1997 financial year ended December 31, an increase of 9.2 percent over the previous year.

Earnings per share were up about nine percent to $3.60 a share. Return on equity rose to 10.2 percent from ten percent in 1996.

Electricity sales revenue increased 3.7 percent or $4.1 million to $112.3 million.

Belco president and chief executive officer Garry Madeiros attributed the gain to control of costs and improved performance. The company sold 1.3 percent more kilowatt hours in 1997 than 1996. The sales increase was below the company's projections for the year.

Mr. Madeiros said the company based its expectations on the amount of office buildings being completed. While peak load increased, that didn't translate into the expected growth in electricity sales.

"We expect a change to that stagnation we had before,'' he said. "We anticipate more business due to the number of office buildings being developed.'' Wholly-owned subsidiary Bermuda Gas & Utility Co. Ltd. sales net of cost of goods sold increased by about seven percent to $309,677. Belco Energy Services Co. Ltd. (Besco), the energy conservation consulting subsidiary, reported its first profit in the last three months of the year after experiencing losses as a start-up operation. Overall, losses decreased to $269,000 from $716,000 in 1996.

The company recently purchased a majority stake in telecommunications company Quantum Communications (see story below) for an initial investment of $577,125 as reflected in the 1997 year end report.

The company began operations in February this year and Mr. Madeiros expects it will be generating profit by next year.

Belco Holdings had a debt of $22 million by year end, $15 million of which is a bond issue due to be paid this year. The company also has a cash reserve of $20 million.

Mr. Madeiros said the company was deciding whether to use cash to retire the bond issue or refinance it through a new issue, or new debt. He said some bondholders had indicated they would be willing to buy a new issue of the bond.

The other option is to continue Belco's programme of diversification through strategic purchases. The company must also consider a plan to spend up to $34 million over the next two years on replacing and adding new equipment in its generating plant.

"We haven't decided what we are going to do yet,'' Mr. Madeiros said.

The company recently renegotiated a labour contract with its unionised employees up until the end of 1999. The company employed 434 staff in 1997, 14 less than it did in 1996. Most work is for the electricity subsidiary.

Mr. Madeiros said the company was in the process of assessing how vulnerable it was to the Year 2000 bug throughout its operating systems.

The company closed the 1997 year with its shares trading on the Bermuda Stock Exchange at $24.50, a 25 percent increase in price. The stock price closed at $24.50 yesterday.