Ken Hanna: Crunch day for the financialchief of Cadbury

A Day in the Life: Ken Hanna found just one glitch the day Cadbury demerged its US drinks arm. A $9m 'bank error' in his firm's favour
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The Independent Online


It would be tough to guess that Ken Hanna was the finance director of one of the world's biggest confectionery companies from his start to the day. After getting up at his Wimbledon home, he contents himself with just a glass of orange juice and vitamin pills. "It's because I eat so irregularly," he says of the vitamins. "It's a consequence of doing the demerger."

Cadbury's split from its US drinks business was announced two years ago. "We tried to do a deal with a private equity firm, and nearly got there until the credit crunch in the summer, so we opted to go down the demerger route," says Mr Hanna, who has been leading the project which has dominated his life since then.

The businesses have been together since 1969, when Cadbury and Schweppes joined forces, and since May histeam has had to meet 100 individual deadlines and to obtain approval from four stock exchanges and more than 20 different regulators.

"It's an unusual situation. This is the first demerger of an American business from its British parent for 10 years. The last 12 months have been the most challenging and demanding of my career," says Mr Hanna. But today, it will be complete.


Mr Hanna has driven himself to work, eschewing the services of a driver. "Perhaps it's my Scots Presbyterianism," he muses. "But I just think I need to set an example, and the drive gives me some thinking time. I have a 'hands-free' as well, and do a lot of voicemails."

Usually he and the chief executive, Todd Stitzer, are the first people to arrive at the company's headquarters in Berkeley Square, Mayfair, but this morning is different. The tax, treasury and legal teams have been beavering away since 4am.

"We normally meet with a Starbucks which we pick up on the way. I used to be a member of the local gym, and would go every morning, but I stopped about 18 months ago because the pressure was too great and I needed the extra hour," he says.

It doesn't seem to have hurt him – he couldn't be further from the stereotypical chocaholic, looking slim and fit. But he says: "When we move to Uxbridge after the demerger there will be a gym on site, and I mean to go every morning."

After the two have talked through the day, Mr Hanna checks the morning press cuttings. He caused a ripple the previous day by saying he was sympathetic to those companies that have been quitting the UK because of what is seen as a harsh business tax regime, while stressing Cadbury has no such plans.

"I'm happy with what has appeared. The Government is running the risk of making the UK uncompetitive in global business terms," he says.

Mr Hanna says he believes promised reforms will address the issue: "I'm confident that the final legislation will be pragmatic and sensible." But there is a sting in the tail: "Every company has to be extremely mindful about shareholder value, and, if it doesn't turn out the way we hope, it [ie, moving] is something we would discuss with our board."


Mr Hanna rejoins Mr Stitzer in the boardroom, which, he says, is full of lawyers along with the tax and treasury teams. The two then spend an hour and a half signing the documents that will formally effect the demerger.

It is a laborious process. Before they put their names down, a lawyer will offer a detailed explanation of what each step is intended to achieve. "When you're splitting a group that has been together for 40 years, it is a bit like unravelling a complex wiring diagram."

After the process is complete, he meets with the financial planning team to review April's results and consider forecasts for the rest of the year.

In recent times, perhaps surprisingly, gum has been Cadbury's big growth business, and it shows no signs of slowing down. "Wrigley and ourselves are constantly competing, trying to out-innovate each other. Our Trident brand has revolutionised the global gum market," says Mr Hanna, with no false modesty, but it is true sales have been growing at an impressive rate.

He is not exactly a man who one might envisage chewing on a stick of gum as he walks down the street, but he dutifully lists Trident Splash as his favourite Cadbury product on the company website, along with the premium Bournville Deeply Dark.

Mr Hanna and Mr Stitzer are then joined by Cadbury's communications team to discuss events during the day. The company has taken a marquee in Berkeley Square that will be the venue for a celebration, and it has belatedly occurred to Mr Hanna that he ought to prepare a speech.

This is followed by a meeting with credit ratings agencies and then with the treasury and investor relations teams to keep them up to date with developments and ensure they are comfortable with the company's debt rating after the demerger.


A pivotal moment. The funds flow has begun. Some $50bn (£25.7bn) of cash will be moved within the next two hours as one company becomes two, both with their own financing arrangements. There have so far been two dry runs with Cadbury's banking syndicates, but these tests involved the treasury team and the banks moving around just a single dollar. Not this time.

"The dry runs went well and I'm very confident. The money starts to flow as soon as New York opens," says Mr Hanna. Nonetheless the team keeps a very, very close eye on what many would see as the most important part of the process.

Fortunately for all concerned, things go relatively smoothly, but when all those billions of dollars are moved and two companies spring into existence there is just one glitch. Cadbury finds that when the dust has settled, it has $9m more than it ought to have in its accounts. It is like the old Monopoly chance card bearing the legend "bank error in your favour" multiplied many, many times. Mr Hanna, though, is the soul of discretion. He refuses to name the bank which committed the, ahem, indiscretion. "We take the decision to send the money back," he says firmly, before spending 30 minutes drafting his speech for tonight.


The demerger is now effective and Mr Hanna takes the opportunity to watch the new management team of Doctor Pepper Snapple Inc ringing the opening bell of the New York Stock Exchange as they take control of the new number three drinks business in the US after Coca-Cola and Pepsi. "I'm confident they will do well," says Mr Hanna, who now has a substantial shareholding in DPS.

He moves on to an employee event in Berkeley Square to celebrate the deal. Staff have been encouraged to wear Cadbury purple for the occasion, and Mr Stitzer is seen sporting a purple smoking jacket, although he is outdone by one of the receptionists, who is decked out head-to-toe in Cadbury's corporate colours, even to the extent of wearing a purple wig. Mr Hanna, however, contents himself with a purple tie. Perhaps it's that Scots Presbyterianism again.

At 5pm, he is back in for a meeting with Goldman Sachs and UBS, Cadbury's brokers, to review the company's position before its forthcoming trading update, and to agree an investor relations programme for the rest of the year.


The evening celebrations have begun on an upbeat note, as Mr Hanna makes his way around the room with the aim of thanking everyone personally. There are 120 people, including the company's advisers. The hurriedly written speech goes down well, and Mr Hanna also finds time to make a quick call to the DPS management to hear how their investor road shows have been going. "We don't finish until 11pm. People stay a lot later than expected," he says.

Tomorrow, though, it will be another 7am start. "We have a business to run and we've set ourselves some very stretching targets."

The CV

Name: Ken Hanna

Age: 55

Family: Married with two grown-up children

Educated: Calday Grange Grammar School, West Kirby; Fellow of the Institute of Chartered Accountants

Other roles: Non-executive director of Inchcape


2004-present Chief financial officer of Cadbury

1999-2004 Partner, private equity house Compass

1997-1999 Chief financial officer and chief executive of Dalgety

1993-1997 Chief financial officer of United Distillers (Guinness)

1984-1993 Avis Europe

1978 – 1984 Black & Decker Inc

1973-1978: Trained as an accountant with Coopers & Lybrand