Table of Contents
What changed
Revenue fell 14.9% to NZ$83.7m, PBT fell 22.5% to NZ$32.1m, and NPAT fell 39.2% to NZ$15.4m. The wider NPAT decline reflects a higher effective tax rate (28.4% vs 38.7% — actually a lower rate this half, so NPAT falling faster than PBT is driven by minority interest / mix, not a tax headwind). On the cleaner pre-tax read, earnings were down about 22.5%.
Cash dropped from NZ$94.4m a year ago to NZ$23.0m, a NZ$71.4m fall, while operating cash flow roughly halved to NZ$24.4m from NZ$55.1m. Total assets declined 28.9% to NZ$700.0m and equity fell 27.3% to NZ$635.5m. Gross borrowings remained at zero, so the group is still net cash, but materially less so.
Segment mix was lopsided: Residential Land Development contributed NZ$47.7m of revenue (57.1% of the group) and NZ$31.9m of segment result, Residential Property Development added NZ$4.2m of result on NZ$8.6m of revenue, while Hotel Operations posted a NZ$3.9m segment loss on NZ$27.3m of revenue. No interim dividend was declared.
What matters
- Earnings are not really a hotel story. Roughly 67% pre-tax margin at Residential Land Development (the CDL Investments stake) supplied essentially all of reported profit. Hotel Operations remain loss-making at around a -14.5% pre-tax margin despite the reopening backdrop, which constrains the read-through from any tourism recovery in H2.
- Cash base has been rebuilt downward. A NZ$71.4m y/y cash decline, against OCF of NZ$24.4m and capex of only NZ$3.6m, implies a large non-operating outflow (the FY21 dividend paid in May 2022 and investment/financing activity) rather than weak trading alone. The group is still net cash, but the buffer that previously anchored the "strong balance sheet" narrative has compressed.
- Dividend policy tightened. No interim was declared, consistent with prior practice, but the low FY21 payout (3.5cps final) combined with a cash-base reset suggests capital returns are being kept conservative despite reported profitability.
Expectations
No numeric guidance, forward bookings, or stated targets were provided. Management said only that MCK expects to remain profitable in 2022.
Seasonality context is mixed: FY21 was first-half weighted (HY21 was 59.7% of FY21 revenue and 63.3% of FY21 NPAT), largely because H2 FY21 was hit by Delta-era restrictions. Annualising HY22 revenue gives roughly NZ$167.3m, marginally above FY21's NZ$164.8m, but that comparison flatters H2 because the second-half run-rate depends heavily on lumpy land-development settlements rather than hotel recovery. The filing does not support a confident shape call for H2.
Quality of result
Earnings quality is mediocre and concentrated. The profit is real but comes almost entirely from property-development settlements in a segment whose output is inherently lumpy, while the hotel book — the asset MCK is named after — is still a drag. Pre-lease free cash flow of NZ$20.8m covers NPAT 1.35x, which looks healthy in isolation, but OCF-to-EBITDA fell to 67.4% from 75.7% and operating cash flow itself halved year-on-year, so cash conversion deteriorated materially even as working capital tightened (operating working capital down to NZ$1.2m from NZ$8.6m).
The effective tax rate moved from 38.7% to 28.4% — a tailwind to NPAT — so the pre-tax decline of 22.5% is the honest run read. An FX adjustment of NZ$3.1m in cash flow also flagged some translation exposure that is not otherwise quantified.
Unresolved
- Why did cash fall NZ$71.4m y/y when OCF less capex was still a positive NZ$20.8m? The filing excerpts do not quantify dividend outflows, investments in CDLI/KIN, or other financing movements in a way that closes the gap.
- What is the pipeline of remaining CDL Investments land settlements, on which the majority of group profit now depends?
- When, if ever, does Hotel Operations turn profitable on a segment basis, and what occupancy/ADR step-up would that require?
- Why was NPAT down 39.2% when PBT was down only 22.5% and the effective tax rate fell? Minority interest in the CDL subsidiary is the likely driver, but it is not separately disclosed in the supplied excerpts.
This briefing cannot assess valuation, since no share price was provided alongside the NZ$3.00 NTA per share figure, and it cannot assess hotel-level operating KPIs (RevPAR, occupancy, ADR) because none were disclosed in the supplied material.
Key metrics
| Metric | HY22 | HY21 | Change |
|---|---|---|---|
| Revenue | $83.7m | $98.4m | -14.9% ↓ |
| EBITDA | $36.2m | — | — |
| Net profit after tax | $15.4m | $25.3m | -39.2% ↓ |
| Net cash inflow from operating activities | $24.4m | $55.1m | -55.7% ↓ |
| Interim dividend per share | 300.0c | 400.0c | -25.0% ↓ |
| Profit before tax | $32.0m | $41.4m | -22.5% ↓ |
| Cash and cash equivalents | $23.0m | $94.4m | -75.7% ↓ |
| Total assets | $700.0m | $984.3m | -28.9% ↓ |
Reference: annolyse.ai/briefings/mck-hy22
Segment breakdown
| Segment | Current revenue | Prior revenue | Current result | Mix shift |
|---|---|---|---|---|
| Hotel Operations | $27.3m | — | −$3.9m | n/a |
| Residential Land Development | $47.7m | — | $31.9m | n/a |
| Investment Property | $0.1m | — | −$0.1m | n/a |
| Residential Property Development | $8.6m | — | $4.2m | n/a |
Reference: annolyse.ai/briefings/mck-hy22
Analytical metrics
| Metric | HY22 | HY21 | Context |
|---|---|---|---|
| PBT growth | -22.5% | — | cleaner earnings measure |
| Effective tax rate | 28.4% | 38.7% | — |
| OCF / EBITDA (cash conversion) | 67.4% | 75.7% | deteriorated |
| FCF pre-lease | $20.8m | $51.1m | −$30.3m |
| FCF / NPAT | 135.2% | 201.5% | complementary conversion metric |
| Capex % revenue | 4.3% | 4.0% | — |
| Capex | $3.6m | — | — |
| Debtor days | 0.0 | 13.4 | -13.4 days |
| Inventory days | 2.7 | 2.5 | +0.2 days |
| Operating working capital | $1.2m | $8.6m | −$7.4m absorbed |
| Trade debtors | $0.0m | $6.0m | −$6.0m |
| Net debt | −$23.0m | −$77.6m | +$54.6m |
| Net debt / EBITDA | -0.63x | -1.07x | Weakening |
| Gross borrowings | $0.0m | — | — |
| Payout ratio vs NPAT | 0.0% | — | — |
| Payout ratio vs FCF pre-lease | 0.0% | — | covered |
| ROE (annualised) | 4.8% | 5.8% | Weakening |
| HY21 share of FY21 revenue | 59.7% | — | Other half was 40.3% |
| HY21 share of FY21 NPAT | 63.3% | — | Other half was 36.7% |
| Profit from continuing operations | — | $25.3m | — |
Reference: annolyse.ai/briefings/mck-hy22
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.