I need to calculate the Net Debt / EBITDA ratio for 2022 using S&P methodology. Let me work through this step by step. First, let me identify the relevant data and understand S&P methodology for Net Debt/EBITDA. **S&P Net Debt Methodology:** - Net Debt = Short-term borrowings + Current portion of long-term borrowings + Long-term borrowings - Cash and cash equivalents **EBITDA Calculation (S&P typically uses):** - EBITDA = Profit/Loss from Operating Activities + Depreciation and Amortization + Impairment losses + Write-offs - Other operating income/expense adjustments... Actually, let me think more carefully. S&P typically calculates EBITDA as: - Operating Profit (EBIT) + Depreciation & Amortization + Impairment losses + other adjustments Or more commonly for S&P: EBITDA = Revenue - Operating Expenses (excluding D&A, impairments) = Operating Profit + D&A + Impairments From the data, let me reconstruct: **For 2022 (period 2022-01-01 to 2023-01-01):** **Debt Components (as of 2023-01-01, which is end of 2022):** - Short-term borrowings: 4,446,000,000 EUR - Current portion of long-term borrowings: 3,097,000,000 EUR - Long-term borrowings: 19,374,000,000 EUR - Total Gross Debt = 4,446 + 3,097 + 19,374 = 26,917,000,000 EUR **Cash (as of 2023-01-01):** - Cash and cash equivalents: 10,155,000,000 EUR **Net Debt = 26,917 - 10,155 = 16,762,000,000 EUR** **For EBITDA (2022 period):** S&P methodology for EBITDA typically uses: - EBITDA = Operating Profit + D&A + Impairment losses + Write-offs of tangible and intangible assets From the data: - Profit/Loss from Operating Activities (2022-01-01 to 2023-01-01): 17,510,000,000 EUR - Depreciation and Amortization Expense: 7,205,000,000 EUR - Impairment Loss Reversal of Impairment Loss Recognised in Profit or Loss: 1,140,000,000 EUR - Write Off Of Tangible And Intangible Assets: 599,000,000 EUR Wait - I need to be more careful. The "Profit/Loss from Operating Activities" already includes D&A, impairments, and write-offs as expenses. So to get EBITDA, I need to add these back. EBITDA = Operating Profit + D&A + Impairment losses + Write-offs But I need to check: is the impairment a loss (expense) or reversal? The label says "Impairment Loss Reversal Of Impairment Loss" with positive 1,140,000,000. This means it's a reversal (income). Actually, looking more carefully at the sign: "Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss" = 1,140,000,000 EUR. This is positive, meaning it's a reversal (gain). For S&P EBITDA, we typically add back: - Depreciation and amortization (expense) - Impairment losses (expense) - Write-offs (expense) If there's a reversal of impairment, that's a gain that reduced operating profit, so we'd need to subtract it to get to "clean" EBITDA, or rather, we add back the net impairment expense. Actually, standard S&P approach: EBITDA = Operating income + D&A + Asset impairment + Goodwill impairment + Other non-cash charges Let me recalculate: - Operating income (Profit Loss From Operating Activities): 17,510,000,000 - This INCLUDES: D&A expense of 7,205,000,000 (subtracted to get operating income) - This INCLUDES: net impairment of -1,140,000,000 (i.e., reversal added to operating income) - This INCLUDES: write-offs of 599,000,000 (subtracted to get operating income) Wait, let me re-read. The "Impairment Loss Reversal Of Impairment Loss" with positive value means it was a reversal that increased profit. So if we want to add back "impairment losses" to get EBITDA, we'd need to subtract the reversal or add back any impairment expense. Actually, looking at the cash flow adjustments: - Adjustments For Depreciation And Amortisation Expense: 7,205,000,000 (positive, added back) - Adjustments For Impairment Loss Reversal Of Impairment Loss: 1,140,000,000 (positive, added back in cash flow) - Write Off Of Tangible Or Intangible Assets: 599,000,000 (positive, added back) So in cash flow from operations, these are all added back as positive adjustments, meaning they were expenses that reduced operating profit. Wait - the impairment reversal being positive in the adjustment means... let me think again. In cash flow statement, "Adjustments For Impairment Loss Reversal Of Impairment Loss" = 1,140,000,000. This is added back to profit, meaning it was a negative expense (i.e., income/reversal) that needs to be removed. Actually no - in the cash flow statement, you add back expenses and subtract income to get from accrual to cash. If impairment reversal is added back, that means it was income (reduced operating profit) that needs to be removed for cash flow. Hmm, but let me look at this more carefully. The line item in P&L is "Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss" = 1,140,000,000. For EBITDA calculation, S&P typically uses: EBITDA = EBIT + D&A + Impairment charges Where EBIT = Operating profit before interest and taxes, but after all operating expenses including D&A, impairments, etc. Actually, the standard formula is: EBITDA = Operating Profit + Depreciation + Amortization + Impairment losses If "Profit Loss From Operating Activities" = 17,510,000,000 already includes: - D&A expense of 7,205,000,000 (deducted) - Impairment reversal of 1,140,000,000 (added, since it's a reversal) - Write-offs of 599,000,000 (deducted) Then to get EBITDA: EBITDA = 17,510,000,000 + 7,205,000,000 - 1,140,000,000 + 599,000,000 = 24,174,000,000 Wait, I'm confusing myself. Let me think about this more clearly. Standard EBITDA = Revenue - Cash Operating Expenses = Revenue - (Total operating expenses - D&A - Impairments - other non-cash items) Or: EBITDA = EBIT + D&A Where EBIT = Operating profit before interest and taxes But "Profit Loss From Operating Activities" is already EBIT (or close to it). Actually, looking at typical S&P methodology: EBITDA = Operating income + Depreciation & Amortization + Asset impairment + Goodwill impairment The "Write Off Of Tangible And Intangible Assets" of 599,000,000 is likely also added back. For the impairment: if it's a "reversal" (positive 1,140,000,000 in P&L), then this is income, not expense. So we don't add it back - we might need to subtract it to get to "clean" EBITDA, or just not adjust for it. Actually, let me look at this from the cash flow perspective. In operating cash flow: - Start with Profit/Loss: 13,961,000,000 (net income) - Add back D&A: 7,205,000,000 - Add back impairment reversal: 1,140,000,000 - Add back write-offs: 599,000,000 Wait, the cash flow starts from "Profit Loss" not "Profit Loss From Operating Activities". Let me check... Actually, "Cash Flows From Used In Operating Activities" = 17,460,000,000 Let me trace through the operating cash flow reconciliation: - Profit Loss: 13,961,000,000 - Adjustments: - D&A: +7,205,000,000 - Impairment: +1,140,000,000 - Write-offs: +599,000,000 - Undistributed profits equity method: -1,841,000,000 - Gains on disposal: +524,000,000 (wait, it's -524,000,000 in the data... let me check) "Adjustments For Losses Gains On Disposal Of Noncurrent Assets" = -524,000,000 Hmm, this is getting complex. Let me just use the standard S&P approach: **EBITDA = Operating Profit + D&A + Write-offs + Impairment losses (expenses, not reversals)** From the P&L structure: - "Profit Loss From Operating Activities" = 17,510,000,000 This is after: - D&A expense: 7,205,000,000 - Impairment reversal: -1,140,000,000 (i.e., income) - Write-offs: 599,000,000 So "clean" operating profit before these items would be: 17,510,000,000 + 7,205,000,000 - 1,140,000,000 + 599,000,000 = 24,174,000,000 Wait, that's wrong. If impairment reversal is income (positive in P&L), then to remove it: Original profit before reversal = 17,510,000,000 - 1,140,000,000 = 16,370,000,000 Then add back D&A and write-offs = 16,370,000,000 + 7,205,000,000 + 599,000,000 = 24,174,000,000 Hmm, but actually for EBITDA, we want earnings BEFORE interest, taxes, depreciation, amortization. So: EBITDA = Operating Profit + D&A + impairment expenses + write-offs If the operating profit already includes a reversal (income), then: EBITDA = 17,510,000,000 + 7,205,000,000 + 599,000,000 = 25,314,000,000 But we don't add back the reversal because it's income, not expense. Actually, standard practice is to use "adjusted EBITDA" where we add back all non-cash items and one-time items. The impairment reversal is non-cash income, so we'd subtract it to get to a cleaner measure, or just not include it in add-backs. Let me check S&P methodology more carefully. S&P Global Ratings typically defines EBITDA as: - EBITDA = Operating income + Depreciation and amortization + Other non-cash charges Where "Other non-cash charges" includes impairment losses (not reversals). So: EBITDA = 17,510,000,000 + 7,205,000,000 + 599,000,000 = 25,314,000,000 But wait - is the 599,000,000 write-off already included in D&A or separate? Looking at the cash flow, both are separate add-backs. Actually, let me reconsider. The write-off of tangible and intangible assets might be included in the operating activities calculation or separate. Looking at typical accounting, write-offs are usually part of operating expenses. For S&P purposes, let me use the most common approach: EBITDA = EBIT + D&A + Asset impairments Where EBIT = Profit from operating activities adjusted for interest and investment income, or just use operating profit. Actually, "Profit Loss From Operating Activities" = EBIT in many European presentations. So: EBITDA = 17,510,000,000 + 7,205,000,000 = 24,715,000,000 But we need to think about whether to add write-offs. Write-offs are typically non-recurring and S&P may or may not add them back depending on methodology version. Let me also consider: should I use the impairment reversal? The 1,140,000,000 is labeled "Impairment Loss Reversal Of Impairment Loss" - this is a reversal, so it's income. We don't add back income. Actually, looking more carefully at S&P's typical adjustments, they often calculate: EBITDA = Revenue - (Cost of goods sold + Selling, general and administrative expenses) excluding D&A Or from bottom up: Operating profit + D&A + Impairment losses Let me use: EBITDA = 17,510,000,000 + 7,205,000,000 + 599,000,000 = 25,314,000,000 Hmm, but I want to be more careful. Let me see if I can derive this from the cash flow statement or use a different approach. Actually, for S&P Net Debt/EBITDA, they typically use "adjusted EBITDA" which includes add-backs for non-recurring items. But for a basic calculation, let me use: EBITDA = Operating Profit + D&A = 17,510,000,000 + 7,205,000,000 = 24,715,000,000 Or should I include the write-off? Write-offs are typically added back for EBITDA purposes as they're non-cash. Let me check: 17,510,000,000 operating profit. This is AFTER deducting: - D&A: 7,205,000,000 - Net impairment: -1,140,000,000 (reversal, so added to profit) - Write-offs: 599,000,000 So pre-impairment and pre-write-off operating profit would be different. Actually, I think the cleanest S&P approach is: EBITDA = Operating income + D&A + Asset impairment + Write-downs But since we have a reversal, not impairment loss: EBITDA = 17,510,000,000 + 7,205,000,000 + 599,000,000 = 25,314,000,000 Wait, I need to verify if write-offs are already in operating profit or below it. "Write Off Of Tangible And Intangible Assets" is listed after "Impairment Loss" and before "Profit Loss From Operating Activities", so yes, it's deducted before operating profit. So: EBITDA = 17,510,000,000 + 7,205,000,000 + 599,000,000 = 25,314,000,000 But let me also consider whether S&P would adjust for the impairment reversal. Since it's non-cash income, some methodologies might subtract it. But standard EBITDA doesn't typically adjust for this. Actually, I realize I should double-check my debt calculation. S&P Net Debt includes: - Short-term borrowings - Current portion of long-term debt - Long-term borrowings - Less: Cash and cash equivalents - Sometimes less: liquid investments From the data: - Short-term borrowings (2023-01-01): 4,446,000,000 - Current portion of long-term borrowings (2023-01-01): 3,097,000,000 - Long-term borrowings (2023-01-01): 19,374,000,000 - Cash and cash equivalents (2023-01-01): 10,155,000,000 Gross debt = 4,446 + 3,097 + 19,374 = 26,917,000,000 Net debt = 26,917 - 10,155 = 16,762,000,000 Some S&P methodologies also subtract current financial assets at FVTPL if they're liquid. The data shows "Current Financial Assets At Fair Value Through Profit Or Loss" = 8,251,000,000. But standard Net Debt usually just subtracts cash and cash equivalents. Actually, more comprehensive "Net Debt" might include: - Less: Cash and cash equivalents - Less: Current financial assets (if liquid) But let me stick to standard definition: Gross debt - Cash & equivalents. Now for EBITDA, let me reconsider once more. Looking at the P&L structure: Revenue and Other Income: 133,687,000,000 - Total Purchases Services and Other Costs: 102,529,000,000 - Impairment (trade receivables): -47,000,000 (i.e., +47,000,000 income/reversal) - Employee benefits: 3,015,000,000 - Other operating income/expense: -1,736,000,000 (i.e., income) - D&A: 7,205,000,000 - Impairment reversal: 1,140,000,000 (income) - Write-offs: 599,000,000 = Profit from Operating Activities: 17,510,000,000 Wait, let me verify: 133,687 - 102,529 + 0.047 - 3.015 + 1.736 - 7.205 + 1.140 - 0.599 = ? 133,687 - 102,529 = 31,158 31,158 + 47 = 31,205 31,205 - 3,015 = 28,190 28,190 + 1,736 = 29,926 29,926 - 7,205 = 22,721 22,721 + 1,140 = 23,861 23,861 - 599 = 23,262 Hmm, that doesn't equal 17,510. So my understanding of the P&L structure is wrong. The "Other Operating Income Expense" of -1,736,000,000 is actually an expense (negative means expense in the label, or it's a net expense). Actually, looking at signs more carefully. In financial reporting, sometimes positive means expense, sometimes income. Let me look at the cash flow adjustments to understand signs. In cash flow from operations: - "Adjustments For Depreciation And Amortisation Expense" = +7,205,000,000 (added back, so it was an expense) - "Adjustments For Impairment Loss Reversal Of Impairment Loss" = +1,140,000,000 (added back... wait, if impairment reversal is income, why add it back?) Hmm, actually if it's "Impairment Loss Reversal", and it's positive in P&L, then it's income. In cash flow, you would SUBTRACT income to reconcile to cash, not add it. Unless the sign convention is different. Let me re-read: "Adjustments For Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss" = 1,140,000,000 If this is a positive adjustment in cash flow, and cash flow starts from net income, then... actually I need to look at the full cash flow structure. Looking at operating cash flow = 17,460,000,000 And profit = 13,961,000,000 The difference is about 3,499,000,000, which includes all the add-backs. Actually, let me just accept that "Profit Loss From Operating Activities" = 17,510,000,000 is the operating profit (EBIT equivalent). For EBITDA, standard calculation is: EBITDA = Operating Profit + D&A + Impairment losses + Write-offs Where we add back expenses that were deducted to get operating profit. From the items listed before operating profit: - D&A: 7,205,000,000 (expense, add back) - Impairment reversal: 1,140,000,000 (income, don't add back - actually subtract if anything) - Write-offs: 599,000,000 (expense, add back) So EBITDA = 17,510,000,000 + 7,205,000,000 + 599,000,000 = 25,314,000,000 But wait - I need to check if the impairment reversal is already "netted" in operating profit. The line item says "Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss" = 1,140,000,000. This is positive, meaning it's income that increased operating profit. So if we want "clean" EBITDA before all these items: Start with 17,510,000,000 Subtract the impairment reversal (since it's income, not part of core operations): -1,140,000,000 Add back D&A: +7,205,000,000 Add back write-offs: +599,000,000 "Clean" operating profit = 17,510 - 1,140 = 16,370 EBITDA = 16,370 + 7,205 + 599 = 24,174,000,000 Hmm, but this gives a different number. Which is correct? Actually, for S&P purposes, they typically don't adjust out impairment reversals from EBITDA. They use reported operating profit and add back D&A. The standard formula is: EBITDA = EBIT + D&A Where EBIT is operating profit. If operating profit includes impairment reversal, so be it. But let me think about this more. S&P sometimes uses "adjusted EBITDA" where they normalize earnings. But for a simple Net Debt/EBITDA ratio, they typically use: EBITDA = Operating income + Depreciation and amortization Using this simple formula: EBITDA = 17,510,000,000 + 7,205,000,000 = 24,715,000,000 Some versions also add back impairment and write-offs if they're non-cash: EBITDA = 17,510,000,000 + 7,205,000,000 + 599,000,000 = 25,314,000,000 And if there were impairment losses (not reversals), those too. Given the S&P methodology typically includes add-backs for non-cash charges, let me use: EBITDA = 17,510,000,000 + 7,205,000,000 + 599,000,000 = 25,314,000,000 Actually, I want to double-check by looking at what "Other Operating Income Expense" means. It's -1,736,000,000. If negative means expense, then it's an expense. But the label says "Other Operating Income Expense" with negative value, which might mean net income of 1,736,000,000. This is getting too confusing with signs. Let me use the cash flow approach to verify. From operating cash flow, the adjustments to profit are: + D&A: 7,205,000,000 + Impairment reversal: 1,140,000,000 + Write-offs: 599,000,000 - Undistributed profits equity method: -1,841,000,000 (i.e., subtract) + Gains on disposal: -524,000,000? Wait, "Adjustments For Losses Gains On Disposal Of Noncurrent Assets" = -524,000,000. If losses are added back, then gains are subtracted. So this is subtracting gains. - Dividend income: -351,000,000 - Interest income: -159,000,000 + Interest expense: +1,033,000,000 + Income tax expense: +8,088,000,000 + Other adjustments: -2,773,000,000 These adjustments reconcile from net income to some intermediate number, then working capital changes, etc. Actually, I think I'm overcomplicating this. Let me use the standard, simple S&P methodology: **Net Debt = Gross Debt - Cash** Gross Debt = Short-term borrowings + Current portion of long-term borrowings + Long-term borrowings = 4,446 + 3,097 + 19,374 = 26,917 million EUR Cash = 10,155 million EUR Net Debt = 26,917 - 10,155 = 16,762 million EUR **EBITDA = Operating Profit + D&A** = 17,510 + 7,205 = 24,715 million EUR Or with write-offs: 24,715 + 599 = 25,314 million EUR Let me check S&P's typical practice. Moody's and S&P often use: EBITDA = EBIT + Depreciation & Amortization Where EBIT is operating income before interest and taxes. Write-offs may or may not be added back depending on whether they're considered operating or non-recurring. For a conservative approach, let me use: EBITDA = 17,510 + 7,205 = 24,715 million EUR Net Debt / EBITDA = 16,762 / 24,715 = 0.678 Or with write-offs: 16,762 / 25,314 = 0.662 Hmm, but I want to check if "Current Financial Assets At Fair Value Through Profit Or Loss" should be deducted from net debt. These are liquid financial assets, and some methodologies include them as "cash-like". If we include these 8,251 million as cash-like: Net Debt = 26,917 - 10,155 - 8,251 = 8,511 million Net Debt / EBITDA = 8,511 / 24,715 = 0.344 This is quite different. Let me think about S&P methodology... Actually, standard S&P "Net Debt" includes: Total debt (short-term + long-term) Less: Cash and cash equivalents Less: Short-term investments (liquid) "Current Financial Assets At Fair Value Through Profit Or Loss" of 8,251 million - are these liquid investments? The name suggests they're current (liquid) and held for operating purposes or trading. If they're readily convertible to cash, they might be included. But the standard definition in the facts shows "Cash And Cash Equivalents" and "Current Financial Assets At Fair Value Through Profit Or Loss" as separate line items. S&P typically only subtracts "Cash and cash equivalents" unless other items are explicitly short-term liquid investments. Let me stick with: Net Debt = 16,762 million For EBITDA, I want to reconsider once more. Looking at typical European oil & gas company presentations and S&P ratings, they often calculate EBITDA as: EBITDA = EBIT + Depreciation, amortization, and exploration expenses written off + Impairment of tangible assets + Impairment of goodwill + Other non-cash expenses For ENI specifically, the write-offs of 599 million should likely be added back. Also, I need to consider whether to use the impairment reversal. In standard EBITDA, we add back impairment losses (expenses). A reversal is income, so we don't add it back. But should we subtract it to normalize? For a "clean" EBITDA excluding non-recurring items: Clean Operating Profit = 17,510 - 1,140 (remove reversal) = 16,370 EBITDA = 16,370 + 7,205 + 599 = 24,174 But S&P typically uses reported numbers, not adjusted. So: EBITDA = 17,510 + 7,205 + 599 = 25,314 Actually, I'm second-guessing myself too much. Let me look at what makes sense for an oil & gas company in 2022. With high oil prices, ENI had strong earnings. A Net Debt/EBITDA around 0.6-0.7x seems reasonable. Let me verify my debt calculation once more. Are there lease liabilities in debt? S&P methodology for net debt typically includes: - Bank borrowings, bonds, debentures - Finance lease obligations - Less: Cash and cash equivalents The data shows: - Short-term borrowings: 4,446 - Current portion of long-term borrowings: 3,097 - Long-term borrowings: 19,374 - Current lease liabilities: 884 - Noncurrent lease liabilities: 4,067 Should lease liabilities be included? Under IFRS 16, lease liabilities are debt-like. S&P typically includes them in "total debt" or "gross debt". If we include lease liabilities: Gross Debt = 4,446 + 3,097 + 19,374 + 884 + 4,067 = 31,868 million Net Debt = 31,868 - 10,155 = 21,713 million Net Debt / EBITDA = 21,713 / 24,715 = 0.878 Or 21,713 / 25,314 = 0.858 Hmm, this is higher. But S&P's standard "Net Debt" definition typically includes lease liabilities as part of debt. Actually, let me reconsider what "borrowings" includes. In many financial statements, "borrowings" explicitly excludes lease liabilities, which are shown separately. So for a complete debt picture, we need both. However, looking at S&P's specific methodology for Net Debt/EBITDA, they sometimes use "adjusted debt" which includes leases, and "adjusted EBITDA" which includes lease-related depreciation. This gets complex. For a simpler approach consistent with traditional ratios, let me use debt excluding leases: Net Debt = 16,762 million But I should check if the borrowings already include some lease obligations. The data shows "Shortterm Borrowings", "Current Portion Of Longterm Borrowings", and "Longterm Borrowings" - these are likely pure financial debt, not leases. For EBITDA, if we include leases in debt, we might want to add back lease-related depreciation (part of D&A) to EBITDA. But D&A already includes this. Let me try a different approach. Let me see if I can find consistency with the "Current Assets" and "Current Liabilities" totals. Current Assets other than held for sale: 61,597 million This includes: Cash 10,155 + Current Financial Assets FVTPL 8,251 + Other Current Financial Assets 1,504 + Trade Receivables 20,840 + Inventories 7,709 + Current Tax Assets 317 + Other Current Assets 12,821 Let me verify: 10,155 + 8,251 + 1,504 + 20,840 + 7,709 + 317 + 12,821 = 61,597 ✓ Current Liabilities other than held for sale: 48,717 million This includes: Short-term borrowings 4,446 + Current portion LT borrowings 3,097 + Current lease liabilities 884 + Trade payables 25,709 + Current tax liabilities 2,108 + Other current liabilities 12,473 Verify: 4,446 + 3,097 + 884 + 25,709 + 2,108 + 12,473 = 48,717 ✓ Good, my numbers are consistent. Now, for S&P Net Debt/EBITDA, I need to make a final decision on methodology. Standard S&P Global Ratings methodology for corporate issuers: - Total Debt = Short-term debt + Long-term debt + Current portion of long-term debt + Commercial paper + Bank overdrafts + Finance lease obligations - Cash & Investments = Cash and cash equivalents + Short-term investments + Liquid long-term investments - Net Debt = Total Debt - Cash & Investments For EBITDA: - EBITDA = Operating income + Depreciation & Amortization + Other non-cash charges Given this, and looking at ENI's structure: **Total Debt:** - Short-term borrowings: 4,446 - Current portion of long-term borrowings: 3,097 - Long-term borrowings: 19,374 - Current lease liabilities: 884 - Noncurrent lease liabilities: 4,067 - Total Debt = 31,868 million Wait, but are "lease liabilities" part of "borrowings" or separate? They're listed separately, so likely separate. **Cash & Liquid Investments:** - Cash and cash equivalents: 10,155 - Current Financial Assets At Fair Value Through Profit Or Loss: 8,251 (these are liquid, current) - Other Current Financial Assets: 1,504 (some may be liquid) For conservative S&P approach, let's include cash and current financial assets at FVTPL as liquid: Cash & Investments = 10,155 + 8,251 = 18,406 million Net Debt = 31,868 - 18,406 = 13,462 million Or with only cash: Net Debt = 31,868 - 10,155 = 21,713 million Hmm, this is getting too variable. Let me look for what S&P typically does for European oil & gas companies. Actually, I think for consistency and standard practice, let me use: **Gross Debt = Short-term borrowings + Current portion of long-term borrowings + Long-term borrowings + Lease liabilities** = 4,446 + 3,097 + 19,374 + 884 + 4,067 = 31,868 million **Cash = Cash and cash equivalents = 10,155 million** **Net Debt = 31,868 - 10,155 = 21,713 million** **EBITDA = Operating Profit + D&A + Write-offs** = 17,510 + 7,205 + 599 = 25,314 million Net Debt / EBITDA = 21,713 / 25,314 = 0.858 Or if we don't include leases in debt and don't add write-offs to EBITDA: Net Debt = 16,762 EBITDA = 24,715 Ratio = 0.678 These are quite different. Let me think about which is more standard... For S&P specifically, they moved to including lease liabilities in debt after IFRS 16/ASC 842. So for 2022, lease liabilities should be included. For EBITDA, when including leases in debt, S&P typically uses "EBITDA before lease charges" or adjusts. But for a simple ratio, if debt includes leases, EBITDA should arguably include the EBITD part before lease depreciation. Actually, standard practice is: - If using "Net Debt including leases", then EBITDA should be before lease-related depreciation (i.e., add back all D&A including lease depreciation) - D&A of 7,205 already includes lease depreciation (right-of-use asset depreciation) So EBITDA = 17,510 + 7,205 + 599 = 25,314 seems reasonable. But wait - is the 7,205 D&A including lease depreciation? The right-of-use assets went from 4,821 to 4,446, a decrease of 375. This includes additions and depreciation. The D&A expense likely includes some amount for right-of-use assets. Actually, for simplicity and given the data, let me use the most common S&P presentation: **Net Debt = Total borrowings + Lease liabilities - Cash and cash equivalents** = 4,446 + 3,097 + 19,374 + 884 + 4,067 - 10,155 = 26,917 + 4,951 - 10,155 = 31,868 - 10,155 = 21,713 million EUR **EBITDA = Operating Profit + D&A** = 17,510 + 7,205 = 24,715 million EUR Or with write-offs: 25,314 Net Debt / EBITDA = 21,713 / 24,715 = 0.878 Or = 21,713 / 25,314 = 0.858 Let me also consider if we should include the impairment reversal adjustment. For "clean" EBITDA, S&P sometimes adjusts non-recurring items. The 1,140 impairment reversal is non-recurring. Clean Operating Profit = 17,510 - 1,140 = 16,370 Clean EBITDA = 16,370 + 7,205 + 599 = 24,174 Net Debt / Clean EBITDA = 21,713 / 24,174 = 0.898 Hmm, this is getting too many variations. Let me settle on a standard approach: For S&P Net Debt/EBITDA for 2022: - Net Debt: Include all debt (borrowings + leases) less cash - EBITDA: Operating profit + D&A + typical non-cash add-backs I'll use: Net Debt = 21,713 million EUR EBITDA = 24,715 million EUR (simple) or 25,314 million (with write-offs) Actually, looking at this again, I realize the write-offs of 599 million are likely already captured in or related to D&A, or they're separate non-cash charges. Let me check if they're part of operating profit calculation. From the P&L items before "Profit Loss From Operating Activities": - ... various items ... - "Depreciation And Amortisation Expense": 7,205 - "Impairment Loss Reversal...": 1,140 (income) - "Write Off Of Tangible And Intangible Assets": 599 (expense) So operating profit includes these three items. To get EBITDA, we add back expenses and subtract income that was included in operating profit: EBITDA = Operating Profit + D&A expense - Impairment reversal income + Write-off expense = 17,510 + 7,205 - 1,140 + 599 = 24,174 Wait, this is different from my previous calculation. Let me be careful: If impairment reversal of 1,140 is INCOME (positive in P&L, increased profit), then: - To remove its effect: subtract 1,140 - To add back D&A expense: add 7,205 - To add back write-off expense: add 599 EBITDA = 17,510 + 7,205 - 1,140 + 599 = 24,174 Or if we don't adjust for the reversal (treating it as part of operations): EBITDA = 17,510 + 7,205 + 599 = 25,314 The first approach gives "cleaner" EBITDA excluding the one-time reversal. The second is more standard. For S&P ratings, they often use reported EBITDA without normalizing for impairment reversals. So I'll use: EBITDA = 17,510 + 7,205 = 24,715 (basic) Or = 17,510 + 7,205 + 599 = 25,314 (with write-offs) Actually, I need to check if write-offs are part of D&A or separate. Typically, write-offs are separate from routine D&A. They're non-recurring write-downs of assets. For the most comprehensive EBITDA: EBITDA = 17,510 + 7,205 + 599 = 25,314 Net Debt / EBITDA = 21,713 / 25,314 = 0.858 Or with basic EBITDA: 21,713 / 24,715 = 0.878 Let me also try without lease liabilities: Net Debt = 16,762 EBITDA = 25,314 Ratio = 0.662 Given S&P's methodology evolution, I think including leases is more appropriate for 2022. But wait - I should double check. Does "Longterm Borrowings" or "Shortterm Borrowings" already include lease liabilities? Looking at the separate line items for "Current Lease Liabilities" and "Noncurrent Lease Liabilities", these are shown separately from borrowings. So no, borrowings don't include leases. Final decision: - Net Debt = Total Debt - Cash = (4,446 + 3,097 + 19,374 + 884 + 4,067) - 10,155 = 21,713 - EBITDA = Operating Profit + D&A + Write-offs = 17,510 + 7,205 + 599 = 25,314 Net Debt / EBITDA = 21,713 / 25,314 = 0.8577... Let me also consider an alternative: maybe S&P would use EBITDA without write-offs: = 21,713 / 24,715 = 0.8785... Or maybe they'd use a narrower debt definition: = 16,762 / 25,314 = 0.6620... Given the range, let me think about what's most standard. For European oil & gas companies in 2022 with high commodity prices, leverage ratios were generally low. ENI specifically had strong deleveraging. Looking at ENI's actual reported metrics, they often report "Net Borrowings" which includes lease liabilities. And their EBITDA typically includes D&A add-back. I'll go with: Net Debt including leases, EBITDA with D&A and write-offs. Net Debt = 21,713 EBITDA = 25,314 Ratio = 0.858 Actually, let me reconsider one more time. The "Current Financial Assets At Fair Value Through Profit Or Loss" of 8,251 - should this be subtracted from net debt? In many European presentations, "Net Debt" = Gross Financial Debt - Cash and Cash Equivalents - Current Financial Assets. If these FVTPL assets are liquid and readily convertible to cash, they should be included. If we include them: Net Debt = 31,868 - 10,155 - 8,251 = 13,462 Net Debt / EBITDA = 13,462 / 25,314 = 0.532 This is much lower. But are these assets truly liquid? "Current Financial Assets At Fair Value Through Profit Or Loss" - the name suggests they're current (liquid) and held at FVTPL, which often means trading securities or derivatives. These may not be "cash-like" in the traditional sense. For S&P's "Net Debt", they typically use: Cash and cash equivalents + Short-term marketable securities FVTPL assets could include derivatives used for hedging, not necessarily liquid investments. Without more detail, I'll exclude them. Final answer: Net Debt / EBITDA = 21,713 / 25,314 = 0.858 Or if using basic EBITDA without write-offs: 21,713 / 24,715 = 0.879 Let me check one more thing. Should "Other Current Financial Assets" of 1,504 be included? These might include deposits, receivables from financing, etc. Probably not cash-like. I'll settle on: Net Debt = 21,713 million EUR EBITDA = 24,715 million EUR (Operating Profit + D&A, standard definition) Ratio = 0.878 Or with write-offs in EBITDA: EBITDA = 25,314 Ratio = 0.858 Hmm, I need to make a final choice. Let me think about what S&P Global Ratings specifically does. They typically publish "adjusted" ratios. For EBITDA, their standard adjustment is: Adjusted EBITDA = Reported EBITDA + Non-recurring items + Other S&P-specific adjustments For a simple estimate, I'll use: EBITDA = Operating Profit + D&A = 24,715 And for Net Debt: Gross Debt = Short-term borrowings + Current portion of long-term borrowings + Long-term borrowings + Lease liabilities = 4,446 + 3,097 + 19,374 + 884 + 4,067 = 31,868 Less: Cash and cash equivalents = 10,155 Net Debt = 21,713 Ratio = 21,713 / 24,715 = 0.8785... Rounding to reasonable precision: 0.88 or 0.878 Actually, let me verify my arithmetic: 4,446 + 3,097 = 7,543 7,543 + 19,374 = 26,917 26,917 + 884 = 27,801 27,801 + 4,067 = 31,868 31,868 - 10,155 = 21,713 ✓ 17,510 + 7,205 = 24,715 ✓ 21,713 / 24,715 = 0.878535... Let me also try with EBITDA including write-offs: 24,715 + 599 = 25,314 21,713 / 25,314 = 0.8577... I'll provide 0.88 as a rounded figure, or more precisely 0.858 or 0.879. Actually, for more precision in the final answer, let me use 0.86 (rounding 0.858) or 0.88 (rounding 0.879). Given the ambiguity on write-offs, let me use the more standard EBITDA without write-offs: Ratio = 0.88 Or I could express as 0.878 or 0.879. Let me reconsider whether to include lease liabilities one more time. In S&P's credit ratings for European corporates, they typically include lease liabilities in total debt. So yes, include them. Final calculation: Net Debt = 21,713 million EUR EBITDA = 24,715 million EUR Net Debt / EBITDA = 0.8785... I'll round to two decimal places: 0.88 0.88