Companhia de Saneamento Básico do Estado de São Paulo - SABESP

Okay, good morning to all. Welcome to SABESP's video conference to discuss the earnings for Q3. My name is Mário Sampaio. I am Head of Capital Markets and Investor Relations at SABESP. Today, we have with us here Dr. Benedito Braga, Chairman of SABESP, Mr. Osvaldo Garcia, Financial Economic Director and Investor Relations, Mr. Marcelo Miaghi, Head of Accounting, Marcelo Sanchez, Superintendent for Regulation. Before passing the floor to Dr. Braga to begin the conference, I'd like to Give some information. First, this video conference is being recorded and the presentation will be available for download at our portal where we already have the press release. We will accept questions only in writing through chat.

Our conference will

It will be for an hour and 30 minutes, and we will have 45 minutes to answer questions from analysts, and at the end, we will have time for questions from journalists. To conclude, a small disclosure. We would like to clarify that any declarations made during this conference concerning the business Perspectives of the company, projections, operational and financial goals are based on beliefs and assumptions of the company's board and also information currently available to the company. Considerations about the future are not guarantee of performance. They involve risks, uncertainties because they refer to future events and therefore depend on circumstances that may or may not occur. Investors should understand that general economic conditions, industry conditions and other operational factors may affect the future results of the company and may lead to results that may differ materially from those expressed in these considerations about the future. Now, I would like to pass the floor to Dr. Braga Dr. Braga, you have the floor for the opening of this conference. Thank you very much, Mário. Good morning to everyone. It's a great satisfaction to bring to you on this rainy morning good news to all. We had very positive financial results, but I will allow our CFO, Dr. Osvaldo Garcia, to talk about this point to you. I would like to begin with three or four topics that are of your interest. Also, as a result of this good news, we have a rainy morning concerning the water safety. We are actually having a situation that is an extreme drought in the southeast of Brazil and this even affected the electricity sector and also, as Dr. Oswaldo may explain, issues involving cost of energy, that went up as a result of this extreme drought situation that we are having. And we were able to get a special authorization from the water authorities to bring from our reservoir in Jaguari, on Paraíba do Sul River, 40 million cubic meters. These are additional until the end of this year. An additional 40 million cubic meters until the end of this year, thus increasing our water safety. I also inform in this direction, talking about water safety, that the works for abstraction of water from Icapanhão River to the Reservoir Beativa Mirim in the Alto Tietê system may remove or may abstract 2.5 million cubic meters of water with a monthly average like this. The works are going very well, and in the first semester of next year, We will have the inauguration of this supplementary system. Now concerning rainfall, we had a month of October that was a little above average in terms of rainfall, but a month of November in the first two weeks, a November with little rainfall, but we still have hopes that In the second part of November, we may have more rainfall to recover our levels at the reservoirs without the need to have any extraordinary measures to guarantee the supply of water in the metropolitan region of São Paulo. In the interior, we had a situation in the city of Franca, In the month of August-September, we had to begin a rationing plan, but this situation is over and today the supply of water in the city of Franca is normal. So, in the other cities, 375 cities, the situation is okay concerning the supply of water. Another important piece of news, very important news, is the implementation of NETS at NETA. This platform will allow the new tariff structure that we have, this structure where we will have a single tariff for all our cities, and this will be applied In 2022, and reminding you that the minimum tariff disappears and we will have a fixed tariff for water connection and plus water consumption. So the person will only pay for what they use, but there will be a fixed fee in the new tariff structure. Also, through this new platform, Netat, we will have a different interaction with clients, much better interaction with payment via PIX, credit cards. In other words, a modernization, a very important modernization and update. Right now, we are implementing this system. There are some initial issues. For example, we have in our contact center, also we had a problem with fake news on fake bills from SABESP, but the Netto system has a much greater efficiency, brings us this greater efficiency and a reduction in delinquency due to The fact that we are working with taxpayer numbers, taxpayer numbers and ID numbers. Our corporate area did an excellent job, an important job, and we inaugurated this new era in terms of relationship with the clients and the monitoring of our So this is an important piece of news. We are modernizing the company. Now, concerning the new sanitation law and the decree that regulates Article 16 in terms of proving the economic financial capacity of the company as a result Of the goals for 2033 concerning 99% coverage with water and also sanitation, we are very comfortable with these issues. Yes, we will have conditions to prove our financial economic capacity, As a result of the following, our largest consumers, our largest cities will not need investments in CapEx. We had already foreseen getting to a situation of universalization before 2033. Also, I can mention here that, unfortunately, the federal government did not act on time in regulating this law and published this decree with nine months late. The National Water Agency regulated other indices that we will have to follow everything We are working hard and fast for everything to be done, everything that is from our part until December 31st and with this we will be absolutely in agreement with the new law for sanitation. Finally, I would like to mention that SABESP was the only company In the Southern Hemisphere to have an agreement with UNFCCC, which is the platform of the United Nations for Climate Change, where we are collaborating in this worldwide movement to increase the resilience of the water systems. We participated actively in COP26, taking our vision and showing that these discussions of the UN, the 26th, have focused a lot on the energy issue, CO2, the problems that will happen In the long term, in the future, but they were not concerned with adaptation, which is happening right now. You can see the issues concerning the drought we have in Brazil, and SABESP has been an example for the rest of the world, for the sanitation companies in the world, because It prepared itself. We adapted ourselves to climate change. So, it is with great satisfaction that we saw that the final report of the chairman of COP26 gave more importance to the adaptation issue. And not only this, the next COP that will happen in Egypt next year, the focus will be on Everyone adapting themselves and how this will impact and bring an improvement to the less developed countries in the southern hemisphere. Also, within this context of ESG, the company is alert, the company is getting stronger and stronger in this direction, ESG. Well, I believe you are more interested right now in hearing our CFO and the positive results in finance. So, Dr. Osvaldo, you have the floor. Good morning, Chairman Braga. Good morning to all. I thank you all for participating in this video conference to discuss the earnings of Q3 2021. Beginning on slide 3, we observe the total volume built with a growth of 3.7% in relation to Q3 2020. This considering the volumes of Mawa, which in this quarter is working in retail, and in Q3 2020, they were working not in retail, Well, this considering the volumes that are exempt from collection and also social and residential categories in shanty towns, going from 957.3 million to 992.7 million cubic meters built. This growth is greater in the sewer services, 4.1% in relation to the volume built in the segment of water that rose 3.4%. The most significant increase happened in the non-residential categories, where tariffs are higher. 15.7% in public, 7% in commercial, and 6.6% in industrial clients. In the residential segment, which represents the greatest volume in relation to the total, the growth was 3.2%. With the recovery of consumption We noticed a recovery in the average tariff with favorable impact on revenue.