REA GROUP LTD — M&A Activity 2005

Aug 11, 2005

11 August 2005

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Dear Shareholder,

As you may be aware, News Limited (a 43.6% shareholder) has announced its intention to make a takeover offer at $2.00 per share (the "Offer") for all of the shares in realestate.com.au Ltd ("REA") that it does not already own.

You will shortly receive the Bidder's Statement prepared by News Limited in relation to the Offer.

Approximately two weeks later you will receive the Target's Statement prepared by REA.

You should do nothing in relation to the Offer until you have received and considered both documents.

As three of REA's five Directors have stood aside from any REA Board consideration of the Offer, a Board Sub-Committee comprising Mr Sam White and Mr John McGrath, will consider and respond to the Offer.

The Subcommittee Directors of REA would like you to know the following;

• the Offer is uninvited and hostile; $\bullet$
• the Subcommittee Directors both recommend against acceptance of the Offer;
• each of the Subcommittee Directors will not accept the Offer in relation to the $\bullet$ shares in which they respectively have a relevant interest (in aggregate approximately 28.4% of the shares that News does not already own);
• the REA share price as at the date of this letter is $2.27, 14% above the Offer price;
• the Offer was made prior to release to the market of:
  • an update of financial information for the 2005 year (indicating expected net profit of $5.4m, 119% above 2004); and

All Company of the Company of the Company of the Company of the Company of the Company of the Company of the Company of the Company of the Company of the Company of the Company of the Company of the Company of the Company

• 2006 budget indicating an anticipated 2006 net profit of $14m (159% above 2005); and
• the 2006 budgets were approved by REA's full Board in June 2005, well before the $\bullet$ Offer was announced.

(For your convenience, we have included a full copy of the relevant release).

The Subcommittee Directors have appointed Investigating Accountants to express a view on the reasonableness of the 2006 budget. This will be included in the Target's Statement.

The Target's Statement will also include:

• the detailed reasons the Subcommittee Directors both recommend you REJECT the Offer, and
• an Independent Expert's report on whether the Offer is fair and reasonable. $\bullet$

You should do nothing in relation the Offer until you have received and read the Target's Statement.

If you do wish to sell REA shares prior to that, you can currently sell them on market for more than the Offer price (though small shareholders may need to consider brokerage costs).

The Subcommittee Directors strongly believe that under the management team now leading the company, REA is well positioned to continue its strong growth.

Yours sincerely,

mc putt

John McGrath Chairman