**Step 1: Identify the relevant industry** FERROVIAL SA is a Spanish multinational company primarily operating in the design, construction, financing, operation, and maintenance of transport infrastructure (toll roads, airports), and urban services. The annual report shows large “Investments In Infrastructure Projects”, consistent with the **Transportation Infrastructure** sector. The provided S&P methodology for Transportation Infrastructure will be applied. **Step 2: Estimate 2021 Adjusted_EBITDA** Base formula: `Adjusted_EBITDA = EBITDA + adjustment_leases + nonrecurring_losses - nonrecurring_gains ± pension_adjustments ± joint_venture_proportional_EBITDA ± other` * **Compute EBITDA 2021:** * Revenue = 6,910,000,000 * Other Income = 1,000,000 * Revenue and Operating Income = 6,911,000,000 * Operating Expense = -6,301,000,000 * Gross Profit = Revenue and Operating Income + Operating Expense. Wait, `Gross Profit` is given as 610,000,000 EUR. * `Profit From Operations Before Impairment And Disposals` = 340,000,000 EUR. This is operating income + amortization. * `Amortisation Expense` = 270,000,000 EUR. * EBITDA = Profit From Operations Before Impairment + Amortisation expense? Wait, `Profit From Operations Before Impairment And Disposals` is subtitled "Before Fair Value Adjustments" is 341M, which seems to be EBITD (earnings before interest, tax, depreciation? No, amortisation is separate). * Let's look at the statement: * Revenue = 6910 * Other Income = 1 * Revenue and Oper Income = 6911 * Raw Materials = -1085 * Misc Other Operating = -3923 (Fair value 1M) * Employee Benefits = -1293 * Operating Expense = -6301 * Gross Profit? Actually, `Gross Profit` is 6911 + (-6301) = 610, which matches "Gross Profit" 610,000,000. * Amortisation = -270 * Profit from Operations Before Impairment and Disposals = 340,000,000. * This implies EBITDA = Profit from Ops Before Impairment + Amortisation = 340M + 270M = 610M. Wait, that is exactly Gross Profit. * But wait, "Profit From Operations Before Impairment And Disposals" is an EBIT measure? No, it's after depreciation, but wait - "Amortisation Expense" is given separately. Depreciation? * Let's check the "Ajustes Al Resultado Por Gastos Por Depreciacion YAmortizacion" = 270M for 2021. * EBITDA = Revenue - OpEx + Amortisation? No, OpEx includes amortisation: 6301M OpEx includes 270M amortisation. * EBITDA = Revenue + Other Income + OpEx + Amortisation (since OpEx is negative) = 6910 + 1 - 6301 + 270 = 880M. Wait! * Let's recalculate: 6911 (Revenue+Other) - 6301 (OpEx) = 610 (Gross Profit). * Operating Exp = 6301. This includes Raw Materials (1085), Misc Other (3923), Employee (1293), and Amortisation (270)? Let's check sum: 1085 + 3923 + 1293 + 270 = 6571. Not 6301. * Operating Exp (6301) = Raw (1085) + Misc (3923) + Employee (1293) + Amort? 1085 + 3922 + 1293 = 6300? Wait, Misc Other is 3922 before fair value? Let's ignore fair value for now. * EBITDA = `Profit From Operations Before Impairment` (340M) + `Amortisation` (270M)? 340 + 270 = 610, which is Gross Profit. * Wait, what about depreciation? Is D&A 270M? Yes, "Ajustes Al Resultado Por Gastos Por Depreciacion YAmortizacion" is 270M. * EBITDA = `Profit Loss From Operating Activities` (1479) ? Wait. * "Profit Loss From Operating Activities" = 1479M (including 1100M fair value). This includes "Impairment And Gains Or Losses On Disposal" (1139M). * So, Operating Profit before impairment/disposal = 1479 - 1139 = 340M. * EBITDA = Operating Profit before impairment/disposal (EBIT) + D&A. D&A = 270M. EBITDA = 340 + 270 = 610M. * Wait, is there depreciation? Yes, 270 is amortisation AND depreciation. * So, Reported EBITDA = 610M. * **Adjustments for 2021:** * `Other Income` = +1M. * `Impairment and Gains on Disposal` = 1139M gain. This is a nonrecurring gain, so we subtract it. * `Share of Profit/Loss of Associates` = -178M. This is below operating profit. * Leases: * `Noncurrent Lease Liabilities` (2022-01-01) = 115M * `Current Lease Liabilities` (2022-01-01) = 58M * Total Lease Liabilities = 173M. * Lease interest = Cash Outflow For Leases 2021? `Cash Outflow For Leases` = 131M. * `Right-of-use Assets` (2022-01-01) = 176M. Depreciation of ROU = (131M - interest). We need lease depreciation. * We'll add lease depreciation to EBITDA, and subtract lease cash outflows to get FFO. * Usually, `Adjusted_EBITDA = EBITDA + operating lease expense`. But we don't have explicit lease expense. * S&P typically adds back the implicit interest and depreciation in operating leases. For simplicity, using the cash flow: `Adjusted_EBITDA` includes adding "Cash Outflow For Leases" (131M) and subtracting the interest portion? No, standard S&P adjustment for operating leases: EBITDA is increased by the lease payment (which is an operating expense), and Debt is increased by the lease liability. * Since EBITDA is already post-lease-payment, we add the total lease payment (131M) back to EBITDA. * Let's check the income statement: OpEx = 6301M. * `Miscellaneous Other Operating Expense` = 3923M. Does this include leases? * We add 131M to EBITDA. * Pension: * `Noncurrent Provisions For Employee Benefits` is minimal (3M). Ignore for simplicity. * Fair value items in OpEx: * `Miscellaneous Other Operating Expense Fair Value Adjustments` = +1M (meaning it reduced the expense by 1M?). Actually, "Fair Value Adjustments Member" for Misc OpEx is +1M EUR. If it's positive in the breakdown, it means it's a gain? Wait. The total Misc OpEx is -3923, composed of -3922 "Before" and +1 "Fair Value"? That means a 1M gain. We have "Gross Profit Fair Value" = -1M. So, Operating Profit Fair Value = -1M. * Wait, `Profit Loss From Operating Activities Fair Value Adjustments` = 1100M. This is from `Impairment and Gains on Disposal Fair Value` (1101M). * We already subtracted the total 1139M gain on disposal (which includes fair value). * JVs and Associates: * We have `Share of Profit/Loss of Associates` = -178M. * We don't have proportional EBITDA, but we have the equity method income. We usually add back the dividends and subtract the equity income to get FFO, but for EBITDA, we might exclude it or keep it as is? S&P usually adjusts FFO, not EBITDA, for associates. * Actually, S&P treats equity-accounted investments by deducting the equity income from FFO and adding back dividends received. This doesn't affect EBITDA directly. * EBITDA 2021 = 610M (Reported EBITDA) + 131M (Leases) = 741M. * Since `Gross Profit` = 610M. We add back 131M. Adjusted EBITDA = 741M? Let's stick to this. Wait, we should exclude non-recurring items from EBITDA. * Non-recurring items in operating profit: "Impairment And Gains Or Losses On Disposal" = 1139M gain. We must subtract this. * Wait, is Impairment and Gains included in "Profit From Operations Before Impairment"? The name says *Before* Impairment. So, EBITDA (610M) does NOT include the 1139M gain. * Did the 610M include the 1M Miscellaneous OpEx fair value adjustment? Yes, it was included in OpEx. The amount is tiny, we can ignore it or subtract it. * Adjusted EBITDA 2021 = 610M + 131M = 741M EUR. **Step 3: Estimate 2021 FFO** `FFO = Adjusted_EBITDA - cash_interest - cash_taxes` * **Cash Interest:** * `Finance Income Cost` = -335M (This is finance income + finance cost). * `Finance Income Cost` "Before Fair Value" = -252M. "Fair Value" = -83M. * Fair value items in finance cost are non-cash. * Cash Interest = Finance Cost (before fair value) + Lease Interest. * Finance Cost = Finance Income + Finance Cost. Let's break it down: * `Financial Result Of Infrastructure Projects` = -307M. * `Financial Result On Financing` (before FV) = -220M. * `Result On Derivatives` (before FV) = -4M. * Total before FV = -224M. Wait, the label is "Financial Result Of Infrastructure Projects Before Fair Value" = -224M. * `Financial Result Excluding Infrastructure Projects` = -28M. * `Financial Result On Financing` (before FV) = -27M. * `Result On Derivatives` (before FV) = -1M. * Total before FV = -28M. * Total Finance Result before FV = -224 + (-28) = -252M. * This is the net interest/cash financing cost = -252M. * Lease Interest: `Cash Outflow For Leases` = 131M. We don't have the split. Let's estimate interest = total lease liability (173M) * 5% = ~9M. * Total Cash Interest = 252 + 9 = 261M. * **Cash Taxes:** * `Income Tax Expense` = -9M (a benefit). * `Income Taxes Paid Classified As Operating Activities` = 155M. * We use 155M. * **Other Adjustments:** * Dividends from Associates: `Dividends Received Classified As Operating Activities` = 272M. * We need to subtract Share of Profit from Associates and add Dividends from Associates. * Share of Profit = -178M. Subtracting this means adding 178M. * So, FFO = 741 (Adj. EBITDA) - 261 (Cash Int) - 155 (Cash Tax) + 178 (Associate Loss) + 272 (Associate Div)? Wait. * S&P FFO formula: `FFO = Adjusted EBITDA - Cash Interest - Cash Taxes + Dividends from Associates - Share of Profit of Associates`? No, FFO starts from net income, but using this shortcut: * EBITDA - Cash Int - Cash Tax = 741 - 261 - 155 = 325. * We subtract associate income. Income was -178M, so subtracting it gives +178M. 325 + 178 = 503. * We add back associate dividends. 503 + 272 = 775? No, dividends are already in cash flow? Wait. If we deducted associate income, we add back dividends received, which are not in EBITDA. * Wait, EBITDA doesn't include associate income. FFO = EBITDA - cash interest - cash taxes + associate dividends. * But S&P methodology often adjusts EBITDA to include proportionate share of EBITDA. Since we don't have that, we use the simplified calculation: * FFO = 741 - 261 - 155 + 272 = 597M. Wait, what about the associate loss? We don't subtract it from EBITDA. * Actually, `Profit Loss Before Tax` = 966M. * Let's compute FFO from bottom up: * Net Income (Profit Loss) = 1336M. * D&A = 270M. * Impairment/Disposal = -1139M. * Deferred Tax: Tax Expense = -9M. Cash Tax = -155M. Difference = 146M. We add back deferred tax benefit (subtract deferred tax expense)? Wait, if Tax Benefit is -9M and Cash Tax is 155M, the difference is -164M? Cash tax is paid, so income tax expense is a benefit (-9M). Deferred tax = -155 - (-9) = -146M? No, income tax expense = current tax + deferred tax. -9 = Current Tax + Deferred Tax. Cash Tax = Current Tax = 155M? Then Deferred Tax = -9 - 155 = -164M. * Finance Cost (FV) = -83M. * Associate Income = -178M. * Associate Div = 272M. * Lease Payment = -131M (in operating expense, but we add it back? FFO from net income = 1336 + 270 (D&A) - 1139 (Gain) + (-164) (Deferred tax? No, we add back deferred tax expense? Wait, deferred tax expense is -164M, which reduces taxes. To get cash taxes, we subtract it. So we subtract deferred tax benefit? No, FFO = Net Income + D&A - Gains + Deferred Tax Expense + ... Wait. * Standard formula: FFO = Net Income + Depreciation & Amortization + Deferred Tax Expense + Other Non-Cash Items. * Net Income = 1336. D&A = 270. Gain on Sale = -1139. Finance Cost (FV) = 83 (loss). Associate Income = -178. Other FV in OpEx = 1. * Deferred Tax: Income Tax Expense = -9. Cash Tax = 155. This suggests Current Tax = 155? No, Cash Tax = 155. Income Tax Expense = -9. Deferred Tax Benefit = 164? Actually, Income Tax Exp = Current Tax + Deferred Tax. If Cash Tax (Current) = 155, Deferred Tax = -164 (benefit). * FFO = 1336 + 270 - 1139 + 83 - (-164) - ... wait. * Let's use the simpler standard: FFO = CFO before WC changes - non-recurring items? No. * `Cash Flows From Used In Operating Activities` = 810M. * `Income Taxes Paid` = 155M. * `Increase Decrease In Working Capital` = 249M. * CFO before Tax and WC = 810 + 155 - 249 = 716M. * S&P FFO = CFO before WC changes + Interest Paid - ... wait. * Let's use `Profit Loss Before Tax` = 966M. * Add D&A = 270M. * Subtract Gain on Disposals = -1139M. * Add Finance Cost (FV) = 83? No, Finance Cost FV is a loss on derivatives, which is non-cash. Add back 83M. * Add back Misc OpEx FV = -1M. * Add back Associate Loss = +178M? No, deduct associate income. * Profits before tax (excl. Associates) = 966 - (-178) = 1144M. * Adjusted Pre-tax Profit = 1144 + 270 - 1139 + 83 - 1 = 357M. * Subtract Cash Interest Paid = 329M (from financing activities "Interest Paid Classified As Financing Activities"). * Subtract Cash Tax = 155M. * Add Associate Dividends = 272M. * FFO = 357 - 329 - 155 + 272 = 145M. * Let's double check. The sum of "Interest Paid" is 329M. Plus lease interest? "Cash Outflow For Leases" was 131M. Is lease interest included in Interest Paid? No, lease principal + interest = 131M. Interest portion is not separated. We need to add it back to CFO? We added 131M to EBITDA. We subtract 131M from FFO. * FFO = 145M - 131M (lease cash outflows) = 14M? No, we used EBITDA that had 131M added to it. So FFO = Adjusted EBITDA (741M) - Cash Interest (252M + 9M) - Cash Tax (155M) + Assoc Div (272M) = 741 - 261 - 155 + 272 = 597M. * Wait, we must be careful with associate income. EBITDA doesn't include it. But if we use the shortcut FFO = Adj EBITDA - cash int - cash tax, we are ignoring associate dividends and income. S&P states FFO = EBITDA - interest - tax + dividends from associates. It assumes share of profit is not in EBITDA. But it is in finance. * Let's trust the carefully computed 145M. Wait, that was too low. * Let's recalculate FFO from Net Income: * Net Income = 1336M. * Adjustments to reconcile profit: -697M? Wait, `Adjustments For Reconcile Profit Loss` = 256M? That's 2021! * "Adjustments For Reconcile Profit Loss" 2021 = 256M. * This means Cash Flow from Operations = Net Income + 256M + Working Capital changes. * Cash Flow from Operations = 810M. Working Capital = 249M. * 810M - 249M = 561M (CFO before WC). * So, Net Income + Non-cash adjustments = 561M. * Non-cash adjustments = 561M - 1336M = -775M. * FFO is usually CFO before tax paid, interest paid, and WC changes? * Let's use standard S&P FFO formula: * FFO = Net Income + Depreciation/Amortization + Deferred Tax + Other Non-Cash Items - Gains from Sales. * Net Income = 1336. * D&A = 270. * Impairment/Gains = -1139. * Finance Cost (FV) = +83. * Associate Income = -178. We exclude it, so subtract it from Net Income? No, FFO excludes associate income. So Net Income 1336 - Associate Income? Wait, Net Income includes Associate Income. So we subtract 178. * Discontinued Operations = 361. Exclude? FFO from continuing. Profit from Cont Ops = 975M. * Let's use Cont Ops Net Income = 975M. * D&A = 270M. * Gain on Disposal = -1139M. * Deferred Tax: Income Tax (Cont Ops) = -9M. Cash Tax = 155M. Deferred Tax = (-9) - 155 = -164M. We add back -164M. (Deferred tax benefit is added back as a positive? No, deferred tax expense is added back. Wait, Tax Expense = -9. Deferred Tax = Tax Exp - Cash Tax = -9 - 155 = -164. Since it's negative, it's a benefit. We add back deferred tax EXPENSE. So we add -164M.) * Finance FV = fair value losses on derivatives = 83M. * Misc OpEx FV = 1M. * FFO = 975 + 270 - 1139 - 164 + 83 + 1 = 26M. * Associate Div = 272M. * FFO = 26 + 272 = 298M. * Wait, this is very sensitive to assumptions. Let's check operating lease adjustment. We added 131M lease payment to EBITDA. In FFO, we subtract the full lease payment (131M) because the interest portion is already subtracted in Cash Interest, and the principal portion is a debt repayment. * Wait, if we added back 131M to EBITDA, we must subtract 131M from FFO. * FFO = 298 - 131 = 167M. Let me rethink this with a cleaner approach, standard S&P adjustments: **Adj. EBITDA** = `Profit From Operations Before Impairment` (340M) + `D&A` (270M) = 610M. Adjustments: 1. Operating Leases: Add lease expense. We don't have explicit expense, but cash outflow is 131M. Assuming principal + interest = 131M. Depreciation of ROU = D&A part of it. Let's just add 131M to EBITDA. Adj. EBITDA = 610 + 131 = 741M. 2. Other non-recurring items: `Miscellaneous OpEx FV` 1M gain. We can ignore. **Adj. FFO** = Adj. EBITDA - Cash Interest - Cash Tax + Associate Dividends. 1. Cash Interest = `Finance Cost (before FV)` = 252M. (Excludes derivative FV of 83M loss). We also need Lease Interest. `Cash Outflow For Leases` = 131M. Principal repayment part of it is not in Cash Interest. Assume interest = 10% of lease liabilities (173M) = 17M. Total Cash Interest = 252 + 17 = 269M. 2. Cash Tax = 155M. 3. Associate Dividends = 272M. 4. Subtract Lease Principal (131 - 17 = 114M) from FFO? No, FFO already subtracts the full lease payment from EBITDA. Wait, Adj. EBITDA added 131M. FFO = 741 - 269 - 155 + 272 = 589M. Then we must subtract the lease principal repayment? S&P methodology: FFO = Adj. EBITDA - Cash Interest - Cash Taxes. Operating lease payment is fully expensed in EBITDA. When we add it back to EBITDA, we added 131M. To get FFO, we subtract the FULL lease payment? No, we subtract only the interest portion from EBITDA to get FFO, and the principal portion is a debt repayment, which reduces FFO? No, FFO is cash from operations before WC changes. Lease principal repayment is a financing activity. If we add back the full lease expense (131M) to EBITDA, we treat it as if it's a capital lease. FFO = Adj. EBITDA - Cash Interest. Cash Interest includes lease interest. So FFO = 741 - 269 = 472M. Then Cash Tax = 155M. FFO = 472 - 155 + 272 = 589M. Let's verify 2021 FFO with disclosed items. Profit Loss Before Tax = 966M. Adj. Pre-tax Profit = 966 - Share of profit (-178) - ? Wait, FV in financials is derivative losses? Let's compute FFO directly from the bridge: Net Income (Cont Ops) = 975M. Income Tax = -9M. Pre-tax Income (Cont) = 966M. Less: Associate Profit = -178M. Plus: Dividends from Associates = 272M. Pre-tax Income excl. Associates = 1144M. Adjustments: Gain on Disposals = -1139M. D&A = 270M. Finance Cost (Fair Value) = 83M. (Add back) Misc OpEx FV = 1M. (Subtract gain) Operating Lease Payment = 131M. (Add back) Lease Depreciation = -114M. (Estimated from 131M cash outflow - 17M interest). We don't need to add this back because we are adding the full 131M. Wait, if we add back the full 131M, we don't subtract lease depreciation. EBITDA = 1144 + 270 = 1414? No, 1144 is Pre-tax Income. We need EBIT. Wait, Pre-tax Income = 966M. Interest Exp = Finance Cost = 335M? `Finance Income Cost` = -335M. This is negative, meaning it's an expense. Pre-tax Income = Operating Profit + Finance Cost + Associate Profit. 966 = 1479 + (-335) + (-178). Correct! 1479 - 335 - 178 = 966. Operating Profit = 1479M. Add back D&A: 1479 + 270 = 1749M. (Wait, Operating Profit includes D&A? No, Operating Profit is after D&A. So EBITDA = 1479 + 270 = 1749M). Wait! I found my mistake. "Profit Loss From Operating Activities" = 1479M. D&A = 270M. EBITDA = 1479 + 270 = 1749M. Let's re-verify: Revenue = 6910. Other Income = 1. Total = 6911. OpEx = -6301. (includes D&A?) Gross Profit = 6911 - 6301 = 610. Amortisation = 270. (This is part of OpEx). Profit from Ops Before Impairment = 610 - 270 = 340. Then Impairment/Gains = 1139. Profit from Ops = 340 + 1139 = 1479. Yes! So EBITDA = 1749M. Why did I think EBITDA = 610? Because I looked at "EBITDA" label. 1749M is the true EBITDA before leases. Reported EBITDA = 1749M. Adjustments to EBITDA: Leases: Add back 131M (operating lease expense is in OpEx). Adj. EBITDA = 1749 + 131 = 1880M. Wait, did OpEx include 131M lease expense? `Miscellaneous Other Operating Expense` = 3923M. `Cash Outflow For Leases` = 131M. It's part of OpEx. Yes, Adj. EBITDA = 1880M. Non-recurring items: Impairment/Gains = 1139M gain. We must subtract it. Adjusted EBITDA 2021 = 1880 - 1139 = 741M. Wow! The result (741M) is exactly the same as my first calculation! What a relief. So Adj. EBITDA 2021 = **741M**. Now FFO 2021. FFO = Adj. EBITDA - Cash Interest - Cash Tax + Associate Dividends. Cash Interest = Finance Cost (before FV) = 252M. (The reported "Finance Income Cost Before FV" is -252M). Finance Cost excludes derivative FV. Cash Taxes = 155M. Associate Dividends = 272M. Lease Interest: 17M (estimated). Total Cash Interest = 252 + 17 = 269M. FFO = 741 - 269 - 155 + 272 = 589M. **Step 4: Estimate 2021 Adjusted Debt** `Adjusted_Debt = reported_debt + leases + pension_deficit + guarantees + hybrid_debt_portion - eligible_cash` * **Reported Debt:** * `Noncurrent Portion Of Other Noncurrent Borrowings` = 9513M * `Current Borrowings And Current Portion` = 1096M * Total Reported Debt = 9513 + 1096 = 10609M. * Wait, `Noncurrent Portion` includes infrastructure projects. "Infrastructure Projects" borrowings = 7362M non-current + 47M current = 7409M. Excluding infra = 2151M non-current + 1049M current = 3200M. Total = 7409 + 3200 = 10609M. Correct. * **Leases:** * `Noncurrent Lease Liabilities` = 115M * `Current Lease Liabilities` = 58M * Total = 173M. * **Pension:** * `Noncurrent Provisions` = 422M. Wait, "Noncurrent Provisions" = 422M. This includes employee benefits (3M) and others. Are these debt-like? Yes, provisions usually count. * Let's keep it simple: Provisions (Noncurrent) = 422M, Current Provisions = 1002M. Often provisions are not considered debt if they are operational. Let's ignore provisions for now, they are not explicitly called out as debt. * **Hybrids:** * `Other Equity Securities` = 507M. This is perpetual subordinated bonds. We treat ~50% as debt? Let's assume 50% > 507 * 0.5 = 253.5M. * **Guarantees:** Not explicitly identified. * **Cash:** * `Cash And Cash Equivalents` = 5536M. * `Restricted Cash` (Noncurrent) = 579M. * Since restricted cash is dedicated to infrastructure projects, it cannot be freely used to pay down parent debt. We do not count it as eligible cash. * Wait, Cash includes "Cash And Cash Equivalents Infrastructure Projects" = 207M. This is project-level cash, likely restricted. * We will use Unrestricted Cash = Total Cash - Infrastructure Cash = 5536 - 207 = 5329M. (This is `Cash Excluding Infra Projects`). * Wait, Restricted Cash (Noncurrent) = 579M is ALREADY cash in noncurrent assets. Total Cash in current assets = 5536M. * So total cash = 5536 + 579 = 6115M. * Infra cash = 207M (current) + 579M (noncurrent)? No, restricted cash is "Restricted Cash Relating To Infrastructure Projects". It's 579M. * Eligible Cash = Total Cash - Restricted - minimum operating cash? S&P often takes 100% of unrestricted cash. * Let's calculate unrestricted = 5536 (Current) - 168 (current restricted) = 5368M. Wait, 168M is restricted? Let's look: * "Cash And Cash Equivalents" = 5536. * "Cash And Cash Eq Infra Projects" = 207. * "Current Restricted Cash ... Infrastructure" = 47. * "Other Cash ... Infrastructure" = 160. * So 5536 = 4962 (Excl Infra) + 574? 4962 + 207 = 5169. Wait, 207 = restricted (47) + other (160). 4962 + 207 = 5169. Total is 5536. The difference of 367M is "Other"? * Let's trust "Cash And Cash Equivalents Excluding Infrastructure Projects" = 5329M (2022-01-01). * We will also add the non-current restricted cash? No, noncurrent restricted cash is 579M. * Eligible Cash = 5329M. (Assuming we subtract all infra cash and restricted cash). * **Adjusted Debt 2021:** * Reported Debt = 10609M. * Leases = 173M. * Hybrid = 254M. * Total Gross Debt = 10609 + 173 + 254 = 11036M. * Net Debt = 11036 - 5329 = 5707M. **Step 5: 2021 Ratios** * `Adjusted_Debt / Adjusted_EBITDA` = 5707 / 741 = 7.7x. * `FFO / Adjusted_Debt` = 589 / 5707 = 0.103. **Steps 7-9: Estimate 2022** * **Adjusted_EBITDA 2022:** * Operating Profit = 423M. * D&A = 299M. * EBITDA = 423 + 299 = 722M. * Impairment/Gains = -6M (loss). No adjustment needed (it's a loss, so EBITDA is not overstated). * Lease Payment: `Cash Outflow For Leases` = 72M. * Adj. EBITDA = 722 + 72 = 794M. * **FFO 2022:** * Finance Cost (before FV) = 268M. (Wait, `Finance Income Cost Before FV` = -268M). * Lease Liabilities: 120 + 64 = 184M. Interest = 18M (estimate). * Total Cash Interest = 268 + 18 = 286M. * Cash Tax = 82M. * Associate Dividends = 284M. * FFO = 794 - 286 - 82 + 284 = 710M. * **Adjusted Debt 2022:** * Reported Debt: Noncurrent (10776) + Current (877) = 11653M. * Leases: 120 + 64 = 184M. * Hybrids: `Other Equity Securities` = 508M. 50% = 254M. * Total Gross Debt = 11653 + 184 + 254 = 12091M. * Eligible Cash: `Cash Excl Infra` = 4962M. * Net Debt = 12091 - 4962 = 7129M. **Step 10-11: 2022 Ratios** * `Adjusted_Debt / Adjusted_EBITDA` = 7129 / 794 = **9.0x**. * `FFO / Adjusted_Debt` = 710 / 7129 = **0.100**. **Step 12: Classify Trend** * **Signal 1 (Leverage):** 2021: 7.7x 2022: 9.0x Change: +1.3x. Threshold: ≥ +0.2x ➔ **Deteriorating**. * **Signal 2 (Cash-flow coverage):** 2021: 0.103 2022: 0.100 Change: -0.003. Threshold: between -0.03 and +0.03 ➔ **Stable**. * **Combining Signals:** Signal 1 is Deteriorating. Signal 2 is Stable. The rule is: if one is Stable and the other is not, return the non-Stable category. **Conclusion:** The trend is **Deteriorating**. Deteriorating