Step 1 — Relevant industry Ferrovial S.A. is best matched to the Transportation Infrastructure methodology, given its major infrastructure-project asset base, toll-road/transport concessions, and transport-infrastructure investment profile. Under the transportation infrastructure methodology, the core ratio is FFO to debt, with FFO cash interest coverage as a supplementary ratio. For this exercise, I use the requested baseline ratios: Adjusted Debt / Adjusted EBITDA and FFO / Adjusted Debt. A key practical issue is that Ferrovial separates “infrastructure projects” debt/cash from “excluding infrastructure projects” debt/cash. Since the consolidated accounts include both, I use consolidated debt and cash, while noting that a pure corporate-recourse analysis could treat project debt differently. The requested workflow asks for estimated S&P-style consolidated metrics, so I proceed on that basis. --- Step 2 — Estimate 2021 Adjusted EBITDA Reported/reconstructed EBITDA: For 2021: - Gross profit: €610m - Amortisation expense: €270m EBITDA approximation: - EBITDA = Gross profit + amortisation - EBITDA = €610m + €270m = €880m Nonrecurring gains/losses normalization: 2021 included very large gains on disposal/impairment line: - Impairment and gains/losses on disposal of noncurrent assets: +€1,139m - This affected operating profit but was not included in gross profit. Since I reconstruct EBITDA from gross profit plus amortisation, the large disposal gain is already excluded from my EBITDA estimate. Lease adjustment: Available lease liabilities at 2022-01-01: - Noncurrent lease liabilities: €115m - Current lease liabilities: €58m - Total leases: €173m No lease interest or depreciation split is provided. Because EBITDA is reconstructed from operating data and amortisation, and lease expense details are unavailable, I do not add a separate lease EBITDA adjustment. I include lease liabilities in debt. Joint ventures/associates: - Share of profit/loss of associates in 2021: -€178m - Dividends received classified as operating activities: €272m S&P may proportionally consolidate significant infrastructure associates in some cases, but proportional EBITDA is not provided. I do not add associate EBITDA, but dividends are implicitly relevant to cash flow. For consistency, FFO is estimated from EBITDA less cash interest and taxes, per the user’s formula. Estimated 2021 Adjusted EBITDA: - Adjusted EBITDA 2021 = €880m --- Step 3 — Estimate 2021 FFO Formula: - FFO = Adjusted EBITDA - cash interest - cash taxes Inputs: - Adjusted EBITDA 2021: €880m - Interest paid classified as financing activities: €295m - Income taxes paid/refund classified as operating activities: €155m Calculation: - FFO 2021 = €880m - €295m - €155m - FFO 2021 = €430m Estimated 2021 FFO: - €430m --- Step 4 — Estimate 2021 Adjusted Debt Use opening 2022-01-01 balance sheet as fiscal year-end 2021. Reported borrowings: - Noncurrent debt securities and bank borrowings of infrastructure projects: €7,362m - Noncurrent debt securities and bank borrowings excluding infrastructure projects: €2,151m - Current debt securities and bank borrowings of infrastructure projects: €47m - Current debt securities and bank borrowings excluding infrastructure projects: €1,049m Total reported debt securities and bank borrowings: - €7,362m + €2,151m + €47m + €1,049m = €10,609m Leases: - Noncurrent lease liabilities: €115m - Current lease liabilities: €58m - Total leases: €173m Gross adjusted debt before cash: - €10,609m + €173m = €10,782m Eligible cash: - Cash and cash equivalents: €5,536m I use reported cash as eligible cash for this high-level estimate. Restricted cash is not included in current cash and cash equivalents except where explicitly classified as such; no further S&P haircut is applied due to lack of detail. Adjusted Debt 2021: - €10,782m - €5,536m = €5,246m Estimated 2021 Adjusted Debt: - €5,246m --- Step 5 — 2021 Adjusted Debt / Adjusted EBITDA - Adjusted Debt / Adjusted EBITDA = €5,246m / €880m - = 5.96x 2021 leverage: - 6.0x approximately --- Step 6 — 2021 FFO / Adjusted Debt - FFO / Adjusted Debt = €430m / €5,246m - = 0.0820 2021 FFO / debt: - 8.2% --- Step 7 — Estimate 2022 Adjusted EBITDA Reported/reconstructed EBITDA: For 2022: - Gross profit: €728m - Amortisation expense: €299m EBITDA approximation: - EBITDA = €728m + €299m = €1,027m Nonrecurring gains/losses normalization: 2022 disposal/impairment line: - Impairment and gains/losses on disposal of noncurrent assets: -€6m Since EBITDA is reconstructed from gross profit plus amortisation, this below-EBITDA operating item is not included. No additional adjustment is necessary. Lease adjustment: Lease expense split is unavailable, so no separate EBITDA lease adjustment is made. Lease liabilities are included in debt. Estimated 2022 Adjusted EBITDA: - €1,027m --- Step 8 — Estimate 2022 FFO Inputs: - Adjusted EBITDA 2022: €1,027m - Interest paid classified as financing activities: €329m - Income taxes paid/refund classified as operating activities: €82m Calculation: - FFO 2022 = €1,027m - €329m - €82m - FFO 2022 = €616m Estimated 2022 FFO: - €616m --- Step 9 — Estimate 2022 Adjusted Debt Use 2023-01-01 balance sheet as fiscal year-end 2022. Reported borrowings: - Noncurrent debt securities and bank borrowings of infrastructure projects: €7,893m - Noncurrent debt securities and bank borrowings excluding infrastructure projects: €2,883m - Current debt securities and bank borrowings of infrastructure projects: €74m - Current debt securities and bank borrowings excluding infrastructure projects: €803m Total reported debt securities and bank borrowings: - €7,893m + €2,883m + €74m + €803m = €11,653m Leases: - Noncurrent lease liabilities: €120m - Current lease liabilities: €64m - Total leases: €184m Gross adjusted debt before cash: - €11,653m + €184m = €11,837m Eligible cash: - Cash and cash equivalents: €5,130m Adjusted Debt 2022: - €11,837m - €5,130m = €6,707m Estimated 2022 Adjusted Debt: - €6,707m --- Step 10 — 2022 Adjusted Debt / Adjusted EBITDA - Adjusted Debt / Adjusted EBITDA = €6,707m / €1,027m - = 6.53x 2022 leverage: - 6.5x approximately --- Step 11 — 2022 FFO / Adjusted Debt - FFO / Adjusted Debt = €616m / €6,707m - = 0.0918 2022 FFO / debt: - 9.2% --- Step 12 — Credit trend classification Signal 1: Leverage - 2021 Adjusted Debt / EBITDA: 5.96x - 2022 Adjusted Debt / EBITDA: 6.53x Change: - 6.53x - 5.96x = +0.57x Threshold: - ≥ +0.2x = Deteriorating Signal 1 conclusion: - Deteriorating Signal 2: Cash-flow coverage - 2021 FFO / Debt: 0.0820 - 2022 FFO / Debt: 0.0918 Change: - 0.0918 - 0.0820 = +0.0098 Threshold: - between -0.03 and +0.03 = Stable Signal 2 conclusion: - Stable Combining the signals: One signal is Deteriorating and the other is Stable. Per the rule, when one signal is Stable and the other is Improving or Deteriorating, return the non-Stable category. The deterioration in leverage is also economically meaningful: debt increased materially, driven by higher borrowings and lower cash, while EBITDA growth did not fully offset this. FFO coverage improved slightly because cash taxes declined and operating cash generation improved, but the improvement was well below the +3 percentage point threshold. Therefore, the year-on-year S&P-style credit trend from 2021 to 2022 is Deteriorating. Deteriorating