Media and leisure should provide plenty of entertainment

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The Independent Online
Who says August is the slow, silly season when the City shuts down, the pundits shut up and corporate activity grinds to a halt?

This week, there are more major companies releasing figures than you could wave a stick at. Over a dozen blue-chip stocks are set to publish results, making it one of the busiest reporting periods in the financial calendar.

While the banks will again hold the ring, with Abbey National, HSBC, Barclays and Standard Chartered all unveiling interims, it is the media and leisure sector which ought to provide the most entertainment.

The highlight of the week should be the Rank Organisation on Thursday. Analysts' pre-tax forecasts for the six months to May are tightly grouped at between pounds 157m-pounds 165m versus pounds 158m last time.

With the figures already well flagged, attention will focus on what will emerge from the internal strategic review being carried out by new chief executive Andrew Teare.

Broker NatWest describes it as the most important development at the leisure group for many years.

Mr Teare is expected to set out his assessment of those businesses which no longer fit into his longer-term vision for the group. Rank has already announced its intention to sell the holiday operation Shearings and analysts think the disposal programme may be extended to include the holiday camp business Butlins.

The group's commitment to the new Oasis holiday park format may also be scaled back, while the video duplication operations could be off-loaded, leaving Rank to focus on its leisure divisions of bingo, casinos and the Hard Rock Cafe chain.

This morning's interim numbers from Pearson, often considered in the City as another candidate for a root-and-branch re-think, will be awful.

The main factor behind the estimated halving in profits to around pounds 25m in the six months to June is the continuing problems at Mindscape, the Californian software subsidiary bought for a whopping pounds 313m two years ago.

Losses here are forecast to total pounds 46m, the bulk of which relate to one- off charges and changes to a more conservative accounting policy. But trading also remains poor and Mindscape is unlikely to go back into the black until the second-half of next year at the earliest.

Also depressing Pearson's bottom line is the reduction in income from BSkyB, where management sold its 9.75 per cent direct holding in the satellite broadcaster last September.

The rest of the group should turn in a respectable performance, including a first-time contribution from the educational publishing business picked up from Harper Collins for pounds 377m earlier this year. A progress report on the sale of Westminster Press, the regional newspaper group commanding a pounds 300m price tag, may also be delivered.

Half-time at publisher Reed International should be a more upbeat affair. The sale of much of the consumer publishing business a year ago means the turnover figure will be down about 7 per cent with operating profits flat. But a significant cut in the interest bill means pre-tax profits for the six months to June are set to rise by more than 10 per cent to about pounds 410m, driven by across-the-board revenue growth and cost containment.

Best performer is likely to be the professional division, with good growth from US on-line information group Lexis-Nexis.

Shares in the drugs group Zeneca have been rising steadily in anticipation of a strong set of half-year results on Tuesday.

Analysts have pencilled in pre-tax profits in the range of pounds 575m-pounds 610m, against pounds 506m last time, as the benefits of new products start to come through.

The prostate cancer drug Casodex, which was recently launched in the US, and the cancer drug Zoladex are the likely star performers, though agrochemicals has had a strong first half, analysts say.

News about the launch costs of new drugs will be closely monitored, as will an update on Zeneca's hunt for a marketing partner for its Accolate asthma drug.

Good results are also awaited from GKN when the engineering group announces its interims on Wednesday. These are seen at or just over pounds 180m, up from pounds 162.6m a year ago, and will underpin the shares' recent re-rating. This is based on the view that earnings will advance steadily into 1997 on the back of good growth prospects for its defence, automotive and the Chep pallet-proofing operations. High hopes are pinned on Westland helicopters, where GKN has a large and well-defined order book.

Poor figures last week from Shell's chemicals activities do not bode well for BP's second-quarter results on Tuesday. But analysts predict better news from BP. Although both operate in ethylene, which has been hard hit by a slump in prices, BP also has large acrylonitrile and acetic acids businesses which should have fared better.

BP is also less exposed to refining in the Far East, about which Shell made cautious comments. However, UK marketing profits will remain depressed due to the continuing effects of the petrol price war initiated by Esso's "Price Watch" campaign. Analysts predict net income of about pounds 625m, against pounds 563m in the corresponding second quarter.

Lower second-quarter profits are expected on Friday at the Anglo-Dutch consumer group Unilever, which was linked last week to a possible takeover of Cadbury-Schweppes, the confectionery giant.

Restructuring costs at two newly acquired businesses in North America - the industrial cleaning group Diversey and the shampoo concern Helene Curtis - could run to pounds 100m, pushing pre-tax profits down to around pounds 640m from pounds 655m last time.

Nevertheless, underlying income should show a near 10 per cent improvement, driven by growth in emerging markets, which account for about a quarter of total sales. Investors will also be keen to hear from Niall Fitzgerald about his strategic vision for the group. He takes over from Sir Michael Perry next month.