Winchester Entertainment, owner of Jellabies, the popular children's characters, is raising £22m to allow it to branch into film distribution in Britain.

The first film it will handle will be a re-release of Raging Bull, starring Robert De Niro, at the end of this month. Up until now Winchester has only been involved in the sales side of film distribution in the UK.

The move will be financed by a share issue at 315p per share. Gary Smith, the chief executive, said: "The funds will be used to develop the newly established UK film distribution business, to acquire rights to US studio-released films and to exploit the group's increasing catalogue of children's television rights."

In addition, the money will be used for film development and marketing.

Winchester also reported its first-half results for the six months ended September 30. The pre-tax profit rose to £972,000 from £704,000 last year, but turnover fell to £2.41m from £2.87m.

The company also announced a three-year deal with Wind Dancer, which produced the series Home Improvement and the film What Women Want, starring Mel Gibson and expected to be released in the US in December.

The deal gives Winchester Entertainment the first option to be executive producer and international sales agent for Wind Dancer's films. Winchester Entertainment's share price yesterday rose 6p, or 1.75%, to 348.5p. Its year high was 365p.