The company was already in trouble with the regulator after failing to meet customer service targets - and an Ofwat spokesman has labelled its latest leakages performance as "unacceptable".
The company said in a statement that it had fixed 38,000 leaks over the course of the financial year - 8,000 more than it managed in the preceding year.
"We believe that we will not attain the annual average target level of leakage," the company said in a statement.
"We have kept Ofwat fully informed of our progress and we are in the process of finalising and verifying our leakage data for submission in our annual June return."
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