First Quarter 2019 Results (1Q19)

Grupo Clarín Announces First Quarter 2019 Results (1Q19)

Buenos Aires, Argentina, May 23, 2019 - Grupo Clarín S.A. ("Grupo Clarín" or the "Company" - LSE: GCLA; BCBA: GCLA), the largest media company in Argentina, announced today its first quarter 2019 results. Figures in this report have been prepared in accordance with International Financial Reporting Standards(*) ("IFRS") as of March 31, 2019, and are stated in Argentine Pesos ("Ps"), unless otherwise indicated.

(*) The Company's Management has applied IAS 29 in the preparation of these financial statements (inflation adjustment) because Resolution 777/18, issued by the Comisión Nacional de Valores ("CNV"), establishes that the restatement will be applied to the financial statements.

Highlights (1Q19 vs.1Q18):

§ Total Revenues reached Ps. 4,108.7 million, a decrease of 17.7% compared to 1Q18, mainly due to lower advertising revenues in the Broadcasting and Programming and the Printing and Publishing segments.

§ Adjusted EBITDA (1) reached Ps. 241.4 million, a decrease of 4.6% compared to 1Q18, mainly driven by a lower EBITDA in the Digital Content and Other segment.

§ Grupo Clarín's Adjusted EBITDA Margin (2) was 5.9% in March 2019, compared to 5.1% in 1Q18.

§ Income for the period totaled Ps. (285.9) million, a decrease compared to Ps. (63.7) million reported in 1Q18. Income for the period attributable to Equity Shareholders amounted Ps (221.1) million in March 2019 from Ps. (35.5) million in 1Q18, a decrease of 522.0%.

FINANCIAL HIGHLIGHTS

(1) We define Adjusted EBITDA is defined in this report as Total Revenues minus cost of sales (excluding depreciation and amortization) and selling and administrative expenses (excluding depreciation and amortization). We believe that Adjusted EBITDA is a meaningful measure of our performance. It is commonly used to analyze and compare media companies based on operating performance, leverage and liquidity. Nonetheless, Adjusted EBITDA is not a measure of net income or cash flow from operations and should not be considered as an alternative to net income, an indication of our financial performance, an alternative to cash flow from operating activities or a measure of liquidity. Other companies may compute Adjusted EBITDA in a different manner; therefore, Adjusted EBITDA as reported by other companies may not be comparable to Adjusted EBITDA as we report it.

(2) We define Adjusted EBITDA Margin as Adjusted EBITDA over Total Revenues.

OPERATING RESULTS

Total Revenues reached Ps. 4,108.7 million, a decrease of 17.7% from Ps. 4,993.5 million in 1Q18. Advertising revenues decreased by 20% in real terms, mainly due to the decline of Argentine GDP during the first quarter of the year, affecting overall advertising investment.

Following is a breakdown of Total Revenues by business segment:

REVENUES

Cost of sales (excluding Depreciation and Amortization) reached Ps. 2,590.9 million, a decrease of 20.4%, compared to the Ps. 3,254.0 million reported in 1Q18. This was due to lower costs across all business segments, mainly in the Printing and Publishing segment, resulting from lower severance payments, lower salaries and printing costs.

Selling and Administrative Expenses (excluding Depreciation and Amortization) reached Ps. 1,276.4 million, a decrease of 14.1% compared to the Ps. 1,486.5 million in 1Q18. This decline was mainly the result of lower fees for services and salaries in the Printing and Publishing segment.

Adjusted EBITDA reached Ps. 241.4 million, decreasing by 4.6% from Ps. 253.0 million reported for 1Q18. This result was driven by lower EBITDA in the Digital Content and Other segment, and was partially offset by higher EBITDA in the Printing and Publishing segment.

Following is a breakdown of Adjusted EBITDA by business segment:

ADJUSTED EBITDA

Financial results net totaled Ps. (282.4) million compared to Ps. (278.3) million in 1Q18. This higher negative result was mainly due to the impact of the peso depreciation with regards to dollar-denominated debt.

Equity in earnings from unconsolidated affiliates in 2018 totaled Ps. 100.9 million, compared to Ps. 129.4 million in 1Q18.

Other Income (expenses), net reached Ps. 17.2 million, compared to Ps. 24.0 million in 1Q18.

Income tax as of 2018 reached Ps. (124.3) million, from Ps. 4.7 million in 1Q18.

Income for the period totaled Ps. (285.9) million, a decrease of 349.1% from Ps. (63.7) million reported in 1Q18. This was mainly due to lower results in the Digital Content & Other segment and lower EBITDA in the Broadcasting and Programming segment. Equity Shareholders Income for the period amounted Ps.-(221.1) million, a decrease of 522.0% YoY.

Cash used in acquisitions of property, plant and equipment (CAPEX) totaled Ps. 170.9 million in 1Q19, an increase of 60.2% from Ps. 106.7 million reported in 1Q18. Of total CAPEX for 1Q19, 79.2% was allocated towards the Broadcasting and Programming segment, 20.1% to the Printing and Publishing segment and the remaining 0.7% to other activities.

Debt profile (1): Debt coverage ratio for the period ended March 31, 2019 was 1.5x and the Net Debt at the end of this period totaled Ps. (34.7) million.

(1) Debt Coverage Ratio is defined as Total Financial Debt divided by Adjusted EBITDA (Last Quarter Annualized). Total Financial debt is defined as financial loans and debt for acquisitions, including accrued interest.

SALES BREAKDOWN BY SOURCE OF REVENUE - MARCH 2019

SALES BREAKDOWN BY SOURCE OF REVENUE - MARCH 2018

RESULTS BY BUSINESS SEGMENT

BROADCASTING AND PROGRAMMING

Revenues

Revenues decreased by 14.5% to Ps. 1,638.4 million in 1Q19, compared to Ps. 1,915.7 million in 1Q18. This was due to lower advertising revenues in constant pesos as of March 2019 in Channel 13 and Radio Mitre.

Cost of Sales (Excluding Depreciation and Amortization)

Cost of sales decreased by 15.0% to Ps. 1,040.0 million in 1Q19, compared to Ps. 1,223.6 million in 1Q18. The decrease was mainly caused by a higher effect of restatement in salaries and production cost for 1Q18 versus 1Q19.

Selling and Administrative Expenses (Excluding Depreciation and Amortization)

Selling and administrative expenses decreased by 16.8% to Ps. 367.6 million in 1Q19, compared to Ps. 441.9 million in 1Q18. The decline was primarily the result of the greater effect of the restatement of the salaries, marketing expenses and fees for services of 1Q18 versus 1Q19, in order to be expressed in homogeneous currency as of March 31, 2019.

Depreciation and Amortization

Depreciation and amortization expenses increased by 5.9% to Ps. 84.0 million in 1Q19 compared to Ps. 79.3 million reported in 1Q18.

PRINTING AND PUBLISHING

Revenues

Total revenues decreased by -18.5% to Ps. 2,119.3 million in 1Q19, mainly as a result of lower advertising revenues in real terms (inflation was 54.7% from 1Q18 to 1Q19 while advertising revenues in current pesos increased by approximately 9%).

Cost of Sales (Excluding Depreciation and Amortization)

Cost of sales decreased by 26.0% to Ps. 1,187.4 million in 1Q19, compared to Ps. 1,604.4 million in 1Q18. The decrease was mainly the result of lower severance payment, salaries and printing costs caused by the greater effect of the restatement for 1Q18.

Selling and Administrative Expenses (Excluding Depreciation and Amortization)

Selling and administrative expenses decreased by 14.0% to Ps. 886.4 million in 1Q19, compared to the Ps. 1,031.3 million reported in 1Q18. This was primarily the result of lower salaries and fees for services, due to the IAS 29 (inflation) adjustment effect in 1Q18.

Depreciation and Amortization

Depreciation and amortization expenses increased by 10.2% to Ps. 107.3 million in 1Q19 compared to Ps. 97.4 million in 1Q18.

DIGITAL CONTENT AND OTHERS

Total revenues in this segment were driven by administrative and corporate services rendered by the Company and its subsidiary GC Gestión Compartida S.A. to third parties, as well as to other subsidiaries of the Company (which are eliminated in the consolidation). Additionally, this segment includes the production of digital content and the organization of trade fairs and exhibitions. Cost of sales (excluding depreciation and amortization) was mainly the result of salaries and professional consulting fees.

During this period, total revenues decreased by 17.0% to Ps. 670.1 milion, from Ps. 806.9 million reported in 1Q18, due to lower sales in digital content and lower revenues from Gestión Compartida. EBITDA reached Ps. (34.9) million.

OPERATING STATISTICS BY BUSINESS SEGMENT

PRINTING AND PUBLISHING

(1) Average number of copies according to IVC (including Diario Clarín and Olé)

(2) Share in Buenos Aires and Greater Buenos Aires Area (AMBA) Diario Clarín. Source: AGEA and IVC.

(3) Share in Buenos Aires and Greater Buenos Aires Area (AMBA) Diario Clarín. Source: Monitor de Medios Publicitarios S.A.

BROADCASTING AND PROGRAMMING

(1) Company estimate, over ad spend in Ps. In broadcast TV for AMBA region.

 (2) Share of broadcast TV audience according to IBOPE for AMBA. PrimeTime is defined as Monday through Friday from 8pm to 12am. Total Time is defined as Monday through Sunday from 12 pm to 12 am.

DIGITAL CONTENT AND OTHERS

(1)In millions. Average. Source DAX and Company Estimates.

DEBT AND LIQUIDITY

Total Financial Debt(1) and Net Debt, increased from Ps. 1,169.3 million to Ps. 1,455.3 million and from Ps. (192.5) million to Ps. (34.7) million respectively. This represents a 24.5% increase in the Total Debt.

Debt coverage ratio (1) as of March 31, 2019 was (0.04x) in the case of Net Debt and of 1.5x in terms of Total Financial Debt.

(1) Debt Coverage Ratio is defined as Total Financial Debt divided by Adjusted EBITDA (Last Quarter Annualized). Total Financial debt is defined as financial loans and debt for acquisitions, including accrued interest.

STOCK AND MARKET INFORMATION

Grupo Clarín trades its stock in the Buenos Aires Stock Exchange (BCBA) and in the London Stock Exchange (LSE), in the form of shares and GDS's, respectively.

CONFERENCE CALL AND WEBCAST INFORMATION

GRUPO CLARIN S.A.

(BCBA: GCLA; LSE: GCLA)

cordially invites you to participate in its conference call and webcast presentation

to discuss First Quarter 2019 Results

Date: Friday, May 24, 2019

Time: 12:00pm Buenos Aires Time/4:00pm London Time/11:00am New York Time

To access the conference call, please dial:Argentina Participants: 0-800-666-0250

U.S. Participants: 1-877-830-2576

All other countries: +1-785-424-1726Passcode: CLARIN

The 1Q19 results will be accompanied by a webcast presentation. To access the live stream and slide presentation, visit: https://services.choruscall.com/links/gcla190514hISQECsn.html

There will be a replay available, for 7 days, starting four hours after the conclusion of the conference call. To access the replay, please dial 1-844-488-7474 toll free from the U.S., or +1-862-902-0129 from anywhere outside the U.S. The replay passcode is: 33051018

The webcast presentation will be archived at http://www.grupoclarin.com.ar/ir 

ABOUT THE COMPANY

Grupo Clarín is the largest media company in Argentina and a leading company in printing and publishing and broadcasting and programming markets. Its flagship newspaper -Diario Clarín- is one of the highest circulation newspapers in Latin America. Grupo Clarín is the largest producer of media content in Argentina, including news, sports and entertainment and reaches substantially all segments of the Argentine population in terms of wealth, geography and age.

Disclaimer

Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of Grupo Clarín. You can identify forward-looking statements by terms such as "expect", "believe", "anticipate", "estimate", "intend", "will", "could", "may" or "might" the negative of such terms or other similar expressions. These statements are only predictions and actual events or results may differ materially. Grupo Clarín does not intend to or undertake any obligation to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in Grupo Clarín's projections or forward-looking statements, including, among others, general economic conditions, Grupo Clarín's competitive environment, risks associated with operating in Argentina a, rapid technological and market change, and other factors specifically related to Grupo Clarín and its operations.

GRUPO CLARÍN S.A.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2019 AND 2018

(Amounts stated in Argentine Pesos)

(1) Includes amortization of intangible assets and film library, right-of-use assets and depreciation of property, plant and equipment in the amount of $ 238,668,641 and $ 196,408,532 for the three-month periods ended March 31, 2019 and 2018, respectively.

The Consolidated Statements of Operations for each business segment are included in the Financial Statements as of March 31st , 2019, available at http://www.grupoclarin.com/ir.

GRUPO CLARÍN S.A.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS OF MARCH 31, 2019 AND DECEMBER 31, 2018

 (Amounts stated in Argentine Pesos)

GRUPO CLARÍN S.A.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE THREE-MONTH PERIODS ENDED March 31, 2019 AND 2018

(Amounts stated in Argentine Pesos)

(1) Includes 1,485 treasury shares. See Note 15 to the separate financial statements.

(2) Broken down as follows: (i) Voluntary reserve for future dividends of $ 2,537,418,908; (ii) Judicial reserve for future dividend distribution of $ 797,113,202, (iii) Voluntary reserve for illiquidity of results of $ 1,359,324,224, (iv) Voluntary reserve to provide financial aid to subsidiaries and in connection with the Audiovisual Communication Services Law of $ 952,035,008, and (v) Voluntary reserve to ensure the liquidity of the Company and its subsidiaries of $ 1,050,972,484.

(3) Corresponds to the effect of the initial application of IFRS 9, mentioned in Note 2.3 to the Company's annual consolidated financial statements as of December 31, 2018.

GRUPO CLARÍN S.A.

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2019 AND 2018

 (Amounts stated in Argentine Pesos)