Final Results

Shires Smaller Companies PLC
20 February 2001

News Release

20 February 2001

                         SHIRES SMALLER COMPANIES PLC 
                           PRELIMINARY ANNOUNCEMENT 

Shires Smaller Companies plc aims 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.

             Preliminary Results for the Year Ended 31 December 2000 
                                                                               
                                                        2000     1999
 
           Net assets attributable to shareholders    £52.5m   £47.8m

           Fully diluted net asset value per share    240.1p   228.7p

           Dividends per share                          7.5p     6.6p

           Ordinary share price                       200.0p   166.0p

- Total return on net assets was 8.3%, ahead of the FTSE SmallCap Index, which
returned 6.9%, and the All-Share Index, which returned -5.9%.

- Return to a shareholder was 25%, largely due to the fall in the discount,
from 27.4% at 31 December 1999 to 16.7% at 31 December 2000.

- Introduction of higher gearing through Zero Coupon Finance strategy, with the
objective of increasing the yield on net assets, has helped reduce the
discount.

- Final dividend of 2.5p per share which brings total dividends for year to
7.5p, an increase of 13.6% over the corresponding period last year.

- The Board intends to pay a dividend of not less than 13.75p in the year to 31
December 2001, representing a net yield of 6.9%, based on the share price of
200p at 31 December 2000.

- With easier monetary policy and lower oil prices, the economic background is
becoming more supportive of equity investment, particularly in the more
cyclical, higher yielding stocks which make up a large proportion of the
Company's portfolio.


For further information please contact:

David Williams, Managing Director
Glasgow Investment Managers Limited                    0141 572 2700


                          Shires Smaller Companies plc 
                              Annual Report - 2000 
                              Chairman's Statement  
Strategy 

When Shires Smaller Companies was launched, in August 1992, the targeted
initial yield on the ordinary shares was 7.0% and the yield on UK ordinary
shares in general, as measured by the yield on the FTSE All-Share Index, was
over 5%. Seven years later, however, the yields on UK equities had fallen, to
just over 2% when the yield on the Company's shares was 4.0%.

Since launch the discount at which the share price stands to underlying net
asset value per share has widened and it was over 30% for a time in early
2000, a matter of considerable concern to the Board. As it appeared that the
lower yield was a factor in the decline in rating of the Company's shares it
was decided to address the problem by restoring their income attractions.
Accordingly, the Company's strategy was modified to raise the yield on the
ordinary shares while retaining the growth characteristics of investment in
smaller companies.

Additional Gearing 

To enhance the yield on net assets additional gearing was introduced by
raising £12 million of zero coupon finance through a series of option
transactions on the FTSE 100 Index. Details of the options purchased and sold
are set out in the Investment Managers' Review, in the Report and Accounts.

As the initial proceeds, maturity value and term of the strategy are known,
the annualised cost of the funds raised, 7.2% p.a., is fixed and unaffected
by movement of the FTSE 100 Index. Market price movements will, however,
determine the incidence of cost over time and the final outcome in respect of
each of the constituent options. The net movement in the value of the options
involved is a charge to capital reserve, with no charge to revenue.

This form of finance is less expensive than zero dividend preference shares
and may be repaid or rolled over before maturity without requiring change to
the capital structure of the Company.

Investment Background 

Like 1999, the year 2000 was a better year for investment in smaller
companies than in larger market capitalisation stocks. The total return on
the FTSE Small Cap Index (excluding Investment Companies) was 6.9%, well
ahead of the -8.2%% return on the FTSE 100 Index.

The share prices of smaller companies were also volatile in 2000. In the
early months of the year investor enthusiasm for telecommunications, media
and technology stocks of the so-called 'new economy' pushed share prices in
these sectors to unusually high ratings. Subsequently, however, technology
lost favour and the merits of 'old economy' stocks re-asserted themselves.
Then, in the fourth quarter, as signs of slower growth in the UK began to
emerge, the smaller companies sector, more dependent than larger companies on
the fortunes of the domestic UK economy, suffered a greater setback than the
stockmarket as a whole.

Investment Returns 

The total return on net assets was 8.3%, comfortably ahead of both the FTSE
SmallCap Index (excluding Investment Companies), which returned 6.9% and the
FTSE All-Share Index, which returned -5.9%.

The return to a shareholder over the year was more impressive, at 25.0%,
largely due to the improvement in the rating of the Company's shares which
followed the introduction and announcement of the new strategy. At 31
December 2000 the discount at which the ordinary share price stood to net
asset value per share was 16.7%, compared with 27.4% a year earlier.

Earnings and Dividends 

The revenue return per share rose by 4.7%. Income from securities in the
final quarter of 2000 benefited from the additional investment in
high-yielding fixed interest stocks under the new strategy, while the
corresponding figure for 1999 was boosted by the receipt of special dividends.

The Directors are proposing a final dividend of 2.5p per share, which brings
total dividends for the year to 7.5p per share, a rise of 13.6% compared with
1999. If approved, the final dividend will be paid on 30 March 2001 to
shareholders on the register at close of business on 9 March 2001.

With the new portfolio structure in place for a full year in 2001, a further
increase in the revenue return per share is expected this year. The Board
intends, therefore, to pay total dividends of not less than 13.75p in respect
of the year to 31 December 2001. At the share price of 200p as at 31 December
2000 this dividend forecast would represent a net annual yield of 6.9%.

Portfolio Structure 

As mentioned above, the new funds raised were invested wholly in corporate
fixed interest securities which are researched and monitored in the same way
as the portfolio of convertible securities has been managed in the past. The
growth characteristics of the portfolio are being preserved by maintaining an
exposure to ordinary shares approximately equal to the value of net assets.

At 31 December 2000 total gearing was 52.4%, with exposure to ordinary shares
at 100.2% and investments in fixed income securities at 52.2%, all expressed
as a percentage of net assets.

Warrants 

On 1 June 2000, the final exercise date of the Company's warrants, holders
exercised their right to subscribe for 1,443,065 new ordinary shares at £1
per share. The remaining 790,352 warrants, in respect of which holders did
not exercise their subscription rights, were exercised by the appointed
trustee. The new ordinary shares issued were then sold in the stockmarket
and, after deduction of the exercise price and expenses, the proceeds were
remitted to the holders on whose behalf the warrants had been exercised.

Outlook 

Rates of aggregate output growth and inflation have begun to fall in the USA,
the UK and the Eurozone after a year in which rises in interest rates and
higher oil prices gradually undermined consumer confidence. The US Federal
Reserve Board has already responded by cutting the Federal Funds target rate
twice in the month of January 2001, by 0.5% on each occasion. Further
interest rate reductions are now also expected in the UK. With easier
monetary policy and lower oil prices, the economic background is becoming
more supportive of equity investment, particularly in the more cyclical,
higher-yielding stocks which make up a large proportion of the Company's
portfolio.

Annual Report and Annual General Meeting 

The Annual Report will be mailed to shareholders on 22 February 2001. Copies
may be 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 Friday 23 March 2001 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 2000 
                                                                     
                                                        2000         
                                           Revenue   Capital    Total
                                              £000      £000     £000
          Gains/(Losses) on investments          -     3,463    3,463
          Cancellation of warrants               -         -        -
          Income (note 1)                    2,734         -    2,734
          Investment management fee            278       278      556
          Other administrative expenses        188         -      188
          NET RETURN BEFORE                                          
          FINANCE COSTS AND TAXATION         2,268     3,185    5,453
          Finance costs of borrowings:                               
          Loans and overdrafts                 500       500    1,000
          Zero coupon finance                    -       353      353
          RETURN ON ORDINARY                                         
          ACTIVITIES BEFORE TAXATION         1,768     2,332    4,100
          Taxation                               -         -        -
          RETURN ON ORDINARY                                         
          ACTIVITIES AFTER TAXATION                                  
          FOR THE FINANCIAL YEAR             1,768     2,332    4,100
          Dividends on equity shares         1,608         -    1,608
          TRANSFER TO RESERVES                 160     2,332    2,492
          Return per share                                           
          - undiluted                        8.44p    11.12p   19.56p
          - fully diluted                    8.27p    10.91p   19.18p
          Dividends per share                7.50p  


                                                                    
                                                        1999         
                                           Revenue   Capital    Total
                                              £000      £000     £000
          Gains/(Losses) on investments          -    13,948   13,948
          Cancellation of warrants               -      (227)    (227)
          Income (note 1)                    2,491         -    2,491
          Investment management fee            216       216      432
          Other administrative expenses        179         -      179
          NET RETURN BEFORE                                          
          FINANCE COSTS AND TAXATION         2,096    13,505   15,601
          Finance costs of borrowings:                               
          Loans and overdrafts                 514       514    1,028
          Zero coupon finance                    -         -        -
          RETURN ON ORDINARY                                         
          ACTIVITIES BEFORE TAXATION         1,582    12,991   14,573
          Taxation                               -         -        -
          RETURN ON ORDINARY                                         
          ACTIVITIES AFTER TAXATION                                  
          FOR THE FINANCIAL YEAR             1,582    12,991   14,573
          Dividends on equity shares         1,297         -    1,297
          TRANSFER TO RESERVES                 285    12,991   13,276
          Return per share                                           
          - undiluted                        8.05p    66.12p   74.17p
          - fully diluted                    7.67p    62.98p   70.65p
          Dividends per share                6.60p                   
 
*The revenue column of this statement is the consolidated revenue account of
the Group.

Notes

1. During the year, the Company's dealing subsidiary commenced trading and
contributed £130,000 towards return on ordinary activities before taxation.
No other operations were acquired or discontinued in the year.

2. 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
1999 and 2000 but is derived from those accounts. Statutory accounts for 1999
have been delivered to the Registrar of Companies and those for 2000 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 
                                Balance Sheets               
                            as at 31 December 2000                              
                                              
                                                 Group     Company           
                                                  2000      2000      1999    
                                                  £000      £000      £000    
  FIXED ASSETS                                                               
  Ordinary shares                               52,638    52,638    54,467  
  Convertibles                                   3,898     3,898     4,649   
  Corporate bonds                               23,357    23,357         -      

  Other fixed interest                             158       158         -      

                                                80,051    80,051    59,116  
  CURRENT ASSETS                                                             
  Debtors                                          968       968       460     
  Cash at bank                                     850       850         -      

                                                 1,818     1,818       460     
  CREDITORS                                                                  
  Amounts falling due within one year            7,004     7,005     1,793   
  NET CURRENT LIABILITIES                       (5,186)   (5,187)   (1,333) 
  TOTAL ASSETS LESS CURRENT LIABILITIES         74,865    74,864    57,783
  
  CREDITORS                                                                  
  Amounts falling due after more than one year  22,325    22,325     9,968   
  NET ASSETS                                    52,540    52,539    47,815 
 
  CAPITAL AND RESERVES                          52,540    52,539    47,815 
 
  Net asset value per share                                                  
  - undiluted                                   240.1p              243.3p  
  - fully diluted                               240.1p              228.7p 
 
                                                                              
                            SHIRES SMALLER COMPANIES PLC                        
                        Consolidated Cash Flow Statement                        
                       for the year ended 31 December 2000                      
                  
                                     2000                  1999               
                                     £000       £000       £000       £000    
  OPERATING ACTIVITIES                                                        
  Dividends and interest received             1,675                 2,610   
  from investments                                                            
  Income tax recovered                            7                    71      
  Deposit interest received                      96                     1       
  Dealing subsidiary receipts                   733                     -       
  Other cash received                             7                    30      
  Administrative expenses paid                 (654)                 (541)   
  Payments to and on behalf of                  (46)                  (42)    
  Directors                                                                   
  Dealing subsidiary payments                  (603)                    -       
  NET CASH INFLOW FROM                                                        
  OPERATING ACTIVITIES                        1,215                 2,129   
  SERVICING OF FINANCE                                                        
  Interest paid                                (972)               (1,037) 
  INVESTING ACTIVITIES                                                        
  Purchases of investments          (42,257)              (14,376)           
  Sales of investments               26,217                16,019             
  NET CASH (OUTFLOW)/INFLOW FROM                                              
  INVESTING ACTIVITIES                       (16,040)               1,643   
  EQUITY DIVIDENDS PAID                       (1,503)              (1,287) 
                                             (17,300)               1,448   
  FINANCING                                                                   
  Zero coupon finance                11,999                     -               

  Exercise of warrants                2,233                    13               
  Purchases of warrants for               -                  (567)              
  cancellation                                                                
                                              14,232                 (554)   
  (DECREASE)/INCREASE IN CASH                 (3,068)                 894