I'll work through this step-by-step for ELECTRICITE DE FRANCE (EDF). ## Step 1: Identify the Relevant Industry EDF is primarily a **regulated utility** (electricity generation, transmission, and distribution in France), but it also has significant unregulated power activities (nuclear generation sold at market prices, renewable energy, etc.). Given the description mentions "Regulated Utilities" as the primary framework and EDF's core business is electricity with significant regulatory oversight, I'll apply the **Regulated Utilities** methodology, with awareness that EDF has substantial unregulated/market-exposed activities. However, EDF is a complex integrated utility with significant nuclear generation that operates under regulated tariffs (ARENH - regulated access to incumbent nuclear electricity) but also market-based activities. Looking more carefully at the data, EDF operates under French public electricity distribution concessions and has significant regulatory framework elements. Given EDF's structure as a largely state-controlled utility with extensive regulated/network activities and the methodology guidance, I'll apply the **Regulated Utilities** framework, noting that EDF's significant market-exposed generation might suggest medial or standard volatility table rather than low volatility. ## Step 2: Estimate Adjusted_EBITDA First, let me reconstruct EBITDA from the available data. From the income statement data for 2022: - Operating Profit Before Depreciation And Amortisation (EBITDA proxy): **-4,986,000,000 EUR** (negative!) - Depreciation And Amortisation Expense: 11,079,000,000 EUR - Operating Profit (EBIT): -19,363,000,000 EUR Wait - let me verify: "Operating Profit Before Depreciation And Amortisation" = -4,986,000,000 EUR for 2022. This is already essentially EBITDA (or more precisely, OIBDA - operating income before depreciation and amortization). Let me verify this is indeed EBITDA by checking the relationship: Operating Profit Before Depreciation And Amortisation (-4,986M) - Depreciation And Amortisation (11,079M) = -16,065M... but reported Operating Profit is -19,363M. There's a gap. Let me check: -4,986 - 11,079 = -16,065, but reported "Profit Loss From Operating Activities" is -19,363M. The difference is -19,363 - (-16,065) = -3,298M. Looking at other items, this likely includes impairment and other operating items. Actually, looking more carefully: "Operating Profit Before Depreciation And Amortisation" is likely EDF's version of EBITDA or EBIT before D&A. Let me use this as the starting point. However, I need to check if this is truly EBITDA or if there are other adjustments. The term "Operating Profit Before Depreciation And Amortisation" suggests it's operating profit before D&A, which is essentially EBITDA. But wait - this is negative, which is unusual. Let me verify by reconstructing from revenue: Revenue: 143,476M - Expense Fuel Energy And Transmission Charges: 121,010M - Other External Services: 9,420M - Employee Benefits: 15,236M - Tax Expense Other Than Income Tax: 3,163M - Other Operating Income And Expenses Included In Ebe: 367M (income) Sum of expenses: 121,010 + 9,420 + 15,236 + 3,163 - 367 = 148,462M Revenue - Expenses = 143,476 - 148,462 = -4,986M ✓ This matches "Operating Profit Before Depreciation And Amortisation" = -4,986M. So EBITDA = -4,986M (already includes other operating income/expenses) Now for S&P adjustments to EBITDA: **Nonrecurring items to adjust:** - "Net Changes In Fair Value On Energy And Commodity Derivatives Excluding Trading Activities": -849M (this is typically excluded as non-cash/mark-to-market) - "Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss": 1,762M (reversal - this is nonrecurring gain) - "Other Income And Expenses Excluded From Ebe": 687M (need to assess if nonrecurring) For S&P purposes: - Fair value changes on derivatives (-849M) are typically normalized out (added back if negative, subtracted if positive) as they're non-cash/mark-to-market. Here it's -849M (loss), so we'd add back 849M. - Impairment reversals (1,762M) are nonrecurring gains, so subtract. - "Other Income And Expenses Excluded From Ebe" of 687M - need to check if nonrecurring. The name suggests excluded from EBE (Excédent Brut d'Exploitation, French for EBITDA), so this might already be excluded. Looking at the pattern, this seems to be items already excluded from the EBITDA-like measure. Actually, let me re-read: "Other Operating Income And Expenses Included In Ebe" = 367M - this is IN EBE. And "Other Income And Expenses Excluded From Ebe" = 687M - this is EXCLUDED from EBE. So the -4,986M already includes the 367M but excludes the 687M. For S&P Adjusted EBITDA, I need to: 1. Start with reported EBITDA (-4,986M) 2. Adjust for nonrecurring items Looking at typical S&P adjustments for utilities: - Nonrecurring losses: add back - Nonrecurring gains: subtract The impairment reversal of 1,762M is a nonrecurring gain (negative for ongoing operations), so subtract it. The fair value changes (-849M) - S&P typically adjusts out derivative fair value changes. Since it's a loss, we'd add back 849M. But wait - I need to check if these are already in or out of the -4,986M. From the structure: "Operating Profit Before Depreciation And Amortisation" likely includes operating items. The "Net Changes In Fair Value On Energy And Commodity Derivatives" is likely part of operating activities. Let me check: -4,986M (OPBDA) - 11,079M (D&A) = -16,065M. But "Profit Loss From Operating Activities" is -19,363M. Difference: -19,363 - (-16,065) = -3,298M. Items between OPBDA and Operating Profit: - Impairment Loss Reversal: 1,762M (positive, so increases profit) - Other items? Actually 1,762M reversal would make operating profit higher (less negative), but we need -19,363 to be more negative than -16,065. So there must be other negative items. Looking at "Other Income And Expenses Excluded From Ebe" = 687M - if this is excluded from EBE but included in operating profit... wait, it's "excluded from Ebe" so it's not in -4,986M but might be in operating profit. Actually, let me re-read the French accounting. EBE = Excédent Brut d'Exploitation = Gross Operating Surplus = essentially EBITDA before some adjustments. The structure seems to be: - OPBDA (-4,986M) includes D&A and some items - Then adjustments to get to Operating Profit Actually, "Operating Profit Before Depreciation And Amortisation" should be before D&A. Then subtract D&A to get to a measure before other items. Let me try: -4,986M - 11,079M (D&A) + 1,762M (impairment reversal) + other items = -19,363M? -16,065 + 1,762 = -14,303. Need to get to -19,363, so need additional -5,060M of expenses. Hmm, "Other Income And Expenses Excluded From Ebe" is 687M. If this is expense (positive number in expense context), then -14,303 - 687 = -14,990. Still not -19,363. Actually, looking more carefully at signs: "Other Income And Expenses Excluded From Ebe" = 687M. The name is ambiguous - is it income or expense? Given it's "Income And Expenses", the positive number might indicate net income. Let me try different interpretation: maybe "Operating Profit Before Depreciation And Amortisation" is actually after some other items. Actually, let me just use the direct EBITDA and work with S&P's typical adjustments more carefully. For regulated utilities, S&P typically makes these adjustments to EBITDA: 1. Add back nonrecurring losses / subtract nonrecurring gains 2. Adjust for pensions if needed 3. Proportional JV EBITDA 4. Operating leases (now mostly in IFRS 16, so less relevant) From the data, key items for 2022: - Impairment reversal: 1,762M (nonrecurring gain, subtract from EBITDA) - Fair value derivatives: -849M (non-cash, typically add back if it's a loss) But I need to check what's already in EBITDA. The "Operating Profit Before Depreciation And Amortisation" = -4,986M seems to be the cleanest EBITDA-like measure. However, for S&P, they often use "Funds From Operations" (FFO) directly from cash flow statement or reconstruct it. Let me look at what we have and try a different approach - go directly to FFO using the cash flow data and S&P methodology. Actually, let me step back and use the more direct approach. For utilities, S&P's FFO is typically: FFO = Net Income + D&A + deferred taxes + other non-cash items - nonrecurring gains/losses ± working capital adjustments... Actually, S&P defines FFO more specifically. Let me use the standard S&P approach: **FFO = Adjusted EBITDA - Cash Interest - Cash Taxes** Or alternatively from net income: **FFO = Net Income + Depreciation & Amortization + Deferred Income Taxes + Other non-cash items - Nonrecurring gains + Nonrecurring losses - Equity earnings + Dividends received** Given the complexity, let me use the cash flow statement approach where possible. From the cash flow data for 2022: - "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund": -5,140M - "Net Financial Expeneses Disbursed Including Dividends Received": 1,003M - "Income Taxes Paid Refund": 1,282M - "Cash Flows From Used In Operating Activities": -7,425M Check: -5,140 - 1,003 - 1,282 = -7,425M ✓ For S&P FFO, we typically want: FFO = Cash Flow from Operations + Interest Paid - Interest Received + Dividends Received (if equity accounted) ... Actually, let me use the more standard S&P approach from the income statement. From net income approach: - "Profit Loss" (Net Income): -18,225M - Add back: "Depreciation And Amortisation Expense": 11,079M - Add back: "Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss": -1,762M (reversal, so subtracts from expenses, i.e., adds to income - so we need to subtract this to get to ongoing earnings) - Deferred taxes: need to calculate Actually, for FFO from net income: Start with Net Income: -18,225M + D&A: 11,079M + Deferred income taxes: ? + Other non-cash items From the income statement: - "Income Tax Expense Continuing Operations": -3,926M (negative means tax benefit) - "Deferred Tax Assets" increased from 1,667M to 8,696M, so +7,029M The large increase in deferred tax assets suggests significant deferred tax benefit. Actually, looking at comprehensive income and tax details is getting complex. Let me try a cleaner approach. For S&P utility FFO, a common formula is: **FFO = Funds from Operations = Net Income + D&A + Deferred Taxes + Other non-cash - Equity Earnings + Dividends from equity investments ± other items** From the cash flow statement, we have a direct measure: "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" = -5,140M This is essentially: EBIT + D&A - Working Capital changes - Cash adjustments... Actually, this seems to be: Operating cash flow before interest and taxes = -5,140M Then FFO would be: -5,140M + Interest Paid (1,003M - dividends received 590M?) ... Let me look at "Net Financial Expeneses Disbursed Including Dividends Received" = 1,003M. This includes interest paid minus interest received plus dividends received? Or is it net financial expenses disbursed? The name suggests: Net Financial Expenses Disbursed (i.e., paid out) Including Dividends Received. So this is likely: Interest Paid - Interest Received + Dividends Received = 1,003M. For FFO, S&P typically uses: FFO = Cash Flow from Operations (after working capital, before interest and tax) + Interest Paid - Interest Received Or from the data: FFO = -5,140M + (Interest Paid - Interest Received) But we have "Net Financial Expeneses Disbursed Including Dividends Received" = 1,003M. If we subtract dividends received (590M), we get Interest Paid - Interest Received = 1,003M - 590M = 413M? Actually, the 590M "Dividends Received Classified As Operating Activities" is likely already in the -5,140M. Let me re-read: "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" = -5,140M. This is BEFORE net financial expenses disbursed and income taxes paid. So to get to "Cash Flows From Used In Operating Activities" = -7,425M, we subtract: - Net Financial Expenses Disbursed Including Dividends Received: 1,003M - Income Taxes Paid Refund: 1,282M So: -5,140 - 1,003 - 1,282 = -7,425M ✓ For S&P FFO, we want something closer to recurring cash generation. The standard approach is: FFO = Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund + Interest Paid (not received) - Nonrecurring items in operating cash flow Or more commonly for utilities: FFO = Net Income + D&A + Deferred Taxes + Other non-cash items - Equity earnings + Dividends received Let me try to calculate this way: Net Income: -18,225M + D&A: 11,079M + Impairment reversal: -1,762M (this is a gain, so subtract it from net income to normalize, i.e., add -1,762 or subtract 1,762) + Deferred tax benefit: From the tax expense, "Income Tax Expense Continuing Operations" = -3,926M (benefit). The cash tax paid was 1,282M. So deferred tax benefit = 3,926M - 1,282M = 2,644M? Wait: Total tax benefit in P&L is 3,926M (negative expense). Cash tax paid is 1,282M (positive outflow). So the accounting tax benefit exceeds cash by 3,926 + 1,282 = 5,208M? That doesn't seem right. Actually, "Income Taxes Paid Refund" = 1,282M. If this is positive, it means taxes paid (outflow). But the income statement shows -3,926M tax expense (benefit). The difference between accounting tax and cash tax is the deferred tax movement. If accounting shows -3,926M benefit but cash paid is +1,282M (outflow), then total tax benefit = 3,926M, cash paid = 1,282M, so deferred tax benefit = 3,926M - 1,282M = 2,644M? No wait... Actually, tax expense = current tax + deferred tax. If total tax expense is -3,926M (benefit), and cash tax paid is 1,282M (positive outflow, so current tax expense is +1,282M expense), then deferred tax benefit = -3,926M - 1,282M = -5,208M? That would mean deferred tax benefit of 5,208M. Let me verify with balance sheet: Deferred Tax Assets went from 1,667M to 8,696M, increase of 7,029M. Deferred Tax Liabilities went from 2,401M to 1,533M, decrease of 868M. Net DTA increase = 7,029M + 868M = 7,897M. This is roughly consistent with large deferred tax benefits. The 5,208M doesn't match 7,897M, but there may be FX, acquisitions, and other items. For FFO purposes, I'll add back the deferred tax benefit. Using the P&L approach: deferred tax benefit ≈ 5,208M (from above calc) or we can use the cleaner balance sheet approach. Actually, let me use a more practical approach. S&P FFO for utilities is often approximated as: FFO = EBITDA - Cash Interest - Cash Taxes ± other adjustments Or from the cash flow statement, a cleaner version: FFO = "Cash Flows From Used In Operating Activities" + "Net Financial Expeneses Disbursed Including Dividends Received" (i.e., add back net interest paid, keeping dividends received) + "Income Taxes Paid Refund" (add back cash taxes paid) - "Dividends Received Classified As Operating Activities" (these are equity income, typically excluded or treated differently) ± working capital normalization ± nonrecurring items So: -7,425M + 1,003M + 1,282M - 590M = -5,730M But this includes working capital changes and nonrecurring items. Let me check working capital: "Increase Decrease In Working Capital" = -8,301M (negative means working capital increased, using cash). To normalize working capital (remove it), we'd add back the working capital use: FFO before working capital = -5,730M + 8,301M = 2,571M? Wait, let me be more careful. The -5,140M "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" already includes working capital changes. From the adjustments in cash flow: "Adjustments For Impairment Loss Reversal" = 1,762M (add back, since it's non-cash gain) "Depreciation And Amortisation Expense Provisions And Fair Value Gains Losses" = 6,820M "Net Financial Income Or Expense" = 446M "Dividends Received Classified As Operating Activities" = 590M "Adjustments For Losses Gains On Disposal Of Noncurrent Assets" = -143M "Adjustments For Income Tax Expense" = -3,926M "Adjustments For Undistributed Profits Of Associates" = 759M "Increase Decrease In Working Capital" = -8,301M Sum of adjustments to net income: 1,762 + 6,820 + 446 + 590 - 143 - 3,926 + 759 - 8,301 = -1,993M Net Income: -18,225M + Adjustments: -1,993M? That gives -20,218M, not matching. Actually, the cash flow reconciliation starts from "Profit Loss From Continuing Operations" = -18,231M, not total "Profit Loss" = -18,225M. Let me try: -18,231 + 1,762 + 6,820 + 446 + 590 - 143 - 3,926 + 759 - 8,301 = -20,224M? Still not right. Hmm, I think I need to be more careful with signs. Let me assume the adjustments are added to net income: Starting point might be different. Let me use: "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" = -5,140M as the key metric. This is: Operating cash flow before interest and tax. For S&P FFO, we want recurring funds from operations. The standard definition is: **FFO = Net income from continuing operations + Depreciation & amortization + Deferred income taxes + Other non-cash items - Equity earnings in unconsolidated affiliates + Cash dividends received from unconsolidated affiliates - Nonrecurring gains + Nonrecurring losses** Let me try to build this: Net income from continuing operations: -18,231M ("Profit Loss From Continuing Operations") + D&A: 11,079M + Deferred income taxes: Need to estimate. From tax expense -3,926M (benefit) and cash taxes 1,282M paid. If we assume current portion is 1,282M expense, deferred is -5,208M benefit? Or using balance sheet: net DTA increase of ~7,897M, but not all flows through P&L. Actually, let me use a simpler approach. The "Adjustments For Income Tax Expense" in cash flow is -3,926M. This is adding back the tax benefit (negative expense). So in the cash flow reconciliation, they add back -3,926M (i.e., subtract 3,926M? No, add back the benefit). Let me just use the direct FFO formula that S&P typically uses for utilities: **FFO = Adjusted EBITDA - Cash Interest - Cash Taxes** First, get Adjusted EBITDA: Reported "Operating Profit Before Depreciation And Amortisation" = -4,986M Adjustments: - Nonrecurring items: Impairment reversal of 1,762M is a gain, so subtract from EBITDA to normalize: -4,986M - 1,762M = -6,748M? Wait, is impairment reversal in or out of OPBDA? Let me check: OPBDA - D&A = -16,065M. But operating profit is -19,363M. The difference is 3,298M. If impairment reversal is 1,762M (positive), then -16,065 + 1,762 = -14,303. Still need to get to -19,363, difference is -5,060M. Looking at "Other Income And Expenses Excluded From Ebe" = 687M. If this is expense not in EBE but in operating profit: -14,303 - 687 = -14,990. Still not there. "Net Changes In Fair Value On Energy And Commodity Derivatives" = -849M. If in operating profit but not in OPBDA: -14,990 - 849 = -15,839. Closer but still not -19,363. Hmm, there are clearly other items. Let me not try to perfectly reconcile and instead use the reported OPBDA as EBITDA starting point. For S&P Adjusted EBITDA: - Start: -4,986M - Subtract nonrecurring gains: Impairment reversal 1,762M (if included in OPBDA). But I don't know if it's included. Actually, looking at typical French reporting, "Operating Profit Before Depreciation And Amortisation" (Résultat d'exploitation avant dépréciation) typically includes D&A add-back but may include other items. The impairment reversal might be below this line. Given uncertainty, let me use a different approach: use the cash flow based FFO directly. From S&P methodology for utilities, FFO can also be calculated as: **FFO = Cash flow from operating activities (after working capital changes) + Cash interest paid - Cash interest received + Dividends received from equity investments - Nonrecurring operating items** From cash flow statement: - Cash Flows From Used In Operating Activities: -7,425M + Net Financial Expenses Disbursed Including Dividends Received: 1,003M (this includes interest paid - interest received + dividends received) - Dividends Received: 590M (to separate out) = -7,425M + 1,003M - 590M + 590M? Actually, let me think more carefully. The 1,003M "Net Financial Expeneses Disbursed Including Dividends Received" is likely: (Interest Paid - Interest Received) + Dividends Received. To get to FFO, I want to add back NET interest paid (Interest Paid - Interest Received), not including dividends received. So: Net interest paid = 1,003M - 590M (dividends) = 413M? Or is the 590M already in the -5,140M? Looking at the structure: "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" = -5,140M. This is BEFORE financial expenses and taxes. So it doesn't include interest or dividends yet. Then we subtract "Net Financial Expeneses Disbursed Including Dividends Received" = 1,003M to get to after-financing-but-before-tax cash flow. Then subtract "Income Taxes Paid Refund" = 1,282M to get final operating cash flow. So the -7,425M includes: operating activities - interest paid + interest received - dividends received - taxes paid. For FFO, S&P typically adds back net interest paid (interest paid - interest received) and also normalizes some items. FFO = Cash Flow from Operating Activities + Net Interest Paid + Cash Taxes Paid ± normalizing adjustments From above: Net interest paid = 1,003M - 590M (dividends) = 413M? Actually, I need to know if "Net Financial Expeneses Disbursed" means net of received, or if it's gross expenses. The term "Net Financial Expenses Disbursed Including Dividends Received" suggests: (Financial Expenses - Financial Income) paid out, plus dividends received. Or it could mean: Net Financial Expenses that were disbursed, and also dividends received are included in this line. Given the name, I'll interpret as: (Interest Expense Paid - Interest Income Received) + Dividends Received = 1,003M. If "Finance Income Cost" = -3,553M (which is net financial expense of 3,553M income? No, -3,553M means net financial income? Actually "Finance Income Cost" = -3,553M suggests finance income minus finance cost = -3,553M, i.e., net finance cost of 3,553M... wait, negative means income > cost? No, in the name "Finance Income Cost" the negative suggests net cost. Actually "Finance Income Cost" = -3,553M for 2022. In 2021 it was 360M. The swing is huge. This includes: - Interest Expense: 1,730M - Discount Effect: 174M - Other Finance Income Cost: -1,997M Sum: 1,730 + 174 - 1,997 = -93M? Not -3,553M. Hmm, there might be more items or different signs. Actually, looking at "Income Loss Before Taxes Of Consolidated Companies" = -22,916M. This is after finance costs. From operating profit -19,363M, we get to -22,916M by subtracting finance costs of 3,553M. So finance costs are 3,553M (as a positive expense, or -3,553M as income). But "Finance Income Cost" = -3,553M suggests net finance income? No, I think the naming convention is that negative means net cost. Or perhaps it's "Finance Income (Cost)" meaning when negative it's cost. This is getting too confusing with signs. Let me use a more robust approach. For EDF, given the complexity, let me use the standard S&P formula with clearer data: **FFO = Net Income + D&A + Deferred Taxes + Other non-cash - Equity Earnings + Dividends Received** From data: - Net Income: -18,225M - D&A: 11,079M - Deferred Taxes: Estimate from balance sheet change or cash flow From cash flow adjustments: "Adjustments For Income Tax Expense" = -3,926M. This is the accounting tax benefit. Cash taxes paid were 1,282M. So the deferred portion is -3,926M (benefit) - current portion. If current tax expense is 0 (since benefit exceeds current), then... actually this doesn't work well. Let me use balance sheet: Deferred Tax Assets increased by 7,029M (1,667 to 8,696). This increase is a non-cash benefit that reduces tax expense. So add back ~7,029M (or the portion that hit P&L). Actually, the cleanest FFO for utilities when reported EBITDA is messy is: **FFO = "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" - Working Capital Changes + Interest Paid - Interest Received** From data: - Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund: -5,140M - Working Capital Changes: -8,301M (negative means use of cash, so to normalize FFO we ADD this back, getting +8,301M) Wait no - if working capital increased (used cash), and we want FFO before working capital, we need to see if -5,140M already includes or excludes working capital. Looking at the cash flow reconciliation: "Increase Decrease In Working Capital" = -8,301M is an adjustment. It reduces cash flow. The -5,140M is after this adjustment (since it's the subtotal before interest and tax). So FFO before working capital = -5,140M - (-8,301M)? No, if working capital reduced cash by 8,301M, and we want pre-working-capital FFO, we add back the working capital use: -5,140M + 8,301M = 3,161M. Then FFO = 3,161M - Cash Interest + Cash Interest Received? Actually, standard S&P FFO includes working capital normalized but not interest. Let me use: FFO = Cash Flow from Operations before interest and tax - Working capital changes + Normalized working capital Hmm, this is getting circular. Let me use the most direct S&P approach: For utilities, **FFO = Adjusted EBITDA - Cash Interest - Cash Taxes** Let me estimate each: **Adjusted EBITDA:** Start with OPBDA: -4,986M + D&A (to get to full EBITDA... wait, OPBDA is already before D&A) Actually, "Operating Profit Before Depreciation And Amortisation" = -4,986M. This IS EBITDA (or close to it). Normalize: - Nonrecurring gains/losses: The impairment reversal of 1,762M - is this in OPBDA? Given OPBDA - D&A doesn't reach operating profit, likely not. Let me assume OPBDA is "clean" EBITDA. - Fair value derivatives: -849M - likely in OPBDA, and S&P would normalize this out. Add back 849M (since it's a non-cash loss). - Other nonrecurring: "Other Income And Expenses Excluded From Ebe" = 687M - excluded from EBE so not in OPBDA. Adjusted EBITDA = -4,986M + 849M (derivative loss add-back) = -4,137M But wait, is the derivative loss already in OPBDA? Looking at the P&L structure, "Net Changes In Fair Value On Energy And Commodity Derivatives" is likely part of operating activities, so yes in OPBDA. Also, "Other Operating Income And Expenses Included In Ebe" = 367M - this is IN EBE/OPBDA, so already included. **Cash Interest:** From cash flow: "Net Financial Expeneses Disbursed Including Dividends Received" = 1,003M Less dividends received: 590M Net interest paid ≈ 413M But we need Cash Interest specifically. From P&L: "Interest Expense" = 1,730M. This is accounting interest. Cash interest paid may differ. From the cash flow name, "Net Financial Expeneses Disbursed" likely means net interest paid (interest paid minus interest received). Let's estimate Cash Interest Paid ≈ 1,730M (from P&L) or less if interest was capitalized. Actually, for S&P, Cash Interest = interest paid, not expensed. From cash flow, if "Net Financial Expeneses Disbursed" = interest paid - interest received, and total is 1,003M including dividends received... Let me assume: Interest Paid ≈ 1,730M (from P&L, assuming no capitalized interest), Interest Received ≈ ?, Dividends Received = 590M. If 1,003M = (Interest Paid - Interest Received) + Dividends Received, and if Interest Paid ≈ 1,730M, then 1,730M - Interest Received + 590M = 1,003M? That gives Interest Received = 1,317M, which seems high. Alternatively: 1,003M = Interest Paid - Interest Received + 590M, so Interest Paid - Interest Received = 413M. From P&L: Interest Expense 1,730M, other finance items. This is too uncertain. Let me use a simpler approach: Cash Interest ≈ 1,730M (P&L interest expense, assuming no material capitalized interest or timing differences). **Cash Taxes:** "Income Taxes Paid Refund" = 1,282M (positive means paid, not refunded despite name). So Cash Taxes = 1,282M. **FFO = Adjusted EBITDA - Cash Interest - Cash Taxes** = -4,137M - 1,730M - 1,282M = -7,149M This seems very negative. Let me recheck. Actually, I think I need to reconsider. The "Income Tax Expense Continuing Operations" = -3,926M (benefit). If there's a tax benefit, cash taxes might be negative (refund). But 1,282M is shown as positive outflow. Wait - "Income Taxes Paid Refund" = 1,282M. In cash flow statements, positive typically means outflow (paid). But the word "Refund" suggests this could be a refund (inflow). Looking at 2021: 2,276M. If taxes were paid, positive is outflow. But in 2022 with huge losses, might get refund. Actually in standard cash flow presentation, "Income Taxes Paid (Refund)" with positive number means taxes paid (negative for cash flow). But the sign in the data: it's shown as 1,282M without negative, and in the calculation -5,140 - 1,003 - 1,282 = -7,425, so it's being subtracted (outflow). So Cash Taxes = 1,282M paid. But with -18,225M net loss, why pay taxes? Possibly foreign operations or prior year adjustments. Given the uncertainty, let me try yet another approach: use the direct S&P FFO definition more carefully. **S&P FFO = Net income + Depreciation & amortization + Deferred income taxes + Other non-cash items - Equity earnings + Cash dividends received from equity investments + Nonrecurring losses - Nonrecurring gains** From data 2022: - Net income: -18,225M - D&A: 11,079M - Deferred income taxes: Estimate ~5,208M (from tax benefit 3,926M + cash paid 1,282M, or from DTA increase) - Other non-cash: Impairment reversal -1,762M (gain, so subtract), fair value derivatives -849M (loss, so add back? or is it non-cash?) - Equity earnings: "Share Of Profit Loss Of Associates And Joint Ventures" = 759M (profit, so subtract 759M) - Cash dividends received: 590M (add) - Nonrecurring losses/gains: Various items Let me try: -18,225 + 11,079 + 5,208 - 1,762 + 849 - 759 + 590 = -3,020M Hmm, this is different. Let me check deferred taxes more carefully. Actually, from the cash flow adjustments: "Adjustments For Income Tax Expense" = -3,926M. This means they add back -3,926M, i.e., subtract 3,926M from net income to reverse the tax benefit. So in cash flow reconciliation, the -3,926M tax benefit is being removed (subtracted). For FFO, we want to add back deferred taxes (non-cash). If total tax benefit is -3,926M and cash tax paid is +1,282M, then deferred tax benefit is -3,926M - 1,282M = -5,208M? No, that gives more negative. Let me think: Tax expense = Current tax + Deferred tax. If tax expense = -3,926M (benefit) And current tax (cash) = +1,282M (expense, paid) Then deferred tax = -3,926M - 1,282M = -5,208M (benefit) So deferred tax benefit is 5,208M. Add this back to net income for FFO. FFO = -18,225 + 11,079 + 5,208 - 759 + 590 + other items = -2,107M + other items Other items: impairment reversal is non-cash gain of 1,762M, so subtract for FFO: -2,107 - 1,762 = -3,869M Fair value derivatives -849M: is this non-cash? Likely yes, add back: -3,869 + 849 = -3,020M This matches my prior -3,020M estimate. But I also need to check "Other Finance Income Cost" = -1,997M and "Discount Effect" = 174M. These might be non-cash or non-operating. For regulated utilities, S&P typically excludes certain finance items from FFO. Let me assume the -3,020M is in the ballpark, but I need to verify. Actually, let me use a cleaner approach. S&P sometimes calculates FFO as: **FFO = Funds from Operations = Cash Flow from Operations + Cash Interest Paid - Cash Interest Received - Dividends Received from Equity Investments ± Nonrecurring items** From cash flow: Cash Flow from Operations = -7,425M Cash Interest Paid: Need to estimate. From "Net Financial Expeneses Disbursed Including Dividends Received" = 1,003M, subtract dividends 590M = 413M for net interest paid (interest paid - interest received). If we assume interest received is small, Cash Interest Paid ≈ 413M to 1,730M. Actually, looking at P&L: "Interest Expense" = 1,730M, "Other Finance Income Cost" = -1,997M, "Discount Effect" = 174M. The "Finance Income Cost" total = -3,553M. Wait: 1,730 + 174 - 1,997 = -93M, not -3,553M. There must be other items or I'm misreading signs. Let me check: "Finance Income Cost" 2021 = 360M. 2022 = -3,553M. From components: "Interest Expense" 2022 = 1,730M "Discount Effect" 2022 = 174M "Other Finance Income Cost" 2022 = -1,997M 1,730 + 174 + (-1,997) = -93M. This doesn't equal -3,553M. Unless "Other Finance Income Cost" = -1,997M means income of 1,997M? Then 1,730 + 174 - 1,997 = -93M? Still not -3,553. There are clearly other financial items not listed. Let me just use the total "Finance Income Cost" = -3,553M as the net financial cost. For cash flow purposes, "Net Financial Expeneses Disbursed Including Dividends Received" = 1,003M. This is cash paid out, so likely: interest paid + dividends paid out - interest received - dividends received? No, "disbursed" means paid out, "received" means received. I think: Net Financial Expenses Disbursed = Interest Paid - Interest Received (net amount disbursed/paid out). Plus Dividends Received (which are received, not disbursed, but included in this line). So: Interest Paid - Interest Received + Dividends Received = 1,003M. If Dividends Received = 590M, then Interest Paid - Interest Received = 413M. For FFO, we add back Net Interest Paid (interest paid - interest received) = 413M. FFO = Cash Flow from Operations + Net Interest Paid - Dividends Received (since these are equity income, not operations) = -7,425M + 413M - 590M = -7,602M? But dividends received are typically kept in FFO for equity method investments (added back after subtracting equity earnings). This is confusing. Let me use the standard S&P approach from net income with clearer items: FFO = -18,225M (net income) + 11,079M (D&A) + ~5,208M (deferred tax benefit, estimated) - 1,762M (impairment reversal, nonrecurring gain) + 849M (derivative fair value loss, non-cash) - 759M (equity earnings) + 590M (dividends received from equity investments, but these are already in cash flow...) Actually, for FFO, dividends received from equity investments are typically ADDED back after subtracting equity earnings (since equity earnings are non-cash, but dividends are cash received). So: -18,225 + 11,079 + 5,208 - 1,762 + 849 - 759 + 590 = -3,020M Let me verify with another approach. The "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" = -5,140M includes working capital changes of -8,301M. If we normalize working capital to zero (or to a sustainable level), and add back net interest: FFO ≈ -5,140M + 8,301M (working capital normalization, add back the use) - 413M (net interest, since it was before interest) + ? Actually, -5,140M is BEFORE interest and tax. So: -5,140M + 8,301M = 3,161M (pre-interest, pre-tax, normalized for working capital) Then subtract Cash Interest (1,730M?) and Cash Taxes (1,282M): 3,161 - 1,730 - 1,282 = 149M? Or if using net interest 413M: 3,161 - 413 - 1,282 = 1,466M? These don't match -3,020M. The discrepancy is large. Let me recheck working capital. "Increase Decrease In Working Capital" = -8,301M. In cash flow, this is typically: (Increase in receivables, inventory) - (Increase in payables). Negative means cash used. In the reconciliation to "Net Cash Flow From Operations Before...", the -8,301M reduces cash flow. So before this adjustment, cash flow would be higher by 8,301M. Actually, looking at the cash flow structure: Start with net income (-18,231M continuing) Add back various non-cash items Then working capital adjustment (-8,301M) Then arrive at -5,140M So: Net income + non-cash adjustments - 8,301M = -5,140M -18,231 + non-cash = -5,140 + 8,301 = 3,161M So non-cash adjustments = 3,161 + 18,231 = 21,392M Check: 1,762 + 6,820 + 446 + 590 - 143 - 3,926 + 759 = 7,308M? Not 21,392M. Hmm, I must be missing items or misreading signs. Let me not try to reconcile perfectly. Given the complexity and time, let me use a pragmatic approach based on S&P's typical utility calculation: **FFO = Adjusted EBITDA - Cash Interest - Cash Taxes** With: - Adjusted EBITDA = -4,986M (reported OPBDA) + 849M (derivative loss, non-cash) - 1,762M (impairment reversal, nonrecurring gain, if in EBITDA) + other normalizations Actually, I realize the impairment reversal might NOT be in OPBDA. Let me check if OPBDA includes it: if OPBDA - D&A + impairment reversal + other = operating profit, and operating profit is much lower, then... -4,986 - 11,079 = -16,065. Operating profit = -19,363. Difference = -3,298M. If impairment reversal (+1,762M) is added: -16,065 + 1,762 = -14,303. Still need -5,060M to reach -19,363. "Other Income And Expenses Excluded From Ebe" = 687M. If expense: -14,303 - 687 = -14,990. Still short. "Net Changes In Fair Value On Energy And Commodity Derivatives" = -849M. If expense: -14,990 - 849 = -15,839. Closer. There are likely other restructuring, disposal gains/losses, etc. Given this, let me assume OPBDA (-4,986M) is the cleanest starting EBITDA and includes normal operations but excludes some items below the line. For S&P Adjusted EBITDA, I'll: - Start with -4,986M - Add back non-cash derivative loss: 849M (if included in OPBDA, which it likely is as operating item) - The impairment reversal is likely below OPBDA line, so no adjustment needed for EBITDA Adjusted EBITDA = -4,986M + 849M = -4,137M? Or is derivative already normalized? Actually, for utilities with significant commodity exposure, S&P typically normalizes out derivative fair value changes. The -849M is a loss, so adding it back increases EBITDA. But wait - if OPBDA already includes this, and we want "adjusted" EBITDA, we add back the loss (since it's non-cash mark-to-market). Adjusted EBITDA = -4,986M + 849M = -4,137M Cash Interest: From "Interest Expense" = 1,730M. Assume this is approximately cash interest (no material capitalized interest). Cash Taxes: 1,282M paid. FFO = -4,137M - 1,730M - 1,282M = -7,149M This is very negative, which seems wrong for a utility. Let me reconsider. Actually, I think I have a sign error. The "Net Changes In Fair Value On Energy And Commodity Derivatives Excluding Trading Activities" = -849M. If this is a loss (negative for profit), then in OPBDA it's already reducing profit. To normalize, we ADD BACK the loss (remove its negative impact), making EBITDA higher (less negative). -4,986M + 849M = -4,137M. Correct. But this is still hugely negative. EDF in 2022 had massive issues with nuclear outages, price caps, etc. So negative EBITDA might be correct. However, for S&P FFO, they might use a different measure. Let me check if there's any other income or if revenue has pass-through costs. Revenue 143,476M vs Fuel/Energy/Transmission 121,010M. The margin is very thin. This suggests EDF is buying energy at high prices and selling at capped prices. For S&P, they sometimes adjust for pass-through costs that distort margins. But here the "cost" is already netted in revenue or shown as expense. Given the unusual year for EDF (2022 energy crisis), let me also check if there are government compensations or other items. Actually, I recall EDF was nationalized and had significant regulatory issues in 2022. The negative earnings are plausible. Let me try a completely different approach: use the cash flow statement's "Funds from Operations" proxy directly. From cash flow reconciliation items that are typically in FFO: - D&A and provisions: "Depreciation And Amortisation Expense Provisions And Fair Value Gains Losses" = 6,820M. Wait, this is less than 11,079M D&A. The 6,820M might be the net add-back after some adjustments. Actually, looking at this line: "Depreciation And Amortisation Expense Provisions And Fair Value Gains Losses" = 6,820M. This seems to combine D&A, provisions, and fair value items. For 2021: 10,488M vs D&A of 10,789M. Close. For 2022: 6,820M vs D&A of 11,079M. Big difference. Why? Possibly because fair value gains reduced the add-back. If D&A is 11,079M and total is 6,820M, then other items (fair value, provisions) = 6,820M - 11,079M = -4,259M. This suggests fair value gains or provision releases of ~4,259M. This is getting too complex. Let me use the most direct S&P FFO calculation I can: **FFO = Net income + D&A + Deferred taxes + Other non-cash - Equity earnings + Dividends received ± nonrecurring** With: - Net income: -18,225M - D&A: 11,079M - Deferred taxes: Use balance sheet change approx 5,000-7,000M (let's use 5,208M from prior calc) - Equity earnings: 759M (subtract) - Dividends received: 590M (add) - Nonrecurring: Impairment reversal 1,762M (subtract as gain) FFO = -18,225 + 11,079 + 5,208 - 759 + 590 - 1,762 = -3,869M Hmm, I get -3,869M. Let me recheck: -18,225 + 11,079 = -7,146. +5,208 = -1,938. -759 = -2,697. +590 = -2,107. -1,762 = -3,869M. If I also add back derivative loss 849M (non-cash): -3,869 + 849 = -3,020M. Or if I treat derivative as already in net income and not separately adjust: -3,869M. Given uncertainty, let me use FFO ≈ -3,500M to -4,000M as a reasonable estimate, or more precisely -3,869M without derivative adjustment. Actually, I want to check one more thing. "Other Comprehensive Income Before Tax Cash Flow Hedges" = -3,522M. This is OCI, not P&L, so not in net income. The fair value derivative -849M is in P&L. Let me use **FFO = -3,869M** as my best estimate from net income approach, or round to **-3,500M** given uncertainties. But wait - I should also consider if there are other non-cash items. "Discount Effect" = 174M. This is likely non-cash (accretion). If it's in P&L, add back. "Other Finance Income Cost" = -1,997M. This might include non-cash items. Actually, for cleaner FFO, let me use the cash flow approach with normalization: "Cash Flows From Used In Operating Activities" = -7,425M + "Net Financial Expeneses Disbursed Including Dividends Received" = 1,003M (add back net interest/dividends) + "Income Taxes Paid Refund" = 1,282M (add back cash taxes) - "Dividends Received Classified As Operating Activities" = 590M (remove equity dividends, keep in FFO separately or not) = -7,425 + 1,003 + 1,282 - 590 = -5,730M This is cash flow before interest and tax but after working capital. To get FFO, normalize working capital: - "Increase Decrease In Working Capital" = -8,301M (cash used) Add back to normalize: -5,730M + 8,301M = 2,571M? Wait, this doesn't make sense. If working capital used cash, and we add it back, we get higher FFO. But -5,730M already includes the -8,301M working capital drag. So pre-working-capital would be -5,730M - (-8,301M) = 2,571M? No: Cash flow before working capital = Cash flow after working capital - working capital change = -5,730M - (-8,301M) = 2,571M Or: -5,730M + 8,301M = 2,571M. Yes. But this 2,571M includes nonrecurring items and other adjustments. It's not clean FFO. Hmm, but 2,571M is positive, unlike my -3,869M from net income. The difference is largely due to working capital normalization and possibly different treatment of items. For S&P FFO, working capital is typically NOT normalized out. FFO includes working capital changes. So -5,730M might be closer, but we need to add back net interest and taxes. Actually, standard FFO = Cash Flow from Operations + Interest Paid - Interest Received - Dividends from equity investments. From -7,425M (CFO): + Interest Paid (not net interest including dividends) - Interest Received - Dividends Received (equity, reclassify) If "Net Financial Expeneses Disbursed Including Dividends Received" = 1,003M represents (Interest Paid - Interest Received) + Dividends Received, then: Interest Paid - Interest Received = 1,003M - 590M = 413M. So FFO = -7,425M + 413M = -7,012M? But this seems too negative and includes working capital. Let me try yet again with the most standard S&P formula: **FFO = Net income + Depreciation and amortization + Deferred income taxes + Other non-cash items** Where "Other non-cash items" includes gains/losses on asset sales, impairment reversals, fair value changes, etc. From net income: -18,225M + D&A: 11,079M + Deferred taxes: Let's use 5,208M (estimated) + Other non-cash: - Impairment reversal: -1,762M (gain, so negative for FFO) - Fair value derivatives: -849M (loss, so positive add-back? No, it's already in net income. If we want to normalize, add back the loss) Wait, if derivative loss is in net income, and it's non-cash, we add it back: +849M. If impairment reversal is in net income, and it's nonrecurring gain, we subtract it: -1,762M. Other items: "Discount Effect" 174M - likely non-cash accretion, add back. "Other Finance Income Cost" -1,997M - unclear, might include non-cash. Let me just use major items: FFO = -18,225 + 11,079 + 5,208 + 849 - 1,762 + 174 = -2,677M Still negative. Let me add equity adjustment: -759M equity earnings + 590M dividends = -169M net. So -2,677 - 169 = -2,846M? Or if dividends already in net income: -2,677 - 759 + 590 = -2,846M. This is still negative. Given EDF's 2022 was a crisis year, negative FFO is plausible. Let me settle on **FFO ≈ -3,000M** as a reasonable estimate, or more precisely use the calculation from cash flow before interest/tax with some adjustments. Actually, I want to try one more thing. Let me look at what S&P actually did for EDF in 2022. Given EDF was downgraded in 2022, they likely had negative FFO. From my best calculation: **FFO = -3,869M** (net income approach) or **FFO = -5,140M** (cash flow before interest/tax, which includes working capital). The -5,140M "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" is interesting. This is essentially EBITDA - Working Capital changes + some cash items. If we add back net interest paid (413M) and cash taxes paid (1,282M), we get to -3,445M, which is close to my -3,869M estimate. Let me use **FFO = -3,500M** as a reasonable midpoint, or more precisely **-3,869M** from the detailed net income calculation. Actually, I'll recalculate more carefully: Net income: -18,225M + D&A: 11,079M + Deferred tax benefit (from P&L): Tax expense -3,926M, cash tax 1,282M. If we assume current tax expense ≈ cash tax paid = 1,282M, then deferred tax benefit = -3,926M - 1,282M = -5,208M? No, tax expense = current + deferred. If tax expense is -3,926M (benefit), and current is +1,282M (expense), then deferred = -3,926M - 1,282M = -5,208M (benefit). Yes. Add deferred tax benefit: +5,208M - Impairment reversal (nonrecurring gain): -1,762M + Fair value derivative loss (non-cash, if in net income): +849M - Equity earnings (non-cash): -759M + Dividends received (cash from equity): +590M FFO = -18,225 + 11,079 + 5,208 - 1,762 + 849 - 759 + 590 = -3,020M Let me verify: -18,225 + 11,079 = -7,146. +5,208 = -1,938. -1,762 = -3,700. +849 = -2,851. -759 = -3,610. +590 = -3,020M. So **FFO = -3,020M** or **-3.02 billion EUR**. Now for **Adjusted Debt**. ## Step 4: Estimate Adjusted_Debt From balance sheet 2022 (end of year, i.e., 2023-01-01): - "Other Noncurrent Financial Liabilities": 71,058M - "Other Current Financial Liabilities": 71,844M Total reported debt = 71,058M + 71,844M = 142,902M But we need to check what's in these line items. For EDF, this likely includes: - Bonds and borrowings - Lease liabilities (IFRS 16) - Derivative liabilities? Probably not, those are typically other categories Also need to check: - "Special French Public Electricity Distribution Concession Liabilities" = 49,459M. This is likely debt-like but might be operating liabilities. For S&P Adjusted Debt: Adjusted_Debt = Reported debt + Leases + Pension deficit + Guarantees + Hybrid debt portion + Other debt-like items - Eligible cash From the data: - Reported debt: 142,902M (noncurrent + current financial liabilities) - Leases: Likely included in financial liabilities under IFRS 16, but let me check if separate Looking at IFRS 16, lease liabilities are typically in "Other Financial Liabilities." So likely included. - Pension deficit: Need to check pension status. "Noncurrent Provisions For Employee Benefits" = 16,231M. This includes pensions and other post-employment benefits. For S&P, pension deficit = pension obligations - plan assets. We don't have plan assets split out. The 16,231M is a provision, which might be net of some assets, or gross. Actually, looking at the equity section, there are significant pension-related OCI items. "Other Comprehensive Income Before Tax Gains Losses On Remeasurements Of Defined Benefit Plans" = 3,494M (positive, meaning actuarial gains). This suggests the pension position improved. For S&P, if we can't determine exact pension deficit, we might use the provision as proxy or make no adjustment if it's already captured. Given complexity, let me assume pension deficit is approximately the provision for employee benefits, but this may be conservative. Actually, S&P typically uses: Pension deficit = Projected Benefit Obligation - Fair Value of Plan Assets. If this is negative (surplus), no adjustment. If positive (deficit), add to debt. Without detailed pension data, I'll assume the 16,231M provision is approximately the net liability, and some portion is debt-like. But this is already in provisions, not debt. For S&P, provisions for employee benefits are typically NOT added to debt unless they're debt-like (i.e., unfunded pension deficits). The 16,231M "Noncurrent Provisions For Employee Benefits" likely includes both funded and unfunded portions. Given uncertainty, let me not add pension deficit separately unless clearly unfunded. - Guarantees: No data available, assume 0. - Hybrid debt: Need to check for perpetual/subordinated instruments. From equity section: "Issuance And Redemption Of Perpetual Subordinated Bonds And Convertible Instruments" = -1,025M (negative means redemption exceeded issuance? Or net outflow?). From cash flow: "Proceeds From Issue Of Subordinated Liabilities And Convertible Instruments" = 994M. "Payments To Holders Of Perpetual Subordinated Bonds In Cfs" = 606M. There are perpetual/subordinated bonds. For S&P, these are typically treated as 100% equity or 50% equity/50% debt depending on features. If they're "perpetual subordinated bonds," S&P often treats 50% as debt. From balance sheet, we need to identify hybrid equity. Looking at equity: "Equity Attributable To Owners Of Parent" = 34,340M. This includes various reserves. The perpetual bonds might be classified as equity or liabilities. From cash flow: "Payments On Perpetual Subordinated Bonds In Change In Equity" = -606M. This suggests they're accounted for as equity (payments reduce equity). So they're in equity, not liabilities. For S&P, if perpetuals are in equity but S&P treats as hybrid, we'd reclassify portion to debt. But without knowing amount outstanding, difficult. From 2021: "Issuance And Redemption Of Perpetual Subordinated Bonds And Convertible Instruments" = 972M positive (issuance). In 2022: -1,025M (redemption). So net, they reduced perpetuals. Let me assume minimal hybrid debt outstanding at end 2022, or use the equity classification as given. - Other debt-like items: "Special French Public Electricity Distribution Concession Liabilities" = 49,459M. These are concession liabilities, which are debt-like. For S&P, these are typically included in debt. Add concession liabilities: 49,459M Also "Other Noncurrent Liabilities" = 4,968M and "Other Current Liabilities" = 33,504M. Some may be debt-like. And "Current Provisions" = 7,943M, "Noncurrent Provisions" total = 76,923M. Some provisions are debt-like (nuclear decommissioning, etc.). For S&P, "Provisions Related To Nuclear Generation Back End Of The Nuclear Cycle Plant Decommissioning And Last Cores" = 56,021M. These are nuclear decommissioning provisions, which are debt-like (unfunded obligations). S&P typically adds these to debt. Add nuclear provisions: 56,021M Also "Other Provisions Including Other Provisions For Decommissionning" = 4,671M. Add these too. So debt-like items to add: - Concession liabilities: 49,459M - Nuclear decommissioning provisions: 56,021M - Other decommissioning: 4,671M - Employee benefits (to extent unfunded): ? Total additions: 49,459 + 56,021 + 4,671 = 110,151M This seems very large. Let me reconsider. Actually, for S&P, not all provisions are added to debt. Only those that are truly debt-like (unfunded, certain to be paid). Nuclear decommissioning provisions are typically added because they're unfunded obligations. But the "Special French Public Electricity Distribution Concession Liabilities" - these might be operating liabilities similar to deferred revenue, not financial debt. Let me be more careful. In French GAAP/IFRS, concession liabilities represent amounts to be returned to the grantor or reinvested. They may not be debt in the S&P sense. For a cleaner approach, let me use: - Reported financial debt: 142,902M - Less: Cash and cash equivalents: 10,948M - Plus: Nuclear decommissioning and similar provisions (to extent not already in debt): 56,021M + 4,671M = 60,692M? Actually, these provisions are already recorded as liabilities, just not as "debt." S&P wants to capture all debt-like obligations. Adjusted Debt = 142,902M (financial debt) + 60,692M (debt-like provisions) + ? (concessions) - 10,948M (cash) = 192,646M? This seems very high. Let me check EDF's actual credit rating. EDF was rated BBB- by S&P in 2022, with significant debt. The 142,902M financial debt + 60,692M provisions = 203,594M gross, minus cash = 192,646M. But I think I'm double-counting or misclassifying. Let me reconsider. Actually, "Noncurrent Provisions" = 76,923M includes: - Nuclear: 56,021M - Employee benefits: 16,231M - Other decommissioning: 4,671M These are provisions, not debt. S&P adds certain provisions to debt if they're unfunded and certain. For nuclear decommissioning: typically added to debt (unfunded liability). For employee benefits: depends on funding status. For other: depends. Also, "Special French Public Electricity Distribution Concession Liabilities" = 49,459M. These are specific to French concessions. They might be considered deferred revenue or operating liabilities, not debt. Given complexity, let me use a simpler S&P approach: Adjusted Debt = Financial Debt + Operating Leases (if not in financial debt) + Pension Deficit + Nuclear Provisions - Cash Financial Debt = 142,902M Operating Leases: Likely in financial debt under IFRS 16 Pension Deficit: Use 16,231M provision as proxy (conservative, likely overstates) Nuclear Provisions: 56,021M + 4,671M = 60,692M Cash: 10,948M Adjusted Debt = 142,902 + 16,231 + 60,692 - 10,948 = 208,877M This seems too high. Let me check if nuclear provisions are already captured elsewhere. Actually, looking at EDF's financials more carefully, the nuclear provisions are significant but may be partially funded. The "Other Noncurrent Financial Assets" = 48,512M includes some assets that might fund these provisions. For S&P, they net pension assets against liabilities. Without knowing exact funding, let me use a more moderate approach. Let me use: Adjusted Debt = Reported Debt - Cash + 50% of nuclear provisions (as compromise) = 142,902 - 10,948 + 30,346 = 162,300M Or more standard: use financial debt minus cash, and add only clearly unfunded portions. Given time constraints, let me use a cleaner approach based on typical S&P utility calculations: **Adjusted Debt = Short-term debt + Long-term debt + Operating leases (if not included) + Pension deficit + Guarantees + Hybrid equity treated as debt - Cash** From balance sheet: - Short-term financial liabilities: 71,844M - Long-term financial liabilities: 71,058M - Total: 142,902M Less: Cash and cash equivalents: 10,948M Less: Other current financial assets that are liquid: 58,033M? No, these may include derivatives, restricted cash, etc. For "eligible cash," S&P typically uses cash and highly liquid investments. "Cash And Cash Equivalents" = 10,948M. "Other Current Financial Assets" = 58,033M - likely includes derivatives, receivables, not all cash. Eligible cash = 10,948M (conservative) For debt-like items, let me add nuclear decommissioning (unfunded portion). If we assume 50% funded: Nuclear provision 56,021M, assume 50% funded, add 28,010M. Also "Other Provisions Including Other Provisions For Decommissionning" 4,671M, add 50% = 2,336M. Total debt-like additions: 30,346M Adjusted Debt = 142,902M + 30,346M - 10,948M = 162,300M Or if no provision additions: 142,902 - 10,948 = 131,954M Given EDF's nuclear obligations are significant and largely unfunded, I'll include them partially. Let me use **Adjusted Debt = 142,902M - 10,948M + 56,021M (nuclear) + 4,671M (other decomm) = 192,646M** if fully adding provisions, or **142,902M - 10,948M = 131,954M** if not. Actually, I recall that for EDF specifically, S&P treats nuclear provisions as part of debt-like obligations. Let me use the higher figure but with some adjustment. From the cash flow and balance sheet, let me also check "Other Noncurrent Financial Assets" = 48,512M. These might include assets backing nuclear provisions. If nuclear provisions are 56,021M and assets backing them are in "Other Noncurrent Financial Assets" (48,512M), then net unfunded = 7,509M. But these assets may not all be nuclear-related. Given uncertainty, let me use a moderate approach: Adjusted Debt = Financial Debt - Cash + Nuclear Provisions (full) - Estimated Nuclear Assets But without knowing nuclear assets, this is guesswork. Let me try a different approach: use S&P's typical treatment for EDF. EDF is known to have high debt including nuclear provisions. S&P likely includes most nuclear provisions as debt. From various sources, EDF's adjusted debt for S&P purposes in 2022 was likely around €150-200 billion. Let me calculate more precisely with what I have: Financial debt: 71,058 + 71,844 = 142,902M Cash: 10,948M Net financial debt: 131,954M Nuclear and similar provisions: 56,021 + 4,671 = 60,692M Employee benefits: 16,231M If S&P adds all these to debt: 131,954 + 60,692 + 16,231 = 208,877M If S&P adds only nuclear (as most debt-like): 131,954 + 60,692 = 192,646M If S&P adds 50% of nuclear: 131,954 + 30,346 = 162,300M Given EDF's rating history and typical S&P treatment, I think they include nuclear provisions. Let me use **Adjusted Debt = 192,646M** (including nuclear and other decommissioning, but not employee benefits which may be partially funded). Actually, let me check one more thing. The "Special French Public Electricity Distribution Concession Liabilities" = 49,459M. Are these debt-like? These arise from the French concession model where EDF operates distribution networks. The liabilities represent amounts to be reinvested or returned. They're not typical financial debt but are obligations. For S&P, these might be treated as operating liabilities or debt-like depending on nature. Given uncertainty, I'll exclude them to be conservative, or include partially. Let me settle on: **Adjusted Debt = 142,902M (financial debt) + 60,692M (nuclear/other decomm provisions) - 10,948M (cash) = 192,646M** Or if I include concession liabilities: 192,646 + 49,459 = 242,105M (too high?) Actually, concession liabilities are likely already captured in the regulatory framework. Let me exclude them from debt. Final Adjusted Debt estimate: **192,646M** or approximately **193 billion EUR**. But wait - I should check if there are other debt-like items. "Other Noncurrent Liabilities" = 4,968M, "Other Current Liabilities" = 33,504M. These include various operating payables and accruals, not typically debt. Also, "Trade And Other Current Payables" = 23,284M - operating creditors, not debt. So my Adjusted Debt = 192,646M. However, this seems very high. Let me verify with a sanity check. EDF's market cap was low/negative in 2022. Debt of 193B with negative EBITDA would imply extreme leverage, consistent with a weak rating. Actually, I want to reconsider the FFO. With negative FFO, the ratio will be negative regardless of debt level. Let me recheck if FFO could be positive. Looking at 2021 for comparison: - OPBDA: 18,005M - Net income: 4,828M - Cash flow from operations: 12,648M In 2021, FFO was likely positive. The 2022 energy crisis caused massive losses. Given EDF's 2022 results, negative FFO is correct. ## Step 5: Calculate FFO / Adjusted_Debt Using: - FFO = -3,020M (from net income approach) or -5,140M (cash flow before interest/tax) - Adjusted Debt = 192,646M If FFO = -3,020M: Ratio = -3,020 / 192,646 = -0.0157 If FFO = -5,140M (more conservative, before working capital normalization): Ratio = -5,140 / 192,646 = -0.0267 If I use a lower Adjusted Debt without nuclear provisions (131,954M): - With FFO -3,020M: -0.0229 - With FFO -5,140M: -0.0389 Given S&P's typical treatment includes nuclear provisions, and FFO should be after some normalization, let me use: **FFO = -3,020M** **Adjusted Debt = 192,646M** Ratio = -3,020 / 192,646 = -0.015676... Or if I use a slightly different FFO from cash flow approach: From "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" = -5,140M, and add back net interest paid (413M estimated) and cash taxes (1,282M), but subtract dividends received (590M), and normalize working capital... Actually, for a cleaner FFO closer to S&P's definition, let me use: FFO = -5,140M (pre-interest/tax operating cash flow) + 413M (net interest) + 1,282M (taxes) - working capital normalization If I don't normalize working capital: this is not FFO but something else. Let me go with my most careful calculation: **FFO = -3,020M** But I want to check one more time. From the cash flow reconciliation, can I derive FFO directly? "Cash Flows From Used In Operating Activities" = -7,425M + Cash Interest Paid: Need to estimate. If "Net Financial Expeneses Disbursed Including Dividends Received" = 1,003M includes 590M dividends, then interest-related = 413M. But is this net or gross? If 413M is Net Interest Paid (Interest Paid - Interest Received), then adding back to CFO gives pre-interest cash flow: -7,425 + 413 = -7,012M. Then add back Cash Taxes Paid: 1,282M. Gives -5,730M. This -5,730M is essentially EBITDA - Working Capital changes + some other cash items, before interest and tax. To get FFO, S&P doesn't add back taxes (they're part of FFO deduction). FFO = Adjusted EBITDA - Cash Interest - Cash Taxes. So from -5,730M (pre-interest, pre-tax, with working capital), if we normalize working capital: -5,730M + 8,301M (working capital use) = 2,571M (pre-working capital, pre-interest, pre-tax) Then FFO = 2,571M - 413M (net interest) - 1,282M (taxes) = 876M? Wait, this is positive! Let me recheck. -5,730M + 8,301M = 2,571M. This is cash flow before working capital, interest, and tax? No, it's before working capital but after some adjustments. Actually, the -5,730M was derived from CFO (-7,425M) + net interest (413M) + taxes (1,282M). So -5,730M is CFO before interest and tax... no wait: CFO = -7,425M CFO + Interest Paid - Interest Received + Taxes Paid = -7,425 + 413 + 1,282 = -5,730M This -5,730M is approximately EBIT + D&A - Working Capital changes = Operating Cash Flow before interest and tax. Then -5,730M + 8,301M working capital = 2,571M. This would be EBIT + D&A + Working Capital normalization? No, adding back working capital use gives pre-working-capital cash flow. Actually, if working capital used 8,301M of cash, and we add that back, we get cash flow before working capital change: 2,571M. But this 2,571M includes nonrecurring items and other adjustments. It's not clean EBITDA. For FFO, if we assume 2,571M is approximately EBITDA (or adjusted EBITDA), then: FFO = 2,571M - 413M - 1,282M = 876M. This is positive! Very different from -3,020M. Where is the discrepancy? The net income approach gave -3,020M, but this cash flow approach gives +876M. The difference is largely due to working capital and nonrecurring items. The 2,571M includes working capital normalization (added back), which S&P typically doesn't do for FFO. FFO includes working capital changes. So if we use -5,730M (before interest/tax, after working capital) and subtract interest and taxes: FFO = -5,730M - 413M - 1,282M? No, -5,730M is already before interest and tax. Actually, -5,730M = CFO + Interest Paid - Interest Received + Taxes Paid. This is Operating Cash Flow BEFORE interest and tax. To get FFO: FFO = Operating Cash Flow BEFORE interest and tax - Cash Interest - Cash Taxes? That would double-count. Let me be clearer: - CFO (after interest, after tax, after working capital) = -7,425M - CFO before interest = -7,425M + 413M = -7,012M (approx, assuming 413M is net interest) - CFO before interest and tax = -7,012M + 1,282M = -5,730M This -5,730M is: EBIT + D&A - Working Capital changes ± other items = Cash generated from operations before interest and tax. For S&P FFO, we want: Net Income + D&A + Deferred Taxes + Other non-cash - Equity Earnings + Dividends. Alternatively: FFO = Adjusted EBITDA - Cash Interest - Cash Taxes. If -5,730M is approximately (EBITDA - Working Capital changes), then to get Adjusted EBITDA, we need to add back working capital: -5,730M + 8,301M = 2,571M. But 2,571M includes nonrecurring items. If we normalize those out, we might get different EBITDA. Given the complexity, let me use the most standard S&P approach and accept some uncertainty. From net income, my FFO calculation of -3,020M is likely too negative because I may have misestimated deferred taxes or other items. From cash flow, if I use: FFO = CFO + Cash Interest Paid - Cash Interest Received. This is a common approximation. CFO = -7,425M Cash Interest Paid: From P&L 1,730M, but cash may differ. From "Interest Expense" 1,730M, assume cash ≈ 1,730M. Cash Interest Received: Unknown. From "Other Finance Income Cost" -1,997M, hard to say. If Net Interest Paid = 413M (from earlier), then: FFO ≈ -7,425M + 413M = -7,012M? This seems too negative and includes working capital. Actually, standard approximation: FFO ≈ CFO + Cash Interest Paid (gross, not net). If Cash Interest Paid ≈ 1,730M: FFO ≈ -7,425M + 1,730M = -5,695M. This is still very negative. Given all approaches give negative FFO, I'll use my most careful estimate: **FFO = -3,020M** or **FFO = -5,140M** (from "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund"). Actually, the -5,140M is interesting. It's "before net financial expenses disbursed and income taxes paid refund." This is essentially operating cash flow before interest and tax, but after working capital. If S&P defines FFO as this minus nothing (since interest and taxes are already excluded), then FFO = -5,140M? No, FFO should subtract cash interest and cash taxes. Actually, I think I finally understand. The -5,140M is: EBITDA ± working capital ± other cash items = Cash from operations before interest and tax. For S&P FFO: FFO = Net Income + D&A + Deferred Taxes + Other non-cash. This is closer to accrual-based, not cash-based. The -5,140M is cash-based. FFO is typically higher than cash flow from operations because working capital is not normalized out. Given the confusion, let me use a blended estimate. For EDF in 2022, with massive losses but some cash generation, FFO was likely deeply negative. Let me use **FFO = -5,140M** (the pre-interest, pre-tax operating cash flow, which is negative) as a conservative estimate, or **FFO = -3,020M** from net income approach. Actually, looking at S&P's actual methodology more carefully, they define FFO as: "Funds from operations (FFO): Net income from continuing operations adjusted for depreciation and amortization, deferred income taxes, and other non-cash items." This is accrual-based. So my -3,020M is more appropriate. But let me recheck with 2021 data to verify methodology: 2021: Net income 4,828M + D&A 10,789M + Deferred taxes (estimate) + other. Tax expense 2021: 1,400M (positive, expense). Cash taxes: 2,276M paid. Deferred tax expense = 1,400M - 2,276M = -876M (benefit? No, cash > accrual means deferred benefit). Actually 2021 tax: expense 1,400M, paid 2,276M. So deferred tax benefit = 876M. FFO 2021 = 4,828 + 10,789 + 876 - 653 (impairment, gain? No 2021 impairment was 653M gain/reversal?) + other. 2021 impairment: "Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss" = 653M. This is a gain. FFO 2021 = 4,828 + 10,789 + 876 - 653 - 215 (derivative) + ... = around 16,000M. Cash flow from operations 2021: 12,648M. FFO should be higher than CFO (since FFO excludes working capital changes). 16,000M > 12,648M, reasonable. For 2022, my FFO = -3,020M. CFO = -7,425M. FFO > CFO, reasonable (working capital used cash). Given this, I'll use **FFO = -3,020M** = -3,020,000,000 EUR. For Adjusted Debt, let me use **192,646M** = 192,646,000,000 EUR. Ratio = -3,020 / 192,646 = -0.015676... Or if I use FFO = -5,140M: -5,140 / 192,646 = -0.02668... Given uncertainty, let me also try with lower debt (excluding nuclear provisions from debt, just financial debt minus cash): Adjusted Debt = 131,954M FFO = -3,020M Ratio = -0.02289... Or with FFO = -5,140M: -0.03895... I need to make a final decision. Given S&P's typical treatment of nuclear provisions as debt-like for EDF, and their accrual-based FFO, I'll use: **FFO = -3,020,000,000 EUR** **Adjusted Debt = 192,646,000,000 EUR** Ratio = -3,020 / 192,646 = -0.015676 ≈ **-0.0157** But actually, I want to recheck my FFO. Let me recalculate more carefully: Net income: -18,225M + D&A: 11,079M + Deferred tax benefit: 5,208M (estimated from tax benefit 3,926M + cash paid 1,282M... wait, let me recheck) Tax expense = -3,926M (benefit) Cash taxes paid = 1,282M (positive outflow) If tax expense = current tax expense + deferred tax expense And current tax expense ≈ cash taxes paid = 1,282M (with some timing differences) Then deferred tax benefit = -3,926M - 1,282M = -5,208M? No: Tax expense = Current + Deferred -3,926 = 1,282 + Deferred Deferred = -3,926 - 1,282 = -5,208M Yes, deferred tax benefit of 5,208M. But wait, this assumes current tax expense = cash taxes paid. There could be timing differences. Also, the 1,282M might include refunds or prior year adjustments. Given the large deferred tax assets increase (7,029M), the 5,208M seems plausible but might understate. Add back deferred tax benefit: +5,208M Other non-cash: - Impairment reversal: -1,762M (gain, so subtract for FFO) - Fair value derivative loss: +849M (loss, non-cash, so add back) - Equity earnings: -759M (non-cash, subtract) - Dividends received: +590M (cash from equity, add back) FFO = -18,225 + 11,079 + 5,208 - 1,762 + 849 - 759 + 590 = -18,225 + 11,079 = -7,146 -7,146 + 5,208 = -1,938 -1,938 - 1,762 = -3,700 -3,700 + 849 = -2,851 -2,851 - 759 = -3,610 -3,610 + 590 = -3,020M Yes, -3,020M. But I should check if "Other Finance Income Cost" includes non-cash items that should be added back. -1,997M. If this includes fair value changes or other non-cash, I might need to adjust. Actually, the -849M derivative loss is separate. "Other Finance Income Cost" = -1,997M might include other items. Also, "Discount Effect" = 174M. This is likely accretion/amortization, non-cash. If in net income, add back. If I add back 174M: FFO = -3,020 + 174 = -2,846M. And if "Other Finance Income Cost" includes non-cash items: hard to say without detail. Let me use FFO = -3,020M as conservative, or -2,846M if adding discount effect. For final answer, I'll use **FFO = -3,020M** and **Adjusted Debt = 192,646M**. Ratio = -3,020 / 192,646 = -0.015676... Rounded to 4 decimal places: **-0.0157** Actually, let me also consider if Adjusted Debt could be lower. If I don't include nuclear provisions: Adjusted Debt = 142,902 - 10,948 = 131,954M Ratio = -3,020 / 131,954 = -0.02289... ≈ -0.0229 Or with FFO -2,846M: -2,846 / 131,954 = -0.02157... ≈ -0.0216 Given S&P's known treatment of EDF including nuclear obligations, I think 192,646M is closer to their approach. However, I want to check one more thing. The "Other Noncurrent Financial Assets" = 48,512M and "Other Current Financial Assets" = 58,033M. These total 106,545M. Some of these might be restricted cash or investments that back nuclear provisions. If nuclear provisions are backed by assets, S&P might net them. But without knowing exact backing, it's hard. Given all this, my final estimate is: **FFO = -3,020,000,000 EUR** **Adjusted Debt = 192,646,000,000 EUR** **FFO / Adjusted Debt = -0.0157** Or if I use a more conservative FFO with discount effect added back: -2,846M / 192,646M = -0.0148 I'll go with -0.0157. Wait, I want to double-check my debt calculation. Financial debt 142,902M: - Noncurrent: 71,058M - Current: 71,844M Plus nuclear provisions: 56,021M + 4,671M = 60,692M Less cash: 10,948M Total: 142,902 + 60,692 - 10,948 = 192,646M. Correct. But are nuclear provisions already included in debt? No, they're in provisions (76,923M total noncurrent provisions, of which 56,021M nuclear + 16,231M employee + 4,671M other). Actually, I realize I should check if any of these provisions are already in current liabilities or elsewhere. The "Current Provisions" = 7,943M might include some nuclear or decommissioning. But for simplicity, I'll use my calculation. Final ratio: -3,020 / 192,646 = -0.015676... → **-0.0157** Hmm, but I want to try one more FFO variant. What if I use "Funds from Operations" closer to the cash flow measure? From "Net Cash Flow From Operations Before Net Financial Expenses Disbursed And Income Taxes Paid Refund" = -5,140M. This is essentially: EBIT + D&A - Working Capital changes ± other = -5,140M. For S&P FFO, working capital is NOT normalized out. So this -5,140M includes working capital drag. If we add back net interest and taxes to get to something like EBITDA: -5,140M + 413M (net interest) + 1,282M (taxes) = -3,445M. This is after working capital, before interest and tax. Or to get pre-working capital: -3,445M + 8,301M = 4,856M. This would be like EBITDA, but includes nonrecurring items. This 4,856M is positive! But it includes working capital normalization and nonrecurring items. For FFO, if we don't normalize working capital: FFO = EBITDA - Cash Interest - Cash Taxes, where EBITDA includes working capital effects? No, EBITDA is before working capital. I'm confusing myself. Let me stick with the standard definition. Standard S&P FFO from net income: **-3,020M** Standard S&P Adjusted Debt: **192,646M** Ratio: **-0.0157** Actually, given the magnitude of losses and S&P's likely adjustments, I wonder if they would normalize some items. For example, the -849M derivative loss might be viewed as part of normal operations for a utility with commodity exposure. If I don't normalize derivatives: FFO = -3,020M - 849M = -3,869M? No, I added back 849M as non-cash. If it's considered cash or normal, don't add back. Actually, fair value changes on derivatives are typically non-cash mark-to-market. S&P normalizes these. But for EDF, with heavy commodity exposure, maybe S&P treats some derivative effects differently. Given uncertainty, let me also present a range: -0.012 to -0.025. For final answer, I'll use **-0.0157** or about **-0.016**. Let me round -0.015676 to 4 decimal places: -0.0157. -0.0157