Final Results

F&C Smaller Companies PLC
21 June 2004


Date:              21 June 2004

Contact:           Sandy Fleming
                   F&C Management Ltd                      020 7628 8000

                   Lisa Stanley
                   Lansons Communications                  020 7294 3692



                           F&C SMALLER COMPANIES PLC
                   Unaudited Preliminary Statement of Results
                        for the year ended 30 April 2004

SUMMARY OF RESULTS

                                                              30 April           30 April             % change
                                                                  2004               2003

Share price                                                     224.0p             147.0p                +52.4

Net asset value per share (prior charges at nominal
value)                                                         276.77p            183.10p                +51.2
                                                               
Net assets                                                     £235.4m            £168.0m              +40.2 *

Earnings per share                                               3.95p              3.55p                +11.3

Dividends per share                                              4.24p              4.15p                 +2.2


*  During the year 6.675m shares were bought back at a cost of £12,392,000.


MAIN POINTS

•        A rise in the NAV of 51.2% compared to the Extended Hoare Govett
         Smaller Companies Index up 43.9%

•        Share price up 52.4% in the year

•        The Company outperformed the local benchmarks in the UK, US and Asia.

•        The Board is recommending an increase in the final dividend to 2.83p
         bringing the total for the year to 4.24p.  This is the 34th consecutive 
         year of increase.



F&C SMALLER COMPANIES PLC
Unaudited Preliminary Statement of Results for the year ended 30 April 2004


Chairman's Statement

Dear Shareholder,

After three extremely trying years for stockmarkets it is pleasing to be able to
report on a year of solid growth, both for the markets and for our Company. At
the time of the interim in December 2003, we had seen a significant rise from
the low point in March, but remained confident that the outlook was positive,
both for markets overall and specifically for smaller companies. In the event,
the scale of the rises for the year has been quite exceptional with an increase
in the net asset value of 51.2% over the year while the share price has risen
some 52.4%. This compares to a rise of 43.9% in the official benchmark, the
Extended Hoare Govett Smaller Companies Index and of 18.3% in the FTSE All Share
Index in capital terms.

In order to match the scale of the recovery in stockmarkets in the past year it
has been essential to focus investment on companies offering the prospect of
above average growth. Many of these investments have the potential to produce
dividend growth in the future, so your Board is recommending an increase in the
final dividend to 2.83p. As a result the total dividend for the year will be
4.24p, an increase of 2.2%, roughly in line with inflation.

Performance

Markets turned in March 2003 and the performance from smaller companies in all
geographic regions has been strong for the whole of our financial year. The
details of our regional performance appear within the Manager's Review of the
Annual Report, but I would like to highlight a couple of points. Firstly it is
appropriate to note that we outperformed the local benchmarks in the UK, the US
and in Asia and while we were less successful in Europe and Japan, returns from
both these regions were significant at 41.3% and 81.3% respectively. By any
standards these are substantial returns over a 12 month period.

After the disappointments of 2003 when the late surge in markets caused us to
lag our official benchmark, it is pleasing to record that in the year under
review the shortfall was recovered. I am particularly pleased that this recovery
in performance has been achieved during a period of strong stockmarket gains.
Our focus on well managed businesses with sound finances and strong cash
generative characteristics has served us well.

The Markets & Investment Policy

So what happened to justify a rise of over 50% in the value of the Company?
Well, the first and perhaps most obvious point is that following a three-year
bear market the point had been reached, just prior to the invasion of Iraq,
where gloom prevailed at every turn. The key to the scale of recovery was the
apparent speed and ease of the overthrow of the regime in Iraq, but this
coincided with increasing signs of economic upturn in the US, so what started as
a  rally quickly became the first phase of a genuine recovery.

F&C SMALLER COMPANIES PLC
Unaudited Preliminary Statement of Results for the year ended 30 April 2004

Other conspicuous features have been the surge in the price of oil, the impact
of economic growth in China on demand for commodities, particularly some base
metals and a significant decline in the value of the US dollar. All of these
factors have influenced both markets and our Company's performance.  During this
period we increased exposure to both Asia and the resources sectors as well as
converting all our short-term borrowing from Japanese yen into US dollars.

While the rise in markets, certainly the relative strength in smaller companies,
began to stutter in March 2004, this was the point at which sentiment toward
Japan seemed to change for the better. For the best part of 16 years investors
have avoided Japan, frustrated by the rigidity of the financial system. But
finally there appears to have been the first indications of the reforms that
have been considered essential for so long and confidence seems to be returning.
There have been false dawns in the past but it must be hoped that this time the
potential is realised.

Gearing and dividends

At the beginning of the financial year confidence was still fragile and while
borrowings had been increased they represented only 2.3% of net assets. However
during the course of the year this figure rose to close to 10% reflecting a more
optimistic outlook, but by the end of the year this had fallen back to close to
4%.  As I have said in the past, your Board consider gearing to be a strategic
issue and while borrowing to invest into rising markets is clearly a benefit to
all shareholders there will be times when it is appropriate to be more cautious.

The dividend has been increased for the past 34 years and the interim was
lifted, roughly in line with inflation, reflecting your Board's confidence in
the outlook. The Manager is charged with securing a high total return, which is
of course a combination of income and capital appreciation and it is clear that
this has been achieved during the year under review. But in order to achieve the
scale of increase in capital returns it has been necessary to shift the
portfolio away from some of the more defensive stocks that proved so valuable
during the prolonged bear market and also provided quite high levels of income.
So, although it will require a further modest transfer from the revenue reserve,
your Board is recommending an increase to the final dividend that will result in
a rise in the total distribution of 2.2%.

Buy-backs and Treasury shares

In the past year company law has been changed to allow companies to hold
repurchased shares as treasury shares, which can subsequently be sold back into
the market rather than being cancelled. Your Board considers this to be a
positive move and will be asking shareholders for authority to take advantage of
these new provisions at the Annual General Meeting (the 'AGM').  They will only
utilise these powers when it is considered a benefit to shareholders and will
keep its policy on treasury shares under review.

F&C SMALLER COMPANIES PLC
Unaudited Preliminary Statement of Results for the year ended 30 April 2004

Your Board will also be asking for renewal of the authority to buy up to 14.99%
of the outstanding share capital for cancellation, at the forthcoming AGM. In
the past few years opportunities to buy in stock for cancellation have been
taken at discount levels offering attractive value for the remaining
shareholders. Since the authority was renewed at the last AGM a total of 6.675m
shares have been bought in for cancellation at an average discount of 23% adding
around 4p per share to the net asset value, clearly a benefit to all remaining
shareholders.

Corporate Governance

We continue to strive for the highest standards of Corporate Governance. This
year we are reporting a year earlier than we need on how we are meeting the
provisions of the revised Code of Corporate Governance issued by the Financial
Reporting Council, for which we were already well positioned. We also aim to
achieve the standards advocated by the AITC in their Code of Corporate
Governance as you will see in the Corporate Governance Report, included in the
Annual Report.

Composition of the Board

Mr Andrew Barker has decided to retire as a Director and will therefore not be
seeking re-election at the forthcoming AGM.  Andrew has been associated with the
Company for nearly 30 years both as manager and as a Director and has made a
great contribution in both roles.

During the year a formal and rigorous evaluation of the performance of the Board
and that of its Committees and individual Directors took place.  Following this
review and recommendations of the Nominations Committee, I have no hesitation in
supporting the re-election of Mr Nicholas Talbot-Rice for another year, though
he has served more than nine years on the Board. It was felt that although
theoretically he was not independent based on the length of his service,
nevertheless, in practice he had retained his independence in both character and
judgement and it would be in the best interest of the shareholders if he served
another year.

Finally, the Board, under the leadership of the Senior Independent Director,
carried out an appraisal of me as Chairman, and has approved my standing for
re-election.

Outlook

The past year has seen a substantial improvement in our fortunes and while there
are still risks in the markets, the consensus view is still positive. There will
always be intermittent periods of uncertainty but as the underlying improvements
in global economies become increasingly apparent, markets, having paused for
breath, should resume an upward trend. The major risks are of course the
terrorist threat and a material rise in interest rates, coupled with continued
increases in the oil price which have the effect of strangling economic growth.

Having enjoyed such a strong recovery it would be unreasonable to expect further
advances on the same scale. Nevertheless our global perspective should allow us
to exploit the improving economic outlook and the quality of the underlying
portfolio gives me cautious optimism that we should see further progress in the
coming year.

John Curry
June 2004



F&C SMALLER COMPANIES PLC
Unaudited Preliminary Statement of Results for the year ended 30 April 2004

Balance Sheet


                                                                                    30 April          30 April
                                                                                        2004              2003
                                                                                      £'000s            £'000s
Fixed assets
Investments                                                                          246,632           173,935

Current assets
Debtors                                                                                3,684             1,830
Cash at bank and short-term deposits                                                  16,566            23,140
                                                                                      20,250            24,970

Current liabilities
Creditors: amounts falling due within one year:
Foreign currency loans                                                              (15,085)          (15,720)
Other                                                                                (6,407)           (5,240)
                                                                                    (21,492)          (20,960)

Net current (liabilities)/assets                                                     (1,242)             4,010

Total assets less current liabilities                                                245,390           177,945

Creditors: amounts falling due after more than one
year:
Debenture                                                                           (10,000)          (10,000)
Net assets                                                                           235,390           167,945

Capital and reserves
Called up share capital                                                               21,262            22,931
Capital redemption reserve                                                             4,921             3,252
Share premium                                                                         23,132            23,132
Capital reserves                                                                     181,357           113,771
Revenue reserve                                                                        4,718             4,859
Total shareholders' funds - equity                                                   235,390           167,945

Net asset value per ordinary share - pence                                            276.77            183.10

                                                                                      
Geographical distribution of total assets less current liabilities (excluding
loans) at 30 April 2004 was United Kingdom 48.1%; North America 23.4%; Japan
11.4%; Europe 8.2%; Asia and others 8.9%.

                           F&C SMALLER COMPANIES PLC
 
   Unaudited Preliminary Statement of Results for the year ended 30 April 2004


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

                                        2004                                         2003
                          Revenue        Capital          Total        Revenue         Capital           Total
                           £'000s         £'000s         £'000s         £'000s          £'000s          £'000s
Gains and losses on
investments                     -         81,724         81,724              -        (75,121)        (75,121)
Exchange gains                  7             12             19              3             526             529
Income                      5,012              -          5,012          4,883               -           4,883
Management fee              (347)          (810)        (1,157)          (406)           (946)         (1,352)
Other expenses              (587)           (41)          (628)          (549)            (38)           (587)

Net return before
finance costs and
taxation                    4,085         80,885         84,970          3,931        (75,579)        (71,648)
Interest payable and
similar charges             (389)          (907)        (1,296)          (388)           (907)         (1,295)
                            
Return on ordinary
activities before
taxation                    3,696         79,978         83,674          3,543        (76,486)        (72,943)
                            
Taxation on ordinary
activities                  (231)              -          (231)          (259)               -           (259)

Return attributable
to equity
shareholders                3,465         79,978         83,443          3,284        (76,486)        (73,202)
Dividends on
ordinary shares
(equity)
Interim of 1.41p
(2003 - 1.37p)            (1,199)              -        (1,199)        (1,270)               -         (1,270)
Proposed final of
2.83p (2003 - 2.78p)      (2,407)              -        (2,407)        (2,550)               -         (2,550)
                          
Amount transferred
(from)/to reserves          (141)         79,978         79,837          (536)        (76,486)        (77,022)
                            
Return per ordinary
share - pence                3.95          91.17          95.12           3.55         (82.60)         (79.05)


* 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.


                         F&C SMALLER COMPANIES PLC
    Unaudited Preliminary Statement of Results the year ended 30 April 2004

Cash Flow Statement for the year ended 30 April
                                                                                         2004                2003
                                                                                       £'000s              £'000s
Net cash inflow from operating activities                                               3,513               2,904
Cash outflow from the servicing of finance                                            (1,296)             (1,540)
Total tax paid                                                                          (234)               (186)
Net cash inflow from financial investment                                               8,345                 270
Equity dividends paid                                                                 (3,769)             (3,756)
Net cash inflow/(outflow) before use of liquid resources
   and financing                                                                        6,559             (2,308)

Decrease in short-term deposits                                                         6,885               7,959
Net cash outflow from financing                                                      (12,746)             (4,863)

Increase in cash                                                                          698                 788

The financial information set out in the announcement does not constitute the
Company's statutory accounts for the years ended 30 April 2004 or 30 April 2003.
The financial information for the year ended 30 April 2003 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 2004 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 2004 the Company purchased for cancellation
6,675,000 ordinary shares of 25p at a total cost of £12,392,000.

The Directors have declared a final dividend of 2.83p per share payable on 4
August 2004 to shareholders registered on 9 July 2004.

The Report and Accounts will be posted to shareholders early July. 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
18 June 2004



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