I need to calculate the Net Debt / EBITDA ratio for 2022 using S&P methodology. First, let me identify what I need: - Net Debt = Financial Debt - Cash and Cash Equivalents - EBITDA = Earnings Before Interest, Taxes, Depreciation, and Amortization For S&P methodology, I need to determine the appropriate components from the financial statements. **Step 1: Calculate EBITDA** For S&P methodology, EBITDA typically starts from Operating Profit and adds back Depreciation & Amortization. From the data: - Profit Loss From Operating Activities 2022: 533,800,000 EUR - Amortisation Depreciation And Provisions 2022: 667,100,000 EUR However, "Amortisation Depreciation And Provisions" includes provisions, not just D&A. Let me look for a cleaner D&A figure. From cash flow statement: - Adjustments For Depreciation And Amortisation Expense And Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss 2022: 478,600,000 EUR This seems to be the pure D&A adjustment. But for EBITDA from operating profit, I should add back D&A to operating profit. Let me verify: Operating Profit + D&A = EBITDA Using the cash flow D&A figure: 533,800,000 + 478,600,000 = 1,012,400,000 EUR But wait - let me check if "Amortisation Depreciation And Provisions" of 667,100,000 is the P&L charge. The cash flow adjustment of 478,600,000 might be after impairment reversals. Actually, for S&P methodology, EBITDA is typically: - Operating Profit + Depreciation & Amortization (as shown in P&L) Using 667,100,000 as the P&L D&A charge: EBITDA = 533,800,000 + 667,100,000 = 1,200,900,000 EUR But let me cross-check: The cash flow shows "Adjustments For Depreciation And Amortisation Expense And Impairment Loss Reversal" of 478,600,000. This suggests the pure D&A is different from 667,100,000. Actually, looking more carefully: "Amortisation Depreciation And Provisions" likely includes D&A plus changes in provisions. The cash flow item specifically says "Depreciation And Amortisation Expense And Impairment Loss Reversal" - so 478,600,000 might be the net D&A after impairment. For S&P methodology, we typically use: EBITDA = EBIT + D&A (where D&A is the expense before impairment, or we use a clean D&A figure) Let me use a different approach. S&P Global Ratings methodology typically calculates EBITDA as: - Operating profit + depreciation and amortization The most accurate would be to use the P&L D&A figure. However, 667M includes "provisions". Looking at the cash flow: "Adjustments For Depreciation And Amortisation Expense And Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss" = 478,600,000 This is specifically D&A and impairment. For EBITDA, we add back D&A to operating profit. If operating profit already has 667M of "Amortisation Depreciation And Provisions" deducted, and this includes other items, I need to be careful. Let me try: EBITDA can also be calculated from the bottom up or verified through cash flows. Actually, let me re-read: "Profit Loss From Operating Activities" is EBIT/Operating Profit. This already has D&A deducted. For S&P methodology, a common approach is: EBITDA = Operating Profit + Depreciation & Amortization (clean D&A) If the 667,100,000 is the total P&L charge including provisions, I need to separate it. But I don't have that breakdown. Let me use the cash flow D&A of 478,600,000 as the clean D&A figure: EBITDA = 533,800,000 + 478,600,000 = 1,012,400,000 EUR But wait - this might not include all amortization. Let me think again. Actually, for S&P, they often calculate EBITDA as: - Recurring operating profit + D&A Let me check if there's another way. The cash flow shows "Cash Flows From Used In Operations Before Changes In Working Capital" = 1,202,000,000 EUR This is roughly: Operating Profit + D&A + other non-cash items - taxes paid + interest received, etc. Actually, "Cash Flows From Used In Operations Before Changes In Working Capital" typically equals: EBIT + D&A - taxes paid +/- other working capital adjustments... no wait, it's before working capital changes. Let me recalculate: Cash from operations before working capital changes = Operating profit + D&A + other non-cash items 1,202,000,000 = 533,800,000 + 478,600,000 + other adjustments? 533,800,000 + 478,600,000 = 1,012,400,000. Difference is 189,600,000. Looking at other adjustments in cash flow: - Allocation To Provisions: 188,500,000 - Adjustments For Undistributed Profits: -10,000,000 - Adjustments For Finance Income Cost: 135,000,000 - Capital Gains Losses: 41,600,000 - Change In Provision For Risks And Charges: -27,800,000 - Adjustments For Employee Benefits: -12,700,000 Sum of these: 188,500,000 - 10,000,000 + 135,000,000 + 41,600,000 - 27,800,000 - 12,700,000 = 314,600,000 Plus 1,012,400,000 = 1,327,000,000. That's not 1,202,000,000. Hmm, let me re-check. The cash flow item says "Cash Flows From Used In Operations Before Changes In Working Capital" = 1,202,000,000. Actually, this might include interest and taxes. Let me look at the structure more carefully. For S&P methodology, let me use a simpler approach: EBITDA = Operating Profit + D&A (from cash flow, as it's cleaner) Actually, I realize I should use the standard S&P definition. S&P Global Ratings defines EBITDA as: - Operating income + depreciation & amortization Where operating income is before interest and taxes, and D&A is the actual depreciation and amortization expense. Given the data, I'll use: - Operating Profit = 533,800,000 - D&A = 478,600,000 (from cash flow, cleanest figure) EBITDA = 533,800,000 + 478,600,000 = 1,012,400,000 EUR Wait, but I need to verify if this is correct. Let me also consider if we need to add back other items. Actually, looking at typical S&P methodology more carefully, they use "Adjusted EBITDA" which might include add-backs for non-recurring items. But with the data given, I'll use the basic calculation. **Step 2: Calculate Net Debt** For S&P methodology, Net Debt = Total Financial Debt - Cash and Cash Equivalents Financial Debt includes: - Noncurrent Financial Liabilities: 5,689,900,000 EUR - Current Financial Liabilities: 650,100,000 EUR Total Financial Debt = 5,689,900,000 + 650,100,000 = 6,340,000,000 EUR Cash and Cash Equivalents = 1,942,400,000 EUR Net Debt = 6,340,000,000 - 1,942,400,000 = 4,397,600,000 EUR But wait - S&P methodology might include other items in debt. Let me check if lease liabilities are included. In S&P methodology, typically both financial debt and lease liabilities are included in "Total Debt" or "Net Debt" depending on the specific definition. Actually, for S&P Global Ratings, "Net Debt" typically includes: - Short-term debt + current portion of long-term debt - Long-term debt - Less: cash and cash equivalents - Less: liquid investments Sometimes finance lease obligations are included, sometimes not depending on the specific ratio definition. For Net Debt/EBITDA, S&P typically uses: Net Debt = Short-term borrowings + Long-term borrowings + Current portion of long-term debt - Cash and cash equivalents Lease liabilities might or might not be included. Let me check both scenarios. Standard approach (excluding lease liabilities): Net Debt = 650,100,000 + 5,689,900,000 - 1,942,400,000 = 4,397,600,000 EUR Including lease liabilities: Noncurrent Lease Liabilities: 55,100,000 Current Lease Liabilities: 21,300,000 Total Lease Liabilities: 76,400,000 Net Debt including leases = 4,397,600,000 + 76,400,000 = 4,474,000,000 EUR For S&P methodology, lease liabilities are typically included in total debt. So I'll use 4,474,000,000 EUR. But actually, let me reconsider. The S&P methodology for Net Debt/EBITDA has evolved, especially with IFRS 16. Pre-IFRS 16, operating leases were off-balance sheet and added back. Post-IFRS 16, lease liabilities are on balance sheet. Given this is 2022 data (post-IFRS 16), and lease liabilities are on the balance sheet, I need to determine S&P's treatment. S&P Global Ratings typically includes lease liabilities in total debt for their leverage calculations. So: Total Debt = Financial Liabilities + Lease Liabilities = 6,340,000,000 + 76,400,000 = 6,416,400,000 Net Debt = 6,416,400,000 - 1,942,400,000 = 4,474,000,000 EUR **Step 3: Calculate Net Debt / EBITDA** Net Debt / EBITDA = 4,474,000,000 / 1,012,400,000 = 4.419 Let me recalculate with more precision: 4,474,000,000 / 1,012,400,000 = 4.4192... But wait, I need to reconsider my EBITDA calculation. Let me verify once more. Actually, I want to double-check if I should use different D&A figures. The P&L shows "Amortisation Depreciation And Provisions" of 667,100,000. If I use this instead: EBITDA = 533,800,000 + 667,100,000 = 1,200,900,000 But this includes "provisions" which are not D&A. For EBITDA, we only add back D&A, not provisions. However, looking at the cash flow, the item "Adjustments For Depreciation And Amortisation Expense And Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss" = 478,600,000 seems to be the cleanest D&A figure. But let me also check: is there a way to cross-validate EBITDA? From the cash flow: Cash Flows From Used In Operations Before Changes In Working Capital = 1,202,000,000 This typically equals: EBITDA - Taxes paid (in operations) - Interest paid (in operations) +/- other items Actually, looking at the detailed cash flow, this line is before: - Dividends received (13,400,000) - Finance income received (41,800,000) - Finance costs paid (128,000,000) - Income taxes paid (165,900,000) So: 1,202,000,000 + 13,400,000 + 41,800,000 - 128,000,000 - 165,900,000 = 963,300,000? No wait, that's not right. Actually, the structure seems to be: Cash Flows From Used In Operations Before Changes In Working Capital: 1,202,000,000 Then adjustments for: - Dividends Received: 13,400,000 - Finance Income Received: 41,800,000 - Finance Costs Paid: -128,000,000 - Income Taxes Paid: -165,900,000 Then working capital changes, etc. So Cash Flows From Used In Operating Activities = 35,700,000 (as given) Let me verify: 1,202,000,000 + 13,400,000 + 41,800,000 - 128,000,000 - 165,900,000 - 927,600,000 (working capital) = 35,700,000? 1,202,000,000 + 13,400,000 = 1,215,400,000 + 41,800,000 = 1,257,200,000 - 128,000,000 = 1,129,200,000 - 165,900,000 = 963,300,000 - 927,600,000 = 35,700,000 ✓ Yes! This checks out. Now, Cash Flows From Used In Operations Before Changes In Working Capital of 1,202,000,000 is essentially: EBITDA + other non-cash adjustments - cash items Actually, this is typically: Operating Profit + D&A + other non-cash items If 1,202,000,000 = Operating Profit (533,800,000) + D&A (478,600,000) + other adjustments (188,500,000 - 10,000,000 + 135,000,000 + 41,600,000 - 27,800,000 - 12,700,000 = 314,600,000) 533,800,000 + 478,600,000 + 314,600,000 = 1,327,000,000 ≠ 1,202,000,000 Difference of 125,000,000. Hmm. Wait, let me re-check. The "Adjustments For Finance Income Cost" of 135,000,000 - this is added back in cash flow but is it in operating profit? Operating profit is before finance income/cost, so finance income/cost is not in operating profit. Therefore, we don't adjust for it when going from operating profit to cash flow before working capital. Let me recalculate without finance income/cost adjustment: 533,800,000 + 478,600,000 + 188,500,000 - 10,000,000 + 41,600,000 - 27,800,000 - 12,700,000 = 1,192,000,000 Still not 1,202,000,000. Difference of 10,000,000. Hmm, maybe I need to include something else. Or perhaps the 478,600,000 is not the right D&A to use with this operating profit. Actually, let me try using the P&L D&A figure of 667,100,000: 533,800,000 + 667,100,000 = 1,200,900,000 for EBITDA But then other adjustments would be different. Let me think about this differently. The cash flow reconciliation shows how to get from operating profit to cash flow. The standard reconciliation is: Operating Profit + D&A + Impairment losses + Other non-cash items - Profit on disposal +/- Changes in provisions = Cash flow before working capital changes Given the complexity, let me use the most standard S&P approach: EBITDA = Operating Profit + D&A (from cash flow statement, as it's the standard add-back) Using 478,600,000 as D&A: EBITDA = 533,800,000 + 478,600,000 = 1,012,400,000 But actually, I realize I should double check if S&P would include the full 667,100,000 or just the clean D&A. In practice, S&P Global Ratings calculates "Adjusted EBITDA" and they may use management's definition or make their own adjustments. With the data given, the most standard academic/professional approach is: EBITDA = EBIT + Depreciation + Amortization Where Depreciation and Amortization are the actual expenses, not including provisions or impairment. Given the cash flow item is specifically labeled "Depreciation And Amortisation Expense And Impairment Loss Reversal", the 478,600,000 includes impairment. So pure D&A would be higher if there was impairment reversal, or lower if there was impairment loss. Actually, "Impairment Loss Reversal Of Impairment Loss" suggests this is net of reversals. So 478,600,000 = D&A expense - impairment reversal + impairment loss (or however the signs work). For EBITDA, we want D&A expense, not net of impairment. So if there was a reversal, we'd need to add it back to get gross D&A. But without the breakdown, I'll use 478,600,000 as the best available proxy for D&A. Actually, let me reconsider one more time. The P&L line "Amortisation Depreciation And Provisions" = 667,100,000 is what was deducted to get operating profit. If we add this back, we get 1,200,900,000. But "provisions" here likely refers to things like warranty provisions, bad debt provisions, etc., which are operating items and should NOT be added back for EBITDA. So using 667,100,000 would overstate EBITDA. The cash flow item "Adjustments For Depreciation And Amortisation Expense And Impairment Loss Reversal" = 478,600,000 is specifically D&A related, so this is the better figure. But wait - I need to check if this 478,600,000 is the full D&A or if some D&A is elsewhere. Let me also check the balance sheet for accumulated depreciation clues, but I don't have that. Given the information available, I'll proceed with: - EBITDA = 533,800,000 + 478,600,000 = 1,012,400,000 EUR Actually, I want to verify one more thing. Is "Profit Loss From Operating Activities" the same as EBIT? In IFRS, "Profit from operating activities" is typically before finance costs and income, so yes, it's EBIT or very close to it. **Final Calculation:** Net Debt (including lease liabilities): - Total Financial Debt: 6,340,000,000 - Lease Liabilities: 76,400,000 - Total Debt: 6,416,400,000 - Less Cash: 1,942,400,000 - Net Debt: 4,474,000,000 EBITDA: 1,012,400,000 Net Debt / EBITDA = 4,474,000,000 / 1,012,400,000 = 4.4192 Rounding to typical presentation: 4.42 or about 4.4x But let me reconsider if S&P includes lease liabilities. Actually, for S&P Global Ratings, they have specific treatment: Post-IFRS 16, S&P includes lease liabilities in total debt for their "Net Debt" calculation in many contexts, but sometimes they report both "including leases" and "excluding leases". For the standard Net Debt/EBITDA ratio, I'll include leases as they are now on-balance sheet and part of the capital structure. However, I want to double-check my EBITDA once more. Some practitioners calculate EBITDA as: Revenue - Operating Expenses (excluding D&A) = EBITDA Or: Revenue - COGS - SG&A (excl D&A) = EBITDA Let me try: Total Revenue = 20,082,000,000 + 548,200,000 = 20,630,200,000 Operating expenses (excluding D&A): - Raw Materials: 16,730,000,000 - Services: 2,105,800,000 - Employee Benefits: 601,100,000 - Other Expense: 74,900,000 - Other Work Capitalized: -82,500,000 (this is a credit, so subtract from expenses) Total operating expenses excl D&A = 16,730,000,000 + 2,105,800,000 + 601,100,000 + 74,900,000 - 82,500,000 = 19,429,300,000 EBITDA = 20,630,200,000 - 19,429,300,000 = 1,200,900,000 Wait! This equals Operating Profit + 667,100,000 (the full P&L charge). So if I use this approach, EBITDA = 1,200,900,000 But this includes the "provisions" part of the 667,100,000. The question is whether provisions are part of normal operations or not. Actually, looking at this calculation: Revenue - Cash Operating Costs = EBITDA. This is 1,200,900,000. But the standard definition is Operating Profit + D&A. If the P&L charge of 667,100,000 includes provisions, then Operating Profit + D&A (clean) would be less than 1,200,900,000. Hmm, but my revenue minus cash operating costs calculation gives 1,200,900,000. Let me verify: 20,630,200,000 - 16,730,000,000 - 2,105,800,000 - 601,100,000 - 74,900,000 + 82,500,000 = 20,630,200,000 - 19,429,300,000 = 1,200,900,000 And 533,800,000 + 667,100,000 = 1,200,900,000 So the P&L charge of 667,100,000 is indeed the total amount deducted to get from this "gross margin before D&A" to operating profit. Now, what is in this 667,100,000? The cash flow tells us that D&A and impairment adjustment is 478,600,000. The difference (667,100,000 - 478,600,000 = 188,500,000) happens to exactly equal "Allocation To Provisions Excluding Change In Provision For Risks And Charges"! So: 667,100,000 = 478,600,000 (D&A and impairment) + 188,500,000 (provisions) Therefore, clean D&A = 478,600,000 minus any impairment, or if impairment is zero, then 478,600,000 is clean D&A. Actually wait, the cash flow item says "Depreciation And Amortisation Expense And Impairment Loss Reversal Of Impairment Loss". This is one item. If there was no impairment, then 478,600,000 = D&A. If there was impairment reversal, then D&A = 478,600,000 + reversal amount. If there was impairment loss, then D&A = 478,600,000 - impairment loss. Given we don't have the breakdown, 478,600,000 is the best proxy for D&A. So EBITDA = 533,800,000 + 478,600,000 = 1,012,400,000 But wait - I need to check S&P methodology more carefully. S&P might define EBITDA differently. Actually, looking at S&P Global Ratings methodology, they often use "Adjusted EBITDA" which can include add-backs for non-recurring items. But for basic Net Debt/EBITDA, they typically use: EBITDA = Operating income + depreciation & amortization Where operating income is recurring operating profit. Given the data, and that 478,600,000 is the cleanest D&A figure: EBITDA = 1,012,400,000 Net Debt = 4,474,000,000 Ratio = 4.42 But I want to also consider if we should exclude lease liabilities from net debt. In some S&P methodologies, especially for comparisons pre- and post-IFRS 16, they might exclude lease liabilities. If excluding leases: Net Debt = 4,397,600,000 Ratio = 4,397,600,000 / 1,012,400,000 = 4.34 Given the question asks for "S&P methodology" and this is 2022 (post-IFRS 16), I'll include lease liabilities as S&P typically does now. Actually, let me reconsider one more time. Should I use EBITDA including or excluding the proportional part? Some S&P methodologies for utility/energy companies (which Hera is, being an Italian multi-utility) might have specific adjustments. But with the standard data given, I'll use: - EBITDA = 1,012,400,000 - Net Debt = 4,474,000,000 Net Debt/EBITDA = 4.42 Let me do a final precise calculation: 4,474,000,000 / 1,012,400,000 = 4.419202... Rounded to two decimal places: 4.42 Or should I present as 4.4? For financial ratios, typically one or two decimal places. I'll use 4.42. Actually, wait. I want to re-verify my net debt calculation. Let me check if there are other debt-like items. Looking at current and non-current liabilities: - Noncurrent Financial Liabilities: 5,689,900,000 - Current Financial Liabilities: 650,100,000 - Noncurrent Lease Liabilities: 55,100,000 - Current Lease Liabilities: 21,300,000 Are there other debt-like items? Derivative liabilities? Typically not included in gross debt for leverage ratios unless they represent debt hedges. Trade payables? No, these are operating liabilities. Other current liabilities? 1,720,000,000 - this might include some debt-like items but typically classified as operating. For S&P methodology, "Total Debt" typically includes: - Short-term debt and current portion of long-term debt - Long-term debt - Finance lease obligations - Sometimes pension deficits or other debt-like items I'll stick with financial liabilities + lease liabilities. One more check: should "Current Financial Liabilities" include the current portion of noncurrent debt? In IFRS balance sheets, this is typically already separated. So 650,100,000 is likely short-term borrowings and current portion. Total = 6,340,000,000 + 76,400,000 = 6,416,400,000 gross debt Less cash 1,942,400,000 = 4,474,000,000 net debt Final answer: 4,474,000,000 / 1,012,400,000 = 4.42 Actually, I want to double check one thing. Is "Current Financial Liabilities" of 650,100,000 the total current financial debt, or are there also current portions within "Other Current Liabilities"? Typically in IFRS, "Current Financial Liabilities" would include all financial liabilities classified as current, including current portion of long-term debt. So 650,100,000 should be complete. Similarly, "Noncurrent Financial Liabilities" of 5,689,900,000 is the long-term portion. So total financial debt = 6,340,000,000 seems correct. Final calculation: 4.4192... ≈ 4.42 I'll round to 4.42 or present more precisely. For this type of ratio, typically 2 decimal places or sometimes 1. Let me provide 4.42. Actually, rethinking - some sources might want this as a raw number with more precision. Let me just calculate exactly: 4474000000 / 1012400000 = 4.419202... Hmm, but I want to make sure about EBITDA. Let me try yet another approach. S&P sometimes calculates EBITDA from the cash flow statement as: Cash flow from operations before working capital changes + Interest paid + Taxes paid - Interest received - Dividends received (if classified as operating) = EBITDA (roughly) From the data: Cash Flows From Used In Operations Before Changes In Working Capital: 1,202,000,000 + Finance Costs Paid: 128,000,000 + Income Taxes Paid: 165,900,000 - Finance Income Received: 41,800,000 - Dividends Received: 13,400,000 = 1,202,000,000 + 128,000,000 + 165,900,000 - 41,800,000 - 13,400,000 = 1,440,700,000 This is much higher than my 1,012,400,000! What's wrong? Ah, I think I misunderstand the cash flow structure. The "Cash Flows From Used In Operations Before Changes In Working Capital" likely ALREADY includes the interest and tax effects in some way, or the signs are different. Actually, looking at standard IFRS cash flow statements: "Cash generated from operations" or "Cash flows from operating activities before changes in working capital" is typically: Operating profit adjusted for non-cash items Then you have: - Interest paid - Interest received - Dividends received - Income taxes paid To get to "Cash flows from operating activities" But in this data, the structure seems different. Let me re-read: "Cash Flows From Used In Operations Before Changes In Working Capital" = 1,202,000,000 Then listed separately: - "Dividends Received Classified As Operating Activities" = 13,400,000 - "Finance Income Received Classified As Operating Activities" = 41,800,000 - "Finance Costs Paid Classified As Operating Activities" = 128,000,000 - "Income Taxes Paid Classified As Operating Activities" = 165,900,000 Then "Increase Decrease In Working Capital" = -927,600,000 Then "Cash Flows From Used In Operating Activities" = 35,700,000 So the calculation is: 1,202,000,000 + 13,400,000 + 41,800,000 - 128,000,000 - 165,900,000 - 927,600,000 = 35,700,000 Let me verify: 1,202,000,000 + 13,400,000 = 1,215,400,000 + 41,800,000 = 1,257,200,000 - 128,000,000 = 1,129,200,000 - 165,900,000 = 963,300,000 - 927,600,000 = 35,700,000 ✓ So "Cash Flows From Used In Operations Before Changes In Working Capital" is BEFORE interest, dividends, and taxes. This means: 1,202,000,000 = Operating profit + non-cash adjustments (like D&A, provisions, etc.) To get EBITDA from this, we'd need to add back any non-cash items that are NOT D&A and subtract any cash items that were added. Actually, 1,202,000,000 is closer to "EBITDA plus other non-cash items minus cash items that were added in the adjustments." From my earlier calculation: Operating Profit (533,800,000) + D&A (478,600,000) + other non-cash adjustments = 1,202,000,000 Other non-cash adjustments = 1,202,000,000 - 533,800,000 - 478,600,000 = 189,600,000 What are these other adjustments? Looking at the cash flow items: - Allocation To Provisions: 188,500,000 - Adjustments For Undistributed Profits: -10,000,000 - Capital Gains Losses: 41,600,000 - Change In Provision For Risks And Charges: -27,800,000 - Adjustments For Employee Benefits: -12,700,000 Sum without finance items: 188,500,000 - 10,000,000 + 41,600,000 - 27,800,000 - 12,700,000 = 179,600,000 Close to 189,600,000 but not exact. Difference of 10,000,000. Hmm, maybe I missed something. Or maybe the "Adjustments For Finance Income Cost" of 135,000,000 is part of this? But finance income/cost is not in operating profit, so it shouldn't be an adjustment from operating profit. Unless... the operating profit includes some finance-related items? No, "Profit Loss From Operating Activities" should be clean operating profit. Let me accept that 1,202,000,000 includes various adjustments and is not pure EBITDA. For S&P methodology, the standard is: EBITDA = Operating Profit + D&A I'll stick with: 533,800,000 + 478,600,000 = 1,012,400,000 But actually, I realize I should check if S&P would use a different starting point. Some S&P methodologies use "EBIT" which is operating profit, and then add D&A. Final answer: 4.42 Wait, I want to check one more thing. Is 478,600,000 really D&A, or is it net of something? The item is: "Adjustments For Depreciation And Amortisation Expense And Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss" This is a single line item. The amount is 478,600,000. If there was an impairment loss reversal, this would reduce the adjustment (since it's a positive item in profit, we don't need to add it back). If there was an impairment loss, we'd add it back. The wording "Impairment Loss Reversal Of Impairment Loss" is confusing. It might mean "and impairment loss or reversal of impairment loss." Given the positive number 478,600,000, this represents adding back expenses. So it's adding back D&A expense and impairment losses, minus any reversals. Without knowing the breakdown, 478,600,000 is the net adjustment. For EBITDA, we want to add back D&A, not impairment losses (which are typically non-recurring). But in practice, for EBITDA calculations, impairment losses are sometimes added back as they are non-cash, though they are not part of "recurring" operations. S&P's "Adjusted EBITDA" typically adds back impairment losses as they are non-cash. So 478,600,000 would be appropriate. Actually, I want to verify: is impairment loss added back for EBITDA? Strictly speaking, EBITDA = Earnings Before Interest, Taxes, Depreciation, and Amortization. Impairment is not in the acronym, so theoretically it's not added back. However, impairment losses are non-cash and often added back in practice to get to a "clean" operating metric. S&P's Adjusted EBITDA typically does add back impairment losses. Given the data constraint, I'll use 478,600,000 as the add-back. Final calculation: Net Debt = 4,474,000,000 EBITDA = 1,012,400,000 Ratio = 4.42 Let me also consider if I should use a different net debt figure. Some S&P methodologies include: - Gross debt = short-term debt + long-term debt + finance leases - Less: cash and cash equivalents - Less: readily marketable securities (none mentioned here) So 4,474,000,000 seems correct. One final verification: should I include derivative financial assets/liabilities? Derivative financial assets: 1,622,200,000 current + 1,000,000 noncurrent = 1,623,200,000 Derivative financial liabilities: 1,347,600,000 current + 6,300,000 noncurrent = 1,353,900,000 These are typically hedging instruments, not debt. For leverage ratios, S&P typically does not include derivatives in debt unless they represent embedded debt or speculative positions. For a utility company, these are likely hedges of commodity or interest rate risk, so excluded. Final answer remains: 4.42 Actually, I want to present this with more thought. The ratio 4.42 seems a bit high for a utility company, but Hera is an Italian multi-utility with significant infrastructure investments, and 2022 was a year of energy crisis with high working capital needs (note the huge increase in inventories and receivables). The revenue nearly doubled from 10.6B to 20.1B, likely due to pass-through of energy costs, which also increased payables and debt. So 4.42x seems plausible in this context. Let me do the math one more time precisely: Net Debt = 6,340,000,000 + 55,100,000 + 21,300,000 - 1,942,400,000 = 6,416,400,000 - 1,942,400,000 = 4,474,000,000 EBITDA = 533,800,000 + 478,600,000 = 1,012,400,000 4,474,000,000 / 1,012,400,000 = 4.419202... Rounded to two decimal places: 4.42 I'll provide 4.42 as my final answer. 4.42