Taiaçupeba Water Treatment Plant, in

Atibainha Dam Technical Reserve Pumps, in Nazaré Paulista

D. Pedro I Roadway Bridge over Atibainha Dam, in Nazaré Paulista SABESP COMPANHIA DE SANEAMENTO BÁSICO DO ESTADO DE

OWNERSHIP STRUCTURE IN 31/DECEMBER/2014 50.3% GOVERNO DE SÃO PAULO, 24.9% NYSE, 24.8% BOVESPA

EMPLOYEES 14,753

RANKING LARGEST SANITATION COMPANY IN THE AMERICAS AND THE FIFTH LARGEST IN THE WORLD IN SERVED POPULATION

CUSTOMERS 28.4 MILLION

OPERATION 364 MUNICIPALITIES

COVERAGE INDEXES WATER: 100%, SEWAGE COLLECTION: 85%, COLLECTED SEWAGE TREATMENT: 77%

MARKET PRICE R$11.6 BILLION

ADJUSTED EBITDA R$2.9 BILLION

AJUSTED EBITDA MARGIN 26%

INVESTIMENT IN THE YEAR R$3.2 BILLION

PROFIT FOR THE YEAR R$903 MILLION

DIVIDEND PER SHARE R$0.786

SHARES CODE BM&FBOVESPA – SBSP3; NYSE – (LEVEL III ADR) SBS 256 219 187 136 189 294 283 295 224 119 354 179 230 131 288 87 72 281 27 364 255 215 358 233 188 53 234 351 302 103 77 303 160 98 207 313 164 315 186 130 221 85 254 360 18 185 208 276 9 110 116 180 213 333 124 29 327 158 273 107 204 155 252 198 115 346 210 195 357 205 173 353 249 128 74 365 220 51 2 139 102 197 296 73 300 209 39 287 79 67 328 61 118 122 211 298 113 192 108 1 238 301 291 10 174 309 176 171 106 218 253 86 137 23 156 95 184 267 359 278 308 258 126 243 289 225 32 262 8 57 38 352 3 263 314 305 264 13 24 269 261 43 88 182 12 266 214 30 48 306 47 96 247 271 217 114 231 191 17 104 345 341 178 177 89 222 14 248 349 293 99 336 89 175 285 100 356 229 6 299 5 76 268 28 170 202 183 250 329 332 97 25 319 82 342 277 311 64 56 16 228 232 22 235 297 4 127 260 242 66 331 33 109 307 49 125 201 361 241 172 212 194 78 199 50 165 200 350 40 169 153 286 44 244 31 226 92 245 154 157 163 316 55 344 168 347 21 257 363 132 326 348 75 63 203 265 45 54 161 270 318 Regional Systems Office 101 121 343 223 15 RA – Alto Business Unit 337 69 20 339 141 355 RB – Baixo Paranapanema Business Unit 7 11 322 34 80 62 RG – Pardo e Grande Business Unit 145 325 292 149 70 RJ – Capivari/Jundiaí Business Unit 52 239 129 284 41 RM – Médio Tietê Business Unit 140 240 323 320 83 310 RN – Litoral Norte Business Unit 146 340 135 68 338 324 123 RR – Vale do Ribeira Business Unit 151 259 RS – Baixada Santista Business Unit 196 236 142 RT – Baixo Tietê e Grande Business Unit 206 118 279 São Paulo Metropolitan Region 275 166 190 237 RV – Vale do Paraíba Business Unit 46 330 152 111 181 35 19 59 112 Metropolitan Office 246 58 91 272 133 26 MC – Centro Business Unit 148 274 138 120 143 304 150 ML – Leste Business Unit 37 227 216 251 MN – Norte Business Unit 147 16271 60 159 321 105 193 290 362 335 MO – Oeste Business Unit 36 93 334 42 MS – Sul Business Unit 134 81 84 280 144 282 65 317 94 312 Universalized Municipalities* (* municipality seat) 167 SABESP OPERATED MUNICIPALITIES (MAP ON THE SIDE FLAP) 1 RB Adamantina 92 RJ Elias Fausto 183 RB Maracaí 274 RR Ribeira 2 RT Adolfo 93 MS 184 RB Mariápolis 275 RA Ribeirão Branco 3 RG Águas da Prata 94 MS Embu-Guaçu 185 RT Marinópolis 276 RG Ribeirão Corrente 4 RA Águas de Santa Bárbara 95 RB Emilianópolis 186 RT Meridiano 277 RA Ribeirão do Sul 5 RM Águas de São Pedro 96 RG Espírito Santo do Pinhal 187 RT Mesópolis 278 RB Ribeirão dos Índios 6 RM 97 RA Espírito Santo do Turvo 188 RG Miguelópolis 279 RA Ribeirão Grande 7 RA Alambari 98 RT Estrela d’Oeste 189 RT Mira Estrela 280 MS Ribeirão Pires 8 RB Alfredo Marcondes 99 RB Estrela do Norte 190 RR Miracatu 281 RG Rifaina 9 RG Altair 100 RB Euclides da Cunha Paulista 191 RB 282 MS Rio Grande da Serra 10 RT Alto Alegre 101 RA Fartura 192 RG Mococa 283 RT Riolândia 11 RM Alumínio 102 RT Fernando Prestes 193 ML * 284 RA Riversul 12 RB Álvares Machado 103 RT Fernandópolis 194 RJ Mombuca 285 RB Rosana 13 RB Álvaro de Carvalho 104 RA Fernão 195 RT Monções 286 RV 14 RA Alvinlândia 105 ML 196 RS Mongaguá 287 RT Rubiácea 15 RA Angatuba 106 RB Flora Rica 197 RT Monte Alto 288 RT Rubinéia 16 RM 107 RT Floreal 198 RT Monte Aprazível 289 RB Sagres 17 RB Anhumas 108 RB Flórida Paulista 199 RJ Monte Mor 290 ML Salesópolis 18 RT d’Oeste 109 RB Florínea 200 RV Monteiro Lobato 291 RB Salmourão 19 RR Apiaí 110 RG 201 RJ Morungaba 292 RM Salto de Pirapora 20 RM Araçariguama 111 MN 202 RB Narandiba 293 RB Sandovalina 21 RA Arandu 112 MN 203 MN Nazaré Paulista 294 RT Santa Albertina 22 RV Arapeí 113 RB Gabriel Monteiro 204 RT Nhandeara 295 RT Santa Clara d’Oeste 23 RB Arco-Íris 114 RA Gália 205 RT Nipoã 296 RG Santa Cruz da Esperança 24 RM 115 RT Gastão Vidigal 206 RA Nova Campina 297 RA Santa Cruz do Rio Pardo 25 RM Areiópolis 116 RT General Salgado 207 RT Nova Canaã Paulista 298 RT Santa Ernestina 26 ML Arujá 117 RT Glicério 208 RT 299 RM Santa Maria da Serra 27 RT Aspásia 118 RA Guapiara 209 RB 300 RB 28 RB 119 RT Guarani D’Oeste 210 RT Nova Luzitânia 301 RG Santa Rosa de Viterbo 29 RT Auriflama 120 RV Guararema 211 RT Novo Horizonte 302 RT Santa Salete 30 RT Avaí 121 RA Guareí 212 RA Óleo 303 RT Santana da Ponte Pensa 31 RA Avaré 122 RG Guariba 213 RT Onda Verde 304 MO Santana de Parnaíba 32 RT Balbinos 123 RS Guarujá 214 RB Oriente 305 RB Santo Anastácio 33 RV Bananal 124 RT Guzolândia 215 RT Orindiúva 306 RG Santo Antônio do Jardim 34 RA Barão de Antonina 125 RJ Hortolândia 216 MO 307 RV Santo Antônio do Pinhal 35 RR Barra do Chapéu 126 RB Iacri 217 RB Oscar Bressane 308 RB Santo Expedito 36 RR Barra do Turvo 127 RA 218 RB Osvaldo Cruz 309 RB Santópolis do Aguapeí 37 MO 128 RT Ibirá 219 RT Ouroeste 310 RS Santos 38 RB Bastos 129 RM Ibiúna 220 RT Palmares Paulista 311 RV São Bento do Sapucaí 39 RT Bento de Abreu 130 RG Icém 221 RT Palmeira D’Oeste 312 MS São Bernardo do Campo 40 RA Bernardino de Campos 131 RG Igarapava 222 RB Paraguaçu Paulista 313 RT São Francisco 41 RS Bertioga 132 RV Igaratá 223 RA Paranapanema 314 RG São João da Boa Vista 42 ML Biritiba-Mirim 133 RR Iguape 224 RT Paranapuã 315 RT São João das Duas Pontes 43 RM 134 RR Ilha Comprida 225 RB Parapuã 316 RV São José dos Campos 44 RM 135 RN 226 RM 317 RR São Lourenço da Serra 45 RM Boituva 136 RT Indiaporã 227 RR Pariquera-Açu 318 RV São Luiz do Paraitinga 46 RA Bom Sucesso de Itararé 137 RB Inúbia Paulista 228 RJ Paulínia 319 RM São Manuel 47 RB Borá 138 RR Iporanga 229 RA Paulistânia 320 RA São Miguel Arcanjo 48 RM Boracéia 139 RT Irapuã 230 RT Paulo de Faria 321 MC São Paulo 49 RM 140 RA Itaberá 231 RM 322 RM São Roque 50 MN Bragança Paulista 141 RA Itaí 232 MN Pedra Bela 323 RN São Sebastião 51 RT Brejo Alegre 142 RS Itanhaém 233 RT Pedranópolis 324 RS São Vicente 52 RA Buri 143 RR Itaóca 234 RG Pedregulho 325 RA Sarapuí 53 RG Buritizal 144 MS 235 RB Pedrinhas Paulista 326 RA Sarutaiá 54 RJ Cabreúva 145 RA 236 RR Pedro de Toledo 327 RT Sebastianópolis do Sul 55 RV Cachoeira Paulista 146 RA Itapeva 237 RS Peruíbe 328 RG 56 RV Caçapava 147 MO 238 RB Piacatu 329 RG Serra Negra 57 RB Caiabu 148 RR Itapirapuã Paulista 239 RM Piedade 330 RR Sete Barras 58 MN Caieiras 149 RA Itaporanga 240 RA Pilar do Sul 331 RV Silveiras 59 MN Cajamar 150 ML 241 RV 332 MN Socorro 60 RR Cajati 151 RA Itararé 242 MN Pinhalzinho 333 RT Sud Mennucci 61 RG Cajuru 152 RR Itariri 243 RB Piquerobi 334 ML Suzano 62 RA Campina do Monte Alegre 153 RJ Itatiba 244 MN Piracaia 335 MO Taboão da Serra 63 RJ Campo Limpo Paulista 154 RM 245 RA Piraju 336 RB Taciba 64 RV Campos do Jordão 155 RG Itirapuã 246 MO Pirapora do Bom Jesus 337 RA Taguaí 65 RR Cananéia 156 RG Itobi 247 RB Pirapozinho 338 RR Tapiraí 66 RV Canas 157 RJ Itupeva 248 RT 339 RA Taquarituba 67 RT Cândido Rodrigues 158 RG Jaborandi 249 RT Planalto 340 RA Taquarivaí 68 RA Capão Bonito 159 RR Jacupiranga 250 RB Platina 341 RB Tarabaí 69 RM Capela do Alto 160 RT Jales 251 ML Poá 342 RB Tarumã 70 RN 161 RV Jambeiro 252 RT Poloni 343 RM Tatuí 71 MO Carapicuíba 162 MO 253 RT Pongaí 344 RV Taubaté 72 RT Cardoso 163 RJ Jarinu 254 RT Pontalinda 345 RB Teodoro Sampaio 73 RG Cássia dos Coqueiros 164 RG Jeriquara 255 RT Pontes Gestal 346 RG Terra Roxa 74 RT Catiguá 165 MN Joanópolis 256 RT Populina 347 RA Timburi 75 RM Cesário Lange 166 RR Juquiá 257 RM Porangaba 348 RM Torre de Pedra 76 RM Charqueada 167 RR Juquitiba 258 RB Pracinha 349 RM Torrinha 77 RG Colômbia 168 RV Lagoinha 259 RS 350 RV Tremembé 78 RM 169 RM Laranjal Paulista 260 RM Pratânia 351 RT Três Fronteiras 79 RT 170 RV Lavrinhas 261 RT 352 RB Tupã 80 RA Coronel Macedo 171 RT Lins 262 RB Presidente Bernardes 353 RT Turiúba 81 MO 172 RV Lorena 263 RB Presidente Epitácio 354 RT Turmalina 82 RB Cruzália 173 RT Lourdes 264 RB Presidente Prudente 355 RN 83 RS Cubatão 174 RB Lucélia 265 RM Quadra 356 RA Ubirajara 84 MS Diadema 175 RA Lucianópolis 266 RB Quatá 357 RT União Paulista 85 RT Dirce Reis 176 RB Luiziânia 267 RB Queiróz 358 RT Urânia 86 RG Divinolândia 177 RA Lupércio 268 RV Queluz 359 RT Uru 87 RT Dolcinópolis 178 RB Lutécia 269 RB Quintana 360 RT Valentim Gentil 88 RM Dourado 179 RT Macedônia 270 RV Redenção da Serra 361 MN Vargem 89 RA 180 RT Magda 271 RB Regente Feijó 362 MO Vargem Grande Paulista 90 RB Echaporã 181 MN Mairiporã 272 RR Registro 363 RJ Várzea Paulista 91 RR Eldorado 182 RB Marabá Paulista 273 RG Restinga 364 RT Vitória Brasil * Parcial and wholesale water supply 365 RT Zacarias COMPANHIA DE SANEAMENTO BÁSICO DO ESTADO DE SÃO PAULO BOARD OF Alberto Goldman DIRECTORS Alexander Bialer (until April, 2014)

Benedito Pinto Ferreira Braga Junior (since January, 2015) Claudia Polto da Cunha

Dilma Pena (until January, 2015)

Edson de Oliveira Giriboni (until March, 2015) Francisco Vidal Luna Jerônimo Antunes

Jerson Kelman (since January, 2015) CHANGE OF PARADIGM AND SAFE SUPPLY Luis Eduardo Assis (since May, 2014) Message from the chairman of the Board of Directors 6

Mauro Guilherme Jardim Arce (until February, 2015) CONCENTRATED EFFORTS TO FIGHT AGAINST THE WATER SHORTAGE Reinaldo Guerreiro Message from the CEO 7 Sidnei Franco da Rocha (since October, 2014) AMONG THE WORLD’S LARGEST COMPANIES IN SERVED POPULATION Walter Tesch Profile 8

PAINEL DE INDICADORES 12 BOARD OF Jerson Kelman (since January, 2015) EXECUTIVE Chief Executive Officer SUPPLY CHALLENGES IN AN ADVERSE CLIMATE SCENARIO OFFICESRS Dilma Pena (until January, 2015) Water 16 Chief Executive Officer Edson José Pinzan (since August 2014) Technology, EnterprisesProject and Environment Officer IMPACTS AND CONSEQUENCES OF THE WATER CRISIS 20 João Paulo Tavares Papa (since August 2014) Technology, EnterprisesProject and Environment Officer STRATEGY AND VISION FOR THE FUTURE 24 Luiz Paulo de Almeida Neto Regional Systems Officer Manuelito Pereira Magalhães Junior CONFRONTING THE WATER CRISIS 28 Corporate Management Officer Paulo Massato Yoshimoto SEWAGE ON THE PATH TO UNIVERSAL SERVICES 40 Metropolitan Region Officer Sewage Rui de Britto Álvares Affonso Chief Financial Officer and Investor Relations Officer FINANCIAL-ECONOMIC MANAGEMENT 46

ENVIRONMENTAL SANITATION IN PURSUIT OF SUSTAINABILITY 54 SUSTAINABILITY Coordinators Aloisio Hildebrand, João Paulo Nocetti Tonello and Priscila Costa da Silva REPORT 2014 Writer/Editor Aloisio Hildebrand and Priscila Costa da Silva VALUING EDUCATION IN THE CONSCIOUS USE OF WATER Reporters Alessandra Mortada Castro, Ana Lúcia Fonseca Rodrigues Szabjubok, João Paulo Nocetti 60 Tonello, Paula Márcia Sapia Furukawa, Priscila Costa da Silva, Ricardo Camellini de Castro, Roseli Chistoni, Silvana Almeida Nogueira, Valéria D´Amico and Wady Roberto Bon Work group Adriano Stringhini, Alessandra Mortada Castro, Aloisio Hildebrand, Ana Lúcia Fonseca, Rodrigues Szabjubok, Angela Beatriz Airoldi, Carlos Eduardo Hashish, Carlos Eduardo Rodrigues, Cristina Gonçalves Tabosa Alves, Edison Airoldi, Eliana Kazue Kitahara, Elizabeth Ayres Gdikian, Guaraci Loureiro Sarzedas, Ivan de Assis, João Paulo Nocetti Tonello, Marcelo Miyagui, Marcel Sanches, Marcio Awards recieved in 2014 77 de Freitas Junior, Maria da Conceição Gouveia, Maria Regina F. Campos, Marilza Soares, Paula Márcia Sapia Furukawa, Paulo Ronaldo Barreto, Priscila Costa da Silva, Ricardo Camellini de Castro, Rodolfo Lopes Protti, Roseli Chistoni, Silvana Almeida Nogueira, Valéria D´Amico, Wady Roberto Bon, Wagner S. 2014 Annual Social Report 78 Pinheiro and Wanderley da Silva Paganini Legal Consulting Elizabeth Melek Tavares and Tales José B. Bronzato External Consulting MZ Group About the report/Materiality matrix 80 Audit of the Financial Statements Deloitte Touche Tohmatsu Photos / Infographics Sabesp Team GRI Indicators 82 Graphic Design and Art Direction Marcus Romanelli (coordination), Beatriz Nalon, Giórgia Cassino, Henrique de Brito and Marcello Mussa UN Global Compact Principles Print run 200 copies 85 MESSAGE FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS MESSAGE FROM THE CEO CHANGE OF PARADIGM CONCENTRATED EFFORTS AND SAFE SUPPLY TO FIGHT AGAINST THE WATER SHORTAGE

G4-1 The southeast region of is facing the worst water cri- Referring to water, also mentioning higher social participation, G4-1 1In Sabesp’s 41 years of history, 2014 was certainly one of the The efforts to fight the water shortage required the realloca- sis of its history. The extremely low rainfall and water inflow levels in another strategic and essential path towards dealing with water most challenging years. During the last twelve months, we have tion of investments and the creation of budget cuts to ensure the water sources of the Metropolitan Region of São Paulo (MRSP) du- crisis focuses on the efficient management of demand. The com- worked tirelessly to deal with the most severe drought in the Southe- execution of the bonus program and the planned works. Never- ring 2014 and early 2015 brought new parameters for the assessment mitment from 80% of population, who can receive bonus in their ast region in more than eight decades, an event whose likelihood of theless, in 2014, the Company invested R$3.2 billion and plans of hydrological risks, previously based on the figures for 1953/1954 bills, concerned with the contingency tariff and /or aware of the occurrence was 0.6%. to invest more than R$13.5 billion by 2019. These factors did not two-year period, the most critical ones recorded up to date. severe situation we have been going through, it has been para- The strategic initiatives in the operations combined with the prevent Sabesp from moving forward to the goal of providing uni- The situation is severe and dealing with the water crisis compri- mount to maintain a consumption level around 30% lower than the population’s excellent response to the awareness and the financial in- versal access to sewage collection and treatment services in its ses a set of actions to reduce the hydrological risks. In this regard, beginning of the drought. centive campaigns for rational use of water were essential to prevent area of operations. we are making additional investments in works with results in the This mobilization, already successful, must be reinforced the jeopardising of the public supply system. The rapid reaction in cities Established jointly with the state government and the served short and medium terms, in order to improve water source reser- with the contribution from other citizens, communities, opinion in the state’s interior and, especially, in the São Paulo metropolitan re- municipalities, this guideline presented positive numbers in the vation, expand the flow transferred between systems and treated makers, press and organized society. We need to join efforts to gion, the most severely affected area, has demonstrated the strength of execution of the third stage of the Tietê project, in the São Paulo water production capacity. increasingly raise the awareness and make those who have not ourinfrastructure and the high technical capacity of our professionals. metropolitan region, and the Onda Limpa (Clean Wave) program in The actions foreseen in the São Paulo Macrometropolis Plan yet absorbed current crisis to understand such critical moment; Only a Company with these attributes is able to replace the sour- the Santos coast region. (area which includes the metropolitan regions of São Paulo, Campi- starting with the approximately 20% of inhabitants of the Greater ce of water supply for a vast and densely populated regions with other In 2014, we delivered 20 sewage treatment stations (STSs) exe- nas, Santos Coast and Paraíba Valley, Jundiaí and urban São Paulo, who during 2014, persisted in consuming more than production systems, as Sabesp has been doing in Greater São Paulo to cuted 244,300 new connections – totaling 22.4 million people served. agglomerates) were anticipated, such as the use of Grande river the necessary. This has to be focus of this mission which per- support the Cantareira system, which was the most severely affected Regarding water supply, although this service is universal, intensive branch in Billings reservoir, which already supplies water to the ABC tains to entire society. It is imperative that the entire population by the drought. Only a company of this size can execute works like the work was required to keep up with the growth of the population and region since the 50’s and will contribute to Taiaçupeba reservoir, in cooperates by saving as much water as possible, so that, jointly one to extract water from Cantareira’s technical reserve. Delivered in a the business. As a result, 231,500 new connections were made. We Alto Tietê water supply system. with Sabesp’s actions, we can go through 2015 without the need short time period, it has become a case study due to the ingenuity and currently serve 25.3 million people directly, more than the population Another example is the interconnection between the Jaguari (Para- of taking more drastic measures. expertise used to extract water below the gravity extraction floodgates. of many countries. íba do Sul river basin) and the Atibainha (PCJ basin) reservoirs, which Without ignoring the essential precepts of environmental preser- Equally efficient was the strengthening of practices against water It is also worth noting the efforts to obtain management effi- increases water safety in both basins. Additionally, you can find in this vation, the understanding on such emergency moment must reach the losses, including intensive scans, faster repairs and replacement of ciency gains and to improve the quality of the services provided in report several interventions in progress, implementation or phase of public administration bodies and related powers. This means greater pipes and branches, in addition to the intensification of pressure ma- the served municipalities. These initiatives include the policy for study which, scheduled to be delivered by the end of the decade, which agility and objectivity in the grant of authorizations and licensing, with nagement in distribution networks. The intensive media campaigns, employee’s valuing trainning, the development of leaders and the must alleviate the pressure on the public supply system of the Metropo- positive operating practical results in the quick execution of works, pre- the mobilization of employees, the adoption of bonuses and, more re- modernization and technological improvement of internal proces- litan Region of São Paulo. venting long stoppages. cently, the contingency tariff complete the set of initiatives that have ses. This transparent and ethical attitude is further reinforced by Obviously, this result relies on ongoing actions and programs exe- The change in models must be extended to new codes of works and produced very positive results. a compliance program based on practices referenced to the main cuted by Sabesp for years, which will be long-lasting pursued. The ini- requirements to new buildings, spreading and implementing measures For the first time since it began operating, the Cantareira system global requirements, such as the Foreign Corrupt Practices Act tiatives include fighting against fraud and pipeline losses, setting the aiming at reducing consumption in urban areas. We must also consider is not the greatest contributor to the large metropolis. Its production (FCPA), and in anticipation of the Anti-corruption Law 12,846/2013, adjustment to network pressure, expanding sector reservoirs, deconta- recycling and reuse for drinkable and non-drinkable purposes, water- averaged 14.03 m³/s in February 2015 – 56% less than the 33 m³/s re- in effect since January 2014. In addition, in 2014, we carried out an minating rivers and protecting water source. -saving devices in households, industry and agriculture. corded before the crisis and less than the production volume of the extensive assessment of anti-fraud mechanisms, resulting in the Due to current situation, the adjustment to the routes and priorities Finally, this is the moment for us to build a more conscious relation Guarapiranga system, which has become the largest water producer. improvement of the 93 existing processes and the implementation focused on expanding water infrastructure certainly has financial im- with water management and consumption. We have to take lessons Our water sources currently produce 70% of what they produced un- of another 77 corporate protection initiatives. pacts on other relevant actions previously assumed, especially those from the Chinese wisdom, which teaches us that every crisis represents der normal conditions, until the end of 2013. The long-term strategic plan, the operating capacity and the de- directed to sanitation. This situation, however, does not exclude from an opportunity to innovate, change paradigms and, above all, implement This 30% reduction pace has to be maintained in 2015. Therefore, dication of our professionals were essential so that the population our scope the target of providing universal access in our performance long-term sustainable solutions. This is what Sabesp and the São Paulo we are carrying out works to increase water supply safety, production could be spared the distress caused by general supply shortage in area, which has recording relevant advances. In this regard, it is worth State Government have been doing: without leaving the past behind, we capacity and the production systems integration in the metropolitan re- 2014. We will maintain these efforts in 2015 and in the upcoming years, pointing out that the complete decontamination still relies on the cons- always must move on. gion, especially the interconnection of Billings reservoir with the Alto leaving an important legacy for future adversities, comprising both cious participation of government and society by correctly disposing Tietê system, the enhancement of Billings with Guarapiranga reservoirs the structural aspect, which is even more robust and secure, and the the urban waste, promote the cleaning of cities and properly connect BENEDITO BRAGA and the expansion of the ABV water treatment station. It is also essen- population’s increased awareness of water issues. sewage to the collecting network. Chairman of the Board of Directors tial that the population continues saving water. With these initiatives, even if rainfall levels are unfavorable, we will possibly not need to adopt JERSON KELMAN more drastic and distressing measures, such as the rotation. Sabesp’s Chief Executive Officer

6 7 G4-3/4/5/6/7/8/9 intangible assets. Also, the Company conti- FOUNDED IN 1973 a from the merger of nues to operate in the 54 municipalities for PROFILE which the agreements have expired and it is different sanitation companies and under the negotiating renewal. By 2030, another 38 municipalities will guidelines of the National Sanitation Plan (Planasa), have their agreements expired. Together, they account for 8.7% of the Company´s to- Companhia de Saneamento Básico do tal revenue and around 8.0% of intangible assets. For these cases, Sabesp will spare The Company operates in 364 Estado de São Paulo (Sabesp) has as its vision no effort to formalize new agreements for municipalities another 30 years. of the state to provide universal access to sanitation services In addition, through December 31, 2014, of São Paulo, the Company supplied water on a whole- besides providing in the area it operates. sale basis to five other municipalities loca- whoesale ted in the metropolitan region of São Paulo water to five (RMSP), four of which also used sewage other cities treatment services. in São Paulo Metropolitan Also, in accordance with sustainable development principles and In another three municipalities of the Region aligned with the environmental, social and economic policies of São State of São Paulo, Sabesp holds interest Paulo State Government, its controlling shareholder, Sabesp has as in Águas de Castilho S.A., Águas de Andra- its mission “to provide public sanitation services, contributing to im- dina S.A. and Saneaqua Mairinque S.A., proving quality of life and the environment”. which provide water and sewage services As a publicly held mixed capital company headquartered in and, in the municipality of Mogi Mirim (SP), the municipality of São Paulo, the capital of São Paulo state, Bra- it it holds interest in SESAMM – Serviços zil, the Company is governed by public and private Law standards de Saneamento de Mogi Mirim S.A., which and principles. is engaged in the modernization, implemen- Sabesp is currently the largest sanitation company of the Ameri- tation and management of the sewage tre- cas and the fi fth largest of the world in terms of population served, atment system. It is worth mentioning that in accordance with the 14th edition (2012-2013) of the Pinsent Masons there were no capital contributions to the Water Yearbook. We operate water and sewage services in São Paulo associated companies in 2014. state, including in the city of São Paulo. In the reuse water segment, Sabesp In 2014, we posted net revenue of approximately R$11.2 billion acts as a partner of Odebrecht Ambiental and net income of R$903.0 million. Our assets totaled R$30.4 billion in Aquapolo Ambiental to produce, provide and our market cap was R$11.6 billion on December 31, 2014. We su- and sell the product to the Capuava Petro- pply water to 28.4 million people (25.3 million directly and 3.1 million chemical Complex and, in the non-domes- served on a wholesale basis) and collect the sewage generated by tic sewage segment, the Company crea- AMONG THE WORLD’S LARGEST COMPANIES IN 22.4 million people. Sabesp’s services cover approximately 67% of ted, together with Estre Ambiental, Attend the urban population of the state of São Paulo. Ambiental, which began operating a non- Our structure is divided into five management divisions, in -domestic sewage pre-treatment station addition to the CEO, two of which are operational, divided into and sludge disposal system in the Metro- 17 business units throughout the State. We operate 235 water politan region of São Paulo in the second treatment plants and 524 sewage treatment stations, including 9 half of 2014, amongst other activities. SERVED POPULATION ocean outfalls. Our water and sewage distribution networks are The Company also provides advisory 70,800 kilometers and 48,000 kilometers long, respectively. On De- services on the rational use of water, plan- cember 31, 2014, the Company had 14,753 employees, whose total ning and commercial management, finan- productivity was 1,008 connections per employee. cial and operating issues. We currently The Company operates in 364 municipalities of the state of São operate in Panama, Honduras and Nica- Paulo, in addition to partially serving the municipality of Mogi das ragua, in partnership with Latin Consult in Cruzes. Between January 1st, 2007, when the new Regulatory Fra- the first two countries. mework (Law 11,445/07) was issued, and on December 31, 2014, we The Company is qualified to provide entered into agreements to provide services for an additional 30 ye- urban rainwater drainage and urban cle- ars with 274 municipalities (including the city of São Paulo), eight of aning services, handle solid waste, sell Construction fo the which executed in 2014. power, perform other services, provide Cantareira System, On December 31, 2014, these 274 municipalities accounted for products and obtain benefits and rights early 70s approximately 73.4% of the Company´s total revenue and 65.7% of that directly or indirectly result from its 9 assets, operations and activities, in Brazil incumbent upon the Shareholders’ Meeting, among others, to Sabesp or abroad. elect or remove members of the Board of Directors and the supplies water to 28.4 million The control, oversight and regulation, Fiscal Council, establish management’s compensation and ap- people, nearly including tariff regulation, of our opera- prove dividends. 67% of the urban tions are mostly carried out by the São The Company’s Board of Directors is currently composed of population Paulo State Energy and Sanitation Regula- ten members for a unified two-year term of office, four of whom of the state of tory Agency – Arsesp. independent, reelection being permitted in accordance with the São Paulo. The Company’s shares – all common BM&FBovespa’s Novo Mercado rules. One of the members was voting shares – are traded on the São elected by minority shareholders. No executive officer is a mem- Paulo Securities, Commodities and Futu- ber of the Board of Directors, except for the CEO, and the CEO res Exchange (BM&FBovespa) under the cannot be the Chairman of the Board of Directors. code SBSP3 and on the New York Stock 2014 and the first months of 2015 were marked by major chan- Exchange (NYSE), as American Deposi- ges in our Management. In March 2014, João Paulo Tavares Papa tary Receipts (Level III ADR), under the resigned from the position of Technology, Enterprises and Envi- code SBS. On December 31, 2014, we ronment Officer and was replaced by Edson José Pinzan in Au- had 5,010 shareholders registered on the gust. In January 2015, Jerson Kelman replaced Dilma Seli Pena BM&FBovespa and our capital stock was as the Company’s Chief Executive Officer. composed as follows: Also in March 2014, Edson de Oliveira Giriboni resigned from the position of Chairman of the Board of Directors. At the Annual Shareholders’ Meeting held in April 2014, the controlling shareholder renewed part of the Company’s Fiscal Council, electing Rui Brasil Assis as a sitting member and Enio Marrano Lopes and Márcio Rea as alternate members. On the same date, Joaldir Reynaldo Machado left the Fiscal Council. On the same occasion, the minority shareholders introduced changes to the Board of Directors, by electing Luís Eduardo Assis to replace Alexander Bialer, and, to the Fiscal Council, by elec- ting Alexandre Luis Oliveira de Toledo and Antonio Claudio Zei- tuni as sitting and alternate members, respectively, to replace 24.9% Massao Fábio Oya and Jorge Michel Lepeltier. In January 2015, Benedito Pinto Ferreira Braga Junior, the new State Secretary of Sanitation and Water Resources, was elected Chairman of the Board of Directors. Subsequently, in February 50.3% 2015, Board member Mauro Guilherme Jardim Arce resigned and was replaced by Jerson Kelman. G4-34 For further information on the Company’s corporate go- 24.8% vernance structure and its operations, see the “Corporate Gover- nance” section in the Investors Relation area of the Company’s website: www.sabesp.com.br/investidores. In 2014, the compensation of executive officers and members of the Board of Directors, including benefits, amounted to appro- ximately R$3.4 million. This amount is added by approximately R$504,000 relating to the executive officers’ variable compensa- tion; the variable compensation is not applicable to members of the Board of Directors and the Fiscal Council, pursuant to State Decree 58,265/12 ratified by the Shareholders’ Meeting held in IN 2014, STRATEGIC ACTIONS TAKEN BY We are still part of the main BM&FBovespa April 2013. indices, including the Corporate Sustainabi- As required by Brazilian Corporation Law, the overall compen- SABESP AND THE EXCELLENT RESPONSE OF lity Index. sation paid to executive officers and members of the Board of Directors and the Fiscal Council is established by the Sharehol- ders´ Meeting. At Sabesp, the policy relating to the compensa- THE POPULATION TO AWARENESS CAMPAIGNS Corporate Governance tion of Board members and executive officers is established in accordance with the guidelines of São Paulo government, mainly AND BONUSES WERE CRUCIAL IN AVOIDING The Company’s highest governing based on performance, always subject to approval by the Sha- body is the Shareholders’ Meeting. It is reholders’ Meeting. COMPROMISING THE PUBLIC SUPPLY SYSTEM. 10 ligações de água ligações de água 7,295 7,481 7,679 7,888 8,210 7,295 7,481 7,679 7,888 8,210

2010 2011 2012 2013 2014 thousand 2010 2011 2012 2013 2014 thousand ligações de esgotoágua 5,718ligações5,921 6,128de esgoto6,340 6,660 7,2955,718 7,4815,921 7,6796,128 7,8886,340 8,2106,660

2010 2011 2012 2013 2014 thousand 2010ligações2011 2012de água2013 2014 thousand 7,295ligações7,481extensão 7,679de esgotoágua água7,888 8,210 65,3795,718 66,3895,921extensão67,6476,128 água69,6196,340 70,8006,660 65,3797,295ligações66,3897,481 67,6477,679de água69,6197,888 70,8008,210 2010ligações2011 2012de água2013 2014 km 7,2952010ligações7,4812011 7,6792012de água7,8882013 8,2102014 thousandkm 7,2952010 7,4812011 7,6792012 7,8882013 8,2102014 thousand 2010 extensão2011 2012 esgoto2013 2014 thousand 44,2797,295ligaçõesextensão45,0737,481 45,7787,679de esgotoesgotoágua47,1037,888 47,9928,210 44,2795,718 45,0735,921 45,7786,128 47,1036,340 47,9926,660 7,2952010ligações7,4812011extensão 7,6792012de esgoto água7,8882013 8,2102014 thousand 2010 2011 2012 2013 2014 km 65,3795,718 66,3895,921 67,6476,128 69,6196,340 70,8006,660 2010 2011 2012 2013 2014 kmthousand 2010ligações2011 2012de esgoto2013 2014 thousand 2010 2011 2012 2013 2014 km 5,7182010ligações5,9212011 etas 6,1282012de esgoto6,3402013 6,6602014 thousand 2010213 2011212 2012214 2322013 2352014 thousand 5,718 5,921 etas6,128 6,340 6,660 2010213 ligações2011212 2012de214 esgoto2322013 2352014 thousand 5,718 extensão5,921extensão6,128 esgoto água6,340 6,660 44,279ligações45,073 45,778de esgoto47,103 47,992 65,3792010 66,3892011 67,6472012 69,6192013 201470,800 un 5,7182010 5,9212011extensão2011 6,1282012 água20136,3402013 20146,6602014 unthousand 65,3792010 66,3892011 poços67,6472012 69,6192013 70,8002014 kmthousand 2010 2011 2012 2013 2014 km 1,0932010 1,1022011 poços1,0792012 1,0832013 1,0552014 thousand 1,093 1,102extensão1,079 água1,083 1,055 2010 2011 2012 2013 2014 km 65,3792010 66,3892011extensãoetas67,6472012 água69,6192013 70,8002014 thousand extensão esgoto 235 65,3792010213 66,3892011extensão212 67,6472012214 água69,6192013232 70,8002014 un 44,2792010 45,0732011 45,7782012 47,1032013 47,9922014 un 65,3792010 extensão66,3892011 67,6472012 esgoto69,6192013 70,8002014 km 44,279 45,073extensão45,778 água47,103 47,992 2010 20112011 2012 20132013 20142014 unkm 65,379 66,389 etes67,647 69,619 70,800 2010490 extensão2011490 etes2012502 esgoto5092013 5242014 km 2010 2011 2012502 5092013 5242014 km 44,279490 45,073490 poços45,778 47,103 47,992 2010 extensão2011 2012 esgoto2013 2014 km 1,093 1,102 etas1,079 1,083 1,055 44,279213 extensão45,073212 45,778214 esgoto47,103232 47,992235 44,2792010 45,07320112011 etas45,7782012 47,10320132013 201447,9922014 uankm 2010213 extensão20112011212 2012214 esgoto20132013232 20142352014 unkmuan 44,279 45,073 45,778 47,103 47,992 2010perdas20112011 - etasfaturamento2012 20132013 20142014 kmun perdas micromedição 213perdas212 - faturamento214 232 235 perdas micromedição 20142010 20112011 poçosetasetes2012 20132013 2014201421.3 kmun 2014 29.8 2014 509 52423521.3 20131,093490213 1,102490212 etas1,079502214 1,083232 1,05524.4 20132014 31.229.8 20122013213 212 poços214 232 23525.724.4 20122013 32.131.2 2010 2011 2012 2013 2014 un 201120121,093 1,102 etas1,079 1,083 1,05525.625.7 20112012 32.032.1 2010 20112011 2012 20132013 20142352014 un 20102011213 212 214 232 26.025.6 un 20102011 32.332.0 2010 2011 poços2012 2013 2014 uan% % 20102010 2011 2012 2013 201426.0 %un 2010 32.3 % 1,0932010 1,1022011 poços1,0792012 1,0832013 1,0552014 un 1,0932010 1,1022011 poçosetes1,0792012 20131,083 20141,055 un 490perdasperdas490 - porfaturamento502 ligação509 524 perdas micromedição 1,093 1,102 1,079 1,083 1,055 20142010403 perdas2011395 poços etespor2012392 ligação2013372 201431921.3 un 2014 29.8 20132010490403 2011490395 2012502392 2013509372 524201431924.4 un 2013 31.2 1,093 1,102 1,079 1,083 1,055 20122010 2011 2012 2013 201425.7 un 2012 32.1 2010 2011 etes2012 2013 2014 uanliter / 2011 25.6 literconnection / / 2011 32.0 490 490 502 509 524 201020102010 20112011 etes20122012 2013 201426.0 unconnectionday / 2010 2011 2012 2013 2014 %uan 2010 32.3 % 2010490perdas4902011 - etesfaturamento5022012 5092013 5242014 day perdas micromedição 490 490 502 509 524 2014 etes 21.3 2014 29.8 20132010índiceperdasperdas2011 de - porfaturamentohidrometação2012 ligação2013 201424.4 uan perdas micromedição 490 490 502 509 524 2013 31.2 201420122010403índice2011395 de hidrometação2012392 2013372 201431999.9725.721.3 uan 20122014 32.129.8 2013201120142010perdas2011 - faturamento2012 2013 201499.9725.624.4 uan 20112013perdas micromedição 32.031.2 20132012 99.9725.7 2012 32.1 20122010 99.9726.0 liter% / 2010 32.3 20142010perdas2011 - faturamento2012 2013 201421.3 uan 2014perdas micromedição 29.8 % 20122011 99.9725.6 connection / 2011 32.0 20132011 99.9724.4 2014perdas - faturamento 21.3 day 20142013perdas micromedição 29.831.2 201020112010 2011 2012 2013 201499.9726.0 % 2010 32.3 % 201420132012 21.324.425.7 % 20132012 31.232.1 2010perdasperdas - porfaturamento ligação 99.97 % 2014 29.8 201320122011 24.425.725.6 201320122011perdas micromedição 31.232.132.0 2014403 395 392 372 31921.3 201220112010índiceperdasvol, de prod, porhidrometação ligaçãoágua 25.725.626.0 % 2014201220112010 29.832.132.032.3 % 201320112010 24.425.626.0 20132010 31.232.3 2,952403 vol,2,992395 prod,3,059392 água3,053372 2,840319 % 2011 32.0 % ligações de água 20142012 99.9725.7 2012 32.1 água 2,9522010 2,992 3,059 3,053 2,84026.0 %liter / 2010 32.3 ligações de água 2013 99.97 connection / % 7,295 7,481 7,679 7,888 8,210 2011 perdas por ligação 25.6 2011 32.0 ligações de água 2010 2011 2012 2013 2014 day ligações de água 201220102010 2011 2012 2013 201499.9726.0 millionliter / m³ CLOSE TO UNIVERSAL ACCESS 7,295ligações7,481 7,679de água7,888 8,210 403 perdas395 por392 ligação372 319 % 2010 32.3 % 7,295 7,481 7,679 7,888 8,210 20112010 2011 2012 2013 201499.97 millionconnection m³ / ~100% Operational7,295ligações7,481 7,679de água7,888 8,210 2010403 perdas2011395 por2012392 ligação2013372 2014319 day 7,295 7,481 7,679 7,888 8,210 2010 99.97 % ligações de água 403índicevol,395 micromedidode hidrometação392 372 319 liter / perdas por ligação(7) connection / Water7,2952010 connections7,4812011 7,6792012 7,8882013 8,2102014 thousand 1,514Water Lossvol,1,557 per micromedido Connection1,601 1,624 1,573 liter / PANEL OF day 20142010 2011 2012 2013 201499.97 ligações de água 7,2952010 7,4812011 7,6792012 7,8882013 8,2102014 thousand 1,514403 1,557395 1,601392 1,624372 1,573319 connection / índicevol, de prod, hidrometação água liter / 2010 2011 2012 2013 2014 thousandthousand 20132010 2011 2012 2013 201499.97 day coleta de esgotos 2010 2011 2012 2013 2014 thousand 2,9522010 2,9922011 3,0592012 3,0532013 2,8402014 millionconnection m³ / 7,295 7,481 7,679 7,888 8,210 ligações de esgoto 20122014 99.97 day 2010 2011 2012 2013 2014 thousand 20102010 20112011 20122012 20132013 2014 litermillion / m³ 2014 85 5,718ligações5,921 6,128de esgoto6,340 6,660 20112013 99.97 2010ligações2011 2012de esgoto2013 2014 thousand índice de hidrometação connection / 2013 84 5,718 5,921 6,128 6,340 6,660 20122010 2011 2012 2013 201499.97 millionday m³ INDICATORS 2010ligações2011 2012de esgoto2013 2014 thousand 20102010 2011 2012 2013 201499.97 % 5,718ligações5,921 6,128de esgoto6,340 6,660 2014índice de hidrometação99.97 2012 83 água 5,718 5,921 6,128 6,340 6,660 2011 99.97 5,718 5,921 6,128 6,340 6,660 20142013índicevol, fat, de agua (8)hidrometação atacado 99.97 2011 82 2010 2011 2012 2013 2014 thousand Sewageligações connections de esgoto 2010Water meter index 99.97 % ligações de esgoto 201420132012293vol,vol, fat,297 micromedido agua298 atacado299 24799.97 2010 81 CLOSE TO UNIVERSAL ACCESS água 5,7182010 5,9212011 6,1282012 6,3402013 6,6602014 thousand vol, prod, água 2010 A 2014 % 20122011293índice297 de hidrometação298 299 24799.97 1,5142013 1,557 1,601 1,624 1,57399.97 5,7182010 5,9212011 6,1282012 6,3402013~100%6,6602014 thousand 2,952 2,992 3,059 3,053 2,840 ligações de esgoto 2010 2011 2012 2013 2014 thousandthousand 20142012201120102010 2011 2012 2013 201499.97 million% m³ CLOSE TO UNIVERSAL ACCESS 2010 2011 2012 2013 2014 thousand vol, prod, água 20132010 2011 2012 2013 201499.97 million m³ esgotos tratados 5,718 5,921 6,128 6,340 6,660 2010 2011extensão2012 água2013~100%2014 thousand 2,952201120102010 2,9922011 3,0592012 3,0532013 2,840201499.97 million% m³ 2014SERVICES 77 20122010 2011 2012 2013 201499.97 million m³ 65,3792010 66,3892011extensão67,6472012 água69,6192013 70,8002014 thousand 2010 99.97 % 2013 78 extensão água 2011 vol, prod, água 99.97 65,3792010 66,3892011extensão67,6472012 água69,6192013 70,8002014 thousand 2010 vol,2011 fat, agua2012 varejo2013 2014 million m³ OPERATIONAL coleta de esgotos 2,9522010 2,992 3,059 3,053 2,84099.97 2012 77 65,379 66,389extensão(4) 67,647 água69,619 70,800 Water producedvol, prod,volume água % Water65,3792010 network66,3892011 67,6472012 69,6192013 70,8002014 km 1,699 vol,vol,1,747 fat, micromedido agua1,796 varejo1,835 1,812 2014 2010 2011 201285 2013 2014 thousand 65,379 66,389 67,647 69,619 70,800 2,952vol,vol, 2,992fat, prod, agua3,059 águaatacado3,053 2,840 FINANCIAL2011 76 coleta de esgotos 2010 2011extensão2012 água2013 2014 km 1,6991,514 1,7471,557 1,7961,601 1,8351,624 1,8121,573 2013 84 2010 2011extensão2012 água2013 2014 kmkm 2,9522010293 vol,2,9922011297 micromedido3,0592012298 3,0532013299 2,8402014247 million m³ 2010 75 % 65,3792010 66,3892011 67,6472012 69,6192013 70,8002014 km 2010 2011 2012 2013 2014 million m³ 20122014 8385 65,379 extensão66,389 67,647 esgoto69,619 70,800 2010 vol,2011 prod,2012 água2013 2014 million m³ ENVIRONMENTAL 2010 2011 2012 2013 2014 km 1,5142010 1,5572011 1,6012012 1,6242013 1,5732014 million m³ 2013 extensão84 água 44,279 extensão45,073 45,778 esgoto47,103 47,992 2,952 2,992 3,059 3,053 2,840 2011 82 2010 2011 2012 2013 2014 km 2010 2011 2012 2013 2014 million m³ SOCIAL 65,379 66,389 67,647 69,619 70,800 44,279 extensão45,073 45,778 esgoto47,103 47,992 vol, micromedido pop, atentida água 20102012 8183 Sewage2010 networkextensão2011 (4) 2012 esgoto2013 2014 km Water2010 micro-measuredágua2011 de2012 volumereúso2013 at retail2014 million m³ % 44,279 45,073 45,778 47,103 47,992 1,514 1,557 1,601 1,624 1,573 2011 82 44,2792010 extensão45,0732011 45,7782012 esgoto47,1032013 47,9922014 km 20100,8 vol,água20110,3 micromedido de20120,3 reúso20130,4 20140,4 million m³ 23,625 23,911 24,249 24,560 25,264 44,279 45,073 45,778 47,103 47,992 1,5140,8 1,5570,3 1,6010,3 1,6240,4 1,5730,4 2010 2010 2011 201281 %2013 2014 km 2010 extensão2011 2012 esgoto2013 2014 km vol,vol, fat, micromedido agua atacado esgotos tratados 2010 2011 2012 2013 2014 kmkm 2010 vol,2011 fat, agua2012 varejo2013 2014 million m³ 44,2792010 extensão45,0732011 45,7782012 esgoto47,1032013 47,9922014 km 1,5142010 1,5572011 1,6012012 1,6242013 1,5732014 million m³ 1,699293 vol,1,747297 micromedido1,796298 1,835299 1,812247 2014 77 44,2792010 45,0732011 etas45,7782012 47,1032013 47,9922014 km 2010vol, 2011fat, agua2012 atacado2013 2014 million m³ esgotos tratados 213 212 214 232 235 1,514Water billed1,557 volume1,601 at wholesale1,624 1,573 2013 extensão78 esgoto 2010 2011 etas2012 2013 2014 km 2010 2011 2012 2013 2014 million m³ thousand água ETA – Water Treatment Stations 235 2010293 2011297 2012298 2013299 2014247 million m³ 2014 44,279 45,073 45,77877 47,103 47,992 2010213 2011212 etas2012214 2322013 2014 km 2010 2011vol fat2012 esgoto2013 2014 million m³ 2010 2011 2012 2013 2014 inhabitants água2012 213 etas214 235235 213 212212 214 232232 235 2010 2011vol fat2012 esgoto2013 2014 million m³ 20112013 7678 213 212 etas214 232 1,434vol, 1,486fat, agua1,535 atacado1,579 1,562 CLOSE TO UNIVERSAL ACCESS 2010213 2011212 2012214 2013232 2014235 un 2010 2011 2012 2013 2014 million m³ Services 2010 2011 2012 2013 2014 km 1,434293 1,486297 1,535298 1,579299 1,562247 20102012 7577 etas vol, fat, agua atacado CLOSEágua TO UNIVERSAL ACCESS ~100% % 2010 2011 2012 2013 2014235 un água de reúso 76 213 212 etas214 232 2010293 vol,2011297 fat, agua2012298 varejo2013299 2014247 million m³ pop, atentida esgoto 2011 ~100% 20102010 20112011 20122012 20132013 20142014235 unun Water0,8vol, billed fat,0,3 volume agua 0,3at retail atacado0,4 0,4 Water coverage ratio 2010213 2011212 poços2012214 2013232 2014 un 2010 2011 2012 2013 2014 million m³ (1) 1,6992010 1,7472011 1,7962012 1,8352013 1,8122014 million m³ CLOSE TO UNIVERSAL ACCESS 2010 etas75 % 1,0932010 1,1022011 poços1,0792012 20131,083 20141,055 un 293vol,vol, fat,297 fat, agua agua298 atacado varejo299 247 20,024 20,498 20,992 21,483 22,353 pop, atentida água poços 2010 2011 2012 2013 2014 million m³ ~100213 % 212 214 232 235 Wells1,0932010 1,1022011 1,0792012 20131,083 20141,055 un 2010 2011 2012 2013 2014 poços 1,699293 1,747297 1,796298 1,835299 1,812247 1,0931,0932010 1,1021,1022011 poços1,07920121,079 20131,0831,083 20141,0551,055 un 2010 vol2011 fat efluentes2012 2013 2014 million m³ coleta de esgotos 23,625 pop,23,911 atentida24,249 24,560água 25,264 1,0932010 1,1022011 1,0792012 1,0832013 1,0552014 un coleta de esgotos 1,093 1,102 poços1,079 1,083 1,055 vol,vol fat, fat aguaefluentes varejo 14.7 Sewage collection coverage ratio Resident population served by water supply 2010 2011 2012 2013 2014 un 2010 2011 2012 2013 2014 million m³ 2014 85 2010 2011 2012 2013 2014 un Sewage2010 billed2011vol volume fat2012 esgoto2013 201414.7 23,625 23,911 24,249 24,560 25,264 1,09320102010 1,10220112011 poços1,07920122012 1,08320132013 1,05520142014 unun 1,699 vol,1,747água fat, aguade1,796 reúso varejo1,835 1,812 20132014 8485 thousand 2010 2011 2012 2013 2014 un 1,434 1,486 1,535 1,579 1,562 2010 2011 2012 2013 2014 inhabitants 1,093 1,102 1,079 1,083 1,055 20100,8 20110,3 20120,3 20130,4 20140,4 million m³ coleta de esgotos2013 84 2010 2011 etes2012 2013 2014 un 1,699 vol,1,747 fat, agua1,796 varejo1,835 1,812 2012 83 poços 509 524 2010 água2011 de2012 reúso2013 2014 million m³ 2014 85 thousand ETE490 – Sewage490 Treatmentetes502 Stations 1,6992010 1,7472011 1,7962012 1,8352013 1,8122014 million m³ 20112012 8283 2010 2011 20121,093 1,1022013 1,0792014 inhabitants1,083 1,055 2010 2011 2012 2013 2014 un 20100,8 vol,20110,3 fat, agua20120,3 varejo20130,4 20140,4 million m³ etes502 509 524 2010 2011 2012 2013 2014 million m³ 2013 2011 84 82 2010490 2011490 etes2012 2013 2014 un empregados 2010municípios universaliz,81 490490 490490 502502 509509 524524 1,699 1,747 1,796 1,835 1,812 % thousand 490 490 etes502 509 524 2010 2011 2012 2013 2014 million m³ 2012 2010 83 81 2010 2011 2012 2013 2014 inhabitants 509 524 15,330 14,896águaempregados de15,019(9) reúso15,015 14,753 204 % 2010 2011 2012 2013 2014 un 490 490 502 Number2010 of2011 employees2012 2013 2014 million m³ 2011 82 193 2010 2011 etes2012 2013 2014 uan 15,3300,8 14,896águavol0,3 fat de15,0190,3 esgoto reúso15,0150,4 14,7530,4 146 pop, atentida esgoto 509 524 2010 vol2011 fat efluentes2012 2013 2014 million m³ Collectedesgotos sewage141 treatment tratados coverage ratio(2) Resident population served by sewage collection 490 490 etes502 0,8 0,3 0,3 0,4 0,4 2010 125 81 % 2010 2011 2012 2013509 2014524 uan 1,434 1,486água de1,535 reúso1,579 1,562 2014 esgotos tratados 77 20102010490 20112011490 20122012502 20132013 20142014 uanuan 14.7 20,024pop,20,498 atentida20,992 esgoto21,483 22,353 2010 2011 2012 2013 2014 uan 20100,8 2011vol0,3 fat20120,3 esgoto20130,4 20140,4 million m³ 20132014 7877 etes Water2010perdas Billed2011 Loss - Indexfaturamento2012(5) 2013 2014 uan perdas micromedição 502 509 524 1,4342010 1,486água2011 de1,5352012 reúso1,5792013 1,5622014 million m³ esgotos tratados2013 78 490 490 2014perdas - faturamento 21.3 20102010 20112011 20122012 20132013 20142014 millionun m³ 20122010 2011 2012 2013 201477 unidade 20,024 20,498 20,992 21,483 22,353 2010 2011 2012 2013 2014 uan 2014perdas0,8 micromedição0,3 0,3 0,4 29.8 0,4 perdas - faturamento perdas20102010 2011micromedição2011 20122012 20132013 20142014 millionun m³ 2014 2012 77 77 201420132010perdas2011 - faturamento2012 2013 201421.324.4 uan 20142013perdas volmicromedição fat esgoto 29.831.2 2011 76 2014perdas - faturamento 21.3 2010 2011 2012 2013 2014 million m³ 2013 78 20122013 25.724.4 20132014perdas1,434 1,486volmicromedição fat1,535 esgoto1,579 31.229.81,562 20102011 7576 thousand 2014 21.3 20142012 2010produtividade2011 2012 operacional2013 29.832.1 2014 million m³ % 2010 2011 2012 2013 2014 inhabitants 20142013 21.324.4 20142013 Operational empregadosproductivity 29.831.2 2012 2010 percepção77 positiva 75 2010 2011 2012 2013 2014 uan 201320122011perdas - faturamento 24.425.725.6 201320122011perdas1,434produtividadevol 1,486volmicromedição fat fat 1,535efluentes esgoto operacional1,579 31.232.132.01,562 % 2012 25.7 15,330849 14,896900 15,019919 15,015948 14,7531,008 2010201120132014perdas - faturamento 26.025.624.421.3 20132012perdas2010 2011micromedição2012 2013 31.232.1 201414.7 million m³ 2011 Positive customer76 satisfaction perception(3) thousand 2012 25.7 % 2012201020112014 1,434849 1,486900 1,535919 1,579948 32.132.332.029.81,5621,008% 2010 2011 2012 2013 2014 inhabitants 201420122011 21.325.725.6 2011 vol fat efluentes32.0 pop, atentida água 201120102013 25.626.024.4 2010201420122013 2010 2011vol fat2012 esgoto2013 32.329.832.131.2 2014 million m³ 2010 2014 75 % 80 municípios universaliz, % 2011 32.0 % pop, atentida água perdas - faturamento 201320112010Waterperdas Metered Lossmicromedição Index(6) 24.425.626.0 % 201320112010 31.232.032.3 14.7 20102012 26.025.7 20102012 1,4342010 1,4862011 1,5352012 1,5792013 32.332.11,5622014% million m³ 2013 89 2014 21.3 % % 23,625 23,911 24,249 24,560 25,264 204 2014201220102011 29.825.726.025.6 % 201220102011 32.132.332.0 % connections / municípios universaliz,193 perdas por ligação 2010 vol2011 fat efluentes2012 2013 2014 23,6252012 23,911 24,249 24,560 25,26489 2013 24.4 20132011 31.225.6 2010 2011 2012 2013 2014 unconnectionsemployee / pop, atentida água 141 146 2010403 perdas395 por392 ligação372 31926.0 % 20112010 2010 2011 2012 2013 32.032.3 2014 million m³ 125 2012 25.7 2010 vol2011 fat efluentes2012 2013 201414.7% employee 2011 92 193 204 20122010 perdas por ligação 32.126.0 % 2010 empregados 32.3 403 perdas395 por392 ligação372 319 vol fat efluentes 14.7% 23,625 23,911 24,249 201024,560 25,264 89 % 141 2011146 25.6 2011403403 perdas395395 por392392 ligação372372 31931932.0 15,330 14,896 15,019 15,015 14,753 125 403 395 392 372 319 liter / 2010produtividade2011empregados2012 operacional2013 2014 million m³ thousand 2010 26.0 % 2010403 395 392 372 31932.3 14.7 2010 2011 2012 2013 2014 inhabitants perdas por ligação %connection / vol fat efluentes thousand 2010 2011 2012 2013 2014 unidade liter / 15,3302010849 14,8962011900 15,0192012919 15,0152013948 14,7531,0082014 million m³ 2010 2011 2012 2013 2014 inhabitants 2010 perdas2011 por2012 ligação2013 2014 day 403 395 392 372 319 connectionliterliter // / 14.7 12 2010403 2011395 2012392 2013372 2014319 dayconnectionliterconnection / // 2010 2011 2012 2013 2014 million m³ 13 2010 2011 2012 2013 2014 unidade liter / empregados thousand 20102010 20112011 20122012 20132013 20142014 dayconnectionday / 2010 2011 2012 2013 2014 inhabitants perdas por ligação 2010 2011 2012 2013 2014 dayconnection / 2010 2011 2012 2013 2014 un pop, atentida esgoto percepção positiva liter / 15,3302010 14,8962011empregados15,0192012 15,0152013 14,7532014 million m³ 403 395 392 372 319 2010 2011 2012 2013 2014 day connections / pop, atentida esgoto índice de hidrometação literconnection / / 15,330 14,896 15,019 15,015 14,753 2010 2011empregados2012 2013 2014 employee 20,024 20,498 20,992 21,483 22,353 2010 2011 2012 2013 2014 connectionday / 2010 2011 2012 2013 2014 un percepção positiva 2014índice de hidrometação99.97 15,330 14,896 15,019 15,015 14,753 20,024 20,498 20,992 21,483 22,353 2014 80 2010índice2011 de hidrometação2012 2013 2014 day produtividade operacional pop, atentida esgoto liter / 20142013 99.97 empregados 2013 89 índice de hidrometação 849 900 919 948 1,008 connection / 2014índice de hidrometação99.97 15,330 14,896 15,019 15,015 14,753 2014 2010 2011 201280 2013 2014 day 201420122013 99.97 produtividade2010 2011 2012 operacional2013 2014 un 20,024 20,498 20,992 21,483 22,353 2012 89 20142013índice de hidrometação99.97 2013 89 201320122011 99.97 2010849 2011900 2012919 2013948 1,0082014 un thousand 2011 92 20132012índice de hidrometação99.97 2010 2011 2012 2013 2014 thousandinhabitants 2012201020112014 99.97 % 2010 2011 2012 2013 2014 un 2012 89 produtividade operacional 2010 2011 2012 2013 2014 inhabitants 2010 % 20102014201220112013 99.97 connections / 92 2011 99.97 % 2010 2011 2012 2013 2014 2011 índice de hidrometação 201320112010 99.97 % produtividade849 900 919 operacional948 1,008 employee thousand 20102012 99.97 2010 2011 2012 2013 2014 un 2010 89 % connections / 2010 2011 2012 2013municípios2014 inhabitants universaliz, 2014 % 99.97 201220102011 vol, prod, água 99.97 % produtividade849 900 919 operacional948 1,008 municípios universaliz, 2010 2011 2012 2013 2014 employee 2013 99.97 2,9522011 2,992 3,059 3,053 2,84099.97 849 900 919 948 1,008 193 204 2010 vol, prod, água 99.97 % 2012 99.97 vol, prod, água produtividade operacional 141 146 193 204 2,9522010 vol,2,992 prod,3,059 água3,053 2,84099.97 % connections / municípios universaliz,125 141 146 2011 99.97 2,952 vol,2,992 prod,3,059 água3,053 2,840 2010849 2011900 2012919 2013948 1,0082014 employee 125 2,9522010 2,9922011 3,0592012 3,0532013 2,8402014 million m³ connections / 204 2010 99.97 % 2,952 vol,2,992 prod,3,059 água3,053 2,840 2010 2011 2012 2013 2014 employee 193 2010 2011 2012 2013 2014 million m³ connections / 141 146 2,9522010 vol,2,9922011 prod,3,0592012 água3,0532013 2,8402014 million m³³ 2010 2011 2012 2013 2014 employee 125 2010 2011 2012 2013 2014 unidade 2010 2011 2012 2013 2014 million m³ 2,9522010 vol,2,9922011 micromedido3,0592012 3,0532013 2,8402014 million m³ 2010 2011 2012 2013 2014 unidade connections / vol, prod, água 1,514 1,557 1,601 1,624 1,573 2010 2011 2012 2013 2014 employee 2010 vol,2011 micromedido2012 2013 2014 million m³ 2,952 2,992 3,059 3,053 2,840 vol, micromedido 1,5142010 vol,1,5572011 micromedido1,6012012 1,6242013 1,5732014 million m³ 2010 2011 2012 2013percepção2014 unidade positiva 1,514 vol,1,557 micromedido1,601 1,624 1,573 percepção positiva 1,5142010 1,5572011 1,6012012 1,6242013 1,5732014 million m³ 2010 2011 2012 2013 2014 million m³ 1,5142010 vol,1,5572011 micromedido1,6012012 1,6242013 1,5732014 million m³ 2010 vol,2011 micromedido2012 2013 2014 million m³³ percepção positiva2014 80 1,5142010 1,5572011 1,6012012 1,6242013 1,5732014 million m³ 20132014 8980 1,5142010 1,5572011 1,6012012 1,6242013 1,5732014 million m³ 20122013 89 vol, micromedido 2010vol, 2011fat, agua2012 atacado2013 2014 million m³ 2014 80 1,514 1,557 1,601 1,624 1,573 2010 2011 2012 2013 2014 million m³ 20112012 9289 293vol, fat,297 agua298 atacado299 247 2013 89 vol, fat, agua atacado 20102011 8992 % 293vol, fat,297 agua298 atacado299 247 2012 89 2010 2011 2012 2013 2014 million m³ 293vol, fat,297 agua298 atacado299 247 2010 89 % 2010293 2011297 2012298 2013299 2014247 million m³ 2011 92 2010293vol, 2011fat,297 agua2012298 atacado2013299 2014247 million m³ 2010vol, 2011fat, agua2012 atacado2013 2014 million m³³ 2010 89 % 2010293 2011297 2012298 2013299 2014247 million m³ vol, fat, agua atacado 2010293 vol,2011297 fat, agua2012298 varejo2013299 2014247 million m³ 2010 2011 2012 2013 2014 million m³ 1,699 vol,1,747 fat, agua1,796 varejo1,835 1,812 293 297 298 299 247 2010 vol,2011 fat, agua2012 varejo2013 2014 million m³ 1,699 vol,1,747 fat, agua1,796 varejo1,835 1,812 1,699 vol,1,747 fat, agua1,796 varejo1,835 1,812 2010 2011 2012 2013 2014 million m³ 1,6992010 1,7472011 1,7962012 1,8352013 1,8122014 million m³ 1,6992010 vol,1,7472011 fat, agua1,7962012 varejo1,8352013 1,8122014 million m³ 2010 vol,2011 fat, agua2012 varejo2013 2014 million m³³ 1,6992010 1,747água2011 de1,7962012 reúso1,8352013 1,8122014 million m³ 1,6992010 1,7472011 1,7962012 1,8352013 1,8122014 million m³ vol, fat, agua varejo 0,8 água0,3 de0,3 reúso0,4 0,4 20100,8 água20110,3 de20120,3 reúso20130,4 20140,4 million m³ 1,699 1,747 1,796 1,835 1,812 20100,8 água20110,3 de20120,3 reúso20130,4 20140,4 million m³ 20100,8 água20110,3 de20120,3 reúso20130,4 20140,4 million m³ 0,8 20110,3 20120,3 20130,4 0,4 million m³ 2010 2011 2012 2013 2014 million m³ 2010 água de reúso 2014 2010 2011 2012 2013 2014 million m³³ 20100,8 água20110,3 de20120,3 reúso20130,4 20140,4 million m³ 20100,8 2011vol0,3 fat20120,3 esgoto20130,4 20140,4 million m³ água de reúso 1,434 1,486vol fat1,535 esgoto1,579 1,562 2010 2011vol fat2012 esgoto2013 2014 million m³ 0,8 0,3 0,3 0,4 0,4 1,4342010 1,4862011vol fat1,5352012 esgoto1,5792013 1,5622014 million m³ 1,434 1,486vol fat1,535 esgoto1,579 1,562 1,4342010 1,4862011 1,5352012 1,5792013 1,5622014 million m³ 2010 2011 2012 2013 2014 million m³ 1,4342010 1,4862011vol fat1,5352012 esgoto1,5792013 1,5622014 million m³ 2010 2011vol fat2012 esgoto2013 2014 million m³³ 1,4342010 1,4862011 1,5352012 1,5792013 1,5622014 million m³ vol fat esgoto 1,4342010 vol1,4862011 fat 1,535efluentes2012 1,5792013 1,5622014 million m³ 2010 2011 2012 2013 2014 million m³ vol fat efluentes 14.7 1,434 1,486 1,535 1,579 1,562 2010 vol2011 fat efluentes2012 2013 2014 million m³ vol fat efluentes 14.7 vol fat efluentes 14.7 2010 2011 2012 2013 2014 million m³ 2010 2011 2012 2013 201414.7 million m³ 14.7 2010 vol2011 fat efluentes2012 2013 2014 million m³ 2010 vol2011 fat efluentes2012 2013 2014 million m³³ 2010 2011 2012 2013 201414.7 million m³ 2010 2011empregados2012 2013 201414.7 million m³ vol fat efluentes 15,330 14,896empregados15,019 15,015 14,753 2010 2011empregados2012 2013 2014 million m³ 14.7 15,3302010 14,8962011empregados15,0192012 15,0152013 14,7532014 million m³ 15,330 14,896empregados15,019 15,015 14,753 15,330 14,896 15,019 15,015 14,753 15,330 14,896empregados15,019 15,015 14,753 2010 2011 2012 2013 2014 million m³ empregados 15,3302010 14,8962011 15,0192012 15,0152013 14,7532014 un 15,330 14,896 15,019 15,015 14,753 2010 2011 2012 2013 2014 un empregados 2010 2011 2012 2013 2014 unun 2010 2011 2012 2013 2014 un 15,330 14,896 15,019 15,015 14,753 produtividade2010 2011 2012 operacional2013 2014 un produtividade849 900 919 operacional948 1,008 produtividade2010 2011 2012 operacional2013 2014 un produtividade2010849 2011900 2012919 operacional2013948 1,0082014 un produtividade849 900 919 operacional948 1,008 849 900 919 948 1,008 2010 2011 2012 2013 2014 un produtividade849 900 919 operacional948 1,008 produtividade operacional connections / 2010849 2011900 2012919 2013948 1,0082014 employee 849 900 919 948 1,008 connections / 2010 2011 2012 2013 2014 employeeconnectionsconnections // produtividade operacional 2010 2011 2012 2013 2014 employeeconnectionsemployee / 2010 2011 2012 2013 2014 employeeconnections / 849 900 919 948 1,008 2010 2011 2012 2013 2014 employee connections / 2010 2011 2012 2013 2014 connectionsemployee / 2010 2011 2012 2013 2014 employee connections / 2010 2011 2012 2013 2014 employee acidentes 6.2 7.2acidentes5.5 6a6 6.4 Accidents / 6.2 7.2 5.5 6a6 6.4 million hours 2010 2011 2012 2013 2014 worked Accidents / million hours 2010 2011 2012 2013 2014 worked valor - internos 382 valor501acidentes - internos522 594 617 6.2 7.2 5.5 6a6 6.4 382 501 522 594 617

R$Accidents / 2010 2011 2012 2013 2014 million hours 2010 2011 2012 2013 2014 worked 2014 5.5 R$ 2010 2011 2012 2013 2014 million 2013 5.3 20122014 valor - internos 4.95.5 2013 5.3 % 2011382 501 522 594 6175.0 net 2012 4.9 2010 4.1 revenue% 2011 5.0 net 2010 4.1 revenue R$ 2010 2011 2012 2013 2014 million valor - externos 2014 5.5 201354 valor57 - externos58 63 475.3 2012 4.9 % 201154 57 58 63 475.0 net 2010 4.1 revenue R$ 2010 2011 2012 2013 2014 million R$ acidentes 20142010 2011 2012 2013 20140.4 million 2013 valor - externos 0.6 6.2 7.2acidentes5.5 6a6 6.4 2014 0.4 201254 57 58 63 470.6 6.2 7.2 5.5 6a6 6.4 20112013 0.6 % acidentes Accidents / net million hours 2012 0.6 revenue acidentes Accidents / 2010 0.6 2010 2011 2012 2013 2014 worked 6.2 7.2 5.5 6a6 6.4 million hours % 6.2 7.2 5.5 6a6 6.4 2011 0.6 net 2010 2011 2012 2013 2014 worked 2010 0.6 R$revenue Accidents / 2010 2011 2012 2013 2014 million millionAccidents hours / Unit 2014 2013 2012 2011 2010 2010 valor2011 - internos2012 2013 2014 workedmillion hours Financial 2010 2011 2012 2013 2014 worked percepção responsa, Gross revenue R$ million 11,823.4 11,984.8 11,391.2 10,529.7 9,785.9 382 valor501 - internos522 594 617 2014 0.4 Net revenue R$ million 11,213.2 11,315.6 10,737.6 9,927.4 9,230.4 382 501 522 594 617 20132014 percepção responsa,0.666 Social acidentes (20) Adjusted EBITDA(10) R$ million 2,918.7 4,006.6 3,605.0 3,371.0 3,222.5 valor - internos 2012Frequency2013 rate of accidents with leave 0.670 Adjusted EBITDA margin % of net revenue 26.0 35.4 33.6 34.0 34.9 Amount investedvalor in - internal internos social programs(21) 6.2 7.2 5.5 6a6 6.4 % 382 501 522 594 617 R$ 201120122014 0.66466 net 382 501 522 594 617 Adjusted EBITDA margin less % of net revenue 34.4 44.6 43.0 43.2 44.7 2010 2011 2012 2013 2014 million 20102013 0.670 revenue construction revenue and cost R$ 2011 80 Accidents / million hours (11) 2010 2011 2012 2013 2014 million 20102012 8364 % Operating result R$ million 1,910.7 3,138.8 2,843.3 2,512.0 2,672.1 2014 5.5 2010 2011 2012 2013 2014 worked (11) 2011 80 Operating margin % of net revenue 17.0 27.7 26.5 25.3 28.9 20142013 5.55.3 R$ Result (net income/loss) R$ million 903.0 1,923.6 1,911.9 1,380.9 1,630.4 2010 2011 2012 2013 2014 millionR$ 2010 83 % 201320122010 2011 2012 2013 20145.34.9 million Net margin % of net revenue 8.1 17.0 17.8 13.9 17.7 percepção responsa, 201420112012 5.55.04.9 % Positive publicvalor perception - internos on Sabesp social responsibility(3) Net debt/adjusted EBITDA multiple 3.1 1.9 1.9 1.8 1.9 2014 5.5 net 201320112010 5.35.04.1 revenue% 2014 66 Net debt/equity(12) % 68.1 58.3 60.9 58.4 62.6 2013 5.3 net 382 501 522 594 617 (13) 20122010 4.94.1 revenue 2013 70 Investment R$ million 3,210.6 2,716.0 2,535.6 2,440.2 2,194.4 2012 4.9 2011 5.0 % 2012 64 2011 5.0 net% 2010 4.1 revenuenet 2011 80 2010 4.1 revenue R$ valor - externos 20102010 2011 2012 2013 201483 million% Amount investedvalor in -external externos social and 2014 5.5 Ambientais Unit 2014 2013 2012 2011 2010 environmental54 57 programs58 63 47 54 57 58 63 47 2013reclamações ranqueadas5.3 Chemical products used in water and sewage treatment t 273,417.9 268,959.8 232,386.1 206,376.6 203,291.8 valor - externos G4-EN1 valor - externos 2012Complaints ranked at Procon 4.9 91 93 G4-EN2 Percentage of chemical products used in water 49 61 78 % % 3.56 3.97 4.54 5.18 5.14 54 57 58 63 47 2011reclamações ranqueadas5.0 net and sewage treatment deriving from recycling R$ 54 57 58 63 47 2010 4.1 revenue G4-EN3(14) Total electricity consumption Terajoules (TJ) 8,613 8,309 8,552 8,196 7,773 2010 2011 2012 2013 2014 million 91 93 R$ 201049 2011 2012 201361 201478 G4-EN5 Electricity consumption/m³of water kWh/m³ 0.71 0.63 0.65 0.64 0.61 2010 2011 2012 2013 2014 million kWh/m³ 0.43 0.42 0.42 0.43 0.41 2014 0.4 G4-EN5 Electricity consumption/m³of sewage R$ R$ 2010 2011 2012 2013 2014 G4-EN6 Energy consumption reduction for water – J % -3.2% - - - - 201420132010 2011 2012 2013 20140.40.6 million Ranking at Procon(22) 2010 2011 2012 2013 2014 million G4-EN6 Energy consumption reduction for sewage – J % -2.4% - - - - 20132012 0.6 valor - externos 2010 2011 2012 2013 2014 ranking G4-EN7 Reductions in energy requirements/m³ of water – kWh/m³ % -12.4 - - - - 201420112012 0.40.6 % 2014 0.4 net 54reclamações57 58 ranqueadas63 47 Reductions in energy requirements/m³ of sewage – kWh/m³ % -4.2 - - - - revenue% G4-EN7 201320112010 0.6 net 2010 2011 2012 2013 2014 ranking 3 2013 0.6 91 93 G4-EN8 Total water withdrawn – surface Million m 2,674 - - - - 20122010 0.6 revenue 49 61 78 2012 0.6 G4-EN8 Total water withdrawn – underground Million m3 166 - - - - 2011 0.6 % (1) 99% and above. (2) For methodological reasons,net% there may be a margin variation of 2 percentage points up and down. 2011 0.6 net R$ G4-EN10 Percentage of water consumption at ETAs % 0.8 0.5 2.3 2.00 1.70 2010 (3) Survey conducted by VR Consultoria0.6 Ltda.revenue in 2014 (5,850 interviews2010 in the2011 entire operating2012 basis,2013 with a 1.3%2014 margin of 2010 0.6 revenue 2010 2011 2012 2013 2014 million error and a confidence interval of 95%). (4) Includes water mains, trunk collectors, interceptors and outfalls. (5) Includes Recovery percentage of washing water percepção responsa, G4-EN10 % 87.4 95.5 96.8 91.4 91.9 physical and non-physical losses. The percentage of water loss is represented by the ratio resulting from (i) the difference for filters and clarifiers at ETAs percepção responsa, between (a) the total water volume produced, (b) the total water2014 volume billed to customers, and (c) total water0.4 volume (16) 2014 66 Direct and indirect emissions of greenhouse gases t CO2 e - 2,154,407 2,141,111 1,987,645 1,873,729 produced (after deduction of certain non-physical water losses specified below) divided by the total water volume produced. 20132014 The following is excluded from our calculation6670 of water losses: 2013(i) the water used to perform periodic maintenance0.6 of water G4-EN15(15) Direct emissions of greenhouse gases (GEE) (Scope 1) t CO e - 1,912,750 - - - percepção responsa, 2010 2011 2012 2013 2014 ranking 2 20132012 percepçãomains and water reservoirs;responsa, (ii) the water7064 supplied to municipalities,2012 such as, for example, to extinguish fires; (iii)0.6 the water Indirect emissions of greenhouse gases (GEE) used by our units; and (iv) estimated water losses associated with the water supplied to shantytowns. (6) Includes physical (15) 2011 0.6 % G4-EN16 t CO2 e - 221,212 - - - 201120122014 and non-physical losses. The water loss666480 percentage represents the quotient resulting from (i) the difference betweennet deriving from energy acquisition (Scope 2) 2014 66 (a) total water volume produced, (b) total micro-measured water2010 volume and (c) total water volume produced (after0.6 excludingrevenue Other indirect emissions of 201320112010 708083 % G4-EN17(15) t CO e - 20,445 - - - 2013 certain non-physical losses specified 70below) divided by the total water volume produced. We excluded the following from greenhouse gases (GEE)(Scope 3) 2 20122010 6483 % 2012 our water losses calculation: (i) the water64 used to perform periodic maintenance of water mains and water reservoirs; (ii) the G4-EN22(16) Reuse water volume provided thousand m³ 1,214.9 1,679.70 1,645.79 1,572.20 1,636.80 2011 water supplied to municipalities, for example,80 to extinguish fires; (iii) the water used by our units; and (iv) estimated water 2011 losses associated with the water supplied80 to shantytowns. (7) Calculated by dividing (i) the annual average of water losses by (16) Percentage of reuse water sold G4-EN22 % 0.27% 0.35 0.35 0.35 0.35 2010 (ii) the average number of connections of83 active% water multiplied by the number of days of the year. (8) Water meter connections over sewage treated at ETEs with reuse 2010 83 % /total connections. (9) Number of own employees. Does not include employeespercepção assigned to responsa, other entities. (10) Adjusted G4-EN22(16) Reuse water percentage provided over installed capacity % 28.50 35.42 34.74 34.74 36.17 EBITDA corresponds to earnings before: (i) depreciation and amortization; (ii) income tax and social contribution (federal income taxes); (iii) the financial result; and (iv) other operating 2014expenses, net.(11) Excludes finance income and 66expenses. Total investments and expenses G4-EN31(17) R$ million 29.8 32.5 27.7 30.4 - (12) Net debt includes deduction of cash and cash equivalents, interest rates and borrowing charges of domestic and foreign related to environmental protection credit facilities. (13) Excludes financial commitments assumed2013 in the program contracts (R$63 million, R$139 million,70 R$155 Number of ETEs and ETAs with million, R$65 million and R$116 million in 2010, 2011, 2012, 2013 and2012 2014, respectively). (14) From the total energy consumption,64 (18) units 95 95 65 65 65 Environmental Management System (SGA) 7,194 TJ refer to the water produced, 1,314 TJ to the sewage treated2011 and 105 TJ in administrative areas. (15) The 201480 annual (18) inventory of GEE emissions has been prepared for 2015. New indicators have been adopted as of 2015. (16) These refer to ETEs Number of ETEs and ETAs certified by ISO 14001 units 51 50 50 50 50 ABC, Barueri, Jesus Netto, Parque Novo Mundo and São Miguel,2010 which have reuse facilities. Water provided corresponds83 % to Number of people that participated in sanitation and environmental the water sold and consumed internally at ETEs (for instance, pump sealing). It is the nominal capacity of facilities. The 2014 people 58,018 64,000 56,456 72,671 - education guided tours in our operating units reclamaçõesamounts exclude theranqueadas volume of effluents provided to Aquapolo Ambiental, which is approximately 10.8 million meters/year. reclamações(17) We considered ranqueadas environmental protection expenditures and investments, directly associated with the development and Saplings planted voluntarily units 20,702 19,081 30,034 126,633 726,255 implementation91 93 of environmental management corporate programs, as well as with the Water Rational Use Program – Pura. 49 61 78 Amount of recyclable materials collected at Sabesp 3Rs t 310 381 372 286 101 Other91 expenditures93 and investments related to the environmental protection are included in the total amount of operating 49 investments and expenses61 reported herein.78 (18) In 2014, we carried out the strategic realignment of the SGA implementation Average consumption of alcohol fuel liters/vehicle 2,861 2,747 2,532 2,529 2,232 reclamações ranqueadas 2010reclamaçõesprogram2011 and2012 certifications, ranqueadas2013 aiming at2014 speeding up the implementation of SGA at all stations until 2024. Given this new scenario, Alcohol consumption/total fuel(19) % 53 54 50 32 48 in91 2015, we will93 reduce our certified stations from 51 to 35. In addition to the 95 stations with SGA implemented, we have 201049 other201191 34 stations201293 under 2013implementation61 201478 phase, totaling 129 stations. (19) Including light vehicles of owned and leased fleet, Positive public perception on Sabesp’s 49 61 78 % 63 69 65 78 81 fueled by ethanol and gasoline. (20) Excludes commuting accidents and occupational diseases. (21) Includes profit sharing. environmental responsibility(3) (22) When not informed, it means that Sabesp was not ranked among the top 50 complaints at Procon composing the ranking. 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 14 2010 2011 2012 2013 2014 ranking 15 2010 2011 2012 2013 2014 ranking reclamações ranqueadas

2010 2011 2012 2013 2014 ranking 91 93 2010 2011 2012 2013 2014 ranking 49 61 78

2010 2011 2012 2013 2014

2010 2011 2012 2013 2014 ranking SABESP ANSWERS FOR the supply of “Diagnosis of the 2013-2014 Rainy Season in the Southeast Region of Brazil, with em- 364 municipalities, totaling 25.3 million people phasis on the Cantareira System”, jointly prepared by both federal institutes, reve- in the State of São Paulo and serving fi ve als that “the scientific community has not identified months in advance any sign of possible considerable reduction in rainfall Relevant Brazilian municipalities at wholesale, with a population Meteorological during the 2013-2014 rainy season in the Institutes were of 3.1 million inhabitants. Southeast region of Brazil“. not able through In such analysis, the institutes point the their radars climate, as the main factor for the water to identify the crisis. “[It was] intense, persistent and ab- severity of the In addition to operating in all the regions of the vast state of São normal atmospheric pressure system whi- situation in Paulo – with territory larger than the UK and Portugal together– ch, by inhibiting rising air currents, obs- advance, which also affected the Company operates in an area where water availability per tructed the occurrence of usual rainfall, regions in the São inhabitant is extremely critical, the metropolitan region of São as well as the passage/development of Paulo inland and Paulo (RMSP). larger scale systems regularly accounting nearby states such With 22 million inhabitants – half of the São Paulo state popu- for more concentrated rain throughout the as , lation and one of the world’s largest urban agglomerations – the rainy season.” and RMSP is located in the headwaters of the Alto Tietê basin, a com- Accompanied by record high tempera- Espirito Santo bination that leads to a per capita water supply comparable to that tures, the drought directly infl uenced the of semi-arid regions. While the United Nations (UN) affi rms that sharp decline in the water sources that com- minimum necessary to have convenient supply is 1.5 million liters, pose the RMSP’s water metropolitan system. SUPPLY CHALENGES IN AN the supply in the RMSP is up to 10 times smaller, with an annual The Cantareira system, which is located average of approximately 150,000 liters/water per inhabitant. in the north side of the RMSP, was the fi rst Between the end of 2013 and the beginning of 2014, this alrea- to show the effects of the drought, in ear- dy historically challenging supply scenario reached alarming pro- ly 2014. Main supply source of the Greater ADVERSE CLIMATE SCENARIO portions with the installation of atmospheric high pressure zones São Paulo, this system is composed of six in the region, obstructing rainfalls and reservoir recovery. During reservoirs interconnected by a complex such period, the most severe drought in a historical series of 84 system of tunnels and channels, located in years was recorded, since when water fl ow stated to be measured the municipalities of São Paulo, Mairiporã, in the main water sources, in 1930. Nazaré Paulista, Piracaia, Vargem and Jo- Relevant Brazilian Meteorological Institutes, such as the CP- anópolis, the latter two in bordering with TEC/Inpe and the National Center of Natural Disasters Alerts and the state of Minas Gerais, approximately Monitoring (Cemaden) were not able through their radars to iden- 100 km from the capital city. tify the severity of the situation in advance, which also affected Water is transferred from one reservoir regions in the São Paulo state inland and nearby states, such as to another one due to severity to a pumping Rio de Janeiro, Minas Gerais and Espírito Santo. A study called station which pumps to the treatment station.

SABESP OPERATED AREA ALTO TIETÊ BASIN Half of São Paulo Statte Ideal minimum RMSP has only population availability 22 (acording to the UN) million inhabitants A persistent and 10% of water availability abnormal atmospheric 1.5 considered ideal by pressure system caused Alto Tietê Basin million the United Nations a draught of historical water avaiability cubic proportions on the meters Sabesp operated 150,000 per year Cantareira System cubic area region, including the meters Sabesp operates a wider per year Jaguari dam, in this area than Portugal and image of early 2014 England together 17 Cantareira System – Water inflow in m3/s Cantareira System constists of six dams. Amount of water fl owing into reservoirs Water flows from one to another by gravity

80 until a pumping station which raises it to

70 the ETA Guaraú. When the crisis deepened, 60 became necessary the installation of pumps 50 to capture water concentrated below the 40 level of the floodgates that made 30 transport by gravity systems, a volume 20 called “technical reserve”. 10

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

october november december january february march april may june july august september

Historical average inflow 30.6 35 53.1 70.5 73.5 66.9 48.4 38.4 35.3 28.8 24.5 25.6

Historical minimum inflow 14 14 21.8 26.9 27.6 28.1 24.7 19.9 16.5 13.9 12 11.8

1953 17.5 26 31.5 26.9 34.5 29.8 34.6 23.8 20.7 17.6 16.6 16.2

2013/2014 25.1 22.1 22.5 15.4 10.5 18.9 17.2 10.1 10 6.4 8.2 9

2014/2015 5.2 8.8 16 11.5 40.7 ------

Afluência de October 2014 a January 2015 Aggravation of water crisis due to the lower infl ow compared to previous year 31% of historical average inflow 79% of historical minimum inflow

The system as a whole stores approximately minimum levels recorded between 1953-1954, the two-year period 1.5 trillion liters of water, of which 982 billion with the most critical indexes until then. liters above the level of the gravity extraction According to the Agronomic Institute of , January re- Under normal fl oodgates (also known as useful volume) and corded the highest drought in 125 years of monitoring the Cantareira conditions, it supplies the remainder below the fl oodgates, volume region. This situation, combined with the withdrawal of water to sup- approximately referred to as “technical reserve”. ply the population and the above-average heat seen during summer, 9 million Under normal conditions, it supplies resulted in a continuous drop in the level of reservoirs composing the inhabitants of approximately 9 million inhabitants of system. In October 2014, instead of a rainy period, the situation was the São Paulo the RMSP with an average intake of 33 even worse. Between October 2014 and January 2015, water infl ow Metropolitan m³/s (31 m³/s from the PCJ Basin, where reached only 31% of the historical average and 79% of the historical Region, with an the Cantareira System is located and 2 minimum infl ow (graph). In January 2015, average water infl ow to the average intake m³/s from the Alto Tietê Basin). Another 5 Cantareira System was 40% lower than January 2014 and only 13% of of 33 thousand liters per second m³/s may be released to rivers supplying the average fl ow for the month. the Metropolitan Region of Campinas and In this scenario, ANA and DAEE during imposed continued re- Pumping system Jundiaí. The removal conditions are defi- ductions of water fl ow withdrawn by us from the Cantareira Sys- to extract water from ned by the National Water Agency (ANA) tem, ensuring the reserved water to not deplete within a short pe- the technical reserve and the Water and Electricity Department riod of time. Thus, in order to continue supplying water to RMSP’s on Jaguari dam (DAEE), in compliance with the grant of the population and reduce Cantareira’s water production, in order to system’s exploration, dated 2004. ensure the survival of the water source until rainfall returns to nor- During 2014, the water infl ow reached mal levels, we took a series of actions which are detailed in the average levels almost 50% lower than the chapter Confronting the water crisis (page 28). 18 19 G4-EC2

Jaguari-Jacareí dam, in THE MEASURES TO mitigate the in higher costs and a revision of the ca- Bragança Paulista (SP), pital expenditure. If the drought persists, is one of the six dams drought resulted in a signifi cant decrease in water the Company may be obliged to take more that form the drastic measures, including the implemen- Cantareira System billed volume and revenue from services, tation of water rotation.

with a material adverse effect on the Company, Concession of the Cantareira system which may worsen if the drought The water extraction from the Cantarei- ra system is granted to Sabesp by the ANA escalates in severity. and the DAEE; the usage rights grant was renewed in 2004 for ten years and would have expired in August 2014. However, due From time to time, Sabesp faces a reduction in water availabi- to the severe water shortage in the Canta- lity in the water sources due to droughts. The Southeast of Brazil, reira system, the usage rights grant was particularly southern Minas Gerais State, the Piracicaba river extended until the end of October 2015. basin (from which we extract the water used in the Cantareira The Company will try to renew the usa- system) and the north side of the RMSP have experienced below- ge rights granted by ANA and DAEE on the -average rainfall since 2012 and the drought got worse from the same basis as from 2004 to 2014, which allo- end of 2013 to September 2014. wed the extraction of 31 m³/s from the PCJ During the rainy season, which began in October 2014, rainfall water basin. However, the severe drought was significantly below average from October 2014 to January in 2014, the driest year in the 84 years of Rains returned to 2015 and returned to a satisfactory level in February, when it was record, has brought a new reference for a satisfactory above average for the month. minimum baseline of rainfall and water in- level in OThe result was a negative effect on reservoir levels, already February/2015;

down due to the severe drought in the 2013-2014 summer. The at the begining depletion of water is worse in the Cantareira system, the largest of the 2014-2015

one in the RMSP. As a result of the drought and the low volume rainy season, Grant for extraction from the Canta- from October to in this system, DAEE and ANA, since March 2014, have gradually reira System January, they reduced the amount of water that Sabesp is permited to extract { remained below from this system. In February 2015, Sabesp was authorized to ex- average, as had tract 13.5 m³/s. happened on In March 2014, the Company was allowed to extract up to 33 2013-2014 Summer m³/s, 31 m³/s of which from the PCJ water basin (Piracicaba, Capi- 59.1% smaller vari and Jundiaí Rivers), where the Cantareira system is located, IMPACTS AND CONSEQUENCES OF THE and 2m³/s from the Alto Tietê water basin. In order to maintain a non-stop supply and continue meeting consumer demand even with lower water availability, the Company has been adopting a series of measures. In 2014, billed water volume fell by 3.1% and net operating re- venue declined by 0.9% from 2013. If the drought continues and reservoir levels remain low, Sa- m3/s m3/s besp will not be able to ensure that the bonus program and other 33 13.5 mitigation measures taken in 2014 and early 2015 will be discon- Extraction on march/2014 Extraction on feb/2015 WATER CRISIS tinued nor that it will be able to serve all the population in its area of operations. It is worth noting that the users’ increased awareness of the need to save water and the implementation of The National Waters Agency (ANA) and the bonus program have reduced per capita water consumption. the Waters and Electrical Energy Sabesp cannot ensure that at end of the bonus program the said Department (DAEE) grant Sabesp to extract consumption will return to levels that existed prior to the current water from the Cantareira System. This water crisis. Lower per capita consumption may adversely affect grant was given in 2004 and lasted for 10 our business and result of operations in the future. years, until August 2014. Due to water In addition, the Company had to make a series of investments scarcity, grant was extended until October to continue providing water to the population, which resulted 2015. Sabesp seeks to renew it. 21 flow, which can make the discussion even standards, specifically COSO – 2013 – The Committee of Sponso- more complex. It is not possible to ensure ring Organizations of the Treadway Commission and ABN NBR that the usage rights grant will be renewed ISO 31.000 – Risk Management – Principles and Guidelines. All on the same basis, especially because it is the work is also aligned with the Best Corporate Governance not clear how these new minimum baseli- Practice Code of the Brazilian Institute of Corporate Governan- nes and the consequent depletion of water ce (IBGC) and the Company’s strategic planning, processes and source will factor in the negotiation. organizational culture. In addition to the risk related to the water The technical parameters of these crisis, the Company is subject to other risk factors, described in historical records, which were used the item 4.1 of the Reference Form1, and mitigating actions are esta- analyze the removals of water from reser- blished based on action plans, with ongoing monitoring. ERP technology voirs and, consequently, the concession, increases may be discussed in light of this new reali- confidence and ty and, on the other hand, it is not possible Legal Proceedings assertiveness in decision to predict if the crisis will persist, worsen making in the or be resolved in the immediate future. In the normal course of its activities, Sabesp is party to civil, financial and environmental, labor and tax legal proceedings, among others. commercial areas Several individual disputes account for a significant portion of and in regard Risk Management the total amount of these claims. Our financial statements inclu- to corporate de proceedings classified as possible and probable losses and governance Sabesp’s risk management activities only those classified as a probable loss are provisioned for. The are carried out in accordance with inter- relevant proceedings are described in Note 19 to the Company’s national standards and Brazilian technical financial statements attached hereto.

Technological management: SiiS

The Company is committed to improving the efficiency of its All the work internal processes by implementing Sabesp’s Integrated Infor- mation System (SiiS). The system is enabled by the Enterprise made at Sabesp Resource Planning – ERP technology, composed of SAP softwa- re and a commercial customer relations software by the com- “ is also aligned pany Engineering. The initial estimate was that the SiiS would be in operation with the as of mid-2014, with the implementation of the SAP modules. Best Corporate However, during the tests, it became clear that a number of fundamental functionalities had to be redone and exhaustive- Governance ly tested before being implemented. As a result, the activities were re-planned, taking into account the number of profes- Practice Code sionals allocated to the project. The team with approximately 150 Sabesp professionals and another 150 professionals from of the Brazilian the contracted consortium is still working to enable the imple- mentation of the SAP modules in 2015 and the new commercial During 2014, Institute system in mid-2016. The technology increases confidence and awareness campaigns assertiveness in decision making in the financial and commer- were carried out, of Corporate cial areas and in regard to corporate governance. This will be such as materials possible through the provision of integrated and consolidated and information Governance information on real time. Another competitive advantage is the distribution (IBGC) change in the organizational culture, to be incorporated by the on the São Paulo employees, due to the need for change in the current processes subway stations in order to adopt best market practices. (photo)

1 – The Reference Form is available on the Portuguese version of www.sabesp.com.br/investidores in the Informações Financeiras e Operacionais – InformationFormulário de Referência e IAN 22 Decanters and SERVICE UNIVERSALIZATION in the area lability by 30% until the end of the decade. fl occulators of ETA Public-private partnerships (PPPs) and Rodolfo José da Costa of operations remains as a goal to be pursued, the installation of new plants through the e Silva (Guarapiranga leasing of assets are partnership modali- System), in the south of propelled by the execution of structuring programs ties that have already been adopted and the capital may be expanded to accelerate the exe- Sabesp and a large amount of investment1. cution of works, strengthen our invest- maintained the ment capacity, expedite the response in trajectory of the implementation of infrastructure, es- service expansion Financial health, operational effi ciency and employees’ valuing pecially in light of this crisis, and enable in 2014, with 231.5 thousand are some of the pillars that support our strategy. the exchange of technology and knowled- new water The plan resulting from this strategy was conceived to ensure ge between those involved. connections and continued supply in the regions served by the Company. 244.3 thousand Between 1995 and 2014, Sabesp invested R$10.9 billion in the new sewage RMSP in order to increase water availability, the capacity to pro- Analysis of Goals connections duce and distribute treated water, and the integration between the production systems and the distribution network. In this period, Important challenges were brought be- our production increased from 57 m³/s to more than 73 m³/s. fore our Company in 2014. Nevertheless, we The planning and implementation of our production systems maintained the trajectory of service expan- in São Paulo metropolitan region were conceived considering sion with 231,500 new water connections the water availability referenced to the average inflows of the and 244,300 new sewage connections. historical series of the last 84 years, and the 1953/1954 two-year At the end of 2014, the collected sewa- period was until then considered the most critical period in São ge treatment ratio was 77%, in line with Paulo metropolitan region. However, the situation experienced 2012 and slightly less than in 2013. This between the end of 2013 and the beginning of 2015 significantly below-expected performance was the reduced water availability in virtually all the water sources in the result of water shortage, leading to lower RMSP to well below the minimum baselines that has driven the water consumption and, consequently, lo- STRATEGY AND production systems design. wer amount of sewage to be collected and In order to deal with this situation, Sabesp has adopted a treated, especially in the areas served with series of actions that reduced dependence on the Cantareira sewage treatment. system (the largest system in the RMSP and the water source In 2014, the water billed loss index fell VISION FOR THE FUTURE most affected by the crisis) and consequently increased the use to 21.3%, refl ecting our efforts under the of water available in other production systems located in RMSP. Corporate Program for Reduction of Water These measures reduced the average outflow of the Cantareira Loss, which comprises actions for network system by half, as detailed in the chapter Confronting the Water maintenance (repair of network leakages, Crisis (page 30). inspection of irregular and idle connec- In order to ensure continuous supply, the Company will imple- tions), asset renewal (replacement of ne- ment medium- and short-term initiatives to increase water avai- tworks, branches and water meters) and

Actual Goals

2014 2014 2015 2016 2017 2018 2020

Water supply2 Close to universal access

Sewage collection (%) 85 85 86 88 89 90 95

Collected sewage treatment (%) 77 78 81 86 88 90 95

New water connections (thousand) 231.5 180 177 172 164 164 3163

New sewage connections4 (thousand) 244.3 235 242 242 242 237 4743

Water losses – revenue (%) 21.3 24.0 23.4 22.2 21.2 20.1 18.1

1 – According to data from the National Sanitation Information Service (SNIIS), released in 2013 by the National Department of Environmental Sanitation of the Ministry of Cities, Sabesp is responsible for around 30% of the sanitation investments in Brazil. 2 – 99% or more. 3 – Accumulated target for 2019/2020. 4 – Total sewage connections, including those in the scope of the Se Liga na Rede (Connect to the Network) program. 25 2014 PROFIT SHARING PROGRAM reducing the number of complaints. This initiative’s most visible Sabesp is committed to conducting its result was the company’s exclusion from the complaint ranking business in a legal, ethical, transparent Indicators Unit Goal Actual over the last five years. This result underlines our daily customer and professional manner, extending to its care efforts. employees and its third-party representa- 1 Adjusted EBITDA margin % 34.0 26.0 In addition, in accordance with the principle of business tives, the obligation to understand, accept transparency and pursuant to Federal Law 12,527/2011 and Sta- and execute these guidelines. Positive customer satisfaction perception % 85 80 te Decree 58,052/2012, Sabesp provides the Citizen Information Our compliance program is in line with Number of new water connections thousand units 180.0 231.5 Service (SIC), a channel that provides citizens with access to the recommendations of the Organization for information on public entities. Economic Co-operation and Development Number of new sewage connections (conventional) thousand units 215.4 238.1 The Company’s minimum information, required by said legisla- (OECD), the United Nations Offi ce on Drugs tion, is available at www.sabesp.com.br, under the SIC link, in the and Crime (UNODC) and the World Bank. Be- Number of new sewage connections (Se Liga na Rede) thousand units 19.6 6.2 top menu, where there is also a channel for citizens to request other cause we are a mixed capital company, our EBITDA fall is information. In addition to the website, citizens can obtain informa- program deals with two different scenarios, consequence of Water billed loss index % 24.0 21.3 tion in person at Rua Costa Carvalho, 300. the active corruption (to pay a bribe) and population’s support to Collected sewage treatment index % 78 77 In 2014, 533 requests for information were responded to via passive corruption (to accept a bribe), and encouragements telephone or the Internet. Over the same period, citizens fi led 37 is structured based on Senior Management’s to water appeals in the lower court and 19 in the appellate court, seeking Commitment; Functional Structuring; Values, consuption intensifi cation of the management of pres- Ethics and Transparency additional information Conduct and Whistle-blowing Channel; Re- reduction sure in the network to mitigate the effects lationships with Third-parties; Governance offered by of the water crisis. The ethical values that underpin Sabesp’s actions in its rela- and Internal Controls; Risk Management; Sabesp As in previous year, the Company’s tionships with its stakeholders are set forth in its Code of Ethics. Combat of corruption Training and Communication. profit sharing plan was based on some Its compliance is monitored by the Committee of Ethics, which is G4-56/G4-SO3/SO4 In 2014, we streng- operational, economic-financial and cus- supported by tools such as the Whistle-blowing Channel, which On January 29, 2014, Law 12,846/2013, known as Anti-corruption thened our Compliance program through tomer satisfaction goals. The plan com- also receives anonymous complaints, the Corporate Accounta- Law, came into effect in Brazil introducing the concept of strict the diagnosis and the mapping of our cur- plies with Decree 59,598, of October 16, bility Procedure, the Ombudsman and the Consumer Information liability for private legal entities in the country, holding companies rent compliance practices and defined 2013, and set the compensation linked to Service. involved in corruption acts in the administrative and civil spheres action plans for 23 procedures conside- employees’ performance. The Company Sabesp’s Ombudsman is a qualified relationship channel with liable. In addition to complying with the Brazilian Anti-corruption red to be material based on the analysis fully met three of the seven targets, as two fronts: Law, because its shares are listed on the New York Stock Exchan- of corruption and corporate fraud risks in shown above. • Last instance of the company’s customers defense, answe- ge, Sabesp is also subject to the Foreign Corrupt Practices Act 2013. This work directly involved auditors, As a result of the severe drought that ring in second instance those who, for any reason, were unsatis- (FCPA), a similar law effective in the United States since 1977. In and the Company’s managers. In addition, has affected our region of operations fied or they were not given answer within the term established accordance with this law, companies may be held liable even if the Company disclosed its ethical values since late 2013, we have encouraged our during their preliminary contact with Sabesp. the corruption acts are practiced by commercial agents, repre- through in-person and virtual lectures and customers to reduce water consumption, • Last instance of the company’s image defense, operating sentatives or other parties acting on their behalf, both in the Uni- training to approximately 1,520 employees resulting in a decline in revenue and, con- together with consumer defense agencies, consumer defense ted States and outside that country. who hold leadership positions. sequently, in EBITDA. non-governmental organizations, besides answering customer’s Regarding customer satisfaction, al- demands sent by other government entities, such as government though we did not reach the target, we secretaries and other ombudsmen. Used by Sabesp since 1997 and adopted in countries such as England and Germany, consider the result to be positive because G4-SO5/HR3 In 2014, 178,783 complaints were received, among in- Total losses (micro-mesured) Sabesp’s Loss Index fell PRVs are activated to reduce water pressure it shows that, despite the water crisis that formation provided, denunciations, compliments, criticisms, sug- 4.5% compared to 2013, in the pipelines during periods of lower demand; is affecting the entire southeast region, gestions and complaints. Specifi cally in relation to denunciations, partly due to the that allows realtime monitoring of the amount of water used in a certain region and our customers recognize the dedication 108 were recorded, of which 79% were solved and 21% are being intensification of Pressure Reducing remotely calibrate the pressure in the analyzed. Out of the total, 8% relates to improper behavior, such as and the efforts of Sabesp’s technical staff 50% Valves (PRVs) local pipeline, thus reducing the amount towards meeting their needs. harassment, discrimination, persecution and unfair treatment. In of water loss due to leakages The target for new sewage connec- regard to the claims accepted, 43 own or outsourced employees National average* Commercial loss tions in the scope of the Se Liga na Rede were punished (8 warnings, 2 suspensions and 33 dismissals). 37% Water that disappears from the program was not reached. The Company’s The analysis of all these types of information allows the Om- Physical loss network by means of illegal focus on efforts to manage the water budsman to provide the Top Management with reports, allowing Caused by leakages connections, frauds, or on the pipelines. inaccurate water meter readings. crisis together with the difficulties inhe- immediate actions towards emergency demands or the implemen- 29.8% rent in the program, which depends on tation of improvements to processes and services rendered.

the customers’ adhesion and hydraulic The attentive monitoring of our Ombudsman analysts with in some States, water adaptations inside the homes, have led to Procon contributed to the company’s efforts of systematically loss index* is greater below-expected performance. than 50% Sabesp 2014 1 – Adjusted EBITDA corresponds to earnings before (i) depreciation and amortization; (ii) income tax and social contribution (federal income 0 taxes); (iii) the financial result; and (iv) other operating expenses, net. * - Source: National System for Sanitation Information (SNIS) 26 27 AT THE FIRST SIGNS of drought, Four systems had their supply areas ex- panded. Due to its proximity, the Alto Tietê WATER in the beginning of 2014, Sabesp implemented system was the fi rst alternative to assist the Cantareira System. Its water production in- emergency measures to maintain regular creased to the maximum level, 14.97 m³/s, in February 2013 and began supplying part of supply in the Metropolitan Region of São Paulo the metropolitan region’s east side, expan- On early 2014, ding from 3.5 million inhabitants supplied in the Cantareira System stopped (RMSP) and in several affected regions February 2014 to 4.5 million one year later. In 2015, thanks to the contribution from being the greatest water producer other systems, its production was reduced in the whole State. of São Paulo for to 11.04 m³/s. The Rio Grande (Billings) and the first time Rio Claro systems are liable for a fraction of since the beginning CONFRONTING THE the southwest region. of its operations, The interior municipalities, experiencing serious situations, were aided For the first time since the beginning in 1973 by the transfer of water intake sources, new mains and the increase of its operations, in 1973, the Cantareira of water production capacity. In the RMSP, the most severely affected system, which served approximately 8.8 area, the capacity for infrastructure integration between the production million people before the crisis, at the systems and the contingency initiatives prevented the adoption of more beginning of March 2015 were supplying drastic measures to the population, such as the water rotation1. 5.6 million clients. As a result, it stopped WATER CRISIS The strategic efforts resulted in a 30% decline in water wi- being the greatest water producer for the thdrawal from reservoirs in the Greater São Paulo – from 71 m³/s RMSP in February 2015, once surpassed in January 2014 to 50 m³/s in February 2015. We focused our grea- by the Guarapiranga system, which is now test efforts on Cantareira, the most seriously affected system; its serving 5.8 million people in the south and contribution to the metropolis’ supply fell down by 56% in terms west regions, versus 3.9 million people be- of water withdrawal. These numbers were achieved through the fore the crisis. With a useful volume of 171 following initiatives: billion liters of water, this system has been maintaining since the start of drought pe- riod, a favorable level of water availabili- Transfers among systems ty. Within one year (from February 2014 to February 2015) its water production incre- Sabesp has eight water production systems in the Metropolitan re- ased from 13.77 m³/s to 14.49 m³/s, above gion of São Paulo – Cantareira, Alto Cotia, Baixo Cotia, Guarapiranga, the 14.03 m³/s produced by the Cantareira Rio Grande, Rio Claro, Alto Tietê and Ribeirão da Estiva Together, under system, followed by Alto Tietê, which deli- normal weather conditions, they have water production capacity of 73 vered 11.04 m³/s. m³/s and they compose the Water Supply Integrated System (SIM). They Despite the installed infrastructure, the are interconnected by large water mains comprising the Metropolitan sectorial maneuvers for systems supply Water Main System (SAM), which is liable for carrying treated water to alternation required a series of structural the sector reservoirs and then to approximately 20 million people in the adaptations in hydraulic systems, boos- Greater São Paulo. ters and pumping stations, among other Due to the exorbitant decline in the Cantareira system’s stored vo- urgent interventions. lume, which began in January 2014, one of the fi rst emergency mea- In addition to higher transfer of fl ows, sures adopted was to transfer the water fl ow from other production SIM gained more capacity to treat and store systems in order to serve the regions which, under normal conditions, water. Regarding treatment, capacity went would be only supplied by the Cantareira system. up 2 m³/s, enough to supply a city with ap-

In September 2014, technical reserve extraction pumps The strategic efforts resulted in a 30% decline began operating at the in water withdrawal from reservoirs in the Greater São Paulo – Atibainha dam (photo) in the municipality “ from 71 m³/s in January 2014 to 50 m³/s in February 2015 of Piracaia; reservoir that is part of the 1 – A rotation situation is characterized when there are programmed water supply interruptions in different regions (sectors) of city for certain periods Cantareira System of time (hours or days). 29 proximately 800,000 inhabitants. The Guara- Alto da Boa Vista, one in Capão Redondo (Parque Fernanda dis- piranga System gained more 1 m³/s – from 14 trict), one in Jardim Ângela, one in Itapecerica da Serra (Cam- Discharge from the base of the dam Portal m³/s to 15 m³/s, and the Rio Grande (Billings) pestre district), one in Diadema (Inamar district), one in Franco System, increased from 5 m³/s to 5.5 m³/s. In da Rocha and one in São Bernardo do Campo. Summing up a early February 2015, with more water trans- capacity of 83 million liters, which adds approximately 7% to the ferred from the water mains of Guaratuba SIM’s reservation capacity, these sector water tanks are essen- Active volume river (maritime watershed) to Ponte Nova tial in high districts or distant from reservoirs, as they ensure Tunnel reservoir of the Alto Tiete system, another the pressure necessary at networks so that water reaches the 0.5 m³/s was added to this system. households. Until April 2015, other seven units will be installed. Additionally, we delivered eight sector The set of 15 large tanks will increase by 10% the stored water Stored volume metal reservoirs of treated water: two in inventory in the Greater São Paulo. Whence water flows downstream (PCJ Basin) Supply to RMSP Water production total reduction in RMSP = 21.2 m³/s Savings from bonus = 6.3 m³/s Technical Savings from reduction of pressure/losses = 13.0 m³/s Reserve Savings from permissionaires = 1.8 m³/s Piracicaba-Capivari-Jundiaí (PCJ) With R$80 million Basin rivers investments, Sabesp held Cantareira in less than –3.5 two months – 17.8 m³/s –5.4 –8.2 Alto Tietê actions that –1.3 Technical reserve 2,914 of the Ministry of Health and is analyzed enables the Average production –0.6 – 3.9 m³/s extraction from in Fev/2015 = 14.03 m³/s –3.1 at Sabesp’s laboratories, which observe the +0.8 Cantareira The Cantareira system as a whole stores approximately 1.5 NBR ISO/IEC-17025 standards and are certi- –0.3 System’s the trillion liters of water, 982 billion liters above the level of the gravity fi ed by Inmetro. The technical reserve’s water technical reserve; extraction fl oodgates and the remainder below the fl oodgates, vo- quality is exactly the same as that gravity-ex- dams, channels, lume known as “technical reserve”. tracted water volume. By means of the so- pipes and a set Under normal conditions, this system is liable for supplying wa- -called base discharge, for decades, the wa- of 17 floating ter to 8.8 million inhabitants, with average intake of up to 33 m³/s (of ter has been released to the rivers that follow pumps were built which 31 m³/s from the PCJ basin, where the Cantareira system is to the Bragantina and Campinas regions, both located and 2 m³/s from the Alto Tietê basin) to supply RMSP. Ano- located in the São Paulo State countryside, to ther 5 m³/s are released to the rivers supplying the metropolitan be used in public supply. region of Campinas and Jundiaí. The National Water Agency (ANA) and the São Paulo State Water and Electricity Department (DAEE) are bodies which resolve on the Bonus e onus conditions for water withdraw from the system, complying with pro- visions of the grant for exploration of the Cantareira system in 2004. The granting of bonuses to those who re- As the simulations carried out in the summer of 2014 indicated the duce water consumption and charging of a potential depletion of the active volume of the Cantareira system be- contingency tariff to those who waste wa- fore the beginning of the next rainy season, Sabesp obtained autho- ter were strategic measures to restrain de- rization from ANA and DAEE to use part of the Cantareira system’s mand. The bonus program was implemented technical reserve – the water below gravity extraction level. in February 2014 and was divided into three In order to be able to use this reserve, Sabesp had to carry out phases. Initially, 8.8 million inhabitants were an emergency construction of dams, channels, pipes and a set of 17 served by the Cantareira system in the north fl oating pumps. The interventions, executed in less than two months and mid sides of the São Paulo city, part of and ended in May 2014, represented an expense of R$80 million and the east and west sides of the city and other enabled the intake of the fi rst quota of the technical reserve, with 10 municipalities of the Greater São Paulo. Guarapiranga Rio Grande / Rio Claro –0.2 182.7 billion liters. The second quota, with 106 billion liters, began to Those who reduced their average con- –1.5 –0.2 –1.3 be extracted at the end of October 2014. The water is pumped to Ca- sumption by, at least, 20% in relation to the +0.6 m³/s –0.2 m³/s +1.0 choeira and Paiva Castro reservoirs, the latter at the Alto Tietê basin, average recorded in preceding 12 months +3.4 –0.8 Average production following to Guaraú ETA, in the north of the city of São Paulo. At the would have a 30% discount in the bill. Sub- in Feb/2015 = 14.49 m³/s station, water is treated within the quality standards observed by Sa- sequently, in April 2014, the measure was ex- besp. The water distributed to the population complies with Ordinance panded to a total of 31 municipalities, nearly 30 31 17 million customers, including, besides the The population immediately reacted to the impact of this task Reduction of water loss geophone system, which has been improved Greater São Paulo, the regions of Braganti- force to raise awareness about the severe water crisis. In the (see box on this below). na and Campinas, which rely on the Canta- second month of the program, 81% of consumers had reduced G4-EN27 Although it was on the spotlight in 2014 due to the se- Concurrently with these measures in reira system. In November 2014, those who consumption and 39% of them received bonuses, an effort which vere water crisis, the water loss control is not a recent concern. progress, in 2014, we reinforced important reduced consumption between 10% and increased month after month and in February 2015, 71% of them Relevant efforts permanently endeavored by Sabesp for an effi- initiatives to fight against losses, e.g. the ins- 15% now receive 10% discount on their bill received bonus out of the 81% of those reduced consumption wi- cient water management, actions fighting against losses conti- tallation of pressure reducing valves (PRVs). It is estimated and 20% discount to consumption reduced thin the new model of different bonus levels. At the end of 2014, nue, for at least, two decades. In 2009, it was transformed into a Sabesp has been using the PRVs since that each São by 15% to 20%. Reduction of 20% or more, daily per capita water consumption in the Greater São Paulo was corporate program. 1997, which are adopted by the world’s Paulo State the 30% discount remains. This model will be 126 liters, versus an average of 163 liters/inhabitant/day before Implemented in partnership with JICA (Japan International Co- best systems, such as UK and Germany, citizen has been reached at least in force until the end of 2015. the bonus grant in January 2014 – which represents a 22% decli- operation Agency), the Corporate Water Loss Reduction Program the PRVs are activated to reduce water 40 times by Concurrently with the growing press cove- ne in individual consumption. is divided into two fronts. The first is focused on fighting what we pressure in the pipelines during periods of water-saving rage, eight advertising campaigns were also In February 2015, a contingency tariff was established to those cus- technically call physical loss, which are caused by leaks in the lower demand, when networks are more According messages. carried out in 2014, with over 3,000 TV inser- tomers who increased consumption, after due approval by the regula- distribution network. The fight agai nst commercial loss – water pressurized. It also allows real-time mo- to National eight adevertising tions and other 13,000 radio insertions, besides tor. Also valid until December 2015, the tariff mechanism applies a 40% that disappears from the network by means of illegal connections, nitoring of the amount of water used in a Sanitation campaigns with publications in newspapers and magazines, burden on the tariff for those exceeding the average consumption from frauds, or inaccurate water meter readings—is another front. certain region and remotely calibrate the Information over 3,000 Tv allowing to estimate that each São Paulo State February 2013 to January 2014 by up to 20%, or 100% over the tariff for In the 12 years of program activity (2009-2020) investments of pressure in the local pipeline, thus, redu- System (SNIS), insertions and while National other 13,000 citizen has been reached, at least, 40 times by those exceeding 20% of the average. R$5.1 billion are estimated, either by means of our own invest- cing the amount of water lost due to leaka- water-saving messages. These fees incur on all users, including those who have firm demand ments or taken out with JICA and the, brazilian development banks ges. Due to the exceptional intensity of the average total radio insertions losses reaches were carried , In February 2015, the State government be- contracts (large-sized consumers). Customers with water consumption Caixa Econômica Federal and BNDES. Over the past seven years, water crisis, other 124 units were imple- 3 37% (in some including also gan a campaign called Each Drop Counts, rein- corresponding to or lower than 10 m , hospitals, first-aid clinics, nursing from 2009 until the end of 2014, we have invested R$2.6 billion, of mented in 2014, totaling more than 1,300 States this newspapers forcing the relevance of the water rational use. homes, police stations and prisons are exempted. In the March bill, 12% which R$541 million only in 2014, with change of equipment, pipes, items of equipment in operation throu- percentage and magazines More than 20 million printed materials were of consumers had their bill adjusted due to higher consumption. Ano- water meter, besides the scanning to identify frauds. ghout 14,000 km of network in the Metro- exceeds 50%), publications and distributed by the Guardiões das Águas (Water ther 7% with this profile were not included in the surcharge, since they Sabesp’s currently metered loss ratio is 29.8% (18.8% of phy- politan Region of São Paulo. Sabesp’s figures intense media Guardians) team (detailson page 60). consumed less than 10 m³/month. sical losses and of 11.0% commercial losses), 4.5% down on the With rainfall below average until Ja- were 29.8% in coverage 31.2% recorded in 2013. National average total losses came to nuary 2015, the water inflow was even lo- 2014, numbers 37% and, in some states, this percentage exceeds 50%, accor- wer in this period, compared to 2014, and 4.5% smaller than 2013’s, ding to the National Sanitation Information System (SNIS). By the we intensified the pressure reduction. as a result of end of the decade, Sabesp intends to reach a 25.9% metered loss This measure raised criticism that Sabesp R$2.6 billion Bonus Program ratio, which accounts for 16.8% of physical losses, a level simi- would not be observing the rules imposed invested since lar to UK and above countries like France and Italy, with ratios by the Brazilian Association of Technical 2009 (from a Reduced consumption and received bonus between 25% and 29%. These goals have been revised, due to Standards(ABNT). The fact, however, is R$5.1 billion Reduced consumption (without bonus) the Program’s budgetary restriction, which is a result of current the ABNT restricts a minimum pressure of total planned water crisis. 10 meters of water column (mwc, unit to until 2020) by the (%) Adhesion to bonus program at RMSP Consumption above average In relation to 2014, it is worth mentioning that the reduction was measure pressure in supply networks), but Corporate Water Loss Reduction 80 influenced by the intensified management of network pressure (see under crisis situations, such as the one we Program 70 details below). Leakage detection efforts were also expanded by are going through, the rule allows pressu- sending teams to the streets of RMSP in order to contain damage re lower than the minimum. Item 5.4.1.2 of

60 71% and loss in the pipelines. The efforts reduced average repair time NBR 12.218/94 says: “the amounts of static 66% 50 65% from 60 to 17 hours. The increasing number of alerts coming from pressure exceeding the maximum and the 40 the population through the Company’s channels and even via mail dynamic pressure lower than the minimum 53% 52%

51% from the CEO were essential to the efficiency of our work. For un- may be accepted, provided that technically 50% 30 49% 46% 45% derground leakages, which are most of the cases, Sabesp has a and economically justified”. 20

10 31% 28% 27% 26% 26% 25% 25% 25% 25% 24% 24% 24% 23% 0 22% 21%

22% FIGHTING AGAINST LEAKAGES TECHNOLOGY 19% 13% 12% 10% Implemented over two decades ago in Sabesp’s leakage detection which means greater speed and accuracy in the repair. In addition, May/14 Jun/14 Jul/14 Aug/14 Sep/14 Oct/14 Nov/14 Dec/14 Jan/14 Feb/14 operations, the geophone technology detects water leaks from the the digitalization and storage of sound signals in a databank will pipes through soil auscultation with a small sensor (geophone). enable the classification of different leak profiles, which will ease savings However, inaccurate chalk or spray marks may result in re- the selection of method to be applied in the repair. This invention, of 3.3 3.9 2.4 3.9 3.6 3.6 4.1 4.8 5.4 6.3 measurement and wasting of time. Therefore, Sabesp is improving still in the research phase, is the result of a partnership between m³/s m³/s m³/s m³/s m³/s m³/s m³/s m³/s m³/s m³/s this system by adjusting a smartphone to the geophone device, Sabesp’s Department of Execution of Research, Development and connecting the operational work on the streets to a data center. Innovation Projects, and professor Linilson Padovese (USP), being With the assistance of a GPS, it will be possible to monitor the supported by the São Paulo Research Foundation (Fapesp). This device Of which: 12% com onus and 7% social tariff/minimum consumption (without onus) technician’s work to accurately detecting and signaling the problem, should be operating in around three years. 32 Water at wholesale cado foi responsável pela economia de 3,4% do total. E o con- the production systems, expanding by 30% the water supply in the sumo per capita caiu 22% em um ano – de 163 litros/habitante/ RMSP by the end of the decade, splitted into three phases. The first In 2014, R$349 million Another measure adopted to offset the dia em janeiro de 2014 para 126 litros/habitante/dia no final de comprises short-term measures, expected to be executed and begin lower flow withdrawn from the Cantareira dezembro de do mesmo ano. operation in 2015, including the transfer of 0.5 m³/s from the Guara- were invested in system was to reduce by around 2 m³/s the Rainfall below average continued until January 2015. The water tuba River to the Alto Tietê system, in operation since February 2015, “ supply infraestructure water volume supplied on a wholesale ba- inflow was even lower during such period, compared to 2014 and the interconnection that will enable the transfer of 4 m³/s from Billin- The systems’ new sis to municipalities composing the covera- was considered the worst period of the historical series. Therefo- gs to the Alto Tietê system, the transfer increase from Billings with on RMSP rainfall and water ge area of this system. re, the interventions scheduled for 2015, as seen thereafter, will donation of another 1 m³/s to Guarapiranga and the enlargement of inflow levels, be essential to maintain the regularity of water supply in the short the ABV water treatment station by 1 m³/s. formerly based term in the entire metropolitan region of São Paulo. In the medium-term, more sources should be incorporated into 90’s, the PMA regularized supply, in conformi- on the figures Results It is worth noting that the systems’ new rainfall and water inflow the integrated system. The São Lourenço production system , whi- ty with population growth and to dealt with a for 1953/1954, levels, formerly based on the figures for 1953/1954, brought new pa- ch works began in April 2014, is one of the main sources. Once situation of rotation experienced by six million brought new parameters for Out of 31 m³/s Sabesp was authorized rameters for the hydrological risks assessment. The new scenario operational, at the end of 2017, it will allow the transfer of another people in the metropolitan region of São Pau- the hydrological to withdraw from PCJ basin prior to March directly impacts the conception of projects and the anticipation of 4.7 m³/s (with a maximum capacity of 6.2 m³/s). The total amount lo due to the lack of infrastructure. risks assessment, 2014, in February 2015 only withdrew 10.40 the works already planned in the São Paulo State’s Macrometropolis for this project is budgeted at R$6.0 billion, including R$2.2 billion Completed in 2000, the first phase of the directly impacting m³/s. The remainder derives from Alto Tietê Plan to expand the supply infrastructure. allocated to construction through a public-private partnership with Metropolitan Water Program put an end to the conception of basin, resulting in the production of 14.03 G4-EN5/EN6 Another impact evidenced with the crisis was the Camargo Corrêa and Andrade Gutierrez and R$3.8 billion to a 21- rotations and expanded the capacity of the projects and the m³/s at the Guaraú water treatment sta- 3.2% increase in the Company’s total energy consumption com- year operation and maintenance of the plant’s services. whole system, as increased untreated water anticipation of tion (Cantareira system). Comparing water pared to 2013 in water product. This is justified by the intensified At the end of January 2015, the Company published a pre- available supply, enhanced the reservation the works already withdrawal from the Cantareira System in replacement of flow between RMSP production systems and the -qualification bid notice for companies interested in bidding for and renovation structures and increased planned February 2014 with February 2015, we have higher need of equipment to expand the systems which now co- the interconnection works between the Jaguari (Paraíba do Sul treated water production and transportation a 56% reduction, which means savings of ver sectors previously supplied by the Cantareira system. basin) and Atibainha (Cantareira system basin) dams. Howbeit (intake) capacity. In 2006, the second phase of 17.74 m³/s – sufficient to supply approxi- The trend is this situation to be reversed with the regulariza- an appeal was taken to the São Paulo State Accounting Court, the Program began. Completed at the end of mately 7.1 million people. Considering the tion of water and operating conditions. In case of sewage, the which was granted partial relief leading to its republication on 2014, it required investments of around R$1.9 set of systems that serve the RMSP, savin- higher energy consumption in sewage activities occurred due to March 21, 2015. It is a large scale construction project, with ex- billion, including our own funds and financing gs came to 21.4 m³/s in the same period, the expansion of services, especially the increase in the number pected average outflow of 5.13 m³/s and maximum outflow of 8.5 from Brazilian Federal Savings Bank (CEF) sufficient to serve 8.6 million inhabitants, of pumping stations which pump the load to sewage treatment m³/s, which should begin operating in the second half of 2016, and Brazilian Development Bank (BNDES) more than the population of the city of Rio stations. (For further details, see the Panel of Indicators, page 16). enhancing the Cantareira system. and funds from the public-private partnership de Janeiro1. Also in the medium term, the Company is studying the cons- (PPP) signed to expand Alto Tietê system’s A gestão da pressão foi responsável truction of two Reuse Water Production Stations , one on “Pi- production capacity – from 10m³/s to 15m³/s. pela parcela de 46% dessa economia, a Future actions nheiros Expressway” (2 m³/s) and another in Barueri (1 m³/s). In Only in 2014, R$349 million were invested transferência de mananciais respondeu these stations, the collected sewage is treated until it is trans- in the Program, a 173% increase over 2013 por 30,5%, o Bônus ajudou em redução de DIn light of the new scenario, confronting the crisis requires the formed into reused water with a quality close to that of potable due to changes in the Company’s strategy 19,8% e a transferência de menor volume repositioning of investments and a series of short and medium-term water, and then transported to the Guarapiranga and Isolina re- due toworks brought forward and emergency de água para municípios atendidos no ata- initiatives to increase water availability and the integration between servoirs (Alto Cotia system), respectively, where it will be treated actions in operation to face the water crisis. and transformed into potable water again. With that Programa, it was possible to cover In order to achieve this result, both reuse water production stations services to consumers from 70% to 100% and 1 – 1 m³/s is sufficient to serve approximately 400,000 people. will be equipped with membrane biologic reactors, which perform ul- the water production capacity in the Metro- trafiltration and have the capacity to remove solid particles with a dia- politan Region of São Paulo increased from 57 Executed actions reduced by 56% the use of water from Cantareira Reduction of pressure/losses meter a thousand times smaller than a hair. Afterwards, the membrane m³/s to 73 m³/s, i.e., a 28% increase in produc- 34.0 33.3 33.3 32.8 33.0 32.8 32.8 filtration may be followed by osmosis and oxidation processes. And as a tion against 22% growth of population (IBGE), 31.9 Bonus Program 32.0 31.6 31.4 31.8 last stage, the water will be submitted to a final disinfection process to making available water sufficient to 5.5 million

Feb/2013 Aug/2013 eliminate pathogens, such as bacteria and viruses. people. Alone, it would be sufficient to supply Oct/2013 Mar/2013 Feb/2014 -3.5 Alternatively to Reuse Water Production Stations, there are studies the cities of Salvador (2.9 million) + Fortaleza Apr/2013May/2013 Dec/2013 27.6 27.0 of new water sources near the RMSP, where good quality water is (2.6 million). This was possible with the impro- Feb/2014 to Feb/2015 25.2 -17.74 m³/s m³/s -8.2 available. These options will be compared with Reuse Stations in ter- ved infrastructure of five systems over these Mar/2014 ms of investments necessary and operating expenses, opting for more two decades. 23.3 -5.4 cost-effective solutions. At Sabesp, the water supply, although is an 22.0 21 Apr/2014 -0.6 universal service, it is a service which conti- Jun/2014 19.9 May/2014 Jul/2014 19.0 nuously requires performance keeping up Aug/2014Sep/2014 17.1 The Metropolitan Water Program with demographic growth and regularization 17.0 Oct/2014 Permissionaires of new areas. Thus, 231,511 new connections Nov/2014Dec/2014 14.0 Advances from Water production at the Cantareira System These measures, which contribute to fight against the largest were made, outpacing the annual records of Jan/2015 other systems (m³/s) drought of history, will carry on a work started over two decades ago the past 15 years. Today, 25.3 million people 12.0 Feb/2015 Savings/action with the Metropolitan Water Program (PMA). Implemented by mid are directly served. 34 35 Protection of Water Sources this project, up to date, approximately R$147.4 million were execu- With the inauguration of the Mambu-Branco station in Itanhaém and Water in Santos Coast Region ted, of which R$30.4 million in 2014. the Jurubatuba station in Guarujá at the end of 2013, both supplying 3.6 A greater need of water sources to supply Concurrently, Billings dam also counts on Pró-Billings program, m³/s to the Santos coast region, it currently has 15 ETAs. After treat- the metropolitan region of São Paulo make whereby sewage treatment works will serve the population with ment, water is sent to 50 storage centers with capacity of approximately actions towards the environmental recovery trunk collectors, sewage pumping stations, collecting networks and 320,000 m3 and is then strategically distributed to nine cities. Integrated system of these water sources yet more urgent, household connections, taking sewage to ETE ABC for treatment, In 2014 we built 1.3 km of treated water mains and its reserva- fl exibilizes supply with an acting of, above all, the municipal with an estimated completion date by the end of 2018. tion was expanded by 17,300 m3 by delivering a 5,000 m³-reservoir executive power, which has the prerogati- Nossa Guarapiranga (Our Guarapiranga) is a third initiative in Vicente de Carvalho and another in Bertioga, with reservation ve to promote land regularization of regions towards the recovery of metropolitan water sources. Started at capacity of 12,300 m³. In addition, it was started a 25,000 m3 re- 9 municipalities already occupied and prevent the irregular the end of 2011, the Program is supported by 10 collector din- servoir construction in Praia Grande. Two stations were also de- settlement in the surroundings of the water ghies and 11 eco-barriers (which are structures with floats and livered; ETA Itu, in São Vicente and ETA Bertioga. Together, the 15 ETAs sources – considered to be environmental underwater metallic screens installed in the mouth of the dam stations required investments of R$16.1 million and added 380 preservation area. inflow that removes waste that reaches these channels). The liters/second of treated water on the south coast. 320 thousand m3 The Water Sources Program, implemen- items taken out of the dam include couches, plastic containers, All these actions are part of the Água no Litoral (Water on the of reservation capacity ted in 2008 in a partnership with the muni- TV sets, car carcasses, and a variety of waste types that conta- Coast) Program which estimates R$1.1 billion in investments by cipal government, is focused on recovery of minate the water and disrupt water intake and treatment opera- the end of the program’s fi rst phase, in 2021, using our own funds Billings and Guarapiranga, two of main re- tions. Between December 2011 and October 2014, 9,026 m3 waste and also CEF’s. Out of this amount, R$934 million have already been 1.8 million tourists servoirs of the Greater São Paulo. Most of were removed. disbursed and R$76 million only in 2014, including funds used on supplied during Season funds have been invested to create sewage This volume, which is sent to the sanitary landfill, corresponds the north coast for improving the system and building treatment (doubling population) collection infrastructure in the region. This to the monthly collection by 475 dump trucks (approximate ave- stations in Ubatuba and Caraguatatuba, which are in progress, and program comprises improvement interven- rage of 250 m3/month). In addition, since July 2012, a diagnosis has a treatment capacity of 150 liters/second each. The second tions, precarious lots and housing units in service has been executed, water plants control and removal , phase of Água no Litoral is under the planning phase. Guarapiranga and Billings sub-basins’ are- i.e., the macrophytes, which obstruct the dam’s water intake, be- as. Initiated in 2009, it must benefi t 58,000 sides hampering the use of reservoir for the practice of nautical Referring to the economic aspect, with households until 2015. These actions have sports. This service relies on two especially-equipped dinghies Interior actions emergency actions, it was possible to avoid been executed with funds of the federal for this operation. From implementation until the end of 2014, a revenue drop of approximately R$60 million government, the State of São Paulo, munici- R$15.1 million were allocated to the program, which should reach Sabesp, through the Regional Systems Executive Boards, ope- which would be generated with supply dis- palities, Sabesp and the World Bank. Out of R$17.9 million by the end of 2016. rates in 310 municipalities in the São Paulo’s interior, where we continuance. In addition, this severe situa- US$ 100 million to be invested by Sabesp in It is worth mentioning that recovering and preserving urban provide universal water supply services. However, the 2014 drou- tion made Sabesp to designate professio- water sources in a complex area with heavy population agglome- ght also affected several regions, depleting up rivers and lowering nals, as requested by the State government, ration as the Greater São Paulo is a collective mission. The parti- reservoirs, which required emergency actions to maintain regular to provide technical assistance to other cipation of sanitation companies of all municipalities through the supply for 1.2 million people. Using its own technical and operatio- municipalities with smaller-sized companies In ABC, Barueri, expansion of sewage collection and treatment, the inspection of nal capacity, 55 emergency water intakes were built in 26 munici- and restricted operational capacity. Jesus Neto, irregular occupancy, urban cleaning and the increased citizens’ palities with the most serious scenario. G4-EC8 Also in the interior, we develop Parque Novo Metropolitan Water Program awareness of the proper waste disposal value are critical actions At a cost of approximately R$21 million, these actions also re- actions intended to bring water supply Mundo and to move forward in preserving these important water sources in quired setting more than 100 kilometers of water mains and resul- and sewage to isolated and low-income São Miguel ETES, Sabesp such a water shortage environment. ted in the production capacity expansion from new intake spots of communities. It is called the Água É Vida increase in water produced in 2014 more than 1.8 m3/second. Such work ensured relief to citizens by (Water is Life) Program. Created in No- production capacity 5 million liters 28% removing the possibility of public supply rotation in these muni- vember 2011, it is being implemented in of reuse water Coastal Supply cipalities. According to the National Protection and Civil Defense Alto Paranapanema and Vale do Ribeira for urban use Department data, until the last months of 2014, 1,117 municipalities regions, once these regions have a large supply: cleaning population Supplying nine municipalities in the Santos coast region is a of 13 Brazilian states of southeast and northeast regions received population in rural areas and present the of streets, yards 22%growth complex, challenging task. Considered by the Brazilian Institute emergency status decrees due to water shortage recognized by worst human development indexes in the and memorials, of Geography and Statistics (IBGE) the 15th largest metropolitan the federal government. In São Paulo, 45 municipalities declared State. In this task, Sabesp is responsible unclogging This difference is big enough to sewage networks, supply the populations of: region in the country considering the number of inhabitants—ap- rationing. None of them is operated by Sabesp. for supplying water and providing techni- rainwater proximately 1.8 million in 2014, which doubles in high season, when In 2014, 9 ETAs and 36 wells were concluded, making available cal assistance to the municipalities which, galleries etc. Salvador (2.9 million)+ the highest temperatures are registered and caused water con- another 794 liters/second to the water supply systems of 33 cities using State funding, are responsible for sumption per capita peaks, that overwhelms the supply system. of the State. Another important action was the construction of 44 installing Individual Sewage Units (USIs). Fortaleza (2.6 million) The need to ensure water supply safety in the region required reservoirs with total capacity of 42.7 million liters. These actions These units are pieces of equipment with building an integrated water intake, treatment and distribution contributed to solve water crisis situations considering also the technology better suited for regions whe- system, as we have in the Greater São Paulo, intended to make demand deriving from the population growth in these municipali- re, due to their isolation, do not have con- In just over two decades the supply flexible. This structure allows us to transfer water flows ties, maintaining universal supply services in all bases operated ditions to have the traditional basic sanita- Metropolitan Water Program ended from regions with higher water availability to regions with higher by Sabesp. For 2015, 8 ETAs have been built (interior and coast), tion infrastructure. the casters and increased water production demand, offsetting the volume availability limitation for water in- which will increase production by 1.7 m3/s, suffi cient to supply a The initial goal is to serve 81 communi- capacity in Greater São Paulo by 28%. take of rivers deriving from Serra do Mar. population of 680,000 people. ties from 30 municipalities, benefi ting more 37 than 15,000 people. By December 31, 2014 Conscious and sustainable use of water Adopted by the most advanced world systems, the reused wa- with sanitation companies Semasa (Santo we had completed the works in 11 commu- ter technology is among the most effi cient initiatives for sustainable André) and DAE (São Caetano do Sul) to sup- nities and in another 14 communities the G4-EN27 As in the Program for Reduction of Water Loss, de- water consumption. Indirectly destined to the human consumption ply reuse water to the industrial units instal- works were in progress. In total, we ac- veloping actions aimed at the efficient and responsible use of by means of double treatment1 or customized for industrial purpo- led in these municipalities, saving drinkable complished 78 kilometers of networks and water has been part of Sabesp’s sustainable management guide- ses, it results in great savings of raw water which is no longer wi- water for municipal citizens. There is also a ducts, and 24 new wells, already in opera- lines for decades. The water crisis has reinforced the relevance thdrawn from water sources. We highlight the Aquapolo Ambiental, study in order to serve new industries in São Sabesp has tion. Most of the work was performed by its of these initiatives. a project implemented and operated since the end of 2012 by means Bernardo do Campo by installing a new wa- 15 regional laboratories, tem own labor force. As for water supply, we in- One of the highlights is PURA (Rational Use of Water Program), of a partnership between Sabesp and Odebrecht Ambiental. ter main. We expect that Aquapolo reaches 15 laboratórios vested R$7.4 million out of a total of R$12.5 which combines educational campaigns in public buildings, with The largest project to produce industrial reuse water in South a peak production of 1 m3/s in the coming regionais, spread million budgeted up to 2015. practical guidance for civil servants on water consumption re- America and fi fth largest in the world, Aquapolo is located near the years. strategically over The measures and consequences of the duction. Concurrently, there is a structural measures implemen- ABC sewage treatment station (ETE), at the border between São G4-EN22 In addition to Aquapolo, Sa- the State; they drought that stroke Brazil’s southeast re- tation, with installation of valves, pressure relief devices, timers, Paulo and São Caetano do Sul, and it able to treat the effl uent ge- besp conducts the reuse of effl uents at ABC, conduct over gion in 2014 led to a continuous drop of the water outputaerators, replacement of floats and water volume nerated at the station. Approximately 900,000 m3 of water per month Barueri, Jesus Neto, Parque Novo Mundo 700,000 company’s revenue, and the investment to sensors, replacement of old plumbing systems and pipelines, and are supplied to the large companies in the Capuava Petrochemical and São Miguel ETEs for urban use sup- essays every expand water availability in the metropoli- building new reservoirs to collect and reuse rainwater. Complex, in the ABC Paulista region (Santo André, São Bernardo ply, such as cleaning of streets, yards and year; moreover, tan region of São Paulo became a priority. Started in 1996, the program has been implanted in 8,160 properties and São Caetano) and used to wash machinery and warehouses, memorials, unclogging sewage networks, the Company Therefore, the scope and program targets all over the State, through partnerships with State and Municipal pu- cooling boilers, power generation, etc. In 2014, negotiations started rainwater galleries, watering yards, redu- pioneers in having technical have been reviewed. blic entities. Only in 2014, 257 buildings of RMSP public administration cing dust in construction sites. In 2014, we tasters in the The scope and goals of this program received the program. Until December 2015 it will be implemented in produced 5 million liters for these purposes. country have been revised, taking into account 240 state schools of the Greater São Paulo, by means of a partnership the outcome of drought which stroke with the Department of Education of the State of São Paulo. Brazil’s southeast region during 2014 and Besides physical structural changes to avoid waste, the par- Aquapolo is the Quality control impacted on the Company’s revenue drop. ticipating schools which manage to reduce water consumption, Investments had to be driven to expand by at least, 10% get a 25% discount on their bill. Until 2015, the largest project do produce The cleaning process conducted at the water availability in the metropolitan expectation is to reach annual savings of R$13.9 million and of at industrial reuse water in South America 28 stations of the Greater São Paulo and region of São Paulo and regions of higher least, 216 million liters of water, saving enough water to supply a “ other 207 stations operated in the coast and and the fifth largest in the wolrd demand on the coast and interior. city 36,000 inhabitants inland combines the most stricter internatio- nal rules. Any doubt about the quality of wa- Between ter coming from stations is solved with over December 2011 700,000 laboratory essays conducted yearly and October 2014, PURA evolution in government buildings ETE ABC by 15 regional laboratories of quality control Nossa (São Paulo) with samples collected in several places, Guarapiranga’s in the metropolitan region of São Paulo from the way to reservoirs, water mains, dis- collector dinghies tribution networks, connections, branches and eco-barriers Number of properties serviced by PURA in RMSP system was REUSE WATER until delivery to households. (after treatment of the ef uent responsible for generated AT ETE ABC) In certain situations, we resort to the taste the withdrawl of sensitivity. Sabesp is the single company to use nine thousand 85 819 1,741 2,191 2,491 2,651 2,908 this resource, it relies on technical tasters who cubic meters 900 million investigate the existence of substances which of waste from liters per month may alter taste or smell. The result of these the dam, which processes, monthly reported in customers’ corresponds to the monthly DESTINATION: bills, show conformity indexes in line with the collection of 475 cooling boilers, sanitary requirements of the Ministry of Health equivalent to dump trucks wash machinery and and the World Health Organization (WHO) warehouses, 360 Currently, 13 of 15 laboratories already Olympic power generation swimming have essays accredited by INMETRO, totaling pools 683 accredited essays. The central laboratory Capuava promotes the improvement of all essays – the Petrochemical Profi ciency Essay Program, which consists of sending a sample to internal and external la- Complex boratories in order to obtain an average result, thus, allowing to identify any weaknesses and provide greater reliability to results. 2008 2009 2010 2011 2012 2013 2013 1 – After treatment at ETE, water is sent to water sources. After intake, water receives new treatment before being distributed to consumers. 38 39 Works of the Tietê EXPANDING THE SEWAGE infrastructure means the drought, which ended up delaying some Project in Suzano: since sewage construction works. SEWAGE 1990, nearly 16 million reducing hospital and clinic admissions due Among the main actions in 2014 are the people have benefi ted delivery of 16 new sewage treatment station from the expansion to water-transmitted diseases, falling in infant mortality, units , the enlargement of one unit and the re- of the sewage newal of other three stations. This set of works collection network decontamination of rivers and water mains, increased treatment capacity by 1.9 m3/s, be- nefi ting 700,000 people in 16 municipalities. The job creation, and increasing the value of tourism interventions for sanitation universalization in the interior required an investment of R$153.2 and real estate. million during the year. Currently, Sabesp has 524 sewage treatment stations in operation throughout the State. In 2015, 27 new units are already under construction in 25 municipali- 22.3 million In other words, sanitation means prosperity, health, life quality ties. Thus, the treatment speed will be expan- people served and development. ded by approximately 800 liters/second, direc- with sewage According to the World Water Development Report 2014, a survey tly benefi ting more than 300,000 people. collections conducted by the UNESCO, it is estimated that more than 80% of the Concurrently to offering more health, sewage in the world--and more than 90% in developing economies —is comfort and life quality to the served citizens, neither collected nor treated. And more: 36% of the world population, expanding the sanitation infrastructure has a approximately 2.5 billion people, live without appropriate sanitation, direct impact on the environment, by improving which is the probable cause of death of more than 1.5 million children water resources. The infrastructure outco- younger than fi ve years old in the world, every year. me is already visible by the improvements in In São Paulo, the expansion of sewage collection and treatment in major rivers, such as the Pararangaba, Lava- municipalities served by Sabesp, reached in 2014 sewage indexes of pés, Lavrinhas and Queluz’sewage treatment 85% for collection and 77% for its treatment. Our sewage system cur- stations, which improved Paraíba do Sul and rently serves 22.3 million people. consequently, the water going to Guandú river, Indexes on operated areas: Even though 2014 was a year of double efforts to ensure water extracted to supply the State of Rio de Janeiro. supply, the sewage collection and treatment expansion actions Another example is the improvement of had significant results. Throughout the year we delivered new sewa- Jundiaí river – which during more than 30 ye- ge treatment stations and made 244,280 new connections all over the ars could not be used for public water supply 85% State, being the highest number of connections since 2011—the second and now, after concluding Campo Limpo and highest over the past 16 years. Várzea sewage stations in 2013, initial opera- tion of Itupeva unit in 2014 – which was reclas- sewage collection sifi ed to Class 3, a category that allows human Interior’s Universal services consumption after conventional treatment. Thus, it will be used to supply approximately 77% Due to the worsening of the water crisis, triggered by the long 250,000 people in the Itupeva and drought, Sabesp, by means of Regional Systems Executive Board had municipalities located in region of lower water to reallocate resources in order to enable the execution of works in availability in the State, with only 104 m3 per sewage treatment the water production systems set in municipalities more affected by inhabitant/year. In addition, along with Soroca-

In 2014 on the interior: Currently, Sabesp has 524 ETEs in operation in the whole State in 16new 1,900 Sewage liters per second 16 Treatment of increase municipalities in sewage with SEWAGE ON THE PATH Station treatment capacity R$153.2 + expansion of one million unit and renovation investiments TO UNIVERSAL SERVICES of three other ETEs 700 thousand people bene ted 41 In 2014, Sabesp invested of São Paulo by the end of the decade, 1st and 2nd phases Sabesp is structuring the fourth Tietê Project and final phase of the Tietê Project, R$14 million in the complete decontamination which means covering an area of appro- which will include works of of two large urban streams, benefiting ximately 250 km2. 1990 2010 great complexity in the central region of São Paulo and the expansion 320,000 people, besides the conservation Construction of great sewage stations, of the already depolluted 146 urban outfall instalation, pipelines, collection of networks to regularized poor “ networks, interceptors and linking to the and remote areas of the streams and the actions to initiate the Sanitation on the coast network benefited: metropolitan area decontamination of another 18 water bodies. 15.8 million people with The São Paulo coastline is another region Water treatment sewage collection billion benefi ting from a better life quality provision, generated around & U$2 30% less sludge millio peolpe with 230km th duction of the Tietê river’s polluted spot, which has already shortened bathing conditions improvement of 82 bea- 8.5 Reducing pollution spot to the 4 phase sewage treatment 230 kilometers compared to 1993, when it reached the Barra Bonita re- ches, better health, and better tourism de- over the past five between 1993 and 2015 years in Sabesp’s servoir, 530 kilometers from its spring, in the Salesópolis municipality. velopment conditions under the Onda Lim- eight production 3ª Etapa (2010 - 2016) Such Information is available in the study called “A Water Quality Por- pa (Clean Wave) Program. As the greatest systems due to trait and the Partial Evolution of the Project Tietê Impact Indicators”, intervention in environmental sanitation on rd the untreated Sewage Collection Collected Sewage Treatment Workd of 3 Phase released in 2014 by the NGO SOS Mata Atlântica Foundation. the Brazilian coastline, the program is mo- water collect 2010 2016 2010 2016 According to this report, in the Greater São Paulo “investments ving up in terms of reaching universal sewa- quality, treatment 39% in basic sanitation have turned 18 collection points distributed in ge services in the Santos coast region and process completed streams and small rivers inside São Paulo, from a very bad condi- north coast municipalities. optimization tion—completely dead rivers—to bad, regular or good condition. The works initiated in 2007 have alre- and the 84% 87% 68% 84% implementation In the entire basin area, the expansion of the sewage collection ady demanded investments totaling R$2.1 36% of new treatment under execution network and the volume of treated sewage have resulted in an im- billion to projects and the expansion of the technologies and proved water quality”. following: network and sewage connection, products +1.5 million + 3 million 25% This progress also refl ects on the actions taken under the program trunk collectors and pumping and treatment people benefited people benefited bidding Córrego Limpo (Clean Stream) Program implemented in 2007, by a par- stations. In addition to our own funds, we tnership with the Municipal Executive Power. Sabesp is responsible have obtained fi nancing from JICA, the Ja- for identifying illegal discharges, improving the stream area’s sewage panese development agency, and the Go- ba river, which was benefi ted with ETEs Paul large-scale initiatives, such as the Tietê Project, the largest environ- systems, and cleaning the margins. The municipal government is res- vernment Severance Indemnity Fund for Em- D’Alho in Boituva and Bairro do Porto in Capela mental sanitation program in Brazil. Implemented in 1992, the project ponsible for registering households in housing programs. From 2007 to ployees (FGTS). Just in 2014, R$187 million do Alto – it contributes to reducing pollution in combines actions in 27 municipalities of the Greater São Paulo. the end of 2014, Sabesp invested R$144 million in this program, resulting were invested in the program. the Tietê river, which is the State’s largest river. Currently it is in its third phase, whose purpose is to expand the in the decontamination of 148 streams. Approximately 2.2 million people In the Santos coast region, the program is However, it is worth noting that the water sewage collection index from 84% to 87% and sewage treatment were directly benefi ted, within an area of approximately 180 km². in its supplemental phase, started in Novem- bodies pollution also originates from indus- levels from 68% to 84% within the RMSP. This phase requires to- While works have been executed, Sabesp promotes forums of ber 2013, subsequent to the fi rst phase. The trial process, waste disposed on soil that tal investments of approximately US$2 billion, with financing from community participation aiming at raising the awareness and inte- completion of the fi rst phase (including the ends up carried by rainwater into the rivers the Inter-American Development Bank (IDB), BNDES and CEF. grate area residents into the actions to keep clean the margin of supplemental phase) with total investments (diffuse pollution), disorderly land use and oc- Out of this amount, R$1.55 billion have already been disbursed, of these streams. Among these actions, the community is trained to par- estimated at R$780 million will allow an increa- cupancy, and the illegal disposal of sewage which R$497 million in 2014. ticipate in the water quality measurements and encouraged to fi ght se from the current 70% to 88% of the sewage With Campo in rainwater. Thus, it is essential that socie- Initiated in 2010, 39% of the works planned for this stage have against the irregular waste disposal. service indicators in Santos coast region, by Limpo and Várzea ty raises its awareness on the importance already been completed, 36% are in progress and 25% are in bi- In 2014, Sabesp invested R$14 million in the complete decontami- completing another 33,000 connections. Sin- (2013) and of correct garbage disposal and connecting dding process. When completed, these works will benefit ano- nation of two large urban streams, benefi ting 320,000 people, besides ce implementation, the program has already Sabesp is Itupeva (2014) houses to the sewage network and that local ther 1.5 million people with sewage collection and 3 million city the conservation of the already depolluted 146 urban streams and the expanded the sewage collection from 53% to committed to ETEs, Jundiaí authorities keep on cleaning their cities and residents will have their sewage treated. actions to initiate the decontamination of another 18 water bodies. 70%, besides 100% treatment of the sewage the pursuit of River water innovation and regained human inspecting irregularities. The current stage supplements the actions taken in the fi rst and We should still emphasize that the Tietê Project actions also help to collected. The program’s goal is to reach 95% second phases, from 1990 to 2010, when the large sewage treatment reduce the pollution generated by these streams. In 2013, starting the and 100%, respectively. technological consumption alternatives for quality station’ construction, the installation of outfall sewer, ducts, collec- program’s fourth phase, we expected to fully or partially depollute On the north coast, the works initiated in proper disposal Metropolitan Region of São Paulo (RMSP) ting networks, interceptors and connections to the networks ena- another 20 major streams by the end 2014, with investments estimated 2008 will increase the region’s sewage col- of solid waste bled the collection to 15.8 million people and treatment of collected at R$100 million. However, due to this drought’s effects and conse- lection index from 36% to 85% by the end of from sanitation Irregular and disorderly settlements, illegal sewage to more than 8.5 million RMSP inhabitants. quences in the southeast of Brazil and the diffi culty faced by the mu- 2016 when approximately R$510 million will services sewage disposals, environmental degradation Sabesp has been structuring the fourth and last phase involving nicipal government to remove and reallocate low-income households, be invested in the region, with own funds of nature conservation areas , defi cient ins- investments estimated at US$2 billion. It will include large, complex the goals had to be revised. and BNDES and CEF’s fi nancing. Until 2014, pections by the local government, and high works in São Paulo downtown and the network expansion to the re- In 2014 we started implementing in Arujá and signed a coope- the program has already demanded R$157 population concentration make RMSP a highly gularized, low-income suburbs. However, due to the water crisis and ration agreement with the municipal government of Ribeirão Pi- million, of which R$12.8 million in 2014, to complex area to expand the the sanitation ser- the need of prioritizing investments in water, the estimated budget res. Additionally, the Bragança Paulista, Ferraz de Vasconcelos, expand collection networks, connections, vice. Tackling this set of negative factors, visu- for this project is under revision. Poá, Suzano, Osasco, Taboão da Serra and Barueri municipalities rising mains and pumping stations and the ally represented by the highly polluted rivers In addition to a healthier environment, the actions result directly are analyzing this program’s feasibility. Our goal is to have decon- conclusion of two ETEs in São Sebastião that crossthe metropolitan region , requires in environmental benefi ts. The greatest example is the expressive re- taminated approximately 200 streams in the metropolitan region (Una/Engenho and Baleia/Sahy). 42 43 Onda Limpa Program “Connect to the Network Program” G4-EC8 This program was rolled out in January 2012 and its Since 2007, were invested purpose is to subsidize sewage connection costs to low-income Greatest households. This is a way to stimulate the connection of more intervention R$2.1 billion households to the public sewage network and thus increase the in (R$187 million volumes sent for treatment and decrease of disposal of in na- in 2014 only) environmental • network expansion tura sewagein the water bodies. The costs are paid by the São sanitation on • sewage connections Paulo State government and Sabesp at the ratio of 80% and 20%, • trunk-collectors respectively. We are also responsible for works, which cover the Brazilian • pumping stations coastline • treatment stations municipalities in our entire area of operation--in the São Paulo metropolitan area, in the interior and coastline. In eight years, the goal is to make household adjustments and Santos coast connect 192,000 households with income of up to three mini- 33,000 mum wages, with total investments of R$349 million. By Decem- region implemented ber 2014, more than 21,000 connections were completed in 110 Investiment of connections municipalities in São Paulo state, with and investment of R$67.6 R$780 million million. We estimate that at the end of the Se Liga na Rede pro- st (1 phase) * – Goal gram 800,000 people will be directly benefited and approximately Before Onda Limpa 40 million São Paulo inhabitants will be indirectly benefited from Current indexes 53% cleaner rivers, streams, and water sources.

To the end of Sewage collection: 70% 1st phase*: Sludge Disposal 88% Sewage The disposal of solid waste originated from sanitation services Treatment: make up a complex equation, consisting of legal, environmental 100% Program Goal: and operational variables. To this regard, we are committed to Universalization seek innovation and technologic alternatives that would contri- bute to minimization, beneficial use and the appropriate final dis- posal of sludge volumes. From a total of R$23.4 million invested in research over the Investments past three years (R$10.7 million in 2014 alone), part was exclu- North sively allocated to developing related to sludge use, starting at From the begining of the coast sanitary landfill coverage material, then composting and drying Program on thePrograma no via solar radiation to finally its use in civil construction. The- North coast (2008) se researches are in partnership with the Brazilian Innovation until 2013: R$144.2 million Agency (FINEP) and Fapesp (São Paulo State Research Sup- port Foundation). In early 2014, documentation was filed with the Ministry of Agriculture to approve the registry which allows the daily use of 70 tonnes of sludge generated by the Lavapés ETE, in São José In 2014: dos Campos, in agriculture. We expect to obtain this permit in R$12.8 million 2015. For the Barueri sewage treatment station , the largest one in Latin America, planning is focused on the installation of sludge drying units and we have studies on how to use the remainder biogas in sludge digestion. With respect to water treatment, Sabesp recorded an approxi- Praia Grande Outfall • Collection network expansion mate 30% decrease in sludge generation at our eight production being transported • new connections • booster lines and stations systems over the past five years. This was possible due to the for installation; work • ETE Una/Engenho conclusion untreated water collected quality, treatment process optimiza- is part of the • ETE Baleia/Sahy conclusion tion, and the implementation of new technologies and products. Onda Limpa Program (both in São Sebastião) Concurrently, over the past 12 years, we have gradually reduced the chemicals used in water treatment in the Greater São Paulo area, with positive environmental effects. 44 45 PURSUING GROWTH while maintaining period, ARSESP authorized to apply the ta- riff repositioning of 6.4952%. a sustainable fi nancial-economic stability Despite our efforts to reduce the de- mand for water, in January 2015, we still was an especially challenging goal in 2014. recorded an increase in consumption by few customers. Accordingly, to reinfor- The severe drought which, since the end of 2013, ce the incentive to reduce consumption, ARSESP approved and we implemented has been beleaguered the region where a contingency tariff mechanism, which consists of additions to water and sewage bills for customers1 whose monthly water we operate led us to take indispensable consumption exceeds the average monthly consumption seen between February 2013 measures to overcome the adversities and January 2014, the same used for the incentive program to reduce water con- we have been facing. sumption, under the following conditions: • 40% when consumption exceeds up to 20%; The discount we have granted to customers to reduce water • 100% when consumption exceeds consumption and other actions that the Company has taken to more than 20%. tackle the water crisis resulted in a decline in revenue and in yet The effects of the actions taken over the more restrictive expenses, in addition to the need to reschedule water billed volume are shown in the Financial- our investments. -Economic Management item of this Report. FINANCIAL-ECONOMICAL To preserve our water resources stocks, in February 2014 the In March 2015, considering the adver- Company implemented an incentive program to reduce consump- se conditions imposed by the water crisis, tion based on a bonus whereby those customers served by the the Company filed with ARSESP, a request Cantareira system, based on the monthly average consumption for extraordinary revision, as provided for MANAGEMENT seen between February 2013 and January 2014, who monthly re- in the Final Technical Note RTS/01/2012 – duce water consumption by 20% would qualify for a 30% discount Detailed Methodology for SABESP’s Tariff in their water and sewage bills. Revision Process – First Tariff Cycle. In March, the program was extended throughout the São Pau- Additionally, regarding regulatory is- lo Metropolitan region and promptly to the Piracicaba, Capivari sues, an adaptation of the internal proces- and Jundiaí Rivers water basin region located in the Cantareira ses to pass on to customers the regulatory system’s area of influence. Originally scheduled to be effective and inspection fee, equivalent to 0.5% of for 7 months, it should remain effective up to December 2015. revenue, net of COFINS and PASEP deri- With a view to encourage the population which had already ved from services provided to regulated been reducing consumption without qualifying for the benefit in municipalities, was completed in 2014; ho- October 2014, we decided to set new ranges of bonuses and the following discounts have been granted: • 10% for customers reducing from 10% to 15%; reduction of more than 20% discount • 20% for customers reducing from 15% to 20%; 30% Reduction • 30% for customers reducing more than 20%. reduction from of water 15% to 20% discount In April 2014, after several discussions with public participa- consumption 20% tion since 2011, Sabesp’s Tariff Revision process has been con- reduction from cluded. On this date, we were authorized to apply the tariff repo- 10% to 15% 10% discount sitioning index of 5.4408%. increase of addition However, in order to not harm the stimulus offered by the in- Increase up to 20% on water bill centive program to reduce water consumption, by the Company’s in water 40% decision, the implementation of tariff repositioning only became consumption increase of of addition over 20% on water bill effective in December 2014, so that to offset the postponement 100%

Pumping structures of Consolation reservoir, 1 – Customers with fi rm demand agreement, although they are not included in the bonus program, they are exempted from complying with consumption contracted in downtown and are subject to the collection of contingency tariff, if consumption increases. Customers with water consumption equal to or lower than 10m3, hospitals, fi rst-aid São Paulo clinics, nursing homes, police stations, prisons and centers of Fundação CASA (social and educational treatment center for adolescents) are exempted. 47 Investment Plan wever, the application thereof will occur (R$ million) Sabesp’s management approach over the years has resulted 108 months, with a 36-month grace period, and only at the appropriate time. in a solid financial-economic performance, which was decisive bears financial charges equivalent to TJLP Also, we should emphasize that the trans- 3000 2,900 to absorb the effects of 2014’s water crisis. (long-term interest rate) + 1.76% p.a. Sabesp’s 1 2,824 fer of legal charge to customers residing in 437 2,706 2,707 This financial-economic performance was reflected in the Additionally, BNDES subscribed and management 662 approach over the Municipality of São Paulo, as set forth in 760 717 gradual increase in credit risk rating over the last years. Never- paid-in 13 debentures out of the 42 un- the years has the municipal legislation, under the coope- 2500 2,361 theless, due to the financial impacts of the water crisis, there der the 3rd series of the 18th issuance of resulted in a ration agreement and services agreement 256 544 was a change in the rating from neutral to negative in 2014, as debentures, in the total amount of R$35.8 executed with São Paulo State and Municipal shown in the graph of this page. million. The remaining balance is schedu- solid financial- 1,255 economic governments, and as provided for by Arsesp 2000 587 led to be subscribed by 2016. Additional 1,255 1,427 performance, Resolution 407/13, is still suspended. 1,919 information on loans and financing are which was Still regarding actions to tackle the wa- Loans and Financing available (only in Portuguese version) in decisive to 1500 ter crisis effects, we cut R$1.1 billion in 1,518 the Company´s Reference Form at www. absorb the effects of 2014’s 2014 cash basis budget, so as to reduce In 2014, the Company obtained loans and financing in the sabesp.com.br/investidores, menu Infor- water crisis the pressure on cash in this period and 1000 amount of approximately R$382 million to make the investments mações Financeiras e Operacionais – For- maintain the Company´s liquidity at an 907 planned for the 2015-2019 period. mulário de Referência e IAN. adequate level. 711 With respect to investments, despite Brazilian Federal Savings Bank – CAIXA: In June 2014 we entered 500 563 some changes in initial plans and resche- into agreements that totaled approximately R$320.8 million. The- Capital Markets duling to face the water crisis, we were se agreements were part of PAC 2012-2013 and PAC 2013-2014 able to execute the original Capex plan. selections made by the Ministry of Cities, intended for the per- In June 2014, the Company made the In 2014, we invested R$3.2 billion, as 2015 2016 2017 2018 2019 formance of works under Tietê Project, the Metropolitan Water 19th issuance of debentures in the total shown in the table below: Water Program and water supply and sewage treatment works in the amount of R$500.0 million, in a single se- Municipalities of Hortolândia and Itatiba. The loans are repaya- ries, maturing in June 2017, pegged to the Sewage Collection ble within 24 years, with a four-year grace period, subject to in- CDI rate plus an interest rate ranging from Sewage Treatment Investment Track Record terest rates indexed to the TR (benchmark interest rate), plus 6% 0.80% to 1.08% per year. The resulting pro- per year and a management fee of 1.4% p.a. and a risk rate of ceeds intended for the payment of financial The table below shows the investments 0.3% p.a. commitments maturing in 2014 and 2015. made in 2014, broken down by segment Indebtedness Level Additional information on debts with the and region (R$ million current): Brazilian Development Bank (BNDES): In June 2014, we entered into capital markets are available (only in Portu- Most of the Company´s debt (around 60%) was raised with official an agreement involving approximately R$61.1 million intended for the guese version) in the Company´s Reference agencies of local and foreign government, and multilateral organi- works under the Metropolitan Water Program in the Municipality of Form at www.sabesp.com.br/investidores Water Sewage Total zations, at low costs and for long terms. The remaining derives from Santana de Parnaíba. This agreement was part of PAC 2013-2014 se- menu Informações Financeiras e Operacio- São Paulo funds raised in the local and international capital markets, prefera- lection made by the Ministry of Cities. This financing is repayable within nais – Formulário de Referência e IAN. 833.8 1,174.2 2,008.0 Metropolitan Region bly intended for debt management purposes. Regional Systems At the end of 2014, our total debt was approximately R$10.8 472.9 729.7 1,202.6 (inland cities and coast region) billion, of which 40.3% was denominated in foreign currency. Most Total 1,306.7 1,903.9 3,210.6 of the foreign-currency denominated debt was raised with interna- tional financing organizations, with long-term maturities, a repay- AAA Note: Commitments assumed with program contracts brAA+ Aa1.br ment schedule diluted over a long period of time, and bearing low AA+ (R$115.6 million) are not included AA(bra) AA interest rates. In 2014, we repaid R$529.5 million of our debt. National Scale brAA- AA-(bra) Between 2008 and 2013, with the acceleration of investment, AA- brA+ A+(bra) A+ For the period between 2015 and 2019, the total debt ratio adjusted by the adjusted EBITDA, stood stable brA the Capex plan was adjusted aiming at at around 2.5 times, since the total indebtedness level increase A brA- increasing investments in water over the consistently with the Company´s operating cash generation level. A- Standard and Poor’s next years and thus, expanding the water However, in 2014, the Company´s indebtedness level increased BBB+ availability and safety in the São Paulo me- 3.64 times, due to the adverse effects of the water crisis, espe- BBB Baa3 investment grade (negative outlook) tropolitan region. Between 2015 and 2019, cially on EBITDA, and not due to a disproportionate rise in debts. BBB- BB+ we expect to invest approximately R$13.5 We have set certain limits to make debt agreements, and the ratio BB+ Fitch Global Scale BB (negative outlook) billion, as shown in the following chart2: should not exceed 3.65 times. BB BB- BB- BB- BB- B+ B+ B+ 1 – Refers to the amount corresponding to 7.5% of revenue earned with services rendered in city of São Paulo, net of COFINS, PASEP and default of B Moody’s municipality’s taxes that Sabesp has been transferring to the Municipal Fund of Environmental Sanitation and Infrastructure since the signature of the B- agreement with the municipality of São Paulo, in June 2010. 2 – For additional information about our investment projects and emergency works to deal with the water crisis, check the chapter Confronting the Oct-95 Jul-98 Apr-01 Jan-04 Oct-06 Jul-09 Apr-12 Dec-14 Sep-17 Water Crisis (page 28). 48 49 Stock Market after the deductions required or permitted under the law, and can be Related Parties In 2014, net operating revenue remai- paid as interest on shareholders’ equity. ned steady, totaling R$11.2 billion, with a Although the tariff adjustment process, In 2014, Sabesp paid R$537.5 million in dividends as interest on sha- On March 18, 2015, the Company, São Palo State government and slight decline of 0.9% over 2013. eagerly awaited by the market, has been reholders’ equity for FY 2013, corresponding to roughly R$0.78633094301 the Water and Electricity Department (DAEE), and the Sanitation and completed in April 2014, Sabesp’s shares per common share and a dividend yield of 3.0%. Water Resources, as intervening party, signed a Term of Agreement, in Net operating revenue track record over the year reflected the unpredictabili- In 2014, the Board of Directors approved the proposal for the pay- order to adjust the undisputable amount of debts related to pension and (R$ billion current) ty of the effects of the severe drought that, ment of interest on shareholders’ equity totaling R$252.3 million, or retirement supplementary benefits referred to by São Paulo State Law 12.0 11.3 11.2 since the end of 2013, has affected the re- R$0.36913009306 per common share and a dividend yield of 2.2%, to be 4819, of August 26, 1958, paid by the Company and not reimbursed by the 10.7 gion where the Company operates. paid within up to 60 days after the Annual Shareholders’ Meeting where State. The current amount of the agreement is R$1.01 billion, out of whi- 10.0 9.9 Thus, shares and ADRs depreciated the 2014 accounts will be submitted for approval. ch R$696.2 million relating to the principal amount and R$316.0 million 9.2 by 35.7% and 44.5% over 2013, closing the relating to inflation adjustment to the principal through February 2015. In BM&FBovespa, 8.0 Sabesp’s shares year at R$17.01 and US$6.29, respectively. For details, see Note 31c to the financial statements. handled an During the same period, the Ibovespa (São Debt of Municipalities Served on Wholesale Basis annual financial Paulo Stock Exchange index) dropped by 6.0 volume of R$7.5 2.9% while the Dow Jones appreciated by The municipalities of , Mauá and Santo André are Financial-Economic Performance billion in 2014, 7.5%. As a result of this performance, the served with treated water on wholesale basis by Sabesp, however, 4.0 and participated Company´s market value, which, in 2013, currently, Guarulhos does not pay the bill, Mauá pays around 2% In 2014, the Company disclosed a net income of R$903.0 million. in all sessions; was R$18.1 billion declined to R$11.6 billion of the bill and Santo André nearly 15% of the account. The unpaid 2.0 whereas in the in 2014. The book value per share was amounts are claimed in court and Sabesp has been receiving favo- US market, the Net Income Track Record trading volume R$19.46 as of December 31, 2014. rable court decisions. (R$ million current) was US$5.7 billion Sabesp’s shares are traded in 100% of In addition, the municipality Mauá also owes to Sabesp the 2010 2011 2012 2013 2014 2,000 1,924 in 2014, stable BM&FBovespa trading sessions and han- investments made by the Company and not indemnified upon the 1,912 compared to 2013 dled an annual financial volume of R$7.5 resumption of services by referred municipality. Sabesp filed a la- 1,630 billion in 2014. In the US market, the Com- wsuit against Mauá and the courts sentenced this municipal go- Gross operating revenue declined by pany closed the year with 169.9 million vernment and SAMA (Mauá’s municipal water and sewage com- 1,500 R$634.6 million, or 6.7%, compared to outstanding ADRs. The annual financial pany) to pay the debt. A final and unappealable court decision was 2013, basically due to the adoption of the volume traded at NYSE in 2014 remained in issued and Sabesp started the court-ordered collection; however, 1,381 Water Consumption Reduction Incentive line with 2013, at US$5.7 billion. the Municipality of Mauá filed an action for relief from judgment in Program since February 2014 and accor- In 2014, Sabesp continued to be monito- an attempt to annul the decision favorable to Sabesp. The lawsuit dingly, a decrease of 2.2% in water and red by the market financial institutions. is pending judgment. 1,000 903 sewage billed volume, with an impact not Referring to the municipality of Diadema, which also had debts offset against the tariff adjustment of 3.1% related to the failure to pay water bills at wholesale and resumed applied since December 2013. The tariff Dividends and non-indemnified assets, in March 2014, Sabesp assumed the repositioning index of 6.5%, applied in De- direct rendering of water supply and sewage services, as part of 500 cember 2014, has impact on revenue only Under our bylaws, common shares are en- the judicial settlement to solve the debts. For details, see Note 9 to as of January 2015. titled to mandatory minimum dividends corres- the financial statements. In 2014, the costs of products and ser- ponding to 25% of profit for the year, obtained vices rendered, administrative and selling expenses, and construction costs increa- 2010 2011 2012 2013 2014 sed by 13.6% (R$1.1 billion). If we exclude

Water and sewage billed volume(1) by user category (millions of m3)

(1) Water Sewage Water + Sewage Water and sewage billed volume by region (millions of m3) 2013 2014 % 2013 2014 % 2013 2014 % Water Sewage Water + Sewage Residential 1,565.6 1,548.6 (1.1) 1,299.1 1,292.7 (0.5) 2,864.7 2,841.3 (0.8) 2013 2014 % 2013 2014 % 2013 2014 % Commercial 175.4 172.6 (1.6) 163.4 162.4 (0.6) 338.8 335.0 (1.1) Metropolitan Region 1,206.9 1,172.4 (2.9) 1,029.2 1,005.4 (2.3) 2,236.1 2,177.8 (2.6) Industrial 39.4 38.9 (1.3) 44.4 43.0 (3.2) 83.8 81.9 (2.3) Regional Systems(2) 628.1 639.4 1.8 520.2 532.6 2.4 1,148.3 1,172.0 2.1 Public 54.6 51.7 (5.3) 42.5 39.9 (6.1) 97.1 91.6 (5.7) Total retail 1,835.0 1,811.8 (1.3) 1,549.4 1,538.0 (0.7) 3,384.4 3,349.8 (1.0) Total retail 1,835.0 1,811.8 (1.3) 1,549.4 1,538.0 (0.7) 3,384.4 3,349.8 (1.0) Wholesale 299.0 256.8 (14.1) 29.7 24.2 (18.5) 328.7 281.0 (14.5) Wholesale 299.0 256.8 (14.1) 29.7 24.2 (18.5) 328.7 281.0 (14.5) Total 2,134.0 2,068.6 (3.1) 1,579.1 1,562.2 (1.1) 3,713.1 3,630.8 (2.2) Total 2,134.0 2,068.6 (3.1) 1,579.1 1,562.2 (1.1) 3,713.1 3,630.8 (2.2)

(1) Unaudited (1) Unaudited (2) Composed of the coast and interior regions 50 51 the effects of the construction cost, the at www.sabesp.com.br/investors, Operational and External Audit 2013 and the Control Objectives for Informa- increase was 11.3%. Costs and expenses Financial Information item in the top menu. tion and Related Technology (COBIT). represented 82.9% of net revenue in 2014 Adjusted EBITDA decreased by 27.2% from R$4.0 billion Sabesp complies with the principles of independence with respect Annually, the evaluation of internal from 72.3% in 2013. For additional infor- in 2013 to R$2.9 billion in 2014, and the adjusted EBITDA to services provided by the external auditor, namely: an auditor can- controls is revaluated considering both mation on the breakdown and changes in margin reached 26.0% from 35.4% in 2013. If we exclude the not audit his or her own work; an auditor cannot function in the role eventual new risks associated to the pre- costs and expenses, see our Press Rele- effects of revenue and construction cost, the adjusted EBI- of management, and an auditor cannot serve in an advocacy role for paration and disclosure of the financial Sabesp internal ase available on the Company´s website TDA margin ends up in 34.4% in 2014 (44.6% in 2013). his or her client. Deloitte Touche Tohmatsu Auditores Independentes is statements and possible significant chan- controls are the auditor for Sabesp since the review of the quarterly financial infor- ges in computer processes and systems. evaluated on mation as at September 30, 2012. In this period, it has audited financial The controls, which are tested by the structured and statements, quarterly financial information, and financing projects Company’s independent unit, cover the pro- systematic basis In 2014, In 2014, the fees paid for these services by Sabesp totaled cedures about the accuracy of accounting since 2005 net operating Adjusted EBITDA and Adjusted EBITDA Margin Track Record revenue remained R$1.2 million, of which 93.9% corresponds to the audit of the fi- records; the preparation of the financial sta- steady, totaling 4.0 nancial statements. Deloitte Touche Tohmatsu Auditores Inde- tements in accordance with effective stan- R$11.2 billion, pendentes does not audit any of our investees. While providing dards; and the proper authorization of the 3.6 audit services, the external auditors did not provide non-audit transactions related to acquisitions, use and with a slight 3.4 decline of 3.2 services to the Company. disposal of the Company’s assets. 0.9% over the 2.9 Legend The review on the effectiveness of in- previous year ternal control environment in 2013, as Internal Controls prescribed by Section 404 of Sarbanes- Adjusted EBITDA (R$ billion current) -Oxley Law, was completed in April 2014 44.7% 44.6% The internal controls are evaluated on a structured and systematic and no material deficiencies were identi- 43.2% 43.0% basis since 2005, based on the parameters established by the Commit- fied, similarly to previous years. The 2014 34.4% Adjusted EBITDA Margin tee of Sponsoring Organizations of the Treadway Commission (COSO) tests will be completed in April 2015.

34.9% (1) 34.0% 33.6% 35.4% 26.0% Adjusted EBITDA Margin Reconciliation of Adjusted EBITDA excluding revenue and (Non-accounting measurements) construction cost 2014 2013 2012 2011 2010 Profit 903.0 1,923.6 1,911.9 1,380.9 1,630.4 2010 2011 2012 2013 2014 Finance income 635.9 483.2 295.7 633.0 378.8 Depreciation and amortization 1,004.5 871.1 738.5 768.7 552.2 Income tax and social contribution 371.8 732.0 635.7 498.1 662.7 G4-EC1 Accumulated economic value 2 (R$ thousand) Other operating income (expenses), net 3.5 (3.3) 23.2 90.3 (1.6) Adjusted EBITDA 2,918.7 4,006.6 3,605.0 3,371.0 3,222.5 2014 2013 2012 Adjusted EBITDA margin 26.0 35.4 33.6 34.0 34.9 A – Direct Economic Value Generated 12,369,246 12,436,533 11,820,477 Construction revenue (2,918.0) (2,444.8) (2,464.5) (2,224.6) (2,130.6) a Revenue 12,369,246 12,436,533 11,820,477 Construction cost 2,885.5 2,394.5 2,414.4 2,177.0 2,081.1 B- Economic Value Distributed 10,005,530 9,737,238 9,410,019 Adjusted EBITDA less revenues and construction cost 2,856.2 3,956.3 3,554.9 3,323.4 3,173.0 Operating expendituresb 5,902,839 5,172,151 5,113,183 Adjusted EBITDA margin less revenues and construction costs 34.4 44.6 43.0 43.2 44.7 Employee salary and benefitsc 2,132,245 1,932,739 1,735,434 1 – The Adjusted EBITDA (“Adjusted EBITDA”) corresponds to the net income before: (i) depreciation and amortization expenses; (ii) income tax and social Payments to shareholdersd 842,286 1,063,581 1,158,562 contribution (federal tax on income); (iii) financial results and (iv) other net operating expenses. The Adjusted EBITDA is neither a measurement of financial

e performance according to the accounting practices adopted in Brazil, the IFRS – International Financial Reporting Standards or USGAAP (accounting principles Payments to governments 1,128,159 1,521,437 1,364,646 generally accepted in the United States), nor should be considered individually or as alternative to the net income, as measurement of operating performance, or Investments in communityf 32,102 47,330 38,194 alternative to the operational cash flows, or measurement of liquidity. The Adjusted EBITDA does not have a standardized meaning and the Company’s definition of Adjusted EBITDA may not be compared to those adopted by other companies. The Company’s Management believes that the Adjusted EBITDA provides a useful Accumulated Economic Value (A-B) 2,363,716 2,699,295 2,410,458 measurement of its performance, which is broadly used by investors and analysts to assess performance and compare peers. Other companies may calculate the Adjusted EBITDA different from our means. The Adjusted EBITDA is not an integral part of the financial statements. Notes The Adjusted EBITDA aims at reporting an operational economic performance index. Sabesp’s Adjusted EBITDA corresponds to the net income before net financial (a) Composed of all operating, financial income and other operating income, monetary variations, foreign exchange gains and revenue related to the expenses, income tax and social contribution (federal tax on income), depreciation and amortization and other net operating expenses. The Adjusted EBITDA is not a construction of assets. financial performance index recognized by the Brazilian Corporate Laws’ methodology and should not be considered individually nor as an alternative to net income (b) Composed of operating costs and expenses, such as: general supplies, treatment supplies, services, electric power, general expenses ( excluding as an operational performance index, nor as an alternative to operational cash flows or as liquidity index. Sabesp’s Adjusted EBITDA works as an overall economic expenses related to the use of water and meals/snacks) and employee training courses. Expenses related to depreciation and amortization and write-off of performance index and is not affected by debt restructuring, fluctuations in interest rates, changes in the tax burden or levels of depreciation and amortization. credits were excluded. As a result, the Adjusted EBITDA works as an adequate instrument for a regular comparison of the operational performance. In addition, there is another formula (c) Employee salary and benefits – Composed of payroll and charges (excludes courses and training), meals/snacks and amounts paid to governmental institutions (employee charges and taxation). to calculate the Adjusted EBITDA which is adopted in clauses of few financial commitments. The Adjusted EBTIDA allows a better understanding not only of the (d) Payment to shareholders – Composed of interest on shareholders’ equity /additional dividends proposed, financial expenses paid such as interest rates, fines operational performance but also of the capacity to meet the Company’s obligations and raise funds for investments in capital goods and working capital. However, and other financial expenses (excluding income tax over remittance abroad), monetary and foreign exchange variations paid. Retained earnings were excluded. the Adjusted EBITDA has limitations preventing it from being used as profitability index, because it does not take into account the costs resulting from Sabesp’s (e) Payments to governments – Composed of Cofins/Pasep over operating and non-operating income, tax expenses, income tax and social contribution activities or other costs that may considerably affect its profit, such as financial expenses, taxes, depreciation, capital expenditures and other related charges. (excluding deferred taxes), income tax over remittance abroad and use of water. 2 – Other net operating expenses mainly refer to the write-offs of property, plant and equipment, provision for intangible assets loss, loss related to economically (f) Investments in community – Composed of institutional support, support of events, reception, exhibits and tax incentives distributed in the areas of unfeasible projects, minus revenue from sale of property, plant and equipment, public notices sales, indemnities and refund of expenses, fines and sureties, property education, culture, health, sports, fight against hunger and food safety. lease, reused water, Pura and Aqualog’s projects an services. 52 53 SABESP’S ENVIRONMENTAL management, a mixed model, and the ISO 14001 stan- dard will be kept at the certified stations, ruled by the guidelines proposed in its Environmental and may be expanded according to the Business Units’ strategy, while for other Policy, is inherent to the rendering of sanitation stations, an own model will be adopted (SGA-Sabesp). services and the essence of its businesses. Until March 2015, Sabesp had 51 sta- tions certifi ed by ISO 14001. Considering Focused on consolidating the environmental culture, the new scenario presented, the scope of certifi cations was reviewed and Sabesp the company prioritizes the in-house and external obtained recommendation for ISO 14001 re- -certifi cation of 35 stations, as of April 2015. The annual dissemination of the knowledge and experiences greenhouse gas emissions Climate changes and greenhouse gas inventories related to the good environmental practices. emission management as well as the promotion of Currently, the climate changes represent operational These are actions included in the corporate environmental manage- one of the great global challenges to be improvement and ment programs, which rely on the involvement of employees, com- faced, and sanitation is one of the sectors control actions of GHG emissions munity and partnership with non-governmental organizations. highly impacted by the effects of climate are initiatives G4-EN31 In 2014, R$29.8 million were allocated to investments change and the extreme events related that expand and expenses related to environmental protection, directly linked thereto. Sabesp, aware of its responsibili- environmental to the development and implementation of corporate environ- ty and of the need of playing its role within awareness mental management programs, as well as the Rational Water Use this context, has been advancing in the de- Program – Pura. velopment of its Greenhouse Gas Emission Other investments and expenses related to environmental pro- Corporate Management Program – GHG, tection are included in the total amount of operating expenses in line with the guidelines of the Climate and investments reported herein. Actions and programs associa- Change State Policy (PEMC) which main ENVIRONMENTAL SANITATION IN PURSUIT OF ted with water and energy consumption, as well as the genera- objective is to reduce and manage these tion of effluents and waste are reported in the chapters referring gases emissions. to operation, given the strict relation of these environmental as- The annual GHG emissions inventories pects with our business. as well as the promotion of operational improvement and control actions of GHG emissions are important work fronts of this SUSTAINABILITY Environmental Management System and ISO 14001 Certifi cation Company’s initiative. These guidelines are Aiming at improving the operating management, in 2009, Sa- besp established a program to gradually implement an Environ- mental Management System (SGA) at the sewage treatment sta- ENVIRONMENTAL MANAGEMENT SYSTEM tions (ETEs) and water treatment stations (ETAs). Approximately R$30 million were invested between 2009 and 2014 to improve the management requirements and stations’ infrastructure, offering R$30 MILLION investment, between 2009 and 2014 greater operating safety to minimize risks, accidents and genera- tion of environmental liabilities, besides stimulating the develop- ment of preventive actions. This initiative reinforces the process of changing the culture 95 implemented under development at the Company, which inserted the environ- 129 STATIONS { under mental management to the corporate guidelines. Structured based 34 implementation The Paraíba do Sul river on ISO 14001 standard, the SGA has already been implemented in was one of the 95 stations and is under phase of implementation in another 34, benefi ciaries of the totaling 129 stations. expansion of the In 2014, there was a strategic realignment of the program to 2024 Implementation target in all stations collection and treatment gain agility, observing the SGA implementation target in all sta- of sewage systems tions until 2024. As a result, in 2015, Sabesp will start adopting 55 G4-EN15/EN16/EN17 pruning remains, so that to transform the raw material, high in Besides the reserves since 1990, Sabesp G4-EN11 Evolution of Greenhouse Gases Emissions at Sabesp phosphorus and nitrogen into an organic fertilizer appropriate has been maintaining two forest nurseries by scope, from 2007 to 2013 for agricultural use. Besides this aspect, the process uses solar Reserves inside protected areas to produce native species trees to conduct

GHG emissions (million ton C02e) energy and promotes more adequate processing of the mate- the riparian forest restoration and recovery rial under aerobic conditions and at the generation place, thus, projects nearby water sources supplying the 2.000 reducing by 80% the need of transportation and minimizing the metropolitan region of São Paulo – RMSP. generation of greenhouse gases by approximately 76 tonnes of One of them is installed at Jaguari dam of the CO e/month. Cantareira system, in the municipality of Var- 1.500 Scope 1 2 Morro Grande Reserve In 2014, for the 9th consecutive time, Sabesp participated in the (municipality of Cotia) gem, and the other at the Alto Cotia water In 2014, Sabesp CDP – Carbon Disclosure Project – Climate Change, an internatio- treatment station – ETA, in the municipality disbursed nal standardization and organization initiative through which the • Area: 10,700 ha of Cotia. R$40.7 million • Perimeter: 70 km 1.000 Scope 2 companies release their results on GHG emissions under inven- • Reservoirs: Graça and Pedro Beicht As regard the use permits and environ- as payment for tory, as well as other aspects of the climate change management. • Drainage basin of Pedro Beicht reservoir mental licensing, our operacional facilities water usage from • Alto Cotia Production System are currently under the Corporate Progra- rivers of Federal • Law n.1949/79 – M. Grande Forest Reserve. or State scope, 500 ms to Obtain and Maintain Water Resour- Scope 3 • Listed as historic place by Condephaat in 1981. concerning the Water resources management and water sources protection • Unesco (1994) declares it as São Paulo City Green Belt Biosphere ce Usage Right Permits and Environmen- basins of the Reserve. tal Licensing. We have filed use permit Paraíba do Sul G4-16 Sabesp is involved in and takes actions at several requests in the manager agencies for all river, rivers of 2007 2008 2009 2010 2011 2012 2013 levels of the Water Resources Management National System, water uses , many of which have already the Piracicaba, through the work of approximately 160 of its employees, from di- been granted and other are under analysis Capivari and fferent company units, under a corporate coordination. At the at the Water and Electricity Department Jundiaí, rivers Water Resources Management National System level, we have a (DAEE) and the National Water Agency and Médio Tietê, seat in the Plenary Session of the National Water Resources Rio Claro Reserve (ANA). The Corporate Program associated (Salesópolis and Bertioga) Santos Coasta in agreement and they aim at meeting the Council (CNRH), and seats in three of this Council’s technical with the licensing of ETEs, ETAs and sewa- Region rivers, PEMC, both referring to the mapping of chambers; we are also represented in the Plenary Session and • Area: 16,200ha ge pumping stations (EEEs) is in progress, Alto Tietê and main sources of emissions, and the survey the technical chambers of the four federal committees with juris- • Drainage basin of Ribeirão do Campo, Guaratuba and Poço and estimated to be concluded until 2017. Baixo Tietê and dissemination of actions with poten- diction in the State of São Paulo. At the state level, we are repre- Preto reservoirs Concerning the new projects, the obtain- Sabesp is • Rio Claro Production System involved and tial reduction of GHG emissions sented in the seven technical chambers of the State Manage- • inserted in the Serra do Mar State Park (Decree nº 10.251/77) ment of licenses and grants is already in- takes actions at In 2014, Sabesp concluded the corporate ment Water Resources Council and we have a seat in the Plenary and declared as the Atlantic Forest Biosphere Reserve by cluded in their life cycle. several levels inventory of GHG of 2013, totaling 2,154,407 Session of the 21 state water basins committees and in technical UNESCO in 1994.

of the Water tCO2e, and the 7th inventory since 2007, ob- chambers, where we prioritize our participation to the Planning, Resources serving the principles and requirements of Sanitation and Water Use Billing chambers. Sabesp Environmental Management NBR ISO 14.064:2007 Part 1 standard and Also aimed at improving the management of water resour- Education Program – PEA National System, the GHG Protocol Brazilian Program. ces, we are monitoring the gradual implementation of the water through the work The trend seen in previous inventories use billing instrument. This is an important instrument to raise The Sabesp Environmental Education of approximately Capivari Farm 160 of its continues with sewage collection and tre- the awareness about the rational use, besides providing part (municipality of São Paulo) Program (PEA) is composed of a set of employees atment activities as the highest sources of of the resources necessary to the actions planned in order to actions and projects within the corporate GHG emissions, accounting for approxi- recover and preserve the water resources. Another issue dis- • Area: 2,900ha scope, concerned with changing the cul- • Perimeter: 12km mately 89% of total. The electricity’s sha- cussed by the Company has focus on the classification of water ture of employees and community. Curren- • Inserted in the Environmental Preservation Area– Capivari-Monos re is 10% and other activities account for bodies, that is the instrument whereby each basin committee • Guarapiranga production system tly, these actions seem to be more neces- nearly 2%. can set an arrangement per water quality goals linked to the sary in order to provide information to the Among the actions to reduce emis- main water uses. population, clarify doubts and emphasize sions, we point out the project developed Both these major management instruments are directly re- everyone’s collaboration to reduce con- in partnership with the municipal gover- lated to our business. In 2014, the Company disbursed R$40.7 sumption and rationally use water. nment of Botucatu and the Agribusiness million, paid to the State and the Federal Water Basins, for the Many of these projects came from lo- University of Unesp. We refer to the work use of the water from the Paraíba do Sul river, Piracicaba , Ca- São Francisco Reserve cal initiatives and then were expanded, (municipality of São Sebastião) called “Transforming Sludge into Organic pivari, and Jundiaí rivers basins, the Sorocaba and Médio Tietê conveying environmental concepts throu- Fertilizer and Decreasing the Generation rivers basis, the Baixada Santista basin, Alto Tietê river basin, • Area: 2,580,971.00 m2 gh theater, dance, music, mimes, drawing of Greenhouse Gases”, which won the and Baixo Tietê river basin. The collection for the use of water • Perimeter: approximately 7,144.40 m workshops, manuals, exhibits, forestation, 8th award Ozires Silva of Sustainable En- from other hydrographics basins in the State of São Paulo should • São Francisco stream stream, river and beach cleaning, moni- • São Francisco Production System trepreneurship , under the Environmental probably start in 2015-2016. • Inserted in the Serra do Mar State Park (Decree nº 10.251/77) tored visitation to treatment stations, and Entrepreneurship for Large-Sized Compa- Valuing the need of preserving water resources, the Company and declared as the Atlantic Forest Biosphere Reserve by educational lectures. They are mainly ai- nies category. owns and maintains areas inside preservation units, which we UNESCO in 1994. med at children and young adults, public The system foresees drying 22 tonnes/ inspect and monitor. These areas are also made available to Uni- and private school students, teachers, and day of sludge and add tree barks and tree versities and NGOs for social and environmental studies. low-income communities. 56 57 The initiatives include the Clubinho Good environmental practices in administrative areas used only wood products and byproducts Sabesp, the Rational Water Use Program of exotic origin or legal native origin in (PURA), the Sabesp Millennium Day, With a view to promoting the management of solid waste ge- the execution of the works and enginee- Navega São Paulo, Abraço Verde, Prol, nerated in Sabesp’s administrative activities, the Sabesp 3Rs ring services. Ecopoints, Sabesp 3Rs, Community Invol- In 2014, almost three Corporate Program is based on the concepts of Reduction, Re- Sabesp’s contractual instruments also vement, Sabesp of All Colors, Fish Repopu- -utilization and Recycling. Implemented in 2008, the program have clauses requiring the compliance lation, Green Life, Futurágua, Clean Beach, thousand lectures have started to be developed from the need identified of organizing with legal Federal, State and Municipal and Small Scientists, amongst others. In “ and standardizing the various selective waste collection initia- provisions, which interfere in the execu- 2014, we conducted almost 3,000 lectures been conducted at schools, tives carried out by different units of the Company. Therefore, a tion of works and/or services, pointing at schools, communities and businesses, business procedure was prepared which defines the guidelines out the compliance with the environmen- reaching an audience of 560,000 people. communities and businesses, to manage such waste and establishes the standard methodo- tal laws. We also organized nearly 2,000 monitored reaching an audience of logy for the selective waste collection implementation phases, The Outsourced Services Studies of visitations to our facilities to approximate- temporary storage and destination of waste managed by admi- the São Paulo State Government – Speci- ly 58,000 visitors. 560 thousand people. nistrative activities, pursuant to prevailing laws and in partner- fic Social and Environmental Instructions Many of the One of the projects is Futurágua, the ship with waste recycling cooperatives. are also applied to define its technical Environmental Education purpose of which is to raise the awareness G4-EN2 By means of Sabesp employees’ qualification and out- specifications. This study establishes the Program’s and transform 6 and 10-year old children sourced workers’ training, the program stimulates the adoption implementation of environmental actions projects – into multiplying agents of the water ratio- of responsible consumption and waste minimization habits, both by means of training of Contractor’s em- In 2014, through which include nal use. In partnership with schools and within the corporate environment and social life. In 2014, we ployees and awareness of all those invol- Vehicle Fleet music, theater, teachers, this project brings daily guidan- sent approximately 310,000 tonnes of solid waste generated by ved, especially pointed out in Technical forestation, Renewal Program, ce to raise children’s awareness towards Planting trees is another front benefiting environment, such administrative activities and trained nearly 250 employees for Specifications and obligations of Sabesp Sabesp furhter stream cleaning environment preservation. On the north as for instance, the project “A child is borne, Plant a Tree”. This the program’s management and monitoring. Since the inception and Contractor. etc. – came advanced in coast, approximately 1,600 primary school is a partnership between Sabesp and the Santa Casa de Miseri- of the Program, more than 1,655 tonnes of waste have already Under the perspective of managing the from local replacing its initiatives students of four cities in the region met the córdia in the municipality of Jales, which defined that for each been disposed appropriately from the social and environmental strategic post-consumption goods used, light vehicle and then were Clubinho Sabesp characters (Super H2O, child born, a tree is planted by families together with employees viewpoint, by training approximately 1,800 professionals among the Company plans, operates and controls fleet with Flex expanded Gotucho and Gota Borralheira) and visited of Santa Casa and Sabesp in the reforestation of Sabesp’s Jales employees and outsourced workers. the physical flow of these materials. These technology, and mandatory supply the facilities of a water treatment station. ETE area. Only in this activity, 900 trees were planted in 2014. The Company carries on its Vehicle Fleet Renovation Program. goods are grouped into lots and they are with ethanol: In 2014, environmental education activi- Overall, during 2014, in the educational voluntary actions to re- In 2014, we further advanced in replacing our light vehicle fle- assigned a market economic value to be 78.5% for light ties were also developed involving the re- cover vegetation throughout the State, approximately 21,000 tree et, with Flex technology and mandatory supply with ethanol. We tendered in auction. Therefore, Sabesp vehicles and 68% lease of nearly 50,000 young fishes of red saplings were planted. reached the percentage of 78.5% for light vehicles and 68% for besides playing its role before the Law for heavy fleet, belly pacu, prochilodus lineatus (curimba), Concurrently, a partnership between Education municipal de- heavy fleet, whose technology complies with Law Euro-5 of re- 8.666/93, does not allow materials to be whose technology tilapia and lambari, in partnership with partments and Sabesp, municipal and state schools participate duction of pollutant emissions. discarded inappropriately. complies with municipal governments and schools. The in the project “Kitchen Garden at Schools”. The activity aims at The economic benefits and management revamp brought In the public notices for unservicea- Law Euro-5 participating municipalities are: Fernan- stimulating children to a healthy eating habit , including greenery by the Program are added to the environmental relevance, such ble item auctions promoted by Sabesp, it of reduction of pollutant dópolis, Estrela D’Oeste, Guarani D’Oeste, and vegetables cultivated by themselves. as reduction of fuel consumption, maintenance and documen- is included environmental clauses aiming emissions Valentim Gentil, Dirce Reis, Guzolândia, The production takes place at the school which plays an im- tation savings and revenues from replaced vehicle auctions at complying with prevailing laws, about Jales, Urânia, Alto Alegre, Gastão Vidigal, portant role of motivating students and teachers, both in relation (R$2.6 million in 2014), besides the decommissioning of the issues, such as solid waste management, Glicério, Monções, Monte Aprazível, Ni- to the cultural usage of kitchen garden, such as the adoption of company’s asset base. With this program, we maintained a pro- the environmental protection and the con- poã, Turiuba, Monte Alto, Santa Ernestina, safe and sustainable food habits. The lessons learnt by children ductivity of 98% of the fleet availability for daily operations. trol of vehicle polluting emissions. Palmares Paulista, Ibirá, Irapuã, Adolfo, with these activities are simple, but the most important ones are Another initiative is the Social and Environmental Seal for The implementation of new rules to Nhandeara, Presidente Alves, Pongaí, those bringing concepts about the relevance of water, the ap- 206 purchase specifications of Sabesp, granted by the State acquire office supplies, cleaning and IT Uru, Catiguá, Avaí and Lins. These actions, preciation of vegetables cultivated, harvested and prepared by Program of Sustainable Public Contracts. We achieved 30% of materials provides for the utilization of jointly with the advance of sanitation ser- them, besides reinforcing the friendship and work group. the foreseen target – the certification of 700 specifications – in WEB platform made available by supplier vices, benefit important water sources in We also point out the PROL – Frying Oil Recycling Program, view of the need of making technical changes in the seal is- to Sabesp’s units and directly delivered at the region, such as Turvo, São José dos which combats its incorrect discard in soil and water. This pro- sue process, required by the Environmental State Department. the utilization sites, contributing to reduce Dourados and Batalha rivers and the Cam- gram relies on the partnership with municipal governments, shop- Enacted by State Decree nº 50,170/05, the seal signals to the the use of transport, thus, minimizing the pestre, Marimbondo, Santa Rita, streams, ping malls, supermarkets, parks and the Environment Department supplying market the São Paulo State’s intention of conforming vehicle atmospheric emissions. among others. (SMA), which cooperated to disseminate this Program. Various its consumption profile with the sustainable development inter- The sewage treatment in these cities partnering NGOs sent the oil collected to produce biodiesel. national guidelines. brought life to the water bodies, enabling Additionally, in 2014 we published the book “40 years of Sa- G4-EN33 Sabesp’s bidding procedures do not allow the partici- the return of fishes and fishermen. In the nitary and Environmental Practices in Sanitation”, aiming at pation of entities interdicted by environmental crimes, pursuant city of Lins, for instance, we usually see registering and disseminating a sample of the comprehensive- to Article 10 of Law 9,605/98, which provides information on cri- people daily fishing in the city’s central re- ness of actions carried out by the Company and its influence on minal and administrative sanctions deriving from conduct and gion. Fishes besides offering leisure, they people’s daily lives, promoting the responsible behavior towar- activities harmful to the environment. In bidding procedure is contribute to the households’ living. ds the environment. required to the Bidder the issuing of a statement that it will be 58 59 G4-10/56

Fernanda Ribeiro was SABESP’S COMMITMENT WITH LEGITIMACY, ethics, transparency Within this perspective, 150 facilitators one of twelve kids who were training with the objective of disse- won a competition and respect for people and environment guides its socially minating their knowledge, thus, creating a among children of citizenship network, whose projects were Sabesp’s employees; responsible performance and business decisions. added to Sabesp’s Volunteer Management themed “water saving” Program to control the indexes. Supported the drawings illustrate Thus, we adopt the assumption that the positive impacts by volunteers’ work and their results, in the 2015 calendar of the 2014, the actions are interconnected with Company a company may exercise in the value chain contribute to the social the Guardião das Águas Program, which promoted as main social and environmen- tal initiative in 2014, the campaign: “water development of population under its infl uence. saving as a way to avoid water shortage”, including tips and advices for consumers about not wasting water. In a scenario susceptible to climate changes and low water availability, As usual, the social aspect was not left Sabesp assumed the challenge of stimulating the changes of behavior aside and as part of Sabesp’s annual ca- contributing to the rational and conscious use of water. In this regard, lendar, the Winter Clothing Campaign was Sabesp launched in 2014 the Guardião das Águas Program (Water organized by FUSSESP – São Paulo State Sabesp Guardian), which reinforces the need of gathering all employees in a Solidarity and Social and Cultural Deve- encourages the compliance network to raise the awareness of customers, communities, institutions, lopment Fund, inspired by the campaign’s with UN’s eight condominiums and children towards limited water resources. motto “Good clothing is to give away”, millennium goals, The corporate citizenship principles guide the sustainability which promoted during four months, the which are part actions among those with whom the Company maintains contact, collection of more than 2.1 million clothes of our Corporate reinforcing its commitment with society. In this regard, we esta- with quality and 170 events were held, be- Volunteering blish business guidelines related to the social and environmental nefiting 280 entities and 52,000 families. Program sustainability and the valuation of human capital, in line with our However, much more than figures, this Code of Ethics and Conduct, in pursuit of the sustainable develo- result represents the social development pment, integrated management, respect for human rights, diver- promoted by employees who every year go sity and improved life quality. beyond as volunteer citizens, supported by The social responsibility trespasses the Company and is refl ec- the managerial body. These initiatives are ted in its strategic objective of fomenting the citizenship practices in line with our Code of Ethics and Conduct, that promote the relationship between Sabesp, volunteers and com- which values the respect towards society munity. This a broad set of commitments incorporated into the or- and customer, the environment, people, in- ganizational culture, the business strategies and the ethical way of tegrity, competency and citizenship. conducting the operations. Aware of the relevance of volunteer work and its benefi ts for the community in general, Sabesp, by means of its Corporate Volunteering Program, foments the good practices, bringing more dignity to those in- volved. This raises employees’ interest and admiration who feel more Winter Clothing Campaing integrated with the organization and its projects and more involved with 2014 the culture and values. Sabesp Corporate Volunteering Program was created in 2009 VALUING EDUCATION IN THE as way of recognizing the volunteers and is inserted into the Company’s strategic guidelines. It was built on a participating over way, organized with all executive boards and its main objecti- 2.1 million ves are to transform the community where it operates, motivating clothes and gaining the involvement of the highest number of employees CONSCIOUS USE OF WATER as possible, besides contributing to Citizenship, expressed in the Company’s Code of Ethics and Conduct. 280 entities G4-15 We also support and encourage the compliance with benefited UN’s eight millennium goals, which are part of our Corporate Vo- lunteering Program consisting of approximately 1,100 volunteers and its main vector are the United Nation’s “Eight Millennium Development Goals”, with emphasis in ODM 7 – Life Quality and 52,000 families Respect of Environment. serviced 61 and efforts endeavored by Sabesp’s technicians to meet their Local communities • Cadê Você (Where are you?) Project: Out of ten respondents, customers’ demand amid a scenario of water crisis which affects Conceived by the Mara Gabrilli Institute eight stated they were “satisfied” Brazil’s southeast region, especially the metropolitan region of G4 SO1 The worsening of water crisis led the Company to poten- and sponsored by Sabesp, it seeks to or “very satisfied” with São Paulo. tialize its relationship with community, seeking to more and more identify individuals with disabilities, li- “ Sabesp, on the annual We also conduct satisfaction surveys every two years in each strengthen the dissemination of conscious use of water, the pro- ving in the poorest communities in São satisfaction survey municipality where we have a program contract. In 2014, approxi- per use of sewage network, waste disposal and the preservation Paulo city, to bring them information on mately 11,600 surveys were conducted in 105 cities. Survey results of water sources areas. The Guardiões das Águas network now is the main services in the areas of health, guided the enhancement of our customer service. The surveys are the Company’s flagship, of which we highlight: work, sports, accessibility, education, widely disclosed, thus strengthening our commitment to transpa- and legal. Customer: awareness and partnership rency and constant improvement of services provided. • Field day about the conscious use of water at schools: Sabesp and the Education State Department launched the ECO-URA Sporting • Film Project at Plaza exhibiting classic G4-EC8 By means of the Guardiões das Event- Conscious School in the Rational Use of Water, which ga- sci-fi movies: Supported by Sabesp, open- Águas campaign, during 2014 Sabesp’s te- Volunteer adhesions and institutional programs thered students from 207 schools of São Paulo capital city. -air film exhibition every Thursday of August ams visited 40,000 condominiums (some of 2014, at Praça Victor Civita, in São Paulo. them more than once), in 89 districts, co- G4-15 In the social area, we point out the maintenance of voluntary • Meetings between leaders and community: Approximately A Sabesp é vering more than 6 million people. Only in adhesions to citizenship actions and global pacts. 180 community leaders held meetings seeking to bring com- • Solidarity during festivities: Several cam- signatária do January 2015, 10,023 condominiums were For the seventh consecutive year, we renewed the certificate gran- munities’ representatives to the company and clearly inform paigns were conducted during Christ- Pacto Global, visited which increased consumption. In ted by Fundação Abrinq – Save the Children, as a child friendly com- them about the water crisis in the southeast, streghtening the mas, like employees producing Christmas iniciativa da addition, the mobilization towards awa- pany. To be entitled to this seal, every year we describe the projects tar- dialogue between community and the company. trees under the sustainability theme, do- ONU que reúne reness were accompanied by distribution geting children, and among them we point out in 2014: Clubinho Sabesp, nation is a simple gesture, Christmas for empresas, trabalhadores e of water tanks to socially vulnerable hou- the Apprentice Program and the Child Citizen Institute (ICC). Know more • Water Rational Use Program – Pura: in partnership with the special children: saving water but was- sociedade civil seholds, earning income of up to three mi- about the projects aimed at younger audiences: Education Department and the Penitentiary Administration ting solidarity, among others. para promover nimum wages and facing water shortage State Department (further details in the chapter: Confronting o crescimento caused by low reservation at their houses. Clubinho Sabesp: Through on-line gaming and characters, the the Water Crisis) • Supports and sponsorships: Culture sustentável e The objective was to adjust the househol- website www.clubinhosabesp.com.br stimulates children and incentive through Rouanet Law: the In- a cidadania, ds’ reservation capacity to the ABNT rules adolescents between 6 and 13 years to interact, today, it has • Environment – Sabesp and Bradesco Partnership: a se- centive Program to São Paulo Film Pro- alinhando suas and maintain supply for until 24 hours, whi- 50,000 members. This virtual space is mainly directed to en- ries of educational actions in Cidade de Deus, Osasco and duction totaled R$4.3 million invested atividades aos princípios de ch does not occur due to the limited buil- vironmental education, focused on “Learn to take care of our other two bank’s branches in Alphaville, to disseminate the by Sabesp, by means of the Rouanet direitos humanos, ding standard of these houses. This action water with saving tips from Clubinho Sabesp team”. concept “Water: the life energy.” In this event, more than 450 Law. Awards were given to production do trabalho, has the partnership with the São Paulo people attended lectures and 2,700 students received in their and finishing of feature films in fiction, de proteção State Government and 800 units were dis- Apprentice Program: technical and professional qualification for classroom volunteers informing about water-saving tips and animation and documentary short film ambiental e tributed in the first quarter of 2015. The youth between 14 and 21 years, with 24-month contract and hourly green preservation. productions. The productions were ao combate à target is to deliver 25,000 units. In addition, load of 3,680 hours between theory and training on the job, this selected by the Culture State Depart- corrupção millions of customers in the metropolitan program prepares youth to the labor market. This is developed in • Educational leisure: Sabesp opens areas of its reservoirs to ment, which evaluated several selec- region of São Paulo received low-flow de- partnership with the National Service of Industrial Apprenticeship the neighboring community which were previously closed. tion criteria, among them, the projects vices, which can reduce faucet consump- Senai – SP and the Company-School Integration Center- CIEE. This Sabesp’s parks in Mooca, Cangaíba and Butantã are areas re- aesthetic quality (previously appro- tion as much as 20%. initiative already opened opportunities to 1,703 young people, 565 novated by Sabesp to offer more life quality by means of sports ved by the Brazilian Cinema Agency) of which joined the program in 2014. and leisure. and the proven residence over two ye- ars of the project’s director in the State For the seventh Customer satisfaction surveys Citizen Child Institute– ICC: Sabesp co-supports this institute des- • Inclusive culture: In partnership with the Association of the of São Paulo. On the other hand, as from consecutive year, tined to qualify youth coming from deprived households, promoting Visually Impaired Friends (ADEVA), it offers an inclusive movie 2012, all the persons benefited with such Sabesp renewed We conduct an annual satisfaction sur- education, culture, and welfare in the Metropolitan region of São session at Sabesp movie theater, free of charge, where all films Law are required to produce copies with the certificate granted by vey with our customers, always using the Paulo. In 2014, Sabesp contributed with R$2.8 million that allowed sponsored by it are required to exhibit subtitles and audio-des- subtitles, in order to increase the access Fundação Abrinq – same methodology, which allows us to free services for 7,400 children and adolescents and 6,200 househol- cription, benefiting those visually and hearing impaired. to the content by those hearing impaired. Save the Children, compare the performance of different bu- ds by means of nine daycare centers and three circus schools. as a child siness units throughout different periods. friendly company Our goal is to enhance customer services We are signatories of the United Nations Global Compact which based on the survey’s results. In 2014, we gathers companies, workers and the civil society in order to promote G4-EC4 FINANCIAL AID RECEIVED FROM THE GOVERNMENT maintained a general satisfaction with the the sustainable growth and the citizenship, aligning its activities to Total incentive 2011 2012 2013 2014 Company at 80%. the human rights, labor, environmental protection and anti-corrup- Culture incentive – Rouanet law 5,405 9,280 7,341 4,304 5,850 people were interviewed in the tion principles. Sabesp is a partner of Ethos Institute for Business Audiovisual incentive 8,000 4,672 6,908 5,572 entire State of São Paulo, where out of and Social Responsibility, a non-profit organization, characterized 10 respondents, 8 stated they were “sa- as civil society organization of public interest whose mission is to Sports incentive 3,090 2,872 3,379 2,130 tisfied” or “very satisfied” with services. mobilize, raise the awareness and help companies manage their bu- Condeca 3,000 3,000 3,300 2,100 This good result was due to the dedication siness in a socially responsible way. Total 19,495 19,831 20,928 14,106 62 63 G4-LA1 TOTAL NUMBER AND RATES OF NEW HIRING OF EMPLOYEES AND TURNOVER BY AGE GROUP was also necessary to involve and commit several stakeholders in Labor practices and By age grou, gender and region decent work conditions convergent efforts. 2011 2012 In this case, people management played a relevant role, with Sabesp, consistent with its corpora- coordinated actions and strict control of personnel indicators and Turnover Men Women Total Men Women Total te and prospective strategy in relation to intensifying the development of leaders with vision of the future, on Gender 7.7% 7.2% 7.6% 5.5% 4.4% 5,3% future scenarios, defined in its Strategic an integrated and entrepreneurship basis, adding efforts so that the Age Group Plan, among business guidelines, the deve- Company could seek alternatives and innovative solutions to provide 20 to 40 years 6.1% 6.9% 6.2% 5.1% 5.6% 5.2% The water and lopment of human capital as a competitive quality answers to society. 41 to 55 years 4.3% 5.9% 4.7% 3.0% 2.6% 3.0% environmental crisis adversity advantage in order to achieve goals, such Above 55 years 24.4% 17.7% 23.2% 15.3% 10.8% 14.7% has been as the sustainable universal services and Region mobilizing the liable for water and sewage services and Employment RMSP 8.1% 6.8% 9.6% 5.4% 4.0% 5.1% entire Company develop solutions to address the restric- Inland and coast 7.3% 8.1% 5.6% 5.6% 5.3% 5.6% to develop tions raised by water shortage. Sabesp conducts the recruiting and selection process through Company Total 7.7% 7.2% 7.6% 5.5% 4.4% 5.3% alternatives to The evolvement to a new level of achie- civil-service examination for employees, trainees and apprenti- Employees Hired 513 210 723 697 218 915 reduce the risk vements requires our professionals to clearly ces, so that to comply with specific laws, ensuring the hiring of and the impact on % Hired Employees 4.3% 7.2% 4.9% 5.8% 7.2% 6.1% understand the context of the world’s trans- qualified professionals, prepared to work in several positions at services rendered to population formation today. It also requires the qualifi- the Company. 2013 2014 cation to take advantage of opportunities of Taking into account the complexity and comprehensiveness of Turnover Men Women Total Men Women Total re-inventing, constantly dealing with the du- the process, the Company engaged Fundação Carlos Chagas – FCC, Gender 3.6% 3.6% 3.6% 1.9% 2.6% 2.0% alism of public administration under the aegis a non-profit entity and specialized in conducting civil-service exami- Age Group of results, and act based on principles and nation processes, under full delegation regime, where expenses are 20 to 40 years 3.9% 5.2% 4.2% 2.2% 3.3% 2.5% values of organizational cultures which en- covered by the number of applications. Seven civil-service examina- 41 to 55 years 2.1% 2.2% 2.1% 0.8% 1.7% 1.0% sure the sustainability and the establishment tions were conducted between 2011 and 2014, as follows: Above 55 years 8.3% 6.1% 8.0% 4.4% 4.6% 4.5% of productive relations with several players of Region the process. Career and Salary RMSP 4.1% 3.3% 3.9% 1.4% 1.2% 1.4% Plan exists to Thinking about these demands, Sabesp 2011 2012 2013 2014 Inland and coast 3.1% 4.4% 3.3% 2.4% 5.6% 2.8% manage human invested in a model of People Management Employees 389 - 624 - resources more Company Total 3.6% 3.6% 3.6% 1.9% 2.6% 2.0% Skills, stimulating the development of cri- Apprentices - 552 565 independently and tical skills for businesses. Once adopted, Employees Hired 405 131 536 19 7 26 Trainees 1,060 - 1,030 748 flexibly; follow our people management model has been % Hired Employees 3.4% 4.3% 3.6% 0.2% 0.2% 0.2% the best market’s improving aiming at offering to Sabesp practices; include The worsening a value proposal to employees, capable actions to attract of water crisis of improving their commitment with the We could see that the civil-service examinations conducted for and retain good led the Company employees; pay organization’s objectives and strategy. Sabesp mobilize a significant number of candidates, and the last two compensation to potentialize In this concern, we especially point out examinations carried out for 624 vacant positions for employees and Workforce Building a more equitable and sustaina- its relationship according to the with community, its integrated processes: the continued edu- 565 for apprentices received 41,319 and 12,147 applications, respec- ble society necessarily entails valuating di- market’s average seeking to cation, the career management, life quality, tively. Aiming at meeting the units’ needs, the Company has a Bank Since Sabesp is a mixed-capital corporation, people manage- versity and social inclusion. The respect for and recognize more and more climate management and HR services. Taking of Opportunities, accessible to all employees, which matches inte- ment has different characteristics from only government or private human and cultural diversity and nondiscri- the employee’s strengthen the into account the Corporate Governance, rests by means of in-house reallocations. companies. On the one hand, the staff must answer to decisions of mination are part of our core principles. We qualification dissemination of Sabesp’s bylaws set forth that all decisions the State of São Paulo’s controlling bodies, and on the other hand, guarantee that right to difference, ensuring efforts conscious use of related to the “Personnel Policy”, such as this is an issue considered highly strategic for business, where each worker, regardless of his or her back- water, the proper the definition of staff, career plan and sala- SANED Merger the decision-making process has a direct impact on the quality ground, all the conditions to develop his or use of sewage ries, the collective bargaining agreement, the of sanitation services rendered to population, well as results for her talents and potentialities. network, waste disposal and opening of selection process and the profit Sabesp started the process of merging Water and Sewage Ser- the government and other shareholders. In this regard, the area’s Sabesp complies with prevailing laws the preservation sharing program, must be resolved by the Bo- vices of Municipality of Diadema – SANED, by Municipal Law nº planning and control are essential to ensure qualified professio- as to the right to reserve job vacancies, of water ard of Directors and approved by controlling 3.355, in September 2013 and the effective operation of services nals who believe and share the Company’s mission. offered in the public selection process for sources areas bodies of the State of São Paulo. by Sabesp began on March 31, 2014. Aiming at aligning SANED’s G4-10 Sabesp has 14,753 employees (base of Dec/14), ruled by disabled people. In 2014, 74 job positions It is worth mentioning in particular the professionals with Sabesp’s strategies, culture and competencies, Brazilian Labor Laws (CLT). The male gender prevails (80%), high were filled under these conditions, 74.3% water and environmental crisis. Such ad- the employees were interviewed to analyze current activities and school educational (50%), white ethnic group (82%), over 40 years employees physically impaired, 17.6% versity has been mobilizing the entire Com- their classification into Sabesp’s current Career and Salary Plan. of age (76%). Employees work 18 years on average at the Company. employees hearing impaired and 8.1% vi- pany to develop alternatives to reduce the The effective reallocation of SANED’s employees to Sabesp is es- Besides the permanent personnel, development opportunities sually impaired. We maintain agreements risk and the impact on services rendered to timated for 2015. are offered to 942 trainees and 559 young apprentices, with le- with associations, through which 145 disa- population. The qualification and expertise The turnover ratio in 2014 was mainly concentrated in profes- arning and qualification activities aiming at their inclusion in the bled people work in our service branches, of professionals in the sanitation business sionals above 55 years. Figures reveal that hiring and dismissal labor market. Sabesp executes services agreements, relying on activity to which they receive over 108 have been decisive for results obtained. It over the past three years remained in line. approximately 7,478 outsourced workers. hours of previous training. 64 65 G4-LA12 NUMBER OF EMPLOYEES PER REGION G4-LA3 The return rate of 86 women who Salary Policy were on maternity leave stood at 78% in 2014. 2011 2012 2013 2014 The Company’s personnel is distributed Sabesp adopts a Salary Policy which seeks the internal and as follows: external balance. Therefore, surveys are yearly carried out with Region Men Women Total Men Women Total Men Women Total Men Women Total

1 (Metropolitan region of São Paulo, Paraíba valley 8.119 2.367 10.486 8.777 2.569 11.346 8.790 2.605 11.395 8.638 2.542 11.180 G4-LA12 COMPOSITION OF GROUPS LIABLE FOR GOVERNANCE AND BREAKDOWN BY EMPLOYEE CATEGORY, and Santos coast region) ACCORDING TO GENDER, AGE GROUP, MINORITIES AND OTHER INDICATORS

2011 2012 2013 2014 2 (Regional systems except for Paraíba valley 3.849 561 4.410 3.224 449 3.673 3.178 442 3.620 3138 435 3.573 Men Women Total Men Women Total Men Women Total Men Women Total and Santos coast region) Governance Bodies Total 11.968 2.928 14.896 12.001 3.018 15.019 11.968 3.047 15.015 11.776 2.977 14.753 Board of Directors and Fiscal Council 14 1 15 14 1 15 2 11 13 13 2 15 Note 1: Sabesp’s contracts are executed by means of civil-service examination, pursuant to 1988 Federal Constitution, where positions, prerequisites, Audit Committee 3 0 3 3 0 3 3 0 3 3 0 3 region, vacancies and salary are detailed. Currently, 78% of our managers work in Region 1 and 22% in Region 2. Manager Note 2: G4-EC8 Sabesp does not directly hire outsourced workers. Services agreements are executed with outsourced workers who are assigned Not commissioned 0 0 0 0 0 0 0 0 0 0 0 0 according to our needs. Under such conditions, we have approximately 7.1 thousand professionals who are not registered in Sabesp’s databank. Comissioned 479 113 592 485 117 602 485 114 599 493 119 612 Category specialized external advisors, so that to attract and retain qualified or leadership/supervision position, as well Managers 479 113 592 485 117 602 485 114 599 493 119 612 professionals necessary for the proper services rendering. as by all benefits granted by the Company. University students 1,678 969 2,647 1,733 973 2,706 1,735 983 2,718 1,702 957 2,659 Until May 2014, Sabesp considered two regional salary bases, The managerial and leadership duties Technicians 4,588 1,751 6,339 4,499 1,768 6,267 4,434 1,754 6,188 4,358 1,714 6,072 different from each other by 20% and in the 2014-2015 collective are assigned according to the complexity bargaining agreement, Sabesp assumed the commitment of the- and the characteristics of activities direc- Operational 5,183 95 5,278 5,284 160 5,444 5,314 196 5,510 5,223 187 5,410 se salaries parity and now the base salary is only one ted and supervised, indicators – number Subtotal 11,928 2,928 14,856 12,001 3,018 15,019 11,968 3,047 15,015 11,776 2,977 14,753 The Career and Salary Plan (PCS) is structured so that to attract, of employees under leadership/super- The possibility of Trainees 442 476 918 443 445 888 443 481 924 446 496 942 retain and rewarding good employees, recognizing overachievers, vision, municipalities serviced, water/ employee’s career Young apprentices 317 189 506 362 198 560 317 174 491 359 200 559 and fostering continuing skill progress, thus helping to build compe- sewage connections and geographic ascension relies titive edges in the environmental sanitation sector. area coverage. on the skill-and Total 12,687 3,593 16,280 12,806 3,661 16,467 12,728 3,702 16,430 12,581 3,673 16,254 The PCS is aligned with Skill-based People Management, which By means of Y career, the PCS allows performance- Age consists of the following guidelines: manage human resources more mobility and the professional ascension based Until 17 years of age 0 0 0 0 0 0 0 0 0 0 0 0 assessment independently and flexibly; follow the best market’s practices; inclu- of undergraduate employees in two direc- results and 18 to 30 years of age 649 289 938 743 327 1,070 708 314 1,022 576 242 818 de actions to attract and retain good employees; pay compensation tions, one technical and the other one ma- the budgetary 31 to 40 years of age 2,775 710 3,485 2,589 705 3,294 2,402 679 3,081 2,109 638 2747 according to the market’s average and recognize the employee’s nagerial, so that the technical employee availability qualification efforts. This model enables to attracting, retaining and at more advanced stage of his/her career 41 to 50 years of age 4,434 1,164 5,598 4,498 1,137 5,635 4,429 1,129 5,558 4,310 1,080 5390 developing qualified and committed professionals, offering careers may continue specializing in his/her te- Above 50 years of age 4,110 765 4,875 4,171 849 5,020 4,429 925 5,354 4,781 1017 5798 prospects and compensation compatible with the market. chnical area, with possibility of receiving Average age 45.8 43.8 45.5 45.9 43.9 45.5 46.5 44.5 46.1 47 45 47 Employees’ compensation is composed of base salary, corres- compensation corresponding to a mana- Length of Service ponding to the job position, bonus, if designated to a managerial gerial career. Until 3 years 1,470 399 1,869 2,028 571 2,599 2,068 610 2,678 1,358 461 1,819 4 to 10 years 1,240 331 1,571 764 194 958 546 91 637 950 188 1,138 G4-LA12 DISTRIBUIÇÃO DE EMPREGADOS POR GÊNERO E ETNIA 11 to 20 years 4,962 1,204 6,166 5,262 1,301 6,563 4,889 1,183 6,072 4,957 1,166 6,123 Men Women Total Above 20 years 4,296 994 5,290 3,947 952 4,899 4,465 1,163 5,628 4,511 1,162 5,673 2011 2012 2013 2014 % 2011 2012 2013 2014 % 2011 2012 2013 2014 % Average time 17.1 16.4 17.2 17 16.3 16.9 17.4 16.7 17.3 18 18 18

Education White 9,912 9,889 9,790 9,637 82% 2,487 2,540 2,545 2,491 84% 12,399 12,429 12,335 12,128 82% Primary school 2,179 53 2,232 2,198 101 2,299 1,712 58 1,770 1,589 52 1,641 Afro descendants 1,808 1,870 1,928 1,893 16% 329 357 379 368 12% 2,137 2,227 2,307 2,261 15% High school 6,233 1,097 7,330 6,164 1,121 7,285 6,462 1,125 7,587 6,346 1,073 7,419 and mulattos University1 3,556 1,778 5,334 3,639 1,796 5,435 3,794 1,864 5,658 3,841 1,852 5,693 Asian 184 202 209 206 2% 110 116 118 113 4% 294 318 327 319 2% Working hours Par time2 1,254 266 1,520 1,224 261 1,485 1,337 302 1,639 296 1326 1,622 Indigenous 6 7 7 7 0% 0 0 0 0 0% 6 7 7 7 0%

Full time 10,714 2,662 13,376 10,777 2,757 13,534 10,631 2,745 13,376 2,681 10,450 13,131 Not declared 18 33 34 33 0% 2 5 5 5 0% 20 38 39 38 0%

1 – 1,932 professionals hold specialization at the graduate/MBA levels and 9% of which hold Master’s degree or PhD. Total 11,928 12,001 11,968 11,776 100% 2,928 3,018 3,047 2,977 100% 14,856 15,019 15,015 14,753 100% 2 – They work in operational and customer service areas. 66 67 G4-LA12 DISTRIBUTION OF EMPLOYEES PER POSITION, GENDER AND ETHNIC GROUP CATEGORY G4-LA13 MATHEMATICAL RATIO OF SALARY AND COMPENSATION Gerentes Universitários BETWEEN WOMEN E MEN, BROKEN DOWN BY EMPLOYEE CATEGORY AND RELEVANT OPERATING UNITS Homem Mulher Homem Mulher Average Salary 2011 2012 2013 2014 Year 2011 2012 2013 2014 2011 2012 2013 2014 2011 2012 2013 2014 2011 2012 2013 2014 Operational 1,880 2,012 2,212 2,443 White 441 450 451 455 108 111 108 111 1.448 1.493 1.487 1.459 824 827 832 810 Afro descendants 19 17 16 19 3 4 4 4 134 139 143 141 86 86 89 89 Technicians 2,884 3,139 3,461 3,757 and mulattos University students 5,955 6,412 7,076 7,742 Asian 19 18 18 19 2 2 2 4 92 96 100 97 59 60 62 58 Indigenous 0 0 0 0 0 0 0 0 1 1 1 1 0 0 0 0 Managers 13,117 15,170 16,388 17,295 Not declared 0 0 0 0 0 0 0 0 3 4 4 4 0 0 0 0 Average 3,488 3,828 4,173 4,559 Total 479 485 485 493 113 117 114 119 1.678 1.733 1.735 1.702 969 973 983 957

Technicians Operational Overall (R$) 2011 2012 2013 2014 Men Women Men Women Initial Base Salary 815 1,100 1,189 1,376 Year 2011 2012 2013 2014 2011 2012 2013 2014 2011 2012 2013 2014 2011 2012 2013 2014 Average Salary 3,488 3,828 4,173 4,559 White 3,857 3,750 3,683 3,622 1,485 1,485 1,472 1,439 4,166 4,196 4,169 4,101 70 117 133 131 Afro descendants Minimum wage 545 622 678 724 664 671 671 658 216 227 226 221 991 1,043 1,098 1,075 24 40 60 54 and mulattos Percentage (%) 1.49 1.67 1.64 1.90 Asian 60 65 67 66 48 52 52 50 13 23 24 24 1 2 2 1 Indigenous 2 3 3 6 0 0 0 0 3 3 3 3 0 0 0 0 PERCENTAGE BETWEEN LOWEST SALARY AND MINIMUM WAGE – OVERALL Not declared 5 10 10 9 2 4 4 4 10 19 20 20 0 1 1 1 in R$ Total 4,588 4,499 4,434 4,361 1,751 1,768 1,754 1,714 5,183 5,284 5,314 5,223 95 160 196 187 2011 2012 2013 2014 Lowest salary* 815 1,101 1,189 1,376 Minimum wage 545 622 678 724 As variable compensation, Sabesp adopts Benefícios the Profit Sharing Program aligned with the Percentage 1.50 1.77 1.75 1.90 compliance with strategic targets and invol- G4-LA2 Sabesp adopts a policy of maintaining benefits consis- * – Lowest initial salary paid to the Environmental Sanitation Agent I. There is no difference of base salary between men and women. ving everyone in a single objective. The PPR tent with those practiced in the market, which contributes to im- G4-EC5 VARIATION OF LOWEST SALARY PERCENTAGE, BROKEN DOWN BY GENDER, aims at stimulating and recognizing the em- prove employees’ life quality. This policy also enables to attrac- COMPARED TO THE LOCAL MINIMUM WAGE IN RELEVANT OPERATING UNITS ployees’ efforts to outpace targets and indi- ting professionals, retaining talents and improving performance. cators set out in the Strategic Plan. Over the 2011 2012 2013 2014 years, the program has been evolved in terms Legal benefits:night-shift premium, paid weekly rest, overtime, pre- Lowest Salary of scope, forms of distribution and indicators, mium for unhealthy work, hazardous work pay, day-care assistan- Region 1 978 1,321 1,427 1,501 always aiming at aligning the criteria to the ce, special day-care assistance, uniform cleaning, remote duty and Region 2 815 1,101 1,189 1,376 Company’s strategies. It is yearly negotiated transportation ticket. Minimum wage 545 622 678 724 with the unions, the general guidelines of whi- Percentage ch are set forth by Federal Law n° 10,101/2000 Other practices: social welfare, group life insurance, superma- Region 1 1.79 2.12 2.10 2.07 and State Decree n° 59,598/2013. rket/drugstore card. Region 2 1.50 1.77 1.75 1.90 DISTRIBUTION OF THE AVERAGE ANNUAL PAYMENT OF PPR Benefits Granted by the Company:meal ticket, snack at extraordina- Obs.: There is no difference of base salary between men and women. 2011 2012 2013 2014 ry hour, staple basket, Christmas basket, Children Center – CCI, job Professional Average* Average* Average* Average* stability, additional sick pay, vacation bonus, health care and private category (R$) (R$) (R$) (R$) Operational 2,168 2,344 2,285 2,755 pension plan (Fundação Sabesprev). It is worth mentioning that the Skill-and Performance-Based Assessment Union Freedom and Technicians 2,927 3,122 3,054 3,698 health care and private pension plan benefits have been discussed by Collective Bargaining Agreement University students 5,086 5,416 5,262 6,533 the Company, requiring studies to analyze the impacts and support the G4-LA11 The Skill – and Performance – Based Assessment is an Managers 9,370 10,849 10,870 13,161 decision on these issues: important managerial tool which foments the continued commu- G4-HR4/G4-11 Sabesp seeks to be proac- Sabesp Average 3,308 3,585 3,542 4,281 • Health Care Plans : The Health Care Plans administered by Sabes- nication between manager and his team, besides identifying the tive in its relationship with professional as- * – The amount to be distributed corresponds to up to the limit of base payroll During its (salary plus commission function and / or functional bonuses established in prev and by Economic Research Institute Foundation – FIPE, have level of skill development and performance of employees rela- sociations, prioritizing ethics and harmony. qualification the employment contract and the lenght of service additional) according been reviewed, evaluating the possibility of improving the inactive ted to business strategies. The assessment cycle targets all em- Also consistent with corporate governance processes, to the results achieved by the PPR indicators, and paid in the immediately following year, in the following ratio: 30% will be divided by the total number employees’ plans. ployees, every year, allowing to equalize expectations between principles, the Company encourages and Sabesp assesses of employees and 70% applied in proportion to wages of each employee. • Private Pension Plan: Employees until July 2010, had access to manager and employee. supports its employees to participate in the compliance a single defined benefit (BD) private pension plan. In view of its The possibility of employee’s career ascension relies on the professional associations, as a full exer- with local Sabesp’s employees are distributed in the characteristics, this plan recorded a relevant actuarial deficit. On skill-and performance-based assessment results and the bud- cise of their rights. This also foments the environmental laws by its 364 municipalities operated by the Company, that date, the National Superintendence of Supplementary Private getary availability. It is worth mentioning that the skill-and per- individual development and collaborate to suppliers through accounting for 56.4% of the São Paulo State’s Pension – PREVIC approved the proposal to extinguish BD plan and formance-based assessment goes beyond promotion issues, maintain a good organizational climate. Out installation municipalities. The proportion between the create a new plan under the Defined Contribution mode (CD), the enabling a perception of the organizational climate, identify per- of total employees, approximately 70% are and operation smallest salary and the minimum wage paid Sabesprev Mais. Currently, this matter is under judgment, and the formance gaps and define development individual plans. In the voluntary Union members. licenses issued at the company is 1.9, without any base salary Benefit Plan – BD remains with 8,670 active beneficiaries and -Sa last cycle, 3,640 employees were promoted and 42,332 develop- The Unions represent employees at the by environmental difference for men and women besprev Mais with 5,188 beneficiaries. ment commitments were established. Company, at the proportion of one Union lea- agencies 68 69 ENTITY AND OBJECTIVE G4-LA5 Out of total employees, 25% work in health and safety • CIPA in Action Program, aiming at po- Sabesp Association – development of leisure, sport, social and cultural activities formal committees and they are involved in activities, such as syste- tentializing Cipa’s actions (internal matization, monitoring and specific programs. On a corporate basis, committee for accident prevention) Association of Retirees and Pensioners of Sabesp – AAPS – defense of retirees and pensioners and active employees eligible to retirement and also the improvement of their life quality over the past years, Sabesp has been improving occupational health with company’s leaders. We also point and safety prevention programs in order to ensure and improve pro- out the In-house Week of Occupatio- Association of University Professionals of Sabesp/APU – it represents employees of all backgrounds, to collaborate and influence fessional activities, adding and incorporating life quality. nal Accident Prevention– SIPAT, with the environmental sanitation management, expand the channels of participation in the company management, improve and develop The planning and direction of actions, campaigns and progra- 15,000 attendances yearly. professionals ms apply the statistical reports of occupational accidents oc- • Fire Brigades, 290 present in all Association of Sabesp Managers/ADMSABESP – defense of interests and aspirations, promoting the professional recognition, curred with employees and service providers, as well as main the company’s units, liable for identi- ensuring the strict observance to the professional and employee ethics occupational health indexes in entire company. This practice has fying, answering and controlling emer- Association of Sabesp Engineers/AESABESP – integration and defense of interests nationwide and internationally and promote the been optimizing the resources destined to prevention in view of gency situations. technical and cultural development gradual reduction of frequency and severity of accidents and oc- • Minute of Prevention is a practice, with cupational diseases. 40,000 attendances/year, including qui- Cooperative of Economy and Mutual Credit of Sabesp Employees/CECRES – it offers lines of credit with more accessible interest rates ck discussions organized by CIPA, SES- Social Security Sabesp Foundation – Sabesprev – supplementary private pension closed entity liable for managing the private pension MT and official representatives. The plans (12,570) and health care (13,700) Safety Practices issues discussed are filmed and made available at the Corporate TV in the Vir- Brazilian Association of Sanitary and Environmental Engineering/ABES – contribution to the knowledge and improved life quality of Brazilian society. It participates nationwide and statewide of CONAMA, National Council of Water Resources – CNRH, CONFEA (Federal The main actions developed are: tual Prevention Minute. Council of Engineering and Agronomy), Environment State Councils and others • Standardization and Programs – basis and structure of Manage- • Health and Safety Campaigns were ment System: the occupational health and safety procedures were intensified through newsletters, lec- Brazilian Association of Infrastructure and Base Industries/ABDIB – development of Brazilian infrastructure market and base industry, improved and combined into two single documents in order to im- tures and preventive actions, such strengthening them according to international standards prove and facilitate its application and the compliance with laws. as “Você no Trânsito” (you in the tra- The unhealthy and hazardous work pay procedure in May 2014, ffic), “Segurança nota 10” (Safety gra- defined a new methodology to standardize the employees’ classi- de 10), Prevenção contra Dengue (pre- fication into the Exposure Similar Groups – GHE in entire Sabesp. vention against dengue), Ergonomia This adjustment derived from a study prepared by specialized con- (ergonomy), Conjunctivitis, Influenza, Minute of der for each 478 employees. Main Unions at relations, in line with the best market’s practices. Besides Unions, other sulting firm, with the participation of Unions and representatives of among others. Prevention To preserve health the Company are: Sintaema – the São Pau- entities and associations gather employees with different objectives, Sabesp’s executive boards and approved in the 2014/2015 collecti- • Indicators and Corrective Action – the is a practice, and develope a lo State Water, Sewage and Environmental enabling greater participation and integration. ve bargaining agreement. path towards the optimization of ac- with 40,000 culture of safety attendances/ Workers’ Union, Sintius – Workers Union of In labor relations, our challenge is to maintain a contingency plan • Environmental Risk Prevention Program (PPRA): this is gene- tions: the computerized health and sa- year, including is priority at Urban Industries of Santos, Santos coast re- encompassing strategies and attitudes ensuring continued production rated by a computerized system and comprises Sabesp’s 500 fety managerial report informs and sub- Sabesp’s people quick discussions gion, south coast and Vale do Ribeira, SEESP processes. This requires a stimulating and synergic environment so that establishments, identifying the environmental risks by Exposu- sidizes managers in the critical analysis management organized by – Engineers Union in the State of São Paulo, business leaderships and employees’ representatives show to be ende- re Similar Groups– GHE, defining measures of control and the of processes and proposal of corrective CIPA, SESMT SASP – the São Paulo Lawyers’ Union, Sin- avored to always find conciliatory solutions for any differences. development of health and safety corrective actions. actions from indicators obtained (see and official tec – the São Paulo State High School Indus- • Occupational Health Medical Control Program (PCMSO): it box below (see table below). representatives; trial Technicians’ Union and others. allows to outline the health profile of all employees, apprenti- Overall, we verify that the integration issues discussed These entities play their role actively Occupational health and safety ces and trainees and subsidizes health and life quality progra- of programs developed and investments are filmed and made available not only claiming improvements, but also ms, besides complying with legal aspects. made in occupational health and safe- at the Corporate giving opinions on corporate issues. The To preserve health and develop a culture of safety is priority at • Vaccination Program, it targets the prevention of infectious di- ty over the past years contributed to the TV in the Virtual collective bargaining process takes pla- Sabesp’s people management. The activity involved in business seases. In 2013 and 2014, 4,160 employees exposed to sewage gradual reduction by 16% in the number of Prevention ce every May and issues are discussed poses several risks which may cause consequences to employe- were vaccinated against typhoid fever. accidents in the period. Minute directly with workers unions, without the es and the environment. Most of human diversity and the places employer’s union intervention. where activities are carried out require a management system to The Company conducts negotiations with protect approximately 15,000 employees and also service provi- SST Performance Indicators 2011 2012 2013 2014 responsibility and transparency, valuing the ders involved in the daily work. To minimize risks and zero acci- Occupational medical examinations (nº) 14,607 12,475 15,456 15,020 healthy dialogue with Union entities. They dents in the working process are the main challenges, conver- Employees vaccinated against influenza (nº) - 11,343 12,256 13,037 also hold meetings at any time in order to dis- ging integrated actions towards preservation of health. Non-conformities (unsafe conditions) registered 1,331 1,403 1,534 1,023 cuss reasonable proposals aiming at meeting G4-HR7 The professionals working in Specialized Occupatio- SST qualification opportunities (nº) 60,501 42,033 38,363 28,261 employees’ expectations and they maintain a nal Health and Safety Engineering Services – SESMT effectively Participations in the Prevention Minute (nº) 40,000 39,967 39,338 32,979 positive agenda with leaderships, aiming at participate by advising managers in each business unit to obser- Campaigns developed by CIPA (nº) - 776 1,073 669 mitigating the usual restrictions of this rela- ve and promote the culture of health and safety prevention at the Inspections carried out by SESMT and CIPA (nº) 700 3,916 4,271 2,638 tionship, however, in observance to its finan- company. We also rely on the engagement and commitment of % of non-conformities solved 1 1 1 1 cial capacity and governmental guidelines. 3,700 professionals working as Cipa members, 1,500 at 150 CIPAS % of items solved at inspections 1 1 1 1 In the 2011-2014 period, the answer to clai- and 2,260 members of the fire brigade. Such performance makes Investments (R$ million) 10 12 12 10 ms prioritized relevant issues referring to labor the difference in results obtained. Investment in prevention per capita (R$) 600 799 799 695 70 71 G4-LA6 TYPES AND RATES OF INJURIES, OCCUPATIONAL DISEASES, DAYS LOST, ABSENTEEISM AND NUMBER OF OCCUPATIONAL blue every Friday in November. Information lectures, video scre- next prevailing period. As a result of two DECEASES BROKEN DOWN BY REGION AND GENDER G4-LA7 EMPLOYEES WITH HIGH INCIDENCE OR HIGH RISK OF OCCUPATIONAL DISEASES enings, and testimonial talks about the importance of prevention cycles of Skill-and Performance-Based As- and early diagnosis were also given. sessment, 83,000 development commitments 2011 2012 2013 2014 were generated directing the UES’ qualifica- Men Women Total Men Women Total Men Women Total Men Women Total tion and development programs. Sabesp Training and Education The University has a subsidy program Frequency rate 8.0 2.9 7.1 6.2 1.7 5.4 7.0 4.6 6.6 7.4 4.3 6.4 aiming at raising education to answer Severity rate 365 189 334 209 20 175 557 182 488 326 40 274 Sabesp was one of the pioneers to adopt the concept of cor- with expertise to the organization’s techni- porate education in Brazil and naturally transformed into influen- cal demands, pointing out MBA/graduate Occupational disease 103 16 119 64 15 79 68 5 73 1 0 1 cers of its continued evolvement. The Sabesp Corporate Univer- studies, technical professional courses, Absenteeism (%) 3% 2% 3% 2% sity has been an ideal tool for the professional development, so languages, educational agreement and Decease 0 0 0 1 0 1 3 0 3 1 0 1 that Sabesp is able to adapt to a complex scenario and several professional certification. Region 1 (metropolitan region of São Paulo, Paraíba valley and Santos coast region) transformations of the sanitation sector and the Brazilian eco- Frequency rate 8.3 3.4 7.3 5.1 2.1 4.7 6.9 4.6 6.4 7.7 2.2 6.6 nomy. In order to make feasible its programs, UES adopted a le- Sabesp Severity rate 298 140 266 150 25 124 674 158 565 318 49 262 arning architecture which mixes on-site methods and self-deve- Strengthening Sabesp Leadership University has a lopment, practices to share knowledge and distance education. Occupational disease 81 16 97 34 12 46 35 3 38 1 0 1 subsidy program In a company geographically distributed, such as Sabesp, the The Sabesp Corporate University – UES aiming at raising Absenteeism (%) 3% 3% 3% 2% distance education – EAD plays a relevant role in the process is liable for developing leaders continuously education to Decease 0 0 0 1 0 0 2 0 2 1 0 1 of disseminating knowledge and collectively exchange informa- preparing the organization for business chal- answer with expertise to the Região 2 (Sistemas Regionais exceto Vale do Paraíba e Baixada Santista) tion. With an annual list of approximately 500 distance courses lenges. The highlight among UES’s actions is organization’s Frequency rate 7.3 1.1 6.6 8.6 0.0 7.7 7.3 4.6 7.0 6.7 1.2 5.9 in different formats, Sabesp offers 35,000 participations/year on the Management Excellence Program– PEG techinical Severity rate 506 402 495 335 0 296 311 291 309 343 0 303 average. The number of participants has been growing yearly aiming at developing our leaders, whose demands Occupational disease 22 0 22 30 3 33 32 2 34 0 0 0 and the proportion of those attending distance courses already main challenge is to help reaching sustaina- achieved 52% of total attendances in 2014. ble, responsible universal water and sewa- Absenteeism (%) 2% 2% 3% 2% G4-LA10 The Qualification and Development Plan is prepared ge services until the end of the decade. This Decease 0 0 0 0 0 0 1 0 1 0 0 0 yearly– PCD, addressing the technical and operational demands activity aims at contributing to implement an Definitions: Frequency rate: number of occupational accidents including injury and leave by million hours/men worked yearly. focused on environment, water resources, sustainability, envi- entrepreneurship culture, focused on result- Severity rate: Days lost debited from occupational accidents by million hours /men worked yearly. Occupational disease: Number of em- ronmental sanitation, solid waste, environmental laws, environ- -driven management, people valuation and ployees under leave due to disease or triggered by work activity. The 2011 to 2013 amounts will be added by the cases of common disease being converted into occupational disease, by INSS (Brazilian Social Security Institute), due to epidemiological technical nexus defined by mental education, safety, human resources, quality, social and development, incentive to creativity and in- such agency. Absenteeism: Percentage which measures the decrease of total load of hours worked due to absence at work. environmental responsibility and compliance. novation in work processes. Between 2012 Another source of analyzing needs is the Development Indivi- and 2014, we formed three classes, compri- dual Plan – PID a product of the Skill-and Performance-Based As- sing 370 leaders. sessment, where after the feedback at the end of each assessment The need to replace our current leaders cycle, manager and employee establish a development plan for the and the fact that 50 % of our officers will re- Life Quality In order to reduce these risks, corporate actions concerned with food re-educational and physical activity are carried out. In G4-LA9 AVERAGE NUMBER OF TRAINING HOURS/YEAR/EMPLOYEE The Life Quality – Live Happy Program 2014, the higher emphasis was the fight against sedentary lifes- broken down by gender and employee category aims at offering the opportunity to, by means tyle, promoting the regular practice of physical activity, such as, of cultural change, assimilate the relevance for instance: Average of hours in 2011 Average of hours in 2012 Average of hours in 2013 Average of hours in 2014 of having a healthy life. The program has • The Challenge Day: a worldwide physical activity campaign Category Men Women Total Men Women Total Men Women Total Men Women Total prevention characteristics, supporting and held every last Wednesday of May, a day dedicated to the life Managers 116.1 71.1 55.2 50.4 58.6 52.0 86.3 94.9 87.9 58.4 72.3 61.1 encouraging personal habits and life styles quality. Consisting of more than 200 activities that include spots University students 88.8 71.0 66.5 61.3 82.7 69.0 96.6 106.4 100.1 91.1 98.5 93.8 which promote health and wellbeing, also matches, dance, gymnastics, power walking and others, Sa- contributing to improved work environment. besp added more than 22,600 participants in the Challenge Day Technicians 63.9 45.5 43.4 44.2 61.2 49.0 58.5 60.3 59.0 60.5 66.6 62.2 In order to direct the corporate actions between 2011 and 2014. Operational 40.2 36.0 35.9 29.7 37.0 29.9 44.6 58.7 45.1 37.2 55.5 37.9 to life quality, Sabesp’s Employees Life Style • Arrangements with Fitness Gyms: Employees and dependents Young apprentices 23.4 50.7 39.8 77.5 75.6 76.8 114.3 153.9 128.4 449.9 460.6 453.7 Mapping was conducted and 6,274 employe- have discounts in the monthly fees of 23 accredited fitness gyms. Trainees 63.9 56.1 68.4 77.1 83.8 80.5 109.3 102.5 105.8 64.1 62.5 63.3 es participated (40% of permanent employe- Several other corporate actions are regularly conducted to es), whose results allowed to conclude that, promote changes of behavior, life style and raise the health con- Total 60.5 46.3 46.5 42.9 69.4 48.8 62.2 83.6 67.0 66.2 94.9 72.7 implementing two corporate actions related cern: the Blood Donation Campaign in 2014 resulted in a total of to food education and prevention against se- 1,270 blood bags collected, Pink October and Blue November: Attendances 2011 2012 2013 2014 dentary lifestyle, it is possible to contribute to these are breast and prostate awareness and prevention cam- Attendance 108,854 92,372 128,903 134,986 control and prevent chronic diseases, such paigns. As it happen all around the world, several Sabesp buil- Total investment (R$ thousand) 9,000 8,442 10,669 11,642 as obesity, hypertension, diabetes, high cho- dings were illuminated with the corresponding colors, and the Investment per capita 546 510 646 708 lesterol and stress. employees dressed in pink every Friday in October and dressed in 72 73 tire in the next five years, required us to pre- Knowledge Management enacted by the bidding laws are applied in our public notices. Du- Climate survey pare their successors. Our Succession and ring bidding phase, the payment of social charges is evidenced, as Career Program aims at developing a new This is an essential process for the intellectual exchange provided for by laws, duly settled by collecting agencies and no debt (second half of 2013) generation of leaders, culturally aligned and amongst individuals, so that to build a collective knowledge asset in arrears before the Labor Court. As condition to supplier sign the ready to face competition and ensure the to meet as much as possible the business’ objectives and invol- agreement, we check the regular standing of debt clearance certi- business sustainability. The company’s main ves the participation of qualified and experienced professionals. ficate – C.N.D. of INSS (Brazilian Social Security Institute) and the challenge in this program was to build a suc- Among the knowledge management practices of Sabesp Corpo- regular standing with Employee Severance Indemnity Fund – CRF. 73% participation among cessor development process consistent with rate University, we point out: During agreement, supplier shall submit to SABESP its invoi- active employees and in line with the market’s best practices, Knowledge centers, Sabesp cooperation network, stimulus to ce evidencing the monthly payment of the social charges, as By the coaching offering a competitive edge in these profes- innovation, critical knowledge, monographs, works and technical provided for by laws. The agreement has a clause referring to process, leader sionals’ qualification. The results obtained presentations, travel report and external events, 64 virtual areas Contractor’s obligations and responsibilities containing labor, have the are already translated into the ascension of and blogs; knowledge center, electronic management of 2,513 occupational safety and environmental requirements and it is opportunity to reflect and 19 professionals (22% of participants), who documents about working processes, articles from domestic and supported by legal orders, thus, conferring to Management a re- review skills and assumed managerial positions between 2011 international training program. levant role in terms of ensuring the labor rights. The contractor challneges and, and 2014. Aiming at structuring other mem- also undertakes to establish partnerships (sub-contractors or forming action bers of the Succession Program, an assess- outsourced workers) only with companies with social security 77% of employees consider plans, improve ment process was conducted in 2014 which Climate Management and labor regular standing, as well as municipal, state or federal the most varied Sabesp a good place resulted in the selection of 78 professionals. taxes regular standing, the contractor being solely liable for any to work capabilities This time, the emphasis was the appointment The Organizational Climate Management at Sabesp enables irregular acts of facts practiced by sub-contractor and/or out- to achieve of new successors by Sabesp’s units, valuing the analysis of the company’s environment and the monitoring of sourced worker of its behalf, employees or representatives. their goals, in line with the the perception of potential leadership detec- employees’ satisfaction, allowing to identify employees’ motiva- Referring to environmental responsibility during its qualifica- Company’s ted by respective areas’ managers. tion in several aspects: leadership, relationship, pride, recogni- tion processes, Sabesp assesses the compliance with local envi- mission Another drive to development is the tion, amongst others ronmental laws by its suppliers through installation and operation Coaching process where leaders have the The latest climate survey took place in the second half of 2013, licenses issued by environmental agencies. In addition, Sabesp opportunity to reflect and review skills and with 73% participation amongst active employees. Summarizing also evaluates the product’s toxicological risks, so that to ensure 59% challenges and from action plans, impro- results, 77% of employees considered Sabesp a good place to safety both at the water treatment station and for end consumer. Average ve the most varied capabilities to achie- work and the average satisfaction index stood at 59%. In 2014, G4-EN32 This process includes the following analyses: tech- satisfaction ve their goals, in line with the Company’s the Company focused the employees’ involvement to prepare ac- nological development index; evaluation of production process, ndex mission. Up to date, 180 leaders from all of tion plans, thus, 18 workshops were held, involving 362 partici- from raw material to final product; checking of aspects related to Sabesp’s executive boards underwent the pants in focused groups with representatives of the Company’s environment/social responsibility; promotion of fair trade, selec- executive coaching. executive boards. ting suppliers with same level of quality and within such context, The direction conferred to the leader- Our conviction is sustained that climate monitoring and em- searching for lower price. (currently, Sabesp has 386 qualified Electronic invitation – in this option, Regional ship programs considers the sanitation ac- ployees’ involvement contribute to the development of an effi- suppliers and 22,547 materials qualified in the series). suppliers are invited by e-mail to regis- purchases, tivity external plan, which has daily beco- cient people management and the organization’s joint commit- Sabesp promotes the participation and engagement of local ter their proposals via Internet. On pre- stimulus to ming more competitive with the presence ment to enable positive results. suppliers in their performance areas. Our business units have -established date, proposals are opened the micro and of domestic and international competitors their own budget and autonomy to contract on a decentralized via Web, via Special Commission of Bids small-sized with new and higher requirements from basis. We operate 23 decentralized units, which process bids and immediately disclosed on the website. company, social responsibility and granting authorities, regulatory authorities Evaluation of suppliers guided by an institutional policy, which aims at ensuring the ap- The Electronic Invitation is used in acqui- adoption of social and the society in general. Therefore, the plication of prevailing laws in supply and contract activities and sition of materials and equipment up to the and environmental evolvement of this sector challenges lea- The Company’s procurement processes are broadly disclosed in establishes conditions, so that purchase and services serve end amount of R$80,000.00. criteria compose ders to find new answers to new questions our electronic bidding portal, available at our Website, ensuring su- customer efficiently. The regional purchases, the stimulus Sabesp’s actions – and managers of the future need to be ppliers equal participation conditions. The relationship with our su- Price Electronic Quote – Reversal Auction – in this option, su- to the micro and small-sized company, the in pursuit of thus qualified. ppliers is guided by ethics, transparency and social-environmental pplier may participate in acquisition of supplies/equipment and social responsibility and the adoption of sustainability in criteria, reason that we encourage entities with which we maintain common services of up to R$16,000.00, works and engineering social and environment criteria compose its contracts business relationship to adhere to the management practices and services of up to R$30,000.00. Through the electronic quote pro- Sabesp’s actions in pursuit of sustainabi- Sabesp operates 23 decentralized reduce the greenhouse gas emissions. We are the first government cess, all potential suppliers are notified via e-mail about the auc- lity in its contracts. Sabesp seeks higher company to implement an electronic procurement process in Bra- tion, therefore, they may tender bids on-line. Same participant number of suppliers meeting the requi- units,which process bids guided zil. Besides reducing costs, the system offers greater transparency, may tender several bids and the system administers them, sho- red technical specifications and quality “by an institutional policy which aims at efficiency and agility to its suppliers and population. wing the lowest prices, without however, reveal the bidders’ na- standards, it maintains a continued eva- ensuring the application of prevailing Sabesp’s on-line procurement system offers its suppliers mes. This type of quote provides transparency to the process and luation process opened to any company same competition and participation conditions, regardless of the allows higher competitiveness and accordingly, reduced prices. interested in performing in any of the lawsand contract activities and estabilishes place these are installed, besides a relevant reduction of costs, The development of information may be followed and checked market segments of its interest. Additio- conditions, so that purchase services and waste and obsolescence. by any citizen, since after the conclusion of the auction, results are nal information is available in our website services serve the end customer efficiently G4-LA14 Referring to the labor laws, it is worth mentioning that disclosed, evidencing once more the Sabesp’s seriousness when www.sabesp.com.br – Qualification Nor- all the requirements to evidence the compliance with its liabilities dealing with these processes. mative Guidelines. 74 75 Child Labor in series. On the other hand, and in relation to the measures taken to effectively eradicate child labor, for the seventh consecutive AWARDS RECEIVED IN 2014 G4-LA15/HR5 Sabesp’s bidding procedu- year, we renewed the Save the Children certifi cate granted by Fun- Corporate Sustainability Index (ISE) BM&FBovespa. Sabesp joins this portfolio for the eight consecutive year. res determine as qualification condition1, dação Abrinq, as reported in the preamble of this chapter. that bidder declares its regular standing “Value 1000” Award – Water and Sanitation Sector, granted by Valor Econômico newspaper. before the Ministry of Labor in the obser- The most infl uential people in Brazil – 2014, conferred to the former chief executive offi cer, Dilma Pena by Época magazine, considered one of vance to the prohibitions provided for in Forced or Slave Labor 2014’s eminent persons. Article 7, item XXXIII of Brazil’s Federal Constitution, i.e., forbidden night, hazar- G4-HR6 The measures adopted by Sabesp to remove all forms IT & Government Award – Public e-Administration category, awarded by Fórum Editorial to Siges – Service Orders Computerized Management. dous or unhealthy work to those under 18 of forced or slave labor result from a study conducted by the Na- Excellence Modern Consumer in Customer Services Award – state government services category, awarded by Consumidor Moderno magazine years of age and any work to those abo- tional Pact on employees production chains, which employ slave to the customer service of regional systems executive board ve 16 years, unless under the condition labor. Actions involving the Registration of Sabesp’s Suppliers One of 100 most innovative companies in IT – Brazil, conferred by IT Mídia, in partnership with PricewaterhouseCoopers (PwC) to Sabesp, as apprentice, as of 14 years of age Du- and the participation in bids and contracts were sent at that time ranked in the 50th position. ring bidding phase, the failure to comply to the Managing Committee of the National Pact for the Eradica- with such notice rule will determine the tion of Slave Labor. Among these actions, we point out: Best Brazilian Sanitation Company, according to the ranking prepared by Spanish consulting fi rm Merco (Business Reputation Monitor) in bidder’s disqualification and during the a) the systematic consultation of our registration area of the partnership with Ibope Inteligência, which lists the 100 most reputed companies in Brazil. contractual performance, any infringe- “black list” of the Ministry of Employment and Labor in order Sanitation Quality National Award (PNQS) 2014, conferred by the Brazilian Association of Sanitary and Environmental Engineering (Abes) : ment to such rules may also result in con- to check if Sabesp’s suppliers are using slave labor; • Level I – Bronze trophy: Vale do Paraíba business unit tractual termination. b) the bidders interested in participating in bids, or to qualify their • Level II – Gold trophy: Mooca and Interlagos regional management units Besides the conditions foreseen in the products in Sabesp, have to declare they do not use slave la- • Level II – Silver trophy: São Mateus regional management unit bidding procedures, the company has its bor in their production chain and; • Level III – Platinum trophy: Santo Amaro regional management unit own qualification process for suppliers c) the contractual provision that the contractor will take the res- The mesures and related products to acquire strategic ponsibility for any use of slave labor in its production chain. São Paulo Management Quality Award PPQG/2014, organized by the São Paulo Management Quality Institute (IPEG): adpted by Sabesp • Level III – State Governor Trophy: Billings regional management unit to remove all materials, such as chemical products. Within this context, we point out that, the utilization of forced forms of forced In the qualifi cation of suppliers, several or compulsory labor is reason for terminating the agreement • Level II – Gold Medal: Santo Amaro regional management unit or slave labor requirements are evaluated, amongst them, with Sabesp. One of the 15 priority works for Brazil’s development, granted according to a study issued by KPMG, independent auditors, auditing companies to result from a the production process, from raw material Also in relation to the commitments assumed, Sabesp publi- PPP São Lourenço. study conducted to the end product, verifying aspects re- shes in its Social Report, included in its Sustainability Report that by the National lated to the social responsibility, such as does neither employ child nor slave labor, it is not involved in Anefac 2014 Transparency Trophy – publicly-held companies with turnover up to R$5 billion, awarded by the National Association of Finance Pact on slave child labor. Currently, Sabesp has 386 quali- prostitution or sexual exploitation of child or adolescent and it is Executives (Anefac) to Sabesp’s fi nancial statements. labor employing production chains fi ed suppliers and 22,547 materials qualifi ed not involved in corruption. SP 2014 Highlights CIO Award, conferred by IT4CIO Network Technology to Sabesp’s IT Superintendent due to his infl uence on the information technology sector.

DatacenterDynamics Awards 2014 National Champion in two categories: innovation in medium datacenter and leadership in the public sector, awarded by Datacenterdynamics to Sabesp’s data center.

Winner in the Sanitation Ranking 2014, awarded by Instituto Trata Brasil to the city of Franca with the basic sanitation best indexes (water supply; Water Guardians sewage collection and treatment; losses; investments/collection). In January 2015 only 2nd position in the Benchmarking Ranking of Companies with the Best Sustainability Practices in Brazil, awarded to Sabesp by Benchmarking 10,023 Brasil, recognized as benchmark in the management of sustainability practices. im condos with increased 3rd Most Reliable Institution, conferred by Brazilian institute of Public Opinion and Statistics (Ibope) to Rede Nossa São Paulo, São Paulo citizens’ 40,000 consumption condos 89 were visited recognition to Sabesp for its services rendered with quality. visited by Sabesp 800 teams in 2014 neighborhood watertanks Learning & Performance Award Brasil – Micropower, ABRH and ADVB 2014 – National Benchmark and rankest fi rst – Best Practices and were distributed (some more in the rst quarter 2015 Lessons Learned to Develop Human Capital than once) impacting over For socially 6 million vulnerable families HR Management Award and “1,000 top and best companies” (Exame magazine) and “Best Companies to Work for” 2014: (income up to • Top 100 Companies in HDI – Organizational, Sustainability, Human Development Index people three minimum wages) • “Top 100 Companies in Corporate Citizenship 2014”. goal: who had lack of water 20% problems caused by low savings 25,000 reservation in their homes São Paulo Diversity Seal – Full Seal, awarded by the São Paulo State Government to Sabesp for reaching the most advanced professional and on tap units personal diversity policy level millions of The aim was to adjust buildings reservation capacity to Brazilian Association of Abrinq Seal – Awarded by Fundação Abrinq – Save the Children, for the seventh consecutive year, for the projects: Child Citizen Institute (ICC), flow reduction devices Technical Standards (ABNT) regulation distributed to RMSP customers and keep up to 24 hours water supplies through which Sabesp is the cosponsor of nine daycare centers and three circus schools; Clubinho Sabesp, and the Apprentice Project

1 – Law 8,666/93 – Article. 27, item V – in compliance with provisions of Article 7, item XXXIII of the Brazilian Federal Constitution. (included by Law no. 9,854 IT&Government Award 2014, granted by Fórum Editorial – Informática Hoje newspaper to SiiS Project – Sabesp’s Information Integrated System. of 1999). 76 77 2014 ANNUAL SOCIAL REPORT 5 – Staff Indicators 2014 2013 Number of emloyees at the end of the period 14,753 15,015 Number of employees hired during the period 26 536 Number of outsourced employees* 7,478 7,108 Number of interns 942 924 1 – Calculation Basis 2014 Ammount (Thousand reais) 2013 Ammount (Thousand reais) Number of employees above 45 years 8,648 8,234 Net Revenue (NR) 11,213,216 11,315,567 Number of female employees 2,977 3,047 Operating Profit (OP) 1,910,709 3,138,845 % of management positions held by female employees 19.44% 19.03% Number of afro-descendent employees 2,261 2,307 Gross payroll (GP) 2,123,607 1,927,078 % of management positions held by black employees 3.76% 3.34% Amount Amount Number of physically-impaired employees or employees 2 – Internal Social Indicators % on GP % on NR % on GP % on NR 219 174 (thousand) (thousand) with special needs Meals 144,449 6.80% 1.29% 135,320 7.02% 1.20% 6 – Relevant information about the exercise 2014 Ammount Targets 2015 Compulsory payroll changes 177,969 8.38% 1.59% 160,195 8.31% 1.42% of corporate citizenship (Thousand reais) Private pension 69,474 3.27% 0.62% 88,426 4.59% 0.78% Ratio between the highest and lowest compensasion 18.28 20.1 Healthcare plan 131,353 6.19% 1.17% 124,305 6.45% 1.10% in the Company Occupational health and safety 11,541 0.54% 0.10% 12,494 0.65% 0.11% Total number of occupational accidents 157 165 Education 2,000 0.09% 0.02% 2,919 0.15% 0.03% ( ) management ( ) management Culture 457 0.02% 0.00% 846 0.04% 0.01% The social and environmental projects developed by the (x) management and managers (x) management and managers Company were defined by: Professional training and development 10,501 0.49% 0.09% 10,785 0.56% 0.10% ( ) all employees ( ) all employees Day-care assistance 1,936 0.09% 0.02% 2,154 0.11% 0.02% (x) management and managers (x) management and managers The safety and health standards in the work environment Profit sharing 63,925 3.01% 0.57% 52,928 2.75% 0.47% ( ) all employees ( ) all employees were defined by: Other 3,967 0.19% 0.04 4,178 0.22% 0.04% ( ) all + Cipa ( ) all + Cipa Total – Internal social indicators 617,572 29.08% 5.51% 594,550 30.85% 5.25% With respect to the trade union freedom, the right to collective ( ) dos not get involved ( ) dos not get involved bargaining agreement and the internal representation of ( ) follows ILO rules ( ) follows ILO rules Amount Amount 3 – External social indicators % on OP % on NR % on OP % on NR employees, the Company: (x) will incentive and follow ILO (x) will incentive and follow ILO (thousand) (thousand) ( ) management ( ) management Education 1,256 0.07% 0.01% 2,028 0.06% 0.02% The private pension plan includes: ( ) management and managers ( ) management and managers (x) all employees (x) all employees Culture 14,445 0.76% 0.13% 24,933 0.79% 0.22% Health and sanitation 838 0.04% 0.01% 5,396 0.17% 0.05% ( ) management ( ) management The profit sharing includes: ( ) management and managers ( ) management and managers Sports 2,584 0.14% 0.02% 4,341 0.14% 0.04% (x) all employees (x) all employees Hunger erradication and food safety 0 0.00% 0.00% 26 0.00% 0.00% In the selection of suppliers, the same ethical ( ) are not considered ( ) are not considered Other 12,979 0.68% 0.12% 10,606 0.34% 0.09% and social and environmental responsibility standards ( ) are suggested ( ) are suggested Total contributions to society 32,102 1.68% 0.29% 47,330 1.51% 0.42% adopeted by the Company: (x) are required (x) are required Taxes (excluding payroll charges) 1,470,003 76.93% 13.11% 1,834,843 58.46% 16.22% ( ) does not get involved ( ) does not get involved With respect to the employees participation in ( ) supports ( ) supports Total – External social indicators 1,502,105 78.62% 13.40% 1,882,173 59.96% 16.63% voluntary work programs, the Company: (x) organizes and encourages (x) organizes and encourages 4 – Environmental Indicators Valor (mil) % sobre RO % sobre RL Valor (mil) % sobre RO % sobre RL in the Company (Ombudsman) 65,762 na empresa Ouv. n/a Investments related to the Company’s production / operation 15.155 0,79% 0,14% 17.096 0,54% 0,15% Total number of customer’s complaints and comments in Procon CIP 2,000 no Procon CIP n/a Investments in external programs and/or projects 14.695 0,77% 0,13% 15.437 0,49% 0,14% in Court JEC/Conc. 331 na Justiça JEC/Conc. n/a Total investments in environment 29.850 1,56% 0,27% 32.533 1,04% 0,29% in the Company (Ombudsman) 98.16% na empresa Ouv. n/a % of complaints and comments received or solved in Procon CIP 89.6% no Procon CIP n/a Concerning the establishment of “annual goasl” to (X) does not have goals (X) does not have goals in Court JEC/Conc. 76.7% na Justiça JEC/Conc. n/a minimize waste, general consumption in production/ ( ) fulfill from 0 to 50% ( ) fulfill from 0 to 50% operation, and improve the efficiency in the use ( ) fulfill from 51 to 75% ( ) fulfill from 51 to 75% Total value added to distribute (em thousands of R$): In 2014: 5,731,007 In 2013: 6,656,476 of natural resources, the Company ( ) fulfill from 76 to 100% ( ) fulfill from 76 to 100% 25.6% government; 27.6% government 34.1% employees; 26.3% employees; Distribution of value added: 15.7% shareholders; 6.9% shareholers; 24.6% outsourced; 17.2% outsourced; 12.0% retained 22.0% retained

7 – Other information

HR7 “This company does no hire child or slave labor, it has no involvement with prostitution or sexual exploration of children or adolescents and is not involved in corruption”. “Our company values and respects the internal and external diversity”. “The number of outsourced employee(s) is estimated considering the labor allocated to services agreement, since Sabesp does not hire outsourced workers directly”.

78 79 Materiality matrix relevance and applicability for its busines- ses and sector, by means of materiality tests, The indicators discussed were prioritized according to the re- pointed out the aspects effectively relevant levance for Sabesp and stakeholders with whom the Company is for the organization at this moment – issues periodically engaged: employees, customers (municipalities), cus- which may reflect the economic, social and tomers (consumers), investors, suppliers, experts and third sector environmental impacts or which may signi- /associations. These stakeholders participate in on-line consulta- ficantly influence the stakeholders’ evalua- tions where they could point out the “very relevant”, “relevant” tions and decisions. This process gave rise to and “irrelevant” aspects among those composing the GRI metho- the following materiality matrix. The aspects ABOUT THE REPORT dology. In total, 201 persons expressed their opinion. contained in the quadrant “very relevant” G4-20 Crossing the issues mentioned by stakeholders, added to have been discussed in report and are rele- the analysis of 2014 Company clipping and Sabesp’s perception of the vant for the entire organization. G4-18/19/21/22/24/25/26/28/29/30/31/33/80

For eight years, Sabesp has been yearly thod and accepted in today’s sustainability reports. We decided releasing its Sustainability Report. This is to migrate from version 3.1 of GRI, adopted in the last four editions Aspects to be reported the fourth edition published concurrently to G4 guidelines, mandatory as of reports prepared based on the with the Company’s Management Report, year of 2015. The indicators can be found highlighted throughout  Economic performance in line with our Joint Committee’s decision the text, alongside the issue reported. A reference list describing  Procurement practices to comply with the market best practices. each one of these indicators can be found in the final pages he- This initiative is also in line with the princi- reof. This report was not submitted to external check.  Energy ple of accountability transparency with the Following the content of the last reports, the execution of this stakeholders involved in such business. report also started with the top management’s involvement, after  Water The material approaches the Company’s discussion and approval of the process adopted for its prepara- performance from January 1, 2014 to De- tion by the Company’s Joint Committee in a meeting held in De-  Emissions cember 31, 2014. Therefore, this docu- cember 2014. Subsequently, in March 2015, documentation was  Effluent and waste ment includes main information about the sent to the Board of Directors’ cognizance. Company’s operational, economic, social In addition, the rules issued by the Brazilian Securities and  Products and services and environmental performance in refer- Exchange Commission (CVM) were applied and the International red period. The growth opportunities stra- Financial Reporting Standards (IFRS), issued by the International  Conformity tegically built from challenges found in the Accounting Standards Board – IASB were applied in the financial Company’s daily activities are also repor- statements and pursuant to the accounting practices adopted in  Investments and environmental protection expenses ted herein and follow business develop- Brazil which observe the pronouncements issued by the Brazilian  Action against corruption ment projections until the end of decade, Accounting Pronouncements – CPCs. as set out in our Target Plan. The financial statements are audited by Deloitte Touch To-  Customer’s health and safety The information contained herein also matsu Auditores Independentes. In order to prepare the Social follow the evolution of works executed by Report, we used the guide of Brazilian Institute of Social and Eco- Sabesp included in its latest report relea- nomic Analyses (Ibase) and the Instituto Ethos’ model. sed on March 31, 2014. In addition, these The survey of data and the construction of texts relied data are also used as document to eviden- on the participation of a team composed of two members of each ce the company’s advance in relation to one of the Company’s five executive boards, all of them directly the 10 principles defined by Global Com- appointed by officers. With the participation of other strategic pact, from which Sabesp has been signa- departments composing the work group. tory since 2006. This initiative created by Successive meetings were held, whether individually or joi- the United Nations (UN) includes compa- ning the whole team for adjustments to the data collection pro- nies that promote the sustainable develo- cess, alignment of issues and number checking, always seeking pment from guidelines which encompass the accuracy and clarity in information disclosed. The prepara- human rights and the sustainable relation tion hereof also had the technical contribution of MZ Associados with environment. consulting firm. In 2014 report we again followed the The electronic version of this report can be found in at our GRI (Global Reporting Initiative) methodo- website www.sabesp.com.br/RS2014, on this date only in Portu- logy which proposes guidelines to monitor guese and subsequently also in English and Spanish versions. the economic, social and environmental Further information, suggestions and comments about this public indicators. This is the most complete me- must be sent to [email protected]. 80 81 G4-32 GRI G4 Indicator Pages Economic category GRI INDICATORS Economic performance G4-EC1 Direct economic value generated and distributed 52 G4-EC2 Financial implications and other risks and opportu-nities for the organization's activities due to climate change 21 Este relatório apresenta conteúdos Padrão das Diretrizes GRI para Relato de Sustentabilidade. Presence in the market A localização dos indicadores abordados no relatório está identificada nas tabelas a seguir. G4-EC5 Range of ratios of standard entry level wage, by gender, compared to local minimum wage at significant 69 locations of operation Indirect and economic impacts Overall Standard Contents Page G4-EC8 Significant indirect economic impacts, including the extent of impacts 37, 44, 62, 67 Strategy and analysis Environmental category G4-1 6, 7 Supplies G4-EN1 Chemical products used to treat water and sewage 14 Organizational profile G4-EN2 Percentage of chemical products used in water and sewage treatment deriving from recycling 14, 59 G4-3 9-10 Energy G4-4 9-10 G4-EN3 Total electricity consumption 14 G4-EN5 Electricity consumption /m³ for water and sewage 14, 34 G4-5 9-10 G4-EN6 Reduction of energy consumption for water and sewage 14, 34 G4-6 9-10 G4-EN7 Reductions in energy/m³ requirements for water and sewage 14 G4-7 9-10 Water G4-EN8 Total water withdrawn – surface and underground sources 14 G4-8 9-10 G4-EN10 Percentage of water consumption at ETAs 14 G4-9 9-10 G4-EN10 Recovery percentage of washing water for filters and clarifiers at ETAs 14 G4-10 61 Biodiversity G4-EN11 Reserves inside protected areas 57 G4-11 69 Emissions G4-13 No relevant changes to be reported G4-EN15 Direct emissions of greenhouse gases (GEE) (Scope 1) 14, 56 G4-EN16 Indirect emissions of greenhouse gases (GEE) deriv-ing from energy acquisition (scope 2) 14, 56 G4-15 61 G4-EN17 Other indirect emissions of greenhouse gases (GEE) (Scope 3) 14, 56 G4-16 56 Effluents and waste Relevant aspects identified and thresholds G4-EN22 Reuse water volume provided 14 G4-EN22 Percentage of reuse water sold over sewage treat-ed at ETEs with reuse 14 Not applicable G4-17 G4-EN22 Reuse water percentage provided over installed capacity 14 G4-18 80-81 Products and services G4-EN27 33 G4-19 80-81 Water Rational Use Program G4-EN27 Effluents reuse 38 G4-21 80-81 Overall G4-22 80-81 G4-EN31 Total environmental protection expenditures and investments 14, 55 Social category G4-23 No relevant changes to be reported Labor practices and decent work Steakholders commitment Employment G4-24 80-81 G4-LA1 Total number and percentages of hiring of employ-ees and turnover by age group, gender and region 65 G4-LA2 Benefits granted to full-time employees not provid-ed to temporary workers or part-time employees, broken down by 68 G4-25 80-81 important operating units of organization G4-26 80-81 G4-LA3 Return-to-work and retention rates after materni-ty/paternity leave, broken down by gender 66 Labor relations Report profile G4-LA4 Minimum notice period(s) for operational changes and whether they are specified in collective agreements The collective G4-28 80-81 agreements do not stipulate a G4-29 80-81 minimum term to 80-81 notify operational G4-30 changes. Any G4-31 80-81 change is notified in advance, and term G4-32 80-82 varies according to the situation G4-33 80-81 Governance G4-34 10 Ethics and honesty G4-56 27, 61

82 83 GRI G4 Indicator Pages GRI G4 Indicator Páginas Occupational Health and Safety Society G4-LA5 Percentage of workforce represented at formal health and safety committees, composed of employees from different 71 Local communities hierarchical levels, who help to monitor and guide occupational health and safety programs G4-SO1 Percentage of operations with commitment programs implemented with local community, assessment of impacts 63 G4-LA6 Types and rates of injuries, occupational diseases, days lost, absenteeism and number of occupational diseases, 72 and local development broken down by region and gender Action against corruption G4-LA7 Employees with high level or high risk of occupa-tional diseases 72 G4-SO3 Percentage and total number of operations analyzed for risks related to corruption and significant risks identified 27 G4-LA8 Topics related to health and safety covered by formal agreements with unions The collective G4-SO4 Communication and training in policies and procedures against corruption 27 agreements executed between G4-SO5 Cases confirmed of corruption and the measures taken 26 Sabesp and Union Government policies entities do not G4-SO6 Total value of financial contributions to political parties and politicians, by country and addressee/beneficiary Sabesp does not include specific adopt such practice issues related to Unfair competition health and safety Total number of legal actions for anti-competitive behavior, anti-trust, and monopoly practices and their outcomes Lawsuit filed in Trading and Education G4-SO7 2010 continues in Average number of training hours/year per employ-ees, broken down by gender and employee category 73 G4-LA9 progress due to G4-LA10 Continued skills and learning programs contrib-uting to continued employability during pre-retirement period 73 damages caused G4-LA11 Percentage of employees regularly receiving ca-reer development and performance analyses, broken down by 69 in view of cartel of gender and employee category gases sentenced Diversity and equal opportunities by Cade (Brazilian G4-LA12 Composition of groups in charge of governance and breakdown of employees by employee category, according to the 86-88 Antitrust Agency). gender, age group, minorities and other diversity indicators Decision was Equal compensation between men and women unfavorable to G4-LA13 Mathematical ratio between salary and men/women compensation, broken down by employee category and relevant 69 Sabesp at trial operating units court, and currently, judgment on appeal Suppliers evaluation in labor practices is pending G4-LA14 Percentage of new suppliers selected based on labor practices-related criteria 74 G4-LA15 Actual and potential relevant negative impacts for labor practices in supply chain and measures taken referring to 76 this issue Human rights Non-discrimination G4-HR3 Total number of incidents of discrimination and corrective actions taken 26 Freedom of association and collective bargaining G4-HR4 Operations and suppliers identified in which the right to exercise freedom of association and collective bargaining 69 may be infringed or may be at significant risk, and actions taken to support these rights Child labor G4-HR5 Operations and suppliers identified as having risk for incidents of child labor and measures to contribute to the effective 76 eradication of child labor Forced or compulsory labor G4-HR6 Operations and suppliers identified as having significant risk for incidents of forced or compulsory labor, and 76 measures to contribute to the elimination of all forms of forced or compulsory labor Safety practices G4-HR7 Percentage of security personnel trained in the organization’s policies or procedures concerning aspects of human 79 rights that are relevant to operations Indigenous rights G4-HR8 Total number of incidents of violations involving rights of indigenous people and actions taken in this regard In 2014, no GLOBAL COMPACT PRINCIPLES occurrences of this type were registered Principles Pages 1 – Businesses should support and respect the protection of internationally proclaimed human 61, 76 rights 2 – Make sure that they are not complicit in human rights abuses 61, 76 3 – Businesses should uphold the freedom of association and the effective recognition of the right 69 to collective bargaining 4 – The elimination of all forms of forced and compulsory labor 76 5 – The effective abolition of child labor 76 6 – The elimination of discrimination in respect of employment and occupation 26, 27 7 – Businesses should support a precautionary approach to environmental challenges 7, 55, 58, 59 8 – Undertake initiatives to promote greater environmental responsibility 55, 58, 59 9 – Encourage the development and diffusion of environmentally friendly technologies 44 10 – Businesses should work against corruption in all its forms, including extortion and bribery 7, 28 84 85 86 87 88