Fleury S A : Financial Statements - 2Q21

(A free translation of the original in Portuguese)

Report on review of quarterly information

To the Board of Directors and Shareholders

Fleury S.A.

Introduction

We have reviewed the accompanying parent company and consolidated interim accounting information of Fleury S.A. ("Company"), included in the Quarterly Information Form (ITR) for the quarter ended June 30, 2021, comprising the balance sheet at that date and the statements of income and comprehensive income for the quarter and six-month period then ended, and the statements of changes in equity and cash flows for the six-month period then ended, and a summary of significant accounting policies and other explanatory information.

Management is responsible for the preparation of the parent company interim accounting information in accordance with the accounting standard CPC 21, Interim Financial Reporting, of the Brazilian Accounting Pronouncements Committee (CPC), and of the consolidated interim accounting information in accordance with CPC 21 and International Accounting Standard (IAS) 34 - Interim Financial Reporting issued by the International Accounting Standards Board (IASB), as well as the presentation of this information in accordance with the standards issued by the Brazilian Securities Commission (CVM), applicable to the preparation of the Quarterly Information (ITR). Our responsibility is to express a conclusion on this interim accounting information based on our review.

Scope of review

We conducted our review in accordance with Brazilian and International Standards on Reviews of Interim Financial Information (NBC TR 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim 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 Brazilian and International Standards on Auditing and consequently did 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 parent company interim information

Based on our review, nothing has come to our attention that causes us to believe that the accompanying parent company interim accounting information included in the quarterly information referred to above has not been prepared, in all material respects, in accordance with CPC 21 applicable to the preparation of the Quarterly Information, and presented in accordance with the standards issued by the CVM.

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PricewaterhouseCoopers, Av. Francisco Matarazzo 1400, Torre Torino, São Paulo, SP, Brasil, 05001-903, Caixa Postal 60054, T: [phone], www.pwc.com.br

FLEURYJUE21.ITR

Fleury S.A.

Conclusion on the consolidated interim information

Based on our review, nothing has come to our attention that causes us to believe that the accompanying consolidated interim accounting information included in the quarterly information referred to above has not been prepared, in all material respects, in accordance with CPC 21 and IAS 34 applicable to the preparation of the Quarterly Information, and presented in accordance with the standards issued by the CVM.

Other matters

Statements of value added

The quarterly information referred to above includes the parent company and consolidated statements of value added for the quarter ended March 31, 2021. These statements are the responsibility of the Company's management and are presented as supplementary information under IAS 34. These statements have been subjected to review procedures performed together with the review of the quarterly information for the purpose of concluding whether they are reconciled with the interim accounting information and accounting records, as applicable, and if their form and content are in accordance with the criteria defined in the accounting standard CPC 09 - "Statement of Value Added". Based on our review, nothing has come to our attention that causes us to believe that these statements of value added have not been properly prepared, in all material respects, in accordance with the criteria established in this accounting standard, and consistent with the parent company and consolidated interim accounting information taken as a whole.

Audit and review of prior year information

The Quarterly Information (ITR) information for comparison regarding the results, to changes in equity, cash flows and value added in the quarter and semester ended June 30, 2020, obtained the corresponding Quartely Information (ITR) from those period, and the balance sheet at 31 December 2020, obtained from the financial statements on December 31, 2020. The review of the Quartely Information (ITR) for the quarter and semester ended June 30, 2020 and examination of financial statements for the year ended December 31, 2020 were conducted under responsibility of other independent auditors, who issued review and audit reports with dates of June 29, 2020 and February 24, 2021, respectively, without reservations. Our conclusion is not due except for this matter.

São Paulo July 29, 2021

PricewaterhouseCoopers

Auditores Independentes

CRC 2SP000160/O-5

Marcelo Orlando

Contador CRC 1SP217518/O-7

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FLEURYJUE21.ITR

FLEURY S.A. AND SUBSIDIARIES

BALANCE SHEET AT JUNE 30, 2021 (In thousands of reais - R$)

	Note	Parent company		Consolidated		Note	Parent company			Consolidated
Assets			06/30/2021	12/31/2020	06/30/2021	12/31/2020	Liabilities and shareholders' equity			06/30/2021	12/31/2020	06/30/2021	12/31/2020
Current assets								Current liabilities
Cash and cash equivalents	5		22,039	18,368	35,433	28,184	Financing	13		579,337	68,341	580,136	68,928
Marketable securities	6		546,861	1,000,593	570,835	1,013,621	Debentures	14		153,946	403,322	153,946	403,322
Accounts receivable	7		653,414	658,128	710,160	704,468	Financial leases	15		98,655	98,099	107,539	105,039
Inventories	8		60,953	59,838	71,514	63,093	Suppliers	16		234,500	223,093	271,937	250,459
Recoverable taxes	9		18,304	20,928	20,009	22,325	Labor liabilities	17		165,688	131,630	179,050	138,774
IRPJ and CSLL recoverable			22,932	27,214	29,709	33,245	Tax liabilities	18		26,075	31,925	32,075	37,417
Other assets			26,882	14,323	31,888	15,263	Income tax and social contribution payable			49,614	-	52,080	212
Total current assets			1,351,385	1,799,392	1,469,548	1,880,199	Accounts payable - Acquisition of companies	19		11,158	17,716	96,445	25,790
								Interest on own capital payable and dividends	24		791	74,504	791	74,504
								Other liabilities	20		5,877	4,438		7,019	5,326
Non-current assets								Total current assets			1,325,641	1,053,068	1,481,018	1,109,771
Marketable securities	6		18,658	15,396	65,807	69,615
Other assets			22,472	32,368	23,171	33,086
Income tax and social contribution - deferred	21		-	-	21,385	12,232	Non-current liabilities
Judicial deposits			23,524	24,269	23,711	24,988	Financing	13		6,611	530,899	7,370	531,949
			64,654	72,033	134,074	139,921	Debentures	14		899,575	899,522	899,575	899,522
								Financial leases	15		594,774	643,559	637,703	680,790
								Deferred income tax and social contribution - net	21		380,507	405,216	380,507	405,217
								Provision for tax, labor and civil risks	22		29,594	41,640	34,240	42,082
								Tax installments	18		12,302	14,001	14,274	14,910
								Accounts payable - Acquisition of companies	19		42,535	30,162	102,405	83,092
								Other liabilities	20		4,206	5,627		4,206	5,627
								Total non-current liabilities			1,970,104	2,570,626	2,080,280	2,663,189
								Shareholders' equity
								Capital	24.a	1,432,202	1,432,202	1,432,202	1,432,202
								Capital reserve - stock options granted	25		36,923	35,954	36,923	35,954
								Legal reserve			115,725	115,725	115,725	115,725
								Retained earnings			2,674	-	2,674	-
Investments	10		822,214	633,955	135,737	34,372	Income for the period			184,145	169,643	184,145	169,643
Property, plant and equipment	11		633,447	643,685	707,228	708,769	Treasury shares	24.c	(24,836)	(2,674)	(24,836)	(2,674)
Intangible assets	11		1,547,210	1,536,286	2,190,439	2,030,608	Investment reserve			10,174	-	10,174	-
Right-of-use	12		633,842	689,193	682,610	729,941	Non-controlling interest			-	-		1,331	-
Total non-current liabilities			3,701,367	3,575,152	3,850,088	3,643,611	Total shareholders' equity			1,757,007	1,750,850	1,758,338	1,750,850
Total assets							Total liabilities and shareholders' equity
		5,052,752	5,374,544	5,319,636	5,523,810			5,052,752	5,374,544	5,319,636	5,523,810
											-	-		-	-

See the accompanying notes to the interim quarterly information

FLEURY S.A. AND SUBSIDIARIES
STATEMENT OF INCOME
THREE AND SIX-MONTH PERIODS ENDED JUNE 30
(In thousands of reais - R$, except earnings per share)
	Note				Parent company						Consolidated
			04/01/2021 to	04/01/2020 to	01/01/2021 to	01/01/2020 to	04/01/2021 to	04/01/2020 to	01/01/2021 to	01/01/2020 to
			06/30/2021	06/30/2020	06/30/2021	06/30/2020		06/30/2021	06/30/2020	06/30/2021	06/30/2020
Revenue from services rendered	26		848,221		424,307		1,683,352		1,083,825			932,066		454,944		1,825,874		1,168,878
Cost of services rendered	27		(597,702)	(420,923)	(1,152,654)	(906,195)		(673,822)	(452,364)	(1,280,372)	(978,711)
Gross income			250,519		3,384		530,698		177,630			258,244		2,580		545,502		190,167
Operating (expenses) revenues
General and administrative	28		(119,802)	(63,700)	(201,871)	(138,319)		(131,802)	(68,137)	(222,464)	(148,421)
Other operating revenues (expenses), net	29		13		488		915		254			(147)	529		2,333		1,250
Reversal (provision) for tax, labor and civil risks	22		2,685		72		2,307		764			2,557		(62)	2,176		606
Equity in net income of subsidiaries	10		(3,075)	(4,973)	(2,838)	1,083			(2)	(1,028)	(201)	(989)
Operating income (loss) before financial income			130,340		(64,729)	329,211		41,412			128,850		(66,118)	327,346		42,613
Financial revenues	30		5,854		8,798		12,181		17,490			6,797		8,778		13,496		18,656
Financial expenses	30		(41,586)	(44,001)	(78,600)	(80,357)		(43,009)	(45,378)	(80,437)	(84,096)
Financial income (loss)			(35,732)	(35,203)	(66,419)	(62,867)		(36,212)	(36,600)	(66,941)	(65,440)
Income (loss) before income tax and social contribution			94,608		(99,932)	262,792		(21,455)		92,638		(102,718)	260,405		(22,827)
Income tax and social contribution
Current	21		(39,820)	12,701		(103,354)	-			(44,239)	12,926		(110,161)	(1,317)
Deferred	21		10,746		13,925		24,707		6,869			17,096		16,486		33,862		9,558
Net income (loss) for the period			65,534		(73,306)	184,145		(14,586)		65,495		(73,306)	184,106		(14,586)
Attributable to the partners:
Controlling shareholders			65,534		(73,306)	184,145		(14,586)		65,534		(73,306)	184,145		(14,586)
Non-controlling shareholders			-		-		-		-			(39)	-		(39)	-
			65,534		(73,306)	184,145		(14,586)		65,495		(73,306)	184,106		(14,586)

Other comprehensive income

Items that will be reclassified to income (loss) for the year in subsequent periods.

Items that will not be reclassified to the result of the financial year in subsequent periods

Total comprehensive income (loss) for the period

Earnings (losses) per share attributable to the Company's shareholders

Basic earnings (losses) per share (weighted average)	31
Diluted earnings (losses) per share (weighted average)	31

-		-		-		-		-		-		-		-
-		-		-		-		-		-		-		-
65,534		(73,306)	184,145	(14,586)	65,495	(73,306)	184,106	(14,586)
0.21		(0.23)	0.58	(0.05)	0.21	(0.23)	0.58	(0.05)
0.21		(0.23)	0.58	(0.05)	0.21	(0.23)	0.58	(0.05)

See the accompanying notes to the interim quarterly information

FLEURY S.A. AND SUBSIDIARIES

STATEMENT OF ADDED VALUE

SIX-MONTH PERIOD ENDED JUNE 30 (In thousands of reais - R$)

		Parent company	Consolidated
		06/30/2021		06/30/2020				06/30/2021		06/30/2020
Revenues	1,796,519		1,158,722				1,952,840		1,251,807
Gross revenue from services rendered	1,812,694		1,169,688				1,968,110		1,262,354
Estimated losses from disallowances	(19,475)	(16,002)			(20,414)	(16,629)
Other revenues	3,300		5,036				5,144		6,082
Inputs acquired from third parties	(694,465)	(505,946)			(796,766)	(549,400)
Cost of services rendered	(634,228)	(467,198)			(726,381)	(507,375)
Materials, energy, outsourced services and other	(60,242)	(37,761)			(70,296)	(41,009)
Loss/recovery of asset values	5		(987)			(89)	(1,016)
Gross added value	1,102,054		652,776				1,156,074		702,407
Depreciation and amortization	(168,666)	(160,857)			(177,721)	(171,953)
Net added value	933,388		491,919				978,353		530,454
Added value received as transfer	9,821		19,266				13,828		18,402
Equity in net income of subsidiaries	(2,838)	1,083				(201)	(989)
Financial revenues	12,659		18,183				14,029		19,391
Total added value payable	943,209		511,185				992,181		548,856
Distribution of added value	(943,209)	(511,185)			(992,181)	(548,856)
Personnel and charges	(403,192)	(301,639)			(433,079)	(323,348)
Direct remuneration	(277,309)	(197,548)			(301,078)	(213,203)
Benefits	(104,292)	(86,686)			(108,305)	(91,238)
Charges	(21,591)	(17,405)			(23,696)	(18,907)
Taxes, duties and contributions	(260,070)	(125,709)			(272,989)	(135,916)
Federal	(205,705)	(89,220)			(212,089)	(95,504)
Municipal	(54,365)	(36,489)			(60,900)	(40,412)
Interest, rental and other operating expenses	(95,802)	(98,423)			(102,007)	(104,178)
Rentals	(11,610)	(9,594)			(14,611)	(10,603)
Interest	(78,600)	(80,357)			(80,437)	(84,096)
Other operating expenses	(5,592)	(8,472)			(6,959)	(9,479)
(Income) loss for the period	(184,145)	14,586				(184,106)	14,586
Retained (earnings) loss for the period	(184,145)	14,586				(184,145)	14,586
Non-controlling interest in retained earnings (losses).	-		-				39		-

See the accompanying notes to the interim quarterly information