The director presents the strategic report for the year ended 31 December 2021.
Clement May Limited experienced the continuing impact of the COVID pandemic during 2021. Most of the contractors that we supply to our clients operate at the sites of those clients. The continued government-mandated lockdowns, and guidance to work from home where possible, had an impact on our clients and a consequential impact on our performance. While there is no certainty that the pandemic has come to/is coming to an end, the easing of restrictions has allowed our employees to return to the office environment with a similar impact for our clients..
Trading performance
As a result of the continuing pandemic across 2021, we entered discussions with our clients about how best to resolve the challenges that they faced. Remote working for both our employees and our client-facing contractors became the norm. Our largest client moved certain projects and activities off-shore to Poland, Romania and Malaysia. As a result of this we managed to increase our Turnover and our Gross profit by 4.7% and 37.7% respectively. Clement May Limited’s ultimate parent, Staffing 360 Solutions inc. (Nasdaq: STAF) guarantees the liabilities of the company and there is no intention for this to change in the next twelve months.
The company’s ability to retain high performing consultants enables us to build strong relationships with clients and in turn gain a competitive advantage through a developed understanding of their cultures and requirements.
Clement May Limited continues to develop its professional recruitment solutions to provide a market leading service to employers. The recruitment of new, and retention of existing experienced consultants along with maximising cost synergies are key to fuelling growth.
Recruitment is seen as a barometer for the general state and health of the economy. Clement May Limited and our clients are no different. The company has worked at mitigating the impact of market volatility by furthering its diversification of clients and sectors to those that are resistant to macro-economic trends.
Financial risk management
The company's operations expose it to a variety of financial risks that include credit, liquidity and interest rate risk.
Credit risk
The company continues its policy of carrying out credit checks on all potential customers before any services are provided. Significant risks with potential customers are subject to review by senior management.
Interest rate risk
The company is subject to risk from interest rate increases on its invoice discount facility. The business regularly reviews the cost effectiveness of the facility and deems it a low risk for the forthcoming year.
Liquidity risk
The company utilises an invoice discount facility that provides short-term working capital. Cash availability and debt collection is continually monitored and managed by the board to ensure the company has sufficient funds available.
Business risks
The failure to retain high performing employees, and equally the failure to attract new employees with the right skill set, may adversely affect the company's operating and financial performance. To mitigate this risk we continually invest in employee training and development on top of providing a competitive pay and benefits structure. Regular appraisals, performance reviews and incentives take place to motivate and manage consultants effectively.
The risk of a further macro-economic downturn, including the continuation of the COVID-19 pandemic, would impact the business and recruitment sector as the industry is largely driven by economic cycles and levels of business confidence. This risk is mitigated through our strategy to operate in various markets as well as contract and permanent type placements.
On behalf of the board
The director presents his annual report and financial statements for the year ended 31 December 2021.
The results for the year are set out on page 9.
No ordinary dividends were paid. The director does not recommend payment of a final dividend.
The director who held office during the year and up to the date of signature of the financial statements was as follows:
The auditor, Moore Kingston Smith LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Basis for opinion
Material uncertainty related to going concern
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the director with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the Strategic Report and the Director's Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Strategic Report and the Director's Report have been prepared in accordance with applicable legal requirements.
As explained more fully in the Director's Responsibilities Statement, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the director determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the director is responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs (UK) we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the company.
Our approach was as follows:
We obtained an understanding of the legal and regulatory requirements applicable to the company and considered that the most significant are the Companies Act 2006, UK financial reporting standards as issued by the Financial Reporting Council, and UK taxation legislation.
We obtained an understanding of how the company complies with these requirements by discussions with management and those charged with governance.
We assessed the risk of material misstatement of the financial statements, including the risk of material misstatement due to fraud and how it might occur, by holding discussions with management and those charged with governance.
We inquired of management and those charged with governance as to any known instances of non-compliance or suspected non-compliance with laws and regulations.
Based on this understanding, we designed specific appropriate audit procedures to identify instances of non-compliance with laws and regulations. This included making enquiries of management and those charged with governance and obtaining additional corroborative evidence as required.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
Use of our report
This report is made solely to the company's member in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's member those matters we are required to state to the member in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's member for our audit work, for this report, or for the opinions we have formed.
The Profit and Loss Account has been prepared on the basis that all operations are continuing operations.
Clement May Limited is a private company limited by shares incorporated in England and Wales. The registered office is 3rd Floor, 24 Cornhill, London, EC3V 3ND.
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 £.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 4 ‘Statement of Financial Position’ – Reconciliation of the opening and closing number of shares;
Section 7 ‘Statement of Cash Flows’ – Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’ – Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’ – Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’ – Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Staffing 360 Solutions Inc. These consolidated financial statements are available from its registered office, 757 3rd Avenue, 27th Floor, New York, NY 10017, USA or from the website of Staffing 360 Solutions Inc: https://www.staffing360solutions.com/investors.
The Company is reliant on its Parent, Staffing 360 Solutions Limited, to provide administrative services to service Clement May’s customers. At the Balance Sheet date, the Parent Company’s going concern uncertainty generated by the economic reaction to the COVID-19 pandemic raise substantial doubt about the Company’s ability to continue as a going concern.
The full impact of the COVID-19 outbreak continues to evolve as of the date of this report. As such it is uncertain the full magnitude that the pandemic will have on the Company’s financial position, liquidity and future results of operations. Management is actively monitoring the impact of the global situation on its financial condition, liquidity, operations, industry and workforce.
In light of the uncertainty, during the year the Parent Company put in a number of measures. The director believes this will provide sufficient liquidity for the business as the economy continues to recover, but reserves the option to consider further financing.
The Company itself has no employees, limited fixed costs and is profitable with net current assets.
On this basis, the Director believes that the Company has adequate resources to continue in operational existence for the foreseeable future. Therefore these financial statements are prepared on a going concern basis.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
In the application of the company’s accounting policies, the director is 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 where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The average monthly number of persons (including directors) employed by the company during the year was: nil (2020: nil).
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
The above bank loan is the invoice factoring facility. There is a fixed and floating charge over the assets of the company.
The company has provided security under an unlimited multilateral cross guarantee for a bank pooling facility covering a number of companies under the control of Staffing 360 Solutions, Inc. for a flexible loan facility of £1,000,000. There is a fixed and floating charge over all assets of the company. The facility is due for review in June 2022. Clement May has access to a group facility comprising of an overdraft facility of £110,000 and a foreign bills of negotiation facility of £137,500.
The company has taken the exemption in accordance with FRS 102 - section 33 ''Related Party Disclosures'', from disclosing related party transactions entered into between members of a group, provided that any subsidiary who is party to the transaction is wholly owned by such a member.
The Company's immediate parent undertaking is Staffing 360 Solutions Limited, an entity registered in the United Kingdom, by virtue of its holding 100% of the Company's issued share capital.
The Company's ultimate parent undertaking is Staffing 360 Solutions, Inc., an entity registered in the United States of America, by virtue of its holding 100% of the issued share capital of Staffing 360 Solutions (Holdings) Limited, the immediate parent of Staffing 360 Solutions Limited.