Interim Results

Scottish Oriental Smlr Co Tst PLC
27 March 2003


               THE SCOTTISH ORIENTAL SMALLER COMPANIES TRUST PLC

    Preliminary Results (Unaudited) for the six months to 28th February 2003



The Board of The Scottish Oriental Smaller Companies Trust PLC is pleased to
announce the results for the six months to 28th February 2003.



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 fell by 6.7% from 138.56p
to 129.23p and fully diluted net asset value fell by 5.7% from 133.77p to
126.16p. This compares with a decline of 13.0% in the benchmark index - the MSCI
AC Asia Free (Ex Japan) Index.

•         The Nomura Asia Small Cap Index and the FTSE All-Share Index declined
10.6% and 14.0% respectively over the same period.

•         Share price fell by 7.1% from 123.75p to 115.00p.

•         Warrant price fell by 20.2% from 49.5p to 39.5p.

•         Discount to undiluted net asset value widened slightly  from 10.7% to
11.0%.



Statement of Total Return for the six months to 28th February 2003 (Unaudited)



                                             Six months to 28th February 2003           Six months to 28th February 2002
                                           Income*        Capital         Total         Income*        Capital     Total

                                            £'000          £'000          £'000          £'000          £'000      £'000

Gains / (losses) on investments         -              (2,387)        (2,387)       -                7,985       7,985
Income from investments                 414            -              414           322              -           322
Other income                            24             -              24            55               -           55
Investment management fees              (157)          -              (157)         (157)            -           (157)
Currency gains                          -              25             25            -                224         224
Other administrative expenses           (116)          -              (116)         (81)             -           (81)

Net return before finance costs and
taxation                                165            (2,362)        (2,197)       139              8,209       8,348
Finance costs of borrowing              (24)           (12)           (36)          (26)             -             (26)

Return on ordinary activities before
taxation                                141            (2,374)        (2,233)       113              8,209       8,322
Tax on ordinary activities              (31)           (1)            (32)          (21)             -           (21)

Return attributable to equity           110            (2,375)        (2,265)       92               8,209       8,301
shareholders
Ordinary dividends on equity shares      -             -              -             -                -             -

Transfer to/(from) reserves             110            (2,375)        (2,265)       92               8,209       8,301

Return per ordinary share               0.43p          (9.33p)        (8.90p)       0.36p            (5.75p)     (5.39)p



* 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 year ended 31st August 2002



                                                                   Year ended 31st August 2002
                                                             Income*          Capital          Total

                                                              £'000            £'000           £'000

Gains on investments                                     -                6,923            6,923
Income from investments                                  1,132            -                1,132
Other income                                             79               -                79
Investment management fees                               (351)            -                (351)
Currency gains                                           -                103              103
Other administrative expenses                            (205)            -                (205)

Net return before finance costs and
taxation                                                 655              7,026            7,681
Finance costs of borrowing                               (49)             -                (49)

Return on ordinary activities before
taxation                                                 606              7,026            7,632
Tax on ordinary activities                               (161)            -                (161)

Return attributable to equity                            445              7,026            7,471
shareholders
Ordinary dividends on equity shares                       (382)           -                (382)

Transfer to reserves                                     63               7,026            7,089

Return per ordinary share                                1.75p            27.59p           29.34p



* 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 28th            As at 28th            As at 31st
(Unaudited)                                                 February 2003          February 2002        August 2002 (1)
                                                                £'000                  £'000                 £'000

Total investments                                       34,689                 35,442                36,947
Net current assets                                      1,942                  3,718                 1,127
Japanese Yen loan                                       (3,598)                (2,642)               (2,726)
Deferred Tax                                            (9)                    (20)                  (62)
Equity shareholders' funds                              33,024                 36,498                35,286

Net asset value per share - undiluted                   129.66p                143.32p               138.56p   (2)
Net asset value per share - fully diluted               126.59p                139.73p               133.77p





(1) The preliminary statement is not the Company's statutory accounts. The results for the year to 31st August 2002 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 28th February 2003 (see note at end of this statement).






Cash Flow Statement for the six months to 28th February 2003


                                                  Six months to                Six months to                 Year to
                                               28th February 2003           28th February 2002          31st August 2002
                                              £'000          £'000          £'000         £'000         £'000      £'000
OPERATING ACTIVITIES:
Dividends received from:
Investments                                              559                          435                         1,088
Interest received                                        24                           57                          89

                                                         583                          492                         1,177
Investment management fee                 (161)                         (143)                       (335)
Secretarial fee                           (21)                          (20)                        (41)
Directors' fees                           (27)                          (24)                        (48)
Other expenses paid                       (21)                          (38)                        (138)

                                                         (230)                        (225)                       (562)

Net cash inflow from operating activities                353                          267                         615
RETURNS ON INVESTMENTS AND SERVICING OF
FINANCE
Interest paid on borrowings                              (23)                         (19)                        (50)
TAXATION:
Total tax paid                                           (29)                         (13)                        (204)
CAPITAL EXPENDITURE AND FINANCIAL
INVESTMENT:
Purchases of investments                  (5,838)                       (6,915)                     (15,707)
Sales of investments                      5,655                         7,618                       13,829
Capital expenses                          (12)                          -                           -
Currency losses                           (2)                           (31)                        (67)

Net cash (outflow)/inflow from capital
expenditure and financial investment                     (197)                        672                        (1,945)
                                                         
EQUITY DIVIDEND PAID                                     (382)                        (461)                       (461)
Financing:
Subscription of new capital:
Ordinary shares                           3                             -                           -
JPY foreign currency loan drawn           3,598
JPY foreign currency loan repaid          (2,698)                       -                           -

                                                         903                          -                           -

Increase/(decrease) in cash                              625                          446                        (2,045)





BOARD STATEMENT



Investment Performance



In the six months ending 28 February 2003, Scottish Oriental's undiluted net
asset value per share declined 6.7% to 129.23p.  This compares with a sterling
adjusted fall of 13.0% in the Trust's benchmark - the MSCI AC Asia Free (ex
Japan) Index.  The Nomura Asia Small Cap Index and the FTSE All-Share Index fell
10.6% and 14.0% respectively over the same period.  The Trust's share price
declined 7.1%, slightly more than its net asset value, resulting in a small
widening of the discount.



Scottish Oriental's encouraging performance, at least relative to its
comparative indices, is attributed to stock selection, particularly the Trust's
holdings in China-related companies listed in Hong Kong.




Review



The performance of Asian stockmarkets was volatile over the six months ending
February 2003.  The key issues of concern remained the relative weakness of the
US economy and the risk of US led war against Iraq. A sharp downward movement in
the markets in September 2002 was quickly reversed in October. However, the
rally proved to be short lived as announcements of weak US economic data and the
hardening of attitudes towards Iraq caused the markets to fall again.



India was the best performing market over the six month period, supported by a
recovery in orders for the software sector.  Thailand continued to outperform as
earnings forecasts were upgraded to reflect stronger economic growth.  South
Korea fell sharply owing to concerns that the North would resume its nuclear
programme.



Asian smaller companies generally outperformed their larger counterparts over
the six month period.



Outlook



Political uncertainty will dominate the short term outlook for Asian
stockmarkets, with the impact of the war in the Middle East as well as
heightened tensions in the Korean peninsular. The rise in commodity prices,
particularly oil, requires careful monitoring. However, a weakening US dollar
provides significant scope for central banks to ease monetary policies.  US
consumption trends - in terms of confidence, demand and pricing - will also
continue to have a major impact on the Asian economies.



However, the longer term prospects for Asian equities remain good. Economic
growth in the Region is well above the global average and valuations are
undemanding.  The Trust is well positioned to benefit from the growth of
domestic consumption, particularly in India and Thailand. The global trend
towards increased sourcing of manufactured goods from Asia should continue given
the low cost of production, particularly in China.



Smaller companies in the Region continue to trade at significant discounts to
their larger counterparts. Scottish Oriental's investment philosophy is well
suited for the current stockmarket volatility, given its focus on well-managed,
financially sound companies.



Borrowing



Scottish Oriental renewed its Yen borrowing facility in February 2003.  The
total borrowing has increased to 670m Yen (£3.6m) from 500m Yen (£2.6m), which
represents approximately 11 per cent of net assets at 28th February 2003.  The
interest rate on the borrowing is 1.04% and the facility matures on 28th
February 2003. 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 27th
January 2003 for the year ending 31st August 2002.  It is too early to make a
forecast of the 2003 distribution, but your Board would hope to be in a position
to maintain the dividend at this level.














Summary Data at 28th February 2003

Shares in issue                                    25,469,050 Shareholders' Funds                            £32.89m
Warrants in issue                                   4,744,600 Market Capitalisation                          £29.29m

Net Asset Value per share - undiluted                 129.23p Warrant Price                                   39.50p
                          - fully diluted             126.16p Package Price                                  122.90p

Share Price                                           115.00p Package equates to one share and
                                                              one-fifth of a warrant

Share Price Discount to Net Asset                             Package Price Discount to Net Asset
Value  - undiluted                                      11.0% Value  - undiluted                                4.9%
       - fully diluted                                   8.9%        - fully diluted                            2.6%


Performance for the six months to 28th February 2003

Net Asset Value - undiluted                    -6.7% MSCI AC Asia Free (ex Japan) Index (£)            -13.0%
                - fully diluted                -5.7%

Share Price                                    -7.1% Nomura Asia Small Cp Index (£)                    -10.6%
Warrant Price                                 -20.2%
Package Price                                  -8.0% FTSE All-Share Index                              -14.0%



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, we are 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, we 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 NAV per share figures at 28th February 2003 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 NAV 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 27th March 2003.

(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:                          Lucy Allan (Head of Investment Trusts)

                                    First State Investments, London 0207 332 6500



27th March 2003


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