**Step 1. Identify the relevant industry for VINCI.** VINCI is a global concessions and construction group. Its core business covers: - Concessions (transportation infrastructure: airports, toll roads, highways—e.g., VINCI Autoroutes, VINCI Airports). - Construction (energy, building, civil engineering). Given the provided sector methodologies, the transportation infrastructure methodology is the most relevant because a substantial part of VINCI’s value and profits comes from long-term concession assets (roads, airports). The construction part does not fit the provided specialized methodologies; the general corporate baseline is used for any adjustments not covered by the transportation infrastructure methodology. Sector chosen for the analysis: **Transportation Infrastructure** (using baseline formulas as the main reference, noting the preferred ratios: FFO to debt, FFO cash interest coverage; core ratio is FFO to debt). **Step 2. Estimate 2021 Adjusted EBITDA.** Baseline formula: > Adjusted_EBITDA = EBITDA (reported or reconstructed) + adjustment_leases + nonrecurring_losses - nonrecurring_gains ± pension_adjustments ± joint_venture_proportional_EBITDA ± other_normalization_adjustments We can reconstruct EBITDA from the income statement data (2021): - "Profit Loss From Operating Activities" 2021: 4,438,000,000 EUR - "Adjustments For Depreciation And Amortisation Expense" 2021: 3,219,000,000 EUR So, reported EBITDA = Operating profit + Depreciation and amortisation = 4,438,000,000 + 3,219,000,000 = 7,657,000,000 EUR. (Note: The direct adjustments for provisions/impairment in cash flow statement 2021 is 206,000,000 EUR. Since operating profit already includes those charges, and depreciation/amortisation is added back, we should check if the 206M is a non-cash provision charge that needs adding back. It appears under "Adjustments For Provisions And Adjustments For Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss". However, the cash flow "Cash Flows From Used In Operations Before Changes In Working Capital" 2021 = 7,884,000,000 EUR. Let's verify: Operating profit 4,438M + D&A 3,219M + Provisions 206M + Share-based 84M - Gains on disposal -27M - Fair value gains -54M + Undistributed profits of equity 18M + Net finance costs 658M + Interest on leases 43M + Income tax 1,625M = 4,438+3,219=7,657 +206=7,863 +84=7,947 -27=7,920 -54=7,866 +18=7,884 +658=8,542 +43=8,585 +1,625=10,210. Wait, that doesn’t match. The cash flow line "Cash Flows From Used In Operations Before Changes In Working Capital" is 7,884M, which is: Operating activities profit 4,438 + D&A 3,219 + provisions 206 + share-based 84 - gains on disposal 27 - fair value gains 54 + undistributed profits 18 = 7,884. So EBITDA for S&P purpose is usually operating profit before D&A, but the cash flow statement indicates operating profit plus D&A plus provisions etc. Actually, the standard S&P EBITDA = Operating Profit + D&A + provisions (if non-recurring?). We'll take reconstructed EBITDA as: Profit from operating activities 4,438M + D&A 3,219M = 7,657M. Adjustments: - Non-recurring items: "Other Operating Income Expense Non Recurring" 2021 = -26,000,000 EUR (loss). So we add back this loss: +26M. - Leases: We have "Adjustments For Interest Expense On Lease Liabilities" 2021 = 43M. We need to add lease depreciation back to EBITDA (operating lease depreciation, if not already in D&A). The D&A figure includes depreciation on right-of-use assets, but S&P reclassifies lease depreciation into EBITDA in some cases, but here we already have D&A including lease depreciation. For transportation infrastructure, S&P’s adjustments might capitalize operating leases, but here leases already on balance sheet (Noncurrent Lease Liabilities, Current Lease Liabilities present). D&A likely includes ROU depreciation. No further add-back for lease depreciation if already in D&A. We can add lease interest back to EBITDA for Adjusted EBITDA? No, baseline formula adds back lease interest as part of "adjustment_leases"? Typically, S&P adds lease depreciation and lease interest to get EBITDAR then subtracts estimated lease principal repayment. But since not provided, we stick to given data. For now, we consider Adjusted EBITDA = EBITDA + non-recurring losses. Potential pension adjustments: "Noncurrent Provisions For Employee Benefits" decreased from 2021 to 2022 (given end-2021: 1,459M, end-2022: 1,149M). No explicit pension cost breakdown. We’ll skip pension adjustment absent data. Joint ventures: "Share Of Profit Loss Of Associates And Joint Ventures Accounted For Using Equity Method" 2021 = 12M. Not material; we add back? S&P usually deducts JV income and adds proportional JV EBITDA. Not enough data on JV EBITDA, so we ignore. So Adjusted EBITDA 2021 ≈ 7,657M + 26M = 7,683M EUR. **Step 3. Estimate 2021 FFO.** FFO = Adjusted EBITDA - cash_interest - cash_taxes. Cash interest: "Interest Paid And Interest Received Classified As Operating Activities" 2021 = 557M EUR (net). This is interest paid minus interest received, presented as a net number in operating activities (cash flow line: “Interest Paid And Interest Received Classified As Operating Activities” = 557M outflow). We use this as net cash interest paid (it already nets interest received). Cash taxes: "Income Taxes Paid Classified As Operating Activities" 2021 = 1,213M EUR. FFO 2021 = 7,683M - 557M - 1,213M = 5,913M EUR. **Step 4. Estimate 2021 Adjusted Debt.** Adjusted_Debt = (reported_debt + leases + pension_deficit + guarantees + hybrid_debt_portion + other_debt_like_items) - eligible_cash. Reported debt: - Noncurrent bonds 22,212M - Other noncurrent borrowings 2,757M - Short-term borrowings 5,769M Total reported debt = 22,212 + 2,757 + 5,769 = 30,738M EUR. Leases: Noncurrent lease liabilities 1,574M + Current lease liabilities 524M = 2,098M EUR. Pension deficit: "Noncurrent Provisions For Employee Benefits" 1,459M represents underfunded pension obligations? Possibly, yes, we include full amount. Hybrid debt: none apparent. Other debt-like: "Other Longterm Provisions" 1,137M (maybe some included, but no breakdown). No guarantees explicitly mentioned. Cash eligible: "Cash And Cash Equivalents" 11,065M. "Current Cash Management Financial Assets" 200M (may count as cash-like). Total cash ≈ 11,265M. Typically S&P caps eligible cash at some amount against debt. We'll subtract full cash. Adjusted Debt 2021 = 30,738 + 2,098 + 1,459 - 11,265 = 23,030M EUR. **Step 5. 2021 Adjusted Debt / Adjusted EBITDA.** 23,030 / 7,683 = 3.00x. **Step 6. 2021 FFO / Adjusted Debt.** 5,913 / 23,030 = 0.257 = 25.7%. **Step 7. Estimate 2022 Adjusted EBITDA.** Profit From Operating Activities: 6,489M EUR D&A: 3,613M EBITDA = 6,489 + 3,613 = 10,102M. Non-recurring items: "Other Operating Income Expense Non Recurring" 2022 = +8M EUR (gain). So subtract this gain: 10,102 - 8 = 10,094M. Adjusted EBITDA 2022 ≈ 10,094M. **Step 8. Estimate 2022 FFO.** Cash interest: 563M. Cash taxes: 1,603M. FFO 2022 = 10,094 - 563 - 1,603 = 7,928M. **Step 9. Estimate 2022 Adjusted Debt.** Reported debt: Noncurrent bonds 20,425M Other noncurrent borrowings 3,205M Short-term borrowings 6,368M Total = 29,998M. Leases: noncurrent 1,580M + current 522M = 2,102M. Pension deficit: 1,149M. Cash: Cash and equivalents 12,578M + Current cash management 755M = 13,333M. Adjusted Debt 2022 = 29,998 + 2,102 + 1,149 - 13,333 = 19,916M. **Step 10. 2022 Adjusted Debt / Adjusted EBITDA.** 19,916 / 10,094 = 1.97x. **Step 11. 2022 FFO / Adjusted Debt.** 7,928 / 19,916 = 0.398 = 39.8%. **Step 12. Classify trend.** Leverage change: 1.97x - 3.00x = -1.03x → Improving (≤ -0.2x). FFO/Debt change: 0.398 - 0.257 = +0.141 → Improving (≥ +0.03). Both signals agree: **Improving**. Improving