RESIMAC GROUP LTD — AGM Information 2006

Oct 22, 2006

HOMELOANS LIMITED ABN 55 095 034 003

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Sixth Annual General Meeting of Homeloans Limited will be held on 23 November 2006 at The Theatrette, Level 4 168 St George's Terrace Perth at 10.00 am.

BUSINESS OF THE MEETING

Financial Statements and Reports

To receive and consider the Financial Statements and Reports of the Directors and Auditors for the year ended 30 June 2006.

Ordinary Business

To consider and if thought fit to pass the following resolutions as ordinary resolutions.

1. Remuneration Report

"That the Remuneration Report for the year ended 30 June 2006 be adopted." Note – the vote on this resolution is advisory only and does not bind the directors or the company.

$2.$ Re-Election of Robert Peter Cockburn Salmon

"That Robert Peter Cockburn Salmon who retires in accordance with clause 13.4 of the Company's Constitution and being eligible offers himself for re-election be re-elected a Director of the Company."

3. Re-Election of Jarrod Lorne Andrew Smith

"That Jarrod Lorne Andrew Smith be re-elected a director of the company in accordance with clause 13.6 of the Company's Constitution."

Special Business

To consider and if thought fit to pass the following resolutions as an ordinary resolution.

4. Approval for the issue of securities in terms of the Homeloans Ltd Employee Share Option Plan

"That the Homeloans Ltd Employee Share Option Plan as described in the Explanatory Statement to the Notice of Meeting and the acquisition of securities of the company by employees under that Plan be and is hereby approved for the purposes of Exception 9 of Listing Rule 7.2 of the ASX Listing Rules."

Approval for the issue of Shares to the Holmes RPS Holders pursuant to the RPS 5. Conversion

"That, for the purposes of section 611 item 7 of the Corporations Act, and for all other purposes, Shareholders approve the issue to the Holmes RPS Holders of up to a maximum of 8,537,500 Shares pursuant to the conversion of the 170,750 RPS held by the Holmes RPS Holders in accordance with the RPS Terms."

6. Approval for the issue of Shares to the Salmon RPS Holders pursuant to the RPS Conversion

"That, for the purposes of section 611 item 7 of the Corporations Act, and for all other purposes, Shareholders approve the issue to the Salmon RPS Holders of up to a maximum of 8,522,050 Shares pursuant to the conversion of the 170,441 RPS held by the Salmon RPS Holders."

Voting entitlements

The following persons may vote at the Annual General Meeting.

A person entitled to vote if they have an interest in the company that allows them to do so; A proxy of a person entitled to vote:

The chairman as proxy for a person entitled to vote, in accordance with their directions.

The entity will disregard any votes cast on resolution number 4 by:

A director of the entity (except one who is ineligible to participate in the Homeloans Limited Employee Option Plan).

An associate of those persons.

In accordance with section 611 item 7 of the Corporations Act, the entity will disregard any votes cast in favour of resolution number 5 by the Holmes RPS Holders or any of their Associates.

In accordance with section 611 item 7 of the Corporations Act, the entity will disregard any votes cast in favour of resolution number 6 by the Salmon RPS Holders or any of their Associates.

The entity will not disregard a vote if:

It is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form: or

It is cast by the person chairing the meting as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form to vote as the proxy decides.

BY ORDER OF THE BOARD

Jennifer Murray Company Secretary

Dated this 23 day of October 2006.

NOTES

Read the Explanatory Statement 1.

Please read the Explanatory Statement which accompanies this Notice of Annual General Meting. This is an important document and should be read in its entirety. If you do not understand it you should consult your professional advisers without delay.

$\overline{2}$ . Proof of Identity

Proof of identity will be required for corporate representatives and attorneys for admission to the meeting. Corporate Representatives and Attorneys must, not less than 48 hours before the meeting deposit at the company's registered office or fax by facsimile number (08) 9327 1778 the power of attorney under which the document is signed or a notarially certified copy of the power of attorney.

3. Proxies

Where a member is unable to attend the meeting, we encourage the member to complete and return the enclosed proxy form. A member who is entitled to cast two or more votes may appoint two proxies and must specify the proportion of the member's voting rights that each proxy is entitled to represent. A proxy need not be a member. A document appointing a proxy must be in writing, signed by the appointor or the attorney of the appointor duly authorised in writing and in any form permitted by the Corporations Act 2001.

The document appointing the proxy must be received at the Company's registered office not less than 48 hours before the time for holding the meeting

Registered Office:	Gooding Pervan, Chartered Accountants
	Level 9 The Quadrant
	1 William Street
	Perth WA 6000
Facsimile No:	$(08)$ 9327 1778
Postal Address:	As above

3. Determination of Shareholding

The Directors have determined under the Corporations Regulations 2001 that the shareholding of each member and their voting entitlements for the AGM be as set out in the Share Register of the Company at end of day 21 November 2006.

EXPLANATORY STATEMENT

This Explanatory Statement forms part of the Notice of Meeting convening the Annual General Meeting of the company to be held on 23 November 2006. This explanatory memorandum is to be read in conjunction with the Notice of Meeting and is intended to assist shareholders in understanding the background to and the legal and other implications of the Notice of Meeting.

Any questions you may have in relation to Homeloans Limited or the matters to be considered at the Annual General Meeting will be welcome. Please submit your questions with your proxy form or by facsimile to (08) 9327 1778. You may also submit questions via the Homeloans Ltd website, www.homeloans.com.au (contact us).

Financial Statements and Reports

The Corporations Act 2001 requires the company's financial statements and reports for the last financial year to be laid before the annual general meeting. The financial statements and reports are contained in the company's 2006 Annual Report which accompanies this notice of meeting (unless you have elected not to receive a copy of the report).

No resolution is required in relation to the financial statements and reports, however shareholders will be given the opportunity to ask questions and make comments on the financial statements and reports. The Company's auditors will also be present at the meeting and shareholders will have an opportunity to ask the auditor questions in relation to the conduct of the audit, the auditor's report, the company's accounting policies and the independence of the auditor.

Adoption of the Remuneration Report

During this item of business there will be an opportunity for shareholders at the meeting to comment on and ask questions about the Remuneration Report which is included in the company's Annual Report for 2006. The vote on the proposed resolution is advisory only and will not bind the directors or the company. The company's remuneration policies and practices have been designed to align the interests of directors and senior executives of the company with those of shareholders.

Election of Robert Peter Cockburn Salmon as a Director

Clause 13.4 of the constitution of the company requires that one third of the directors in office (except a managing director) must retire by rotation at each annual general meeting of the Company. Mr Robert Peter Cockburn Salmon therefore retires at the forthcoming annual general meeting in accordance with the constitution and being eligible offers himself for re-election at the meeting. Mr Robert Peter Cockburn Salmon's qualifications and experience are reported in the Company's Annual Report.

Election of Jarrod Lorne Andrew Smith as a Director

Clause 13.6 of the Company's Constitution states that a director who is appointed by the Board as an addition to the existing number of directors must be re-elected at the next general meeting of the Company.

Mr Jarrod Lorne Andrew Smith was appointed as an additional director of the Company by the Board of directors on 5 April 2006. He therefore holds office only until the next general meeting after his appointment in accordance with the constitution and being eligible offers himself for re-election at the meeting.

Mr Jarrod Lorne Andrew Smith's qualifications and experience are reported in the Company's Annual Report.

Approval for the issue of securities in terms of the Homeloans Ltd Employee Share Option Plan

Listing Rule 7.1 states that an entity must not issue or agree to issue securities over 15% of its issued capital without the approval of holders of ordinary securities of the company.

Listing Rule 7.2 Exception 9 (b) states that an issue of securities in terms of an employee incentive scheme are an exception to Listing Rule 7.1 provided that within 3 years before the date of issue the holders of ordinary securities have approved the issue of securities under the scheme as an exception to Rule 7.1

The Homeloans Ltd Employee Share Option Plan was established by the directors of the company for the benefit of the employees on 22 December 2000. Since the scheme was established before the company listed on the Australian Stock Exchange Ltd on 19 March 2001 a summary of the terms of the scheme were set out in the Prospectus issued by the company on 11 January 2001 in accordance with Listing Rule 7.2 Exception 9 (a).

The scheme had been in operation for a three year period at the end of 2003 and hence the scheme was approved by the shareholders of the Company in accordance with Listing Rule 7.2 Exception 9 (b) at the annual general meeting of the Company held on 25 November 2003.

The Scheme will be in operation for six years on 22 December 2006 and will require the approval of shareholders in accordance with Listing Rule 7.2 Exception 9 (b) for the issue of options in terms of the Plan as an exception to Listing Rule 7.1 for a further three vear period.

A Summary of the terms of the Employee Share Option Plan

The Directors of Homeloans Limited have established an Employee Share Option Plan for the benefit of employees. The key features of the Plan are as follows:-

• 1. The Employee Share Option Plan is designed to enable employees of the company to become holders of options to acquire ordinary fully paid shares in the company. The purpose of the plan is to retain key employees and attract quality people to become employees. The Plan is administered by the Board free of charge. The options issued under this plan are not listed for quotation on the Official List of the Australian Stock Exchange. There are presently 850,000 options which are on issue in terms of this Plan. Since the date of the last approval the number of options on issue in terms of the Plan has increased by 30,000.
• $\overline{2}$ . The Board at its discretion may make a written offer to an employee it chooses to accept options to acquire shares in the Company. Without limiting the discretion of the Board, the Board will consider amongst other criteria, the seniority and performance of the employee.
• 1. For the purposes of this Plan options may be granted to the employee or to a spouse, child or related body corporate of the employee.
• 1. The exercise price for the options will be set by the Board at its absolute discretion although the exercise price will not be less than the volume weighted average of the Company's shares quoted on the Australian Stock Exchange for the 5 business days prior to the issue of the option.
• 1. An option lasts for 5 years from the date it is issued. However it ends earlier, and immediately, if the employee ceases to be employed by the Company.

After a 2 year period the employee can exercise up to 50% of the options that employee holds (so long as all of those options to be exercised have been held for at least 2 years). After a 3 year period, the employee can exercise all of the options that employee holds (so long as all of those options have been held for at least 3 years.)

An option can also be exercised in one of the following situations: Within 90 days after the employee retires. Within 120 business days after the employee dies or becomes totally and permanently disabled. Within 6 months after the employee ceases to be employed by the company as a result of a

takeover of the company or change to the composition of the board of directors of the company resulting from the takeover of the company.

Approval of the Proposal and Recommendation by Directors

The directors of the Company approved the proposal and recommend that the resolution be passed as it benefits the employees and is in the best interests of the company for the reasons set out in this Explanatory Statement.

Copies of the Homeloans Employee Share Options Plan

A copy of the Employee Share Option Plan can be obtained by contacting the Company Secretary at the redistered office of the Company.

Telephone Number (08) 9327 1777 or Fax Number (08) 9327 1778

Approval for the issue of Shares to the Holmes RPS Holders and Salmon RPS Holders pursuant to the RPS Conversion

Definitions relating to resolution numbers 5 and 6 and the explanatory notes to those 1. resolutions

ASIC means the Australian Securities and Investments Commission. Associate has the meaning given to it in section 12 of the Corporations Act. ASX means the Australian Stock Exchange Limited. Board means all or some of the directors of the Company acting as a board. Company or Homeloans means Homeloans Limited ABN 55 095 034 003. Controlled Entity means an entity controlled by another entity for the purpose of section 50AA of the Corporations Act. Corporations Act means the Corporations Act 2001 (Commonwealth). Director means a director of the Company from time to time. Listing Rules means the official listing rules of the ASX. Holmes Associates means Carol Mary Holmes, Joanna Mary Holmes, Lucy Caroline Holmes and Tiffany Eliza Farrar Holmes. Holmes RPS Holders means Timothy Alastair Holmes (Non-Executive Chairman and a Director of Homeloans) and Tico Pty Ltd ACN 009 460 842 as trustee for the TA Holmes Family Trust and the TA Holmes Superannuation Fund and any of their Related Bodies Corporate, Associates or Controlled Entities.

Holmes RPS Conversion means the issue to the Holmes RPS Holders of up to a maximum of 8,537,500 Shares pursuant to the conversion of the 170,750 RPS held by the Holmes RPS Holders in accordance with the RPS Terms.

Notice means this Notice of Annual General Meeting.

Related Body Corporate has the meaning given to it in section 9 of the Corporations Act. RPS mean the reset preference shares issued by the Company

RPS Conversion means the conversion of each RPS into 1 Share together with the issue of up to 49 Shares to the holder of each RPS in accordance with the RPS Terms.

RPS Prospectus means the prospectus for the issue of 503,540 RPS dated 25 November 2003 and lodged with ASIC by Homeloans on that date.

RPS Redemption means the redemption of the RPS by payment of a cash amount to the RPS Holder for each RPS equal to the greater of:

• (1) the result of dividing the issue price of the RPS ($10) by 92.5% of the VWASP and multiplying the result by the VWASP; and
• (2) the Conversion Minimum (being 20 subject to any applicable adjustment) multiplied by the VWASP during the 20 trading days immediately preceeding the exchange date.

RPS Terms means the terms of the RPS set out in section 8.2 of the RPS Prospectus. Salmon RPS Holders means Robert Peter Cockburn Salmon (a non-executive Director of Homeloans) and Peterlyn Pty Ltd ACN 009 460 842 and any of their Related Bodies Corporate, Associates or Controlled Entities.

Share means a fully paid ordinary share in the Company.

Shareholder means a registered holder of a Share.

VWASP means the average of daily volume weighted average sale prices of Shares sold on ASX in a given period.

$21$ Background to RPS Conversion

Homeloans issued 503,528 RPS on the RPS Terms under the RPS Prospectus, all of which currently remain on issue and are listed on ASX under the ASX code HOMPA.

Under the RPS Terms. Homeloans may require the exchange of some or all of the RPS on a reset date. If Homeloans requires the exchange of RPS, the holder of the RPS will receive on the reset date (at Homeloans' choice) either:

• by way of RPS Conversion, between 20 and 50 Shares for each RPS determined in $(1)$ accordance with the RPS terms by dividing the issue price of the RPS ($10) by the VWASP of Shares sold on ASX during the 20 trading days immediately preceding the exchange date, multiplied by the discount percentage of 92.5%; or
• $(2)$ by way of RPS Redemption, a cash amount for each RPS equal to the greater of:
  • (a) the result of dividing the issue price of the RPS ($10) by 92.5% of the VWASP during the 20 trading days immediately preceding the exchange date and multiplying the result by this VWASP: and
  • (b) the Conversion Minimum (being 20 subject to any applicable adjustment) multiplied by the result of this VWASP during the 20 trading days immediately preceeding the exchange date.

The RPS Terms are set out in full in the RPS Prospectus, which was lodged with ASIC on 25 November 2003 and is available from the Company on request.

The first reset date applicable to the RPS is 30 November 2006. Homeloans intends to require the exchange of all of the RPS on issue on this reset date by way of RPS Conversion. In accordance with the RPS terms, Homeloans will send notices to holders of RPS advising them of the RPS Conversion at least 20 business days prior to 30 November 2006.

Under the RPS Terms, the maximum number of Shares that may be received on RPS Conversion in respect of each RPS is 50 Shares and the minimum number of Shares that may be received is 20 Shares. Based on the VWASP calculated for the 20 trading days to 18 October 2006, the Directors anticipate that holders of RPS will be entitled to receive 21 Shares for each RPS held pursuant to the RPS Conversion.

There are currently 50,354,063 Shares on issue. The following table sets out the total number of Shares that will be issued to holders of RPS on conversion of the RPS on 30 November 2006 based on the maximum, minimum and expected number of Shares to be issued. All calculations in this notice of meeting are based on none of the options on issue in the capital of the Company being exercised. If any of these options are exercised, the total number of Shares will increase.

TABLE 1

Entity	Maximum number ofShares(50 Shares per RPS)	Minimum number ofShares(20 Shares per RPS)	Expected number ofShares*(21 Shares per RPS)
Shares on issue priorto RPS Conversion	50,354,063	50,354,063	50,354,063
Shares issuedpursuant to RPSConversion	25,176,400	10.070.560	10,574,088
Total Shares onissue after RPSConversion	75,530,463	60,424,623	60,928,151

*Expected number of Shares calculated based on the VWASP for the 20 trading days to 18 October 2006.

The Holmes RPS Holders and Salmon RPS Holders were issued RPS pursuant to the RPS Prospectus on the same terms as all other subscribers for RPS. The number of RPS held by the Holmes RPS Holders and Salmon RPS Holders, together with the maximum, minimum and expected number of Shares they will receive on conversion of the RPS on 30 November 2006 is set out in the table below.

TABLE2

Entity	Number61 R X	Maximum number ofShares	Minimum number ofShares	Expected number ofShares*
	held	(50 Shares per RPS)	(20 Shares per RPS)	(21 Shares per RPS)
Holmes RPS Holders
Timothy AlastairHolmes	3.662	183.100	73,240	76,902
Tico Pty Ltd as trusteefor the TA Holmes
Family Trust	141,754	7,087,700	2,835,080	2.976,834
Tico Pty Ltd as trusteefor the TA HolmesSuperannuation Fund
	25,334	1,266,700	506,680	532,014
Total for HolmesRPS Holders	170,750	8,537,500	3,415,000	3,585,750
Salmon RPS Holders
Robert PeterCockburn Salmon	3.662	183.100	73.240	76,902
Peterlyn Pty Ltd astrustee for the SalmonFamily Trust
	136,151	6,807,550	2,723,020	2,859,171
Peterlyn Pty Ltd astrustee for the RPCSuperannuation Fund
	30.628	1,531,400	612,560	643,188
Total for SalmonRPS Holders	170.441	8.522.050	3,408.820	3.579.261

*Expected number of Shares calculated based on the VWASP for the 20 trading days to 18 October 2006.

The Holmes RPS Holders (other than Timothy Holmes) and the Holmes Associates are considered by Homeloans to be related parties and associates of Timothy Holmes, the non-executive Chairman and a non-executive director of Homeloans.

The Salmon RPS Holders (other than Robert Salmon) are considered by Homeloans to be related parties and associates of Robert Salmon, a non-executive director of Homeloans.

3. Section 606 of the Corporations Act

Section 606 of the Corporations Act prohibits, subject to various specified exceptions, a person acquiring a relevant interest in issued voting shares in a company if, as a result of the acquisition, that person's or someone else's voting power in the Company increases:

• $(1)$ from 20% or below to more than 20%; or
• from a starting point that is above 20% and below 90%. $(2)$

The voting power of a person in a company is determined under section 610 of the Corporations Act. The calculation of a person's voting power in the Company involves determining the voting shares in the Company in which the person and the person's Associates have a relevant interest. Under section 608(1) of the Corporations Act, a person has a relevant interest in securities if they:

• $(1)$ are the holder of the securities;
• $(2)$ have the power to exercise, or control the exercise of, a right to vote attached to the securities; or
• $(3)$ have the power to dispose of, or control the exercise of a power to dispose of, the securities.

4. Requirements of section 611 item 7 of the Corporations Act and ASIC Policy Statement 74

Section 611 item 7 of the Corporations Act provides an exception to the prohibition in section 606 if Shareholders approve the acquisition of voting Shares at a meeting at which no votes are cast by parties making the proposed acquisition, including their Associates.

Shareholder approval is being sought under section 611 item 7 for the issue of the Shares to:

• $(1)$ in respect of resolution number 5, the Holmes RPS Holders; and
• in respect of resolution number 6, the Salmon RPS Holders, $(2)$

because on completion of the RPS Conversion, the Holmes RPS Holders and the Salmon RPS Holders and each of their Associates will acquire a relevant interest in more than 20% of the voting power in the Company.

The information set out in paragraphs 0 to 4.12 below is provided to Shareholders for the purposes of section 611 item 7 and ASIC Policy Statement 74.

$4.1$ Identity of person proposing to make the acquisition and its Associates

The persons proposing to make the acquisition pursuant to the RPS Conversion are:

• in respect of the acquisition the subject of resolution number 5, the Holmes RPS Holders; $(1)$ and
• $(2)$ in respect of the acquisition the subject of resolution number 6, the Salmon RPS Holders.

At the date of this notice of meeting, the Holmes RPS Holders' Associates are the Holmes Associates, except that each Holmes RPS Holder is an Associate of the other Holmes RPS Holders.

At the date of this notice of meeting, the Salmon RPS Holders do not have any Associates who hold any voting Shares in Homeloans, except that each Salmon RPS Holder is an Associate of the other Salmon RPS Holders.

$4.2$ Allottee of Securities

The allottee of Shares pursuant to the RPS Conversion is:

• in respect of resolution number 5, the Holmes RPS Holders; and $(1)$
• $(2)$ in respect of resolution number 6, the Salmon RPS Holders.

$4.3$ Relevant Interests

Those persons who will or may have a relevant interest in the Shares to be issued pursuant to the RPS Conversion are:

• in respect of resolution number 5, the Holmes RPS Holders and the Holmes Associates; $(1)$ and
• $(2)$ in respect of resolution number 6, the Salmon RPS Holders.

4.4 Impact on voting power

Resolution number 5 - Holmes RPS Conversion

On completion of the RPS Conversion, the Holmes RPS Holders and the Holmes Associates will obtain the following respective interests in Shares:

• $(1)$ The maximum extent of the increase in the Holmes RPS Holders' voting power in the Company that would result from the RPS Conversion is an increase from 17.91% to 23.25%, being an increase of 5.34% of voting power in the Company.
• $(2)$ The maximum voting power that the Holmes RPS Holders' would have on completion of the RPS Conversion is 23.25%.
• $(3)$ The maximum extent of the increase in the voting power of each of the Holmes RPS Holders' Associates that would result from the RPS Conversion is an increase from 17.91% to 23.25%, being an increase of 5.34% of voting power in the Company.
• $(4)$ The maximum voting power each of the Holmes RPS Holders' Associates would have on completion of the RPS Conversion is 23.25%.
• The particulars of the maximum number of Shares in the Company to which the Holmes $(5)$ RPS Holders and the Holmes Associates will be entitled immediately before and on completion of the RPS Conversion are as follows:
  • (a) before the RPS Conversion 9,019,781 Shares (being 17.91% of the current issued Share capital of the Company); and
  • (b) on completion of the RPS Conversion 17,557,281 Shares (being 23.25% of the issued Share capital of the Company).

The breakdown of the maximum voting power (ignoring Associates' voting power) of each of the Holmes RPS Holders' and Holmes Associates' voting power that would arise on completion of the RPS Conversion is set out in the table below.

TABLE 3

Entity	Current votingpower in theCompany	Maximum extent ofincrease to voting powerin the Company	Maximum total voting power inthe Company on completion ofthe RPS Conversion
Holmes RPS Holders
Timothy Alastair Holmes	0.84%	Nil	0.80%
Tico Pty Ltd as trustee forthe TA Holmes Family Trust	15.58%	4.19%	19.77%
Tico Pty Ltd as trustee forthe TA HolmesSuperannuation Fund	1.23%	1.27%	2.50%
Holmes Associates
Carol Mary Holmes	0.11%	Nil	0.07%
Joanna Mary Holmes	0.05%	Nil	0.03%
Lucy Caroline Holmes	0.05%	Nii	0.03%
Tiffany Eliza Farrar Holmes	0.05%	Nil	0.03%

Resolution number 6 - Salmon RPS Conversion

On completion of the RPS Conversion, the Salmon RPS Holders and their Associates will obtain the following respective interests in Shares:

• $(1)$ The maximum extent of the increase in the Salmon RPS Holders' voting power in the Company that would result from the RPS Conversion is an increase from 17.29% to 22.81%, being an increase of 5.52% of voting power in the Company.
• $(2)$ The maximum voting power that the Salmon RPS Holders' would have on completion of the RPS Conversion is 22.81%.
• The maximum extent of the increase in the voting power of each of the Salmon RPS Holders' $(3)$ Associates that would result from the RPS Conversion is an increase from 17.29% to 22.81%. being an increase of 5.52% of voting power in the Company.
• $(4)$ The maximum voting power each of the Salmon RPS Holders' Associates would have on completion of the RPS Conversion is 22.81%.
• The particulars of the maximum number of Shares in the Company to which the Salmon RPS $(5)$ Holders and their Associates will be entitled immediately before and on completion of the RPS Conversion are as follows:
  • $(a)$ before the RPS Conversion - 8,705,366 Shares (being 17.29% of the current issued Share capital of the Company); and
  • on completion of the RPS Conversion 17,227,416 Shares (being 22.81% of the issued $(b)$ Share capital of the Company).

The breakdown of the maximum voting power (ignoring Associates' voting power) of each of the Salmon RPS Holders' voting power that would arise on completion of the RPS Conversion is set out in the table below.

TABLE 4

Entity	Current voting powerin the Company	Maximum extent ofincrease to votingpower in the Company	Maximum total votingpower in the Company oncompletion of the RPSConversion
Salmon RPS Holders
Robert Peter CockburnSalmon	0.73%	Nii	0.73%
Peterlyn Pty Ltd astrustee for the SalmonFamily Trust
	15.27%	3.92%	19.20%
Peterlyn Pty Ltd astrustee for the RPCSuperannuation Fund	1.29%	1.62%	2.89%

• 4.5 Future Intentions of the Holmes RPS Holders and Salmon RPS Holders for Company Each of the Holmes RPS Holders and Salmon RPS Holders (other than Timothy Holmes and Robert Salmon in the ordinary course of their duties as Directors):
  • $(1)$ has no present intention of recommending or otherwise seeking to make any changes to the business of Homeloans:
  • $(2)$ has no present intention of injecting further capital into Homeloans;
  • has no present intention to change, or to recommend a change to, the number or terms $(3)$ of employment of the present employees of the Company;
  • $(4)$ has no current intention to propose that any property be transferred between the Company and any of the Holmes RPS Holders, Salmon RPS Holders or their Associates or Related Parties:
  • has no present intention to otherwise seek or recommend the redeployment of the fixed $(5)$ assets of the Company: and
  • has no present intention to change, or to seek the change of, the financial or dividend $(6)$ policies of the Company.

$4.6$ Particulars of the terms of the proposed issue

Subject to shareholder approval of resolution number 5 (in respect of the issue of Shares to the Holmes RPS Holders) and resolution number 6 (in respect of the issue of Shares to the Salmon RPS Holders) being obtained, the Shares will be issued to the Holmes RPS Holders and the Salmon RPS Holders by conversion of each RPS they hold into 1 Share together with the issue of up to 49 Shares to the holder of each RPS in accordance with the RPS Terms.

The RPS Terms and the basis on which the Shares are to be issued are summarised in paragraph 2 above and are set out in full in the RPS Prospectus, which was lodged with ASIC on 25 November 2003 and is available from the Company on request.

The number of RPS held by the Holmes RPS Holders and Salmon RPS Holders, together with the maximum, minimum and expected number of Shares they will receive on conversion of the RPS on 30 November 2006 is set out in Table 2 above.

4.7 Allotment Date

Subject to shareholder approval of resolution number 5 (in respect of the issue of Shares to the Holmes RPS Holders) and resolution 6 (in respect of the issue of Shares to the Salmon RPS Holders) being obtained, the Shares to be issued to the Holmes RPS Holders and the Salmon RPS Holders pursuant to the RPS Conversion will be issued on 30 November 2006 (being the reset date of the RPS) together with all other Shares to be issued to holders of RPS.

4.8 Relevant agreements

No agreement between the Holmes RPS Holders or the Salmon RPS Holders, or their Associates, is conditional on, or otherwise dependent on, Shareholders passing resolution numbers 5 and 6.

However, under the RPS Terms, if the Company cannot convert the RPS held by the Holmes RPS Holders or the Salmon RPS Holders due to the failure by Shareholders to approve either resolution numbers 5 or 6, the Company will be obliged to either:

• implement an RPS Redemption on request by the holder of the RPS at least 20 business $(1)$ days prior to a reset date; and
• otherwise continue to honour the obligations to the holders of the RPS in accordance with $(2)$ the RPS Terms.

If approval is not given by Shareholders for the Holmes RPS Conversion and Salmon RPS Conversion, the Company still intends to exchange all other RPS on issue in accordance with the RPS Terms and such number of the RPS held by the Holmes RPS Holders and Salmon RPS Holders as is permitted by Part 6.1 of the Corporations Act 2001 with the effect that the voting power of the Holmes RPS Holders and Salmon RPS Holders will not exceed 20% of the voting power in the Company.

4.9 Explanation of Reasons for Proposed Allotment

The proposed allotment of Shares to the Holmes RPS Holders and Salmon RPS Holders is being made in accordance with the RPS Terms, which are described in paragraph 2 above. The Directors consider that it is in the best interests of the Company to exchange all of the RPS on issue on 30 November 2006 (being the reset date of the RPS) for the following reasons:

• $(1)$ As a result of the introduction of the Australian equivalent of International Financial Reporting Standards (AIFRS), the RPS are no longer as efficient as they were when issued. The RPS were initially issued as equity instruments whereas under AIFRS they are treated as debt, however the interest payments are not tax deductible.
• $(2)$ The Directors are of the view that the retention of capital is strategically important. This is because of the potential acquisition opportunities that Homeloans believes will arise as a consequence of increasing consolidation in the sector.

The RPS Terms and the basis on which the number of Shares received in respect of each RPS by RPS Holders are summarised in paragraph 2 above and set out in full in the RPS Prospectus, which was lodged with ASIC on 25 November 2003 and is available from the Company on request.

4.10 Directors' Interests in Resolutions

Resolution number 5 - Holmes RPS Conversion

Timothy Holmes has a material personal interest in the outcome of resolution number 5 because, if resolution number 5 is passed by Shareholders:

(1) he will personally receive up to a maximum of 183,100 Shares in exchange for the 3,662 RPS he currently holds; and

(2) his Associates and Related Parties will receive up to a maximum of 8,354,400 Shares in exchange for the 167,088 RPS they currently hold.

Resolution number 6 - Salmon RPS Conversion

Robert Salmon has a material personal interest in the outcome of resolution number 6 because, if resolution number 6 is passed by Shareholders:

• $(1)$ he will personally receive up to a maximum of 183,100 Shares in exchange for the 3,662 RPS he currently holds: and
• his Associates and Related Parties will receive up to a maximum of 8,338,950 Shares in $(2)$ exchange for the 166,779 RPS they currently hold.

Other than as set out above in this paragraph 0, the Directors do not have an interest in either of resolution numbers 5 or 6 other than their interest as Shareholders.

4.11 Approval of Directors and recommendation of Directors

All of the Directors of the Company (being those persons listed below, but excluding Timothy Holmes and Robert Salmon due to their material personal interest in the resolutions) voted in favour of putting resolution numbers 5 and 6 and the explanatory notes contained in this notice of meeting to Shareholders.

All of the Directors of the Company (being those persons listed below, but excluding Timothy Holmes and Robert Salmon due to their material personal interest in the resolutions) recommend that all non-associated Shareholders approve and vote in favour of resolution numbers 5 and 6.

The current Directors of the Company are:

• $(1)$ Timothy Holmes;
• $(2)$ Robert Salmon:
• $(3)$ Robert Scott:
• $(4)$ Brian Jones; and
• $(5)$ Jarrod Smith.

$4.12$ Analysis of whether the RPS Conversion is fair and reasonable

ASIC Policy Statement 74 recommends that Shareholders be provided with an analysis of whether the proposal to be presented is fair and reasonable when considered in the context of the interests of the members other than those involved in the proposed allotment or associated with such persons (Non-associated Shareholders).

ASIC Policy Statement 74 provides that the Directors may satisfy their obligation to provide Shareholders with an analysis of the proposal, by those directors not associated with the proposal (Independent Directors) either:

• $(1)$ commissioning an independent expert's report; or
• $(2)$ undertaking a detailed examination of the proposal themselves (using specialist valuations if required) and preparing a report for the Non-associated Shareholders.

The Independent Directors, being Robert Scott, Brian Jones and Jarrod Smith, consider that they have sufficient expertise, experience and resources to prepare a report on which the Nonassociated Shareholders may rely. A copy of this report follows these explanatory notes.

Independent Directors' Report

1. Introduction

This Independent Directors' Report has been prepared to assist Shareholders with their consideration of resolution numbers 5 and 6 proposed for the Annual General Meeting of Homeloans Limited (the Company) to be held on Thursday, 23 November 2006 at The Theatrette, Level 4, 168 St George's Terrace, Perth at 10.00am.

Capitalised terms used in this report have the same meaning as the terms defined in the Notice of Annual General Meeting (Notice) and accompanying Explanatory Notes (Explanatory Notes).

Resolution numbers 5 and 6 set out in the Notice seek shareholder approval for the issue of Shares to the Holmes RPS Holders and Salmon RPS Holders pursuant to the RPS Conversion. This report should be read in conjunction with the Notice and Explanatory Notes.

The Directors of the Company at the date of the Notice of Meeting are: Mr Timothy Holmes; a)

• b) Mr Robert Salmon:
• c) Mr Robert Scott;
• d) Mr Brian Jones; and
• e) Mr Jarrod Smith.

This Directors' Report has been prepared by Mr Scott. Mr Jones and Mr Smith.

$\overline{2}$ . Summary and Opinion

The Directors preparing this report conclude that both the Holmes RPS Conversion and the Salmon RPS Conversion are fair and reasonable when considered in context of the interests of Shareholders other than those involved in the proposed allotment or associated with the Holmes RPS Holders or Salmon RPS Holders.

The Directors preparing this report unanimously recommend that all non-associated Shareholders approve resolution numbers 5 and 6 set out in the Notice for the reasons specified below.

3. Details of the Holmes RPS Conversion and the Salmon RPS Conversion

Details of the Holmes RPS Conversion (being the subject or resolution number 5 set out in the Notice) and the Salmon RPS Conversion (being the subject of resolution number 6 set out in the Notice) are set out in the Notice and Explanatory Notes.

The Directors preparing this report are of the view that the information presented in the Notice and Explanatory Notes is all the information that is reasonably required by Shareholders to make a decision whether it is in the Company's interests to pass resolution numbers 5 and 6 set out in the Notice.

4. Report Requirements

As stated in section 3.12 of the Explanatory Notes, ASIC Policy Statement 74 provides that the directors of the Company may satisfy their obligations to provide shareholders with an analysis of the Holmes RPS Conversion and the Salmon RPS Conversion by undertaking a detailed examination of the proposal themselves and preparing a report for the Company's shareholders.

The directors of the Company who have prepared this Directors' Report consider they have sufficient expertise, experience and resources to prepare this report and that accordingly, an independent expert's report is not required.

The information required to be presented to shareholders by section 611 of the Corporations Act is reproduced in the Explanatory Notes.

5. Assessment of the Holmes RPS Conversion and the Salmon RPS Conversion

$5.1$ Effect of the Holmes RPS Conversion and the Salmon RPS Conversion

If the Holmes RPS Conversion and the Salmon RPS Conversion are approved, the RPS held by the Holmes RPS Holders and the Salmon RPS Holders will be converted into Shares. This will occur in accordance with the RPS Terms that were set out in the RPS Prospectus lodged with ASIC on 25 November 2003. The number of Shares that may be issued to the Holmes RPS Holders and Salmon RPS Holders is set out in detail in the Explanatory Notes.

The Directors preparing this report note that the Company intends to exchange all of the RPS on issue for Shares in accordance with the RPS Terms on 30 November 2006. If approval is not given by Shareholders for the Holmes RPS Conversion and Salmon RPS Conversion, the Company still intends to redeem all other RPS on issue, but not all of the RPS held by the Holmes RPS Holders and the Salmon RPS Holders. For further information, please see section 7.4 of this Report.

$5.2$ Advantages to Ordinary Shareholders of Approving the Holmes RPS Conversion and Salmon RPS Conversion

The Directors are of the opinion that there will be advantages to the Company and Shareholders of the Holmes RPS Conversion and Salmon RPS Conversion. These advantages are set out as follows:

• a) It will allow the Company to fully exchange all RPS on issue for Shares, which is considered beneficial to the Company and Shareholders for the following reasons:
  • As a result of the introduction of the Australian equivalent of International a. Financial Reporting Standards (AIFRS), the RPS are no longer as efficient as they were when issued. The RPS were initially issued as equity instruments whereas under AIFRS they are treated as debt, however the interest payments are not tax deductible.
  • b. The Directors are of the view that the retention of capital is strategically important. This is because of the potential acquisition opportunities that Homeloans believes will arise as a consequence of increasing consolidation in the sector.
  • The Company will no longer be bound by the RPS Terms which, amongst other C. things, provide an entitlement for holders of RPS to receive a cumulative entitlement to an unfranked divided of 10% per annum.
• The redemption of the RPS held by the Holmes RPS Holders and the Salmon RPS b) Holders together with the RPS held by other persons will result in administrative and cost savings for the Company (being the costs of having to maintain a separate register of RPS holders).

5.3 Disadvantages to the Ordinary Shareholders of Not Approving the Holmes RPS Conversion and Salmon RPS Conversion and What Will Happen if the Resolutions are Not Passed

Should resolution numbers 5 and/or 6 set out in the Notice not be passed by Shareholders, the Holmes RPS Conversion and Salmon RPS Conversion will not go ahead as proposed and some of the RPS held by the Holmes RPS Holders and the Salmon RPS Holders will remain on issue in

the capital of the Company. The Directors are of the opinion that this will disadvantage the Company and in turn the Shareholders as:

• uncertainty will arise in relation to the RPS held by the Holmes RPS Holders and the Salmon a) RPS Holders given that under the RPS Terms the Company is obliged to implement an RPS Redemotion (resulting in a cash payment to the holders of the RPS) on request by the holder of the RPS at least 20 business days prior to a reset date. This may interfere with the Company's management of its share capital and funding initiatives.
• b) The Company will not be able to exchange all RPS on issue for Shares and accordingly will still be bound by the RPS Terms and have the burden of administering a separate class of shares.

If approval is not given by Shareholders for the Holmes RPS Conversion and Salmon RPS Conversion, the Company still intends to exchange all other RPS on issue for Shares in accordance with the RPS Terms, but not all of the RPS held by the Holmes RPS Holders and the Salmon RPS Holders. In these circumstances the Company will exchange such number of the RPS held by the Holmes RPS Holders and Salmon RPS Holders as is permitted by Part 6.1 of the Corporations Act 2001 with the effect that the voting power of the Holmes RPS Holders and Salmon RPS Holders will not exceed 20% of the voting power in the Company.

5.4 Disadvantages to Ordinary Shareholders of Approving the Holmes RPS Conversion and Salmon RPS Conversion

The Directors preparing this report are of the opinion that there are no significant disadvantages to Shareholders in approving the Holmes RPS Conversion and Salmon RPS Conversion apart from the possible dilutive effect on existing Shareholders' voting power arising from the issue of further shares if the Resolutions are passed. The Directors preparing this report also do not consider that the Holmes RPS Conversion and Salmon RPS Conversion will deter the making of any takeover bid for the Company.

It is noted by the Directors preparing this report that although the approval sought from Shareholders is for the maximum number of Shares to be issued pursuant to the RPS Conversion, it is likely that the actual number of Shares issued to the Holmes RPS Holders and Salmon RPS Holders will be significantly lesser than the maximum number of Shares for which approval is sought. Details of the maximum, minimum and expected number of Shares to be issued to the RPS Holders and Salmon RPS Holders is set out in Table 2 in the Explanatory Notes.

$5.5$ Other relevant factors

The Directors preparing this report note that the RPS issued to the Holmes RPS Holders and the Salmon RPS Holders were issued on the same terms as to members of the public subscribing for RPS under the RPS Prospectus. Accordingly, the Directors preparing this report are of the view that the Holmes RPS Holders and the Salmon RPS Holders should be and will be if resolution numbers 5 and 6 are passed by Shareholders, treated on the same terms as all other holders of RPS. The Directors preparing this report consider that the proposed terms of the Holmes RPS Conversion and the Salmon RPS Conversion are reasonable in the circumstances and are no less favourable to the Company than the terms and treatments of the RPS issued to members of the public.

Domith

Jarrod Smith on behalf of the Independent Directors

20 October 2006

Contact Daytime Telephone

HOM WIP 150139/000001/000001/i

1 Your Address

This is your address as it appears on the company's share register. If this information is incorrect, please mark the box and make the correction on the form. Securityholders sponsored by a broker (in which case your reference number overleaf will commence with an 'x') should advise your broker of any changes. Please note, you cannot change ownership of your securities using this form.

$\overline{2}$ Appointment of a Proxy

If you wish to appoint the Chairman of the Meeting as your proxy, mark the box. If the individual or body corporate you wish to appoint as your proxy is someone other than the Chairman of the Meeting please write the full name of that individual or body corporate in the space provided. If you leave this section blank, or your named proxy does not attend the meeting, the Chairman of the Meeting will be your proxy. A proxy need not be a securityholder of the company. Do not write the name of the issuer company or the registered securityholder in the space.

3 Votes on Items of Business

You may direct your proxy how to vote by placing a mark in one of the three boxes opposite each item of business. All your securities will be voted in accordance with such a direction unless you indicate only a portion of voting rights are to be voted on any item by inserting the percentage or number of securities you wish to vote in the appropriate box or boxes. If you do not mark any of the boxes on a given item, your proxy may vote as he or she chooses. If you mark more than one box on an item your vote on that item will be invalid.

4 Appointment of a Second Proxy

You are entitled to appoint up to two proxies to attend the meeting and vote on a poll. If you wish to appoint a second proxy, an additional Proxy Form may be obtained by telephoning the company's share registry or you may copy this form.

To appoint a second proxy you must:

• (a) like on each of the first Proxy Form and the second Proxy Form state the percentage of your voting rights or number of securities applicable to that form. If the appointments do not specify the percentage or number of votes that each proxy may exercise, each proxy may exercise half your. votes. Fractions of votes will be disregarded.
• $(b)$ return both forms together in the same envelope.

5 Signing Instructions

You must sign this form as follows in the spaces provided:

Individual:		where the holding is in one name, the holder must sign.
Joint Holding:		where the holding is in more than one name, all of the securityholders should sign.
	Power of Attorney:	to sign under Power of Attorney, you must have already lodged this document with the registry. If you have notpreviously lodged this document for notation, please attach a certified photocopy of the Power of Attorney to this formwhen you return it.
Companies:		where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by thatperson. If the company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, aSole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Directoror a Company Secretary. Please indicate the office held by signing in the appropriate place.

If a representative of a corporate Securityholder or proxy is to attend the meeting the appropriate "Certificate of Appointment of Corporate Representative" should be produced prior to admission. A form of the certificate may be obtained from the company's share registry or at www.computershare.com.

Lodgement of a Proxy

This Proxy Form (and any Power of Attorney under which it is signed) must be received at an address given below no later than 48 hours before the commencement of the meeting at 10.00am on 23 November 2006. Any Proxy Form received after that time will not be valid for the scheduled meeting.

Documents may be lodged: IN PERSON

Registered Office - C/- Gooding Pervan, Level 9 The Quadrant, 1 William Street, PERTH WA 6000

BY MAIL Registered Office - C/- Gooding Pervan, PO Box Z5045, PERTH WA 6831

BY FAX

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