Interim Results

F&C Smaller Companies PLC
21 December 2004

Date:              21 December 2004

Contact:           Sandy Fleming
                   F&C Management Ltd                   0207 628 8000

                   Lisa Stanley
                   Lansons Communications               0207 294 3692



                           F&C SMALLER COMPANIES PLC
                     Unaudited Interim Statement of Results
                    for the half year ended 31 October 2004

Highlights

  • Rise in NAV of 3.1% against benchmark rise of 1.4%;
  • Rise in share price of 5.2% has narrowed the discount to 17%;
  • Strong relative performance particularly in the UK and Europe;
  • Interim dividend will be increased from 1.41p to 1.44p, broadly in line
    with inflation;
  • 35th year of uninterrupted dividend increases.

SUMMARY OF RESULTS
                                                                 31 Oct               30 Apr                  %
                                                                   2004                 2004             change
Attributable to equity shareholders

Net assets                                                      £242.3m              £235.4m               +2.9

Net asset value per share
(debenture at nominal value)                                    285.27p              276.77p               +3.1

Net asset value per share
(debenture at market value)                                     280.29p              272.04p               +3.0

Share price                                                     235.75p              224.00p               +5.2

                                                            6 months to          6 months to
                                                                 31 Oct               31 Oct                  %
                                                                   2004                 2003             Change

Earnings per share                                                2.16p                2.17p               -0.5

Dividend per share                                                1.44p                1.41p               +2.1






                          F&C SMALLER COMPANIES PLC
 Unaudited Interim Statement of Results for the half year ended 31 October 2004

Chairman's Statement:

Dear Shareholder

I am sad to have to report that, for personal reasons, John Curry, your previous
Chairman, felt it necessary to stand down from your Board in September. John
joined the Board in 1996 and became its Chairman in 2002. He has made a
significant contribution during his time on the Board and his experience and
leadership will be greatly missed. I know I speak for all shareholders in
wishing John good luck in the future. At the same time I would like to welcome
Anthony Townsend to the Board following his appointment in September. Anthony
has a wealth of investment trust experience and having been Chairman of the
Association of Investment Trusts between 2001 and 2003 is a heavyweight in our
industry.

This has been a good period for your Company and I am pleased to be able to
report a period of further relative outperformance, with the net asset value of
the company growing 3.1% compared to a capital return increase of 1.4% for the
official benchmark, the Extended Hoare Govett UK Smaller Companies Index and a
2.7% rise in the FTSE All Share Index. For a sterling investor the UK has again
shown superior relative returns in the six months to October, with only Europe
providing stronger performance.  The relative performance of the portfolio in
the UK and Europe has been positive. The US and Asia were in line with local
benchmarks and only Japan has lagged.

Markets & Investment Policy

Most major stock markets have traded in a narrow range during the period under
review as investors' attention has been focused on the slowing of global
economic growth, interest rate trends, the Middle East and of course, the oil
price. Consumer led expansion has moderated in the US and the UK while sentiment
in Europe continues to be fragile despite signs of a revival in export led
growth. High unemployment, particularly in Germany continues to restrict
domestic demand and there are few, if any, signs of a change in ECB monetary
strategy. So the main global drivers have been the scale of the expansion of the
Chinese economy and the imbalance between supply and demand within the resource
sectors.

Market performance has been mixed with the UK, the USA and Europe showing growth
while both Japan and Asia fell, in sterling terms. Obviously the weakness of the
US dollar and the strength of the Euro played a significant part in the scale of
the returns, but following the strong performance exhibited by smaller companies
in the year to April it is not surprising that progress in the last six months
has been somewhat more muted. However, investor interest has remained high and
returns have generally kept pace with the main indices as expectations for
profit growth continue to be higher for smaller companies.

During the period under review we have seen strong performance from the resource
sectors where we have enjoyed significant gains from our holdings in Cairn
Energy which has been a significant investment for several years and two AIM
listed international explorers; First Calgary Petroleums, a Canadian gas company
and Hardman Resources, an Australian oil stock that is a significant participant
in off-shore exploration activities in Mauritania. However we have also enjoyed
meaningful relative returns from both the Real Estate sector in the UK, where
Capital & Regional has been particularly strong and from technology where
investor interest has returned. An increasing number of companies are beginning
to prove that some of the optimism that created the 'TMT bubble' was not
entirely misplaced. Another notable feature has been the continued growth in
Infratil, the specialist investment company based in New Zealand that was
mentioned in our last report and accounts.


                          F&C SMALLER COMPANIES PLC
 Unaudited Interim Statement of Results for the half year ended 31 October 2004

Throughout the period we continued to maintain a high exposure to the UK as
economic growth, while not dynamic, continues to be above the long term trend.
Given the scale of geo-political uncertainty, we thought that this market would
provide a comparatively safe haven, and this confidence appears to have been
well founded. The next move in interest rates is unclear because although a
number of authoritative commentators continue to expect further rises in 2005,
the Bank of England appears to be somewhat more relaxed indicating that recent
action appears to have had the desired effect of slowing the rate of consumer
spending and arresting the housing bubble without compromising economic growth.

Gearing, Dividends and Share Buy backs

Borrowing continues to be an issue that we keep closely under review and as our
confidence in the markets has increased, so has the level of gearing. Current
effective gearing of 6% is comparatively modest and provides significant
opportunities for increased market exposure going forward.

During the past few years we have made it clear that income cannot be a key
component of our investment decisions but we have also emphasised our focus on
investing in companies that exhibit the ability to generate cash and therefore
offer the potential for dividend growth. So in the past few years your Board has
continued to increase the dividend by making modest transfers from the
substantial revenue reserve in anticipation of a time when investment income
would again exceed the distribution. As a result the interim dividend will be
increased from 1.41p to 1.44p, broadly in line with inflation.

Authority was obtained by your Board at the last AGM in July to acquire stock
both for cancellation and for treasury at its discretion. It is your Board's
intention to make use of these powers when it is felt appropriate in order to
help maintain stability in the valuation of the company.  One purchase for
cancellation was made during the period under review, but since the new
authority was issued in July no further purchases have been undertaken.

Outlook

The extreme valuation gap between large and small companies that existed in
early 2003 has now been largely eliminated. However the anticipated growth for
smaller stocks continues to be superior to that predicted for the larger market
and on that basis we retain our confidence that progress will be maintained. Our
focus on stock picking on a global basis, offers the opportunity to exploit
misunderstood and undervalued companies everywhere and as your new Chairman I
view the future with confidence.

I am deeply honoured to have been elected by your Board to serve as your
Chairman and I will be doing all I can to deserve the confidence that has been
placed in me.



Gerry Grimstone
December 2004




                        F&C SMALLER COMPANIES PLC
 Unaudited Interim Statement of Results for the half year ended 31 October 2004

Unaudited Balance Sheet

                                                              at 31 Oct            at 31 Oct         at 30 Apr
                                                                   2004                 2003              2004
                                                                 £'000s               £'000s            £'000s
Fixed assets
Investments                                                     253,858              223,768           246,632

Current assets
Debtors                                                           1,419                1,989             3,684
Cash at bank and short-term deposits                             18,195               16,303            16,566
                                                                 19,614               18,292            20,250

Creditors: amounts falling due within one year:
Loans                                                          (14,599)             (15,814)          (15,085)
Other                                                           (6,608)              (3,261)           (6,407)
                                                               (21,207)             (19,075)          (21,492)

Net current liabilities                                         (1,593)                (783)           (1,242)

Total assets less current liabilities                           252,265              222,985           245,390

Creditors: amounts falling due after more than
one year:
Debenture                                                      (10,000)             (10,000)          (10,000)

Net assets                                                      242,265              212,985           235,390

Capital and reserves
Called up share capital                                          21,231               21,619            21,262
Share premium account                                            23,132               23,132            23,132
Capital redemption reserve                                        4,952                4,564             4,921
Capital reserves                                                187,620              158,075           181,357
Revenue reserve                                                   5,330                5,595             4,718
Total shareholders' funds                                       242,265              212,985           235,390

Net asset value per ordinary share - pence                       285.27               246.30            276.77


Geographical distribution of total assets less current liabilities (excluding
loans) at 31 October 2004 was United Kingdom 50.2%; USA 23.0%; Japan
11.3%; Europe 8.2%;  Far East and others 7.3%.


                           F&C SMALLER COMPANIES PLC
Unaudited Interim Statement of Results for the half year ended 31 October 2004



Unaudited Statement of Total Return (incorporating the revenue account*)

                                  6 months to 31 October 2004                  6 months to 31 October 2003
                                  Revenue        Capital          Total        Revenue        Capital       Total
                                   £'000s         £'000s         £'000s         £'000s         £'000s      £'000s

Gains on investments                    -          7,004          7,004              -         55,172      55,172
Exchange gains/(losses)                 2            441            443              5          (321)       (316)
Income                              2,635              -          2,635          2,746              -       2,746
Management fee                      (168)          (391)          (559)          (181)          (422)       (603)
Other expenses                      (297)           (18)          (315)          (289)           (19)       (308)

Net return before
finance costs and
taxation                            2,172          7,036          9,208          2,281         54,410      56,691
Interest payable and
similar charges                     (212)          (495)          (707)          (188)          (440)       (628)
                                    
Return on ordinary
activities before
taxation                            1,960          6,541          8,501          2,093         53,970      56,063
Taxation on ordinary
activities                          (125)              -          (125)          (138)              -       (138)
                                    
Return attributable to
equity shareholders                 1,835          6,541          8,376          1,955         53,970      55,925
Dividends on ordinary
shares                            (1,223)              -        (1,223)        (1,219)              -     (1,219)
                                  
Amount transferred to
reserves                              612          6,541          7,153            736         53,970      54,706
                                      
Return per ordinary
share - pence                        2.16           7.70           9.86           2.17          59.88       62.05
                                     

* 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.


                          F&C SMALLER COMPANIES PLC
 Unaudited Interim Statement of Results for the half year ended 31 October 2004

Unaudited Cash Flow Statement
                                                                                  6 months to        6 months to
                                                                                  31 Oct 2004        31 Oct 2003
                                                                                       £'000s             £'000s
Net cash inflow from operating activities                                               2,407              2,423
Interest paid                                                                           (706)              (626)
Total tax paid                                                                          (120)              (160)
Net cash inflow from purchases and sales of investments                                 2,390              4,078
Equity dividends paid                                                                 (2,407)            (2,550)
Net cash inflow before use of liquid resources
   and financing                                                                        1,564              3,165
(Increase)/decrease in short term deposits                                            (4,900)              5,439
Net cash outflow from financing                                                         (278)            (9,785)

Decrease in cash during the period                                                    (3,614)            (1,181)

The Directors have declared an interim dividend of 1.44p per share payable on 2
February 2005 to shareholders on the register at 31 December 2004.  The
ex-dividend date will be 29 December 2004.

The results for the half year ended 31 October 2004, which are unaudited and set
out in this announcement, constitute non-statutory accounts within the meaning
of Section 240 of the Companies Act 1985.  They have been prepared on the basis
of the accounting policies set out in the Company's financial statements at 30
April 2004. The latest published accounts which have been delivered to the
Registrar of Companies are for the year ended 30 April 2004. The report of the
auditors thereon was unqualified and did not contain a statement under Section
237 of the Companies Act 1985. The abridged financial statements shown above for
the year ended 30 April 2004 are an extract from those accounts.

The interim Report and Accounts will be posted to shareholders in early January
2005.

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
20 December 2004


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