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Independent Inv Tst (IIT)

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Wednesday 22 January, 2003

Independent Inv Tst

Final Results

Independent Investment Trust PLC
22 January 2003


                    Results for the year to 30 November 2002

                                22 January 2003


                              Chairman's Statement

During the year to 30 November 2002, our net asset value per share rose by 2.6%
to 111.8p.  This is clearly not a great result for a fund aiming to produce good
absolute returns, but we consider it satisfactory in the context of a difficult
stockmarket environment: the FTSE All Share Index fell by 20.3% during the year.

We drew attention in our Interim Report to the damage to global stockmarket
sentiment caused by concerns about accounting practices, historically high
valuations and a shift in asset allocations of pension funds and insurance
companies.  These factors intensified in the second half of our year and were
reinforced by more recent concerns about the pace of economic activity and the
possibility of war in Iraq.

The freedom to ignore the composition of stockmarket indices when deciding on
the shape of our portfolio once again worked to our advantage.  We stuck with
many of the ideas we had the previous year and were rewarded with another year
of generally satisfactory fundamental progress from much of the portfolio.  For
those companies that have disappointed us with their trading results, the damage
to their share prices has often been limited by a perception among investors
that these are inherently strong businesses which have the potential to bounce
back strongly when conditions improve.  Where we have shared such a perception
we have tended to persevere with the holding.  We have once again lost a
significant proportion of the portfolio to takeover bids; in each case this was
at a profit, although in two important instances - Haslemere and Rodamco North
America - we feel aggrieved at the low prices paid by the bidders.

Despite the weakness of markets, we have persisted with our policy of borrowing
to invest in companies with generous yields and some element of enhanced
security.  Indeed, we have extended the policy to encompass a modest investment
in high yield bonds and a hedge against our dollar investments.  I am glad to
report that our 'borrowing portfolio' has both a comfortable surplus over its
book value and a good bank of realized profits.  Moreover, the dollar hedge has
saved us considerable amounts, both in interest charges and in protection
against the significant reduction in the sterling value of the dollar that
occurred during our year.  At 30 November 2002, we had net borrowings of £10.2m
(15% of shareholders' funds).  Essentially all of these were denominated in

Our housebuilding holdings have once again made a big contribution to our
overall results. From time to time, however, share prices in the sector have
been hit by a growing view that house prices are set to collapse.  To date, we
remain unpersuaded of this but we shall continue to monitor the situation
closely, and we are reassured in the meantime by the extreme statistical
cheapness of the shares.  Our retail holdings, led by New Look, have proved
resilient and the initial showing of our insurance holdings, particularly the
Lloyd's vehicles, has been encouraging.  However, our recruitment companies have
suffered from difficult trading conditions and our decision to switch from water
companies into apparently high-yielding banks was at best premature.  For a
detailed review of developments within the portfolio, please see Max Ward's

Earnings per share for the period were 3.17p.  We are proposing a final dividend
of 1.5p (1.0p) to make a total for the year of 2.5p.  No special dividend will
be paid in respect of the year; for the previous period a basic dividend of 2.0p
and a special dividend of 1.0p were paid.  The resulting revenue reserve of
1.03p per share gives us confidence that a dividend of 2.5p is sustainable in
the absence of dramatic changes to the portfolio.  Our expenses for the year
(other than interest charges) amounted to £360,000, equivalent to 0.6% of
shareholders' funds at the start of the period.

The continued willingness of investors to pay a premium to net asset value for
our shares has enabled us to make new issues of shares.  In addition to the
exercise of options at net asset value, we have issued a total of 5.4m new
shares on terms that have added £376,000 - a figure in excess of the cost of
managing the Company over the last year - to shareholders' funds.  Perversely,
FRS 3 requires us to treat this issuance in a way that shows a lower capital
element in out statement of total return than would have been the case had we
not issued any new shares, because of the subsequent fall in the value of the
portfolio. We shall continue to look for opportunities to make further new
issues at a premium and we stand prepared to buy in shares at a discount to net
asset value.

The process of purging the excesses of the booming nineties has been more
protracted and more painful than most had expected.  Nor is it clear that it has
yet run its course: the economies of continental Europe and Japan are in a poor
state, while those of the United States and the United Kingdom depend for their
growth upon consumers who appears very fully stretched and upon the readiness of
savers in the rest of the world to finance their deficits.  Equity markets have
fallen a long way, but it remains difficult to argue that valuations are cheap
by historical standards.  As ever, we take comfort from the fact that our
portfolio has characteristics quite different from those of the market as a
whole and our belief that this distinctiveness will prove a long term benefit.

I should like to thank the Managing Director, Max Ward, for another outstanding
result in difficult circumstances.  Our second full year has produced no
operational problems, and thanks are also due to Vivien Keighren (formerly
Watson) for ensuring the smooth running of our small office, and to Baillie
Gifford & Co, in whose secretarial and compliance strengths we continue to have
great confidence.

Once again, we should like to encourage you to come to the AGM, which is to be
held in the offices of Baillie Gifford at 4.45pm on Wednesday, 19 March 2003.
It will help our planning if we know how many shareholders are likely to attend,
and I shall be grateful if you will mark the proxy form accordingly and return
it to us.  I look forward to seeing as many of you as possible there.


                       Managing Director's Statement

During the year to 30 November 2002, The Independent Investment Trust produced
an NAV total return of 4.7%.  Once again, therefore, we need to fall back on
comparative arguments to show this in any sort of favourable light.  A
theoretical investment in the FTSE All Share Index over the period would have
produced a total return of -17.9%.

Our biggest position throughout the year has continued to be in housebuilding.
Our housebuilding stake was worth £13.6m on 30 November 2001; we made net
purchases of £1m during the year and the value of the stake on 30 November 2002
was £17.8m.  Our continuing enthusiasm for the industry has three elements: a
high regard for the managements of our holdings; a strong belief that the
industry's long term prospects are favourable thanks to the supply constraints
created by the planning system; and a view that this bright long term prospect
is some way from being properly reflected in housebuilders' share prices.  Most
other investors appear to be concentrating on the immediate prospects for the
industry, which they consider poor but which we find difficult to read and
therefore choose not to predict.  One of the strengths of The Independent's
style of operation is intended to be the scope to put more emphasis on medium
term factors than short term factors when it seems appropriate to do so.  We
think this is just such an occasion not only in regard to housebuilders, but
also in regard to retailers, the second of our three big industry positions.
Within our housebuilding portfolio, Redrow, which was first bought early in the
current financial year, has emerged as our biggest holding.  We consider it
particularly well placed to cope with any deterioration in industry operating
conditions and believe that its shares represent exceptional value within an
industry which is itself cheaply rated.

Another strong performance from New Look (the shares stood at over twice our
book value on 30 November 2001 and almost doubled again during the year) enabled
our retail holdings to show a modest profit on the year: valued at £10.5m on 30
November 2001, they were worth £15.3m on 30 November 2002 after net additions of
£4.6m.  The New Look performance was driven by a highly successful programme to
broaden its product range and increase the average size of its stores.  It is
encouraging that there remains considerable scope for replacing its small stores
with larger ones.  William Morrison produced an exemplary trading performance
during the year and saw its shares rise modestly as a result.  However, we
realized a big loss on our shareholding in Carphone Warehouse and registered
smaller unrealised losses in Merchant Retail, Carpetright, DFS and Signet.  In
the case of each of these last four, the market appears concerned about an
imminent deterioration in the trading outlook and may well be right to be so.
However, we consider all four to be strong businesses trading at valuations that
do not reflect our optimism about their long term prospects and so we have no
immediate intention of disturbing the holdings.

A year ago, we were feeling our way in the insurance industry: at 30 November
2001 our insurance stake was valued at £5.0m (of which £1.2m was a holding in
Royal & Sun Alliance, subsequently sold at a painful loss).  Since then, we have
gradually become more confident in our view that this is an industry within
which a number of well placed companies face a period of unusually favourable
operating conditions as a result of the enormous destruction of capacity that
has resulted from years of sloppy underwriting and poor investment returns, and
the one-off loss caused by the terrorist attacks in September 2001.  During the
year, we made net purchases of £9.6m and on 30 November 2002 our stake was worth
£14.6m.  The underlying performance was rather better than these figures imply
because Converium and our Bermudan holdings have had the benefit of our dollar
hedging.  In addition to the £1.2m investment in the Hiscox Insurance Portfolio
Fund, we had £2.5m invested in brokers, £4.1m invested in reinsurers and £6.8m
invested in Lloyd's vehicles at 30 November 2002.

Rather to our surprise, we found ourselves dealing quite actively in water
companies during the year.  The lack of economic sensitivity in the water
business tends to make investors regard shares in water companies as defensive
investments.  We were able to take advantage of a period of neglect for the
sector early in our year to add to our holdings in Kelda and United Utilities.
These then held up remarkably well as the market collapsed and we were able to
realize profits on them at market levels close to the bottom.  As the market
recovered towards the end of our year, the share prices fell back and we started
to buy back our holding in Kelda.

Alas, the brilliance of our dealings in the water sector was neatly
counterbalanced by our ineptitude in the banking sector.  We took holdings in
Abbey National and Lloyds TSB - funded largely by the proceeds of our water
sales - on the basis that the strength of their core banking businesses
underwrote the dividends of the two companies, despite obvious problems in some
of their peripheral activities.  In the case of Abbey National we were clearly
wrong on this and the market appears to believe that we are also wrong in the
case of Lloyds.  Nevertheless, we retain our view that both shares are cheap and
currently intend to hold onto them. We ended our year with a significant loss on
our holding in Abbey National and a modest profit on our holding in Lloyds TSB.

Technology and telecommunications have once again proved difficult areas for us,
although with the exception of ARM our holdings showed signs of relative
resilience in the second half of our year.  Indeed, Nokia, our biggest holding
in the field, actually rose by 27% in the second half, making it the best
performing stock in our portfolio over that period.  We continue to believe that
our investments in the two Herald funds will provide attractive returns from
current levels and are encouraged by the trading performances of Nokia and Sage.
  ARM must now be regarded as a more speculative holding, but the strength of
its balance sheet at least ensures that survival is not an issue.

The printing and publishing sector represented a small proportion of our
portfolio on 30 November 2002, but it made a big contribution to our performance
during the year.  The brilliantly executed acquisition of RIM enabled us to make
Johnston Press up into a big holding on very attractive terms and the subsequent
strength in the share price allowed us to realize a substantial profit on much
of our holding.  We continue to have the highest regard for the company's
management.  We were also able to realize our holding in St. Ives on
surprisingly favourable terms (albeit recording a loss), given the extent of the
deterioration in that company's trading environment.

Our recruitment companies came down to earth with a bump when it became clear
that the recovery in their markets was still some way off.  The strength of
their balance sheets, coupled with our faith in their managements, persuaded us
to add to both at prices we considered depressed.  To date, these additions have
proved profitable.

Elsewhere in the portfolio, we lost Enterprise Oil, Haslemere and Rodamco North
America to takeover bids, each at a profit; we sold our holding in the First
State Global Health and Biotechnology Fund at a loss and were lucky to salvage
anything from a disastrous investment in SFI.  New purchases included Philip
Morris, the property company Compco and the property agent DTZ Holdings.  None
of these has yet produced a significant profit on cost.

Results for the Period 1 June 2002 to 30 November 2002

We are bound by the listing requirements to disclose the results for the six
months 1 June 2002 to 30 November 2002.  During that period, the net asset value
fell by 13.8% while the FTSE All Share Index fell by 19.1%.


The following is the unaudited preliminary statement for the year to 30 November
2002 which was approved by the Board on 21 January 2003.  The Directors of The
Independent Investment Trust PLC are recommending to the Annual General Meeting
of the Company to be held on 19 March 2003 the payment of a final dividend of
1.50p net (1.00p net last year) per ordinary share, making a total of 2.50p net
(3.00p net last year) per ordinary share for the year ended 30 November 2002.

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

                                          For the year ended                     For the period ended
                                           30 November 2002                       30 November 2001+

                                     Revenue    Capital       Total          Revenue    Capital        Total
                                       £'000      £'000       £'000            £'000      £'000        £'000

Realised gains on investments              -      4,299       4,299                -      2,620        2,620
Unrealised (losses)/gains on
investments                                -     (4,371)     (4,371)               -      2,507        2,507
Currency gains/(losses)                    -        634         634                -         (8)          (8)
Income                                 2,564          -       2,564            2,927          -        2,927
Administrative expenses                 (360)         -        (360)            (423)         -         (423)
Net return before finance costs
and taxation                           2,204        562       2,766            2,504      5,119        7,623

Finance costs of borrowings             (459)         -        (459)            (527)         -         (527)
Return on ordinary activities
before taxation                        1,745        562       2,307            1,977      5,119        7,096

Tax on ordinary activities                 -          -           -              (70)         -          (70)
Return on ordinary activities
after taxation                         1,745        562       2,307            1,907      5,119        7,026
Dividends in respect of equity
shares                                (1,447)         -      (1,447)          (1,592)         -       (1,592)
Transfer to reserves                     298        562         860              315      5,119        5,434

Return per ordinary share :
(note 1)
Basic                                   3.17p      1.02p       4.19p            3.60p      9.67p       13.27p
Diluted (FRS 14)                        3.13p      1.01p       4.14p            3.54p      9.51p       13.05p

Dividends per ordinary share
(note 2)                                2.50p                                   3.00p

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

+  The comparative 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 30 November 2002

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


Fixed tangible assets                                                                9                       18
Fixed asset investments                                                         75,638                   61,140
Net liquid assets                                                                3,426                    6,156

Total assets (before deduction of bank loans)                                   79,073                   67,314
Bank loans                                                                     (12,640)                  (9,506)
                                                                                66,433                   57,808


Called-up share capital                                                         14,850                   13,263
Capital reserves                                                                50,970                   44,230
Revenue reserve                                                                    613                      315

EQUITY SHAREHOLDERS' FUNDS                                                      66,433                   57,808

NET ASSET VALUE PER ORDINARY SHARE (note 3)                                      111.8p                   109.0p

                                   THE INDEPENDENT INVESTMENT TRUST PLC

                                     SUMMARISED CASH FLOW STATEMENT

                                                           For the year ended         For the period ended
                                                           30 November 2002           30 November 2001+
                                                                £'000       £'000          £'000       £'000

NET CASH INFLOW FROM OPERATING ACTIVITIES                                   2,057                      2,246

NET CASH OUTFLOW FROM SERVICING OF FINANCE                                   (457)                      (509)

Acquisitions of tangible assets                                     -                        (27)
Acquisitions of investments                                   (59,432)                   (90,107)
Disposals of investments                                       43,270                     34,094
Realised currency loss                                            (11)                       (80)

INVESTMENT                                                                (16,173)                   (56,120)

EQUITY DIVIDENDS PAID                                                      (1,617)                      (531)

NET CASH OUTFLOW BEFORE FINANCING                                         (16,190)                   (54,914)

Issues of shares                                                7,771                     52,691
Expenses of share issues                                           (6)                      (317)
Bank loans drawn down                                           3,779                      9,578
NET CASH INFLOW FROM FINANCING                                             11,544                     61,952
(DECREASE)/INCREASE IN CASH                                                (4,646)                     7,038


(Decrease)/increase in cash in the year                                    (4,646)                     7,038
Bank loans drawn down                                                      (3,779)                    (9,578)
Exchange movement on bank loans                                               645                         72

MOVEMENT IN NET DEBT IN THE YEAR                                           (7,780)                    (2,468)
NET DEBT AT START OF YEAR                                                  (2,468)                         -
NET DEBT AT END OF YEAR                                                   (10,248)                    (2,468)

+  The comparative 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.



                                                                      Year to                     Period to
                                                             30 November 2002              30 November 2001
                                                                        £'000                         £'000
1.    Return per ordinary share
      Revenue return                                                    1,745                         1,907
      Capital return                                                      562                         5,119

      The returns per share are based on the above returns and on 54,992,130 
      shares (2001 - 52,930,837), being the weighted average number of shares in 
      issue during the year.

      The diluted returns per share are based on the above returns and on 
      55,812,907 shares (2001 - 53,837,855), being the weighted average number 
      of shares in issue during the year plus the notional number of shares that 
      would have been issued for no consideration using an average share price 
      of 125.8p (2001 - 114.0p) and on average exercise price for the options of 
      116.9p (2001 - 105.2p).

                                                   Year to 30 November 2002    Period to 30 November 2002
                                                        Pence          £'000             Pence        £'000
2.    Dividends per share
      Interim dividend paid 4 September 2002             1.00            556              1.00          531
      Special interim dividend                              -              -              1.00          531
      Proposed final dividend payable 7 April            1.50            891              1.00          530
                                                         2.50          1,447              3.00        1,592

      If approved, the final dividend will be paid on 7 April 2003 to all 
      shareholders on the register at the close of business on 14 March 2003.

                                                               At 30 November                At 30 November
                                                                         2002                          2001
                                                                        £'000                         £'000
3.    Net asset value per ordinary share
      Net asset value attributable to ordinary shares                  66,433                        57,808

      Net asset value per ordinary share is based on net assets (as shown above) 
      and on 59,400,000 ordinary shares (2001 - 53,050,000) being the number of 
      ordinary shares in issue at the year end.

      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 year. Because these options are exercisable at 
      net asset value, no dilution to net asset value arises from their

4.    The financial information set out above does not constitute the Company's 
      statutory accounts for the year ended 30 November 2002.  The financial  
      information for 2001 is derived from the statutory accounts for 2001 which 
      have been delivered to the Registrar of Companies.  The Auditors have
      reported on the 2001 accounts; their report was unqualified and it did not 
      contain a statement under section 237(2) or (3) of the Companies Act 1985.  
      The statutory accounts for 2002 will be finalised on the basis of the 
      financial information presented in this preliminary announcement and
      will be delivered to the Registrar of Companies following the Company's 
      Annual General Meeting.

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