Severn Trent has become the latest water company to unveil higher profits after a sharp rise in bills for customers.
Turnover at Severn Trent's water division increased 13.4 per cent to £1.15 billion, while profits at the arm were up 30 per cent to £400.4 million in the year to March 31.
The company, which serves eight million customers in the heart of England, increased bills by 15.2 per cent as part of a five-year regulatory settlement allowing firms to raise charges in return for major investment in the network.
Severn said it invested £400 million in its regulated assets during the year, including £95 million in infrastructure renewals.
The company added that its reservoirs were currently more than 97 per cent full and that it did not envisage any restrictions for customers this summer.
It pointed out it had been working on measures to safeguard future water supplies as part of commitments agreed in the current regulatory period.
Meanwhile, it emerged that Severn Trent group - owner of Severn Trent Water - will demerge its Biffa waste management business by the end of October.
It will also look to offload its US-based laboratory business, in a deal which could raise £60 million, although the performance will have to improve before it proceeds with a disposal.
The figures from Severn Trent come days after United Utilities, which provides water, electricity and gas to customers in the North West, saw group profits rise 21 per cent to £481 million while South West Water owner Pennon announced a 25 per cent rise to £110.9 million.
Severn Trent, which is Britain's second-biggest listed water company, said leaks had worsened last year.
"A dry summer, followed by a winter with short but severe cold periods creating ground movement, has driven higher volumes of bursts over the winter period, resulting in 2005/6 being a challenging year for leakage management," it said.
Severn Trent is second only to Thames Water in an official league table of Britain's worst offenders for leaks, with 512 million litres seeping away every day.
"We're obviously disappointed with our leakage performance last year. We were on track for most of it, but then the rate went up near the end," Severn Trent chief executive Colin Matthews said. Mr Matthews dismissed accusations that his firm was profiteering at the expense of its customers.
At the same time, the company also promised to increase shareholder dividends annually by three per cent above inflation to 2010 after it recommended a payout of 51.13 pence per share for the year just gone, a rise of 5.4 per cent.
Severn Trent also promised to meet its leakage target set by Ofwat over the current five-year regulatory period to 2010.
Chairman Sir John Egan said: "We have delivered an encouraging performance in a year of significant change, demonstrating that overall our businesses are in good shape."