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INVESTMENT PROPERTIES

6 Months Ended

Dec. 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 as of December 31, 2014. The exchange rate is based on the exchange rate as of December 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	Jan 04, 2008		5,554			894
Purchase of rental property – Property II – JiangHuai	Jan 06, 2010		3,600			580
Purchase of rental property – Property III - Fu Li	Apr 08, 2010		4,025			648
Currency translation			-			3
Gross investment in rental property			13,179			2,125
Accumulated depreciation on rental property			(3,287	)		(530	)
Net investment in property – China			9,892			1,595

The following table presents the Company’s investment in properties in China as of June 30, 2014.

	Investment Date	Investment Amount			Investment Amount
		(RMB)			(U.S. Dollars)
Purchase of rental property – Property I – MaoYe	Jan 04, 2008		5,554		904
Purchase of rental property – Property II – JiangHuai	Jan 06, 2010		3,600		586
Purchase of rental property – Property III - Fu Li	Apr 08, 2010		4,025		655
Currency translation			-		(23	)
Gross investment in rental property			13,179		2,122
Accumulated depreciation on rental property			(2,961	)	(476	)
Net investment in property – China			10,218		1,646

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

		(RM)		(U.S. Dollars)
Purchase of rental property – Penang Property I	Dec 31, 2012	681		196
Gross investment in rental property		681		196
Accumulated depreciation on rental property		(305	)	(88	)
Net investment in property – Malaysia		376		108

The following table presents the Company’s investment in properties in Malaysia as of June 30, 2014.

		(RM)			(U.S. Dollars)
Purchase of rental property – Penang Property I	Dec 31, 2012		681			212
Gross investment in rental property			681			212
Accumulated depreciation on rental property			(300	)		(93	)
Net investment in property – Malaysia			381			119

Rental Property I - MaoYe

In fiscal 2008, Trio-Tech (Chongqing) Co. Ltd. (“TTCQ”) purchased an office in Chongqing, China from MaoYe Property Ltd. (“MaoYe”), for a total cash purchase price of RMB 5,554, or approximately $894 based on the exchange rate as of December 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, 2014 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 $30 and $59 for the three and six months ended December 31, 2014, respectively, and $29 and $57 for the same periods in the last fiscal year, respectively.

Rental Property II - JiangHuai

In fiscal year 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 $580 based on the exchange rate as of December 31, 2014 published by the Monetary Authority of Singapore. TTCQ rented all of these commercial units to a third party until the agreement expired in January 2012. TTCQ then rented three of the eight commercial units to another party during the fourth quarter of fiscal year 2013 under a rental agreement that expired on March 31, 2014. Currently all the units are vacant and TTCQ has been actively looking for suitable tenants for renting all the commercial units. TTCQ has yet to receive the title deed for these properties. TTCQ is in the legal process to obtain the title deed which is dependent on JiangHuai completing the entire project.

Property purchased from JiangHuai did not generate any rental income during the three and six months ended December 31, 2014, while it generated a rental income of $4 and $9, respectively, for the same periods in the last fiscal year.

Rental Properties III – Fu Li

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 $648 based on the exchange rate as of December 31, 2014 published by the Monetary Authority of Singapore. The development was completed and the property was handed over during April 2013 and the title deed was received during the third quarter of fiscal 2014. The two commercial properties were leased to third parties under two separate rental agreements, one of which expired in April 2014 and the other of which expired 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 carries an increase in rent of 20% in the first year, as compared to the expired rental agreement. Thereafter the rent increases by approximately 10% for the subsequent years until April 2017. For the unit for which the agreement expired in August 2014, a new tenant was identified and a new agreement has been executed, which expires on August 9, 2016. The new agreement carries an increase in rental of approximately 21% in the first year, as compared to the expired rental agreement. Thereafter the rent increases by approximately 6% for the subsequent years until August 2016.

Property purchased from Fu Li generated a rental income of $14 and $28 for the three and six months ended December 31, 2014, respectively, while it generated a rental income of $12 and $24, respectively, for the same periods in the last fiscal year.

Penang Property I

In the fourth quarter of fiscal year 2013, Trio-Tech Malaysia Sdn. Bhd. (“TTM”) determined to sell the factory building in Penang. However, as the government authorities did not approve the transaction, the sale did not take place. Because the market value was increasing during the second quarter of fiscal year 2013, TTM decided to hold the factory building in Penang as an investment rental property. Hence TTM reclassified the factory building as investment property at the end of the second quarter of fiscal year 2013, which had a net book value of RM 376, or approximately $108. The depreciation expenses were approximately $1 and $2 for the three and six months ended December 31, 2014, respectively. There were no such depreciation expenses for the same periods in the last fiscal year, since the asset was classified as “Assets held for sale.”

Summary

Total rental income for all investment properties (Property I, II and III) in China was $44 and $87 for the three and six months ended December 31, 2014, respectively, and was $46 and $90, respectively, for the same periods in the last fiscal year.

Depreciation expenses for all investment properties in China were $27 and $54 for the three and six months ended December 31, 2014, respectively, and were $26 and $54, respectively, for the same periods in the last fiscal year.