Brewery in costs alert; LEISURE: Cuts predicted to meet pounds 5m shortfall.

Byline: By Jon Griffin

WOLVERHAMPTON and Dudley Breweries today forecast a pounds 5 million rise in costs thanks to higher energy prices and an increase in the minimum wage.

In a trading update, the UK's biggest regional brewer warned "efficiency and cost reduction" initiatives were on the cards.

The statement said: "We expect that higher energy prices and a six per cent increase in the minimum wage level will impact on our overall cost base by around pounds 5 million next year.

"We remain cautious on the outlook for consumer spending given recent increases in domestic energy costs, historically high levels of consumer debt and some upward pressure on interest rates.

"We continue to seek to mitigate the impact of cost pressures through efficiency and cost reduction initiatives."

The company said performance for the year was "in line with expectations, with good summer trading overall".

The Wolverhampton-based firm also revealed it was carrying out a pensions valuation. "We are carrying out a triennial valuation of our final salary pension scheme and, although the valuation is not yet finalised, we estimate pension costs charged to the profit and loss account will increase by around pounds 2 million from next year."

The group said detailed plans were in place for the smoking ban in England and Wales.

"Our investment plans, both in managed and tenanted pubs, are well advanced. Over 85 per cent of our pubs have gardens, patios or some form of outside trading area, allowing us to target opportunities."