Watlington Waterworks Ltd. made a profit of $408,798 for the year ended December 31, a 158 percent gain over the previous financial year when costs associated with the purchase of Pure Water (Bermuda) Ltd. cut the company's net income in half.

The profit of 36 cents a share is still below the $411,530 profit of 1994 and 40 percent below 1993's profit. Closely held Watlington Waterworks, which is traded on the Bermuda Stock Exchange, bought Pure Water for $3.1 million on January 1, 1997.

Watlington supplies water and purified water in Bermuda. During 1997 the company had water sales of about $5.3 million, a 10 percent increase over 1996 sales. Other operating revenues from the company's retail shop and plumbing service rose 18 percent to about $1.2 million.

Total revenue including money earned from rents and interest and dividends on investments increased 11 percent to $6.5 million.

The company had expenses of $6.1 million, an eight percent increase over 1996.

Expenses included a $368,859 payment on the company's bank loan and overdraft interest. The company borrowed $2 million in 1994, with principal repayments of $200,400 a year repayable by 2004. In 1996 the company borrowed a further $3.1 million repayable over a seven year period with expected principal repayments of $500,000 a year.

As at the end of 1997 shareholders' equity was $6.8 million, a gain of about six percent.

President and Chief Executive Officer Allan Rance said demand for the company's products and services remained strong during 1997. However technological changes has reduced the effective operating life of some of the company's water treatment plans, leading the company to accelerate some depreciation charges.

The company has also reduced the period over which it is amortising the goodwill calculated on the acquisition of Pure Water to 10 years from 40 years.

Looking ahead he said revenues are expected to be reduced in 1998, but the fall should be offset by savings on interest charges by reducing the debt.

"We have experienced a period of above average rainfall from August 1997 to the present time and, more recently, water sales have been depressed to the extent that we do not anticipate that sales in 1998 will achieve the same level as 1997,'' he said. "However with continued savings in interest charges following planned debt reduction, we anticipate that the overall result in 1998 will be similar to that achieved in 1997.'' At December 31 the company's directors and officers owned a 37 percent chunk of Watlington's stock. Former Pure Water owners Allay Marshall and Paul Claude became significant shareholders in Watlington Waterworks when their company was purchased. The two received a $2 million cash payment and 220,000 newly issued shares at $5 a share.

Watlington Waterworks stock last traded at $6 on March 23, $1 short of its 52 week high.