United Utilities announced higher profits yesterday as it managed to reduce the amount of water lost through leakages from its pipes.
The firm, which last year bought Cheltenham-based financial services company Marlborough Stirling, said its level of leakages was in line with terms agreed with regulator Ofwat. This helped send group pretax profits for the year to March 31 up by 21 per cent to £481 million.
Warrington-based United also said that increased investment in its water business meant there would be no need to limit how much water its customers used, despite problems elsewhere in the UK.
Chief executive Philip Green, who took over the top job in February, said: "Our reservoirs are over 90 per cent full and we expect to maintain a healthy supply-demand balance, avoiding the need for water restrictions."
United, which serves 2.9 million water and electricity customers in north west England, said it reduced its leakage level by around 50 megalitres a day to 470 megalitres a day last year. It pledged to spend around £70 million on finding and fixing leaks over the next four years.
United also benefited from higher water and electricity bills and said there would be further price increases ahead for its customers as agreed with regulators.
The company, which was created in 1995 through the merger of North West Water and Norweb, upped its water bills by 8.4 per cent and electricity bills by 11.5 per cent last year.
It sent revenues in its gas and electricity arm up nine per cent to £1.5 billion and operating profits up 16 per cent to £652 million.
Mr Green said: "With further real price increases ahead, our regulated businesses should continue to deliver strong profit growth."
But as well as banking higher profits last year, United invested £582 million across its water, wastewater and electricity business.
Mr Green said: "For the 16th consecutive year, capital expenditure has exceeded the profits earned as the company invests to improve quality and service for its customers."
Analysts are expecting an average pretax profit for the year of around £492 million.
United also ruled itself out of the auction process for Thames Water after weeks of speculation it might take part in the race in a bid to expand its core business.
German utility RWE has hired Deutsche Bank to sound out potential buyers for the firm after initially appointing Goldman Sachs to look at arranging a stock market float.
"We have no desire, inclination or ability to actually bid for it," Mr Green said, adding that he would be more interested in any new outsourcing contracts the new buyer might put to tender.
Instead, Mr Green said he would be looking to beef up United's existing businesses, including outsourcing arm Vertex. Annual operating profits at Vertex fell 12 per cent to £21 million during the year to end-March after margins were hit by start-up costs with its Thurrock Council contract and trading weakness at Marlborough Stirling.