Watlington Waterworks is gearing up to replace its main reservoir and to build a second, new reservoir in a two-year capital project.

The water company, which on Friday reported a 50 percent jump in net income for the first half of 2004, said the reservoir construction will be partially funded by the company with some external financing also required.

The reservoir project comes after the company replaced 12,000 feet of pipeline ? a quarter of it more than 70 years old ? in the six months to June.

Strong demand for the company's products, sparked in part by lower than expected rainfall, and new operating efficiencies increased the company's net income to $1,080,464, from $719,092 in the first half of 2003.

The company said total revenue was $4,316,909, up from $3,768,060 and net earnings per share were 94 cents versus 63 cents.

"Our policy of continuing to invest in capital improvements to strengthen the company's manufacturing and distribution capabilities has resulted in operating efficiencies which have lead to lower unit production costs and this has also contributed to the improved net earnings for the first half of the year," the company said.

"The forecast for the remainder of this year and the first quarter of the next year is for demand for our products and services to remain strong."