A tie-up with former MG Rover bidder SAIC, China's biggest carmaker, has helped revive the financial fortunes of one of Britain's leading automotive consultancies.
Ricardo, which has its driveline development centre at Leamington Spa, yesterday announced annual results that showed a near-fivefold rise in pretax profits to £8.4 million for the year to June 30.
The West Sussex-based group, which is helping to spearhead the development of a new generation of high fuel economy, low emission engines, has bounced back after a spell in the doldrums following the post-millennium economic downturn.
It has joined forces with SAIC to develop new cars based on the Rover 75 and 45 models and has mopped up about 100 former MG Rover technical staff made redundant when the Longbridge company went into administration in April.
The figures showed that after goodwill and exceptional costs, Ricardo turned the previous year's loss of £2.8 million into a pretax profit of £7.4 million.
Turnover last year rose by 9.3 per cent to £159.9 million and the order book grew by 21 per cent to £70 million.
Earnings per share before goodwill rose by 277 per cent to 16.2p and the final dividend is pegged at 6.3p giving a total for the year of 9p.
Measured on an FRS 17 basis, the deficit in the group's defined benefit pension scheme, which is now closed to new members, grew to £ 24.2 million from £19.1 million previously.
The worsening situation was due mainly to falling bond yields used as the basis for the discount rate, more prudent investment assumptions as poor equity investment returns, Ricardo said.
The company plans to increase its additional contribution from £1.6 million to about £3.2 million a year and this will have a "significant impact" on future cashflow, Ricardo said.
Outgoing chief executive Rodney Westhead said: "I am pleased with these results and the significant improvement over the year.
"The new year has begun well, and our order prospects continue to strengthen with a much better geographic balance with growth from Asia.
"Although the global automotive market remains challenging we are confident of further steady progress."
Mr Westhead, who will retire after the Annual General Meeting on November 4 and be replaced by Dave Shemmans, said that although profitability had improved following a restructuring of the business it had not yet reached "acceptable levels" in some areas.
"Our focus on China has led to a number of important new contracts with new Chinese clients and the award of our contract with SAIC is testimony to the reputation we are rapidly building in the territory," Mr Westhead said.
A move into the military vehicle market was generating "useful additional business" to Ricardo's traditional operations, and the group is growing its Prague office as a low cost support base for its UK operations.
Current projects include collaboration with the UK government on the development of a combined four stroke/two stroke engine designed to reduce internal friction and cut fuel consumption and exhaust emissions.
Ricardo shares closed up 41/4p at 2751/2p.