I need to estimate the Net Debt / EBITDA ratio for 2022 using S&P methodology. First, let me understand what I need: - Net Debt = Total Debt - Cash and Cash Equivalents - EBITDA = Earnings Before Interest, Taxes, Depreciation, and Amortization For S&P methodology, I need to identify the components carefully. **Step 1: Calculate Total Debt** From the balance sheet, debt items include: - Noncurrent portion of debt instruments: "Participaciones Preferentes Obligaciones YOtros Valores Negociables No Corrientes1" - Noncurrent loans received: "Noncurrent Portion Of Noncurrent Loans Received" - Current debt instruments: "Participaciones Preferentes Obligaciones YOtros Valores Negociables Corrientes" - Current loans received: "Current Loans Received And Current Portion Of Noncurrent Loans Received" For 2022 (2022-01-01): - Noncurrent debt instruments: 2,364,000,000 EUR - Noncurrent loans: 2,073,000,000 EUR - Current debt instruments: 1,666,000,000 EUR - Current loans: 280,000,000 EUR Total Debt at 2022-01-01 = 2,364 + 2,073 + 1,666 + 280 = 6,383,000,000 EUR For 2023-01-01 (end of 2022): - Noncurrent debt instruments: 3,101,000,000 EUR - Noncurrent loans: 2,624,000,000 EUR - Current debt instruments: 1,139,000,000 EUR - Current loans: 553,000,000 EUR Total Debt at 2023-01-01 = 3,101 + 2,624 + 1,139 + 553 = 7,417,000,000 EUR Average debt for 2022 = (6,383 + 7,417) / 2 = 6,900,000,000 EUR Or we could use year-end debt. Let me use year-end 2022 debt (2023-01-01): 7,417,000,000 EUR Actually, for Net Debt/EBITDA, we typically use the debt at the period end. Let me use 2022 year-end figures. Net Debt at 2022 year-end (2023-01-01): - Total Debt: 7,417,000,000 EUR - Cash and Cash Equivalents: 2,360,000,000 EUR Net Debt = 7,417 - 2,360 = 5,057,000,000 EUR Wait - I should also check if there are lease liabilities included. S&P methodology typically includes lease liabilities in debt. Lease liabilities: - Noncurrent Lease Liabilities 2023-01-01: 439,000,000 EUR - Current Lease Liabilities 2023-01-01: 72,000,000 EUR - Total lease liabilities: 511,000,000 EUR But wait - the debt instruments might already include some lease-related items. Looking more carefully at S&P methodology, they typically include all interest-bearing liabilities. Let me recalculate more carefully. The "loans received" and "participaciones preferentes, obligaciones y otros valores negociables" are clearly debt instruments. Actually, let me check if the balance sheet totals help verify. Looking at the financing cash flows might give clues. From cash flow statement for 2022-2023: - Emision De Instrumentos De Pasivo Financiero: 4,021,000,000 - Devolucion YAmortizacion De Instrumentos De Pasivo Financiero: -3,186,000,000 - Net: 835,000,000 This matches "Cobros YPagos Por Instrumentos De Pasivo Financiero" of 835,000,000 For S&P Net Debt, we typically use: - Short-term debt + Long-term debt + Current portion of long-term debt - Cash and cash equivalents Let me use a cleaner approach. From the balance sheet at 2023-01-01: - Current Loans Received And Current Portion Of Noncurrent Loans Received: 553,000,000 - Participaciones Preferentes Obligaciones YOtros Valores Negociables Corrientes: 1,139,000,000 - Noncurrent Portion Of Noncurrent Loans Received: 2,624,000,000 - Participaciones Preferentes Obligaciones YOtros Valores Negociables No Corrientes1: 3,101,000,000 Total Debt = 553 + 1,139 + 2,624 + 3,101 = 7,417,000,000 EUR Cash and Cash Equivalents = 2,360,000,000 EUR Net Debt = 7,417 - 2,360 = 5,057,000,000 EUR **Step 2: Calculate EBITDA** For EBITDA, I need to work from the income statement for 2022 (2022-01-01 to 2023-01-01): Starting with Profit Loss From Operating Activities: 1,334,000,000 EUR This is EBIT essentially (operating profit before financing items). Wait, let me check what's in this. Looking at the income statement structure: - Revenue: 11,195,000,000 - Other Income: 1,016,000,000 - Changes In Inventories: -72,000,000 - Raw Materials: -3,483,000,000 - Employee Benefits: -2,077,000,000 - Other Expense By Nature: -4,814,000,000 - Dotacion Amortizacion YVariacion De Provisiones: -762,000,000 (this is depreciation and amortization and provision changes) - Impairment: -15,000,000 - Other Gains Losses: 13,000,000 - Resultado De Puesta En Equivalencia Operativa: 159,000,000 Profit Loss From Operating Activities = 1,334,000,000 EUR To get EBITDA, I need to add back depreciation and amortization. From "Dotacion Amortizacion YVariacion De Provisiones": 762,000,000 EUR But this includes "variacion de provisiones" (changes in provisions), not just D&A. Let me look more carefully. Actually, looking at the cash flow statement: "Ajustes Por Amortizacion Variacion De Provisiones YDeterioros" = 848,000,000 EUR And "Other Adjustments To Reconcile Profit Loss" = 79,000,000 EUR Total adjustments = 927,000,000 EUR From the cash flow, the depreciation/amortization/impairment/provision piece is 848,000,000. For EBITDA, I need to add back depreciation and amortization to EBIT. But I need to separate D&A from provision changes. Looking at the P&L line "Dotacion Amortizacion YVariacion De Provisiones" = 762,000,000 EUR And "Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss" = -15,000,000 EUR (this is a negative expense, so a gain) Hmm, this is tricky. Let me try another approach. From operating profit (EBIT) = 1,334,000,000 EUR I need to add back depreciation and amortization. Looking at cash flow adjustments: "Ajustes Por Amortizacion Variacion De Provisiones YDeterioros" = 848,000,000 EUR This includes amortization, provision changes, and impairments. For S&P methodology, EBITDA = EBIT + D&A (typically excluding impairment and provision changes if possible, but often we use what's available). Actually, let me look more carefully. The P&L line "Dotacion Amortizacion YVariacion De Provisiones" at 762,000,000 is likely the main D&A charge. But wait - in the cash flow statement, the adjustment is 848,000,000 vs 762,000,000 in P&L. The difference might be due to different treatments or the impairment piece. Let me try to reconstruct. If operating profit includes: - Depreciation and amortization expense - Other operating expenses including provision charges For a cleaner EBITDA, let me use: EBITDA = Profit Loss From Operating Activities + Depreciation & Amortization But I need to extract just D&A. Actually, looking at typical Spanish reporting, "Dotacion Amortizacion YVariacion De Provisiones" includes: - Depreciation of fixed assets - Amortization of intangible assets - Changes in provisions For S&P purposes, we typically add back all of "depreciation and amortization" but not provision changes. However, without more detail, let me use the cash flow approach. The cash flow from operations starts with profit and adds back non-cash items. Profit Loss = 615,000,000 EUR (this is net income) Adjustments to reconcile: - Total adjustments: 927,000,000 EUR - Of which amortization/depreciation/provisions/impairments: 848,000,000 EUR - Other adjustments: 79,000,000 EUR But wait, I need EBITDA, which is before interest and taxes. Let me work from Profit Before Tax: 869,000,000 EUR Add back: Finance Costs: 256,000,000 EUR Less: Finance Income: 47,000,000 EUR EBIT = 869 + 256 - 47 = 1,078,000,000 EUR? Wait, that's not right. Let me check. Actually, Profit Loss Before Tax = 869,000,000 EUR This includes: - Finance Income: 47,000,000 - Finance Costs: -256,000,000 - Other financial items... Let me recalculate EBIT from the P&L structure: Profit Loss From Operating Activities = 1,334,000,000 EUR Then we have: + Finance Income: 47,000,000 - Finance Costs: -256,000,000 + Exchange differences: 8,000,000 - Fair value changes: -70,000,000 - Share of profit/loss of equity method investments: -194,000,000 Profit Before Tax = 1,334 + 47 - 256 + 8 - 70 - 194 = 869,000,000 ✓ So EBIT = Profit Loss From Operating Activities = 1,334,000,000 EUR? Wait, no. "Profit Loss From Operating Activities" might already include some items. Let me check if it includes the equity method result. Looking at the structure: - Resultado De Puesta En Equivalencia Operativa: 159,000,000 EUR (this is equity method operating result) So it seems "Profit Loss From Operating Activities" = 1,334,000,000 includes the operating equity method result. For EBIT, we typically exclude the financial equity method result. But "Share Of Profit Loss Of Associates And Joint Ventures Accounted For Using Equity Method" is -194,000,000 EUR, which seems to be the financial/non-operating part. Actually, looking more carefully: "Resultado De Puesta En Equivalencia Operativa" (159,000,000) is likely the operating portion, and the total equity method result in the financial section (-194,000,000) might be different or there might be some reclassification. This is getting complex. Let me use a simpler approach. For S&P EBITDA, typically: EBITDA = Operating Profit + Depreciation & Amortization Or from the bottom up: EBITDA = Net Income + Interest + Taxes + Depreciation & Amortization Net Income = 615,000,000 EUR Income Tax Expense = 254,000,000 EUR Finance Costs = 256,000,000 EUR Finance Income = 47,000,000 EUR So EBIT = 615 + 254 + 256 - 47 = 1,078,000,000 EUR? But this doesn't match the 1,334,000,000 operating profit. The difference is because of the equity method and other items that sit between operating profit and profit before tax. Actually, let me re-read: "Profit Loss From Operating Activities" = 1,334,000,000 EUR Then we have various items to get to Profit Before Tax: - Finance items, equity method, etc. So EBIT for S&P purposes might be closer to 1,078,000,000 EUR if we use the standard definition (earnings before interest and taxes). But wait - "Profit Loss From Operating Activities" in IFRS often includes operating items only, and then financing and investing items are below. The equity method result of -194,000,000 is below operating profit. Hmm, but "Resultado De Puesta En Equivalencia Operativa" of 159,000,000 is included in operating profit. And then there's another equity method line of -194,000,000 lower down. This suggests there are two parts to equity method accounting. Let me try: EBIT = Profit Before Tax + Interest Expense - Interest Income = 869,000,000 + 256,000,000 - 47,000,000 = 1,078,000,000 EUR But this excludes equity method results and other items that are pre-tax but not operating. For S&P Global Ratings methodology, they typically define EBITDA as: EBITDA = Operating Profit + Depreciation & Amortization + Other non-cash charges Or more specifically, they often adjust reported EBITDA. Let me try another approach. From the cash flow statement: Cash Flows From Used In Operating Activities = 1,648,000,000 EUR This includes: - Profit: 615,000,000 - Adjustments: 927,000,000 - Working capital: 135,000,000 - Other operating cash flows: -283,000,000 - Interest paid: -209,000,000 - Interest received: 40,000,000 - Dividends received: 89,000,000 - Income taxes: -215,000,000 - Other: 12,000,000 Sum: 615 + 927 + 135 - 283 - 209 + 40 + 89 - 215 + 12 = 1,111... let me check: 615+927=1542, +135=1677, -283=1394, -209=1185, +40=1225, +89=1314, -215=1099, +12=1111. Hmm, doesn't equal 1,648. Wait, I need to re-read. The cash flow statement items might be structured differently. Let me look at "Otros Flujos De Efectivo De Actividades De Explotacion" = -283,000,000 EUR which might include several items. Actually, looking more carefully at the structure, I think "Otros Flujos De Efectivo De Actividades De Explotacion" at -283,000,000 is a separate line, and then interest, dividends, taxes are additional. Let me try: 615 + 927 + 135 - 283 + (-209 + 40 + 89 - 215 + 12) = ? Actually the interest paid, interest received, dividends received, income taxes, and other might all be part of the 1,648. Let me just use: 615 + 927 = 1,542 (profit + adjustments) Then 1,648 - 1,542 = 106, which is the remaining items net. This is getting too detailed. Let me focus on a practical EBITDA calculation. For S&P methodology, a common approach is: EBITDA = Revenue - Operating Expenses (excluding D&A) + Other Operating Income Or: EBITDA = EBIT + D&A Let me use EBIT = 1,334,000,000 (Operating Profit) and add back D&A. For D&A, I'll use the cash flow adjustment of 848,000,000 EUR, but this includes provisions and impairments. Actually, let me look at the P&L line "Dotacion Amortizacion YVariacion De Provisiones" = 762,000,000 EUR more carefully. In Spanish accounts, this typically includes: - Depreciation (amortización del inmovilizado material) - Amortization of intangibles - Changes in provisions (variación de provisiones) For EBITDA, we want to add back depreciation and amortization, but NOT provision changes (which are typically operating). However, without the split, I need to estimate. Often in these consolidated figures, the majority is D&A. Let me try using the balance sheet approach to estimate D&A: - PPE increased from 8,066 to 9,485 = 1,419 - But there were purchases and disposals From cash flow: Purchase of PPE, intangibles, investment property, other noncurrent assets = 2,195,000,000 EUR Proceeds from disposals = 47,000,000 EUR This doesn't directly give me D&A. Let me use a simpler approach. S&P often uses "Adjusted EBITDA" which starts from operating profit and adds back depreciation and amortization. If I use Operating Profit = 1,334,000,000 and add back the full 762,000,000 "Dotacion Amortizacion YVariacion De Provisiones", I get: EBITDA = 1,334 + 762 = 2,096,000,000 EUR But this includes provision changes. For a cleaner estimate, maybe 90% is D&A: D&A ≈ 686,000,000 EBITDA ≈ 1,334 + 686 = 2,020,000,000 EUR Alternatively, using the cash flow adjustment of 848,000,000 which includes impairments: If I add back to operating profit: 1,334 + 848 = 2,182,000,000 EUR But this seems too high as it includes working capital and other items. Wait, the 848,000,000 is from cash flow adjustments to profit, not from operating profit. The operating profit already excludes the 762,000,000 expense (it's deducted before getting to operating profit). So to get EBITDA from operating profit, I add back D&A portion of the 762,000,000. Let me try yet another approach. S&P sometimes uses: EBITDA = EBIT + D&A, where EBIT is earnings before interest and taxes, and D&A is depreciation and amortization. From the net income: Net Income = 615,000,000 + Income Tax = 254,000,000 + Net Interest (256 - 47) = 209,000,000 = EBIT = 1,078,000,000 EUR Then add D&A. But what D&A? The 762,000,000 includes provision changes. Actually, looking at the cash flow, "Ajustes Por Amortizacion Variacion De Provisiones YDeterioros" = 848,000,000. This is the adjustment to profit, which suggests the P&L charge was 762,000,000 and there's additional 86,000,000 from impairments or other items, or it's a different categorization. Hmm, let me check: 615 (profit) + 927 (total adjustments) = 1,542. But this is before working capital and other items. The 927 adjustments include: - 848 for amortization/depreciation/provisions/impairments - 79 other adjustments If I assume the 848 is mostly D&A plus some provision changes, and the 79 is other non-cash items... For a practical S&P estimate, let me use: EBITDA = Profit Before Tax + Interest Expense + D&A Profit Before Tax = 869,000,000 Interest Expense (net of interest income) = 256 - 47 = 209,000,000 D&A estimate = 762,000,000 (using the full P&L line, or slightly less) EBITDA = 869 + 209 + 762 = 1,840,000,000 EUR? But wait, this double counts if I'm not careful. Let me think again. Actually, standard formula: EBITDA = Net Income + Taxes + Interest + D&A = 615 + 254 + 209 + D&A For D&A, if I use 762,000,000: EBITDA = 615 + 254 + 209 + 762 = 1,840,000,000 EUR But this 762 includes provision changes. If D&A is roughly 600,000,000 (estimate), then: EBITDA = 615 + 254 + 209 + 600 = 1,678,000,000 EUR Let me try to cross-check. The operating profit is 1,334,000,000. If I add back just D&A (excluding provision changes from the 762), and if D&A is about 600,000,000: EBITDA = 1,334 + 600 = 1,934,000,000 EUR Hmm, these give different results. The issue is whether EBIT is 1,078 (from net income + tax + interest) or 1,334 (operating profit). The difference (1,334 - 1,078 = 256) is roughly the equity method and other items between operating profit and PBT. Specifically: 159 (operating equity method) - 194 (financial equity method) + 8 (exchange) - 70 (fair value) + other items = roughly -97, but I need to check. 1,334 + 47 - 256 + 8 - 70 - 194 = 869 = PBT. So EBIT (if defined as PBT + interest expense - interest income) = 869 + 256 - 47 = 1,078. But "operating profit" of 1,334 includes equity method operating results and excludes financial items. For S&P methodology, they typically use "Adjusted EBITDA" which often starts from operating profit or EBIT and makes standard adjustments. Let me use a more standard S&P approach: - Start with Operating Profit: 1,334,000,000 - Add back D&A: need to estimate From the cash flow, if total adjustments are 927,000,000 and this includes D&A, provisions, impairments, and other non-cash items... Actually, let me look at this differently. The cash flow from operations is 1,648,000,000. This is after working capital changes and other items. If I want "cash EBITDA" approximation: CFO + Interest + Taxes - Working capital changes = 1,648 + 209 + 215 - 135 = 1,937,000,000 EUR (roughly) This is in the ballpark of my earlier estimates. Let me settle on a practical approach. I'll use: EBITDA = Operating Profit + Depreciation & Amortization For D&A, I'll estimate based on typical patterns. The 762,000,000 "Dotacion Amortizacion YVariacion De Provisiones" likely includes: - D&A of fixed assets and intangibles: roughly 70% = 533,000,000 - Provision changes: roughly 30% = 229,000,000 But this is speculative. Let me try using the full 762 as a conservative estimate (upper bound for EBITDA, lower bound for ratio), or use the cash flow adjustment of 848. Actually, for S&P Global Ratings, they typically define: EBITDA = EBIT + Depreciation and Amortization And EBIT is often taken as operating profit before equity earnings, or with adjustments. Let me use a simpler, more defensible approach: EBITDA = Revenue - Cash Operating Costs + Other Operating Income Revenue = 11,195,000,000 Other Income = 1,016,000,000 Total Income = 12,211,000,000 Operating costs (excluding D&A): - Raw Materials: 3,483,000,000 - Employee Benefits: 2,077,000,000 - Other Expense By Nature: 4,814,000,000 - Changes in Inventories: -72,000,000 (negative expense, so add) - Other items... Wait, this is getting messy with signs. Let me use: Total costs = 3,483 + 2,077 + 4,814 + 762 + 15 - 13 - 159 + 72 = ? Actually, from the P&L structure to get operating profit of 1,334: Revenue 11,195 + Other Income 1,016 + Changes in Inventories (-72, negative expense = income? No, it's negative meaning inventory increase) Wait, "Changes In Inventories Of Finished Goods And Work In Progress" = -72,000,000 In standard P&L, this is often: negative means expense (increase in inventory is a use of cash, but in P&L it's often positive when inventory decreases). Actually in IFRS, "Changes in inventories of finished goods and work in progress" as a negative number suggests it's an expense (increase in inventory levels, or costs capitalized to inventory exceeding costs released). Let me just trust the operating profit of 1,334,000,000 and add back D&A. For a reasonable D&A estimate, I'll use the balance sheet approach. PPE and intangibles grew significantly. The ratio of D&A to average PPE is typically 5-8% for infrastructure companies. Average PPE = (8,066 + 9,485) / 2 = 8,775,500,000 At 6% = 526,530,000 At 8% = 702,040,000 Plus intangibles amortization. Average intangibles (ex goodwill) = (453 + 545) / 2 = 499,000,000 At 10% = 49,900,000 Plus right-of-use assets amortization. Average ROU = (528 + 548) / 2 = 538,000,000 At 8% = 43,040,000 Total estimated D&A ≈ 526 + 50 + 43 = 619,000,000 to 702 + 50 + 43 = 795,000,000 This range 619-795 overlaps with the 762 figure. So D&A is likely in the 600-700 range. Let me use D&A = 650,000,000 EUR as a reasonable estimate. Then EBITDA = 1,334 + 650 = 1,984,000,000 EUR ≈ 2,000,000,000 EUR Or using a higher D&A of 700,000,000: EBITDA = 1,334 + 700 = 2,034,000,000 EUR Let me check with another approach. The cash flow shows purchases of PPE, intangibles, etc. of 2,195,000,000. If gross PPE additions are roughly 2,195 and disposals are 47, net additions are about 2,148. But PPE only grew by 1,419. The difference (2,148 - 1,419 = 729) could be roughly D&A. This is close to my estimate! Wait, this calculation includes intangibles and other assets too. Let me be more precise. PPE change: 9,485 - 8,066 = 1,419 Investment property change: 168 - 141 = 27 Intangibles other than goodwill change: 545 - 453 = 92 Other noncurrent assets change: 545 - 468 = 77 Total change in non-current operating assets: 1,419 + 27 + 92 + 77 = 1,615 Purchases: 2,195 Disposals: 47 Net purchases: 2,148 D&A estimate = Net purchases - Asset increase = 2,148 - 1,615 = 533,000,000 But this ignores reclassifications, foreign exchange, impairments, and other movements. So actual D&A could be higher. If I add back estimated FX and other adjustments of maybe 100-200,000,000, D&A could be 633-733,000,000. Let me use D&A = 700,000,000 EUR. EBITDA = 1,334 + 700 = 2,034,000,000 EUR Or, using a more conservative D&A = 600,000,000: EBITDA = 1,934,000,000 EUR Let me try to verify with the cash flow. If EBITDA is about 2,000,000,000, and we add back working capital changes and subtract cash items... Actually, let me use a different approach. S&P sometimes publishes or uses standard adjustments. For a quick estimate, let me use: EBITDA = 2,000,000,000 EUR (approximate) **Net Debt calculation:** At year-end 2022 (2023-01-01): Total Debt = 7,417,000,000 EUR Cash and Cash Equivalents = 2,360,000,000 EUR Net Debt = 7,417 - 2,360 = 5,057,000,000 EUR But wait - I should check if there are other cash-like items or if cash is restricted. The "Shortterm Investments Classified As Cash Equivalents" = 462,000,000 is already in Cash and Cash Equivalents. Actually, looking more carefully: "Cash And Cash Equivalents" = 2,360,000,000, which includes "Cash" = 1,898,000,000 and "Shortterm Investments Classified As Cash Equivalents" = 462,000,000. For S&P Net Debt, they typically subtract unrestricted cash and cash equivalents. I'll assume 2,360 is appropriate. However, S&P also sometimes includes certain other items or excludes certain debt-like items. Let me also check if lease liabilities should be included. In modern S&P methodology post-IFRS 16, lease liabilities are typically included in debt. Total lease liabilities at 2023-01-01: - Noncurrent: 439,000,000 - Current: 72,000,000 - Total: 511,000,000 Are these already in the debt figures? The "loans received" might include some lease liabilities, or they might be separate. Looking at the structure, lease liabilities are listed separately from "loans received" and "participaciones preferentes", so they might be additional debt-like items. But in many modern treatments, lease liabilities are considered debt. Let me check if S&P would include them. Actually, looking at the financing cash flows: "Payments Of Lease Liabilities Classified As Financing Activities" = 120,000,000 EUR. This confirms lease liabilities are treated as debt-like for cash flow purposes. However, the question asks for S&P methodology. S&P Global Ratings typically includes lease liabilities in total debt for leverage calculations. But wait - are lease liabilities already included in "Noncurrent Portion Of Noncurrent Loans Received" or other loan categories? Probably not, given they're listed separately. So adjusted Total Debt = 7,417 + 511 = 7,928,000,000 EUR? Hmm, but this might double count if some leases are already in loans. Let me be conservative and check both. Actually, looking at standard practice, IFRS 16 lease liabilities are often reported separately from borrowings. The separate line items suggest they're not included in the loan figures. So Total Debt including leases = 7,417 + 511 = 7,928,000,000 EUR Net Debt = 7,928 - 2,360 = 5,568,000,000 EUR But let me also check if there are other debt-like items: - Deferred tax liabilities? No, these are not debt. - Provisions? Not typically included in net debt. - Other noncurrent liabilities? Need to check if any are debt-like. "Other Noncurrent Liabilities" = 1,134,000,000 EUR - these might include some debt-like items, but typically exclude for standard net debt. For a cleaner S&P net debt, I'll use: Total Debt = Loans + Debt securities + Lease liabilities = 2,624 + 553 + 3,101 + 1,139 + 439 + 72 = 7,928,000,000 EUR Or, using just the explicit debt items (excluding leases to be conservative, or including them): Without leases: 7,417,000,000 With leases: 7,928,000,000 Net Debt without leases: 5,057,000,000 Net Debt with leases: 5,568,000,000 For S&P methodology, I'll include leases as is standard post-IFRS 16. Net Debt = 5,568,000,000 EUR But actually, I need to re-verify. Let me re-read the debt items: - "Participaciones Preferentes Obligaciones YOtros Valores Negociables No Corrientes1" = 3,101,000,000 (non-current debt securities) - "Noncurrent Portion Of Noncurrent Loans Received" = 2,624,000,000 (non-current loans) - "Noncurrent Lease Liabilities" = 439,000,000 (non-current leases) - "Participaciones Preferentes Obligaciones YOtros Valores Negociables Corrientes" = 1,139,000,000 (current debt securities) - "Current Loans Received And Current Portion Of Noncurrent Loans Received" = 553,000,000 (current loans) - "Current Lease Liabilities" = 72,000,000 (current leases) Total with leases = 7,928,000,000 EUR **Calculate the ratio:** Using EBITDA = 2,034,000,000 (with D&A = 700M) and Net Debt = 5,568,000,000: Ratio = 5,568 / 2,034 = 2.74x Using EBITDA = 1,984,000,000 (with D&A = 650M) and Net Debt = 5,568,000,000: Ratio = 5,568 / 1,984 = 2.81x Using EBITDA = 2,034 and Net Debt without leases = 5,057: Ratio = 5,057 / 2,034 = 2.49x Hmm, let me reconsider my EBITDA. Maybe I should use a higher EBITDA. If I use the full cash flow adjustment approach, or if D&A is closer to 762: EBITDA = 1,334 + 762 = 2,096,000,000 Ratio with lease-inclusive net debt = 5,568 / 2,096 = 2.66x Or if I use EBIT = 1,078 (from PBT + interest) and add D&A = 762: EBITDA = 1,078 + 762 = 1,840,000,000 Ratio = 5,568 / 1,840 = 3.03x This is quite different. The issue is whether to start from operating profit (1,334) or EBIT (1,078). For S&P methodology, they typically use "adjusted EBITDA" which often starts from operating profit before equity earnings and adds D&A, or makes other standard adjustments. Actually, looking at S&P's typical approach for European corporates: Adjusted EBITDA = Reported EBITDA + adjustments for non-recurring items, etc. Reported EBITDA is typically Operating Profit + D&A. If Operating Profit = 1,334 includes equity method earnings (159 operating), and S&P wants to exclude equity method earnings or include them differently... Actually, S&P typically includes equity earnings in EBITDA for infrastructure companies, or adjusts them. The "Resultado De Puesta En Equivalencia Operativa" of 159,000,000 is included in operating profit. Let me try to find a more precise D&A figure. Looking at the relationship between the P&L and cash flow: P&L "Dotacion Amortizacion YVariacion De Provisiones" = 762,000,000 Cash flow "Ajustes Por Amortizacion Variacion De Provisiones YDeterioros" = 848,000,000 The difference (848 - 762 = 86) might be due to: - Impairments in the cash flow adjustment that aren't in the P&L line, or - Different categorization, or - Additional items in the cash flow The cash flow also has "Other Adjustments To Reconcile Profit Loss" = 79,000,000. Total adjustments to profit = 927,000,000 = 848 + 79. If I assume the 848 is the main non-cash charge and 79 is other items... For EBITDA, I want to add back depreciation, amortization, and typically impairment. But not provision changes if they're operating. Actually, provision changes ARE typically added back for EBITDA if they're non-cash, but they're often considered part of operating performance. Standard EBITDA = Earnings Before Interest, Taxes, Depreciation, and Amortization. It does NOT add back provision changes or impairments (unless they're considered non-recurring). So pure EBITDA should add back only D&A, not provision changes. Given the difficulty of splitting the 762, let me use a practical estimate. For infrastructure/utility-type companies like Acciona, D&A is typically substantial. Let me use D&A = 600,000,000 EUR as a conservative estimate (likely mostly from PPE and intangibles, excluding provision changes). EBITDA = 1,334 + 600 = 1,934,000,000 EUR Or, if I believe the 762 is mostly D&A with small provision changes: D&A = 700,000,000 EBITDA = 2,034,000,000 EUR Let me check Acciona's actual reported EBITDA if possible from the data. Actually, I don't have explicit EBITDA. Given the range, let me use EBITDA = 2,000,000,000 EUR as a round number, or calculate with both bounds. Actually, let me try to derive D&A more precisely. The goodwill is unchanged at 249, so no impairment there. Intangibles other than goodwill grew from 453 to 545. With purchases and amortization, if we assume no significant disposals: Intangibles: 453 + additions - amortization = 545 From cash flow, purchases of intangibles are included in the 2,195 figure (which is total PPE, intangibles, investment property, other noncurrent assets). If intangibles additions were roughly 100,000,000 (guess), then amortization = 453 + 100 - 545 = 8,000,000? That seems too low. Actually, the 2,195 is total for all categories. Let me think about this differently. If total non-current operating assets grew by 1,615 (as calculated earlier) and purchases were 2,195 with disposals of 47, then D&A + other adjustments = 2,195 - 47 - 1,615 = 533. But this 533 is too low compared to the 762 P&L charge. The discrepancy suggests: - Foreign exchange gains/losses on asset values - Reclassifications - Asset transfers - Impairments - Or my calculation is wrong Actually, I forgot investment property and other items. Let me recheck: PPE: 9,485 - 8,066 = 1,419 increase Investment property: 168 - 141 = 27 increase Intangibles (ex goodwill): 545 - 453 = 92 increase Goodwill: 249 - 249 = 0 Right-of-use assets: 548 - 528 = 20 increase Other noncurrent assets: 545 - 468 = 77 increase Total increase = 1,419 + 27 + 92 + 0 + 20 + 77 = 1,635 Net purchases = 2,195 - 47 = 2,148 Difference = 2,148 - 1,635 = 513 This 513 is closer to a D&A figure, but still lower than 762. The remaining difference (762 - 513 = 249) could be: - Provision changes included in the 762 - Impairments - FX impacts on asset values - Reclassifications from current assets or other categories Given this analysis, pure D&A might be around 500-600,000,000 EUR, with the rest being provisions, impairments, etc. Let me use D&A = 550,000,000 EUR. EBITDA = 1,334 + 550 = 1,884,000,000 EUR With Net Debt = 5,568,000,000: Ratio = 5,568 / 1,884 = 2.96x Or with Net Debt = 5,057,000,000 (excluding leases): Ratio = 5,057 / 1,884 = 2.68x Hmm, these are getting closer to 3x or 2.7x. Let me try a different EBITDA approach. What if I use the cash flow from operations and work backwards? Cash from operations = 1,648,000,000 + Interest paid = 209,000,000 + Income taxes paid = 215,000,000 - Interest received = -40,000,000 - Dividends received = -89,000,000 - Other inflows/outflows classified as operating = -12,000,000 (or adjust) = Approximate "EBITDA minus working capital changes" = 1,648 + 209 + 215 - 40 - 89 - 12 = 1,931,000,000 Then add back working capital increase (which was 135,000,000 positive, meaning source of cash): If working capital was a source of 135, then EBITDA was higher by 135 to generate that cash after working capital benefit. Actually, if working capital contributed 135 to cash flow, then: EBITDA - working capital benefit = 1,931 EBITDA = 1,931 + 135 = 2,066,000,000 EUR This is close to my 2,000 estimate! Let me verify: 2,066 (EBITDA) - 135 (working capital) - 209 (interest) - 215 (taxes) + 40 (interest received) + 89 (dividends) + 12 (other) = 1,648? = 2,066 - 135 - 209 - 215 + 40 + 89 + 12 = 1,648 ✓ Great! So EBITDA ≈ 2,066,000,000 EUR But wait, this includes dividends received of 89,000,000. Should EBITDA include dividends received? Typically no, these are investment income, not operating. So Operating EBITDA = 2,066 - 89 = 1,977,000,000 EUR Or if we exclude interest received too: 1,977 - 40 = 1,937,000,000 EUR Hmm, but standard EBITDA includes operating items only, before interest and taxes. Dividends received are typically not in EBITDA. Let me recalculate more carefully. The cash flow from operations includes: - Operating cash flows before interest, taxes, dividends: ? - Interest paid: -209 - Interest received: +40 - Dividends received: +89 - Income taxes: -215 - Other: +12 If I strip these out from the 1,648: Core operating cash flow = 1,648 + 209 - 40 - 89 + 215 - 12 = 1,931,000,000 This 1,931 includes working capital benefit of 135, so: Cash flow before working capital = 1,931 - 135 = 1,796,000,000 But this is cash-based, not accrual-based EBITDA. To get accrual EBITDA, I need to add back non-cash charges. Actually, the 1,796 is roughly "cash operating profit" or EBITA (before working capital). If D&A is 550, then EBITDA = 1,796 + 550 = 2,346,000,000? That seems too high. I'm getting confused with the signs. Let me restart. Cash flow from operations = 1,648 This equals: Net Income 615 + Adjustments 927 (including D&A, provisions, etc.) + Working capital 135 + Other operating -283 - Interest paid -209? No wait, interest paid is often included in CFO. Looking at the detailed structure: "Otros Flujos De Efectivo De Actividades De Explotacion" = -283,000,000 Then separately: "Interest Paid Classified As Operating Activities" = 209,000,000 (positive? or is this the cash outflow) Wait, the sign convention: "Interest Paid" as positive 209 might mean it's reported as a positive number but represents an outflow, or it's the cash outflow amount. Actually, looking at standard IFRS cash flow presentation, these are typically shown as positive numbers when they're outflows (using a direct or indirect method where inflows are positive and outflows are negative, or all shown as absolute values with description). Given "Cash Flows From Used In Operating Activities" = 1,648,000,000 is positive, this is net cash inflow. The components with their signs as given: - Interest Paid: 209,000,000 (if positive, maybe it's the expense amount, or if the line is "interest paid" as an outflow, it should be negative... but shown as positive for some reason) Actually, I think the data uses absolute values with the description indicating direction, or there's some inconsistency. Let me just trust the aggregate CFO = 1,648 and work with my earlier EBITDA estimates. From the reconciliation: EBITDA ≈ 2,066,000,000 EUR (including dividends received) Or more standard EBITDA excluding dividends: EBITDA ≈ 1,977,000,000 EUR Let me use EBITDA = 2,000,000,000 EUR as a reasonable round estimate. **Final Calculation:** Net Debt (including lease liabilities, year-end 2022): = Total Debt + Lease Liabilities - Cash and Cash Equivalents = 7,417 + 511 - 2,360 = 5,568,000,000 EUR Wait, I need to double-check if leases are already in debt. Let me re-examine. The debt items are: - "Participaciones Preferentes Obligaciones YOtros Valores Negociables No Corrientes1" = 3,101 - "Noncurrent Portion Of Noncurrent Loans Received" = 2,624 - "Participaciones Preferentes Obligaciones YOtros Valores Negociables Corrientes" = 1,139 - "Current Loans Received And Current Portion Of Noncurrent Loans Received" = 553 Total traditional debt = 6,417,000,000? Wait, let me recheck: 3,101 + 2,624 + 1,139 + 553 = 7,417. Yes, that's correct. Lease liabilities are separate: - "Noncurrent Lease Liabilities" = 439 - "Current Lease Liabilities" = 72 Total leases = 511 For S&P methodology post-IFRS 16, lease liabilities are typically included in total debt. So: Total Debt for S&P = 7,417 + 511 = 7,928,000,000 EUR Net Debt = 7,928 - 2,360 = 5,568,000,000 EUR EBITDA = 2,000,000,000 EUR (estimated) Ratio = 5,568 / 2,000 = 2.78x If I use EBITDA = 2,066,000,000: Ratio = 5,568 / 2,066 = 2.70x If I use EBITDA = 1,977,000,000 (excluding dividends): Ratio = 5,568 / 1,977 = 2.82x Given the range, let me settle on approximately 2.7-2.8x. But wait - I should check if S&P would use average debt or year-end debt. Typically for leverage ratios, S&P uses year-end debt or sometimes average. For Net Debt/EBITDA, it's typically year-end net debt divided by annual EBITDA. Let me also consider if they use "adjusted" EBITDA with certain add-backs. For Acciona, a major infrastructure company, there might be adjustments for project development costs, etc. Given my analysis, I'll use: - Net Debt = 5,568,000,000 EUR (including leases) - EBITDA = 2,000,000,000 EUR (approximate) Ratio = 2.78 Or if I use a slightly higher EBITDA of 2,100,000,000: Ratio = 2.65 Let me try one more EBITDA verification. If I use the standard formula: EBITDA = Revenue - Cash Operating Costs (excluding D&A) Revenue = 11,195 Other Income = 1,016 Total = 12,211 Operating costs in P&L: Raw Materials = 3,483 Employee Benefits = 2,077 Other Expense = 4,814 Changes in Inventories = -72 (this is a negative expense, meaning it reduces costs or is income-like) Dotacion Amortizacion = 762 (includes D&A and provisions) Impairment = -15 (negative expense = gain) Other Gains Losses = 13 Hmm, the signs are tricky. Let me use the operating profit as the anchor. Operating Profit = Revenue + Other Income + Change in Inventories - Raw Materials - Employee Benefits - Other Expense - Dotacion - Impairment + Other Gains + Equity Operating Result = 11,195 + 1,016 + (-72) - 3,483 - 2,077 - 4,814 - 762 - (-15) + 13 + 159 = 11,195 + 1,016 - 72 - 3,483 - 2,077 - 4,814 - 762 + 15 + 13 + 159 = 12,211 - 72 - 11,136 + 187 + 159 = 12,211 - 72 - 11,136 + 346 = 12,211 - 10,862 + 346... wait let me be careful. = 11,195 + 1,016 = 12,211 12,211 - 72 = 12,139 12,139 - 3,483 = 8,656 8,656 - 2,077 = 6,579 6,579 - 4,814 = 1,765 1,765 - 762 = 1,003 1,003 + 15 = 1,018 1,018 + 13 = 1,031 1,031 + 159 = 1,190 Hmm, I get 1,190, not 1,334. I'm missing something. Let me recheck. Actually, "Changes In Inventories Of Finished Goods And Work In Progress" = -72,000,000. In many financial statement presentations, a negative change in inventories means the inventory balance increased, which is a use of cash but in the P&L, it's often shown as a negative expense (i.e., it increases profit) when costs capitalized exceed costs expensed. Or it could be presented with opposite sign convention. Let me try with +72 instead: 11,195 + 1,016 + 72 - 3,483 - 2,077 - 4,814 - 762 + 15 + 13 + 159 = 12,283 - 3,483 = 8,800 8,800 - 2,077 = 6,723 6,723 - 4,814 = 1,909 1,909 - 762 = 1,147 1,147 + 15 = 1,162 1,162 + 13 = 1,175 1,175 + 159 = 1,334 ✓ So the correct interpretation is that "Changes In Inventories" = -72 means it's a positive contribution (reduction in inventory levels, or costs released exceeding costs capitalized). The negative sign in the data might indicate the direction of the change, not the P&L effect. Actually, looking at standard IFRS income statements, "Change in inventories of finished goods and work in progress" is typically shown as a positive when inventory decreases (credit to P&L) and negative when inventory increases. So -72 means inventory increased, which is a debit to P&L (expense). But my calculation shows I need +72 to get to 1,334. Hmm, this is confusing. Let me just trust the operating profit of 1,334 and not try to reconstruct it. Given all my analysis, let me finalize with: EBITDA = 2,000,000,000 EUR (approximate, with D&A around 650-700M added to operating profit of 1,334M) Net Debt = 5,568,000,000 EUR (including lease liabilities) Ratio = 5,568 / 2,000 = 2.78 Or if I use a more precise EBITDA of 2,066,000,000: Ratio = 5,568 / 2,066 = 2.70 Given the uncertainty, I'll estimate the ratio at approximately 2.7x to 2.8x. Let me check one more thing. Should I use net debt excluding leases for a more traditional measure, or including leases for post-IFRS 16 measure? S&P methodology has evolved. For comparability, they often use "FFO to Debt" or "Debt to EBITDA" with explicit treatment of leases. For Net Debt/EBITDA, including leases is now standard. However, some practitioners calculate both. Let me provide the lease-inclusive version as primary. Final answer: approximately 2.7x to 2.8x. I'll use 2.8 as a slightly conservative estimate, or 2.75 as midpoint. Actually, let me recalculate with slightly different assumptions to see the range: Scenario 1: Conservative EBITDA (D&A = 500M), EBITDA = 1,834M, Net Debt = 5,568M, Ratio = 3.04x Scenario 2: Moderate EBITDA (D&A = 650M), EBITDA = 1,984M, Net Debt = 5,568M, Ratio = 2.81x Scenario 3: Higher EBITDA (D&A = 762M full P&L line), EBITDA = 2,096M, Net Debt = 5,568M, Ratio = 2.66x Scenario 4: Excluding leases from net debt, moderate EBITDA: Net Debt = 5,057M, EBITDA = 1,984M, Ratio = 2.55x Given this range of 2.55x to 3.04x, with central estimates around 2.7-2.8x, I'll use 2.8x as my best estimate. But wait - I want to double check my net debt. Let me see if there are any other debt-like items I should include. Looking at "Other Current Liabilities" = 1,798,000,000 EUR - this is quite large. Could some of this be debt-like? And "Other Noncurrent Liabilities" = 1,134,000,000 EUR. Without more detail, I cannot determine if these include debt-like items. For standard net debt, I'll stick with explicit debt instruments and leases. Actually, let me reconsider whether to include current portion of long-term debt properly. The "Current Loans Received And Current Portion Of Noncurrent Loans Received" = 553,000,000 clearly includes current portion of long-term debt. And "Participaciones Preferentes Obligaciones YOtros Valores Negociables Corrientes" = 1,139,000,000 includes current debt securities. These are correctly included in my 7,417 total. One more check: Are there bank overdrafts or other short-term borrowings not captured? I don't see any explicit line items suggesting this. So my final calculation: Net Debt = 5,568,000,000 EUR EBITDA = 2,000,000,000 EUR (rounded from ~2,066M or ~1,984M) Actually, let me use a more precise EBITDA. From my cash flow derivation: EBITDA ≈ 2,066,000,000 EUR (including dividends received in operating cash flow, which might not be correct) If I exclude dividends received from the operating cash flow derivation: Core operating cash flow before working capital = 1,648 + 209 - 40 + 215 - 12 - 135 = 1,885,000,000? Wait, let me recalculate: CFO = 1,648 Add back: Interest paid 209, Taxes paid 215 Subtract: Interest received 40, Dividends received 89, Other 12 = 1,648 + 209 + 215 - 40 - 89 - 12 = 1,931 This 1,931 is after working capital benefit of 135, so before working capital: = 1,931 - 135 = 1,796,000,000 But this is cash-based, not accrual. The difference between accrual and cash is the non-cash adjustments. If net income is 615 and total adjustments are 927, the accrual-to-cash reconciliation includes many items. The "cash EBIT" or operating cash flow before working capital would be roughly: Net Income 615 + Adjustments 927 - Working capital 135 (because it was a source, we subtract to get pre-WC) = 1,407,000,000? Hmm, that's not right either. Working capital was +135 in the cash flow (positive, meaning source of cash). So: CFO before working capital = 1,648 - 135 = 1,513,000,000 Then add back interest and taxes to get approximate EBITDA: 1,513 + 209 + 215 - 40 - 89 = 1,808,000,000? This is getting too convoluted. Let me use a simpler approach and accept some uncertainty. Given all my analysis, I'll estimate: Net Debt / EBITDA = 5,568 / 2,000 = 2.78 Or using EBITDA = 2,100 (slightly optimistic): = 5,568 / 2,100 = 2.65 I'll round to 2.8 as a reasonable estimate, or provide 2.75 as a more precise figure. Actually, looking at this again, I realize I should check if Acciona is more of an infrastructure/construction company or utility. The high PPE and revenue growth suggest significant infrastructure activities. For such companies, EBITDA margins are often in the 15-20% range. Revenue = 11,195,000,000 At 18% margin: EBITDA = 2,015,000,000 At 20% margin: EBITDA = 2,239,000,000 My estimate of ~2,000,000,000 is roughly 18% margin, which seems reasonable. Let me finalize with: Net Debt = 5,568,000,000 EBITDA = 2,000,000,000 Ratio = 2.78 I'll provide 2.8 as my final answer. Wait, I want to do one more sanity check. The company's total assets grew from 19,603 to 22,595, roughly 15% growth. Revenue grew from 8,104 to 11,195, roughly 38% growth. This is strong growth. The debt also grew significantly, suggesting investment. Net debt/EBITDA of ~2.8x for a growing infrastructure company seems reasonable and not excessive. Let me also verify my net debt one more time. At 2022 year-end: Total Debt = 7,417 (traditional) + 511 (leases) = 7,928 Cash = 2,360 Net Debt = 5,568 At 2021 year-end: Total Debt = 2,364 + 2,073 + 1,666 + 280 + 430 + 68 = 6,881? Wait, let me check 2021: Noncurrent debt instruments 2,364, noncurrent loans 2,073, current debt instruments 1,666, current loans 280, noncurrent leases 430, current leases 68. Total 2021 debt with leases = 2,364 + 2,073 + 1,666 + 280 + 430 + 68 = 6,881,000,000 Cash 2021 = 2,318,000,000? Wait, Cash 2022-01-01 = 2,318,000,000? Let me check. "Cash And Cash Equivalents" 2022-01-01: 2,318,000,000 EUR. Yes. Net Debt 2021 = 6,881 - 2,318 = 4,563,000,000 So net debt increased from 4,563 to 5,568, roughly 22% increase. EBITDA likely increased too. If 2021 EBITDA was lower due to lower revenue (8,104 vs 11,195), maybe 2021 EBITDA was around 1,500,000,000. 2021 Net Debt/EBITDA = 4,563 / 1,500 = 3.0x 2022 ratio of ~2.8x would be an improvement, which makes sense with strong revenue growth and operating leverage. This sanity check supports my estimate. Final answer: I'll use 2.8x, or more precisely about 2.7-2.8x. Let me provide 2.8. Actually, rethinking one more time: should I use EBITDA excluding equity method earnings? S&P sometimes adjusts for this. The "Resultado De Puesta En Equivalencia Operativa" = 159,000,000 is included in operating profit. If S&P excludes equity method earnings from EBITDA: Adjusted Operating Profit = 1,334 - 159 = 1,175,000,000 Adjusted EBITDA = 1,175 + 700 = 1,875,000,000 Ratio = 5,568 / 1,875 = 2.97x Or if they include it: 2.78x as before. S&P's standard approach is to include equity earnings in EBITDA but make other adjustments. For associates and JVs, they sometimes include the dividend received rather than the equity earnings, or make other adjustments. Given the complexity, I'll stick with my central estimate of ~2.8x. One more refinement: Let me check if I should use "Funds From Operations" (FFO) or another S&P metric. The question asks specifically for Net Debt / EBITDA. For S&P Global Ratings, the standard definition is: Debt / EBITDA, where Debt includes short-term and long-term interest-bearing debt, and EBITDA is adjusted for non-recurring items. "Net Debt" is Debt minus Cash and Cash Equivalents. Given my analysis, I'll provide my best estimate. 2.8