Second Quarter 1999
For the period ended April 30, 1999
Press Release
MIDDLEFIELD BANCORP REPORTS SECOND QUARTER RESULTS
Message to Shareholders
Middlefield Bancorp Limited ("MBN") is pleased to report significant growth in revenue and net income during the second quarter ended April 30, 1999. Revenue for the six months ended April 30, 1999 increased 39% to $9.7 million from $7.0 million for the same period last year. This increase resulted primarily from the realization of a $2.9 million gain on the sale of the equity investment in Porter Chadburn plc. Earnings per share in the second quarter increased to $0.22 compared to $0.03 per share in the first quarter of 1999.
| Financial Summary | ||
| For the six months ended April 30 | 1999 | 1998 |
| Revenue | $9,659,000 | $6,963,000 |
| EBITDA | 3,359,000 | 1,306,000 |
| Net income | 2,169,000 | 695,000 |
| Fully diluted earnings per share | 0.25 | 0.08 |
| Weighted average number of shares | 8,901,700 | 8,891,000 |
The Porter Chadburn investment exemplifies MBN's strategy of investing in undervalued companies and pursuing various avenues to crystallize the intrinsic value and thereby realize a significant return. In this situation MBN, through its pursuit of Porter Chadburn, caused the company to seek out other bidders. As a result, MBN which already had a significant stake of approximately 8% in Porter Chadburn, was able to realize a significant gain on investment in a relatively short time.
H.E.R.O. Industries is on schedule to launch two new products. Initial marketing of the 18P Colorant Dispenser will commence during the summer followed by the launch of the revolutionary H2K Pump in the fall. A medical device for Parkinson's disease that employs some of our core technology is currently undergoing clinical trials at NYU Medical Centre and Harvard University.
In the coming months, MBN expects to announce further activity in its Sterling International division as it is currently in discussion with various acquisition candidates in the packaging sector.
Middlefield Bancorp trades on the Toronto Stock Exchange under the symbol "MBN".
June 29, 1999
| BALANCE SHEETS | ||||
| As at April 30 (unaudited) | ||||
| (All amounts in thousands) | ||||
| 1999 | 1998 | |||
| Assets | ||||
| Current assets | ||||
| Cash | $ | 857 | $ | 398 |
| Marketable securities | 5,790 | 11,915 | ||
| Receivables | 12,420 | 3,338 | ||
| Inventories | 2,159 | 1,738 | ||
| Prepaid expenses | 1,347 | 167 | ||
| 22,573 | 17,556 | |||
| Capital assets, net | 709 | 396 | ||
| Other assets, net | 811 | 521 | ||
| $ | 24,093 | $ | 18,473 | |
| Liabilities | ||||
| Current liabilities | ||||
| Bank indebtedness | $ | 6,000 | $ | 4,979 |
| Payables and accruals | 1,937 | 1,086 | ||
| Income taxes | 702 | 290 | ||
| 8,639 | 6,355 | |||
| Long-term payables | 154 | - | ||
| 8,793 | 6,355 | |||
| Shareholders' Equity | ||||
| Capital stock | 8,519 | 8,500 | ||
| Retained earnings | 6,781 | 3,618 | ||
| 15,300 | 12,118 | |||
| $ | 24,093 | $ | 18,473 | |
| STATEMENTS OF INCOME AND RETAINED EARNINGS | ||||
| For the six months ended April 30 (unaudited) | ||||
| (All amounts in thousands, except per share amounts) | 1999 | 1998 | ||
| Revenue | $ | 9,659 | $ | 6,963 |
| Income before the undernoted | 1,671 | 1,783 | ||
| Investment income, net | 2,570 | 131 | ||
| 4,241 | 1,914 | |||
| Expenses: | ||||
| General and administrative | 882 | 608 | ||
| Interest | 182 | 79 | ||
| Depreciation and amortization | 31 | 59 | ||
| 1,095 | 746 | |||
| Income before income taxes | 3,146 | 1,168 | ||
| Income taxes | 977 | 473 | ||
| Net income | 2,169 | 695 | ||
| Retained earnings, beginning of period | 4,612 | 2,923 | ||
| Retained earnings, end of period | $ | 6,781 | $ | 3,618 |
| Earnings per share | $ | 0.28 | $ | 0.09 |
| Fully diluted earnings per share | $ | 0.25 | $ | 0.08 |
| STATEMENTS OF CASH FLOWS | ||||
| For the six months ended April 30 (unaudited) | ||||
| (All amounts in thousands) | 1999 | 1998 | ||
| Operating | ||||
| Net income | $ | 2,169 | $ | 695 |
| Items not involving cash: | ||||
| Deferred income taxes | 35 | (27) | ||
| Gain on sale of marketable securities | (2,770) | - | ||
| Depreciation and amortization | 31 | 59 | ||
| (535) | 727 | |||
| Net change in non-cash operating working capital | (10,807) | (1,624) | ||
| (11,342) | (897) | |||
| Investing | ||||
| Purchase of marketable securities | (352) | (4,038) | ||
| Proceeds on sale of marketable securities | 9,034 | - | ||
| Increase in development costs | (32) | (36) | ||
| Purchase of capital assets, net of disposal proceeds | (106) | (83) | ||
| 8,544 | (4,157) | |||
| Financing | ||||
| Increase in bank indebtedness | 96 | 4,979 | ||
| Decrease in long-term payables | (39) | - | ||
| Issue of capital stock | 19 | - | ||
| 76 | 4,979 | |||
| Net decrease in cash | (2,722) | (75) | ||
| Cash, beginning of period | 3,579 | 473 | ||
| Cash, end of period | $ | 857 | $ | 398 |
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 strategic investing in businesses with strong management and exceptional prospects for longer term earnings growth and 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. |
LEGAL COUNSEL Ogilvy Renault, Toronto |
|
| Peter A. Braaten President and CEO, Morrison Middlefield Resources Limited |
Robert B. May Chairman and CEO, Sterling International Group Inc. |
AUDITORS 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 Ltd. |
Charles B. Young Chairman, Ascend Capital Management |