# S&P Adjusted Debt-to-EBITDA Analysis for Acciona SA (2022)

## Step 1: Identify the Relevant Industry

Based on the annual report facts for Acciona SA, the company operates across multiple business segments:
- **Renewable energy generation** (wind, solar, hydro)
- **Water infrastructure and management**
- **Transportation infrastructure** (roads, airports)
- **Construction and engineering services**

Acciona is a diversified infrastructure and renewable energy company. The most appropriate framework to apply is a **blend of regulated utilities (water), unregulated power (renewables), and transportation infrastructure**, with general corporate principles where these don't apply.

However, given the company's significant diversification across multiple infrastructure segments and significant unregulated renewable generation, I'll apply a **modified infrastructure and power generation approach**, treating the company as a diversified utility/infrastructure player with material unregulated activities.

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## Step 2: Calculate Adjusted_Debt

### Reported Debt Components (as of December 31, 2022 - shown as 2023-01-01 dates):

**Current Debt:**
- Current loans and current portion of noncurrent loans: €553 million
- Current lease liabilities: €72 million
- Current preferentes/obligaciones: €1,139 million
- **Total current debt: €1,764 million**

**Noncurrent Debt:**
- Noncurrent portion of noncurrent loans: €2,624 million
- Noncurrent lease liabilities: €439 million
- Noncurrent preferentes/obligaciones: €3,101 million
- **Total noncurrent debt: €6,164 million**

**Gross Debt (reported): €7,928 million**

### Adjustments:

**1. Lease Obligations (Operating Leases)**
- Noncurrent lease liabilities: €439 million
- Current lease liabilities: €72 million
- **Lease adjustment: €511 million** (already in balance sheet, so included in gross debt)

**2. Pension Adjustments**
- Deferred Tax Assets (2022): €920 million
- Deferred Tax Liabilities (2022): €813 million
- No explicit pension deficit disclosed in facts; assume minimal pension adjustment: €0

**3. Guarantees and Other Debt-Like Items**
- No material guarantees disclosed beyond balance sheet items
- Adjustment: €0

**4. Hybrid Debt (Preferentes/Obligaciones)**
- Current preferentes: €1,139 million
- Noncurrent preferentes: €3,101 million
- These appear to be classified as debt instruments; S&P typically views these as debt
- Already included in gross debt: €4,240 million

**5. Eligible Cash (Cash and Cash Equivalents)**
- Cash and cash equivalents (2023-01-01): €2,360 million

### Adjusted Debt Calculation:

```
Adjusted_Debt = Gross Debt + Lease Adjustments + Other Adjustments - Eligible Cash
Adjusted_Debt = €7,928 + €0 + €0 - €2,360
Adjusted_Debt = €5,568 million
```

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## Step 3: Calculate Adjusted_EBITDA

### Reported EBITDA Reconstruction (FY 2022: 2021-01-01 to 2022-01-01):

Starting with:
- Profit Loss From Operating Activities (EBIT): €829 million

**Add back:**
- Depreciation and amortization (Dotacion Amortizacion): €714 million
- Impairment loss reversals: €67 million (reversal, so add back the negative)

**EBITDA = €829 + €714 + €67 = €1,610 million**

### Adjustments:

**1. Lease Adjustments (IFRS 16)**
- Operating leases are capitalized; interest component should be removed from finance costs
- Estimated lease interest: ~€25-30 million (approximated from lease liability levels)
- Lease adjustment for EBITDA: ~€0 (lease payments are operational, already reflected in EBIT)

**2. Non-recurring Items**
- Impairment loss reversal: €67 million (non-recurring, subtract from reported EBITDA adjustment)
- Other gains/losses (2021-2022): €-7 million
- Exchange rate gains/losses (2021-2022): €10 million
- Actual non-recurring items to normalize: ~€-67 million

**3. Equity Method Adjustments (JVs and Associates)**
- Share of profit/loss of associates using equity method (2021-2022): €-81 million
- This represents the company's share of earnings from JVs/associates
- For leverage purposes, S&P typically adds back a proportional amount of EBITDA from these entities
- Estimated adjustment: €+81 million (to normalize for equity method accounting)

**4. Pension Adjustments**
- No material pension funding/service costs identified separately
- Adjustment: €0

**5. Other Normalization**
- Non-recurring finance costs or other one-off items: €0
- Stock-based compensation: Generally included in operating expenses, no separate adjustment needed
- Environmental/restructuring: Not separately identified as material

### Adjusted EBITDA Calculation:

```
Adjusted_EBITDA = Reported EBITDA + Lease Adjustments + Non-Recurring Normalizations + JV Adjustments
Adjusted_EBITDA = €1,610 + €0 + €67 + €81
Adjusted_EBITDA = €1,758 million
```

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## Step 4: Calculate Adjusted Debt-to-EBITDA Ratio

```
Adjusted_Debt / Adjusted_EBITDA = €5,568 million / €1,758 million
Adjusted_Debt / Adjusted_EBITDA = 3.166
```

Rounding to two decimal places: **3.17x**

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<answer>3.17</answer>