Troubled utility giant Thames Water has warned that its turnaround will “take time” as it revealed its profits have more than halved and it faces an increase in its huge debts.

The company, which is responsible for water supply and waste water treatment in Oxfordshire, reported a 54 per cent drop in pre-tax profits to £246.4 million in the six months to September 30.

Revenues rose 12 per cent to £1.3 billion but it spent a record £1 billion on improving its network.

The results also revealed its debt pile swelled by 7 per cent to £14.7 billion.

Concern over Thames' financial strength earlier this year led to speculation it might be taken over by the government.

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It was revealed in June that the Government was drawing up contingency plans for an emergency nationalisation should Thames Water collapse as concerns grew that it would buckle under the weight of its massive debts.

Thames Water shareholders agreed in the summer to inject £750 million but that is contingent on the regulator agreeing to bill increases of 40 per cent by 2030.

The group is also set for a possible investigation into whether it misled MPs earlier this year over the state of its finances and support from investors.

Last year the company had asked investors for £1 billion.

Interim bosses said: “Turning around Thames will take time. We simply cannot do everything that our customers and stakeholders wish to see at a pace and for a price that everyone would like.

“We will continue to make the tough choices required to deliver what matters most to our customers and the environment.”

A Thames Water Utilities spokesman added: “We are in a robust financial position and are extremely fortunate to have such supportive shareholders.”

Shareholders have also “acknowledged” the need for around another £2.5 billion in equity investment needed in future regulatory periods, the group added.

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The water supplier’s former boss, Sarah Bentley, stepped down abruptly in June amid concerns over the firm’s financial security.

The company – whose ownership structure has been revealed to comprise a highly complicated web of firms behind the supplier – has been saddled with debts since privatisation and now faces higher interest on this debt as some of it is linked to the rate of inflation.

Auditors of Kemble Water Holdings – the main company behind Thames Water – have also warned it could run out of money by next April if shareholders do not pump in more cash.

PricewaterhouseCoopers (PwC) warned in accounts published last week at Companies House that there is a “material uncertainty” over its future amid worries there are no plans in place over how to refinance a £190 million loan at one of its subsidiary companies.