GRUPO CLARÍN S.A.

Annual Report and Consolidated Monetary Statements

For the 12 months ended December 31, 2020,

offered on a comparative foundation

English free translation of the Monetary Statements and Experiences initially issued in Spanish.

GRUPO CLARÍN S.A.

2020 ANNUAL REPORT

To the Shareholders of

Grupo Clarín S.A.

We hereby submit on your consideration the Annual Report and Exhibit, the Separate Assertion of Monetary Place, the Separate Assertion of Complete Earnings, the Separate Assertion of Adjustments in Shareholders’ Fairness and the Separate Assertion of Money Flows and Notes of Grupo Clarín S.A. (hereinafter, “the Firm” or “Grupo Clarín”) for fiscal 12 months No. 22 ended December 31, 2020 and the Consolidated Monetary Statements as of December 31, 2020.

The primary subsidiaries during which Grupo Clarín S.A. has a direct or oblique controlling curiosity are: Arte Gráfico Editorial Argentino S.A. (AGEA), Compañía Inversora en Medios de Comunicación S.A. (CIMECO), Arte Radiotelevisivo Argentino S.A.(ARTEAR), GC Gestión Compartida S.A., Inversora de Eventos S.A.(IESA) and Radio Mitre S.A.

2020 MACROECONOMIC ENVIRONMENT

The Argentine financial system closes the 12 months 2020 amid an unprecedented disaster on a world scale, which considerably hindered the efficiency of the incoming administration in its first 12 months. Certainly, the outbreak of COVID-19 worsened the delicate scenario of an financial system which, within the first months of the 12 months, was restructuring its sovereign debt issued in international forex, looking for to normalize its efficiency and to stabilize its basic variables.

On this extremely unsure and sophisticated surroundings, native public insurance policies have been centered on flattening the an infection curve and minimizing the detrimental results of the pandemic on the inhabitants and on companies. To that finish, in March 20, the Nationwide Authorities ordered the Necessary and Preventive Social Isolation (hereinafter, ASPO, for its Spanish acronym), which was carried out in numerous phases in line with the actual scenario of every province.

Though this technique allowed the federal government to attain an preliminary success by way of the an infection stage, it generated an unprecedented collapse in non-public consumption and financial exercise, which was considerably extra extreme than in different international locations within the area. With the intention to keep away from social collapse and the large chapter of companies, a number of containment measures have been carried out, each at productive and social ranges, amongst which the next stand out:

1. The Emergency Household Earnings, which supplied social allowance in three phases to roughly 9 million individuals (many extra individuals than what the federal government had initially estimated); and
2. The Emergency Help Program for Work and Manufacturing, which assisted corporations within the epicenter of the disaster with the fee of fifty% of the web salaries of barely over 2.0 million workers (about one-third of the marginally over 6 million registered workers of the non-public sector).

Because of these help applications for individuals and companies and the collapse of income assortment ensuing from the extreme contraction of the GDP, the sharp deterioration of the fiscal accounts was a standard denominator for the world’s economies.

The distinction between Argentina and nearly all of the international locations on this planet was the supply of financing of those excessive fiscal deficits. Within the absence of voluntary financing from the Nationwide Treasury, the exponential enhance of public spending and the numerous deterioration of the first fiscal deficit of roughly 8.5% of GDP (~6.5% excluding curiosity funds on the

nation’s sovereign debt) was nearly wholly financed by way of an unprecedented forex challenge. In historic phrases, the fiscal deficit of the nation for 2020 was the very best of the final 45 years.

In a twin forex financial system akin to Argentina, the place there’s a low actual demand for the forex it points and stringent international forex restrictions, the surplus of pesos typically quickly interprets into an extra demand for US {dollars}. Beneath international trade management regimes, this extra demand for international forex generates will increase within the completely different trade charges of the US greenback current in Argentina and, subsequently, widens the gaps between the unofficial charges and the “official” ARS/USD trade fee.

Whereas these unsustainable rising gaps have an effect on the margin over costs, additionally they feed expectations of devaluation, even when the at the moment prevailing official trade fee is above the historic common and exports exceed imports. This widespread notion that the worth of the US greenback is affordable erodes each the flows on the exterior entrance and the Central Financial institution’s reserves. In an excessive scenario (which was luckily prevented within the 12 months underneath evaluation), the financial authority might find yourself with its reserve place being decimated, which might result in the acceleration of discreet will increase in official trade fee, exacerbating the disaster.

The foregoing is a broad description of the efficiency of the financial system throughout 2020. There may be at the moment a 70% hole between the blue-chip swap and the official trade fee. Initially of the 12 months, that hole was of 25/30% and it elevated uninterruptedly by way of mid-October when it reached a file excessive of 130%.

The exterior surplus confirmed a extreme decline. In actual fact, the “money” present account stability reported by the Central Financial institution, which by the tip of 2019 stood at barely above USD6.0 Bn, closes 2020 just about in equilibrium. This decline was coupled with the lower of the Central Financial institution’s gross reserves, which gathered till the start of December a lack of barely over USD6.0 Bn, resulting in important ranges of web reserves.

Normally, Argentine historical past exhibits that the influence of unbacked forex challenge on the costs of the financial system is commonly mirrored with a lag that may span a number of months, which primarily depends upon the diploma of belief within the course and experience of the administration.

On account of a number of components, amongst which essentially the most related are the strict lockdown ordered by the Nationwide Authorities in mid-March and the collapse of exercise / non-public consumption, the influence on costs of the mega-currency challenge carried out in 2020 was unprecedentedly low within the months following its implementation.

As a consequence, the Argentine financial system closed 2020 with a 36.1% inflation fee in retail costs. The inflation charges noticed in 2020 are principally accounted for by the linear and fewer unstable official ARS/USD trade fee (+40.5% point-to-point vs +58.4% in 2019), and, to a lesser extent, by the digital freezing of a lot of the utility tariffs (with fiscal price) and the continuity of the worth settlement program (“Precios Cuidados“).

In comparison with the +53.8% inflation fee recorded in 2019, there was a lower of virtually 18 share factors in 2020. Nonetheless, it ought to be famous that the figures of the final value index and the core inflation fee for the final month of the 12 months (+4.0% and +4.9%, respectively) have been the very best of the 12 months and distinction with the lower noticed on a point-to-point foundation. On an annualized foundation, the final index and the core inflation fee have been of 60% and 77%, respectively.

PERSPECTIVES FOR THE UPCOMING YEAR

The emergency forex points carried out by the primary developed economies in response to the outbreak of COVID-19 have formed, a priori, a positive situation for Argentina with ample liquidity, low efficiency of sovereign/company bonds, and excessive costs for agricultural commodities on a world stage, in addition to the anticipated robust restoration of our two primary buying and selling companions (China and Brazil.)

After the collapse in 2020, and so long as the well being scenario goes again to regular, the elemental variables of Argentine financial system are anticipated to enhance. However the foregoing, the efficiency will depend upon two components primarily: The extent to which public spending shall be normalized (and, therefore, the imbalance of public accounts) and the estimated forex challenge for its financing.

With 2021 being a 12 months of legislative elections during which the course of the financial insurance policies shall be subordinated to political wants in the direction of the election day, the main focus shall be on recovering a part of the misplaced floor by way of exercise/consumption, employment, and the buying energy of wages/pensions. The trade stability is a vital situation (although not sufficient) for the accomplishment of this purpose.

Because the lowest figures reported in April 2020, the financial exercise has significantly improved, displaying a restoration of roughly 30% by December (final obtainable information) in simply eight months. Because of the statistical carryover, so long as the exercise stays at present ranges all through 2021, the GDP would register an annual enhance of round 6%. If such have been the case, the financial system would get well barely beneath 60% of the numerous decline skilled in 2020 (~10.0%). Though the GDP confirmed some of the extreme declines on a world stage, the diploma of restoration anticipated for the Argentine financial system in comparison with different comparable international locations within the area can be one of many lowest.

The financial authorities challenge for 2021 a fiscal deficit at nationwide stage of round 6.0% of GDP (~$2.5 trillion), i.e., 2.5 share factors beneath that recorded in 2020. The Nationwide Treasury expects to proceed to finance a big portion of the fiscal deficit with forex challenge, which must be intently monitored contemplating the worrying indicators of inflationary acceleration talked about above.

In an financial system with an extra of pesos, a scarcity of liquid reserves, and lack of voluntary financing, there may be little margin for making use of expansionary macroeconomic insurance policies to shore up demand. Certainly, the inflationary acceleration of current months and the present dimension of trade gaps are signs of the financial system’s present imbalances.

The wealthy huge historical past of Argentine financial system teaches us that the mere presence of excessive and sustained ranges of fiscal deficits, no matter its supply of financing, at all times represents a possible supply of imbalances for the remainder of the elemental financial variables. The choice to finance continual fiscal deficits with forex challenge, though it might keep away from, at first, a disaster within the stability of funds, it often results in intervals of secular stagflation characterised by more and more stringent trade controls.

THE YEAR 2020 AND THE MEDIA SECTOR IN ARGENTINA AND THE WORLD

The complicated reconversion and convergence course of within the media business, coupled with the robust influence of the outbreak of COVID-19 and the lockdown, continues to power corporations engaged in these actions to reformulate their enterprise fashions to adapt to the digital period and to the adjustments in consumption derived from new applied sciences. As well as, the sustained migration of promoting in the direction of the digital surroundings is concentrated in a couple of totally digital international gamers, particularly Fb, Google and Amazon.

Confronted with this context, the sustainability challenges and sure detrimental unintended effects inherent to the growth of the Web (such because the chaotic dissemination of stories – true and pretend – or the worrying information biases created by the algorithms of social media and platforms that reinforce their customers’ personal beliefs), the media proceed to concentrate on gaining power. To this finish, they emphasize differential property such because the credibility of their manufacturers, they guess on incorporating new applied sciences into their newsrooms (content material, business, advertising, and large information), and spotlight the institutional function they’ve traditionally performed in democratic societies.

Over the previous few years, the multimedia paradigm has been totally consolidated. The multiplatform is the norm and, with out exception, conventional media are exploring different languages. On this manner,

the consumption of contents is simultaneous, overlapped and thru a number of home windows. In 2020, this was worsened by the disaster attributable to the COVID-19 pandemic and social distancing measures. There was a pointy enhance within the consumption of multimedia content material on all obtainable screens, particularly by way of OTT codecs. Due to this fact, the primary problem was to draw and retain the eye of these audiences in all codecs potential.

As a result of uncommon context generated by the pandemic, the media business suffered a extreme influence on its financial indicators. In response to PWC’s most up-to-date annual International Leisure

• Media Outlook, business revenues fell in 2020 at a fee of round 4.7% (a sharpest decline than the one noticed in international GDP) principally pushed by the autumn of conventional promoting and the lower within the consumption of media and leisure exterior the house (printed newspapers, magazines, films, dwell occasions, and so on.). OTT subscription segments, digital actuality platforms and Web promoting (particularly for cell gadgets) confirmed a considerable progress in the course of the interval, but it surely was not sufficient to offset the autumn at mixture stage. On this manner, digital content material continued to extend its share within the income construction of those corporations and has consolidated itself, in lots of instances, as the primary supply of revenues.

It’s evident that an increasing number of customers are deciding on the contents they devour prioritizing preferences, high quality, comfort and truthful data. Due to this fact, the businesses on this business wish to have direct contact with the person to construct loyalty by way of the added worth of their manufacturers and the personalization of content material and providers that they might develop sooner or later.

Whereas audiences proceed emigrate to the digital world, customers more and more favor cell gadgets to seek for the contents that finest go well with their preferences. In response to Chartbeat: Roughly 80% of the visits to information websites are made out of a cell phone. This phenomenon poses large challenges for an business pressured to continually change and adapt the contents and the adverts to cell screens.

Throughout 2020, there was a rise within the variety of customers keen to pay for viewing the contents that they devour essentially the most, particularly within the case of platforms or media that they already visited.

Thus, the method of consolidating subscriptions as the primary supply of revenues within the business continued and deepened throughout 2020, largely pushed by the consumption of video streaming (primarily OTTs), digital music, podcasts, video video games and a number of other digital newspapers that launched and boosted their paywall fashions. In actual fact, Deloitte and PWC estimate that in 2020 there have been extra customers subscribed to no less than one video streaming service than to a standard TV service.

On the similar time, the primary analyzes carried out by media consultants confirmed that the pandemic accelerated and broadened adjustments in client habits. This pressured turning factors within the business that may have in any other case been seen at a later time.

Nonetheless, the business’s long-term perspective stays robust, which exhibits the agility and dynamism of the ecosystem. Within the years earlier than the pandemic, international media and leisure progress outpaced GDP progress, as media experiences grew to become more and more central to client’s lives.

Within the native context, similar to in 2019, the complicated macroeconomic surroundings, additionally affected by the coronavirus, generated an inflationary acceleration, a decline in non-public consumption and within the GDP, which had a substantial influence on the efficiency of this business.

This efficiency is usually accounted for by the sensitivity of Argentine media corporations’ income construction to the financial cycles. On this sense, media corporations’ promoting revenues are nonetheless particularly delicate to recessive cycles as a result of reasonable xxx growth nonetheless proven by paid subscription fashions within the home market.

On this sense, it ought to be famous that promoting funding in actual phrases additionally shrank considerably throughout 2020 in keeping with the additional downturn of the financial system, coupled with the impact of the lockdown. This contraction of promoting revenues, markedly in analog media (principally printed

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Disclaimer

Grupo Clarin SA revealed this content material on 06 April 2021 and is solely answerable for the knowledge contained therein. Distributed by Public, unedited and unaltered, on 06 April 2021 18:03:05 UTC.