ABN 54 068 349 066

PROSPECTUS

For a pro-rata renounceable rights issue to shareholders of 1 New Share for every 14.25 Shares held on the Record Date at an issue price A$3.00 per New Share to raise up to approximately A$25,016,076.

The Rights Issue closes at 7.00pm Sydney, Australia time on 8 June 2006.

This is an important document and requires your immediate attention. It should be read in its entirety. If you do not understand its contents, or are in doubt as to how to act, you should consult your stockbroker or professional adviser.

Important Information

This Prospectus is dated 10 May 2006 and was lodged with ASIC on that date. Neither ASIC nor the ASX, nor any of their officers, take any responsibility for the contents of this Prospectus or for the merits of the investment to which this Prospectus relates.

No New Shares will be issued on the basis of this Prospectus after the Expiry Date. New Shares issued pursuant to this Prospectus will be issued on the terms and conditions set out in this Prospectus. REA will apply to ASX for the New Shares to be quoted on ASX within 7 days after the date of this Prospectus.

Foreign jurisdictions

The New Shares being offered under this Prospectus are being offered to Eligible Shareholders. being Shareholders with registered addresses in Australia and New Zealand (and who are not holding Shares for the account or benefit of, a person who is resident in the U.S.) on the terms and conditions described in Section 1.7 of this Prospectus. In making the offer to Eligible Shareholders in New Zealand, REA is relying on the Securities Act (Overseas Companies) Exemption Notice 2002 (NZ), by virtue of which this Prospectus is not required to be registered in New Zealand.

The distribution of this Prospectus in jurisdictions outside Australia and New Zealand may be restricted by law and persons who come into possession of this Prospectus should seek advice on and observe any such restrictions. This Prospectus does not constitute an offer in any place in which, or to any person to whom, it would not be lawful to make such an offer. No action has been taken to register the New Shares or Rights, or otherwise permit an offering of the New Shares or Rights, in any jurisdiction outside of Australia and New Zealand. In particular, this Prospectus does not constitute an offer for sale of the New Shares or any Right to a security into the United States or to U.S. persons. The New Shares have not been, and will not be, registered under the U.S. Securities Act and must not be offered or sold within the United States or to U.S. persons unless they are registered under the U.S. Securities Act or an exemption from the registration requirements of the U.S. Securities Act is available.

Investment decisions

The information in this Prospectus does not constitute financial product advice. This Prospectus does not take into account the investment objectives, financial situation, tax position and particular needs of individual investors. Investors should obtain their own independent advice and consider the appropriateness of the offer of New Shares pursuant to this Prospectus having regard to their objectives, financial situation, tax position and needs.

Future performance

Except as required by law, and only then to the extent so required, neither REA nor any other person warrants the future performance of REA, or any return on any investment made pursuant to this Prospectus. An investment in the New Shares offered by this Prospectus should be considered speculative.

Continuously quoted securities

This is a Prospectus for an offer of continuously quoted securities (as defined in the Corporations Act) of REA and has been prepared in accordance with section 713 of the Corporations Act. Accordingly, this Prospectus does not contain the same level of disclosure as an initial public offering prospectus.

Prospectus availability

Eligible Shareholders can obtain a copy of this Prospectus during the period of the Rights Issue on the REA website at www.realestate.com.au. The electronic version of this Prospectus on the REA website will not include an Entitlement and Acceptance Form. Eligible Shareholders will only be entitled to exercise their Rights and take up New Shares in accordance with the instructions in the personalised Entitlement and Acceptance Form which accompanies a paper copy of this Prospectus.

Terms of the Rights Issue

Subject to compliance with the Corporations Act, the Listing Rules and any other applicable laws, the Directors reserve the right to withdraw the Rights Issue and Prospectus at any time or to scale back entitlements (on a pro rata basis) in their absolute discretion. In either case, the relevant Application Monies will be refunded (without interest).

10 May 2006

Dear Shareholder.

It is with pleasure that I announce the launch of a Rights Issue by realestate.com.au Limited to raise approximately $25 million where shareholders have the right to purchase, at a price of $3.00, one new share for every 14.25 existing shares they own.

This Rights Issue is being undertaken to repay debt relating to the purchase of a controlling stake in the UK property site propertyfinder.com and to pay for two recent acquisitions – PropertyLook Pty Ltd and HubOnline Global Pty Ltd as well as to replenish working capital reserves.

PropertyLook is the owner of propertylook.com.au, one of the most comprehensive commercial real estate sites in Australia and New Zealand and the only site to list properties from the four leading commercial real estate agents. PropertyLook is to be merged with realcommercial.com.au, Australia's most popular commercial real estate site, to create, what Directors believe is, Australia' most comprehensive listings database for commercial real estate. In addition, each of the four leading commercial real estate agents have entered into 5 year advertising agreements with realcommercial.com.au.

HubOnline is the owner of the PropertiesOnline suite of products that allow real estate franchises. franchisees and independent real estate operators to manage their entire office's websites, sales network, management reports, direct marketing tools and property listings, all online. The PropertiesOnline suite of products will be merged with the realestate.com.au administration system and the existing realestate.com.au Web Design Services business.

The Board of Directors believes that these acquisitions have created new growth opportunities by allowing realestate.com.au Limited to enter the larger UK market, enhance its commercial real estate website and move into the real estate sale management software market.

The Rights Issue has been priced at an attractive discount to current market for REA Shares. This is to encourage all Shareholders to participate in the Rights Issue. If for any reason a Shareholder chooses not to, the pricing is such that there should be a viable rights market where they can be disposed of at a profit.

This Prospectus contains detailed information about the transactions and I encourage you to read it carefully before making your investment decision.

On behalf of my fellow Directors, I recommend the Rights Issue to you and thank you for your continuing support.

Yours faithfully

John McGrath Chairman

1. DETAILS OF THE RIGHTS ISSUE
2. ACTION REQUIRED BY ELIGIBLE SHAREHOLDERS
3. EFFECT OF THE RIGHTS ISSUE ON REA
4. RISK FACTORS
5. ADDITIONAL INFORMATION
6. AUTHORISATION
7. DEFINED TERMS AND INTERPRETATION

Summary of Important Dates*

Lodgement of Prospectus with ASIC	10 May 2006
Existing Shares quoted ex-Rights on ASX and Rights trading	15 May 2006
commences on ASX
Record Date to determine entitlements under the Rights	19 May 2006
Issue (5.00pm Sydney time)
Rights Issue opens	25 May 2006
Rights trading on ASX ends	1 June 2006
Closing date and date for renunciations, acceptances	8 June 2006
and payment in full
Allotment of New Shares and dispatch of holding statements	19 June 2006
for New Shares
Trading commences for New Shares on ASX	20 June 2006

*These dates are indicative only and may be subject to change. Subject to the Corporations Act, theListing Rules and other applicable laws, the Directors reserve the right to vary the dates, including to extend the Rights Issue, close the Rights Issue early or accept late applications (either generally or in particular cases), without prior notice. You are encouraged to submit your Entitlement and Acceptance Form as soon as possible. The commencement of quotation is subject to ASX confirmation.

Definitions

Throughout this Prospectus, for ease of reading, various words and phrases have been defined rather than used in full on each occasion and are set out in Section 7.

A reference to time in this Prospectus is to Australian Eastern Daylight Time, unless otherwise stated.

A reference to $ and cents is to Australian currency, unless otherwise stated.

1. DETAILS OF THE RIGHTS ISSUE

$1.1$ Rights Issue

REA is offering for subscription, by way of a pro-rata renounceable Rights Issue, approximately 8,338,692 New Shares at an issue price of $3.00 for each New Share

This Prospectus invites Eligible Shareholders to participate in the pro-rata renounceable rights issue on the basis of 1 New Share for every 14.25 Shares held on the Record Date at an issue price of $3.00 per New Share.

The number of New Shares to which you are entitled is shown on the Entitlement and Acceptance Form which will accompany this Prospectus as sent to Eligible Shareholders. In determining entitlements under the Rights Issue, any fractional entitlement will be rounded up to the nearest whole number.

The Rights Issue will open for receipt of acceptances at 9.00am on 25 May 2006 and will close at 7,00pm on 8 June 2006, or such later date as the Directors, in their absolute discretion and subject to compliance with the Corporations Act, the Listing Rules and any other applicable laws, may determine. You should allow sufficient time to ensure that Entitlement and Acceptance Forms reach the Share Registry by the specified time.

The Rights Issue is renounceable. This provides Eligible Shareholders who do not wish to subscribe for some or all of their Rights an opportunity to sell those Rights. See Sections 2.3, 2.4 and 2.5.

As at the date of this Prospectus, REA has 118,826,365 Shares on issue. Holders of Options will not be entitled to participate in the Rights Issue unless they exercise their Options and are issued Shares prior to the Record Date. If all the Options that can be exercised prior to the Record Date are exercised prior to the Record Date (90,000 Options), the maximum number of New Shares that may be issued under this Prospectus is 8,338,692 New Shares. Shareholders who do not exercise their Rights will be diluted with respect to their interest in REA.

If optionholders do not exercise their Options prior to the Record Date, there is no adjustment to the exercise price of the Options to account for the Rights Issue and those optionholders will be diluted with respect to their potential shareholding interest in REA.

If all Options are exercised prior to the Record Date, and this results in an over subscription to the Rights Issue, there will be a scale back of the Rights Issue (on a pro rata basis) to ensure that Option holders will be able to participate in the Rights Issue.

The Rights Issue is fully underwritten by two of REA's major shareholders, News Limited and Songpan Pty Limited (a company controlled by Mr Sam White, a Director of REA) in the proportions that their existing respective shareholdings in REA bear to each other. See Section 5.4 for a summary of the Underwriting Agreement.

$12$ Purpose of the Rights Issue

REA will raise gross proceeds of approximately $25,016,076 through the Rights Issue, before deducting estimated expenses of approximately $190,000.

The $25,016,076 will be used for the following purposes:

Approximately $10.8 million will be used to repay the remaining amount of a bridging loan made by News International to REA to partially fund REA's share of the purchase price of Propertyfinder.com. To purchase Propertyfinder.com. REA and News International Limited incorporated a company in the United Kingdom in which each has an equal shareholding. This company purchased 95.2% of Asserta Holdings Limited, which owns Propertyfinder.com, as well as other minority shareholders. A summary of the loan agreement is set out in Section 5.7.
$5 million of the funds raised from the Rights Issue will be used to fund the acquisition of all of the issued share capital in HubOnline. The total purchase price for all of the issued share capital in HubOnline was $6 million. The remaining $1 million was funded using REA's existing funds. HubOnline builds and supports Internet and Intranet based solutions for small and medium sized businesses by combining technical expertise with an in-depth knowledge of the industries in which its clients operate. Its services include industry platform solutions, Internet and Intranet applications and interactive websites. A summary of the HubOnline acquisition agreement is set out in Section 5.7(b).
$7 million will be used to repay bridging finance taken up by REA to partially fund the acquisition of PropertyLook. The total purchase price for all the issued share capital in PropertyLook was $9.05 million. The remaining $2.05 million was funded using REA's existing funds. PropertyLook is a listing website for commercial real estate in Australia and New Zealand.
The remaining $2.05 million will be used to replenish REA working $\blacksquare$ capital reserves used to fund the PropertyLook acquisition referred to above.

$1.3$ Issue and Allotment of New Shares

The New Shares are expected to be issued and allotted by no later than 19 June 2006.

The New Shares will be issued fully paid, and from the date of issue, will rank equally in all respects with existing Shares on issue. By returning your Entitlement and Acceptance Form, you agree to comply with the Constitution in respect of the New Shares issued to you. Details of the rights attaching to Shares are set out in Section 5.3.

$14$ Application Monies

Until the New Shares are issued and allotted, REA will hold the Application Monies on trust for applicants in a separate bank account opened and maintained for that purpose only. Any interest earned on the Application Monies will be for the benefit of REA and will be retained by it irrespective of whether allotment of the New Shares takes place.

If quotation of the New Shares is not granted by ASX, Application Monies will be refunded to applicants without interest.

$1.5$ Trading history of Shares on ASX

The following graph shows the price at which Shares have traded during the period from 1 August 2005 to 5 May 2006. During this period:

News announced an off-market cash takeover bid for REA on 1 August 2005. The bid price was initially $2.00 cash per REA share, and this was subsequently increased to $2.50. In the three months prior to the announcement of that takeover offer. Shares traded as high as $1.69 (on 28 and 29 July 2005) and as low as $1.35 (on 18 and 20 May 2005).
News' offer for REA closed on 11 November 2005. During the News offer, the highest and lowest market prices of Shares on ASX were $2.64 (on 19 October 2005) and $2.05 (on 2 August 2005).
Since News' bid closed, REA's share price has traded in the range of $4.15 to $2.48. The latest available closing sale price of Shares on ASX immediately before the date of this Prospectus was $3.61 on 8 May 2006.

$1.6$ ASX Quotation

REA will make application to the ASX within 7 days following the date of this Prospectus for the official quotation of the New Shares.

If approval is not granted by ASX within 3 months after the date of this Prospectus, REA will not allot or issue any New Shares and will repay all Application Monies (where applicable), without interest.

The fact that the Shares have been admitted to quotation on ASX is not to be taken in any way as an indication of the merits of REA or the New Shares now offered for subscription.

Treatment of overseas Shareholders $1.7$

This Prospectus and the accompanying Entitlement and Acceptance Form do not constitute an offer in any jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer.

REA is of the view that it is unreasonable to extend to the Rights Issue to Ineligible Shareholders, having regard to:

the small number of Ineligible Shareholders:
the number and value of the New Shares which would be offered to Ineligible Shareholders; and
the cost of complying with the legal requirements and requirements of the regulatory authorities, in the respective overseas jurisdictions.

Accordingly, the Rights Issue is not being extended to any Shareholder whose registered address is outside Australia and New Zealand. REA reserves the right to treat as invalid any Entitlement and Acceptance Form that appears to have been submitted by an Ineligible Shareholder.

In particular, this Prospectus does not constitute an offer for sale of the New Shares or any Right to a security into the United States or to U.S. persons. The New Shares and Rights have not been, and will not be, registered under the U.S. Securities Act and must not be offered or sold within the United States or to U.S. persons unless they are registered under the U.S. Securities Act or an exemption from the registration requirements of the U.S. Securities Act is available.

Eligible Shareholders holding Shares on behalf of persons who are resident outside Australia and New Zealand are responsible for ensuring that taking up any Rights under the Rights Issue does not breach regulations in the relevant overseas jurisdiction. Return of a duly completed Entitlement and Acceptance Form will constitute a representation that there has been no breach of such regulations. Shareholder who are nominees are therefore advised to seek independent advice as how they should proceed. Where the Prospectus has been dispatched to a Shareholder domiciled outside Australia and New Zealand and where the country's securities code or legislation prohibits or restricts in any way the making of the offers contemplated by this Prospectus, the Prospectus is provided for information purposes only.

REA has appointed CCZ Statton Equities Pty Limited, who has been approved by ASIC as Nominee for the Ineligible Shareholders to arrange for the sale of the Rights which would have been offered to the Ineligible Shareholders. REA will transfer the Rights of the Ineligible Shareholders to the Nominee who will account to the Ineligible Shareholders for the net proceeds of the sale of the Rights (if any). The Nominee will have the absolute and sole discretion to determine the timing and the price at which Rights may be sold and the manner of any such sale. Neither REA nor the Nominee will be subject to any liability for failure to sell the Rights or to sell them at a particular price. If in the reasonable opinion of the Nominee, there is no viable market for the Rights or a surplus over the expenses of sale cannot be obtained for the Rights that would have been offered to the Ineligible Shareholders, then the Rights will be allowed to lapse and they will form part of the Shortfall.

$1.8$ Taxation implications

Each Shareholder's taxation position is different and driven by a number of factors including, but not limited to, domicile. Shareholders should take their own taxation advice in relation to the Issue and its implications for them personally. Please refer to Section 3.2 in relation to the taxation implications of the Rights Issue on the Company.

1.9 Underwriting and Commitment by Underwriters to subscribe for entitlements under Rights Issue

Subject to the terms of the underwriting agreement summarised in Section 5.4. News Limited and Songpan (a company controlled by Mr Sam White, a Director of REA) (being the "Underwriters") have each undertaken to REA

to subscribe for the whole of their respective entitlement under the Rights Issue as well as severally underwrite any Shortfall in the proportions that their existing respective shareholdings in REA (as at 5.00 pm on the Record Date) bear to each other.

As at the date of this Prospectus:

News Limited holds 69.135.834 Shares, and it holds a relevant interest and voting power in 58.2% of the total number of Shares on issue; and
Songpan holds 15,068,817 Shares and it holds a relevant interest and $\bullet$ voting power in 12.7% of the total number of Shares on issue.

Based on their respective shareholdings in REA as at the date of this Prospectus, News Limited will underwrite approximately 82% of the Rights Issue and Songpan will underwrite approximately 18%.

$1.10$ Possible Control implications Arising from the Rights Issue

Set out below is a summary of the possible effects of the Rights Issue on each of News Limited and Songpan's voting power in REA, based upon different scenarios in respect of applications whether in taking up Rights or by virtue of the underwriting.1

News Limited

News Limited'scurrent votingpower in REA	News Limited's votingpower in REA if RightsIssue is fully subscribed	News Limited's votingpower in REA if onlyNews Limited andSongpan take up theirRights and underwritethe Shortfall
58.2%	58.2%	59.75%

Songpan Pty Limited

Songpan's currentvoting power inREA	Songpan's voting powerin REA if Rights Issue isfully subscribed	Songpan's voting powerin REA if only Songpanand News Limited takeup their Rights andunderwrite the Shortfall
12.7%	12.7%	13.02%

In summary, the voting power of News Limited and Songpan may slightly increase from their current levels in the event of any Shortfall under the Rights Issue.

$^1$ In preparing these figures, REA has taken into account the undertaking given by each of the Underwriters that neither Underwriter will acquire any Rights on-market.

$\overline{2}$ ACTION REQUIRED BY ELIGIBLE SHAREHOLDERS

$2.1$ What you may do

If you are an Eligible Shareholder, you may:

take up your Rights in full (see Section 2.2);
sell your Rights in full on ASX (see Section 2.3);
sell part of your Rights on ASX and take up the balance (see Section $(2.4)$ :
transfer all or part of your Rights to another person other than via ASX, with or without taking up the balance (see Section 2.5); or
do nothing in which case your Rights will lapse (see Section 2.6).

If you have questions about completing your Entitlement and Acceptance Form or the processing of your application, please contact the Share Registry on 1300 855 080 (within Australia) or +61 3 9415 4000.

Entitlements under the Rights Issue have been based upon holdings of Shares as at the Record Date. If you believe that you should have received a personalised Entitlement and Acceptance Form, and have not, or you have questions about completing your Entitlement and Acceptance Form or the processing of your application, please contact the Share Registry (see above).

$2.2$ If you wish to take up your Rights in full

If you are an Eligible Shareholder and you wish to take up all of your Rights, you must accept the offer by completing the personalised Entitlement and Acceptance Form mailed to you with this Prospectus. This form will detail your entitlement to New Shares under the Rights Issue. You should complete the form in accordance with the instructions set out on the reverse side of the form.

The completed Entitlement and Acceptance Form must be accompanied by a cheque or bank draft for the appropriate Application Monies calculated at $3.00 per New Share applied for. Please ensure that the completed Entitlement and Acceptance Form, together with your cheque, is received by the Share Registry:

Computershare Investor Services Pty Limited Level 3, 60 Carrington Street SYDNEY NSW 2000

Computershare Investor Services Pty Limited: GPO Box 253 SYDNEY NSW 2001

by not later than 7.00pm on 8 June 2006 or such later date as the Directors advise. Completed Entitlement and Acceptance Forms and Application Monies will not be accepted at REA's registered office. Cheques should be made payable to "REA Rights Issue Account" and crossed "Not Negotiable".

$2.3$ If you wish to sell your Rights in full on ASX

If you wish to sell all of your Rights on ASX, complete the section headed "Instructions to Stockbroker" on the back of the accompanying Entitlement and Acceptance Form and lodge the Entitlement and Acceptance Form with your stockbroker as soon as possible. Do not return your Entitlement and Acceptance Form to the Share Registry.

You can sell your Rights on ASX from 15 May 2006. All sales on ASX must be effected by the close of trading on 1 June 2006, when Rights trading ends on ASX.

REA does not accept any responsibility for any failure by your stockbroker to carry out your instructions.

$2.4$ If you wish to sell part of your Rights on ASX and take up the balance

If you wish to sell part of your Rights on ASX and take up the balance. complete the section headed "Instructions to your stockbroker" on the back of the accompanying Entitlement and Acceptance Form and lodge the Entitlement and Acceptance Form, together with your cheque or bank draft for the Application Monies for the New Shares for which you wish to subscribe, with your stockbroker as soon as possible. You must return your Entitlement and Acceptance Form to your Broker prior to it being sent to the Share Registry.

You can sell your Rights on ASX from 15 May 2006. Any sale of part of your Rights on ASX must be effected by close of trading on 1 June 2006. when Rights trading ends on ASX.

To take up the remaining part of your Rights, your stockbroker will need to ensure that the completed Entitlement and Acceptance Form reaches the Share Registry:

Computershare Investor Services Pty Limited Level 3, 60 Carrington Street SYDNEY NSW 2000

Computershare Investor Services Pty Limited; GPO Box 253 SYDNEY NSW 2001

REA does not accept any responsibility for any failure by your stockbroker to carry out your instructions.

2.5 If you wish to transfer all or part of your Rights to another person other than on ASX

Eligible Shareholders may elect to transfer all or part of their Rights to another person other than on ASX, provided that the purchaser is not resident in the United States.

If you hold Shares on the issuer-sponsored register or certificated subregister and you wish to transfer all or part of your Rights to another person other than on ASX, forward a completed renunciation form (which can be obtained through the Share Registry) signed by you (as the seller) and the buyer, together with your Entitlement and Acceptance Form completed by the buver and the buver's cheque or bank draft for the appropriate Application Monies to reach the Share Registry:

Computershare Investor Services Pty Limited Level 3, 60 Carrington Street SYDNEY NSW 2000

Computershare Investor Services Pty Limited; GPO Box 253 SYDNEY NSW 2001

By completing a renunciation form, a Shareholder will be deemed to have made the representations, warranties and agreements in the Entitlement and Acceptance Form.

If you are an Eligible Shareholder holding Shares on CHESS and you wish to transfer all or part of your Rights to another person other than on ASX. you should contact your sponsoring participant.

If the Share Registry receives both a completed renunciation form and a completed Entitlement and Acceptance Form in favour of the same Shareholder in respect of the same Rights, the renunciation will be given effect in priority to the acceptance.

$2.6$ If you do nothing

If you are an Eligible Shareholder and you do nothing by 7.00pm 8 June 2006, being the closing date, your Rights will form part of the Shortfall which will be taken up by the Underwriters and you will not receive any benefit.

However, you should consider selling (renouncing) your Rights or taking up your Rights, rather than doing nothing and allowing them to lapse.

$\overline{3}$ EFFECT OF THE RIGHTS ISSUE ON REA

$3.1$ Effects of the Rights Issue on REA's capital structure

At the date of this Prospectus, REA had 118,826,365 Shares on issue.

The number of New Shares issued pursuant to this Prospectus will be 8.338.692, or 6.6% of the issued capital of REA, and the total number of Shares on issue after the Rights Issue will be 127,255,057 on a fully diluted basis

REA has 90,000 Options on issue as at the date of this Prospectus.

As noted in Section 1.1 above, only Option holders who have exercised their Options and been issued Shares prior to the Record Date are entitled to participate in the Rights Issue. If all the Options that can be exercised (90,000 Options), are exercised before the Record Date, the maximum number of New Shares which could be issued under this Prospectus is unaltered (refer Section 1.1).

The pro-forma capital structure of REA following the Rights Issue is set out below:

Issued Capital	Number
Existing Shares	118,826,365
Existing Options	90,000
Existing issued capital fully diluted	118,916,365
Maximum number of New Shares to be issued	8,338,692
pursuant to this Prospectus
Total New Shares on issue after the Rights Issue	127,255,057
(fully diluted)

$3.2$ Tax Implications for REA

It is considered that no significant adverse Australian income tax or GST consequences should arise for REA as a result of the Rights Issue.

We note that these comments are limited to the taxation consequences for REA and do not address the taxation consequences that may arise for REA shareholders. Hence it is important that Existing Shareholders seek their own independent taxation advice, specific to their own circumstances.

$3.3$ Pro-Forma Consolidated Statement of Financial Position

Set out in this section 3.3 is the statement of financial position (i.e. balance sheet) as at 31 December 2005 (as extracted from the Appendix 4D Half Yearly Financial Report) and the summary pro-forma statement of financial position (i.e. balance sheet) as if the Rights Issue had occurred at 31 December 2005. Set out in sections 3.4 to 3.9 are explanatory notes regarding these statements of financial position.

BALANCE SHEETS AS AT 31 DECEMBER 2005

	Note	Pro formaConsolidatedBalance Sheet31 December 2005$'000	Pre Rights IssueConsolidatedBalance Sheet31 December 2005$'000
CURRENT ASSETSCashReceivablesOther	3.5(a)	4,8067,715713	6,0007,167693
TOTAL CURRENT ASSETS		13,234	13,860
NON-CURRENT ASSETSProperty, plant and equipmentDeferred income tax assetIntangible assetsGoodwill	3.83.7	2,6751,6018,92652,419	2,4991,6016,62038,707
TOTAL NON-CURRENT ASSETS		65,621	49,427
TOTAL ASSETS		78,855	63,287
CURRENT LIABILITIESPayablesInterest bearing loans and borrowingsProvisionsDerivativesOther	3.5(b)3.5(b)	4,9181318173,832	4,49610,4157153163,749
TOTAL CURRENT LIABILITIES		9,698	19,691
NON CURRENT LIABILITIESInterest bearing loans and borrowingsProvision for deferred income taxesOther Provisions		7912,593339	7911,903294
TOTAL NON-CURRENT LIABILITIES		3,723	2,988
TOTAL LIABILITIES		13,421	22,679
NET ASSETS		65,434	40,608
SHAREHOLDERS' EQUITYIssued CapitalOther ReservesRetained profitsParent interestsMinority interests	3.6	55,882(132)(7, 284)48,46616,968	31,056(132)(7, 284)23,64016,968
TOTAL SHAREHOLDERS' EQUITY		65,434	40,608

The pro forma balance sheet should be read in conjunction with the accompanying notes, with particular reference to the assumptions set out in the notes in Section 3.5.

$3.4$ Summary of significant accounting policies

Basis of preparation of the consolidated and pro forma balance sheets

The consolidated and proforma balance sheets of REA have been prepared in accordance with the recognition and measurement requirements but not all of the disclosure requirements of applicable Accounting Standards and other mandatory professional reporting requirements in Australia. They have been prepared on a historical cost basis, except for derivative financial instruments that have been measured at fair value

Principles of compilation and consolidation

The consolidated proforma balance sheet reflects the financial position of REA at 31 December 2005 as if the Rights Issue proceeds and settlement of outstanding loans had occurred on that date. It also incorporates the impact of the acquisitions of PropertyLook and HubOnline (both acquired post 31 December 2005) as if the acquisitions had occurred on that date.

$3.5$ Assumptions used in compiling the Proforma Consolidated Balance Sheet

The proforma consolidated balance sheet has been prepared to reflect the financial position of REA as at 31 December 2005 after accounting for material transactions subsequent to year end that are associated with the Rights Issue, changes to the group structure or those that are considered once off such that an exclusion would mislead the proposed readers of the financial statements. The proforma consolidated balance sheet has been compiled as if the following transactions and events had occurred at 31 December 2005.

the issue of 8,338,692 shares at $3.00 each to the shareholders pursuant to the Prospectus to raise $25,016,076.
the payment of costs incurred by REA in relation to the Rights Issue and the Prospectus estimated to be $190,000.
the repayment of a related party loan (News International) and attached derivative instrument totalling $10.62 million as at 31 December 2005
the acquisition of PropertyLook estimated to be $9.05 million before costs incurred on acquisition.
the acquisition of HubOnline estimated to be $6.00 million before costs incurred on acquisition.

Cash $(a)$

Cash reconciled as follows:	$'000
Cash held as at 31 December 2005 as per pre rights issue consolidatedbalance sheet	6,000
Proceeds due to REA from rights issue (Section 3.5(c))Repayment of shareholder loans and derivative instrument (Section 3.5(b))Acquisition of PropertyLook including acquisition costsAcquisition of HubOnline including acquisition costsCost of rights issue (Section $3.5(c)$ )	25,016(10, 620)(9,200)(6, 200)(190)
Cash held as per 31 December 2005 proforma consolidated balance sheet	4.806

$(b)$ Settlement of loan balances

The following schedule shows the related party loans and borrowings that REA will pay from the proceeds of the rights issue. These transactions are reflected in the proforma consolidated balance sheet and accompanying notes to the report.

Interest Bearing loans and borrowings	$'000
Opening balance of related party loanOpening balance of derivative instrumentRepayment of related party loan and derivative instrument	10,314316(10,620)
Closing balance of related party loan and related derivative instrument
Share Capital(c)
	$'000
Issued capital as at 31 December 2005	31,056
Rights Issue to the Public	25,016
Pursuant to the Offer under this Prospectus, 8,338,692 shares at $3.00 will beissued
Issue Costs	(190)
Issue costs have been offset against funds raised and are directly attributable tothe cost of the rights issue
Issued capital as per 31 December 2005 proforma consolidated balance sheet	55,882

$3.6$ Share Capital

	Proforma ConsolidatedBalance Sheet		Pre Rights IssueConsolidated Balance Sheet
	Number ofshares	31/12/05	Number ofshares	31/12/05
		$'000		$'000
Issued capital of consolidated entities	118,030,365	31.056	118,030,365	31,056
Share issue under this Prospectus (seeSection $3.5(c)$ )	8,338,692	25,016
Issue costs		(190)
Total issued capital	126,369,057	55.882	118,030,365	31,056

$3.7$ Goodwill

The following schedule shows the increase in goodwill as a result of the acquisitions of PropertyLook and HubOnline

	$'000
Goodwill as at 31 December 2005 as per pre rights issue consolidatedbalance sheet	38,707
Goodwill arising on acquisition of PropertyLookGoodwill arising on acquisition of HubOnline	8.1095.603
Goodwill as per 31 December 2005 proforma consolidated balance sheet	52.419

$3.8$ Intangible Assets

The following schedule shows the increase in intangible assets arising as a result of the acquisitions of PropertyLook and HubOnline

	$'000
Intangible assets as at 31 December 2005 as per pre rights issueconsolidated balance sheet	6,620
Software and related intellectual property in HubOnline 2Customer contracts in PropertyLook 3	1,0061,300
Intangible assets as per 31 December 2005 proforma consolidated balance sheet	8.926

$\frac{2}{3}$ Intellectual property held in HubOnline is to be amortised over three years. $\frac{3}{3}$ Intellectual property held in PropertyLook is to be amortised over five years.

$3.9$ Acquisitions

Subsequent to 31 December 2005, REA has purchased:

100% of the share capital of PropertyLook for $9.050 million (prior to costs $(a)$ incurred on acquisition). The purchase date as announced to the ASX was 21 April 2006; and
85.3% of the securities of HubOnline. REA has agreed to purchase all of $(b)$ the issued securities in HubOnline for $6.000 million (prior to costs incurred on acquisition). The remaining 14.7% is to be acquired upon reinstatement of the registration of three shareholding companies. This purchase was announced to the ASX on 1 May 2006.

PropertyLook is to be consolidated into the books and records of REA from 4 May 2006 following the adoption of Completion Accounts (yet to be completed). HubOnline is to be consolidated into the books and records of REA from 5 May 2006 following the adoption of Completion Accounts (vet to be completed).

The following schedule shows an abbreviated profit and loss account for both entities up to 31 December 2005.

PropertyLook	Audited Profit andLoss Account forthe year ended31 December 2005$'000	Audited Profit andLoss Account forthe year ended31 December 2004$'000
Sales Revenue from ordinary activities	1,427	1,274
Employee ExpensesMarketing ExpensesDepreciation ExpensesOther Expenses	740155110367	63082115360
Total Expenses	1,372	1,187
Net Profit before income tax expense	59	87
Income tax expense
Net Profit after tax expense	59	87

HubOnline	Unaudited Profit andLoss Account for thesix months ended31 December 2005$'000	Unaudited Profitand Loss Accountfor the year ended30 June 2005$'000
Sales Revenue from ordinary activities	730	1,050
Employee ExpensesWebsite ExpensesDepreciation ExpensesOther ExpensesTotal Expenses	4433613244736	1,06674303811,551
Net Profit/(Loss) before income tax expense	(6)	(501)
Income tax expense		(178)
R&D Tax Credit		621
Net Profit after tax expense	(6)	(58)

EII FRNST & YOU INC.

Independent Accountant's Report $3.10$

[insert EY letterhead]

10 May 2006

The Directors realestate.com.au Limited Level2 678 Victoria Street RICHMOND VIC 3121

Dear Sirs

Independent Accountant's Report

$\mathbf{1}$ . Introduction

The Directors of realestate.com.au Limited ("REA" or "the Company") have requested Ernst & Young to report on the historical financial information as at 31 December 2005 and the pro forma statement of financial position as at 31 December 2005. This report has been prepared for inclusion in a prospectus ("the Prospectus") to be dated on or about 10 May 2006 relating to the offer by REA of approximately 8,338,692 new shares at $3.00 each to shareholders. The amount to be raised in the Capital Raising is $25,016,076. ("Rights Issue").

The Rights Issue is jointly underwritten by News Limited and Songpan.

$21$ Background Information

REA listed on the Australian Stock Exchange Limited ("ASX") on 1 December 1999 after a successful initial public offering. Since listing on the ASX, REA has continued to grow organically and via acquisition.

The REA business unit sells classified and display advertising on the realestate.com.au website to residential real estate agents, property developers and non-real estate industry advertisers. This includes the provision of internet and technology solutions such as web site design and development.

On 2 August 2005, News Limited launched a takeover bid for the shares of REA. As at the date of the Rights Issue. News Limited is a majority shareholder of REA, holding 58.18%.

The purpose of the Rights Issue is to enable the Company to:

repay the remaining amount of a bridging loan made by News International to REA to partially fund REA's share of the purchase price of Propertyfinder.com;
fund the acquisition of HubOnline:

Firmst & Young Building 8 Exhibition Street Melboarne VIC 3000 Australia

GPO Box 67 Melbourne VIC 3001 ■ Tel 61 3 9288 8000 Fax 61 3 8650 2222

to repay bridging finance taken up by REA to partially fund the acquisition of PropertyLook: and
to replenish REA's working capital reserves used to fund the balance of the purchase price in relation to the acquisition of PropertyLook.

Ernst & Young are the statutory auditors of REA and we have issued an unqualified audit opinion on the statutory report of REA for the financial year ended 30 June 2005 and unqualified review opinion on the financial report of REA for the half year ended 31 December 2005.

$\overline{3}$ Scope of the Report

Financial Half-Year Ended 31 December 2005

We have reviewed the historical financial report of REA for the financial half-year ended 31 December 2005 as set out in Section 3.3 of the Prospectus. The Directors of REA are responsible for the financial report for the half-year ended 31 December 2005.

We conducted an independent review of the financial report in order to make a statement about it to the members of the company, and in order for the company to lodge the financial report with the ASX and the Australian Securities and Investments Commission.

Our review was conducted in accordance with Australian Auditing Standards applicable to review engagements, in order to state whether, on the basis of the procedures described, anything has come to our attention that would indicate that the financial report is not presented fairly in accordance with the Corporations Act 2001. Accounting Standard AASB 134 "Interim Financial Reporting" and other mandatory professional reporting requirements in Australia, and the ASX Listing Rules as they relate to Appendix 4D, so as to present a view which is consistent with our understanding of the consolidated entity's financial position, and of its performance as represented by the results of its operations and cash flows.

A review is limited primarily to inquiries of company personnel and analytical procedures applied to the financial data. These procedures do not provide all the evidence that would be required in an audit, thus the level of assurance is less than given in an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

Pro Forma Statement of Financial Position as at 31 December 2005

We have performed an independent review of the pro forma statement of financial position of REA as at 31 December 2005 as set out in Section 3.3 of the Prospectus. The Directors of REA are responsible for the pro forma statement of financial position. Our review of the financial information does not extend to the historical profit and loss account of PropertyLook and HubOnline as disclosed in Section 3.9 to the pro forma financial report.

The purpose of the pro forma statement of financial position is to show the financial effects on the Company as if the following transactions had taken place as at 31 December 2005:

the issue of 8,338,692 shares at $3.00 each to the shareholders pursuant to the Prospectus to raise $25,016,076.

the payment of costs incurred by REA in relation to the Rights Issue and the Prospectus estimated to be $190,000.
the repayment of a related party loan (News International Ltd) taken out by REA in anticipation of the Rights Issue and attached derivative instrument totalling $10.62 million as at 31 December 2005.
the acquisition of PropertyLook estimated to be $9.05 million before costs incurred on acquisition.
the acquisition of the HubOnline estimated to be $6.00 million before costs incurred on acquisition.

We have reviewed the pro forma statement of financial position in order to state whether, on the basis of the procedures described, anything has come to our attention that would indicate that the pro forma statement of financial position is not presented fairly in accordance with the measurement and recognition requirements, but not all the disclosure requirements, of applicable Accounting Standards and other mandatory professional reporting requirements in Australia, as if the transactions set out in Section 3.3 of the Prospectus had taken place as at 31 December 2005.

Our review also determined whether the proposed transactions formed a reasonable basis for the preparation of the pro forma statement of financial position.

Our review has been conducted in accordance with Australian Auditing Standard AUS 902 "Review of Financial Reports" and was limited to enquiries of the Directors and personnel of REA, reading of minutes of meetings of the Board of REA and relevant contracts, analytical review procedures applied to the financial data, the performance of limited verification procedures, and comparison for consistency in application of accounting standards and policies.

These review procedures do not provide all the evidence that would be required in an audit, thus the level of assurance provided is less than that given in an audit. We have not performed an audit and accordingly, we do not express an audit opinion on the proforma statement of financial position.

$\mathbf{A}$ Statements

Half-Year Ended 31 December 2005

Based on the scope of our review, which is not an audit, nothing has come to our attention that causes us to believe that the historical financial report as at 31 December 2005 as set out in Section 3.3 of the Prospectus, does not present fairly, in accordance with the measurement and recognition requirements, but not all the disclosure requirements of applicable Accounting Standards and other mandatory reporting requirements in Australia, the financial position of REA as at 31 December 2005 and its performance for the half-year ended 31 December 2005.

Pro Forma Statement of Financial Position at 31 December 2005

Based on the scope of our review, which is not an audit, nothing has come to our attention that would require any modification to the pro forma statement of financial position of REA, as set out in Section 3.3 of the Prospectus in order for it to present fairly the financial position of REA as at 31 December 2005 on the basis of the

assumptions stated in Section 3.5 of the Prospectus and in accordance with the measurement and recognition requirements, but not all the disclosure requirements, of applicable Accounting Standards and other mandatory professional reporting requirements in Australia, had the material transactions in Section 3.5 of the Prospectus taken place as at 31 December 2005. Our review of the financial information does not extend to the historical profit and loss account of PropertyLook and HubOnline as disclosed in Section 3.9 to the pro forma financial report.

5. Subsequent Events

To the best of our knowledge and belief, and based on the work we have performed as described in the scope paragraph above, there have been no material transactions or events subsequent to 31 December 2005, other than those included in our report, which would require comment on, or adjustment to, the financial information referred to in our report or that would cause such information included in this report to be misleading.

6. Disclosures

Ernst & Young does not have any pecuniary interests that could reasonably be regarded as being capable of affecting its ability to give an unbiased opinion in relation to this matter. Ernst & Young is the ongoing auditor and tax advisor of the Company and will receive a professional fee for the preparation of this report.

The Directors have agreed to indemnify and hold harmless Ernst & Young and its employees from any claims arising out of the misstatement or omission in any material or information supplied by the Directors.

Consent for the inclusion of the Independent Accountant's Report in the Prospectus in the form and context in which it appears has been given. At the date of this report consent has not been withdrawn.

Yours faithfully

Brownly

Ernst & Young

Don Brumley Partner

Ernst & Young

4 RISK FACTORS

REA is subject to a number of risks and other factors that may impact both on its future performance and the market price at which its Shares trade. Broadly, these risks can be classified as risks general to investing in the stock market and risks specific to an investment in REA.

The New Shares issued under this Prospectus do not carry any quarantee of profitability, dividends or the price at which they trade on ASX. The Directors consider that the following summary, which is not exhaustive, represents some of the major risk factors of which investors need to be aware. However, before taking up any Rights or investing in REA, the Directors strongly recommend investors examine the contents of this Prospectus in its entirety and consult their professional advisers before deciding whether to subscribe for New Shares pursuant to this Prospectus.

4.1 General

As with all stock market investments, there are risks associated with an investment in REA. Share prices may rise or fall and the price of shares might trade below or above the issue price for the New Shares under this Prospectus.

General factors that may affect the market price of REA shares include:

economic conditions in both Australia and internationally:
investor sentiment and local and international share market conditions:
changes in interest rates and the rate of inflation; $\bullet$
changes to government regulation, policy or legislation;
changes in exchange rates; and
the nature of competition in the industry in which REA operates.

$4.2$ Specific risks relating to REA

$(a)$ Industry risks

REA is a media company utilising the Internet as its primary delivery mechanism. The Internet is a relatively new business medium with low technology barriers to entry. Competition may arise from a number of sources and may include companies with greater capital resources. While REA believes that the strength of its brand, its clear market leadership, the large number of consumers and advertisers already using the service, its relationship with the real estate industry and the quality of its service offering limit the impact of existing and future competition, no assurances can be given that such competition will not arise.

$(b)$ Managing Rapid Growth

REA is continuing to experience rapid growth in the number of advertisers and visitors to its website. To manage this growth effectively, REA will be required to continue to improve its technology infrastructure, its operating and financial systems, and to expand, train and manage its employee base.

Risks associated with REA business model $(c)$

REA's business is dependent on the ongoing maintenance of the web infrastructure to provide the necessary data speed, capacity and security to allow REA to offer a viable service. The Directors consider that the World Wide Web has experienced significant growth in numbers of users and amount of traffic. To the extent that the web continues to experience increased numbers of users, there can be no assurance that the web infrastructure will continue to be able to support the demands placed on it by continued growth.

The performance of www.realestate.com.au website is very important to REA's reputation, its ability to attract customers and ability to achieve overall market acceptance of its services. Any system failure that causes an interruption or increased response time to REA's services could affect its business. System failures, if prolonged, could reduce the attractiveness of REA's services to clients and visitors to the Internet site. REA has clearly defined and tested disaster recovery processes in place to mitigate the impact of any outage.

REA's business is partially dependent on the state of the real estate market in Australia, New Zealand, and the United Kingdom. It is dependent on the number of offices operating in these markets as this is a driver of subscriptions and on the number of properties for sale and for rent as this is a key driver of additional advertising revenues. This market is subject to factors outside the control of REA including the general market outlook for economic growth and interest rates.

Significant effort is directed towards attracting and retaining a quality workforce and minimising the risk of turnover, particularly amongst key personnel and key elements of REA's workforce. However, REA's business could be materially prejudiced if REA loses access to key personnel or if REA is unable to attract and retain highly skilled and qualified personnel in the future.

$(d)$ Key Personnel

Whilst every effort is made to retain key employees and contractors, the Board considers that the loss of key personnel may adversely affect the earnings or growth prospects of REA.

Mr Baker is considered to be a key person. Mr Baker has recently been appointed as a Director of REA and currently has an employment contract with REA for a duration of two years. Mr Baker was Chief Executive Officer of REA for five vears prior to being appointed Managing Director of REA. Mr Baker's employment contract with REA expires on 30 June 2007.

5. ADDITIONAL INFORMATION

$5.1$ Transaction Specific Prospectus

Disclosing entities are, pursuant to the Corporations Act, entitled to issue a prospectus satisfying the test set out in section 713 of the Corporations Act where the securities offered by the prospectus are "continuously quoted securities" as defined in section 9 of the Corporations Act. Such a prospectus is referred to as a "transaction specific" prospectus.

This Prospectus is a "transaction specific" prospectus, issued pursuant to section 713 of the Corporations Act. In addition to formal matters, a transaction specific prospectus need only contain information relating to the terms and conditions of the Rights Issue and all such information which investors and their professional advisers would reasonably require, and reasonably expect to find in the Prospectus, for the purpose of making an informed assessment of:

the effect of the Rights Issue on REA; and $(a)$
the rights and liabilities attaching to the New Shares. $(b)$

Section 713 also requires a "transaction specific" prospectus to contain certain information excluded from continuous disclosure under the Listing Rules. REA has not excluded any such information from disclosure under the Listing Rules and this requirement is therefore not relevant to this Prospectus.

$5.2$ Continuous Disclosure and Documents Available for Inspection

REA is a "disclosing entity" for the purposes of section 111AC of the Corporations Act. As such, it is subject to regular reporting and disclosure obligations. These disclosure obligations require REA to disclose to the ASX any information that a reasonable person would expect to have a material affect on the price or value of the securities of REA.

REA believes that it has complied with the requirements of the ASX (as applicable from time to time throughout the 12 months before the issue of this Prospectus) which require REA to notify ASX of information about specified events or matters as they arise for the purpose of ASX making that information available to the stock market conducted by ASX.

Copies of documents lodged with ASIC in relation to REA may be obtained from, or inspected at, an office of ASIC.

REA will provide a copy of the following documents free of charge, to any person who requests a copy during the period in which the rights Issue remains open:

$(a)$ the annual financial report for the financial year ended 30 June 2005 (being the last annual financial report to be lodged with ASIC by REA before the issue of this Prospectus):

$(b)$ the half-year financial report lodged with ASIC after lodgment of the annual financial report and before the lodgment of the copy of this prospectus with ASIC; and
all continuous disclosure notices given by REA to ASX since $(c)$ the lodgement of the annual financial report referred to in paragraph (a) above and before the lodgement of this Prospectus with ASIC, being the following documents:

Date lodged	Document description
05/05/2006	Chief Executive Officer Remuneration Package
21/04/2006	Acquires PropertyLook
13/04/2006	Appendix 3B
07/04/2006	Initial Director's Interest Notice
05/04/2006	Simon Baker Appointed to Board
05/04/2006	Final Director's Interest Notice
05/04/2006	Director Resignation
17/03/2006	Appendix 3B
15/03/2006	In formal discussions to acquire PropertyLook
03/03/2006	ZSP: March Quarterly Rebalance to the S&P/ASX Indices
27/02/2006	Appendix 3B
22/02/2006	Half Yearly Report & Half Year Accounts
25/01/2006	Appendix 3B
23/12/2005	FY 2006 Forecast Update
13/12/2005	Change in substantial holding from NWS
12/12/2005	Appendix 3B
22/11/2005	Appendix 3B
17/11/2005	Results of Meeting
14/11/2005	Change in substantial holding from NWS
10/11/2005	Change in substantial holding from NWS
09/11/2005	Independent Directors Still Reject News
08/11/2005	Ceasing to be a substantial holder
04/11/2005	Intended Director Resignation
02/11/2005	REA & NWS jointly acquire Propertyfinder.com
01/11/2005	Letter to Shareholders re Extension of Takeover Offer
31/10/2005	NWS: News Ltd has more than 50% of realestate.com.au
	Ltd
25/10/2005	HWG: Signs exclusive agreement with Accipiter
24/10/2005	Supplementary Target's Statement
21/10/2005	Independent Directors REJECT the News Limited offer
21/10/2005	Amended Proxy Form
18/10/2005	Independent Directors advise take no action
18/10/2005	Appendix 3B
18/10/2005	Increase in T/O Bid/4th Supplementary Bidder's
	Statement
18/10/2005	Notice of Annual General Meeting

If investors require any further information in relation to REA, the Directors recommend that they take advantage of the ability to inspect or obtain copies of the document referred to above. Requests for copies of the above documents should be made to REA's Company Secretary, Mr Nick Geddes, on telephone + 61 2 9252 1933.

53 Rights attaching to REA Shares

There is only one class of shares on issue in REA being fully paid ordinary shares. REA also has on issue Options over fully paid ordinary shares.

The rights attaching to Shares are:

set out in the Constitution; and $(a)$
$(b)$ in certain circumstances, regulated by the Corporations Act, the Listing Rules, the ASTC Settlement Rules and the general law.

The following is a summary of the principal rights of the holders of the Shares

Votina

Subject to the Constitution, at a general meeting:

$(a)$ on a show of hands, every member present as one vote;
$(b)$ on a poll, every member present has:
- $(i)$ one vote for each fully paid share held by the member and in respect of which the member is entitled vote: and
- $(iii)$ a fraction of a vote for each partly paid share held by the member and in respect of which the member is entitled to vote, equivalent to the proportion which the amount paid (not credited) on the share bears to the total amounts paid and payable (excluding amounts credited) on the share (an amount paid on a share in advance of a call is to be ignored).

Subject to the Constitution, each member entitled to vote at a meeting of members may vote in person, or whether a member is a body corporate, by its representative, by proxy or, if the member is entitled to cast two or more votes at the meeting, by not more than two proxies; or by not more than two attorneys.

Dividends

The Directors may pay any interim and final dividends as, in their judgment, the financial position of the company justifies.

Subject to any rights or restrictions attached to a share or class of shares all dividends in respect of a share must be paid in the proportion which the amount paid (not credited) on the share bears to the total amounts paid and payable (excluding amounts credited) on the share.

Transfer of Shares

Subject to the Constitution and to the rights or restrictions attached to any shares or class of shares, a member may transfer all or any of the member's shares by:

by proper ASTC transfer; or $(a)$
by instrument in writing in any usual form or in any other form $(b)$ that the Directors approve.

The Directors may ask ASTC to apply a holding lock to prevent a proper ASTC transfer or may decline to register an instrument of transfer in the circumstances permitted unde the Listing Rules or ASTC Settlement Rules. as applicable or where the transfer is not in registrable form.

Meetings and Notice

Notice of every general meeting must be given in the manner authorised by the Constitution and in accordance with the Corporations Act to every member.

Winding up

Subject to the Constitution and to the rights and restrictions attached to any shares or class of shares, if REA is wound up and the property of REA is more than sufficient to pay all of the debts and liabilities of REA and the costs, charges and expenses of the winding up, the excess must be divided among the members in proportion to the shares held by them, irrespective of the amounts paid or credited as paid on the shares.

If REA is wound up, the liquidator may, with the sanction of a special resolution divide among the members the whole or any part of the property of REA and determine how the division is to be carried out as between the members or different classes of members.

Shareholder Liability

As the New Shares are fully paid shares, they are not subject to any calls for money by the Directors and will therefore not become liable for forfeiture

54 Underwriting Agreement

REA and the Underwriters entered into an Underwriting Agreement on 10 May 2006, under which the Underwriters have severally agreed to:

$(a)$ apply for the whole of their respective entitlement to the New Shares under the Rights Issue; and
$(b)$ underwrite any Shortfall at no charge to REA, in the proportions that the Underwriters' respective shareholdings in REA (as at 5.00 pm on the Record Date) bear to each other.

The Underwriting Agreement contains all the usual representations. warranties and undertakings including in relation to compliance with statutory requirements and REA's constitution and regarding REA's conduct of the Rights Issue.

Subject to certain exclusions, relating to, among other things, wilful misconduct, fraud or negligence, REA has undertaken to keep the Underwriters and certain affiliated parties indemnified from losses suffered in connection with:

$(a)$ any false or misleading statement in or any omission from this Prospectus:
any false or misleading statement in or any omission from any $(b)$ information, announcement, advertisement or publicity in relation to this Prospectus or the Rights Issue:
- $(i)$ made or distributed by REA; or
- $(i)$ made or distributed by the Underwriters with REA's consent or knowledge;
$(c)$ any non-compliance by REA with the Corporations Act, the ASX Listing Rules or any other legal obligation in relation to the Rights Issue or this Prospectus; or
$(d)$ any breach by REA of its representations, warranties and undertakings in the Underwriting Agreement.

Either or both of the Underwriters may terminate their respective underwriting obligations at any time before the issue of the shares under this Prospectus if any one or more of the termination events set out below occurs:

$(a)$ the Underwriters become aware of any information in this Prospectus or any supplementary prospectus which is untrue, incorrect or misleading in its contents in a material manner or the Underwriters become aware that there is an omission from or non-disclosure in this Prospectus and that defect is not remedied by REA within 7 days after the Underwriters becoming so aware and notifying REA, unless the Underwriters were aware of or caused the misrepresentation or omission; or
$(b)$ any material default by REA or any of its Related Bodies Corporate in the performance of its obligations under the Underwriting Agreement or any material breach by REA of any warranty or covenant given by REA under the Underwriting Agreement and which default or breach is not remedied by REA within 7 days after the breach or default; or
$(c)$ except as publicly announced to the ASX prior to the date of the Underwriting Agreement, no event has happened since 30 June 2005 and no event happens before the Closing Date which results in or is reasonably likely to result in a material adverse change in the business, assets, liabilities, financial or trading

position or prospects of, or status of any material contracts entered into with, REA or any of its Related Bodies Corporate; or

$(d)$ at any time before the Closing Date, REA or any of its Related Bodies Corporate:
- $(i)$ is or becomes unable to pay its debts when they are due or is or becomes unable to pay its debts within the meaning of the Corporations Act or is presumed to be insolvent under the Corporations Act;
- $(ii)$ is wound up; or
- is placed in administration or a receiver and $(iii)$ manager of any of its assets is appointed,

where such event results from circumstances that arise independently of an act or omission by an Underwriter: or

$(e)$ any of the following applications or notifications is made:
- $(i)$ ASIC issues an order under section 739 of the Corporations Act in relation to the Rights Issue or Prospectus and that order is not lifted within 7 days of being made;
- ASIC commences an investigation or hearing under $(i)$ Part 3 of the Australian Securities and Investments Commission Act 1989 (Cth)_in relation to the Rights Issue and that investigation or hearing is not discontinued or is not determined in favour of REA within 7 days:
- $(iii)$ any person gives a notice under section 730 of the Corporations Act in relation to this Prospectus and the defect giving rise to the notice is not remedied within 7 days after the notice is given;
- $(iv)$ any person other than the Underwriters who has previously consented to the inclusion of its name in this Prospectus withdraws that consent and the defect giving rise to the withdrawal of consent is not remedied within 7 davs of the withdrawal of the consent: or
- the Takeovers Panel makes a declaration that $(v)$ circumstances in relation to REA's affairs are unacceptable circumstances under Part 6.10 of the Corporations Act or an application for such a declaration is made to the Takeovers Panel, other than arising out of the conduct of the Underwriters. and that application is not dismissed within 14 days after being made or such longer period as the Underwriters may agree.

5.5 Other underwriting options

The REA board sought underwriting proposals from two commercial underwriters, both of whom would have charged underwriting fees. The Underwriters submitted a proposal which would not require REA to pay any underwriting commission or any fees or charges. A committee of the REA board comprising Mr Martin Hoffman (succeeded by Mr Simon Baker, following Mr Hoffman's resignation from the Board of REA, and Mr Baker's appointment as Managing Director) and Mr John McGrath, both of whom are independent of the Underwriters, was established. This committee considered that the proposal submitted by the Underwriters was superior and were satisfied that the terms of the underwriting agreement were more favourable to REA than would be reasonable in the circumstances of REA and the Underwriters were clearly at arm's length.

5.6 Litigation

REA is not a party to any current material litigation and the Directors have no knowledge of any potential material litigation.

5.7 Other Material Contracts

$(a)$ Loan Agreement

As noted in Section 1.2, the funds raised by the Rights Issue will be used to repay advances made by News International to REA. On 1 November 2005, REA and News International entered into a loan agreement under which News International agreed to advance up to £7.550,000 to REA. REA has entered into a hedging arrangement with the National Australia Bank to ensure that the moneys payable under the Loan Agreement are hedged against foreign currency movements.

As at 30 April 2006, the loan balance was £4,462,029.23 ($10,848,600.12) including accrued interest.

REA entered into the Loan Agreement to obtain finance to proceed with the PropertyFinder acquisition. The Loan Agreement is of a standard form and will cease without penalty once the funds pursuant to this Prospectus are raised and paid to News International.

The key terms of the Loan Agreement are as follows:

Principal: £7,550,000. $(i)$
Interest: 2% over the base-lending rate of The Bank $(i)$ of England from time to time. Interest accrues daily and is payable in arrears on the date for repayment.
Repayment: The last day for repayment of the loan $(iii)$ is 30 June 2006. If all advances together with accrued interest, have not been paid in full on or before this date, the interest payable on any amounts outstanding increases to 5% over the base-lending rate of The Bank of England. compounded monthly.
$(iv)$ Prepayment: REA may prepay any amounts outstanding under the Loan Agreement in whole or in part (without any premium or fee), provided that REA gives News International not less than 5 business days notice in writing of its intention to make such prepayment. REA must also pay to News International accrued interest on the prepaid amount to the date of actual payment.
$(v)$ Representations and warranties: REA provides representations and warranties (on execution of the Loan Agreement and again on the date of each draw down) typical in a loan agreement including that REA is duly incorporated and has the power and authority to enter into and perform the Loan Agreement and that no event of default or potential event of default has occurred, is continuing or may result from drawing down under the loan agreement.
$(vi)$ Events of default: An event of default will occur in circumstances including where the Loan Agreement or any provision of the Loan Agreement becomes invalid or unenforceable or it comes unlawful at any time for REA to perform all or any of its obligations under the Loan Agreement. Other events of default include the typical events of default relating to REA's solvency.
- $(vii)$ Acceleration following event of default: If an event of default occurs and is continuing. News International can give notice to REA that the outstanding amounts owing under the loan and all interest are immediately due and payable or are payable on demand. Where notice is given in this way, the rate of interest payable on any amounts outstanding under the loan agreement after the date of such notice shall be 5% over the base-lending rate of The Bank of England from time to time.
- (viii) Governing law: The loan agreement is governed by and construed in accordance with English law.

$(b)$ HubOnline Share Sale Deed

On 28 April 2006, REA entered into a share sale deed to purchase all the issued securities in HubOnline. HubOnline holds all the issued shares in Web Effect. Completion of the acquisition of 85.3% of the issued securities of HubOnline occurred on 5 May 2006.

At the date of the share sale deed, three companies, Hermanus Pty Ltd. Mild Online Pty Ltd and Rahman Securities Limited, formerly shareholders in HubOnline, had been deregistered. Prior to their deregistration, these companies held 14.7% of all the issued shares in the capital of the HubOnline.

The previous shareholders of Hermanus Pty Ltd and Mild Online Pty Ltd have agreed to use their best endeavours to procure the transfer of the outstanding 13.2% of shares in HubOnline to REA, as early as possible.

After execution of the Share Sale Deed the parties ascertained that the holder of 1.5% of the issued securities in HubOnline, Rahman Securities Limited, a British Virgin Islands registered company had been deregistered. The parties entered into an Amending Deed dated 5 May 2006 amending the Share Sale Deed to provide for the previous beneficial shareholder of Rahman Securities Limited to similarly use his best endeavours to procure the transfer of the outstanding shares in HubOnline to REA as soon as possible.

The purchase price of HubOnline may be altered depending on the sales figures for HubOnline and Web Effect.

The purchase price of the HubOnline is to be paid in a number of instalments

The Share Sale Deed contains extensive warranties in relation to the business and assets of HubOnline. The liability of the sellers for breach of warranty has been limited in a number of ways, including:

each sellers' maximum liability is limited to the total consideration pavable to that seller: and
all warranty claims which do not relate to tax are required to be lodged by REA by 31 December 2007.

$(c)$ NAB Facility Agreement

REA has entered into a revolving senior debt standby facility with NAB, Netwide Solutions and property com au for the purposes of assisting with bridge funding for the PropertyLook acquisition and for general working capital purposes.

The NAB Facility Agreement has an aggregate limit of $10 million (with a sublimit of $2 million for working capital) and a term of 364 days. Interest is payable quarterly in arrears.

REA, Netwide Solutions and property com au are subject to a deed of quarantee and indemnity in which each company has agreed to quarantee the obligations of the others.

5.8 Expenses

The expenses of the Rights Issue payable by the Company, including legal and accounting fees and share registry costs, are estimated to amount to approximately $190,000 as described below:

Entity	Estimated Costs
Financial Adviser	25,750
Legal Adviser - Kemp Strang	70,000
Accounting Adviser - Ernst & Young Australia	35,000

Entity	Estimated Costs
Tax Adviser - Australia - Ernst & Young Australia	27,000
Tax Adviser – UK – Ernst & Young, LLP	2,500
Printer Costs	5,610
ASIC/ASX	16,345
Other related expenses	8,200
Total	190,405

5.9 Interests of Directors

Except as disclosed in this Prospectus:

no Director (nor any entity with which a REA Director is $(a)$ associated) or promoter of REA has or had within two years before the date of this Prospectus, any interest in:
- the formation or promotion of REA; $(i)$
- $(ii)$ property acquired or proposed to be acquired by REA in connection with its formation, promotion or the Rights Issue:
- $(iii)$ the Rights Issue.
$(b)$ no amount has been paid or agreed to be paid and no benefit has been given or agreed to be given to any Director either to induce him to become, or to qualify him as a Director or otherwise for services rendered by him in connection with the formation or promotion of REA or the Rights Issue.

5.10 Directors' Interests in Securities

As at the date of this Prospectus, the Directors' interests in the securities of RFA are as follows:

Director	No. of Shares
John D McGrath 1	2,139,086
Alasdair Macleod	Nil
Stephen P Rue	Nil
Sam R White 2	15,128,817
Simon Baker 3	3,623,600

Notes

1. 2,039,086 Shares are registered in the name of Fondorru Pty Limited. Mr McGrath is the sole Director and shareholder of Fondorru Pty Limited. 100,000 Shares are registered in the name of Goodhope Realty Pty Limited. Mr McGrath is the sole Director and McGrath Limited is the sole shareholder of Goodhope Realty Pty Limited. Mr McGrath has a relevant interest in 80% of McGrath Limited.
1. 15,068,817 Shares are registered in the name of Songpan Pty Limited. Mr Sam White is the legal and beneficial owner of 100% of the securities in Jespin Investments Pty Limited which owns 33.33% of Reva Group Holdings Pty Limited, which is the ultimate parent company of and controls Songpan Pty Limited. Denzel Pty Limited and Wilabee Investments Pty Limited hold the remaining 66.66% of Reva Group Holdings Pty Limited equally. Mr Brian White is the legal and beneficial owner of 100% of the securities in

both Denzel Pty Limited and Wilabee Investments Pty Limited. 60,000 Shares are registered in Mr Sam White's name. In addition, Mr Brian White (Mr Sam White's father) is the beneficial owner of shares in Sanben Superannuation Pty Limited which holds 818.750 Shares

1.026.500 Shares are registered in the name of STB Holdings Pty Ltd ACN 088 408 379. Mr Baker is the sole Director and shareholder of STB Holdings Pty Ltd. 312,000 Shares are registered in the name of ST + M Super Fund.

No Directors have an interest in any Options.

Directors will be eligible to participate in the Rights Issue. News Limited and Songpan are Underwriters for the Rights Issue.

5.11 Interests of advisers

News Limited4 and Songpan have acted as Underwriters for the Rights Issue and will not receive any fees for so acting.

Except as set out elsewhere in this prospectus, no person named in this Prospectus as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of this Prospectus, promoter, or stockbroker to REA or an Underwriter has, or had within two vears before lodgement of this Prospectus with ASX any interest in:

the formation or promotion of REA; $(a)$
property acquired or proposed to be acquired by REA in $(b)$ connection with its formation, promotion or the Rights Issue:
$(c)$ the Rights Issue

and no amounts have been paid or agreed to be paid and no benefits have been given or agreed to be given to any of those persons for services rendered by him or her in connection with the formation or promotion of REA or the Rights Issue.

5.12 ASIC relief

REA has obtained technical relief from ASIC in a form similar to ASIC Class Order 02/225 to enable REA to provide a copy of this Prospectus free of charge to a person who requests it provided that, in the reasonable opinion of the Directors, the person is not a person in a jurisdiction where it is not lawful or practicable to make the offer under the Rights Issue.

5.13 Consents

Each of the parties referred to as consenting parties who are named below:

has given and has not, before the lodgement of this Prospectus $(a)$ with ASIC, withdrawn its written consent to be named in this Prospectus in the form and context in which it is named;

<sup>4 Mr Alasdair Macleod is an executive of News Limited and Stephen Rue is a Director of News Limited

has not made any statement in this Prospectus or any $(b)$ statement on which a statement made in this Prospectus is based: and
to the maximum extent permitted by law, expressly disclaims $(c)$ and takes no responsibility for any statements in or omissions from this Prospectus, other than the reference to its name.

Name of Party	Role
News Limited	Underwriter
Songpan	Underwriter
Kemp Strang	Legal adviser
Ernst & Young	Investigating Accountant
Computershare Investor Services Pty Limited	Share Registry

5.14 Privacy statement

By filling out the Entitlement and Acceptance Form to apply for New Shares, you are providing personal information to REA.

The Privacy Act 1988 (Cth) regulates the way REA collects, uses, disposes, keeps secure and gives people access to their personal information.

REA is committed to respecting the privacy of your personal information. REA collects, holds and uses that personal information in order to process your application and to administer your shareholding in REA, including

REA setting up and maintaining a register of shareholders in accordance with the Corporations Act:
REA communicating with you, such as sending you annual reports. notices of meetings and any other documents which REA wishes to send to you as a Shareholder;
REA carrying out general administration, including monitoring, auditing, evaluating, modelling data, dealing with complaints and answering queries; and
REA complying with its legal and regulatory obligations.

If you do not provide the information requested in the Entitlement and Acceptance Form, REA may not be able to process or accept your application for New Shares.

Your personal information may also be provided to REA's agents or service providers. The types of agents and service providers that may be provided with your personal information and the circumstances in which your personal information may be disclosed are:

the Share Registry for ongoing administration of the share register;
printers and mail houses for the purposes of preparation and distribution of documents to you and for handling mail;
professional service advisers such as lawyers, accountants, auditors and other professional advisers for the purpose of administering, and

advising on, the New Shares and for any associated actions; and

other companies where REA believes it is more efficient to outsource $\bullet$ services or functions to those companies.

Your personal information may be provided to certain third parties. The types of third parties that may be provided with your personal information. and the circumstances in which your personal information may be disclosed, are:

your financial adviser or broker (other than your tax file number information) in connection with services provided to you by your adviser or broker:
government, regulatory authorities or other people when permitted or $\bullet$ required by law, such as ASIC or people inspecting the Share register in accordance with the Corporations Act;
ASX: and
in certain circumstances and with safeguards to respect your privacy. potential or actual purchasers of an interest in REA or REA's business or any part thereof.

You have the right to gain access to your personal information held by, or on behalf of, REA, subject to certain exemptions under the law. You may be required to pay a reasonable charge in order to access your personal information. You can request access to your personal information by telephoning or writing to the Company Secretary as follows:

Mr Nick Geddes Australian Company Secretaries Pty Ltd Level 5, 255 George Street SYDNEY NSW 2000

Tel: + 61 2 9252 1933

6. AUTHORISATION

This Prospectus is issued by REA and each of its Directors consents to its lodgment with ASIC.

This Prospectus has been signed by a Director for and on behalf of the Company in accordance with section 351 of the Corporations Act.

Dated 10 May 2006

. . . . . . . . . . . . . . . . . . . . John McGrath

Chairman

$\overline{7}$ . DEFINED TERMS AND INTERPRETATION

$7.1$ Defined Terms

Certain expressions are used throughout this Prospectus. These have the following meanings:

"Application Monies"	The monies received from personsapplying for New Shares pursuant tothe terms of the Rights Issue.
"ASIC"	Australian Securities & InvestmentsCommission.
"ASTC Settlement Rules"	The Settlement Rules for the ASXSettlement & Transfer CorporationPty Ltd ABN 49 004 504 532.
"ASX"	Australian Stock Exchange LimitedACN 008 624 691.
"Board"	Board of Directors of REA.
"Business Day"	Has the meaning given to that termin the Listing Rules.
"CHESS"	Has the meaning attributed to thatterm in the ASTC Settlement Rules.
"Closing Date"	7.00pm on 8 June 2006, or suchlater date as the Directors, in theirabsolute discretion and subject tocompliance with the Listing Rules,may determine.
"Company" or "REA"	realestate.com.au LimitedABN 54 068 349 066.
"Constitution"	The Constitution of REA.
"Corporations Act"	Corporations Act 2001 (Cth).
"Director"	A director of REA.
"Eligible Shareholders"	All Shareholders registered as theholder of Shares on the RecordDate, other than IneligibleShareholders.
"Entitlement andAcceptance Form®	The entitlement and acceptance formaccompanying this Prospectus.
"Expiry Date"	8 July 2007, being 13 months afterthe date of this Prospectus.

"HubOnline"	Hub Online Global Pty LimitedACN 088 045 532.
"Ineligible Shareholders"	All Shareholders whose registeredaddress is not in Australia and NewZealand or is holding for the accountor benefit of, a person who is a U.S.person or in the United States.
"Listing Rules"	The official listing rules of ASX.
"NAB"	National Australia Bank LimitedACN 004 044 937.
"Netwide Solutions"	Netwide Solutions Pty LimitedACN 080 195 535.
"New Share"	A Share issued by way of the pro-rata renounceable Rights Issueoffered pursuant to this Prospectus.
"News International"	News International Limited, acompany incorporated in Englandand Wales with company number81701.
"News Limited"	News Limited ABN 47 007 871 178.

"Nominee"	CCZ Statton Equities Pty LimitedACN 104 843 370.
"Options"	An option to subscribe for one Shareissued under the REA employeeoption scheme.
"Property.com.au"	property.com.au Pty LimitedACN 095 798 888
"PropertyLook"	Property Look Pty Limited ACN 095320 068
"PropertyLook Sellers"	Jones Lang La Salle Australia PtyLimited ACN 008 476 257, KnightFrank Australia Pty Limited ACN 004973 684, CB Richard Ellis Pty LtdACN 057 373 574 and ColliersInternational Holdings (Australia)Limited ACN 008 178 238.
"Prospectus"	This prospectus dated 10 May 2006.

"Related Bodies Corporate"	Has the meaning as is ascribed tothat term in Section 50 of theCorporations Act.
"Rights"	The rights of Eligible Shareholders tosubscribe for New Shares under theRights issue.
"Rights Issue"	The issue pursuant to thisProspectus of up to 8,338,692 NewShares (assuming no Options areconverted) at an issue price of $3.00per New Share.
"Section"	A section of this Prospectus.
"Share"	A fully paid ordinary share issued inthe capital of REA.
"Share Registry"	Computershare Investor Services PtyLimited.
"Shortfall"	Those New Shares not applied for byEligible Shareholders pursuant totheir Rights or by persons to whoman Eligible Shareholder's Rightshave, in whole or in part, beenassigned.
"Songpan"	Songpan Pty LimitedACN 101 428 291.
"Underwriters"	News Limited and Songpan.
"U.S." or "United States"	The United States of America, itsterritories and possessions, anyState of the United States and theDistrict of Columbia.
"U.S. person"	Has the meaning given to that termin Regulation S under the U.S.Securities Act.
"U.S. Securities Act"	The Securities Act of 1933, asamended, of the United States.
"Web Effect"	Web Effect Int. Pty Limited ACN 087156 358.

$72$ Interpretation

In this Prospectus and in the Entitlement and Acceptance Form, unless the context otherwise requires:

words and phrases have the same meaning (if any) given to $(a)$ them in the Corporations Act:
$(b)$ words importing a gender include any gender;
$(c)$ words importing the singular include the plural and vice versa;
$(d)$ an expression importing a natural person includes any company, partnership, joint venture, association, corporation or other body corporate and vice versa:
$(e)$ a reference to a section is a reference to a section of this Prospectus:
$(f)$ a reference to a statute, regulation, proclamation, ordinance, by-law includes all statutes, regulations, proclamations, ordinances or by-laws amending, consolidating or replacing it, whether passed by the same or another government agency with legal power to do so, and a reference to a statute includes all regulations, proclamations, ordinances and by-laws issued under that statute:
$(q)$ headings and boldings are for convenience only and do not affect the interpretation in this Prospectus;
a reference to time, unless otherwise stated, is a reference to $(h)$ Australian Eastern Daylight Time; and
$\left($ i) a reference to writing includes email and facsimile transmissions

CORPORATE DIRECTORY

DIRECTORSSECRETARY	Mr John McGrath (Chairman)Mr Simon Baker (Managing Director)Mr Stephen P Rue (Non-executive Director)Mr Sam R White (Non-executive Director)Mr Alasdair Macleod (Non-executive Director)Mr Nick Geddes

REGISTERED OFFICE	C/- Australian Company Secretaries Pty LtdLevel 5, 255 George StreetSYDNEY NSW 2000AUSTRALIA
	Tel: IFax: F	+61 2 9252 1933+61 2 9252 2487
SHARE REGISTRY	Computershare Investor Services Pty LimitedLevel 3, 60 Carrington StreetSYDNEY NSW 2000AUSTRALIA
	Tel∶ l	1300 855 080 (within Australia)+61 3 9415 4000 (outside Australia)
STOCK EXCHANGE	Realestate.com.au Limited's securities are quotedon the Official List of Australian Stock ExchangeLimited, the home branch being Sydney.
ASX CODE	REA

AI assistant

REA GROUP LTD — Capital/Financing Update 2006

65679_rns_2006-05-09_9d5767fc-dd6c-4fcb-a776-8f6f52b8fcf4.pdf

PROSPECTUS

Important Information

Foreign jurisdictions

Investment decisions

Future performance

Continuously quoted securities

Prospectus availability

Terms of the Rights Issue

TABLE OF CONTENTS

Summary of Important Dates*

Definitions

1. DETAILS OF THE RIGHTS ISSUE

$1.1$ Rights Issue

$12$ Purpose of the Rights Issue

$1.3$ Issue and Allotment of New Shares

$14$ Application Monies

$1.5$ Trading history of Shares on ASX

$1.6$ ASX Quotation

Treatment of overseas Shareholders $1.7$

$1.8$ Taxation implications

1.9 Underwriting and Commitment by Underwriters to subscribe for entitlements under Rights Issue

$1.10$ Possible Control implications Arising from the Rights Issue

News Limited

Songpan Pty Limited

$\overline{2}$ ACTION REQUIRED BY ELIGIBLE SHAREHOLDERS

$2.1$ What you may do

$2.2$ If you wish to take up your Rights in full

$2.3$ If you wish to sell your Rights in full on ASX

$2.4$ If you wish to sell part of your Rights on ASX and take up the balance

2.5 If you wish to transfer all or part of your Rights to another person other than on ASX

$2.6$ If you do nothing

$\overline{3}$ EFFECT OF THE RIGHTS ISSUE ON REA

$3.1$ Effects of the Rights Issue on REA's capital structure

$3.2$ Tax Implications for REA

$3.3$ Pro-Forma Consolidated Statement of Financial Position

BALANCE SHEETS AS AT 31 DECEMBER 2005

$3.4$ Summary of significant accounting policies

Basis of preparation of the consolidated and pro forma balance sheets

Principles of compilation and consolidation

$3.5$ Assumptions used in compiling the Proforma Consolidated Balance Sheet

Cash $(a)$

$(b)$ Settlement of loan balances

$3.6$ Share Capital

$3.7$ Goodwill

$3.8$ Intangible Assets

$3.9$ Acquisitions

EII FRNST & YOU INC.

Independent Accountant's Report $3.10$

Independent Accountant's Report

$\mathbf{1}$ . Introduction

$21$ Background Information

$\overline{3}$ Scope of the Report

Financial Half-Year Ended 31 December 2005

Pro Forma Statement of Financial Position as at 31 December 2005

$\mathbf{A}$ Statements

Half-Year Ended 31 December 2005

Pro Forma Statement of Financial Position at 31 December 2005

5. Subsequent Events

6. Disclosures

4 RISK FACTORS

4.1 General

$4.2$ Specific risks relating to REA

$(a)$ Industry risks

$(b)$ Managing Rapid Growth

Risks associated with REA business model $(c)$

$(d)$ Key Personnel

5. ADDITIONAL INFORMATION

$5.1$ Transaction Specific Prospectus

$5.2$ Continuous Disclosure and Documents Available for Inspection

53 Rights attaching to REA Shares

Votina

Dividends

Transfer of Shares

Meetings and Notice

Winding up

Shareholder Liability

54 Underwriting Agreement

REA GROUP LTD Capital/Financing Update 2006