Interim Results

Scottish Oriental Smlr Co Tst PLC
25 March 2004




              THE SCOTTISH ORIENTAL SMALLER COMPANIES TRUST PLC


    Preliminary Results (Unaudited) for the six months to 29th February 2004


The Board of The Scottish Oriental Smaller Companies Trust PLC is pleased to
announce the results for the six months to 29th February 2004.


These results are presented in a format which summarises the information which
will be given in the forthcoming Interim Report.


Financial Highlights


• Undiluted net asset value per ordinary share rose by 7.4% to 187.92p
and fully diluted net asset value rose by 6.9% to 175.28p.

• This compares with a rise of 7.1% in the benchmark Index - the MSCI
AC Asia Free (Ex Japan) Index.

• The Nomura Asia Small Cap Index and the FTSE All-Share Index
  increased 11.2% and 8.7% respectively over the same period.

• Share price rose by 4.8% to 163.50p.

• Warrant price rose by 12.6% to 76.00p.

• Discount to undiluted net asset value widened to 13.0%.


Statement of Total Return for the six months to 29th February 2004 (Unaudited)


                     Six months to 29th           Six months to 28th February
                     February                     2003
                         2004

                     Income*   Capital    Total   Income*    Capital     Total
                       £'000     £'000    £'000      £'000     £'000     £'000


Gains / (losses) on        -     3,197    3,197          -    (2,387)   (2,387)
investments
Income from              567         -      567        414         -       414
investments
Other income              48         -       48         24         -        24
Investment              (235)        -     (235)      (157)        -      (157)
management fee
Currency gains             -       160      160          -        25        25
Other administrative    (150)        -     (150)      (116)        -      (116)
expenses              --------  --------  -------  ---------   -------   -------

Net return before
finance costs and
taxation                 230     3,357    3,587        165    (2,362)   (2,197)
Finance costs of         (18)        -      (18)       (24)      (12)      (36)
borrowing             --------  --------  -------  ---------   -------   -------

Return on ordinary
activities before
taxation                 212     3,357    3,569        141    (2,374)   (2,233)
Tax on ordinary          (44)        -      (44)       (31)       (1)      (32)
activities            --------  --------  -------  ---------   -------   -------

Return attributable
to equity
shareholders             168     3,357    3,525        110    (2,375)   (2,265)
Ordinary dividends         -         -        -          -         -         -
on equity shares      --------  --------  -------  ---------   -------   -------

Transfer to/(from)       168     3,357    3,525        110    (2,375)   (2,265)
reserves              --------  --------  -------  ---------   -------   -------

Return per ordinary     0.66p    13.02p   13.68p      0.43p    (9.33p)   (8.90p)
share


* The income column of this statement is the Profit and Loss Account of the
Company.

All income and capital items derive from continuing operations.

Statement of Total Return for the six months to 29th February 2004 (Unaudited)
(Continued)



                                                  Year ended 31st August
                                                          2003

                                           Income*    Capital            Total
                                              £'000          £'000       £'000

Gains on investments                              -          9,172       9,172
Income from investments                       1,245              -       1,245
Other income                                     69              -          69
Investment management fees                     (362)             -        (362)
Currency losses                                   -            (18)        (18)
Other administrative expenses                  (229)             -        (229)
                                             --------       --------     -------

Net return before finance costs and
taxation                                        723          9,154       9,877
Finance costs of borrowing                      (42)           (12)        (54)
                                             --------       --------     -------

Return on ordinary activities before
taxation                                        681          9,142       9,823
Tax on ordinary activities                     (185)             2        (183)
                                             --------       --------     -------

Return attributable to equity
shareholders                                    496          9,144       9,640
Ordinary dividends on equity shares            (382)             -        (382)
                                             --------       --------     -------

Transfer to reserves                            114          9,144       9,258
                                             --------       --------     -------

Return per ordinary share                      1.95p         35.90p      37.85p


* The income column of this statement is the Profit and Loss Account of the
Company.

All income and capital items derive from continuing operations.



SUMMARY BALANCE SHEET                As at 29th    As at 28th    As at 31st
                       (Unaudited)   February      February      August 2003 (1)
                                     2004          2003
                                           £'000         £'000           £'000

Total investments                         48,498        34,689          44,393
Net current assets                         2,892         1,942           3,826
Japanese Yen loan                         (3,304)       (3,598)         (3,631)
Deferred Tax                                 (32)           (9)            (41)
                                      ------------   -----------     -----------
Equity shareholders' funds                48,054        33,024          44,547
                                      ============   ===========     ===========

Net asset value per share -               188.58p       129.66p  174.91p   (2)
undiluted
Net asset value per share - fully         175.89p       126.59p         163.94p
diluted



(1) The preliminary statement is not the Company's statutory accounts. The
results for the year to 31st August 2003 and the position as at that date are an
abridged version of the full accounts for that year, which received an
unqualified audit report and did not contain statements under Section 237(2) or
(3) of the Companies Act 1985 and which have been filed with the Registrar of
Companies.

(2) Including Revenue Reserve uplift for the 6 months to 29th February 2004 (see
note at end of this statement).




Cash Flow Statement for the six months to 29th February 2004

                    Six months to        Six months to       Year to
                    29th February 2004   28th February       31st August 2003
                                         2003
                       £'000     £'000     £'000     £'000      £'000    £'000

OPERATING
ACTIVITIES:
Dividends received
from:
Investments                        633                 559               1,303
Interest received                   49                  24                  68
                                --------            --------             -------
                                   682                 583               1,371
Investment              (229)               (161)                (333)
management fee
Secretarial fee          (21)                (21)                 (42)
Directors' fees          (29)                (27)                 (54)
Other expenses           (85)                (21)                (123)
paid                  --------            --------             --------

                                  (364)               (230)               (552)
                                --------            --------             -------
Net cash inflow                    318                 353                 819
from operating
activities
RETURNS ON
INVESTMENTS AND
SERVICING OF
FINANCE
Interest paid on                   (18)                (23)                (42)
borrowings
TAXATION:
Total tax paid                     (21)                (29)               (155)
CAPITAL EXPENDITURE
AND FINANCIAL
INVESTMENT:
Purchases of         (10,930)             (5,838)             (11,403)
investments
Sales of               9,754               5,655               13,129
investments
Capital expenses           -                 (12)                 (12)
Indian capital           (31)                  -                   (1)
gains tax
Currency losses         (166)                 (2)                 (13)
                      --------            --------             --------

Net cash outflow/
(inflow) from
capital expenditure
and financial
investment
                                (1,373)               (197)              1,700
EQUITY DIVIDEND                   (382)               (382)               (382)
PAID
Financing:
Subscription of new
capital:
Ordinary shares           13                   3                    3
JPY foreign                -               3,598                3,598
currency loan
drawn
JPY foreign                -              (2,698)              (2,698)
currency loan         --------            --------             --------
repaid

                                    13                 903                 903
                                --------            --------             -------

Increase/(decrease)             (1,463)                625               2,843
in cash                         ========            ========             =======






BOARD STATEMENT


Investment Performance


In the six months ending 29th February 2004, Scottish Oriental's undiluted net
asset value per share rose 7.4 per cent to 187.92p. This compares with
sterling-adjusted increases of 7.1 per cent in the MSCI AC Asia Free (ex Japan)
Index and 11.2 per cent in the Nomura Asia Small Cap Index.  The Trust's share
price appreciated by 4.8 per cent only, reflecting a slight widening of the
discount to net asset value. The Trust underperformed the FTSE All-Share Index,
which rose 8.7 per cent over the period.


Smaller companies generally outperformed their larger counterparts over the
period with particularly strong returns in Hong Kong and India.


Review


The rise in Asian markets over the six month period ending February 2004 was
supported by strong economic growth and low interest rates. China's rapidly
expanding economy provided additional momentum to export growth throughout the
Region. This resulted in higher demand for a wide range of goods including
commodities, electronic components and capital equipment.


Indonesia was the best performing market over the period as inflation and
interest rates continued to fall.  Positive economic data and strong corporate
earnings growth contributed to the outperformance of the Thai market. Taiwan
suffered from increased political uncertainty prior to the Presidential
elections scheduled for March 2004.


Outlook


The outlook for Asian stockmarkets remains positive. Economic growth throughout
the Region is expected to accelerate this year driven by higher domestic
consumption, recovery in private investment and robust exports. Interest rates
are expected to remain low short term, but inflation will have to be monitored
closely. The end of deflation in China and Hong Kong is a positive development,
as it is already contributing to improved consumer sentiment.


The Region is not devoid of risks.  Elections will take place in many Asian
countries this year, including India, Indonesia and the Philippines, causing
uncertainty over the political environment. The presidential election in Taiwan
requires careful monitoring given a possible adverse response by mainland
China's Government to the re-election of the pro-independence President, Chen
Hsui Bien. The sustainability of some countries' fixed exchange rates remains
questionable. Global euphoria about the long term prospects for China might
easily prove justified, but problems will arise on the way. Over-investment in
certain industries is clearly a danger, as is food price inflation.


Valuations for Asian companies are inexpensive and earnings growth higher when
compared to the rest of the world. Many Asian smaller companies have experienced
a significant re-rating of their valuations in recent months, thereby narrowing
the discount to their larger counterparts. The Trust is well positioned to
participate in the high rates of economic growth, which are expected in 2004. At
the same time, Scottish Oriental's focus on well-managed, soundly financed
companies with strong business franchises should stand it in good stead if
stockmarkets prove to be less robust than was the case in 2003.


Borrowing


Scottish Oriental's borrowings of £3.3m in Yen represent approximately 6.9 per
cent of net assets at 29th February 2004. The rate of interest on the borrowing
is 1.04% and the facility matures on 28th February 2007. This borrowing
continues to give the Trust greater flexibility to enhance long term returns.


Dividend


A dividend of 1.50p per share net (equivalent to 1.67p gross) was paid on 23rd
January 2004 for the year ending 31st August 2003. It is too early to make a
forecast of the distribution due in 2005, but your Board would hope to be in a
position to maintain the dividend at this level.



Changes to the Board


Mr Guild, who will attain the age of 80 shortly, has intimated his wish to
retire both as Chairman and Director of the Trust on 22 April 2004.


The Board of Scottish Oriental would like to take this opportunity to thank Mr
Guild for his leadership of the Trust from its inception in 1995.


The Board expect to announce the appointment of a new Chairman shortly.



Performance for the six months to 29th February 2004

Net Asset Value (fully        + 6.9%   MSCI AC Asia Free (ex Japan)  + 7.1%
diluted)

Net Asset Value (undiluted)   + 7.4%   Index (£)

Share Price                   + 4.8%   Nomura Asia Small Cap Index   +
                                       (£)                           11.2%

Warrant Price                 +        FTSE All-Share Index          + 8.7%
                              12.6%



Summary Data at 29th February 2004

Shares in issue      25,482,502   Shareholders' Funds                   £48.05m

Warrants in issue     4,731,148   Market Capitalisation                 £41.66m

Net Asset Value per               Share Price Discount to Net Asset
share
(fully diluted)          175.28p  Value (fully diluted)                    6.7%

Net Asset Value per               Share Price Discount to Net Asset
share                             Value (undiluted)
(undiluted)              187.92p                                          13.0%

Share Price              163.50p
Warrant Price             76.00p



Benchmark and Comparative Indices


From inception in March 1994 until October 1999, the Trust adopted the Morgan
Stanley Capital International AC Asia Free (ex Japan) Index ('MSCI') as its
benchmark.  No suitable regional smaller companies index was available at that
time.


In October 1999 the Directors agreed to the replacement of the MSCI with the SG
Asian (ex Japan) Smaller Companies Index, following its reconstitution to cover
previously excluded countries.  Unfortunately, this Index ceased to be available
from the end of 2002.


The Directors have therefore decided to revert to the MSCI as its benchmark.
This Index, being dominated by larger companies, is far from an ideal
performance measurement tool.  It has, however, the dual merits of being the
most widely recognised regional index and of pre-dating the inception of the
Trust.


For comparison purposes, the Trust is also displaying The Nomura Small Cap Index
('NASCI') which covers the relevant markets with the exception of Pakistan and
Sri Lanka.  The NASCI is comprised of companies with a market capitalisation of
between US$100m and US$1,000m,  This range does not match exactly that of the
Trust, which has no lower limit and which is generally restricted to companies
with a market capitalisation of under US$750m.  Unfortunately this Index dates
only from the end of 1996, and thus cannot provide a complete historical
performance comparison with the Trust.  Nevertheless, the NASCI gives a useful
indication of the performance of smaller companies in Asia over recent years.


As most investors in the Trust are based in the United Kingdom, the Directors
consider that it is also relevant to compare the Trust's performance to that of
the FTSE All-Share Index.



Notes:

(1) The accounting policies applied in preparing these accounts are consistent
with those applied in the latest published annual accounts.
(2) The Shareholders' Funds and Net Asset Value per share figures at 29th
February 2004 are stated on a capital only basis, and do not include any income
retention at that date. This is because the Company only pays one dividend per
year for which no provision has been made at this stage. However, the
Shareholders' Funds and Net Asset Value per share figures given with the Balance
Sheet do include the Revenue Reserve uplift for the period.
(3) The terms of the interim report and the preliminary announcement were
approved by the Board on 25th March 2004.
(4) Copies of the Interim Report will be posted to shareholders shortly and
further copies may be obtained from the registered office at 23 St Andrew
Square, Edinburgh, EH2 1BB.

Enquiries:     Angus Tulloch / Susie Rippingall
               First State Investments, Edinburgh Ph: 44 (0)131 473 2200


25 March 2004

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