**Step 1 – Identify the industry**

Electricité de France (EDF) operates mainly in electricity generation, transmission and distribution under a regulated framework. Consequently, the relevant S&P methodology is the **Regulated Utilities** sector.

**Step 2 – Reconstruct Adjusted EBITDA (2021 & 2022)**  

Base figure – “Operating Profit Before Depreciation And Amortisation” (EBITDA)  

| Year | Reported EBITDA (€ million) |
|------|----------------------------|
| 2021 | 18 005 |
| 2022 | –4 986 |

Adjustments (per S&P guidance for regulated utilities):

| Adjustment | 2021 (€ M) | 2022 (€ M) |
|------------|------------|------------|
| **Impairment reversal** (non‑cash gain) – subtract | –653 | –1 762 |
| **Net changes in fair value of derivatives** (non‑cash loss) – add back | +215 | +849 |
| **Share of profit of JVs** (proportional EBITDA) – add | +644 | +759 |

*No lease data are provided, so the lease adjustment is zero.*  

Compute:

- 2021 Adjusted EBITDA = 18 005 – 653 + 215 + 644 = **18 211 M€**  
- 2022 Adjusted EBITDA = –4 986 – 1 762 + 849 + 759 = **–5 140 M€**

**Step 3 – Compute FFO (Funds From Operations)**  

FFO = Adjusted EBITDA – cash interest – cash taxes  

| Year | Cash interest (Interest expense) | Cash taxes (Income taxes paid) | FFO (€ M) |
|------|----------------------------------|--------------------------------|-----------|
| 2021 | 1 459 | 2 276 | 18 211 – 1 459 – 2 276 = **14 476** |
| 2022 | 1 730 | 1 282 | –5 140 – 1 730 – 1 282 = **–8 152** |

**Step 4 – Estimate Adjusted Debt**  

Adjusted Debt = reported debt + pension deficit + nuclear decommissioning provisions + other provisions – eligible cash  

*Reported debt* (financial liabilities):  
- 2022: 71 058 + 71 844 + 49 459 = 192 361 M€  
- 2021: 56 543 + 45 014 + 48 853 = 150 410 M€  

*Pension deficit* (non‑current provisions for employee benefits):  
- 2022: 16 231 M€; 2021: 21 716 M€  

*Nuclear decommissioning provisions* (non‑current):  
- 2022: 56 021 M€; 2021: 62 067 M€  

*Other provisions* (including decommissioning):  
- 2022: 4 671 M€; 2021: 5 442 M€  

*Cash* (Cash & cash equivalents):  
- 2022: 10 948 M€; 2021: 9 919 M€  

Compute:

- 2022 Adjusted Debt = 192 361 + 16 231 + 56 021 + 4 671 – 10 948 = **258 336 M€**  
- 2021 Adjusted Debt = 150 410 + 21 716 + 62 067 + 5 442 – 9 919 = **229 716 M€**

**Step 5 – Leverage ratio (Adjusted Debt / Adjusted EBITDA)**  

- 2021: 229 716 / 18 211 = **12.62×**  
- 2022: 258 336 / (‑5 140) = **–50.27×**  

Change = –50.27 – 12.62 = **–62.89 turns**  

**Step 6 – Cash‑flow coverage ratio (FFO / Adjusted Debt)**  

- 2021: 14 476 / 229 716 = **6.31 % (0.0631)**  
- 2022: –8 152 / 258 336 = **–3.15 % (‑0.0315)**  

Change = –0.0315 – 0.0631 = **–0.0946 (‑9.46 pp)**  

**Step 7‑11 – Summary of ratios**

| Metric | 2021 | 2022 | Change |
|--------|------|------|--------|
| Adjusted EBITDA (€ M) | 18 211 | –5 140 | – |
| FFO (€ M) | 14 476 | –8 152 | – |
| Adjusted Debt (€ M) | 229 716 | 258 336 | – |
| Leverage (Debt/EBITDA) | 12.62× | –50.27× | –62.89× |
| FFO/ Debt | 0.0631 | –0.0315 | –0.0946 |

**Step 12 – Credit‑trend classification**

- **Signal 1 (Leverage change):** –62.89 turns → ≤ –0.2 turns → **Improving**  
- **Signal 2 (Cash‑flow coverage change):** –0.0946 → ≤ –0.03 → **Deteriorating**

The two signals conflict. Cash‑flow coverage has turned negative, indicating a clear deterioration in the ability to service debt, while the leverage change is distorted by the large negative EBITDA. Given that a negative FFO is a more immediate and material indicator of credit risk, and the magnitude of the cash‑flow change far exceeds its threshold, the more negative signal (Deteriorating) is the appropriate conclusion.

**Final answer**

<answer>Deteriorating</answer>