NORTHUMBRIAN Water yesterday announced a 54 per cent rise in half-year profits and pledged to invest even more money on improvements to benefit customers if the trend continues.

The company's £64.3m in pre-tax profits reflected a recent 9.9 per cent increase in customers' water bills in the wake of a regulatory review.

Managing director John Cuthbert said that if the company continued to perform as well in the coming years, then it would increase the investment already outlined.

He said: "One way we could return something to our customers is by committing more expenditure that has not already been allowed by regulators."

The investment would come on top of the £1bn planned for water and sewerage services across the North-East, Essex and Suffolk in the next five years.

Earlier this year, industry regulator Ofwat told Northumbrian Water that it could increase its prices by no more than 15 per cent for 2005 to 2010.

But Mr Cuthbert said water prices over the next five years would be lower, in real terms, than they were in the late 1990s, before they were cut by 22 per cent at the end of 1999.

Northumbrian Water's 2.6 million customers across the region pay, on average, £232 a year in bills. This is likely to increase to £260 by 2010.

Yesterday's figures also showed that Northumbrian Water's revenue rose from £271.4m to £295.3m during the six months to September.

The firm increased its interim dividend to 3.52p and announced a special dividend of 2.82p after the sales this year of environmental consultancy Entec, in Gosforth, Newcastle, and infrastructure company Fastflow Pipeline Services, in Washington, Wearside, for a total of £30.8m.

Local WaterVoice watchdog chairwoman Andrea Cook said: "Water companies need to be attractive to shareholders and the dividends announced will maintain confidence that the industry provides a good return on investment, but why shouldn't customers also share in outperformance?

"It is time for the industry and the regulator to find ways of demonstrating that customers who have all seen increases in their water and sewerage bills in recent months are at the heart of a company's business."