Prime Trust announces a $92 million Half Year loss, sales down 50%

Prime Trust, with 45 villages, followed other operators in reviewing village valuations down to reflect the current market, partly creating an accounting loss of $92 million for the six months to December 30. CEO Phillip Powell reported to us however that operationally the six months were about break even. Built into the loss was a $34 million provision against second mortgage loans to external village developers, which may be at risk. (Being a passive investment trust, Prime cannot develop greenfield sites itself; it provides second mortgage finance with a contract to take ownership of the village on completion).
While sales have been off by 50%, he is cautiously optimistic that demand and settlements will return by midyear. They received six applications last week and reserved units are 15% higher than in June, but applicants are taking significantly longer to sell their own home. Prime also has significant village holdings in monsoon afflicted North Queensland.
In addition to selling non-core assets to reduce debt, Powell says his focus is to continue restructuring the business to ensure a positive cash flow and a return to income distributions to investing unit holders.