The Week Ahead: Shell to sing a new tune while Sanctuary gets a metal bashing

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The Independent Online

After last year's reserves scandal, Shell shareholders will get the chance on Tuesday to approve a radical revamp of the company's structure. They will vote on a proposal to merge the Dutch and British holding companies to form a single entity, to be called Royal Dutch Shell.

For nearly a century, Shell has operated under dual ownership, but this came under heavy fire in 2004 after the group slashed its proven oil and gas reserves by 20 per cent. The scandal claimed three top executives and severely dented investor confidence in the corporate structure and management.

If the AGM vote is successful, the single entity will have one board, one chairman and one chief executive, replacing the existing structure of two boards and a committee of managing directors. Its main listing will be in London and should start trading on 20 July.

Corporate governance group Rrev welcomed the proposals. "The renewed plans are an improvement on the existing arrangements and the structure is more aligned to best practice and our guidelines," said its chief executive, Tim Sawyer.

Elsewhere, a string of high-profile trading updates and results will guide the direction of the market. The FTSE 100 hit three-year highs last week and there is cautious optimism about the outlook for UK equities. "I think it's relatively upbeat," said Gary Dugan, a global equity strategist at Barclays Private Clients. "The fly in the ointment is that oil, at $60 a barrel, will slow growth."

However, Mr Dugan added, the prospects for global economic growth were good, while interest rates were likely to be heading down in most major economies, except the US.

That would be good news for retailers, which have complained of weaker consumer spending in recent months . This week, it is the turn of music and books giant HMV to release full-year results and the market will be looking for signals on how current trading is holding up.

In early May, the City was warned that underlying sales had fallen at both HMV and its books chain, Waterstone's. This was particularly disappointing after a strong Christmas, fuelled by sales of albums by giant bands such as U2 and the DVD of the hit series Little Britain.

Still in the music business, Sanctuary will release interim results on Tuesday. A trading update two weeks ago saw its shares plummet after the company behind Morrissey and Iron Maiden warned that profits would be "substantially lower". The City will want more details about trading as well as reassurance that the long-term outlook is more positive.

Elsewhere, and the owner of the Daily Mirror, Trinity Mirror, will provide an update on trading, which in turn will be a pointer to the strength of the advertising market. Investors will be hoping that conditions have improved since the last update, for March and April, when advertising revenue fell 1.4 per cent. But analysts fear conditions may have worsened since then.

Most of the problems surround the group's flagship publication, whose circulation has fallen away since the fake Iraq war photo scandal, which led to the departure of then Mirror editor Piers Morgan. However, chief executive Sly Bailey has been praised by analysts for concentrating on the bottom line and not engaging in costly promotions to attract readers.

Sir Martin Sorrell's WPP, the world's second-largest advertising firm, will update the market at its annual general meeting. Investors will be hoping that the owner of advertising agencies including JWT, Ogilvy & Mather and Young & Rubicam continues its recent strong performance.

In April the group reported a near 6 per cent rise in quarterly like-for-like revenues. It also said profitability and operating margins "were ahead of budget" during the first quarter.

Away from the glamorous world of advertising, the smaller end of the market will hear from Dobbies Garden Centres and Heavitree Brewery, both of which are releasing interim results. The updates on current trading will be of most interest, as will the outlook for the rest of the summer - a key period for both businesses. If last week's break in the hot weather continues, it will not bode well.

Across the Atlantic, and Nike and Constellation Brands release quarterly results. The alcohol giant recently had to withdraw from the bidding war for Allied Domecq, leaving the way clear for Pernod Ricard, which last week was granted European Union approval for the deal. Interest in Constellation, owner of Corona Extra and Hardys wine, will be focused on how much the failed bid cost and what direction management will now take.

CALENDAR

Tomorrow 27

UK: Results: (final) Designer Vision, Honeycombe Leisure, Northgate Information Solutions; (interim) Parkdean.

Tuesday 28

UK: Results: (F) Carpetright, Computer Software, First Technology, HMV,

International Greetings, Profile Media, Stonemartin; (I) Dobbies Garden Centre, Domino Printing Sciences, Hardide, Porvair, Sanctuary.

Wednesday 29

UK: Results: (I) Wynnstay

Thursday 30

UK: Results: (F) DS Smith, La Tasca, Minco, Reliance Security, Sibir Energy, Xansa; (I) Heavitree, Montpellier.

Friday 1

UK: Results: (F) ITM Power, Micro Focus International.

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