Interim Results

Ivory & Sime UK Smlr.Co's Trust PLC
8 November 2001


INTERIM RESULTS

Investment Objective

Ivory & Sime UK Smaller Companies Trust aims to achieve capital growth by
investing primarily in a portfolio of smaller companies quoted on the London
Stock Exchange.

Interim results for the six months ended 30 September 2001

o    Net asset value per share fell by 20.7%
o    Outperformance of 4.6% compared to the benchmark index.
o    Unchanged interim dividend of 1.0p per share


Results  
Over the six months to 30 September 2001, the Company's net asset value fell
by 20.7%.  This compares with a fall of 25.3% in the Company's benchmark
index, the FTSE SmallCap (ex Investment Companies) Index, over the same
period.  Towards the end of the period markets were dominated by the tragic
events in the United States of America on 11  September 2001.  The benchmark
index fell by over 20% during September alone.  The fact that no sector
recorded a positive return during September is further evidence of the
widespread nature of the decline.
 
It is too early to evaluate fully the impact on the global economy following
the attacks in the US but what is clear is that in the immediate aftermath
disruption of business activity was considerable. The extent of the correction
in share prices was justifiable given the increased likelihood of a US
economic recession and consequent further pressure on corporate profitability.

Earnings and Dividends  Group earnings per share were 2.75 pence per ordinary
share in respect of the six months ended 30 September 2001 (2000 - 3.66
pence).  The Board has declared an unchanged interim dividend of 1.0 pence per
ordinary share payable on 4 January 2002 to shareholders on the register on 7
December 2001. 

Portfolio There was a marked contrast in the performance of shares within the
portfolio. Those stocks with more defensive characteristics demonstrated more
resilience. Prime examples were to be found among the housebuilding and
construction stocks: Bovis, Westbury and Keller Group. Other contributors were
Thorntons, Macfarlane Group, Austin Reed and iSOFT.  Almost without exception
any combination of technology and US exposure was a recipe for
underperformance.  Given the fragile underlying sentiment new issue activity
was muted - the Company's participation was limited to one company, Parkman
Group, a consulting engineer.

In the current environment, the Board believes it is appropriate that the
Managers focus on the financial strength of stocks within the portfolio. 
Against a difficult trading background, this will be a key requirement for
success.  The coming months will provide opportunities for companies to use
that strength to enhance their competitive position. 

Shareholder Value  In common with most smaller company investment trusts the
discount on which the Company's shares trade has widened, a consequence of the
increased levels of economic uncertainty.   The Board continues to monitor the
level of discount and is continually evaluating means of enhancing shareholder
value.  Marketing activities have continued to attract new shareholders
principally through the Company's ZeroCharge TM Individual Savings Accounts
(Isas) and Investment Plans, although the Board has deferred certain specific
initiatives until the second half of the financial year.  However, the
Managers continue to communicate strategy to shareholders and stock market
analysts during these more demanding times.

Borrowings The Managers have maintained a high level of cash balances over the
reporting period.  Variable rate debt was repaid, the capital element of the
fixed rate loan is covered by cash and near cash instruments, and there are
additional cash balances of some £3 million. The Board is supportive of the
level of cash and near cash instruments held by the Managers whilst they
evaluate a number of potential investment opportunities. However, the Managers
consider that economic activity levels have not yet stabilised to the extent
that they can make rational appraisals of new business opportunities. The
Board and the Managers will continue to monitor developments closely.

Outlook Company valuations appear low by recent historic standards, yet this
must be tempered by the recognition that short-term earnings visibility is
limited for many businesses.   The Managers do not believe that the point has
been reached at which market participants can have any confidence in corporate
earnings projections.  However, central banks have acted decisively on
interest rates to mitigate the impact of falling asset prices and diminished
job security on consumer confidence.  The Managers believe that the global
co-ordination in monetary policy and the fiscal stimuli in the US will
ultimately provide a backdrop from which smaller companies can make a strong
recovery. 

For further information contact:

Stephen Grant/Gordon Hay Smith
Friends Ivory & Sime plc : tel. [phone]

 Group Balance Sheet (Unaudited)

                                            As at       As at       As at 
                                           30.9.01     30.9.00     31.3.01
                                            £'000       £'000       £'000
                     
Fixed Assets                     
Investments                                42,420       83,509       51,742
Net current assets/(liabilities)            4,470       (4,646)       5,569
                                          _______       _______      _______
                                           46,890       78,863       57,311
                     
Long term borrowings                       (7,000)      (7,000)      (7,000)
                                           _______       _______      _______
                                           39,890        71,863       50,311
                                           _______       _______      ______ 
                     
Equity Shareholders' funds                  39,890       71,863       50,311
                     
                     
Net asset value per ordinary share         182.40p       328.59p      230.04p

 
Group Statement Of Total Return (Unaudited)
(Incorporating the Revenue Account)
For the Six Months Ended 30 September 2001


                                                    Six Months ended
                                                    30 September 2001
                     
                                            Revenue       Capital       Total
                                             £'000        £'000       £'000
                     
Total gains and losses on investments         -          (10,486)    (10,486)
Realised exchange differences                 -                -          -
Warrants purchased for cancellation           -                -          -
Income                                       958               -         958
Investment management and secretarial fees  (124)           (177)       (301)
Other expenses                               (86)              -         (86)
                                            ______         ______      ______
Return before finance costs and taxation     748         (10,663)      (9,915)
                     
Interest payable                            (100)           (187)        (287)
                                            ______       ______        ______
Return on ordinary activities 
 before taxation                             648         (10,850)     (10,202)
                     
Tax on ordinary activities                   (47)             47            -
                                            ______        ______       ______
Return attributable to equity shareholders    601       (10,803)      (10,202)
                     
Dividends in respect of equity shares        (219)            -          (219)
                                            ______       ______       ______
Transfer to/(from) reserves                   382       (10,803)      (10,421)
                                            ______       ______       ______
Return per ordinary share (p):                     
Basic                                         2.75       (49.40)      (46.65)
Diluted (FRS 14)                               n/a          n/a          n/a

 
Group Statement Of Total Return (Unaudited)
(Incorporating the Revenue Account)
For the Six Months Ended 30 September 2000

                                                      Six months ended
                                                      30 September 2000
                     
                                              Revenue     Capital     Total
                                              £'000       £'000       £'000
                     
Total gains and losses on investments            -       (4,462)     (4,462)
Realised exchange differences                    -            -           -
Warrants purchased for cancellation              -          (36)        (36)
Income                                         1,194         -        1,194
Investment management and secretarial fees      (153)      (237)       (390)
Other expenses                                  (109)         -        (109)
                                              ______       ______      ______
Return before finance costs and taxation         932      (4,735)    (3,803)
                     
Interest payable                                (145)       (269)      (414)
                                               ______       ______    ______
Return on ordinary activities before taxation    787      (5,004)    (4,217)
                     
Tax on ordinary activities                        (7)           7         -
                                                ______     ______     ______
Return attributable to equity shareholders        780     (4,997)    (4,217)
                     
Dividends in respect of equity shares            (219)        -        (219)
                                               ______       _____      ______
Transfer to/(from) reserves                       561     (4,997)    (4,436)
                                               ______       _____      ______
Return per ordinary share (p):                     
Basic                                           3.66       (23.42)    (19.76)
Diluted (FRS 14)                                 n/a          n/a       n/a

 Group Statement of Total Return 
(Incorporating the Revenue Account)
For the Year Ended 31 March 2001

                                                      Year Ended
                                                    31 March 2001
                     
                                            Revenue       Capital      Total
                                            £'000          £'000       £'000
                     
Total gains and losses on investments           -        (25,093)    (25,093)
Realised exchange differences                   -              8           8
Warrants purchased for cancellation             -            (36)        (36)
Income                                      1,857              -       1,857
Investment management and secretarial fees   (308)          (459)       (767)
Other expenses                               (220)             -        (220)
                                         ________       _______       ________
Return before finance costs and taxation    1,329        (25,580)    (24,251)
                     
Interest payable                             (301)          (560)       (861)
                                           _______       _______       _______
Return on ordinary activities
 before taxation                             1,028       (26,140)    (25,112)
                     
Tax on ordinary activities                     (33)           33          -
                                          ________       _______       _______
Return attributable to equity
 shareholders                                  995       (26,107)    (25,112)
                     
Dividends in respect of equity shares         (875)            -        (875)
                                           ________       _______     _______
                     
Transfer to /(from) reserves                   120       (26,107)    (25,987)
                                           ________       _______     _______
Return per ordinary share (p):                     
Basic                                         4.61       (120.86)    (116.25)
Diluted (FRS 14)                              4.59       (120.32)    (115.73)

 
Summarised Unaudited Group Statement of Cash Flows

       
                              Six months to      Six months to      Year to
                              30 September       30 September       31 March
                              2001               2000               2001
                              £'000              £'000              £'000
                     
Net cash inflow from 
operating activities           434                 636              900
Servicing of finance          (344)               (356)            (811)
Taxation                         7                   -                -
Financial investment        (1,575)             (8,726)           3,533
Equity dividends paid         (656)               (580)            (799)
                     
Net cash (outflow)/inflow 
before financing            (2,134)             (9,026)           2,823
Financing                   (5,000)              5,710            5,710
                     
(Decrease)/increase in cash (7,134)             (3,316)           8,533
                     
                     
Reconciliation of net cash flow 
to movement in net debt              
                     
(Decrease)/increase in cash (7,134)             (3,316)           8,533
Loans drawn down                 -              (5,000)          (5,000)
Loans repaid                 5,000                   -                -
Changes in net debt 
resulting from cash         (2,134)             (8,316)           3,533
Flows                     
Currency gains                 -                    -                 8
                     
Movement in net debt        (2,134)             (8,316)           3,541
Net debt at 1 April           (665)             (4,206)          (4,206)
                     
Net debt at 
30 September/31 March       (2,799)            (12,522)            (665)
                     
Reconciliation of net return before 
finance costs and taxation to net cash
inflow from operating activities        

Net return before finance 
costs and taxation             748                 932            1,329
Investment management fee 
charged to capital            (177)               (237)            (459)
Changes in working capital 
and other non-cash items      (137)                (59)              30
                     
Net cash inflow from 
operating activities           434                  636             900



Notes

1.  The unaudited interim results have been prepared on the basis of the
accounting policies set out in the statutory accounts of the Group for the
year ended 31 March 2001.

2.  Earnings for the first six months should not be taken as a
guide to the results for the full year.

3.  Basic return per ordinary share is based on a weighted average of
21,870,260 ordinary shares in issue during the period (2000 - 21,335,297).

4.  The interim dividend of 1.00 pence per ordinary share will be paid on
4 January 2002 to shareholders on the Register on 7 December 2001.

5.  There were 21,870,260 ordinary shares in issue at 30 September 2001
(31 March 2001 and 30 September 2000 - 21,870,260).

6.  The group results consolidate those of I&S UK Securities Limited, a
wholly owned subsidiary which deals in securities.

7.  These are not statutory accounts in terms of Section 240 of the Companies
Act 1985 and are unaudited.  Statutory accounts for the year to 31 March 2001,
which received an unqualified audit report, have been lodged with the
Registrar of Companies.  No statutory accounts in respect of any period after
31 March 2001 have been reported on by the Company's auditors or delivered to
the Registrar of Companies.

8.  Copies of the Interim Report, which has been reviewed by the Company's
auditors, will be mailed to shareholders and will be available for inspection
at the Registered Office of the Company, One Charlotte Square, Edinburgh, EH2 
4DZ


Managed by Friends Ivory & Sime plc