Winchester Entertainment, owner of the popular Jellabies children's characters, is to establish a separate unit aimed at distributing Hollywood movies to British cinemas.

The move into film distribution follows the announcement of record pre-tax profits of £1.54m for the year to March 31 on the back of a 33% increase in turnover to £4.9m.

Chief executive Gary Smith said Winchester was talking to several US producers about licensing the international rights to their films and distributing them with partners which might include the video company VCI. The first feature film it will distribute will be Another Life, staring Nick Moran and Natasha Little, which is set to be released in Britain in February next year.

"We are looking to increase our control over the exploitation of our intellectual property rights," Mr Smith said. "We are looking to distribute on video, aircraft, television, the internet and video on demand. By going into this area in partnership we will minimise the risks involved by sharing print and advertising costs."

Winchester will also look to increasingly take an ownership position in films. It is already part-funding Heartbreakers, an MGM-produced film staring Sigourney Weaver and Gene Hackman. In return it receives worldwide distribution, sales and marketing rights, excluding the North American market.

Mick Southworth, formerly managing director of Film Four Distributors and responsible for the release of films including Brassed Off and Secrets and Lies, is to head the new division.

Winchester is also talking to toy companies about producing merchandise for The Wheels on The Bus, a new children's programme.