MG Rover, the British carmaker written off as a lost cause a year ago on its divorce from BMW, has pared its losses to well below £300m and begun taking on more staff.

John Towers, the chairman, said yesterday that in the last eight months of 2000 it had beaten its target loss and was on course to break even or make a profit next year. Experts say losses this year could be as low as £100m.

Mr Towers paid a nominal £10 for the group (above) and the anniversary of the event was marked yesterday with the distribution of £10 notes to each of its 5,500 employees, including Duncan Read and Sharon Hingley (right).

Rover, which cost BMW £2.7bn during the German group's six-year ownership, lost around £400m in the last four months of what is now seen in Munich as a "disastrous experiment". That was on top of £750m losses, including those from Land Rover, sold to Ford last year, in 1999.

Rover's share of a now-booming British car market has fallen to about 4% but officials said the 33,000 domestic sales in the first four months put it ahead of plans to sell 95,000 this year. The group aims to sell 200,000 a year overall, with half for export.

Rover's main Longbridge plant near Birmingham has just recruited 50 production workers and 60 apprentices from 1,000 applicants, the first additions to the workforce for many years.

The group inherited four models from BMW but now has nine in production, with weekly output due to rise 25% by September from 3,600 units to 4,500.

Mr Towers said that strict cashflow management meant Rover could fund investment in models to replace the R25 and R45, its medium-size saloons, from its own resources.

The group has abandoned plans to ally with a foreign carmaker to produce the new models and is discussing collaboration with component suppliers.