MERCURY  INDUSTRIES  BERHAD
(Company No. 105550 - K)

The  Board  of  Directors  is  pleased  to  announce  the  following :
UNAUDITED  INTERIM  REPORT  OF  THE  GROUP  FOR  THE  4TH  QUARTER   ENDED  31 DECEMBER  2003

CONDENSED CONSOLIDATED INCOME  STATEMENTS

			INDIVIDUAL  QUARTER	CUMULATIVE QUARTER	

Current Quarter	Preceding Year Corresponding Quarter	
Current          
Period      To  Date	Preceding
Year Corresponding Period	
			31/12/2003	31/12/2002	31/12/2003	31/12/2002	
			RM’000	RM’000	RM’000	RM’000	
1.		Revenue	7,995	7,593	29,572	30,458	
		Cost of sales	(5,798)	(5,580)	(21,156)	(22,684)	
		Operating expenses	(3,581)	(3,505)	(8,438)	(7,272)	
		Other operating income	688	219	751	312	
							
		Profit  from  operations	(696)	(1,273)	729	814	
		Interest  expense	(1)	Nil	(6)	(7)	
		Interest  income	1	2	3	4	
		Exceptional  items   	Nil              	Nil	Nil	Nil	
		Share of profits and losses of associated companies	
Nil	
Nil	
Nil	
Nil	
        		Profit  before income tax	(696)	(1,271)	726	811          	
		Income  tax 	138	633	(382)	(368)	
		Profit  after income tax  	(558)	(638)	344	443	
	a)	Net profit  from ordinary activities attributable  to  members  of  the  Company	(558)	(638)	344	443	
							
		Earnings per share based on 1(a) above :-					
		(a) Basic  (based  on  36,182,000 ordinary  shares)   (sen)             	
(1.54)	
(1.76)	
0.95	
1.22	

Note : For comparison purpose, the taxation figure in the Condensed Consolidated Income Statements for the financial quarter ended 31 December 2002 has been adjusted to reflect the effect of adopting MASB 25 – Income Taxes on the assumption that this accounting standard was being adopted then. 

The Condensed Consolidated Income Statements should be read in conjunction with the Annual Audited Financial Statements for the year ended  31 December 2002.

CONDENSED CONSOLIDATED  BALANCE  SHEETS					
				As  At                            End  of    Current     Quarter	As  At Preceding Financial  Year End		
				31/12/2003	31/12/2002		
				RM’000	RM’000		
1.	Property,  plant  and  equipment		8,656	8,787		
2.	Investment  in  unconsolidated  subsidiary  companies		-	-		
3.	Investment  in  associated  companies		-	-		
4.	Other investments		640	640		
5.	Deferred tax assets		                     241	304		
6.	Current  assets					
		Inventories		6,069	5,289		
		Trade  receivables		13,924	14,698		
		Cash and  bank  balances		3,172	3,342		
		Other  debtors,  deposits  and  prepayments		16,304	15,200		
				39,469	38,529		
7.	Current  liabilities						
		Trade  payables		2,453	3,047		
		Other  payables		28,812	27,879		
		Short  term  borrowings 		107	-		
		Provision  for  taxation		-	44		
				31,372	30,970 		
							
8.	Net  current  assets		8,097	7,559		
						
			17,634	17,290		
9.	Shareholders’  funds					
	Share  Capital		36,182	36,182		
	Reserves					
		Share  premium		81,819	81,819		
		(Accumulated  loss)		(102,218)	(102,562)		
		Reserve  arising  on  consolidation		1,851	1,851		
				(18,548)	(18,892) 		
			17,634	17,290		
						
10.	Net  tangible  assets  per  share  (sen)		48.74	47.79		
			
Note : For comparison purpose, the deferred tax asset and reserve on consolidation figures in the Condensed Consolidated Balance Sheets have been adjusted to reflect the effect of adopting MASB 25 – Income Taxes on the assumption that this accounting standard was being adopted then.
 
The Condensed Consolidated Balance Sheets should be read in conjunction with the Annual Audited Financial Statements for the year ended  31 December 2002.

CONDENSED  CONSOLIDATED  STATEMENT  OF CHANGES  IN  EQUITY

		< ---Non-distributable-- >
reserves			

	Issued
capital	Share
premium	Reserve
arising on 
consolidation	Accumulated
Loss	Total
shareholders’
equity	
The  Group	RM’000	RM’000	RM’000	RM’000	RM’000	
Balance as  of 1 January 2003						
As previously stated	36,182	81,819	2,005	(103,020)	16,986	
Prior years’ adjustments	-	-	(154)	458	304	
As restated 	36,182	81,819	1,851	(102,562)	17,290	
Net  profit  for  the  year	-	-	-	344	344	
Balance as of  31 December
 2003	
36,182	
81,819	
1,851	
(102,218)	
17,634	

Balance as  of 1 January 2002						
As previously stated	36,182	81,819	2,005	(103,450)	16,556	
Prior years’ adjustments	-	-	(154)	445	291	
As restated	36,182	81,819	1,851	(103,005)	16,847	
						
Net profit for the year						
As previously stated	-	-	-	430	430	
Prior years’ adjustments	-	-	-	13	13	
As restated 	-	-	-	443	443	

Balance as of  31 December
 2002	
36,182	
81,819	
1,851	
(102,562)	
17,290	
						
The Condensed Consolidated Statement of Changes in Equity should be read in conjunction with the Annual Audited Financial Statements for the year ended  31 December 2002.

CONDENSED  CONSOLIDATED CASH  FLOW  STATEMENTS
						12 months ended     31/12/2003	12 months ended 31/12/2002	
The  Group		RM’000	RM’000	
				
CASH  FLOWS  FROM/(USED IN)  OPERATING  ACTIVITIES			
Profit  before  tax	726	811	
Adjustments  for:			
	Non -cash  items	1,585	2,505	
	Non-operating  items	(1,512)	(1,514)	
	Operating  Profit  Before Working  Capital Changes	799	1,802	
				
Changes  in  working  capital			
	Net  change  in  current  assets	(940)	(1,178)	
	Net  change  in  current  liabilities	402	1,129	
				
Net  Cash  From/(Used)  In Operating  Activities	261	1,753	
			
CASH FLOWS FROM/(USED IN) INVESTING  ACTIVITIES			
Purchase of property, plant and equipment	(559)	(379)	
Proceeds  from  disposal of  property, plant  and  equipment	24	9	
Interest received	3	4	
Net  Cash  Used  In  Investing  Activities	(532)	(366)	
			
CASH FLOWS  USED  IN  FINANCING  ACTIVITY			
Finance cost  paid	(6)	(8)	
Net  Cash  Used  In  Financing  Activity	(6)	(8)	
			
NET  INCREASE/(DECREASE)  IN  CASH  AND  CASH  EQUIVALENTS	(277)	1,379	
			
CASH  AND CASH  EQUIVALENTS  AT  BEGINNING  OF  YEAR	3,342	1,963	
			
CASH  AND  CASH  EQUIVALENTS  AT  END OF  THE  YEAR	3,065	3,342	

The Condensed Consolidated Cash Flow Statement should be read in conjunction with the Annual Audited Financial Statements for the year ended  31 December 2002.

Notes  to  the  Interim  financial  report					
1.	Accounting  Policies
The  interim  financial  statements  are  unaudited  and  have  been  prepared  in compliance  with  MASB 26,  Interim  Financial  Reporting and part A of Appendix 9B of the Listing Requirements of Malaysia Securities Exchange Berhad (“MESB”). The  same accounting  policies  and  methods  of  computation  are  followed  in the quarterly  financial  statements  as  compared  with  the  annual  financial  statements  of  the  Group  for  the  year  ended  31  December  2002 except for MASB 25 – Income Taxes.
In prior periods, the tax effects of the transactions are recognised, using the ‘liability’ method, in the period such transactions entered into the determination of net income regardless of when they are recognised for tax purposes except where timing differences gave rise to net deferred tax asset, the tax effects were recognised generally on actual realisation.
Upon adoption of MASB 25, the Group changed its accounting policy to recognise all taxable temporary differences and to recognise deferred tax assets to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognized if the temporary differences arise from goodwill (or negative goodwill) or from initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit. 
The accounting change has been accounted for retrospectively and the effects on prior years have been taken up as prior years’ adjustments in the financial statements. 
The following accounts in prior year in the Consolidated Balance Sheets and Statement of Changes in Equity have been restated to reflect the effect of the accounting change.
	
Accumulated Loss
(RM’000)	
Reserve arising on Consolidation
(RM’000)	
Deferred Tax Asset
(RM’000)	

As of  31.12.2002, as previously stated	
 103,020	
2,005	
-	

Less: Prior years’ adjustment in relation to provision of deferred taxation	

        (458)	

(154)	

304	

As of  31.12.2002, as restated	
  102,562	
1,851	
304	

	

The  consolidated  financial  statements  include  the  financial  statements  of  the  Company  and  all  its  subsidiary companies   except  for  the  financial  statements  of   Jutai  Investments  and  its  subsidiary  companies  as  the  directors  are  of  the  opinion  that  the  Company  has  ceased  to  have  effective  control  and  influence  over  the  management  of  the  said   subsidiary  companies  as  a  result  of  the  on-going  intention  of  the  Company  to  eventually  dispose  of  the  said  subsidiary  companies.
The  non-consolidation  of  the  said  subsidiary  represents  a  non-compliance  with  the  applicable  approved  accounting  standards  of  the  Malaysian  Accounting  Standards  Board  Standard  11 - Consolidated  Financial  Statements  and  Investments  in  Subsidiaries,  which  requires  a  company  which  issues  consolidated  financial statements   to   consolidate  all  subsidiary  companies.
		
2.	Audit  Report  of  the  Group’s  preceding  Annual  Financial   Statements
The  audit  report  of  the  Group’s  annual  Financial   Statements  for the  year  ended  31  December  2002  was  qualified due to the non-compliance with the Malaysian Accounting Standards Board Standard 11 - Consolidated Financial  Statements and  Investments  in  Subsidiaries  as  mentioned  above.
		
3.	Seasonality or  cyclicality  of  interim  operations
The  Group’s  operation  are  not  significantly  affected  by  any  seasonal  or  cyclical  factors.
		
4.
	Unusual  items
There  were  no  unusual  items  that  have  a  material  effect  on  the  assets,  liabilities,  equity,  net  income  or  cash flows   during  the  financial  period  under  review  because  of  their  nature,  size,  or  incidence.		
			
5.	Material  changes  in  accounting  estimates
There  were  no  material  changes  in  accounting  estimates  of  amounts  reported  in  prior  quarters  of   the  current  financial  year  or   prior  financial  years.
		
6.	Issuances,   cancellations,  repurchases,  resale  and  repayments  of  debt  and  equity  securities
There  were  no  issuance,  cancellations,  repurchases,  resale  and  repayments  of  debt  and  equity  securities  for  the  current  quarter   and   period  to  date  ended   31 December  2003.
		
7.	Dividend  paid
No  dividend  is  paid   during  the  current   quarter  and   period  to  date  ended   31 December  2003.
		
8.	Segmental  Reporting		
	Segmental  report  for  the  financial  year  ended   31  December  2003  is  as  follows:		
	By  Industry
		Manufacturing of paints, retailing of  paints & related products	 Others	Eliminations 	Group				Assets employed	Assets employed	
			RM’000	RM’000	RM’000	RM’000					
	Revenue										
	External sales		29,572	-	-	29,572					
	Inter-segment		12,635	  1,512	(14,147)	-					
	Total  Revenue		42,207	 1,512	(14,147)	29,572					
											
	Results									
	Segment  result	1,092	(363)  	-	729					
	Profit  from operations				729					
	Interest expense				(6)					
	Interest  income				3					
	Profit  before  income  tax 				726					
	Income  tax				(382)					
	Net  profit  for  the  period				344					
										
	By  Geographical  market			Sales  revenue  by
 geographical market					
				YTD  December 2003	YTD  December 2002					
				RM ‘000	RM’000					
	Malaysia			24,424	24,408					
	Other  Countries			5,148	6,050					
					29,572	30,458					
					
9.
	Valuation  of  property,  plant  and  equipment
The  Group  does  not  state  any  assets  based  on  valuation  of   its  property,  plant  and  equipment. 
				
10.	Material  events  not  reflected  in  the  financial  statements
There  were  no  material   events  subsequent  to  the  end  of  the  period  under  review  that  have  not  been  reflected  in  the  financial  statement   of  the  period. 				
11.	Changes  in  the  composition  of  the  Group
There  is  no  change  in  the  composition  of  the  Group  in  the  current  quarter  ended  31  December  2003,   including  business  combinations,  acquisition  or  disposal  of  subsidiaries  and  long-term  investments,  restructurings  and  discontinuing  operations.				
12.	Changes  in  contingent  liabilities  or  contingent  assets
There  were  no  changes  in  the  contingent   liabilities  of  the  Group  since  the  last  annual  balance  sheet  date.  The  Company  has  issued  corporate  guarantees  to  certain  banks  for  credit  facilities  totalling  RM6.79  million  granted  to  its   subsidiary  companies.  Accordingly,  the  Company  is  contingently  liable  to  the  extent  of  credit  facilities  utilised  by  the  said  subsidiary  companies.
There  were  no  contingent  assets  as  at  the  end  of  the  current  quarter  and  as  of  the  last   annual  balance  sheet  date.				

Explanatory  notes  as  per  listing  requirements  of  MSEB			RM’000	
1.

	Review  of   Performance
The  Group  recorded  a  revenue  for  the twelve  months  ended  31  December  2003  of  RM29.57 million  against    RM30.46  million  registered  in  the  corresponding  period  in  2002,  representing  a  decrease  of  2.92%.  The  decrease  in  revenue  is  attributable  to  the  decrease  in  export  sales  of   paints  products.  The  Group  recorded  a  profit  before  income  tax  of  RM0.73  million  for  the  twelve  months  ended  31  December  2003  against  a  profit  before  income  tax  of  RM0.81  million  for  the  corresponding   period  in  2002.  The  decrease  in  profit  before  income  tax  is   mainly  attributable  to  higher  selling   and  administrative  expenses.		
		
2.	Comparison  with  Preceding  Quarter’s  Results
Revenue  for  the current  quarter  was   at  RM7.99  million  as  compared  to  the  preceding  quarter of   RM7.03 million,  representing    an   increase  of   13.66%.  The  Group  recorded  a  loss  before  income  tax  of  RM0.696   million  in  the  current  quarter  as  compared  to  a  profit  before  income  tax  of  RM0.458 million  for  the  preceding  quarter.  The  decrease  in  profit  before  income  tax  is  mainly  attributed  to  higher  selling  and  administrative  expenses.	
		
3.	Current  Year  Prospects
The  Board  of  Directors  expects  the   Group’s   performance  in  2004  to  be maintained.  The  Company  intends  to  re-look  into  the  China  market  by  setting  up  joint ventures  in  China   to  harness  the  potential  of  reduction  in  cost  of  production.    	
					
4.	Variance  from   Profit  Forecast
 This  note  is  not  applicable.				
					
5.	Income  Tax		Current Year  to date		
			31/12/2003		
			RM’000		
	Provision  for  current  taxation 		319		
	Provision  for  deferred  taxation		63		
			382		

	The  effective  tax  rate  is  higher  than  the  statutory  tax  rate  due  mainly  to  losses of  the  Company and  certain  subsidiary  companies  which,  for  tax  purposes,  cannot  be  offset  against  profits  of  the  other  subsidiary  companies  in  the  Group.		
			
6.	Profit  on  Sale  of  Unquoted  Investments  and/or  Properties
There  were  no  sales  of  unquoted   investments  and/or   properties   for  the  current  quarter  and   period  to  date  ended  31  December  2003.		

	

	
7.	Purchase or  Disposal  of  Quoted  Securities	
(a)	There  were  no  purchase  or  disposal  of  quoted  securities  for  the  current  quarter  and  period  to  date  ended  31  December  2003.		
(b)	As  at  31 December  2003, investments  in  quoted   securities  which  were  quoted  in  Malaysia  were  as   follows :		
		RM’000			
	i)     Quoted  shares  in  Malaysia  at  cost	3,136			
	ii)    Quoted  shares  in  Malaysia  at  carrying  value	   640			
	iii)   Market  value of  quoted  shares  as  at  31 December  2003      	   746                			

8.	Status  of  Corporate  Proposals
There  were  no  corporate  proposals  announced   but  not  completed  as  of  27  February  2004.
As  of  this  date  of  the  announcement,  the  Company  is  still  exploring  various  possibilities  and  avenues  to  meet  the  minimum  paid-up  capital  requirement  of  RM40  million  for  companies  listed  on  the  second  board  of  the  Malaysia  Securities  Exchange  Berhad. 		
			
9.

(a)	Group  Borrowings  &  Debt  Securities
As  of  31  December  2003:
Short term borrowings amounted to RM107,000 represents bank overdraft.		
(b)	There  were  no  long  term  borrowings.		
(c)   	There  were  no  borrowings  or  debt  securities  denominated  in  foreign  currencies. 		
			
10.	Financial  Instruments
The  Group  does  not  have  any  off   balance  sheet   financial  instruments   as  of  the  date  of  this  announcement.   		
			
11.
	Changes  in  Material  Litigation
There  were  no  changes  in  material  litigation  as  of  the  date  of  this  announcement. 		
			
12.	Dividend
No  dividend  is  recommended  for  the  4th  quarter  ended   31  December  2003.	 	
			
13.	Profit  per  ordinary  share
Net  profit  per  ordinary  share  is  calculated  by  dividing  the  Group’s  net  profit  for  the  current  quarter and  year-to-date  of   RM344,000 by  the  number  of  ordinary  shares  in  issue  of  36,182,000  during  the  year.