Falling exchange rates in Australia and New Zealand in particular have taken their toll on Independent Newspapers in the first half of the year, and together with a near doubling in interest charges, were the main factors behind the fall in interim profits from £39 million to £34.2 million.

With the New Zealand dollar plunging further in the second half as the economy moves into recession and with the Australian dollar and South African rand all sharply lower than the levels used by Independent to translate its first-half profits, little relief is in prospect in the second half of the year. The half-year figures, however, contained few surprises and analysts are not rushing to reduce their current full-year forecasts.

In the half year to June 1997, Independent translated its Australian, New Zealand and South African profits at A$2.01, NZ$2.25 and 7.01 rand but these currencies had weakened to A$2.15, NZ$2.51 and 7.08 rand for the half to June 1998. Since the end of June, these currencies have fallen further and are currently trading at A$2.42, NZ$2.84 and 8.86 rand to the pound.

The fall in the New Zealand dollar meant that turnover in New Zealand fell from £92.7 million to £85 million, with operating profits down from £18 million to £16.3 million. In Australia, Independent's share of APN's profits was up slightly from £4.5 million to £4.7 million.

Overall turnover was up from £276.4 million to £312.3 million, while operating profits were up from £49 million to £55.1 million. Interest charges - reflecting the acquisition programme over the past two years - were up from £9.6 million to £17.7 million.

The Irish operations benefited from the strength of the economy but one analyst, Mr Rory Gillen of NCB, described the performance in Ireland as "mediocre" with the rise in operating profits from £20.3 million to £23 million falling well short of the 25 per cent growth in the advertising market. Overall, sales from the Irish operations were up from £91.5 million to more than £100 million, with all of the wholly-owned national and provincial titles reporting an improved performance. The 50 per-cent owned Star also had a good year, and accounted for most of the £440,000 profits from Independent's associate companies in Ireland.

The other associate company in Ireland, the 50-per-cent owned Princes Holdings cable television company, produced its first ever half-year profit and its customer base now stands at 143,000.

In Britain Independent acquired full control of the London Independent in the first half of the year, and this has now been integrated into the group's British operations. Independent director Mr Brendan Hopkins said the group had "stopped the rot" at the In- dependent and that more than £4 million has been invested in the editorial product. "We're in the investment phase, and we hope to keep losses below last year's level," he said.