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Chap boss frustrated by external factors hindering further progress at the builder after 33% rise in turnover

l-r Chap operations director Fraser Taylor, managing director Hugh Craigie and pre-construction director Andy McNair.
l-r Chap operations director Fraser Taylor, managing director Hugh Craigie and pre-construction director Andy McNair.

North-east construction firm Chap has posted a large jump in turnover and narrower losses, but also warned of external pressures impacting growth ambitions.

Chap, based in Westhill, near Aberdeen, saw turnover increase to £39.4 million during the year to September 30 2021, from £29.6m in 2019-20.

Pre-tax losses for the latest period came in at £705,000, down from £934,000 previously.

The group faces a number of market driven pressures, including material availability and inflationary cost increases.”

Hugh Craigie, managing director, Chap.

Chap said it reduced its debt by 31% last year, to £4.5m, and had started more than £35m of new work during the past 12 months.

But material and labour cost inflation caused by the “unprecedented combination” of Brexit, Covid and, more recently, the Ukraine conflict restricted margin growth, the company warned.

It added: “This has made meeting client budget expectations increasingly difficult,
making the winning of work more challenging.”

Debt reduction ‘satisfying’

Despite this, Chap is currently tendering for “several exciting and good-sized projects” and anticipates turnover continuing to rise in the year ahead.

Managing director Hugh Craigie said: “I am pleased at the improvements achieved in the period, albeit it remains frustrating that external factors continue to hinder progress.

“It has been satisfying to see our focus on debt reduction programme bear fruit and for this to be recognised by our banking partner Santander, who have granted us a two-year extension to our facilities.”

Hugh Craigie, managing director, Chap.

Commenting on the 2020-21 trading year in Chap’s accounts, Mr Craigie said: “The group faces a number of market driven pressures, including material availability and inflationary cost increases.

“These market factors increase the pressure on trading margins and could make winning new work more challenging in an ever-competitive market.

“The group, however, have taken steps to mitigate the risks of supply shortages and price increases by maintaining strong relationships with its supply chain.”

Two new directors on board

Meanwhile, Chap said it had invested heavily in its senior management team during the past year, with Fraser Taylor and Andy McNair joining the board as operations director and pre-construction director respectively.

“Tier one” managers have also joined the business, further broadening its skillset and increasing its ability to take on larger scale and more complex projects, the firm added.

Headcount grew slightly across the group during the 2021-22 trading year, to 155, despite Chap completing the sale of its quarries division in March 2021. The quarrying business was acquired by JKR Quarries and Concrete Products, based near Ellon.

One of Chap’s new homes at Lochter, Inverurie.

Established in 1976, Chap takes its name from the surname initials of its four founders – Alasdair Craigie (the current MD’s father), Ian Harper, Frank Anderson and Ian Philip.

Mr Craigie Snr retired as chief executive in 2012, passing on the reins of the company to his son and Douglas Thomson as joint managing directors. Mr Thomson left the business in autumn 2019 and is now project director at Ury Estates.

The Chap group operates three trading divisions – construction, civils and homes.

Its housebuilding arm, Chap Homes, is currently developing sites in Countesswells, in Aberdeen, and Inverurie.

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