Memoria Y Estados Contables Al 31 De Diciembre De 2002 Y 2001
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GRUPO CLARÍN S.A. 2011 ANNUAL REPORT To the Shareholders of Grupo Clarín S.A. We hereby submit for your consideration the Annual Report and Exhibit, the Balance Sheet, the Statement of Income, the Statement of Changes in Shareholders’ Equity and the Statement of Cash Flows, Notes and Exhibits of Grupo Clarín S.A. (hereinafter, “the Company” or “Grupo Clarín”) for fiscal year No. 13 ended December 31, 2011 and the Consolidated Financial Statements as of December 31, 2011. The main subsidiaries in which Grupo Clarín S.A. has a direct or indirect controlling interest are: Arte Gráfico Editorial Argentino S.A. (AGEA), Artes Gráficas Rioplatense S.A.(AGR), Compañía Inversora en Medios de Comunicación S.A. (CIMECO) Cablevisión S.A. (Cablevisión), Primera Red Interactiva de Medios Argentinos (PRIMA) S.A., Contenidos de Medios Digitales S.A.(CMD), Arte Radiotelevisivo Argentino S.A.(ARTEAR), GC Gestión Compartida S.A., Inversora de Eventos S.A.(IESA) and Radio Mitre S.A., among others. 2011 MACROECONOMIC ENVIRONMENT In a year marked by global uncertainty, the world was undoubtedly distinguished by the dynamics emerging economies managed to sustain under a complex environment of ongoing crises of different kind that hit the developed countries (with peripheral Europe at the epicenter). In fact, while during the year under analysis half of the world represented by the developed countries experienced, at best, anemic GDP growth in spite of the several incentives granted to them; the other half - the block of emerging countries led by China - preserved their dynamics which, on average, tripled that of the former. The world has continued to see growth at two different paces of structural trend, reflecting the operation of the new global accumulation mechanism focused on emerging economies. In this context, the Argentine economy managed to sustain growth in its productive activity in 2011, in line with virtually all emerging countries. Such performance was driven by the vigorous terms of trade in the external arena, along with the typical expansionist bias of the economic policy in an electoral year and the favorable weather conditions for the agricultural sector on the domestic front. However, unlike other emerging countries, this increase in productive activity was again paired with high inflation rates that prevented the country from fully capitalizing on the proceeds from such growth and from improving their distribution. In 2011, the Argentine economy experienced growth with inflation again. This fact, coupled with the currency board strategy implemented in order to moderate the inflationary impact of the strong drive generated by public policies, resulted in a new deterioration of the pillars that supported the recovery process after the 2001-2002 crisis. In addition to this, the Argentine economy is operating under certain disturbing conditions, such as, increased primarization, a shortage of reproductive investments (noticeable mainly in the capital depletion of key strategic sectors) and the low level of foreign direct investment in relation to other countries in the region. Therefore, in spite of its remarkable growth cycle, Argentina has yet to show any clear progress in its development. Poverty, which has remained almost unchanged since early 2007 and which, according to private estimates, still affects 9 million Argentine people, clearly reflects the latter. According to private sources, Argentina’s real GDP is estimated to have increased by approximately 7%, slightly below the 2010's figure; whereas inflation remained at virtually the same level as the previous year (around 23%). The Argentine economy continues to register an inflation rate three percentage points higher than the growth rate, a unique phenomenon in the region, except for Venezuela. The three pillars that supported the economic recovery after the 2001-2002 crisis deteriorated in the year under analysis. The nominal exchange rate, which operates as an inflation buffer together with the virtually frozen utility tariff rates, did depreciate with respect to the US dollar throughout the year, but at a substantially lower rate than the price increases (slightly over 8% vs. 23% mentioned above). The significant adjustment of the real exchange rate that led to this gap continued to accelerate the loss of competitiveness. The currency depreciation, coupled with the strong dynamics of the economic activity, exacerbated the growth of imports which, at the end of 2011, were higher than exports, thus deteriorating the balance of trade surplus (which showed an 11% decrease, from USD11.6 billion to USD10.3 million in absolute values). For the first time in more than two decades, at the end of the year, Argentina's energy industry will have showed a negative trade balance (estimated in over USD2.5 billion). For the purposes of assessing the energy self-sufficiency loss, only four years ago, this sector's balance of trade showed surplus (approximately USD2.5 billion) and accounted for more than one quarter of the total external surplus. The lower generation of foreign currency was worsened by a capital flight from the private sector which, in the year under analysis, almost doubled the previous year's figure and stood somewhere in the neighborhood of 2008's record high (USD23.8 billion). This resulted in a decrease in the Central Bank's international reserves which, by the end of the year, stood at almost USD6 billion below the USD52.1 billion recorded in December, 2010, in spite of stronger exchange controls. Thus, deterioration on the fiscal front was more significant than on the external front. The national public sector showed a financial deficit in the year under analysis (as a result of the debt service) which jumped to almost two and a half point of GDP. In absolute values, this deficit (estimated in over Ps. 50 billion, without counting revenue distributions received from the BCRA and revenues of the ANSES derived from the ownership of government-issued securities) almost doubled that of 2010 and has become the most significant one since 2003 onwards. This deterioration, mostly funded by the issue of currency and intra-governmental indebtedness, took place in spite of record-high tax pressure (approximately 35% of GDP). Perspectives for the Upcoming Year During the last weeks, the growing uncertainty over the recovery pace of the developed countries' economic activity and employment resulted in overall downward growth perspectives for 2012. The virtual stagnation or expansion below potential experienced by these countries, in general, and peripheral Europe, in particular, became an actual threat to the world's economy, where one of the key concerns is the extent of the impact of this external shock on the current emerging catalysts. In the light of this new international crisis, the Argentine economy has less scope for action. In fact and unlike 2008, the Argentine economy no longer has fiscal, exchange or energy buffers. Actually, unlike the last years, the local economy lacks strong dollar reserves. In perspective, the energetic situation is seen as the main responsible for the deterioration of the external and fiscal accounts. Accordingly, the growing public expenditure to sustain tariff rates and import energy compromised public accounts so badly that it accounts for a significant portion of the last years' fiscal deterioration. The scheduled elimination of subsidies seeks to streamline a structure that was unequal and that could no longer be genuinely funded. In addition, the macro and microeconomic consequences of the recently implemented controls on imports to preserve the trade surplus are difficult to foresee as of the date of this annual report. The truth is that insofar as the government continues to pretend to use the exchange rate to anchor inflation by minimizing the Argentine currency nominal devaluation rate, the expansive economic policies - so far focused on boosting GDP growth and import growth indirectly - will be clearly limited in their scope. The implementation of measures to moderate the growth pace of variables, such as, public spending, salaries and monetary aggregates, shall be understood within the framework of this growth moderating strategy adopted in the face of a certainly less favorable environment. To make matters worse in this already complex environment, the drought caused by “La Niña” compelled to dramatically reduce agricultural projections (which stood somewhere in the neighborhood of 110 million tons and have been now cut to approximately 100 million tons) and, therefore, the sector's exports (by approximately 10% compared to 2011). As a result of all the above mentioned, the Argentine economy's growth rate would slow down significantly in 2012. However, inflation would remain at current levels, since the increases in the utility tariff rates resulting from the overall elimination of subsidies are expected to considerably offset the lower dynamics of aggregate demand. Thus, high inflation would continue to hinder significant improvements in social indicators and in the distribution of income among the Argentine people. The conditions described above clearly show that Argentina has less macroeconomic tools to face this new international crisis. In spite of its dynamics and low indebtedness level, the current economy systematically expels local capital and repels foreign capital. In other words, the current modus operandi of the local economy does not provide a reasonable level of confidence to the Argentine people (who prefer to invest their savings abroad, rather than domestically) as well as to foreigners (who channel a low level of their regional productive investments in our country). THE YEAR 2011 AND THE MEDIA SECTOR IN ARGENTINA In 2011, the global media industry - undoubtedly, one of the most seriously hit by the 2009's financial crisis, experienced certain weakening in its business volume, as a result of the sudden slowdown of the global economic activity and, particularly, of the developed countries. As a matter of fact and due to their inherent differences, the slowdown was not homogenous at all among countries, segments and companies.