FINANCIAL PERFORMANCE

Despite the difficult trading conditions, the Company's performance was consistent with the guidance provided to - and the expectations of - the market.

While the reduction in TV revenue was reflected in margins, we achieved a very strong performance in the management of costs. A thorough review of costs was undertaken across both Network Ten and EYE, achieving considerable cost reductions in non-income-generating areas of expenditure.

While Network Ten has always been seen as a highly cost-effective network, television costs were reduced on the previous year, on both a reported and ex-selling basis. This was achieved despite the prudent levels of investment in new programming for TEN and the launch of our new digital sports channel, ONE. The cost of ONE will be less than $20 million per annum and the channel is expected to be profitable in its first full year of operation.

Equally, EYE's sustained focus on streamlining its operations led to a positive earnings contribution for the year and the team at EYE is working hard as the cycle improves to get back to a level of profitability that more accurately reflects our view of the value inherent in this business.

This outcome is a result of the substantial effort by the teams across the Company, who underwent highly disciplined review processes and delivered real efficiencies.

In addition, the capital expenditure program to digitise our television infrastructure and content is complete, and we now stand to benefit from the ongoing cost efficiencies arising from this process.

In light of the prevailing market conditions, a review of assets and contracts in EYE and TEN resulted in non-recurring expense items being recognised. Those items were, in EYE, $123 million representing asset write-downs and losses on onerous contracts and a non-recurring tax expense of $10 million from the write-off of tax losses, as well as asset write-downs in TEN of $15 million.

Shareholders received a fully franked ordinary dividend payment for 2009 of 2 cents per share, paid in January 2009.

Ten Holdings went into the global financial crisis with a healthy balance sheet, which assisted considerably in weathering the storm.

Forecast debt levels, our strict cost control and trading expectations meant Ten Holdings continued to operate within its banking covenants throughout the financial year. However, as a measure of prudence, the Board elected to undergo two key measures to further strengthen the Company's position.

The Board determined that no further dividend would be paid in the 2009 financial year due to the impact on current year earnings from the non-recurring items recognised in the first half result.

In August, Ten Holdings also undertook a successful and fully underwritten equity raising of $138 million, representing approximately 12.9 per cent of the total shares on issue.

The strong response to the equity raising demonstrated the level of improved sentiment for the Company, and to a large extent this has been reflected in the sustained share price improvement since the raising was completed. The proceeds were used to pay down debt, further improving gearing levels and placing our balance sheet in an enhanced position.

With the subsequent exit from the Company's share register of our major shareholder Canwest - which sold down its 50.06 per cent stake in early October 2009 - we are in a further improved position with a broad mix of institutional and retail shareholders, with no controlling shareholder.

The initial investment made in 1992 by Canwest's founder and chairman Israel ('Izzy') Asper has proved to be a highly profitable one for Canwest over the period. As a result of the changed circumstances, two Directors connected with Canwest, Leonard Asper and Tom Strike, resigned from the Board and the Board has been reconstituted to comprise five Directors. On behalf of my Board colleagues, I thank both Leonard and Tom for their long service as supportive and active Directors.

The periodic reporting on the economic situation of our major shareholder Canwest was an external distraction at times during the year. The key for the teams across Ten Holdings was to maintain our unrelenting focus on managing the businesses, leveraging the opportunities now and for the future, and creating value for shareholders.