Interim Results

Aberforth Smaller Companies Tst PLC
16 July 2002



ABERFORTH SMALLER COMPANIES TRUST plc

INTERIM RESULTS

For the Six Months to 30 June 2002


FEATURES

•          Fully Diluted Net Asset Value Total Return            +6.9%

•          Benchmark Index Total Return                          -6.1%

•          Increase in Interim Dividend per Ordinary Share       +3.1%



Aberforth Smaller Companies Trust plc (ASCoT) invests only in small UK quoted
companies and is managed by Aberforth Partners.


CHAIRMAN'S STATEMENT TO SHAREHOLDERS

RESULTS REVIEW

For the six months to 30 June 2002 ASCoT achieved a positive total return of
6.9%, which compares favourably with the negative total return of 6.1% from the
Hoare Govett Smaller Companies Index (excluding investment companies), your
Company's investment benchmark.  The share price performance of larger companies
was poor with the FTSE All-Share Index registering a negative total return of
8.9%.



Your Board is pleased to announce an increase in this year's interim dividend to
3.30p per share.  This represents an increase of 3.1% compared with the
equivalent period last year.  This rate of increase is lower than has been the
case for some time, reflecting the slowdown in economic growth and the obvious
pressures on corporate profitability.  The interim dividend will be paid on 6
September 2002 to Shareholders on the register on 9 August 2002.



At the Annual General Meeting held in February, Shareholders approved the
continuation of ASCoT as an investment trust and renewed the authority for your
Company to buy-in up to 14.99% of its Ordinary Shares.  No shares have yet been
bought in under this authority but the Board will not hesitate to act should we
believe it to be in Shareholders' best interests.



During the six month period, your Company was unable to buy any Warrants for
cancellation, owing to a lack of willing sellers.  However, on 2 April 2002, a
total of 224,482 Warrants were exercised.  There now remain 1,434,811 Warrants
outstanding and your Company is prepared to buy these in at prices that enhance
the fully diluted net asset value.  Warrantholders should note that the final
exercise date for the Warrants is 31 March 2003.


ASCoT remains fully invested consistent with its investment policy.  An £80m
debt facility remains available and may be drawn down on request.  Your
Managers' cautious views on likely returns from stockmarkets mean that this
facility has been unutilised since early 2000.



INVESTMENT BACKGROUND



Despite a recovery in the fourth quarter of 2001 from the shock of the terrorist
attacks on America, equity valuations around the world have come under renewed
pressure in the first half of 2002.  In many respects, the causes of this
weakness are a continuation of those that precipitated the initial peaking of
valuations in early 2000 and, again, we must look to the US to understand them.



•                    Equities remain highly valued in a historical context.
Standard & Poor's own analysis of the S&P 500 Index suggests that its PE ratio
on 2001 operating earnings (i.e. excluding exceptionals) is 26x.  With the
effect of exceptionals included, the multiple rises to 41x.  Even if account is
taken of cyclically depressed corporate profitability, these appear high
valuations for an index whose average PE multiple since 1945 has been 15x.



•                    Such valuations prevail at a time when confidence in the
quality of company earnings and in the executives who report them has been
undermined.  The downfall of Enron is astonishing but appears merely symptomatic
of a wider malaise that threatens to increase the perceived risk of equity
investment.



•                    In both the US and UK, corporate profits' share of GDP has
been declining since the mid 1990s.  Companies appear to have handed
productivity benefits on to their employees and have found it difficult to pass
through cost increases.  Moreover, the TMT bubble encouraged investment in what
proved unnecessary capacity and technologies.  Companies were thus left with
excessive levels of debt and diminished pricing power, an unfortunate
combination in increasingly risk averse capital markets.



•                    Compounding their woes has been the slowdown in the US
economy, which had accounted for 40% of the growth in global demand between 1996
and 2000.  Recession officially commenced in March 2001, though its worst
effects were mitigated by a pre-emptive and aggressive loosening of monetary
policy: inspired by mortgage refinancing and supported by greater government
spending, the responsive American consumer has continued to spend.



An important element to a revival in stockmarkets is a robust recovery in
corporate profitability and, by extension, in the American economy.  Recent
economic statistics suggest that a recovery is under way, though commentators
still dispute its speed and duration.  Although the principal risk remains the
deflationary influence of high private sector debt levels, some argue that a
mounting budget deficit and historically low interest rates threaten to
re-ignite inflation.



Adding to the uncertainty is the weakness of the US Dollar, which reflects a
continuing deterioration in the current account and a reduced enthusiasm for US
assets: not only does it inhibit the ability of the American consumer to buy
overseas goods, but it also threatens to foster a recovery in corporate America
that comes at the expense of the rest of the world.  Hints of such a unilateral
upturn have already been seen in the Bush Administration's steel tariffs.



US Dollar weakness has not, to date, proved too troublesome for the UK, with
Sterling also having fallen against the Euro.  Sustained currency weakness would
provide a welcome fillip to the beleaguered British manufacturing sector.  The
Monetary Policy Committee may also be pleased to the extent that it affords
greater scope to raise interest rates in response to an increasingly bullish
consumer.  Low unemployment and a booming housing market have combined to
produce an annualised growth rate in consumer spending of 4%.  As in the US,
this is showing up in a potentially troublesome deterioration in the trade
account.



INVESTMENT PERFORMANCE



In a difficult period for equities, ASCoT managed to outstrip its benchmark.
Your Managers undeniably benefited from what following winds there were in an
otherwise stormy stockmarket.  Reflecting their cheaper valuations and lower
exposure to problematic industries such as telecoms, smaller companies performed
well against their larger peers.  Moreover, the value investment style, to which
your Managers have always adhered, continued to be helpful in the opening six
months of the year, as many growth companies failed again to live up to
investors' expectations.



These two broad stockmarket trends made important contributions to ASCoT's
performance but were essentially beyond the influence of the Managers.  Factors
over which they have greater control are sector and stock selection.  Clearly,
adherence to value investment would have had a positive influence on the choice
of sectors and stocks. Reassuringly, though, third-party data available to the
Managers suggest that the portfolio would also have outstripped an index of
small UK quoted 'value' companies.



Historically your Managers have benefited from periods of high takeover
activity. Consistent with continuing economic uncertainty and difficult credit
markets only one holding was the subject of a takeover bid in the six month
period.  However, four investments sought equity financing for acquisition or
organic growth.



The sector distribution of the portfolio has changed little over the year to
date.  Indeed, the only move of note has been a relatively modest increase in
exposure to Information Technology.  Here, your Managers have been attracted by
the availability of a handful of companies with reasonable valuations rather
than by a general view that an upturn in technology is imminent.



The portfolio comprises holdings in 96 companies, a level of diversification
consistent with ASCoT's history.  Perhaps more than has been the case for the
last four years, this portfolio represents an accumulation of individually
attractive companies, with broader views on industries playing a less important
role in its construction.  Notwithstanding the macro-economic issues that
bedevil equity valuations in general, your Managers can see opportunities in
virtually all sectors of the UK smaller companies universe.  A useful, if
somewhat cliched, way of describing the current situation is therefore as 'a
market of stocks rather than a stockmarket'.



INVESTMENT OUTLOOK



Prospects for equities - even for small UK quoted companies - continue to be
dominated by events in the US.  The success of the American capitalist model
through the 1990s means that its influences are felt around the world.  However,
imbalances in the US economy are combining with uncertainty over the true
profitability of business to call into question the precise nature of this
success.  This crisis of confidence finds confirmation in the weakening of the
previously unassailable US Dollar.



Against this background, it would seem reasonable to adjust expectations of
annual returns from holding equities.  A reversion to the longer-run historical
average of 5-7%, in real terms, would appear more likely than the returns in the
late 1990s of two to three times that level.  In such circumstances, dividend
yields become a proportionately more important element of the total return.



In this context, small UK quoted companies would appear relatively well
positioned. Excluding loss makers, the FTSE All-Share Index (excluding
investment companies) boasts a yield of 3.0% and a PE of 19.0x.  Smaller
companies continue to enjoy lower PE valuations, despite their outperformance
over the past six months, and, given the superior dividend cover, would appear
to afford better chances of dividend growth.  Their industrial exposures also
differ markedly from larger companies, offering higher weightings in cyclical
sectors, which should benefit from an improvement in the general economic
outlook.



                                                     30 June 2002            30 June 2001
Characteristics                             ASCoT       Benchmark    ASCoT      Benchmark



Number of Companies                         96          915          95         980
Weighted Average Market Capitalisation      £317.6m     £355.4m      £358.8m    £353.4m
Price Earnings Ratio (Historic)             12.3x       14.3x        13.0x      14.1x
Net Dividend Yield (Historic)               3.0%        2.8%         3.1%       2.6%
Dividend Cover (Historic)                   2.7x        2.5x         2.5x       2.8x






Within their large universe of potential investments, your Managers continue to
identify ample investment opportunities: ASCoT's aggregate portfolio valuation
characteristics remain attractive in relation to the benchmark.  In constructing
this portfolio, your Managers have not altered their investment process and the
underlying companies continue to offer a combination of strong business
fundamentals and attractive valuations.



Nevertheless, it is unlikely that this portfolio can enjoy as large a margin of
outperformance against the benchmark moving forward as it has over the last two
years.  The bursting of the TMT bubble has provided a powerful extraneous boost
to ASCoT's performance over the last two years.  If only because these sectors
now account for a considerably smaller portion of the benchmark, they are very
unlikely to exercise such an influence - positive or negative - on the overall
returns of the market for some time.



Consequently, while the portfolio characteristics and the consistency of your
Managers' investment approach might lead one to expect ASCoT to continue to
surpass its benchmark, its degree of outperformance is unlikely to match the
exceptional level enjoyed in the recent past.





William Y Hughes
Chairman
16 July 2002





The Statement of Total Return, summary Balance Sheet and summary Cash Flow
Statement are set out below:-





STATEMENT OF TOTAL RETURN

(Incorporating the Revenue Account 1)

(unaudited)

                                                              6 months to                                  6 months to
                                                             30 June 2002                                 30 June 2001
                                    Revenue        Capital          Total        Revenue        Capital          Total
                                      £'000          £'000          £'000          £'000          £'000          £'000

  Realised gains/(losses)                 -          7,298          7,298              -         20,850         20,850
  on sales                                                                                                            
  Unrealised gains/(losses)               -         10,187         10,187              -          7,966          7,966
                               ------------   ------------   ------------   ------------   ------------   ------------
  Gains/(losses) on                       -         17,485         17,485              -         28,816         28,816
  investments                                                                                                         
  Deemed cost of Warrants                                                                                             
  purchased for cancellation              -              -              -              -        (1,275)        (1,275)
  Dividend income                     5,442            254          5,696          5,383              -          5,383
  Interest income                       299              -            299            509              -            509
  Other income                           48              -             48              -              -              -
  Investment management fee           (580)          (967)        (1,547)          (534)          (890)        (1,424)
  Other expenses                      (127)              -          (127)          (103)              -          (103)
                               ------------   ------------   ------------   ------------   ------------   ------------
  Return on ordinary                                                                                                  
  activities                                                                                                          
  before tax                          5,082         16,772         21,854          5,255         26,651         31,906
  Tax on ordinary activities              -              -              -              -              -              -
                               ------------   ------------   ------------   ------------   ------------   ------------
  Return attributable to                                                                                              
  equity shareholders                 5,082         16,772         21,854          5,255         26,651         31,906
  Dividends in respect of           (2,767)              -        (2,767)        (2,676)              -        (2,676)
  equity shares                                                                                                       
                               ------------   ------------   ------------   ------------   ------------   ------------
  Transfer to reserves                2,315         16,772         19,087          2,579         26,651         29,230
                                    =======        =======        =======        =======        =======        =======
  Returns per Ordinary                                                                                                
  Share2:                                                                                                             
  Basic                               6.07p         20.03p         26.10p          6.30p         31.94p         38.24p
  Diluted                             5.99p         19.76p         25.75p          6.17p         31.28p         37.45p

  Dividends per Ordinary              3.30p              -          3.30p          3.20p              -          3.20p
  Share                                                                                                               




NOTES



1.  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.  No operations were acquired or discontinued in the
period.



2.   The calculations of revenue return per Ordinary Share are based on net
revenue of £5,082,000 (30 June 2001 - £5,255,000) and on Ordinary Shares of
83,741,322 (30 June 2001 - 83,442,561) in the case of basic returns and
84,864,791 (30 June 2001 - 85,195,768) in the case of diluted returns.



The calculations of capital return per Ordinary Share are based on net capital
gains of £16,772,000 (30 June 2001 - £26,651,000) and on Ordinary Shares of
83,741,322 (30 June 2001 - 83,442,561) in the case of basic returns and
84,864,791 (30 June 2001 - 85,195,768) in the case of diluted returns.





SUMMARY BALANCE SHEET

(unaudited)

                                                                          30 June          30 June      31 December
                                                                             2002             2001             2001
                                                                            £'000            £'000            £'000

      Securities officially listed on the London Stock Exchange           335,263          311,157          305,074
                                                                   --------------   --------------   --------------
      Cash at bank                                                            612           20,148           14,210
      Debtors                                                               2,315            2,399            1,094
      Creditors                                                           (3,617)          (3,690)          (5,116)
                                                                   --------------   --------------   --------------
      Net current (liabilities)/assets                                      (690)           18,857           10,188
                                                                   --------------   --------------   --------------
      Total assets less liabilities                                       334,573          330,014          315,262
                                                                         ========         ========         ========
      Capital and reserves: equity interests                                                                       
      Called up share capital (Ordinary Shares)                               839              836              836
      Reserves:                                                                                                    
      Share premium account                                                 1,089              868              868
      Special reserve                                                     133,525          133,525          133,525
      Capital reserve - realised                                          144,040          139,850          137,455
      Capital reserve - unrealised                                         42,828           43,943           32,641
      Revenue reserve                                                      12,252           10,992            9,937
                                                                   --------------   --------------   --------------
                                                                          334,573          330,014          315,262
                                                                         ========         ========         ========
      Net Asset Values:                                                                                            
      per Ordinary Share (basic)                                           399.0p           394.6p           377.0p
      per Ordinary Share (fully diluted)                                   394.0p           388.5p           371.6p
      per Ordinary Share (diluted - FRS 14)                                394.1p           388.8p           371.8p



NOTES

As at 30 June 2002, the Company had 83,855,423 Ordinary Shares (30 June 2001 and
31 December 2001 - 83,630,941) and 1,434,811 Warrants (30 June 2001 - 1,779,293
and 31 December 2001 - 1,659,293) in issue.



On 2 April 2002, as a result of certain holders exercising the subscription
rights of their Warrants, 224,482 Ordinary Shares of 1p were issued at 100p per
share.



During the six months to 30 June 2002, the Company did not buy in any Warrants
for cancellation.





SUMMARY CASH FLOW STATEMENT

(unaudited)

                                                                        6 months to                       6 months to
                                                                       30 June 2002                      30 June 2001
                                                             £'000            £'000            £'000            £'000

    Net cash inflow from operating activities                                 3,312                             3,470
    Capital expenditure and financial investment                                                                     
    Payments to acquire investments                       (61,962)                          (68,296)                 
    Receipts from sales of investments                      49,762                            76,015                 
                                                    --------------                    --------------                 
    Net cash (outflow)/inflow from capital                                                                           
    expenditure and financial investment                                   (12,200)                             7,719
                                                                     --------------                    --------------
                                                                            (8,888)                            11,189
    Equity dividends paid                                                   (4,934)                           (4,704)
                                                                     --------------                    --------------
                                                                           (13,822)                             6,485
    Financing                                                                                                        
    Issue of Ordinary Shares                                   224                               371                 
    Warrants purchased for cancellation                          -                           (1,782)                 
                                                    --------------                    --------------                 
    Net cash inflow/(outflow) from financing                                    224                           (1,411)
                                                                     --------------                    --------------
    (Decrease)/increase in cash                                            (13,598)                             5,074
                                                                           ========                          ========

NOTES



1.  The foregoing do not comprise statutory accounts (as defined in section 240
(5) of the Companies Act 1985) of the Company.  The statutory accounts for the
year to 31 December 2001, which contained an unqualified Report of the Auditors,
have been lodged with the Registrar of Companies and did not contain a statement
required under section 237(2) or (3) of the Companies Act 1985.



2.   The Interim Report is expected to be posted to shareholders on 22 July
2002.  Members of the public may obtain copies from Aberforth Partners, 14
Melville Street, Edinburgh EH3 7NS or from its website at www.aberforth.co.uk.





CONTACT:     John Evans     •     Aberforth Partners     •     0131 220 0733


Aberforth Partners, Secretaries - 16 July 2002


ANNOUNCEMENT ENDS


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