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Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under
the Securities Exchange Act of 1934.

Yes ______ No ___X___

 

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	CIA. DE SANEAMENTO BÁSICO DO ESTADO DE SÃO PAULO - SABESP Rui de Britto Álvares Affonso Economic-Financial Officer and Investor Relations Officer Mario Azevedo de Arruda Sampaio Head of Capital Market and Investor Relations Phone: (5511) 3388-8664 / Fax: (5511) 3388-8669 e-mail: maasampaio@sabesp.com.br

SABESP announces its second quarter 2005 results So Paulo, August 15, 2005 - SABESP – Cia. de Saneamento Básico do Estado de So Paulo – (NYSE: SBS; Bovespa: SBSP3), the largest water and sewage utility company in the Americas and the third largest in the world, according to its number of customers, announces today its results for the second quarter 2005 (2Q05). The Company’s operating and financial information, except when indicated otherwise, is shown in Brazilian Reais, in accordance with the Brazilian corporate law. All comparisons in this release, unless otherwise stated, refer to the second quarter of 2004.	SBSP3: R$153,00/thousand shares SBS: US$16,52 (ADR=250 shares) Total shares:28,480 million Market value: R$4,357 million Closing price:08/15/2005
Highlights
Recovery of billed volumes for water and sewage services, recording a 5.7% growth in comparison to 2Q04. Net revenue in the quarter posted an 18.5% growth. Refinancing of the US$275 million Eurobonds through the 8th debenture issuance. 10% drop in the Company’s foreign exchange variation risk.

 

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1. SABESP posted a 18.5% net revenue growth and a 27.1% EBITDA growth

						(R$ million)
Highlights		2Q04		2Q05		Change %
Net operating revenue		1,038.9		1,231.3		18.5
EBIT (*)		291.5		410.6		40.9
EBITDA (**)		440.8		560.2		27.1
EBITDA margin - %		42.4%		45.5%		-
Net income		(73.3)		335.7
(*) Earnings before interest and taxes
(**) Earnings before interest, taxes, depreciation and amortization

SABESP recorded net revenue of R$1.2 billion and EBITDA of R$560.2 million in 2Q05. The final result in the period, a R$335.7 million net income, is mainly due to the 23.3% increase in gross operating revenue and to the positive effect of the 11.8% real appreciation versus the US dollar in the period.

2. Net operating revenue – 18.5% growth

Net operating revenue increased by R$192.4 million or 18.5% . The upside is a result of the 6.8% tariff readjustment as of August 29, 2004 and of the 5.7% increase in billed volumes for water and sewage services, the migration of customers for a higher tariff consumption level, and the end of the program for the rational use of water. However, this increase was minimized by the R$59.2 million raise due to changes occurred in the COFINS/PASEP legislation.

The following tables show the water and sewage billed to the retail and to the wholesale markets by customer category and region, in the second quarter of 2004 and 2005:

VOLUME OF WATER AND SEWAGE BILLED** BY CUSTOMER CATEGORY – million m3
		Water				Chg  %		Sewage				Chg  %		Water + Sewage				Chg  %
		2Q04		2Q05				2Q04		2Q05				2Q04		2Q05
Residential		298.4		315.7		5.8%		231.6		247.4		6.8%		530.0		563.1		6.2%
Commercial		35.2		36.5		3.7%		31.7		33.2		4.7%		66.9		69.7		4.2%
Industrial		7.8		8.2		5.1%		7.8		8.0		2.6%		15.6		16.2		3.8%
Public		11.6		12.0		3.4%		9.1		9.6		5.5%		20.7		21.6		4.3%
Total Retail		353.0		372.4		5.5%		280.2		298.2		6.4%		633.2		670.6		5.9%
Wholesale		62.3		64.6		3.7%								62.3		64.6		3.7%
Total		415.3		437.0		5.2%		280.2		298.2		6.4%		695.5		735.2		5.7%

VOLUME OF WATER AND SEWAGE BILLED** BY REGION – million m3
		Water				Chg		Sewage				Chg		Water + Sewage				Chg
		2Q04		2Q05		%		2Q04		2Q05		%		2Q04		2Q05		%
Metropolitan		234.7		248.0		5.7%		189.7		202.4		6.7%		424.4		450.4		6.1%
Regional System*		118.3		124.4		5.2%		90.5		95.8		5.9%		208.8		220.2		5.5%
Total Retail		353.0		372.4		5.5%		280.2		298.2		6.4%		633.2		670.6		5.9%
Wholesale		62.3		64.6		3.7%								62.3		64.6		3.7%
Total		415.3		437.0		5.2%		280.2		298.2		6.4%		695.5		735.2		5.7%
(*) Composed by Costal and Interior regions
(**) Non audited information

3. Costs, administrative and selling expenses

Costs, administrative and selling expenses went up by R$73.3 million or 9.8% .

Below we present the main variations:

								(R$ million)
		2Q04		2Q05		Variation		Chg. %
Salaries and payroll		269.9		278.0		8.1		3.0
General expenses		20.8		28.2		7.4		35.6
Treatment supplies		22.6		26.1		3.5		15.5
Third-party services		98.6		116.9		18.3		18.6
Electric power		90.7		109.1		18.4		20.3
General expenses		23.5		45.4		21.9		93.2
Depreciation and amortization		149.3		149.5		0.2		0.1
Credit write-offs		66.8		60.4		(6.4)		(9.6)
Tax expenses		5.2		7.1		1.9		36.5
Costs, administrative and selling expenses		747.4		820.7		73.3		9.8

3.1. Salaries and payroll

Salaries and payroll posted a R$8.1 million or 3.0% increase. This variation was mainly due to the 7.94% increase in wages, benefits and charges from the collective labor agreement as from May 2005, which impacted approximately R$19.3 million, partially offset by the 1.3% drop in the number of employees. Another factor that contributed to this lower variation is related to the allowance payment corresponding to 20% of the outcome of the Maximizing Results Program during the same period of 2004, in the amount of R$9.4 million.

3.2. General supplies

This line recorded a R$7.4 million or 35.6% increase, mainly directed towards operational systems maintenance in the amount of R$2.7 million, maintenance of residential connection in the amount of R$1.6 million and gas and lubricant for the Company’s vehicles in the amount of R$1.0 million.

3.3. Treatment supplies

Recorded a R$3.5 million or 15.5% increase, as a result of the following material’s variation: aluminum sulfate, totaling R$1.5 million and chlorine, totaling R$1.1 million. Aluminum sulfate was used in a larger scale, replacing other products with higher prices. In chlorine case, the increase was due to the water quality, which created the need to use a larger quantity of this product, in order to comply with the established parameters.

3.4. Third party services

Went up by R$18.3 million or 18.6%, mainly motivated by technical professional services, regarding the 8^th debenture issuance, maintenance and improvement of the call center for the metropolitan region, studies regarding the development of a strategy for the universalization of sanitation services (Tietê Project Second Phase), tariff study, Corporate Social Responsibility program, strategic planning, management support mechanisms, studies and research regarding sludge disposal in sewage treatment plants and water treatment plants, and residential connection maintenance (Global Sourcing Program).

3.5. Electric power

Electric power presented an increase of R$18.4 million or 20.3%, resulting from the average increase of 18.0% in electric power tariffs. Regarding electric power consumption, there was a 0.2% drop in the second quarter of 2005 (509,536 MWh) in comparison to the same period of 2004 (510,399 MWh), due to the Energetic Efficiency Program.

3.6. General expenses

Presented a R$21.9 million or 93.2% raise, mainly due to provisions for civil contingencies, in the amount of R$13.4 million, due to revision and changes in the outlook for lawsuits already in course and provision for losses in the amount of R$4.5 million.

3.7. Credit write-offs

Credit write-offs recorded a R$6.4 million or 9.6% drop, mainly due to credit recovery through the reception and agreements with past due customers.

3.8. Tax expenses

Recorded a R$1.9 million or 36.5% increase, mainly due to the Provisory Contribution on Financial Transactions – CPMF from the anticipation of US dollar purchase.

4. Financial expenses and passive monetary and exchange variations

4.1. Financial expenses

Financial expenses posted a R$3.7 million increase, due to:

• Interest on domestic loans and financing, up by R$18.7 million due to the debentures;
• Provision for financial contingencies, with a R$8.6 million increase, regarding interest and estimate updates for the already existing lawsuits;
• Interest over external loans and financing, down by R$22.7 million, as a result of the real appreciation versus the US dollar in 2Q05, affecting the interest provisioned over their respective balance;
• Income tax over external remittance, a R$4.7 million drop, due to the payment of interest during 2Q04;
• Other financing expenses, corresponding to a R$3.6 million drop.

4.2. Passive monetary and exchange variation

Passive monetary and exchange variation was R$448.8 million, mainly due to the 11.8% real appreciation versus US dollar in 2Q05 in comparison to a 6.8% real depreciation in 2Q04.

5. Operating indicators

The table below shows the continued improvement on the company’s services.

Operational indicators				2Q04		2Q05		Chg. %
Water connections (1)				6,285		6,431		2.3
Sewage connections (1)				4,673		4,817		3.1
Population directly served - water (2)				22.2		22.5		1.4
Population directly served – sewage (2)				18.0		18.2		1.1
Wholesale water billed volume (3)				62.3		64.6		3.7
Retail water billed volume (3)				353.0		372.4		5.5
Sewage services billed volume (3)				280.2		298.2		6.4
Number of employees				17,807		17,577		(1.3)
Operating productivity (4)				615		640		4.1
Notes:
(1) In 1,000 units at the end of the period
(2) Million of inhabitants at the end of the period (does not include wholesale services)
(3 )In million m³
(4) Number of water and sewage connection per employee

6. Loan settlements and financing

On July 28, the Eurobonds in the amount of US$275 million, as well as the interest over the last installment, corresponding to R$699 million, was fully settled. The resources to amortize such debt were funded by the 8^th debentures issuance, in the amount of R$700 million, substantially decreasing the Company’s foreign exchange variation risk, regarding its debt in the capital markets.

																(R$ million)
		Jul-Dec												2011
INSTITUTION		2005		2006		2007		2008		2009		2010		and		TOTAL
														onwards
DOMESTIC
Banco do Brasil		90		191		208		226		247		269		1,048		2,279
Caixa Econômica Federal		20		42		45		49		52		56		228		492
Debentures		50		249		381		-		747		289		349		2,065
BNDES		6		23		26		26		26		26		48		181
Other		1		4		5		5		4		4		4		27
Interest and charges		101		10		-		-		-		-		-		111
Domestic Total		268		519		665		306		1.076		644		1,677		5,155
INTERNATIONAL
World Bank		5		11		5		-		-		-		-		21
Société Génerale		1		3		-		-		-		-		-		4
IDB		44		101		101		70		70		70		587		1,043
Eurobonds		646		-		-		529		-		-		-		1,175
Deutsche Bank Luxembourg		24		-		-		-		-		-		-		24
Interest and charges		40		-		-		-		-		-		-		40
International Total		760		115		106		599		70		70		587		2,307
Total		1,028		634		771		905		1,146		714		2,264		7,462

7. Conference calls and webcast details

Portuguese:		August 24, 2005
		10am – US EST  Phone: (55 11) 2101-1490
		Conference ID code: SABESP
English:		August 24, 2005
		12pm – US EST  Phone: +1 (973) 935-2401
		Conference ID code: SABESP or 6378195

For additional information please contact the Investor Relations Department:

Mario Sampaio		Marisa Guimares
(55 11) 3388-8664		(55 11) 3388-9135
maasampaio@sabesp.com.br		marisag@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.

Income Statement

Brazilian Corporate Law				R$ thousand
		2Q05		2Q04		%
Sales/Services Gross Revenues		1,330,236		1,078,647		23.3
Water Supply - Retail		685,134		551,635		24.2
Water Supply - Wholesale		58,434		52,648		11.0
Sewage Collection and Treatment		563,505		449,545		25.4
Other Services		23,163		24,819		(6.7)
Gross Revenue Deductions (Cofins/Pasep)		(98,891)		(39,712)		149.0
Net Sales		1,231,345		1,038,935		18.5
Cost of Goods and/or Services Sold		(594,793)		(546,541)		8.8
Gross Profit		636,552		492,394		29.3
Selling Expenses		(131,550)		(132,245)		(0.5)
General & Administrative Expenses		(94,352)		(68,637)		37.5
Net Interest Income (Expense)		84,263		(365,768)		(123.0)
Operating Result		494,913		(74,256)		(766.5)
Non Operating Expenses (Income)		1,428		(11,001)		(113.0)
Income Before Taxes		496,341		(85,257)		(682.2)
Provivision for Income Tax/Social Contribution		(155,144)		17,843		(969.5)
Provivision for Deferred Income Tax/Social Contribution		3,325		2,859		16.3
Extraordinary Item Net of IT and SC		(8,781)		(8,780)		-
Net Income		335,741		(73,335)		(557.8)
Shares Outstanding (1000 shares)		28,479,577		28,479,577
EPS (R$/1000 shares)		11.79		(2.58)		(557.8)
Depreciation and Amortization		149,539		149,242		0.2
EBITDA		560,188		440,753		27.1
% of net sales		45.5%		42.4%

Balance Sheet

Brazilian Corporate Law				R$ thousand
ASSETS		06/30/05		12/31/04
Cash and Cash Equivalents		877,949		105,557
Accounts Receivable, net		1,115,441		949,792
Accounts Receivable from Shareholders		174,742		81,334
Inventory		25,040		29,604
Taxes and contributions		30,421		30,215
Other Receivables		47,830		33,288
Total Current Assets		2,271,423		1,229,790
Accounts Receivable, net		278,687		278,060
Accounts Receivable from Shareholders		757,727		740,609
Indemnities Receivable		148,794		148,794
Judicial Deposits		15,395		16,189
Taxes and contributions		272,293		257,271
Other Receivables		31,064		27,976
Total Long-Term Assets		1,503,960		1,468,899
Investments		5,100		5,100
Permanent Assets		13,981,250		14,040,922
Deferred Assets		35,277		39,097
Total Permanent Assets		14,021,627		14,085,119
Total Assets		17,797,010		16,783,808
LIABILITIES		06/30/05		12/31/04
Suppliers and Constructors		46,553		51,578
Loans and Financing		1,420,176		1,496,810
Salaries and Payroll Charges		169,579		107,228
Provivion for Judicial Pendencies		30,979		30,373
Interest on Own Capital Payable		183,526		144,078
Taxes and contributions payable		129,115		115,119
Taxes and contributions		69,980		71,902
Other Payables		86,110		83,801
Total Current Liabilities		2,136,018		2,100,889
Loans and Financing		6,041,965		5,553,843
Taxes and contributions payable		264,998		272,338
Taxes and Contributions		131,615		130,055
Provision for Contingencies		528,084		460,231
Pension Fund Obligations		249,736		222,176
Other Payables		103,362		92,688
Total Long-Term Liabilities		7,319,760		6,731,331
Capital Stock		3,403,688		3,403,688
Capital Reserves		72,824		65,291
Revaluation Reserves		2,574,594		2,619,220
Profit Reserves		1,863,389		1,863,389
Retained Earnings		426,737		-
Shareholder's Equity		8,341,232		7,951,588
Total Liabilities and Shareholder's Equity		17,797,010		16,783,808

Cash Flow

Brazilian Corporate Law				R$ thousand
Description		Apr-Jun/05		Jan-Jun/05
Cash flow from operating activities
Net income (loss) for the period		335,741		487,111
Adjustments for reconciliation of net income (loss)
Deferred income tax and social contribution		(5,002)		(15,590)
Provisions for contingencies		36,679		68,015
Liabilities related to pension plans		17,130		34,255
Property, plant and equipment received as donations (Private Sector)		-		-
Loss in the wirte-off of property, plant and equipment		1,448		2,332
Depreciation		142,724		281,338
Amortization		6,815		13,661
Interest calculated on loans and financing payable		167,611		334,763
Foreign exchange loss on loans and financing		(275,152)		(264,052)
Monetary exchange loss on interest on own capital		-		715
Passive monetary exchange variation and interest		6,309		12,812
Active monetary exchange variation and interest		3,918		(2,479)
Provisions for bad debt		60,395		106,257
		498,616		1,059,138
(Increase) decrease in assets
Clients		(99,256)		(212,297)
Accounts receivable from shareholders		(107,968)		(95,155)
Inventories		(500)		4,564
Other accounts receivable		(668)		(14,542)
Clients – long term		(26,376)		(60,233)
Accounts receivable - long term		41,706		(13,608)
Judicial deposits		773		794
Other long term receivables		(2,193)		(3,088)
		(194,482)		(393,565)
Increase (decrease) in liabilities
Accounts payable to suppliers and contractors		10,654		(5,025)
Salaries and payroll charges		37,421		62,351
Taxes and contributions		6,981		(6,157)
Other accounts payable		3,160		2,308
Pension plan		(3,357)		(6,695)
Provision for contingencies		444		444
Other accounts payable - long term		9,547		10,674
		64,850		57,900
Net cash from operating activities		368,984		723,473
Cash flow from investing activities
Acquisition of property, plant and equipment		(139,532)		(240,663)
Sale of property, plant and equipment		-		-
Increase in Deferred Assets		(28)		(53)
Net cash used in investing activities		(139,560)		(240,716)
Cash flow from financing activities
Loans and Financing - long term
Funding		713,843		1,061,414
Payments		(454,515)		(706,227)
Interest on own Capital
Interest on own capital payment		(63,025)		(65,552)
Net cash used in financing activities		196,303		289,635
Net increase (decrease) in cash equivalents		425,727		772,392
Cash and cash equivalents at the beginning of the period		452,222		105,557
Cash and cash equivalents at the end of the period		877,949		877,949
Additional information on cash flow
Interest and payable taxes for loans and financing		163,375		320,422
Capitalization of interest and financial charges		(23,210)		(14,411)
Payable income tax and social contribution		130,774		183,405
Property, plant and equip. received as donations and/or paid in stocks		5,527		7,533
COFINS and PASEP taxes payable		100,229		184,130
Balancing accounts		0		(715)

 

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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.

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