Pinewood studios continues to take a loss

Pinewood Shepperton has urged the government to amend its film financing proposals after the movie studio reported a collapse in revenues following a crisis in UK production funding - reports The Guardian.

The facilities that filmed the James Bond and Harry Potter franchises suffered a fall in bookings from Hollywood projects amid uncertainty over the future of tax incentives for film-makers. The Treasury announced a new tax credit for producers last month but will not implement the regime until it has finished consulting with the industry.

Ivan Dunleavy, chief executive of Pinewood Shepperton, said he expected the booking drought to last into next year, with the new tax regime forecast to be ready in the spring.

He said the proposed overhaul, which would allow producers to reclaim up to 24% of a film's budget, demonstrated the government's "commitment" to UK film. However, Mr Dunleavy called for further improvements to the plans, adding that the company's efforts to influence the Treasury had fallen on deaf ears. Pinewood Shepperton would like to see the value of the tax credit increase depending on how many projects a film-maker puts into production.

"It would be a mechanism which would motivate people to produce a lot of films and it is an idea we have put forward and hopefully it will have some resonance with the government," he said.

A Treasury spokesperson said all proposals from film industry companies would be evaluated, but added that tax breaks were not the only reason for using UK film facilities.

"The government has made it clear that the current, longstanding reliefs remain available," the spokesperson said.

"UK film studios have world-class production facilities and we cannot accept that the level of tax relief is the only consideration in determining the location of film production."

Pinewood Shepperton's first-half results were affected by the dragged-out process of replacing the outgoing tax system, due to be phased out by the middle of next year. Turnover in the six months to June 30 fell 35% to £13.3m as productions hesitated over booking facilities.

A pre-tax profit of £1.2m in the same period in 2004 became a loss of £114,000 this year, due to restructuring costs following the acquisition of Teddington Studios.

Mr Dunleavy said Pinewood Shepperton's revenue forecasts for the full year were "achievable" but admitted the hiatus in studio reservations might drag into spring as the government closes its consultation over the tax credit and enshrines it in law.

"We don't want to come back to this process again. I would much rather we took our time to get it right rather than come back in a year to readjust things," he said.

Two Hollywood productions are shooting at Pinewood Shepperton at present: an adaptation of the best-selling book The Da Vinci Code; and a sequel to Basic Instinct. The strong pound has prompted some US film-makers to look elsewhere. Shooting on the fourth Harry Potter film has been completed, but there is speculation that number five, Harry Potter and the Order of the Phoenix, will move abroad, ending one of Pinewood's most lucrative franchises.

A revamp of the studios has been delayed to conserve costs, with plans to build new production facilities and workshops put on hold. Mr Dunleavy said the projects would be held over for a year, and a cost reduction programme implemented until the market recovers. The cost cutting will see "no significant reduction in headcount", he added.

Analysts expect Pinewood Shepperton to cancel its dividend this year.

Thanks to `Kyvan` for the alert.

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