Message from our Chairman and Chief Executive Officer Henn Tan

Aptly phrased The Right to Ownership summarizes our mission in 2004. The mission of Trek 2000 International Ltd (“Trek 2000” or “the Group”) for the year was to protect our intellectual property (“IP”) rights. What we are protecting are not simply Trek’s rights or your rights. We are protecting both our rights. Our shareholders’ investments in Trek 2000 reflect their belief in the power of our solutions and correspondingly, their rights to the IP ownerships surrounding the solutions that their company develops. It is therefore understandable that the Board and Management of Trek 2000 closely guard
and protect our IP rights that in turn impact our shareholders’ value.

A business associate recently told me that the three items found hanging on the key chains of young professionals today are – the car key, the house key and the USB portable storage device. When we first introduced the ThumbDrive® in early 2000, we believe that this little device is set to change the way consumers across the world store and transport information and data. More importantly, it will become a lifestyle product
of equal importance to the mobile phone. This vision is now a reality.

With the USB portable storage products gaining rapid recognition, IP protection will assume precedence on our agenda. Over the last few years we have invested our resources to register and patent many solutions that were developed by our research and development (“R & D”) teams. I am pleased to inform that as at 31 December 2004, Trek 2000 has registered a total of 26 patents in all significant countries worldwide. To Trek, our strength lies in our ability to continually develop commercially viable and patenable solutions. This growing library of patents is one of our most valuable assets. It enables us to license our IP ownerships and thereby creating a new stream of revenue for the Group.

Another major event during the year was our effort to further strengthen the relationships that we have with our strategic partners. This subsequently resulted in our partners, Toshiba Corporation, TEAC Corporation and Creative Technology Ltd taking equity investments in Trek 2000.

On the operational front, our revenues in 2004 rose 11.3% to $139.6 million reflecting the broadening market recognition of the Group’s engineering solutions. The Group’s net profit after tax was lower by 75.3% to 1.3 million due to the litigation cost incurred to protect our IP and increased expenses in our R & D activities in India and
Malaysia. Our cashflow remained healthy with cash and cash equivalents rising 62% to $40 million as at 31 December 2004.

Some of the challenges ahead will be from managing the acute global shortage and price volatility of the Nand Flash Memory; Trek’s protection over its library of patents; and our ability to explore R & D partnerships with leading technological leaders. Nevertheless, the Group is confident that it will remain profitable in the new financial year.

Looking ahead, business performance will be driven by the expansion of Treks’ product range and by securing new OEMs (“Original Equipment Manufacturer”); further widening of regional distribution network and customer base; and synergistic partnerships with potential parties whose businesses complement that of the Group.

I would like to take this opportunity to thank all our customers, shareholders, business associates and employees for their support and confidence in 2004. Despite the challenges in the new financial year, I am sure that with all your assistance together we will make the year another successful one for Trek 2000 and our shareholders. For the financial year ended 31 December 2004, the Board recommends a first and final dividend of 1 Singapore cent per ordinary share subject to the approval of the shareholders at the forthcoming Annual General Meeting.

Henn Tan
Chairman and Chief Executive Officer