Severn Trent's profits have halved despite a rise in revenues, as the water firm faced a series of charges.
Half-year pre-tax profits at Severn, which serves eight million customers, have fallen from £208.2m to £101.1m.
Extra costs for restructuring and infrastructure spending held back profits, and Severn said trading conditions were challenging.
But without the charges profits fell 16%, and Severn said it was nearing the end of a major period of change.
Severn's revenues rose 1.9% to £867.9m for the six months to the end of September.
The company cut its interim dividend by 2.5% to 26.04p, and introduced a new dividend policy for the period between 2011-12 and 2014-15.
"The board has decided that the dividend policy for Severn Trent for the period should be RPI plus 3%," the company said in a statement.
Tony Wray, chief executive, said: "We have continued to raise standards and drive greater efficiency across the business, with good progress in many key areas including further improvements in customer service, sewer flooding and leakage."
Before anyone gets their handkerchief out and starts weeping for them, Severn Trent has a long history of falsifying customer data in order to justify massive price increases:
See: Severn Trent admits fraud and fined £35.8m
