Administration Proposal to the Annual Shareholders' Meeting of Fleury S.A. 2018

Administration Proposal to the Annual Shareholders' Meeting of Fleury S.A. 2018

FLEURY S.A. Publicly Held Company Company Taxpayer s ID (CNPJ): 60.840.055/0001-31 Company Registry (NIRE): 35.300.197.534 Administration Proposal to the Annual Shareholders' Meeting of Fleury S.A., to be held on April 23, 2018 MANAGEMENT COMMENTS ON THE FINANCIAL CONDITION OF THE COMPANY (PURSUANT TO ITEM 10 OF THE REFERENCE FORM CVM INSTRUCTION 480) PROPOSAL FOR ALLOCATION OF 2017 NET INCOME (Exhibit 9-1-II of CVM Instruction No. 481) INFORMATION REGARDING THE CANDIDATES TO THE VACANT POSITIONS OF THE BOARD OF DIRECTORS (AS DESCRIBED ON THE ITEMS 12.5 TO 12.10 - INST. CVM 480) PROPOSAL FOR MANAGEMENT COMPENSATION (PURSUANT TO ARTICLE 12 - CVM INSTRUCTION 481) ADDITIONAL INFORMATION ON MANAGEMENT COMPENSATION (PURSUANT TO ITEM 13 OF THE REFERENCE FORM - CVM INSTRUCTION 480)

MANAGEMENT COMMENTS ON THE FINANCIAL CONDITION OF THE COMPANY (PURSUANT TO ITEM 10 OF THE REFERENCE FORM CVM INSTRUCTION 480) 10. Management comments (Amounts consolidated in R$ thousands unless otherwise indicated) 10.1. Management should comment on: a. General financial and equity conditions Comparison between the years ended December 31, 2017 and December 31, 2016 In 2017, the Fleury Group focused on the execution of the expansion plan announced in the end of 2016, with integration of strategic units to the Company's portfolio in order to expand the supply of differentiated quality services and the convenience of our brands to our customers and the medical community. Within this context, in 2017 we added 30 new Patient Service Centers (PSCs) to (i) the Fleury and a+ brands in São Paulo; (ii) Felippe Mattoso and Labs a+ in Rio de Janeiro; (iii) a+ in Paraná; (iv) a+ in Brasília; and (v) Weinmann in Rio Grande do Sul. Since the start of the implementation of the expansion plan in October 2016 until February 2018, we have opened 34 PSCs. These inaugurations correspond to the opening of one new unit each 11 days, showing a high execution capacity that will certainly enable us to fulfill our plan that aims to open 73 to 90 units by 2021. This capillarity expansion is in line with continuous investments in our recognized medical, technical and services excellence. To this end, we continued to develop operational efficiency projects, such as Lean, Workforce Management and Telemetry, in order to improve even more our customers experience through process redesign at our units, optimization of services, and reduction of waiting times. As a result, there was a significant increase in NPS (Net Promoter Score), which assesses the recommendation of our services by customers. In 2017, this indicator improved, having increased by 455 bps against the previous year, and reaching 76.8%. As part of the results of the initiatives mentioned above, Fleury Group recorded expansion across all income lines for the year. Gross revenues grew 12.4% to R$ 2.6 million, net revenues increased by 13.7% as a result of the reduction in cancellations, which reached 1.7% in the period. EBITDA increased by 28.1%, while EBITDA margin grew 292 bps, to 26.0%. Net income was R$320.6 million, up 40.2%. The Company s total consolidated assets amounted to R$ 3,527.3 million in 2017, up 17.4% compared to 2016. Total equity was R$ 1,706.5 in 2017, up 11.1% compared to 2016. At the end of 2017, the Company s short- and long-term gross debt was R$1,054.9 million, while cash and cash equivalents, and securities amounted to R$ 671.8 million. Thus, the Company s indebtedness was R$ 383.1 million as of December 31, 2017, down R$ 42.1 million compared to 2016. Net debt/ebitda LTM ratio was 0.6x in 2017.

Comparison between the years ended December 31, 2016 and December 31, 2015 The year of 2016 was marked by the consolidation of initiatives to capture the existing demand for quality services and the improvement of operations profitability, in addition to a renewed focus on projects intended to improve customers experience when using our services. These initiatives include the Lean project, which is responsible for redesigning processes at our units with the purpose of optimizing customer services, increasing employees productivity, and reducing waiting times for customers. The thirteen units included in the first phase of the project saw significant increase in NPS and, in 2017, we will continue to roll-out this methodology to other units of the Group. We have also developed the Procurement project, through which we renegotiated our agreements with suppliers, and restructured our processes in order to reduce costs and expenses. Another standout was the reimplementation of SAP system, which enabled greater integration, transparency and governance of information. In 2016, we completed the turnaround cycle started in the end of 2013, which resulted in the consistent and sustainable growth and evolution of profitability in our operations. Within this context, the Company recorded expansion across all income lines in the period. We highlight the 10.6% growth in net revenues, increase by 289 bps in EBITDA margin, record-breaking operating cash generation of R$ 0.5 billion, and 113.1% growth in net income. The Company s total consolidated assets amounted to R$ 3,005.8 million in 2016, down 6.2% compared to 2015. Total equity was R$ 1,535.7 in 2016, down 7.2% compared to 2015. At the end of 2016, the Company s short- and long-term gross debt was R$ 832.0 million, while cash and cash equivalents, and securities amounted to R$ 406.8 million. Thus, the Company s indebtedness was R$ 425.2 million as of December 31, 2016, up R$ 64.7 million versus 2015. The net debt/ebitda LTM ratio was 0.9x in 2016. b. Capital Structure In thousands of Brazilian reais- R$ 2017 % 2016 % 2015 % Current and noncurrent Liabilities 1,820,804 51.6% 1,470,095 48.9% 1,548,797 48.3% Total Equity 1,706,528 48.4% 1,535,725 51.1% 1,655,439 51.7% Total Liabilities and Equity 3,527,332 100.0% 3,005,820 100.0% 3,204,236 100.0% c. Ability to pay financial commitments undertaken Considering its indebtedness profile, its cash flow for the coming years and accounts receivable, the Company is fully capable of paying all its financial obligations. In thousands of Brasilian reais- R$, except percentage 2017 Var. % 2017/2016 2016 Var. % 2016/2015 2015 Var. % 2015/2014 EBITDA 618,689 28% 483,089 35% 357,980 16% Financial result (49,106) 10% (44,479) -30% (63,160) 25% Coverage index (EBITDA/Financial result) 12.6 0.0 10.9 0.0 5.7 0.0 Gross debt 1,055,529 27% 832,021-16% 990,027-5% Cash equivalents and Marketable securities 671,830 65% 406,810-35% 629,528 25% Net debt 383,699-10% 425,211 18% 360,500-32% Net debt/ebitda 0.6 0.9 1.0 d. Sources of funding used for working capital and for investments in noncurrent assets

The Company s principal source of funding for working capital and investments in noncurrent assets is its own operational cash generation. Capital market transactions are also an option for financing its investments. e. Sources of funding for working capital and for investments in noncurrent assets the Company intends to use to cover liquidity shortages Cash from operations, noncurrent loans and funding, and proceeds from the issue of debentures will give us the liquidity and capital we need to fulfill our financial commitments and pay our operating and investment expenses. We may also analyze alternative funding sources through bank loans, financing from development agencies, and access to the local capital markets. f. Indebtedness levels and the characteristics of such debts i. Relevant loan and financing agreements Debentures Principal Amortization Accumulated In thousands of Brazilian - R$, except percentage Date of Issuence Amount Principal Remuneration Final Balance Maturity Interest 1 st Issuence (2 nd series) 11/12/11 30,000 300,000 CDI + 1,20% p.y. 200,000 200,171 100,374 2018 2 nd Issuence 2/15/13 50,000 500,000 CDI + 0,85% p.y. - 274,227 515,826 2020 3 rd Issuence 11/24/17 30,000 300,000 CDI + 0,49% p.y. - - 301,827 2022 Total Repayments of principal installments for the 1 st issue (2 nd series) took place in 4Q16 and 4Q17. Each one was worth R$100 million, and the remaining principal is R$100 million. Principal amount regarding the 2 nd issue will start to be repaid in 2018, while principal for the 3 rd issue will start to be repaid in 2021. The Company used the proceeds from the issue of debentures to strengthen its working capital; keep its cash strategy; stretch its debt profile; and finance its investments in its expansion plan and acquisitions in the coming years. Financing In thousands of Brazilian reais - R$ Date of signature Charges and taxes Contract Value Accumulated Accumulated Interest Accumulated Principal Amount release Amortization Amortization Final Balance Final Maturuty FINEP 1 05/08/09 4.25% p.y. 7,098 7,098 1,219 7,098 800 09/2017 BNDES FINAME 10/11/11 8.70% p.y. 13,234 13,234 563 13,234-10/2016 FINEP Subvenção 07/13/12 104 104-104 - Indeterminated FINEP 2 08/06/12 4.00% p.y. 10,752 10,752 1,312 5,463 5,298 08/2020 FINAME DR -CEF* 01/31/13 TR + 16.49% p.y. 225 225 - - 13 01/2018 FINAME TOMO - Banco do Brasil* 02/25/13 3.00% p.y. 820 820 - - 570 03/2023 FINAME ECO - Banco do Brasil* 05/25/13 2.99% p.y. 400 400 - - 80 02/2018 FINAME RM - Banco do Brasil* 10/22/13 3.50% p.y. 3,850 3,850 - - 2,891 11/2023 BNDES - Cartão* 05/22/14 17.46% p.y. 500 121 - - 121 Indeterminated FINEP PROMETHEUS I e II 08/28/14 4.00% p.y. 155,444 152,444 13,119 25,613 127,052 09/2022 FINAME RX -CEF* 07/14/15 7.00% p.y. 206 206 - - 138 07/2020 FINAME ECO -CEF* 04/25/16 TJLP + 8.7% p.y. 102 102 - - 80 05/2021 Caixa Econômica Federal* 06/09/16 TR + 10.47% p.y. 55 55 - - 16 06/2018 Bradesco S.A.* 10/05/17 25.64% p.y. 673 673 - - 671 10/2020 Other Loans 12/29/17 0.00% 1,263 1,263 - - 1,263 01/2018 Total 194,726 191,347 16,213 51,512 138,993 The amounts obtained through financing were allocated, primarily, to the Group s internal R&D, purchase of external knowledge, and medical equipment. ii. Other long-term relations with financial institutions

Our noncurrent liabilities do not include long-term relations with financial institutions other than those mentioned above. iii. Degree of subordination between debts In the event of bankruptcy proceedings, the priority of the obligations recorded in liabilities in the balance sheets, which are an integral part of the Company's financial statements, will comply with article 83 of Law 11.101/05 ( Bankruptcy Law ). iv. Any restrictions imposed on the issuer, especially regarding indebtedness limits and the contracting of new debts, distribution of dividends, asset sales, issuance of new securities and sale of shareholder control, as well as whether the issuer is in compliance with such restrictions The debentures are subject to covenants, and all obligations regarding such debentures may be declared as immediately due in case the Company is not able to fulfill the following financial indices: (a) (b) Net financial debt / EBITDA lower than or equal to three times (3x); and/or EBITDA/Net financial expenses greater than or equal to 1.5x. As of December 31, 2017, the Company and its subsidiaries were in compliance with the financial indices mentioned above. The table below shows the evolution of the indicators for fulfillment of the terms indicated above: (i) Net financial debt / EBITDA LTM lower than or equal to three (3) times (in thousands of R$): 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 (i) Net financial debt/ebitda LMT 1.9x 1.5x 1.2x 1.0x 0.8x 0.4x 0.2x 0.8x 0.8x 0.7x 0.6x 0.6x Net financial debt 578,556 509,022 434,419 371,606 335,545 187,001 106,050 385,980 447,504 403,727 375,694 397,748 (+) Financial debt 1,049,515 1,053,348 1,051,539 1,001,134 992,689 946,347 941,506 792,790 784,677 837,525 858,435 1,069,578 (+) Debentures 921,999 926,341 926,422 879,343 873,893 179,828 175,216 128,460 282,414 722,570 712,143 918,027 (+) Financing 113,181 112,307 111,365 110,684 109,809 716,882 719,394 619,532 452,592 107,117 138,275 136,897 (+) Accounts payable - company acquisition 14,335 14,700 13,752 11,106 8,987 49,637 46,896 44,798 49,671 7,838 8,017 14,655 (-) Cash and cash equivalents (470,959) (544,326) (617,120) (629,527) (657,144) (759,346) (835,456) (406,810) (337,173) (433,798) (482,741) (671,830) EBITDA LTM 308,921 337,659 347,653 365,564 418,004 442,034 474,524 490,367 537,315 565,816 590,126 618,357 (+) Net profit 73,616 89,705 93,877 107,343 138,580 151,794 179,728 228,749 265,652 307,408 330,859 320,618 (-) Financial result (65,441) (64,726) (64,140) (63,160) (58,606) (58,607) (51,316) (44,479) (47,208) (44,871) (47,372) (49,106) (-) Income tax and social contribution (54,223) (64,495) (62,928) (65,137) (82,294) (87,617) (98,967) (65,627) (79,339) (71,702) (70,838) (107,146) (-) Depreciation and amortization of intangible (116,181) (118,756) (121,067) (122,457) (127,905) (133,365) (138,454) (145,353) (143,703) (141,244) (140,860) (142,752) (-) Provisions for taxes, labour and civil risks 40 27 (5,641) (7,467) (10,620) (10,651) (6,059) (6,159) (1,412) (591) (198) 1,266 (ii) EBITDA LTM/Net Financial Expenses greater than or equal to one point five (1.5) time (in thousands of R$) 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 (ii) EBITDA LTM/ Net financial expense EBITDA LTM 308,921 337,659 347,653 365,564 418,004 442,034 474,524 490,367 537,315 565,816 590,126 618,357 (+) Net profit 73,616 89,705 93,877 107,343 138,580 151,794 179,728 228,749 265,652 307,408 330,859 320,618 (-) Financial result (65,441) (64,726) (64,140) (63,160) (58,606) (58,607) (51,316) (44,479) (47,208) (44,871) (47,372) (49,106) (-) Income tax and social contribution (54,223) (64,495) (62,928) (65,137) (82,294) (87,617) (98,967) (65,627) (79,339) (71,702) (70,838) (107,146) (-) Depreciation and amortisation of goodwill (116,181) (118,756) (121,067) (122,457) (127,905) (133,365) (138,454) (145,353) (143,703) (141,244) (140,860) (142,752) (-) Provisions for taxes, labour and civil risks 40 27 (5,641) (7,467) (10,620) (10,651) (6,059) (6,159) (1,412) (591) (198) 1,266 Net financial expense LTM 65,441 64,726 64,140 63,160 58,606 58,607 51,316 44,479 47,208 44,871 47,372 49,106 (+) Financials expenses 134,253 138,199 144,936 148,468 149,741 155,121 155,049 152,075 146,371 130,738 114,418 98,266 (-) Financial income (68,812) (73,473) (80,796) (85,308) (91,135) (96,514) (103,733) (107,596) (99,163) (85,867) (67,046) (49,159) FINEP requires that the Company ensure payment of any obligations arising from the contract through the issue of a bank surety letter in the amount of the balance released, this clause being indispensable for releasing the amounts.

g. Limits for use of financing already contracted See item 10.1.f. h. Material changes in each item of the financial statements The tables below include financial information from the past three years (ended December 31, 2017, 2016 and 2015). See below the principal accounts and variations that, in the opinion of the management, provide a better understanding of our performance. Income Accounts Income Statement (Consolidated) In thousands of Brazilian reais - R$, except percentage 2017 AV (%) AV (bps) 2017/2016 2016 AV (%) AV (bps) 2016/2015 2015 AV (%) AV (bps) 2015/2014 AH (%) AH (%) 2017/2016 2016/2015 Revenue 2,586,514 108.5% -120.3 2,300,328 109.7% -93.2 2,097,243 110.7% -126.5 12.4% 9.7% Patient Service Center (PSCs) 2,167,524 91.0% -92.5 1,925,950 91.9% -100.3 1,760,130 92.9% -146.7 12.5% 9.4% B2B 418,990 17.6% -27.8 374,378 17.9% 7.1 337,114 17.8% 20.2 11.9% 11.1% - 0.0% 0.0 Revenue deduction (203,502) 8.5% -120.3 (204,215) 9.7% -93.2 (202,279) 10.7% -126.5-0.3% 1.0% - 0.0% 0.0 Net revenue 2,383,012 100.0% 0.0 2,096,113 100.0% 0.0 1,894,960 100.0% 0.0 13.7% 10.6% - 0.0% 0.0 Cost of services (1,646,936) 69.1% -221.4 (1,495,062) 71.3% -213.6 (1,392,074) 73.5% -271.4 10.2% 7.4% - 0.0% 0.0 Personnel and medical services (843,894) 35.4% -2.4 (742,797) 35.4% -163.7 (702,544) 37.1% 24.1 13.6% 5.7% Materials and exam intermediation (233,572) 9.8% -14.3 (208,446) 9.9% -11.1 (190,552) 10.1% -8.6 12.1% 9.4% General services, rentals and utilities (460,699) 19.3% -91.8 (424,467) 20.3% -96.2 (401,961) 21.2% 476.5 8.5% 5.6% General expenses (8,602) 0.4% 0.8 (7,404) 0.4% 5.3 (5,698) 0.3% -715.9 16.2% 29.9% Depreciation and Amortization (100,169) 4.2% -113.7 (111,949) 5.3% 52.2 (91,319) 4.8% -47.5-10.5% 22.6% - 0.0% 0.0 Gross Profit 736,075 30.9% 221.4 601,051 28.7% 213.6 502,886 26.5% 271.4 22.5% 19.5% 0 0.0% 0.0 Operating income (expenses) (259,205) 10.9% -163.1 (262,196) 12.5% -159.4 (267,247) 14.1% 184.2-1.1% -1.9% General and administrative (213,952) 9.0% -103.6 (209,913) 10.0% -6.9 (191,072) 10.1% -88.5 1.9% 9.9% (42,583) 1.8% 19.3 (33,404) 1.6% -5.0 (31,139) 1.6% 13.6 27.5% 7.3% Other operating income (expenses), net (4,868) 0.2% -45.6 (13,838) 0.7% -132.9 (37,686) 2.0% 157.0-64.8% -63.3% Reversal (provision) for tax, labor and civil risks 1,266-0.1% -34.7 (6,159) 0.3% -10.0 (7,467) 0.4% 18.8-120.5% -17.5% Equity in subsidiaries 933 0.0% 1.4 1,119-0.1% -4.7 117 0.0% -0.7-16.6% 860.2% - 0.0% 0.0 Operating profit before financial result 476,871 20.0% 384.5 338,855 16.2% 373.1 235,639 12.4% 87.2 40.7% 43.8% - 0.0% 0.0 Financial result (49,106) 2.1% -6.1 (44,479) 2.1% -12.1 (63,159) 3.3% 32.3 10.4% -29.6% Financial income 49,159 2.1% -310.7 108,368 5.2% 6.7 85,308 4.5% 53.3-54.6% 27.0% Financial expenses (98,266) 4.1% -316.8 (152,847) 7.3% -5.4 (148,468) 7.8% 85.6-35.7% 2.9% - 0.0% 0.0 Earnings before income tax and social contribution 427,765 18.0% 390.7 294,376 14.0% 494.2 172,480 9.1% 54.9 45.3% 70.7% - 0.0% 0.0 Income tax and social contribution (107,146) 4.5% 136.5 (65,627) 3.1% -3.1 (65,137) 3.4% -0.5 63.3% 0.8% - 0.0% 0.0 Profit for the year 320,618 13.5% 254 228,750 10.9% 52.5 107,343 5.7% 55.4 40.2% 113.1% Gross Revenues Gross revenues increased by 12.4% in 2017 compared to 2016, to R$ 2,586.5 million. This growth is due to the performance of our brands, particularly our regional brands and Rio de Janeiro s brands, and to our organic expansion, with the opening of 30 Patient Service Centers throughout the year. In 2016, gross revenues increased by 9.7% to R$ 2,300.3 million. This result was mainly due to the final phases of the turnaround process of our operations in Rio de Janeiro; repositioning of our a+ brand for the upper-intermediate segment; and expansion of the Fleury brand.

Net revenues In thousands of Brasilian reais- R$, except percentage 2017 AH (%) 2017/2016 2016 AH (%) 2016/2015 2015 AH (%) 2015/2014 Taxes (159,067) 11.9% (142,107) 8.9% (130,545) 9.9% Cancellations (44,435) -28.5% (62,108) -13.4% (71,733) -12.2% Total (203,502) -0.3% (204,215) 1.0% (202,278) 0.9% Net Revenue 2,383,012 13.7% 2,096,113 10.6% 1,894,960 12.9% In the past 3 years, net revenues have surpassed gross revenues due to more efficiency in the cancellation of operations. Cost of services provided The cost of services provided was R$ 1,646.9 million in 2017, up 10.2% compared to 2016. Cost efficiency, measured on the basis of its share of net revenues, was 69.1%, up 221 bps compared to the previous year. The Personnel and Medical Services line continues to be the most representative one, accounting for 35.4% of net revenues, and remaining unchanged compared to 2016. Principal gains resulted from Depreciation and Amortization and General Services, Rentals and Utilities, which increased by 114 bps and 92 bps, respectively. The improved results in these lines are due to: review of the useful lives of specific medical equipment, and end of the useful lives of some intangible assets, with reduction of depreciation and amortization; (ii) review and renegotiation of agreements with suppliers; and (iii) renegotiation of rents. In 2016, the cost of services provided was R$ 1,495.1 million, an increase of 7.4% against 2015. Compared to net revenues in the period, costs accounted for 71.3%, down 214 bps compared to the same period in the previous year. The Personnel and Medical Services line continues to be the most representative one, accounting for 35.4% of net revenues. Salaries and charges represented the greatest dilution in the personnel item as a result of operational efficiency gains, and reduction in the number of employees (decrease of 1.6% in headcount in the 12-month period), despite the increase in the volume of operations and salary adjustments. The General Services, Rentals and Utilities line increased by 5.6% compared to 2015, although its share of net revenues fell from 21.2% in the previous year to 20.3% in 2016. Finally, the third most representative line in costs, that is, "Materials and Exam Intermediation," rose 9.4% between 2016 and 2015, bur remained stable regarding its participation on net revenues of approximately 10%. Gross profit Gross profit increased significantly in the past 3 years, as a result of increased cost controls, efficiency gains, and productivity gains that reflected the dilution of fixed costs, particularly in the general expenses line. Gross profit in 2017 increased by 22.5% to R$ 736.1 million, with gross margin of 30.9%. In 2016, Gross profit rose by 19.5% to R$ 601.0 million, with gross margin of 28.7%. Operating expenses In 2017, operating expenses amounted to R$ 259.2 million, down 1.1% compared to 2016.

The general and administrative expenses line amounted to R$ 213.9 million, or 9.0% of net revenues, up 104 bps compared to 2016. In this line, the item institutional and legal matters, consulting and licenses amounted to R$ 9.8 million, having recorded the best dilution, 83 bps. Depreciation and amortizations totaled R$ 42.6 million, or 1.8% of net revenues, up 19 bps compared to the previous year. The result was due to the increased amortization of software developed internally, after SAP reimplementation in 2016. Other operating revenues and expenses amounted to R$ 4.9 million, corresponding to 0.2% of net revenues, up 46 bps compared to 2016. The main impacts relate to the write-off of assets in 2016. Reversal of (provision for) tax, labor and civil risks amounted to -R$ 1.3 million, or -0.1% of net revenues, having improved 35 bps compared to the same period of the previous year. Finally, the equity pick-up line totaled R$ 0.9 million, down 16.6% compared to 2016. In 2016, operating expenses reached R$ 262.2 million, down 1.9% compared to the same period of the previous year. The general and administrative expenses line amounted to R$ 209.9 million, or 10% of net revenues. Expenses for Consulting services and promotions and events recorded the highest growth in the period due to the procurement project, and expenses with surveys relating to the medical area, activation of customers, the "Fleury 90 years" campaign, etc. Personnel and medical services expenses dropped from R$ 124.7 million in 2015 to R$ 120.7 million in 2016. Finally, other operating revenues/expenses, net fell from R$ 37.7 million in 2015 to R$ 13.8 million in 2016. Financial income In 2017, financial income was R$ 49.1 million, an increase of 10.4% compared to the previous year. In 2016, financial income was R$ (44.5) million, down 29.6% versus 2015. Income and social contribution taxes In 2017, the effective rate was 25.0%, totaling IR [Income Tax] / CSLL [Social Contribution] of R$ 107.1 million. In 2016, the effective rate was 22.3%, resulting in IR/CSLL of R$ 65.6 million. In 2016 and 2017, the Company used the maximum benefit generated from the use of earnings distribution through interest on shareholders equity. In adittion, the Company is always searching for a better use of tax benefits.

Balance Sheet Balance Sheet (Consolidated) In thousands of Brazilian reais - R$, except percentage Asset 2017 AV (%) AV (bps) 2017/2016 2016 AV (%) AV (bps) 2016/2015 2015 AV (%) AH (%) 2017/2016 AH (%) 2016/2017 Current assets Cash and cash equivalents 337,544 9.6% -87.1 313,834 10.4% -562.8 514,886 16.1% 7.6% -39.0% Marketable securities 334,286 9.5% 638.4 92,976 3.1% -48.5 114,642 3.6% 259.5% -18.9% Derivative financial instruments 17 0.0% 0.0-0.0% 0.0-0.0% 0.0% 0.0% Trade receivables 512,241 14.5% 111.3 403,041 13.4% 100.3 397,520 12.4% 27.1% 1.4% Inventories 21,545 0.6% -44.0 31,598 1.1% 53.9 16,405 0.5% -31.8% 92.6% Taxes recoverable 49,286 1.4% -82.3 66,745 2.2% -11.7 74,913 2.3% -26.2% -10.9% Receivables 3,854 0.1% -0.6 3,454 0.1% 8.9 834 0.0% 11.6% 314.0% Other assets 8,264 0.2% -48.4 21,576 0.7% 30.4 13,247 0.4% -61.7% 62.9% Total current asset 1,267,037 35.9% 487.3 933,224 31.0% -429.5 1,132,448 35.3% 35.8% -17.6% Noncurrent Taxes recoverable - 0.0% 0.0-0.0% -46.1 14,758 0.5% 0.0% -100.0% Judicial deposits 47,521 1.3% -7.1 42,634 1.4% 10.0 42,238 1.3% 11.5% 0.9% Deferred income tax and social contribuiton - 0.0% 0.0-0.0% 0.0% 0.0% Credits receivable 12,694 0.4% -2.2 11,470 0.4% -58.7 31,052 1.0% 10.7% -63.1% Other assets 9,555 0.3% -24.8 15,596 0.5% -8.1 19,205 0.6% -38.7% -18.8% Total long-term assets 69,770 2.0% -34.1 69,700 2.3% -102.8 107,253 3.3% 0.1% -35.0% Investments 11,296 0.3% 2.9 8,762 0.3% 5.3 7,634 0.2% 28.9% 14.8% Property and equipment 641,920 18.2% 254.9 470,409 15.6% 181.9 443,183 13.8% 36.5% 6.1% Intangible assets 1,537,309 43.6% -711.0 1,523,724 50.7% 345.1 1,513,717 47.2% 0.9% 0.7% Total noncurrent assets 2,260,295 64.1% -487.3 2,072,595 69.0% 429.5 2,071,788 64.7% 9.1% 0.0% TOTAL ASSETS 3,527,332 100.0% 3,005,818 100.0% 3,204,236 100.0% 17.4% -6.2% Liabilities and equity Current liabilities Financing 30,948 0.9% 23 19,532 0.6% 37 9,080 0.3% 58.4% 115.1% Debentures 284,693 8.1% 380 128,460 4.3% (132) 179,343 5.6% 121.6% -28.4% Finance lease 606 0.0% 2-0.0% - - 0.0% 0.0% 0.0% Derivative financial instruments - 0.0% (1) 252 0.0% 1-0.0% -100.0% 0.0% Trade payables 148,485 4.2% (55) 143,050 4.8% 150 104,517 3.3% 3.8% 36.9% Payroll and related charges 100,354 2.8% (26) 93,246 3.1% 48 83,890 2.6% 7.6% 11.2% Taxes and contributions payable 30,634 0.9% 6 24,304 0.8% 2 25,124 0.8% 26.0% -3.3% Accounts payable - company acquisition 1,855 0.1% 4 243 0.0% (14) 4,616 0.1% 664.2% -94.7% Dividends payable and interest on equity 41,420 1.2% 117 14 0.0% 0-0.0% 0.0% 0.0% Other accounts payable 151 0.0% 0 81 0.0% (35) 11,327 0.4% 86.4% -99.3% Total current liabilities 639,146 18.1% 451 409,182 13.6% 57 417,897 13.0% 56.2% -2.1% 0.0% 0.0% Noncurrent liabilities 0.0% 0.0% Financing 105,949 3.0% 21 84,029 2.8% (38) 101,604 3.2% 26.1% -17.3% Debentures 633,334 18.0% (201) 600,000 20.0% (188) 700,000 21.8% 0.0% 0.0% Finance lease 6,769 0.2% 19-0.0% - - 0.0% 0.0% 0.0% Deferred income tax and social contribution 362,777 10.3% 63 290,232 9.7% 214 240,951 7.5% 25.0% 20.5% Provision for tax, labor and civil risks 30,480 0.9% (27) 34,107 1.1% 8 33,759 1.1% -10.6% 1.0% Taxes and contributions payable 29,549 0.8% (65) 44,798 1.5% (1) 48,095 1.5% -34.0% -6.9% Accounts payable - company acquisition 12,800 0.4% 11 7,746 0.3% 6 6,490 0.2% 65.2% 19.4% Total noncurrent liabilities 1,181,658 33.5% (180) 1,060,913 35.3% 0 1,130,899 35.3% 11.4% -6.2% Equity Share capital 1,413,608 40.1% (652) 1,400,453 46.6% 353 1,379,747 43.1% 0.9% 1.5% Capital reserve 17,923 0.5% 19 9,412 0.3% 13 5,709 0.2% 90.4% 64.9% Capital reserve - options granted recognized 78 0.0% (182) 77 1.8% 181 242 0.0% 1.8% -68.3% Legal reserve 70,681 2.0% 19 54,650 1.8% 47 43,213 1.3% 29.3% 26.5% Investments reserve - 0.0% - - 0.0% (673) 215,762 6.7% 0.0% -100.0% Retained profit 204,238 5.8% 579-0.0% - - 0.0% 0.0% 0.0% Additional dividends proposed - 0.0% (237) 71,133 2.4% 203 10,766 0.3% -100.0% 560.7% Total equity 1,706,528 1,535,725 1,655,439 Total liabilities and equity 3,527,332 100% 3,005,820 100% 3,204,236 100% 17.4% -6.2%

Comparison between the years ended December 31, 2017 and December 31, 2016 Assets Current Assets Cash and cash equivalents Cash and cash equivalents increased by 7.6% in 2016, to R$ 337.5 million. This growth is mainly explained by cash generation in the period, due to the increase in operations. Securities Securities amounted to R$ 334.3 million, up 259.5% compared to 2016. As with cash and cash equivalents, this growth was due to the increase in operations. Accounts receivable days. Accounts receivable totaled R$ 512,2 million in 2017. The average term of receipts was 73 Non-current assets Property and equipment Property and equipment balance was R$ 641.9 million in 2017, a growth of 36.5% against the previous year. The growth reflects our investments in the expansion plan, with the opening of new service units. Intangible assets Intangible assets amounted to R$ 1,523.3 million in 2017, remaining stable against 2016. Liabilities Current liabilities Loans, financing and debentures The balance of loans, financing and debentures in 2017 was R$ 315.6 million. Ninety percent of this line refers to debentures issued by the Company. For more information see 10.1.f. Suppliers The balance of suppliers increased by 3.8% between 2017 and 2016, totaling R$ 148.5 million. This line is almost entirely denominated in Brazilian currency. Salaries and charges payable The balance of salaries and charges payable increased by 7.6% in 2017, to R$ 100.4 million. This variation is explained, among other factors, by the annual increase in salaries, in accordance with the collective bargaining agreement. Non-current liabilities Loans, financing and debentures The balance of loans, financing and debentures in 2017 was R$ 739.3 million. Eighty-six percent of this line refers to debentures issued by the Company. For more information see 10.1.f.

Deferred income and social contribution taxes Deferred income and social contribution taxes reached R$392.8 million in 2017, or an increase of 25.0% against 2015. This growth is justified, among other factors, by the effect of goodwill amortization for tax purposes, which rose from R$ 1,157.7 million in 2016, to R$ 1,324.0 million in 2017. Shareholders' equity Capital Stock As of December 31, 2017, our capital stock was R$ 1,413.6 million. On November 1, 2016, the Board of Directors approved a capital increase in order to fulfill the exercise of stock options under the Company's Stock Options Plan, in the amount of R$ 8.4 million, through the issue of 280,644 shares, and R$ 4.6 million, through the issue of 520,654 shares, in May and October 2017, respectively. On June 26, 2017, the Extraordinary Shareholders Meeting approved the split of common shares without any change in the amount of the Company s Capital Stock. As from June 27, 2017, each share issued by the Company is represented by two (2) shares of the same type. Accordingly, 157,395,769 shares are now represented by 314,791,538 registered, book-entry common shares with no par value. Accordingly, the Company closed the year with 315,312,192 shares. Comparison between the years ended December 31, 2016 and December 31, 2015 Assets Current Assets Cash and cash equivalents Cash and cash equivalents decreased by 39.0% in 2016, to R$ 313.8 million. This reduction is mainly explained by the payment of dividends and interest on shareholders equity (R$331.3 million) in December 2016. Securities Securities totaled R$ 92.9 million, down 18.9% compared to 2015. As with cash and cash equivalents, this reduction is due to the payment of extraordinary dividends and interest on shareholders equity. Accounts receivable Accounts receivable totaled R$ 403.0 million in 2016. The average term of receipts was 65 days (against 71 days in 2015), as a result of the continuous improvement in accounts receivable.

Noncurrent assets Property and Equipment The balance of property and equipment was R$470.4 million in 2016, mainly impacted by the growth in building in progress and improvements to third-party property, which totaled R$34.5 million (against R$0.8 million in 2015) and R$56.2 million (against R$31.4 million in 2015). Intangible assets Intangible assets amounted to R$ 1,523.7 million in 2016, against R$ 1,513.7 million in 2015. This increase is basically explained by the growth in the "software development" line, which rose 133.4% between 2016 and 2015, to R$ 78.8 million. Liabilities Current Liabilities Loans, financing and debentures The balance of loans, financing and debentures in 2016 was R$ 148.0 million. Eighty-seven percent of this line refers to debentures issued by the Company. For more information see 10.1.f. Suppliers The balance of suppliers increased by 37.0% between 2016 and 2015, totaling R$143.0 million. This line is almost entirely denominated in Brazilian currency. Salaries and charges payable The balance of salaries and charges payable increased by 11.2% in 2016, to R$93.2 million. This variation is explained, among other factors, by the increase in the provision for employees' profit sharing. Non-current liabilities Loans, financing and debentures The balance of loans, financing and debentures in 2016 was R$ 684.0 million. Eighty-eight percent of this line refers to debentures issued by the Company. For more information see 10.1.f. Deferred income and social contribution taxes Deferred income and social contribution taxes reached R$ 290.2 million in 2016, or an increase of 20.5% against 2015. This growth is justified, among other factors, by the effect of goodwill amortization for tax purposes, which rose from R$ 984 million in 2015, to R$ 1,157.7 million in 2016.

Shareholders' equity Capital stock As of December 31, 2016, our capital stock was R$ 1,400,453 million. On November 1, 2016, the Board of Directors approved a capital increase in order to fulfill the exercise of stock options under the Company's Stock Options Plan, in the amount of R$ 20.7 million, through the issue of 821,769 shares.

10.2. Officers should comment on: a. The issuer's results of operations, particularly: i. Descriptions of any major components of revenues Our revenue from services mainly consists of payments we receive from healthcare operators, laboratories, hospitals, companies and private customers as a result of our diagnostic, preventive and therapeutic medicine services. Patient Service Centers ( PSCs ) As of December 2017, there are 168 units accounting for 83.8% of Fleury Group's gross revenues, which are located in the states of São Paulo, Rio de Janeiro, Rio Grande do Sul, Pernambuco, Bahia, Paraná and in the Federal District. In-hospital operations These operations account for 14.8% of revenues by providing exams and diagnoses in 23 hospital institutions as of December 2017. Reference Laboratory Related to medium and high-complexity exams provided for other laboratories, hospitals and clinics throughout Brazil, thus enabling them to extend their range of offerings and ensure unique diagnostic quality. This service accounts for 1.2% of the company's gross revenues. Preventive Medicine: Preventive health care solutions for companies accounted for about 0.2% of gross revenues. ii. Factors that materially affected results of operations See item 10.1, letter h. b. Revenue variations attributable to fluctuation in prices, exchange rates, inflation, changes in volumes and introduction of new products and services. 2017 2016 2015 IPCA Inflation (%) 2.95 6.30 10.70 IGPM Inflation (%) -0.53 7.17 10.50 Selic rate (%) 7.10 13.75 14.25 Exchange rate (R$/US$) 3.31 3.26 3.96 Nº of private health insurance beneficiaries 47,304,945 47,898,787 49,898,787 Source: IBGE, Central Bank of Brazil and ANS The increase of the Company s gross revenues in recent years has been directly related to: (i) offering more services; (ii) more volume of tests performed in the PSCs; (iii) changes in the services mix, with a higher share of more complex, higher priced and higher added-value exams (iv) annual realignment of exams prices and (v) M&As made in recent years. The prices of services provided to healthcare operators are renegotiated annually based on the Consumer Price Index (CPI). In the last three (3) yearly negotiations, price increases have on average lagged behind the IPCA cumulative rise in the previous 12 months.

In relation to numbers of exams realized, we reached 68.5 million in 2017, an increase of 13.6% in comparison to the 60.3 million provided in 2016. In 2015, we realized 58.1 million. Numbers of exams by business unit evolved as follows: In thousands 2017 Var. 2017/2016 2016 Var. 2016/2015 2015 Patiante Service Center 39,668.29 8.5% 36,550.24 5.1% 34,767.52 B2B 28,825.92 21.4% 23,747.52 1.9% 23,296.00 Hospital Operations 27,749.74 22.0% 22,741.41 1.9% 22,319.54 Lab-to-lab 815.98 6.3% 767.88-4.6% 804.87 Preventive Medicine 260.20 9.2% 238.23 38.8% 171.59 Comparison between fiscal years ended December 31, 2017 and December 31, 2016 In 2017, Fleury Group's gross revenues grew 10.1% to reach R$2,586.5 million. The numbers posted for each of the company's lines of business are shown in the table below: 2017 vs 2016 Patiante Service Center 9.7% Fleury Brand 10.8% Regional Brands excl. RJ 17.4% Brands RJ 13.0% B2B 11.9% The Fleury brand posted 10.8% growth. Initiatives to boost occupancy of imaging equipment and constant improvements in service levels helped reach this growth rate. Our regional brands excluding Rio de Janeiro showed a 17.4% increase in gross revenues, mainly due to brands a + SP (24.7%) and a + PR (19.9%). Rio de Janeiro's regional brands posted 13.0% growth in revenues, driven by higher usage of Patient Service Centers, with higher occupancy of imaging equipment and clinical analysis volumes. Finally, diagnostic operations in hospitals grew 11.9% against the previous year as we added new contracts. Comparison between fiscal years ended December 31, 2016 and December 31, 2015 In 2016, Fleury Group's gross revenues grew 9.7% to reach R$2,300.3 million. The numbers for each of the company's lines of business are shown in the table below: 2016 vs 2015 Patiante Service Center 9.4% Fleury Brand 9.6% Regional Brands excl. RJ 15.2% Brands RJ 3.3% B2B 11.1% The Fleury brand posted 9.6% growth in the year. Initiatives to boost occupancy of imaging equipment and constant improvements in service levels helped reach this growth rate. Regional brands excluding Rio de Janeiro showed a significant 15.2% growth of gross revenues, mainly due to brands a + SP (19.5%) and a + PR (18.3%). Revenue from Rio de Janeiro's regional brands grew by 3.3%, but were negatively impacted by the closure of four Patient Service Centers in 2016, and positively by higher usage of Patient Service Centers, with a higher volume of clinical analyses. Finally, diagnostic operations in hospitals grew 11.1% against the previous year.

c. Impact of inflation, price variation of main inputs and products, currency exchange rate and interest rate on the issuer's results of operations and financial income Inflation The Company's costs and expenses are mainly impacted by inflation. A significant part of our costs and expenses are affected by salary adjustments arising from annual negotiations with labor unions. We have contracts with our suppliers that are affected by variation of annual IPCA and IGPM price indexes, in particular rents and cleaning, security and transportation services. In addition, our revenue from services is affected by price adjustments in our contracts with our payment sources, which are updated during annual negotiations based on the IPCA price index. Currency exchange rate On the impacts of the exchange rate, a small portion of our costs and expenses has direct exposure to the US dollar's exchange rate, mainly related to reagent costs for the clinical analysis process. Although most of our costs are denominated in Brazilian Reais, we may be indirectly impacted by dollar rate fluctuations, since we sign contracts with suppliers of medical materials, reagents and equipment who import some of their materials. Foreign currency liabilities exposed to currency risk at December 31, 2017 accounted for 0.13% of total consolidated current liabilities. Fleury Group holds assets in foreign currency (trade balance receivables) that account for 0.09% of total consolidated accounts receivable as of December 31, 2017, thus helping reduce its exposure to trade accounts payable in foreign currency. In addition, we have entered into derivative contracts to hedge exchange rates on acquisitions of services in foreign currency. The company had the following net exposure as of December 31, 2017 (US$1.00 - R$3.3074): 2017 US$ thousand R$ thousand Trade receivables 141 466 Inventories (261) (863) Deviivative financial instruments 5 17 Net Expouse (115) (380) We do not trade in derivatives for speculative purposes. We believe our internal controls are adequate to control risks associated with these derivatives and ensure they are properly recognized in our financial statements. Interest rate Our results from operations are also exposed to fluctuating interest rates. We released debentures and financing denominated in Brazilian Reais, which are adjusted based on the interbank rate (CDI) in most cases. Our other loans and financing are adjusted based on the long-term rate (TJLP). For more details of loans and financing see item 10.1.f

10.3. The Management should comment on material effects that the events mentioned below have caused or are expected to cause in relation to the issuer's financial statements and results: a. Introduction or disposal of operating segment In 2017, Fleury Group did not include or reduce the types of service segments in which it operates. b. Incorporation, acquisition or sale of equity interest As announced in a Material Fact disclosed on September 14, 2017, the Company expanded its current clinical analysis offering in the South region and strengthened its diagnostic medicine portfolio by signing a purchase and sale agreement on the abovementioned date to acquire 100% of the share capital of Serdil Serviço Especializado em Radiodiagnóstico Ltda., a long established company with a 45-year history of operating in the diagnostic medicine segment and providing imaging exams in the city of Porto Alegre, state of Rio Grande do Sul. On November 30, 2017 (acquisition date), the conditions precedent provided for in the agreement were met and the subsidiary Fleury Centro de Procedimentos Médicos S.A (CPMA) acquired control of 100% of Serdil's share capital. The acquisition's base price of R$ 29,784 is subject to adjustment resulting from variation in working capital and estimated net debt, which will be deducted in the amount of R$ 5,931 to settle loans and financing, resulting in the amount of R$ 23,853 of which R$ 13,880 were paid on November 30, 2017 and the remainder is subject to certain withholdings related to legal liabilities and customer relationships. Gross purchase price 29,784 Monetary restatement 44 (-) Deduction for loans paid off (5,931) (-)Deduction for transfer of consulting services (991) Cash payment (12,889) Purchase price adjustment (2,035) Balance payable on 12. 31.2017 7,982 Current 1,612 Noncurrent 6,370 Net identifiable assets acquired and goodwill The difference between the consideration transferred in exchange for control of Serdil and its net assets at fair value resulted in the recognition of goodwill and certain intangible assets. The allocation of the amount / consideration paid was based on a preliminary assessment of the fair value of the net assets acquired from Serdil as of November 30, 2017. The fair values of the business combination's identifiable assets acquired and liabilities assumed were estimated using the discounted cash flow and replacement cost method. The fair value estimates using the discounted cash flow methodology were based on a 15.1% annual discount rate. The portion of this business combination's unidentifiable net assets was allocated as goodwill. Assets and liabilities acquired and recognized on the acquisition date are shown below:

Assets 11/30/2017 Cash and cash equivalents 173 Accounts receivable 1,072 Inventory 59 Other assets 322 Property and equipment and intangible assets 8,063 Total assets 9,689 Liabilities Suppliers 358 Loans and financing 4,500 Tax liabilities 1,810 Labor liabilities 619 Other liabilities 419 Total Liabilities 7,706 Net assets acquired 1,983 The following table shows the allocation of price of the consideration transferred: Gross purchase price 29,784 Reference net indebtedness (5,931) Purchase price, net of indebtedness 23,853 Price adjustment (2,036) Adjusted purchase price, net 21,817 Serdil's shareholders' equity (1,983) Surplus value/loss on assets and liabilities (871) Intangible Assets (643) Deferred Income (IR) and social contribution (CS) tax liabilities on adjustments 515 Goodwill on business combination 18,835 Identified intangible assets have the following useful lives: Amount allocated Remaining useful life Brand 556 69 months Brand contract 87 12 months Total intangible assets (surplus value) 643 Provision for labor, tax and civil law risks Fleury CPMA and Serdil's former shareholders agreed that all contingencies relating to periods prior to the signing of the purchase agreement would be the responsibility of the former shareholders and therefore these amounts would be reimbursed or deducted from debt to be paid. The investee recognized a provision for contingencies in the amount of R$ 340, for which its contra entry was also recognized in other assets for reimbursement purposes by the former shareholders at the time it occurr.

Cash generating unit Goodwill and intangible asset allocations are associated with the Diagnostic Medicine cash-generating unit. The consolidated financial statements include the balances of Fleury S.A., its subsidiaries and special purpose entities represented by the exclusive investment funds as shown below: % interest Company. Type 2017 2016 Description of Operations Bradesco Fundo de Investimento Renda Fixa Crédito Privado Exclusivo Beta Direct 100% 100% Exclusive investment fund Santander Fi Exclusivo Alpha Renda Fixa Crédito Privado Longo Prazo Direct 100% 100% Exclusive investment fund Fleury Centro de Procedimentos Médicos Avançados ( Fleury CPMA ) Direct 100% 100% Concentrates Diagnostic Imaging activities in certain hospitals Serdil Serviço Especializado em Radiodiagnóstico Ltda.1 Indirect 100% 0% Diagnostic medicine operation - imaging exams in the city of Porto Alegre, Rio Grande do Sul Jointly controlled Recognized using the equity accounting method, with its indirect interest being shows below: % interest Company. Papaiz Associados Diagnóstico por Imagem S/S Ltda. Type 201 7 2016 Description of operations Indire 51% 51% ct Odontological radiology operation c. Unusual events or operations Not applicable.

10.4. The management should comment on: a. significant changes in accounting practices There were no significant changes in accounting practices in 2017. b. significant effects of changes in the accounting practices There were no significant changes in accounting practices in 2017. c. qualifications and emphases in the auditor's report There are no restriction or emphasis paragraphs in the auditors report.

10.5. Officers should report critical accounting policies adopted by the issuer and comment on them, in particular using management s accounting estimates for matters that are uncertain but material when describing its financial condition and results, and require subjective or complex judgments such as provisions, contingencies, revenue recognition, tax credits, longterm assets, useful life of non-current assets, pension plans, foreign currency conversion adjustments, environmental recovery costs, or impairment testing criteria for financial assets and financial instruments Financial asset impairment Financial assets, except for those designated at fair value through profit or loss, are tested for impairment at the end of each reporting period. Impairment losses are recognized if, and only if, there is objective evidence of a fall in recoverable amount of a financial asset as a result of one or more events that occurred after their initial recognition, with impact on estimated future cash flows from this asset to be discounted at the original interest rate applicable to the financial assets. For certain categories of financial assets, such as accounts receivable, assets that do not show impairment when individually tested may subsequently do so in a collective assessment. Objective evidence of impairment for a receivable portfolio may include Fleury Group s past experience of collecting payments, as well as observable changes in national or local economic conditions related to defaulted receivables. A financial asset s book value is reduced directly by impairment loss for all financial assets, except for accounts receivable, in which the book value is reduced by the use of an account to recognize estimated losses. Subsequent recoveries of amounts previously written off are credited to this account. Changes in the book value of this estimate are recognized in income. Intangible Assets - Goodwill Goodwill results from the acquisition of subsidiaries and represents the excess (i) of consideration transferred, (ii) the value of the noncontrolling interest in the acquiree and (iii) the fair value on the date of acquisition of anyx previous equity interest in the acquire, over the fair value of the identifiable net assets acquired. If the total consideration transferred, noncontrolling interest recognized and holding previously measured at fair value is less than the fair value of the net assets of the subsidiary acquired, in the case of a bargain purchase, the difference is recognized directly in the statement of income. For impairment testing purposes, goodwill is allocated to each of Fleury Group's cash generating units or groups of cash-generating units, provided they do not exceed the operating segments that will be benefiting from the business combination's synergies. The cash generating units to which the goodwill has been allocated are subject to impairment testing on the balance sheet date at the end of each year or, if there is any evidence, this procedure may take place more frequently. If the recoverable value of a cash-generating unit is less than its book value, an impairment loss is first allocated to reduce the book value of any goodwill allocated to the unit and, subsequently, to the unit's other assets, in proportion to the book value of each of its assets. Any impairment loss for goodwill is recognized directly in income for the year. An impairment loss may not be reverted in subsequent years. Impairment of non-financial assets, except goodwill At the end of each year, Fleury Group reviews the book value of its tangible and intangible assets to determine whether there are any signs of impairment. If there is such a sign, the asset's book value is estimated for the purpose of measuring the impairment loss amount, if there is.