The profit before tax stood at 拢9.1m, before the impact of European growth and the 拢1.4m cost of expansion into Paris reduced the gain to 拢7.6m. Last year was the first year that M&C Saatchi's operating performance has been significantly impacted by its expansion strategy in Europe.
The underlying operating margin dropped to 11.5% from 11.6% in 2004 due to the loss of BA revenues in the fourth quarter and associated pitch costs. It lost the account to Bartle Bogle Hegarty in October last year, after 23 years working on the brand.
The group predicts that the loss of BA will be more significantly felt in 2006 in an environment that will limit the opportunity for margin growth.
Reported revenues increased by 9.4% to 拢68m in the group's 11th successive year of organic revenue growth. While most areas of the business performed well, the key driver of growth has been in the UK with revenues up 8.1%.
The group has reported strong new-business performance, and significant new wins included Australian Tourism, ITV, Ribena, Cadbury Muller and Direct Line Insurance.
Plans are well advanced for further European expansion into Germany and Spain, with an added interest in Asia.
David Kershaw, chief executive of M&C Saatchi, said: "We have made good progress with our strategy of expansion into new geographies and new businesses, which is the foundation of our future growth.
"Our new-business performance has also been strong across the group, which has helped to offset the financial impact of losing the BA account."
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