Water company Severn Trent has set out “radical” plans for improving its performance after missing its target to deal with leaks.

The company, which serves 3.7m households and business customers and is the main water supplier for Shropshire and Mid Wales, is already facing a fine from regulator Ofwat.

The penalty was imposed for an earlier failure to achieve customer service performance standards.Severn said it had fixed 38,000 leaks in the year to the end of March – 8,000 more than a year earlier. But the company admitted that 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 admitted it would not hit the regulator’s annual target level.

Severn Trent managing director Tony Wray said: “We are absolutely determined to raise our performance when responding to fundamental issues such as leakage, sewer flooding, written customer complaints and water quality.

“Having reshaped the business to focus purely on water quality and sewage treatment, we must now build on the many improvements already achieved to ensure we deliver a first class service as often as possible.”

Chief executive Colin Matthews, who will leave the group at the end of the year, said the demerger from waste business Biffa last October meant that Birmingham-based Severn Trent was now committed to the “single minded pursuit of continuous improvement”.