**1. Identify the relevant industry for "BOUYGUES".** Bouygues SA is a diversified French industrial group. Its main business segments are: - Construction (Bouygues Construction, Bouygues Immobilier) - Infrastructure / Transport concessions (Colas, which manages roads infrastructure) - Media (TF1) - Telecoms (Bouygues Telecom, which operates in the unregulated power/gas... no, unregulated telecoms) None of the provided industry methodologies (Regulated Utilities, Oil and Gas E&P, Unregulated Power and Gas, Transportation Infrastructure) definitively cover the entirety of Bouygues' portfolio. Construction is not covered by the provided sectors. Colas has some "Transportation Infrastructure" (roads) concessions, but the group is not a pure-play transportation infrastructure company. Therefore, I will apply the **general corporate baseline formulas** as instructed. **Optional: General Corporate Baseline Formulas** - Adjusted_EBITDA = EBITDA + leases_interest - nonrecurring_gains + nonrecurring_losses - FFO = Adjusted_EBITDA - cash_interest - cash_taxes - Adjusted_Debt = Long-term debt + Short-term debt + Leases + Pensions - eligible_cash - Eligible Cash = Cash and cash equivalents **2. Estimate the 2021 "Adjusted_EBITDA" following the S&P guidelines.** First, reconstruct 2021 EBITDA from the income statement: *Revenue*: Revenue = 37,589 (from contracts) + 55 (other) = 37,644 M€. *Operating Expenses (excluding D&A, impairments, provisions)*: - Raw Materials: -16,641 - Employee Benefits: -8,497 - Services Expense: -8,614 - Tax Expense: -597 - Changes in Inventories: +99 - Other Income Recurring: +2,280 - Other Expense Recurring: -960 - Profit Loss From Operating Activities Recurring = 1,693 Let's derive EBITDA = Profit Loss From Operating Activities Recurring + D&A + Impairment/Provisions + Depreciation (Right-of-use) - Reversal of unutilised provisions (included in impairment line) Wait, "Impairment Loss Reversal... And Provision Expense" is the net charge. The reversal is shown separately but is part of the net. Profit Loss From Operating Activities Recurring = 1,693 Add back: D&A = 2,065 Add back: Depreciation (Right-of-use) = 353 Add back: Impairment Loss Reversal... And Provision Expense = 405 EBITDA = 1,693 + 2,065 + 353 + 405 = 4,516 M€. Now adjust for leases: Addition for leases = +446 (depreciation of right-of-use) + 62 (interest on leases)? Wait, standard S&P formula for Adjusted EBITDA: S&P adds back operating lease expense. If leases are capitalized, we add back the depreciation of right-of-use assets and the interest expense on lease liabilities. But wait, the data shows: Interest Expense On Lease Liabilities = 62. Cost Of Net Debt = 198 (includes 231 interest - 33 interest income). The FFO formula: FFO = Adjusted_EBITDA - cash_interest - cash_taxes. Cash interest = Interest Expense - non-cash interest? Wait, simpler: cash interest = 'Interest Paid Classified As Financing Activities' + 'Payments Of Lease Liabilities...' No, standard S&P: Adjusted EBITDA = Reported EBITDA + Lease depreciation + Lease interest. FFO = Adjusted EBITDA - Lease interest - Other cash interest - Cash taxes. So Adjusted EBITDA = 4,516 + 446 + 62 = 5,024 M€. Wait, 4,516 already includes the 353 depreciation? Let's check: Reported "Profit Loss From Operating Activities Recurring" = 1,693. "Depreciation And Amortisation Expense" = 2,065. "Depreciation Rightofuse Assets" = 353. Wait, is 353 part of 2,065? Usually yes. If so, adding both would double count. Let's assume "Depreciation And Amortisation Expense" includes the right-of-use depreciation. The data lists them separately, so we must be careful. "Depreciation And Amortisation Expense" = 2,065. "Depreciation Rightofuse Assets" = 353. To avoid double counting, EBITDA should be Profit + D&A (assuming D&A includes right-of-use? Better to assume "Depreciation And Amortisation Expense" is the total D&A, and "Depreciation Rightofuse Assets" is a subset for lease adjustment. Let's use total D&A = 2,065. Then EBITDA = 1,693 + 2,065 + 405 = 4,163. Then Adjusted EBITDA = EBITDA + 353 (Depreciation Rightofuse Assets) + 62 (Interest on leases)? Wait. Under IFRS 16, EBITDA naturally excludes depreciation and interest. So reported EBITDA = Revenue - OpEx (excl. D&A). We calculated 4,516 using 2,065 + 353. If 2,065 includes 353, EBITDA = 1,693 + 2,065 + 405 = 4,163. Let's assume 2,065 excludes 353? No, typically total D&A in IFRS is the sum of owned and right-of-use depreciation. So "Total D&A" = 2,065. Therefore, EBITDA = 1,693 + 2,065 + 405 = 4,163. Wait, what about "Other Operating Income Non Recurring" (115) and "Other Operating Expense Non Recurring" (75)? Profit from Operating Activities = 1,733. Recurring = 1,693. Non-recurring items net = 115 - 75 = 40 profit. Adjusted EBITDA should adjust for non-recurring items: -40. So EBITDA = 1,693 + 2,065 + 405 = 4,163. Adjustments: + Non-recurring losses? Net non-recurring is +40 gain. We subtract this gain. + Interest on lease liabilities = +62. + Depreciation on right-of-use = +353. Wait, the adjusted EBITDA formula adds the full lease expense (which is depreciation + interest). If we already excluded depreciation from EBITDA (by adding back total D&A including right-of-use), we just need to add the interest? No, standard S&P Adjusted EBITDA = EBITDA (with leases accounted for as operating) + nonrecurring adjustments. Since IFRS 16 capitalizes leases, S&P adds back the full lease payment (or depreciation + interest). So Adjusted EBITDA = EBITDA (IFRS 16) + Depreciation Right-of-use Assets + Interest Expense on Lease Liabilities - Nonrecurring Gains + Nonrecurring Losses. EBITDA (IFRS 16) = 1,693 + 2,065 + 405 = 4,163. Adjusted EBITDA = 4,163 + 353 + 62 - 115 + 75 = 4,538 M€. Wait, the net non-recurring is +40. Other Operating Income Non Recurring = 115. Other Operating Expense Non Recurring = 75. Net gain = 115 - 75 = 40. We subtract the gain: -115 + 75 = -40. Let's use the baseline formula: Adjusted_EBITDA = EBITDA + adjustment_leases + nonrecurring_losses - nonrecurring_gains. EBITDA = 4,163. adjustment_leases = Depreciation Rightofuse Assets + Interest Expense On Lease Liabilities = 353 + 52 = 405. Wait, "Interest Expense On Lease Liabilities" = 62. Let's use 62. nonrecurring_losses = Other Operating Expense Non Recurring = 75. nonrecurring_gains = Other Operating Income Non Recurring = 115. Adjusted EBITDA 2021 = 4,163 + 353 + 62 + 75 - 115 = 4,538 M€. **3. Estimate the 2021 "FFO" following the S&P guidelines.** FFO = Adjusted_EBITDA - cash_interest - cash_taxes. cash_interest = Interest Paid Classified As Financing Activities = 207. But wait, "Interest Paid" includes interest on lease liabilities? "Payments Of Lease Liabilities Classified As Financing Activities" = 361. The interest portion is 62. Standard FFO = Adjusted EBITDA - Cash Interest - Cash Taxes. Cash Interest = Interest Paid (207). But 207 includes the 52? "Interest Paid Classified As Financing Activities" = 207. "Payments Of Lease Liabilities Classified As Financing Activities" = 361. The lease interest is part of the 207? Typically, yes. But to be safe, we can use: FFO = Adjusted EBITDA - Interest Paid - Lease interest paid? No, if Adjusted EBITDA includes +62 (lease interest), and we subtract total cash interest (which includes lease interest), it cancels out. So FFO = Adjusted_EBITDA - Cash_Interest - Cash_Taxes. Cash_Interest = 207. Cash_Taxes = Income Taxes Paid Classified As Operating Activities = 397. FFO 2021 = 4,538 - 207 - 397 = 3,934 M€. **4. Estimate the 2021 "Adjusted_Debt" following the S&P guidelines.** Adjusted_Debt = (reported_debt + leases + pension_deficit + guarantees + hybrid_debt_portion + other_debt_like_items) - eligible_cash. Since we have no info on hybrids, pensions, guarantees, we assume they are zero or already included in debt. reported_debt = Long-term Borrowings (5,805) + Current Borrowings (1,324) + Current Overdrafts (351) = 7,480 M€. leases = Noncurrent Lease Liabilities (1,473) + Current Lease Liabilities (362) = 1,835 M€. eligible_cash = Cash And Cash Equivalents If Different From Statement Of Financial Position (6,150). Wait, "Cash And Cash Equivalents If Different From Statement Of Financial Position" is 6,150 for 2021 (given as "Cash And Cash Equivalents If Different From Statement Of Financial Position 2022-01-01: 6150 M€"). Adjusted_Debt 2021 = 7,480 + 1,835 - 6,150 = 3,165 M€. Wait, the firm gave "Net Debt" = 941 M€ in 2021. Net Debt = Long-term Borrowings + Current Borrowings + Overdrafts - Cash = 5,805 + 1,324 + 351 - 6,501? Wait, Net Debt = 941. Long-term debt: 5,805 + 1,324 + 351 = 7,480. Cash = 6,501. 7,480 - 6,501 = 979. Wait, leases are not in "Net Debt". Our Adjusted Debt = 3,165 M€. **5. Calculate the 2021 "Adjusted_Debt / Adjusted_EBITDA" ratio.** = 3,165 / 4,538 = 0.697x. **6. Calculate the 2021 "FFO / Adjusted_Debt" ratio.** = 3,934 / 3,165 = 1.243. **7. Estimate the 2022 "Adjusted_EBITDA".** Revenue = 44,322 + 76 = 44,398 M€. Profit From Operating Activities Recurring = 1,962. Total D&A: 2,228. (Includes right-of-use? Let's assume yes). EBITDA = 1,962 + 2,228 + 172 = 4,362 M€. (Note: "Impairment Loss Reversal... And Provision Expense" = 172). Adjustments: + Depreciation Right-of-use Assets = 446. + Interest Expense On Lease Liabilities = 62. + Other Operating Expense Non Recurring = 183. - Other Operating Income Non Recurring = 93. Adjusted EBITDA 2022 = 4,362 + 446 + 62 + 183 - 93 = 4,960 M€. **8. Estimate the 2022 "FFO".** FFO = Adjusted_EBITDA - cash_interest - cash_taxes. cash_interest = 260. cash_taxes = 518. FFO 2022 = 4,960 - 260 - 518 = 4,182 M€. **9. Estimate the 2022 "Adjusted_Debt".** reported_debt = Long-term Borrowings (11,586) + Current Borrowings (1,361) + Current Overdrafts (418) = 13,365 M€. leases = Noncurrent Lease Liabilities (2,107) + Current Lease Liabilities (498) = 2,605 M€. eligible_cash = Cash And Cash Equivalents If Different... (5,318) (Wait, the data says 5,736 for "Cash And Cash Equivalents" and 5,318 for "Cash And Cash Equivalents If Different From Statement Of Financial Position". Let's use the latter, 5,318). Adjusted_Debt 2022 = 13,365 + 2,605 - 5,318 = 10,652 M€. **10. Calculate the 2022 "Adjusted_Debt / Adjusted_EBITDA" ratio.** = 10,652 / 4,960 = 2.147x. **11. Calculate the 2022 "FFO / Adjusted_Debt" ratio.** = 4,182 / 10,652 = 0.3926. **12. Classify the year-on-year credit trend between 2021 and 2022.** Change in Leverage (2022 - 2021): 2.147x - 0.697x = +1.45x. This is >= +0.2x, so Signal 1 is **Deteriorating**. Change in FFO / Adjusted Debt (2022 - 2021): 0.3926 - 1.243 = -0.8504. This is <= -0.03, so Signal 2 is **Deteriorating**. Both signals agree: **Deteriorating**. Deteriorating