**Step 1: Identify the relevant industry**
TERNA S.p.A. is the Italian electricity transmission grid operator ("Rete Elettrica Nazionale"). It operates as a natural monopoly providing essential infrastructure with a comprehensive regulatory framework. Therefore, the relevant industry is **Regulated Utilities**.

**Step 2: Estimate 2021 Adjusted_EBITDA**
For Regulated Utilities, Adjusted EBITDA starts with reported EBITDA. We calculate reported EBITDA from the income statement:
- Profit Loss From Operating Activities (EBIT) 2021: 1,200,400,000 EUR
- Depreciation Amortisation And Impairment Loss 2021: 654,400,000 EUR
- Reported EBITDA = 1,200,400,000 + 654,400,000 = 1,854,800,000 EUR
No specific adjustments (leases, nonrecurring, JVs, etc.) are explicitly quantifiable from the data. 
**2021 Adjusted_EBITDA = 1,854,800,000 EUR**

**Step 3: Estimate 2021 FFO**
For Regulated Utilities, FFO = Adjusted EBITDA - cash_interest - cash_taxes.
- Cash Interest (Interest Paid Classified As Operating Activities) 2021 = 214,600,000 EUR
- Cash Taxes (Income Taxes Paid Refund) 2021 = 317,900,000 EUR
**2021 FFO** = 1,854,800,000 - 214,600,000 - 317,900,000 = **1,322,300,000 EUR**

**Step 4: Estimate 2021 Adjusted_Debt**
Adjusted Debt = Reported Debt + leases + pension deficit + hybrid debt + other debt-like items - eligible cash.
- Longterm Borrowings (2022-01-01) = 8,835,000,000 EUR
- Shortterm Borrowings (2022-01-01) = 1,947,000,000 EUR
- Current Portion Of Longterm Borrowings = 1,640,000,000 EUR
- Reported Gross Debt = 8,835,000,000 + 1,947,000,000 + 1,640,000,000 = 12,422,000,000 EUR
- Hybrids (Equity Instruments Perpetual Hybrid Bonds) = 989,000,000 EUR (treated as debt under S&P hybrid treatment)
- Pension Deficit (Noncurrent Provisions for Employee Benefits = 60,800,000; we'll conservatively estimate the deficit as the full provision) = 60,800,000 EUR
- Eligible Cash (Cash And Cash Equivalents) = 1,566,800,000 EUR
**2021 Adjusted_Debt** = 12,422,000,000 + 989,000,000 + 60,800,000 - 1,566,800,000 = **11,905,000,000 EUR**

**Step 5: Calculate 2021 Adjusted_Debt / Adjusted_EBITDA**
Ratio = 11,905,000,000 / 1,854,800,000 = **6.42x**

**Step 6: Calculate 2021 FFO / Adjusted_Debt**
Ratio = 1,322,300,000 / 11,905,000,000 = **0.111 (11.1%)**

**Step 7: Estimate 2022 Adjusted_EBITDA**
- Profit Loss From Operating Activities (EBIT) 2022: 1,333,500,000 EUR
- Depreciation Amortisation And Impairment Loss 2022: 725,700,000 EUR
- Reported EBITDA = 1,333,500,000 + 725,700,000 = 2,059,200,000 EUR
**2022 Adjusted_EBITDA = 2,059,200,000 EUR**

**Step 8: Estimate 2022 FFO**
- Cash Interest (Interest Paid Classified As Operating Activities) 2022 = 154,800,000 EUR
- Cash Taxes (Income Taxes Paid Refund) 2022 = 380,100,000 EUR
**2022 FFO** = 2,059,200,000 - 154,800,000 - 380,100,000 = **1,524,300,000 EUR**

**Step 9: Estimate 2022 Adjusted_Debt**
- Longterm Borrowings (2023-01-01) = 8,416,700,000 EUR
- Shortterm Borrowings = 444,100,000 EUR
- Current Portion Of Longterm Borrowings = 1,909,300,000 EUR
- Reported Gross Debt = 8,416,700,000 + 444,100,000 + 1,909,300,000 = 10,770,100,000 EUR
- Hybrids = 989,000,000 EUR
- Pension Deficit (Noncurrent Provisions for Employee Benefits) = 48,400,000 EUR
- Eligible Cash (Cash And Cash Equivalents) = 2,155,100,000 EUR
**2022 Adjusted_Debt** = 10,770,100,000 + 989,000,000 + 48,400,000 - 2,155,100,000 = **9,652,400,000 EUR**

**Step 10: Calculate 2022 Adjusted_Debt / Adjusted_EBITDA**
Ratio = 9,652,400,000 / 2,059,200,000 = **4.69x**

**Step 11: Calculate 2022 FFO / Adjusted_Debt**
Ratio = 1,524,300,000 / 9,652,400,000 = **0.158 (15.8%)**

**Step 12: Classify the year-on-year credit trend**
- **Signal 1 (Leverage):** Change in Adjusted_Debt / Adjusted_EBITDA = 4.69x - 6.42x = -1.73x. 
  Threshold: ≤ -0.2x implies **Improving**.
- **Signal 2 (Cash-flow coverage):** Change in FFO / Adjusted_Debt = 0.158 - 0.111 = +0.047.
  Threshold: ≥ +0.03 implies **Improving**.

Both signals indicate an **Improving** trend, reflecting significantly lower leverage and notably stronger cash flow coverage.

<answer>Improving</answer>