I'll work through this step-by-step, analyzing HERA S.P.A.'s financial data and applying S&P's methodology.

## Step 1: Identify the Relevant Industry

HERA S.P.A. is described as a "multi-utility" operating in Italy. Based on the S&P methodology descriptions, HERA fits into the **Regulated Utilities** sector, specifically the "Multi-utilities" subsector. The company provides essential infrastructure services (water, gas, power, waste management) with comprehensive regulation.

## Step 2: Estimate 2021 Adjusted_EBITDA

First, let me reconstruct EBITDA for 2021:
- Revenue: 10,555,300,000 EUR
- Other Revenue: 400,100,000 EUR
- **Total Revenue**: 10,955,400,000 EUR

Operating expenses:
- Raw Materials And Consumables Used: 6,668,500,000 EUR
- Services Expense: 2,464,600,000 EUR
- Employee Benefits Expense: 592,800,000 EUR
- Other Expense By Nature: 66,500,000 EUR
- Other Work Performed By Entity And Capitalised: -60,800,000 EUR (capitalized, so subtract from expenses)
- Amortisation Depreciation And Provisions: 612,100,000 EUR

**Operating Profit (Profit Loss From Operating Activities)**: 611,700,000 EUR

To get EBITDA, I add back depreciation/amortization:
- EBITDA = Operating Profit + Amortisation Depreciation And Provisions
- EBITDA = 611,700,000 + 612,100,000 = **1,223,800,000 EUR**

For regulated utilities, S&P notes they use "regulatory accounting" but do not adjust GAAP figures. They focus on economics and actual cash flow generation.

Checking for adjustments needed per S&P methodology:
- Leases: Right-of-use assets exist, but S&P for regulated utilities notes they don't typically adjust for operating leases in the same way
- Looking at the cash flow statement, lease payments are in financing activities (22,500,000 EUR for 2021)

For regulated utilities, S&P mentions specific adjustments for purchased power contracts and seasonal working capital, but these don't appear directly relevant here.

Let me check if there are non-recurring items or other adjustments needed. The data doesn't explicitly identify non-recurring gains/losses.

Baseline Adjusted_EBITDA 2021 = **1,223,800,000 EUR**

## Step 3: Estimate 2021 FFO

FFO = Adjusted_EBITDA - cash_interest - cash_taxes

From cash flow statement:
- Finance Costs Paid Classified As Operating Activities: 96,200,000 EUR
- Income Taxes Paid Classified As Operating Activities: 156,300,000 EUR

FFO = 1,223,800,000 - 96,200,000 - 156,300,000 = **971,300,000 EUR**

Wait - let me verify this against the cash flow statement's "Cash Flows From Used In Operating Activities": 1,045,400,000 EUR

The difference includes working capital changes and other items. Let me recalculate more carefully using the cash flow approach.

From cash flow statement:
- Cash Flows From Used In Operations Before Changes In Working Capital: 1,205,500,000 EUR
- This includes: dividends received (12,000,000), finance income received (32,600,000), finance costs paid (96,200,000), income taxes paid (156,300,000)

Actually, let me use the standard S&P approach more carefully. FFO typically starts from operating cash flow before working capital changes.

Cash Flows From Used In Operations Before Changes In Working Capital: 1,205,500,000 EUR
Less: Dividends Received Classified As Operating Activities: 12,000,000 EUR
Less: Finance Income Received Classified As Operating Activities: 32,600,000 EUR
Add: Finance Costs Paid Classified As Operating Activities: 96,200,000 EUR (already in the 1,205.5M?)

Let me re-read: The 1,205,500,000 is "before changes in working capital" and includes various adjustments. Looking at the components:
- Adjustments For Depreciation And Amortisation: 469,900,000
- Allocation To Provisions: 142,200,000
- Adjustments For Undistributed Profits: -13,200,000
- Adjustments For Finance Income Cost: 218,000,000
- Capital Gains Losses: 25,500,000
- Change In Provision For Risks: -31,200,000
- Adjustments For Employee Benefits: -12,600,000

Sum of adjustments to operating profit (611,700,000):
611,700,000 + 469,900,000 + 142,200,000 - 13,200,000 + 218,000,000 + 25,500,000 - 31,200,000 - 12,600,000 = 1,410,300,000... this doesn't match 1,205,500,000.

Let me try: 611,700,000 + 469,900,000 + 142,200,000 - 13,200,000 + 218,000,000 + 25,500,000 - 31,200,000 - 12,600,000 = 1,410,300,000. Hmm, not matching.

Actually, looking more carefully at the structure: "Cash Flows From Used In Operations Before Changes In Working Capital" = 1,205,500,000. This should equal Operating Profit plus various adjustments.

Let me check: 611,700,000 (operating profit) + 469,900,000 (D&A) + 142,200,000 (provisions) - 13,200,000 (undistributed profits) + 218,000,000 (finance income/cost) + 25,500,000 (capital gains) - 31,200,000 (change in provision) - 12,600,000 (employee benefits) = 1,410,300,000. Still not 1,205,500,000.

I think the finance income/cost adjustment of 218,000,000 might be the non-cash portion, not the total. Let me recalculate: 611,700,000 + 469,900,000 + 142,200,000 - 13,200,000 + 25,500,000 - 31,200,000 - 12,600,000 = 1,192,300,000. Close but not exact.

Perhaps there's additional items. Let me just use the reported 1,205,500,000 as the base.

For FFO, S&P typically uses: Funds From Operations = Cash Flow From Operations Before Working Capital Changes - Dividends Received + Interest Paid (or uses a direct calculation).

Standard S&P FFO = Net Income + D&A + Deferred Taxes + Other Non-Cash Items - Capital Gains + Interest Expense

Let me use a cleaner approach:
FFO = Operating Profit + D&A - Cash Taxes (approximate)

Or from the cash flow: Cash Flows From Used In Operations Before Changes In Working Capital = 1,205,500,000
This includes finance costs paid and income taxes paid and dividends received and finance income received.

To get FFO: 
1,205,500,000 (before WC changes)
+ 96,200,000 (finance costs paid - these are financing outflows, not operating)
- 32,600,000 (finance income received - this is not operating)
- 12,000,000 (dividends received - investment income)

Actually, looking at the cash flow statement structure, the 1,205,500,000 already excludes these (they're shown as separate line items below). Let me check if 1,205,500,000 includes or excludes them.

Looking at the structure:
- Cash Flows From Used In Operations Before Changes In Working Capital: 1,205,500,000
- Then: Dividends Received (12,000,000), Finance Income Received (32,600,000), Finance Costs Paid (96,200,000), Income Taxes Paid (156,300,000)
- Then: Cash Flows From Used In Operating Activities: 1,045,400,000

So: 1,205,500,000 + 12,000,000 + 32,600,000 - 96,200,000 - 156,300,000 = 997,600,000. But reported is 1,045,400,000. Hmm, difference of 47,800,000.

Wait: 1,205,500,000 - 96,200,000 - 156,300,000 + 12,000,000 + 32,600,000 = 997,600,000. Not matching 1,045,400,000.

Let me try: 1,205,500,000 + 12,000,000 + 32,600,000 - 96,200,000 - 156,300,000 = 997,600,000. Still not right.

Perhaps signs are different. "Cash Flows From Used In" - maybe negative means used. Let me check: 2021 operating cash flow is 1,045,400,000 (positive, so generated).

1,205,500,000 - 96,200,000 - 156,300,000 + 12,000,000 + 32,600,000 = 997,600,000. 

Actually, maybe "Finance Costs Paid Classified As Operating Activities" means these are operating outflows, not financing. In some IFRS presentations, interest paid can be operating or financing.

Let me try: 1,205,500,000 - 156,300,000 + 12,000,000 + 32,600,000 = 1,093,800,000 if finance costs are already in the 1,205,500,000.

Or: 1,205,500,000 + 12,000,000 + 32,600,000 - 96,200,000 - 156,300,000 = 997,600,000.

The difference from 1,045,400,000 is 47,800,000. Maybe there's other items or the 1,205,500,000 is already after some adjustments.

Let me use a different approach. For regulated utilities, S&P FFO is typically:
FFO = Funds from operations = Cash flow from operations before working capital changes, or more precisely:
FFO = Net Income + Depreciation & Amortization + Deferred Income Taxes - Other Non-Cash Items + Interest Expense

From P&L 2021:
- Profit Loss: 372,700,000
- Amortisation Depreciation And Provisions: 612,100,000 (but this includes more than just D&A)

From cash flow: Adjustments For Depreciation And Amortisation Expense And Impairment Loss: 469,900,000

Let me use: Net Income 372,700,000 + D&A 469,900,000 + Interest Expense (net) 204,800,000 - Share of profit of associates 13,200,000 = 1,034,200,000 approximately.

Actually, S&P FFO for utilities is often calculated as:
FFO = Operating Cash Flow Before Working Capital Changes + Interest Paid

Or more standard: FFO = EBITDA - Cash Interest - Cash Taxes

Using EBITDA = 1,223,800,000
Cash Interest = 96,200,000 (finance costs paid, operating) or 300,300,000 (finance costs P&L)?
Cash Taxes = 156,300,000

If we use P&L finance costs: 300,300,000, but cash paid is 96,200,000.

For FFO, S&P uses cash interest paid: 96,200,000
FFO = 1,223,800,000 - 96,200,000 - 156,300,000 = 971,300,000

But wait, this doesn't match. Let me check if we need to use the full finance costs.

Actually, standard S&P FFO = Adjusted EBITDA - Cash Interest - Cash Taxes

Let me verify with another approach: 
Cash Flows From Used In Operations Before Changes In Working Capital = 1,205,500,000
This is roughly: EBIT + D&A - Cash Taxes (if interest not yet deducted) or EBIT + D&A - Cash Interest - Cash Taxes

1,205,500,000 = 611,700,000 + 469,900,000 + other adjustments... = 1,081,600,000 + other items.

Hmm, let me add: 611,700,000 + 469,900,000 + 142,200,000 - 13,200,000 + 25,500,000 - 31,200,000 - 12,600,000 = 1,192,300,000. Still not 1,205,500,000.

Difference is 13,200,000. Maybe there's other items I'm missing.

Let me just use: FFO = Cash Flows From Used In Operations Before Changes In Working Capital - Dividends Received + Interest Paid (if interest is in financing, not operating)

Actually for S&P purposes, FFO is typically:
FFO = Cash flow from operations before changes in working capital + Interest paid (if classified as financing) - Dividends received (if classified as operating)

Given the complexity, let me use a simpler approach:
FFO = Net Income + D&A + Interest Expense + Other Non-Cash Items - Capital Gains

Or: FFO = 372,700,000 + 469,900,000 + 300,300,000 - 13,200,000 + ... 

Let me use the reported cash flow and work backwards.

Cash Flows From Used In Operating Activities: 1,045,400,000
Add back: Increase Decrease In Working Capital: -47,800,000 (since 2021 had positive 47,800,000? No, 2021 was 47,800,000 positive)

Wait: Increase Decrease In Working Capital 2021: 47,800,000
So: Cash Flow Before WC Changes = 1,045,400,000 - 47,800,000 = 997,600,000? No, if WC increased cash flow, then before WC changes would be lower.

Actually: Cash Flow Before WC Changes + WC Change = Cash Flow From Operations
1,205,500,000 + 47,800,000 = 1,253,300,000? No, reported is 1,045,400,000.

Hmm: 1,205,500,000 - 160,100,000 = 1,045,400,000 approximately. But WC change is 47,800,000.

Let me check: 1,205,500,000 + 12,000,000 + 32,600,000 - 96,200,000 - 156,300,000 = 997,600,000. Then 997,600,000 + 47,800,000 = 1,045,400,000. Yes! 

So Cash Flow Before WC Changes (1,205,500,000) includes dividends and finance income but excludes finance costs paid and income taxes paid? No wait, the calculation shows:

1,205,500,000 + 12,000,000 + 32,600,000 - 96,200,000 - 156,300,000 = 997,600,000 then + 47,800,000 = 1,045,400,000.

But that means 1,205,500,000 is before dividends, finance income, finance costs, and taxes. Then we add/subtract those and add WC change to get operating cash flow.

Actually, re-reading: "Cash Flows From Used In Operations Before Changes In Working Capital" = 1,205,500,000. Then there are separate lines for dividends received, finance income received, finance costs paid, income taxes paid. Then "Cash Flows From Used In Operating Activities" = 1,045,400,000.

So: 1,205,500,000 + 12,000,000 + 32,600,000 - 96,200,000 - 156,300,000 = 997,600,000. Then where does 1,045,400,000 come from?

997,600,000 + 47,800,000 (WC change) = 1,045,400,000. Yes! So the 1,205,500,000 is before WC changes and before those other items.

For S&P FFO, we want: Cash flow from operations before working capital changes, adding back interest paid and taxes paid (since FFO is before these):
FFO = 1,205,500,000 + 12,000,000 + 32,600,000 = 1,250,100,000? No, that's not right either.

Standard S&P FFO calculation:
FFO = Net cash from operating activities 
      + Increase in working capital (if positive, meaning cash outflow) 
      + Interest paid 
      + Taxes paid 
      - Dividends received from operating activities
      - Interest received from operating activities

Or more commonly:
FFO = Funds from operations = Operating cash flow before working capital changes + Interest paid + Taxes paid - Dividends received (if in operating) - Interest received (if in operating)

Actually, let me use the most standard definition:
FFO = Net Income + Depreciation & Amortization + Deferred Income Taxes + Other Non-Cash Items - Gains on Asset Sales + Interest Expense

For 2021:
- Net Income: 372,700,000
- D&A (from cash flow): 469,900,000
- Interest Expense (P&L): 300,300,000 (Finance Costs) - 82,300,000 (Finance Income) = 218,000,000? Or just Finance Costs 300,300,000?

Actually "Finance Income Cost" is shown as -204,800,000, which is 82,300,000 - 300,300,000 = -218,000,000. But reported as -204,800,000. Let me check: 82,300,000 - 300,300,000 = -218,000,000. But "Finance Income Cost" 2021 is -204,800,000. Difference of 13,200,000, which equals share of profit of associates. So Finance Income Cost = Finance Income - Finance Costs + Share of Profit? Or 82,300,000 - 300,300,000 + 13,200,000 = -204,800,000. Yes!

So net finance cost in P&L is 204,800,000.

For FFO, S&P adds back interest expense. Using gross interest expense: 300,300,000.

FFO = 372,700,000 + 469,900,000 + 300,300,000 - 13,200,000 (undistributed profits, already in net income?) + other items...

This is getting complex. Let me use a practical approach:

FFO ≈ EBITDA - Cash Interest - Cash Taxes + Other Non-Cash Adjustments

Or: FFO = Operating Profit + D&A - Cash Taxes (if interest not yet deducted from operating profit)

Operating Profit: 611,700,000
Add D&A: 469,900,000 (from cash flow, cleaner)
Less: Cash Taxes: 156,300,000
Less: Cash Interest: 96,200,000? Or is this already in operating profit?

Operating profit is before interest and taxes. So:
FFO = 611,700,000 + 469,900,000 - 156,300,000 - 96,200,000 = 829,100,000? But this seems low.

Actually, operating profit (EBIT) is before interest and taxes. So:
EBITDA = EBIT + D&A = 611,700,000 + 612,100,000 = 1,223,800,000 (using P&L D&A)

FFO = EBITDA - Cash Interest - Cash Taxes = 1,223,800,000 - 96,200,000 - 156,300,000 = 971,300,000

But wait, the cash flow shows "Finance Costs Paid Classified As Operating Activities" = 96,200,000. If these are operating, then they're already reflected. But EBIT is before interest, so we subtract cash interest.

However, in standard S&P, FFO = Operating Cash Flow Before Working Capital Changes. Let me calculate this directly:

From Cash Flow Statement:
Cash Flows From Used In Operations Before Changes In Working Capital: 1,205,500,000

This includes:
- Operating profit adjustments
- But what about interest and taxes?

Looking at the structure, the 1,205,500,000 is before the lines for dividends, finance income, finance costs, and taxes. So it's before these items.

For S&P FFO, we calculate:
FFO = Cash Flows From Used In Operations Before Changes In Working Capital
      + Finance Costs Paid (interest paid)
      + Income Taxes Paid
      - Finance Income Received (if interest income)
      - Dividends Received (if classified as operating)

= 1,205,500,000 + 96,200,000 + 156,300,000 - 32,600,000 - 12,000,000
= 1,413,400,000

This seems high. Let me verify with another approach.

Actually, standard S&P FFO is:
FFO = Funds from operations = Net income from continuing operations 
      + Depreciation and amortization 
      + Deferred income taxes 
      + Other non-cash items

For 2021:
- Profit Loss: 372,700,000
- D&A: 469,900,000 (from cash flow)
- Other non-cash: provisions 142,200,000 - 31,200,000 = 111,000,000; undistributed profits -13,200,000; capital gains 25,500,000; employee benefits -12,600,000

FFO = 372,700,000 + 469,900,000 + 142,200,000 - 13,200,000 + 25,500,000 - 31,200,000 - 12,600,000 + 300,300,000 (interest expense, add back)
= 1,253,600,000? 

Hmm, this is inconsistent. Let me try yet another approach.

S&P sometimes defines FFO as:
FFO = Cash flow from operations before changes in working capital + Interest expense

For 2021, Cash Flow Before WC Changes = 1,205,500,000. But this already includes some adjustments.

Actually, looking at typical S&P utility methodology, they often use:
FFO = Net Income + D&A + Interest Expense + Deferred Taxes

Let me try: 372,700,000 + 469,900,000 + 300,300,000 = 1,142,900,000 (approximate)

Or with net interest (204,800,000): 372,700,000 + 469,900,000 + 204,800,000 = 1,047,400,000. Close to operating cash flow 1,045,400,000.

I think for practical purposes, let me use:
FFO = Cash Flow From Operations Before Working Capital Changes + Interest Paid + Taxes Paid - Interest Received - Dividends Received (operating)

= 1,205,500,000 + 96,200,000 + 156,300,000 - 32,600,000 - 12,000,000 = 1,413,400,000

But this seems too high. Let me reconsider.

Actually, "Cash Flows From Used In Operations Before Changes In Working Capital" of 1,205,500,000 likely already includes interest received and dividends received, and we need to subtract interest paid and taxes paid to get to operating cash flow.

Wait, the signs: "Cash Flows From Used In" - if positive, it's cash generated. The items below:
- Dividends Received: +12,000,000 (positive, cash in)
- Finance Income Received: +32,600,000 (positive, cash in)
- Finance Costs Paid: -96,200,000 (negative, cash out)
- Income Taxes Paid: -156,300,000 (negative, cash out)

So: 1,205,500,000 + 12,000,000 + 32,600,000 - 96,200,000 - 156,300,000 = 997,600,000
Then + 47,800,000 (WC change, positive means cash in?) = 1,045,400,000.

But 997,600,000 + 47,800,000 = 1,045,400,000. Yes!

So Cash Flow Before WC Changes = 1,205,500,000 includes operating profit + D&A + other non-cash adjustments, but NOT interest/dividends/taxes.

For FFO, S&P wants funds FROM operations, which is before interest and taxes but after working capital:
FFO = Cash Flow From Operations + Interest Paid + Taxes Paid - Interest Received - Dividends Received (if in operating)
= 1,045,400,000 + 96,200,000 + 156,300,000 - 32,600,000 - 12,000,000
= 1,253,300,000

Or using before WC changes:
FFO = 1,205,500,000 + 96,200,000 + 156,300,000 - 32,600,000 - 12,000,000 = 1,413,400,000

Hmm, these differ by WC change. Standard S&P FFO is typically before working capital changes.

Let me use: FFO = 1,205,500,000 + 96,200,000 + 156,300,000 - 32,600,000 - 12,000,000 = 1,413,400,000? No wait, that's adding back too much.

Actually, standard definition: FFO is cash flow from operations BEFORE changes in working capital and BEFORE interest and taxes. So if we start from operating cash flow, we add back interest, taxes, and working capital changes.

FFO = Operating Cash Flow + Interest Paid + Taxes Paid + Working Capital Increase (or - decrease) - Interest Received - Dividends Received
= 1,045,400,000 + 96,200,000 + 156,300,000 + (-47,800,000) - 32,600,000 - 12,000,000
= 1,205,500,000 + 96,200,000 + 156,300,000 - 32,600,000 - 12,000,000
= 1,413,400,000

This equals Cash Flow Before WC Changes + Interest Paid + Taxes Paid - Interest Received - Dividends Received.

But this seems inconsistent with typical FFO definitions. Let me check: FFO should approximate Net Income + D&A + Interest + Deferred Taxes.

372,700,000 + 469,900,000 + 300,300,000 + some other items = 1,142,900,000 + other items.

The difference is about 270,500,000. Where does this come from?

Looking at cash flow adjustments: 142,200,000 (provisions) - 13,200,000 (undistributed) + 218,000,000 (finance income/cost) + 25,500,000 (capital gains) - 31,200,000 (change in provision) - 12,600,000 (employee benefits) = 328,700,000.

1,142,900,000 + 328,700,000 = 1,471,600,000. Still not matching.

I think the issue is that "Finance Income Cost" adjustment of 218,000,000 is the non-cash portion or net amount.

Let me try a completely different approach. For regulated utilities, S&P often uses a simplified FFO:
FFO = EBITDA - Cash Interest - Cash Taxes

2021:
EBITDA = 1,223,800,000
Cash Interest = 96,200,000 (from operating activities, or 300,300,000 total finance costs?)
Cash Taxes = 156,300,000

If using cash interest paid in operating: 96,200,000
FFO = 1,223,800,000 - 96,200,000 - 156,300,000 = 971,300,000

But this ignores other cash and non-cash items. Let me check if this is reasonable by comparing to cash flow.

Actually, looking at this more carefully, I realize that for S&P credit analysis, they often use "FFO" as specifically defined in their methodology. Let me look at what they typically use for regulated utilities.

For regulated utilities, S&P Global Ratings typically calculates:
FFO = Funds from operations = Net income + Depreciation & amortization + Deferred income taxes + Other non-cash items - Capital gains + Interest expense

Or more practically for cash-based analysis:
FFO = Cash flow from operations before working capital changes + Interest paid + Taxes paid

Given the data, let me use:
FFO = 1,205,500,000 (before WC changes) + 96,200,000 + 156,300,000 = 1,458,000,000? No, that double counts.

Actually, 1,205,500,000 is already "Cash Flows From Used In Operations Before Changes In Working Capital" which suggests it's cash flow from operations before WC changes. This should already include interest and taxes if they're operating items.

But then why are there separate lines for finance costs paid, taxes paid, etc.?

I think the structure is:
1. Cash Flows From Used In Operations Before Changes In Working Capital: 1,205,500,000
2. Dividends Received: 12,000,000
3. Finance Income Received: 32,600,000
4. Finance Costs Paid: (96,200,000)
5. Income Taxes Paid: (156,300,000)
6. Cash Flows From Used In Operating Activities: 1,045,400,000

So 1,205,500,000 + 12,000,000 + 32,600,000 - 96,200,000 - 156,300,000 = 997,600,000, then + 47,800,000 (WC) = 1,045,400,000.

This means 1,205,500,000 excludes dividends, finance income, finance costs, and taxes. It's the "operating" cash flow before these items and before WC changes.

For S&P FFO, the standard is:
FFO = Cash flow from operations before changes in working capital + Interest paid + Taxes paid - Interest received - Dividends received (if classified as operating)

= 1,205,500,000 + 96,200,000 + 156,300,000 - 32,600,000 - 12,000,000
= 1,413,400,000

But this seems too high. Let me verify with the EBITDA approach:
EBITDA = 1,223,800,000
Less: Cash Interest = 96,200,000
Less: Cash Taxes = 156,300,000
FFO = 971,300,000

These two approaches give very different results. The difference is 442,100,000.

Looking at the cash flow adjustments more carefully: The 1,205,500,000 includes many non-cash adjustments. Let me see what it equals:

Operating Profit: 611,700,000
+ D&A: 469,900,000
+ Provisions: 142,200,000
- Undistributed profits: -13,200,000
+ Finance income/cost adjustment: 218,000,000? (non-cash portion)
+ Capital gains: 25,500,000
- Change in provision: -31,200,000
- Employee benefits: -12,600,000
= 1,410,300,000

Still not 1,205,500,000. Difference is 204,800,000, which equals the Finance Income Cost!

So maybe: 611,700,000 + 469,900,000 + 142,200,000 - 13,200,000 + 25,500,000 - 31,200,000 - 12,600,000 = 1,192,300,000. Still not right.

Let me add 218,000,000: 1,192,300,000 + 218,000,000 = 1,410,300,000. Too high.

Subtract 204,800,000: 1,192,300,000 - 204,800,000 = 987,500,000. Too low.

I think I need to just accept that 1,205,500,000 is the reported number and use it.

Given the complexity, let me use a practical approach for FFO:
FFO = Cash Flows From Used In Operations Before Changes In Working Capital - Dividends Received - Finance Income Received + Finance Costs Paid + Income Taxes Paid

Wait, that doesn't make sense either.

Let me look at this from the perspective of what S&P actually wants. They want "Funds From Operations" which represents cash generated from operations available to debt holders. This is:

FFO = EBIT + D&A - Cash Taxes
(or more precisely, including other non-cash items)

For 2021:
EBIT = 611,700,000
D&A = 612,100,000 (from P&L) or 469,900,000 (from cash flow)
Cash Taxes = 156,300,000

Using P&L D&A:
FFO = 611,700,000 + 612,100,000 - 156,300,000 = 1,067,500,000

Using cash flow D&A:
FFO = 611,700,000 + 469,900,000 - 156,300,000 = 925,300,000

Neither matches previous calculations. But 1,067,500,000 is close to 1,045,400,000 (operating cash flow).

Actually, let me check: 1,067,500,000 - 47,800,000 (WC) + 12,000,000 + 32,600,000 - 96,200,000 - 156,300,000 = 807,800,000. Not matching 1,045,400,000.

I think the cleanest approach is:
FFO = Cash Flows From Used In Operations Before Changes In Working Capital = 1,205,500,000 for 2021? No, that's before WC changes and before some items.

Actually, re-reading S&P methodology: "FFO to debt is the preferred measure" for transportation infrastructure, and for utilities they use similar. FFO is typically "funds from operations" which equals cash from operations before working capital changes plus adjustments.

Let me use the most common S&P definition:
FFO = Net Income + D&A + Interest Expense + Deferred Taxes + Other Non-Cash Items

For 2021:
Net Income: 372,700,000
D&A (cash flow): 469,900,000
Interest Expense (gross): 300,300,000
Other non-cash from cash flow: 142,200,000 - 13,200,000 + 25,500,000 - 31,200,000 - 12,600,000 = 110,700,000

FFO = 372,700,000 + 469,900,000 + 300,300,000 + 110,700,000 = 1,253,600,000

Or with net interest (204,800,000):
FFO = 372,700,000 + 469,900,000 + 204,800,000 + 110,700,000 = 1,158,100,000

Hmm, 1,253,600,000 is close to 1,205,500,000 + some adjustments.

Given the ambiguity, let me use a middle ground and calculate FFO as:
FFO = EBITDA - Cash Taxes + Other Non-Cash Adjustments (excluding interest)

= 1,223,800,000 - 156,300,000 + (provisions and other items)
= 1,067,500,000 + 142,200,000 - 31,200,000 - 12,600,000 + ... 

This is getting too messy. Let me simplify and use:

**FFO 2021 = 1,205,500,000** (Cash Flows From Used In Operations Before Changes In Working Capital)

This is a common proxy for FFO in S&P analysis when detailed adjustments aren't clear. But wait, this excludes interest and taxes which are below.

Actually, looking at real S&P calculations, they often use:
FFO = Cash flow from operations + Increase in working capital - Decrease in working capital + Interest paid + Taxes paid

For 2021:
= 1,045,400,000 + (-47,800,000) + 96,200,000 + 156,300,000 = 1,250,100,000

Or before WC changes:
= 1,205,500,000 + 96,200,000 + 156,300,000 = 1,458,000,000? No, 1,205,500,000 is already before WC.

I think 1,205,500,000 + 96,200,000 + 156,300,000 = 1,458,000,000 is wrong because 1,205,500,000 might already include some of these.

Let me try: if 1,205,500,000 excludes interest and taxes, then adding them back gives FFO. But "Cash Flows From Used In Operations Before Changes In Working Capital" should include all operating items.

I think the confusion is whether "Finance Costs Paid Classified As Operating Activities" means these are part of operating cash flow or financing. In IFRS, interest paid can be operating or financing.

If interest paid is operating, then 1,205,500,000 already includes it. If it's financing, then 1,205,500,000 excludes it.

Given the separate line item "Finance Costs Paid Classified As Operating Activities", this suggests it's classified as operating. So 1,205,500,000 includes interest paid? But then why show it separately?

Actually, I think the cash flow statement is structured as:
1. Start with operating profit
2. Add adjustments to get "Cash Flows From Used In Operations Before Changes In Working Capital"
3. Then show specific cash flows: dividends, finance income, finance costs, taxes
4. Then show working capital changes
5. Get to "Cash Flows From Used In Operating Activities"

So 1,205,500,000 is after step 2, before steps 3-5.

For S&P FFO, we want step 2 plus interest paid and taxes paid (since FFO is before these):
FFO = 1,205,500,000 + 96,200,000 + 156,300,000 = 1,458,000,000? 

But this assumes 1,205,500,000 excludes interest and taxes. Let me verify with 2022 numbers to see if this makes sense.

Actually, I realize I should just use the standard S&P formula and be consistent. Let me define:

**FFO = Net Income + Depreciation & Amortization + Interest Expense + Other Non-Cash Items**

For 2021:
= 372,700,000 + 469,900,000 + 300,300,000 + (142,200,000 - 13,200,000 + 25,500,000 - 31,200,000 - 12,600,000)
= 372,700,000 + 469,900,000 + 300,300,000 + 110,700,000
= 1,253,600,000

For 2022:
Net Income: 305,300,000
D&A: 478,600,000
Interest Expense: 217,200,000 (Finance Costs)
Other non-cash: 188,500,000 - 10,000,000 + 41,600,000 - 27,800,000 - 12,700,000 = 179,600,000

FFO = 305,300,000 + 478,600,000 + 217,200,000 + 179,600,000 = 1,180,700,000

Hmm, but wait - I should check if "Finance Income" should be subtracted. Gross interest expense is 300,300,000 for 2021 and 217,200,000 for 2022. Net finance cost is 204,800,000 for 2021 and 125,000,000 for 2022.

For FFO, S&P typically adds back gross interest expense (or net interest expense). Let me use gross for consistency with debt service coverage.

Actually, looking more carefully at S&P methodology, they define FFO as:
"Funds from operations (FFO): Net income from continuing operations adjusted for depreciation and amortization, deferred income taxes, other non-cash items, and preferred dividends."

They do NOT add back interest in the base FFO calculation. FFO is for equity holders and debt holders together, but interest is already deducted in net income. Wait, no - FFO is typically calculated from net income which is after interest.

Actually, standard S&P FFO = Net Income + D&A + Deferred Taxes + Other Non-Cash Items. This is AFTER interest expense.

But then "FFO to debt" and "FFO cash interest coverage" use this FFO. For "FFO to debt", FFO is available to service debt, but interest is already paid. Hmm, this doesn't make sense unless FFO is before interest.

Let me re-check: In S&P methodology, "FFO" is typically defined as cash from operations before working capital changes, or equivalently EBITDA minus cash interest minus cash taxes. But in their published formulas, they often use:

FFO = Net income + D&A + deferred taxes + other non-cash items

This is because net income already includes interest expense as a deduction, so FFO as defined is after interest expense but before working capital changes.

For "FFO to debt", they want to see how much cash is available relative to debt. Since interest is already paid, FFO can be used to pay down debt principal.

For "FFO cash interest coverage", they use FFO + Interest Paid / Interest Paid, or similar.

Given this, let me recalculate FFO properly:

**FFO = Net Income + D&A + Other Non-Cash Items**

Where Other Non-Cash Items include provisions, deferred taxes, etc.

For 2021:
= 372,700,000 + 469,900,000 + 142,200,000 - 13,200,000 + 25,500,000 - 31,200,000 - 12,600,000
= 372,700,000 + 469,900,000 + 110,700,000
= 953,300,000

For 2022:
= 305,300,000 + 478,600,000 + 188,500,000 - 10,000,000 + 41,600,000 - 27,800,000 - 12,700,000
= 305,300,000 + 478,600,000 + 179,600,000
= 963,500,000

Wait, I need to check if "Adjustments For Finance Income Cost" is non-cash. In 2021 it's 218,000,000 and in 2022 it's 135,000,000. This seems to be the non-cash portion of finance costs.

Let me include this:
2021 FFO = 372,700,000 + 469,900,000 + 142,200,000 - 13,200,000 + 218,000,000 + 25,500,000 - 31,200,000 - 12,600,000
= 372,700,000 + 469,900,000 + 328,700,000
= 1,171,300,000

2022 FFO = 305,300,000 + 478,600,000 + 188,500,000 - 10,000,000 + 135,000,000 + 41,600,000 - 27,800,000 - 12,700,000
= 305,300,000 + 478,600,000 + 314,600,000
= 1,098,500,000

Hmm, but 328,700,000 and 314,600,000 seem high for "other non-cash items". Let me verify: 142,200,000 - 13,200,000 + 218,000,000 + 25,500,000 - 31,200,000 - 12,600,000 = 328,700,000. Yes.

But wait, the 218,000,000 is "Adjustments For Finance Income Cost". If this is the non-cash portion, then adding it back to net income (which already includes the cash portion) gives us something closer to EBITDA - cash interest.

Actually, let me think about this differently. Net income includes:
- Operating profit: 611,700,000
- Share of associates: 13,200,000
- Finance income: 82,300,000
- Finance costs: -300,300,000
- Tax: -34,200,000
= 372,700,000

Cash flow adjustments include "Adjustments For Finance Income Cost" of 218,000,000. This equals 300,300,000 - 82,300,000 = 218,000,000? No, 300,300,000 - 82,300,000 = 218,000,000. Yes! But the P&L shows Finance Income Cost of -204,800,000, not -218,000,000.

Difference: 218,000,000 - 204,800,000 = 13,200,000, which equals share of profit of associates. So Finance Income Cost in P&L = Finance Income - Finance Costs + Share of Associates = 82,300,000 - 300,300,000 + 13,200,000 = -204,800,000.

So "Adjustments For Finance Income Cost" of 218,000,000 in cash flow = Finance Costs - Finance Income = 300,300,000 - 82,300,000 = 218,000,000. This is the accrual to cash adjustment? No, it's just the net finance cost excluding associates.

Actually, this is getting too detailed. Let me use a simpler approach that matches S&P's typical practice:

**FFO = Cash Flows From Used In Operations Before Changes In Working Capital**

This is a common proxy used by S&P when detailed adjustments are not available, and it represents the cash generating ability of operations before working capital investments.

For 2021: **FFO = 1,205,500,000 EUR**
For 2022: **FFO = 1,202,000,000 EUR**

But wait, I need to check if this is consistent with EBITDA approach.

Actually, let me use the most standard S&P definition which is widely accepted:

**FFO = Net Income + Depreciation & Amortization + Deferred Income Taxes + Other Non-Cash Items**

And for "other non-cash items", I'll use the cash flow adjustments excluding working capital and excluding items already in D&A.

For 2021:
Net Income: 372,700,000
D&A: 469,900,000
Other non-cash from cash flow statement (excluding D&A, WC, and financing items):
- Allocation To Provisions: 142,200,000
- Adjustments For Undistributed Profits: -13,200,000
- Capital Gains Losses: 25,500,000
- Change In Provision For Risks: -31,200,000
- Adjustments For Employee Benefits: -12,600,000
Total other non-cash: 110,700,000

FFO = 372,700,000 + 469,900,000 + 110,700,000 = **953,300,000 EUR**

For 2022:
Net Income: 305,300,000
D&A: 478,600,000
Other non-cash:
- Allocation To Provisions: 188,500,000
- Adjustments For Undistributed Profits: -10,000,000
- Capital Gains Losses: 41,600,000
- Change In Provision For Risks: -27,800,000
- Adjustments For Employee Benefits: -12,700,000
Total other non-cash: 179,600,000

FFO = 305,300,000 + 478,600,000 + 179,600,000 = **963,500,000 EUR**

This seems reasonable and consistent. The FFO is relatively stable despite lower net income in 2022, due to higher D&A and other non-cash items.

But wait, I need to check if "Adjustments For Finance Income Cost" should be included. This is 218,000,000 for 2021 and 135,000,000 for 2022. These represent non-cash finance costs (accrual adjustments).

If I include these:
2021 FFO = 953,300,000 + 218,000,000 = 1,171,300,000
2022 FFO = 963,500,000 + 135,000,000 = 1,098,500,000

Hmm, but finance costs are not typically "operations". S&P usually excludes financing items from FFO.

Let me check S&P's exact definition again. They say:
"FFO: Funds from operations. Net income from continuing operations adjusted for depreciation and amortization, deferred income taxes, other non-cash items, and preferred dividends."

Finance costs are not mentioned, so I should exclude them.

**Final FFO 2021 = 953,300,000 EUR**
**Final FFO 2022 = 963,500,000 EUR**

Actually, I want to double-check by comparing to EBITDA minus cash interest minus cash taxes:

2021: EBITDA 1,223,800,000 - Cash Interest ? - Cash Taxes 156,300,000

If Cash Interest is 96,200,000 (from operating activities): FFO = 1,223,800,000 - 96,200,000 - 156,300,000 = 971,300,000

Close to 953,300,000. Difference of 18,000,000 could be due to other items.

If Cash Interest is 300,300,000 - 82,300,000 = 218,000,000 (net finance cost, but cash not accrual): Hmm, cash interest paid is 96,200,000 per cash flow.

Actually, 971,300,000 is close enough to 953,300,000 given rounding and different approaches. Let me use the more precise calculation:

**FFO 2021 = 953,300,000 EUR** (or approximately 971,300,000 using EBITDA approach)

I'll use **953,300,000 EUR** as it's directly calculated from S&P's formula.

But let me verify once more. The EBITDA approach gives 971,300,000. The difference is 18,000,000, which could be working capital related or other items.

Actually, I realize I should check: is "Other Work Performed By Entity And Capitalised" of 60,800,000 (2021) included in EBITDA? This is capitalized work, so it's not an expense. In my EBITDA calculation, I subtracted it from expenses (i.e., treated as negative expense, meaning it increases EBITDA). Let me recheck.

Revenue: 10,555,300,000
Other Revenue: 400,100,000
Total Revenue: 10,955,400,000

Expenses:
Raw Materials: 6,668,500,000
Services: 2,464,600,000
Employee Benefits: 592,800,000
Other Expense: 66,500,000
Other Work Capitalized: -60,800,000 (this reduces expenses, so add back)
Amortisation Depreciation And Provisions: 612,100,000

Total expenses = 6,668,500,000 + 2,464,600,000 + 592,800,000 + 66,500,000 - 60,800,000 + 612,100,000 = 10,343,700,000

Operating Profit = 10,955,400,000 - 10,343,700,000 = 611,700,000. ✓

EBITDA = Operating Profit + Amortisation Depreciation And Provisions = 611,700,000 + 612,100,000 = 1,223,800,000. ✓

But wait, "Other Work Performed By Entity And Capitalised" is already excluded from expenses (negative expense), so EBITDA is correct.

Now for FFO via EBITDA: 1,223,800,000 - Cash Interest - Cash Taxes. But what is Cash Interest? The cash flow shows "Finance Costs Paid Classified As Operating Activities" = 96,200,000. But P&L shows Finance Costs = 300,300,000. The difference is non-cash or financing-classified interest.

If we use 96,200,000 as cash interest paid in operations:
FFO = 1,223,800,000 - 96,200,000 - 156,300,000 = 971,300,000

But this is before other non-cash adjustments. The cash flow adjustments include other items that affect FFO.

Actually, I think the cleanest approach is:

**FFO = Cash Flows From Used In Operations Before Changes In Working Capital - Dividends Received - Finance Income Received + Finance Costs Paid + Income Taxes Paid**

Wait, this is trying to reconstruct something.

Let me just use: **FFO = EBITDA - Cash Interest - Cash Taxes + Other Non-Cash Items Not in EBITDA**

For 2021:
= 1,223,800,000 - 96,200,000 - 156,300,000 + (provisions 142,200,000 - change in provision 31,200,000) + ...
= 971,300,000 + 111,000,000 + ... = too high.

I think the issue is that EBITDA already includes some non-cash items (like provisions if they're in operating expenses).

Let me go with the direct S&P formula:

**FFO 2021 = Net Income + D&A + Other Non-Cash Items = 372,700,000 + 469,900,000 + 110,700,000 = 953,300,000 EUR**

**FFO 2022 = 305,300,000 + 478,600,000 + 179,600,000 = 963,500,000 EUR**

## Step 4: Estimate 2021 Adjusted_Debt

Adjusted_Debt = Reported_Debt + Leases + Pension_Deficit + Guarantees + Hybrid_Debt_Portions + Other_Debt_Like_Items - Eligible_Cash

From balance sheet 2022-01-01 (end of 2021):
- Noncurrent Financial Liabilities: 3,716,000,000
- Current Financial Liabilities: 499,700,000
- **Total Reported Debt = 4,215,700,000 EUR**

Leases:
- Noncurrent Lease Liabilities: 53,200,000
- Current Lease Liabilities: 43,400,000
- **Total Leases = 96,600,000 EUR**

Pension Deficit:
- Noncurrent Provisions For Employee Benefits: 105,400,000
- This is likely the pension provision. Need to check if there's a deficit.

Actually, "Noncurrent Provisions For Employee Benefits" = 105,400,000. This is likely pension and other post-employment benefits. For S&P, they may add this if it's underfunded, but we don't have that detail.

Guarantees: Not disclosed in the data.
Hybrid Debt: Not apparent in the data.
Other Debt-Like Items: Not apparent.

Eligible Cash:
- Cash And Cash Equivalents: 985,600,000 (end of 2021, from 2022-01-01 balance... wait, let me check)

Looking at balance sheet dates:
- "Cash And Cash Equivalents" 2022-01-01: 885,600,000 (this is start of 2022, end of 2021)
- "Cash And Cash Equivalents" 2021-01-01: 987,100,000 (start of 2021)

Wait, there's also: "Cash And Cash Equivalents" 2023-01-01: 1,942,400,000 and 2022-01-01: 885,600,000.

So end of 2021 cash = 885,600,000 EUR.

But also: "Current Financial Assets" 2022-01-01: 29,300,000. This might be short-term investments.

For S&P, eligible cash typically includes cash and cash equivalents, and sometimes short-term marketable securities if readily convertible.

**Eligible Cash = 885,600,000 EUR** (or 885,600,000 + 29,300,000 = 914,900,000 if including current financial assets)

Let me use 885,600,000 as conservative.

Adjusted_Debt 2021 = 4,215,700,000 + 96,600,000 + 105,400,000 - 885,600,000
= 3,532,100,000 EUR

Wait, should I include pension? S&P includes pension deficit, not total pension liability. We don't know the deficit. Let me include the full amount as conservative, or exclude if not sure.

Actually, for regulated utilities, S&P may not heavily adjust pensions. Let me check if there's deferred tax assets related to pensions.

Looking at the data, there are "Deferred Tax Assets" of 229,400,000 at 2022-01-01. These might offset some liabilities.

Let me use a simplified approach:
Adjusted_Debt = Total Debt + Leases - Cash
= 4,215,700,000 + 96,600,000 - 885,600,000
= **3,426,700,000 EUR**

Or with pension included: 3,532,100,000 EUR

I'll use **3,426,700,000 EUR** as base, and note pension could add ~105M.

Actually, let me re-check the debt components. "Noncurrent Financial Liabilities" = 3,716,000,000 and "Current Financial Liabilities" = 499,700,000. Total = 4,215,700,000.

But wait, there are also "Current Derivative Financial Liabilities" = 1,703,300,000 and "Noncurrent Derivative Financial Liabilities" = 13,500,000. These are derivative liabilities, not necessarily debt.

For S&P, derivative liabilities might be included if they're debt-like (e.g., interest rate swaps hedging debt). But typically, fair value of derivatives is not included in "debt" unless they're embedded.

Let me check if "Noncurrent Financial Liabilities" includes derivatives. Probably not, as derivatives are listed separately.

So **Reported Debt = 4,215,700,000 EUR**

Also, "Trade And Other Current Payables To Trade Suppliers" = 2,356,600,000. These are trade payables, not debt.

"Other Current Liabilities" = 1,435,600,000. Need to check if any debt-like.

For simplicity, I'll use the financial liabilities as debt.

**Adjusted_Debt 2021 = 4,215,700,000 + 96,600,000 - 885,600,000 = 3,426,700,000 EUR**

## Step 5: Calculate 2021 Adjusted_Debt / Adjusted_EBITDA

= 3,426,700,000 / 1,223,800,000 = **2.80x**

## Step 6: Calculate 2021 FFO / Adjusted_Debt

= 953,300,000 / 3,426,700,000 = **0.278** or **27.8%**

## Step 7: Estimate 2022 Adjusted_EBITDA

Revenue 2022: 20,082,000,000
Other Revenue 2022: 548,200,000
Total Revenue: 20,630,200,000

Operating expenses 2022:
- Raw Materials: 16,730,000,000
- Services: 2,105,800,000
- Employee Benefits: 601,100,000
- Other Expense: 74,900,000
- Other Work Capitalized: -82,500,000
- Amortisation Depreciation And Provisions: 667,100,000

Total expenses = 16,730,000,000 + 2,105,800,000 + 601,100,000 + 74,900,000 - 82,500,000 + 667,100,000 = 20,096,400,000

Operating Profit = 20,630,200,000 - 20,096,400,000 = 533,800,000. ✓ (matches reported)

EBITDA = 533,800,000 + 667,100,000 = **1,200,900,000 EUR**

## Step 8: Estimate 2022 FFO

Using S&P formula:
Net Income: 305,300,000
D&A: 478,600,000
Other non-cash:
- Allocation To Provisions: 188,500,000
- Adjustments For Undistributed Profits: -10,000,000
- Capital Gains Losses: 41,600,000
- Change In Provision For Risks: -27,800,000
- Adjustments For Employee Benefits: -12,700,000
Total other non-cash: 179,600,000

FFO = 305,300,000 + 478,600,000 + 179,600,000 = **963,500,000 EUR**

## Step 9: Estimate 2022 Adjusted_Debt

Balance sheet 2023-01-01 (end of 2022):
- Noncurrent Financial Liabilities: 5,689,900,000
- Current Financial Liabilities: 650,100,000
- **Total Reported Debt = 6,340,000,000 EUR**

Leases:
- Noncurrent Lease Liabilities: 55,100,000
- Current Lease Liabilities: 21,300,000
- **Total Leases = 76,400,000 EUR**

Pension:
- Noncurrent Provisions For Employee Benefits: 92,000,000

Cash:
- Cash And Cash Equivalents: 1,942,400,000

Adjusted_Debt = 6,340,000,000 + 76,400,000 + 92,000,000 - 1,942,400,000
= 4,566,000,000 EUR

Or without pension: 6,340,000,000 + 76,400,000 - 1,942,400,000 = **4,474,000,000 EUR**

I'll use **4,474,000,000 EUR** as base (consistent with 2021 approach), or 4,566,000,000 with pension.

Actually, let me be consistent. In 2021 I didn't include pension. So for 2022:
**Adjusted_Debt 2022 = 6,340,000,000 + 76,400,000 - 1,942,400,000 = 4,474,000,000 EUR**

Wait, I need to check if I should include "Current Financial Assets" = 77,700,000 as additional cash-like.

Eligible Cash could be: 1,942,400,000 + 77,700,000 = 2,020,100,000

Adjusted_Debt = 6,340,000,000 + 76,400,000 - 2,020,100,000 = 4,396,300,000

For consistency with 2021 (where I used only cash, not current financial assets), I'll use:
**Adjusted_Debt 2022 = 4,474,000,000 EUR**

## Step 10: Calculate 2022 Adjusted_Debt / Adjusted_EBITDA

= 4,474,000,000 / 1,200,900,000 = **3.72x**

## Step 11: Calculate 2022 FFO / Adjusted_Debt

= 963,500,000 / 4,474,000,000 = **0.215** or **21.5%**

## Step 12: Classify Year-on-Year Credit Trend

**Signal 1: Leverage (Adjusted_Debt / Adjusted_EBITDA)**
- 2021: 2.80x
- 2022: 3.72x
- Change: 3.72 - 2.80 = **+0.92x**

Since +0.92x ≥ +0.2x, this signal is **Deteriorating**

**Signal 2: Cash-flow coverage (FFO / Adjusted_Debt)**
- 2021: 0.278 (27.8%)
- 2022: 0.215 (21.5%)
- Change: 0.215 - 0.278 = **-0.063** (-6.3 percentage points)

Since -0.063 ≤ -0.03, this signal is **Deteriorating**

**Both signals agree: Deteriorating**

### Verification and Sensitivity Check

Let me verify my calculations with alternative assumptions:

If I include pension provisions in debt:
- 2021 Adjusted_Debt = 3,426,700,000 + 105,400,000 = 3,532,100,000; ratio = 3,532,100,000/1,223,800,000 = 2.89x
- 2022 Adjusted_Debt = 4,474,000,000 + 92,000,000 = 4,566,000,000; ratio = 4,566,000,000/1,200,900,000 = 3.80x
- Change: +0.91x, still Deteriorating

If I include current financial assets in cash:
- 2021 Adjusted_Debt = 4,215,700,000 + 96,600,000 - 914,900,000 = 3,397,400,000; ratio = 2.78x
- 2022 Adjusted_Debt = 6,340,000,000 + 76,400,000 - 2,020,100,000 = 4,396,300,000; ratio = 3.66x
- Change: +0.88x, still Deteriorating

If I use FFO including finance cost adjustments:
- 2021 FFO = 1,171,300,000; FFO/Debt = 1,171,300,000/3,426,700,000 = 0.342
- 2022 FFO = 1,098,500,000; FFO/Debt = 1,098,500,000/4,474,000,000 = 0.246
- Change: -0.096, still Deteriorating

All alternative calculations confirm **Deteriorating**.

### Context and Reasoning

The deterioration is driven by:
1. **Massive increase in debt**: Total financial liabilities increased from 4.2B to 6.3B EUR (+50%), primarily in noncurrent financial liabilities (3.7B to 5.7B). This likely reflects increased borrowing to fund working capital needs given the revenue nearly doubled.

2. **Revenue surge with margin compression**: Revenue grew 90% (from 10.6B to 20.1B), but this appears to be largely pass-through driven (raw materials grew 151%, suggesting commodity price passthrough). EBITDA actually declined slightly (1.22B to 1.20B), indicating margin compression.

3. **Working capital stress**: The cash flow statement shows significant working capital outflow in 2022 (-927.6M vs +47.8M in 2021), driven by inventory buildup (+627.4M vs +196.7M) and receivables growth (+1,280.7M vs +893.8M), partially offset by payables growth.

4. **Cash position improved but debt grew faster**: Cash increased from 885.6M to 1,942.4M, but debt grew disproportionately.

The magnitude of leverage increase (+0.92x) is very substantial, well beyond the 0.2x threshold. The FFO coverage decline (-6.3 pp) is also well beyond the 3pp threshold. Both signals strongly indicate deterioration.

<answer>Deteriorating</answer>