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INVESTMENT PROPERTIES

9 Months Ended

Mar. 31, 2014

INVESTMENT PROPERTIES (IN THOUSANDS, EXCEPT EARNINGS PER SHARE AND NUMBER OF SHARES)

The following table presents the Company’s investment in properties in China and Malaysia as of March 31, 2014. The exchange rate is based on the exchange rate as of March 31, 2014 published by the Monetary Authority of Singapore.

	Investment Date	Investment Amount			Investment Amount
		(RMB)			(U.S. Dollars)
Purchase of rental property – Property I - MaoYe	01/04/2008		5,554			894
Purchase of rental property – Property II - JiangHuai	01/06/2010		3,600			578
Purchase of rental property – Property III - Fu Li	01/06/2010		4,025			647
Gross investment in rental property			13,179			2,119
Accumulated depreciation on rental property			(2,796	)		(451	)
Net investment in property – China			10,383			1,668

	Investment Date	Investment Amount			Investment Amount
		(RM)			(U.S. Dollars)
Purchase of rental property – Penang Property I	31/12/2012		681			208
Gross investment in rental property			681			208
Accumulated depreciation on rental property			(297	)		(91	)
Net investment in property – Malaysia			384			117

Rental Property I

In fiscal 2008, Trio-Tech (Chongqing) Co. Ltd. (“TTCQ”) entered into a Memorandum Agreement with MaoYe Property Ltd. to purchase an office space in Chongqing, China for a total cash purchase price of RMB 5,554, or approximately $894 based on the exchange rate as of March 31, 2014 published by the Monetary Authority of Singapore. TTCQ rented this property to a third party on July 13, 2008. The term of the rental agreement was five years. The rental agreement was renewed on July 16, 2013 for a further period of five years. The rental agreement provides for a rent increase of 8% every year after July 15, 2015. The renewed agreement expires on July 15, 2018.

Property purchased from MaoYe generated a rental income of RMB 179, or approximately $30, and RMB 529, or approximately $87, for the three and nine months ended March 31, 2014, respectively, and RMB 135, or approximately $22, and RMB 404, or approximately $65, for the same periods in the last fiscal year, respectively.

Rental Property II

In fiscal 2010, TTCQ purchased eight units of commercial property in Chongqing, China from Chongqing JiangHuai Real Estate Development Co., Ltd (“JiangHuai”) for a total purchase price of RMB 3,600, or approximately $578 based on the exchange rate as of March 31, 2014 published by the Monetary Authority of Singapore. TTCQ rented these commercial units to a third party until the lease agreement expired in January 2012. TTCQ then rented three of the eight commercial units to another party during the fourth quarter of fiscal 2013 under a rental agreement that expired on March 31, 2014. TTCQ is actively looking for suitable tenants for the remaining five commercial units and the three units for which the rental agreement expired on March 31, 2014.

Property purchased from JiangHuai generated a rental income of RMB 27, or approximately $4, and RMB 82, or approximately $13, for the three and nine months ended March 31, 2014, respectively, and did not generate any rental income for the same periods in the last fiscal year.

Other Properties III – FuLi

In fiscal 2010, TTCQ entered into a Memorandum Agreement with Chongqing Fu Li Real Estate Development Co. Ltd. (“FuLi”) to purchase two commercial properties totaling 311.99 square meters (“office space”) located in Jiang Bei District Chongqing. Although TTCQ currently rents its office premises from a third party, it intends to use the office space as its office premises. The total purchase price committed and paid was RMB 4,025, or approximately $647 based on the exchange rate as of March 31, 2014 published by the Monetary Authority of Singapore. The development was completed and the property was handed over during April 2012 and the title deed was received during the third quarter of fiscal 2013. One of the two rental agreements expired in April 2014 and the other will expire in August 2014. For the unit for which the agreement expired in April 2014, a new tenant was identified and a new agreement has been executed, which expires on April 30, 2017. The new agreement is with an increase in rental by 20% in the first year, as compared to the expired rental agreement. Thereafter the rental increases by approximately 10% for the subsequent years till April 2017.

Property purchased from FuLi generated a rental income of RMB 74, or approximately $12, and RMB 221, or approximately $36, for the three and nine months ended March 31, 2014, respectively, and RMB 70, or approximately $11, and RMB 197, or approximately $31, respectively, for the same periods in the last fiscal year.

Penang Property I

Since the market value of the factory building in Penang, Malaysia is increasing significantly, during the second quarter of fiscal 2013 Trio-Tech Malaysia (TTM) changed its plans to sell the factory building and decided to hold that as an investment rental property. Hence, TTM re-classified the factory building to investment property at the end of the second quarter of fiscal 2013, which had a net book value of $117.

Summary

Total rental income for all investment properties (Property I, II and III) in China was $46 and $136 for the three and nine months ended March 31, 2014, respectively, and was $33 and $96, respectively, for the same periods in the last fiscal year.

Rental income from the Penang property was nil for the three and nine months ended March 31, 2014 as the property in Penang, Malaysia is vacant at the date of this report. TTM is in the process of identifying a suitable tenant.

Depreciation expenses for all investment properties in China were $27 and $81 for the three and nine months ended March 31, 2014, respectively, and were $26 and $78, respectively, for the same periods in the last fiscal year.