Year End 1998
For the year ended October 31, 1998
MIDDLEFIELD BANCORP REPORTS 1998 RESULTS
Middlefield Bancorp Limited ("MBN") is pleased to announce record operating results for the year ended October 31, 1998. Total revenue increased by 13% to $14.7 million, while net income increased by 39% to $1.7 million reflecting increased operating efficiencies and effective cost management. As a percentage of revenue, net income before tax increased from 16% in 1997 to 20% in 1998. Audited financial results are attached.
During 1998, the Company strengthened its financial position by expanding its line of credit with Bank of Nova Scotia to $10 million. At October 31, 1998, the Company had drawn $5.9 million under this facility.
Over the course of the year, the Company increased its equity interest in Porter Chadburn plc to 8.3%, as its shares continued to trade below their fundamental value. In March 1998, MBN led a US$7 million convertible note offering by Centurion Energy International Inc., an aggressive junior oil and gas company operating in Tunisia and Egypt.
As MBN enters 1999, it is well positioned to benefit from the growth prospects in its current investment portfolio as well as other exciting new investments under consideration.
| Financial Summary | ||
| For the year ended October 31 | 1998 | 1997 |
| Revenue | $14,650,000 | $12,937,000 |
| EBITDA | 3,301,000 | 2,223,000 |
| Net income | 1,689,000 | 1,213,000 |
| Fully diluted earnings per share | 0.19 | 0.18 |
| Weighted average number of shares | 8,901,000 | 6,908,000 |
Middlefield Bancorp trades on the Toronto Stock Exchange under the symbol "MBN".
March 12, 1999
| BALANCE SHEETS | ||||
| As at October 31 | ||||
| (All amounts in thousands) | 1998 | 1997 | ||
| Assets | ||||
| Current assets | ||||
| Cash and short-term investments | $ | 3,579 | $ | 473 |
| Marketable securities | 5,839 | 7,877 | ||
| Receivables | 2,844 | 2,116 | ||
| Inventories | 1,887 | 1,800 | ||
| Prepaid expenses | 294 | 73 | ||
| 14,443 | 12,339 | |||
| Investments | 5,863 | - | ||
| Property and equipment, net | 652 | 363 | ||
| Other assets, net | 795 | 467 | ||
| $ | 21,753 | $ | 13,169 | |
| Liabilities | ||||
| Current liabilities | ||||
| Bank indebtedness | $ | 5,904 | $ | - |
| Payables and accruals | 1,847 | 1,427 | ||
| Income taxes | 697 | 319 | ||
| 8,448 | 1,746 | |||
| Long-term payables | 193 | - | ||
| 8,641 | 1,746 | |||
| Shareholders' Equity | ||||
| Capital stock | 8,500 | 8,500 | ||
| Retained earnings | 4,612 | 2,923 | ||
| 13,112 | 11,423 | |||
| $ | 21,753 | $ | 13,169 | |
| STATEMENTS OF INCOME AND RETAINED EARNINGS | ||||
| For the years ended October 31 | ||||
| (All amounts in thousands, except per share amounts) | 1998 | 1997 | ||
| Revenue | $ | 14,650 | $ | 12,937 |
| Operating income before the undernoted: | 4,267 | 3,017 | ||
| General and administrative expenses | 966 | 794 | ||
| Interest: | ||||
| Term debt | - | 19 | ||
| Other | 225 | 18 | ||
| Depreciation and amortization | 130 | 120 | ||
| Income before provision for income taxes | 2,946 | 2,066 | ||
| Provision for income taxes | 1,257 | 853 | ||
| Net income | 1,689 | 1,213 | ||
| Retained earnings, beginning of year | 2,923 | 1,710 | ||
| Retained earnings, end of year | $ | 4,612 | $ | 2,923 |
| Earnings per share | $ | 0.21 | $ | 0.19 |
| Fully diluted earnings per share | $ | 0.19 | $ | 0.18 |
| STATEMENTS OF CASH FLOWS | ||||
| For the years ended October 31 | ||||
| (All amounts in thousands) | 1998 | 1997 | ||
| Operating | ||||
| Net income | $ | 1,689 | $ | 1,213 |
| Items not requiring an outlay of cash: | ||||
| Deferred income taxes | 12 | 47 | ||
| Loss on sale of marketable securities and investments | 100 | - | ||
| Depreciation and amortization | 130 | 120 | ||
| 1,931 | 1,380 | |||
| Net change in non-cash operating working capital | (238) | 360 | ||
| 1,693 | 1,740 | |||
| Investing | ||||
| Purchase of marketable securities and investments | (12,898) | (7,074) | ||
| Proceeds on sale of marketable securities and investments | 8,973 | - | ||
| Purchase of patent | (309) | - | ||
| Increase in development costs | (53) | (58) | ||
| Purchase of property and equipment, net of disposal proceeds | (397) | (87) | ||
| (4,684) | (7,219) | |||
| Financing | ||||
| Increase in bank indebtedness | 5,904 | - | ||
| Increase in long-term payables | 193 | - | ||
| Repayment of term debt | - | (427) | ||
| Issue of capital stock | - | 5,358 | ||
| 6,097 | 4,931 | |||
| Net increase (decrease) in cash and short-term investments | 3,106 | (548) | ||
| Cash and short-term investments, beginning of year | 473 | 1,021 | ||
| Cash and short-term investments, end of year | $ | 3,579 | $ | 473 |
Corporate Profile
Middlefield Bancorp Limited is a Canadian merchant bank managed by Middlefield Group. The Company's principle objective is to create long term shareholder value through a twofold strategy of (1) strategic investing in businesses with strong management and exceptional prospects for longer term earnings growth and (2) special situation investing where there is excellent potential for significant near term capital appreciation. Our aim is to produce a steady stream of growing earnings from strategic investments supplemented by earnings from special situation activities. MBN's board of directors and management include experienced and successful individuals who have committed their own capital to the Company.
Directors
| Thomas I.A. Allen,
Q.C. Partner, Ogilvy Renault |
Thomas C.
Laurie Vice-President, RBC Dominion Securities Inc. |
Corporate
Counsel Ogilvy Renault |
|
| Peter A.
Braaten President and CEO, Morrison Middlefield Resources Limited |
Robert B.
May Chairman and CEO, Sterling International Group |
Auditor Arthur Andersen LLP |
|
| Murray J.
Brasseur Managing Director, Middlefield Group |
A. Gordon
Stollery Chairman, Angus Glen Development Ltd. |
Banker Bank of Nova Scotia |
|
| George S.
Dembroski Former Vice Chairman, RBC Dominion Securities Limited |
Charles B.
Young Chairman, Ascend Capital Management |