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Independent Inv Tst (IIT)

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Thursday 11 July, 2002

Independent Inv Tst

Interim Results

Independent Investment Trust PLC
11 July 2002


                   Results for the six months to 31 May 2002

                                  11 July 2002

                               Chairman's Statement

The six month period ending 31 May 2002 proved a rewarding one for our company,
producing a net asset value total return of 20%.  This was achieved in a
generally unhelpful market environment: the FTSE All Share Index produced a
total return of negligible proportions over the same period.

The total return can be broken down into a gain of 19% in our net asset value -
from 109.0p to 129.7p - and a dividend of 1p, unchanged from last year and paid
from earnings of 1.24p (1.75p for the comparable period last year).  It is still
too early to make precise predictions about earnings for the full year, but we
expect to declare a final dividend at least equal to last year's 1p.  We doubt
that there will be scope for a special dividend this year.

The UK market background was unusually dull during the period with the main
market indices moving within narrow ranges.  Positive factors included
stimulative monetary conditions and a gentle improvement in economic activity,
led in the UK by a buoyant consumer sector.  However, these were offset by
global concerns about accounting practices, historically high valuations and a
shift in the asset allocations of pension funds and insurance companies away
from equities in favour of bonds and property.

Having reduced our borrowings in the latter part of last year, we have found
enough interesting opportunities to increase them again this year and we ended
the period with net borrowings of £11.7m, a gearing level of 16.2%.  We have
stuck to the principle of borrowing only to the extent that our borrowings are
covered by investments with generous yields and other characteristics that allow
us to persuade ourselves that they are low risk (at times, as our investment in
Royal & Sun Alliance showed, we are too easily persuaded).  Most of our
borrowings are denominated in US dollars, in order to hedge our dollar assets.

During the period our share price traded consistently at a premium to net asset
value and we have been able to capitalize on this by issuing a total of 2.5m new
shares at a significant premium to net asset value, raising some £3.3m in the
process and enhancing net asset value by 0.2%.

We once again benefited from the strong stockmarket performance of our
housebuilding holdings, not least because the industry's trading conditions have
been more favourable than we could have dared hope six months ago.  Particular
credit goes to Wimpey, where a 56% rise in the share price over the period
reflected the great strides the new management team has made - and continues to
make - in improving the business.  We remain enthusiastic about the industry's
long term prospects for the reasons we outlined in our annual report.
Valuations still seem very cheap, but there is a growing threat of a short term
dislocation in the market.  Our initial £13.2m investment in the industry was
worth £18.6m by the end of the period, even after net realizations of £5.6m.

As foreshadowed in our annual report, we have made big additions to our
insurance holdings and now have £4.9m invested in brokers, £5.3m in reinsurance
companies and £3.6m in Lloyd's vehicles, as well as holdings in the Hiscox
Insurance Portfolio Fund and Travelers.  Conditions in the industry are as tight
as at any time in the last twenty-five years and seem likely to remain broadly
favourable for several years to come.  The brokers, with their freedom from
underwriting risk, represent the cleanest participation in the industry's
prosperity, but are no longer obviously cheap; the well capitalized reinsurers,
particularly those based in Bermuda, are enjoying conditions of extraordinary
buoyancy and still look attractively valued; so too do the Lloyd's vehicles,
which are probably inherently riskier businesses and have correspondingly
greater potential.

The star of our retail portfolio was once again New Look which, at the period
end, was standing at four times our book cost.  Management's success in
extending the product range to appeal to older customers and in establishing a
profitable basis for trading from larger stores has produced excellent profits
as well as providing a platform for continued rapid growth in the years ahead.
The shares still seem modestly valued in relation to exciting prospects.  Signet
has also confounded expectations by generating increased earnings in one of the
toughest US jewellery retail environments of the last twenty years.  This has
served to underpin our confidence in the company's fundamental strengths and we
think the shares still represent excellent value even after their strong
performance.  DFS has been rather in the doldrums despite results that have
matched expectations and an unexpected special dividend, but William Morrison
has once again demonstrated the strength of its trading proposition and seen its
share price reflect this; we have added to the holding.  Towards the end of the
period, we took a holding in Merchant Retail, a rapidly growing retailer whose
success in developing The Perfume Shop chain has led to a spectacular share
price performance.  We think both the chain and the company can produce strong
growth for some years to come.

Our investments in the telecommunications and technology industries have
disappointed us, but we retain the view that our companies are coping relatively
well with a tough trading environment.  As long as this remains the case, we
expect to continue with an investment in the two industries.  If this sounds
familiar, it is because it is exactly what we wrote a year ago.  We have,
however, sold Amerindo and Carphone Warehouse in the meantime at prices which
were poor in relation to what we paid, but which look good with the benefit of

Other complete sales have included Enterprise, which received a generous
takeover bid; Haslemere and Rodamco North America, which were taken over on
terms which left us a profit but which we did not think fairly reflected the
value of the companies; and Royal & Sun Alliance, with a 40% loss on book cost.

Elsewhere in the portfolio, our water companies benefited from their safe haven
status, much of the benefit coming after our substantial additions; our
recruitment agents and St. Ives produced surprisingly good share price
performances despite the absence of any improvement in their business
conditions; Johnston Press benefited from resilient trading in a difficult
market and the brilliantly timed acquisition of RIM; and the Wolseley share
price responded to news of good trading.  Apart from our technology holdings,
our chief disappointments have been our pharmaceutical holdings, which have been
affected by growing investor concern about present and future patent protection
for key products.  We should also mention our big percentage loss, as yet
unrealised, in IG Group, where the combination of disappointing trading and the
unexpected departure of the chief executive proved unhelpful to market

Since 31 May the global concerns mentioned earlier have had the upper hand in
markets: between then and the time of writing the fall in our net asset value
has been broadly in line with that of the FTSE All Share Index.  Though we share
some of these general concerns, we believe that the business prospects and
valuations of our holdings, which do not reflect any market index, continue to
be attractive.


The following is the interim statement for the six months to 31 May 2002 which
has been neither reviewed nor audited by the auditors.  This statement is being
printed and will be sent to all shareholders on 31 July 2002.  Copies will be
available for inspection at the Registered Office of the Company or may be
obtained on request from the Company Secretaries after that date.

                                   STATEMENT OF TOTAL RETURN
                    (unaudited and incorporating the revenue account*)

                      For the six months to          For the six months to            For the period to
                           31 May 2002                    31 May 2001                 30 November 2001**

                  Revenue     Capital     Total   Revenue   Capital     Total    Revenue    Capital     Total
                    £'000       £'000     £'000     £'000     £'000     £'000     £'000      £'000      £'000
Realised gains          -       3,441     3,441         -       974       974         -      2,620      2,620
on investments
Unrealised              -       7,219     7,219         -     4,880     4,880         -      2,507      2,507
appreciation on
Currency gains/         -         188       188         -       (17)      (17)        -         (8)        (8)
Income              1,117           -     1,117     1,353         -     1,353     2,927          -      2,927
Administrative       (179)          -      (179)     (165)        -      (165)     (423)         -       (423)
Net return            938      10,848    11,786     1,188     5,837     7,025     2,504      5,119      7,623
before finance
costs and
Finance costs of     (266)          -      (266)     (226)        -      (226)     (527)         -       (527)
Return on             672      10,848    11,520       962     5,837     6,799     1,977      5,119      7,096
before taxation
Tax on ordinary        (1)          -        (1)      (38)        -       (38)      (70)         -        (70)
Return on             671      10,848    11,519       924     5,837     6,761     1,907      5,119      7,026
activities after
Dividends in         (556)          -      (556)     (531)        -      (531)   (1,592)         -      (1,592)
respect of
equity shares
Transfer to           115      10,848    10,963       393     5,837     6,230       315      5,119       5,434
Return per
ordinary share:
(note 1)
Basic                1.24p     20.11p     21.35p     1.75p    11.03p    12.78p      3.60p      9.67p     13.27p
Diluted (FRS 14)     1.22p     19.79p     21.01p     1.71p    10.81p    12.52p      3.54p      9.51p     13.05p
Dividends per        1.00p                           1.00p                          3.00p
ordinary share
(note 2)

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

**  The period to the Company's first financial year end commenced on 30 August
2000, the date on which the Company was incorporated, although the share
flotation proceeds were not received until 18 October 2000.

All revenue and capital items in the above statement derive from continuing


                            SUMMARISED BALANCE SHEET

                                                      At                       At                       At
                                             31 May 2002              31 May 2001         30 November 2001
                                                   £'000                    £'000                    £'000

Fixed tangible assets                                 14                       20                       18
Fixed asset investments                           83,778                   71,090                   61,140
Net liquid (liabilities)/assets                     (792)                   2,305                    6,156
Total assets (before deduction of
bank loans)                                       83,000                   73,415                   67,314
Bank loans                                       (10,885)                 (12,000)                  (9,506)
                                                  72,115                   61,415                   57,808


Called-up share capital                           13,896                   13,263                   13,263
Capital reserves                                  57,789                   47,548                   44,230
Revenue reserve                                      430                      604                      315
EQUITY SHAREHOLDERS' FUNDS                        72,115                   61,415                   57,808

(note 3)                                          129.7p                   115.8p                    109.0p


                         SUMMARISED CASH FLOW STATEMENT

                                                                        For the six For the six     For the
                                                                          months to   months to   period to
                                                                        31 May 2002 31 May 2001 30 November
                                                                              £'000       £'000       £'000

NET CASH INFLOW FROM OPERATING ACTIVITIES                                       862         767       2,246

NET CASH OUTFLOW FROM SERVICING OF FINANCE                                     (272)       (201)       (509)

Acquisitions of tangible assets                                                   -           -         (27)
Acquisitions of investments                                                 (32,438)    (36,266)    (90,107)
Disposals of investments                                                     21,601      14,649      34,094
Realised currency loss                                                          (11)        (17)        (80)


EQUITY DIVIDENDS PAID                                                        (1,061)          -        (531)

NET CASH OUTFLOW BEFORE FINANCING                                           (11,319)    (21,068)    (54,914)

Issue of shares                                                               3,344         567      52,691
Expenses of share issue                                                           -          (5)       (317)
Bank loans drawn down                                                         1,578      12,000       9,578

NET CASH INFLOW FROM FINANCING                                                4,922      12,562      61,952

(DECREASE)/INCREASE IN CASH                                                  (6,397)     (8,506)      7,038


(Decrease)/increase in cash in the period                                    (6,397)     (8,506)      7,038
Bank loans drawn down                                                        (1,578)    (12,000)     (9,578)
Exchange movement on bank loans                                                 199           -          72

MOVEMENT IN NET DEBT IN THE PERIOD                                           (7,776)    (20,506)     (2,468)
NET (DEBT)/FUNDS AT START OF PERIOD                                          (2,468)     10,888           -
NET DEBT AT END OF PERIOD                                                   (10,244)     (9,618)     (2,468)

**  The period to the Company's first financial year end commenced on 30 August
2000, the date on which the Company was  incorporated,  although the share
flotation proceeds were not received until 18 October 2000.

                               THE INDEPENDENT INVESTMENT TRUST PLC


                                          Six months to     Six months to         Period to
                                                 31 May            31 May       30 November 
                                                   2002              2001              2001
                                                  £'000             £'000             £'000

1.    Return per ordinary share
      Revenue return                                671               924             1,907
      Capital return                             10,848             5,837             5,119

      The returns per share are based on the above returns and on 53,946,984 
      shares (May 2001 - 52,897,413; November 2001 - 52,930,837), being the 
      weighted average number of shares in issue during the period.

      The diluted returns per share are based on the above returns and on 
      54,823,289 shares (May 2001 - 53,972,853; November 2001 - 53,837,855), 
      being the weighted average number of shares in issue during the period 
      plus the national number of shares that would have been issued for no 
      consideration using an average share price of 131.3p (May 2001 - 119.2p; 
      November 2001 - 114.0p) and on average exercise price for the
      options of 121.5p (May 2001 - 108.3p; November 2001 - 105.2p).

2.    The interim dividend will be paid on 4 September 2002 to all shareholders 
      on the register at the close of business on 9 August 2002.

3.    Net asset value per ordinary share

                                                 31 May            31 May       30 November 
                                                   2002              2001              2001
                                                  £'000             £'000             £'000
      Net asset value attributable to
      ordinary shares                            72,115            61,415            57,808
      Net asset value per ordinary share is based on net assets (as shown above)
      and on 55,583,980 ordinary shares (May 2001 and November 2001 - 
      53,050,000) being the number of ordinary shares in issue at the period 

      Dilution of revenue and capital return is attributable to the difference 
      between the average share price and the average exercise price of the 
      outstanding options for the period. Because these options are exercisable 
      at net asset value, no dilution to net asset value arises from their 

4.    The financial information for the period ended 30 November 2001 has been 
      extracted from the statutory accounts, which have been filed with the 
      Registrar of Companies and which contain an unqualified Auditor's Report.

5.    The accounting policies applied in calculating the interim figures were 
      consistent with those used in the Annual Financial Statements.  The 
      Interim Report was approved by the Board on 10 July 2002.

                      This information is provided by RNS
            The company news service from the London Stock Exchange