## Reasoning

### S&P Net Debt / EBITDA Methodology

S&P's methodology for Net Debt / EBITDA involves specific adjustments. Let me work through this step by step.

### Step 1: Calculate EBITDA

The report provides "Beneficio Bruto De Explotacion Ebitda" (EBITDA) for the period 2022-01-01 to 2023-01-01 = **13,228 million EUR**.

This is the reported EBITDA. S&P typically starts with this and may make adjustments, but for this estimation, I'll use the reported EBITDA as a base and consider S&P-specific adjustments.

S&P adjustments to EBITDA typically include:
- Adding back operating lease payments (since S&P capitalizes operating leases)
- The company already reports right-of-use assets and lease liabilities under IFRS 16, so lease depreciation and interest are already in the numbers

Since IFRS 16 is already applied, the EBITDA figure already excludes lease depreciation and lease interest, which aligns with S&P's approach. S&P EBITDA ≈ reported EBITDA = **13,228 million EUR**.

### Step 2: Calculate Net Debt (S&P methodology)

S&P Net Debt includes:
1. **Short-term borrowings + Long-term borrowings** (financial debt)
2. **Plus: Lease liabilities** (already on balance sheet under IFRS 16)
3. **Plus: Hybrid instruments treated as debt** (S&P typically treats a portion of hybrid/perpetual subordinated bonds as debt)
4. **Minus: Cash and cash equivalents**
5. **Plus: Other debt-like items** (pensions underfunding, etc.)

From the balance sheet at 2023-01-01 (end of fiscal year 2022):

**Non-current financial liabilities:**
- Deudas con entidades de crédito y obligaciones = 36,129M
- Instrumentos de capital con características de pasivo financiero no corriente = 576M
- Non-current derivative financial liabilities = 3,690M (typically excluded from debt)
- Non-current lease liabilities = 2,287M
- Other non-current financial liabilities = 1,534M

**Current financial liabilities:**
- Deudas con entidades de crédito y obligaciones corrientes = 10,458M
- Instrumentos de capital con características de pasivo financiero corriente = 87M
- Current derivative financial liabilities = 3,398M (typically excluded)
- Current lease liabilities = 151M
- Trade and other payables = 5,927M (operating, typically excluded)
- Other current financial liabilities = 5,058M

**Gross Financial Debt (core borrowings):**
- Non-current bank debt and bonds: 36,129M
- Current bank debt and bonds: 10,458M
- **Subtotal core borrowings: 46,587M**

**Lease liabilities:**
- Non-current: 2,287M
- Current: 151M
- **Subtotal leases: 2,438M**

**Instruments with financial liability characteristics (hybrid instruments):**
- Non-current: 576M
- Current: 87M
- **Subtotal: 663M**

S&P typically classifies hybrid instruments. For perpetual subordinated bonds, S&P often assigns intermediate equity content (50% debt, 50% equity). Looking at the equity statement, there were perpetual subordinated bond interest accruals of 169M. The non-controlling interests include perpetual subordinated bonds (from the 2,740M issuance in prior year). However, the "Instrumentos de capital con características de pasivo financiero" on the liability side (663M) should be treated as debt.

**Other non-current financial liabilities:** 1,534M - these could include various items; I'll include them.

**Other current financial liabilities:** 5,058M - may include collateral/margin deposits related to derivatives. This is harder to classify but often partially included.

For a more conservative/standard approach:

**S&P Gross Debt:**
- Core borrowings: 46,587M
- Lease liabilities: 2,438M
- Instruments with liability characteristics: 663M
- Other non-current financial liabilities: 1,534M
- **Total: 51,222M**

S&P also typically considers:
- **Pension obligations:** Non-current provisions for employee benefits = 1,226M. S&P would add underfunded pension obligations to debt.
- **50% of hybrid instruments in equity (NCI perpetual subordinated bonds):** From the equity changes, there appear to be ~2,740M+ in perpetual subordinated bonds in NCI. S&P would typically treat 50% as debt = ~1,370M (but this is complex; some may already be in the financial liabilities).

Let me take a simpler, more standard approach:

**S&P Adjusted Gross Debt:**
- Bank debt and bonds (NC + C): 36,129 + 10,458 = 46,587M
- Lease liabilities: 2,287 + 151 = 2,438M
- Capital instruments with liability characteristics: 576 + 87 = 663M
- Other NC financial liabilities: 1,534M
- Pension-related provisions: 1,226M (S&P often adds this)
- **Subtotal: ~52,448M**

For the hybrid/perpetual subordinated bonds that sit in NCI equity, S&P would reclassify a portion to debt. Based on the equity statement, approximately 2,750M of perpetual subordinated bonds were issued. With 50% equity credit, ~1,375M would be added to debt.

**Adjusted Gross Debt: ~53,823M**

**Less: Cash and cash equivalents: 4,608M**

**S&P Net Debt: ~49,215M**

**Net Debt / EBITDA = 49,215 / 13,228 ≈ 3.7x**

However, let me reconsider. A simpler S&P approach often focuses on:
- Total reported debt (borrowings + leases)
- Plus pension adjustments
- Plus hybrid debt content
- Minus surplus cash

Let me also reconsider whether to include "Other current financial liabilities" of 5,058M. These could include margin/collateral deposits that S&P might or might not include. Let me exclude them as they likely relate to derivative collateral and trade-related items.

**Simplified calculation:**

Gross Debt:
- NC borrowings: 36,129M
- C borrowings: 10,458M
- NC lease: 2,287M
- C lease: 151M
- Capital instruments (liability): 663M
- Total: 49,688M

Add: Pensions: 1,226M
Add: 50% of perpetual subordinated bonds in equity (~2,750M × 50% = 1,375M)
Adjusted Gross Debt: ~52,289M

Less: Cash: 4,608M

Net Debt: ~47,681M

**Net Debt / EBITDA = 47,681 / 13,228 ≈ 3.6x**

Given the complexity and that different analysts might include/exclude certain items, a reasonable estimate is approximately **3.6 to 3.7x**.

Let me settle on the most standard approach:

Core debt (borrowings): 46,587M
Lease liabilities: 2,438M
Gross debt: 49,025M
Less cash: 4,608M
Net debt: 44,417M
Net Debt/EBITDA = 44,417/13,228 = 3.36x

With S&P adjustments (pensions + hybrid treatment):
Net debt ≈ 47,000-49,000M
Ratio ≈ 3.5-3.7x

I'll estimate approximately **3.6x**.

<answer>3.6</answer>