##### 









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


FORM 20-F


|   |  |                                                                                                   
|-- |  | --------------------------------------------------------------------------------------------------
|o  |  | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
    OF THE SECURITIES EXCHANGE ACT OF 1934
|  
|OR
|  
|þ  |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934          
|  
|   |  | For the fiscal year ended December 31, 2004                                                       
|  
|OR
|  
|o  |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934      
|  
|   |  | For the transition period
    from           to                                                   

Commission file number 001-04192


MFC BANCORP LTD.


(Exact name of Registrant as specified in its charter)


Not Applicable


(Translation of Registrants Name into English)


British Columbia, Canada


(Jurisdiction of incorporation or organization)


8th Floor, Dina House, Ruttonjee Centre, 11 Duddell
Street, Central, Hong Kong, SAR, China


(Address of executive office)


Securities registered or to be registered pursuant to
Section 12(b) of the Act:


Not Applicable




Not Applicable




Securities registered or to be registered pursuant to
Section 12(g) of the Act:


Common Shares Without Par Value




Securities for which there is a reporting obligation pursuant
to Section 15(d) of the Act:


Not Applicable






There were 13,577,146 common shares, without par value,
issued and outstanding as of December 31, 2004.


þ o




o þ










---



##### 



MFC BANCORP LTD.


(the Company)


2004 REPORT












|                     |         |                             |         |      |      |   |         |      |  |   |         |      | 
|-------------------- | ------- | --------------------------- | ------- | ---- | ---- | - | ------- | ---- |  | - | ------- | ---- | 
|                     |         | Year ended December 31      |        
|                     |         |                             |        
|                     |         | 2004                        |         |      | 2003 |   |         | 2002 | 
|                     |         |                             |         |      |      |   |         |      | 
|                     |         | (U.S. Dollars in thousands, |        
|                     |         | except per share amounts)   |        
|                     |         | (Information Only)          |        
|Revenues             |         | $                           | 579,731 |      |      | $ | 316,863 |      |  | $ | 180,006 |     
|Net income           |         |                             | 30,701  |      |      |   | 38,004  |      |  |   | 32,129  |     
|Net income per share |         |                             |         |      |      |   |         |      |  |   |         |     
|                     | Basic   |                             |         | 2.27 |      |   |         | 2.91 |  |   |         | 2.48 | 
|                     | Diluted |                             |         | 2.24 |      |   |         | 2.78 |  |   |         | 2.35 | 

|                                     |  |                             |         |  |      |   |         | 
|------------------------------------ |  | --------------------------- | ------- |  | ---- | - | ------- | 
|                                     |  | Year ended December 31      |        
|                                     |  |                             |        
|                                     |  | 2004                        |         |  | 2003 |  
|                                     |  |                             |         |  |      |  
|                                     |  | (U.S. Dollars in thousands) |        
|                                     |  | (Information Only)          |        
|Cash and cash equivalents            |  | $                           | 179,231 |  |      | $ | 112,544 | 
|Short-term securities                |  |                             | 17,542  |  |      |   | 6,509   | 
|Total assets                         |  |                             | 501,579 |  |      |   | 313,043 | 
|Long-term debt, less current portion |  |                             | 11,950  |  |      |   | 21,182  | 
|Shareholders equity                 |  |                             | 223,849 |  |      |   | 169,024 | 





i



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##### 





     


Order backlog  KHD Humboldt Wedag AG


|                           |  |       |             |     |                 |  |             | 
|-------------------------- |  | ----- | ----------- | --- | --------------- |  | ----------- | 
|                           |  | Euros |             |     | U.S. Dollars(2) | 
|                           |  |       |             |     |                 | 
|March 31, 2005 (estimated) |  |       | 250 million | (1) |                 |  | 338 million | 
|December 31, 2004          |  |       | 190 million |     |                 |  | 257 million | 
|December 31, 2003          |  |       | 97 million  |     |                 |  | 131 million | 






|    |                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------
|(1) | This amount is estimated for the period from January 1,
    2005 to March 31, 2005.                                                          
|   
|(2) | For easy comparison, all
     amounts
    are translated into U.S. dollars at 1.3536, the exchange
    rate prevailing on December 31, 2004.











| |                        
| | -----------------------
| | Respectfully submitted,
|
| | /s/ Michael J. Smith   
| |                        
| | M.J. Smith             
| | President              

ii



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##### 





CONSOLIDATED BALANCE SHEETS


|                                     |                                       |                              |         |         |         |   |         |         |         | 
|------------------------------------ | ------------------------------------- | ---------------------------- | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                                     |                                       | December 31,                 |        
|                                     |                                       |                              |        
|                                     |                                       | 2004                         |         |         | 2003    |  
|                                     |                                       |                              |         |         |         |  
|                                     |                                       | (U.S. Dollars in thousands)  |        
|                                     |                                       | (Information Only)           |        
|ASSETS                              
|Current Assets                       |                                       |                              |         |         |         |   |         |        
|                                     | Cash and cash equivalents             |                              | $       | 179,231 |         |   | $       | 112,544 |        
|                                     | Restricted cash                       |                              |         | 13,706  |         |   |         |        |        
|                                     | Securities                            |                              |         | 17,542  |         |   |         | 6,509   |        
|                                     | Loans                                 |                              |         | 8,156   |         |   |         | 11,123  |        
|                                     | Receivables                           |                              |         | 81,527  |         |   |         | 38,972  |        
|                                     | Commodity investments                 |                              |         | 21,415  |         |   |         | 8,484   |        
|                                     | Inventories                           |                              |         | 9,155   |         |   |         |        |        
|                                     | Real estate held for sale             |                              |         | 35,663  |         |   |         | 2,615   |        
|                                     | Contract deposits, prepaid and other  |                              |         | 18,128  |         |   |         | 1,754   |        
|                                     | Future income tax assets              |                              |         | 6,664   |         |   |         |        |        
|                                     |                                       |                              |         |         |         |  
|                                     |                                       | Total current assets         |         |         | 391,187 |   |         |         | 182,001 | 
|                                     |                                       |                              |         |         |         |  
|Non-current Assets                   |                                       |                              |         |         |         |   |         |        
|                                     | Securities                            |                              |         | 8,190   |         |   |         | 28,281  |        
|                                     | Loans                                 |                              |         | 14,165  |         |   |         | 1,932   |        
|                                     | Property, plant and equipment         |                              |         | 18,368  |         |   |         | 48,155  |        
|                                     | Resource property                     |                              |         | 29,363  |         |   |         | 27,889  |        
|                                     | Goodwill                              |                              |         | 16,987  |         |   |         | 12,478  |        
|                                     | Equity method investments             |                              |         | 15,362  |         |   |         | 12,307  |        
|                                     | Future income tax assets              |                              |         | 7,957   |         |   |         |        |        
|                                     |                                       |                              |         |         |         |  
|                                     |                                       | Total non-current assets     |         |         | 110,392 |   |         |         | 131,042 | 
|                                     |                                       |                              |         |         |         |  
|                                     |                                       | $                            | 501,579 |         |         | $ | 313,043 |        
|                                     |                                       |                              |         |         |         |  
|                                    
|LIABILITIES AND SHAREHOLDERS EQUITY
|Current Liabilities                  |                                       |                              |         |         |         |   |         |        
|                                     | Accounts payable and accrued expenses |                              | $       | 132,944 |         |   | $       | 41,555  |        
|                                     | Notes payable                         |                              |         | 15,263  |         |   |         |        |        
|                                     | Long-term debt, current portion       |                              |         | 6,790   |         |   |         | 4,582   |        
|                                     | Deposits                              |                              |         | 38,653  |         |   |         | 17,166  |        
|                                     | Provision for warranty costs          |                              |         | 9,672   |         |   |         |        |        
|                                     | Stock distribution payable            |                              |         |        |         |   |         | 55,501  |        
|                                     | Future income tax liability           |                              |         | 5,213   |         |   |         | 299     |        
|                                     |                                       |                              |         |         |         |  
|                                     |                                       | Total current liabilities    |         |         | 208,535 |   |         |         | 119,103 | 
|Long-term Liabilities                |                                       |                              |         |         |         |   |         |        
|                                     | Long-term debt, less current portion  |                              |         | 11,950  |         |   |         | 21,182  |        
|                                     | Pension liabilities                   |                              |         | 30,568  |         |   |         |        |        
|                                     | Provision for warranty costs          |                              |         | 1,295   |         |   |         |        |        
|                                     | Other long-term liabilities           |                              |         | 1,030   |         |   |         |        |        
|                                     |                                       |                              |         |         |         |  
|                                     |                                       | Total long term liabilities |         |         | 44,843  |   |         |         | 21,182  | 
|                                     |                                       |                              |         |         |         |  
|                                     |                                       | Total liabilities            |         |         | 253,378 |   |         |         | 140,285 | 
|                                     |                                       |                              |         |         |         |  
|Minority Interests                   |                                       |                              | 24,352  |         |         |   | 3,734   |        
|Shareholders Equity                 |                                       |                              |         |         |         |   |         |        
|                                     | Common stock                          |                              |         | 59,415  |         |   |         | 47,888  |        
|                                     | Equity component of convertible debt  |                              |         | 121     |         |   |         |        |        
|                                     | Retained earnings                     |                              |         | 174,444 |         |   |         | 134,381 |        
|                                     | Cumulative translation adjustment     |                              |         | (10,131 | )       |   |         | (13,245 | )      
|                                     |                                       |                              |         |         |         |  
|                                     |                                       |                              | 223,849 |         |         |   | 169,024 |        
|                                     |                                       |                              |         |         |         |  
|                                     |                                       | $                            | 501,579 |         |         | $ | 313,043 |        
|                                     |                                       |                              |         |         |         |  

iii



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##### 



CONSOLIDATED STATEMENTS OF OPERATIONS


|                                                                 |                                     |                                  |         |         |      |   |         |         |  |   |         |         | 
|---------------------------------------------------------------- | ----------------------------------- | -------------------------------- | ------- | ------- | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                                                                 |                                     | For the years ended December 31, |        
|                                                                 |                                     |                                  |        
|                                                                 |                                     | 2004                             |         |         | 2003 |   |         | 2002    | 
|                                                                 |                                     |                                  |         |         |      |   |         |         | 
|                                                                 |                                     | (U.S. Dollars in thousands,      |        
|                                                                 |                                     | except per share amounts)        |        
|                                                                 |                                     | (Information Only)               |        
|Financial services revenue                                       |                                     | $                                | 414,318 |         |      | $ | 316,863 |         |  | $ | 180,006 |        
|Industrial and engineering services                              |                                     |                                  | 165,413 |         |      |   |        |         |  |   |        |        
|                                                                 |                                     |                                  |         |         |      |   |         |         | 
|                                                                 |                                     |                                  | 579,731 |         |      |   | 316,863 |         |  |   | 180,006 |        
|                                                                 |                                     |                                  |         |         |      |   |         |         | 
|Expenses                                                         |                                     |                                  |         |         |      |   |         |         |  |   |         |        
|                                                                 | Financial services                  |                                  |         | 358,047 |      |   |         | 254,990 |  |   |         | 111,290 | 
|                                                                 | Industrial and engineering services |                                  |         | 131,546 |      |   |         |        |  |   |         |        | 
|                                                                 | General and administrative          |                                  |         | 52,037  |      |   |         | 19,489  |  |   |         | 22,637  | 
|                                                                 | Goodwill impairment                 |                                  |         |        |      |   |         |        |  |   |         | 10,203  | 
|                                                                 | Interest                            |                                  |         | 6,184   |      |   |         | 3,398   |  |   |         | 6,010   | 
|                                                                 |                                     |                                  |         |         |      |   |         |         | 
|                                                                 |                                     |                                  | 547,814 |         |      |   | 277,877 |         |  |   | 150,140 |        
|                                                                 |                                     |                                  |         |         |      |   |         |         | 
|Income from operations before income taxes and minority interest |                                     |                                  | 31,917  |         |      |   | 38,986  |         |  |   | 29,866  |        
|Recovery of (provision for) income taxes                         |                                     |                                  | 3,463   |         |      |   | (648    | )       |  |   | 2,214   |        
|                                                                 |                                     |                                  |         |         |      |   |         |         | 
|Income from operations before minority interest                  |                                     |                                  | 35,380  |         |      |   | 38,338  |         |  |   | 32,080  |        
|Minority interests                                               |                                     |                                  | (4,679  | )       |      |   | (334    | )       |  |   | 49      |        
|                                                                 |                                     |                                  |         |         |      |   |         |         | 
|Net income                                                       |                                     | $                                | 30,701  |         |      | $ | 38,004  |         |  | $ | 32,129  |        
|                                                                 |                                     |                                  |         |         |      |   |         |         | 
|Earnings per share                                               |                                     |                                  |         |         |      |   |         |         |  |   |         |        
|                                                                 | Basic                               |                                  | $       | 2.27    |      |   | $       | 2.91    |  |   | $       | 2.48    | 
|                                                                 |                                     |                                  |         |         |      |   |         |         | 
|                                                                 | Diluted                             |                                  | $       | 2.24    |      |   | $       | 2.78    |  |   | $       | 2.35    | 
|                                                                 |                                     |                                  |         |         |      |   |         |         | 

iv



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MFC BANCORP LTD.


FORM 20-F


TABLE OF CONTENTS


|          |  |                                                                                  |    |          |    | 
|--------- |  | -------------------------------------------------------------------------------- | -- | -------- | -- | 
|          |  |                                                                                  |    | Page No. |   
|          |  |                                                                                  |    |          |   
|PART 1   
|Item 1.   |  | Identity of Directors, Senior Management and Advisers                            |    |          | 1  | 
|Item 2.   |  | Offer Statistics and Expected Timetable                                          |    |          | 1  | 
|Item 3.   |  | Key Information                                                                  |    |          | 2  | 
|          |  | Selected Financial Data                                                          |    |          | 2  | 
|          |  | Risk Factors                                                                     |    |          | 4  | 
|         
|Item 4.   |  | Information on MFC Bancorp Ltd.                                                  |    |          | 10 | 
|          |  | History and Development of MFC Bancorp
    Ltd.                                  |    |          | 10 | 
|          |  | Overview                                                                         |    |          | 10 | 
|          |  | Organizational Structure                                                         |    |          | 15 | 
|          |  | Property, Plants and Equipment                                                   |    |          | 16 | 
|         
|Item 5.   |  | Operating and Financial Review and Prospects                                     |    |          | 17 | 
|          |  | Operating Results                                                                |    |          | 17 | 
|          |  | Liquidity and Capital Resources                                                  |    |          | 20 | 
|          |  | Off-balance Sheet Arrangements                                                   |    |          | 25 | 
|          |  | Contractual Obligations                                                          |    |          | 25 | 
|         
|Item 6.   |  | Directors, Senior Management and Employees                                       |    |          | 25 | 
|          |  | Directors and Senior Management                                                  |    |          | 25 | 
|          |  | Compensation                                                                     |    |          | 26 | 
|          |  | Board Practices                                                                  |    |          | 27 | 
|          |  | Employees                                                                        |    |          | 28 | 
|          |  | Share Ownership                                                                  |    |          | 28 | 
|Item 7.   |  | Major Shareholders and Related Party Transactions                                |    |          | 29 | 
|          |  | Major Shareholders                                                               |    |          | 29 | 
|          |  | Related Party Transactions                                                       |    |          | 29 | 
|Item 8.   |  | Financial Information                                                            |    |          | 30 | 
|Item 9.   |  | The Offer and Listing                                                            |    |          | 31 | 
|Item 10.  |  | Additional Information                                                           |    |          | 31 | 
|          |  | Share Capital                                                                    |    |          | 31 | 
|          |  | Memorandum and Articles of
    Association                                       |    |          | 31 | 
|          |  | Material Contracts                                                               |    |          | 32 | 
|          |  | Exchange Controls                                                                |    |          | 34 | 
|          |  | Taxation                                                                         |    |          | 35 | 
|          |  | Documents on Display                                                             |    |          | 38 | 
|          |  | Subsidiary Information                                                           |    |          | 38 | 
|Item 11.  |  | Quantitative and Qualitative Disclosures About Market Risk                       |    |          | 39 | 
|Item 12.  |  | Description of Securities Other Than Equity Securities                           |    |          | 42 | 
|         
|PART II  
|Item 13.  |  | Defaults, Dividend Arrearages and Delinquencies                                  |    |          | 42 | 
|         
|Item 14.  |  | Material Modifications to the Rights of Security Holders and Use
    of Proceeds |    |          | 42 | 
|         
|Item 15.  |  | Controls and Procedures                                                          |    |          | 42 | 
|         
|Item 16.  |  | Reserved                                                                         |    |          | 43 | 
|         
|Item 16A. |  | Audit Committee Financial Expert                                                 |    |          | 43 | 
|         
|Item 16B. |  | Code of Ethics                                                                   |    |          | 43 | 
|         
|Item 16C. |  | Principal Accountant Fees and Services                                           |    |          | 44 | 
|         
|Item 16D. |  | Exemption from the Listing Standards for Audit Committees                        |    |          | 44 | 
|Item 16E. |  | Purchases of Equity Securities by the Company and
    Affiliated Purchasers      |    |          | 44 | 
|         
|PART III 
|Item 17.  |  | Financial Statements                                                             |    |          | 45 | 
|Item 18.  |  | Financial Statements                                                             |    |          | 45 | 
|Item 19.  |  | Exhibits                                                                         |    |          | 76 | 
|Signature |  |                                                                                  | 79 |         



v



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##### 






PART I













Item 1     Identity of Directors,
Senior Management and Advisers







Item 2     Offer Statistics and
Expected Timetable




1



---



##### 






Item 3     Key Information


A. Selected Financial
Data




Selected Financial Data


(Stated in Canadian Dollars  Calculated in
accordance with Canadian GAAP)


Fiscal Year Ended December 31 (Audited)


|                                                                                      |         |                                              |         |      |      |   |         |      |  |   |         |      |  |      |         |      |  |   |         |      | 
|------------------------------------------------------------------------------------- | ------- | -------------------------------------------- | ------- | ---- | ---- | - | ------- | ---- |  | - | ------- | ---- |  | ---- | ------- | ---- |  | - | ------- | ---- | 
|CANADIAN GAAP                                                                         |         | 2004                                         |         |      | 2003 |   |         | 2002 |  |   | 2001    |      |  | 2000 |        
|                                                                                      |         |                                              |         |      |      |   |         |      |  |   |         |      |  |      |        
|                                                                                      |         | (In thousands, other than per share amounts) |        
|Revenues                                                                              |         | $                                            | 697,764 |      |      | $ | 409,513 |      |  | $ | 284,339 |      |  | $    | 214,246 |      |  | $ | 156,220 |     
|Income from continuing operations                                                     |         |                                              | 36,951  |      |      |   | 49,116  |      |  |   | 50,755  |      |  |      | 45,288  |      |  |   | 39,163  |     
|Income from continuing operations per share                                           |         |                                              |         |      |      |   |         |      |  |   |         |      |  |      |         |      |  |   |         |     
|                                                                                      | Basic   |                                              |         | 2.73 |      |   |         | 3.76 |  |   |         | 3.93 |  |      |         | 3.59 |  |   |         | 3.24 | 
|                                                                                      | Diluted |                                              |         | 2.70 |      |   |         | 3.59 |  |   |         | 3.70 |  |      |         | 3.35 |  |   |         | 3.03 | 
|Net income                                                                            |         |                                              | 36,951  |      |      |   | 49,116  |      |  |   | 50,755  |      |  |      | 45,288  |      |  |   | 39,163  |     
|Net income per share                                                                  |         |                                              |         |      |      |   |         |      |  |   |         |      |  |      |         |      |  |   |         |     
|                                                                                      | Basic   |                                              |         | 2.73 |      |   |         | 3.76 |  |   |         | 3.93 |  |      |         | 3.59 |  |   |         | 3.24 | 
|                                                                                      | Diluted |                                              |         | 2.70 |      |   |         | 3.59 |  |   |         | 3.70 |  |      |         | 3.35 |  |   |         | 3.03 | 
|Total assets                                                                          |         |                                              | 603,699 |      |      |   | 404,577 |      |  |   | 446,574 |      |  |      | 394,639 |      |  |   | 332,063 |     
|Net assets                                                                            |         |                                              | 298,731 |      |      |   | 223,273 |      |  |   | 291,041 |      |  |      | 249,118 |      |  |   | 216,915 |     
|Long-term debt                                                                        |         |                                              | 22,556  |      |      |   | 33,297  |      |  |   | 68,798  |      |  |      | 98,000  |      |  |   | 35,421  |     
|Shareholders equity                                                                  |         |                                              | 269,421 |      |      |   | 218,447 |      |  |   | 285,290 |      |  |      | 245,997 |      |  |   | 213,134 |     
|Capital stock                                                                         |         |                                              | 71,512  |      |      |   | 61,891  |      |  |   | 70,269  |      |  |      | 76,673  |      |  |   | 65,138  |     
|Cash dividends(1)                                                                     |         |                                              |        |      |      |   |        |      |  |   |        |      |  |      |        |      |  |   |        |     
|Cash dividends per share(1)                                                           |         |                                              |        |      |      |   |        |      |  |   |        |      |  |      |        |      |  |   |        |     
|Cash dividends (U.S.$)(1)                                                             |         |                                              |        |      |      |   |        |      |  |   |        |      |  |      |        |      |  |   |        |     
|Cash dividends per share (U.S.$)(1)                                                   |         |                                              |        |      |      |   |        |      |  |   |        |      |  |      |        |      |  |   |        |     
|Weighted average common stock outstanding, fully diluted (in
    thousands of shares) |         |                                              | 13,818  |      |      |   | 14,129  |      |  |   | 14,170  |      |  |      | 14,002  |      |  |   | 13,438  |     






|    |                             
|--- | ----------------------------
|(1) | Paid on MFCs common shares.

2



---



##### 






Selected Financial Data


(Stated in Canadian Dollars  Calculated in
accordance with U.S. GAAP)


Fiscal Year Ended December 31 (Audited)


|                                                                                      |         |                                              |         |      |      |   |         |      |  |   |         |      |  |      |         |      |  |   |         |      | 
|------------------------------------------------------------------------------------- | ------- | -------------------------------------------- | ------- | ---- | ---- | - | ------- | ---- |  | - | ------- | ---- |  | ---- | ------- | ---- |  | - | ------- | ---- | 
|UNITED STATES GAAP                                                                    |         | 2004                                         |         |      | 2003 |   |         | 2002 |  |   | 2001    |      |  | 2000 |        
|                                                                                      |         |                                              |         |      |      |   |         |      |  |   |         |      |  |      |        
|                                                                                      |         | (In thousands, other than per share amounts) |        
|Revenues                                                                              |         | $                                            | 697,764 |      |      | $ | 409,513 |      |  | $ | 284,339 |      |  | $    | 212,000 |      |  | $ | 162,694 |     
|Income from continuing operations                                                     |         |                                              | 36,973  |      |      |   | 49,116  |      |  |   | 50,755  |      |  |      | 43,211  |      |  |   | 45,637  |     
|Income from continuing operations per share                                           |         |                                              |         |      |      |   |         |      |  |   |         |      |  |      |         |      |  |   |         |     
|                                                                                      | Basic   |                                              |         | 2.73 |      |   |         | 3.76 |  |   |         | 3.93 |  |      |         | 3.42 |  |   |         | 3.78 | 
|                                                                                      | Diluted |                                              |         | 2.70 |      |   |         | 3.59 |  |   |         | 3.70 |  |      |         | 3.20 |  |   |         | 3.51 | 
|Net income                                                                            |         |                                              | 36,973  |      |      |   | 49,116  |      |  |   | 50,755  |      |  |      | 43,211  |      |  |   | 45,637  |     
|Net income per share                                                                  |         |                                              |         |      |      |   |         |      |  |   |         |      |  |      |         |      |  |   |         |     
|                                                                                      | Basic   |                                              |         | 2.73 |      |   |         | 3.76 |  |   |         | 3.93 |  |      |         | 3.42 |  |   |         | 3.78 | 
|                                                                                      | Diluted |                                              |         | 2.70 |      |   |         | 3.59 |  |   |         | 3.70 |  |      |         | 3.20 |  |   |         | 3.51 | 
|Total assets                                                                          |         |                                              | 604,203 |      |      |   | 401,235 |      |  |   | 445,342 |      |  |      | 391,489 |      |  |   | 336,523 |     
|Net assets                                                                            |         |                                              | 297,541 |      |      |   | 218,401 |      |  |   | 289,809 |      |  |      | 245,968 |      |  |   | 221,375 |     
|Long-term debt                                                                        |         |                                              | 22,720  |      |      |   | 33,297  |      |  |   | 68,798  |      |  |      | 98,000  |      |  |   | 35,421  |     
|Shareholders equity                                                                  |         |                                              | 268,231 |      |      |   | 213,575 |      |  |   | 284,058 |      |  |      | 242,847 |      |  |   | 217,594 |     
|Capital stock                                                                         |         |                                              | 71,472  |      |      |   | 61,891  |      |  |   | 70,269  |      |  |      | 76,673  |      |  |   | 65,138  |     
|Cash dividends(1)                                                                     |         |                                              |        |      |      |   |        |      |  |   |        |      |  |      |        |      |  |   |        |     
|Cash dividends per share(1)                                                           |         |                                              |        |      |      |   |        |      |  |   |        |      |  |      |        |      |  |   |        |     
|Cash dividends (U.S.$)(1)                                                             |         |                                              |        |      |      |   |        |      |  |   |        |      |  |      |        |      |  |   |        |     
|Cash dividends per share (U.S.$)(1)                                                   |         |                                              |        |      |      |   |        |      |  |   |        |      |  |      |        |      |  |   |        |     
|Weighted average common stock outstanding, fully diluted (in
    thousands of shares) |         |                                              | 13,818  |      |      |   | 14,129  |      |  |   | 14,170  |      |  |      | 14,002  |      |  |   | 13,438  |     






|    |                             
|--- | ----------------------------
|(1) | Paid on MFCs common shares.

Reconciliation to United States
Generally Accepted Accounting Principles




Disclosure of Exchange Rate
History




|                   |  |                          |        |  |      |  |        |      |  |  |        |  |  |      |        |  |  |  |        | 
|------------------ |  | ------------------------ | ------ |  | ---- |  | ------ | ---- |  |  | ------ |  |  | ---- | ------ |  |  |  | ------ | 
|                   |  | Years Ended December 31, |       
|                   |  |                          |       
|                   |  | 2004                     |        |  | 2003 |  |        | 2002 |  |  | 2001   |  |  | 2000 |       
|                   |  |                          |        |  |      |  |        |      |  |  |        |  |  |      |       
|End of period      |  |                          | 0.8310 |  |      |  | 0.7738 |      |  |  | 0.6329 |  |  |      | 0.6279 |  |  |  | 0.6666 | 
|High for period    |  |                          | 0.8493 |  |      |  | 0.7738 |      |  |  | 0.6619 |  |  |      | 0.6697 |  |  |  | 0.6984 | 
|Low for period     |  |                          | 0.7177 |  |      |  | 0.6349 |      |  |  | 0.6200 |  |  |      | 0.6241 |  |  |  | 0.6397 | 
|Average for period |  |                          | 0.7682 |  |      |  | 0.7138 |      |  |  | 0.6368 |  |  |      | 0.6457 |  |  |  | 0.6732 | 

3



---



##### 





|                    |  |      |        |  |     |  |        | 
|------------------- |  | ---- | ------ |  | --- |  | ------ | 
|                    |  | High |        |  | Low | 
|                    |  |      |        |  |     | 
|2004                |  |      |        |  |     |  |        | 
|September           |  |      | 0.7906 |  |     |  | 0.7651 | 
|October             |  |      | 0.8201 |  |     |  | 0.7858 | 
|November            |  |      | 0.8493 |  |     |  | 0.8155 | 
|December            |  |      | 0.8435 |  |     |  | 0.8064 | 
|                   
|2005                |  |      |        |  |     |  |        | 
|January             |  |      | 0.8346 |  |     |  | 0.8050 | 
|February            |  |      | 0.8134 |  |     |  | 0.7961 | 
|March 1 to March 15 |  |      | 0.8305 |  |     |  | 0.8024 | 








D. Risk Factors








Transaction Risks




| |                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We are subject to transaction risks which may have a
    material adverse effect on our business, results of operations,
    financial condition and cash flow.





4



---



##### 





| |                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------
| | We may face a lack of suitable acquisition or merger or
    other proprietary investment candidates which may limit our
    growth.



Credit or Counterparty Risks




| |                                                                                                                                                                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We are exposed to the risk that parties owing us money,
    security or other assets or that have contracted with us for the
    delivery of products and/or services will not perform their
    obligations and as a result our business, results of operations,
    financial condition and cash flow could be adversely
    affected.





| |                                                                                                                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Although we regularly review our credit exposure to
    specific clients and counterparties and to specific industries,
    countries and regions, we are subject to significant credit risk
    which could have a material adverse effect on our business,
    results of operations, financial condition and cash flow.



Market Risks






| |                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We are exposed to the risk of a market downturn which
    could lead to a decline in the number and size of the
    transactions that we execute for our clients.



5



---



##### 

















| |                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We are exposed to political, economic, legal, operational
    and other risks as a result of our global operations, which
    could negatively effect our business, results of operations,
    financial condition and cash flow could be adversely
    affected.





| |                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------
| | Fluctuations in interest rates and foreign currency
    exchange rates may affect our results of operations and
    financial condition.





6



---



##### 





| |                                                                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our risk management strategies leave us exposed to
    unidentified or unanticipated risks which could impact our risk
    management strategies in the future and could negatively affect
    our results of operation and financial condition.





| |                                                                                                           
| | ----------------------------------------------------------------------------------------------------------
| | A rise in inflation may negatively affect our business,
    results of operations and financial condition.





| |                                                                                                       
| | ------------------------------------------------------------------------------------------------------
| | Market risks may increase the other risks that we face,
    which could adversely affect our business.





| |                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| | We have adopted risk management processes to facilitate,
    control and monitor risk taking which policies and procedures
    may not be fully effective.





Competition Risks




| |                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our competitors include firms traditionally engaged in
    financial services such as banks, broker-dealers and investment
    dealers, along with other companies offering financial services
    such as insurance companies, mutual fund groups, merchant banks
    and trading and trade finance companies. An increase in
    competition may lead us to become involved in transactions with
    more risk.



7



---



##### 





Legal and Regulatory Risks




| |                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We are exposed to legal risks in our business which are
    often difficult to assess or quantify. We incur significant
    legal expenses every year in defending against
    litigation.





| |                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Extensive regulation of our business often serves to limit
    our activities, including through net capital, customer
    protection and market conduct requirements.





Employment Risks




| |                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We may be dependant on the services of certain key
    employees and the loss of these certain key employees may have a
    materially adverse effect on our company.



8



---



##### 



Enforcement Risks




| |                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | All of our directors and officers are outside the United
    States, with the result that it may be difficult for investors
    to enforce any judgments obtained against us or any of our
    directors or officers.







| |                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As we are organized under the laws of the Province of
    British Columbia, Canada and our principal operating assets are
    located outside of the United States, you may have trouble
    enforcing U.S. bankruptcy laws and other laws in Canada or
    elsewhere.



Environmental Risks




| |                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Certain of our proprietary investments are subject to
    stringent environmental standards and we may incur substantial
    costs to comply with current requirements or new environmental
    laws that might be adopted.



Other Risks




| |                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------
| | Certain factors may inhibit, delay or prevent a takeover
    of our company which may adversely affect the price of our
    common stock.



Investment Canada Act




9



---



##### 





| |                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our articles contain provisions and we have entered into
    agreements indemnifying our officers and directors against all
    costs, charges and expenses incurred by them.





| |                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Investors interests in our company will be diluted
    and investors may suffer dilution in their net book value per
    share if we issue additional shares or raise funds through the
    sale of equity securities.








|       |                                
|------ | -------------------------------
|Item 4 | Information on MFC Bancorp Ltd.






| |                                               
| | ----------------------------------------------
| | A. History and Development of MFC Bancorp Ltd.

Companies
Act of 1934 Canada
Business Corporations Act Business Corporations Act Business Corporations Act







| |            
| | -----------
| | B. Overview







10



---



##### 











|              |  |                |         |  |      |   |         |      |  |   |         | 
|------------- |  | -------------- | ------- |  | ---- | - | ------- | ---- |  | - | ------- | 
|              |  | 2004           |         |  | 2003 |   |         | 2002 | 
|              |  |                |         |  |      |   |         |      | 
|              |  | (In thousands) |        
|Europe        |  | $              | 403,804 |  |      | $ | 391,282 |      |  | $ | 254,564 | 
|Canada        |  |                | 10,042  |  |      |   | 7,872   |      |  |   | 26,006  | 
|United States |  |                | 46,320  |  |      |   | 9,563   |      |  |   | 3,559   | 
|Asia          |  |                | 207,320 |  |      |   |        |      |  |   |        | 
|Africa        |  |                | 23,522  |  |      |   | 796     |      |  |   | 210     | 
|Other         |  |                | 6,756   |  |      |   |        |      |  |   |        | 
|              |  |                |         |  |      |   |         |      | 
|              |  | $              | 697,764 |  |      | $ | 409,513 |      |  | $ | 284,339 | 
|              |  |                |         |  |      |   |         |      | 



| |                                         
| | ----------------------------------------
| | Description of Merchant Banking Business







11



---



##### 





| |                                       
| | --------------------------------------
| | Banking, Finance and Advisory Services







| |                                             
| | --------------------------------------------
| | Trading of Commodities and Natural Resources











12



---



##### 





| |                        
| | -----------------------
| | Proprietary Investments

     






















13



---



##### 

















| |            
| | -----------
| | Competition



14



---



##### 








| |                            
| | ---------------------------
| | C. Organizational Structure



|                                         |  |                                              
|---------------------------------------- |  | ---------------------------------------------
|Name of Wholly-Owned Subsidiary          |  | Jurisdiction of Incorporation or Organization
|                                         |  |                                              
|Blake International, Inc.                |  | British Virgin Islands                       
|MFC Merchant Bank S.A.                   |  | Switzerland                                  
|Sutton Park International Ltd.           |  | Barbados                                     
|Trimble Resources Corporation            |  | Turks & Caicos Islands                       
|32565 Yukon Inc.                         |  | Yukon                                        
|Robabond Holding AG                      |  | Switzerland                                  
|MFC Commodities AG                       |  | Switzerland                                  
|New Image Investment Company Limited     |  | Washington                                   
|Harfree Holdings Limited                 |  | Canada                                       
|Constitution Insurance Company of Canada |  | Canada                                       
|Garda Investments Corp.                  |  | British Virgin Islands                       
|MFC Financial Services GmbH              |  | Austria                                      
|AWP Aluminium Walzprodukte GmbH          |  | Germany                                      
|MAW Mansfelder Aluminiumwerk GmbH        |  | Germany                                      



|                                                         |  |                        |  |                                |  |                  |      |     
|-------------------------------------------------------- |  | ---------------------- |  | ------------------------------ |  | ---------------- | ---- | ----
|                                                         |  | Jurisdiction of        |  |                                |  |                 
|                                                         |  | Incorporation or       |  |                                |  |                 
|Name of Non-Wholly-Owned Subsidiary                      |  | Organization           |  | Owner of Interests             |  | Our Shareholding |     
|                                                         |  |                        |  |                                |  |                  |     
|DTA Holding AG                                           |  | Germany                |  | MFC Bancorp Ltd.*              |  |                  | 93   | %   
|CVD Financial Corporation                                |  | British Virgin Islands |  | MFC Bancorp Ltd.*              |  |                  | 96   | %   
|Winford Finance Corp.                                    |  | British Virgin Islands |  | MFC Bancorp Ltd.*              |  |                  | 96   | %   
|Alson Enterprises Corp.                                  |  | British Virgin Islands |  | Sutton Park International Ltd. |  |                  | 80   | %   
|Mazak Limited                                            |  | United Kingdom         |  | Alson Enterprises Corp.        |  |                  | 100  | %** 
|Mazak Slovakia s.r.o.                                    |  | Slovakia               |  | Alson Enterprises Corp.        |  |                  | 100  | %** 
|Hovis Commodities Trading GmbH                           |  | Austria                |  | Garda Investments Corp.        |  |                  | 95   | .5%*
|MFC Commodities GmbH                                     |  | Austria                |  | Hovis Commodities Trading GmbH |  |                  | 100  | %** 
|JH Trade & Financial Service GmbH                        |  | Austria                |  | MFC Commodities GmbH (Austria) |  |                  | 100  | %** 
|IC Management Service GmbH                               |  | Austria                |  | MFC Commodities GmbH (Austria) |  |                  | 100  | %** 
|Global Bulk Transport GmbH                               |  | Austria                |  | MFC Commodities GmbH (Austria) |  |                  | 100  | %** 
|MFC Pulp & Paper GmbH                                    |  | Austria                |  | MFC Commodities GmbH (Austria) |  |                  | 100  | %** 
|Danzas Corp.                                             |  | Marshall Islands       |  | MFC Commodities GmbH           |  |                  | 100  | %** 
|HIT International AG                                     |  | Germany                |  | MFC Commodities GmbH           |  |                  | 60   | %** 
|HIT Paper Trading GmbH                                   |  | Austria                |  | HIT International AG           |  |                  | 100  | %** 
|K-Logistics GmbH                                         |  | Austria                |  | MFC Commodities GmbH           |  |                  | 60   | %** 
|MFC Industrial Holdings AG                               |  | Germany                |  | MFC Bancorp Ltd.*              |  |                  | 73   | %   
|KHD Humboldt Wedag AG                                    |  | Germany                |  | MFC Industrial Holdings AG     |  |                  | 100  | %** 
|Rhine Venture Invest S.A.                                |  | Switzerland            |  | MFC Industrial Holdings AG     |  |                  | 100  | %** 
|Zementanlagenbau Dessau GmbH                             |  | Germany                |  | KHD Humboldt Wedag AG          |  |                  | 100  | %** 
|EKOF Flotation GmbH                                      |  | Germany                |  | KHD Humboldt Wedag AG          |  |                  | 100  | %** 
|Humboldt Wedag Australia Pty Ltd.                        |  | Australia              |  | KHD Humboldt Wedag AG          |  |                  | 100  | %** 
|Humboldt Wedag Inc.                                      |  | U.S.A.                 |  | KHD Humboldt Wedag AG          |  |                  | 100  | %** 
|Humboldt Wedag (S.A.) (Pty) Ltd.                         |  | South Africa           |  | KHD Humboldt Wedag AG          |  |                  | 100  | %** 
|Humboldt Wedag India Ltd.                                |  | India                  |  | KHD Humboldt Wedag AG          |  |                  | 100  | %** 
|Altmark Industriepark AG                                 |  | Germany                |  | KHD Humboldt Wedag AG          |  |                  | 94.8 | %** 
|Swiss Factoring AG                                       |  | Switzerland            |  | MFC Merchant Bank S.A.         |  |                  | 75   | %** 
|ZAB Industrietechnik & Service GmbH                      |  | Germany                |  | Zementanlagenbau Dessau GmbH   |  |                  | 100  | %** 
|Med Net International Ltd.                               |  | Bermuda                |  | MFC Bancorp Ltd.*              |  |                  | 63   | %   
|Lasernet Ltd.                                            |  | Liberia                |  | Med Net International Ltd.     |  |                  | 100  | %** 
|Mednet (Shanghai) Medical Technical Developing Co., Ltd. |  | China                  |  | Med Net International Ltd.     |  |                  | 100  | %** 

15



---



##### 



|                                                          |  |                  |  |                                                                                                                            |  |                  |     |    
|--------------------------------------------------------- |  | ---------------- |  | -------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | --- | ---
|                                                          |  | Jurisdiction of  |  |                                                                                                                            |  |                 
|                                                          |  | Incorporation or |  |                                                                                                                            |  |                 
|Name of Non-Wholly-Owned Subsidiary                       |  | Organization     |  | Owner of Interests                                                                                                         |  | Our Shareholding |    
|                                                          |  |                  |  |                                                                                                                            |  |                  |    
|MFC Shanghai Commodities Ltd.                             |  | China            |  | MFC Asia Commodities Limited                                                                                               |  |                  | 100 | %**
|Lasernet Medical Equipment Industrial (Shenzhen) Co. Ltd. |  | China            |  | Lasernet Ltd.                                                                                                              |  |                  | 100 | %**
|Chongqing MFC Medical Management Consulting Co., Ltd.     |  | China            |  | Mednet (Shanghai) Medical Technical Developing Co., Ltd. and
    Lasernet Medical Equipment Industrial (Shenzhen) Co. Ltd. |  |                  | 100 | %**






| |   |                                                 
| | - | ------------------------------------------------
| | * | held by MFC Bancorp Ltd. and/or its subsidiaries



|   |                                                          
|-- | ---------------------------------------------------------
|** | representing shareholding by the immediate parent company






| |                                  
| | ---------------------------------
| | D. Property, Plants and Equipment

Office
Space






Royalty
Interest  Wabush Iron Ore Mine








Real
estate held for sale






16



---



##### 










KHD
Humboldt Wedag AG






Mazak
Limited













|       |                                             
|------ | --------------------------------------------
|Item 5 | Operating and Financial Review and Prospects










| |                     
| | --------------------
| | A. Operating Results



17



---



##### 













| |                                                                               
| | ------------------------------------------------------------------------------
| | Year Ended December 31, 2004 Compared to the Year Ended
    December 31, 2003.





|                           |  |                                                               |         |  |              |   |         |         |  |   |          |  |  |   |         | 
|-------------------------- |  | ------------------------------------------------------------- | ------- |  | ------------ | - | ------- | ------- |  | - | -------- |  |  | - | ------- | 
|                           |  | 2004                                                          |        
|                           |  |                                                               |        
|                           |  | December 31                                                   |         |  | September 30 |   |         | June 30 |  |   | March 31 | 
|                           |  |                                                               |         |  |              |   |         |         |  |   |          | 
|                           |  | (Canadian Dollars in thousands, other than per share amounts) |        
|Revenues                   |  | $                                                             | 206,497 |  |              | $ | 195,717 |         |  | $ | 181,221  |  |  | $ | 114,329 | 
|Expenses                   |  |                                                               | 199,677 |  |              |   | 189,116 |         |  |   | 167,539  |  |  |   | 103,017 | 
|Net income                 |  |                                                               | 7,640   |  |              |   | 7,248   |         |  |   | 10,962   |  |  |   | 11,101  | 
|Diluted earnings per share |  |                                                               | 0.56    |  |              |   | 0.53    |         |  |   | 0.80     |  |  |   | 0.81    | 
|Total assets               |  |                                                               | 603,699 |  |              |   | 691,044 |         |  |   | 660,080  |  |  |   | 621,587 | 
|Shareholders equity       |  |                                                               | 269,421 |  |              |   | 257,068 |         |  |   | 262,993  |  |  |   | 245,960 | 







18



---



##### 





| |                                                                               
| | ------------------------------------------------------------------------------
| | Year Ended December 31, 2003 Compared to the Year Ended
    December 31, 2002.





|                           |  |                                                               |         |   |              |   |         |         |  |   |          |  |  |   |         | 
|-------------------------- |  | ------------------------------------------------------------- | ------- | - | ------------ | - | ------- | ------- |  | - | -------- |  |  | - | ------- | 
|                           |  | 2003                                                          |        
|                           |  |                                                               |        
|                           |  | December 31                                                   |         |   | September 30 |   |         | June 30 |  |   | March 31 | 
|                           |  |                                                               |         |   |              |   |         |         |  |   |          | 
|                           |  | (Canadian Dollars in thousands, other than per share amounts) |        
|Revenues                   |  | $                                                             | 126,756 |   |              | $ | 102,393 |         |  | $ | 97,496   |  |  | $ | 82,868  | 
|Expenses                   |  |                                                               | 102,465 |   |              |   | 96,233  |         |  |   | 87,308   |  |  |   | 73,122  | 
|Net income                 |  |                                                               | 23,050  |   |              |   | 6,123   |         |  |   | 10,125   |  |  |   | 9,818   | 
|Diluted earnings per share |  |                                                               | 1.65    |   |              |   | 0.46    |         |  |   | 0.75     |  |  |   | 0.73    | 
|Total assets               |  |                                                               | 404,577 |   |              |   | 441,429 |         |  |   | 429,057  |  |  |   | 449,728 | 
|Shareholders equity       |  |                                                               | 218,447 | * |              |   | 281,708 |         |  |   | 272,452  |  |  |   | 279,160 | 






|  |                                                         
|- | --------------------------------------------------------
|* | after deduction of distribution payable of $71.7 million









19



---



##### 








| |                                   
| | ----------------------------------
| | B. Liquidity and Capital Resources



|                                     |  |                             |         |  |                   |   |         |      |  |   |         |  |  |   |         | 
|------------------------------------ |  | --------------------------- | ------- |  | ----------------- | - | ------- | ---- |  | - | ------- |  |  | - | ------- | 
|                                     |  | December 31,                |         |  | December 31,      |  
|                                     |  |                             |         |  |                   |  
|                                     |  | 2004                        |         |  | 2003              |   |         | 2004 |  |   | 2003    | 
|                                     |  |                             |         |  |                   |   |         |      |  |   |         | 
|                                     |  | (U.S. Dollars in thousands) |         |  | (Canadian Dollars |  
|                                     |  | (for information)           |         |  | in thousands)     |  
|Cash and cash equivalents            |  | $                           | 179,231 |  |                   | $ | 112,544 |      |  | $ | 215,722 |  |  | $ | 145,452 | 
|Short-term securities                |  |                             | 17,542  |  |                   |   | 6,509   |      |  |   | 21,113  |  |  |   | 8,412   | 
|Total assets                         |  |                             | 501,579 |  |                   |   | 313,043 |      |  |   | 603,699 |  |  |   | 404,577 | 
|Long-term debt, less current portion |  |                             | 11,950  |  |                   |   | 21,182  |      |  |   | 14,383  |  |  |   | 27,376  | 
|Shareholders equity                 |  |                             | 223,849 |  |                   |   | 169,024 |      |  |   | 269,421 |  |  |   | 218,447 | 












.


   pari passu





20



---



##### 







| |                     
| | --------------------
| | Operating Activities





| |                     
| | --------------------
| | Investing Activities





| |                     
| | --------------------
| | Financing Activities







| |                 
| | ----------------
| | Foreign Currency







21



---



##### 







| |                       
| | ----------------------
| | Derivative Instruments





| |          
| | ---------
| | Inflation





| |                                            
| | -------------------------------------------
| | Application of Critical Accounting Policies







| |                    
| | -------------------
| | Revenue Recognition









| |                                    
| | -----------------------------------
| | Provisions for Assets Held for Sale





22



---



##### 











| |                            
| | ---------------------------
| | Allowance for Credit Losses







| |   |                                                                 
| | - | ----------------------------------------------------------------
| |  | repayment history of the borrower;                              
|
| |  | overall financial position and results of the borrower;         
|
| |  | the nature and quality of collateral and guarantee;             
|
| |  | business plan and outlook of the borrower;                      
|
| |  | secondary market value of the loan and the collateral; and      
|
| |  | our business plan or strategy to divest or restructure the debt.





| |                    
| | -------------------
| | Goodwill Impairment



23



---



##### 







| |   |                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a significant adverse change in legal factors or in the business
    climate;                                                                        
|
| |  | an adverse action or assessment by a regulator;                                                                                                      
|
| |  | unanticipated competition;                                                                                                                           
|
| |  | loss of key personnel;                                                                                                                               
|
| |  | a more-likely-than-not expectation that a significant portion or
    all of a reporting unit will be sold or otherwise disposed of;                  
|
| |  | the testing for write-down or impairment of a significant asset
    group within a reporting unit; or                                                
|
| |  | the recognition of a goodwill impairment loss in its separate
    financial statements by a subsidiary that is a component of the
    reporting unit.



| |                        
| | -----------------------
| | Valuation of Securities











| |   |                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------
| |  | trend of the quoted market price and trading volume;                                                              
|
| |  | financial position and results for a period of years;                                                             
|
| |  | liquidity or going concern problems of the investee;                                                              
|
| |  | changes in or reorganization of the investee and/ or its future
    business plan;                                
|
| |  | outlook of the investees industry;                                                                               
|
| |  | the current fair value of the investment (based upon an
    appraisal thereof) relative to its carrying value; and
|
| |  | our business plan and strategy to divest the security or to
    restructure the investee.                         



| |               
| | --------------
| | Warranty Costs





| |                 
| | ----------------
| | Pension Benefits



24



---



##### 












| |                                  
| | ---------------------------------
| | E. Off-balance Sheet Arrangements








| |                           
| | --------------------------
| | F. Contractual Obligations

|                                                                                       |  |                        |        |     |       |   |        |       |  |   |           |  |  |   |     | 
|-------------------------------------------------------------------------------------- |  | ---------------------- | ------ | --- | ----- | - | ------ | ----- |  | - | --------- |  |  | - | --- | 
|                                                                                       |  | Payments Due by Period |       
|                                                                                       |  |                        |       
|                                                                                       |  | Less than              |        |     | 2 - 3 |   |        | 4 - 5 |  |   | More than | 
|Contractual Obligations                                                                |  | 1 Year                 |        |     | Years |   |        | Years |  |   | 5 Years   | 
|                                                                                       |  |                        |        |     |       |   |        |       |  |   |           | 
|                                                                                       |  | (In thousands)         |       
|Long-Term Debt Obligations(1)                                                          |  | $                      | 8,173  |     |       | $ | 7,657  |       |  | $ | 6,726     |  |  | $ |    | 
|Capital Lease Obligations(1)                                                           |  |                        | 52     |     |       |   | 50     |       |  |   | 17        |  |  |   |    | 
|Operating Lease Obligations                                                            |  |                        | 2,710  |     |       |   | 7,491  |       |  |   | 2,863     |  |  |   | 580 | 
|Purchase Obligations                                                                   |  |                        | 72,265 | (2) |       |   |       |       |  |   |          |  |  |   |    | 
|Other Long-Term Liabilities Reflected on the Registrants
    Balance Sheet Under GAAP |  |                        |       |     |       |   |       |       |  |   |          |  |  |   |    | 
|                                                                                       |  |                        |        |     |       |   |        |       |  |   |           | 
|Total                                                                                  |  | $                      | 83,200 |     |       | $ | 15,198 |       |  | $ | 9,606     |  |  | $ | 580 | 
|                                                                                       |  |                        |        |     |       |   |        |       |  |   |           | 






|    |                                                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------
|(1) | Principal amounts only                                                                                               
|   
|(2) | Including $65.0 million on purchases for industrial and
    engineering contracts and $6.0 million on zinc purchases.






|       |                                           
|------ | ------------------------------------------
|Item 6 | Directors, Senior Management and Employees






| |                                   
| | ----------------------------------
| | A. Directors and Senior Management



|                           |  |                                                               |  |                 |          |  |                |  |         | 
|-------------------------- |  | ------------------------------------------------------------- |  | --------------- | -------- |  | -------------- |  | ------- | 
|                           |  |                                                               |  | Date of         |          |  | Expiration of  | 
|                           |  |                                                               |  | Commencement of |          |  | Term of Office | 
|Name and Age               |  | Present Position with MFC                                     |  | Office with MFC |          |  | with MFC       | 
|                           |  |                                                               |  |                 |          |  |                | 
|Michael J. Smith (56)      |  | Director
    President, Chief Executive Officer and Secretary |  |                 | 19861996 |  |                |  | 2005N/A | 
|Dr. Shuming Zhao(1) (51)   |  | Director                                                      |  |                 | 2004     |  |                |  | 2007    | 
|Dr. Kelvin K. Yao(1) (53)  |  | Director                                                      |  |                 | 2004     |  |                |  | 2007    | 
|Dr. Stefan Feuerstein (53) |  | Director
    Vice-President                                   |  |                 | 20002000 |  |                |  | 2006N/A | 
|Silke Brossmann(1) (37)    |  | Director                                                      |  |                 | 2003     |  |                |  | 2005    | 






|    |                               
|--- | ------------------------------
|(1) | Member of our audit committee.



| |                                                                       
| | ----------------------------------------------------------------------
| | Michael J. Smith  President, Chief Executive
    Officer and Director



25



---



##### 







| |                            
| | ---------------------------
| | Dr. Shuming Zhao  Director







| |                             
| | ----------------------------
| | Dr. Kelvin K. Yao  Director





| |                                                        
| | -------------------------------------------------------
| | Dr. Stefan Feuerstein  Director and
    Vice-President





| |                           
| | --------------------------
| | Silke Brossmann  Director








| |                
| | ---------------
| | B. Compensation





| |                       
| | ----------------------
| | Executive Compensation



26



---



##### 



SUMMARY COMPENSATION TABLE


|                            |                                                               |                        |         |              |                        |                  |              |              |  |           |         |  |  |              |     |  |  |   |        |  | 
|--------------------------- | ------------------------------------------------------------- | ---------------------- | ------- | ------------ | ---------------------- | ---------------- | ------------ | ------------ |  | --------- | ------- |  |  | ------------ | --- |  |  | - | ------ |  | 
|                            |                                                               | Annual Compensation(1) |         |              | Long Term Compensation |                  |              |             
|                            |                                                               |                        |         |              |                        |                  |              |             
|                            |                                                               |                        |         |              |                        | Securities Under |              |              | 
|                            |                                                               |                        |         | Other Annual |                        |                  | Options/SARs |              |  | All other |        
|Name and Principal Position |                                                               | Salary                 |         |              | Bonus                  |                  |              | Compensation |  |           | Granted |  |  | Compensation |    
|                            |                                                               |                        |         |              |                        |                  |              |              |  |           |         |  |  |              |    
|Michael J. Smith            |                                                               | $                      | 301,037 |              |                        | $                | 223,838      |              |  |           | Nil     |  |  |              | Nil |  |  | $ | 15,713 | 
|                            | President, Chief Executive Officer, Secretary and Director(2) |                        |         |              |                        |                  |              |              |  |           |         |  |  |              |     |  |  |   |        |  | 
|Dr. Stefan Feuerstein       |                                                               | $                      | 416,659 |              |                        | $                | 31,682       |              |  |           | Nil     |  |  |              | Nil |  |  |   | Nil    | 
|                            | Vice-President and Director                                   |                        |         |              |                        |                  |              |              |  |           |         |  |  |              |     |  |  |   |        |  | 
|George Zimmerman            |                                                               | $                      | 323,380 | (3)          |                        |                  | Nil          |              |  |           | Nil     |  |  |              | Nil |  |  |   | Nil    | 
|                            | Director  KHD Humboldt Wedag AG                              |                        |         |              |                        |                  |              |              |  |           |         |  |  |              |     |  |  |   |        |  | 
|Herman Krager               |                                                               | $                      | 258,704 | (3)          |                        | $                | 38,806       |              |  |           | Nil     |  |  |              | Nil |  |  |   | Nil    | 
|                            | Director  KHD Humboldt Wedag AG                              |                        |         |              |                        |                  |              |              |  |           |         |  |  |              |     |  |  |   |        |  | 
|Rudolf Pich                 |                                                               | $                      | 266,789 | (3)          |                        |                  | Nil          |              |  |           | Nil     |  |  |              | Nil |  |  |   | Nil    | 
|                            | Director  KHD Humboldt Wedag AG                              |                        |         |              |                        |                  |              |              |  |           |         |  |  |              |     |  |  |   |        |  | 






|    |                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | On a cash basis, unless otherwise stated.                                                                                                              
|   
|(2) | Mr. Smith was appointed as Secretary on October 6,
    2003.                                                                                           
|   
|(3) | On an annualized basis. We acquired our interest in KHD Humboldt
    Wedag AG in March 2004 and have consolidated its results as of
    March 31, 2004.



| |                        
| | -----------------------
| | Directors Compensation





| |                                                                             
| | ----------------------------------------------------------------------------
| | Employment Agreements and Termination of Employment or
    Change of Control










| |                   
| | ------------------
| | C. Board Practices

Business
Corporations Act


27



---



##### 














D. Employees


.





E. Share
Ownership




|                      |                                                                |                    |        |  |               |  |     |   | 
|--------------------- | -------------------------------------------------------------- | ------------------ | ------ |  | ------------- |  | --- | - | 
|                      |                                                                | Number of          |        |  |              
|                      |                                                                | Common Shares      |        |  |              
|Name Office Held      |                                                                | Beneficially Owned |        |  | Percentage(1) | 
|                      |                                                                |                    |        |  |               | 
|Michael J. Smith      |                                                                |                    | 85,000 |  |               |  | *   | %
|                      | President, Chief Executive Officer,
    Secretary and Director |                    |        |  |               |  |     |   | 
|Dr. Shuming Zhao      |                                                                |                    | 0      |  |               |  | Nil |  
|                      | Director                                                       |                    |        |  |               |  |     |   | 
|Dr. Kelvin K. Yao     |                                                                |                    | 0      |  |               |  | Nil |  
|                      | Director                                                       |                    |        |  |               |  |     |   | 
|Dr. Stefan Feuerstein |                                                                |                    | 0      |  |               |  | Nil |  
|                      | Vice President and Director                                    |                    |        |  |               |  |     |   | 
|Silke Brossmann       |                                                                |                    | 0      |  |               |  | Nil |  
|                      | Director                                                       |                    |        |  |               |  |     |   | 






| |   |                            
| | - | ---------------------------
| | * | Less than one percent (1%).



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Based on 15,149,269 common shares issued and outstanding as
    at March 15, 2005. Does not include 939,749 common
    shares owned by two wholly-owed subsidiaries and 406,000 common
    shares repurchased, but not yet cancelled, during the year ended
    December 31, 2004. Includes the 1,870,000 common
    shares held by the TriMaine Holdings, Inc. Liquidating Trust,
    which holds 1,572,123 common shares for the benefit of our
    wholly-owned subsidiary. On our consolidated financial
    statements, these 1,572,123 common shares have been
    eliminated, resulting in an outstanding number of 13,577,146.

Stock Option Plan




28



---



##### 










|       |                                                  
|------ | -------------------------------------------------
|Item 7 | Major Shareholders and Related Party Transactions




A. Major
Shareholders




|                                             |  |              |           |            |          |  |      |  
|-------------------------------------------- |  | ------------ | --------- | ---------- | -------- |  | ---- | -
|                                             |  |              |           | Percent of |         
|Name                                         |  | Amount Owned |           |            | Class(1) | 
|                                             |  |              |           |            |          | 
|Peter Kellog                                 |  |              | 3,141,550 | (2)        |          |  | 20.7 | %
|FMR Corp.                                    |  |              | 876,285   |            |          |  | 5.8  | %
|Liquidating Trust of TriMaine Holdings, Inc. |  |              | 1,870,000 |            |          |  | 12.3 | %






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Based on 15,149,269 common shares issued and outstanding on
    March 15, 2005. Does not include 939,749 common shares
    owned by two wholly-owed subsidiaries and 406,000 common
    shares repurchased, but not yet cancelled, during the year ended
    December 31, 2004. Includes the 1,870,000 common
    shares held by the TriMaine Holdings, Inc. Liquidating
    Trust, which holds 1,572,123 common shares for the benefit of
    our wholly-owned subsidiary. On our consolidated financial
    statements, these 1,572,123 common shares have been
    eliminated, resulting in an outstanding number of 13,577,146.
|   
|(2) | In his public filings, Mr. Kellog disclaims beneficial
    ownership of 2,821,550 of the shares, or approximately 18.6% of
    our issued and outstanding common shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                           














B. Related Party
Transactions






29



---



##### 












Item 8     Financial
Information




Financial Statements filed as
part of the Annual Report:




| |                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------
| | Independent Auditors Report dated March 18, 2005 on
    the Consolidated Financial Statements of MFC as at
    December 31, 2004, 2003 and 2002
|
| | Consolidated Balance Sheets at December 31, 2004 and 2003                                                                                       
|
| | Consolidated Statements of Income for the years ended
    December 31, 2004, 2003 and 2002                                                      
|
| | Consolidated Statements of Changes in Shareholders Equity
    for the years ended December 31, 2004, 2003 and 2002                             
|
| | Consolidated Statements of Cash Flows for the years ended
    December 31, 2004, 2003 and 2002                                                  
|
| | Notes to Consolidated Financial Statements                                                                                                      
|
| | Independent Auditors Report on Financial Statement Schedule                                                                                    
|
| | Financial Statement Schedule:                                                                                                                   



| |                                                                            
| | ---------------------------------------------------------------------------
| | I Condensed Financial Information of Registrant
    (Regulation 210.12.-04)



Significant Changes




Legal Proceedings






30



---



##### 



Dividend Distributions









|       |                      
|------ | ---------------------
|Item 9 | The Offer and Listing

Markets and Price History




|                          |  |         |       |  |         |  |       | 
|------------------------- |  | ------- | ----- |  | ------- |  | ----- | 
|                          |  | Nasdaq  |      
|                          |  |         |      
|                          |  | High    |       |  | Low     | 
|                          |  |         |       |  |         | 
|                          |  | (U.S.$) |       |  | (U.S.$) | 
|Annual Highs and Lows     |  |         |       |  |         |  |       | 
|2000                      |  |         | 10.00 |  |         |  | 6.75  | 
|2001                      |  |         | 11.60 |  |         |  | 7.13  | 
|2002                      |  |         | 11.51 |  |         |  | 6.45  | 
|2003                      |  |         | 18.42 |  |         |  | 6.81  | 
|2004                      |  |         | 27.65 |  |         |  | 15.25 | 
|                         
|Quarterly Highs and Lows  |  |         |       |  |         |  |       | 
|2003                      |  |         |       |  |         |  |       | 
|First Quarter             |  |         | 8.35  |  |         |  | 6.74  | 
|Second Quarter            |  |         | 9.87  |  |         |  | 7.92  | 
|Third Quarter             |  |         | 14.35 |  |         |  | 8.25  | 
|Fourth Quarter            |  |         | 18.42 |  |         |  | 13.27 | 
|                         
|2004                      |  |         |       |  |         |  |       | 
|First Quarter             |  |         | 27.65 |  |         |  | 17.50 | 
|Second Quarter            |  |         | 25.45 |  |         |  | 15.75 | 
|Third Quarter             |  |         | 19.90 |  |         |  | 15.25 | 
|Fourth Quarter            |  |         | 21.69 |  |         |  | 16.55 | 
|                         
|Monthly Highs and Lows    |  |         |       |  |         |  |       | 
|2004                      |  |         |       |  |         |  |       | 
|October                   |  |         | 19.23 |  |         |  | 16.55 | 
|November                  |  |         | 21.69 |  |         |  | 16.57 | 
|December                  |  |         | 20.90 |  |         |  | 18.90 | 
|                         
|2005                      |  |         |       |  |         |  |       | 
|January                   |  |         | 20.48 |  |         |  | 17.03 | 
|February                  |  |         | 20.44 |  |         |  | 17.57 | 
|March (to March 22, 2005) |  |         | 22.97 |  |         |  | 20.18 | 






Item 10     Additional
Information





A. Share Capital







B. Memorandum and
Articles of Association




31



---



##### 















Business
Corporations Act




Investment Canada Act, Investment Canada Act









C. Material
Contracts






32



---



##### 




















































33



---



##### 









































| |                     
| | --------------------
| | D. Exchange Controls



34



---



##### 





Investment Canada Act This
summary is of a general nature only and is not intended to be,
and should not be construed to be, legal advice to any holder or
prospective holder of our common shares, and no opinion or
representation to any holder or prospective holder of our common
shares is hereby made. Accordingly, holders and prospective
holders of our common shares should consult with their own legal
advisors with respect to the consequences of purchasing and
owning our common shares.


Investment Canada Act Investment
Canada Act, Investment Canada
Act Investment Canada Act,


Investment Canada
Act, Investment Canada Act


Investment Canada Act,




| |   |                                                                                                                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the acquisition of our common shares by a person in the ordinary
    course of that persons business as a trader or dealer in
    securities;                                                                                                                  
|
| |  | the acquisition of control of MFC in connection with the
    realization of security granted for a loan or other financial
    assistance and not for a purpose related to the provisions of
    the Investment Canada Act; and                                 
|
| |  | the acquisition of control of MFC by reason of an amalgamation,
    merger, consolidation or corporate reorganization following
    which the ultimate direct or indirect control in fact of MFC,
    through ownership of our common shares, remains unchanged.






| |            
| | -----------
| | E. Taxation



| |                                                 
| | ------------------------------------------------
| | Certain Canadian Federal Income Tax Consequences

Income
Tax Act


Investment Tax Act, Investment Tax Act


35



---



##### 





This summary is of a general nature only and is not intended
to be, and should not be construed to be, legal, business or tax
advice to any particular holder or prospective holder of our
common shares, and no opinion or representation with respect to
the tax consequences to any holder or prospective holder of our
common shares is made. Accordingly, holders and prospective
holders of our common shares should consult their own tax
advisors with respect to the income tax consequences of
purchasing, owning and disposing of our common shares in their
particular circumstances.




| |          
| | ---------
| | Dividends

Investment Tax Act Investment Tax Act




| |              
| | -------------
| | Capital Gains

Investment Tax Act Investment Tax Act




| |   |                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------
| |  | the non-resident holder;                                                                                
|
| |  | persons with whom the non-resident holder did not deal at
    arms length; or                          
|
| |  | the non-resident holder and persons with whom such non-resident
    holder did not deal at arms length,





| |                                                          
| | ---------------------------------------------------------
| | Certain United States Federal Income Tax
    Consequences





The following discussion is for general information only and
is not intended to be, nor should it be construed to be, legal,
business or tax advice to any holder or prospective holder of
our common shares, and no opinion or representation with respect
to the United States Federal income tax consequences to any such
holder or prospective holder is made. Accordingly, holders and
prospective holders of common shares should


36



---



##### 



consult their own tax advisors with respect to Federal,
state, local, and foreign tax consequences of purchasing, owning
and disposing of our common shares.




| |             
| | ------------
| | U.S. Holders





| |              
| | -------------
| | Distributions





| |              
| | -------------
| | Capital Gains





| |                   
| | ------------------
| | Foreign Tax Credit

The availability of the foreign
tax credit and the application of these complex limitations on
the tax credit are fact specific and holders and prospective
holders of our common shares should consult their own tax
advisors regarding their individual circumstances.




| |                                       
| | --------------------------------------
| | Passive Foreign Investment Corporation



37



---



##### 







U.S. Holders and prospective holders should consult
their own tax advisors regarding the potential application of
the PFIC rules to their ownership of our common shares.







| |                        
| | -----------------------
| | H. Documents on Display








| |                          
| | -------------------------
| | I. Subsidiary Information



|                                         |  |                                  |                        | 
|---------------------------------------- |  | -------------------------------- | ---------------------- | 
|                                         |  | Jurisdiction of Incorporation or |                       
|Name of Wholly-Owned Subsidiary          |  | Organization                     |                       
|                                         |  |                                  |                       
|Blake International, Inc.                |  |                                  | British Virgin Islands | 
|MFC Merchant Bank S.A.                   |  |                                  | Switzerland            | 
|Sutton Park International Ltd.           |  |                                  | Barbados               | 
|Trimble Resources Corporation            |  |                                  | Turks & Caicos Islands | 
|32565 Yukon Inc.                         |  |                                  | Yukon                  | 
|Robabond Holding AG                      |  |                                  | Switzerland            | 
|MFC Commodities AG                       |  |                                  | Switzerland            | 
|New Image Investment Company Limited     |  |                                  | Washington             | 
|Harfree Holdings Limited                 |  |                                  | Canada                 | 
|Constitution Insurance Company of Canada |  |                                  | Canada                 | 
|Garda Investments Corp.                  |  |                                  | British Virgin Islands | 
|MFC Financial Services GmbH              |  |                                  | Austria                | 
|AWP Aluminium Walzprodukte GmbH          |  |                                  | Germany                | 
|MAW Mansfelder Aluminiumwerk GmbH        |  |                                  | Germany                | 



|                                  |  |                        |  |                                |  |                  |       |   
|--------------------------------- |  | ---------------------- |  | ------------------------------ |  | ---------------- | ----- | --
|                                  |  | Jurisdiction of        |  |                                |  |                 
|Name of Non-Wholly-Owned          |  | Incorporation or       |  |                                |  |                 
|Subsidiary                        |  | Organization           |  | Owner of Interests             |  | Our Shareholding |      
|                                  |  |                        |  |                                |  |                  |      
|DTA Holding AG                    |  | Germany                |  | MFC Bancorp Ltd.*              |  |                  | 93%   |   
|CVD Financial Corporation         |  | British Virgin Islands |  | MFC Bancorp Ltd.*              |  |                  | 96%   |   
|Winford Finance Corp.             |  | British Virgin Islands |  | MFC Bancorp Ltd.*              |  |                  | 96%   |   
|Alson Enterprises Corp.           |  | British Virgin Islands |  | Sutton Park International Ltd. |  |                  | 80%   |   
|Mazak Limited                     |  | United Kingdom         |  | Alson Enterprises Corp.        |  |                  | 100%  | **
|Mazak Slovakia s.r.o              |  | Slovakia               |  | Alson Enterprises Corp.        |  |                  | 100%  | **
|Hovis Commodities Trading GmbH    |  | Austria                |  | Garda Investments Corp.        |  |                  | 95.5% | * 
|MFC Commodities GmbH              |  | Austria                |  | Hovis Commodities Trading GmbH |  |                  | 100%  | **
|JH Trade & Financial Service GmbH |  | Austria                |  | MFC Commodities GmbH (Austria) |  |                  | 100%  | **

38



---



##### 



|                                                              |  |                  |  |                                                                                                                                |  |                  |       |   
|------------------------------------------------------------- |  | ---------------- |  | ------------------------------------------------------------------------------------------------------------------------------ |  | ---------------- | ----- | --
|                                                              |  | Jurisdiction of  |  |                                                                                                                                |  |                 
|Name of Non-Wholly-Owned                                      |  | Incorporation or |  |                                                                                                                                |  |                 
|Subsidiary                                                    |  | Organization     |  | Owner of Interests                                                                                                             |  | Our Shareholding |      
|                                                              |  |                  |  |                                                                                                                                |  |                  |      
|IC Management Service GmbH                                    |  | Austria          |  | MFC Commodities GmbH (Austria)                                                                                                 |  |                  | 100%  | **
|Global Bulk Transport GmbH                                    |  | Austria          |  | MFC Commodities GmbH (Austria)                                                                                                 |  |                  | 100%  | **
|MFC Pulp & Paper GmbH                                         |  | Austria          |  | MFC Commodities GmbH (Austria)                                                                                                 |  |                  | 100%  | **
|Danzas Corp.                                                  |  | Marshall Islands |  | MFC Commodities GmbH                                                                                                           |  |                  | 100%  | **
|HIT International AG                                          |  | Germany          |  | MFC Commodities GmbH                                                                                                           |  |                  | 60%   | **
|HIT Paper Trading GmbH                                        |  | Austria          |  | HIT International AG                                                                                                           |  |                  | 100%  | **
|K-Logistics GmbH                                              |  | Austria          |  | MFC Commodities GmbH                                                                                                           |  |                  | 60%   | **
|MFC Industrial Holdings AG                                    |  | Germany          |  | MFC Bancorp Ltd.*                                                                                                              |  |                  | 73%   |   
|KHD Humboldt Wedag AG                                         |  | Germany          |  | MFC Industrial Holdings AG                                                                                                     |  |                  | 100%  | **
|Rhine Venture Invest S.A.                                     |  | Switzerland      |  | MFC Industrial Holdings AG                                                                                                     |  |                  | 100%  | **
|Zementanlagenbau Dessau GmbH                                  |  | Germany          |  | KHD Humboldt Wedag AG                                                                                                          |  |                  | 100%  | **
|EKOF Flotation GmbH                                           |  | Germany          |  | KHD Humboldt Wedag AG                                                                                                          |  |                  | 100%  | **
|Humboldt Wedag Australia Pty Ltd.                             |  | Australia        |  | KHD Humboldt Wedag AG                                                                                                          |  |                  | 100%  | **
|Humboldt Wedag Inc.                                           |  | U.S.A.           |  | KHD Humboldt Wedag AG                                                                                                          |  |                  | 100%  | **
|Humboldt Wedag (S.A.) (Pty) Ltd.                              |  | South Africa     |  | KHD Humboldt Wedag AG                                                                                                          |  |                  | 100%  | **
|Humboldt Wedag India Ltd.                                     |  | India            |  | KHD Humboldt Wedag AG                                                                                                          |  |                  | 100%  | **
|Altmark Industriepark AG                                      |  | Germany          |  | KHD Humboldt Wedag AG                                                                                                          |  |                  | 94.8% | **
|Swiss Factoring AG                                            |  | Switzerland      |  | MFC Merchant Bank S.A.                                                                                                         |  |                  | 75%   | **
|ZAB Industrietechnik & Service GmbH                           |  | Germany          |  | Zementanlagenbau Dessau GmbH                                                                                                   |  |                  | 100%  | **
|Med Net International Ltd.                                    |  | Bermuda          |  | MFC Bancorp Ltd.*                                                                                                              |  |                  | 63%   |   
|Lasernet Ltd.                                                 |  | Liberia          |  | Med Net International Ltd.                                                                                                     |  |                  | 100%  | **
|Mednet (Shanghai) Medical Technical Developing Co., Ltd.      |  | China            |  | Med Net International Ltd.                                                                                                     |  |                  | 100%  | **
|MFC Shanghai Commodities Ltd.                                 |  | China            |  | MFC Asia Commodities Limited                                                                                                   |  |                  | 100%  | **
|Lasernet Medical Equipment
    Industrial (Shenzhen) Co. Ltd. |  | China            |  | Lasernet Ltd.                                                                                                                  |  |                  | 100%  | **
|Chongqing MFC Medical
    Management Consulting Co., Ltd.     |  | China            |  | Mednet (Shanghai) Medical
    Technical Developing Co., Ltd. and Lasernet Medical Equipment
    Industrial (Shenzhen) Co. Ltd. |  |                  | 100%  | **






|  |                                                 
|- | ------------------------------------------------
|* | held by MFC Bancorp Ltd. and/or its subsidiaries



|   |                                                          
|-- | ---------------------------------------------------------
|** | representing shareholding by the immediate parent company






|        |                                                               
|------- | --------------------------------------------------------------
|Item 11 | Quantitative and Qualitative Disclosures About Market
    Risk





39



---



##### 





| |                       
| | ----------------------
| | Derivative Instruments



 




| |                   
| | ------------------
| | Interest Rate Risk



As at December 31, 2004


|                             |  |                |        |  |       |                     |        |      |  |   |        |  |  |      |       |  |      |   |       |      |  |   |            |  |  |   |       |  |  |   |        | 
|---------------------------- |  | -------------- | ------ |  | ----- | ------------------- | ------ | ---- |  | - | ------ |  |  | ---- | ----- |  | ---- | - | ----- | ---- |  | - | ---------- |  |  | - | ----- |  |  | - | ------ | 
|                             |  |                |        |  |       | Expected Cash Flow* |       
|                             |  | Carrying       |        |  | Fair  |                     |        |      | 
|                             |  | Value          |        |  | Value |                     |        | 2005 |  |   | 2006   |  |  | 2007 |       |  | 2008 |   |       | 2009 |  |   | Thereafter | 
|                             |  |                |        |  |       |                     |        |      |  |   |        |  |  |      |       |  |      |   |       |      |  |   |            | 
|                             |  | (In thousands) |       
|Investments(1)               |  | $              | 50,201 |  |       | $                   | 50,201 |      |  | $ | 19,461 |  |  | $    | 4,900 |  |      | $ | 4,900 |      |  | $ | 4,900      |  |  | $ | 4,900 |  |  | $ | 35,640 | 
|Loans(2)                     |  |                | 9,667  |  |       |                     | 9,667  |      |  |   | 229    |  |  |      | 3,220 |  |      |   |      |      |  |   |           |  |  |   |      |  |  |   | 11,240 | 
|Debt obligations             |  |                | 19,133 |  |       |                     | 19,249 |      |  |   | 8,220  |  |  |      | 8,812 |  |      |   | 432   |      |  |   | 723        |  |  |   | 6,976 |  |  |   |       | 
|Interest rate swap liability |  |                | 93     |  |       |                     | 93     |      |  |   | 87     |  |  |      | 37    |  |      |   |      |      |  |   |           |  |  |   |      |  |  |   |       | 






|  |                                                   
|- | --------------------------------------------------
|* | Including interest and dividends where applicable.



|    |                                                            
|--- | -----------------------------------------------------------
|(1) | Investments consist of debt securities and preferred stock.
|   
|(2) | Unsecured loans.                                           

As at December 31, 2003


|                             |  |                |        |  |       |                     |        |      |  |   |        |  |  |      |       |  |      |   |        |      |  |   |            |  |  |   |       |  |  |   |        | 
|---------------------------- |  | -------------- | ------ |  | ----- | ------------------- | ------ | ---- |  | - | ------ |  |  | ---- | ----- |  | ---- | - | ------ | ---- |  | - | ---------- |  |  | - | ----- |  |  | - | ------ | 
|                             |  |                |        |  |       | Expected Cash Flow* |       
|                             |  | Carrying       |        |  | Fair  |                     |        |      | 
|                             |  | Value          |        |  | Value |                     |        | 2004 |  |   | 2005   |  |  | 2006 |       |  | 2007 |   |        | 2008 |  |   | Thereafter | 
|                             |  |                |        |  |       |                     |        |      |  |   |        |  |  |      |       |  |      |   |        |      |  |   |            | 
|                             |  | (In thousands) |       
|Investments(1)               |  | $              | 57,248 |  |       | $                   | 57,248 |      |  | $ | 12,681 |  |  | $    | 6,859 |  |      | $ | 13,307 |      |  | $ | 5,132      |  |  | $ | 9,002 |  |  | $ | 36,343 | 
|Debt obligations(2)          |  |                | 19,072 |  |       |                     | 21,733 |      |  |   | 2,390  |  |  |      |      |  |      |   | 2,855  |      |  |   |           |  |  |   |      |  |  |   |       | 
|Interest rate swap liability |  |                | 81     |  |       |                     | 81     |      |  |   | 125    |  |  |      | 79    |  |      |   | 34     |      |  |   |           |  |  |   |      |  |  |   |       | 






|  |                                                   
|- | --------------------------------------------------
|* | Including interest and dividends where applicable.



|    |                                                                                                                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Investments consist of debt securities and preferred stock.                                                                                                                                                                                                                                      
|   
|(2) | Debt obligations consist of the bonds with carrying value of
    $16.3 million which mature on April 1, 2008 and bear
    interest at 8% per annum, the majority of which was converted
    into common stock with the balance redeemed in cash for
    approximately $0.9 million in early 2004.

40



---



##### 





| |                                    
| | -----------------------------------
| | Foreign Currency Exchange Rate Risk



As at December 31, 2004


|                             |  |                |        |  |       |                            |        |      |  |   |        |  |  |      |       |  |      |   |     |      |  |   |            |  |  |   |       |  |  |   |        | 
|---------------------------- |  | -------------- | ------ |  | ----- | -------------------------- | ------ | ---- |  | - | ------ |  |  | ---- | ----- |  | ---- | - | --- | ---- |  | - | ---------- |  |  | - | ----- |  |  | - | ------ | 
|                             |  |                |        |  |       | Expected Future Cash Flow* |       
|                             |  | Carrying       |        |  | Fair  |                            |        |      | 
|                             |  | Value          |        |  | Value |                            |        | 2005 |  |   | 2006   |  |  | 2007 |       |  | 2008 |   |     | 2009 |  |   | Thereafter | 
|                             |  |                |        |  |       |                            |        |      |  |   |        |  |  |      |       |  |      |   |     |      |  |   |            | 
|                             |  | (In thousands) |       
|Investments(1)               |  | $              | 28,820 |  |       | $                          | 29,321 |      |  | $ | 19,345 |  |  | $    |      |  |      | $ |    |      |  | $ |           |  |  | $ |      |  |  | $ | 9,886  | 
|Loans(2)                     |  |                | 26,865 |  |       |                            | 26,865 |      |  |   | 10,551 |  |  |      | 8,466 |  |      |   | 110 |      |  |   | 110        |  |  |   | 110   |  |  |   | 14,333 | 
|Deposits(3)                  |  |                | 37,021 |  |       |                            | 37,021 |      |  |   | 37,021 |  |  |      |      |  |      |   |    |      |  |   |           |  |  |   |      |  |  |   |       | 
|Debt obligations(4)          |  |                | 40,927 |  |       |                            | 41,042 |      |  |   | 30,666 |  |  |      | 8,812 |  |      |   | 432 |      |  |   | 723        |  |  |   | 6,976 |  |  |   |       | 
|Interest rate swap liability |  |                | 93     |  |       |                            | 93     |      |  |   | 87     |  |  |      | 37    |  |      |   |    |      |  |   |           |  |  |   |      |  |  |   |       | 






|  |                                                   
|- | --------------------------------------------------
|* | Including interest and dividends where applicable.



|    |                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Investments consist of debt securities and equity securities,
    both of which are denominated in U.S. dollars, Euros or
    Swiss francs.
|   
|(2) | Loans are denominated in U.S. dollars, Euros or Swiss
    francs.                                                                          
|   
|(3) | Deposits consist of cash deposits with MFC Merchant Bank S.A.                                                                              
|   
|(4) | Debt obligations consist of the bonds and other debt, all of
    which are denominated in U.S. dollars, Euros or Swiss
    francs.         

As at December 31, 2003


|                             |  |                |        |  |       |                            |        |      |  |   |        |  |  |      |       |  |      |   |       |      |  |   |            |  |  |   |       |  |  |   |        | 
|---------------------------- |  | -------------- | ------ |  | ----- | -------------------------- | ------ | ---- |  | - | ------ |  |  | ---- | ----- |  | ---- | - | ----- | ---- |  | - | ---------- |  |  | - | ----- |  |  | - | ------ | 
|                             |  |                |        |  |       | Expected Future Cash Flow* |       
|                             |  | Carrying       |        |  | Fair  |                            |        |      | 
|                             |  | Value          |        |  | Value |                            |        | 2004 |  |   | 2005   |  |  | 2006 |       |  | 2007 |   |       | 2008 |  |   | Thereafter | 
|                             |  |                |        |  |       |                            |        |      |  |   |        |  |  |      |       |  |      |   |       |      |  |   |            | 
|                             |  | (In thousands) |       
|Investments(1)               |  | $              | 37,465 |  |       | $                          | 34,602 |      |  | $ | 12,627 |  |  | $    | 1,959 |  |      | $ | 8,407 |      |  | $ | 232        |  |  | $ | 4,102 |  |  | $ | 11,714 | 
|Loans(2)                     |  |                | 15,390 |  |       |                            | 15,390 |      |  |   | 13,368 |  |  |      | 158   |  |      |   | 103   |      |  |   | 103        |  |  |   | 2,459 |  |  |   |       | 
|Deposits(3)                  |  |                | 22,185 |  |       |                            | 22,185 |      |  |   | 22,185 |  |  |      |      |  |      |   |      |      |  |   |           |  |  |   |      |  |  |   |       | 
|Debt obligations(4)          |  |                | 33,297 |  |       |                            | 35,958 |      |  |   | 7,273  |  |  |      | 4,719 |  |      |   | 7,412 |      |  |   |           |  |  |   |      |  |  |   |       | 
|Interest rate swap liability |  |                | 81     |  |       |                            | 81     |      |  |   | 125    |  |  |      | 79    |  |      |   | 34    |      |  |   |           |  |  |   |      |  |  |   |       | 






|  |                                                   
|- | --------------------------------------------------
|* | Including interest and dividends where applicable.



|    |                                                                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Investments consist of debt securities and equity securities,
    both of which are denominated in U.S. dollars, Euros or
    Swiss francs.                                                                                                            
|   
|(2) | Loans are denominated in U.S. dollars, Euros or Swiss
    francs.                                                                                                                                                                                      
|   
|(3) | Deposits consist of cash deposits with MFC Merchant Bank S.A.                                                                                                                                                                                          
|   
|(4) | Debt obligations consist of the bonds and other debt, all of
    which are denominated in U.S. dollars or Euros. The
    majority of the convertible bonds was converted into common
    shares of MFC with the balance redeemed in cash in early 2004.



| |                  
| | -----------------
| | Equity Price Risk



41



---



##### 





As at December 31, 2004


|               |  |                |        |  |       |                            |        |      |  |   |        |  |  |      |       |  |      |   |       |      |  |   |            |  |  |   |       |  |  |   |        | 
|-------------- |  | -------------- | ------ |  | ----- | -------------------------- | ------ | ---- |  | - | ------ |  |  | ---- | ----- |  | ---- | - | ----- | ---- |  | - | ---------- |  |  | - | ----- |  |  | - | ------ | 
|               |  |                |        |  |       | Expected Future Cash Flow* |       
|               |  | Carrying       |        |  | Fair  |                            |        |      | 
|               |  | Value          |        |  | Value |                            |        | 2005 |  |   | 2006   |  |  | 2007 |       |  | 2008 |   |       | 2009 |  |   | Thereafter | 
|               |  |                |        |  |       |                            |        |      |  |   |        |  |  |      |       |  |      |   |       |      |  |   |            | 
|               |  | (In thousands) |       
|Investments(1) |  | $              | 52,658 |  |       | $                          | 53,159 |      |  | $ | 12,359 |  |  | $    | 4,900 |  |      | $ | 4,900 |      |  | $ | 4,900      |  |  | $ | 4,900 |  |  | $ | 45,700 | 






|  |                                                   
|- | --------------------------------------------------
|* | Including interest and dividends where applicable.



|    |                                          
|--- | -----------------------------------------
|(1) | Investments consist of equity securities.

As at December 31, 2003


|                    |  |                |        |  |       |                            |        |      |  |   |        |  |  |      |       |  |      |   |       |      |  |   |            |  |  |   |       |  |  |   |        | 
|------------------- |  | -------------- | ------ |  | ----- | -------------------------- | ------ | ---- |  | - | ------ |  |  | ---- | ----- |  | ---- | - | ----- | ---- |  | - | ---------- |  |  | - | ----- |  |  | - | ------ | 
|                    |  |                |        |  |       | Expected Future Cash Flow* |       
|                    |  | Carrying       |        |  | Fair  |                            |        |      | 
|                    |  | Value          |        |  | Value |                            |        | 2004 |  |   | 2005   |  |  | 2006 |       |  | 2007 |   |       | 2008 |  |   | Thereafter | 
|                    |  |                |        |  |       |                            |        |      |  |   |        |  |  |      |       |  |      |   |       |      |  |   |            | 
|                    |  | (In thousands) |       
|Investments(1)      |  | $              | 61,198 |  |       | $                          | 57,856 |      |  | $ | 12,732 |  |  | $    | 4,900 |  |      | $ | 4,900 |      |  | $ | 4,900      |  |  | $ | 4,900 |  |  | $ | 53,366 | 
|Debt obligations(2) |  |                | 16,340 |  |       |                            | 19,001 |      |  |   | 861    |  |  |      |      |  |      |   |      |      |  |   |           |  |  |   |      |  |  |   |       | 






|  |                                                   
|- | --------------------------------------------------
|* | Including interest and dividends where applicable.



|    |                                                                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Investments consist of equity securities.                                                                                                                                                                                          
|   
|(2) | Debt obligations consist of the bonds which are convertible into
    common shares of MFC at a fixed price, the majority of which
    were converted into common shares of MFC with the balance
    redeemed in cash in early 2004.






|        |                                                           
|------- | ----------------------------------------------------------
|Item 12 | Description of Securities Other Than Equity
    Securities






PART II







|        |                                                
|------- | -----------------------------------------------
|Item 13 | Defaults, Dividend Arrearages and Delinquencies








|        |                                                                                 
|------- | --------------------------------------------------------------------------------
|Item 14 | Material Modifications to the Rights of Security Holders
    and Use of Proceeds








|        |                        
|------- | -----------------------
|Item 15 | Controls and Procedures





42



---



##### 










|        |         
|------- | --------
|Item 16 | Reserved






|          |                                 
|--------- | --------------------------------
|Item 16A. | Audit Committee Financial Expert










|          |               
|--------- | --------------
|Item 16B. | Code of Ethics



| |               
| | --------------
| | Code of Ethics





| |   |                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | honest and ethical conduct, including the ethical handling of
    actual or apparent conflicts of interest between personal and
    professional relationships;                                                        
|
| |  | full, fair, accurate, timely, and understandable disclosure in
    reports and documents that we file with, or submit to, the
    Securities and Exchange Commission and in other public
    communications made by us;
|
| |  | compliance with applicable governmental laws, rules and
    regulations;                                                                                                                                               
|
| |  | the prompt internal reporting of violations of the Code of
    Business Conduct and Ethics to an appropriate person or persons
    identified in the Code of Business Conduct and Ethics; and                          
|
| |  | accountability for adherence to the Code of Business Conduct and
    Ethics.                                                                                                                                           







43



---



##### 








|          |                                       
|--------- | --------------------------------------
|Item 16C. | Principal Accountant Fees and Services



| |           
| | ----------
| | Audit Fees





| |                   
| | ------------------
| | Audit Related Fees





| |         
| | --------
| | Tax Fees





| |               
| | --------------
| | All Other Fees







| |   |                                                                                                                                                                                                                                                                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | approved by our audit committee; or                                                                                                                                                                                                                                                                                                                                       
|
| |  | entered into pursuant to pre-approval policies and procedures
    established by the audit committee, provided the policies and
    procedures are detailed as to the particular service, the audit
    committee is informed of each service, and such policies and
    procedures do not include delegation of the audit
    committees responsibilities to management.










|          |                                                              
|--------- | -------------------------------------------------------------
|Item 16D. | Exemption from the Listing Standards for Audit
    Committees








|          |                                                                            
|--------- | ---------------------------------------------------------------------------
|Item 16E. | Purchases of Equity Securities by the Company and
    Affiliated Purchasers



|                       |  |                  |         |  |                |                     |       |                 |                    |  |                 |  |  |  |         | 
|---------------------- |  | ---------------- | ------- |  | -------------- | ------------------- | ----- | --------------- | ------------------ |  | --------------- |  |  |  | ------- | 
|                       |  |                  |         |  |                | Total Number of     |       |                 | Maximum Number     | 
|                       |  |                  |         |  |                | Shares Purchased    |       |                 | of Shares that May | 
|                       |  |                  |         |  |                | as Part of Publicly |       |                 | Yet Be Purchased   | 
|                       |  | Total Number of  |         |  | Average Price  |                     |       | Announced Plans |                    |  | Under the Plans | 
|Period                 |  | Shares Purchased |         |  | Paid per Share |                     |       | or Programs     |                    |  | or Programs     | 
|                       |  |                  |         |  |                |                     |       |                 |                    |  |                 | 
|December 1 to 31, 2004 |  |                  | 406,000 |  |                | U.S. $              | 20.58 |                 |                    |  | 406,000         |  |  |  | 194,000 | 

44



---



##### 






PART III







|        |                     
|------- | --------------------
|Item 17 | Financial Statements








|        |                     
|------- | --------------------
|Item 18 | Financial Statements



| |                                                         
| | --------------------------------------------------------
| | Financial Statements Filed as Part of the annual report:



| |                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------
| | Independent Auditors Report on the Consolidated Financial
    Statements of MFC as at December 31, 2004, 2003 and 2002          
|
| | Consolidated Balance Sheets at December 31, 2004 and 2003
    (audited)                                                          
|
| | Consolidated Statements of Income for the years ended
    December 31, 2004, 2003 and 2002 (audited)                             
|
| | Consolidated Statements of Changes in Shareholders Equity
    for the years ended December 31, 2004, 2003 and 2002
    (audited)
|
| | Consolidated Statements of Cash Flows for the years ended
    December 31, 2004, 2003 and 2002 (audited)                         
|
| | Notes to Consolidated Financial Statements                                                                                       
|
| | Independent Auditors Report on Financial Statement Schedule                                                                     
|
| | Financial Statement Schedule:                                                                                                    



| |                                                                            
| | ---------------------------------------------------------------------------
| | I Condensed Financial Information of Registrant
    (Regulation 210.12.-04)

45



---



##### 






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM














| |                           
| | --------------------------
| | /s/ Peterson Sullivan PLLC



46



---



##### 



MFC BANCORP LTD. AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS


|                                     |                                                              |                             |         |         |         |   |         |         |         | 
|------------------------------------ | ------------------------------------------------------------ | --------------------------- | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                                     |                                                              | December 31,                |        
|                                     |                                                              |                             |        
|                                     |                                                              | 2004                        |         |         | 2003    |  
|                                     |                                                              |                             |         |         |         |  
|                                     |                                                              | (Canadian dollars, in       |        
|                                     |                                                              | thousands)                  |        
|ASSETS                              
|Current Assets                       |                                                              |                             |         |         |         |   |         |        
|                                     | Cash and cash equivalents                                    |                             | $       | 215,722 |         |   | $       | 145,452 |        
|                                     | Restricted cash                                              |                             |         | 16,496  |         |   |         |        |        
|                                     | Securities                                                   |                             |         | 21,113  |         |   |         | 8,412   |        
|                                     | Loans                                                        |                             |         | 9,816   |         |   |         | 14,375  |        
|                                     | Receivables                                                  |                             |         | 98,126  |         |   |         | 50,367  |        
|                                     | Commodity investments                                        |                             |         | 25,775  |         |   |         | 10,964  |        
|                                     | Inventories                                                  |                             |         | 11,019  |         |   |         |        |        
|                                     | Real estate held for sale                                    |                             |         | 42,924  |         |   |         | 3,380   |        
|                                     | Contract deposits, prepaid and other                         |                             |         | 21,819  |         |   |         | 2,267   |        
|                                     | Future income tax assets                                     |                             |         | 8,021   |         |   |         |        |        
|                                     |                                                              |                             |         |         |         |  
|                                     |                                                              | Total current assets        |         |         | 470,831 |   |         |         | 235,217 | 
|Non-current Assets                   |                                                              |                             |         |         |         |   |         |        
|                                     | Securities                                                   |                             |         | 9,858   |         |   |         | 36,551  |        
|                                     | Loans                                                        |                             |         | 17,049  |         |   |         | 2,497   |        
|                                     | Property, plant and equipment                                |                             |         | 22,108  |         |   |         | 62,235  |        
|                                     | Resource property                                            |                             |         | 35,341  |         |   |         | 36,044  |        
|                                     | Goodwill                                                     |                             |         | 20,445  |         |   |         | 16,127  |        
|                                     | Equity method investments                                    |                             |         | 18,490  |         |   |         | 15,906  |        
|                                     | Future income tax assets                                     |                             |         | 9,577   |         |   |         |        |        
|                                     |                                                              |                             |         |         |         |  
|                                     |                                                              | Total non-current assets    |         |         | 132,868 |   |         |         | 169,360 | 
|                                     |                                                              |                             |         |         |         |  
|                                     |                                                              | $                           | 603,699 |         |         | $ | 404,577 |        
|                                     |                                                              |                             |         |         |         |  
|                                    
|LIABILITIES AND SHAREHOLDERS EQUITY
|Current Liabilities                  |                                                              |                             |         |         |         |   |         |        
|                                     | Accounts payable and accrued expenses                        |                             | $       | 160,012 |         |   | $       | 53,705  |        
|                                     | Notes payable                                                |                             |         | 18,371  |         |   |         |        |        
|                                     | Long-term debt, current portion                              |                             |         | 8,173   |         |   |         | 5,921   |        
|                                     | Deposits                                                     |                             |         | 46,523  |         |   |         | 22,185  |        
|                                     | Provision for warranty costs                                 |                             |         | 11,641  |         |   |         |        |        
|                                     | Stock distribution payable                                   |                             |         |        |         |   |         | 71,730  |        
|                                     | Future income tax liability                                  |                             |         | 6,274   |         |   |         | 387     |        
|                                     |                                                              |                             |         |         |         |  
|                                     |                                                              | Total current liabilities   |         |         | 250,994 |   |         |         | 153,928 | 
|Long-term Liabilities                |                                                              |                             |         |         |         |   |         |        
|                                     | Long-term debt, less current portion                         |                             |         | 14,383  |         |   |         | 27,376  |        
|                                     | Pension liabilities                                          |                             |         | 36,792  |         |   |         |        |        
|                                     | Provision for warranty costs                                 |                             |         | 1,559   |         |   |         |        |        
|                                     | Other long-term liabilities                                  |                             |         | 1,240   |         |   |         |        |        
|                                     |                                                              |                             |         |         |         |  
|                                     |                                                              | Total long-term liabilities |         |         | 53,974  |   |         |         | 27,376  | 
|                                     |                                                              |                             |         |         |         |  
|                                     |                                                              | Total liabilities           |         |         | 304,968 |   |         |         | 181,304 | 
|Minority Interests                   |                                                              |                             | 29,310  |         |         |   | 4,826   |        
|Shareholders Equity                 |                                                              |                             |         |         |         |   |         |        
|                                     | Common stock, without par value; authorized unlimited number |                             |         | 71,512  |         |   |         | 61,891  |        
|                                     | Equity component of convertible debt                         |                             |         | 146     |         |   |         |        |        
|                                     | Retained earnings                                            |                             |         | 209,961 |         |   |         | 173,674 |        
|                                     | Cumulative translation adjustment                            |                             |         | (12,198 | )       |   |         | (17,118 | )      
|                                     |                                                              |                             |         |         |         |  
|                                     |                                                              | Total shareholders equity  |         |         | 269,421 |   |         |         | 218,447 | 
|                                     |                                                              |                             |         |         |         |  
|                                     |                                                              | $                           | 603,699 |         |         | $ | 404,577 |        
|                                     |                                                              |                             |         |         |         |  



47



---



##### 



MFC BANCORP LTD. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF INCOME


|                                                                  |                                     |                                  |         |         |        |  |         |         |        |  |         |         |        | 
|----------------------------------------------------------------- | ----------------------------------- | -------------------------------- | ------- | ------- | ------ |  | ------- | ------- | ------ |  | ------- | ------- | ------ | 
|                                                                  |                                     | For the Years Ended December 31, |        
|                                                                  |                                     |                                  |        
|                                                                  |                                     | 2004                             |         |         | 2003   |  |         | 2002    |       
|                                                                  |                                     |                                  |         |         |        |  |         |         |       
|                                                                  |                                     | (Canadian dollars, in thousands, |        
|                                                                  |                                     | except earnings per share)       |        
|Revenue                                                           |                                     |                                  |         |         |        |  |         |         |        |  |         |        
|                                                                  | Financial services                  |                                  | $       | 498,672 |        |  | $       | 409,513 |        |  | $       | 284,339 |       
|                                                                  | Industrial and engineering services |                                  |         | 199,092 |        |  |         |        |        |  |         |        |       
|                                                                  |                                     |                                  |         |         |        |  |         |         |       
|                                                                  |                                     |                                  | 697,764 |         |        |  | 409,513 |         |        |  | 284,339 |        
|Expenses                                                          |                                     |                                  |         |         |        |  |         |         |        |  |         |        
|                                                                  | Financial services                  |                                  |         | 430,945 |        |  |         | 329,549 |        |  |         | 175,792 |       
|                                                                  | Industrial and engineering services |                                  |         | 158,329 |        |  |         |        |        |  |         |        |       
|                                                                  | General and administrative          |                                  |         | 62,632  |        |  |         | 25,187  |        |  |         | 35,758  |       
|                                                                  | Goodwill impairment                 |                                  |         |        |        |  |         |        |        |  |         | 16,116  |       
|                                                                  | Interest                            |                                  |         | 7,443   |        |  |         | 4,392   |        |  |         | 9,493   |       
|                                                                  |                                     |                                  |         |         |        |  |         |         |       
|                                                                  |                                     |                                  | 659,349 |         |        |  | 359,128 |         |        |  | 237,159 |        
|                                                                  |                                     |                                  |         |         |        |  |         |         |       
|Income from operations before income taxes and minority interests |                                     |                                  | 38,415  |         |        |  | 50,385  |         |        |  | 47,180  |        
|Recovery of (provision for) income taxes                          |                                     |                                  | 4,168   |         |        |  | (837    | )       |        |  | 3,497   |        
|                                                                  |                                     |                                  |         |         |        |  |         |         |       
|Income from operations before minority interests                  |                                     |                                  | 42,583  |         |        |  | 49,548  |         |        |  | 50,677  |        
|Minority interests                                                |                                     |                                  | (5,632  | )       |        |  | (432    | )       |        |  | 78      |        
|                                                                  |                                     |                                  |         |         |        |  |         |         |       
|                                                                  |                                     | Net income                       |         | $       | 36,951 |  |         | $       | 49,116 |  |         | $       | 50,755 | 
|                                                                  |                                     |                                  |         |         |        |  |         |         |       
|Earnings per share                                                |                                     |                                  |         |         |        |  |         |         |        |  |         |        
|                                                                  | Basic                               |                                  | $       | 2.73    |        |  | $       | 3.76    |        |  | $       | 3.93    |       
|                                                                  |                                     |                                  |         |         |        |  |         |         |       
|                                                                  | Diluted                             |                                  | $       | 2.70    |        |  | $       | 3.59    |        |  | $       | 3.70    |       
|                                                                  |                                     |                                  |         |         |        |  |         |         |       



48



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##### 



MFC BANCORP LTD. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS
EQUITY


|                                                                               |  |                                                      |            |   |              |   |             |      |  |            |          |   |             |            |         |   |       |   |         |   |  |   |         |  
|------------------------------------------------------------------------------ |  | ---------------------------------------------------- | ---------- | - | ------------ | - | ----------- | ---- |  | ---------- | -------- | - | ----------- | ---------- | ------- | - | ----- | - | ------- | - |  | - | ------- | -
|                                                                               |  | For the Years Ended December 31, 2004, 2003 and 2002 |           
|                                                                               |  |                                                      |           
|                                                                               |  | Common Stock                                         |            |   | Equity       |   |             |     
|                                                                               |  |                                                      |            |   | Component of |   |             |      |  | Cumulative |          |   |            
|                                                                               |  | Number of                                            |            |   |              |   | Convertible |      |  | Retained   |          |   | Translation |            |         |  
|                                                                               |  | Shares                                               |            |   | Amount       |   |             | Debt |  |            | Earnings |   |             | Adjustment |         |   | Total |  
|                                                                               |  |                                                      |            |   |              |   |             |      |  |            |          |   |             |            |         |   |       |  
|                                                                               |  | (Canadian dollars, in thousands)                     |           
|Balance at December 31, 2001                                                   |  |                                                      | 13,177,156 |   |              | $ | 76,673      |      |  | $          |         |   |             | $          | 164,872 |   |       | $ | 4,452   |   |  | $ | 245,997 |  
|Net income                                                                     |  |                                                      |           |   |              |   |            |      |  |            |         |   |             |            | 50,755  |   |       |   |        |   |  |   | 50,755  |  
|Shares issued for exercise of stock options                                    |  |                                                      | 157,500    |   |              |   | 1,635       |      |  |            |         |   |             |            |        |   |       |   |        |   |  |   | 1,635   |  
|Shares issued for purchase of minority interest in consolidated
    subsidiary |  |                                                      | 25,071     |   |              |   | 397         |      |  |            |         |   |             |            |        |   |       |   |        |   |  |   | 397     |  
|Repurchase of shares                                                           |  |                                                      | (546,100   | ) |              |   | (8,660      | )    |  |            |         |   |             |            |        |   |       |   |        |   |  |   | (8,660  | )
|Shares issued for compensation                                                 |  |                                                      | 18,227     |   |              |   | 224         |      |  |            |         |   |             |            |        |   |       |   |        |   |  |   | 224     |  
|Translation adjustment                                                         |  |                                                      |           |   |              |   |            |      |  |            |         |   |             |            |        |   |       |   | 14,281  |   |  |   | 14,281  |  
|Dividend in equity securities, at carrying value                               |  |                                                      |           |   |              |   |            |      |  |            |         |   |             |            | (19,339 | ) |       |   |        |   |  |   | (19,339 | )
|                                                                               |  |                                                      |            |   |              |   |             |      |  |            |          |   |             |            |         |   |       |  
|Balance at December 31, 2002                                                   |  |                                                      | 12,831,854 |   |              |   | 70,269      |      |  |            |         |   |             |            | 196,288 |   |       |   | 18,733  |   |  |   | 285,290 |  
|Net income                                                                     |  |                                                      |           |   |              |   |            |      |  |            |         |   |             |            | 49,116  |   |       |   |        |   |  |   | 49,116  |  
|Shares issued for exercise of stock options                                    |  |                                                      | 487,500    |   |              |   | 4,281       |      |  |            |         |   |             |            |        |   |       |   |        |   |  |   | 4,281   |  
|Shares issued for conversion of bonds                                          |  |                                                      | 72,261     |   |              |   | 1,294       |      |  |            |         |   |             |            |        |   |       |   |        |   |  |   | 1,294   |  
|Repurchase of shares                                                           |  |                                                      | (672,183   | ) |              |   | (13,953     | )    |  |            |         |   |             |            |        |   |       |   |        |   |  |   | (13,953 | )
|Translation adjustment                                                         |  |                                                      |           |   |              |   |            |      |  |            |         |   |             |            |        |   |       |   | (35,851 | ) |  |   | (35,851 | )
|Distribution of assets declared, at carrying value                             |  |                                                      |           |   |              |   |            |      |  |            |         |   |             |            | (71,730 | ) |       |   |        |   |  |   | (71,730 | )
|                                                                               |  |                                                      |            |   |              |   |             |      |  |            |          |   |             |            |         |   |       |  
|Balance at December 31, 2003                                                   |  |                                                      | 12,719,432 |   |              |   | 61,891      |      |  |            |         |   |             |            | 173,674 |   |       |   | (17,118 | ) |  |   | 218,447 |  
|Net income                                                                     |  |                                                      |           |   |              |   |            |      |  |            |         |   |             |            | 36,951  |   |       |   |        |   |  |   | 36,951  |  
|Issuance of convertible debt, equity component                                 |  |                                                      |           |   |              |   |            |      |  |            | 186      |   |             |            |        |   |       |   |        |   |  |   | 186     |  
|Shares issued for conversion of bonds                                          |  |                                                      | 965,837    |   |              |   | 16,904      |      |  |            | (40      | ) |             |            |        |   |       |   |        |   |  |   | 16,864  |  
|Repurchase of shares                                                           |  |                                                      | (406,000   | ) |              |   | (10,058     | )    |  |            |         |   |             |            |        |   |       |   |        |   |  |   | (10,058 | )
|Shares re-issued as a result of liquidation of a subsidiary                    |  |                                                      | 297,877    |   |              |   | 2,775       |      |  |            |         |   |             |            |        |   |       |   |        |   |  |   | 2,775   |  
|Translation adjustment                                                         |  |                                                      |           |   |              |   |            |      |  |            |         |   |             |            |        |   |       |   | 4,920   |   |  |   | 4,920   |  
|Pre-consolidation income of purchased subsidiaries                             |  |                                                      |           |   |              |   |            |      |  |            |         |   |             |            | 81      |   |       |   |        |   |  |   | 81      |  
|Adjustment to the recorded value of assets distributed                         |  |                                                      |           |   |              |   |            |      |  |            |         |   |             |            | (745    | ) |       |   |        |   |  |   | (745    | )
|                                                                               |  |                                                      |            |   |              |   |             |      |  |            |          |   |             |            |         |   |       |  
|Balance at December 31, 2004                                                   |  |                                                      | 13,577,146 |   |              | $ | 71,512      |      |  | $          | 146      |   |             | $          | 209,961 |   |       | $ | (12,198 | ) |  | $ | 269,421 |  
|                                                                               |  |                                                      |            |   |              |   |             |      |  |            |          |   |             |            |         |   |       |  



49



---



##### 



MFC BANCORP LTD. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                                             |                                                   |                                                                                                                      |                                       |         |        |         |         |         |         |        |         |         |         |        |  
|---------------------------------------------------------------------------- | ------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------- | ------------------------------------- | ------- | ------ | ------- | ------- | ------- | ------- | ------ | ------- | ------- | ------- | ------ | -
|                                                                             |                                                   | For the Years Ended December 31,                                                                                     |                                      
|                                                                             |                                                   |                                                                                                                      |                                      
|                                                                             |                                                   | 2004                                                                                                                 |                                       |         | 2003   |         |         | 2002    |        
|                                                                             |                                                   |                                                                                                                      |                                       |         |        |         |         |         |        
|                                                                             |                                                   | (Canadian dollars, in thousands)                                                                                     |                                      
|CASH FLOWS FROM OPERATING ACTIVITIES                                         |                                                   |                                                                                                                      |                                       |         |        |         |         |         |         |        |         |        
|                                                                             | Net income                                        |                                                                                                                      | $                                     | 36,951  |        |         | $       | 49,116  |         |        | $       | 50,755  |        
|                                                                             | Adjustments for:                                  |                                                                                                                      |                                       |         |        |         |         |         |         |        |         |         |        
|                                                                             |                                                   | Goodwill impairment                                                                                                  |                                       |         |       |         |         |         |        |        |         |         | 16,116  |       
|                                                                             |                                                   | Gain on debt reduction                                                                                               |                                       |         | (843   | )       |         |         |        |        |         |         | (19,746 | )     
|                                                                             |                                                   | Amortization and depreciation                                                                                        |                                       |         | 10,333 |         |         |         | 1,487   |        |         |         | 1,528   |       
|                                                                             |                                                   | Equity (income) loss on equity method investments                                                                    |                                       |         | (1,206 | )       |         |         | 905     |        |         |         |        |       
|                                                                             |                                                   | Minority interests                                                                                                   |                                       |         | 5,632  |         |         |         | 432     |        |         |         | (78     | )     
|                                                                             |                                                   | Debt extinguishment                                                                                                  |                                       |         |       |         |         |         |        |        |         |         | (49,122 | )     
|                                                                             |                                                   | Financial advisory services revenue                                                                                  |                                       |         |       |         |         |         | (6,089  | )      |         |         |        |       
|                                                                             |                                                   | Gain on sales of securities and assets, net                                                                          |                                       |         |       |         |         |         | (17,574 | )      |         |         |        |       
|                                                                             |                                                   | Changes in operating assets and liabilities, net of effects of
    acquisitions and dispositions
    Restricted cash |                                       |         | (8,090 | )       |         |         |        |        |         |         |        |       
|                                                                             |                                                   |                                                                                                                      | Securities                            |         |        | 10,880  |         |         |         | 7,021  |         |         |         | 12,179 |  
|                                                                             |                                                   |                                                                                                                      | Receivables                           |         |        | 18,295  |         |         |         | 9,459  |         |         |         | 1,621  |  
|                                                                             |                                                   |                                                                                                                      | Commodity investments                 |         |        | (11,531 | )       |         |         | 1,080  |         |         |         | (6,026 | )
|                                                                             |                                                   |                                                                                                                      | Inventories                           |         |        | (1,192  | )       |         |         |       |         |         |         |       |  
|                                                                             |                                                   |                                                                                                                      | Real estate held for sale             |         |        | (71     | )       |         |         | 1,064  |         |         |         | 13,487 |  
|                                                                             |                                                   |                                                                                                                      | Accounts payable and accrued expenses |         |        | 25,523  |         |         |         | (2,617 | )       |         |         | 3,767  |  
|                                                                             |                                                   |                                                                                                                      | Provision for warranty costs          |         |        | (1,350  | )       |         |         |       |         |         |         |       |  
|                                                                             |                                                   |                                                                                                                      | Future income taxes                   |         |        | (5,444  | )       |         |         |       |         |         |         | (4,604 | )
|                                                                             |                                                   |                                                                                                                      | Contract deposits, prepaid and other  |         |        | (18,282 | )       |         |         | (1,572 | )       |         |         |       |  
|                                                                             |                                                   |                                                                                                                      | Other                                 |         |        | 604     |         |         |         | (5,349 | )       |         |         | 970    |  
|                                                                             |                                                   |                                                                                                                      |                                       |         |        |         |         |         |        
|CASH FLOWS FROM OPERATING ACTIVITIES                                         |                                                   |                                                                                                                      | 60,209                                |         |        |         | 37,363  |         |         |        | 20,847  |        
|CASH FLOWS FROM INVESTING ACTIVITIES                                         |                                                   |                                                                                                                      |                                       |         |        |         |         |         |         |        |         |        
|                                                                             | Net decrease (increase) in loans                  |                                                                                                                      |                                       | (9,761  | )      |         |         | 52,438  |         |        |         | (4,778  | )      
|                                                                             | Sales (purchases) of long-term securities, net    |                                                                                                                      |                                       | (5,118  | )      |         |         | 4,788   |         |        |         | (5,441  | )      
|                                                                             | Purchases of property, plant and equipment        |                                                                                                                      |                                       | (3,693  | )      |         |         |        |         |        |         |        |        
|                                                                             | Disposition of subsidiaries, net of cash disposed |                                                                                                                      |                                       | (207    | )      |         |         |        |         |        |         |        |        
|                                                                             | Sale of equity method investment                  |                                                                                                                      |                                       |        |        |         |         |        |         |        |         | 25,915  |        
|                                                                             | Purchases of subsidiaries, net of cash acquired   |                                                                                                                      |                                       | 31,133  |        |         |         | (755    | )       |        |         | (34,978 | )      
|                                                                             | Proceeds from sale of assets                      |                                                                                                                      |                                       |        |        |         |         | 10,634  |         |        |         |        |        
|                                                                             | Other                                             |                                                                                                                      |                                       | 1,797   |        |         |         | (2,175  | )       |        |         | 204     |        
|                                                                             |                                                   |                                                                                                                      |                                       |         |        |         |         |         |        
|CASH FLOWS FROM INVESTING ACTIVITIES                                         |                                                   |                                                                                                                      | 14,151                                |         |        |         | 64,930  |         |         |        | (19,078 | )      
|CASH FLOWS FROM FINANCING ACTIVITIES
    Net increase (decrease) in deposits |                                                   |                                                                                                                      | 23,842                                |         |        |         | (13,516 | )       |         |        | 33,894  |        
|                                                                             | Borrowings                                        |                                                                                                                      |                                       | 15,579  |        |         |         | 6,649   |         |        |         | 38,660  |        
|                                                                             | Debt repayments                                   |                                                                                                                      |                                       | (30,459 | )      |         |         | (31,722 | )       |        |         | (52,005 | )      
|                                                                             | Issuance (repurchase) of common stock, net        |                                                                                                                      |                                       | (10,058 | )      |         |         | (9,672  | )       |        |         | (7,025  | )      
|                                                                             | Issuance of shares by a subsidiary                |                                                                                                                      |                                       | 1,392   |        |         |         |        |         |        |         |        |        
|                                                                             | Other                                             |                                                                                                                      |                                       | 12      |        |         |         | (31     | )       |        |         |        |        
|                                                                             |                                                   |                                                                                                                      |                                       |         |        |         |         |         |        
|CASH FLOWS FROM FINANCING ACTIVITIES                                         |                                                   |                                                                                                                      | 308                                   |         |        |         | (48,292 | )       |         |        | 13,524  |        
|Exchange rate effect on cash and cash equivalents                            |                                                   |                                                                                                                      | (4,398                                | )       |        |         | (10,962 | )       |         |        | 9,954   |        
|                                                                             |                                                   |                                                                                                                      |                                       |         |        |         |         |         |        
|Increase in cash and cash equivalents                                        |                                                   |                                                                                                                      | 70,270                                |         |        |         | 43,039  |         |         |        | 25,247  |        
|CASH AND CASH EQUIVALENTS, beginning of year                                 |                                                   |                                                                                                                      | 145,452                               |         |        |         | 102,413 |         |         |        | 77,166  |        
|                                                                             |                                                   |                                                                                                                      |                                       |         |        |         |         |         |        
|CASH AND CASH EQUIVALENTS, end of year                                       |                                                   | $                                                                                                                    | 215,722                               |         |        | $       | 145,452 |         |         | $      | 102,413 |        
|                                                                             |                                                   |                                                                                                                      |                                       |         |        |         |         |         |        



50



---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1. The Company and Summary of Significant
Accounting Policies




Nature of
Operations








Principles of
Consolidation






Cash and Cash
Equivalents






|                                                          |  |   |        | 
|--------------------------------------------------------- |  | - | ------ | 
|Security for current industrial and engineering contracts |  | $ | 11,006 | 
|Collateral for debt currently due                         |  |   | 5,122  | 
|Other                                                     |  |   | 368    | 
|                                                          |  |   |       
|                                                          |  | $ | 16,496 | 
|                                                          |  |   |       



51



---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)




Securities










Loans and
Receivables










52



---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


Allowance for Credit
Losses








Derivative Financial
Instruments










Commodity
Investments




Inventories




|                 |  |   |        | 
|---------------- |  | - | ------ | 
|Raw materials    |  | $ | 4,073  | 
|Work in progress |  |   | 3,907  | 
|Finished goods   |  |   | 3,039  | 
|                 |  |   |       
|                 |  | $ | 11,019 | 
|                 |  |   |       

53



---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


Real Estate Held for
Sale




Resource
Property




Property, Plant and
Equipment






|                                |  |       |                 |  |        |  |               | 
|------------------------------- |  | ----- | --------------- |  | ------ |  | ------------- | 
|                                |  | Lives |                 |  | Method | 
|                                |  |       |                 |  |        | 
|Buildings                       |  |       | 15 to 20  years |  |        |  | straight-line | 
|Investment property (buildings) |  |       | 20 years        |  |        |  | straight-line | 
|Manufacturing plant equipment   |  |       | 3 to 20 years   |  |        |  | straight-line | 
|Office equipment                |  |       | 3 to 10 years   |  |        |  | straight-line | 



Asset Retirement
Obligations




Goodwill




54



---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


Equity Component of
Convertible Debt




Revenue
Recognition










Provision for
Warranty




Pensions




Foreign Currency
Translation




55



---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)




Taxes on
Income




Stock-Based
Compensation


Stock-Based Compensation and
Other Stock-Based Payments




Earnings Per
Share




Estimates




Reclassifications




New Canadian Accounting
Standards




| |                                                                             
| | ----------------------------------------------------------------------------
| | Accounting Guideline AcG-15, Consolidation of Variable
    Interest Entities



56



---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)




| |                                                  
| | -------------------------------------------------
| | Accounting Guideline AcG-18, Investment Companies





| |                      
| | ---------------------
| | Financial Instruments

Financial Instruments  Disclosure and Presentation


Financial Instruments  Recognition and Measurement




| |                     
| | --------------------
| | Comprehensive Income

Comprehensive
Income


Surplus Equity Comprehensive
Income




| |       
| | ------
| | Hedges

Hedges


Note 2.     Acquisitions




|                                                            |  |   |         | 
|----------------------------------------------------------- |  | - | ------- | 
|Current assets                                              |  | $ | 89,639  | 
|Property, plant and equipment and real estate held for sale |  |   | 55,714  | 
|Loans and other non-current assets                          |  |   | 38,156  | 
|                                                            |  |   |        
|Total assets acquired                                       |  |   | 183,509 | 
|Current liabilities                                         |  |   | 73,523  | 
|Debt and other long-term liabilities                        |  |   | 57,254  | 
|Minority interest                                           |  |   | 18,345  | 
|                                                            |  |   |        
|Total liabilities assumed                                   |  |   | 149,122 | 
|                                                            |  |   |        
|Net assets acquired                                         |  | $ | 34,387  | 
|                                                            |  |   |        

57



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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)












|                   |         |                         |         |      |      |   |         |      | 
|------------------ | ------- | ----------------------- | ------- | ---- | ---- | - | ------- | ---- | 
|                   |         | Year Ended December 31, |        
|                   |         |                         |        
|                   |         | 2004                    |         |      | 2003 |  
|                   |         |                         |         |      |      |  
|                   |         | (Unaudited)             |        
|Revenues           |         | $                       | 796,021 |      |      | $ | 714,117 |     
|Net income         |         |                         | 35,248  |      |      |   | 40,615  |     
|Earnings per share |         |                         |         |      |      |   |         |     
|                   | Basic   |                         |         | 2.61 |      |   |         | 3.11 | 
|                   | Diluted |                         |         | 2.57 |      |   |         | 2.99 | 

Note 3. Goodwill




|                             |  |      |        |  |      |   |        |  
|---------------------------- |  | ---- | ------ |  | ---- | - | ------ | -
|                             |  | 2004 |        |  | 2003 |  
|                             |  |      |        |  |      |  
|Balance at beginning of year |  | $    | 16,127 |  |      | $ | 16,412 |  
|Acquisitions                 |  |      | 4,294  |  |      |   |       |  
|Exchange rate effect         |  |      | 24     |  |      |   | (285   | )
|                             |  |      |        |  |      |  
|Balance at end of year       |  | $    | 20,445 |  |      | $ | 16,127 |  
|                             |  |      |        |  |      |  



58



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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


Note 4. Securities






|                 |  |                             |       |       |            |   |       |            |           |        |   |  |          |       |        |            |  |            |           |  |        |   |   |  |  |   |       |  |  |   |        | 
|---------------- |  | --------------------------- | ----- | ----- | ---------- | - | ----- | ---------- | --------- | ------ | - |  | -------- | ----- | ------ | ---------- |  | ---------- | --------- |  | ------ | - | - |  |  | - | ----- |  |  | - | ------ | 
|                 |  | Unrealized Gains and Losses |      
|                 |  |                             |      
|                 |  | 2004                        |       |       | 2003       |  
|                 |  |                             |       |       |            |  
|                 |  |                             |       | Gross |            |   | Gross |            | Estimated |        |   |  |          | Gross |        | Gross      |  |            | Estimated | 
|                 |  | Carrying                    |       |       | Unrealized |   |       | Unrealized |           | Market |   |  | Carrying |       |        | Unrealized |  | Unrealized |           |  | Market |  
|                 |  | Value                       |       |       | Gains      |   |       | Losses     |           | Value  |   |  | Value    |       |        | Gains      |  | Losses     |           |  | Value  |  
|                 |  |                             |       |       |            |   |       |            |           |        |   |  |          |       |        |            |  |            |           |  |        |  
|Debt             |  | $                           |      |       |            | $ |      |            |           | $      |  |  |          | $     |       |            |  | $          | 19,229    |  |        | $ |  |  |  | $ |      |  |  | $ | 19,229 | 
|Preferred shares |  |                             | 299   |       |            |   |      |            |           |        |  |  |          |       | 299    |            |  |            | 299       |  |        |   |  |  |  |   |      |  |  |   | 299    | 
|Common shares    |  |                             | 9,559 |       |            |   | 501   |            |           |        |  |  |          |       | 10,060 |            |  |            | 17,023    |  |        |   |  |  |  |   | 3,342 |  |  |   | 13,681 | 
|                 |  |                             |       |       |            |   |       |            |           |        |   |  |          |       |        |            |  |            |           |  |        |   |   | 
|                 |  | $                           | 9,858 |       |            | $ | 501   |            |           | $      |  |  |          | $     | 10,359 |            |  | $          | 36,551    |  |        | $ |  |  |  | $ | 3,342 |  |  | $ | 33,209 | 
|                 |  |                             |       |       |            |   |       |            |           |        |   |  |          |       |        |            |  |            |           |  |        |   |   | 





|                       |           |                  |       |   |        |       |       |        |       |       |           |   |       |             |     |   |       |     |        |       |       |       |        |   |       |        |        |   |        |        | 
|---------------------- | --------- | ---------------- | ----- | - | ------ | ----- | ----- | ------ | ----- | ----- | --------- | - | ----- | ----------- | --- | - | ----- | --- | ------ | ----- | ----- | ----- | ------ | - | ----- | ------ | ------ | - | ------ | ------ | 
|                       |           | Remaining Terms  |      
|                       |           |                  |      
|                       |           | Within           |       |   | 1 to 3 |       |       | 3 to 5 |       |       | More than |   |       | No Specific |     |   | 2004  |     |        | 2003  |      
|                       |           | 1 Year           |       |   | Years  |       |       | Years  |       |       | 5 Years   |   |       | Maturity    |     |   | Total |     |        | Total |      
|                       |           |                  |       |   |        |       |       |        |       |       |           |   |       |             |     |   |       |     |        |       |      
|Short-term securities: |           |                  |       |   |        |       |       |        |       |       |           |   |       |             |     |   |       |     |        |       |       |       |        |   |       |        |        |  
|                       | Debt:     |                  |       |   |        |       |       |        |       |       |           |   |       |             |     |   |       |     |        |       |       |       |        |   |       |        |        |   |       
|                       |           | Governments      |       | $ |       |       |       | $      | 5,493 |       |           | $ | 1,292 |             |     | $ |      |     |        | $     |      |       |        | $ | 6,785 |        |        | $ |       |       
|                       |           | Other issuers    |       |   | 1,222  |       |       |        | 2,473 |       |           |   | 2,571 |             |     |   | 603   |     |        |       |      |       |        |   | 6,869 |        |        |   | 580    |       
|                       |           |                  |       |   |        |       |       |        |       |       |           |   |       |             |     |   |       |     |        |       |      
|                       |           |                  | 1,222 |   |        |       | 7,966 |        |       |       | 3,863     |   |       |             | 603 |   |       |     |       |       |       |       | 13,654 |   |       |        | 580    |  
|                       | Equities: |                  |       |   |        |       |       |        |       |       |           |   |       |             |     |   |       |     |        |       |       |       |        |   |       |        |        |   |       
|                       |           | Preferred shares |       |   |       |       |       |        |      |       |           |   |      |             |     |   |      |     |        |       | 903   |       |        |   | 903   |        |        |   | 1,096  |       
|                       |           | Common shares    |       |   |       |       |       |        |      |       |           |   |      |             |     |   |      |     |        |       | 6,556 |       |        |   | 6,556 |        |        |   | 6,736  |       
|                       |           |                  |       |   |        |       |       |        |       |       |           |   |       |             |     |   |       |     |        |       |      
|                       |           |                  |      |   |        |       |      |        |       |       |          |   |       |             |    |   |       |     | 7,459  |       |       |       | 7,459  |   |       |        | 7,832  |  
|                       |           |                  |       |   |        |       |       |        |       |       |           |   |       |             |     |   |       |     |        |       |      
|                       |           |                  | Total |   |        | 1,222 |       |        |       | 7,966 |           |   |       | 3,863       |     |   |       | 603 |        |       |       | 7,459 |        |   |       | 21,113 |        |   |        | 8,412  | 
|Long-term securities:  |           |                  |       |   |        |       |       |        |       |       |           |   |       |             |     |   |       |     |        |       |       |       |        |   |       |        |        |  
|                       | Debt:     |                  |       |   |        |       |       |        |       |       |           |   |       |             |     |   |       |     |        |       |       |       |        |   |       |        |        |   |       
|                       |           | Governments      |       |   |       |       |       |        |      |       |           |   |      |             |     |   |      |     |        |       |      |       |        |   |      |        |        |   | 12,289 |       
|                       |           | Other issuers    |       |   |       |       |       |        |      |       |           |   |      |             |     |   |      |     |        |       |      |       |        |   |      |        |        |   | 6,940  |       
|                       |           |                  |       |   |        |       |       |        |       |       |           |   |       |             |     |   |       |     |        |       |      
|                       |           |                  |      |   |        |       |      |        |       |       |          |   |       |             |    |   |       |     |       |       |       |       |       |   |       |        | 19,229 |  
|                       | Equities: |                  |       |   |        |       |       |        |       |       |           |   |       |             |     |   |       |     |        |       |       |       |        |   |       |        |        |   |       
|                       |           | Preferred shares |       |   |       |       |       |        |      |       |           |   |      |             |     |   |      |     |        |       | 299   |       |        |   | 299   |        |        |   | 299    |       
|                       |           | Common shares    |       |   |       |       |       |        |      |       |           |   |      |             |     |   |      |     |        |       | 9,559 |       |        |   | 9,559 |        |        |   | 17,023 |       
|                       |           |                  |       |   |        |       |       |        |       |       |           |   |       |             |     |   |       |     |        |       |      
|                       |           |                  |      |   |        |       |      |        |       |       |          |   |       |             |    |   |       |     | 9,858  |       |       |       | 9,858  |   |       |        | 17,322 |  
|                       |           |                  |       |   |        |       |       |        |       |       |           |   |       |             |     |   |       |     |        |       |      
|                       |           |                  | Total |   |        |      |       |        |       |      |           |   |       |            |     |   |       |    |        |       |       | 9,858 |        |   |       | 9,858  |        |   |        | 36,551 | 
|                       |           |                  |       |   |        |       |       |        |       |       |           |   |       |             |     |   |       |     |        |       |      
|Total securities       |           | $                | 1,222 |   |        | $     | 7,966 |        |       | $     | 3,863     |   |       | $           | 603 |   |       | $   | 17,317 |       |       | $     | 30,971 |   |       | $      | 44,963 |  
|                       |           |                  |       |   |        |       |       |        |       |       |           |   |       |             |     |   |       |     |        |       |      

59



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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


Note 5. Loans


|                                                                                                                                                                                                                             |  |      |        |  |      |   |        | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------ |  | ---- | - | ------ | 
|                                                                                                                                                                                                                             |  | 2004 |        |  | 2003 |  
|                                                                                                                                                                                                                             |  |      |        |  |      |  
|Bank loans, collateralized by traded securities and other
    assets, amounts due from one company of $5,489 and $5,091 at
    December 31, 2004 and 2003, respectively, are
    collateralized by patents                   |  | $    | 6,382  |  |      | $ | 6,899  | 
|Other loans, collateralized by traded securities, receivables,
    inventories and other tangible assets, due from two companies
    $18,145 at December 31, 2004 and due from two companies
    $6,319 at December 31, 2003 |  |      | 20,483 |  |      |   | 9,973  | 
|                                                                                                                                                                                                                             |  |      |        |  |      |  
|                                                                                                                                                                                                                             |  | $    | 26,865 |  |      | $ | 16,872 | 
|                                                                                                                                                                                                                             |  |      |        |  |      |  



|            |  |        |       |  |       |   |       |           |  |   |       |  |  |   |        | 
|----------- |  | ------ | ----- |  | ----- | - | ----- | --------- |  | - | ----- |  |  | - | ------ | 
|            |  | Within |       |  | 1  5 |   |       | More than |  |   | 2004  | 
|            |  | 1 Year |       |  | Years |   |       | 5 Years   |  |   | Total | 
|            |  |        |       |  |       |   |       |           |  |   |       | 
|Bank loans  |  | $      | 1,532 |  |       | $ | 4,850 |           |  | $ |      |  |  | $ | 6,382  | 
|Other loans |  |        | 8,284 |  |       |   | 2,338 |           |  |   | 9,861 |  |  |   | 20,483 | 
|            |  |        |       |  |       |   |       |           |  |   |       | 
|            |  | $      | 9,816 |  |       | $ | 7,188 |           |  | $ | 9,861 |  |  | $ | 26,865 | 
|            |  |        |       |  |       |   |       |           |  |   |       | 





Note 6. Receivables


|                                    |  |      |        |  |      |   |        | 
|----------------------------------- |  | ---- | ------ |  | ---- | - | ------ | 
|                                    |  | 2004 |        |  | 2003 |  
|                                    |  |      |        |  |      |  
|Commodity transactions              |  | $    | 32,959 |  |      | $ | 32,369 | 
|Industrial and engineering services |  |      | 31,449 |  |      |   |       | 
|Sale of a subsidiary                |  |      |       |  |      |   | 4,884  | 
|Sale of investment                  |  |      |       |  |      |   | 6,556  | 
|Short-term advances                 |  |      |       |  |      |   | 1,277  | 
|Investment income                   |  |      | 5,628  |  |      |   | 400    | 
|Pension plan recovery               |  |      | 1,812  |  |      |   | 1,587  | 
|Government taxes                    |  |      | 2,080  |  |      |   | 646    | 
|Due from affiliates                 |  |      | 16,664 |  |      |   | 373    | 
|Other                               |  |      | 7,534  |  |      |   | 2,275  | 
|                                    |  |      |        |  |      |  
|                                    |  | $    | 98,126 |  |      | $ | 50,367 | 
|                                    |  |      |        |  |      |  

Note 7. Property, Plant and Equipment


|                                     |  |      |        |             |              |   |          |       |  |   |        |             |  |              |          |  |       |   |      |   |  |   |        | 
|------------------------------------ |  | ---- | ------ | ----------- | ------------ | - | -------- | ----- |  | - | ------ | ----------- |  | ------------ | -------- |  | ----- | - | ---- | - |  | - | ------ | 
|                                     |  | 2004 |        |             | 2003         |  
|                                     |  |      |        |             |              |  
|                                     |  |      |        | Accumulated |              |   | Net Book |       |  |   |        | Accumulated |  |              | Net Book | 
|                                     |  | Cost |        |             | Depreciation |   |          | Value |  |   | Cost   |             |  | Depreciation |          |  | Value |  
|                                     |  |      |        |             |              |   |          |       |  |   |        |             |  |              |          |  |       |  
|Natural resource processing facility |  | $    |       |             |              | $ |         |       |  | $ |       |             |  | $            | 58,165   |  |       | $ |     |   |  | $ | 58,165 | 
|Buildings                            |  |      | 2,424  |             |              |   | (1,030   | )     |  |   | 1,394  |             |  |              |         |  |       |   |     |   |  |   |       | 
|Investment property                  |  |      | 12,232 |             |              |   | (3,657   | )     |  |   | 8,575  |             |  |              |         |  |       |   |     |   |  |   |       | 
|Manufacturing plant equipment        |  |      | 16,026 |             |              |   | (5,086   | )     |  |   | 10,940 |             |  |              | 3,579    |  |       |   | (254 | ) |  |   | 3,325  | 
|Office equipment                     |  |      | 2,626  |             |              |   | (1,427   | )     |  |   | 1,199  |             |  |              | 1,477    |  |       |   | (732 | ) |  |   | 745    | 
|                                     |  |      |        |             |              |   |          |       |  |   |        |             |  |              |          |  |       |  
|                                     |  | $    | 33,308 |             |              | $ | (11,200  | )     |  | $ | 22,108 |             |  | $            | 63,221   |  |       | $ | (986 | ) |  | $ | 62,235 | 
|                                     |  |      |        |             |              |   |          |       |  |   |        |             |  |              |          |  |       |  

60



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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


Note 8. Contracts in Progress




|                                                         |  |   |          |  
|-------------------------------------------------------- |  | - | -------- | -
|Costs incurred to date on uncompleted contracts          |  | $ | 69,660   |  
|Estimated earnings recognized to date on these contracts |  |   | 13,957   |  
|                                                         |  |   |         
|                                                         |  |   | 83,617   |  
|Less billings to date                                    |  |   | (120,526 | )
|                                                         |  |   |         
|                                                         |  | $ | (36,909  | )
|                                                         |  |   |         



|                                                                                                          |                                                                                                                                         |   |         |         |  
|--------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | - | ------- | ------- | -
|Costs and estimated earnings in excess of billings on
    uncompleted contracts (included in inventories) |                                                                                                                                         | $ | 3,907   |        
|                                                                                                          | Billings in excess of costs and estimated earnings on
    uncompleted contracts (included in accounts payable and accrued
    expenses) |   |         | (40,816 | )
|                                                                                                          |                                                                                                                                         |   |        
|                                                                                                          |                                                                                                                                         | $ | (36,909 | )      
|                                                                                                          |                                                                                                                                         |   |        



|                     |                                                   |                                    |   |         |         | 
|-------------------- | ------------------------------------------------- | ---------------------------------- | - | ------- | ------- | 
|Contracts in process |                                                   |                                    |   |        
|                     | Total contract amount                             |                                    | $ | 392,350 |        
|                     | Less revenue recognized through December 31, 2004 |                                    |   | (83,617 | )      
|                     |                                                   |                                    |  
|                     |                                                   | Total backlog at December 31, 2004 |   | $       | 308,733 | 
|                     |                                                   |                                    |  





Note 9. Accounts Payable and Accrued Expenses


|                                                                                |  |      |         |  |      |   |        | 
|------------------------------------------------------------------------------- |  | ---- | ------- |  | ---- | - | ------ | 
|                                                                                |  | 2004 |         |  | 2003 |  
|                                                                                |  |      |         |  |      |  
|Accounts payable                                                                |  | $    | 98,115  |  |      | $ | 40,444 | 
|Billings in excess of costs and estimated earnings on
    uncompleted contracts |  |      | 40,816  |  |      |   |       | 
|Bank overdrafts                                                                 |  |      | 1,044   |  |      |   | 3,137  | 
|Property and other taxes                                                        |  |      | 4,165   |  |      |   | 1,487  | 
|Affiliates                                                                      |  |      | 906     |  |      |   | 1,138  | 
|Commissions and severance                                                       |  |      | 1,626   |  |      |   | 803    | 
|Interest                                                                        |  |      | 975     |  |      |   | 392    | 
|Other                                                                           |  |      | 12,365  |  |      |   | 6,304  | 
|                                                                                |  |      |         |  |      |  
|                                                                                |  | $    | 160,012 |  |      | $ | 53,705 | 
|                                                                                |  |      |         |  |      |  

Note 10. Deposits




61



---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


Note 11. Provision for Warranty




|                                                     |  |   |        |  
|---------------------------------------------------- |  | - | ------ | -
|Balance at the time of the acquisition of KHD        |  | $ | 15,225 |  
|Costs incurred                                       |  |   | (3,876 | )
|Warranty reserves established on completed contracts |  |   | 3,625  |  
|Reversal of reserves at end of warranty period       |  |   | (1,587 | )
|Exchange differences                                 |  |   | (187   | )
|                                                     |  |   |       
|Balance, December 31, 2004                           |  | $ | 13,200 |  
|                                                     |  |   |       



|                |                   |   |        |       | 
|--------------- | ----------------- | - | ------ | ----- | 
|Current portion |                   | $ | 11,641 |      
|                | Long-term portion |   |        | 1,559 | 
|                |                   |   |       
|                |                   | $ | 13,200 |      
|                |                   |   |       

Note 12. Notes Payable








62



---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


Note 13. Long-term Debt


|                                                                                                                                                                                                                                                                                                                                                                    |  |      |        |   |      |   |        |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                                                                                                                                                                                                                                                                                                                                                                    |  | 2004 |        |   | 2003 |  
|                                                                                                                                                                                                                                                                                                                                                                    |  |      |        |   |      |  
|Bonds payable, US$12,647 at December 31, 2003, interest at
    8%, unsecured, non-recourse. Redeemed in full in 2004.                                                                                                                                                                                                                                               |  | $    |       |   |      | $ | 16,340 |  
|Bonds payable,
    2,523 at
    December 31, 2004, interest at 4.4%, interest due annually
    in December, principal due December 2009, unsecured. These bonds
    are convertible into common shares of the Company at various
    contractually fixed prices increasing each year over the next
    five years ranging from
    17.36 to
    22.15 per share. |  |      | 3,995  |   |      |   |       |  
|Bonds payable, US$1,316 and US$1,674 at December 31, 2004
    and 2003, respectively, interest at 5%, principal and interest
    due December 2006, unsecured.                                                                                                                                                                                                      |  |      | 1,584  |   |      |   | 2,163  |  
|Note payable to a bank,
    5,450 at
    December 31, 2004, interest at six-month Euribor plus 1.5%
    (resulting in a rate of 4.61%), interest and principal payments
    of $2,220
    (1,363) due
    semi-annually beginning June 2003, due in full December 2006,
    secured by commodity transactions receivables.                                        |  |      | 8,880  |   |      |   | 13,309 |  
|Note payable to a corporation, interest at six-month Euribor
    plus 2% (resulting in a rate of 3.98%), interest due annually
    and principal due on demand, secured by cash deposit of $3,421.                                                                                                                                                                  |  |      | 3,421  |   |      |   |       |  
|Note payable to a bank, interest at 10% due annually and
    principal due December 2009, secured by real estate.                                                                                                                                                                                                                                                   |  |      | 2,441  |   |      |   |       |  
|Note payable to a bank, interest at 3.5% due annually and
    principal due March 2006, secured by a building.                                                                                                                                                                                                                                                      |  |      | 1,581  |   |      |   |       |  
|Other                                                                                                                                                                                                                                                                                                                                                               |  |      | 654    |   |      |   | 1,485  |  
|                                                                                                                                                                                                                                                                                                                                                                    |  |      |        |   |      |  
|                                                                                                                                                                                                                                                                                                                                                                    |  |      | 22,556 |   |      |   | 33,297 |  
|Less current portion                                                                                                                                                                                                                                                                                                                                                |  |      | (8,173 | ) |      |   | (5,921 | )
|                                                                                                                                                                                                                                                                                                                                                                    |  |      |        |   |      |  
|                                                                                                                                                                                                                                                                                                                                                                    |  | $    | 14,383 |   |      | $ | 27,376 |  
|                                                                                                                                                                                                                                                                                                                                                                    |  |      |        |   |      |  



|         |  |        |        | 
|-------- |  | ------ | ------ | 
|Maturity |  | Amount |       
|         |  |        |       
|2005     |  | $      | 8,173  | 
|2006     |  |        | 7,657  | 
|2007     |  |        |       | 
|2008     |  |        | 290    | 
|2009     |  |        | 6,436  | 
|         |  |        |       
|         |  | $      | 22,556 | 
|         |  |        |       

Note 14. Income Taxes




|         |  |      |        |  |      |   |        |      |  |   |        | 
|-------- |  | ---- | ------ |  | ---- | - | ------ | ---- |  | - | ------ | 
|         |  | 2004 |        |  | 2003 |   |        | 2002 | 
|         |  |      |        |  |      |   |        |      | 
|Canadian |  | $    | 3,339  |  |      | $ | 4,587  |      |  | $ | 36,427 | 
|Foreign  |  |      | 35,076 |  |      |   | 45,798 |      |  |   | 10,753 | 
|         |  |      |        |  |      |   |        |      | 
|         |  | $    | 38,415 |  |      | $ | 50,385 |      |  | $ | 47,180 | 
|         |  |      |        |  |      |   |        |      | 

63



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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)




|        |          |      |       |        |      |   |      |      |   |   |       |        |  
|------- | -------- | ---- | ----- | ------ | ---- | - | ---- | ---- | - | - | ----- | ------ | -
|        |          | 2004 |       |        | 2003 |   |      | 2002 |  
|        |          |      |       |        |      |   |      |      |  
|Current |          |      |       |        |      |   |      |      |   |   |       |       
|        | Canadian |      | $     | (109   | )    |   | $    | (202 | ) |   | $     | (1,004 | )
|        | Foreign  |      |       | (1,247 | )    |   |      | (529 | ) |   |       | (589   | )
|Future  |          |      |       |        |      |   |      |      |   |   |       |       
|        | Canadian |      |       | (89    | )    |   |      | 221  |   |   |       | 301    |  
|        | Foreign  |      |       | 5,613  |      |   |      | (327 | ) |   |       | 4,789  |  
|        |          |      |       |        |      |   |      |      |  
|        |          | $    | 4,168 |        |      | $ | (837 | )    |   | $ | 3,497 |       
|        |          |      |       |        |      |   |      |      |  



|                                                       |                                                                                      |      |         |       |      |   |         |        |   |   |         |       | 
|------------------------------------------------------ | ------------------------------------------------------------------------------------ | ---- | ------- | ----- | ---- | - | ------- | ------ | - | - | ------- | ----- | 
|                                                       |                                                                                      | 2004 |         |       | 2003 |   |         | 2002   |  
|                                                       |                                                                                      |      |         |       |      |   |         |        |  
|Income before income taxes and minority interests      |                                                                                      | $    | 38,415  |       |      | $ | 50,385  |        |   | $ | 47,180  |      
|                                                       |                                                                                      |      |         |       |      |   |         |        |  
|Computed provision for income taxes at statutory rates |                                                                                      | $    | (12,339 | )     |      | $ | (17,191 | )      |   | $ | (17,041 | )    
|(Increase) decrease in taxes resulting from:           |                                                                                      |      |         |       |      |   |         |        |   |   |         |      
|                                                       | Nontaxable dividend income                                                           |      |         | 1,733 |      |   |         | 1,695  |   |   |         | 1,795 | 
|                                                       | Foreign statutory tax rate differences                                               |      |         | 1,926 |      |   |         | 3,740  |   |   |         | 2,286 | 
|                                                       | Other permanent differences                                                          |      |         | 933   |      |   |         | 4,731  |   |   |         | 7,807 | 
|                                                       | Valuation allowance, net of acquisitions                                             |      |         | 3,840 |      |   |         | 12,480 |   |   |         | 2,526 | 
|                                                       | Non-capital tax loss carryforwards lost from change in
    subsidiarys jurisdiction |      |         |      |      |   |         | (5,323 | ) |   |         |      | 
|                                                       | Non-capital tax loss carryforwards acquired from purchase of
    subsidiary          |      |         | 8,200 |      |   |         |       |   |   |         | 6,124 | 
|                                                       | Other, net                                                                           |      |         | (125  | )    |   |         | (969   | ) |   |         |      | 
|                                                       |                                                                                      |      |         |       |      |   |         |        |  
|Recovery of (provision for) income taxes               |                                                                                      | $    | 4,168   |       |      | $ | (837    | )      |   | $ | 3,497   |      
|                                                       |                                                                                      |      |         |       |      |   |         |        |  

64



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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)




|                                                                                        |                                                                 |                               |        |         |        |   |       |        |       |  
|--------------------------------------------------------------------------------------- | --------------------------------------------------------------- | ----------------------------- | ------ | ------- | ------ | - | ----- | ------ | ----- | -
|                                                                                        |                                                                 | 2004                          |        |         | 2003   |  
|                                                                                        |                                                                 |                               |        |         |        |  
|Future income tax assets:                                                               |                                                                 |                               |        |         |        |   |       |       
|                                                                                        | Non-capital tax loss carryforwards:                             |                               |        |         |        |   |       |        |      
|                                                                                        |                                                                 | Canada                        |        | $       | 1,900  |   |       | $      | 227   |  
|                                                                                        |                                                                 | Switzerland                   |        |         | 1,090  |   |       |        | 1,682 |  
|                                                                                        |                                                                 | Austria                       |        |         | 2,060  |   |       |        | 3,103 |  
|                                                                                        |                                                                 | Germany                       |        |         | 39,100 |   |       |        |      |  
|                                                                                        |                                                                 | England                       |        |         | 120    |   |       |        |      |  
|                                                                                        |                                                                 |                               |        |         |        |  
|                                                                                        |                                                                 |                               | 44,270 |         |        |   | 5,012 |       
|                                                                                        | Pension liability                                               |                               |        | 2,740   |        |   |       |       |      
|                                                                                        | Other                                                           |                               |        | 1,570   |        |   |       |       |      
|                                                                                        |                                                                 |                               |        |         |        |  
|                                                                                        |                                                                 |                               | 48,580 |         |        |   | 5,012 |       
|                                                                                        | Valuation allowance                                             |                               |        | (30,982 | )      |   |       | (5,012 | )    
|                                                                                        |                                                                 |                               |        |         |        |  
|                                                                                        |                                                                 | Future income tax assets      |        | $       | 17,598 |   |       | $      |      |  
|                                                                                        |                                                                 |                               |        |         |        |  
|Future income tax assets are included in the consolidated
    balance sheet as follows: |                                                                 |                               |        |         |        |   |       |       
|                                                                                        |                                                                 | Current                       |        | $       | 8,021  |   |       | $      |      |  
|                                                                                        |                                                                 | Non-current                   |        |         | 9,577  |   |       |        |      |  
|                                                                                        |                                                                 |                               |        |         |        |  
|                                                                                        |                                                                 | $                             | 17,598 |         |        | $ |      |       
|                                                                                        |                                                                 |                               |        |         |        |  
|Future income tax liabilities:                                                          |                                                                 |                               |        |         |        |   |       |       
|                                                                                        | Difference in tax basis of assets acquired in the United States |                               | $      |        |        |   | $     | (387   | )    
|                                                                                        | Uncompleted contracts                                           |                               |        | (4,606  | )      |   |       |       |      
|                                                                                        | Other                                                           |                               |        | (1,668  | )      |   |       |       |      
|                                                                                        |                                                                 |                               |        |         |        |  
|                                                                                        |                                                                 | Future income tax liabilities |        | $       | (6,274 | ) |       | $      | (387  | )
|                                                                                        |                                                                 |                               |        |         |        |  





|           |  |        |       |  |             |   |       |         |  |   |         |  |  |         |         |  |  |   |     | 
|---------- |  | ------ | ----- |  | ----------- | - | ----- | ------- |  | - | ------- |  |  | ------- | ------- |  |  | - | --- | 
|Year       |  | Canada |       |  | Switzerland |   |       | Austria |  |   | Germany |  |  | England |        
|           |  |        |       |  |             |   |       |         |  |   |         |  |  |         |        
|2005       |  | $      |      |  |             | $ |      |         |  | $ |        |  |  | $       |        |  |  | $ |    | 
|2006       |  |        | 4     |  |             |   |      |         |  |   |        |  |  |         |        |  |  |   |    | 
|2007       |  |        | 2,136 |  |             |   | 340   |         |  |   |        |  |  |         |        |  |  |   |    | 
|2008       |  |        |      |  |             |   | 250   |         |  |   |        |  |  |         |        |  |  |   |    | 
|2009       |  |        | 1,380 |  |             |   |      |         |  |   |        |  |  |         |        |  |  |   |    | 
|2010-2020  |  |        | 2,390 |  |             |   | 2,800 |         |  |   |        |  |  |         |        |  |  |   |    | 
|Indefinite |  |        |      |  |             |   |      |         |  |   | 6,430   |  |  |         | 121,700 |  |  |   | 375 | 
|           |  |        |       |  |             |   |       |         |  |   |         |  |  |         |        
|           |  | $      | 5,910 |  |             | $ | 3,390 |         |  | $ | 6,430   |  |  | $       | 121,700 |  |  | $ | 375 | 
|           |  |        |       |  |             |   |       |         |  |   |         |  |  |         |        

65



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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)


Note 15. Earnings Per Share




|                                                                    |                               |      |        |     |      |   |        |       |  |   |        |       | 
|------------------------------------------------------------------- | ----------------------------- | ---- | ------ | --- | ---- | - | ------ | ----- |  | - | ------ | ----- | 
|                                                                    |                               | 2004 |        |     | 2003 |   |        | 2002  | 
|                                                                    |                               |      |        |     |      |   |        |       | 
|Basic earnings from operations available to
    common shareholders |                               | $    | 36,951 |     |      | $ | 49,116 |       |  | $ | 50,755 |      
|Effect of dilutive securities                                       |                               |      |        |     |      |   |        |       |  |   |        |      
|                                                                    | Interest on convertible bonds |      |        | 327 |      |   |        | 1,599 |  |   |        | 1,735 | 
|                                                                    |                               |      |        |     |      |   |        |       | 
|Diluted earnings from operations                                    |                               | $    | 37,278 |     |      | $ | 50,715 |       |  | $ | 52,490 |      
|                                                                    |                               |      |        |     |      |   |        |       | 

|                                                                                   |                   |        |            |         |      |  |            |           |  |  |            |           | 
|---------------------------------------------------------------------------------- | ----------------- | ------ | ---------- | ------- | ---- |  | ---------- | --------- |  |  | ---------- | --------- | 
|                                                                                   |                   | Shares |           
|                                                                                   |                   |        |           
|                                                                                   |                   | 2004   |            |         | 2003 |  |            | 2002      | 
|                                                                                   |                   |        |            |         |      |  |            |           | 
|Basic earnings per share, weighted average number of common
    shares outstanding |                   |        | 13,520,221 |         |      |  | 13,054,727 |           |  |  | 12,931,117 |          
|Effect of dilutive securities:                                                     |                   |        |            |         |      |  |            |           |  |  |            |          
|                                                                                   | Convertible bonds |        |            | 298,153 |      |  |            | 1,020,951 |  |  |            | 1,030,038 | 
|                                                                                   | Options           |        |            |        |      |  |            | 52,943    |  |  |            | 209,006   | 
|                                                                                   |                   |        |            |         |      |  |            |           | 
|Weighted average number of common shares outstanding 
    diluted                 |                   |        | 13,818,374 |         |      |  | 14,128,621 |           |  |  | 14,170,161 |          
|                                                                                   |                   |        |            |         |      |  |            |           | 

Note 16. Stock Option Plan






|                                          |           |           |           |                  |                    |   |       |        |  
|----------------------------------------- | --------- | --------- | --------- | ---------------- | ------------------ | - | ----- | ------ | -
|                                          |           |           |           | Weighted Average |                   
|                                          |           | Number of |           |                  | Exercise Price Per |  
|                                          |           | Shares    |           |                  | Share              |  
|                                          |           |           |           |                  |                    |  
|Outstanding at December 31, 2001          |           |           | 1,025,000 |                  |                    | $ | 10.77 |       
|                                          | Exercised |           |           | (157,500         | )                  |   |       | (10.49 | )
|                                          | Forfeited |           |           | (372,500         | )                  |   |       | (11.43 | )
|Outstanding at December 31, 2002          |           |           | 495,000   |                  |                    |   | 10.05 |       
|                                          | Exercised |           |           | (487,500         | )                  |   |       | (10.04 | )
|                                          | Forfeited |           |           | (7,500           | )                  |   |       | (10.50 | )
|Outstanding at December 31, 2003 and 2004 |           |           |          |                  |                    | $ |      |       
|                                          |           |           |           |                  |                    |  

Note 17. Commitments and Contingencies




| |       
| | ------
| | Leases



|     |  |        |        | 
|---- |  | ------ | ------ | 
|Year |  | Amount |       
|     |  |        |       
|2005 |  | $      | 2,710  | 
|2006 |  |        | 5,257  | 
|2007 |  |        | 2,234  | 
|2008 |  |        | 1,495  | 
|2009 |  |        | 1,368  | 
|     |  |        |       
|     |  | $      | 13,064 | 
|     |  |        |       

66



---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)






| |           
| | ----------
| | Litigation





| |           
| | ----------
| | Guarantees






| |            
| | -----------
| | Regulations



Note 18. Interest Rate Sensitivity Position




Note 19. Pension Benefits








|                                                                             |                       |   |        |        |  
|---------------------------------------------------------------------------- | --------------------- | - | ------ | ------ | -
|Accrued benefit obligation, at the time of acquisition of MFC
    Industrial |                       | $ | 36,330 |       
|                                                                             | Current service cost  |   |        | 33     |  
|                                                                             | Interest cost         |   |        | 1,389  |  
|                                                                             |                       |   |       
|                                                                             | Net pension cost      |   |        | 1,422  |  
|                                                                             | Cash benefit payments |   |        | (1,468 | )
|                                                                             | Exchange difference   |   |        | 508    |  
|                                                                             |                       |   |       
|Accrued benefit obligation, end of year                                      |                       | $ | 36,792 |       
|                                                                             |                       |   |       



|                                        |  |  |     |  
|--------------------------------------- |  |  | --- | -
|Weighted average discount rate          |  |  | 5.5 | %
|Rate of increase in future compensation |  |  | 1.5 | %

67



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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)




Note 20. Business Segment Information






|                                                                  |              |                              |         |                |             |   |         |       |  |   |         |       | 
|----------------------------------------------------------------- | ------------ | ---------------------------- | ------- | -------------- | ----------- | - | ------- | ----- |  | - | ------- | ----- | 
|                                                                  |              | Year ended December 31, 2004 |        
|                                                                  |              |                              |        
|                                                                  |              |                              |         | Industrial and |             |   |        
|                                                                  |              | Financial                    |         |                | Engineering |   |         |      
|                                                                  |              | Services                     |         |                | Services    |   |         | Total | 
|                                                                  |              |                              |         |                |             |   |         |       | 
|Revenues from external customers                                  |              | $                            | 498,672 |                |             | $ | 199,092 |       |  | $ | 697,764 |      
|Intersegment revenues                                             |              |                              | 274     |                |             |   | 120     |       |  |   | 394     |      
|Interest expense                                                  |              |                              |         |                |             |   |         |       |  |   |         |      
|                                                                  | External     |                              |         | 3,904          |             |   |         | 3,539 |  |   |         | 7,443 | 
|                                                                  | Intersegment |                              |         | 120            |             |   |         | 80    |  |   |         | 200   | 
|Income from operations before income taxes and minority interests |              |                              | 21,359  |                |             |   | 17,056  |       |  |   | 38,415  |      

|                                                  |  |                         |         |                |             |   |         |       |  |   |         |  
|------------------------------------------------- |  | ----------------------- | ------- | -------------- | ----------- | - | ------- | ----- |  | - | ------- | -
|                                                  |  | As at December 31, 2004 |        
|                                                  |  |                         |        
|                                                  |  |                         |         | Industrial and |             |   |        
|                                                  |  | Financial               |         |                | Engineering |   |         |      
|                                                  |  | Services                |         |                | Services    |   |         | Total | 
|                                                  |  |                         |         |                |             |   |         |       | 
|Segment assets                                    |  | $                       | 359,491 |                |             | $ | 254,905 |       |  | $ | 614,396 |  
|Less: intercorporate investment                   |  |                         |         |                |             |   |         |       |  |   | (10,697 | )
|                                                  |  |                         |         |                |             |   |         |       | 
|Consolidated total assets                         |  |                         |         |                |             |   |         |       |  | $ | 603,699 |  
|                                                  |  |                         |         |                |             |   |         |       | 
|Equity method investments                         |  |                         | 10,353  |                |             |   | 8,137   |       |  |   | 18,490  |  
|Cash expenditures for capital assets and goodwill |  |                         | 1,426   |                |             |   | 2,267   |       |  |   | 3,693   |  



|              |  |      |         |  |      |   |         |      |  |   |         | 
|------------- |  | ---- | ------- |  | ---- | - | ------- | ---- |  | - | ------- | 
|              |  | 2004 |         |  | 2003 |   |         | 2002 | 
|              |  |      |         |  |      |   |         |      | 
|Canada        |  | $    | 10,042  |  |      | $ | 7,872   |      |  | $ | 26,006  | 
|Europe        |  |      | 403,804 |  |      |   | 391,282 |      |  |   | 254,564 | 
|United States |  |      | 46,320  |  |      |   | 9,563   |      |  |   | 3,559   | 
|Asia          |  |      | 207,320 |  |      |   |        |      |  |   |        | 
|Africa        |  |      | 23,522  |  |      |   | 796     |      |  |   | 210     | 
|Other         |  |      | 6,756   |  |      |   |        |      |  |   |        | 
|              |  |      |         |  |      |   |         |      | 
|              |  | $    | 697,764 |  |      | $ | 409,513 |      |  | $ | 284,339 | 
|              |  |      |         |  |      |   |         |      | 

68



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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)




|              |  |            |        |  |       |   |         |            |  |   |         |  |  |   |         | 
|------------- |  | ---------- | ------ |  | ----- | - | ------- | ---------- |  | - | ------- |  |  | - | ------- | 
|              |  | 2004       |        |  | 2003  |  
|              |  |            |        |  |       |  
|              |  | Long-lived |        |  | Total |   |         | Long-lived |  |   | Total   | 
|              |  |            |        |  |       |   |         |            |  |   |         | 
|Canada        |  | $          | 35,345 |  |       | $ | 74,359  |            |  | $ | 36,062  |  |  | $ | 58,884  | 
|Europe        |  |            | 40,560 |  |       |   | 427,587 |            |  |   | 20,179  |  |  |   | 271,778 | 
|United States |  |            | 302    |  |       |   | 36,171  |            |  |   |        |  |  |   | 15,047  | 
|Asia          |  |            | 932    |  |       |   | 42,868  |            |  |   |        |  |  |   |        | 
|Africa        |  |            | 191    |  |       |   | 9,330   |            |  |   | 58,165  |  |  |   | 58,868  | 
|Other         |  |            | 564    |  |       |   | 13,384  |            |  |   |        |  |  |   |        | 
|              |  |            |        |  |       |   |         |            |  |   |         | 
|              |  | $          | 77,894 |  |       | $ | 603,699 |            |  | $ | 114,406 |  |  | $ | 404,577 | 
|              |  |            |        |  |       |   |         |            |  |   |         | 



Note 21. Fair Value of Financial Instruments




|                                                      |  |          |         |  |       |   |         |          |  |   |         |  |  |   |         | 
|----------------------------------------------------- |  | -------- | ------- |  | ----- | - | ------- | -------- |  | - | ------- |  |  | - | ------- | 
|                                                      |  | 2004     |         |  | 2003  |  
|                                                      |  |          |         |  |       |  
|                                                      |  | Carrying |         |  | Fair  |   |         | Carrying |  |   | Fair    | 
|                                                      |  | Amount   |         |  | Value |   |         | Amount   |  |   | Value   | 
|                                                      |  |          |         |  |       |   |         |          |  |   |         | 
|Cash and cash equivalents (including restricted cash) |  | $        | 232,218 |  |       | $ | 232,218 |          |  | $ | 145,452 |  |  | $ | 145,452 | 
|Short-term securities                                 |  |          | 21,113  |  |       |   | 21,113  |          |  |   | 8,412   |  |  |   | 8,412   | 
|Loans                                                 |  |          | 26,865  |  |       |   | 26,865  |          |  |   | 16,872  |  |  |   | 16,872  | 
|Receivables                                           |  |          | 98,126  |  |       |   | 98,126  |          |  |   | 50,367  |  |  |   | 50,367  | 
|Accounts payable and accrued expenses                 |  |          | 160,012 |  |       |   | 160,012 |          |  |   | 53,705  |  |  |   | 53,705  | 
|Deposits                                              |  |          | 46,523  |  |       |   | 46,523  |          |  |   | 22,185  |  |  |   | 22,185  | 
|Notes payable and debt                                |  |          | 40,927  |  |       |   | 41,042  |          |  |   | 33,297  |  |  |   | 35,958  | 
|Interest rate swap derivative contract, liability     |  |          | 93      |  |       |   | 93      |          |  |   | 79      |  |  |   | 79      | 



Note 22. Transactions with Affiliates






69



---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)








Note 23. United States Generally Accepted
Accounting Principles




|                                               |                                          |                                                                                               |         |       |       |   |         |         |        |   |         |        |       |  
|---------------------------------------------- | ---------------------------------------- | --------------------------------------------------------------------------------------------- | ------- | ----- | ----- | - | ------- | ------- | ------ | - | ------- | ------ | ----- | -
|                                               |                                          | December 31                                                                                   |        
|                                               |                                          |                                                                                               |        
|                                               |                                          | 2004                                                                                          |         |       | 2003  |   |         | 2002    |       
|                                               |                                          |                                                                                               |         |       |       |   |         |         |       
|Reconciliation of Net Income                   |                                          |                                                                                               |         |       |       |   |         |         |        |   |         |       
|Net income in accordance with Canadian GAAP    |                                          | $                                                                                             | 36,951  |       |       | $ | 49,116  |         |        | $ | 50,755  |       
|Interest accretion on convertible bonds        |                                          |                                                                                               | 22      |       |       |   |        |         |        |   |        |       
|                                               |                                          |                                                                                               |         |       |       |   |         |         |       
|Net income in accordance with U.S. GAAP        |                                          | $                                                                                             | 36,973  |       |       | $ | 49,116  |         |        | $ | 50,755  |       
|                                               |                                          |                                                                                               |         |       |       |   |         |         |       
|Basic earnings per common share U.S. GAAP      |                                          | $                                                                                             | 2.73    |       |       | $ | 3.76    |         |        | $ | 3.93    |       
|                                               |                                          |                                                                                               |         |       |       |   |         |         |       
|Diluted earnings per common share U.S. GAAP    |                                          | $                                                                                             | 2.70    |       |       | $ | 3.59    |         |        | $ | 3.70    |       
|                                               |                                          |                                                                                               |         |       |       |   |         |         |       
|Retained earnings in accordance with U.S. GAAP |                                          | $                                                                                             | 208,453 |       |       | $ | 172,144 |         |        | $ | 194,758 |       
|                                               |                                          |                                                                                               |         |       |       |   |         |         |       
|Comprehensive Income                           |                                          |                                                                                               |         |       |       |   |         |         |        |   |         |       
|Net income in accordance with U.S. GAAP        |                                          | $                                                                                             | 36,973  |       |       | $ | 49,116  |         |        | $ | 50,755  |       
|Other comprehensive income, net of tax         |                                          |                                                                                               |         |       |       |   |         |         |        |   |         |       
|                                               | Foreign currency translation adjustment  |                                                                                               |         | 4,920 |       |   |         | (35,851 | )      |   |         | 14,281 |      
|                                               | Unrealized gains (losses) on securities: |                                                                                               |         |       |       |   |         |         |        |   |         |        |      
|                                               |                                          | Unrealized holding gains (losses) arising during the year                                     |         |       | 647   |   |         |         | (3,524 | ) |         |        | 2,151 |  
|                                               |                                          | Reclassification adjustment for gains realized in net income                                  |         |       |      |   |         |         | (182   | ) |         |        | (233  | )
|                                               |                                          | Reclassification adjustment for shares becoming trading
    securities                        |         |       | (58   | ) |         |         |       |   |         |        |      |  
|                                               |                                          | Reclassification adjustment for shares becoming subsidiaries or
    equity method investments |         |       | 3,257 |   |         |         |       |   |         |        |      |  
|                                               |                                          | Reclassification adjustment for other than temporary decline in
    value                     |         |       |      |   |         |         | 66     |   |         |        |      |  
|                                               |                                          |                                                                                               |         |       |       |   |         |         |       
|                                               |                                          | Net unrealized gains (losses)                                                                 |         |       | 3,846 |   |         |         | (3,640 | ) |         |        | 1,918 |  
|                                               |                                          |                                                                                               |         |       |       |   |         |         |       
|Other comprehensive income                     |                                          |                                                                                               | 8,766   |       |       |   | (39,491 | )       |        |   | 16,199  |       
|                                               |                                          |                                                                                               |         |       |       |   |         |         |       
|Comprehensive income                           |                                          | $                                                                                             | 45,739  |       |       | $ | 9,625   |         |        | $ | 66,954  |       
|                                               |                                          |                                                                                               |         |       |       |   |         |         |       

70



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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)




| |           
| | ----------
| | Securities







|                 |  |             |        |  |      |   |       | 
|---------------- |  | ----------- | ------ |  | ---- | - | ----- | 
|                 |  | December 31 |       
|                 |  |             |       
|                 |  | 2004        |        |  | 2003 |  
|                 |  |             |        |  |      |  
|Debt securities  |  | $           | 13,654 |  |      | $ | 580   | 
|Preferred shares |  |             | 903    |  |      |   | 1,096 | 
|Common shares    |  |             | 4,796  |  |      |   | 6,736 | 
|                 |  |             |        |  |      |  
|                 |  | $           | 19,353 |  |      | $ | 8,412 | 
|                 |  |             |        |  |      |  





| |                  
| | -----------------
| | Convertible Bonds





| |                                       
| | --------------------------------------
| | New United States Accounting Standards









71



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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)






72



---



##### 






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM












| |                           
| | --------------------------
| | /s/ Peterson Sullivan PLLC





73



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##### 



MFC BANCORP LTD.


SCHEDULE I: CONDENSED FINANCIAL INFORMATION OF REGISTRANT


BALANCE SHEETS


|                                      |                           |                        |         |         |      |   |         |         | 
|------------------------------------- | ------------------------- | ---------------------- | ------- | ------- | ---- | - | ------- | ------- | 
|                                      |                           | As at December 31,     |        
|                                      |                           |                        |        
|                                      |                           | 2004                   |         |         | 2003 |  
|                                      |                           |                        |         |         |      |  
|                                      |                           | (Dollars in thousands) |        
|ASSETS                               
|Current                               |                           |                        |         |         |      |   |         |        
|Cash and securities                   |                           | $                      | 253,331 |         |      | $ | 153,864 |        
|Loans                                 |                           |                        | 9,816   |         |      |   | 14,375  |        
|Receivables                           |                           |                        | 98,126  |         |      |   | 50,367  |        
|Commodity investments                 |                           |                        | 25,775  |         |      |   | 10,964  |        
|Inventories                           |                           |                        | 11,019  |         |      |   |        |        
|Real estate held for sale             |                           |                        | 42,924  |         |      |   | 3,380   |        
|Contract deposits, prepaid and other  |                           |                        | 21,819  |         |      |   | 2,267   |        
|Future income tax assets              |                           |                        | 8,021   |         |      |   |        |        
|                                      |                           |                        |         |         |      |  
|                                      | Total current assets      |                        |         | 470,831 |      |   |         | 235,217 | 
|Non-current                           |                           |                        |         |         |      |   |         |        
|Securities                            |                           |                        | 9,858   |         |      |   | 36,551  |        
|Loans                                 |                           |                        | 17,049  |         |      |   | 2,497   |        
|Property, plant and equipment         |                           |                        | 22,108  |         |      |   | 62,235  |        
|Resource property                     |                           |                        | 35,341  |         |      |   | 36,044  |        
|Goodwill                              |                           |                        | 20,445  |         |      |   | 16,127  |        
|Equity method investments             |                           |                        | 18,490  |         |      |   | 15,906  |        
|Future income tax assets              |                           |                        | 9,577   |         |      |   |        |        
|                                      |                           |                        |         |         |      |  
|                                      | Total non-current assets  |                        |         | 132,868 |      |   |         | 169,360 | 
|                                      |                           |                        |         |         |      |  
|                                      |                           | $                      | 603,699 |         |      | $ | 404,577 |        
|                                      |                           |                        |         |         |      |  
|                                     
|LIABILITIES AND SHAREHOLDERS EQUITY 
|Current liabilities                   |                           |                        |         |         |      |   |         |        
|Accounts payable and accrued expenses |                           | $                      | 160,012 |         |      | $ | 53,705  |        
|Notes payable and debt                |                           |                        | 26,544  |         |      |   | 5,921   |        
|Deposits                              |                           |                        | 46,523  |         |      |   | 22,185  |        
|Provision for warranty costs          |                           |                        | 11,641  |         |      |   |        |        
|Stock distribution payable            |                           |                        |        |         |      |   | 71,730  |        
|Future income tax liability           |                           |                        | 6,274   |         |      |   | 387     |        
|                                      |                           |                        |         |         |      |  
|                                      | Total current liabilities |                        |         | 250,994 |      |   |         | 153,928 | 
|Long-term liabilities                 |                           |                        |         |         |      |   |         |        
|Debt                                  |                           |                        | 14,383  |         |      |   | 27,376  |        
|Pension liabilities                   |                           |                        | 36,792  |         |      |   |        |        
|Other long-term liabilities           |                           |                        | 2,799   |         |      |   |        |        
|                                      |                           |                        |         |         |      |  
|                                      |                           |                        | 53,974  |         |      |   | 27,376  |        
|                                      |                           |                        |         |         |      |  
|                                      | Total liabilities         |                        |         | 304,968 |      |   |         | 181,304 | 
|Minority interests                    |                           |                        | 29,310  |         |      |   | 4,826   |        
|Shareholders equity                  |                           |                        | 269,421 |         |      |   | 218,447 |        
|                                      |                           |                        |         |         |      |  
|                                      |                           | $                      | 603,699 |         |      | $ | 404,577 |        
|                                      |                           |                        |         |         |      |  

74



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##### 



STATEMENTS OF OPERATIONS


|                                            |                                     |                         |         |         |      |   |         |         |  |   |         |         | 
|------------------------------------------- | ----------------------------------- | ----------------------- | ------- | ------- | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                                            |                                     | Year Ended December 31, |        
|                                            |                                     |                         |        
|                                            |                                     | 2004                    |         |         | 2003 |   |         | 2002    | 
|                                            |                                     |                         |         |         |      |   |         |         | 
|Financial services revenue                  |                                     | $                       | 498,672 |         |      | $ | 409,513 |         |  | $ | 284,339 |        
|Industrial and engineering services revenue |                                     |                         | 199,092 |         |      |   |        |         |  |   |        |        
|Expenses                                    |                                     |                         |         |         |      |   |         |         |  |   |         |        
|                                            | Financial services                  |                         |         | 430,945 |      |   |         | 329,549 |  |   |         | 175,792 | 
|                                            | Industrial and engineering services |                         |         | 158,329 |      |   |         |        |  |   |         |        | 
|                                            | General and administrative          |                         |         | 62,632  |      |   |         | 25,187  |  |   |         | 35,758  | 
|                                            | Goodwill impairment                 |                         |         |        |      |   |         |        |  |   |         | 16,116  | 
|                                            | Interest                            |                         |         | 7,443   |      |   |         | 4,392   |  |   |         | 9,493   | 
|Income taxes recovery (provision)           |                                     |                         | 4,168   |         |      |   | (837    | )       |  |   | 3,497   |        
|Minority interest                           |                                     |                         | (5,632  | )       |      |   | (432    | )       |  |   | 78      |        
|                                            |                                     |                         |         |         |      |   |         |         | 
|Net income                                  |                                     | $                       | 36,951  |         |      | $ | 49,116  |         |  | $ | 50,755  |        
|                                            |                                     |                         |         |         |      |   |         |         | 

STATEMENTS OF CASH FLOWS


|                                                    |  |                         |         |   |      |   |         |      |  |   |         |  
|--------------------------------------------------- |  | ----------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                    |  | Year Ended December 31, |        
|                                                    |  |                         |        
|                                                    |  | 2004                    |         |   | 2003 |   |         | 2002 | 
|                                                    |  |                         |         |   |      |   |         |      | 
|Net cash provided by operating activities           |  | $                       | 60,209  |   |      | $ | 37,363  |      |  | $ | 20,847  |  
|Net cash (used in) provided by investing activities |  |                         | 14,151  |   |      |   | 64,930  |      |  |   | (19,078 | )
|Net cash (used in) provided by financing activities |  |                         | 308     |   |      |   | (48,292 | )    |  |   | 13,524  |  
|Exchange rate effect on cash and cash equivalents   |  |                         | (4,398  | ) |      |   | (10,962 | )    |  |   | 9,954   |  
|                                                    |  |                         |         |   |      |   |         |      | 
|Net change in cash                                  |  |                         | 70,270  |   |      |   | 43,039  |      |  |   | 25,247  |  
|Cash and cash equivalents, beginning of year        |  |                         | 145,452 |   |      |   | 102,413 |      |  |   | 77,166  |  
|                                                    |  |                         |         |   |      |   |         |      | 
|Cash and cash equivalents, end of year              |  | $                       | 215,722 |   |      | $ | 145,452 |      |  | $ | 102,413 |  
|                                                    |  |                         |         |   |      |   |         |      | 

75



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##### 








|        |         
|------- | --------
|Item 19 | Exhibits



| |                               
| | ------------------------------
| | Exhibits Required by Form 20-F

|        |   |     |             |                                                                                                                                                                                                                                               
|------- | - | --- | ----------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |   |     |            
|Number  |   |     | Description
|        |   |     |            
|        | 1 | .1  |             | Articles of Amalgamation.(1)                                                                                                                                                                                                                  
|        | 1 | .2  |             | By-laws.(1)                                                                                                                                                                                                                                   
|        | 1 | .3  |             | Certificate of Continuance(6)                                                                                                                                                                                                                 
|        | 1 | .4  |             | Notice of Articles(6)                                                                                                                                                                                                                         
|        | 1 | .5  |             | Articles**                                                                                                                                                                                                                                    
|        | 2 | .1  |             | Master Trust Indenture between MFC and Norwest Bank Minnesota,
    National Association, as trustee, dated March 31, 1998.(1)                                                                                                                 
|        | 2 | .2  |             | Trust Indenture between MFC and Computershare Trust Company of
    Canada, dated January 7, 2004(7)                                                                                                                                           
|        | 4 | .1  |             | Memorandum of Agreement between MFC and Wabush Iron Co.
    Limited, Stelco Inc. and Dofasco Inc. dated
    November 24, 1987.(2)                                                                                                             
|        | 4 | .2  |             | Amendment to Mining Lease between MFC and Wabush Iron Co.
    Limited, Stelco Inc. and Dofasco Inc. dated
    January 1, 1987.(2)                                                                                                             
|        | 4 | .3  |             | First Amendment to Memorandum of Agreement between MFC and
    Wabush Iron Co. Limited, Stelco Inc. and
    Dofasco Inc.(2)                                                                                                                   
|        | 4 | .4  |             | Assignment Agreement between MFC and Prada Holdings Ltd. Dated
    as of January 1 1992.(1)                                                                                                                                                   
|        | 4 | .5  |             | Separation Agreement between Mercer International Inc. and
    MFC dated for reference March 29, 1996.(1)                                                                                                                                     
|        | 4 | .6  |             | Purchase Agreement between MFC and Volendam Securities C.V.
    dated for reference May 17, 1996.(1)                                                                                                                                          
|        | 4 | .7  |             | Purchase Agreement between MFC and Volendam Securities C.V.
    dated for reference May 27, 1996.(1)                                                                                                                                          
|        | 4 | .8  |             | Share Purchase Agreement between MFC and Frederick Wong dated
    June 6, 1996.(1)                                                                                                                                                            
|        | 4 | .9  |             | Subscription Agreement between MFC and Drummond Financial
    Corporation dated June 20, 1996.(1)                                                                                                                                             
|        | 4 | .10 |             | Share Purchase Agreement between MFC and Med Net
    International Ltd. Dated June 20, 1996.(1)                                                                                                                                               
|        | 4 | .11 |             | Share Purchase Agreement among MFC and various shareholders of
    Logan International Corp. dated June 20, 1996.(1)                                                                                                                          
|        | 4 | .12 |             | Subscription Agreement between Drummond Financial Corporation
    and Logan International Corp. dated June 20, 1996.
    Incorporate by reference to Logan
    International Corp.s Form 8-K dated
    June 27, 1996.                        
|        | 4 | .13 |             | Share Purchase Agreement between Lehman Brothers
    Bankhats AG and MFC dated October 3, 1996.(1)                                                                                                                                            
|        | 4 | .14 |             | Purchase Agreement between MFC and Robabond Holding AG dated
    June 27, 1997.(1)                                                                                                                                                            
|        | 4 | .15 |             | Share Purchase Agreement between MFC and Procom Holding AG dated
    September 22, 1997.(1)                                                                                                                                                   
|        | 4 | .16 |             | Supplementary Agreement to Share Purchase Agreement between MFC
    and Procom Holding AG dated September 22, 1997.(1)                                                                                                                        
|        | 4 | .17 |             | Agreement between MFC and the holders of MFCs Class A
    Preferred Shares dated December 1, 1996.(1)                                                                                                                                        
|        | 4 | .18 |             | Subscription Agreement between MFC and Logan
    International Corp. dated December 2, 1996.
    Incorporated by reference to MFCs Schedule 13D/A
    (Amendment No. 1) dated December 16, 1996 with respect
    to Logan International Corp.
|        | 4 | .19 |             | Shareholder Protection Rights Plan Agreement between MFC and
    Montreal Trust Company of Canada dated as of May 18,
    1993.(1)                                                                                                            
|        | 4 | .20 |             | Amended 1997 Stock Option Plan of MFC.(1)                                                                                                                                                                                                     
|        | 4 | .21 |             | Amended and Restated Employment Agreement between MFC and
    Michael J. Smith made effective as of November 20,
    2000.(1)                                                                                                                 
|        | 4 | .22 |             | Directors Indemnity Agreement between MFC and
    Michael J. Smith dated for reference November 20,
    2000.(1)                                                                                                                             
|        | 4 | .23 |             | Indemnity Agreement between MFC and Roy Zanatta dated for
    reference November 20, 2000.(1)                                                                                                                                                 

76



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##### 



|        |   |     |             |                                                                                                                                                                                                                                                                                                                                                         
|------- | - | --- | ----------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |   |     |            
|Number  |   |     | Description
|        |   |     |            
|        | 4 | .24 |             | Investment and Restructuring Agreement among Sutton Park
    International Limited, Garda Investments Corp., MFC,
    Glamiox Beteiligungsverwaltunds GmbH, Hovis GmbH,
    Jurriaan J. Hovis, Johannes Hovis and Ferdinand Steinbauer
    dated for reference October 1, 2001.(1)                                                                      
|        | 4 | .25 |             | Owners Agreement among Garda Investments Corp.,
    Glamiox Beteiligungsverwaltunds GmbH, Jurriaan J.
    Hovis and Ferdinand Steinbauer dated for reference
    October 1, 2004.(1)                                                                                                                                                                   
|        | 4 | .26 |             | Dividend Trust Settlement Agreement between MFC and The Dividend
    Trust Committee of the Board of Directors of MFC
    Bancorp Ltd. dated for reference December 21, 2001.(1)                                                                                                                                                                        
|        | 4 | .27 |             | Share Sale Agreement among Newmont Australia Limited, Newmont
    LaSource S.A.S., and MFC dated August 7, 2002.(4)                                                                                                                                                                                                                                     
|        | 4 | .28 |             | Royalty Deed among MFC, Newmont Australia Limited and Newmont
    LaSource S.A.S. dated August 7, 2002.(4)                                                                                                                                                                                                                                              
|        | 4 | .29 |             | Arrangement Agreement between Trimble Resources Corporation
    Resources Corporation and MFC dated May 17, 2002.(4)                                                                                                                                                                                                                                    
|        | 4 | .30 |             | Stock Purchase Agreement among Occidental (East Shabwa) LLC,
    Intercap Yemen, Inc. and MFC dated July 23, 2002.(4)                                                                                                                                                                                                                                   
|        | 4 | .31 |             | Share Purchase Agreement between Mazak Ltd. and Trident
    Alloys Ltd. dated July 24, 2003(5)                                                                                                                                                                                                                                                          
|        | 4 | .32 |             | Trust Indenture, dated January 7, 2004, between MFC
    Bancorp Ltd. and Computershare Trust Company of Canada, as
    Trustee, for the issuance of 4.4% Convertible Unsecured
    Subordinated Bonds due December 31, 2009.**                                                                                                                          
|        | 4 | .33 |             | General Security Agreement made as of October 11, 2004
    between Med Net International Ltd., as Debtor, and MFC
    Bancorp Ltd., MFC Commodities GmbH and Sutton Park
    International Ltd., as Secured Parties, as security for the
    present and future indebtedness of the Debtor and as a
    supplement to the existing demand guarantee.**  
|        | 4 | .34 |             | Share Pledge Agreement made as of October 12, 2004 between
    Med Net International Ltd., as Pledgor, and MFC
    Bancorp Ltd., MFC Commodities GmbH and Sutton Park
    International Ltd., as additional security for the Secured
    Liabilities.**                                                                                                 
|        | 4 | .35 |             | General Security Agreement made as of October 12, 2004
    between Lasernet Limited, as Debtor, and MFC Bancorp Ltd.,
    MFC Commodities GmbH and Sutton Park
    International Ltd., as Secured Parties, as security for the
    present and future indebtedness of the Debtor and as a
    supplement to the existing demand guarantee.**            
|        | 4 | .36 |             | Share Pledge Agreement made as of October 12, 2004 between
    Lasernet Limited, as Pledgor, and MFC Bancorp Ltd.,
    MFC Commodities GmbH and Sutton Park
    International Ltd., as additional security for the Secured
    Liabilities.**                                                                                                           
|        | 4 | .37 |             | Variation Agreement, dated December 22, 2004, between MFC
    Bancorp Ltd. and Sutton Park International Limited, varying
    MFC Bancorps interest obligation to Sutton Park
    International Limited in respect of the 4.4% Convertible
    Unsecured Subordinated Bond in the principal amount of
    6,786,436,
    maturing December 31, 2009.**
|        | 8 | .1  |             | Significant subsidiaries of MFC Bancorp Ltd.:                                                                                                                                                                                                                                                                                                           
|        |   |     |             | Blake International, Inc.                                                                                                                                                                                                                                                                                                                               
|        |   |     |             | MFC Merchant Bank S.A.                                                                                                                                                                                                                                                                                                                                  
|        |   |     |             | Sutton Park International Ltd.                                                                                                                                                                                                                                                                                                                          
|        |   |     |             | Trimble Resources Corporation                                                                                                                                                                                                                                                                                                                           
|        |   |     |             | 32565 Yukon Inc.                                                                                                                                                                                                                                                                                                                                        
|        |   |     |             | Robabond Holding AG                                                                                                                                                                                                                                                                                                                                     
|        |   |     |             | MFC Commodities AG                                                                                                                                                                                                                                                                                                                                      
|        |   |     |             | New Image Investment Company Limited                                                                                                                                                                                                                                                                                                                    
|        |   |     |             | Harfree Holdings Limited                                                                                                                                                                                                                                                                                                                                
|        |   |     |             | Constitution Insurance Company of Canada                                                                                                                                                                                                                                                                                                                
|        |   |     |             | Garda Investments Corp.                                                                                                                                                                                                                                                                                                                                 
|        |   |     |             | MFC Financial Services GmbH                                                                                                                                                                                                                                                                                                                             
|        |   |     |             | AWP Aluminium Walzprodukte GmbH                                                                                                                                                                                                                                                                                                                         
|        |   |     |             | MAW Mansfelder Aluminiumwerk GmbH                                                                                                                                                                                                                                                                                                                       
|        |   |     |             | DTA Holding AG                                                                                                                                                                                                                                                                                                                                          
|        |   |     |             | CVD Financial Corporation                                                                                                                                                                                                                                                                                                                               
|        |   |     |             | Winford Finance Corp.                                                                                                                                                                                                                                                                                                                                   
|        |   |     |             | Alson Enterprises Corp.                                                                                                                                                                                                                                                                                                                                 
|        |   |     |             | Mazak Limited                                                                                                                                                                                                                                                                                                                                           
|        |   |     |             | Mazak Slovakia s.r.o.                                                                                                                                                                                                                                                                                                                                   

77



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##### 



|        |    |      |             |                                                                                     
|------- | -- | ---- | ----------- | ------------------------------------------------------------------------------------
|Exhibit |    |      |            
|Number  |    |      | Description
|        |    |      |            
|        |    |      |             | Hovis Commodities Trading GmbH                                                      
|        |    |      |             | MFC Commodities GmbH                                                                
|        |    |      |             | JH Trade & Financial Service GmbH                                                   
|        |    |      |             | IC Management Service GmbH                                                          
|        |    |      |             | Global Bulk Transport GmbH                                                          
|        |    |      |             | MFC Pulp & Paper GmbH                                                               
|        |    |      |             | Danzas Corp.                                                                        
|        |    |      |             | HIT International AG                                                                
|        |    |      |             | HIT Paper Trading GmbH                                                              
|        |    |      |             | K-Logistics GmbH                                                                    
|        |    |      |             | MFC Industrial Holdings AG                                                          
|        |    |      |             | KHD Humboldt Wedag AG                                                               
|        |    |      |             | Rhine Venture Invest S.A.                                                           
|        |    |      |             | Zementanlagenbau Dessau GmbH                                                        
|        |    |      |             | EKOF Flotation GmbH                                                                 
|        |    |      |             | Humboldt Wedag Australia Pty Ltd.                                                   
|        |    |      |             | Humboldt Wedag Inc.                                                                 
|        |    |      |             | Humboldt Wedag (S.A.) (Pty) Ltd.                                                    
|        |    |      |             | Humboldt Wedag India Ltd.                                                           
|        |    |      |             | Altmark Industriepark AG                                                            
|        |    |      |             | Swiss Factoring AG                                                                  
|        |    |      |             | ZAB Industrietechnik & Service GmbH                                                 
|        |    |      |             | Med Net International Ltd.                                                          
|        |    |      |             | Lasernet Ltd.                                                                       
|        |    |      |             | Mednet (Shanghai) Medical Technical Developing Co., Ltd.                            
|        |    |      |             | MFC Shanghai Commodities Ltd.                                                       
|        |    |      |             | Lasernet Medical Equipment Industrial (Shenzhen) Co. Ltd.                           
|        |    |      |             | Chongqing MFC Medical Management Consulting Co., Ltd.                               
|        | 11 | .1   |             | Code of Ethics(7)                                                                   
|        | 12 | .1** |             | Section 302 Certification under Sarbanes-Oxley Act of 2002
    for Michael J. Smith.
|        | 13 | .1** |             | Section 906 Certification under Sarbanes-Oxley Act of 2002
    for Michael J. Smith 






|   |                
|-- | ---------------
|** | Filed herewith.



|    |                                                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------
|(1) | Incorporated by reference to our Form 20-Fs filed in
    prior years.                                               
|   
|(2) | Incorporated by reference to our Form 10-K for the year
    ended December 31, 1989.                                 
|   
|(3) | Incorporated by reference to our Schedule 13D dated
    June 27, 1996 with respect to Logan International Corp.      
|   
|(4) | Incorporated by reference to our Form 20-F filed with the
    Securities and Exchange Commission on April 28, 2003.  
|   
|(5) | Incorporated by reference to our Form 6-K filed with the
    Securities and Exchange Commission on August 7, 2003.   
|   
|(6) | Incorporated by reference to our Form 6-K filed with the
    Securities and Exchange Commission on November 23, 2004.
|   
|(7) | Incorporated by reference to our Form 20-F filed with the
    Securities and Exchange Commission on April 26, 2004.  

78



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##### 






SIGNATURE






| |                 
| | ----------------
| | MFC Bancorp Ltd.



| |      |                     
| | ---- | --------------------
| | Per: | /s/ Michael J. Smith

| |                                    
| | -----------------------------------
| |                                    
| | Michael J. Smith,                  
| | Chief Executive Officer            
| | (Principal Executive, Financial and
| | Accounting Officer)                



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