Interim Management Statement

MERRILL LYNCH BRITISH SMALLER COMPANIES TRUST PLC

Interim Management Statement - 4 months to 30 June 2007

To the members of Merrill Lynch British Smaller Companies Trust plc

This interim management statement has been produced solely to provide
additional information to shareholders as a body to meet the relevant
requirements of the UK Listing Authority's Disclosure & Transparency Rules. It
should not be relied on by any other party for any other reason.

This interim management statement relates to the period from 1 March 2007 to 30
June 2007, and contains information that covers this period, and up to the date
of publication of this interim management statement.

The Company invests mainly in smaller UK quoted companies, and seeks to achieve
long term capital growth for shareholders. The Company is managed by Mike
Prentis of BlackRock Merrill Lynch Investment Managers.

Stock Performance

Cumulative Performance(%):

                                  One      Three        One     Three      Five
                                                                               
                                Month     Months       Year     Years     Years
                                                                               
Net Asset Value                -1.70%      3.30%     34.10%   108.30%   141.40%
Share Price                    -2.80%      2.10%     34.30%   122.00%   156.50%
FTSE SmallCap Index (ex        -4.90%     -1.40%     17.50%    48.70%    67.60%
IC's)                                                                          

All performance figures are in £ on a capital only basis.

As shown in the table above, performance has consistently exceeded the FTSE
SmallCap Index and in the period under review the Company's net asset value
increased by 6.4% and the FTSE SmallCap Index fell by 0.6%. Exposure to mining
stocks such as Albidon and International Ferro Metals has been very beneficial.
In the oil sector Oilexco was very successful with its North Sea exploration
and at last brought its Brenda field onstream. Other strong performers included
London Capital and Babcock International.

Real estate stocks featured prominently amongst our poor performers.
Operationally Wichford's latest update was disappointing, but the Manager
considers the shares are now attractively valued. The Company's holding in
Premier Research also performed poorly. However, the holding was substantially
reduced at higher than currently prevailing prices.

Sector Allocation

Major overweight sectors are currently Mining, Real Estate, Oil & Gas and
Construction. The Manager has a positive view on the resources sectors where
metal and oil prices remain high, and demand and supply dynamics look
favourable. UK construction should be helped by substantial infrastructure
spending programmes and the 2012 Olympics. By contrast, real estate yields look
to have bottomed for now and the sector is underperforming. The Manager has
reduced our weightings slightly, but continues to believe value is starting to
emerge again.

The main investment themes remain largely unchanged.

Ten Largest Equity Holdings at 30 June 2007

Aveva Group
Brewin Dolphin
BSS Group
Dechra Pharmaceuticals
Domino Printing
ITE Group
Rathbone Brothers
Spirax-Sarco
Victrex
WSP Group

Key Portfolio Changes

The Manager continues to look for new opportunities, and recently invested in a
few IPOs including PV Crystalox and Evans Analytical. PV Crystalox is a long
established, highly profitable business that makes wafers used in solar panels.
This gives the Company some additional, modest exposure to profitable new
energy. EAG is a leading materials science company, providing microanalytical
materials characterization testing services with expertise in areas such as
surface analysis, trace elemental analysis and failure analysis. Other recent
new holdings include Axon and Euromoney. Axon, a leading integrator of SAP
systems, has grown very strongly in recent years recently expanding into the
US, a move that has gone well. Euromoney posted excellent results which
followed on from its purchase of Metal Bulletin, a former holding. Management
were very confident when we met them after the results.

Disposals included holdings in Carter & Carter, Gyrus and Spice. The Manager
considered them to be rather fully valued when they were sold, but was also
concerned that forecasts at Carter & Carter looked demanding in the face of
management change; Gyrus has considerable US dollar exposure likely to make
forecasts more demanding; and Spice has been very acquisitive. As it happens,
Carter & Carter has issued two profit warnings after the holding was sold and
its shares have fallen sharply.

The portfolio continues to be built around well managed, market leading growth
companies with strong records. It has exposure to companies with positive
earnings and share price momentum.

Financial position and performance as at 30 June 2007

At 30 June

                                               £m
                                                 
Gross Assets                                264.4
Short term borrowings                         7.4
7.75% Debenture 2022                           15
                                                 
Net asset value (at par)                 478.86p*
Net asset value (at fair value)          474.10p*
Share Price                               404.00p
Ordinary Shares in Issue               49,993,523
                                                 
Actual Gearing                              10.4%
Discount to NAV                             15.6%                                                 
Average Discount over the Period            14.6%
                                                 
* Calculated on a capital only basis                  

Material Events

There were no material events during the period.

Material Transactions

There were no issues of shares and no share buybacks during the period to 30
June. Subsequent to that, on 12 July 2007 518,815 shares were bought back to be
held in treasury.

Gearing has remained at about 10% of shareholders' funds during the period.

The Board is not aware of any significant events or transactions, except as
disclosed herein, occurring between 30 June 2007 and the date of publication of
this interim management statement which would have a material impact on the
financial position of the Company. Latest information is available by typing, 
www.blackrock.co.uk/its on the internet, "BLRKINDEX" on Reuters, "BLRK" on
Bloomberg or "8800" on Topic 3 (ICV terminal).

Contact details:

Caroline Driscoll
Secretary
Tel: [phone]

18 July 2007