Power Leisure warned shareholders yesterday that current-year earnings may be adversely affected by uncertainty resulting from foot-and-mouth disease.

Turnover to March 7th this year had been materially affected by the cancellation of horse and dog racing events, the company's finance director, Mr Peter O'Grady Walshe, told shareholders at yesterday's annual general meeting. During the first 11 weeks of trading to March 20th, turnover in the company's betting offices and telephone operation was 2 per cent below that achieved in the same period last year. On a like-for-like basis the reduction in turnover in its betting offices was 2.4 per cent.

"While earnings' expectations for 2001 for these operations are not adversely affected to date, they are difficult to reaffirm in the light of continuing uncertainty resulting from foot-and-mouth disease," the company said in a statement.

Mr O'Grady Walshe denied the company was issuing a profit warning.

"It's not a profit warning at all, but it is putting down a marker saying it is entirely outside of our control whether there is or there isn't horse racing and dog racing in Ireland and the UK," he told The Irish Times.

"We go with whatever the governments in both countries and their advisers suggest, but if it is all cancelled, that will have an adverse effect on us."

Mr O'Grady Walshe attributed the drop in turnover to the first days following the cancellation of horse racing in the UK and Ireland on February 28th.

"We are coping with it better now than in the first few days. The reason the numbers were so adverse in the first few days of cancellation of Irish and UK horse racing was because there were no substitutes," he said.

Alternative live horse racing events from France, Italy, South Africa and Dubai were provided to betting offices by satellite within a few days of British and Irish meetings being cancelled. Turnover had improved since, said Mr O'Grady Walshe.

Power Leisure's aggregate gross margin from betting offices during the first 11 full weeks of trading was marginally greater than that earned in the same period last year, he added.

Mr Stewart Kenny, chief executive, warned the group was very likely to locate all of its non-betting office operations - such as telephone and Internet betting - in Britain if the Government did not follow the UK example of abolishing betting duty.

"The Government has no choice but to reduce tax. If it doesn't bring it down to around 1 per cent, there will be no telephone or Internet operations left in Ireland. In the event of the Government not reducing the tax to 1 per cent, we're off. I have no choice about this. The shareholders have a right to get the best deal they can," said Mr Kenny.

Power Leisure was carrying 5.3 per cent betting tax in Ireland for its Internet customers because its competitors were not charging tax, Mr Kenny said.

Its Internet betting service had achieved 16,137 account registrations by March 20th, 2001 - up 30 per cent from December 31st, 2000 - according to Mr O'Grady Walshe.