Companhia De Saneamento Basico Do Estado De Sao Paulo-Sabesp 6-K, filed Mar 31, 2022
Companhia De Saneamento Basico Do Estado De Sao Paulo-Sabesp (SBS)
About this 6-K
Companhia De Saneamento Basico Do Estado De Sao Paulo-Sabesp filed this 6-K on March 31, 2022.
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 March, 2022 (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):
| 1 |
|---|
| Earnings Results<br><br>**2021** |
| --- | | Highlights | | --- |
In 2021, the Company recorded a net income of R$ 2,305.9 million, compared to the R$ 973.3 million reported in 2020, an increase of R$ 1,332.6 million (+136.9%).
Adjusted EBITDA totaled R$ 6,372.7 million, a decrease of R$ 49.1 million from the R$ 6,421.8 million reported in 2020 (-0.8%).
Revenue from sanitationservices
Increased by R$ 1,146.4 million, impacted by: (i) tariff adjustment; (ii) higher total volume, excluding the volumes from the Residential Social and Residential Favela categories that were exempt from paying the tariff in 2020; and (iii) higher average tariff due to the increase in the billed volume from the Commercial and Industrial categories.
Costs, administrativeand selling expenses (excluding construction costs)
Growth of R$ 1,318.6 million, mainly due to the: (i) R$ 339.4 million increase in expenses with services; (ii) R$ 248.5 million increase in electricity expenses; (iii) R$ 216.2 million increase in depreciation and amortization expenses; (iv) R$ 212.9 million increase in general expenses; and (v) R$ 198.9 million increase in the allowance for doubtful accounts.
Compared to the increases above, personnel expenses remained flat year-on-year, increasing by only 0.3%, mainly due to the 5.4% decrease in the average number of employees, caused by employee terminations under the Knowledge Retention Program in 2020.
Impacts from the exchangevariation
Exchange variation expenses on borrowings and financing fell by R$ 2,228.8 million, due to the lower appreciation of the U.S. dollar and the depreciation of the Japanese Yen against the Brazilian real in 2021, compared to the appreciation reported in 2020, as shown in the chart below:
| 2021 | 2020 | |
|---|---|---|
| Debt in foreign currency - R$ thousand | 3,296,153 | 3,547,862 |
| Foreign currency debt as a percentage of total debt | 19% | 21% |
| U.S. variation in the year | 7.4% | 28.9% |
| Yen variation in the year | (3.9%) | 35.7% |
Operations in themunicipality of Mauá
In June 2020, the Company entered into an agreement with the municipality of Mauá, starting operations in November. The impact of the agreement in 2020 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$ 226.5 million year-on-year in 2021, as shown below:
| R$ million | ||||
|---|---|---|---|---|
| Impacts of Mauá | 2021 | 2020 | Var. | |
| Revenue – Wholesale Agreement^(1)^ | - | 195.0 | (195.0) | |
| Revenue - Retail^(2)^ | 99.2 | 10.8 | 88.4 | |
| (=) | Total revenue from sanitation services | 99.2 | 205.8 | (106.6) |
| COFINS and PASEP | (7.2) | (14.6) | 7.4 | |
| (=) | Net revenue | 92.0 | 191.2 | (99.2) |
| Costs and expenses^(3)^ | (45.1) | (3.7) | (41.4) | |
| Estimated losses with indemnification of assets^(4)^ | - | 85.9 | (85.9) | |
| (=) | Total Expenses | (45.1) | 82.2 | (127.3) |
| (=) | Net effect | 46.9 | 273.4 | (226.5) |
| 1. | Non-recurring revenue in 2020 resulting from the formalization of the agreement | |||
| --- | --- | |||
| 2. | Revenue referring to billing from retail operations | |||
| --- | --- | |||
| 3. | Costs and expenses related to the beginning of operations (excludes indirect costs and expenses) | |||
| --- | --- | |||
| 4. | Non-recurring reversal of estimated losses with asset compensation, due to the formalization of the agreement | |||
| --- | --- | |||
| 2 | ||||
| --- |
| Earnings Results<br><br>**2021** |
| --- |
Impacts from the COVID-19pandemic
| · | Increase of R$ 198.9 million (+44.7%) in the allowance for doubtful accounts, mainly from the higher delinquency<br>recorded in 2021; and | |||||||
|---|---|---|---|---|---|---|---|---|
| · | Payment exemption for customers in the Residential Social and Residential Favela<br>categories in 2020, estimated at R$ 125.0 million, offset in the Third Ordinary Tariff Revision in 2021. | |||||||
| --- | --- | |||||||
| 1. | Financial Highlights | |||||||
| --- | --- | |||||||
| R million | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2021 | 2020 | Var. (R$) | % | 4Q21 | 4Q20 | Var. (R$) | % | |
| 16,304.2 | 15,157.8 | 1,146.4 | 7.6 | 4,200.8 | 4,052.2 | 148.6 | 3.7 | |
| 4,376.7 | 3,716.6 | 660.1 | 17.8 | 1,144.4 | 1,122.2 | 22.2 | 2.0 | |
| (1,189.9) | (1,076.9) | (113.0) | 10.5 | (281.4) | (290.2) | 8.8 | (3.0) | |
| (=) | 19,491.0 | 17,797.5 | 1,693.5 | 9.5 | 5,063.8 | 4,884.2 | 179.6 | 3.7 |
| (11,115.4) | (9,796.8) | (1,318.6) | 13.5 | (3,050.4) | (2,477.5) | (572.9) | 23.1 | |
| (4,278.3) | (3,630.1) | (648.2) | 17.9 | (1,118.7) | (1,095.0) | (23.7) | 2.2 | |
| 22.1 | 14.1 | 8.0 | 56.7 | 5.9 | 4.5 | 1.4 | 31.1 | |
| (21.8) | 107.7 | (129.5) | (120.2) | (34.3) | (5.6) | (28.7) | 512.5 | |
| (=) | 4,097.6 | 4,492.4 | (394.8) | (8.8) | 866.3 | 1,310.6 | (444.3) | (33.9) |
| (927.4) | (3,166.4) | 2,239.0 | (70.7) | (301.2) | (180.0) | (121.2) | 67.3 | |
| (=) | 3,170.2 | 1,326.0 | 1,844.2 | 139.1 | 565.1 | 1,130.6 | (565.5) | (50.0) |
| (864.3) | (352.7) | (511.6) | 145.1 | 2.4 | (299.1) | 301.5 | (100.8) | |
| (=) | 2,305.9 | 973.3 | 1,332.6 | 136.9 | 567.5 | 831.5 | (264.0) | (31.7) |
| 3.37 | 1.42 | 0.83 | 1.22 |
All values are in US Dollars.
* Total shares = 683,509,869
Adjusted EBITDA Reconciliation(Non-accounting measures)
| R million | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | Var. (R$) | % | 4Q21 | 4Q20 | Var. (R$) | % | |
| 2,305.9 | 973.3 | 1,332.6 | 136.9 | 567.5 | 831.5 | (264.0) | (31.7) | |
| 864.3 | 352.7 | 511.6 | 145.1 | (2.4) | 299.1 | (301.5) | (100.8) | |
| 927.4 | 3,166.4 | (2,239.0) | (70.7) | 301.2 | 180.0 | 121.2 | 67.3 | |
| 21.8 | (107.7) | 129.5 | (120.2) | 34.3 | 5.6 | 28.7 | 512.5 | |
| (=) | 4,119.4 | 4,384.7 | (265.3) | (6.1) | 900.6 | 1,316.2 | (415.6) | (31.6) |
| 2,253.3 | 2,037.1 | 216.2 | 10.6 | 593.3 | 526.8 | 66.5 | 12.6 | |
| (=) | 6,372.7 | 6,421.8 | (49.1) | (0.8) | 1,493.9 | 1,843.0 | (349.1) | (18.9) |
| 32.7 | 36.1 | 29.5 | 37.7 |
All values are in US Dollars.
* Adjusted EBIT corresponds to net income before: (i) other operating revenues (expenses), net; (ii) financial result; and (iii) income tax and social contribution.
** Adjusted EBITDA corresponds to net income before: (i) other operating revenues (expenses), net; (ii) financial result; (iii) income tax and social contribution; and (iv) depreciation and amortization expenses.
| 3 |
|---|
| Earnings Results<br><br>**2021** |
| --- |
The net operating revenue, which considers construction revenue, totaled R$ 19,491.0 million in 2021, up by 9.5% over 2020.
Costs and expenses, which consider construction costs, totaled R$ 15,393.7 million, up by 14.6% over 2020.
Adjusted EBIT, of R$ 4,119.4 million, fell by 6.1% from the R$ 4,384.7 million recorded in 2020. Adjusted EBITDA, of R$ 6,372.7 million, fell by 0.8% from the R$ 6,421.8 million recorded in 2020.
Adjusted EBITDA margin reached 32.7% in 2021, compared to the 36.1% recorded in 2020.
Excluding the effects of revenue and construction costs, the adjusted EBITDA margin was 41.5% in 2021, compared to the 45.0% recorded in 2020.
The Company recorded a net income of R$ 2,305.9 million in 2021, compared to R$ 973.3 million reported in 2020.
| 2. | Revenue from sanitation services |
|---|
The gross operating revenue from sanitation services, which excludes construction revenue, totaled R$ 16,304.2 million in 2021, an increase of R$ 1,146.4 million (+7.6%) over the R$ 15,157.8 million recorded in 2020.
Among others, the main factors that led to this increase were:
| · | Tariff adjustment of 3.4% since August 2020; and |
|---|---|
| · | Average tariff adjustment of 7.0% since May 2021. |
| --- | --- |
| 3. | Construction revenue |
| --- | --- |
Construction revenue increased by R$ 660.1 million (+17.8%) in 2021, due to higher investments made.
| 4. | Billed volume |
|---|
The following tables show the water and sewage billed volume, on a quarter-on-quarter and year-on-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 | 2021 | 2020 | % | 2021 | 2020 | % | 2021 | 2020 | % |
| Residential | 1,864.8 | 1,802.2 | 3.5 | 1,629.9 | 1,565.9 | 4.1 | 3,494.7 | 3,368.1 | 3.8 |
| Commercial | 168.5 | 163.5 | 3.1 | 159.0 | 155.9 | 2.0 | 327.5 | 319.4 | 2.5 |
| Industrial | 33.6 | 31.4 | 7.0 | 35.8 | 35.9 | (0.3) | 69.4 | 67.3 | 3.1 |
| Public | 35.7 | 36.7 | (2.7) | 31.4 | 32.4 | (3.1) | 67.1 | 69.1 | (2.9) |
| Total retail | 2,102.6 | 2,033.8 | 3.4 | 1,856.1 | 1,790.1 | 3.7 | 3,958.7 | 3,823.9 | 3.5 |
| Wholesale^(3)^ | 49.7 | 50.1 | (0.8) | 15.8 | 14.5 | 9.0 | 65.5 | 64.6 | 1.4 |
| Subtotal | 2,152.3 | 2,083.9 | 3.3 | 1,871.9 | 1,804.6 | 3.7 | 4,024.2 | 3,888.5 | 3.5 |
| Mauá^(4)^ | 21.5 | 29.5 | (27.1) | - | - | - | 21.5 | 29.5 | (27.1) |
| Residential Social/Favela^(5)^ | - | 45.8 | (100.0) | - | 35.3 | (100.0) | - | 81.1 | (100.0) |
| Total | 2,173.8 | 2,159.2 | 0.7 | 1,871.9 | 1,839.9 | 1.7 | 4,045.7 | 3,999.1 | 1.2 |
| 4 | |||||||||
| --- |
| Earnings Results<br><br>**2021** |
| --- | | | Water | | | Sewage | | | Water + Sewage | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Category | 4Q21 | 4Q20 | % | 4Q21 | 4Q20 | % | 4Q21 | 4Q20 | % | | Residential | 470.6 | 455.0 | 3.4 | 411.7 | 395.6 | 4.1 | 882.3 | 850.6 | 3.7 | | Commercial | 45.3 | 41.8 | 8.4 | 41.9 | 39.7 | 5.5 | 87.2 | 81.5 | 7.0 | | Industrial | 8.6 | 8.3 | 3.6 | 8.5 | 8.6 | (1.2) | 17.1 | 16.9 | 1.2 | | Public | 8.8 | 8.8 | - | 7.6 | 7.6 | - | 16.4 | 16.4 | - | | Total retail | 533.3 | 513.9 | 3.8 | 469.7 | 451.5 | 4.0 | 1,003.0 | 965.4 | 3.9 | | Wholesale^(3)^ | 12.0 | 12.9 | (7.0) | 4.3 | 3.5 | 22.9 | 16.3 | 16.4 | (0.6) | | Subtotal | 545.3 | 526.8 | 3.5 | 474.0 | 455.0 | 4.2 | 1,019.3 | 981.8 | 3.8 | | Mauá^(4)^ | 5.3 | 3.4 | 55.9 | - | - | - | 5.3 | 3.4 | 55.9 | | Residential Social/Favela^(5)^ | - | 18.4 | (100.0) | - | 14.2 | (100.0) | - | 32.6 | (100.0) | | Total | 550.6 | 548.6 | 0.4 | 474.0 | 469.2 | 1.0 | 1,024.6 | 1,017.8 | 0.7 | | WATER AND SEWAGE BILLED VOLUME^(1)^ PER REGION - million m^3^ | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Water | | | Sewage | | | Water + Sewage | | | | Region | 2021 | 2020 | % | 2021 | 2020 | % | 2021 | 2020 | % | | Metropolitan | 1,419.4 | 1,351.3 | 5.0 | 1,255.7 | 1,192.6 | 5.3 | 2,675.1 | 2,543.9 | 5.2 | | Regional^(2)^ | 683.2 | 682.5 | 0.1 | 600.4 | 597.5 | 0.5 | 1,283.6 | 1,280.0 | 0.3 | | Total retail | 2,102.6 | 2,033.8 | 3.4 | 1,856.1 | 1,790.1 | 3.7 | 3,958.7 | 3,823.9 | 3.5 | | Wholesale^(3)^ | 49.7 | 50.1 | (0.8) | 15.8 | 14.5 | 9.0 | 65.5 | 64.6 | 1.4 | | Subtotal | 2,152.3 | 2,083.9 | 3.3 | 1,871.9 | 1,804.6 | 3.7 | 4,024.2 | 3,888.5 | 3.5 | | Mauá^(4)^ | 21.5 | 29.5 | (27.1) | - | - | - | 21.5 | 29.5 | (27.1) | | Residential Social/Favela^(5)^ | - | 45.8 | (100.0) | - | 35.3 | (100.0) | - | 81.1 | (100.0) | | Total | 2,173.8 | 2,159.2 | 0.7 | 1,871.9 | 1,839.9 | 1.7 | 4,045.7 | 3,999.1 | 1.2 | | | Water | | | Sewage | | | Water + Sewage | | | | Region | 4Q21 | 4Q20 | % | 4Q21 | 4Q20 | % | 4Q21 | 4Q20 | % | | Metropolitan | 359.0 | 339.4 | 5.8 | 316.3 | 299.3 | 5.7 | 675.3 | 638.7 | 5.7 | | Regional^(2)^ | 174.3 | 174.5 | (0.1) | 153.4 | 152.2 | 0.8 | 327.7 | 326.7 | 0.3 | | Total retail | 533.3 | 513.9 | 3.8 | 469.7 | 451.5 | 4.0 | 1,003.0 | 965.4 | 3.9 | | Wholesale^(3)^ | 12.0 | 12.9 | (7.0) | 4.3 | 3.5 | 22.9 | 16.3 | 16.4 | (0.6) | | Subtotal | 545.3 | 526.8 | 3.5 | 474.0 | 455.0 | 4.2 | 1,019.3 | 981.8 | 3.8 | | Mauá^(4)^ | 5.3 | 3.4 | 55.9 | - | - | - | 5.3 | 3.4 | 55.9 | | Residential Social/Favela^(5)^ | - | 18.4 | (100.0) | - | 14.2 | (100.0) | - | 32.6 | (100.0) | | Total | 550.6 | 548.6 | 0.4 | 474.0 | 469.2 | 1.0 | 1,024.6 | 1,017.8 | 0.7 | | 1. | Not reviewed by external auditors | | --- | --- | | 2. | Including coastal and interior regions | | --- | --- | | 3. | Wholesale includes volumes of reuse water and non-domestic sewage | | --- | --- | | 4. | Billed volume in the wholesale segment in 2020 and in the retail segment in 2021 | | --- | --- | | 5. | Volume exempt of payment in 2020 | | --- | --- | | 5. | Costs, administrative & selling expenses and construction costs | | --- | --- |
Costs, administrative and selling expenses, and construction costs increased by R$ 1,966.8 million in 2021 (+14.6%). Excluding construction costs, the increase was R$ 1,318.6 million (+13.5%).
Costs, administrative and selling expenses, and construction costs as a percentage of net revenue was 79.0% in 2021, compared to the 75.4% recorded in 2020.
| 5 |
|---|
| Earnings Results<br><br>**2021** |
| --- | | | | | | | | | R million | | --- | --- | --- | --- | --- | --- | --- | --- | | | 2021 | 2020 | Var. (R$) | % | 4Q21 | 4Q20 | Var. (R) | | Salaries and payroll charges and Pension plan obligations | 2,656.0 | 2,647.0 | 9.0 | 0.3 | 675.0 | 641.5 | 33.5 | | General supplies | 333.3 | 263.8 | 69.5 | 26.3 | 107.7 | 77.1 | 30.6 | | Treatment materials | 364.5 | 338.8 | 25.7 | 7.6 | 101.2 | 84.9 | 16.3 | | Services | 2,111.8 | 1,772.4 | 339.4 | 19.1 | 605.7 | 448.7 | 157.0 | | Electricity | 1,465.9 | 1,217.4 | 248.5 | 20.4 | 391.3 | 301.4 | 89.9 | | General expenses | 1,211.0 | 998.1 | 212.9 | 21.3 | 298.9 | 276.8 | 22.1 | | Tax expenses | 75.9 | 77.4 | (1.5) | (1.9) | 17.3 | 25.3 | (8.0) | | Subtotal | 8,218.4 | 7,314.9 | 903.5 | 12.4 | 2,197.1 | 1,855.7 | 341.4 | | Depreciation and amortization | 2,253.3 | 2,037.1 | 216.2 | 10.6 | 593.3 | 526.8 | 66.5 | | Allowance for doubtful accounts | 643.7 | 444.8 | 198.9 | 44.7 | 260.0 | 95.0 | 165.0 | | Subtotal | 2,897.0 | 2,481.9 | 415.1 | 16.7 | 853.3 | 621.8 | 231.5 | | Costs, administrative and selling expenses | 11,115.4 | 9,796.8 | 1,318.6 | 13.5 | 3,050.4 | 2,477.5 | 572.9 | | Construction costs | 4,278.3 | 3,630.1 | 648.2 | 17.9 | 1,118.7 | 1,095.0 | 23.7 | | Costs, adm & selling expenses and construction costs | 15,393.7 | 13,426.9 | 1,966.8 | 14.6 | 4,169.1 | 3,572.5 | 596.6 | | % of net revenue | 79.0 | 75.4 | | | 82.3 | 73.1 | |
All values are in US Dollars.
Salaries and payrollcharges and Pension plan obligations
The R$ 9.0 million increase (+0.3%) recorded in 2021 was due to:
| · | R$ 40.8 million, of which: (i) R$ 21.1 million in overtime expenses; and (ii)<br>R$ 19.7 million in healthcare expenses, both resulting from higher social distancing in 2020 because of COVID-19; and |
|---|---|
| · | R$ 18.3 million mainly due to the application of 1% referring to the Career and<br>Salary Plan in February 2021, and the 7.8% salary adjustment in May 2021, partially offset by the 5.4% decline in the average of number<br>of employees dismissed from the Knowledge Retention Program in 2020. |
| --- | --- |
The increases above were partially offset by the R$ 45.4 million decrease in pension plans expenses, due to changes in the actuarial assumptions, mainly the reduction of the base of participants of the defined benefit plan G0, referring to Law 4,819/58.
General supplies
The R$ 69.5 million increase (+26.3%) mainly resulted from: (i) R$ 32.6 million with the maintenance of water and sewage connections and networks; (ii) R$ 14.6 million with water and sewage system maintenance; and (iii) R$ 12.4 million with fuels and lubricants.
Treatment supplies
Increase of R$ 25.7 million (+7.6%), mainly due to the higher use of algaecides, coagulants, and disinfectants in several Water Treatment Plants to maintain the quality of raw water, as well as to the increase in the prices of some chemicals.
Services
Service expenses totaled R$ 2,111.8 million in 2021, an increase of R$ 339.4 million (+19.1%) over the R$ 1,772.4 million recorded in 2020. The main increases were:
| · | R$ 112.7 million with the maintenance of water and sewage connections and networks; |
|---|---|
| · | R$ 56.3 million with technical services, especially computer technical support; |
| --- | --- |
| 6 | |
| --- |
| Earnings Results<br><br>**2021** |
| --- | | · | R$ 48.9 million with water meter reading, due to the reduction in 2020; | | --- | --- | | · | R$ 39.8 million with paving and replacing of sidewalks; | | --- | --- | | · | R$ 33.8 million with customer service channels; | | --- | --- | | · | R$ 12.6 million with publicity; and | | --- | --- | | · | R$ 11.0 million with maintenance of properties and facilities. | | --- | --- |
Electricity
Electricity expenses totaled R$ 1,465.9 million in 2021, an increase of R$ 248.5 million (+20.4%) over the R$ 1,217.4 million recorded in 2020. The Free Market Tariffs (ACL) accounted for 51.2% of total expenses in 2021 (47.5% in 2020), while the Regulated Market Tariffs (ACR) accounted for 48.8% (52.5% in 2020).
The main factors that contributed to this variation were:
| · | Average increase of 2.3% in ACL prices (includes Grid Market Tariffs - TUSD), with a 15.7% rise in consumption;<br>and |
|---|---|
| · | Average increase of 18.9% in ACR tariffs, with a 7.9% decrease in consumption. |
| --- | --- |
General expenses
General expenses totaled R$ 1,211.0 million in 2021, an increase of R$ 212.9 million (+21.3%) over the R$ 998.1 million recorded in 2020, mainly due to:
| · | Higher expenses with lawsuits in 2021, of R$ 87.2 million; |
|---|---|
| · | Higher provision for transfer to the Municipal Funds for Environmental Sanitation<br>and Infrastructure, of R$ 78.3 million, resulting from an increase revenue and the number of municipalities with expected transfers. Expenses<br>with municipal transfers totaled R$ 615.9 million in 2021, compared to the R$ 537.6 million reported in 2020; and |
| --- | --- |
| · | Increase of R$ 13.6 million in expenses with the use of water. |
| --- | --- |
Depreciation and amortization
The R$ 216.2 million increase (+10.6%) was due to the beginning of operations of intangible assets, totaling R$ 4.2 billion.
Allowance for doubtfulaccounts
Increase of R$ 198.9 million (+44.7%), due to the higher delinquency recorded in 2021.
| 6. | Other operating income (expenses), net |
|---|
Other net operating income and expenses fell by R$ 129.5 million, due to the following non-recurring effects recorded in 2020: (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 |
|---|
| Earnings Results<br><br>**2021** |
| --- | | 7. | Financial result | | --- | --- | | | | | | | --- | --- | --- | --- | | | 2021 | 2020 | Var. (R) | | Financial expenses, net of income | (692.5) | (807.1) | 114.6 | | Net monetary and exchange variation | (234.9) | (2,359.3) | 2,124.4 | | Financial result | (927.4) | (3,166.4) | 2,239.0 |
All values are in US Dollars.
Financial expenses,net of income
| R$ million | ||||
|---|---|---|---|---|
| 2021 | 2020 | Var. (R$) | % | |
| Financial expenses | ||||
| Interest and charges on domestic loans and financing | (517.2) | (348.0) | (169.2) | 48.6 |
| Interest and charges on international loans and financing | (46.8) | (136.3) | 89.5 | (65.7) |
| Other financial expenses | (402.0) | (538.5) | 136.5 | (25.3) |
| Total financial expenses | (966.0) | (1,022.8) | 56.8 | (5.6) |
| Financial income | 273.5 | 215.7 | 57.8 | 26.8 |
| Financial expenses net of income | (692.5) | (807.1) | 114.6 | (14.2) |
The main impacts in financial expenses, net of income result from:
| · | Increase of R$ 169.2 million in interest and charges on domestic borrowings and<br>financing, mainly due to: (i) recognition of interest totaling R$ 61.7 million in 2021, due to funds raised with BID Invest in November<br>2020; (ii) higher interest on debentures, of R$ 57.0 million, mainly from the proceeds of the 25th, 27th, and 28th issues; and (iii) rise<br>in the average DI rate (from 2.77% in 2020 to 5.06% in 2021), which impacted interest on several domestic borrowings; |
|---|---|
| · | Decrease of R$ 89.5 million in interest and charges on international borrowings<br>and financing, mainly due to the amortization of Eurobond on September 30, 2020, leading to a decrease of R$ 75.8 million; |
| --- | --- |
| · | Decrease of R$ 136.5 million in other financial expenses, mostly due to lower<br>recognition of interest on lawsuits, of R$ 108.0 million; and |
| --- | --- |
| · | Increase of R$ 57.8 million in financial income, mainly on financial investments<br>in 2021, as a result of the higher value adopted and the average DI rate. |
| --- | --- |
Monetary and exchangevariation, net
| R$ million | ||||
|---|---|---|---|---|
| 2021 | 2020 | Var. (R$) | % | |
| Monetary exchange rate variation on liabilities | ||||
| Monetary variation on loans and financing | (225.8) | (86.9) | (138.9) | 159.8 |
| Currency exchange variation on loans and financing | 48.5 | (2,180.3) | 2,228.8 | (102.2) |
| Other monetary variations | (256.5) | (215.0) | (41.5) | 19.3 |
| Total Monetary and exchange rate variation on liabilities | (433.8) | (2,482.2) | 2,048.4 | (82.5) |
| Monetary and exchange rate variation on assets | 198.9 | 122.9 | 76.0 | 61.8 |
| Monetary/exchange rate variation, net | (234.9) | (2,359.3) | 2,124.4 | (90.0) |
The effect of net monetary and exchange variations totaled R$ 2,124.4 million in 2021, lower than the amounts reported in 2020, especially due to:
| 8 |
|---|
| Earnings Results<br><br>**2021** |
| --- | | · | R$ 138.9 million increase in monetary variations on borrowings and financing,<br>due to the rise in the Amplified Consumer Price Index (IPCA), from 4.52% in 2020 to 10.06% in 2021; | | --- | --- | | · | Decrease of R$ 2,228.8 million in exchange variations on borrowings and financing,<br>due to: (i) lower appreciation of the U.S. dollar and depreciation of the Japanese Yen against the Brazilian real in 2021 (7.4% and -3.9%,<br>respectively), compared to the appreciations recorded in 2020 (28.9% and 35.8%, respectively); (ii) debt exchange with IDB in May 2020,<br>from US$ 494.6 million to R$ 2,810.9 million; and (iii) amortization of Eurobond in September 2020, of R$ 1,910.1 million (US$ 350.0 million); | | --- | --- | | · | R$ 41.5 million increase in other monetary variations, due to: (i) higher monetary<br>variation on asset leases, of R$ 20.0 million, due to a rise in average Consumer Price Index (IPC); and (ii) higher monetary variation<br>on lawsuits, of R$ 11.2 million; and | | --- | --- | | · | R$ 76.0 million increase in monetary and exchange variation gains, mainly due<br>to higher adjustments on agreements and overdue bills, caused by the rise in the IPCA. | | --- | --- | | 8. | Income tax and social contribution | | --- | --- |
The R$ 511.6 million increase in 2021 was mainly due to:
| · | Higher net operating revenue, of R$ 1,693.5 million; |
|---|---|
| · | Decrease in exchange variation expenses of R$ 2.228.8 million; and |
| --- | --- |
| · | Higher costs and expenses, of R$ 1,966.8 million. |
| --- | --- |
9. Indicators
| a) | Operating | ||
|---|---|---|---|
| Operating indicators* | 2021 | 2020 | % |
| --- | --- | --- | --- |
| Water connections^(1)^ | 9,840 | 10,088 | (2.5) |
| Sewage connections^(1)^ | 8,418 | 8,518 | (1.2) |
| Population served - water^(2)^ | 27.8 | 27.5 | 1.1 |
| Population served - sewage^(2)^ | 24.6 | 24.3 | 1.2 |
| Number of employees | 12,515 | 12,806 | (2.3) |
| Water volume produced^(3)^ | 2,864 | 2,907 | (1.5) |
| IPM - Micromeasured Water Loss (%)^(4)^ | 27.9 | 27.0 | 3.3 |
| IPDt (liters/connection x day)^(4)^ | 252.0 | 263 | (4.2) |
| 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 periodo. Excludes wholesale | ||
| --- | --- | ||
| 3. | In millions of m³. Excludes Aguaí, Tapiratiba e Tejupá | ||
| --- | --- | ||
| 4. | Excludes Santo André, Mauá, Aguaí, Tapiratiba e Tejupá | ||
| --- | --- |
* Not reviewed by external auditors
| b) | Economic | |
|---|---|---|
| Economic Variables at the close of the year* | 2021 | 2020 |
| --- | --- | --- |
| Amplified Consumer Price Index (IPCA)^(1)^ | 10.06 | 4.52 |
| National Consumer Price Index (INPC)^(1)^ | 10.16 | 5.45 |
| Consumer Price Index (IPC)^(1)^ | 9.74 | 5.64 |
| Interbank Deposit Certificate (CDI)^(2)^ | 5.06 | 2.77 |
| US Dolar^(3)^ | 5.5805 | 5.1967 |
| Yen^(3)^ | 0.04847 | 0.05043 |
| 1. | Accrued in the year (%) | |
| --- | --- | |
| 2. | Average annual rate | |
| --- | --- | |
| 3. | Ptax sale rate on the last day | |
| --- | --- |
* Not reviewed by external auditors
| 9 |
|---|
| Earnings Results<br><br>**2021** |
| --- |
10. Loans and financing
30th issuance of Debentures
As of March 18, 2022, the Company raised R$ 1.0 billion referring to the realization of the 30th debentures issued in two series, under CVM Instruction 476. The proceeds of this issuance will be used to refinance financial commitments due in 2022 and to recompose and reinforce the Company’s cash position.
The first Series totals R$ 500 million, matures in March 2027, and yields CDI + 1.30% p.a.. The second Series totals R$ 500 million, matures in March 2029, and yields CDI + 1.58% p.a..
| R thousand | ||||||||
|---|---|---|---|---|---|---|---|---|
| DEBT PROFILE | ||||||||
| INSTITUTION | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 onwards | TOTAL |
| Local Currency | ||||||||
| Debentures | 596,418 | 694,806 | 1,062,558 | 1,194,424 | 1,074,178 | 1,153,648 | 1,556,497 | 7,332,529 |
| Caixa Econômica Federal | 98,784 | 94,055 | 93,315 | 99,152 | 105,355 | 111,936 | 876,357 | 1,478,954 |
| BNDES | 209,832 | 203,103 | 196,438 | 176,274 | 166,466 | 154,029 | 282,181 | 1,388,323 |
| IDB 2202 | 181,349 | 181,349 | 181,349 | 181,349 | 181,349 | 181,349 | 1,437,658 | 2,525,752 |
| IDB INVEST | 34,800 | 37,340 | 39,550 | 44,300 | 106,390 | 108,728 | 554,092 | 925,200 |
| Lease (Concession Agreements, Program Contracts and Contract Asset)^(1)^ | 36,640 | 39,132 | 40,228 | 44,322 | 30,846 | 30,481 | 175,662 | 397,311 |
| Leasing (others)^(2)^ | 69,306 | 40,094 | 9,640 | 5,656 | 1,273 | 0 | 0 | 125,969 |
| Others | 4,790 | 4,719 | 2,393 | 2,162 | 0 | 0 | 0 | 14,064 |
| Interest and other charges | 239,581 | 0 | 0 | 0 | 0 | 0 | 0 | 239,581 |
| Total in Local Currency | 1,471,500 | 1,294,598 | 1,625,471 | 1,747,639 | 1,665,857 | 1,740,171 | 4,882,447 | 14,427,683 |
| Foreign Currency | ||||||||
| IDB | 57,357 | 57,357 | 57,357 | 61,811 | 8,908 | 8,908 | 132,922 | 384,620 |
| IBRD | 33,927 | 33,928 | 33,928 | 33,928 | 33,928 | 33,928 | 216,688 | 420,255 |
| JICA | 206,815 | 206,815 | 206,815 | 206,815 | 206,815 | 206,815 | 1,147,034 | 2,387,924 |
| IDB 1983AB | 42,927 | 42,336 | 0 | 0 | 0 | 0 | 0 | 85,263 |
| Interest and other charges | 18,091 | 0 | 0 | 0 | 0 | 0 | 0 | 18,091 |
| Total in Foreign Currency | 359,117 | 340,436 | 298,100 | 302,554 | 249,651 | 249,651 | 1,496,644 | 3,296,153 |
| Total | 1,830,617 | 1,635,034 | 1,923,571 | 2,050,193 | 1,915,508 | 1,989,822 | 6,379,091 | 17,723,836 |
All values are in US Dollars.
| 1. | Refers to work contracts signed as assets lease |
|---|---|
| 2. | Obligations related to leasing agreements, mainly vehicle leases |
| --- | --- |
Covenants
The table below shows the most restrictive clauses in 2021:
| Covenants | |
|---|---|
| Adjusted EBITDA / Adjusted Financial Expense | Equal to or higher than 2.80 |
| EBITDA / Financial Expense Paid | Equal to or higher than 2.35 |
| Adjusted Net Debt / Adjusted EBITDA | Equal to or lower than 3.80 |
| Net Debt / Adjusted EBITDA | Equal to or lower than 3.50 |
| 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 |
| 1. | Other Onerous Debt correspond to the sum of social security liabilities, heathcare plan installment payment<br>of tax debts and installment payment of debts with the electricity supplier |
| --- | --- |
| 10 | |
| --- |
| Earnings Results<br><br>**2021** |
| --- |
As of December 31, 2021, the Company had met the requirements of its borrowings and financing agreements.
11. CAPEX
Investments totaled R$ 4,983.0 million in 2021, and were presented as additions in Contract Asset, and Intangible Assets and Property, Plant and Equipment in the Notes to the Financial Statements, in the amounts of R$ 4,759.8 million, R$ 173.0 million and R$ 50.2 million, respectively. Cash disbursed in 2021 referring to the Company’s investments, including from previous periods, totaled R$ 3,747.0 million.
The tables below show investments broken down by water, sewage, and region:
| R million | |||
|---|---|---|---|
| Investment – January to Dezember/21 | Water | Sewage | |
| Metropolitan Region | 1,398.3 | 2,385.8 | |
| Regional Systems | 551.8 | 647.1 | |
| Total | 1,950.1 | 3,032.9 |
All values are in US Dollars.
| 11 |
|---|
| Earnings Results<br><br>**2021** |
| --- |
For more information, please contact:
Mario Arruda Sampaio
Head of Capital Markets and InvestorRelations
Phone:(55 11) 3388-8664
E-mail: maasampaio@sabesp.com.br
Angela Beatriz Airoldi
Investor Relations Manager
Phone:(55 11) 3388-8793
E-mail: abairoldi@sabesp.com.br
Juliana P. S. Jardim
IR Analyst
Phone:(55 11) 3388-9267
E-mail: jpsjardim@sabesp.com.br
Statements contained in this pressrelease may contain information that is forward-looking and reflects management's current view and estimates of future economic circumstances,industry conditions, SABESP performance, and financial results. Any statements, expectations, capabilities, plans and assumptions containedin this press release that do not describe historical facts, such as statements regarding the declaration or payment of dividends, thedirection of future operations, the implementation of principal operating and financing strategies and capital expenditure plans, thefactors or trends affecting financial condition, liquidity or results of operations are forward-looking statements within the meaningof the U.S. Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties. There is no guarantee thatthese 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 materiallyfrom current expectations.
| 12 |
|---|
| Earnings Results<br><br>**2021** |
| --- |
Income Statement
| Brazilian Corporate Law | R$ '000 | |
|---|---|---|
| 2021 | 2020 | |
| Net Operating Income | 19,491,061 | 17,797,541 |
| Operating Costs | (12,800,042) | (11,179,667) |
| Gross Profit | 6,691,019 | 6,617,874 |
| Operating Expenses | ||
| Selling | (825,879) | (751,286) |
| Estimated losses with doubtful accounts | (643,730) | (444,826) |
| Administrative expenses | (1,124,069) | (1,051,181) |
| Other operating revenue (expenses), net | (21,841) | 107,656 |
| Operating Income Before Shareholdings | 4,075,500 | 4,478,237 |
| Equity Result | 22,079 | 14,136 |
| Earnings Before Financial Results, net | 4,097,579 | 4,492,373 |
| Financial, net | (975,887) | (988,028) |
| Exchange gain (loss), net | 48,464 | (2,178,343) |
| Earnings before Income Tax and Social Contribution | 3,170,156 | 1,326,002 |
| Income Tax and Social Contribution | ||
| Current | (961,556) | (460,721) |
| Deferred | 97,269 | 108,037 |
| Net Income for the period | 2,305,869 | 973,318 |
| Registered common shares ('000) | 683,509 | 683,509 |
| Earnings per shares - R$ (per share) | 3.37 | 1.42 |
| Depreciation and Amortization | (2,253,322) | (2,037,112) |
| Adjusted EBITDA | 6,372,742 | 6,421,829 |
| % over net revenue | 32.7% | 36.1% |
| 13 | ||
| --- |
| Earnings Results<br><br>**2021** |
| --- |
Balance Sheet
| Brazilian Corporate Law | R$ '000 | |
|---|---|---|
| ASSETS | 12/31/2021 | 12/31/2020 |
| Current assets | ||
| Cash and cash equivalents | 717,929 | 396,401 |
| Financial investments | 2,433,385 | 3,411,146 |
| Trade receivables | 2,695,077 | 2,204,029 |
| Related parties and transactions | 173,657 | 168,054 |
| Inventories | 113,506 | 104,848 |
| Restricted cash | 28,467 | 35,742 |
| Currrent recoverable taxes | 276,104 | 22,672 |
| Other assets | 64,873 | 97,946 |
| Total current assets | 6,502,998 | 6,440,838 |
| Noncurrent assets | ||
| Trade receivables | 223,234 | 246,957 |
| Related parties and transactions | 644,895 | 638,591 |
| Escrow deposits | 141,667 | 164,942 |
| National Water and Sanitation Agency – ANA | 20,666 | 26,463 |
| Other assets | 161,369 | 148,164 |
| Equity investments | 79,437 | 63,417 |
| Investment properties | 46,126 | 46,274 |
| Contract assets | 8,550,102 | 7,969,164 |
| Intangible assets | 36,503,834 | 34,405,575 |
| Property, plant and equipment | 291,157 | 268,251 |
| Total noncurrent assets | 46,662,487 | 43,977,798 |
| Total assets | 53,165,485 | 50,418,636 |
| LIABILITIES AND EQUITY | 12/31/2021 | 12/31/2020 |
| Current liabilities | ||
| Trade payables | 236,763 | 263,741 |
| Borrowings and financing | 1,830,617 | 3,034,449 |
| Accrued payroll and related charges | 426,616 | 410,943 |
| Taxes and contributions | 257,130 | 266,819 |
| Dividends and interest on capital payable | 548,006 | 231,611 |
| Provisions | 809,821 | 760,209 |
| Services payable | 469,027 | 453,750 |
| Public-Private Partnership – PPP | 142,757 | 130,207 |
| Program Contract Commitments | 77,652 | 162,541 |
| Other liabilities | 294,538 | 185,860 |
| Total current liabilities | 5,092,927 | 5,900,130 |
| Noncurrent liabilities | ||
| Borrowings and financing | 15,893,219 | 14,224,175 |
| Deferred income tax and social contribution | 283,739 | 320,716 |
| 14 | ||
| --- |
| Earnings Results<br><br>**2021** |
| --- | | Deferred Cofins and Pasep | 159,456 | 149,444 | | --- | --- | --- | | Provisions | 638,672 | 492,093 | | Pension obligations | 2,321,662 | 2,868,594 | | Public-Private Partnership – PPP | 2,917,428 | 3,045,066 | | Program Contract Commitments | 44,995 | 68,939 | | Other liabilities | 881,528 | 555,775 | | Total noncurrent liabilities | 23,140,699 | 21,724,802 | | Total liabilities | 28,233,626 | 27,624,932 | | Equity | | | | Paid-up capital | 15,000,000 | 15,000,000 | | Profit reserve | 9,885,485 | 8,194,706 | | Other comprehensive income | 46,374 | (401,002) | | Total equity | 24,931,859 | 22,793,704 | | Total equity and liabilities | 53,165,485 | 50,418,636 | | 15 | | --- |
| Earnings Results<br><br>**2021** |
| --- |
Cash Flow
| Brazilian Corporate Law | R$ '000 | |
|---|---|---|
| Jan-Dec2021 | Jan-Dec2020 | |
| Cash flow from operating activities | ||
| Profit before income tax and social contribution | 3,170,156 | 1,326,002 |
| Adjustment for Net income reconciliation: | ||
| Depreciation and amortization | 2,253,322 | 2,037,112 |
| Residual value of property, plant and equipment and intangible assets written-off | 27,754 | 16,590 |
| Allowance for doubtful accounts | 643,730 | 444,826 |
| Mauá agreement | - | (280,774) |
| Provision and inflation adjustment | 380,624 | 444,090 |
| Interest calculated on loans and financing payable | 647,980 | 559,931 |
| Inflation adjustment and foreign exchange gains (losses) on loans and financing | 177,269 | 2,267,179 |
| Interest and inflation adjustment losses | 37,202 | 20,931 |
| Interest and inflation adjustment gains | (171,173) | (46,946) |
| Financial charges from customers | (349,491) | (344,513) |
| Margin on intangible assets arising from concession | (98,402) | (86,477) |
| Provision for Consent Decree (TAC) and Knowledge retention program (KRP) | 3,195 | 1,684 |
| Equity result | (22,079) | (14,136) |
| Interest and inflation adjustment (Public-Private Partnership) | 464,398 | 424,639 |
| Provision from São Paulo agreement | 131,878 | 142,232 |
| Pension obligations | 176,673 | 136,585 |
| Other adjustments | 15,152 | 5,283 |
| 7,488,188 | 7,054,238 | |
| Changes in assets | ||
| Trade accounts receivable | (742,260) | (213,084) |
| Accounts receivable from related parties | 20,665 | 83,419 |
| Inventories | (8,658) | (34,394) |
| Recoverable taxes | (253,432) | (342,127) |
| Escrow deposits | 43,865 | 35,630 |
| Other assets | 31,386 | (36,264) |
| Changes in liabilities | ||
| Trade payables and contractors | (245,501) | (248,404) |
| Services payable | (116,601) | (162,560) |
| Accrued payroll and related charges | 12,478 | (185,020) |
| Taxes and contributions payable | 196,255 | 384,676 |
| Deferred Cofins/Pasep | 10,012 | 5,751 |
| Provisions | (184,433) | (227,596) |
| Pension obligations | (215,937) | (123,014) |
| Other liabilities | (68,260) | (13,306) |
| Cash generated from operations | 5,967,767 | 5,977,945 |
| Interest paid | (845,445) | (626,625) |
| Income tax and contribution paid | (1,208,569) | (373,112) |
| Net cash generated from operating activities | 3,913,753 | 4,978,208 |
| Cash flows from investing activities | ||
| Acquisition of contract assets and intangible assets | (3,696,669) | (3,299,657) |
| Restricted cash | 7,275 | (9,724) |
| Financial investments | 1,076,468 | (3,411,146) |
| 16 | ||
| --- |
| Earnings Results<br><br>**2021** |
| --- | | Increase/(write-off) of investments | - | (5,734) | | --- | --- | --- | | Purchases of tangible assets | (50,281) | (42,407) | | Net cash used in investing activities | (2,663,207) | (6,768,668) | | Cash flow from financing activities | | | | Loans and financing | | | | Proceeds from loans | 2,922,811 | 4,777,474 | | Repayments of loans | (2,896,604) | (3,244,099) | | Payment of interest on shareholders'equity | (254,218) | (890,095) | | Public-Private Partnership – PPP | (579,486) | (543,346) | | Program Contract Commitments | (121,521) | (166,283) | | Net cash used in financing activities | (929,018) | (66,349) | | Increase/(decrease) in cash and cash equivalents | 321,528 | (1,856,809) | | Represented by: | | | | Cash and cash equivalents at beginning of the year | 396,401 | 2,253,210 | | Cash and cash equivalents at end of the year | 717,929 | 396,401 | | Increase/(decrease) in cash and cash equivalents | 321,528 | (1,856,809) | | 17 | | --- |
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: March 24, 2022
| 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.