Companhia de saneamento Basico Do Estado De Sao Paulo - Sabesp 6-K 2007
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For April 24, 2007(Commission File No. 1-31317)
Companhia de Saneamento Básico do Estado de São Paulo - SABESP
(Exact name of registrant as specified in its charter)
Basic Sanitation Company of the State of Sao Paulo - SABESP
(Translation of Registrant's name into English)
Rua Costa Carvalho, 300
São Paulo, S.P., 05429-900
Federative Republic of Brazil
(Address of Regristrant's principal executive offices)
Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F.
Form 20-F ___X___ Form 40-F ______
Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(1)__.
Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(7)__.
Indicate by check mark whether the registrant by furnishing the
If "Yes" is marked, indicated below the file number assigned to the
registrant in connection with Rule 12g3-2(b):
1. Net revenue grows 11.6% and EBITDA grows 11.1%
(*) Earnings before interest and taxes
(**) Earnings before interest, taxes, depreciation and amortization
In 2006, net operating revenue totaled R$ 5,527.3 million, an 11.6% increase in comparison to 2005. Costs and expenses, in the amount of R$ 3,629.6 million were 11.2% higher than in 2005. EBITDA grew from R$ 2,285.6 million in 2005 to R$ 2,539.9 million in 2006, corresponding to an 11.1% growth, as revenue increased more than costs.
EBIT recorded a 12.3% growth, from R$ 1,689.6 million in 2005 to R$ 1,897.7 million in 2006. Net income reached R$ 872.7 million, 0.8% above the R$ 865.6 million recorded in 2005. In 4Q06 net income reached R$ 173.7 million, down by 7.3% when compared to the same period of 2005.
2. Gross operating revenue growth
In 2006, gross operating revenue increased by R$ 627.7 million, or 11.7%, moving from R$ 5,356.4 million in 2005 to R$ 5,984.1 million in 2006. The main reasons for this increase were:
In 4Q06 gross operating revenue reached R$ 1,599.4 million, up by R$ 148.3 million or 10.2% when compared to the same period of 2005.
3. Billed volume
The following tables show billed water and sewage volume per customer category and region in the 4Q05, 4Q06, 2005 and 2006.
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BILLED WATER AND SEWAGE VOLUME(1) PER CUSTOMER CATEGORY - million m3
BILLED WATER AND SEWAGE VOLUME(1) PER REGION - million m3
(1) Not audited
4. Costs, administrative and selling expenses
In 2006, the costs of products and services rendered and administrative and selling expenses moved up by R$ 365.8 million or 11.2% . However, costs and expenses as a percentage of net revenues remained fairly stable, from 65.9% in 2005 to 65.7% in 2006. In 4Q06, it increased by R$ 168.1 million or 19.2% .
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4.1. Payroll and benefits
The Company expanded its services and increased its productivity. The number of connections per employee grew from 651 in 2005 to 684 in 2006, corresponding to a 5.1% productivity growth.
In 2006 payroll and benefits grew by R$ 152.0 million or 13.7%, moving up from R$ 1,106.4 million to R$ 1,258.4 million, due to the following:
In 4Q06 payroll and benefits grew by R$ 48.1 million or 16.7%, mainly due to the Profit Sharing Plan and the charges with the Incentive Resignation Program, both in the amount of R$ 40.7 million.
In 2006, this figure increased by R$ 11.8 million or 10.2%, from R$ 115.9 million to R$ 127.7 million, mostly due to:
In 4Q06, the R$ 5.2 million increase was mainly motivated by the increase of R$ 2.2 million in fuel and lubricant prices and of R$ 2.5 million in network and system maintenance.
4.3. Treatment supplies
The R$ 5.7 million or 5.8% increase, from R$ 98.8 million to R$ 104.5 million in 2006, was due to a higher volume of treated water as a result of the increase in consumption and of the 8.3% average price readjustment. Despite these factors, the 5.8% increase was mainly due to a better operating efficiency when using chemical products. In 4Q06 treatment supplies moved up by R$ 0.4 million or 2.0% .
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4.4. Third-party services
In 2006 third-party services grew by R$ 12.2 million or 2.6%, from R$ 474.0 million to R$ 486.2 million. The main reasons for this performance were:
In 4Q06 third-party services jumped by R$ 10.0 million or 7.0%, chiefly due to software maintenance, expansion of the research for the detection of leakage and maintenance and preservation of operating areas.
4.5. Electric power
It increased by R$ 25.4 million or 6.0%, from R$ 423.5 million to R$ 448.9 million, mainly due to:
In 4Q06 this expense grew by R$ 10.6 million, also due to the factors mentioned above.
4.6. General expense
In 2006, general expenses moved up by R$ 45.5 million or 27.6%, from R$ 164.6 million to R$ 210.1 million, as a result of:
In 4Q06 the R$ 57.1 million increase was mainly due to provisions for contingencies.
4.7. Depreciation and amortization
Depreciation and amortization grew by R$ 46.2 million or 7.8%, from R$ 596.0 million to R$ 642.2 million, due to the transfer of works in place to operating permanent assets in the fiscal year 2006.
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4.8. Credit write-offs
In 2006, credit write-offs climbed by R$ 62.9 million or 24.6%, moving up from R$ 255.3 million in 2005 to R$ 318.2 million this year, mostly as a result of the following:
In 4Q06 dropped by R$ 4.6 million or 5.4%, due to a lower provisioning of the wholesale segment.
4.9. Tax expenses
In 2006 rose by R$ 4.1 million or 14.0% as a result of federal taxes and charges, which moved up by R$ 2.3 million due to services hired abroad for the management of the Environmental Recovery Program for the Metropolitan Region of the Santos Costal Area; and the CPMF tax, which grew by R$ 1.1 million due to the settlement of part of the principal, interest and premium of the 2008 Eurobond, in November 2006.
In 4Q06, the R$ 2.2 million increase is mainly a result of the expenses related to the issue of the 2016 Eurobond in November.
5. Financial expenses and revenues
5.1. Financial expenses
In 2006 financial expenses dropped by R$ 104.5 million or 13.2%, as follows:
The highlights regarding domestic financing are:
The highlights for international financing are:
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Regarding other financial expenses, despite the R$ 3.0 million increase, we highlight the R$ 9.8 million drop, resulting from the decrease in the Long-Term Interest Rate (TJLP) on interest from PAES.
In 2006, contingencies related to interest and monetary restatement of lawsuits were reversed, due to a lower probability of loss, resulting in a R$ 79.2 million decrease in provisions.
5.2. Financial revenues
Financial revenues grew by R$ 16.8 million or 20.8%, from R$ 80.7 million to R$ 97.5 million in 2006, due to the agreement reached with Companhia de Saneamento de Diadema SANED and the return on financial investments.
6. Passive and active monetary variation
6.1. Passive monetary variation
The net effect of passive monetary variation was negative by R$ 1.5 million in 2006, in comparison to a positive R$ 230.1 million in 2005. This negative variation of R$ 231.6 million was due to:
6.2. Active monetary variation
Active monetary variation dropped by R$ 6.0 million or 17.6%, from R$ 34.0 million to R$ 28.0 million, in 2006 as a result of the update of the GESP Agreement balance due to the lower remaining balance.
7. Operating indicators
(1) In thousand units at the end of the period
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8. Loans and financing
Regarding debt management in the capital market, the Company, in line with its pro active attitude, issued the FIDC SABESP I in the amount of R$ 250 million. These proceeds were used to settle the debt maturing in 2006 and to anticipate the withdrawal of the total outstanding balance of the Debentures from the first series of the 5th issuance, in the amount of R$ 104.5 million as principal and R$ 1.9 million as interest, which would mature in March 2007.
Also in line with this trend, in November the Company issued international bonds in the amount of US$ 140 million (2016 Eurobonds), at a rate of 7.5% per year due in November 2016. These proceeds were used to repurchase 56.4% of the notes issued in 2003 (2008 Eurobonds) in the amount of US$ 225 million, at a rate of 12% p.a., due in June 2008. This operation enabled the extension of the Companys debt maturity and the reduction of its average cost.
9. Balance Sheet
On December 31, 2006, the balance of the account collection to be discriminated, pertaining to Accounts Receivable group of accounts, was R$ 43 million negative, although it is a crediting account of the balance sheet.
The Company is under a process of analysis and reconciliation of this balance, in order to identify the causes for the inversion of the nature of this balance, with a view to adequate the respective accounting impacts to the Companys accounting statements. This fact is mentioned in the Independent Auditors Report, issued on March 30, 2007.
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For more information, please contact our Investor Relations Department:
Angela Beatriz Airoldi
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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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the city São Paulo, Brazil.
Date: April 24, 2007
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.