ricardo plc
annual report  accounts 2002 ricardo plc annual report  accounts 2002  1
contents
2 financial highlights
3 corporate profile
4 recent key projects
14 board members
15 chairman’s statement
16 chief executive’s review
18 finance director’s review
20 directors’ report
24 remuneration committee report
30 corporate governance
32 statement of directors’ responsibilities
33 independent auditors’ report
34 consolidated profit and loss account
35 consolidated  and company balance sheets
36 statement of total recognised gains and losses
36 reconciliation of movements in total
shareholders’ funds
37 consolidated cash flow statement
38 notes to the financial statements
60 notice of meeting
64 secretary and advisers financial highlights
2 ricardo plc annual report  accounts 2002
five year performance record
1998 1999 2000 2001 2002
£’000 £’000 £’000 £’000 £’000
turnover 82368 95489 121107 139911 143178
turnover from continuing operations 78509 91003 117376 138370 143178
profit before taxation 8012 10425 12800 15107 16659
profit for the financial year 5362 7219 8923 10643 12061
total shareholders’ funds 26807 31378 37932 48131 55908
basic earnings per ordinary share 118p 155p 189p 222p 249p
dividends per ordinary share 66p 70p 74p 78p 86p
 the five year performance record has not been restated for the three years ended 30 june 2000 following the
adoption of frs19deferred tax
0
20
40
60
80
100
120
140
160
1998 1999 2001
785
910
1384
1432
0
2
4
6
8
10
12
14
16
18
80
104
128
151
167
249
0
5
10
15
20
25
118
155
189
2000
1174
2002 1998 1999 2001 2000 2002 1998 1999 2001 2000 2002
222
t urnover from continuing
operations £m
profit before taxation £m basic earnings per
ordinary share p


Summary:
 ricardo market place
i am pleased to report record results for the fifth consecutive year in an ever tougher market place recession in the
united states and germany our major markets led to a very competitive environment with all of our customers striving
to reduce their costs despite these pressures we enter the new financial year with a record order book the overall mix
of our order book continues to change reflecting a move away from  testing to increasing volumes of engineering
design consultancy
our profile and reputation within our industry continue to rise and whilst this is good news in helping to develop new
business it does mean that increasingly our customers put our proposals to them under the microscope especially as
regards cost and performance
the united states has been a particularly difficult market over the last year with recession following the events of 11
september and continuing problems for some of our major customers this is our most challenging market place
however the satisfactory delivery of a number of major programmes together with cost containment resulted in a
profitable year this has helped to raise the level of our opportunities and proposals presented in addition we have
further strengthened our management team
business development
the past year was the first year for the newly created rve business based at our leamington site the year started with
one major programme underway and closed with two major programmes in progress and excellent prospects for the
future the integration of this business unit based on the original parts from shoreham and leamington has gone
extremely smoothly the clear focus that we now have between engine transmission and vehicle is benefiting our
programme delivery and marketing and has been achieved at minimal extra cost
just after the year end we concluded the acquisition of the assets and staff of gemini transmissions limited a company
specialising in the development and production of motorsport racing transmissions to further strengthen our growing
presence in motorsport we are pleased to welcome the gemini staff to ricardo and look forward to the integration of
this business into ricardo and the further development of our motorsport activities we will increasingly promote and
develop this business stream where our core skills in engine transmissions and vehicle engineering can be readily
applied whereas the popular view is that motorsport leads the automotive industry in technical development for
ricardo the reality is that our technology developments for the mainstream industry can likewise benefit the motorsport
industry
one of our fastest growing areas of expertise is electronics and controls for engines vehicle and transmissions during
the course of the year we opened an office in bedfordshire specifically to attract the high calibre staff that were
becoming available in that locality development of this key expertise remains a priority and one in which we will
continue to concentrate our resources
our development in germany europe’s major automotive development country has continued the volume of work
carried out and orders won have grown significantly aided by our three recently established offices as well as looking
for growth in germany we are also looking for accelerated growth in many aspects of automotive electronics but
excluding incar entertainment we will also consider other automotive areas where high added value and intellectual
capital can be achieved but not in volume dependent activities
a significant building programme in detroit is nearing completion to bring the majority of our us business under one
roof and to provide improved facilities for this business as the us remains at the centre of our strategic development
in japan we carry out a steadily increasing level of business and in the year have won our largest orders ever from this
country our level of contact continues to grow as our japanese customers increasingly recognise their need to
outsource and utilise ricardo’s range of capabilities we will continue to develop our client base in japan
16 ricardo plc annual report  accounts 2002
chief executive’s review research and development
each year ricardo spends approximately £5 million at prime cost of our own money on research and development and
considerably more on behalf of our customers our costs are fully expensed many of these research programmes have
historically led to the development of advanced concepts and capabilities which in future years have been part of our
service offering this year has seen the fruition of a 24 month programme to develop a vehicle demonstrator embodying
much of our efforts in that time this vehicle codenamed imogen – intelligent motor generator – is a mild hybrid
vehicle with a 42 volt electronics regenerative braking integrated starter motor and generator with a highly complex
electronic control system the vehicle is powered by a 12 litre turbo charged diesel engine significantly downsized from
the original 2 litre engine in the host vehicle with a 28 improvement in fuel efficiency imogen has been driven by
senior executives from all the major european and united states automotive companies to great acclaim and is a superb
showcase for ricardo skills and expertise the vehicle will be demonstrated in japan and korea in october a more
detailed account of this vehicle is given on page 8 alongside other client projects where we have client permission to
discuss the work we have carried out in recent years we have published a series of these project profiles to better
illustrate the breadth of our capability and client base the whole series is available on our website at wwwricardocom
as i reported last year we are increasingly seeking to exploit our intellectual property and this year our income from this
source has continued to grow
people
staff numbers have remained stable in the year but this conceals a constantly changing mix as the business continues
to grow high addedvalue engineering consultancy and the volume of testing reduced in line with industry demands
we confirm our continuing support for our final salary and money purchase pension schemes increasing the
company’s contributions to both of these schemes over the last 10 years the company’s contribution to the final salary
scheme has had to increase from 5 to 26 of payroll for those members of staff in the scheme and for the new
financial year 200203 our pensions charge will increase by approximately £14m however our staff are our principal
asset and we consider that our pension schemes incentive plans and base salary levels are a vital part in ensuring that
they are properly rewarded
i would like to thank everybody for their enormous contribution in the year
r j westhead
23 september 2002
ricardo plc annual report  accounts 2002  17