The directors of the company have elected not to include a copy of the income statement within the financial statements.

Proclad Heat Treatment Limited is a private company limited by shares incorporated in Scotland. The registered office is Viewfield Industrial Estate, Viewfield Road, Glenrothes, Fife, United Kingdom, KY6 2RD. The company's principal activities and nature of its operations are disclosed in the directors' report.

The financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) and in accordance with applicable accounting standards.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention unless otherwise specified in these accounting policies. The material accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. In preparing these financial statements, the company applies the recognition, measurement and disclosure requirements of UK-adopted International Accounting Standards in conformity with the requirements of the Companies Act 2006 and has set out below where advantage of the FRS 101 disclosure exemptions have been taken (where applicable).

• presentation of a statement of cash flows and related notes;

• disclosure of the objectives, policies and processes for managing capital;

• disclosure of key management personnel compensation;

• certain financial instrument disclosures as required by IFRS 7 Financial Instruments: Disclosures;

• disclosure of the future impact of new International Financial Reporting Standards in issue but not yet effective at the reporting date;

• maturity analysis of lease liabilities;

• comparative period reconciliations for the carrying amounts of property, plant and equipment;

• related party disclosures for transactions with the parent or wholly owned members of the group; and

• certain disclosures required under IFRS 15 Revenue from Contracts with Customers.

Where required, equivalent disclosures are given in the group accounts of National Industries Group (Holding) SAK. The group accounts of National Industries Group (Holding) SAK are available to the public and can be obtained as set out in note 17.

The company has adopted amendments to IAS 1 and IFRS Practice Statement 2 requiring that an entity discloses its material accounting policies, instead of its significant accounting policies.

The directors have prepared the financial statements on a going concern basis.  In making their assessment the directors have considered the company's financial results in the year being a loss after tax of £423,849, Net Current liabilities of £3,200,680 which contributes to an overall Net liability position of £2,999,628 and the pipeline of work.  The directors have prepared a detailed cashflow projections out to December 2026 that demonstrate that the company can meet its obligations as they fall due.true

The company's existing working capital facility is a Group Invoice Discounting Facility with a limit of £5m for the company and its fellow subsidiary companies (FTV Proclad UK Limited, FTV Proclad international Limited, Proclad Induction Bending Limited and IODS Pipe Clad Limited).  The Invoice Discounting Facility matures in July 2026 and whilst the directors are confident the company will be able to refinance the facility; there is no guarantee at the time of approving the financial statements that a refinance on similar facility terms and limits will be secured.  On this basis the Directors have prepared cash flow projections that assume the run-down of the facility in July 2026.  These projections demonstrate that the company and its fellow subsidiaries can meet their obligations as they fall due from existing cash reserves by operating a group cash pooling treasury management system.

These projections are considered to be a worst case scenario as it is the Directors intention to operate with a finance facility in place and there are potential cash flow upsides that are not incorporated into the projections.  It is the Director's view that the primary risk associated with the cash flow projections is the delay in timing of secured work being completed due to supply chain or customer delays.  The Directors are confident that the close working relationships they have fostered with the supply chain and key customers mitigates this risk to an acceptably low level and whilst acknowledging it cannot be eliminated the directors believe they have levers available to them to mitigate this risk.

As of 30 November 2024, the Company had net liabilities of £2,999,628. However, the Company had balances of £3,086,263 due to intercompany counterparties which are contractually repayable on demand. The intercompany counterparties have signed a written confirmation that they will waive their contractual right to recall the balances for a period of 12 months from date of approval of these financial statements to support the Company’s ability to continue as a going concern. As there are no other balances due in the going concern period, the directors consider it appropriate to prepare the financial statements on a going concern basis.

On this basis, the directors are of the opinion that the company can meet its obligations as they fall due and have prepared the financial statements on a going concern basis.

Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The company recognises revenue in line with the contract with the customer at the point when goods are delivered or when goods are dispatched as this is the company's only performance obligation under the contracts. Certain contracts are made up of multiple items and revenue is therefore recognised as each line item is delivered or dispatched in line with the purchase order received from the customer as they have stand alone parts, quantities, sizes and prices.

Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

Property, plant and equipment are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.

The assets' residual values, useful lives and depreciation methods are reviewed and adjusted prospectively if appropriate or if there is an indication of a significant change since the last reporting date.

At each reporting end date, the company reviews the carrying amounts of its property plant equipment to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

Financial assets are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument. Financial assets are classified into specified categories, depending on the nature and purpose of the financial assets.

At initial recognition, financial assets classified as fair value through profit and loss are measured at fair value and any transaction costs are recognised in profit or loss. Financial assets not classified as fair value through profit and loss are initially measured at fair value plus transaction costs and subsequently measured at amortised cost.

The company only holds financial assets at amortised cost.

Financial instruments are classified as financial assets measured at amortised cost where the objective is to hold these assets in order to collect contractual cash flows, and the contractual cash flows are solely payments of principal and interest. They arise principally from the provision of goods and services to customers (eg trade receivables). They are initially recognised at fair value plus transaction costs directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment where necessary.

Financial assets are assessed for indicators of impairment at each reporting end date.

The impairment model is based on the premise of providing for expected losses. Expected credit losses are measured through a lifetime expected loss allowance for all trade receivables and contract assets.

To measure the expected credit losses and trade receivables are grouped based on shared credit risk characteristics and the days past due. The company has concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates.

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.

The company recognises financial debt when the company becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.

The company has no 'financial liabilities at fair value through profit or loss' at the reporting date.

Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

Financial liabilities are derecognised when, and only when, the company’s obligations are discharged, cancelled, or they expire.

Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs.

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of inventories or non-current assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due. Amounts not paid are shown in accruals as a liability in the statement of financial position. The assets of the plan are held separate from the company in independently administrated funds.

The company recognises assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value.

Lease liabilities are initially measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the company's incremental borrowing rate on commencement of the lease is used.

The right-of-use asset is initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:

• Lease payments made at or before commencement of the lease;

• Initial direct costs incurred; and

• The amount of any provision recognised where the company is contractually required to dismantle, remove or restore the leased asset.

Subsequent to initial measurement, lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term. The interest charged and the amortisation are recognised within the consolidated statement of comprehensive loss.

Finance costs

Finance costs are charged to profit and loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.

The extent to which deferred tax assets can be recognised is based on an assessment of the probability that future taxable income will be available against which the underlying tax losses or deductible temporary differences can be utilised. Based on an assessment of future market and trading conditions and the effects of such, management judge that there will be sufficient profits to recognise the deferred tax amount shown in the note 12.

The average monthly number of persons (including directors) employed by the company during the year was:

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2023 - 1).

The charge for the year can be reconciled to the loss per the income statement as follows:

The company has unrecognised deferred tax assets of approximately £614,730 (2023 - £466,277) in respect of trading losses and other timing differences. The potential deferred tax assets has not been provided for due to the uncertainty of when the losses will be utilised.

A change in the UK Corporation tax rate to 25% took effect from 1 April 2023. This change had a consequential effect on the company's tax charge in the comparative period with the standard rate of tax in that year reflective of a marginal tax rate arising from the company's period straddling the 19% and 25% tax rates. Deferred tax has been calculated at 25%.

The amounts due on invoice financing are secured by a floating charge over the assets of this and other group undertakings within the UK. The invoice financing balance is secured against trade debtors.

Amounts owed to group undertakings are interest free, unsecured and repayable on demand.

Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:

All lease liabilities relate to right of use assets in relation to property rented.

The total cash outflow from leases in the year was £79,770 (2023: £87,113).

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon during the current and prior reporting period.

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

All shares rank pari passu for dividend rights and provide the holder with one vote.

The retained earnings reserves represents cumulative profits and losses less dividends paid.

As the income statement has been omitted from the filing copy of the financial statements, the following information in relation to the audit report on the statutory financial statements is provided in accordance with s444(5B) of the Companies Act 2006:

The auditor's report was unqualified.

The immediate parent undertaking is Scotar Group Limited. The ultimate parent undertaking and controlling party is National Industries Group (Holding) SAK. This company is registered in Kuwait and copies of the financial statements which include the results of the company are available from PO Box, 13005 Safat, Kuwait.