Profit is up at Watlington Waterworks Ltd. The company reported net income of $2.07 million last year, compared with $1.75 million in 2013.

Total revenue was also higher, at $10 million, compared to $9.74 million in 2013.

The improved performance was partly the result of an increase in customers, particularly in the West End where Watlington has spent $4.2 million in recent years extending its pipeline from Lighthouse Road, in Southampton, westwards towards Somerset Village.

Another factor was rainfall distribution.

“It was another year of above average rain which was more intense over shorter periods, leading to higher demand for our products and services during longer intervals between rains,” the company said in a statement.

In 2014 the company notched up its largest single-year investment in property, plant and equipment in the past 20 years.

Part of that cost was for a new brackish water reverse osmosis plant. During each of the past 25 years the company has bought a minimum of 100 million gallons of treated brackish water from the GE Iconics plant at the company’s Parsons Lane, Devonshire headquarters. That lease expired last April and was not been renewed as Watlington decided instead to install and operate its own brackish water treatment facility.

“The new brackish water reverse osmosis plant is more energy efficient than the old treatment plant it replaced. As a consequence plant operational costs decreased. This led to an improvement in the gross profit margin and to overall stronger net earnings,” reported the company in its statement.

During 2014, Watlington issued dividends of 11 cents per ordinary share on four occasions — mirroring the dividend payments of the previous year.

However, shareholders can look forward to a retrospective dividend adjustment next month. In its letter to shareholders, released through the Bermuda Stock Exchange yesterday, the company said: “The Board has been conscious of the steadily increasing depreciation expense as the company continues to annually reinvest most of the cash generated from operations to finance infrastructure projects.

“The concern is that present shareholders will not be sharing in the benefit of present and ongoing investment to the extent future shareholders will benefit after the investment cost has been recouped through depreciation.

“The Board is sensitive to balancing the need to continue infrastructure investing with present shareholder’s interests. As a result the Board has revised the dividend policy to benefit shareholders more equitably by moving from basing dividends on net earnings to basing dividends on net cash generated.

“This will be applied to the year 2014 retrospectively to be included with the June 2015 dividend payment.”

Basic earnings per share rose from $1.65 to $1.96 in 2014.

The company said it was carrying a “substantial cash reserve” that has been earmarked for land and asset acquisition and a future reservoir in the West End.

Watlington’s bottling plant is also being upgraded to make it more efficient and with an increase in environmentally friendly containers, the company said.

The letter to shareholders noted that this year “has continued the improving trend seen in 2014, due partially to increasing numbers of customers, referred to above, and also in large part due to cost savings more than revenue growth”.

It continued: “There is not yet sufficient confidence in the trend to attribute part of it to an overall improvement in our national economic condition.”