2Q14 Results

August 2014- Economic - Financial Office and Investor Relations Office

This presentation may contain forward-looking statements referring to

SABESP’s business outlook, operating and financial results estimates, and growth

prospects. These are only forecasts, and as such, they are exclusively based on

SABESP’s management expectation in relation to the future of business and its

continuous access to capital to finance the Company’s business plan. These

forward-looking statements largely depend on changes in market conditions,

governmental rules, industry performance and the Brazilian economy, among

other factors, in addition to risks exhibited in disclosure documents filed by

SABESP. Therefore, they are subject to changes without prior notice.

Disclaimer

Agenda

Company Overview 1

Our Operations 2

Our Financial Performance 3

Sabesp is one of the largest water and sewage

service providers in the world based on the

number of Customers

Provides water to 25.1 million people and sewage

services to 22.1 million people

Also sells wholesale treated water to 5

municipalities (3.1 million people)

Natural monopoly, low operating risk

Serves the City of São Paulo and 363 out of 645

municipalities in the State

Covers 59% of State's urban population

Operations in the São Paulo Metropolitan Region*

represent 70,9% of our total revenues

(1) As of June 30, 2014

(2) Treated sewage as percentage of collected sewage

São Paulo Regional Systems

Metropolitan Region

One of the largest water and sewage service providers

in the world…

*The Metropolitan Region we consider for this estimate, includes 8

municipalities outside the legal boundaries of the São Paulo

Metropolitan Region and represent the total cities served by the

Company’s Metropolitan Division

4

Main Operational Indicators(1) Company Overview

Water Sewage

Connections (million) 8.1 6.5

Coverage (%) 100 84

Treatment (%) 100 78(²)

Billed Volume (m³ million) 1,066.0 797.8

We are a mixed capital company, majority-owned by the State of São Paulo, with significant private

ownership

State law requires the State of São Paulo to own at least 50% + 1 voting shares at all times

Currently the Government of São Paulo has 50.3% share

Listed on the “Novo Mercado” and NYSE, to the highest corporate governance standards. We are

also part of BM&FBovespa’s Sustainability Index – ISE

100% common shares

Market Cap: R$ 16.1 billion (as of June, 2014)

(1) As of June, 2014

…with strong corporate governance

5

Ownership Structure(1)

24,0%

25,7%

50,3%

Agenda

6

3

Our Operations 2

Our Company 1

Our Financial Performance

Diversified customer base

7

Water Volume by Type of Customer Sewage Volume by Type of Customer

Over 80% of water volume comes from

residential, commercial and industrial

customer

Over 90% of sewage volume comes from

residential, commercial and industrial

customer

Residential 74%

Commercial 8%

Industrial 2%

Public 3%

Whosale 13%

Residential83%

Commercial10%

Industrial 3%

Public 2%

Whosale 2%

Broad coverage of municipalities

8

Contracts

30-year-service agreement between Sabesp, Municipality of São Paulo and State Government (expires in 2040)

Minimum investment of 13% of the Gross Revenue, net of Cofins and Pasep, approximately R$ 600 million/year -

R$ 16.9 billion in 30 years

Transfer of 7.5% of the Gross Revenue, net of Cofins and Pasep, to the Municipal Environmental Sanitation and

Infrastructure Fund – to be recovered in tariff

Contract with the Municipality of São Paulo

Diadema – From wholesale to retail

Full operation of water supply and sewage services – 30-year contract

Contract signed in March 2014

386,000 population - 100% water and 96% sewage coverage

Nº of

municipalities

% of revenue

Renewed/Secured (Program and Service Contract) 273 74.1%

Metropolitan Region Without Contract 20 11.3%

Expired/Under Negotiations 34 3.8%

To be expired:

Today to 2023 10 1.7%

2024 to 2034 27 7.5%

Total Retail 364 98.3%

Wholesale 5 1.7%

Total Sabesp 369 100.0%

9

Regulatory Framework

Concession Power in Metropolitan Regions

Legal proceedings related to this matter under Supreme Court (STF) appraisal were ruled in

February 2013

Final decision released in September 2013:

• Sanitation services in metro regions are subject to shared responsibility between State and

Municipality

• State Legislative has two years to adjust the legislation, create entities and mechanisms to

implement the ruling

Obligatory creation of a Regulatory Agency Municipal or State level

Clarifies the payment conditions of non-amortized investments up to 4 years

Disbursement of federal funds conditioned to the existence of a sanitation plan Deadline 2015

Federal Law # 11,445/07 Federal Decree 7,217/10 and Federal Decree 8,211/14

Regulation activities and responsibilities include:

• Service quality

• Tariff structure and reviews

Planning is a concession holder attribution

ARSESP´s attribution

May 18, 2011 ARSESP discloses WACC of 8.06% (RTS/01/2011)

Apr 16, 2012 ARSESP’s discloses detailed Tariff Methodology (RTS/ 01/2012)

Aug 30, 2012 Sabesp submits to ARSESP the Regulatory Asset Base (RAB) and the detailed Business Plan

Nov 13, 2012 ARSESP discloses the proposed preliminary Initial Maximum Average Tariff (P0) and Efficiency Gain Factor (X Factor)

Mar 22, 2013 ARSESP discloses Tariff Review Results relating to preliminary P0 and X Factor (RTS/01/2013)

Apr 30, 2013 SABESP requests postponement of its Tariff Structure to April /14 – Accepted by ARSESP in June /13

Ago 2, 2013 ARSESP discloses Resolution nº 427 alleging that found inconsistencies in the RAB and maintained tariff revision suspended

Ago 16, 2013 SABESP files request for tariff adjustment by 6.27% (IPCA index) - 2.35% = 3.83%

Sep 2, 2013 SABESP requests ARSESP three months to revise the RAB – Accepted in September 6

Nov 1, 2013

Resolution nº 435 : ARSESP authorizes a tariff adjustment of 3.1451% as of December 11, 2013 (NT/F/007/2013)

Resolution nº 434 :

ARSESP fixes the date of March 10, 2014 for the publication of the definitive Initial Maximum Tariff Price (P0) and the Efficiency

Factor (X Factor)

Dec 4, 2013 SABESP delivers the RAB revised

Feb 11, 2014 ARSESP discloses proposal of First Tariff Revision of Sabesp - calculation of P0, P1, and X Factor (RTS/001/2014)

Mar 12, 2014 Public Hearing and related to calculation of P0, P1, and X Factor (RTS/001/2014)

Apr 17, 2014

Resolution nº 484: ARSESP discloses First Tariff Revision of Sabesp - calculation of P0, P1, and X Factor (RTS/004/2014)

• repositioning index = 5.4408%

• X Factor = 0.9386%

• Future annual tariff adjustments = April 11 of 2015 and 2016

• Next tariff revision = April 11, 2017

May 17, 2014 Resolution nº 488: ARSESP maintains the suspension of the effectiveness of Resolution nº 407 postponing the authorization of

the pass through to the service bill the 7.5%

Tariff Revision

10

RAB0 CAPEX + OPEX + IRCS + ∆ CG

RABT = RAB0 + ∑(CAPEX+∆ CG-DEP) Volume (M3)

P0 TIR = WACC

Tariff adjustments

11

Annual tariffs adjustments vs. inflation (%)

Annual tariffs adjustment formula

Productivity

Factor New Average

Tariff = 1

Inflation

(IPCA)

100 x

Previous

Average Tariff Quality

Factor - -

+

November 1, 2013 ARSESP authorizes a tariff adjustment of 3.1451% as of December 11, 2013

13.05%

8.22%

18.95%

6.78%

9.00%

6.71%

4.12% 5.10% 4.43% 4.05%

6.83%5.15%

2.35%

3.15%

13.74%

7.66%

15.43%

6.81% 6.57%

3.97% 3.74%

6.37%

4.50% 4.60%

6.87%

5.20%6.27%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Adjustment established by ARSESP Sabesp Formula

Apr/22/13

Dec/11/13

Annual Adjustment IPCA

12

Water Connection Evolution (million) Water Coverage (Connections in ´000s)

Evolution of operations

Sewage Connection Evolution (million) Sewage Coverage (Connections in ´000s)

Add 1.7 million new connections by 2020

Collection: 95% in 2020

Treatment: 95% in 2020

Add 1.2 million new connections by 2020

180 177 172

644

2014 2015 2016 2017 - 2020

237 246 243

928

2014 2015 2016 2017 - 2020

6.6 6.8 6.9 7.1 7.3 7.5 7.7 7.9 8.1

2006 2007 2008 2009 2010 2011 2012 2013 1S14

5.0

5.2 5.3 5.5

5.7 5.9

6.1 6.3 6.5

2006 2007 2008 2009 2010 2011 2012 2013 1S14

Capex plan

13

Capex Plan of R$ 12.8 billion from 2014 to 2018

Metropolitan Water Program

Tietê Project

Corporate Program for Water Loss Reduction

Clean Wave Program

Coastal Water Program

Main Programs

R$ million

1,139 1,129 1,087 956 974

1,092 1,069 889

893 1,107

411 478 553 647 339

2,642 2,676 2,529 2,496 2,420

2014 2015 2016 2017 2018

Water Suply Sewage collection Collected sewage treatment

1,282

Real

Capex financing

14

2014 to 2018 – R$ 12.8 billion

CAIXA R$ 2.18 bn BNDES R$ 1.45 bn IDB R$ 871 mn JICA R$ 728 mn IBRD R$ 127 mn

CAIXA and BNDES

Company Funds R$ 6.4 bi 50.2 %

Contrated R$ 5.4 bi

84.6%

Under Negociation R$ 977.6mn

15.4%

Financing R$ 6.3 bi 49.8 %

15

Our Company 1

Our Operations 2

Our Financial Performance 3

Agenda

0

150

300

450

600

750900

1,050

1,200

1,350

1,500

1,650

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026+

279

1,059 990

1,235

873 949

1,302

431 390 354 262 208

1,487 Local Currency Foreign Currency

16

Long term and low cost funding

R$ million

Total debt breakdown Total debt by currency

Debt amortization profile

(*) IDB 713 agreement

JICA 9.8%

IDB 14.8%

Eurobônus 11.0%

Debêntures 30.0%

BNDES 12.9%

CEF 16.0%

BIRD 1.0%

Others 4.4%

Local Currency

63.4%

US Dollar 24.9%

Yen 9.7%

Currency Basket*

2.0%

17

Net Revenues (R$ million)

Adjusted EBITDA (R$ million)

Consistent performance

Net Income (R$ million)

2007 2008 2009 2010 2011 2012 2013

Dividend

Declared 1.32 1.30 1.73 2.00 2.54 2.35 0.78

Pay Out

% 28.5 34.3 26.1 27.9 47.3 27.9 27.9

Dividends/Pay Out

5,527 5,971

7,809* 8,580* 9,231*9,927*

10,738* 11,316*

5,546*

6,1326,540 7,099

7,703

8,273 8,871

4,336

2006 2007 2008 2009 2010 2011 2012 2013 1S14

*Since 2008 calculated in accordance with CPCs / IFRS, which includes construction Costs

Net Renevues Net Renevues Without Construction

7891,055

863*

1,508* 1,631*

1,381*

1,912*1,924*

780*

2006 2007 2008 2009 2010 2011 2012 2013 1S14

*Since 2008 calculated in accordance with CPCs / IFRS, which includes construction Costs

2,865 2,7273,222* 3,371*

3,605*4,007* 3,851*

36.7% 31.8% 34.9% 34.0%33.6% 35.4% 30.2%

44.7% 43.2% 43.0% 44.6%38.1%

2008 2009 2010 2011 2012 2013 1S14

* Since 2008 calculated in accordance with CPCs / IFRS, which includes construction Costs

Adjusted EBITDA Adjusted EBITDA Margin Adjusted EBITDA Margin Without Constrution

18

* Adjusted EBITDA – LTM ** Financial Exenses - LTM Calculated in accordance with CPCs/IFRS

Historical leverage metrics (R$ million)

Net Debt vs. Adjusted EBITDA* Net Debt vs. Shareholders’ Equity

5,2205,787

6,221 6,2816,959

7,6687,995

2,865 2,7273,222 3,371 3,605

4,007 3,851

1.8x

2.1x1.9x

1.9x

1.9x1.9x

2.1x

2008 2009 2010 2011 2012 2013 1S14

Net Debt Adjusted EBITDA Net Debt/Adjusted EBITDA

5,220 5,7876,221 6,281

6,9597,668 7,995

6,758

8,439

9,68210,546

11,256

12,93113,668

0.8x0.7x 0.6x

0.6x 0.6x 0.6x 0.6x

2008 2009 2010 2011 2012 2013 1S14

Net Debt Shareholders' Equity Net Debt/SE

Total Debt vs. Adjusted EBITDA* Adjusted EBITDA* vs. Financial Expenses**

5,678

6,558

8,209 8,423 8,875

9,450 9,819

2,865 2,727 3,222 3,371 3,605

4,007 3,851

2.0x2.4x

2.5x 2.5x 2.5x 2.4x2.5x

2008 2009 2010 2011 2012 2013 1S14

Total Debt Adjusted EBITDA Total Debt/Adjusted EBITDA

2,865 2,727

3,222 3,371

3,605 4.007 3.851

843 765 789 702 578 603 677

3.4x 3.6x 4.1x 4.8x6.2x 6.4x 5.5x

2008 2009 2010 2011 2012 2013 1S14

Adjusted EBITDA

Financial Expenses

Adjusted EBITDA/Financial Expenses

Financial Highlights

19

* In accordance with CPCs / IFRS, which includes Construction Costs.

(R$ million)

** R$ / 000 shares

2002 2003 2004 2005 2006 2007 2008* 2009* 2010* 2011* 2012* 2013* 1S14*

Net Revenues (R$) 3,767.1 4,130.8 4,397.1 4,953.4 5,527.3 5,970.8 7,809.3 8,579.5 9,230.4 9,927.4 10,737.6 11,315.6 5,546.1

Adjusted EBITDA (R$) 1,860.0 2,076.5 1,927.0 2,285.6 2,446.1 2,698.9 2,865.1 2,727.3 3,222.5 3,371.0 3,605.0 4,006.6 1,677.6

Adjusted EBITDA Margin (%) 49.4 50.3 43.8 46.1 44.3 45.2 36.7 31.8 34.9 34.0 33.6 35.4 30.2

Net Income (R$) (651.0) 833.3 513.1 865.6 789.4 1,055.3 862.9 1,507.7 1,630.4 1,380.9 1,911.9 1,923.6 780.0

Net Margin (%) - 20.2 11.7 17.5 14.3 17.7 11.0 17.6 17.7 13.9 17.8 17.0 14.1

Total Assets (R$) 16,331.9 16,590.1 16,783.8 17,431.1 17,999.9 18,659.9 17,206.0 20,242.9 23,293.1 24,983.2 26,476.1 28,274.3 28,983.5

Total Debt (R$) 7,925.1 7,264.3 7,050.7 6,664.2 6,326.7 5,685.2 6,865.0 6,558.0 8,209.3 8,423.3 8,875.3 9,450.1 9,818.7

Short-term Debt (R$) 1,132.4 997.0 1,496.8 759.0 852.5 742.1 1,449.0 1,009.9 1,242.1 1,629.2 1,342.6 640.9 637.9

Long-Term Debt (R$) 6,592.6 6,267.3 5,553.8 5,905.2 5,474.2 4,943.1 5,416.0 5,548.0 7,022.5 6,794.1 7,532.7 8,809.2 9,180.8

Foreign Currency Debt (R$) 3,708.0 3,012.7 2,680.9 1,575.9 1,472.2 1,242.3 2,281.0 1,745.6 2,249.9 3,053.4 3,215.8 3,698.6 3,593.6

Shareholders' Equity (R$) 4,217.1 7,576.9 7,951.6 8,482.5 9,018.5 9,780.5 6,758.0 8,439.0 9,682.0 10,546.0 11,256.8 12,930.8 13,667.9

Total Debt/Total Cap. (%) 65.3 48.9 47.0 44.0 41.2 36.8 50.4 43.7 45.9 44.4 44.1 42.2 41.8

Investments (R$) 619 594 601 678 905 921 1,734 2,059 2,194 2,440 2,536 2,716 1,282

Dividend Declared (R$/ share) - 17,7** 5,4** 12,23** 9,51** 1.3 1.3 1.7 2.0 2.5 2.35 0.78 -

Pay Out (%) - 60.5 29.8 40.2 34.7 28.5 34.3 26.1 28.0 41.9 27.9 27.9 -

Dividend Yield (%) - 10.8 3.4 7.8 3.2 3.2 4.7 5.0 4.7 4.9 2.7 2.9 -

Outstanding shares (million) 28.5 28.5 28.5 28.5 28.5 227.8 227.8 227.8 227.8 227.8 227.8 683.5 -

Extra Slides

As of October, 10th 2014

Reservoirs levels

1

CANTAREIRA SYSTEM (%)

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT 22.2 16.4 13.4 10.7 24.9 20.6 15.4 11.0 6.9 5.8

RIO GRANDE SYSTEM (%)

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT

92.7 94.3 94.6 95.8 94.2 92.0 86.0 80.4 77.0 76.3

RIO CLARO SYSTEM (%)

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT

98.7 93.0 96.6 101 102 99.0 83.0 74.9 61.8 58.5

GUARAPIRANGA SYSTEM (%)

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT

67.2 66.7 77.0 77.9 74.3 71.8 65.0 57.3 52.1 49.9

ALTO TIETÊ SYSTEM (%)

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT

44.7 38.8 37.3 36.0 30.8 26.0 20.8 15.6 12.5 11.7

ALTO COTIA SYSTEM (%)

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT

63.2 55.8 56.8 50.6 48.4 46.7 43.0 38.0 35.7 34.5

2

The Path of the Waters

Cantareira System

PCJ Water Basin Alto Tietê Water Basin

19.7 m³/s

Measures taken by the Company due to the compulsory reduction of water withdrawal from the

PCJ Water Basin to Cantareira from 33m ³/s to 19.7 m³/s: Bonus Program: 20% reduction in water consumption 30% discount on water and sewage bill

Use of Alto Tietê, Guarapiranga, Rio Claro and Rio Grande water systems more than 2.3 million people prior served

by the Cantareira Systems

Partial use of the Technical Reserve 286.5 billion liters

100%

0%

182.5 billion liters

SPMR

Campinas

Operational

Capacity 982.7 billion liters

Technical Reserve 510.9 billion liters

Cantareira’s Operational Capacity and Technical Reserve

3

+ 106.0 billion liters Authorized use 286.5 billion liters

4

Cantareira System – Rainfall (mm)

Up to October 6, 2014

Out Nov Dez Jan Fev Mar Abr Mai Jun Jul Ago Set

Média Histórica 130,8 163,8 226,8 265,9 206,5 184,1 89,2 83,2 56,0 49,9 36,9 91,9

Minima Histórica 21,4 52,4 104,5 111,8 40,2 55,8 7,6 8,8 0,0 0,0 0,1 0,9

2013/14 123,4 97,0 62,9 87,8 73,0 193,3 85,7 37,3 15,8 40,4 22,6 66,0

2014/15 0,4

93%

59%

28%

33% 35%

105%

96%

45%

28%

81% 61%

72%

0% 0,0

50,0

100,0

150,0

200,0

250,0

300,0

mm

Out Nov Dez Jan Feb Mar Abr Mai Jun Jul Ago Set

Média Histórica 130,8 163,8 226,8 265,9 206,5 184,1 89,2 83,2 56,0 49,9 36,9 91,9

Mínima Histórica 21,4 52,4 104,5 111,8 40,2 55,8 7,6 8,8 0,0 0,0 0,1 0,9

2013/14 123,4 97,0 62,9 87,8 73,0 193,3 85,7 37,3 15,8 40,4 22,6 66,0

2014/15 0,4

outubro novembro dezembro janeiro fevereiro março abril maio junho julho agosto setembro

Média Histórica 30,6 35,0 53,1 70,9 73,9 66,9 48,4 38,4 35,3 28,8 24,5 25,6

Mínima Histórica 14,0 14,0 21,8 26,9 27,6 28,1 24,7 19,9 16,5 13,9 12,0 11,8

1953 17,5 26,0 31,5 26,9 34,5 29,8 34,6 23,8 20,7 17,6 16,3 16,2

2013/2014 25,1 22,1 22,5 15,4 10,5 18,9 17,2 10,1 10,0 6,4 8,2 8,5

0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

80,0

Out Nov Dez Jan Fev Mar Abr Mai Jun Jul Ago Set

Média Histórica 30,6 35,0 53,1 70,9 73,9 66,9 48,4 38,4 35,3 28,8 24,5 25,6

Mínima Histórica 14,0 14,0 21,8 26,9 27,6 28,1 24,7 19,9 16,5 13,9 12,0 11,8

1953 17,5 26,0 31,5 26,9 34,5 29,8 34,6 23,8 20,7 17,6 16,3 16,2

2013/2014 25,1 22,1 22,5 15,4 10,5 18,9 17,2 10,1 10,0 6,4 8,2 8,5

5

Cantareira System – Water inflow (m³/s)

Affluence between January and September, 30 2014

¼ of the historical average

-2,5

+0,4

-0,6

+3,8 +2,5

+0,9

+0,7

0,0 +0,6

+0,6

+0,6

+1,2

15,00

17,00

19,00

21,00

23,00

25,00

27,00

29,00

out/13 nov/13 dez/13 jan/14 fev/14 mar/14 abr/14 mai/14 jun/14 jul/14 ago/14 set/14

2014 2013

6

Temperature - 2013/2014

OCT/13 NOV/13 DEC/13 JAN/14 FEB/14 MAR/14 APR/14 MAY/14 JUN/14 JUL/14 AUG/14 SEP/14

ºC

7

Bonus Program

Reduced consumption and reached the bonus

Reduced consumption but not the bonus

Increased consumption

SPMR - Bonus Program Balance

Up to September 30, 2014

45%

52% 46%

51% 49%

31% 27% 28%

25% 26% 24% 21%

26% 24% 25%

mai jun jul ago setMAY/14 JUN/14 JUL/14 AUG/14 SEP/14

20% water bill savings = 30% discount on water and sewage bill

Scope:

Since February consumers served by the Cantareira System

Since April all consumers directly served in the SPMR

Since May 12 municipalities served by Sabesp in the Piracicaba, Capivari and Jaguari

Water Basin

Integration Jaguari – Atibainha

8

Capex: R$ 800 million

Up to 8.5 m³/s (5 m³/s average)

www.sabesp.com.br

IR Contacts

Mario Azevedo de Arruda Sampaio Angela Beatriz Airoldi maasampaio@sabesp.com.br abairoldi@sabesp.com.br (55 11) 3388 8664 (55 11) 3388 8793