Final Results

Foreign & Colonial Smaller Co's PLC
19 June 2001



Date:  19 June 2001
Contact:       Sandy Fleming
               F&C Management Ltd                   020 7628 8000
               Louise Dolan
               Financial Dynamics                   020 7831 3113



                   FOREIGN & COLONIAL SMALLER COMPANIES PLC
                  Unaudited Preliminary Statement of Results
                       for the year ended 30 April 2001



SUMMARY OF RESULTS

                                                   30 April  % change  % change
                                                       2001 2000-2001 1999-2000

Share price                                          242.5p      -5.0     +25.4

Net assets                                          £274.9m     -12.2     +18.0

Net asset value per share (prior charges at         291.89p     -10.3    +27.5
nominal value)

Earnings per share *                                  4.22p       u/c     -19.6

Dividends per share                                   3.95p      +5.3     +11.6


* Restated in 1999 to reflect changes in accounting policies

MAIN POINTS

*  Both the NAV and the share price have increased over the past two years,
   although the last 12 months have seen a decline.

*  This is the 31st year of consecutive dividend increases.

*  The discount narrowed during the year from 21.6% to 16.9%.


CHAIRMAN'S COMMENT

In 2000-2001 the markets took back some of Foreign & Colonial Smaller
Companies' substantial gains in the previous year. However it is pleasing to
have ended the two-year switchback with the share price well ahead, to have
been able to increase the dividend for the 31st year running, to have seen our
discount narrow and to see a further increase in the number of individual
shareholders.


Extracts from the Chairman's Statement

In 2000-01 the markets took back some of the substantial gains achieved by
your trust in the previous year. In particular, weakness in Japan and
continental Europe, regions that have delivered us some excellent returns in
recent years, caused us to underperform our benchmark, which is based on UK
stocks. Given the extreme volatility in share prices, and the damage inflicted
on some high-growth sectors, it is however pleasing that we should have
emerged from the switchback of the past two years significantly ahead.

This may help to explain why we saw our discount narrow from 21.6% to 16.9%.
Our share price fell much less than our net asset value and was significantly
less volatile than the share price of many other companies listed on the stock
markets.

A strong revenue performance has meanwhile enabled us to announce a 5.3%
increase in our final dividend. So with a total payment of 3.95p, your company
has achieved the thirty-first successive year of dividend increases, and a
further year in which the scale of the increase has exceeded the rate of
inflation by a healthy margin.



Varied markets

In marked contrast to the previous year, our strongest performance in 2000-01
was in the United States, where our portfolio rose by 10.5% in sterling terms,
compared with a rise of 6.2% in the main US smaller companies index, the
Russell 2000. In the UK, our portfolio made very modest gains, up 0.5% over
the year as a whole. Although this compares favourably with the FTSE All-Share
Index, which fell 2.2% over the period, it was slightly below the rise of 1.7%
in our main benchmark, the Extended Hoare Govett Smaller Companies Index.



Our overall performance was dragged down by very sharp falls in other markets,
so that overall our Net Asset Value declined by 10.3%. Last year's star - our
Japanese portfolio, which rose 59.5% - proved this year's disappointment,
falling 36.2%. However, a rebound began in December, and our Japanese
portfolio had risen 14.6% by the end of May. This indicates the benefits of
investment trusts being able to ride out difficult times, rather than being
forced to sell at the wrong moment.



While this correction in the value of your trust has been much less dramatic
than for many others, we are naturally disappointed to have given back some of
last year's large gains. But as our discount narrowed, the impact on our share
price was somewhat less, resulting in a year-on-year decline of 5.0%. At the
end of the year, there were encouraging signs of a recovery, and by mid-June
our share price was back to April 2000 levels.



Dividends and buy-backs

Your board encourages the manager to focus on total returns, so it is pleasing
to note that we have been able to recommend an increase in the dividend well
ahead of inflation. We have also, as I indicated in my last report, focused
increasingly on marketing your trust to new and existing investors, and are
very pleased to report that the total number of shareholders has risen by 5%.
Today the proportion of the company owned by individual investors has risen to
43.4%, a relatively high share that reflects the advantages it offers in terms
of a geographically and industrially diverse investment portfolio of smaller
companies.



At our last Annual General Meeting authority was granted to repurchase up to
15% of the issued shares, and we have used this facility effectively during
the year to buy back shares at a price calculated to enhance NAV per share
significantly. We intend to continue to take opportunities to do so in the
future. Some 2,030,000 shares have been bought in during the year, allowing
your board to exert some control over the availability of stock, and we intend
to ask shareholders for authority to buy in up to another 15% of the issued
share capital at the forthcoming AGM.



The Annual General Meeting

Our AGM will again be held at the London Chamber of Commerce and Industry, at
11.30am on 30 July 2001. Once again I look forward to welcoming as many of you
as are able to attend. Both your board and your manager, Sandy Fleming, who
will be making a presentation at the meeting, look forward to this opportunity
to meet shareholders.



On this occasion we will be saying good-bye to a highly valued member of the
board, Robin Herbert, who is retiring after having served on the board of
Foreign & Colonial Smaller Companies since 1985. He remains Chairman of the
Foreign & Colonial Income Growth Investment Trust. This year we are also
welcoming back Andrew Barker, Chairman of The Bankers Investment Trust and for
many years the manager of our trust, as a member of the board. Andrew has also
served as the Chairman of the Association of Investment Trust Companies, and
we are delighted that he has been able to join us in this new capacity.



At the AGM we will also be asking for shareholders' agreement to reverse the
name change of the Company made in 1991, to the very limited extent of
incorporating the initials 'F&C' in place of the words 'Foreign & Colonial'.
This change, which returns us to our previous style, will enable us to benefit
from the branding being used by our manager to promote the range of retail
savings products.



Future prospects

The markets continue to be subject to sharp mood swings, and the extent of the
slowdown in the United States is still far from clear. The bursting of the
technology bubble has had a profound impact on investor thinking, and while
our portfolio felt the backlash of the collapse in TMT share prices, it has
reinforced our determination to focus on companies with strong underlying
fundamentals. We continue to believe that a diversified portfolio, invested in
over 20 countries, not only offers the opportunity to participate in worldwide
growth opportunities but offers some protection against setbacks in individual
markets. Overall, the combination of a portfolio of interesting and varied
stocks, some relatively undervalued, and the capacity to borrow for investment
when we believe the time to be right, puts your company in a strong position
going forward.



We are well-placed to benefit from recovery, having reduced our gearing during
a period of falling markets. Consequently, when we feel confident that markets
have resumed a growth path, we have plenty of scope for investment around the
world. We believe that the coming year will offer opportunities for good
quality investments in many sectors, and remain convinced that an investment
trust is the ideal vehicle to take advantage of these.



Sarah Hogg
June 2001



Balance Sheet


                                                             30 April  30 April
                                                                 2001      2000
                                                               £'000s    £'000s
Fixed assets
Investments                                                   284,064   341,892

Current assets
Debtors                                                         1,902     2,533
Cash at bank and short-term deposits                           23,083     4,555
                                                               24,985     7,088

Current liabilities
Creditors: amounts falling due within one year:
Foreign currency and sterling loans                          (20,558)  (16,262)
Other                                                         (3,518)   (4,590)
                                                             (24,076)  (20,852)

Net current assets/(liabilities)                                  909  (13,764)

Total assets less current liabilities                         284,973   328,128

Creditors: amounts falling due after more than one
year:
Sterling loan                                                       -   (5,000)
Debenture                                                    (10,000)  (10,000)
Provision for liabilities and charges                            (43)         -
Net assets                                                    274,930   313,128

Capital and reserves
Called up share capital                                        23,547    24,055
Capital redemption reserve                                      2,636     2,128
Share premium                                                  23,132    23,132
Capital reserves                                              220,117   258,603
Revenue reserve                                                 5,498     5,210
Total shareholders' funds                                     274,930   313,128

Net asset value per share - pence                              291.89    325.42


Geographical distribution of total assets less current liabilities (excluding
loans) at 30 April 2001 was United Kingdom 49%; North America 22%; Japan 8%;
Europe 16%; Far East and others 5%.



Statement of Total Return (incorporating the revenue account*)
for the year ended 30 April


                                         - 2001 -               - 2000-
                                  Revenue Capital  Total Revenue Capital  Total
                                   £'000s  £'000s £'000s  £'000s  £'000s £'000s

Gains and losses on investments         - (32,376)(32,376)     -  69,325  69,325
Exchange gains and losses               5   1,044   1,049     (3)(1,779) (1,782)
Income                              6,006       -  6,006   6,157       -   6,157
Management fee                      (422)    (985) (1,407)  (376)  (877) (1,253)
Other expenses                      (574)     (24)   (598)  (764)   (26)   (790)
Net return before finance costs
and taxation                       5,015  (32,341)(27,326) 5,014  66,643  71,657
Interest payable and similar
charges                             (497)  (1,159) (1,656)  (479) (1,118)(1,597)
Return on ordinary
activities before taxation         4,518  (33,500)(28,982) 4,535  65,525 70,060
Taxation on ordinary activities     (497)     325    (172)  (322)    288    (34)
Return on ordinary activities
after taxation                     4,021  (33,175)(29,154) 4,213  65,813 70,026
                                   
Dividends on ordinary shares
(equity)
Interim of 1.31p (2000 - 1.25p)   (1,247)      -   (1,247)(1,225)      - (1,225)
Proposed final of 2.64p (2000 -
2.50p)                            (2,486)      -   (2,486)(2,399)      - (2,399)
                                  
Amount transferred to/(from)
reserves                             288  (33,175)(32,887)   589  65,813 66,402

Return per ordinary share - pence   4.22   (34.82) (30.60)  4.22   65.91  70.13

* The revenue column of this statement is the profit and loss account of the
  Company.


Cash Flow Statement for the year ended 30 April

                                                               2001       2000
                                                             £'000s     £'000s
Net cash inflow from operating activities                     3,685      4,290
Cash outflow from the servicing of finance                  (1,640)    (1,598)
Total tax paid                                                (140)       (53)
Net cash inflow/(outflow) from financial investment          25,684       (82)
Equity dividends paid                                       (3,645)    (3,554)

Net cash inflow/(outflow) before use of liquid resources
   And financing                                             23,944      (997)

(Increase)/decrease in short term deposits                 (20,414)     13,810
Net cash outflow from financing                             (5,132)   (18,248)

Decrease in cash                                            (1,602)    (5,435)



The financial information set out in the announcement does not constitute the
Company's statutory accounts for the years ended 30 April 2001 or 30 April
2000. The financial information for the year ended 30 April 2000 has been
extracted from the statutory accounts for that year which have been delivered
to the Registrar of Companies. The auditors reported on those accounts: their
report was unqualified and did not contain a statement under either Section
237(2) or Section 237(3) of the Companies Act 1985. The statutory accounts for
the year ended 30 April 2001 will be finalised on the basis of the financial
information presented by the directors in this preliminary announcement and
will be delivered to the Registrar of Companies following the Company's Annual
General Meeting.

During the year to 30 April 2001 the Company purchased for cancellation
2,031,782 ordinary shares of 25p at a total cost of £5,311,000.

The Directors have declared a final dividend of 2.64p per share payable on  31
July 2001 to shareholders registered on 29 June 2001.

The Report and Accounts will be posted to shareholders on or around 27 June
2001. Copies may be obtained during normal business hours from the Company's
Registered Office, Exchange House, Primrose Street, London EC2A 2NY.


By order of the Board
F & C Management Limited - Secretary
19 June 2001