Thames Water has seen its underlying operating profit reduced by nearly £22 million due to rising inflation and increased bad debt as it announces its results for the six months to 30 September 2012.

Underlying operating profit fell to £311.8 million for the period, while post-tax profit decreased by 13% to £127.6 million (2011: £146.6 million). Thames said it has seen an £8 million increase in bad debt.

Turnover for the water company increased to £902.7 million compared to £850.8 million at the same time last year. Real price increases agreed with Ofwat together with RPI increases led to the increase of £58.7 million.

Capital expenditure for the six months to 30 September 2012 was £498.6m compared to £533.2m for the prior period.

Thames said it has delivered over £2.5bn of investment in the first half of AMP5 and is on course to deliver the investment allowed in the Final Determination, together with the investment required in the adopted private sewers and in the designing and enabling of the Thames Tideway Tunnel.

The firm’s leakage level remained lower than the Ofwat reduction target for the seventh successive year.

Martin Baggs, Chief Executive of Thames Water, said:

“Thames Water has spent £17 billion on improvements to its water and waste water infrastructure since privatisation in 1989.

“As a direct result of this investment, the quality of our customers’ tap water and the environmental compliance of our 350 sewage works are better than they’ve ever been, and leakage from our 20,000 mile network of water mains remains close to its lowest-ever level. This transformation would never have been possible under public ownership.”

“However, we face significant cost challenges brought about largely by external factors such as rising inflation and customer bad debt. Despite this, we are determined to continue delivering record levels of investment to improve services for our customers both now and in future.”