I need to estimate the FFO / Net debt ratio for 2022 based on S&P methodology. Let me break this down. ## S&P FFO Methodology FFO (Funds From Operations) under S&P methodology is typically calculated as: - Operating Profit Before Depreciation and Amortisation (EBITDA-like measure) - Plus/minus certain adjustments - Or more commonly: Net Income + Depreciation & Amortization + Deferred Income Taxes + Other non-cash items However, for corporate issuers, S&P typically defines FFO as: - **Net cash from operating activities** (from cash flow statement) - Or alternatively: **Profit/Loss from continuing operations + Depreciation & Amortization + Deferred taxes + Other non-cash charges** Let me use a more standard S&P approach for FFO: - FFO = Operating Profit Before D&A + D&A - Cash interest paid - Income taxes paid (or using cash flow from operations before working capital changes) Actually, let me use the most common S&P definition for corporate issuers: **FFO = Net income from continuing operations + Depreciation and amortization + Deferred income taxes + Other non-cash items** Or more practically, S&P often uses: **FFO = Cash flow from operating activities before changes in working capital** (which is essentially EBITDA - cash taxes - cash interest) Looking at the data, I can calculate FFO using the "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" which is -5,140,000,000 EUR for 2022. But this is negative, which seems problematic. Let me try another S&P approach: **FFO = Operating Profit Before Depreciation And Amortisation + Depreciation And Amortisation - Interest Expense - Income Tax Expense + Other adjustments** Or: FFO = Profit/Loss from continuing operations + D&A + Deferred taxes + Impairment losses (reversed) + other non-cash items Let me use a cleaner S&P definition: **FFO = Net income + D&A + Deferred income tax + Other non-cash expenses - Gain on asset sales** For 2022: - Profit Loss From Continuing Operations: -18,231,000,000 EUR - Depreciation And Amortisation Expense: 11,079,000,000 EUR - Income Tax Expense Continuing Operations: -3,926,000,000 EUR (negative = tax benefit) - Impairment Loss Reversal: 1,762,000,000 EUR (this is a reversal/negative expense, so subtract) - Share Of Profit Loss Of Associates: 759,000,000 EUR (subtract) Wait, let me reconsider. S&P FFO is more commonly: **FFO = Funds from operations = Net income + Depreciation + Deferred taxes + Other non-cash items** But for utilities with regulated activities, S&P often uses: **FFO = Operating cash flow before working capital changes** From the data: "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" = -5,140,000,000 EUR This seems very negative. Let me verify with another approach. Actually, let me look at this more carefully. The standard S&P formula is: **FFO = Net income + Realized gains/losses + Depreciation + Amortization + Deferred income taxes + Other non-cash items** For 2022: - Net income (continuing operations): -18,231,000,000 EUR - D&A: 11,079,000,000 EUR - Deferred tax: Need to calculate from balance sheet change Deferred tax assets: 8,696,000,000 (2023) - 1,667,000,000 (2022) = 7,029,000,000 increase Deferred tax liabilities: 1,533,000,000 (2023) - 2,401,000,000 (2022) = -868,000,000 decrease Net deferred tax increase = 7,029,000,000 + 868,000,000 = 7,897,000,000 (benefit) Income tax expense: -3,926,000,000 (benefit) Cash taxes paid: 1,282,000,000 (refund, so negative paid = refund) This is getting complex. Let me use a simpler, more standard approach. **S&P FFO = Operating Profit Before D&A + D&A - Cash interest - Cash taxes** Or from cash flow: "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" + "Net Financial Expeneses Disbursed Including Dividends Received" + "Income Taxes Paid Refund" - working capital impact... Actually, let me use the most direct S&P formula: **FFO = Profit from continuing operations + D&A + Interest expense + Income tax expense - Interest income + Other non-cash items - Cash taxes paid adjustments** Wait - I think the cleanest approach given data is: FFO = Operating Profit Before Depreciation And Amortisation + Depreciation And Amortisation - Interest Expense (accrual) - Income Tax Expense (accrual) + Other non-cash adjustments = -4,986,000,000 + 11,079,000,000 - 1,730,000,000 - (-3,926,000,000) ... Hmm, this gives: -4,986 + 11,079 - 1,730 + 3,926 = 8,289,000,000 But this mixes accrual and cash. Let me try: **FFO = EBITDA - Interest expense - Cash taxes** Or the standard S&P approach for corporate issuers: **FFO = Net cash provided by operating activities + Increase in operating working capital - Capitalized development costs - Change in customer deposits** Given complexity, let me use: **FFO = Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund + Net Financial Expeneses Disbursed Including Dividends Received + Income Taxes Paid Refund - Dividends received** = -5,140,000,000 + 1,003,000,000 + 1,282,000,000 - 590,000,000 = -5,140,000,000 + 1,003,000,000 + 1,282,000,000 - 590,000,000 = -3,445,000,000 This is still negative. But this seems wrong for FFO. Let me try yet another approach - the "EBITDA minus capex" proxy or use operating cash flow more directly. Actually, looking at S&P methodology more carefully, they define FFO as: **FFO = Funds from operations = Net income before extraordinary items + Depreciation + Deferred income taxes + Other non-cash items** For 2022: - Profit Loss From Continuing Operations: -18,231,000,000 - Add: Depreciation And Amortisation: 11,079,000,000 - Add: Deferred tax benefit (from P&L): 3,926,000,000 (since tax expense is negative) - Less: Impairment reversal (non-cash benefit): -1,762,000,000 - Less: Share of profit of associates: -759,000,000 FFO = -18,231 + 11,079 + 3,926 - 1,762 - 759 = -5,747,000,000 Still negative. This seems to reflect the actual difficult 2022 for EDF. But wait - let me check if we should use "Operating Profit Before Depreciation And Amortisation" as starting point instead, which is closer to EBITDA. S&P also uses: **FFO = Operating profit before D&A - Interest expense - Cash taxes paid** Or: FFO = Operating cash flow before working capital changes From cash flow statement, let me calculate: Cash Flows From Used In Operating Activities = -7,425,000,000 Add: Increase Decrease In Working Capital = -8,301,000,000 (negative means working capital increase, cash outflow) So before working capital: -7,425,000,000 - (-8,301,000,000) = -7,425,000,000 + 8,301,000,000 = 876,000,000 Wait, that's not right either. Let me re-read: "Increase Decrease In Working Capital" = -8,301,000,000. This means working capital increased (used cash). So operating cash flow before working capital changes = Operating cash flow + Working capital increase = -7,425,000,000 + 8,301,000,000 = 876,000,000 But this seems too low. Let me verify with the "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" = -5,140,000,000 Add back: Net Financial Expenses Disbursed = 1,003,000,000 Add back: Income Taxes Paid/Refund = 1,282,000,000 (refund, so this is cash inflow) So: -5,140 + 1,003 + 1,282 = -2,855,000,000? No wait, the -5,140 already excludes these. Actually, "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" means this is before those items. So to get to actual operating cash flow, we need to subtract those disbursements. Operating cash flow = -5,140,000,000 - 1,003,000,000 - 1,282,000,000 = -7,425,000,000 ✓ (matches) So "before" means before subtracting those expenses. This is like EBITDA - working capital changes - cash interest - cash taxes. For FFO, S&P wants to add back working capital changes to get to a "cleaner" operating cash flow. FFO ≈ -5,140,000,000 + some adjustments? No, -5,140 already has working capital in it. Let me recalculate: The -5,140 is "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" This = Operating profit before D&A + adjustments - working capital changes - cash interest - cash taxes? No, it's BEFORE net financial expenses and income taxes. So: -5,140 = Some measure before financial expenses and taxes Actually, let me look at this differently. The formula seems to be: - Start with profit/loss - Add back D&A, impairments, etc. - Adjust for working capital - = Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund This equals: -5,140,000,000 Then subtract: Net Financial Expenses Disbursed (1,003,000,000) Then subtract/add: Income Taxes Paid/Refund (1,282,000,000 refund = add? No, "Paid Refund" suggests refund is negative paid) Actually "Income Taxes Paid Refund" = 1,282,000,000. If this is a refund, it's cash inflow, so in "paid" terms it's negative. But in the calculation, to get from -5,140 to -7,425, we subtract 1,003 and subtract 1,282: -5,140 - 1,003 - 1,282 = -7,425. ✓ So -5,140 is before these items. For S&P FFO, we typically use: **FFO = Net cash from operating activities + Increase in working capital - Capitalized interest - Dividends received from unconsolidated affiliates** Or more standard: **FFO = Operating cash flow before working capital changes** From above: -7,425,000,000 (operating CF) + (-8,301,000,000 working capital impact, but need to reverse) Wait: "Increase Decrease In Working Capital" = -8,301,000,000. This is the adjustment made in cash flow statement. If working capital increased (used cash), this is subtracted. So to reverse it, add back. Operating CF before WC = -7,425,000,000 - (-8,301,000,000) = -7,425,000,000 + 8,301,000,000? No... Actually, let me think again. In cash flow statement: Net income + D&A + Other non-cash - Working capital increase (or + decrease) = Cash from operations before interest and taxes - Interest paid - Taxes paid = Net operating cash flow Given "Increase Decrease In Working Capital" = -8,301,000,000, this means working capital INCREASED (negative for cash flow). So: Profit + D&A + other non-cash - 8,301,000,000 - interest - taxes = -7,425,000,000 And "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" = -5,140,000,000 This is: Profit + D&A + other non-cash - 8,301,000,000 = -5,140,000,000 So: Profit + D&A + other non-cash = -5,140,000,000 + 8,301,000,000 = 3,161,000,000 Then FFO (before working capital, interest, taxes) would be this 3,161,000,000? No wait, FFO includes interest and taxes on accrual basis typically. Let me try yet another standard S&P formula: **FFO = Net income + Depreciation + Amortization + Deferred taxes + Other non-cash items - Gain on sale of assets** For 2022: - Net income (total): -18,225,000,000 - D&A: 11,079,000,000 - Deferred tax assets increase (non-cash benefit): ~7,897,000,000 (from balance sheet, but need to check if this hits P&L) Actually, the income tax expense is -3,926,000,000 (benefit). The deferred tax change on balance sheet is from 1,667 to 8,696 (assets) and 2,401 to 1,533 (liabilities). Change in deferred tax assets: +7,029,000,000 Change in deferred tax liabilities: -868,000,000 Net: +7,897,000,000 But income tax expense is only -3,926,000,000. This includes current and deferred. Cash taxes were refunded 1,282,000,000. So: Tax expense = Current tax + Deferred tax -3,926 = Current tax + Deferred tax Cash tax refund = 1,282, so current tax paid = -1,282 (refund) Deferred tax benefit = -3,926 - (-1,282) = -3,926 + 1,282 = -2,644,000,000 But balance sheet change is 7,897,000,000. There's a discrepancy due to FX, acquisitions, etc. For S&P FFO, I'll use: **FFO = Profit Loss From Continuing Operations + Depreciation And Amortisation Expense + Impairment Loss Reversal (subtract as it's a benefit) - Share Of Profit Of Associates + Interest Expense + Income Tax Expense** This gets us to Operating Profit Before D&A essentially, then adjust. = -18,231 + 11,079 - 1,762 - 759 + 1,730 + (-3,926) = -18,231 + 11,079 - 1,762 - 759 + 1,730 - 3,926 = -11,869,000,000 That's not right. Let me try: Start with Operating Profit Before D&A: -4,986,000,000 Subtract: Interest expense: -1,730,000,000 Subtract: Income tax expense: +3,926,000,000 (benefit, so add back) = -4,986 - 1,730 + 3,926 = -2,790,000,000? No this is getting to profit before tax. Actually: Operating Profit Before D&A - D&A - Interest - Tax = Net income -4,986 - 11,079 - 1,730 + 3,926 (tax benefit) ... = -13,869, not -18,231 Wait, let me check: -4,986 - 11,079 = -16,065. Then -16,065 - 1,730 = -17,795. Then -17,795 + 3,926 = -13,869. But profit is -18,231. There's also "Net Changes In Fair Value On Energy And Commodity Derivatives" = -849,000,000 And "Other Income And Expenses Excluded From Ebe" = 687,000,000 And "Impairment Loss Reversal" = 1,762,000,000 Let me trace through more carefully. The "Operating Profit Before Depreciation And Amortisation" is -4,986,000,000. Then: -4,986,000,000 - D&A: -11,079,000,000 - Impairment reversal: +1,762,000,000 (benefit) - Other excluded: +687,000,000? Or is this already in? "Profit Loss From Operating Activities" = -19,363,000,000 Then: -19,363 + Finance costs: -3,553,000,000 (negative means net cost) = Income before tax: -22,916,000,000? But given as -22,916,000,000 ✓ Then: -22,916 + Tax benefit 3,926 + Share of profit 759 = -19,231 + discontinued 6 = -18,225 ≈ -18,231 (rounding) OK so the numbers work. For S&P FFO, let me use the most practical definition: **FFO = Cash Flows From Used In Operating Activities + Increase Decrease In Working Capital - Dividends Received Classified As Operating Activities + Net Financial Expeneses Disbursed Including Dividends Received + Income Taxes Paid Refund** Wait, I'm overcomplicating. Standard S&P: **FFO = Operating cash flow before working capital changes** From cash flow statement, this is: Cash Flows From Used In Operating Activities - Increase Decrease In Working Capital (as adjustment) = -7,425,000,000 - (-8,301,000,000) = -7,425,000,000 + 8,301,000,000 = 876,000,000 But wait, "Increase Decrease In Working Capital" = -8,301,000,000 means working capital increased, which is USE of cash. In the cash flow statement, this is subtracted. So to get back to "before working capital", we add it back. Operating CF = Net income + D&A + ... - Working capital increase - Interest - Taxes = Net income + D&A + ... - 8,301 - Interest - Taxes = -7,425 So before working capital: Net income + D&A + ... - Interest - Taxes = -7,425 + 8,301 = 876,000,000 But this 876,000,000 includes interest and taxes. For FFO, S&P typically wants BEFORE interest and taxes on accrual basis, or we can use this and adjust. Actually, let me check: "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" = -5,140,000,000 This is: Operating CF before interest paid and taxes paid = -5,140 But this INCLUDES working capital changes! So: Profit + D&A + other non-cash - Working capital increase = -5,140 Profit + D&A + other non-cash - 8,301 = -5,140 Profit + D&A + other non-cash = 3,161,000,000 Then actual FFO (S&P definition, before working capital, interest, taxes): = 3,161,000,000? No, this is before working capital but still has interest and tax accruals in the profit. Actually, I think the cleanest is to use the standard S&P formula for corporate issuers: **FFO = Net income + Realized gains(losses) + Depreciation & amortization + Deferred income taxes + Other non-cash items** For 2022: - Net income (continuing operations): -18,231,000,000 - Add D&A: 11,079,000,000 - Add deferred tax benefit: 2,644,000,000 (estimated from above, or use 3,926,000,000 total tax benefit? No, current tax is also non-cash in accrual sense for FFO... actually S&P adds back total income tax expense) - Other non-cash: Impairment reversal is a negative, so subtract: -1,762,000,000 Actually, S&P adds back the total income tax expense (since FFO is pre-tax in concept). And adds back interest expense. Let me use: **FFO = EBIT + D&A - Cash taxes** or similar. Or: **FFO = EBITDA - Interest expense - Cash taxes** For 2022: - EBITDA = Operating Profit Before D&A = -4,986,000,000? No, this is French "EBE" concept which is operating profit before D&A, but may include other items. Actually "Operating Profit Before Depreciation And Amortisation" in French accounts is often "EBITDA" equivalent or "Gross Operating Profit". Let me check if this is truly EBITDA. Looking at the name: "Operating Profit Before Depreciation And Amortisation" - this is EBIT + D&A = EBITDA? No wait, "Operating Profit Before Depreciation And Amortisation" suggests it's already before D&A, so this IS EBITDA. But in French accounting, "Résultat d'exploitation avant dépréciation et amortissement" is typically: Revenue - Operating expenses + Other operating income = EBITDA-like measure Given: -4,986,000,000 for 2022. This is negative EBITDA! Then FFO = EBITDA - Interest - Cash taxes? That would be even more negative. Hmm, but S&P FFO should be more stable. Let me re-read the data. "Operating Profit Before Depreciation And Amortisation" 2022: -4,986,000,000 "Depreciation And Amortisation Expense" 2022: 11,079,000,000 "Profit Loss From Operating Activities" 2022: -19,363,000,000 Check: -4,986 - 11,079 = -16,065. But operating profit is -19,363. Difference is -3,298,000,000. This difference includes: - "Net Changes In Fair Value On Energy And Commodity Derivatives Excluding Trading Activities": -849,000,000 - "Impairment Loss Reversal": 1,762,000,000 - "Other Income And Expenses Excluded From Ebe": 687,000,000 Sum: -849 + 1,762 + 687 = 1,600,000,000. Not -3,298. So there are other items. Actually, looking more carefully: "Other Operating Income And Expenses Included In Ebe" = 367,000,000 for 2022. Let me try: -4,986 (OPBDA) - 11,079 (D&A) + 367 (other op inc in EBE) - 849 (fair value) + 1,762 (impairment) + 687 (other) = ? -4,986 - 11,079 = -16,065 -16,065 + 367 = -15,698 -15,698 - 849 = -16,547 -16,547 + 1,762 = -14,785 -14,785 + 687 = -14,098 Still not -19,363. I'm missing something. Actually, I think "Operating Profit Before Depreciation And Amortisation" might be a specific French measure that doesn't include all items. Let me just use the cash flow approach which is more reliable. For S&P FFO, I'll use: **FFO = Cash Flows From Used In Operating Activities - Increase Decrease In Working Capital + Dividends Received Classified As Operating Activities** Wait, dividends received are already in operating CF. Let me check if they're included. From cash flow: "Dividends Received Classified As Operating Activities" = 590,000,000 And "Net Financial Expeneses Disbursed Including Dividends Received" = 1,003,000,000 Hmm, "Including Dividends Received" suggests the 1,003 includes -590 or +590? The wording is "Net Financial Expenses Disbursed Including Dividends Received" = 1,003. This is net financial expenses disbursed, which includes dividends received (as offset). So net financial expenses paid = 1,003 + 590? Or 1,003 already includes the 590? Actually, reading carefully: "Net Financial Expeneses Disbursed Including Dividends Received" - this suggests financial expenses disbursed, and the "including dividends received" might mean dividends received are netted against this. So if dividends received were 590, then interest paid = 1,003 + 590 = 1,593? Or is 1,003 the net after including dividends? I think 1,003 is the net amount, meaning: Financial expenses paid minus dividends received = 1,003. So if dividends received are 590, then gross financial expenses = 1,593. But then "Dividends Received Classified As Operating Activities" = 590 is shown separately, suggesting it might be in operating activities. For S&P FFO, the standard is: **FFO = Net cash from operating activities + Increase in working capital - Capitalized development costs - Change in customer deposits** Or more commonly for utilities: **FFO = EBITDA - Cash interest - Cash taxes** Given negative EBITDA, FFO will be negative. But let me try the "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" and adjust. Actually, I found a better approach. Let me use S&P's exact formula for corporate issuers: **FFO = Net income before extraordinary items + Realized gains/losses from sales of assets + Depreciation and amortization + Deferred income taxes + Other non-cash items** For 2022: - Net income before extraordinary: -18,225,000,000 (total) or -18,231,000,000 (continuing) - Realized gains/losses on sales: "Adjustments For Losses Gains On Disposal Of Noncurrent Assets" = -143,000,000 (negative = gain, so subtract) - D&A: 11,079,000,000 - Deferred income taxes: Need to estimate. Total tax expense = -3,926,000,000. Cash tax refund = 1,282,000,000. So deferred tax = -3,926 - (-1,282) = -2,644,000,000? No wait, if cash tax is refund of 1,282, then current tax benefit is 1,282, and deferred is -3,926 - 1,282 = -5,208? No... Tax expense = Current tax expense + Deferred tax expense -3,926 = Current + Deferred Cash taxes paid/refund: If refund of 1,282, then current tax PAID is -1,282 (negative = refund, so current tax expense is benefit of 1,282) Actually, "Income Taxes Paid Refund" = 1,282,000,000. Positive number suggests... refund? Or paid? In cash flow statement, "Income Taxes Paid Refund" as positive 1,282,000,000 with operating CF going from -5,140 to -7,425 by subtracting this... wait no: "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" = -5,140 Then subtract "Net Financial Expeneses Disbursed Including Dividends Received" = 1,003 Then subtract "Income Taxes Paid Refund" = 1,282 Get: -5,140 - 1,003 - 1,282 = -7,425 ✓ So "Income Taxes Paid Refund" = 1,282 is treated as a subtraction, meaning it's taxes PAID (positive = cash outflow). But the name says "Paid Refund" which is confusing. Actually, re-reading: If 1,282 is positive and subtracted, then it's taxes paid. But if it were a refund, it would be negative (cash inflow, added). So 1,282,000,000 is taxes paid, not refund. The "Refund" in the name might mean "Paid or Refund" as a combined line item. Wait, but then "Income Tax Expense Continuing Operations" = -3,926,000,000 is a benefit. So taxes paid of 1,282 with total benefit of 3,926 means deferred tax benefit is 3,926 + 1,282 = 5,208,000,000? Tax expense = Current tax expense + Deferred tax expense -3,926 = Current + Deferred If current tax PAID is 1,282 (positive outflow), then current tax EXPENSE is 1,282 (expense). Then deferred = -3,926 - 1,282 = -5,208,000,000 (benefit) But balance sheet deferred tax assets increased by 7,029,000,000 and liabilities decreased by 868,000,000. The P&L deferred tax benefit should roughly match the balance sheet change, but 5,208 ≠ 7,897. The difference is due to OCI, FX, acquisitions. For S&P FFO, we add back deferred tax (the non-cash portion). Using the P&L number: deferred tax benefit of 5,208,000,000 (add back as non-cash benefit). But wait, S&P typically adds back the total income tax expense, not just deferred. Because FFO is a pre-tax measure conceptually. Actually no - S&P FFO is AFTER tax on accrual basis. The formula adds back deferred tax to get closer to cash taxes, but keeps current tax expense. Let me use: FFO = Net income + D&A + Deferred tax benefit (add back as non-cash) - Gain on sales - Share of profit of associates = -18,231 + 11,079 + 5,208 - (-143) - 759? Hmm, the impairment reversal of 1,762 is already in net income. And "Adjustments For Impairment Loss Reversal" in cash flow is 1,762, which is added back in indirect method (since it's a non-cash benefit, it reduced net income so add back). Actually, in cash flow statement: "Adjustments For Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss" = 1,762,000,000 In indirect method, you ADD back impairment expense, but SUBTRACT reversal (since it increased profit). Wait, the line says "Adjustments For Impairment Loss Reversal" = 1,762. If this is the adjustment amount, and it's positive, does it mean add or subtract? Looking at other items: "Depreciation And Amortisation Expense Provisions And Fair Value Gains Losses" = 6,820,000,000. This is added back. "Adjustments For Impairment Loss Reversal" = 1,762,000,000. Since reversal is a benefit to profit, the adjustment should be to subtract it. But the number is positive... Actually, in some presentations, the adjustment is shown as the amount to add back. For impairment expense, add positive. For reversal, add negative (or show as subtract). Here it's positive 1,762, which might mean they're adding back an expense, not subtracting a reversal. But the name says "Reversal"... Let me check: "Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss" in P&L = 1,762,000,000 (positive = income/benefit). In cash flow: "Adjustments For Impairment Loss Reversal" = 1,762,000,000. If this is the same item, and it's a benefit to profit, the cash flow adjustment should subtract it. But shown as positive... Actually, looking at French reporting, sometimes they show the adjustment as the amount of the original item. So "Adjustments for impairment reversal" = 1,762 means "we need to adjust for the 1,762 reversal" and the sign is determined by whether it's added or subtracted in the calculation. Given the cash flow from operations is very negative, and the reversal helped profit, they likely subtract it. But in the line item presentation, they might show it as positive with a note, or the calculation might add negative numbers. This is getting too complex. Let me use a simpler, more direct approach. **Direct S&P FFO calculation:** From S&P Global's corporate methodology: "FFO is net income from continuing operations adjusted for non-cash items, primarily depreciation and amortization, deferred taxes, and gains or losses from the sale of assets." FFO = Net income (continuing) + D&A + Deferred income taxes + Other non-cash charges - Gain on asset sales - Undistributed profits of equity investments For 2022: - Net income continuing: -18,231,000,000 - D&A: 11,079,000,000 - Deferred income taxes: ~5,208,000,000 (estimated from tax expense - cash taxes paid) - Other non-cash: Need to identify - Gain on asset sales: -143,000,000 (so subtract, or add back if it's a gain... wait, if gain is in net income, subtract it for FFO) - Undistributed profits of associates: 759,000,000 (subtract) Actually, "Adjustments For Undistributed Profits Of Associates" = 759,000,000 in cash flow statement. This is added back (since profit of associates is in net income but not cash). Let me recalculate using cash flow approach which is more reliable: Start with: Cash Flows From Used In Operating Activities = -7,425,000,000 Adjustments to get to FFO: - Subtract: Increase Decrease In Working Capital = -(-8,301,000,000) = +8,301,000,000? No, working capital increase is bad for cash, so to reverse, add back. - Subtract: Dividends received (reclassify to investing? S&P sometimes excludes from FFO): -590,000,000 - Add back: Net financial expenses disbursed (FFO is before interest): +1,003,000,000? Or is this already excluded? Actually, operating cash flow = -7,425 already includes: - Net financial expenses disbursed of 1,003 (subtracted) - Income taxes paid of 1,282 (subtracted) - But includes dividends received of 590 (added) Wait, let me re-trace. The "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" = -5,140 This is BEFORE financial expenses and taxes. So it includes everything else: profit, D&A, working capital, other non-cash, etc. Then: -5,140 - 1,003 (financial expenses) - 1,282 (taxes) = -7,425 (operating CF) But does -5,140 include dividends received? The 1,003 is "Net Financial Expeneses Disbursed Including Dividends Received". So financial expenses net of dividends received = 1,003. If gross financial expenses = 1,593 and dividends received = 590, then net = 1,003. And "Dividends Received Classified As Operating Activities" = 590 is shown separately. So in the -5,140, is dividends received included? It seems not, since it's part of the "net financial expenses" line. But that line is subtracted from -5,140 to get to -7,425. Actually, the structure suggests: -5,140 (before financial expenses and taxes) - 1,003 (net financial expenses, which includes -590 dividends received) - 1,282 (taxes paid) = -7,425 But wait, if dividends received are included in the 1,003 as negative (reducing net financial expenses), then the 590 is already accounted for. Hmm, but "Dividends Received Classified As Operating Activities" = 590 is a separate line. Is this in addition to? Let me check: If gross interest paid = 1,593, and dividends received = 590, then net financial expense = 1,593 - 590 = 1,003. This matches! So the 1,003 is interest paid minus dividends received. The 590 is the dividends received component. For FFO, S&P typically includes dividends received from operating activities in FFO. So we don't adjust for them. FFO (S&P) = Operating cash flow before working capital changes + Cash interest paid + Cash taxes paid - Dividends received from operating activities? No, dividends received stay. Actually, standard S&P FFO: = Net cash from operating activities + Increase in working capital (if working capital increased, add back the use of cash) - Capitalized development costs - Change in customer deposits + Cash interest paid (if not already in operating CF) For EDF, operating CF = -7,425 already includes interest paid and taxes paid. So FFO = -7,425 + 8,301 (working capital add back) = 876,000,000? But this seems too low for a company with 143B revenue. Let me verify. Actually, I think I have the sign wrong. "Increase Decrease In Working Capital" = -8,301 in the cash flow statement means it's subtracted (working capital increase uses cash). Operating CF = Base - 8,301 - 1,003 - 1,282 = -7,425 So Base - 10,586 = -7,425 Base = 3,161,000,000 This "Base" is essentially FFO before interest and taxes, but after working capital? No wait, the Base includes working capital changes. Actually: "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" = -5,140 This = Base - working capital changes? Or Base already includes working capital? From the name, this is "Net Cash Flow From Operations Before..." so it's a cash flow measure. It includes all operating cash flows except financial expenses and taxes. So it includes working capital changes. So: -5,140 = Profit + D&A + other non-cash - Working capital changes (excluding interest and taxes) Then FFO (before working capital, interest, taxes) = -5,140 + working capital changes = -5,140 + 8,301? No wait, if working capital increase was subtracted to get -5,140, then to reverse we add back. Actually, let me think: Profit (accrual): -18,231 + D&A: 11,079 + Impairment reversal: -1,762 (subtract as it's a benefit) + Other non-cash: various - Working capital increase: -8,301 (subtract as it uses cash) = Subtotal before interest and taxes: -5,140 Check: -18,231 + 11,079 - 1,762 + ... - 8,301 = -5,140 -18,231 + 11,079 = -7,152 -7,152 - 1,762 = -8,914 -8,914 - 8,301 = -17,215... not -5,140. I'm missing positive adjustments of about 12,075,000,000. These include: - "Net Changes In Fair Value On Energy And Commodity Derivatives": -849 (subtract, so add back? No, it's already in profit) - "Other Finance Income Cost": -1,997 (in profit, but this is finance not operating) Actually, let me use the cash flow statement items directly: "Adjustments For Impairment Loss Reversal": 1,762 "Depreciation And Amortisation Expense Provisions And Fair Value Gains Losses": 6,820 "Net Financial Income Or Expense": 446 "Dividends Received": 590 "Adjustments For Losses Gains On Disposal": -143 "Adjustments For Income Tax Expense": -3,926 "Adjustments For Undistributed Profits Of Associates": 759 Sum of adjustments: 1,762 + 6,820 + 446 + 590 - 143 - 3,926 + 759 = 6,308 Then: Profit -18,231 + adjustments 6,308 = -11,923 Then + "Increase Decrease In Working Capital" -8,301 = -20,224... not matching -7,425. Wait, I need to check which profit. "Profit Loss From Continuing Operations" = -18,231. But cash flow might start from "Profit Loss" = -18,225. And "Net Financial Income Or Expense" = 446. Is this in operating or financing? It's an adjustment, so likely added back. Actually, looking at standard indirect method: Net profit + D&A + Impairment losses (or - reversals) + Interest expense (or - income) - Gain on sales +/- Other non-cash = Operating profit before working capital changes - Working capital increase - Interest paid - Taxes paid = Net operating cash flow For EDF, the "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" = -5,140 suggests this is after working capital but before interest and taxes. Then: -5,140 - 1,003 (interest net of dividends) - 1,282 (taxes) = -7,425 So FFO (S&P, before working capital) = -5,140 + working capital adjustment = -5,140 + 8,301 = 3,161,000,000? But this is still before interest and taxes. S&P FFO is typically after interest and taxes on accrual basis, or before them but clearly defined. Actually, I think the most standard S&P FFO for this case is: **FFO = Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund + Net Financial Expeneses Disbursed Including Dividends Received - Dividends Received + Income Taxes Paid Refund - Increase Decrease In Working Capital** = -5,140 + 1,003 - 590 + 1,282 - (-8,301)? No this is messy. Let me try: FFO = Operating cash flow + Working capital increase - Dividends received + Interest paid + Taxes paid = -7,425 + 8,301 - 590 + 1,593 + 1,282? Where 1,593 = 1,003 + 590 (gross interest) = -7,425 + 8,301 - 590 + 1,593 + 1,282 = 3,161,000,000 Hmm, 3,161. Let me verify: -7,425 + 8,301 = 876. Then 876 - 590 = 286. Then 286 + 1,593 = 1,879. Then 1,879 + 1,282 = 3,161. But this includes interest paid and taxes paid, so it's not "before" them. Actually, S&P FFO is typically: - After tax (on accrual basis, or cash basis approximated) - After interest (since it's a debt service coverage ratio denominator) - Before working capital changes So FFO = Operating cash flow + Working capital changes = -7,425 + 8,301 = 876,000,000? But this is too low. And it includes dividends received. Or: FFO = EBITDA - Cash taxes - Cash interest = -4,986 - 1,282 - 1,593 = -7,861? No that's worse. Given negative EBITDA, FFO is likely negative. But let me check if "Operating Profit Before Depreciation And Amortisation" is truly EBITDA. Actually, in French financial statements, "Résultat d'exploitation avant dépréciation et amortissement" (EBE) is: Revenue - Purchases + Inventory change - Other external expenses - Personnel costs - Taxes - Other operating income/expenses This is closer to operating cash flow before working capital, or "Gross Operating Surplus". For 2022: -4,986,000,000 This is negative due to massive energy costs (121B vs 84B prior year) exceeding revenue growth. Given this, FFO will be negative or very low. But S&P might adjust for certain items. Actually, let me look at this from a different angle. S&P FFO / Net Debt is a leverage ratio. For EDF in 2022, with nationalization and energy crisis, the ratio would be very stressed. Let me calculate Net Debt first, then determine a reasonable FFO. ## Net Debt Calculation Net Debt = Total Debt - Cash and Cash Equivalents Debt items: - "Other Noncurrent Financial Liabilities" 2023-01-01: 71,058,000,000 - "Other Current Financial Liabilities" 2023-01-01: 71,844,000,000 - "Special French Public Electricity Distribution Concession Liabilities" 2023-01-01: 49,459,000,000 Wait, are concession liabilities debt? These are specific to French utilities and represent obligations related to concession assets. S&P typically includes these as debt-like obligations. Total debt = 71,058 + 71,844 + 49,459 = 192,361,000,000? But wait, there might be more debt items. Let me check: - "Noncurrent Provisions" include nuclear decommissioning and employee benefits. These are not financial debt. - "Trade And Other Current Payables" = 23,284,000,000: operating payables, not debt - "Other Noncurrent Liabilities" = 4,968,000,000: need to check if financial Actually, looking at S&P methodology, they include: - Bank loans and bonds - Finance leases - Pension liabilities (sometimes, if underfunded) - Concession liabilities (typically included as debt-like) For EDF, "Special French Public Electricity Distribution Concession Liabilities" = 49,459,000,000 is likely included as debt. But let me check if there are other debt items in "Other Noncurrent Financial Liabilities" and "Other Current Financial Liabilities". These likely include bonds, bank loans, derivatives, etc. Actually, "Other Current Financial Assets" = 58,033,000,000 and "Other Noncurrent Financial Assets" = 48,512,000,000. These might include derivatives, deposits, etc. Some might offset debt. For S&P Net Debt: Gross Debt = Financial liabilities (current + noncurrent) + Concession liabilities (if applicable) - Fair value of derivatives that hedge debt From balance sheet: - Other Noncurrent Financial Liabilities: 71,058,000,000 - Other Current Financial Liabilities: 71,844,000,000 - Special French Public Electricity Distribution Concession Liabilities: 49,459,000,000 Total = 192,361,000,000 Less: Cash and Cash Equivalents: 10,948,000,000 Less: Other Current Financial Assets (if liquid): 58,033,000,000? No, this includes derivatives, not all cash-like. Less: Other Noncurrent Financial Assets: 48,512,000,000? Probably not liquid. Net Debt = 192,361 - 10,948 = 181,413,000,000? Or with more adjustments. Actually, S&P typically includes only cash and near-cash as deductions. "Other Current Financial Assets" might include some liquid investments, but likely also includes derivative assets, trade receivables, etc. Looking at the structure: "Trade And Other Current Receivables" = 24,844,000,000 is separate. "Other Current Financial Assets" = 58,033,000,000 likely includes derivatives, margin deposits, short-term investments. For conservative estimate, Net Debt ≈ 192,361 - 10,948 = 181,413,000,000 Or if we include more cash-like items from financial assets... but let's be conservative. Actually, let me check 2022 year-end vs 2023. The question asks for 2022 ratio. The balance sheet dates are 2023-01-01 and 2022-01-01, which are year-ends for 2022 and 2021 respectively. So for 2022 (date 2023-01-01): - Other Noncurrent Financial Liabilities: 71,058,000,000 - Other Current Financial Liabilities: 71,844,000,000 - Special French Public Electricity Distribution Concession Liabilities: 49,459,000,000 - Cash and Cash Equivalents: 10,948,000,000 Gross debt = 71,058 + 71,844 + 49,459 = 192,361,000,000 Net debt = 192,361 - 10,948 = 181,413,000,000 But wait, is "Special French Public Electricity Distribution Concession Liabilities" really debt? This is a specific French accounting item for concession obligations. S&P may or may not include it. Let me assume they do, as it's a contractual obligation. Actually, looking at EDF's actual S&P ratings, they report Net Debt which includes these items. Let me proceed. ## FFO Calculation - Final Attempt Given the complexity, let me use the most direct S&P approach: **FFO = Net income from continuing operations + Depreciation and amortization + Deferred income taxes + Other non-cash items - Gain on sale of assets - Share of earnings of equity investments + Interest expense + Current income tax expense** Wait, this gets us to EBIT + D&A = EBITDA essentially. Actually: Net income + Interest + Taxes + D&A = EBITDA = -18,231 + 1,730 + (-3,926) + 11,079 = -9,348? No... Net income = EBIT - Interest - Taxes So EBIT = Net income + Interest + Taxes = -18,231 + 1,730 - 3,926 = -20,427 Then EBITDA = EBIT + D&A = -20,427 + 11,079 = -9,348,000,000 But "Operating Profit Before Depreciation And Amortisation" = -4,986,000,000. These don't match because EBIT and "Operating Profit Before D&A" are different concepts. Actually, "Profit Loss From Operating Activities" = -19,363,000,000. This is operating profit (EBIT). EBIT + D&A = -19,363 + 11,079 = -8,284. Still not -4,986. The difference is due to items between "Operating Profit Before D&A" and "Profit Loss From Operating Activities". These include fair value changes, impairment, other items. Let me just use "Operating Profit Before Depreciation And Amortisation" as the starting point for EBITDA-like measure. FFO (S&P) = Operating Profit Before D&A + D&A - Interest expense - Cash taxes = EBITDA - Interest - Cash taxes But this is not standard. S&P FFO is typically from cash flow statement. Let me use: **FFO = Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund + Income Taxes Paid Refund - Increase Decrease In Working Capital** = -5,140 + 1,282 - (-8,301) ? No, this adds taxes paid back, getting to pre-tax. Actually: -5,140 is before financial expenses and taxes. To get FFO (after tax and interest on accrual basis, before working capital): FFO = -5,140 + Working capital adjustment + (Accrual tax - Cash tax) + (Accrual interest - Cash interest) This is too complex. Simplest reliable approach: **FFO = Cash Flows From Used In Operating Activities - Increase Decrease In Working Capital** = -7,425 - (-8,301) = -7,425 + 8,301 = 876,000,000 But this is very low. And it includes dividends received and other items. Or: FFO = Operating Profit Before D&A - Interest expense - Income tax expense = -4,986 - 1,730 - (-3,926) = -4,986 - 1,730 + 3,926 = -2,790,000,000 Still negative. Given EDF's 2022 was extraordinary with massive losses, FFO is likely negative. But for the ratio, we need a number. Let me try yet another approach. S&P sometimes uses "Funds From Operations" as: **FFO = Operating cash flow before working capital changes + Interest paid + Taxes paid - Dividends received** = 876 + 1,003 + 1,282 - 590? Wait, 876 is operating CF before WC. This already includes interest paid and taxes paid? No, 876 is from: -7,425 + 8,301 = 876, where -7,425 includes interest and taxes paid. So 876 = Profit + D&A + other non-cash - working capital changes... no wait, I added working capital back, so 876 is before working capital but after interest and taxes. Actually: -7,425 (operating CF) = (Profit + D&A + non-cash - WC change) - interest paid - taxes paid + dividends received = Base - 8,301 - 1,003 - 1,282 = -7,425? No, -7,425 includes the -8,301 already. Let me be precise. Indirect method: Net profit: -18,225 + D&A: 11,079 + Impairment reversal: -1,762 (or + if adding back expense, but reversal is negative expense) + Fair value changes: -849? Or is this in financing? + Other non-cash: various - Working capital increase: -8,301 (subtract as it uses cash) - Interest paid: -1,003? But interest expense in P&L is 1,730 - Taxes paid: -1,282? But tax benefit in P&L is -3,926 + Dividends received: +590 The cash flow statement adjustments show: "Net Financial Income Or Expense" = 446 adjustment "Adjustments For Income Tax Expense" = -3,926 adjustment So starting from profit, they add back net financial expense of 446 (meaning financial income - expense = -446, so add back 446 to reverse), and add back tax expense of -3,926 (tax benefit, so subtracting benefit = adding expense? No, -3,926 means they subtract 3,926, which removes the tax benefit). This is getting too confusing with signs. Let me just use the explicit cash flow numbers. From the cash flow statement, the most reliable FFO proxy is: **FFO = Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund - Increase Decrease In Working Capital + Dividends Received Classified As Operating Activities** Wait, -5,140 is before financial expenses and taxes. It includes working capital and dividends received. So: -5,140 = Accrual-based operating profit adjusted for non-cash items - working capital changes + dividends received? Actually, -5,140 includes everything operating except interest and taxes. So: FFO (S&P, after interest and taxes on accrual, before working capital) would require adding back working capital and adjusting for accrual vs cash interest/taxes. Given time constraints, let me use a practical approach: **FFO ≈ Operating Profit Before Depreciation And Amortisation + Depreciation And Amortisation - Interest Expense - Income Tax Expense + Other non-cash adjustments** But this is just EBIT + D&A - Interest - Taxes + ... = Net income + D&A + ... = -18,231 + 11,079 = -7,152,000,000 (from continuing operations) Or with total profit: -18,225 + 11,079 = -7,146,000,000 Add back impairment reversal (non-cash benefit that reduced profit): -1,762,000,000 (so subtract to normalize) Add back share of profit of associates (non-cash): -759,000,000 (subtract) Add back net fair value changes (non-cash): -849,000,000? Or is this operating? Normalized FFO = -7,152 - 1,762 - 759 = -9,673,000,000? This is worse. Actually, for S&P, we want to ADD back non-cash expenses that reduced profit, and SUBTRACT non-cash benefits that increased profit. Impairment reversal INCREASED profit by 1,762, so we SUBTRACT it for FFO. Share of profit of associates INCREASED profit by 759, so we SUBTRACT it. Net fair value changes: -849 means LOSS, so this REDUCED profit, so we ADD back 849. So: -7,152 + 849 = -6,303 Then -6,303 - 1,762 (impairment reversal benefit) = -8,065 Then -8,065 - 759 (share of profit) = -8,824 This is getting more negative, which seems wrong. Let me try: Start from Operating Profit Before D&A = -4,986 This is "cleaner" as it's before D&A and many non-cash items. FFO = -4,986 + D&A (11,079) - Cash interest - Cash taxes + other adjustments = -4,986 + 11,079 - 1,003 - 1,282 = 3,808,000,000? Wait, is this right? -4,986 + 11,079 = 6,093. Then 6,093 - 1,003 = 5,090. Then 5,090 - 1,282 = 3,808. But I'm using cash interest and cash taxes, not accrual. And -4,986 is before D&A, so adding D&A gets to... what? Operating profit after D&A is -19,363. But -4,986 + 11,079 = 6,093, not -19,363. So -4,986 is NOT EBIT + D&A. It's something else. Actually, re-reading: "Operating Profit Before Depreciation And Amortisation" = -4,986. Then "Depreciation And Amortisation Expense" = 11,079. Then "Profit Loss From Operating Activities" = -19,363. If OPBDA - D&A = Operating Profit, then -4,986 - 11,079 = -16,065, not -19,363. So "Operating Profit Before Depreciation And Amortisation" is NOT simply Operating Profit + D&A. There are other items between them. The items between OPBDA and Operating Profit include: - "Net Changes In Fair Value On Energy And Commodity Derivatives Excluding Trading Activities": -849 - "Depreciation And Amortisation Expense": 11,079 - "Impairment Loss Reversal": 1,762 - "Other Income And Expenses Excluded From Ebe": 687 Sum: -849 + 11,079 + 1,762 + 687 = 12,679 Then: -4,986 - 12,679 = -17,665, still not -19,363. Missing -1,698. There must be other items not explicitly listed or my understanding is wrong. Given this complexity, let me use the cash flow based FFO which is more reliable: **FFO = Cash Flows From Used In Operating Activities + |Working capital increase| - Dividends received (if included in operating) + Interest paid + Taxes paid - Capitalized development** = -7,425 + 8,301 - 590 + 1,593 + 1,282 - 0 Where 1,593 = gross interest (1,003 net + 590 dividends) = -7,425 + 8,301 - 590 + 1,593 + 1,282 = 3,161,000,000 Wait: -7,425 + 8,301 = 876. 876 - 590 = 286. 286 + 1,593 = 1,879. 1,879 + 1,282 = 3,161. So FFO ≈ 3,161,000,000? This is the "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" plus working capital adjustment... no wait. Actually, 3,161 = -5,140 + 8,301. Yes! The -5,140 already excludes interest and taxes, and includes working capital. Adding back working capital gives 3,161. But 3,161 is BEFORE interest and taxes (both cash and accrual). S&P FFO is typically AFTER interest and taxes. To get after interest and taxes: 3,161 - 1,593 (interest) - 1,282 (taxes) + (accrual adjustments)... = 3,161 - 1,593 - 1,282 = -714? No, that's just operating CF before working capital but with gross interest. I'm going in circles. Let me use a completely different, simpler approach. ## Simplest Approach: Standard S&P Formula **FFO = Net income + Depreciation + Deferred taxes + Other non-cash items** For 2022, using continuing operations: - Net income: -18,231,000,000 - D&A: 11,079,000,000 - Deferred tax: From balance sheet change, approximately +5,208,000,000 (but this is messy) - Other non-cash: Add back impairment reversal? No, that's a benefit. Add back fair value losses? Actually, let me just use: **FFO = Operating cash flow before working capital changes** From the data, the best proxy is: "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" = -5,140,000,000 This is a measure of operating cash generation before interest and taxes, including working capital. To get "before working capital", I need to adjust. But actually, for S&P FFO / Net Debt, they sometimes use this exact measure or adjust it slightly. Given -5,140 is negative, and net debt is ~181B, the ratio would be negative. But wait - let me re-read the 2022 data. The period "2022-01-01 - 2023-01-01" is the 2022 fiscal year. The balance sheet date "2023-01-01" is year-end 2022. For 2022, EDF had massive losses due to energy price caps in France. The FFO should be stressed. However, I want to check if "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" of -5,140 is correct, or if I should use a different measure. Actually, looking at this again: The -5,140 is NEGATIVE. This means even before paying interest and taxes, operating cash flow was negative. This is due to massive working capital outflows. For S&P FFO, we add back working capital changes to normalize: FFO = -5,140 - (-8,301) = 3,161,000,000? No, -5,140 already INCLUDES the working capital outflow. So to reverse it, add back: -5,140 + 8,301 = 3,161,000,000. But 3,161 is still before interest and taxes. S&P FFO typically includes interest and taxes (i.e., it's after these expenses). If we subtract cash interest and cash taxes: 3,161 - 1,003 - 1,282 = 876,000,000. This matches my earlier calculation of operating CF + working capital change. So FFO ≈ 876,000,000 EUR? This seems very low for a 143B revenue company, but 2022 was extraordinary. Actually, let me verify: 876M / 181B net debt = 0.48% ratio, essentially zero. But I think I'm missing something. Let me re-check the working capital adjustment. "Increase Decrease In Working Capital" = -8,301,000,000. This is the cash flow impact. If working capital increased (more receivables, more inventory, less payables), cash is used. In the cash flow statement: Operating CF = Net profit + D&A + ... - Working capital increase - Interest paid - Taxes paid + Dividends received The "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" = -5,140 includes: Net profit + D&A + ... - Working capital increase = -5,140 So: -18,231 + 11,079 + other adjustments - 8,301 = -5,140 Other adjustments = -5,140 + 18,231 - 11,079 + 8,301 = 10,313,000,000 These other adjustments include: impairment reversal, fair value changes, share of profit, disposal gains/losses, etc. Then FFO (before working capital, after interest and taxes on accrual basis) would be: Net profit + D&A + other non-cash adjustments = -5,140 + 8,301 = 3,161,000,000 But this is BEFORE interest and taxes. To get S&P FFO (which is typically after interest and taxes), we need to subtract interest and taxes on accrual basis: = 3,161 - 1,730 (interest expense) - (-3,926) (tax benefit) = 3,161 - 1,730 + 3,926 = 5,357,000,000 Or with cash basis: 3,161 - 1,003 - 1,282 = 876,000,000 The difference is due to accrual vs cash timing. S&P typically uses a hybrid: FFO = Operating cash flow before working capital changes, with some adjustments. This is closest to 876M (cash basis) or 3,161M (before interest and taxes). Actually, I recall now: S&P FFO for corporate issuers is: **FFO = Net cash from operating activities + Increase in working capital - Capitalized development costs - Change in customer deposits** This is essentially operating cash flow before working capital changes = 876,000,000 for 2022. But they also sometimes add back dividends received from operating activities if they're not part of core operations. EDF has 590M dividends received. And they adjust for other items. Given the complexity, let me use **FFO = 876,000,000 EUR** as my base estimate, but note this is very conservative. Actually, I want to double-check by calculating 2021 to see if the methodology makes sense. For 2021: - Cash Flows From Used In Operating Activities: 12,648,000,000 - Increase Decrease In Working Capital: 1,526,000,000 (positive = working capital decrease, cash inflow) - Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund: 15,512,000,000 Check: 15,512 - 1,526 = 13,986? No, 15,512 - 588 - 2,276 = 12,648. ✓ So FFO for 2021 (before working capital, after cash interest and taxes) = 12,648 + 1,526 = 14,174,000,000? Or 15,512 - 1,526 = 13,986? Wait: Operating CF = 12,648. Working capital change = 1,526 (positive = decrease, source of cash). So before working capital: 12,648 - 1,526 = 11,122? No, if working capital decrease added 1,526 to cash, then before this benefit, cash was lower: 12,648 - 1,526 = 11,122. But "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" = 15,512. And 15,512 - 588 - 2,276 = 12,648. ✓ So 15,512 is before interest and taxes, including working capital. Before working capital: 15,512 - 1,526 = 13,986,000,000? No, if working capital decrease is +1,526 in cash flow, then 15,512 includes this +1,526. So before working capital = 15,512 - 1,526 = 13,986. Then after cash interest and taxes: 13,986 - 588 - 2,276 = 11,122,000,000. But operating CF is 12,648. The difference is 12,648 - 11,122 = 1,526. Yes! Because I subtracted working capital decrease instead of adding. Correct: Operating CF 12,648 = Before WC - 1,526 (wait, WC decrease should ADD to cash). If WC decreased by 1,526, this is a source of cash. So: Before WC + 1,526 = 12,648. Thus Before WC = 12,648 - 1,526 = 11,122. But "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" = 15,512. This includes WC. So 15,512 = Before WC and before interest/taxes = 11,122 + 1,526 + 588 + 2,276? No, 11,122 + 1,526 = 12,648. Then 12,648 + 588 + 2,276 = 15,512. ✓ So for 2021, FFO (before working capital, after cash interest and taxes) = 11,122,000,000. For 2022: Operating CF = -7,425. WC increase = -8,301 (uses cash). So before WC = -7,425 - (-8,301) = -7,425 + 8,301 = 876,000,000. Wait, this is after interest and taxes. Before interest and taxes: 876 + 1,003 + 1,282 = 3,161,000,000. This matches -5,140 + 8,301 = 3,161. So FFO (after cash interest and taxes, before working capital) = 876,000,000 for 2022. Or FFO (before interest and taxes, before working capital) = 3,161,000,000. S&P uses the former (after interest and taxes) for FFO/Net Debt, as interest is paid from FFO and net debt includes interest-bearing debt. So **FFO = 876,000,000 EUR** for 2022. But wait, I should check if S&P makes other adjustments. They typically add back dividends received from unconsolidated subsidiaries if included in operating activities. EDF has 590M dividends received, which are in operating activities. Do we add back? No, S&P FFO includes dividends received as they're part of operating cash flow. Actually, looking more carefully: The 876M already includes dividends received? Let me check. Operating CF = -7,425. This includes: - Net Cash Flow From Operations Before... = -5,140 - Less: Net Financial Expenses Disbursed Including Dividends Received = 1,003 - Less: Income Taxes Paid Refund = 1,282 The 1,003 is "Net Financial Expenses Disbursed Including Dividends Received". If this is net of dividends, then gross financial expenses = 1,003 + 590 = 1,593. But where are dividends received in operating CF? They're part of the "Net Financial Expenses Disbursed Including Dividends Received" line as an offset. So the -7,425 already reflects net financial expenses of 1,003 (which is expenses minus dividends). To get to a "gross" FFO, we might add back dividends: 876 + 590 = 1,466,000,000? But S&P typically doesn't do this; they use net financial expenses. Actually, for FFO/Net Debt, S&P Global Ratings methodology states: "FFO is net cash from operating activities less changes in working capital, less capitalized development costs, less change in customer deposits, plus dividends received from unconsolidated subsidiaries and affiliates (if not already included in net cash from operating activities)." If dividends are already in operating CF, we don't add them. The 1,003 net financial expenses includes dividends received as reduction. So operating CF = -7,425 includes the benefit of 590 dividends. For FFO: -7,425 - (-8,301) = 876. This includes the dividends benefit. So FFO = 876,000,000 EUR. ## Net Debt Final Calculation For 2022 (balance sheet date 2023-01-01): - Other Noncurrent Financial Liabilities: 71,058,000,000 - Other Current Financial Liabilities: 71,844,000,000 - Special French Public Electricity Distribution Concession Liabilities: 49,459,000,000 - Cash and Cash Equivalents: 10,948,000,000 Gross debt = 71,058 + 71,844 + 49,459 = 192,361,000,000 Net debt = 192,361 - 10,948 = 181,413,000,000 But I need to check if "Other Current Financial Assets" should reduce net debt. These are 58,033,000,000. If they include liquid investments or derivatives that hedge debt, S&P might net them. However, "Other Current Financial Assets" likely includes trade receivables, derivatives, margin deposits, etc. Not all are liquid cash-like. S&P is conservative and typically only nets cash and near-cash. Actually, looking at EDF's structure, "Other Current Financial Assets" = 58,033,000,000 is large. This might include: - Derivative assets - Short-term investments - Loans to associates - Trade receivables (but these are separate at 24,844) Without more detail, I'll assume only Cash and Cash Equivalents (10,948) are deducted for Net Debt. But wait - "Current Tax Assets Current" = 497,000,000. This is not debt-like. Net debt = 181,413,000,000 EUR. ## FFO / Net Debt Ratio FFO / Net Debt = 876 / 181,413 = 0.00483 = 0.48% This is extremely low, essentially zero. But I want to double-check my FFO. Let me see if there's a better measure. Alternative: Use "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" = -5,140,000,000 as a proxy for "EBITDA-like" cash flow. But this is negative and includes working capital. Or: Use operating profit before D&A = -4,986,000,000. Negative EBITDA means no FFO in traditional sense. Given the negative operating profitability, FFO is severely stressed. However, I realize I may have made an error. Let me re-check: Is "Operating Profit Before Depreciation And Amortisation" truly negative? -4,986,000,000 EUR. Yes. And revenue was 143,476,000,000 with fuel/energy/transmission charges of 121,010,000,000. So gross margin after energy costs was only 22,466,000,000. Then employee costs 15,236, other external services 9,420, other taxes 3,163... this quickly goes negative. Actually: 143,476 - 121,010 - 9,420 - 15,236 - 3,163 + 367 (other op inc) = -4,986. ✓ So yes, negative operating profit before D&A. For S&P FFO, with negative EBITDA, the traditional calculation gives negative FFO. But they might use adjusted measures. Given all this, my FFO estimate of 876,000,000 seems reasonable as it reflects some cash generation before working capital, despite negative accrual profits. But let me also consider: S&P might calculate FFO differently for utilities, using "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" and adding back working capital changes, then subtracting only maintenance capex or similar. Actually, I found that for some European utilities, S&P calculates FFO as: FFO = Net cash from operating activities - Change in working capital + Dividends from associates - Maintenance capex But this gets to discretionary cash flow, not FFO. Let me stick with: FFO = 876,000,000 EUR. Wait - I want to re-verify. For 2021: FFO = 12,648 - 1,526 = 11,122,000,000 (using my formula: Operating CF - Working capital change) Using the same formula for 2022: -7,425 - (-8,301) = -7,425 + 8,301 = 876,000,000. ✓ This 876M is positive but very small. Ratio: 876 / 181,413 = 0.00483 As percentage: 0.48% Or as multiple: 0.0048x S&P typically expresses this as a percentage or as "times" (e.g., 0.48% or 0.0048x). Actually, looking at S&P methodology, they express FFO/Net Debt as a percentage. So 0.48%. But let me also check if I should use average net debt or year-end net debt. S&P typically uses average for flow ratios, but for leverage ratios, they often use year-end or average. For simplicity, I'll use year-end 2022 net debt. One more check: Should I include "Noncurrent Assets Or Disposal Groups Classified As Held For Sale" of 150,000,000? Not in net debt. Should I include "Liabilities Included In Disposal Groups Classified As Held For Sale" of 37,000,000? Probably not as debt. Final numbers: - FFO = 876,000,000 EUR - Net Debt = 181,413,000,000 EUR - FFO / Net Debt = 876 / 181,413 = 0.00483 = 0.48% But wait, I want to check one more thing. Is "Special French Public Electricity Distribution Concession Liabilities" truly debt-like? This is a specific accounting item for French electricity distribution concessions. It represents obligations to reinstate concession assets at the end of the concession. S&P typically treats these as debt-like obligations, especially if they're material and have economic substance similar to debt. However, some analysts might exclude them. If excluded: Gross debt = 71,058 + 71,844 = 142,902,000,000 Net debt = 142,902 - 10,948 = 131,954,000,000 FFO / Net Debt = 876 / 131,954 = 0.00664 = 0.66% Given S&P's conservative approach, they likely include concession liabilities. So I'll use 181,413. But actually, I realize I should double-check EDF's actual reporting. The "Special French Public Electricity Distribution Concession Liabilities" might be offset by "Property Plant And Equipment Operated Under French Public Electricity Distribution Concessions" of 63,966,000,000. These are concession assets that generate revenue. The liability represents the obligation to maintain/return these assets. In S&P methodology, they DO include these as debt-like, but sometimes net against the concession assets if the assets are non-separable. Actually, no - they typically gross them up: include both the asset and liability. For Net Debt calculation, we include the liability as debt. Final answer: FFO / Net Debt = 0.48% or approximately 0.5%. But let me express this as a ratio: 0.0048 or 0.48. Actually, I want to re-verify my FFO one more time. The 876M seems very low. Let me see if there are other adjustments S&P would make. Looking at the cash flow adjustments: - "Adjustments For Impairment Loss Reversal" = 1,762,000,000: This is a non-cash benefit. In FFO, do we add or subtract? The reversal increased profit, so it's not a source of cash. We should SUBTRACT it from profit to normalize, or not add it back if starting from cash flow. Since I'm starting from operating cash flow, the impairment reversal is already adjusted (added back as a negative, or subtracted). The 876M FFO is after all these adjustments. Actually, let me verify: Operating CF = -7,425. This includes all adjustments from net profit. So the 876M (before working capital) includes the impairment reversal adjustment. To get "S&P FFO", we might need to further adjust. For example, S&P excludes: - Capitalized development costs (none obvious) - Changes in customer deposits (not obvious) - Dividends received from associates (590M) - sometimes excluded or reclassified If we exclude dividends received: 876 - 590 = 286,000,000. Even lower. Or if we use a different starting point... Given the uncertainty, let me also calculate using "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" and adding back working capital, but keeping interest and taxes on accrual basis: FFO = -5,140 + 8,301 - 1,730 (accrual interest) + 3,926 (accrual tax benefit) = 5,357,000,000 Then FFO / Net Debt = 5,357 / 181,413 = 2.95% This is more reasonable and uses accrual interest/taxes which smooths timing differences. Actually, S&P FFO is typically closer to this: it's after interest and taxes on accrual basis, before working capital changes. Let me verify with 2021: -5,140 for 2022 vs 15,512 for 2021 (before interest/taxes, with working capital) Add back working capital: 15,512 - 1,526 = 13,986 for 2021 Subtract accrual interest: 13,986 - 1,459 = 12,527 Add accrual tax expense: 12,527 + 1,400 = 13,927? No wait, 2021 tax expense is positive 1,400 (expense). For 2021: FFO = 15,512 - 1,526 - 1,459 - 1,400 = 11,127. This matches my prior 11,122 (rounding). For 2022: FFO = -5,140 + 8,301 - 1,730 + 3,926 = 5,357. Wait, tax benefit is negative expense, so I add it? -5,140 + 8,301 = 3,161 3,161 - 1,730 (interest expense, cash outflow) = 1,431 1,431 + 3,926 (tax benefit) = 5,357 But is this right? Tax benefit of 3,926 means lower cash outflow. So FFO should be HIGHER with tax benefit. Yes. But wait, cash tax refund was 1,282. Accrual tax benefit is 3,926. The difference is deferred tax benefit of ~2,644. S&P FFO adds back deferred tax (non-cash) to get closer to cash basis, but keeps current tax. So: FFO with cash taxes = 3,161 - 1,730 - 1,282 = 149,000,000? No wait, 3,161 is before interest and taxes. Subtract cash interest 1,003 and cash taxes... but cash tax was refund. Actually, 3,161 - 1,003 (net financial expenses including dividends) - 1,282 (taxes paid, but these were refunded... wait, the 1,282 is positive and subtracted in cash flow, so it's taxes PAID, not refund). Hmm, but income tax expense is -3,926 (benefit), and cash taxes paid are 1,282 (outflow). This suggests current tax expense is 1,282 and deferred is -5,208, totaling -3,926. For S&P FFO, using cash taxes: 3,161 - 1,003 - 1,282 = 876,000,000. This matches my prior calculation. Using accrual taxes: 3,161 - 1,730 + 3,926 = 5,357,000,000. Which does S&P use? They typically use a hybrid that adds back deferred taxes. So FFO = Net income + D&A + Deferred taxes + Other non-cash - Gain on sales. = -18,231 + 11,079 + 5,208 - (-143) - 759 = -2,560,000,000? Let me calculate: -18,231 + 11,079 = -7,152 -7,152 + 5,208 = -1,944 -1,944 + 143 = -1,801 -1,801 - 759 = -2,560 Hmm, negative. But this uses total profit, not continuing. For continuing: -18,231 + 11,079 + 5,208 + 143 - 759 = -2,560,000,000. This is negative FFO! But my cash-based FFO was positive 876M or 5,357M. The difference is due to working capital and other items. The accrual-based FFO of -2,560M is before working capital. Adding back working capital: -2,560 + 8,301 = 5,741,000,000? No, that's not right either. I think the issue is that "deferred tax" of 5,208 is wrong. Let me recalculate. Tax expense = -3,926 (benefit) Cash taxes paid = 1,282 (outflow, positive in "paid" terms) Deferred tax benefit = Tax expense - Current tax expense = -3,926 - 1,282 = -5,208? But if cash taxes are PAID of 1,282, then current tax expense is 1,282 (expense). Then deferred tax = -3,926 - 1,282 = -5,208. Yes, deferred tax benefit of 5,208. But balance sheet deferred tax assets increased by 7,029 and liabilities decreased by 868, total 7,897. The difference (7,897 - 5,208 = 2,689) is due to OCI, FX, and other items. For S&P FFO, we add back the deferred tax from P&L (5,208), not the balance sheet change. So FFO = -18,231 + 11,079 + 5,208 - 1,762 (impairment reversal, subtract as benefit) + 849 (fair value loss, add back) - 687 (other income, subtract) - 759 (share of profit) + 143 (gain on disposal, subtract)... This is getting too detailed. Let me use the cash flow based FFO of 876,000,000 or 5,357,000,000. Given S&P's preference for cash flow based measures that are sustainable, and the fact that 2022 had massive one-time working capital outflows, I think FFO should add back working capital but use accrual interest and taxes to normalize. Actually, I just realized: The standard S&P FFO formula I should use is: **FFO = Net cash from operating activities + Increase in working capital - Capitalized development costs - Change in customer deposits** For EDF 2022: = -7,425 + 8,301 = 876,000,000 (assuming no capitalized development or customer deposits) This 876M is the most standard S&P FFO. But wait, I need to check if "Increase Decrease In Working Capital" = -8,301 means working capital INCREASED (used cash). Yes. So adding back: -7,425 - (-8,301) = -7,425 + 8,301 = 876. ✓ However, some S&P analysts use average working capital or make other adjustments. For this exercise, I'll use 876M. But I also want to consider: Should I use "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" and adjust differently? This measure (-5,140) is before interest and taxes. If I add back working capital: -5,140 + 8,301 = 3,161. This is EBITDA-like but on cash basis. Then subtract accrual interest and taxes: 3,161 - 1,730 + 3,926 = 5,357. This is after accrual interest and taxes, before working capital. But S&P FFO is typically after CASH interest and taxes, not accrual. So 876M. Actually, I found a reference: S&P Global Ratings defines FFO as "funds from operations" which is "net cash from operating activities less changes in working capital less capitalized development costs less change in customer deposits." This is 876M for EDF 2022. But for utilities, they sometimes adjust for regulatory timing differences. Given EDF's regulated activities, there might be timing differences in working capital. Given all this, my final answer is: FFO = 876,000,000 EUR Net Debt = 181,413,000,000 EUR FFO / Net Debt = 0.48% However, I want to check one more time if net debt should include concession liabilities. Let me think... The "Special French Public Electricity Distribution Concession Liabilities" = 49,459,000,000 represents obligations under the concession contract. These are not financial liabilities per IFRS (not debt instruments), but they are debt-like economic obligations. S&P Global Ratings typically includes these as "debt-like obligations" in their adjusted debt calculations. For EDF specifically, I believe they include them. But to be thorough, let me also calculate without: Net Debt = 71,058 + 71,844 - 10,948 = 131,954,000,000 FFO / Net Debt = 876 / 131,954 = 0.66% Given the question asks for "S&P methodology", and S&P is conservative, I'll include concession liabilities. Final ratio: 0.48% or 0.0048 as decimal. Actually, I want to express this properly. S&P typically shows FFO/Net Debt as a percentage. So 0.48%. Or as "0.48" if percentage is implied. Or sometimes as "0.0048x" meaning 0.48%. Let me provide 0.48 as the percentage, or 0.0048 as the decimal ratio. Actually, looking at typical S&P presentations, they say "FFO to debt of 20%" or similar. So 0.48% would be "0.48". But as a ratio for calculation purposes, it's 0.0048. I'll provide 0.48 as my answer, assuming percentage format. Wait, let me double-check my net debt once more. Are there other debt items? Looking at liabilities: - Noncurrent Provisions: 76,923 (nuclear, employee, other) - these are not financial debt - Trade And Other Current Payables: 23,284 - operating, not debt - Other Current Liabilities: 33,504 - need to check if any financial - Current Tax Liabilities: 967 - not debt I think I've captured the main debt items. But let me check "Other Noncurrent Liabilities" = 4,968. Could this include debt? And "Other Current Liabilities" = 33,504. Could this include short-term debt not in "Other Current Financial Liabilities"? "Other Current Financial Liabilities" = 71,844 seems comprehensive for short-term financial debt. I'll stick with my calculation. One more verification: Total liabilities = 203,941 (noncurrent) + 137,542 (current) + 37 (held for sale) = 341,520,000,000 Equity = 46,612 Total = 388,132 ✓ Debt portion of total liabilities: 192,361 / 341,520 = 56%. Seems reasonable for a capital-intensive utility. Final answer: 0.48 But wait, I want to re-verify FFO. Let me see if 876M is correct by checking 2021. 2021 FFO = 12,648 - 1,526 = 11,122,000,000 2021 Net Debt = (56,543 + 45,014 + 48,853) - 9,919 = 150,410 - 9,919 = 140,491,000,000? Wait, 2021 balance sheet (date 2022-01-01): - Other Noncurrent Financial Liabilities: 56,543,000,000 - Other Current Financial Liabilities: 45,014,000,000 - Special French Public Electricity Distribution Concession Liabilities: 48,853,000,000 - Cash: 9,919,000,000 Net Debt 2021 = 56,543 + 45,014 + 48,853 - 9,919 = 150,410 - 9,919 = 140,491,000,000 FFO/Net Debt 2021 = 11,122 / 140,491 = 7.92% For 2022: 876 / 181,413 = 0.48% This dramatic drop from 7.92% to 0.48% reflects the energy crisis impact on EDF. Seems plausible. Actually, I want to check if my 2021 FFO is right. The 11,122M seems reasonable for a normal year. But let me also verify: 2021 "Operating Profit Before Depreciation And Amortisation" = 18,005,000,000. This is positive and healthy. 2022: -4,986,000,000. Negative due to energy cost spike. So FFO dropping from 11B to 0.9B makes sense. I'll finalize with 0.48. Hmm, but I want to make sure about the exact S&P definition. Let me see if I should use "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" as FFO proxy instead. This is -5,140M for 2022. But this is negative and includes working capital. Not good for ratio. Or with working capital added back: 3,161M. Then 3,161 / 181,413 = 1.74%. This is higher but still stressed. Which is more "S&P"? I think the 876M (after cash interest and taxes, before working capital) is more standard. But actually, I recall now: For FFO/Net Debt, S&P uses FFO AFTER interest and taxes, because the denominator is debt and interest is paid from FFO. So 876M is correct. Final answer: 0.48 Wait, I want to check one more thing. Should I use "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" minus working capital change, then minus cash interest and plus cash tax refund? = -5,140 + 8,301 - 1,003 + 1,282 = 3,440? No wait: -5,140 is BEFORE financial expenses and taxes. So to get to FFO (after financial expenses and taxes, before working capital): = -5,140 + 8,301 (working capital) - 1,003 (net financial expenses) - 1,282 (taxes paid) = 876. ✓ Same result. Or with accrual basis for interest and taxes: = -5,140 + 8,301 - 1,730 (accrual interest) + 3,926 (accrual tax benefit) = 5,357. S&P uses cash basis for interest (usually) and sometimes accrual for taxes. The 876M uses cash for both. Given the large tax refund/benefit in 2022, using accrual taxes gives higher FFO. But S&P prefers cash taxes for sustainability. I'll use 876M / 181,413M = 0.48%. Actually, one more consideration: The "Net Financial Expeneses Disbursed Including Dividends Received" = 1,003. If I use gross interest (1,593) and separate dividends received (590), then: FFO = -5,140 + 8,301 - 1,593 + 1,282 + 590? No, dividends are already in operating CF or not? I think the 1,003 is: Interest paid (1,593) - Dividends received (590) = 1,003. So net financial expense disbursed is 1,003. In operating CF, we subtract this 1,003. The dividends received are not separately added; they're netted against interest. So my 876M is correct. Final answer: 0.48 0.48