I need to estimate the Net Debt / EBITDA ratio for 2022 based on S&P methodology. First, let me understand what S&P methodology typically means for Net Debt/EBITDA: - Net Debt = Total Debt - Cash and Cash Equivalents (or Liquid Funds) - EBITDA = Earnings Before Interest, Taxes, Depreciation and Amortization From the data, I need to find: 1. EBITDA for 2022 (period 2022-01-01 to 2023-01-01) 2. Net Debt as of the end of 2022 (which is 2023-01-01 balance sheet date) **Finding EBITDA:** Looking at the data, I see "Operating Profit Before Depreciations Ebitda" for 2022-01-01 - 2023-01-01: 1,842,000,000 EUR However, I also see "Comparable Ebitda" for 2022-01-01 - 2023-01-01: 2,436,000,000 EUR For S&P methodology, they typically use reported EBITDA or comparable EBITDA depending on context. Let me verify the calculation: - Operating Profit (Profit Loss From Operating Activities): 1,277,000,000 EUR - Add back Depreciation and Amortisation: 566,000,000 EUR - This gives: 1,277,000,000 + 566,000,000 = 1,843,000,000 EUR ≈ 1,842,000,000 EUR (the reported EBITDA) Actually, let me check if "Operating Profit Before Depreciations Ebitda" is the right metric. The name suggests it's already before depreciation, so it should be EBITDA. Wait - let me re-read: "Operating Profit Before Depreciations Ebitda" = 1,842,000,000 EUR. This seems to be the EBITDA figure. But I also need to check if S&P would use continuing operations or total. The EBITDA of 1,842,000,000 EUR seems to be for continuing operations or total operations as presented. Actually, looking more carefully at S&P methodology, they typically define EBITDA as: - Operating profit + depreciation and amortization + other non-cash items (sometimes) Or they might use "Comparable EBITDA" for credit analysis. The "Comparable Ebitda" is 2,436,000,000 EUR. However, standard S&P methodology for Net Debt/EBITDA typically uses: - EBITDA = Reported EBITDA (not comparable), or sometimes they adjust it Let me think about this more carefully. The "Operating Profit Before Depreciations Ebitda" of 1,842,000,000 EUR includes items affecting comparability. For S&P Global Ratings methodology, they typically calculate EBITDA as: - Operating profit + depreciation and amortization Looking at the income statement approach: - Profit Loss From Operating Activities: 1,277,000,000 EUR - Add: Depreciation And Amortisation Expense: 566,000,000 EUR - EBITDA = 1,843,000,000 EUR ≈ 1,842,000,000 EUR (matches the reported figure) But wait - I need to check if this includes discontinued operations or not. Looking at the structure, the profit/loss items seem to be presented with continuing and discontinued separately. Actually, looking more carefully, "Profit Loss From Operating Activities" (1,277,000,000 EUR) and "Operating Profit Before Depreciations Ebitda" (1,842,000,000 EUR) seem to be total figures. For S&P methodology, I should use the standard EBITDA. Let me use 1,842,000,000 EUR as the base EBITDA, but I need to check if adjustments are needed. Actually, for S&P, they often use "Adjusted EBITDA" which might be closer to "Comparable EBITDA" (2,436,000,000 EUR) or they might make their own adjustments. However, the most standard S&P definition for Net Debt/EBITDA uses: - EBITDA from continuing operations or total EBITDA before exceptional items Let me check if there's a better EBITDA figure. The "Comparable Ebitda" of 2,436,000,000 EUR is calculated as: - Operating Profit Before Depreciations Ebitda (1,842,000,000) - Less: Items Affecting Comparability (-593,000,000) - wait that would be 1,842,000,000 - (-593,000,000) = 2,435,000,000 ≈ 2,436,000,000 EUR Actually: 1,842,000,000 + 593,000,000 = 2,435,000,000 ≈ 2,436,000,000 EUR. Yes, that checks out. For S&P methodology, they typically use "Adjusted EBITDA" which excludes certain one-time items. The "Comparable EBITDA" might be closer to what S&P uses, but they might also use reported EBITDA and then adjust it themselves. Let me look at what S&P typically does. S&P Global Ratings adjusts EBITDA by: - Adding back items like restructuring costs, impairment losses, etc. - But they may not add back all items affecting comparability Actually, for the standard Net Debt/EBITDA ratio in S&P methodology, they typically use: - EBITDA = Operating profit + D&A + other typical adjustments Given the data, I think the most appropriate EBITDA for S&P methodology would be based on continuing operations or total operations EBITDA. Looking at the cash flow statement, I see "Cash Flows From Used In Operations Before Changes In Working Capital" of 2,322,000,000 EUR for 2022. Let me try a different approach. S&P typically defines EBITDA as: EBITDA = Revenue - Operating expenses (excluding D&A) = Operating profit + D&A From the income statement: - Revenue: 8,804,000,000 EUR - Other Income: 101,000,000 EUR - Materials And Services: -5,350,000,000 EUR - Employee Benefits Expense: -504,000,000 EUR - Other Expense By Nature: -615,000,000 EUR - Depreciation And Amortisation Expense: -566,000,000 EUR Operating profit = 8,804,000,000 + 101,000,000 - 5,350,000,000 - 504,000,000 - 615,000,000 - 566,000,000 = 2,870,000,000... Wait, that doesn't match 1,277,000,000. Let me check. Actually, I need to be more careful. The "Profit Loss From Operating Activities" of 1,277,000,000 EUR includes items affecting comparability (-593,000,000 EUR) and comparable operating profit (1,871,000,000 EUR). So: 1,871,000,000 + (-593,000,000) = 1,278,000,000 ≈ 1,277,000,000 EUR. Yes. And "Operating Profit Before Depreciations Ebitda" = 1,842,000,000 EUR = Comparable Operating Profit (1,871,000,000) + D&A (566,000,000) - some adjustment? Wait: 1,871,000,000 + 566,000,000 = 2,437,000,000 ≈ 2,436,000,000 EUR (Comparable EBITDA) And 1,277,000,000 + 566,000,000 = 1,843,000,000 ≈ 1,842,000,000 EUR (reported EBITDA) So: Reported EBITDA = 1,842,000,000 EUR, Comparable EBITDA = 2,436,000,000 EUR. For S&P methodology, I need to determine which to use. S&P typically adjusts EBITDA for non-recurring items, so they might use something closer to Comparable EBITDA. However, S&P also has specific adjustments. Actually, looking at S&P's published methodology, they typically calculate EBITDA as: - Reported EBIT + depreciation and amortization + certain adjustments But for a quick estimate based on available data, let me consider what information we have. Looking at the balance sheet for Net Debt: - I need to find total debt and subtract cash From the balance sheet as of 2023-01-01 (end of 2022): - Liquid Funds (Cash and Cash Equivalents): 3,919,000,000 EUR - Other Current Financial Assets: 660,000,000 EUR - Current Derivative Financial Assets: 1,486,000,000 EUR For debt, I need to look at: - Other Noncurrent Financial Liabilities: 3,658,000,000 EUR - Noncurrent Derivative Financial Liabilities: 756,000,000 EUR - Other Current Financial Liabilities: 4,127,000,000 EUR - Current Derivative Financial Liabilities: 3,973,000,000 EUR But S&P Net Debt typically includes: - Short-term debt + Long-term debt + Current portion of long-term debt - Cash and cash equivalents I need to be careful about what's included in "financial liabilities" vs actual debt. Looking at the cash flow statement for financing activities: - Proceeds From Noncurrent Borrowings: 2,421,000,000 EUR - Repayments Of Non Current Borrowings And Repayments Of Lease Liabilities: 5,888,000,000 EUR - Cash Flows From Used In Increase Decrease In Current Borrowings: -170,000,000 EUR This suggests there are borrowings included in the financial liabilities. For S&P methodology, Net Debt typically includes: - Short-term borrowings - Long-term borrowings - Current portion of long-term debt - Less: Cash and cash equivalents - Sometimes less other liquid assets From the balance sheet, "Other Noncurrent Financial Liabilities" (3,658,000,000 EUR) and "Other Current Financial Liabilities" (4,127,000,000 EUR) likely include debt. But I need to be more careful. Let me look at what might constitute "debt" vs other financial liabilities. Actually, in many annual reports, "financial liabilities" includes: - Borrowings (debt) - Lease liabilities - Derivatives - Other financial liabilities For S&P Net Debt, we typically want: - Interest-bearing debt minus cash and equivalents Let me look for a better approach. The cash flow statement mentions "Noncurrent Borrowings" and "Current Borrowings", so these are definitely debt. However, I don't have a clean breakdown of what's debt vs other financial liabilities in the balance sheet. Let me try another approach. Looking at the 2022 balance sheet (as of 2023-01-01): - Total Liabilities: 15,905,000,000 EUR - Equity: 7,737,000,000 EUR - Total Assets: 23,642,000,000 EUR The balance sheet is much smaller in 2022 compared to 2021, suggesting significant divestitures (the discontinued operations). For Net Debt, S&P typically uses: - Short-term debt + Long-term debt - Cash and cash equivalents From the balance sheet, I need to identify debt. "Other Noncurrent Financial Liabilities" and "Other Current Financial Liabilities" are likely the main debt items, but they might include other things. Actually, looking more carefully at the structure, the derivative financial assets/liabilities are typically not included in "debt" for Net Debt calculations, or they might be included depending on methodology. Let me think about this differently. In Fortum's case, they had significant operations in Russia (Uniper, etc.) that were discontinued. The balance sheet shrunk dramatically from 149,661,000,000 EUR to 23,642,000,000 EUR. For the end of 2022 (2023-01-01), the remaining company is much smaller. Let me try to estimate debt from the financing cash flows and balance sheet changes, but this is getting complex. Actually, let me look at what items are likely debt: - Other Noncurrent Financial Liabilities: 3,658,000,000 EUR - Other Current Financial Liabilities: 4,127,000,000 EUR These are the main interest-bearing liabilities. The derivatives are typically not "debt" in the traditional sense. But wait - I should also check if there are lease liabilities included. The cash flow mentions "Repayments Of Non Current Borrowings And Repayments Of Lease Liabilities" together. For a simplified S&P Net Debt, I might use: - Debt = Other Noncurrent Financial Liabilities + Other Current Financial Liabilities - Or perhaps also include derivatives if they're negative value (liabilities) Actually, S&P Global Ratings typically includes in debt: - All interest-bearing liabilities - Bank loans - Bonds - Lease liabilities - Sometimes pension liabilities - Minus cash and liquid assets For a practical estimate, let me consider: - Gross debt = Other Noncurrent Financial Liabilities + Other Current Financial Liabilities - Or possibly including derivative liabilities if they're part of financing But derivatives can be either assets or liabilities and are typically related to hedging, not financing. Let me try a different approach. Looking at the 2022-01-01 balance sheet (beginning of 2022): - Other Noncurrent Financial Liabilities: 8,701,000,000 EUR - Noncurrent Derivative Financial Liabilities: 16,657,000,000 EUR - Other Current Financial Liabilities: 8,519,000,000 EUR - Current Derivative Financial Liabilities: 71,947,000,000 EUR The derivatives are huge! This suggests Fortum had massive derivative positions, likely related to commodity hedging (electricity, gas, etc.). For Net Debt, S&P typically excludes derivative liabilities that are part of normal operations/hedging, but includes them if they're related to financing. Actually, looking more carefully at S&P methodology, they typically calculate Net Debt as: - Short-term debt + Long-term debt + Current portion of long-term debt - Cash and cash equivalents - Marketable securities For Fortum, given the complexity, let me try to find a simpler approach. Looking at the 2023-01-01 (end of 2022) balance sheet: - Liquid Funds: 3,919,000,000 EUR - Other Current Financial Assets: 660,000,000 EUR For debt-like items: - Other Noncurrent Financial Liabilities: 3,658,000,000 EUR - Other Current Financial Liabilities: 4,127,000,000 EUR - Total: 7,785,000,000 EUR Net Debt = 7,785,000,000 - 3,919,000,000 = 3,866,000,000 EUR But I need to check if this is correct. The "Other Current Financial Assets" of 660,000,000 EUR might also be liquid enough to subtract. Also, I need to consider if derivatives should be included. The noncurrent derivative liabilities are 756,000,000 EUR and current derivative liabilities are 3,973,000,000 EUR. If these are "financing" derivatives, they might be included. But if they're commodity/electricity hedging derivatives, they might not be. For S&P, the treatment depends on the nature. Given Fortum is an energy company, most derivatives are likely commodity hedges, not financing. However, looking at the 2021 balance sheet, the derivative values are enormous (16.7 billion noncurrent, 71.9 billion current liabilities), which suggests these are mainly energy trading/hedging derivatives, not debt. After the divestiture/discontinuation, the derivative values dropped dramatically, confirming they were related to the divested operations (likely Uniper). For the remaining Fortum in 2022, the simplified Net Debt might be: - Debt: Other Noncurrent Financial Liabilities + Other Current Financial Liabilities = 3,658 + 4,127 = 7,785 million EUR - Cash: Liquid Funds = 3,919 million EUR - Net Debt = 7,785 - 3,919 = 3,866 million EUR But wait, I should also check if there are other debt-like items. The "Margin Liabilities" of 352,000,000 EUR might be related to trading and could be considered debt-like. Also, "Trade And Other Current Payables" of 1,657,000,000 EUR are typically not debt. Let me reconsider. For S&P methodology, they might also include: - Nuclear provisions? Probably not, these are operational provisions. - Pension liabilities? "Noncurrent Recognised Liabilities Defined Benefit Plan" = 13,000,000 EUR - small. Actually, looking at S&P's specific methodology for utilities/energy companies, they may have specific adjustments. Let me try another approach. The "Cash Flows From Used In Financing Activities Continuing Operations" for 2022 was -4,686,000,000 EUR, which includes: - Proceeds From Noncurrent Borrowings: 2,421,000,000 - Repayments Of Non Current Borrowings And Repayments Of Lease Liabilities: -5,888,000,000 - Cash Flows From Used In Increase Decrease In Current Borrowings: -170,000,000 - Dividends paid: -1,013,000,000 - 19,000,000 - Margin liabilities change: 150,000,000 - Other: -168,000,000 This suggests significant debt repayment in 2022. For the balance sheet at end of 2022, let me estimate debt more precisely. The "Other Noncurrent Financial Liabilities" and "Other Current Financial Liabilities" likely include: - Borrowings - Lease liabilities - Other financial liabilities If I want just "debt" (borrowings), I need to separate out lease liabilities. But I don't have that breakdown. For S&P Net Debt, lease liabilities are typically included in debt. So my estimate: Gross debt ≈ 7,785,000,000 EUR, Cash = 3,919,000,000 EUR, Net Debt ≈ 3,866,000,000 EUR. But let me also consider if "Other Current Financial Assets" (660,000,000 EUR) should be subtracted as it's liquid. And "Current Tax Assets Current" (71,000,000 EUR) is probably not liquid enough. Actually, for strict "Cash and Cash Equivalents", I should use "Liquid Funds" or "Cash And Cash Equivalents". The data shows "Liquid Funds" = 3,919,000,000 EUR and "Cash And Cash Equivalents" = 3,919,000,000 EUR (same value). For EBITDA, I need to decide between: - Reported EBITDA: 1,842,000,000 EUR - Comparable EBITDA: 2,436,000,000 EUR For S&P methodology, they typically start with reported EBITDA and make adjustments. However, for a ratio based on "S&P methodology", they often use "Adjusted EBITDA" which is closer to comparable EBITDA but with their own specific adjustments. Given the information available, and that S&P would likely adjust for items affecting comparability (especially large one-time items), the Comparable EBITDA of 2,436,000,000 EUR might be closer to what S&P would use. However, I need to be careful. The "Items Affecting Comparability" of -593,000,000 EUR includes: - Impairment loss reversal: 905,000,000 EUR - Capital gains and other related items: 785,000,000 EUR - Changes in fair values of derivatives hedging future cash flow: 393,000,000 EUR - Other adjustments affecting comparability: 80,000,000 EUR Total positive items: 905 + 785 + 393 + 80 = 2,163,000,000 EUR But "Items Affecting Comparability" is reported as -593,000,000 EUR. This suggests there are also negative items not detailed, or the sign convention is different. Actually, looking at the income statement: Comparable Operating Profit (1,871,000,000) + Items Affecting Comparability (-593,000,000) = Profit Loss From Operating Activities (1,277,000,000). So the "Items Affecting Comparability" being negative means they reduced profit. But the detailed items (impairment reversal, capital gains, etc.) are positive. This is confusing. Wait, let me re-read: "Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss" = 905,000,000 EUR. This is a positive (gain). But "Items Affecting Comparability" = -593,000,000 EUR. If the detailed items are all positive gains, but total items affecting comparability is negative, that doesn't add up. Unless there are large negative items not listed, or the sign convention for the detailed items is different. Actually, looking more carefully: "Capital Gains And Other Related Items" = 785,000,000 EUR. In 2021, this was 2,673,000,000 EUR. These are likely gains from divestitures. For 2022, the total of 905 + 785 + 393 + 80 = 2,163 million EUR, but "Items Affecting Comparability" is -593 million EUR. This suggests there are other negative items of 2,756 million EUR not listed, or I'm misunderstanding the sign. Actually, I think the issue is that "Items Affecting Comparability" = -593,000,000 EUR means the net effect is negative. But the detailed breakdown might show both positive and negative items, or the detailed items listed are the components that make up a different total. Let me re-check: The items listed under "Items Affecting Comparability" might be the breakdown. But 905 + 785 + 393 + 80 = 2,163, which doesn't equal -593. Hmm, unless these are not the components. Let me look again... Actually, I think these items might be presented with their signs already, and they sum to something else, or they're not all the components. Actually, re-reading: "Impairment Loss Reversal" = 905,000,000. If this is a reversal, it's a positive in the income statement. "Capital Gains" = 785,000,000. Positive. "Changes In Fair Values Of Derivatives Hedging Future Cash Flow" = 393,000,000. Positive. "Other Adjustments" = 80,000,000. Positive. These sum to 2,163,000,000. But "Items Affecting Comparability" is -593,000,000. This is inconsistent unless there are large negative items not detailed, or the "Items Affecting Comparability" includes other things. Wait - I need to re-check. Looking at 2021: "Items Affecting Comparability" = 2,897,000,000 EUR (positive). The components: Impairment 35, Capital Gains 2,673, Derivatives -264, Other 6. Sum = 35 + 2,673 - 264 + 6 = 2,450. Not equal to 2,897. Hmm, so these detailed items don't sum to the total. They must be partial breakdowns or I'm misunderstanding the relationship. Actually, looking more carefully, these items might be presented in the "Other Comprehensive Income" section or elsewhere, not as components of "Items Affecting Comparability". Let me step back. For S&P methodology, the standard approach is: **Net Debt / EBITDA** For EBITDA, S&P typically uses: - Last twelve months (LTM) EBITDA, adjusted for non-recurring items Given the data, I'll use "Comparable EBITDA" of 2,436,000,000 EUR as it's closer to what S&P would use (adjusted for comparability items). For Net Debt, I need to estimate as of end of 2022 (2023-01-01). From the balance sheet: - Debt items: Other Noncurrent Financial Liabilities (3,658) + Other Current Financial Liabilities (4,127) = 7,785 million EUR - Cash: Liquid Funds = 3,919 million EUR - Net Debt = 7,785 - 3,919 = 3,866 million EUR But I should check if there are other debt-like items or if I should include more. Looking at S&P's typical definition, they might also include: - Margin liabilities (352 million)? These are typically related to trading collateral. - Derivative liabilities? Typically not included for commodity derivatives. Actually, for energy companies, S&P might include certain derivative positions if they're considered part of the financing structure. But typically, commodity derivatives are excluded. Let me also consider: should I include "Other Noncurrent Financial Assets" and "Other Current Financial Assets" as subtractible from debt? "Other Noncurrent Financial Assets" = 624,000,000 EUR "Other Current Financial Assets" = 660,000,000 EUR These might include things like loans to associates, deposits, etc., not necessarily liquid. S&P typically subtracts only "Cash and Cash Equivalents" and "Marketable Securities" or very liquid assets. For a conservative S&P Net Debt estimate: - Gross Debt = Other Noncurrent Financial Liabilities + Other Current Financial Liabilities = 3,658 + 4,127 = 7,785 million EUR - Less: Cash and Cash Equivalents = 3,919 million EUR - Net Debt = 3,866 million EUR But wait, I should check if there are other debt items. What about "Nuclear Non Current Provisions" (966 million)? These are provisions for nuclear waste, not debt. S&P typically excludes these, or sometimes includes them as "debt-like" if they're significant and have debt characteristics. For nuclear provisions, S&P might treat them as debt-like since they're obligations to the state or for future decommissioning. But typically, they're treated as provisions, not debt. Similarly, "Deferred Tax Liabilities" (152 million) are not debt. Let me also check "Other Longterm Provisions" (118 million) - these are operational provisions. So my Net Debt estimate is 3,866 million EUR. But actually, I realize I should double-check the debt figure. "Other Noncurrent Financial Liabilities" and "Other Current Financial Liabilities" might include non-debt items like: - Lease liabilities - Derivative liabilities (if not separated) - Other financial obligations Actually, looking at the 2021 balance sheet, "Noncurrent Derivative Financial Liabilities" and "Current Derivative Financial Liabilities" are listed separately, so the "Other Financial Liabilities" likely exclude derivatives. But do they include lease liabilities? Probably yes, as these are financial liabilities under IFRS 16. For S&P Net Debt, lease liabilities are typically included. So Net Debt = 3,866 million EUR seems reasonable. But let me also consider an alternative: maybe I should use a broader definition of debt. Looking at total liabilities minus current liabilities that are not debt-like... Actually, let me try a completely different approach. Looking at the equity and total assets: Total Assets = 23,642 million Total Liabilities = 15,905 million Equity = 7,737 million If I consider that Net Debt = Total Debt - Cash, and Total Debt is part of Total Liabilities... But I need to identify which liabilities are "debt". Trade payables (1,657 million), other short-term provisions (13 million), margin liabilities (352 million), current tax liabilities? These are typically not "debt" in the Net Debt sense. Actually, let me look at what's in current liabilities: - Other Current Financial Liabilities: 4,127 - Current Derivative Financial Liabilities: 3,973 - Other Shortterm Provisions: 13 - Margin Liabilities: 352 - Trade And Other Current Payables: 1,657 Total current liabilities other than held for sale: 10,122 million And noncurrent liabilities: - Other Noncurrent Financial Liabilities: 3,658 - Noncurrent Derivative Financial Liabilities: 756 - Deferred Tax Liabilities: 152 - Nuclear Non Current Provisions: 966 - Other Longterm Provisions: 118 - Noncurrent Recognised Liabilities Defined Benefit Plan: 13 - Other Noncurrent Liabilities: 121 Total noncurrent liabilities: 5,784 million Total liabilities: 15,905 million (matches) For Net Debt, the standard S&P approach would include: - All interest-bearing liabilities (debt, bonds, loans, lease liabilities) - Sometimes derivative liabilities if related to financing - Less: Cash and cash equivalents - Less: Liquid investments The "financial liabilities" (current and noncurrent, excluding derivatives) = 4,127 + 3,658 = 7,785 million EUR seems to be the core debt. But I need to check if derivatives should be included. For commodity derivatives in an energy company, S&P typically excludes them from Net Debt because they're operational hedges, not financing. However, if some derivatives are "financing derivatives" (like interest rate swaps, cross-currency swaps related to debt), those might be included. Given the complexity and the data available, let me use: - Debt = Other Noncurrent Financial Liabilities + Other Current Financial Liabilities = 7,785 million EUR - Cash = Liquid Funds = 3,919 million EUR - Net Debt = 3,866 million EUR For EBITDA, let me use Comparable EBITDA = 2,436 million EUR, as this is closer to S&P's adjusted EBITDA concept. Net Debt / EBITDA = 3,866 / 2,436 = 1.587x But wait, I want to double-check if S&P would use reported or comparable EBITDA. S&P Global Ratings typically makes its own adjustments, starting from reported EBITDA. They would add back items they consider non-recurring. The "Items Affecting Comparability" of -593 million EUR (negative, so it reduced reported EBITDA) includes various items. S&P would likely adjust for some of these. Actually, I realize I need to be more careful about the sign. "Items Affecting Comparability" = -593,000,000 EUR. Since this is negative, it means: - Comparable Operating Profit (1,871) + Items Affecting Comparability (-593) = Reported Operating Profit (1,277) So reported is lower than comparable. This means the "items affecting comparability" were net negative (losses/impairments/etc. that are excluded from comparable). Wait, but I listed impairment reversal (positive 905), capital gains (positive 785), etc. These are positive items. If comparable is higher than reported, then the items must be net negative, which contradicts my understanding of the detailed items. Let me re-read: "Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss" = 905,000,000 EUR. If this is a "reversal", it's a positive gain. But it's listed under items affecting comparability, which is net negative (-593). Unless... the detailed items are not all components, or they have different signs than I think. Actually, looking at 2021: "Items Affecting Comparability" = 2,897,000,000 EUR (positive). The components: Impairment 35, Capital Gains 2,673, Derivatives -264, Other 6. Sum = 35 + 2,673 - 264 + 6 = 2,450. This is close to 2,897 but not exact. The difference might be other items or taxes. For 2022: 905 + 785 + 393 + 80 = 2,163. But total is -593. This doesn't make sense unless there are large negative items. Wait - I think I misread. Let me check if "Changes In Fair Values Of Derivatives Hedging Future Cash Flow" = 393,000,000 is positive or negative. The value is shown as positive, but maybe it's actually a negative change? Actually, looking at the data format, all values are shown with their sign implied by the label, or perhaps all are absolute values with signs indicated by the context. Hmm, the data shows: "Changes In Fair Values Of Derivatives Hedging Future Cash Flow" 2022-01-01 - 2023-01-01: 393000000 EUR And for 2021: -264000000 EUR So 2021 is negative, 2022 is positive. These are likely pre-tax gains/losses. But still, the sum of positive items in 2022 doesn't equal -593. Unless... "Items Affecting Comparability" is not the sum of these detailed items. These detailed items might be presented elsewhere in the annual report (like in the notes), and "Items Affecting Comparability" is the total from the income statement. Actually, re-reading the data structure, I see these items are listed as separate line items, not necessarily as sub-components of "Items Affecting Comparability". They might be part of Other Comprehensive Income or other sections. Let me check: "Changes In Fair Values Of Derivatives Hedging Future Cash Flow" - this sounds like it could be in OCI, not P&L. Actually, looking at the OCI section: "Gains Losses On Cash Flow Hedges Before Tax" = -2,594,000,000 EUR. This is different from "Changes In Fair Values Of Derivatives Hedging Future Cash Flow" = 393,000,000 EUR. So the 393 million is likely in the P&L, part of items affecting comparability. But the math still doesn't work for me. Let me just accept that "Items Affecting Comparability" = -593,000,000 EUR is the net figure, and "Comparable Operating Profit" = 1,871,000,000 EUR is the adjusted figure. For S&P, they might use either: - Reported EBITDA = 1,842,000,000 EUR - Comparable EBITDA = 2,436,000,000 EUR Given that S&P adjusts for non-recurring items, and "comparable" figures are meant to exclude one-time items, S&P would likely use something closer to Comparable EBITDA. However, I need to be careful. S&P might not adjust for all items that Fortum classifies as "affecting comparability". They have their own criteria. For a practical estimate, let me consider both: **Option 1: Reported EBITDA** Net Debt / EBITDA = 3,866 / 1,842 = 2.10x **Option 2: Comparable EBITDA** Net Debt / EBITDA = 3,866 / 2,436 = 1.59x Which is more appropriate for S&P methodology? S&P Global Ratings typically uses "Adjusted EBITDA" which is management's adjusted EBITDA with S&P's own adjustments. If management's "Comparable EBITDA" is reasonable and excludes truly non-recurring items, S&P might use it or make further adjustments. Given that 2022 was a year of massive divestiture (Uniper was largely divested/exited), the "items affecting comparability" likely include significant one-time items related to this. S&P would definitely adjust for these. However, I also need to consider if EBITDA should include discontinued operations or not. The "Comparable EBITDA" of 2,436 million EUR - does this include discontinued operations? Looking at the data structure, there's "Cash Flows From Used In Operating Activities Continuing Operations" and separate "Cash Flows From Used In Operating Activities Discontinued Operations". For EBITDA, I need to check if it's for total operations or continuing only. "Operating Profit Before Depreciations Ebitda" doesn't specify "Continuing" or "Discontinued", so it might be total. But wait - looking at the P&L items, "Profit Loss From Operating Activities" is 1,277 million, and then there's "Profit Loss From Discontinued Operations" of -11,302 million. These are presented separately below the operating profit line. Actually, in standard IFRS presentation: - Operating profit is from continuing operations - Then finance costs, share of associates, etc. - Then profit before tax from continuing operations - Then discontinued operations So "Profit Loss From Operating Activities" (1,277 million) is likely from continuing operations only, or it might be total operating profit before financing items. Actually, looking more carefully: "Profit Loss From Operating Activities" = 1,277 million. Then "Share Of Profit Loss Of Associates" = -629 million. Then "Finance Income Cost" = -193 million. Then "Profit Loss Before Tax" = 455 million. 1,277 - 629 - 193 = 455. Yes, this checks out. So "Profit Loss From Operating Activities" is before associates and financing. And "Profit Loss From Discontinued Operations" = -11,302 million is shown separately, after tax. So the EBITDA of 1,842 million is for the continuing operations (or at least the pre-tax, pre-associates part). The discontinued operations are separate. For S&P Net Debt/EBITDA, they typically use EBITDA from the same scope as the debt. If debt is at the consolidated level including discontinued operations, then EBITDA should include discontinued operations. But if debt is only for continuing operations... Actually, in 2022, Fortum largely divested/discontinued its Uniper operations. By end of 2022, the discontinued operations are largely gone from the balance sheet (the balance sheet is much smaller). For the Net Debt calculation, I'm using the end-2022 balance sheet, which is the post-divestiture Fortum. So the debt is for the remaining Fortum. For EBITDA, should I use continuing operations EBITDA or total EBITDA including discontinued operations? In 2022, the discontinued operations were being divested. For a ratio at end of 2022, S&P might use LTM EBITDA including discontinued operations if the divestiture happened during the year, or they might pro-forma it. Actually, looking at the data, "Profit Loss From Discontinued Operations" = -11,302 million EUR. This is a massive loss. But this is the net profit/loss, not EBITDA. I don't have explicit "EBITDA from discontinued operations". But I can infer from the cash flow statement: - Cash Flows From Used In Operating Activities Discontinued Operations: -10,870 million EUR This is very negative, suggesting the discontinued operations had significant cash outflows (likely due to the losses/impairments). For S&P methodology, when calculating Net Debt/EBITDA after a major divestiture, they might use pro-forma EBITDA (post-divestiture) or historical EBITDA depending on the context. Given the complexity, and that the question asks for "2022" based on S&P methodology, I think the most appropriate approach is: 1. Use the remaining Fortum's debt at end of 2022 2. Use EBITDA for the relevant period Since the divestiture largely happened in 2022, and we're looking at end-2022 balance sheet, S&P might use a pro-forma or continuing operations EBITDA. Actually, let me re-think. The "Comparable Operating Profit" of 1,871 million EUR and "Comparable EBITDA" of 2,436 million EUR - are these for total Fortum or continuing operations? Given that "Profit Loss From Operating Activities" (1,277 million) feeds into "Profit Loss Before Tax" (455 million) and then "Profit Loss From Continuing Operations" (1,011 million), and then "Profit Loss From Discontinued Operations" (-11,302 million) is separate, the operating profit and EBITDA figures seem to be pre-discontinued operations. So EBITDA of 1,842 million or 2,436 million is for continuing operations or the core operations. For S&P, using continuing operations EBITDA makes sense if the debt is also for continuing operations. But wait - I need to check if my Net Debt includes only continuing operations debt. The balance sheet at end of 2022 is post-divestiture, so yes, it's the remaining debt. However, there might be debt or liabilities related to discontinued operations that are still on the balance sheet or classified separately. Looking at the balance sheet: "Noncurrent Assets Or Disposal Groups Classified As Held For Sale" = 0. And there's no separate "Liabilities Held For Sale" shown. So the balance sheet is clean post-divestiture. Now, for EBITDA, if the 1,842 million or 2,436 million is for the full year 2022 but only for continuing operations, and the continuing operations were the remaining Fortum after/during the divestiture, then this might be appropriate. But actually, I need to think about this more carefully. In 2022, Fortum had both continuing and discontinued operations during the year. By end of 2022, the discontinued operations are largely gone. For a ratio at end of 2022, S&P might want a "run-rate" or pro-forma EBITDA for the post-divestiture entity. But if we only have full-year historical EBITDA, we use that. Actually, looking at the data again, I notice that "Cash Flows From Used In Operating Activities Continuing Operations" for 2022 is 2,104 million EUR, and for 2021 is 1,119 million EUR. And "Cash Flows From Used In Operating Activities Discontinued Operations" for 2022 is -10,870 million EUR, and for 2021 is 3,851 million EUR. The discontinued operations had massive negative cash flow in 2022 due to the losses. For EBITDA, if we use continuing operations only (1,842 or 2,436 million), this seems reasonable for the post-divestiture entity. Let me also check: is there a way to estimate total EBITDA including discontinued operations? Not directly from the data. Given the information, I'll use: - Net Debt = 3,866 million EUR (estimated) - EBITDA = 2,436 million EUR (Comparable EBITDA, continuing operations) Net Debt / EBITDA = 3,866 / 2,436 = 1.587x Or with reported EBITDA: 3,866 / 1,842 = 2.10x I need to decide which EBITDA is more appropriate for S&P. Actually, let me reconsider the Net Debt figure. I want to make sure I'm not missing something. Looking at the 2023-01-01 balance sheet again: - Total Assets: 23,642 million - Total Liabilities: 15,905 million For an energy/utility company, debt might include more than just "Other Financial Liabilities". Let me think about what's in "Other Noncurrent Liabilities" (121 million) and "Other Current Liabilities" (not explicitly shown, but Trade And Other Current Payables = 1,657 million). Actually, looking at the current liabilities breakdown: - Other Current Financial Liabilities: 4,127 - Current Derivative Financial Liabilities: 3,973 - Other Shortterm Provisions: 13 - Margin Liabilities: 352 - Trade And Other Current Payables: 1,657 Sum: 4,127 + 3,973 + 13 + 352 + 1,657 = 10,122 million. This matches "Current Liabilities Other Than Liabilities Included In Disposal Groups Classified As Held For Sale" = 10,122 million. For S&P Net Debt, "Margin Liabilities" of 352 million might be considered debt-like if they're related to trading collateral that needs to be returned. But typically, margin liabilities are operational. "Trade And Other Current Payables" of 1,657 million are definitely not debt. So my debt estimate of 7,785 million seems reasonable. But let me also consider: should I include the 3,973 million of "Current Derivative Financial Liabilities"? For energy companies, commodity derivatives are typically excluded from Net Debt. However, if Fortum has "financing derivatives" (interest rate swaps, etc.), those might be included. Given that "Noncurrent Derivative Financial Liabilities" is 756 million and "Current Derivative Financial Liabilities" is 3,973 million, and these are presented separately from "Other Financial Liabilities", they're likely mainly commodity/electricity derivatives. In 2021, these were huge (16,657 million noncurrent, 71,947 million current), which is consistent with large energy trading operations (Uniper). After the divestiture, they're much smaller but still significant. For the remaining Fortum, these derivatives are likely related to the core electricity generation and trading business. S&P would typically exclude them from Net Debt. However, I want to check if there's any financing component. Looking at the cash flow statement, there's no clear separation. For a conservative estimate, I'll exclude derivatives from Net Debt. So: Net Debt = 7,785 - 3,919 = 3,866 million EUR. But wait - I should also consider if "Other Noncurrent Financial Assets" (624 million) and "Other Current Financial Assets" (660 million) are liquid enough to subtract. "Other Current Financial Assets" of 660 million - this could include things like short-term loans, deposits, or other liquid assets. S&P might subtract these if they're considered "liquid" and not part of operations. "Other Noncurrent Financial Assets" of 624 million - these are noncurrent, so less liquid. Probably not subtracted. If I subtract "Other Current Financial Assets" as well: Net Debt = 7,785 - 3,919 - 660 = 3,206 million EUR Net Debt / EBITDA = 3,206 / 2,436 = 1.32x Or 3,206 / 1,842 = 1.74x Hmm, this changes things. I need to decide what's appropriate. For S&P Global Ratings, their standard definition of Net Debt is: "Total debt minus cash and cash equivalents and marketable securities and short-term investments and long-term investments in marketable securities." They typically don't include "other financial assets" unless they're very liquid and marketable. "Other Current Financial Assets" might include trade receivables, loans to associates, etc. Without more detail, I'll be conservative and not subtract them. So Net Debt = 3,866 million EUR remains my estimate. Now, for EBITDA, I want to make one more check. The question asks for "2022". In the data, "Operating Profit Before Depreciations Ebitda" for 2022-01-01 to 2023-01-01 is 1,842 million EUR. This is the fiscal year 2022. And the balance sheet as of 2023-01-01 is the end of fiscal 2022. So the ratio is: Net Debt (end of 2022) / EBITDA (full year 2022) This is standard. But I need to consider: should EBITDA be annualized or adjusted for the divestiture? If the divestiture happened mid-year, and we're looking at the post-divestiture balance sheet, S&P might use pro-forma or continuing operations EBITDA. Actually, looking at the data more carefully, I see that "Cash Flows From Used In Operating Activities Discontinued Operations" is -10,870 million EUR for 2022. This suggests the discontinued operations were still generating significant cash flows (negative, but large in magnitude) during 2022. However, the EBITDA figures I have (1,842 and 2,436 million) don't seem to include discontinued operations, as they're based on "Operating Profit" which is before the discontinued operations line. Wait, let me verify. In standard IFRS: - Revenue - Operating expenses - Operating profit (EBIT) - Finance costs - Share of associates - Profit before tax - Income tax - Profit from continuing operations - Profit from discontinued operations - Net profit So "Operating Profit" and "EBITDA" are for the operations before financing and discontinued items. This typically includes all operations (continuing and discontinued) up to the operating profit line, or it might be presented separately. Actually, in modern IFRS, discontinued operations can be presented separately in the income statement, either: - As a single line for post-tax profit/loss, with details in notes - Or with separate columns for continuing and discontinued Given that "Profit Loss From Discontinued Operations" = -11,302 million is a single line after "Profit Loss From Continuing Operations" = 1,011 million, the income statement likely presents: - All revenue and expenses for continuing operations - Then finance items, tax - Then discontinued operations as a single line If this is the case, then "Operating Profit" and "EBITDA" are for continuing operations only. Actually, let me check: "Profit Loss From Continuing Operations" = 1,011 million. This is after tax. "Profit Loss From Operating Activities" = 1,277 million. This is before tax and before associates/finance. 1,277 (operating) - 629 (associates) - 193 (finance) = 455 (before tax) 455 - (-556) tax expense? Wait, tax expense is -556, so 455 - 556 = -101? That doesn't match 1,011. Wait, let me re-read. "Income Tax Expense Continuing Operations" = -556,000,000 EUR. The negative sign might mean tax benefit (income). So: Profit before tax (455) - Tax expense (-556) = 455 + 556 = 1,011. Yes! This matches "Profit Loss From Continuing Operations" = 1,011 million. Great, so the math checks out. Now, is "Profit Loss From Operating Activities" = 1,277 million for continuing operations only? Looking at the structure: - "Profit Loss From Operating Activities" = 1,277 - Then associates, finance, tax - "Profit Loss From Continuing Operations" = 1,011 - Then "Profit Loss From Discontinued Operations" = -11,302 - "Profit Loss" = -10,291 million? But stated as -10,290 million... wait, let me check. Actually: "Profit Loss" 2022-01-01 - 2023-01-01: -10290000000 EUR = -10,290 million. 1,011 + (-11,302) = -10,291 ≈ -10,290. Yes, matches (rounding). So "Profit Loss From Operating Activities" = 1,277 million is for continuing operations only. The discontinued operations are completely separate. Therefore, EBITDA of 1,842 million or 2,436 million is for continuing operations only. For S&P Net Debt/EBITDA, if the debt at end of 2022 is for the post-divestiture entity (continuing operations), then using continuing operations EBITDA is appropriate. However, I need to consider if the 2022 EBITDA is representative of the post-divestiture run-rate. If the divestiture happened mid-2022, then full-year 2022 continuing operations EBITDA includes only part of the year with the full remaining operations. Actually, looking at the timeline: Uniper was largely lost/divested in 2022. Fortum's stake in Uniper was written down, and Uniper was nationalized by Germany. By end of 2022, Fortum had largely exited Uniper. The remaining Fortum is primarily Nordic clean energy (hydro, nuclear, wind, solar, etc.). For 2022, the continuing operations EBITDA of 2,436 million (comparable) or 1,842 million (reported) reflects this remaining business, but possibly with some transition effects. For S&P, they might use the full year 2022 EBITDA as the best available, or they might pro-forma it. Given the information, I'll proceed with: - Net Debt = 3,866 million EUR - EBITDA = 2,436 million EUR (Comparable EBITDA, as S&P would adjust for one-time items) Net Debt / EBITDA = 3,866 / 2,436 = 1.587 Or approximately 1.6x. But let me also consider if S&P would use a different EBITDA. Looking at the cash flow statement: - "Cash Flows From Used In Operations Before Changes In Working Capital" = 2,322 million EUR This is close to EBITDA but includes interest paid/received and taxes? Actually, it's more like EBIT + D&A + working capital changes... no, it's "before changes in working capital". Actually, "Cash Flows From Used In Operations Before Changes In Working Capital" typically equals: - EBIT + D&A - Taxes paid +/ other items For 2022: 2,322 million. This is higher than EBITDA of 1,842 million, which suggests there are adjustments. Actually, looking at the detailed cash flow: - Operating Profit Before Depreciations Ebitda: 1,842 - Adjustments For Income Tax Expense: -556 - Adjustments For Finance Income Cost: -193 - Adjustments For Undistributed Profits Of Associates: -629 - Adjustments For Depreciation And Amortisation Expense: 566 - Adjustments For Alternative Performance Measures: -593 - Other Adjustments For Noncash Items: 153 Sum: 1,842 - 556 - 193 - 629 + 566 - 593 + 153 = 590? That doesn't equal 2,322. Hmm, let me re-read. The adjustments are "for" various items, meaning they adjust the starting point to get to cash flow. Actually, "Cash Flows From Used In Operations Before Changes In Working Capital" is typically calculated from net income with adjustments, not from EBITDA. Starting from "Profit Loss" = -10,290 million, adding back all adjustments, we get to 2,322 million. This includes discontinued operations too? No, wait - the cash flow statement might be for total operations or continuing only. Actually, looking at the data: "Cash Flows From Used In Operating Activities Continuing Operations" = 2,104 million, and "Cash Flows From Used In Operating Activities Discontinued Operations" = -10,870 million. Total operating cash flow = 2,104 - 10,870 = -8,767 million. But "Cash Flows From Used In Operations Before Changes In Working Capital" = 2,322 million. This seems to be for continuing operations only, as it's close to the 2,104 million operating cash flow from continuing operations (before working capital changes). Actually, 2,322 - working capital increase (219) = 2,103 ≈ 2,104. Yes! So "Cash Flows From Used In Operations Before Changes In Working Capital" = 2,322 million is for continuing operations. And this 2,322 million includes: - EBITDA-like starting point - But adjusted for various items Actually, looking at standard cash flow preparation: Start with Operating Profit (1,277) Add: D&A (566) Add: Other non-cash items Adjust for working capital, interest, taxes But "Cash Flows From Used In Operations Before Changes In Working Capital" of 2,322 is higher than Operating Profit + D&A (1,277 + 566 = 1,843). The difference: 2,322 - 1,843 = 479 million. This could be from: - Adjustments for alternative performance measures (-593)? No, that would reduce. - Other adjustments for non-cash items (153)? - Interest received (84)? - Dividends received (18)? - Other items? Actually, looking at the detailed items: - Adjustments For Alternative Performance Measures: -593 - Other Adjustments For Noncash Items: 153 - Interest Received: 84 - Interest Paid: -201 - Dividends Received: 18 - Income Taxes Paid: -167 These seem to be adjustments in the operating cash flow section. For EBITDA, the standard definition is clear: Operating Profit + D&A. The reported figure is 1,842 million. For S&P, they might also add back certain items. The "Comparable EBITDA" of 2,436 million adds back items affecting comparability (593 million), giving 1,842 + 593 = 2,435 ≈ 2,436. Given that S&P adjusts for non-recurring and one-time items, using Comparable EBITDA of 2,436 million seems most appropriate for S&P methodology. Now, one more check on Net Debt. I want to verify if there are other sources of debt information. Looking at the financing cash flows for 2022: - Proceeds from noncurrent borrowings: 2,421 - Repayments of noncurrent borrowings and lease liabilities: 5,888 - Change in current borrowings: -170 This suggests significant debt repayment. The beginning debt (2022-01-01) would have been higher. For end of 2022, my estimate of 7,785 million in financial liabilities seems reasonable given the repayments. Actually, let me cross-check with the 2021 balance sheet: - Other Noncurrent Financial Liabilities: 8,701 - Other Current Financial Liabilities: 8,519 - Total: 17,220 million With 2022 repayments of 5,888 + 170 = 6,058 million (net of new borrowings 2,421), the net repayment is 3,637 million. 17,220 - 3,637 = 13,583 million. But my end-2022 estimate is 7,785 million. The difference is 5,798 million. This discrepancy could be due to: - The 2021 figures including Uniper (discontinued operations) - Reclassifications - Foreign exchange effects - Other changes Actually, the 2021 balance sheet includes Uniper, which was largely divested in 2022. So the 2021 debt figure includes Uniper's debt, and the 2022 figure is post-divestiture. This confirms that my 2022 debt figure of 7,785 million is for the remaining Fortum only, which is correct for the Net Debt calculation at end of 2022. However, I need to check if there was any debt transferred with the divestiture, or if Fortum retained some Uniper-related debt. Looking at the "Cash Flows From Used In Financing Activities Discontinued Operations" = 10,757 million EUR. This is positive, meaning cash inflow from financing activities of discontinued operations. This could include debt that was transferred or settled. Actually, positive financing cash flow from discontinued operations suggests that liabilities (debt) were assumed or that there were inflows. It's hard to interpret without more detail. In any case, my Net Debt estimate for the remaining Fortum at end of 2022 is 3,866 million EUR. Let me do one final check. Is there any other debt-like item I should include? - "Margin Liabilities" = 352 million: These are typically collateral received for trading. They might be considered debt-like if they're significant and need to be returned. For S&P, they might be excluded as operational. - "Trade And Other Current Payables" = 1,657 million: Definitely not debt. - "Other Shortterm Provisions" = 13 million: Not debt. - "Nuclear Non Current Provisions" = 966 million: These are provisions for nuclear waste management. S&P sometimes treats these as debt-like for utilities, especially if they're funded or represent legal obligations. Actually, for nuclear provisions, S&P's treatment varies. If they're backed by assets (like the "Share In State Nuclear Waste Management Fund" = 966 million), they might be netted. Looking at the balance sheet: - "Share In State Nuclear Waste Management Fund" = 966 million (asset) - "Nuclear Non Current Provisions" = 966 million (liability) These are equal and likely offset in economic terms. The fund is set aside for the provision. For Net Debt, S&P might exclude both the asset and the liability, or include the liability if it's considered debt-like. Given that the asset and liability are equal, including both would have no net effect on Net Debt. Including just the liability would increase Net Debt by 966 million. For conservative S&P practice, nuclear provisions are often included in "Net Debt-like liabilities" or "Adjusted Net Debt". But in standard Net Debt, they might be excluded. If I include nuclear provisions in debt: Gross Debt = 7,785 + 966 = 8,751 million Net Debt = 8,751 - 3,919 = 4,832 million Net Debt / EBITDA = 4,832 / 2,436 = 1.98x Or with reported EBITDA: 4,832 / 1,842 = 2.62x This is a significant difference. I need to decide if S&P would include nuclear provisions. Looking at S&P's utility methodology, they often calculate "Funds From Operations (FFO)" and use "Net Debt" that includes certain regulatory and nuclear liabilities. However, in standard Net Debt/EBITDA, they might use a simpler definition. For a quick estimate based on available data, I'll use the simpler definition excluding nuclear provisions, as they're matched by assets and are operational in nature. Final estimate: - Net Debt = 3,866 million EUR - EBITDA = 2,436 million EUR (Comparable EBITDA, S&P-adjusted) - Net Debt / EBITDA = 3,866 / 2,436 = 1.587 Rounded to one decimal place: 1.6 Or more precisely: 1.59 Actually, let me also calculate with reported EBITDA to see the range: - 3,866 / 1,842 = 2.10 And if I include nuclear provisions: - 4,832 / 2,436 = 1.98 - 4,832 / 1,842 = 2.62 Given the question asks for "S&P methodology", and S&P typically adjusts EBITDA, I'll go with Comparable EBITDA and standard Net Debt (excluding nuclear provisions). Net Debt / EBITDA = 3,866 / 2,436 = 1.587 Let me express this as a number: approximately 1.6 or 1.59. Actually, I want to double-check my Net Debt calculation once more. Debt: - Other Noncurrent Financial Liabilities: 3,658 - Other Current Financial Liabilities: 4,127 - Total Debt: 7,785 Cash: - Liquid Funds: 3,919 Net Debt: 7,785 - 3,919 = 3,866 Is there any other cash-like item? "Current Derivative Financial Assets" = 1,486 million. These are not cash. "Other Current Financial Assets" = 660 million. Not clearly cash. What about "Margin Receivables" = 2,607 million? These are receivables from margin calls, not cash. So 3,919 million in cash seems correct. One more consideration: should I use "Cash And Cash Equivalents" or "Liquid Funds"? The data shows both at 3,919 million for 2023-01-01, so they're the same. For 2022-01-01, "Liquid Funds" = 7,592 million and "Cash And Cash Equivalents" = 7,592 million. Same. OK, I'm comfortable with Net Debt = 3,866 million. For EBITDA, one more check: should I use LTM (last twelve months) or something else? The data is for fiscal year 2022, which is the standard period. Actually, since the balance sheet is at 2023-01-01 and the income statement is for 2022-01-01 to 2023-01-01, they match perfectly. Final calculation: 3,866 / 2,436 = 1.587 I'll round to 1.59 or present as 1.6. Given the precision of the inputs, 1.59 or 1.6 seems appropriate. Actually, looking at the exact numbers: 3,866,000,000 / 2,436,000,000 = 1.587027... So approximately 1.59. But wait - I want to reconsider one more time if S&P would use reported or comparable EBITDA. S&P Global Ratings' methodology states they use "adjusted EBITDA" which includes their own adjustments for non-recurring items, stock-based compensation, etc. They may or may not fully align with management's "comparable" adjustments. However, without more detailed information about what's in "Items Affecting Comparability", using management's Comparable EBITDA is a reasonable proxy for S&P-adjusted EBITDA. If S&P were to use reported EBITDA, the ratio would be 2.10, which is significantly higher. Given the large one-time items in 2022 (divestiture-related), S&P would definitely make adjustments. I'll use Comparable EBITDA = 2,436 million. Final answer: Net Debt / EBITDA = 3,866 / 2,436 = 1.59 Actually, let me also consider if I should present this as a negative or use absolute values. Net Debt is positive (debt exceeds cash), so the ratio is positive. One more thing: I want to check if there's any possibility that "Other Current Financial Liabilities" includes trade payables or other non-debt items. Looking at the 2021 data: - Trade And Other Current Payables: 14,856 million (separate line) - Other Current Financial Liabilities: 8,519 million (separate) These are separate line items, so "Other Current Financial Liabilities" does not include trade payables. Similarly in 2022: - Trade And Other Current Payables: 1,657 million - Other Current Financial Liabilities: 4,127 million Separate, so "Other Current Financial Liabilities" is indeed debt-like financial liabilities. Good, my debt estimate is solid. Final answer: 1.59 or approximately 1.6. I'll provide 1.59 for more precision, or round to 1.6. Given that financial ratios are often presented to one decimal place, I'll use 1.6. Actually, re-thinking: the inputs are in millions with 3-4 significant figures, so the ratio could be presented as 1.59 or 1.6. I'll use 1.6 as a rounded figure, or perhaps 1.59 for slightly more precision. Let me check if 3,866 / 2,436 could be simplified: both divisible by 2: 1,933 / 1,218. Not nice numbers. 1.587... rounds to 1.59 to two decimal places, or 1.6 to one decimal place. For credit ratios, one decimal place is typical. So 1.6. But the question says "estimate", so some precision is fine. I'll provide 1.59. Wait, I want to make absolutely sure about one thing. Is "Comparable EBITDA" the right metric, or should I calculate EBITDA differently? From the data: - "Operating Profit Before Depreciations Ebitda" = 1,842 million - "Comparable Ebitda" = 2,436 million The difference is 594 million, which is approximately the absolute value of "Items Affecting Comparability" (-593 million). So Comparable EBITDA = Reported EBITDA + |Items Affecting Comparability| (since items were negative, they reduced reported EBITDA, so comparable adds them back). For S&P, if the items affecting comparability are truly one-time (impairments, gains/losses on divestitures, etc.), they would add them back to get to a "run-rate" EBITDA. Given that 2022 included massive divestiture impacts, using Comparable EBITDA is appropriate. However, I should note that "Items Affecting Comparability" of -593 million includes both positive and negative items. The net is negative, meaning there were more losses than gains (or the presentation is such that it reduces profit). Actually, looking at the detailed positive items (impairment reversal 905, capital gains 785, derivatives 393, other 80), these total 2,163 million. If these are all positive but "Items Affecting Comparability" is -593 million, there must be offsetting negative items of 2,756 million. For S&P, they might not add back all of these. For example, capital gains from divestitures are typically not added back to EBITDA (they're not in EBITDA to begin with). Wait - capital gains are typically below EBITDA, so they don't affect EBITDA. Actually, let me think about this. EBITDA is Earnings Before Interest, Taxes, Depreciation, and Amortization. Capital gains on divestitures are typically: - Either in operating profit (if considered operating) or - Below operating profit (if considered non-operating) In Fortum's case, "Capital Gains And Other Related Items" is listed as an item affecting comparability. If these gains/losses are in operating profit, they affect EBITDA. If they're below operating profit, they don't. Given that "Items Affecting Comparability" is presented between "Comparable Operating Profit" and "Profit Loss From Operating Activities", it suggests these items are in operating profit. Therefore, they affect EBITDA. For S&P, they would need to assess which items are truly non-recurring and adjust accordingly. Given the information available, using "Comparable EBITDA" is the best proxy for S&P-adjusted EBITDA. Final answer: Net Debt / EBITDA = 3,866 / 2,436 = 1.59 I'll provide this as my estimate. 1.59