Kellogg’s reclassifies subsidiaries
CEREALS giant Kellogg’s has re-registered two of its Manchester subsidiaries as unlimited companies.
Several US companies, such as Microsoft, have come under scrutiny after re-registering Irish subsidiaries as unlimited for tax purposes. Kellogg’s said it had taken the decision to help, “facilitate a capital reorganisation”.
Kellogg Manchester and a company called Kelf were re-registered in May and September 2007 according to recently filed accounts of Kellogg’s UK parent, the Kellogg UK Holding Company.
They are among 15 susidiaries of Kellogg UK, the most significant of which is Kellogg Company of Great Britain which employs around 1,300 staff in Manchester and contributed a profit of £32.6m last year.
Kellogg said Kellogg Manchester was created to handle corporate acquisitions and some of these investments were realised in 2007 giving it a profit of £213.3m. In a statement the company said it had made the company unlimited to, “facilitate the passing of the funds realised from the disinvestment to its parent, Kellogg UK Holding Company”.
David Bills, head of audit for KPMG in the North West, said some companies used unlimited status to make it easier to redeem preference shares.
He said: “Under the Companies Act 2006 if you’re an unlimited company then you do not have to go to court to reduce your share capital. Before 2006 it would take longer and be more costly. That would be a benefit but a downside is the shareholders no longer have limited liability status.”
In the accounts Kellogg UK said it had redeemed its investment in the preference share capital of Kellogg Manchester, receiving £177.2m. But it was forced to write off £157.8m, listed as the “remaining cost of this investment”.
Kellogg’s UK operations made a pre-tax profit of £64.9m in the year to December 29, 2007, up from £13.8m the previous year.
The directors approved a dividend payment of £275.1m to its sole shareholder Kellogg Group SARL, registered in Luxembourg. The ultimate parent is Kellogg Company, the US business listed on the New York Stock Exchange.
It unveiled third quarter figures last week showing net sales up 9% to $3.3bn (£2bn) and operating profit also up 9% at $533m (£337m).
Some unlimited companies do not have to file accounts but susidiaries of limited companies are required to do so. Kellogg’s said it would continue to file, as required by law.
