FILM studio Pinewood Shepperton lost a fifth of its value after issuing a profits warning to investors.

The group, which last year attracted blockbuster productions including Batman Begins, said it expected to report interim operating profits of about £2m - slightly below market estimates.

It also admitted it was unlikely to achieve the expected full-year operating profit of about £8.7m.

Shares fell 19 per cent to 121p following the update.

Last month, 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, which was due to start at the beginning of this month, will not begin until the end of next month.

Film companies were holding off from converting provisional bookings because of the uncertainty.

However, it said it continued "to view the long-term prospects for the company with confidence".

Pinewood, which is 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 Paramount Pictures was considering pulling production of its sci-fi epic The Watchmen from the UK in a move that could lose Pinewood about £2.2m.