Water firm Severn Trent said it had reduced leakage to a record low level as it pledged to invest an additional £150 million in its network.
Severn, which supplies eight million customers across the Midlands and the heart of England, said the amount of water lost through leaks fell 7% in the year to the end of March, below the target set by the regulator.
This, and a 1.6% fall in consumption, helped the company to repeat its expectation that it will not have to enforce a hosepipe ban over the current financial year.
The group will spend an additional £150 million over the next three years to enhance water security, on top of the £1.6 billion already planned.
Underlying pre-tax profits fell 4.6% to £275.3 million in the year, despite a 3.5% increase in turnover to £1.8 billion, after a weaker performance from its services arm.
Chief executive Tony Wray said: "We have beaten our leakage target, reduced supply interruptions, continue to forecast no water usage restrictions for our region this year and we maintained the lowest average charges for our customers."
The group also announced that it will return £150 million to shareholders.
At its water division, turnover increased by 4.9% to £1.5 billion after it put up prices in line with inflation at the start of the year. Prices have again increased in April, this time by 5.2%.
Consumption from customers with water meters was lower, reducing its turnover by some £10 million, while business customers used water more efficiently.
Underlying profits in the division fell 0.7% to £500 million as it spent £40 million more on improving its network and on new costs such as maintaining private drains and sewers and the new carbon reduction commitment levy.
Group bottom-line pre-tax profits fell 38% to £156.7 million after £67.7 million of losses on financial instruments.