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Last Updated: Monday, 21 March, 2005, 14:10 GMT
Film studio warns of tax fallout
Scene from The World is Not Enough
All the James Bond films have been made at Pinewood
Shares in Pinewood Shepperton fell on Monday after the firm warned that first half profits would be hit by delays to key productions.

Last year, the government cracked down on a tax loophole within the film tax credit and suggested its abolition, deterring some US film investors.

In the Budget, the government extended the tax credit system, news which should help Pinewood's second half.

Pinewood Shepperton posted a 143% rise in annual pre-tax profits to 6.4m.

Shares in the company were marked 29 pence lower, nearly 14%, at 183.5p on Monday.

Tax relief on film production in the UK has been particularly important in the last year as it has helped to offset the impact of the weaker dollar.

The unfavourable exchange rate could have deterred some US film companies from paying for studio space in the UK.

Our performance in the first half of 2005 will be adversely affected by the uncertainty that has surrounded this issue
Michael Grade, chairman

The government decided to crack down on a loophole within the tax credit system, which allowed some film producers to claim tax relief more than once for the same production.

This crackdown had led to delay in the timing of some key productions at Pinewood Shepperton.

One-off blow

But the company said the situation was a "one-off hiatus" and that things would improve.

"The government has reiterated its commitment to UK film by extending the supportive fiscal regime in the recent budget, " said chairman Michael Grade.

"Our performance in the first half of 2005 will be adversely affected by the uncertainty that has surrounded this issue."

Pinewood Shepperton was formed after a management team bought Pinewood Studios from the Rank Group in 2000. It then bought Shepperton Studios in February 2001.

Based in Buckinghamshire, the company employs about 200 people and has 34 stages.

Currently in production is a sequel to the thriller "Basic Instinct".

Last year, Pinewood was home to "Harry Potter and the Goblet of Fire" and Tim Burton's "Charlie and the Chocolate Factory".

Since the early 1960s, Pinewood Studios has been home to the James Bond series and still houses the famous '007' sound stage.

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