I'll work through this step-by-step for VINCI, which is a transportation infrastructure company (primarily concessions, construction, and airports). ## Step 1: Identify the relevant industry for VINCI VINCI is a French company primarily operating in: - Concessions (motorways, airports) - Transportation Infrastructure - Contracting (construction, energy) - more cyclical Given that VINCI's core and most stable business is concessions (transportation infrastructure), and this is where the majority of its value and cash flow stability comes from, I'll apply the **Transportation Infrastructure** methodology. However, VINCI also has significant contracting exposure, so I need to be careful. Looking at the revenue breakdown: €62.3B total revenue, with €61.7B from contracts with customers (construction/contracting) and only €0.6B from concession subsidiaries' work for non-group companies. However, VINCI's profitability and cash flow stability comes significantly from its concessions business (VINCI Autoroutes, VINCI Airports). Given the mixed nature but with infrastructure concessions being the credit-relevant core, I'll apply the general approach with transportation infrastructure considerations where relevant, particularly for volatility assessment and debt treatment. ## Step 2: Estimate Adjusted_EBITDA First, let me reconstruct EBITDA from available data: **Starting point: Profit Loss From Operating Activities (2022): €6,489,000,000** Add back: - Depreciation and Amortization: €3,613,000,000 (from cash flow adjustments) **EBITDA = 6,489,000,000 + 3,613,000,000 = €10,102,000,000** Let me verify another way: - Revenue: €62,265,000,000 (Revenue From Contracts With Customers + Other Revenue = 62,265 + 249 = 62,514? Actually let me check: 62,265 + 249 = 62,514, but operating expense is 55,691, so operating profit before D&A would be different) Actually, let me recalculate: - Total Revenue = Revenue From Contracts With Customers + Other Revenue = 62,265 + 249 = €62,514M? Wait, let me check: "Revenue From Contracts With Customers" = 62,265M, "Other Revenue" = 249M, total = 62,514M Operating Expense = 55,691M Profit Loss From Ordinary Operating Activities = 6,824M So: 62,514 - 55,691 = 6,823M ≈ 6,824M (Profit Loss From Ordinary Operating Activities) ✓ Now to get to operating profit (Profit Loss From Operating Activities): - Profit Loss From Operating Activities = 6,489M - This includes: Other Operating Income Expense Non Recurring = 8M - And: Other Operating Income Expense Recurring = -9M Let me trace through: Profit Loss From Ordinary Operating Activities: 6,824M + Share Of Profit Loss Of Associates And Joint Ventures: 22M + Other Operating Income Expense Recurring: -9M = Profit Loss From Operating Activities Recurring: 6,481M? But reported as 6,481M... wait let me check: 6,824 + 22 - 9 = 6,837, not 6,481. Actually looking more carefully: - Profit Loss From Ordinary Operating Activities: 6,824M - Share Of Profit Loss Of Associates: 22M - Other Operating Income Expense Recurring: -9M - = Profit Loss From Operating Activities Recurring: 6,481M? Hmm, 6,824 + 22 + (-9) = 6,837, not 6,481. Let me re-read... Actually "Share Of Profit Loss Of Associates And Joint Ventures Accounted For Using Equity Method" is 22M. This is typically below operating profit. Looking at standard IFRS structure: Operating profit (before associates) = Profit Loss From Ordinary Operating Activities = 6,824M Then add: Share of profit of associates = 22M Then: Other operating income/expense = -9M (recurring) and 8M (non-recurring) Actually the structure seems to be: - Profit Loss From Ordinary Operating Activities: 6,824M - Then adjustments to get to recurring: includes share of associates? No wait... Let me use the cash flow approach which is clearer for FFO purposes. From cash flow statement: Cash Flows From Used In Operations Before Changes In Working Capital: 10,215M This = Operating profit + D&A + other non-cash items + interest + tax effects... Actually, looking at the adjustments: - Adjustments For Depreciation And Amortisation Expense: 3,613M - Adjustments For Sharebased Payments: 162M - Adjustments For Losses Gains On Disposal Of Noncurrent Assets: -68M - Adjustments For Fair Value Gains Losses: -236M - Adjustments For Undistributed Profits Of Investments Accounted For Using Equity Method: 42M - Adjustments For Net Finance Costs: 614M - Adjustments For Interest Expense On Lease Liabilities: 48M - Adjustments For Income Tax Expense: 1,737M Sum of adjustments to profit before working capital: Starting from Profit Loss (net income): 4,417M + D&A 3,613M + share-based payments 162M - gains on disposal 68M - fair value gains 236M + undistributed profits 42M + net finance costs 614M + interest on leases 48M + income tax expense 1,737M = 4,417 + 3,613 + 162 - 68 - 236 + 42 + 614 + 48 + 1,737 = 10,329M But reported "Cash Flows From Used In Operations Before Changes In Working Capital" = 10,215M Difference = 114M. Let me check... there's also "Finance Costs Paid Classified As Operating Activities" 29M and other items. Actually, I think the 10,215M includes working through from operating profit, not net income. Let me try: Profit Loss From Operating Activities 6,489M + D&A 3,613M + share-based payment expense 356M? No wait, the adjustment is 162M (which is the non-cash portion) Actually looking more carefully at cash flow reconciliation: The adjustments sum to get from profit to pre-working capital cash flow. Let me use: EBITDA = Profit Loss From Operating Activities + D&A = 6,489 + 3,613 = 10,102M But this includes non-recurring items and associates. For S&P purposes, we want clean EBITDA. From the methodology, Adjusted_EBITDA = EBITDA + lease adjustments + nonrecurring losses - nonrecurring gains ± pension ± JV adjustments ± other Non-recurring items: - Other Operating Income Expense Non Recurring: 8M (gain, so subtract) Associates: Share Of Profit Loss Of Associates = 22M. This is equity-accounted, so for proportional consolidation, we'd want to add back and then take proportional EBITDA. But S&P typically doesn't fully proportionalize for infrastructure JVs unless they're material and operationally integrated. For VINCI, given the complexity, let me use a practical approach: **Base EBITDA** = Profit Loss From Operating Activities + D&A = 6,489 + 3,613 = **10,102M** Adjustments: - Non-recurring gain: -8M (the 8M non-recurring is positive, so it's a gain to remove) - Lease adjustments: Interest on lease liabilities 48M (already in operating profit? No, finance costs are below operating profit in IFRS) Wait - in IFRS 16, lease depreciation and interest are treated differently. Looking at the data: - Adjustments For Interest Expense On Lease Liabilities: 48M (this is in financing, not operating) For S&P, operating leases are typically added back to EBITDA (though under IFRS 16 they're already capitalized). The standard S&P adjustment is to add back lease-related depreciation/interest to get to a "pre-IFRS 16" like EBITDA, or to use reported EBITDA and adjust debt. Actually, under current S&P methodology for IFRS 16, they typically: - Use reported EBITDA (which includes lease depreciation in operating expenses, or rather excludes it since it's depreciation) - Add back lease interest to FFO Let me recalculate EBITDA properly: Operating profit (IFRS) = 6,489M This includes: depreciation of PPE and intangibles, and IFRS 16 lease depreciation D&A expense = 3,613M (total depreciation and amortization) So EBITDA = 6,489 + 3,613 = 10,102M But wait - is the 3,613M just D&A, or does it include lease depreciation? Under IFRS 16, lease depreciation is typically part of D&A. Looking at cash flow: "Adjustments For Depreciation And Amortisation Expense" = 3,613M For S&P Adjusted_EBITDA, typical adjustments: - Add back non-recurring losses / subtract non-recurring gains: -8M (gain to remove) - Pension adjustments: need to check if any pension service costs are in operating items From the data: "Noncurrent Provisions For Employee Benefits" = 1,459M to 1,149M (decrease). "Other Longterm Provisions" = 1,137M to 961M. Looking at OCI: "Other Comprehensive Income Before Tax Gains Losses On Remeasurements Of Defined Benefit Plans" = 362M. This suggests defined benefit plans exist. For S&P, pension adjustments typically involve adding back pension service cost to EBITDA (if it's in operating expenses) and treating deficit as debt-like. However, in IFRS, pension service cost is typically in operating expenses. Without detailed pension breakdown, I'll make a simplifying assumption that pension service costs are embedded in operating expenses and not separately identifiable. Given the relatively small size of pension provisions (1,149M vs total liabilities), I'll proceed with minimal pension adjustment. **Joint Venture adjustments**: Share of profit of associates = 22M. For S&P, if we want proportional EBITDA, we'd add this back and include proportional share of JV EBITDA. However, for infrastructure, S&P sometimes accepts equity accounting. Given limited data on JVs, I'll add back the 22M (to get to pre-associate operating profit) but not try to gross up JV EBITDA. Actually, standard approach: add back equity-accounted profits to get to "EBITDA before associates", then if material, add proportional EBITDA. Since we only have net profit of associates (22M), and not their EBITDA, I'll add back 22M and stop there. **Adjusted_EBITDA calculation:** - Base EBITDA: 10,102M - Less: Non-recurring gain: -8M - Add back: Share of profit of associates (to de-equity-account): +22M - Lease adjustment: Under IFRS 16, reported EBITDA already excludes lease interest (which is in finance costs). S&P sometimes adds lease interest back to get to "as if operating lease" EBITDA. The lease interest is 48M. Add this back. - Pension: insufficient data, assume 0 Wait - let me reconsider. Under IFRS 16: - Lease depreciation is in D&A (part of 3,613M) - Lease interest is in finance costs (48M) - EBITDA = Operating profit + D&A, where operating profit already has lease depreciation deducted For S&P's Adjusted_EBITDA, they typically want a "debt-free" measure. The 48M lease interest is already excluded from operating profit. If we want comparability with pre-IFRS 16, we'd add back both lease depreciation and lease interest. But lease depreciation is already in the 3,613M and added back. Actually, standard S&P approach now is to work with reported numbers and make specific adjustments. For FFO, they add back lease interest. Let me use a cleaner approach from S&P's standard methodology: **Adjusted_EBITDA = 10,102M - 8M (non-recurring gain) + 22M (associate profit add-back) + 48M (lease interest, to normalize) = 10,164M** Hmm, but actually for FFO calculation, S&P typically starts from net income or funds from operations and builds up. Let me go to Step 3 and use the standard FFO formula. ## Step 3: Estimate FFO S&P FFO formula from net income approach: FFO = Net income from continuing operations + D&A + deferred income taxes + other non-cash items - non-recurring gains/losses + interest expense - interest income (if not from operations) Or from EBITDA approach: FFO = Adjusted_EBITDA - cash interest - cash taxes Let me use the cash flow based approach as it's more robust: From the cash flow statement: Cash Flows From Used In Operations Before Changes In Working Capital: 10,215M This is essentially: EBIT + D&A - cash taxes paid (not accrued) + other non-cash items - working capital changes... no wait, it's before working capital. Actually "Cash Flows From Used In Operations Before Changes In Working Capital" = 10,215M Then: - Increase Decrease In Working Capital: -392M (negative = use of cash, so working capital increased) - Income Taxes Paid: 1,603M (cash outflow) - Interest Paid And Interest Received: 563M (net outflow? or is this classified...) Wait, let me look at the full operating cash flow: Cash Flows From Used In Operations Before Changes In Working Capital: 10,215M + Increase Decrease In Working Capital: -392M - Income Taxes Paid Classified As Operating Activities: 1,603M - Interest Paid And Interest Received Classified As Operating Activities: 563M? No wait, this is likely net interest paid + Dividends Received From Investments Accounted For Using Equity Method: 92M + Other Inflows Outflows Of Cash: 854M = Cash Flows From Used In Operating Activities: 9,387M Let me verify: 10,215 - 392 - 1,603 - 563 + 92 + 854 = 8,603? That doesn't equal 9,387. Actually re-reading: "Interest Paid And Interest Received Classified As Operating Activities" = 563M. The sign convention in cash flows can be tricky. If it's positive 563M, it could mean net inflow, or it could be presented as a positive number for outflow (depending on format). Looking at the pattern: "Finance Costs Paid Classified As Operating Activities" = 29M (separate line). This suggests interest paid is 29M classified as operating. Actually I think "Interest Paid And Interest Received Classified As Operating Activities" = 563M is likely the net amount (interest paid minus received), presented as positive for outflow. Let me try: 10,215 - 392 - 1,603 + 92 + 854 = 9,166, then minus 563 = 8,603? Still not 9,387. Hmm, let me re-check: 10,215 - 392 = 9,823. Then 9,823 - 1,603 = 8,220. Then 8,220 - 563 = 7,657. Then + 92 = 7,749. Then + 854 = 8,603. Not 9,387. Wait, maybe "Interest Paid And Interest Received" is 563M inflow? 10,215 - 392 - 1,603 + 563 + 92 + 854 = 9,729. Still not 9,387. Let me try different signs. Maybe working capital -392 means source of cash (decrease in working capital)? In some conventions, "Increase Decrease" as negative means decrease. If -392 means decrease in working capital (source of cash): 10,215 + 392 - 1,603 - 563 + 92 + 854 = 9,387. ✓ Yes! So working capital change of -392M means decrease in working capital (positive for cash flow). So: Cash Flows From Used In Operations Before Changes In Working Capital = 10,215M + Decrease in working capital = +392M (interpreting -392 as decrease) - Income taxes paid = -1,603M - Net interest paid = -563M? Or is it +563M? Actually with +392: 10,215 + 392 = 10,607. Then 10,607 - 1,603 = 9,004. Need to get to 9,387 with remaining items 92 + 854 = 946, and interest item. 9,004 + 946 = 9,950. Then 9,950 - 563 = 9,387. So interest is subtracted (paid, not received). So net interest paid in operating activities = 563M. But wait, there's also "Finance Costs Paid Classified As Operating Activities" = 29M. This seems to be a subset or different classification. Actually re-reading: "Finance Costs Paid Classified As Operating Activities" = 29M. This might be specific finance costs (like arrangement fees) paid, while "Interest Paid And Interest Received" = 563M is the main interest. For FFO calculation, S&P standard formula: FFO = Funds from operations = Net income + D&A + deferred taxes + other non-cash - non-recurring gains/losses Or more precisely from cash flow: FFO = Cash flow from operations before working capital changes - cash interest - cash taxes? No, that's different. Standard S&P FFO: FFO = Net income before preferred dividends + depreciation and amortization + deferred income taxes + other non-cash items From the cash flow data, "Cash Flows From Used In Operations Before Changes In Working Capital" = 10,215M includes: - Net income: 4,417M + D&A: 3,613M + share-based payments: 162M - gains on disposal: -68M? Actually -68M means gains (subtract) - fair value gains: -236M + undistributed profits of equity method: 42M + net finance costs: 614M + interest on leases: 48M + income tax expense: 1,737M Sum: 4,417 + 3,613 + 162 - 68 - 236 + 42 + 614 + 48 + 1,737 = 10,329M But reported is 10,215M. Difference of 114M. Possibly other items or my interpretation. Actually, looking more carefully, "Adjustments For Net Finance Costs" = 614M. This adds back total net finance costs (interest expense minus interest income). But then "Finance Costs Paid Classified As Operating Activities" = 29M and "Interest Paid And Interest Received Classified As Operating Activities" = 563M are in the cash flow section. For S&P FFO, we want: - Start from net income: 4,417M - Add back D&A: 3,613M - Add back deferred taxes: need to calculate. Income tax expense 1,737M, cash taxes paid 1,603M, so deferred tax portion = 134M - Add back other non-cash: share-based payments 162M, undistributed profits of associates 42M - Subtract non-recurring gains: gains on disposal 68M, fair value gains 236M, non-recurring operating gain 8M - Add back interest expense (to get to pre-interest, pre-tax): net finance costs 614M + lease interest 48M = 662M total interest Wait, S&P FFO is typically "funds from operations" before interest and after working capital, or after interest? Standard definition: FFO = Net income + D&A + deferred taxes + other non-cash items - non-recurring gains/losses This is AFTER interest expense. So we do NOT add back interest. Let me recalculate: FFO = 4,417M (net income) + 3,613M (D&A) + 134M (deferred taxes = 1,737 - 1,603) + 162M (share-based payment, non-cash) + 42M (undistributed profits of equity investments) - 68M (gains on disposal) - 236M (fair value gains) - 8M (non-recurring operating gain) = 4,417 + 3,613 + 134 + 162 + 42 - 68 - 236 - 8 = 8,056M But wait, this includes dividends to non-controlling interests? S&P FFO is typically before non-controlling interests or after? Usually FFO is available to all providers of capital, so we use net income (which includes NCI). Actually, S&P typically uses "net income from continuing operations attributable to all equity holders" or similar. The 4,417M is total net income including NCI. Let me cross-check with EBITDA approach: Adjusted_EBITDA - cash interest - cash taxes Adjusted_EBITDA = 10,102 (base) - 8 (non-recurring) = 10,094M? Or with other adjustments. Actually from cash flow: "Cash Flows From Used In Operations Before Changes In Working Capital" = 10,215M. This is essentially EBITDA - cash taxes + some other items, or EBIT + D&A + other non-cash. 10,215M includes: - Operating profit 6,489M + D&A 3,613M + other non-cash adjustments (share-based 162, gains/losses, etc.) + tax expense (not paid) + finance costs (not paid) Actually it's: 6,489 + 3,613 + 162 - 68 - 236 + 42 + 614 + 48 + 1,737 = 10,401? Not matching. Let me just use: 10,215M is the starting point for "cash from operations before working capital" For S&P FFO, a common practical approach is: FFO = Cash flow from operations before working capital changes - after-tax interest income (if any) +/- other adjustments Or: FFO = 10,215M - 563M (interest paid, to get to after-interest? No, 10,215 already includes...) Actually, I think 10,215M is already after adding back non-cash items to net income, but BEFORE working capital, taxes paid, and interest paid/received. From the reconciliation: 10,215M - 392M (working capital) - 1,603M (taxes) - 563M (net interest) + 92M (dividends) + 854M (other) = 9,387M? Let me recheck with working capital as source: 10,215 + 392 - 1,603 - 563 + 92 + 854 = 9,387. ✓ So 10,215M is before: working capital, taxes paid, interest paid, dividends received, other. For FFO, S&P typically uses: FFO = Cash flow from operations before working capital changes - cash interest paid? No, that's different. Let me use the standard S&P definition more carefully: **FFO = Net income + Depreciation & amortization + Deferred income taxes + Other non-cash items - Non-recurring gains/losses** = 4,417 + 3,613 + (1,737 - 1,603) + 162 + 42 - 68 - 236 - 8 = 4,417 + 3,613 + 134 + 162 + 42 - 68 - 236 - 8 = 8,056M But I need to check if "other non-cash items" includes the fair value gains and disposal gains properly. The -236M and -68M are already deductions (gains to remove). Actually, looking at adjustments: "Adjustments For Fair Value Gains Losses" = -236M. The negative means these are gains (reducing profit). So we subtract them from net income to normalize. Similarly "Adjustments For Losses Gains On Disposal Of Noncurrent Assets" = -68M, meaning gains. And "Other Operating Income Expense Non Recurring" = 8M (positive, so gain). For "Adjustments For Undistributed Profits Of Investments Accounted For Using Equity Method" = 42M. This adds back the non-cash equity pickup (since we want FFO, not earnings). So FFO = 4,417 + 3,613 + 134 + 162 - 68 - 236 + 42 - 8 = 8,056M Wait, I need to be more careful about tax. The 1,737M is income tax expense. Cash taxes paid are 1,603M. The difference 134M is deferred tax. But in FFO, we add back DEFERRED taxes, not total tax expense. Actually no - we start from net income which already has total tax expense deducted. So we add back the deferred portion only (since it's non-cash). Actually, standard approach: Net income = PBT - tax expense. Tax expense includes current and deferred. Cash taxes paid = current portion (roughly). So deferred tax = tax expense - cash taxes = 1,737 - 1,603 = 134M. This is added back as non-cash. But wait - is 1,603M the same as "Income Taxes Paid Classified As Operating Activities"? Yes. So deferred tax = 134M. However, I also need to consider if there are tax items in OCI or elsewhere. Looking at OCI: "Income Tax Relating To Components Of Other Comprehensive Income That Will Be Reclassified To Profit Or Loss" = 110M, and "Income Tax Relating To Components Of Other Comprehensive Income That Will Not Be Reclassified To Profit Or Loss" = 97M. These are not in net income, so ignore for FFO. Now, what about interest? In standard FFO, we do NOT add back interest because FFO is a measure of cash flow available to service debt (after interest). Wait, actually let me check S&P's definition. S&P's FFO definition: "Funds from operations (FFO) are cash flows from operating activities before changes in working capital, minus cash tax payments, plus after-tax interest received, minus after-tax interest paid, minus dividends received, plus dividends paid..." Actually no, that's free cash flow. Let me be more careful. S&P defines FFO as: FFO = Net income before extraordinary items + Depreciation and amortization + Deferred income taxes + Other non-cash items This is AFTER interest expense. So interest is NOT added back. But then FFO is used in "FFO to debt" and "FFO interest coverage". For FFO interest coverage, we use FFO / gross interest. For FFO to debt, it's FFO / debt. So my calculation: FFO = 8,056M But let me cross-check with another approach. From EBITDA: Adjusted_EBITDA = 10,094M (10,102 - 8 non-recurring) - Cash interest paid? No, EBITDA is pre-interest. Actually: EBITDA = 10,102M (includes D&A add-back, so pre-interest, pre-tax) - Interest expense = 614M (net finance costs) + 48M (lease interest) = 662M? But "net finance costs" includes interest income. Gross finance costs = 750M Interest income on cash = 136M Net finance costs = 614M Other finance income/cost = 279M (positive, meaning income) Total interest expense = 750M (gross) Total interest income = 136M + 279M = 415M Net = 750 - 415 = 335M? But reported net finance costs = 614M. Hmm, discrepancy. Let me check: 750 - 136 = 614. So "Other Finance Income Cost" = 279M is not interest income. It's other finance items (like FX gains, fair value changes, etc.). So: Gross finance costs = 750M, Interest income on cash = 136M, Net finance costs = 614M. The 279M is other finance income (probably FX or other). For cash interest: "Interest Paid And Interest Received Classified As Operating Activities" = 563M (net paid). "Finance Costs Paid Classified As Operating Activities" = 29M. Total cash interest paid = probably around 750M or less (some may be capitalized or in financing). For S&P FFO from EBITDA approach: FFO = Adjusted_EBITDA - cash interest - cash taxes Adjusted_EBITDA = 10,102 - 8 (non-recurring) + adjustments for associates, pensions, etc. If we use: 10,094M (EBITDA less non-recurring) - Cash interest paid (approx) = 563M + 29M = 592M? Or just 563M? - Cash taxes = 1,603M = 10,094 - 592 - 1,603 = 7,899M This is close to my 8,056M but different. The difference may be due to: - Dividends received from associates (92M) - in cash flow but not in EBITDA - Other items in the 10,215M vs my 10,094M EBITDA Actually, let me use the more precise cash-flow based FFO: From "Cash Flows From Used In Operations Before Changes In Working Capital" = 10,215M This includes: net income + non-cash items (but not working capital, not cash taxes, not cash interest) Actually 10,215M is roughly: Net income 4,417 + D&A 3,613 + other non-cash items = 10,215 So 10,215 - 4,417 - 3,613 = 2,185M of other adjustments. These include: tax expense 1,737, finance costs 614, lease interest 48, share-based 162, gains/losses, etc. For FFO, we want: Net income + D&A + deferred tax + other non-cash - non-recurring gains = 4,417 + 3,613 + 134 + (162 + 42 - 68 - 236 - 8) = 4,417 + 3,613 + 134 + (-108) = 8,056M But wait, is 10,215M equal to this before some items? 4,417 + 3,613 + 1,737 + 614 + 48 + 162 - 68 - 236 + 42 = 10,329M. Not 10,215M. Difference of 114M. Hmm, let me check if there's something else. "Adjustments For Provisions And Adjustments For Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss" = 0 for 2022. In 2021 it was 206M. Maybe the difference is due to how "net finance costs" is defined vs components. Or perhaps there's an item I'm missing. Given the complexity, let me use a practical approach: FFO ≈ 8,056M or approximately 8,000M. But let me also check if we should use the 10,215M as a base. Actually, looking at S&P methodology more carefully, they sometimes define FFO as: FFO = Cash flow from operating activities + Increase in working capital (or - decrease) - Capitalized interest (if any) - Dividends received from associates (if included in CFO) Or: FFO = CFO + working capital changes - after-tax interest income + dividends received? No. Let me try: CFO = 9,387M + Increase in working capital = +392M (since working capital decrease was source of cash) + Cash interest paid = +563M (to get to pre-interest) + Cash taxes paid = +1,603M (to get to pre-tax) - Dividends received from associates = -92M (to exclude, as not operating) - Other non-operating inflows = -854M = 9,387 + 392 + 563 + 1,603 - 92 - 854 = 10,999M? Not matching 10,215M. I think my sign convention for working capital is wrong. Let me re-interpret. "Increase Decrease In Working Capital" = -392M. In many European presentations, negative means "increase in working capital" (use of cash). So: CFO before WC: 10,215M - Increase in working capital: 392M - Income taxes paid: 1,603M - Interest paid net: 563M + Dividends received: 92M + Other: 854M = 9,387M Check: 10,215 - 392 - 1,603 - 563 + 92 + 854 = 8,603? No: 10,215 - 392 = 9,823; 9,823 - 1,603 = 8,220; 8,220 - 563 = 7,657; 7,657 + 92 = 7,749; 7,749 + 854 = 8,603. Not 9,387. Hmm, still not matching. Unless "Interest Paid And Interest Received" = 563M is actually interest received (inflow). Then: 10,215 - 392 - 1,603 + 563 + 92 + 854 = 9,729. Closer but not 9,387. Or if working capital is decrease (source): 10,215 + 392 - 1,603 + 563 + 92 + 854 = 10,513. No. Let me try: 10,215 - 392 - 1,603 + 563 + 92 + 854 = 9,729. Difference from 9,387 is 342. Or: 10,215 + 392 - 1,603 - 563 + 92 + 854 = 9,387! ✓ So: working capital -392M means decrease in working capital (source of cash, so +392 in the flow) Interest Paid And Interest Received = 563M, but with minus sign? No wait, I used -563. Actually: 10,215 + 392 = 10,607. Then 10,607 - 1,603 = 9,004. Then 9,004 - 563 = 8,441. Then + 92 = 8,533. Then + 854 = 9,387. ✓ So yes: working capital decrease (positive for cash), taxes paid (negative), interest paid (negative), dividends received (positive), other (positive). So CFO before WC = 10,215M includes interest and tax expense (not paid), but not working capital changes. For FFO, S&P typically uses: FFO = CFO before working capital changes - cash interest paid - cash taxes paid + dividends received from associates? Or something similar. Actually, standard S&P FFO from cash flow: FFO = Cash flow from operating activities before changes in working capital - after-tax interest income + dividends received from investments in equity method Or more commonly, they use the net income based approach for consistency. Let me settle on: **FFO = 8,056M** from net income approach, or approximately **8,000M** rounded. But let me also compute using the EBITDA - cash interest - cash taxes approach with proper Adjusted_EBITDA: **Adjusted_EBITDA** = Operating profit + D&A - non-recurring gains + associate profit add-back + lease interest add-back = 6,489 + 3,613 - 8 + 22 + 48 = 10,164M Wait, should I add lease interest? Under IFRS 16, EBITDA includes lease depreciation (in D&A add-back) but excludes lease interest (which is below operating profit). For S&P comparability with pre-IFRS 16, they sometimes add lease interest back to EBITDA. Actually, let me check: Operating profit 6,489M includes all operating expenses. Under IFRS 16, lease depreciation is in operating expenses (or D&A). Lease interest is in finance costs. So operating profit is already after lease depreciation but before lease interest. EBITDA = Operating profit + D&A = 6,489 + 3,613 = 10,102M. This includes lease depreciation in the 3,613M. For "as if operating lease" EBITDA, S&P might want to add lease interest back: 10,102 + 48 = 10,150M. Then Adjusted_EBITDA = 10,150 - 8 (non-recurring) + 22 (associates) = 10,164M. Then FFO = 10,164 - cash interest - cash taxes Cash interest: from cash flow, "Interest Paid And Interest Received" = 563M paid, plus "Finance Costs Paid" = 29M, total ≈ 592M. But this includes interest received. Gross interest paid is higher. From P&L: Gross finance costs = 750M. This is accrued interest expense. Cash interest paid may differ due to timing, capitalized interest, etc. For S&P FFO, they typically use CASH interest paid, not accrued. From cash flow: 563M + 29M = 592M? Or is 29M part of 563M? Actually "Finance Costs Paid Classified As Operating Activities" = 29M might be a subset. Total cash interest = 563M (which includes interest received, net). If interest received was 136M (from P&L), then interest paid = 563 + 136 = 699M? Or 563M is net paid = interest paid - interest received, so interest paid = 563 + 136 = 699M. But "Interest Income On Cash And Cash Equivalents" = 136M. "Other Finance Income Cost" = 279M. Total interest/finance income = 415M. If net interest paid is 563M, then gross interest paid = 563 + 415 = 978M? That seems high compared to 750M expense. Actually, maybe "Interest Paid And Interest Received Classified As Operating Activities" = 563M is the NET amount, and since it's classified as operating, it might include only some interest. Under IFRS, some interest can be classified as financing. Looking at financing activities: "Proceeds From Noncurrent Borrowings" etc. No interest there. Let me use a simpler approach: FFO = 8,056M from net income method. This is after interest expense (accrual basis), so it's consistent. For debt, we need to be consistent. FFO is after interest, so we compare to debt service (interest + principal). ## Step 4: Estimate Adjusted_Debt From balance sheet (2022 year-end, i.e., 2023-01-01 values): - Noncurrent Portion Of Noncurrent Bonds Issued: 20,425M - Noncurrent Portion Of Other Noncurrent Borrowings: 3,205M - Shortterm Borrowings: 6,368M - Current Derivative Financial Liabilities: 440M - Noncurrent Derivative Financial Liabilities: 1,939M - Current Lease Liabilities: 522M - Noncurrent Lease Liabilities: 1,580M Total reported debt-like items = 20,425 + 3,205 + 6,368 + 440 + 1,939 + 522 + 1,580 = 34,479M But we need to be careful about what's in "reported debt". Standard debt = bonds + borrowings + short-term borrowings = 20,425 + 3,205 + 6,368 = 30,000M? Let me check: 20,425 + 3,205 = 23,630; + 6,368 = 29,998M ≈ 30,000M. Now, for Adjusted_Debt per S&P: Adjusted_Debt = reported_debt + leases + pension_deficit + guarantees + hybrid_debt_portion + other_debt_like_items - eligible_cash **Leases**: Already included in borrowings? Under IFRS 16, lease liabilities are separate. We have: - Current Lease Liabilities: 522M - Noncurrent Lease Liabilities: 1,580M Total leases = 2,102M Are these in "borrowings"? Probably not, they're separate line items. So add to debt: +2,102M (but wait, are they already in the 30,000M? No, they're separate). Actually, looking at the liability structure: - Noncurrent Liabilities include: bonds 20,425M, other borrowings 3,205M, derivative liabilities 1,939M, lease liabilities 1,580M, other 894M, deferred tax 4,162M - Current Liabilities include: short-term borrowings 6,368M, current lease 522M, etc. So "reported debt" for S&P purposes typically includes: bonds, borrowings, short-term borrowings, and sometimes derivatives if debt-like. Let me define reported debt = 20,425 + 3,205 + 6,368 = 29,998M Plus lease liabilities = 2,102M Plus derivatives (debt-like, if negative mark-to-market) = 440 + 1,939 = 2,379M? Or just the liability side. Actually, derivative liabilities are obligations, but they may be offset by assets. Net derivative position: liabilities 2,379M - assets 376 + 115 = 491M non-current + current? Wait, derivative assets are 376M (noncurrent) + 115M (current) = 491M. Derivative liabilities are 1,939M + 440M = 2,379M. Net = -1,888M (net liability). For S&P, they typically include derivative liabilities as debt-like if they're not hedging operating items, or net them against assets if netting is permitted. Let me include derivative liabilities net of derivative assets where legally nettable: 2,379 - 491 = 1,888M. **Pension deficit**: Noncurrent Provisions For Employee Benefits: 1,149M Other Longterm Provisions: 961M Total long-term provisions = 2,110M Are these pension? "Provisions For Employee Benefits" includes pension, but may include other post-employment benefits. Without more detail, I'll assume the pension deficit is embedded here. For S&P, pension deficit = liability - plan assets. We don't have plan assets. The 1,149M is provision, not necessarily net deficit. In IFRS, pension liabilities are net of plan assets on balance sheet. So 1,149M might be the net deficit. Actually, looking at the notes structure, "Noncurrent Provisions For Employee Benefits" likely includes the net pension liability. I'll add this as debt-like: +1,149M. But wait - is this already in "other noncurrent liabilities" or separate? It's separate. So add +1,149M. **Guarantees**: No specific data on guarantees. Assume 0. **Hybrid debt**: No specific data. Assume 0. **Other debt-like items**: - Deferred tax liabilities: 4,162M. S&P typically does NOT include deferred taxes as debt-like (they're non-debt). - Other noncurrent liabilities: 894M. May include some debt-like items, but likely operating. Assume 0. - Current provisions: 6,599M. Operating, not debt-like. - Trade payables: 13,088M. Operating, not debt-like. - Other current liabilities: 20,315M. May include some debt-like, but likely operating. **Eligible cash**: Cash And Cash Equivalents: 12,578M Current Cash Management Financial Assets: 755M Other Current Financial Assets: 84M Noncurrent financial assets that are liquid? Probably not. S&P typically uses "cash and near-cash" as eligible cash. Standard approach: cash and cash equivalents = 12,578M. Sometimes they subtract restricted cash or operating cash needs. Looking at "Cash And Cash Equivalents If Different From Statement Of Financial Position" = 11,495M for 2023-01-01. This suggests some difference, possibly restricted cash. For conservative approach, I'll use reported cash: 12,578M. But wait - S&P also sometimes includes cash management financial assets as cash: 755M. Total eligible cash = 12,578 + 755 = 13,333M? Or just 12,578M. Actually, "Current Cash Management Financial Assets" = 755M are likely short-term investments, cash-like. Let me use: eligible cash = 12,578 + 755 = 13,333M. But I need to check if there's restricted cash. The difference between 12,578M and 11,495M (in "Cash And Cash Equivalents If Different From Statement Of Financial Position") = 1,083M. This might be restricted cash included in the 12,578M but not in the cash flow statement. For S&P, restricted cash is typically NOT eligible for netting against debt. So eligible cash = 11,495M (the unrestricted cash per cash flow statement) + 755M? Or just 11,495M. Let me use 11,495M as the conservative, comparable number. **Adjusted_Debt calculation:** Reported debt (bonds + borrowings + short-term): 29,998M + Lease liabilities: 2,102M + Net derivative liabilities: 1,888M (or just include liability portion) + Pension deficit (employee benefits provision): 1,149M - Eligible cash: 11,495M = 29,998 + 2,102 + 1,888 + 1,149 - 11,495 = 23,642M Wait, let me reconsider derivatives. S&P typically includes derivative liabilities as debt-like, but may also consider derivative assets as offsets if they're receivable from the same counterparty with netting agreements. Without specific netting info, I'll include gross derivative liabilities: 2,379M. Adjusted_Debt = 29,998 + 2,102 + 2,379 + 1,149 - 11,495 = 24,133M Hmm, but this seems high. Let me check if leases are already in borrowings. Under IFRS 16, lease liabilities are presented separately from borrowings. So yes, add them. Actually, looking at VINCI's structure again: they're a concession company. S&P has specific treatment for concessions. From the methodology: "When operating under a concession, the company is required to repay its debt before the assets return to the grantor." For VINCI's concession debt, S&P may treat it as limited-recourse or ring-fenced. However, for consolidated reporting, we use consolidated debt. Also, for transportation infrastructure, S&P mentions they may deconsolidate securitized debt or apply specific treatments. Let me also check if there's "debt at amortized cost" vs "fair value". The bonds and borrowings are likely at amortized cost. Another consideration: VINCI has significant cash (12,578M) and short-term investments. S&P's standard approach is to subtract "surplus cash" but not all cash. They typically leave some cash for operations (usually 1-2% of revenue or specific analysis). For a company with 62B revenue, 1-2% = 600M-1,200M operating cash need. So surplus cash = 12,578 - 1,000 ≈ 11,500M. This aligns with using most cash as eligible. Let me recalculate with slightly different assumptions: **Reported debt:** - Noncurrent bonds: 20,425M - Noncurrent other borrowings: 3,205M - Short-term borrowings: 6,368M Total = 29,998M **Plus:** - Lease liabilities (current + noncurrent): 522 + 1,580 = 2,102M - Derivative liabilities (net of assets where netting applies): Let's use 1,888M net, or 0 if we assume derivatives are hedging and not debt-like. S&P typically includes derivative liabilities as debt-like if they're not normal operating hedges. For infrastructure companies with commodity/FX hedging, they might be operating. I'll include 50%: 944M. - Pension deficit: 1,149M **Minus eligible cash:** - Cash and equivalents: 11,495M (unrestricted per cash flow statement) - Cash management assets: 755M Total eligible = 12,250M Adjusted_Debt = 29,998 + 2,102 + 944 + 1,149 - 12,250 = 21,943M Or with full derivatives: 29,998 + 2,102 + 1,888 + 1,149 - 12,250 = 22,887M Let me try another approach. Looking at VINCI's actual credit metrics from S&P or similar. VINCI is typically rated BBB+ or similar by S&P. Their FFO/debt is usually around 20-25%. With FFO ≈ 8,000M and debt ≈ 30,000M-35,000M, ratio = 22-27%. This seems reasonable. Let me refine FFO. From the cash flow statement, a cleaner FFO might be: FFO = Cash Flows From Used In Operations Before Changes In Working Capital - cash taxes paid + cash interest received - cash interest paid? No, that's getting confused. Actually, "Cash Flows From Used In Operations Before Changes In Working Capital" = 10,215M already includes non-cash adjustments. This is essentially EBITDA - working capital accruals + other. For S&P, a practical FFO definition from this: FFO = 10,215M - 1,603M (cash taxes) - 563M (net cash interest paid) + 92M (dividends from associates, equity income) - 854M (other, if non-operating)? Actually S&P FFO excludes dividends from associates (they're investment returns). And "other inflows" may be non-recurring. Let me try: FFO = 10,215 - 1,603 - 563 + adjustments for non-recurring and normalization. But 10,215 - 1,603 - 563 = 8,049M. Close to my 8,056M! Then + 92M dividends - 854M other = 7,287M? Or is other operating? Given the complexity, let me use **FFO = 8,056M** from net income approach, or approximately **8,000M**. Actually, let me recalculate more carefully with the net income approach: Net income: 4,417M + D&A: 3,613M + Deferred tax: 134M (1,737 - 1,603) + Share-based payments: 162M (non-cash portion? Actually expense was 356M, adjustment is 162M, so 194M was cash? No, share-based is always non-cash. The 356M is total expense, 162M is the non-cash portion in CFO reconciliation. The difference might be settled in cash or equity.) + Undistributed profits of equity method: 42M - Gains on disposal: -68M - Fair value gains: -236M - Non-recurring operating gain: -8M = 4,417 + 3,613 + 134 + 162 + 42 - 68 - 236 - 8 = 8,056M Wait, should I use 162M or 356M for share-based? The 356M is the total expense in P&L. The 162M is the adjustment in cash flow (meaning 194M was settled in cash or otherwise not a non-cash add-back?). Actually, looking at the cash flow: "Adjustments For Sharebased Payments" = 162M. This suggests only 162M was non-cash. But share-based payments are typically entirely non-cash. Actually in IFRS, share-based payment expense is non-cash. The 162M might be the portion that was equity-settled. If some was cash-settled (liability awards), then 356M total expense, 162M equity-settled (added back), and 194M cash-settled (not added back, as it's like cash compensation). For FFO, we add back non-cash items. So +162M is correct. But wait - is the 356M expense already in operating profit? Yes. And 162M of it is non-cash. The 194M cash-settled portion is like salary, already in operating profit and not added back. So FFO = 8,056M seems correct. However, I need to check if "Other Comprehensive Income" items affect FFO. No, FFO is based on net income, not comprehensive income. Now for a final check on FFO: Should I add back the 22M share of profit of associates? In my calculation, I started from net income which already includes +22M from associates. But then I added 42M for "undistributed profits" adjustment. The 42M is the non-cash portion (retained earnings not distributed as dividends). The 22M in net income includes both distributed and undistributed. The 92M dividends received is the cash distribution. Actually, net income includes: share of profit of associates = 22M. Of this, 92M was received as dividends (more than 22M, meaning prior period earnings were distributed). The 42M "undistributed profits" adjustment in cash flow suggests that the net income includes some equity-accounted profit that wasn't received as cash. For FFO, we want to exclude equity-accounted earnings (since they're not cash). So we should subtract the 22M from net income, not add it back. But then we add 42M for undistributed profits? That doesn't make sense. Let me re-think. The cash flow adjustment "Adjustments For Undistributed Profits Of Investments Accounted For Using Equity Method" = 42M. This is ADDED BACK in the cash flow reconciliation, meaning it was deducted in net income but not received in cash. But net income only shows 22M total share of profit. How can undistributed profits be 42M? Perhaps the 42M is the change in undistributed profits, not the total. Or perhaps it includes other items. Actually, looking more carefully: "Share Of Profit Loss Of Associates And Joint Ventures Accounted For Using Equity Method" = 22M. This is in the P&L. In the cash flow: "Adjustments For Undistributed Profits Of Investments Accounted For Using Equity Method" = 42M. This suggests that the 22M in P&L includes some distributed profits, and the undistributed portion is 42M? That would mean total equity-accounted earnings were 64M, of which 22M is net income share and 42M is added back? That doesn't align. Perhaps the 42M is a different metric - maybe it's the dividends received (92M) minus something, or it's related to other comprehensive income. Given the confusion, let me just use the cash flow based FFO which is cleaner: From CFO before WC = 10,215M This is: Net income + all non-cash adjustments For FFO, we want to normalize by removing non-recurring items and adjusting for associates. Non-recurring items to adjust: - Gains on disposal: -68M (already in 10,215 as +68M add-back? No, the adjustment is -68M, meaning gains were deducted. In 10,215, this is already included.) - Fair value gains: -236M (similar) - Non-recurring operating gain: 8M (in P&L, not in 10,215 directly?) Actually, the 10,215M is based on net income which includes the 8M non-recurring gain. The cash flow adjustments don't separately show this 8M. So 10,215M includes the 8M gain. To normalize: 10,215M - 8M = 10,207M. Then FFO = 10,207M - cash interest paid - cash taxes paid? No, 10,215M is before taxes and interest are paid, but after they're accrued. Actually, 10,215M includes: - Net income 4,417M (after tax expense and interest expense) + D&A 3,613M + other non-cash items So 10,215M is AFTER interest expense and tax expense (accrual), but BEFORE working capital, and with non-cash add-backs. For S&P FFO, we want AFTER cash interest and cash taxes. So: FFO = 10,215M - (cash taxes vs tax expense) - (cash interest vs interest expense) adjustments = 10,215M - (1,603 - 1,737) - (563 - 614 - 48)? Cash taxes paid = 1,603M, tax expense = 1,737M, so cash taxes are 134M less than expense. This means FFO should be 10,215 - (-134) = 10,349? No, that's wrong. If tax expense is 1,737 and cash paid is 1,603, then net income is lower by 1,737 (expense). But cash flow is lower by 1,603 (paid). The 134M difference is deferred tax, already added back in 10,215M. So 10,215M already reflects the add-back of deferred tax (since it's non-cash). The cash taxes paid are separate in the cash flow. For FFO, S&P typically uses: accrual-based FFO before working capital, then subtracts cash taxes and cash interest? No, that's double counting. I think the cleanest approach is: **FFO = 8,056M** from net income + add-backs approach. Let me also try: FFO = EBITDA - cash interest - cash taxes, with proper Adjusted_EBITDA. Adjusted_EBITDA = 10,102M (reported) - 8M (non-recurring) + 22M (associates, to de-equity account? No, for EBITDA we want pre-associate). Actually, standard EBITDA = Operating profit + D&A = 6,489 + 3,613 = 10,102M. This is AFTER share of profit of associates (22M is below operating profit). So EBITDA is pre-associate. For Adjusted_EBITDA, we might want to add proportional EBITDA of associates. But we don't have that data. So we leave as is, or add 22M back and call it "EBITDA before associates" = 10,102M (already is, since associates are below). Then Adjusted_EBITDA = 10,102 - 8 = 10,094M. FFO = 10,094 - cash interest - cash taxes = 10,094 - 750 (gross interest, approx) - 1,737 (tax expense)? No, that's not right. FFO should be after interest and tax. So: 10,094 - 750 - 1,737 = 7,607M? But this uses accrual interest and tax, not cash. Using cash: 10,094 - 699 (cash interest paid, est.) - 1,603 (cash taxes) = 7,792M. This is close to 8,056M but lower. The difference may be due to working capital in taxes/interest timing, or my cash interest estimate. Given all this, let me use **FFO = 8,000M** as a rounded, practical estimate. Or more precisely, let me use the average: **FFO ≈ 7,900M to 8,100M**. For precision, I'll use **FFO = 8,056M** from the net income approach. ## Step 5: Calculate FFO / Adjusted_Debt Using: - FFO = 8,056M - Adjusted_Debt = 24,133M (with full derivatives) or 21,943M (with net derivatives) Ratio with full derivatives: 8,056 / 24,133 = 0.3338 or 33.38% Ratio with net derivatives: 8,056 / 21,943 = 0.3671 or 36.71% Let me refine Adjusted_Debt. Looking at VINCI's actual S&P rating, they likely use: - Debt including lease liabilities - Less cash and cash equivalents - Plus/minus other items From balance sheet 2022 (year-start, 2022-01-01): - Noncurrent bonds: 22,212M - Noncurrent other borrowings: 2,757M - Short-term borrowings: 5,769M - Lease liabilities: 524 + 1,574 = 2,098M - Derivative liabilities: 513 + 422 = 935M - Less cash: 11,065M Debt at 2022 start = 22,212 + 2,757 + 5,769 + 2,098 + 935 - 11,065 = 22,706M For 2022 year-end (2023-01-01): = 20,425 + 3,205 + 6,368 + 2,102 + 2,379 - 12,578 = 21,901M? Or with 11,495 cash = 22,984M Hmm, using 11,495 unrestricted cash: 20,425 + 3,205 + 6,368 + 2,102 + 2,379 - 11,495 = 22,984M Or without derivatives: 20,425 + 3,205 + 6,368 + 2,102 - 11,495 = 20,605M Given VINCI's BBB+ rating and typical metrics, FFO/debt of 20-25% is common. With 8,056M FFO and 22,000M-24,000M debt, ratio is 33-37%, which seems high for BBB+. Wait, let me check. Actually for infrastructure companies, FFO/debt can be higher. And VINCI has been improving. Let me check if my FFO is too high or debt too low. Actually, looking at 2022 performance: VINCI had strong recovery post-COVID. Revenue up 25%, profits up significantly. FFO of 8B on 62B revenue (13% margin) seems reasonable for a construction/infrastructure company. Debt of 22B-24B with 30B equity gives leverage of ~40-45%, which is moderate. FFO/debt of 33-37% might be right for a strong year. But let me check if S&P uses lower FFO. Actually, S&P FFO typically excludes working capital but also makes other normalizations. They might use lower FFO. Let me try a more conservative FFO: - Start from 10,215M (CFO before WC) - Subtract: 1,603M cash taxes - Subtract: 563M net interest paid - Subtract: 92M dividends received (exclude, as investment income) - Add/Subtract: other normalization = 10,215 - 1,603 - 563 - 92 = 7,957M? Or +92 if we include dividends. S&P FFO typically includes dividends from associates as they're part of operating cash generation for infrastructure. So: 10,215 - 1,603 - 563 = 8,049M. Then normalize for non-recurring: -8M = 8,041M. This is very close to my 8,056M. So **FFO ≈ 8,040M**. For debt, let me use a more standard S&P approach: Reported debt = bonds + borrowings + lease liabilities + derivative liabilities (net) - cash = 20,425 + 3,205 + 6,368 + 2,102 + (1,939 + 440 - 376 - 115) - 11,495 = 32,100 + 1,888 - 11,495 = 22,493M Or with gross derivatives: 32,100 + 2,379 - 11,495 = 22,984M Let me use **Adjusted_Debt = 22,500M** as a reasonable estimate. FFO / Adjusted_Debt = 8,040 / 22,500 = 0.3573 or 35.73% Hmm, but let me check VINCI's actual metrics. I recall VINCI's S&P FFO/debt was around 20-25% historically. With 2022 being a strong year, maybe 30%+. Actually, I think I may be overestimating FFO or underestimating debt. Let me recheck debt. Looking at VINCI's 2022 annual report (from memory and data), total financial debt was around 25-30B EUR. With 12.6B cash, net debt around 12-17B. S&P Adjusted_Debt is typically higher than net debt due to add-backs. So 22-25B seems right. For FFO, let me verify with EBITDA: EBITDA = 10,102M - Interest = 750M - Taxes = 1,737M = 7,615M But this is "earnings before interest, taxes, depreciation, amortization" minus interest and taxes = EBIT - taxes = 6,489 - 1,737 = 4,752M? No, that's wrong. EBITDA - interest - taxes = 10,102 - 750 - 1,737 = 7,615M. This is "EBITDA after interest and taxes", not a standard metric. FFO should be closer to: Net income + D&A + deferred tax + other = 4,417 + 3,613 + 134 + 162 - 68 - 236 + 42 - 8 = 8,056M. Or from EBITDA: EBITDA - cash interest - cash taxes + other non-cash adjustments for non-recurring items = 10,102 - 699 - 1,603 - 8 = 7,792M. The difference (8,056 vs 7,792 = 264M) is due to timing differences (accrual vs cash) and other items. For S&P, they typically use the accrual-based FFO (net income approach), so 8,056M is correct. But wait - I need to subtract dividends to non-controlling interests? S&P FFO is typically "funds from operations available to the entity and its debt providers", so NCI dividends are not subtracted (they're part of net income distribution, not an operating cash flow adjustment). However, some S&P definitions use "net income attributable to ordinary shareholders" which excludes NCI. If we use net income attributable to owners: 4,259M instead of 4,417M. Then FFO = 4,259 + 3,613 + 134 + 162 - 68 - 236 + 42 - 8 = 7,898M. This is lower by 159M (the NCI portion). S&P Global Ratings typically uses consolidated net income (including NCI) for FFO, as debt is consolidated. So 4,417M is correct. However, for "FFO to debt", if debt is at the parent level and not consolidated, we might use parent FFO. But S&P typically rates the consolidated entity. Let me finalize with: - **FFO = 8,056M** (or round to 8,060M) - **Adjusted_Debt = 22,500M** (midpoint estimate) Ratio = 8,056 / 22,500 = 0.3580 But let me try to be more precise on debt. From the balance sheet, let me identify all debt-like items: 2023-01-01 (year-end 2022): - Noncurrent bonds: 20,425M - Noncurrent other borrowings: 3,205M - Short-term borrowings: 6,368M - Current lease liabilities: 522M - Noncurrent lease liabilities: 1,580M - Current derivative liabilities: 440M - Noncurrent derivative liabilities: 1,939M Sum = 34,479M Less eligible cash: - Cash and equivalents: 12,578M (or 11,495M unrestricted) - Cash management assets: 755M Net debt = 34,479 - 12,578 - 755 = 21,146M (with all cash) Or = 34,479 - 11,495 - 755 = 22,229M (with unrestricted cash) For S&P Adjusted_Debt, we also add: - Pension deficit: 1,149M (net employee benefit provision) Adjusted_Debt = 21,146 + 1,149 = 22,295M (with all cash) Or = 22,229 + 1,149 = 23,378M (with unrestricted cash) Hmm, using all cash is aggressive. Using unrestricted cash is more conservative. Let me use: **Adjusted_Debt = 23,000M** approximately. Then FFO / Adjusted_Debt = 8,056 / 23,000 = 0.3503 or 35.03%. Or with more precision: - Adjusted_Debt = 20,425 + 3,205 + 6,368 + 522 + 1,580 + 440 + 1,939 + 1,149 - 11,495 - 755 = 34,628 - 12,250 = 22,378M FFO / Adjusted_Debt = 8,056 / 22,378 = 0.3600 or 36.00%. Let me try yet another combination. Maybe S&P doesn't include all derivative liabilities, or includes derivative assets as offsets. Net derivative position = (376 + 115) - (1,939 + 440) = 491 - 2,379 = -1,888M If we use net derivatives as debt-like (only the net liability): +1,888M instead of +2,379M. Adjusted_Debt = 20,425 + 3,205 + 6,368 + 522 + 1,580 + 1,888 + 1,149 - 11,495 - 755 = 35,137 - 12,250 = 22,887M FFO / Adjusted_Debt = 8,056 / 22,887 = 0.3520 or 35.20%. Given all these calculations, the ratio is consistently in the **35-36% range**. However, I want to double-check my FFO. Let me recalculate from the precise formula: FFO = Net income 4,417M + D&A 3,613M + Deferred tax 134M (1,737 - 1,603) + Share-based payment (non-cash) 162M + Undistributed profits of equity investments 42M - Gains on disposal -68M - Fair value gains -236M - Non-recurring operating gain -8M = 4,417 + 3,613 + 134 + 162 + 42 - 68 - 236 - 8 = 8,056M Wait, I need to verify: is "undistributed profits of equity investments" added or subtracted? In the cash flow, it's an adjustment added to net income. This means it was deducted in arriving at net income but not paid in cash. But net income includes +22M share of profit. The 42M "undistributed profits" suggests that of the total equity-accounted earnings, 42M was not distributed as dividends. But 22M is the net share of profit. This is confusing. Actually, I think the 42M is the CHANGE in undistributed profits, not the total. Or it's a different metric. Let me just use the cash flow as given: 42M is added back. But wait - if net income includes 22M from associates, and we add 42M for undistributed profits, we're effectively saying that net income understates the cash flow from associates by 42M? That doesn't make sense if 22M is the total profit. Perhaps the 22M is after some adjustments, and 42M is the pre-tax or gross amount. Or perhaps the 42M includes other items. Given the data limitations, I'll use **FFO = 8,056M** as calculated. For a final check, let me see if this aligns with VINCI's reported credit metrics. VINCI's 2022 results showed strong FFO. The company reported "free cash flow" and "net cash position" improvements. S&P likely upgraded or maintained ratings based on strong 2022 performance. I recall VINCI's S&P FFO/debt was around 25-30% in 2021, improving in 2022. My 35% seems plausible for a strong year. Let me also consider: does VINCI's contracting business require different treatment? The construction business is more cyclical and working-capital intensive. S&P might apply some adjustments or use medial/low volatility table based on business mix. Given VINCI is about 60% concessions/40% contracting by profit, and concessions are low volatility while contracting is standard, S&P might use medial volatility table. But for the FFO/debt ratio calculation, the methodology doesn't change - just the thresholds for ratings. ## Final Calculation I'll use my most precise estimates: **FFO = 8,056M EUR** **Adjusted_Debt** calculation: - Bonds and borrowings (short and long-term): 20,425 + 3,205 + 6,368 = 29,998M - Lease liabilities: 522 + 1,580 = 2,102M - Derivative liabilities (net of assets where netting applies): 1,888M (net liability position) - Pension deficit (employee benefits): 1,149M - Less eligible cash and cash equivalents: 11,495M (unrestricted) - Less cash management assets: 755M Adjusted_Debt = 29,998 + 2,102 + 1,888 + 1,149 - 11,495 - 755 = 22,887M FFO / Adjusted_Debt = 8,056 / 22,887 = 0.3520 Or with slightly different assumptions (using all cash 12,578M): Adjusted_Debt = 29,998 + 2,102 + 1,888 + 1,149 - 12,578 - 755 = 21,804M Ratio = 8,056 / 21,804 = 0.3695 The difference is whether we use 11,495M or 12,578M cash. S&P typically uses "available cash" which excludes restricted cash. The 11,495M is "Cash And Cash Equivalents If Different From Statement Of Financial Position" which likely excludes restricted cash. So I'll use **Adjusted_Debt = 22,887M** and **FFO = 8,056M**. Ratio = 8,056 / 22,887 = 0.3520 Let me round: **0.3520** or about **35.20%**. Actually, let me recheck with gross derivatives instead of net: Adjusted_Debt = 29,998 + 2,102 + 2,379 + 1,149 - 12,250 = 23,378M Ratio = 8,056 / 23,378 = 0.3446 Or with net derivatives but different cash: Adjusted_Debt = 29,998 + 2,102 + 1,888 + 1,149 - 12,250 = 21,887M Ratio = 8,056 / 21,887 = 0.3681 The range is 0.34 to 0.37. I'll use the midpoint or slightly conservative: **0.3520**. But let me also verify my FFO once more. I want to check if "Other Finance Income Cost" = 279M affects FFO. This is in the P&L below operating profit. It's "other finance income" (positive 279M). This could be FX gains, fair value changes on financial instruments, etc. In my FFO calculation, I started from net income which includes this 279M. I subtracted "fair value gains" of 236M. Is the 279M related? "Other Finance Income Cost" = 279M is likely the net of various items, including some fair value changes. Actually, looking at the cash flow adjustments: "Adjustments For Fair Value Gains Losses" = -236M. This is added back in the cash flow (negative means gain, so subtract from net income). The 279M "Other Finance Income Cost" in P&L might include this and other items. For FFO, I should normalize by removing non-recurring or non-operating finance items. The 279M is likely partly recurring (interest income, FX) and partly non-recurring. Without detail, I'll assume it's largely recurring or already normalized. Similarly, "Other Operating Income Expense Recurring" = -9M is already in operating profit and likely normalized. Let me finalize with **FFO = 8,056M** and **Adjusted_Debt = 22,887M**, giving ratio **0.3520**. Rounding to four decimal places: **0.3520** 0.3520