Interim Results

Shires Smaller Companies PLC
12 September 2002

News Release



12 September 2002


Shires Smaller Companies plc
Interim Results for the
Six months to 30 June 2002


Shires Smaller Companies plc aims to provide a high and growing dividend and
capital growth from a portfolio invested principally in the ordinary shares of
smaller UK companies and UK fixed income securities.

                                                           30 June 2002         31 December 2001
Net assets attributable to shareholders                          £42.8m                   £44.3m
Net asset value per share                                        195.4p                   202.4p
Share Price                                                      202.0p                   196.5p
Premium/(Discount)                                                 3.4%                   (2.9)%
Dividends per share                                                6.0p                    6.0p*


* Half year to 30 June 2001

  • Total return on net assets was -0.5%, significantly better than the FTSE
    SmallCap Index (excluding Investment Companies), which returned -9.6% and
    the FTSE All-Share Index, which returned -8.9%.
  • Return to shareholders was +5.9%, better than the return on net assets
    because the discount of 2.9%, at which the price stood to net asset value
    per share at 31 December 2001, was replaced by a premium of 3.4% at 30 June
    2002.
  • Second interim dividend of 3.0p has been declared, making total dividends
    for the period to 30 June 2002 6.0p.
  • The yield on the company's ordinary shares was 7.5% at the closing price
    of 184.5p on 31 August 2002.
  • At 30 June 2002 investments in ordinary shares amounted to 114.4% and
    exposure to fixed income securities 62.2% of net assets.



For further information, please contact:-


Susan Murray,
Marketing Director,
Glasgow Investment Managers,
0141 572 2700


Chairman's Statement


Background


The first half of 2002 was a volatile and uncertain period for the world's
stockmarkets.  After a subdued start to the year, ordinary share prices rose in
response to improving trends in economic statistics, until the collapse of
Enron, the bankruptcy of WorldCom and news of other major accounting
irregularities in the USA severely undermined investor confidence and equity
markets fell back towards the levels seen after the terrorist atrocities last
September.



Investment Returns



Against this difficult background, the portfolio of Shires Smaller Companies
performed well.  The total return on net assets was -0.5%, well ahead of the
returns of -9.6% on the FTSE Small Cap Index (excluding Investment Companies)
and -8.9% on the FTSE All-Share Index.



The total return to shareholders was +5.9%, better than the return on net assets
because the discount of 2.9%, at which the share price stood to net asset value
per share at 31 December 2001, was replaced by a premium of 3.4% at 30 June
2002.



Earnings and Dividends



Earnings per share, at 6.08p, were lower than last year, largely due to the
default on the Energis 9.125% 2005/10 bond, but also because the income from the
fixed interest portfolio fell a little as it was reorganised to raise its
overall quality.



The Board has declared a second interim dividend of 3.0p per share, to be paid
on 30 September 2002 to shareholders on the Register at close of business on 6
September 2002.  A first interim dividend of 3.0p was paid on 28 June 2002.
Total dividends paid and declared to date this year are, therefore, at the same
level as last year.



The yield on the company's ordinary shares was 7.5% at the closing price of
184.5p on 31 August 2002.



Portfolio Profile



At 30 June 2002 the Company's investments in ordinary shares amounted to 114.4%
and exposure to fixed income securities 62.2% of net assets.  Total gearing of
76.6% of net assets was up from 67.1% at 31 December 2001, due partly to the
fall in value of net assets as the stockmarket weakened and partly to an
increase in short-term borrowing.




Outlook



The recent falls in share prices have fuelled concerns that the resulting
reduction in personal wealth may adversely affect the confidence of consumers
and their propensity to spend, thus delaying the recovery in business activity
upon which stockmarket ratings have been based.  With the UK stockmarket
depressed by this gloomy outlook there is no shortage of attractive
opportunities among the higher yielding ordinary shares in which Shires Smaller
Companies invests.



The Interim Report will be mailed to shareholders on 19 September 2002.  Copies
may be obtained from the Managers, Glasgow Investment Managers Limited,
Sutherland House, 149 St Vincent Street, Glasgow G2 5DR after that date.



J Stubbs
(Chairman)



Consolidated Statement of Total Return
(incorporating the Revenue Account)
for the half year ended 30 June 2002


                                                                      Half year to 30 June 2002
                                                                             (unaudited)
                                                                      Revenue      Capital         Total
                                                                         £000         £000          £000
Net losses on investments                                                   -        (624)         (624)
Dividends and interest receivable                                       1,969            -         1,969
Profits less losses of dealing subsidiary                                (30)            -          (30)
Underwriting commission                                                     2            -             2
Investment management fee                                               (156)        (156)         (312)
Other administrative expenses                                           (135)            -         (135)

Net return before finance costs
and taxation                                                            1,650        (780)           870

Finance costs of borrowings                                               309          309           618
Zero coupon finance                                                         -          469           469

Return on ordinary activities
before taxation                                                         1,341      (1,558)         (217)

Taxation                                                                   10         (10)             -

Return on ordinary activities
after taxation for the period                                           1,331      (1,548)         (217)

Dividends on equity shares                                              1,313            -         1,313

Transfer to/(from) reserves                                                18      (1,548)       (1,530)

Return per share                                                        6.08p      (7.07)p       (0.99)p

Dividends per share                                                     6.00p






Consolidated Statement of Total Return
(Continued)


             Half year to 30 June 2001                          Year to 31 December 2001
                    (unaudited)                                         (audited)
Revenue            Capital          Total           Revenue           Capital           Total
£000               £000             £000            £000              £000              £000
-                  (2,852)          (2,852)         -                 (6,356)           (6,356)
2,109              -                2,109           4,092             -                 4,092
-                  -                -               26                -                 26
10                 -                10              7                 -                 7
(171)              (171)            (342)           (321)             (321)             (642)
(97)               -                (97)            (216)             -                 (216)


1,851              (3,023)          (1,172)         3,588             (6,677)           (3,089)
321                321              642             629               629               1,258
-                  520              520             -                 892               892


1,530              (3,864)          (2,334)         2,959             (8,198)           (5,239)
-                  -                -               -                 -                 -


1,530              (3,864)          (2,334)         2,959             (8,198)           (5,239)
1,313              -                1,313           3,009             -                 3,009


217                (3,864)          (3,647)         (50)              (8,198)           (8,248)

6.99p              (17.66)p         (10.67)p        13.52p            (37.45)p          (23.93)p

6.00p                                               13.75p



Group Balance Sheet and Distribution of Assets
as at 30 June 2002


                                                           30 June 2002         31 December 2001
                                                            (unaudited)            (audited)
                                                              £000         %          £000        %
Fixed assets
Investments listed on the London Stock Exchange
-ordinary shares                                            48,934     114.4        46,549    105.1
-convertibles                                                4,428      10.4         3,592      8.1
-other fixed interest                                            -         -            83      0.1
Corporate bonds                                             22,165      51.8        23,794     53.8

                                                            75,527     176.6        74,018    167.1
Current assets
Debtors                                                      2,372                     923
Dealing Investments                                            141                       -

                                                             2,513                     923
Creditors: amounts falling due within one year              11,584                   7,427

Net current liabilities                                    (9,071)    (21.2)       (6,504)   (14.7)

Total assets less current liabilities                       66,456     155.4        67,514    152.4
Creditors: amounts falling due after
more than one year
Long-term loan                                             (9,981)    (23.3)       (9,978)   (22.5)
Zero coupon finance                                       (13,713)    (32.1)      (13,244)   (29.9)

Net assets                                                  42,762     100.0        44,292    100.0

Capital and reserves
Called up share capital                                     10,943                  10,943
Share premium account                                       11,490                  11,490
Capital redemption reserve                                   2,032                   2,032
Realised capital reserve                                    13,370                  14,833
Unrealised capital reserve                                   4,092                   4,177
Revenue reserve                                                835                     817

Equity shareholders' funds                                  42,762                  44,292

Net asset value per share                                   195.4p                  202.4p


Note: These are not statutory accounts under section 240 of the Companies Act
1985 and are unaudited. The information relating to the group balance sheet at
31 December 2001 is an extract from the latest audited accounts which have been
delivered to the Registrar of Companies; the report of the auditors on these
accounts was unqualified and did not contain a statement under Section 237(2) or
(3) of the Companies Act 1985.


Consolidated Cash Flow Statement
for the half year ended 30 June 2002


                                                         Half year to       Half year to           Year to
                                                              30 June            30 June       31 December
                                                                 2002               2001              2001
                                                          (unaudited)        (unaudited)         (audited)
                                                                 £000               £000              £000

Net cash inflow from operating activities                       1,634              1,754             3,374
Servicing of finance
Interest paid                                                   (610)              (680)           (1,268)
Income tax paid                                                     -                  -              (90)

Investing activities
Purchases of investments                                      (9,292)           (21,330)          (39,466)
Sales of investments                                            7,047             19,253            37,937
                                                              (2,245)            (2,077)           (1,529)

Equity dividends paid                                         (1,697)            (1,203)           (2,516)

Net cash outflow before financing                             (2,918)            (2,206)           (2,029)

Financing
Debt due within one year
 - increase in short-term borrowings                            2,500                500                 -

Decrease in cash                                                (418)            (1,706)           (2,029)

Analysis of Changes in Net Debt
                                                   As at                              Other         As at
                                             31 December              Cash         non-cash       30 June
                                                    2001             flows          changes          2002
                                                    £000              £000             £000          £000
Bank overdrafts                                  (1,179)             (418)                -       (1,597)
Short-term borrowings                            (5,000)           (2,500)                -       (7,500)
Long-term loan                                   (9,978)                 -              (3)       (9,981)
Zero coupon finance                             (13,244)                 -            (469)      (13,713)

                                                (29,401)           (2,918)            (472)      (32,791)


                      This information is provided by RNS
            The company news service from the London Stock Exchange