 2,072,700,000 and subtract working capital changes (but the sign is tricky), do I get to operating cash flow before interest and taxes? Actually, I think the issue is that "Cash Flows From Used In Operations Before Changes In Working Capital" is already after some items and before others. Let me not try to reconcile. For practical purposes, I'll use the simpler and more direct calculation: FFO = Net income from continuing operations + D&A = 878,000,000 + 736,100,000 = 1,614,100,000 This is conservative and standard. Net Debt = 8,615,000,000 FFO / Net Debt = 0.1874 Let me round to 0.187 or 18.7%. Actually, I want to check one more thing. Should I use 2022 beginning or end debt? For 2022 performance, using end-2022 debt (2023-01-01) is standard. But sometimes average debt is used. Average debt = (10,770,100,000 + 2022 beginning debt) / 2 2022 beginning debt (from 2022-01-01 balance sheet): - Longterm Borrowings: 8,835,000,000 - Shortterm Borrowings: 1,947,000,000 - Current Portion Of Longterm Borrowings: 1,640,000,000 Total = 12,422,000,000 Wait, that's much higher! Let me check: 8,835,000,000 + 1,947,000,000 + 1,640,000,000 = 12,422,000,000 But end debt is 10,770,100,000. So debt decreased significantly. Average gross debt = (12,422,000,000 + 10,770,100,000) / 2 = 11,596,050,000 Average cash = (1,566,800,000 + 2,155,100,000) / 2 = 1,860,950,000 Average net debt = 11,596,050,000 - 1,860,950,000 = 9,735,100,000 FFO / Average Net Debt = 1,614,100,000 / 9,735,100,000 = 0.1658 or 16.6% This is quite different! But S&P typically uses end-of-period debt for their published ratios, not average. Let me verify by checking S&P's methodology documents. Actually, S&P sometimes uses "three-year average" FFO and "year-end" debt, or various combinations. For simplicity and consistency with common practice, I'll use year-end figures. Final answer: 0.187 or 18.7% Let me express this as a decimal ratio: 0.187 Or should I express it as a percentage? The question says "ratio", so decimal is appropriate. Actually, looking at the format requested: "no units, and no prose". So I should provide just the number. Let me finalize with 0.187 or more precisely 0.1874. I'll use 0.187. Wait, I want to do one more sanity check. Let me see if I can find any S&P research or rating on Terna to verify typical ratios. Unfortunately, I don't have access to real-time S&P reports. For a regulated transmission operator in Europe, FFO/net debt of around 18-20% would typically correspond to a BBB or BBB+ rating. Terna is likely investment grade, so this seems reasonable. Let me also check if my FFO should be higher. Some practitioners include dividends received from associates, add back provisions, etc. But I'll stick with the standard definition. One more thing: Should I include the "Revenue And Operating Income" vs just "Revenue"? "Revenue And Operating Income" is 2,964,500,000 vs Revenue 2,898,100,000. The difference is other operating income of 66,400,000. This is already in operating profit and net income. My FFO calculation uses net income, so it's already included. Final calculation: FFO = 1,614,100,000 Net Debt = 8,615,000,000 Ratio = 0.1874 I'll provide 0.187 as a rounded figure, or perhaps 0.19. Let me use 0.187 for more precision. Actually, let me reconsider if I should include the hybrid bonds in debt. The "Equity Instruments Perpetual Hybrid Bonds" of 989,000,000 are classified as equity. For credit analysis, S&P might treat these as 50% debt. If I include 50%: Additional debt = 494,500,000 Net Debt = 8,615,000,000 + 494,500,000 = 9,109,500,000 Ratio = 1,614,100,000 / 9,109,500,000 = 0.1772 or 17.7% Or if 100% debt treatment: Net Debt = 8,615,000,000 + 989,000,000 = 9,604,000,000 Ratio = 1,614,100,000 / 9,604,000,000 = 0.1681 or 16.8% For standard net debt (accounting based), I'll exclude hybrid bonds. But for "total adjusted debt" per S&P, they might be included. Given the question asks for "Net debt" not "Total adjusted debt", I'll use the standard accounting net debt excluding hybrid bonds. Final answer: 0.187 Let me also check if I should use the more precise 0.1874. I'll provide 0.187. Actually, rethinking: The question might expect a percentage (18.7) or a multiple (5.3x if inverted). But it says "FFO / Net debt ratio", which is clearly FFO divided by Net Debt, so a decimal less than 1. Let me provide 0.187 or 0.19. I'll use 0.187 for more precision. One final check: Let me make sure I'm using the right year's balance sheet. For 2022 performance (2022-01-01 to 2023-01-01), the end balance sheet is at 2023-01-01. This is correct. And for 2021 comparison, the balance sheet at 2022-01-01 would be used. But I'm only calculating 2022, so 2023-01-01 is correct. I'm comfortable with 0.187. 0.187