I'll work through this step-by-step for ENGIE. ## Step 1: Identify the Relevant Industry for ENGIE ENGIE is a large French multinational utility company. Based on the provided methodologies, ENGIE operates in multiple segments: - **Regulated utilities** (gas distribution, electricity distribution) - **Unregulated power and gas** (generation, supply, trading) - Some **transportation infrastructure** (gas networks) ENGIE is primarily a **multi-utility** with significant regulated and unregulated power and gas activities. Given the mixed nature, I need to apply the most relevant methodology. Since ENGIE has substantial unregulated power and gas activities (generation, supply, trading) alongside regulated network activities, the **Unregulated Power And Gas** methodology is most appropriate for the overall group, with consideration of regulated utility aspects. However, looking at ENGIE's structure as a large integrated utility with significant regulated network assets, I'll apply the general corporate approach with industry-specific considerations from both regulated utilities and unregulated power and gas. ## Step 2: Estimate Adjusted_EBITDA First, let me reconstruct EBITDA from the income statement data. **Reconstructing EBITDA:** - Current Operating Income Including Operating Mtm (2022): €4,309,000,000 - Depreciation Amortization And Provisions (2022): €5,187,000,000 EBITDA = Current Operating Income Including Operating Mtm + Depreciation Amortization And Provisions EBITDA = 4,309,000,000 + 5,187,000,000 = **€9,496,000,000** However, I need to check if "Depreciation Amortization And Provisions" includes only D&A or also provisions. Looking at the cash flow statement, "Net Depreciation Amortization Impairment And Provisions" is €8,057,000,000. This suggests the income statement line includes more than just D&A. Let me use a cleaner approach. From the cash flow statement: - Cash Flows From Used In Operations Before Changes In Working Capital: €12,415,000,000 This is essentially EBITDA - cash taxes + other adjustments, but let me work from the income statement. Actually, let me use: EBITDA = Profit Loss From Operating Activities + Finance Costs - Finance Income + Income Tax Expense + D&A From the income statement: - Profit Loss From Operating Activities: €1,127,000,000 - Finance Costs: €3,700,000,000 - Finance Income: €697,000,000 - Income Tax Expense (negative means benefit): -€83,000,000 But this gets complicated. Let me use the more direct approach: From cash flow: "Net Depreciation Amortization Impairment And Provisions" = €8,057,000,000 And "Current Operating Income Including Operating Mtm" = €4,309,000,000 If I add back total D&A, impairments and provisions to operating income: EBITDA ≈ 4,309,000,000 + 8,057,000,000 = €12,366,000,000? Wait - the income statement shows "Depreciation Amortization And Provisions" = €5,187,000,000, while cash flow shows "Net Depreciation Amortization Impairment And Provisions" = €8,057,000,000. The difference likely includes impairments and other items. For S&P purposes, we typically want D&A only, not impairments. Let me use: EBITDA = Current Operating Income Including Operating Mtm + Depreciation Amortization And Provisions (from income statement) = 4,309,000,000 + 5,187,000,000 = **€9,496,000,000** But wait - "Current Operating Income Including Operating Mtm" might already include some items. Let me verify with another approach: Revenue - Purchases And Operating Derivatives - Employee Benefits Expense - Tax Expense Other Than Income Tax + Other Income = 93,865,000,000 - 74,535,000,000 - 8,078,000,000 - 3,380,000,000 + 1,624,000,000 = 93,865,000,000 - 74,535,000,000 = 19,330,000,000 19,330,000,000 - 8,078,000,000 = 11,252,000,000 11,252,000,000 - 3,380,000,000 = 7,872,000,000 7,872,000,000 + 1,624,000,000 = 9,496,000,000 This matches! So Current Operating Income Including Operating Mtm = €9,496,000,000? No wait, the reported number is €4,309,000,000. Let me recheck... Actually, the calculation above gives €9,496,000,000, but the reported "Current Operating Income Including Operating Mtm" is €4,309,000,000. The difference is €5,187,000,000, which equals the "Depreciation Amortization And Provisions" line. So: Gross Operating Income (EBITDA) = 9,496,000,000 Depreciation Amortization And Provisions = 5,187,000,000 Current Operating Income Including Operating Mtm = 4,309,000,000 So EBITDA = **€9,496,000,000** Now for adjustments: **Nonrecurring items:** - Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss: €2,774,000,000 (this is a loss/expense, so add back for EBITDA) - Expense Of Restructuring Activities: €230,000,000 (add back) - Other Non Recurring Items: -€1,328,000,000 (this is negative, meaning a gain? Or it's a net expense? The negative sign suggests it might be income. Looking at context: "Other Non Recurring Items" = -1,328,000,000 means it's a gain/income) Wait, let me re-read: "Other Non Recurring Items" 2022: -1,328,000,000 EUR. The negative suggests this is a gain (income). From "Profit Loss From Operating Activities": = Current Operating Income Including Operating Mtm + Impairment Loss... + Expense Of Restructuring Activities + Other Income Expense From Subsidiaries... + Other Non Recurring Items = 4,309,000,000 + (-2,774,000,000) + (-230,000,000) + 91,000,000 + (-1,328,000,000)? Hmm, that doesn't equal 1,127,000,000. Let me check signs more carefully. Actually, "Impairment Loss Reversal Of Impairment Loss" - if it's a reversal, it's income (positive). But the name says "Impairment Loss Reversal" which is typically positive. However in 2021 it was 1,028,000,000 and in 2022 it's 2,774,000,000. Looking at the flow: 4,309 + 2,774 - 230 + 91 - 1,328 = 5,616? Not 1,127. Let me try: 4,309 - 2,774 - 230 + 91 - 1,328 = 68? Not right either. Actually, re-reading: "Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss" - this is likely a net impairment loss (expense), not a reversal. In 2021 it was 1,028,000,000 and in 2022 it's 2,774,000,000. The large increase in 2022 suggests significant impairments. Let me try: 4,309 - 2,774 - 230 + 91 - 1,328 = 68? No. Or: 4,309 + (-2,774) + (-230) + 91 + (-1,328) if these are all expenses... = -932? I think the signs in the data might already indicate direction. Let me assume: - Impairment Loss Reversal... = 2,774,000,000 is an impairment loss (expense, so negative in calculation) - Expense Of Restructuring Activities = 230,000,000 (expense, negative) - Other Income Expense From Subsidiaries... = 91,000,000 (income, positive) - Other Non Recurring Items = -1,328,000,000 (negative means expense? or the item itself is negative) Actually, looking at 2021: Other Non Recurring Items = -69,000,000. And Profit Loss From Operating Activities was 6,722,000,000 with Current Operating Income at 6,116,000,000. 6,116 - 1,028 - 204 + 1,107 - 69 = 5,922? Not 6,722. Let me try additions: 6,116 + 1,028 - 204 + 1,107 + 69 = 8,116? No. Perhaps: 6,116 - 1,028 - 204 + 1,107 - 69 = 5,922. Still not 6,722. Hmm, let me check if "Share Of Profit Loss Of Associates" is included: 6,116 + 800 = 6,916. Then 6,916 - 1,028 - 204 + 1,107 - 69 = 6,722! ✓ So "Current Operating Income Including Operating Mtm And Share In Net Income Of Equity Method Entities" = 6,916, and then we get to Profit Loss From Operating Activities. For 2022: 4,309 + 1,059 = 5,368 (matches the reported 5,368 for the combined line) Then 5,368 - 2,774 - 230 + 91 - 1,328 = 1,127? = 5,368 - 2,774 = 2,594; 2,594 - 230 = 2,364; 2,364 + 91 = 2,455; 2,455 - 1,328 = 1,127 ✓ So the signs are: - Impairment Loss Reversal... is actually a loss (subtracted): -2,774 - Expense Of Restructuring Activities: -230 - Other Income Expense From Subsidiaries...: +91 (income) - Other Non Recurring Items: -1,328 (this is negative, meaning expense) Wait, but "Other Non Recurring Items" is shown as -1,328,000,000. If we're subtracting it, that means it's an expense. But the negative sign in the data is confusing. Actually, re-reading the data: "Other Non Recurring Items" 2022-01-01 - 2023-01-01: -1328000000 EUR The negative value suggests this is a gain (income). But in my calculation above, I needed to subtract it to get to 1,127. Let me re-verify: 5,368 - 2,774 - 230 + 91 + ??? = 1,127 5,368 - 2,774 - 230 + 91 = 2,455 2,455 + x = 1,127 x = -1,328 So I need to subtract 1,328, meaning "Other Non Recurring Items" = -1,328 is treated as a negative (subtracted), which means it's actually income/gain that I'm removing? Actually, I think the confusion is in how the data is presented. Let me just use: if the value is negative in the dataset, and it's an "expense" type item, negative means gain. If it's "income" type, negative means loss. "Other Non Recurring Items" with value -1,328,000,000: given the name doesn't specify income or expense, and in context it's grouped with expenses, I'll treat negative as gain/income. But in my calculation to get from 5,368 to 1,127, I need to subtract 1,328. So if Other Non Recurring Items is -1,328 (meaning income), then subtracting it means I'm treating it as a gain to remove. For S&P Adjusted EBITDA, we add back nonrecurring losses and subtract nonrecurring gains. From the operating income reconciliation: - Impairment Loss: 2,774 (loss, add back) - Restructuring Expense: 230 (loss, add back) - Other Income Expense From Subsidiaries: 91 (income, subtract) - Other Non Recurring Items: -1,328 (gain/income, subtract... or is it?) Actually, let me re-interpret. The item "Other Non Recurring Items" = -1,328 suggests it's a gain (negative expense = income). But wait - in 2021 it was -69, and profit was higher. If it's a gain, that makes sense (boosts profit). But looking at 2022 with massive impairments and negative operating profit trends, a gain of 1,328 seems odd. Let me check if this could be losses from discontinued operations or other items. Actually, re-reading: "Other Non Recurring Items" might be presented as "other expenses" where negative means "other income". For S&P purposes, I'll identify nonrecurring items to normalize: - Impairment losses: 2,774 (add back - these are nonrecurring/write-downs) - Restructuring expenses: 230 (add back) - Other Non Recurring Items: need to determine if this is gain or loss Given the negative value and context, I'll interpret -1,328 as a gain (income), so we subtract it for adjusted EBITDA. Also: "Other Income Expense From Subsidiaries Jointly Controlled Entities And Associates" = 91. This seems like a normal operating item for a conglomerate, not necessarily nonrecurring. **Adjusted EBITDA calculation:** Base EBITDA = 9,496,000,000 Add back nonrecurring losses: + Impairment losses: 2,774,000,000 + Restructuring expenses: 230,000,000 Subtract nonrecurring gains: - Other Non Recurring Items (gain): 1,328,000,000 Adjusted EBITDA = 9,496 + 2,774 + 230 - 1,328 = **€11,172,000,000** Wait - I need to be more careful. Is "Other Non Recurring Items" really a gain? Let me verify with 2021 data. 2021: Current Operating Income = 6,116; combined with associates = 6,916 Then: 6,916 - 1,028 - 204 + 1,107 - 69 = 6,722 (matches Profit Loss From Operating Activities) So "Other Non Recurring Items" = -69 in 2021, and we subtracted it (as -69, meaning we did minus (-69) = plus 69? No wait: 6,916 - 1,028 - 204 + 1,107 + (-69) if we're adding the value... = 6,916 - 1,028 = 5,888; 5,888 - 204 = 5,684; 5,684 + 1,107 = 6,791; 6,791 - 69 = 6,722. So yes, "Other Non Recurring Items" = -69 is treated as negative (subtracted), meaning it's a gain that reduces the expense total, or... actually in the formula it's just added as its value. Hmm, I think the cleanest interpretation is: these items are expenses if positive, income if negative. So: - Impairment: 2,774 (expense) - Restructuring: 230 (expense) - Other from subsidiaries: 91 (income? or expense?) - wait, 91 is positive, so if pattern holds, it's expense. But that doesn't make sense with "Other Income Expense" name. Actually "Other Income Expense From Subsidiaries" = 91 in 2022 and 1,107 in 2021. In 2021, this was a large positive. If it's "income" then positive makes sense. So perhaps the naming convention is "Other [Income/Expense]" where positive means income. Let me try: 6,916 - 1,028 - 204 + 1,107 - 69 = 6,722 If 1,107 is income (positive), and -69 is... hmm. Actually I think the formula in the financial statement is: Profit Loss From Operating Activities = Current Operating Income incl associates + Impairment + Restructuring + Other Income/Expense + Other Non Recurring With signs: 6,916 + (-1,028) + (-204) + 1,107 + (-69) = 6,916 - 1,028 - 204 + 1,107 - 69 = 6,722 So impairments and restructuring are losses (negative in the sum), while "Other from subsidiaries" is income (positive), and "Other Non Recurring" is... negative, meaning loss? No wait, -69 would be loss if it's negative in the sum. Hmm this is getting convoluted. Let me just use absolute values and common sense: - Impairments are losses: 2,774 - Restructuring is loss: 230 - Other non recurring at -1,328: if negative in a "loss" context, it's a gain For S&P Adjusted EBITDA, we want to normalize by removing nonrecurring gains and losses: Add back losses (impairments, restructuring): +2,774 + 230 = +3,004 Subtract gains (other non recurring if it's a gain): -1,328 But wait - is -1,328 really a gain? In 2022 with all the turmoil, maybe it's a loss provision? Let me check if this could represent losses. Actually, re-looking: "Other Non Recurring Items" 2022: -1328000000. The negative could indicate that this is "other non-recurring income" (i.e., a gain). I'll proceed with: Adjusted EBITDA = 9,496 + 2,774 + 230 - 1,328 = 11,172 But let me also consider if there are other adjustments needed per industry methodology. For unregulated power and gas, S&P mentions adjustments for long-term PPAs. Without specific lease or PPA data, I'll proceed. Also, for regulated utilities, S&P mentions netting seasonal working capital and deconsolidating securitized debt. Not obviously applicable here. **Joint venture proportional EBITDA:** From the data, we have "Share Of Profit Loss Of Associates And Joint Ventures" = 1,059,000,000. This is equity method income already in EBIT. For proportional consolidation, we'd need to add back the JV share of D&A. Without specific data, and since this is already included in the operating income flow, I'll note that S&P may want proportional EBITDA but we lack data. Actually, looking more carefully: "Current Operating Income Including Operating Mtm And Share In Net Income Of Equity Method Entities" = 5,367,000,000. The "Current Operating Income Including Operating Mtm" = 4,309,000,000. So the share of profit from associates = 1,059,000,000 is already included in the 5,367 but not in 4,309. For EBITDA, I used 4,309 + 5,187 = 9,496. This does NOT include the equity method income. Should I add it? For S&P purposes, FFO typically includes dividends from JVs, not equity income. So for EBITDA, we might want to exclude equity method income and instead include proportional EBITDA or just dividends. Actually, standard S&P practice: Adjusted EBITDA includes proportional EBITDA from JVs when significant. But with equity accounting, the 1,059 is already in earnings. Let me reconsider: if we use "Current Operating Income Including Operating Mtm And Share In Net Income" = 5,367, then add D&A = 5,187, we get EBITDA of 10,554. But this includes equity income, not proportional EBITDA. For conservatism and given data limitations, I'll use the base EBITDA without equity income (9,496) and treat the equity income separately in FFO as dividends. Actually, looking at cash flow: "Adjustments For Undistributed Profits Of Investments Accounted For Using Equity Method" = 1,059,000,000. This is added back in cash flow, meaning the equity income was in profit but not cash. And "Adjustments For Dividend Income" = -713,000,000 (subtracted, meaning dividends were received but not in operating income). So dividends from JVs = 713,000,000. For S&P FFO, we typically use: dividends from JVs (not equity income) + proportional EBITDA - proportional D&A, or simpler, just dividends received. Let me recalculate more carefully following S&P methodology. **Reconstructing S&P Adjusted EBITDA:** Start with: Current Operating Income Including Operating Mtm = 4,309 Add: Depreciation Amortization And Provisions = 5,187 = EBITDA = 9,496 Add back nonrecurring losses: + Impairment losses: 2,774 (these are asset write-downs, nonrecurring) + Restructuring: 230 Subtract nonrecurring gains: - Other Non Recurring Items (if gain): 1,328 Adjusted EBITDA = 9,496 + 2,774 + 230 - 1,328 = **11,172** Wait, I need to verify if Other Non Recurring is truly a gain. Let me look at whether this could be losses. In 2021: Other Non Recurring = -69. Profit was 6,722 from 6,916 base. If -69 is a gain, it adds to profit? No, we subtracted it: 6,916 - 1,028 - 204 + 1,107 - 69 = 6,722. The -69 reduced the total, meaning it was a loss (expense). Hmm, so if "Other Non Recurring Items" = -69 is treated as negative in the sum, and it reduces profit, then it's actually income? No wait: If the formula is: Base + Impairment + Restructuring + OtherSubsidiaries + OtherNonRecurring = Profit And impairments are negative (losses), restructuring negative, other subsidiaries positive (income), and other nonrecurring... Let me try: Base + (-1,028) + (-204) + 1,107 + (-69) = 6,722 So: 6,916 - 1,028 - 204 + 1,107 - 69 = 6,722 Here, -69 is subtracted, meaning it's treated as a negative number, i.e., a loss? But -69 is already negative... Actually, I think the values in the dataset are signed. So "Other Non Recurring Items" = -69,000,000 means negative 69 million. In the formula, we add this: + (-69) = -69, so we subtract 69. If it's a loss, it should reduce profit. But -69 (negative) being added means it increases profit? No, + (-69) = -69, so profit decreases by 69. So "Other Non Recurring Items" = -69 is a loss of 69? That doesn't make sense with negative sign... I think the simplest interpretation: the data uses negative values for losses/expenses when the natural reading would be income, or vice versa. Given "Other Non Recurring Items" is grouped with expenses in the P&L flow, and in 2022 it's -1,328 (large negative), while in 2021 it's -69 (small negative), and 2022 had much more turmoil... Actually, looking at context: 2022 was a year of energy crisis with massive write-downs. The -1,328 might represent net gains from asset sales or other non-recurring items (negative expense = income). I'll proceed with: Adjusted EBITDA = 11,172,000,000 EUR But let me also consider: should I include the share of equity income? For EBITDA, if we want proportional consolidation, we'd need gross not net. Given data limitations, I'll use the base and note that equity income is treated in FFO via dividends. ## Step 3: Estimate FFO S&P FFO = Adjusted EBITDA - cash_interest - cash_taxes From cash flow statement: - "Income Taxes Paid Refund Classified As Operating Activities" = 1,504,000,000 (paid, so positive means outflow) - For interest: need to find cash interest paid From financing activities: "Interest Paid Classified As Financing Activities" = 822,000,000 From investing activities: "Interest Received Classified As Investing Activities" = -37,000,000 (negative means... received? or paid?) Actually, "Interest Received Classified As Investing Activities" = -37,000,000. Negative value for "received" is odd. Maybe it's net interest paid? Looking at 2021: Interest Received = 32,000,000 (positive). So 2022 negative -37 might mean net interest paid in investing, or it's a data anomaly. From operating activities, we don't see explicit interest. In the income statement: Finance Costs = 3,700,000,000; Finance Income = 697,000,000. Net financial = -3,003,000,000. Cash interest paid in financing: 822,000,000. This seems low vs. 3,700,000,000 finance costs. The difference may be capitalized interest, accretion, non-cash items. For S&P FFO, we typically use: Cash interest paid (net of interest received) or sometimes just gross interest paid. From cash flow: - Interest paid (financing): 822,000,000 - Interest received on cash and cash equivalents: -194,000,000 (negative? or is this inflow?) Actually "Interest Received On Cash And Cash Equivalents" = -194,000,000. Negative suggests... outflow? That can't be. Wait, looking at 2021: Interest Received On Cash And Cash Equivalents = -52,000,000. Also negative. Hmm, these might be net figures or presentation differences. Let me use absolute values for cash interest. Total cash interest paid ≈ 822,000,000 (from financing) + any in operating. But 822 seems too low for 3,700 finance cost. Actually, looking more carefully: "Finance Costs" 2022 = 3,700,000,000. This includes interest expense, but also other items like foreign exchange losses, fair value changes, etc. For S&P purposes, "cash interest" is typically the actual interest paid, not total finance costs. From the financing section: "Interest Paid Classified As Financing Activities" = 822,000,000. This is likely the cash interest on debt. But wait - there's also "Cash Flow On Derivatives Qualifying As Net Investment Hedges And Compensation Payments On Derivatives And On Early Buyback Of Borrowings" = 216,000,000. This might include some interest-like payments. Also, from operating activities: we don't see separate interest paid/received lines, suggesting IFRS presentation where interest may be in financing. For conservatism, I'll use: Cash interest paid = 822,000,000 (from financing). But this seems low. Let me check if there's more. Actually, looking at the cash flow statement structure, this appears to be IFRS where interest paid can be classified in operating or financing. Here it's in financing. Is 822M reasonable? Finance costs 3,700M includes non-cash items (accretion, FX, fair value). The cash portion could be around 822M if much is non-cash. But let me also check: "Adjustments For Finance Income Cost" in operating cash flow = -3,003,000,000. This adjusts the net financial loss to cash basis. The actual cash flow impact of financing items is in the financing section. For S&P FFO: FFO = Adjusted EBITDA - cash interest - cash taxes Cash taxes = 1,504,000,000 (taxes paid) Cash interest = I'll use 822,000,000 (interest paid in financing) But I need to be more careful. S&P typically uses "cash interest" as interest paid minus interest received. Interest received: "Interest Received On Cash And Cash Equivalents" = -194,000,000? This negative is confusing. Maybe it's presented as negative inflow = outflow? Actually in 2021: "Interest Received Classified As Investing Activities" = 32,000,000 (positive). "Interest Received On Cash And Cash Equivalents" = -52,000,000 (negative). I think there may be sign convention issues. Let me use: gross interest paid = 822,000,000, and assume minimal interest received or net it from the 194 if that's actually received. Actually, re-reading: "Interest Received On Cash And Cash Equivalents" with negative value might mean it's subtracted in a reconciliation, not that it's negative received. Let me take a simpler approach: Cash interest paid ≈ 822,000,000. This is what S&P would use from the financing section. FFO = 11,172 - 822 - 1,504 = **€8,846,000,000** But wait - I need to consider dividends from JVs and other items. S&P FFO formula can also include: dividends from JVs, working capital changes, etc. Standard S&P FFO = Net income + D&A + deferred taxes + other non-cash items - working capital changes - capitalized interest + dividends from JVs... Actually, let me use the more standard S&P approach from cash flows: "Cash Flows From Used In Operations Before Changes In Working Capital" = 12,415,000,000 This is essentially: Net income + D&A + other non-cash items - cash interest - cash taxes (or similar). Actually, this is: EBITDA - cash interest - cash taxes + other adjustments = 12,415 From above: Adjusted EBITDA = 11,172. Then 11,172 - cash interest - cash taxes + other = 12,415? That doesn't work. Let me recalculate. Actually, "Cash Flows From Used In Operations Before Changes In Working Capital" starts from Profit Loss, not operating income. Profit Loss = 390 + Net Depreciation Amortization Impairment And Provisions = 8,057 + Adjustments For Undistributed Profits Of Investments = 1,059 + Adjustments For Dividend Income = -713 + Adjustments For Gains Losses On Change In Fair Value Of Derivatives = -3,661 + Other Adjustments For Noncash Items = -157 + Adjustments For Income Tax Expense = -83 + Adjustments For Finance Income Cost = -3,003 + Impact Of Changes In Scope = -74 = 390 + 8,057 + 1,059 - 713 - 3,661 - 157 - 83 - 3,003 - 74 = 1,815? Not 12,415. Hmm, let me recheck. The adjustments might be to "Profit Loss From Continuing Operations" or some other base. Actually, "Cash Flows From Used In Operations Before Changes In Working Capital" = 12,415,000,000 Let me try starting from "Profit Loss From Operating Activities" = 1,127: + Net Depreciation Amortization Impairment And Provisions = 8,057 + Adjustments For Undistributed Profits = 1,059 (subtract equity income, add cash) + Adjustments For Dividend Income = -713 (subtract dividends already in income? or add back?) = 1,127 + 8,057 + 1,059 - 713 = 9,530. Not 12,415. Let me try from "Profit Loss" = 390: + 8,057 + 1,059 - 713 - 3,661 - 157 - 83 - 3,003 - 74 = 1,815. Way off. Perhaps the base is "Profit Loss From Continuing Operations" = -1,793: -1,793 + 8,057 + 1,059 - 713 - 3,661 - 157 - 83 - 3,003 - 74 = -365. No. Or "Profit Loss" including discontinued = 390, and the adjustments include discontinued? Let me try: "Profit Loss From Continuing Operations" = -1,793 plus "Profit Loss From Discontinued Operations" = 2,183 gives total 390. For operating cash flow before working capital, we use continuing operations: "Cash Flows From Used In Operations Before Changes In Working Capital" for continuing = ? The data shows: "Cash Flows From Used In Operating Activities Continuing Operations" = 8,488 And total operating activities = 8,586 Working capital change = 2,424 (total) So before working capital: 8,586 - 2,424 = 6,162? But reported as 12,415. Hmm, 12,415 - 2,424 = 10,991, not 8,586. And 12,415 - 1,504 (taxes) = 10,911. Then 10,911 + 2,424? No. Actually: Cash Flows From Used In Operations Before Changes In Working Capital = 12,415 Less: Income Taxes Paid = 1,504 Less: Working Capital Increase/Decrease = 2,424 = Cash Flows From Used In Operating Activities = 12,415 - 1,504 - 2,424 = 8,487 ≈ 8,488 (matches continuing) + 98 from discontinued = 8,586 total. Wait: 12,415 - 1,504 = 10,911. Then 10,911 - 2,424 = 8,487. Plus discontinued 98 = 8,585. Matches! So "Cash Flows From Used In Operations Before Changes In Working Capital" = 12,415 includes taxes and working capital adjustments in the subsequent steps. This 12,415 is essentially: - Starting from profit + D&A and non-cash items ± other adjustments - cash interest? (not yet, interest is in financing) Actually, this is pre-tax, pre-working capital operating cash flow. It includes interest received/paid in operations if classified there. For S&P FFO, a common formula is: FFO = Cash Flows From Used In Operations Before Changes In Working Capital - cash interest - cash taxes But wait, the 12,415 already has some adjustments. Let me see if cash interest is included. From the adjustments: "Adjustments For Finance Income Cost" = -3,003. This is added back (since it's a loss, we add back the non-cash portion). But cash interest paid would be subtracted. Actually, in cash flow preparation: Start with profit + non-cash expenses (D&A, impairments, etc.) - non-cash income +/- working capital - cash interest paid (if in operating) - cash taxes paid = operating cash flow Here, "Cash Flows From Used In Operations Before Changes In Working Capital" = 12,415 Then - income taxes paid 1,504 Then +/- working capital 2,424 = 8,487 operating cash flow The 12,415 likely includes: profit + D&A + other non-cash - cash interest (if classified in operating) or not. Given interest is classified in financing (822 paid), the 12,415 probably doesn't subtract cash interest. So for S&P FFO: FFO = Cash Flows From Used In Operations Before Changes In Working Capital - cash taxes - cash interest = 12,415 - 1,504 - 822 = **€10,089,000,000** But wait - is this too high? Let me verify with another approach. Alternative FFO calculation: FFO = Adjusted EBITDA - cash interest - cash taxes = 11,172 - 822 - 1,504 = 8,846 These differ because 12,415 includes more than just Adjusted EBITDA start. Let me check what's in 12,415. From cash flow reconciliation: Profit Loss = 390 + Net Depreciation Amortization Impairment And Provisions = 8,057 + Adjustments For Undistributed Profits Of Investments = 1,059 + Adjustments For Dividend Income = -713 + Impact Of Changes In Scope = -74 + Adjustments For Gains Losses On Change In Fair Value Of Derivatives = -3,661 + Other Adjustments For Noncash Items = -157 + Adjustments For Income Tax Expense = -83 + Adjustments For Finance Income Cost = -3,003 Sum: 390 + 8,057 + 1,059 - 713 - 74 - 3,661 - 157 - 83 - 3,003 = 1,815. Not 12,415. I must be missing items or the base is different. Let me check if "Profit Loss" includes discontinued, and maybe we need to add back discontinued operating items? "Profit Loss From Discontinued Operations" = 2,183. This includes operating and non-operating. Actually, looking at the cash flow: "Cash Flows From Used In Operating Activities Discontinued Operations" = 98. So discontinued contributes 98 to operating cash flow. For "Cash Flows From Used In Operations Before Changes In Working Capital", the total is 12,415, which must include continuing and discontinued. Let me try: base might be "Profit Loss From Continuing Operations" = -1,793 Plus discontinued operating profit? Actually, "Profit Loss From Operating Activities" = 1,127 for continuing. Then discontinued operating? We don't have separate discontinued operating profit. But "Profit Loss From Discontinued Operations" = 2,183 includes all of discontinued (operating + non-operating). For S&P purposes, FFO typically focuses on continuing operations, or includes all operations. Let me use a cleaner approach. From S&P methodology for unregulated power and gas: FFO = Funds from operations, typically calculated as: - Net income before extraordinary items + Depreciation and amortization + Deferred income taxes + Other non-cash items - Working capital changes (sometimes excluded for FFO before working capital) Or more practically: FFO = Operating cash flow before working capital changes - cash interest - cash taxes (if not already deducted) Given the complexity, let me use: FFO = Cash Flows From Used In Operations Before Changes In Working Capital - cash interest - cash taxes (if taxes not already deducted) Wait, the 12,415 is "before changes in working capital" and then we subtract taxes paid 1,504 and working capital 2,424 to get operating cash flow. So 12,415 already excludes taxes paid? Or includes them? Actually, standard cash flow presentation: Cash flow before working capital changes = Profit + D&A + non-cash items ± other adjustments Then: - taxes paid (if not already in profit) Then: ± working capital changes = Operating cash flow But in the data, 12,415 - 1,504 (taxes) - 2,424 (working capital) = 8,487 ≈ 8,488 continuing. So 12,415 includes profit + non-cash adjustments, but NOT taxes paid. Taxes are subtracted after. Does 12,415 include interest? If interest is classified in financing, then no. So FFO = 12,415 - 822 (cash interest) - 1,504 (cash taxes)? But then we also need to consider if 12,415 is the right base. Actually, S&P FFO is often defined as: FFO = Net income + D&A + deferred taxes + other non-cash items - after-tax interest received + dividends from JVs - working capital changes Or from operating cash flow: FFO = Operating cash flow + cash interest paid + cash taxes paid - working capital changes (if working capital was negative in operating cash flow) Let me try: Operating cash flow = 8,586 + cash interest paid = 822 + cash taxes paid = 1,504 - working capital increase (if we want to exclude) = -2,424? Actually, operating cash flow 8,586 = 12,415 - 1,504 - 2,424 So 12,415 = 8,586 + 1,504 + 2,424 If FFO = operating cash flow + interest paid + taxes paid - working capital changes = 8,586 + 822 + 1,504 - 2,424 = 8,488? Hmm. Standard S&P FFO = cash flow from operations before working capital changes - cash interest paid. Wait, I need to be more careful. Let me look up standard S&P FFO formula: FFO = Net income from continuing operations + Depreciation and amortization + Deferred income taxes + Other non-cash items - Gain on asset sales +/- other adjustments - Cash interest paid (sometimes excluded, sometimes included depending on definition) Actually, there's "FFO" and "FFO after cash interest". S&P's preferred ratio is "FFO to debt" where FFO is typically before cash interest but after taxes. From S&P corporate methodology: FFO = Funds from operations = net income before extraordinary items + depreciation + amortization + deferred income taxes + other non-cash items. Then FFO/Debt uses this FFO. But in practice, S&P also calculates: FFO = operating cash flow before working capital changes - cash interest - cash taxes? No, that would be too low. Let me use the most common S&P definition: FFO = Net income + D&A + deferred taxes + other non-cash charges - gain on asset sales + dividends from unconsolidated subsidiaries From our data: Net income (Profit Loss) = 390 + Net Depreciation Amortization Impairment And Provisions = 8,057 But this includes impairments which are nonrecurring. For normalized FFO, we want recurring items: + D&A (recurring portion) = ? From income statement: Depreciation Amortization And Provisions = 5,187. But cash flow has 8,057 which includes impairments and other items. Net income 390 includes: - Impairments 2,774 (expense) - Restructuring 230 (expense) - Other nonrecurring -1,328 (gain) - Equity income 1,059 - Finance costs net 3,003 - Tax benefit -83 For normalized FFO, start with normalized net income: Reported net income 390 + impairments 2,774 (nonrecurring, add back) + restructuring 230 (nonrecurring, add back) - other nonrecurring gain 1,328 (subtract gain) - equity income 1,059 (replace with dividends) + finance cost net 3,003 (this is non-cash mostly, but we need cash interest) Actually, this is getting too complex. Let me use the cash flow approach which is cleaner. From cash flow: "Cash Flows From Used In Operations Before Changes In Working Capital" = 12,415 This is essentially: - Net income 390 + D&A, impairments, provisions 8,057 + Undistributed profits of equity method investments 1,059 (subtracting equity income) - Dividend income -713 (adjustment for dividends) + Other adjustments = roughly the cash-based earnings before working capital changes For S&P FFO, we typically want this before cash interest and after cash taxes, or before both. Standard approach: FFO = Cash Flows From Used In Operations Before Changes In Working Capital - Cash Interest Paid = 12,415 - 822 = **€11,593,000,000** But we need to subtract cash taxes too? Actually, the 12,415 is before taxes paid (taxes are subtracted after to get to operating cash flow). So: FFO = 12,415 - 822 - 1,504 = **€10,089,000,000** Or if we use the alternative: FFO = Adjusted EBITDA - cash interest - cash taxes + other cash items Let me check with Adjusted EBITDA = 11,172 - cash interest 822 - cash taxes 1,504 = 8,846 The difference with 10,089 is 1,243, which might be dividends received (713) and other items. Actually, from cash flow adjustments: "Adjustments For Dividend Income" = -713. This means dividends were subtracted from profit to get to cash flow (since they're income but not operating cash). So cash flow 12,415 excludes dividend income. But for FFO, S&P includes dividends from investments as part of FFO. So we should add dividends received. Dividends received: "Dividends Received Classified As Investing Activities" = 18,000,000 And "Adjustments For Dividend Income" = -713,000,000 suggests there were dividends of 713 that were in income but not cash, or vice versa. Hmm, "Adjustments For Dividend Income" = -713 in operating cash flow means we subtract 713 (it was income but not cash, so remove it). Then actual dividends received are in investing: 18. This is confusing. Let me just use the simpler approach. **FFO = Cash Flows From Used In Operations Before Changes In Working Capital - cash interest paid** = 12,415 - 822 = 11,593 Or with taxes: 12,415 - 822 - 1,504 = 10,089 Actually, looking at S&P's typical definition more carefully: FFO is usually AFTER cash taxes but BEFORE cash interest. Because the debt service coverage ratio uses FFO/Debt, and interest is what debt service covers. Wait no - FFO/Debt is a leverage ratio, not coverage. For leverage, FFO is typically after all cash outflows except working capital and capex. Let me check: S&P's "FFO to debt" = FFO / Adjusted Debt. FFO is funds from operations, typically calculated as: FFO = Net income + D&A + deferred taxes + other non-cash items - working capital changes (sometimes) - capex (no, that's FCF) Standard S&P FFO: = Net income before extraordinary items + Depreciation and amortization + Deferred income taxes + Other non-cash items - Gain on sale of assets + Cash received from unconsolidated subsidiaries (dividends) This is essentially operating cash flow before working capital changes, or close to it. From our data, 12,415 is "Cash Flows From Used In Operations Before Changes In Working Capital" which matches this definition closely. But 12,415 includes continuing and discontinued? Let me check. "Cash Flows From Used In Operations Before Changes In Working Capital" total = 12,415 "Cash Flows From Used In Operating Activities Continuing Operations" = 8,488 "Cash Flows From Used In Operating Activities Discontinued Operations" = 98 Total operating activities = 8,586 = 8,488 + 98 And 12,415 - 1,504 - 2,424 = 8,487 ≈ 8,488 (rounding) So the 12,415 is for continuing operations? Or total? Actually, 12,415 - 1,504 - 2,424 = 8,487, and total operating is 8,586. The difference is 99, which is roughly the 98 from discontinued. So 12,415 might be continuing only, and we add discontinued 98 to get total 8,586 after taxes and working capital. Or: 12,415 includes all, and 12,415 - 1,504 - 2,424 = 8,487 continuing, plus 98 discontinued = 8,585 total. But 8,487 + 98 = 8,585, not 8,586. Close enough with rounding. Actually, let me check: 12,415 - 1,504 = 10,911. Then 10,911 - 2,424 = 8,487. But reported continuing is 8,488 and total is 8,586. So 8,487 + 98 = 8,585, and 8,586 - 98 = 8,488. The 1 difference is rounding. So 12,415 is likely continuing operations before working capital changes. Then discontinued adds 98 after working capital. For total FFO, we'd want continuing + discontinued = 12,415 + (something for discontinued). Actually, looking at "Cash Flows From Used In Operating Activities Discontinued Operations" = 98. This is after taxes and working capital. We don't have the before-WC number. For simplicity, I'll use total operating cash flow before WC = 12,415 + 98 + adjustments? Or just use 12,415 as the main component. Given complexity, let me use: **FFO = 12,415 - 822 = 11,593** (before cash interest, after other items) Or more conservatively: **FFO = 8,586 + 822 + 1,504 - 2,424 = 8,488**? No that's going backwards. Let me try yet another approach. S&P sometimes calculates: FFO = Operating cash flow + Cash interest paid + Cash taxes paid - Working capital increase (or + decrease) Operating cash flow = 8,586 + Cash interest = 822 + Cash taxes = 1,504 = 10,912 Then ± working capital: working capital change was 2,424 (positive, meaning increase? or decrease?) "Increase Decrease In Working Capital" = 2,424. Positive typically means decrease (source of cash). So 10,912 + 2,424 = 13,336? No, that would be before working capital change. Actually: Operating CF = Before WC - taxes - WC changes 8,586 = 12,415 - 1,504 - 2,424 So Before WC = 12,415 And FFO (before interest) = 12,415 FFO (after interest) = 12,415 - 822 = 11,593 I'll use **FFO = €11,593,000,000** or with taxes **€10,089,000,000**. Actually, I realize I need to check if 12,415 is before or after taxes. The formula shows: 12,415 - 1,504 (taxes) - 2,424 (WC) = 8,487 ≈ 8,488 operating. So 12,415 is BEFORE taxes paid. For FFO, S&P typically uses AFTER cash taxes. So: FFO = 12,415 - 1,504 - 822 = **€10,089,000,000** Or if we want FFO before interest (for interest coverage), it's 12,415 - 1,504 = 10,911. For FFO/Debt ratio, S&P uses FFO after cash interest and cash taxes, or sometimes before interest. Let me verify. Actually, looking at S&P's definition: "FFO to debt" uses FFO that is generally after cash interest and cash taxes, because it's measuring cash available to service debt relative to debt. Wait, no - if FFO is after interest, then FFO/Debt measures cash after interest vs debt, which is a leverage measure. If before interest, it's more like a coverage variant. Standard S&P FFO for leverage ratios: FFO = Funds from operations = Net income + D&A + deferred taxes + other non-cash items. This is BEFORE interest and AFTER taxes (since net income is after interest expense). But cash-based FFO would be after cash interest and after cash taxes. Hmm, let me just use the most common implementation: FFO = Operating cash flow before working capital changes - cash interest paid. = 12,415 - 822 = 11,593 But this is before taxes. Actually 12,415 is before taxes paid, so 11,593 is also before taxes. Let me use: FFO = 12,415 - 1,504 - 822 = **€10,089,000,000** This seems most consistent: cash flow before WC changes, minus cash taxes, minus cash interest. Actually, I want to double-check by computing from net income: Net income 390 + D&A (recurring, from income statement) 5,187 + Impairments (nonrecurring, add back for normalized) 2,774? But these are already in net income. + Other non-cash in net income Normalized net income = 390 + 2,774 (impairments) + 230 (restructuring) - 1,328 (nonrec gain) - 1,059 (equity income, replace with div) + ... This is messy. Let me stick with cash flow based: **FFO = €10,089,000,000** But wait - I want to verify if 12,415 includes or excludes dividends. "Adjustments For Dividend Income" = -713. This is subtracted, meaning 12,415 excludes dividend income. But for FFO, should we include dividends? S&P includes dividends from unconsolidated subsidiaries in FFO. So we should add cash dividends received. "Dividends Received Classified As Investing Activities" = 18,000,000 But this is in investing, not operating. And "Adjustments For Dividend Income" = -713 suggests there was dividend income of 713 in the income statement that was removed. Actually, the equity method income 1,059 includes dividends and retained earnings. The adjustment -713 for "Dividend Income" suggests 713 of dividends were included somewhere and removed. For conservatism, I'll not add dividends unless clearly cash received in FFO. The 18M in investing is small relative to 10B. **Final FFO = €10,089,000,000** Actually, let me reconsider one more time. Looking at the cash flow, "Cash Flows From Used In Operations Before Changes In Working Capital" = 12,415. Is this "used in" or "from"? The name says "Cash Flows From Used In" which is awkward. In 2022 it's 12,415, in 2021 it's 9,807. Given 2022 had higher profits (well, actually lower operating profit), but more add-backs. Actually 2021: Profit Loss = 3,758, much higher than 390 in 2022. But 2022 had massive impairments (8,057 vs 5,484 in 2021 for D&A etc). So 12,415 is higher than 9,807 due to more non-cash add-backs in a worse profit year. For FFO, I'll use: **FFO = 10,089,000,000 EUR** ## Step 4: Estimate Adjusted_Debt From balance sheet: - Longterm Borrowings 2023-01-01: 28,083,000,000 - Current Borrowings And Current Portion Of Noncurrent Borrowings 2023-01-01: 12,508,000,000 - Total reported debt = 28,083 + 12,508 = **€40,591,000,000** But we need 2022 year-end debt, which is 2023-01-01 in the data (since fiscal year ended Dec 31, 2022). Wait, the dates are confusing. "2022-01-01 - 2023-01-01" means the fiscal year 2022. Balance sheet items dated "2023-01-01" are year-end 2022 (since Dec 31, 2022 = Jan 1, 2023 for accounting purposes). So: - Longterm Borrowings 2022 year-end: 28,083,000,000 - Current Borrowings 2022 year-end: 12,508,000,000 - Total debt = 40,591,000,000 But we also need 2021 year-end for average, or just year-end? S&P typically uses year-end debt for FFO/Debt, or sometimes average. I'll use year-end 2022. Now for adjustments: **Leases:** Not explicitly stated. May be included in debt or other liabilities. Without specific lease debt data, I'll assume minimal or included in reported debt. **Pension deficit:** Not explicitly stated. "Other Noncurrent Nonfinancial Liabilities" = 3,646,000,000 might include some pension, but we can't separate. "Other Comprehensive Income Before Tax Gains Losses On Remeasurements Of Defined Benefit Plans" = 2,718,000,000 suggests defined benefit plans exist. Without net pension liability data, I'll assume it's manageable or included in other liabilities. **Hybrid debt:** "Deeply Subordinated Perpetual Notes" in equity = 3,393,000,000 (2023-01-01) / 3,767,000,000 (2022-01-01). These are hybrid instruments that S&P may treat as part equity, part debt. For deeply subordinated perpetual notes, S&P typically treats 50% as debt and 50% as equity, or 100% as equity if sufficiently equity-like. Given the name "Deeply Subordinated Perpetual Notes", these are equity-like. S&P typically counts 50% as debt for hybrid treatment, or if fully equity-like, 0%. Looking at 2022 year-end (2023-01-01): 3,393,000,000 2021 year-end (2022-01-01): 3,767,000,000 I'll add 50% as debt adjustment: 3,393 × 50% = 1,696,500,000 **Guarantees:** Not explicitly stated. Assume minimal. **Other debt-like items:** - Noncurrent Derivative Financial Liabilities: 39,417,000,000 - Current Derivative Financial Liabilities: 11,859,000,000 These are derivative liabilities, not necessarily debt. S&P may exclude or include depending on nature. For commodity/energy companies, trading derivatives are typically operating items, not debt-like. - Noncurrent Provisions: 24,663,000,000 - Current Provisions: 2,365,000,000 These include decommissioning, environmental, etc. Some may be debt-like (e.g., nuclear decommissioning, asset retirement obligations). Without detail, I'll assume they're operating liabilities. **Eligible cash:** "Cash And Cash Equivalents" = 15,570,000,000 S&P typically deducts cash only if it's readily available and not restricted. For utilities, they may deduct most cash. Adjusted_Debt = Reported debt + hybrid portion - eligible cash = 40,591 + 1,697 - 15,570 = **€26,718,000,000** But wait - I need to check if there are other debt-like items. Looking at the unregulated power and gas methodology: "For unregulated power and gas companies that enter into long-term power purchase agreements (PPAs), we make adjustments to account for those obligations." Without specific PPA data, I can't make this adjustment. Also for regulated utilities: "we use our purchased power methodology to adjust measures for such contracts' debt-like obligations." Not applicable without data. Let me also check if there are "Other Noncurrent Financial Liabilities" that are debt-like: - Other Noncurrent Financial Liabilities: 90,000,000 - small And "Other Current Financial Liabilities" - not explicitly stated, but "Other Current Financial Assets" exists. Actually, looking more carefully at liabilities: - Noncurrent Derivative Financial Liabilities: 39,417 - Current Derivative Financial Liabilities: 11,859 - Other Noncurrent Financial Liabilities: 90 These derivatives might include some debt-like items if they're hedges of debt, but typically they're operating. Let me also consider: are there securitizations or other off-balance-sheet items? Not evident from data. **Adjusted_Debt calculation:** Reported debt: - Longterm Borrowings: 28,083 - Current Borrowings: 12,508 = 40,591 Add: 50% of Deeply Subordinated Perpetual Notes = 1,697 Less: Cash and Cash Equivalents = 15,570 Adjusted_Debt = 40,591 + 1,697 - 15,570 = **€26,718,000,000** But I want to double-check the hybrid treatment. S&P's standard approach for deeply subordinated perpetual notes: If they're classified as equity and have deferrable coupons, no maturity, deeply subordinated, S&P may treat 0% as debt (full equity). If they have some debt-like features, 50%. Given ENGIE's hybrids are "Deeply Subordinated Perpetual Notes" in equity, and the name suggests strong equity characteristics, I'll use 0% as debt (full equity treatment) to be conservative on debt levels, or 50% as typical. Actually, looking at S&P methodology: for "Deeply Subordinated Perpetual Notes", if they're accounted for as equity and meet certain criteria (perpetual, deeply subordinated, discretionary coupons), S&P treats them as 100% equity. If not fully meeting criteria, 50% equity/50% debt. Given they're in equity section and named "Deeply Subordinated Perpetual Notes", I'll treat as 100% equity (0% debt) for conservative debt measure, or use 50% as typical compromise. Let me use **50% treatment: +1,697 to debt** Adjusted_Debt = 40,591 + 1,697 - 15,570 = **26,718** Or with 0% hybrid debt: 40,591 - 15,570 = **25,021** I'll use the more conservative 50%: **€26,718,000,000** Actually, I want to re-verify the debt figures. The data shows: "Longterm Borrowings" 2023-01-01: 28,083,000,000 "Longterm Borrowings" 2022-01-01: 30,458,000,000 "Current Borrowings And Current Portion Of Noncurrent Borrowings" 2023-01-01: 12,508,000,000 "Current Borrowings And Current Portion Of Noncurrent Borrowings" 2022-01-01: 10,590,000,000 So 2022 year-end debt = 28,083 + 12,508 = 40,591 2021 year-end debt = 30,458 + 10,590 = 41,048 Average debt = (40,591 + 41,048) / 2 = 40,820 For year-end FFO/Debt, S&P typically uses year-end debt. I'll use 40,591. But wait - I need to check if there are other debt items. "Noncurrent Liabilities" total 102,427 includes much more than just debt. Also, looking at "Liabilities Included In Disposal Groups Classified As Held For Sale" = 371. This is liabilities of discontinued operations, not necessarily debt. And "Current Liabilities" total 93,778 includes trade payables, derivatives, etc. For debt, I think 40,591 is the core borrowings. Let me also check if "Other Noncurrent Financial Liabilities" or "Other Current Financial Liabilities" include debt-like items: - Other Noncurrent Financial Liabilities: 90 - No "Other Current Financial Liabilities" shown separately So total debt-like = 40,591 + 90 = 40,681 if we include the small other item. Adjusted_Debt = 40,681 + 1,697 - 15,570 = **€26,808,000,000** Or approximately **€26,718,000,000** without the 90. I'll use **€26,718,000,000** or round to **26,718**. ## Step 5: Calculate FFO / Adjusted_Debt FFO = 10,089,000,000 Adjusted_Debt = 26,718,000,000 FFO / Adjusted_Debt = 10,089 / 26,718 = **0.3776** Let me verify with alternative FFO: If FFO = 11,593 (before taxes): 11,593 / 26,718 = 0.4339 If FFO = 8,846 (from Adjusted EBITDA - interest - taxes): 8,846 / 26,718 = 0.3311 The 10,089 seems most appropriate as it's based on actual cash flow before working capital changes, minus cash interest and taxes. Let me also try with 0% hybrid treatment: Adjusted_Debt = 40,591 - 15,570 = 25,021 FFO / Adjusted_Debt = 10,089 / 25,021 = **0.4032** And with average debt: Adjusted_Debt (avg) = 40,820 + 1,697 - 15,570 = 26,947 Or with 0% hybrid: 40,820 - 15,570 = 25,250 FFO/Debt with year-end and 50% hybrid = 10,089 / 26,718 = 0.3776 Given typical S&P practice, let me finalize: **FFO = €10,089,000,000** **Adjusted_Debt = €26,718,000,000** **FFO / Adjusted_Debt = 0.3776** But I want to double-check my FFO calculation once more. "Cash Flows From Used In Operations Before Changes In Working Capital" = 12,415 This includes: - Net income (including nonrecurring items, equity income, etc.) + Non-cash adjustments For S&P FFO, we want normalized, recurring funds from operations. Should we adjust for nonrecurring items? The 12,415 includes add-back of impairments (8,057 includes impairments). If we want normalized FFO, we might subtract nonrecurring gains and add back nonrecurring losses... but the 12,415 already has the accounting add-backs. Actually, looking at cash flow preparation: it starts from net income and adds back non-cash items. So 12,415 is essentially cash-based, with nonrecurring items already impacting it. For S&P FFO, they typically want normalized earnings power. So if there are large nonrecurring items (like 2,774 impairments), we might normalize by excluding them. But in cash flow, the 8,057 add-back includes impairments. If we exclude impairments from FFO, we'd subtract them from the add-back. Normalized FFO approach: Reported FFO-like = 12,415 Less: nonrecurring items that won't repeat - Impairments add-back: 2,774 was added back, but it's noncash. Should we exclude? Actually impairments are non-cash, so they don't affect FFO directly except through net income. Hmm, FFO is meant to measure recurring cash generation. Large impairments reduce net income but are non-cash, so they increase FFO (via add-back). But they're nonrecurring. For normalized FFO, S&P might adjust for nonrecurring items. If we subtract the impairment add-back effect: Actually, the impairment reduced net income by 2,774. Then in cash flow, we add back 2,774 (since it's non-cash). Net effect on FFO: 0. The FFO is based on pre-impairment earnings. Wait, that's not right. Net income includes the impairment charge. FFO adds back the impairment (non-cash). So FFO is higher than net income by the impairment amount. But the impairment is nonrecurring. For normalized FFO, we might want to exclude nonrecurring items. So: Normalized net income = 390 + 2,774 (impairment) + 230 (restructuring) - 1,328 (nonrec gain) = 2,066 + D&A 5,187 + other normalized add-backs = normalized FFO? This is getting too complex. Let me stick with the standard cash flow based FFO = 10,089, recognizing that S&P may make further normalization adjustments. Actually, let me try one more refinement. From the cash flow: "Cash Flows From Used In Operations Before Changes In Working Capital" = 12,415 This is for continuing + discontinued? Let me verify with components. From the detailed adjustments: Profit Loss = 390 + Net Depreciation Amortization Impairment And Provisions = 8,057 + Adjustments For Undistributed Profits Of Investments = 1,059 + Adjustments For Dividend Income = -713 + Impact Of Changes In Scope = -74 + Adjustments For Gains Losses On Change In Fair Value Of Derivatives = -3,661 + Other Adjustments For Noncash Items = -157 + Adjustments For Income Tax Expense = -83 + Adjustments For Finance Income Cost = -3,003 Sum: 390 + 8,057 + 1,059 - 713 - 74 - 3,661 - 157 - 83 - 3,003 = 1,815 But 12,415 is reported. I'm missing 10,600! Oh wait - I think "Net Depreciation Amortization Impairment And Provisions" = 8,057 is the total, but maybe there are other items I'm missing. Or the base profit is different. Actually, looking more carefully: the cash flow adjustments might start from "Profit Loss From Continuing Operations" not total Profit Loss. Profit Loss From Continuing Operations = -1,793 + Profit Loss From Discontinued Operations = 2,183 = 390 total For continuing operations cash flow before WC: "Cash Flows From Used In Operations Before Changes In Working Capital" = 12,415? But this seems to be total. Let me check if 12,415 includes discontinued. "Cash Flows From Used In Operating Activities Discontinued Operations" = 98. This is after WC and taxes. The before-WC amount would be higher. If total before-WC is 12,415, and continuing operating CF is 8,488, with discontinued 98, then: Continuing before-WC = 12,415 - (discontinued portion) Hmm, 12,415 - 1,504 - 2,424 = 8,487 continuing. Then where does discontinued 98 fit? Maybe: 12,415 is total before-WC, then -1,504 taxes, -2,424 WC = 8,487 total operating. But reported is 8,586 = 8,488 + 98. Difference: 8,586 - 8,487 = 99. And 8,488 - 8,487 = 1. Rounding errors. So 12,415 is likely continuing only, and discontinued adds separately. Or 12,415 is total and the math works with rounding. For practical purposes, I'll use 12,415 as the FFO base (before interest and taxes). FFO = 12,415 - 822 - 1,504 = 10,089 ## Final Calculation FFO = €10,089,000,000 Adjusted_Debt = €26,718,000,000 FFO / Adjusted_Debt = 10,089 / 26,718 = 0.3776... Let me compute precisely: 10,089 / 26,718 = 0.377609... Rounded to four decimal places: **0.3776** Wait, let me recheck: 10089 / 26718 = ? 10089 / 26718 = 0.377609... Yes, 0.3776. But I want to verify my Adjusted_Debt once more. Should I include more debt-like items? Looking at the balance sheet more carefully: - "Noncurrent Derivative Financial Liabilities" = 39,417 - "Current Derivative Financial Liabilities" = 11,859 These total 51,276. Are these debt-like? For energy companies, derivatives are typically operating (commodity hedges). S&P generally excludes operating derivatives from debt. However, if some derivatives are hedges of debt (interest rate, currency), they might be debt-like. Without detail, I'll exclude. - "Trade And Other Current Payables" = 39,801 - operating, not debt - "Current Contract Liabilities" = 3,292 - operating - "Other Current Nonfinancial Liabilities" = 23,583 - may include some debt-like, but likely operating - "Noncurrent Provisions" = 24,663 - includes decommissioning, pensions, etc. Some may be debt-like. - "Deferred Tax Liabilities" = 6,408 - not debt-like per S&P For "Noncurrent Provisions", if this includes nuclear decommissioning or asset retirement obligations, S&P may treat as debt-like. But without specifics, I'll leave out. **Final Adjusted_Debt = 40,591 + 1,697 - 15,570 = 26,718** FFO / Adjusted_Debt = 10,089 / 26,718 = 0.3776 Actually, let me reconsider one more time whether FFO should be 10,089 or higher. Looking at S&P's typical FFO calculation for utilities, they often use: FFO = Cash flow from operations before changes in working capital - cash interest This would be 12,415 - 822 = 11,593 if taxes are already deducted in the 12,415. But 12,415 is before taxes paid (taxes are subtracted after). Hmm, let me re-read: "Cash Flows From Used In Operations Before Changes In Working Capital" = 12,415. Then "Income Taxes Paid Refund Classified As Operating Activities" = 1,504. Then "Increase Decrease In Working Capital" = 2,424. Then operating activities = 12,415 - 1,504 - 2,424 = 8,487. So 12,415 is definitely before taxes. For FFO, if we want after-tax FFO, we subtract taxes: 12,415 - 1,504 = 10,911. Then subtract cash interest: 10,911 - 822 = 10,089. Or if we want pre-tax FFO (sometimes used): 12,415 - 822 = 11,593. S&P's standard "FFO to debt" is typically after-tax, so 10,089 seems right. Final answer: **0.3776** But wait - I want to check if I should use average debt or year-end debt. S&P typically uses year-end debt for point-in-time ratios, or average for trend. For annual report analysis, year-end is common. Using year-end 2022 debt: 40,591 Using year-end 2021 debt: 41,048 Average: 40,820 With average debt and 50% hybrid: 40,820 + 1,697 - 15,570 = 26,947 FFO/Debt = 10,089 / 26,947 = 0.3744 With year-end: 0.3776 I'll use year-end as it's more common for single-year analysis. 0.3776