2007 Full Year Result Corporate Governance Statement

Introduction

The Board of Directors of Ten Network Holdings Limited (“Ten Holdings”) is committed to responsible corporate governance in accordance with community and shareholder expectations.

Prior to the exchange by the CanWest group of companies of interests which they held in The Ten Group Pty Limited ('Ten Group') in August 2007 (the 'CanWest Exchange'), each of Ten Holdings and Ten Group (together referred to as 'Ten') operated in accordance with Constitutions which were adopted in 1998. These Constitutions contained various restrictive provisions, including on the nature and scope of the activities that each company could engage in and the composition and responsibilities of each of the respective Boards of Directors.

Following the CanWest Exchange, the majority of the limitations contained in the respective Constitutions for each of Ten Holdings and Ten Group have automatically fallen away pursuant to provisions formerly contained in those Constitutions.

Additionally, provisions previously contained in each Constitution to permit shareholders of Ten Holdings to be able to attend and vote at general meetings of Ten Group, have ceased to apply.

It is intended that the Constitutions for each Company will be updated prior to the end of the 2007 calendar year – see in this regard the resolution to be considered at this year's annual general meeting for Ten Holdings to adopt a replacement Constitution.

For the purposes of this report, and having regard to the transitionary period faced by each of Ten Holdings and Ten Group, which has yet to be finalised, as a result of the simplification of the corporate structure following the CanWest Exchange, this review considers the corporate governance practices as they existed within each of Ten Holdings and Ten Group during the financial year ended 31 August 2007.

During that time, the principal operations of Ten Holdings were limited to the holding of a significant interest in Ten Group, which is the major operating entity within the Ten Holdings group of companies. Accordingly, the corporate governance practices were structured having regard to these operations.

In determining the standards that Ten should seek to achieve, Ten Holdings and Ten Group have previously reviewed, with the assistance of external advisers, its practices in terms of the ASX Corporate Governance Council’s Principles of Good Corporate Governance and Best Practice Recommendations (“the ASX Guidelines”).

Ten acknowledges that the ASX Corporate Governance Council undertook a review of the ASX Guidelines during the year and new Corporate Governance Principles and Recommendations were issued in August 2007 and will take effect from 1 January 2008.

Having regard to the nature of the transitionary arrangements faced by Ten referred to above, this report has been prepared (as permitted) under the original ASX Guidelines.

Ten considers that its practices were largely consistent with those contained in the ASX Guidelines (except where referred below) and continued efforts have been directed throughout the year to attaining a greater level of compliance.

In summary, compliance with the ASX Guidelines has been achieved as at 31 August 2007 as follows:

	ASX Principle	Compliance

Principle 1:	Lay solid foundations for management and oversight

1.1	Formalise and disclose the functions reserved to the board and those delegated to management.	Comply


Principle 2:	Structure the board to add value

2.1	A majority of the board should be independent directors.	Comply

2.2	The chairperson should be an independent director.	Non-Comply

2.3	The roles of chairperson and chief executive officer should not be exercised by the same individual.	Non-Comply

2.4	The board should establish a nomination committee.	Comply

2.5	Provide the information indicated in the ASX Guidelines to reporting on Principle 2.	Comply

Principle 3:	Promote ethical and responsible decision-making

3.1	Establish a code of conduct to guide the directors, the chief executive officer (or equivalent), the chief financial officer (or equivalent) and any other key executives as to: 3.1.1 the practices necessary to maintain confidence in the company’s integrity, 3.1.2 the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.	Comply Comply

3.2	Disclose the policy concerning trading in company securities by directors, officers and employees.	Comply

3.3	Provide the information indicated in the ASX Guidelines to reporting on Principle 3.	Comply


Principle 4:	Safeguard integrity in financial reporting

4.1	Require the chief executive officer (or equivalent) and the chief financial officer (or equivalent) to state in writing to the board that the company’s financial reports present a true and fair view, in all material respects, of the company’s financial condition and operational results and are in accordance with relevant accounting standards.	Comply

4.2	The board should establish an audit committee.	Comply

4.3	Structure the audit committee so that it consists of: · Only non-executive directors · A majority of independent directors · An independent chairperson, who is not chairperson of the board · At least three members	Comply

4.4	The audit committee should have a formal charter.	Comply

4.5	Provide the information indicated in the ASX Guidelines to reporting on Principle 4.	Comply


Principle 5:	Make timely and balanced disclosure

5.1	Establish written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior management level for that compliance.	Comply

5.2	Provide the information indicated in the ASX Guidelines to reporting on Principle 5.	Comply

Principle 6:	Respect the rights of shareholders

6.1	Design and disclose a communications strategy to promote effective communication with shareholders and encourage effective participation at general meetings.	Comply

6.2	Request the external auditor to attend the annual general meeting and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the auditor’s report.	Comply

Principle 7:	Recognise and manage risk

7.1	The board or appropriate board committee should establish policies on risk oversight and management.	Comply

7.2	The chief executive officer (or equivalent) and the chief financial officer (or equivalent) should state to the board in writing that: 7.2.1 the statement given in accordance with best practice recommendation 4.1 (the integrity of financial statements) is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the board, 7.2.2 the company’s risk management and internal compliance and control system is operating efficiently and effectively in all material respects.	Comply Comply
7.3	Provide the information indicated in the ASX Guidelines to reporting on Principle 7.	Comply


Principle 8:	Encourage enhanced performance

8.1	Disclose the process for performance evaluation of the board, its committees and individual directors and key executives.	Comply

Principle 9:	Remunerate fairly and responsibly

9.1	Provide disclosure in relation to the company’s remuneration policies to enable investors to understand (i) the costs and benefits of those policies, and (ii) the link between remuneration paid to directors and key executives and corporate performance.	Comply

9.2	The board should establish a remuneration committee.	Comply

9.3	Clearly distinguish the structure of non-executive directors’ remuneration from that of executives.	Comply

9.4	Ensure that payment of equity-based executive remuneration is made in accordance with thresholds set in plans approved by shareholders.	Comply

9.5	Provide the information indicated in the ASX Guidelines to reporting on Principle 9.	Comply


Principle 10:	Recognise the legitimate interests of stakeholders

10.1	Establish and disclose a code of conduct to guide compliance with legal and other obligations to legitimate stakeholders.	Comply

Ten is pleased to report in detail below on its performance in regard to the recommendations contained in the ASX Guidelines as they related to Ten Holdings and Ten Group.

Principle 1: Lay solid foundations for management and oversight.

Recommendation 1.1: Formalise and disclose the functions reserved to the Board and those delegated to management.

The role of the Board of Ten Holdings recognised that the Company was created as a limited purpose company principally to hold securities on issue from Ten Group.

Except in the limited circumstances provided under its Constitution, Ten Holdings was not permitted to:

· incur any borrowings or other liabilities;

· dispose of its interests in the securities that it holds in Ten Group;

· acquire any asset or investment or carry on any business other than in respect of securities in Ten Group.

The key responsibilities and functions of the Board of Ten Holdings were as follows:

(a) monitoring the investments held in Ten Group including the strategies and budgets to be approved by the Ten Group Board, through the representation by various of its Directors to the Board of Ten Group;

(b) monitoring compliance with regulatory requirements and ethical standards;

(d) assessment of Ten Holdings’ Board performance;

(e) determination of the membership and terms of reference of the Ten Holdings’ Board committees;

(f) appointment of the Company Secretary;

(g) any matters in excess of discretions that it may have from time to time delegated to Ten Group or any one or more of the Ten Group Directors, company secretary of either Ten Holdings or Ten Group or the Ten Holdings’ or Ten Group’s share registrar or any them from time to time;

(h) monitoring and enforcement of the provisions contained in Schedule 1 of the Constitution of Ten Holdings relating to compliance with the foreign ownership provisions of the Broadcasting Services Act prior to the cessation of these restrictions pursuant to the changes to the Broadcasting Services Act to remove the previous restrictions on foreign and cross media ownership, which took effect earlier this year;

(i) approval of each of the following:

(i) the acquisition, disposal or cessation of any permitted assets or investments in Ten Group by Ten Holdings;

(ii) the issue of any shares, options, equity instruments or other securities in Ten Holdings;

(iii) payment of dividends in accordance with the Constitution of Ten Holdings;

(iv) the appointment of the external auditor and remuneration payable in connection with the audit of the financial statements;

(v) half yearly and annual financial statements and associated Directors’ reports; and

(vi) any changes to the discretions delegated from the Board.

Ten Group, as the parent entity of the operating entities, had a more dynamic role, which is mirrored in the responsibilities that were assumed by its Board.

These responsibilities included:

(a) appointment of senior management of Ten Group including its Chief Executive Officer (and his or her direct reports) and its Company Secretary, and the determination of their terms and conditions of appointment (including remuneration);

(b) monitoring and evaluating the performance of senior management of Ten Group (including its Chief Executive Officer) in achieving any strategies and budgets approved by the Board;

(i) executive and Board succession planning (and in particular for the Chief Executive Officer); and

(ii) executive development activities.

(d) appointment of the Chairperson;

(e) determination of the membership and terms of reference of Board Committees;

(f) adoption of, and monitoring compliance with, corporate governance policies;

(g) monitoring compliance with the ASX Listing Rules requirements to ensure that timely disclosure is made to Ten Holdings in accordance with the undertaking provided by Ten Group to the ASX;

(h) monitoring and enforcement of the provisions contained in Schedule 1 of the Constitution of Ten Group relating to compliance with the foreign ownership provisions of the Broadcasting Services Act prior to the cessation of these restrictions pursuant to the changes to the Broadcasting Services Act to remove the previous restrictions on foreign and cross media ownership, which took effect earlier this year;

(i) determining any matters in excess of discretions that it may have, from time to time, delegated to the Chief Executive Officer and senior management/the Executive Committee; and

(j) approving each of the following:

(i) the financial and capital expenditure budgets;

(ii) significant changes to the organisational structure and the appointment of such senior officers as the Board may determine;

(iii) the acquisition, establishment, disposal or cessation of any significant business of Ten Group;

(iv) payment of dividends in accordance with the Constitution of Ten Group;

(v) the appointment of the external auditor and remuneration payable in connection with the audit of the financial statements;

(vi) the issue of any shares, options, equity instruments or other securities in Ten Group and any major debt obligations to be incurred by Ten Group;

(vii) annual financial statements and Directors’ reports;

(viii) periodic news releases of the Ten Group’s financial results;

(ix) any changes to the discretions delegated from the Board; and

(x) the risk management policies of Ten Group.

It is the role of senior management within Ten Group and its subsidiaries to manage the activities of those companies in accordance with the direction and delegations of the Board. It is the Board’s responsibility to oversee the activities of management in carrying out those delegated duties. The Board of Ten Group was also responsible for reviewing the strategies proposed by its management for the growth and operations of the Ten companies.

In carrying out its governance role, the task of the Ten Group’s Board has been to drive the performance of Ten Group and its subsidiaries. The Board has also ensured that these companies complied with all of their contractual, statutory and other legal obligations.

In each case, the Boards had adopted formal charters that detailed the functions and responsibilities of the Board of each Company. A copy of these charters appears on Ten’s website and, in the case of the charter for Ten Holdings, it is anticipated that the charter will be revised to reflect the change in responsibilities within the Ten structure following the CanWest Exchange.

Following the CanWest Exchange and the attendant changes to the Constitutions for each of Ten Holdings and Ten Group, it is intended that the Board of Ten Holdings will assume principal responsibility for the oversight of the operations of both the television and the out-of-home activities conducted by subsidiaries of Ten Holdings. Under these changes, the Board of Ten Group will in future conduct itself in a similar manner to each other subsidiary of Ten Holdings and otherwise in a manner consistent with a subsidiary of a listed public company.

Principle 2: Structure the board to add value.

Recommendation 2.1 A majority of the Board should be independent directors.

Size and composition of the Board of Ten Holdings

Details of the Directors of Ten Holdings in office during the 2007 financial year are set out on pages 6 to 10.

Ten Holdings considers that only two of its eleven Directors were not independent, being Nick Falloon (as an Executive Chairman) and Peter Viner (as an executive of CanWest, which held a substantial economic interest in Ten Group which, after the exchange is held in Ten Holdings).

In determining whether a Director is independent, the Boards of Ten Holdings and Ten Group had regard to whether the Director was considered to be one who:

(a) had a material relationship as an adviser, supplier or customer or in any other contractual role with Ten Holdings or Ten Group (either directly, or as a partner, shareholder or executive officer of an organisation that has a material relationship with Ten Holdings or Ten Group);

(b) was, or had been within the previous three years, employed by Ten Holdings or Ten Group or a subsidiary of Ten Group;

(c) was, or had been within the previous three years employed by, or a partner in, any firm that in the past three years had been the external auditor to either Ten Holdings or Ten Group;

(d) was a substantial shareholder of either Ten Holdings or Ten Group or otherwise associated with a substantial shareholder of either company;

(e) had served on the Board of Ten Holdings or Ten Group for a period which could, or could reasonably be perceived to, materially interfere with the Director’s ability to act in the best interests of Ten Holdings or Ten Group, as appropriate; and

(f) was free from any interest and any business or other relationship that could, or could be perceived to, materially interfere with the Director’s ability to act in the best interests of Ten Holdings or Ten Group, as appropriate.

The Boards of Ten Holdings and Ten Group had previously determined that a material relationship was to be determined on the basis of fees paid or monies received or paid to either a Director or a Director-related entity, which would have impacted the EBITDA of Ten Group in the previous financial year by more than 5%.

These criteria continue to apply in determining the independence of Directors of Ten Holdings.

The Boards considered that the independent Directors of each Company, who had served for a number of years, brought considerable skill, experience and expertise to Ten and they continued to review and challenge the performance of management and to exercise independent judgement. Accordingly, the Boards considered that the length of service did not materially interfere with the ability of the respective Directors to act in the best interests of their respective Companies during the last financial year.

Following the CanWest Exchange and having regard to the fact that CanWest now holds 56% of the issued shares in Ten Holdings, each of Messrs Laurence Freedman, Paul Harris, Geoff Levy, Robert Magid, Brian Sherman and Ms Irene Lee have resigned as Directors of each of Ten Holdings and Ten Group with effect from 26 October 2007. Messrs Leonard Asper, Peter Viner, Jack Cowin and John Studdy have also resigned from the Board of Ten Group.

The Boards of those Companies have moved to fill the casual vacancies on each Board following these resignations by appointing each of Messrs Leonard Asper and Thomas Strike to the Board of Ten Holdings and by appointing each of Messrs Grant Blackley (Chief Executive Officer – Television) and John Kelly (Chief Financial Officer) to the Board of Ten Group. As a consequence of these Board changes and reflecting the shareholding position of CanWest under the new corporate structure, the majority of the Directors on the Board of Ten Holdings are now considered to be non-independent.

As part of the new Constitutions for each of these Companies, it is proposed that the size of the Boards be reduced to a maximum of 11 Directors in the case of Ten Holdings and 5 Directors in the case of Ten Group.

Each Company also considered that whilst Jack Cowin is the Chairman of, and holds a substantial interest in Competitive Foods Australia Limited, which is an advertising client of Ten Group, his company was not considered to be a material customer.

The present Constitution of Ten Holdings provides that generally one third of those Directors (other than a Managing Director, Alternate Directors and any Director who has been appointed to fill a casual vacancy or as an addition to the Board since the last annual general meeting) are required to retire and seek re-election each year and no Director can hold office for more than three years without seeking re-election.

The Directors may appoint persons to fill casual vacancies or as additions to the Board. Any person filling a casual vacancy or appointed as an additional Director holds office until the next annual general meeting, where they must retire but are eligible for re-election.

A person is only eligible for appointment as a Director at an annual general meeting where a nomination of the person, by a member, and a consent signed by the person are received at least 30 business days before the relevant general meeting.

Size and composition of the Board of Ten Group

The former provisions of the Constitution of Ten Group and the associated Director Appointment deeds (entered into between Ten Group and various parties at the time of the listing of Ten Holdings in 1998) provided that the Board of Ten Group should at all times be comprised of 13 Directors, of whom:

· Mr Falloon, being a person appointed under the Constitution, is a Director and the Chairperson.

· The CanWest Group was entitled to appoint three persons as Directors (previously being Messrs Asper, Strike and Viner).

· Messrs Sherman and Freedman were jointly entitled to appoint two Directors (previously Messrs Sherman and Freedman) whilst they held a substantial interest in Ten Holdings. Having ceased to hold this substantial interest in May 2004, they subsequently resigned but the Ten Group Board appointed them to fill the vacancies caused as a result of their resignation. At the Annual General Meeting in 2004, they were elected as Directors in accordance with the constitution of Ten Group.

· In light of the change of circumstances referred immediately above, the members of Ten Holdings were entitled to elect the nine remaining Directors.

The Constitution of Ten Group also stipulated (but the provisions have now been deleted as part of the CanWest Exchange) that any Board committee should have five members and should be comprised of:

· the Chairperson or his nominee;

· one person nominated by the CanWest Group; and

· three persons appointed by the Board.

The Board was not allowed to nominate any person for election as a Director except for a casual vacancy. Any vacancies on the Board of Ten Group (except vacancies where one or more persons had a right to appoint the replacement under the Constitution of Ten Group) were required to be elected by members of Ten Group at a general meeting (and thus the members of Ten Holdings under the see-through voting provisions – refer above as to the changes following the CanWest Exchange).

Nominations to fill a casual vacancy were reviewed by Ten Group’s Executive Committee of the Board, with recommendations submitted to its Board of Directors for approval.

A person was only eligible to be so appointed as a Director (even if his or her re-election arose from retirement by rotation) where both the nomination of the person by a member and a consent to nomination signed by the person were received by Ten Group at least 28 business days before the relevant general meeting.

Members of Ten Holdings were entitled to nominate a person to be a Director of Ten Group by delivering a form of nomination together with the consent of the person nominated, to Ten Holdings at least 30 business days before the relevant general meeting of Ten Group.

As a result of the CanWest Exchange, the Board of Ten Group has been reconstituted as of 26 October 2007 as set out on page 30 above and future appointments to that Board will be controlled by Ten Holdings.

Each of the Directors of Ten Holdings was also a Director of Ten Group. Additionally, Messrs Asper and Strike were also Directors of Ten Group.

Ten Group considered that, based upon the criteria referred to above relating to independent directors, its Board was composed of a majority of independent directors with only Nick Falloon (the Executive Chairman), Leonard Asper, Thomas Strike and Peter Viner (as appointees of CanWest, which previously held a substantial economic interest in Ten Group and as a result of the CanWest Exchange now holds those interests in Ten Holdings) being considered non-independent directors.

In the case of the CanWest Group’s representatives, the Board considered that, given the significant role played by the CanWest Group in the early 1990s in rescuing the Ten licensee companies from financial distress and the significant international media industry expertise and experience of the relevant CanWest Group Board members, these Directors provided substantial contributions to the Ten Group’s Board.

During the financial year, the Board of Ten Group has maintained an Executive Committee, which had five (5) members, each of whom was required to be a Ten Group Director.

The members were:

Nick G Falloon (Chairman)

Jack J Cowin

Laurence S Freedman

Thomas C Strike (CanWest nominee)

Paul V Gleeson

The Board had delegated its powers to the Executive Committee between Board meetings to facilitate the expeditious handling of matters that were otherwise required to be dealt with by the Board.

The quorum for meetings of the Executive Committee was 5 members, and all decisions of the Executive Committee were required to be unanimous.

During the financial year, this Committee did not meet and following the CanWest Exchange, this Committee has been disbanded.

Recommendation 2.2: The Chairperson should be an independent director.

Recommendation 2.3: The roles of Chairperson and Chief Executive Officer should not be exercised by the same individual.

Nick Falloon is the Chairman of Ten Holdings and the Chairman and Chief Executive Officer of Ten Group. Mr Falloon was originally appointed to these roles in February 2002.

In considering the nominations for appointment of the Chairman at that time, the Boards considered that Mr Falloon had an outstanding record and reputation in the media sector and was held in the highest regard across Australia’s business community.

In addition, the Boards believed that, given Mr Falloon’s operational skills and experience in the media, it was appropriate for him to also assume executive responsibilities within Ten Group.

While Mr Falloon holds the position of both Chairman and Chief Executive Officer of Ten Group, Grant Blackley holds the position of Chief Executive Officer – Television and Gerry Thorley occupies the position of Chief Executive Officer of Eye Corp, being the two operating divisions within Ten.

Recommendation 2.4: The Board should establish a nomination committee.

The Board of Ten Holdings previously maintained a Nomination Committee comprised of all Directors of Ten Holdings.

This Committee was chaired by John Studdy, who was an independent, non-executive Director.

A charter was established which charged the Nomination Committee with responsibility for considering issues associated with Board composition and succession planning, including nomination of non-executive Directors to the Board. The Nomination Committee was in the process of formulating procedures and policies for the selection and appointment of new Directors. Following the CanWest exchange, the role of this Committee has now been reviewed and the duties in future will be assumed by the Board of Ten Holdings. The Board of Ten Holdings proposes to develop procedures for the future selection and appointment of new independent Directors and, once adopted, these procedures will be made available on the Company’s website. The Board also proposes to review the appraisal system developed by the previous Committee to review the performance of the Board, its committees and individual Directors.

A copy of the former charter for this Committee appears on Ten’s website.

Principle 3: Promote Ethical and Responsible Decision Making

Recommendation 3.1: Establish a code of conduct to guide the Directors, Chief Executive Officer, the Chief Financial Officer and any equivalent key executives.

Ten has adopted a Code of Conduct that governs conflicts of interest, corporate opportunities, confidentiality, unethical behaviour and compliance with laws and regulations.

A copy of this Code appears on Ten’s website.

The Chief Financial Officer has also undertaken to the Audit Committees of each of Ten Holdings and Ten Group that he will comply with the Group of 100 CFO Code of Conduct.

In addition, each Executive is bound by a written employment agreement that also contains provisions dealing with confidentiality, conflicts of interest, compliance with laws and other policies adopted by Ten.

Recommendation 3.2: Disclose the policy covering trading in company securities by directors, officers and employees.

A policy exists in relation to dealings in the securities of Ten Holdings by Directors and employees within Ten. This policy provides that such persons should be aware of the insider trading provisions contained in the Corporations Act when considering any dealings in shares of Ten Holdings.

Directors and senior employees are also prohibited from dealing in securities in the Company during the period commencing at the conclusion of each six monthly financial period and concluding on the day following the release by the Company of its relevant half yearly announcement to the Australian Securities Exchange. This policy reflects the perception that during these periods Directors and senior employees may be in possession of significant financial information associated with the preparation of the Company's periodic financial disclosures to the market.

Directors are required to inform the Chairman when they wish to trade shares in Ten Holdings. Executives have been advised to contact the Company Secretary regarding any queries or concerns over share trading restrictions.

Principle 4: Safeguard Integrity in Financial Reporting

Recommendation 4.1: Require the Chief Executive Officer and the Chief Financial Officer to state in writing to the board that the company’s financial reports present a true and fair view, in all material respects, of the company’s financial condition and operational results and are in accordance with relevant accounting standards.

The Boards of Ten Holdings and Ten Group required the Chief Executive Officer and the Chief Financial Officer to provide a representation letter for consideration in conjunction with the review of the yearly financial statements and, in the case of Ten Holdings, at the time the Board considers the half yearly financial reports.

These representation letters provide a sign-off in relation to various issues associated with the keeping of financial records generally, the preparation of the financial statements and the disclosures made, including a specific sign-off that the financial statements present a true and fair view.

In accordance with the Corporations Act, the Directors may only give their declaration in relation to the annual financial statements if the Chief Executive Officer and the Chief Financial Officer have made the declarations contained in their representation letters.

Recommendation 4.2: The board should establish an audit committee.

Recommendation 4.3: Structure the audit committee so that it consists of:

· only non-executive directors

· a majority of independent directors

· an independent chairperson who is not chairperson of the board

· at least 3 members

The Boards of Ten Holdings and Ten Group had previously each established an Audit Committee. The members of the Audit Committee of Ten Holdings were:

Paul V Gleeson (Chairman)

Geoff H Levy

Paul Harris

Irene Y Lee

The Ten Group Audit Committee included each of the members of the Audit Committee of Ten Holdings, together with Thomas Strike (a CanWest nominee).

The Chairman of each of the above Committees was a member of the Institute of Chartered Accountants and has significant experience in dealing with financial and accounting matters.

The details of the qualifications of the remaining members of these Committees may be found in their Director Profiles on page 7 to 10. Details of attendances at meetings of the Audit Committees are set out at page 11.

Recommendation 4.4: The audit committee should have a formal charter.

The Audit Committees of Ten Holdings and Ten Group had each previously adopted a formal charter. The charters indicated that responsibilities of the Audit Committees included:

· reporting to the respective Boards on their activities;

· reviewing the effectiveness of management systems, in areas of greatest financial risk;

· recommending to the respective Boards on the appointment of the external auditor (which is subject to each Company’s Constitution) and on the auditor’s remuneration;

· reviewing and assessing the auditor’s report and the actions proposed by management in response;

· being satisfied that the scope of the audit is adequate especially in relation to areas where the Audit Committee believes special attention is necessary;

· reviewing the accounting policies and practices of each Company; and

· reviewing the half yearly and annual financial statements.

The former charters for the Audit Committees may be accessed on Ten’s website. The charter for the Audit Committee for Ten Holdings has yet to be reviewed following the CanWest Exchange but it is anticipated that no significant change to the charter will be implemented in the near future.

Following the CanWest Exchange, the Audit Committee of Ten Group has been disbanded and the Audit Committee of Ten Holdings will now assume responsibility to additionally undertake the responsibilities that were previously undertaken by the Audit Committee of Ten Group.

Under the provisions formerly contained in the Constitution for each of Ten Holdings and Ten Group, the respective Companies were required to appoint PricewaterhouseCoopers as their auditor (subject to any rights of removal the members have under the Corporations Act or the Constitution of each company). In accordance with the Corporations Act, the lead and review audit partner is required to rotate at least every five years.

Principle 5: Make Timely and Balanced Disclosure

Recommendation 5.1: Establish written policies and procedures designed to ensure compliance with ASX Listing Rules disclosure requirements and to ensure accountability at a senior management level for that compliance.

Ten Holdings, as a listed company, is required to comply with the Listing Rules of the ASX. Ten Group previously undertook to the ASX that it would comply with certain Listing Rules, including to ensure that information was provided to Ten Holdings in respect of any continuous disclosure requirements.

Following the CanWest Exchange, the ASX has agreed that this undertaking may be withdrawn, on the basis that the simplified corporate structure no longer dictates that such obligations be formalised and on the basis that CanWest has ceased to hold a substantial economic interest in Ten Group. This change will come into effect once the minority interest in Ten Group accept an offer to exchange their shares in Ten Group for new shares to be issued by Ten Holdings.

The Board of Ten Group had previously established a policy to ensure that any relevant information requiring disclosure is referred to the Company Secretary for review in conjunction with the Chairman of Ten Holdings. The Company Secretary for Ten Holdings, together with the Chief Financial Officer, will now ensure that any information requiring disclosure by Ten Holdings will be referred to the Chairman of Ten Holdings for review prior to any disclosure being made.

A copy of this policy also appears on Ten’s website but it is intended to be revised in the near future to reflect the changes arising following the CanWest Exchange.

Principle 6: Respect the Rights of Shareholders

Recommendation 6.1: Define and disclose a communications strategy to promote effective communication with shareholders and encourage effective participation at general meetings.

Ten Holdings provides regular financial releases to the ASX in respect of its half-year (ending February) and full-year (ending August) financial results. These disclosures are generally made during March/April and October of each year.

Additionally, relevant high level financial information is also disclosed in relation to its first quarter (ending November) and third quarter (ending May) results each year.

The financial results are posted to Ten’s website within 24 hours of disclosure to the ASX. Similarly, any other major disclosures to the ASX outside of the financial results are also posted to Ten’s website. Those shareholders who wish to be advised of any announcements, may notify the share registrar of Ten Holdings, who will arrange for an email to be sent to the shareholder advising that an announcement has been posted on Ten’s website on each occasion that a major disclosure is made by Ten Holdings to the ASX.

Ten Holdings also posts copies of all presentations made to analysts and media representatives on its website and shareholders may communicate with Ten by email.

Ten Holdings produces its annual review for dispatch to shareholders generally by early November each year. Shareholders are given the opportunity, following recent amendments to the Corporations Act, to 'opt-in' to receive the annual review. In the event that a shareholder does not elect to opt-in to receive an annual review, they may alternatively elect to receive an email from the share registrar for Ten Holdings advising that the annual review has been posted to the Ten website or will be notified at the same time as the notice of annual general meeting is sent to shareholders.

The notice of annual general meeting for Ten Holdings is forwarded, together with proxy forms allowing shareholders unable to attend the annual general meeting to be able to vote (in the event of resolutions being put to a poll) on the matters contained in the notice of meeting.

Under the previous Constitution of both Ten Holdings and Ten Group, shareholders of Ten Holdings were generally entitled to attend and vote at general meetings of Ten Group as if they were shareholders of Ten Group.

In those circumstances, the shareholders in Ten Holdings were able to cast a vote on a poll on the basis of one vote for each share held by the shareholder in Ten Holdings.

Following the CanWest Exchange, these see-through voting rights no longer apply.

Recommendation 6.2: Require the external auditor to attend the annual general meeting and be able to answer shareholder questions about the preparation and content of the auditor’s report.

The partner from PricewaterhouseCoopers responsible for the audit of the financial statements of Ten Holdings attends the annual general meeting to answer any questions that shareholders may wish to raise in relation to the financial statements.

Shareholders may submit written questions to the auditor in relation to the content of the auditor’s report and the conduct of the audit of the annual financial statements no later than the 5^th business day before the annual general meeting.

Principle 7: Recognise and Manage Risk

Recommendation 7.1: The board or an appropriate board committee should establish policies on risk oversight and management.

A copy of Ten’s Risk Management Policy is available on Ten’s website.

The policy identifies that:

· the Boards of Ten Holdings and Ten Group were responsible for overseeing the establishment and implementation by management of risk management systems and reviewing the effectiveness of these systems;

· the Audit Committees of Ten Holdings and Ten Group were delegated the responsibility for receiving submissions from management regarding the management of business risks, including the formulation and review of the business risks policy and other risk management policies; and

· management is responsible for the management of, and reporting to the Board on, risk in accordance with the business risks policy through a formal organisation-wide risk management framework and other formal and informal risk specific frameworks and approaches.

The policy is presently being revised to reflect changes arising following the CanWest Exchange.

Recommendation 7.2: The Chief Executive Officer and the Chief Financial Officer should state to the board in writing that:

7.2.1 the statement given in accordance with best practice recommendation 4.1 (the integrity of financial statements) is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the board.

7.2.2 the company’s risk management and internal compliance and control system is operating efficiently and effectively in all material respects.

In addition to regular reports provided by management to the Audit Committee of Ten Holdings, the representation letter which is provided by the Chief Executive Officer and the Chief Financial Officer to the Board of the Company at the time that the half-yearly and yearly financial statements are prepared (see Recommendation 4.1 above) includes statements which address the matters referred to in this recommendation.

Principle 8: Encourage Enhanced Performance

Recommendation 8.1: Disclose the process for performance evaluation of the board, its committees and individual directors and key executives.

The Nomination Committee of the Ten Holdings’ Board has previously been delegated responsibility to review the performance of the Board, its Committees and individual Directors.

Following the CanWest Exchange, these procedures are being reviewed.

Agendas are set by the Board's Chairman to ensure adequate coverage of financial, strategic and major risk areas throughout the financial year.

In order to assist the Boards in performance of their duties, reports have traditionally been prepared by each of the relevant General Managers and submitted to Directors in advance of each regular Board meeting.

Additionally, financial reports are prepared and distributed to each Director at the end of each calendar month, with Directors having the opportunity to receive weekly pacing reports that show latest revenue and ratings performances.

The Boards of Ten Holdings and Ten Group, and Board Committees were entitled to retain advisers as considered necessary.

Directors of both Companies also had access to the Company Secretary of the relevant Company to assist in the provision of any information reasonably sought by Directors and the Company Secretaries were accountable to the Board through the Chairman on all governance issues.

Under the Constitutions of both Ten Holdings and Ten Group, the Company Secretary of each Company is required to be appointed and removed by the Board as a whole.

In the case of senior executives of Ten Group, a formal performance evaluation process was conducted under the guidance of the Remuneration Committee of Ten Group. The performance criteria for senior executives are set out on pages 12 to 14 of the Directors’ Report.

Principle 9: Remunerate Fairly and Responsibly

Recommendation 9.1: Provide disclosure in relation to the company’s remuneration policies to enable investors to understand:

(i) the cost and benefits of those policies; and

(ii) the link between remuneration paid to directors and key executives and corporate performance.

Recommendation 9.3: Clearly distinguish the structure of non-executive directors' remuneration from that of executives.

Disclosure of the remuneration for each Director and each of the five highest paid executives is set out on pages 15 to 16 of the Directors’ Report.

Non-Executive Directors of Ten Holdings and Ten Group did not participate in any share or option plans offered by those companies to the executives of Ten Group.

Additionally, there are no retirement benefit plans available to non-Executive Directors of either company. Ten Group did make contributions during the last financial year to approved superannuation funds on behalf of each Australian resident non-executive Director in accordance with the superannuation guarantee legislation.

Recommendation 9.2: The Board should establish a Remuneration Committee.

Ten Group, had previously established a Remuneration Committee. During the year this Committee met on three occasions and all five members, shown below, attended, either personally or by their alternate Director, on each occasion:

Nick G Falloon (Chairman)

Jack J Cowin

Laurence S Freedman

Irene Y L Lee

Thomas C Strike (CanWest nominee)

The role of the Remuneration Committee was to:

· review the remuneration policy for Ten Group;

· approve the remuneration of the Chief Executive Officer and the executives reporting to the Chief Executive Officer of Ten Group;

· review the performance and financial incentives of the Executive Chairman on an annual basis. The Executive Chairman does not participate in such reviews;

· review proposals for incentive plans prior to submission to the Board of Directors for approval; and

· review human resources planning with particular emphasis on succession planning for senior group executive positions.

In light of the CanWest Exchange, this Committee has been disbanded and its former responsibilities will now be assumed by a new Committee which has been established by the Board of Ten Holdings.

Recommendation 9.4: Ensure that payment of equity based executive remuneration is made in accordance with thresholds set in plans approved by shareholders.

The various share schemes operated for the benefit of executives of Ten Group are disclosed on pages 13 to 14 of the Directors’ Report.

In the case of the Ten Executive Option Plan, thresholds based on the performance of the Ten Holdings’ accumulation share price against the all industrials accumulation share index, have been established. Prior to executives being able to exercise options under this Plan, reports are received from S&P Australia to confirm that the thresholds have been achieved.

Note that in accordance with the announcement in October 2002, the Ten Executive Option Plan has been suspended and no issues of options have been made since December 2001.

Principle 10: Recognise the Legitimate Interests of Stakeholders

Recommendation 10.1: Establish and disclose a code of conduct to guide compliance with legal and other obligations to legitimate stakeholders.

As noted above, each Company has adopted a Code of Conduct that governs conflicts of interest, corporate opportunities, confidentiality, unethical behaviour and compliance with laws and regulations.

A copy of this Code of Conduct appears on Ten’s website.

Ten's goal as a television broadcaster is to be highly competitive in the 18-49 year old demographic. Ten’s program acquisitions and schedules are focused on achieving this goal.

Ten targets this demographic as it is seen to be particularly attractive to major advertisers.

The television operations conducted by Ten Group also have achieved minimal operating cost increases since Ten Holdings’ listing in 1998 and as a result Ten delivers continually high operating profit margins.

Eye Corp's operations are directed to seeking a pre-eminent position in particular sectors of the out-of-home advertising sector where Eye Corp considers it has market leading technologies and practices. These sectors are spread across a number of different geographic locations with a view to maximising its market reach.

These strategies aim to ensure growth in shareholder value through increased distributions and growth in the Ten Holdings’ share price.

Each of Ten and Eye Corp have developed policies in relation to equal employment opportunity and affirmative action, occupational health and safety, privacy, internet usage, sexual harassment and trade practices.

Regular training sessions, at which employees of Ten and Eye Corp are required to attend, are held to promote an understanding of compliance and also to provide updates on regulatory developments affecting the operations of Ten or Eye Corp as appropriate.

Executives of Ten and Eye Corp also enter into a written contract that sets out the terms of their employment. The contracts include provisions that deal with compliance with the above-mentioned policies, together with restricting employees engaging in business activities that are in competition with the group's activities and ensure appropriate confidentiality is maintained in relation to the group's business affairs.

Ten’s Website

Further information is available at www.tencorporate.com.au and also at www.eyecorp.com.

Introduction

The Board of Directors of Ten Network Holdings Limited (“Ten Holdings”) is committed to responsible corporate governance in accordance with community and shareholder expectations.

Additionally, provisions previously contained in each Constitution to permit shareholders of Ten Holdings to be able to attend and vote at general meetings of Ten Group, have ceased to apply.

Having regard to the nature of the transitionary arrangements faced by Ten referred to above, this report has been prepared (as permitted) under the original ASX Guidelines.

In summary, compliance with the ASX Guidelines has been achieved as at 31 August 2007 as follows:

	ASX Principle	Compliance

Principle 1:	Lay solid foundations for management and oversight

1.1	Formalise and disclose the functions reserved to the board and those delegated to management.	Comply


Principle 2:	Structure the board to add value

2.1	A majority of the board should be independent directors.	Comply

2.2	The chairperson should be an independent director.	Non-Comply

2.3	The roles of chairperson and chief executive officer should not be exercised by the same individual.	Non-Comply

2.4	The board should establish a nomination committee.	Comply

2.5	Provide the information indicated in the ASX Guidelines to reporting on Principle 2.	Comply

Principle 3:	Promote ethical and responsible decision-making

3.1	Establish a code of conduct to guide the directors, the chief executive officer (or equivalent), the chief financial officer (or equivalent) and any other key executives as to: 3.1.1 the practices necessary to maintain confidence in the company’s integrity, 3.1.2 the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.	Comply Comply

3.2	Disclose the policy concerning trading in company securities by directors, officers and employees.	Comply

3.3	Provide the information indicated in the ASX Guidelines to reporting on Principle 3.	Comply


Principle 4:	Safeguard integrity in financial reporting

4.1	Require the chief executive officer (or equivalent) and the chief financial officer (or equivalent) to state in writing to the board that the company’s financial reports present a true and fair view, in all material respects, of the company’s financial condition and operational results and are in accordance with relevant accounting standards.	Comply

4.2	The board should establish an audit committee.	Comply

4.3	Structure the audit committee so that it consists of: · Only non-executive directors · A majority of independent directors · An independent chairperson, who is not chairperson of the board · At least three members	Comply

4.4	The audit committee should have a formal charter.	Comply

4.5	Provide the information indicated in the ASX Guidelines to reporting on Principle 4.	Comply


Principle 5:	Make timely and balanced disclosure

5.1	Establish written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior management level for that compliance.	Comply

5.2	Provide the information indicated in the ASX Guidelines to reporting on Principle 5.	Comply

Principle 6:	Respect the rights of shareholders

6.1	Design and disclose a communications strategy to promote effective communication with shareholders and encourage effective participation at general meetings.	Comply

6.2	Request the external auditor to attend the annual general meeting and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the auditor’s report.	Comply

Principle 7:	Recognise and manage risk

7.1	The board or appropriate board committee should establish policies on risk oversight and management.	Comply

7.2	The chief executive officer (or equivalent) and the chief financial officer (or equivalent) should state to the board in writing that: 7.2.1 the statement given in accordance with best practice recommendation 4.1 (the integrity of financial statements) is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the board, 7.2.2 the company’s risk management and internal compliance and control system is operating efficiently and effectively in all material respects.	Comply Comply
7.3	Provide the information indicated in the ASX Guidelines to reporting on Principle 7.	Comply


Principle 8:	Encourage enhanced performance

8.1	Disclose the process for performance evaluation of the board, its committees and individual directors and key executives.	Comply

Principle 9:	Remunerate fairly and responsibly

9.1	Provide disclosure in relation to the company’s remuneration policies to enable investors to understand (i) the costs and benefits of those policies, and (ii) the link between remuneration paid to directors and key executives and corporate performance.	Comply

9.2	The board should establish a remuneration committee.	Comply

9.3	Clearly distinguish the structure of non-executive directors’ remuneration from that of executives.	Comply

9.4	Ensure that payment of equity-based executive remuneration is made in accordance with thresholds set in plans approved by shareholders.	Comply

9.5	Provide the information indicated in the ASX Guidelines to reporting on Principle 9.	Comply


Principle 10:	Recognise the legitimate interests of stakeholders

10.1	Establish and disclose a code of conduct to guide compliance with legal and other obligations to legitimate stakeholders.	Comply