TORONTO — Nelvana Ltd.’s strategic shift from third-party service productions to proprietary production has generated more profit on lower revenue.

Toronto-based Nelvana reported Thursday that profit in the second quarter ended June 30 rose to C$834,000 ($597,561) from a loss of C$223,000 ($159,780) a year earlier, while revenue slipped to C$7.4 million ($5.3 million) from C$10.2 million ($7.3 million).

Nelvana, Canada biggest producer of children’s and family filmed entertainment, attributed the results to its move away from service production. In fact, service production revenue fell to nearly zero in the second quarter, from $3 million in the 1996 period.

In the six months, the company earned $845,470 on revenue of $11.7 million, compared with $281,584 on revenue of $15.7 million in the first half a year ago.

Nelvana has also changed its accounting policy for proprietary productions to recognize revenue on the delivery of each episode rather than on a completed series. The previous policy made Nelvana’s earnings fluctuate from quarter to quarter, but the new approach should smooth out those variations and improve the predictability of the results, the company said.

Library sales made up roughly half of all production and distribution revenue in the first half, which grew 5% to $8.5 million.

In the first six months, Nelvana delivered seven episodes of “Little Bear,” 13 episodes of “Rupert” and six episodes of the 3-D animated series “Donkey Kong Country,” based on the Nintendo game and co-produced with Medialab of France. As previously announced, Nelvana plans to deliver at least 117 proprietary animation episodes this year, up from 69 in 1996.

The company’s co-produced feature film, “Pippi Longstocking,” debuts today in U.S. theaters, released by Legacy Releasing Inc., with a video to follow Nov. 24 from Warner Bros. Family Entertainment.

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