Center Parcs shares dropped sharply following the UK holiday village operator announcing that rising energy costs would have an impact on its future performance.

Announcing interim results for the six months ending 7 October, the group said there had been “significant increases” in energy costs over the period with like for like costs rising 9.1 per cent and further increases expected in the second half.

Center Parcs also stated that it expected energy costs to rise by 25 per cent by the end of spring 2006 which would result in an additional cost of £1.5m.

However, during the period, occupancy at the four villages averaged 91.5 per cent which meant interim profits, before tax and exceptionals, rose from £19.5m to £20.1m.

Elsewhere in its results, the group reported turnover of £113.2m.

Center Parcs also recently announced that a fifth site in Woburn, subject to planning approval, will be built within the next four years.

It has also confirmed that, as part of developing the group's spa strategy, Chapel Spa, a single business situated in Cheltenham, has been acquired for £1.3m. The spa will retain its existing brand and continue to operate as a standalone operation, with the founder and employees joining Center Parcs.

Chief executive, Martin Dalby, said: “We are pleased to announce a solid set of results for the first half, particularly given the challenging trading environment in which we operated.

“we continue to deliver on our growth strategy and management’s expectations for the full year remain unchanged based on current bookings.”