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CIA. DE SANEAMENTO BÁSICO DO ESTADO DE SÃO PAULO - SABESP
Rui de Britto Álvares Affonso
Chief Financial Officer and Investor Relations Officer
Mario Azevedo de Arruda Sampaio
Head of Capital Markets and Investor Relations

SABESP announces 1Q09 results
São Paulo, May 15, 2009 - Companhia de Saneamento Básico do Estado de São Paulo –SABESP (BM&FBovespa: SBSP3; NYSE: SBS), one of the largest water and sewage services providers in the world based on the number of customers, announces today its results for the first quarter of 2009 (1Q09). The Company’s operating and when indicated otherwise, is presented in Brazilian Reais, in accordance with the Brazilian Corporate Law. All comparisons in this release, unless otherwise stated, refer to the same period of 2008.		SBSP3: R$ 28.96 / share  SBS US$ 27.40 (ADR=2 shares) Total shares: 227,836,623  Market value: R$ 6.6 billion  Closing price: May 15, 2009

1. Net Operating Revenue

In 1Q09, net operating revenue totaled R$ 1.7 billion, a 7.4% increase compared to same period of 2008. Costs and expenses, stood at R$ 1.2 billion, 30.1% higher than in the previous year. EBITDA dropped 19.5%, from R$ 774.4 billion in 1Q08 to R$ 623.6 billion in 1Q09.

Earnings before financial expenses (EBIT) decreased 26.0%, from R$ 624.3 million in 1Q08 to R$ 462.0 million in 1Q09.

This quarter results was particularly affected by an accounting register of R$ 146.6 million, corresponding to payment of termination costs related to retired employees who will be laid off, between 2009 and 2011, in compliance to the Conduct Adjustment Term (TAC). Disregarding this fact, net income would have totaled R$ 358.3 million, and EBITDA R$ 778.2 million, with a 47.1% margin.

2. Gross operating revenue

In 1Q09, gross operating revenue grew R$ 120.8 million, or 7.3%, from R$ 1.7 billion in 1Q08 to R$ 1.8 billion in 1Q09. The main reasons for this increase were:

• The 5.1% tariff adjustment as of September 2008;
• The 3.0% growth in total billed volume, 2.7% of which corresponded to water and 3.5% to sewage.

3. Billed volume

The following tables show billed water and sewage volume per customer category and region in 1Q08 and 1Q09.

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4. Costs, administrative and selling expenses

In 1Q09, costs of products and services, administrative and selling expenses increased 30.1% (R$ 275.6 million). Costs and expenses as a percentage of net revenue grew from 59.5% in 1Q08 to 72.1% in 1Q09. Excluding the TAC effect of R$ 146.6 million, these costs would have reached R$ 1,036.8 million and its net revenue percentage would be of 62.7% .

4.1. Payroll and benefits

In 1Q09 payroll and benefits grew R$ 169.0 million or 53.0%, from R$ 319.0 million to R$ 488.0 million, due to:

• Wage increase of 5.03% as of May 2008;

• R$146.6 million increase (non recurring) due to the TAC, composed of advanced notice, assessment of Government Severance Indemnity Fund for Employees - FGTS - and benefits;

• R$7.9 million increase in payment of assessment of FGTS; due to lay off occurred in 1Q09, not associated to the TAC; and

• R$1.3 million increase in provision for pension plan obligations, due to the adjustment of 2009 estimated value.

4.2. Supplies

In 1Q09, supplies grew R$ 4.1 million or 13.4%, from R$ 30.7 million to R$ 34.8 million. The main reasons for this increase were expenses with supplies used in the maintenance of water and sewage treatment stations and electrical and electro-mechanical systems in pumping stations and sewage treatment, and the intensification of efforts related to the Water Loss Reduction Program.

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4.3. Treatment supplies

In 1Q09, expenses with chemical products dropped R$ 1.2 million or 3.0%, from R$ 40.0 million in 1Q08 to R$ 38.8 million in 1Q09, mainly due to the improvement in the quality of water of the Alto Tietê and Guarapiranga reservoirs.

4.4. Services

In the 1Q09, this item grew R$ 53.3 million or 41.5%, from R$ 128.4 million to R$ 181.7 million. The main factors leading to this increase were:

• Expenses with advertising campaigns focused on social environmental initiatives, such as Onda Limpa, Projeto Verão, Córrego Limpo, PURA (Program for the Rational Use of Water), among others, in the amount of R$ 16.5 million, which will be recurring for the coming quarters;

• Expenses with risk contracts for the recovery of credits in the amount of R$ 8.7 million, due to the intensification of collection operations, which led to a R$ 65.3 million increase in the quarter’s ;

• Technical professional services in the amount of R$ 5.4 million due to the hiring of consultancy and advisory firms, as well as other specialized services focused on several areas, such as: implementation of Added-Value Management (GVA), hiring of the FIPECAFI (Actuarial and Economic Research Institute Foundation) to conduct studies regarding characteristics of large water clients demand, development of quality management projects for maintenance services at the Regional Office – GLOBAL “R”, investment bank to conduct the economic-financial valuation of the EMAE (Metropolitan Company of Water and Energy), engineering service to list, describe and analyze properties sewage systems; monitoring, analysis and integration of the information image exposure, among others;

• Residential connection and sewage network maintenance in the amount of R$ 7.5 million, due to the intensification of the efforts to meet the demand from the Córrego Limpo Program with the Municipality of São Paulo;

• Preventive and corrective maintenance of water and sewage treatment systems in the amount of R$ 3.8 million;

• Expenses with the implementation of PURA (Program for the Rational Use of Water) at municipal schools in the amount of R$ 3.4 million, as a result of the partnership established between Sabesp and the São Paulo municipal government, with higher disbursements since July/08;

• Hydrometer reading and bill delivery in the amount of R$ 2.5 million, due to the higher number of connections and utilization of new technologies, increasing security and speeding up the system for issuing and reading the bills; and

• Car rental expenses totaling R$ 2.2 million, due to the replacement of the Company’s own fleet as of 2008.

4.5. Electric power

In 1Q09, electric power expenses grew R$ 3.6 million or 3.2%, from R$ 113.5 million to R$ 117.1 million. This result was due to: The 3.5% adjustment in the tariff from the captive market and a 3.7% consumption increase, while the free market presented a 13.5% drop in consumption and 3.7% increase in tariffs.

4.6. General expenses

In 1Q09, general expenses dropped R$ 10.4 million or 15.2%, from R$ 68.4 million to R$ 58.0 million, mainly due to the decline of R$ 14.6 million in provisions for judicial contingencies.

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4.7. Credit write-offs

In 1Q09 credit write-offs grew R$ 29.9 million or 52.0%, from R$ 57.5 million to R$ 87.4 million, mainly due to the need to complement provision over the municipalities billing, that are served by the Company in the wholesale. These values are registered as provision at the moment of the debit, which will be non-recurring for the coming quarters.

4.8. Tax expenses

In 1Q09 tax expenses grew R$ 15.8 million or 192.7%, due to:

• Payment of the Municipal Real Estate Tax – IPTU to the São Paulo municipality in the amount of R$ 8.3 million, which will be recurring; and

• Payment of the TRCF (Regulation, Control and Supervision Charge) to ARSESP (São Paulo State Sanitation and Energy Regulatory Agency) in the amount of R$ 6.3 million, which will be recurring for the coming quarters.

5. Other operating revenues and expenses

5.1. Operating revenues

Operating revenues dropped R$ 7.8 million in 1Q09, mainly due to decrease in the sale of exceeding electric power.

5.2. Operating expenses

Operating expenses declined R$ 1.3 million or 38.2%, mainly as a result of lower write-off in suspended construction works and projects due to obsolescence.

6. Financial revenues and expenses

6.1. Financial expenses

In 1Q09, financial expenses dropped R$ 23.3 million or 13.4%, as described below:

• R$ 4.3 million increase in interest in international financing, due to the new AB LOAN, contracted in June, 2008, in the amount of US$ 250.0 million, with booking of interest of R$ 6.8 million in 1Q09; and to the loan with the IDB (Inter-American Development Bank), with variation of R$ 1.2 million, due to a lower US dollar depreciation, of 0.93% in 1Q09 compared to 1.25% in 1Q08;

• This increase was partially offset by the settlement of the 2008 Eurobonds, in June 2008, in the amount of US$ 98.0 million, with a R$ 3.8 million variation;

• Decrease in interest on lawsuits in the amount of R$ 19.8 million, due to lower indemnities payment; and

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• R$ 7.8 million decrease in other financial expenses, mainly due to the adjustment in interest calculation regarding the special installment program (PAES).

6.2. Financial revenues

Financial revenues presented an increase of R$ 12.1 million mainly due to the income arising from the higher average balance of financial investments in 1Q09.

7. Foreign exchange and indexation

7.1. Variation on liabilities

The net effect of the variation on liabilities was R$ 66.6 million lower in 1Q09 versus 1Q08, due to the:

• 0.93% US Dollar appreciation versus the Brazilian Real in 1Q09, was higher than the US dollar depreciation in 1Q08 (1.25%), in addition to the currency basket variation, which recorded a 3.6% depreciation in 1Q09 and a 6.0% appreciation in 1Q08, totaling a net impact of R$ 44.4 million in exchange variations. The US Dollar denominated debt balance in 1Q08 was R$ 1.2 billion (US$ 679.7million), versus R$ 1.8 billion (US$ 789.3 million) in 1Q09;

• R$ 26.6 million decrease in monetary variation on debentures, resulting from a lower variation in the IGPM (General Market Price Index) – 0.92% in 1Q09, versus 2.38% in 4Q08; and

• Other monetary variations from lawsuit indemnities, with a R$ 4.1 million increase.

7.2. Variation on assets

The variation on assets declined R$ 8.1 million, mainly due to retention of JICA (former JBIC) disbursements in December 2008 and January 2009, which were affected by depreciation of the yen, by the time of the disbursement in February 2009.

8. Operating indicators

Sabesp continues to work on reducing water loss. Total water loss dropped 6.5%, from 29.1% in 1Q08 to 27.2% in 1Q09. This reduction can be observed by the 0.4% decrease in the volume of water produced combined to 2.7% increase in billed volume.

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9. Loans and financing

Financial leverage measured by the Net Debt/EBITDA ratio rose from 1.9x in 1Q08 to 2.3x in 1Q09, as a result of funds that the Company has been raising related to investments. In the same period, foreign currency debt increased from 23% to 35%, due to the Real devaluation and additional US denominated fund raising. However, in 1Q09 the company holds 85% of this debt with multilateral institutions versus 66% in 1Q08.

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10. Conference Calls

For more information, please contact:

Mario Arruda Sampaio
Phone: (55 11) 3388-8664
E-mail: maasampaio@sabesp.com.br

Angela Beatriz Airoldi
Phone: (55 11) 3388-8793
E-mail: abairoldi@sabesp.com.br

Statements contained in this press release may contain information that is forward-looking and reflects management's current view and estimates of future economic circumstances, industry conditions, SABESP performance, and financial results. Any statements, expectations, capabilities, plans and assumptions contained in this press release that do not describe historical facts, such as statements regarding the declaration or payment of dividends, the direction of future operations, the implementation of principal operating and financing strategies and capital expenditure plans, the factors or trends affecting financial condition, liquidity or results of operations are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties. There is no guarantee that these results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.

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Income Statement

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Balance Sheet

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Cash Flow

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This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.