Pinewood Shepperton into red, affected by uncertainty over tax sops |
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Thu, 01 Sep 2005 13:05
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LONDON: The legendary Pinewood Shepperton studios, venue for shooting of several multi million pound films, including Harry Potter and James Bond movies, says confusion over tax sops offered to film production units is hampering its business and the company has gone into the red for the first time since its listing. It has now only two big budget films on its floor -- the Da Vinci Code and the Basic Instinct 11, both Hollywood productions.
The company's chief executive Ivan Dunleavy disclosed that in the six months ending 30 June, the company had sales of 13.3 million pounds, down from 20.4 million pounds during the corresponding previous year period, while it recorded a loss of 108,000 pounds against a pre-tax profit of 1.6 million pounds last year. Sales from the rental of its film stages and related services, traditionally its core business, halved to 5 million pounds, meaning films accounted for less than half of the company's group sales for the first time, falling to 40 per cent in the half, from 57 per cent through 2004. Dunleavy says the fall could be termed as positive because the company's decision to diversify into television production is indeed paying dividends. Revenue from television and sound services was down by 17 per cent to 5 million pounds.
The company said the results were disappointing but its board is confident of the long-term prospects and that film makers will return to the country.
The British government has come out with a consultation document to frame a film fiscal policy for the country. A new system is expected to be put in place by April next.
Dunleavy is confident with the new policy, film makers will come back as its studios have a skillbase that is unparalleled.
The company had issued a profit warning in March after the Treasury had decided to shelve the section-42 tax code, meant to offer sops for producers using the country's film studio facilities. Although there were negotiations, many producers with film budgets of 15 million pounds or more opted to pull out of the country. The benefits offered are known to have been abused by some investors through what is described as "double-dipping".
One of the major films to go out of the company's fold was Paramount's The Watchman,
The company has postponed a revamp of the studios, which includes new production facilities and workshops. Dunleavy said these works will be taken up next year.
Dunleavy said the proposed overhaul that would allow producers to reclaim up to 24 per cent of a film's budget, showed the government's commitment to the industry. However, further improvements are required like higher tax credit mainly depending on the number of projects a film-maker puts into production.
A spokesperson for the Treasury said proposals from the industry will be evaluated before a final decision is taken. He, however, said withdrawal of tax sops is not the only reason why foreign film producers are not using the country's facilities.
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