FILM studio owner Pinewood Shepperton unveiled a sharp decline in profits yesterday but said the outcome of the Chancellor's Budget looked likely to put it on the recovery trail as major film producers come back to the UK.

Pinewood, whose studios were used for the making of The Da Vinci Code and Basic Instinct 2, said turnover dropped £5.3m to £33.4m, while pre-tax profits were £5.3m for 2005, compared with £12.9m in 2004.

For the whole industry, film production spending in the UK slumped from £812m to £559m in 2005 as producers chose to shoot overseas rather than risk the UK's uncertain tax-break regime.

This meant Pinewood, which is traditionally used for Bond films, was overlooked for the current remake of Casino Royale, starring Daniel Craig, in favour of a studio in Prague.

However, more films are to be made in the UK after Gordon Brown confirmed new tax breaks in his Budget speech last week.

Movies that cost £20m or less can claim a guaranteed tax benefit of 20 per cent of production costs, with films costing more getting a 16 per cent reduction.

The company said prospects for the current year were encouraging, as the firm continued its diversification into television, hosting programmes such as The Weakest Link, My Family and the Trisha Goddard series, along with a number of medium-sized televised dramas, such as the acclaimed Elizabeth.

The Buckinghamshire-based company said Teddington Studios, which it bought in April, had been successfully integrated into the group.