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Companhia De Saneamento Basico Do Estado De Sao Paulo-Sabesp 6-K, filed Sep 2, 2021

Companhia De Saneamento Basico Do Estado De Sao Paulo-Sabesp (SBS)

6-K 2021-09-02 For: 2021-06-30
View Original
Added on April 09, 2026

About this 6-K

Companhia De Saneamento Basico Do Estado De Sao Paulo-Sabesp filed this 6-K on September 2, 2021.

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 6-K

REPORT OF FOREIGN ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 OF THE

SECURITIES EXCHANGE ACT OF 1934

For August, 2021 (Commission File No. 1-31317)

Companhia de Saneamento Básico do Estado de São Paulo - SABESP

(Exact name of registrant as specified in its charter)

Basic Sanitation Company of the State of Sao Paulo - SABESP

(Translation of Registrant's name into English)

Rua Costa Carvalho, 300 São Paulo, S.P., 05429-900 Federative Republic of Brazil

(Address of Registrant's principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F ___X___ Form 40-F ______

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1)__.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7)__.

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes ______ No ___X___

If "Yes" is marked, indicated below the file number assigned to the registrant in connection with Rule 12g3-2(b):

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Table of Contents

Company Information

Capital Breakdown 1
Parent Company’s Financial Statements
Statement of Financial Position – Assets 2
Statement of Financial Position – Liabilities 3
Income Statement 5
Statement of Comprehensive Income 7
Statement of Cash Flows 8
Statement of Changes in Equity
1/01/2021 to 6/30/2021 10
1/01/2020 to 6/30/2020 11
Statement of Value Added 12
Comments on the Company’s Performance 13
Notes to the Quarterly Information 23
Comments on the Company’s Projections 83
Other Information Deemed as Relevant by the Company 84
Reports and Statements
Unqualified Reports on Special Review 86
Executive Officers’ Statement on the Financial Statements 87
Executive Officers’ Statement on the Report of Independent Registered Public Accounting Firm 88 
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Company Data / Capital Breakdown

Number of shares Current Quarter
(Units) 6/30/2021
Paid-In Capital
Common 683,509,869
Preferred 0
Total 683,509,869
Treasury Shares
Common 0
Preferred 0
Total 0 
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Parent Company’s Financial Statements / Statement of FinancialPosition – Assets

(R$ thousand)

Code Description Current Quarter Previous Year
6/30/2021 12/31/2020
1 Total Assets 50,921,444 50,418,636
1.01 Current Assets 5,661,267 6,440,838
1.01.01 Cash and Cash Equivalents 249,932 396,401
1.01.02 Financial Investments 2,698,856 3,411,146
1.01.02.03 Financial Investments Valued at Amortized Cost 2,698,856 3,411,146
1.01.03 Accounts Receivable 2,415,336 2,372,083
1.01.03.01 Trade Receivables 2,249,036 2,204,029
1.01.03.02 Other Receivables 166,300 168,054
1.01.03.02.01 Related-Party Balances 166,300 168,054
1.01.04 Inventories 108,866 104,848
1.01.06 Recoverable Taxes 43,571 22,672
1.01.06.01 Current Recoverable Taxes 43,571 22,672
1.01.08 Other Current Assets 144,706 133,688
1.01.08.03 Others 144,706 133,688
1.01.08.03.01 Restricted Cash 27,950 35,742
1.01.08.03.20 Other Assets 116,756 97,946
1.02 Noncurrent Asset 45,260,177 43,977,798
1.02.01 Long-Term Assets 9,281,660 9,194,281
1.02.01.04 Accounts Receivable 279,028 246,957
1.02.01.04.01 Trade Receivables 279,028 246,957
1.02.01.09 Receivables from Related Parties 635,385 638,591
1.02.01.09.03 Receivables from Controlling Shareholders 635,385 638,591
1.02.01.10 Other Noncurrent Assets 8,367,247 8,308,733
1.02.01.10.04 Escrow Deposits 146,518 164,942
1.02.01.10.05 Water National Agency – ANA 23,904 26,463
1.02.01.10.06 Contract Asset 8,043,865 7,969,164
1.02.01.10.20 Other Assets 152,960 148,164
1.02.02 Investments 121,882 109,691
1.02.02.01 Equity Interest 75,632 63,417
1.02.02.01.03 Equity Interest in Jointly-Owned Subsidiaries 69,533 57,318
1.02.02.01.04 Other Investments 6,099 6,099
1.02.02.02 Investment Properties 46,250 46,274
1.02.03 Property, Plant and Equipment 267,469 268,251
1.02.04 Intangible Assets 35,589,166 34,405,575
1.02.04.01 Intangible Assets 35,589,166 34,405,575
1.02.04.01.01 Concession Contracts 1,186,331 1,218,440
1.02.04.01.02 Program Contracts 17,915,779 17,731,230
1.02.04.01.03 Service Contracts 15,829,277 14,872,604
1.02.04.01.04 Software License of Use 552,088 540,625
1.02.04.01.05 Right of Use 105,691 42,676 
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Parent Company’s Financial Statements / Statement of FinancialPosition – Liabilities

(R$ thousand)

Code Description Current Quarter Previous Year
6/30/2021 12/31/2020
2 Total Liabilities 50,921,444 50,418,636
2.01 Current Liabilities 5,932,223 5,900,130
2.01.01 Labor Liabilities and Pension Plan Obligations 418,131 410,943
2.01.01.01 Pension Plan Obligations 29,854 48,198
2.01.01.02 Labor Liabilities 388,277 362,745
2.01.02 Trade Payables 225,901 263,741
2.01.02.01 National Suppliers 225,901 263,741
2.01.03 Tax Liabilities 258,069 266,819
2.01.03.01 Federal Tax Liabilities 254,599 258,902
2.01.03.01.01 Income Tax and Social Contribution Payable 75,125 69,041
2.01.03.01.02 Pis-Pasep and Cofins Payable 101,102 93,601
2.01.03.01.03 INSS (Social Security Contribution) Payable 38,690 37,599
2.01.03.01.20 Other Federal Taxes 39,682 58,661
2.01.03.03 Municipal Tax Liabilities 3,470 7,917
2.01.04 Borrowings and Financing 3,277,147 3,034,449
2.01.04.01 Borrowings and Financing 1,128,331 1,016,356
2.01.04.01.01 In Local Currency 799,979 656,712
2.01.04.01.02 In Foreign Currency 328,352 359,644
2.01.04.02 Debentures 2,052,651 1,952,670
2.01.04.03 Financing through Lease 96,165 65,423
2.01.05 Other Liabilities 1,027,183 1,163,969
2.01.05.01 Payables to Related Parties 626 626
2.01.05.01.03 Payables to Controlling Shareholders 626 626
2.01.05.02 Others 1,026,557 1,163,343
2.01.05.02.01 Dividends and Interest on Capital Payable 500 231,611
2.01.05.02.04 Services Payable 496,535 453,750
2.01.05.02.05 Refundable Amounts 40,395 40,514
2.01.05.02.06 Program Contract Commitments 140,983 162,541
2.01.05.02.07 Public-Private Partnership (PPP) 146,242 130,207
2.01.05.02.09 Indemnities 6,839 8,969
2.01.05.02.20 Other Liabilities 195,063 135,751
2.01.06 Provisions 725,792 760,209
2.01.06.01 Tax, Social Security, Labor and Civil Provisions 200,927 187,193
2.01.06.01.01 Tax Provisions 27,076 26,281
2.01.06.01.02 Social Security and Labor Provisions 93,810 88,475
2.01.06.01.04 Civil Provisions 80,041 72,437
2.01.06.02 Other Provisions 524,865 573,016
2.01.06.02.03 Provisions for Environmental Liabilities and Decommissioning 18,398 26,299
2.01.06.02.04 Provisions for Customers 145,105 140,093
2.01.06.02.05 Provisions for Suppliers 361,362 406,624
2.02 Noncurrent Liabilities 20,951,983 21,724,802
2.02.01 Borrowings and Financing 13,211,481 14,224,175
2.02.01.01 Borrowings and Financing 8,530,016 9,136,552
2.02.01.01.01 In Local Currency 5,762,150 5,948,334
2.02.01.01.02 In Foreign Currency 2,767,866 3,188,218
2.02.01.02 Debentures 4,243,085 4,678,427 
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Parent Company’s Financial Statements / Statement of FinancialPosition – Liabilities

(R$ thousand)

Code Description Current Quarter Previous Year
6/30/2021 12/31/2020
2.02.01.03 Financing through Lease 438,380 409,196
2.02.02 Other Liabilities 6,900,604 6,687,818
2.02.02.02 Others 6,900,604 6,687,818
2.02.02.02.04 Pension Plan Obligations 2,858,777 2,868,594
2.02.02.02.05 Program Contract Commitments 42,029 68,939
2.02.02.02.06 Public-Private Partnership (PPP) 2,966,051 3,045,066
2.02.02.02.07 Indemnities 26,581 27,765
2.02.02.02.08 Labor Liabilities 1,806 1,007
2.02.02.02.09 Deferred Cofins/Pasep 152,600 149,444
2.02.02.02.20 Other Liabilities 852,760 527,003
2.02.03 Deferred Taxes 291,750 320,716
2.02.03.01 Deferred Income Tax and Social Contribution 291,750 320,716
2.02.03.01.01 Deferred Income Tax and Social Contribution 291,750 320,716
2.02.04 Provisions 548,148 492,093
2.02.04.01 Tax, Social Security, Labor and Civil Provisions 278,679 255,030
2.02.04.01.01 Tax Provisions 27,269 30,987
2.02.04.01.02 Social Security and Labor Provisions 244,974 212,902
2.02.04.01.04 Civil Provisions 6,436 11,141
2.02.04.02 Other Provisions 269,469 237,063
2.02.04.02.03 Provisions for Environmental Liabilities and Decommissioning 262,897 223,252
2.02.04.02.04 Provisions for Customers 5,975 10,059
2.02.04.02.05 Provisions for Suppliers 597 3,752
2.03 Equity 24,037,238 22,793,704
2.03.01 Paid-Up Capital 15,000,000 15,000,000
2.03.04 Profit Reserves 8,168,330 8,194,706
2.03.04.01 Legal Reserve 1,417,072 1,417,072
2.03.04.08 Additional Dividend Proposed 0 26,376
2.03.04.10 Reserve for Investments 6,751,258 6,751,258
2.03.05 Retained Earnings/Accumulated Losses 1,269,910 0
2.03.06 Equity Valuation Adjustments -401,002 -401,002 
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Parent Company’s Financial Statements / Income Statement

(R$ thousand)

Code Description YTD Current Same Quarter YTD Previous
Current Quarter Year Previous Year Year
4/01/2021 to 6/30/2021 1/01/2021 to 6/30/2021 4/01/2020 to 6/30/2020 1/01/2020 to 6/30/2020
3.01 Revenue from Sales and/or Services 4,595,919 9,273,336 4,432,546 8,474,896
3.02 Cost of Sales and/or Services -3,063,427 -6,111,470 -2,818,900 -5,240,912
3.02.01 Cost of Sales and/or Services -2,063,521 -4,111,266 -1,822,224 -3,735,471
3.02.02 Construction Costs -999,906 -2,000,204 -996,676 -1,505,441
3.03 Gross Profit 1,532,492 3,161,866 1,613,646 3,233,984
3.04 Operating Income/Expenses -633,274 -1,157,663 -421,087 -1,038,397
3.04.01 Selling Expenses -343,762 -659,607 -308,700 -648,159
3.04.01.01 Selling Expenses -199,661 -394,455 -191,523 -373,493
3.04.01.02 Allowance for Doubtful Accounts -144,101 -265,152 -117,177 -274,666
3.04.02 General and Administrative Expenses -292,774 -520,049 -224,976 -509,155
3.04.04 Other Operating Income 11,954 19,750 30,616 40,655
3.04.04.01 Other Operating Income 15,734 27,935 33,803 44,859
3.04.04.02 Cofins and Pasep -3,780 -8,185 -3,187 -4,204
3.04.05 Other Operating Expenses -12,853 -9,972 79,068 71,782
3.04.06 Equity Pickup 4,161 12,215 2,905 6,480
3.05 Income before Financial Result and Taxes 899,218 2,004,203 1,192,559 2,195,587
3.06 Financial Result 248,813 -105,557 -675,468 -2,655,753
3.06.01 Financial Income 93,551 205,009 69,568 169,724
3.06.01.01 Financial Income 99,009 215,434 72,763 176,572
3.06.01.02 Exchange Gains -854 -407 404 1,628
3.06.01.03 Cofins and Pasep -4,604 -10,018 -3,599 -8,476
3.06.02 Financial Expenses 155,262 -310,566 -745,036 -2,825,477
3.06.02.01 Financial Expenses -287,054 -615,303 -242,998 -526,903
3.06.02.02 Exchange Losses 442,316 304,737 -502,038 -2,298,574
3.07 Earnings before Income Taxes 1,148,031 1,898,646 517,091 -460,166
3.08 Income Tax and Social Contribution -374,979 -628,736 -138,931 180,380
3.08.01 Current -374,219 -657,702 -107,351 125,373
3.08.02 Deferred -760 28,966 -31,580 55,007 
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Parent Company’s Financial Statements / Income Statement

(R$ thousand)

Code Description YTD Current Same Quarter YTD Previous
Current Quarter Year Previous Year Year
4/01/2021 to 6/30/2021 1/01/2021 to 6/30/2021 4/01/2020 to 6/30/2020 1/01/2020 to 6/30/2020
3.09 Net Result from Continued Operations 773,052 1,269,910 378,160 -279,786
3.11 Profit/Loss for the Period 773,052 1,269,910 378,160 -279,786
3.99 Earnings per Share - (Reais/Share)
3.99.01 Basic Earnings per Share
3.99.01.01 Common 1.13100 1.85793 0.55326 -0.40934
3.99.02 Diluted Earnings per Share
3.99.02.01 Common 1.13100 1.85793 0.55326 -0.40934 
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Parent Company’s Financial Statements / Statement of ComprehensiveIncome

(R$ thousand)

Code Description Current Quarter YTD Current Same Quarter YTD Previous
4/01/2021 to 6/30/2021 Year 1/01/2021 to Previous Year Year
6/30/2021 4/01/2020 to 6/30/2020 1/01/2020 to 6/30/2020
4.01 Net Income (Loss) for the Period 773,052 1,269,910 378,160 -279,786
4.03 Comprehensive Income (Loss) for the Period 773,052 1,269,910 378,160 -279,786 
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Parent Company’s Financial Statements / Statement of Cash Flow- Indirect Method

(R$ thousand)

Code Description YTD Current<br><br> <br>Year YTD Previous<br><br> <br>Year
1/01/2021 to 6/30/2021 1/01/2020 to 6/30/2020
6.01 Net Cash from Operating Activities 1,973,029 2,874,261
6.01.01 Cash from Operations 3,618,620 3,186,034
6.01.01.01 Profit before Income Tax and Social Contribution 1,898,646 -460,166
6.01.01.02 Provision and Inflation Adjustments on Provisions 111,294 122,039
6.01.01.04 Finance Charges from Customers -175,324 -438,406
6.01.01.05 Residual Value of Property, Plant and Equipment, Intangible Assets and Investment Properties Written-off 4,961 5,757
6.01.01.06 Depreciation and Amortization 1,095,106 982,115
6.01.01.07 Interest on Borrowings and Financing Payable 290,429 285,680
6.01.01.08 Monetary and Exchange Variations on Borrowings and Financing -209,361 2,307,083
6.01.01.09 Interest and Monetary Variation Losses 18,805 13,118
6.01.01.10 Interest and Monetary Variation Gains -51,190 -12,335
6.01.01.11 Allowance for Doubtful Accounts 265,152 274,666
6.01.01.12 Provision for Consent Decree (TAC) and Knowledge Retention Program (PRC) 3,214 1,744
6.01.01.13 Equity Pickup -12,215 -6,480
6.01.01.14 Interest and Inflation Adjustment PPP 225,623 200,749
6.01.01.15 Others Adjustments -19,510 -3,263
6.01.01.16 Transfer of Funds to the São Paulo Municipal Government 128,265 114,473
6.01.01.17 Construction Margin over Intangible Assets Resulting from Concession Agreements -46,005 -35,579
6.01.01.18 Pension Plan Obligations 90,730 115,613
6.01.01.19 Agreement with the Municipality of Mauá 0 -280,774
6.01.02 Changes in Assets and Liabilities -658,909 56,283
6.01.02.01 Trade Receivables -167,184 314,234
6.01.02.02 Related-Party Balances and Transactions 25,505 50,217
6.01.02.03 Inventories -4,018 -14,291
6.01.02.04 Recoverable Taxes -678,601 -29,017
6.01.02.05 Other Assets 4,763 -76,931
6.01.02.06 Escrow Deposits 30,732 13,164
6.01.02.08 Trade Payables -242,244 -169,547
6.01.02.09 Salaries, Payroll Charges and Social Contributions 3,974 -14,231
6.01.02.10 Pension Plan Obligations -100,547 -103,447
6.01.02.11 Taxes and Contributions Payable 665,664 249,381
6.01.02.12 Services Payable -85,480 -8,412
6.01.02.13 Other Liabilities -24,973 -1,980
6.01.02.14 Provisions -89,656 -153,071
6.01.02.15 Deferred Cofins/Pasep 3,156 214
6.01.03 Others -986,682 -368,056
6.01.03.01 Interest Paid -312,268 -368,056
6.01.03.02 Income Tax and Social Contribution Paid -674,414 0
6.02 Net Cash from Investing Activities -746,901 -1,278,629
6.02.01 Acquisition of Contract Asset and Intangible Assets -1,472,725 -1,255,386
6.02.02 Acquisition of Property, Plant and Equipment -12,873 -20,666
6.02.04 Restricted Cash 7,792 -2,577 
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Parent Company’s Financial Statements / Statement of Cash Flow- Indirect Method

(R$ thousand)

Code Description YTD Current<br><br> <br>Year YTD Previous<br><br> <br>Year
1/01/2021 to 6/30/2021 1/01/2020 to 6/30/2020
6.02.07 Financial Investments 730,905 0
6.03 Net Cash from Financing Activities -1,372,597 -482,437
6.03.01 Funding 141,922 1,718,412
6.03.02 Amortization -915,804 -968,179
6.03.03 Payment of Interest on Capital -254,218 -890,051
6.03.04 Public-Private Partnership (PPP) -288,603 -229,574
6.03.05 Program Contract Commitments -55,894 -113,045
6.05 Increase (Decrease) in Cash and Cash Equivalents -146,469 1,113,195
6.05.01 Opening Balance of Cash and Cash Equivalents 396,401 2,253,210
6.05.02 Closing Balance of Cash and Cash Equivalents 249,932 3,366,405 
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Parent Company’s Financial Statements / Statement of Changesin Equity / 1/01/2021 to 6/30/2021

(R$ thousand)

Code Description Paid-Up Capital Capital Reserves, Options Granted and Treasury Shares Profit Reserves Retained Earnings/Accumulated<br><br> <br>Losses Other Comprehensive<br><br> <br>Income Equity
5.01 Opening Balances 15,000,000 0 8,194,706 0 -401,002 22,793,704
5.03 Restated Opening Balances 15,000,000 0 8,194,706 0 -401,002 22,793,704
5.04 Capital Transactions with Partners 0 0 -26,376 0 0 -26,376
5.04.08 Additional Dividends Approved 0 0 -26,376 0 0 -26,376
5.05 Total Comprehensive Income 0 0 0 1,269,910 0 1,269,910
5.05.01 Net Income (Loss) for the Period 0 0 0 1,269,910 0 1,269,910
5.07 Closing Balances 15,000,000 0 8,168,330 1,269,910 -401,002 24,037,238 
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Parent Company’s Financial Statements / Statement of Changesin Equity / 1/01/2020 to 6/30/2020

(R$ thousand)

Code Description Paid-Up Capital Capital Reserves, Options Granted and Treasury Shares Profit Reserves Retained Earnings/Accumulated<br><br> <br>Losses Other Comprehensive<br><br> <br>Income Equity
5.01 Opening Balances 15,000,000 0 7,547,954 0 -912,171 21,635,783
5.03 Restated Opening Balances 15,000,000 0 7,547,954 0 -912,171 21,635,783
5.04 Capital Transactions with Partners 0 0 -80,973 0 0 -80,973
5.04.08 Additional Dividends Approved 0 0 -80,973 0 0 -80,973
5.05 Total Comprehensive Income 0 0 0 -279,786 0 -279,786
5.05.01 Net Income (Loss) for the Period 0 0 0 -279,786 0 -279,786
5.07 Closing Balances 15,000,000 0 7,466,981 -279,786 -912,171 21,275,024 
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Parent Company’s Financial Statements / Statement of Added Value

(R$ thousand)

Code Description YTD Current<br><br> <br>Year YTD Previous<br><br> <br>Year
1/01/2021 to 6/30/2021 1/01/2020 to 6/30/2020
7.01 Revenue 9,627,425 8,777,703
7.01.01 Goods, Products and Services Sold 7,818,433 7,466,490
7.01.02 Other Revenue 27,935 44,859
7.01.03 Revenue from Construction of Own Assets 2,046,209 1,541,020
7.01.04 Allowance for/Reversal of Doubtful Accounts -265,152 -274,666
7.02 Inputs Acquired from Third Parties -4,335,152 -3,551,164
7.02.01 Costs of Goods, Products and Services Sold -3,742,958 -3,083,956
7.02.02 Materials, Electricity, Outsourced Services and Others -582,222 -538,990
7.02.04 Others -9,972 71,782
7.03 Gross Value Added 5,292,273 5,226,539
7.04 Retentions -1,095,106 -982,115
7.04.01 Depreciation, Amortization and Depletion -1,095,106 -982,115
7.05 Net Added Value Produced 4,197,167 4,244,424
7.06 Wealth Received in Transfer 227,242 184,680
7.06.01 Equity Pickup 12,215 6,480
7.06.02 Financial Income 215,027 178,200
7.07 Total Value Added to Distribute 4,424,409 4,429,104
7.08 Value Added Distribution 4,424,409 4,429,104
7.08.01 Personnel 1,167,600 1,211,122
7.08.01.01 Salaries and Wages 832,169 858,114
7.08.01.02 Benefits 272,709 288,725
7.08.01.03 Government Severance Indemnity Fund for Employees (FGTS) 62,722 64,283
7.08.02 Taxes and Contributions 1,543,193 664,202
7.08.02.01 Federal 1,425,880 564,074
7.08.02.02 State 85,725 73,562
7.08.02.03 Municipal 31,588 26,566
7.08.03 Value Distributed to Providers of Capital 443,706 2,833,566
7.08.03.01 Interest 432,564 2,825,476
7.08.03.02 Rental 11,142 8,090
7.08.04 Value Distributed to Shareholders 1,269,910 -279,786
7.08.04.03 Retained Earnings/Accumulated Losses for the Period 1,269,910 -279,786 
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The Company recorded a net income of R$ 773.1 million in 2Q21, compared to the R$ 378.2 million reported in 2Q20, an increase of R$ 394.9 million (+104.4%).

Adjusted EBITDA totaled R$ 1,453.2 million, a decrease of R$ 128.2 million from the R$ 1,581.4 million reported in 2Q20 (-8.1%).

The main factors were:

(a) Operations in the municipality of Mauá

In June 2020, the Company executed an agreement with the municipality of Mauá, starting operations in November. The impact of the agreement on 2Q20 was R$ 195.0 million in the revenue from sanitation services and a reversal of R$ 85.9 million in expenses, resulting in a negative variation of R$ 256.7 million year-over-year in 2Q21, as shown in the following table:

Impacts of Mauá (R million) Var.
2Q20 R$
Revenue - Wholesale(1) 195.0 (195.0)
Revenue - Retail(2) - 24.2
(=) Total revenue from sanitation services 195.0 (170.8)
Cofins and Pasep (13.3) 11.3
(=) Net Revenue 181.7 (159.5)
Costs and expenses (3) 85.9 (97.2)
Total Costs and Expenses 85.9 (97.2)
(=) Net effect 267.6 (256.7)

All values are in US Dollars.

(1) Non-recurring revenue in 2Q20 from the formalization of the agreement.
(2) Revenue referring to billing from retail operations.
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(3) Costs and expenses related to the operation(excludes indirect costs and expenses). Non-recurring reversal of estimated losses with asset compensation in 2Q20, due to the formalizationof the agreement.
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(b) Effects of economic instability worsened by the COVID-19 pandemic
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The economic instability, worsened by the COVID-19 pandemic, led to a strong appreciation of the U.S. dollar and Yen against the Brazilian real in 2Q20, significantly affecting the financial expenses on international borrowings and financing. In 2Q21, the revenue with exchange variations on borrowings and financing totaled R$ 442.3 million, resulting in a positive variation of R$ 944.3 million over the R$ 502.0 million expense reported in 2Q20.

In addition, the delinquency level was higher in 2Q21, increasing the allowance for doubtful accounts by R$ 26.9 million.

(c) Reduction of foreign currency exposure

On April 28, 2020, the Company completed the debt conversion with the Inter-American Development Bank (IDB), from US$ 494.6 million to R$ 2,810.9 million, to reduce foreign currency exposure.

On September 30, 2020, the early amortization of the Eurobonds maturing in December 2020, of R$ 1,910.1 million

(US$ 350.0 million) was carried out.

The dollar-denominated debt fell by 68.9%, from US$ 515.4 million on June 30, 2020 to US$ 160.4 million on June 30, 2021, mainly as a result of the above-mentioned actions.

Debt denominated in foreign currency accounted for 18.8% in June 2021 (34.4% in June 2020).

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| --- | --- | | (d) | Agreement with Companhia de Saneamento de Alagoas (CASAL) in 2Q20 | | --- | --- |

In 2Q20, the Company executed an agreement with CASAL. The effects of the agreement had a positive impact of

R$ 33.1 million on the 2Q20 result.

2. Financial Highlights

R$ million

Var. Var.
2Q21 2Q20 R$ % 1H21 1H20 R$ %
Revenue from sanitation services 3,881.2 3,662.6 218.6 6.0 7,818.4 7,466.5 351.9 4.7
Construction revenue 1,022.9 1,019.6 3.3 0.3 2,046.2 1,541.0 505.2 32.8
COFINS and PASEP/TRCF taxes (308.2) (249.7) (58.5) 23.4 (591.3) (532.6) (58.7) 11.0
(=) Net operating revenue 4,595.9 4,432.5 163.4 3.7 9,273.3 8,474.9 798.4 9.4
Costs and expenses (2,700.1) (2,355.9) (344.2) 14.6 (5,290.9) (4,892.8) (398.1) 8.1
Construction costs (999.9) (996.7) (3.2) 0.3 (2,000.2) (1,505.4) (494.8) 32.9
Equity pickup 4.2 3.0 1.2 40.0 12.2 6.5 5.7 87.7
Other operating revenues (expenses), net (0.9) 109.7 (110.6) (100.8) 9.8 112.4 (102.6) (91.3)
(=) Earnings before financial result, income tax and social contribution 899.2 1,192.6 (293.4) (24.6) 2,004.2 2,195.6 (191.4) (8.7)
Financial result 248.8 (675.5) 924.3 (136.8) (105.6) (2,655.8) 2,550.2 (96.0)
(=) Earnings before income tax and social contribution 1,148.0 517.1 630.9 122.0 1,898.6 (460.2) 2,358.8 (512.6)
Income tax and social contribution (374.9) (138.9) (236.0) 169.9 (628.7) 180.4 (809.1) (448.5)
(=) Net income/(loss) 773.1 378.2 394.9 104.4 1,269.9 (279.8) 1,549.7 (553.9)
Earnings (loss) per share (R$)* 1.13 0.55 1.86 (0.41)

(*) Number of shares = 683,509,869

Adjusted EBITDA Reconciliation (Non-accounting measures)

R$ million

Var. Var.
2Q21 2Q20 R$ % 1H21 1H20 R$ %
Net income (loss) 773.1 378.2 394.9 104.4 1,269.9 (279.8) 1,549.7 (553.9)
Income tax and social contribution 374.9 138.9 236.0 169.9 628.7 (180.4) 809.1 (448.5)
Financial result (248.8) 675.5 (924.3) (136.8) 105.6 2,655.8 (2,550.2) (96.0)
Other operating revenues (expenses), net 0.9 (109.7) 110.6 (100.8) (9.8) (112.4) 102.6 (91.3)
(=) Adjusted EBIT* 900.1 1,082.9 (182.8) (16.9) 1,994.4 2,083.2 (88.8) (4.3)
Depreciation and amortization 553.1 498.5 54.6 11.0 1,095.0 982.0 113.0 11.5
(=) Adjusted EBITDA** 1,453.2 1,581.4 (128.2) (8.1) 3,089.4 3,065.2 24.2 0.8
(%) Adjusted EBITDA margin 31.6 35.7 33.3 36.2

* Adjusted EBIT corresponds to net incomebefore: (i) other operating revenues (expenses), net; (ii) financial result; and (iii) income tax and social contribution.

** Adjusted EBITDA corresponds to net incomebefore: (i) other operating revenues (expenses), net; (ii) financial result; (iii) income tax and social contribution; and (iv) depreciationand amortization expenses.

The net operating revenue, which considers construction revenue, totaled R$ 4,595.9 million in 2Q21, up by 3.7% over 2Q20.

Costs and expenses, which consider construction costs, totaled R$ 3,700.0 million, up by 10.4% over 2Q20.

Adjusted EBIT, of R$ 900.1 million, fell by 16.9% from the R$ 1,082.9 million recorded in 2Q20.

Adjusted EBITDA, of R$ 1,453.2 million, fell by 8.1% from the R$ 1,581.4 million recorded in 2Q20 (R$ 6,446.1 million in the last 12 months).

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Adjusted EBITDA margin reached 31.6% in 2Q21, compared to 35.7% in 2Q20 (34.7% in the last 12 months).

Excluding the effects of revenue and construction costs, the adjusted EBITDA margin reached 40.0% in 2Q21, compared to 45.7% in 2Q20 (44.2% in the last 12 months).

The Company recorded a net income of R$ 773.1 million in 2Q21, compared to R$ 378.2 million in 2Q20.

3. Revenue from sanitation services

The gross operating revenue from sanitation services, which excludes construction revenue, totaled R$ 3,881.2 million in 2Q21, an increase of R$ 218.6 million, or 6.0%, over the R$ 3,662.6 million recorded in 2Q20.

The main factors that led to this increase were:

· Average tariff adjustment of 7.0% since May 2021, with an impact of<br>approximately 1.7%;
· Tariff adjustment of 3.4% since August 2020;
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· Increase of 1.6% in total billed volume; and
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· Increase of R$ 62.8 million in revenue<br>from customers in the “Residential Social” and “Residential Favela” categories, due to the exemption from payment<br>to these categories in 2Q20.
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The above-mentioned effects were mitigated by the R$ 170.8 million decrease from the non-recurring effects of the formalization of the agreement with the municipality of Mauá on the 2Q20 revenue.

4. Construction revenue

The construction revenue increased R$ 3.3 million in 2Q21, or 0.3%, as investments remained in line with those of 2Q20.

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| --- | --- | | 5. | Billed volume | | --- | --- |

The following tables show the water and sewage billed volume, on a quarter-on-quarter and year-over-year basis, per customer category and region. The Mauá volumes and the exemption of the “Residential Social” and “Residential Favela” categories are presented individually.

WATER AND SEWAGE BILLED VOLUME^(1)^PER CUSTOMER CATEGORY - million m^3^
Water Sewage Water + Sewage
Category 2Q21 2Q20 Var. % 2Q21 2Q20 Var. % 2Q21 2Q20 Var. %
Residential 463.5 432.9 7.1 406.5 378.6 7.4 870.0 811.5 7.2
Commercial 39.7 37.5 5.9 38.0 35.2 8.0 77.7 72.7 6.9
Industrial 8.4 7.0 20.0 9.3 8.3 12.0 17.7 15.3 15.7
Public 8.3 8.9 (6.7) 7.4 7.9 (6.3) 15.7 16.8 (6.5)
Total retail 519.9 486.3 6.9 461.2 430.0 7.3 981.1 916.3 7.1
Wholesale (3) 12.5 12.5 - 3.7 3.5 5.7 16.2 16.0 1.3
Subtotal 532.4 498.8 6.7 464.9 433.5 7.2 997.3 932.3 7.0
Mauá (4) 5.4 9.2 (41.3) - - - 5.4 9.2 (41.3)
Residential Social/Favela (5) - 25.9 - - 19.1 - - 45.0 -
Total 537.8 533.9 0.7 464.9 452.6 2.7 1,002.7 986.5 1.6
Water Sewage Water + Sewage
Category 1H21 1H20 Var. % 1H21 1H20 Var. % 1H21 1H20 Var. %
Residential 936.6 884.1 5.9 817.5 769.3 6.3 1,754.1 1,653.4 6.1
Commercial 81.0 82.3 (1.6) 77.0 78.8 (2.3) 158.0 161.1 (1.9)
Industrial 16.7 15.2 9.9 17.9 18.3 (2.2) 34.6 33.5 3.3
Public 17.1 19.4 (11.9) 15.1 17.3 (12.7) 32.2 36.7 (12.3)
Total retail 1,051.4 1,001.0 5.0 927.5 883.7 5.0 1,978.9 1,884.7 5.0
Wholesale (3) 25.7 24.7 4.0 7.6 7.4 2.7 33.3 32.1 3.7
Subtotal 1,077.1 1,025.7 5.0 935.1 891.1 4.9 2,012.2 1,916.8 5.0
Mauá (4) 11.1 18.1 (38.7) - - - 11.1 18.1 (38.7)
Residential Social/Favela (5) - 28.5 - - 21.0 - - 49.5
Total 1,088.2 1,072.3 1.5 935.1 912.1 2.5 2,023.3 1,984.4 2.0
WATER AND SEWAGE BILLED VOLUME^(1)^ PER REGION - million m^3^
Water Sewage Water + Sewage
Region 2Q21 2Q20 Var. % 2Q21 2Q20 Var. % 2Q21 2Q20 Var. %
Metropolitan 357.5 320.4 11.6 318.5 284.7 11.9 676.0 605.1 11.7
Regional (2) 162.4 165.9 (2.1) 142.7 145.3 (1.8) 305.1 311.2 (2.0)
Total retail 519.9 486.3 6.9 461.2 430.0 7.3 981.1 916.3 7.1
Wholesale (3) 12.5 12.5 - 3.7 3.5 5.7 16.2 16.0 1.3
Subtotal 532.4 498.8 6.7 464.9 433.5 7.2 997.3 932.3 7.0
Mauá (4) 5.4 9.2 (41.3) - - - 5.4 9.2 (41.3)
Residential Social/Favela (5) - 25.9 - - 19.1 - - 45.0 -
Total 537.8 533.9 0.7 464.9 452.6 2.7 1,002.7 986.5 1.6
Water Sewage Water + Sewage
Region 1H21 1H20 Var. % 1H21 1H20 Var. % 1H21 1H20 Var. %
Metropolitan 711.3 663.1 7.3 629.8 587.6 7.2 1,341.1 1,250.7 7.2
Regional (2) 340.1 337.9 0.7 297.7 296.1 0.5 637.8 634.0 0.6
Total retail 1,051.4 1,001.0 5.0 927.5 883.7 5.0 1,978.9 1,884.7 5.0
Wholesale (3) 25.7 24.7 4.0 7.6 7.4 2.7 33.3 32.1 3.7
Subtotal 1,077.1 1,025.7 5.0 935.1 891.1 4.9 2,012.2 1,916.8 5.0
Mauá (4) 11.1 18.1 (38.7) - - - 11.1 18.1 (38.7)
Residential Social/Favela (5) - 28.5 - - 21.0 - - 49.5 -
Total 1,088.2 1,072.3 1.5 935.1 912.1 2.5 2,023.3 1,984.4 2.0
(1) Not reviewed by external auditors
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(2) Including coastal and interior regions
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(3) Wholesale includes volumes of reuse water and non-domestic sewage
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(4) Billed volume in the retail segment in 2Q21/1H21 and the wholesalesegment in 2Q20/1H20
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(5) Volume exempt of payment in 2Q20/1H20
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| --- | --- | | 6. | Costs, administrative & selling expenses and construction costs | | --- | --- |

Costs, administrative and selling expenses and construction costs increased R$ 347.4 million in 2Q21 (+10.4%). Excluding construction costs, the increase was R$ 344.2 million (+14.6%). Costs, administrative and selling expenses and construction costs as a percentage of net revenue were 80.5% in 2Q21, compared to 75.6% in 2Q20.

R$ million

Var. Var.
2Q21 2Q20 R$ % 1H21 1H20 R$ %
Salaries and payroll charges and Pension plan obligations 678.3 658.3 20.0 3.0 1,299.8 1,336.1 (36.3) (2.7)
General supplies 78.0 57.5 20.5 35.7 146.3 123.2 23.1 18.8
Treatment supplies 82.3 81.2 1.1 1.4 181.3 175.0 6.3 3.6
Services 480.2 442.0 38.2 8.6 984.1 866.1 118.0 13.6
Electricity 340.7 278.5 62.2 22.3 699.6 605.0 94.6 15.6
General expenses 325.7 204.5 121.2 59.3 584.6 496.9 87.7 17.6
Tax expenses 17.7 18.2 (0.5) (2.7) 35.0 33.7 1.3 3.9
Subtotal 2,002.9 1,740.2 262.7 15.1 3,930.7 3,636.0 294.7 8.1
Depreciation and amortization 553.1 498.5 54.6 11.0 1,095.0 982.0 113.0 11.5
Allowance for doubtful accounts 144.1 117.2 26.9 23.0 265.3 274.8 (9.5) (3.5)
Subtotal 697.2 615.7 81.5 13.2 1,360.3 1,256.8 103.5 8.2
Costs, administrative and selling expenses 2,700.1 2,355.9 344.2 14.6 5,291.0 4,892.8 398.2 8.1
Construction costs 999.9 996.7 3.2 0.3 2,000.2 1,505.4 494.8 32.9
Costs, adm & selling expenses and construction costs 3,700.0 3,352.6 347.4 10.4 7,291.2 6,398.2 893.0 14.0
% of net revenue 80.5 75.6 78.6 75.5

Salaries and payroll charges and Pension plan obligations

The R$ 20.0 million increase (+3.0%) recorded in 2Q21 was due to:

· R$ 16.9 million<br>in healthcare expenses, mainly because of lower demand for medical services in 2Q20, because of the social distancing measures adopted<br>as a way to control the COVID- 19 pandemic; and
· R$ 11.5 million,<br>mainly from the 7.8% salary adjustment in May 2021, partially offset by the 8.8% decline in the number of employees dismissed from the<br>Knowledge Retention Program.
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The increases above were partially offset by the R$ 12.7 million decrease in pension plans, due to changes in the actuarial assumptions.

General supplies

The R$ 20.5 million increase (+35.7%) mainly resulted from: (i) R$ 11.1 million with maintenance of water and sewage connections and networks; and (ii) R$ 4.2 million with maintenance of water and sewage systems.

Services

Service expenses totaled R$ 480.2 million, an increase of R$ 38.2 million (+8.6%) over the R$ 442.0 million recorded in 2Q20. The main increases were:

· R$ 13.7 million in technical services, especially computer technical<br>support;
· R$ 12.4 million with maintenance of water and sewage systems;
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· R$ 6.4 million with customer services; and
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· R$ 4.8 million with employees assigned by the municipalities of Mauá<br>and Guarulhos.
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Electricity

Electricity expenses totaled R$ 340.7 million in 2Q21, an increase of R$ 62.2 million (+22.3%) over the R$ 278.5 million recorded in 2Q20. The Free Market Tariffs (ACL) accounted for 51.0% of total expenses in 2Q21 (48.9% in 2Q20) while the Regulated Market Tariffs (ACR) accounted for 49.0% (51.1% in 2Q20).

The main factors that contributed to this variation were:

· Average decrease of 2.2% in ACL prices<br>(includes Grid Market Tariffs - TUSD), with a 15.2% rise in consumption; and
· Average increase of 13.4% in ACR tariffs, with a 5.3% rise in consumption.
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General expenses

General expenses totaled R$ 325.7 million in 2Q21, an increase of R$ 121.2 million (+59.3%) over the R$ 204.5 million recorded in 2Q20, mainly due to:

· Higher expenses with lawsuits in 2Q21, of R$ 55.7 million;
· Higher provision for transfer to the<br>Municipal Funds for Environmental Sanitation and Infrastructure, of R$ 26.0 million, resulting from an increase in revenue and in the<br>number of municipalities with future transfers; and
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· Non-recurring reversal of provision,<br>of R$ 12.5 million in 2Q20, from the execution of the agreement with CASAL.
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Depreciation and amortization

The R$ 54.6 million increase (+11.0%) was due to beginning of operations of intangible assets, totaling R$ 4.4 billion.

Allowance for doubtful accounts

Increase of R$ 26.9 million (+23.0%), due to the higher provisioning resulting from the increase in the level of delinquency in 2Q21.

Other operating income (expenses), net

Other net operating income and expenses fell by R$ 110.6 million, due to the following 2Q20 non-recurring effects: (i) reversal of estimated losses with indemnification of assets in the municipality of Mauá, of R$ 85.9 million; and (ii) revenue of R$ 20.6 million, due to the execution of an agreement with – CASAL.

7. Financial result

R$ million

Var.
2Q21 2Q20 R$ %
Financial expenses, net of income (134.9) (173.0) 38.1 (22.0)
Net monetary and exchange variation 383.7 (502.5) 886.2 (176.4)
Financial Result 248.8 (675.5) 924.3 (136.8) 
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Financial expenses, net of income

R$ million

Var.
2Q21 2Q20 R$ %

Financial expenses

Interest and charges on domestic borrowings and financing (106.6) (89.3) (17.3) 19.4
Interest and charges on international borrowings and financing (10.4) (35.2) 24.8 (70.5)
Other financial expenses (74.8) (94.3) 19.5 (20.7)
Total financial expenses (191.8) (218.8) 27.0 (12.3)
Financial income 56.9 45.8 11.1 24.2
Financial expenses, net of income (134.9) (173.0) 38.1 (22.0)

The main impacts in “financial expenses, net of income” result from:

· Increase of R$<br>17.3 million in interest and charges on domestic borrowings and financing, mainly due to a R$ 15.4 million increase in interest on debentures,<br>especially the proceeds of the 26th and 27th issues;
· Decrease of R$ 24.8<br>million in interest and charges on international borrowings and financing, mostly due to the following events that occurred in 2020: (i)<br>amortization of Eurobonds, leading to a decrease of R$ 26.8 million; and (ii) debt exchange with IDB, from US$ 494.6 million to R$ 2,810.9<br>million, with an effect of R$ 4.4 million; and
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· Decrease of R$<br>19.5 million in other financial expenses, mostly due to lower recognition of interest on lawsuits, of R$ 8.5 million, and on receivables<br>from the municipality of São Paulo, of R$ 6.1 million.
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Monetary and exchange variation, net

R$ million

Var.
2Q21 2Q20 R$ %

Monetary and exchange variation on liabilities

Monetary variation on borrowings and financing (43.0) 10.1 (53.1) (525.7)
Exchange variation on borrowings and financing 442.3 (502.0) 944.3 (188.1)
Other monetary variations (52.2) (34.3) (17.9) 52.2
Total monetary and exchange variations on liabilities 347.1 (526.2) 873.3 (166.0)
Monetary and exchange variation on assets 36.6 23.7 12.9 54.4
Monetary and exchange variation, net 383.7 (502.5) 886.2 (176.4)

The effect of net monetary and exchange variations totaled R$ 886.2 million in 2Q21, lower than the amounts reported in 2Q20, especially due to:

· R$ 53.1 million<br>increase in the monetary variation on borrowings and financing, mainly due to the proceeds of the 26th debenture issue and the increase<br>in the IPCA;
· Decrease of R$<br>944.3 million in exchange variations on borrowings and financing, due to: (i) depreciation of the U.S. dollar and Yen against the Brazilian<br>real in 2Q21 (12.2% and 12.6%, respectively), compared to the 2Q20 appreciation (5.3% and 5.1%, respectively); (ii) debt exchange with<br>IDB in 2020, from US$ 494.6 million to R$ 2,810.9 million; and (iii) amortization of Eurobonds in 2020, of R$ 1,910.1 million (US$ 350.0<br>million);
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· Increase of R$<br>17.9 million in other monetary variations, due to: (i) higher monetary variations on lawsuits, of R$ 10.9 million; and (ii) higher monetary<br>variation
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on the agreement with Empresa Metropolitana de Águas e Energia (EMAE), of R$ 4.7 million, resulting from an increase in the IPCA; and

· Increase of R$ 12.9 million in monetary<br>and exchange variation gains, due to higher adjustments on agreements and escrow deposits, caused by the increase in the IPCA.
8. Income tax and social contribution
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In 2Q21, the R$ 236.0 million increase was due to higher taxable income, highlighting:

· Lower expenses with exchange variation, of R$ 944.3 million; and
· Higher net operating revenue, excluding<br>the effect of the construction revenue, of R$ 160.1 million.
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The effects above mentioned were mitigated by higher costs and expenses, especially general expenses (R$ 121.2 million), electricity (R$ 62.2 million), and depreciation and amortization (R$ 54.6 million).

9. Indicators
a) Operating
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Operating Indicators^(*)^ 2Q21 2Q20 %
Water connections ^(1)^ 10,174 10,022 1.5
Sewage connections ^(1)^ 8,608 8,426 2.2
Population directly served - water ^(2)^ 27.6 27.2 1.5
Population directly served - sewage (2) 24.5 24.0 2.1
Number of employees 12,667 13,792 (8.2)

(1) Total connections, active and inactive, in thousand units at the end of the period. Excludes Mauá

^(2)^ In million inhabitants, at the end of the period. Excludes wholesale supply and Mauá

^(*)^ Not reviewed by external auditors

b) Economic
Economic Variables at the Close of the Quarter (*) 2Q21 2Q20
Amplified Consumer Price Index (1) 1.68 (0.43)
National Consumer Price Index (1) 1.95 (0.18)
Consumer Price Index (1) 1.67 (0.15)
Interbank Deposit Certificate (2) 4.15 2.15
U.S. DOLLAR (3) 5.0022 5.4760
YEN (3) 0.04505 0.05081

^(1)^ Accrued in the quarter (%)

^(2)^ Quarterly rate on the last day

^(3)^ Ptax sale rate on the last day

^(*)^ Not reviewed by external auditors

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| --- | --- | | 10. | Borrowings and financing | | --- | --- |

To meet its capital needs, on July 16, 2021, the Company held the 28th debenture issue of R$ 1.2 billion maturing in July 2028, in three series: (i) the first, of R$ 127.8 million, yielding CDI + 1.20% p.a., (ii) the second, of R$ 888.2 million, yielding CDI + 1.44% p.a., and (iii) the third, of R$ 184.0 million, yielding CDI + 1.60% p.a.

(R$thousand)

DEBT PROFILE
INSTITUTION<br><br> <br>****<br><br> <br>Local currency<br><br> <br>Debentures 2021<br><br> <br><br><br> <br><br><br> <br>1,521,488 2022<br><br> <br><br><br> <br><br><br> <br>588,241 2023<br><br> <br><br><br> <br><br><br> <br>687,467 2024<br><br> <br><br><br> <br><br><br> <br>925,030 2025<br><br> <br><br><br> <br><br><br> <br>491,488 2026<br><br> <br><br><br> <br><br><br> <br>383,807 2027 onwards<br><br> <br>****<br><br> <br>1,698,215 TOTAL<br><br> <br><br><br> <br><br><br> <br>6,295,736 % of total<br><br> <br>****<br><br> <br>37
Brazilian Federal Savings Bank 46,860 97,413 91,691 90,804 96,486 102,525 927,417 1,453,196 9
BNDES 89,531 179,062 172,323 165,668 145,490 135,671 397,671 1,285,416 8
IDB 2202 90,674 181,349 181,349 181,349 181,349 181,349 1,618,530 2,615,949 16
IDB INVEST 44,815 89,630 89,630 89,630 89,630 89,630 450,243 943,208 5
****<br><br> <br>Lease (Concession Agreements, Program Contracts and Contract Asset) ****<br><br> <br>34,940 ****<br><br> <br>35,911 ****<br><br> <br>38,411 ****<br><br> <br>41,810 ****<br><br> <br>38,687 ****<br><br> <br>28,290 ****<br><br> <br>196,405 ****<br><br> <br>414,454 ****<br><br> <br>3
Leases (others) 33,385 49,504 23,424 7,630 5,068 1,080 - 120,091 1
Others 2,019 4,038 3,977 1,757 1,610 - - 13,401 0
Interest and other charges 250,959 - - - - - - 250,959 2
Total in local currency 2,114,671 1,225,148 1,288,272 1,503,678 1,049,808 922,352 5,288,481 13,392,410 81
****<br><br> <br>Foreign currency
IDB 25,707 51,413 51,413 51,413 53,921 5,016 77,439 316,322 2
IBRD 15,206 30,412 30,412 30,412 30,412 30,412 225,341 392,607 2
JICA 95,370 190,739 190,739 190,739 190,739 190,739 1,244,756 2,293,821 15
IDB 1983AB - 38,478 37,680 - - - - 76,158 0
Interest and other charges 17,310 - - - - - - 17,310 0
Total in foreign currency 153,593 311,042 310,244 272,564 275,072 226,167 1,547,536 3,096,218 19
TOTAL 2,268,264 1,536,190 1,598,516 1,776,242 1,324,880 1,148,519 6,836,017 16,488,628 100

Covenants

The table below shows the most restrictive clauses in 2Q21:

Covenants
Adjusted EBITDA / Adjusted Financial Expenses Equal to or higher than 2.80
Adjusted Net Debt / Adjusted EBITDA Equal to or lower than 3.80
Total Adjusted Debt / Adjusted EBITDA Lower than 3.65
Other Onerous Debt ^(1)^ / Adjusted EBITDA Equal to or lower than 1.30
Adjusted Current Liquidity Higher than 1.00
EBITDA / Financial Expenses Paid Equal to or higher than 2.35
Net Debt / Adjusted EBITDA Equal to or lower than 3.50
(1) “Other Onerous Debt” correspond<br>to the sum of social security obligations, healthcare plan, installment payment of tax debts and installment payment of debts with the<br>electricity supplier.
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As of June 30, 2021, the Company had met the requirements set forth by its borrowing and financing agreements.

11. CAPEX

Investments totaled R$ 1,189.2 million in 2Q21. Cash disbursed in 2Q21 referring to the Company’s historical investments totaled R$ 826.3 million.

The table below shows investments broken down by water, sewage, and region:

R$ million

Investments Water Sewage Total
Metropolitan Region 305.8 571.3 877.1
Regional Systems 152.6 159.5 312.1
Total 458.4 730.8 1,189.2 
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| --- | --- | | Notes to the Quarterly Information | | | 1 | Operations | | --- | --- |

Companhia de Saneamento Básico do Estado de São Paulo ("SABESP" or the "Company") is a mixed-capital company headquartered in the municipality São Paulo, at Rua Costa Carvalho, 300, CEP 05429-900, controlled by the São Paulo State. The Company is engaged in the provision of basic and environmental sanitation services in the São Paulo State and supplies treated water and sewage services on a wholesale basis.

In addition to providing basic sanitation services in the São Paulo State, SABESP may perform activities in other states and countries and can operate in drainage, urban cleaning, solid waste handling, and energy markets. SABESP aims to be a world reference in the provision of sanitation services, in a sustainable, competitive, and innovative manner, with a focus on customers.

As of June 30, 2021, the Company operated water and sewage services in 375 municipalities of the São Paulo State, 342 have already signed contracts, according to Law 11,445/2007. Most of these municipalities’ operations are based on 30-year concession, program and service contracts, except for the municipalities of Guarulhos, Mauá, Santo André, São Bernardo do Campo, São João da Boa Vista, and Tejupá, which have a 40-year term.

The table below shows a summary of the contractual situation of the municipalities served:

June 30,<br><br> <br>2021 December 31,<br><br> <br>2020 June 30,<br><br> <br>2020
Total municipalities that have already signed contracts 342 342 341
Balance – intangible and contract assets 40,935,847 39,440,568 38,369,843
Percentage of intangible and contract assets 93.82% 93.08% 93.46%
Revenue from sanitation services (excluding construction revenue) 7,439,706 14,406,803 6,913,492
Percentage of revenue from sanitation services (excluding construction revenue) 95.16% 95.05% 92.59%
Municipalities with expired contracts: 8 8 8
Balance – intangible and contract assets 216,167 264,931 214,050
Percentage of intangible and contract assets 0.50% 0.63% 0.52%
Revenue from sanitation services (excluding construction revenue) 19,556 39,088 18,892
Percentage of revenue from sanitation services (excluding construction revenue) 0.25% 0.26% 0.25% 
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| --- | --- | | Notes to the Quarterly Information | | | | June 30,<br><br> <br>2021 | December 31, 2020 | June 30, 2021 | | --- | --- | --- | --- | | Municipalities with concession agreements due by 2030: | 25 | 25 | 26 | | Balance – intangible and contract assets | 1,148,988 | 1,436,529 | 1,184,831 | | Percentage of intangible and contract assets | 2.63% | 3.39% | 2.89% | | Revenue from sanitation services (excluding construction revenue) | 299,480 | 597,483 | 283,603 | | Percentage of revenue from sanitation services (excluding construction revenue) | 3.83% | 3.94% | 3.80% | | Municipality of São Paulo: | | | | | Percentage of intangible and contract assets | 42.71% | 37.94% | 42.30% | | Percentage of revenue from sanitation services (excluding construction revenue) | 44.59% | 44.58% | 43.94% |

The Company's shares have been listed in the Novo Mercado segment of B3 under ticker SBSP3 since April 2002 and on the New York Stock Exchange (NYSE) as American Depositary Receipts (“ADRs”) Level III, under ticker SBS, since May 2002.

Since 2008, the Company has been setting up partnerships with other companies, which resulted in the following companies: Sesamm, Águas de Andradina, Saneaqua Mairinque, Aquapolo Ambiental, Águas de Castilho, Attend Ambiental, and Paulista Geradora de Energia. Although SABESP has no majority interest in the capital stock of these companies, the shareholders’ agreements provide for the power of veto and casting vote in certain issues jointly with associates, indicating the shared control in the management of investees, except for Saneaqua Mairinque, which, as of August 2020, no longer has a shared control.

Economic instability worsened by COVID-19

The global economic instability worsened with the outbreak of a new coronavirus in early 2020, which was considered pandemic by the World Health Organization (WHO). Accordingly, SABESP has been taking several measures to ensure the continuity and quality of the services provided to the population, which have become even more essential. It is worth noting that any interruption in water supply by a basic sanitation company may compromise compliance with WHO’s recommendations for everyone to keep good hygiene habits, such as washing hands correctly and more frequently.

The Company implemented several preventive measures so that its employees are not exposed to situations of risks, such as: (i) employees from the administrative sectors (especially) and those with more than 60 years of age are working under a remote system; (ii) restriction of domestic and international trips; (iii) anticipation of the influenza and pneumonia vaccination campaigns; (iv) closing of all branches that assist the public, concentrating services in the digital channels to protect customers and employees; among others.

Some of the economic and financial consequences arising from the COVID-19 pandemic include the following effects:

(i) high exchange rate volatility;
(ii) recovery of part of the volume billed in the public, commercial, and industrial<br>categories that have higher average tariffs, and application of tariff adjustments in August 2020 and May 2021, leading to an increase<br>in revenues with customers in these categories in an estimated amount of R$ 248.5 million from April to June 2021, and R$ 118.4 million<br>from January to June 2021, when compared to the same periods of 2020;
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| --- | --- | | Notes to the Quarterly Information | | | (iii) | increase in revenues from residential customers in an estimated amount<br>of R$ 208.0 million from April to June 2021, and R$ 415.5 million from January to June 2021, when compared to the same periods of 2020; | | --- | --- | | (iv) | R$ 62.9 million increase in revenues from April to June 2021, and<br>R$ 89.7 million from January to June 2021, when compared to the same periods in 2020, due to the billing of customers in the Residential<br>Social and Residential Favela categories, who were exempt from paying water and sewage tariffs; | | --- | --- | | (v) | increase in delinquency and in the expectation of higher future losses<br>of customers in the private and commercial/industrial categories, leading to a provisioning of estimated losses of R$ 144.1 million<br>from April to June 2021 (R$ 117.2 from April to June 2020) and R$ 265.2 million from January to June 2021 (R$ 274.7 million<br>from January to June 2020); | | --- | --- |

The payment of 50% of the Regulation, Control and Oversight Fee (TRCF), totaling R$ 24.0 million, was postponed from May to December 2020, for settlement in 24 installments beginning January 2021, of which R$ 3,003 was paid from April to June 2021, and R$ 6,006 from January to June 2021.

Management expects that the financial funds raised with the gradual recovery of the economic activities, improved water security from the works carried out, generation of operational cash, and credit lines available for investments, will be sufficient to meet the Company’s commitments and not compromise the necessary investments.

New Legal Sanitation Framework

On July 15, 2020, the Brazilian President sanctioned Federal Law 14,026/2020, known as New Legal Framework for Basic Sanitation. The new law expands competition in the sector by extinguishing program contracts, encourages the region-wise provision of services to promote economies of scale, and provides for strengthening the service regulation.

Additionally, the New Legal Framework imposes performance goals to reach 99% of the population served with drinking water and 90% with sewage collection and treatment by December 31, 2033, encouraging operators to increase efficiency. The new Law also granted the National Water Agency (ANA) with power to edit reference rules to regulate sanitation services, aiming to standardize the operation of the regulatory agencies and minimize regulatory uncertainties, thus creating a more stable and attractive environment for investments in the sector.

Last May 31, Federal Decree 10,710 was published, regulating article 10-B of Law 11,445/2007, establishing the methodology for proving the economic and financial capacity of public providers of drinking water supply and sewage services, to make it possible the compliance with the universalization goals by 2033. Said regulation determines economic and financial evaluation metrics on service providers to prove their ability to make investments within the intended deadlines, as well as several conditions for current contracts to be considered regular. Any adjustments to them should be made by March 31, 2022, in line with paragraph 1 of article 11-B of the new law.

In this new context, the Company understands it is important to highlight that: i) it has contracts that already include goals that meet or even anticipate those defined by the New Legal Framework; ii) it has access to public capital and the private capital market due to its sound reputation, favoring the maintenance and/or expansion of its operated base and compliance with the universalization of services within the deadline established by the new law; iii) it has high governance level; and iv) it has current contracts with the granting authority that ensure 95% of revenue.

Approvals

The interim information was approved by the Board of Directors on August 12, 2021.

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| --- | --- | | Notes to the Quarterly Information | | | 2 | Basis of preparation and presentation ofthe quarterly information | | --- | --- |

Presentation of the Interim Financial Information

The interim financial information as of June 30, 2021, was prepared based on the provisions of CPC 21 (R1) – Interim Financial Information and the international standard IAS 34 – Interim Financial Reporting, issued by the International Accounting Standards Board (IASB), applicable to the preparation of the Quarterly Information Form – ITR and they are fairly presented consistent with the rules issued by the Brazilian Securities and Exchange Commission (CVM). Accordingly, this interim information takes into consideration the Official Letter CVM/SNC/SEP 003 of April 28, 2011, which allows the entities to present selected notes to the financial statements, in cases of redundant information already disclosed in the Annual Financial Statements. The interim information for June 30, 2021, therefore, does not include all the notes and reporting required by the annual financial statements, and accordingly, shall be read jointly with the Annual Financial Statements as of December 31, 2020, prepared pursuant to the International Financial Reporting Standards – IFRS, issued by the International Accounting Standards Board – IASB, and pursuant to the accounting practices adopted in Brazil, which observe the pronouncements issued by the Brazilian Accounting Pronouncements Committee - CPC. Therefore, in this interim financial information, the notes below were either not presented or are not as detailed as those in the annual financial statements (according to numerical references):

i. Summary of significant accounting policies (Note 3);
ii. Changes in accounting practices and disclosures (Note 4);
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iii. Risk management – financial instruments (Note 5.4);
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iv. Key accounting estimates and judgments (Note 6);
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v. Related-party balances and transactions (Note 11);
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vi. Investments (Note 12);
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vii. Intangible assets (Note 15);
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viii. Borrowings and financing (Note 17);
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ix. Deferred taxes and contributions (Note 19);
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x. Provisions (Note 20);
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xi. Employees benefits (Note 21);
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xii. Equity (Note 24);
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xiii. Insurance (Note 27);
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All material information related to the interim financial information, and this information alone, is being disclosed and corresponds to the information used by the Company’s Management in its administration.

The amounts disclosed in the Notes are in thousands of Brazilian reais, unless otherwise stated.

3 Summary of significant accounting policies

The accounting policies used in the preparation of the interim financial information of June 30, 2021 are consistent with those used to prepare the Annual Financial Statements for the year ended December 31, 2020, disclosed on Note 3 of such financial statements.

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| --- | --- | | Notes to the Quarterly Information | | | 4 | Risk management | | --- | --- | | 4.1 | Financial Risk Management | | --- | --- |

Financial risk factors

The Company's activities are affected by the Brazilian economic scenario, making it exposed to market risk (exchange rate and interest rate), credit risk, and liquidity risk. The financial risk management is focused on the unpredictability of financial markets and seeks to minimize potential adverse effects on financial performance.

The Company has not utilized derivative instruments in any of the reported periods.

(a) Market risk

Exchange risk

Currency exposure implies market risks associated with currency fluctuations, since the Company has foreign currency-denominated liabilities, arising from long-term funding, in development institutions, at lower interest rates, in U.S. dollar and Yen.

The management of the currency exposure considers several current and projected economic factors, besides the market conditions.

This risk arises from the possibility that the Company may incur losses due to exchange rate fluctuations that would impact liability balances of foreign currency-denominated borrowings and financing and related financial expenses. The Company does not maintain hedge or swap contracts or any derivative financial instrument to hedge against this risk.

Part of the financial debt, totaling R$ 3,116,560 as of June 30, 2021 (R$ 3,563,170 as of December 31, 2020), is indexed to the U.S. dollar and Yen. The exposure to the exchange risk is as follows:

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| --- | --- | | Notes to the Quarterly Information | | | | | December 31, 2020 | | | --- | --- | --- | --- | | | R$ | Foreign currency | R$ | | Borrowings and financing – US | 802,558 | 167,479 | 870,338 | | Borrowings and financing – Yen | 2,296,692 | 52,969,560 | 2,671,255 | | Interest and charges from borrowings and financing – US | 3,921 | | 5,540 | | Interest and charges from borrowings and financing – Yen | 13,389 | | 16,037 | | Total exposure | 3,116,560 | | 3,563,170 | | Borrowing cost – US | (17,473) | | (12,342) | | Borrowing cost – Yen | (2,869) | | (2,966) | | Total foreign currency-denominated borrowings (Note 16) | 3,096,218 | | 3,547,862 |

All values are in US Dollars.

The 12.7% decrease in the balance of the foreign currency-denominated debt from December 31, 2020 to June 30, 2021 was mainly impacted by the amortization of debt installments, contractually agreed, and the depreciation of the U.S. dollar and Yen against the Brazilian real, as follows:

June 30,<br><br> <br>2021 December 31,<br><br> <br>2020 Var.
US$ R$ 5.0022 R$ 5.1967 -3.7%
Yen R$ 0.04505 R$ 0.05043 -10.7%

From January to June 2021, the liabilities of borrowings and financing agreements decreased by R$ 302,873 (increased by R$ 2,356,350 from January to June 2020), from the currency variation of the borrowings and financing agreements. As of June 30, 2021, if the Brazilian real had depreciated or appreciated by 10 percentage points against the U.S. dollar and Yen with all other variables held constant, in addition to the impacts mentioned above, the effects on the result before taxes for the six months ended June 30, 2021, would have been R$ 311,656 (R$ 563,701 for the six months ended June 30, 2020), lower or higher, mainly as a result of exchange losses or gains on the translation of foreign currency-denominated borrowings and financing.

Scenario I below presents the effect in the income statements for the next 12 months, considering the projected rates of the U.S. dollar and the Yen. Considering the other variables as remaining constant, the impacts of possible depreciations of 25% and 50% in the U.S. dollar and Yen, respectively, are shown in scenarios II and III.

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The Company understands that the scenarios presented are reasonable, given the instability of the Brazilian real against the U.S. dollar and the Yen. The depreciation of the U.S. dollar and Yen against the Brazilian real came to 3.7% and 10.7%, respectively, in 2021.

Scenario I (Probable) Scenario II (+25%) Scenario III (+50%)
(*)
Net currency exposure as of June 30, 2021 in US$ - Losses 160,441 160,441 160,441
US$ rate as of June 30, 2021 5.0022 5.0022 5.0022
Exchange rate estimated according to the scenario 5.1500 6.4375 7.7250
Difference between the rates (0.1478) (1.4353) (2.7228)
Effect on the net financial result R$ - gain/(loss) (23,713) (230,281) (436,849)
Net currency exposure as of June 30, 2021, in ¥ - Losses 50,980,944 50,980,944 50,980,944
Yen rate as of June 30, 2021 0.04505 0.04505 0.04505
Exchange rate estimated according to the scenario 0.04599 0.05749 0.06899
Difference between the rates (0.00094) (0.01244) (0.02394)
Effect on the net financial result R$ - gain/(loss) (47,922) (634,203) (1,220,484)
Total effect on the net financial result in R$ - gain/(loss) (71,635) (864,484) (1,657,333)
(*) For the probable scenario in U.S. dollar, the exchange rate estimated for June 30, 2022 was used, according to the BACEN Focus Report of June 30, 2021. For the Yen, the exchange estimated for June 30, 2022 was used, according to B3’s Reference Rates report of June 30, 2021.

Interest rate risk

This risk arises from the possibility that the Company could incur losses due to fluctuations in interest rates, increasing the financial expenses related to borrowings and financing.

The Company has not entered into any derivative contract to hedge against this risk; however, it continually monitors market interest rates to evaluate the possible need to replace its debt.

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| --- | --- | | Notes to the Quarterly Information | |

The table below provides borrowings and financing subject to variable interest rates:

June 30, 2021 December 31, 2020
CDI (i) 7,471,313 7,836,988
TR (ii) 1,635,045 1,619,416
IPCA (iii) 2,161,934 2,176,547
TJLP (iv) 1,404,654 1,517,657
LIBOR (v) 802,559 870,337
Interest and charges 254,873 164,439
Total 13,730,378 14,185,384
(i) CDI - (Certificado de Depósito Interbancário), an<br>interbank deposit certificate
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(ii) TR – Interest Benchmark Rate
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(iii) IPCA – (Índice Nacional de Preços ao ConsumidorAmplo), a consumer price index
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(iv) TJLP – (Taxa de Juros a Longo Prazo), a long-term interest<br>rate index
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(v) LIBOR – London Interbank Offered Rate
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Another risk to which the Company is exposed is the mismatch of inflation adjustment indices of its debts with those of its service revenues. Tariff adjustments of services provided do not necessarily follow the increases in the inflation indexes to adjust borrowings, financing, and interest rates affecting indebtedness.

As of June 30, 2021, if interest rates on borrowings and financing had been 1 percentage point higher or lower with all other variables held constant, the effects on profit before taxes for the six months ended June 30, 2021 would have been

R$ 137,304 (R$ 111,959 for the six months ended June 30, 2020), lower or higher, mainly as a result of lower or higher interest expense on floating rate borrowings and financing.

(b) Credit risk

Credit risk is related to cash and cash equivalents, financial investments, as well as credit exposures to wholesale basis and retail customers, including accounts receivable, restricted cash, and accounts receivable from related parties. Credit risk exposure to customers is mitigated by sales to a dispersed base.

The maximum exposure to credit risk as of June 30, 2021 is the carrying amount of instruments classified as cash and cash equivalents, financial investments, restricted cash, trade receivables, and accounts receivable from related parties on the reporting date. See additional information in Notes 6, 7, 8, 9, and 10.

Regarding the financial assets held with financial institutions, the credit quality was assessed by reference to external credit ratings (if available) or historical information about the bank’s default rates. For the credit quality of the banks, such as deposits and financial investments, the Company assesses the rating published by three main international agencies (Fitch, Moody's and S&P), as follows:

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| --- | --- | | Notes to the Quarterly Information | | | Banks | Fitch | Moody's | Standard Poor's | | --- | --- | --- | --- | | Banco do Brasil S/A | AA(bra) | AAA.br | - | | Banco Santander Brasil S/A | - | AAA.br | brAAA | | Brazilian Federal Savings Bank | AA(bra) | AAA.br | brAAA | | Banco Bradesco S/A | AAA(bra) | AAA.br | brAAA | | Banco Itaú Unibanco S/A | AAA(bra) | AAA.br | brAAA | | Banco BV | - | AA.br | brAAA | | Banco BTG Pactual S/A | AA(bra) | AA+.br | brAA+ |

The rating assessment disclosed by Fitch for deposit transactions and financial investments in local currency (R$ - domestic rating) is as follows:

June 30, 2021 December 31, 2020
Cash and cash equivalents and financial investments
AA(bra) 1,773,447 2,662,685
AAA(bra) 909,760 891,243
Others (*) 265,581 253,619
2,948,788 3,807,547

(*) As of June 30, 2021, this category includes R$ 255,828 (R$ 253,066 as of December 31, 2020) referring to Banco BV, checking accounts, and financial investments, which are not rated by Fitch.

(c) Liquidity risk

Liquidity is primarily reliant upon cash provided by operating activities and borrowings and financing obtained in the local and international capital markets, as well as the payment of debts. The management of this risk considers the assessment of its liquidity requirements to ensure it has sufficient cash to meet its operating and capital expenditures needs.

The funds held are invested in interest-bearing current accounts, time deposits, and securities, with instruments with appropriate maturity or liquidity sufficient to provide margin as determined by the projections mentioned above.

The table below shows the financial liabilities, by maturity, including the installments of principal and future interest. For agreements with floating interest rates, the interest rates used correspond to the base date of June 30, 2021.

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| --- | --- | | Notes to the Quarterly Information | | | | July to December 2021 | 2022 | 2023 | 2024 | 2025 | 2026 onwards | Total | | --- | --- | --- | --- | --- | --- | --- | --- | | June 30, 2021 | | | | | | | | | Liabilities | | | | | | | | | Borrowings and financing | 2,369,459 | 2,180,341 | 2,188,523 | 2,312,456 | 1,796,652 | 10,517,405 | 21,364,836 | | Suppliers | 225,901 | - | - | - | - | - | 225,901 | | Services payable | 496,535 | - | - | - | - | - | 496,535 | | Public-Private Partnership - PPP | 212,294 | 424,865 | 425,177 | 389,794 | 356,036 | 4,244,702 | 6,052,868 | | Program Contract Commitments | 108,781 | 34,680 | 34,680 | 1,080 | 1,080 | 13,553 | 193,854 |

Cross default

The Company has borrowings and financing agreements including cross-default clauses, i.e., the early maturity of any debt may imply the early maturity of these agreements. The indicators are continuously monitored to avoid the execution of these clauses, and the most restrictive are shown in Note 16 (c).

(d) Sensitivity analysis on interest rate risk

The table below shows the sensitivity analysis of the financial instruments, prepared in accordance CPC 40, to evidence the balances of main financial assets and liabilities, calculated at a rate projected for a future period after June 30, 2021, or until the final settlement of each contract, whichever is shorter, considering a probable scenario (Scenario I), with additions of 25% (Scenario II) and 50% (Scenario III).

The purpose of the sensitivity analysis is to measure the impact of changes in the market over the financial instruments, considering constant all other variables. At the time of settlement, the amounts can be different from those presented, due to the estimates used in the measurement.

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| --- | --- | | Notes to the Quarterly Information | | | June 30, 2021 | | | | | | --- | --- | --- | --- | --- | | Indicators | Exposure | Scenario I<br><br> <br>(Probable) (i) | Scenario II<br><br> <br>25% | Scenario III<br><br> <br>50% | | Assets | | | | | | CDI | 2,858,944 | 6.5800%(**) | 8.2250% | 9.8700% | | Financial income | | 188,119 | 235,148 | 282,178 | | Liabilities | | | | | | CDI | (7,471,313) | 6.5800%(**) | 8.2250% | 9.8700% | | Interest to be incurred | | (491,612) | (614,515) | (737,419) | | CDI net exposure | (4,612,369) | (303,493) | (379,367) | (455,241) | | Liabilities | | | | | | TR | (1,635,045) | 0.0001%(**) | 0.0001% | 0.0002% | | Expenses to be incurred | | (2) | (2) | (3) | | IPCA | (2,161,934) | 4.1700%(*) | 5.2125% | 6.2550% | | Expenses to be incurred | | (90,153) | (112,691) | (135,229) | | TJLP | (1,404,654) | 5.1700%(***) | 6.4625% | 7.7550% | | Interest to be incurred | | (72,621) | (90,776) | (108,931) | | LIBOR | (802,559) | 0.1850%(**) | 0.2313% | 0.2775% | | Interest to be incurred | | (1,485) | (1,856) | (2,227) | | Total expenses to be incurred, net | | (467,754) | (584,692) | (701,631) | | (*)       Source: Focus-BACEN Report of June 30, 2021 | | | | | | (**)     Source: B3 of June 30, 2021: | | | | | | (***)   Source: LCA Consultores of June 30, 2021 | | | | | | (i) | Refers to the scenario of the projected interest to be incurred for the<br>12 months as of June 30, 2021, or until the maturity of the agreements, whichever is shorter. | | --- | --- |

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| --- | --- | | Notes to the Quarterly Information | | | 4.2 | Capital management | | --- | --- |

The Company’s objectives when managing capital are to ensure its ability to increase investments in infrastructure, provide returns for shareholders and benefits for other stakeholders, and maintain an optimal capital structure to reduce the cost of capital.

Capital is monitored based on the leverage ratio, which corresponds to net debt divided by total capital (shareholders and creditor’s equity). Net debt corresponds to total borrowings and financing less cash and cash equivalents and financial investments. Total capital is calculated as total equity plus net debt, as shown in the statement of financial position.

June 30, 2021 December 31, 2020
Total borrowings and financing (Note 16) 16,488,628 17,258,624
(-) Cash and cash equivalents (Note 6) (249,932) (396,401)
(-) Financial investments (Note 7) (2,698,856) (3,411,146)
Net debt 13,539,840 13,451,077
Total equity 24,037,238 22,793,704
Total (shareholders plus creditor’s equity) 37,577,078 36,244,781
Leverage ratio 36% 37%

As of June 30, 2021, the leverage ratio decreased to 36%, compared to 37% as of December 31, 2020, mainly due to the profit recorded in the first half of 2021, of R$ 1,269,910.

4.3 Fair value estimates

The Company considers that balances from trade receivables (current) and trade payables by carrying amount less impairment approximate their fair values, considering the short maturity. Long-term trade receivables also approximate their fair values, as they will be adjusted by inflation and/or will bear contractual interest rates over time.

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| --- | --- | | Notes to the Quarterly Information | | | 4.4 | Financial instruments | | --- | --- |

The Company did not have financial assets classified as fair value through other comprehensive income and fair value through profit or loss. The financial instruments included in the amortized cost category comprise cash and cash equivalents, financial investments, restricted cash, trade receivables, balances with related parties, other assets and balances receivable from the Water National Agency (ANA), accounts payable to suppliers, borrowings and financing, services payable, balances payable deriving from the Public-Private Partnership (PPP) and program contract commitments, which are non-derivative financial assets and liabilities with fixed or determinable payments, not quoted in an active market, except for cash equivalents and financial investments.

The estimated fair values of the financial instruments are as follows:

Financial Assets

June 30, 2021 December 31, 2020
Carrying amount Fair value Carrying amount Fair value
Cash and cash equivalents 249,932 249,932 396,401 396,401
Financial investments 2,698,856 2,698,856 3,411,146 3,411,146
Restricted cash 27,950 27,950 35,742 35,742
Trade receivables 2,528,064 2,528,064 2,450,986 2,450,986
ANA 23,904 23,904 26,463 26,463
Other receivables 269,716 269,716 246,110 246,110

Additionally, SABESP has financial assets receivable from related parties, totaling R$ 801,685 as of June 30, 2021

(R$ 806,645 as of December 31, 2020), which were calculated under the conditions negotiated between the related parties. The conditions and additional information related to these financial instruments are disclosed in Note 10. Part of this balance, totaling R$ 729,762 (R$ 732,391 as of December 31, 2020), refers to reimbursement of additional retirement and pension plan - G0, indexed by IPCA plus simple interest of 0.5% p.m. On the transaction date, this interest rate approximated that of National Treasury Notes (NTN-b), with a term similar to the terms of related-party transactions.

Financial Liabilities

June 30, 2021 December 31, 2020
Carrying amount Fair value Carrying amount Fair value
Borrowings and financing 16,488,628 16,941,396 17,258,624 17,702,649
Suppliers 225,901 225,901 263,741 263,741
Services payable 496,535 496,535 453,750 453,750
Program Contract Commitment 183,012 183,012 231,480 231,480
Public-Private Partnership - PPP 3,112,293 3,112,293 3,175,273 3,175,273

The criteria adopted to obtain the fair values of borrowings and financing in preparing the interim financial information as of June 30, 2021, are consistent with those adopted in the Annual Financial Statements for the fiscal year ended December 31, 2020.

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| --- | --- | | Notes to the Quarterly Information | |

Financial instruments referring to financial investments and borrowings and financing are classified as Level 2 in the fair value hierarchy.

Considering the nature of other financial instruments, assets and liabilities, the balances recognized in the statement of financial position approximate the fair values, except for borrowings and financing, considering the maturities close to the end of the reporting date, comparison of contractual interest rates with market rates in similar operations at the end of the reporting period, their nature, and maturity terms.

5 Key accounting estimates and judgments

The preparation of the interim financial information requires Management to make judgments (except for those that involve assumptions) that have a significant impact on the amounts recognized based on experience and other factors deemed as relevant, which affect the values of assets and liabilities, and present results that may differ from the actual ones.

The Company makes estimates and assumptions concerning the future, which are reviewed on a timely basis. Such accounting estimates, by definition, may differ from the actual results. The effects from the reviews of the accounting estimates are recognized in the period in which the estimates are reviewed.

The Company evaluated the main accounting policies that involve judgment, except for those that involve estimates, and concluded that none of them have a significant effect.

The areas that require a higher level of judgment and greater complexity, as well as those in which assumptions and estimates are significant for the quarterly information are: (i) allowance for doubtful accounts; (ii) intangible assets arising from concession agreements and program contracts; (iii) pension plan obligations - pension plans; (iv) deferred income tax and social contribution; (v) provisions; and (vi) unbilled revenue.

6 Cash and cash equivalents
June 30, 2021 December 31, 2020
--- --- ---
Cash and banks 76,930 74,033
Cash equivalents 173,002 322,368
Total 249,932 396,401

Cash and cash equivalents include cash, bank deposits, and high-liquidity short-term financial investments, mainly represented by repurchase agreements, fund shares (accruing CDI interest rates), and CDBs, whose original maturities or intention of realization are lower than three months, which are convertible into a cash amount and subject to an insignificant risk of change in value.

As of June 30, 2021, the average yield of financial investments corresponded to 95.94% of CDI (95.82% as of December 31, 2020).

7 Financial investments

The Company has financial investments in CDB, with daily liquidity, which it does not intend to use in the next three months, as shown below:

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| --- | --- | | Notes to the Quarterly Information | | | | June 30, 2021 | December 31, 2020 | | --- | --- | --- | | Banco BV | 255,828 | 253,066 | | Banco Itaú S/A | 358,087 | 354,296 | | Banco Bradesco S/A | 511,640 | 506,136 | | Banco BTG Pactual S/A | 358,145 | 354,299 | | Banco do Brasil S/A | 1,215,156 | 1,943,349 | | | 2,698,856 | 3,411,146 |

As of June 30, 2021, the average yield of the financial investments corresponded to 99.54% of CDI (98.95% as of December 31, 2020).

8 Restricted cash
June 30, 2021 December 31, 2020
--- --- ---
Agreement with the São Paulo municipal government (i) 21,458 29,599
Brazilian Federal Savings Bank – escrow deposits (ii) 367 272
Other 6,125 5,871
27,950 35,742
(i) Refers to the amount deducted from the transfer of 7.5% of the revenue<br>earned in the municipality to the Municipal Fund for Environmental Sanitation and Infrastructure, corresponding to eventual amounts unpaid<br>by direct management bodies, foundations, and government agencies, as established in the agreement entered into with the São Paulo<br>municipal government; and
--- ---
(ii) Refers to the savings account intended to receive escrow deposits from<br>lawsuits with final and unappealable decisions in favor of the Company, which are blocked under the contractual clause.
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| --- | --- | | Notes to the Quarterly Information | | | 9 | Trade receivables | | --- | --- | | (a) | Statement of financial position details | | --- | --- |

June 30, 2021 December 31, 2020
Private sector:
General (i) and special customers (ii) 1,819,277 1,663,738
Agreements (iii) 481,393 398,367
2,300,670 2,062,105
Government entities:
Municipal 480,535 473,201
Federal 5,120 3,859
Agreements (iii) 375,349 333,740
861,004 810,800
Wholesale customers – Municipal governments: (iv)
Mogi das Cruzes 3,784 3,582
São Caetano do Sul 21,263 18,808
Total wholesale customers – Municipal governments 25,047 22,390
Unbilled supply 607,020 713,310
Subtotal 3,793,741 3,608,605
Allowance for doubtful accounts (1,265,677) (1,157,619)
Total 2,528,064 2,450,986
Current 2,249,036 2,204,029
Noncurrent 279,028 246,957
2,528,064 2,450,986
(i) General customers - residential, and small and mid-sized companies;
--- ---
(ii) Special customers – large consumers, commercial industries, condominiums,<br>and special billing customers (fixed demand agreements, industrial waste, wells, among others);
--- ---
(iii) Agreements - installment payments of past-due receivables, plus monetary<br>restatement and interest, according to the agreements; and
--- ---
(iv) Wholesale basis customers - municipal governments. This balance refers<br>to the sale of treated water to municipalities, which are responsible for distributing to, billing, and charging final customers.
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| --- | --- | | Notes to the Quarterly Information | | | (b) | The aging of trade receivables is as follows: | | --- | --- | | | June 30, 2021 | December 31, 2020 | | --- | --- | --- | | Current | 1,731,219 | 1,793,104 | | Past-due: | | | | Up to 30 days | 402,327 | 340,760 | | From 31 to 60 days | 201,756 | 177,103 | | From 61 to 90 days | 146,972 | 120,488 | | From 91 to 120 days | 124,677 | 88,323 | | From 121 to 180 days | 150,632 | 113,060 | | From 181 to 360 days | 97,384 | 82,365 | | Over 360 days | 938,774 | 893,402 | | Total past-due | 2,062,522 | 1,815,501 | | Total | 3,793,741 | 3,608,605 |

The increase in the past-due balance was mainly due to higher default of the private sector.

(c) Allowance for doubtful accounts
January to June 2021 January to June 2020
--- --- ---
Balance at the beginning of the period 1,157,619 1,042,015
Additions 130,074 193,295
Recoveries (22,016) (30,519)
Balance at the end of the period 1,265,677 1,204,791
Reconciliation of estimated/historical losses at the result April to<br><br> <br>June 2021 January to<br><br> <br>June 2021 April to<br><br> <br>June 2020 January to<br><br> <br>June 2020
--- --- --- --- ---
Write-offs (94,115) (156,500) (66,579) (104,347)
(Losses)/reversal with state entities – related parties (146) (594) (6,812) (7,543)
(Losses) with the private sector/government entities (62,048) (130,074) (66,808) (193,295)
Recoveries 12,208 22,016 23,022 30,519
Amount recorded as expense (Note 27) (144,101) (265,152) (117,177) (274,666) 
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| --- | --- | | Notes to the Quarterly Information | |

The Company does not have customers representing 10% or more of its total revenues.

10 Related-party balances and transactions
(a) São Paulo State
--- ---
(i) Accounts receivable, interest on capital, revenue, and expenses withthe São Paulo State Government
--- ---
June 30, 2021 December 31, 2020
--- --- ---
Accounts receivable
Current:
Sanitation services 109,684 109,078
Estimated losses (39,721) (39,127)
Reimbursement of additional retirement and pension benefits paid (G0):
- Monthly flow (payments) 16,283 22,726
- GESP Agreement – 2015 80,054 75,377
Total current 166,300 168,054
Noncurrent:
Agreement for the installment payment of sanitation services 1,960 4,303
Reimbursement of additional retirement and pension benefits paid (G0):
- GESP Agreement – 2015 633,425 634,288
Total noncurrent 635,385 638,591
Total receivables from shareholders 801,685 806,645
Assets:
Sanitation services 71,923 74,254
Reimbursement of additional retirement and pension benefits paid (G0) 729,762 732,391
Total 801,685 806,645
Liabilities:
Interest on capital payable to related parties - 116,180 
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| --- | --- | | Notes to the Quarterly Information | | | | April to<br><br> <br>June 2021 | January to<br><br> <br>June 2021 | April to<br><br> <br>June 2020 | January to<br><br> <br>June 2020 | | --- | --- | --- | --- | --- | | Revenue from sanitation services | 118,975 | 243,381 | 123,949 | 265,834 | | Payments from related parties | (108,113) | (220,336) | (143,946) | (293,441) | | Receipt of reimbursement referring to Law 4,819/1958 | (33,877) | (88,058) | (17,714) | (71,916) | | (ii) | Disputed amounts | | --- | --- |

As of June 30, 2021 and December 31, 2020, the disputed amounts between SABESP and the São Paulo State, referring to additional retirement and pension benefits paid (Law 4,819/1958), totaled R$ 1,320,356 and R$ 1,281,409, respectively, for which allowances for doubtful accounts were created.

(iii) Actuarial liability

The Company recognized an actuarial liability corresponding to additional retirement and pension benefits paid to employees, retired employees, and pensioners of the G0 Plan. As of June 30, 2021 and December 31, 2020, the amounts corresponding to the actuarial liability totaled R$ 2,545,673 and R$ 2,549,541, respectively. For detailed information on additional retirement and pension benefits, see Note 21.

(b) Use of Reservoirs – EMAE

Empresa Metropolitana de Águas e Energia S.A. (EMAE) planned to receive the credit and obtain financial compensation for alleged past and future losses in electricity generation arising from water collection, and compensation for costs already incurred and to be incurred with the operation, maintenance, and inspection of the Guarapiranga and Billings reservoirs used by SABESP in its operations.

As of October 28, 2016, the Company entered into an agreement based on a Private Transaction Agreement and Other Adjustments to settle the disputes fully and completely and SABESP will continue using the reservoirs.

As of June 30, 2021, the balance of the agreement totaled R$ 7,791 and R$ 83,659 (R$ 17,255 and R$ 73,660 as of December 31, 2020), recorded in Other liabilities, under current and noncurrent liabilities, respectively.

(c) Agreements with reduced tariff for State Entities that join the RationalWater Use Program (PURA)

The Company has agreements with government entities related to the São Paulo State Government that benefit them with a 25% discount on water supply and sewage services tariffs when they are not in default. These agreements provide for the implementation of the rational water use program, which takes into consideration the reduction in water consumption.

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| --- | --- | | Notes to the Quarterly Information | | | (d) | Guarantees | | --- | --- |

The São Paulo State provides guarantees for some of the Company’s borrowings and financing and does not charge any related fees.

(e) Personnel assignment agreement among entities related to the SãoPaulo State Government

The Company has personnel assignment agreements with entities related to the State Government, whose expenses are fully charged.

From April to June and from January to June 2021, expenses with employees assigned to other state entities totaled R$ 218 and R$ 375 (R$ 579 and R$ 1,267 from April to June and from January to June 2020), respectively.

No expenses with employees from other entities assigned to the Company were recorded from April to June and from January to June 2021 (R$ 13 and R$ 13 from April to June and from January to June 2020, respectively).

(f) Non-operating assets

As of June 30, 2021 and December 31, 2020, the Company’s had land and lent structures totaled R$ 3,613.

(g) SABESPREV

The Company sponsors a private defined benefit pension plan (G1 Plan), which is operated and administered by SABESPREV. The net actuarial liability recognized as of June 30, 2021 totaled R$ 313,104 (R$ 319,053 as of December 31, 2020), according to Note 21.

(h) Compensation of the Management Key Personnel and Fiscal Council

From April to June and from January to June 2021, expenses related to the compensation of the members of the Management and Fiscal Council totaled R$ 1,596 and R$ 3,190 (R$ 1,596 and R$ 3,179 from April to June and from January to June 2020), respectively.

Additional amounts of R$ 360 and R$ 720, referring to the executive officers’ bonus program, were recorded from April to June and from January to June 2021 (R$ 360 and R$ 720 from April to June and from January to June 2020), respectively.

(i) Loan agreement through credit facility

The Company holds interest in certain Special Purpose Entities (SPEs), in which it does not hold the majority interest but has cast vote and power of veto in some issues, with no ability to use such power of veto in a way to affect the returns over investments. Therefore, these SPEs are considered for accounting purposes as jointly arrangements.

The Company entered into a loan agreement through a credit facility with SPE Aquapolo Ambiental S/A to finance the operations of that company until the borrowings and financing requested with financial institutions is granted.

As of June 30, 2021, the balance of principal and interest of this agreement totaled R$ 9,597 and R$ 24,315, recorded in “Other assets” under current assets and noncurrent assets, respectively (R$ 9,420 and R$ 23,866, respectively, as of December 31, 2020), at CDI + 1.2% p.a.

The loan originally matured on April 30, 2015 but was extended to October 30, 2015. On November 25, 2015, a new amendment changed the payment schedule for three annual installments, the first of which maturing on December 30, 2021, and the last on December 30, 2023.

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| --- | --- | | Notes to the Quarterly Information | | | (j) | “Se Liga na Rede” (Connect to the Network Program) | | --- | --- |

The São Paulo State enacted the State Law 14,687/2012, creating the Pro-Connection program, intended to financially subsidize the execution of household branches necessary to connect to the sewage collecting networks in low-income households, which agreed to adhere to the program. The Law was regulated by Decree 58,280/2012 and is effective for eight years. During the Program, R$ 52,174 was reimbursed by the São Paulo State. As of June 30, 2021, there were no balances receivable from related parties.

11 Investments

The Company holds interest in certain Special Purpose Entities (SPE). Although SABESP has no majority shares of its investees, the shareholders’ agreement provides for the power of veto in certain management issues, however, with no ability to use such power of veto in a way to affect the returns over the investments, indicating participating shared control (joint venture – CPC 19 (R2)).

The Company holds equity interest valued by the equity accounting in the following investees:

Equity Profit (loss) for the period
June<br><br> <br>30,<br><br> <br>2021 December<br><br> <br>31,<br><br> <br>2020 January to June 2021 (*) January to June 2020
Sesamm 54,717 51,514 3,203 - 3,621
Águas de Andradina 30,446 29,576 959 (89) (1,612)
Águas de Castilho 9,210 8,533 662 15 555
Attend Ambiental 21,683 11,409 2,891 7,383 3,050
Aquapolo Ambiental 54,241 41,903 12,338 - 8,964
Paulista Geradora de Energia 6,410 6,692 (282) - (225) 
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| --- | --- | | Notes to the Quarterly Information | | | | Investment | | Equity result | | | Interest percentage | | | --- | --- | --- | --- | --- | --- | --- | --- | | | June<br><br> <br>30,<br><br> <br>2021 | December<br><br> <br>31,<br><br> <br>2020 | January to June<br><br> <br>2021 | (*) | January to June<br><br> <br>2020 | June<br><br> <br>30,<br><br> <br>2021 | December<br><br> <br>31,<br><br> <br>2020 | | Sesamm | 19,699 | 18,546 | 1,153 | - | 1,303 | 36% | 36% | | Águas de Andradina | 9,134 | 8,873 | 288 | (27) | (483) | 30% | 30% | | Águas de Castilho | 2,763 | 2,560 | 199 | 4 | 168 | 30% | 30% | | Saneaqua Mairinque^1^ | - | - | - | - | (216) | 4.6% | 4.6% | | Attend Ambiental | 9,757 | 5,134 | 1,301 | 3,322 | 1,372 | 45% | 45% | | Aquapolo Ambiental | 26,577 | 20,532 | 6,045 | - | 4,392 | 49% | 49% | | Paulista Geradora de Energia | 1,603 | 1,673 | (70) | - | (56) | 25% | 25% | | Total | 69,533 | 57,318 | 8,916 | 3,299 | 6,480 | | | | Other investments | 6,099 | 6,099 | | | | | | | Total | 75,632 | 63,417 | | | | | |

(*) Refers to changes in the equity of investees, as their financial statements for the year ended December 31, 20120 were issued after the disclosure of SABESP’s financial statements.

^(1)^ As of August 20, 2020, SABESP discontinued the equity accounting method for the investment in Saneaqua Mairinque and recorded R$ 5,734 in “Other investments”.

12 Investment Properties
December 31,<br><br> <br>2020 Depreciation June 30,<br><br> <br>2021
--- --- --- ---
Investment properties 46,274 (24) 46,250
December 31,<br><br> <br>2019 Transfer Depreciation June 30,<br><br> <br>2020
--- --- --- --- ---
Investment properties 47,562 11 (24) 47,549

As of June 30, 2021, the market value of these properties was approximately R$ 386,000 (R$ 383,000 as of December 31, 2020).

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| --- | --- | | Notes to the Quarterly Information | | | 13 | Contract asset | | --- | --- |

Contract Asset (works in progress) is the right to consideration in exchange for goods or services transferred to customers. As established by CPC 47 – Revenue from Contracts with Customers, assets subject to the concession under construction, recorded under the scope of ICPC 01 (R1) – Concession Agreements, must be classified as Contract Asset during the construction period and transferred to Intangible Assets only after the conclusion of the works.

A contract asset is initially designated at fair value and includes borrowing costs capitalized during the period when the asset is under construction, based on the weighted average rate of borrowings in effect on the capitalization date. See Note 14 for further information on the capitalization of interest and construction margin, recorded during the construction period.

December 31, 2020 Additions (i) Transfers Transfers of works to intangible assets (ii) June 30,<br><br> <br>2021 (iii)
Total contract asset 7,969,164 2,225,121 1,039 (2,151,459) 8,043,865
December 31, 2019 Additions Transfers Transfers of works to intangible assets June 30,<br><br> <br>2020
--- --- --- --- --- ---
Total contract asset 7,617,714 1,708,731 35 (1,614,733) 7,711,747
(i) The largest additions of the period are located in the municipalities of<br>São Paulo, Praia Grande, and Guarulhos, totaling R$ 1,204 million, R$ 74 million, and R$ 65 million, respectively.
--- ---
(ii) The largest transfers of the period are located in the municipalities of<br>São Paulo, Caieiras, and Franco da Rocha, totaling R$ 1,494 million, R$ 108 million, and R$ 71 million, respectively.
--- ---
(iii) The largest works are located in the municipalities of São Paulo,<br>Praia Grande, and São Bernardo do Campo, totaling R$ 2,765 million, R$ 570 million, and R$ 472 million, respectively.
--- ---

As of June 30, 2020, the contract asset included R$ 276,893, recorded as lease (R$ 276,893 as of December 31, 2020). Leases are part of construction costs, however, constructions are still in progress.

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| --- | --- | | Notes to the Quarterly Information | | | 14 | Intangible assets | | --- | --- | | (a) | Statement of financial position details | | --- | --- | | | June 30, 2021 | | | December 31, 2020 | | | | --- | --- | --- | --- | --- | --- | --- | | | Cost | Accumulated amortization | Net | Cost | Accumulated amortization | Net | | Intangible right arising from: | | | | | | | | Concession agreements – equity value | 682,685 | (196,652) | 486,033 | 671,904 | (188,129) | 483,775 | | Concession agreements – economic value | 1,462,734 | (762,436) | 700,298 | 1,446,261 | (711,596) | 734,665 | | Program contracts | 23,794,927 | (7,223,588) | 16,571,339 | 23,160,119 | (6,799,812) | 16,360,307 | | Program contracts – commitments | 1,709,757 | (365,317) | 1,344,440 | 1,709,757 | (338,834) | 1,370,923 | | Service contracts – São Paulo | 22,011,190 | (6,181,913) | 15,829,277 | 20,579,676 | (5,707,072) | 14,872,604 | | Software license of use | 1,037,062 | (484,974) | 552,088 | 978,085 | (437,460) | 540,625 | | Right of use – Other assets | 176,560 | (70,869) | 105,691 | 141,782 | (99,106) | 42,676 | | Total | 50,874,915 | (15,285,749) | 35,589,166 | 48,687,584 | (14,282,009) | 34,405,575 | | (b) | Changes | | --- | --- | | | December<br><br> <br>31,<br><br> <br>2020 | Additions | Transfer of contract asset | Transfers | Write-offs and disposals | Amortization | June<br><br> <br>30,<br><br> <br>2021 | | --- | --- | --- | --- | --- | --- | --- | --- | | Intangible right arising from: | | | | | | | | | Concession agreements - equity value (*) | 483,775 | - | 10,994 | 62 | (136) | (8,662) | 486,033 | | Concession agreements – economic value | 734,665 | - | 16,807 | 74 | (239) | (51,009) | 700,298 | | Program contracts (*) | 16,360,307 | 8,881 | 629,440 | 433 | (1,363) | (426,359) | 16,571,339 | | Program contracts – commitments | 1,370,923 | - | - | - | - | (26,483) | 1,344,440 | | Service contracts – São Paulo | 14,872,604 | 7,157 | 1,435,242 | - | (2,611) | (483,115) | 15,829,277 | | Software license of use | 540,625 | - | 58,976 | - | - | (47,513) | 552,088 | | Right of use – Other assets | 42,676 | 103,521 | - | - | (462) | (40,044) | 105,691 | | Total | 34,405,575 | 119,559 | 2,151,459 | 569 | (4,811) | (1,083,185) | 35,589,166 |

(*) As of June 30, 2021, Concession agreements – equity value, and Program contracts, included leases totaling R$ 71,056 and R$ 186,894 (R$ 76,454 and R$ 193,107 as of December 31, 2020), respectively.

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| --- | --- | | Notes to the Quarterly Information | | | | December<br><br> <br>31,<br><br> <br>2019 | Additions | Contract renewal | Transfer of contract asset | Transfers | Write-offs and disposals | Amortization | June<br><br> <br>30,<br><br> <br>2020 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Intangible right arising from: | | | | | | | | | | Concession agreements – equity value (*) | 1,494,853 | - | (1,030,964) | 40,719 | 180 | (193) | (19,138) | 485,457 | | Concession agreements – economic value | 712,852 | - | - | 44,635 | (1) | (8) | (44,223) | 713,255 | | Program contracts (*) | 13,819,700 | 285,589 | 1,030,964 | 1,014,385 | (66,071) | (2,440) | (380,586) | 15,701,541 | | Program contracts – commitments | 1,364,875 | 58,323 | - | - | - | - | (25,792) | 1,397,406 | | Service contracts – São Paulo | 14,390,763 | 6,469 | - | 505,577 | (11,781) | (3,053) | (434,997) | 14,452,978 | | Software license of use | 471,706 | - | - | 9,417 | 78,243 | - | (33,210) | 526,156 | | Right of use – Other assets | 70,698 | 23,347 | - | - | - | - | (28,351) | 65,694 | | Total | 32,325,447 | 373,728 | - | 1,614,733 | 570 | (5,694) | (966,297) | 33,342,487 |

(*) As of June 30, 2020, Concession agreements – equity value, and Program contracts, included leases totaling R$ 81,860 and R$ 199,332 (R$ 87,266 and R$ 205,558 as of December 31, 2019), respectively.

As of June 30, 2020, a contract was signed for the provision of treatment services and final disposal of solid waste and collection of garbage tax in the Municipality of Diadema for 40 years. Garbage collection fees started to be charged on water and sewage bills as of January 1, 2021 and were interrupted on May 1, 2021. To reach the best operationalization format, treatment services and final disposal of solid waste are in the study phase and, based on the contractual provision, are subject to a partnership between SABESP and a private party, which will occur by means of a public call.

(c) Obligations arising from concession agreements

As of June 30, 2021, the Company has obligations recorded in “Program contract commitments”, under current liabilities and noncurrent liabilities, totaling R$ 140,983 and R$ 42,029 (R$ 162,541 and R$ 68,939 as of December 31, 2020), respectively.

(d) Capitalization of interest and other finance charges

The Company capitalizes interest, inflation adjustment, and exchange variation in concession intangible assets during the construction period. From January to June 2021, it capitalized R$ 121,996 (R$ 139,994 from January to June 2020).

(e) Construction margin

The Company is primarily responsible for the construction and installation of the concession infrastructure, either by using its employees or contracting third parties and is significantly exposed to its risks and benefits. Accordingly, the Company recognizes revenue from construction services corresponding to construction costs increased by gross margin.

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| --- | --- | | Notes to the Quarterly Information | |

Constructions related to the concessions are usually performed by third parties. In such a case, the margin is lower to cover administration costs and the assumption of responsibility for primary risks is lower. The construction margin was 2.3% as of June 30, 2021 and 2020.

From April to June and from January to June 2021, the construction margins were R$ 22,998 and R$ 46,005 (R$ 22,924 and R$ 35,579 from April to June and from January to June 2020), respectively.

(f) Expropriations

As a result of the construction of priority projects related to water and sewage systems, the Company was required to expropriate third-party properties, whose owners will be compensated either amicably or through court.

Expropriation costs are recorded as concession intangible assets after the transaction is concluded. From April to June and from January to June 2021, expropriations totaled R$ 40,618 and R$ 50,292 (R$ 14,137 and R$ 21,453 from April to June and from January to June 2021), respectively.

(g) Public-Private Partnership - PPP

SABESP carries out operations related to the PPPs mentioned below. These operations and their respective obligations and guarantees are supported by agreements executed according to Law 11,079/2004.

The amounts recorded in intangible assets, net of amortization, are as follows:

June 30, 2021 December 31, 2020
Alto Tietê 278,195 287,645
São Lourenço 2,980,663 3,065,445
Total 3,258,858 3,353,090

The obligations assumed by the Company are as follows:

June 30, 2021 December 31, 2020
Current liabilities Noncurrent liabilities Total liabilities Current liabilities Noncurrent liabilities Total liabilities
Alto Tietê 58,043 129,852 187,895 59,429 149,726 209,155
São Lourenço 88,199 2,836,199 2,924,398 70,778 2,895,340 2,966,118
Total 146,242 2,966,051 3,112,293 130,207 3,045,066 3,175,273 
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| --- | --- | | Notes to the Quarterly Information | | | (h) | Amortization of Intangible Assets | | --- | --- |

The average amortization rate totaled 4.7% as of June 30, 2021 and 2020.

(i) Software license of use

The software license of use is capitalized based on the costs incurred to acquire software and make them ready for use. As of April 10, 2017, the Integrated Business Management System (Enterprise Resource Planning – SAP ERP) was implemented. This system includes the administrative/financial module.

The implementation of the commercial module Net@Suíte system began in August 2019 and is being carried out in different phases. As of June 30, 2021, it had already been implemented in 228 municipalities. The implementation is expected to be concluded in December 2021.

(j) Right of use

The Company recognizes right of use assets and lease liabilities, except for those of short term and low value. For these cases, SABESP maintained the amounts of R$ 4,578, R$ 5,375, and R$ 918 from January to June 2021 (R$ 1,961, R$ 4,869, and R$ 984 from January to June 2020) under operating costs, selling expenses, and administrative expenses, respectively.

Nature June 30,<br><br> <br>2021 December 31,<br><br> <br>2020
Leases - Contract asset 276,893 276,893
Leases - Concession and Program Contract
Cost 405,446 405,426
Accumulated amortization (147,496) (135,865)
(=) Net 257,950 269,561
Other assets (*)
Vehicles 143,056 115,208
Properties 8,527 15,508
Equipment 9,677 4,541
Other assets 15,300 6,525
Accumulated amortization (70,869) (99,106)
(=) Net 105,691 42,676
Right of use 640,534 589,130

(*) From January to June 2021, costs and accumulated amortization totaling R$ 68,280, referring to expired rights of use, were written off.

The lease liability corresponds to total future fixed lease payments, adjusted to present value, considering an incremental rate on borrowings. For further information, see Note 16.

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| --- | --- | | Notes to the Quarterly Information | |

The table below shows the impact on the Company’s result:

Impact on the result
June 30,<br><br> <br>2021 June 30,<br><br> <br>2020
Right of use amortization (51,675) (39,981)
Financial result – interest expense and inflation adjustment (34,070) (31,616)
Expenses of short-term leases with low value (10,871) (7,814)
Reduction of profit for the period (96,616) (79,411)
(k) Performance Agreements
--- ---

As of June 30, 2021, the accounting balances of these agreements recorded in contract asset and intangible assets were R$ 544,697 and R$ 644,839 (R$ 306,738 and R$ 265,940 as of December 31, 2020), respectively.

15 Property, plant and equipment
(a) Statement of financial position details
--- ---
June 30, 2021 December 31, 2020
--- --- --- --- --- --- --- --- ---
Cost Accumulated depreciation Net Annual average depreciation rate Cost Accumulated depreciation Net Annual average depreciation rate
Land 94,213 - 94,213 - 94,213 - 94,213 -
Buildings 86,196 (40,676) 45,520 2.1% 86,860 (41,513) 45,347 2.1%
Equipment 378,565 (278,629) 99,936 14.3% 372,103 (271,087) 101,016 14.8%
Transportation equipment 10,239 (7,685) 2,554 9.9% 10,319 (7,350) 2,969 9.9%
Furniture and fixtures 31,736 (14,305) 17,431 6.7% 31,232 (13,813) 17,419 6.7%
Other 8,020 (205) 7,815 4.9% 7,618 (331) 7,287 4.9%
Total 608,969 (341,500) 267,469 10.6% 602,345 (334,094) 268,251 11.2% 
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| --- | --- | | Notes to the Quarterly Information | | | (b) | Changes | | --- | --- | | | December 31, 2020 | Additions | Transfers | Write-offs and disposals | Depreciation | June 30,<br><br> <br>2021 | | --- | --- | --- | --- | --- | --- | --- | | Land | 94,213 | - | - | - | - | 94,213 | | Buildings | 45,347 | 707 | (20) | - | (514) | 45,520 | | Equipment | 101,016 | 11,172 | (1,761) | (110) | (10,381) | 99,936 | | Transportation equipment | 2,969 | (80) | - | - | (335) | 2,554 | | Furniture and fixtures | 17,419 | 635 | 54 | (40) | (637) | 17,431 | | Other | 7,287 | 439 | 119 | - | (30) | 7,815 | | Total | 268,251 | 12,873 | (1,608) | (150) | (11,897) | 267,469 | | | December 31, 2019 | Additions | Transfers | Write-offs and disposals | Depreciation | June 30,<br><br> <br>2020 | | --- | --- | --- | --- | --- | --- | --- | | Land | 92,962 | - | - | - | - | 92,962 | | Buildings | 41,705 | 1,157 | (189) | - | (562) | 42,111 | | Equipment | 152,273 | 17,351 | (50) | (53) | (14,310) | 155,211 | | Transportation equipment | 1,984 | 299 | 891 | - | (289) | 2,885 | | Furniture and fixtures | 18,219 | 902 | (1,365) | (10) | (603) | 17,143 | | Other | 7,250 | 957 | 97 | - | (30) | 8,274 | | Total | 314,393 | 20,666 | (616) | (63) | (15,794) | 318,586 |

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| --- | --- | | Notes to the Quarterly Information | | | 16 | Borrowings and Financing | | --- | --- |

Borrowings and financing outstanding balance June 30, 2021 December 31, 2020
Financial institution ****<br><br> <br>Current Noncurrent ****<br><br> <br>Total ****<br><br> <br>Current Noncurrent ****<br><br> <br>Total
Local currency
12th issue debentures 45,450 135,733 181,183 45,450 158,425 203,875
14th issue debentures 41,755 - 41,755 51,873 24,205 76,078
17th issue debentures 96,518 96,187 192,705 91,850 183,335 275,185
18th issue debentures 47,194 124,460 171,654 45,918 135,105 181,023
21st issue debentures 174,789 - 174,789 175,000 174,769 349,769
22nd issue debentures 200,000 491,022 691,022 99,969 678,149 778,118
23rd issue debentures - 864,728 864,728 - 864,678 864,678
24th issue debentures - 434,681 434,681 - 414,994 414,994
25th issue debentures 1,446,945 - 1,446,945 1,442,610 - 1,442,610
26th issue debentures - 1,099,106 1,099,106 - 1,047,767 1,047,767
27th issue debentures - 997,168 997,168 - 997,000 997,000
Brazilian Federal Savings Bank 94,940 1,358,256 1,453,196 90,382 1,324,459 1,414,841
Brazilian Development Bank - BNDES PAC 13,394 13,352 26,746 13,185 20,247 33,432
Brazilian Development Bank - BNDES PAC II 9751 7,161 33,877 41,038 7,159 37,447 44,606
Brazilian Development Bank - BNDES PAC II 9752 4,851 23,044 27,895 4,851 25,470 30,321
Brazilian Development Bank - BNDES ONDA LIMPA 26,751 73,449 100,200 26,751 86,809 113,560
Brazilian Development Bank – BNDES TIETÊ III 86,823 499,116 585,939 86,823 542,519 629,342
Brazilian Development Bank - BNDES 2015 33,558 437,405 470,963 33,558 454,126 487,684
Brazilian Development Bank - BNDES 2014 6,524 26,111 32,635 5,143 23,017 28,160
Inter-American Development Bank – IDB 2202 181,349 2,434,600 2,615,949 181,349 2,524,798 2,706,147
Inter-American Development Bank – IDB INVEST 89,630 853,578 943,208 44,815 898,060 942,875
Leases (Concession Agreements, Program Contracts, and Contract Asset) 34,940 379,514 414,454 28,847 399,896 428,743
Leases (others) 61,225 58,866 120,091 36,576 9,300 45,876
Other 4,039 9,362 13,401 3,778 11,382 15,160
Interest and other charges 250,959 - 250,959 158,918 - 158,918
Total in local currency 2,948,795 10,443,615 13,392,410 2,674,805 11,035,957 13,710,762 
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| --- | --- | | Notes to the Quarterly Information | | | Borrowings and financing outstanding balance | | | December 31, 2020 | | | | --- | --- | --- | --- | --- | --- | | Financial institution | Noncurrent | ****<br><br> <br>Total | ****<br><br> <br>Current | Noncurrent | ****<br><br> <br>Total | | Foreign currency | | | | | | | Inter-American Development Bank - IDB 1212 – US 46,251 thousand (US 51,390 thousand in December 2020) | 179,946 | 231,359 | 53,412 | 213,649 | 267,061 | | Inter-American Development Bank - IDB 4623 – US 19,053 thousand (US 10,220 thousand in December 2020) | 84,963 | 84,963 | - | 46,474 | 46,474 | | International Bank for Reconstruction and Development (IBRD) – IBRDs 7662 and 8906 - US 79,752 thousand (US 82,792 thousand in December 2020) | 362,195 | 392,607 | 31,594 | 393,949 | 425,543 | | JICA 15 – 9,795,655 thousand ( 10,371,870 thousand in December 2020) | 389,377 | 441,294 | 58,117 | 464,936 | 523,053 | | JICA 18 – 8,807,360 thousand ( 9,325,440 thousand in December 2020) | 349,921 | 396,600 | 52,253 | 417,846 | 470,099 | | JICA 17 – 3,361,541 thousand ( 3,349,203 thousand in December 2020) | 140,122 | 150,566 | 11,260 | 156,738 | 167,998 | | JICA 19 – 29,016,288 thousand ( 29,923,047 thousand in December 2020) | 1,223,662 | 1,305,361 | 91,456 | 1,415,683 | 1,507,139 | | IDB 1983AB – US 15,385 thousand (US 23,077 thousand in December 2020) | 37,680 | 76,158 | 39,975 | 78,943 | 118,918 | | Interest and other charges | - | 17,310 | 21,577 | - | 21,577 | | Total in foreign currency | 2,767,866 | 3,096,218 | 359,644 | 3,188,218 | 3,547,862 | | Total borrowings and financing | 13,211,481 | 16,488,628 | 3,034,449 | 14,224,175 | 17,258,624 | | Exchange rate as of June 30, 2021: US 5.0022;  0.04505 (as of December<br> 31, 2020: US 5.1967; 0.05043).<br> As of June 30, 2021, the Company did not have balances of borrowings and financing<br> raised during the year, maturing in up to 12 months. | | | | | |

All values are in US Dollars.

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| --- | --- | | Notes to the Quarterly Information | | | Local currency | Guarantees | Maturity | Annual interest rate | Inflation adjustment | | --- | --- | --- | --- | --- | | 12th issue debentures | Own funds | 2025 | TR + 9.5% | | | 14th issue debentures | Own funds | 2022 | TJLP + 1.92 % (series 1 and 3) and 9.19% (series 2) | IPCA (series 2) | | 17th issue debentures | Own funds | 2023 | CDI + 0.75% (series 1), 4.5% (series 2), and 4.75% (series 3) | IPCA (series 2 and 3) | | 18th issue debentures | Own funds | 2024 | TJLP + 1.92 % (series 1 and 3) and 8.25% (series 2) | IPCA (series 2) | | 21st issue debentures | Own funds | 2022 | CDI + 0.60% (series 1) and CDI+ 0.90% (series 2) | | | 22nd issue debentures | Own funds | 2025 | CDI + 0.58% (series 1), CDI+ 0.90% (series 2), and 6.0% (series 3) | IPCA (series 3) | | 23rd issue debentures | Own funds | 2027 | CDI + 0.49% (series 1) and CDI+ 0.63% (series 2) | | | 24th issue debentures | Own funds | 2029 | 3.20% (series 1) and 3.37% (series 2) | IPCA (series 1 and 2) | | 25th issue debentures | Own funds | October 2021 | CDI + 3.30% | | | 26th issue debentures | Own funds | 2030 | 4.65% (series 1) and 4.95% (series 2) | IPCA (series 1 and 2) | | 27th issue debentures | Own funds | 2027 | CDI + 1.60% (series 1), CDI+ 1.80% (series 2), and 2.25% (series 3) | | | Brazilian Federal Savings Bank | Own funds | 2021/2042 | 5% to 9.5% | TR | | Brazilian Development Bank - BNDES PAC | Own funds | 2023 | TJLP + 1.82% | | | Brazilian Development Bank - BNDES PAC II 9751 | Own funds | 2027 | TJLP + 1.72% | | | Brazilian Development Bank - BNDES PAC II 9752 | Own funds | 2027 | TJLP + 1.72% | | | Brazilian Development Bank - BNDES ONDA LIMPA | Own funds | 2025 | TJLP + 1.92% | | | Brazilian Development Bank – BNDES TIETÊ III | Own funds | 2028 | TJLP + 1.66% | | | Brazilian Development Bank - BNDES 2015 | Own funds | 2035 | TJLP + 2.18% | | | Brazilian Development Bank - BNDES 2014 | Own funds | 2026 | TJLP + 1.76% | | | Inter-American Development Bank – IDB 2202 | Government | 2035 | CDI + 0.86% | | | Inter-American Development Bank – IDB INVEST | Own funds | 2034 | CDI+ 1.90% and CDI 2.70% | | | Leases (Concession Agreements, Program Contracts, and Contract Asset) | | 2035 | 7.73% to 10.12% | IPC | | Leases (others) | | 2026 | 4.25% to 10.70% | | | Other | Own funds | 2025 | 3% (FEHIDRO) TJLP + 1.5% (FINEP) | |

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| --- | --- | | Notes to the Quarterly Information | | | Foreign currency | Guarantees | Maturity | Annual interest rate | Exchange variation | | --- | --- | --- | --- | --- | | Inter-American Development Bank - IDB 1212 – US$ 46,251 thousand | Government | 2025 | 3.31% (*) | US$ | | Inter-American Development Bank - IDB 4623 – US$ 19,053 thousand | Government | 2044 | 1.12% (*) | US$ | | International Bank for Reconstruction and Development (IBRD) – IBRDs 7662 and 8906 - <br><br>US$ 79,752 thousand | Government | 2034 | 2.85% (*) | US$ | | JICA 15 – ¥ 9,795,655 thousand | Government | 2029 | 1.8% and 2.5% | Yen | | JICA 18 – ¥ 8,807,360 thousand | Government | 2029 | 1.8% and 2.5% | Yen | | JICA 17 – ¥ 3,361,641 thousand | Government | 2035 | 1.2% and 0.01% | Yen | | JICA 19 – ¥ 29,016,288 thousand | Government | 2037 | 1.7% and 0.01% | Yen | | IDB 1983AB – US$ 15,385 thousand | - | 2023 | 2.08% to 2.38% (*) | US$ |

(*) Rates comprising LIBOR + contractually defined spread.

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| --- | --- | | Notes to the Quarterly Information | | | (i) | Payment schedule – accounting balances as of June 30, 2021 | | --- | --- | | | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 to 2048 | TOTAL | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | LOCAL CURRENCY | | | | | | | | | | Debentures | 1,521,488 | 588,241 | 687,467 | 925,030 | 491,488 | 383,807 | 1,698,215 | 6,295,736 | | Brazilian Federal Savings Bank | 46,860 | 97,413 | 91,691 | 90,804 | 96,486 | 102,525 | 927,417 | 1,453,196 | | BNDES | 89,531 | 179,062 | 172,323 | 165,668 | 145,490 | 135,671 | 397,671 | 1,285,416 | | IDB 2202 | 90,674 | 181,349 | 181,349 | 181,349 | 181,349 | 181,349 | 1,618,530 | 2,615,949 | | IDB INVEST | 44,815 | 89,630 | 89,630 | 89,630 | 89,630 | 89,630 | 450,243 | 943,208 | | Leases (Concession Agreements, Program Contracts, and Contract Asset) | 34,940 | 35,911 | 38411 | 41,810 | 38,687 | 28,290 | 196,405 | 414,454 | | Leases (others) | 33,385 | 49,504 | 23,424 | 7,630 | 5,068 | 1,080 | - | 120,091 | | Other | 2,019 | 4,038 | 3,977 | 1,757 | 1,610 | - | - | 13,401 | | Interest and other charges | 250,959 | - | - | - | - | - | - | 250,959 | | TOTAL IN LOCAL CURRENCY | 2,114,671 | 1,225,148 | 1,288,272 | 1,503,678 | 1,049,808 | 922,352 | 5,288,481 | 13,392,410 | | FOREIGN CURRENCY | | | | | | | | | | IDB | 25,707 | 51,413 | 51,413 | 51,413 | 53,921 | 5,016 | 77,439 | 316,322 | | IBRD | 15,206 | 30,412 | 30,412 | 30,412 | 30,412 | 30,412 | 225,341 | 392,607 | | JICA | 95,370 | 190,739 | 190,739 | 190,739 | 190,739 | 190,739 | 1,244,756 | 2,293,821 | | IDB 1983AB | - | 38,478 | 37,680 | - | - | - | - | 76,158 | | Interest and other charges | 17,310 | - | - | - | - | - | - | 17,310 | | TOTAL IN FOREIGN CURRENCY | 153,593 | 311,042 | 310,244 | 272,564 | 275,072 | 226,167 | 1,547,536 | 3,096,218 | | Total | 2,268,264 | 1,536,190 | 1,598,516 | 1,776,242 | 1,324,880 | 1,148,519 | 6,836,017 | 16,488,628 |

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| --- | --- | | Notes to the Quarterly Information | | | (ii) | Changes | | --- | --- | | | December 31, 2020 | Addition (lease) | Funding | Borrowing costs | Monetary and exchange variation | Inflation adjustment / exchange variation and incorporated interest- Capitalized | Interest paid | Amortization | Accrued interest | Provision for interest and fees - Capitalized | Expenses with borrowing costs | June<br><br> <br>30, 2021 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | LOCAL CURRENCY | | | | | | | | | | | | | | Debentures | 6,756,504 | - | - | (867) | 95,382 | - | (89,796) | (437,780) | 123,693 | 33,361 | 8,136 | 6,488,633 | | Brazilian Federal Savings Bank | 1,418,832 | - | 84,254 | - | - | - | (55,955) | (45,904) | 36,008 | 20,074 | - | 1,457,309 | | BNDES | 1,370,902 | - | 7,136 | - | - | - | (41,793) | (88,956) | 7,902 | 33,473 | 128 | 1,288,792 | | IDB 2202 | 2,730,195 | - | - | - | - | - | (40,708) | (90,674) | 19,368 | 29,920 | 478 | 2,648,579 | | IDB INVEST | 944,513 | - | - | - | - | - | (7,758) | - | 24,044 | - | 332 | 961,131 | | Leases (Concession Agreements, Program Contracts, and Contract Asset) | 428,743 | - | - | - | - | - | (40,201) | (14,290) | 40,201 | - | - | 414,453 | | Leases (others) | 45,876 | 103,521 | - | - | - | - | (2,790) | (40,044) | 13,529 | - | - | 120,092 | | Other | 15,197 | - | - | - | - | - | (352) | (1,760) | 324 | 12 | - | 13,421 | | TOTAL IN LOCAL CURRENCY | 13,710,762 | 103,521 | 91,390 | (867) | 95,382 | - | (279,353) | (719,408) | 265,069 | 116,840 | 9,074 | 13,392,410 | | FOREIGN CURRENCY | | | | | | | | | | | | | | IDB 1212 | 270,804 | - | - | - | (8,591) | - | (4,149) | (27,111) | 3,325 | - | - | 234,278 | | IDB 4623 | 46,498 | - | 47,593 | (3,796) | (5,393) | - | (324) | - | 440 | - | 85 | 85,103 | | IBRD | 426,860 | - | - | (1,733) | (14,239) | - | (1,375) | (17,070) | 675 | - | 105 | 393,223 | | JICA | 2,684,321 | - | 9,335 | - | (274,159) | 1,870 | (25,450) | (111,609) | 19,797 | 3,001 | 97 | 2,307,203 | | IDB 1983AB | 119,379 | - | - | - | (2,361) | - | (1,617) | (40,606) | 1,123 | 285 | 208 | 76,411 | | TOTAL IN FOREIGN CURRENCY | 3,547,862 | - | 56,928 | (5,529) | (304,743) | 1,870 | (32,915) | (196,396) | 25,360 | 3,286 | 495 | 3,096,218 | | Total | 17,258,624 | 103,521 | 148,318 | (6,396) | (209,361) | 1,870 | (312,268) | (915,804) | 290,429 | 120,126 | 9,569 | 16,488,628 |

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| ITR - Quarterly Information Form - 6/30/2021 - CIA SANEAMENTO BASICO EST SAO PAULO | Version : 1 |

| --- | --- | | Notes to the Quarterly Information | | | | December 31, 2019 | Foreign/local currency translation | Addition (lease) | Funding | Borrowing costs | Monetary and exchange variation | Inflation adjustment / exchange variation and incorporated interest- Capitalized | Interest paid | Amortization | Accrued interest | Accrued interest and<br><br> <br>rates - Capitalized | Expenses with borrowing costs | June<br><br> <br>30, 2020 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | LOCAL CURRENCY | | | | | | | | | | | | | | | Debentures | 3,711,228 | - | - | 1,462,640 | (13,551) | 8,505 | - | (108,961) | (516,816) | 88,678 | 9,129 | 2,760 | 4,643,612 | | Brazilian Federal Savings Bank | 1,429,250 | - | - | 33,129 | - | - | - | (56,252) | (41,531) | 37,297 | 18,921 | - | 1,420,814 | | BNDES | 1,201,411 | - | - | 210,000 | - | - | - | (40,078) | (67,740) | 26,225 | 13,699 | 129 | 1,343,646 | | IDB 2202 | - | 2,063,069 | - | - | - | - | - | - | - | 10,255 | 5,561 | 80 | 2,078,965 | | Leases (Concession Agreements, Program Contracts, and Contract Asset) | 459,671 | - | - | - | - | - | - | (27,662) | (13,486) | 26,488 | - | - | 445,011 | | Leases | 74,453 | - | 23,346 | - | - | - | - | (3,222) | (28,350) | 2,465 | - | - | 68,692 | | Other | 9,898 | - | - | 3,896 | - | - | - | (305) | (750) | 295 | 14 | - | 13,048 | | TOTAL IN LOCAL CURRENCY | 6,885,911 | 2,063,069 | 23,346 | 1,709,665 | (13,551) | 8,505 | - | (236,480) | (668,673) | 191,703 | 47,324 | 2,969 | 10,013,788 | | FOREIGN CURRENCY | | | | | | | | | | | | | | | IDB | 2,316,190 | (2,063,069) | - | - | - | 859,110 | 48,246 | (39,415) | (93,424) | 6,270 | 24,695 | 398 | 1,059,001 | | IBRD | 357,880 | - | - | - | (352) | 125,533 | 1,217 | (5,159) | (14,950) | 5,209 | 752 | 65 | 470,195 | | Eurobonds | 1,413,956 | - | - | - | - | 505,855 | - | (62,722) | - | 58,388 | 5,780 | 412 | 1,921,669 | | JICA | 2,106,908 | - | - | 22,869 | (67) | 742,556 | 8,310 | (19,188) | (87,650) | 19,777 | 3,247 | 95 | 2,796,857 | | IDB 1983AB | 163,864 | - | - | - | (152) | 65,524 | - | (5,092) | (103,482) | 4,333 | 423 | 433 | 125,851 | | TOTAL IN FOREIGN CURRENCY | 6,358,798 | (2,063,069) | - | 22,869 | (571) | 2,298,578 | 57,773 | (131,576) | (299,506) | 93,977 | 34,897 | 1,403 | 6,373,573 | | Total | 13,244,709 | - | 23,346 | 1,732,534 | (14,122) | 2,307,083 | 57,773 | (368,056) | (968,179) | 285,680 | 82,221 | 4,372 | 16,387,361 |

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| ITR - Quarterly Information Form - 6/30/2021 - CIA SANEAMENTO BASICO EST SAO PAULO | Version : 1 |

| --- | --- | | Notes to the Quarterly Information | | | (a) | Main events in the six months ended June 30, 2021 | | --- | --- | | (i) | Debentures | | --- | --- |

In the first quarter of 2021, the Company amortized the first installment of series 3 of the 17th issue debentures, totaling R$ 91.7 million, and series 1 of the 22nd issue debentures, totaling R$ 100.0 million.

In the second quarter of 2021, it amortized series 2 of the 21st issue debentures, totaling R$ 175.0 million.

(ii) IDB

In the first quarter of 2021, the Company raised R$ 17.8 million, referring to another installment of contract IDB 4623, and amortized R$ 90.7 million, referring to contract IDB 2202.

In the second quarter of 2021, the Company raised R$ 29.8 million, referring to another installment of contract IDB 4623.

(iii) JICA

In the first quarter of 2021, the Company amortized R$ 102.8 million, referring to contracts JICA 15, 18, and 19.

(b) Lease

The Company has lease agreements signed as Assets Lease. During the construction period, work costs are capitalized to contract asset and the lease amount is recorded at the same proportion.

After startup, the lease payment period starts (240 monthly installments) and the amount is periodically restated by the contracted price index.

The amounts payable for the right of use of assets are also recorded in this line (Note 14 (j))

(c) Covenants

The table below shows the most restrictive covenants as of June 30, 2021.

Covenants
Adjusted EBITDA / Adjusted Financial Expenses Equal to or higher than 2.80
Adjusted Net Debt / Adjusted EBITDA Equal to or lower than 3.80
Total Adjusted Debt / Adjusted EBITDA Lower than 3.65
Other Onerous Debt ^(1)^ / Adjusted EBITDA Equal to or lower than 1.30
Adjusted Current Liquidity Higher than 1.00
EBITDA / Financial Expenses Paid Equal to or higher than 2.35
Net Debt / Adjusted EBITDA Equal to or lower than 3.50
(1) The contractual definition of “Other Onerous Debts” corresponds to the sum of pension plan obligations and healthcare plan, installment payment of tax debts, and installment payment of debts with the electricity supplier.

As of June 30, 2021 and December 31, 2020, the Company met the requirements set forth by its borrowings and financing agreements.

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| --- | --- | | Notes to the Quarterly Information | | | (d) | Borrowings and financing - credit limited | | --- | --- | | Agent | June 30, 2021 | | --- | --- | | | (in millions of <br><br>Brazilian reais (*)) | | Brazilian Federal Savings Bank | 1,430 | | Brazilian Development Bank (BNDES) | 701 | | Japan International Cooperation Agency (JICA) | 68 | | Inter-American Development Bank (IDB) | 1,405 | | International Bank for Reconstruction and Development (IBRD) | 1,247 | | Other | 51 | | TOTAL | 4,902 |

(*) Brazilian Central Bank’s exchange rate as of June 30, 2021 (US$ 1.00 = R$ 5.0022; ¥ 1.00 = R$ 0.04505).

Financing resources contracted have specific purposes and are released for the execution of their respective investments, according to the progress of the works.

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| --- | --- | | Notes to the Quarterly Information | | | 17 | Taxes and contributions | | --- | --- | | (a) | Current assets | | --- | --- | | | June 30, 2021 | December 31, 2020 | | --- | --- | --- | | Recoverable taxes | | | | Income tax and social contribution | 35,824 | - | | Withheld income tax (IRRF) on financial investments | 4,595 | 4,391 | | Other federal taxes | 3,152 | 18,281 | | Total | 43,571 | 22,672 | | (b) | Current liabilities | | --- | --- |

June 30, 2021 December 31, 2020
Taxes and contributions payable
Income tax and social contribution 75,125 69,041
Cofins and Pasep 101,102 93,601
INSS (social security contribution) 38,690 37,599
IRRF (withholding income tax) 10,703 21,287
Other 32,449 45,291
Total 258,069 266,819 
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| --- | --- | | Notes to the Quarterly Information | | | 18 | Deferred taxes and contributions | | --- | --- | | (a) | Statement of financial position details | | --- | --- |

June 30, 2021 December 31, 2020
Deferred tax assets
Provisions 448,055 436,445
Pension plan obligations - G1 152,568 154,498
Donations of underlying assets on concession agreements 48,800 50,142
Allowance for doubtful accounts 173,324 155,719
Other 120,465 134,932
Total deferred tax asset 943,212 931,736
Deferred tax liabilities
Temporary difference on concession of intangible asset (380,793) (388,675)
Capitalization of borrowing costs (385,843) (390,211)
Profit on supply to government entities (355,618) (356,513)
Actuarial gain – G1 Plan (48,979) (48,979)
Construction margin (47,461) (48,843)
Borrowing costs (16,268) (19,231)
Total deferred tax liabilities (1,234,962) (1,252,452)
Deferred tax liability, net (291,750) (320,716) 
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| --- | --- | | Notes to the Quarterly Information | | | (b) | Changes | | --- | --- | | Deferred tax assets | December 31,<br><br> <br>2020 | Net<br><br> <br>change | June 30,<br><br> <br>2021 | | --- | --- | --- | --- | | Provisions | 436,445 | 11,610 | 448,055 | | Pension plan obligations - G1 | 154,498 | (1,930) | 152,568 | | Donations of underlying assets on concession agreements | 50,142 | (1,342) | 48,800 | | Allowance for doubtful accounts | 155,719 | 17,605 | 173,324 | | Other | 134,932 | (14,467) | 120,465 | | Total | 931,736 | 11,476 | 943,212 | | Deferred tax liabilities | | | | | Temporary difference on concession of intangible asset | (388,675) | 7,882 | (380,793) | | Capitalization of borrowing costs | (390,211) | 4,368 | (385,843) | | Profit on supply to government entities | (356,513) | 895 | (355,618) | | Actuarial gain – G1 | (48,979) | - | (48,979) | | Construction margin | (48,843) | 1,382 | (47,461) | | Borrowing costs | (19,231) | 2,963 | (16,268) | | Total | (1,252,452) | 17,490 | (1,234,962) | | Deferred tax liability, net | (320,716) | 28,966 | (291,750) | | Deferred tax assets | December 31,<br><br> <br>2019 | Net<br><br> <br>change | June 30,<br><br> <br>2020 | | --- | --- | --- | --- | | Provisions | 366,673 | (14,763) | 351,910 | | Pension plan obligations - G1 | 157,998 | (1,995) | 156,003 | | Donations of underlying assets on concession agreements | 51,818 | (1,061) | 50,757 | | Allowance for doubtful accounts | 145,622 | 29,579 | 175,201 | | Other | 183,147 | (24,254) | 158,893 | | Total | 905,258 | (12,494) | 892,764 | | Deferred tax liabilities | | | | | Temporary difference on concession of intangible asset | (408,732) | 10,260 | (398,472) | | Capitalization of borrowing costs | (409,236) | 10,525 | (398,711) | | Profit on supply to government entities | (372,289) | 12,226 | (360,063) | | Actuarial gain – G1 | (54,222) | - | (54,222) | | Construction margin | (83,399) | 33,174 | (50,225) | | Borrowing costs | (11,376) | 1,316 | (10,060) | | Total | (1,339,254) | 67,501 | (1,271,753) | | Deferred tax liability, net | (433,996) | 55,007 | (378,989) |

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| --- | --- | | Notes to the Quarterly Information | | | (c) | Reconciliation of the effective tax rate | | --- | --- |

The amounts recorded as income tax and social contribution expenses in the financial statements are reconciled to the statutory rates, as shown below:

April to<br><br> <br>June 2021 January to<br><br> <br>June 2021 April to<br><br> <br>June 2020 January to<br><br> <br>June 2020
Profit/(loss) before income taxes 1,148,031 1,898,646 517,091 (460,166)
Statutory rate 34% 34% 34% 34%
Estimated expense at the statutory rate (390,331) (645,540) (175,811) 156,456
Benefit of interest on capital 13,874 13,874 48,009 48,009
Permanent differences
Provision Law 4,819/1958 – G0 (i) (5,651) (11,927) (9,669) (19,764)
Donations (2,308) (3,675) (2,156) (5,930)
Other differences 9,437 18,532 696 1,609
Income tax and social contribution (374,979) (628,736) (138,931) 180,380
Current income tax and social contribution (374,219) (657,702) (107,351) 125,373
Deferred income tax and social contribution 760 28,966 (31,580) 55,007
Effective rate 33% 33% 27% 39%
(i) Permanent difference related to the provision for the actuarial liability (Note 21 (ii)).
--- ---
19 Provisions
--- ---
(a) Lawsuits and proceedings that resulted in provisions
--- ---

(I)      Statement of financial position details

The Company is a party to several legal claims and administrative proceedings arising from the normal course of business, including civil, tax, labor, and environmental matters. Management recognizes provisions consistently with the recognition and measurement criteria established in Note 3.14 to the Annual Financial Statements as of December 31, 2020. The terms and payment amounts are defined based on the outcome of these lawsuits.

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| ITR - Quarterly Information Form - 6/30/2021 - CIA SANEAMENTO BASICO EST SAO PAULO | Version : 1 |

| --- | --- | | Notes to the Quarterly Information | | | | June 30, 2021 | | | December 31, 2020 | | | | --- | --- | --- | --- | --- | --- | --- | | <br><br> <br> | Provisions | Escrow deposits | Provisions net of deposits | Provisions | Escrow deposits | Provisions net of deposits | | Customer claims (i) | 161,519 | (10,439) | 151,080 | 160,705 | (10,553) | 150,152 | | Supplier claims (ii) | 362,824 | (865) | 361,959 | 410,734 | (358) | 410,376 | | Other civil claims (iii) | 88,976 | (2,499) | 86,477 | 86,083 | (2,505) | 83,578 | | Tax claims (iv) | 69,091 | (14,746) | 54,345 | 59,678 | (2,410) | 57,268 | | Labor claims (v) | 354,070 | (15,286) | 338,784 | 316,880 | (15,503) | 301,377 | | Environmental claims (vi) | 281,327 | (32) | 281,295 | 249,582 | (31) | 249,551 | | Total | 1,317,807 | (43,867) | 1,273,940 | 1,283,662 | (31,360) | 1,252,302 | | Current | 725,792 | - | 725,792 | 760,209 | - | 760,209 | | Noncurrent | 592,015 | (43,867) | 548,148 | 523,453 | (31,360) | 492,093 |

(II)    Changes

December 31, 2020 Additional provisions Interest and inflation adjustment Use of the accrual Amounts not used<br><br> <br>(reversal) June 30,<br><br> <br>2021
Customer claims (i) 160,705 22,820 13,885 (16,717) (19,174) 161,519
Supplier claims (ii) 410,734 8,964 21,817 (39,309) (39,382) 362,824
Other civil claims (iii) 86,083 2,208 5,750 (2,187) (2,878) 88,976
Tax claims (iv) 59,678 6,071 4,406 - (1,064) 69,091
Labor claims (v) 316,880 54,665 19,205 (20,470) (16,210) 354,070
Environmental claims (vi) 249,582 19,417 21,590 - (9,262) 281,327
Subtotal 1,283,662 114,145 86,653 (78,683) (87,970) 1,317,807
Escrow deposits (31,360) (13,991) (2,370) 3,018 836 (43,867)
Total 1,252,302 100,154 84,283 (75,665) (87,134) 1,273,940 
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| ITR - Quarterly Information Form - 6/30/2021 - CIA SANEAMENTO BASICO EST SAO PAULO | Version : 1 |

| --- | --- | | Notes to the Quarterly Information | | | | December 31, 2019 | Additional provisions | Interest and inflation adjustment | Use of the accrual | Amounts not used<br><br> <br>(reversal) | June 30,<br><br> <br>2020 | | --- | --- | --- | --- | --- | --- | --- | | Customer claims (i) | 253,665 | 6,240 | 9,054 | (73,380) | (41,841) | 153,738 | | Supplier claims (ii) | 153,654 | 74,383 | 8,073 | (35,535) | (734) | 199,841 | | Other civil claims (iii) | 93,910 | 7,297 | 5,247 | (16,981) | (5,994) | 83,479 | | Tax claims (iv) | 59,143 | 1,496 | 1,139 | (75) | (1,764) | 59,939 | | Labor claims (v) | 325,129 | 28,126 | 20,092 | (34,736) | (19,939) | 318,672 | | Environmental claims (vi) | 192,950 | 17,731 | 10,369 | - | (1,690) | 219,360 | | Subtotal | 1,078,451 | 135,273 | 53,974 | (160,707) | (71,962) | 1,035,029 | | Escrow deposits | (42,643) | (6,903) | (833) | 14,539 | 5,587 | (30,253) | | Total | 1,035,808 | 128,370 | 53,141 | (146,168) | (66,375) | 1,004,776 |

(b) Lawsuits deemed as contingent liabilities

The Company is a party to lawsuits and administrative proceedings relating to environmental, tax, civil, and labor claims, which are assessed as contingent liabilities in the financial statements, since it either does not expect outflows to be required or the amount of the obligations cannot be reliably measured. Contingent liabilities, net of deposits, are represented as follows:

June 30, 2021 December 31, 2020
Customer claims (i) 155,798 110,508
Supplier claims (ii) 1,524,686 1,350,308
Other civil claims (iii) 774,145 758,800
Tax claims (iv) 1,349,213 1,253,636
Labor claims (v) 1,057,355 1,005,648
Environmental claims (vi) 6,468,677 5,981,837
Total 11,329,874 10,460,737
(c) Explanation on the nature of main classes of lawsuits
--- ---
(i) Customer claims
--- ---

Approximately 750 lawsuits (690 as of December 31, 2020) were filed by commercial customers, who claim that their tariffs should correspond to those of the other customer categories, and 320 lawsuits (310 as of December 31, 2020) in which customers claimed a reduction in the sewage tariff due to losses in the system, consequently requesting the refund of amounts charged by the Company, and 30 lawsuits (30 as of December 31, 2020) in which customers plead the reduction in tariff under the category “Social Welfare Entity”.

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| --- | --- | | Notes to the Quarterly Information | | | (ii) | Supplier claims | | --- | --- |

Include lawsuits filed by some suppliers alleging underpayment of monetary adjustments and economic and financial imbalance of the agreements, and are in progress at different courts.

(iii) Other civil claims

Refer mainly to indemnities for property damage, pain and suffering, and loss of profits allegedly caused to third parties, such as vehicle accidents, claims, challenges on the methodology to collect tariffs, among others, filed at different court levels.

(iv) Tax claims

Tax claims refer mainly to tax collections and fines in general challenged due to disagreements regarding notification or differences in the interpretation of legislation by the Company's Management, which were accrued while others were deemed as contingent liabilities.

(v) Labor claims

The Company is a party to several labor lawsuits, involving issues such as overtime, shift schedule, health hazard premium and hazardous duty premium, prior notice, change of function, salary equalization, service outsourcing, and others, which are at various court levels.

(vi) Environmental claims

These refer to several administrative proceedings and lawsuits filed by government entities, including Companhia Ambiental do Estado de São Paulo (CETESB) and the Public Prosecution Office of the São Paulo State, which aim at certain obligations to do and not to do, with provision of fines for non-compliance, and imposition of compensation for environmental damages allegedly caused by the Company.

(d) Guarantee insurance

As of May 25, 2020, the Company renewed the insurance for policy issuance, thus contracting guarantee insurance for escrow deposit, totaling R$ 500.000, for one year. The purpose of such insurance is to settle legal claims given that instead of immediately disbursing cash, the Company uses the insurance until the conclusion of these proceedings. The guarantee insurance can be used in up to five years.

From April to June 2021, the Company used R$ 7,456 (R$ 69,771 from April to June 2020).

Until June 2021, the Company used R$ 3,893 of the contract in effect, thus remaining R$ 496,107.

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| --- | --- | | Notes to the Quarterly Information | | | 20 | Labor liabilities and pension plan obligations | | --- | --- | | | June 30, 2021 | December 31, 2020 | | --- | --- | --- | | Salaries and payroll charges | 34,432 | 53,107 | | Provision for vacation | 231,857 | 207,906 | | Provision for Christmas bonus | 49,204 | - | | Healthcare plan (i) | 49,290 | 45,768 | | Provision for profit sharing (ii) | 44,462 | 91,209 | | Consent Decree (TAC) | 6,982 | 8,978 | | Knowledge Retention Program (PRC) | 1,904 | 3,975 | | Total | 418,131 | 410,943 | | (i) | Healthcare plan | | --- | --- |

Benefits are paid after the event, free of choice, and are sponsored by the contributions of SABESP and the employees. In the second quarter of 2021, the Company contributed 7.8%, on average, of gross payroll, totaling R$ 54,881 (9.4% in the second quarter of 2020, totaling R$ 58,670).

(ii) Profit sharing

The profit-sharing program was implemented according to an agreement with the labor union. Payment corresponds to up to one month's salary for each employee, depending on the performance of goals reached from January to December, and should be paid in the subsequent year.

21 Pension plan obligations

The Company has Post-Employment Benefit Plans in the following modalities: Defined Benefit (BD) – G1 (i) and G0 (ii); and Defined Contribution (CD) – Sabesprev Mais (iii), and VIVEST (iv). See the reconciliation of expenses with such plans in item (v).

Defined benefit plans

Summary of pension plan obligations

G1 Plan G0 Plan Total
Pension plan obligations as of December 31, 2020 (319,053) (2,549,541) (2,868,594)
Expenses recognized in 2021 (11,623) (79,107) (90,730)
Payments made in 2021 17,572 82,975 100,547
Pension plan obligations as of June 30, 2021 (313,104) (2,545,673) (2,858,777) 
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| --- | --- | | Notes to the Quarterly Information | | | | G1 Plan | G0 Plan | Total | | --- | --- | --- | --- | | Pension plan obligations as of December 31, 2019 | (314,677) | (3,046,255) | (3,360,932) | | Expenses recognized in 2020 | (12,482) | (103,131) | (115,613) | | Payments made in 2020 | 18,721 | 84,726 | 103,447 | | Pension plan obligations as of June 30, 2020 | (308,438) | (3,064,660) | (3,373,098) | | (i) | G1 Plan | | --- | --- |

Managed by SABESPREV, the defined benefit plan (“G1 Plan”) receives similar contributions established in a plan of subsidy of actuarial study of SABESPREV, as follows:

· 0.99% of the portion of the salary of participation up to 20 salaries; and
· 8.39% of the surplus, if any, of the portion of the salary of participation over 20 salaries.
--- ---
(ii) G0 Plan
--- ---

According to State Law 4,819/1958, employees who started providing services before May 1974 and retired as an employee of the Company acquired a legal right to receive supplemental pension payments, which rights are referred to as "G0 Plan". The Company pays supplemental retirement and pension amounts on behalf of the São Paulo State and seeks reimbursements of such amounts, which are recorded as accounts receivable from shareholders, limited to the amounts considered virtually certain to be reimbursed by the São Paulo State.

(iii) Sabesprev Mais Plan

Since December 31, 2019, the “Sabesprev Mais” Defined Contribution Plan, managed by SABESPREV, has not been accepting any new adhesions and, since January 1, 2020, new employees have the option to join Fundação CESP’s Defined Contribution Plan (VIVEST) Defined Contribution Plan, as well as those who did not join the Sabesprev Mais Plan.

The sponsor's contributions correspond to the result obtained by applying a percentage of 100% on the basic contribution made by the participant.

(iv) VIVEST Plan

Defined Contribution Plan administered by VIVEST. The sponsor's contributions correspond to the result obtained by applying a percentage of 100% on the basic contribution made by the participant.

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| --- | --- | | Notes to the Quarterly Information | | | (v) | Reconciliation of expenditures with pension plan obligations | | --- | --- | | | April to<br><br> <br>June 2021 | January to<br><br> <br>June 2021 | April to<br><br> <br>June 2020 | January to<br><br> <br>June 2020 | | --- | --- | --- | --- | --- | | G1 Plan (i) | 5,812 | 11,623 | 6,241 | 12,482 | | G0 Plan (ii) | 39,553 | 79,107 | 51,566 | 103,131 | | Sabesprev Mais Plan (iii) | 5,604 | 10,890 | 5,475 | 10,894 | | VIVEST Plan (iv) | 32 | 58 | 14 | 15 | | Subtotal | 51,001 | 101,678 | 63,296 | 126,522 | | Capitalized | (1,064) | (2,058) | (1,222) | (2,562) | | Reimbursement of additional retirement and pension benefits paid (G0) | (22,934) | (44,027) | (23,127) | (45,003) | | Other | 1,257 | 2,472 | 1,197 | 3,408 | | Pension plan obligations (Note 27) | 28,260 | 58,065 | 40,144 | 82,365 | | 22 | Services payable | | --- | --- |

This line records the balances payable, mainly from services received from third parties, such as the supply of electric power, reading of hydrometers and delivery of water and sewage bills, cleaning, surveillance and security services, collection, legal counsel services, audit, marketing, and advertising and consulting services, among others. This line also includes the amounts payable related to the transfer of 7.5% of revenue from the São Paulo municipal government to the Municipal Fund for Environmental Sanitation and Infrastructure. The balances as of June 30, 2021 and December 31, 2020, were R$ 496,535 and R$ 453,750, respectively.

23 Equity
(a) Share capital

As of June 30, 2021 and December 31, 2020, the authorized, subscribed and paid-in capital, totaling R$ 15,000.000, was composed of 683,509,869 registered, book-entry common shares with no par value, as follows:

June 30, 2021 December 31, 2020
Number of shares % Number of shares %
São Paulo State 343,507,729 50.3 343,507,729 50.3
Other shareholders
In Brazil ^(1)^ 237,793,046 34.8 254,868,646 37.3
Abroad ^(2) (3)^ 102,209,094 14.9 85,133,494 12.4
Total 683,509,869 100.0 683,509,869 100.0
(1) As of June 30, 2021, the common shares traded in Brazil were held by<br>46,916 shareholders. It includes six shares held by Cia Paulista de Parcerias – CPP, a company controlled by the São Paulo<br>State.
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(2) Shares traded as American Depositary Receipts (ADR) on the New York<br>Stock Exchange, through The Bank New York Mellon, the depositary bank of the Company’s ADRs.
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(3) Each ADR corresponds to 1 share.
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| --- | --- | | Notes to the Quarterly Information | | | (b) | Interest on capital | | --- | --- |

The Annual Shareholders’ Meeting of April 29, 2021 approved the distribution of dividends as interest on capital totaling R$ 231,163, corresponding to a minimum mandatory dividend of R$ 40,806 as additional dividends, totaling

R$ 271,969, paid on June 28, 2021.

24 Earnings<br>per share

Basic and diluted

The basic earnings/(loss) per share is calculated by dividing the equity attributable to owners by the weighted average number of outstanding common shares during the year. The Company does not have potentially dilutive common shares outstanding or debts convertible into common shares. Accordingly, basic and diluted earnings per share are equal.

April to<br><br> <br>June 2021 January to<br><br> <br>June 2021 April to<br><br> <br>June 2020 January to<br><br> <br>June 2020
Profit/(loss) attributable to the Company’s owners 773,052 1,269,910 378,160 (279,786)
Weighted average number of common shares issued 683,509,869 683,509,869 683,509,869 683,509,869
Basic and diluted earnings/(loss) per share (reais per share) 1.13100 1.85793 0.55326 (0.40934) 
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| --- | --- | | Notes to the Quarterly Information | | | 25 | Operating segment information | | --- | --- |

The Company’s Management, composed of the Board of Directors and the Executive Board, has determined the operating segment used to make strategic decisions, such as sanitation services.

Result

April to June 2021
Sanitation (i) Reconciliation to the income statement (ii) Balance according to the financial statements
Gross operating revenue 3,881,211 1,022,904 4,904,115
Gross sales deductions (308,196) - (308,196)
Net operating revenue 3,573,015 1,022,904 4,595,919
Costs, selling, general and administrative expenses (2,700,057) (999,906) (3,699,963)
Income from operations before other operating expenses, net and equity accounting 872,958 22,998 895,956
Other operating income / (expenses), net (899)
Equity accounting 4,161
Financial result, net 248,813
Income before income tax and social contribution 1,148,031
Depreciation and amortization (553,055) (553,055) 
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| --- | --- | | Notes to the Quarterly Information | | | | January to June 2021 | | | | --- | --- | --- | --- | | | Sanitation (i) | Reconciliation to the income statement (ii) | Balance according to the financial statements | | Gross operating revenue | 7,818,433 | 2,046,209 | 9,864,642 | | Gross sales deductions | (591,306) | - | (591,306) | | Net operating revenue | 7,227,127 | 2,046,209 | 9,273,336 | | Costs, selling, general and administrative expenses | (5,290,922) | (2,000,204) | (7,291,126) | | Income from operations before other operating expenses, net and equity accounting | 1,936,205 | 46,005 | 1,982,210 | | Other operating income / (expenses), net | | | 9,778 | | Equity accounting | | | 12,215 | | Financial result, net | | | (105,557) | | Income before income tax and social contribution | | | 1,898,646 | | Depreciation and amortization | (1,095,106) | - | (1,095,106) |

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| --- | --- | | Notes to the Quarterly Information | | | | April to June 2020 | | | | --- | --- | --- | --- | | | Sanitation (i) | Reconciliation to the income statement (ii) | Balance according to the financial statements | | Gross operating revenue | 3,662,613 | 1,019,600 | 4,682,213 | | Gross sales deductions | (249,667) | - | (249,667) | | Net operating revenue | 3,412,946 | 1,019,600 | 4,432,546 | | Costs, selling, general and administrative expenses | (2,355,900) | (996,676) | (3,352,576) | | Income from operations before other operating expenses, net and equity accounting | 1,057,046 | 22,924 | 1,079,970 | | Other operating income / (expenses), net | | | 109,684 | | Equity accounting | | | 2,905 | | Financial result, net | | | (675,468) | | Income before income tax and social contribution | | | 517,091 | | Depreciation and amortization | (498,546) | - | (498,546) |

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| --- | --- | | Notes to the Quarterly Information | | | | January to June 2020 | | | | --- | --- | --- | --- | | | Sanitation (i) | Reconciliation to the income statement (ii) | Balance according to the financial statements | | Gross operating revenue | 7,466,490 | 1,541,020 | 9,007,510 | | Gross sales deductions | (532,614) | - | (532,614) | | Net operating revenue | 6,933,876 | 1,541,020 | 8,474,896 | | Costs, selling, general and administrative expenses | (4,892,785) | (1,505,441) | (6,398,226) | | Income from operations before other operating expenses, net and equity accounting | 2,041,091 | 35,579 | 2,076,670 | | Other operating income / (expenses), net | | | 112,437 | | Equity accounting | | | 6,480 | | Financial result, net | | | (2,655,753) | | Income before income tax and social contribution | | | (460,166) | | Depreciation and amortization | (982,115) | - | (982,115) | | (i) | See Note 31 for information on non-cash effect items<br>and Notes 13 and 14 for information on long-lived assets. | | --- | --- | | (ii) | Construction revenue and related costs are not reported<br>to the CODM. Revenue from construction is recognized in accordance with ICPC 01 (R1) / IFRIC 12 (Concession Agreements) and CPC 47/IFRS<br>15 (Revenue from Contracts with Customers), as all performance obligations are satisfied over time. See Note 14 (e) for further information. | | --- | --- |

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| --- | --- | | Notes to the Quarterly Information | | | 26 | Operating revenue | | --- | --- | | (a) | Revenue from sanitation services: | | --- | --- | | | April to<br><br> <br>June 2021 | January to<br><br> <br>June 2021 | April to<br><br> <br>June 2020 | January to<br><br> <br>June 2020 | | --- | --- | --- | --- | --- | | Metropolitan Region of São Paulo | 2,787,854 | 5,569,632 | 2,630,554 | 5,300,720 | | Regional Systems | 1,093,357 | 2,248,801 | 1,032,058 | 2,165,770 | | Total | 3,881,211 | 7,818,433 | 3,662,612 | 7,466,490 | | (b) | Reconciliation between gross operating revenue and<br>net operating revenue: | | --- | --- | | | April to<br><br> <br>June 2021 | January to<br><br> <br>June 2021 | April to<br><br> <br>June 2020 | January to<br><br> <br>June 2020 | | --- | --- | --- | --- | --- | | Revenue from sanitation services (i) | 3,881,211 | 7,818,433 | 3,662,612 | 7,466,490 | | Construction revenue | 1,022,904 | 2,046,209 | 1,019,600 | 1,541,020 | | Sales tax | (289,903) | (554,788) | (232,769) | (498,820) | | Regulation, Control and Oversight Fee (TRCF) | (18,293) | (36,518) | (16,897) | (33,794) | | Net revenue | 4,595,919 | 9,273,336 | 4,432,546 | 8,474,896 | | (i) | Includes R$ 19,568 and R$ 38,857 referring<br>to the TRCF charged in the municipalities regulated by ARSESP from April to June and from January to June 2021 (R$ 17,168 and R$ 35,906<br>from April to June and from January to June 2020), respectively. | | --- | --- |

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| --- | --- | | Notes to the Quarterly Information | | | 27 | Operating costs and expenses | | --- | --- | | | April to<br><br> <br>June 2021 | January to<br><br> <br>June 2021 | April to<br><br> <br>June 2020 | January to<br><br> <br>June 2020 | | --- | --- | --- | --- | --- | | Operating costs | | | | | | Salaries, payroll charges and benefits | (518,265) | (991,360) | (488,232) | (991,909) | | Pension plan obligations | (9,082) | (17,932) | (8,979) | (18,681) | | Construction costs (Note 25) | (999,906) | (2,000,204) | (996,676) | (1,505,441) | | General supplies | (70,782) | (131,712) | (48,814) | (105,463) | | Treatment supplies | (82,332) | (181,257) | (81,198) | (174,962) | | Outsourced services | (341,052) | (708,647) | (306,044) | (615,008) | | Electricity | (340,012) | (697,987) | (277,707) | (603,545) | | General expenses | (191,077) | (371,554) | (148,979) | (314,775) | | Depreciation and amortization | (510,919) | (1,010,817) | (462,271) | (911,128) | | | (3,063,427) | (6,111,470) | (2,818,900) | (5,240,912) | | Selling expenses | | | | | | Salaries, payroll charges and benefits | (67,812) | (129,074) | (70,081) | (138,075) | | Pension plan obligations | (1,184) | (2,361) | (1,209) | (2,523) | | General supplies | (1,888) | (3,418) | (982) | (2,397) | | Outsourced services | (80,588) | (167,523) | (78,446) | (140,506) | | Electricity | 329 | 676 | (273) | (636) | | General expenses | (31,279) | (58,325) | (26,069) | (60,455) | | Depreciation and amortization | (16,581) | (33,078) | (14,463) | (28,901) | | | (199,661) | (394,455) | (191,523) | (373,493) | | Allowance for doubtful accounts (Note 9 (c)) | (144,101) | (265,152) | (117,177) | (274,666) | | Administrative expenses | | | | | | Salaries, payroll charges and benefits | (63,941) | (121,312) | (59,865) | (123,784) | | Pension plan obligations | (17,994) | (37,772) | (29,956) | (61,161) | | General supplies | (5,356) | (11,165) | (7,721) | (15,345) | | Outsourced services | (58,541) | (107,923) | (57,529) | (110,626) | | Electricity | 311 | 901 | (482) | (815) | | General expenses | (103,414) | (154,750) | (29,416) | (121,647) | | Depreciation and amortization | (25,555) | (51,211) | (21,812) | (42,086) | | Tax expenses | (17,662) | (35,015) | (18,195) | (33,691) | | | (292,774) | (520,049) | (224,976) | (509,155) |

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| --- | --- | | Notes to the Quarterly Information | | | | April to June 2021 | January to June 2021 | April to June 2020 | January to June 2020 | | --- | --- | --- | --- | --- | | Operating costs and expenses | | | | | | Salaries, payroll charges and benefits | (650,018) | (1,241,746) | (618,178) | (1,253,768) | | Pension plan obligations (Note 21) (v)) | (28,260) | (58,065) | (40,144) | (82,365) | | Construction costs (Note 25) | (999,906) | (2,000,204) | (996,676) | (1,505,441) | | General supplies | (78,026) | (146,295) | (57,517) | (123,205) | | Treatment supplies | (82,332) | (181,257) | (81,198) | (174,962) | | Outsourced services | (480,181) | (984,093) | (442,019) | (866,140) | | Electricity | (340,652) | (699,564) | (278,462) | (604,996) | | General expenses | (325,770) | (584,629) | (204,464) | (496,877) | | Depreciation and amortization | (553,055) | (1,095,106) | (498,546) | (982,115) | | Tax expenses | (17,662) | (35,015) | (18,195) | (33,691) | | Allowance for doubtful accounts (Note 9 (c)) | (144,101) | (265,152) | (117,177) | (274,666) | | | (3,699,963) | (7,291,126) | (3,352,576) | (6,398,226) |

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| --- | --- | | Notes to the Quarterly Information | | | 28 | Financial income (expenses) | | --- | --- | | | April to<br><br> <br>June 2021 | January to<br><br> <br>June 2021 | April to<br><br> <br>June 2020 | January to<br><br> <br>June 2020 | | --- | --- | --- | --- | --- | | Financial expenses | | | | | | Interest and charges on borrowings and financing – local currency | (106,659) | (211,339) | (89,259) | (162,840) | | Interest and charges on borrowings and financing – foreign currency | (10,354) | (22,816) | (35,241) | (84,339) | | Other financial expenses | (78,902) | (153,544) | (85,319) | (164,270) | | Income tax over international remittance | - | - | (4,546) | (9,739) | | Inflation adjustment on borrowings and financing | (42,985) | (95,382) | 10,102 | (8,505) | | Other monetary variations | (40,672) | (82,786) | (33,587) | (65,801) | | Interest and inflation adjustments on provisions | (7,482) | (49,436) | (5,148) | (31,409) | | Total financial expenses | (287,054) | (615,303) | (242,998) | (526,903) | | Financial income | | | | | | Inflation adjustment gains | 37,470 | 88,653 | 23,372 | 59,520 | | Income on financial investments | 29,636 | 47,858 | 22,847 | 44,949 | | Interest income | 31,903 | 78,882 | 26,543 | 72,099 | | Cofins and Pasep | (4,604) | (10,018) | (3,599) | (8,476) | | Other | - | 41 | 1 | 4 | | Total financial income | 94,405 | 205,416 | 69,164 | 168,096 | | Financial income (expenses), net of exchange variation | (192,649) | (409,887) | (173,834) | (358,807) | | Exchange variation | | | | | | Exchange variation on borrowings and financing | 442,316 | 304,743 | (502,039) | (2,298,578) | | Exchange variation on assets | 854 | 407 | 404 | 1,628 | | Other exchange variations | - | 6 | 1 | 4 | | Exchange variations, net | 441,462 | 304,330 | (501,634) | (2,296,946) | | Financial income (expenses), net | 248,813 | (105,557) | (675,468) | (2,655,753) |

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| --- | --- | | Notes to the Quarterly Information | | | 29 | Other operating income (expenses), net | | --- | --- | | | April to<br><br> <br>June 2021 | January to<br><br> <br>June 2021 | April to<br><br> <br>June 2020 | January to<br><br> <br>June 2020 | | --- | --- | --- | --- | --- | | Other operating income, net | 11,954 | 19,750 | 30,616 | 40,655 | | Other operating expenses | (12,853) | (9,972) | 79,068 | 71,782 | | Other operating income (expenses), net | (899) | 9,778 | 109,684 | 112,437 |

Other operating income includes the sale of property, plant and equipment, sale of contracts awarded in public bids, right to sell electricity, indemnities and reimbursement of expenses, fines and guarantees, property leases, reuse water, PURA projects and services, net of Cofins and Pasep.

Other operating expenses consist mainly of derecognition of concessions assets due to obsolescence, discontinued construction works, unproductive wells, projects considered economically unfeasible, losses on property, plant and equipment, estimated losses, and operational assets indemnification.

30 Commitments

The Company has agreements to manage and maintain its activities, as well as agreements to build new projects aiming at achieving the objectives proposed in its target plan. The main unrecognized committed amounts as of June 30, 2021 are as follows:

1 year 1-3 years 3-5 years More than<br><br> <br>5 years Total
Contractual obligations – Expenses 1,353,475 707,701 143,146 727,121 2,931,443
Contractual obligations - Investments 2,015,527 1,724,507 1,524,584 359,974 5,624,592
Total 3,369,002 2,432,208 1,667,730 1,087,095 8,556,035 
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| --- | --- | | Notes to the Quarterly Information | | | 31 | Supplemental cash flow information | | --- | --- | | | January to June 2021 | January to June 2020 | | --- | --- | --- | | Total additions to contract assets (Note 13) | 2,225,121 | 1,708,731 | | Total additions to intangible assets (Note 14 (b)) | 119,559 | 373,728 | | Items not affecting cash (see breakdown below) | (871,955) | (827,073) | | Total additions to intangible and contract assets according to the statement of cash flows | 1,472,725 | 1,255,386 | | Investments and financing operations affecting intangible assets but not cash: | | | | Interest capitalized in the period (Note 14 (d)) | 121,996 | 139,994 | | Contractors payable | 204,404 | 196,867 | | Program contract commitments | - | 58,323 | | Performance agreements | 396,029 | 92,190 | | Right of use | 103,521 | 23,346 | | Construction margin (Notes 14 (e) and 25) | 46,005 | 35,579 | | Agreement with the Municipality of Mauá | - | 280,774 | | Total | 871,955 | 827,073 |

32                 Events after the reporting period

· 28th Issue Debentures

As of July 16, 2021, the Company raised R$ 1.2 billion referring to the 28th issue of simple and unsecured debentures, not convertible into shares, in up to three series, according to CVM Instruction 476. The funds raised will be used to refinance commitments maturing in 2021 and to recompose the Company’s cash.

The 28th issue debentures was as follows:

Value Maturity Remuneration
Series 1 R$ 127,800 07/2024 CDI + 1.20% p.a.
Series 2 R$ 888,200 07/2026 CDI + 1.44% p.a.
Series 3 R$ 184,000 07/2028 CDI + 1.60% p.a.
· The agreed covenants are as follows:
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Calculated every quarter, when disclosing the quarterly information or annual financial statements:

  • Net debt/adjusted EBITDA lower than or equal to 3.50;

  • Adjusted EBITDA/paid financial expenses equal to or higher than 1.5;

  • Disposal of operating assets, termination of licenses, loss of concession or loss of the Issuer’s capacity to execute and operate public sanitation services in areas of the São Paulo State which, individually or jointly during the term of the agreement, lead to a reduction of the Issuer’s net sales and/or service revenue of more than twenty-five percent (25%). The above limit will be calculated every quarter, taking into consideration the Issuer’s net operating income during the twelve (12) months before the end of each quarter and using the financial information disclosed by the Issuer.

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    Notes to the Quarterly Information

The failure to comply with the covenants for at least two consecutive quarters, or two non-consecutive quarters within twelve months, will cause the early termination of the agreement (in which case the 30-day cure period does not apply).

The contract has a cross acceleration clause, i.e. the early maturity of any of the Company’s debts, in an individual or aggregate amount equal to or higher than R$ 166 million, adjusted by the IPCA inflation index as of the issue date, constitutes a default event and may result in the early maturity of the obligations arising from the Debentures.

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Comments on the Company’s Projections

Comments on the Company’s Projections

The projections presented in the Reference Form are annual and not quarterly. Therefore, the quarterly comparison between information disclosed in the Reference Form with quarterly results shall not apply.

The projections monitoring occurs every year and are disclosed in the Reference Form.

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Other Information Deemed as Relevant by the Company

**1.**CHANGES IN INTEREST HELD BY THE CONTROLLING SHAREHOLDER, BOARD MEMBERS AND EXECUTIVE OFFICERS

CONSOLIDATED SHAREHOLDING POSITION OF CONTROLLING SHAREHOLDERS, MANAGEMENT AND OUTSTANDING SHARES<br><br> <br>Position as of June 30, 2021
****<br><br> <br>Shareholder Number of<br><br> <br>Common Shares (units) ****<br><br> <br>% Total Number of Shares<br><br> <br>(units) ****<br><br> <br>%
Controlling Shareholder
Treasury Department(1) 343,507,729 50.3% 343,507,729 50.3%
Companhia Paulista de Parcerias<br><br> <br>- CPP ****<br><br> <br>6 ****<br><br> <br>0.0% ****<br><br> <br>6 ****<br><br> <br>0.0%
Management
Board of Directors 0 0.0% 0 0.0%
Executive Board 200 0.0% 200 0.0%
Fiscal Council 0 0.0% 0 0.0%
Treasury Shares - - - -
Other Shareholders
Total 343,507,935 50.3% 343,507,935 50.3%
Outstanding Shares 340,001,934 49.7% 340,001,934 49.7% 
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Other Information Deemed as Relevant by the Company

CONSOLIDATED SHAREHOLDING POSITION OF CONTROLLING SHAREHOLDERS, MANAGEMENT AND OUTSTANDING SHARES<br><br> <br>Position as of June 30, 2020
****<br><br> <br>Shareholder Number of<br><br> <br>Common Shares (units) ****<br><br> <br>% Total Number of Shares<br><br> <br>(units) ****<br><br> <br>%
Controlling Shareholder
Treasury Department 343,507,750 50.3% 343,507,750 50.3%
Companhia Paulista de Parcerias<br><br> <br>- CPP ****<br><br> <br>6 ****<br><br> <br>0.0% ****<br><br> <br>6 ****<br><br> <br>0.0%
Management
Board of Directors 3,000 0.0% 3,000 0.0%
Executive Board - - - -
Fiscal Council 0 0.0% 0 0.0%
Treasury Shares - - - -
Other Shareholders
Total 343,510,756 50.3% 343,510,756 50.3%
Outstanding Shares 339,999,113 49.7% 339,999,113 49.7%

**2.**SHAREHOLDING POSITION

SHAREHOLDING POSITION OF HOLDERS OF MORE THAN 5% OF EACH TYPE AND CLASS OF COMPANY SHARES, UP TO THE INDIVIDUAL LEVEL
Company:<br><br> <br>CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO Position as of June 30, 2021<br><br> <br>(number of shares)
Common shares Total
Shareholder Number of shares % Number of shares %
****<br><br> <br>Treasury Department ****<br><br> <br>343,507,729 ****<br><br> <br>50.3% ****<br><br> <br>343,507,729 ****<br><br> <br>50.3% 
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Reports and Statements / Unqualified Reports on Special Review

Report on Review of Interim Financial Information

To the Shareholders, Directors and Management of

Companhia de Saneamento Básico do Estado de São Paulo – SABESP

São Paulo – SP

Introduction

We have reviewed the accompanying interim financial information of Companhia de Saneamento Básico do Estado de São Paulo (“Company”), included in the Interim Financial Information Form (ITR) for the quarter ended June 30, 2021, which comprises the Statement of financial position as of June 30, 2021 and the related income statement and statement of comprehensive income for the three and six months then ended and the statements of changes in equity and cash flows for the six months then ended, including a summary of significant accounting policies and other explanatory notes.

Management is responsible for the preparation of the interim financial information in accordance with Technical Pronouncement NBC TG - 21- Interim Financial Reporting and IAS 34 - Interim Financial Reporting, issued by the International Accounting Standards Board (IASB), as well as for the presentation of such information in accordance with the standards issued by the Brazilian Securities and Exchange Commission (CVM) applicable to the preparation of Interim Financial Information (ITR). Our responsibility is to express a conclusion on this interim financial information based on our review.

Scope of Review

We conducted our review in accordance with Brazilian and international standards on review of interim financial information (NBC TR 2410 and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the standards on auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion on the interim financial information

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information included in the Interim Financial Information Form (ITR) referred to above is not prepared, in all material respects, in accordance with NBC TG – 21 and IAS 34 applicable to the preparation of interim financial information and presented in accordance with the standards issued by the Brazilian Securities and Exchange Commission (CVM).

Other matters

Review of corresponding values related to comparative period

The review of the interim financial information for the quarter ended June 30, 2020 was performed by another independent auditor, who issued the review report without mofidication over the aforementioned interim financial information on August 13, 2020.

Statement of value added

The quarterly information referred to above includes stetements of value added for the period of six months ended June 30, 2021, prepared under the responsibility of the Company's management and presented as supplementary information for the purposes of IAS 34. These statements were submitted to the same review procedures in conjunction with the review of the Company's interim financial information in the order to conclude they are reconciliated to the interim financial information and to the accounting records, as applicable, and whether the structure and content are in accordance with the criteria established in the NBC TG 09 - Statement of Value Added. Based on our review, nothing has come to our attention that causes us to believe that the accompanying statements of value added were not prepared, in all material respects, in accordance with the interim financial information taken as a whole.

São Paulo, August 12, 2021

Nelson Fernandes Barreto Filho

CT CRC 1SP-151.079/O-0

Grant Thornton Auditores Independentes

CRC 2SP-025.583/O-1

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Reports and Statements / Executive Officers’ Statement on the Financial Statements

Executive Officers’ Statement on the Quarterly Information

STATEMENT

The Executive Officers of Companhia de Saneamento Básico do Estado de São Paulo - SABESP, with Corporate Taxpayers’ ID (CNPJ/MF) number 43.776.517/0001-80, headquartered at Rua Costa Carvalho, nº 300, Pinheiros, São Paulo, declare that, according to paragraph 1 of article 25, item VI of CVM Instruction 480, of December 7, 2009:

They reviewed, discussed and agreed with the quarterly information for the period ended June 30, 2021.

São Paulo, August 12, 2021.

Companhia de Saneamento Básico do Estado de São Paulo – SABESP

Benedito Pinto Ferreira Braga Junior

CEO

Osvaldo Garcia

CFO and Investor Relations Officer

Adriano Candido Stringhini

Corporate Management Officer

Alceu Segamarchi Junior

Technology, Project and Environment Officer

Ricardo Daruiz Borsari

Metropolitan Officer

Monica Ferreira do Amaral Porto

Regional Systems Officer

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Reports and Statements / Executive Officers’ Statement on the Report of Independent Registered Public Accounting Firm

Executive Officers’ Statement on the Report of Independent Registered Public Accounting Firm

STATEMENT

The Executive Officers of Companhia de Saneamento Básico do Estado de São Paulo - SABESP, with Corporate Taxpayers’ ID (CNPJ/MF) number 43.776.517/0001-80, headquartered at Rua Costa Carvalho, nº 300, Pinheiros, São Paulo, declare that, according to paragraph 1 of article 25, item V of CVM Instruction 480, of December 7, 2009:

They reviewed, discussed and agreed with the Report of Independent Registered Public Accounting Firm on the quarterly information for the period ended June 30, 2021.

São Paulo, August 12, 2021.

Companhia de Saneamento Básico do Estado de São Paulo – SABESP

Benedito Pinto Ferreira Braga Junior

CEO

Osvaldo Garcia

CFO and Investor Relations Officer

Adriano Candido Stringhini

Corporate Management Officer

Alceu Segamarchi Junior

Technology, Project and Environment Officer

Ricardo Daruiz Borsari

Metropolitan Officer

Monica Ferreira do Amaral Porto

Regional Systems Officer

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the city São Paulo, Brazil.

Date: August 27, 2021

Companhia de Saneamento Básico do Estado de São Paulo - SABESP
By: /s/  Osvaldo Garcia    <br><br> <br>* * *
Name: Osvaldo Garcia<br><br><br> <br>Title: Chief Financial Officer and Investor Relations Officer

FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.

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