Pinewood disappoints on profits

SHARES in film studio Pinewood Shepperton plunged more than 20% after it warned on profits and said trading had not improved since May.

The group, which last year attracted blockbuster productions such as Harry Potter And The Goblet Of Fire, Bridget Jones: Edge Of Reason and Batman Begins, said it expected to report interim operating profits of about £2m, which it described as slightly below market estimates.

It also said it was unlikely to achieve full year operating profit estimates of about £8.7m. Shares fell 30½p - more than 20% - to 120p following the update.

In May the company told investors that it would need to convert a number of provisional film bookings into firm contracts, including at least one blockbuster film this year, if it was to achieve its full year targets.

However, it said protracted uncertainty surrounding a Government review of tax policy for the film industry had made that more difficult.A consultation exercise for the review that was due to start at the beginning of June was not now set to begin until the end of July, a Pinewood spokesman said.

Film companies were holding off from converting provisional bookings due to the uncertainty. 'It's this issue that is causing the problem here because there's no resolution of it as yet,' he said. Pinewood said the adverse dollar/sterling exchange rate was also making life more difficult.

The group, which employs about 200 people, said it was considering measures to improve profits and would review the timing of capital spending, although it declined to give details.

It also said it would not declare an interim dividend for the current financial year and would consider whether to pay a final dividend for the full year in the light of results achieved. However, it said it continued 'to view the long term prospects for the company with confidence'.

Pinewood - headed by BBC chairman Michael Grade - warned in April that it was braced to lose a major contract because of the cost of movie-making in the UK.

It said entertainment giant Paramount Pictures was considering pulling production of its sci-fi epic The Watchmen from the UK in a move that could lose Pinewood around £2.2m in revenues.

Pinewood has started integrating recently-acquired Teddington Studios into its existing business. It paid £2.6m for the studio, which has hosted hit shows such as The Office and Pop Idol.