Preliminary announcement

Scottish Oriental Smlr Co Tst PLC
21 October 2004



               THE SCOTTISH ORIENTAL SMALLER COMPANIES TRUST PLC

             Preliminary Results for the year ended 31 August 2004
                     (Extracted from the Audited Accounts)


The Board of The Scottish Oriental Smaller Companies Trust PLC is pleased to
announce the results for the year ended 31 August 2004.

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

Financial Highlights

   • Fully diluted net asset value per ordinary share rose by 3.2% from
     163.94p to 169.14p and undiluted net asset value rose by 3.2% from 174.91p
     to 180.50p.
   • This compares with a rise of 1.0% in the benchmark index - the MSCI AC
     Asia (ex Japan) Index.
   • The Nomura Asia Small Cap Index fell 1.6% and the FTSE All-Share Index
     rose 7.2% respectively over the same period.
   • The share price rose by 0.5% from 156.00p to 156.75p.
   • The warrant price rose by 3.0% from 67.50p to 69.50p.
   • A final dividend of 1.575p net is recommended to be paid on 21 January
     2005 to shareholders registered on 17 December 2004.


Statement of Total Return for the year ended 31 August 2004

                              2004                        2003
                        Income*   Capital   Total   Income*   Capital   Total
                          £'000     £'000   £'000     £'000     £'000   £'000

Gains on investments         -      1,326   1,326         -     9,172   9,172
Income from
investments               1,467         -   1,467     1,245         -   1,245
Other income                100         -     100        69         -      69
Investment management
fees                       (480)        -    (480)     (362)        -    (362)
Currency
gains/(losses)                -        28      28         -       (18)    (18)
Other administrative
expenses                   (272)        -    (272)     (229)        -    (229)
                         -------- --------- -------  -------- -------   -------

Net return before
finance costs and
taxation                    815     1,354   2,169       723     9,154   9,877
Finance costs of
borrowing                   (36)        -     (36)      (42)      (12)    (54)
                         -------- --------- -------  --------   ------- -------

Return on ordinary
activities before
taxation                    779     1,354   2,133       681     9,142   9,823
Tax on ordinary
activities                 (232)      (63)   (295)     (185)        2    (183)
                         -------- --------- -------  --------   ------- -------

Return attributable to
equity                      547     1,291   1,838       496     9,144   9,640
shareholders
Ordinary dividends on
equity shares              (401)        -    (401)     (382)  --         (382)
                         -------- --------- -------  -------- -------   -------

Transfer to reserves
**                          146     1,291   1,437       114     9,144   9,258
                         -------- --------- -------  --------   ------- -------

Basic Return per
ordinary share             2.14p     5.05p   7.19p     1.95p    35.90p  37.85p
Fully diluted return
per ordinary share (in
accordance with FRS
14)                        2.00p     4.72p   6.72p     1.90p    35.05p  36.95p

* The income column of this statement is the Profit and Loss Account of the
Company.
All income and capital items derive from continuing operations.
** after dividend proposed for 2004 - £401,349 (2003: £382,036)

Summary Balance Sheet as at 31 August 2004

                                                 2004                  2003
                                           £'000      £'000      £'000      £'000

Total investments                                    46,934                44,393
Current Assets:
 Debtors                                     337                   181
 Cash and deposits                         2,903                 4,271
                                          --------              --------
                                           3,240                 4,452
Current Liabilities (due within one
year)
 Creditors                                  (319)                 (244)
 Dividend payable                           (401)                 (382)
                                          --------              --------
                                            (720)                 (626)
Net current assets                                    2,520                 3,826
                                                     --------              --------
                                                     49,454                48,219
Creditors (due after one year)
 Foreign currency loan                               (3,404)               (3,631)
Provision for liabilities and charges
 Deferred tax                                           (53)                  (41)
                                                     --------              --------
Shareholders' funds                                  45,997                44,547
                                                     ========              ========

Capital and reserves                                 45,997                44,547
                                                     ========              ========

Net asset value per share - undiluted                180.50p               174.91p
Net asset value per share - fully                    169.14p               163.94p
diluted


Summary Cash Flow Statement for the year ended 31 August 2004

                                                             2004        2003
                                                            £'000       £'000

Net cash inflow from operating activities                     827         819
Interest paid on borrowings                                   (36)        (42)
Taxation                                                     (204)       (155)
Net cash (outflow)/inflow from capital expenditure and
financial investment                                       (1,586)      1,700
Equity dividend paid                                         (382)       (382)
Financing                                                      13         903
                                                         ----------  ----------
(Decrease)/increase in cash                                (1,368)      2,843
                                                         ==========  ==========

(a) Reconciliation of total income to net cash inflow from operating activities

                                                              2004        2003
                                                             £'000       £'000

Income                                                       1,567       1,314
Administration expenses                                       (752)       (591)
(Increase)/decrease in debtors                                  (7)         81
Increase in dividends accounted for but not yet received        (7)          -
Increase in creditors                                           26          15
                                                          ----------  ----------
Net cash inflow from operating activities                      827         819
                                                          ==========  ==========

(b) Analysis of changes in cash and net debt during the year

                   At the start      Cash         Currency   At the end of the
                    of the year                  Movements                year
                          £'000     Flows            £'000               £'000
                                    £'000
Cash                      4,271    (1,368)               -               2,903
Foreign
Currency                 (3,631)        -              227              (3,404)
Loan                   ---------- ---------        ---------          ----------
Net
(debt)/cash                 640    (1,368)             227                (501)
                       ========== =========        =========          ==========


BOARD STATEMENT

Investment Performance

This is Scottish Oriental's tenth annual report, and covers the year to 31st
August 2004; it provides a suitable opportunity to look back over the period
since the Trust's inception. There were two principal reasons for the launch of
Scottish Oriental: the first was that small companies in Asia were available on
modest ratings and the second was the belief that smaller companies were likely
to grow faster than larger ones. In general there has been some rerating of
smaller companies especially over the last five years. This, together with a
strong improvement in both earnings and, for an increasing number of companies,
dividends has helped to produce satisfactory growth in assets. The diluted and
undiluted net asset values per share have risen by 70.6% and 82.3% respectively
since inception, which compare with a decline of 18.6% in the MSCI AC Asia (ex
Japan) Index in sterling terms.

This year's performance has also been good in relation to the Index and
satisfactory in relation to other Asian funds. The fully diluted and undiluted
net asset values increased by 3.2% to 169.1p and 180.5p. The MSCI Index
increased by 1.0% in sterling terms and the Nomura Asian Small Cap Index fell by
1.6% in the same period.

The Board continue to be confident about the long term outlook for Scottish
Oriental. The Trust has a portfolio of good quality investments and the
arguments for investing in smaller companies in Asia remain persuasive.

Ivor Guild was the chairman of Scottish Oriental for the first nine years of its
life until he retired earlier this year. His wise leadership was greatly valued
by the Board and the Investment Manager. His guidance was a major factor in the
successful establishment and development of the Trust. The Board are very
grateful to him.

Share buy-back

The Board is seeking general authority to buy back Scottish Oriental shares and
a resolution to this effect will be proposed at the Trust's AGM on 24 January
2005. This power, if approved, will be in relation to a maximum number of shares
(just under 15% of Scottish Oriental's issued share capital at 21 October 2004)
and the maximum (105% of the 5 day average middle market price) and minimum (the
nominal value) prices at which the shares may be bought. The authority would
only be used in circumstances that produce a clear benefit for continuing
shareholders. Any shares that are bought under this authority will be cancelled.

Gearing

Scottish Oriental had total borrowings of £3.4 million in yen at 31st August
2004 representing 7.4% of net assets. This facility runs until February 2007 and
the rate of interest is fixed at 1.04%. At the year end £2.9 million was held in
cash, mainly in sterling.

Performance for the year ended 31 August 2004

Net Asset Value - fully diluted   +3.2%  MSCI AC Asia (ex Japan)
                - undiluted       +3.2%  Index (£)                        +1.0%
                                         Nomura Asia Small Cap
Share Price                       +0.5%  Index (£)                        -1.6%
Warrant Price                     +3.0%  FTSE All-Share Index (£)         +7.2%


Performance since inception (March 1995)

Net Asset Value - fully diluted   +70.6%  MSCI AC Asia (ex Japan)
                - undiluted       +82.3%  Index (£)                      -21.0%
                                          FTSE All-Share Index (£)       +93.4%

Summary Data at 31 August 2004

Shares in issue           25,482,502   Shareholders' Funds              £46.00m
Warrants in issue          4,731,148   Market Capitalisation            £39.94m

Net Asset Value per share
          - fully diluted     169.14p  Share Price Discount to Net
                                       Asset
- undiluted                   180.50p  Value - fully diluted               7.3%
Share Price                   156.75p        - undiluted                  13.2%
Warrant Price                  69.50p

Review by Investment Manager

The performance of Asian stockmarkets was mixed for the year ending 31 August
2004. Returns were generally higher in the first half of the period owing to
rising exports and higher domestic consumption, which led to a very strong flow
of funds into the Region. South Korea and Taiwan benefited from the improved
demand for electronic products. A correction in the second half was caused by a
rising oil price, US interest rate fears and concerns over China's
macro-economic policy. Technology stocks performed particularly poorly during
this latter period owing to negative news from the US and evidence of margin
pressure.

Economic growth within the Region remained well above the global average
supported by rising exports and low nominal interest rates. Domestic consumption
continued to improve with the exception of South Korea, where the level of debt
held by individuals remains high. The end of deflation in China and Hong Kong
provided an additional boost to consumer demand.

Smaller companies marginally underperformed over the period. There was a
significant fall in the price of a number of China related companies towards the
end of the financial year.

Outlook by Investment Manager

Susie Rippingall, Portfolio Manager for Scottish Oriental said, 'The outlook for
Asian stockmarkets continues to be positive. Economic growth throughout the
Region should remain well above the global average driven by high domestic
consumption, recovery in private investment and robust exports. For the most
part, interest rates are expected to remain relatively stable, but inflation
will have to be monitored closely.
There are of course concerns. Global euphoria about the long term prospects for
China might easily prove justified, but it is too early to judge whether a 'soft
landing' of the economy can be achieved. Over-investment in certain industries
is clearly a danger, as are commodity price increases. Both the Chinese and
Indian Governments will have to be vigilant on the inflation front.

The weak US dollar has so far proved to be a blessing for Asian equities,
boosting exports of both commodities and finished goods as well as increasing
domestic liquidity. Confidence in the US dollar as the world's principal store
of value should not be taken for granted. An uncontrollable shift out of US
dollars by either Asian Central Banks or the private sector could yet have
serious ramifications for the global economic and stockmarket outlook. In this
case Asia - especially those countries whose economic growth is dependent on
manufacturing, as opposed to commodity related exports - would certainly be
adversely affected.

Finally, the adverse impact of the deteriorating situation in the Middle East
has yet to be felt. Insecurity in oil producing countries, such as Saudi Arabia
as well as Iraq, could still result in significant further rises in the oil
price. Peacekeeping is proving increasingly expensive, and its impact on
relevant government finances must be a cause for concern.

The Trust is well positioned to benefit from the high rates of economic growth,
which the Investment Manager expects during the Trust's current financial year.
Valuations for Asian smaller companies are still relatively attractive, with
earnings growth rates over the longer term likely to be higher than the rest of
the world. 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 than robust.'

Dividend

The Board is proposing a final dividend of 1.575p net (2003: 1.50p net),
representing an increase of 5% on last year. Scottish Oriental's primary
investment objective has been and continues to be capital growth, and dividends
have been restricted so as to build up a reasonable revenue reserve. This is
over £1 million and now gives the Board the flexibility, subject to reasonable
economic conditions prevailing in the Region, to aim to increase the dividend
each year in real terms, that is faster than the rate of inflation.

Notes:

(1) The financial information contained within this Preliminary Announcement
does not constitute statutory accounts as defined in Section 240 of the
Companies Act 1985. The results for the years ended 31st August 2004 and 2003
are an abridged version of the statutory accounts for those years, which
received unqualified audit reports and did not contain statements under sections
237(2) or (3) of the Companies Act 1985. Statutory accounts for 2003 have been
filed with the registrar of Companies and those for 2004 will be delivered in
due course.

(2) The accounting policies applied in preparing these accounts are consistent
with those applied in the latest published annual accounts.

(3) The terms of the Preliminary Announcement were approved by the Board on 21
October 2004.

(4) Copies of the Annual 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:      Sara Dennehy, Media Relations Manager,
                First State Investments, Ph: 44 (0) 207 332 6542
                Susie Rippingall, Portfolio Manager,
                First State Investments, Ph: 44 (0)131 473 2528

21 October 2004



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