Step 1 — Relevant industry methodology

REN – Redes Energéticas Nacionais, SGPS, S.A. is an energy networks operator, primarily transmission infrastructure for electricity and gas in Portugal. This fits the Regulated Utilities methodology because it provides essential infrastructure services, is largely shielded from competition, and is subject to tariff/regulatory oversight.

For the debt-to-EBITDA calculation, the supplied methodology does not prescribe a special alternative formula for regulated utilities beyond S&P’s general corporate adjustments. Therefore, I use the baseline adjusted debt and adjusted EBITDA approach, with available disclosed items.

Step 2 — Estimate Adjusted Debt

Baseline formula:

Adjusted_Debt = reported_debt + leases + pension_deficit + guarantees + hybrid_debt_portion + other_debt_like_items − eligible_cash

From the 2022 year-end balance sheet, i.e. 2023-01-01:

Reported borrowings:
- Long-term borrowings = EUR 1,695,362,000
- Current borrowings and current portion of noncurrent borrowings = EUR 638,944,000

Reported debt:

1,695,362,000 + 638,944,000 = 2,334,306,000

Pension / employee benefit deficit:
- Noncurrent provisions for employee benefits = EUR 64,939,000

The facts do not provide separate guarantees, hybrid debt, or detailed lease liabilities. Lease payments are small, but no lease liability balance is separately disclosed, so no separate lease debt adjustment is added beyond reported borrowings.

Eligible cash:
- Cash and cash equivalents = EUR 365,292,000

Adjusted_Debt:

2,334,306,000 + 64,939,000 − 365,292,000 = 2,033,953,000

So:

Adjusted_Debt = EUR 2,033,953,000

Step 3 — Estimate Adjusted EBITDA

EBITDA can be reconstructed from operating profit plus depreciation and amortisation:

- Profit from operating activities = EUR 239,721,000
- Depreciation and amortisation expense = EUR 249,276,000

Reported/reconstructed EBITDA:

239,721,000 + 249,276,000 = 488,997,000

Construction accounting adjustment:

REN reports:
- Revenue recognised on exchanging construction services for intangible asset = EUR 197,420,000
- Costs with construction of concession assets = EUR 175,095,000

These IFRIC/service concession construction revenues and costs create a construction margin included in operating profit:

197,420,000 − 175,095,000 = 22,325,000

For an S&P-style recurring utility EBITDA estimate, this construction margin is often not treated as recurring operating EBITDA from regulated network operations. I therefore remove the net construction margin from EBITDA:

Adjusted_EBITDA = 488,997,000 − 22,325,000 = 466,672,000

No additional lease, nonrecurring, pension service-cost, or JV proportional EBITDA adjustments can be reliably quantified from the supplied data.

So:

Adjusted_EBITDA = EUR 466,672,000

Step 4 — Calculate Adjusted Debt / Adjusted EBITDA

Adjusted_Debt / Adjusted_EBITDA:

2,033,953,000 / 466,672,000 = 4.3584

Rounded to two decimals:

<answer>4.36</answer>