ERG shows a large-scale, asset-heavy structure with high liabilities and significant cash outflows financing activities in 2022. Key points for hybrid consideration: - 2022 revenue EUR 713.8m, profit after tax continuing EUR 88.97m, but total profit including discontinued operations EUR 383.1m; substantial impairment reversals and non-cash items present. - Cash flows from operating activities €502.5m; investing activities €758.8m; financing outflows €-1,695.3m, including large repayments of current borrowings and dividends; net debt dynamics appear adverse in 2022. - Balance sheet: Equity €2,054.7m (2023), total assets €5,226.4m; liabilities €3,171.7m (2023). Noncurrent liabilities €2.3359b; current liabilities €746.4m. Equity to total capital suggests leverage is moderate but there is substantial spread between assets and liabilities; cash flow generation supports interest but funding needs are elevated due to large capex/discontinued operations and potential investments (Service Concession Rights increased to EUR 956.24m in 2023). - Hybrids can improve adjusted leverage with equity credit; maximum 15% of total adjusted capital. Current starting point unknown exact hybrid outstanding; assume there is some hybrids given capital structure typical for utilities, but guideline states cap 15%. Industry considerations: ERG operates in energy with service concessions; regulatory risk moderate; not strictly regulated utility but large capex and ongoing acquisitions could justify some hybrid issuance for balance sheet optimization. Rating context: S&P methodology suggests hybrids provide equity-like credit and improve leverage metrics; but cost of debt increases. Given 2022 high capex and large financing outflow, and potential need to maintain investment-grade and support rating, a modest use of hybrids could be warranted. However, the company already has substantial noncurrent liabilities and equity base; conservative stance would choose a mid-to-high level within cap if cash flow supports. The 7.5% level seems a balanced step, offering meaningful leverage improvement without overreliance on hybrid cost. Thus, recommend 7.5% of total adjusted capital. Final answer line: 7.5%