Harworth targets £7.4m annual cost savings in overhaul
The developer is simplifying its business to focus on powered land and industrial and logistics development as it resists an unwanted £583m takeover bid from Peel.
Harworth expects £6.9m of the savings to be in place by the end of 2027, with 94% of the targeted savings expected to have been achieved by then, and said £1.3m of savings have already been realised through job cuts launched earlier this year.
It expects annualised run-rate savings to reach £3.2m by the end of 2026, £6.9m by the end of 2027, and £7.4m by the end of 2028.
The planned savings represent a 20.4% reduction in the company’s administrative expenses, based on the £36.3m recorded in the 12 months to the end of 2025.
The cost reduction programme forms part of Harworth’s plans to create a “simpler, lower-cost and higher-returning platform”, with the group seeking to align its operating model and cost base with a pure-play powered land and industrial and logistics business.
Harworth said it expects to achieve the cost savings before its transition to the new business model is fully complete, meaning the two programmes will run on different timetables.
The group is also expecting further efficiencies from its digital transformation programme, which has been underway for the past two years and is due to complete later this year.
These benefits have not been included in the £7.4m quantified cost savings, and Harworth said it aims to exceed the current target.
The cost-cutting plans have been announced as Harworth continues to resist a £172.5p-per-share cash offer from Peel, which owns roughly 30% of Harworth through its subsidiary Goodweather Holdings.
The offer represents a 20.1% premium to Harworth’s closing share price on 5 August and a 36% premium to its three-month volume-weighted average share price.
If successful, the deal would see Harworth delist from the London Stock Exchange and become wholly owned by Peel.
Harworth’s board has unanimously rejected the offer, arguing that it “fundamentally undervalues” the business and its prospects.
Harworth described Peel’s offer as “highly opportunistic”, arguing that it had been timed to take advantage of the gap between its share price and the underlying value of its assets amid wider weakness across the UK listed real estate sector.
The board said the cost savings and wider operational changes are expected to support its longer-term ambition of delivering a low double-digit total accounting return.
