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9. INVESTMENT PROPERTIES

12 Months Ended

Jun. 30, 2015

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

9. INVESTMENT PROPERTIES

The following table presents the Company’s investment properties in China as of June 30, 2015. The exchange rate is based on the exchange rate as of June 30, 2015 published by the Monetary Authority of Singapore.

	Investment Date	Investment Amount			Investment Amount
		(RMB)			(U.S. Dollars)
Purchase of Property I – MaoYe	Jan 04, 2008		5,554			894
Purchase of Property II – JiangHuai	Jan 06, 2010		3,600			580
Purchase of Property III – FuLi	Apr 08, 2010		4,025			648
Currency translation			-			1
Gross investment in rental properties			13,179			2,123

Accumulated depreciation on rental properties	June 30, 2015		(3,619	)		(583	)

Net investment in properties – China			9,560			1,540

The following table presents the Company’s investment properties in China as of June 30, 2014. The exchange rate is based on the exchange rate as of June 30, 2014 published by the Monetary Authority of Singapore.

	Investment Date	Investment Amount			Investment Amount
		(RMB)			(U.S. Dollars)
Purchase of Property I – MaoYe	Jan 04, 2008		5,554			904
Purchase of Property II – JiangHuai	Jan 06, 2010		3,600			586
Purchase of Property III – FuLi	Apr 08, 2010		4,025			655
Currency translation			-			(23	)
Gross investment in rental properties			13,179			2,122

Accumulated depreciation on rental properties	June 30, 2014		(2,961	)		(476	)

Net investment in properties – China			10,218			1,646

The following table presents the Company’s investment properties in Malaysia as of June 30, 2015. The exchange rate is based on the exchange rate as of June 30, 2015 published by the Monetary Authority of Singapore.

	Investment Date	Investment Amount			Investment Amount
		(RM)			(U.S. Dollars)
Reclassification of Penang Property I	Dec 31, 2012		681			181
Gross investment in rental property			681			181

Accumulated depreciation on rental property	June 30, 2015		(310	)		(83	)
Reclassified as “Assets held for sale”	June 30, 2015		(371	)		(98	)
Net investment in rental property - Malaysia			-			-

The following table presents the Company’s investment properties in Malaysia as of June 30, 2014. The exchange rate is based on the exchange rate as of June 30, 2014 published by the Monetary Authority of Singapore.

	Investment Date	Investment Amount			Investment Amount
		(RM)			(U.S. Dollars)
Reclassification of Penang Property I	Dec 31, 2012		681			212
Gross investment in rental property			681			212

Accumulated depreciation on rental property	June 30, 2014		(300	)		(93	)

Net investment in rental property - Malaysia			381			119

Rental Property I - MaoYe

In fiscal 2008, 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 June 30, 2015 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, however as at the date of this report, this rental agreement (1,104 square meters at a monthly rental of RMB 38,645) has been terminated and a new rental agreement (653 square meters at a monthly rental of RMB 38,520) was signed on August 1, 2015. This rental agreement provides for a rent increase of 5% every year after January 31, 2017 and it expires on July 31, 2020.

Property purchased from MaoYe generated a rental income of $115 for both the years ended June 30, 2015 and 2014.

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 June 30, 2015 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; however TTCQ has the vacant possession with the exception of two units, which is in the process of clarification. TTCQ is in the legal process to obtain the title deed, which is dependent on JiangHuai completing the entire project.

Property purchased from JiangHuai generated a rental income of nil and $13 for the years ended June 30, 2015 and 2014, respectively.

Rental Properties III – FuLi

In fiscal 2010, TTCQ entered into a Memorandum Agreement with Chongqing FuLi 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 June 30, 2015 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 expired in August 2014. For the unit for which the agreement expired in April 2014, a new tenant was identified and a new agreement was 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 was 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 FuLi generated a rental income of $58 and $49 for the years ended June 30, 2015 and 2014, respectively.

Penang Property I

During the fourth quarter of 2015, the operations in Malaysia planned to sell its factory building in Penang, Malaysia. In May 2015, Trio-Tech Malaysia was approached by a potential buyer to purchase the factory building. Negotiation is still ongoing and is subject to approval by Penang Development Corporation. In accordance to ASC Topic 360, the property was reclassified from investment property, which had a net book value of RM 371, or approximately $98, to assets held for sale since there was an intention to sell the factory building. There was no such asset in the prior year.

Summary

Total rental income for all investment properties (Property I, II and III) in China was $173 for the year ended June 30, 2015, and was $177 for the same period in the last fiscal year.

Rental income from the Penang property was nil for the years ended June 30, 2015 and 2014, as the property in Penang, Malaysia was vacant at the date of this report. In the fourth quarter of fiscal year 2015, the Penang property was reclassified from investment property to assets held for sale.

Depreciation expenses for all investment properties in China and Malaysia were $109 for both the years ended June 30, 2015, and 2014.