I need to estimate the FFO / Net debt ratio for 2022. Let me break this down. First, let me understand what FFO (Funds From Operations) and Net debt are: **FFO** is typically calculated as: - Operating Profit Before Depreciation And Amortisation (EBITDA) + Depreciation and Amortisation - Interest Expense - Tax Expense... Actually, let me think more carefully. FFO in credit analysis (especially for utilities) is usually: - Net Income + Depreciation & Amortization + Deferred Taxes + Other non-cash items Or more commonly for utilities/ratings agencies: - Funds From Operations = Operating Cash Flow (before working capital changes) or EBITDA - Interest - Taxes + some adjustments Let me look at what's available. A common approach for FFO is: FFO = Profit/Loss from Operating Activities + Depreciation & Amortization - Interest Expense (or use cash flow from operations before working capital changes) Actually, looking at standard credit metrics, FFO is often calculated as: FFO = Net Income + Depreciation & Amortization + Deferred Income Taxes + Other Non-Cash Items Or from the cash flow statement perspective: FFO = Cash Flow from Operating Activities + Increase/Decrease in Working Capital - Interest Paid + Interest Received (or just before working capital changes) Let me use a more practical approach. Looking at the data, I can calculate: From the cash flow data: - "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" 2022: -5,140,000,000 EUR This seems like operating cash flow before interest and taxes. But it's negative, which is problematic. Let me try another approach. FFO is often approximated as: FFO = Operating Profit Before Depreciation And Amortisation (EBITDA) - Interest Expense - Cash Taxes + D&A (added back) Wait, let me reconsider. EBITDA is already before D&A. So: EBITDA = Operating Profit Before Depreciation And Amortisation = -4,986,000,000 EUR for 2022 This is negative, which is unusual. Let me verify: "Operating Profit Before Depreciation And Amortisation" 2022: -4,986,000,000 EUR Hmm, this seems wrong. Let me re-read: "Operating Profit Before Depreciation And Amortisation" - this is actually what some call "Gross Operating Profit" or it's EBIT + D&A, i.e., EBITDA. Actually in French reporting, "Operating Profit Before Depreciation And Amortisation" might be what we call EBIT before D&A, i.e., EBITDA equivalent or EBE (Excédent Brut d'Exploitation). Wait - I see "Ebe" mentioned in "Other Operating Income And Expenses Included In Ebe". Let me check if this is EBITDA. Actually, looking more carefully at French terminology: - EBE = Excédent Brut d'Exploitation = Gross Operating Surplus = Revenue - External Costs - Personnel Costs - Taxes = roughly EBITDA But "Operating Profit Before Depreciation And Amortisation" at -4,986,000,000 EUR seems to be negative. Let me verify this is indeed EBITDA by checking if I can reconstruct it: Revenue: 143,476,000,000 - Expense Fuel Energy And Transmission Charges: 121,010,000,000 - Other External Services: 9,420,000,000 - Employee Benefits: 15,236,000,000 - Tax Expense Other Than Income Tax: 3,163,000,000 + Other Operating Income And Expenses Included In Ebe: 367,000,000 = 143,476 - 121,010 - 9,420 - 15,236 - 3,163 + 0.367 = -4,986,000,000 Yes! This matches exactly. So "Operating Profit Before Depreciation And Amortisation" is indeed the EBE/EBITDA equivalent. But it's negative in 2022. This is due to the massive increase in fuel/energy costs (121B vs 44B prior year). For FFO, I need to think about what rating agencies use. Standard & Poor's defines FFO as: FFO = Funds from operations = Net income + Depreciation & Amortization + Deferred income taxes + Other non-cash items Or from cash flows: Cash from operations before changes in working capital. Let me look at "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" = -5,140,000,000 This is negative. But we need to add back interest and taxes to get closer to operating cash flow before working capital. Actually, let me think about this differently. The standard FFO calculation for utilities: FFO = Net Income + D&A + Deferred Taxes + Other non-cash charges - Gain on asset sales Or: FFO = Operating Cash Flow + Increase in Working Capital (to normalize) From the data: - Cash Flows From Used In Operating Activities: -7,425,000,000 - Increase Decrease In Working Capital: -8,301,000,000 (negative means working capital increased, so cash outflow) So if we add back working capital decrease (or subtract the increase): Operating cash flow before working capital changes = -7,425,000,000 - (-8,301,000,000) = -7,425,000,000 + 8,301,000,000? Wait, the sign convention. "Increase Decrease In Working Capital" = -8,301,000,000 means working capital increased (cash outflow). In cash flow statement: CFO = CFO before WC changes + WC changes -7,425,000,000 = CFO_before_WC + (-8,301,000,000)? Actually, looking at the line "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" = -5,140,000,000 Then: "Net Financial Expeneses Disbursed Including Dividends Received" = 1,003,000,000 And "Income Taxes Paid Refund" = 1,282,000,000 So: -5,140,000,000 - 1,003,000,000 - 1,282,000,000 = -7,425,000,000? -5,140 - 1,003 - 1,282 = -7,425. Yes! ✓ So "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" is like EBITDA - cash taxes + interest received or something similar, but before interest paid and taxes paid. Actually this is more like: Operating cash flow before interest and taxes = EBIT + D&A - cash taxes paid + other adjustments? No wait, it's already after some adjustments. Let me think about what FFO really means in credit analysis. Moody's defines FFO as: FFO = Net Income + D&A + Deferred Income Taxes + Other Non-Cash Items Let me calculate this: Net Income (Profit Loss) 2022: -18,225,000,000 + Depreciation And Amortisation Expense: 11,079,000,000 + Impairment Loss Reversal: -1,762,000,000 (this is a reversal, so it's income, need to subtract) + Other adjustments? Actually, let me use a cleaner approach. In utility credit analysis, FFO is often approximated as: FFO = EBITDA - Cash Interest - Cash Taxes Or from the cash flow statement: CFO + Working capital changes (to normalize) Let me try: FFO = Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund + Interest Expense (accrual) - Interest Income? Actually, the standard approach for FFO in European utilities is: FFO = Operating cash flows before changes in working capital Which would be: -5,140,000,000 + 1,003,000,000 (financial expenses disbursed, but we want accrual basis) ? Hmm, this is getting messy with negative numbers. Let me try a different approach using accrual-based FFO: FFO = Profit Loss From Operating Activities + Depreciation And Amortisation Expense + Impairment Losses - Reversals + Other non-cash items Profit Loss From Operating Activities: -19,363,000,000 + Depreciation And Amortisation Expense: 11,079,000,000 + Impairment Loss Reversal (negative, so subtract): -1,762,000,000 + Other non-cash in Other Income And Expenses: ? = -19,363 + 11,079 - 1,762 = -10,046,000,000? This is still very negative. Wait, I need to reconsider. "Profit Loss From Operating Activities" is EBIT, not operating profit before D&A. Let me recalculate: Operating Profit Before Depreciation And Amortisation (EBITDA): -4,986,000,000 - Depreciation And Amortisation Expense: 11,079,000,000 = Profit Loss From Operating Activities (EBIT): -4,986 - 11,079 = -16,065? But actual "Profit Loss From Operating Activities" is -19,363,000,000. Difference: -19,363 - (-16,065) = -3,298,000,000. This is roughly the "Net Changes In Fair Value On Energy And Commodity Derivatives" (-849M) + "Other Income And Expenses Excluded From Ebe" (687M) + other items. Actually let me check: -4,986 (EBITDA) - 11,079 (D&A) = -16,065. Then -16,065 + 687 (other income) - 849 (derivatives) + 1,762 (impairment reversal) - 3,298? Hmm, the numbers don't quite add up. Let me not worry about exact reconciliation. For FFO, let me use the most common credit metric definition: **FFO = Net Income + D&A + Deferred Taxes + Other Non-Cash Items - Gain on Sales** Or for utilities, a simpler version: **FFO = EBITDA - Interest Expense (cash) - Tax Expense (cash)** But with negative EBITDA, this will be negative. Actually, I think I need to look at this more carefully. The "Operating Profit Before Depreciation And Amortisation" being negative is unusual but reflects the extreme situation in 2022 with high energy costs. For Net Debt, I need: Net Debt = Total Financial Debt - Cash and Cash Equivalents Financial Debt = Non-current financial liabilities + Current financial liabilities From the balance sheet: - Other Noncurrent Financial Liabilities: 71,058,000,000 - Other Current Financial Liabilities: 71,844,000,000 Total Financial Debt = 71,058 + 71,844 = 142,902,000,000 Cash and Cash Equivalents: 10,948,000,000 Net Debt = 142,902 - 10,948 = 131,954,000,000 EUR Wait, I need to check if there are other financial liabilities. Let me look again: Noncurrent Liabilities includes: - Special French Public Electricity Distribution Concession Liabilities: 49,459,000,000 (this is specific to French utilities, related to concession assets) - Other Noncurrent Financial Liabilities: 71,058,000,000 Current Liabilities includes: - Other Current Financial Liabilities: 71,844,000,000 The "Special French Public Electricity Distribution Concession Liabilities" - are these debt? In French accounting, these are specific liabilities related to the public electricity distribution concession. They might not be "financial debt" in the traditional sense but are more like regulatory liabilities. For credit analysis, we typically include all interest-bearing debt. Let me assume: Total Debt = 71,058 + 71,844 = 142,902 (excluding concession liabilities which are more like operating liabilities) Or if we include concession liabilities: 142,902 + 49,459 = 192,361 Actually, looking at standard EDF credit analysis, the concession liabilities are typically included in "total debt" or "adjusted debt" for some purposes, but for Net Debt calculation, let me check standard practice. For S&P/Moody's, "Special French Public Electricity Distribution Concession Liabilities" are often considered as debt-like or quasi-debt. But let me be conservative and use standard financial debt first. Actually, I realize I should look at this more carefully. The term "Other Noncurrent Financial Liabilities" and "Other Current Financial Liabilities" - these are clearly financial debt. But wait - I need to check if there are any other debt items. Looking through the liabilities: Noncurrent Liabilities: - Special French Public Electricity Distribution Concession Liabilities: 49,459 - Other Noncurrent Financial Liabilities: 71,058 - Other Noncurrent Liabilities: 4,968 - Deferred Tax Liabilities: 1,533 - Noncurrent Provisions: 76,923 Current Liabilities: - Current Provisions: 7,943 - Trade And Other Current Payables: 23,284 - Other Current Financial Liabilities: 71,844 - Current Tax Liabilities: 967 - Other Current Liabilities: 33,504 Total "financial" debt would be: 71,058 + 71,844 = 142,902 But I need to check if "Special French Public Electricity Distribution Concession Liabilities" is debt-like. In French GAAP/IFRS for EDF, this represents the liability corresponding to assets operated under concession. It's a specific accounting item. For credit ratios, rating agencies may or may not include this. Let me check: these concession liabilities are matched by concession assets (Property Plant And Equipment Operated Under French Public Electricity Distribution Concessions: 63,966). Actually, for Net Debt, the standard definition is: Net Debt = Short-term debt + Long-term debt + Current portion of long-term debt - Cash and cash equivalents Let me use: 71,058 (non-current financial) + 71,844 (current financial) - 10,948 (cash) = 131,954 But I should double check - are there any other debt instruments? The "Proceeds From Issue Of Subordinated Liabilities And Convertible Instruments" suggests there are subordinated liabilities. These would be in "Other Noncurrent Financial Liabilities" or "Other Current Financial Liabilities". Also, I need to check if "Special French Public Electricity Distribution Concession Liabilities" should be included. Looking at the cash flow statement, there's "Funding Contributions Received For Assets Operated Under Concessions And Government Grants Received" - this suggests these are like grants/funding, not debt. Actually, I think for standard Net Debt, I should use: Financial Debt = Other Noncurrent Financial Liabilities + Other Current Financial Liabilities = 71,058 + 71,844 = 142,902 Net Debt = 142,902 - 10,948 = 131,954 million EUR Now for FFO. Let me think about this more carefully. In credit analysis, especially for European utilities, FFO is defined as: FFO = Net income from continuing operations before extraordinary items + Depreciation and amortization + Impairment losses + Deferred income taxes + Other non-cash items Or more practically from cash flows: FFO = Cash flow from operating activities + Increase in working capital (or - decrease in working capital) - Capital expenditures (no, that's FCF) +/- Other items Actually, let me use the most standard definition: FFO = Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund + Interest Expense (accrual basis, not cash) Wait, "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" = -5,140,000,000 This is CFO before interest paid and taxes paid. To get FFO, I need to add back interest paid and make other adjustments? No, FFO is typically after interest but before working capital changes. Let me think again. The standard FFO formula from cash flow is: FFO = Cash Flow from Operating Activities + Changes in Working Capital (to normalize working capital) - Gain on sale of assets Or: FFO = EBITDA - Cash Interest - Cash Taxes ± Other items Given the unusual year with negative EBITDA, let me try to calculate FFO using the accrual approach: FFO = Profit Loss (Net Income) + D&A + Deferred Taxes + Other non-cash items Net Income: -18,225,000,000 + D&A: 11,079,000,000 + Impairment reversal: -1,762,000,000 (this reduces FFO since it's a gain) + Deferred Tax change: ? Deferred Tax Assets went from 1,667 to 8,696, so increase of 7,029. This is a non-cash benefit. Deferred Tax Liabilities went from 2,401 to 1,533, so decrease of 868. Net Deferred Tax change = +7,029 - (-868) = +7,897? Actually, increase in DTA is a benefit, decrease in DTL is also a benefit. Wait, the "Income Tax Expense Continuing Operations" is -3,926,000,000 (negative means benefit/income). This is confusing. Let me try a different approach. Actually, looking at standard credit rating agency methodology for FFO: Moody's: FFO = Net Income + Depreciation + Deferred Income Taxes + Other Non-Cash Items - Gain on Sale of Assets S&P: FFO = Funds from operations = Net income before extraordinary items + depreciation + deferred income taxes + other non-cash items Let me calculate with available data: Net Income 2022: -18,225,000,000 + Depreciation And Amortisation Expense: 11,079,000,000 + Impairment Loss Reversal: this is actually a positive item in P&L (reversal of impairment), so it's already in Net Income. We should NOT add it back. Actually, if we want to add back "impairment losses", we should subtract reversals. Hmm, but "Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss" = 1,762,000,000. This is income. So in Net Income, this 1,762 is already included. For FFO, we typically want to exclude this kind of non-recurring/non-cash item. Actually, standard practice: add back impairment losses, subtract impairment reversals. So: FFO = Net Income + D&A - Impairment Reversal + Other items = -18,225 + 11,079 - 1,762 + ? = -8,908,000,000 This is still very negative. But wait - I need to think about whether this makes sense for the ratio. With negative FFO and positive Net Debt, the ratio would be negative, which is meaningful (can't cover debt). However, I wonder if I'm using the right FFO definition. Let me check if there's a more "normalized" FFO. Actually, in utility credit analysis, especially for EDF in 2022, the massive losses were due to regulatory price caps and high wholesale prices. The French government implemented a "tariff shield" and EDF had to sell electricity at below-market prices. For 2022, EDF reported significant losses. Let me see if I can find a more normalized FFO. Looking at the cash flow statement again: "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" = -5,140,000,000 If I add back "Net Financial Expeneses Disbursed Including Dividends Received" (1,003,000,000) and "Income Taxes Paid Refund" (1,282,000,000), I get back to -7,425,000,000 which is the operating cash flow. But "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" is essentially: EBITDA - Cash Taxes + Other adjustments - Working Capital changes? Actually, let me recalculate from the components given: - Profit Loss From Operating Activities (EBIT): -19,363,000,000 + D&A: 11,079,000,000 = EBITDA equivalent: -8,284,000,000? But stated "Operating Profit Before Depreciation And Amortisation" is -4,986,000,000. The difference: -4,986 vs -8,284. The difference is about 3,298,000,000. Looking at the adjustments to get from EBITDA to operating cash flow before working capital: - Net Changes In Fair Value On Energy And Commodity Derivatives: -849,000,000 - Other Operating Income And Expenses Included In Ebe: 367,000,000 - Impairment Loss Reversal: 1,762,000,000 - Other Income And Expenses Excluded From Ebe: 687,000,000 Hmm, these don't quite reconcile. Let me not worry about exact reconciliation. For FFO, let me try using the cash flow approach with normalization: FFO = Cash Flows From Used In Operating Activities - Increase Decrease In Working Capital = -7,425,000,000 - (-8,301,000,000) = -7,425,000,000 + 8,301,000,000 = 876,000,000 EUR Wait, this gives a small positive FFO! This makes sense - the operating cash flow was negative due to working capital buildup, but before working capital changes, there was slight positive generation. Actually, let me verify: "Increase Decrease In Working Capital" = -8,301,000,000. The negative sign means working capital increased (used cash). So: CFO before WC changes = CFO - WC_change = -7,425 - (-8,301) = -7,425 + 8,301 = 876. Yes! But wait, I need to check if this is correct. In cash flow statements: CFO = CFO_before_WC + WC_change -7,425 = CFO_before_WC + (-8,301) CFO_before_WC = -7,425 + 8,301 = 876 Yes! So FFO ≈ 876,000,000 EUR But I need to check if I should use "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" instead, which is -5,140,000,000. This already excludes working capital changes? Let me check. Actually, "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" - does this include working capital changes? Looking at the line items: - Adjustments For Impairment Loss: 1,762 - Depreciation And Amortisation Expense Provisions And Fair Value Gains Losses: 6,820 - Net Financial Income Or Expense: 446 - Dividends Received Classified As Operating Activities: 590 - Adjustments For Losses Gains On Disposal: -143 - Adjustments For Income Tax Expense: -3,926 - Adjustments For Undistributed Profits Of Associates: 759 - Increase Decrease In Working Capital: -8,301 Sum of adjustments to get from Profit Loss From Operating Activities to "Net Cash Flow From Operations Before...": Start: -19,363 (operating profit) + 1,762 (impairment) = -17,601 + 6,820 (D&A etc) = -10,781 + 446 (net financial) = -10,335 + 590 (dividends) = -9,745 - 143 (gains on disposal) = -9,888 - 3,926 (income tax expense) = -13,814 + 759 (undistributed profits) = -13,055 - 8,301 (working capital) = -21,356 Hmm, this doesn't equal -5,140. Let me check - I think "Net Financial Income Or Expense" at 446 might be different from what's in operating profit. Actually, let me look at this differently. The line "Net Financial Income Or Expense" = 446,000,000 in 2022. But in the P&L, "Finance Income Cost" = -3,553,000,000. These are different! The 446 in the cash flow reconciliation is probably the "Net Financial Income Or Expense" included in operating activities or some adjustment. Actually, I think I need to be more careful. Let me look at the exact cash flow reconciliation structure. From the data, starting from "Profit Loss From Operating Activities" (-19,363), we add various adjustments to get to "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" (-5,140). The adjustments listed: 1. Adjustments For Impairment Loss: +1,762 2. Depreciation And Amortisation Expense Provisions And Fair Value Gains Losses: +6,820 3. Net Financial Income Or Expense: +446 4. Dividends Received: +590 5. Adjustments For Losses Gains On Disposal: -143 6. Adjustments For Income Tax Expense: -3,926 7. Adjustments For Undistributed Profits Of Associates: +759 8. Increase Decrease In Working Capital: -8,301 Sum: -19,363 + 1,762 + 6,820 + 446 + 590 - 143 - 3,926 + 759 - 8,301 = -21,356 But target is -5,140. Doesn't match! Wait, I need to re-read. "Adjustments For Income Tax Expense" = -3,926,000,000. But in the P&L, "Income Tax Expense Continuing Operations" = -3,926,000,000. Negative tax expense means tax benefit. Hmm, but -21,356 ≠ -5,140. There's a difference of about 16,216. Let me check if I'm missing something. Actually, looking more carefully at the line items, I see "Depreciation And Amortisation Expense Provisions And Fair Value Gains Losses" = 6,820,000,000. But D&A expense alone is 11,079,000,000. So this 6,820 is D&A plus provisions minus fair value gains/losses? Or something else? Actually, I think this 6,820 includes only part of D&A, or is net of some items. The exact composition isn't clear. Given the complexity and my inability to perfectly reconcile, let me use a simpler approach. For FFO, I'll use the most common practical definition: **FFO = Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund + Interest Expense (accrual)** Wait, no. FFO is typically after interest expense. Let me use: **FFO = Cash Flow from Operating Activities before Working Capital changes** From my calculation above: -7,425 - (-8,301) = 876,000,000 EUR Or using the "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" and adjusting: Actually, I think "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" might already be before working capital changes? Let me check the name again. "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" - "Before" refers to financial expenses and taxes, not working capital. So this should include working capital changes. But then adding back working capital: -5,140 + 8,301 = 3,161,000,000? Wait, I need to be more careful. Let me re-read the cash flow structure. Looking at standard cash flow statement format: 1. Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund 2. Net Financial Expeneses Disbursed Including Dividends Received 3. Income Taxes Paid Refund 4. = Cash Flows From Used In Operating Activities Continuing Operations So: -5,140 - 1,003 - 1,282 = -7,425. Yes, this matches. Now, what is "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund"? It's essentially operating cash flow before interest and taxes. To get FFO, I want to add back interest (accrual, not cash) and normalize working capital. But this is getting complicated. Let me try a completely different approach. Let me use the definition: **FFO = EBITDA + Interest Income - Cash Interest - Cash Taxes** Or for simplicity in this case, let me use: **FFO = Operating Profit Before Depreciation And Amortisation + Depreciation And Amortisation Expense - Interest Expense - Tax Expense** = -4,986 + 11,079 - 1,730 - (-3,926)? Wait, "Tax Expense Other Than Income Tax Expense" is 3,163 (operating tax), and "Income Tax Expense Continuing Operations" is -3,926 (negative = benefit). Total tax = 3,163 + (-3,926) = -763 (net benefit) Hmm, this is getting messy. Let me try: FFO approx = EBITDA - Interest Expense + Interest Income - Cash Taxes But I don't have Interest Income separately. Actually, "Finance Income Cost" = -3,553,000,000. This is net finance cost (negative = net expense). "Interest Expense" = 1,730,000,000 "Discount Effect" = 174,000,000 "Other Finance Income Cost" = -1,997,000,000 So: 1,730 + 174 + (-1,997) = -93? But Finance Income Cost is -3,553. Hmm, these don't add up. 1,730 + 174 - 1,997 = -93, not -3,553. Wait, I need to re-read. "Other Finance Income Cost" = -1,997,000,000. The negative sign means it's a cost/income? Actually, looking at 2021: Interest Expense 1,459 + Discount Effect -2,670 + Other Finance Income Cost 4,489 = 1,459 - 2,670 + 4,489 = 3,278. But Finance Income Cost = 360. Doesn't match either. I think "Other Finance Income Cost" might be net of something, or the signs are confusing. Let me just use "Finance Income Cost" = -3,553 as the net finance cost. For FFO, let me use the most straightforward calculation from available data: **FFO = Profit Loss From Operating Activities + Depreciation And Amortisation Expense - Interest Expense (accrual) + Interest Income - Tax Expense** Actually, standard FFO = EBIT + D&A - Interest + ... no wait. Let me use: FFO = Net Income + D&A + Deferred Taxes + Other non-cash Net Income: -18,225 + D&A: 11,079 + Impairment reversal: we need to SUBTRACT this since it's a gain already in Net Income: -1,762 + Deferred tax benefit: let's estimate from balance sheet change Deferred Tax Assets: 1,667 → 8,696 = increase of 7,029 (benefit) Deferred Tax Liabilities: 2,401 → 1,533 = decrease of 868 (benefit) But these changes include items that went through OCI, not just P&L. The "Income Tax Expense Continuing Operations" is -3,926, which includes current and deferred. Actually, for FFO, we add back the deferred portion of tax expense. If total tax expense is -3,926 (benefit), and assuming most is deferred... this is too complicated. Let me try a simpler approach using the cash flow data: FFO = Cash Flows From Used In Operating Activities - Increase Decrease In Working Capital = -7,425 - (-8,301) = 876,000,000 EUR This is the operating cash flow before working capital changes, which is a common proxy for FFO. But wait, this includes interest paid and taxes paid. Standard FFO is typically before interest and after interest, depending on definition. Actually, looking at S&P's definition: "Funds from operations (FFO): Net income from continuing operations before extraordinary items, adjusted for depreciation, deferred taxes, and other non-cash items." This is closer to accrual-based. But with negative net income, FFO will be negative or small. Let me try another approach: FFO = EBITDA - Cash Interest - Cash Taxes ± Other EBITDA (Operating Profit Before D&A): -4,986 This is already negative, so FFO would be very negative before any adjustments. Hmm, but my cash flow based FFO of 876 is positive. The difference is due to non-cash items and timing differences. Actually, I think for 2022, with such unusual results, the cash flow based approach might be more meaningful. But let me verify if 876 makes sense. From -7,425 (CFO) + 8,301 (WC increase) = 876. This means without the working capital buildup, operating cash flow would have been slightly positive. But wait - is "Increase Decrease In Working Capital" = -8,301 correct? Let me verify the sign. In cash flow statements, an increase in working capital (more receivables, more inventory, less payables) uses cash, so it's negative for cash flow. Yes, -8,301 means working capital increased, using cash. So to normalize, we add back: -7,425 + 8,301 = 876. But I want to double check: should I use "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" instead? -5,140 + 8,301 = 3,161? No, because -5,140 already includes working capital changes? Let me check. Actually, I need to understand what -5,140 includes. Looking at the line items that sum to it: From Profit Loss From Operating Activities (-19,363), we add: + Impairment reversal: 1,762 + D&A and provisions and fair value: 6,820 + Net financial income/expense: 446 + Dividends received: 590 - Gains on disposal: 143 - Income tax expense: 3,926? Wait, it's -3,926, so subtract -3,926 = add 3,926? + Undistributed profits of associates: 759 + Working capital change: -8,301 Let me recalculate with signs: Start: -19,363 + 1,762 (impairment reversal, positive so add) + 6,820 (D&A etc, positive so add) + 446 (net financial, positive so add) + 590 (dividends, positive so add) - 143 (gains on disposal, negative so subtract the gain) - 3,926? Wait, "Adjustments For Income Tax Expense" = -3,926. If this is the adjustment, and it's negative, do we add or subtract? Actually, I think "Adjustments For Income Tax Expense" = -3,926 means we adjust by -3,926, i.e., subtract 3,926. But tax expense in P&L was already subtracted to get to Net Income. Since we're starting from Operating Profit (before tax), we need to subtract tax expense. Wait, no. "Profit Loss From Operating Activities" is already after operating taxes but before financial items and income tax? Or is it before all taxes? Looking at standard P&L structure: Operating Profit (EBIT) = after operating costs, before interest and income taxes +/- Financial items = Profit before tax - Income tax = Net Income But "Profit Loss From Operating Activities" at -19,363 - this seems to be after some items. Let me check if it's EBIT or something else. From data: Operating Profit Before Depreciation And Amortisation: -4,986 - Depreciation And Amortisation: 11,079 = -16,065 (this would be EBIT) But actual "Profit Loss From Operating Activities" = -19,363. Difference = -3,298. This could be: - Net Changes In Fair Value: -849 - Other Income And Expenses Excluded From Ebe: 687 - Impairment reversal: 1,762 -16,065 - 849 + 687 + 1,762 = -14,465? Not -19,363. Hmm, let me try: -16,065 + 687 (other income) - 849 (derivatives loss) - 3,136 (something else)? Actually, I think "Other Operating Income And Expenses Included In Ebe" at 367 is already in the -4,986. And "Other Income And Expenses Excluded From Ebe" at 687 is excluded from EBE. So: -4,986 (EBE) - 11,079 (D&A) + 687 (other excluded income) - 849 (derivatives) - 3,136? = -19,363 -4,986 - 11,079 = -16,065 -16,065 + 687 = -15,378 -15,378 - 849 = -16,227 -16,227 - 3,136? = -19,363? No, -16,227 - 3,136 = -19,363. Yes! So there's a missing item of about -3,136. This might be the "Impairment Loss Reversal" treated differently, or other items. Actually wait - I had impairment reversal as +1,762 in the operating profit. Let me recheck. From the data: "Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss" = 1,762. This is a positive (income). So: -16,065 + 687 - 849 + 1,762 = -14,465. Still not -19,363. Hmm, maybe "Other Income And Expenses Excluded From Ebe" is negative? Let me re-read: 687,000,000. Positive. Wait, I think I need to re-examine. "Other Operating Income And Expenses Included In Ebe" = 367. This is included in the -4,986. "Other Income And Expenses Excluded From Ebe" = 687. This is excluded from EBE, so it comes after. But what about "Impairment Loss Reversal"? Is this in operating profit or after? Looking at standard IFRS, impairment losses/reversals are typically in operating profit. So: EBITDA (EBE) = -4,986 - D&A = -11,079 = EBIT before impairments and other = -16,065 + Impairment reversal = +1,762 + Other excluded income = +687 - Derivatives = -849 = -14,465 Still not -19,363. There's a gap of about -4,898. Maybe there are other items I'm missing, or the "Other Income And Expenses Excluded From Ebe" is actually negative in the calculation? Or perhaps "Net Changes In Fair Value" is part of operating profit differently? Actually, let me re-read "Net Changes In Fair Value On Energy And Commodity Derivatives Excluding Trading Activities" = -849. This is negative, so it's a loss. Let me try a different combination. Maybe "Operating Profit Before Depreciation And Amortisation" is not exactly EBE/EBITDA but something else. Actually, I realize I should just accept that I can't perfectly reconcile and move on with a practical FFO estimate. Given the complexity, let me use the most straightforward approach: **FFO = Cash Flows From Used In Operating Activities - Increase Decrease In Working Capital** = -7,425,000,000 - (-8,301,000,000) = 876,000,000 EUR Or, if I want to use the pre-interest, pre-tax version: **FFO = Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund - Increase Decrease In Working Capital + Net Financial Expeneses Disbursed (interest paid) + Income Taxes Paid** = -5,140 - (-8,301) + 1,003 + 1,282? = -5,140 + 8,301 + 1,003 + 1,282 = 5,446? No wait, that's double counting. If I start from -5,140 (before interest and taxes), and I want FFO (which is typically after interest), I should not add back interest. Actually, let me reconsider what FFO means. In credit analysis: - FFO = Funds From Operations = cash generated from operations available to service debt - It's typically AFTER interest expense (since interest is a financing cost, not operating) - But BEFORE working capital changes and capex Wait, no. Actually, FFO is typically: - Net Income + D&A + Deferred Taxes + Other non-cash items - This is AFTER interest expense and AFTER taxes So FFO is from the perspective of equity holders + debt holders? No, it's from operations, so after operating costs but before financing costs? Actually, I need to clarify. There are different definitions: 1. EBITDA = Earnings Before Interest, Taxes, D&A (before all financing and tax) 2. EBIT = Earnings Before Interest and Taxes 3. FFO = typically Net Income + D&A + Deferred Taxes + Other non-cash (after interest, after taxes) But in cash flow terms, FFO is sometimes called "Cash Flow from Operations before Working Capital Changes" which is AFTER interest and AFTER taxes. Let me verify with the cash flow: CFO before WC changes = CFO - WC_change = -7,425 - (-8,301) = 876 This 876 is AFTER interest paid (1,003) and AFTER taxes paid (1,282). So it's a very low/weak FFO. But wait, is this right? Let me check 2021: CFO = 12,648 WC change = 1,526 (positive means working capital decreased, providing cash) CFO before WC = 12,648 - 1,526 = 11,122 Or using my formula: 12,648 - 1,526 = 11,122. Yes. Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund 2021 = 15,512 - Net Financial Expenses: 588 - Taxes: 2,276 = 15,512 - 588 - 2,276 = 12,648. Yes. So for 2021, FFO before interest and tax = 15,512. FFO after interest and tax (before WC) = 11,122. For 2022: FFO after interest and tax (before WC) = 876 This seems very low but positive. However, I need to check if rating agencies use FFO before or after interest. Looking at S&P's methodology: "FFO: Net income from continuing operations before extraordinary items, adjusted for depreciation, deferred income taxes, and other non-cash items." This is AFTER interest and AFTER taxes. So my 876 is in the right direction, but let me verify with accrual-based calculation. Net Income 2022: -18,225 + D&A: 11,079 - Impairment reversal (since it's a gain): -1,762? Or do we add back impairment losses and subtract reversals? Actually, S&P says "adjusted for depreciation, deferred income taxes, and other non-cash items." Impairment reversals are non-cash items that increased net income, so we should subtract them. -18,225 + 11,079 - 1,762 = -8,908 This is very different from 876. The difference is due to working capital, timing differences, and other items. Hmm, but S&P's FFO is accrual-based, not cash-based. Let me check if I should use accrual or cash basis. Actually, I think for practical purposes, especially with such unusual year, the cash-based FFO before working capital changes (876) might be more meaningful, or I should use a normalized version. But wait - let me re-examine. The S&P definition uses "Net income from continuing operations before extraordinary items." For 2022, "Profit Loss From Continuing Operations" = -18,231, and "Profit Loss From Discontinued Operations" = 6. So Net Income from Continuing Operations = -18,231 (approximately, actual is -18,225 total). Plus D&A: +11,079 Plus deferred taxes: need to estimate Plus other non-cash: ? The "Income Tax Expense Continuing Operations" = -3,926. This includes current and deferred. If most is deferred (non-cash), we add back the deferred portion. But I don't know the split between current and deferred tax. However, looking at cash flow, "Income Taxes Paid Refund" = 1,282. This suggests current tax paid was 1,282, and the total tax benefit was -3,926, so deferred tax benefit was -3,926 - 1,282 = -5,208? That doesn't make sense because total tax benefit can't be less than cash refund. Actually, if total tax expense is -3,926 (benefit) and cash tax paid is 1,282 (payment), then deferred tax benefit = -3,926 - 1,282 = -5,208? No wait, tax expense = current + deferred. If cash paid is 1,282, and total expense is -3,926, then deferred = -3,926 - 1,282 = -5,208. But this would mean deferred tax benefit of 5,208, which seems large. Actually, I think "Income Taxes Paid Refund" = 1,282 could mean taxes paid (positive number) or refund (negative). The sign convention in cash flows: positive means outflow (paid), negative means inflow (refund). So if 1,282 is positive, it means taxes were paid, not refunded. But total tax expense is negative (benefit). This can happen if there's a large deferred tax benefit that offsets current tax payable. Hmm, this is getting too complicated. Let me use a simpler approach. For Net Debt, I'll use: Total Financial Debt = Other Noncurrent Financial Liabilities + Other Current Financial Liabilities = 71,058 + 71,844 = 142,902 Cash = 10,948 Net Debt = 131,954 But wait, I should check if there are any other cash-like items or debt-like items. "Other Current Financial Assets" = 58,033. Are these liquid? Probably not all cash equivalents. Actually, "Cash And Cash Equivalents" = 10,948, and "Other Current Financial Assets" = 58,033. The latter likely includes derivatives, receivables, and other financial assets that are not immediately liquid. For standard Net Debt, we typically use only Cash and Cash Equivalents. But let me reconsider: should I include "Special French Public Electricity Distribution Concession Liabilities" in debt? These are liabilities related to assets operated under concession. In French accounting for EDF, these represent the obligation to return concession assets at the end of the concession period, or liabilities related to concession fees. For credit analysis, rating agencies sometimes treat these as "debt-like" obligations. However, for standard Net Debt calculation, I'll exclude them as they're not financial debt in the traditional sense (no interest, no refinancing risk). Actually, let me reconsider. Looking at EDF's financial statements and typical credit analysis, I recall that EDF has significant "financial debt" that includes various categories. Let me check if there are other debt items I missed. Looking at the equity section, there are "Perpetual Subordinated Bonds" - these are hybrid instruments that may be treated as equity or debt depending on the analysis. For Net Debt, we typically include them as debt or debt-like. From the cash flow: "Proceeds From Issue Of Subordinated Liabilities And Convertible Instruments" = 994. These would be in "Other Noncurrent Financial Liabilities" or similar. Also, "Payments To Holders Of Perpetual Subordinated Bonds In Cfs" = 606. And "Payments On Perpetual Subordinated Bonds In Change In Equity" = 606. This suggests some perpetual bonds are treated as equity, not debt. For standard Net Debt, I should include financial debt as reported, which is: - Other Noncurrent Financial Liabilities: 71,058 - Other Current Financial Liabilities: 71,844 Total: 142,902 Net Debt = 142,902 - 10,948 = 131,954 Now for FFO. Let me try to be more precise. I'll use the cash flow based FFO: FFO = CFO before working capital changes = 876. But I want to verify this is reasonable. Let me also calculate using the "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" and adjusting for interest and taxes. Actually, I realize that "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" at -5,140 is essentially: EBITDA - Cash Taxes + Other items - Working Capital changes? Or is it after working capital? Given the name, I think this is AFTER working capital changes but BEFORE interest and taxes. Let me verify with 2021: 2021: Net Cash Flow From Operations Before... = 15,512 Working Capital = 1,526 (positive = decrease = cash inflow) If this is after WC: then before WC would be 15,512 - 1,526 = 13,986? Or 15,512 + 1,526 = 17,038? Actually, in 2021, working capital decrease (positive 1,526) provided cash. So if 15,512 is after this benefit, then before WC it would be 15,512 - 1,526 = 13,986. But let me check: EBITDA 2021 = 18,005 (Operating Profit Before D&A). Cash taxes paid = 2,276. Interest paid = 588. 18,005 - 2,276 - 588 = 15,141. Close to 15,512? Not exact, but in the ballpark. Difference due to other items. Hmm, 15,141 vs 15,512. Difference of 371. Could be dividends received (467) and other adjustments. Actually, 18,005 + 467 (dividends) - 2,276 (taxes) - 588 (interest) = 15,608. Closer to 15,512. For 2022: -4,986 (EBITDA) + 590 (dividends) - 1,282 (taxes) - 1,003 (interest) = -6,681. But actual is -5,140. Difference of 1,541. Hmm, not exact. There are clearly other items. Given the complexity, let me just use the most defensible FFO estimate: **FFO = Cash Flows From Used In Operating Activities - Increase Decrease In Working Capital** = -7,425 - (-8,301) = 876,000,000 EUR This is CFO before working capital changes, a common proxy for FFO. But wait, I want to double-check the sign of "Increase Decrease In Working Capital". In 2021: "Increase Decrease In Working Capital" = 1,526,000,000 (positive) CFO = 12,648,000,000 If working capital decreased (positive number), this provided cash. So CFO before WC = CFO - WC_change = 12,648 - 1,526 = 11,122. In 2022: "Increase Decrease In Working Capital" = -8,301,000,000 (negative) CFO = -7,425,000,000 If working capital increased (negative number), this used cash. So CFO before WC = CFO - WC_change = -7,425 - (-8,301) = -7,425 + 8,301 = 876. Yes, this is correct. But I want to verify: is 876 a good proxy for FFO? Let me check if it includes or excludes interest and taxes. CFO = -7,425 includes interest paid and taxes paid. So 876 also includes interest paid and taxes paid. This is "after interest, after tax" FFO. For credit ratios, we sometimes want "before interest" FFO to calculate interest coverage, but for FFO/Net Debt, we typically use after-interest FFO since Net Debt is on the balance sheet and we want to see cash flow available to repay debt. Actually, for FFO/Net Debt ratio, the standard is: FFO / Net Debt where FFO is funds from operations available to service debt, so typically AFTER interest and AFTER taxes (since taxes must be paid). Wait, no. If FFO is after interest, then it's not available to service interest. But it is available to repay principal. Actually, let me think about this more carefully. The FFO/Net Debt ratio is a leverage ratio. It shows how many years of FFO it would take to repay net debt. If FFO is after interest and after tax, then it's the cash actually generated that could be used to repay debt principal. If FFO is before interest, then it could service both interest and principal. For credit analysis, Moody's and S&P typically use FFO after interest and after tax for the FFO/Debt ratio, because: - FFO = Net Income + D&A + Deferred Taxes + Other non-cash - This is after interest, after tax But they also calculate "EBITDA/Interest" for interest coverage separately. So my FFO = 876 (after interest, after tax, before working capital) seems reasonable. However, 876 seems very small compared to the scale of EDF. Let me verify if I should use a different FFO. Actually, I realize I should check if "Cash Flows From Used In Operating Activities" includes discontinued operations. The data shows: "Cash Flows From Used In Operating Activities Continuing Operations" = -7,425 "Cash Flows From Used In Operating Activities Discontinued Operations" = 0 "Cash Flows From Used In Operating Activities" = -7,425 So no discontinued ops impact. Now, one more check: should I add back "Net Financial Expeneses Disbursed Including Dividends Received" to get a pre-interest FFO? If I want FFO before interest (to match with gross debt), I could calculate: FFO before interest = 876 + 1,003 (interest paid) = 1,879 Or using the other line: -5,140 + 8,301 = 3,161? But this is before interest and taxes, not after. Actually, let me recalculate: - Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund = -5,140 This is before interest, before taxes, but after working capital? Or before working capital? Given the name and the structure, I think -5,140 is after working capital, before interest and taxes. Let me verify: If -5,140 is after WC, then before WC = -5,140 - (-8,301) = 3,161. Then after interest and taxes: 3,161 - 1,003 - 1,282 = 876. Yes! This matches. So: - FFO before interest, before tax, before WC = not directly available - FFO after WC, before interest, before tax = -5,140 - FFO before WC, before interest, before tax = 3,161 - FFO before WC, after interest, after tax = 876 For FFO/Net Debt, I think 876 is the most appropriate (after interest, after tax, before working capital). But let me also consider if I should use a "normalized" FFO excluding one-time items. In 2022, EDF had massive losses due to regulatory intervention. The French government forced EDF to sell electricity at below-market prices to protect consumers. If I look at "Operating Profit Before Depreciation And Amortisation" = -4,986, this is unusually negative. In 2021, it was 18,005. For a normalized FFO, I might add back some of these unusual costs. But without specific guidance on what's "unusual", I'll stick with reported numbers. Actually, let me try one more FFO calculation using the accrual approach with available data: FFO = Profit Loss From Continuing Operations + Depreciation And Amortisation Expense + Impairment Losses - Reversals + Other non-cash items Profit Loss From Continuing Operations: -18,231 + Depreciation And Amortisation Expense: 11,079 - Impairment Loss Reversal: -1,762 (subtract the reversal since it's a gain) + Deferred tax benefit: ? = -18,231 + 11,079 - 1,762 = -8,914 This is very negative, unlike my cash-based 876. The difference is largely due to working capital changes and timing differences. For credit analysis, the cash-based FFO is often preferred because it's more reflective of actual cash generation. However, accrual-based FFO is also used to smooth out timing differences. Given the massive working capital buildup in 2022 (-8,301), the cash-based FFO of 876 might understate normalized cash generation if working capital normalizes. But for the actual ratio at year-end 2022, I should use actual numbers. Hmm, but wait. Let me re-examine. The working capital increase of 8,301 - is this a normalization or a structural change? In 2022, with high energy prices, EDF likely had: - Higher receivables (selling at higher prices, or government compensation receivables) - Higher payables (buying energy at high prices) - Or changes in margin calls on derivatives The net effect was a large working capital use. This might reverse in future. For a "point in time" leverage ratio, some analysts use FFO before working capital changes to avoid distortion from temporary working capital swings. I'll use FFO = 876,000,000 EUR. Now for Net Debt, let me reconsider if I should include all financial liabilities or just certain types. Standard Net Debt = Short-term borrowings + Long-term borrowings + Current portion of long-term debt - Cash and cash equivalents From the balance sheet: - Other Current Financial Liabilities: 71,844 (this includes short-term borrowings and current portion of long-term debt) - Other Noncurrent Financial Liabilities: 71,058 (long-term borrowings) Total debt = 142,902 Cash = 10,948 Net Debt = 131,954 But I need to check if there are any other debt-like items. Looking at the liabilities: "Special French Public Electricity Distribution Concession Liabilities" = 49,459. These are non-financial liabilities related to the concession. They don't represent borrowed money. I should exclude them. "Other Noncurrent Liabilities" = 4,968. These might include some debt-like items, but likely are deferred income, provisions, etc. "Current Provisions" = 7,943. These are operating provisions, not debt. "Trade And Other Current Payables" = 23,284. Operating payables, not debt. "Other Current Liabilities" = 33,504. Likely includes deferred income, accruals, etc. Some might be debt-like but not financial debt. So my Net Debt = 131,954 seems reasonable. But wait - I should check if "Other Current Financial Liabilities" includes derivatives at fair value. In IFRS, derivative liabilities are included in "financial liabilities" even if they're not "debt" in the economic sense. Looking at EDF's business, they use derivatives for hedging. The 71,844 in current financial liabilities likely includes: - Short-term borrowings - Current portion of long-term debt - Derivative liabilities - Other financial liabilities Similarly, 71,058 in non-current financial liabilities includes: - Long-term bonds and loans - Derivative liabilities - Other non-current financial liabilities For "Net Debt" in credit analysis, we typically want to exclude derivative liabilities (or net them against derivative assets) because they're hedging instruments, not funding instruments. But without more detailed breakdown, I'll use the reported financial liabilities. Actually, let me check if I can find derivative positions. "Net Changes In Fair Value On Energy And Commodity Derivatives Excluding Trading Activities" = -849 in P&L. And there are derivative assets/liabilities on the balance sheet. "Other Current Financial Assets" = 58,033 likely includes derivative assets. "Other Noncurrent Financial Assets" = 48,512 likely includes derivative assets. If I wanted "Economic Net Debt" excluding derivatives, I'd need more detail. But for standard reporting, I'll include all financial liabilities. So: FFO / Net Debt = 876 / 131,954 = 0.00664 or about 0.66% This seems very low. Let me verify if this makes sense. With FFO of 876 million and Net Debt of 132 billion, the ratio is about 0.7%. This means it would take about 150 years of FFO to repay net debt. This reflects the extreme stress in EDF's financials in 2022. But I want to double-check my FFO. Let me see if I should use a higher number. Actually, I realize I should reconsider whether "FFO before working capital changes" is the right metric, or if I should use "EBITDA - Cash Interest - Cash Taxes" or some other variant. Let me try: EBITDA (accrual) = -4,986 Cash Interest = 1,003 (from cash flow) Cash Taxes = 1,282 (from cash flow, but this was paid, not refunded) -4,986 - 1,003 - 1,282 = -7,271 This is very negative, much worse than 876. The difference is due to working capital and non-cash items. Alternatively, if I use "Operating Profit Before Depreciation And Amortisation" but adjusted for non-cash items: -4,986 + 11,079 (D&A) - 1,730 (interest) + 3,926 (tax benefit) = 8,289? Wait, this is mixing things. Operating Profit Before D&A is already before D&A. So: -4,986 - 1,730 (interest) - 3,163 (operating taxes) + 3,926 (income tax benefit) = -5,953? This is getting messy with different tax items. Let me step back. The cash-based FFO of 876 is: CFO (-7,425) + Working capital buildup (8,301) = 876 This represents the cash that would have been generated if working capital had stayed constant. It's a reasonable proxy for normalized operating cash flow. But for "FFO" specifically, let me check if I should use a different metric. In Moody's methodology for utilities: "FFO = Net income + Depreciation + Deferred income taxes + Other non-cash items" If I approximate: Net income: -18,225 + D&A: 11,079 + Deferred tax: let's say total tax benefit -3,926, cash tax paid 1,282, so deferred tax benefit = -3,926 - 1,282 = -5,208? Wait, this gives -18,225 + 11,079 + 5,208 = -1,938. Still negative. But if I add back working capital changes (which are not in FFO by Moody's definition), I get different numbers. I think the key issue is whether to use accrual-based or cash-based FFO. For 2022, with such unusual results, different methods give very different answers. Let me try one more approach. Looking at the "Comprehensive Income" and other data, let me see if there's a better FFO proxy. Actually, I recall that for EDF in 2022, the French government provided compensation for some of the regulatory losses. Let me check if there's any indication in the data. Looking through the data, I see "Other Changes" in equity includes various items, and there are "Funding Contributions Received For Assets Operated Under Concessions And Government Grants Received" = 694 in cash flow. But I don't see explicit government compensation for the tariff shield. Given the complexity, let me stick with my cash-based FFO of 876, but also consider if I should adjust for the negative EBITDA. Actually, wait. Let me re-read the cash flow more carefully. The line "Net Financial Expeneses Disbursed Including Dividends Received" = 1,003. Does this include dividends received? Yes, "Including Dividends Received". The dividends received classified as operating activities = 590. So net interest paid = 1,003 - 590 = 413? Or is 1,003 the total including dividends? Looking at 2021: "Net Financial Expeneses Disbursed Including Dividends Received" = 588, and "Dividends Received Classified As Operating Activities" = 467. So net financial expenses = 588, which includes 467 dividends. This means actual interest paid = 588 + 467? Or 588 - 467? Hmm, the phrasing "Net Financial Expeneses Disbursed Including Dividends Received" suggests that dividends received are included in this number. So if dividends are received (positive cash inflow), they reduce the net financial expense disbursed. In 2021: 588 = interest paid - dividends received = interest paid - 467. So interest paid = 588 + 467 = 1,055? But actual Interest Expense (accrual) was 1,459. In 2022: 1,003 = interest paid - 590. So interest paid = 1,003 + 590 = 1,593? But actual Interest Expense (accrual) was 1,730. These are in the ballpark. The difference between cash and accrual interest is due to timing (capitalized interest, accrued interest, etc.). For FFO, if I want to add back cash interest paid to get a pre-interest measure: 876 + 1,593 = 2,469 (approximate) But standard FFO is after interest, so 876 should be fine. Actually, let me reconsider one more time. Should I use FFO before or after interest for the FFO/Net Debt ratio? Looking at standard credit ratios: - FFO / Net Debt is typically used with FFO after interest, after tax - This shows cash available to repay debt principal after servicing interest But some analysts use EBITDA / Net Debt or (FFO + Interest) / Net Debt to show total cash available for debt service. For consistency with standard practice, I'll use FFO after interest, after tax = 876. But I want to verify this number once more. Let me recalculate: CFO = -7,425 WC change = -8,301 (increase, so cash outflow) FFO before WC = CFO - WC_change = -7,425 - (-8,301) = -7,425 + 8,301 = 876. ✓ Now, Net Debt = 131,954. FFO / Net Debt = 876 / 131,954 = 0.00664 As a percentage: 0.664% Hmm, this seems extremely low. Let me check if I should express this as a ratio (0.0066) or percentage (0.66%). Typically FFO/Net Debt is expressed as a percentage or a ratio. Moody's often uses "FFO/Debt" as a percentage. S&P uses "FFO/Debt" as a ratio or percentage. Actually, looking at typical credit metrics, FFO/Net Debt is often expressed as a percentage (e.g., 15% would be healthy). But 0.66% is extremely low. Let me verify if my Net Debt is correct. Could it be lower? If I exclude some financial liabilities that are not true debt (like derivatives), Net Debt might be lower. But I don't have that breakdown. Alternatively, if I include only "debt" proper and not all "financial liabilities", the number might differ. But "Other Noncurrent Financial Liabilities" and "Other Current Financial Liabilities" are the standard debt categories. Wait, I should check if there are any debt items in "Other Noncurrent Liabilities" or "Other Current Liabilities". "Other Noncurrent Liabilities" = 4,968 - likely includes deferred income, employee benefits, etc. Not typically debt. "Other Current Liabilities" = 33,504 - likely includes deferred income, accruals, VAT, etc. Not typically debt. So my Net Debt seems correct. Let me also verify my FFO once more. Is 876 the right number, or should I use something else? Actually, I realize I want to check one more thing. In some definitions, FFO includes interest income and excludes certain non-recurring items. Let me see if I can refine. From the cash flow, "Financial Income On Cash And Cash Equivalents" = 100. This is likely included in CFO already. Also, "Effect Of Exchange Rate Changes On Cash And Cash Equivalents" = -397. This is not in CFO. And "Other Non Monetary Changes On Cash And Cash Equivalent" = -107. Not in CFO. For FFO, I should use the operational cash generation, not affected by exchange rates. My FFO = 876 seems reasonable as a base. But let me also consider: should I use "Funds From Operations" as defined by NAREIT or similar? No, that's for real estate. For utilities, let me check if there's a standard adjustment. Actually, I recall that for EDF specifically, credit analysts sometimes adjust for the regulatory lag and government compensation. Given that 2022 was an exceptional year with negative EBITDA, the FFO/Net Debt ratio will naturally be very low or negative. My calculation of 0.66% reflects this stress. However, I want to make sure I'm not missing something. Let me try one more FFO calculation: From "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" = -5,140 Add: Net Financial Expenses Disbursed = 1,003 Add: Income Taxes Paid = 1,282 = -5,140 + 1,003 + 1,282 = -2,855 Wait, this is not 876. What's wrong? Oh! I see the issue. "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" is BEFORE these items, so to get to CFO, I SUBTRACT them: -5,140 - 1,003 - 1,282 = -7,425. Yes. To get FFO before WC from this, I need to add back working capital: -5,140 - (-8,301) = 3,161? But earlier I said FFO before WC = 876. These don't match! Wait, let me re-examine. Is -5,140 before or after working capital? From the cash flow structure: 1. Start with Operating Profit 2. Add adjustments (D&A, impairments, etc.) 3. Add working capital changes 4. Get to "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" 5. Subtract interest and taxes 6. Get to CFO If this is correct, then -5,140 is AFTER working capital changes. So: FFO before WC = -5,140 - (-8,301) = 3,161? But then after interest and taxes: 3,161 - 1,003 - 1,282 = 876. Yes! So there are two equivalent ways to get FFO after interest, after tax, before WC: 1. CFO (-7,425) - WC_change (-8,301) = 876 2. Pre-interest, pre-tax, after-WC (-5,140) - WC_change (-8,301) - interest (1,003) - taxes (1,282) = -5,140 + 8,301 - 1,003 - 1,282 = 876 Wait, method 2 gives: -5,140 + 8,301 - 1,003 - 1,282 = 876. Yes! ✓ So FFO after interest, after tax, before WC = 876. But what about FFO before interest, before tax, before WC? That would be: 876 + 1,003 + 1,282 = 3,161? Or from -5,140 + 8,301 = 3,161. Yes! FFO before interest, before tax, before WC = 3,161. For the FFO/Net Debt ratio, which FFO should I use? Standard practice is FFO after interest, after tax. So 876. But let me verify with a reference. In S&P's methodology, "FFO to debt" uses FFO after interest and after tax. Moody's "FFO/Debt" also uses after-interest, after-tax FFO. So: 876 / 131,954 = 0.00664 Hmm, but I want to double-check if this ratio is typically expressed as a decimal or percentage. In credit analysis, it's often expressed as a percentage (e.g., "FFO/Debt of 20%"). But sometimes as a ratio (0.20). The question asks for "FFO / Net debt ratio". I'll provide it as a decimal ratio. But wait - I want to make absolutely sure about my FFO. Let me see if there's an alternative interpretation. Some analysts calculate FFO as: FFO = Net Income + Depreciation + Amortization + Deferred Taxes + Other Non-Cash Items For 2022: Net Income: -18,225 + D&A: 11,079 + Deferred Tax benefit: ? From balance sheet, Deferred Tax Assets increased by 7,029 and Deferred Tax Liabilities decreased by 868. But not all of this went through P&L. The "Income Tax Expense Continuing Operations" = -3,926. This is the total tax benefit in P&L. Cash taxes paid = 1,282. So deferred tax benefit = -3,926 - 1,282 = -5,208? No wait, if total tax benefit is -3,926 and cash tax paid is +1,282 (payment), then: Tax expense = Current tax expense + Deferred tax expense -3,926 = Current tax expense + Deferred tax expense Cash tax paid = 1,282. If we assume current tax expense ≈ cash tax paid (with some timing difference), then: Current tax expense ≈ 1,282 (expense, positive number) Deferred tax expense = -3,926 - 1,282 = -5,208 (benefit, negative number) So deferred tax benefit of 5,208. FFO = -18,225 + 11,079 + 5,208 + other non-cash items = -18,225 + 11,079 + 5,208 = -1,938 Then add back impairment reversal? No, that's already in net income. Actually, we should subtract it since it's a non-cash gain: -1,938 - 1,762 = -3,700? Or if we add back losses and subtract gains: -18,225 + 11,079 - 1,762 (reversal is gain, so subtract) + 5,208 = -3,700 This is very different from 876. The difference is due to working capital (8,301) and other items. Actually, let me check: -3,700 + 8,301 (working capital buildup, which is not in accrual FFO) = 4,601. Still not 876. Hmm, there are clearly other differences. The cash-based and accrual-based FFO differ due to: - Timing differences in interest (accrual 1,730 vs cash 1,003 or 1,593) - Timing differences in taxes - Other non-cash items - Working capital changes - Etc. Given these complexities, I think the cash-based FFO of 876 is more reliable for 2022, as it directly reflects cash generation. But let me also consider: should I use FFO after adding back working capital changes? In other words, should I use 876 or -7,425? Standard FFO is BEFORE working capital changes, so 876 is correct. Actually, wait. I want to re-verify my working capital adjustment. CFO = -7,425 Working capital change = -8,301 (increase) In the cash flow statement: CFO = Net income + adjustments + WC changes + other items If WC increased by 8,301 (used cash), then: CFO without WC change = CFO - WC_change_effect = -7,425 - (-8,301)? Actually, the relationship is: CFO = (Net income + non-cash adjustments) + WC_change -7,425 = (Net income + adjustments) + (-8,301) So (Net income + adjustments) = -7,425 + 8,301 = 876 This "Net income + adjustments" is essentially FFO (accrual-based, after interest, after tax). And it equals 876. So my cash-based and accrual-based FFO converge to the same number when properly calculated! The 876 is both: - Cash-based: CFO - WC_change - Accrual-based: Net income + non-cash adjustments (excluding WC) Great, this gives me confidence in 876. Now, one final check on Net Debt. Let me see if I should include or exclude certain items. Actually, I realize I want to check if "Other Current Financial Liabilities" includes the current portion of long-term debt, or if it's separate. In standard balance sheets, "Other Current Financial Liabilities" typically includes both short-term borrowings and the current portion of long-term debt. Similarly, "Other Noncurrent Financial Liabilities" includes long-term debt excluding current portion. So my debt calculation seems correct. But let me also consider: should I deduct not just "Cash and Cash Equivalents" but also other highly liquid financial assets? "Other Current Financial Assets" = 58,033. This likely includes: - Derivative assets - Short-term investments - Trade receivables (financial) - Other liquid assets For "Net Debt" in strict sense, we only deduct cash and cash equivalents. For "Net Debt" in broader sense (sometimes called "Net Debt and Cash"), we might deduct other liquid assets. But standard practice is to use Cash and Cash Equivalents only. So Net Debt = 131,954. However, I want to check if EDF's "Cash And Cash Equivalents" is unusually low. At 10,948 vs total assets of 388,132, cash is only 2.8% of assets. This seems low for a utility. But given the stress in 2022, EDF might have used cash or not generated much. Actually, let me verify: Cash 2021 was 9,919, and 2022 is 10,948. So cash actually increased slightly, despite the operating cash flow burn. This was due to financing activities (issuing shares and borrowing). Now, my final calculation: FFO = 876,000,000 EUR Net Debt = 131,954,000,000 EUR FFO / Net Debt = 876 / 131,954 = 0.006638... ≈ 0.0066 or 0.66% Let me express this as a decimal: 0.0066 Or should I express it as a percentage? The question asks for "ratio", so decimal is appropriate. But I want to round appropriately. 876 / 131,954 = 0.006638... Let me verify: 876 / 131,954 = ? 876 / 131,954 = 0.006638... Or about 0.66% if expressed as percentage. Actually, I want to double-check my arithmetic: 131,954 = 142,902 - 10,948 142,902 = 71,058 + 71,844 71,058 + 71,844 = 142,902. ✓ 142,902 - 10,948 = 131,954. ✓ 876 / 131,954 = ? Let me calculate: 876 / 131,954 = 0.0066386... Rounded to reasonable precision: 0.0066 or 0.66% Hmm, but I want to make sure about the FFO once more. Is there any reason to use a different FFO? One consideration: in 2022, EDF received government compensation or had regulatory adjustments that might not be fully reflected in operating cash flow. But without specific data, I can't adjust. Another consideration: should I use "EBITDA" as a proxy for FFO? EBITDA = -4,986 This is very different from 876. But EBITDA is before interest and taxes, while FFO is after. So: FFO ≈ EBITDA - Interest - Taxes = -4,986 - 1,730 - (-3,926) = -4,986 - 1,730 + 3,926 = -2,790 This is negative, unlike 876. The difference is due to working capital, non-cash items, and timing differences. For credit analysis, FFO is preferred over EBITDA because it's closer to actual cash flow. I'll stick with 876 / 131,954 = 0.0066. But let me also consider if I should present this as a percentage (0.66) or ratio (0.0066). Looking at typical reporting: - "FFO/Net Debt ratio of 0.66%" or "FFO/Net Debt of 0.66%" - Sometimes "FFO/Net Debt of 0.0066" I think decimal ratio 0.0066 is most standard, but let me check if the question implies percentage. The question says "FFO / Net debt ratio". A ratio can be expressed as X:1 or as a decimal. In finance, FFO/Net Debt is typically expressed as a decimal or percentage. For example, a ratio of 20% would be 0.20. A ratio of 0.66% would be 0.0066. Given the very low number, I'll provide 0.0066 or 0.66%. Let me think about which is more standard. Actually, looking at Moody's and S&P reports, they typically say "FFO/debt of X%" where X is a number like 15%, 20%, etc. So 0.66% would be expressed as 0.66 or as 0.0066 depending on whether they use % sign. Since the question asks for "ratio" and says "no units", I should provide the decimal form: 0.0066. But wait, I want to check one more thing. Could my FFO be too low because I'm including interest paid in it? Let me see what FFO before interest would be: FFO before interest = 876 + 1,003 (net financial expenses disbursed, excluding dividends) or 876 + 1,593 (gross interest paid)? If I use 876 + 1,003 = 1,879 Or if I add back dividends received (which are in operating cash flow): 876 + 590 = 1,466? No, dividends received are already in 876. Actually, let me think about this. The 876 is AFTER dividends received and AFTER interest paid (net). If I want FFO before all financing items: 876 + 1,003 (net financial expenses) = 1,879? But 1,003 includes dividends received. Gross interest paid = 1,003 + 590 = 1,593 (approximate) FFO before interest, after tax = 876 + 1,593 = 2,469? Or 876 + 1,003 = 1,879 if we consider net? Actually, I think for standard FFO/Net Debt, we use after-interest FFO. The ratio shows how much cash is available to repay debt principal after paying interest. If we used before-interest FFO, we'd be double-counting the debt servicing capacity (interest is for debt service too). So 876 is correct for standard FFO/Net Debt. However, I want to verify one more time. Let me see if there's any adjustment for the "Net Changes In Fair Value On Energy And Commodity Derivatives" or other items that should be excluded from FFO. In 2022, "Net Changes In Fair Value On Energy And Commodity Derivatives Excluding Trading Activities" = -849. This is a non-cash loss in the P&L. For FFO, we typically add back non-cash losses. But this is already in my cash-based FFO (since it's non-cash, it affects accrual earnings but not cash flow). Actually, in my cash-based FFO of 876, this -849 is already excluded (since it's non-cash). So no adjustment needed. Similarly, "Impairment Loss Reversal" = 1,762 is a non-cash gain. It's in accrual earnings but not in cash flow. My 876 excludes it. Good. OK, I'm fairly confident in my numbers: - FFO = 876,000,000 EUR - Net Debt = 131,954,000,000 EUR - FFO / Net Debt = 0.0066 Let me do one final verification of the calculation: 876 / 131,954 = ? 131,954 × 0.006 = 791.724 131,954 × 0.0006 = 79.1724 131,954 × 0.00006 = 7.91724 131,954 × 0.000006 = 0.791724 131,954 × 0.0000006 = 0.0791724 Sum: 791.724 + 79.1724 = 870.8964 + 7.91724 = 878.81364 So 0.00664 gives about 876. 876 / 131,954 = 0.0066386... Rounded to 2 significant figures: 0.0066 Or to 3 significant figures: 0.00664 I'll provide 0.0066 or more precisely 0.00664. Actually, looking at the precision of my inputs: - FFO = 876 (derived from numbers in millions, so precise to millions) - Net Debt = 131,954 (precise to millions) 876 / 131,954 = 0.0066386... I think providing 0.0066 or 0.007 would be appropriate. But let me provide a few more digits for precision: 0.00664. Actually, I want to reconsider one more time if my FFO could be different. Let me re-examine the cash flow. From the data: "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" = -5,140,000,000 Is this really after working capital? Let me verify by checking if "Increase Decrease In Working Capital" is part of the adjustments to get to this number. Looking at the sequence of adjustments: 1. Profit Loss From Operating Activities: -19,363 2. Adjustments For Impairment Loss: +1,762 3. Depreciation And Amortisation Expense Provisions And Fair Value Gains Losses: +6,820 4. Net Financial Income Or Expense: +446 5. Dividends Received: +590 6. Adjustments For Losses Gains On Disposal: -143 7. Adjustments For Income Tax Expense: -3,926 8. Adjustments For Undistributed Profits Of Associates: +759 9. Increase Decrease In Working Capital: -8,301 Sum: -19,363 + 1,762 + 6,820 + 446 + 590 - 143 - 3,926 + 759 - 8,301 = -21,356 But "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" = -5,140 These don't match! -21,356 ≠ -5,140. Difference is 16,216. This suggests my understanding of the cash flow structure is wrong, or there are missing items. Let me re-examine. Perhaps "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" is not the sum of these adjustments. Maybe some adjustments are below this line. Actually, looking more carefully, I think the structure might be: - Start with Profit Loss From Operating Activities - Add certain adjustments to get to "Net Cash Flow From Operations Before..." But which adjustments? Let me try different combinations. If I exclude "Increase Decrease In Working Capital" (-8,301): -19,363 + 1,762 + 6,820 + 446 + 590 - 143 - 3,926 + 759 = -13,055 Still not -5,140. Difference is 7,915. If I also exclude "Adjustments For Income Tax Expense" (-3,926): -13,055 + 3,926 = -9,129. Still not -5,140. If I exclude "Net Financial Income Or Expense" (+446): -9,129 - 446 = -9,575. No. Hmm, let me try a different combination. What if "Depreciation And Amortisation Expense Provisions And Fair Value Gains Losses" at 6,820 is not just D&A but includes other items? Actually, I notice "Depreciation And Amortisation Expense" in P&L is 11,079, but in cash flow it's 6,820. The difference is 4,259. This 4,259 might be provisions, fair value gains/losses, or other items that are part of operating profit but not added back here. If I add the difference: -13,055 + 4,259 = -8,796. Still not -5,140. Let me try: -19,363 + 11,079 (full D&A) + 1,762 + 446 + 590 - 143 - 3,926 + 759 - 8,301 = -17,097. No. I'm clearly missing something in the reconciliation. But this doesn't affect my FFO calculation from CFO, which is more direct. From CFO = -7,425 and WC_change = -8,301, I get FFO before WC = 876. This is independent of the intermediate line items. Let me verify CFO directly: "Cash Flows From Used In Operating Activities" = -7,425,000,000. This is the final operating cash flow. And WC_change = -8,301,000,000. FFO = CFO - WC_change = -7,425 - (-8,301) = 876. This is robust regardless of intermediate calculations. Actually, I want to double-check: is "Increase Decrease In Working Capital" the full working capital change, or is there working capital change embedded in other line items? Typically, "Increase Decrease In Working Capital" is the net change in working capital (receivables, payables, inventory, etc.). If there are other working capital changes in different line items, my calculation would be off. But standard cash flow presentation puts all working capital changes in one line. So I'm confident in 876. One more check: should I express FFO/Net Debt as a percentage or decimal? In financial analysis, this is typically expressed as: - "FFO/Net Debt was 15%" (meaning 0.15 as decimal) - Or "FFO/Net Debt ratio of 0.15" Since the question says "ratio" and "no units", I'll provide the decimal. Final answer: 0.0066 or more precisely 0.00664. Let me provide 0.0066 as a rounded figure, or perhaps 0.007 if rounding to 2 significant figures. But I think 0.0066 is fine. Actually, let me calculate more precisely: 876 / 131,954 = 0.00663869... Rounded to 4 significant figures: 0.006639 Or to 2 significant figures: 0.0066 I'll provide 0.0066. Wait, I want to reconsider one aspect. Should I use "Net Debt" or "Gross Debt" for the denominator? The question asks for "FFO / Net debt ratio", so Net Debt is specified. Also, should I check if there's any "cash-like" item beyond "Cash And Cash Equivalents"? "Other Current Financial Assets" = 58,033. Some of this might be very liquid. But without knowing the exact composition, I'll stick with standard Cash and Cash Equivalents. However, I recall that in some Net Debt calculations for utilities, "cash" includes only unrestricted cash. If some cash is restricted, it should be excluded. But I don't have that information. Final answer: FFO / Net Debt = 876 / 131,954 = 0.0066 Let me express this as 0.0066 or 0.66%. Since no units and ratio, I'll use 0.0066. Actually, looking at my calculation once more, I wonder if I should use 0.66 (as percentage without % sign) or 0.0066 (as decimal). The question says "no units" and "ratio". A ratio of 0.0066 means 0.66%. If someone says "the ratio is 0.66", they might mean 66% or 0.66%. To avoid confusion, I'll provide the decimal form: 0.0066. But let me check: is 876 the right FFO, or should I use millions (i.e., 876 million / 131,954 million = same ratio)? Yes, the ratio is the same. OK, final answer: 0.0066. Actually, I want to do one more sanity check. EDF's market cap and debt in 2022. Net debt of 132 billion EUR. FFO of 876 million. This is a very stressed financial position, which matches the narrative of EDF in 2022 (nationalization, massive losses, government support). The ratio of 0.66% means FFO is less than 1% of Net Debt, indicating severe leverage stress. This seems plausible for 2022. I'll provide 0.0066. Hmm, but I want to check if I should round differently. 0.006638... rounds to 0.0066 if we keep 2 significant figures, or 0.00664 if 3 significant figures. Given the precision of the inputs (to millions), I think 2-3 significant figures is appropriate. Let me provide 0.0066. Actually, one more thought: should I check if "Other Noncurrent Financial Liabilities" and "Other Current Financial Liabilities" include non-debt items like derivatives? If yes, my Net Debt might be overstated. But without more detail, I can't adjust. Standard practice is to use reported financial liabilities. Also, I should check if EDF has any cash or debt not reflected in these main categories. Looking through the data, I don't see other obvious debt items. Final answer: 0.0066. Let me write this as 0.0066 or perhaps 0.007 if rounding more aggressively. I'll use 0.0066. Actually, rethinking: in some European reporting, FFO is calculated differently. Let me see if I should use "Operating Profit Before Depreciation And Amortisation" minus cash interest minus cash taxes, but adjusted for non-cash items. Or perhaps: FFO = EBITDA - Cash Interest - Cash Taxes + Dividends Received = -4,986 - 1,003 - 1,282 + 590 = -6,681 This is negative, very different from 876. But this is because EBITDA is negative. The cash-based FFO of 876 is positive because of working capital and other adjustments. For a going concern, cash-based FFO might be more relevant. But for credit analysis, accrual-based FFO is standard. Hmm, I'm now second-guessing myself. Let me think about what a credit analyst would actually do. In 2022, EDF had massive accounting losses due to mark-to-market on derivatives and regulatory price caps. But cash flow was somewhat protected because: - Some losses were non-cash (derivatives, impairments) - Working capital built up (receivables from government or customers) - The company received government support and raised capital For a credit analyst, the key question is: what is the sustainable cash flow available to service debt? If working capital buildup of 8,301 is temporary (e.g., receivables that will be collected), then FFO before WC of 876 might understate normalized cash flow. But if the working capital buildup is structural, then 876 overstates normalized cash flow. Without more insight, I'll stick with reported numbers. Actually, let me try one more FFO variant. Some analysts calculate: FFO = Net Income + D&A + Deferred Taxes - Gain on asset sales + Other non-cash items Net Income: -18,225 + D&A: 11,079 + Deferred tax benefit (estimated): 5,208 (from earlier) - Impairment reversal (gain): -1,762 = -18,225 + 11,079 + 5,208 - 1,762 = -3,700 This is negative. But this accrual-based FFO excludes working capital changes. My cash-based FFO of 876 includes working capital effects indirectly (by excluding them). Actually, I realize I should be more careful. The standard definition of FFO by NAREIT is for real estate. For corporates, especially utilities, FFO is not standardized. S&P defines FFO as: "Funds from operations (FFO): Net income from continuing operations before extraordinary items, adjusted for depreciation, deferred income taxes, and other non-cash items." This is accrual-based. Using this: Net income from continuing operations: -18,231 + Depreciation: 11,079 + Deferred income taxes: let's estimate from cash flow + Other non-cash items: ? From the cash flow, the difference between my accrual-based -3,700 and cash-based 876 is about 4,576. This could be due to: - Working capital: 8,301 - Interest timing: ~700 - Tax timing: ~? - Other items: ~? Actually, I think the issue is that my "deferred tax" estimate is wrong. Let me recalculate. "Income Tax Expense Continuing Operations" = -3,926. This is the total tax benefit in P&L. "Income Taxes Paid Refund" = 1,282. This is cash tax paid (positive = outflow). If total tax benefit is -3,926 and cash tax paid is +1,282, then: - If "Income Tax Expense" includes both current and deferred, and it's a benefit of 3,926 - And cash tax paid is 1,282 (expense) - Then deferred tax benefit = 3,926 - 1,282 = 2,644? Or 3,926 + 1,282 = 5,208? Let me think carefully. Tax expense = Current tax expense + Deferred tax expense. -3,926 (benefit) = Current tax expense + Deferred tax expense. Cash tax paid = 1,282. Assuming current tax expense ≈ cash tax paid = 1,282 (but expense, so positive). Then: -3,926 = 1,282 + Deferred tax expense Deferred tax expense = -3,926 - 1,282 = -5,208 (benefit of 5,208). But this implies a huge deferred tax benefit, which seems inconsistent with the balance sheet change. Deferred Tax Assets increased from 1,667 to 8,696 = +7,029. Deferred Tax Liabilities decreased from 2,401 to 1,533 = -868. Net deferred tax asset increase = 7,029 + 868 = 7,897. If deferred tax benefit is 5,208, then other comprehensive income or other items explain 7,897 - 5,208 = 2,689 of the DTA increase. This is plausible since OCI includes items that affect deferred taxes. So deferred tax benefit in P&L = 5,208 seems reasonable. FFO = -18,225 + 11,079 + 5,208 - 1,762 = -3,700 (approximate) But this is very different from 876. The difference of 4,576 is largely working capital (8,301) minus other items. For credit analysis, S&P's FFO is accrual-based, so -3,700 might be the "correct" FFO by their definition. But a negative FFO / Net Debt ratio would be -2.8%, which is also meaningful. However, I think for practical purposes, especially when the accrual earnings are distorted by non-cash items and regulatory effects, cash flow based FFO is more informative. Let me check what EDF's actual credit rating was in 2022. EDF was rated BBB or similar by S&P, with negative outlook. The FFO/Debt ratio was likely very weak. Given all this, I'll provide my cash-based FFO / Net Debt ratio of 0.0066. But I want to make one final adjustment. Looking at the data again, I see "Dividends Received Classified As Operating Activities" = 590. These are dividends from investments, not core operations. Should I exclude them from FFO? Standard FFO includes dividends received from operating activities (if classified as such). But some analysts exclude them as non-core. If I exclude dividends: 876 - 590 = 286. Then FFO/Net Debt = 286 / 131,954 = 0.0022. This is even lower. But I think including dividends is standard if they're classified as operating activities. I'll stick with 876. Final answer: 0.0066. Actually, let me provide more precision: 876 / 131,954 = 0.00663869... I'll round to 0.0066. One last check: should I use 0.66 instead, interpreting the ratio as percentage? No, the question says "ratio" and "no units", so decimal is correct. 0.0066