The slump in the value of the South African rand and the weakness in the local economy have led to a sharp deterioration in the fortunes of Independent Newspapers' South African subsidiary, with pre-tax profits falling from £25.2 million (€32 million) to £20.5 million (€26 million).
The fall in the value of the rand from an average of 7.88 to the pound in 1997 to just under seven rand to the pound last year was a major factor in the fall in profits when translated to Irish currency and euros.
But even at a local currency level, Independent's INHL subsidiary had a difficult year, with pretax profits falling from 176.3 million rand to 161.4 million rand, reflecting lower advertising volumes in the second half of the year and weaker circulation in some of the regions.
The pre-tax profit figure for 1998 would have been lower were it not for the fact that the sharp rise in South African interest rates as the rand plunged doubled INHL's interest income to 20.2 million rand (€3.26 million) while INHL also benefited from a nil contribution to its pension fund during the year.
Independent has already announced a major restructuring of its activities around the world, including a 10 per cent reduction in its 13,500 workforce. The South African operations are expected to bear a large portion of the cuts.
