Interim Results

Shires Smaller Companies PLC
05 September 2007


News Release


5 September 2007



Shires Smaller Companies plc
Interim Results for the
Six months to 30 June 2007


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.


                                                           30 June 2007           31 December 2006

Total investments                                                £98.6m                     £96.6m
Shareholders' funds                                              £64.1m                     £63.9m
Net asset value per share                                        290.1p                     289.0p
Share price                                                      286.0p                    268.25p
Premium/(Discount) (share price to adjusted
net asset value)*
                                                                   0.2%                     (5.6%)
Dividends per share                                                8.1p                      8.0p+
     Fourth Interim Dividend (2006)                               4.75p                      4.75p
     First Interim Dividend (2007)                                3.35p                      3.25p
     Second Interim Dividend (2007)( ^ )                          3.35p                      3.25p



+     Half year to 30 June 2006

( ^ ) The second Interim Dividend is not reflected in these accounts.

*     Based on IFRS NAV reduced by the dividend adjustment of 4.75p


  • First and second interim dividends for 2007 totalled 6.7p compared to 6.5p
    in 2006 an increase of 3.1%.

  • The total return on net assets for the six month period was 3.3% against
    the benchmark return of 2.1%.

  • Based on the last four quarterly dividends the yield on the Company's
    shares at 30 June 2007 was 5.1% compared to 2.0% on FTSE SmallCap Index
    (excl. Investment Companies), the Company's benchmark.

  • The rating of the Company's shares improved in the six month period,
    moving from a discount of 5.6% to a premium of 0.2% at 30 June 2007.

  • Glasgow Investment Managers, the Company's Manager, have been acquired by
    Aberdeen Asset Managers.  The Board is confident Aberdeen will be able to
    build on the success achieved by Glasgow Investment Managers Limited.



For further information, please contact:-

Kenneth Harper
Head of Investment Trusts
Glasgow Investment Managers,
0141 572 2700



K Hussain
Glasgow Investment Managers,
0141 572 2700





Chairman's Statement


Financial Highlights

I am pleased to report a further increase in your Company's dividend adding to
its attraction to investors seeking a higher level of income from their equity
investments. The first and second interim dividends for 2007 totalled 6.7p
compared to 6.5p in the previous year, giving a yield of 5.1% based upon a share
price of 286p as at 30 June 2007. Subject to any unforeseen circumstances
current estimates suggest that the dividend can be increased further in the
current year. However this should not be taken as a forecast of profits.


Investment Returns

The total return on net assets over the six months was 3.3%, which was higher
than the 2.1% return on the FTSE SmallCap Index (excluding Investment
Companies), the Company's benchmark.    This outperformace was primarily due to
the strong stock selection within the equity portfolio which returned 5.1%.
This was partially offset by the poor performance of the fixed interest
portfolio due to rising interest rates.

The total return to shareholders or the share price total return was 10.8%.
This reflects the fact that discount at which the share price stood to the net
asset value at 31 December 2006 of 5.6%, has been turned to a premium of 0.2% at
30 June 2007.


Earnings and Dividends

As shown in the financial highlights section actual dividends paid to date in
respect of the 2007 financial year amounted to 6.7p compared to 6.5p for the
same period last year. This comprised two payments of 3.35p per share, made on
30 April 2007 and 31 July 2007 respectively.


Portfolio Profile

The distribution of assets table on page 12 shows 105.4% of net assets was
invested in ordinary shares at 30 June 2007.  This compares to 99.4% at 31
December 2006.  This increase was due to a net investment into equities of £1.8
million and the continued growth of equities in the period.  Total gearing at 30
June 2007 was 53.7%, up slightly from 51.1% at 31 December 2006.  The majority
of the Company's gearing continues to be invested in high-yielding fixed
interest securities of principally an investment grade nature. These fixed
interest securities make a major contribution to the high level of income paid
by the Company while allowing a full exposure to the equity market.


Outlook

The UK economic environment remains robust helped by strong global demand.
Against expectation, the price of oil and many commodities has re-accelerated
raising further concerns about the risks of higher inflation. The current high
interest rates in the UK are making life more difficult for consumers and
retailers in the second half of the year.

Although personal balance sheets may be strained, the corporate sector remains
well financed. Companies continue to announce higher dividends and share buy
back schemes. During the recent stock market correction, caused by worries about
US sub prime mortgages and a credit crunch, valuations have adjusted to more
realistic levels. This is particularly true of the FTSE 250 Mid Cap section of
the stock market which was expensive but has now lost its takeover premium.

Smaller companies continue to generate inflation beating earnings and dividend
growth despite more nervous financial times. In the next few months, the
strategy is to take advantage of periods of volatility to invest selectively for
yield and value.


Investment Manager

On 24th August 2007 Glasgow Investment Managers Limited, the Company's Managers,
were acquired by Aberdeen Asset Managers plc. Aberdeen is a global investment
manager, has considerable experience in the investment trust sector and will
complement their existing range of Investment Trusts with the acquisition of
Glasgow. The Board has agreed that Aberdeen will manage the Company going
forward and is confident they will be able to build on the success achieved by
Glasgow Investment Managers Limited.  The Glasgow investment team, led by Iain
Lynn, will be joining the Aberdeen Group to ensure continuity of management.


The Interim Report will be mailed to shareholders on 10 September 2007.  Copies
may be obtained from the Managers, Glasgow Investment Managers Limited,
Sutherland House, 149 St Vincent Street, Glasgow G2 5DR after that date.



H S Cathcart
Chairman




Consolidated Income Statement
for the half year ended 30 June 2007

                                                                              Half year to 30 June 2007
                                                                                     (unaudited)
                                                                            Revenue     Capital        Total
Gains                                                                          £000        £000         £000
Gains on investments at fair value                                                -         525          525
Zero coupon finance costs                                                         -       (238)        (238)


Revenue
Dividend income                                                               2,021           -        2,021
Interest income from investments                                                803        (59)          744
Deposit Interest                                                                  3           -            3
Net gain/(loss) on financial assets held for trading                             11           -           11
                                                                              2,838         228        3,066


Expenses
Investment management fee                                                     (222)       (222)        (444)
Other administrative expenses                                                 (121)           -        (121)
Finance costs of borrowings                                                   (238)       (238)        (476)
                                                                              (581)       (460)      (1,041)


Profit before tax                                                             2,257       (232)        2,025
Tax expense                                                                       -           -            -

Profit for the year                                                           2,257       (232)        2,025

Profit attributable to equity holders of the company                          2,257       (232)        2,025

Earnings per ordinary share (pence)                                                                    9.16p

The Total column is the Income Statement of the Group

There are no discontinued operations





Consolidated Income Statement
(Continued)

                                                   Half year to 30 June 2006         Year to 31 December 2006
                                                          (unaudited)                       (audited)
                                                  Revenue    Capital      Total    Revenue    Capital      Total
                                                     £000       £000       £000       £000       £000       £000

Gains
Gains on investments at fair value                      -        612        612          -      8,859      8,859
Zero coupon finance costs                               -      (112)      (112)          -      (455)      (455)


Revenue
Dividend income                                     1,286          -      1,286      2,985          -      2,985
Interest income from investments                      740       (32)        708      1,472       (73)      1,399
Deposit Interest                                        4          -          4         13          -         13
Net (loss)/gain on financial assets held for         (59)          -       (59)          5          -          5
trading
                                                    1,971        468      2,439      4,475      8,331     12,806


Expenses
Investment management fee                           (204)      (204)      (408)      (409)      (409)      (818)
Other administrative expenses                       (147)          -      (147)      (325)          -      (325)
Finance costs of borrowings                         (219)      (219)      (438)      (447)      (447)      (894)
                                                    (570)      (423)      (993)    (1,181)      (856)    (2,037)


Profit before tax                                   1,401         45      1,446      3,294      7,475     10,769
Tax expense                                             -          -          -          -          -          -

Profit for the year                                 1,401         45      1,446      3,294      7,475     10,769

Profit attributable to equity holders of the
Company                                             1,401         45      1,446      3,294      7,475     10,769

Earnings per ordinary share (pence)                                        6.5p                           48.71p




Group Balance Sheet
as at 30 June 2007

                                                             30 June       31 December           30 June
                                                                2007              2006              2006
                                                         (unaudited)         (audited)       (unaudited)
                                                                £000              £000              £000
Non current assets
  Ordinary shares                                             67,600            63,537            59,149
  Convertibles                                                 1,568             1,548             2,186
  Corporate bonds                                             20,481            21,220            21,264
  Other fixed interest                                         8,951            10,270             6,117
  Zero coupon finance derivatives at fair value                7,576             5,752             4,738

                                                             106,176           102,327            93,454

Current assets
  Trade and other receivables                                  2,901             1,456                 -
  Accrued income and prepayments                               1,439             1,399               947
  Financial assets of dealing subsidiary                         628               617               306
  Cash and cash equivalents                                        -                 -               719

                                                               4,968             3,472             1,972

Current liabilities
  Trade and other payables                                   (3,306)             (346)             (417)
  Short-term borrowings                                      (7,012)           (6,922)           (5,720)

                                                            (10,318)           (7,268)           (6,137)

Non current liabilities
  Long term loan                                            (10,000)          (10,000)          (10,000)
  Zero coupon finance derivatives at fair value             (26,688)          (24,627)          (23,270)

                                                            (36,688)          (34,627)          (33,270)

Net assets                                                    64,138            63,904            56,019


Issued capital and reserves attributable
To equity holders of the parent
  Called up share capital                                     11,055            11,055            11,055
  Share premium account                                       11,892            11,892            11,892
  Capital premium reserve                                      2,032             2,032             2,032
  Retained Earnings
     Realised capital reserve                                 23,561            21,090            16,907
     Unrealised capital reserve                               12,771            15,474            12,227
     Revenue reserve                                           2,827             2,361             1,906

Equity shareholders' funds                                    64,138            63,904            56,019

Net asset value per ordinary share (pence)                    290.1p            289.0p            253.4p




Note: These are not statutory accounts under section 240 of the Companies Act
1985 and are unaudited. The figures and financial information for the year ended
31 December 2006 have been extracted from the 2006 report and accounts which
have been delivered to the Registrar of Companies; the report of the auditors on
these accounts was unqualified and did not contain a statement under Section 237
(2) or (3) of the companies Act 1985.



Consolidated Cash Flow Statement
for the half year ended 30 June 2007


                                                              Half year to      Half year to           Year to
                                                                   30 June           30 June       31 December
                                                                      2007              2006              2006
                                                               (unaudited)
                                                                      £000              £000              £000

Cash flows from operating activities
Investment income received                                           2,785             2,233             4,204
Deposit interest received                                                3                 6                16
Investment management fee paid                                       (432)             (421)             (818)
Sales less purchases of current financial assets
 held for trading                                                        -                 -             (247)
Other cash receipts                                                      -                 -                 -
Other cash expenses                                                  (152)             (186)             (324)

Cash generated from operations                                       2,204             1,632             2,831
Interest paid                                                        (475)             (449)             (896)
Taxation                                                                 -                 -                 -

Net cash inflows from operating activities                           1,729             1,183             1,935

Cash flows from investing activities
Purchases of investments                                          (24,277)          (11,915)          (43,956)
Sales of investments                                                24,249            13,245            44,050
Net cash (outflow)/ inflow from investing activities                  (28)             1,330                94

Cash flows from financing activities
Equity dividends paid                                              (1,791)           (1,769)           (3,206)
Net (decrease)/ increase in cash and
  Cash equivalents                                                    (90)               744           (1,177)

Cash and cash equivalents at start of period                       (6,922)           (5,745)           (5,745)
Cash and cash equivalents at end of period                         (7,012)           (5,001)           (6,922)

Cash and cash equivalents comprise:
Cash and cash equivalents                                                -               719                 -
Short -term borrowings                                             (7,012)           (5,720)           (6,922)

                                                                   (7,012)           (5,001)           (6,922)




Consolidated Statement of Changes in Equity
for the half year ended 30 June 2007


                          Share        Share         Capital     Realised    Unrealised     Retained
                        Capital      Premium      Redemption      Capital       Capital      Revenue
                                                     Reserve      Reserve       Reserve      Reserve      Total
                           £000         £000            £000         £000          £000         £000       £000
As at 31 December
2006                     11,055       11,892           2,032       21,090        15,474        2,361     63,904

Revenue profit for
the period                    -            -               -            -             -        2,257      2,257
Capital profits for
 the period                   -            -               -        2,471       (2,703)            -      (232)
Equity dividends              -            -               -            -             -      (1,791)    (1,791)

As at 30 June 2007       11,055       11,892           2,032       23,561        12,771        2,827     64,138





Distribution of Assets and Liabilities


                             Valuation at                                                    Valuation at
                           31 December 2006        Purchases        Sales    Appreciation/   30 June 2007
                              (audited)                                     (Depreciation)   (unaudited)
                               £000          %          £000         £000             £000       £000         %
Listed investments

Ordinary shares              63,537       99.4        16,815     (14,960)            2,208      67,600     105.4
Convertibles                  1,548        2.4             -            -               20       1,568       2.4
Corporate bonds              21,220       33.2         1,798      (1,775)            (762)      20,481      31.9
Other fixed interest         10,270       16.1         8,639      (8,959)            (999)       8,951      14.0

                             96,575      151.1        27,252     (25,694)              467      98,600     153.7

Other non current

Assets                        5,752        9.0                                                   7,576      11.8
Current assets                3,472        5.4                                                   4,968       7.8
Current liabilities         (7,268)     (11.4)                                                (10,318)    (16.1)
Non current liabilities    (34,627)     (54.1)                                                (36,688)    (57.2)
                           
Net assets                   63,904      100.0                                                  64,138     100.0


Net asset value
  per share                  289.0p                                                             290.1p




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