I need to estimate the Net Debt / EBITDA ratio for 2022 using S&P methodology. First, let me identify the key components needed: **EBITDA (S&P methodology typically uses):** S&P typically uses "Current Operating Income Including Operating Mtm" plus depreciation/amortization, or adjusts from reported figures. Let me look at what's available. From the income statement: - Current Operating Income Including Operating Mtm 2022: €4,309,000,000 - Depreciation Amortization And Provisions 2022: €5,187,000,000 However, S&P methodology for EBITDA typically uses: - Operating profit / EBIT + depreciation & amortization Let me check if I can derive a cleaner EBITDA. Looking at the cash flow adjustments: - Net Depreciation Amortization Impairment And Provisions 2022: -€8,057,000,000 (this includes impairment, so it's broader) For S&P methodology, EBITDA is typically: - Current Operating Income Including Operating Mtm + Depreciation Amortization (without impairment) But we need to be careful. Let me use a standard approach: EBITDA = Current Operating Income Including Operating Mtm + Depreciation Amortization And Provisions (from P&L, not including impairment portion if separated) Actually, looking more carefully at S&P methodology: - S&P Global Ratings typically defines EBITDA as operating income before depreciation and amortization, and also before certain items. From the data: - "Depreciation Amortization And Provisions" in P&L = €5,187,000,000 for 2022 - But in cash flow, "Net Depreciation Amortization Impairment And Provisions" = -€8,057,000,000 The difference (€8,057M - €5,187M = €2,870M) likely represents impairments and other provisions changes. For S&P EBITDA, we typically use: EBITDA = Current Operating Income Including Operating Mtm + Depreciation & Amortization (excluding impairment) So EBITDA ≈ €4,309M + €5,187M = €9,496M But wait - let me also consider if S&P would use "Profit Loss From Operating Activities" which includes more items. That was €1,127M for 2022. Actually, S&P typically adjusts back certain non-recurring items. Let me think about this more carefully. Standard S&P EBITDA calculation: - Start with operating profit (before financing and tax) - Add back depreciation and amortization - Adjust for non-recurring items if material Looking at the structure: - Current Operating Income Including Operating Mtm: €4,309M - This is before: impairments, restructuring, other non-recurring, share of equity method For a cleaner S&P EBITDA, I should use: EBITDA = Current Operating Income Including Operating Mtm + Depreciation Amortization And Provisions = €4,309M + €5,187M = €9,496M Or should I use the cash flow approach? The cash flow shows adjustments for non-cash items to get to operating cash flow before working capital. Actually, let me reconsider. S&P methodology often uses "Funds From Operations" (FFO) related metrics, but for Net Debt/EBITDA: Let me check if there's a better EBITDA proxy. The cash flow statement shows: - Cash Flows From Used In Operations Before Changes In Working Capital: €12,415M This includes: operating income + D&A + other non-cash items + dividends received - taxes paid pattern, etc. For S&P, EBITDA is typically more like: - EBIT + D&A, where EBIT is closer to operating profit before financing costs Let me use: Current Operating Income Including Operating Mtm + Depreciation Amortization And Provisions = 4,309 + 5,187 = €9,496M But I need to check if this is too low. Let me also consider if S&P would add back some items. Actually, looking at typical utility/energy company analysis, S&P might also consider the equity method income. But for strict EBITDA, it's usually pre-financing, pre-tax. Let me try another approach: S&P sometimes uses "Adjusted EBITDA" which might include share of profit from equity method: = Current Operating Income Including Operating Mtm And Share In Net Income Of Equity Method Entities + Depreciation = €5,367M + €5,187M = €10,554M However, standard EBITDA doesn't include equity method income. Let me stick with the more conservative €9,496M, or check if there's a better measure. Actually, re-reading S&P methodology: they typically define EBITDA as earnings before interest, taxes, depreciation and amortization. For this, we need EBIT (earnings before interest and taxes). "Profit Loss From Operating Activities" at €1,127M includes impairments and other non-recurring items, so it's not clean EBIT. Let me use: Current Operating Income Including Operating Mtm as the closest to EBIT, then add D&A. EBITDA = 4,309 + 5,187 = €9,496 million Or, if we want to be more comprehensive and use a figure closer to what S&P might calculate from reported financials, let me also consider if we should gross up by other items. Actually, I realize I should check: is "Current Operating Income Including Operating Mtm" before or after D&A? Looking at typical French GAAP/IFRS reporting, this is typically operating profit before financing costs, which is AFTER D&A. So adding back D&A gives EBITDA. **Net Debt:** Net Debt = Total Borrowings (short and long term) - Cash and Cash Equivalents From balance sheet 2022-01-01 (end of 2022): - Longterm Borrowings: €28,083,000,000 - Current Borrowings And Current Portion Of Noncurrent Borrowings: €12,508,000,000 - Total Borrowings = €28,083M + €12,508M = €40,591M Wait - I need to check the dates. The balance sheet items with "2023-01-01" are end of 2022, and "2022-01-01" are end of 2021. So for end of 2022: - Longterm Borrowings 2023-01-01: €28,083M - Current Borrowings And Current Portion Of Noncurrent Borrowings 2023-01-01: €12,508M - Cash And Cash Equivalents 2023-01-01: €15,570M Total Debt = €28,083M + €12,508M = €40,591M Net Debt = €40,591M - €15,570M = €25,021M But wait - S&P methodology for net debt typically also includes: - Sometimes other financial liabilities - Sometimes derivatives if they represent debt-like obligations Looking at other items: - Noncurrent Derivative Financial Liabilities: €39,417M - Current Derivative Financial Liabilities: €11,859M These are large! However, these are typically fair value of derivatives, not necessarily debt. S&P may or may not include these depending on the nature. For commodity companies, these can be operating derivatives. Also, looking at assets: - Noncurrent Derivative Financial Assets: €33,134M - Current Derivative Financial Assets: €15,252M Net derivative position = (33,134 + 15,252) - (39,417 + 11,859) = 48,386 - 51,276 = -€2,890M (net liability) For S&P Net Debt, typically: - Gross debt includes all interest-bearing debt, finance leases, and sometimes pension deficits - Less: cash and cash equivalents, and sometimes liquid investments Standard S&P Net Debt = Long-term borrowings + Current borrowings + Current portion of long-term debt - Cash and cash equivalents = €28,083M + €12,508M - €15,570M = €25,021M But I should check if there are other debt-like items. "Other Noncurrent Financial Liabilities" is only €90M. "Other Current Financial Assets" might include some liquid items but are assets. Let me also consider: does S&P include working capital adjustments or just strict debt minus cash? Standard definition: Net Debt = (Long-term debt + Short-term debt + Current portion of long-term debt) - (Cash + Cash equivalents) = 28,083 + 12,508 - 15,570 = 25,021 million EUR Now, for EBITDA, let me reconsider. S&P for energy companies might calculate EBITDA differently. Let me look at whether there's a more appropriate figure. Actually, I want to double-check my EBITDA calculation. Looking at the cash flow: Cash Flows From Used In Operations Before Changes In Working Capital = €12,415M This equals roughly: Net income + D&A + other non-cash items - taxes paid + finance costs, etc. Let me verify: Profit Loss = €390M. Add back: Net Depreciation Amortization Impairment And Provisions (-€8,057M, so add 8,057), adjustments for finance costs (-€3,003M, add 3,003), adjustments for income tax (-€83M, add 83), etc. Actually the cash flow reconciliation starts from Profit Loss and adds back non-cash items: 390 + 8,057 + 740 + 3,661 + 157 + 83 + 3,003 + 1,059 - 713 + other items... Hmm, let me just use the reported €12,415M for "Cash Flows From Used In Operations Before Changes In Working Capital" but this is not EBITDA - it's more like operating cash flow before working capital changes, which includes tax payments and other items. For S&P EBITDA, I think the standard approach using Current Operating Income + D&A is better. But let me also consider: should I use "Current Operating Income Including Operating Mtm And Share In Net Income Of Equity Method Entities"? Actually, looking more carefully at typical S&P methodology for this type of company, they might calculate "Adjusted EBITDA" as: - Operating income before depreciation and amortization - Plus/minus certain non-recurring items Given the data, let me use: EBITDA = Current Operating Income Including Operating Mtm + Depreciation Amortization And Provisions = 4,309 + 5,187 = 9,496 million EUR Or, should I add back more to get to a "cash" EBITDA? The impairment loss was €2,774M in 2022, which is non-cash. But S&P typically excludes impairments from EBITDA (they're below EBITDA in the calculation, or rather, EBITDA is before such items). Wait - I need to re-read the income statement structure. "Current Operating Income Including Operating Mtm" is already after D&A but before impairments and other non-recurring items. So: - Current Operating Income Including Operating Mtm = EBIT before impairments and non-recurring - Impairment Loss = non-recurring/non-cash item below this - Restructuring = non-recurring - Other items = non-recurring So EBIT (as S&P might define for EBITDA calculation) could be: = Current Operating Income Including Operating Mtm - Impairment Loss - Restructuring - Other non-recurring... Actually no - looking at the progression: Current Operating Income Including Operating Mtm: 4,309 + Share Of Profit Of Associates: 1,059 = Current Operating Income Including Operating Mtm And Share In Net Income: 5,367 - Impairment Loss: 2,774 - Expense Of Restructuring: 230 + Other Income Expense From Subsidiaries...: 91 + Other Non Recurring Items: -1,328 (negative = expense) = Profit Loss From Operating Activities: 1,127 Wait, that doesn't add up: 5,367 - 2,774 - 230 + 91 - 1,328 = 1,126 ≈ 1,127. Yes. So "Current Operating Income Including Operating Mtm" is BEFORE impairments, restructuring, and other non-recurring items. This is like "adjusted operating profit" or "recurring operating profit." For EBITDA, S&P typically wants earnings BEFORE these items anyway, so starting from Current Operating Income Including Operating Mtm and adding back D&A is appropriate. EBITDA = 4,309 + 5,187 = 9,496 million EUR But let me also consider if S&P would include the share of equity method income. Some methodologies include it, some don't. For a conservative approach, let's see both: With equity method: 5,367 + 5,187 = 10,554 Without: 4,309 + 5,187 = 9,496 I think for standard EBITDA, we exclude equity method income (it's below operating profit typically). So 9,496. However, I want to double-check: is "Depreciation Amortization And Provisions" the right D&A to add back? The cash flow shows "Net Depreciation Amortization Impairment And Provisions" of 8,057, which is higher because it includes impairment and provision changes. For EBITDA, we want just Depreciation and Amortization, not impairment. So 5,187 seems right if it's the clean D&A figure. Actually, let me re-verify: "Depreciation Amortization And Provisions" - this name suggests it might include provisions too, not just D&A. In French reporting, this line item often includes: - Depreciation of fixed assets - Amortization of intangibles - Provisions for various risks If it includes provisions, then adding it all back to get EBITDA might be wrong, because provision charges are part of operating profit. Hmm, but in typical income statement presentation, "Depreciation Amortization And Provisions" is often shown as a separate line in the expense analysis, representing non-cash charges. If Current Operating Income is already after these charges, then adding them back gives EBITDA. Let me assume this is the correct approach: EBITDA = 4,309 + 5,187 = 9,496. Actually, I want to sanity check this. Revenue is 93,865. Purchases are 74,535. Employee benefits 8,078. Tax other than income tax 3,380. Other income 1,624. D&A 5,187. Rough check: 93,865 - 74,535 - 8,078 - 3,380 + 1,624 - 5,187 = 4,309. Yes! This confirms Current Operating Income is after D&A. So EBITDA = 93,865 - 74,535 - 8,078 - 3,380 + 1,624 = 14,496? Wait, let me recalculate: 93,865 - 74,535 = 19,330. 19,330 - 8,078 = 11,252. 11,252 - 3,380 = 7,872. 7,872 + 1,624 = 9,496. Hmm, that's 9,496, not 14,496. I forgot D&A was already included in the expenses. Actually, the calculation shows: Revenue - Purchases - Employee - Tax + Other Income - D&A = Current Operating Income So: 93,865 - 74,535 - 8,078 - 3,380 + 1,624 - 5,187 = 4,309? Let me verify: 93,865 - 74,535 = 19,330 19,330 - 8,078 = 11,252 11,252 - 3,380 = 7,872 7,872 + 1,624 = 9,496 9,496 - 5,187 = 4,309. ✓ So yes, Current Operating Income is after D&A. EBITDA = 9,496. But wait - I calculated 9,496 as the "gross operating profit" or EBITDA before other operating expenses. Let me verify this is correct. Actually, looking at this calculation: Revenue - Purchases - Employee - Tax + Other Income = 9,496. This is like "Gross Operating Surplus" or EBITDA if we haven't subtracted D&A yet. But we didn't subtract D&A in this calculation... Hmm, I think I'm confusing myself. Let me re-read: the line items are expenses or income. D&A is an expense. So: Revenue: +93,865 Purchases: -74,535 Employee: -8,078 Tax other: -3,380 Other income: +1,624 D&A: -5,187 = 4,309 So yes, 4,309 is after D&A. The pre-D&A figure would be 4,309 + 5,187 = 9,496. But is 9,496 the EBITDA? It includes other income of 1,624. Typically EBITDA includes other operating income. So yes. Net Debt / EBITDA = 25,021 / 9,496 = 2.63x But let me reconsider if S&P would use a different EBITDA. They might adjust for non-recurring items, or use average debt, or include more items in debt. Actually, I want to re-check: does S&P use average net debt or year-end net debt? Typically for ratios, they use year-end debt with annual EBITDA, or sometimes average debt. For Net Debt/EBITDA, it's typically point-in-time net debt divided by annual EBITDA. Let me also consider if I should use 2021 or 2022 figures, or average. The question asks for 2022, so using end-2022 net debt and 2022 EBITDA. But wait - I need to check if there's a better EBITDA figure. The cash flow statement shows "Cash Flows From Used In Operations Before Changes In Working Capital" of 12,415. This includes adjustments for non-cash items and other items. Is this closer to what S&P uses? Actually, S&P sometimes calculates "Funds From Operations" (FFO) which is closer to cash flow. But for EBITDA, it's the accrual-based measure. Let me also check if I should include discontinued operations in EBITDA. The company has discontinued operations with profit of 2,183. S&P might include or exclude depending on whether the operations are still part of the group at year-end. Given the large held-for-sale items, this is tricky. Looking at balance sheet: "Noncurrent Assets Or Disposal Groups Classified As Held For Sale" was 11,881 at end 2022, but only 428 at end 2023. So in 2022, there were significant assets held for sale. The discontinued operations profit of 2,183 in 2022 suggests significant activity. For S&P methodology, if discontinued operations are still part of the group during the year, EBITDA might include them. But typically for leverage ratios, S&P uses "adjusted EBITDA" that might exclude discontinued operations if they're being sold. This is getting complex. Let me try a simpler approach: use continuing operations figures as the base, which is what I did. Actually, looking at the income statement, "Profit Loss From Continuing Operations" is -1,793, and "Profit Loss From Discontinued Operations" is 2,183, giving total Profit Loss of 390. For a more comprehensive EBITDA including discontinued operations, I'd need to reconstruct the EBITDA of discontinued operations, which isn't fully available. Let me stick with continuing operations EBITDA of 9,496 and see if this is reasonable. Actually, I want to double-check my net debt calculation. Are there other borrowings or debt-like items? Looking at current liabilities: - Current Borrowings And Current Portion Of Noncurrent Borrowings: 12,508 - Are there any other debt items? Trade payables, contract liabilities, other current nonfinancial liabilities are operating, not debt. Looking at noncurrent liabilities: - Longterm Borrowings: 28,083 - Other Noncurrent Financial Liabilities: 90 Total interest-bearing debt = 28,083 + 12,508 + 90 = 40,681? Or is the 90 already included? Typically "Other Noncurrent Financial Liabilities" might include debt-like items. Let me include it to be comprehensive: 40,681 - 15,570 = 25,111. Or should I exclude it? The 90 is small relative to the total, so it won't change much. What about current financial liabilities? "Current Derivative Financial Liabilities" of 11,859 - these are typically not debt but fair value of derivatives. S&P may include these if they're liability hedges or speculative derivatives, but typically not for commodity operating derivatives. Actually, for energy companies, S&P has specific treatment. Let me check if there's derivative debt. Looking at the balance sheet, the large derivative values suggest significant commodity trading/hedging activity. For S&P, these are typically treated as operating working capital, not debt. I'll stick with Net Debt = 40,591 - 15,570 = 25,021 or with other financial liabilities 40,681 - 15,570 = 25,111. Using 25,021 / 9,496 = 2.63 But let me also consider: should I use average net debt? (End 2021 + End 2022) / 2? End 2021 net debt: - Longterm Borrowings 2022-01-01: 30,458 - Current Borrowings 2022-01-01: 10,590 - Cash 2022-01-01: 13,890 - Net debt 2021 = 41,048 - 13,890 = 27,158 Average net debt = (27,158 + 25,021) / 2 = 26,090 Average net debt / EBITDA = 26,090 / 9,496 = 2.75 S&P sometimes uses average debt for ratios, but for Net Debt/EBITDA, it's typically year-end net debt. Let me verify with another EBITDA approach. S&P sometimes calculates EBITDA from the cash flow: EBITDA ≈ Cash Flow From Operations Before Working Capital Changes + Cash Taxes Paid + Cash Interest Paid From cash flow: - Cash Flows From Used In Operations Before Changes In Working Capital: 12,415 - Income Taxes Paid: 1,504 (this is paid, not refund - positive means paid) - Finance Costs (interest): 3,700 (from P&L), but cash interest paid in financing is 822, and in investing is... actually interest received in investing is -37. Hmm, the cash flow interest classification is complex. Let me not go down this path. Actually, looking at S&P Global Ratings methodology for utilities and energy companies, they typically use: - EBITDA = Operating income + Depreciation & Amortization + Other non-cash charges Where operating income is recurring operating profit. Given "Current Operating Income Including Operating Mtm" is the recurring operating profit measure, my EBITDA = 9,496 seems reasonable. But I want to check one more thing: should I include the share of equity method income? For some companies, S&P includes it in EBITDA if it's a core part of operations. ENGIE has significant equity method investments (investment value of 9,279 at end 2022, profit of 1,059 in 2022). If I include equity method income: EBITDA = 5,367 + 5,187 = 10,554 Net Debt / EBITDA = 25,021 / 10,554 = 2.37 Or if S&P uses a different measure... Actually, let me search my knowledge base for how S&P treats ENGIE specifically or similar companies. S&P typically includes dividends from equity method investments in EBITDA or FFO, not the equity method income itself. The equity method income is already above operating profit in some presentations. Looking at the income statement structure again: Current Operating Income Including Operating Mtm: 4,309 + Share Of Profit Of Associates: 1,059 = 5,367 This suggests share of profit is after the main operating income line. In IFRS, equity method income is typically part of operating profit or finance income depending on classification. Here it seems to be between operating profit and financing. For S&P, if equity method investments are core to operations, they might include the income in EBITDA. But standard EBITDA typically excludes equity method income (it's not in EBIT). Let me be conservative and use EBITDA without equity method: 9,496. Net Debt / EBITDA = 25,021 / 9,496 = 2.635 Rounding: 2.6x or 2.64x But I want to also try with the broader "Cash Flows From Used In Operations Before Changes In Working Capital" to see if this gives a similar EBITDA proxy. This was 12,415, which includes taxes and other items. If we gross up for taxes paid (1,504) and maybe interest, we might get higher. Actually, 12,415 + 1,504 (taxes paid, add back since EBITDA is pre-tax) = 13,919. This is higher than 9,496 because it includes other adjustments like working capital-related non-cash items, or because my EBITDA calculation is missing something. Wait - I need to check: is "Cash Flows From Used In Operations Before Changes In Working Capital" a positive or negative? The value is 12,415, and it's described as "Cash Flows From Used In" - the "Used In" suggests outflow, but the positive number suggests inflow. Actually in IFRS taxonomy, "Cash Flows From Used In" means the line can be positive (from) or negative (used in). Here 12,415 is positive, so it's cash generated. This 12,415 includes: - Starting from Profit Loss: 390 - Add back: various non-cash items Let me verify roughly: 390 + 1,059 (undistributed profits) - 713 (dividend income) + 8,057 (D&A etc.) - 74 (scope changes) - 3,661 (derivatives) - 157 (other) - 83 (tax) - 3,003 (finance costs) = 1,900... this doesn't add to 12,415. Actually, I need to be more careful. The cash flow reconciliation starts from Profit Loss and adds back items to get to operating cash flow before working capital. Let me add: 390 (profit) + 1,059 (undistributed profits of equity method - add back because cash flow uses equity method dividends, not income) - 713 (dividend income - remove because it's financing/investing, not operating) + 8,057 (net D&A, impairments, provisions - non-cash) - 74 (scope changes - non-recurring?) - 3,661 (fair value changes - non-cash) - 157 (other non-cash) - 83 (income tax expense - non-cash accrual, actual tax paid is separate) - 3,003 (finance costs - non-operating, to be removed) = 390 + 1,059 - 713 + 8,057 - 74 - 3,661 - 157 - 83 - 3,003 = 1,815 This doesn't equal 12,415. I'm missing something. Let me re-read the cash flow items. Actually, looking more carefully: "Adjustments For Undistributed Profits Of Investments Accounted For Using Equity Method" = 1,059. This is an adjustment to remove the equity method income and replace with dividends. Since it's positive in the adjustments, it means we're adding back... actually, if profit includes 1,059 of equity income but we only received dividends, we subtract the undistributed portion. But the line says "Adjustments For Undistributed Profits" = 1,059. If this is positive, it might mean add back (if we're reversing an expense) or it might mean something else. Actually, I think the signs in the cash flow are confusing me. Let me not pursue this detailed reconciliation and trust my EBITDA calculation. Let me try one more sanity check. If revenue is 93,865 and EBITDA is 9,496, the EBITDA margin is 10.1%. For a utility/energy company in 2022 with high energy prices, this seems reasonable but maybe a bit low. However, ENGIE has a lot of commodity purchase costs (74,535), so the margin is squeezed. Actually, 2021 EBITDA would be: Current Operating Income 6,116 + D&A 4,840 = 10,956. Revenue was 57,866. Margin = 18.9%. The 2022 margin drop to 10.1% seems odd given higher revenue. Wait - revenue went from 57,866 to 93,865 (+62%), but EBITDA went from 10,956 to 9,496 (-13%). This suggests margin compression due to higher commodity costs that couldn't be fully passed through, or maybe the 2022 numbers include significant trading activity with high revenue but low margin. Actually, looking at purchases: 38,861 to 74,535 (+92%), growing faster than revenue. This suggests cost pressures. For 2022, with the energy crisis, this pattern is plausible - high commodity prices increasing both revenue and costs, with utilities sometimes unable to pass through all costs immediately. Given this, my EBITDA of 9,496 seems plausible. Let me finalize: - Net Debt (end 2022) = 28,083 + 12,508 - 15,570 = 25,021 - EBITDA (2022) = 4,309 + 5,187 = 9,496 - Net Debt / EBITDA = 25,021 / 9,496 = 2.635 Or if I include other noncurrent financial liabilities in debt: - Net Debt = 28,083 + 12,508 + 90 - 15,570 = 25,111 - Ratio = 25,111 / 9,496 = 2.644 The difference is minimal. I'll use 2.6 or 2.64. Actually, let me also check if S&P uses "total equity and liabilities" approach to verify debt. Total assets = 235,490. Equity = 39,285. Total liabilities = 196,205. Current + noncurrent liabilities = 93,778 + 102,427 = 196,205. ✓ Debt is a subset of liabilities. Total liabilities include trade payables, provisions, etc. which are not debt. Let me verify my debt items are reasonable: 40,591 debt / 196,205 total liabilities = 21% debt ratio, which seems reasonable for a utility. One more check: should I include "Liabilities Included In Disposal Groups Classified As Held For Sale" of 371 in debt? These are held for sale, so maybe not part of ongoing debt. And 371 is small anyway. Also, what about "Current Provisions" and "Noncurrent Provisions"? These are typically not debt, but operating liabilities or reserves. I think my calculation is reasonable. Let me provide the ratio as 2.6x. But actually, I want to try one more variant: S&P sometimes uses "Adjusted EBITDA" which adds back certain non-recurring items. In 2022, there were significant impairments (2,774), restructuring (230), and other non-recurring (-1,328, which is negative = expense). If we adjust EBITDA for these (add them back since they're non-recurring): Adjusted EBIT = 4,309 + 2,774 + 230 - 1,328 + 91 = 6,076? Wait, "Other Income Expense From Subsidiaries Jointly Controlled Entities And Associates" = 91. Is this non-recurring? And "Other Non Recurring Items" = -1,328 (expense). Actually, S&P typically does NOT add back impairments to EBITDA - impairments are considered a normal part of business risk. They might add back restructuring if it's truly one-time. For a conservative S&P approach, let me not add back these items. Final answer: Net Debt / EBITDA = 25,021 / 9,496 = 2.635 Rounding to one decimal: 2.6 Or more precisely: 2.64 I'll go with 2.6 as a rounded figure, or should I provide more precision? The question asks for an estimate, so 2.6 or 2.64 seems appropriate. Actually, let me reconsider one more time if I should include equity method income. For many European utilities, equity method investments are a core part of the business model (joint ventures for power plants, etc.). S&P might include the dividends from these in FFO, but for EBITDA, if the equity income is classified as part of operating income, it might be included. Looking at the line "Current Operating Income Including Operating Mtm And Share In Net Income Of Equity Method Entities" = 5,367. This suggests management views this as an operating metric. If S&P uses this as the starting point: EBITDA = 5,367 + 5,187 = 10,554 Ratio = 25,021 / 10,554 = 2.37 This is significantly different. Which is more appropriate? I think for standard EBITDA, we should use the measure before equity method income, because: 1. EBITDA is typically based on consolidated operations 2. Equity method income is not from consolidated operations 3. The investment itself is on the balance sheet as "Investment Accounted For Using Equity Method" not as operating assets So I'll stick with 2.6. Wait - I want to check one more thing. Is the D&A of 5,187 the right amount? Let me see if there's a separate depreciation figure. The cash flow shows "Net Depreciation Amortization Impairment And Provisions" = 8,057. This is net of reversals and includes impairments. The pure D&A might be different. In the P&L, "Depreciation Amortization And Provisions" = 5,187. But this name includes "And Provisions" - so it might include provision charges, not just D&A. If it includes provisions, then adding it all back gives something higher than pure EBITDA - it gives "EBITDA before provision charges" which is not standard. Hmm, this is a problem. Let me think about this. In French accounting/IFRS, the line "Dotations aux amortissements et provisions" (Depreciation, Amortization and Provisions) typically includes: - Depreciation of tangible assets - Amortization of intangible assets - Impairment losses - Provisions for risks, pensions, etc. But in the income statement presentation here, "Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss" is shown separately as 2,774. So the 5,187 might be just D&A + operating provisions, excluding impairment. Actually, looking at the cash flow: "Net Depreciation Amortization Impairment And Provisions" = 8,057. This includes impairments of 2,774. So 8,057 - 2,774 = 5,283, which is close to 5,187. The difference might be provision reversals or other items. So the P&L line "Depreciation Amortization And Provisions" = 5,187 likely includes D&A and net provisions. For EBITDA, we want to add back D&A but not provision charges (which are part of operating performance). However, in practice, many analysts and rating agencies add back the entire line if it's presented as "non-cash" charges, or they try to separate D&A from provisions. Given the data available, I cannot perfectly separate D&A from provisions. Let me assume the 5,187 is the right add-back for EBITDA purposes, as it's the standard presentation. Actually, I realize that in many European annual reports, "Depreciation Amortization And Provisions" is indeed the line that includes all non-cash operating charges, and EBITDA is commonly calculated by adding this entire line back to operating profit. This is a practical approach even if not theoretically pure. So I'll stick with EBITDA = 9,496. One final check: should I use 2022 average net debt or year-end? S&P typically uses year-end net debt for leverage ratios, but sometimes average for companies with seasonal patterns. Utilities don't have strong seasonality in debt, so year-end is fine. Also, should I use 2022 EBITDA or last twelve months? Since we're at end of 2022, 2022 annual EBITDA is appropriate. Final calculation: 25,021 / 9,496 = 2.635 I'll round to 2.6 or provide 2.64. Given the estimation nature, let me provide 2.6. Actually, I want to try one more thing. Let me see if there's an EBITDA proxy from the cash flow that's more reliable. "Cash Flows From Used In Operations Before Changes In Working Capital" = 12,415 This is roughly: EBITDA - Cash taxes - Cash interest + Other adjustments, or similar. If I add back cash taxes paid (1,504) and maybe cash interest, I might get closer to EBITDA. But cash flow interest is classified in financing and investing, not operating. The operating cash flow before working capital is after interest and tax accruals but before actual cash movements. Actually, looking at the adjustments: "Adjustments For Finance Income Cost" = -3,003. This is subtracted in the cash flow reconciliation (to remove finance costs from operating cash flow). So the 12,415 is after removing finance costs. And "Adjustments For Income Tax Expense" = -83. This is also subtracted. So 12,415 is roughly: Net income + D&A + other non-cash items - finance costs - tax expense + actual cash tax/interest differences... This is getting too complex. Let me trust my EBITDA calculation. Actually, one more variant: S&P sometimes uses "FFO" (Funds From Operations) which is closer to 12,415, and calculates "FFO/Debt" rather than "EBITDA/Debt". But the question specifically asks for Net Debt/EBITDA. Let me provide my final answer as 2.6. Wait - I want to check one more thing. Should I include "Other Current Financial Assets" of 2,394 in cash? These might be liquid investments. If they're cash-like, I should subtract them from debt. S&P typically includes "Cash and Cash Equivalents" and sometimes "Marketable Securities" or "Short-term Investments" in the cash deduction. "Other Current Financial Assets" might include some of these. However, without knowing the composition, I'll be conservative and only include "Cash And Cash Equivalents" as explicitly labeled cash. Final answer: 2.6 or more precisely 2.64. I'll provide 2.6 as a reasonable estimate. Actually, let me provide more precision since the data allows: 25,021 / 9,496 = 2.6348... Rounding to one decimal: 2.6 Or two decimals: 2.63 I'll use 2.6 as it's a reasonable estimate given the methodology uncertainties. Hmm, but I want to reconsider one more time. Let me see if I should use "Total Debt" differently. In the balance sheet, are there any other debt-like items I missed? - "Noncurrent Derivative Financial Liabilities" = 39,417 - these are large! - "Current Derivative Financial Liabilities" = 11,859 For commodity trading companies, S&P sometimes includes derivative liabilities in debt if they're not hedges. But for a utility like ENGIE, most derivatives are likely hedges of commodity exposures, not speculative. However, the net derivative position is negative (more liabilities than assets), which might suggest some speculative position or timing differences. If I were to include net derivative liabilities in debt: Net derivative liability = (39,417 + 11,859) - (33,134 + 15,252) = 51,276 - 48,386 = 2,890 Adjusted Net Debt = 25,021 + 2,890 = 27,911 Ratio = 27,911 / 9,496 = 2.94 This is higher but still reasonable. However, I don't think S&P typically includes operating derivatives in net debt for utilities. Let me stick with 2.6. Actually, I want to do one more verification using a different approach. Let me calculate EBITDA margin and see if it's reasonable. EBITDA / Revenue = 9,496 / 93,865 = 10.1% For ENGIE, a large French utility with generation, networks, and energy services, this seems a bit low but plausible in 2022 with high commodity prices squeezing margins. For comparison, 2021 EBITDA margin = 10,956 / 57,866 = 18.9%. The drop is significant but explained by the energy crisis dynamics. I think my calculation is reasonable. Final answer: 2.6. Let me write this as 2.6 or should I be more precise? I'll use 2.6. Actually, rethinking: the question says "estimate" and "based on S&P methodology." S&P methodology has specific adjustments that I may not fully capture with the data. But my approach is reasonable. One more check: S&P sometimes uses "Adjusted EBITDA" which might exclude certain non-recurring items or include others. Without specific S&P adjustments for ENGIE, I'll use the standard calculation. Final answer: 2.6 2.6