6-K 1 sbsitr3q20_6k.htm SBSITR3Q20_6K

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For November, 2020
(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 Registrant'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
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___

If "Yes" is marked, indicated below the file number assigned to the
registrant in connection with Rule 12g3-2(b):

ITR - Quarterly Information Form - 9/30/2020 - CIA SANEAMENTO BASICO EST SAO PAULO | Version : 1

Table of Contents

Company Information |
Capital Breakdown | 1
Parent Company’s Financial Statements |
Statement of Financial Position – Assets | 2
Statement of Financial Position – Liabilities | 3
Income Statement | 5
Statement of Comprehensive Income | 7
Statement of Cash Flows | 8
Statement of Changes in Equity |
1/01/2020 to 9/30/2020 | 10
1/01/2019 to 9/30/2019 | 11
Statement of Value Added | 12
Comments on the Company’s Performance | 13
Notes to the Interim Financial Information | 25
Comments on the Company’s Projections | 81
Other Information Deemed as Relevant by the Company | 82
Reports and Statements |
Unqualified Reports on Special Review | 84
Executive Officers’ Statement on the Financial Statements | 85
Executive Officers’ Statement on the Report of Independent Registered Public Accounting Firm | 86

ITR - Quarterly Information Form - 9/30/2020 - CIA SANEAMENTO BASICO EST SAO PAULO | Version : 1

Company Information / Capital Breakdown

Number of shares | Current Quarter
(Units) | 6/30/2020
Paid-in Capital |
Common | 683,509,869
Preferred | 0
Total | 683,509,869
Treasury Shares |
Common | 0
Preferred | 0
Total | 0

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ITR - Quarterly Information Form - 9/30/2020 - CIA SANEAMENTO BASICO EST SAO PAULO | Version : 1

Parent Company’s Financial Statements / Statement of Financial Position – Assets

(R$ thousand)

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ITR - Quarterly Information Form - 9/30/2020 - CIA SANEAMENTO BASICO EST SAO PAULO | Version : 1

Parent Company’s Financial Statements / Statement of Financial Position – Liabilities

(R$ thousand)

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ITR - Quarterly Information Form - 9/30/2020 - CIA SANEAMENTO BASICO EST SAO PAULO | Version : 1

Parent Company’s Financial Statements / Statement of Financial Position – Liabilities

(R$ thousand)

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Parent Company’s Financial Statements / Statement of Income

(R$ thousand)

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Parent Company’s Financial Statements / Statement of Income

(R$ thousand)

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Parent Company’s Financial Statements / Statement of Comprehensive Income

(R$ thousand)

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ITR - Quarterly Information Form - 9/30/2020 - CIA SANEAMENTO BASICO EST SAO PAULO | Version : 1

Parent Company’s Financial Statements / Statement of Cash Flows – Indirect Method

(R$ thousand)

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ITR - Quarterly Information Form - 9/30/2020 - CIA SANEAMENTO BASICO EST SAO PAULO | Version : 1

Parent Company’s Financial Statements / Statement of Cash Flows – Indirect Method

(R$ thousand)

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ITR - Quarterly Information Form - 9/30/2020 - CIA SANEAMENTO BASICO EST SAO PAULO | Version : 1

Parent Company’s Financial Statements / Statement of Changes in Equity / 1/01/2020 to 9/30/2020

(R$ thousand)

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ITR - Quarterly Information Form - 9/30/2020 - CIA SANEAMENTO BASICO EST SAO PAULO | Version : 1

Parent Company’s Financial Statements / Statement of Changes in Equity / 1/01/2019 to 9/30/2019

(R$ thousand)

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Parent Company’s Financial Statements / Statement of Value Added

(R$ thousand)

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ITR - Quarterly Information Form - 9/30/2020 - CIA SANEAMENTO BASICO EST SAO PAULO | Version : 1

Comments on the Company’s Performance

1. Quarter Highlights

The Company recorded net income of R$ 421.6 million in 3Q20, compared to net income of R$ 1,208.9 million in 3Q19, a decrease of R$ 787.3 million.

Adjusted EBITDA totaled R$ 1,513.6 million, a decrease of R$ 1,495.7 million over the R$ 3,009.3 million reported in 3Q19.

The main highlights of the 3Q20 result were:

(a) Economic instability worsened by COVID-19

The economic instability worsened by COVID-19 brought reflexes for the Company, especially:

| (i) | reduction in revenues from commercial and industrial customers, in the amount of approximately R$ 275 million, partially offset by the increase in residential category in the amount of R$ 243.0 million;

(ii) postponement of the tariff adjustment, with estimated impact of R$ 65.6 million on operating revenue. The reposition of this impact has already been authorized by ARSESP and started in August 2020;

(iii) payment exemption for customers in the "Residencial Social" and "Residencial Favela” categories, in the approximate amount of R$ 51.6 million;

(iv) increase in the level of delinquency, with an impact of R$ 75.1 million in allowance for doubtful accounts;

(v) exchange rate volatility, increasing expenses with exchange variation of R$ 111.0 million, and

(vi) donation of 110 thousand basic food baskets, in the amount of R$ 12.4 million.

(b) Reduction to foreign currency exposure

The Company adopted the following measures during 2020, aiming to reduce exposure to foreign exchange exposure:

| · | On April 28, 2020, it completed the conversion of an outstanding loan, in the amount of US$ 494.6 million to R$ 2,810.9 million with the Inter-American Development Bank (IDB); and

| · | On September 30, 2020, the Company amortized its outstanding Eurobonds, in the amount of R$ 1,910.1 million (US$ 350.0 million).

(c) Operation in the municipality of Santo André

The operation in the municipality of Santo André, started in August 2019, represented a reduction of R$ 1,204.6 million in gross operating revenues and an increase of R$ 84.3 million in expenses in 3Q20, when compared to 3Q19, as follows:

Impacts of Santo André (R$ million) | Var.
| 3Q20 | 3Q19 | R$
Revenue – Wholesale(1) | - | 1,261.7 | (1,261.7)
Revenue – Retail(2) | 87.1 | 30.0 | 57.1
(=) Total Gross Revenue | 87.1 | 1,291.7 | (1,204.6)
COFINS and PASEP | (6.1) | (70.8) | 64.7
(=) Net Revenue | 81.0 | 1,220.9 | (1,139.9)
Costs and expenses(3) | (37.2) | (9.8) | (27.4)
Allowance for doubtful accounts(4) | (5.4) | 51.5 | (56.9)
(=) Total Expenses | (42.6) | 41.7 | (84.3)
(=) Net effect | 38.4 | 1,262.6 | (1,224.2)

(1) Non-recurring revenue in 2019 results from the formalization of the agreement. (2) Refers to billing from retail operation.

(3) Costs and expenses, relates to the operation (excludes indirect costs and expenses).

(4) Reversal of non-recurring allowance for doubtful accounts results in 3Q19, from the formalization of the agreement.

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ITR - Quarterly Information Form - 9/30/2020 - CIA SANEAMENTO BASICO EST SAO PAULO | Version : 1

Comments on the Company’s Performance

(d) TAC – Retirees

On February 20, 2009, SABESP and the Public Prosecution Office of the State of São Paulo signed a Conduct Adjustment Term (TAC), in which the Company pledged to promote the gradual dismissal of retired employees. As a result of this TAC, the Company recorded a provision for the dismissal of these employees.

On October 11, 2019, the Public Prosecution Office closed the case regarding the TAC given its understanding that the legal requirements were achieved. Therefore, the Company reversed R$ 173.3 million in the Salaries and payroll charges and Pension plan obligations account in 3Q19, which was recorded as a non-recurring event.

(e) Signature of a Program agreement with the Municipality of Guarujá

In 3Q19, non-recurring expenses related to the conclusion of legal proceedings were recognized, arising from the signing of an agreement with the municipality of Guarujá, in the amount of R$46.9 million.

2. Profit (loss) for the period

R$ million

|  |  | Var. |  |  | Var.
| 3Q20 | 3Q19 | R$ | % | 9M20 | 9M19 | R$ | %
Gross operating revenue | 3,639.1 | 4,984.1 | (1,345.0) | (27.0) | 11,105.6 | 12,099.3 | (993.7) | (8.2)
Construction revenue | 1,053.4 | 699.5 | 353.9 | 50.6 | 2,594.5 | 1,991.5 | 603.0 | 30.3
COFINS and PASEP/TRCF taxes | (254.0) | (273.0) | 19.0 | (7.0) | (786.7) | (803.8) | 17.1 | (2.1)
(=) Net operating revenue | 4,438.5 | 5,410.6 | (972.1) | (18.0) | 12,913.4 | 13,287.0 | (373.6) | (2.8)
Costs and expenses | (2,426.5) | (2,183.9) | (242.6) | 11.1 | (7,319.3) | (6,862.3) | (457.0) | 6.7
Construction costs | (1,029.7) | (683.7) | (346.0) | 50.6 | (2,535.2) | (1,946.7) | (588.5) | 30.2
Equity result | 3.1 | 2.4 | 0.7 | 29.2 | 9.6 | 8.3 | 1.3 | 15.7
Other operating revenue (expenses), net | 0.8 | 13.2 | (12.4) | (93.9) | 113.3 | 18.3 | 95.0 | 519.1
(=) Earnings before financial result, income tax and social contribution | 986.2 | 2,558.6 | (1,572.4) | (61.5) | 3,181.8 | 4,504.6 | (1,322.8) | (29.4)
Financial result | (330.6) | (719.9) | 389.3 | (54.1) | (2,986.4) | (1,026.0) | (1,960.4) | 191.1
(=) Earnings before income tax and social contribution | 655.6 | 1,838.7 | (1,183.1) | (64.3) | 195.4 | 3,478.6 | (3,283.2) | (94.4)
Income tax and social contribution | (234.0) | (629.8) | 395.8 | (62.8) | (53.6) | (1,168.1) | 1,114.5 | (95.4)
(=) Net income | 421.6 | 1,208.9 | (787.3) | (65.1) | 141.8 | 2,310.5 | (2,168.7) | (93.9)
Earnings per share (R$)* | 0.62 | 1.77 |  |  | 0.21 | 3.38 |  |

(*) Total shares = 683,509,869

Adjusted EBITDA Reconciliation (Non-accounting measures)

R$ million

|  |  | Var. |  |  | Net
| 3Q20 | 3Q19 | R$ | % | 9M20 | 9M19 | R$ | %
Net income | 421.6 | 1,208.9 | (787.3) | (65.1) | 141.8 | 2,310.5 | (2,168.7) | (93.9)
Income tax and social contribution | 234.0 | 629.8 | (395.8) | (62.8) | 53.6 | 1,168.1 | (1,114.5) | (95.4)
Financial result | 330.6 | 719.9 | (389.3) | (54.1) | 2,986.4 | 1,026.0 | 1,960.4 | 191.1
Other operating revenues (expenses), net | (0.8) | (13.2) | 12.4 | (93.9) | (113.3) | (18.3) | (95.0) | 519.1
(=) Adjusted EBIT* | 985.4 | 2,545.4 | (1,560.0) | (61.3) | 3,068.5 | 4,486.3 | (1,417.8) | (31.6)
Depreciation and amortization | 528.2 | 463.9 | 64.3 | 13.9 | 1,510.2 | 1,299.3 | 210.9 | 16.2
(=) Adjusted EBITDA** | 1,513.6 | 3,009.3 | (1,495.7) | (49.7) | 4,578.7 | 5,785.6 | (1,206.9) | (20.9)
(%) Adjusted EBITDA margin | 34.1 | 55.6 |  |  | 35.5 | 43.5 |  |

* Adjusted EBIT corresponds to net income/(loss) before: (i) other operating revenues (expenses), net; (ii) financial result; and (iii) income tax and social contribution.

** Adjusted EBITDA corresponds to net income/(loss) before: (i) other operating revenues (expenses), net; (ii) financial result; (iii) income tax and social contribution and; (iv) depreciation and amortization expenses.

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ITR - Quarterly Information Form - 9/30/2020 - CIA SANEAMENTO BASICO EST SAO PAULO | Version : 1

Comments on the Company’s Performance

In 3Q20, net operating revenue, including construction revenue, reached R$ 4,438.5 million, down by 18.0% over the same period in 2019.

Costs and expenses, which consider construction costs, totaled R$ 3,456.2 million, up 20.5% over 2019.

Adjusted EBIT totaled R$ 985.4 million, down by 61.3% over the R$ 2,545.4 million recorded in 3Q19.

Adjusted EBITDA, in the amount of R$ 1,513.6 million, reduced by 49.7% when compared to the R$ 3,009.3 million reported in 3Q19 (R$ 6,303.7 million in the last 12 months).

Adjusted EBITDA margin reached 34.1% in 3Q20, against 55.6% in 3Q19 (35.8% in the last 12 months). Excluding the effects of revenue and construction costs, the adjusted EBITDA margin was 44.0% in 3Q20, compared to 63.5% in 3Q19 (44.3% in the last 12 months).

The Company recorded net income of R$ 421.6 million in 3Q20, compared to net income of R$1,208.9 million in 3Q19.

3. Gross operating revenue

Gross operating revenue related to sanitation services, in the amount of R$ 3,639.1 million, which does not consider construction revenue, decreased by R$ 1,345.0 million, or 27.0%, from the R$ 4,984.1 million recorded in 3Q19.

The main factors that led to this variation were:

| · | Signing of the agreement with the municipality of Santo André in 3Q19, generating non-recurring R$ 1,261.7 million;

| · | Lower billed volume in the Commercial, Industrial and Public categories, leading to a reduction of approximately R$ 275 million compared to 3Q19; and

| · | Exemption granted to customers in the “Residential Social” and “Residential Favela” categories from paying water and sewage bills, leading to a decrease of R$ 21.7 million in revenue.

The decrease in operating revenue was offset by:

| · | Higher billed volume in the Residential category, in the amount of R$ 243.0 million;

| · | Higher revenue from the retail segment in the municipality of Santo André, in the amount of R$57.1 million; and

| · | Tariff adjustment of 3.4% since August 2020.

4. Construction revenue

Construction revenue increased by R$ 353.9 million, or 50.6%, in 3Q20 over 3Q19. The variation was mainly due to higher asset investments.

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ITR - Quarterly Information Form - 9/30/2020 - CIA SANEAMENTO BASICO EST SAO PAULO | Version : 1

Comments on the Company’s Performance

5. Billed volume

The following tables show the water and sewage billed volume, on a quarter-over-quarter and year-over-year basis, per customer category and region. The volumes of Santo André, Mauá and the categories exempt from payment are presented individually.

WATER AND SEWAGE BILLED VOLUME(1) PER CUSTOMER CATEGORY - million m3
| Water | Sewage | Water + Sewage
Category | 3Q20 | 3Q19 | Var. % | 3Q20 | 3Q19 | Var. % | 3Q20 | 3Q19 | Var. %
Residential | 432.0 | 420.7 | 2.7 | 375.4 | 363.2 | 3.4 | 807.4 | 783.9 | 3.0
Commercial | 38.3 | 43.5 | (12.0) | 36.3 | 42.4 | (14.4) | 74.6 | 85.9 | (13.2)
Industrial | 7.6 | 8.1 | (6.2) | 8.7 | 9.8 | (11.2) | 16.3 | 17.9 | (8.9)
Public | 8.2 | 11.0 | (25.5) | 7.3 | 9.9 | (26.3) | 15.5 | 20.9 | (25.8)
Total retail | 486.1 | 483.3 | 0.6 | 427.7 | 425.3 | 0.6 | 913.8 | 908.6 | 0.6
Wholesale(3) | 12.9 | 12.0 | 7.5 | 3.5 | 4.2 | (16.7) | 16.4 | 16.2 | 1.2
Subtotal | 499.0 | 495.3 | 0.7 | 431.2 | 429.5 | 0.4 | 930.2 | 924.8 | 0.6
Santo André(4) | 13.6 | 18.1 | (24.9) | 13.5 | 7.1 | 90.1 | 27.1 | 25.2 | 7.5
Mauá(5) | 7.9 | 8.8 | (10.2) | - | - | - | 7.9 | 8.8 | (10.2)
“Residencial Social/Favela”(6) | 17.9 | - | - | 13.9 | - | - | 31.8 | - | -
Total | 538.4 | 522.2 | 3.1 | 458.6 | 436.6 | 5.0 | 997.0 | 958.8 | 4.0
| Water | Sewage | Water + Sewage
Category | 9M20 | 9M19 | Var. % | 9M20 | 9M19 | Var. % | 9M20 | 9M19 | Var. %
Residential | 1,294.2 | 1,273.3 | 1.6 | 1,122.2 | 1,095.0 | 2.5 | 2,416.4 | 2,368.3 | 2.0
Commercial | 118.5 | 130.8 | (9.4) | 112.7 | 127.4 | (11.5) | 231.2 | 258.2 | (10.5)
Industrial | 22.6 | 24.4 | (7.4) | 26.6 | 29.6 | (10.1) | 49.2 | 54.0 | (8.9)
Public | 27.1 | 32.8 | (17.4) | 24.1 | 29.4 | (18.0) | 51.2 | 62.2 | (17.7)
Total retail | 1,462.4 | 1,461.3 | 0.1 | 1,285.6 | 1,281.4 | 0.3 | 2,748.0 | 2,742.7 | 0.2
Wholesale(3) | 37.5 | 35.9 | 4.5 | 11.0 | 12.3 | (10.6) | 48.5 | 48.2 | 0.6
Subtotal | 1,499.9 | 1,497.2 | 0.2 | 1,296.6 | 1,293.7 | 0.2 | 2,796.5 | 2,790.9 | 0.2
Santo André(4) | 40.3 | 53.9 | (25.2) | 39.9 | 15.9 | 150.9 | 80.2 | 69.8 | 14.9
Mauá(5) | 26.0 | 26.0 | - | - | - | - | 26.0 | 26.0 | -
“Residencial Social/Favela”(6) | 44.4 | - | - | 34.2 | - | - | 78.6 | - | -
Total | 1,610.6 | 1,577.1 | 2.1 | 1,370.7 | 1,309.6 | 4.7 | 2,981.3 | 2,886.7 | 3.3
WATER AND SEWAGE BILLED VOLUME(1) PER REGION - million m3
| Water | Sewage | Water + Sewage
Region | 3Q20 | 3Q19 | Var. % | 3Q20 | 3Q19 | Var. % | 3Q20 | 3Q19 | Var. %
Metropolitan | 318.1 | 320.7 | (0.8) | 280.5 | 282.1 | (0.6) | 598.6 | 602.8 | (0.7)
Regional(2) | 168.0 | 162.6 | 3.3 | 147.2 | 143.2 | 2.8 | 315.2 | 305.8 | 3.1
Total retail | 486.1 | 483.3 | 0.6 | 427.7 | 425.3 | 0.6 | 913.8 | 908.6 | 0.6
Wholesale(3) | 12.9 | 12.0 | 7.5 | 3.5 | 4.2 | (16.7) | 16.4 | 16.2 | 1.2
Subtotal | 499.0 | 495.3 | 0.7 | 431.2 | 429.5 | 0.4 | 930.2 | 924.8 | 0.6
Santo André(4) | 13.6 | 18.1 | (24.9) | 13.5 | 7.1 | 90.1 | 27.1 | 25.2 | 7.5
Mauá(5) | 7.9 | 8.8 | (10.2) | - | - | - | 7.9 | 8.8 | (10.2)
“Residencial Social/Favela”(6) | 17.9 | - | - | 13.9 | - | - | 31.8 | - | -
Total | 538.4 | 522.2 | 3.1 | 458.6 | 436.6 | 5.0 | 997.0 | 958.8 | 4.0
WATER AND SEWAGE BILLED VOLUME(1) PER REGION - million m3
| Water | Sewage | Water + Sewage
Region | 9M20 | 9M19 | Var. % | 9M20 | 9M19 | Var. % | 9M20 | 9M19 | Var. %
Metropolitan | 955.8 | 965.0 | (1.0) | 841.5 | 846.3 | (0.6) | 1,797.3 | 1,811.3 | (0.8)
Regional(2) | 506.6 | 496.3 | 2.1 | 444.1 | 435.1 | 2.1 | 950.7 | 931.4 | 2.1
Total retail | 1,462.4 | 1,461.3 | 0.1 | 1,285.6 | 1,281.4 | 0.3 | 2,748.0 | 2,742.7 | 0.2
Wholesale(3) | 37.5 | 35.9 | 4.5 | 11.0 | 12.3 | (10.6) | 48.5 | 48.2 | 0.6
Subtotal | 1,499.9 | 1,497.2 | 0.2 | 1,296.6 | 1,293.7 | 0.2 | 2,796.5 | 2,790.9 | 0.2
Santo André(4) | 40.3 | 53.9 | (25.2) | 39.9 | 15.9 | 150.9 | 80.2 | 69.8 | 14.9
Mauá(5) | 26.0 | 26.0 | - | - | - | - | 26.0 | 26.0 | -
“Residencial Social/Favela”(6) | 44.4 | - | - | 34.2 | - | - | 78.6 | - | -
Total | 1,610.6 | 1,577.1 | 2.1 | 1,370.7 | 1,309.6 | 4.7 | 2,981.3 | 2,886.7 | 3.3

(1) Unaudited

(2) Including coastal and interior regions

(3) Wholesale includes volumes of reuse water and non-domestic sewage

(4) Billed volume in the retail segment in 3Q20/9M20 and in the wholesale/retail segment in 3Q19/9M19 (5) Volume billed in the retail segment in 3Q20 and at wholesale in 3Q19

(6) Volume billed in categories exempt from paying water and sewage bill

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Comments on the Company’s Performance

6. Costs, administrative & selling expenses and construction costs

Costs, administrative & selling expenses and construction costs increased by R$ 588.6 million in 3Q20 (20.5%). Excluding construction costs, the increase was R$ 242.6 million (11.1%).

Costs, administrative & selling expenses and construction costs represented as a percentage of net revenue was 77.9% in 3Q20, compared to 53.0% in 3Q19.

R$ million

|  |  | Var. |  |  | Net
| 3Q20 | 3Q19 | R$ | % | 9M20 | 9M19 | R$ | %
Salaries and payroll charges and Pension plan obligations | 669.4 | 517.0 | 152.4 | 29.5 | 2,005.6 | 1,969.6 | 36.0 | 1.8
General supplies | 63.5 | 67.3 | (3.8) | (5.6) | 186.7 | 196.1 | (9.4) | (4.8)
Treatment supplies | 78.9 | 67.4 | 11.5 | 17.1 | 253.9 | 229.8 | 24.1 | 10.5
Services | 457.6 | 449.9 | 7.7 | 1.7 | 1,323.7 | 1,326.5 | (2.8) | (0.2)
Electricity | 311.0 | 282.5 | 28.5 | 10.1 | 915.9 | 845.0 | 70.9 | 8.4
General expenses | 224.4 | 358.6 | (134.2) | (37.4) | 721.3 | 889.5 | (168.2) | (18.9)
Tax expenses | 18.4 | 14.9 | 3.5 | 23.5 | 52.1 | 55.6 | (3.5) | (6.3)
Subtotal | 1,823.2 | 1,757.6 | 65.6 | 3.7 | 5,459.2 | 5,512.1 | (52.9) | (1.0)
Depreciation and amortization | 528.2 | 463.9 | 64.3 | 13.9 | 1,510.2 | 1,299.3 | 210.9 | 16.2
Allowance for doubtful accounts | 75.1 | (37.6) | 112.7 | (299.7) | 349.9 | 50.9 | 299.0 | 587.4
Subtotal | 603.3 | 426.3 | 177.0 | 41.5 | 1,860.1 | 1,350.2 | 509.9 | 37.8
Costs, administrative and selling expenses | 2,426.5 | 2,183.9 | 242.6 | 11.1 | 7,319.3 | 6,862.3 | 457.0 | 6.7
Construction costs | 1,029.7 | 683.7 | 346.0 | 50.6 | 2,535.2 | 1,946.7 | 588.5 | 30.2
Costs, adm & selling expenses and construction costs | 3,456.2 | 2,867.6 | 588.6 | 20.5 | 9,854.5 | 8,809.0 | 1,045.5 | 11.9
% of net revenue | 77.9 | 53.0 |  |  | 76.3 | 66.3 |  |

Salaries and payroll charges and Pension plan obligations

In 3Q20, there was an increase of R$ 152.4 million, due to the reversal of R$ 173.3 million in non-recurring TAC - Retiree expenses related to 3Q19.

This increase was offset by the following factors:

| · | Reduction of R$ 9.8 million in pension plans due to changes in the actuarial assumptions;

| · | Lower overtime expense, in the amount of R$ 5.1 million; and

| · | Decrease of R$ 3.4 million, mainly due to the 2.8% reduction in the average number of employees, arising from the gradual dismissals through the Knowledge Retention Program - PRC, whose effect was offset by the 2.0% increase in wages according to the Career and Salaries Plan (Plano de Cargos e Salários) in February 2020.

Treatment materials

Increase of R$ 11.5 million, or 17.1%, due to the higher use of algaecides and coagulants in several Water Treatment Plants in the Metropolitan Region of São Paulo, in order to maintain the quality of raw water.

Electricity

Electricity expenses totaled R$ 311.0 million in 3Q20, up R$ 28.5 million, or 10.1%, compared to the R$ 282.5 million recorded in 3Q19. Of the total expenses with electricity, the Free Market Tariffs (ACL) accounted for 49.2% in 3Q20 (37.7% in 3Q19) and the Regulated Market Tariffs (ACR) accounted for 50.8% (62.3% in 3Q19).

The main factors influencing this variation were:

| · | Average increase of 44.0% in ACL prices (including Grid Market Tariffs - TUSD), with an increase of 16.8% in consumption; and

| · | Average reduction of 8.8% in ACR tariffs, with no significant variation in consumption.

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Comments on the Company’s Performance

General expenses

Decrease of R$ 134.2 million, or 37.4%, totaling R$ 224.4 million in 3Q20, compared to the R$ 358.6 million recorded in 3Q19, mainly due to:

| · | Lower provisioning for lawsuits in 3Q20, in the amount of R$ 57.1 million;

| · | Non-recurring expenses related to the conclusion of legal proceedings were recognized, arising from the signing of an agreement with the municipality of Guarujá, in the amount of R$ 46.9 million, as previously highlighted; and

| · | Lower provision for transfer to the São Paulo Municipal Fund for Environmental Sanitation and Infrastructure, in the amount of R$ 12.6 million, due to lower revenue earned in the municipality.

Depreciation and amortization

Increase of R$ 64.3 million, or 13.9%, due to the start-up of intangible assets, in the amount of R$ 3.6 billion.

Allowance for doubtful accounts

Increase of R$ 112.7 million, mainly due to:

| · | Non-recurring reversal of R$ 51.5 million in 3Q19, due to the agreement with the municipality of Santo André; and

| · | Increase in delinquency rates due to the economic instability worsen by COVID-19.

Other operating income (expenses), net

Other operating revenues and expenses recorded a negative variation of R$ 12.4 million due to the donation of basic food baskets, within the context of the COVID-19 pandemic.

7. Financial result

|  |  |  | R$ million
|  |  | Var.
| 3Q20 | 3Q19 | R$ | %
Financial expenses, net of income | (180.2) | (185.6) | 5.4 | (2.9)
Net monetary and exchange variations | (150.4) | (534.3) | 383.9 | (71.9)
Financial result | (330.6) | (719.9) | 389.3 | (54.1)

Financial expenses, net of income

|  |  |  | R$ million
|  |  | Var.
| 3Q20 | 3Q19 | R$ | %
Financial expenses |  |  |  |
Interest and charges on domestic loans and financing | (92.0) | (89.9) | (2.1) | 2.3
Interest and charges on international loans and financing | (39.5) | (44.0) | 4.5 | (10.2)
Other financial expenses | (94.2) | (125.0) | 30.8 | (24.6)
Total financial expenses | (225.7) | (258.9) | 33.2 | (12.8)
Financial income | 45.5 | 73.3 | (27.8) | (37.9)
Financial expenses net of income | (180.2) | (185.6) | 5.4 | (2.9)

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Comments on the Company’s Performance

Decrease of R$ 5.4 million, due to:

| · | Reduction of R$ 4.5 million in interest and charges on international loans and financing, mainly due to the exchange of the US$ 494.6 million debt to R$ 2,810.9 million with the Interamerican Development Bank (IDB);

| · | R$ 30.8 million decrease in other financial expenses, as a result of lower recognition of interest on lawsuits, in the amount of R$ 29.8 million; and

| · | Decrease of R$ 27.8 million in financial revenue, mostly due to the lower income obtained on financial investments, due to the reduction in the remuneration of the DI rate.

Monetary and exchange variation, net

|  |  |  | R$ million
|  |  | Var.
| 3Q20 | 3Q19 | R$ | %
Monetary and exchange variation on liabilities |  |  |  |
Monetary variation on borrowings and financing | (19.7) | (4.3) | (15.4) | (358.1)
Exchange variation on loans and financing | (111.1) | (522.1) | (411.0) | (78.7)
Other monetary variations | (39.8) | (29.3) | (10.5) | (35.8)
Total monetary/exchange variation on liabilities | (170.6) | (555.7) | (385.1) | (69.3)
Monetary/exchange variation on assets | 20.2 | 21.4 | (1.2) | (5.6)
Monetary/exchange variations, net | (150.4) | (534.3) | 383.9 | (71.9)

The effect of net monetary and exchange variations in 3Q20 totaled R$ 383.9 million, lower than the amounts reported in 3Q19, especially due to:

| · | R$ 15.4 million increase in monetary variation on loans and financing, due to the increase in the IPCA consumer price index and funding from the 26th debenture issuance;

| · | Decrease of R$ 411.0 million in exchange variations on loans and financing, due to: (i) lower appreciation of the US dollar and the yen against the real in 3Q20 (3.01% and 5.16%, respectively), when compared to the appreciation in 3Q19 (8.67% and 8.38%, respectively); (ii) exchange of debt, from US$ 494.6 million to R$2,810.9 million with the Inter-American Development Bank (IDB); and (iii) early amortization of the Eurobonds, which would mature on December 16, 2020, in the amount of R$ 1,910.1 million (US$ 350.0 million); and

| · | Increase of R$ 10.5 million in other monetary variations, due to higher monetary variation on lawsuits in 3Q20, in the amount of R$ 9.0 million, due to the increase of the Court of Justice update rate, of 1.1% in 3Q20, compared to 0.23% in 3Q19.

8. Income tax and social contribution

In 3Q20, taxes decreased by R$ 395.8 million due to the lower taxable result recorded.

In 3Q19, non-recurring revenue was recognized in the amount of R$ 1,261.7 million, related to the agreement with the municipality of Santo André and the reversal of R$ 173.3 million in TAC - Retiree expenses.

In addition, the allowance for doubtful accounts increased by R$ 112.7 million in 3Q20, which was offset by the reduction in expenses with exchange rate variation, in the amount of R$ 411.0 million.

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Comments on the Company’s Performance

9. Indicators

a) Operating

Operating indicators(*) | 3Q20 | 3Q19 | %
Water connections(1) | 10,030 | 9,881 | 1.5
Sewage connections(1) | 8,458 | 8,277 | 2.2
Population directly served - water(2) | 27.4 | 27.0 | 1.5
Population directly served - sewage(2) | 24.2 | 23.7 | 2.1
Number of employees | 13,533 | 14,018 | (3.5)
Water volume produced in the quarter(3) | 726 | 711 | 2.1
Water volume produced in the year(3) | 2,171 | 2,141 | 1.4
IPM - Micromeasured Water Loss (%)(4) | 27.6 | 29.4 | (6.1)
IPDt (liters/connection x day)(4) | 271.0 | 289.0 | (6.2)

(1) Total connections, active and inactive, in thousand units at the end of the period

(2) In million inhabitants, at the end of the period. Does not include wholesale

(3) In millions of cubic meters

(4) Does not include Guarulhos and Santo André

(*) Unaudited

b) Management’s Indicators

The following performance Management Indicators show: Gross Revenue, Operating Expenses and EBITDA, all measured based on billed cubic meter.

The historical series is presented since 2014, based on quarterly financial data disclosed by the Company, disregarding some non-recurring and material events that would distort the result.

All indicators were calculated based on average values of 3Q20, adjusted by variations in the IPCA consumer price index, to determine the behavior on a same-price base in the period.

Gross Revenue per billed cubic meter shows increasing average evolution, especially after the third quarter of 2015. In 3Q20, result fell by 8.6% year over year, influenced by the lower revenue from commercial and industrial customers, payment exemption for customers in the "Residencial Social" and "Residencial Favela” categories and postponement of the tariff adjustment.

Operating Expenses per billed cubic meter increased on a quarterly basis in a controlled manner, being compatible with the expansion of operations showing a stable average performance and reflecting disciplined cost management. In 3Q20, expenses fell by 11.5% compared to 3Q19.

Finally, the EBITDA per cubic meter increased in the period, basically due to the performance of Gross Revenue and Operating Expenses. Compared to the beginning of 2020, this indicator had a positive evolution in 3Q20, in spite of the 10.4% decrease compared to 3Q19.

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Comments on the Company’s Performance

Total Gross Revenue per Billed m³ - R$/m³

Figures at 3Q20 average prices, updated by IPCA

The following were not considered:

- Construction revenue

- R$928 million referring to the agreement with Guarulhos in 4Q18

- R$1,254 million referring to agreement with Santo André in 3Q19

- R$194.9 million referring to agreement with Mauá in 2Q20

Operating Expenses per Billed m³ - R$/m³

Figures at 3Q20 average prices, updated by IPCA

Expenses considered: personnel, treatment materials, general supplies, outsourced services, electricity, general expenses and tax expenses. Reversals excluded:

1.R$ 696 million referring to agreement with the State Government in 1Q15

2.R$ 307 million referring to the migration of the supplementary pension plan in 3Q16

3.R$ 173 million referring to the TAC - Retirees in 3Q19

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Comments on the Company’s Performance

EBITDA per Billed m³ - R$/m³

Figures at 3Q20 average prices, updated by IPCA

The following were not considered:

1. Revenue:

- R$ 928 million referring to the agreement with Guarulhos in 4Q18

- R$ 1,254 million referring to the agreement Santo André in 3Q19

- R$ 194.9 million referring to the agreement signed with Mauá in 2Q20

2. Reversal of Expenses:

- R$ 696 million referring to the agreement with the State Government in 1Q15

- R$ 307 million referring to the migration of the supplementary pension plan in 3Q16

- R$ 173 million referring to the end of TAC - Retirees in 3Q19

c) Economic

Economic Variables at the close of the quarter (*) | 3Q20 | 3Q19
Amplified Consumer Price Index(1) | 1.24 | 0.26
National Consumer Price Index(1) | 1.68 | 0.17
Consumer Price Index(1) | 2.16 | 0.47
Interbank Deposit Certificate(2) | 1.90 | 5.40
US DOLLAR(3) | 5.6407 | 4.1644
YEN(3) | 0.05343 | 0.03852

(1) Quarterly rate (%)

(2) Quarterly average

(3) Ptax sale rate on the last day

(*) Unaudited

10. Loans and financing

On September 30, Eurobonds, in the amount of US$ 350.0 million, maturing on December 16, 2020, were early amortized. The Company used cash for such redemption, and is in line with its strategy to reduce currency exposure. The Company formalized this month a financing agreement with Inter-American Investment Corporation – IDB Invest, in the amount of R$950.0 million, in two tranches: (i) the first, of R$508.0 million, whose funds will be used for investment in the New Pinheiros River Program and in Renewable Energy Plants; and (ii) the second, of R$ 442.0 million, whose funds will be used to refinance debt. The transaction has no guarantees.

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Comments on the Company’s Performance

|  |  |  |  |  |  |  |  | R$’000
DEBT PROFILE
INSTITUTION | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 onwards | TOTAL | % of total
Local currency |  |  |  |  |  |  |  |  |
Debentures | 48,828 | 1,941,913 | 572,615 | 373,82 | 707,839 | 282,442 | 1,670,293 | 5,597,750 | 36
Brazilian Federal Savings Bank | 21,74 | 89,722 | 94,608 | 87,55 | 86,408 | 91,819 | 929,6 | 1,401,447 | 9
BNDES | - | 174,348 | 174,348 | 167,698 | 161,164 | 141,28 | 523,128 | 1,341,966 | 9
IDB 2202 | - | 181,349 | 181,349 | 181,349 | 181,349 | 181,349 | 1,799,162 | 2,705,907 | 18
Leasing | 46,517 | 66,293 | 42,12 | 37,503 | 40,517 | 40,545 | 222,959 | 496,454 | 3
Others | 621 | 3,779 | 4,038 | 3,977 | 1,757 | 1,61 | - | 15,782 | 0
Interest and other charges | 60,357 | 40,42 | - | - | - | - | - | 100,777 | 1
Total in Local Currency | 178,063 | 2,497,824 | 1,069,078 | 851,897 | 1,179,034 | 739,045 | 5,145,142 | 11,660,083 | 76
Foreign Currency |  |  |  |  |  |  |  |  |
IDB 1212 | - | 57,976 | 57,976 | 57,976 | 57,976 | 57,976 | - | 289,88 | 2
IBRD | - | 34,294 | 34,294 | 34,294 | 34,294 | 34,294 | 290,788 | 462,258 | 3
JICA | 5,833 | 225,498 | 225,498 | 225,498 | 225,498 | 225,498 | 1,695,750 | 2,829,073 | 18
IDB 1983AB | - | 43,39 | 43,39 | 42,28 | - | - | - | 129,06 | 1
Interest and other charges | 5,658 | 4399 | - | - | - | - | - | 10,057 | 0
Total in Foreign Currency | 11,491 | 365,557 | 361,158 | 360,048 | 317,768 | 317,768 | 1,986,538 | 3,720,328 | 24
TOTAL | 189,554 | 2,863,381 | 1,430,236 | 1,211,945 | 1,496,802 | 1,056,813 | 7,131,680 | 15,380,411 | 100

Covenants

The table below shows the most restrictive covenants in 3Q20:

(1)“Other Onerous Debt” correspond to the sum of social security liabilities, health care plan installment payment of tax debts and installment payment of debts with the Electricity supplier

As of September 30, 2020, the Company had met the requirements set forth by its borrowings and financing agreements.

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Comments on the Company’s Performance

11. CAPEX

Investments totaled R$ 1,072.7 million in 3Q20. The investment in 9M20 was R$ 3,117.5 million.

Cash used in 9M20 referring to the Company’s historical investments totaled R$ 2,302.1 million.

PAGE:24 of 86

ITR - Quarterly Information Form - 9/30/2020 - CIA SANEAMENTO BASICO EST SAO PAULO | Version : 1

Notes to the Interim Financial Information

1 Operations

Companhia de Saneamento Básico do Estado de São Paulo ("SABESP" or the "Company") is a mixed-capital company headquartered in the municipality São Paulo, at Rua Costa Carvalho, 300, CEP 05429-900, controlled by the São Paulo State Government (GESP). The Company is engaged in the provision of basic and environmental sanitation services in the São Paulo State, as well as it supplies treated water and sewage services on a wholesale basis.

In addition to providing basic sanitation services in the São Paulo State, SABESP may perform activities in other states and countries, and can operate in drainage, urban cleaning, solid waste handling and energy markets. SABESP aims to be a world reference in the provision of sanitation services, in a sustainable, competitive and innovative manner, with a focus on customers.

As of September 30, 2020, the Company operated water and sewage services in 374 municipalities of the São Paulo State, 342 have already signed contracts, pursuant to Law 11,445/2007. Most of these municipalities’ operations are based on 30-year concession, program and service contracts, except for the municipalities of Guarulhos, Mauá, Mogi das Cruzes, Santo André, São Bernardo do Campo, São João da Boa Vista and Tejupá, which have a 40-year term.

The table below shows a summary of the contractual situation of the municipalities served:

| September 30, 2020 | December 31, 2019 | September 30, 2019
Total municipalities that have already signed contracts* | 342 | 325 | 319
Balance – intangible and contract assets | 39,035,377 | 35,990,087 | 35,253,130
Percentage of intangible and contract assets | 93.71% | 90.10% | 90.17%
Revenue from sanitation services (excluding construction revenue) | 10,364,110 | 13,700,777 | 9,949,085
Percentage of revenue from sanitation services (excluding construction revenue) | 93.32% | 84.92% | 82.23%
Municipalities with expired contracts: | 8 | 21 | 25
Balance – intangible and contract assets | 216,326 | 1,637,878 | 1,627,293
Percentage of intangible and contract assets | 0.52% | 4.10% | 4.16%
Revenue from sanitation services (excluding construction revenue) | 28,480 | 451,603 | 339,171
Percentage of revenue from sanitation services (excluding construction revenue) | 0.26% | 2.80% | 2.80%
Municipalities with concession agreements due by 2030: | 25 | 27 | 28
Balance – intangible and contract assets | 1,176,822 | 1,181,172 | 1,235,219
Percentage of intangible and contract assets | 2.83% | 2.96% | 3.16%
Revenue from sanitation services (excluding construction revenue) | 433,989 | 588,628 | 451,228
Percentage of revenue from sanitation services (excluding construction revenue) | 3.91% | 3.65% | 3.73%
Municipality of São Paulo: |  |  |
Percentage of intangible and contract assets | 42.17% | 43.37% | 43.68%
Percentage of revenue from sanitation services (excluding construction revenue) | 44.37% | 44.48% | 43.36%
* Includes the municipality of Mauá, which signed contract in June 2020, with operations expected to begin in December 2020.

PAGE:25 of 86

ITR - Quarterly Information Form - 9/30/2020 - CIA SANEAMENTO BASICO EST SAO PAULO | Version : 1

Notes to the Interim Financial Information

The Company operates in the municipality of Juquitiba under authorization by public deeds, which are valid and governed by the Brazilian Civil Code. Revenue from sanitation services (excluding construction revenue) of this municipality totaled R$ 4,451 from January to September 2020 (R$ 4,088 from January to September 2019) and the total amount of intangible and contract assets for this municipality was R$ 81,754 as of September 30, 2020 (R$ 80,563 as of December 31, 2019).

The Company's shares have been listed in the Novo Mercado segment of B3 under ticker SBSP3 since April 2002 and on the New York Stock Exchange (NYSE) as American Depositary Receipts (“ADRs”) Level III, under ticker SBS, since May 2002.

Since 2008, the Company has been setting up partnerships with other companies, which resulted in the following companies: Sesamm, Águas de Andradina, Saneaqua Mairinque, Aquapolo Ambiental, Águas de Castilho, Attend Ambiental and Paulista Geradora de Energia. Although SABESP has no majority interest in the capital stock of these companies, the shareholders’ agreements provide for the power of veto and casting vote in certain issues jointly with associates, indicating the shared control in the management of investees, except for Saneaqua Mairinque, which, as of August 2020, no longer has a shared control.

Economic instability worsened by COVID-19

The global economic instability worsened in early 2020 with the outbreak of a new coronavirus, which was considered pandemic by the World Health Organization (WHO). Accordingly, SABESP has adopted and has taken several preventive measures to ensure the continuity and quality of the services provided to the population, given that the services rendered by the Company have become even more essential to the society in the context of the COVID-19 pandemic. It is worth noting that any interruption in water supply by a basic sanitation company may compromise compliance with WHO’s recommendations for everyone to keep good hygiene habits, such as washing hands correctly and more frequently.

The Company implemented a number of preventive measures so that its employees are not exposed to situations of risks, such as: (i) employees from the administrative sectors (especially) and those with more than 60 years of age are working under a remote system; (ii) restriction of domestic and international trips; (iii) use of remote means of communication; and (iv) anticipation of the influenza vaccination campaign; among others. The Company also took all necessary preventive measures so that employees with strategic functions can work without increasing the risk of contamination, thus ensuring the continuity in the provision of essential services.

Some of the economic and financial consequences arising from the COVID-19 pandemic include: (i) high exchange volatility and increase in new funding costs; (ii) reduction in billed volume and, consequently, in revenues from customers in the commercial, industrial and public categories, in the amount of approximately R$ 275.0 million from June to September 30, 2020 and R$ 598.1 million from January to September 2020; (iii) postponement of the tariff adjustment from May 11 to August 15, 2020, with an estimate net impact of R$ 65.6 million on the operating revenue from July to September 2020 and R$ 93.6 million from January to September 2020; (iv) increase in default and in the expectation of higher future losses, due to the decrease in the municipalities’ revenue and the increase in bankruptcy petitions, which negatively impacted estimated losses by R$ 112.8 million from July to September 2020 compared to July to September 2019 and R$ 298.9 million from January to September 2020 compared to January to September 2019; and (v) payment exemption of water and sewage bills for consumers in the Residential Social and Residential Favela categories in all operated municipalities from April 1 to September 15, 2020, reducing revenue by R$ 51.6 million from July to September 2020 and by R$ 116.9 million from January to September 2020, compared to the same periods in 2019. Opposed to the adverse effects, there was a positive effect, such as the increase in revenues from residential customers (except for the social and favela categories), in the amount of R$ 243.0 million from July to September 2020 and R$ 517.4 million from January to September 2020, and the postponement of the payment of 50% of the Regulation, Control and Inspection Fee (TRCF) from May to December 2020, for settlement in 24 installments beginning January 2021, of R$ 13.1 million from May to September 2020.

Because of the adverse effects, the Company reduced expenses and budget adjustments to preserve economic and financial sustainability and, on April 27, 2020 and July 10, 2020, it held the 25th and 26th issue debentures in the amounts of R$ 1.45 billion and R$ 1.05 billion, respectively. In addition to these initiatives, on April 28, 2020, the Company concluded the translation of a debt contracted with the Inter-American Development Bank (IDB), from US$ 494.6 million to R$ 2,810.9 million, reducing its exposure to the variation of the US dollar. In addition, as of September 30, 2020, the Company early amortized Eurobonds in the amount of R$ 1,910.1 million (US$ 357.8 million) to reduce currency exposure.

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Notes to the Interim Financial Information

Management expects that the initiatives implemented because of the above-mentioned impacts, in addition to the signature of contracts with the municipalities of Guarulhos, Santo André and Mauá, improved water security, due to the works carried out, and the credit lines contracted for purposes of investments, will be sufficient to meet its commitments and not compromise the Company’s operating and financial continuity.

New Legal Sanitation Framework

On July 15, 2020, the Brazilian President sanctioned Law 14,026/2020 with 11 vetoes. Although they can be overruled by the Brazilian Congress, by extinguishing the program contract, the Law changes the scenario for operations in the sector, ensuring competition.

Additionally, the Law imposes performance goals that encourage operators to increase operating efficiency, and provides conditions for the National Water Agency (ANA) to establish parameters and guidelines in order to minimize regulatory uncertainties, thus creating a more stable and attractive environment for investments in the sector.

In this context, the Company believes it has competitive advantages, given that: i) contracts already include goals that meet or even anticipate those contained in the new regulatory framework, ii) it provides access to public and private capital, iii) it has high governance level and iv) it has great exposure to the market, thus being prepared to compete in the expansion of its market share.

Approvals

The interim financial information was approved by the Board of Directors on November 12, 2020.

2 Basis of preparation and presentation of the interim financial information

Presentation of the Interim Financial Information

The interim financial information as of September 30, 2020, was prepared based on the provisions of CPC 21 (R1) – Interim Financial Information and the international standard IAS 34 – Interim Financial Reporting, issued by the International Accounting Standards Board (IASB), applicable to the preparation of Quarterly Information Form – ITR and they are fairly presented consistent with the rules issued by the Brazilian Securities and Exchange Commission (CVM).

Accordingly, this interim information takes into consideration the Official Letter CVM/SNC/SEP 003 of April 28, 2011, which allows the entities to present selected notes to the financial statements, in cases of redundant information already disclosed in the Annual Financial Statements. The interim financial information as of September 30, 2020, therefore, does not include all the notes and reporting required by the annual financial statements, and accordingly, shall be read jointly with the Annual Financial Statements as of December 31, 2019, prepared pursuant to the International Financial Reporting Standards – IFRS, issued by the International Accounting Standards Board – IASB and pursuant to the accounting practices adopted in Brazil, which observe the pronouncements issued by the Brazilian Accounting Pronouncements Committee - CPC. Therefore, in this interim financial information, the notes below were either not presented or are not as detailed as those in the annual financial statements (according to numerical references):

i. Summary of significant accounting policies (Note 3);

ii. Changes in accounting practices and disclosures (Note 4);

iii. Risk management – financial instruments (Note 5.4);

iv. Key accounting estimates and judgments (Note 6);

v. Related-party balances and transactions (Note 10);

vi. Investments (Note 11);

vii. Intangible assets (Note 14);

viii. Borrowings and financing (Note 16);

ix. Deferred taxes and contributions (Note 18);

x. Provisions (Note 19);

xi. Employees benefits (Note 20);

xii. Equity (Note 23);

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Notes to the Interim Financial Information

xiii. Insurance (Note 26);

xiv. Financial income (expenses) (Note 29).

All material information related to the interim financial information, and this information alone, is being disclosed and corresponds to the information used by the Company’s Management in its administration.

The amounts disclosed in the Notes to the interim financial information are in thousands of reais, unless otherwise stated.

3 Summary of significant accounting policies

The accounting policies used in the preparation of the interim financial information as of September 30, 2020 are consistent with those used to prepare the Annual Financial Statements for the year ended December 31, 2019, disclosed on Note 3 of such financial statements.

4 Risk Management

4.1 Financial Risk Management

Financial risk factors

The Company's activities are affected by the Brazilian economic scenario, making it exposed to market risk (exchange rate and interest rate), credit risk and liquidity risk. The financial risk management is focused on the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance.

The Company has not utilized derivative instruments in any of the reported periods.

(a) Market risk

Exchange risk

Currency exposure implies market risks associated with currency fluctuations, since the Company has foreign currency-denominated liabilities, arising from long-term funding, in development institutions, at lower interest rates, in US dollar and yen.

The management of currency exposure considers several current and projected economic factors, besides market conditions.

This risk arises from the possibility that the Company may incur in losses due to exchange rate fluctuations that would impact liability balances of foreign currency-denominated borrowings and financing and related financial expenses. The Company does not maintain hedge or swap contracts or any derivative financial instrument to hedge against this risk.

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Notes to the Interim Financial Information

A significant portion of financial debt is indexed to the US dollar and Yen, in the total amount of R$ 3,729,145 as of September 30, 2020 (R$ 6,382,009 as of December 31, 2019). The exposure to exchange risk is as follows:

| September 30, 2020 | December 31, 2019
| Foreign currency | R$ | Foreign currency | R$
Borrowings and financing – US$ | 157,259 | 887,051 | 1,051,881 | 4,239,817
Borrowings and financing – Yen | 53,004,615 | 2,832,037 | 56,452,885 | 2,097,225
Interest and charges from borrowings and financing – US$ |  | 4,142 |  | 32,242
Interest and charges from borrowings and financing – Yen |  | 5,915 |  | 12,725
Total exposure |  | 3,729,145 |  | 6,382,009
Borrowing cost – US$ |  | (5,853) |  | (20,173)
Borrowing cost – Yen |  | (2,964) |  | (3,038)
Total foreign currency-denominated borrowings (Note 16) |  | 3,720,328 |  | 6,358,798

The 41.5% decrease in foreign-currency denominated debt from December 31, 2019 to September 30, 2020 was mainly due to:

| · | Exchange of foreign currency to local currency of the BID 2202 contract, in the amount of R$ 2,810,907 (US$ 494,617 thousand);

| · | Final amortization of Eurobonds, in the amount of R$ 1,910,124 (US$ 357,763 thousand), corresponding to principal plus interest and charges;

The decrease was offset by the appreciation of the US dollar and Yen against the Real, as shown below:

| September 30, 2020 | December 31, 2019 | Var.
US$ | R$ 5.6407 | R$ 4.0307 | 39.9%
Iene | R$ 0.05343 | R$ 0.03715 | 43.8%

From January to September 2020, the Company recorded R$ 2,474,804 in liabilities from the currency variation of the borrowing and financing agreements. As of September 30, 2020, if the Brazilian real had depreciated or appreciated by 10 percentage points, in addition to the impacts mentioned above, against the US dollar and Yen with all other variables held constant, the effects on results before taxes on the nine-month period ended September 30, 2020 would have been R$ 372,915 (R$ 675,049 for the nine-month period ended September 30, 2019), lower or higher, mainly as a result of exchange losses or gains on the translation of foreign currency-denominated borrowings and financing.

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Notes to the Interim Financial Information

Scenario I below presents the effect in income statements for the next 12 months, considering the projected rates of the US dollar and the Yen. Considering the other variables as remaining constant, the impacts for the next 12 months are shown in scenarios II and III with possible depreciations of 25% and 50%, respectively, in the Brazilian real.

| Scenario I (Probable) | Scenario II (+25%) | Scenario III (+50%)
| (*) |  |
Net currency exposure as of September 30, 2020 in US$ - Liabilities | 157,259 | 157,259 | 157,259
US$ rate as of September 30, 2020 | 5.6407 | 5.6407 | 5.6407
Exchange rate estimated according to the scenario | 5.1200 | 6.4000 | 7.6800
Differences between the rates | 0.5207 | (0.7593) | (2.0393)
Effect on net financial result R$ - gain/(loss) | 81,885 | (119,407) | (320,698)
Net currency exposure as of September 30, 2020 in ¥ – Liabilities | 53,004,615 | 53,004,615 | 53,004,615
Yen rate as of September 30, 2020 | 0.05343 | 0.05343 | 0.05343
Exchange rate estimated according to the scenario | 0.05453 | 0.06816 | 0.08179
Differences between the rates | (0.00110) | (0.01473) | (0.02836)
Effect on net financial result R$ - (loss) | (58,305) | (780,758) | (1,503,211)
Total effect on net financial result in R$ - gain/(loss) | 23,580 | (900,165) | (1,823,909)
(*) For the probable scenario in US dollar, the exchange rate estimated for September 30, 2021 was used, pursuant to the BACEN Focus Report of September 30, 2020. For the Yen, the exchange estimated for September 30, 2021 was used, according to B3’s Reference Rates report of September 30, 2020.

Interest rate risk

This risk arises from the possibility that the Company could incur losses due to fluctuations in interest rates, increasing the financial expenses related to borrowings and financing.

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Notes to the Interim Financial Information

The Company has not entered into any derivative contract to hedge against this risk; however, it continually monitors market interest rates, in order to evaluate the possible need to replace its debt.

The table below provides the borrowings and financing subject to variable interest rate:

| September 30, 2020 | December 31, 2019
CDI (i) | 5,886,988 | 1,866,755
TR (ii) | 1,617,388 | 1,675,203
IPCA (iii) | 2,130,378 | 1,366,134
TJLP (iv) | 1,494,985 | 1,381,342
LIBOR (v) | 887,051 | 2,829,073
Interest and charges | 104,901 | 105,667
Total | 12,121,691 | 9,224,174

(i) CDI - (Certificado de Depósito Interbancário), an interbank deposit certificate

(ii) TR – Interest Benchmark Rate

(iii) IPCA - (Índice Nacional de Preços ao Consumidor Amplo), a consumer price index

(iv) TJLP - (Taxa de Juros a Longo Prazo), a long-term interest rate index

(v) LIBOR - London Interbank Offered Rate

Another risk to which the Company is exposed is the mismatch of inflation adjustment indices of its debts with those of its service revenues. Tariff adjustments of services provided do not necessarily follow the increases in the inflation indexes to adjust borrowings, financing and interest rates affecting indebtedness.

As of September 30, 2020, if interest rates on borrowings and financing had been 1 percentage point higher or lower with all other variables held constant, the effects on profit before taxes for the nine-month period ended September 30, 2020 would have been R$ 121,217 (R$ 93,943 for the nine-month period ended September 30, 2020), lower or higher, mainly as a result of lower or higher interest expense on floating rate borrowings and financing.

(b) Credit risk

Credit risk is related to cash, banks and cash equivalents, financial investments, as well as credit exposures to wholesale basis and retail customers, including accounts receivable, restricted cash and accounts receivable from related parties. Credit risk exposure to customers is mitigated by sales to a dispersed base.

The maximum exposures to credit risk as of September 30, 2020 are the carrying amounts of instruments classified cash and cash equivalents, financial investments, restricted cash, trade receivables and accounts receivable from related parties in the reporting period. See additional information in Notes 6, 7, 8, 9 and 10.

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Notes to the Interim Financial Information

Regarding the financial assets held with financial institutions, the credit quality that is not past due or subject to impairment loss can be assessed by reference to external credit ratings (if available) or to historical information about the bank’s default rates. For the credit quality of the banks, such as deposits and financial investments, the Company considers the lower rating published by three main international rating agencies (Fitch, Moody's and S&P), according to internal policy of market risk management:

| September 30, 2020 | December 31, 2019
Cash and cash equivalents and financial investments |  |
AA(bra) | 790,515 | 2,193,725
AAA(bra) | 882,962 | 41,992
Others (*) | 258,085 | 17,493
| 1,931,562 | 2,253,210

(*) This category includes current accounts and investment funds in banks whose balances were not significant.

The available credit rating information of the banks, as of September 30, 2020, in which the Company made deposit transactions and financial investments in local currency (R$ - local rating) during the period is as follows:

Banks | Fitch | Moody's | Standard Poor's
Banco do Brasil S/A | AA(bra) | - | -
Banco Santander Brasil S/A | - | Aaa.br | brAAA
Caixa Econômica Federal | AA(bra) | Aa1.br | brAAA
Banco Bradesco S/A | AAA(bra) | Aa1.br | brAAA
Banco Itaú Unibanco S/A | AAA(bra) | Aa1.br | brAAA
Banco BV | - | Aa3.br | brAAA
Banco BTG Pactual S/A | AA(bra) | Aa2.br | brAA+

(c) Liquidity risk

Liquidity is primarily reliant upon cash provided by operating activities and borrowings and financing obtained in the local and international capital markets. The management of this risk considers the assessment of its liquidity requirements to ensure it has sufficient cash to meet its operating and capital expenditures needs, as well as the payment of debts.

The funds held by the Company are invested in interest-bearing current accounts, time deposits and securities, selecting instruments with appropriate maturity or liquidity sufficient to provide margin as determined by projections mentioned above.

The table below shows the financial liabilities, per relevant maturities, including the installments of principal and future interest to be paid according to the agreement. Future interest was calculated based on the contractual clauses for all agreements. For agreements with floating interest rate, the interest rates used correspond to the base date of September 30, 2020.

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Notes to the Interim Financial Information

| October to December 2020 | 2021 | 2022 | 2023 | 2024 | 2025 onwards | Total
Em 30 de setembro de 2020 |  |  |  |  |  |  |
Liabilities |  |  |  |  |  |  |
Borrowings and financing | 249,448 | 3,720,526 | 1,780,555 | 1,507,228 | 1,756,199 | 9,138,513 | 18,152,469
Trade payables and contractors | 237,840 | - | - | - | - | - | 237,840
Services payable | 507,343 | - | - | - | - | - | 507,343
Public-Private Partnership – PPP | 100,812 | 403,344 | 403,638 | 403,934 | 350,834 | 4,490,915 | 6,153,477
Program Contract Commitments | 141,815 | 47,258 | 32,552 | 32,552 | 1,028 | 13,946 | 269,151

The Company has borrowings and financing agreements including cross default clauses, i.e. the early maturity of any debt may imply the early maturity of these agreements. The indicators are continuously monitored in order to avoid the execution of these clauses, and the most restrictive are shown in Note 16 (c).

(d) Sensitivity analysis on interest rate risk

The table below shows the sensitivity analysis of the financial instruments, prepared in accordance with CVM Rule 475/2008 in order to evidence the balances of main financial assets and liabilities, calculated at a rate projected for the twelve-month period after September 30, 2020, or until the final settlement of each contract, whichever is shorter, considering a probable scenario (Scenario I), appreciation of 25% (Scenario II) and 50% (Scenario III).

The purpose of the sensitivity analysis is to measure the impact of changes in the market over the financial instruments of the Company, considering constant all other variables. In the time of settlement the amounts can be different from those presented, due to the estimates used in the measurement.

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Notes to the Interim Financial Information

September 30, 2020
Indicators | Exposure | Scenario I (Probable) (i) | Scenario II 25% | Scenario III 50%
Assets |  |  |  |
CDI | 1,827,326 | 2.5000%(*) | 3.1250% | 3.7500%
Financial income |  | 45,683 | 57,104 | 68,525
Current |  |  |  |
CDI | (5,886,988) | 2.5000%(*) | 3.1250% | 3.7500%
Interest to be incurred |  | (147,175) | (183,968) | (220,762)
CDI net exposure | (4,059,662) | (101,492) | (126,864) | (152,237)
Current |  |  |  |
TR | (1,617,388) | 0.0001%(**) | 0.0001% | 0.0002%
Expenses to be incurred |  | (2) | (2) | (3)
IPCA | (2,130,378) | 3.0100%(*) | 3.7625% | 4.5150%
Expenses to be incurred |  | (64,124) | (80,155) | (96,187)
TJLP | (1,494,985) | 4.9100%(*) | 6.1375% | 7.3650%
Interest to be incurred |  | (73,404) | (91,755) | (110,106)
LIBOR | (887,051) | 0.2180%(**) | 0.2725% | 0.3270%
Interest to be incurred |  | (1,934) | (2,417) | (2,901)
Total expenses to be incurred, net |  | (240,956) | (301,193) | (361,434)
(*) Source: CDI and IPCA (BACEN Focus Report, September 30, 2020) and long-term interest rate as of September 30, 2020 (BACEN).
(**) Source: B3.

(i) Refers to the scenario of interest to be incurred for the 12 months as of September 30, 2020 or until the maturity of the agreements, whichever is shorter.

4.2 Capital management

The Company’s objectives when managing capital are ensure its ability to increase investments in infrastructure, provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure to reduce the cost of capital.

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Notes to the Interim Financial Information

Capital is monitored based on the leverage ratio, which corresponds to net debt divided by total capital (shareholders and creditor’s equity). Net debt corresponds to total borrowings and financing less cash and cash equivalents and financial investments. Total capital is calculated as total equity plus net debt, as shown in the statement of financial position.

| September 30, 2020 | December 31, 2019
Total borrowings and financing (Note 16) | 15,380,411 | 13,244,709
(-) Cash and cash equivalents (Note 6) | (113,786) | (2,253,210)
(-) Financial investments (Note 7) | (1,817,776) | -
Net debt | 13,448,849 | 10,991,499
Total equity | 21,696,617 | 21,635,783
Total (shareholders plus creditor’s equity) | 35,145,466 | 32,627,282
Levarage rate | 38% | 34%

As of September 30, 2020, the leverage rate reached 38% compared to the 34% as of December 31, 2019, mainly because of the increase in net debt, due to the appreciation of the US dollar and Yen.

4.3 Fair value estimates

The Company considers that balances from trade receivables (current) and trade payables by carrying amount less impairment approximate their fair values, considering the short maturity. Long-term trade receivables also approximate their fair values, as they will be adjusted by inflation and/or will bear contractual interest rates over time.

4.4 Financial instruments

The Company did not have financial assets classified as fair value through other comprehensive income and fair value through profit or loss. The financial instruments included in the amortized cost category comprise cash and cash equivalents, financial investments, restricted cash, trade receivables, balances with related parties, other assets and balances receivable from the Water National Agency (ANA), accounts payable to contractors and suppliers, borrowings and financing, services payable, balances payable deriving from the Public Private Partnership (PPP) and program contract commitments, which are non-derivative financial assets and liabilities with fixed or determinable payments, not quoted in an active market, except for cash equivalents and financial investments.

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Notes to the Interim Financial Information

The estimated fair values of financial instruments are as follows: Financial assets

| September 30, 2020 | December 31, 2019
| Carrying amount | Fair value | Carrying amount | Fair value
Cash and cash equivalents | 113,786 | 113,786 | 2,253,210 | 2.253.210
Financial investments | 1,817,776 | 1,817,776 | - | -
Restricted cash | 31,172 | 31,172 | 26,018 | 26,018
Trade receivables | 2,296,029 | 2,296,029 | 2,353,027 | 2,353,027
ANA | 28,015 | 28,015 | 32,466 | 32,466
Other assets | 264,747 | 264,747 | 194,178 | 194,178

Additionally, SABESP has financial assets receivable from related parties, totaling R$ 791,910 as of September 30, 2020 (R$ 850,896 as of December 31, 2019), which were calculated in accordance with the conditions negotiated between the related parties. The conditions and additional information related to these financial instruments are disclosed in Note 10. Part of this balance, totaling R$ 721,094 (R$ 747,579 as of December 31, 2019), refers to reimbursement of additional retirement and pension plan - G0, indexed by IPCA plus simple interest of 0.5% p.m. On the transaction date, this interest rate approximated that of National Treasury Notes (NTN-b), with a term similar to the terms of related-party transactions.

Financial Liabilities

| September 30, 2020 | December 31, 2019
| Carrying amount | Fair value | Carrying amount | Fair value
Borrowings and financing | 15,380,411 | 15,188,710 | 13,244,709 | 13,937,611
Trade payables and contractors | 237,840 | 237,840 | 369,631 | 369,631
Services payable | 507,343 | 507,343 | 474,078 | 474,078
Program Contract Commitment | 252,573 | 252,573 | 377,253 | 377,253
Public-Private Partnership - PPP | 3,194,079 | 3,194,079 | 3,293,980 | 3,293,980

The criteria adopted to obtain the fair values of borrowings and financing, in preparing the interim financial information as of September 30, 2020, are consistent with those adopted in the Annual Financial Statements for the fiscal year ended December 31, 2019.

Considering the nature of other financial instruments, assets and liabilities, the balances recognized in the statement of financial position approximate the fair values, except for borrowings and financing, considering the maturities close to the end of the reporting date, comparison of contractual interest rates with market rates in similar operations at the end of the reporting period, their nature and maturity terms.

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Notes to the Interim Financial Information

5 Key accounting estimates and judgments

The preparation of the interim financial information requires Management to make judgements and use assumptions based on experience and other factors deemed as relevant, which affect the values of assets and liabilities and present results that may differ from the actual ones.

The areas that require a higher level of judgment and greater complexity, as well as the areas in which assumptions and estimates are significant for the interim financial information are: (i) allowance for doubtful accounts; (ii) intangible assets arising from concession agreements and program contracts; (iii) pension plan liabilities; (iv) deferred income tax and social contribution, and (v) provisions.

6 Cash and cash equivalents

| September 30, 2020 | December 31, 2019
Cash and banks | 68,852 | 176,497
Cash equivalents | 44,934 | 2,076,713
Total | 113,786 | 2,253,210

Cash and cash equivalents include cash, bank deposits and high-liquidity short-term financial investments, mainly represented by repurchase agreements, fund shares (accruing CDI interest rates) and CDBs, whose original maturities or intention of realization are lower than three months, which are convertible into a cash amount and subject to an insignificant risk of change in value, totaling R$ 35,384 (R$ 2,076,713 as of December 31, 2019), which are deposited at a fund in Banco do Brasil, in which SABESP is the exclusive shareholder.

The fund exclusively aims at receiving resources from SABESP and, as of September 30, 2020, it was mainly comprised of investments in treasury notes, repurchase agreements backed by national treasury notes and fixed income financial assets.

Given that SABESP is the exclusive shareholder and has control over the fund, it should be consolidated in the interim financial information; however, since 99% of the balance has already been presented in the financial statements under Cash and cash equivalents and the remaining balance, referring to the fund's management and maintenance expenses, is irrelevant, the Company decided not to present the balances between Parent Company and Consolidated because there is no significant difference between such balances and because it does not generate significant disclosure to users of financial statements.

As of September 30, 2020, the average yield of cash equivalents corresponded to 88.24% of CDI (98.02% as of December 31, 2019).

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Notes to the Interim Financial Information

7 Financial investments

The Company has financial investments in CDB, with daily liquidity, which it does not intend to use in the next three months, as shown below:

| September 30, 2020 | Remuneration rate
Banco BV | 252,020 | 102.09% of the CDI
Banco Itaú S/A | 352,830 | 103.00% of the CDI
Banco Bradesco S/A | 504,042 | 103.05% of the CDI
Banco BTG Pactual S/A | 352,832 | 103.00% of the CDI
Banco do Brasil S/A | 356,052 | 97.00% of the CDI
| 1,817,776 |

8 Restricted cash

| September 30, 2020 | December 31, 2019
Agreement with the São Paulo municipal government (i) | 25,103 | 17,068
Brazilian Federal Savings Bank – escrow deposits (ii) | 224 | 2,245
Other | 5,845 | 6,705
| 31,172 | 26,018

(i) Refers to the amount deducted from the 7.5% of revenue earned in the municipality to the Municipal Fund, corresponding to eventual amounts unpaid by direct management bodies, foundations and government agencies, as established in the agreement entered into with São Paulo municipal government; and

(ii) Refers to savings account for receiving escrow deposits regarding lawsuits with final and unappealable decisions in favor of the Company, which are blocked as per contractual clause.

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Notes to the Interim Financial Information

9 Trade receivables

(a) Statement of financial position details

| September 30, 2020 | December 31, 2019
Private sector: |  |
General (i) and special customers (ii) | 1,582,014 | 1,505,150
Agreements (iii) | 361,536 | 378,341
| 1,943,550 | 1,883,491
Government entities: |  |
Municipal | 497,790 | 472,666
Federal | 2,366 | 2,805
Agreements (iii) | 304,057 | 277,047
| 804,213 | 752,518
Wholesale customers – Municipal governments: (iv) |  |
Mogi das Cruzes | 3,542 | 3,278
São Caetano do Sul | 14,507 | 9,871
Total wholesale customers – Municipal governments | 18,049 | 13,149
Unbilled supply | 670,708 | 745,884
Subtotal | 3,436,520 | 3,395,042
Allowance for doubtful accounts | (1,140,491) | (1,042,015)
Total | 2,296,029 | 2,353,027
Current | 2,055,667 | 2,137,752
Noncurrent | 240,362 | 215,275
| 2,296,029 | 2,353,027

(i) General customers - residential and small and mid-sized companies;

(ii) Special customers – large consumers, commercial industries, condominiums and special billing customers (fixed demand agreements, industrial waste, wells, among others);

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Notes to the Interim Financial Information

(iii) Agreements - installment payments of past-due receivables, plus monetary restatement and interest, according to the agreements; and

(iv) Wholesale basis customers - municipal governments. This balance refers to the sale of treated water to municipalities, which are responsible for distributing to, billing and charging final customers.

Agreement with the municipality of Mauá

On June 16, 2020, the Company entered into a debt payment and receipt Consent Decree with the Municipality of Mauá (“Mauá”) and the Mauá Basic Sanitation (SAMA), aiming to settle SAMA’s existing debt upon the transfer of sanitation services to SABESP for 40 years.

The Company has not started the operation in Mauá yet, which was initially expected for August 2020, and now is expected for December 2020.

(b) The aging of trade receivables is as follows:

| September 30, 2020 | December 31, 2019
Current | 1,750,640 | 1,762,606
Past-due: |  |
Up to 30 days | 323,844 | 330,488
From 31 to 60 days | 144,177 | 164,913
From 61 to 90 days | 93,713 | 86,765
From 91 to 120 days | 75,003 | 58,971
From 121 to 180 days | 142,041 | 81,003
From 181 to 360 days | 57,600 | 33,206
Over 360 days | 849,502 | 877,090
Total past-due | 1,685,880 | 1,632,436
Total | 3,436,520 | 3,395,042

The increase in the past-due balance was mainly due to higher default of the private sector.

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Notes to the Interim Financial Information

(c) Allowance for doubtful accounts

| January to September 2020 | January to September 2019
Balance at the beginning of the period | 1,042,015 | 1,099,442
Private sector/government entities | 151,947 | (26,343)
Recoveries | (53,471) | (43,845)
Net additions/(recoveries) in the period | 98,476 | (70,188)
Balance at the end of the period | 1,140,491 | 1,029,254

Reconciliation of estimated losses at the result | July to September 2020 | January to September 2020 | July to September 2019 | January to September 2019
Write-offs | (140,579) | (244,926) | (34,422) | (118,550)
(Losses)/reversal with state entities – related parties (Note 10) | 1,154 | (6,389) | (387) | (2,536)
(Losses)/reversal with private sector/government entities | 41,348 | (151,947) | 60,331 | 26,343
Recoveries | 22,952 | 53,471 | 12,155 | 43,845
Amount recorded as expense (Note 27) | (75,125) | (349,791) | 37,677 | (50,898)

Expenses with estimated losses increased from R$ 50,898 between January and September 2019 to R$ 349,791 in the same period in 2020, due to higher default arising from Brazil’s economic instability, worsened by COVID 19.

The Company does not have customers representing 10% or more of its total revenues.

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Notes to the Interim Financial Information

10 Related-party balances and transactions

(a) Accounts receivable, interest on capital payable, revenue and expenses with the São Paulo State Government

| September 30, 2020 | December 31, 2019
Accounts receivable |  |
Current: |  |
Sanitation services | 110,675 | 131,851
Allowance for losses | (45,806) | (39,417)
Reimbursement of additional retirement and pension benefits paid (G0): |  |
- Monthly flow (payments) | 22,939 | 31,584
- GESP Agreement – 2015 | 72,247 | 68,888
Total current | 160,055 | 192,906
Noncurrent: |  |
Agreement for the installment payment of sanitation services | 5,947 | 10,883
Reimbursement of additional retirement and pension benefits paid (G0): |  |
- GESP Agreement – 2015 | 625,908 | 647,107
Total noncurrent | 631,855 | 657,990
Total receivables from shareholders | 791,910 | 850,896
Assets: |  |
Sanitation services | 70,816 | 103,317
Reimbursement of additional retirement and pension benefits paid (G0) | 721,094 | 747,579
Total | 791,910 | 850,896
Liabilities: |  |
Interest on capital payable to related parties | - | 401,963

| July to September 2020 | January to September 2020 | July to September 2019 | January to September 2019
Revenue from sanitation services | 113,989 | 379,824 | 137,063 | 406,495
Payments from related parties | (110,938) | (404,527) | (133,021) | (399,194)
Receipt of GESP reimbursement referring to Law 4,819/1958 | (54,922) | (126,839) | (51,070) | (128,433)

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Notes to the Interim Financial Information

| (b) | São Paulo State Government - GESP (i) (i) Disputed amounts

As of September 30, 2020, and December 31, 2019, the disputed amounts between SABESP and GESP, corresponding to additional retirement and pension benefits paid (Law 4,819/1958), totaled R$ 1,255,306 and
R$ 1,195,217, respectively. The Company created allowances for doubtful accounts for such amounts.

(ii) Actuarial liability

The Company recognized an actuarial liability corresponding to additional retirement and pension benefits paid to employees, retired employees and pensioners of the G0 Plan. As of September 30, 2020, and December 31, 2019, the amounts corresponding to the actuarial liability totaled R$ 3,074,518 and R$ 3,046,255, respectively. For detailed information on additional retirement and pension benefits, see Note 20 (b).

(c) Use of Reservoirs – EMAE

Empresa Metropolitana de Águas e Energia S.A. (EMAE) planned to receive for the credit and obtain financial compensation for alleged past and future losses in electricity generation, due to water collection, and compensation for costs already incurred and to be incurred with the operation, maintenance and inspection of the Guarapiranga and Billings reservoirs used by SABESP in its operations.

On October 28, 2016, the Company entered into an agreement based on a Private Transaction Agreement and Other Adjustments aimed to settle the disputes fully and completely and SABESP will continue using the reservoirs.

As of September 30, 2020, the balance of the agreement totaled R$ 17,176 and R$ 84,953 (R$ 16,653 and R$ 87,231 as of December 31, 2019), recorded in Other liabilities, under current and noncurrent liabilities, respectively.

(d) Agreements with reduced tariff for State Entities that joined the Rational Water Use Program (PURA)

The Company has signed agreements with government entities related to the State Government where it operates that benefit from a reduction of 25% in the tariff of water supply and sewage services when they are not in default. These agreements provide for the implementation of the rational water use program, which takes into consideration the reduction in water consumption.

(e) Guarantees

The State Government provides guarantees for some of the Company’s borrowings and financing and does not charge any fee for such guarantees.

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Notes to the Interim Financial Information

(f) Personnel assignment agreement among entities related to the State Government

The Company has personnel assignment agreements with entities related to the State Government, whose expenses are fully charged. From July to September 2020 and 2019, the expenses related to employees assigned to other state government entities amounted to R$ 468 and R$ 1,008, respectively, and, from January to September 2020 and 2019, they amounted to R$ 1,735 and R$ 3,982, respectively.

From July to September 2020 and 2019, there were no expenses related to personnel assigned by other entities to the Company. From January to September 2020 and 2019, these expenses amounted to R$ 13 and R$ 139, respectively.

(g) Non-operating assets

As of September 30, 2020, and December 31, 2019, land and lent structures amounted to R$ 3,613.

(h) SABESPREV

The Company sponsors a private defined benefit pension plan (G1 Plan), which is operated and administered by SABESPREV. The net actuarial liability recognized as of September 30, 2020, amounted to R$ 305,447 (R$ 314,677 as of December 31, 2019), according to Note 20 (b).

(i) Compensation of Management Key Personnel and Fiscal Council

From July to September 2020 and 2019, expenses related to the compensation of the members of the Management and Fiscal Council totaled R$ 1,570 and R$ 1,587, respectively. From January to September 2020 and 2019, these amounts totaled R$ 4,749 and R$ 3,762, respectively.

Additional amounts of R$ 380 and R$ 360 referring to the Executive Officers' bonus program were recorded from July to September 2020 and 2019, respectively, and, from January to September 2020 and 2019, these amounts totaled R$ 1.100 and R$ 1,080, respectively.

(j) Loan agreement through credit facility

The Company holds interest in certain Special Purpose Entities (SPEs), not holding the majority interest but with cast vote and power of veto in some issues, with no ability to use such power of veto in a way to affect returns over investments. Therefore, these SPEs are considered for accounting purposes as jointly arrangements.

The Company entered into a loan agreement through credit facility with the SPE Aquapolo Ambiental S/A to finance the operations of this company, until the borrowings and financing requested with financial institutions is granted.

As of September 30, 2020, the balance of principal and interest of this agreement totaled R$ 33,030, which was recorded in Noncurrent assets, under Other assets (R$ 34,992 as of December 31, 2019), at CDI + 1.2% p.a. As of January 27, 2020, the Company received R$ 3,000, of which R$ 1,231 for amortization of principal and R$ 1,769 for amortization of interest.

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The loan originally matured on April 30, 2015 but was extended to October 30, 2015. On November 25, 2015, a new amendment changed the payment schedule for three annual installments, the first of which maturing on December 30, 2021 and the last on December 30, 2023.

(k) “Se Liga na Rede” (Connect to the Network Program)

The State Government enacted the State Law 14,687/2012, creating the pro-connection program, destined to financially subsidize the execution of household branches necessary to connect to the sewage collecting networks, in low-income households, which agreed to adhere to the program. The program expenditures, except for indirect costs, construction margin and borrowing costs are financed with 80% of funds deriving from the State Government and the remaining 20% invested by SABESP, which is also liable for the execution of works. Until September 30, 2020, the program total amount was R$ 126,900 (R$ 117,272 as of December 31, 2019); as of September 30, 2020 and December 31, 2019, there was no balance receivable from related parties. As of September 30, 2020, R$ 74,726 (R$ 65,099 as of December 31, 2019) was recorded under intangible assets. R$ 52,174 was reimbursed by GESP (R$ 52,174 as of December 31, 2019) from the beginning of the program until September 30, 2020.

11 Investments

The Company holds interest in certain Special Purpose Entities (SPE). Although SABESP has no majority shares of its investees, the shareholders’ agreement provides for the power of veto in certain management issues, however, with no ability to use such power of veto in a way to affect returns over investments, indicating participating shared control (joint venture – CPC 19 (R2)).

Below is a summary of the investees’ financial statements in which SABESP holds equity interest valued by the equity accounting:

| Equity | Dividends distributed | Profit (loss) for the period
| September 30, 2020 | December 31, 2019 | January to September 2020 | January to September 2020 | (*) | January to September 2019
Sesamm | 51,281 | 45,923 | - | 5,358 | - | 2,714
Águas de Andradina | 29,310 | 30,065 | - | 1,870 | (2,625) | 3,000
Águas de Castilho | 8,232 | 7,242 | - | 977 | 13 | 1,221
Saneaqua Mairinque (1) | 4,013 | 4,783 | - | (770) | - | (12)
Attend Ambiental | 10,491 | 7,486 | - | 3,040 | (35) | (288)
Aquapolo Ambiental | 42,649 | 37,772 | (8,516) | 13,393 | - | 12,902
Paulista Geradora de Energia | 6,894 | 7,144 | - | (250) | - | (381)

(1)Amounts referring to July 31, 2020.

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| Investments | Dividends distributed | Other comprehenive income | Reclassification | Equity result | Interest percentage
| September 30, 2020 | December 31, 2019 | January to September 2020 | January to September 2020 | January to September 2020 | January to September 2020 | (*) | January to September 2019 | September 30, 2020 | December 31, 2019
Sesamm | 18,462 | 16,533 | - | - | - | 1,929 | - | 977 | 36% | 36%
Águas de Andradina | 8,794 | 9,020 | - | - | - | 561 | (787) | 900 | 30% | 30%
Águas de Castilho | 2,470 | 2,172 | - | - | - | 294 | 4 | 366 | 30% | 30%
Saneaqua Mairinque(2) | - | 1,434 | - | 17 | (1.203) | (248) | - | (4) | 4.6% | 30%
Attend Ambiental | 4,721 | 3,369 | - | - | - | 1,368 | (16) | (130) | 45% | 45%
Aquapolo Ambiental | 20,897 | 18,508 | (4,173) | - | - | 6,562 | - | 6,322 | 49% | 49%
Paulista Geradora de Energia | 1,723 | 1,786 | - | - | - | (63) | - | (94) | 25% | 25%
Joint ventures | 57,067 | 52,822 | (4,173) | 17 | (1,203) | 10,403 | (799) | 8,337 |  |
Other investments | 6,099 | 365 |  |  |  |  |  |  |  |
Overall total | 63,166 | 53,187 |  |  |  |  |  |  |  |

(*) Refer to changes in the equity of investees, as their financial statements for the year ended December 31, 2019 were issued after disclosure of SABESP’s financial statements.

(2) On August 20, 2020, the investee Saneaqua Mairinque held an Extraordinary Shareholders' Meeting that approved a capital increase in the amount of R$ 21,944, through the issue of 17,178,988 shares. SABESP waived its preemptive right in the participation of such capital increase, and the shares then issued because of the capital increase were entirely subscribed by the shareholder BRK Ambiental, resulting in the dilution of SABESP’s interest in the investee. Accordingly, SABESP discontinued the equity accounting method and recorded this financial asset under the fair value on the transaction date, in the amount of R$ 5,734. The amounts corresponding to the equity result were recorded until July 2020.

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12 Investment Properties

| December 31, 2019 | Transfers | Depreciation | September 30, 2020
Investment properties | 47,562 | (1,240) | (36) | 46,286

| December 31, 2018 | Transfers | Depreciation | September 30, 2019
Investment properties | 47,620 | (9) | (37) | 47,574

As of September 30, 2020 and December 31, 2019, the market values of these properties were approximately R$ 383,000 and R$ 386,000, respectively.

13 Contract assets

Contract Assets (works in progress) is the right to consideration in exchange for goods or services transferred to customers. As established by CPC 47 – Revenue from Contracts with Customers, assets conditioned to the concession under construction, recorded under the scope of ICPC 01 (R1) – Concession Agreements, must be classified as Contract Assets during the construction period and transferred to Intangible Assets only after the conclusion of the works.

A contract asset is initially designated at fair value and includes borrowing costs capitalized during the period when the asset is under construction, based on the weighted average rate of borrowings in effect on the capitalization date. For further information on the capitalization of interest and construction margin, recorded during the construction period, see Note 14.

| December 31, 2019 | Additions (ii) | Transfers | Transfers of works to intangible assets | September 30, 2020 (i)
Total contract assets | 7,617,714 | 2,762,570 | 55,496 | (2,319,375) | 8,116,405

| December 31, 2018 | Additions | Transfers | Transfers of works to intangible assets | September 30, 2019
Total contract assets | 7,407,948 | 2,228,063 | 10,508 | (2,067,034) | 7,579,485

| (i) | The largest works are located in the municipalities of São Paulo, Praia Grande and São Bernardo do Campo, in the amounts of R$ 3,617 million, R$ 520 million and R$ 457 million, respectively.

| (ii) | The largest additions of the period are located in the municipalities of São Paulo, Praia Grande and São Bernardo do Campo, in the amounts of R$ 1,088 million, R$ 236 million and R$ 161 million, respectively.

As of September 30, 2020, the contract asset included R$ 276,893, recorded as lease (R$ 276,893 as of December 31, 2019). The works are being carried out by means of service contracts.

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14 Intangible assets

(a) Statement of financial position details

| September 30, 2020 | December 31, 2019
| Cost | Accumulated amortization | Net | Cost | Accumulated amortization | Net
Intangible right arising from: |  |  |  |  |  |
Concession agreements – equity value | 669,350 | (184,470) | 484,880 | 2,066,459 | (571,606) | 1,494,853
Concession agreements – economic value | 1,396,698 | (688,728) | 707,970 | 1,334,531 | (621,679) | 712,852
Program contracts | 22,415,582 | (6.588,180) | 15,827,402 | 19.413,768 | (5,594,068) | 13,819,700
Program contracts – commitments | 1,709,757 | (325,592) | 1,384,165 | 1,651,434 | (286,559) | 1,364,875
Services contracts – São Paulo | 20,042,088 | (5,483,778) | 14,558,310 | 19,217,091 | (4,826,328) | 14,390,763
Software license of use | 936,018 | (414,725) | 521,293 | 829,739 | (358,033) | 471,706
Right of use – Other assets | 139,903 | (84,920) | 54,983 | 113,233 | (42,535) | 70,698
Total | 47,309,396 | (13,770,393) | 33,539,003 | 44,626,255 | (12,300,808) | 32,325,447

(b) Changes

| December 31, 2019 | Additions | Contract renewals | Transfer of contract asset | Transfers | Write-offs and disposals | Amortization | September 30, 2020
Intangible right arising from: |  |  |  |  |  |  |  |
Concession agreements – equity value (*) | 1,494,853 | - | (1,031,829) | 43,690 | 1,431 | (216) | (23,049) | 484,880
Concession agreements – economic value | 712,852 | - | - | 63,781 | (1,621) | (28) | (67,014) | 707,970
Program contracts (*) | 13,819,700 | 289,838 | 1,031,829 | 1,338,664 | (51,448) | (3,579) | (597,602) | 15,827,402
Program contracts – commitments | 1,364,875 | 58,324 | - | - | - | - | (39,034) | 1,384,165
Service contracts – São Paulo | 14,390,763 | 12,697 | - | 845,327 | (24,356) | (5,398) | (660,723) | 14,558,310
Software license of use | 471,706 | - | - | 27,913 | 78,243 | - | (56,569) | 521,293
Right of use – Other assets | 70,698 | 26,670 | - | - | - | - | (42,385) | 54,983
Total | 32,325,447 | 387,529 | - | 2,319,375 | 2,249 | (9,221) | (1,486,376) | 33,539,003

(*) As of September 30, 2020, Concession agreements – equity value, and Program contracts included leases in the amounts of R$ 79,157 and R$ 196,219 (R$ 87,266 and R$ 205,558 as of December 31, 2019), respectively.

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| December 31, 2018 | First-time adoption IFRS 16 | Additions | Contract renewals | Transfer to indemnities receivable | Transfer of contract asset | Transfers | Write-offs and disposals | Amortization | September 30, 2019
Intangible right arising from: |  |  |  |  |  |  |  |  |  |
Concession agreements - equity value (*) | 4,073,344 | - | 1 | (2,645,084) | (4,345) | 53,390 | 80,155 | (53) | (73,489) | 1,483,919
Concession agreements - economic value | 1,232,009 | - | 1 | (507,018) | - | 59,461 | 381 | (18) | (59,942) | 724,874
Program contracts (*) | 8,777,929 | - | 1,337,443 | 3,152,102 | - | 493,892 | 136,962 | (3,685) | (439,684) | 13,454,959
Program contracts - commitments | 1,079,551 | - | 291,327 | - | - | - | - | - | (33,409) | 1,337,469
Service contracts - – São Paulo | 13,391,452 | - | 3,064 | - | - | 1,387,998 | (229,311) | (10,605) | (586,667) | 13,955,931
Software license of use | 458.,175 | - | - | - | - | 72,293 | (616) | - | (50,215) | 479,637
Right of use | - | 64,955 | 45,527 | - | - | - | - | - | (30,379) | 80,103
Total | 29,012,460 | 64,955 | 1,677,363 | - | (4,345) | 2,067,034 | (12,429) | (14,361) | (1,273,785) | 31,516,892

(*) As of September 30, 2019, Concession agreements – equity value and Program contracts included leases in the amounts of R$ 89,969 and R$ 208,684, respectively.

In the first half of 2020, the Company renewed program contracts with the municipalities of Bragança Paulista, Cubatão, Ilhabela, Jandira, Joanópolis, Lupércio, Meridiano, Paulínia, Pinhalzinho, Piracaia, Pirapora do Bom Jesus, Santana de Parnaíba, Ubatuba and Vargem Grande Paulista, and, in the third quarter of 2020, with the municipality of Pedrinhas Paulista, all of them for 30 years.

The Company signed contracts with the municipalities of Tapiratiba and Tejupá in October 2019 and March 2020, and started operations in April and September 2020, for 30 and 40 years, respectively.

In addition to the municipalities above, SABESP signed contract with the municipality of Mauá in June 2020, for 40 years. The Company has not started the operation in Mauá yet, which was initially expected for August 2020, and now is expected for December 2020.

As of June 30, 2020, a contract was signed for the provision of treatment services and final disposal of solid waste and collection of garbage tax in the Municipality of Diadema for 40 years, which will start operations as of January 1, 2021. Regarding treatment services and final disposal of solid waste, the Company is analyzing the best way to operationalize such services.

(c) Intangible rights arising from concession agreements

The Company has obligations recorded in “Program Contract– Commitments” in current liabilities in the amounts of R$ 173,555 and R$ 273,932 as of September 30, 2020 and December 31, 2019, respectively, and noncurrent liabilities in the amounts of R$ 79,018 and R$ 103,321 as of September 30, 2020 and December 31, 2019, respectively.

(d) Capitalization of interest and other finance charges

From January to September 2020, the Company capitalized interest, inflation adjustment and exchange variation, in concession intangible assets, totaling R$ 187,798 (R$ 187,605 from January to September 2019) during the construction period.

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(e) Construction margin

The Company is primarily responsible for the construction and installation of the concession infrastructure, either by using its own employees or contracting third parties, and is significantly exposed to its risks and benefits. Accordingly, the Company recognizes revenue from construction services corresponding to construction costs increased by gross margin.

Generally, constructions related to the concessions are performed by third parties. In such case, the margin is lower to cover administration costs and the assumption of responsibility for primary risks is lower. As of September 30, 2020 and 2019 the margin was 2.3%.

The construction margin from July to September 2020 and 2019 totaled R$ 23,684 and R$ 15,726, respectively, and from January to September 2020 and 2019 it came to R$ 59,263 and R$ 44,775, respectively.

(f) Expropriations

As a result of the construction of priority projects related to water and sewage systems, the Company was required to expropriate third-parties' properties, whose owners will be compensated either amicably or through courts.

Expropriation costs are recorded as concession intangible assets after the transaction is concluded. From July to September 2020, expropriations totaled R$ 6,455 and, from January to September 2020, they came to R$ 27,908
(R$ 8,612 from July to September 2019 and R$ 28,902 from January to September 2019).

(g) Public-Private Partnership - PPP

SABESP carries out operations related to the PPPs mentioned below. These operations and their respective obligations and guarantees are supported by agreements executed according to Law 11,079/2004.

Alto Tietê Production System

As of September 30, 2020 and December 31, 2019, the carrying amounts related to this PPP recorded in intangible assets were R$ 292,397 and R$ 348,586, respectively.

São Lourenço Production System

As of September 30, 2020, and December 31, 2019, the carrying amounts recorded in the Company’s intangible assets, related to this PPP, were R$ 3,107,836 and R$ 3,235,008, respectively.

The obligations assumed by the Company as of September 30, 2020, and December 31, 2019, are shown in the table below:

| September 30, 2020 | December 31, 2019
| Current current | Noncurrent liabilities | Total liabilities | Current liabilities | Noncurrent liabilities | Total liabilities
Alto Tietê | 55,290 | 155,313 | 210,603 | 44,003 | 208,217 | 252,220
São Lourenço | 86,223 | 2,897,253 | 2,983,476 | 66,288 | 2,975,472 | 3,041,760
Total | 141,513 | 3,052,566 | 3,194,079 | 110,291 | 3,183,689 | 3,293,980

(h) Amortization of Intangible Assets

The average amortization rate totaled 4.6% and 4.5% as of September 30, 2020 and 2019, respectively.

(i) Software license of use

The software license of use is capitalized based on the costs incurred to acquire software and ensure that they are ready for use. As of April 10, 2017, the Integrated Business Management System (Enterprise Resource Planning – SAP ERP)

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Notes to the Interim Financial Information

was implemented. This system includes the administrative/financial module. The implementation of the commercial module is in progress.

The implementation of the commercial module Net@Suíte system began in August 2019 and is being carried out in different phases. As of September 30, 2020, it had already been implemented in 17 municipalities. The implementation is expected to be concluded in December 2021.

(j) Right of use

The statement of financial position account Right of Use, created by the Company on January 1, 2019, reflects the amendment introduced by IFRS 16 / CPC 06 (R2), which requires lessees to record the right-of-use asset and the lease liability, which may not be applied to short-term leases and assets of low-value. For these cases, from January to September 2020, SABESP maintained the amounts of R$ 2,838, R$ 6,970 and R$ 1,473 in its results, allocated to operating costs, selling expenses and administrative expenses, respectively.

Nature | September 30, 2020 | December 31, 2019
Leases - Contract asset | 276,893 | 276,893
Leases - Concession and Program Contract |  |
Cost | 405,426 | 405,426
Accumulated amortization | (130,049) | (112,602)
(=) Net | 275,377 | 292,824
Other assets |  |
Vehicles | 113,813 | 91,709
Properties | 13,309 | 13,309
Equipment | 4,329 | 3,801
Other assets | 8,452 | 4,414
Accumulated amortization | (84,920) | (42,535)
(=) Net | 54,983 | 70,698
Right of use | 607,253 | 640,415

Lease liability corresponds to total future fixed lease payments, adjusted to present value, considering an incremental rate on borrowings. For further information, see Note 16.

The table below shows the impact on the Company’s result:

Impact on the result
| September 30, 2020 | September 30, 2019
Right of use amortization | (59,832) | (47,443)
Financial result – interest expense and inflation adjustment | (47,363) | (39,549)
Short-term and low-value lease expenses | (11,281) | (40,936)
Decrease of the income of the period | (118,476) | (127,928)

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15 Property, plant and equipment

(a) Statement of financial position details

| September 30, 2020 | December 31, 2019
| Cost | Accumulated depreciation | Net | Average depreciation | Cost | Accumulated depreciation | Net | Average depreciation
Land | 94,213 | - | 94,213 | - | 92,962 | - | 92,962 | -
Buildings | 84,689 | (41,258) | 43,431 | 2.1% | 82,143 | (40,438) | 41,705 | 2.1%
Equipment | 365,428 | (266,533) | 98,895 | 16.0% | 402,850 | (250,577) | 152,273 | 16.3%
Transportation equipment | 10,057 | (7,173) | 2,884 | 10.9% | 8,946 | (6,962) | 1,984 | 9.9%
Furniture and fixtures | 31,996 | (13,666) | 18,330 | 6.7% | 31,365 | (13,146) | 18,219 | 6.7%
Other | 2,188 | (321) | 1,867 | 4.9% | 7,559 | (309) | 7,250 | 5.0%
Total | 588,571 | (328,951) | 259,620 | 12.6% | 625,825 | (311,432) | 314,393 | 12.5%

(b) Changes

| December 31, 2019 | Additions | Transfers | Write-offs and disposals | Depreciation | September 30, 2020
Land | 92,962 | - | 1.251 | - | - | 94,213
Buildings | 41,705 | 2,657 | (110) | - | (821) | 43,431
Equipment | 152,273 | 19,217 | (50,704) | (96) | (21,795) | 98,895
Transportation equipment | 1,984 | 299 | 1.055 | - | (454) | 2,884
Furniture and fixtures | 18,219 | 2,503 | (1,551) | (65) | (776) | 18,330
Other | 7,250 | 1,106 | (6,446) | - | (43) | 1,867
Total | 314,393 | 25,782 | (56,505) | (161) | (23,889) | 259,620

| December 31, 2018 | Additions | Transfers | Write-offs and disposals | Depreciation | September 30, 2019
Land | 92,979 | - | (17) | - | - | 92,962
Buildings | 40,125 | 1,781 | 15 | - | (1,546) | 40,375
Equipment | 116,086 | 47,724 | 1,962 | (102) | (22,502) | 143,168
Transportation equipment | 3,473 | 303 | (1,195) | - | (540) | 2,041
Furniture and fixtures | 13,578 | 3,595 | 1,108 | (130) | (907) | 17,244
Other | 1,371 | 2,783 | 57 | - | (46) | 4,165
Total | 267,612 | 56,186 | 1,930 | (232) | (25,541) | 299,955

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16 Borrowings and Financing

Borrowings and financing outstanding balance | September 30, 2020 | December 31, 2019
Financial institution | Current | Noncurrent | Total | Current | Noncurrent | Total
Local currency |  |  |  |  |  |
10th issue debentures | 22,651 | - | 22,651 | 41,021 | - | 41,021
12th issue debentures | 45,450 | 169,778 | 215,228 | 45,450 | 203,829 | 249,279
14th issue debentures | 42,971 | 31,513 | 74,484 | 41,940 | 63,012 | 104,952
17th issue debentures | 89,387 | 178,395 | 267,782 | 289,211 | 263,226 | 552,437
18th issue debentures | 33,770 | 137,187 | 170,957 | 34,239 | 133,679 | 167,918
21st issue debentures | 175,000 | 174,771 | 349,771 | 150,000 | 349,660 | 499,660
22nd issue debentures | 99,937 | 670,595 | 770,532 | - | 765,689 | 765,689
23rd issue debentures | - | 864,662 | 864,662 | - | 864,603 | 864,603
24th issue debentures | - | 403,451 | 403,451 | - | 395,855 | 395,855
25th issue debentures | - | 1,440,486 | 1,440,486 | - | - | -
26th issue debentures | - | 1,017,746 | 1,017,746 | - | - | -
Brazilian Federal Savings Bank | 88,487 | 1,312,960 | 1,401,447 | 83,519 | 1,341,660 | 1,425,179
Brazilian Development Bank - BNDES PAC | 9,888 | 23,015 | 32,903 | 11,184 | 27,854 | 39,038
Brazilian Development Bank - BNDES PAC II 9751 | 5,288 | 38,623 | 43,911 | 6,990 | 40,685 | 47,675
Brazilian Development Bank - BNDES PAC II 9752 | 3,165 | 23,213 | 26,378 | 3,913 | 24,457 | 28,370
Brazilian Development Bank - BNDES ONDA LIMPA | 19,745 | 92,003 | 111,748 | 23,704 | 100,582 | 124,286
Brazilian Development Bank – BNDES TIETÊ III | 64,124 | 555,608 | 619,732 | 52,874 | 383,191 | 436,065
Brazilian Development Bank - BNDES 2015 | 24,754 | 454,838 | 479,592 | 31,712 | 460,646 | 492,358
Brazilian Development Bank - BNDES 2014 | 3,797 | 23,905 | 27,702 | 4,659 | 25,411 | 30,070
Inter-American Development Bank – IDB 2202 | 181,349 | 2,524,558 | 2,705,907 | - | - | -
Leases | 77,147 | 419,307 | 496,454 | 78,402 | 455,722 | 534,124
Other | 3,391 | 12,391 | 15,782 | 1,665 | 8,207 | 9,872
Interest and charges | 100,777 | - | 100,777 | 77,460 | - | 77,460
Total in local currency | 1,091,078 | 10,569,005 | 11,660,083 | 977,943 | 5,907,968 | 6,885,911

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Borrowings and financing outstanding balance | September 30, 2020 | December 31, 2019
Financial institution | Current | Noncurrent | Total | Current | Noncurrent | Total
Foreign currency |  |  |  |  |  |
Inter-American Development Bank - IDB 1212 – US$ 51,390 thousand (US$ 61,668 thousand in December 2019) | 57,976 | 231,904 | 289,880 | 41,428 | 207,140 | 248,568
Inter-American Development Bank - IDB 2202 – (US$ 510,573 thousand in December 2019) | - | - | - | 128,623 | 1,914,298 | 2,042,921
International Bank for Reconstruction and Development (IBRD) – US$ 82,792 thousand (US$ 88,871 thousand in December 2019) | 34,294 | 427,964 | 462,258 | 24,505 | 330,898 | 355,403
Eurobonds – US$ thousand (US$ 350,000 thousand in December 2019) | - | - | - | 1,409,921 | - | 1,409,921
JICA 15 – ¥ 10,371,870 thousand (¥ 11,524,300 thousand in December 2019) | 61,574 | 492,595 | 554,169 | 42,813 | 385,315 | 428,128
JICA 18 – ¥ 9,325,440 thousand (¥ 10,361,600 thousand in December 2019) | 55,362 | 442,709 | 498,071 | 38,493 | 346,237 | 384,730
JICA 17 – ¥ 3,384,258 thousand (¥ 2,830,420 thousand in December 2019) | 11,666 | 168,289 | 179,955 | 12,466 | 91,845 | 104,311
JICA 19 – ¥ 29,923,047 thousand (¥ 31,736,565 thousand in December 2019) | 96,896 | 1,499,982 | 1,596,878 | 67,372 | 1,109,644 | 1,177,016
IDB 1983AB – US$ 23,077 thousand (US$ 40,769 thousand in December 2019) | 43,390 | 85,670 | 129,060 | 71,312 | 91,521 | 162,833
Interest and charges | 10,057 | - | 10,057 | 44,967 | - | 44,967
Total in foreign currency | 371,215 | 3,349,113 | 3,720,328 | 1,881,900 | 4,476,898 | 6,358,798
Total borrowings and financing | 1,462,293 | 13,918,118 | 15,380,411 | 2,859,843 | 10,384,866 | 13,244,709
Exchange rate as of September 30, 2020: US$ 5.6407; ¥ 0.05343 (as of December 31, 2019: US$ 4.0307; ¥ 0.03715). As of September 30, 2020, the Company did not have balances of borrowings and financing raised during the year, maturing within 12 months.

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Notes to the Interim Financial Information

Local currency | Guarantees | Maturity | Annual interest rate | Inflation adjustment
10th issue debentures | Own funds | 2020 | TJLP + 1.92% (series 1 and 3) and 9.53% (series 2) | IPCA (series 2)
12th issue debentures | Own funds | 2025 | TR + 9.5% |
14th issue debentures | Own funds | 2022 | TJLP + 1.92 % (series 1 and 3) and 9.19% (series 2) | IPCA (series 2)
17th issue debentures | Own funds | 2023 | CDI + 0.75% (series 1) and 4.5% (series 2) and 4.75% (series 3) | IPCA (series 2 and 3)
18th issue debentures | Own funds | 2024 | TJLP + 1.92 % (series 1 and 3) and 8.25% (series 2) | IPCA (series 2)
21st issue debentures | Own funds | 2022 | CDI + 0.60% (series 1) and CDI+ 0.90% (series 2) |
22nd issue debentures | Own funds | 2025 | CDI + 0.58% (series 1) and CDI+ 0.90% (series 2) and 6.0% (series 3 | IPCA (series 3)
23rd issue debentures | Own funds | 2027 | CDI + 0.63% (series 1) and CDI+ 0.49% (series 2) |
24th issue debentures | Own funds | 2029 | 3.20% (series 1) and 3.37% (series 2) | IPCA (series 1 and 2)
25th issue debentures | Own funds | 2021 | CDI + 3.3% |
26th issue debentures | Own funds | 2030 | 4.65% (series 1) and 4.95% (series 2) | IPCA (series 1 and 2)
Brazilian Federal Savings Bank | Own funds | 2020/2039 | 5% to 9.5% | TR
Brazilian Development Bank - BNDES PAC | Own funds | 2023 | TJLP + 2.15% |
Brazilian Development Bank - BNDES PAC II 9751 | Own funds | 2027 | TJLP + 1.72% |
Brazilian Development Bank - BNDES PAC II 9752 | Own funds | 2027 | TJLP + 1.72% |
Brazilian Development Bank - BNDES ONDA LIMPA | Own funds | 2025 | TJLP + 1.92% |
Brazilian Development Bank - BNDES TIETÊ III | Own funds | 2028 | TJLP + 1.66% |
Brazilian Development Bank - BNDES 2015 | Own funds | 2035 | TJLP + 2.5% |
Brazilian Development Bank - BNDES 2014 | Own funds | 2026 | TJLP + 1.76% |
Inter-American Development Bank – IDB 2202 | Government | 2035 | CDI + 0.86% |
Leases | - | 2035 | 4.25% to 10.47% | IPC
Other | Own funds | 2025 | 3% (FEHIDRO) TJLP + 1.5% (FINEP) |

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Notes to the Interim Financial Information

Foreign currency | Guarantees | Maturity | Annual interest rate | Exchange variation
Inter-American Development Bank - IDB 1212 – US$ 51,390 thousand | Government | 2025 | 3.73% (*) | US$
International Bank for Reconstruction and Development – IBRD – US$ 82,792 thousand | Government | 2048 | 1.02% and 2.12% (*) | US$
JICA 15 – ¥ 10,371,870 thousand | Government | 2029 | 1.8% and 2.5% | Yen
JICA 18 – ¥ 9,325,440 thousand | Government | 2029 | 1.8% and 2.5% | Yen
JICA 17 – ¥ 3,384,258 thousand | Government | 2035 | 1.2% and 0.01% | Yen
JICA 19 – ¥ 29,923,047 thousand | Government | 2037 | 1.7% and 0.01% | Yen
IDB 1983AB – US$ 23,077 thousand | - | 2023 | 2.08% to 2.38% (*) | US$

(*) Rates comprising LIBOR + contractually defined spread.

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Notes to the Interim Financial Information

| (i) | Payment schedule – accounting balances as of September 30, 2020

| 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 to 2048 | TOTAL
LOCAL CURRENCY |  |  |  |  |  |  |  |
Debentures | 48,828 | 1,941,913 | 572,615 | 373,820 | 707,839 | 282,442 | 1,670,293 | 5,597,750
Brazilian Federal Savings Bank | 21,740 | 89,722 | 94,608 | 87,550 | 86,408 | 91,819 | 929,600 | 1,401,447
BNDES | - | 174,348 | 174,348 | 167,698 | 161,164 | 141,280 | 523,128 | 1,341,966
IDB 2202 | - | 181,349 | 181,349 | 181,349 | 181,349 | 181,349 | 1,799,162 | 2,705,907
Leases | 46,517 | 66,293 | 42,120 | 37,503 | 40,517 | 40,545 | 222,959 | 496,454
Other | 621 | 3,779 | 4,038 | 3,977 | 1,757 | 1,610 | - | 15,782
Interest and charges | 60,357 | 40,420 | - | - | - | - | - | 100,777
TOTAL IN LOCAL CURRENCY | 178,063 | 2,497,824 | 1,069,078 | 851,897 | 1,179,034 | 739,045 | 5,145,142 | 11,660,083
FOREIGN CURRENCY |  |  |  |  |  |  |  |
IDB 1212 | - | 57,976 | 57,976 | 57,976 | 57,976 | 57,976 | - | 289,880
IBRD | - | 34,294 | 34,294 | 34,294 | 34,294 | 34,294 | 290,788 | 462,258
JICA | 5,833 | 225,498 | 225,498 | 225,498 | 225,498 | 225,498 | 1,695,750 | 2,829,073
IDB 1983AB | - | 43,390 | 43,390 | 42,280 | - | - | - | 129,060
Interest and charges | 5,658 | 4,399 | - | - | - | - | - | 10,057
TOTAL IN FOREIGN CURRENCY | 11,491 | 365,557 | 361,158 | 360,048 | 317,768 | 317,768 | 1,986,538 | 3,720,328
Total | 189,554 | 2,863,381 | 1,430,236 | 1,211,945 | 1,496,802 | 1,056,813 | 7,131,680 | 15,380,411

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Notes to the Interim Financial Information

(ii) Changes

| December 31, 2019 | Foreign/local currency translation | Addition (lease) | Funding | Borrowing costs | Monetary and exchange variation | Inflation adjustment / exchange variation and incorporated interest - Capitalized | Interest paid | Amortization | Accrued interest | Provision for interest and fees - Capitalized | Expenses with borrowing costs | September 30, 2020
LOCAL CURRENCY |  |  |  |  |  |  |  |  |  |  |  |  |
Debentures | 3,711,228 | - | - | 2,507,640 | (48,953) | 28,217 | - | (137,876) | (538,405) | 146,016 | 15,028 | 6,285 | 5,689,180
Brazilian Federal Savings Bank | 1,429,250 | - | - | 39,267 | - | - | - | (84,065) | (62,995) | 54,926 | 29,050 | - | 1,405,433
BNDES | 1,201,411 | - | - | 210,000 | - | - | - | (47,164) | (81,213) | 37,146 | 21,589 | 194 | 1,341,963
IDB 2202 | - | 2,807,371 | - | - | - | - | - | (37,613) | (90,674) | 15,201 | 16,628 | 318 | 2,711,231
Leases | 534,124 | - | 26,670 | - | - | - | - | (50,471) | (60,087) | 46,218 | - | - | 496,454
Other | 9,898 | - | - | 7,252 | - | - | - | (486) | (1,340) | 472 | 26 | - | 15,822
TOTAL IN LOCAL CURRENCY | 6,885,911 | 2,807,371 | 26,670 | 2,764,159 | (48,953) | 28,217 | - | (357,675) | (834,714) | 299,979 | 82,321 | 6,797 | 11,660,083
FOREIGN CURRENCY |  |  |  |  |  |  |  |  |  |  |  |  |
IDB 1212 | 253,121 | - | - | - | - | 90,456 | - | (10,860) | (49,145) | 8,104 | - | - | 291,676
IDB 2202 | 2,063,069 | (2,807,371) | - | - | - | 776,640 | 48,246 | (34,150) | (71,943) | 416 | 24,695 | 398 | -
IBRD | 357,880 | - | - | - | (2,029) | 138,788 | 1,217 | (7,572) | (31,216) | 4,544 | 752 | 96 | 462,460
Eurobonds | 1,413,956 | - | - | - | - | 457,931 | - | (104,170) | (1,868,676) | 90,941 | 9,195 | 823 | -
JICA | 2,106,908 | - | - | 34,215 | (67) | 876,498 | 15,704 | (42,970) | (191,604) | 31,052 | 5,107 | 143 | 2,834,986
IDB 1983AB | 163,864 | - | - | - | (152) | 69,324 | - | (5,092) | (103,482) | 5,645 | 561 | 538 | 131,206
TOTAL IN FOREIGN CURRENCY | 6,358,798 | (2,807,371) | - | 34,215 | (2,248) | 2,409,637 | 65,167 | (204,814) | (2,316,066) | 140,702 | 40,310 | 1,998 | 3,720,328
Total | 13,244,709 | - | 26,670 | 2,798,374 | (51,201) | 2,437,854 | 65,167 | (562,489) | (3,150,780) | 440,681 | 122,631 | 8,795 | 15,380,411

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ITR - Quarterly Information Form - 9/30/2020 - CIA SANEAMENTO BASICO EST SAO PAULO | Version : 1

Notes to the Interim Financial Information

| December 31, 2018 | Additions (lease) | Funding | Borrowing costs | Monetary and exchange variation | Inflation adjustment / exchange variation and incorporated interest- Capitalized | Interest paid | Amortization | Accrued interest | Provision for interest and fees - Capitalized | Expenses with borrowing costs | September 30, 2019
LOCAL CURRENCY |  |  |  |  |  |  |  |  |  |  |  |
Debentures | 3,486,861 | - | 1,266,755 | (11,580) | 32,105 | - | (171,877) | (994,228) | 146,267 | 12,402 | 3,129 | 3,769,834
Brazilian Federal Savings Bank | 1,345,684 | - | 120,243 | - | - | - | (81,178) | (59,259) | 55,692 | 25,637 | - | 1,406,819
BNDES | 1,072,605 | - | 123,000 | (628) | 2,082 | 826 | (62,874) | (95,864) | 46,304 | 16,616 | 169 | 1,102,236
Leases (*) | 568,666 | 110,482 | - | - | 684 | 3,761 | (36,494) | (46,049) | 40,812 | 7,862 | - | 649,724
FINEP | 9,571 | - | 851 | - | 28 | - | (502) | (1,037) | 496 | - | - | 9,407
TOTAL IN LOCAL CURRENCY | 6,483,387 | 110,482 | 1,510,849 | (12,208) | 34,899 | 4,587 | (352,925) | (1,196,437) | 289,571 | 62,517 | 3,298 | 6,938,020
FOREIGN CURRENCY |  |  |  |  |  |  |  |  |  |  |  |
IDB | 2,399,985 | - | - | - | 125,351 | 41,139 | (83,602) | (171,892) | 20,450 | 42,778 | 716 | 2,374,925
IBRD | 356,420 | - | - | - | 24,672 | 1,378 | (10,627) | (12,273) | 6,749 | 1,241 | 14 | 367,574
Deutsche Bank | 292,872 | - | - | - | 15,686 | - | (15,572) | (150,131) | 12,122 | 1,168 | 2,008 | 158,153
Eurobonds | 1,358,412 | - | - | - | 101,360 | - | (49,689) | - | 70,196 | 6,575 | 618 | 1,487,472
JICA | 2,036,128 | - | 105,371 | (111) | 181,976 | 2,686 | (34,622) | (148,613) | 24,408 | 2,077 | 138 | 2,169,438
IDB 1983AB | 225,592 | - | - | (106) | 14,393 | - | (6,065) | (71,141) | 7,342 | 693 | 693 | 171,401
TOTAL IN FOREIGN CURRENCY | 6,669,409 | - | 105,371 | (217) | 463,438 | 45,203 | (200,177) | (554,050) | 141,267 | 54,532 | 4,187 | 6,728,963
Total | 13,152,796 | 110,482 | 1,616,220 | (12,425) | 498,337 | 49,790 | (553,102) | (1,750,487) | 430,838 | 117,049 | 7,485 | 13,666,983

(*) Additions of leases include R$ 64,955 in 2019, corresponding to the first-time adoption of CPC 06 (R2) as of January 1, 2019.

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Notes to the Interim Financial Information

| (a) | Main events in the nine-month period ended September 30, 2020

(i) Debentures

As of January 2020, the Company amortized the last installment of series 2 of the 17th issue debentures, totaling

R$ 291.8 million.

In April 2020, the 25th issue debentures was carried out, in the amount of R$ 1,450,000, as follows:

| Value | Maturity | Remuneration
Single series | R$ 1,450,000 | 10/2021 | CDI + 3.3 p.a.

In July 2020, the 26th issue debentures was carried out, in the amount of R$ 1,045,000, as follows:

| Value | Maturity | Remuneration
Series 1 | R$ 600.000 | 07/2027 | IPCA+4.65 p.a.
Series 2 | R$ 445.000 | 07/2030 | IPCA+4.95 p.a.

· The covenants agreed for the 25th and 26th issue debentures are:

Calculated on a quarterly basis, when disclosing the interim financial information or annual financial statements:

- Net debt/adjusted EBITDA lower than or equal to 3.50;

- Adjusted EBITDA/paid financial expenses equal to or higher than 1.5;

- Disposal of operating assets, termination of license, loss of concession or loss of the Issuer’s capacity to execute and operate public sanitation services in areas of the São Paulo State which, individually or jointly during the term of the agreement, result in a reduction of the Issuer’s net sales and/or service revenue of more than twenty- five percent (25%). The above limit will be calculated on a quarterly basis, taking into consideration the Issuer’s net operating revenues during the twelve (12) months prior to the end of each quarter and using the financial information disclosed by the Issuer.

The failure to comply with the covenants for at least two consecutive quarters, or for two non-consecutive quarters within a twelve-month period, will cause the early termination of the agreement (in which case the 30-day cure period does not apply).

The contract has a cross acceleration clause, i.e. the early maturity of any of the Company’s debts, in and individual or aggregate amount equal to or higher than R$ 155 million, adjusted by the IPCA inflation index as of the issue date, constitutes a default event and may result in the early maturity of the obligations arising from the Debentures.

(ii) IDB

In May 2020, the company exchanged foreign currency for local currency related to BID 2202 contract, in the amount of R$ 2,810,907 (US$ 494,617 thousand) using the exchange rate of R$ 5.683 to compose the debt balance. The interest rate is CDI + 0.86% p.a., with semi-annual payment of principal and interest, beginning on September 3, 2020.

(iii) Eurobonds

As of September 30, 2020, the early full amortization of the loan, in the amount of R$ 1,910,124 (US$ 357,763 thousand), referring to principal plus charges, initially maturing in December 2020, was carried out.

(d) Lease

The Company has lease agreements signed as Assets Lease. During the construction period, works are capitalized to intangible assets in progress and the lease amount is recorded at the same proportion.

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Notes to the Interim Financial Information

After startup, the lease payment period starts (240 monthly installments), whose amount is periodically restated by contracted price index.

The amounts payable for the right of use of assets are also recorded in this line (Note 14 (j))

(c) Covenants

The table below shows the most restrictive covenants as of September 30, 2020.

| Covenants
Adjusted EBITDA / Adjusted Financial Expenses | Equal to or higher than 2.80
Adjusted Net Debt / Adjusted EBITDA | Equal to or lower than 3.80
Adjusted Total Debt / Adjusted EBITDA | Lower than 3.65
Other Onerous Debt (1) / Adjusted EBITDA | Equal to or lower than 1.30
Adjusted Current Ratio | Higher than 1.00
EBITDA / Financial Expenses Paid | Equal to or higher than 2.35
Net Debt / Adjusted EBITDA | Equal to or lower than 3.50
(1) “Other Onerous Debts” correspond to the sum of pension obligations and healthcare plan, installment payment of tax debts and installment payment of debts with the electricity supplier.

As of September 30, 2020, and December 31, 2019, the Company met the requirements set forth by its borrowings and financing agreements.

(d) Borrowings and financing – Credit Limited

Agent |  | September 30, 2020
|  | (in millions of reais (*))
Brazilian Federal Savings Bank |  | 1,690
Brazilian Development Bank (BNDES) |  | 704
Japan International Cooperation Agency (JICA) |  | 104
Inter-American Development Bank (IDB) |  | 1,692
International Bank for Reconstruction and Development (IBRD) |  | 1,407
Other |  | 54
TOTAL |  | 5,651

(*) Brazilian Central Bank’s exchange rate as of September 30, 2020 (US$ 1.00 = R$ 5.6407; ¥ 1.00 = R$ 0.05343).

Financing resources contracted have specific purposes, which have been released for the execution of their respective investments, according to the progress of the works.

17 Taxes and contributions

(a) Current assets

| September 30, 2020 | December 31, 2019
Recoverable taxes |  |
Income tax and social contribution | 130,811 | 136,436
Withheld income tax (IRRF) on financial investments | 3,112 | 1,359
Other federal taxes (*) | 18,128 | 3,471
Total | 152,051 | 141,266

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Notes to the Interim Financial Information

(*) As of September 30, 2020, it includes R$ 13,900 from the surplus payment of withholding income tax of interest on capital payable.

(b) Current liabilities

| September 30, 2020 | December 31, 2019
Taxes and contributions payable |  |
Income tax and social contribution | 51,212 | -
Cofins and Pasep | 245,874 | 94,027
INSS (social security contribution) | 92,819 | 39,404
IRRF (withholding income tax) | 4,542 | 69,932
Other | 33,730 | 46,955
Total | 428,177 | 250,318

The increase in Cofins, Pasep and INSS was due to payment postponements permitted by the Administrative Rule 245 of June 15, 2020, of the Ministry of Economy.

18 Deferred taxes and contributions

(a) Statement of financial position details

| September 30, 2020 | December 31, 2019
Deferred tax assets |  |
Provisions | 342,727 | 366,673
Pension plan liabilities - G1 | 155,058 | 157,998
Donations of underlying assets on concession agreements | 50,815 | 51,818
Credit losses | 151,317 | 145,622
Other | 151,728 | 183,147
Total deferred tax asset | 851,645 | 905,258
Deferred tax liabilities |  |
Temporary difference on concession of intangible asset | (393,425) | (408,732)
Capitalization of borrowing costs | (394,153) | (409,236)
Profit on supply to government entities | (359,705) | (372,289)
Actuarial gain – G1 Plan | (54,222) | (54,222)
Construction margin | (49,534) | (83,399)
Borrowing costs | (20,593) | (11,376)
Total deferred tax liabilities | (1,271,632) | (1,339,254)
Deferred tax liability, net | (419,987) | (433,996)

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Notes to the Interim Financial Information

(b) Changes

Deferred income tax assets | December 31, 2019 | Net change | September 30, 2020
Provisions | 366,673 | (23,946) | 342,727
Pension obligations - G1 | 157,998 | (2,940) | 155,058
Donations of underlying assets on concession agreements | 51,818 | (1,003) | 50,815
Credit losses | 145,622 | 5,695 | 151,317
Other | 183,147 | (31,419) | 151,728
Total | 905,258 | (53,613) | 851,645
Deferred income tax liabilities |  |  |
Temporary difference on concession of intangible asset | (408,732) | 15,307 | (393,425)
Capitalization of borrowing costs | (409,236) | 15,083 | (394,153)
Profit on supply to government entities | (372,289) | 12,584 | (359,705)
Actuarial gain – G1 | (54,222) | - | (54,222)
Construction margin | (83,399) | 33,865 | (49,534)
Borrowing costs | (11,376) | (9,217) | (20,593)
Total | (1,339,254) | 67,622 | (1,271,632)
Deferred tax liability, net | (433,996) | 14,009 | (419,987)

(c) Reconciliation of the effective tax rate

The amounts recorded as income tax and social contribution expenses in the financial statements are reconciled to the statutory rates, as shown below:

| July to September 2020 | January to September 2020 | July to September 2019 | January to September 2019
Profit before income taxes | 655,559 | 195,393 | 1,838,628 | 3,478,621
Statutory rate | 34% | 34% | 34% | 34%
Estimated expense at statutory rate | (222,890) | (66,434) | (625,134) | (1,182,731)
Benefit of interest on equity | - | 48,009 | - | 40,412
Permanent differences: |  |  |  |
Provision Law 4,819/1958 – G0 (i) | (10,276) | (30,040) | (12,162) | (35,594)
Donations | (611) | (6,541) | (3,092) | (11,557)
Other differences | (206) | 1,403 | 10,620 | 21,375
Income tax and social contribution | (233,983) | (53,603) | (629,768) | (1,168,095)
Current income tax and social contribution | (192,985) | (67,612) | (434,142) | (990,751)
Deferred income tax and social contribution | (40,998) | 14,009 | (195,626) | (177,344)
Effective rate | 36% | 27% | 34% | 34%

(i) Permanent difference related to the provision for actuarial liability (Note 20 (b) (ii)).

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Notes to the Interim Financial Information

19 Provisions

| (a) | Lawsuits and proceedings that resulted in provisions

(I) Statement of financial position details

The Company is a party to a number of legal claims and administrative proceedings arising from the normal course of business, including civil, tax, labor and environmental matters. Management recognizes provisions consistently with the recognition and measurement criteria established in Note 3.14 to the Annual Financial Statements as of December 31, 2019. The terms and payment amounts depend on the outcome of the lawsuits.

| September 30, 2020 |  | December 31, 2019
| Provisions | Escrow deposits | Provisions net of deposits |  | Provisions | Escrow deposits | Provisions net of deposits
Customer claims (i) | 159,234 | (10,123) | 149,111 |  | 253,665 | (9,973) | 243,692
Supplier claims (ii) | 160,720 | (305) | 160,415 |  | 153,654 | (298) | 153,356
Other civil claims (iii) | 84,356 | (2,636) | 81,720 |  | 93,910 | (16,496) | 77,414
Tax claims (iv) | 61,719 | (3,605) | 58,114 |  | 59,143 | (3,518) | 55,625
Labor claims (v) | 307,171 | (15,003) | 292,168 |  | 325,129 | (12,329) | 312,800
Environmental claims (vi) | 234,822 | (30) | 234,792 |  | 192,950 | (29) | 192,921
Total | 1,008,022 | (31,702) | 976,320 |  | 1,078,451 | (42,643) | 1,035,808
Current | 498,229 | - | 498,229 |  | 550,247 | - | 550,247
Noncurrent | 509,793 | (31,702) | 478,091 |  | 528,204 | (42,643) | 485,561

(II) Changes

| December 31, 2019 | Additional provisions | Interest and inflation adjustment | Use of the accrual | Amounts not used (reversal) | September 30, 2020
Customer claims (i) | 253,665 | 12,220 | 13,177 | (74,745) | (45,083) | 159,234
Supplier claims (ii) | 153,654 | 84,916 | 9,151 | (66,335) | (20,666) | 160,720
Other civil claims (iii) | 93,910 | 12,174 | 7,627 | (19,259) | (10,096) | 84,356
Tax claims (iv) | 59,143 | 3,447 | 1,321 | (76) | (2,116) | 61,719
Labor claims (v) | 325,129 | 41,632 | 26,697 | (51,844) | (34,443) | 307,171
Environmental claims (vi) | 192,950 | 26,495 | 17,095 | - | (1,718) | 234,822
Subtotal | 1,078,451 | 180,884 | 75,068 | (212,259) | (114,122) | 1,008,022
Escrow deposits | (42,643) | (11,715) | (1,091) | 16,023 | 7,724 | (31,702)
Total | 1,035,808 | 169,169 | 73,977 | (196,236) | (106,398) | 976,320

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Notes to the Interim Financial Information

| December 31, 2018 | Additional provisions | Interest and inflation adjustment | Use of the accrual | Amounts not used (reversal) | September 30, 2019
Customer claims (i) | 290,649 | 13,717 | 17,624 | (86,455) | (39,669) | 195,866
Supplier claims (ii) | 67,985 | 31,161 | 44,816 | (25,970) | (28,122) | 89,870
Other civil claims (iii) | 98,302 | 26,119 | 16,703 | (7,521) | (21,831) | 111,772
Tax claims (iv) | 63,335 | 9,991 | 2,267 | (4,813) | (4,466) | 66,314
Labor claims (v) | 302,935 | 131,300 | 53,214 | (42,250) | (44,511) | 400,688
Environmental claims (vi) | 170,419 | 33,475 | 19,678 | - | (33,934) | 189,638
Subtotal | 993,625 | 245,763 | 154,302 | (167,009) | (172,533) | 1,054,148
Escrow deposits | (100,763) | (12,613) | (11,215) | 17,854 | 64,248 | (42,489)
Total | 892,862 | 233,150 | 143,087 | (149,155) | (108,285) | 1,011,659

(b) Lawsuits deemed as contingent liabilities

The Company is party to lawsuits and administrative proceedings relating to environmental, tax, civil and labor claims, which are assessed as contingent liabilities in the financial statements, since it either does not expect outflows to be required or the amount of the obligation cannot be reliably measured. Contingent liabilities, net of deposits, are represented as follows:

| September 30, 2020 | December 31, 2019
Customer claims (i) | 103,980 | 86,061
Supplier claims (ii) | 1,576,252 | 1,986,736
Other civil claims (iii) | 748,225 | 679,623
Tax claims (iv) | 1,190,087 | 1,184,811
Labor claims (v) | 972,914 | 631,364
Environmental claims (vi) | 5,316,473 | 4,864,894
Total | 9,907,931 | 9,433,489

(c) Explanation on the nature of main classes of lawsuits

(i) Customer claims

Approximately 690 lawsuits (680 as of December 31, 2019) were filed by commercial customers, who claim that their tariffs should correspond to other customer categories, and 310 lawsuits (320 as of December 31, 2019) in which customers claimed a reduction in the sewage tariff due to losses in the system, consequently requesting the refund of amounts charged by the Company, and 30 lawsuits (30 as of December 31, 2019 ) in which customers plead the reduction in tariff under the category “Social Welfare Entity”.

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(ii) Supplier claims

These lawsuits include lawsuits filed by some suppliers alleging underpayment of monetary adjustments and the economic and financial imbalance of the agreements, and are in progress at different courts.

(iii) Other civil claims

These mainly refer to indemnities for property damage, pain and suffering, and loss of profits allegedly caused to third parties, such as vehicle accidents, claims, challenges on the methodology to collect tariffs, among others, filed at different court levels.

(iv) Tax claims

Tax claims refer mainly to tax collections and fines in general challenged due to disagreements regarding notification or differences in the interpretation of legislation by the Company's Management, which were accrued while others were deemed as contingent liabilities.

(v) Labor claims

The Company is a party to several labor lawsuits, involving issues such as overtime, shift schedule, health hazard premium and hazardous duty premium, prior notice, change of function, salary equalization, service outsourcing and other, which are at various court levels.

(vi) Environmental claims

These refer to several administrative proceedings and lawsuits filed by government entities, including Companhia Ambiental do Estado de São Paulo (CETESB) and the Public Prosecution Office of the São Paulo State, that aim affirmative and negative covenants and penalty is estimated due to failure to comply in addition to the imposition of indemnity due to environmental damages allegedly caused by the Company.

(d) Guarantee insurance for escrow deposit

On May 25, 2020, the Company contracted guarantee insurance for escrow deposit, in the amount of R$ 500.0 million, for one year. Such insurance will be used to settle legal claims instead of having immediate cash disbursement by the Company, such insurance is used until the conclusion of these proceedings limited to up to five years.

From July to September 2020, the Company used R$ 44.0 of the contracted amount. A total of R$ 387.8 million from the current contract is outstanding.

20 Employees benefits

(a) Healthcare plan

Since August 1, 2019, the new health plans managed by Fundação CESP (VIVEST), which replaced the previous health plans managed by SABESPREV, have been in effect.

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Benefits are now paid after the event, free of choice, sponsored by contributions of SABESP and the employees. In the third quarter of 2020, the Company contributed 7.8%, on average, of gross payroll, totaling R$ 55,229 (7.3% in the third quarter of 2019, totaling R$ 50,276).

(b) Pension plan liabilities

The Company has Post-Employment Benefit Plans in the following modalities: Defined Benefit (BD) – G1 (i) and G0 (ii); and Defined Contribution (CD) – Sabesprev Mais and VIVEST (iii).

Defined benefit plans

Summary of pension plan – Liabilities

| G1 Plan | G0 Plan | Total
Pension plan liabilities as of December 31, 2019 | (314,677) | (3,046,255) | (3,360,932)
Expenses recognized in 2020 | (18,723) | (154,697) | (173,420)
Payments made in 2020 | 27,953 | 126,434 | 154,387
Pension plan liabilities as of September 30, 2020 | (305,447) | (3,074,518) | (3,379,965)

| G1 Plan | G0 Plan | Total
Pension plan liabilities as of December 31, 2018 | (363,902) | (2,606,107) | (2,970,009)
Expenses recognized in 2019 | (30,056) | (170,525) | (200,581)
Payments made in 2019 | 27,748 | 127,389 | 155,137
Pension plan liabilities as of September 30, 2019 | (366,210) | (2,649,243) | (3,015,453)

(i) G1 Plan

Managed by SABESPREV, the defined benefit plan (“G1 Plan”) receives similar contributions established in a plan of subsidy of actuarial study of SABESPREV, as follows:

· 0.99% of the portion of the salary of participation up to 20 salaries; and

· 8.39% of the surplus, if any, of the portion of the salary of participation over 20 salaries.

In the third quarter of 2020, expenses related to the obligation of defined benefit in the G1 Plan G1 allocated to operating costs, selling expenses and administrative expenses totaled R$ 4,621, R$ 663 and R$ 404, respectively (R$ 7,462, R$ 1,063 and R$ 661 in the third quarter of 2019), and from January to September 2020 these costs totaled R$ 13,770, R$ 1,946 and R$ 1,209, respectively (R$ 21,161, R$ 3,650 and R$ 2,591 from January to September 2019). In the third quarter of 2020 and 2019, R$ 553 and R$ 833 were capitalized in assets, respectively. From January to September 2020 and 2019, these expenses totaled R$ 1,798 and R$ 2,654, respectively.

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(ii) G0 Plan

Pursuant to State Law 4,819/1958, employees who started providing services prior to May 1974 and retired as an employee of the Company acquired a legal right to receive supplemental pension payments, which rights are referred as "G0 Plan". The Company pays these supplemental benefits on behalf of GESP and makes claims for reimbursements from the State Government, which are recorded as accounts receivable from related parties, limited to the amounts considered virtually certain that will be reimbursed by GESP.

In the third quarter of 2020, expenses related to the obligation of the benefit defined in the G0 Plan, recorded under administrative expenses, totaled R$ 51,566 (R$ 56,842 in the third quarter of 2019). From January to September 2020 and 2019, these expenses totaled R$ 154,697 and R$ 170,525, respectively.

(iii) Sabesprev Mais and VIVEST Plans

Since December 31, 2019, the “Sabesprev Mais” Defined Contribution Plan, managed by SABESPREV, has not been accepting any new adhesions and, since January 1, 2020, new employees have the option to enroll in the Defined Contribution Plan managed by VIVEST, as well as those who did not enroll in the Sabesprev Mais Plan.

The sponsor's contributions correspond to the result obtained by applying a percentage of 100% on the basic contribution made by the participant.

In the third quarter of 2020, expenses related to defined contribution allocated to operating costs, selling expenses and administrative expenses totaled R$ 3,618, R$ 445 and R$ 1,037 (R$ 9,535, R$ 1,252 and R$ 2,546 in the third quarter of 2019), respectively. From January to September 2020, these amounts were R$ 11,005, R$ 1,383 and R$ 3,139 (R$ 16,566, R$ 2,180 and R$ 4,452 from January to September 2019), respectively. In the third quarter of 2020 and 2019, R$ 649 and R$ 1,533 were capitalized in assets, respectively. From January to September 2020 and 2019, these expenses totaled R$ 1,966 and R$ 2,512, respectively.

(c) Profit sharing

The profit sharing program was implemented in accordance with an agreement with the labor union. Payment corresponds to up to one-month salary for each employee, depending on performance of goals reached from January to December. In the third quarter of 2020 and 2019, R$ 22,912 and R$ 23,650, respectively, were accrued under Salaries, payroll charges and benefits. From January to September 2020 and 2019, these amounts totaled R$ 68,979 and R$ 69,880, respectively. In the third quarter of 2020 and 2019, R$ 1,671 and R$ 1,682, respectively were capitalized and, from January to September 2020 and 2019, these amounts were R$ 5,085 and R$ 3,480, respectively.

21 Services payable

This line records the balances payable, mainly from services received from third parties, such as supply of electric power, reading of hydrometers and delivery of water and sewage bills, cleaning, surveillance and security services, collection, legal counsel services, audit, marketing and advertising and consulting services, among others. This line also includes the amounts payable related to the transfer of 7.5% of revenue earned in the São Paulo municipal government to the Municipal Fund for Environmental Sanitation and Infrastructure. The balances as of September 30, 2020 and December 31, 2019 were R$ 507,343 and R$ 474,078, respectively.

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22 Knowledge Retention Program and Consent Decree

a) Knowledge Retention Program (PRC)

In June 2018, the Knowledge Retention Program (PRC) was implemented (and is expected to end in December 2020) with a view to provide personnel planning conditions and mitigate the impact of the exit of employees who possess strategic knowledge acquired throughout their career.

For those enrolled in the Program, the compliance with the agreements of the Collective Bargaining Agreement effective on the date of termination is thereby guaranteed. They will also receive a severance incentive proportional to the length of service at SABESP, corresponding to a percentage of the balance of the Guarantee Fund for Length of Service (FGTS), for termination purposes, on the date of termination.

As of September 30, 2020, the balance totaled R$ 112,582 (R$ 153,377 as of September 31, 2019), recorded in “Labor liabilities” under current liabilities.

b) Consent Decree (TAC)

As of September 30, 2020, the amount accrued under Labor liabilities, related to the Consent Decree, totaled R$ 9,951 (R$ 10,472 as of December 31, 2019), of which R$ 9,116 (R$ 8,242 as of December 31, 2019) under current liabilities and R$ 835 (R$ 2,230 as of December 31, 2019) under noncurrent liabilities.

23 Equity

(a) Share capital

As of September 30, 2020, and December 31, 2019, the authorized, subscribed and paid-in capital, in the amount of R$ 15,000.000, was composed of 683,509,869 registered, book-entry common shares with no par value, as follows:

| September 30, 2020 | December 31, 2019
| Number of shares | % | Number of shares | %
São Paulo State Government (1) (2) | 343,507,756 | 50.26 | 343,524,285 | 50.26
Companhia Brasileira de Liquidação e Custódia | 254,608,500 | 37.24 | 235,643,765 | 34.47
The Bank Of New York ADR Department (equivalent in shares) (3) | 84,875,457 | 12.42 | 103,823,655 | 15.19
Others | 518,156 | 0.08 | 518,164 | 0.08
| 683,509,869 | 100.00 | 683,509,869 | 100.00

(1) As of September 30, 2020, it includes 343,507,750 shares from the Treasury Department of the São Paulo State and six shares held by Companhia Paulista de Parcerias (CPP), which is controlled by the São Paulo State Government.

(2) There is a lawsuit with a mandatory injunction filed under number 1051534-40.2019.8.26.0053 pending at the 7th Tax Court of the City of São Paulo, pleading the unlawfulness of the disposal of shares owned by the Treasury Department of the São Paulo State to third parties, filed by Banco Bradesco S.A., the custodian and bookkeeping agent of the Company’s shares.

(3) Each ADR corresponds to 1 share.

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(b) Interest on capital payable

The Annual Shareholders’ Meeting of April 28, 2020 approved the distribution of dividends as interest on capital in the amount of R$ 799,785, corresponding to minimum mandatory dividend of R$ 141,203 as additional dividends (R$ 80,973 net of withholding income tax), totaling R$ 940,988, paid on May 29, 2020.

24 Earnings per share

Basic and diluted

Basic earnings per share is calculated by dividing the equity attributable to owners by the weighted average number of outstanding common shares during the year. The Company does not have potentially dilutive common shares outstanding or debts convertible into common shares. Accordingly, basic and diluted earnings per share are equal.

| July to September 2020 | January to September 2020 | July to September 2019 | January to September 2019
Profit attributable to the Company’s owners | 421,576 | 141,790 | 1,208,860 | 2,310,526
Weighted average number of common shares issued | 683,509,869 | 683,509,869 | 683,509,869 | 683,509,869
Basic and diluted earnings per share (reais per share) | 0.61678 | 0.20744 | 1.76861 | 3.38039

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25 Operating segment information

Management has determined the operating segment used to make strategic decisions, as sanitation services.

Result

| July to September 2020
| Sanitation (i) | Reconciliation to the income statement (ii) | Balance as per financial statements
Gross operating revenue | 3,639,105 | 1,053,432 | 4,692,537
Gross sales deductions | (254,057) | - | (254,057)
Net operating revenue | 3,385,048 | 1,053,432 | 4,438,480
Costs, selling, general and administrative expenses | (2,426,500) | (1,029,748) | (3,456,248)
Income from operations before other operating expenses, net and equity accounting | 958,548 | 23,684 | 982,232
Other operating income / (expenses),net |  |  | 842
Equity accounting |  |  | 3,124
Financial result, net |  |  | (330,639)
Income before income tax and social contribution |  |  | 655,559
Depreciation and amortization | (528,186) | - | (528,186)

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| January to September 2020
| Sanitation (i) | Reconciliation to the income statement (ii) | Balance as per financial statements
Gross operating revenue | 11,105,595 | 2,594,452 | 13,700,047
Gross sales deductions | (786,671) | - | (786,671)
Receita operacional líquida | 10,318,924 | 2,594,452 | 12,913,376
Costs, selling, general and administrative expenses | (7,319,285) | (2,535,189) | (9,854,474)
Income from operations before other operating expenses, net and equity accounting | 2,999,639 | 59,263 | 3,058,902
Other operating income / (expenses), net |  |  | 113,279
Equity accounting |  |  | 9,604
Financial result, net |  |  | (2,986,392)
Income before income tax and social contribution |  |  | 195,393
Depreciation and amortization | (1,510,301) | - | (1,510,301)

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| July to September 2019
| Sanitation (i) | Reconciliation to the income statement (ii) | Balance as per financial statements
Gross operating revenue | 4,984,140 | 699,458 | 5,683,598
Gross sales deductions | (273,005) | - | (273,005)
Net operating revenue | 4,711,135 | 699,458 | 5,410,593
Costs, selling, general and administrative expenses | (2,183,855) | (683,732) | (2,867,587)
Income from operations before other operating expenses, net and equity accounting | 2,527,280 | 15,726 | 2,543,006
Other operating income / (expenses), net |  |  | 13,198
Equity accounting |  |  | 2,352
Financial result, net |  |  | (719,928)
Income from operations before taxes |  |  | 1,838,628
Depreciation and amortization | (463,962) | - | (463,962)

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| January to September 2019
| Sanitation (i) | Reconciliation to the income statement (ii) | Balance as per financial statements
Gross operating revenue | 12,099,335 | 1,991,515 | 14,090,850
Gross sales deductions | (803,843) | - | (803,843)
Net operating revenue | 11,295,492 | 1,991,515 | 13,287,007
Costs, selling, general and administrative expenses | (6,862,346) | (1,946,740) | (8,809,086)
Income from operations before other operating expenses, net and equity accounting | 4,433,146 | 44,775 | 4,477,921
Other operating income / (expenses), net |  |  | 18,324
Equity accounting |  |  | 8,337
Financial result, net |  |  | (1,025,961)
Income from operations before taxes |  |  | 3,478,621
Depreciation and amortization | (1,299,363) | - | (1,299,363)

| (i) | See Note 31 for further information about non-cash items, other than depreciation and amortization that impact segment results, and for additional information to long-lived asset.

(ii) Construction revenue and related costs are not reported to the CODM. Revenue from construction is recognized in accordance with ICPC 01 (R1) / IFRIC 12 (Concession Agreements) and CPC 47/IFRS 15 (Revenue from Contracts with Customers), as all performance obligations are satisfied over time. See Note 14 (e) for further information.

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26 Operating revenue

(a) Revenue from sanitation services:

| July to September 2020 | January to September 2020 | July to September 2019 | January to September 2019
Metropolitan Region of São Paulo | 2,561,241 | 7,861,961 | 3,920,970 | 8,941,288
Regional Systems | 1,077,864 | 3,243,634 | 1,063,170 | 3,158,047
Total | 3,639,105 | 11,105,595 | 4,984,140 | 12,099,335

(b) Reconciliation between gross operating income and net operating income:

| July to September 2020 | January to September 2020 | July to September 2019 | January to September 2019
Revenue from sanitation services (i) | 3,639,105 | 11,105,595 | 4,984,140 | 12,099,335
Construction revenue | 1,053,432 | 2,594,452 | 699.458 | 1,991,515
Sales tax | (237,160) | (735,980) | (257,951) | (759,085)
Regulation, Control and Oversight Fee (TRCF) | (16,897) | (50,691) | (15,054) | (44,758)
Net revenue | 4,438,480 | 12,913,376 | 5,410,593 | 13,287,007

(i) Includes the amounts of R$ 17,569 from July to September 2020 and R$ 53,475 from January to September 2020 (R$ 17,381 from July to September 2019 and R$ 51,057 from January to September 2019), from the TRCF charged from customers from the municipalities regulated by ARSESP.

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27 Operating costs and expenses

| July to September 2020 | January to September 2020 | July to September 2019 | January to September 2019
Operating costs |  |  |  |
Salaries, payroll charges and benefits | (494,967) | (1,486,876) | (368,245) | (1,435,511)
Pension plan obligations | (8,985) | (27,666) | (12,461) | (37,130)
Construction costs (Note 25) | (1,029,748) | (2,535,189) | (683,732) | (1,946,740)
General supplies | (63,664) | (169,127) | (64,810) | (188,336)
Treatment supplies | (78,889) | (253,851) | (67,402) | (229,831)
Outsourced services | (312,170) | (927,178) | (306,514) | (897,873)
Electricity | (310,497) | (914,042) | (282,000) | (843,019)
General expenses | (157,481) | (472,256) | (161,536) | (486,512)
Depreciation and amortization | (486,089) | (1,397,217) | (433,012) | (1,215,842)
| (2,942,490) | (8,183,402) | (2,379,712) | (7,280,794)
Selling expenses |  |  |  |
Salaries, payroll charges and benefits | (67,834) | (205,909) | (48,874) | (200,292)
Pension plan obligations | (1,215) | (3,738) | (1,731) | (5,135)
General supplies | (1,545) | (3,942) | (1,683) | (5,357)
Outsourced services | (82,327) | (222,833) | (101,514) | (272,110)
Electricity | (266) | (902) | (292) | (1,002)
General expenses | (26,721) | (87,176) | (33,763) | (89,503)
Depreciation and amortization | (14,510) | (43,411) | (8,088) | (16,910)
| (194,418) | (567,911) | (195,945) | (590,309)
Bad debt expenses (Nota 9 (c)) | (75,125) | (349,791) | 37,677 | (50,898)
Administrative expenses |  |  |  |
Salaries, payroll, charges and benefits | (64,695) | (188,479) | (48,219) | (181,069)
Pension plan obligations | (31,727) | (92,888) | (37,500) | (110,467)
General supplies | 1,716 | (13,629) | (790) | (2,380)
Outsourced services | (63,067) | (173,693) | (41,897) | (156,482)
Electricity | (186) | (1,001) | (203) | (997)
General expenses | (40,233) | (161,880) | (163,273) | (313,492)
Depreciation and amortization | (27,587) | (69,673) | (22,862) | (66,611)
Tax expenses | (18,436) | (52,127) | (14,863) | (55,587)
| (244,215) | (753,370) | (329,607) | (887,085)

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Operating costs and expenses |  |  |  |
Salaries, payroll charges and benefits | (627,496) | (1,881,264) | (465,338) | (1,816,872)
Pension plan obligations | (41,927) | (124,292) | (51,692) | (152,732)
Construction costs (Note 25) | (1,029,748) | (2,535,189) | (683,732) | (1,946,740)
General supplies | (63,493) | (186,698) | (67,283) | (196,073)
Treatment supplies | (78,889) | (253,851) | (67,402) | (229,831)
Outsourced services | (457,564) | (1,323,704) | (449,925) | (1,326,465)
Electricity | (310,949) | (915,945) | (282,495) | (845,018)
General expenses | (224,435) | (721,312) | (358,572) | (889,507)
Depreciation and amortization | (528,186) | (1,510,301) | (463,962) | (1,299,363)
Tax expenses | (18,436) | (52,127) | (14,863) | (55,587)
Bad debt expenses (Note 9 (c)) | (75,125) | (349,791) | 37,677 | (50,898)
| (3,456,248) | (9,854,474) | (2,867,587) | (8,809,086)

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28 Financial income (expenses)

| July to September 2020 | January to September 2020 | July to September 2019 | January to September 2019
Financial expenses |  |  |  |
Interest and charges on borrowings and financing – local currency | (92,086) | (254,926) | (89,886) | (248,817)
Interest and charges on borrowings and financing – foreign currency | (39,515) | (123,854) | (44,049) | (127,578)
Other financial expenses | (81,141) | (245,411) | (83,064) | (254,386)
Income tax over international remittance | (5,395) | (15,134) | (4,531) | (13,552)
Inflation adjustment on borrowings and financing | (19,712) | (28,217) | (4,217) | (34,216)
Other inflation adjustments | (29,294) | (95,095) | (27,857) | (69,466)
Interest and inflation adjustments on provisions | (18,140) | (49,549) | (39,009) | (105,333)
Total financial expenses | (285,283) | (812,186) | (292,613) | (853,348)
Financial revenue |  |  |  |
Inflation adjustment gains | 19,275 | 78,795 | 20,970 | 71,512
Income on short-term investments | 18,409 | 63,358 | 41,886 | 119,094
Interest income | 35,837 | 107,936 | 37,726 | 115,027
Cofins and Pasep | (8,785) | (17,261) | (6,274) | (15,848)
Other | - | 4 | 3 | 10
Total financial income | 64,736 | 232,832 | 94,311 | 289,795
Financial income (expenses), net before exchange variation | (220,547) | (579,354) | (198,302) | (563,553)
Net exchange gains (losses) |  |  |  |
Exchange rate changes on borrowings and financing | (111,059) | (2,409,637) | (522,069) | (463,438)
Exchange gains on assets | 967 | 2.595 | 451 | 1.042
Other exchange variations | - | 4 | (8) | (12)
Exchange variations, net | (110,092) | (2,407,038) | (521,626) | (462,408)
Financial income (expenses), net | (330,639) | (2,986,392) | (719,928) | (1,025,961)

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29 Other operating revenues/(expenses), net

| July to September 2020 | January to September 2020 | July to September 2019 | January to September 2019
Other operating income, net | 17,393 | 58,048 | 14.477 | 48,693
Other operating expenses | 16,551 | 55.231 | (1,279) | (30,369)
Other operating income (expenses), net | 842 | 113.279 | 13,198 | 18,324

Other operating income is comprised of sale of property, plant and equipment, sale of contracts awarded in public bids, right to sell electricity, indemnities and reimbursement of expenses, fines and collaterals, property leases, reuse water, PURA projects and services, net of Cofins and Pasep.

Other operating expenses consist mainly of derecognition of concessions assets due to obsolescence, discontinued construction works, unproductive wells, projects considered economically unfeasible, losses on property, plant and equipment, and creation and reversal of estimated losses with asset indemnification, the main impact in the year being the agreement signed with the municipality of Mauá.

30 Commitments

The Company has agreements to manage and maintain its activities, as well as agreements to build new projects aiming at achieving the objectives proposed in its target plan. The main unrecognized committed amounts as of September 30, 2020 are as follows:

| 1 year | 1-3 years | 3-5 years | More than 5 years | Total
Contractual obligations – Expenses | 1,675,881 | 1,525,697 | 858,006 | 3,232,411 | 7,291,995
Contractual obligations - Investments | 1,916,008 | 2,061,927 | 2,034,626 | 488,640 | 6,501,201
Total | 3,591,889 | 3,587,624 | 2,892,632 | 3,721,051 | 13,793,196

The main commitment refers to the São Lourenço PPP. See Note 14 (g).

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Notes to the Interim Financial Information

31 Supplemental cash flow information

| January to September 2020 | January to September 2019
Total additions to contract assets (Note 13) | 2,762,570 | 2,228,063
Total additions to intangible assets (Note 14 (b)) | 387,529 | 1,742,318
Items not affecting cash (see breakdown below) | (815,470) | (1,941,168)
Total additions to intangible and contract assets as per statement of cash flows | 2,334,629 | 2,029,213
Investments and financing operations affecting intangible assets but not cash: |  |
Interest capitalized in the period (Note 14 (d)) | 187,798 | 187,605
Contractors payable | 112,562 | 210,988
Program contract commitments | 4,422 | 39,819
Public-Private Partnership - São Lourenço PPP (Note 14 (g)) | - | 10,591
Performance agreements | 143,981 | -
Lease | 26,670 | 110,482
Construction margin (Note 25) | 59,263 | 44,775
Agreement with the municipality of Mauá | 280,774 | -
Agreement with the municipality of Santo André | - | 1,336,908
Total | 815.470 | 1,941,168

32 Events after the reporting period

· Financing Agreement - BID Invest

On November 10, 2020, the Company formalized a financing agreement with the Inter-American Investment Corporation – IDB Invest, in the amount of R$ 950.0 million, in two tranches: (i) the first totaling R$ 508.0 million, of which proceeds will be invested in the New Pinheiros River Program and Renewable Energy Plants; and (ii) the second, in the amount of R$ 442.0 million, of which proceeds will be used to refinance debts. The transaction has no guarantees.

· 27th Issue Debentures

On November 12, 2020, the Board of Directors approved the 27th issue of simple, unsecured debentures, not convertible into shares, in up three (3) series, for public distribution, with restricted placement efforts, pursuant to CVM Instruction 476, totaling R$ 1.0 billion. The proceeds to be obtained from the debenture issue, once concluded, will be used to refinance commitments maturing in 2021 and to recompose the Company’s cash.

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Notes to the Interim Financial Information

Comments on the Company’s Projections

The projections presented in the Reference Form are annual and not on a quarterly basis. Therefore, the quarterly comparison between information disclosed in the Reference Form with quarterly results shall not apply.

The projections monitoring occurs on annual basis and are disclosed in the Reference Form.

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Notes to the Interim Financial Information

1. CHANGES IN INTEREST HELD BY THE CONTROLLING SHAREHOLDER, BOARD MEMBERS AND EXECUTIVE OFFICERS

CONSOLIDATED SHAREHOLDING OF CONTROLLING SHAREHOLDERS, MANAGEMENT AND OUTSTANDING SHARES Position as of September 30, 2020
Shareholder | Number of Common shares (units) | % | Total Number of Shares (units) | %
Controlling Shareholder |  |  |  |
Treasury Department(1) | 343,507,750 | 50.3% | 343,507,750 | 50.3%
Companhia Paulista de Parcerias - CPP | 6 | 0% | 6 | 0%
Management |  |  |  |
Board of Directors | 3,000 | 0.0% | 3,000 | 0.0%
Executive Board | - | - | - | -
Fiscal Council | 0 | 0% | 0 | 0%
Treasury Shares | - | - | - | -
Other Shareholders |  |  |  |
Total | 343,510,756 | 50.3% | 343,510,756 | 50.3%
Outstanding Shares | 339,999,113 | 49.7% | 339,999,113 | 49.7%

(1) There is a lawsuit with a mandatory injunction filed under number 1051534-40.2019.8.26.0053 pending at the 7th Tax Court of the City of São Paulo, pleading the unlawfulness of the disposal of shares owned by the Treasury Department of the São Paulo State to third parties, filed by Banco Bradesco S.A., the custodian and bookkeeping agent of SABESP’s shares.

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Notes to the Interim Financial Information

CONSOLIDATED SHAREHOLDING POSITION OF CONTROLLING SHAREHOLDERS, MANAGEMENT AND OUTSTANDING SHARES Position as of September 30, 2019
Shareholder | Number of Common shares (units) | % | Total Number of Shares (units) | %
Controlling Shareholder |  |  |  |
Treasury Department | 343,524,285 | 50.3% | 343,524,285 | 50.3%
Companhia Paulista de Parcerias - CPP | 6 | 0% | 6 | 0%
Management |  |  |  |
Board of Directors | 3,000 | 0.0% | 3,000 | 0.0%
Executive Board | - | - | - | -
Fiscal Council | 2 | 0.0% | 2 | 0.0%
Treasury Shares | - | - | - | -
Other Shareholders |  |  |  |
Total | 343,527,293 | 50.3% | 343,527,293 | 50.3%
Outstanding Shares | 339,982,576 | 49.7% | 339,982,576 | 49.7%

2. SHAREHOLDING POSITION

SHAREHOLDING POSITION OF HOLDERS OF MORE THAN 5% OF EACH TYPE AND CLASS OF COMPANY SHARES, UP TO THE INDIVIDUAL LEVEL
Company: CIA SANEAMENTO BÁSICO ESTADO SÃO PAULO | Position as of September 30, 2020 (number of shares)
| Common shares | Total
Shareholder | Number of shares | % | Number of shares | %
Treasury Department | 343,507,750 | 50.3 | 343,507,750 | 50.3

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Notes to the Interim Financial Information

Reports and Statements / Unqualified Report on Special Review

Report on Review of Interim Financial Information

To the Management and Shareholders of

Companhia de Saneamento Básico do Estado de São Paulo

São Paulo – SP

Introduction

We have reviewed the accompanying interim financial information of Companhia de Saneamento Básico do Estado de São Paulo (“Company”), included in the Interim Financial Information Form (ITR) for the quarter ended September 30, 2020, which comprises the Statement of financial position as of September 30, 2020 and the related income statement and statement of comprehensive income for the three and nine-months periods then ended and the statements of changes in equity and cash flows for the nine-months period then ended, including a summary of significant accounting policies and other explanatory notes.

Management is responsible for the preparation of the interim financial information in accordance with Technical Pronouncement NBC TG - 21- Interim Financial Reporting and IAS 34 - Interim Financial Reporting, issued by the International Accounting Standards Board (IASB), as well as for the presentation of such information in accordance with the standards issued by the Brazilian Securities and Exchange Commission (CVM) applicable to the preparation of Interim Financial Information (ITR). Our responsibility is to express a conclusion on this interim financial information based on our review.

Scope of review

We conducted our review in accordance with Brazilian and international standards on review of interim financial information (NBC TR 2410 and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the standards on auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion on the interim financial information

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information included in the Interim Financial Information Form (ITR) referred to above is not prepared, in all material respects, in accordance with NBC TG – 21 and IAS 34 applicable to the preparation of interim financial information and presented in accordance with the standards issued by the Brazilian Securities and Exchange Commission (CVM).

Other matters

Audit and review of corresponding values related to comparative period and year

The audit of corresponding values financial statements for the year ended December 31, 2019 was conducted under responsibility of other independent auditor, who issued the audit report without modifications on March 26, 2020. The review of interim financial information for the three and nine-months periods ended September 30, 2019 was performed by another independent auditor, who issued the review report without modification over the aforementioned interim financial information on November 14, 2019.

Statement of value added

The quarterly information referred to above includes the statements of value added for the period of nine months ended September 30, 2020, prepared under the responsibility of the Company's management and presented as supplementary information for the purposes of IAS 34. These statements were submitted to the same review procedures in conjunction with the review of the Company's interim financial information in the order to conclude they are reconciliated to the interim financial information and to the accounting records, as applicable, and whether the structure and content are in accordance with the criteria established in the NBC TG 09 - Statement of Value Added. Based on our review, nothing has come to our attention that causes us to believe that the accompanying statements of value added were not prepared, in all material respects, in accordance with the interim financial information taken as a whole.

São Paulo, November 12, 2020

Nelson Fernandes Barreto Filho

CT CRC 1SP-151.079/O-0

Grant Thornton Auditores Independentes

CRC 2SP-025.583/O-1

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Notes to the Interim Financial Information

Reports and Statements / Executive Officers’ Statement on the Financial Statements

Executive Officers’ Statement on the Interim Financial Information

STATEMENT

The Executive Officers of Companhia de Saneamento Básico do Estado de São Paulo - SABESP, with Corporate Taxpayers’ ID (CNPJ/MF) 43.776.517/0001-80, headquartered at Rua Costa Carvalho, nº 300, Pinheiros, São Paulo, declare that, pursuant to paragraph 1 of article 25, item VI of CVM Instruction 480, of December 7, 2009, that:

They revised, discussed and agreed with the interim financial information as of September 30, 2020. São Paulo, November 12, 2020.

Companhia de Saneamento Básico do Estado de São Paulo – SABESP

Benedito Pinto Ferreira Braga Junior

Chief Executive Officer

Rui de Britto Álvares Affonso

Chief Financial Officer and Investor Relations Officer

Adriano Candido Stringhini

Corporate Management Officer

Alceu Segamarchi Junior

Technology, Project and Environment Officer

Ricardo Daruiz Borsari

Metropolitan Officer

Monica Ferreira do Amaral Porto

Regional Systems Officer

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Notes to the Interim Financial Information

Reports and Statements / Executive Officers’ Statement on the Report of Independent Registered Public Accounting Firm

Executive Officers’ Statement on the Report of Independent Registered Public Accounting Firm

STATEMENT

The Executive Officers of Companhia de Saneamento Básico do Estado de São Paulo - SABESP, with Corporate Taxpayer’s ID (CNPJ/MF) 43.776.517/0001-80, headquartered at Rua Costa Carvalho, nº 300, Pinheiros, São Paulo, declare that, pursuant to paragraph 1 of article 25, item V, of CVM Instruction 480, of December 7, 2009, that:

They revised, discussed and agreed with the Report of Independent Registered Public Accounting Firm on the interim financial information as of September 30, 2020.

São Paulo, November 12, 2020.

Companhia de Saneamento Básico do Estado de São Paulo – SABESP

Benedito Pinto Ferreira Braga Junior

Chief Executive Officer

Rui de Britto Álvares Affonso

Chief Financial Officer and Investor Relations Officer

Adriano Candido Stringhini

Corporate Management Officer

Alceu Segamarchi Junior

Technology, Project and Environment Officer

Ricardo Daruiz Borsari

Metropolitan Officer

Monica Ferreira do Amaral Porto

Regional Systems Officer

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SIGNATURE
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: November 27, 2020

Companhia de Saneamento Básico do Estado de São Paulo - SABESP
By: | /s/ Rui de Britto Álvares Affonso |
| Name: Rui de Britto Álvares Affonso Title: Chief Financial Officer and Investor Relations Officer |

FORWARD-LOOKING STATEMENTS

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.