Auditors question £15.5m Jordan accounts payment

THE auditors to the Jordan Formula One team have raised questions about how a £15.5 million payment was treated in the outfit’s financial accounts.

Accountants KPMG said the payment, which was recognised as turnover in the year ended December 2003, should have been booked as operating income in the 2002 accounts.

Had the £15.5m been booked in 2002, Jordan would have made a loss of just over £16m last year instead of a loss of £587,000, while its 2002 pre-tax loss of £0.2m would turned a profit of £15.3m.

The £15.5m was a settlement received by the team in 2002 after a deal from an engine manufacturer was terminated.

“In our opinion, this amount should have been recognised as other operating income in the year ended 31 December 2002 since the company had no future obligations related to the termination payment,” said KPMG.

The auditors signed off the accounts as giving a “true and fair view” of the state of affairs at Jordan, though it disagreed with the decision to book the payment in 2003.

A spokesperson for Jordan did not comment yesterday.

According to the accounts filed at Companies’ House in London the company saw lower turnover because of its poor performance on the track. Eddie Jordan’s team finished ninth of 10 teams in the 2003 season despite winning the Brazilian Grand Prix.

Turnover fell from £57 million to £49 million and also suffered an after-tax loss of £659,000.

The company had to reduce its workforce by 27 to 199, and this lowered its wages and salary bill from £9.9m to £8.4m.

Eddie Jordan said the year was the most difficult the team faced since it entered Formula One in 1992.

“As anticipated, income levels fell dramatically and therefore the Jordan Ford team was restricted by resources and was unable to develop the car through the season as they would have liked.”

And he believed that had the points scoring system not changed, the team would have finished in fifth position instead of ninth.

Last year a group of Irish private investors a bought 49.9% stake in Jordan for an undisclosed sum. Mr Jordan and his wife are the other shareholders in the company. It had retained profits of £13.2m at the end of 2003.