Final Results

Scottish Oriental Smlr Co Tst PLC
20 October 2005


               THE SCOTTISH ORIENTAL SMALLER COMPANIES TRUST PLC

             Preliminary Results for the year ended 31 August 2005
                     (Extracted from the Audited Accounts)

The Board of The Scottish Oriental Smaller Companies Trust PLC is pleased to
announce the results for the year ended 31 August 2005.

These results are presented in a format which summarises the information which
will be given in the forthcoming Annual Report.

Financial Highlights

   • The share price rose by 35.7% from 156.75p to 212.75p.

   • The warrant price rose by 61.9% from 69.50p to 112.50p.

   • Fully diluted net asset value per ordinary share rose by 29.3% from
     169.14p to 218.64p and undiluted net asset value rose by 33.0% from 180.50p
     to 240.12p.

   • This compares with a rise of 28.7% in the benchmark index - the MSCI AC
     Asia (ex Japan) Index.

   • The Nomura Asia Small Cap Index rose 26.0% and the FTSE All-Share Index
     rose 24.1% respectively over the same period.

   • A final dividend of 2.6p net is recommended to be paid on 27th January
     2006 to shareholders registered on 16th December 2005.


Statement of Total Return for the year ended 31 August 2005

                                            2005                          2004
                                Income*   Capital    Total    Income*   Capital    Total
                                 £'000     £'000     £'000     £'000     £'000     £'000

Gains on investments               -      14,774    14,774       -       1,326     1,326
Income from investments          2,080       -       2,080     1,467       -       1,467
Other income                      182        -        182       100        -        100
Investment management fees       (562)       -       (562)     (480)       -       (480)
Currency gains                     -        100       100        -        28        28
Other administrative expenses    (297)       -       (297)     (272)       -       (272)

Net return before finance        1,403    14,874    16,277      815      1,354     2,169
costs and taxation
Finance costs of borrowing       (36)        -       (36)      (36)        -       (36)

Return on ordinary activities    1,367    14,874    16,241      779      1,354     2,133
before taxation
Tax on ordinary activities       (407)      29       (378)     (232)     (63)      (295)

Return attributable to equity     960     14,903    15,863      547      1,291     1,838
shareholders
Ordinary dividends on equity     (663)       -       (663)     (401)       -       (401)
shares

Transfer to reserves **           297     14,903    15,200      146      1,291     1,437

Basic Return per ordinary        3.77p    58.47p    62.24p     2.14p     5.05p     7.19p
share
Fully diluted return per         3.47p    53.87p    57.34p     2.00p     4.72p     6.72p
ordinary share (in accordance
with FRS 14)

* The income column of this statement is the Profit and Loss Account of the
Company.
All income and capital items derive from continuing operations.
** after dividend proposed for 2005 - £662,704 (2004: £401,359)

Summary Balance Sheet as at 31 August 2005

                                           2005                 2004
                                      £'000     £'000     £'000      £'000

Total investments                              57,290               46,934
Current Assets:
Debtors                               1,090                 337
Cash and deposits                     7,486               2,903
                                      8,576               3,240
Current Liabilities (due within one
year)
Creditors                              (569)               (319)
Dividend payable                       (663)               (401)
                                     (1,232)               (720)
Net current assets                              7,344                2,520
                                               64,634               49,454
Creditors (due after one year)
Foreign currency loan                          (3,353)              (3,404)
Provision for liabilities and
charges
Deferred tax                                      (78)                 (53)
Shareholders' funds                            61,203               45,997

Capital and reserves                           61,203               45,997

Net asset value per share -                    240.12p              180.50p
undiluted
Net asset value per share - fully              218.64p              169.14p
diluted


Summary Cash Flow Statement for the year ended 31 August 2005

                                                     2005          2004
                                                    £'000         £'000

Net cash inflow from operating activities           1,334          827
Interest paid on borrowings                           (36)         (36)
Taxation                                             (233)        (204)
Net cash inflow/(outflow) from capital
expenditure and financial investment                3,913       (1,586)
Equity dividend paid                                 (401)        (382)
Financing                                               6           13
Increase/(decrease) in cash                         4,583       (1,368)

(a) Reconciliation of total income to net cash inflow from operating activities

                                                      2005          2004
                                                     £'000         £'000

Income                                               2,261         1,567
Administration expenses                               (859)         (752)
Increase in debtors                                     (8)           (7)
Increase in dividends accounted for but not yet       (100)           (7)
received
Increase in creditors                                   40            26
Net cash inflow from operating activities            1,334           827

(b) Analysis of changes in cash and net debt during the year

                            At the start    Cash      Currency    At the end
                            of the year     Flows     Movements  of the year
                               £'000        £'000       £'000       £'000
Cash                           2,903        4,583           -       7,486
Foreign Currency Loan         (3,404)           -          51      (3,353)
Net (debt)/cash                 (501)       4,583          51       4,133

BOARD STATEMENT

Scottish Oriental had a good year. The share price total return, that is taking
the increase in the share price and the dividend together, was 36%. This was a
result of a narrowing in the fully diluted discount to net asset value per share
(2.7% at 31st August 2005), and a satisfactory increase in the fully diluted net
asset value per share of 29.3%. The MSCI AC Asia (ex Japan) Index and the Nomura
Asia Small Cap Index increased in sterling terms by 28.7% and 26% respectively.

During the year the Board reviewed the terms of Scottish Oriental's investment
management agreement with First State Investment Management (UK) Limited ('the
Manager'), who asked the Board to consider the introduction of a performance
element into the fee. The Board had taken the view that the existing arrangement
served the Company well and that there was no advantage in changing it. However,
the Board now consider that a performance fee designed to encourage the Manager
to concentrate on the share price total return of Scottish Oriental is in the
interest of shareholders. Consequently the Board has negotiated a halving in the
basic fee to 0.5% with effect from 1st September 2005 and the introduction of a
performance element. The Board was required by the UK Listing Authority to seek
an opinion that the terms of this arrangement were fair and reasonable and has
been advised by Brewin Dolphin Securities that this is the case. Details of the
performance fee and changes to the investment management agreement are shown in
Appendix 1 below.

The Board is seeking power to buy back Scottish Oriental shares. This power
would only be used in circumstances that produce a clear benefit for continuing
shareholders. Any shares that are bought under this authority will be cancelled.

The Board continues to be optimistic about the longer term prospects for smaller
companies and is particularly heartened by the growth in dividends experienced
over the year.

+-------------------------------------------------------------------------+
|Performance for the year ended 31 August 2005                            |
+----------------------------+--------+--------------------------+--------+
|                            |        |                          |        |
+----------------------------+--------+--------------------------+--------+
|Net Asset Value - fully     |  +29.3%|MSCI AC Asia (ex Japan)   |  +28.7%|
|diluted                     |        |                          |        |
+----------------------------+--------+--------------------------+--------+
|- undiluted                 |  +33.0%|Index (£)                 |        |
+----------------------------+--------+--------------------------+--------+
|                            |        |Nomura Asia Small Cap     |  +26.0%|
+----------------------------+--------+--------------------------+--------+
|Share Price                 |  +35.7%|Index (£)                 |        |
+----------------------------+--------+--------------------------+--------+
|Warrant Price               |  +61.9%|FTSE All-Share Index (£)  |  +24.1%|
+----------------------------+--------+--------------------------+--------+
|                            |        |                          |        |
+----------------------------+--------+--------------------------+--------+
|Performance 31st August 1995 to 31st August 2005                         |
+----------------------------+--------+--------------------------+--------+
|                            |        |                          |        |
+----------------------------+--------+--------------------------+--------+
|Net Asset Value - fully     | +106.2%|MSCI AC Asia (ex Japan)   |   -5.0%|
|diluted                     |        |                          |        |
+----------------------------+--------+--------------------------+--------+
|- undiluted                 | +123.9%|Index (£)                 |        |
+----------------------------+--------+--------------------------+--------+
|                            |        |FTSE All-Share Index (£)  | +111.1%|
|                            |        |                          |        |
+----------------------------+--------+--------------------------+--------+

+---------------------------------------------------------------------------+
|                                                                           |
|Summary Data at 31 August 2005                                             |
+----------------------------+----------+-------------------------+---------+
|                            |          |                         |         |
+----------------------------+----------+-------------------------+---------+
|Shares in issue             |25,488,602|Shareholders' Funds      |  £61.20m|
+----------------------------+----------+-------------------------+---------+
|Warrants in issue           | 4,725,048|Market Capitalisation    |  £54.23m|
+----------------------------+----------+-------------------------+---------+
|                            |          |                         |         |
+----------------------------+----------+-------------------------+---------+
|Net Asset Value per share - |   218.64p|Share Price Discount to  |     2.7%|
|fully diluted               |          |Net Asset Value - fully  |         |
|                            |          |diluted                  |         |
+----------------------------+----------+-------------------------+---------+
|Net Asset Value per share - |   240.12p|Share Price Discount to  |    11.4%|
|undiluted                   |          |Net Asset Value -        |         |
|                            |          |undiluted                |         |
+----------------------------+----------+-------------------------+---------+
|                            |          |                         |         |
|Share Price                 |   212.75p|                         |         |
+----------------------------+----------+-------------------------+---------+
|Warrant Price               |   112.50p|                         |         |
+----------------------------+----------+-------------------------+---------+
|                            |          |                         |         |
+----------------------------+----------+-------------------------+---------+

Review by Investment Manager

In the year ending 31st August 2005, Asian stockmarkets made significant gains
despite the negative impact of a higher oil price on the global economy and
concerns over rising interest rates. Stockmarkets have benefited from an
improved global appetite for risk with a strong flow of funds into the Region.
India was the best performing market, with high levels of foreign investment
attracted by the ongoing reforms and strong economic growth. South Korea also
benefited from an inflow of foreign funds attracted by relatively low valuations
and evidence of a recovery in the domestic economy.

Throughout the Region, economic growth rates have slowed reflecting the impact
of a higher oil price and interest rates as well as a slowdown in export growth.
Manufacturing companies have experienced a decline in margins owing to their
inability to pass on higher costs, particularly raw materials but also wages, to
customers.

Smaller companies marginally underperformed over the period. The returns from
smaller companies in China, Malaysia and Thailand were particularly
disappointing, reflecting the problems being experienced by the manufacturing
sector.

Outlook by Investment Manager

Susie Rippingall, Portfolio Manager for Scottish Oriental said, 'Asian
stockmarkets continue to provide attractive investment opportunities over the
longer term supported by the Region's high savings rates, attractive
demographics and growth in personal consumption. However, the short-term outlook
is more uncertain as rising costs, most notably in oil, are resulting in higher
inflation. Interest rates are climbing and further increases are expected unless
there is a significant fall in the price of oil. The outlook for regional
corporate profit growth is dull in both absolute and relative terms; this
dullness is attributed to the slowdown in exports and lower profit margins.
Having outperformed the World Index for four years in a row, valuations for many
Asian companies are no longer compelling though they are still much more
attractive than those which prevailed in the mid 1990s. On a price/earnings and
price/book basis, ratios are close to the ten-year norm. Cash flow generation is
unusually high, but the average return on equity is expected to fall as
companies further reduce their level of debt. Liquidity abounds but corporate
Asia is apparently lacking risk appetite. Dividend yields are the one bright
spot, both on an historic and a relative basis.

Confidence in the US dollar as the world's principal store of value should not
be taken for granted. An uncontrollable shift out of US dollars by either Asian
Central Banks or the private sector could yet have serious ramifications for the
global economic and stockmarket outlook. Not least, protectionism might rear its
ugly head. In this case Asia - especially those countries dependent on
manufacturing, as opposed to commodity, exports - would certainly be adversely
affected.

Further short-term concerns are the large number of fund-raising exercises
currently in the pipeline, mainly from China but India too. There is also the
possibility of the Avian Flu virus, no longer confined to South East Asia,
mutating into a more contagious and dangerous variety; this would, of course,
have significant global, as well as regional, implications.

Notwithstanding all of the above qualifications, our confidence in the Region
remains undiminished. As in the past, our emphasis on quality in terms of
management, franchise and financials will stand us in good stead if markets
prove to be less robust than has recently been the case.

Dividend

The Board is proposing a final dividend of 2.6p net (2004: 1.575p net),
representing an increase of 65% on last year. Scottish Oriental's primary
investment objective has been and continues to be capital growth, and dividends
have been restricted so as to build up a reasonable revenue reserve.

Notes:

(1) The financial information contained within this Preliminary
Announcement does not constitute statutory accounts as defined in
Section 240 of the Companies Act 1985. The results for the years ended
31st August 2005 and 2004 are an abridged version of the statutory
accounts for those years, which received unqualified audit reports and
did not contain statements under sections 237(2) or (3) of the Companies
Act 1985. Statutory accounts for 2004 have been filed with the registrar
of Companies and those for 2005 will be delivered in due course.

(2) The accounting policies applied in preparing these accounts are
consistent with those applied in the latest published annual accounts.

(3) The terms of the Preliminary Announcement were approved by the Board
on 20 October 2005.

(4) Copies of the Annual Report will be posted to shareholders shortly
and further copies may be obtained from the registered office at 23 St
Andrew Square, Edinburgh, EH2 1BB.

                                   Appendix 1

First State Investment Management (UK) Limited has been appointed as Investment
Manager and Secretary under an agreement dated 20th March 1995 (as amended by a
supplemental agreement dated 23rd and 31st July 1998) ('the Agreement'). The
Agreement provided for the payment of a management fee of 0.25 per cent of the
value of the Company's net assets at the end of each calendar quarter and a
secretarial fee, initially based on £35,000 per annum until 31st March 1996 and
which has subsequently increased in line with the UK Retail Prices Index
annually.

The Company and the Investment Manager have agreed to change the basis of
calculation of the management fee. This change is a smaller related party
transaction (as defined by the Listing Rules of the United Kingdom Listing
Authority) with First State Investment Management (UK) Limited. With effect from
1st September 2005 the current management fee will be replaced with a base fee
and a performance fee. These fees will be capped, in aggregate, at an amount not
exceeding or equal to 5% of the lower of (1) the gross asset value of the
Company and (2) its market capitalisation, in each case at the relevant 31st
August year end. The base fee is 0.5% per annum of the Company's net assets
payable quarterly in arrears and using the formula set out in the Agreement.

The performance fee is payable annually and is based on the Company's Share
Price Total Return ('SPTR') over a three year period. This includes dividends
received. If the Company's SPTR exceeds the SPTR of the Company's benchmark
index (the MSCI AC Asia (ex Japan) Index) over the three year period plus ten
percentage points then a performance fee is payable to the Investment Manager.
The calculation of the performance fee is based on the Company's annualised
share price total return over the three year period. The objective of the
performance fee is to give the Investment Manager ten per cent of the additional
value generated for shareholders by such outperformance. If the Company's SPTR
for the relevant period is not positive then the performance fee will be nil.
The first period for calculation of the performance fee will end on 31st August
2006. There will be no change to the basis of calculation of the secretarial
fee.

The Investment Manager's appointment as investment manager is subject to
termination on one year's notice. Its appointment as Secretary is subject to
termination by not less than six months' notice. The Company is entitled to
terminate the Investment Manager's appointment as investment manager and
secretary on less than the specified notice period subject to compensation being
paid to the Investment Manager for the period of notice not given. The Agreement
provided that the compensation payable was based on the value of the Company's
net assets (as calculated in accordance with the Agreement) (in the case of the
Investment Manager's appointment as investment manager) and £17,500 (in the case
of the Investment Manager's appointment as Secretary). With effect from 1st
September 2005 the Company and the Investment Manager have agreed to change the
method of calculation of the compensation payable to the Investment Manager if
the specified period of notice is not given. In this case the compensation, in
the case of the Investment Manager's appointment as investment manager, will be
based on 0.5% the value of the Company's net assets up to the date of
termination on a pro rata basis. In addition a termination performance fee
amount may be due to the Investment Manager based on the Company's three year's
performance up to the date of termination and paid on a pro rata basis. In the
case of the Investment Manager's appointment as Secretary the compensation will
be based on the secretarial fee for the last full year prior to termination and
paid on a pro rata basis.

Enquiries:             Gillian Davies,
                       First State Investments, Ph: 44 (0) 131 473 2224

                       Susie Rippingall, Portfolio Manager,
                       First State Investments, Ph: 00 852 2846 7526
                       Angus Tulloch, Porfolio Manager
                       First State Investments, Ph 44 (0) 131 473 2271

20 October 2005



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