Table of Contents
What changed
Revenue fell 25.1% to $172.0m and PBT fell 40.4% to $50.9m, yet reported NPAT declined only 7.5% to $46.0m. The gap is almost entirely a tax-rate effect: the effective tax rate collapsed to 10.6% from roughly 41.8% in FY19, making PBT the cleaner read on operating performance. Beneath the group numbers, the segment mix shifted violently: Hotel Operations revenue dropped from $126.6m to $64.1m (share of group revenue from 55% to 37%) and segment profit collapsed from $33.5m to just $1.9m — a 94% decline confirmed in management's own commentary. Residential Land Development, at $88.8m of revenue and $41.8m of profit, now drives the group. Net debt fell to $17.2m from $23.8m, but cash and equivalents dropped to $20.8m. No final dividend was declared.
What matters
- Earnings quality is dominated by one segment. Residential Land Development delivered a ~47% segment margin and $41.8m of result against a hotel segment that was essentially break-even. The group headline masks the fact that the operating business MCK is branded around — hotels — contributed almost nothing.
- The NPAT print overstates underlying resilience. A 31-percentage-point swing in the effective tax rate cushioned the bottom line. Stripping that out, PBT down 40.4% is the honest operating picture.
- Cash generation was unusually strong. OCF of $86.1m exceeded EBITDA of $60.4m (142%), and capex of only $6.0m produced pre-lease FCF of $80.1m — roughly 174% of NPAT. Net debt fell despite cash dropping, suggesting working-capital release and constrained investment rather than earnings-led cash flow.
Expectations
No quantitative FY21 target, backlog or forward-work disclosure was provided. The only forward signal is management's statement that 2021 occupancy in key tourist destinations is "significantly less than what we saw twelve months ago," which reads as a negative setup for hotels into FY21. Half-on-half shape reinforces this: HY20 delivered 49.3% of full-year revenue but 74.2% of full-year NPAT, implying the second half NPAT run-rate was only ~$11.9m on ~$87.2m of revenue. Absent a quantified target, the release does not support a view on FY21 earnings recovery — only that the second-half exit rate was materially weaker than the first half.
Quality of result
Mixed. The PBT decline is genuine and operationally driven. Three features make the reported NPAT look better than the underlying run-rate warrants: the tax-rate collapse to 10.6%, the dominance of Residential Land Development (a lumpy, project-driven earnings stream), and working-capital release — trade receivables fell to $7.3m from $11.8m, shortening receivable days from 18.8 to 15.5. The strong $86.1m OCF therefore contains a working-capital tailwind and reflects minimal capex ($6.0m, 3.5% of revenue) rather than a sustainable uplift in operating cash generation. Leverage, on net debt/EBITDA, actually ticked up modestly to 0.29x from 0.25x because EBITDA weakened faster than debt, even though absolute net debt fell.
Unresolved
- Durability of Residential Land Development earnings: project timing, remaining inventory, and sales pipeline are not quantified in the extracted release, yet this segment now underwrites group profitability.
- The driver of the 10.6% effective tax rate — whether it reflects deferred tax recognition, asset revaluation effects, or timing — is not disclosed here and materially affected the NPAT headline.
- No FY19 OCF, capex or cash comparator was provided in the like-for-like extraction, so the apparent cash-flow strength cannot be benchmarked.
- Hotel trajectory into FY21: with management flagging sharply weaker 2021 occupancy, the question is whether the hotel segment breaks even, loses money outright, or is restructured.
- This briefing cannot assess valuation (no NTA or share-price context) or the composition of the tax line that drove the NPAT vs PBT divergence.
Key metrics
| Metric | FY20 | FY19 | Change |
|---|---|---|---|
| Revenue | $172.0m | $229.7m | -25.1% ↓ |
| EBITDA | $60.4m | — | — |
| Net profit after tax | $46.0m | $49.7m | -7.5% ↓ |
| Net cash inflow from operating activities | $86.1m | — | — |
| Final dividend per share | 0.0c | — | — |
| Profit before tax | $50.9m | $85.4m | -40.4% ↓ |
| Total assets | $987.9m | $1008.2m | -2.0% ↓ |
Reference: annolyse.ai/briefings/mck-fy20
Segment breakdown
| Segment | Current revenue | Prior revenue | Current result | Mix shift |
|---|---|---|---|---|
| Hotel Operations | $64.1m | $126.6m | $1.9m | -17.9pp |
| Residential Land Development | $88.8m | $91.8m | $41.8m | +11.7pp |
| Residential Property Development | $19.1m | $11.3m | $7.2m | +6.2pp |
Reference: annolyse.ai/briefings/mck-fy20
Analytical metrics
| Metric | FY20 | FY19 | Context |
|---|---|---|---|
| PBT growth | -40.4% | — | cleaner earnings measure |
| Effective tax rate | 10.6% | 41.8% | — |
| OCF / EBITDA (cash conversion) | 142.4% | — | stable |
| FCF pre-lease | $80.1m | — | — |
| FCF / NPAT | 174.3% | — | complementary conversion metric |
| Capex % revenue | 3.5% | — | — |
| Capex | −$6.0m | — | — |
| Debtor days | 15.4 | 18.8 | -3.4 days |
| Inventory days | 2.9 | 2.6 | +0.3 days |
| Operating working capital | $8.6m | $13.5m | −$4.8m absorbed |
| Trade debtors | $7.3m | — | — |
| Net debt | $17.2m | $23.8m | −$6.6m |
| Net debt / EBITDA | 0.28x | 0.25x | Weakening |
| Gross borrowings | $38.0m | — | — |
| Payout ratio vs NPAT | 0.0% | — | — |
| Payout ratio vs FCF pre-lease | 0.0% | — | covered |
| ROE (annualised) | 5.6% | — | — |
| HY20 share of FY20 revenue | 49.3% | — | Other half was 50.7% |
| HY20 share of FY20 NPAT | 74.2% | — | Other half was 25.8% |
Reference: annolyse.ai/briefings/mck-fy20
This analysis was generated using Annolyse, an AI-powered tool that analyses NZX/ASX company announcements. The analysis is based on available company filings and standard Annolyse calculations. This is general information only and does not constitute financial advice. The analysis may contain errors. Always read the original company filings and consult a licensed financial adviser before making investment decisions.