Message to Shareholders

Dear Shareholders,

We take our responsibility to our shareholders very seriously. Our belief is that by maintaining a long-term focus, we can maximise shareholder value. Rather than thinking about ways in which we can create short-lived gains each quarter, we focus on serving our clients and delivering the most relevant solutions as best as we can. By providing the best customer solutions, we believe that we are building a company that will create more value, not just for our customers, but ultimately also for our shareholders as well.

In this address, I would like to briefly mention the changes and steps we have taken to protect our shareholders' long-term interest.

2007 was an exciting year filled with challenges for the Group, as we continued our journey of transformation from one of Asia's leading System Architects to a Technology Enabler and Provider. This year, we concluded our business re-alignment to streamline our operations and I am pleased to say that the Group has emerged even stronger and better equipped to face the challenging market opportunities in the future. In our newer-aligned business organisation model, the Group will operate under two major groupings of Digital Media and Infrastructure Enabling. The Digital Media group is made up of three segments namely, Digital Media Solution, Multi Media Software and New Media Content. Our Infrastructure Enabling group consists of our Infrastructure Solution and Managed Services segments.

The Group's foray into the digital media market started with the Cable TV industry in China in 2004. Since then, in order to ride upon the growing business opportunities in the digital media market, the Group has expanded our participation beyond providing integrated hardware solution to offering our multimedia software under a separate subsidiary, BEE MediaSoft Ltd, to the recently created New Media Content offering.

In 2007, less than 20% of the 130 million analog cable TV subscribers in China had been converted to digital. The Chinese government has mandated full digitisation by 2015. The migration from analog to digital cable TV is forecast to grow by CAGR of 35% from 2007 to 2010; while Pay TV households is forecast to grow at 45% CAGR from 2006 to 2010.

Digitisation creates greater opportunities for consumers to interact through their TV, PC, Mobile screens and view content in a very personalised manner. Convergences of technologies and the quest to meet lifestyle changes of consumers have created a new media market.

As outlined above, the Group sees growth opportunities in the digital media market; especially in the Cable TV industry. Besides the experience and track records in implementing large scale digital media solution for the enabling of digital TV or IPTV, the marketing of the our multi-media video software under BEE MediaSoft Ltd has expanded the Group's market coverage. In addition, the offering of new media content enables the Group to position itself into service offerings with operators on Video on Demand (VOD) and Pay Per View (PPV); which have become important services for digital TV or IPTV.

This move reflects the shift in emphasis of our business, as we become a leading Technology Enabler and Provider with the Digital Media group spearheading the growth. In October 2007, the Group made a strategic move into consumer media with the creation of our New Media Content Group, and invested a 10% equity stake in Beijing CNTI Media Holding Co. Ltd (CNTI), whose core business is in the Chinese Mobile TV industry distribution services. CNTI will operate a joint venture with one of only six Mobile TV license holders in China, opening up opportunities for the Group to develop products and services in areas such as content production and mobile advertising over mandated Chinese networks. This will bring us closer to end consumers and extend the Group's participation in the digital TV and media space, especially in the expansive China market, which research has projected to have 31 million Mobile TV subscribers by 2010.

In December 2007, our Group's Beijing office was appointed by Beijing Gehua CATV Network Co., Ltd (Beijing Gehua) as the total solutions provider for their digital TV broadcast system; ranging from provision of infrastructure to setting up of a media operation support system.

Beijing Gehua is the only cable TV operator in Beijing, serving more than 3 million cable TV subscribers. More recently, we have been awarded an initial contract to implement the fi rst provincial scale interactive digital TV platform for cable TV operator, Neimeng Broadcast TV information Network Co. Ltd (“Neimeng”) of Inner Mongolia, China. Neimeng, the only cable TV operator in the province of Inner Mongolia, serves a total of about 1.4 million cable subscribers.

In competition with cable operators offering digital TV services, there is growing trend of telecom operators offering IPTV services to reduce customer churn and increase non-voice revenue. Various research groups have predicted that worldwide IPTV subscribers will reach between 70 million to 100 million by 2011. Revenue for the IPTV market is projected to hit US$14 billion by 2012.

Through strategic account wins, investments and alliances, the Group envisions becoming one of China's leading new media companies operating in the areas of mobile, internet and digital cable TV. Such calculated investments and decisions have also greatly benefi ted the Group, and we see revenue from our Digital Media group leap a remarkable 37.3% to US$35million in 2007.

On the other hand, the proliferation of the Internet, increasing awareness of security threat to networks, more stringent corporate governance have given rise to demands for network security and related services. The IT security solutions market in Asia Pacifi c is expected to grow at an annual rate of 15% from 2007 till 2011 while China is forecast to grow at a faster pace of over 20% per annum. This market is expected to reach over US$5.8 billion by 2011.

To better address the market opportunities and counter the competition in Infrastructure Solutions, Vantage, a division providing Managed Services, was set up in February 08. Besides focusing on all professional services that were rendered in the past, service operation centres will be set up to provide additional services such as managed security services. Managed Services enhances the focus and compliments the Group's offering of differentiated security solution.

I will always remember the year 2007 as a year of metamorphosis for the Group. The Group sees the digital media industry as a favourable market for the creation of recurring revenue. At the same time, by focusing on enhanced solutions and services in the infrastructure market, the Group hopes to insulate itself better against lower IT spending. Emerging with newer and stronger divisions that specialise in niche markets, we are equipped, prepared and capable to become a leading information technology enabler and top player in the digital media arena, especially in the China market, in the near future.

I would like to extend my heartfelt appreciation to all our valued customers, suppliers, business associates and shareholders for your patience and unwavering support for us through this year of challenge. Your confi dence and faith in our capabilities form the basis of our strength in overcoming the obstacles to pursue continual growth.

Lastly, I want to take this opportunity to thank our dedicated and professional DMX team, whom have worked together seamlessly through this period of business operations re-alignment. Together with our esteemed partners, let us ride the wave of success and look forward to an exciting 2008 with endless business opportunities to bring the Group to greater heights.

Emmy Wu
Executive Chairman