2007 Full Year Result Directors Report

TEN NETWORK HOLDINGS LIMITED

ANNUAL REPORT

For the year ended
31 August 2007

ABN 14 081 327 068

This financial report covers both Ten Network Holdings Limited as an individual entity and the consolidated entity consisting of Ten Network Holdings Limited and its controlled entities.

Ten Network Holdings Limited is a company limited by shares, incorporated and domiciled in Australia.

The Directors of Ten Network Holdings Limited present their report on the consolidated entity, consisting of Ten Network Holdings Limited (“the Company”) and its controlled entities, for the year ended 31 August 2007.

Directors

The Directors that have been in office during the year and since year end are:

Mr NG Falloon, Chairman

Mr JJ Cowin (Alternate Mr JB Studdy)

Mr LS Freedman (Alternate Mr NG Falloon)

Mr PV Gleeson (Alternate Mr NG Falloon)

Mr PPA Harris (Alternate Mr PV Gleeson) ^A

Ms IYL Lee (Alternate Mr JB Studdy)

Mr GH Levy (Alternate Mr PV Gleeson)

Mr R Magid (Alternate Mr NG Falloon)

Mr BM Sherman (Alternate Mr B Sechos)^B

Mr JB Studdy (Alternates Mr JJ Cowin and Mr AJ Peschar) ^C

Mr PD Viner (Alternates Mr LJ Asper, Mr TC Strike and Mr JE Maguire)

^A: Mr PV Gleeson was appointed Alternate Director for Mr PPA Harris on 12 March 2007.

^B: Mr EP Sherman resigned as Alternate Director and Mr PV Gleeson was appointed Alternate Director for Mr BM Sherman on 10 November 2006.

Mr PV Gleeson resigned as Alternate Director for Mr BM Sherman on 4 December 2006.

Mr EP Sherman was appointed Alternate Director for Mr BM Sherman on 5 December 2006.

Mr EP Sherman resigned as Alternate Director and Mr B Sechos was appointed Alternate Director for Mr BM Sherman on 18 May 2007.

^C: Mr AJ Peschar resigned as Alternate Director for Mr JB Studdy on 11 September 2007.

Principal Activities

The principal activity of Ten Network Holdings Limited is the investment in The Ten Group Pty Limited (“Ten Group”) and controlled entities, whose principal activities are the operation of commercial television licences TEN-10 (Sydney), ATV-10 (Melbourne), TVQ-10 (Brisbane), ADS-10 (Adelaide) and NEW-10 (Perth), and out-of-home advertising.

Results

The consolidated profit after income tax for the year ended 31 August comprises:

	2007 $’000	2006 $’000
Earnings before interest, tax, depreciation and amortisation	248,346	251,971
Depreciation	(25,566)	(20,596)
Amortisation	(3,524)	(1,125)
Earnings before interest and tax	219,256	230,250
Subordinated debenture interest	(50,883)	(84,462)
Net interest expense – other	(42,698)	(32,161)
Profit before income tax	125,675	113,627
Income tax (expense)/revenue	(47,152)	(59,180)
Profit after income tax	78,523	54,447
Profit attributable to minority interest	(12,392)	(8,634)
Profit attributable to members of the Company	66,131	45,813

Dividends

Since the end of the previous financial year a fully franked dividend of 9.0 cents per share ($35,900,918) was paid on 11 January 2007 and a fully franked dividend of 4.0 cents per share ($15,955,964) was paid on 11 July 2007 in respect of the results for the period to 30 June 2007. Dividends in respect to the six months to 31 December 2007 will be paid during January 2008.

Review of Operations

The Directors were satisfied with the results of the consolidated entity for the year.

Significant Changes in the State Of Affairs

On 28 August 2007, CanWest exchanged the convertible debentures which it previously held in The Ten Group Pty Limited into 455,000,000 new shares in Ten Network Holdings Limited. On that same day, CanWest exchanged its previous shareholding of 68,249,990 shares in The Ten Group Pty Limited for an equivalent number of new shares in Ten Network Holdings Limited. These transactions took place pursuant to the exchange deeds put in place at the time of the restructure and public listing of Ten Network Holdings Limited in April 1998.

Additionally, the subordinated debentures, which had previously been issued to CanWest by The Ten Group Pty Limited, were redeemed for cash and Ten Network Holdings Limited was also issued 455,000,000 new shares in The Ten Group Pty Limited and became the holder of an additional 68,249,990 shares in The Ten Group Pty Limited as part of this transaction.

Following the exchange, CanWest now owns 56.7% of the issued shares in Ten Network Holdings Limited and Ten Network Holdings Limited owns 99.4% of the issued shares in The Ten Group Pty Limited.

During the year, Eye Corp Pty Limited, a controlled entity, acquired the following entities:

·       On 15 September 2006, Eye Corp Pty Limited acquired the Ultimate Media Group Pty Ltd (now called Eye Study Pty Limited) which in turn owned 100% of the issued shares in Ultimate Media Group (New Zealand) Pty Limited (now called Eye Study New Zealand Limited) which operates advertising concessions across more than 100 higher education campuses across Australia and New Zealand;

·       On 11 October 2006, Eye Corp Mall Media (USA) LLC was appointed preferred media supplier for the Macerich Company for static and digital media offerings within 56 malls from their portfolio. The Macerich Company is one of the largest regional shopping groups in North America. The Macerich contract took effect on 1 January 2007; and

·       Eye Corp Pty Limited acquired Foxmark Media LLC in North America on 14 December 2006. The acquisition gives the company advertising rights to 70 shopping malls including 49 Westfield and 21 independent malls.

During the year, the consolidated entity disposed of the following:

·       The Company disposed of its 24.3% interest in its equity accounted associate Global Television Limited on 5 January 2007; and

·       Eye Corp Pty Limited, a controlled entity, disposed of its 30% interest in the Malaysian company, Big Tree Outdoor Sdn Bhd on 30 March 2007 (equity accounted associate).

Other than the above, there were no significant changes in the state of affairs of the consolidated entity during the year.

Events Subsequent to Balance Date

No matters or circumstances have arisen since balance date that have significantly affected or may significantly affect:

·            the operations in financial years subsequent to 31 August 2007 of the consolidated entity; or

·            the results of those operations; or

·            the state of affairs in financial years subsequent to 31 August 2007 of the consolidated entity.

Likely Developments

Information as to likely developments in the operations of the consolidated entity and the expected results of those operations in subsequent financial years has not been included in this report because, in the opinion of the Directors, it would prejudice the interests of the consolidated entity.

Information on Directors

Particulars of Directors’ Interests in Shares and Options of The Company

Director

Responsibilities

Ordinary Shares

Options



Chairman - Executive

NG Falloon

Executive Chairman of Board of Directors

217,300

-

Non-Executive Directors

JJ Cowin

1,000,000

-

LS Freedman

7,347

-

PV Gleeson

Chairman of Audit Committee

15,128,608

-

PPA Harris

Member of Audit Committee

24,611

-

IYL Lee

Member of Audit Committee

10,000

-

GH Levy

Member of Audit Committee

33,000

-

R Magid

300,000

-

BM Sherman

7,016,105

-

JB Studdy

50,000

-

PD Viner ^A

-

-

^A: Mr Viner has 50,000 subordinate voting shares of CanWest Global Communications Corp., whose subsidiary, CanWest MediaWorks Ireland Holdings, has 56.7% ownership in Ten Network Holdings Limited.

All Directors are members of the Nomination Committee.

Qualifications and Experience of Directors

The qualifications and experience of each Director are detailed below.

Nicholas G Falloon

BMS (Age 50)

Appointed Executive Chairman of Ten Network Holdings Limited and The Ten Group Pty Limited in February 2002. Previously served as Chief Executive Officer of Publishing and Broadcasting Limited from 1998 to 2001. Prior to that Mr Falloon held other senior executive positions within the PBL organisation. He has also been a Director of a number of companies including Foxtel, Fox Sports and ecorp.

Mr Falloon is a member of the Nomination Committee of Ten Network Holdings Limited and is Chairman of each of the Executive and Remuneration Committees and a member of the Corporate Development Committee of The Ten Group Pty Limited.

Other Current Australian Listed Company Directorships: None

Former Australian Listed Company Directorships in Last 3 Years: None

Jack J Cowin

BA (Age 65)

Director of Ten Network Holdings Limited and The Ten Group Pty Limited since April 1998. Previously a Director of The Ten Group Pty Limited from December 1992 to January 1997. Founder and Chairman of Competitive Foods Australia Limited and is a Governor of Centennial Parklands foundation and is on the Board of Directors of SOPA.

Mr Cowin is a member of the Nomination Committee of Ten Network Holdings Limited and the Executive, Remuneration and Corporate Development Committees of The Ten Group Pty Limited.

Other Current Australian Listed Company Directorships: None

Former Australian Listed Company Directorships in Last 3 Years: None

Laurence S Freedman AM

ASA, F Fin, MAUSIMM (Age 64)

Director of Ten Network Holdings Limited since February 1998 and of The Ten Group Pty Limited since March 1994. Founder of The EquitiLink Group. Director of a number of investment companies listed on the American and Canadian stock exchanges. Chairman of The Freedman Foundation.

Mr Freedman is a member of the Nomination Committee of Ten Network Holdings Limited and the Executive, Remuneration and Corporate Development Committees of The Ten Group Pty Limited.

Other Current Australian Listed Company Directorships: None

Former Australian Listed Company Directorships in Last 3 Years: None

Paul V Gleeson

BEc, ACA (Age 54)

Director of Ten Network Holdings Limited since February 1998 and of The Ten Group Pty Limited since April 1998. Previously a Director of The Ten Group Pty Limited from December 1992 to March 1994. He is a member of the Institute of Chartered Accountants in Australia.

Mr Gleeson is Chairman of the Audit Committees of each of Ten Network Holdings Limited and The Ten Group Pty Limited. He is also a member of the Nomination Committee of Ten Network Holdings Limited and the Executive Committee of The Ten Group Pty Limited.

Other Current Australian Listed Company Directorships: None

Former Australian Listed Company Directorships in Last 3 Years: None

Paul P A Harris

MA, F Fin (Age 62)

Director of Ten Network Holdings Limited since February 1998 and of The Ten Group Pty Limited since December 1992. Mr Harris is a Director of Fulcrum Capital Partners Ltd and Governor of WWF Australia.

Mr Harris is a member of each of the Audit Committees of Ten Network Holdings Limited and The Ten Group Pty Limited. He is also a member of the Nomination Committee of Ten Network Holdings Limited.

Other Current Australian Listed Company Directorships: Director of Wilson HTM Limited.

Former Australian Listed Company Directorships in Last 3 Years: Multi Channel Solutions Limited (Nov 2004 to Jan 2007).

Irene Y L Lee

BA, Barrister-at-Law (Age 54)

Director of Ten Network Holdings Limited and of The Ten Group Pty Limited since October 2000. She is also a member of the Takeovers Panel, the Advisory Council of JPMorgan Australia, and the Executive Council of the UTS Faculty of Business, as well as a Trustee of the Art Gallery of New South Wales. Ms Lee has held senior positions in investment banking and funds management over the past twenty years. Ms Lee was an executive director of Citicorp Investment Bank before becoming Head of Corporate Finance at the Commonwealth Bank of Australia and then Chief Executive Officer of Sealcorp Holdings Limited. Ms Lee is a Director of ING Bank (Australia) Limited.

Ms Lee is a member of each of the Audit Committees of Ten Network Holdings Limited and The Ten Group Pty Limited. She is also a member of the Nomination Committee of Ten Network Holdings Limited and the Remuneration Committee of The Ten Group Pty Limited.

Other Current Australian Listed Company Directorships: Executive Chair of Mariner Bridge Investments Limited and Director of QBE Insurance Group (since May 2002).

Former Australian Listed Company Directorships in Last 3 Years: Director of Beyond International Limited from September 1986 to November 2004, Director of Record Funds Management Limited (as responsible entity for Record Realty) from December 2002 to August 2005, Director of Record Investments Group from January 2001 to June 2006, and Director of Mariner Financial Limited from September 1985 to October 2006.

Geoffrey H Levy AO

BComm, LLB, F Fin, MAICD (Age 48)

Director of Ten Network Holdings Limited and The Ten Group Pty Limited since April 1998. Previously a Director of The Ten Group Pty Limited from February 1995 to December 1996. Mr Levy is Executive Chairman of Investec Bank (Australia) Limited. He is also involved in not-for-profit and government organisations including being Deputy Chairman of the Australian Sports Anti-Doping Authority. Mr Levy was formerly a partner of the law firm, Freehills, and has over twenty years experience in the corporate advisory environment.

Mr Levy is a member of each of the Audit Committees of Ten Network Holdings Limited and The Ten Group Pty Limited. He is also a member of the Nomination Committee of Ten Network Holdings Limited.

In 2005 Mr Levy was honoured in the Queen’s Birthday Honours list by being appointed an Officer of the Order of Australia.

Other Current Australian Listed Company Directorships: Chairman of Specialty Fashion Group Limited (since April 2005) and Director of STW Group Limited (since November 1993).

Former Australian Listed Company Directorships in Last 3 Years: The Mirvac Group (appointed February 1997 and resigned March 2006).

Robert Magid

BSc, BA(Maths), MA(Econ) (Age 66)

Director of Ten Network Holdings Limited and The Ten Group Pty Limited since April 1998. Chairman and Managing Director of TMG Developments Pty Limited and Pier One Developments Pty Limited. Director of Australia-Israel Chamber of Commerce. Owner and Publisher of the Australian Jewish News.

Mr Magid is a member of the Nomination Committee of Ten Network Holdings Limited.

Other Current Australian Listed Company Directorships: None

Former Australian Listed Company Directorships in Last 3 Years: None

Brian M Sherman AM

B Comm, CTA, SA Fin (Age 64)

Director of Ten Network Holdings Limited since February 1998 and The Ten Group Pty Limited since March 1994. Mr Sherman is President of the Australian Museum Trust, Chairman of Aberdeen Leaders Limited (ASX) and a Director of Voiceless, the fund for animals. He is also a Director of a number of investment companies listed on the American and Canadian stock exchanges and of a number of private companies.

Mr Sherman is the former Chairman and Joint Managing Director of The EquitiLink Group (1981 to 2000), was previously a Director of the Sydney Organising Committee for the Olympic Games (SOCOG) and Chairman of SOCOG’s Finance Committee.

Mr Sherman is a member of the Nomination Committee of Ten Network Holdings Limited and the Corporate Development Committee of The Ten Group Pty Limited.

Other Current Australian Listed Company Directorships: None

Former Australian Listed Company Directorships in Last 3 Years: None

John B Studdy AM

BEc, FCA (Age 78)

Director of Ten Network Holdings Limited since June 1998 and Director of The Ten Group Pty Limited since July 2005. Chairman of Ten Network Holdings Limited from 1998 to February 2002 and Chairman of The Ten Group Pty Limited from May 1993 to February 2002. Mr Studdy is also Director of IWPE Nominees Pty Limited. Recipient of Centenary Medal 2003. Mr Studdy is an Honorary Vice President of the International Federation of MS Societies, Emeritus President of the MS Society and Chairman of the Pain Management Research Institute and of ING Australia Foundation.

Mr Studdy is Chairman of the Nomination Committee of Ten Network Holdings Limited.

Other Current Australian Listed Company Directorships: None

Former Australian Listed Company Directorships in Last 3 Years: Director of Angus & Coote (Holdings) Limited from March 1999 to February 2007, and Director of Westfield Group, a stapled security which comprises Westfield Holdings Limited and Westfield Management Limited as the responsible entity of Westfield Trust and Westfield America Management Limited as the responsible entity of Westfield America Trust, and Director of Westfield Management Limited as the responsible entity of Carindale Property Trust, from January 2004 to May 2007.

Peter D Viner

(Age 62)

Director of Ten Network Holdings Limited since April 1998 and of The Ten Group Pty Limited since July 1997. Served as Chief Executive Officer of The Ten Group Pty Limited from 1993 to 1997. Currently Executive Vice-President of CanWest Global Communications Corp.

Mr. Viner is a member of the Nomination Committee of Ten Network Holdings Limited.

Other Current Australian Listed Company Directorships: None

Former Australian Listed Company Directorships in Last 3 Years: None

Company Secretary

Stephen Partington was appointed as Company Secretary of The Ten Group Pty Limited in October 1996 and as Company Secretary of Ten Network Holdings Limited in June 2001. He also holds the position of Group General Counsel.

Previously he held the position of General Counsel and Group Secretary at Advance Bank where he was employed from 1982 to 1996. Stephen graduated with a Bachelor of Commerce and Bachelor of Laws from the University of New South Wales and Masters of Laws from each of Sydney University and University of Technology, Sydney.

He is a fellow of Chartered Secretaries Australia and has been admitted as a solicitor in New South Wales since 1980.

Directors’ Meetings

The number of meetings of the Company’s Board of Directors and of each Board Committee held during the year ended 31 August 2007, and the number of meetings attended by each Director were:

Director’s Name
Alternate name (if   applicable)

Date appointed

Date
resigned

No. of Meetings of Directors Held/Attended

Meetings of Committees Held/Attended

Audit

NG Falloon

13/02/02

Continuing

10

10

-

-

JJ Cowin

03/04/98

Continuing

10

9

-

-

     JB Studdy (Alternate)

03/04/98

Continuing

1

LS Freedman

16/02/98

Continuing

10

10

-

-

PV Gleeson

16/02/98

Continuing

10

10

4

4

PPA Harris

16/02/98

Continuing

10

9

4

3

     PV Gleeson (Alternate)

12/03/07

Continuing

1

1

IYL Lee

13/10/00

Continuing

10

8

4

3

     JB Studdy (Alternate)

22/10/03

Continuing

2

1

GH Levy

03/04/98

Continuing

10

8

4

4

     PV Gleeson (Alternate)

06/07/04

Continuing

2

R Magid

03/04/98

Continuing

10

9

-

-

     NG Falloon (Alternate)

26/10/05

Continuing

1

BM Sherman

16/02/98

Continuing

10

5

-

-

     EP Sherman (Alternate)

05/12/06

18/05/07

1

     PV Gleeson (Alternate)

10/12/06

04/12/06

1

     BG Sechos (Alternate)

18/05/07

Continuing

2

JB Studdy

04/06/98

Continuing

10

10

-

-

PD Viner

03/04/98

Continuing

10

2^A

-

-

     TC Strike (Alternate)

11/08/00

Continuing

5

     JE Maguire (Alternate)

28/11/05

Continuing

2

The number of meetings held refers to the period whilst a Director.

^A: Mr Viner did not attend the Directors' Meeting held on 15 November 2006. At this meeting, it was discussed how the Company should respond to the prospect of CanWest selling its interest in The Ten Group Pty Limited.

Remuneration Report

Principles Used to Determine the Nature and Amount of Remuneration

The objective of the Company’s executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with achievement of strategic objectives and the creation of value for shareholders. The Board ensures that executive reward satisfies the following key criteria for good reward governance practices:

·          Competitiveness and reasonableness

·          Acceptability to shareholders

·          Performance linkage / alignment of executive compensation

·          Transparency

·          Capital management.

In consultation with external remuneration consultants, the Company has structured an executive remuneration framework that is market competitive and complementary to the reward strategy of the organisation.

Alignment to shareholders’ interests:

·          Has economic profit (earnings before interest and tax – “EBIT”) as a core component of plan design

·          Focuses on sustained growth in share price and delivering constant return on assets as well as focusing the executive on key non-financial drivers of value

·          Attracts and retains high calibre executives.

Alignment to program participants’ interests:

·          Rewards capability and experience

·          Reflects competitive reward for contribution to shareholder growth

·          Provides a clear structure for earning rewards

·          Provides recognition for contribution.

The framework provides a mix of fixed and variable pay, and a blend of short and long-term incentives. As Executives gain seniority with the group, the balance of this mix shifts to a higher proportion of “at risk” rewards.

Non-Executive Directors

Fees and payments to non-executive Directors reflect the demands which are made on, and the responsibilities of the Directors. The Nomination Committee has responsibility for reviewing and recommending the level of remuneration for non-executive Directors in relation to Board and Committee duties. The non-executive Directors do not participate in any share option plans.

Remuneration for non-executive Directors consists of annual fees and superannuation contributions made in accordance with superannuation guarantee legislation for the Directors performing their duties on the Board of the Company and The Ten Group Pty Limited and on various committees.

Directors’ fees have been determined on the basis that it will be attractive to proposed Board members and ensure the Company’s Board is comprised of skilled and well-qualified Directors.

There are no retirement allowances for non-executive Directors.

Executive Pay

The executive pay and reward framework has four components:

·          Base pay and benefits

·          Short-term performance incentives through cash bonuses

·          Long-term incentives through participation in the Long-Term Incentive Plan, and

·          Other remuneration such as superannuation.

Executives in the past have been granted share options under the Ten Executive Option Plan. This Plan is currently suspended.

The combination of these components comprises the Executives’ total remuneration.

Base Pay

Base pay is structured as fixed remuneration that may be delivered as a combination of cash and salary packaged benefits including motor vehicles.

External remuneration consultants periodically provide analysis and advice to ensure base pay is set to reflect the market for a comparable role. Base pay for senior Executives is reviewed annually to ensure the Executive’s pay is competitive with the market. Some Executives have fixed annual base pay increases included as a term of their employment contract.

Retirement Benefits

Retirement benefits are delivered under defined contribution superannuation funds.

Short-Term Incentives

Short-term incentives are available through cash bonuses to certain Executives as determined by the Remuneration Committee. Short-Term Incentive Scheme ('STI') targets are established in each financial year with 25% of the incentive dependent on group EBIT targets, as approved by the Board, and the remainder based on achievement of specific individual and leadership related business drivers and objectives plus a discretionary component based on individual contribution to the business. EBIT is deemed to be the most appropriate measure in determining incentive remuneration in line with company performance. Short-term incentives are payable in December of each year. Using a combination of financial and non-financial targets ensures variable reward is linked to shareholder value consistent with the business plan.

Each Executive has a target short-term incentive opportunity depending on the accountabilities of the role and impact on organisation or business unit performance. For senior Executives (other than the Executive Chairman) the maximum target bonus opportunity varies between 15-35% of fixed remuneration. The Executive Chairman can receive up to a maximum target bonus of 75% of fixed remuneration. Each year, the Remuneration Committee reviews both the prescribed business drivers for the forthcoming year and recommended payments for the completed year under the plan. Performance against STI objectives is measured via a confidential 360-degree feedback review plus a discretionary payment based on individual contribution to the business. The Executive Chairman's performance is assessed by the Board Remuneration Committee annually against pre-determined performance criteria.

Long-Term Incentive Plan

A limited number of senior Executives are invited to participate in a long-term incentive share plan. Ten Network Holdings Limited wishes to give eligible employees an opportunity to participate in the Long-Term Incentive Plan (“Ten Long-Term Incentive Plan”) to encourage retention of key employees, provide an incentive for future performance and align employee interests with shareholder value in the future.

For participants a maximum “incentive amount” is determined at the Remuneration Committee's discretion. The incentive amount is payable with reference to certain profit and personal targets.

Shares equal to the incentive amount are bought on market upfront and vest in four equal tranches over 3 years. The first tranche vests on or about 15 December in each year with the next 3 tranches of shares vesting on or about each successive anniversary of the first acquisition date.

Whilst employed by the Company the tranches of shares are subject to a trading lock until the applicable anniversary of the first acquisition date.

Long-Term Incentive Share Option Plan

Executives in the past have been granted share options under the Ten Executive Option Plan. This Plan is currently suspended.

Details of Remuneration

Amounts of Remuneration

Details of the nature and amount of each element of the emoluments of each Director of Ten Network Holdings Limited and each of the five Executives of the consolidated entity receiving the highest emoluments for the year ended 31 August 2007 are set out in the following tables.

Executive Director of Ten Network Holdings Limited

2007

Short-term Benefits

Post-Employment

Benefits

Share-Based Payment

Name

Cash Salary and Fees

$

Cash Bonus

$

Motor Vehicle

$

Other

$

Super-annuation

$

Shares

$

Total

$

NG Falloon

2,057,541

525,000

-

-

42,459

786,844

3,411,844

Directors of Ten Network Holdings Limited

2007

Short-term Benefits

Post-Employment

Benefits

Share-Based Payment

Name

Cash Salary and Fees

$

Cash Bonus

$

Motor Vehicle

$

Other

$

Super-annuation

$

Shares

$

Total

$

JJ Cowin

78,372

-

-

-

7,053

-

85,425

LS Freedman

78,372

-

-

-

7,053

-

85,425

PV Gleeson

-

-

-

-

87,605

-

87,605

PPA Harris

75,872

-

-

-

6,828

-

82,700

IYL Lee

78,872

-

-

-

7,098

-

85,970

GH Levy

75,872

-

-

-

6,828

-

82,700

R Magid

70,872

-

-

-

6,378

-

77,250

BM Sherman

-

-

-

-

77,250

-

77,250

JB Studdy

75,000

-

-

-

-

-

75,000

PD Viner

75,000

-

-

-

-

-

75,000

Total

608,232

-

-

-

206,093

-

814,325

Other Executives of the Consolidated Entity

2007

Short-Term Benefits

Post-Employment

Benefits

Share-Based Payment

Name

Cash Salary and Fees

$

Cash Bonus

$

Motor Vehicle

$

Other

$

Super-annuation

$

Shares

$

Total

$

G Blackley

821,240

85,500

-

5,607

18,760

282,894

1,214,001

Chief Executive Officer - Television

G Thorley

636,883

204,750

50,357

-

12,760

192,569

1,097,319

Chief Executive Officer – Eye Corp

D Mott

657,240

88,816

-

5,607

12,760

185,840

950,263

Chief Programming Officer

K Kingston

505,453

74,391

-

5,607

41,299

147,429

774,179

Chief Operating Officer

J Kelly

436,925

58,605

28,883

4,757

43,654

131,075

703,899

Chief Financial Officer

Total

3,057,741

512,062

79,240

21,578

129,233

939,807

4,739,661

Cash Bonuses and Options

In the past, options have been granted to Executives under the Ten Executive Option Plan, details of which are set out in Note 37 to the financial statements. The Ten Executive Option Plan is currently suspended.

All short-term incentives were reduced due to EBIT not being achieved.

Shares granted as part of the Long-Term Incentive Plan were issued on a discretionary basis. The amounts disclosed above as part of 'Share-Based Payment' represents the estimated amount accrued in line with the accounting requirements of AASB 2 Share-Based Payment.

Service Agreements

Remuneration and other terms of employment for the Executive Director and the five Executives of the consolidated entity receiving the highest emoluments are formalised in service agreements. Each of these agreements provide for the provision of short-term performance-related incentives, other benefits including car leases and participation when eligible, in the Ten Executive Option Plan and the Long- Term Incentive Plan. Major provisions of the agreements relating to remuneration are set out below.

Nicholas Falloon, Executive Chairman

Term of agreement – 3 years commencing 1 September 2005.

·          Effective 1 September 2006 fixed remuneration of $2,100,000 inclusive of superannuation, to be reviewed annually by the Remuneration Committee and increased by an amount not less than any rise in the annual CPI during the relevant period.

·          A short-term incentive (STI) of up to 75% of current fixed remuneration may be paid against a set of targets and objectives heavily weighted to the financial performance of the group.

·          Long-term incentives (LTI) of up to a maximum of $1,500,000 of Ten Network Holdings Limited shares may be paid against a set of targets to be determined annually and weighted heavily to the financial performance of the Group. Shares must be held by Mr Falloon for a period of not less than 18 months from date of acquisition.

·          Payment of termination benefit on early termination by the employer, other than for gross misconduct, is based on 12 months' fixed remuneration plus 12 months' short and long-term incentive payments.

·          In addition, 100% of the eligible STI is paid on a pro-rated period remaining in the financial year.

·          Termination benefit for resignation, immediate termination by the company for cause or breach of contract is restricted to fixed remuneration and leave unpaid at the date of termination.

·          One month's notice of termination may be given by Mr Falloon within ninety days after there is any diminution in the nature of the duties or responsibilities to be performed by him which results from a change in control. A payment equal to 12 months' fixed remuneration together with short-term and long-term incentive payments is required to be paid to Mr Falloon in such circumstances.

Grant Blackley, Chief Executive Officer – Television

Term of agreement – commencing 1 July 2005 and expiring 1 September 2009.

·          Effective 1 September 2006 fixed remuneration salary, inclusive of superannuation is $840,000, to be reviewed annually by the Executive Chairperson of the board of directors of the Ten Group Pty Limited (currently Mr Falloon), and increased by an amount not less than any rise in the CPI.

·          Fixed remuneration will be reviewed each year with effect from 1 September 2007.

·          For the financial year commencing from 1 September 2006 short-term incentives are available under a short-term incentive scheme equivalent to 30% of fixed remuneration on achievement of specific STI targets.

·          Long-term incentives of up to 25% of fixed remuneration are available through participation in the Long-Term Incentive Plan, subject to Mr Blackley satisfying individual and corporate performance criteria.

·          Payment of termination benefit on early termination by the employer, other than for gross misconduct, on or after 1 July 2006 shall be 12 months' fixed remuneration to the employee.

·          In addition, 100% of the eligible STI is paid on a pro-rated period remaining in the financial year, such pro rata amount being calculated using the percentage of the maximum short term incentive payment achieved in the previous financial year.

·          Long-term incentives allocated but not acquired will be additionally delivered.

·          Immediate termination by the company for cause or breach of contract is restricted to fixed remuneration, any STI amount due and payable and leave unpaid at the date of termination.

·          Twelve months' notice of termination may be given by Mr Blackley no earlier than six months prior to the expiration of the contract. A payment of fixed remuneration to date of termination and short term incentive payments is required to be paid to Mr Blackley in such circumstances.

Gerry Thorley, Chief Executive Officer – Eye Corp

Term of agreement – 3 years commencing 1 January 2005.

·          Effective 1 January 2006 fixed remuneration, inclusive of superannuation, is $650,000.

·          Short-term incentives are available under a short-term incentive scheme equivalent to 25% of fixed remuneration on achievement of specific short term incentive targets.

·          Long-term incentives are available through participation in the Long-Term Incentive Plan.

·          Six months' fixed remuneration may be given by the employee if there is a substantive change to his role.

·          A payment equivalent to twelve months' fixed remuneration must be paid if there is a substantive change in his role leading to termination.

Term of agreement – commencing 1 January 2007.

·          Effective 1 January 2007 fixed remuneration, inclusive of superannuation is $725,000 increasing by no less than 4% on 1 January 2008, no less than 4% annually.

·          Short-term incentives are available under a short-term incentive scheme equivalent to 35% of fixed remuneration on achievement of specific STI targets weighted heavily to the financial performance of the Group.

·          Long-term incentives equivalent to 20% of fixed remuneration are available through participation in the Long-Term Incentive Plan.

·          The company may terminate the contract at any time by providing twelve months' fixed remuneration.

·          Immediate termination by the company for cause or breach of contract is restricted to fixed remuneration and leave unpaid at the date of termination.

·          21 days' notice may be given by the employee if there is a substantive change to his role.

·          A payment equivalent to twelve months' fixed remuneration must be paid if there is a substantive change in his role leading to termination.

·          Six months' notice of termination may be given by Mr Thorley on or after the fourth anniversary of the commencement date.

David Mott, Chief Programming Officer

Term of agreement – 4 years commencing 1 January 2006

·          Fixed remuneration, inclusive of superannuation, for the year ended 31 December 2006 of $650,000, increasing to $680,000 on 1 January 2007, $710,000 on 1 January 2008 and $740,000 on 1 January 2009.

·          A sign on bonus of $200,000 was payable upon commencement of this agreement.

·          Short-term incentives are available under a short term incentive scheme equivalent to 25% of fixed remuneration on achievement of specific STI targets.

·          Long-term incentives are available through participation in the Long-Term Incentive Plan.

·          Immediate termination by the company for cause or breach of contract is restricted to fixed remuneration and leave unpaid at the date of termination.

Kerry Kingston, Chief Operating Officer

Term of agreement – 3 years commencing 1 January 2006.

·          Fixed remuneration, inclusive of superannuation, for the year ended 31 December 2006 of $529,000, increasing to $555,450 on 1 January 2007 and no less than 4% on 1 January 2008.

·          Short-term incentives are available under a short-term incentive scheme equivalent to 25% of fixed remuneration on achievement of specific STI targets.

·          Long-term incentives are available through participation in the Long-Term Incentive Plan.

·          Immediate termination by the company for cause or breach of contract is restricted to fixed remuneration and leave unpaid at the date of termination.

John Kelly, Chief Financial Officer

Term of agreement – 3 years commencing 1 January 2005.

·          Fixed remuneration, inclusive of superannuation, for the year ended 31 December 2006 of $416,745.

·          Short-term incentives are available under a short-term incentive scheme equivalent to 25% of fixed remuneration on achievement of specific STI targets.

·          Pro rata short-term incentive payment payable at end of contract based on completed calendar months in fiscal year.

·          Long-term incentives are available through participation in the Long-Term Incentive Plan.

Term of agreement – 4 years commencing 1 January 2007.

·          Fixed remuneration, inclusive of superannuation, for the year ended 31 December 2007 of $550,000, increasing by no less than 5% on 1 January 2008, no less than 5% on 1 January 2009 and no less than 5% on 1 January 2010.

·          Short-term incentives are available under a short-term incentive scheme equivalent to 25% of fixed remuneration on achievement of specific STI targets.

·          Pro rata short-term incentive payment payable at end of contract based on completed calendar months in fiscal year.

·          Long-term incentives are available through participation in the Long-Term Incentive Plan.

·          Immediate termination by the company for cause or breach of contract is restricted to fixed remuneration and leave unpaid at the date of termination.

Loans to Directors and Executives

No loans were made during the financial year to Directors of Ten Network Holdings Limited or to Executives of the consolidated entity, including their personally-related entities.

Share Options Granted to Directors and Executives

The Ten Executive Option Plan is currently suspended. Therefore, no options over unissued ordinary shares of Ten Network Holdings Limited were granted during or since the end of the financial year to Directors or any of the five most highly remunerated officers of Ten Network Holdings Limited and consolidated entities as part of their remuneration.

Shares Under Option

There are no unissued ordinary shares of Ten Network Holdings Limited under option at the date of this report.

Share Holdings of Directors and Executives

The number of ordinary shares in the Company held during the financial year by each Director of Ten Network Holdings Limited and each of the five Executives of the consolidated entity receiving the highest emoluments for the year ended 31 August 2007, including their personally-related entities, are set out below.

Name

Balance at the Start of the Year

Received During the Year on the Exercise of Options

Received During the Year as Remuneration

Other Changes During the Year

Balance at the End of the Year

Directors of Ten Network Holdings Limited

NG Falloon

-

-

217,300¹

-

217,300

JJ Cowin

1,000,000

-

-

-

1,000,000

LS Freedman

507,347

-

-

(500,000)

7,347

PV Gleeson

15,048,608

-

-

80,000

15,128,608

PPA Harris

24,611

-

-

-

24,611

IYL Lee

10,000

-

-

-

10,000

GH Levy

33,000

-

-

-

33,000

R Magid

300,000

-

-

-

300,000

BM Sherman

8,016,105

-

-

(1,000,000)

7,016,105

JB Studdy

50,000

-

-

-

50,000

PD Viner

-

-

-

-

-

Other Executives of the consolidated entity

G Blackley

72,752

-

164,417²

-

237,169

G Thorley

51,948

-

100,608³

3,000

155,556

D Mott

66,120

-

98,579³

-

164,699

K Kingston

49,076

-

76,617²

-

125,693

J Kelly

141,212

-

64,313²

(100,000)

105,525

¹: Shares purchased under The Ten Employee Performance Incentive Plan were acquired at the prevailing market price at the date of acquisition being $3.5016 and $3.31949.

²: Shares purchased under The Ten Employee Performance Incentive Plan were acquired at the prevailing market price at the date of acquisition being $3.45602 and $3.48014.

³: Shares purchased under The Ten Employee Performance Incentive Plan were acquired at the prevailing market price at the date of acquisition being $3.45602 and $3.45225.

Relationship Between Remuneration and Company Performance - unaudited

The overall level of executive reward takes into account the performance of the consolidated entity over a number of years. Over the past 5 years, the consolidated entity's normalised EBIT has grown at an average of around 15% per annum, and shareholder wealth (normalised earnings per share) has grown at an average rate of around 10% per annum. During the same period, average executive remuneration (Executive Director and the top five remunerated Executives) has grown by approximately 15% per annum. Executive remuneration includes the accounting impact of long-term incentives in line with AASB 2 Share-Based Payment.

Non-Audit Services

The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the Company and/or the consolidated entity are important.

Details of the amounts paid or payable to the auditor (PricewaterhouseCoopers) for audit and non-audit services provided during the year are set out below.

The Board of Directors has considered the position, and, in accordance with the advice received from the Audit Committee is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

·                      All non-audit services have been reviewed by the Audit Committee to ensure they do not impact the impartiality and objectivity of the auditor

·                      None of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants.

During the year the following fees were paid or payable for services provided by the auditor of the Company, its related practices and non-related audit firms:

Auditor

PricewaterhouseCoopers continues in office in accordance with section 329 of the Corporations Act 2001.

Auditors' Independence Declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 23.

Contracts with Directors

During the financial year, Competitive Foods Australia Limited entered into agreements in respect of the purchase of television airtime (through an advertising agency) from a controlled entity on normal commercial terms and conditions. Mr JJ Cowin, a Director of the Company, is Chairman of, and has a substantial interest in, Competitive Foods Australia Limited. The value of such transactions, which are at arm's-length, is not material to the consolidated entity.

Insurance of Officers

During the financial year, the Company arranged for directors and officers liability insurance cover for officers of the Company and related parties. An insurance premium was paid in relation thereto. The officers of the Company covered by this insurance includes all Directors and all employees in positions of responsibility.

The Directors have not included details of the nature of the liabilities covered or the amount of the premium paid in respect of the directors’ and officers’ insurance contracts as such disclosure is prohibited under the terms of the contract.

Indemnification of Officers

The Company has entered into deeds to indemnify each Director of the Company in accordance with the approval given at the Annual General Meeting of the Company held on 7 December 1999.

In broad terms, the deeds of indemnity entrench a Director’s rights to:

·                 access the books and records of the Company which relate to the period the Director acted as a Director of the Company;

·                 be indemnified by the Company to the maximum extent permitted by law; and

·                 require the Company to take out an appropriate directors’ and officers’ insurance policy to protect the Director from liability (to the maximum extent permitted by law).

Separately, a deed of indemnity has been provided by The Ten Group Pty Limited to Directors and officers of that company and its controlled entities.

Additionally, separate deeds of indemnity cover other executives of controlled entities who have been requested to act as directors on the boards of other companies in which the Group holds an interest.

No liability has arisen under these indemnities at the date of this report.

Environmental Regulations

The consolidated entity is not subject to significant environmental regulations, with the exception that a controlled entity holds environmental licences for its manufacturing site in Victoria. The licenses require discharge to air and water to be below specified levels. These requirements arise under the Environmental Protection Authorities Regulations.

The Directors are not aware of any breaches to environmental regulations and are not aware of any infringement notices being issued.

Rounding of Amounts to Nearest Thousand Dollars

The Company is of a kind referred to in Class Order 98/100 and accordingly the financial report has been rounded to the nearest thousand dollars, unless otherwise stated.

Signed in Sydney on 25 October 2007 in accordance with a resolution of the Directors.

NG Falloon
Chairman