GRUPO CLARÍN S.A. Annual Report and Consolidated Financial Statements For the year ended December 31, 2018, presented on a comparative basis GRUPO CLARÍN S.A. 2018 ANNUAL REPORT To the Shareholders of Grupo Clarín S.A. We hereby submit for your consideration the Annual Report and Exhibit, the Separate Statement of Financial Position, the Separate Statement of Comprehensive Income, the Separate Statement of Changes in Shareholders' Equity and the Separate Statement of Cash Flows and Notes of Grupo Clarín S.A. (hereinafter, “the Company” or “Grupo Clarín”) for fiscal year No. 20 ended December 31, 2018 and the Consolidated Financial Statements as of December 31, 2018. The main subsidiaries in which Grupo Clarín S.A. has a direct or indirect controlling interest 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. 2018 MACROECONOMIC ENVIRONMENT During 2018, the performance of the Argentine economy was marked by two events that significantly reduced the circumstantial currency flow recorded in the first two years of the current administration. The severe drought that affected the agricultural sector, coupled with the sharp decrease of external financing, triggered a currency crisis that completely changed the baseline scenario originally foreseen for an economy that, in the first months of the year, was growing at rates above 3%, with seamless access to financing that allowed to maintain the country’s high public spending. As a result of the drought, the production volume of cereals and oilseed crops decreased around 25 MM tons (equivalent to almost 20% of the total), deducting approximately 1.5 percentage points directly from the 2018 GDP and US$ 7.5 MM from the export value. The significant capital outflow observed in emerging economies and, in particular, Argentina as a result of the tightening of international financial conditions as from April, worsened this scenario, causing the significant erosion of the level of reserves of the Central Bank and of the value of the Argentine peso. Argentina's dual currency economy amplifies the inflationary and recessive effects that are typical of devaluations. In this sense, the depreciation of the Argentine peso tends to have a larger impact on prices compared to other countries in the region due to the high pass-through coefficient at a local level. The external front imbalance often improves mostly through a fast decline in the consumption of foreign currency (mainly imports) given the lag that is often recorded in exports value when the exchange rate competitiveness improves. Finally, this situation hinders the projected unwinding of the fiscal imbalance and increases subsidies as a consequence of the effective regulatory framework applicable to gas and electricity tariffs and the interest payments of a debt mainly denominated in foreign currency. The scenario described above makes it difficult for Argentina to completely absorb, through exchange rate flexibility, the shocks in order to avoid the erosion of the Central Bank’s reserves and the fall of the GDP, as was the case with other economies in the region. The above factors forced the Government to abandon its fiscal gradualism plans and accelerated the unwinding of the existing imbalances in the fiscal and external accounts. By mid-April, and in order to mitigate the magnitude of the budding adjustment, the Argentine Government and the International Monetary Fund reached a 3-year Standby Arrangement (SBA) for a total of US$ 50.0 Bn (subsequently increased to US$ 57.1 Bn) aimed at providing certainty on the compliance with interest payments on its debt denominated in foreign currency during the remainder of the current administration. The evolution of the fundamental variables of Argentine economy during the year, mainly the evolution of the Argentine peso, can be divided into three clearly differentiated stages. In the first stage, during the first quarter of the year, the economy showed relative tranquility because the country was still able to finance its fiscal imbalance and the $/US$ exchange rate slid on a par with retail prices. 1 The second stage lasted from May until the end of the third quarter, when, as a consequence of the sudden loss of external financing, the exchange rate surged from approximately $/US$20 to slightly above $/US$40 in an environment of growing uncertainty. In the third stage, during the last quarter of the year, the new monetary and exchange framework, established by the new authorities of the Central Bank, allowed the country to stabilize the exchange rate and even reverse the upward trend with high real interest rates. On a point-to-point basis, the wholesale $/US$ exchange rate increased by 101% during 2018 (from US$18.77 to $/US$37.81). As it always happens, the high impact of devaluations on prices along with the higher increase of regulated prices, generated a worrying inflationary acceleration (+47.6% point-to-point - a record high since 1991 to date -, +34.3% on average) which could have been even higher if it had not been for its recessive implications. In fact, the impact of this price acceleration on the purchasing power of salaries and pensions depressed private consumption and plunged the 2018 GDP into a deep decline of 2.6% on average (7.0% negative on a year-on-year point-to-point basis.) Apart from increasing the national unemployment rate by almost 10%, the above circumstances worsened the troubling poverty and extreme poverty rates in an overly delicate social context. On the fiscal front, the impossibility of continuing to finance large gaps generated several downward revisions of the gradual reduction path. The annual target set for the operating deficit on a national level was revised from 3.2% to 2.7% of the GDP. Argentina managed to exceed this target (2.4% of GDP or 5.2% including debt interest). On the other hand, the Government committed to a challenging fiscal balance target for 2019, placing even more fiscal pressure on the formal sector of the economy. In addition, the IMF approved an increase in the disbursements for the period 2018/2019 (from US$32.5 Bn of the original SBA to US$51.2 Bn, respectively.) The fall of the GDP measured in US$, as a result of the devaluation, spiraled the sovereign-debt-to-GDP ratio to around 85% (40% is held by public sector agencies) from the 57% recorded by the end of 2017. On the external front, the lower availability of foreign currency and its consequences, the exchange rate surge and its short-term negative side effects significantly depressed the consumption of US dollars over the last months of the year. Consequently, the deficit accrued in the current account, which in 2017 stood at US$31.6 Bn (5.0% of GDP, more than double the figure recorded in 2016), would decrease in absolute values in 2018 though continue in high relative values as a result of the smaller size of the economy. Perspectives for the Upcoming Year At the beginning of the year, the Argentine economy will have a competitive exchange rate and its external/fiscal imbalances are expected to improve significantly (necessary to face the larger external debt of the public and private sectors.) If the current exchange rate were to remain stable, the challenging fiscal targets (primary fiscal balance for the country) and monetary targets (a commitment to cap the growth of money to virtually zero percent until June 2019 and no more than 13.5% during the year) undertaken with the IMF would pave the way for a gradually disinflationary path. However, the above would not be enough to encourage the recovery of the GDP as a consequence of the inherited strongly negative statistics carried over from previous years (of almost three percentage points) and the very same recessionary bias of the scheme. In fact, and in contrast with previous years, this election year will not be expansive: The GDP would fall again (-1.2% on average, according to the latest review conducted by the Central Bank) and would thus accumulate two years of decline for the first time since the 2001/2002 crisis. The above is mostly accounted for by the strongly negative carryover and the difficult recovery of private consumption (~75% of GDP). The positive contributions expected from the agricultural and energy sectors will make exports the most dynamic component of the GDP. On the external front, and in view of the reduced availability of foreign currency, the imbalance would be considerably redressed with the reversal of the trade deficit. The expected normalization of the soy and corn harvests, in addition to the expected improvement in industrial exports as a result of the perspectives about Brazil, and the reduction of the items that are sensitive to the depreciation of the Argentine peso, such as imports and tourism, would reduce the external imbalance to less than half the negative ~5% estimated for 2018. Finally, it should be noted that the quarterly disbursements provided under the arrangement with the IMF depend on the strict compliance with the fiscal targets (considerably challenging in an election year and with 2 the declining GDP.) With a public sector that needs to normalize its access to voluntary credit, any deviation from the targets would hinder these disbursements and would return the economy to a highly uncertain environment, with a negative impact on the solvency of a financial program expected to reach fiscal surpluses as from 2020. THE YEAR 2018 AND THE MEDIA SECTOR IN ARGENTINA AND THE WORLD The complex process of reconversion and convergence in the media and communications industry continues to force companies engaged in these activities to reformulate their business models to adapt to the digital era and to the changes in consumption derived from new technologies.