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The group is expanding in Europe and revealed it has acquired 25% of a Spanish marketing services group it is not ready to name yet, with a commitment to acquire a further 50% over the next two years.

M&C expects its European operations to move into profit this year, with Asia Pacific and America performing well, but warned trading conditions in the UK remain challenging.

However, the UK was the group's best performing region in 2006, with wins such as Kingsmill and Lucozade taking revenues to £44.3m, up from £39.5m in 2005. The UK media agency Walker Media, in which M&C Saatchi has a 75% stake, put in a particularly good contribution, most notably picking up the £70m Barclays media account in March last year.

In contrast, profits from the group's own companies dropped by 8.9% to £3.7m, and there were problems in Asia and Australia where profit dropped 29%.

This hit the group's operating margin, which was down from 9% to 8.2%. However, organic revenue growth was high at 11.8%.

David Kershaw, chief executive of M&C Saatchi, said: "Overall the outlook for 2007 remains in line with current expectations."