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Independent Inv Tst (IIT)

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Wednesday 09 July, 2003

Independent Inv Tst

Interim Results

Independent Investment Trust PLC
09 July 2003


                   Results for the six months to 31 May 2003

                                  9 July 2003


                             Chairman's Statement

The six month period ending 31 May 2003 proved a satisfactory one for our
company, producing a net asset value total return of 10.5%.  We can flatter this
return by drawing attention to the total return of 0.3% produced by the FTSE All
Share Index over the same period, but we need to remind ourselves that our net
asset value at 31 May 2003 was still 6% below that of 31 May 2002.  As with all
assessments of performance, it all depends on your starting point and on what
you choose as the basis for comparison, but in any case has no relevance to the

The total return can be broken down into a gain of 9.4% in our net asset value -
from 111.8p to 122.3p - and an interim dividend of 1.25p (1.00p last year), to
be paid on 4 September 2003 from earnings of 1.98p (1.24p last year).  It would
be rash to make predictions about earnings for the full year at this stage, but
we shall be disappointed if we find ourselves unable to recommend a final
dividend at least equal to last year's 1.5p.

Much of the period under review saw the market retreating under the weight of
the concerns mentioned in our last annual report: accounting issues, valuation
worries, asset allocation shifts, economic inactivity and the threat of war.
However, since March equity markets have risen strongly, encouraged by the swift
conclusion of the Iraq war and, more significantly, a policy of monetary easing
by the Federal Reserve and other central banks.

Throughout much of the life of The Independent, the managing director has
demonstrated a greater enthusiasm for borrowing than the rest of the board, who
have been concerned above all about the levels of valuation prevailing in equity
markets.  This concern had been considerably reduced by the time markets reached
their low point in March and soon afterwards the board relaxed its gearing
limit.  We ended the period with net borrowings of £14.4m (20% of shareholders'
funds), up from £10.2m last November.  We have continued with our policy of
hedging essentially all of our dollar portfolio with the result that some 55% of
our borrowing is denominated in dollars.

Our housebuilding holdings have again made a major contribution to our results,
increasing in value by some £3.5m after adjustment for modest net purchases.
Investors appear to have attached greater weight to the statistical cheapness of
the shares than to prophecies of collapsing house prices.  We were particularly
pleased by the 22% increase in the price of Redrow, our biggest holding by some
margin, in reaction to excellent results, and by the good start made by Wilson
Bowden, a new holding for us.  We continue to believe that share prices in the
sector take ample account of the short term uncertainties facing it and give
little credit for what we still regard as outstanding long term prospects.

Our insurance portfolio also performed strongly.  Brokers have been obvious
beneficiaries of the considerable tightening that has taken place in insurance
markets and there can be little doubt that property casualty underwriters with
strong balance sheets and adequate reserves for business written in earlier
years will enjoy excellent results over the next couple of years at least.
There are limitations to the insight any outsider can obtain into the adequacy
of an individual company's reserves and this has led to our having a broader
spread of holdings in the insurance underwriting area than we have in other
parts of the portfolio.  On the evidence to date, however, we feel pleased with
the progress being made by most of our selections.

Our third big area of exposure, retailing, had a modestly negative impact once
the effect of £1.9m of net purchases is taken into account.  The main factors
behind this were: a poor reception accorded William Morrison's bid for Safeway;
a marked deterioration in trading at New Look; signs that Carpetright and DFS
may also be in the early stages of a slowdown; and worries about the effect of a
weak dollar on the profits of Signet's substantial US business.  By contrast,
Merchant Retail has, thanks to the buoyancy of its Perfume Shop chain, produced
good figures and enjoyed an appropriate response in its share price.  While we
share the market's concerns about the immediate trading outlook for the sector,
our confidence in the strength of our individual holdings persuades us that it
is still right to have a big retail weighting.

Our dismal experience of owning bank shares has continued with the prices of
both Abbey National and Lloyds TSB registering steep falls over the period.  We
reduced the Abbey National holding but added to Lloyds TSB at a price that
initially looked unfortunate but which is looking better now.  On a brighter
note, we are pleased with the initial showing of our holding in Anglo Irish
Bank, which has an outstanding record of growth and seems very reasonably

Our technology and telecommunications holdings ended the half year on a strong
note and, but for an ill-timed sale of ARM, would have made a modest positive
contribution to our overall performance.  It is a measure of the devastation
suffered by these sectors that we can point with some pride to the fact that our
remaining holdings are, in aggregate, worth more than half of what we paid for

Our recruitment companies continue to endure miserable short term trading
conditions, but we remain hopeful of strong recovery at some point in the
future.  The strength of their balance sheets offers some reassurance in the
meantime.  Much the same can be said of DTZ, which is having a particularly
difficult time in Germany.

We have once again been active in the water sector with profitable involvements
in Kelda, Severn Trent and United Utilities, although only United remained in
the portfolio at 31 May.

Elsewhere in the portfolio, new purchases of Geest, Inter Link Foods and Vitec
are all showing significant gains on cost, while Compco and IG Group have
benefited from bid approaches.  Johnston Press has been as dependable as ever
and Altria, after some nervous moments, has made a positive contribution over
the period.  Finally, we have reluctantly bid farewell to Wolseley and Bellway,
both of which served us well.

After the strong rise in equity markets, valuations in general are once again
demanding by historical standards, and the excesses which built up in the
stockmarket boom of the 1990's have not yet been resolved.  The rest of the
world continues to look to an overstretched US economy to lead an upturn, and is
showing little capacity to take the initiative itself.  This may not seem a
comfortable background against which to be geared to equities, but we continue
to believe that we are invested in strong companies with reasonable valuations.


The following is the interim statement for the six months to 31 May 2003 which
has been neither reviewed nor audited by the auditors.  This statement is being
printed and will be sent to all shareholders on 30 July 2003.  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 year to
                                  31 May 2003                    31 May 2002                  30 November 2002
                          Revenue    Capital    Total    Revenue    Capital    Total    Revenue    Capital    Total

                           £'000      £'000     £'000     £'000      £'000     £'000     £'000      £'000     £'000
Realised gains on               -     1,251     1,251          -      3,441    3,441         -     4,299     4,299
Unrealised appreciation
/(depreciation) on                                              -                              -   (4,371)   (4,371)
investments                     -     4,315     4,315                7,219     7,219
Currency gains                  -       406       406          -       188       188         -       634       634
Income                      1,560         -     1,560      1,117         -     1,117       2,564       -     2,564
Administrative expenses      (200)        -      (200)      (179)        -      (179)      (360)       -       (360)
Net return before           1,360     5,972     7,332        938    10,848    11,786     2,204       562      2,766
finance costs and
Finance costs of             (158)        -      (158)      (266)        -      (266)      (459)       -       (459)
Return on ordinary          1,202     5,972     7,174        672    10,848    11,520      1,745      562      2,307
activities before
Tax on ordinary               (14)        -       (14)        (1)        -        (1)         -         -         -
Return on ordinary          1,188     5,972     7,160        671    10,848    11,519      1,745       562     2,307
activities after
Dividends in respect of      (770)        -      (770)      (556)        -      (556)    (1,447)       -     (1,447)
equity shares
Transfer to reserves          418     5,972     6,390        115    10,848    10,963        298       562      860
Return per ordinary
share:  (note 1)
Basic                        1.98p     9.96p    11.94p      1.24p    20.11p    21.35p      3.17p     1.02p     4.19p
Diluted (FRS 14)             1.95p                          1.22p                          3.13p
Dividends per ordinary
share (note 2)               1.25p                          1.00p                          2.50p

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

 All revenue and capital items in this statement derive from continuing

                                     THE INDEPENDENT INVESTMENT TRUST PLC

                                           SUMMARISED BALANCE SHEET


                                                       At                       At                        At
                                              31 May 2003              31 May 2002          30 November 2002
                                                    £'000                    £'000                     £'000


Fixed tangible assets                                  5                       14                        9
Fixed asset investments                           88,763                   83,778                   75,638
Net liquid assets /(liabilities)                     648                     (792)                   3,426
Total assets (before deduction of
bank loans)                                       89,416                   83,000                   79,073
Bank loans                                       (15,545)                 (10,885)                 (12,640)
                                                  73,871                   72,115                   66,433


Called-up share capital                           15,100                   13,896                   14,850
Capital reserves                                  57,740                   57,789                   50,970
Revenue reserve                                    1,031                      430                      613
EQUITY SHAREHOLDERS' FUNDS                        73,871                   72,115                   66,433

(note 3)                                          122.3p                   129.7p                   111.8p

                                   THE INDEPENDENT INVESTMENT TRUST PLC

                                     SUMMARISED CASH FLOW STATEMENT


                                                                   For the six  For the six         For the
                                                                     months to    months to         year to
                                                                        31 May       31 May     30 November
                                                                          2003         2002            2002
                                                                         £'000        £'000           £'000

NET CASH INFLOW FROM OPERATING ACTIVITIES                               1,402          862          2,057

NET CASH OUTFLOW FROM SERVICING OF FINANCE                               (148)        (272)           (457)

TOTAL TAX PAID                                                            (14)           -               -

Acquisitions of investments                                           (21,043)     (32,438)        (59,432)
Disposals of investments                                               15,065       21,601          43,270
Realised currency loss                                                    (47)         (11)            (11)

AND FINANCIAL INVESTMENT                                               (6,025)     (10,848)        (16,173)

EQUITY DIVIDENDS PAID                                                    (906)      (1,061)         (1,617)

NET CASH OUTFLOW BEFORE FINANCING                                      (5,691)     (11,319)        (16,190)

Issue of shares                                                         1,048        3,344           7,765
Net bank loans drawn down                                               3,358        1,578           3,779

NET CASH INFLOW FROM FINANCING                                          4,406        4,922         11,544

DECREASE IN CASH                                                       (1,285)      (6,397)         (4,646)


Decrease in cash in the period                                         (1,285)      (6,397)         (4,646)
Net bank loans drawn down                                              (3,358)      (1,578)         (3,779)
Exchange movement on bank loans                                           453           199           645

MOVEMENT IN NET DEBT IN THE PERIOD                                     (4,190)      (7,776)         (7,780)
NET DEBT AT START OF PERIOD                                           (10,248)      (2,468)         (2,468)
NET DEBT AT END OF PERIOD                                             (14,438)     (10,244)        (10,248)

                                      THE INDEPENDENT INVESTMENT TRUST PLC


                                       Six months to 31  Six months to 31           Year to
                                                    May               May       30 November 
                                                   2003              2002              2002
                                                  £'000             £'000             £'000

1.    Return per ordinary share

      Revenue return                              1,188               671             1,745

      Capital return                              5,972            10,848               562

      The returns per share are based on the above returns and on 59,965,934 shares (May
      2002 - 53,946,984; November 2002 - 54,992,130), being the weighted average number of
      shares in issue during the period.

      The diluted revenue returns per share are based on the above revenue returns and on
      60,770,293 shares (May 2002 - 54,823,289; November 2002 - 55,812,907), being the
      weighted average number of shares in issue during the period plus the notional number
      of shares that would have been issued for no consideration using an average share
      price of 115.4p (May 2002 - 131.3p; November 2002 - 125.8p) and on average exercise
      price for the options of 106.3p (May 2002 - 121.5p; November 2002 - 116.9p).

2.    The interim dividend will be paid on 4 September 2003 to all shareholders on the
      register at the close of business on 15 August 2003.

3.    Net asset value per ordinary share

                                                 31 May            31 May       30 November 

                                                   2003              2002              2002 

                                                  £'000             £'000             £'000
      Net asset value attributable to
      ordinary shares
                                                 73,871            72,115            66,433

      Net asset value per share is based on net assets (as shown above) and on 60,400,000
      shares (May 2002 - 55,583,980; and November 2002 - 59,400,000), being the number of
      shares in issue at the period end.

      Dilution of revenue 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 exercise.

4.    The financial information for the period ended 30 November 2002 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 9 July 2003.

                      This information is provided by RNS
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