Severn Trent has set out "radical" plans for improving its performance after it emerged the water company had missed its target on leakage rates.

The group, which serves 3.7 million household and business customers in England and Wales, is already facing a fine from regulator Ofwat for an earlier failure to achieve customer service performance standards.

The water company said it had fixed 38,000 leaks in the year to the end of March - 8,000 more than a year earlier - but said that it was not until the final month of the period that it performed in line with Ofwat's leakage standards.

As a result it said it would not hit the regulator's annual target level.

Chief executive Colin Matthews, who will leave Severn Trent at the end of the year, said the recent de-merger of waste business Biffa meant the Birming-ham-based group was now committed to the "single- minded pursuit of continuous improvement" at Severn Trent Water.

He said the company had introduced 20 key indicators which it planned to use to measure its performance against other operators.

Mr Matthews said: "We have chosen these with great care, because they represent what we believe are the key concerns for customers, employees, shareholders and regulators."

Announcing its annual results yesterday, Severn Trent said turnover for its core water and sewerage business increased by 5.8 per cent to £1.22 billion.

The increase has followed a price hike of more than seven per cent allowed by Ofwat in return for infrastructure investment.

Pre-tax profits were up 3.1 per cent on the previous year to £413 million, as ongoing cost efficiencies helped offset an increase in energy costs of £24 million.