Final Results

Final Results 

    GLASGOW, Scotland--(BUSINESS WIRE)--Feb. 18, 2003--

Shires Smaller Companies plc
Preliminary Results for the year ended 31 December 2002

Shires Smaller Companies' objective is 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. The Company is managed by Glasgow Investment Managers.

                                                        2002                      2001

Total assets less current liabilities                £56.49m                   £67.51m
Shareholders' funds                                  £32.31m                   £44.29m
Market capitalisation                                £30.53m                   £43.01m
Net asset value per share                             147.6p                    202.4p
Ordinary share price                                  139.5p                    196.5p
Discount (share price to net asset value)               5.5%                      2.9%
Revenue return per share                              13.77p                    13.52p
Dividends per share                                   13.75p                    13.75p
Gearing                                                84.7%                     67.1%


o        The total return on net assets was -20.3%, comfortably ahead of
         the -27.8% return on the FTSE SmallCap Index (excluding Investment
         Companies) and -22.7% on the FTSE All-Share Index.

o        The portfolio of ordinary shares performed significantly
         better than the above figures indicate, returning -15.8%, but
         being geared in a falling stockmarket depressed the overall
         result.

o        The total return to shareholders was -22.0%, slightly lower
         than the return on net assets due to a small rise in the
         discount of share price to net asset value.

o        Dividends for the year were maintained at 13.75p.

o        The yield on the Company's ordinary shares was 9.9% at 31 December 2002.

o        The UK stockmarket continues to remain depressed due to the
         prospect of war in the Middle East. This has led to the
         ordinary shares of many companies being on low ratings and
         therefore offering good value, particularly among the
         higher-yielding smaller capitalisation stocks in which the
         company invests.

For further information please contact:

David Williams, Managing Director
Glasgow Investment Managers
0141 572 2700



Shires Smaller Companies plc
Annual Report 31 December 2002
Chairman's Statement


Background
The ordinary share prices of UK companies fell for the third
consecutive year in 2002. The last time this happened was in the years
1947 to 1949, in the straitened aftermath of the Second World War.
Although aggregate output grew at a faster rate in the Western
economies in 2002 than in 2001, stockmarkets were more influenced by
the potential impact on confidence - and thus future levels of
activity - of terrorism, accounting and corporate miscreance and,
increasingly at the end of 2002, the Iraq crisis, than by current
economic data.

Investment Performance
Against the background of a declining stockmarket, the Company
performed relatively well. The total return on net assets was -20.3%,
better than the return of -22.7% on the FTSE All-Share Index and
substantially better than the return of -27.8% on the FTSE SmallCap
Index (excluding Investment Companies), the Company's performance
benchmark.

The portfolio of ordinary shares performed significantly better than
these figures indicate, returning -15.8%, but being geared in a
falling stockmarket depressed the overall result.

The return to a shareholder was -22.0%, lower than the return on net
assets due to a rise, from 2.9% to 5.5% over the year, in the discount
at which the share price stands to net asset value.

Earnings and Dividends
The revenue return per share was 13.77p. The Board is recommending a
final dividend of 4.75p per share, to bring total dividends for the
year to 13.75p, the same level as last year. If approved, the final
dividend will be paid on 31 March 2003 to shareholders on the register
at close of business on 7 March 2003.

Portfolio Profile
Ordinary shares were equivalent to 101.2% of net assets at 31 December
2002, compared with the 105.1% reported last year. This reduction
reflected falls in the prices of ordinary shares held in the portfolio
and net sales of £5.6 million of equities to control gearing as the
value of net assets fell.

Total gearing rose over the year from 67.1% to 84.7% of net assets,
largely because the aggregate exposure to fixed income securities rose
from 62.0% to 83.5%. These investments were retained in order to
continue to meet the Company's income objective.

Longer Term Strategy
The year to 31 December 2002 was the second full year of the
investment strategy embarked on in August 2000. The higher level of
dividend distributions has been maintained and the share price rating
has moved in a range between a discount of 9.0% at the end of March
and a premium of 10.0% at the end of August. This represents a
sustained improvement relative to the five year period from 1996 to
2000 when the discount averaged over 20%.

Outlook
Although consensus forecasts continue to indicate that the current
gradual recovery in output will persist, stockmarkets are pre-occupied
with the prospect of war in the Middle East and its possible adverse
impact on business activity if oil prices rise and consumer confidence
falls. In such circumstances of uncertainty, the ordinary shares of
many companies are on low ratings, a fact that investors may only
appreciate after sentiment has improved and share prices have risen.

Board
Christopher Arnander, a founder Director of the Company at its launch
in 1992, and John Izat, a consultant to the Company since its
inception and a Director since 1996, both attained the age of seventy
in the course of 2002. In accordance with the provisions of the
Articles of Association, therefore, they will retire from the Board
after the Annual General Meeting on 21 March 2003. I should like to
take this opportunity to thank Christopher and John for their
contributions to the Company over the last ten years and to wish them
both well in retirement.

I should like to extend a warm welcome to Mr James West, a
non-executive director of Candover Investments and other companies,
who joined the Board in April last year.

Annual Report and Annual General Meeting
The Annual Report will be mailed to shareholders on 19 February 2003.
Copies may obtained from the managers, Glasgow Investment Managers
Limited, Sutherland House, 149 St Vincent Street, Glasgow, G2 5DR
after that date.

The Annual General Meeting will be held at Trinity House, Tower Hill,
London, EC3N 4DH on 21 March 2003 at 12 noon.

John Stubbs
Chairman



Shires Smaller Companies plc
Consolidated Statement of Total Return
(incorporating the Revenue Account*)
for the year ended 31 December 2002

                                                                  2002                                  2001
                                            Revenue       Capital      Total       Revenue      Capital       Total
                                              £000          £000       £000          £000         £000        £000


Losses on investments                             -       (10,148)    (10,148)          -        (6,356)     (6,356)
Income                                        4,184            -        4,184        4,125            -       4,125
Investment management fee                      (289)         (289)       (578)        (321)        (321)       (642)
Other administrative expenses                  (254)           -         (254)        (216)           -        (216)
                                              -----------------------------------------------------------------------

NET RETURN BEFORE
FINANCE COSTS AND TAXATION                    3,641       (10,437)     (6,796)       3,588       (6,677)     (3,089)

Finance costs:
?Loans and overdrafts                          (612)         (612)     (1,224)        (629)        (629)     (1,258)
?Zero coupon finance                              -          (955)       (955)           -         (892)      (892)
                                              -----------------------------------------------------------------------

RETURN ON ORDINARY
ACTIVITIES BEFORE TAXATION                    3,029       (12,004)     (8,975)       2,959       (8,198)     (5,239)

Taxation                                        (15)           15           -            -            -           - 
                                              -------------------------------------------------------------------------

RETURN ON ORDINARY
ACTIVITIES AFTER TAXATION
FOR THE FINANCIAL YEAR                        3,014       (11,989)     (8,975)       2,959        (8,198)      (5,239)

Dividends on equity shares                   (3,009)           -       (3,009)      (3,009)            -       (3,009)
                                             ------------------------------------------------------------------------


TRANSFER TO/(FROM) RESERVES                       5       (11,989)    (11,984)         (50)      (8,198)       (8,248)
                                             ----------------------------------------------------------------------

Return per share                              13.77p       (54.78)p    (41.01)p      13.52p      (37.45)p      (23.93)p

Dividends per share                           13.75p                                 13.75p

* The revenue column of this statement is the consolidated revenue
account of the Group. All revenue and capital items in the above
statement derive from continuing operations. No operations were
acquired or discontinued in the year.

The financial information set out above and on the following pages
does not constitute the Company's statutory accounts for the years
ended 31 December 2001 and 2002 but is derived from those accounts.
Statutory accounts for 2001 have been delivered to the Registrar of
Companies and those for 2002 will be delivered following the Company's
annual general meeting. The auditors have reported on those accounts;
their reports were unqualified and did not contain statements under
section 237(2) or (3) of the Companies Act 1985.



Shires Smaller Companies plc
Group Balance Sheet as at 31 December 2002

                                                                                 2002          2001
                                                                                 £000          £000

FIXED ASSETS
Ordinary shares                                                                32,706        46,549
Convertibles                                                                    3,577         3,592
Corporate bonds                                                                22,547        23,794
Other fixed interest                                                              831            83
                                                                               ------        ------
                                                                               59,661        74,018
CURRENT ASSETS
Debtors                                                                           961           923
Investments of dealing subsidiary undertaking                                     140             -
Cash at bank                                                                       89             -
                                                                               ------        ------
                                                                                1,190           923

CREDITORS
Amounts falling due within one year                                            (4,360)       (7,427)
                                                                               ------        ------

NET CURRENT LIABILITIES                                                        (3,170)       (6,504)
                                                                               ------        ------

TOTAL ASSETS LESS CURRENT LIABILITIES                                          56,491        67,514

CREDITORS
Amounts falling due after more than one year                                  (24,183)     (23,222)
                                                                               ------        -------

NET ASSETS                                                                     32,308        44,292
                                                                               ------        ------


EQUITY SHAREHOLDERS' FUNDS                                                     32,308        44,292
                                                                               ------        ------

Net asset value per share                                                      147.6p        202.4p



Shires Smaller Companies plc
Consolidated Cash Flow Statement for the year ended 31 December 2002


                                                                       2002                   2001  

                                                                  £000      £000         £000       £000

OPERATING ACTIVITIES
Dividends and interest received from investments                           4,060                   4,194
Income tax recovered                                                         108                       -
Deposit interest received                                                     10                      43
Dealing subsidiary receipts                                                    -                     127
Other cash received                                                            2                       7
Administrative expenses paid                                                (638)                   (843)
Payments to and on behalf of Directors                                       (71)                    (53)
Dealing subsidiary payments                                                 (171)                   (101)
                                                                           ------                   ----

NET CASH INFLOW FROM OPERATING ACTIVITIES                                  3,300                   3,374

SERVICING OF FINANCE
Interest paid                                                  (1,228)                 (1,268) 
Income tax paid                                                      -                    (90)
                                                              --------                 --------
                                                                          (1,228)                 (1,358)
TAXATION
Corporation tax paid                                                          (4)                     -

INVESTING ACTIVITIES
Purchases of investments                                       (34,400)                (39,466)
Sales of investments                                            38,609                  37,937
                                                                ------                  ------


NET CASH INFLOW/(OUTFLOW) FROM
  INVESTMENT ACTIVITIES                                                    4,209                  (1,529)

EQUITY DIVIDENDS PAID                                                     (3,009)                 (2,516)
                                                                          ------                   -----


INCREASE/(DECREASE) IN CASH                                                3,268                  (2,029)
                                                                           -----                   -----


   Short Name: Shires Smaller Co's
   Category Code: FR
   Sequence Number: 00002011
   Time of Receipt (offset from UTC): 20030214T111929+0000