Despite the improvement, the company acknowledged it has some way to go before the margins on its £110m turnover can be deemed acceptable. Turnover last year was £87m.
The company blames the poor margins on tight pricing policies by Ford, its main supplier.
The company plans to improve margins by cost-cutting, which will include some job losses among the company's 385 staff.
The company refused to comment on how many staff would be shed, saying this was still under review.
Michael Porter, the group's finance director, said: "Margins have been forced down progressively over the year by manufacturers. We have to cut our cloth accordingly."
During the year the company acquired a Lincoln-based distributor of cars manufactured in the Far East, including Nissan, Mazda and Hyundai.
The company is looking for further opportunities to acquire other franchises to help meet its target of a £250m turnover within five years. The company also hopes to raise margins to 5 per cent within the same time frame.
The company is on the lookout for up-market franchises such as BMW and Mercedes.
Mr Porter said: "We are very confident about the future."
Earnings per share are 2.29p, up from 1.25p last year.
The total dividend is 1p, up from 0.5p last year.