Final Results

F&C Smaller Companies PLC
17 June 2003


EMBARGOED UNTIL 07.00AM ON TUESDAY 17 JUNE 2003

Contact: Sandy Fleming, F&C Management Ltd, 020 7628 8000/Emma Chilvers, Lansons
Communications, 020 7294 3606


                           F&C SMALLER COMPANIES PLC
                   Unaudited Preliminary Statement of Results
                        for the year ended 30 April 2003

SUMMARY OF RESULTS

                                                              30 April           30 April             % change
                                                                  2003               2002

Share price                                                     147.0p             219.0p                -32.9

Net assets                                                     £168.0m            £246.3m                -31.8


Net asset value per share (prior charges at nominal
value)
                                                               183.10p            265.51p                -31.0


Earnings per share                                               3.55p              3.89p                 -8.7

Dividends per share                                              4.15p              4.02p                 +3.2


MAIN POINTS

•    Underperformed Benchmark in difficult markets;

•    Proposed dividend for the year is 4.15 pence which is an increase of
     3.2 per cent, broadly in line with inflation.  This is the 33rd 
     consecutive annual increase.

Chairman's Statement

Commenting on these results John Curry, the Chairman said:

I started my interim review last October by describing stockmarkets as 'testing'
and sadly the second half of our financial year saw no respite in the gloom and
uncertainty surrounding equity markets worldwide.  During the year the net asset
value per share and the share price fell substantially, being 31.0% and 32.9%
down respectively.  As a result the discount, which began the financial year at
17.5%, widened to around 27% before closing the period at 19.7%.

In the light of your board's confidence in the underlying portfolio it has
decided to recommend an increase in the final dividend of 3.7% to 2.78p.  This
makes a total of 4.15p for the year, a rise of 3.2%, broadly in line with
inflation.

Performance

Global smaller company markets fell for the third consecutive year as did
stockmarkets overall and there was nowhere to hide, although the Japanese and
Asian markets recorded lower rates of decline than those experienced in the UK,
the US and Europe.  Once again volatility was high with substantial lurches in
markets and currencies occurring throughout the period.  In my interim statement
I reported that performance in the UK and the US had suffered from the portfolio
failing to match a sharp rise in the markets during October and we have suffered
a similar fate in April.  The result was that for only the fourth time since the
Extended Hoare Govett Smaller Companies index was adopted as our official
benchmark some 15 years ago, the portfolio has failed to outperform. While at
the time of writing this report it looks as though we are on the way to
recovering the shortfall, this is no help in reviewing last year's numbers.

The Markets & Investment Policy

By any standards the past year has been difficult for stockmarkets with the poor
economic conditions that continue to prevail throughout the world, being
compounded by the war in Iraq, the ongoing threat of global terrorism and more
recently the spread of the SARS virus.  For much of the period under review the
threat of war created considerable uncertainty, with speculation over both the
scale of the conflict and the implications for international relations.  Markets
hate uncertainty, so the actual invasion and the apparent speed of success
resulted in a substantial bounce in markets, especially in the US and the UK.
At the same time the fear of the spread of the SARS virus had an immediate
negative impact on all Asian markets and has resulted in a material decrease in
the level of economic activity in the region.

Throughout the period we have tried to focus on the longer term perspective and
looked to invest where the fundamentals justify purchase.  In a year where there
were no clear industrial trends that offered compelling value this meant that
the broadly-based nature of the portfolio was reinforced and new purchases
appeared in almost all sectors and in most international markets.  However when
markets fall, the short term impact tends to be indiscriminate and the
underlying quality of specific companies can be ignored.  Conversely when the
markets rallied, it was the stocks that had fallen the furthest which bounced
the quickest, as those investors capable of selling shares they don't own rushed
to balance their speculative positions.  In these circumstances it is hard for
investors who focus on the industrial fundamentals to enjoy the same level of
short term success.  Nevertheless we believe that the portfolio must remain
focused on quality investments across the globe and we accept that there will be
occasional short term aberrations to performance.  Unfortunately one such period
led up to the financial year end and diminished the relative returns in the UK
and US, the two biggest investment markets.  While this lag in performance was
offset by a pick-up in the fortunes of our investments in continental Europe and
in Japan and Asia, the overall numbers were disappointing.

Gearing, Dividends & Share Buy Backs

The ability to borrow is a key weapon for investment trusts but gearing will
only benefit the company when markets are rising.  At the beginning of the year
the level of borrowing was extremely low and as the markets have fallen, gearing
rose to close the period at 2.3% of net assets.  While this reflects a higher
level of optimism in stockmarkets going forward, it is also a function of the
ratio between the cost of our long-term debt and the net asset value of the
company.

The dividend has been increased annually for the past 33 years and in many years
a substantial transfer to the revenue reserve has also been possible.  Our
objective is to secure a high total return, being a combination of capital and
income growth and in the medium to long term we would expect the bulk of that
growth to be achieved by capital as the companies in which we invest grow.
Nevertheless the steady increase in the level of distribution has, I know, been
welcomed by shareholders.  This year your board is proposing to recommend a
final dividend that will bring the annual payout to a level, broadly in line
with inflation.  This will require a transfer from the revenue reserve, as was
the case in 2002.

A particular feature of the year has been the steady level of demand for shares
in your company from both new and existing shareholders.  For most of the year
this demand has been sufficient to absorb selling but on a number of occasions,
particularly in the early part of 2003, when the mood in the stockmarkets was
particularly bleak, opportunities to buy stock in for cancellation, at discount
levels of over 26%, were taken.  A total of 1,039,455 shares were purchased at
prices between 125.7p and 129p.  Your board will be asking for a renewal of the
authority to buy up to 14.9% of the outstanding share capital at the forthcoming
Annual General Meeting.  We believe that used carefully the ability to buy in
shares not only enhances the net asset value of the company for remaining
shareholders, but indicates to the market, in a practical way, that we believe
that our own stock is a most attractive investment.

Corporate Governance

A particular feature of the current investment scene is an increased focus on
corporate behavior.  As a result of the problems arising from the collapse of
many split capital investment trusts, both the Financial Services Authority and
the AITC are proposing changes to the management structure of Investment Trusts
to improve investor protection, particularly to increase the independence of
directors.  I can report that your company already complies with the bulk of the
recommendations, having an independent board that strives to ensure that the
quality of service received from the managers is the best available.

Your board is also aware of the broader corporate issues currently receiving
widespread publicity and is encouraging your managers to use their judgement to
ensure that those companies in which we invest conduct themselves appropriately
for their size.

Outlook

While the markets have seen a healthy recovery from the levels reached before
the Iraq war, there are still a number of reasons for being cautious.
Principally the absence of any signs of an improvement in the global economic
outlook, including the US, but also the final political and economic outcome in
the Middle East.  Smaller companies have the opportunity to grow faster than the
underlying trend which means they can prosper despite the absence of a vibrant
trading environment.  Thus while the markets stutter, seeking some clear
direction, we will continue to look to invest in businesses that are not only
growing during these difficult times, but that have the capacity to thrive when
economic circumstances improve.


John Curry
16 June 2003


Balance Sheet

                                                                                    30 April          30 April
                                                                                        2003              2002
                                                                                      £'000s            £'000s
Fixed assets
Investments                                                                          173,935           251,411

Current assets
Debtors                                                                                1,830             1,067
Cash at bank and short-term deposits                                                  23,140            31,698
                                                                                      24,970            32,765

Current liabilities
Creditors: amounts falling due within one year:
Foreign currency loans                                                              (15,720)          (19,816)
Other                                                                                (5,240)           (8,060)
                                                                                    (20,960)          (27,876)

Net current assets                                                                     4,010             4,889

Total assets less current liabilities                                                177,945           256,300

Creditors: amounts falling due after more than one
year:
Debenture                                                                           (10,000)          (10,000)
Net assets                                                                           167,945           246,300

Capital and reserves
Called up share capital                                                               22,931            23,191
Capital redemption reserve                                                             3,252             2,992
Share premium                                                                         23,132            23,132
Capital reserves                                                                     113,771           191,590
Revenue reserve                                                                        4,859             5,395
Total shareholders' funds - equity                                                   167,945           246,300

Net asset value per ordinary share - pence                                            183.10            265.51

                                                                                 
Geographical distribution of total assets less current liabilities (excluding
loans) at 30 April 2003 was United Kingdom 48%; North America 24%; Japan 9%;
Europe 13%; Far East and others 6%.


Statement of Total Return (incorporating the revenue account*)
for the year ended 30 April


                                               - 2003-                                 - 2002-
                                    Revenue       Capital         Total     Revenue       Capital       Total
                                     £'000s        £'000s        £'000s      £'000s        £'000s      £'000s
Losses on investments

                                          -      (75,121)      (75,121)           -      (24,536)    (24,536)
Exchange gains                            3           526           529           -           728         728
Income                                4,883             -         4,883       5,687             -       5,687
Management fee                        (406)         (946)       (1,352)       (442)       (1,031)     (1,473)
Other expenses                        (549)          (38)         (587)       (550)          (35)       (585)
Net return before finance
costs and taxation                    3,931      (75,579)      (71,648)       4,695      (24,874)    (20,179)

Interest payable and similar
charges                               (388)         (907)       (1,295)       (461)       (1,076)     (1,537)
                                      
Return on ordinary
activities before taxation            3,543      (76,486)      (72,943)       4,234      (25,950)    (21,716)
Taxation on ordinary
activities                            (259)             -         (259)       (595)           436       (159)
                                     
Return attributable to equity
shareholders                          3,284      (76,486)      (73,202)       3,639      (25,514)    (21,875)
                                   
Dividends on ordinary shares
(equity)

Interim of 1.37p (2002 -
1.34p)                              (1,270)             -       (1,270)     (1,256)             -     (1,256)
                                  
Proposed final of 2.78p (2002
- 2.68p)                            (2,550)             -       (2,550)     (2,486)             -     (2,486)
                                   
Amount transferred from
reserves                              (536)      (76,486)      (77,022)       (103)      (25,514)    (25,617)
                                   
Return per ordinary share -
pence                                  3.55       (82.60)       (79.05)        3.89       (27.26)     (23.37)
                                     

* The revenue column of this statement is the profit and loss account of the
Company.

All revenue and capital items in the above statement derive from continuing
operations.


Cash Flow Statement for the year ended 30 April
                                                                                         2003               2002
                                                                                       £'000s             £'000s
Net cash inflow from operating activities                                               2,904              3,680
Cash outflow from the servicing of finance                                            (1,540)            (1,429)
Total tax paid                                                                          (186)              (172)
Net cash inflow from financial investment                                                 270             11,840
Equity dividends paid                                                                 (3,756)            (3,743)
Net cash (outflow)/inflow before use of liquid resources
 and financing                                                                        (2,308)             10,176

Decrease/(increase) in short-term deposits                                              7,959            (5,988)
Net cash outflow from financing                                                       (4,863)            (2,866)

Increase in cash                                                                          788              1,322


The financial information set out in the announcement does not constitute the
Company's statutory accounts for the years ended 30 April 2003 or 30 April 2002.
The financial information for the year ended 30 April 2002 has been extracted
from the statutory accounts for that year which have been delivered to the
Registrar of Companies.  The auditors reported on those accounts: their report
was unqualified and did not contain a statement under either Section 237(2) or
Section 237(3) of the Companies Act 1985.  The statutory accounts for the year
ended 30 April 2003 will be finalised on the basis of the financial information
presented by the directors in this preliminary announcement and will be
delivered to the Registrar of Companies following the Company's Annual General
Meeting.

During the year to 30 April 2003 the Company purchased for cancellation
1,039,455 ordinary shares of 25p at a total cost of £1,333,000.

The Directors have declared a final dividend of 2.78p per share payable on 29
July 2003 to shareholders registered on 27 June 2003.

The Report and Accounts will be posted to shareholders on or around 26 June
2003.

Copies may be obtained during normal business hours from the Company's
Registered Office, Exchange House, Primrose Street, London EC2A 2NY.

By order of the Board
F & C Management Limited - Secretary
16 June 2003



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