LONDON: U.K. children’s producer/distributor HIT Entertainment will launch a licensing and merchandising division by next spring, according to chief executive Peter Orton.

It will also continue an aggressive policy of rights acquisition that started two years ago when it snapped up book properties Brambly Hedge and Percy the Park Keeper. Both have gone on to achieve significant success internationally as animated television series.

Orton’s plans were unveiled as HIT declared its first financial results since it went public on the London Stock Exchange last August. At that time, HIT raised UK£8 million (US$13.5 million) from investors-half of which has already been plowed back into a new raft of program rights including Fairies, Bob the Builder and Archibald the Koala, which is being co-produced as a 26-part series with Millimages in France.

According to Orton, all UK£8 million is earmarked for production. ‘We must spend it to grow the business,’ he says. ‘The last thing the city wants is for you to raise money and hold it on deposit.’

HIT’s results show its transition from a classic distributor to a rights owner has been accompanied by rapid growth. In the first seven months of 1997, turnover grew to UK£5.6 million (US$9.5 million)-up more than 20 percent on a comparable period in 1996. Profits leapt to UK£570,000 (US$965,600) for the same period. According to Orton, the fruits of rights ownership are apparent in HIT’s increased profit margins, which this year stands at 45 percent. This compares with 33 percent when the company was raising financing for third-party projects.

‘This is the first time that anyone outside has been able to peek under the carpet and see the evolution of the company,’ says Orton. ‘We’ve taken all the skills we used to demonstrate in raising finance for third parties to turn the company into a multimedia rights owner.’

Increasingly, the company has been seeking to tie up rights in all media platforms. As a result, Orton is looking at a wide range of ways to kick-start the licensing and merchandising division. He says that acquisition specialist companies and the head-hunting of talent are both options being considered.