Anglian Water owner AWG has announced a six per cent rise in profits for its regulated business in a year when customers were faced with higher charges.
The water business - owner of Kidderminster-based process engineers Purac - was recently cleared by Ofwat to increase bills by an average of £19 over the next five years.
The company intends to invest in improvements to infrastructure and environmental standards.
The increased bills charged since April to six million customers in the east of England and Hartlepool were the lowest in the country and were accompanied by "challenging" efficiency targets imposed by Ofwat, said the company.
Yesterday , AWG said Anglian Water's financial performance showed " continuing improvement" with the previous regulatory pricing formula enabling turnover to increase by 3.9 per cent to £796.8 million and operating profits to hit £339.3 million.
Expenditure was unchanged at £291.1 million, despite additional costs from a previously announced redundancy programme and pressures from higher fuel costs.
Across the AWG business, the company's non-regulated support services arm Morrison helped lift underlying profits for the year to March 31 to £ 83 . 5 million, against £77.9 million last year.
AWG, which is just over four years into a five year contract to maintain 84,000 Birmingham council homes, vowed to at least maintain the dividend payout in real terms for the next five years.
It declared a full-year dividend of 48.7 pence a share, up 3.2 per cent on the year before.
The company will also return £75 million to shareholders following the sale of businesses.
AWG said a drive to improve the performance of Morrison had paid off with operating profits of £21.8 million, up 27.5 per cent on a year earlier.
Overall, AWG achieved bottom- line profits of £65.3 million, against losses of £79.8 million in 2004, when figures were affected by exceptional items linked to a restructuring and the disposal of international businesses.
Barclays Stockbrokers said: "As one of the smaller UK water and sewerage businesses, AWG is a potential takeover target, although it is difficult to see any predator finding justification to pay a takeover premium, with the shares already trading well above asset value."