That is a 53 per cent rise on the previous year, when pounds 307m of provisions were used. Despite that, taxable profits were 2.3 per cent down on the previous pounds 1.32bn, the first time Hanson's profits have fallen in its 29-year history.
The group's annual report, released yesterday, also shows that Hanson set up pounds 1.29bn of provisions against Beazer, the housing, aggregates and construction business acquired last December. Of these, pounds 889m was for environmental and other costs relating to discontinued operations, pounds 147m for employee obligations and pounds 670m for rationalisation and changes in accounting policy.
A further pounds 142m of provisions were charged against profits in the year, down from pounds 153m the previous year. That brings the total provisions in Hanson's balance sheet to pounds 4.86bn.
In the year to June 1991, Beazer made pounds 54m profits and the book value of its net assets on the date it was bought was pounds 944m. But Hanson has revalued its US aggregates reserves by pounds 1.15bn to pounds 3.13m.
The revaluation and the provisions meant the pounds 391m cost of the acquisition equalled the value of the assets acquired and no goodwill write-off was required. Hanson also avoided goodwill write- offs on its two previous large acquisitions, Cavenham Forest Industries and Peabody. Cavenham's assets were devalued by pounds 81m, and pounds 105m of provisions were established while, at Peabody, Hanson revalued the coal reserves from pounds 1.01bn to pounds 3.11bn, and made pounds 1.67bn of provisions.
Although Hanson had indicated that sizeable provisions would be needed at Beazer, the amount still took the City by surprise. BTR provided pounds 250m- pounds 300m when it acquired Hawker Siddeley this year, compared with Hawker's forecast of pounds 160m profit before tax, and TI made pounds 100m of provisions and write-offs following its takeover of Dowty, which had been expected to make pounds 27m in the year to March 1992.
Martin Taylor, Hanson's vice- chairman, said part of the Beazer provisions related to Koppers, the chemicals business. Although this was sold before Hanson's takeover, Beazer could not sell the environmental obligations.
'It is difficult to have a goodwill write-off with a natural resources business, provided you have not paid too much for it,' he said, adding that the resources were included in the books at a cost that allowed them to be sold at a profit.
Lord Hanson's salary fell by pounds 30,000 from pounds 1.38m to pounds 1,35m.Reuse content