ar 2001 & solve Trek 2000 International Ltd Trek 2000 International Ltd

Transcription

1 Trek 2000 International Ltd ar 2001 innovate & solve Trek 2000 International Ltd 30 Loyang Way #07-13/14/15 Loyang Industrial Estate Singapore Tel : Fax :

2 About Trek 2000 International Ltd Trek 2000 International Ltd offers state-of-the-art design solutions ranging from portable storage devices, digital audio and video products to sophisticated ASIC design all catering to the fast changing digital industry. Trek has offices all over the world including the U.S., Malaysia, Thailand, India, Hong Kong, Singapore, Netherlands, France, China and the Philippines to serve the rapidly expanding markets in all regions. A public company on the Singapore Stock Exchange (SGX: TREK), Trek 2000 International Ltd is named by Forbes Global as one of the Best Small Companies in the World for Trek 2000 International Ltd is also ranked as the Best Managed Small Company in Singapore by AsiaMoney (of Euromoney). For more information, visit

3 contents 2-5 Chairman s Statement 6 Board of Directors 7 Corporate Information 7 Awards 8 Financial Highlights 9 Financial Statements

4 CHAIRMAN S STATEMENT FY2001 in Perspective 2001 was a year of challenges for the IT industry. The burst dotcom bubble seriously impacted the IT industry leaving it with a massive inventory overstock. The economic slowdown globally was further exacerbated by the events of September 11 which left a bewildered world trying to come to terms with the degree of destruction it witnessed. Like all the other companies in the IT industry, Trek 2000 International Ltd ( Trek or the Group ) was not spared from the impact of the economic slowdown. Yet, we managed to achieve a turnover of $98.1 million in spite of the fact that the conditions around us were increasingly tough and competitive. The lower turnover during the year represented a decline of about 29% over that of the previous year. Riding on the back of the lower turnover, our post tax profit also fell by 9% and stood at $7.1 million as of the end of FY2001, compared to the $7.9 million achieved in the previous year. The Group s performance for the year was a reflection of the high inventory levels burdening most of our customers, as well as higher costs incurred by the Group to expand its market presence geographically, and increase in marketing and promotional activities. Our performance for the year was affected by the lower contributions from our Customized Engineering business, which saw a decline of about 39% relative to the previous year. Revenue contribution from Customized Engineering totalled approximately $66.3 million in FY2001. On the other hand, revenue contribution from the Digital Technology business was higher due to increased demand from the market for a range of ThumbDrive Solutions as well as the ability of the Group to expand its customer base. In FY2001, the revenue contribution from Digital Technology rose 5% from that of the previous year to $31.8 million despite the bearish market sentiment. We have filed the relevant patents to protect our engineering solutions. In fact, we are pleased to announce that as of 16th April 2002, Trek has been granted the patent for one of our renowned ThumbDrive solutions by the Intellectual Property Office of Singapore (IPOS). A Review of Our Operations The Group s operating profit (before tax, interest, depreciation, amortization and foreign exchange) decreased to S$7.7 million from S$10.7 million (or 28.0%) in FY2001. The higher contribution from Digital Technology, which traditionally commands a better profit margin, had boosted the overall margin during the year, which otherwise would have been lower. 2

5 create & develop Despite the challenges in the market, which include the price erosion of flash memories as well as competition posed by several companies attempting to replicate our ThumbDrive Solutions, we were able to achieve significant growth in this business segment. This can be attributed to the ability of our international customers to recognize our capability as well as their respect for Intellectual Property Rights (IPR). We have filed the relevant patents to protect our engineering solutions. In fact, we are pleased to announce that as of 16th April 2002, Trek has been granted the patent for one of our renowned ThumbDrive solutions by the Intellectual Property Office of Singapore (IPOS). In FY2001, 6 patents were filed. Together with the other 5 patents filed the previous year, we have now filed a total of 11 patents. To further protect our IPR, we expect to file a series of new patents in FY2002. During the year, notwithstanding the weak economic conditions, we extended our geographic footprints with the establishment of a new liaison office in India and subsidiary companies in the United States and Hong Kong. Higher marketing expenditures were incurred as the Group increased its efforts in these areas to create awareness on its engineering solutions and to counter the effects of the global economic slowdown. As a result of these initiatives, our profitability in FY2001 was eroded by both the start-up costs as well as the marketing costs. However, we view these as important and necessary investments needed to position the Group to meet the challenges ahead as the global economy recovers. Contributing to the Group s profits during the year was the higher share of profits from the Group s associated companies, mainly the higher revenues and profits from an associated company in China. Another item that significantly impacted the profitability of the Group is the foreign exchange gain. In FY2001, the foreign exchange gain increased substantially as a result of the appreciation of the US dollar against the Singapore dollar. The Group benefited from this move, as our net assets are mainly denominated in US dollars. The Group s taxation was lower due to the corporate tax incentives extended by the Singapore Government as well as the higher tax-exempt profits from one of our subsidiary companies. Corporate taxation in FY2001 decreased 69.2%, from S$2.6 million to S$0.8 million, further contributing to the post tax profitability of the Group. 3

6 CHAIRMAN S STATEMENT We are confident that with the strong demand from major IT companies in US, the US market will be able to deliver significant contributions to our future performance. By segmental geographical analysis, Singapore continues to play an important role contributing about $52.5 million to the Group s revenue. Malaysia ranks as the next highest contributor turning in revenues of approximately $18.2 million while India, Thailand, the United States and other markets contributed $10.0 million, $1.6 million, $1.7 million and $14.1 million respectively. Singapore, as it continues to oversee our sales and marketing efforts in markets like Japan, Taiwan, Korea and Australia, is one of the primary beneficiaries of our marketing and promotional programmes during the year. However, our performance in markets such as Malaysia and Thailand was affected by the ongoing economic slowdown in these countries. India, which reflected strong growth, is expected to continue its performance in view of the country s success in penetrating and attracting investments from blue chip companies. We are confident that with the strong demand from major IT companies in US, the US market (while being one of those with lower revenue contributions to the Group s performance) will be able to deliver significant contributions to our future performance. Hong Kong is our initial starting point for the China market. This sales and marketing office was established in FY2001 and we expect to see contribution from Hong Kong in FY2002. Current Year Prospects We are greatly encouraged by the early signs of economic recovery as well as the return of consumer confidence and spending in the US. Furthermore, the entry of the People s Republic of China ( the PRC or China ) into the World Trade Organization as well as the selection of Beijing as the host city for the 2008 Olympics have also brought renewed hopes to businesses in Asia and across the world. Into the new financial year, we have stretched our presence to China (Shanghai and Dongguan), the Philippines, France and the Netherlands through the establishment of subsidiary companies, liaison offices, and joint ventures with local partners in these countries. Intellectual Property Rights protection is an important aspect Trek will be closely monitoring. In our position as an engineering solutions provider, we will continue to develop new solutions through our Research and Development programmes. These new solutions will be protected through a series of new patents that we expect to file in FY2002. The awarding of these patents will give a whole new perspective to the business at Trek and help us compete in the world stage on a more levelled playing field. 4

7 serve & commit Despite the increasingly positive outlook for the world s economic conditions, the growing competitive global business environment will inevitably exert downward pressure on prices and margins. However, our overseas expansions will be expected to bring on some new accounts that are anticipated to fuel additional growth for subsequent years. Finally, I would like to share with you an important mission that our organization has embarked on. To ensure continuity as well as sustain the growth rate of the Group, we are now in the process of identifying and developing our new generation of leaders. Being an engineering solutions provider, we are at the forefront of technology. Ultimately it is imperative that we cultivate a ready source of professionals and talents with the ability to undertake the roles and responsibility of growing and expanding business at Trek. Our new generation of leaders should share the same passion and vision upon which the company was built and embrace the strong commitment to protect and continually increase the value of our shareholders to the best of their abilities. In conclusion, on behalf of the Board and Management of Trek 2000 International Ltd, I would like to thank all our customers, shareholders, business associates and employees for their help and contributions during the very difficult year in We look forward to your support into the new financial year as we face more challenges ahead. For the financial year ended 31 December 2001, the Board proposes a dividend of 20% and a bonus issue on the basis of one (1) new ordinary share of S$0.05 each credited as fully paid for every four (4) existing ordinary shares of S$0.05 each held by in the capital of the Company on a date to be determined by the Directors of the Company. The proposed issue will be made by capitalising a maximum of S$2,476,697 from the Company s Share Premium Account, which stands at S$9,050,959 as at 31 December The above proposals will be subject to the approval of the shareholders at the forthcoming Annual General Meeting and Extraordinary General Meeting respectively. Henry Tan (Henn Tan) Chairman and Chief Executive Officer 5

8 BOARD OF DIRECTORS Henry Tan Chairman and Chief Executive Officer Foo Kok Wah Executive Director Kuan Mun Kwong Executive Director Lai Chee Kong Executive Director Chay Yee Meng Non-Executive Director Cheah Kim Teck Non-Executive Director Gurcharan Singh Non-Executive Director Isao Nihongi Non-Executive Director Lee Sang Fun Non-Executive Director 6

9 CORPORATE INFORMATION BOARD OF DIRECTORS Executive: Henry Tan (Chairman and Chief Executive Officer) Foo Kok Wah Kuan Mun Kwong Lai Chee Kong Non-Executive: Chay Yee Meng Cheah Kim Teck Gurcharan Singh Isao Nihongi Lee Sang Fun AUDIT COMMITTEE Lee Sang Fun (Chairman) Chay Yee Meng Gurcharan Singh NOMINATION COMMITTEE Gurcharan Singh (Chairman) Henry Tan Lee Sang Fun REMUNERATION COMMITTEE Gurcharan Singh (Chairman) Henry Tan Lee Sang Fun SECRETARIES Linda Law, FCIS Yeo Poh Noi Caroline, ACIS REGISTERED OFFICE 30 Loyang Way #07-13/14/15 Loyang Industrial Estate Singapore Tel : Fax : SHARE REGISTRARS Lim Associates (Pte) Ltd 10 Collyer Quay #19-01 Ocean Building Singapore AUDITORS Ernst & Young 10 Collyer Quay #21-01 Ocean Building Singapore AUDIT PARTNER-IN-CHARGE Mak Keat Meng BANKERS Overseas-Chinese Banking Corporation Limited The Development Bank of Singapore Ltd Citibank, N.A. AWARDS Jul 2000 ZDTV (now TechTV), US awarded Sep 2000 Best New Technology, Australia Oct 2000 Computer User Creativity Award, Thailand Oct 2000 Forbes World Best 300 Companies Nov 2000 PCWorld Award, Norway Nov 2000 Excellence Award, UK Dec 2000 Hardwarezone.com, Singapore Jan 2001 PC Expert Excellence Technique, France Jan 2001 AsiaMoney s Best Managed Company (S pore) May 2001 MIStupid.com, US awarded Jan 2002 PC World, US awarded 7

10 FINANCIAL HIGHLIGHTS Turnover (S$million) Profit Before Income Tax (S$million) Net Tangible Assets Backing Per Share (cents) Basic Earning Per Share (cents) Financial Summary *1997 *1998 *1999 * (S$ 000) (Proforma) (Proforma) (Proforma) (Proforma) Turnover 42,824 40,567 65, ,251 98,077 Profit before income tax ,420 10,442 7,912 Profit attributable to shareholders ,523 7,872 7,146 Shareholders equity 3,892 4,514 7,603 28,851 34,564 Cash & cash equivalents 2,986 5,393 5,686 16,120 15,472 Total Borrowings 2,177 2,003 1,641 1, Net dividend paid/proposed ,495 1,495 Gross dividend (%) Net Tangible Assets backing per share (cents) 2.33** 2.70** 4.42** 14.34*** 17.04*** Basic Earnings per share (cents) 0.16** 0.22** 1.51** 3.97*** 3.61*** Note: * Pursuant to a group Restructuring Exercise which took effect on 2 May 2000, the Company became the holding company of the Group. The Restructuring Exercise is described in the Company s prospectus dated 13 May The proforma consolidated financial statements of the Group have been prepared on the basis as if the Company has been the holding company of the Group throughout the years. ** Calculated based on the pre-invitation share capital of 167,335,740. For details, please refer to the Company s prospectus dated 13 May *** Calculated based on the issued share capital of 198,135,740. 8

11 Financial Statements 10 Report of the Directors 15 Report on Corporate Governance 19 Statement by Directors 20 Report of the Auditor 21 Profit and Loss Accounts 22 Balance Sheets 23 Statements of Changes in Equity 25 Statements of Consolidated Cash Flow 27 Notes to the Financial Statements

12 REPORT OF THE DIRECTORS The directors are pleased to present their report to the members together with the audited financial statements of the Company and the Group for the financial year ended 31 December PRINCIPAL ACTIVITIES The principal activity of the Company is that of investment holding. The principal activities of the subsidiary companies consist of dealing in electrical and electronics appliances and components, and performing research and development of computer hardware, software and other related products. There were no significant changes in these principal activities during the financial year. RESULTS FOR THE FINANCIAL YEAR Group Company $ $ Profit for the financial year attributable to shareholders 7,145,783 3,270,836 MATERIAL TRANSFERS TO/(FROM) RESERVES AND PROVISIONS There were no material transfers to/(from) reserves and provisions during the financial year except for normal amounts set aside as disclosed in the notes to the financial statements. Details of movements in reserves are shown in the Statements of Changes in Equity. DIVIDENDS During the financial year, the Company paid a first and final dividend of 20% less income tax of 24.5% on the ordinary shares of the Company totaling $1,495,925 in respect of the previous financial year, as proposed in the directors report of that year. The directors propose a first and final dividend of 20% less income tax of 24.5% on the ordinary shares of the Company totaling $1,495,925, be paid in respect of the financial year under review. DIRECTORS The directors in office at the date of this report are: - Henry Tan Chairman and Chief Executive Officer Chay Yee Meng Cheah Kim Teck Gurcharan Singh Lee Sang Fun Isao Nihongi Foo Kok Wah (Appointed on 22 November 2001) Kuan Mun Kwong (Appointed on 22 November 2001) Lai Chee Kong (Appointed on 22 November 2001) 10

13 DIRECTORS INTEREST IN SHARES AND DEBENTURES The following directors, who held office at the end of the financial year had, according to the register of directors shareholdings required to be kept under Section 164 of the Companies Act, Cap. 50, an interest in shares of the Company and its related companies as stated below: - Registered in the Director s name of director deemed interest At At or date of At At or date of At At Name of director appointment appointment Ordinary shares of $0.05 each Ordinary shares of $0.05 each The Company Trek 2000 International Ltd Henry Tan 98,750,360 97,750,360 97,750,360 10,146,940 9,676,940 9,636,940 Cheah Kim Teck 105, , , Chay Yee Meng , ,000 Gurcharan Singh 262, , , Lee Sang Fun 75,000 75,000 75, Foo Kok Wah 1,598,240 1,598,240 1,598, Kuan Mun Kwong 5,000 5,000 5, By virtue of Section 7 of the Companies Act, Cap 50, Mr Henry Tan who holds direct and deemed interest in more than 20% of the issued share capital of the Company, is deemed to have an interest in the subsidiary companies of the Company. ARRANGEMENT TO ENABLE DIRECTORS TO ACQUIRE SHARES AND DEBENTURES Neither at the end of the financial year nor at any time during the year, was the Company a party to any arrangement whose object is to enable the directors of the Company to acquire benefits by means of the acquisition of shares or debentures of the Company or any other body corporate other than pursuant to the Trek 2000 International Ltd Share Option Scheme. DIRECTORS CONTRACTUAL BENEFITS Since the end of the previous financial year, no director of the Company has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the director, or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest. 11

14 REPORT OF THE DIRECTORS OPTIONS ON SHARES IN THE COMPANY The Trek 2000 International Ltd Share Option Scheme (the Scheme ) was approved by shareholders at an extraordinary general meeting held on 8 November Under the Scheme, all options to be issued will have a term no longer than ten years from the date of approval of the Scheme. The exercise price of the option will be the average of the closing prices of the Company s ordinary shares on the Stock Exchange of Singapore Dealing and Automated Quotation System ( SESDAQ ) for the five market days immediately preceding the date of grant. The Remuneration Committee administering the Scheme comprises the following directors: - Gurcharan Singh Henry Tan Lee Sang Fun (Chairman) At the extraordinary general meeting held on 8 November 2001, the shareholders approved the participation of Mr Henry Tan and his associates Messrs Tan Boon Tat, Charlie Tan, Tan Boon Siong and Tan Boon Liew, and the non-executive directors of the Company in the Scheme. The exercise price of the option was determined based on the average of the last dealt prices of the Company s ordinary shares on the SESDAQ for the five market dates immediately preceding the date of printing of the circular to Shareholders in relation to the Scheme. No employee has received 5% or more of the total number of options available under the Scheme. During the financial year, in consideration for the payment of $1 for each offer accepted, options were granted pursuant to the Scheme in respect of 10,563,000 unissued shares of $0.05 each in the Company. At the end of the financial year, options for unissued shares of the Company under the Scheme are as follow: - Number of unissued ordinary shares of $0.05 each Options granted Options Options Balance at Exercise Expiry Date of grant at date of grant accepted cancelled price date 9 November , , ,000 $ November November ,178,000 10,178,000-10,178,000 $ November 2011 Details of options granted to the directors of the Company are as follow: - Aggregate options exercised since commencement Aggregate options Options of Scheme outstanding granted during to end of at end of Exercise Name of director financial year financial year financial year Price Henry Tan 200, ,000 $0.35 Chay Yee Meng 500, ,000 $0.39 Cheah Kim Teck 500, ,000 $0.39 Gurcharan Singh 500, ,000 $0.39 Lee Sang Fun 500, ,000 $0.39 Isao Nihongi 500, ,000 $0.39 Foo Kok Wah 1,000,000-1,000,000 $0.39 Kuan Mun Kwong 1,000,000-1,000,000 $0.39 Lai Chee Kong 1,000,000-1,000,000 $

15 AUDIT COMMITTEE The Audit Committee of the board of directors comprises three members, all of whom are independent non-executive directors. The members of the Audit Committee at the date of this report are: - Lee Sang Fun Chairman Gurcharan Singh Chay Yee Meng (Appointed on 22 June 2001) The Audit Committee carried out its functions and duties as set out in the Companies Act and the Listing Manual of the Singapore Exchange Securities Trading Limited ( SGX-ST ). In performing those functions, the Committee reviewed: - a. the audit plan of the Company s external auditor and their evaluation of the systems of internal controls arising from their audit examination; b. the assistance and co-operation given by the officers of the Company and its subsidiary companies to the auditor; c. the scope and results of the audit procedures performed; and d. the financial statements of the Company and the consolidated financial statements of the Group for the financial year ended 31 December 2001, and the report of the auditor on these financial statements before their submission to the board of directors. The Committee has nominated Ernst & Young, Certified Public Accountants, for re-appointment as auditor of the Company by shareholders for the ensuing financial year. ACQUISITION AND DISPOSAL OF SUBSIDIARY COMPANIES No subsidiary company was acquired or disposed of during the financial year. ISSUE OF SHARES AND DEBENTURES The Company and its subsidiary companies did not issue any shares or debentures during the financial year. BAD AND DOUBTFUL DEBTS Before the profit and loss account and balance sheet of the Company were made out, the directors took reasonable steps to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts, and have satisfied themselves that there were no bad debts to be written off and that adequate provision has been made for doubtful debt. At the date of this report, the directors are not aware of any circumstances which would render it necessary to write off any bad debts or the doubtful debts provided in the Group inadequate to any substantial extent. CURRENT ASSETS Before the profit and loss account and balance sheet of the Company were made out, the directors took reasonable steps to ascertain that any current assets which were unlikely to realise their book value in the ordinary course of business had been written down to their estimated realisable values or adequate provision had been made for the diminution in values of these current assets. At the date of this report, the directors are not aware of any circumstances which would render the values attributed to current assets in the consolidated financial statements misleading. 13

16 REPORT OF THE DIRECTORS CHARGES ON ASSETS AND CONTINGENT LIABILITIES Since the end of the financial year, and up to the date of this report, no charge on the assets of the Company or the subsidiary companies has arisen which secures the liabilities of any other person, and no contingent liability has arisen. ABILITY TO MEET OBLIGATIONS No contingent or other liability of the Company or the subsidiary companies has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Company and of the Group to meet their obligations as and when they fall due. OTHER CIRCUMSTANCES AFFECTING THE FINANCIAL STATEMENTS At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report, or the financial statements of the Company and of the Group which would render any amount stated in the financial statements of the Company and the consolidated financial statements misleading. UNUSUAL ITEMS In the opinion of the directors, the result of the operations of the Company and of the Group during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature except for the prior year adjustments as disclosed in Note 21 to the financial statements. UNUSUAL ITEMS AFTER THE FINANCIAL YEAR In the opinion of the directors, no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which would affect substantially the results of the operations of the Company or of the Group for the financial year in which this report is made. AUDITOR Ernst & Young has expressed their willingness to accept re-appointment as auditor. On behalf of the Board, HENRY TAN Director LAI CHEE KONG Director 16 April 2002 Singapore 14

17 REPORT ON CORPORATE GOVERNANCE The board of directors of Trek 2000 International Ltd is committed to maintain a high standard of corporate governance within the Group. Good corporate governance establishes and maintains a legal and ethical environment in which the Group strives to preserve the interest of all stakeholders. For effective corporate governance, the Company has put in place the following self-regulatory and monitoring mechanisms: - THE BOARD OF DIRECTORS The Board comprises 9 directors: - Executive directors Henry Tan Chairman and Chief Executive Officer Foo Kok Wah (Appointed on 22 November 2001) Kuan Mun Kwong (Appointed on 22 November 2001) Lai Chee Kong (Appointed on 22 November 2001) Non-executive directors Chay Yee Meng Cheah Kim Teck Gurcharan Singh Lee Sang Fun Isao Nihongi The Board oversees the business affairs of the Group. It reviews and approves decisions involving the governance of financial objectives, major investments, funding decisions and strategies to be implemented by the management. It also monitors the standard of performance and issue of policy, both directly, through its committees, or by means of a system of delegation of authority to management personnel. While the directors take a keen interest in the Group s business strategies, they are also committed to increase the level of corporate governance in the Company so as to enable the Board to carry out such functions more effectively. 15

18 REPORT ON CORPORATE GOVERNANCE AUDIT COMMITTEE The Audit Committee comprises three members, all of whom are independent non-executive directors. The members of the Audit Committee at the date of this report are: - Lee Sang Fun (Chairman) Gurcharan Singh Chay Yee Meng (Appointed on 22 June 2001) The Singapore Exchange Securities Trading Limited ( SGX-ST ) issued a Best Practices Guide on 4 May The Company has adopted the formats set out by this guide in relation to the roles and responsibilities of the Audit Committee with the overall objective of ensuring that management has created and maintained an effective control environment in the Company and the Group. The Committee met twice in the financial year 2001 to discharge the following delegated functions: - a. Reviewed with the external auditor their audit plan and scope of audit examinations; b. Reviewed with the external auditor their evaluation of internal controls together with management s response; c. Reviewed the assistance given by the Group s officers to the external auditor; d. Reviewed the financial statements of the Company and the Group, including the half-year and full year results before their submission to the Board, together with the external auditor s report thereon; e. Reviewed the Group s compliance with such functions and duties as may be required under the relevant statutes or the Listing Manual and by such amendments made thereto from time to time; f. Nomination of external auditor; and g. Reviewed all existing and future interested person transactions to ensure that they are carried out on normal commercial terms and are not prejudicial to the interest of the Company s shareholders. The Company is currently looking at outsourcing the internal audit services which includes regular operational and financial audits of the Company and its subsidiary companies. In the opinion of the directors, Trek 2000 International Ltd complies with the Best Practices Guide, with respect to Audit Committee. The Committee has full access to and co-operation from the Company s management and has full discretion to invite any director or executive officer to attend its meetings. The auditor has unrestricted access to the Audit Committee. The Audit Committee has reasonable resources to enable it to discharge its function properly. The Audit Committee may examine whatever aspects it deems appropriate of the Group s financial affairs, its audit and its exposure to risks of a regulatory or legal nature. It keeps under review the effectiveness of the Group s system of accounting and internal financial controls, for which the directors are responsible. It also keeps under review the Company s programme to monitor compliance with its legal, regulatory and contractual obligations. 16

19 SECURITIES TRANSACTIONS Following the introduction of the Best Practices Guide by the SGX-ST, the Group has issued an Internal Compliance Code on Securities Transactions to directors and key employees (including employees with access to price-sensitive information to the Company s shares) of the Group setting out the code of conduct on transactions in the Company s shares by these persons, the implications of insider trading and the recommendations of the Best Practices Guide issued by the SGX-ST. The directors of the Company have also adopted the Best Practices Guide with regards to dealing in the Company s shares. NOMINATION COMMITTEE ( NC ) The NC was established by the Board on 12 September 2001, and comprises the following members, 2 of whom are independent nonexecutive directors. Gurcharan Singh Henry Tan Lee Sang Fun (Chairman) The roles and responsibilities of the NC are set out in a written terms of reference. In brief, the NC is charged with the following functions: - NOMINATION OF DIRECTORS The NC recommends new Board members for approval and retiring members for re-election. During the year, the NC received and recommended the nomination of Messrs Foo Kok Wah, Kuan Mun Kwong and Lai Chee Kong as new executive directors. They were appointed on 22 November The retirement of directors is determined on a rotational basis. Directors due for retirement are required to submit themselves to the NC for re-nomination. At the coming annual general meeting, Messrs Gurcharan Singh, Lee Sang Fun, Foo Kok Wah, Kuan Mun Kwong and Lai Chee Kong will be due for retirement and re-election. Name of director Date of last re-election Henry Tan (Chairman and Chief Executive Officer) NA Chay Yee Meng 23 May 2001 Cheah Kim Teck 23 May 2001 Gurcharan Singh 23 May 2001 Lee Sang Fun 23 May 2001 Isao Nihongi 23 May 2001 Foo Kok Wah Appointed on 22 November 2001 Kuan Mun Kwong Appointed on 22 November 2001 Lai Chee Kong Appointed on 22 November

20 REPORT ON CORPORATE GOVERNANCE REMUNERATION COMMITTEE ( RC ) The RC was established by the Board on 12 September 2001, and comprises the following members, 2 of whom are independent nonexecutive directors. Gurcharan Singh Henry Tan Lee Sang Fun (Chairman) The roles and responsibilities of the RC are set out in a written terms of reference. In brief, the RC is charged with the following functions: - (A) DIRECTORS REMUNERATION The RC reviews and approves the executive directors remuneration packages yearly. The RC also reviews the non-executive directors remuneration in the form of directors fees, having regards to the roles that the individual directors play. The directors fees are submitted for shareholders approval at the annual general meeting. The remuneration of directors of the Company is disclosed in bands as follows: - Salaries/ Number of Bonuses/ director Fees Other benefits % % 2001 $250,000 to $499, Below $250, $250,000 to $499, Below $250, (B) ADMINISTRATION OF THE TREK 2000 INTERNATIONAL LTD SHARE OPTION SCHEME (THE SCHEME ) The RC also administers the Scheme and determines the grant of share options to eligible participants. Details of the share options granted during the year are set out in the directors report. On behalf of the Board, HENRY TAN Director LAI CHEE KONG Director 16 April 2002 Singapore 18

21 STATEMENT BY DIRECTORS PURSUANT TO SECTION 201(15) OF THE COMPANIES ACT, CAP. 50 We, Henry Tan and Lai Chee Kong, being two of the directors of Trek 2000 International Ltd, do hereby state that, in the opinion of the directors: - (i) (ii) the accompanying balance sheets, profit and loss accounts, statements of changes in equity and statements of consolidated cash flow, together with the notes thereto, set out on pages 21 to 45, are drawn up so as to give a true and fair view of the state of affairs of the Company and of the Group as at 31 December 2001, and of the results and changes in equity of the Company and of the Group, and the cash flow of the Group for the year then ended; and at the date of this statement there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due. The board of directors authorised these financial statements for issue on 16 April On behalf of the Board, HENRY TAN Director LAI CHEE KONG Director 16 April 2002 Singapore 19

22 REPORT OF THE AUDITOR TO THE MEMBERS OF TREK 2000 INTERNATIONAL LTD We have audited the financial statements of Trek 2000 International Ltd set out on page 21 to 45. These financial statements comprise the balance sheets of the Company and the Group as at 31 December 2001, the profit and loss accounts and the statements of changes in equity of the Company and the Group, and the statements of cash flow of the Group for the year then ended, and the notes thereon. These financial statements are the responsibility of the Company s directors. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Singapore Standards on Auditing. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the directors, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, (a) the financial statements are properly drawn up in accordance with the provisions of the Companies Act, Cap. 50 ( Act ) and the Singapore Statements of Accounting Standard and so as to give a true and fair view of: - (i) the state of affairs of the Company and of the Group as at 31 December 2001, and of the results and changes in equity of the Company and of the Group, and the cash flow of the Group for the year then ended; and (ii) the other matters required by Section 201 of the Act to be dealt with in the financial statements and consolidated financial statements. (b) the accounting and other records, and the registers required by the Act to be kept by the Company and by those subsidiary companies incorporated in Singapore of which we are the auditor have been properly kept in accordance with the provisions of the Act. We have considered the financial statements and auditors reports of all subsidiary companies for which we have not acted as auditor, being financial statements included in the consolidated financial statements. The names of those subsidiary companies audited by our associated firms are stated in Note 1. We are satisfied that the financial statements of the subsidiary companies that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations as required by us for those purposes. The auditors reports on the financial statements of the subsidiary companies were not subject to any qualification and in respect of subsidiary companies incorporated in Singapore did not include any comment made under Section 207(3) of the Act. ERNST & YOUNG Certified Public Accountants 16 April 2002 Singapore 20

23 PROFIT AND LOSS ACCOUNTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2001 Group Company Note $ $ $ $ Revenue 3 98,077,083 93,568,202 3,962,714 - Costs of goods sold (87,410,411) (85,046,976) - - Gross profit 10,666,672 8,521,226 3,962,714 - Research and development expenses (725,947) (983,755) - - Marketing and distribution expenses (2,327,286) (1,048,331) - - General administration expenses (1,277,349) (794,272) (193,325) (260,531) Other operating income 1,354,855 1,333, , ,129 Operating profit 4 7,690,945 7,028,043 4,342,223 64,598 Finance cost 5 (81,458) (60,632) - - Share of profits/(losses) of associated companies 302,917 (12,646) - - Profit before income tax 7,912,404 6,954,765 4,342,223 64,598 Income tax 6 (766,621) (1,603,974) (1,071,387) (23,058) Profit for the financial year attributable to shareholders 7,145,783 5,350,791 3,270,836 41,540 Earnings per share 7 Basic (cents) Fully diluted (cents) The accompanying notes form an integral part of the financial statements. 21

24 BALANCE SHEETS AS AT 31 DECEMBER 2001 Group Company Note $ $ $ $ Fixed assets 8 2,465,255 2,243, Intangible assets 9 804, , Investments Subsidiary companies ,619,388 5,619,388 Associated companies , , , ,447 Unquoted investments 12 1,095,000-1,095,000-1,589, ,101 7,353,835 6,258,835 Current assets Trade debtors 13 19,672,864 17,378, Inventories 14 6,013,103 8,596, Amounts due from subsidiary companies ,849,382 8,691,432 Amounts due from associated companies 15 16, Other debtors ,388 97, ,665 14,753 Fixed deposits 10,638,007 10,446,262-4,072,990 Cash and bank balances 4,834,271 5,673, , ,000 41,895,275 42,192,578 13,508,177 12,995,175 Current liabilities Trade creditors and accruals 10,362,342 11,317, Amount due to associated company 15-21, Other creditors , ,309 33, ,666 Bank term loan, secured , Hire purchase creditors 19 30,171 30, Provision for income tax 1,183,691 2,961,186 54,732 23,058 11,896,756 14,758,312 87, ,724 Net current assets 29,998,519 27,434,266 13,420,362 12,740,451 Non-current liabilities Bank term loan, secured 18 - (1,268,831) - - Hire purchase creditors 19 (104,108) (134,264) - - Deferred income tax 20 (189,683) (61,683) ,564,156 28,851,192 20,774,197 18,999,286 Authorised share capital 1,000,000,000 ordinary shares of $0.05 each 50,000,000 50,000,000 50,000,000 50,000,000 Capital and reserves Issued and fully paid share capital 198,135,740 ordinary shares of $0.05 each 9,906,787 9,906,787 9,906,787 9,906,787 Share premium 9,050,959 9,050,959 9,050,959 9,050,959 Capital reserve 4,542,638 4,542, Revenue reserve 11,000,649 5,350,791 1,816,451 41,540 Translation reserve 63, The accompanying notes form an integral part of the financial statements. 34,564,156 28,851,192 20,774,197 18,999,286 22

25 STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2001 The Group Share (1) Share Capital Revenue Translation Note capital premium reserve reserve reserve Total $ $ $ $ $ $ Balance at 1 January Issued pursuant to acquisition of subsidiaries and associated company 5,626,785-4,542, ,169,423 Subdivision of 5,626,787 ordinary shares of $1 each into 112,535,740 ordinary shares of $0.05 each 5,626,787-4,542, ,169,425 Issued 48,000,000 ordinary shares of $0.05 each at par for cash 2,400, ,400,000 Issued 37,600,000 ordinary shares of $0.05 each at premium of $0.27 per share in connection with Initial Public Offering 1,880,000 10,152, ,032,000 Expenses in relation to the Initial Public Offering - (1,101,041) (1,101,041) Foreign currency translation Profit for the financial year attributable to shareholders ,350,791-5,350,791 Balance at 31 December 2000 As previously reported 9,906,787 9,050,959 4,542,638 3,868, ,368,718 Prior year adjustments ,482,474-1,482,474 As restated 9,906,787 9,050,959 4,542,638 5,350, ,851,192 Foreign currency translation ,106 63,106 Dividend paid (1,495,925) - (1,495,925) Profit for the financial year attributable to shareholders ,145,783-7,145,783 Balance at 31 December ,906,787 9,050,959 4,542,638 11,000,649 63,123 34,564,156 (1) The holders of ordinary shares are entitled to receive dividend as and when declared by the Company. All ordinary shares carry one vote per share without restriction. The accompanying notes form an integral part of the financial statements. 23

26 STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2001 The Company Share (1) Share Revenue Note capital premium reserve Total $ $ $ $ Balance at 1 January Issued pursuant to acquisition of subsidiaries and associated company 5,626, ,626,785 Subdivision of 5,626,787 ordinary shares of $1 each into 112,535,740 ordinary shares of $0.05 each 5,626, ,626,787 Issued 48,000,000 ordinary shares of $0.05 each at par for cash 2,400, ,400,000 Issued 37,600,000 ordinary shares of $0.05 each at premium of $0.27 per share in connection with Initial Public Offering 1,880,000 10,152,000-12,032,000 Expenses in relation to the Initial Public Offering - (1,101,041) - (1,101,041) Profit for the financial year attributable to shareholders ,540 41,540 Balance at 31 December 2000 As previously reported 9,906,787 9,050,959 41,540 18,999,286 Prior year adjustments As restated 9,906,787 9,050,959 41,540 18,999,286 Profit for the financial year attributable to shareholders - - 3,270,836 3,270,836 Dividend paid (1,495,925) (1,495,925) Balance at 31 December ,906,787 9,050,959 1,816,451 20,774,197 (1) The holders of ordinary shares are entitled to receive dividend as and when declared by the Company. All ordinary shares carry one vote per share without restriction. The accompanying notes form an integral part of the financial statements. 24

27 STATEMENTS OF CONSOLIDATED CASH FLOW FOR THE FINANCIAL YEAR ENDED 31 DECEMBER $ $ Cash flow from operating activities: - Operating profit before income tax 7,912,404 6,954,765 Adjustments for: - Amortisation of intangible assets 93,829 28,783 Depreciation of fixed assets 220, ,183 Share of (gains)/losses of associated companies (302,917) 12,646 Gain on disposal of fixed assets (130,877) (49,917) Interest income (688,271) (738,153) Interest expense 81,458 60,632 Exchange difference on consolidation 63, Operating profit before reinvestment in working capital 7,249,652 6,399,956 Increase in debtors (2,500,069) (4,040,299) Decrease/(increase) in inventories 2,582,940 (5,091,012) Decrease in creditors (928,703) (1,198,163) Cash generated from/(used in) operating activities 6,403,820 (3,929,518) Interest received 688, ,153 Interest paid (81,458) (60,632) Income tax paid (2,832,699) (881,739) Net cash generated from/(used in) operating activities 4,177,934 (4,133,736) Cash flow from investing activities Due to acquisition of subsidiary companies (note b) - 7,928,647 Government grants received 7,958 - Proceeds from disposal of fixed assets 133,388 52,507 Purchase of fixed assets (444,093) (49,146) Purchase of shares in associated companies - (630,309) Payment of patent registration expenses (460,932) (39,716) Purchase of unquoted investments (1,095,000) - Net cash (used in)/generated from investing activities (1,858,679) 7,261,983 Cash flow from financing activities Repayment of bank term loan (1,402,252) (84,272) Repayment of hire purchase instalments (30,856) (107,289) Increase in amounts due from associated companies (37,879) (147,712) Payment of dividend (1,495,925) - Proceeds from issue of new shares - 2,400,000 Proceeds from initial public offering - 12,032,000 Initial public offering expenses incurred - (1,101,041) Net cash (used in)/generated from financing activities (2,966,912) 12,991,686 Net (decrease)/increase in cash and cash equivalents (647,657) 16,119,933 Cash and cash equivalents at 1 January 16,119,935 2 Cash and cash equivalents at 31 December (note a) 15,472,278 16,119,935 25

28 STATEMENTS OF CONSOLIDATED CASH FLOW FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2001 (A) CASH AND CASH EQUIVALENTS Cash and cash equivalents included in the consolidated statements of cash flow comprise the following balance sheet amounts: $ $ Fixed deposits 10,638,007 10,446,262 Cash and bank balances 4,834,271 5,673,673 15,472,278 16,119,935 (B) ACQUISITION OF NET ASSETS PURSUANT TO THE RESTRUCTURING EXERCISE The acquisition of the assets and liabilities pursuant to the Restructuring Exercise have been shown in the statement as a single item. The effect on the individual assets and liabilities acquired is set out below: - Fixed assets - 2,328,597 Inventories - 3,505,031 Debtors - 13,394,111 Cash and cash equivalents - 7,928,647 Creditors - (12,936,519) Provision for income tax - (2,279,951) Hire purchase creditors - (272,424) Bank term loan, secured - (1,486,524) Deferred income tax - (20,683) Net assets acquired - 10,160,285 Capital reserve arising on acquisition - (4,542,638) Shares issued by the Company pursuant to the Restructuring Exercise - (5,617,647) - - Cash and cash equivalents acquired - 7,928,647 Cash flow on acquisition of subsidiary companies - 7,928,647 The accompanying notes form an integral part of the financial statements. 26

29 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER CORPORATE INFORMATION The Company is a limited liability company incorporated in the Republic of Singapore, which is also the place of domicile. Its registered office and principal place of business is located at 30, Loyang Way #07-13/14/15, Loyang Industrial Estate, Singapore The Company is principally an investment holding company. Details of the subsidiary and associated companies, and their principal activities as at 31 December 2001 are: - SUBSIDIARY COMPANIES Percentage of equity Name of company Principal activities Cost held by the Group (Country of incorporation) (Place of business) $ $ % % Trek Technology Research, design, development of computer 2,676,509 2,676, (Singapore) Pte Ltd hardware, software, electronic components (Singapore) and other related products (Singapore) S-Com System (S) Research, design, development of computer 2,941,136 2,941, Pte Ltd hardware, software, electronic components (Singapore) and other related products (Singapore) * Trek Systems (M) Research, design, development of computer Sdn Bhd hardware, software, electronic components (Malaysia) and other related products (Malaysia) * Trek Technology (HK) Marketing and distribution Co. Ltd (Hong Kong) (Hong Kong) # Trekstor USA Inc. Marketing and distribution 1,740 1, (United States of America) (Unites States of America) 5,619,388 5,619,388 27

30 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER CORPORATE INFORMATION (CONT D) ASSOCIATED COMPANIES Percentage of equity Name of company Principal activities Cost held by the Group (Country of incorporation) (Place of business) $ $ % % * Trek Technology Marketing of computer, hardware, software, 9,138 9, (Thailand) Company Ltd electronic components and other related (Thailand) products (Thailand) ** Netac Technology Research, design, development of computer 630, , Co., Ltd hardware, software, electronic components (People s Republic and other related products of China) (People s Republic of China) * Audited by member firms of Ernst & Young International ** Audited by Shen Zhen Peng Cheng Certified Public Accountants 639, ,447 # Unaudited because there is no statutory audit requirement in the country of incorporation 2. SIGNIFICANT ACCOUNTING POLICIES (A) BASIS OF ACCOUNTING The financial statements of the Company and of the Group, which are expressed in Singapore dollars, are prepared in accordance with the Singapore Statements of Accounting Standard and applicable requirements of Singapore law. The accounting policies applied by the Company and the Group have been applied consistently with those used in the previous financial year except for the changes in accounting policies discussed in (b) below. (B) CHANGES IN ACCOUNTING POLICIES Consolidation Effective 1 January 2001, the Company adopted SAS 22 (2000), Business Combinations. In accordance with the transitional provisions of SAS 22 (2000), the change in accounting policy is applied prospectively where goodwill (negative goodwill) arising on acquisition made after this date is amortized on a straight-line basis to the consolidated profit and loss account, over its economic useful life. Prior to the adoption of SAS 22 (2000), goodwill (negative goodwill) was taken to the Group s reserves in the year in which it arose. Dividends In accordance with SAS 10 (2000), Events after the Balance Sheet Date, the Company changed its accounting policy from recognising dividends proposed or declared after the balance sheet date as a liability as at the balance sheet date. Instead, such dividends would be recorded in the financial year in which it is declared. The effect of this change is an increase in the revenue reserve and net assets of the Company and of the Group as at 31 December 2000 of $1,495,925. The comparatives for 2000 have been restated to conform to this new policy. 28

31 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER SIGNIFICANT ACCOUNTING POLICIES (CONT D) (B) CHANGES IN ACCOUNTING POLICIES (CONT D) Dividends (cont d) Consistent with the above change, the Company now recognizes dividend income in respect of dividends proposed or declared by subsidiary companies after the balance sheet date in the period in which those dividends are declared. The effect of this change is an increase in dividend income and net profit of the Company for the year of $1,981,357 and $1,495,925 respectively, and a decrease in dividend income and net profit of the same amounts in financial year The comparatives for 2000 have been restated to conform to this new policy. Employee leave entitlement Effective 1 January 2001, the Company and the Group adopted SAS 17 (Revised 2000), Employee Benefits. In accordance with the revised standard, employees entitlements to annual leave are recognised when they accrue to the employees. Accordingly, an accrual is made for the estimated leave liability as a result of services rendered by employees up to the balance sheet date. Prior to the adoption of the revised standard, such employment costs were recognised when paid. The accrual for the employees annual leave entitlements, made up to financial year ended 31 December 2001, amounted to $20,855. Of this amount, $13,451 pertained to the prior year and accordingly a prior year adjustment has been made and the comparative figures have been restated. As a result of the change in accounting policy, the profit before income tax and profit after income tax of the Company and the Group for the financial year have been decreased by $7,404 (2000 : $13,451) and the revenue reserve of the Company and the Group as at the balance sheet date was decreased by $20,855 (2000 : $13,451). (C) BASIS OF CONSOLIDATION The accounting year of the Company and its subsidiary companies ends on 31 December, and the consolidated financial statements incorporate the financial statements of the Company and its subsidiary companies. When subsidiary companies are acquired, any excess of the consideration over the net assets at the date of acquisition is included in goodwill on consolidation. The goodwill is amortised on a straight-line basis, to the profit and loss account over its estimated useful life of up to 20 years. Assets, liabilities and results of overseas subsidiary companies are translated into Singapore dollars on the bases outlined in paragraph (s) below. (D) SUBSIDIARY COMPANIES Subsidiary companies comprise those companies in which the Group holds more than one half of the voting power and/ or controls the majority composition of the board of directors and/or is in a position to exercise controlling influence on their final and operating policies. Investment in subsidiary companies are stated in the financial statements of the Company at cost, and any impairment in value which is other than temporary is recognised in the profit and loss account of the Company. Dividends from subsidiary companies are included in investment income of the Company when the dividends are declared or paid. 29

32 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER SIGNIFICANT ACCOUNTING POLICIES (CONT D) (E) ASSOCIATED COMPANY An associated company is defined as a company, not being a subsidiary company, in which the Group has long-term interest of not less than 20% of the issued share capital, and in whose financial and operating policy decisions the Group exercises significant influence. Investment in associated companies are stated in the financial statements of the Company at cost, and provision is made when there has been an impairment in value. The Group s share of the results of associated companies, based on audited financial statements, are included in the consolidated profit and loss account. On acquisition of an associated company, any difference between the cost of acquisition and the Group s share of the fair value of the net identifiable assets of the associated companies is dealt with as goodwill and amortized to profit earned over its useful lives. The Group s share of the post-acquisition reserves of associated companies are included in the investments in the consolidated balance sheet. (F) (G) UNQUOTED INVESTMENTS Unquoted investments held on a long-term basis are stated at cost, write downs are made where there is an impairment in value. REVENUE RECOGNITION Revenue from the sale of trading products are recognised upon passage of title to the customers which generally coincides with their delivery and acceptance. Interest income is recognised as the interest accrues, unless collectibility is in doubt. (H) (I) FIXED ASSETS Fixed assets are stated at cost less accumulated depreciation. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to working condition for its intended use. Expenditures for additions, improvements and renewals are capitalised and expenditures for maintenance and repairs are charged to the profit and loss accounts. When assets are sold or retired, their cost and accumulated depreciation are removed from the financial statements and any gain or loss resulting from their disposal is included in the profit and loss accounts. INTANGIBLE ASSETS Intangible assets comprise goodwill and patent costs: - (i) Patent costs relates to the cost of registering the invention. These are stated at cost and amortised over the estimated useful lives up to a maximum of 15 years, during which the benefits of the expenditure are expected to arise; and (ii) Goodwill consists of the consideration paid over the fair value of the net assets of business acquired, and is written off to the profit and loss accounts on a straight line basis over 9 years from date of acquisition, during which the benefits of the expenditure are expected to arise. (J) RESEARCH AND DEVELOPMENT EXPENSES Research and development expenses comprises all costs that are directly attributable to research and development activities, and includes salaries and costs of consumables. These costs are expensed to the profit and loss account when incurred. 30

33 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER SIGNIFICANT ACCOUNTING POLICIES (CONT D) (K) INVENTORIES Inventories are stated at the lower of cost and net realisable value. Cost, which is determined on a first-in-first-out basis, includes purchase price and other incidental cost in bringing each product to its present location and condition. Net realisable value represents the estimated selling price less anticipated cost of disposal and after making allowance for damaged, obsolete and slow-moving items. (L) TRADE AND OTHER RECEIVABLES Trade and other receivables, which generally have 30 to 90 day terms, are recognized and carried at original invoice amount, less an allowance for any uncollectible amounts. Receivables from related companies and related parties, which have no fixed terms of repayment, are recognised and carried at cost, less allowance for any uncollectible amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are writtenoff as incurred. (M) TRADE AND OTHER PAYABLES Liabilities for trade and other payables which are normally settled on 30 to 90 day terms, are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received whether or not billed to the Group. Payables to related companies and related parties, which have no fixed terms of repayment, are carried at cost. (N) DEPRECIATION OF FIXED ASSETS Depreciation of fixed assets is calculated on the straight-line method to write off the cost of the fixed assets over their estimated useful lives as follows: - Freehold property Leasehold property Furniture and fittings Office equipment Computers Motor vehicles Plant and machinery - 50 years - Over the term of the lease (30 years) - 8 years - 6 years - 3 years - 6 years - 3 years Fully depreciated assets are retained in the financial statements until they are no longer in use. (O) (P) PROVISIONS Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. EMPLOYEE BENEFITS (i) Defined contribution plan Contributions made by the Group on its employees behalf to a state pension scheme is charged to the profit and loss accounts in the same period as the employment that gives rise to the contribution. 31

34 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER SIGNIFICANT ACCOUNTING POLICIES (CONT D) (P) EMPLOYEE BENEFITS (CONT D) (ii) Share options Share options are granted to certain directors and employees of the Group under the Trek 2000 International Ltd Share Option Scheme. No compensation cost is recognized upon granting or the exercise of the options. When the options are exercised, the proceeds received net of any transaction costs are credited to share capital (for the par value of the shares issued) and share premium. (iii) Employee leave entitlement Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for leave as a result of services rendered by employees up to the balance sheet date. (Q) (R) DEFERRED INCOME TAX Deferred income tax is accounted for under the liability method whereby the tax charge for the financial year is based on the disclosed book profit after adjusting for all permanent differences. The amount of income tax deferred on account of all timing differences is reflected in the deferred income tax account. Deferred income tax benefits are not recognised in the financial statements except when there are reasonable expectation of their realisation. LEASED ASSETS Finance leases, which effectively transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the present value of the minimum lease payments at the inception of the lease term and disclosed as fixed assets. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to profit and loss accounts. Capitalised leased assets are depreciated over the shorter of the estimated useful lives of the assets or the lease term. (S) FOREIGN CURRENCIES Foreign currency transactions during the financial year are converted at rates closely approximating those ruling on the transaction dates. Foreign currency monetary assets and liabilities are converted into local currency at exchange rates ruling at the balance sheet date. All exchange differences arising from conversion are included in the profit and loss accounts. For inclusion in the consolidated financial statements, the financial statements of foreign subsidiary and associated companies are translated into Singapore dollars at the exchange rate ruling at the balance sheet date. Exchange differences due to such currency translations are taken directly to the translation reserve. (T) CASH AND CASH EQUIVALENTS Cash and cash equivalents consists of cash at bank and in hand, and fixed deposits. 32

35 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER REVENUE Revenue of the Group comprises the invoiced value of goods supplied to external customers, and excludes intra-group transactions. Revenue of the Company comprises dividend income. Revenue is analysed as follows: - Group Company $ $ $ $ Sales of goods 98,077,083 93,568, Dividend income from subsidiary companies - - 3,962, OPERATING PROFIT Operating profit is stated after charging/(crediting) the following: - 98,077,083 93,568,202 3,962,714 - Amortisation of - Patents 45,529 4, Goodwill 48,300 24, Auditors remuneration - Auditor of the Company Statutory audit 54,000 54,000 19,000 19,000 Other services 10,020 18,349 1,680 7,299 - Other auditors of subsidiary company Statutory audit 9,014 10, Other services Depreciation of fixed assets 220, , Directors of the Company - Fees - 200, ,000 - Salaries and other banefits 311, , Other directors of subsidiary companies - Salaries and other benefits 212, , Employees salaries and benefits 1,535,739 1,151, Employer s contribution to state pension funds 181, , Foreign exchange (gain)/loss (265,946 ) (223,162) (111,629) 5,865 Grant income received (7,958 ) Gain on disposal of fixed assets (130,877 ) (49,917) - - Interest income - Fixed deposits (688,271 ) (738,153) (269,761) (285,662) - Subsidiary company - - (44,035) (45,333) Provision/(write back) for - Doubtful trade debts 63,371 65, Obsolete inventories (883,406 ) 886, Rental expense 44,425 25,

36 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER OPERATING PROFIT (CONT D) Group $ $ Number of employees Non- Non- Executive executive Executive executive director director director director Number of directors of the Company in remuneration band of: - - $250,000 to $499, Below $250, FINANCE COST Group Company $ $ $ $ Interest expenses - Hire purchase 6,277 5, Term loans 75,181 55, INCOME TAX 81,458 60, Provision for income tax in respect of profit for the year: - Current income tax - Singapore 656,807 1,428,080 1,099,100 23,058 - Overseas 9,527 90, Deferred income tax (note 20) 128,000 41, ,334 1,559,280 1,099,100 23,058 (Over)/under provision in respect of previous years (27,713) 44,694 (27,713) - 766,621 1,603,974 1,071,387 23,058 The Group has profits amounting to approximately RM10,431,000 (2000 : RM2,989,000) in a Malaysian subsidiary company which was awarded the Multimedia Super Corridor status and pioneer status by the Government of Malaysia on 5 November The award exempts the subsidiary company s profits from income tax for a period of 10 years commencing 5 November 1998, subject to formal agreement by the Malaysian Inland Revenue Board ( IRB ). The directors have been informed that approval by the Malaysian IRB is most likely and accordingly, no income tax has been provided in respect of these profits. 34

37 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER INCOME TAX (CONT D) A reconciliation of the statutory tax rate to the effective tax rate applicable to profit from operations for the years ended 31 December are as follow: - Group Company % % % % Domestic statutory tax rate Exempt pioneer profits (15.1) (4.7) - - Non-tax deductible expenses Partial income tax exemption (1.4) Loss making companies in the Group Effective tax rate EARNINGS PER SHARE (A) BASIC EARNINGS PER SHARE The basic earnings per share ( EPS ) is calculated by dividing the Group s profit attributable to shareholders by the weighted average number of ordinary shares. Group $ $ Attributable profit 7,145,783 5,350,791 No. of shares Weighted average number of ordinary shares 198,135, ,869,073 Earnings per share (Basic) (B) FULLY DILUTED EARNINGS PER SHARE For the fully diluted earnings per share, the Group s attributable profit is adjusted for changes in attributable profit resulting from exercise of all dilutive share options. The reconciliation of the Group s adjusted attributable profit used to compute diluted earnings per share is as follows: - Group $ $ Attributable profit 7,145,783 5,350,791 Change in attributable profit due to dilutive share options 5,474 - Adjusted attributable profit 7,151,257 5,350,791 35

38 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER EARNINGS PER SHARE (CONT D) (B) FULLY DILUTED EARNINGS PER SHARE (CONT D) The weighted average number of ordinary shares is adjusted to assume exercise of all dilutive share options. The reconciliation of the weighted average number of ordinary shares used to compute diluted earnings per share is as follows: - No. of shares Weighted average number of ordinary shares used to compute the basic earnings per share 198,135, ,869,073 Effects of dilutive securities share options 9,302,118 - Weighted average number of ordinary shares used to compute diluted earnings per share 207,437, ,869,073 Earnings Per Share (Fully diluted) FIXED ASSETS Furniture Freehold Leasehold and Office Motor Plant and Group property property fittings equipment Computers vehicles machinery Total $ $ $ $ $ $ $ $ Cost Balance at 1 January ,775 1,549, ,075 99, , ,775-3,377,025 Currency realignment Additions - - 4,953 17,901 24, ,313 21, ,093 Disposals (3,767) (319,000) - (322,767) Balance at 31 December ,775 1,549, , , , ,088 21,889 3,499,077 Accumulated depreciation Balance at 1 January , , ,289 80,270 87, ,944-1,133,055 Currency realignment - - (113) 22 1,347 (806) Charge for the year 11,956 51,465 33,487 6,947 19,477 94,469 2, ,573 Disposals (1,256) (319,000) - (320,256) Balance at 31 December , , ,663 87, , ,607 2,772 1,033,822 Charge for ,971 34,310 22,549 5,296 11,869 49, ,183 Net book value At 31 December ,130 1,286,607 58,951 29,899 41, ,481 19,117 2,465,255 At 31 December ,086 1,338,072 86,786 18,929 40, ,831-2,243,970 Motor vehicles stated at net book value of approximately $155,000 (2000 : $209,000) were acquired under hire purchase agreements. 36

39 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER FIXED ASSETS (CONT D) The following properties are owned by the Group as of 31 December 2001: - Built up Unexpired Location Type Title area lease (a) 10, Jalan Besar, #03-46 Sim Lim Tower, Singapore Shop unit Freehold 31 sq.m. N.A. (b) 30, Loyang Way, #07-13/14/15 Commercial office Leasehold 800 sq.m. 26 years Loyang Industrial Estate, Singapore The mortgage on the freehold property has been fully discharged as the bank term loan of a subsidiary company was fully repaid during the financial year (Note 18). 9. INTANGIBLE ASSETS Group Patents Goodwill Total $ $ $ Costs Balance at 1 January , , ,416 Additions 460, ,932 Grant income (7,958) - (7,958) Balance at 31 December , , ,390 Accumulated amortisation Balance at 1 January ,633 24,150 28,783 Charge for the year 45,529 48,300 93,829 Balance at 31 December ,162 72, ,612 Charge for ,633 24,150 28,783 Net book value At 31 December , , ,778 At 31 December , , , SUBSIDIARY COMPANIES Company $ $ Unquoted equity shares, at cost 5,619,388 5,619,388 The subsidiary companies are listed in Note 1. 37

40 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER ASSOCIATED COMPANIES Group Company $ $ $ $ Unquoted equity shares, at cost 639, , , ,447 Goodwill on acquisition (see note 9) (434,700) (434,700) - - Currency realignment (623) Share of net post-acquisition reserves/(losses) 290,271 (12,646) , , , ,447 The associated companies are listed in Note UNQUOTED INVESTMENTS Group and Company $ $ Unquoted equity investment, at cost 912,000 - Non-interest bearing note, at cost 183,000-1,095,000 - Market value of non-interest bearing note 177,510 - The non-interest bearing note is principal guaranteed, and matures at the end of 3 years. The returns on the note is linked to the performance of the NASDAQ 100 Index. 13. TRADE DEBTORS Group $ $ Trade debtors are stated after deducting provision for doubtful debts of 259, ,321 Analysis of provision for doubtful debts: - Balance at 1 January 229,321 - Due to subsidiary companies acquired - 164,301 Charge to profit and loss accounts 63,371 65,020 Bad debts written off (32,796) - Balance at 31 December 259, ,321 38

41 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER INVENTORIES Group $ $ Inventories, at cost 6,000,577 8,235,386 Inventories, at net realisable value 12, ,657 6,013,103 8,596,043 Inventories at net realisable value is stated after deducting provision for obsolete inventories of 356,408 1,239,814 Analysis of provision for obsolete inventories: - Balance at 1 January 1,239,814 - Due to subsidiary companies acquired - 353,502 (Write back)/charge to profit and loss accounts (883,406) 886,312 Balance at 31 December 356,408 1,239, AMOUNTS DUE FROM/TO SUBSIDIARY AND ASSOCIATED COMPANIES With the exception of an unsecured amount owing by a subsidiary company of $9,150,000 (2000 : $4,146,520), which bear interest ranging from 1.92% to 6.2% per annum (2000 : 6% to 6.44% per annum), the other amounts receivable from subsidiary companies are non-trade related, unsecured, non-interest bearing, and with no fixed terms of repayment. The amount due from/to associated companies are non-trade related, unsecured, non-interest bearing, and with no fixed terms of repayment. 16. OTHER DEBTORS Group Company $ $ $ $ Income tax recoverable 416, ,583 - Amount due from related party 131,510 34, Staff advances 63, Sundry debtors 54,848 15,514 13,082 - Prepayments 37,499 17, Deposits 16,276 29,971-14, ,388 97, ,665 14,753 Related party refers to a company in which a director has significant interest. The amount due to the related party is unsecured, interest free, and has been repaid subsequent to the financial year-end. 17. OTHER CREDITORS Accrued operating expenses 253, ,399 5, ,083 Sundry creditors 46,325 20,459 28,000 26,583 Accrual for unutilised vacation leave 20,855 13, , ,309 33, ,666 39

42 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER BANK TERM LOAN, SECURED The bank term loan was obtained to finance the acquisition of the freehold property of a subsidiary company. The loan was secured on the freehold property, and was jointly and severally guaranteed by certain directors of the Company. Interest was charged at 5.25% to 5.75% (2000 : 5.75% to 6.75%) per annum. The loan was fully repaid during the financial year and the securities have been discharged. 19. HIRE PURCHASE CREDITORS The Group leases certain motor vehicles, which are classified as hire purchases, and expire over the next 5 years (2000 : 6 years). The discount rates implicit in the leases ranges from 2.7% to 3.38% (2000 : 2.7% to 3.38%). Future minimum lease payments under hire purchase together with the present value of the net minimum lease payments are as follows: Present Present Group Minimum value of Minimum value of payments payments payments payments $ $ $ $ Within one year 36,264 30,171 37,148 30,871 After one year but not more than five years 120, , , ,124 More than five years 4,238 3,564 29,879 25,140 Total future minimum lease payments 160, , , ,135 Less : Amounts representing finance charges (26,446) - (32,723) - Present value of net minimum lease payments 134, , , ,135 Repayable within one year (30,171) (30,171) (30,871) (30,871) Repayable after one year 104, , , , DEFERRED INCOME TAX Group $ $ Balance at 1 January 61,683 - Due to subsidiary companies acquired - 20,683 Charge to profit and loss accounts (Note 6) 128,000 41,000 Balance at 31 December 189,683 61,683 The deferred income tax arises as a result of: - Excess of net book value over tax written down value of fixed assets 23,520 30,090 Unrealised exchange differences 220,990 78,795 Other timing differences (54,827) (47,202) 189,683 61,683 40

43 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER PRIOR YEAR ADJUSTMENTS Group Company $ $ $ $ Arising from changes in accounting policies on - Dividend paid 1,495,925-1,495, Dividend income from subsidiary companies - - (1,495,925) - - Accrual of unutilised vacation leave (13,451) ,482, Details of changes in accounting policies are stated in Note 2b. 22. DIVIDENDS PAID Final dividend paid in respect of prior year of 20% less income tax of 24.5% 1,495,925-1,495,925 - For the financial year ended 31 December 2001, the directors have proposed a first and final dividend of 20% less income tax of 24.5% on the ordinary shares of the Company totaling $1,495,925. Arising from the adoption of SAS 10, these financial statements do not reflect this dividend which was proposed subsequent to the end of the financial year. 23. INFORMATION BY SEGMENT ON THE GROUP S OPERATIONS (A) BUSINESS SEGMENTS The following tables present revenue and profit information regarding industry segments of the Group for the financial year ended 31 December 2001, and certain assets and liabilities information regarding industry segments as at that date. Customized engineering Digital technology Consolidated $ $ $ $ $ $ Segment revenue Sales to external customers 31,789,083 79,432,798 66,288,000 14,135,404 98,077,083 93,568,202 Segment results Segment operating profit 3,691,000 3,372,898 3,999,945 3,655,145 7,690,945 7,028,043 Finance costs (81,458) (60,632) Share of profit/(losses) of associates 302,917 (12,646) Profit before income tax 7,912,404 6,954,765 Income tax (766,621) (1,603,974) Profit for the financial year attributable to shareholders 7,145,783 5,350,791 41

44 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER INFORMATION BY SEGMENT ON THE GROUP S OPERATIONS (CONT D) Customized engineering Digital technology Consolidated $ $ $ $ $ $ Segment assets 29,981,206 34,688,141 14,822,102 9,784,040 44,803,308 44,472,181 Investment in associates , , , ,101 29,981,206 34,688,141 15,316,497 9,976,141 45,297,703 44,664,282 Unallocated assets 1,457, ,000 Total assets 46,754,703 45,074,282 Segment liabilities 3,951,175 3,553,090 8,239,372 12,670,000 12,190,547 16,223,090 Other segment information Capital expenditure 144,030 20, ,063 28, ,093 49,146 Depreciation of fixed assets 71,861 55, ,712 76, , ,183 Amortisation of intangible assets ,829 28,783 93,829 28,783 42

45 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER INFORMATION BY SEGMENT ON GROUP S OPERATIONS (CONT D) (B) GEOGRAPHICAL SEGMENTS The following table shows the distribution of the Group s sales by geographical market regardless of where the goods were produced: - Singapore Malaysia India Thailand United States Others Eliminations Consolidated $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Segment revenue Sales to external customers 52,532,000 57,409,490 18,197,000 17,915,986 9,983,083 5,611,549 1,551,000 2,435,417 1,696,000 80,000 14,118,000 10,115, ,077,083 93,568,202 Inter-segment sales 3,569,923 2,274,270 24,006, ,014,381-17,402 2,090,049 (28,608,507 ) (4,364,319 ) - - Total revenue 56,101,923 59,683,760 42,203,801 17,915,986 9,983,083 5,611,549 1,551,000 2,435,417 2,710,381 80,000 14,135,402 12,205,809 (28,608,507 ) (4,364,319 ) 98,077,083 93,568,202 Other geographical segments information Carrying amount of segment assets 35,083,527 43,449,270 8,012,119 62,000 23,000 19,000 7,000 5, , ,000 2,982,042 1,332, ,754,703 45,074,282 Capital expenditure 333,070 29,650 75,496 7,372 4,441 12,124 4, , ,093 49,146 The Group s assets are located in the various marketing sites in Singapore, Malaysia, Hong Kong, India and United States of America. The turnover generated from each specific geographical market were tracked based on the locations of the Group s customers. On the other hand, the operating expenses are incurred and recorded at the marketing sites and the profits are thus generated at each of these sites. Given the global nature of the Group s business, there is no correlation between the location of assets employed and the profits thereof, and the markets to which sales are made. 43

46 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER SIGNIFICANT RELATED PARTY TRANSACTIONS Significant transactions are entered between the Group and its related party, and the effect of these transactions on terms agreed between the parties are reflected in these financial statements as follow : - Group $ $ Associated company: - Commission paid 23,005 16, COMMITMENTS Commitments not provided for in these financial statements as at 31 December are as follows: - (A) APPROVED CAPITAL EXPENDITURE Amounts approved by directors but not committed - - Amounts approved and committed 395, ,000 - The amounts approved and committed by the Group for the year comprise capital expenditure relating to the incorporation of two subsidiary companies of $395,000. (B) FUTURE MINIMUM LEASE RENTAL UNDER NON-CANCELLABLE LEASES ARE AS FOLLOW: - Payable within 1 year 9,496 17,330 Payable within 2 to 5 years - 8,665 9,496 25, FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Group does not have written risk management policies and guidelines. However, the board of directors meets periodically to analyse and formulate measures to manage the Group s exposure to market risk. Generally, the Group adopts a conservative approach to its risk management. The main risks arising from the Group s financial instruments are credit risk and foreign exchange risk. The management reviews and agrees polices for managing these risks, and they are summarised below: - Credit risks Credit risk is limited to the risk arising from the inability of a debtor to make payments when due. It is the Group s policy to provide credit terms to diverse creditworthy customers. These debts are continually being monitored and therefore, the Group does not expect to incur material credit losses. The carrying amount of trade and other debtors, and cash placed with banks represents the Group s maximum exposure to credit risk. No other financial assets carry a significant exposure to credit risk. The Group has no significant concentration of credit risk with any single customer, and cash are placed with established financial institutions. 44

47 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT D) Foreign exchange risk The Group purchases and sells its products in several countries and, as a result, is exposed to movements in foreign currency exchange rates. The Group currently does not enter into foreign currency hedging activities to protect against volatility associated with foreign currency sales and purchases. Such risks are hedged through matching sales with corresponding purchases, and assets with liabilities of the same currencies and amounts. Interest rate risk The Group s exposure to interest rate risk is minimal. Liquidity risk The Group s exposure to liquidity risk is minimal. 27. FAIR VALUE OF FINANCIAL INSTRUMENTS The following methods and assumptions are used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value. Cash and cash equivalents, other debtors and other creditors The carrying amounts approximate fair value due to the short-term nature of these balances. Trade debtors and trade creditors The carrying amounts of these debtors and creditors approximate their fair values as they are subject to normal trade credit terms. Related party balances The carrying amounts of these non-trade balances due from/to subsidiary and associated companies approximate their fair values as they have no fixed terms of repayment. Hire purchase creditors The carrying value as disclosed in Note 19 approximates the fair value, which is estimated using discounted cash flow analysis, based on current incremental lending rates for similar types of borrowing arrangements. 28. SUBSEQUENT EVENTS Subsequent to the financial year end, the Company incorporated two wholly-earned subsidiary companies, Trek Technology (Shanghai) Co. Ltd and Trek Technology Europe B.V., with an initial set-up capital of US$200,000 and Euro 18,000 respectively. 29. COMPARATIVE FIGURES The comparative figures of the Group cover the period from 1 May 2000 to 31 December Certain comparative figures have been reclassified to conform with current year presentation. In particular, some of the comparatives have been adjusted or extended to take into account the requirements of the following new or revised Singapore Statements of Accounting Standard (SAS) that came into effect in financial year 2001: - SAS 10 (2000): Events Occurring after the Balance Sheet Date SAS 17 (2001): Employee Benefits SAS 22 (2000): Business Combinations SAS 32 (2000): Financial Instruments: Disclosure and Presentation 45

48 STATISTICS OF SHAREHOLDINGS AS AT 5 APRIL 2002 SHAREHOLDERS INFORMATION AS AT 5 APRIL 2002 Authorised share capital : $50,000,000 Issued and fully paid-up capital : $9,906,787 Class of shares : Ordinary share of $0.05 Voting rights : One vote per share DISTRIBUTION OF SHAREHOLDINGS No. of Size of Shareholdings Shareholders % No. of Shares % 1-1, , ,001-10, ,728, ,001-1,000, ,461, ,000,001 and above ,769, Total 1, ,135, SUBSTANTIAL SHAREHOLDERS AS RECORDED IN THE REGISTER OF SUBSTANTIAL SHAREHOLDERS Name of Shareholders No. of shares registered in % No. of shares in which the % the name of the substantial substantial shareholders shareholders are deemed to have an interest Henry Tan 94,750, ,436, Tan Boon Tat 10,111, Note: By virtue of Section 7 of the Companies Act, Chapter 50, Henry Tan is deemed to have an interest in 9,436,940 shares (out of which 7,282,995 registered in the name of nominee) held by his wife, Ang Poh Tee. TWENTY LARGEST SHAREHOLDERS Name No. of Shares % 1 Citibank Nominees Singapore Pte Ltd 95,605, Kim Eng Ong Asia Securities Pte Ltd 29,977, NTUC Income Insurance Co-operative Limited 8,225, UOB Kay Hian Pte Ltd 7,079, Toshiba Electronics Asia (Singapore) Pte Ltd 6,800, Tan Boon Siong 6,147, Yeo Theng Swee 4,893, DBS Vickers Securities (S) Pte Ltd 2,552, Tan Charlie 2,208, Ang Poh Tee 2,153, Phillip Securities Pte Ltd 1,673, Foo Kok Wah 1,428, OCBC Securities Private Ltd 1,026, Dexia Nominees (S) Pte Ltd 1,000, Chan Kok Yong 937, Yeo Chiu Lim 876, United Overseas Bank Nominees Pte Ltd 723, Woo Sze Wei 695, J M Sassoon & Co (Pte) Ltd 669, DBS Nominees Pte Ltd 626, Total 175,296,

49 NOTICE OF ANNUAL GENERAL MEETING TREK 2000 INTERNATIONAL LTD (Incorporated in the Republic of Singapore) NOTICE IS HEREBY GIVEN that the Annual General Meeting of Trek 2000 International Ltd ( the Company ) will be held at 30 Loyang Way #07-13/14/15, Loyang Industrial Estate, Singapore on 21 May 2002 at a.m. for the following purposes: AS ORDINARY BUSINESS 1. To receive and adopt the Directors Report and the Audited Accounts of the Company for the year ended 31 December (Resolution 1) 2. To declare a first and final dividend of 20% or 1 cent per ordinary share less income tax for the year ended 31 December (Resolution 2) 3. To re-elect the following Directors retiring pursuant to Articles 91 and 97 of the Company s Articles of Association: Mr Lee Sang Fun (Retiring under Article 91) (Resolution 3) Mr Gurcharan Singh (Retiring under Article 91) (Resolution 4) Mr Foo Kok Wah (Retiring under Article 97) (Resolution 5) Mr Kuan Mun Kwong (Retiring under Article 97) (Resolution 6) Mr Lai Chee Kong (Retiring under Article 97) (Resolution 7) Messrs Lee Sang Fun and Gurcharan Singh will, upon re-election as Directors of the Company, remain as Chairman and a Member of the Audit Committee respectively. They will be considered independent of management for the purposes of Clause 902(4)(a) of Listing Manual of the Singapore Exchange Securities Trading Limited. 4. To re-appoint Messrs Ernst & Young as the Company s Auditors and to authorise the Directors to fix their remuneration. (Resolution 8) 5. To transact any other business that may be transacted at an Annual General Meeting. AS SPECIAL BUSINESS To consider and, if thought fit, to pass the following resolutions as Ordinary Resolutions, with or without modifications: 6. Authority to allot and issue shares up to 50 per centum (50%) of issued capital That pursuant to Section 161 of the Companies Act, Cap. 50 and Clause 941(3)(b) of the Listing Manual of the Singapore Exchange Securities Trading Limited, the Directors be empowered to allot and issue shares in the capital of the Company at any time and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit provided that the aggregate number of shares to be allotted and issued pursuant to this Resolution shall not exceed fifty per centum (50%) of the issued share capital of the Company for the time being, of which the aggregate number of shares to be issued other than on a pro rata basis to all shareholders of the Company shall not exceed twenty per centum (20%) of the existing issued share capital of the Company and that such authority shall, unless revoked or varied by the Company in general meeting, continue in force until the conclusion of the Company s next Annual General Meeting. [See Explanatory Note (i)] (Resolution 9) 47

50 NOTICE OF ANNUAL GENERAL MEETING 7. Authority to allot and issue shares under the Trek 2000 International Ltd Share Option Scheme That pursuant to Section 161 of the Companies Act, Cap. 50, the Directors be empowered to allot and issue shares in the capital of the Company to the holders of options granted by the Company under the Trek 2000 International Ltd Share Option Scheme ( the Scheme ) established by the Company upon the exercise of such options and in accordance with the terms and conditions of the Scheme provided always that the aggregate number of additional ordinary shares to be allotted and issued pursuant to the Scheme shall not exceed fifteen per centum (15%) of the issued share capital of the Company for the time being. [See Explanatory Note (ii)] (Resolution 10) 8. Approval of Shareholders Mandate for Interested Person Transactions That for the purposes of Chapter 9A of the Listing Manual of the Singapore Exchange Securities Trading Limited:- (a) (b) (c) approval be given for the renewal of the mandate for the Company, its subsidiaries and target associated companies or any of them to enter into any of the transactions falling within the types of Interested Person Transactions as set out on pages 59 to 61 of the Company s Prospectus dated 13 May 2000 ( Prospectus ) with any party who is of the class of Interested Persons described in the Prospectus, provided that such transactions are carried out in the normal course of business, at arm s length and on commercial terms and in accordance with the guidelines of the Company for Interested Person Transactions as set out in the Company s Prospectus (the Shareholders Mandate ) the Shareholders Mandate shall, unless revoked or varied by the Company in general meeting, continue in force until the conclusion of the next Annual General Meeting; and authority be given to the Directors to complete and do all such acts and things (including executing all such documents as may be required) as they may consider necessary, desirable or expedient to give effect to the Shareholders Mandate as they may think fit. [See Explanatory Note (iii)] (Resolution 11) By Order of the Board LINDA LAW / YEO POH NOI CAROLINE Company Secretaries Singapore, 3 May

51 NOTICE OF ANNUAL GENERAL MEETING Explanatory Notes: (i) (ii) (iii) The Ordinary Resolution 9 proposed in item 6 above, if passed, will empower the Directors from the date of the above Meeting until the date of the next Annual General Meeting, to allot and issue shares in the Company. The number of shares which the Directors may allot and issue under this Resolution would not exceed fifty per centum (50%) of the issued share capital of the Company for the time being. For issue of shares other than on a pro rata basis to all shareholders, the aggregate number of shares to be issued shall not exceed twenty per centum (20%) of the existing issued share capital of the Company. The Ordinary Resolution 10 proposed in item 7 above, if passed, will empower the Directors of the Company, from the date of the above Meeting until the next Annual General Meeting, to allot and issue shares in the Company of up to a number not exceeding in total fifteen per centum (15%) of the issued share capital of the Company for the time being pursuant to the exercise of the options under the Scheme. The Ordinary Resolution 11 proposed in item 8 above, if passed, will authorise the Interested Person Transactions as described in the Prospectus and recurring in the year and will empower the Directors to do all acts necessary to give effect to the Shareholders Mandate. This authority will, unless previously revoked or varied by the Company at a general meeting, expire at the conclusion of the next Annual General Meeting of the Company. Notes: 1. A member entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy or proxies (not more than two) to attend and vote on his/her behalf. A proxy need not be a member of the Company. 2. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his/her attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its Common Seal or by an attorney or an officer of the corporation duly authorised. 3. The instrument appointing a proxy or proxies must be deposited at the Registered Office at 30 Loyang Way #07-13/14/15, Loyang Industrial Estate Singapore at least 48 hours before the time appointed for the Annual General Meeting. 49

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53 PROXY FORM TREK 2000 INTERNATIONAL LTD (Incorporated in the Republic of Singapore) PROXY FORM (Please see notes overleaf before completing this Form) I/We, of being a member/members of TREK 2000 INTERANTIONAL LTD (the Company ), hereby appoint of or failing him/her, of or failing him/her, the Chairman of the meeting as my/our proxy to vote for me/us on my/our behalf at the Annual General Meeting of the Company to be held on 21 May 2002 at a.m. and at any adjournment thereof. The proxy is to vote on the business before the meeting as indicated below. If no specific direction as to voting is given, the proxy will vote or abstain from voting at his/her discretion, as he/she will on any other matter arising at the Meeting: NO. RESOLUTIONS RELATING TO: FOR AGAINST 1 Directors Report and Audited Accounts for the year ended 31 December Payment of Proposed First and Final Dividend 3 Re-election of Mr Lee Sang Fun as a Director 4 Re-election of Mr Gurcharan Singh as a Director 5 Re-election of Mr Foo Kok Wah as a Director 6 Re-election of Mr Kuan Mun Kwong as a Director 7 Re-election of Mr Lai Chee Kong as a Director 8 Re-appointment of Messrs Ernst & Young as Auditors 9 Authority to allot and issue new shares 10 Authority to allot and issue shares under the Trek 2000 International Ltd Share Option Scheme 11 Approval of shareholders mandate for Interested Person Transactions (Please indicate with a cross [X] in the space provided whether you wish your vote to be cast for or against the Resolutions as set out in the Notice of the Meeting.) Dated this day of Signature of Shareholder(s) or, Common Seal of Corporate Shareholder Total Number Of Shares In: (a) CDP Register (b) Register of Members No. Of Shares To be valid, this form must be lodged at the Company s Registered Office at 30 Loyang Way #07-13/14/15, Loyang Industrial Estate, Singapore at least 48 hours before the time appointed for the Annual General Meeting.

54 Notes: 1. Please insert the total number of Shares held by you. If you have Shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number of Shares. If you have Shares registered in your name in the Register of Members, you should insert that number of Shares. If you have Shares entered against your name in the Depository Register and Shares registered in your name in the Register of Members, you should insert the aggregate number of Shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the Shares held by you. 2. A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint a proxy or proxies (not more than two) to attend and vote on his/her behalf. A proxy need not be a member of the Company. 3. Where a member appoints two proxies, the appointments shall be invalid unless he/she specifies the proportion of his/her shareholding (expressed as a percentage of the whole) to be represented by each proxy. 4. The instrument appointing a proxy or proxies must be deposited at the Registered Office of the Company at 30 Loyang Way #07-13/14/15, Loyang Industrial Estate, Singapore at least 48 hours before the time appointed for the Annual General Meeting. 5. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its Common Seal or by an attorney or an officer of the corporation duly authorised. 6. A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fit to act as its representative at the Annual General Meeting, in accordance with Section 179 of the Companies Act, Chapter 50 of Singapore. General: The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of Shares entered in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown to have Shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding the Annual General Meeting, as certified by The Central Depository (Pte) Limited to the Company.

55 Corporate Directory Trek Technology (Singapore) Pte Ltd Singapore (HQ): 30 Loyang Way #07-13/14/15 Loyang Industrial Estate Singapore Tel : Fax : trek0591@singnet.com.sg Bangalore Office: #224, 1st Main Road, Domlur 2nd Stage, Bangalore Tel : Fax : indialia@blr.vsnl.net.in New Delhi Office: #51, Vasant Enclave, Vasant Vihar, New Delhi Tel/Fax : trekdelhi@vsnl.net Philippines Office: Unit 412, 4/F Alabang Corporate Center, KM. 25 West Servire Road, Alabang; Muntinlupa, Metro Manila. benny@trek2000.com.sg Trek Technology (Thailand) Co. Ltd. 947 Moo, 12 Thospol Land Building 3, Room C3, Bangna-Trad Road, Bangna, Bangkok Tel : Fax : trek@a-net.net.th Trek Technology (HK) Co. Limited Flat 207B 2/F Harbour Centre, Tower II 8 Kok Cheung Street, Hung Hom, Kowloon. Tel : Fax : harry@trek2000.com.sg S-Com System (S) Pte Ltd 30 Loyang Way, #07-13/14/15 Loyang Industrial Estate, Singapore Tel : Fax : scomsys@singnet.com.sg Trek Systems (M) Sdn. Bhd. Block P1, UPM, MTDC Technology Incubation Centre One, Universiti Putra Malaysia, Serdang, Selangor Darul Ehsan. Tel : / Fax : treksb@po.jaring.my Trekstor USA, Inc 2411 Old Crow Canyon Road, Suite 125, San Ramon, CA Tel : Fax : sales@trekstorusa.com Trek Technology (Shanghai) Co. Ltd No. 300 units , Hankoulu PC200001, Shanghai China. Tel : Fax : shibch@trek2000.com.sg Trek Technology (Europe) B.V. Poststraat 10-6, 6135 KR SITTARD (Netherlands). Tel : Fax : teo@trek-europe.nl Trek 2000 France SA 58, rue de la Boétie, PARIS. Tel : Fax : trekfrance@wanadoo.fr