SABESPSABESPSABESPSABESP1st Quarter, 2007

11stst Quarter 2008Quarter 2008May 2008 May 2008 –– Economic Economic -- Financial Office and Investor Relations OfficeFinancial Office and Investor Relations OfficeMay 2008 May 2008 –– Economic Economic -- Financial Office and Investor Relations OfficeFinancial Office and Investor Relations Office

DisclaimerDisclaimer

This presentation may contain forward-looking statements referring to

SABESP’s business outlook. operating and financial results estimates. and

growth prospects. These are only projections. and as such. they are exclusively

based on SABESP’s management expectation in relation to the future of

b i d it ti t it l t fi th C ’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 Brazilianmarket conditions. governmental rules. industry performance and the Brazilian

economy. amongst other factors. in addition to risks exhibited in disclosure

documents filed by SABESP . Therefore. they are subject to changes without

prior notice.

2

AgendaAgenda

Company Overview1

Our Operations2 p

Our Financial Performance3

3

One of the largest water and sewage i id i th ld

Main Operational Indicators (1)Company Overview

service providers in the world…

Sabesp is one of the largest water and sewage service providers in the world based on the number of customers

Water Sewage

Connections (million) 6 8 5 2based on the number of customers Provides water to 23.0 million people

and sewage services to 18.9 million people

Connections (million) 6.8 5.2

Coverage (%) 100% 79%

Treatment (%) 100% 69%(²)

Also sells wholesale treated water to 6 municipalities (3.3 million people)

Natural monopoly, low operating risk (1) As of March 31, 2008(2) Treated sewage as percentage of collected sewage

Volume Billed (m³ million) 469.0 330.2

Network (km thousand) 62.3 40.6

p y, p g Serves the City of São Paulo and 365

out of 645 municipalities in the State Covers 60% of State's urban population

(2) Treated sewage as percentage of collected sewage

BrazilCovers 60% of State s urban population Operations in the São Paulo

Metropolitan Region represent 75.8% of revenues

Regional Systems

Metropolitan Region

Brazil

São Paulo

4

p g

…with strong corporate governance We are a mixed capital company, majority-owned by the State of São Paulo, with

significant private ownership• Corporate by laws and State law requires the State of São Paulo to own at least 50%

g p g

• Corporate by-laws and State law requires the State of São Paulo to own at least 50% + 1 voting shares at all times

• In 2004, the Government of São Paulo completed a public share offering to sell its excess holdings, which resulted in its current ownership of 50.3% share

Listed on the “Novo Mercado” and NYSE, leading to high corporate governance standards

100% common shares

Ownership structure¹

Source: The Company

5

Source: The Company(1) As of April 2008

AgendaAgenda

Our Company1

Our Operations2

p y

3

p

Our Financial Performance

6

Diversified customer baseWater Volume by Type of Customer Sewage Volume by Type of Customer

Diversified customer base

Water Revenues by Type of Customer Sewage Revenues by Type of Customer

7

Metropolitan Region water resources The São Paulo Metropolitan Region represents 72% of the total billed water volume Operational flexibility to guarantee continued services to the growing demand

Metropolitan Region water resources

Operational flexibility to guarantee continued services to the growing demand Water production capacity of 67.7 m³/s, increasing by 7.5 m³/s until the end of 2009 20 reservoirs of non-treated water, 182 reservoirs of treated water and 8 water

production systems

Water Production (65.5 m³/s) Distribution Systems – Metropolitan Region

P. B. JESUSCAJAMARMAIRIPORÃ

ARUJÁ

STA. ISABELF. DAROCHA

F. MORATO

CAIEIRASR. JuqueriR. Águas

Cl

SUZANOSÃO PAULO

V.GDE.PAUL.

ITAPEVI

COTIAR. daGraça

EMBU

JANDIRA

ITAP DA

T.DASERRA

S. C.DO SUL

DIADEMA.STO.ANDRÉ

R.PIRESR. GDE.

FERRAZVASC.

POÁBARUERI

S. DOPARNAÍBA

SUZANO

MOGI DAS CRUZESITAQUA

OSASCO

GUARAREMA

BIRITIBAMIRIM

SALESÓPOLIS

R.TaiaçupebaR.Jundiaí

R.BiritibaMirim

R.Paraitinga

R.P. NovaR. R. do

Campo

Claras GUARULHOS

R.Guarapiranga

R.Guarapiranga

CARAPI-CUÍBA.

MAUÁ

R. P. Beicht

R.Billings

S.B.DOCAMPOS. LOURENÇO

DA SERRA

ITAP. DASERRA

JUQUITIBA

SERRA

Barr. doFrançaR. Juquitiba

piranga

EMBUGUAÇU

8Note: Average of the 12 months ended March 2008

Broad coverage of municipalities

We currently serve 366 municipalities, mostly through concession contracts Out of the 174 concessions that matured up to 2007, 84 were renewed In addition, 21 concessions with maturity after 2008 have already been renewed (includes 8

municipalities that did not have a formal contract) Although we maintain no formal contract with the municipality of São Paulo, we own all the

assets

Concession maturity profile

9

Regulatory FrameworkRegulatory Framework

Obli t ti f R l t A M i i l St t l l

Federal Law # 11,445/07 Effective as of March 2007

Obligatory creation of a Regulatory Agency – Municipal or State level

Defines deadline for the establishment of formal contractual relationship - year 2010

Clarifies the payment conditions of the agreements executed prior to the law – up to 4 years

Scope of sanitation services: supply of drinking water, sewage, urban cleaning and solid waste handling, drainage and handling of urban rainwater

Defines Program Contract as the contractual base to be utilized between Sabesp and a Municipality. • Program Contract is a modality of concession contract based on the Public Consortium Law 11,107/05.

• No biding process is required.

A Cooperation Agreement between the State and the Municipality is needed to turn effective the program Contract and to delegate the regulation to the State Regulatory Agencyprogram Contract and to delegate the regulation to the State Regulatory Agency.

Still remains a discussion in the Federal level over the power of concession for sanitation services in

Discussion of Power of Concession

Still remains a discussion in the Federal level over the power of concession for sanitation services in Metropolitan regions Law 11,445/07 does not address this matter.

Basic discussion: sanitation services are of local interest or common interest.

Two legal proceedings under Supreme Court (STF) appraisal – no final decision / no clear direction:

10

Two legal proceedings under Supreme Court (STF) appraisal – no final decision / no clear direction:• State of Rio de Janeiro x Niteroi – 3 votes

• State of Bahia x Salvador – 4 votes

Regulatory FrameworkRegulatory Framework

C t d D b 7 2007 f ll i L 11 445/07 di ti d i t

State Regulatory Agency - ARSESP

Created on December 7, 2007, following Law 11,445/07 directions and requirements

The agency will cover energy, gas and sanitation

Expected that municipalities will delegate sanitation regulation to State Regulatory Agency

A Cooperation Agreement is needed between the Municipality and the State

The agency is expected to be effective by mid 2008

Commitment Partnership between the Municipality of São Paulo and Sabesp

Preparation of drafts for the Cooperation Agreement, Metropolitan Program Contract and M i i l L P j tMunicipal Law Project;

Adjust the Contract to the requirements of Law 11,445/07;

Settle any financial outstanding debt;

Targeted programs and additional sanitation and environmental initiatives driven to several areas of the municipality, with pre established funding;

To ensure long term rendering of sanitation services by Sabesp to the Municipality of São Paulo.

11

Consistent annual tariff adjustments Tariffs are adjusted every year by using a formula which adjusts our controllable costs by

inflation and contemplates a “pass-through” of non-controllable costs

j

A special tariff policy is being implemented geared towards Large Customers, in line with Sabesp Environmental Solution activities.

Sabesp will continue to utilize it´s tariff structure, until a regulatory agency is effective

Annual Tariffs Adjustments vs. Inflation (%) Annual Tariffs Adjustment Index

Full “Pass-Through”

Part A Part B

Inflation (IPCA) X

Controllable Costs

of Non-Controllable Costs Includes:

Electricity

Treatment materials Treatment materials

Taxes

Use of water resources

12Tariffs revision under new formula

Evolution of operations and visible growth

Water Connection Evolution (million) Water Coverage (thousand connections)*

gpotential – water

* Adding 652,100 new connections through 2010 to match organic population growth

Today’s production capacity (m³/s)

T t l 103 5

Expected growth (m³/s)

Total 103.5SPMR 67.7

Total 11.0SPMR 8.0

13

Evolution of operations and visible growth

Sewage Connection Evolution (million) Sewage Coverage (thousand connections)

gpotential – sewage

Increase coverage by adding 791,700 connections

Current System(m³/s)

Collectionl

Expected growth (m³/s)

CollectionT t l 4 6Total 30.3

SPMR 21.2

Treatment Total 39 5

Total 4.6From: 78% to: 84%

Treatment Total 9 3

14

Total 39.5SPMR 18.0

Total 9.3From: 63% to: 82%

Water Loss Program

Water Losses Target (%)

g

Strategy to reduce water loss

In March 2008: 29.1% Replacement and repair of water pipes and mains;

Physical losses

32.033.034.035.0

% mains; Installation of probing and pressure-regulating

valves; Preventive maintenance of existing and newly

installed water meters;

28 029.030.031.03 0 installed water meters;

Improvement in the quality of the materials. Non-visible leak research; Selective change of network and ramifications.

24 025.026.027.028.0 g

Non physical losses

Replacement of inaccuracy water meters;

Goal in December 2010: 24.0%

24.0 p y ; Expand personnel who work on anti-fraud

actions; Preventing frauds; Control of inactive connections

15

Control of inactive connections.

Expansion opportunities and operational ffi i i tefficiency improvement

New Contracts – New Businesses

Target new municipalities (15.3 million people – urban population including wholesale); In March 2006, Law nº 12,292 was approved, allowing us to operate outside of the São Paulo State and

abroad; Sabesp Environmental Solutions Focus on large customers – catered solutionsSabesp Environmental Solutions Focus on large customers – catered solutions As of December 2007:

• Sabesp is allowed to establish subsidiaries, as well as to take a stake in other companies withsimilar corporate purpose, in Brazil and abroad.

• The scope of services that can be rendered by Sabesp may be increased to:• The scope of services that can be rendered by Sabesp may be increased to:o Urban rainwater drainage and management;o Urban cleaning and solid waste management;o Unrestricted operation of power generation, storage, conservation and energy activities

Move Wholesale Customers to Retail

Target municipalities currently served on a wholesale basis - Currently 3.3 million population Direct access to customers

• Sell water directly to end user• Provide sewage collection and treatment services

Si ifi tl i ll ti t

16

Significantly improve collection rates, Use of accounts receivable as consideration for acquisitions

Capex plan - Investments - Expected Benefits Total investment plan of R$ 5.9 billion for 2007 to 2010, comprising of:

1,5911,745

1,574

960

02

960

Maintain: • Natural resources – water • Operating base – mainly Metropolitan Regions (Major markets)

Meet service and revenue goals Further enhance compliance with Environmental Laws:

Mi i i t l it

17

• Minimizes our exposure to lawsuits• Approaches Company and society

Capex financing

Financing by caseFunds from Company Cash flow

R$2.8 billion = 48%Funds from FinancingR$3.1 billion = 52%

CEF R$ 776 miR$ 2.4 billion

78%

CEF R$ 776 miBID R$ 168 miJBIC R$ 384 miOthers R$ 12 mi

CEF R$ 338 iCEF R$ 338 mi

BNDES R$ 129 mi

Others R$ 55 mi

CEFCEF

BNDES

BID

Total Financed Investments- Total Amount = R$ 4.4 bi- Financed Amount = R$ 3 1 bi

18

- Financed Amount = R$ 3.1 bi- Matching Funds = R$ 1.3 bi- Leverage = 70%

Access to long term low cost financing Solid capital structure, strong credit profile

Total debt / total book capitalization ratio below 50%

Access to long term, low cost financing

• Total debt / total book capitalization ratio below 50%• Sabesp has reduced its debt leverage from 3.6x in 2004 to 1.9x in March 2008

Average life of 5.9 years with an annual average cost of debt of 12.2% in R$ and 7.9% in foreign currencyg y

Access to international and domestic capital markets and multilateral financing• 66% of foreign currency debt is from multilateral financings

Total Debt BreakdownTotal Debt by Currency

F i G A F iOthers3%Foreign

Currency

CEF and BB

Gov. Ag. Foreign

Foreign Capital

Gov. Ag. Local

42%7%

4%

15%3%

Local Currency

Local Capital Markets

Foreign Capital Markets

42%

29%

7%

19

Currency Markets

Debt amortization profile The US dollar-denominated debt is long-term and low cost (multilateral agencies). Currently,

SABESP’s credit rating by S&P is brA+ (domestic) and BB- (international).

1,284

671866

911

520 518

329206

87 5735

207

Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019+Local Debt 408 1,218 799 843 449 447 136 17 13 13 13 46 Foreign Debt 263 67 67 69 71 71 71 71 316 44 22 161

20

Foreign Debt 263 67 67 69 71 71 71 71 316 44 22 161 Total 671 1,284 866 911 520 518 206 87 329 57 35 207

AgendaAgenda

Our Company1

Our Operations2

Our Financial Performance3

21

Consistent performance

Net Revenues (R$ million) Gross Profit (R$ million)

p

EBITDA (R$ million) Net Income (R$ million)

22

Financial Highlights(In R$ million)

Financial Highlights 2003 2004 2005 2006 2007 1Q08

N t R (R$) 4 130 8 4 397 1 4 953 4 5 527 3 5 970 8 1 540 1Net Revenues (R$) 4,130.8 4,397.1 4,953.4 5,527.3 5,970.8 1,540.1 EBITDA (R$) 2,076.5 1,927.0 2,285.6 2,446.0 2,698.9 774.4 EBITDA Margin (%) 50.3 43.8 46.1 44.3 45.2 50.3 Net Income (R$) 833.3 513.1 865.6 778.9 1,048.7 303.7 Net Margin (%) 20.2 11.7 17.5 14.1 17.6 19.7

Total Assets (R$) 16,590.1 16,783.8 17,431.1 17,999.9 18,663.4 18,590.2 Total Debt (R$) 7,264.3 7,050.7 6,664.2 6,326.7 5,685.2 5,691.6 Short-term Debt (R$) 997.0 1,496.8 759.0 852.5 742.1 980.1 Long-Term Debt (R$) 6,267.3 5,553.8 5,905.2 5,474.2 4,943.1 4,711.5 Foreign Currency Debt (R$) 3,012.7 2,680.9 1,575.9 1,472.2 1,242.3 1,289.9 Shareholders' Equity (R$) 7,576.9 7,951.6 8,482.5 9,018.5 9,784.0 10,087.7Shareholders Equity (R$) 7,576.9 7,951.6 8,482.5 9,018.5 9,784.0 10,087.7Total Debt/Total Cap. (%) 48.9 47.0 44.0 41.2 36.8 36.1 Investments (R$) 594.0 601.0 678.2 904.9 921.1 270.0

Dividend Declared (R$/000 shares) 17.7 5.4 12.2 9.5 1,32* - ( )Pay Out (%) 60.5 29.8 40.2 34.7 28.7 - Dividend Yield (%) 10.8 3.4 7.8 3.2 3.2 -

23Note: Financials are in Brazilian Corporate Law.

*earnings per share

Historical leverage metrics

New Debt vs. Amortization (R$ million)

g

Capital structure has remained consistent with operating cash generation and capitalization

Net Debt vs. EBITDA* (R$ million) Net Debt vs. Shareholders’ Equity (R$ million)

24* EBITDA - LTM

www.sabesp.com.br

IR ContactsIR Contacts

Mario Azevedo de Arruda Sampaio Angela Beatriz Airoldimaasampaio@sabesp.com.br abairoldi@sabesp.com.br

25

(55 11) 3388 8664 (55 11) 3388 8793