Ladies and gentlemen, thank you for standing by and welcome to the first quarter results 2018. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you'd like to ask a question over the phone today, please press star then one on your telephone keypad. Alternatively, you may submit a question on the web by typing it in the Ask a Question box and clicking submit. I must advise you the call is being recorded today, Friday the 11th of May 2018. I would now hand the conference over to your first speaker today, Miguel Viana. Please go ahead.
Good morning, ladies and gentlemen. First of all, thanks for being with us today in this conference call for the presentation of EDP's 2018 first quarter results. As usual, we'll begin with a presentation providing an overview of the results and the main developments of the first quarter of the year. We'll move to the Q&A session. Our CEO, António Mexia, and our CFO, Miguel Stilwell, will be fully available to answer your questions. As usual, through the Q&A platform on our website, www.edp.com, this time through the phone. I will give the floor to our CEO, António Mexia, who will give us an update on the main highlights of the period.
Thank you, Miguel. First of all, thank you for being here, participating in this conference call. As Miguel Viana already mentioned, we will be going through also at the end of Q&A through the platform, live questions over the phone. Hopefully this will answer some of the demands that some of you raised in the past. Personally, I prefer. Starting in slide number one. I believe that our operating performance is clearly marked by specific events. On one hand, by a healthy underlying growth, both in renewables and in Brazil, which was obviously partially hidden by the negative ForEx impact on one end, so positives underlying growth. On the other end, by the negative year-on-year impact from regulatory changes in, most of them implemented during the second half of 2017, well known by all of you, by all of us at this stage.
This combination justifies the 4% year-on-year decline of the recurrent EBITDA to EUR 911 million. In terms of growth, our average generation capacity increased 4%, fully driven by new renewables capacity, namely 600 MW additional wind and solar capacity, which increased our rate of renewables to 74% of our generation mix. I think it's a quite distinctive ratio. We continue also showing the positive developments on the efficiency with a 1% rise in operating costs, excluding ForEx impact, falling short of 4% growth in generation capacity and 1% increase in the number of customers. Our net debt went down to EUR 13.8 billion, with the average net debt decreasing 15% year-on-year, leading to an adjusted net debt to EBITDA of 3.8x. It's clear that interest cost improved 16%, driven by a 50 basis point decline in average cost of debt to 3.8%.
The net profit declined 12% on a pro forma base, excluding the disposed gas network, while recurring net profits fell 5%, excluding extraordinary energy tax in both years, so like for like. In first quarter, the revision of the CMEC final adjustment related to 2017. This bottom line performance results from the combination of one hand, as I mentioned, the strong earnings growth at our subsidiaries EDPR in Brazil. Second, improved operation conditions in Iberian free market. Third, better efficiency, which on the other hand was more than offset by the fourth element, the previously deferred regulatory changes of last year in Portugal.
Finally, as fully expected, on 5th of April, EDP shareholders meeting approved the annual dividend of EUR 0.19 per share, which was already fully paid in cash on 2nd of May, representing a dividend yield of 6.4%, reflecting once again the delivery of our strong commitment with shareholder return. Let's move to recurring EBITDA. 4% down as the 8% underlying growth, mostly driven by renewables in Brazil, was eroded by ForEx and regulation in Portugal. We see, as I mentioned, I would like to stress this underlying growth driven by renewables in Brazil, but also the recovery of Iberian free market conditions versus an extremely difficult year in 2017 and the previously deferred benefits from efficiency improvements.
This strong underlying performance was eroded by the 6% negative ForEx impact due to the evaluation of US dollars and Brazilian real versus the EUR, and the EUR 66 million negative year-on-year impact from the regulatory changes in Portugal. I would like to stress, 90% of which resulted from regulatory measures taken during the second half of 2017. That are currently fully reflected on our guidance for 2018. Going to slide number three, we see that the recurring EBITDA ex ForEx grows 1%, analyzed even with the regulation in Portugal. If we focus on the breakdown of this underlying recurring EBITDA, we can see that 1% considered as growth ex ForEx results from a very distinct performance by geography and segments. Renewable business.
This represents 42% of our EBITDA in this first quarter, show the sound EBITDA growth of 8%, excluding ForEx, or 2% in EUR, following the 7% increase of average installed capacity, mostly in U.S. and Brazil. The EBITDA from our generation supply electricity operations in Portugal was the only negative contributor in terms of underlying EBITDA, falling by 29%, even considering the demand growth and the increased hydro production. A decline fully justified by the adverse regulatory change. In generation, we face not only already known the end of CMEC annual adjustments since 2017 July, but also the more recent decision that factored it in a way of the CMEC final adjustment, that a negative impact of EUR 6 million, this final revision is still under our analysis.
Still in generation, we were also penalized by the increase of the clawback tax since last August, as you know, and the new coal consumption levy in place since last January, totaling a negative EUR 17 million impact. That basically is the first element. The second is rather small. In distribution, the 14% cut on regulated revenues decided on December 17, and in force since the beginning of 2018, implied the already known EUR 43 million reduction on EBITDA. Even considering the 4% year-on-year growth on electricity consumption in the period is good news. EDP Brasil showed an 18% growth of EBITDA in local currency on good results from integrated hedging strategy in energy markets and efficiency improvements, namely the lower losses in distribution and higher availability in generation with the best ever in our power plants, namely in the coal power plants.
Finally, EBITDA from generation and supply and distribution in Spain showed 24% increase, enlightening the better operation conditions in the Iberia free market versus last year. Going to slide four. What do you see? Strong recovery of hydro resources allowed year-on-year improvement in production and recovery of the reservoirs, slightly above historical average. As you can see, we have a strong improvement in rainfall, particularly since March, allowed a one terawatt hour improvement in our hydro production and the recovery of our hydro reservoirs, which moved from extremely low levels in late February to above average by the end of the quarter. Nevertheless, volumes produced were still two terawatt hours less than in a normalized period. Of course, reservoirs brings us good expectations for the rest of the years, as we will see. Slide five. Sound performance on operating costs across all divisions.
In Iberia, OPEX fell by 1%, particularly outstanding as regard the over 3% increase in average capacity installed, an enlarged portfolio of customers, and the 0.8% inflation. At EDPR, adjusted core OPEX per megawatt improved by 1% on the back of control over costs and on the strategy in place. Finally, in Brazil, OPEX decreased 3% in local currency, while inflation stood at almost 3%. An impressive performance backed by several cost-cutting initiatives, namely the third year in a row of zero-based budgets. Note that after highly successful execution of our last OPEX program, we are currently working on the new OPEX plan that we expect to present to the market after the summer. Slide six. Steady decline on interest costs backed by what? 50 basis point reduction in average interest rate and lower average net debt. We have a steady improvement.
50% decline on our cost of debt to 3.8%. 15% decline on average net debt. I would like to highlight 70 basis points year-on-year decline in the marginal cost of debt. This reinforces the positive outlook for our cost of debt. Moving to net profit. The drivers are the same, but even reinforced. Growth from renewables, Brazil and Iberia free market was eroded by regulatory changes in Portugal. Renewables added 48% growth to earnings, combining the impact from the increase in our equity stake to almost 83%, and EDPR net profit grows by 39%. Note, I think it's important, that EDPR has represented close to 50% of our net profit in the first quarter. The contribution of Brazil to EDP net profit increased by 31% in euro terms, following EDP Brasil, 59% increase in net profit in local currency. Performance in free market also improved in Spain.
All of this was overshadowed by the 65% year-on-year decline in Portugal, prompted by regulatory changes that you already knew last year. What you see, if you add up EDP Renewables with EDP Brasil and EDP Spain, you have 90% of the net profit coming from these three business units. All in all, this performance makes very clear why it makes sense to diversify our portfolio and how to grow our growth strategy outside Iberia, while keeping focus on reinforcing visibility, it's a critical element of our growth platform at attractive returns, as shown in the next few slides. Let's talk about this visibility. On slide number eight, in renewables, in the first quarter, we reinforced visibility on growth, preserving attractive returns. I repeat this because I think it's important.
We started the construction of new 0.2 GW in U.S., reaching 1 GW of assets under construction by the end of the quarter. 80% of this will be commissioned in 2018. Moreover, following the recovery of the PPAs markets in U.S., plus the tax reform clarification, we have signed five PPAs for additional 600 MW, reaching 1.4 GW of secured PPAs or feed-in tariff for renewables project. I would like to stress that returns of 10% is familiar figure to us. Equally important to stress is that the lower long-term contracted prices reflect wind increasing competitiveness and improves efficiency, so attractive returns are being preserved. An element that I really want to stress. Regarding our 1.9 GW of wind offshore in U.K. and France, I would like to mention the following.
In U.K., we are on track to reach a final investment decision during the second half of this year. We have recently concluded a 20% sale-down in Moray East, anticipating a value creation in early stages project. In France, we are confident on a reasonable outcome from the expected government decision, which should assure the feasibility of the projects. Brazil. We have been delivering growth through the execution of value-accretive deals and delivering projects ahead of time, under a strict capital discipline. We delivered São Manoel ahead of schedule, four months ahead of schedule for the first turbines, and the revision of contracted volumes improves economics and reduce the GSF risk. As you know, we have five greenfield transmission lines representing a total investment of 3.1 billion BRL to build until 2022.
The expected returns on equity ranges from 12%-14%, there's room to improve on back of better funding conditions, reinforced value creation. I really want to highlight that the first transmission line is currently 17 months ahead of schedule. I think it's important, in terms of increasing the returns and having more money ahead of time. More recently, we have completed the acquisition of 19.6% stake in the electricity distribution company, Celesc, for a total investment of 300 million BRL. With an implicit EV RAB of 0.8x, we are creating new optionalities in Brazil, paving the way for a significant involvement in management decision and capturing the value for potential efficiency improvements, with expected net savings of more than 130 million BRL over the next four or five years, backed by the ongoing, namely, HR restructuring plan.
To conclude, regarding solar PV, distributed generation, and this is part of a new growth agenda in the supply business. We consider solar important and taking advantage of the exceptional solar conditions that we have in Brazil. We currently have 11 megawatts peak under the development, representing an investment slightly over BRL 100 million. Overall, these value-enhancing investments should allow us to almost double our earnings in Brazil over the next four years. Slide 10. I think it's important to stress this. Overall, comparing to our previous call, we had some positive developments in what concerns of the year-on-year recovery of the hydro volumes and electricity demand. We assume hydro normalization for the rest of the year.
The regulatory framework is known, namely the impact on distribution and generation in Portugal for the rest of the year. We expect to continue to deliver on efficiency gains and operating cost control. At EDPR, we expect we have full visibility to add this year the 800 megawatts of new capacity, mostly in U.S. and Brazil, which EDP Brasil should continue to show solid growth in local currency. We continue to assume a negative ForEx impact for the rest of the year, but much smaller on a year-on-year base, namely following the recent rebound of the dollar relating to the euro. On net interest costs, we should continue to benefit from the declining average cost of debt and lower average net debt. Overall, EBITDA EUR 3.4 billion. Net profit, EUR 800 million. The maintenance of our guidance.
Regarding medium-term outlook, we expect to update our financial targets in our capital markets day 2018, to be held after the summer, in which we keep with our strong focus on value creation and shareholder return. My key message in this last slide is, with what we know since we met last time and the evolution, clearly we keep our guidance for 2018. Now I would pass to Miguel Stilwell, the CFO, for a more detailed analysis of the first quarter. Then we will move to typical Q&A with now phone. Miguel, please.
Good morning, everyone. Pleasure to be on the call. I will walk you through the next couple of slides. We turn to slide 13, basically talking about EDP generation portfolio. Here, what's quite clear is that the strong focus on renewable energy represents more than 70%. We see that in the first quarter, EDP continued investing in this area. The installed capacity grew 3% year-on-year. We basically added approximately 600 megawatts of wind and solar capacity and 200 megawatts of hydro. With this, the renewable energy altogether reaches a weight of more than 70%, both in installed capacity and in overall production. We move to the following slide. We start doing deep dive in each of the business units, starting with EDP Renewables, which currently represents over 40% of our EBITDA. EDP Renewables end up being the main contributor in absolute terms.
Its EBITDA increased 2% to EUR 381 million. If we exclude the negative impact from ForEx, it would have increased by 8%. Showing the strong underlying performance that António mentioned just a little while ago. This growth is mainly supported by new capacity additions in the U.S. and Brazil, but also by a higher load factor, approximately 2% higher, reflecting better than average wind resources in Iberia, essentially 5% higher than historical average. This was all partially offset by a 5% decrease in the average selling price, excluding ForEx, and also by the termination of some 10-year-old PTCs in the U.S., which is expected by definition when they get to the end of those 10 years, fall away. If we move forward to the next slide 15, talking about generation supply in Iberia, which represents approximately 23% of our EBITDA.
We see that excluding the lower CMEC adjustment, the recurring EBITDA increased 1% to EUR 204 million. As mentioned before, the regulatory changes in Portugal impacted the positive impact from improved market conditions. This was mostly the increase in the clawback tax, which is mentioned as a second half 2017 effect, and so already incorporated. Also the end of the annual adjustment of the CMECs, which ended in June of 2017 as well. Those negative impacts partially offset the positives, which were a 2% increase in the average selling price to customers and a 17% decrease in the average fuel costs. Once again, it is worth noting that the hydro production was higher year-over-year, clearly, and we also built up our reservoirs. The production, at least in the first quarter, was still below the historical average by about 2 terawatt-hours, hence the guidance.
Moving on to slide 16, talking about EDP Brasil, representing 18% of our EBITDA. They showed a very positive performance in the first quarter, particularly in local currency, increasing by 18%. This was mostly to do with the integrated energy management, how we managed our contracted and uncontracted volumes, as well as just general overall operational performance. We really see this coming through in the high availability of Pecém, our coal power plant, which increases 4% availability to 98%, which we think is a pretty good number. Also by the reduction of distribution grid losses in both the distribution networks in Espírito Santo and in São Paulo area. Moving on to slide 17. Talking about regulated energy networks in Iberia, 17% of our EBITDA. Here we are excluding the gas distribution, obviously, which was there in 2017, but we sold.
The EBITDA excluding that falls by 23%, reflecting mostly the EUR 44 million cut in regulated revenue in Portugal. New as of December. This was partially offset by 7% OPEX decrease and a 4% growth in volumes distributed, which I think, once again, in terms of the underlying performance of the OPEX and the volumes, is positive. In Spain, we also had a relatively prudent approach to the possible regulatory changes of the
One question from the net, from Harry Halberg, from Bank of America Merrill Lynch. The question is regarding the improvement of hydro and the significant improvement in recent weeks. Why the fiscal final year guidance only appeared to improve from 770 to 800 million EUR? To justify.
Thank you, Harry. I would like to start. April 2018, hydro production, 0.5 terawatts above average. Accumulated first four months production is still 1.5 below historical average. Period January to February, typically, normally represents 50% of annual production. Looking into next month, hydro reservoir is now at 83%. Above historical average of 73. Typically, May to September are normally five dry months. That historically represents 20% of the annual hydro generation. Having this into account, plus the downwards revision on the assumption of the final CMEC adjustment, that means for the 2018 EBITDA, something probably between 10 and 15. We see at this stage no reason to change our previous guidance of 800 for the generation supply. It's in line with what was said in early March. I think that we are comfortable with this.
Of course, you have, again, a key uncertainty in the future is the last quarter of 2018 level of rain. All in all, I think that the last two months give us a good mood, but no reason to change the agenda for now.
Thank you. We can go now to the questions on the telephone.
Thank you. As a reminder to ask a question over the phone today, please press star, then one on your telephone keypad. The first question we have today comes from Rui Teixeira from UBS. Please go ahead.
Hi. Good morning, everyone. Just to clarify, do you now assume 2018 as a normalized year in terms of hydro? This is just one of the questions that I have, just to clarify.
Okay, Rui. Thank you. From now on, yes, basically, as you know, for a normalized year, you would see a figure of 900, now we are seeing a figure for this year as an 800. It's a normalize until the end of the year, with a figure of 800. Okay?
Okay. Clear. All right. My very first question is more on energy policy in Portugal. Basically because last weekend, as you've seen, the Portuguese Secretary of State for Energy said in an interview to the press that his main goal is to see electricity prices in line with the European average until the next elections. I think the next elections will take place in October 2019, if I'm not wrong. Basically, the government would like to see electricity tariffs to drop by roughly 10% within the next year and a half. I think we are talking about a total cut in the revenues of the system of around EUR 600 million, EUR 700 million. Correct me if I'm wrong, it's quite a significant cut. The question is, how could this be achieved without a negative impact on EDP? This is the first question.
The second, and I'll make it the last, could you just give us some more detail on what is happening to your supply business? Apart from regulatory risks or regulatory issues, why is it so weak? The margins that you achieved were quite low during Q1, despite the improvements in market conditions. What is the reason behind the rough 10%-15% drop in electricity volumes sold in the business segments during the quarter? Thank you very much.
I will start with the question of the target of 10% reduction. I would like to say that without any further regulatory measures, that's because it could be behind the question. Such a tough decline naturally comes up when system debt gets to zero by early 2020. In any case, this is even more clear following last year's cost cuts and this year's demand evolution. We have seen something that, as you know, the reduction of going down in the curve of the tariff deficit is clearly also driven by demand, and demand has currently been very positive. As you know, we are now seeing a super profit of the system of more than EUR 700 million. I don't see any reason why the system could not cope with the reductions through its own dynamics.
By the way, as you know, only 10% of the consumption is under the territory system because the rest is in the free market. As you have seen, the movement, even with the possibility of the clients going back to the regulated market, the movement was basically zero. By the way, it's negative. The free market has been growing in Portugal. I believe that this idea is totally compatible with the actual dynamics of the system. The system debt is no longer an issue. The main issue there is that EDP Financial's system debt was down year to date 2020, from EUR 4.6 to EUR 4.5. System delivering is backed by our consumption. Consumption in April 2018 was up 6.6%. I think that the dynamics clearly are there to support an evolution without any additional risk.
On the supply, Miguel was responsible until recently, so it's good to see him.
Going to one of your questions on the volumes, we are generally long only long in clients, our opportunity cost is basically buying energy in the pool and selling it to customers. We have a very strong policy of not selling below cost. People would agree with in terms of discipline on margins. We had some large B2B customers, mainly in Spain, which we had in the previous year and which we didn't have in this year, that explains basically the decrease in the volumes. Basically, this focus on margin discipline will be as aggressive as possible, but it comes to a point when it doesn't justify keeping volume just for volume's sake. In relation to the supply and to the evolution of margins, there is partially a seasonal effect.
In the first quarter, higher acquisition costs, which then smooth out over the year. The energy is bought and locked in. It's got a fixed price to the customer, over the year, there will be a certain smoothing out of this margin effect, of the negative margin effect, and we'll end up positive on the year.
Now clear. Thank you.
We can go to the next question on the phone, please.
Thank you very much. The next question today comes from the line of Javier Garrido from JP Morgan. Please go ahead.
Good morning. Thanks very much for taking questions on the line. My first question would be on your statement about doubling profits in Brazil in four years. Which profit line are you thinking of, EBITDA or EBIT? Also on Brazil, you have stated that you are 17 months ahead in the works on the first transmission line. How sustainable do you think this anticipated delivery can be? Is it feasible to deliver these projects with such anticipation, or should we expect something more in line with what you achieve with São Manoel? The second question would be on the regulatory situation in Portugal. You were very clear about the levers for the government to lower prices without having an impact on EDP.
I would like to know if we have come to an end on the debate on the adjustments to the CMEC, with the decision to allocate EUR 154 million as a final adjustment, or whether the government could open up the file again at some later point and come back with some adjustment. I'm particularly thinking on the original debate about the EUR 500 million of additional potential cuts that was highlighted, that seem to not to have been adopted by the government. Is the government able to come back with some additional cuts? Thank you.
Thank you, Javier. Relating to Brazil, here we are talking about the bottom line, so really the last line. We expect this to double. I think a lot of this, of course, relates to the new transmission line. They have a huge impact, and as you know, they will have an impact even before being concluded. The fact that they have been concluded, and we expect clearly to be closer to the 17 months anticipation than to the four months of São Manoel. As you know, we have a good team on that front. We were cautious in the first approach. Clearly this coupled with interest rate going down, plus everything that is efficiency wise, risk management approach integrated.
I believe that Brazil has proven very strongly the value of having distribution both in generation and even if you don't have the self-dealing, you have an edging, even with the hydro situations in Brazil and the pool prices. Clearly, I believe that this doubling is a very sound target, and we will be, of course, more detailed in the capital market. I feel comfortable as we speak. On the regulatory in Portugal, what I would like to share is that we believe that first, as I mentioned, more than 90% was already known. I think that we have reached, I would say the bottom of what could be considered a recurrent basis. As you know, we are disputing some of those issues, but in our figures, we have what we have now.
We are disputing, of course, some of those because they are clearly Some of those doesn't make any sense, like double taxations. In what concerns the final revision of the CMEC, as you know, you have seen a small impact, a provision of EUR 18 million. By the way, was also questioned by Manuel Palomo. Clearly, the EUR 18 million is a non-recurrent. It was due to the second half of 2017. The figure was higher than when you see on an annual basis from now on, because it was Hydro and Sines. Now, full year in 2018, you have only what I mentioned, between EUR 10 and EUR 15, and relates only to Hydro. Let's be clear.
For us, a final CMEC is a final CMEC, and in what concerns any consideration for other items that people would like to reanalyze, we feel totally comfortable in what concerns just doing exactly what was mandatory by whatever law at that moment. By the way, everything was approved on an early basis by the authorities and the regulators. On that front, we are very comfortable, no matter what. Of course, we will make this our key message all over. In what concerns the EUR 500, let's be very clear, and sometimes people make this confusion. The eventually mentioning of EUR 500, that was, as you remember, mentioned by the regulator in the two lines comments when they provide the final revision of the CMEC.
We have already had access to all the comments of the regulator between 2007 and 2016, including even the comments before 2007, as you know, when they started being in force. Clearly, and that's very obvious, the approvals were there, and any change would needed to be changed. We feel very comfortable. I don't want to be very long on this. The more information we have about this, namely these annual documentations of the regulator, the more comfortable we feel of a totally in existence of any excessive rent based on the Decree-Law 240 of 2004. Let's be clear. Let's not make a soup of different elements. Final CMEC is the final CMEC.
We can go to the next question on the phone, please.
Thank you very much. The next question today comes from the line of Jorge Guimarães from Haitong. Please go ahead.
Hi, good morning, everyone, Thank you for taking my questions. Still, sorry to go back to the final CMEC adjustment. Taking Javier's question about the features or the innovative features, are you also comfortable with the past environmental CapEx in the Sines plant? Isn't there the risk that it could be taken out of the final CMEC adjustment? Secondly, still on the regulatory issues in Portugal, where do you see it ending? Remaining at the current EUR 4.75 per megawatt hour or below that value? Finally, regarding the low voltage concessions in Portugal, which are to be renewed in 2020, you always seem to downplay a bit the profitability of these concessions. Could you see a scenario where another Portuguese company takes one of those concessions or a Spanish company? Thank you very much.
Questions. I've seen that we are spending a lot of time about only 10% of our net profit. I really would love to talk about the 90%, but let's see. I thank you the questions because we want to be precise. What concerns the investments on the ESCOs and the NOCs. All the investments were in line with contracts. All were approved by relevant authorities. They were mandatory. By the way, all the other players have been recognized as investment because they were mandatory. If it was not for these investments, Sines would not have been able to operate under environment rules. It would not be able to fulfill contracted availability level. We were demanded to be available, we were demanded to supply, and we could only supply under those legal binding laws, and everything was approved. We were not really innovative.
We are just complying with the law. In what concerns the clawback, as you know, I'm putting this together with also a question of Manuel Palomo, just to be clear, when we see the difference between previous year and this year of regulatory impact, we have EUR 150 on distribution. It was known. EUR 60 million on clawback, it was known, and I will go back. EUR 7 million on coal. The only thing that is new is the final CMEC provision that will affect on a yearly basis, recurrence between EUR 10 and EUR 15. Typically, a small figure. In what concerns the clawback, as you see, we put here the full figure, but we expect that, of course, a normalized situation where you don't create a distortion that makes power stations in Portugal, either EDP or anybody else, with an unfair competition could be clarified down the road.
For now, our guidance includes the clawback for the full year.
Okay, we can go now to the.
Oh, low voltage. Sorry. Low voltage. I think it's too early. The key issue is, of course, we don't know what will be the rules of the game. Clearly, I think that the key restriction of the system is that whatever happens, it should minimize dyssynergies in the system and should imply the best solution for the final customer. The only thing is clearly we will be there if and when it makes sense, and our job at this stage is to help, as anybody else should be doing, on making something that makes sense for the system. By the way, in any case, we will always receive the full rev if we don't want or if whatever happens. That's clear. Let's wait. It's too early.
Now go to some questions on the web. The first one comes from Manuel Palomo from Exane BNP Paribas. Given your increased focus on renewable energies, what are our thoughts regarding the full ownership of EDPR? Maybe I'll put together also the question from Antonella Bianchini from Citi regarding the targets of disposals for 2018. If you can elaborate on this and how are they progressing, or what are our plans?
Very well. In renewables, as I mentioned, I'm going to repeat myself. Down the road, a lot of things can make sense. There is no sense of urgency or whatever. We will not, in the current environment, ask people to be waiting for something standing up. Clearly, no surprises. In what concerns disposals, as you know, many others in Portugal and in Brazil are classified as assets held for sale. In what concerns asset rotation or farm-downs, it's the new normal, and the focus will be in the U.S. Typically, there is nothing new on the table compared to what we stated three months ago.
More questions from the web. One is regarding electricity distribution in Spain. If we can elaborate on the detail, on the decline on the EBITDA, and what is our expectation for the full year. Also regarding tax rate guidance for 2018.
I'll take those questions. From Antonella, in terms of the tax rate, sorry, that's the second question. We maintain our guidance of less than 20% for the full year. Obviously, this depends on several variables, but that's our guidance, and we're fairly comfortable with that. In terms of the distribution in Spain, as you know, the regulatory terms are set for the end of 2019, and any changes before that do not make sense. However, formerly, there was a process called the Visibilidad in Spain, which was declared at the beginning of April, targeting changes to the useful life of assets. It doesn't change the rules, but it just paves the way for a possible court in the Supreme Court's challenge. We just took a prudent approach.
We're optimistic about the outcome, in this case, we have just provisions for, or we are adjusting for that amount. In any case, a final decision would probably happen sometime over the next year. We'll have visibility on that then.
I think it is everything. We can go to the next question on the phone.
Thank you. The next question comes from the line of Carolina Dores from Morgan Stanley. Please go ahead.
Hello. Good morning, everyone. Thanks for taking my questions. I have three. One, it is very quick one. What is the timeframe that you expect to communicate on the business plan? Is it 2020, 2022 or 2021? Second, Brazil, the operations are going very well. Do you expect to make more investments or is the idea just to focus on delivering the transmission lines at this point? Third, you mentioned about the tax or the levy on coal and the clawback. I understand that, especially on coal, the economics with this tax increases over time. What is the plan? Do you expect some negotiations with the government or would be the plan to potentially shut down Sines? Thank you very much.
Thank you, Carolina. We will be presenting after summer, the 2022. It's also a very quick answer to your simple question. 1822, and it will be probably beginning of October. We will set a date where we will hopefully be meeting all of us. Brazil, new investments. We have not been involved in the last interesting and exciting auction for a distribution company there. I like the idea of creating optionalities with Celesc, with 0.8 RAB. That, of course, gives us a lot of room in what concerns whenever this company will be in the next stage of her life, going into the market, I think it makes sense. Meanwhile, we are helping the current shareholders to make a more efficient company. I like this idea of optionality.
I like the idea of also going into. You will not see us on those big bids, 2 point something RAB acquisition. Let's be clear. On what concerns, also static opportunities, adjusting even percentage of our portfolio. As you know, we have assets where we have 60%, the others were only 30%. We will try to move around, as we have seen, selling mini hydro shows that we are keen in crystallizing value and capturing, as it was the case in previous assets, to buy additional stakes if it makes sense to optimize our value on that asset. I'm talking about, for example, existing hydro projects that we have already. We see clearly transmission, that now we were one of the first. Now, everybody looks into transmission.
We will be looking into transmission whenever it makes sense, at the prices that make sense, with clearly double-digit returns. Basically, optionality and balanced approach. Tax on coal. Of course, I believe that any tax on coal, that, by the way, I think it was introduced the concept when the CO2 price was very low, and now as you see, the market is clearly, finally picking up. Creating individual, piecemeal, and a country alone doing whatever they want, it makes less sense, especially in an integrated market. We see ourselves, Sines as a very competitive, one of the most competitive and the cleanest coal plants in Iberia. Of course, it would not make sense import-wise, balance, payment, employment, imports of energy, to have much worse power plants in Spain occupying the place of a much better and more recent coal fire plant in Portugal.
Of course, having in mind that up to 2030, they will be all gone, but the transition phase should make sense, and I believe that we will be working and everybody should be working on this front. What concerns the clawback, I just wanted to repeat myself is, we need to approach, once again, the concept is people should have the same playing field, whatever the side of the border in integrated market they are. We expect this to be taken into consideration because if not, we would make Portuguese located power plants or whatever in a disadvantage compared to located in Spain. Once again, for the full year, this year, we expect we have in our guidance of the figure that we have, again, confirmed, we put the delta of the EUR 60 million compared to the previous year.
Just for the sake of time, as this call is reaching 60 minutes, which is our timing target. We will go for a last question on the phone, and then we will follow up at IR level, the remaining questions.
Thank you very much. The next question today comes from the line of José Martins from JB Capital Markets. Please go ahead.
Hello there. I hope everyone is well. I have two questions. One is about Celesc. Recently, in their investor day, REN disclosed that they expect news in matter of months, instead in a matter of years. I was wondering if you could share that view or if you had anything that you could guide us through that. Something related to that.
You provisioned for the payment of Celesc already, but it is not a cash outflow. I just wanted to clarify that. The second question is, well, you seem to find growth options, whether it is renewables, whether it is Brazil. I think probably we should approach it in a different way. You want to maintain optionality, and you want a balanced approach. Have you ever considered, if you had more capital, would you grow faster? You seem to have had, historically, a wise investment process. If you had more capital, would you deploy it? Would you consider tapping the capital markets to do that? You have two listed subsidiaries. Rather than removing the minorities, you could probably use them to invest at a higher pace. Those are my questions. Thank you.
Thank you. In what concerns CESE, I will be probably repeating what was said at REN. As you know, we have challenged CESE, as well as the other two companies, Galp and REN. It is true, answering to your second question, we have provision, but we are not cashed out in the sense that we consider that not only the repetition, but especially the fact that the cash of the sales was not going as it was foreseen into the sector, made this decision of giving a warranty and not the cash. It is the fair one. The sooner the better we have a decision. Hopefully what was said in REN in terms of timing happens, because I think that all these issues should be clarified as soon as possible. In that case, it will be good news. In what concerns growth, let us be clear.
We will not have any rights issue, especially not EDP. We will not have at EDPR. As you know, EDPR, the decision is taken. The equity story of the group is where it is for now. It is clear. We clearly prefer to do what we have been doing, as we did with gas. We have cashed EUR 2.5 billion , 16 times EBITDA. We have redeployed money also to invest in Brazil to have more or less 90% of the same EBITDA at the beginning of next decade with one-third of the investment. We have, as you know, recently, because I think it makes all the sense in terms of de-risking and in terms of crystallizing value, updated our strategy in terms of asset rotation, including farm-downs, so we can grow faster and we can be also developer.
I think that the nature of the business in renewables has changed, at least in what concerns our vision and our key strengths. I really do not see any need to do. I feel totally comfortable with the muscle that we have and the strategy that we have in terms of building the optionalities. By the way, we have talked a lot of time about what represents today a very small part, unfortunately, of our profit. I think that eventually the fact that no question was raised there, is that five PPAs in the last months, full visibility of 800 megawatts for this year. It shows what? That we know exactly your mark , what we are doing.
Whenever people hesitate because they feel a weakness in a specific market, namely in U.S., it will be more difficult, the PTCs market with the phasing down, the tax equity market will be difficult. As you will see, as we have seen, we have been delivering always. If anything, we could be, as you mentioned, doing more. Of course, the farm-down asset rotation strategy will allow us to develop more, crystallize more, and the cash positioning of EDP at the level of EDPR is totally comfortable. Liquidity or having capital is not the issue. Thank you for all your questions.
Very clear. Thank you.
Miguel will follow with some of the details, namely some of the gas and some more smaller questions. Once again, I would like to highlight that probably you are looking into a company that has bottomed part of its problems in what concerns the framework of regulation in Portugal and legal and regulatory framework. Clearly wanted to share with you all the possibilities that we've been creating, both in renewables, especially in U.S., but also in Brazil, giving a sound basis for what will be presented just after summer. I think that we will have a good moment. Thank you for your presence, and see you soon.
Thank you very much. That does conclude the conference for today. Thank you for participating. You may all disconnect.