Bookmaker William Hill cuts costs to soften UK tax blow

By Keith Weir

LONDON, Feb 28 (Reuters) - Leading British bookmaker William Hill is to cut costs by up to 20 million pounds ($33.3 million) in 2015 to cushion the impact of a new tax regime for online gambling companies, it said on Friday.

Online gambling has been a growth area for William Hill (Other OTC: WIMHF - news) in recent years but competition remains intense, even as the government prepares to close a loophole that allowed businesses to base online activities offshore to cut their tax bills.

The tax charge is likely to cost Britain's largest bookmaker between 60 and 70 million pounds a year, Finance Director Neil Cooper said.

However, William Hill sees a silver lining in the form of a chance to increase market share at the expense of smaller rivals that could struggle to cope with the new tax bill.

"While it will lead to a significant additional cost for the group ... we do believe there is potential for larger-scale operators to benefit from increased market share as smaller operators may be squeezed out of the market by the additional tax burden," the company said.

CEO SUCCESSION PLAN

The comments came as William Hill reported operating profit of 335 million pounds last year, up 3 percent on 2012.

Ladbrokes (LSE: LAD.L - news) , Britain's second-largest bookmaker, said this week that its 2013 operating profit fell by a third year on year to 138 million pounds largely as a result of its struggle to keep pace with its larger rival in the online sector.

William Hill shares rose 2.8 percent to 385.5p by 0840 GMT.

The company remains a familiar presence on Britain's high streets, where it has more than 2,300 shops, but it has also built up the online business and expanded into overseas markets including Spain and Australia.

It will have to find a successor to Chief Executive Ralph Topping, who plans to step down by the end of next year. Topping has been in the top job for six years and has worked for the company for four decades.

"I'm here until the end of 2015," he said, dismissing a recent report that he could stand down earlier.