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INVESTMENT PROPERTIES

12 Months Ended

Jun. 30, 2014

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

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 Amount			Investment Amount
	Investment Date	(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 property			13,179			2,122

Accumulated depreciation on rental property	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 China as of June 30, 2013.

		Investment Amount			Investment Amount
	Investment Date	(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
Gross investment in rental property			13,179			2,145

Accumulated depreciation on rental property	June 30, 2013		(2,302	)		(375	)

Net investment in properties – China			10,877			1,770

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 Amount			Investment Amount
	Investment Date	(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 properties - Malaysia			381			119

The following table presents the Company’s investment properties in Malaysia as of June 30, 2013.

		Investment Amount			Investment Amount
	Investment Date	(RM)			(U.S. Dollars)
Reclassification of Penang Property I	Dec 31, 2012		681			214
Gross investment in rental property			681			214

Accumulated depreciation on rental property	June 30, 2013		(294	)		(91	)

Net investment in rental properties - Malaysia			387			123

Rental Property I

In fiscal year 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 $904 based on the exchange rate as of June 30, 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 $115 for the year ended June 30, 2014, and $86 for the same period in the last fiscal year.

Rental Property II

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 $586 based on the exchange rate as of June 30, 2014 published by the Monetary Authority of Singapore. The title deeds for these properties are yet to be received. 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 year 2013 under a rental agreement that expired on March 31, 2014. TTCQ is actively looking for suitable tenants for the eight units.

Property purchased from JiangHuai generated a rental income of $13 for the year ended June 30, 2014 and $3 for the same period in the last fiscal year.

Other Properties III – FuLi

In fiscal year 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 purchased office space as its office premises. The total purchase price committed and paid was RMB 4,025, or approximately $655 based on the exchange rate as of June 30, 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 year 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 carries an increase in rental of 20% in the first year, as compared to the expired rental agreement. Thereafter the rental increases by approximately 10% for the subsequent years until April 2017.

Property purchased from FuLi generated a rental income of $49 for the year ended June 30, 2014, and $43 for the same period 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 year 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 year 2013, which had a net book value of $119. In fiscal year 2014 the depreciation expenses were $2, as compared to a depreciation of $7 in fiscal year 2013.

Summary

Total rental income for all investment properties (Property I, II and III) in China was $177 for the year ended June 30, 2014, and was $132 for the same period in the last fiscal year.

Rental income from the Penang property was nil for the year ended June 30, 2014 and 2013 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 and Malaysia were $109 for the year ended June 30, 2014, and were $112 for the same period in the last fiscal year.