I need to calculate Net Debt / EBITDA for 2022 using S&P methodology. Let me break this down. ## Step 1: Understand S&P Methodology for Net Debt S&P Global typically defines Net Debt as: - Total Debt (short-term + long-term borrowings) - Less: Cash and Cash Equivalents - Less: Liquid Investments (if any) For Ferrovial, an infrastructure company, I need to be careful about what debt to include. S&P typically includes: - All recourse debt of the parent company - Proportionally consolidated debt of infrastructure projects (or full consolidation if the company consolidates them) Looking at the balance sheet structure, Ferrovial has two types of debt: - Infrastructure projects debt (non-recourse or ring-fenced) - Excluding infrastructure projects debt (corporate/recourse debt) ## Step 2: Calculate Total Debt From the balance sheet at 2023-01-01 (end of 2022): **Noncurrent Borrowings:** - Noncurrent Portion Of Other Noncurrent Borrowings: 10,776,000,000 EUR - Of which: Noncurrent Debt Securities And Bank Borrowings Of Infrastructure Projects: 7,893,000,000 EUR - Of which: Noncurrent Debt Securities And Bank Borrowings Excluding Infrastructure Projects: 2,883,000,000 EUR **Current Borrowings:** - Current Borrowings And Current Portion Of Noncurrent Borrowings: 877,000,000 EUR - Of which: Current Debt Securities And Bank Borrowings Of Infrastructure Projects: 74,000,000 EUR - Of which: Current Debt Securities And Bank Borrowings Excluding Infrastructure Projects: 803,000,000 EUR **Total Debt = 10,776,000,000 + 877,000,000 = 11,653,000,000 EUR** Or broken down: - Infrastructure Projects Debt: 7,893,000,000 + 74,000,000 = 7,967,000,000 EUR - Excluding Infrastructure Projects Debt: 2,883,000,000 + 803,000,000 = 3,686,000,000 EUR For S&P methodology with infrastructure companies, we typically look at **consolidated net debt**, which includes all debt less cash. ## Step 3: Calculate Cash and Cash Equivalents At 2023-01-01: - Cash And Cash Equivalents: 5,130,000,000 EUR - Cash And Cash Equivalents Infrastructure Projects: 168,000,000 EUR - Current Restricted Cash And Cash Equivalents Infrastructure Projects: 38,000,000 EUR - Other Cash And Cash Equivalents Infrastructure Projects: 130,000,000 EUR - Cash And Cash Equivalents Excluding Infrastructure Projects: 4,962,000,000 EUR Also need to check for other liquid financial assets: - Noncurrent Financial Assets: 1,095,000,000 EUR (includes long-term loans, restricted cash, etc.) - Current Derivative Financial Assets: 184,000,000 EUR - Noncurrent Derivative Financial Assets: 148,000,000 EUR For S&P, "Cash and Liquid Investments" typically includes: - Cash and Cash Equivalents - Short-term investments/marketable securities Restricted cash related to infrastructure projects may or may not be deducted depending on S&P's view. For conservative S&P approach, typically only unrestricted cash is subtracted. However, looking more carefully at standard S&P methodology for infrastructure companies: they usually take **total cash** less restricted cash if it's truly restricted. Let me use: Cash And Cash Equivalents = 5,130,000,000 EUR But we should also consider if there are other current financial assets that are liquid: - Other Current Financial Assets: 0 EUR ## Step 4: Calculate Net Debt **Net Debt = Total Debt - Cash and Cash Equivalents** Using total consolidated approach: Net Debt = 11,653,000,000 - 5,130,000,000 = **6,523,000,000 EUR** However, S&P sometimes uses a narrower definition focusing on recourse debt. Let me also calculate: - Corporate Net Debt (excluding infrastructure projects) = 3,686,000,000 - 4,962,000,000 = negative (company has more cash than corporate debt) For a complete consolidated picture (which S&P uses for credit ratings), I'll use total consolidated net debt. Wait - let me reconsider. The "Other Noncurrent Financial Liabilities" of 838,000,000 EUR might also be debt-like. Let me check if this should be included. Also, I need to check if there are lease liabilities that S&P would include: - Noncurrent Lease Liabilities: 120,000,000 EUR - Current Lease Liabilities: 64,000,000 EUR S&P typically includes finance leases in debt, but may or may not include operating leases depending on the methodology version. Under current S&P methodology post-IFRS 16, lease liabilities are typically included in debt. So adjusted total debt might be: - Borrowings: 11,653,000,000 EUR - Lease Liabilities: 184,000,000 EUR - Other Noncurrent Financial Liabilities: 838,000,000 EUR But "Other Noncurrent Financial Liabilities" could include derivatives, pensions, etc. not all debt. Let me stick with a cleaner definition: debt securities and bank borrowings plus known debt-like items. Actually, re-reading: "Noncurrent Portion Of Other Noncurrent Borrowings" and "Current Borrowings And Current Portion Of Noncurrent Borrowings" seem to be the main debt lines. Let me verify: 10,776,000,000 + 877,000,000 = 11,653,000,000 EUR total borrowings. For S&P Net Debt, I'll use: Total Borrowings + Lease Liabilities - Cash and Cash Equivalents = 11,653,000,000 + 184,000,000 - 5,130,000,000 = 6,707,000,000 EUR Or more conservatively with other financial liabilities if debt-like. Let me also check if restricted cash should be excluded from cash: - Restricted Cash Relating To Infrastructure Projects And Other Financial Assets (noncurrent): 597,000,000 EUR - Current Restricted Cash And Cash Equivalents Infrastructure Projects: 38,000,000 EUR Total restricted cash = 635,000,000 EUR Unrestricted cash = 5,130,000,000 - 38,000,000 = 5,092,000,000 EUR? But the 168M infrastructure cash may also be restricted. Actually, looking at the breakdown: - Cash And Cash Equivalents Infrastructure Projects: 168,000,000 EUR - Current Restricted Cash And Cash Equivalents Infrastructure Projects: 38,000,000 EUR - Other Cash And Cash Equivalents Infrastructure Projects: 130,000,000 EUR The "Other" 130M might be unrestricted project cash. For S&P, typically all project cash is considered restricted/ring-fenced and excluded from net debt calculations for corporate credit analysis, OR included for consolidated analysis. For a full consolidated Net Debt/EBITDA (as used for group-level metrics), I'll include all cash. Net Debt = 11,653,000,000 - 5,130,000,000 = 6,523,000,000 EUR ## Step 5: Calculate EBITDA For EBITDA, I need to work from the income statement. S&P typically calculates EBITDA as: - Operating Profit (before exceptional items) + Depreciation & Amortization + Other non-cash charges From the 2022 data (period 2022-01-01 to 2023-01-01): "Profit Loss From Operating Activities": 423,000,000 EUR This is after D&A and after impairments. Let me build up: - "Gross Profit": 728,000,000 EUR - Less: "Miscellaneous Other Operating Expense" (part of): need to figure out what's in operating profit Actually, let me use: "Profit From Operations Before Impairment And Disposals Of Non Current Assets": 429,000,000 EUR This is before impairment but likely after D&A. Add back: - "Amortisation Expense": 299,000,000 EUR But wait, is this included in operating expenses? Let me check the structure. "Operating Expense": 6,825,000,000 EUR "Revenue And Operating Income": 7,553,000,000 EUR Gross Profit = 7,553,000,000 - 6,825,000,000 = 728,000,000 EUR ✓ But "Profit From Operations Before Impairment And Disposals Of Non Current Assets" is 429,000,000 EUR, which is less than Gross Profit of 728,000,000 EUR. Difference = 728,000,000 - 429,000,000 = 299,000,000 EUR This exactly equals "Amortisation Expense"! So it seems Amortization is deducted after Gross Profit to get to Operating Profit. So: Operating Profit before impairment = 429,000,000 EUR Add back: Amortization = 299,000,000 EUR Add back: Impairment and disposals = 6,000,000 EUR (negative, so loss) Wait, "Impairment And Gains Or Losses On Disposal Of Non Current Assets" = -6,000,000 EUR (loss) So EBITDA = Operating Profit before impairment + Impairment/losses + D&A = 429,000,000 + 6,000,000 + 299,000,000? No wait, let me re-read. "Profit From Operations Before Impairment And Disposals" is already before impairment. Then "Profit Loss From Operating Activities" = 423,000,000 = 429,000,000 - 6,000,000. So "Profit From Operations Before Impairment And Disposals" = 429,000,000 already includes amortization. Therefore: EBITDA = "Profit From Operations Before Impairment And Disposals" + Amortization + Depreciation We have Amortization = 299,000,000 EUR. But where is Depreciation? Looking at the cash flow: "Ajustes Al Resultado Por Gastos Por Depreciacion YAmortizacion" = 299,000,000 EUR. This seems to be total D&A combined (in Spanish: "Adjustments to results for depreciation and amortization expenses"). So total D&A = 299,000,000 EUR. Then EBITDA = 429,000,000 + 299,000,000 = 728,000,000 EUR? Wait, that equals Gross Profit. Let me check if Gross Profit = EBITDA. Actually, looking at typical income statement structure: Revenue - COGS (including D&A of production assets?) = Gross Profit - SG&A (including D&A?) - Other operating expenses = EBIT/Operating Profit But in this case, "Amortisation Expense" is shown separately, and it equals the difference between Gross Profit and Operating Profit. Gross Profit = 728,000,000 Operating Profit before impairment = 429,000,000 Difference = 299,000,000 = Amortisation So yes, it appears all D&A is charged between Gross Profit and Operating Profit. Therefore: EBITDA = Operating Profit before impairment + D&A = 429,000,000 + 299,000,000 = 728,000,000 EUR Or simply = Gross Profit = 728,000,000 EUR? No, Gross Profit typically doesn't include all operating expenses. Wait, let me re-check. "Miscellaneous Other Operating Expense" = 4,182,000,000 EUR and "Employee Benefits Expense" = 1,446,000,000 EUR. Total = 5,628,000,000 EUR. Revenue = 7,551,000,000 EUR Raw Materials = 1,197,000,000 EUR Gross Profit (by calculation) = 7,551,000,000 - 1,197,000,000 = 6,354,000,000 EUR? But stated Gross Profit = 728,000,000 EUR. This is very different! Actually, looking more carefully: "Revenue And Operating Income" = 7,553,000,000 EUR. This includes "Other Income" of 2,000,000 EUR. So Revenue = 7,551,000,000 EUR, Other Income = 2,000,000 EUR, total = 7,553,000,000 EUR. "Operating Expense" = 6,825,000,000 EUR. 7,553,000,000 - 6,825,000,000 = 728,000,000 EUR = Gross Profit. ✓ But what's in Operating Expense? It includes: - Raw Materials And Consumables Used: 1,197,000,000 EUR - Miscellaneous Other Operating Expense: 4,182,000,000 EUR? No wait, that's 4,183,000,000 before fair value adjustment, 4,182,000,000 after. Actually: 1,197,000,000 + 4,182,000,000 + 1,446,000,000 = 6,825,000,000 EUR. ✓ So Operating Expense = Raw Materials + Misc Other Operating Expense + Employee Benefits. And Gross Profit = Revenue + Other Income - Operating Expense = 7,553,000,000 - 6,825,000,000 = 728,000,000. But then where does Amortization fit? It's not in these line items explicitly. Unless "Miscellaneous Other Operating Expense" includes it, and the "Amortisation Expense" is a separate disclosure. Actually, the cash flow statement shows "Ajustes Al Resultado Por Gastos Por Depreciacion YAmortizacion" = 299,000,000 EUR as an adjustment to profit. This confirms it's a non-cash expense deducted in arriving at profit. So the income statement likely has: - Start with some profit measure - D&A of 299,000,000 is deducted somewhere Looking at "Profit From Operations Before Impairment And Disposals" = 429,000,000 vs "Gross Profit" = 728,000,000. Difference is 299,000,000. This must be where D&A is charged. So: Gross Profit: 728,000,000 Less: D&A and perhaps other items: 299,000,000 = Profit from operations before impairment: 429,000,000? But 728,000,000 - 299,000,000 = 429,000,000. ✓ So EBITDA = 429,000,000 + 299,000,000 = 728,000,000 EUR? Or is there more to add back? Actually, for S&P EBITDA, we also need to consider if there are other items. S&P typically defines EBITDA as: - EBIT + Depreciation + Amortization - Where EBIT is operating profit before interest and taxes "Profit Loss From Operating Activities" = 423,000,000 EUR. This is after impairment of 6M loss. EBIT (operating profit) = 423,000,000 EUR (or 429,000,000 before impairment) For S&P, typically use EBIT before impairment and unusual items = 429,000,000 EUR. EBITDA = 429,000,000 + 299,000,000 = 728,000,000 EUR. But wait - is 728M reasonable? Let me check if this makes sense. Revenue is 7.5B, so EBITDA margin of about 9.6%. For a construction/infrastructure company, this seems low but possible. Actually, I want to double-check. Let me see if there's other D&A or if we need to add back more. Looking at the cash flow adjustments: - Adjustments For Reconcile Profit Loss: -697,000,000 EUR (this is net adjustments) - Includes: D&A: 299,000,000 EUR - Includes: adjustments for undistributed profits of equity method investments: -165,000,000 EUR - Includes: finance costs: 320,000,000 EUR - Includes: income tax: -30,000,000 EUR - Includes: discontinued operations: -64,000,000 EUR - Includes: non-controlling interests: 116,000,000 EUR - Includes: gain/loss on disposals: 6,000,000 EUR Let me verify: Starting from Profit Loss = 302,000,000 EUR (or continuing operations 238M + discontinued 64M) Cash flow from operations = 1,002,000,000 EUR. The reconciliation shows various adjustments. For EBITDA, S&P also typically adjusts for the equity-accounted earnings/losses if using a proportionally consolidated or fully consolidated approach. But since Ferrovial fully consolidates subsidiaries and equity-accounts associates, the EBIT of 429M already includes the company's share of associate profits (or rather, the equity-accounted income is below operating profit). Actually, looking at "Share Of Profit Loss Of Associates Accounted For Using Equity Method" = 165,000,000 EUR. This is AFTER operating profit. So Operating Profit of 429M does NOT include equity-accounted income. Good. For S&P EBITDA calculation for a company with significant associates, sometimes they add back the equity income or use a proportionally consolidated approach. But for standard Net Debt/EBITDA, we use the as-reported consolidated EBITDA. Let me also check if we need to add back lease depreciation. Under IFRS 16, lease depreciation is part of D&A or part of operating expenses. The Right-of-use assets are 183M, so lease depreciation would be roughly 183M/lease term. This might be in the 299M amortization or in other expenses. Actually, looking more carefully: "Amortisation Expense" = 299,000,000 EUR. This is labeled as amortization, not depreciation. Where is depreciation? In Spanish accounts, "depreciación" is depreciation and "amortización" can mean both depreciation and amortization. The line "Ajustes Al Resultado Por Gastos Por Depreciacion YAmortizacion" = 299,000,000 EUR suggests this is total D&A. But the income statement line says "Amortisation Expense" = 299,000,000 EUR. This likely includes both depreciation and amortization (common in Spanish/IFRS reporting to call it all amortization). So total D&A = 299,000,000 EUR. EBITDA = 429,000,000 + 299,000,000 = 728,000,000 EUR. Hmm, but let me verify this is correct by another approach. S&P sometimes calculates EBITDA as: Revenue - Cash Operating Costs, or EBITDA = Gross Profit + Other operating income - Cash operating expenses... Actually, I realize I may be making an error. Let me re-examine the income statement structure more carefully. Looking at the line items again: - "Revenue And Operating Income" = 7,553,000,000 EUR - "Operating Expense" = 6,825,000,000 EUR - "Gross Profit" = 728,000,000 EUR Then: - "Amortisation Expense" = 299,000,000 EUR - "Profit From Operations Before Impairment And Disposals Of Non Current Assets" = 429,000,000 EUR Wait, 728,000,000 - 299,000,000 = 429,000,000. So yes, Amortization is deducted after Gross Profit. But is Gross Profit before or after other operating expenses? The term "Gross Profit" is used, but in this context it seems to mean "Operating Profit before D&A" or something similar. Actually, looking at standard IFRS income statement format: Revenue Cost of sales = Gross Profit Distribution costs Administrative expenses Other operating income/expenses = Operating Profit But here, "Gross Profit" of 728M seems to already be after all operating expenses except D&A and impairment. Let me check: If "Operating Expense" includes all cash operating costs plus D&A, then: Revenue + Other Income - Operating Expense = 728M would be after all operating expenses. But then 728M - 299M = 429M suggests D&A was not in Operating Expense. Actually, re-reading: "Miscellaneous Other Operating Expense" has a fair value adjustment of -1M, making it 4,182M instead of 4,183M. And total Operating Expense has fair value adjustment of -1M, making it 6,825M instead of 6,826M. So "Operating Expense" = Raw Materials (1,197M) + Misc Other Operating (4,182M or 4,183M before FV adjustment) + Employee Benefits (1,446M). If Misc Other Operating includes D&A, then the separate "Amortisation Expense" is just a disclosure, not an additional expense. But then Gross Profit = 7,553 - 6,825 = 728 would already be after D&A, which contradicts 728 - 299 = 429. Unless... "Gross Profit" here is actually "Profit before D&A and impairment" - a subtotal that's not true gross profit. Looking at this more carefully with fresh eyes: In some European reporting, "Gross Profit" can be used loosely, or there might be a different structure. Actually, I think I see the issue. Let me check if "Revenue And Operating Income" minus "Operating Expense" gives a subtotal before D&A. Wait - "Revenue And Operating Income" includes "Revenue" (7,551M) + "Other Income" (2M). "Operating Expense" is total operating costs. Their difference is "Gross Profit" (728M). Then separately, "Amortisation Expense" (299M) is deducted to get "Profit From Operations Before Impairment" (429M). This means "Gross Profit" as defined here is actually operating profit before D&A, not true gross profit. This is non-standard terminology but seems to be how this company reports. So: - "Gross Profit" = EBIT before D&A and before impairment = 728M - Less: D&A = 299M - = EBIT before impairment = 429M - Less: impairment = 6M - = EBIT = Operating Profit = 423M Therefore, EBITDA = "Gross Profit" = 728,000,000 EUR? No, EBITDA typically includes D&A added back to EBIT. If EBIT before impairment = 429M, then EBITDA = 429M + 299M = 728M. And this equals the "Gross Profit" line. So "Gross Profit" in this company's terminology = EBITDA. This makes sense as it's profit before D&A and impairment. Actually wait - I need to be more careful. Let me check if "Gross Profit" includes other items that S&P would exclude from EBITDA. For S&P EBITDA, typical adjustments include: - Start with EBIT - Add back D&A - Add back impairment (if unusual) - Adjust for other non-cash or non-recurring items In this case, using "Profit From Operations Before Impairment And Disposals" = 429M as EBIT before impairment: EBITDA = 429M + 299M = 728M. Or if we use "Gross Profit" = 728M as the starting point and it's defined as before D&A, then EBITDA = 728M. But I need to check if "Gross Profit" includes any non-operating or non-recurring items that S&P would adjust. Looking at the components: "Gross Profit" = Revenue + Other Income - Operating Expense. "Other Income" = 2M (small) "Operating Expense" = Raw Materials + Misc Other Operating + Employee Benefits. This seems to be core operations. So EBITDA = 728,000,000 EUR. But wait - I should also consider if S&P makes other adjustments. For example, does EBITDA include dividends received or interest income? Typically no, these are below EBITDA. Also, for infrastructure companies, S&P sometimes calculates "Funds From Operations" (FFO) or uses a proportionally consolidated EBITDA. But for standard Net Debt/EBITDA, we use as-reported consolidated EBITDA. Let me also check if we need to annualize or if there's any seasonal effect. The period is 2022-01-01 to 2023-01-01, so it's a full year. ## Step 6: Final Calculation Net Debt: - Total Borrowings: 11,653,000,000 EUR - Noncurrent: 10,776,000,000 - Current: 877,000,000 - Plus Lease Liabilities (debt-like per S&P): 184,000,000 EUR - Noncurrent: 120,000,000 - Current: 64,000,000 - Total Debt-like liabilities: 11,837,000,000 EUR Less: Cash and Cash Equivalents: 5,130,000,000 EUR Net Debt = 11,837,000,000 - 5,130,000,000 = 6,707,000,000 EUR Or if excluding leases from debt: Net Debt = 11,653,000,000 - 5,130,000,000 = 6,523,000,000 EUR For S&P methodology, I'll include leases as they are debt-like: **Net Debt = 6,707,000,000 EUR** EBITDA = 728,000,000 EUR **Net Debt / EBITDA = 6,707,000,000 / 728,000,000 = 9.21x** Let me also calculate with the alternative (excluding leases from debt but adding to EBITDA? No, S&P doesn't do that). Actually, under IFRS 16, lease depreciation is part of D&A or operating expenses, and lease interest is part of finance costs. The 299M amortization likely includes lease depreciation. So EBITDA already includes the add-back of lease depreciation. For S&P, the standard approach post-IFRS 16 is: - Debt includes lease liabilities - EBITDA includes EBITDAR (or rather, EBITDA includes the operating lease replacement which is now depreciation + interest, but since we add back D&A and interest is below the line...) Actually, under IFRS 16, operating lease expense is replaced by: - Depreciation of right-of-use asset (in operating expenses/D&A) - Interest on lease liability (in finance costs) When we calculate EBITDA = EBIT + D&A, we add back the depreciation portion but not the interest. So EBITDA under IFRS 16 is higher than under IAS 17 by the amount of interest on leases (roughly). For comparability, S&P sometimes uses "EBITDAR" or adjusts for leases. But for standard Net Debt/EBITDA with IFRS 16 numbers, we use as-reported. Given the complexity, let me use a cleaner approach that matches S&P's typical published metrics for such companies. Actually, I want to double-check my EBITDA. Let me see if there's a better way to calculate it. From the cash flow statement: Cash Flows From Used In Operating Activities = 1,002,000,000 EUR This includes: - Profit adjustments - Working capital changes - Dividends received - Taxes paid Let me try to back-calculate EBITDA from cash flow: Operating Cash Flow = 1,002,000,000 Less: Dividends received = 284,000,000 (typically excluded from EBITDA) Less/Add: Working capital = 83,000,000 Add: Taxes paid = 82,000,000 = Approx operating cash flow before working capital and dividends This gets messy. Let me stick with the income statement approach. Actually, I realize I should check if "Gross Profit" of 728M is truly EBITDA or if there are other items to add back. Looking at S&P's typical EBITDA calculation: EBITDA = Operating income + Depreciation & Amortization + Other non-cash charges Operating income here = "Profit Loss From Operating Activities" = 423M Add: Impairment = 6M (to get to pre-impairment) Add: D&A = 299M = 728M Or starting from "Profit From Operations Before Impairment And Disposals" = 429M Add: D&A = 299M = 728M So EBITDA = 728,000,000 EUR. Confirmed. Now for Net Debt, I want to be more precise. Let me check if there are other debt-like items: From balance sheet at 2023-01-01: - "Noncurrent Derivative Financial Liabilities" = 66,000,000 EUR (could be debt-like if negative value) - "Current Derivative Financial Liabilities" = 47,000,000 EUR These are typically excluded from debt if they're operating hedges, or included if they're debt-related. - "Deferred Tax Liabilities" = 924,000,000 EUR (not debt) - "Other Noncurrent Financial Liabilities" = 838,000,000 EUR What is in "Other Noncurrent Financial Liabilities"? Could include: - Derivatives, contingent consideration, pensions, etc. Without more detail, I'll exclude this as it's unclear if it's debt-like. For S&P Net Debt, standard definition: Total Debt = Short-term borrowings + Long-term borrowings + Finance lease obligations + Commercial paper + Bank overdrafts + Other debt-like instruments I'll use: Total Debt = 11,653,000,000 (borrowings) + 184,000,000 (leases) = 11,837,000,000 EUR Less: Cash = 5,130,000,000 EUR Net Debt = 6,707,000,000 EUR Net Debt / EBITDA = 6,707 / 728 = 9.213... Let me round to 9.2x. But wait - I should also consider if restricted cash should be excluded. S&P typically excludes restricted cash that is not freely available. Restricted cash: - Noncurrent: Restricted Cash Relating To Infrastructure Projects And Other Financial Assets = 597,000,000 EUR - Current: Current Restricted Cash And Cash Equivalents Infrastructure Projects = 38,000,000 EUR Total restricted = 635,000,000 EUR Freely available cash = 5,130,000,000 - 635,000,000 = 4,495,000,000 EUR? But wait, the 168M "Cash And Cash Equivalents Infrastructure Projects" includes 38M restricted and 130M "other". Is the 130M restricted? Probably not fully freely available to the parent, but may be available for project purposes. For consolidated Net Debt/EBITDA, S&P might include all cash if it's consolidated. But for corporate credit analysis, they exclude project cash. Given the ambiguity, let me calculate both ways: - With all cash: Net Debt = 6,707M, Ratio = 9.21x - With restricted cash excluded: Net Debt = 6,707M + 635M - 38M? No wait, I already subtracted all cash. If we exclude restricted cash from the cash deduction: Net Debt = 11,837M - (5,130M - 635M) = 11,837M - 4,495M = 7,342M Ratio = 7,342 / 728 = 10.09x Or if we exclude all project cash (168M): Net Debt = 11,837M - (5,130M - 168M) = 11,837M - 4,962M = 6,875M Ratio = 6,875 / 728 = 9.44x I think for a standard consolidated ratio, using all cash is appropriate. But let me check if S&P has specific guidance for infrastructure companies. Actually, looking at Ferrovial's structure, they separate "Infrastructure Projects" debt and cash from corporate debt and cash. For S&P corporate rating, they might focus on the corporate (excluding infrastructure projects) or use a consolidated approach. For consolidated Net Debt/EBITDA (most common for financial reporting): Net Debt = Total Debt - Total Cash = 11,653M - 5,130M = 6,523M (without leases) Or 11,837M - 5,130M = 6,707M (with leases) EBITDA = 728M Ratio with leases = 9.21x Ratio without leases in debt = 6,523/728 = 8.96x Given S&P's tendency to include leases as debt, I'll use 9.21x. But let me also consider if we should use "Net Debt at year end 2022" which is 2023-01-01, or average net debt. S&P typically uses year-end or latest available, so 2023-01-01 is correct. One more check: Should I use 2022 EBITDA or LTM? The period 2022-01-01 to 2023-01-01 is the 2022 fiscal year, so it's correct. Final verification of numbers: - Total borrowings: 10,776 + 877 = 11,653 ✓ - Lease liabilities: 120 + 64 = 184 ✓ - Total debt: 11,837 ✓ - Cash: 5,130 ✓ - Net debt: 6,707 ✓ - EBITDA: 728 ✓ - Ratio: 6,707 / 728 = 9.213... Rounding: 9.21 or about 9.2. Actually, let me see if I can get a more precise number. 6707/728 = 9.212912... I'll provide 9.21 as the answer. Wait, I want to double-check one thing. Is "Gross Profit" truly EBITDA? Let me verify by checking if there are any other non-cash or non-operating items in it. "Gross Profit" = Revenue + Other Income - Operating Expense = 7,553,000,000 - 6,825,000,000 = 728,000,000 Operating Expense = Raw Materials + Misc Other Operating + Employee Benefits = 1,197 + 4,182 + 1,446 = 6,825 ✓ Are there any non-cash items in Operating Expense? The "Miscellaneous Other Operating Expense" might include some. But D&A is shown separately as 299M, deducted after "Gross Profit". So "Gross Profit" = EBIT before D&A and before impairment = EBITDA (since we add back D&A to EBIT, and EBIT before D&A is... wait, that's not right). Let me clarify: - EBIT = Earnings Before Interest and Taxes - EBITDA = Earnings Before Interest, Taxes, Depreciation, and Amortization So EBIT + D&A = EBITDA. "Profit From Operations Before Impairment And Disposals" = 429M. This is EBIT before impairment (since interest and taxes are below this line). 429M + 299M (D&A) = 728M = EBITDA. And "Gross Profit" = 728M. So yes, "Gross Profit" in this report = EBITDA. It's just unusual naming. Actually, I want to be absolutely sure. Let me trace through the full P&L: Revenue + Other Income = 7,553M - Operating Expense = 6,825M = "Gross Profit" = 728M - Amortisation Expense = 299M = Profit from operations before impairment = 429M - Impairment = 6M = Profit from operating activities = 423M + Share of profit of associates = 165M - Finance costs = 320M = Profit before tax = 268M - Tax = 30M = Profit from continuing operations = 238M + Profit from discontinued operations = 64M = Profit for the year = 302M Wait, let me check: 423 + 165 - 320 = 268? 423 + 165 = 588. 588 - 320 = 268. ✓ And 268 - 30 = 238. ✓ 238 + 64 = 302. ✓ And 302 = attributable to owners 186M + NCI 116M. ✓ Great, the numbers tie out. So EBITDA = 728M is correct. One final check: Should S&P EBITDA include dividends received or other items? Typically no, EBITDA is from operations before interest, taxes, D&A. The 284M dividends received in operating cash flow are typically excluded from EBITDA (they're a return on investment, not operating income). So my final answer: Net Debt = 6,707,000,000 EUR (including lease liabilities, excluding restricted cash adjustment) EBITDA = 728,000,000 EUR Net Debt / EBITDA = 9.21x Actually, I want to reconsider the lease treatment one more time. Under S&P methodology, especially for infrastructure companies with IFRS 16: S&P Global Ratings typically includes lease liabilities in total debt. However, for EBITDA, they may use a pre-IFRS 16 comparable measure or adjust for lease depreciation. But in standard published financial ratios, they use as-reported numbers. So with IFRS 16: - Debt includes lease liabilities - EBITDA includes EBIT + D&A (where D&A includes lease depreciation) This is consistent with my calculation. However, I realize I should check if the 299M "Amortisation Expense" includes lease depreciation. Given Right-of-use assets are 183M at year-end and 176M at start, with maybe 100-150M average, and assuming 5-10 year lease terms, lease depreciation would be roughly 20-40M per year. So the 299M likely includes some lease depreciation. This is fine - it's all captured in the EBITDA add-back. Final answer: 9.21 Let me also provide the simpler version without leases in debt to see if that's more standard: Net Debt = 11,653 - 5,130 = 6,523M Ratio = 6,523 / 728 = 8.96x But S&P explicitly includes leases in debt for their leverage ratios, so 9.21 is more appropriate. Actually, reviewing S&P's corporate methodology: "We include finance leases and operating leases (post-IFRS 16) in total debt." So yes, include leases. 9.21