Austereo Group Limited Annual Report 2010 Report Annual Limited Group Austereo Austereo Group Limited Annual Report 2010

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design by fusion.com.au design AUSTEREO GROUP LIMITED ANNUAL REPORT 2010 REPORT ANNUAL LIMITED GROUP AUSTEREO AUSTEREO GROUP LIMITED ANNUAL REPORT 2010

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J0005676_AustereoAnnualReport10_CoverPRINT_FA.indd 1 25/08/10 10:52 AM CONTENTS

P01 REVIEW 2010 HIGHLIGHTS PERFORMANCE SUMMARY P02 CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S REPORT P03 BOARD OF DIRECTORS P09 AUSTEREO SENIOR EXECUTIVES P12

P13 REPORT FINANCIAL STATEMENTS

J0005676_AustereoAnnualReport10_CoverPRINT_FA.indd 2 25/08/10 10:52 AM 2010 HIGHLIGHTS

CREATING AUSTRALIA’S LEADING RADIO AND ONLINE / INTERACTIVE GROUP

> Audience Leadership in all key under 54 demographics:

• 22.0% of all 10+ listeners¹ • 33.9% of 25-39 audience¹ • 28.4% of 25-54 audience¹

> Over 40% of people 10+, totalling 5 million listeners via FM digital, radio, online and mobile.

> #1 FM Sydney, Melbourne, Brisbane and Perth¹

> Leader in sales share:

• Top 40 client retention 100% • Today Network outpaced 2009 sales • Triple M re-build driving improved revenue

> Austereo’s online platforms continue their robust growth:

• Unique browsers up 25% year on year² • Podcast downloads averaging 5 million per month, more than double the prior year³ • Video Streams 135% growth year on year⁴

> Austereo owns the largest share of capital city DAB+ Spectrum, 27.1%.

¹ Nielsen Media Research Survey 4, 2010 ² Nielsen Netratings ³ Avacast ⁴ Brightcove

J0005676_AustereoAnnualReport10_SpreadsPRINT_DD10.indd Sec1:1 14/09/10 4:39 PM PERFORMANCE SUMMARY

FINANCIAL SUMMARY

DOLLARS IN MILLIONS 2010 2009 % Total Revenue 263.6 258.9 1.8

Underlying EBITDA 88.6 87.6 1.1

Underlying EBIT 80.6 79.8 1.0

Underlying Proﬁ t Before Tax 67.2 65.3 2.9

Tax Expense 20.1 20.1 0.0

Underlying Net Proﬁ t After Tax 47.1 45.2 4.2

Statutory Proﬁ t After Tax 47.1 41.4 13.8

Underlying EBITDA Margin 33.6% 33.8%

Earnings Per Share (excl material items) 13.66 cents 13.08 cents 4.4

Dividends Per Share (fully franked) 9.7 cents 9.1 cents 6.6

MARKET SHARE OVERVIEW

Metropolitan Radio Market Metropolitan Radio Market Metropolitan Radio Market Share 10+* Share 25–39* Share 25–54*

Austereo 22.0% Austereo 33.9% Austereo 28.4%

ARN 13.4% ARN 14.6% ARN 16.4%

DMG 12.7% DMG 18.2% DMG 14.7%

Fairfax 15.3% Fairfax 6.1% Fairfax 10.5%

Other 36.6% Other 27.3% Other 29.9%

* Nielsen Media Research, Survey 4, 2010

J0005676_AustereoAnnualReport10_SpreadsPRINT_FA2.indd Sec1:2 15/09/10 3:43 PM CHAIRMAN AND CHIEF EXECUTIVE OFFICER'S REPORT

Austereo Group Limited continued to lead the Australian capital city commercial radio market through a year marked by a high degree of economic uncertainty.

Th e leadership in audiences was driven by the strength of the on-air talent. Th e stars of Austereo’s programmes are well known and many are multi-media leaders, including Hamish & Andy, Kyle & Jackie O, Matt & Jo, Eddie McGuire and Roy & HG. Austereo’s networks deliver popular culture, music, sport and other topics of interest to Australians under 54. Austereo stations are also vital hubs in their cities, focusing on local news and events, building communities through ongoing special events, fund-raising and support of community activities and issues.

Austereo actively supports Australian music and has created industry-leading online and interactive social media operations, which seamlessly fold into the overall radio and communication strategy of the group. Th e more than 660 members of the Austereo team comprise on-air talent, programmers, music specialists, creative and production, sales, integration, ﬁ nance, IT and online/interactive experts. Each member contributed to the many successes enjoyed by Austereo in ﬁ nancial year 2010. Our major media platform commercial radio, again demonstrated its strength. Radio was the best-performing and most resilient traditional medium through the year and Austereo’s online growth paralleled the dynamic growth of the total social media category.

Austereo has enjoyed a long-term consulting partnership in Malaysia, taking a leading role in the construction and development of the nation’s leading commercial radio group. In the course of the year, there were strong audience gains and a successful sales outcome. Austereo staﬀ across all business disciplines are involved on-site in Kuala Lumpur and the Malaysian executives are also involved in training programmes at the company’s Australian stations.

Austereo is also involved in two joint venture radio enterprises in Canberra and Newcastle who both had a very successful year. Th e two stations in Canberra along with the two stations in Newcastle won audience leadership in both markets, along with solid sales growth.

Marketing is an important function of the business. Most of our income is derived from advertising and we, in turn, are ﬁ rm believers in the power of well-targeted and creative advertising campaigns. Our audience leadership is underpinned to an important degree by marketing campaigns. Allied with marketing is a focus upon research into our audiences, tracking changes in audience attitudes, as well as providing a strong base for our sales teams in their contact with advertisers, creative advertising agencies and media buyers.

AUDIENCE LEADER IN AUSTRALIA FM RADIO

Th e ten capital city stations, divided equally between the Today and Triple M Networks, achieved an exceptional combined audience of over 5 million listeners. Th is is an exceptional fi gure. Of equal signifi cance, the group achieved a 37.2% share of the under 40 capital city audience and 28.4% of the 25-54 demographic. Th ese are the key age groups sought by the majority of advertisers. Apart from the strength of audiences achieved, the consistency of results is a prime factor in encouraging media-buyer support. It is signifi cant that Austereo enjoys a number of longer-term contracts with the major buyers of media, who recognise the ongoing leadership results achieved by the group.

In the ﬁ nal survey of ﬁ nancial year 2010, Austereo achieved Number 1 FM places in Sydney, Melbourne, Brisbane and Perth and Number 2 FM place in Adelaide1.

Of note, solid recent results were achieved in Triple M Sydney and Melbourne, which have been the focus of audience rebuilding strategies. Year on year, key demographic groups achieved increased share, resulting in increased advertiser support.

1 Nielsen Media Research Survey 4, 2010

J0005676_AustereoAnnualReport10_SpreadsPRINT_DD10.indd Sec1:3 14/09/10 4:39 PM Austereo continues to share Australia’s passion for sport. Both the Today and Triple M Networks provide strong sporting coverage and Triple M, in particular, covers AFL and NRL football codes. Triple M Melbourne and Adelaide broadcast AFL matches and have achieved 96 consecutive Melbourne ratings wins in the under 55 target audience. In the ﬁ nal survey of the ﬁ nancial year, Triple M Melbourne more than doubled the nearest competitive under 55 AFL broadcast. Triple M Sydney and Brisbane cover AFL home team match calls as well as live coverage of Monday night NRL. Th e Triple M Network also covers Cricket, V8 Supercars, eTh Sprint Racing Carnival and other major sports events.

Austereo invests signiﬁ cantly in new talent and works to a system of ongoing talent identiﬁ cation and training. Th is strategy is led by the CEO and Content Director and also involves content heads in each city. Th ere is also focus upon the current leading talent in the group, to enhance their performance and survey results. We are fortunate in Australia to have an environment that encourages a wide range of skills suited to on-air exposure, often at world standard. Austereo is committed to retaining its place as the home of the most outstanding personalities in the nation and invests accordingly in capital, time and training.

MAINTAINING SALES SUPREMACY

Austereo has consistently punched above its weight in sales results.

Strong audience ratings must be converted to leading sales shares, to ensure commercial success. Austereo’s over 200 sales-related staff benefi t from robust ratings, along with a well-credentialed and ongoing training programme. Th e sales teams are supported by integration experts who develop, amongst other initiatives, programmes for advertising clients to enhance the strength of radio campaigns on our networks. Creative and production teams are used for the creation of radio commercials for direct clients who do not have the benefi t of advertising agency support.

In fi nancial year 2010, $260.2 million sales were written by Austereo, an increase on the previous fi nancial year. In the same period, the total capital city radio industry grew 2.3%. Austereo sales yield is driven not only by radio commercials, but also (and to a growing degree) by non-spot revenue. Th is growing resource opportunity utilises sponsorship, “presents” etc. to further utilise the value of available airtime. In the course of the year, the group achieved the leading market share in the industry and the Today Network clearly outpaced the previous year. Signs of potential Triple M Sydney and Melbourne recovery also emerged as the two stations recorded higher sales fi gures in the last two months of the fi nancial year. In June 2010, the total group posted its highest sales in 10 years.

Amongst the top forty clients, there was little change of position despite the economic diffi culties. Th e retention rate of the top forty clients was an exceptional 100%, endorsing the success of our sales operations as well as the strength of radio in achieving highly eff ective, cost effi cient campaigns for advertisers. Th e categories of Retail, Media, Medical and Financial grew in the period and we received exceptional support from the leading buying agencies.

Highly competitive trading conditions, both within the commercial radio industry and also from external media sources placed Austereo’s rates under some pressure, but the group held rate integrity at a satisfactory level, through one of the most diﬃ cult trading periods ever experienced in the media category. Th is outcome was signiﬁ cantly assisted by non-spot revenue growth, along with the continued growth in online/interactive elements being introduced into radio campaigns. During the year, over 30% of campaigns were integrated radio/online/ interactive packages.

"WHAT SENT MATT AND JO INTO THE KITCHEN?" Go to www.austereo.com.au/mattandjo to watch the exclusive content. 4

J0005676_AustereoAnnualReport10_SpreadsPRINT_DD10.indd Sec1:4 14/09/10 4:39 PM STRONG ONLINE/INTERACTIVE AND DIGITAL RADIO GROWTH

Austereo leads the commercial radio industry in its online/interactive operations and is also a major player in the overall online entertainment category. Th e growth of our social media business properties has been remarkable and is underpinned by our entertainment information resources along with the star-power of our on-air talent. Few broadcast media companies can compete with the growth rate of Austereo’s online results and continued growth is anticipated into the next ﬁ nancial year and beyond.

Austereo is one of Australia’s foremost entertainment media companies, currently reaching over 5 million Australians weekly via its FM, digital radio, online and mobile platforms.

Austereo’s online platforms continue to grow strongly, consistently in Nielsen’s Top 10 Australian entertainment websites since July 09 (ranked on average daily unique browsers). Average monthly unique browsers for ﬁ nancial year 2010 were over 1.2 million, a 25% increase year-on-year2.

Austereo’s growth in podcasts demonstrate how the audience will actively seek out our compelling content on- demand, with podcast downloads averaging almost 5 million per month for ﬁ nancial year 2010, more than double the year prior3. Video is also now a very important part of the content oﬀ ering, with video streams showing a massive 135% growth year-on-year, averaging over 1.4 million streams each month over the past year4.

Th e Today Network has continued its domination of the online radio and entertainment landscape in Australia in terms of traﬃ c to the websites and also digital leadership in unique new content initiatives. Th e Today Network delivered the number 1 local radio station websites in every state for the full year. Hamish & Andy’s BYO Pool Party live video stream in November 2009 was one of the largest ever Australian live video stream of any event with over 81,500 streams.

Th e Dirt is also a world leading example of on-air and online integration, with online celebrity news and gossip content regularly crossing over to daily on-air segments and a nightly show. Hamish & Andy’s Caravan of Courage America in September and October 2009 proved to be the biggest online radio tactic ever, with over 16.9 million page impressions and 500,000 video views. Th en Hamish & Andy’s Caravan of Courage Great Britain and Ireland in June 2010 broke previous records to become most popular online tactic in Australian radio history with an unparalleled level of visual coverage, resulting in over 1 million video views and almost 200,000 unique browsers. Th e Today Network also cemented its social media presence with over 300,000 people following Kyle & Jackie O’s Twitter feed and over 700,000 fans for Hamish & Andy’s Facebook page.

On the Triple M Network, Sydney’s $20,000 Punter was the ﬁ rst-ever live streaming radio event for Austereo, driving record unique browsers for Th e Grill Team. Triple M’s coverage of AC/DC’s Black Ice Tour delivered best- ever engagement for the Music channel of the websites, with fan photos driving over 2 million page impressions. Delivering a new experience to our audience, Triple M’s campaign Team Bingle vs Team Fevola was an innovative use of social media that drove the Network to its best month ever for unique browsers with 450,000 (25% up on previous record).

Austereo rolled out mobile streaming applications and m-sites in January 2010, with now playing information, click-to-buy etc. Over 200,000 iPhone applications were downloaded in the ﬁ rst few months after release.

Austereo clearly leads the charge as the country embraces digital radio. Radar Radio and Barry join Austereo’s line-up of brands as our signature digital radio oﬀ erings. Focused on new music and comedy respectively, they are unique and compelling content initiatives and ﬂ agships of Austereo’s leadership in this new medium. During the year, digital radio channels Radio Gaga and High Voltage Radio were launched to help celebrate the Australian tours of Lady Gaga and AC/DC. Austereo also joined forces with Th e Salvation Army to launch a multi-platform I See Red campaign including a digital radio station, to create awareness among the younger generation for the Red Shield Appeal, as a complement to traditional Door Knock activity. Hamish & Andy’s Caravan of Courage Radio added a unique dimension to the on-air and online story for their Great Britain and Ireland trip, where fans could relive highlights of past adventures and keep up-to-date with the current trip.

As digital platforms continue to evolve, Austereo is exceptionally placed to take advantage of these new technologies and leverage them to great business advantage.

2 Nielsen Netratings 3 Avacast 4 Brightcove

J0005676_AustereoAnnualReport10_SpreadsPRINT_DD10.indd Sec1:5 14/09/10 4:39 PM “WHAT DID KYLE AND JACKIE O GIVE THEIR SCREAMING BOSS?” Go to www.austereo.com.au/kyleandjackieo to watch the exclusive content.

THE DIGITAL FUTURE – AUSTEREO WINS THE GREATEST SHARE OF DIGITAL SPECTRUM

In November 2009, Austereo successfully bid for a major share of excess Digital Spectrum, which will carry broadcast and data content. Austereo now owns 27.1% of the capital city spectrum nationally, comprising Brisbane 22.64%, Sydney 25%, Melbourne 19.64%, Adelaide 42.9% and Perth 39.3%. Th is strategic investment will underpin the group’s intention to take maximum advantage in the growth of digital technology, with great potential to provide multiple content channel oﬀ erings.

LIVE AND LOCAL – THE COMMUNITY FOCUS

No other medium can match radio’s immediacy and local relevance. News is constantly updated; traﬃ c, weather and other local issues are comprehensively covered, as are local community events, large and small. Austereo’s resources are focussed on the community and our stations make important contributions in the support of causes and events both local and nationally.

Nationally, both networks supported the Salvation Army’s annual Red Shield Appeal. Th e Today Network harnessed the power of social networking for its I See Red campaign with a dedicated website, Facebook page, Twitter stream and support from Hamish and Andy. Th e Triple M Network stirred up listener engagement and response with Rock the Red Shield Appeal, a content-led campaign featuring interviews with people who benefi tted fi rst-hand from their work, as well as Salvo staff and celebrity ambassadors.

Our talent also threw their own support behind the projects, including Fiﬁ Box talking her celebrity friends into joining the doorknock and staﬀ at Perth’s 92.9 taking to the streets to shake donation tins.

Both the Today and Triple M Networks again got behind Earth Hour with 2Day FM’s Hot30 Countdown acting as ambassadors for the event.

2Day FM also continued their support for the Sydney Randwick Children’s Hospital, with Hamish and Andy hosting a Gold Week fundraiser listener party; while the station’s monthly Breast Check Day moves into its fourth consecutive year. Triple M’s Footy Jumper Friday raised awareness for Beyond Blue with the former Prime Minister, Kevin Rudd posing in his footy jumper.

In Melbourne, Triple M again handed the station over to the Salvation Army for their Red Shield Appeal. Th e station also received massive online support for Footy Jumper Friday for the Fight Cancer Foundation .

Brisbane was again busy with events ranging from Triple M’s fundraising touch football match for the Samoan Tsunami Relief to B105’s Breakfast Show, raising $1.5 million for the Royal Children’s Hospital in the station’s annual Christmas Appeal.

At Triple M Adelaide, Kym, Ali and Dzelde’s Lamington Drive raised over $50,000 for the Flinders Medical Centre’s Neonatal Unit and their Salvation Army Cans for Cairns food drive was a huge success with thousands of cans of tinned food collected and then delivered to the Salvation Army for distribution to those in need over the Christmas and New Year period.

J0005676_AustereoAnnualReport10_SpreadsPRINT_DD10.indd Sec1:6 14/09/10 4:39 PM In Perth, both stations again supported Telethon, with Mix 94.5’s Grand Mascot Race raising $44,000 while 92.9’s Lisa, Baz and Sam hosted their breakfast show live on the TV fundraising appeal. For the sixth consecutive year, Mix 94.5 partnered with the Active Foundation for the City To Surf fun run as the oﬃ cial radio partner for the event which attracted over 40,000 participants.

In Canberra, 104.7 and Mix 106.3 helped the local community with support and over $1 million in donated airtime for causes including Camp Quality, the ACT Eden Monaro Cancer Support Group, Canberra Hospital’s Paediatrics Unit and the Snowy Hydro Southcare Rescue Helicopter. Skyﬁ re, 104.7’s signature annual event, continued to be the biggest single event in the ACT.

Newcastle’s KO-FM and NXFM again went into bat for local people in need which included fundraising and respite care for two sisters with Netherton’s Syndrome. Th e stations also dedicated over $1.5 million in airtime to a wide range of local charities and community organisations.

SUSTAINABILITY AND COMMUNITY ENGAGEMENT

As part of our endeavours to build shareholder value, Austereo is committed to a course of action that includes corporate social responsibility and sustainability. Our ability to inﬂ uence the behaviour of our staﬀ and millions of listeners inside and outside of Australia, gives us an extraordinary opportunity to positively impact the whole globe and the future of all its inhabitants. It starts by living the message ourselves.

ne We aim to ensure that we are operating our business from a responsible environmental and social point of n view while continuing to maximise shareholder proﬁ t. Moreover, the group recognises that it needs to have vide the appropriate corporate social responsibility framework and strategies in place to deliver on its economic, environmental and social sustainability into the future.

We acknowledge that sustainability reporting is increasingly on the agenda for many companies and we have been working in the past year to ascertain relevant key indices and to build data systems to track them. We are making progress on a number of fronts. Austereo has an active ‘Green Team’, a group of employees who meet regularly to er plan and implement green oﬃ ce ideas.

uses However by its nature, this work is ongoing and presents many challenges and opportunities to the group. Th e areas of our focus include energy and greenhouse gas emissions, reduction in air pollution, waste, water usage and our ongoing community and charitable activities.

Summarised data from our reporting and initiatives are made available on our website. d ﬁtted

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J0005676_AustereoAnnualReport10_SpreadsPRINT_FA2.indd Sec1:7 17/09/10 3:12 PM OUR AWARDS

In the recent Commercial Radio Industry Awards, the following categories were won by Austereo staﬀ .

> Best On Air Team > Engineering Excellence > Best Program Director > Best Community Service Project > Best Show Producer – Entertainment/Music > Best Newcomer Oﬀ Air > Best Station Promotion > Best Station Sales Achievement > Best Networked Program > Best Direct Salesperson > Best Sales Promotion > Best Agency Salesperson > Best Station Produced Commercial > Best Multimedia Execution > Best Achievement In Production

THE YEAR AHEAD

We embark on fi nancial year 2011 with optimism. While there are continuing international and domestic economic uncertainties, the radio industry has proved that it weathers uncertain times better than most other media. We have also learned, through recent experience, to manage the networks with even greater effi ciency, yet without compromise to on-air quality. Th e group has maintained audience and sales leadership, positioning it well for fi nancial year 2011. Online/interactive operations continue their powerful growth. Th e total business is in good shape.

We thank our shareholders, our great staﬀ , audiences, media buyers and advertisers for their support and their belief in our enterprise. We have many new targets to achieve in ﬁ nancial year 2011 – these are exciting times for Austereo Group Limited.

J0005676_AustereoAnnualReport10_SpreadsPRINT_DD10.indd Sec1:8 14/09/10 4:39 PM BOARD OF DIRECTORS

Peter M. Harvie Chairman / Age 71 / Member of the Board since 16 January 2001

Chairman of Austereo Pty Ltd since 1997. First entered radio in 1993 as Managing Director of the Triple M Network before becoming Managing Director of the enlarged group following its merger with Austereo in 1994. Founder and Managing Director of the Clemenger Harvie advertising agency from 1974 to 1993. Director Clemenger BBDO 1975 to 1992. Mr Harvie serves on the board of Village Roadshow Limited, the Mazda Foundation Limited, Australian International Cultural Foundation and the Australian National Maritime Museum.

Member Executive Committee Other Listed Public Company Directorships in previous 3 years: Village Roadshow Limited, since 20 June 2000

Guy Dobson Chief Executive Oﬃ cer / Age 44 / Member of the Board since September 2008

Mr Dobson has over 25 years experience in radio initially joining the Triple M Network as a programmer in 1996. Mr Dobson then became Group Programme Director of the Today Network and the Triple M Network in 2005. In 2007, he became Head of Content embracing both radio and online media channels. Mr Dobson was appointed Chief Executive Oﬃ cer in January 2010.

Member Executive Committee Other Listed Public Company Directorships in previous 3 years: Nil

Michael E. Anderson BA Soc Sc / Chief Executive Oﬃ cer / Age 54 / Member of the Board since 16 January 2001

In 2002 Mr Anderson was appointed as Executive Director Sales Strategy & Operations, in May 2003 he was appointed as Chief Operating Oﬃ cer and in August 2003 as Chief Executive Oﬃ cer. Mr Anderson advised on 23 July 2009 that he did not intend to seek an extension to his employment contract, which expired 30 June 2010 and resigned from the Board of Austereo on 6 January 2010.

Member Executive Committee Other Listed Public Company Directorships in previous 3 years: Nil

Robert G. Kirby B.Comm / Non-executive Director / Age 59 / Member of the Board since 19 June 2001

Chairman of Village Roadshow Limited, with over 30 years experience in the entertainment and media industries. Th rough the launch of Roadshow Home Video, Mr Kirby was the driving force behind the Australian video revolution of the 1980’s and 1990’s. He is a pioneer of new cinema concepts in both Australia and internationally and has been at the forefront of Village Roadshow’s successful diversiﬁ cation into theme parks, radio and ﬁ lm production. Deputy Chairman of Village Roadshow Corporation Pty Ltd, currently Deputy Chairman of Peter MacCallum Cancer Foundation, Victoria Board of Directors and Member of Patrons Council, Epilepsy Foundation, and Patron of Victorian Arts Centre.

Other Listed Public Company Directorships in previous 3 years: Village Roadshow Limited, since 5 July 2001

John R. Kirby B.Econ., AASA, CPA / Non-executive Director / Age 63 / Member of the Board since 19 January 2001

Holds a Bachelor of Economics and is a Certiﬁ ed Practising Accountant with over 40 years experience in the entertainment industry. Chairman Village Roadshow Limited. Director Village Roadshow Corporation Pty Ltd.

Member Remuneration Committee Other Listed Public Company Directorships in previous 3 years: Village Roadshow Limited, since 12 August 1988

J0005676_AustereoAnnualReport10_SpreadsPRINT_DD10.indd Sec1:9 14/09/10 4:39 PM Graham W. Burke Non-executive Director / Age 68 / Member of the Board since 19 January 2001

Managing Director Village Roadshow Limited, a position he has held since 1988 with unrivalled experience in the entertainment and media industries. Mr Burke has been one of the strategic and creative forces behind Village Roadshow’s development and founded Roadshow Distributors with Roc Kirby. He was also a founding director of radio station 2Day FM, and spent four years as the original Commissioner of the Australian Film Commission. Director Village Roadshow Corporation Pty Ltd.

Chairman Remuneration Committee Other Listed Public Company Directorships in previous 3 years: Village Roadshow Limited, since 9 September 1988

Peter E. Foo B. Econ / Non-executive Director / Age 55 / Member of the Board since 25 February 2004

Mr Foo was Group COO of Village Roadshow Limited, from March 2007 to 4 August 2009. Mr Foo has had over 30 years experience in the management and ﬁ nance of all facets of Village Roadshow, having joined the Company in 1978. A former member of Village Roadshow Limited’s executive committee, he was also on the Board of all Village Roadshow’s major subsidiary companies.

Member Audit Committee Other Listed Public Company Directorships in previous 3 years: Village Roadshow Limited, from 12 February 1998 to 19 March 2007, Sydney Attractions Group Limited, from 15 February 2008 to 24 June 2008.

R. David Mattingly Independent Non-executive Director / Age 72 / Member of the Board since 16 January 2001

Founder and Chairman of the Young & Rubicam Mattingly advertising agency. Mr Mattingly has over 25 years experience in the advertising industry and is a Director of the Retail Advertising and Marketing Association of the United States. Mr Mattingly is also a Director of a number of private companies.

Member Remuneration Committee Member Audit Committee Other Listed Public Company Directorships in previous 3 years: Nil

Christopher J. Newman B Econ, B Comm / Independent Non-executive Director / Age 66 / Member of the Board since 1 February 2005

Mr Newman has extensive experience in investment management, merger and acquisition and corporate ﬁ nance activities. For more than 20 years prior to becoming a public company director, Mr Newman was a member of the Australian Stock Exchange Limited.

Chairman Audit Committee Other Listed Public Company Directorships in previous 3 years: Gunns Limited, since 24 September 2001, World Wide Entertainment Group (formerly Coneco Limited), since 30 November 2004, Webjet Limited since 1 December 2006

Julie E. Raﬀ e FCA (UK), FFIN, AICD / Alternate Non-executive Director / Age 48

Chief Financial Offi cer, Village Roadshow Limited. Member of Village Roadshow Executive Committee. Fellow Institute of Chartered Accountants. Prior to joining Village Roadshow, Ms Raff e was an audit manager at Horwath & Horwath in Australia and the United Kingdom. Alternate Director for Mr R. Kirby since 29 August 2001 and for Mr P Foo since 25 February 2004 to 4 August 2009. Ms Raff e is a director of public listed Signature Capital Investments Ltd and the North East Housing Service Ltd.

Other Listed Public Company Directorships in previous 3 years: Nil

Tim Carroll Alternate Non-executive Director / Age 46

Chief Marketing Oﬃ cer - Global, Village Roadshow Limited. Member of Village Roadshow Executive Committee. Board member of Roadshow Film Group, Village Cinemas, Village Roadshow Th eme Parks and Sydney Attractions Group. Alternate Director for Mr G. Burke since 19 June 2001.

Other Listed Public Company Directorships in previous 3 years: Sydney Attractions Group Limited, from 15 February 2008 to 7 May 2008.

J0005676_AustereoAnnualReport10_SpreadsPRINT_DD10.indd Sec1:10 14/09/10 4:39 PM Chris Chard Alternate Non-executive Director / Age 47

Managing Director of both Roadshow Entertainment and Roadshow Television and is a director of Roadshow Films Pty Ltd. Board member for the pay TV company Th e Movie Network Channel. Mr Chard has over 20 years senior management experience in the entertainment industry including ﬁ lm, TV, music, interactive games and DVD distribution and has taken Roadshow Entertainment to a market leading position in Australia and New Zealand in the DVD sector. He spent 4 years with the Virgin Group before joining Roadshow in 1992. Alternate Director for Mr J. Kirby since 24 April 2004.

Other Listed Public Company Directorships in previous 3 years: Nil

COMPANY SECRETARIES

Kathryn J. Gramp BA Acc; FCA, FCSA, GAICD, MFTA / Chief Financial Oﬃ cer and Company Secretary / Age 51

Ms Gramp joined the Group in 1989 and has over 20 years radio experience as a ﬁ nance executive. Fellow Institute of Chartered Accountants and Fellow Institute Chartered Secretaries Australia. Acts as a Director on Austereo’s Australian joint ventures. Ms Gramp serves on the board of Commercial Radio Australia, Royal District Nursing Society (SA), Adelaide Convention Centre and Masonic Homes.

Member Executive Committee

Philip S. Leggo B Bus, CA, FAICD / Group Company Secretary Village Roadshow Ltd / Age 56

Mr Leggo has over 25 years experience in the media and entertainment industries, is a member of the Village Roadshow Executive Committee and a director and secretary of all Village Roadshow’s major subsidiaries, including the Austereo group.

"WHAT DOES THE GRILL TEAM WEAR TO THE SUPERMARKET?" Go to www.austereo.com.au/grillteam to watch the exclusive content

J0005676_AustereoAnnualReport10_SpreadsPRINT_DD10.indd Sec1:11 14/09/10 4:39 PM AUSTEREO SENIOR EXECUTIVES

Kathy Gramp Helen Davies Chief Financial Offi cer General Manager, 2Day, Triple M – Craig Bruce Sydney Head of Content Ben Armafi o Cathy Th omas General Manager, Fox, Triple M – National Sales Director Melbourne Ross Forgione Chief Information Offi cer Richard Barker General Manager, B105, Triple M – Adam Lang Brisbane Director of Operations Jeremy Macvean James Pedersen Head of Digital Strategy General Manager, Safm, Triple M – Adelaide Nikki Clarkson National Marketing Director Linda Wayman Jill Johnston General Manager, 92.9, Mix 94.5 – Head of Human Resources Perth Steve Smith General Manager, KOFM, NXFM – Newcastle, joint venture with Macquarie Regional Radioworks

Eoghan O’Byrne General Manager, FM104.7, MIX 106.3 – Canberra, joint venture with Australian Radio Network "WHO SANG THEIR HEART OUT AT EDDIE MCGUIRE’S DESK?” Go to www.austereo.com.au/eddiemcguire to watch the exclusive content

J0005676_AustereoAnnualReport10_SpreadsPRINT_DD10.indd Sec1:12 14/09/10 4:39 PM FINANCIAL REPORT TABLE OF CONTENTS

14 Directors' Report

17 Auditor's Independence Declaration

18 Remuneration Report

25 Corporate Governance Statement

30 Statement of Comprehensive Income

31 Balance Sheet

32 Statement of Changes to Equity

33 Cash Flow Statement

34 Notes to the Financial Statements

69 Directors' Declaration

70 Independent Auditor's Report

71 Share Registry Information

72 Company Directory

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 13 24/09/10 5:35 PM DIRECTORS' REPORT

Your Directors submit their report for the year ended 30 June 2010.

DIRECTORS AND SECRETARIES Th e names of the Directors and Secretaries of the Company in oﬃ ce during the ﬁ nancial year and until the date of this report are:

Directors: Secretaries: Peter M. Harvie (Chairman) Kathryn J. Gramp Michael E. Anderson (resigned 6 January 2010) Philip S. Leggo Guy C. Dobson Alternate Directors: John R. Kirby Tim Carroll (for Graham W. Burke) Robert G. Kirby Julie E. Raﬀ e (for Robert G. Kirby and to 5 August 2009 for Peter E. Foo) Graham W. Burke Chris Chard (for John R. Kirby) Peter E. Foo R. David Mattingly Christopher J. Newman

Interests in the shares of the Company and related bodies corporate: As at the date of this report, the relevant interests of the Directors in the shares, and in-substance options of the Company and related bodies corporate were as follows:

Austereo Group Limited Village Roadshow Limited Ordinary Shares Ordinary Shares Preference Shares Ordinary Options Peter M. Harvie 1,030,001 257,400 242,900 - Guy C. Dobson ---- Michael E. Anderson 350,001 - 200,000 - Robert G. Kirby 181,093,856 77,859,352 - - John R. Kirby 181,093,856 77,859,352 - - Graham W. Burke 181,093,856 77,859,352 - 6,000,000 Peter E. Foo 37,522 1,000,000 809,000 - R. David Mattingly 109,460 - - - Christopher J. Newman ---- Chris Chard (alt) - 4,000 500,000 - Julie E. Raﬀ e (alt) - - 350,000 - Tim Carroll (alt) - - 500,000 - Th e qualiﬁ cations and experience of the Directors and Secretaries and the special responsibilities of the Directors are disclosed on pages 9 to 11 of this report.

PRINCIPAL ACTIVITIES OPERATING AND FINANCIAL REVIEW Th e principal activity of the consolidated entity during the year was Th e Statement of Comprehensive Income shows a consolidated commercial radio broadcasting. Th ere has been no signifi cant change in underlying net profi t attributable to members before material items of the principal activity during the year. $47.1 million compared with $45.2 million at 30 June 2009. Operating profi t before income tax and material items was $67.2 million for the year (2009: $65.3 million) and consolidated total revenue was up from $258.9 million at 30 June 2009 to $263.6 million at 30 June 2010. Statutory net profi t was $47.1 million compared with $41.4 million at 30 June 2009, which included the write down of the group’s investment in UKRD of $3.8 million. Sales revenue from continuing operations increased 2.1% to $260.2 million. Excluding revenue related costs and depreciation, costs increased by 2.4%, impacted by investment in content and sales, plus performance bonuses and non-recurring expenses of approximately $1.6 million.

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 14 24/09/10 5:35 PM Shareholder Returns 2010 2009 2008 2007 2006

Underlying net proﬁ t (‘000’s) $47,112 $45,211 $48,824 $46,452 $41,594 Statutory net proﬁ t (‘000’s) $47,112 $41,411 $48,824 $46,452 $41,594 Basic EPS (excl material items income and expense) 13.66 cents 13.08 cents 13.93 cents 12.75 cents 10.88 cents Basic EPS 13.66 cents 11.98 cents 13.93 cents 12.75 cents 10.88 cents Dividends per share (fully franked) 9.7 cents 9.1 cents 10.0 cents 9.0 cents 7.7 cents Yield 5.7% 6.5% 6.9% 4.5% 4.5% Gross Yield 8.2% 9.3% 9.7% 6.4% 6.5% Dividend Payout Ratio 71% 76% 71% 69% 70% Available Franking credits (‘000’s) $62,737 $56,383 $46,100 $37,653 $33,061 Net Debt to Equity 30.6% 33.2% 31.3% 35.4% 27.5% Net Tangible Assets per ordinary share (incl radio licences) 1.97 1.92 1.90 1.85 1.80

Investments for future performance DIVIDENDS Th e consolidated entity acquired property plant and equipment totalling Subsequent to year end, the Directors recommended payment of a fi nal $8.5 million during the year. dividend of 5.7 cents per fully paid ordinary share, fully franked. Investment in technological infrastructure platforms allowed the Since the commencement of the fi nancial year, fully franked dividends Company to grow its online presence, as well as providing increased of 5.1 cents (fi nal 2009) and 4.0 cents (interim 2010) per share were paid. fl exibility and effi ciency to maintain its market leading commercial radio position. BASIC EARNINGS PER SHARE An ongoing focus on recruitment, talent identifi cation and career Basic earnings per share for the year, excluding material items of development ensures the Company’s staff have the right environment to expense, were 13.66 cents (2009: 13.08 cents). Basic earnings per share grow and develop, enhancing the organisation’s culture as well as aiding for the year, including material items of expense were 13.66 cents (2009: the long term growth and stability of the group’s operations. 11.98 cents). Th ere were no potentially dilutive shares in the years ended 30 June 2010 or 30 June 2009. Review of Financial Condition Capital Structure SIGNIFICANT CHANGES IN STATE OF AFFAIRS Th e movement in the Company’s capital structure of $0.026 million is Th ere were no signifi cant changes in the state of aff airs for the year due to the repayment of Employee Share Plan loans. ended 30 June 2010.

Treasury Policy EVENTS SUBSEQUENT TO REPORTING DATE Th e consolidated entity’s treasury function operates within the policies Th ere has not arisen in the interval between the end of the fi nancial set by the Board. Hedging of interest rate risks is undertaken through year and the date of this report any item, transaction or event of a the use of interest rate swap contracts to manage the risks associated material and unusual nature likely, in the opinion of the Directors of the with the interest rates on borrowings that are fl oating. At year end, Company, to aff ect signifi cantly the operation of the consolidated entity, 59.8% of interest commitments were hedged using interest rate swap the results of those operations, or the state of aff airs of the consolidated contracts. entity in future fi nancial years.

Liquidity and Funding LIKELY DEVELOPMENTS AND EXPECTED RESULTS Th e group has a cash advance facility of $240 million which was drawn It is anticipated that the development of the consolidated entity's to $209.1 million at 30 June 2010. In addition, guarantees, operational commercial radio broadcasting business will continue. overdraft and other payment facilities of $4.67 million are available of which $2.24 million was utilised as at 30 June 2010. ENVIRONMENTAL REGULATION AND PERFORMANCE Cash from Operations Th e Company, as part of the Village Roadshow Limited Group, is subject Net receipts from customers and suppliers increased year on year as a to the National Greenhouse and Energy Reporting Act for the year result of the growth in sales revenue. Focus on receivables collection ended 30 June 2010, however this will not result in any material impact has been maintained. Other movements in Cash from Operations are to Austereo. due to decreased borrowing costs as a result of interest rate movements and the timing of tax payments compared to 2009. During the year the SHARE OPTIONS company paid $4.7 million for a major share of excess capacity digital Th ere are no unissued shares under option or shares issued as a result broadcast spectrum. of the exercise of options. Details of share and in-substance option transactions in relation to Directors of the consolidated entity are set out in Note 22 and Note 23 of the ﬁ nancial report. 15

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 15 24/09/10 5:35 PM DIRECTORS' REPORT CONT.

INDEMNIFICATION AND INSURANCE OF OFFICERS REMUNERATION REPORT AND AUDITORS Th e Remuneration Report, which forms part of this Directors’ Report, Since the commencement of the fi nancial year, the Company has not, is set out on pages 18 to 24. in respect of any person who is or has been an offi cer or auditor of the Company or related body corporate, indemnifi ed or made any relevant DIRECTORS' MEETINGS agreement for indemnifying against a liability (including costs and Th e following statement sets out the attendance of Directors at formal expenses incurred in successfully defending legal proceedings) incurred Directors' meetings and committee of Directors' meetings held during as an offi cer or auditor, nor has the Company paid or agreed to pay the period the Director held offi ce: a premium for insurance against any such liabilities incurred as an offi cer or auditor, other than an un-allocated group insurance premium of $87,294 (2009: $81,956) which has been paid to insure each of the Directors and Secretaries of the Company against any liabilities for costs and expenses incurred in defending any legal proceedings arising out of their conduct as offi cers of the Company or related body corporate, other than conduct involving wilful breach of duty.

Number of Meetings Held While in Ofﬁ ce Number of Meetings Attended Name of Director Formal Audit Remuneration Formal Audit Remuneration Peter M. Harvie 6 - - 6 - - Guy C. Dobson 6 - - 5 - - Michael E. Anderson 3 - - 3 - - Robert G. Kirby 6 - - 4 - - John R. Kirby 6 - 2 5 - 2 Graham W. Burke 6 - 2 5 - 2 Peter E. Foo 6 2 - 6 2 - R. David Mattingly 6 2 2 6 2 2 Christopher J. Newman 6 2 - 6 2 - Chris Chard (Alt) 1 - - 1 - - Julie E. Raﬀ e (Alt) 3 - - 2 - - Tim Carroll (Alt) 1----- Informal procedural meetings attended by a minimum quorum of 3 Directors to facilitate document execution and incidental matters, are not included in determining the number of Directors' meetings held.

TAX CONSOLIDATION NON-AUDIT SERVICES PROVIDED BY AUDITOR Eﬀ ective 1 July 2002, for the purposes of income taxation, Austereo Details of the non-audit services provided by the Auditor are set out in Group Limited and its 100% owned Australian subsidiaries formed a tax Note 24 of the Financial Report. Th e non-audit services summarised consolidated group. Members of the group entered into a combined Tax in Note 24 were provided by the entity’s auditor Ernst & Young. Th e Sharing and Tax Funding agreement (‘TSA’) in order to allocate income Directors are satisﬁ ed that the provision of non-audit services is tax expense to the wholly-owned subsidiaries on a stand alone basis. In compatible with the general standard of independence for auditors addition, the TSA provides for the allocation of income tax liabilities imposed by the Corporations Act. Th e nature and scope of each type between the entities should the head entity default on its tax payment of non-audit service provided means that auditor independence was obligations. not compromised.

AUDITOR INDEPENDENCE ROUNDING Th e Auditor’s Independence Declaration to the Directors of Austereo Th e amounts contained in this report and in the ﬁ nancial statements have Group Limited, which forms part of the Directors’ Report, is set out on been rounded-oﬀ to the nearest $1,000 (where rounding is applicable) page 17 of this report. under the option available to the Company under ASIC Class Order 98/100. Th e Company is an entity to which the Class Order applies. Signed in accordance with a resolution of the Directors at Melbourne this 26th day of August 2010. Signed

Peter M. Harvie Chairman

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 16 24/09/10 5:35 PM AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OF AUSTEREO GROUP LIMITED

In relation to our audit of the ﬁ nancial report of Austereo Group Limited for the ﬁ nancial year ended 30 June 2010, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.

Ernst & Young

Mark Phelps Partner Adelaide, 26 August 2010

Liability limited by a scheme approved under Professional Standards Legislation 17

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 17 24/09/10 5:35 PM REMUNERATION REPORT

Th is report outlines the remuneration arrangements in place for Directors compensation ‘at risk’ by having the opportunity to participate in the and senior managers of the Company and of other senior executives of Company’s bonus scheme where specifi ed criteria are met including the Austereo Group Limited consolidated entity for the year ended 30 criteria relating to profi tability, audience ratings, cash fl ow, and other June 2010 in accordance with Section 300A of the Corporations Act 2001. pre-determined personal performance indicators and benchmarks; For the purposes of the report Key Management Personnel (KMP) of the • Establish appropriate, demanding, personalised performance consolidated entity are defi ned as those persons having authority and hurdles in relation to variable executive remuneration and bonuses. responsibility for planning, directing and controlling the major activities Th e framework of the Company’s remuneration policy provides for a of the Company and the Group, directly or indirectly, including any mix of fi xed pay and variable (‘at risk’) pay: director (whether executive or otherwise) of the parent company, and includes the 5 executives in the Group receiving the highest remuneration. • Fixed Remuneration Package inclusive of superannuation and other Th e KMP of the consolidated entity and the 5 executives in the Group benefi ts; receiving the highest remuneration are: • Variable Remuneration: Directors: - Short Term performance Incentive Bonus (‘STI’); and Peter M. Harvie Executive Chairman - Long Term equity-linked performance Incentive (‘LTI’). Guy C. Dobson Chief Executive Offi cer (appointed 6 January 2010) 2. REMUNERATION COMMITTEE Michael E. Anderson Chief Executive Offi cer Th e Remuneration Committee’s Charter provides for the review (resigned 6 January 2010) of compensation of the Company’s Executive Directors and senior Robert G. Kirby Non-executive Director managers, including any equity participation by Directors. Th e John R. Kirby Non-executive Director Committee determines the compensation of the Executive Directors Graham W. Burke Non-executive Director and senior managers with the overall objective of motivating and Peter E. Foo Non-executive Director appropriately rewarding performance. Decisions are made in line with R. David Mattingly Independent Non-executive Director the Company’s present circumstances and goals to ensure maximum Christopher J. Newman Independent Non-executive Director shareholder benefi ts from the attraction and retention of a high quality Julie E. Raff e Alternate Non-executive Director Board and senior management team. Tim Carroll Alternate Non-executive Director Th e Charter, role, responsibilities, operation and membership of the Chris Chard Alternate Non-executive Director Remuneration Committee of the Board are set out in the “Corporate Executives Governance” section of the Annual Report. Kathy J. Gramp Chief Financial Offi cer Craig Bruce Head of Content 3. COMPENSATION STRUCTURE (appointed 6 January 2010) In accordance with best practice corporate governance, the structure of Cathy Th omas National Sales Director Non-executive Director compensation is separate and distinct from that (appointed 1 November 2009) for Executive Directors and senior managers. Ross Forgione Chief Information Offi cer (appointed 1 January 2010) Th e total cash compensation of Non-executive Independent Directors Jeremy MacVean Head of Digital Strategy (being Directors’ Fees not paid to anyone in an Executive capacity), is Adam Lang National Director of Operations distinguished from that of Executive Directors and is approved in (appointed 3 February 2010) aggregate by shareholders in general meetings from time to time. Ben A. Amarfi o* General Manager – Austereo – Melbourne Th e compensation structure for Executive Directors and senior Des R. Decean Director Engineering & IT managers is designed to strike an appropriate balance between fi xed (resigned 1 October 2009) and variable remuneration, rewarding capability and experience and Geraint H. Davies Chief Operating Offi cer providing recognition for contribution to the Company’s overall goals (resigned 5 February 2010) and objectives. Th e variable components of compensation are designed * Ben A. Amarfi o does not form part of the KMP of the consolidated group, however he does form part of the 5 executives in the Group receiving the highest remuneration. to refl ect the particular role of the individual and the extent and capacity to which the role is capable of contributing directly to the fi nancial performance of the consolidated entity. 1. BOARD POLICY Th e performance of the Company depends upon the quality of its Adjustments to base pay are made annually based on both contractual Directors and its Secretaries and senior executives (‘senior managers’). commitments to the particular individual as well as changes in the scope, To prosper the Company must attract, motivate and retain highly skilled duties and responsibilities and performance of the individual whilst taking Directors and executives. into account relative comparable market and industry pay conditions.

To this end the Company embodies the following principles in its 4. NON-EXECUTIVE DIRECTOR COMPENSATION remuneration framework: • Provide competitive rewards to attract and retain high calibre a) Objective Directors and senior managers who are dedicated to the interests of Th e Board seeks to set aggregate compensation at a level which provides the Company; the Company with the ability to attract and retain appropriately qualifi ed and experienced Directors of the highest calibre, whilst incurring a cost • Link executive compensation to the achievement of the Company’s which is acceptable to shareholders. Th e Company operates a complex fi nancial and operational performance; business in fi ercely competitive markets and the duties and obligations of • All Executive Directors and senior managers have a portion of their Non-executive Directors are becoming increasingly onerous. 18

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 18 24/09/10 5:35 PM b) Structure 5. EXECUTIVE DIRECTOR AND SENIOR MANAGER Th e Constitution of the Company and the ASX Listing Rules specify COMPENSATION that the aggregate remuneration of Non-executive Directors shall be determined from time to time by shareholders in general meetings. a) Objective An amount not exceeding the annual amount so determined is then Th e Company aims to reward Executive Directors and senior managers divided between the Non-executive Directors as agreed. with a level and mix of compensation commensurate with the seniority of their position and responsibilities within the Company, so as to: Th e latest determination was at a general meeting held on 19 January 2001 when shareholders approved an aggregate compensation • reward for Company performance against targets set by reference to level of $250,000 per annum. Th is aggregate fee level includes any appropriate benchmarks; compensation paid to Non-executive Independent Directors who may • align the interests of the Executive Directors and senior managers serve on Boards of the consolidated entity. with those of shareholders; Th e Village Roadshow Limited appointed Non-executive Directors do • link their rewards to the strategic goals and performance of the not receive compensation from Austereo Group Limited. Company; and • ensure total compensation is competitive by market standards. Each Non-executive Independent Director receives a fee for being a Director of the Company. An additional fee is also paid for each Board b) Structure Committee on which an Independent Director sits. Th e payment of In determining the level and make-up of Executive Director and additional fees for serving on a Committee recognises the additional senior manager compensation, the Remuneration Committee seeks time commitment required by Independent Directors who serve on one independent advice of external consultants as required to advise on or more Committees. market levels of compensation for comparable Executive Director and Non-executive Directors' fees do not incorporate any bonus or senior management roles from time to time. incentive element. Th e compensation and terms and conditions of employment for the During the year, Independent Directors were paid at the rate of $50,000 Chief Executive Offi cer, Mr Michael Anderson (resigned 6 January per annum plus $5,000 per annum for each Board Committee on which 2010), Mr Guy Dobson (appointed 6 January 2010) and the Executive they had served, payable quarterly in arrears. Aggregate payments to Chairman, Mr Peter Harvie, are specifi ed in individual contracts of Non-executive Directors have never exceeded the total pool approved employment and are signed by the executive and Austereo Pty Ltd by shareholders. respectively. Th e details of each contract are outlined on page 22 of this Remuneration Report. Th e Company does not have and never has had a retirement benefi t scheme for Non-executive Directors, other than their individual Th e compensation and terms and conditions of employment for the statutory superannuation benefi ts which are included as part of their senior managers are specifi ed in individual contracts of employment total Director’s fee compensation. and are signed by the executive and by Austereo Pty Ltd. Th e details of each contract of the relevant executives are outlined on page 24 of this In addition, it is considered good governance for Directors to have a Remuneration Report. stake in the Company on whose board he or she sits and the Company encourages Executive and Non-executive Directors to hold shares in Th e compensation of Executive Directors and senior managers consists the Company. Subject to any necessary approvals as may be required by of one or more of the following key elements: law or ASX Listing Rules, Directors may be invited from time to time to • Fixed Remuneration Package inclusive of superannuation and other participate in share and option plans off ered by the Company. benefi ts; Only 2 allotments under the Non-Executive Director Share Plan and • Variable Remuneration: Loan Facility (‘NEDSP’) have been made, both contemporaneously with - Short Term Incentive Bonus (‘STI’); and the Company’s listing on ASX in 2001. Th e terms and conditions of the - Long Term Incentive (‘LTI’). NEDSP are identical to the Company’s Executive Share Plan and Loan Facility (‘AESP’) for executives and Executive Directors, described later Th e proportion of fi xed compensation and variable compensation in this report. Only Mr Mattingly currently holds shares under this (potential short term and long term incentives) is monitored by the NEDSP plan. Remuneration Committee, taking into account the Company’s then present circumstances and its future short-term and longer-term goals. Th ere has been no allotment to any Non-executive Director under the Th e details of the variable component for Executive Directors and senior NEDSP during the fi nancial year. Th e loan held by Mr Mattingly, the managers are set out on pages 21 and 22 of this Remuneration Report. sole Non-executive Director of the Company remaining in the NEDSP during the fi nancial year, is set out in Note 23 of the Financial Report. c) Fixed Compensation Th e various share and in-substance option entitlements of all Directors i) Objective are advised to the ASX in accordance with the Listing Rules and Th e level of fi xed compensation is set so as to provide a base level of Corporations Act requirements and are set out in the ‘Directors’ section remuneration which is appropriate to the seniority of the position and to on page 1 of the Directors’ Report. be competitive in the market. Th e compensation of Independent Directors for the year ended 30 June Fixed compensation (defi ned as the base compensation payable to 2010 is detailed on page 23 of this Remuneration Report. an individual and which is not dependent on the outcome of specifi c criteria) is reviewed annually by the Remuneration Committee. As noted earlier, the Committee has access to independent external advice.

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 19 24/09/10 5:35 PM REMUNERATION REPORT CONT.

ii) Structure e) Variable Compensation — Long Term Incentive (‘LTI’) Th e Executive Directors and senior managers are given the opportunity i) Objective to receive their fi xed (primary) remuneration in a variety of forms Th e objective of the LTI plan is to reward Executive Directors in a including cash and the grossed up taxable value of fringe benefi ts such manner which aligns this element of compensation with the creation as motor vehicles, salary sacrifi ce superannuation and other non-cash of shareholder wealth. Th e Company’s Executive Share Plan and Loan benefi ts. It is intended that the manner of payment chosen will be Facility (‘AESP’) was approved by the then shareholders of the Company optimal for the recipient without creating undue cost for the Company. on 19 January 2001, which was prior to the ASX listing of the Company. Th e fi xed remuneration component of each Executive Director and each Only 4 Executive Directors have been invited to participate in the above senior manager for the year ended 30 June 2010 is detailed on page 24 of LTI plan since its inception, which allotment was contemporaneous this Remuneration Report. with the Company’s listing on ASX. Th at allotment recognises that d) Variable Compensation — Short Term Incentive Executive Directors are in a central position to be able to infl uence the Bonus (‘STI’) generation of shareholder wealth and thus have a direct impact on the Company's performance against the relevant long term performance i) Objective hurdle, the Company’s share price. Only 2 Executive Directors, Messrs Th e objective of the STI bonus program is to link the achievement of the P.M. Harvie and M.E. Anderson, hold shares under the LTI plan as at 30 Company’s annual operational targets with the compensation received June 2010. by the Executive Directors and senior managers charged with meeting Since its inception, 65 senior managers and divisional executives have those targets. Th e total potential STI bonus available is set at a level so been invited to participate in the LTI plan, with 60 of these employees as to provide suffi cient incentive to the Executive Director or senior being allotted AESP shares contemporaneously with the Company’s manager to achieve the operational targets and such that the cost to the listing on ASX in 2001. At 30 June 2010, 17 employees held shares under Company is reasonable in the circumstances. the AESP.

ii) Structure Th e outline of this LTI AESP plan is detailed below. All Executive Directors and senior managers are eligible to participate in ii) Structure the Company’s annual STI bonus scheme. Actual STI bonus payments made to the Chief Executive Offi cer depend on the extent to which Th e AESP allows for the issue of up to 5% of the Company’s issued specifi c budgeted operating targets set at the beginning of each fi nancial ordinary shares to executives and employees of the Austereo year are met. Th e STI bonus for the Executive Chairman is discretionary consolidated entity, including the Executive Directors. at the option of the Remuneration Committee based on the fi nancial Off ers are at the discretion of the Remuneration Committee and fully performance of Austereo. paid ordinary shares are issued at the 5-day weighted average price on Th e operational targets consist of a number of Key Performance the market prior to allotment, rounded up to the next whole cent. Th e Indicators (‘KPIs’) as part of the annual budget setting process covering shares are held directly by the participant who pays for the allotment by fi nancial measures of performance supporting the Company’s annual obtaining a loan from Austereo ESP Finance Pty Ltd, which holds the targets. Th ese include criteria relating to profi tability, audience ratings, AESP shares as security. cash fl ow and other performance indicators. Th e Company has Th e shares are ‘earned’ at the rate of 25% over 4 years from date of grant. predetermined performance benchmarks of achieving Board approved Th e fi rst 6 cents of every dividend per share is used to repay the interest Earnings Before Interest and Tax (‘EBIT’) targets which must be met in accrued and 50% of the remaining dividend per share is used to repay order to trigger payments under the short term incentive bonus scheme the capital amount of the loan. for the Chief Executive Offi cer. Th ese performance conditions were chosen so as to align the STI payment to the Chief Executive Offi cer to If the participant resigns or is dismissed, the restricted or ‘unearned’ the operational performance of the Company. shares are forfeited and the loan on the remaining unrestricted shares must be repaid within 6 months or such other time as approved by the On an annual basis, after consideration of the annual performance of Remuneration Committee. In circumstances where the market value the Company against the previously determined budgeted KPIs, the of the remaining AESP shares at the end of the 6 month period is less bonus amount, if any, for the Chief Executive Offi cer is approved by than the amount owing on the loan, then the Company will buyback the Remuneration Committee. Payments made are delivered as a cash the shares and cancel them in repayment of the loan without further bonus, and accrued for in the fi nancial year to which they relate. recourse to the participant. Apart from the STI for the Chief Executive Offi cer, which is specifi ed Th e LTI plan is not designed specifi cally to remunerate participants, in the terms of his employment contract described on page 22 of this unlike their fi xed compensation or their STI bonus arrangements, and Remuneration Report, as future STI bonus payments are dependent has no specifi c performance conditions for the vesting of such benefi ts on the future share price of the Company’s securities and the fi nancial other than tenure, which of itself is dependent on the annual KPI performance of the consolidated entity, it is not possible to estimate the performance reviews outlined above. Instead the LTIs are intended to maximum or minimum bonuses that might be payable in following encourage a sense of ownership with those key participants to whom fi nancial years. the LTIs are granted and to align their long term interests with those of Th e STI bonus payments made to each of the Executive Directors shareholders, and may be regarded as a partial retention mechanism for and each senior manager in the fi nancial year ended 30 June 2010 are the Company. detailed on page 24 of this Remuneration Report.

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 20 24/09/10 5:35 PM Th e benefi ts, if any, under the LTIs are linked to the ultimate measure Th e number of shares and ‘in substance options’ in the Company during of the performance of the Company, its share price. Th e Company the fi nancial year in which the Key Management Personnel of the considers that the 4 year period over which the AESP shares are ‘earned’ Company have a relevant interest, including their personally-related by the participant and the long term horizon of the loans from the entities, are set out in Note 23 of the Financial Report. consolidated entity for the duration of the participant’s employment are appropriate given the shorter term KPI performance hurdles to which f) Other Benefi ts the participants are subject. Th e Company has other compensation arrangements with Executive Directors and senior managers, such as travel and professional Under AASB 2 Share Based Payments these shares and loans under the development reimbursement, relocation and expatriate related costs, AESP are all deemed to be ‘in substance options’ even where the equity car allowances and the payment of superannuation amounts within instrument itself is not an option. prescribed statutory limits including various ancillary insurance covers. As the dates of grant of all such AESP shares are prior to 7 November Th e details of the value of these benefi ts are set out on page 24 of this 2002, these ‘in substance options’ have been ‘grandfathered’ and the Remuneration Report. fair value of such ‘in substance options’ have not been recognised as an expense in the fi nancial statements. 6. COMPANY PERFORMANCE Th ere has been no allotment to any Executive Director or senior Th e table below shows the performance of the Company over the last manager under the AESP during the fi nancial year. Th e loans for ‘in fi ve years since 2006 including the current year. In a competitive radio substance options’ over shares held by Key Management Personnel of environment that has seen the introduction of new licences in all the Company including their personally related entities under the AESP major capital cities, Austereo has maintained its position as the most during the fi nancial year are set out in Note 23 of the Financial Report. successful capital city radio operation in Australia.

2010 2009 2008 2007 2006 Underlying EBIT (‘000’s) $80,629 $79,832 $86,784 $81,068 $71,406 Statutory EBIT (‘000’s) $80,629 $76,032 $86,784 $81,068 $71,406 Underlying net proﬁ t (‘000’s) $47,112 $45,211 $48,824 $46,452 $41,594 Statutory net proﬁ t (‘000’s) $47,112 $41,411 $48,824 $46,452 $41,594 Basic EPS (excl material items of income and expense) 13.66 cents 13.08 cents 13.93 cents 12.75 cents 10.88 cents Basic EPS 13.66 cents 11.98 cents 13.93 cents 12.75 cents 10.88 cents Dividends per share (fully franked) 9.7 cents 9.1 cents 10.0 cents 9.0 cents 7.7 cents Yield 5.7% 6.5% 6.9% 4.5% 4.5% Dividend Payout Ratio 71% 76% 71% 69% 70% Net Debt to Equity 30.6% 33.2% 31.3% 35.4% 27.5% Total Key Management Personnel Compensation* $5,432,702 $4,353,360 $4,852,072 $5,691,168 $4,760,601

*excludes termination payments made

Reﬂ ected in the compensation paid to Executive Directors and senior Th e remuneration policy aims to achieve a link between the managers is the relevant experience of those Directors and senior compensation received by the Executive Directors and senior managers, managers, the restructuring of the senior management team to and increased earnings and the creation of shareholder wealth. A short incorporate specialist support, particularly in the revenue and new term incentive plan (STI) and long term incentive plan (LTI) exists under media ﬁ elds, and the challenging operational environment that has the policy. Th e STI is focused on the achievement of short to medium existed for the past few years in radio advertising, and which is expected term operational targets maintaining shareholder wealth through a to continue. volatile period. Th e LTI is focused on the achievement of long term growth in shareholder returns.

Percentage of total Remuneration Executive KMP Fixed Remuneration STI LTI Chairman 2010 94.3% 0.0% 5.7% 2009 84.5% 9.7% 5.7% CEO 2010 82.9% 16.3% 0.8% 2009 98.1% 0.0% 1.9% Other Executives 2010 77.2% 22.8% 0.0% 2009 98.4% 1.6% 0.0%

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 21 24/09/10 5:35 PM REMUNERATION REPORT CONT.

Th e ‘at risk’ portion of compensation of Executive Directors and a) Executive Directors senior executives is closely linked to the performance of the Company Th e names of the Directors and their titles and roles are set out in the measured against Board approved targets including EBIT. Th ese targets Directors’ section on pages 9 to 11 of this Report. are set taking into account the current radio media environment, Th e CEO, Mr Anderson advised on 23 July 2009 that he did not intend signifi cant legislative changes, new licences and increased competition. to seek an extension to his employment contract, which expired 30 June Over the medium term the policy has achieved its aim of linking the 2010. Mr Anderson received a termination payment of $438,928, in compensation of Executive Directors and senior managers as overall accordance with the terms of his employment contract. compensation has decreased in years when earnings have decreased Mr. G. C. Dobson’s contract with Austereo Pty Ltd as Chief Executive and only increased in years where the earnings have increased. Th e Offi cer commenced on 6 January 2010 and expires on 6 January 2013. In relationship is however impacted by changes in the composition of addition to base salary and superannuation, Mr Dobson is entitled to an Executive Directors and senior managers forming the Key annual EBIT bonus payable of $250,000 in the event that the company Management Personnel. result achieves the budgeted EBIT, and an additional $250,000 will be Since 2002 there have been a number of signifi cant changes in key paid in the event that the company result over achieves the budgeted management personnel as a result of resignations and the restructuring EBIT by 10%. Payment for termination without cause is equal to 12 of the senior management team to incorporate specialist support. It is months of salary. also important to note that the radio industry generally has experienced Mr P. M. Harvie's contract with Austereo Pty Ltd as Executive volatility over the recent past as a result of additional licences being issued. Chairman expires on 30 June 2012. In addition to base salary and superannuation, CPI adjusted, an annual discretionary performance 7. EMPLOYMENT CONTRACTS bonus is payable together with participation in the AESP. Payment for Compensation and other terms of employment for the Company's Chief termination without cause is equal to 12 months of salary. Executive Offi cer, the Executive Chairman and the key management personnel of the consolidated entity are formalised in service agreements. b) Company executives All major contracts and bonus payments are reviewed by the All employees are employed by entities within the consolidated entity, Remuneration Committee. Th e major provisions of the service the majority of which are employed by Austereo Pty Ltd. agreements of these offi cers relating to remuneration are as set c) Consolidated entity executives out below. Th e names and respective positions of the non director key management personnel and 5 executives in the Group receiving the highest remuneration of the consolidated entity are set out below:

Austereo Group Limited consolidated entity Name Position Employer Kathy J. Gramp Chief Financial Offi cer Austereo Pty Limited Craig Bruce Head of Content Austereo Pty Limited Cathy Th omas National Sales Director Austereo Pty Limited Ross Forgione Chief Information Offi cer Austereo Pty Limited Jeremy MacVean Head of Digital Strategy Austereo Pty Limited Adam Lang National Director of Operations Austereo Pty Limited Ben A. Amarfi o* General Manager – Austereo - Melbourne Austereo Pty Limited Des R. Decean Director Engineering & IT Austereo Pty Limited Geraint H. Davies Chief Operating Offi cer Austereo Pty Limited * Ben A. Amarfi o does not form part of the KMP of the consolidated group, however he does form part of the 5 executives in the Group receiving the highest remuneration.

Ms K. J. Gramp, Mr J. MacVean, Mr R. Forgione, Mr A. Lang and Ms of the agreements for the Executives provide for pre-determined C. Th omas do not have service agreements that stipulate an expiry compensation in the event of termination, except for Ms Gramp where date. In addition to base salary and superannuation, all the named payment for termination without cause is equal to 12 months of her Executives are eligible to be paid an annual performance bonus. None salary package.

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 22 24/09/10 5:35 PM Related Performance 1 - 0 - 0 - 0 1 0 0 9 0 , , , 5 5 5 Total % - 62,459 3.94% - 62,763 4.40% -- 153,370 117,763 1.60% 2.35% Share Share Based Options ND 30 JUNE 2009 Payments - - - - Payments Termination Termination - - - - ts LSL LSL Accrual Plans Incentive Incentive - 2,459 - 2,763 - 2,459 - 2,763 ts Benefi Retirement - - 1 --- --5 0 --- --3 0 --- --5 4 1 4 5 9 5 , , , 4 Post Employment Benefi Long Term Super- annuation - - - 39,451 - 4,540 Cash Cash Bonus ts - - - - ts Non- benefi monetary monetary 0 --3 0 --4 0 --4 6 6 0 Short Benefi Term 4 4 0 , , , 0 0 Fees 9 ------9 ------9 ------9 ------95 9 ------9 ------9 ------0 ------0 ------01 0 ------05 0 ------0 ------0 ------1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2010 60,000 2010 111,460 2009 110,460 42 52 42 12 12 12 12 12 0 0 0 0 0 0 0 0 / / / / / / / / 4 2 2 8 6 6 e 2 e 2 e 2 e 2 e 2 e 2 e 2 e 2 1 1 0 0 0 0 c c c c c c c c 0 0 0 0 / / / / / / / / n n n n n n n n 1 5 2 From / to Year Salary & 9 i i i i i i i i 9 9 9 9 16/01/01 2009 60,000 e1 e2 e2 ns v v v i i i a t t t u u u m c c c w e e e es e x x x k r e e e - - - y s N u e 1 e 1 e 2 e 1 . b n n n v v v v y s J r i i i i t 0 B o o o i r l s . d s t t t t b e s o s l n r e r u u u u e i o o a N N N K h c c c c r W d e e e h p e e e e F r t t t K . n G . x x x x a o m a a a t e t C e e e e a E r n n n s s R p - - - - r C i i r r r e h e n e n n n n r r e e e a b t t t t d m h o o o o r h h l l l i o e n o REMUNERATION OF KEY MANAGEMENT PERSONNEL AND THE FIVE HIGHEST PAID EXECUTIVES OF THE COMPANY FOR THE YEARS ENDED A 30 JUNE 2010 Name Non-executive Non-executive Directors Sub total - - total Sub N Non-executive Directors N N N P G Independent C R R David Mattingly since C I J Julie E. Raff T A A A

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 23 24/09/10 5:35 PM REMUNERATION REPORT CONT. - - - - % % % 6 7 4 1 7 2 . . . 0 0 Related Performance 94 22 83 0 - 1 3 9 0 7 1 9 0 , , , , 3 4 4 0 1 6 9 5 Total % - 323,273 - 324,117 - 358,818 12.82% - 138,609 18.04% - 310,000 3.23% - 278,780 - 368,054 17.32% - 1,110,168 18.47% - 349,768 24.30% - 1,027,699 15.48% -- 486,142- 324,083 359,177 32.91% 20.88% - 922,458- 5.72% - 1,516,449 1,058,708 11.08% 1.91% - 6,446,273 15.66% - 6,599,643 15.34% - 4,232,879- 4,350,642 4.83% 4.76% Share Share Based Options ND 30 JUNE 2009 CONT. Payments ------Payments Termination Termination - 124,402 - - - 208,899 - - 438,928 ts LSL LSL Accrual - - 21,036 - - 8,109 - - - - 110,259 - 37,665 --- 9,612 9,057 48,319 Plans Incentive Incentive ------20,175 18,950 - - 59,086 13,937 - - - - 52,753 15,620 - 18,013 - 70,766- 242,511 73,225 242,511 772,229 772,229 - 79,261 50,053 - 50,053 82,024 ts Benefi Retirement 1 --- --3 5 --- --3 5 --- --5 8 --- --1 6 7 4 4 4 7 7 4 , , , , 4 3 3 Post Employment Benefi Long Term Super- annuation - 50,000 - 100,000 - 12,367 - 32,488 - 47,000 - 49,684 76 01 01 6 0 0 1 , 0 0 , , 9 0 5 Cash Cash Bonus ts - 10,000 13,745 18 44 9 0 2 9 , ts , Non- benefi monetary monetary 5 --1 93 4 -1 04 5 8 5 6 Short Benefi Term 2 5 2 9 , , , , 6 3 5 6 3 0 9 8 Fees 9 ------92 9 ------9 ------95 9 ------02 01 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2010 287,500 2,343 63,750 14,461 2010 228,177 450 75,000 7,231 2010 214,708 3,166 85,000 9,229 2010 809,633 11,964 2010 79,784 5,608 25,000 7,181 2010 770,539 9,909 205,000 14,461 2010 268,474 1,106 160,000 46,950 2009 270,000 3,273 2010 103,762 4,238,934 938,917 230,065 2010 4,127,474 103,762 938,917 190,614 2009 81,372 3,509,274 125,000 387,919 2009 3,619,734 81,372 125,000 392,459 ective 6 January 2010 cer, eff cer, 82 52 02 92 02 02 0 1 0 1 0 1 / / / / / / 2 2 6 1 1 1 e 2 e 2 0 0 0 0 0 1 c c / / / / / / n n 4 6 3 1 1 1 From / to Year Salary & i i since 05/2/07 0 since since since since since 01/07/01 2010 50,821 6,693 since to 01/10/09 2009 196,938 19,070 to 05/2/10to 2009 286,255 r0 e y0 r0 r0 g c e o e t t c c cer06/01/10 to 2009 924,266 45,633 a cer 26/05/03 2009 267,186 840 e r r t i t0 S l n D o s e a s t t e i l n g a g s i o n S l a omas D C f f a L n o o o d d m i a a t a cer a e e d REMUNERATION OF KEY MANAGEMENT PERSONNEL AND THE FIVE HIGHEST PAID EXECUTIVES OF THE COMPANY FOR THE YEARS ENDED A 30 JUNE 2010 Name Sub-total executives Operations Executive directors Offi Executives Ben A. Amarfi National Director of General Manager - Des R. DeceanDes Executive ChairmanExecutive 16/01/01 2009 742,120 12,556 100,000 100,000 N Director of EngineeringDirector of Geraint H. Davies H. Geraint 10/12/07 2010 171,324 6,246 46,000 10,846 Chief Operating Operating Chief Peter M. HarviePeter Chief Information Offi Guy C. Dobson** Chief Executive Offi Craig Bruce Craig Cathy Th Cathy Kathy J. Gramp Chief Financial Offi H Chief Executive Offi Jeremy MacVean Jeremy Ross Forgione H Michael E Anderson* 11/08/03 2010 846,965 48,082 150,000 14,461 & IT Total Austereo Melbourne A * Michael Anderson provided part-time consultancy services to Austereo from 6 January to 2010 30** Guy June Dobson 2010. was appointed Chief Executive Offi 24

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 24 24/09/10 5:35 PM CORPORATE GOVERNANCE STATEMENT 2010

Th e following statement sets out a summary of the Company’s corporate In fulfi lling this responsibility the Board is supported by a number of governance practices that were in place during the fi nancial year in committees whose composition is reviewed periodically. All Board accordance with Listing Rule 4.10.3 and how those practices relate to Committees provide recommendations to the Board and, with the the Corporate Governance Principles and Recommendations issued exception of the Executive Committee, all Committees shall comprise a by the Australian Securities Exchange (“ASX”) Corporate Governance majority of Non-executive Directors and shall be suitably resourced. Council (“ASX Recommendations”). In ensuring the highest standards of ethical behaviour and BOARD OF DIRECTORS – COMPOSITION AND MEMBERSHIP accountability, the Board have included in its corporate governance Th e composition of the Board of Directors is determined in accordance policies those matters contained in the ASX Recommendations where with the following principles: applicable. However, the Board also recognises that full adoption of the • Th e Board should comprise at least six Directors with an above ASX Recommendations may not be practical nor provide the appropriate balance of Executive, Non-executive, Independent and optimal result given the particular circumstances and structure of Shareholder Directors, the defi nitions of which are: the Company. Executive Director - one in full time employment by the Company or a subsidiary of the Company, either directly or through a BOARD OF DIRECTORS – ROLE AND RESPONSIBILITIES consultancy; Th e Board of Directors provides leadership and direction to Non-executive Director - one who is not an Executive Director; management and agrees with management the aims, strategies and Independent Director - one who is not a substantial shareholder policies of the Company. Th e Board is also responsible for the overall or associated directly with a substantial shareholder, who is non- corporate governance of the Company. executive and is not or has not been employed in an executive In particular, the functions and responsibilities of the Board include: capacity nor principal of a material professional advisor or consultant within the last 2 years, who is not a material supplier • Final approval of corporate strategy, annual budgets and or customer, who has no material contractual relationship other performance objectives; than as a director, who is free from any interest or business or • Reviewing and ratifying of the risk management and internal relationship which could reasonably be perceived to materially control framework, codes of conduct and legal and other internal interfere with the Director’s ability to act in the best interests compliance programs; of the Company and who derives minimal or zero income • Approval and monitoring of signifi cant capital expenditure, capital (excluding Directors’ Fees) from the Company, compared to management, acquisitions and divestitures; income from other sources; Shareholder Director - one with a prescribed direct, indirect or • Approval and monitoring of signifi cant fi nancial and other reporting; representative shareholding interest exceeding 5% of the total • Appointment and removal of the Managing Director or equivalent; issued ordinary capital of the Company. • Monitoring compliance with corporate governance policies • Th e Board should comprise Directors with an appropriate range of and assessing the appropriateness and adequacy of corporate qualifi cations and specifi c expertise that will enable them to make a governance policies and implementing changes or additions that are contribution to the deliberations of the Board. deemed fi tting. • Th e Board shall meet at least six times per year. Meeting guidelines ensure that Directors are provided with all necessary information to participate fully in an informed discussion of all agenda items. During the fi nancial year the names of each Director, their respective roles, appointment dates to the Board and classifi cations were:

Peter M. Harvie Executive Chairman January 2001 Executive Michael E. Anderson Chief Executive Offi cer January 2001 Executive Guy C. Dobson Chief Executive Offi cer September 2008 Executive Robert G. Kirby Non-executive Director June 2001 Shareholder John R. Kirby Non-executive Director January 2001 Shareholder Graham W. Burke Non-executive Director January 2001 Shareholder Peter E. Foo Non-executive Director February 2004 Non-executive R. David Mattingly Independent Director January 2001 Independent Christopher J. Newman Independent Director February 2005 Independent Julie E. Raff e Alternate Non-executive Director to Robert G. Kirby August 2001 Shareholder Tim Carroll Alternate Non-executive Director to Graham W. Burke June 2001 Shareholder Chris Chard Alternate Non-executive Director to John R. Kirby April 2004 Shareholder

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 25 24/09/10 5:35 PM CORPORATE GOVERNANCE STATEMENT 2010 CONT.

Membership of the Board is the exclusive responsibility of the full Board AUDIT COMMITTEE of Directors, subject to the approval of the Company’s shareholders In accordance with its Terms of Reference, all members of the Audit in general meetings. Th e Company does not have a Nomination Committee are Non-executive Directors, the majority Independent Committee nor conduct a performance evaluation of the Board. Th is is Directors, with appropriate skills and experience. Th e Chairperson of the at variance to ASX Recommendations. Instead the Board acknowledges Audit Committee is an Independent Director who is not the Chairperson that, due to its size and composition, a formal Nomination Committee of the Board. Th e Audit Committee reports directly to the Board. structure may not be optimal. Th e role of the Audit Committee is to review, both with management Accordingly the Board collectively consider any recommendations for and the external auditors, all published fi nancial statements and audited new nominees to the Board when suitable candidates may be available, statements prior to approval by the Board and their subsequent publication. taking into account the required skill set, relevant industry expertise and experience of potential candidates such that they complement Th e role and responsibilities of the Audit Committee includes: that of existing Board members. Consideration is also given to the • Reviewing all external reporting (published fi nancial statements composition of the Board and shareholder structure of the Company including interim statements and year-end audited statements, such that an incoming Director would be able to make an overall preliminary announcement of results prior to publication) with positive contribution to the deliberations of the Board without adversely management and the external auditors prior to their approval by the impacting on the effi cient decision-making by the Board as a whole. Board, focusing in particular on: In addition, the assessment of the Board’s overall performance and its - Signifi cant changes in accounting policies and practices; own succession plan is conducted informally by the Chairperson and - Major judgmental areas and signifi cant audit adjustments; Directors on an ad hoc basis rather than through a formal evaluation - Adequacy and reliability of fi nancial information provided to process under the guidance of a Nomination Committee. Nevertheless, shareholders; and given the Company’s ownership structure and the relatively small size - Compliance with statutory and ASX reporting requirements. of the Board, the Directors consider that an appropriate and adequate • Discussing the scope and eff ectiveness of the audit and any matters evaluation of Directors occurs. arising from the audit with the external auditor; Th e Company’s Constitution sets out the procedures to be followed • From 2003, seeking written representations from the Chief regarding: Executive Offi cer and Chief Financial Offi cer that the Company’s • Th e appointment, number and rotation of the Directors; fi nancial reports present a true and fair view in all material respects of the Company’s fi nancial condition and operational results and • Th e appointment of the Managing Director or equivalent; and are in accordance with relevant accounting standards; • Procedures for Directors’ meetings, including voting. • Reviewing the nomination, performance, independence and All Directors have access to the Company Secretaries and are entitled competence of the external auditor - Ernst & Young were appointed to seek independent professional advice at the Company’s expense, on 19 January 2001 as the Company’s auditors. Since 2003 the audit subject to the prior approval of the Chairperson, such approval not to be partner is rotated every 5 years; and unreasonably withheld. • Receiving reports from the Corporate Governance and Compliance Th e Chairperson of the Company is determined by the Board of Committee and to assess the adequacy and eff ectiveness of Directors, recognising the Company’s ownership structure. Th e the fi nancial internal control framework and risk management Executive Chairperson role is at variance to ASX Recommendations. Th e procedures. Board is of the opinion that the executive role of the Chairperson in the Th e Chief Executive Offi cer and the Chief Financial offi cer provide day to day operations of the Company adds value to the Company due to written representations to the Board that the Company’s fi nancial the incumbent’s considerable experience in the Company’s business. reports present a true and fair view in all material respects of the Although the majority of the Board is comprised of Non-executive Company’s fi nancial condition and operational results and are in Directors rather than Independent Directors - which is at variance to accordance with relevant accounting standards. ASX Recommendations - the Company considers that there is adequate During the fi nancial year the Audit Committee comprised the following monitoring of the Executive Directors. Informal meetings of members with their respective appointment dates: Non-executive Directors are held to discuss matters of mutual concern when required. Christopher J. Newman February 2005 Chairperson Peter E. Foo February 2004 A formal Letter of Appointment is provided to incoming Directors R. David Mattingly February 2004 together with such induction as may be required by the incoming Director. Th e Audit Committee meets at least twice per year. Th e minutes of the Committee are circulated to all Board members. Th e Committee invites the external auditor to its meetings together with a representative of the Corporate Governance and Compliance Committee and senior Company executives when required. In addition, the Audit Committee meets at least twice a year with the external auditor without management being present and the external auditor is also provided with the opportunity, at their request, to meet with the Board of Directors without management being present.

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 26 24/09/10 5:35 PM EXECUTIVE COMMITTEE Th e Committee periodically obtains independent advice from external Th e Executive Committee monitors and reports on the major risks consultants and utilises benchmarks from comparable organisations. aff ecting the business and develops, subject to approval of the full Board, Senior executive performance and compensation is reviewed annually strategies to mitigate these risks. and is tabled at Committee meetings. Th e quantum and adequacy of all Th e Executive Committee has responsibility to fully inform the Board compensation packages for senior executives are assessed and monitored on all matters of substance. Th e key functions and responsibilities of by the Remuneration Committee. Th e Company considers that the this Executive Committee include: compensation paid to Directors and senior executives is reasonable and fair having regard to comparable companies and the performance and • Development of the strategic plan which encompasses the responsibilities of each respective Director and senior executive. Company’s vision, mission and strategy statements and stakeholders’ needs; Th e Company discloses all relevant compensation details of its Directors and senior executives in accordance with the Corporations Act, ASX • Implementation of operating plans and budgets by management Recommendations and relevant Australian equivalents to International and monitoring progress against budget as well as monitoring all Financial Reporting Standards. When there is a material or signifi cant signifi cant areas of the business; variation in the compensation arrangements of the Company’s • Establishment and monitoring of capital expenditure and capital Executive Directors, as appropriate, this is promptly disclosed to ASX management; under the Company’s continuous disclosure policy. • Establishment of committees to monitor and report on all aspects Under its Charter, the composition of this Committee is 3 members, of risk management including environmental issues and health and at least 2 of which must be Non-executive Directors. Although this is safety matters; not in strict compliance with ASX Recommendations, the Company • Reviewing cash fl ow projections and gearing; considers that due to the relatively small number of Executive Directors • Review of acquisitions and disposal of businesses and assets and and recognising the Company’s ownership structure, the Directors approval of contracts within defi ned limits including budgets; and consider that an appropriately independent and adequate evaluation of • Treasury responsibility including advising the Board on liquidity, the Executive Directors occurs. currency and interest rate risk and credit policies. Th e Committee meets at least twice per year and formally reports either Th e management of the Company annually brings to the Executive verbally or in writing to the Board. In addition, senior executives may Committee detailed budget proposals for consideration, the fi nal be invited to Committee meetings to provide input on management consolidated version of which is submitted to the full Board of Directors performance and salary packages. in June each year. During the fi nancial year the Remuneration Committee comprised the Th e Executive Committee derives their mandate and operates in following members with their respective appointment dates: accordance with the Group’s formal ‘Delegation of Authority’ document. Graham W. Burke January 2001 Chairperson Th is Delegation of Authority is reviewed and updated on an annual basis, John R. Kirby January 2001 with major changes approved by the Board. R. David Mattingly January 2001 During the fi nancial year the members of this Committee were: Th e total cash compensation of Independent Directors (being Directors’ Peter M. Harvie (Chairperson) Fees paid to anyone not in an Executive capacity), is distinguished from Michael E. Anderson (to January 2010) that of Executive Directors and is approved in aggregate by shareholders Guy C. Dobson (from January 2010) in general meetings from time to time. Independent Directors receive Kathy J. Gramp $50,000 per annum plus $5,000 per annum for each Board Committee on which they serve payable quarterly in arrears. Th e Executive Committee meets at frequent intervals. Th e Non-executive Shareholder Directors do not receive any compensation from the Company. REMUNERATION COMMITTEE Th e Committee’s Charter provides for the review of Executive Th e Company does not and never has had a retirement benefi t scheme Committee recommendations on senior operational and corporate for Non-executive Directors, other than the individual statutory executive compensation packages and the preparation of the annual superannuation benefi ts of Independent Directors which are included as Remuneration Report. In particular the Remuneration Committee part of their total Director’s Fee remuneration. reviews Executive Director compensation including equity participation In addition, the Company encourages Executive and Non-executive by such Executive Directors and makes appropriate recommendations Directors to hold shares in the Company. Subject to any necessary thereon to the Company’s full Board. approvals as may be required by law or ASX Listing Rules, Directors Th e Committee makes recommendations on the compensation of may be invited from time to time to participate in share and option the Executive Directors with the overall objective of motivating and plans off ered by the Company. Th e various share and option appropriately rewarding performance. Th e recommendations are made entitlements of all Directors are advised to ASX in accordance with the in line with the Company’s present circumstances and goals to ensure Listing Rules and Corporations Act requirements and are detailed in the maximum shareholder benefi ts from the attraction and retention of a Directors’ Report. high quality Board and senior management team.

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 27 24/09/10 5:35 PM CORPORATE GOVERNANCE STATEMENT 2010 CONT.

SHAREHOLDER MEETINGS AND COMMUNICATION Th e Company’s nominated Communications Offi cers are responsible Th e Company’s Constitution sets out the procedures to be followed for liaising with ASX and for ensuring the Company’s compliance with regarding: its legal and ASX reporting and disclosure obligations. • Th e convening of meetings; No communication is permitted to any external third party about an announcement until confi rmation that the communication has been • Th e form and requirements of the notice; released to the market has been received from ASX. Once confi rmation • Chairman and quorums; has been received, the Company provides a copy of its release on its • Voting procedures, proxies, representatives and polls. corporate website as soon as possible. Notices of meetings of shareholders will comply with current good Communication by the Company with external parties is the practice guidelines as outlined in the ASX Recommendations and the responsibility of a limited number of authorised spokespersons to format of resolutions to be put to meetings of shareholders will be clear, ensure the consistency of information provided and to safeguard concise and in plain English. Distinctly separate issues will be presented against inadvertent disclosure of price sensitive information. All in separate motions and only combined into one resolution where the communications are monitored by the Communication Offi cers to subject matter requires it to be so presented. ensure that no material information has been inadvertently released. Th e format of proxies will be such that shareholders will be able to clearly In particular, the Communications Offi cers ensure that no price indicate their voting intentions and full directions on the completion of sensitive information is provided in discussions with broking analysts, proxies will be contained in both the proxy form itself and in the notice investors or to the media unless it has fi rst been released through ASX. of meeting, including any relevant voting exclusion statements. Th e Directors believe that, in accordance with the Company’s constitution, CORPORATE CODE OF CONDUCT voting by shareholders should be determined fi rstly on a show of hands of Th e Board of Directors insist on the highest ethical standards from those present at the meeting and by poll where requested by shareholders all offi cers and employees of the Company and are vigilant to ensure or by the Chairperson. Th e constitution sets out the circumstances in appropriate corporate professional conduct at all times. which a poll may be called by the Chairperson or by shareholders whether Standards setting out the Company’s Code of Conduct by which present in person or by proxy or by representative. employees are expected to act are contained in the Induction Materials Th e Chairperson of meetings of shareholders shall allow a reasonable and formal contracts and letters of employment. Th ey include: opportunity for shareholders to ask questions on those matters on the • Insider trading and employee security trading; agenda that are before shareholders for consideration and to enable • Confl icts of interest; informed participation and voting by shareholders in the meeting. • Use of market power and pricing practices; In addition, the external auditor shall attend the Company’s annual • Confi dentiality and Privacy Policy; general meeting and be available to answer questions about the conduct of the audit and the auditor’s report on the Company’s fi nancial • Compliance with Laws and Regulations; statements. Th is will include any written questions forwarded to the • Employment practices including Occupational Health & Safety; and Company more than one week prior to the meeting. • Maintenance, quality and safety of goods and services. Th e Company is supportive of developments by the share registry Compliance programs also reinforce systemized compliance with industry to facilitate the option of electronic communication with various laws and regulations. shareholders, and since 2008 has placed the Company’s annual report on its website as a principle distribution method to shareholders, All Directors and managers have an obligation to act with the utmost aff ording them the option of receiving a printed copy should they so integrity and objectivity, striving at all times to enhance the reputation request one. and performance of the Company. Th e Company’s corporate website at www.austereo.com.au contains Th e Company has a commitment to corporate social responsibility as relevant information for shareholders about the Company, its operations, evidenced by its support for community activities. In addition, as part of corporate profi le, structure and other supporting information including the Company’s commitment to corporate sustainability, the Company a separate section outlining the Company’s corporate governance will be reporting in late 2010 under the National Greenhouse Energy policies. In addition shareholders can email queries to the Company Reporting Act. through the website, or by facsimile, by mail or by telephone. All purchases of major consumables are obtained by the Company by a periodic competitive tendering process. CONTINUOUS DISCLOSURE POLICY Th e Directors ensure that the market is fully informed on a timely basis INTERCOMPANY AGREEMENT of all material, price sensitive information regarding the Company. In Certain intercompany arrangements have been entered into between support of this objective, the Company has procedures in place to the Company and Village Roadshow Limited (“VRL”). Historically ensure that it meets its reporting and continuous disclosure obligations. the Company and VRL have maintained various fi nancial and In this regard, the Company supports the ASX Recommendations and administrative arrangements and have regularly engaged in transactions Australian Securities and Investment Commission’s “Better Disclosure with each other and their respective affi liates. for Investors” guidance principles and believes its practices are consistent with these guidance principles.

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 28 24/09/10 5:35 PM Th is relationship is governed by the Intercompany Agreement dated Th e Company’s formal Risk Management Methodology incorporates a 19 January 2001 between the Company and VRL. Th e Intercompany holistic and structured approach to the identifi cation and mitigation of Agreement specifi cally states that it is the intention of both parties that business risks by key business units. Th is risk approach covers strategic, the relationship between them and their respective affi liates prior to operational, compliance and fi nancial risks and accountability for Austereo's listing on ASX will continue on the same basis while VRL managing such key risks rests with the CEO and CFO. continues to hold a controlling interest in the Company. In accordance with the Risk Management Methodology adopted by the Th e Intercompany Agreement requires each party to make services Audit Committee, formal risk assessments are conducted twice a year, in available to the other, either without charge, on a reduced cost basis or on June and December, with reporting to the Audit Committee on major a recharge basis, depending on how such services were provided prior to risks and action plans. Th is includes reporting on all material fi nancial listing. Where costs are to be recharged, the charge is to be determined in and non-fi nancial risks across all markets in which the Company accordance with established accounting principles, and failing agreement, operates with detailed sign-off s from key process owners and internal the dispute will be referred to an independent person appointed by the management questionnaires completed bi-annually as part of the President of the Law Institute of Victoria whose decision shall be fi nal in Company’s full-year and half-year fi nancial reporting procedures. determining the quantum of costs to be allocated. Th e Company’s fi nancial structure includes a number of covenants to In respect of the Intercompany Agreement and all other matters banks, requiring a structured level of monitoring and management to between the Company and VRL, the Directors will be required to ensure compliance. Th e Group Treasury Risk Policy articulates the comply with the requirements of the Constitution and the Corporations recognition, measurement and management of interest rate risks, foreign Act governing any confl icts of interest that may arise. exchange exposures, hedging, credit risk, liquidity levels and monitoring of economic and fi nancial conditions. Th e parameters of all policies, SECURITIES TRADING POLICY including the Treasury Risk Management Policy, are periodically reviewed by the Audit Committee to ensure they remain appropriate All Directors have a written contractual obligation to the Company to and address current issues. immediately advise the Company of all changes to their interests in shares, options and debentures, if any, in the Company and its associates Th e Company established a Business Continuity Management project for the timely reporting of any changes to ASX by the Company in 2003 and established the agreed areas upon which to focus. Th e Secretaries. resulting Disaster Recovery Plan and Business Continuity Plan focuses primarily on critical on-air systems and IT&T operations to support day In addition to all Directors of the Company, all members of the Executive to day back offi ce operations with a view to reducing the risk of business Committee and other key executives of the Austereo group of companies disruption to a pragmatic and acceptable level. Th e Company already has (‘the Group’) who are involved in material transactions concerning the in place existing disaster recovery procedures for broadcast operations Company are included in the defi nition of ‘Designated Offi cers’. Th ese in all markets including access to shared facilities at other stations Designated Offi cers are precluded from dealing in securities of the which enables the Company to maintain program services on air with Company during the periods one month prior to the release dates of minimum downtime and loss of revenue. the half year profi t announcement and 30 June to the release of the full fi nancial year end profi t announcement. Reviews are undertaken at least on an annual basis to ensure compliance with various Occupational Health and Safety Regulations. Consultative Outside of those periods, no Designated Offi cers may deal in securities mechanisms including Safety Committees have been established to of the Company when in possession of any information which, if made identify and deal with any issues which may arise. External consultants publicly available, could reasonably be expected to materially aff ect are engaged when required. Workers Compensation claims are the price of the Company’s securities, whether upwards or downwards. considered under well established procedures. Legal advice will be obtained by the Company Secretaries on behalf of the Designated Offi cers in circumstances where any doubt exists. Th e Village Roadshow Group Internal Audit Division, which is totally independent of all operating business units, performs regular reviews on All Directors of the Company, and the Austereo Group, are required to signifi cant areas of risks within business units to ensure that the internal provide a standing notice, updated as appropriate, giving details of the controls framework is adequate and remains eff ective. nature and extent of their ‘material personal interests’ in the aff airs of the Company and Group upon appointment as a Director. All notices Th e Company’s Corporate Governance and Compliance Committee are tabled and recorded in the minutes of each meeting of Directors and monitors the implementation and eff ectiveness of sound governance entered into a register which is open for inspection by all Directors and policies and procedures across the Group in line with ASX is provided to all future incoming Directors. Recommendations. Such policies and procedures include risk management and internal controls framework, the code of conduct and RISK MANAGEMENT the compliance process adopted by management. Th e Board is responsible for the approval and review of the Group’s Th e responsibilities of the Committee include the formulation of risk management and internal controls framework and policies in annual Compliance Programs for Audit Committee approval and accordance with its Group Risk Management policy. However the the co-ordination and monitoring of such programs to ensure timely management of risk and the implementation of appropriate controls to implementation and review. Th e Committee reports twice each year on mitigate such risks is the responsibility of management. all material aspects of such risk and compliance programs to the Audit Committee and in writing to the CEO and CFO on the appropriateness To assist the Board in discharging its responsibilities in relation to risk and eff ectiveness of these programs. management, the Board has delegated the recognition and management of risk to the Audit Committee in accordance with its Charter.

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 29 24/09/10 5:35 PM STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2010

Consolidated Notes 2010 2009 $ '000 $ '000 Revenues from operations 3(a) 263,238 258,459 Other income 3(b) 342 465 Expenses from operations excluding fi nance costs 3(c) (184,842) (180,854) Finance costs 3(c) (13,440) (14,538) Material items of income and (expense) - write down of investment 3(c) - (3,800) Share of net profi ts of associates accounted for using the equity method 11(a)(i) 1,891 1,762 Profi t from operations before income tax expense 67,189 61,494 Income tax expense relating to operations 5 (20,077) (20,083) Profi t from operations after income tax expense 47,112 41,411 Other comprehensive income Cash fl ow hedges: Gain/(loss) taken to equity 1,948 (3,957) Income tax eff ect (585) 1,003 Foreign currency translation (166) 45 Other comprehensive income for the period, net of tax 1,197 (2,909) Total comprehensive income for the period 48,309 38,502 Basic earnings per share from operations 4 13.66 cents 11.98 cents Diluted earnings per share from operations 4 13.66 cents 11.98 cents Th e accompanying notes form an integral part of this Statement of Comprehensive Income

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 30 24/09/10 5:35 PM BALANCE SHEET AS AT 30 JUNE 2010

Consolidated Notes 2010 2009 $ '000 $ '000 Current assets Cash and cash equivalents 7(a) 1,425 691 Trade and other receivables 8 53,382 50,129 Derivatives 29(b) 108 - Other 10 1,121 932 Total current assets 56,036 51,752 Non-current assets Receivables 82,186 2,714 Investments accounted for using the equity method 11 7,057 7,974 Other ﬁ nancial assets 12 541 541 Property, plant & equipment 13 41,560 41,048 Intangible assets - Radio licences 9 869,953 865,246 Deferred tax assets 57,088 8,121 Derivatives 29(b) 44 27 Total non-current assets 928,429 925,671 Total assets 984,465 977,423 Current liabilities Trade and other payables 14 44,813 40,732 Income tax payable 4,657 5,134 Provisions 16 7,860 7,937 Other 17 1,247 993 Total current liabilities 58,577 54,796 Non-current liabilities Payables 14 2,211 4,102 Interest bearing loans and borrowings 15 209,100 220,100 Deferred tax liabilities 532,16631,132 Provisions 16 1,390 1,148 Other 17 2,010 2,252 Derivatives 29(b) 1,437 3,277 Total non-current liabilities 248,314 262,011 Total liabilities 306,891 316,807 Net assets 677,574 660,616 Equity Contributed equity 18 631,252 631,226 Reserves 19 (930) (2,127) Retained earnings 19(c) 47,252 31,517 Total equity 677,574 660,616

Th e accompanying notes form an integral part of this Balance Sheet

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 31 24/09/10 5:35 PM STATEMENT OF CHANGES TO EQUITY FOR THE YEAR ENDED 30 JUNE 2010

Contributed Equity Issued Employee Retained Foreign Cash Flow Total Capital Share Plan Earnings Currency Hedge Loans (accumulated Translation Reserve losses) $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 CONSOLIDATED At 1 July 2008 640,878 (2,839) 24,701 121 661 663,522 Proﬁ t for the period - - 41,411 - - 41,411 Other comprehensive income - - - 45 (2,954) (2,909) Total comprehensive income for the period - - 41,411 45 (2,954) 38,502 Transactions with owners in their capacity as owners: Austereo Employee Share Plan - 42 - - - 42 Decreases through returns of capital, buybacks, (6,855) ----(6,855) cancellations Equity dividends paid --(34,595) --(34,595) At 30 June 2009 634,023 (2,797) 31,517 166 (2,293) 660,616

At 1 July 2009 634,023 (2,797) 31,517 166 (2,293) 660,616 Proﬁ t for the period - - 47,112 - - 47,112 Other comprehensive income - - - (166) 1,363 1,197 Total comprehensive income for the period - - 47,112 (166) 1,363 48,309 Transactions with owners in their capacity as owners: Austereo Employee Share Plan - 26 - - - 26 Decreases through returns of capital, buybacks, ------cancellations Equity dividends paid --(31,377) --(31,377) At 30 June 2010 634,023 (2,771) 47,252 - (930) 677,574

Th e accompanying notes form an integral part of this Statement of Changes to Equity

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 32 24/09/10 5:35 PM CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2010

Consolidated Notes 2010 2009 $ '000 $ '000 Cash fl ows from operating activities Receipts from customers 278,482 277,495 Payments to suppliers and employees (176,477) (179,263) Interest received 174 202 Finance costs (13,561) (14,685) Income taxes paid (19,071) (24,551) GST paid (15,502) (15,190) Net operating cash fl ows 7(b) 54,045 44,008 Cash fl ows from investing activities Purchases of property, plant & equipment (8,517) (16,577) Proceeds from sale of property, plant & equipment - 2 Proceeds from sale of business undertakings -6 Proceeds from related party loans 1,891 3,684 Proceeds from other party loans 182 (495) Proceeds from sale of investments 276 - Purchase of investments (42) (761) Purchase of intangibles (4,707) - Net investing cash fl ows (10,917) (14,141) Cash fl ows from fi nancing activities Proceeds from borrowings 140,500 156,687 Repayment of borrowings (151,500) (144,587) Dividends paid (31,377) (34,595) Payment for share buyback -(6,866) Other (17) (8) Net fi nancing cash fl ows (42,394) (29,369) Net increase/(decrease) in cash and cash equivalents 734 498 Cash and cash equivalents at beginning of year 691 193 Cash and cash equivalents at end of year 7(a) 1,425 691 Th e accompanying notes form an integral part of this Cash Flow Statement

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 33 24/09/10 5:35 PM NOTES TO THE FINANCIAL STATEMENTS

NOTE 1 CORPORATE INFORMATION which has been prepared in accordance with the requirements of the Th e fi nancial report of Austereo Group Limited for the year ended 30 Corporations Act 2001 including applicable Australian Accounting June 2010 was authorised for issue on 26 August 2010 in accordance Standards. Th e fi nancial report is presented in Australian dollars and with a resolution of directors. all values are rounded to the nearest thousand dollars ($000's) unless otherwise stated under the option available to the Company under Austereo Group Limited is a company limited by shares incorporated in ASIC Class Order 98/100. Th e Company is an entity to which the Class Australia whose shares are publicly traded on the Australian Securities Order applies. Exchange. Th e principal activity of the consolidated entity during the year was (b) Statement of Compliance Commercial Radio Broadcasting. Th e fi nancial report complies with Australian Accounting Standards and International Financial Reporting Standards ('IFRS') as issued by NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING the International Accounting Standards Board. POLICIES Australian Accounting Standards that have recently been amended but are not yet eff ective have not been adopted for the annual reporting (a) Basis of Preparation period ended 30 June 2010. Th e table below outlines each of these Th e fi nancial statements have been prepared in accordance with the amended standards and the expected change in accounting policy when historical cost convention except for derivative fi nancial instruments applied, if any: and available-for-sale fi nancial assets which have been valued at fair value. Th e fi nancial report is a general purpose fi nancial report

Reference Summary Impact on Group Application Application Accounting Policy date of date for standard* Group AASB 2009-5 Further Amendments to Australian Accounting Standards arising from Th e Group has not 1 January 2010 1 July 2010 the Annual Improvements Project yet determined the extent of the Th e amendments to some Standards result in accounting changes impact of the for presentation, recognition or measurement purposes, while some amendment, if any. amendments that relate to terminology and editorial changes are expected to have no or minimal eff ect on accounting except for the following: Th e amendment to AASB 107 explicitly states that only expenditure that results in a recognised asset can be classifi ed as a cash fl ow from investing activities. AASB 2009-8 Amendments to Australian Accounting Standards – Group Cash-settled Th e Group has not 1 January 2010 1 July 2010 Share-based Payment Transactions [AASB 2] yet determined the extent of the Th e amendments clarify the accounting for group cash-settled share- impact of the based payment transactions in the separate or individual fi nancial amendment, if any. statements of the entity receiving the goods or services when the entity has no obligation to settle the share-based payment transaction. AASB 2010-3 Further Amendments to Australian Accounting Standards arising from Th e Group has not 1 July 2010 1 July 2010 the Annual Improvements Project yet determined the extent of the Limits the scope of the measurement choices of non-controlling interest impact of the at proportionate share of net assets in the event of liquidation. Other amendment, if any. components of NCI are measured at fair value. Requires an entity (in a business combination) to account for the replacement of the acquiree’s share-based payment transactions (whether obliged or voluntarily), i.e. split between consideration and post combination expenses. Clarifi es that contingent consideration from a business combination that occurred before the eff ective date of AASB 3 Revised is not restated. Eliminates the requirement to restate fi nancial statements for a reporting period when signifi cant infl uence or joint control is lost and the reporting entity accounts for the remaining investment under AASB 139. Th is includes the eff ect on accumulated foreign exchange diff erences on such investments.

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 34 24/09/10 5:35 PM NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT. (b) Statement of Compliance cont.

Reference Summary Impact on Group Application Application Accounting Policy date of date for standard* Group AASB 2010-4 Further Amendments to Australian Accounting Standards arising from Th e Group has not 1 January 2011 1 July 2011 the Annual Improvements Project yet determined the extent of the Emphasises the interaction between quantitative and qualitative AASB impact of the 7 disclosures and the nature and extent of risks associated with fi nancial amendment, if any. instruments. Clarifi es that an entity will present an analysis of other comprehensive income for each component of equity, either in the statement of changes in equity or in the notes to the fi nancial statements. Provides guidance to illustrate how to apply disclosure principles in AASB 134 for signifi cant events and transactions. Clarify that when the fair value of award credits is measured based on the value of the awards for which they could be redeemed, the amount of discounts or incentives otherwise granted to customers not participating in the award credit scheme, is to be taken into account. AASB 124 Th e revised AASB 124 simplifi es the defi nition of a related party, Th e Group has not 1 January 2011 1 July 2011 (Revised) clarifying its intended meaning and eliminating inconsistencies from the yet determined defi nition, including: the extent of the impact of the (a) the defi nition now identifi es a subsidiary and an associate with the amendment, if any. same investor as related parties of each other; (b) entities signifi cantly infl uenced by one person and entities signifi cantly infl uenced by a close member of the family of that person are no longer related parties of each other; and (c) the defi nition now identifi es that, whenever a person or entity has both joint control over a second entity and joint control or signifi cant infl uence over a third party, the second and third entities are related to each other. AASB 9 AASB 9 includes requirements for the classifi cation and measurement Th e Group has not 1 January 2013 1 July 2013 of fi nancial assets resulting from the fi rst part of Phase 1 of the IASB’s yet determined project to replace IAS 39 Financial Instruments: Recognition and the extent of the Measurement (AASB 139 Financial Instruments: Recognition and impact of the Measurement). amendment, if any. Th e main changes from AASB 139 are described below. (a) Financial assets are classifi ed based on (1) the objective of the entity’s business model for managing the fi nancial assets; (2) the characteristics of the contractual cash fl ows. (b) AASB 9 allows an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. Dividends in respect of these investments that are a return on investment can be recognised in profi t or loss and there is no impairment or recycling on disposal of the instrument. (c) Financial assets can be designated and measured at fair value through profi t or loss at initial recognition if doing so eliminates or signifi cantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities, or recognising the gains and losses on them, on diff erent bases.

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 35 24/09/10 5:35 PM NOTES TO THE FINANCIAL STATEMENTS CONT.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT. (b) Statement of Compliance cont.

Reference Summary Impact on Group Application Application Accounting Policy date of date for standard* Group AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 Th e Group has not 1 January 2013 1 July 2013 yet determined Th e revised Standard introduces a number of changes to the accounting the extent of the for fi nancial assets, the most signifi cant of which includes: impact of the • two categories for fi nancial assets being amortised cost or fair value amendment, if any. • removal of the requirement to separate embedded derivatives in fi nancial assets • strict requirements to determine which fi nancial assets can be classifi ed as amortised cost or fair value. Financial assets can only be classifi ed as amortised cost if (a) the contractual cash fl ows from the instrument represent principal and interest and (b) the entity’s purpose for holding the instrument is to collect the contractual cash fl ows • an option for investments in equity instruments which are not held for trading to recognise fair value changes through other comprehensive income with no impairment testing and no recycling through profi t or loss on derecognition • reclassifi cations between amortised cost and fair value no longer permitted unless the entity’s business model for holding the asset changes • changes to the accounting and additional disclosures for equity instruments classifi ed as fair value through other comprehensive income *Application date is for the annual reporting periods beginning on or after the date showing in the above table.

(c) Principles of Consolidation In the process of applying the group's accounting policies, management Th e consolidated fi nancial statements are those of the group, comprising has made various judgements involving estimations which have had an Austereo Group Limited (the parent entity) and all entities which impact on the fi nancial statements. the parent entity controlled from time to time during the year and at Th e carrying amounts of certain assets and liabilities are often balance date. determined based on estimates and assumptions of future events. Th e Th e consolidated fi nancial statements include the information contained key estimates and assumptions that have a signifi cant risk on causing in the fi nancial statements of Austereo Group Limited and each of its a material adjustment to the carrying amounts of certain assets and controlled entities as from the date the parent entity obtains control liabilities within the next annual reporting period are: until such time as control ceases. Impairment of Intangibles with Indefi nite Useful Lives Th e fi nancial statements of controlled entities are prepared for the same Th e group determines whether intangibles with indefi nite useful lives reporting year as the parent entity, using consistent accounting policies. are impaired at least on an annual basis. Th is requires an estimation Adjustments are made to bring into line any dissimilar accounting of the recoverable amount of the cash-generating units to which these policies which may exist. intangibles are allocated. Th e assumptions used in this estimation of All intercompany balances and transactions, and unrealised profi ts recoverable amount and the carrying amount are discussed in Note 9. arising from intra-group transactions, have been eliminated in full. Financial Guarantees (d) Signifi cant Accounting Judgements, Estimates and Th e fair value of fi nancial guarantee contracts discussed in Note 31 has Assumptions been assessed using a probability weighted discount approach. In order to estimate the fair value under this approach the following assumptions Signifi cant Accounting Judgements are made: Th e preparation of the fi nancial statements requires management to make judgements, estimates and assumptions that aff ect the reported • Probability of Default (PD): Th is represents the likelihood of the amounts in fi nancial statements. Management continually evaluates guaranteed party defaulting in a 1 year period and is assessed on its judgements and estimates in relation to assets, liabilities, contingent historical default rates of companies rated by Standard & Poors. Th e liabilities, revenue and expenses. range used in the model is between 0.5 and 5%.

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 36 24/09/10 5:35 PM (d) Signifi cant Accounting Judgements, Estimates and On disposal of a foreign entity, the deferred cumulative amount Assumptions cont. recognised in equity relating to that particular foreign operation is • Loss Given Default (LGD): Th is represents the proportion of the recognised in the profi t or loss. exposure that is not expected to be recovered in the event of a default by the guaranteed party and is based on the result of studies (g) Cash and Cash Equivalents into the recovery rate for unsecured debt obligations. Th e rate used Cash and cash equivalents in the balance sheet comprise cash at bank in the model is 60%. and in hand and short-term deposits with an original maturity of • Exposure at Default (EAD): Th is represents the maximum loss three months or less. For the purposes of the cash fl ow statement, cash that Austereo Group Limited is exposed to if the guaranteed party and cash equivalents includes cash on hand and in banks, and money were to default. Th e model assumes that the guaranteed facility is market investments readily convertible to cash as stated above, net of at maximum possible exposure at the time of default and hence, outstanding overdrafts. equates to the values disclosed in Note 31. (h) Trade and Other Receivables Th e value of the fi nancial guarantee over each future year of the Trade receivables, which generally have 30-45 day terms, are initially guarantees’ life is then equal to PD x LGD x EAD, which is discounted measured at fair value and subsequently at amortised cost, and where over the contractual term of the guarantee, to reporting date to appropriate, less an allowance for uncollectible amounts. An estimate determine the fair value. for doubtful debts is made when collection of the full amount is no Further details of the nature of these assumptions and conditions may longer probable. Bad debts are written off when identifi ed. be found in the relevant notes to the fi nancial statements. (i) Financial Instruments and Derivatives (e) Segment Reporting AASB 139: Financial Instruments: Recognition and Measurement An operating segment is a component of the group that engages in requires identifi cation and fair value measurement of fi nancial business activities from which it may earn revenues and incur expense instruments such as interest rate swaps. (including revenues and expenses relating to transactions with other Th e interest rate swaps are classifi ed as cash fl ow hedges and are components of the same entity), whose operating results are regularly required to be recorded on the balance sheet and valued at fair value, reviewed by the group's chief operating decision maker to make meaning the interest rate swaps are marked to market based on decisions about resources to be allocated to the segment and assess its prevailing interest rates. performance and for which discrete fi nancial information is available. Management will also consider other factors in determining operating Th e eff ectiveness of the hedge relationship will be periodically assessed segments such as the existence of a line manager and the level of during the life of the hedge. In relation to cash fl ow hedges to hedge fi rm segment information presented to the Board of Directors. Th e reporting commitments which meet the conditions for hedge accounting, the used by the Executive Committee breaks the group into 2 major portion of the gain or loss on the hedging instrument that is determined segments, “Radio Broadcasting” and “Other Operations”. Th e nature of to be an eff ective hedge is recognised directly in equity and the the two radio network products have similar economic characteristics ineff ective portion is recognised in the profi t or loss. and therefore are aggregated to form one operating segment. Amounts taken to equity are transferred to the profi t or loss when the (f) Foreign Currency hedged transaction aff ects profi t or loss, such as when hedged income or expenses are recognised or when a forecast sale or purchase occurs. Both the functional and presentation currency of Austereo Group When the hedged item is the cost of a non-fi nancial asset or liability, the Limited and its Australian subsidiaries is Australian dollars ($A). amounts taken to equity are transferred to the initial carrying amount Transactions in foreign currencies are initially recorded in the of the non-fi nancial asset or liability. functional currency at the exchange rates ruling at the date of the transaction. (j) Investments Investments in associates are accounted for under the equity method Monetary assets and liabilities denominated in foreign currencies are of accounting in the consolidated fi nancial statements and are retranslated at the rate of exchange ruling at the balance sheet date. carried in the consolidated balance sheet at cost plus post-acquisition All exchange diff erences in the consolidated fi nancial report are taken changes in the associates share of net assets, less any impairment in to the profi t or loss. value. Th e group's share of profi t/(loss) is refl ected in the statement of Non-monetary items that are measured in terms of historical cost in comprehensive income. foreign currency are translated using the exchange rates as at the date (k) Interests in Joint Ventures of the initial transaction. Joint ventures represent a contractual association, between two or more Non-monetary items measured at fair value in a foreign currency are parties to undertake a specifi c business project where the venturers meet translated using the exchange rates at the date when the fair value the cost of the project and receive a share of any resulting output. was determined. Interests in joint venture operations are brought to account by including At the reporting date the assets and liabilities of those overseas in the respective classifi cations, the share of individual assets employed, subsidiaries are translated into the presentation currency of Austereo liabilities and expenses incurred and revenue from the sale of joint Group Limited at the rate of exchange ruling at the balance sheet date venture output. and the income statements are translated at the weighted average exchange rates for the period. Th e exchange diff erences arising on the retranslation are taken directly to a separate component of equity.

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 37 24/09/10 5:35 PM NOTES TO THE FINANCIAL STATEMENTS CONT.

(l) Impairment of Financial Assets (o) Intangibles Austereo's radio licences meet the defi nition of intangible asset held at Financial Assets Carried at Cost cost under AASB 138: Intangible Assets and are disclosed on this basis. If there is objective evidence that an impairment loss has been incurred on an unquoted equity instrument that is not carried at fair value Under AASB 138, based on the current understanding, Austereo (because fair value cannot be reliably measured), or on a derivative asset believes the useful life of its radio licences satisfy the defi nition of an that is linked to and must be settled by delivery of such an unquoted indefi nite life intangible assets and are not amortised. Th e radio licences equity instrument, the amount of the loss is measured as the diff erence are required to be renewed every fi ve years, with relevant authorities between the asset's carrying amount and the present value of estimated required to renew the licences unless the renewal potentially leads to future cash fl ows, discounted at the current market rate of return for a a breach of licence conditions. Austereo reviews the determination similar fi nancial asset. of indefi nite useful life at each reporting date to determine whether events and circumstances continue to support the indefi nite useful life (m) Leases assessment for its radio licences. Th e radio licences are also subject to an annual impairment test, or more frequently if events or changes in Leases of fi xed assets, where substantially all the risks and benefi ts circumstance indicate the carrying amount may be impaired under incidental to the ownership of the asset are transferred to entities within AASB 136: Impairment of Assets, as discussed in Note 2(p) below. the group, are classifi ed as fi nance leases. All other leases are classifi ed as operating leases. Operating lease payments are recognised as an Gains or losses arising from derecognition of an intangible asset are expense in the statement of comprehensive income on a straight-line measured as the diff erence between the net disposal proceeds and the basis over the lease term. Th e group sub-leases buildings under an carrying amount of the asset and are recognised in the profi t or loss operating lease and rent revenue is recorded as income in the statement when the asset is derecognised. of comprehensive income on a straight-line basis. (p) Impairment of Assets Finance leases are capitalised by recording an asset and a liability equal to the fair value of the leased property, or, if lower, at the present value Under AASB 136: Impairment of Assets, the recoverable amount of an of the minimum lease payments, including any guaranteed residual asset is determined as the higher of fair value less costs to sell and value values. Lease payments are allocated between the reduction of the lease in use. liability and the lease fi nance charges for the year. As at 30 June 2010 the Under AASB 136 to calculate value in use, the discounted cash fl ow consolidated entity did not hold any fi nance leases. methodology is applied to assets using pre-tax cash fl ows and discount Th e determination of whether an arrangement is or contains a lease is rates that refl ect current market assessments of the time value of based on the substance of the arrangement and requires an assessment money and the risks specifi c to the asset. Impairment losses relating of whether the fulfi llment of the arrangement is dependant on the use to continuing operations are recognised in those expense categories of a specifi c asset or assets and the arrangement conveys a right to use consistent with the function of the impaired asset. the asset. All impairment tests are performed on either an individual asset or on Capitalised lease assets are depreciated over the shorter of the estimated a cash generating unit basis depending on whether the asset generates useful life of the asset and the lease term if there is no reasonable cash infl ows that are largely independent of those from other assets certainty that the group will obtain ownership by the end of the or groups of assets. At each reporting date, Austereo performs an lease term. assessment of whether an indicator of impairment exists, apart from radio licences that are impairment tested annually. An impairment test (n) Property, Plant & Equipment is performed where a trigger is believed to exist at balance date. An assessment is also made at each reporting date as to whether there Cost and Valuation is any indication that previously recognised impairment losses may All classes of property, plant & equipment, including freehold land no longer exist or may have decreased. If such indication exists, the and buildings on freehold land, are measured at cost, less accumulated recoverable amount is estimated. A previously recognised impairment depreciation and any accumulated impairment losses. loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment Depreciation and Amortisation loss was recognised. If that is the case the carrying amount of the asset Buildings and improvements are depreciated between 8 and 40 years is increased to its recoverable amount. Th at increased amount cannot using the straight line method, less any impairment in value. exceed the carrying amount that would have been determined, net of Plant, equipment and vehicles are depreciated between 3 and 15 years depreciation, had no impairment loss been recognised for the asset in using the straight line or reducing balance method, less any impairment prior years. After such a reversal the depreciation charge is adjusted in in value. future periods to allocate the asset's revised carrying amount, less any residual value, on a systematic basis over its remaining useful life. Leasehold improvements are amortised over the unexpired occupancy periods generally between 4 and 16 years using the straight line method, (q) Trade and Other Payables less any impairment in value. Trade and other payables are carried at amortised cost and represent Finance lease assets are amortised over the shorter of the estimated liabilities for goods and services provided to the group prior to the end useful life of the asset or the lease term, which has been determined to of the fi nancial year that are unpaid and arise when the group becomes be between 4 and 5 years, using the straight line method. obliged to make future payments in respect of the purchase of these goods and services. Depreciation and amortisation periods are consistent with prior period.

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 38 24/09/10 5:35 PM (r) Interest Bearing Loans and Borrowings (v) Contributed Equity All loans and borrowings are initially recognised at the fair value of the Contributed equity is recognised at the fair value of the consideration consideration received less directly attributable transaction costs. received by the company. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the After initial recognition, interest bearing loans and borrowings are share proceeds received. subsequently measured at amortised cost using the eff ective interest method. (w) Revenue Recognition Gains and losses are recognised in profi t or loss when the liabilities Revenue is recognised to the extent that it is probable that the economic are derecognised. benefi ts will fl ow to the group and the revenue can be reliably measured. Th e following specifi c recognition criteria must also be met before (s) Provisions revenue is recognised: Provisions are recognised when the group has a present obligation (legal or constructive) as a result of a past event, it is probable that an Rendering of Services outfl ow of resources embodying economic benefi ts will be required to Income derived from airtime and online sales is recognised based on settle the obligation and a reliable estimate can be made of the amount when services to the customers are rendered, that is when the advertising of the obligation. If the eff ect of the time value of money is signifi cant, is aired. Where services are yet to be rendered, amounts are recorded as provisions are determined by discounting the expected future cash fl ows unearned revenue. at a pre-tax rate that refl ects current market assessments of the time value of money and, where appropriate, the risk specifi c to the liability. Interest A provision for dividends is not recognised as a liability unless the Revenue is recognised as the interest accrues (using the eff ective interest dividends are declared. method, which is the rate that exactly discounts estimated future cash receipts through the expected life of the fi nancial instrument to the net (t) Employee Benefi ts carrying amount of the fi nancial asset). Provision is made for employee benefi ts accumulated as a result of employees rendering services up to the reporting date. Th ese benefi ts Dividends include wages and salaries, annual leave and long service leave. Liabilities Revenue is recognised when the group's right to receive the payment arising in respect of wages and salaries, annual leave and any other is established. employee entitlements expected to be settled within twelve months of the reporting date are measured at their nominal amounts. All other Rental Revenue employee benefi t liabilities are measured at the present value of the Rental income is recognised on a straight line basis. estimated future cash outfl ow to be made in respect of services provided by employees up to the reporting date. Th e value of the employee (x) Income Tax share incentive scheme is not being charged as an employee benefi ts Under AASB 112: Income Taxes, Austereo is required to use the expense as it is grandfathered from such requirements. In respect of the balance sheet method to account for deferred taxes, which focuses on group's superannuation and retirement plans described in Note 21, any the tax impact of the transactions and other events aff ecting amounts contributions made to the plans by the entities within the group are recognised in the balance sheet and a tax-based equivalent balance sheet. charged against profi ts when due. Current tax assets and liabilities for the current and prior periods are (u) Share-Based Payment Transactions measured at the amount expected to be recovered from or paid to the taxation authorities. Th e group provides benefi ts to employees (including Directors) of the group in the form of share-based payment transactions under Th e tax rates and tax laws used to compute the amount are those that are its Employee Share Plan Scheme (ESPS). Th e group has applied the enacted or substantively enacted by the balance sheet date. exemption in AASB 1: First Time Adoption of Australian Standards Deferred income tax liabilities are recognised for all taxable temporary which permits the equity instruments granted under the Employee diff erences except: Share Plan Scheme to be grandfathered from requirements of AASB 2: Share-Based Payments. • Where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a Th us, under the exemption, AASB 2: Share-Based Payments has not been business combination and, at the time of the transaction, aff ects applied to any equity instruments granted under the Employee Share neither the accounting profi t nor taxable profi t or loss; and Plan Scheme on or before 7 November 2002. • In respect of taxable temporary diff erences associated with In the event that any future loans are provided to employees, under investments in subsidiaries, associates and interests in joint ventures, AASB 2: Share-Based Payments, the share plan loans are considered, in and where the timing of the reversal of the temporary diff erences substance, share options and the group will recognise the fair value of can be controlled and it is probable that the temporary diff erences these options granted to employees as remuneration expense, on a pro will not reverse in the foreseeable future. rata basis over the vesting period, in the statement of comprehensive Deferred income tax assets are recognised for all deductible temporary income with a corresponding adjustment to equity. diff erences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profi t will be available against which the deductible temporary diff erences, and the carry-forward of unused tax assets and unused tax losses can be utilised except:

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 39 24/09/10 5:35 PM NOTES TO THE FINANCIAL STATEMENTS CONT.

(x) Income Tax cont. of the Tax Consolidated group recognises current tax amounts relating • Where the deferred income tax asset relating to the deductible to transactions, events and balances of the wholly-owned entities in temporary diff erence arises from the initial recognition of an asset the group as if those transactions, events and balances were its own, in or liability in a transaction that is not a business combination and, at addition to the current and deferred tax amounts arising in relation to its the time of the transaction, aff ects neither the accounting profi t nor own transactions, events and balances. Revenues and expenses arising the taxable profi t or loss; and under the TSA are recognised as components of income tax expense (revenue) in each wholly-owned entity. • In respect of deductible temporary diff erences associated with investments in subsidiaries, associates and interests in joint Under the terms of the TSA, the wholly-owned entities reimburse the ventures, deferred tax assets are only recognised to the extent that head entity for any income tax amounts receivable or payable in respect it is probable that the temporary diff erences will reverse in the of their stand-alone activities. Amounts receivable or payable under the foreseeable future and taxable profi t will be available against which TSA are included with other amounts receivable or payable between the temporary diff erences can be utilised. group entities. Refer also Note 5 for additional disclosures relating to Tax Consolidation. Th e carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable (y) Other Taxes that suffi cient taxable profi t will be available to allow all or part of the deferred income tax asset to be utilised. Revenues, expenses and assets are recognised net of the amount of GST except: Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the • Where the GST incurred on a purchase of goods and services is not liability is settled, based on tax rates (and tax laws) that have been recoverable from the taxation authority, in which case the GST is enacted or substantively enacted at the balance sheet date. Unrecognised recognised as part of the cost of acquisition of the asset or as part of deferred income tax assets are reassessed at each balance date and are the expense item as applicable; and recognised to the extent that it has become probable that future taxable • Receivables and payables are stated with the amount of GST profi t will allow the deferred tax to be recovered. included. Th e net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in Income taxes relating to items recognised directly in equity are the balance sheet. recognised in equity and not in profi t or loss. Deferred tax assets and deferred tax liabilities are off set only if a legally enforceable right exists (z) Borrowing Costs to set off current tax assets against current tax liabilities and the deferred Th e group does not currently hold qualifying assets but, if it did, the tax assets and liabilities relate to the same taxable entity and the same borrowing costs directly associated with this asset would be capitalised taxation authority. (including any other associated costs directly attributable to the Tax Consolidation borrowing and temporary investment income earned on the borrowing). All other borrowing costs are expensed in the period they occur. For Australian income tax purposes, various entities in the group have formed a Tax Consolidated group and have executed a combined Tax (aa) Earnings per Share Sharing and Tax Funding agreement ('TSA') in order to allocate income Basic earnings per share is determined by dividing the net profi t tax expense to the relevant wholly-owned entities on a stand-alone basis. attributable to members by the weighted average number of ordinary In addition, the TSA provides for the allocation of income tax liabilities shares outstanding during the fi nancial year. As there are currently between the entities should the head entity default on its income tax no potentially dilutive ordinary shares outstanding, the calculation of payment obligations to the Australian Taxation Offi ce. Th e head entity diluted earnings per share is determined as for basic earnings per share.

NOTE 3 REVENUES AND EXPENSES

Consolidated 2010 2009 $ '000 $ '000 Revenues and Income from Continuing Operations (a) Revenue Revenue from services 260,187 254,755 Consultancy fees 1,981 2,490 Rental income -125 Commission/fees received 22 13 Management and services fees 874 874 Interest from other entities 174 202 263,238 258,459

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 40 24/09/10 5:35 PM NOTE 3 REVENUES AND EXPENSES CONT. Consolidated 2010 2009 $ '000 $ '000 (b) Other Income Net gains on disposal of investments 276 - Net gains on disposal of property, plant & equipment - 31 Sundry income 66 434 342 465 Total revenue and income from continuing operations 263,580 258,924

(c) Expenses from Continuing Operations Employee benefi ts expense: Salary & wages 72,444 67,742 Employee leave entitlements 5,498 4,845 Defi ned contribution superannuation expense 6,157 5,435 Other employee benefi ts expenses 5,382 5,965 Total employee benefi ts expense 89,481 83,987 Occupancy expenses: Operating lease rental - minimum lease payments 5,589 6,202 Other occupancy expenses 3,165 3,380 Total occupancy expenses 8,754 9,582 Depreciation of: Building & improvements 21 21 Plant, equipment & vehicles 6,442 6,579 Amortisation of: Leasehold improvements 1,537 1,188 Total depreciation and amortisation 8,000 7,788 Net foreign exchange losses/(gains): Net foreign exchange losses/(gains) - realised 49 (59) Net foreign exchange losses/(gains) - unrealised (166) 7 Total net foreign exchange (gains) (117) (52) General and administration expenses: Provision for doubtful debts 14 27 Net loss on disposal of property, plant and equipment 4 29 Net loss on disposal of investment -15 Management & service fees 250 250 Brand enhancement 16,963 17,302 Regulatory & licensing fees 18,011 17,056 Settlement, agency commissions and other incentives 18,405 18,902 Telecommunications 3,302 4,152 Repairs & maintenance 3,136 2,909 Subscriptions & on-line information services 3,534 3,584 Other general and administration expenses 15,105 15,323 Total general and administration expenses 78,724 79,549 Total expenses excluding fi nance costs 184,842 180,854 Finance costs: Other entities - unsecured 13,440 14,538 Total fi nance costs 13,440 14,538 Material item of income and expense: Write down of investment in UKRD Group Limited (no tax eff ect) - 3,800

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 41 24/09/10 5:35 PM NOTES TO THE FINANCIAL STATEMENTS CONT.

NOTE 4 EARNINGS PER SHARE

Consolidated 2010 2009 Earnings per share Basic and diluted EPS, including material items 13.66 cents 11.98 cents Basic and diluted EPS, excluding material items 13.66 cents 13.08 cents Th e following refl ects the income and share data used in the calculations of basic and diluted earnings per share: Consolidated 2010 2009 $ '000 $ '000 Net profi t attributable to ordinary equity holders, excluding material items 47,112 45,211 Write down of investment in UKRD Group Limited - (3,800) Net profi t attributable to ordinary equity holders, including material items 47,112 41,411 Earnings used in calculating basic and diluted earnings per share, excluding material items 47,112 45,211 Write down of investment in UKRD Group Limited - (3,800) Earnings used in calculating basic and diluted earnings per share, including material items 47,112 41,411 Weighted average number of issued ordinary shares during the year used in determining earnings per ordinary share (basic) was 344,798,708 (2009: 345,686,656). Th ere were no potentially dilutive shares on issue during 2010 or 2009.

NOTE 5 INCOME TAX Consolidated 2010 2009 $ '000 $ '000 Th e major components of income tax expense are: Income Statement Current income tax Current income tax charge 19,821 19,647 Adjustments in respect of current income tax of previous years (1,227) 810 Deferred income tax Relating to origination and reversal of temporary diff erences 524 (374) Adjustments in respect of current income tax of previous years 959 - Deferred income tax arising from temporary diff erences and prior year adjustments 1,483 (374) Income tax expense reported in the statement of comprehensive income 20,077 20,083 Amounts charged or credited directly to equity Deferred income tax related to items charged or credited directly to equity Net gain/(loss) on revaluation of cash fl ow hedges (585) (1,003) Income tax expense reported in equity (585) (1,003) A reconciliation between tax expense and the product of accounting profi t before income tax multiplied by the group's applicable income tax rate is as follows: Accounting profi t before tax from continuing operations 67,189 61,494 At the group's statutory income tax rate of 30% (2009: 30%) 20,157 18,448 Adjustments in respect of income tax of previous years (268) 217 Non assessable income 132 (71) Non deductible expenditure 639 928 Share of associates net profi ts (567) (529) Non deductible impairment -1,140 Other (16) (50) Income tax expense reported in the statement of comprehensive income 20,077 20,083

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 42 24/09/10 5:35 PM NOTE 5 INCOME TAX CONT.

Balance sheet Statement of Comprehensive Income 2010 2009 2010 2009 $ '000 $ '000 $ '000 $ '000 Deferred income tax Deferred income tax at 30 June relates to the following: CONSOLIDATED Deferred tax liabilities Accelerated depreciation for tax purposes (1,966) (369) (1,597) 262 Radio licences (30,200) (30,200) - - Other - (563) 563 (756) Gross deferred income tax liabilities (32,166) (31,132) CONSOLIDATED Deferred tax assets Post-employment beneﬁ ts 2,790 2,656 134 (47) Provision for doubtful debts 533 562 (29) (135) Sundry creditors & accruals 2,237 3,257 (1,020) 527 Derivatives 399 983 - - Other 1,129 663 466 523 Gross deferred income tax assets 7,088 8,121 Deferred tax income/(expense) (1,483) 374

Tax Losses Tax Consolidation Th e Group has carried forward Australian capital tax losses for which Eff ective 1 July 2002 Austereo Group Limited ('AGL') and its relevant no deferred tax asset is recognised on the balance sheet of $7,681,168 wholly-owned entities formed a Tax Consolidated group. Members of the (2009: deductible temporary diff erences of $7,681,168), which are group entered into a combined Tax Sharing and Tax Funding agreement available indefi nitely for off set against future capital gains subject to ('TSA') in order to allocate income tax expense to the wholly-owned continuing to meet the relevant statutory tests. Th e Group also has entities on a stand-alone basis. In addition, the TSA provides for the unrecognised capital tax losses of $897,854 (2009: Nil) arising from the allocation of income tax liabilities between the entities should the head dissolution of Austereo Entertainment Europe Limited during the year. entity default on its income tax payment obligations to the Australian Taxation Offi ce. At balance date, the possibility of default is remote. Th e head entity of the Tax Consolidated group is AGL. In accordance with the TSA and Interpretation 1052: Tax Consolidation Accounting, all deferred tax balances are allocated to wholly-owned entities on a stand-alone basis.

NOTE 6 DIVIDENDS

Consolidated 2010 2009 $ '000 $ '000 (a) Recognised amounts Dividends paid during the ﬁ nancial period: Prior year ﬁ nal Fully franked dividend - 5.1c per share (2009: 6.0c, fully franked) 17,585 20,803 Current year interim Fully franked dividend - 4.0c per share (2009: 4.0c, fully franked) 13,792 13,792 31,377 34,595

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 43 24/09/10 5:35 PM NOTES TO THE FINANCIAL STATEMENTS CONT.

NOTE 6 DIVIDENDS CONT.

Consolidated 2010 2009 $ '000 $ '000 (b) Unrecognised amounts Final fully franked dividend for 2010: 5.7 cents 19,654 17,585 (2009: 5.1c fully franked) After the balance sheet date, the above dividends were proposed by the Directors. Th ese amounts have not been recognised as a liability in 2010 but will be brought to account in 2011. (c) Franking Credit Balance Th e amount of franking credits available for the subsequent fi nancial year are: Franking account balance as at the end of the fi nancial year at 30% (2009: 30%) 62,737 56,383 Franking credits arising from payment of fi nal quarter PAYG instalment 3,532 3,603 Impact on franking account of proposed dividends (8,423) (7,536) 57,846 52,450

Th e tax rate at which paid dividends have been franked is 30% (2009: 30%).

NOTE 7 CASH FLOW STATEMENT

Consolidated 2010 2009 $ '000 $ '000 (a) Reconciliation of cash and cash equivalents Cash and cash equivalents balance comprises: Cash on hand and at bank 1,425 691 1,425 691 (b) Reconciliation of net profi t after tax to net operating cash fl ows Net profi t after tax 47,112 41,411 Adjust for: Depreciation 6,463 6,600 Amortisation 1,537 1,188 Provisions 14 27 Net (gain)/loss on sale of plant & equipment 4 (2) Net loss on sale of investments -15 Write down of UKRD investment -3,800 Share of associates' net profi ts (1,891) (1,762) Unrealised exchange diff erences (167) 7 Changes in assets & liabilities: (Increase)/decrease Receivables (3,313) (436) Increase/(decrease) Payables 3,207 (2,600) Increase/(decrease) Current tax liabilities (477) 95 (Increase)/decrease Deferred tax asset 449 127 Increase/(decrease) Deferred tax liability 1,034 (4,075) (Increase)/decrease Other assets 76 (867) Increase/(decrease) Other liabilities (3) 480 Net operating cash fl ows 54,045 44,008

(c) Undrawn credit facilities (d) Non cash ﬁ nancing and investing activities Th e group has a cash advance facility of $240,000,000 which was drawn Buyback/cancellation of employee shares under the share scheme of to $209,100,000 at 30 June 2010. In addition, guarantees, operational $Nil (2009: $Nil). overdraft and other payment facilities of $4,670,000 are available of Dividends received from equity accounted investments of $2,850,000 which $2,239,000 was utilised as at 30 June 2010. (2009: $1,000,000). 44

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 44 24/09/10 5:35 PM NOTE 8 TRADE AND OTHER RECEIVABLES

Consolidated 2010 2009 $ '000 $ '000 Current Trade receivables (i) 54,882 51,674 Provision for doubtful debts (1,771) (1,875) 53,111 49,799 Due from related parties 271 330 53,382 50,129 Non-current Owing by: Other 2,186 2,714 2,186 2,714

(i) Trade receivables are non-interest bearing and generally have 30-45 Information regarding the fair value of trade and other receivables is set day terms. An allowance for doubtful debts is made when there is out in Note 29. For the terms and conditions of non-current related party objective evidence that a trade receivable is impaired. An allowance receivables refer to Note 30 and Note 31. of $14,194 (2009: $27,377) has been recognised as an expense in the current year for specifi c debtors for which such evidence exists. Th e amount of the allowance has been measured as the diff erence between the carrying amount of the trade receivables and the estimated future cash fl ows expected to be received from the relevant debtors.

(a) Allowance for impairment loss Movements in the provision for impairment loss were as follows:

Consolidated 2010 2009 $ '000 $ '000 At 1 July 1,875 2,324 Charge for the year 14 27 Amounts written oﬀ (118) (476) At 30 June 1,771 1,875

At 30 June, the ageing analysis of trade receivables is as follows: 0-30 days 54,046 51,193 31-60 days 435 105 31-60 days - PDNI* 270 238 61-90 days - PDNI* 26 78 61-90 days - CI* 818 91 days - CI* 97 42 Total 54,882 51,674

* Past Due Not Impaired ('PDNI'), Considered Impaired ('CI')

Receivables past due but not considered impaired are: $296,043 (2009: Other balances within trade and other receivables do not contain $315,963). Payment terms on these amounts have not been re-negotiated impaired assets and are not past due. It is expected that these other however credit has been stopped until full payment is made. Contact balances will be received when due. has been made with the relevant debtor and payment is expected to be received in full.

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 45 24/09/10 5:35 PM NOTES TO THE FINANCIAL STATEMENTS CONT.

NOTE 9 INTANGIBLE ASSETS - RADIO LICENCES

Consolidated 2010 2009 $ '000 $ '000 Australian metropolitan radio licences at cost 865,472 860,765 Other at cost 4,481 4,481 869,953 865,246 At 1 July 865,246 865,246 Digital Broadcast Spectrum acquired 4,707 - At 30 June 869,953 865,246

Impairment testing of radio licences Th e growth in the radio market is determined by reference to the long Radio licences are classifi ed as indefi nite life intangible assets and term historical growth rate and nominal GDP estimates published are therefore subject to annual impairment testing. For the purposes by leading long term economic forecasters. Th e growth rate used in of impairment testing the licences have been allocated to individual the DCF beyond the most recent budgets/forecasts averages 5.0%. cash generating units (CGU's), the most material being Australian Cost infl ation is determined by reference to CPI estimates published metropolitan radio. by leading long term economic forecasters and the Reserve Bank of Australia's (RBA) CPI target band. Revenue share forecasts for each Th e recoverable amount of the radio licences has been determined using CGU are determined via reference to actual results achieved and trends an independent valuation which is commissioned annually and updated identifi ed in relevant statistics made available to the radio industry. six monthly. Th e discount rates applied to cash fl ow projections range from 10.04% Th e independent valuation employs as its primary valuation methodology, to 12.27% (2009: 10.12% to 12.20%). Various secondary valuation a value in use calculation, being a discounted cash fl ow analysis (DCF) techniques were also applied to assess the fair market value of the of Austereo's future projected cash fl ows for six years adjusted for a licences, as a cross reference analysis to support assumptions in the termination value based on current market estimates. Six years has primary DCF valuation. been used as the projection period to ensure consistency with the DCF valuation approach adopted since the listing of Austereo Group Limited Sensitivity to changes in assumptions in 2001. Key assumptions underpinning the DCF analysis relate to: Based on sensitivity analysis of the key variables supporting the DCF valuation, it is management and the Board's belief that such changes • Growth in the radio market; would not result in the carrying value of the radio licences to materially • Th e revenue shares achieved by each CGU in their relevant market; diff er from the range of values determined at year end. and • Cost infl ation.

NOTE 10 OTHER ASSETS

Consolidated 2010 2009 $ '000 $ '000 Current Prepayments 1,121 932 1,121 932

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 46 24/09/10 5:35 PM NOTE 11 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Consolidated 2010 2009 $ '000 $ '000 Non-current Investments in associates 7,057 7,974 (a) Investments in associates (i) Share of associates' profi ts after income tax 1,891 1,762 (ii) Carrying amount of investments in associates Balance at beginning of year 7,974 6,419 Sale of shares in associates -(16) Reclassifi ed from other investments 42 809 Dividends received from associate (2,850) (1,000) Share of associates' profi t 1,891 1,762 Balance at end of year 7,057 7,974

Equity accounted carrying amount of investments in associates represented by:

Ownership Carrying values 2010 2009 2010 2009 Name Business % % $ '000 $ '000 Sydney FM Facilities Pty Ltd Radio Transmitter 50.0 50.0 615 615 Melbourne FM Facilities Pty Ltd Radio Transmitter 50.0 50.0 - - Perth FM Facilities Pty Ltd Radio Transmitter 66.7 66.7 307 321 Radio Newcastle Pty Ltd Radio Broadcasting 50.0 50.0 5,232 6,177 Digital Radio Broadcasting Sydney Pty Ltd Digital Radio 22.6 22.6 817 775 Digital Radio Broadcasting Melbourne Pty Ltd Digital Radio 18.2 18.2 14 14 Digital Radio Broadcasting Brisbane Pty Ltd Digital Radio 25.0 25.0 20 20 Digital Radio Broadcasting Adelaide Pty Ltd Digital Radio 33.3 33.3 26 26 Digital Radio Broadcasting Perth Pty Ltd Digital Radio 33.3 33.3 26 26 7,057 7,974

Neither the parent nor any of its controlled entities has the capacity to Whilst more than 50% of Perth FM Facilities Pty Ltd is owned by the control the decision making of these entities and they therefore do not Group, it does not control the voting rights as all shareholders are meet the deﬁ nition of subsidiaries under AASB 127. As a result they required to agree on material operating matters. Due to the nature are treated as associates and accounted for using the equity method and treatment of the Digital Radio Broadcasting operations, the 18.2% prescribed by AASB 128. investment in Digital Radio Broadcasting Melbourne Pty Ltd has been recognised as an associate for the year ended 30 June 2010.

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 47 24/09/10 5:35 PM NOTES TO THE FINANCIAL STATEMENTS CONT.

NOTE 11 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD CONT.

Consolidated 2010 2009 $ '000 $ '000 (iii) Share of net assets of associates Th e group's share of net assets of associates in aggregate is: Current assets 3,804 1,738 Non-current assets 9,662 11,037 Current liabilities (2,204) (1,493) Non-current liabilities (3,006) (3,359) Net assets 8,256 7,923

(iv) Extract from associates income statements Revenue 27,377 16,427 Net proﬁ t 9,157 3,474 Cumulative unrecognised share of associate's proﬁ t/ (loss) 1,296 (111)

(v) Retained profi ts of the group attributable to associates Balance at the beginning of the fi nancial year 1,326 564 Share of associates net profi ts 1,891 1,762 Dividends received from associate (2,850) (1,000) Balance at the end of the fi nancial year 367 1,326

Th e annual balance date of associated entities is 30 June. Th ere are no material commitments or contingent liabilities relating to investments in associates.

NOTE 12 OTHER FINANCIAL ASSETS

Consolidated 2010 2009 $ '000 $ '000 Non-current Available for sale investments: At Fair Value - Unlisted: other 541 541 541 541

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 48 24/09/10 5:35 PM NOTE 12 OTHER FINANCIAL ASSETS CONT.

Percentage of equity interest held by the group Name Incorporated in 2010 2009 (a) Investments in controlled entities Austereo Capital FM Pty Ltd Australia 100% 100% Austereo Direct Marketing Pty Ltd Australia 0%* 100% Austereo Entertainment Pty Ltd Australia 100% 100% Austereo Entertainment Europe Limited U.K. 0%* 100% Austereo ESP Finance Pty Ltd Australia 100% 100% Austereo International Pty Ltd Australia 100% 100% Austereo Online Pty Ltd Australia 100% 100% Austereo Mall Advertising Pty Ltd Australia 0%* 100% Austereo Pty Ltd Australia 100% 100% Consolidated Broadcasting System (WA) Pty Ltd Australia 100% 100% Perth FM Radio Pty Ltd Australia 100% 100% Today FM Brisbane Pty Ltd Australia 100% 100% Today FM Sydney Pty Ltd Australia 100% 100% Today Radio Network Pty Ltd Australia 100% 100% Triple M Adelaide Pty Ltd Australia 100% 100% Triple M Brisbane Pty Ltd Australia 100% 100% Triple M Melbourne Pty Ltd Australia 100% 100% Triple M Network Pty Ltd Australia 100% 100% Triple M Sydney Pty Ltd Australia 100% 100% VRB Pty Ltd Australia 100% 100% * Th ese entities were dissolved during the year ended 30 June 2010.

NOTE 13 PROPERTY, PLANT & EQUIPMENT

Consolidated 2010 2009 $ '000 $ '000 Buildings & improvements: At cost 354 352 Accumulated depreciation (162) (141) 192 211 Leasehold improvements: At cost 21,926 18,547 Accumulated amortisation (4,980) (3,443) 16,946 15,104 Work in progress 5,169 7,863 5,169 7,863 Equipment & vehicles (owned): At cost 47,241 39,427 Accumulated depreciation (27,988) (21,557) 19,253 17,870 41,560 41,048

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 49 24/09/10 5:35 PM NOTES TO THE FINANCIAL STATEMENTS CONT.

NOTE 13 PROPERTY, PLANT & EQUIPMENT CONT.

Consolidated 2010 2009 $ '000 $ '000 Reconciliations Buildings & improvements: Carrying amount at beginning of year 211 214 Additions 2 18 Depreciation expense (21) (21) 192 211 Leasehold improvements: Carrying amount at beginning of year 15,104 7,506 Additions 3,379 13,805 Disposals -(5,019) Amortisation expense (1,537) (1,188) 16,946 15,104 Work in progress: Carrying amount at beginning of year 7,863 8,025 Additions 12,398 16,787 Items capitalised (15,092) (16,949) 5,169 7,863 Equipment & vehicles (owned): Carrying amount at beginning of year 17,870 16,503 Additions 7,842 10,215 Disposals (17) (2,269) Depreciation expense (6,442) (6,579) 19,253 17,870

NOTE 14 TRADE AND OTHER PAYABLES

Consolidated 2010 2009 $ '000 $ '000 Current Trade and other payables (i) 44,813 40,732 44,813 40,732 Non-current Owing to associated entities 2,211 4,102 2,211 4,102

(i) Trade payables are non-interest bearing and are normally settled (ii) As described in Note 31, the group has provided a ﬁ nancial on 30 day terms. guarantee to a subsidiary which commits the group to make payments on behalf of that entity upon their failure to perform under the terms of the unsecured borrowing facility. Information regarding the fair value and credit risk of trade and other payables is set out in Note 29. For the terms and conditions of non-current related party payables refer to Note 30 and Note 31.

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 50 24/09/10 5:35 PM NOTE 15 INTEREST BEARING LOANS AND BORROWINGS

Consolidated 2010 2009 $ '000 $ '000 Non-current Unsecured borrowings 209,100 220,100 209,100 220,100

Borrowings: Th e group has $240,000,000 (2009: $240,000,000) in long term ﬁ nance facilities. Borrowings are unsecured and subject to ﬁ nancial covenants. Information regarding the fair value of non-current borrowings is set out in Note 29.

NOTE 16 PROVISIONS

Consolidated 2010 2009 $ '000 $ '000 Current Employee benefi ts 7,860 7,937 Non-current Employee benefi ts 1,390 1,148 During the year, movement in employee benefi ts provision was as follows: At 1 July 9,085 9,242 Arising during the year 3,377 4,269 Utilised (3,212) (4,426) At 30 June 9,250 9,085

NOTE 17 OTHER LIABILITIES

Consolidated 2010 2009 $ '000 $ '000 Current Unearned revenue 1,005 751 Other 242 242 1,247 993 Non-current Other 2,010 2,252

NOTE 18 CONTRIBUTED EQUITY

Consolidated 2010 2009 $ '000 $ '000 Contributed equity: 344,798,708 ordinary shares (2009: 344,798,708) 631,252 631,226

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 51 24/09/10 5:35 PM NOTES TO THE FINANCIAL STATEMENTS CONT.

NOTE 18 CONTRIBUTED EQUITY CONT.

During the year, movement in contributed equity was as follows:

Consolidated Consideration No. of shares 2010 2009 2010 2009 $ '000 $ '000 '000 '000 (a) Ordinary shares: Balance at the beginning of year* 631,226 638,039 344,798 349,690 Employee Share Plan loans 26 42 - - Share buy back** - (6,855) - (4,892) Total for the year 631,252 631,226 344,798 344,798 *Opening balance is net of employee share plan loans of $2,796,547 (2009: $2,838,590) **As a result of on-market share buybacks, 4,891,769 shares were bought back during the 2009 ﬁ nancial year and subsequently cancelled.

(b) Capital management When managing capital, the Board's objective is to ensure the group may change the amount of dividends to be paid to shareholders, issue continues as a going concern as well as to maintain optimal returns to new shares or sell assets to reduce debt. During 2010, the Board's capital shareholders and beneﬁ ts for other stakeholders. Th e Board also aims management objectives were eﬀ ected through paying dividends of to maintain a capital structure that ensure the lowest cost of capital $31,376,683 (2009: $34,595,058). Th e Board monitors capital through available to the group. Th e Board are constantly adjusting the capital the gearing ratio (net debt/equity). Th e target for the Group's gearing structure to take advantage of favourable costs of capital or high ratio is not to exceed 40%. Th e gearing ratios based on continuing returns on assets. As the market is constantly changing, the Board operations at 30 June 2010 and 2009 were as follows:

Consolidated 2010 2009 $'000 $'000 Total borrowings 209,100 220,100 Less cash and cash equivalents (1,425) (691) Net debt 207,675 219,409 Total equit y 677,574 660,616 Gearing ratio 30.6% 33.2%

NOTE 19 RESERVES AND RETAINED EARNINGS

Consolidated 2010 2009 Notes $'000 $'000 Foreign currency translation reserve (a) - 166 Cash ﬂ ow hedge reserve (b) (930) (2,293) (930) (2,127) Retained earnings (c) 47,252 31,517

(a) Foreign currency translation (i) Nature and purpose of reserve: Th e foreign currency translation reserve is used to record exchange diﬀ erences arising from the translation of the ﬁ nancial statements of foreign operations. (ii) Movements in reserve: Balance at the beginning of year 166 121 Gain on translation of overseas controlled entities - 45 Loss on translation of disposal of overseas controlled entities (166) - Balance at end of year -166 52

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 52 24/09/10 5:35 PM NOTE 19 RESERVES AND RETAINED EARNINGS CONT.

Consolidated 2010 2009 $'000 $'000 (b) Cash fl ow hedge (i) Nature and purpose of reserve: Th is reserve records the portion of the gain or loss on a hedging instrument in a cash fl ow hedge that is determined to be an eff ective hedge. (ii) Movements in reserve: Balance at the beginning of year (2,293) 661 Net gain/(loss) 1,948 (3,957) Tax eff ect of cash fl ow hedge (585) 1,003 Balance at end of year (930) (2,293) (c) Retained earnings Balance at the beginning of year 31,517 24,701 Net profi t attributable to members of Austereo Group Limited 47,112 41,411 Total available for appropriation 78,629 66,112 Dividends provided or paid (31,377) (34,595) Balance at end of year 47,252 31,517

NOTE 20 CONTINGENT LIABILITIES

Consolidated 2010 2009 $'000 $'000 Estimated maximum amounts relating to: Termination beneﬁ ts under personal service agreements 20,793 21,948 20,793 21,948

NOTE 21 EXPENDITURE COMMITMENTS (a) Operating leases - Group as lessee Th e group has entered into commercial leases on premises and certain plant & equipment. Th ese leases have an average life of between 3 and 10 years with varying renewal options.

Consolidated 2010 2009 $ '000 $ '000 Payable within 1 year 10,660 8,537 Payable between 1 and 5 years 44,804 34,547 Payable after 5 years 20,857 33,038 76,321 76,122

Operating leases - Group as lessee Within one year 926 797 After one year but not more than ﬁ ve years 625 1,551 Total future minimum sublease payments receivable 1,551 2,348

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 53 24/09/10 5:35 PM NOTES TO THE FINANCIAL STATEMENTS CONT.

NOTE 21 EXPENDITURE COMMITMENTS CONT. (b) Superannuation commitments Th ere are established superannuation and retirement plans for Th ere are legally enforceable obligations for contributions to be the benefi t of employees of the company and its controlled and made to the plans in respect of some employees. As the plans are associated entities. Th e benefi ts provided are accumulation benefi ts. accumulation type funds, no actuarial assessment is made and the level Contributions to the plans are based on varying percentages of of funds is suffi cient to meet applicable employee benefi ts which may employees' gross remuneration and are made either by the employer accrue in the event of termination of the plans or on the voluntary or or by the employee and the employer. Contributions made to the compulsory termination of employment of any employee. plans will not exceed the permitted levels prescribed by income tax legislation from time to time.

NOTE 22 DIRECTOR AND EXECUTIVE DISCLOSURES

(a) Details of Key Management Personnel Th e following persons were the key management personnel with the greatest authority for the strategic direction and management of the consolidated entity during the ﬁ nancial year:

Director's Name Position Executives Name Position Peter M. Harvie Executive Chairman Kathy J. Gramp Chief Financial Offi cer Guy C. Dobson Chief Executive Offi cer Craig Bruce Head of Content (appointed 6 January 2010) (appointed 6 January 2010) Michael E. Anderson Chief Executive Offi cer Cathy Th omas National Sales Director (resigned 6 January 2010) (appointed 1 November 2009) Robert G. Kirby Non-executive Director Ross A. Forgione Chief Information Offi cer John R. Kirby Non-executive Director (appointed 1 January 2010) Graham W. Burke Non-executive Director Jeremy MacVean Head of Digital Strategy Peter E. Foo Non-executive Director Adam M. Lang National Director of Operations (appointed 3 February 2010) R. David Mattingly Independent non-executive Director Des R. Decean Director Engineering and IT Christopher J. Newman Independent non-executive Director (to 1 October 2009) Julie E. Raff e Alternate Director for R.G Kirby and to Geraint H. Davies Chief Operating Offi cer 5 August 2009 for Peter E. Foo (to 5 February 2010) Tim Carroll Alternate Director for G.W Burke Chris Chard Alternate Director for J.R Kirby

Other than as set out above, there were no changes to the Directors after the reporting date and before the date the ﬁ nancial report was authorised for issue.

(b) Compensation of Key Management Personnel

Consolidated 2010 2009 $$ Short Term 4,901,362 3,850,078 Post-Employment 215,604 371,203 Other Long Term 315,736 132,077 Termination Payments 772,229 302,306 6,204,931 4,655,664

Group totals in respect of the ﬁ nancial year ended 2009, do not necessarily equal the sums of individual amounts disclosed for 2009 for individuals speciﬁ ed in 2010, as there have been changes in Key Management Personnel.

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 54 24/09/10 5:35 PM NOTE 22 DIRECTOR AND EXECUTIVE DISCLOSURES CONT.

Th e number of shares in the Company held during the ﬁ nancial year by each key management personnel, including Directors of Austereo Group Limited and their personally-related entities, are set out below:

2010

Name Balance at the start Granted as On exercise of Net change Balance at the end of the year compensation options other of the year Ord Ord Ord Ord Ord Directors Peter M. Harvie 5,001 - - - 5,001 Guy C. Dobson ----- Michael E. Anderson 1 - - - 1 Robert G. Kirby 181,093,856 ---181,093,856 John R. Kirby 181,093,856 ---181,093,856 Graham W. Burke 181,093,856 - - - 181,093,856 Peter E. Foo 37,522 - - - 37,522 R. David Mattingly 59,460 - - - 59,460 Christopher J. Newman -----

Chris Chard (alt) ----- Julie E. Raﬀ e (alt) ----- Tim Carroll (alt) -----

Executives Kathy J. Gramp ----- Craig Bruce ----- Cathy Th omas ----- Ross A. Forgione ----- Jeremy MacVean ----- Adam M. Lang ----- Des R. Decean 10,000 - - (10,000) - Geraint H. Davies -----

2009

Chris Chard (alt) ----- Julie E. Raﬀ e (alt) ----- Tim Carroll (alt) -----

Executives Kathy J. Gramp ----- Craig Bruce ----- Cathy Th omas ----- Ross A. Forgione ----- Jeremy MacVean ----- Adam M. Lang ----- Des R. Decean 10,000 - - - 10,000 Geraint H. Davies -----

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NOTE 22 DIRECTOR AND EXECUTIVE DISCLOSURES CONT.

(c) Shareholdings of Key Management Personnel in Austereo Group Limited during the year cont. Th e number of shares in Village Roadshow Limited held during the ﬁ nancial year by each Director of Austereo Group Limited and each of the executives of the consolidated entity, including their personally-related entities, are set out below:

2010

Name Balance at the start of Granted as On exercise of Net change other Balance at the end the year compensation options of the year Ord Pref Ord Pref Ord Pref Ord Pref Ord Pref Directors Peter M. Harvie ------Guy C. Dobson ------Michael E. Anderson ------Robert G. Kirby 77,859,352 ------77,859,352 - John R. Kirby 77,859,352 ------77,859,352 - Graham W. Burke 77,859,352------77,859,352 - Peter E. Foo -9,000 ------9,000 R. David Mattingly ------Christopher J. Newman ------

Chris Chard (alt) 4,000------4,000 - Julie E. Raﬀ e (alt) ------Tim Carroll (alt) ------

Executives Kathy J. Gramp ------Craig Bruce ------Cathy Th omas ------Ross A. Forgione ------Jeremy MacVean ------Adam M. Lang ------Des R. Decean ------Geraint H. Davies ------

2009

Name Balance at the start of Granted as On exercise of Net change other Balance at the end the year compensation options of the year Ord Pref Ord Pref Ord Pref Ord Pref Ord Pref Directors Peter M. Harvie ------Guy C. Dobson ------Michael E. Anderson ------Robert G. Kirby 77,517,432 -----341,920-77,859,352- John R. Kirby 77,517,432-----341,920-77,859,352- Graham W. Burke 77,517,432-----341,920-77,859,352- Peter E. Foo -9,000------9,000 R. David Mattingly ------Christopher J. Newman ------

Chris Chard (alt) 4,000------4,000- Julie E. Raﬀ e (alt) ------Tim Carroll (alt) ------

Executives Kathy J. Gramp ------Craig Bruce ------Cathy Th omas ------Ross A. Forgione ------Jeremy MacVean ------Adam M. Lang ------Des R. Decean ------Geraint H. Davies ------

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 56 24/09/10 5:35 PM NOTE 22 DIRECTOR AND EXECUTIVE DISCLOSURES CONT. Th e LTI plan is not designed specifi cally to remunerate key management personnel, unlike their fi xed compensation or their STI bonus All shares held under the Company's Executive Share Plan and Village arrangements, and has no specifi c performance conditions for the Roadshow Limited's Executive Share Plan and Executive and Employee vesting of such benefi ts other than tenure and share price performance. Option Plan for the above key management personnel have been treated Instead the LTI is primarily intended to encourage a sense of ownership as 'in substance options' and have been excluded from the above tables. with those key management personnel to whom 'in substance options' Details of such 'in substance options' are set out in Note 23 Share Based under the LTI are granted and to assist in aligning their long term Payment Plans. interests with those of shareholders, and may be regarded as a partial retention mechanism by the company. All equity transactions with key management personnel, other than those which have been treated as 'in substance options', have been Th e benefi ts, if any, under the LTI are linked to the performance of the Company via its share price. Th e Company considers that the four year entered into under terms and conditions no more favourable than those period over which the AESP are ‘earned’ and the long term horizon of the entity would have adopted if dealing at arm's length. the loans from the consolidated entity for the AESP for the duration of the key management personnel's employment are appropriate given the NOTE 23 SHARE BASED PAYMENT PLANS shorter term annual performance hurdles to which they are each subject and are designed to encourage performance and to closely align the (a) Long Term Incentive Executive Share and Loan Plan interests of the key management personnel with those of shareholders. Th e consolidated entity provides benefi ts to employees (including Directors) of the consolidated entity in the form of share-based payment (i) 'In Substance Options' provided as compensation transactions under its Employee Share Plan Scheme (AESP). Th e No options nor 'in substance options' over ordinary shares in the consolidated entity has applied the exemption in AASB 1: First Time Company were provided as remuneration to any key management Adoption of Australian Accounting Standards which permits the equity personnel of the Austereo Group Limited consolidated group during the instruments granted under the Employee Share Plan Scheme to be fi nancial year. All 'in substance options' on issue at the beginning of the grandfathered from requirements of AASB 2: Share-Based Payments. fi nancial year had fully vested.

Th us, under the exemption, AASB 2: Share-Based Payments has not (ii) Shares provided on exercise of 'In Substance Options' been applied to any equity instruments granted under the Employee Share Plan Scheme on or before 7 November 2002. No 'in substance options' to acquire shares were exercised during the ﬁ nancial year. Th e vesting periods for the various 'in substance options' In relation to the Village Roadshow Ltd 'in substance options', the are outlined above. company has used the fair value measurement provisions of AASB 2: Share-based Payment for all options or equity instruments granted to Directors and relevant senior executives which have not vested as at 1 July 2004. Under AASB 2: Share-based Payment these LTI executive share plan shares and loans are all deemed to be ‘in substance options’ even where the equity instrument itself is not a share option. Th e fair value of such ‘in substance option’ grants are amortised and disclosed as part of Director and senior manager compensation on a straight-line basis over the vesting period. No adjustments have been or will be made to reverse amounts previously disclosed in relation to options that never vest (i.e. forfeitures).

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NOTE 23 SHARE BASED PAYMENT PLANS CONT.

(b) Holdings of 'In Substance Options' of Key Management Personnel during the year (i) 'In Substance Options' for shares in Austereo Group Limited Th e number of 'in substance options' for shares in the company held during the ﬁ nancial year by each key management personnel, including Directors of Austereo Group Limited and their personally-related entities, are set out in the table following.

2010

Name Balance at the start Granted as On exercise of Net change Balance at the end of the year compensation options other of the year Ord Ord Ord Ord Ord Directors Peter M. Harvie 1,025,000 - - - 1,025,000 Guy C. Dobson - - - - - Michael E. Anderson 350,000 - - - 350,000 Robert G. Kirby - ---- John R. Kirby - ---- Graham W. Burke - ----

Peter E. Foo - - - - - R. David Mattingly 50,000 - - - 50,000 Christopher J. Newman - - - - -

Chris Chard (alt) - - - - - Julie E. Raﬀ e (alt) - ---- Tim Carroll (alt) - - - - -

Executives

Kathy J. Gramp - - - - - Craig Bruce - ---- Cathy Th omas - ---- Ross A. Forgione - ---- Jeremy MacVean - ---- Adam M. Lang - ---- Des R. Decean - - - - - Geraint H. Davies - - - - -

2009

Chris Chard (alt) - - - - - Julie E. Raﬀ e (alt) - ---- Tim Carroll (alt) - - - - -

Executives Kathy J. Gramp - - - - - Craig Bruce - ---- Cathy Th omas - ---- Ross A. Forgione - ---- Jeremy MacVean - ---- Adam M. Lang - ---- Des R. Decean - - - - - Geraint H. Davies - - - - -

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 58 24/09/10 5:35 PM NOTE 23 SHARE BASED PAYMENT PLANS CONT.

(b) Holdings of 'In Substance Options' of Key Management Personnel during the year cont. (ii) 'In Substance Options' for shares in Village Roadshow Limited Th e number of 'in substance options' for shares in Village Roadshow Limited held during the ﬁ nancial year by each key management personnel, including Directors of Austereo Group Limited and their personally-related entities, are set out below:

2010

Name Balance at the start of Granted as On exercise of Net change other Balance at the end the year compensation options of the year Ord Pref Ord Pref Ord Pref Ord Pref Ord Pref Directors Peter M. Harvie 257,400 242,900 ------257,400 242,900 Guy C. Dobson ------Michael E. Anderson - 200,000 ------200,000 Robert G. Kirby ------John R. Kirby ------Graham W. Burke ------Peter E. Foo 1,000,000 800,000 ------1,000,000 800,000 R. David Mattingly ------Christopher J. Newman ------

Chris Chard (alt) - 500,000 ------500,000 Julie E. Raﬀ e (alt) - 350,000 ------350,000 Tim Carroll (alt) - 500,000 ------500,000

Executives

Kathy J. Gramp - 35,000 ------35,000

Craig Bruce ------

Cathy Th omas ------

Ross A. Forgione ------

Jeremy MacVean ------

Adam M. Lang ------

Des R. Decean ------

Geraint H. Davies

2009

Name Balance at the start of Granted as On exercise of Net change other Balance at the end the year compensation options of the year Ord Pref Ord Pref Ord Pref Ord Pref Ord Pref

Directors Peter M. Harvie 257,400 242,900 ------257,400 242,900 Guy C. Dobson ------Michael E. Anderson - 200,000 ------200,000 Robert G. Kirby ------John R. Kirby ------Graham W. Burke ------Peter E. Foo 1,000,000 800,000 ------1,000,000 800,000 R. David Mattingly ------Christopher J. Newman ------

Chris Chard (alt) - 500,000 ------500,000 Julie E. Raﬀ e (alt) - 350,000 ------350,000 Tim Carroll (alt) - 500,000 ------500,000

Executives Kathy J. Gramp - 35,000 ------35,000 Craig Bruce ------Cathy Th omas ------Ross A. Forgione ------Jeremy MacVean ------Adam M. Lang ------Des R. Decean ------Geraint H. Davies ------All shares in Village Roadshow Limited held by Messrs P. M. Harvie, M. E. Anderson, P.E. Foo, C. Chard and T. Carroll and Ms J. E. Raﬀ e and Ms K. J. Gramp are held under the employee share plans run by Village Roadshow Limited. 59

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 59 24/09/10 5:35 PM NOTES TO THE FINANCIAL STATEMENTS CONT.

NOTE 23 SHARE BASED PAYMENT PLANS CONT.

(i) Details of aggregates of 'In Substance Option' loans to Key Management Personnel are as follows: Details of loans made to key management personnel, including Directors of Austereo Group Limited, including their personally-related entities, are set out below:

2010 Group Balance at the Interest charged Interest not Write-off Balance at the Number in Group at start of the year charged* end of the year the end of the year $$$$$ Directors 2,550,607 85,500 73,224 - 2,528,519 3 Executives ------

2009 Group Balance at the Interest charged Interest not Write-off Balance at the Number in Group at start of the year charged* end of the year the end of the year $$$$$ Directors 2,579,107 85,500 82,025 - 2,550,607 3 Executives ------

(ii) Details of individuals with 'In Substance Option' loans above $100,000 in the reporting period are as follows: 2010 Group Balance at the Interest charged Interest not Write-off Balance at the Highest balance start of the year charged* end of the year in period $$$$$ $ Director Peter M. Harvie 1,835,972 61,500 52,753 - 1,820,084 1,859,898 Michael E. Anderson 626,911 21,000 18,013 - 621,486 635,081

2010 Group Balance at the Interest charged Interest not Write-off Balance at the Highest balance start of the year charged* end of the year in period $$$$$ $ Director Peter M. Harvie 1,856,472 61,500 59,086 - 1,835,972 1,875,175 Michael E. Anderson 633,911 21,000 20,175 - 626,911 640,298 * Refers to aggregate net non-monetary benefi t to refl ect the value of the diff erence between the interest at the deemed arms length market interest rate and the actual interest rate charged and paid and payable on a cents per share basis on 'in substance option' loans for shares held under the company's various executive incentive share plans.

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(iii) Terms and conditions of loans Under the terms of both the Executive and Non-executive Directors No write-downs or allowances for doubtful receivables have been Share Plans, dividends earned as a result of ownership of the shares recognised in relation to any loans made to key management personnel. ('in substance options') are ﬁ rstly applied towards payment of interest Th ese loans are considered in substance employee share options under on the loan. Interest on the loan is six cents per share per annum. Any AASB 2: Share Based Payments, but have been grandfathered on excess dividend is split so that 50% is applied towards repayment of the transition to AIFRS. capital component of the loan and the remaining 50% is remitted to the participant. No repayments have been made during the year under the relevant loan agreements, other than by way of dividends as described above.

2010 2010 2009 2009 Number WAEP* Number WAEP* Outstanding at beginning of year 1 1,570,000 1.85 1,575,000 1.85 Granted during the year ---- Forfeited during the year - - (5,000) 1.85 Exercised during the year ---- Expired during the year ---- Outstanding at the end of the year 1,570,000 1.85 1,570,000 1.85

Exerciseable at the end of the year 1,570,000 1.85 1,570,000 1.85 *Weighted Average Exercise Price

Th e outstanding balance as at 30 June 2010 is represented by: 1,570,000 options over ordinary shares with an exercise price of predominantly $1.85 each, exercisable upon meeting the above conditions.

1 Th e total balance of options outstanding as at 30 June 2010 and 2009 have not been recognised in accordance with AASB 2 as the options were granted on or before 7 November 2002. Th ese options have not been subsequently modiﬁ ed and therefore do not need to be accounted for in accordance with AASB 2.

NOTE 24 REMUNERATION OF AUDITORS

Consolidated 2010 2009 $$ Aggregate remuneration received or due and receivable by Ernst & Young (Australia), directly or indirectly from the parent or any related entity, in connection with: Parent auditor: Auditing accounts 306,838 313,506 Other services - non-audit services 42,622 18,473 349,460 331,979 Aggregate remuneration received or due and receivable by Ernst & Young (UK), directly in connection with: Auditing accounts 15,992 - 15,992 -

NOTE 25 EVENTS SUBSEQUENT TO REPORTING DATE No matter or circumstance has arisen since the end of the fi nancial year which has materially aff ected, or may materially aff ect, the operations of the group, the results of those operations, or the state of aff airs of the group in fi nancial years subsequent to that to which this report relates.

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NOTE 26 JOINTLY CONTROLLED OPERATIONS

Interests in joint venture operations Names and principal activities of joint venture operations, the percentage interest held by entities in the group and the contributions of those undertakings to results after tax:

Ownership Contributions to operating proﬁ t after tax 2010 2009 2010 2009 Name Business % % $ '000 $ '000 Canberra FM Radio Radio broadcasting 50.0 50.0 2,581 2,469 2,581 2,469 Th ere are no material commitments or contingent liabilities relating to joint venture operations.

NOTE 27 SEGMENT REPORTING Cash fl ow interest rate risk Th e group operates predominantly in the radio broadcasting segment Th e group's exposure to the risk of changes in market interest rates in Australia. relates to the group's long-term debt obligations with a fl oating interest rate. Th e group's policy is to manage its interest cost using a mix of NOTE 28 FINANCIAL RISK MANAGEMENT OBJECTIVES fi xed and variable rate debt. Th is maintains the stability of interest AND POLICIES rate expense with an appropriate level of fl exibility to accommodate Th e group's principal fi nancial instruments, other than derivatives, potential changes in funding requirements. To manage this mix in comprise bank loans and overdrafts and cash and short term deposits. a cost effi cient manner, the group enters into interest rate swaps, Th e main purpose of these fi nancial instruments is to raise fi nance for in which the group agrees to exchange, at specifi ed intervals, the the group's operations. Th e group has various other financial assets diff erence between fi xed and variable rate interest amounts calculated and liabilities such as trade receivables and trade payables, which arise by reference to an agreed-upon notional principal amount. Th ese swaps directly from its operations. Th e group also enters into derivative are designated to hedge underlying debt obligations. At 30 June 2010, transactions including, principally, interest rate swaps. Th e purpose is after taking into account the eff ect of interest rate swaps, approximately to manage the interest rate risks arising from the group's operations and 59.8% of the group's borrowings are at a fi xed rate of interest. At balance its sources of fi nance. It has been the group's policy that no trading in date, the Group had the following mix of fi nancial assets and liabilities fi nancial instruments shall be undertaken. Th e main risks arising from exposed to Australian variable interest rate risk that are not designated the group's fi nancial instruments are cash fl ow interest rate risk, liquidity in cash fl ow hedges: risk, foreign currency risk and credit risk. Th e Board reviews and agrees policies for managing each of these risks and they are summarised below. Details of the material accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis of which income and expenses are recognised, in respect of each class of fi nancial asset, fi nancial liability and equity instrument are disclosed in Note 2 to the fi nancial statements.

Consolidated 2010 2009 $$ Financial assets Cash and cash equivalents 1,425 691 1,425 691 Financial Liabilities Unsecured borrowings 84,100 120,100 84,100 120,100 Net exposure (82,675) (119,409)

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 62 24/09/10 5:35 PM NOTE 28 FINANCIAL RISK MANAGEMENT OBJECTIVES alternative fi nancing, alternative hedging positions and the mix of fi xed AND POLICIES CONT. and variable interest rates. Th e following sensitivity analysis is based on Interest rate swap contracts outlined in note 29(b), with a liability fair the interest rate risk exposures in existence at balance date. A sensitivity of value of $1,437,000 (2009: liability fair value of $3,277,000) and an asset 1 per cent has been selected as this is reasonably possible given the current fair value of $108,000 (2009: Nil) are exposed to fair value movement level of both short term and long term Australian dollar interest rates. if interest rates change. At 30 June 2010, if interest rates had moved as illustrated in the table Th e Group constantly analyses its interest rate exposure. Within this below, with all other variables held constant, post tax profi t and equity analysis consideration is given to potential renewals of existing positions, would have been aff ected as follows:

Post Tax Proﬁ t Equity Higher/(Lower) Higher/(Lower) 2010 2009 2010 2009 Sensitivity Analysis $ '000 $ '000 $ '000 $ '000 Consolidated +1% (100 basis points) (2009: 100 basis points) (841) (1,227) 1,372 250 -1% (100 basis points) (2009: 100 basis points) 841 1,227 (1,395) (250)

Th e movements in proﬁ t are due to higher/lower interest costs from variable rate debt and cash balances. Th e movement in equity is due to an increase/decrease in the fair value of derivative instruments designated as cash ﬂ ow hedges.

Foreign currency risk Concentrations of credit risk Th e group also has transactional currency exposures. Such exposure Th e group minimises concentrations of credit risk in relation to trade arises from sales or purchases by an operating unit in currencies other accounts receivable by undertaking transactions with a large number than the functional currency of Australian dollars. Less than 1% of the of customers within specifi c industries. Th e majority of customers are group's sales are denominated in currencies other than the functional concentrated in Australia. Credit risk in trade receivables is managed currency of the operating unit making the sale. in the following ways: • payment terms are generally 45 days; Credit risk exposures • a risk assessment process is used for all customers; and Th e group's maximum exposure to credit risk at balance date in relation to each class of recognised fi nancial asset, other than derivatives, is the • fi nancial assets that are neither past due or not impaired are not carrying amount of those assets as indicated in the balance sheet. Th e considered a credit risk due to being subject to credit application maximum credit risk exposure does not take into account the value of any and approval process. Th e group manages credit risk in relation collateral or other security held, in the event other entities or parties fail to to interest rate swaps by limiting such undertakings to those with perform their obligations under the fi nancial instruments in question. whom the group has a lending relationship.

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NOTE 28 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES CONT.

Liquidity Risk Th e group's objective is to maintain a balance between continuity of contractually fi xed pay-off s and receivables for settlement, repayments funding and fl exibility through the use of bank overdrafts and bank loans. and interest resulting from recognised fi nancial assets and liabilities, To ensure that the maturity of funding facilities is not concentrated in one including derivative fi nancial instruments as of 30 June 2010. Cash fl ows period, the group's policy is to ensure that an annual renewal option is for fi nancial assets and liabilities without fi xed amount or timing are maintained on its evergreen facility. Th e table below refl ects all based on the conditions existing at 30 June 2010.

6 months or less 6-12 months 1-5 years Over 5 years Total

$'000 $'000 $'000 $'000 $'000 Year ended 30 June 2010 Financial assets Derivatives - interest rate swaps 127 - - - 127 Total fi nancial assets 127 - - - 127 Financial liabilities Trade and sundry payables 44,813 - - - 44,813 Accounts payable - associated and other entities - - - 2,211 2,211 Secured and unsecured borrowings 7,171 6,705 228,677 - 242,553 Derivatives - interest rate swaps 504 468 542 - 1,514 Total fi nancial liabilities 52,488 7,173 229,219 2,211 291,091 Year ended 30 June 2009 Financial liabilities Trade and sundry payables 40,732 - - - 40,732 Accounts payable - associated and other entities - - - 4,102 4,102 Secured and unsecured borrowings 5,129 5,026 237,716 - 247,871 Derivatives - interest rate swaps 1,168 970 1,158 - 3,296 Total fi nancial liabilities 47,029 5,996 238,874 4,102 296,001

NOTE 29 FINANCIAL INSTRUMENTS Receivables - associated entities and other advances

(a) Terms, conditions and accounting policies Amounts (other than trade debts) receivable from associated entities and for other advances are carried at original amounts due, being fair value. Th e group's accounting policies, including the terms and conditions of Interest, when charged, is recognised in the statement of comprehensive each class of ﬁ nancial asset, ﬁ nancial liability and equity instrument, income on an accruals basis. Details of the terms and conditions both recognised and unrecognised at the balance date, are as follows: applicable to related parties are set out in Note 30 and Note 31.

Recognised Financial Instruments Secured advances

(i) Financial assets Secured advances are shown at cost. Interest, when charged, is recognised in the statement of comprehensive income on an accruals basis. Receivables - trade debtors Investments in unlisted shares Trade debtors are carried at original invoice cost less any provision for uncollectible doubtful debts. A provision for doubtful debts is Investments in unlisted shares are measured at fair value. Dividends are recognised when collection of the full amount is no longer probable. recognised when declared by the investee. Credit sales are normally settled on 30 to 45 day terms.

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 64 24/09/10 5:35 PM NOTE 29 FINANCIAL INSTRUMENTS CONT. Interest rate swaps Th e group enters into interest rate swap or hedge agreements that are (ii) Financial liabilities used to convert the variable interest rates attached to various of its Trade and sundry creditors specifi c facilities into fi xed interest rates. Th e swaps are entered into Creditors are recognised at amortised cost and represent liabilities for with the objectives of ensuring that earnings are not subject to wide goods and services already received, whether or not billed to the group fl uctuations caused by fl uctuating interest commitments and ensuring and are normally settled on 30 day terms. compliance with loan covenants.

Accounts payable - associated and other entities At 30 June 2010, the group has interest rate swap agreements in place with notional amounts totalling $125,000,000 whereby it pays fi xed Amounts owing to associated and other entities are carried at original rates of interest on the various swaps ranging between 6.17% and amounts due, being fair value. Interest, when charged, is recognised in 3.96% and receives a variable rate equal to either BBSW or BBSY on the the statement of comprehensive income on an accruals basis. Details of notional amounts. Th ese swaps covered approximately 59.8% of total the terms and conditions applicable to related parties are set out in Note borrowings of the group drawn down at balance date. Th e swaps mature 30 and Note 31. between December 2010 and May 2012, with rolling 3 month periods. Borrowings Th e group classifi es interest rate swaps as cash fl ow hedges and states Borrowings are carried at amortised cost. Interest is recognised in the them at fair value. statement of comprehensive income on an eff ective rate method. (iii) Equity Bank loans are repayable either monthly, quarterly or bi-annually with Ordinary shares terms ranging from less than one year to fi ve years. Ordinary share capital has been recognised at the issue value of the While interest is charged either at the bank's fl oating rate or at a shares. Details of shares issued at balance date are set out in Note 18. contracted rate above the Australian dollar BBSY rate, certain borrowings are subject to interest rate swaps. Refer interest rate swaps (b) Net fair values section below. Th e aggregate net fair values of fi nancial assets and fi nancial liabilities, both recognised and unrecognised at the balance date, are as follows:

Total carrying amount as per Aggregate consolidated balance sheet net fair value 2010 2009 2010 2009 $ '000 $ '000 $ '000 $ '000 Financial assets Cash and cash equivalents 1,425 691 1,425 691 Receivables - trade debtors 53,111 49,799 53,111 49,799 Receivables - associated entities and other 2,457 3,044 1,696 2,099 Derivatives - options 44 27 44 27 Derivatives - interest rate swaps 108 - 108 - Investments in unlisted shares 541 541 541 541 Total ﬁ nancial assets 57,686 54,102 56,925 53,157 Financial liabilities Trade and sundry payables 44,813 40,732 44,813 40,732 Accounts payable - associated and other entities 2,211 4,102 2,211 4,102 Derivatives - interest rate swaps 1,437 3,277 1,437 3,277 Secured and unsecured borrowings 209,100 220,100 207,420 214,191 Total ﬁ nancial liabilities 257,561 268,211 255,881 262,302

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 65 24/09/10 5:35 PM NOTES TO THE FINANCIAL STATEMENTS CONT.

NOTE 29 FINANCIAL INSTRUMENTS CONT. Th e fair value hierarchy of ﬁ nancial assets and ﬁ nancial liabilities, are as follows:

Valuation technique Valuation technique - Valuation technique Valuation technique - - market observable non market observable - market observable non market observable inputs (Level 2) inputs (Level 3) inputs (Level 2) inputs (Level 3) 2010 2010 2009 2009 $ '000 $ '000 $ '000 $ '000 Financial assets Derivatives - options 44 - 27 - Derivatives - interest rate swaps 108 - - - Investments in unlisted shares - 541 - 541 Total ﬁ nancial assets 152 541 27 541

Financial liabilities Derivatives - interest rate swaps 1,437 - 3,277 - Total ﬁ nancial liabilities 1,437 - 3,277 -

Assets carried in excess of fair value are not written down as the Borrowings - non-current Directors expect they will recover their full face values. Th e fair values of non-current borrowings are estimated using Th e following methods and assumptions are used to determine the net discounted cash ﬂ ow analysis, based on current incremental borrowing fair values of ﬁ nancial assets and liabilities: rates for similar types of arrangements.

Interest rate swaps Recognised ﬁ nancial instruments Cash, cash equivalents and short-term deposits Interest rate swaps are marked to market based on prevailing interest rates in order to determine fair value based on advice received from Th e carrying amount approximates fair value because of short-term counter parties. maturity.

Receivables and accounts payable - current NOTE 30 OTHER RELATED PARTY DISCLOSURES Th e carrying amount approximates fair value because of short-term Th e following related party transactions occurred during the ﬁ nancial maturity. year and were conducted on normal commercial terms and conditions unless otherwise stated: Receivables - non-current

Th e fair values of non-current receivables are estimated using (a) Immediate parent entity group discounted cash ﬂ ow analysis, based on current incremental lending Th e immediate parent entity is Village Roadshow Limited which rates for similar types of arrangements. is incorporated in Australia. Th e ultimate parent entity is Positive Investments Pty Ltd which is incorporated in Australia. Village Investments Roadshow and Austereo entered into an intercompany agreement For investments where there is no quoted market price, a reasonable in 2001 for the provision of corporate services that maintain the estimate of the fair value is determined by reference to the current market relationship between Village Roadshow and Austereo in a manner that value of another instrument which is substantially the same or is calculated is consistent in all material respects with past practices. Th e results of based on the expected cash ﬂ ows or the underlying net asset base of the the group for the year include an amount of $250,000 (2009: $250,000) investment. in respect of management fees paid by Austereo under this agreement.

Borrowings - current

Th e carrying amount approximates fair value because of short-term maturity.

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 66 24/09/10 5:35 PM NOTE 30 OTHER RELATED PARTY DISCLOSURES CONT.

(a) Immediate parent entity group cont.

Consolidated 2010 2009 $$ Revenues and expenses Th e following transactions with the Village Roadshow Ltd group and their associates were included in the determination of the operating proﬁ t before tax for the year (material amounts have been separately identiﬁ ed): Sales revenue: Village Cinemas Australia Pty Ltd 677 631 Roadshow Distributors Pty Ltd -216 Warner Village Th eme Parks 474 333 Roadshow Films Pty Ltd 2,230 1,588 3,381 2,768 Management fees paid: Village Roadshow Limited 250 250

Receivables and payables Th e following amounts remain receivable from or payable to Village Roadshow Ltd group entities at the end of the year: Current receivables 271 330

Property, Plant & Equipment In prior year, Village Roadshow Ltd and Austereo entered into a commercial lease agreement for its previous Melbourne property under a sub-lease arrangement. Under the terms of the lease, a property ﬁ t-out incentive was included, in line with ordinary commercial negotiations for such transactions. Th e funds were utilised in the ﬁ t-out of the premises for Village Roadshow Ltd.

Leasehold improvements -900

(b) Associated entities Consolidated 2010 2009 $$ Revenues and expenses Th e following transactions with associated entities were included in the determination of the operating proﬁ t before tax for the year (material amounts have been separately identiﬁ ed): Commission received 22 13 Management fees received 874 874 Transmitter costs paid: Sydney FM Facilities Pty Ltd 934 1,002 Melbourne FM Facilities Pty Ltd 364 240 Perth FM Facilities Pty Ltd 75 72 1,373 1,314 Receivables and payables

Th e following amounts remain receivable from or payable to associated entities at the end of the year. Th ese loans are non-interest bearing loans: Non-current receivables other than trade receivables: Digital Radio Broadcasting Melbourne Pty Ltd 575 641 Digital Radio Broadcasting Brisbane Pty Ltd 635 785 Digital Radio Broadcasting Adelaide Pty Ltd 554 630 Digital Radio Broadcasting Perth Pty Ltd 564 629 2,328 2,685

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 67 24/09/10 5:35 PM NOTES TO THE FINANCIAL STATEMENTS CONT.

NOTE 30 OTHER RELATED PARTY DISCLOSURES CONT.

Th ere are no material provisions against trade and other receivables at 30 June 2010. No material interest has been charged on the amounts receivable. Consolidated 2010 2009 $$ Non-current loans payable: Sydney FM Facilities Pty Ltd 379 361 Melbourne FM Facilities Pty Ltd 146 340 Perth FM Facilities Pty Ltd 180 180 Radio Newcastle Pty Ltd 1,497 3,212 Canberra FM JV 99 Digital Radio Broadcasting Sydney Pty Ltd 169 - 2,380 4,102

NOTE 31 PARENT ENTITY INFORMATION Information relating to Austereo Group Limited:

Austereo Group Limited 2010 2009 $$ Current Assets 566 Total Assets 784,996 1,248,771 Current Liabilities 4,657 5,134 Total Liabilities 40,247 516,271 Net Assets 744,749 732,500 Issued Capital 634,023 634,023 Retained Earnings 110,726 98,477 Total Shareholders Equity 744,749 732,500

Proﬁ t or Loss of the parent entity 42,405 44,157 Total comprehensive income of the parent entity 43,763 45,424

Th e following related party transactions occurred during the ﬁ nancial year and were conducted on normal commercial terms and conditions unless otherwise stated: Controlled Entities Revenues and expenses During the year the following transactions occurred between the parent and its controlled entities: Dividends received from controlled entities 39,235 41,200 Interest received from controlled entities 4,069 3,762 Receivables and payables At balance date, the following aggregate loans were outstanding between the parent and its controlled entities: Owing by controlled entities 24,585 488,291 Owing to controlled entities 34,611 509,847 Contingent Liabilities Contingent Liabilities relating to Austereo Group Limited: (i) Guarantees for unsecured credit facilities of controlled entities 209,100 220,100 (ii) Secured guarantees for operating lease commitments of controlled entities 2,085 2,085 211,185 222,185

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 68 24/09/10 5:35 PM DIRECTORS' DECLARATION

In accordance with a resolution of the Directors of Austereo Group Limited, I state that: (1) In the opinion of the Directors – (a) the fi nancial statements and notes of the Company and the consolidated entity are in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the company's and consolidated entity's fi nancial position as at 30 June 2010 and of their performance for the year ended on that date; and (ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; (b) the fi nancial statements and notes also comply with International Financial Reporting Standards as disclosed in note 2; and (c) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. (2) Th is declaration has been made after receiving the declarations required to be made to the directors in accordance with section 295A of the Corporations Act 2001 for the fi nancial year ending 30 June 2010.

On behalf of the Board

PETER M. HARVIE Chairman Melbourne, 26 August 2010

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 69 24/09/10 5:35 PM INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AUSTEREO GROUP LIMITED

Report on the Financial Report Independence We have audited the accompanying fi nancial report of Austereo Group In conducting our audit we have met the independence requirements Limited, which comprises the balance sheet as at 30 June 2010, and the of the Corporations Act 2001. We have given to the directors of the statement of comprehensive income, statement of changes to equity company a written Auditor’s Independence Declaration, a copy of and cash fl ow statement for the year ended on that date, a summary which is included in the directors’ report. In addition to our audit of the of signifi cant accounting policies, other explanatory notes and the fi nancial report, we were engaged to undertake the services disclosed in directors’ declaration of the consolidated entity comprising the company the notes to the fi nancial statements. Th e provision of these services has and the entities it controlled at the year’s end or from time to time during not impaired our independence. the fi nancial year. Auditor’s Opinion Directors’ Responsibility for the Financial Report In our opinion: Th e directors of the company are responsible for the preparation 1. the fi nancial report of Austereo Group Limited is in accordance and fair presentation of the fi nancial report in accordance with the with the Corporations Act 2001, including: Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. Th is responsibility (i) giving a true and fair view of the consolidated entity's fi nancial includes establishing and maintaining internal controls relevant to position at 30 June 2010 and of its performance for the year the preparation and fair presentation of the fi nancial report that is free ended on that date; and from material misstatement, whether due to fraud or error; selecting (ii) complying with Australian Accounting Standards (including and applying appropriate accounting policies; and making accounting the Australian Accounting Interpretations) and the estimates that are reasonable in the circumstances. In Note 2, the Corporations Regulations 2001. directors also state that the fi nancial report, comprising the fi nancial statements and notes, complies with International Financial Reporting 2. the fi nancial report also complies with International Financial Standards as issued by the International Accounting Standards Board. Reporting Standards as issued by the International Accounting Standards Board. Auditor’s Responsibility Report on the Remuneration Report Our responsibility is to express an opinion on the fi nancial report based We have audited the Remuneration Report included in pages 18 to 24 on our audit. We conducted our audit in accordance with Australian of the directors’ report for the year ended 30 June 2010. Th e directors Auditing Standards. Th ese Auditing Standards require that we comply of the company are responsible for the preparation and presentation with relevant ethical requirements relating to audit engagements and of the Remuneration Report in accordance with section 300A of the plan and perform the audit to obtain reasonable assurance whether the Corporations Act 2001. Our responsibility is to express an opinion on the fi nancial report is free from material misstatement. Remuneration Report, based on our audit conducted in accordance with An audit involves performing procedures to obtain audit evidence about Australian Auditing Standards. the amounts and disclosures in the fi nancial report. Th e procedures selected depend on our judgment, including the assessment of the risks Auditor’s Opinion of material misstatement of the fi nancial report, whether due to fraud or In our opinion the Remuneration Report of Austereo Group Limited error. In making those risk assessments, we consider internal controls for the year ended 30 June 2010, complies with section 300A of the relevant to the entity’s preparation and fair presentation of the fi nancial Corporations Act 2001. report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the eff ectiveness of the entity’s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as Ernst & Young evaluating the overall presentation of the fi nancial report. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion. Mark Phelps Partner Adelaide, 26 August 2010

70 Liability limited by a scheme approved under Professional Standards Legislation

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 70 24/09/10 5:35 PM SHARE REGISTRY INFORMATION

SUBSTANTIAL SHAREHOLDERS AS AT 31 AUGUST 2010 Name Ordinary Shares % of Total Village Roadshow Limited 181,093,856 52.15 Commonwealth Bank of Australia Limited 48,015,259 13.93 Perpetual Limited 41,316,112 11.98 DFA Australia Limited 17,241,609 5.00

DISTRIBUTION OF SECURITY HOLDERS AS AT 31 AUGUST 2010 Category of Holding Number of Holders % Number of Units % 1 - 1,000 276 18.65 136,853 0.04 1,001 - 5,000 751 50.74 1,859,430 0.54 5,001 - 10,000 234 15.81 1,622,039 0.47 10,001 - 100,000 189 12.77 4,574,255 1.33 100,001 and over 30 2.03 336,606,131 97.62 1,480 100.00 344,798,708 100.00 Number of holdings less than marketable parcel (310 shares) 98 10,833

20 LARGEST SECURITY HOLDERS AS AT 31 AUGUST 2010 Name of Holder Shares % Rank Village Roadshow Limited 181,093,856 52.52 1 RBC Dexia Investor Services Australia Nominees Pty Limited 30,822,242 8.94 2 (PIPOOLED A/C) J P Morgan Nominees Australia Limited 27,438,147 7.96 3 HSBC Custody Nominees (Australia) Limited 23,287,143 6.75 4 National Nominees Limited 19,584,413 5.68 5 Citicorp Nominees Pty Limited 18,393,325 5.33 6 Cogent Nominees Pty Limited 6,911,602 2.00 7 ANZ Nominees Limited (CASH INCOME A/C) 5,044,893 1.46 8 Citicorp Nominees Pty Limited (CFSIL CWLTH AUST SHS 4 A/C) 4,927,898 1.43 9 RBC Dexia Investor Services Australia Nominees Pty Limited (PIIC A/C) 3,497,620 1.01 10 Queensland Investment Corporation 2,218,390 0.64 11 UBS Nominees Pty Ltd (PB SEG A/C) 1,512,955 0.44 12 Australian Reward Investment Alliance 1,380,310 0.40 13 Merrill Lynch (Australia) Nominees Pty Limited 1,310,193 0.38 14 Suncorp Custodian Services Pty Limited (AET) 1,299,716 0.38 15 Cogent Nominees Pty Limited (SMP Accounts) 1,294,240 0.38 16 AMP Life Limited 1,247,769 0.36 17 Citicorp Nominees Pty Limited (CFSIL CWLTH SMALL CO 7 A/C) 1,030,825 0.30 18 Mr Peter Mervyn Harvie 1,025,001 0.30 19 UBS Nominees Pty Ltd 648,542 0.19 20 TOTAL 333,969,080 96.85

VOTING RIGHTS OF ORDINARY SHARES On a show of hands - one vote for every member present in person or by proxy. On a poll - one vote for every share held.

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 71 24/09/10 5:35 PM COMPANY DIRECTORY

SECRETARIES SHARE REGISTRY JOINT VENTURES Kathryn J. Gramp Computershare Investor Services Radio Newcastle Phillip S. Leggo Yarra Falls KOFM & NXFM 452 Johnston Street 252 Paciﬁ c Highway REGISTERED OFFICE Abbotsford VIC 3067 Charlestown NSW 2290 Austereo Group Limited Telephone (03) 9415 5000 Telephone (02) 4942 3333 Level 2 Toll Free 1300 850 505 Canberra 257 Clarendon Street Sydney FM104.7 & MIX 106.3 FM South Melbourne VIC 3205 Level 3 Bellenden Street Telephone (03) 9252 1051 60 Carrington Street Gungahlin ACT 2912 Facsimile (03) 9252 1262 Sydney NSW 2000 Telephone (02) 6123 4104 HOME EXCHANGE Telephone (02) 8234 5400 Toll free 1300 855 080 AUSTEREO INTERNATIONAL Australian Stock Exchange Limited Measat/Austereo Joint Venture 123 Eagle Street Brisbane All Asia Broadcast Centre Brisbane QLD 4000 Level 19 Administration Building Telephone 131 279 307 Queen Street 2nd Floor Brisbane QLD 4000 Technology Park Malaysia BANKERS Telephone (07) 3237 2100 Lebuhraya Puchong – Sungei Besi National Australia Bank Limited Toll free 1300 552 270 Bukit Jalil 57000 Corporate & Institutional Financial Services Perth Kuala Lumpur Malaysia Level 33 Level 2 Telephone 0011 603 9543 8888 500 Bourke Street 45 St Georges Terrace Melbourne VIC 3000 Perth WA 6000 AUSTEREO GROUP Telephone (03) 8641 3500 Telephone (08) 9232 2077 LIMITED WEBSITE ANZ Banking Group Toll Free 1300 557 010 Stakeholders can keep up to date on the Level 16 company through the Austereo website 530 Collins Street STATE OFFICES at www.austereo.com.au. Melbourne VIC 3000 Austereo Sydney Th e website contains copies of stock exchange Telephone (03) 9273 1645 2Day & Triple M releases, ratings information and links to the Level 14 Commonwealth Bank Australia Austereo stations’ websites. 50 Goulburn Street Level 8 Sydney NSW 2000 Please contact Computershare Investor 100 King William Street Telephone (02) 9367 1000 Services for all inquires on your Austereo Adelaide SA 5000 shareholding including for conﬁ rmation Telephone (08) 8206 4468 Austereo Melbourne of holding and for changes in security Fox & Triple M holders details. AUDITOR Level 2 Ernst & Young 257 Clarendon Street Ernst & Young Building South Melbourne VIC 3205 121 King William Street Telephone (03) 9252 1051 Adelaide SA 5000 Austereo Brisbane Telephone (08) 8417 1600 B105 & Triple M William Jolly Place SOLICITOR 309 North Quay Herbert Geer Brisbane QLD 4000 Level 12 Telephone (07) 3837 1053 77 King Street Sydney NSW 2000 Austereo Adelaide Telephone (02) 9239 4500 SAFM & Triple M 128 Greenhill Road Unley SA 5061 Telephone (08) 8301 1071 Austereo Perth 92.9 & Mix 94.5 450 Roberts Road Subiaco WA 6008 Telephone (08) 9382 0945

J0005676_AustereoAnnualReport10_FinancialsPRINT_FA2.indd 72 24/09/10 5:35 PM design by fusion.com.au design AUSTEREO GROUP LIMITED ANNUAL REPORT 2010 REPORT ANNUAL LIMITED GROUP AUSTEREO AUSTEREO GROUP LIMITED ANNUAL REPORT 2010

SWITCHED ON.

J0005676_AustereoAnnualReport10_CoverPRINT_FA.indd 1 25/08/10 10:52 AM *I00000101*

916CR_0_Sample_Proxy/000001/000002

Lodge your vote:

By Mail: Computershare Investor Services Pty Limited GPO Box 242 Melbourne Victoria 3001 Australia

Alternatively you can fax your form to (within Australia) 1800 783 447 (outside Australia) +61 3 9473 2555 000001 000 AEO MR SAM SAMPLE FLAT 123 For all enquiries call: 123 SAMPLE STREET (within Australia) 1300 850 505 THE SAMPLE HILL (outside Australia) +61 3 9415 4000 SAMPLE ESTATE SAMPLEVILLE VIC 3030 *L000001*

Proxy Form For your vote to be effective it must be received by 10.00am (Melbourne time) Tuesday 9 November 2010 Appointment of Proxies Important 1. Each member entitled to attend and vote at the meeting is entitled to 1. If you are unable to attend the meeting, you may appoint a appoint not more than two persons as their proxy or proxies to attend and vote proxy to attend the meeting on your behalf. See the section at the meeting. The person appointed may be an individual or a body opposite headed “Appointment of Proxies”. corporate. 2. If you are attending the meeting, please bring this bar coded 2. A proxy need not be a member of the Company. Proxy Form to assist in shareholder identification and registration. 3. If more than one proxy is appointed neither proxy shall have the right to 3. On a show of hands, each shareholder present in person or by vote on a show of hands but will have the right to vote on a poll. proxy, representative or attorney is entitled to one vote. On a poll, 4. A proxy may demand or join in demanding a poll. every shareholder present in person or by proxy, representative or 5. Each proxy may be appointed to represent a specific portion or number of attorney has one vote for every share held. the member’s votes. If the appointment does not specify a proportion or 4. If two or more joint holders purport to vote, the vote of the joint number, each proxy may exercise half of the votes in which case any fraction holder whose name appears first in the Register will be accepted to of votes will be disregarded. the exclusion of the other joint holder or holders. 6. In the case of joint holders all must sign this proxy form. 5. Any member which is a corporation may appoint an individual as 7. In the case of corporations, proxies must be executed in accordance with its representative as provided by the Act. Section 127 of the Corporations Act 2001 (the “Act”), or signed by an 6. The Remuneration Report is set out on pages 18 to 24 of the authorised officer or attorney. Annual Report. Under the Act, the vote is advisory only and does 8. If you mark the abstention box on this proxy form for any item of business, not bind the Directors or the Company. you are directing your proxy not to vote on a show of hands or on a poll and 7. In accordance with regulation 7.11.37 of the Corporations your shares will not be counted in calculating the required majority on a poll. If Regulations 2001 all securities of the Company that are quoted you do not indicate how your proxy is to vote, they may vote as they see fit. securities at 7.00 pm Melbourne time on Tuesday, 9 November 2010 9. If this proxy form is signed by the member but does not name the proxy or are taken, for the purposes of the above meeting, to be held by the proxies in whose favour it is given, the Chairman may either act as proxy or persons who held them at that time. Only those persons will be complete the proxy by inserting the name or names of one or more directors or entitled to vote at the Annual General Meeting on Thursday, 11 the company secretary. The Chairman will vote the proxy in favour of all November 2010. Resolutions. 10. To be valid, the proxy form must be deposited together with the power of attorney (if any) under which it is signed or a certified copy of such power of attorney, at the Company’s share registry, Computershare Investor Services Pty Limited 452 Johnston Street Abbotsford Vic 3067 or returned to the share registry in the reply paid envelope provided. Alternatively, the proxy may be lodged by facsimile with the Company’s share registry on 1800 783 447 (within Australia) or +61 3 9473 2555 (outside Australia). 11. Custodian voting - for Intermediary Online subscribers only (custodians) Turn over to complete the form please visit www.intermediaryonline.com to submit your voting intentions.

View your securityholder information, 24 hours a day, 7 days a week: www.investorcentre.com

Review your securityholding Your secure access information is: Update your securityholding SRN/HIN: I9999999999

PLEASE NOTE: For security reasons it is important that you keep your SRN/HIN confidential.

916CR_0_Sample_Proxy/000001/000001 MR SAM SAMPLE Change of address. If incorrect, FLAT 123 mark this box and make the 123 SAMPLE STREET THE SAMPLE HILL correction in the space to the left. *I9999999999* SAMPLE ESTATE Securityholders sponsored by a SAMPLEVILLE VIC 3030 broker (reference number commences with ’X’) should advise your broker of any changes. I 9999999999 I ND

Proxy Form Please mark to indicate your directions

Appoint a Proxy to Vote on Your Behalf XX I/We being a member/s of Austereo Group Limited hereby appoint PLEASE NOTE: Leave this box blank if the Chairman you have selected the Chairman of the OR of the meeting Meeting. Do not insert your own name(s). or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as my/our proxy to act generally at the meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, as the proxy sees fit) at the Annual General Meeting of Austereo Group Limited to be held at Westin Room IV, The Westin Melbourne on Regent Place, 205 Collins Street, Melbourne, Victoria on Thursday 11 November 2010 at 10.00am and at any adjournment of that meeting.

PLEASE NOTE: If you mark the Abstain box for an item, you are directing your proxy not to vote on your Items of Business behalf on a show of hands or a poll and your votes will not be counted in computing the required majority.

Item B To approve the Remuneration Report (non binding resolution)

Item C(i) Re-election of a Director - Peter M. Harvie

Item C(ii) Re-election of a Director - Robert G. Kirby

The Chairman of the Meeting intends to vote undirected proxies in favour of each item of business.

Signature of Securityholder(s) This section must be completed. Individual or Securityholder 1 Securityholder 2 Securityholder 3

Sole Director and Sole Company Secretary Director Director/Company Secretary

Contact Contact Daytime Name Telephone Date / /

A E O 1 2 1 7 9 3 A