Key points:

Mailpac’s MyCart deal has changed from an all-share arrangement to $243 million in cash plus 50 million shares, raising questions about how the revised payment structure should be reconciled with earlier disclosures and the $1.21-billion contingent consideration liability in the audited accounts.

The accounting work tied to the MyCart acquisition has delayed Mailpac’s 2025 audited financials and its first-quarter report for the 2026 financial year, putting the company at possible risk of JSE sanctions if the filings remain outstanding beyond the late-filing deadline.

Mailpac says its growth plans remain intact despite the audit delay, with the company pointing to continued expansion of its courier, MyCart, Pack Yuh Barrel, and Mailpac Local businesses, though specific Caribbean expansion markets have not been publicly identified.

MAILPAC Group Limited could face a possible Jamaica Stock Exchange (JSE) sanction as revised terms for its MyCart acquisition continue to delay the completion of its 2025 audited financial statements and its first-quarter report for the 2026 financial year.

The JSE Junior Market company disclosed in a JSE filing last Thursday that the purchase price for the acquisition of MyCart Quick Limited’s assets has been revised to $243 million in cash and 50 million new ordinary shares in Mailpac Group. The cash portion was paid on April 15, with the listing of the new shares to be completed at a later date.

Mailpac acquired the assets of MyCart Quick Limited in April 2024.

The revised arrangement marks a change from the structure previously disclosed to the market. In a March 4 update to the JSE, Mailpac said the acquisition would be settled entirely through the issuance of shares and that no cash payment or loan financing would be used. The company also said at the time that no shares had yet been issued to MyCart’s owner/operators because the transaction had not yet closed.

Under the original terms, the company was set to issue new ordinary shares of Mailpac to MyCart founders Kamar Palmer and Aldane Smith, with the number of shares depending on the performance of the acquired MyCart assets from April 2024 to March 2025.

The amended terms have required Mailpac, its auditors and valuation advisers to revisit how the MyCart deal should be recorded in the audited accounts, including how much value should be placed on the assets acquired, the liabilities assumed, and the goodwill arising from the purchase. Ernst & Young (EY) Services Limited was contracted as the independent valuation expert for the transaction.

“This delay in the delivery of our audited financials is driven by the nuances of acquisition accounting, and we will close those out in the next month now that we have gotten clear alignment with our external auditors, valuators, and all other parties that have to coordinate an audit of an acquisition,” said Mailpac Chairman Khary Robinson in an email to the Jamaica Observer.

“We remain committed to the highest standards of governance, transparency and accountability, and we appreciate the patience and continued support of our shareholders as this final technical work is completed,” Robinson added.

The MyCart transaction has also produced major changes in Mailpac’s balance sheet, including the value assigned to intangible assets and the amount recorded as a future acquisition-related liability.

In its unaudited December 2024 management accounts Mailpac reflected $137.19 million as “shares to be issued” and carried intangible assets of $320.59 million. In the audited December 2024 financial statements, however, the “shares to be issued” line was no longer shown, intangible assets rose to $1.39 billion, and the company recorded a $1.21-billion contingent consideration liability.

The revised deal terms now disclosed have added another layer to the accounting work. Based on Mailpac’s closing price of $2.19 on Tuesday, June 23, the 50 million shares would have a market value of approximately $109.5 million. When added to the $243-million cash payment, the disclosed cash-and-share package would amount to about $352.5 million before final accounting conclusions.

That does not necessarily mean the value of MyCart has fallen from $1.21 billion to $352.5 million, as acquisition accounting can include assumptions about future performance, customer relationships, brand value, and expected earnings. However, Mailpac has not publicly provided a full reconciliation between the original all-share structure, the $1.21-billion contingent consideration liability reflected in the 2024 audited accounts and December 2025 management accounts, and the amended cash-and-share package now disclosed.

The Business Observer sought further clarification from Robinson on how investors should reconcile those figures and transaction structures. He had not responded up to publication time, and calls to his phone went unanswered.

Mailpac published its unaudited fourth-quarter report on February 16, with the MyCart acquisition still subject to final accounting treatment. However, the company’s external auditor requested an updated assessment of the goodwill balances, including the final accounting conclusions arising from the MyCart deal.

Its audited financial statements were due by March 31 but have been held up by the ongoing work by EY on the MyCart acquisition. The delay has also affected the release of Mailpac’s first-quarter report for the 2026 financial year, which covers the period ended March 31.

Mailpac has requested an extension from the JSE to submit its audited financials by July 17, but it might still face sanctions because of the lengthy delay. The JSE’s Junior Market rule book stipulates that the exchange may suspend trading of a company’s securities if its financial statements are not submitted within 90 days of the original due date. For Mailpac, that deadline is June 29.

The company’s first-quarter report was originally due by May 15, and the 45-day late-filing period for that report also ends on June 29.

The possible sanction would come against the backdrop of increased JSE enforcement of late financial reporting. Since 2023, seven listed companies have been suspended for delayed financials, including four Junior Market companies.

Derrimon Trading Company Limited was recently suspended after its audited financial statements remained outstanding more than 90 days beyond its submission deadline. Jamaica Broilers Group Limited was not suspended after delayed financials, making it an exception to the recent enforcement trend.

Mailpac says growth plans remain intact

Despite the hurdles in completing its external audit, Mailpac said it remains focused on growing the combined businesses. Mailpac operates as a premium courier and freight-forwarding business, while MyCart continues as a value courier operation. The group’s diversified offering also includes Pack Yuh Barrel, its digital barrel packing and shipping service; and Mailpac Local, its local, online purchasing platform.

The company’s unaudited fourth-quarter report showed a one per cent reduction in revenue to $827.21 million as nine retail locations were affected by Hurricane Melissa.

“While the impact was largely short-term, these disruptions affected store accessibility, processing capacity, and customer activity across several communities. Despite this, the team responded quickly to restore service continuity, and the business demonstrated resilience as operations normalised toward the latter part of the quarter,” the company said.

Even with the reduction in the top line, Mailpac’s operating profit rose 11 per cent to $133.88 million due to tighter cost management. However, though profit before tax went up five per cent to $80.08 million, net profit dipped by 25 per cent to $53 million due to a higher tax rate. Mailpac benefited from full income tax relief between December 2019 and December 2024 but is now subject to 50 per cent of the normal 25 per cent tax rate.

The company officially opened its 13th location at Barbican, St Andrew, in mid-June. This forms part of the company’s push to deepen its presence in key urban areas as a premium courier.

“We want the Mailpac brand to be closer and more ingrained in the everyday life of our consumers so we will be aggressively repositioning the brand and platform in that way, including an impending partnership with another lifestyle brand,” Robinson said of the company’s expansion.

Robinson said the regional roll-out has been slower than planned but added that the company hopes to close one of its opportunities “in short order”.

Mailpac has not publicly identified the specific Caribbean markets being targeted for regional expansion.

For the overall financial year Mailpac’s unaudited revenue was up 16 per cent to $2.98 billion, with operating profit climbing 44 per cent to $536.49 million. Despite a 60 per cent rise in finance costs to $184.70 million, Mailpac Group’s profit before tax grew 37 per cent to $354.15 million. Net profit increased 21 per cent to $301.15 million, with an earnings per share of $0.12.

“Mailpac Group continues to successfully execute on our stated strategies, and that can be seen in our financial performance. Our business is growing, our customer base is expanding, our profit is continually improving, and our ambitions of regional expansion is unchanged,” Robinson added.

Mailpac’s stock closed at $2.19 on Tuesday, June 23, down $0.15, or 6.41 per cent, leaving the company with a market capitalisation of approximately $5.48 billion.

While previous announcements indicated that the company would rebrand to MyPac Group, Mailpac has shelved this proposal, which would have required an extraordinary general meeting (EGM).

“Following completion of integration activities and management’s ongoing review of the business, the board has not proceeded with the proposed rebranding initiative, and no EGM has been convened in relation to that matter,” the company said.

ROBINSON…we have gotten clear alignment with our external auditors, valuators, and all other parties that have to coordinate an audit of an acquisition.