As filed with the Securities and Exchange Commission on June 29, 2001
================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 20-F

             [ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR
                  12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
                                       OR
               [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2000
                                       OR
              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                         Commission File Number 0-13119
                        CORDIANT COMMUNICATIONS GROUP PLC
             (Exact name of registrant as specified in its charter)

                                     ENGLAND
                 (Jurisdiction of incorporation or organization)

                           121-141 WESTBOURNE TERRACE
                             LONDON W2 6JR, ENGLAND
                    (Address of principal executive offices)

              Securities registered or to be registered pursuant to
                           Section 12(b) of the Act:

      Title of each class             Name of each exchange on which registered:
      -------------------             ------------------------------------------
American Depositary Shares, each      New York Stock Exchange
representing five Ordinary Shares
of 50p each

Ordinary Shares of 50p each*          New York Stock Exchange

---------------------------
*   Listed, not for trading or quotation purposes, but only in connection with
    the registration of American Depositary Shares pursuant to the requirements
    of the Securities and Exchange Commission.

       Securities registered or to be registered pursuant to Section 12(g)
                                of the Act: None

        Securities for which there is a reporting obligation pursuant to
                         Section 15(d) of the Act: None

        Indicate the number of outstanding shares of each of the issuer's
        classes of capital or common stock as of the close of the period
                   covered by the annual report: 364,561,997
                                  -------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                 Yes |X| No |_|

Indicate by check mark which financial statement item the registrant has elected
to follow.

                             Item 17 |_| Item 18 |X|

================================================================================
<PAGE>

                                  INTRODUCTION

References

         In this Annual Report, "Cordiant" and "Group" refer to Cordiant
Communications Group plc and, unless the context otherwise requires, its
consolidated subsidiaries. "Cordiant plc" means Cordiant and its subsidiaries in
relation to the period prior to the demerger of Saatchi & Saatchi plc on
December 14, 1997. References to "Saatchi & Saatchi" or "Saatchi & Saatchi
Group" are to Saatchi & Saatchi plc and, unless the context otherwise requires,
its subsidiaries.

         References in this document to the "Companies Act" are to the Companies
Act 1985, as amended, of Great Britain and references to the "Articles" are to
Cordiant Communications Group plc's Memorandum and Articles of Association.

Currency Translation

         The Company publishes its consolidated financial statements in pounds
sterling ("L"). References to "US dollars" or "$" are to United States
dollars and references to "pounds sterling," "L," "pence" or "p" are to UK
currency.

         For the reader's convenience, some financial information in this
document has been translated from pounds sterling into US dollars. Unless
otherwise specified, translations into US dollars contained in this Report are
made at L1.00 to $1.4955, the noon buying rate in the City of New York for
cable transfers in foreign currencies as certified by the Federal Reserve Bank
of New York for customs purposes on December 29, 2000. The Noon Buying Rate on
June 25, 2001 was L1.000 to $ 1.4130. The convenience translations do not
mean that the UK currency amounts actually represent the corresponding US dollar
amounts stated or could be converted into US dollars at the assumed rate.

Forward-Looking Information

         This report contains certain "forward-looking statements" and
information that are based on the current expectations, estimates and
projections of Cordiant's management and information currently available to
Cordiant. These statements reflect the current views of Cordiant with respect to
future events, but are not guarantees of future performance and involve certain
risks and uncertainties that are difficult to predict. In addition, some
forward-looking statements are based upon assumptions as to future events that
may not prove to be accurate.

         These statements include statements in "Item 5. Operating and Financial
Review and Prospects--Industry Background" relating to trends in the advertising
and marketing services industry, particularly with respect to anticipated
advertising expenditures in the world's advertising markets. Actual advertising
expenditures may differ materially from the estimates contained therein
depending on, among other things, regional, national and international political
and economic conditions, technological changes, the availability of media and
regulatory regimes in the world's advertising markets. Additionally, this report
contains a number of forward-looking statements relating to the Group's
performance, particularly in "Item 4. Information on the Company - Organization
and Services" and "Item 5. Operating and Financial Review and Prospects." The
Group's actual results could differ materially from those anticipated depending
on, among other things, gains to or losses from its client base, the amount of
revenue derived from clients, the Group's exposure to changes in the exchange
rates of major currencies against the pound sterling (because a substantial
portion of its revenues are derived and costs incurred outside of the UK), the


<PAGE>

general level of advertising expenditures in the Group's markets referred to
above, the overall level of economic activity in the Group's major markets as
discussed above and other factors discussed in "Item 3. Key Information-Risk
Factors." The Group's ability to reduce its fixed cost base in the short term is
limited and therefore its trading performance can be significantly affected by
variations in the level of its revenues.

         Many of the factors named above are macroeconomic in nature and are,
therefore, beyond the control of Cordiant's management. Should one or more of
these risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those described herein as
anticipated, believed, estimated, expected, intended, planned or projected.
Cordiant does not intend, and does not assume any obligation, to update the
forward looking statements contained in this document.

                                     PART I

Item 1.  Identity of Directors, Senior Management and Advisers.

         Not applicable.

Item 2.  Offer Statistics and Expected Timetable.

         Not applicable.

Item 3.  Key Information.

Selected Financial Data

         The selected financial data set forth below is derived from the audited
consolidated financial statements of Cordiant. The Consolidated Financial
Statements and notes thereto as of December 31, 2000 and 1999 and for each of
the years in the three year period ended December 31, 2000 have been audited by
KPMG Audit Plc and are included elsewhere herein.

         The Consolidated Financial Statements of the Group are prepared in
accordance with UK Generally Accepted Accounting Principles ("UK GAAP"), which
differ in certain significant respects from US Generally Accepted Accounting
Principles ("US GAAP"). Reconciliation to US GAAP is set forth in Note 35 in the
Notes to the Consolidated Financial Statements.

         With respect to 1997, significant changes were made to Cordiant's
capital structure as a result of the demerger on December 14, 1997 by Cordiant
plc of Saatchi & Saatchi Holdings Limited (further described under "Item 4.
"Information on the Company"). The selected financial data set forth below with
respect to 1996 and 1997 reflects the capital structure in place prior to the
demerger, which was appropriate historically to Cordiant plc and the capital
position, finance charges and tax liabilities included in such data do not
reflect the Group's capital position, finance charges and tax liabilities in
respect of any of the periods covered had the Group effected the demerger prior
to such period. See "Item 5. Operating and Financial Review and Prospects."


                                       -2-
<PAGE>

         The financial information presented below is only a summary and should
be read together with the Consolidated Financial Statements of Cordiant plc.
<TABLE>
<CAPTION>
                                                                                        Year Ended December 31,
                                                                    ----------------------------------------------------------------
                                                                      2000       2000      1999       1998      1997     1996
                                                                      ----       ----      ----       ----      ----     ----
                                                                      $(1)        L          L           L         L       L
                                                                                 (In millions, except per share data)
<S>                                                                   <C>       <C>       <C>       <C>       <C>       <C>
CONSOLIDATED INCOME STATEMENT DATA:(2)
Amounts in Accordance with UK GAAP
     Revenue
        Continuing operations                                         $596.2    L392.3    L335.8    L301.8    L736.1    L754.9
        Acquisitions                                                  $183.5    L120.7         -         -         -         -
                                                                      ------    ------    ------    ------    ------    ------
        Total                                                         $779.7    L513.0    L335.8    L301.8    L736.1    L754.9
                                                                      ------    ------    ------    ------    ------    ------
    Profit on ordinary activities before tax
     historically reported(3)                                         $ 87.4    L 57.5    L 32.3    L 25.9    L 34.6    L 41.8
    Adjustment for provisions(4)                                           -         -         -    L (1.2)   L (4.7)   L (7.0)
                                                                      ------    ------    ------    ------    ------    ------
    Profit on ordinary activities before
       tax - restated(3)                                              $ 87.4    L 57.5    L 32.3    L 24.7    L 29.9    L 34.8
                                                                      ------    ------    ------    ------    ------    ------
    Net profit                                                        $ 51.1    L 33.6    L 18.6    L 13.8    L 10.4    L 17.2
                                                                      ------    ------    ------    ------    ------    ------
    Net profit per Cordiant ordinary share basic(2)                   $ 0.17      11.4p      8.2p      6.2p      4.7p      3.9p
    Net profit per Cordiant ordinary share diluted(2)                 $ 0.16      10.6p      7.8p      6.2p      4.7p      3.9p

Approximate Amounts in Accordance with US GAAP
    Profit/(loss) before change in accounting principles              $  7.3       4.9      (6.3)      4.6       3.1       5.1
    Cumulative effect of change in accounting principles(5)                -         -     (14.9)        -         -         -
                                                                      ------    ------    ------    ------    ------    ------
    Net profit/(loss)                                                  $ 7.3       4.9     (21.2)      4.6       3.1       5.1

    Net profit/(loss) per basic ordinary share(2)                      $ 2.5       1.6p     (9.5)p     2.1p      1.4p      1.1p
                                                                      ------    ------    ------    ------    ------    ------
    Net profit/(loss) per basic ADS(2)                                $ 12.5       8.3p    (47.6)p    10.3p      7.0p      5.7p

                                                                                             December 31,
                                                                    ---------------------------------------------------------------
                                                                      2000       2000      1999       1998      1997     1996
                                                                      ----       ----      ----       ----      ----     ----
                                                                      $ (6)        L         L          L         L        L
                                                                                 (In millions, except per share data)
CONSOLIDATED BALANCE SHEET DATA:
Amounts in Accordance with UK GAAP
Working capital (deficiency)/asset (7)                                (230.0)   (153.8)     (6.2)     11.8       2.8     (59.8)
Total assets                                                         2,088.6   1,396.6     589.6     386.7     377.8     912.4
Long term liabilities, including minority interests                    286.5     191.6     185.0     136.9     123.2     262.6
Net assets/Liabilities (8)                                             706.0     472.1     (40.2)    (68.9)    (79.6)   (207.2)

Shareholder's funds/(deficiency)-historically reported                 692.9     463.3     (45.8)    (71.5)    (85.7)   (215.3)
Adjustment for provisions(4)                                             -          -         -        7.6       8.8      27.5
                                                                      ------    ------    ------    ------    ------    ------
Shareholder's funds/(deficiency)-restated                              692.9     463.3     (45.8)    (63.9)    (76.9)   (187.8)
                                                                      ------    ------    ------    ------    ------    ------
Capital Stock (9)                                                      272.6     182.3     114.4     112.7     111.0     230.1
Number of shares outstanding at year end                               364.6     364.6     228.8     225.5     221.9     443.7

Approximate Amounts in Accordance with US GAAP
                                                                      ------    ------    ------    ------    ------    ------
Shareholders' funds                                                    748.2     500.3      20.6      18.6      20.2      24.6
                                                                      ------    ------    ------    ------    ------    ------
</TABLE>
                                      -3-
<PAGE>

<TABLE>
<CAPTION>
                                                                                             December 31,
                                                                    ---------------------------------------------------------------
                                                                      2000       2000      1999       1998      1997     1996
                                                                      ----       ----      ----       ----      ----     ----
                                                                      $ (6)        L         L          L         L        L
                                                                                 (In millions, except per share data)
<S>                                                                   <C>       <C>       <C>       <C>       <C>       <C>

OTHER DATA:
  Weighted average number of shares outstanding
    Basic.....................................................         294.0     294.0     226.6      222.4     221.9    443.6
    Diluted in Accordance with UK GAAP........................         318.0     318.0     239.6      223.3     221.9    443.6
    Diluted in Accordance with US GAAP (10)...................         328.6     328.6     239.6      223.3     222.9    445.3
</TABLE>

-----------------

(1)  These figures have been translated into US Dollars at the average rate
     ofL1.00 to $1.52.

(2)  Per share and per ADS amounts have been adjusted to reflect the share
     consolidation in connection with the demerger in 1997. However, capital
     stock and the weighted average number of shares outstanding for 1996 have
     not been adjusted for this share consolidation which took place in 1997.

(3)  The profit on ordinary activities before tax reflects: (a) exceptional
     costs of L2.2 million and L16.5 million that were incurred in 1997 and
     1996, respectively; (b) a profit on disposal of operations of L20.8 million
     and L17.8 million in 1997 and 1996 respectively; and (c) costs relating to
     the fundamental reorganization of the Group as a result of the demerger of
     L33.0 million in 1997. There were no such items in 1998, 1999 or 2000.

(4)  Due to a change in UK GAAP in 1999, the Group now discounts its property
     provisions for the purposes of UK GAAP and restated the results of prior
     years as if this accounting has been in effect for those years.

(5)  During 1999, the Group reviewed its accounting for property provisions
     under US GAAP and determined that it is preferable under US GAAP to record
     property provisions on a gross basis rather than on a discounted basis. The
     cumulative effect of this change in accounting policy for periods through
     December 31, 1998 was a charge to profit under US GAAP of L14.9 million
     (6.6p per ordinary share).

(6)  These figures have been translated into US Dollars at the noon buying rate
     on December 29, 2000.

(7)  "Working capital" represents current assets minus current liabilities.

(8)  "Net assets" represents total assets minus total liabilities. For UK
     reporting purposes, total liabilities exclude minority interests.

(9)  "Capital stock" represents authorized, allotted called-up and fully paid
     ordinary share capital.

(10) Under UK GAAP, the dilutive effect of equity based contingent earnouts is
     restricted to those which have met their performance criteria at the
     balance sheet date. Under US GAAP, the full dilutive effect is taken.

Dividends

         Dividends recommended by Cordiant's Board of Directors in respect of a
particular fiscal year are paid in the following fiscal year if approved by the
Cordiant shareholders. The following table sets forth the annual dividends paid
per ordinary share for the years 1996 through 1999, as well as the dividend
amount per ordinary share for 2000 approved at the Annual General Meeting of
shareholders held on June 12, 2001. The table shows the dividend amounts in
pounds sterling, together with the US dollar equivalent, for each of the years
indicated.

                                      -4-

<PAGE>

   Year                                    Dividend per Ordinary Share
   ----                                    ---------------------------
                                   (in pence)                         (cents)(1)
  1996                                 2.0                              3.3
  1997                                 1.2                              2.0
  1998                                 1.4                              2.2
  1999                                 1.8                              2.7
  2000(2)                              2.1                              2.9
--------------------



(1)  Dividend amounts were translated into dollars at the noon buying rate for
     pounds sterling on the relevant dividend payment date. The amount shown for
     2000 was translated into dollars at the noon buying rate on June 25, 2001.

(2)  The 2000 dividend will be paid on June 29, 2001 to shareholders of record
     at June 1, 2001.

     For a description of the Group's dividend policy, see "Item 8. Financial
Information--Dividend Policy."

Exchange Rate Information

     Fluctuations in the exchange rate between the pound sterling and the US
dollar will affect the dollar equivalent of the pound sterling prices of the
Ordinary Shares on the London Stock Exchange and as a result, are likely to
affect the market price of the American Depositary Shares, or ADSs, in the
United States. Such fluctuations will also affect the dollar amounts received by
holders of ADSs on conversion by the depositary of cash dividends paid in pounds
sterling on the Cordiant Ordinary Shares represented by the ADSs.

     The following table sets forth, for the periods indicated, the average,
high, low and period-end noon buying rates for pounds sterling expressed in US
dollars per L1.00.
<TABLE>
<CAPTION>
<S>                                               <C>              <C>           <C>          <C>
                                                  Average*         High          Low          Period End
                                                  -------          ----          ---          ----------
1996..........................................      1.57           1.71          1.49            1.71
1997..........................................      1.64           1.70          1.58            1.64
1998..........................................      1.66           1.72          1.61            1.66
1999                                                1.62           1.68          1.55            1.61
2000..........................................      1.51           1.65          1.40            1.50
   December...................................                     1.50          1.44            1.50
2001
   January....................................                     1.50          1.46            1.46
   February...................................                     1.48          1.44            1.44
   March......................................                     1.47          1.42            1.42
   April......................................                     1.44          1.42            1.43
   May........................................                     1.44          1.42            1.42
   June (through June 25, 2001)...............                     1.42          1.37            1.41
</TABLE>
--------------------
* The average exchange rate is based on the average of the exchange rates on the
last business day of each month during the relevant period.

The Noon Buying Rate for pounds sterling on June 25, 2001 was L1.00 =
$1.4130.

                                      -5-

<PAGE>

Risk Factors

If Cordiant is unable to integrate companies that it has acquired or may
acquire, the Group's operating results may be negatively affected.

         The Group acquired a number of companies in 2000, including Lighthouse
Global Network, Inc. and Healthworld Corporation. Cordiant expects that the
integration of acquired operations will place significant burden on its
management. This integration is subject to risks and uncertainties, including:

o    the inability to effectively assimilate the operations, services, personnel
     and cultures of entities that Cordiant acquires;

o    the diversion of management's attention to the combining of operations;

o    undisclosed or potential legal liabilities of acquired businesses for which
     Cordiant may not have a contractual or legal remedy;

o    the potential disruption of the Group's business; and

o    the impairment or loss of relationships with employees and clients.

         If in connection with acquiring new businesses Cordiant fails to
integrate its operations successfully or on a timely basis, or if it incurs any
unforeseen expenses, the Group's financial performance could suffer.

Cordiant's ability to reduce costs quickly in response to revenue decreases may
be limited.

         If advertising expenditures by Cordiant's clients decrease, Cordiant's
revenues will be adversely affected. Cordiant has a limited ability to reduce
its fixed cost base in the short term in response to such decreases. The most
significant component of Cordiant's operating expenses is staff costs
(approximately 60% in 2000). The Group's ability to reduce in the short term its
operating expenses in response to decreased advertising expenditures by clients
is limited because: severance and other costs reduce the impact of such actions;
there is usually a delay between the decreases in expenditures and cost
reduction actions; such actions may result in excess property that cannot be
used or leased by Cordiant on acceptable terms although Cordiant remains liable
for the lease payments; the Group's overhead and infrastructure costs cannot
easily be reduced despite the decreases in advertising expenditures; business
acquisition agreements entered into by Cordiant may limit its ability to reduce
costs in those businesses in the short term; and there is a need to maintain
sufficient staffing to service ongoing projects as well as to be prepared to
respond to increases in clients' advertising expenditures.

Cordiant may face hurdles with respect to management of growth and acquisition
risks.

         Cordiant's continuing growth will depend on a number of factors,
including its ability to:

o    maintain the high quality of the services it provides to clients;

o    increase the number of services it provides to existing clients; and

o    grow through the acquisition of other communications businesses in an
     environment of increased competition for acquisition candidates.

                                      -6-

<PAGE>

          There can be no assurance that the Group will be able to successfully
achieve all or any of these strategies for growth.

Exclusivity arrangements with the Group's clients may limit its ability to
provide services to others.

         It is customary in the marketing communications services industry to
enter into exclusivity arrangements with clients. The Group has entered into
these arrangements with a number of its clients, restricting its ability to
provide services to their competitors. Cordiant has in the past been, and may in
the future be, unable to take on new clients because such opportunities would
require the Group to provide services to direct competitors of its existing
clients. In addition, the Group risks harming relationships with existing
clients if it agrees to provide services to their indirect competitors.
Prospective clients may also choose not to retain Cordiant for reasons of actual
or perceived conflicts of interest.

Cordiant generally does not have long-term contracts with its clients.

         Clients typically hire the Group on a project by project basis or on an
annual contractual relationship. Moreover, clients generally have the right to
terminate their relationships with Cordiant without penalty and with relatively
short or no notice. Once a project is completed, there can be no assurance that
a client will engage Cordiant for further services.

Cordiant depends on a number of key clients.

         Cordiant's revenues are dependent on the advertising sales and
marketing expenditures of a number of key clients. In 2000, Cordiant's largest
five clients accounted for approximately 22 percent of Cordiant's revenues.
 From time to time, highly successful engagements have ended because a client
was acquired and the new owners decided not to retain the Group. The termination
of the Group's business relationships with any of its significant clients, or a
material reduction in the use of Cordiant's services by any of the significant
clients, could adversely affect the Group's future financial performance.

Cordiant's international operations expose it to the risk of fluctuations in
currency exchange rates.

         The results of operations and financial position of most of Cordiant's
non-U.K. subsidiaries are reported in the currencies of countries in which those
subsidiaries reside. That financial information is then translated into pounds
sterling at the applicable exchange rates for inclusion in Cordiant's
Consolidated Financial Statements. In 2000, approximately 84 percent of
Cordiant's consolidated revenues were generated in local currencies and
translated into pounds sterling.

         The exchange rate between these local currencies and the pound sterling
fluctuates substantially, which has a significant translation effect on
Cordiant's reported consolidated results of operations and financial position.
Appreciation of the pound sterling against these currencies will result in the
reduction of reported revenues and earnings before interest and taxes when
consolidated and translated into pounds sterling. See "Item 11. Quantitative and
Qualitative Disclosures About Market Risk--Foreign Exchange."

Cordiant may encounter difficulty in managing its business due to the global
nature of its operations.

         Cordiant operates in more than 80 countries around the world. As of
December 31, 2000, Cordiant had approximately 23 percent of its 8,367 employees
located in the United Kingdom, approximately 27 percent in Continental Europe,
approximately 18 percent in North America and approximately 32 percent in Asia
and Latin America. To manage its day-to-day operations, Cordiant must overcome
cultural and language barriers and assimilate different business practices. In
addition, Cordiant


                                       -7

<PAGE>

is required to create compensation programs, employment policies and other
administrative programs that comply with the laws of multiple countries.
Cordiant also must communicate and monitor group-wide policies across its global
network. Cordiant's failure to successfully manage its geographically diverse
operations could impair its ability to react quickly to changing business and
market conditions.

Cordiant is dependent on key personnel.

         Cordiant is dependent on the efforts and abilities of its senior
management and senior creative personnel. The loss of the services of any of
these key employees could have a material adverse effect on the Group. In
addition, while a number of executive officers of the Group have entered into
employment agreements and confidentiality and non-solicitation agreements with
Cordiant, there is no assurance that Cordiant would be able to retain the
services of such individuals or prevent the unauthorized disclosure or use of
its knowledge, practices, procedures or client lists.

Cordiant may be unable to recruit and retain qualified experienced
professionals.

         The Group competes with other companies to recruit and hire from a
limited pool of qualified, experienced marketing and communications
professionals. If Cordiant is unable to hire and retain personnel, its business
results will suffer. In addition, the Group's ability to generate revenues
directly relates to its personnel, both in terms of the number and expertise of
the personnel that Cordiant has to service the clients and the mix of full-time
employees, temporary employees and contract service providers that it utilizes.
As a result, if Cordiant fails to retain existing employees or hire new
employees, it may not be able to complete or retain existing engagements or bid
for new engagements of similar scope or revenues and its business, financial
condition and operating results could be materially and adversely affected.

Cordiant may face increased competition and increasing industry consolidation.

         The marketing and communications industry is highly competitive.
Cordiant competes with other marketing and communications firms, including
international and local full-service and specialized marketing and
communications firms and other contract sales and marketing organizations. A
number of the Group's competitors will have substantially greater financial
resources, personnel and facilities than the Group. In addition, if the current
trend toward consolidation continues, Cordiant may have to compete for clients
against larger firms that enjoy greater economies of scale and that can devote
more resources to bidding for work. Although the Group believes that it will be
able to compete on the basis of the quality of its creative product, service,
reputation and personal relationships with clients, there can be no assurance
that it will be able to maintain its competitive position in the industry.

Changes in government regulations could adversely affect Cordiant's business.

         A number of the services that the Group provides are subject to
extensive government regulation, both domestic and foreign, with respect to the
truth in and fairness of advertising and other marketing-related regulations. In
addition, certain industries in which some of the Group's clients operate are
subject to regulations in the United States and in other jurisdictions that
restrict the nature and method of advertising for products in those industries.
If the regulation of advertising for products in these industries is made more
stringent in the future, Cordiant's ability to earn revenues from its clients in
these industries could be adversely affected.


                                      -8-

<PAGE>

Item 4.  Information on the Company

Organization

         Cordiant Communications Group plc is a public limited company organized
under the laws of England in 1977. Cordiant comprises the ongoing businesses of
Cordiant plc after the demerger of the Saatchi & Saatchi Group from Cordiant
plc.

          Cordiant's principal corporate offices are located at 121-141
Westbourne Terrace, London W2 6JR, England, telephone number
011-44-20-7262-4343. Information about Cordiant can be found on its website,
www.ccgww.com. Cordiant's agent for U.S. federal securities law purposes is
Michael J. Kopscak, Esq., Cordiant US Holdings, Inc., 498 Seventh Avenue, New
York, New York 10018.

History

Cordiant is a global advertising and marketing communications group. The Group
comprises:

o    Bates Worldwide, one of the leading global communications networks in the
     world;

o    Diamond Ad Ltd., Korea's second largest advertising agency, of which the
     Group owns 80 percent;

o    Scholz & Friends, the largest multinational advertising network
     headquartered in Germany;

o    141 Worldwide, the marketing communications network of Bates Worldwide;

o    Bates Healthworld, the international healthcare marketing agency, now a new
     division of Bates Worldwide;

o    Business Communications International, a leading business communications
     consultancy;

o    Branding + Design, the global branding and design network;

o    CCG.XM network, offering internet-related services; and

o    Zenith Media Worldwide, a global specialist media services and planning
     agency, of which the Group owns 50 percent.

         The origins of Bates Worldwide date back to 1940 when Ted Bates &
Company was founded in New York by Theodore Bates and Rosser Reeves. Ted Bates &
Company grew rapidly in the 1960s and 1970s, developing a worldwide network
through acquisitions and organic growth. In 1964, Ted Bates & Company acquired
the largest advertising agency in Australia, the George Patterson Advertising
Agency. In 1985, the German agency Scholz & Friends was acquired.

         In 1986, Ted Bates Worldwide was acquired by Cordiant plc. Earlier that
year, Cordiant plc had acquired a US agency, Backer and Spielvogel and, in 1987,
the two agencies were merged to form Backer Spielvogel Bates Worldwide. The
network was later rebranded Bates Worldwide, although Scholz & Friends was
preserved as a separately branded advertising agency.


                                       -9-

<PAGE>

         In 1988, Cordiant plc formed a single media buying operation in the UK
called Zenith Media Buying Services. The operation was renamed Zenith Media
Worldwide in 1991 and in 1992 extended its services to include media planning.
Following the demerger, Cordiant and Saatchi & Saatchi each retained a 50
percent shareholding in Zenith, which is accounted for as a joint venture.

         In December 1997, Saatchi & Saatchi was demerged from Cordiant plc,
with the remaining businesses renamed Cordiant.

         In 1997, 141 Worldwide was established as a separately branded network
within Bates Worldwide, specializing in sales promotion, direct marketing,
interactive media and associated activities. Since the demerger, 141 Worldwide
has expanded rapidly and now operates 78 offices in 49 countries.

         As a result of the demerger, Cordiant and Saatchi & Saatchi became
separate publicly traded companies operating independently of each other.
Neither company has any interest in the shares of the other. However, the
Company and certain companies within the Group entered into certain agreements
and arrangements with Saatchi & Saatchi and Zenith to enable the demerger to be
carried out, allocate responsibility for certain obligations, provide for
certain transitional arrangements and otherwise define their relationship
following the demerger. In 2000 Saatchi & Saatchi was acquired by Publicis
Groupe SA.

         In December 1999, Cordiant acquired 80 percent of Diamond Ad Ltd.
Diamond was previously the in-house agency for Hyundai Group, and Hyundai
retained a 20 percent interest in Diamond. The acquisition of Diamond
significantly strengthened the Group's position in South Korea, the world's 10th
largest advertising market, and further consolidated its relationship with
Hyundai.

         In March 2000, Cordiant completed the acquisition of Healthworld
Corporation, an international healthcare marketing agency. Healthworld provides
multinational pharmaceutical clients with a wide range of communication services
including advertising and promotion, medical education, contract sales, direct
marketing, market research and interactive services. Healthworld has become a
new division of Bates Worldwide.

         Also in March 2000, the Group consolidated its interactive businesses
into a new global brand named CCG.XM. CCG.XM offers clients digital marketing
and e-commerce consulting services.

         In September 2000, Cordiant acquired Lighthouse Global Network, Inc. an
international network of specialist communications and marketing businesses. The
transaction led to the creation of two new business streams, Branding + Design
and Business Communications International (BCI). Branding + Design works for
clients on a global and local basis across a range of design and branding
services. BCI offers financial and corporate public relations, internal
communications, M&A communications and investor relations.

         The Group's operations consist of advertising and other marketing
services including direct marketing, media services, sales promotion, production
services, interactive media, branding and design, and business communications
consulting.

Strategic Objectives

         Following the demerger in 1997 the Group established a three-year
strategic plan with objectives designed to position the business for faster
growth and improved profitability. At the forefront of the Group's strategy was
the objective to grow the percentage of revenues from marketing communications.
In 1997, 80 percent of revenues were derived from advertising services. In 2000,
on a pro forma basis


                                      -10-


<PAGE>

adjusting for acquisitions, advertising services and marketing communications
both represented 50 percent of total revenues.

         The Group's strategic priorities are to consolidate its leading
positions in healthcare marketing, branding and design and business
communications, and further enhance its total position in marketing services and
specialist communications. To that end the Group has set itself the new
objective of increasing the proportion of marketing communications to
approximately two-thirds of total revenues by 2003.

         A strong profile in North America is central to the Group's ambition to
become one of the world's leading communications groups. North America is key
not only because it is the world's largest market for communications but also
because an even greater proportion of global spend by multinational clients is
controlled from the region. Cordiant intends to continue to strengthen its total
business in North America and make its offer increasingly attractive to
multinational clients on a global basis.

Organization and Services

         Historically, the Group was organized on a geographic basis. During
2000, the Group expanded by acquiring healthcare and other specialist
communications and marketing businesses. As the result of this expansion in
2001, the Group's principal activities are organized as follows:

                      Advertising and integrated marketing

Bates Worldwide                              Advertising and marketing
                                                communications
Scholz & Friends                             Advertising and marketing
                                                communications
Diamond(1)                                   Advertising and marketing
                                                communications
141 Worldwide                                Marketing services

                            Other marketing services

Bates Healthworld                            Healthcare marketing
CCG.XM                                       Interactive services
Business Communications International        Business communications consulting
Branding + Design                            Branding and design services

                                 Media services

Zenith Media Worldwide2                      Media services
-------------
(1)   Owned 80 percent by Cordiant, 20 percent by Hyundai Group
(2)   Owned 50 percent by Cordiant, 50 percent by Saatchi & Saatchi (acquired by
      Publicis Groupe SA in 2000)


                                      -11-

<PAGE>

         During 2000, advertising services accounted for 64 percent of the
Group's revenues and marketing services accounted for 36 percent, on a reported
basis, and 50 percent and 50 percent respectively on a pro forma basis. During
1999, advertising services accounted for 76 percent of CCG's revenues and
marketing services accounted for 24 percent, on a reported basis, and 68 percent
and 32 percent respectively on a pro forma basis.

         In 2000, the Group's largest five clients accounted for 22 percent of
revenues. The two largest clients accounted for 9 percent and 6 percent,
respectively, of total reported revenues.

Advertising and Marketing Communications

         The Group's advertising agencies are principally involved in the
creation of advertising and marketing programs for products, services, brands,
companies and organizations. These programs involve various media such as
television, magazines, newspapers, cinema, radio, outdoor, electronic and
interactive media, as well as techniques such as direct marketing, sales
promotion and design. The creation of advertising and marketing materials
includes the writing, designing and development of concepts. When the concepts
have been approved by the client, the agency supervises the production of
materials necessary to implement that program. These include film, video, print
and electronic materials, which are produced externally.

         The agencies often perform a strategic planning function, which
involves analysis of the particular product, service, brand, company or
organization against its competitors and the market. The Group's agencies also
evaluate the choice of media to reach the desired market most efficiently. In
the case of global and regional campaigns, the Group's networks, Bates Worldwide
and Scholz & Friends, plan and coordinate the implementation of their program
through their networks of national agencies. The Group's agencies are involved
in buying media space and time for their clients. This is executed by Zenith, by
the agencies' in-house teams or sourced from external suppliers.

         Bates Worldwide

         Bates Worldwide is a global advertising and marketing communications
network with 180 offices in 81 countries. Expanding from a base as an
international advertising network, Bates Worldwide employs the expertise of its
marketing services units to serve its clients, including 141 Worldwide, its
global marketing services business and Bates Healthworld, the international
healthcare marketing network.

         Scholz & Friends

         Scholz & Friends is the largest German-based multinational network*
with 14 offices operating across Europe. Scholz & Friends provides clients with
a wide range of marketing communications services including advertising, sales
promotion, public relations, direct marketing, design, consulting and
interactive media. Having previously owned 90 percent, the Group acquired the
remaining 10 percent of Scholz & Friends held by minority shareholders in
January 2000.

------------------------
*     Source:  Advertising Age, Agency Report April 2001.


                                      -12-

<PAGE>

         Diamond

         Diamond was established in 1983 by the Hyundai Group to provide Hyundai
companies with a full range of advertising and marketing services. Other
industrial groups in Korea have followed a similar strategy and each of the
three largest agencies in Korea is linked to one of the major industrial groups.
The Group acquired 80 percent of Diamond from Hyundai Group in December 1999,
with Hyundai retaining the remaining 20 percent. Hyundai has been a major client
of Cordiant for 15 years and after the acquisition is the Group's largest global
client. Headquartered in Seoul, the agency has branch offices in Pusan (Korea),
Los Angeles, Frankfurt and Beijing and employs over 500 staff worldwide.

Marketing Services

         141 Worldwide

         141 Worldwide is a global network specializing in marketing services,
offering expertise in a wide range of activities including sales promotion,
direct marketing, event marketing, merchandising, sponsorship, design and
interactive media. Launched in 1997 as a separately branded network within Bates
Worldwide, 141 Worldwide has grown rapidly and now comprises 78 offices in 49
countries.

Healthcare Marketing

         Bates Healthworld

         Bates Healthworld is an international healthcare marketing and contract
sales organization headquartered in New York. Acquired by the Group in March
2000, as a new division of Bates Worldwide, Bates Healthworld provides its
pharmaceutical and healthcare clients with a comprehensive range of integrated
marketing services, including professional and direct-to-consumer advertising
and promotion, contract sales, consulting, medical education, public relations,
marketing research, interactive multimedia and database marketing. Bates
Healthworld offers its clients international capabilities through its operations
spanning 18 countries, including affiliates.

Interactive services

         CCG.XM

         CCG.XM was launched in March 2000 as Cordiant's e-business consulting
and implementation firm. The newly unified brand joins the interactive resources
of Cordiant and competes with both leading international consultancies and the
e-commerce units of the major advertising networks. Headquartered in New York,
CCG.XM has 16 offices worldwide offering Internet-related services that include
strategic consulting, digital brand creation, web site development, systems
integration and online marketing.

Business Communications Consulting

         Business Communications International

         Cordiant created the Business Communications International (BCI) group
after it acquired Lighthouse in September 2000.


                                      -13-

<PAGE>

         BCI offer financial and corporate public relations, internal
communications, M&A communications and investor relations. The division
comprises Financial Dynamics, Morgen-Walke Associates, Gallagher & Kelly,
Bulletin International and C&FD.

Branding and Design Services

         Branding + Design

         As part of Cordiant's strategy of establishing leading positions in
marketing communications it has built, through strategic acquisitions, a global
branding and design network.

         While Cordiant previously had a number of design businesses within the
Group, the first strategic move towards building a global network was the
acquisition of PSD, a London-based product design consultancy. This platform was
significantly augmented with the acquisition of Lighthouse, which included one
of the leading global brands agencies, Fitch, and a number of other specialist
agencies: AAD in Arizona, Ideascope in Boston, Leonhardt in Seattle, Peclers in
Paris and Primo Angeli in San Francisco. In November 2000 Cordiant added Bamber
Forsyth, a brand identity and communications consultancy based in London.

Media Services

         Zenith Media Worldwide

         Zenith Media Worldwide is one of the world's leading media
communications agencies. Zenith provides clients with specialized media
planning, buying, evaluation and coordination, both in traditional and new media
areas. Zenith is a joint venture operation owned equally by Cordiant and Saatchi
& Saatchi, part of Publicis Groupe SA.

         In connection with the demerger, Cordiant plc, entities within the
Saatchi & Saatchi Group and Zenith entered into a shareholders' agreement (the
"Zenith Shareholders' Agreement") to regulate the relationship between Cordiant
and Saatchi & Saatchi as shareholders of Zenith.

         The Zenith Shareholders' Agreement makes provision for the operation of
Zenith including:

     o    the composition of executive and non-executive management;

     o    matters that require consent of both shareholders before they can be
          undertaken by Zenith (alteration of capital structure, annual business
          plan and contracts out of the ordinary course of its business or not
          at arm's length terms);

     o    the transfer of shares of Zenith; and

     o    resolution of disputes both between shareholders and Zenith and
          clients of the shareholders and Zenith.

         Seventy-five percent of the distributable profits of Zenith are
distributed to shareholders and divided between them in part by reference to the
proportions in which Zenith receives revenue from clients of each shareholder.
The remainder may be retained by Zenith.


                                      -14-


<PAGE>

         The Zenith Shareholders' Agreement prohibits the transfer of shares in
Zenith, except in some limited circumstances. It also contains options whereby
one shareholder is entitled to acquire all of the Zenith shares of the other
shareholder in the event that: (1) the other shareholder becomes insolvent; (2)
the other shareholder experiences a change of control and following which there
is a material breach of any of the terms of the media services agreement
(described below) to which that shareholder is a party which either is not
capable of remedy or is not remedied within a certain period; or (3) the other
shareholder terminates the media services agreement to which it is a party.

         The Zenith Shareholders' Agreement will remain in force until (i)
either shareholder acquires all of the shares in Zenith held by the other, (ii)
an order is made or resolution is passed for the winding up of Zenith or (iii) a
third party acquires all of the shares of Zenith.

         Each of the Company and Saatchi & Saatchi entered into a media services
agreement with Zenith in 1997. Under the terms of these agreements, the
shareholders each appointed Zenith as the exclusive supplier of media buying,
media planning and certain related services for all of the clients, subject to
certain exceptions, of each shareholder. The media services agreements also set
out the duties of Zenith in respect of each country in which Zenith operates.

         Each of the media services agreements will terminate on December 31,
2001 or on any subsequent anniversary of that date provided either party has
given to the other not less than 12 months' written notice of such termination.

Significant Subsidiaries

         The following table sets forth the significant subsidiaries owned,
directly or indirectly, by Cordiant:

Country        Name of company               Included Within    Percentage owned

England        Bates UK Ltd                  Bates Worldwide          100%
Australia      George Patterson Pty Ltd      Bates Worldwide          100%
Germany        Scholz & Friends Group Gmbh   Scholz & Friends         100%


Korea          Diamond Ad Ltd                Diamond                   80%
US             Bates Advertising USA, Inc.   Bates Worldwide          100%
US             GHBM, Inc.                    Bates Healthworld        100%

Acquisitions & Disposals

         During the period from December 31, 2000 to June 4, 2001, Cordiant made
the following material acquisitions:

         On January 5, 2001, Cordiant entered into an agreement to acquire the
entire share capital of MicroArts Corporation ("MicroArts"), a United States
e-business consultancy, for a maximum total consideration of $88.1 million
(L59.1 million). The initial consideration of $47.4 million (L32.3
million) was satisfied by the issuance of Cordiant Ordinary Shares. The amount
of the remaining deferred


                                      -15-


<PAGE>

consideration of $40.7 million (L26.8 million) is dependent on MicroArt's
financial performance to December 2003 and is payable in Cordiant Ordinary
Shares.

         On April 3, 2001, Cordiant acquired Gallagher & Kelly Public Relations
Limited, a leading business communications consultancy in Ireland, for a total
consideration of L9.5 million. The initial consideration of L5.6
million was satisfied by the issuance of Cordiant Ordinary Shares. The remaining
deferred consideration is dependent on Gallagher & Kelly's financial performance
to December 2003 and is payable in Cordiant Ordinary Shares.

         On May 3, 2001, Cordiant acquired Bulletin International Limited, an
international broadcast public relations consultancy, for a maximum total
consideration of L8.5 million. This was satisfied by an initial payment of
L2.9 million in cash and Cordiant Ordinary Shares. The remaining deferred
consideration is dependent on Bulletin's financial performance to December 2003
and is payable in Cordiant Ordinary Shares.

         During 2000, the Group made the following acquisitions:

         In January 2000, the Group acquired the remaining 10 percent interest
in Scholz & Friends, in Germany, for cash consideration of L2.9 million.

         In January 2000, the previous 31 percent holding in Saatchi & Saatchi
Bates Yomiko KKK, renamed Bates Yomiko KKK, in Japan was increased by the
acquisition of an additional 19 percent, for L0.1 million cash
consideration.

         In January 2000, the previous 70 percent holding in Bates Fernandez SA
in Argentina was increased by the acquisition of an additional 4.8 percent, for
L0.2 million cash consideration.

         In March 2000, the Group acquired Healthworld Corporation. The purchase
price for the acquisition included an initial payment of L148.3 million
paid by the issuance of Cordiant ADSs and Cordiant Ordinary Shares and the
conversion of Healthworld's employee options into options over Cordiant Ordinary
Shares. The acquisition also provides for additional contingent cash payments of
L3.3 million, due in the years 2001 and 2002 based on average earnings
before interest, tax, depreciation, and amortization for the preceding years of
certain subsidiaries previously acquired by Healthworld Corporation.

         In April 2000, the Group acquired PSD Associates Limited in the United
Kingdom. The purchase price for the acquisition included an initial payment of
L14.6 million paid by Cordiant through the issuance of Cordiant Ordinary
Shares, and further payments are due in the years 2001 through to 2004 based on
the average profits for the preceding three years. Estimated total additional
payments of L13.9 million have been accrued. The contingent payment will
be paid entirely through the issuance of Cordiant Ordinary Shares.

         In May 2000, the Group acquired substantially all of the assets of
Arcom Limited in the United Kingdom. The purchase price for the acquisition
included an initial payment of L1.8 million paid by Cordiant through the
issuance of Cordiant Ordinary Shares, and a further payment is due in the year
2003 based on the average profits for the preceding four years. Estimated total
additional payments of L0.9 million have been accrued. The contingent
payment will be paid entirely through the issuance of Cordiant Ordinary Shares.


                                      -16-


<PAGE>

         In July 2000, the Group acquired Donino White & Partners in the United
States. The purchase price for the acquisition included an initial payment of
L7.3 million paid by the issuance of Cordiant Ordinary Shares, and further
payments are due in the years 2002 through to 2003 based on the average profits
for the preceding three years. Estimated total additional payments of L2.5
million have been accrued. The contingent payment will be paid entirely through
the issuance of Cordiant ADSs.

         In August 2000, the Group acquired a 85 percent holding in PPR Limited
in Australia. The purchase price for the acquisition included an initial payment
of L1.7 million paid in cash, and further payments are due in the years
2002 through to 2003 based on the average profits for the preceding three years.
Estimated total additional cash payments of L4.4 million have been
accrued.

         In September 2000, the Group acquired Lighthouse Global Network, Inc.
The purchase price for the acquisition included a payment of L283.1
million paid by the issuance of Cordiant ADSs and Cordiant Ordinary Shares and
the conversion of Lighthouse's employee options into options over Cordiant
Ordinary Shares. The acquisition also provides for additional contingent cash
payments of up to L17.7 million, due in the years 2001 through to 2005
based on average earnings before interest, tax, depreciation, and amortization
for the preceding years for certain subsidiaries previously acquired by
Lighthouse.

         In October 2000, the Group acquired Generator Limited in New Zealand.
The purchase price for the acquisition included an initial payment of L2.0
million paid in cash, and further cash payments are due in the years 2001
through to 2003 based on the average profits for the preceding three years.
Estimated total additional payments of L1.6 million have been accrued.

         In November 2000, the Group acquired Bamber Forsyth Limited in the
United Kingdom. The purchase price for the acquisition included an initial
payment of L7.0 million paid by the issuance of Cordiant Ordinary Shares,
and further payments are due in the years 2001 through to 2004 based on the
average profits for the preceding three years. Estimated total additional
payments of L9.0 million have been accrued. The contingent payment will be
paid entirely through the issuance of Cordiant Ordinary Shares.

         In November 2000, the previous 32 percent holding in Newcomm Bates
Group in Brazil was increased by the acquisition of an additional 19 percent.
The purchase price for the additional acquisition included an initial payment of
L8.1 million paid in cash, and further cash payments are due in the years
2001 and 2003 based on the average profits for the preceding three years.
Estimated total additional cash payments of L8.7 million have been
accrued.

         In November 2000, the Group acquired an 80 percent holding in Intercom
KG in Germany. The purchase price for the acquisition included an initial
payment of L6.5 million paid by Cordiant through the issuance of Cordiant
Ordinary Shares, and further payments are due in the years 2001 through to 2004
based on the average profits for the preceding three years. Estimated total
additional payments of L0.1 million have been accrued.

         During 2000, the Group acquired: One Four One, Inc., in the
Philippines; Camerote, in Spain; Immpressionist, in Finland; CKMP Limited, in
the United Kingdom; Herman Beasley Limited in the United Kingdom; an 85 percent
holding in Big Island Limited, in Australia; and ESC Communicacion, in Spain.
Additionally, in 2000, the previous 28.9 percent holding in Ideaworks Limited,
in Australia, was increased by the acquisition of an additional 46.2 percent;
the previous 31.3 percent holding in Marketforce Limited, in Australia, was
increased by the acquisition of an additional 18.8 percent. The consideration
paid in 2000


                                      -17-


<PAGE>

for all these acquisitions was L4.6 million in cash and estimated total
additional cash payments of L7.0 million have been accrued.

         During 1999, the Group made the following acquisitions:

         In December 1999, the Group acquired substantially all of the assets of
Interactive Edge, Inc., a New York corporation, Interactive Edge, Inc., a
Connecticut corporation and Interactive Edge, LLC, a Delaware limited liability
company, all of which were commonly owned by the sellers in the acquisition. The
purchase price for the acquisition included an initial payment of $6.1 million
paid by Cordiant through the issuance of Cordiant ADSs having a value of $5.5
million and $600,000 in cash. The acquisition also provides for an additional
contingent payment in 2003 of up to a maximum of $18.9 million based on
Interactive Edge achieving certain revenues and operating margins for the three
years ending December 31, 2002. The contingent payment will be paid entirely
through the issuance of Cordiant ADSs. The Group has accrued an estimated total
additional deferred consideration of L7.4 million at December 31, 2000 ,
payable in Cordiant ADSs.

         In December 1999, Cordiant acquired an 80 percent interest in the share
capital of Diamond Ad Ltd. The initial consideration was L14.8 million in
cash plus the assumption of approximately L12 million of debt, and further
payments were due in the years 2000, 2001, and 2002 based on a multiple of
average operating profits from 1999 to 2001, up to a maximum of L82.1
million. As at December 31, 1999, further payments, based upon management's
forecasts were estimated at L25.8 million. A cash payment of L34.9
million was made in October 2000, and at December 31, 2000 it is expected that
there will be no further payments.

         In October 1999, the previous 63 percent holding in Bates Fernandez SA
in Argentina was increased by the acquisition of an additional 7 percent, for
nil consideration.

         In November 1999, the previous 60 percent holding in Bates Poland Sp
z.o.o. in Poland was increased by the acquisition of an additional 40 percent,
for L0.1 million cash consideration.

         In November 1999, the previous 80 percent holding in Dr. Puttner Bates
Werebeagentur GmbH in Austria was increased by the acquisition of the remaining
20 percent, for L0.3 million cash consideration.

         During 1999, the Group acquired: Cronert in Sweden; a 55 percent
holding in LdV in Belgium; a 75 percent holding in Rodergas and Promopoma in
Spain; Blue Skies Ltd. in the United Kingdom; a 50 percent holding in Appel
Grafik GmbH in Germany; Bates Clarion in India; a 51 percent holding in Bates
Romania in Romania; and Sarkka in Finland. The consideration paid in 1999 for
all these acquisitions was L3.7 million in cash and estimated total
additional payments of L0.2 million have been accrued at December 31, 2000
and these will be paid entirely through the issuance of Cordiant Ordinary
Shares.

         During 1998, the Group made the following acquisitions:

         In the US, The Criterion Group, Inc., a company specializing in
marketing for the travel and tourism industry, was acquired and renamed Bates
Travel and Tourism, Inc. Churchill Group, Inc., a public relations company, and
Churchill Advertising, Inc., a business to business advertising company, were
acquired and renamed Bates Churchill Group, Inc. and Bates Churchill Advertising
Group, Inc., respectively.

         In Australia, a 24.9 percent holding in The Communications Group Pty
Ltd. (the holding company for Cordiant's Australian businesses), was acquired,
giving the Group 100 percent control.


                                      -18-


<PAGE>

         In Argentina, the Group's 10 percent investment in Verdino Bates SA was
increased, at the same time acquiring and merging with it Fernando Fernandez SA,
to give a 63 percent holding in the merged entity, which was, renamed Verdino
Bates Fernando Fernandez SA. Also, in December 1998, the Group acquired a 32
percent equity interest in Newcomm Bates SA in Brazil.

         In Europe, small acquisitions were made of a 50.8 percent interest in
EMC Starke & Gerlach GmbH, the holding company of 141 Germany Promotion and
Communication GmbH, 51 percent of Kontoret As Reklamebyra in Norway, and the
business of Not Just Film BV in the Netherlands which was merged into Bates
Nederland BV, renamed Bates Not Just Film BV.

Disposals

         No material disposals took place in the first six months of 2001 or in
2000, 1999 or 1998.

         The share capital of Bates Japan Ltd was restructured in 1999,
converting it from a wholly-owned subsidiary to a 31 percent joint venture
investment in the renamed Saatchi & Saatchi Bates Yomiko KKK. No profit or loss
was recognized in the consolidated profit and loss account as a result of this
transaction.

Geographic Coverage

         Cordiant serves clients in all of the world's major advertising
markets.

                      Geographic analysis of Group revenue
<TABLE>
<CAPTION>
                                                                          Percentage of
                                                                   Consolidated Group Revenue
                                                             2000              1999            1998
                                                             ----              ----            ----
       <S>                                                   <C>               <C>             <C>
       UK                                                     16                12              13
       North America                                          29                25              24
       Continental Europe (including Africa and India)        26                36              36
       Asia Pacific and Latin America                         29                27              27

</TABLE>

Competition

         The advertising industry is highly competitive at both an international
and local level. Cordiant's principal competitors in the advertising industry
are the large multi-national agencies based in the US, the UK and France as well
as smaller agencies, which operate in local markets. The principal competitive
factors include an agency's reputation, its creative strength and quality of
client service, its ability to perceive clients' needs accurately, the
commercial effectiveness of its ideas, its geographic coverage and diversity,
its understanding of advertising media and its media buying power. In addition,
an agency's ability to maintain its existing clients and develop new
relationships depends to a significant degree on factors such as the
interpersonal skills of the individuals managing client accounts. Normal
practice in the industry is for agency contracts to have a three month
termination period.

         Cordiant believes that the Group is well positioned to compete in the
advertising and marketing communications industry. Cordiant also believes that
the combination of the Group's local presence and its worldwide networks
provides it with a strong operating format to implement advertising and
marketing communication strategies on a worldwide basis.


                                      -19-


<PAGE>

Regulation

         Governments, government agencies and industry self-regulatory bodies in
the various countries in which the Group operates continue to adopt legislation
and regulations which directly or indirectly affect the form, content and
scheduling of advertising and other communications services, or otherwise affect
the activities of such businesses and their clients. Certain of the legislation
and regulations relate to considerations such as truthfulness, substantiation,
interpretation of claims made and comparative advertising. In addition, there is
a tendency toward restrictions or prohibitions relating to advertising for such
products as pharmaceuticals, tobacco and alcohol.

Seasonality of Results

         In the year-ended December 31, 2000, 41 percent of revenues and 29
percent of operating profit was earned in the six months to June 30, 2000. In
the year ended December 31, 1999, 50 percent of revenues and 32 operating profit
was earned in the six months to June 31, 1999. If the results of the
acquisitions made in 2000 are excluded, 47 percent of existing revenues and 34
percent of existing operating profit was earned in the six months to June 30,
2000.

         The seasonality of revenues and operating profits reflects the spending
pattern of the Group's clients and the industries that they operate in.

Property


         Cordiant leases all its premises. The principal properties leased by
Cordiant are as follows:

<TABLE>
<CAPTION>
                                    Area          Annual Base          Next Rent        Expiration
                   Location        Sq. Ft.       Rental-Millions       Review Date        of Lease
                   --------        -------       ---------------       -----------        --------
<S>                                <C>                <C>                  <C>              <C>
498 Seventh Avenue                 204,000            $6.0                 2004             2014
New York, New York

121-141 Westbourne Terrace          62,500            L1.5                  --              2003
London, England

</TABLE>

         In addition, in respect of Landsdowne House, Berkeley Square, London,
England Cordiant leases 123,000 (1999: 103,000) square feet at an annual rental
of L7.7 million (1999: L6.5 million), which is sublet for mainly
coterminous periods as Cordiant at an average, annualized rental of
approximately L6.5 million during 2000 (1999: L6.1 million). A
further 50,000 square feet at an annual rental of L2.9 million is sublet
on a short-term basis at an average annualized rental of approximately
L2.0 million during 2000.

         At December 31, 2000, Cordiant's owned and leased properties and
fixtures (including furniture and equipment) had a net book value of L37.9
million ($56.5 million).

         Cordiant considers its offices and other facilities to be in good
condition. However, it has surplus office space based on the needs of its
current business. At December 31, 2000, L19.6 million ($29.2 million) had
been reserved by the Group for potential costs of surplus space, primarily in
London and New York City.


                                      -20-


<PAGE>

         The following outstanding property guarantees by Cordiant companies of
obligations of certain companies in the Saatchi & Saatchi Group were not
released in connection with the demerger in 1997: (i) the Saatchi & Saatchi
Group's lease of premises at 375 Hudson Street, New York, for a term expiring on
January 31, 2013, at a current annual base rent of $17.9 million subject to
periodic rent reviews; and (ii) the Saatchi & Saatchi Group's lease of premises
at 21 Dukes Road, London, for a term expiring on October 31, 2016 with a
tenant's right to break on October 31, 2006 with a current annual base rent of
L255,882, subject to periodic rent reviews. Saatchi & Saatchi has agreed
to give additional, or in some cases substitute, guarantees and to indemnify
Cordiant against any liability in its preexisting guarantees.

         There are no material plans to construct, expand or improve the
existing property facilities.

Environmental Policy

         As primarily a service-based operation, the Group believes that the
impact of the Group's activities on the environment is small. However, steps are
being taken to assess the impact of the Group's activities in terms of its
premises, the use of equipment and the efficient consumption of resources with a
view to developing Groupwide guidance and standards during 2001. Currently, as a
minimum standard, all operating companies are expected to comply with local
environment regulations.

Item 5.  Operating and Financial Review and Prospects.

General

         The information in "Operating and Financial Review and Prospects"
concerning the results of operations and the financial condition of Cordiant
refers to the Consolidated Financial Statements included in this Annual Report
which are prepared in accordance with UK GAAP.

         Cordiant's ongoing revenue is generated from commissions and fees paid
by clients. In each of the last three years, between 29 and 37 percent of
ongoing revenue was commission based and varied with the level of media and
production expenditure. The remainder was derived from fees, which were project
or time based, as agreed with the client. With certain clients, an additional
element of remuneration can be earned by meeting certain performance criteria
set in conjunction with the client. The Group's advertising businesses generally
have ongoing relationships with their clients which last a number of years. In
contrast, the majority of revenue from clients of a number of the Group's
marketing communications businesses are based on project specific assignments,
although there is often a relationship with the same client over many years.

         Revenue in any year is dependent primarily on the level of expenditure
by clients on existing assignments and to a lesser degree on business gains and
losses. When business is won or lost there is usually a delay of some months
before revenue is affected. This is primarily because it is usual in the
advertising industry for contracts to have a three month termination clause. In
the case of new commission based work the delay is longer as the agency is not
paid until the advertisement has appeared in the media. Additionally, the
revenues actually earned from new business wins may vary significantly from
revenues anticipated at the outset of any new business win because the level of
expenditure that a client ultimately determines is most appropriate can vary
significantly from the budgeted amounts.

         The majority of Cordiant's net operating costs are staff related and
over the past three years the Group's staff cost to revenue ratio (including
temporary staff and freelancers) was approximately 58 percent. When revenue
growth is slow or declining in any particular operating unit, Cordiant is able
over


                                      -21-


<PAGE>

time to reduce headcount, although this can result in severance costs.
Conversely, staffing can be increased to handle sustained periods of increased
business activity. The remainder of net operating costs relate to leased
properties, depreciation and other administrative costs.

         The profitability of new business varies depending on the terms of
remuneration negotiated and on the nature of the assignment. In particular,
profitability depends on whether revenue is generated by increased spending on
existing assignments, new or existing clients or product categories and on the
number of offices involved in the assignment.

         Cordiant has offices or affiliated agencies in over 80 countries and
its revenues and costs are denominated in a number of currencies. Consequently,
exchange rate movements between pounds sterling and several other currencies
have an impact on the operating result. Cordiant's costs are generally
denominated in the same currency as the associated revenue, thereby mitigating
the impact of exchange rate movements on operating profit. At the net profit
level, the impact of exchange rate movements is also affected by the currency in
which debt is denominated and the countries in which Cordiant's tax charges
arise.

         For the purpose of this section, figures that are compared on a
"constant currency" basis exclude the translation effect of exchange rate
movements between the currencies in which Cordiant's revenues are earned and
expenses are incurred and pounds sterling. The calculation of "underlying"
revenue growth excludes these translation effects and takes into account the
impact of acquisitions made in the period by adding the equivalent revenue from
these acquisitions in the prior period to the base total revenues from which
growth is measured.

Industry Background

         Spending in the advertising and marketing communications industry has
historically been closely linked with growth in gross domestic product. With the
economic slowdown in the United States and other economies, industry
commentators expect growth in the advertising and marketing communications
industry in 2001 to be substantially below that of 2000.

Recent Developments

         In the first four months of 2001, Group revenues grew by 47 percent on
a constant currency basis with underlying growth of 3 percent. The recent
economic slowdown, and in particular the decline in the technology sector, has
impacted revenue growth for elements of the Group. In light of these more
difficult trading conditions, headcount reductions have been made in a number of
Cordiant's businesses and are being contemplated in others. While the Group's
overall profitability will be impacted, operating margins are expected to
improve on a full year basis over 2000. Revenue growth for 2001 as a whole is
expected to be in line with the overall growth of advertising expenditures in
our major markets.


                                      -22-


<PAGE>

Differences Between US GAAP and UK GAAP

         Cordiant's Consolidated Financial Statements are prepared in accordance
with UK GAAP. UK GAAP differs in certain significant respects from US GAAP. The
Consolidated Financial Statements contain a reconciliation of net profit (loss)
and shareholders' deficit to US GAAP for each of the years in the three year
period ended December 31, 2000. The principal differences between the net profit
/ (loss) attributable to shareholders and shareholders' funds (deficit) under UK
and US GAAP for 2000 are set out below (and discussed more fully in Note 35 in
the Notes to the Consolidated Financial Statements).

     o    US and UK GAAP adopt different accounting rules for the calculation
          and amortization of goodwill, which resulted in a L19.0 million
          increase in the goodwill amortization charge under US GAAP. The
          cumulative effect on shareholders' funds is an increase of L32.8
          million.

     o    UK GAAP requires that deferred tax assets are only recognized when
          they are expected to be recoverable without replacement by equivalent
          deferred tax assets. US GAAP permits deferred tax assets to be
          recognized if their realization is considered to be more likely than
          not. The effect on net profit and on shareholders' funds is an
          increase of L1.8 million.

     o    Under UK GAAP committed costs relating to the relocation of acquired
          enterprises were treated as a fair value adjustment, whereas under US
          GAAP costs that have a future economic benefit to the combined company
          are expensed as incurred. This resulted in an extra charge of L0.4
          million under US GAAP. There is no cumulative effect on shareholders'
          funds.

     o    Under UK GAAP no compensation is recognized for certain performance
          based share options, but under US GAAP compensation expense is
          recorded for all performance based share options which resulted in an
          increase in costs of L11.4 million. There is no cumulative effect on
          shareholders' funds.

     o    Under UK GAAP the Group's property provision is discounted to its net
          present value, and this discount is amortized over the life of the
          provision. Under US GAAP provisions are made on a gross basis and the
          amortization has been credited back to the net profit resulting in an
          increase of L1.1 million. The cumulative effect on shareholders' funds
          is a reduction in funds of L5.2 million.

     o    Under UK GAAP research and development costs may be capitalized and
          amortized over their estimated useful life. Under US GAAP these costs
          are written off as incurred, resulting in an increase in costs of L0.8
          million. The cumulative effect on shareholders' funds is a reduction
          in funds of L0.8 million.

         Under UK GAAP ordinary dividends proposed are provided for in the year
in respect of which they are recommended by the Board of Directors for approval
by the shareholders. Under US GAAP, such dividends are not provided for until
declared by the Board of Directors. The cumulative effect on shareholders' funds
is an increase in funds of L8.4 million.


                                      -23-


<PAGE>

Results of Operations

         Year Ended December 31, 2000 vs. Year Ended December 31, 1999

         Revenue

         Revenue by geographical area was as follows:
<TABLE>
<CAPTION>
                                              Acquisitions             Total      % of Total      Total      % of Total
                                              ------------             -----      -----------     -----      ----------
                                           2000          2000           2000          2000         1999         1999
Revenue by geographical area               L m           L m            L m                        L m
<S>                                        <C>           <C>           <C>            <C>          <C>          <C>

United Kingdom                             38.1          46.0           84.1           16%          40.2         12%
North America                              96.3          52.2          148.5           29%          83.1         25%
Continental Europe                        125.3           7.8          133.1           26%         121.9         36%
Asia Pacific and Latin America            132.6          14.7          147.3           29%          90.6         27%
                                          -----          ----          -----           ---          ----         ---
Total                                     392.3         120.7          513.0          100%         335.8        100%
                                          =====         =====          ======         ====         =====        ====
</TABLE>

         Revenue growth by geographical area and revenue by geographical area as
a percentage of Group revenue were as follows:

<TABLE>
<CAPTION>
                                                                                 Percentage of Group
                                                Revenue Growth 2000                    Revenue
                                                     Constant                     (Reported Basis)
                                        Reported     Currency     Underlying       2000       1999
                                        --------     --------     ----------       ----       ----
                                               %            %           %           %           %
<S>                                          <C>          <C>
United Kingdom                               109          109           9           16          12
North America                                 79           68          12           29          25
Continental Europe                             9           18          11           26          36
Asia Pacific and Latin America                63           62          17           29          27
                                              --           --          --           --          --
Group                                         53           54          13          100         100
                                              ==           ==          ==          ===         ===
</TABLE>

         Group revenue increased by 54 percent to L513.0 million in 2000
from L335.8 million in 1999. On an underlying basis, revenue increased by
13 percent. Acquisitions in 2000 contributed revenue of L120.7 million.

         In the UK revenues increased by 109 percent to L84.1 million,
representing 16 percent of Group revenues (1999: 12 percent). United Kingdom
revenues increased by 9 percent on an underlying basis. Although trading results
in the United Kingdom's advertising business were generally weaker than expected
in 2000 due to reduced spending from clients, the recently acquired Healthworld
and Lighthouse businesses performed strongly with substantial increases in
client spending.

         In North America, revenues increased by 68 percent on a constant
currency basis to L148.5 million. On an underlying basis revenues
increased by 12 percent. The region represented 29 percent of the Group's
revenues in 2000 (1999: 25 percent). Cordiant businesses performed strongly in
the United


                                      -24-


<PAGE>

States in 2000 with increased client spending in most units, augmented by a
number of new business wins during the year.

         In Continental Europe, revenues increased by 18 percent on a constant
currency basis to L133.1 million and by 11 percent on an underlying basis.
This region (which includes revenues derived from Africa and India) represented
26 percent of the Group's revenues (1999: 36 percent). In Bates Europe, revenues
increased by 15 percent to L87.5 million with increased levels of business
activity from clients in a number of major units. Scholz & Friends revenues were
up 12 percent on a constant currency basis to L41.5 million with net
increases in spending from new and existing clients.

         Asia Pacific and Latin American revenues increased by 62 percent on a
constant currency basis to L147.3 million and by 17 percent on an
underlying basis. In 2000, this region accounted for 29 percent of the Group's
revenues (1999: 27 percent). Australasia (Australia and New Zealand) revenues
(39 percent of Asia Pacific and Latin American revenues) increased by 15 percent
at constant exchange rates to L56.9 million. The Group has significantly
extended its range of marketing services during the year in Australia with a
number of in-fill acquisitions which increased revenue from this region in 2000.
Asian revenues (58 percent of Asia Pacific and Latin American revenues)
increased by 133 percent on a constant currency basis to L85.3 million,
principally reflecting a full year contribution from Diamond which saw
substantial increases in client activity in the year. Latin America accounted
for the remaining 3 percent of revenues from this region.

         Operating Profit

         Operating profit by geographical area was as follows:
<TABLE>
<CAPTION>
                                                                                           % of                % of
                                                        Acquisitions          Total       Total      Total    Total
                                                        -----------           ------     -------    ------    -----
                                                      2000         2000       2000        2000       1999     1999
Operating profit by geographical area                 L m          L m        L m                    L m

<S>                                                   <C>          <C>         <C>         <C>       <C>       <C>
United Kingdom                                         1.3          6.6         7.9        13%        4.4      13%
North America                                          6.9          9.0        15.9        26%       10.9      33%
Continental Europe                                    15.1          0.9        16.0        26%       12.5      37%
Asia Pacific and Latin America                        18.9          2.7        21.6        35%        5.7      17%
                                                      ----          ---        ----        ---        ---      ---
Total                                                 42.2         19.2        61.4       100%       33.5     100%
                                                      ====         ====        ====       ====       ====     ====
</TABLE>

                                      -25-


<PAGE>

         Operating profit growth by geographical area and operating profit by
geographical area as a percentage of Group operating profit were as follows:

                                                             Percentage of Group
                                         Operating Profit     Operating Profit
                                              Growth           (Reported Basis)
                                         (Reported Basis)    2000       1999
                                         ----------------    ----       ----
                                             %                %           %
>
United Kingdom                              80                13          13
North America                               46                26          33
Continental Europe                          28                26          37
Asia Pacific and Latin America              278               35          17
                                            ---               --          --
Group                                       83               100         100
                                            ==               ===         ===

         Group operating profit increased by 83 percent on a reported basis to
L61.4 million in 2000 from L33.5 million in 1999. Acquisitions in
2000 contributed operating profits of L19.2 million.

         In the UK, operating profits were up by 80 percent on a reported basis
reflecting the contribution from acquisitions. In North America, operating
profit grew by 46 percent on a reported basis, primarily due to the contribution
from acquisitions. In Continental Europe, operating profit increased by 28
percent on a reported basis, reflecting the growth in revenue. In Asia Pacific
and Latin America, operating profit increased by 278 percent on a reported
basis, partly due to acquisitions in Australia and a full year contribution from
Diamond.

         Operating Margins

         Operating margins by geographical area were as follows:

                                                       Operating Margin
                                                       (Reported Basis)
                                                     2000              1999
                                                     ----              ----
                                                        %                 %
United Kingdom                                        9.4              10.9
North America                                        10.7              13.1
Continental Europe                                   12.0              10.3
Asia Pacific and Latin America                       14.7               6.3
                                                     ----               ---
Group                                                12.0              10.0
                                                     ====              ====

         Operating margins in the UK fell from 10.9 percent in 1999 to 9.4
percent in 2000 on a reported basis, reflecting the weaker than expected
performance of the UK advertising business and the introduction of lower margin
contract sales business with the Healthworld acquisition. In North America,
operating margins fell from 13.1 percent in 1999 to 10.7 percent in 2000 on a
reported basis, due principally to significant initial costs in developing the
Group's e-business capabilities. In Continental Europe, operating margins at
Bates Europe improved to 12.0 percent from 8.8 percent. However, at Scholz and
Friends, operating margins fell to 12.0 percent from 13.3 percent, principally
due to development costs in their


                                      -26-


<PAGE>

regional offices. In Asia Pacific, the main contributor to improved operating
margins was a full year contribution from Diamond and a stronger performance
from Bates Asia. In Australia, margins improved as the Group extended its range
of marketing services with a number of in-fill acquisitions.

         Joint Ventures and Associates

         The Group's share of operating profits, primarily from Zenith, Newcomm
Bates and The Facilities Group, increased to L5.6 million, up 14.3 percent
from 1999. Zenith continues to perform well with revenue growth of 19 percent
during the year and a further improvement in profitability.

         US GAAP

         Under UK GAAP the profit for the year ended December 31, 2000 was
L33.6 million. After taking account of the differences in UK and US GAAP
(which are discussed briefly at the beginning of this Item 5 and more fully in
Note 35 in the Notes to the Consolidated Financial Statements), the profit under
the US GAAP was L4.9 million.

         Year Ended December 31, 1999 vs. Year Ended December 31, 1998

         Revenue

         Group revenue increased by 11 percent to L335.8 million in 1999
from L301.8 million in 1998. On an underlying basis, revenue increased by
8 percent.

         In the UK revenues increased by 1 percent to L40.2 million which
represents 12 percent of Group revenues (1998: 13 percent). The restructuring of
Bates UK as an integrated agency, and management changes impeded revenue growth
in 1999.

         In North America, revenues increased by 16 percent to L83.1
million. On a constant currency basis the increase was 13 percent. The region
represented 25 percent of the Group's revenues in 1999 (1998: 24 percent). The
revenue growth reflected net new business wins and increased spending from
existing clients.

         In Continental Europe, revenues increased by 12 percent and by 15
percent on a constant currency basis. This region (which includes revenues
derived from Africa and India) represents 36 percent of the Group's revenues
(1998: 36 percent). In Bates Europe, revenues increased by 13 percent on a
constant currency basis reflecting growth in the existing businesses combined
with in-fill acquisitions. Scholz & Friends performed well with revenue growth
of 18 percent on a constant currency basis reflecting net new business wins and
increased spending from existing clients.

         Asia Pacific and Latin American revenues increased by 11 percent and by
6 percent on a constant currency basis. In 1999, this region accounted for 27
percent of the Group's revenues (1998: 27 percent). Australasian (Australia and
New Zealand) revenues (approximately 57 percent of Asia Pacific and Latin
American revenues) decreased by 2 percent on a constant currency basis. This
decline reflected reduced spending by existing clients. Asia revenues
(approximately 38 percent of Asia Pacific and Latin American revenue) increased
by 9 percent on a constant currency basis. The increase reflected a mixture of
growth from existing businesses as economic growth resumed in the region and
from acquisitions.


                                      -27-


<PAGE>

         Operating Profit

         Group operating profit increased by 29 percent to L33.5 million
in 1999 from L26.0 million in 1998. On a constant currency basis, group
operating profits increased by 29 percent.

         In the UK, operating profits were down 2 percent to L4.4 million
in 1999. This marginal decrease reflected increased costs associated with the
restructuring of Bates UK.

         In North America, operating profit grew by 33 percent to L10.9
million in 1999 (28 percent on a constant currency basis). This profit growth
was driven principally by the increase in revenues and cost control.

         In Continental Europe, operating profit increased by 24 percent to
L12.5 million in 1999. On a constant currency basis the increase was 26
percent. In Bates Europe, the increase of 34 percent on a constant currency
basis reflected the successful integration of the recent acquisitions. In Scholz
& Friends, the increase of 17 percent on a constant currency basis primarily
reflected a strong conversion of revenue gains into operating profit.

         In Asia Pacific and Latin America, operating profit increased by 78
percent to L5.7 million in 1999. On a constant currency basis operating
profit increased by 79 percent. In Australasia, operating profit declined by 70
percent on a constant currency basis. This primarily reflected a combination of
lower revenues and investment costs in its interactive business. In Asia
operating profits were achieved, from losses in 1998, giving an operating margin
7.6 percent. This improved performance reflected conversion of revenue growth
into operating profits from existing businesses combined with net acquisitions.

         Operating Margins

         Group operating margin was 10.0 percent in 1999, an increase from 8.6
percent in 1998.

         On a geographic basis, operating margins were as follows:

                                                    1999         1998
                                                    ----         ----
                                                     %            %

         UK                                         10.9         11.3
         North America                              13.1         11.4
         Continental Europe                         10.3         9.3
         Asia Pacific and Latin America             6.9          3.9
                                                    ---          ---
         Group                                      10.0         8.6
                                                    ====         ===
         Joint Ventures and Associates

         The Group's share of operating profits, primarily from Zenith and
Newcomm, amounted to L4.9 million, an increase of 88 percent over 1998. Of
the L2.3 million increase, 52 percent was due to the acquisition of
Newcomm. The remainder primarily was due to Zenith, which achieved revenue
growth of 16 percent during 1999 combined with improved profitability.


                                      -28-


<PAGE>

Net Interest Expense and Similar Items

         Net interest expense and similar items for Cordiant amounted to
L9.5 million in 2000 and L6.1 million in 1999. The increase in 2000
is primarily due to additional debt (further described under "-- Liquidity and
Capital Resources") incurred to fund cash payments for acquisitions and debt
assumed with the acquisition of Lighthouse Global Network Inc.

         Net interest expense and similar items for Cordiant amounted to
L6.1 million in 1999 and L3.9 million in 1998. The increase in 1999
is due to increased interest rates and a L1 million write-off of
unamortized bank fees relating to the refinancing of the Group's principal bank
facilities.

Taxation

         In 2000 the Group's tax charge for the year was L18.1 million,
representing an effective tax rate of 32 percent. In 1999 Cordiant's tax charge
for the year was L10.6 million, representing an effective tax rate of 33
percent. In 1998 Cordiant's tax charge for the year was L9.2 million,
representing an effective tax rate of 36 percent. The decrease in the Group's
effective tax rate in 2000, 1999 and 1998 was principally due to the mix of
international profits.

         During 2000, Cordiant adopted the new accounting standard FRS 16
"Current Tax". FRS 16 "Current Tax" specifies how current tax, in particular
withholding tax and tax credits, should be reflected in the financial
statements. There was no material impact to the financial statements from the
adoption of this standard.

Equity Minority Interests

         Equity minority interests amounted to L5.8 million in 2000, an 87
percent increase compared to 1999. This increase was largely due to profits
attributable to the 20 percent minority holders of Diamond. The increase
resulting from the impact of Diamond was only partially offset by the decrease
resulting from Cordiant's purchase of the outstanding 10 percent minority in
Scholz & Friends at the start of 2000.

         Equity minority interests from ongoing businesses were L3.1
million in 1999 and L1.7 million in 1998. The increase in 1999 was
principally due to the improved profitability of the Scholz & Friends network,
of which the Group owned 90 percent, and the acquisition in December 1999 of 80
percent of Diamond in South Korea. The decrease in 1998 reflects the purchase of
the 25 percent minority interest in The Communications Group in that year.

Return Attributable to Shareholders

         The Group's net profit attributable to ordinary shareholders for 2000
was L33.6 million, an increase of 81.9 percent on a constant currency
basis. Diluted earnings per share were 10.6p compared to 7.8p in 1999,
representing an increase of 35.9 percent for the year, on a reported basis.

         A dividend of 2.1p per share in respect of 2000 was approved at the
Annual General Meeting of shareholders held on June 12, 2001. The comparable
1999 figure was a dividend of 1.8p. Earnings covered the recommended dividend
4.0 times in 2000 and 3.6 times in 1999.

         The Group's net profit attributable to ordinary shareholders for 1999
was L18.6 million, resulting in diluted earnings per share of 7.8p, and
for 1998 was L13.8 million, resulting in diluted earnings per share of
6.2p.


                                      -29-


<PAGE>

         A dividend of 1.8p per share was paid in respect of 1999. The
comparable 1998 figure was a dividend of 1.4p. Earnings covered the recommended
dividend 3.6 times in 1999 and 4.4 times in 1998.


Liquidity and Capital Resources

         General

         The Group's primary liquidity sources are cash flows generated from its
operations, the issuance of equity and debt securities and its banking
facilities. In July 2000, Cordiant refinanced the Group's core banking
facilities with a new committed facility of $400 million (the "Facility"). The
Facility was used for cash acquisition payments, including Lighthouse Global
Network Inc., other acquisition costs and for the Group's ongoing working
capital requirements.

         The capital structure consists of both senior debt and equity. The
Facility provides committed credit facilities at a rate between 0.7-1.25 percent
over LIBOR, depending upon the Group's ability to achieve certain financial
ratios. The Facility is divided into two amounts: (i) $175.0 million
(L117.4 million) initially maturing in November 2000 which was extended to
November 2001 at Cordiant's option and subsequently repaid and canceled in April
2001, and (ii) $225.0 million (L151.1 million) maturing in November 2004.
The Facility requires the Group to comply with financial and other covenants. It
also contains provisions whereby, on the occurrence of certain specified events
of default, the amount made available could be declared immediately due and
payable. These events of default include breach of covenants, cross default by
certain companies in the Group in respect of indebtedness over a specified
amount, and a change of control of Cordiant. The Facility is secured by
guarantees from the principal companies of the Group.

         On December 31, 2000, the Group had drawings under the Facility of $267
million (L179.2 million), compared with drawings of $105 million
(L70.5 million) on December 31, 1999. The primary reason for the higher
drawings were the Group's requirements for acquisition financing during 2000 and
non-recurring capital expenditure relating to an office relocation in the US.

         On April 5, 2001, the Group issued US$175.0 million (L117.4
million) of 7.61 percent Guaranteed Senior Notes, in a private placement to
institutional investors. The Guaranteed Senior Notes mature in April 2011 and
have an average life of eight years taking into account scheduled repayments of
US$35.0 million (L23.5 million) per year, beginning in April 2007. The
proceeds of this issue were used to repay and cancel committed bank facilities
of US$175.0 million (L117.4 million) maturing in November 2001.

         The undrawn element of Cordiant's senior bank facilities is required in
part to fund the Group's acquisitions and cyclical working capital needs and in
part to allow the Group to finance contingencies. Cyclical needs arise each
month as a result of country specific media payment cycles and from seasonal
variations in advertising activity during the year which affect the Group's cash
position.

         The Group has significant cash balances in its international
operations. These balances are required primarily to finance the working capital
cycles of the individual country operations and, in certain cases, to provide
the required level of working capital for media accreditation allowing the
agencies to buy media on behalf of their clients. Although cash is often
required for local funding purposes, the Group has a policy of repatriating all
available cash to the center to maximize core liquidity.

         In connection with the demerger, Zenith entered into an agreement (the
"Zenith Facility Agreement") which provided a L16.5 million secured
reducing multi-currency revolving credit facility (the


                                      -30-


<PAGE>

"Zenith Facility"). The Company and Saatchi & Saatchi provided a guarantee to
the lenders in respect of the Zenith Facility and agreed between themselves that
any liability under such guarantee is to be shared equally.

         At December 31, 2000 the amount outstanding under the Zenith Facility
was L7.7 million. This facility amortizes by L4 million in 2001,
with the balance due in 2002. In addition, the Zenith Facility will be reduced
by an amount equal to 75 percent of the net proceeds received (subject to a de
minimus of $1.5 million per annum) on or following a sale by Zenith of any
subsidiary (or a material part of the business of any subsidiary).

         The Zenith Facility Agreement requires Zenith to comply with various
financial covenants relating to gross interest cover, maximum gross debt and
gross capital expenditure. It also contains provisions whereby, under certain
specified events of default, amounts made available could be declared
immediately due and payable. In addition to customary events of default, these
events include defaults by certain companies in the Zenith Group in respect of
indebtedness over specified limits or in circumstances where there has been a
change of control of Zenith.

         Cash Flows from Operating Activities

         Cash generated from operating activities in 2000 was L45.3
million compared to L50.0 million in 1999, a decrease of L4.7
million. There was a net outflow of working capital in 2000 of L17.4
million compared to a net inflow of L10.8 million in 1999. In 2000, there
was an additional outflow of L8.3 million in relation to a pre-payment for
a property lease. These outflows were only partially offset by the L27.9
million increase in operating profit.

         Cash generated from operating activities in 1999 was L50.0
million compared with L19.8 million in 1998, an increase of L30.2
million. Of this increase, L7.5 million is derived from increased
operating profit. There was a reduction in the payments in respect of unutilized
property, which had been provided for in prior years, for ongoing operations
from L7.0 million in 1998 to L4.8 million in 1999. The payments in
respect of unutilized property in general represent the difference between the
payments being made by Cordiant relating to excess space and the income Cordiant
receives from subletting that space. The majority of the excess space arises
from the restructuring of the former Cordiant businesses in the early 1990s. The
balance of L20.5 million increase is derived from a working capital inflow
of L10.8 million in the year, compared to a net working capital outflow of
L9.0 million in 1998.

         Cash Outflows from Returns on Investments and Servicing of Finance

         In 2000, cash outflows from net interest expense (including bank fees)
and dividends to minorities were L11.5 million compared to L7.0
million in 1999. Net interest paid by the Group increased from L4.3
million in 1999 to L7.1 million in 2000, largely due to the debt incurred
to finance cash payments made in connection with acquisitions. Dividends to
minorities increased from L1.0 million in 1999 to L2.1 million in
2000.

         In 1999, cash outflows from net interest expense (including bank fees)
and dividends to minorities were L7.0 million compared to L4.9
million in 1998. Net interest paid by the Group increased from L2.4
million to L6.0 million, largely due to the payment of one-time fees in
November 1999 relating to refinancing the bank facilities. Dividends to
minorities decreased from L2.5 million to L1.0 million following the
acquisition of the minority interest in Australia.


                                      -31-


<PAGE>

         Taxation Paid

         Net tax paid by the Group increased from L6.7 million in 1999 to
L11.3 million in 2000, primarily due to acquisitions made during 2000.

         Cash Flows from Capital Expenditure and Financial Investment

         In 2000, payments for the acquisition of tangible fixed assets, net of
receipts from disposals, amounted to L18.1 million compared with
L18.3 million in 1999.

         In 2000, the net cash outflow from the acquisition and disposal of
miscellaneous investments was L5.4 million compared with a net cash
outflow of L0.3 million in 1999. The increase was principally due to a
further investment in the shareholding in NewComm Bates, increasing the Group
ownership to 51 percent.

         Cash Flows from Acquisitions and Disposals

         Payments for the acquisition of investments in subsidiary and
associated undertakings in 2000 net of cash acquired with companies was
L46.8 million compared with L22.2 million in 1999. Additional
acquisition consideration of L440.9 million was satisfied by the issuance
of 130 million Cordiant Ordinary Shares in respect of the acquisitions of the
Group's 100 percent interest in PSD Associates Limited and Bamber Forsyth
Limited in the United Kingdom, and Healthworld Corporation, Lighthouse Group
Network Inc. and Donino White & Partners in the United States, and in respect of
the Group's 80 percent interest in Intercom Management GmbH in Germany.
Additional costs of approximately L98.2 million relating to deferred
contingent consideration relating to acquisitions were also accrued during the
year, and at the year end an accrual of L79.4 million remained. These
accruals are expected to result in cash payments and the issue of shares in
future years.

         There were no proceeds from the sale of subsidiaries during 2000 and
1999. In 2000, however, an investment was reclassified as a subsidiary as a
result of an increase in the Group's ownership.

         Equity Dividends Paid

         In 2000, a dividend to equity shareholders of L5.1 million was
paid in relation to 1999 profits, compared with the dividend of L3.2
million paid in 1999, in relation to 1998 profits.

         Cash Flows from Financing Activities

         In 2000, shares were issued for a cash value of L8.3 million
(1999: L1.9 million) in connection with the exercise of employee share
options.

         The net draw down of Group  borrowing  facilities  was  L53.4  million
(1999:L25.2  million)  and  repayments  of finance  lease  borrowings  were L0.4
million (1999:L0.2 million).

         In 2000 the L53.4 million net drawdown of loans consisted of
loans drawn of L122.8 million and repayments of L69.4 million
represent the refinancing of the Group's bank facilities during the year and the
funding of acquisitions.


                                      -32-


<PAGE>

         In 1999, shares were issued for cash value of L1.9 million (1998:L0.5
million) following the exercise of employee share options. The net draw down of
Group borrowing facilities was L25.2 million (1998:L8.6 million) and repayments
of finance lease borrowings was L0.2 million (1998:L0.2 million).

         In 1999, the L25.2 million net draw down of loans consisted of
loans drawn of L90.9 million and repayments of L65.7 million
representing the refinancing of the Group's bank facilities during the year and
the funding of acquisitions made and capital expenditure incurred in 1999.

         In 1998, shares were issued for cash value of L0.5 million
following the exercise of employee share options. The net draw down of Group
borrowing facilities was L8.6 million and repayments of finance lease
borrowings was L0.2 million.

         Material Commitments

         At December 31, 2000, the Group had L1.6 million (1999:
L0.4 million) of capital expenditure committed, but not provided for,
relating to expenditure on information technology equipment, furniture and other
equipment.

         The Group may make capital payments in future years as a result of
contracts entered into to acquire additional interests in subsidiaries and
associated companies. Such payments are contingent on the levels of profits
achieved by those companies and may be partially paid by the issue of shares at
the Group's option. In addition, the Group is committed to make certain capital
payments in the form of deferred consideration. The Group's best estimate of
commitments, totalling L79.4 million as at December 31, 2000 (1999:
L51.4 million), have been accrued in the balance sheet. Of this amount,
L45.6 million is payable in cash with the remainder of L33.8 million
being payable in new Cordiant Ordinary Shares.

         Working Capital

         The Group believes that the working capital is sufficient for its
present requirements. Details of the financial instruments used by the Group,
the maturity profile of debt currency and interest rate structure are disclosed
in Note 32 to the Consolidated Financial Statements.

Item 6.  Directors, Senior Management and Employees.

Directors and Executive Officers

         The directors and executive officers of Cordiant are as follows:
<TABLE>
<CAPTION>

Name                            Position                                                     Age
----                            --------                                                     ---
<S>                             <C>                                                          <C>
Michael Bungey                  Director and Chief Executive Officer of Cordiant and
                                Chairman and Chief Executive Officer, Bates Worldwide        61

Arthur D'Angelo                 Finance Director of Cordiant                                 49

Jean de Yturbe                  Director, Group President, Bates Worldwide                   54

Peter M Schoning                Director, Chairman and Chief Executive Officer,
                                Scholz & Friends                                             55

Charles Scott                   Chairman of Cordiant                                         52
</TABLE>


                                      -33-


<PAGE>
<TABLE>
<CAPTION>
Name                            Position                                                     Age
----                            --------                                                     ---
<S>                             <C>                                                          <C>

Ian Smith                       Director,  Chairman and Chief Executive Officer, CCG.XM      45

William Whitehead               Director, Group President and Chief Operating Officer,       55
                                Bates Worldwide

Dudley Fishburn                 Non-executive Director                                       55

Professor Theodore Levitt       Non-executive Director                                       76

Dr. Rolf Stomberg               Non-executive Director                                       61

James Tyrrell                   Non-executive Director                                       60

Denise Williams                 Company Secretary                                            43

</TABLE>

         Executive Directors

         Charles Scott (52) Chairman: Mr. Scott joined the Board as Finance
Director in January 1990. He was promoted to Chief Operating Officer in July
1991 and Chief Executive Officer in April 1993. In January 1995 he was appointed
Chief Executive Officer and Acting Chairman, and in July 1995 was appointed
Chairman. He is a non-executive director of several companies.

         Michael Bungey (61) Chief Executive Officer: Mr. Bungey became
Chairman and Chief Executive Officer of Bates Dorland and Bates Europe in 1988.
He was appointed President and Chief Operating Officer of Bates Worldwide in
1993, Chief Executive Officer in April 1994 and Chairman in December 1994. He
was appointed to the Board as Chief Executive Officer of Cordiant in December
1997.

         Arthur D'Angelo (49) Finance Director: Mr. D'Angelo joined Saatchi &
Saatchi Holdings USA in 1987 and joined Bates USA in April 1994 as Executive
Vice President and Chief Financial Officer. He was named Chief Financial Officer
of Bates North America later that year, and was appointed Chief Financial
Officer of Bates Worldwide in July 1995. He was appointed to the Board as
Finance Director in December 1997.

         Jean de Yturbe (54) Director: Mr. Yturbe appointed President of HDM
Europe from 1985 to 1990 and Chief Executive Officer of Eurocom Advertising
Worldwide from 1990 to 1992. He joined Bates in July 1993 as Chief Executive
Officer of Bates France and was named Chairman of Bates Europe in January 1995.
He was appointed to the Board in December 1997 and appointed a Group President
for Bates Worldwide in December 1999.

         Peter Schoning (55) Director: Mr. Schoning joined Scholz & Friends in
1984 as Managing Director. He was named Managing Partner in 1987. In 1993 he was
appointed Chief Executive Officer of Scholz & Friends, and since 1995 he has led
the agency as Chairman and Chief Executive Officer. He was appointed to the
Board in December 1997.

         Ian Smith (45) Director: Mr. Smith joined George Patterson Bates in
1989 and was named General Manager and New Business Director in 1990. He became
National Client Services Director in 1993 and National Managing Director in
1996. He was appointed to the newly-created position of President,
International, Bates Worldwide in March 1998 and a Group President for Bates
Worldwide in


                                      -34-


<PAGE>

December 1999. He was appointed to the Board in January 2000 and as Chairman and
Chief Executive of CCG.XM in September 2000.

         William Whitehead (55) Director: Mr. Whitehead was named Executive
Director of Worldwide Client Services at Bates Worldwide and Regional Director
of Latin America for Bates Worldwide in May 1994. In December 1994 he was
appointed Chief Operating Officer for Bates North America. He became President
and Chief Operating Officer of Bates USA in September 1995. In July 1996 he
became Chief Executive Officer of Bates North America. He was appointed to the
Board in December 1997 and became a Group President for Bates Worldwide in
December 1999 and President and Chief Operating Officer of Bates Worldwide in
September 2000.

         Non-Executive Directors

         Dudley Fishburn (55) Non-executive Director: Mr. Fishburn is Associate
Editor of The Economist, Treasurer of the National Trust, Chairman of the
Trustees of the Open University, Chairman of HFC Bank plc and a director of
Philip Morris Inc.. He was previously Member of Parliament for Kensington and
Executive Editor of The Economist. He was appointed to the Board in May 1996.

         Professor Theodore Levitt (76) Non-executive Director: Professor Levitt
is Edward W. Carter Professor of Business Administration, Emeritus, of the
Harvard Business School, and formerly Editor of the Harvard Business Review. He
serves on the board of seven Sanford C. Bernstein Funds, is a retired director
of eight New York Stock Exchange companies, and author of numerous articles and
books on economics, management and marketing. Professor Levitt was appointed to
the Board in March 1990.

         Dr. Rolf Stomberg (61) Non-executive Director: Dr. Stomberg worked for
The British Petroleum Company plc from 1970 to 1997 where he was Chief Executive
Officer for B.P. Oil International and a B.P. Group Managing Director. He is
Chairman of John Mowlem & Company PLC and Management Consulting Group plc and
serves on a number of UK and continental boards. He is also a Visiting Professor
at Imperial College Management School, London. He was appointed to the Board in
May 1998.

         James Tyrrell (60) Non-executive Director: Mr. Tyrrell was Group
Finance Director of London International Group until November 1997, and
executive director until August 1998. Previously he was Group Finance Director
of Abbey National Plc, prior to which he was Managing Director of HMV Shops
Limited. He was appointed to the Board in May 1998.

         Executive Officers

         Denise Williams joined Cordiant in March 1998 as Deputy Company
Secretary. Prior to that she was Group Secretary at Jacques Vert plc from 1992
to 1998. She was appointed Company Secretary in March 2000.

Re-election of Directors

         The Company's Articles require the Directors to retire by rotation each
year at the Annual General Meeting, such that each Director offers himself for
re-election at least once every three years. A retiring director shall be
eligible for re-election. Any director not re-elected at the Annual General
Meeting shall retain office until the Meeting appoints another person in his
place, or if it does not appoint a replacement, until the end of the Meeting.


                                      -35-


<PAGE>

Corporate Governance

         Statement of compliance

         In June 1998, the Stock Exchange published the Principles of Good
Governance and the Code of Best Practice ("the Combined Code") which embraces
the work of the Cadbury, Greenbury and Hampel Committees and became effective in
respect of accounting periods ending on or after December 31, 1998. In September
1999 the Stock Exchange published "Internal Control: Guidance for Directors on
the Combined Code." The Board has taken note of the recommendations contained in
the Combined Code and the Guidance for Directors and fully endorses the general
principles behind the recommendations made.

         The Board is committed to high standards of corporate governance and
has complied throughout the year with the provisions set out in Section 1 of the
Combined Code with the exception that the Board has not considered the reduction
of executive Directors' contract periods to one year or less.

         The Board

         The Board comprises seven executive Directors, including the Chairman
who is responsible for running the Board, the Chief Executive Officer who has
overall responsibility for running the Company's business, and four
non-executive members. The Board considers all four non-executive Directors to
be independent of management and free from any business or relationship which
could materially interfere with the exercise of their independent judgment.

         In accordance with the recommendations of the Combined Code, Rolf
Stomberg is the appointed senior independent non-executive Director.

         The Board, which met on nine occasions in 2000, provides effective
leadership and manages overall control of the Group's affairs via a schedule of
matters reserved for its decision. This includes approval of the annual budget,
major capital expenditure, significant acquisitions and disposals, risk
management policies and the approval of financial statements. The Board is
supplied in a timely manner with information in a form and of a quality to
enable it to discharge its duties. The Board delegates certain of its
responsibilities to Board committees with clearly defined authority and terms of
reference. The composition and functions of these committees are described
below.

         The Audit Committee

         The Audit Committee comprises the non-executive directors only and was
chaired during the year by James Tyrrell.

         The main duties of the Audit Committee are to:

          o    Review, on behalf of the Board, the financial statements and
               preliminary and interim results;
          o    Review the nature and scope of the external audit and the
               findings of the external auditors;
          o    Review, on behalf of the Board, the Group's systems of internal
               control;
          o    Review and direct the internal audit function; and
          o    Make recommendations to the Board concerning the appointment and
               remuneration of the external auditors.


                                      -36-


<PAGE>

         The Audit Committee met on three occasions during 2000.

         The ultimate responsibility for reviewing and approving the financial
statements and preliminary and interim results remains with the Board.

         The Remuneration and Nominations Committee

         The principal functions of the Remuneration and Nominations Committee
are to determine on behalf of the Board and the shareholders the Company's
policy for executive remuneration and the remuneration packages of the executive
directors and other senior executives. It also considers appointments to the
Board of Directors and makes recommendations in this respect to the Board.

         The Committee, which met on seven occasions in 2000, comprises the
non-executive directors only and is chaired by Dudley Fishburn.

         The Risk Management Committee

         The Risk Management Committee comprises both executive and
non-executive directors. The Committee is chaired by Charles Scott. The purpose
of the Committee is to assist the Directors in discharging their
responsibilities in respect of the internal control aspects of the Combined
Code.

         The main duties of the Risk Management Committee are to:

          o    Establish a risk-based approach to maintaining a sound system of
               internal control which is embedded in the business processes of
               the Group
          o    Review regular reports from management, focusing on an assessment
               of the significant risks and the effectiveness of the system of
               internal control in managing those risks
          o    Undertake an annual assessment of the significant risks facing
               the group and the internal controls to manage those risks
          o    Undertake an annual review for the purpose of making its public
               statement on internal control
          o    Review and direct the Risk Management services function

         The Risk Management Committee was formed in December 1999. The first
meeting took place in January 2000. Four meetings were held during the year.

         Internal Controls

         As required by the London Stock Exchange, the Company has complied with
the Combined Code provisions on internal control by establishing the procedures
necessary to implement the guidance and by reporting in accordance with that
guidance.

         The Board is responsible for the Group's system of internal control and
for reviewing its effectiveness while the role of management is to implement
Board policies on risk and control. The system of internal control is designed
to manage rather than eliminate the risk of failure to achieve business
objectives, and can only provide reasonable and not absolute assurance against
material misstatement or loss.


                                      -37-


<PAGE>

         There is a continuous process for identifying, evaluating and managing
the significant risks faced by the Group. This has been in place since January
2000. The Risk Management Committee ("RMC") on behalf of the Board regularly
reviews this process.

         The processes used by the Board to review the effectiveness of the
system of internal control include:

        Risk Management Committee

         o    Approving the scope of the annual group risk management program

         o    Reviewing the results of the risk identification process

         o    Providing input on risks and internal controls into the annual
              Board strategy discussions

         o    Reviewing the  effectiveness  of the risk management  process and
              discussing significant risk issues with the Board

        Audit Committee

         o    Considering reports from internal and external audit on the
              system of internal control and any material control weaknesses

         o    Reviewing the internal audit and external audit work plans

        Other procedures

          o    The Group has guidelines for capital expenditure, which include
               annual budgets and appraisal and review procedures. Where
               businesses are being acquired, there are established authority
               levels and due diligence requirements. Post investment appraisals
               are performed for major investments
          o    The Group has a comprehensive system of financial reporting which
               includes an annual budget process, monthly reporting with rolling
               forecasts, half year and annual reporting to enable the Group to
               meet its public financial reporting requirements and bi-annual
               self certification by operating unit management on internal
               controls and compliance with group policies
          o    The Group has certain centralized functions that are staffed by
               appropriately qualified individuals who draw on external
               professional advice. These include finance, tax, treasury,
               management information services, legal, company secretarial, risk
               management services and internal audit and investor relations

         At each year-end, before producing the Board's statement in the
Consolidated Financial Statements filed with the United Kingdom's Registrar of
Companies ("Annual Report and Accounts"), the Board, through the Audit and Risk
Management Committees considers the following:

          o    Self certification received from all operating units that, among
               other things, they have maintained appropriate systems of
               internal control during the period under review and complied with
               Group policies
          o    Reports from internal and external audit on any major problems
               that have occurred during the year end


                                      -38-


<PAGE>

Relations with Shareholders

         The Directors place a high importance on maintaining good relationships
with both institutional and private investors, and via an Investor Relations
department, ensure that shareholders are kept informed of significant Company
developments. Shareholders can access information on the financial statements
and other up-to-date information on the Company via the Group's website at
www.ccgww.com. Members of the Board meet regularly with institutional
shareholders and analysts, and the Directors welcome the opportunity to meet
with private investors at the Company's general meetings, where shareholders are
invited to ask questions and express views on the Company's business.

Compensation

         In 2000, the aggregate amount of compensation paid or accrued for all
directors and executive officers as a group (12 persons) who served during the
year, was L4,253,000. Such compensation was mainly in the form of salaries
and fees and included L95,000 set aside for pension plans.

         The table below reports remuneration by Cordiant for the year ended
December 31, 2000. The compensation for executive directors for 2000 was
approved by the Remuneration Committee.

<TABLE>
<CAPTION>
------------------------- ------------ ------------ ------------ ------------ ------------ --------- --------------
                               Salary        Bonus           As    Long term     Benefits   Pension        Total
                                                     percentage    Incentive    in kind(1)  costs(2)   remuneration
                                                      of salary      plans
                               -------       ------  ----------    ---------    ----------  --------   ------------

                               L'000          L'000    percent      L'000         L'000      L'000          L'000
<S>                              <C>           <C>         <C>        <C>         <C>         <C>        <C>
Executive Directors

Michael Bungey (CEO)             582(3)        567           97        14          86         40         1,289
Arthur D'Angelo                  263           263          100         9          14          8           557
Jean de Yturbe                   249            68           27        14          34         19           384
Peter Schoning                   249           337          135        14          10          -           610
Charles Scott (Chairman)         200             -            -         -          20         22           242
Ian Smith                        296            80           27         -          26          -           402
William Whitehead                362           170           47         9          37          3           581

Non-executive Directors
Dudley Fishburn                   31             -            -         -           -          -            31
Professor Theodore Levitt         27             -            -         -           -          -            27
Dr Rolf Stomberg                  29             -            -         -           -          -            29
James Tyrrell                     35             -            -         -           -          -            35

</TABLE>

(1)  Benefits in kind typically include company car, pension, medical and life
     insurance. Mr. Bungey, who is a UK citizen and has been relocated to the
     US, received an annual travel allowance for flights between the US and the
     UK for his wife.

(2)  The amounts for pension costs disclosed in the executive directors'
     compensation are based on the cash cost to the employing company of defined
     contribution schemes.

(3)  Mr. Bungey's salary includes an amount of L65,453 as part of a tax
     equalisation scheme in respect of tax paid on his remuneration under US tax
     law.

         The basic salary for each director is determined by taking into account
an assessment of the director's experience, responsibility and market value.
Salaries are reviewed annually.

         In addition to salary, all senior executives are eligible for an annual
performance-related bonus, which is non-pensionable. The bonus is designed to
provide an incentive to achieve and exceed targets set by the Committee and to
ensure that annual remuneration varies in line with both corporate and personal
performance.

         For the year ended December 31, 2000, the annual bonus paid to each
executive director was a percentage of salary based on:


                                      -39-


<PAGE>

     o    with respect to Messrs. Bungey and D'Angelo, the performance of
          Cordiant;

     o    with respect to Messrs. Smith, Whitehead and de Yturbe, by reference
          to a combination of the performance of Cordiant and the business that
          each director heads; and

     o    with respect to Mr. Schoning, on the performance of Scholz & Friends.

         Miss Williams participates in a discretionary bonus scheme based on the
performance of Cordiant.

For all executive directors and officers, only basic salary is pensionable.
Their pension arrangements are as follows:

     o    Mr. Bungey is a member of a small self-administered scheme to which
          Cordiant contributes 6 percent of his salary plus L15,000 per annum;

     o    Mr. D'Angelo is entitled to an annual pension contribution of $7,500
          and is also a member of the Bates Advertising USA Inc. 401K plan.

     o    Mr. de Yturbe is not a member of any company pension scheme. However,
          pursuant to French legislation, his salary is subject to state pension
          scheme contributions, which are included in the table set forth above.

     o    Mr. Scott receives a company contribution equivalent to 10 percent of
          his salary, which is paid into a personal pension scheme.

     o    Mr. Whitehead is a member of the Bates Advertising USA Inc. 401K plan
          and is also entitled to a pension from the age of 60 from his previous
          employer, Bates Canada Inc.

     o    Miss Willliams receives a company contribution equivalent to 6 percent
          of salary, which is paid into a group money purchase plan.

         The Board of Directors agrees on the remuneration of non-executive
directors for their services as members of the Board and its committees within
the limits imposed by Cordiant's Articles of Association. The Board retains
discretion to approve additional payments for special services. The
non-executive directors do not participate in any of the incentive or benefit
schemes of the Group.

Service Agreements

         With the exception of Peter Schoning, no executive director has a
service agreement containing a notice period exceeding one year.

         Mr. Schoning has a service agreement with Cordiant in respect of his
directorship of Cordiant which may be terminated at any time on 12 months'
notice. His underlying contract with Scholz & Friends includes a notice period
of at least one-year ending on a financial year-end and may not be terminated
until December 2002.

         With the exception of Mr. Schoning, if an executive director's service
agreement is terminated by Cordiant within two years of a change of control, the
executive is entitled to payment based on up to two years' remuneration.


                                      -40-


<PAGE>

         The Committee has considered the notice periods and termination
arrangements in the light of the Combined Code and believes that it is
appropriate for the executive directors to have service agreements on such terms
taking into account their seniority and value to Cordiant, and the changes
undergone by Cordiant in recent years.

         The arrangements for termination of a senior executive's contract are
decided by the Remuneration and Nominations Committee after consultation with
the Group's Chief Executive Officer. In some cases the Remuneration and
Nominations Committee will recommend a clean break with the individual concerned
and a one-off payment will be made at the time of termination based on that
individual's contract. In other cases the Remuneration and Nominations Committee
will recommend that the contractual entitlement of the individual be paid in
installments following termination.

         The non-executive directors do not have a service agreement, but are
engaged under a letter of appointment. Professor Levitt has a letter of
appointment for a period of one year, which expires on December 14, 2001. Dr
Stomberg and Mr. Tyrrell are engaged for a period of three years ending on April
30, 2004, whilst Mr. Fishburn is engaged for a three-year period ending on
December 14, 2003.

Share Ownership

         The following table lists, as of June 1, 2001, the directors' and
officers' interests in Ordinary Shares, ordinary share options and equity
participation rights.

Directors' Interests

<TABLE>
<CAPTION>
                                    Beneficially Owned             Ordinary Share         Equity Participation
                                      Ordinary Shares                  Options                     Rights
                                    ------------------             --------------          -------------------
<S>                                     <C>                              <C>                         <C>
M. Bungey                               167,997                          509,809                     890,110
A. D'Angelo                                 960                          216,854                     593,401
J. de Yturbe                                  -                          260,996                     593,401
D. Fishburn                                   -                                -                           -
T. Levitt                                18,796                                -                           -
P. Schoning                              59,926                           72,500                     593,401
C. Scott*                                85,172                          488,821                           -
I. Smith                                      -                           35,000                     415,382
R. Stomberg                                   -                                -                           -
J. Tyrrell                                    -                                -                           -
W. Whitehead                                787                          222,426                     593,401
D Williams                                    -                           50,152                           -
-----------------
*Includes spouse's interests

</TABLE>

Equity Participation Plan

         Participants in the Equity Participation Plan pay a cash sum to
participate in the Plan and the benefits, if any, depend upon the performance of
the Group. Grantees of awards have a maximum of 120 days from invitation in
which to make payment to the trustee.

         Participants are eligible to receive shares if earnings per share
growth is higher than the annual increase in the UK Retail Price Index plus 2
percent over a three year period. If growth is below this hurdle rate,
participants lose their investment. Above this level, they may receive up to a
maximum of eight times the number of shares that could have been acquired with
the original investment depending on


                                      -41-


<PAGE>

how Cordiant's earnings per share growth ranks on a scale. To achieve maximum
allocation requires EPS growth of 25 percent compound per annum.

         One-half of shares vesting will normally be received by participants
after three years with the remainder issued one year later.

         One-half of awards to directors of Cordiant will vest depending on
earnings per share growth as described above. The other half will be determined
on total shareholder return compared with a group of major publicly quoted
advertising groups. The maximum number of shares will vest if Cordiant is first
or second of the comparator group. No new awards were made during 2000. At
December 31, 2000, there were 50 participants with awards over a maximum of
10,541,137 shares. The Plan expired in December 2000, and no further awards may
be granted thereunder.

Performance Share Option Scheme

         The Performance Share Option Scheme is similar to the Equity
Participation Plan. Options granted under the Scheme have an exercise price
equal to market value at the time of grant.

         Participants are required to agree to a salary or bonus sacrifice of up
to L50,000 over a three-year period. The sum payable is one-eleventh of
the exercise price of the options. This sacrifice is not offset against the
exercise price payable. Participants are eligible to exercise their options
depending on the performance of the Group over a three-year period. If earnings
per share growth are higher than the UK Retail Price Index plus 2 percent,
participants may exercise a proportion of the options based on a scale of
earnings per share growth. Full exercise requires earnings per share growth of
25 percent compound per annum over three years.

         One-half of the eligible options may normally be exercised after three
years with the remainder one-year later.

         Four new awards were made under the Scheme during the year whereby a
total of 47 employees were invited to participate in the Scheme. Options over
2,187,109 shares were granted subject to salary or bonus sacrifices amounting to
L653,502. At December 31, 2000, there were 152 participants holding
options over a maximum of 9,916,064 shares. The Scheme expired in December 2000
and no further options may be granted thereunder.

Zenith Scheme

         Cordiant has an incentive scheme for senior executives of Zenith. To
participate, executives invest in the Scheme by cash payment or salary or bonus
sacrifice. The Scheme is set up on the basis that a fixed monetary amount of
benefit is determined which will be delivered by a combination of options over
Cordiant Ordinary Shares and, if necessary, cash. Actual entitlement will be
determined by measuring the growth in Zenith's operating profit over a
three-year period. The Scheme expired in December 2000 and no further options
may be granted thereunder.

Sharesave 1995

         A savings-related share options scheme was in operation for UK
employees during 2000, though no new options could be granted under it. In 1995,
eligible employees were granted options linked to a five-year savings contract.
The exercise price was fixed at 80 percent of market value at the time of grant.
As part of the demerger process, employees of Saatchi & Saatchi holding these
options were issued parallel


                                      -42-


<PAGE>

unapproved options over Saatchi & Saatchi shares which were exercisable in lieu
of the original options with the unaccumulated savings and interest/bonus under
the Cordiant plc scheme. Employees of Zenith and The Facilities Group had
parallel options split 50:50 between Saatchi & Saatchi and Cordiant shares. The
original options under the Scheme and the parallel options over Cordiant shares
vested during the year.

Other Schemes

         Cordiant also has two executive share options schemes, which expired in
1997 or earlier, under which there are subsisting options. Options granted to
participants were issued at market value at the time of grant. Ordinary options
are exercisable only if, over any three-year period from the date of grant,
there is an increase of earnings per share of Cordiant of between 2 percent and
6 percent more than the increase in the Retail Price Index. Super options cannot
be exercised before the fifth anniversary of the date of grant and only then if
the growth in earnings per share from the date of grant has been sufficient to
place Cordiant in the top quartile of the FTSE 100 companies ranked by reference
to growth in earnings per share. Group employees who ceased to be full-time
employed by the Group as a result of the demerger in 1997 and employees of
Zenith and The Facilities Group, who held options under these Cordiant schemes,
were invited to cancel their options in return for replacement options split
50:50 between options over Cordiant shares and options over Saatchi & Saatchi
shares.

New Share Option Schemes

         Two new schemes have been developed, which will replace the Equity
Participation Plan and Performance Share Option Scheme. These schemes were
approved by Cordiant's shareholders on June 12, 2001.

         Under a new Executive Share Option Scheme two types of options may be
granted: market value options (for the majority of participants) and discounted
options (principally, but not exclusively, for executive directors of Cordiant).

         Participants who are granted discounted options must make a
non-refundable advance payment at the time of grant equivalent to 12.5 percent
of the market value of the Cordiant Ordinary Shares that are subject to the
option at the date of the grant. No advance payment is required for the market
value options.

         Options under the Executive Share Option Scheme will not normally be
exercisable unless the performance criteria set by the Remuneration Committee on
grant have been achieved. Options granted to participants who are not directors
of Cordiant will only be exercisable if the annual percentage growth in the
Group's earnings per share over the performance period exceeds both (a) the
annual growth in the UK Retail Price Index over the same period by more than 3
percent and (b) 5 percent per annum. The options will only be exercisable in
full if the Group's compound growth in earnings per share over the performance
period exceeds 20 percent per annum.

         Options granted to individuals who are Directors of Cordiant will, as
to 75 percent of Cordiant Ordinary Shares under option, be exercisable in
accordance with the above earnings per share targets and, in relation to the
other 25 percent, be exercisable based on the total shareholder return
performance of Cordiant measured against a comparator group initially comprising
24 similar companies. If Cordiant's performance is such as to place it in the
top quartile among that group of companies, all of that part of the option will
be exercisable. If Cordiant's performance is such as to place it below the
median, that part of the options will not be exercisable at all.


                                      -43-


<PAGE>

         Under the XM Plan, it is intended that CCG.XM Holdings Inc., ("XM") a
subsidiary of Cordiant, will have the ability to grant options to acquire
(whether by purchase or subscription) shares of XM to employees (including
officers and executive employees) and directors of XM and its subsidiaries and
affiliates. Options granted under the XM Plan will be either "incentive stock
options", which are intended to qualify for special tax treatment in the US, or
options that are not intended to be incentive stock options, referred to as
"non-qualified stock options." Option holders will be required to pay the option
exercise price in order to exercise the options. The option exercise price will
at least be equal to the fair market value of the underlying stock on the date
of grant of the option.

Employee Benefits Plans

         Cordiant employees are members of a number of pension schemes
throughout the world, but principally in the UK and the US. Cordiant currently
operates two principal UK pension schemes: a defined benefits scheme (the
Cordiant Group Pension Scheme) and a defined contribution scheme (the Cordiant
Group Money Purchase Plan). Since the demerger, Cordiant employees have remained
members of these schemes.

         Employees of the Saatchi & Saatchi Group and Zenith continued their
membership in both schemes during the year pursuant to Inland Revenue approval.
Cordiant and Saatchi & Saatchi agreed that, at the end of a transitional period,
Saatchi & Saatchi's members within the two UK pension schemes would be given the
opportunity to transfer to new pension arrangements set up by Saatchi & Saatchi.
The transfer took effect on April 6, 2001. A transfer payment determined by the
trustee of the two UK pension schemes, having taken actuarial advice, will be
made once Inland Revenue approval has been obtained to the new Saatchi & Saatchi
pension arrangements in respect of the accrued rights under the relevant UK
pension scheme of those members who had requested a transfer. Employees of
Zenith will remain members of Cordiant's UK pension schemes.

Ownership Schemes

         Cordiant operated "ownership schemes" prior to the demerger, which
allocated "network shares" to key executives, the value of the network shares
increasing or decreasing in line with the network's performance against target.
These schemes were replaced by the Equity Participation Plan and the Performance
Share Option Scheme. Accrued benefits up to the date of the demerger were frozen
at 50 percent of the value at December 31, 1997 in respect of participants in
the Equity Participation Plan and the Performance Option Scheme and will be paid
to executives in future years in accordance with the terms of the schemes.

         Awards to directors and executive officers under the ownership schemes
were valued as follows:
<TABLE>
<CAPTION>
                                                   Value at                                  Value at
                                          December 31, 1999    2000 Cash Payment    December 31, 2000
                                          -----------------    -----------------    -----------------
                                                   L                       L                    L
<S>                                           <C>                     <C>                  <C>
Michael Bungey                                28,481                  14,240               14,241
Arthur D'Angelo                               17,090                   8,545                8,545
Jean de Yturbe                                28,484                  14,242               14,242
Peter Schoning                                28,484                  14,242               14,242
Ian Smith                                     10,221                     -                 10,221
William Whitehead                             17,090                   8,545                8,545

</TABLE>
                                      -44-


<PAGE>

No awards were made under the ownership schemes during 2000.

         As of June 1, 2001, the number of Ordinary Shares subject to options
granted to the directors and executive officers of Cordiant was 1,856,558.

         The table below describes the various share options awarded to the
directors and executive officers of Cordiant as of June 1, 2001.

<TABLE>
<CAPTION>
                    Original Date      Exercise Price
                         of Grant         (pence)         Number of shares      Exercise Period
                    -------------      --------------     ----------------      ---------------
<S>                  <C>                     <C>             <C>                 <C>
M Bungey             03/05/1995                73             67,498             May 98-May 05
                     11/08/1995                95             67,497             Aug 98-Aug 05
                     10/04/1992               107             74,814             Apr 97-Apr 02
                     19/04/1996               130            150,000             Apr 01-Apr 03
                     23/04/1997               131             75,000             Apr 02-Apr 04
                     23/04/1997               131             75,000             Apr 00-Apr 07

A D'Angelo           03/05/1995                73             33,427             May 98-May 05
                     11/08/1995                95             33,427             Aug 98-Aug 05
                     19/04/1996               130             37,500             Apr 99-Apr 06
                     19/04/1996               130             37,500             Apr 01-Apr 03
                     23/04/1997               131             37,500             Apr 02-Apr 04
                     23/04/1997               131             37,500             Apr 00-Apr 07

J de Yturbe          03/05/1995                73             40,498             May 98-May 05
                     11/08/1995                95             40,498             Aug 98-Aug 05
                     19/04/1996               130             45,000             Apr 99-Apr 06
                     19/04/1996               130             45,000             Apr 01-Apr 03
                     23/04/1997               131             45,000             Apr 02-Apr 04
                     23/04/1997               131             45,000             Apr 00-Apr 07


P Schoning           19/04/1996                 130           17,500             Apr 01-Apr 03
                     23/04/1997                 131           27,500             Apr 02-Apr 04
                     23/04/1997                 131           27,500             Apr 00-Apr 07

C Scott              03/05/1995                  73          109,926             May 00-May 02
                     10/04/1992                 107           68,605             Apr 95-Apr 02
                     10/04/1992                 107           10,290             Apr 95-Apr 02
                     19/04/1996                 130          150,000             Apr 01-Apr 03
                     23/04/1997                 131           75,000             Apr 00-Dec 04
                     23/04/1997                 131           75,000             Apr 02-Dec 04

I Smith              23/04/1997                 131           17,500             Apr 02-Apr 04
                     23/04/1997                 131           17,500             Apr 00-Apr 07
</TABLE>
                                      -45-
<PAGE>
<TABLE>
<CAPTION>
                    Original Date      Exercise Price
                         of Grant         (pence)         Number of shares      Exercise Period
                    -------------      --------------     ----------------      ---------------
<S>                  <C>                     <C>             <C>                 <C>

W Whitehead          03/05/1995                  73           21,213             May 98-May 05
                     11/08/1995                  95           21,213             Aug 98-Aug 05
                     19/04/1996                 130           45,000             Apr 99-Apr 06
                     19/04/1996                 130           45,000             Apr 01-Apr 03
                     23/04/1997                 131           45,000             Apr 02-Apr 04
                     23/04/1997                 131           45,000             Apr 00-Apr 07

D Williams           11/03/1999                 165           50,152             Mar 02-Mar 09

</TABLE>

         During 2000, Cordiant Ordinary Shares traded on the London Stock
Exchange opened at 293.0p, with a high of 406.0p, and a low of 230.5p, and
closed at 277.0p on December 31, 2000.

         During the year, Mr. Schoning exercised options over a total of 59,926
shares on August 18, 2000, which, based on a market value of 344.5p on that day,
gave rise to a gain of L148,056.17.

         Other than as disclosed above, no options were granted to, or exercised
by, serving directors during the year, and no options lapsed during the year in
respect of such directors.

Employees and Labor Relations

         As of December 31, 2000, Cordiant had approximately 8,367 employees
worldwide. The following table sets forth the number of employees at December
31, 2000, 1999 and 1998.
<TABLE>
<CAPTION>
                                                         Employees at December 31,
                                                         -------------------------
                                                    2000             1999           1998
                                                    ----             ----           ----
<S>                                                 <C>             <C>             <C>
United Kingdom                                      1,878             520             523
North America                                       1,491             941             882
Continental Europe                                  2,286           1,850           1,676
Asia Pacific and Latin America                      2,712           1,842           1,823
                                                    -----           -----           -----
Average number of employees of the Group            8,367           5,153           4,904
</TABLE>

         The success of Cordiant's advertising and media services businesses,
like that of all communication groups, depends largely on the skill and
creativity of their personnel and their relationships with clients. Cordiant
believes that its relationships with its employees are good.

Item 7.  Major Shareholders and Related Party Transactions.

Major Shareholders

         The Company is not owned or controlled by any government or by any
other corporation.

         There is one holder of 5 percent or more of the issued Ordinary Share
capital of Cordiant as of June 1, 2001:


                                      -46-


<PAGE>


------------------------------ -------------------------- ----------------------
Name                           Ordinary Share Capital     Percentage Held
------------------------------ -------------------------- ----------------------


GTCR Fund VILP                 21,071,823                 5 percent
------------------------------ -------------------------- ----------------------


         Cordiant believes that, as of June 1, 2001, 3 percent of the
outstanding Cordiant Ordinary Shares, which are represented by American
Depositary Shares, were held in the US by 644 record holders and 11 percent of
the Cordiant Ordinary Shares were held in the US by approximately 111 record
holders. Cordiant estimates that, as of June 1, 2001, an additional 8 percent of
Cordiant Ordinary Shares are owned beneficially by US persons giving an
aggregate US holding of 22 percent.

Related Party Transactions

         The following contracts were entered into by Cordiant with related
parties during 2000:

         In January 2000, the Group acquired the remaining 10 percent interest
in Scholz & Friends, in Germany, for consideration of DEM 9.0 million
(L2.9 million).

         In January 2000, the Group acquired a further 19 percent interest in
Bates Yomiko, in Japan, for consideration of JPY 19.0 million (L0.1
million).

         In December 2000, the Group acquired a further 19 percent interest in
NewComm Bates, in Brazil, for consideration of BRL 23.7 million (L8.1
million).

         During 2000 and 1999, Cordiant conducted transactions in the ordinary
course of business with joint ventures and associated undertakings on arm's
length terms.

         The balances at December 31, 2000 with joint ventures and associated
undertakings are disclosed in Notes 10 and 17.

Item 8.  Financial Information.

Consolidated Financial Statements

         See  "Item 18.  Financial Statements."

Legal Proceedings

         There are no material legal or arbitration proceedings involving the
Group, including governmental proceedings pending or known to be contemplated.

Dividend Policy

         Dividends recommended by Cordiant's Board in respect of a particular
fiscal year are paid in the following fiscal year if approved by Cordiant's
shareholders.

         Under UK company law, the ability to pay a dividend is dependent on
whether the Company has distributable reserves. At December 31, 2000, the
Company had distributable reserves of L38.5 million.


                                      -47-


<PAGE>

         The Board of Directors makes dividend determinations taking into
account the Group's results of operations, investment requirements, cash flow
after repayment of debt and legal and contractual restrictions, if any.
Consideration is given to the declaration of foreign income dividends, if
appropriate.

Significant Changes

         Acquisitions

         The material acquisitions that Cordiant has made in the period from
December 31, 2000 to June 20, 2001 are described in "Item 4. Information on the
Company--Acquisitions & Disposals."

         Current Trading

         The performance of the Group in 2001 is discussed in "Item 5.
Operating and Financial Review" and Prospects--Recent Developments."

         Financing

         On April 5, 2001, the Group issued $175.0 million (L117.4
million) of 7.61% Guaranteed Senior Notes in a private placement to
institutional investors. The Guaranteed Senior Notes will mature in April 2011
and have an average life of eight years taking into account scheduled repayments
of $35.0 million (L23.5 million) per year, beginning in April 2007. The
proceeds of this issuance were used to repay and cancel committed bank
facilities of $175.0 million (L117.4 million) maturing in November 2001.
See "Item 10. Additional Information--Material Contracts."

Item 9.  The Offer and Listing

         Cordiant Ordinary Shares are quoted on the London Stock Exchange. The
table below sets forth, for the quarters indicated, the reported high and low
middle market quotations for the Ordinary Shares on the London Stock Exchange
based on its Daily Official List. Such quotations have been translated in each
case into US dollars at the noon buying rate on each of the respective dates of
such quotations.
<TABLE>
<CAPTION>

                                                          Pence Per              Translated into
                                                        Ordinary Share              US Dollars
                                                      High          Low         High          Low
                                                      ----          ---         ----          ---
      <S>                                            <C>           <C>         <C>           <C>
      Annual highs and lows
      1996                                           138.0          90.0       2.09          1.47
      1997                                           135.5          98.5       2.22          1.59
      1998                                           136.0          88.5       2.27          1.46
      1999                                           301.5         107.0       4.89          1.77
      2000                                           406.0         230.5       6.46          3.40

      Quarterly highs and lows
      1999     First Quarter                         167.0         107.5       2.72          1.78
               Second Quarter                        193.0         155.5       3.08          2.49
               Third Quarter                         198.0         165.0       3.10          2.55
               Fourth Quarter                        302.0         172.0       4.88          2.80

      2000     First Quarter                         406.0         267.0       6.47          4.40

</TABLE>
                                      -48-


<PAGE>
<TABLE>
<CAPTION>
                                                          Pence Per              Translated into
                                                        Ordinary Share              US Dollars
                                                      High          Low         High          Low
                                                      ----          ---         ----          ---
      <S>                                            <C>           <C>         <C>           <C>

               Second Quarter                        386.5         280.0       6.17          4.24
               Third Quarter                         374.5         259.0       5.67          3.83
               Fourth Quarter                        310.0         242.5       4.44          3.45

      2001     First Quarter                         293.5         240.0       4.38          3.43
               Second Quarter                        273.5         194.5       3.93          2.73
                 (through June 25, 2001)

      Monthly highs and lows
      2000     December                              291.5         244.0       4.27          3.51

      2001     January                               293.5         256.5       4.38          3.76
               February                              287.5         264.5       4.21          3.82
               March                                 284.0         240.0       4.15          3.43
               April                                 263.5         199.5       3.79          2.89
               May                                   273.5         240.0       3.93          3.43
               June (through June 25, 2001)          254.0         194.5       3.53          2.73
</TABLE>

         Cordiant Ordinary Shares trade in the US on the New York Stock Exchange
in the form of American Depositary Shares ("ADSs") which are evidenced by
American Depositary Receipts. Each ADS represents five Ordinary Shares. The
depositary for the ADSs is The Bank of New York. The table below sets forth the
high and low sales prices for the ADSs as reported in the New York Stock
Exchange-Composite Transactions.

                                                     US dollars per
                                                          ADS
                                                  High            Low
                                                  ----            ---

Annual highs and lows                             6 3/8           4
1996                                              9 1/2           4 5/8
1997                                             12 1/4           7
1998                                             24 1/2           9 1/4
1999                                             32 1/4          16 7/8
2000

Quarterly highs and lows
1999
      First Quarter                              13 5/8           9 1/4
      Second Quarter                             15 1/2          12 7/16
      Third Quarter                              15 1/2          12 3/4
      Fourth Quarter                             24 7/16         14

2000
      First Quarter                              32 3/8          22


                                      -49-


<PAGE>

                                                     US dollars per
                                                          ADS
                                                  High            Low
                                                  ----            ---

      Second Quarter                             30 7/8          21 3/16
      Third Quarter                              28              18 6/8
      Fourth Quarter                             21 7/8          17 1/8

2001
      First Quarter                              21 1/5          18 1/5
      Second Quarter                             19 9/20         14 1/10
           (through June 25, 2001)

Monthly highs and lows
2000  December                                   21              17
2001  January                                    22              18 3/4
      February                                   21              18 7/10
      March                                      20              17 1/5
      April                                      19 1/10         14 1/10
      May                                        19 9/20         17 1/5
      June (through June 25, 2001)               17 3/5          14 1/10


Item 10.  Additional Information

Memorandum and Articles of Association

          Cordiant is registered in England and Wales and its registered number
at the Registrar of Companies for England and Wales is 1320869. The principal
objects of the Company are set out in Clause 4 of its Memorandum of Association
and are, among other things, to carry on the businesses of a holding company.

          The Articles of Association of the Company ("the Articles") contain
provisions, among other things, to the following effect:

         Directors

         Voting by Directors on Proposals with Material Interest.

         A Director may not vote, or count towards the quorum in respect of any
contract or arrangement or other proposal in which he (or any person "connected
with" him, as defined in the Companies Act) has any material interest, otherwise
then by virtue of his interests in shares or other securities of, or otherwise
in or through the Company. This prohibition does not apply to any of the
following matters, in the absence of some other material interest:-

         (i) the giving of any security, guarantee or indemnity in respect of
money lent or obligations incurred by the Director or any other person at the
request of, or for the benefit of, the Company or any of its subsidiaries;


                                      -50-


<PAGE>

         (ii) any proposal concerning an offer of shares or other securities of
the Company or any of its subsidiaries in which the Director or connected person
is entitled to participate as a holder of securities, or is interested as a
participant in the underwriting;

         (iii) any proposal concerning any other company in which the Director
is interested, provided that he is not the holder of or beneficially interested
in one per cent or more of any class of the equity shares of that company or of
the voting rights in that company;

         (iv) any proposal concerning the adoption, modification or operation of
any arrangement for the benefit of employees of the Company or any of its
subsidiaries (including a retirement benefits scheme or employee share scheme
under which he may benefit) and which does not confer on any Director any
privilege or advantage not generally accorded to the employees to whom such
arrangement relates; and

         (v) any proposal concerning the purchase or maintenance of any
insurance policy under which he may benefit.

         The Companies Act requires a Director of a Company who is in any way
interested in a contract or proposed contract with the Company to declare the
nature of his interest at a meeting of the Directors.

         Under the Company's Articles of Association, the Directors have power
to determine the remuneration paid to executive directors for their services as
employees of the Company and to determine the fees payable to non-executive
directors, provided that unless otherwise approved by shareholders non-executive
directors' fees may not exceed a basic fee of L20,000 per director per
annum, together with specified amounts for attendance at meetings/service on
committees. Pursuant to the Combined Code appended to the Listing Rules of the
U.K. Listing Authority, the Directors' powers of determining the remuneration of
executive directors have been delegated to the Remuneration and Nominations
Committee of the Board, consisting solely of non-executive directors.

         Borrowing Power Exercisable by Directors.

         The Directors may exercise all of the powers of the Company to borrow
money, provided that the Company's Articles of Association require the Directors
to restrict the borrowings of the Company, and to exercise all voting and other
rights or powers of control in relation to its subsidiaries, so as to procure
(as far as they are able in the case of subsidiaries) that the aggregate
principal amount for the time being outstanding of all monies borrowed by the
Company and its subsidiaries (exclusive of intra-group borrowings) shall not at
any time, without the approval of an ordinary resolution of shareholders, exceed
four times the aggregate of the amount paid up or credited as paid up on the
share capital of the Company and the amount standing to the credit of the
consolidated capital and revenue reserves of the Company and its subsidiaries,
all as shown by the latest audited consolidated balance sheet of the Company and
its subsidiaries, but after making certain adjustments prescribed by the
Articles.

         Qualification of Directors.

         There is no age limit applicable to the Directors of the Company. There
is no requirement that a person hold any shares in the Company in order to
qualify as a Director.

         Election of Directors.


                                      -51-


<PAGE>

         At the Annual General Meeting of the Company in every year, one third
of the Directors (or the nearest to one third if their number is not a multiple
of three), are required to retire from office, but are eligible for re-election.
The Directors to retire in each year are those who have been longest in office
since their last election, but as between persons who became Directors on the
same day, those to retire are determined by lot or as otherwise agreed among
themselves. Directors appointed since the last Annual General Meeting are also
required to retire from office, but are eligible for re-election.

         Rights of Cordiant Ordinary Shares

          i.   as to voting: subject to disenfranchisement in the event of (a)
               non-payment of calls or other monies due and payable in respect
               of Cordiant Ordinary Shares and (b) non-compliance with a
               statutory notice requiring disclosure as to beneficial ownership,
               and subject to any special terms as to voting upon which any
               shares may for the time being be held (as to which there are none
               at present), upon a show of hands every member present in person
               or (in the case of a corporate member) by representative, shall
               have one vote and upon a poll every member present in person, by
               representative ( in the case of a corporate member) or by proxy
               shall have one vote for every share held by him;

          ii.  as to dividends: subject to the Statutes (as defined in the
               Articles) and to the rights of the holders of any shares entitled
               to any priority, preference or special privileges and the terms
               of issue of any shares, all dividends shall be declared and paid
               to the members in proportion to the amounts paid up or credited
               as paid up on the shares held by them respectively;

          iii. as to return of capital: on a winding-up, the assets remaining
               after payment of the debts and liabilities of the Company and the
               costs of the liquidation, shall, subject to the rights of the
               holders of shares (if any) issued upon special conditions, be
               applied first in repaying to the members the amounts paid up on
               such shares held by them, and the balance (if any) shall be
               distributed among the members in proportion to the number of
               shares held by them;

          iv.  as to liability to further capital calls: the Directors may make
               calls upon the shareholders in respect of any amounts unpaid on
               their shares, while shares that are fully paid, or credited as
               fully paid are not subject to further calls.

          Modification of the share rights

          If at any time the capital is divided into different classes of
shares, the rights attached to any class or any of such rights (unless otherwise
provided by the terms of issue of the shares of that class) may, subject to the
provisions of the Act, be modified, abrogated or varied with the consent in
writing of the holders of three-fourths of the issued shares of that class or
with the sanction of an extraordinary resolution passed at a separate general
meeting of the holders of the shares of that class, but not otherwise.

          Changes in share capital

          The Company may by ordinary resolution increase its capital by the
creation of new shares, consolidate its share capital, cancel any unissued
shares and sub-divide its shares. The Company may by


                                      -52-


<PAGE>

special resolution reduce its share capital, any capital redemption reserve and
any share premium account in any manner authorized by law.

          Transfer of shares: certificated

          All transfers of certificated shares must be in writing in the usual
common form or in any other form permitted by the Stock Transfer Act 1963 or
approved by the Directors. The instrument of transfer must be signed by or on
behalf of the transferor and, if the shares being transferred are not fully
paid, by or on behalf of the transferee. The Directors may in their absolute
discretion and without giving any reason refuse to register any transfer of
certificated shares which are not fully paid or on which the Company has a lien,
provided that where any such shares are admitted to the Official List, the
Directors may impose only such restrictions on transfer as are permitted by the
London Stock Exchange.

          Transfers of shares: uncertificated

          Subject to the Uncertificated Securities Regulations 1995 (SI 1995
No.95/3272) and the Articles, a member may transfer uncertificated shares in any
manner which is permitted by the Statutes (as defined in the Articles) and is
from time to time approved by the Directors. The Directors may, in their
absolute discretion and without giving any reason, refuse to register a transfer
of uncertificated shares when permitted by the statutes.

          Unclaimed dividends

          Any dividend unclaimed after a period of 12 years from the date such
dividend became due for payment shall be forfeited and shall revert to the
Company.

          Untraced shareholders

          Subject to the provision of the Statutes (as defined in the Articles),
the Company may, after advertising its intention and fulfilling various other
requirements, sell at the best price reasonably obtainable, any shares of a
member or person entitled to those shares by transmission provided that, for a
period of 12 years during which period the Company has paid at least three
dividends none of which has been claimed, no cheque or warrant sent by the
Company to such member has been cashed and the Company has not received any
communication from the member in question or the person so entitled during that
12 year period and during the further period of three months after the date of
the advertisement. Upon such sale, the Company shall be regarded as indebted to
the former member or to any other person so entitled in an amount equal to the
net proceeds of sale.

          Non-UK shareholders

          There are no limitations in the Memorandum or Articles of Association
on the rights of non-UK shareholders to hold or exercise voting rights attaching
to Cordiant Ordinary Shares. However, a member who has no registered address
within the United Kingdom and has not given notice to the Company of an address
for notices in the United Kingdom shall not be entitled to receive any notices
from the Company.

          Restrictions on shareholders

          The Company may disenfranchise any holder of shares of the Company if
the Company has not received the information required in any notice issued by
the Company requiring the disclosure of interests in the shares specified in the
notice, within 14 days after service from such holder or any other person


                                      -53-


<PAGE>

appearing to be interested in those shares. If a shareholder holding 0.25
percent or more in nominal value of such shares has not complied with the notice
within 14 days after service, the Company may impose restrictions on such
shareholder which include not only disenfranchisement but also the withholding
of the right to receive dividends or other monies payable and, subject to the
Statutes, restrictions on the transfer of the shares in question. For
shareholders holding less than 0.25 percent in nominal value of such shares,
disenfranchisement is the only restriction which the Company may impose.

         Shareholder Meetings

         The Company is required to hold a general meeting each year as its
Annual General Meeting, in addition to other meetings (called Extraordinary
General Meetings) as the Directors think fit. The type of meeting will be
specified in the notice calling it. Not more than 15 months may elapse between
the date of one Annual General Meeting and the next.

         In the case of an Annual General Meeting, or an Extraordinary General
Meeting at which a Special Resolution will be proposed, 21 clear days' notice is
required. In other cases, 14 clear days' notice is required. A notice must
specify the place, the date and the hour of the Meeting and the general nature
of the business to be transacted.

         Disclosure of Share Holdings

         Cordiant's Articles of Association do not require shareholders to
disclose their share holdings. However, the Companies Act requires persons who
are interested in shares of a public company carrying voting rights to disclose
certain information about their interests if they are interested in shares
carrying 3% or more of the company's voting rights. In addition, under Section
212 of the Companies Act, the Company has power to issue notices requiring
persons it knows or has reasonable cause to believe to be interested in its
shares (or to have been so interested within the past three years) to provide
certain information about their interests.

Material Contracts

         Following is a summary of each contract, other than any contract
entered into in the ordinary course of business, for the two years immediately
preceding the date of this Report that is material to Cordiant.

         1. A Loan Agreement dated July 4, 2000 (the "Loan Agreement") pursuant
to which certain banks led by The Bank of New York and HSBC Investment Bank plc,
as Arrangers, agreed to advance to Cordiant and certain of its subsidiaries loan
facilities of up to $400,000,000 to be used for the purposes of re-financing
existing facilities, other general corporate purposes and paying costs and
expenses incurred in connection with the acquisition of Lighthouse. The Loan
Agreement provides for committed credit facilities at a rate between 0.7-1.25
percent over LIBOR, depending upon the Group's ability to achieve certain
financial ratios. Of these facilities, $225,000,000 ("Facility A") are available
until November 8, 2004 and the remaining $175,000,000 of the loan facilities
("Facility B") were initially available until November 7, 2000, which was
extended at Cordiant's option to November 7, 2001 and subsequently repaid and
canceled in April 2001. The proceeds of Cordiant's private placement of 7.61%
Guaranteed Senior Notes, described below, were used to repay and cancel the
amounts maturing under the Loan Agreement in November 2001.


                                      -54-


<PAGE>

         The Loan Agreement requires the Group to comply with financial and
other covenants. It also contains provisions whereby, on the occurrence of
certain specified events of default, the amount made available could be declared
immediately due and payable. These events of default include breach of
covenants, cross default by certain companies in the Group in respect of
indebtedness over a specified amount and a change of control of Cordiant. The
loan facilities are secured by guarantees from the principal companies of the
Group. The Loan Agreement has been filed as Exhibit 4.1 to this Report.

         2. On April 5, 2001, the Group issued $175.0 million (L117.4
million) of 7.61% Guaranteed Senior Notes in a private placement to
institutional investors. The Guaranteed Senior Notes mature in April 2011 and
have an average life of eight years taking into account scheduled repayments of
$35.0 million (L23.5 million) per year, beginning from April 2007. The
Guaranteed Senior Notes are secured by the guarantee of Cordiant and by the
guarantees of certain of its existing subsidiaries. The Guaranteed Senior Notes
include both affirmative and negative covenants. The affirmative covenants
include compliance with applicable laws, maintenance of relevant insurance
policies, maintenance of respective properties, payment of all relevant taxes
and claims, preservation of corporate existence, continuance of principal
businesses and deliverance of relevant subsidiary guarantors. The negative
covenants include restrictions on encumbrances, limitations on subsidiary
borrowings, maintenance of financial conditions, restrictions on subsidiary
asset dispositions, restrictions on mergers, consolidations and/or other similar
business transactions and limitations on transactions with affiliates. The Note
Purchase Agreement has been filed as Exhibit 4.2 to this Report.

         3. In September 2000, Cordiant acquired Lighthouse Global Network,
Inc., an international network of specialist communications and marketing
businesses. The purchase price for the acquisition included a payment of
L283.1 million paid by the issuance of Cordiant ADSs and Cordiant Ordinary
Shares and conversion of Lighthouse's employee options into options over
Cordiant Ordinary Shares. Cordiant may be required to make contingent cash
payments of up to L17.7 million, due in the years 2001 through 2005 based
on average earnings before interest, tax, depreciation, and amortization for the
preceding years for certain subsidiaries previously acquired by Lighthouse. The
Agreement and Plan of Merger and Amendment No. 1 to the Agreement and Plan of
Merger have been filed as Exhibits 4.3 and 4.4 to this Report.

         4. In March 2000, Cordiant acquired Healthworld Corporation, an
international healthcare marketing agency. The purchase price for the
acquisition included an initial payment of L148.3 million paid by the
issuance of Cordiant ADSs, Cordiant Ordinary Shares and the conversion of
Healthworld's employee options into options over Cordiant Ordinary Shares.
Cordiant may be required to make additional contingent cash payments of
L3.3 million, due in the years 2001 and 2002, based on average earnings
before interest, tax, depreciation, and amortization for the preceding years of
certain subsidiaries previously acquired by Healthworld. The Agreement and Plan
of Merger and Amendment No. 1 to the Agreement and Plan of Merger have been
filed as Exhibits 4.5 and 4.6 to this Report.

Exchange Controls

         There are no limitations on the rights of nonresident or foreign
persons to hold or vote Cordiant Ordinary Shares imposed by the laws of the UK
or by Cordiant's Articles other than those which are customary and generally
applicable to all shareholders. In particular, Article 151 of Cordiant's
Articles provides that a member who has no registered address within the UK and
has not notified Cordiant in writing of an address within the UK for the service
of notice, shall not be entitled to receive notice from Cordiant.


                                      -55-


<PAGE>

Taxation

US Federal Income Taxation

         The following is a summary of the principal US federal income tax
consequences that may be relevant with respect to the acquisition, ownership and
disposition of Ordinary Shares in Cordiant or ADSs. This summary addresses only
the US federal income tax considerations of holders that will hold the Ordinary
Shares or ADSs as capital assets. This summary does not address tax
considerations applicable to holders that may be subject to special tax rules,
such as financial institutions, insurance companies, real estate investment
trusts, regulated investment companies, grantor trusts, dealers or traders in
securities or currencies, tax-exempt entities, persons that received the
Ordinary Shares or ADSs as compensation for the performance of services, persons
that will hold the Ordinary Shares or ADSs as part of a "hedging" or
"conversion" transaction or as a position in a "straddle" for US federal income
tax purposes, persons that have a "functional currency" other than the US dollar
or holders that own (or are deemed to own) 10 percent or more (by voting power
or value) of the stock of Cordiant. Moreover, this summary does not address the
US federal estate and gift or alternative minimum tax consequences of the
acquisition, ownership and disposition of Ordinary Shares or ADSs. This summary
(i) is based on the Code, US Treasury Regulations and judicial and
administrative interpretations thereof, in each case as in effect and available
on the date of this Annual Report and (ii) is based in part on the
representations of the Depositary and the assumption that each obligation in the
Deposit Agreement and any related agreement will be performed in accordance with
its terms. All of the foregoing are subject to change, which change could apply
retroactively and could affect the tax consequences described below.

         The US Treasury Department has expressed concern that depositaries for
American depositary receipts, or other intermediaries between the holders of
shares of an issuer and the issuer, may be taking actions that are inconsistent
with the claiming of US foreign tax credits by US holders of such receipts or
shares. Accordingly, the analysis regarding the availability of a US foreign tax
credit for UK taxes and sourcing rules described below could be affected by
future actions that may be taken by the US Treasury Department.

         For purposes of this summary, a "US Holder" is a beneficial owner of
Ordinary Shares or ADSs that, for US federal income tax purposes, is: (i) a
citizen or resident of the US, (ii) a partnership or corporation created or
organized in or under the laws of the US or any state thereof (including the
District of Columbia), (iii) an estate the income of which is subject to US
federal income taxation regardless of its source or (iv) a trust if such trust
validly elects to be treated as a US person for US federal income tax purposes
or if (x) a court within the US is able to exercise primary supervision over its
administration and (y) one or more US persons have the authority to control all
of the substantial decisions of such trust. A "Non-US Holder" is a beneficial
owner of Ordinary Shares or ADSs that is not a US Holder.

         Each holder should consult its own tax advisor with respect to the US
federal, state, local and foreign tax consequences of acquiring, owning or
disposing of Ordinary Shares or ADSs.

         Ownership of ADSs in General

         For US federal income tax purposes, a holder of ADSs generally will be
treated as the owner of the Ordinary Shares represented by such ADSs.


                                      -56-


<PAGE>

         Distributions

         The gross amount of any distribution by Cordiant of cash or property
(other than certain distributions, if any, of Ordinary Shares distributed pro
rata to all shareholders of Cordiant, including holders of ADSs) with respect to
Ordinary Shares or ADSs, before reduction for any UK taxes withheld therefrom,
will be includible in income by a US Holder as dividend income to the extent
such distributions are paid out of the current or accumulated earnings and
profits of Cordiant as determined under US federal income tax principles. Such
dividends will not be eligible for the dividends received deduction generally
allowed to corporate US Holders. To the extent, if any, that the amount of any
distribution by Cordiant exceeds Cordiant's current and accumulated earnings and
profits as determined under US federal income tax principles, it will be treated
first as a tax-free return of the US Holder's adjusted tax basis in the Ordinary
Shares or ADSs and thereafter as capital gain. Cordiant does not maintain
calculations of its earnings and profits under US federal income tax principles.

         Any such dividend paid in pounds sterling will be included in the gross
income of a US Holder in an amount equal to the US dollar value of the pounds
sterling on the date of receipt. The amount of any distribution of property
other than cash will be the fair market value of such property on the date of
distribution.

         Dividends received by a US Holder with respect to Ordinary Shares or
ADSs will be treated as foreign source income, which may be relevant in
calculating such holder's foreign tax credit limitation. Subject to certain
conditions and limitations, UK tax withheld on dividends may be deducted from
taxable income or credited against a US Holder's US federal income tax
liability. The limitation on foreign taxes eligible for credit is calculated
separately with respect to specific classes of income. For this purpose,
dividends distributed by Cordiant generally will constitute "passive income,"
or, in the case of certain US Holders, "financial services income."

         Subject to the discussion below under "Backup Withholding Tax and
Information Reporting Requirements," a Non-US Holder of Ordinary Shares or ADSs
generally will not be subject to US federal income or withholding tax on
dividends received on Ordinary Shares or ADSs, unless such income is effectively
connected with the conduct by such Non-US Holder of a trade or business in the
US.

         Sale or Exchange of Ordinary Shares or ADSs

         A US Holder generally will recognize gain or loss on the sale or
exchange of Ordinary Shares or ADSs equal to the difference between the amount
realized on such sale or exchange and the US Holder's adjusted tax basis in the
Ordinary Shares or ADSs. Such gain or loss will be capital gain or loss. In the
case of a non-corporate US Holder, the maximum marginal US federal income tax
rate applicable to such gain will be lower than the maximum marginal US federal
income tax rate applicable to ordinary income if such US Holder's holding period
for such Ordinary Shares or ADSs exceeds one year and will be further reduced if
such holding period exceeds five years. Gain or loss, if any, recognized by a US
Holder generally will be treated as US source income or loss for US foreign tax
credit purposes. The deductibility of capital losses is subject to limitations.

         The initial tax basis of Ordinary Shares to a US Holder will be the US
dollar value of the pounds sterling denominated purchase price determined on the
date of purchase. If the Ordinary Shares are treated as traded on an
"established securities market," a cash basis US Holder (or, if it elects, an
accrual basis US Holder) will determine the dollar value of the cost of such
Ordinary Shares by translating the amount paid at the spot rate of exchange on
the settlement date of the purchase. The conversion of US dollars to pounds


                                      -57-


<PAGE>

sterling and the immediate use of that currency to purchase Ordinary Shares
generally will not result in taxable gain or loss for a US Holder.

         With respect to the sale or exchange of Ordinary Shares, the amount
realized generally will be the US dollar value of the payment received
determined on (i) the date of receipt of payment in the case of a cash basis US
Holder and (ii) the date of disposition in the case of an accrual basis US
Holder. If the Ordinary Shares are treated as traded on an "established
securities market," a cash basis taxpayer (or, if it elects, an accrual basis
taxpayer) will determine the US dollar value of the amount realized by
translating the amount received at the spot rate of exchange on the settlement
date of the sale.

         Subject to the discussion below under "Backup Withholding Tax and
Information Reporting Requirements," a Non-US Holder of Ordinary Shares or ADSs
generally will not be subject to US federal income or withholding tax on any
gain realized on the sale or exchange of such Ordinary Shares or ADSs unless (i)
such gain is effectively connected with the conduct by such Non-US Holder of a
trade or business in the US or (ii) in the case of any gain realized by an
individual Non-US Holder, such holder is present in the US for 183 days or more
in the taxable year of such sale or exchange and certain other conditions are
met.

         Backup Withholding Tax and Information Reporting Requirements

         US backup withholding tax and information reporting requirements
generally apply to certain payments to certain non-corporate holders of stock.
Information reporting generally will apply to payments of dividends on, and to
proceeds from the sale or redemption of, Ordinary Shares or ADSs made within the
US to a holder of Ordinary Shares or ADSs (other than an "exempt recipient",
including a corporation, a payee that is not a US person that provides an
appropriate certification and certain other persons). A payor will be required
to withhold 31 percent of any payments of dividends on, or the proceeds from the
sale or redemption of, Ordinary Shares or ADSs within the US to a holder (other
than an "exempt recipient") if such holder fails to furnish its correct taxpayer
identification number or otherwise fails to comply with, or establish an
exemption from, such backup withholding tax requirements.

         In the case of such payments made within the US to a foreign simple
trust, a foreign grantor trust or a foreign partnership (other than payments to
a foreign simple trust, a foreign grantor trust or a foreign partnership that
qualifies as a "withholding foreign trust" or a "withholding foreign
partnership" within the meaning of such US Treasury Regulations and payments to
a foreign simple trust, a foreign grantor trust or a foreign partnership that
are effectively connected with the conduct of a trade or business in the US),
the beneficiaries of the foreign simple trust, the persons treated as the owners
of the foreign grantor trust or the partners of the foreign partnership, as the
case may be, will be required to provide the certification discussed above in
order to establish an exemption from backup withholding tax and information
reporting requirements. Moreover, a payor may rely on a certification provided
by a payee that is not a US person only if such payor does not have actual
knowledge or a reason to know that any information or certification stated in
such certificate is incorrect.

         THE ABOVE SUMMARY IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF
ALL TAX CONSEQUENCES RELATING TO ACQUISITION, OWNERSHIP AND DISPOSITION OF
ORDINARY SHARES OR ADSs. HOLDERS OF ORDINARY SHARES OR ADSs SHOULD CONSULT THEIR
OWN TAX ADVISORS CONCERNING THE TAX CONSEQUENCES OF THEIR PARTICULAR SITUATIONS.


                                      -58-

<PAGE>

UK Tax Consequences

         The following is a summary of certain UK tax consequences generally
applicable to a beneficial owner of American Depositary Receipts ("ADRs") or
Ordinary Shares in the Company who is resident in the United States and not
resident in the United Kingdom (a "US Holder") for the purposes of the current
double taxation convention on income and capital gains between the United States
and the United Kingdom (the "Convention").

         Subject to the following paragraph, this summary is based on current UK
tax law and practice as of the date of this filing and is subject to any changes
in UK tax law and practice (including changes in the Convention) occurring after
that date. As the following discussion is only a general summary, it does not
purport to address all potential tax consequences for all types of investors
and, consequently, its applicability will depend upon the particular
circumstances of individual investors. Investors should, therefore, consult
their own tax advisers about their UK tax position in relation to the Company
including the particular tax consequences to them of owning and disposing of
ADRs or Ordinary Shares.

         The discussion of UK tax is based on current UK tax law as potentially
amended by the Finance Bill 2001. The Chancellor of the Exchequer's Budget was
delivered on March 7, 2001, containing proposals for enactment in the Finance
Act 2001.

         United Kingdom Taxation of Dividends and Refunds of Tax Credits

         For the purposes of the Convention and for the purposes of the United
States Internal Revenue Code of 1986, as amended (the "Code"), the holders of
the ADRs should be treated as the owners of the underlying Ordinary Shares
represented by the American Depositary Shares ("ADSs") that are evidenced by
such ADRs.

         The payment by the Company of a dividend in respect of the Ordinary
Shares generally gives rise to a tax credit in the hands of shareholders who are
UK resident individuals at the rate of 10 percent of the sum of the cash
dividend and the tax credit.

         Under the Convention, certain US Holders who receive a dividend from a
UK company are entitled in certain circumstances to claim from the Inland
Revenue payment of the tax credit or part of the tax credit (a "Tax Credit
Refund") to which a UK resident individual would be entitled, subject to a
withholding tax. However, with the tax credit rate of 10 percent, the
withholding tax will eliminate or virtually eliminate the Tax Credit Refund. In
view of this, the availability of Tax Credit Refunds under the Convention is not
discussed any further in this summary. US Holders should consult their own tax
advisers as to the availability or otherwise of Tax Credit Refunds.

         The Convention further provides, subject to various exceptions and
limitations set our therein, that, although dividends paid by a UK resident
company may be taxed in the UK, if the beneficial owner of such a dividend is a
US Holder, the tax so charged is not to exceed the tax withheld from the Tax
Credit Refund.

         United Kingdom Taxation of Capital Gains

         Holders of ADRs or Ordinary Shares who are US citizens or residents of
the United States for US federal income tax purposes, and who are not resident
nor ordinarily resident in the United Kingdom for UK income tax purposes, will
not normally be liable to UK taxation of capital gains arising on the disposal
or deemed disposal of their ADRs or Ordinary Shares, unless the ADRs or Ordinary
Shares are held in connection with a trade, profession or vocation carried on in
the UK through a branch or agency or, in certain circumstances, their


                                      -59-


<PAGE>

non-UK residence is only temporary. However, US citizens and residents holding
ADRs or Ordinary Shares may be liable for taxation of such gains under the laws
of the United States.

         United Kingdom Inheritance and Gift Tax

         UK Inheritance Tax ("IHT") is a tax charged, broadly, on the value of
an individual's estate at his death, upon certain transfers of value (e.g.
gifts) made by individuals during their lifetime and on certain transfers of
value involving trusts and closely held companies. A transfer of value made
during an individual's lifetime may lead to an immediate liability to IHT (e.g.
a transfer into discretionary trust), or it may be potentially exempt (e.g. an
outright gift to another individual), in which case it will only become
chargeable if the donor dies within 7 years. The transfer of value which is
deemed to occur on death is an immediately chargeable transfer of value. Special
rules apply to assets held in trusts, gifts out of which the donor reserves a
benefit and gifts to or from closely held companies, which are not discussed
herein.

         Many chargeable transfers of value do not in fact result in a charge to
tax because IHT is charged at a "zero-rate" on transfers of value up to
L234,000 (for chargeable transfers made on or after April 6, 2000). The
March 2001 Budget has proposed that this should be increased to L242,000
as from April 6, 2001. In simple terms, the value of all immediately chargeable
transfers made within the seven year period before the transfer under
consideration are aggregated with the value of that transfer in determining
whether the limit of the L234,000 (or L242,000) "zero-rate band" has
been reached. For transfers of value which (in accordance with the aggregation
principle) go beyond the limit of the zero rate band, the rates of tax are 20
percent on lifetime chargeable transfers and 40 percent on transfers on, or
within the period of three years before, death (with modified rules applying to
transfers within the period from seven to three years before death).

         IHT is chargeable upon the worldwide assets of individuals who are
domiciled or deemed to be domiciled in the United Kingdom, and upon the UK
situate assets of individuals domiciled elsewhere.

         Accordingly, an individual who is domiciled in the United States and is
not deemed to be domiciled in the United Kingdom for IHT purposes is only within
the scope of IHT to the extent of his UK situate assets. These will include
Ordinary Shares in the Company which are registered in the United Kingdom. It is
understood to be the Inland Revenue's normal practice to treat ADRs representing
shares in UK companies as assets situated in the United Kingdom for IHT
purposes.

         The rules outlined above will, in many cases, be modified by the US-UK
Convention on Inheritance and Gift Taxes. In general, an individual who is
domiciled in the US for the purposes of that convention and who is not a UK
national will not be subject to IHT in relation to Ordinary Shares in a UK
company or ADRs representing Ordinary Shares in a UK company on death or on a
lifetime gift, provided that any gift or estate tax due in the USA is paid and
that the Ordinary Shares or ADRs are not part of the business property of a
permanent establishment in the UK or part of the assets of a fixed UK base used
by the holder for the performance of services.

         In the exceptional case where the Ordinary Shares or ADRs are subject
both to IHT and to US federal gift or estate tax, the gift tax convention
provides a credits system designed to avoid double taxation.


                                      -60-


<PAGE>

         United Kingdom Stamp Duty and Stamp Duty Reserve Tax

         Transfers of  Ordinary Shares for a consideration

         UK stamp duty is payable ad valorem on certain documents or instruments
conveying or transferring shares or securities (including Ordinary Shares in the
Company) on sale and UK stamp duty reserve tax ("SDRT") is imposed on agreements
for the transfer of certain shares and securities (including Ordinary Shares in
the Company) for a consideration in money or money's worth. The charge is
normally at the rate of 0.5 percent of the amount or value of the consideration
given for the transfer (with rounding up, in the case of stamp duty, to the
nearest multiple of L5). Stamp duty and SDRT are generally payable by the
purchaser but SDRT can in certain circumstances be collected from persons other
than the purchaser (e.g., certain brokers and market makers). The charge to SDRT
is normally incurred on the day ("the relevant day") on which the agreement is
made or, if later, becomes unconditional and it normally becomes payable on the
seventh day of the month following that in which it is incurred. However, if the
SDRT is paid and at any time on or within six years after the relevant day the
agreement is completed by a duly stamped transfer, a claim can be made within
that six year period for repayment of the SDRT and, to the extent that it has
not been paid, the charge will be cancelled.

         Consequently, transfers of, or agreements to transfer, Ordinary Shares
in the Company will normally be subject to ad valorem stamp duty or SDRT.

         The electronic transfer system known as CREST permits shares to be held
in uncertificated form and to be transferred without a written instrument. The
absence of a written instrument of transfer results in such paperless transfers
generally being liable to SDRT rather than stamp duty. Special rules apply to
the collection of SDRT on paperless transfers settled within CREST.

         Transfers of Ordinary Shares into ADS form

         UK stamp duty or SDRT will normally be payable on any transfer of
Ordinary Shares to the Depositary or its nominee, or where the Depositary issues
an ADR in respect of Ordinary Shares hitherto held for another purpose by it or
its nominee. The charge is at the rate of 1.5 percent:

          (i)  in the case of a transfer of Ordinary Shares for consideration,
               of the amount or value of the consideration for the transfer, and

          (ii) in the case of a transfer of Ordinary Shares other than for
               consideration and in the case of the issue of an ADR in respect
               of Ordinary Shares hitherto held for another purpose, of the
               value of the Ordinary Shares.

In the case of stamp duty, the charge is rounded up to the nearest multiple of
L5.

         Transfers of Ordinary Shares within the depositary arrangements

         UK Stamp duty is chargeable on an instrument transferring an ADR or on
a written agreement to transfer an ADR.

         No SDRT will be payable in respect of an agreement to transfer an ADR
(whether made in or outside the UK).


                                      -61-


<PAGE>

         Transfers of  Ordinary Shares out of ADS form

         Where no sale is involved, a transfer of Ordinary Shares by the
Depositary or its nominee to the holder of an ADR upon cancellation of the ADR
is not subject to any ad valorem stamp duty or SDRT, though it will generally be
subject to a fixed UK stamp duty of L5 per instrument of transfer. By
contrast, a transfer of, or agreement to transfer, Ordinary Shares underlying an
ADR by the Depositary or its nominee at the direction of the ADR seller directly
to a purchaser for a consideration may give rise to a liability to ad valorem
stamp duty or SDRT generally by reference to the amount of value of the
consideration for the transfer.

         Gifts of Ordinary Shares

         A transfer of Ordinary Shares for no consideration whatsoever is not
chargeable to ad valorem stamp duty or SDRT, nor would it normally give rise to
the fixed stamp duty of L5 per instrument of transfer.

Documents on Display

         Cordiant is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended. In accordance with these requirements,
Cordiant files reports and other information with the U.S. Securities and
Exchange Commission. These materials, including this Annual Report and the
exhibits thereto, may be inspected and copied at prescribed rates at the SEC's
public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549 and at
the Commission's regional offices at 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661, and 7 World Trade Center, New York, New York 10048.
Further information on the operation of the public reference room may be
obtained by calling the Commission at 1-800-SEC-0330. The Commission also
maintains a web site at http://www.sec.gov that contains reports and other
information regarding registrants that file electronically with the Commission.
Cordiant's annual reports and some of the other information submitted by
Cordiant to the Commission may be accessed through this web site.

         Documents concerning Cordiant that are referred to in this Annual
Report may be inspected at the principal executive offices of Cordiant at
121-141 Westbourne Terrace, London W2 6JR, England, telephone number
011-44-20-7262-4343.

Item 11.  Quantitative and Qualitative Disclosures About Market Risk.

Financial Risk Management

         Group policy relating to the use of financial instruments, including
types of instruments used and amounts invested, is determined by the Board. The
instruments used by the Group in 2000 are fixed and floating rate borrowings,
interest rate caps, forward foreign currency contracts and foreign currency
swaps. The main risks arising from the Group's financial instruments are
interest rate risks, liquidity risks and foreign currency risks. The Group does
not trade in derivatives and does not enter into transactions of a speculative
nature or unrelated to the Group's investment activities. Derivatives are used
only to manage the risks arising from the underlying business activities.

Foreign Exchange

         The Group publishes its consolidated financial statements in pounds
sterling. The Group's profits are spread over a variety of currencies with the
largest being the US dollar (25 percent of 2000 operating


                                      -62-


<PAGE>

profit). As a result, the Group is subject to foreign exchange risk due to the
effects that foreign currency movements have on the Group's translation of
results.

         The Group has significant and diverse investments in foreign
operations. The Group's balance sheet and profit and loss can therefore be
materially affected by movements in exchange rates. It is not the Group's policy
to manage net assets by balance sheet hedging, or to hedge international
profits. The Group seeks to mitigate the effect of currency exposures by
borrowing in the same currencies as the currencies in which it lends and by
using currency swaps to match the currencies in which it lends. In addition, the
Group uses forward exchange contracts to hedge known cross-currency cash flows.

         The Group's long term debt is denominated in US Dollars, and as such is
subject to foreign exchange risks due to currency movements. The long-term debt
at December 31, 2000 was US$283 million. (L190 million).

         The following sensitivity shows the impact on the reported value of
long term debt of an instantaneous 10 percent change in the foreign currency
rate between sterling and US Dollar from their levels at December 31, 2000, with
all other variables held constant.
<TABLE>
<CAPTION>
                          Fair value reported at        Impact of a + 10 percent      Impact of a - 10 percent
                             December 31, 2000          movement in exchange rate     movement in exchange rate
                                 L million                     L million                      L million
                          ---------------------------- ----------------------------   -------------------------
<S>                               <C>                          <C>                               <C>
Long term debt*                   190.0                        (11.6)                            14.2

</TABLE>
*    Included within long term debt is an amount of L117.4 million, which was
     due within one year at the balance sheet date. In April 2001 this debt was
     refinanced and now matures in April 2011.

Interest Rates

         The Group is exposed to interest rate fluctuations due to the floating
rate central bank facility borrowings. The majority of these floating rate
liabilities are denominated in sterling or US dollars. This exposure is managed
via interest rate caps denominated in both sterling and US dollars. The Group
aims to hold interest rate caps to cover the majority of its borrowings and with
a variety of maturities. The current interest rate caps mature between June 2001
and June 2002. The Group will renew these caps on maturity. The Group's weighted
average interest rate for 2000 was 7.5 percent. The Company estimates that if
the 2000 interest rates had been 1 percentage point higher, the net interest
expense would have increased by L1.3 million.

         See Note 32 of the Consolidated Financial Statements for more
information on the Group's risk profile, which has been provided in accordance
with FRS 13.

Item 12.  Description of Securities Other than Equity Securities.

          Not applicable.

                                      -63-


<PAGE>


                                     PART II


Item 13.  Defaults, Dividend Arrearages and Delinquencies.

          None.

Item 14.  Material Modifications to the Rights of Security Holders and Use of
          Proceeds.

          None.

Item 15.  [Reserved]



Item 16.  [Reserved]



                                      -64-

<PAGE>


                                    PART III


Item 17.  Financial Statements.

         The Company has elected to provide financial statements and the related
information pursuant to Item 18.

Item 18.  Financial Statements.

          See pages F-1 to F-55.

Item 19.  Exhibits.

          Documents filed as exhibits to this Annual Report:

          1.1   Memorandum and Articles of Association.

          4.1   Loan Agreement dated July 4, 2000 between certain banks led by
                The Bank of New York and HSBC Investment Bank plc, as
                Arrangers, and Cordiant.

          4.2   Note Purchase Agreement, dated as of April 5, 2001, by and
                among Cordiant Finance, Inc., as Issuer, Cordiant
                Communications Group plc, as Parent Guarantor, and each of the
                Purchasers listed in Schedule A attached thereto.

          4.3   Agreement and Plan of Merger dated as of July 4, 2000
                between Cordiant Communications Group plc, Lighthouse
                Acquisition, Inc. and Lighthouse Global Network, Inc.
                (Incorporated by reference to Exhibit 2.1 to Cordiant's
                Registration Statement on Form F-3 (File No. 333-46570).)

          4.4   Amendment No. 1 to Agreement and Plan of Merger dated as of
                February 3, 2000, among Cordiant Communications Group plc,
                Healthworld Acquisition Corp. and Healthworld Corporation.
                (Incorporated by reference to Exhibit 2(b) to Cordiant's
                Registration Statement on Form F-4 (File No. 333-96241).)

          4.5   Agreement and Plan of Merger dated as of November 9, 1999,
                among Cordiant Communications Group plc, Healthworld
                Acquisition Corp. and Healthworld Corporation. (Incorporated
                by reference to Exhibit 2(a) to Cordiant's Registration
                Statement on Form F-4 (File No. 333-96241).)

         4.6    Amendment No. 1 to Agreement and Plan of Merger dated as of
                September 5, 2000 between Cordiant Communications Group plc,
                Lighthouse Acquisition, Inc. and Lighthouse Global Network,
                Inc. (Incorporated by reference to Exhibit 2.2 to Cordiant's
                Registration Statement on Form F-3 (File No. 333-46570).)

         4.7    Rules of the Cordiant Communications Group Executive Share
                Option Scheme.


                                   -65-


<PAGE>

         8.1    Significant subsidiaries as of the end of the year covered
                by this Report: See "Significant Subsidiaries" under "Item
                4. Information on the Company."

        10.1    Consent of Independent Auditor.


                                      -66-


<PAGE>

                                   SIGNATURES


         The registrant hereby certifies that it meets all of the requirements
for filing on Form 20-F and that it has duly caused and authorized the
undersigned to sign this annual report on its behalf.



                          CORDIANT COMMUNICATIONS GROUP PLC



                          By: /s/ Arthur D'Angelo
                              --------------------------------------
                              Name:   ARTHUR D'ANGELO
                              Title:  FINANCE DIRECTOR



Date:  June 29, 2001

                                      -67-
<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


                          INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholders of Cordiant Communications Group plc:

We have  audited  the  accompanying  consolidated  balance  sheets  of  Cordiant
Communications  Group plc and subsidiaries as of December 31, 2000 and 1999, and
the   related    consolidated    statements   of    operations,    shareholders'
funds/(deficiency)  and other share capital,  total  recognized gains and losses
and cash flows for each of the years in the three year period ended December 31,
2000. These  consolidated  financial  statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards
in the United  Kingdom  and in the United  States of  America.  Those  standards
require that we plan and perform the audit to obtain reasonable  assurance about
whether the financial  statements  are free of material  misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the financial  statements.  An audit also includes  assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.  We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in  all  material   respects,   the  financial   position  of  Cordiant
Communications Group plc and subsidiaries at December 31, 2000 and 1999, and the
results  of their  operations  and their cash flows for each of the years in the
three year period ended December 31, 2000, in conformity with generally accepted
accounting principles in the United Kingdom.

Generally accepted  accounting  principles in the United Kingdom vary in certain
significant respects from generally accepted accounting principles in the United
States of America.  Application of generally accepted  accounting  principles in
the United States of America would have affected  results of operations for each
of the years in the three year period ended December 31, 2000 and  shareholders'
funds/(deficiency)  at December  31, 2000 and 1999 to the extent  summarized  in
note 35 to the consolidated financial statements.




                                            /s/ KPMG AUDIT PLC
                                           -----------------------------------
London, England                            CHARTERED ACCOUNTANTS
March 7, 2001                              REGISTERED AUDITOR
Except with respect to  paragraph 2 of note 32 and  paragraph 3 of note 34 which
are dated April 5, 2001
<PAGE>


                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                                        Continuing Operations
                                                                     -------------------------------
                                                                                          Acquisi-
                                                                                           tions           Total
                                                                            2000           2000            2000
                                                             Note           L m             L m             L m
                                                          ---------- ---------------- -------------- --------------
<S>                                                       <C>             <C>             <C>          <C>
Turnover
Group and share of joint ventures                                          2,948.4          274.6       3,223.0
Less: Share of joint ventures                                               (881.5)           -          (881.5)
                                                                     ---------------- -------------- --------------
Group turnover                                                             2,066.9          274.6       2,341.5
Cost of sales                                                             (1,674.6)        (153.9)     (1,828.5)
Revenue
--------------------------------------------------------- ---------- ---------------- -------------- --------------
Group and share of joint ventures                                            417.7          120.7         538.4
Less: Share of joint ventures                                                (25.4)           -           (25.4)
--------------------------------------------------------- ---------- ---------------- -------------- --------------
Group revenue                                                                392.3          120.7         513.0
Net operating expenses                                       3              (350.1)        (101.5)       (451.6)
                                                                     ---------------- -------------- --------------
Group operating profit                                                        42.2           19.2          61.4
                                                                     ==============================
Share of operating profits:
Joint ventures                                                                                              3.4
Associated undertakings                                                                                     2.2
                                                                                                     --------------
Profit on ordinary activities before interest and tax                                                      67.0
--------------------------------------------------------- ---------- ---------------- -------------- --------------
Net interest payable and similar items - other               6                                             (8.4)
FRS 12 - finance charge                                      18                                            (1.1)
--------------------------------------------------------- ---------- ---------------- -------------- --------------
Net interest payable and similar items                                                                     (9.5)
                                                                                                     --------------
Profit on ordinary activities before tax                                                                   57.5
Tax on ordinary activities                                   7                                            (18.1)
                                                                                                     --------------
Profit on ordinary activities after tax                                                                    39.4
Equity minority interests                                                                                  (5.8)
                                                                                                     --------------
Profit attributable to Ordinary shareholders                                                               33.6
Dividends                                                                                                  (8.4)
                                                                                                     --------------
Retained profit for the financial year                                                                     25.2
                                                                                                     ==============

--------------------------------------------------------- ---------- ---------------- -------------- --------------

Basic earnings per Ordinary share                            8                                             11.4p
Diluted earnings per Ordinary share                          8                                             10.6p
Ordinary dividend per share                                                                                 2.1p
--------------------------------------------------------- ---------- ---------------- -------------- --------------


There is no difference between the total reported results in the financial year and that on an historical cost basis.

                           See accompanying notes to the consolidated financial statements.
</TABLE>




                                      F-2
<PAGE>


                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>


<CAPTION>
                                                                                            1999
                                                                           Note             L m
                                                                      ------------ ----------------
<S>                                                                   <C>          <C>
Turnover
Group and share of joint ventures                                                        2,070.9
Less: Share of joint ventures                                                             (393.0)
                                                                                   ----------------
Group turnover                                                                           1,677.9
Cost of sales                                                                           (1,342.1)
Revenue
--------------------------------------------------------------------- ------------ ----------------
Group and share of joint ventures                                                          351.3
Less: Share of joint ventures                                                              (15.5)
--------------------------------------------------------------------- ------------ ----------------
Group revenue                                                                              335.8
Net operating expenses                                                    3               (302.3)
                                                                                   ----------------
Group operating profit                                                                      33.5
Share of operating profits:
Joint ventures                                                                               2.9
Associated undertakings                                                                      2.0
                                                                                   ----------------
Profit on ordinary activities before interest and tax                                       38.4
--------------------------------------------------------------------- ------------ ----------------
Net interest payable and similar items - other                            6                 (3.8)
FRS 4 - write off of bank fees                                                              (1.0)
FRS 12 - finance charge                                                                     (1.3)
--------------------------------------------------------------------- ------------ ----------------
Net interest payable and similar items                                                      (6.1)
                                                                                   ----------------
Profit on ordinary activities before tax                                                    32.3
Tax on ordinary activities                                                7                (10.6)
                                                                                   ----------------
Profit on ordinary activities after tax                                                     21.7
Equity minority interests                                                                   (3.1)
                                                                                   ----------------
Profit attributable to Ordinary shareholders                                                18.6
Dividends                                                                                   (5.1)
                                                                                   ----------------
Retained profit for the financial year                                                      13.5
                                                                                   ================

--------------------------------------------------------------------- ------------ ----------------

Basic earnings per Ordinary share                                         8                  8.2p
Diluted earnings per Ordinary share                                       8                  7.8p
Ordinary dividend per share                                                                  1.8p
--------------------------------------------------------------------- ------------ ----------------


There is no difference between the total reported results in the financial year and that on an historical cost basis.

                         See accompanying notes to the consolidated financial statements.
</TABLE>




                                      F-3
<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>


<CAPTION>
                                                                                            1998
                                                                           Note             L m
                                                                      ------------ ----------------
<S>                                                                   <C>          <C>
Turnover
Group and share of joint ventures                                                        1,847.4
Less: Share of joint ventures                                                             (281.8)
                                                                                   ----------------
Group turnover                                                                           1,565.6
Cost of sales                                                                           (1,263.8)
Revenue
--------------------------------------------------------------------- ------------ ----------------
Group and share of joint ventures                                                          316.0
Less: Share of joint ventures                                                              (14.2)
--------------------------------------------------------------------- ------------ ----------------
Group revenue                                                                              301.8
Net operating expenses                                                    3               (275.8)
                                                                                   ----------------
Group operating profit                                                                      26.0
Share of operating profits:
Joint ventures                                                                               1.4
Associated undertakings                                                                      1.2
                                                                                   ----------------
Profit on ordinary activities before interest and tax                                       28.6
--------------------------------------------------------------------- ------------ ----------------
Net interest payable and similar items - other                            6                 (2.7)
FRS 12 - finance charge                                                                     (1.2)
--------------------------------------------------------------------- ------------ ----------------
Net interest payable and similar items                                                      (3.9)
                                                                                   ----------------
Profit on ordinary activities before tax                                                    24.7
Tax on ordinary activities                                                7                 (9.2)
                                                                                   ----------------
Profit on ordinary activities after tax                                                     15.5
Equity minority interests                                                                   (1.7)
                                                                                   ----------------
Profit attributable to Ordinary shareholders                                                13.8
Dividends                                                                                   (3.1)
                                                                                   ----------------
Retained profit for the financial year                                                      10.7
                                                                                   ================

--------------------------------------------------------------------- ------------ ----------------

Basic earnings per Ordinary share                                         8                  6.2p
Diluted earnings per Ordinary share                                       8                  6.2p
Ordinary dividend per share                                                                  1.4p
--------------------------------------------------------------------- ------------ ----------------


There is no difference between the total reported results in the financial year and that on an historical cost basis.

                         See accompanying notes to the consolidated financial statements.
</TABLE>




                                      F-4
<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                                         December 31,

                                                                                      2000               1999
                                                                       Notes          L m                L m
                                                                  --------------------------------------------------
<S>                                                               <C>            <C>                 <C>
ASSETS

Current assets:
   Cash and short-term deposits                                                          99.8           80.0
   Short-Term Investments                                                9                2.4            7.5
   Accounts and other receivables, prepayments and accrued income       10/11           452.1          336.0
   Billable production                                                  11               33.6           20.7
                                                                                 -------------------------------
     Total current assets                                                               587.9          444.2
                                                                                 -------------------------------
Long-Term Investments                                                   12               11.8           12.4
Long-term receivables:
   Accounts and other receivables, prepayments and accrued income       10               25.5           20.1
Property and equipment, net                                             13               59.6           33.7
Goodwill                                                                14              711.8           79.2
                                                                                 -------------------------------
     Total assets                                                                     1,396.6          589.6
                                                                                 ===============================

LIABILITIES AND SHAREHOLDERS' FUNDS/(DEFICIENCY)
Current liabilities:
   Bank loans, overdrafts and other loans                               16              136.3            7.5
   Accounts payable, other liabilities and accrued expenses             17              565.7          417.3
   Taxation and social security                                         22               39.7           25.6
                                                                                 -------------------------------
     Total current liabilities                                                          741.7          450.4
                                                                                 -------------------------------

Long-term liabilities:
   Accounts payable, other liabilities and accrued expenses             17               31.5           24.6
   Provision for joint venture deficit                                  18               12.1           14.4
   Property, pension and other provisions                               18               39.6           40.6
   Long-term debt                                                       19               73.0           75.8
   Deferred taxation                                                    21                0.4            1.2
   Taxation                                                             22               26.2           22.8
   Minority interests                                                                     8.8            5.6
                                                                                 -------------------------------
     Total long-term liabilities                                                        191.6          185.0
                                                                                 -------------------------------

     Total liabilities                                                                  933.3          635.4
                                                                                 -------------------------------
Shareholders' funds/(deficiency):
   Share capital
     Allotted, called up and fully paid:
       364,561,997 Ordinary Shares of 50p each (1999:
           228,782,839 Ordinary Shares of 50p each)                     23              182.3          114.4
   Share premium                                                                        137.2            3.2
   Merger reserve                                                                       250.7            3.4
   Shares to be issued                                                                   35.1            1.4
   Special reserve                                                                       25.7           25.7
   Accumulated deficit                                                                 (167.7)        (193.9)
                                                                                 -------------------------------
     Shareholders' funds/(deficiency)                                                   463.3          (45.8)
                                                                                 -------------------------------
Total liabilities and shareholders' funds                                             1,396.6          589.6
                                                                                 ===============================
See accompanying notes to the consolidated financial statements.
</TABLE>




                                      F-5
<PAGE>
                                                 CORDIANT COMMUNICATIONS GROUP
                                                       AND SUBSIDIARIES


<TABLE>

                                  CONSOLIDATED STATEMENTS OF SHAREHOLDERS' FUNDS/(DEFICIENCY)
                                                      AND OTHER SHARE CAPITAL

<CAPTION>
                                                                   Years ended December 31, 2000, 1999 and 1998

                                                                       Premiums                      Shares
                                                          Share       in Excess      *Merger         to be       **Special
                                                        Capital      of Par Value    reserve         Issued        Reserves
                                                           L m           L m           L m            L m            L m
                                                 -------------------------------------------------------------------------------
<S>                                                       <C>            <C>           <C>             <C>          <C>
At December 31, 1997                                      111.0            -              -             -            25.7
Issues of Ordinary Shares net of expenses                   1.7            2.3            -             -             -
Transfer of Goodwill reserve                                -              -              -             -             -
Option payments for employee share scheme                   -              -              -             1.3           -
Goodwill arising on acquisitions made in
    previous periods                                        -              -              -             -             -
Profit retained for the year                                -              -              -             -             -
Reversal of imputed employee share scheme cost              -              -              -             -             -
Translation adjustment                                      -              -              -             -             -
                                                 -------------------------------------------------------------------------------

At December 31, 1998                                      112.7            2.3            -             1.3          25.7
Issues of Ordinary Shares net of expenses                   1.7            0.9            3.4           -             -
Option payments for employee share scheme                   -              -              -             0.1           -
Goodwill arising on acquisitions made in
    previous periods                                        -              -              -             -             -
Profit retained for the period                              -              -              -             -             -
Reversal of imputed employee share scheme cost              -              -              -             -             -
Translation adjustment                                      -              -              -             -             -
                                                 -------------------------------------------------------------------------------

At December 31, 1999                                      114.4            3.2            3.4           1.4          25.7
Issues of Ordinary Shares net of expenses                  67.9          134.0          247.3          33.7           -
Option payments for employee share scheme                   -              -              -             -             -
Goodwill arising on acquisitions made in
    previous periods                                        -              -              -             -             -
Profit retained for the period                              -              -              -             -             -
Reversal of imputed employee share scheme cost              -              -              -             -             -
Translation adjustment                                      -              -              -             -             -
                                                 -------------------------------------------------------------------------------

At December 31, 2000                                      182.3          137.2          250.7          35.1          25.7
                                                 ===============================================================================
</TABLE>
<PAGE>
<TABLE>

<CAPTION>

                                                                       Accumulated        Total
                                                        Goodwill       Earnings       Shareholders'
                                                        Reserves       (Deficit)    Funds/(Deficiency)
                                                         L m              L m              L m
                                                      ---------------------------------------------------

<S>                                                     <C>             <C>              <C>
At December 31, 1997                                    (113.2)         (100.4)          (76.9)
Issues of Ordinary Shares net of expenses                  -               -               4.0
Transfer of Goodwill reserve                             113.2          (113.2)            -
Option payments for employee share scheme                  -               -               1.3
Goodwill arising on acquisitions made in
    previous periods                                       -              (2.2)           (2.2)
Profit retained for the year                               -              10.7            10.7
Reversal of imputed employee share scheme cost             -               0.9             0.9
Translation adjustment                                     -              (1.7)           (1.7)
                                                      ---------------------------------------------------

At December 31, 1998                                       -            (205.9)          (63.9)
Issues of Ordinary Shares net of expenses                  -               -               6.0
Option payments for employee share scheme                  -               -               0.1
Goodwill arising on acquisitions made in
    previous periods                                       -              (3.1)           (3.1)
Profit retained for the period                             -              13.5            13.5
Reversal of imputed employee share scheme cost             -               2.6             2.6
Translation adjustment                                     -              (1.0)           (1.0)
                                                      ---------------------------------------------------

At December 31, 1999                                       -            (193.9)          (45.8)
Issues of Ordinary Shares net of expenses                  -               -             482.9
Option payments for employee share scheme                  -              (1.7)           (1.7)
Goodwill arising on acquisitions made in
    previous periods                                       -              (0.1)           (0.1)
Profit retained for the period                             -              25.2            25.2
Reversal of imputed employee share scheme cost             -               4.1             4.1
Translation adjustment                                     -              (1.3)           (1.3)
                                                      ---------------------------------------------------

At December 31, 2000                                       -            (167.7)          463.3
                                                      ===================================================


As at December 31, 2000, the Accumulated  Deficit  included  cumulative  exchange  translation  losses of L31.0 million (1999: L29.7
million;  1998: L28.7 million).  There is no tax effect of these movements.

* The movement in the merger reserve of L247.3 million arose following the  acquisition,  by issue of the Company's  shares,  of the
Group's 100% interest in PSD Associates  Limited,  Arcom Limited,  and Bamber Forsyth Limited in the United Kingdom,  and Lighthouse
Global Network,  Inc. in the United States.  Where equity shares are issued at a premium in excess of par value in consideration for
such an acquisition, there is relief from the requirement to credit the premium to "Premiums in Excess of Par Value."

* *The special reserve is non-distributable other than for the purposes of paying up shares in a bonus issue of fully paid shares.

See accompanying notes to the consolidated financial statements.
</TABLE>




                                                     F-6
<PAGE>
<TABLE>
                                                                   CORDIANT COMMUNICATIONS GROUP
                                                                         AND SUBSIDIARIES

<CAPTION>
                                                               CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                2000           1999            1998
                                                                Note            L m             L m             L m
-------------------------------------------------------------- --------- -------------- -------------- ---------------
<S>                                                            <C>              <C>            <C>            <C>
Net cash inflow from operating activities                        27              45.3          50.0           19.8

Net cash outflow arising from external Demerger costs                             -             -             (8.2)

Dividends from associated undertakings and joint ventures                         1.6           1.7            0.2

Returns on investments and servicing of finance                  27             (11.5)         (7.0)          (4.9)

Taxation paid                                                    27             (11.3)         (6.7)          (8.3)

Capital expenditure and financial investment                     27             (23.5)        (18.6)          (7.4)

Acquisitions and disposals                                       27             (46.8)        (22.2)          (7.4)

Equity dividends paid                                                            (5.1)         (3.2)          (2.7)
                                                                           -------------------------------------------
Cash outflow before financing                                                   (51.3)         (6.0)         (18.9)
                                                                           -------------------------------------------


Management of liquid resources                                   27               5.2          (5.5)          (0.8)
Issue of ordinary share capital                                                   8.3           1.9            0.5
External loans drawn less repaid                                                 53.4          43.7            8.6
Other movements                                                                   0.5          (0.1)          (0.2)
                                                                           -------------------------------------------
Net cash inflow from financing                                                   67.4          40.0            8.1
                                                                           -------------------------------------------
Increase/(decrease) in cash for the year                                        16.1          34.0          (10.8)
                                                                           ===========================================

Reconciliation of net cash flow to movement in net funds:
Increase/(decrease) in cash for the year                                         16.1          34.0          (10.8)
Cash inflow from debt financing                                                 (56.3)        (30.5)          (8.4)
Cash (inflow)/outflow from cash deposits                                         (5.2)          5.5            0.8
Loans acquired -acquisitions                                                    (66.2)        (11.9)           0.6
Translation difference and non-cash movements                                    (2.7)          0.7           (2.3)
                                                                           -------------------------------------------
Movement in net funds in the year                                              (114.3)         (2.2)         (20.1)
Net funds at beginning of year                                                    2.4           4.6           24.7
                                                                           -------------------------------------------
Net (debts)/funds at end of year                                 27            (111.9)          2.4            4.6
                                                                           ===========================================
</TABLE>
<PAGE>
<TABLE>

                              CONSOLIDATED STATEMENTS OF TOTAL RECOGNIZED GAINS AND LOSSES


<CAPTION>
                                                                                2000           1999            1998
                                                                                L m             L m             L m
--------------------------------------------------------------- -------- -------------- -------------- ---------------
<S>                                                                      <C>                 <C>             <C>
Profit attributable to Ordinary shareholders                                     33.6          18.6           13.8
Translation adjustment                                                           (1.3)         (1.0)          (1.7)
                                                                         -------------- -------------- ---------------
Total recognised gains relating to the financial year                            32.3          17.6           12.1
                                                                         ============== ============== ===============
See accompanying notes to the consolidated financial statements.
</TABLE>




                                       F-7
<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Accounting Policies

The  preparation  of the  financial  statements  in  conformity  with  generally
accepted accounting principles requires the Group's management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

Basis of Accounting

The financial statements have been prepared under the historical cost accounting
rules and in  accordance  with  applicable  accounting  standards  in the United
Kingdom.   The  following  principal   accounting  policies  have  been  applied
consistently in dealing with items which are considered  material in relation to
the Group's financial statements.

Companies Act 1985

The Form 20-F, containing Consolidated Financial Statements, does not constitute
"statutory accounts" within the meaning of the Companies Act 1985 of England and
Wales for any of the three years ended December 31, 2000. Statutory accounts for
1998 and 1999 have been filed with the United Kingdom's  Registrar of Companies;
the statutory  accounts for 2000 will be filed  following  the Company's  Annual
General Meeting. The auditor has reported on these accounts.  Their reports were
unqualified and did not contain  statements  under Section 237(2) or (3) of that
Act.

Consolidation

The consolidated  financial  statements  incorporate the financial statements of
Cordiant Communications Group plc and all its subsidiary undertakings made up to
December 31, 2000. All material  intragroup  transactions and balances have been
eliminated on consolidation.

Turnover, cost of sales and revenue

Turnover   comprises  the  gross  amounts   billed  to  clients  in  respect  of
commission-based  income  together with the total of other fees earned.  Cost of
sales  comprises media payments and production  costs.  Turnover and revenue are
stated exclusive of VAT, sales taxes and trade discounts.

For advertising and marketing communications  services,  revenue is derived from
commissions or fees. Traditionally, revenue was calculated as a commission based
on  total  media  and  production  expenditure.  In  recent  years,  changes  in
compensation  arrangements  have  meant  that  revenue  has  become a mixture of
commissions  and fees,  which are  negotiated  and  agreed  with  clients  on an
individual  basis.  Revenue is  recognised  when the  service is  performed,  in
accordance with the terms of the contractual arrangement.




                                      F-8
<PAGE>
                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES

For  project  based  businesses,  revenue is derived  from a mixture of fees for
services  performed and retainer  fees,  which are specific to the contract with
the  client.  In such  cases,  revenue is  recognised  when the service has been
performed,  in accordance  with the  contractual  arrangements  and the stage of
completion of the work.

Pension costs

Retirement benefits for employees of most companies in the Group are provided by
either  defined  contribution  or defined  benefit  schemes  which are funded by
contributions from Group companies and employees.

The Group's share of  contributions to defined  contribution  schemes is charged
against profits of the year for which they are payable and the cost of providing
defined   benefits  is  charged   against   profit,   in  accordance   with  the
recommendations  of independent  actuaries,  in such a way as to provide for the
liabilities evenly over the remaining working lives of the employees.

Employee share schemes

Payments made by participants to acquire options under the Equity  Participation
Plan (the Plan) are credited to capital as "Shares to be issued." The  estimated
cost of awards is  expensed  as a charge to the  profit  and loss  account  on a
straight  line basis over the period to which the  performance  criteria  of the
plan relate. In compliance with UITF abstract 17: "Employee share schemes",  the
periodic  charge to the profit and loss  account is  credited  to  reserves.  On
exercise  of  options  under the Plan the  original  cash paid by  employees  to
participate in the scheme will be transferred  from shares to be issued to share
capital and share premium.

Leases

Where the Group enters into a lease which entails taking  substantially  all the
risks and rewards of  ownership  of an asset,  the lease is treated as a finance
lease.  The asset is recorded in the balance sheet as a tangible fixed asset and
is depreciated over the shorter of its estimated useful life and the lease term.
Future  installments under such leases, net of finance charges,  are included in
creditors. Rentals payable are apportioned between the finance element, which is
charged to the profit and loss  account as  interest,  and the capital  element,
which reduces the outstanding obligation for future installments.

All other leases are  operating  leases and the rental  charges are taken to the
profit and loss account on a straight line basis over the life of the lease.

Goodwill

Purchased  goodwill  arising in respect of  acquisitions  before January 1, 1998
(including any additional  goodwill  estimated to arise from contingent  capital
payments),  when FRS 10 was adopted,  was written off to reserves in the year of
acquisition. A charge would be recognized in the Group's profit and loss account
in respect  of any  permanent  diminution  in the value of  goodwill  previously
written  off to  reserves.  Goodwill  written off  directly to reserves  and not
previously  charged to the  Group's  profit  and loss  account  is  included  in
determining the profit or loss on disposal of a subsidiary.





                                      F-9
<PAGE>
                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES

Purchased  goodwill  arising from  acquisitions on and after January 1, 1998 has
been  capitalized as an intangible fixed asset. The directors are of the opinion
that the intangible  fixed assets of the Group have an indefinite  economic life
and as such the goodwill  related to acquisitions to date is not amortized,  but
is subject to annual review for impairment. This is due to the durability of the
Group's  brand  names,  their  ability to sustain  long-term  profitability  and
Cordiant  Communication  Group plc's  commitment  to develop  and enhance  their
value. The acquisitions of the Group are intended to enhance the long-term value
of the  Group's  networks.  The  individual  circumstances  of  each  subsequent
acquisition  the Group  makes will be  assessed  to  determine  the  appropriate
treatment of any related goodwill.

The  financial  statements  depart from the  specific  requirement  of companies
legislation  to amortize  goodwill  over a finite period in order to give a true
and fair view. The directors consider this to be necessary for the reasons given
above.  Because of the indefinite  life of these  intangible  assets,  it is not
possible to quantify the impact of this departure.

Property and Equipment

Property and equipment are stated at historical cost less accumulated
depreciation. Additions, improvements and major renewals are capitalized.
Maintenance repairs and minor renewals are expensed as incurred. The cost of
property and equipment less the estimated residual value is written off by equal
annual installments over the expected useful lives of the assets as follows:

<TABLE>
<S>                                                                      <C>
Freehold and long leasehold properties:                                  50 years
Short leasehold properties with terms of less than 50 years:             Period of lease
Furniture and equipment:                                                 Between 4 and 10 years
Motor vehicles:                                                          4 years
</TABLE>

Joint ventures and associated undertakings

The Group's share of the profits less losses of all  significant  joint ventures
and  associated  undertakings  is included in the Group profit and loss account.
The carrying value of significant joint ventures and associated  undertakings in
the Group balance sheet is calculated by reference to the Group's  equity in the
net assets of such undertakings.

Billable Production

Billable production is stated at the lower of cost and net realizable value, and
comprises mainly outlays incurred on behalf of clients,  and billable production
under project arrangements.

Deferred taxation

Deferred taxation is provided at the anticipated tax rates on timing differences
arising  from the  inclusion  of items of income  and  expenditure  in  taxation
computations  in periods  different from those in which they are included in the
financial  statements,  to the extent  that it is probable  that a liability  or
asset will  crystallize  in the  foreseeable  future.  No  provision is made for
deferred tax on unremitted overseas earnings unless the Group expects them to be
remitted.





                                      F-10
<PAGE>
                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


Property provisions

In accordance  with FRS 12  "Provisions,  Contingent  Liabilities and Contingent
Assets" the Group's property provisions have been discounted,  using a risk-free
rate, to the present value of future net lease  obligations and related costs of
leasehold  property (net of estimated  sublease income and certain risk factors)
where the  space is  vacant or  currently  not  planned  to be used for  ongoing
operations.  The  periodic  unwinding  of the  discount is treated as an imputed
interest charge and is disclosed under net financial items.

Foreign currencies

The Group has  adopted FRS 13  "Derivatives  and Other  Financial  Instruments".
Refer to note 32 for all related disclosures.  Profit and loss accounts and cash
flow  statements  in foreign  currencies  are  translated  into  sterling at the
average  rate during the year,  with the year end  adjustment  to closing  rates
being  taken to  reserves.  Assets and  liabilities  in foreign  currencies  are
translated using the rates of exchange ruling at the balance sheet date.


Derivatives

Interest rate caps
The Group  manages  interest  rate  exposure via interest  rate caps,  which are
accounted for on an accruals basis.  The notional  amounts of interest rate caps
are recorded off balance sheet.

Finance costs  associated with debt issuances are charged to the profit and loss
account over the life of the issue.

Forward exchange contracts
Forward exchange  contracts are used by the Group to hedge known  cross-currency
cash flows.  These instruments are accounted for as hedges from the inception of
the contract.

Exchange gains and losses
Where the  instrument is used to hedge against  future  transactions,  gains and
losses  are  recognized  at the  inception  of the hedge in the  profit and loss
account.

If the  underlying  exposure  changes,  or  ceases  to exist,  the  contract  is
terminated  and the exchange  gain or loss on  termination  is recognized in the
profit and loss account immediately.

Gains  or  losses  on   translation  of  the  opening  net  assets  of  overseas
subsidiaries  and those  arising from the  retranslation  of  long-term  foreign
currency borrowings used to finance foreign currency  investments,  are taken to
reserves.

All other exchange differences are taken to the profit and loss account.




                                      F-11
<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES

The Group's principal  trading  currencies and the exchange rates used against L
sterling are as follows:

<TABLE>
<CAPTION>

                                                      Average rate                      Closing rate
                                                      ------------                      ------------
                                             2000         1999         1998         2000           1999
                                     ------------- ------------ ------------ ------------ ---------------
<S>                                        <C>           <C>          <C>          <C>             <C>
        US Dollar                            1.52         1.62          1.66        1.49            1.61
        Deutschmark                          3.21         2.97          2.91        3.11            3.14
        Australian Dollar                    2.61         2.51          2.64        2.69            2.46
        Korean won (000's) *                1,710        1,923           N/A       1,890           1,826
</TABLE>


* There were no operations in Korea during 1998.

Note 2 - Acquisitions, Disposals and Contingent and Deferred Capital Payments

Where  applicable in this Note,  translation  from local currency is made at the
rates at which the transactions were concluded.

Acquisitions

(a)      2000

In January  2000,  the Group  acquired  the  remaining  10% interest in Scholz &
Friends, in Germany, for consideration of L2.9 million.

In January 2000,  the previous 31% holding in Saatchi & Saatchi Bates Yomiko KKK
renamed  Bates  Yomiko  KKK in Japan  was  increased  by the  acquisition  of an
additional 19%, for L0.1 million consideration.

In January 2000, the previous 70% holding in Bates Fernandez SA in Argentina was
increased  by  the   acquisition  of  an  additional   4.8%,  for  L0.2  million
consideration.

In March 2000, the Group acquired a 100% holding in Healthworld Corporation. The
purchase price for the acquisition included an initial payment of L148.3 million
paid by Cordiant  through the issuance of Cordiant  ADSs and  transferred  share
options.  The  acquisition  also provides for  additional  estimated  contingent
payments  of L3.3  million,  due in the  years  2001 and 2002  based on  average
earnings before interest, tax, depreciation,  and amortisation for the preceding
years.

In April  2000,  the  Group  acquired  the  whole of the  share  capital  of PSD
Associates  in the  United  Kingdom.  The  purchase  price  for the  acquisition
included  an initial  payment of L14.6  million  paid by  Cordiant  through  the
issuance of Cordiant  shares,  and  further  payments  are due in the years 2001
through to 2004 based on the average  profits  for the  preceding  three  years.
Estimated  total  additional  payments of L13.9 million have been  accrued.  The
contingent  payment  will be paid  entirely  through  the  issuance  of Cordiant
shares.

In May 2000, the Group acquired substantially all of the assets of Arcom Limited
in the United  Kingdom.  The  purchase  price for the  acquisition  included  an
initial  payment of L1.8  million  paid by  Cordiant  through  the  issuance  of
Cordiant  shares,  and a further  payment  is due in the year 2003  based on the
average  profits




                                      F-12
<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES

for the  preceding  three years.  Estimated  total  additional  payments of L0.9
million have been accrued.  The contingent payment will be paid entirely through
the issuance of Cordiant shares.

In July 2000,  the Group acquired the whole of the share capital of Donino White
and  Partners  in the United  States.  The  purchase  price for the  acquisition
included  an initial  payment  of L7.3  million  paid by  Cordiant  through  the
issuance of Cordiant  shares,  and  further  payments  are due in the years 2002
through to 2003 based on the average  profits  for the  preceding  three  years.
Estimated  total  additional  payments of L2.5  million have been  accrued.  The
contingent payment will be paid entirely through the issuance of Cordiant ADSs.

In August 2000,  the Group  acquired a 85% holding in PPR Limited in  Australia.
The  purchase  price for the  acquisition  included  an initial  payment of L1.7
million paid in cash, and further  payments are due in the years 2002 through to
2003 based on the average profits for the preceding three years. Estimated total
additional payments of L4.4 million have been accrued.

In  September  2000,  the Group  acquired a 100%  holding in  Lighthouse  Global
Network, Inc. The purchase price for the acquisition included an initial payment
of L283.1  million paid by Cordiant  through the  issuance of Cordiant  Ordinary
shares,  ADSs and transferred  share options.  The acquisition also provides for
additional  contingent  payments estimated at L17.7 million to be made to former
vendors of business  acquired by Lighthouse  Global  Network,  Inc.,  due in the
years  2001  through to 2005 based on average  earnings  before  interest,  tax,
depreciation,  and amortisation for the preceding years of certain  subsidiaries
of Lighthouse Global Network, Inc.

In October 2000, the Group  acquired a 100% holding in Generator  Limited in New
Zealand.  The purchase price for the acquisition  included an initial payment of
L2.0  million  paid in cash,  and  further  payments  are due in the years  2001
through to 2003 based on the average  profits  for the  preceding  three  years.
Estimated total additional payments of L1.6 million have been accrued.

In November  2000,  the Group  acquired the whole of the share capital of Bamber
Forsyth  Limited in the United  Kingdom.  The purchase price for the acquisition
included  an initial  payment  of L7.0  million  paid by  Cordiant  through  the
issuance of Cordiant  shares,  and  further  payments  are due in the years 2001
through to 2004 based on the average  profits  for the  preceding  three  years.
Estimated  total  additional  payments of L9.0  million have been  accrued.  The
contingent  payment  will be paid  entirely  through  the  issuance  of Cordiant
shares.

In November  2000, the previous 32% holding in Newcomm Bates Group in Brazil was
increased by the  acquisition of an additional 19% interest.  The purchase price
for the additional  acquisition included an initial payment of L8.1 million paid
in cash,  and further  payments  are due in the years 2001 and 2003 based on the
average  profits for the  preceding  three  years.  Estimated  total  additional
payments of L8.7 million have been accrued.

In November  2000,  the Group acquired an 80% holding in Intercom KG in Germany.
The  purchase  price for the  acquisition  included  an initial  payment of L6.5
million paid by Cordiant  through the issuance of Cordiant  shares,  and further
payments are due in the years 2001 through to 2004 based on the average  profits
for the  preceding  three years.  Estimated  total  additional  payments of L0.1
million have been accrued.




                                      F-13
<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES

During 2000,  the Group  acquired a 100% holding in One Four One,  Inc.,  in the
Philippines;  acquired a 100%  holding in  Camerote,  in Spain;  acquired a 100%
holding in Impressionist,  in Finland;  acquired a 100% holding in CKMP Limited,
in the  United  Kingdom;  acquired  substantially  all of the  assets  of Herman
Beasley Limited  Limited in the United  Kingdom;  acquired an 85% holding in Big
Island Limited,  in Australia;  the previous 28.9% holding in Ideaworks Limited,
in Australia,  was increased by the  acquisition  of an  additional  46.2%;  the
previous 31.3% holding in Marketforce  Limited,  in Australia,  was increased by
the  acquisition  of an  additional  18.8%;  acquired  a  100%  holding  in  ESC
Communicacion,   in  Spain.  The  consideration  paid  in  2000  for  all  these
acquisitions was L4.6 million in cash and estimated total additional payments of
L7.0 million have been accrued.

(b)      1999

In  December  1999,  the  Group  acquired  substantially  all of the  assets  of
Interactive  Edge,  Inc.,  a New York  corporation,  Interactive  Edge,  Inc., a
Connecticut  corporation and Interactive Edge, LLC, a Delaware limited liability
company, all of which were commonly owned by the sellers in the acquisition. The
purchase price for the  acquisition  included an initial payment of $6.1 million
paid by Cordiant  through the  issuance of Cordiant  ADSs having a value of $5.5
million and $600,000 in cash.  The  acquisition  also provides for an additional
contingent  payment  in  2003 of up to a  maximum  of  $18.9  million  based  on
Interactive Edge achieving  certain revenues and operating margins for the three
years ending  December 31, 2002.  The  contingent  payment will be paid entirely
through the issuance of Cordiant ADSs. The Group had accrued an estimated  total
additional  deferred  consideration  of L11.5 million on acquisition at December
31,  1999,  payable in Cordiant  ADSs,  and at  December  31, 2000 the Group has
revised it's estimate and has now accrued a total amount of L7.4 million.

In December  1999,  the Group  acquired an 80% interest in the share  capital of
Diamond Ad Ltd. The initial consideration was L14.8 million and further payments
were due in the years  2000,  2001,  and 2002  based on a  multiple  of  average
operating profits in 1999 to 2001, to a maximum of L82.1 million. As at December
31, 1999 further payments,  based upon management's  forecasts were estimated at
L25.8  million.  A payment of L34.9  million  was made in October  2000,  and at
December 31, 2000 it is expected that there will be no more payments.

In October 1999, the previous 63% holding in Bates Fernandez SA in Argentina was
increased by the acquisition of an additional 7%, for nil consideration.

In November 1999,  the previous 60% holding in Bates Poland Sp z.o.o.  in Poland
was  increased  by the  acquisition  of an  additional  40%,  for  L0.1  million
consideration.

In November  1999,  the previous 80% holding in Dr Puttner  Bates  Werebeagentur
GmbH in Austria was increased by the  acquisition of the remaining 20%, for L0.3
million consideration.

During 1999, the Group acquired a 100% holding in Cronert in Sweden, 55% holding
in LdV in Belgium,  75% holding in Rodergas and Promopoma in Spain, 100% holding
in Blue  Skies  Ltd in United  Kingdom,  50%  holding  in Appel  Grafik  GmbH in
Germany, 100% holding in Bates Clarion in India, 51% holding in Bates Romania in
Romania,  and 100% holding in Sarkka in Finland.  The consideration paid in 1999
for all  these  acquisitions  was  L3.7  million  in cash  and  estimated  total
additional payments of L0.2 million have been accrued at December 31, 2001.




                                      F-14
<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES

(c)     1998

In November  1998,  the purchase of the  remaining  24.9% of The  Communications
Group Pty Ltd, the holding  company of its Australian  subsidiaries,  previously
held by management,  was completed.  The  acquisition was effective from July 1,
1998. The cost of acquisition  was L6.7 million,  of which L3.3 million was paid
in cash and L3.4 million by the issue of shares.

In July 1998, the Group acquired the whole of the share capital of The Criterion
Group,  Inc.,  renamed Bates Travel and Tourism,  Inc.. The initial  payment was
US$1.9 million (Ll.2  million) and further  payments were due in the years 1999,
2000 and 2001 based on the average  profits for the preceding  three years.  The
Group had  accrued  estimated  total  additional  payments  of L2.6  million  on
acquisition  at December  31,  1998.  A payment of L2.6  million was made during
1999,  and at December 31, 2000 the Group has revised it's  estimate and has now
accrued a total amount of L0.7 million.

In October  1998,  the Group  acquired the whole of the issued share  capital of
Churchill  Advertising  Group, Inc. renamed Bates Churchill  Advertising  Group,
Inc.,  and Churchill  Group,  Inc.,  renamed Bates  Churchill  Group,  Inc.. The
acquisition  was  effective  from July 1, 1998.  The initial  payment was US$1.3
million (L0.8  million) and further  payments were due in the years 1999,  2000,
2001 and 2002 based on the average  revenue of the 4 years ended June 30,  2002.
The Group had accrued  estimated  total  additional  payments of L3.3 million on
acquisition at December 31, 1998. Two payments  totalling L0.9 million were made
during  1999 and 2000,  and at  December  31,  2000 the Group has  revised  it's
estimate and has now accrued a total amount of L1.9 million.

In October  1998,  the previous 10% holding in Verdino Bates SA in Argentina was
increased by the acquisition of an additional 80%. Subsequently Verdino Bates SA
acquired the whole of the share capital of Fernando Fernandez SA in exchange for
a 30%  share of  Verdino  Bates SA with  which it has been  merged.  The  merged
company  has been  renamed  Verdino  Bates  Fernando  Fernandez  SA. The capital
restructuring reduces the Group's holding to 63%. The payment for the additional
shares was L1.4 million based on average profits for the years 1997 to 1999. Put
and call  options  that were  granted  during 1998 for an  additional  7% of the
shares were exercised during 1999.

During 1998,  the Group  acquired  50.8% holding in EMC Starke & Gerlach GmbH in
Germany,  51% holding in Kontoret As  Reklamebyra  in Norway and 100% holding in
Not Just Film in The Netherlands.  The consideration  paid in 1998 for all these
acquisitions  was L0.7  million in cash and with further  consideration  of L0.1
million payable in the years 2002 and 2003.

Disposals

No disposals took place in 2000, 1999 and 1998 (other than Bates Japan Ltd).

The  share  capital  of  Bates  Japan  Ltd was  restructured  during  the  year,
converting it from a wholly-owned  subsidiary to a 31% joint venture  investment
in the renamed  Saatchi & Saatchi Bates Yomiko KKK. No profit or loss arose as a
result of this.




                                      F-15
<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES

Contingent and Deferred Capital Payments

The Group may make  capital  payments in future  years as a result of  contracts
entered into to acquire  additional  interests in  subsidiaries  and  associated
companies.  Such payments are  contingent  on the levels of profits  achieved by
those  companies and may be partially paid by the issue of shares at the Group's
option. In addition,  the Group is committed to make certain capital payments in
the form of deferred consideration.  The Directors best estimate of commitments,
totalling  L79.4 million (1999:  L51.4 million) have been accrued in the balance
sheet,  of this amount  L45.6  million is payable in cash with the  remainder of
L33.8 million being payable in new Cordiant Communications Group plc shares.

Cordiant  estimates  that, at the rates of exchange ruling at December 31, 2000,
the  total  contingent  payments  (including  interest)  that may be made are as
follows:

                                  2000         1999
                                  Lm           Lm
                               ------------ ------------
Due within 1 year                 12.6         33.4
Due within years 2-5              66.8         18.0
                               ------------ ------------
                                  79.4         51.4
                               ============ ============

Note 3 - Operating and Administrative Expenses

Operating and administrative  expenses from continuing  operations  included the
following:

<TABLE>
<CAPTION>
<S>                                                          <C>            <C>              <C>

                                                                        Year ended December 31,
                                                             ----------------------------------------------
                                                                  2000           1999             1998
                                                                  Lm             Lm               Lm
                                                             -------------- ---------------- --------------
Staff and associated costs (see note 5)                           274.8          184.4            168.9
Depreciation of owned fixed assets                                 13.4           10.3              9.5
Depreciation of assets held under finance leases                    0.2            0.1              0.2
Hire of plant and machinery - operating leases (see note            0.2            1.9              1.6
   26)
Hire of other assets - leasehold property net of sublease
   income (see note 26)                                            22.3           18.7             17.2
Loss/(profit) on sale of tangible fixed assets                      -              0.1             (0.1)
Goodwill written off                                                -              -                0.2
Auditor's remuneration, including expenses                          1.5            1.0              1.0
Auditor's remuneration, other than audit fees                       1.4            0.4              0.3
Other administrative expenses, including exceptional items        137.8           85.4             77.0
                                                             -------------- ---------------- --------------
                                                                  451.6          302.3            275.8
                                                             ============== ================ ==============

</TABLE>

Of the  other  fees paid to the  auditors  and their  associates,  L0.9  million
related  to advice on the  integration  of  acquired  companies  and  associated
corporate  reorganisations.  For the year ended  December  31, 2000 the auditors
were also paid L1.7 million which has been  capitalised  as part of the goodwill
arising on acquisitions.

Cordiant made  charitable  donations in the United Kingdom of L14,000,  L97,000,
and L14,000 in the years ended December 31, 2000, 1999 and 1998, respectively.


                                      F-16
<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES



Note 4 - Exceptional Operating Items

Included  in  Operating  and  Administrative  Expenses  in Note 3 above  are the
following exceptional items:


                                          Total    Total     Total
                                          2000     1999      1998
                                          Lm       Lm        Lm
                                          -------- --------- ---------
Goodwill written off                         -       -       2.2
                                          ======== ========= =========


The goodwill written off in 1998 relates to the Group's  Indonesian  subsidiary.
The decision was taken in view of the economic uncertainty in that country.

Note 5 - Employees

<TABLE>
<CAPTION>
Average number of employees of Cordiant by geographic area:                   Year ended December 31,
                                                                         ----------------------------------
                                                                               2000        1999       1998
                                                                         ----------- ----------- ----------
<S>                                                                      <C>         <C>         <C>
United Kingdom                                                                1,878         520        523
North America                                                                 1,491         941        882
Continental Europe                                                            2,286       1,850      1,676
Asia Pacific and Latin America                                                2,712       1,842      1,823
                                                                         ----------- ----------- ----------
                                                                              8,367       5,153      4,904
                                                                         =========== =========== ==========


                                                                              Total       Total      Total
                                                                              2000        1999       1998
                                                                              Lm          Lm         Lm
                                                                         ----------- ---------- -----------
Wages and salaries                                                            244.7       163.2      150.0
Social security costs                                                          22.0        16.5       14.5
Pension costs - see Note 25                                                     8.1         4.7        4.4
                                                                         ----------- ----------- ----------
                                                                              274.8       184.4      168.9
                                                                         =========== =========== ==========

</TABLE>

                                      F-17
<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


Note 6 - Net Interest and Similar Charges
<TABLE>
<CAPTION>

                                                                              Year ended December 31,
                                                                         ----------------------------------
                                                                             2000        1999       1998
                                                                             Lm          Lm         Lm
                                                                         ----------- ----------- ----------
<S>                                                                      <C>         <C>         <C>
Interest payable and similar charges:
On bank loans, overdraft facilities and other loans required to be
repaid within five years                                                     12.3        4.9         3.6
On capitalized leases and hire purchase                                       0.1        0.1         0.1
Bank fees                                                                     1.3        0.7         0.7
Foreign exchange                                                              -          0.2         0.3
                                                                         ----------- ----------- ----------
                                                                             13.7        5.9         4.7
                                                                         ----------- ----------- ----------
Interest receivable and similar items:
On cash and deposits                                                          (3.7)       (1.5)       (1.7)
Note interest                                                                  -           -          (0.1)
                                                                         ----------- ----------- ----------
                                                                              (3.7)       (1.5)       (1.8)
                                                                         ----------- ----------- ----------
Group net interest payable and similar items                                  10.0         4.4         2.9
Net interest receivable
- Joint ventures                                                              (1.7)       (0.5)       (0.1)
- Associated undertakings                                                      0.1        (0.1)       (0.1)
                                                                         ----------- ----------- ----------
Net interest payable and similar items                                         8.4         3.8         2.7
                                                                         =========== =========== ==========

</TABLE>

Note 7 - Taxes on Income

Taxes on income were made up as follows:


<TABLE>
<CAPTION>
                                                                              Year ended December 31,


                                                                         ----------------------------------
                                                                              2000        1999       1998
                                                                              Lm          Lm         Lm
                                                                         ----------- ----------- ----------
<S>                                                                      <C>         <C>         <C>
UK corporation tax:
Currently payable                                                             (0.8)        0.1       1.3
Relief for overseas tax                                                       (0.1)       (0.1)     (0.1)
Deferred                                                                       0.4       -           -
                                                                         ----------- ----------- ----------
                                                                              (0.5)      -           1.2
Overseas taxation:
Currently payable                                                             15.0         9.5       5.7
Deferred                                                                       1.1        (0.7)      1.4
                                                                         ----------- ----------- ----------
Group taxation                                                                15.6         8.8       8.3
Joint ventures                                                                 2.0         1.1       0.5
Associated undertakings                                                        0.5         0.7       0.4
                                                                         ----------- ----------- ----------
Tax on ordinary activities                                                    18.1        10.6       9.2
                                                                         =========== =========== ==========

</TABLE>

                                      F-18
<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


The above  charges  reconcile as follows with the  standard UK  corporation  tax
rates:

<TABLE>
<CAPTION>

                                                                              Year ended December 31,
                                                                   ----------------------------------------------
                                                                        2000            1999           1998
                                                                        Lm              Lm             Lm
                                                                   ---------------- -------------- --------------
<S>                                                                <C>              <C>            <C>

Tax charge in financial statements                                     (18.1)          (10.6)          (9.2)
Tax charge on pre-tax profit at 30% (1999: 30.25%, 1998: 30.75%)       (17.3)           (9.8)          (7.6)
                                                                   ---------------- -------------- --------------
Difference                                                              (0.8)           (0.8)          (1.6)
                                                                   ================ ============== ==============

Deferred tax credits not available                                       0.2            (0.4)           2.3
Permanent differences between expenditures charged in arriving
   at income and expenditures allowed for tax purposes:
    UK                                                                  (2.4)           (1.3)          (1.8)
    US                                                                   0.9            (0.6)           0.1
    Rest of World                                                       (1.0)           (0.8)          (1.1)
    Unrelieved profit/(losses)                                           1.9             4.4           (1.3)
   Difference between UK and overseas standard tax rates                (3.0)           (2.7)          (1.8)
Other items                                                              2.6             0.6            2.0
                                                                   ---------------- -------------- --------------
Difference above                                                        (0.8)           (0.8)          (1.6)
                                                                   ================ ============== ==============

The components of profit before taxation are as follows:

                                                                              Year Ended December 31,
                                                                   ----------------------------------------------
                                                                        2000            1999           1998
                                                                        Lm              Lm             Lm
                                                                   ---------------- -------------- --------------
Domestic (UK)                                                            6.2              3.1            3.0
Foreign                                                                 51.3             29.2           21.7
                                                                   ---------------- -------------- --------------
                                                                        57.5             32.3           24.7
                                                                   ================ ============== ==============

</TABLE>

At December 31, 2000, the Group had L98 million of operating loss  carryforwards
expiring  between  2001 and 2020.  Additionally,  the Group had L30  million  of
operating loss carryforwards,  which had no expiration date. It is possible that
all or part of the operating loss  carryforwards  expiring between 2001 and 2020
may be  restricted  or  eliminated  under  any of  several  statutory/regulatory
provisions  or  judicially-created  doctrines.   Moreover,  the  operating  loss
carryforwards  are generally only available to offset future income of the Group
within  the  tax  jurisdiction  where  the  operating  loss  arose,  and are not
transferable between jurisdictions.

Reference should be made to Note 21, Deferred Taxation.


                                      F-19
<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


Note 8 - Earnings Per Ordinary Share

Basic  earnings  per  Ordinary  Share has been  calculated  on earnings  ofL33.6
million  (1999:L18.6  million,  1998: L13.8 million) based on 293,974,656 shares
(1999:  226,583,809 shares; 1998: 222,436,033 shares) being the weighted average
number of Ordinary  Shares in issue during the  periods.  The number of Ordinary
Shares in issue at December 31, 2000 was 364,561,997 (1999: 228,782,839).

Share options  outstanding under the employee share schemes are considered to be
common stock equivalents, and are included in the earnings per share calculation
only when they are dilutive. Diluted earnings per ordinary share have been based
on 317,959,652 shares (1999: 239,578,425 shares; 1998: 223,337,644).


Note 9 - Short-Term Investments

Short-term  investments  comprised overseas unlisted investments of L1.1 million
and cash deposits of L1.3 million.  In 1999,  overseas  unlisted  investments of
L1.1 million and cash deposits of L6.4 million.


Note 10 - Accounts and Other Receivables, Prepayments and Accrued Income

<TABLE>
<CAPTION>
                                                                       2000               1999
                                                                       Lm                 Lm
                                                                ------------------- ------------------
<S>                                                             <C>                 <C>
Due within one year:
Trade receivables (net of allowances for doubtful debts)              401.1               303.4
Amounts due from joint ventures and associated undertakings             0.6                 1.2
Other receivables                                                      22.7                12.0
Prepayments and accrued income                                         27.7                19.4
                                                                ------------------- ------------------
                                                                      452.1               336.0
                                                                =================== ==================
Due after one year:
Other receivables                                                       4.9                 3.2
Prepayments and accrued income                                         20.6                16.9
                                                                ------------------- ------------------
                                                                       25.5                20.1
                                                                ------------------- ------------------
</TABLE>

Reference  should be made to Note 11 concerning  the amounts of  allowances  for
doubtful debts for each of the years presented.


                                      F-20
<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES

Note 11 - Valuation and Qualifying Accounts

<TABLE>
<CAPTION>

                                                                      Additions
                                                    Balance at        charged to                         Balance
                                                    beginning         costs and                          at end of
                  Description                       of period         expenses        Deductions*        period
                  -----------                         Lm                 Lm                Lm              Lm
                                                  ---------------- ----------------- ---------------- ----------------
<S>                                               <C>              <C>               <C>              <C>
Year ended December 31, 2000:
   Allowance for doubtful accounts (deducted
   from accounts receivable)                           11.2              7.1                -              18.3
   Allowance for non-recoverable billable
   production (deducted from billable
   production)                                          0.7              0.4                -               1.1
------------------------------------------------- ---------------- ----------------- ---------------- ----------------
Year ended December 31, 1999:
   Allowance for doubtful accounts (deducted
   from accounts receivable)                            7.5              3.7                -              11.2
   Allowance for non-recoverable billable
   production (deducted from billable
   production)                                          2.1               -               (1.4)             0.7
------------------------------------------------- ---------------- ----------------- ---------------- ----------------
Year ended December 31, 1998:
   Allowance for doubtful accounts (deducted
   from accounts receivable)                            7.3              0.2                -               7.5
   Allowance for non-recoverable billable
   production (deducted from billable
   production)                                          3.2               -               (1.1)             2.1
------------------------------------------------- ---------------- ----------------- ---------------- ----------------
</TABLE>

*    Substantially represents amounts utilized against specific non-recoverable
     billable production and bad debts arising during the periods.

Note 12 - Long-Term Investments

<TABLE>
<CAPTION>

                                          Associated undertakings
                                     ----------------------------------
                                         Share of
                                       tangible net       Share of                     Long term
                                          assets          Goodwill         Total      investments      Total
                                            Lm               Lm               Lm            Lm            Lm
                                     ----------------- ---------------- ------------- ------------- ------------
<S>                                  <C>               <C>              <C>           <C>           <C>
Cost or valuation
At beginning of year                        3.7              7.5             11.2           1.2          12.4
Additions                                   -                0.3              0.3           5.0           5.3
Disposals                                   -                -                -            (0.1)         (0.1)
Transfer to Group subsidiary               (0.3)            (4.7)            (5.0)          -            (5.0)
Share of retained profit                   (0.8)             -               (0.8)          -            (0.8)
                                     ----------------- ---------------- ------------- ------------- ------------
At end of year                              2.6              3.1              5.7           6.1          11.8
                                     ================= ================ ============= ============= ============
</TABLE>

The transfer to Group subsidiary  relates to Newcomm Bates,  where an additional
19% was purchased in December 2000, increasing the Group ownership to 51%.

All long-term investments are unlisted.

The  Group's  investment  in Zenith is  classified  as a joint  venture,  and is
represented by a net deficit and disclosed as a provision (see Note 18).


                                      F-21
<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


Note 13 - Property and Equipment

<TABLE>
<CAPTION>

                                           Leasehold     Leasehold     Information
                              Freehold      property      property      technology     Furniture and       Motor
                              property       - long        - short      equipment     other equipment    vehicles        Total
                                  Lm          Lm            Lm             Lm               Lm              Lm            Lm
                            ------------ ------------ -------------- --------------- ---------------- -------------- -------------
<S>                         <C>          <C>          <C>            <C>             <C>              <C>            <C>

Cost
At beginning of year              0.8          0.3         17.2           35.2            27.3              3.3           84.1
Translation adjustment            -            -            0.5            0.3             0.3              -              1.1
Additions                         -            -            6.7            7.9             6.0              1.0           21.6
Companies acquired                0.6          2.7          1.7            7.5             5.0              1.1           18.6
Disposals                         -           (0.1)        (1.5)          (3.2)           (2.7)            (1.3)          (8.8)
                            ------------ ------------ -------------- --------------- ---------------- -------------- -------------
At end of year                    1.4          2.9         24.6           47.7            35.9              4.1          116.6
                            ------------ ------------ -------------- --------------- ---------------- -------------- -------------
Depreciation
At beginning of year              -            0.2          7.7           24.2            15.9              2.4           50.4
Translation adjustment            -            -            0.1            0.1             -                -              0.2
Charge for the year               -            0.1          2.1            6.4             4.3              0.7           13.6
Disposals                         -           (0.1)        (1.2)          (2.7)           (2.2)            (1.0)          (7.2)
                            ------------ ------------ -------------- --------------- ---------------- -------------- -------------
At end of year                    -            0.2          8.7           28.0            18.0              2.1           57.0
                            ------------ ------------ -------------- --------------- ---------------- -------------- -------------
Net book value
At beginning of year              0.8          0.1          9.5           11.0            11.4              0.9           33.7
                            ============ ============ ============== =============== ================ ============== =============
At end of year                    1.4          2.7         15.9           19.7            17.9              2.0           59.6
                            ============ ============ ============== =============== ================ ============== =============
Net book value of assets
held under finance leases
included above
At beginning of year                 -            -            -           0.1             0.2              -              0.3
                            ============ ============ ============== =============== ================ ============== =============
At end of year                       -            -            -           0.3             0.1              0.1            0.5
                            ============ ============ ============== =============== ================ ============== =============

</TABLE>


Net book value of land and buildings at end of year wasL20.0 million (1999:L10.4
million).

Depreciation  attributable  to owned  property and  equipment  was L13.4 million
(1999:L10.3 million); and depreciation attributable to assets held under finance
leases wasL0.2 million (1999:L0.1 million).

At  December  31,  2000 the  commitments  in respect of capital  expenditure  on
properties, furniture and equipment was L1.6 million (1999: L0.4 million).

                                      F-22

<PAGE>

                         CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES

Note 14 - Intangible assets - goodwill
<TABLE>
<CAPTION>

                                                                                                     2000             1999
Cost                                                                                 Note            L m              L m
--------------------------------------------------------------------------------- ----------- --------------- -----------------
<S>                                                                               <C>         <C>             <C>
At beginning of year                                                                                 79.2             16.2
Additions                                                                              15           625.7             60.4
Translation adjustment                                                                                6.9              2.6
                                                                                              --------------- -----------------
At end of year                                                                                      711.8             79.2
                                                                                              =============== =================
</TABLE>

Note 15 - The effects of the acquisition of subsidiaries in 2000

The table below summarises the aggregate of subsidiaries acquired by the Group
during 2000:
<TABLE>
<CAPTION>
                                                  L m                                                 L m
---------------------------------------- ---------------- -------------------------------- ----------------
<S>                                      <C>              <C>                              <C>
Goodwill capitalised                              625.7   Loans and finance leases                    66.2
Goodwill transferred to reserves                    0.1   Creditors                                  135.3
Tangible fixed assets                              18.6   Minorities                                   0.1
Work in progress                                   13.9   Cost of acquisitions:
Debtors                                           104.8   o cash (net)                                24.4
Current investments                                 2.0   o Cordiant shares issued                   440.9
                                                          o accruals                                  98.2
                                         ----------------                                  ----------------
                                                  765.1                                              765.1
                                         ================                                  ================
</TABLE>

The effects of the acquisitions of subsidiaries in 1999:

Owing to the timing of the  acquisitions  in the year ended  December  31, 1999,
their  results  did not have a  material  impact  on the  Group's  turnover  and
operating  profit  for the year and they have  consequently  not been  disclosed
separately on the face of the consolidated profit and loss.

The aggregate  revenue and operating  profit included in the Group's results for
the year ended  December 31, 1999 in respect of  acquisitions  in the  financial
year were L9.6 million and L2.6 million respectively.
<TABLE>
<CAPTION>

                                           Acquisitions                                    Acquisitions
                                                Lm                                             Lm
                                        -----------------                                ----------------
<S>                                     <C>                                              <C>
Goodwill capitalized                            60.4      Loans and finance leases             11.9
Goodwill transferred to reserves                 3.1      Creditors                            68.1
Tangible fixed assets                            2.9      Minorities                            0.4
Work in progress                                 0.6      Cost of acquisitions
Debtors                                         70.4      - cash (net)                         19.8
Current investments                              4.4      - Cordiant shares issued              4.1
                                                          - accruals                           37.5
                                        -----------------                                -------------------
                                               141.8                                          141.8
                                        =================                                ===================
</TABLE>

Goodwill of L3.1 million has been written off directly to reserves in respect of
adjustments  made to estimates of deferred  consideration  on acquisitions  made
prior to January 1, 1998.

                                      F-23

<PAGE>

                         CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES

The effects of the acquisitions and disposal of subsidiaries in 1998:

<TABLE>
<CAPTION>
                                   Acquisitions    Disposals                                    Acquisitions  Disposals
                                        Lm         Lm                                                 Lm            Lm
                                   -------------- -----------                                  ------------- -----------
<S>                                <C>            <C>                                          <C>           <C>
Goodwill capitalized (net)                 16.4            -  Loans and finance leases                0.2         (0.8)
Goodwill transferred to reserves            4.6         (2.4) Creditors                               9.0        (15.5)
Tangible fixed assets                       0.7         (0.5) Provision for joint venture
                                                              deficit                                 -            1.0
Work in progress                            0.6         (1.1) Minorities                             (0.7)          -
Debtors                                     7.2        (13.3) Cost of acquisitions
Cash in companies disposed of                  -        (0.4) - cash (net)                            6.8           -
Cash received                                  -         2.4  - Cordiant shares issued                3.4           -
                                                              - investments                           0.4           -
                                                              - accruals                             10.4           -
                                   -------------- -----------                                  ------------- -----------
                                           29.5        (15.3)                                        29.5        (15.3)
                                   ============== ===========                                  ============= ===========
</TABLE>

The  effects  of the  acquisition  of  Healthworld  Corporation  in the  year to
December 31, 2000

The  following  table sets out the book  values of the  identifiable  assets and
liabilities of Healthworld Corporation, in the United States, acquired and their
fair value to the Group:

<TABLE>
<CAPTION>
                                                                 Book          Fair value        Fair value
                                                                 Value        Adjustments         to Group
                                                  Note           L m                 L m          L m
                                            ----------------- ------------- ------------------ -----------------
<S>                                         <C>               <C>           <C>                <C>

Fixed assets                                                         3.0                -                3.0

Current assets                                     a                51.1               (0.2)            50.9
                                                              ------------- ------------------ -----------------
Total assets                                                        54.1               (0.2)            53.9
                                                              ------------- ------------------ -----------------

Creditors                                          a               (45.3)              (1.8)           (47.1)
                                                              ------------- ------------------ -----------------
Net assets/(liabilities)                                             8.8               (2.0)             6.8
                                                              ============= ================== =================

Goodwill                                                                                               155.1
                                                                                               ----------------
                                                                                                       161.9
                                                                                               =================
Satisfied by:
Shares issued                                                                                          138.0
Acquisition costs                                                                                       10.3
Contingent earnout payments                                                                              3.3
Options yet to be exercised                                                                             10.3
                                                                                               -----------------
Total consideration                                                                                    161.9
                                                                                               =================
</TABLE>

<PAGE>

Healthworld  Corporation  is  headquartered  in the  United  States.  Contingent
earnout payments are based on management's  forecasts of the earnings of various
underlying units.  Material  adjustments  necessary to restate the net assets of
Healthworld Corporation to their fair value were:

a     Fair value adjustment to provide for additional provision against
      irrecoverable debtors, and for relocation of premises and redundancies,
      committed prior to acquisition, not accrued in the company's management
      accounts.

                                      F-24

<PAGE>


                         CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


                                                                    2000
Net cash outflows in respect of the acquisition comprised:          L m
                                                           -----------------

Acquisition costs                                                    10.3
Cash at bank and in hand                                             (9.0)
Bank overdrafts acquired                                              1.7
                                                           -----------------
Total                                                                 3.0
                                                           =================

There was no charge to the Group's  profit and loss  account in respect of costs
incurred in reorganising,  restructuring  and integrating the acquisition in the
period from effective date of acquisition of March 2, 2000 to December 31, 2000.

The Healthworld  Group of companies  acquired during the year  contributed  L5.5
million in respect to the Group's net  operating  cash flows,  contributed  L0.3
million in respect of net returns on investments and servicing of finance,  paid
L0.4  million in respect of tax, and had net receipts of L0.1 million in respect
of capital  expenditure.  Healthworld  generated  a profit  after  taxation  and
minority  interests of L9.6 million before  exceptional  items in the year ended
December 31, 2000 (1999: L3.3 million),  of which a profit of L9.3 million arose
in the period from March 2, 2000 to December 31, 2000. The unaudited  summarised
profit and loss account and unaudited  statement of total  recognised  gains and
losses for the year from January 1, 2000 to March 1, 2000,  extracted from local
management accounts, and shown under UK GAAP, and on the basis of the accounting
policies of Healthworld prior to the acquisition, are as follows:


                                                           Pre-Acquisition
Profit and loss account                                      Period to
                                                            March 1, 2000
                                                                L m
-------------------------------------------------------------------------------


Turnover                                                        18.7
Cost of sales                                                   (9.6)
                                                                --------
Revenue                                                          9.1
                                                                --------
Net operating expenses                                          (8.8)
Exceptional items                                               (2.7)
                                                                --------
Total net operating expenses                                   (11.5)
                                                               ---------
Operating loss                                                  (2.4)
Net interest payable and similar items                           -
                                                                --------
Loss on ordinary activities before tax                          (2.4)
Tax on profit on ordinary activities                             -
                                                                --------
Loss on ordinary activities after tax                           (2.4)
Minority interests                                               -
                                                                --------
Loss for the pre-acquisition period                             (2.4)
                                                                ========



                                      F-25

<PAGE>


                         CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES

<TABLE>
<CAPTION>

                                                                                              Pre-acquisition
                                                                                                    Period to
                                                                                                     March 1,
                                                                                                         2000
Statement of total recognised gains and losses                                                            L m
----------------------------------------------------------------------------------------------- ------------------
<S>                                                                                           <C>
Loss for the pre-acquisition period                                                                      (2.4)
Translation adjustment                                                                                    -
                                                                                                ------------------
Total recognised gains and losses relating to the pre-acquisition period                                 (2.4)
                                                                                                ==================
</TABLE>

The effects of the acquisition of Lighthouse Global Network, Inc. in the year to
December 31, 2000

The  following  table sets out the book  values of the  identifiable  assets and
liabilities of Lighthouse Global Network,  Inc. acquired and their fair value to
the Group:

<TABLE>
<CAPTION>

                                                                                    Book        Fair value       Fair value
                                                                                    Value       Adjustments      to Group
                                                                      Note          L m            L m              L m
                                                                     -------- -------------- ----------------- ----------------
<S>                                                                  <C>      <C>            <C>               <C>

Fixed assets                                                                         10.2                -             10.2

Current assets                                                          a            72.6               (2.2)          70.4
                                                                              -------------- ----------------- ----------------
Total assets                                                                         82.8               (2.2)          80.6
                                                                              -------------- ----------------- ----------------

Current Liabilities                                                     a          (130.2)              (0.1)        (130.3)
                                                                              -------------- ----------------- ----------------
Net liabilities                                                                     (47.4)              (2.3)         (49.7)
                                                                              ============== ================= ================

Goodwill                                                                                                              364.7
                                                                                                               ----------------
                                                                                                                      315.0
                                                                                                               ================

Satisfied by:
Shares issued                                                                                                         272.5
Acquisition costs paid and accrued                                                                                     14.2
Contingent earnout payments                                                                                            17.7
Options yet to be exercised                                                                                            10.6
                                                                                                               ----------------
Total consideration                                                                                                   315.0
                                                                                                               ================
</TABLE>

Lighthouse  Global  Network,   Inc.  is  headquartered  in  the  United  States.
Contingent earnout payments are based on management's  forecasts of the earnings
of various underlying units.  Material adjustments  necessary to restate the net
assets of Lighthouse Global Network, Inc. to their fair value were:

a    Fair  value  adjustment  for  additional  provision  against  irrecoverable
     debtors and legal  accruals,  not provided for in the company's  management
     accounts.

                                      F-26
<PAGE>


                         CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


                                                                       2000
Net cash outflows in respect of the acquisition comprised:             L m
                                                                 ---------------

Acquisition costs                                                      8.6
Cash at bank and in hand                                              (6.0)
Bank overdrafts acquired                                               1.0
                                                                 ---------------
Total                                                                  3.6
                                                                 ===============


The charge to the Group's  profit and loss account in respect of costs  incurred
in  reorganising,  restructuring  and  integrating the acquisition in the period
from effective date of acquisition of September 6, 2000 to December 31, 2000 was
L0.6 million.
The  Lighthouse  Global  Network  Group of  companies  acquired  during the year
contributed L2.9 million in respect to the Group's net operating cash flows.
Lighthouse Global Network,  Inc.  generated a profit after taxation and minority
interests  of L11.3  million in the year ended  December  31, 2000  (1999:  L0.9
million),  of which a profit of L4.1 million arose in the period from  September
6, 2000 to December 31, 2000. The unaudited  summarised  profit and loss account
and unaudited  statement of total  recognised gains and losses for the year from
January 1, 2000 to September 5, 2000,  extracted from local management accounts,
and  shown  under  UK  GAAP,  and on the  basis of the  accounting  policies  of
Lighthouse Global Network, Inc. prior to the acquisition, are as follows:


                                                         Pre-acquisition
                                                               Period to
                                                             September 5,
                                                                    2000
Profit and loss account                                              L m
-----------------------------------------------------------------------------

Turnover                                                           137.8
Cost of sales                                                      (61.1)
                                                         --------------------
Revenue                                                             76.7
Net operating expenses                                             (60.9)
                                                         --------------------
Operating profit                                                    15.8
Net interest payable and similar items                              (4.6)
                                                         --------------------
Profit on ordinary activities before tax                            11.2
Tax on profit on ordinary activities                                (4.0)
                                                         --------------------
Profit on ordinary activities after tax                              7.2
Minority interests                                                   -
                                                         --------------------
Profit for the pre-acquisition period                                7.2
                                                         ====================

<PAGE>


                                                             Pre-acquisition
                                                                   Period to
                                                                September 5,
                                                                        2000
Statement of total recognised gains and losses                           L m
-----------------------------------------------------------------------------


Profit for the pre-acquisition period                                7.2
Translation adjustment                                              (1.0)
                                                         --------------------
Total recognised gains and losses relating to
  the pre-acquisition period                                         6.2
                                                         ====================

                                      F-27
<PAGE>

                         CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


Note 16 - Bank Loans, Overdrafts and Other Loans

<TABLE>

<CAPTION>
                                                       Balance at end of     Weighted average
                                                             period           interest rate
                                                       ------------------- ---------------------

                                                             Year ended December 31, 2000
                                                             Lm                      %
                                                       ------------------- ---------------------
<S>                                                   <C>                  <C>
Bank loans and overdrafts                                    136.3                 7.5
                                                       =================== =====================
                                                             Year ended December 31, 1999
                                                             Lm                      %
                                                       ------------------- ---------------------
Bank loans and overdrafts                                      7.5                 7.9
                                                       =================== =====================
</TABLE>

An amount of L179.4  million  (1999:  L65.2  million) of the Group's  borrowings
(comprising bank loans,  overdrafts and long-term debt) is secured by guarantees
from a number of its subsidiaries.

An amount of L0.7  million  (1999:  L1.1  million)  included  in bank  loans and
overdrafts is secured by charges over assets.

Note 17 - Accounts Payable, Other Liabilities and Accrued Expenses

<TABLE>
<CAPTION>
                                                                   December 31, 2000            December 31, 1999
                                                              ----------------------------- --------------------------
                                                                Due Within     Due After     Due Within    Due After
                                                                 one year       one year      one year     one year
                                                                    L m           L m           L m           L m
                                                              --------------- ------------- ------------- ------------
<S>                                                          <C>              <C>           <C>           <C>
Accounts payable                                                    342.2           -             293.2         -
Amounts payable:  Associated companies and joint ventures             7.5           -               5.4         -
Payments on account                                                  49.1           -              27.0         -
Finance leases                                                        2.8           0.9             0.5         0.2
Proposed dividends - equity shareholders                              8.4           -               5.1         -
Accruals and deferred income                                        133.1          20.6            69.0        11.5
Other payables                                                       22.6          10.0            17.1        12.9
                                                              --------------- ------------- ------------- ------------
                                                                    565.7          31.5           417.3        24.6
                                                              =============== ============= ============= ============
</TABLE>

An amount of L0.6  million  (December  31,  1999:  L5.3  million) is included in
accounts  payable is secured by related  trade  receivables.  Liabilities  under
finance leases are secured on the assets leased.


                                      F-28
<PAGE>


                         CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


Note 18 - Property, Pension and Other Provisions
<TABLE>
<CAPTION>
                                                                Pensions
                                                              and similar
                                                               employment                               Joint
                                                  Property    obligations     Other        Total      ventures
                                                     Lm            Lm           Lm          Lm            Lm
                                                 ------------ ------------- ----------- ------------ ------------
<S>                                                  <C>           <C>           <C>        <C>          <C>

Gross provision
At beginning of year                                  28.6         16.8           1.5        46.9         14.4
Translation                                            0.2          1.1          (0.1)        1.2         (0.7)
Profit and loss account                                -            1.6           1.0         2.6         (1.6)
Utilized                                              (4.0)        (1.7)         (0.2)       (5.9)         -
                                                 ------------ ------------- ----------- ------------ ------------
At end of year                                        24.8         17.8           2.2        44.8         12.1
                                                 ------------ ------------- ----------- ------------ ------------
Discount
At beginning of year                                   6.3          -             -           6.3          -
Profit and loss account                               (1.1)         -             -          (1.1)         -
                                                 ------------ ------------- ----------- ------------ ------------
At end of year                                         5.2          -             -           5.2          -
                                                 ------------ ------------- ----------- ------------ ------------
Net book value
At beginning of year                                  22.3         16.8           1.5        40.6         14.4
                                                 ============ ============= =========== ============ ============
At end of year                                        19.6         17.8           2.2        39.6         12.1
                                                 ============ ============= =========== ============ ============
</TABLE>


Property  provisions relate to future payments on vacant properties and assigned
leases, and are analyzed by year as follows:

                                                       2000        1999
                                                       Lm          Lm
                                                    ----------- ------------

Under one year                                           3.9         3.6
One to two years                                         3.3         3.5
Two to five years                                        5.4         7.2
Over five years                                          7.0         8.0
                                                    ----------- ------------
                                                        19.6        22.3
                                                    =========== ============


Provisions for joint venture  deficit*
The Group share of net  liabilities is as shown below.

                                                       2000        1999
                                                       Lm          Lm
                                                    ----------- ------------

Fixed assets                                              2.1         1.7
Current assets                                          128.5        84.4
                                                    ----------- ------------
Share of gross assets                                   130.6        86.1
                                                    ----------- ------------
Liabilities due within one year                        (142.6)      (99.9)
Liabilities due after one year                           (0.1)       (0.6)
                                                    ----------- ------------
Share of gross liabilities                             (142.7)     (100.5)
                                                    ----------- ------------
Share of joint venture net liabilities                  (12.1)      (14.4)
                                                    =========== ============

* The provision for joint venture  deficit  relates to Zenith Media Worldwide in
2000 and to Zenith Media Worldwide and Saatchi & Saatchi Bates Yomiko in 1999.


                                      F-29
<PAGE>


                         CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


Note 19 - Long-Term Debt

                                         2000              1999
                                          Lm                Lm
                                   ------------------ ----------------

Bank loans                               73.0              75.8
                                   ================== ================

In July  2000,  the Group  refinanced  it's core  banking  facilities,  with new
committed  facilities of US$400  million  (L268.5  million),  which replaced the
existing core facilities. The Group's core banking facilities are to be used for
cash  acquisition  payments,  including the  acquisition  of  Lighthouse  Global
Network, Inc. (see note 15), acquisition related costs and expenses, and for the
Group's ongoing working capital requirements.

Interest is payable on each  advance  under the  facilities  at a rate per annum
based on the aggregate of LIBOR and a margin of between 0.7% and 1.25% per annum
depending upon the Group complying with certain financial covenants.

Note 20 - Guarantees and Contingent Liabilities

In  addition  to the  amounts  described  in Notes 16 and 19,  the  Company  has
guaranteed  L8.1  million  (1999:  L2.2  million) of  borrowings  of  subsidiary
undertakings. At December 31, 2000 in total L187.5 million (1999: L67.4 million)
of such borrowings were outstanding.

The Company has also guaranteed the operating lease commitments (all relating to
leasehold  property)  of  certain  subsidiary  undertakings.  The leases are for
various  periods up to the year 2013 and the total  obligations  at December 31,
2000  amounted to L136.7  million  (1999:  L147.3  million)  and in addition the
Company has given  other  guarantees  in respect of  liabilities  of  subsidiary
undertakings  incurred  in the  normal  course of  business  amounting  to L40.6
million (1999: L12.6 million).

The Company gave a number of guarantees in respect of  obligations  of Saatchi &
Saatchi  plc  companies  which  remain  in  force.  Saatchi  &  Saatchi  plc has
undertaken  to indemnify  Cordiant  Communications  Group plc for any  liability
under these guarantees.  They include  guarantees of operating lease commitments
related to a leasehold  property in New York. The lease expires in the year 2013
and the total obligations at December 31, 2000 were L170.1 million (1998: L183.2
million).

The  Company  and  Saatchi &  Saatchi  plc have each  guaranteed  Zenith's  bank
facility of L16.5  million and have agreed  between  themselves to share equally
any liability arising therefrom. Borrowings drawn down under the Zenith facility
at December 31, 2000 were L7.7 million (1999: L5.4 million).

Other guarantees given by the Group to third parties amounted to L2.5 million at
December 31, 2000 (1999: L6.0 million).


                                      F-30
<PAGE>

                         CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


At December 31, 2000 and 1999, the Group had the following other  commitments in
respect of capital  expenditure  and  non-cancellable  operating  leases for the
following year:

                                                             2000       1999
                                                              Lm         Lm
                                                          ----------- ----------

Capital expenditure committed but not provided for           1.6         0.4
                                                          =========== ==========

<TABLE>
<CAPTION>

                                                            Land and
                                                            buildings
                                                  Gross    provisions      Net        Other        2000         1999
                                                   Lm           Lm         Lm         Lm           Lm           Lm
                                                ---------- ------------ ----------- ----------- ----------- ----------
<S>                                             <C>        <C>          <C>         <C>         <C>         <C>
Non-cancellable operating lease which expire:
Within one year                                       5.6       (0.7)        4.9         0.9         5.8         4.5
Within two to five years                             18.4       (0.5)       17.9         1.7        19.6         8.3
Over five years                                      28.3       (2.7)       25.6         0.1        25.7        14.4
                                                ---------- ------------ ----------- ----------- ----------- ----------
                                                     52.3       (3.9)       48.4         2.7        51.1        27.2
                                                ========== ============ =========== =========== =========== ==========
</TABLE>

Of the above operating lease property commitments,  an amount of L9.7 million is
recoverable from subtenants (1999: L10.2 million).


Note 21 - Deferred Taxation

                                                      2000        1999
                                                      Lm          Lm
                                                   ----------- ----------
Provisions for UK deferred taxation                     0.4         -
Provisions for overseas deferred taxation               -          1.2
                                                   ----------- ----------
                                                        0.4        1.2
                                                   =========== ==========

The Group has no material  deferred  tax  liabilities  unprovided  in respect of
accelerated capital allowances.

Unremitted  earnings  of  subsidiaries  which  have been or are  intended  to be
permanently   reinvested  to  meet  media   accreditation  and  working  capital
requirements,  exclusive  of amounts  which if remitted in the near future would
result in little or no tax by operation of relevant statutes normally in effect,
aggregated L80 million (1999: L69 million).

<PAGE>

Temporary  differences at the appropriate tax rate at December 31, 2000 and 1999
are as follows:

                                                      Asset/(liability)
                                                 ----------------------------
                                                     2000          1999
                                                      Lm            Lm
                                                 ------------- --------------

Deferred tax asset
Accrued property rental expense                        6.4           7.1
Accrued compensation                                   6.4           5.6
Capital loss carryforwards                            15.0           9.6
Operating loss carryforwards*                         50.0          51.0
Other                                                 10.8           8.6
                                                 ------------- --------------
Total deferred tax assets                             88.6          81.9
Valuation allowance                                  (84.6)        (81.9)
                                                 ------------- --------------
Net deferred tax asset                                 4.0           -
                                                 ============= ==============

                                      F-31
<PAGE>


                         CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES



Deferred tax liabilities
Other                                                 (4.4)         (1.2)
                                                 ------------- --------------
Net deferred tax liabilities                          (0.4)         (1.2)
                                                 ============= ==============

* See Note 7 for a  discussion  of  potential  restrictions  on  operating  loss
carryforwards.

A valuation  allowance  is provided to reduce the deferred tax assets to a level
which, based on the weight of available  evidence,  will more likely than not be
realized.  The net deferred asset reflects  management's  estimate of the amount
which will be realized based on this criteria.

The net change in the  valuation  allowance  for deferred tax assets during 2000
amounted to an increase of L2.7 million.

Note 22 - Taxation

This largely represents  corporation tax liabilities due to be paid in more than
one year from the date of the financial  statements.  Tax  liabilities due to be
settled in less than one year are included under current liabilities.


Note 23 - Share Capital


                                                            December 31,
                                                         2000           1999
                                                         Lm             Lm
                                                    --------------- ------------
Authorized share capital of the Company                   260.0          150.5
                                                    =============== ============
Allotted, called up and fully paid:
364,561,997 Ordinary Shares of 50p each
(1999: 228,782,839 Ordinary Shares of 50p each)           182.3          114.4
                                                    =============== ============

During the year the Company issued 5.8 million  Ordinary  shares of 50p each for
consideration of L8.3 million pursuant to receipt of notices to exercise options
from  employees of the Group.  In  addition,  the Company  issued 130.0  million
Ordinary  shares  of 50p each for a total  consideration  of L440.9  million  in
respect of the  acquisition  of the  Group's  100%  interest  in PSD  Associates
Limited,  Arcom Limited,  and Bamber Forsyth Limited in the United Kingdom,  and
Healthworld  Corporation,  Lighthouse  Global  Network,  Inc.,  Donino White and
Partners in the United  States,  and in respect of the  Group's 80%  interest in
Intercom Management GmbH in Germany.



                                      F-32
<PAGE>


                         CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


Note 24 - Employee Share Schemes

Changes  in the  number of  Cordiant  Communication  Group plc  Ordinary  Shares
issuable under options  outstanding  under the Company's  executive share option
schemes during the three year period ended December 31, 2000 were as follows:

<TABLE>

<CAPTION>

Cordiant Ordinary Shares:                                    Year ended December 31,
                                                  2000                 1999                1998
                                          --------------------- ------------------- --------------------
<S>                                       <C>                   <C>                 <C>

At beginning of year                            25,814,219            26,136,926          28,045,239
Options exercised during year                   (5,220,687)           (1,641,720)           (499,877)
Options issued during year                       2,187,109             2,268,577           1,523,078
Options lapsed during year                      (1,535,741)             (949,564)         (2,931,514)
Options rolled over from acquisitions           12,752,835                     -                   -
                                          --------------------- ------------------- --------------------
At end of year                                  33,997,735            25,814,219          26,136,926
                                          --------------------- ------------------- --------------------
Exercisable at end of year                       7,844,122             1,714,021           2,591,584
                                          --------------------- ------------------- --------------------
Weighted average exercise price                        143p                  113p                114p
                                          ===================== =================== ====================
</TABLE>

Changes  in the  number of  Cordiant  Communication  Group plc  Ordinary  Shares
issuable under options  outstanding  under  Sharesave 1995 during the three year
period ended December 31, 2000 were as follows:

<TABLE>
<CAPTION>

Cordiant Ordinary Shares:                                    Year ended December 31,
                                                  2000                 1999                1998
                                          --------------------- ------------------- --------------------
<S>                                       <C>                   <C>                 <C>

At beginning of year                             1,080,256             1,291,543           1,624,662
Options exercised during year                     (592,976)              (24,695)            (84,612)
Options issued during year                               -                     -                   -
Options lapsed during year                        (487,280)             (186,592)           (248,507)
                                          --------------------- ------------------- --------------------
At end of year                                           -             1,080,256           1,291,543
                                          --------------------- ------------------- --------------------
Exercisable at end of year                               -             1,080,256                   -
                                          ===================== =================== ====================
</TABLE>


Under  UITF 17 the Group is exempt  from  charging  the  discount  on  sharesave
options to the profit and loss account.





                                      F-33
<PAGE>


                         CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES

Options  outstanding  at December  31,  2000 under the  Company's  share  option
schemes are shown below:

<TABLE>
<CAPTION>

                                                       Date of     Number of  Exercise                         Scheme
                                                         grant        shares       price                  Exercisable
<S>                                             <C>             <C>           <C>         <C>

----------------------------------------------- --------------- ------------- ----------- ----------------------------
Number 2 Scheme                                       Jun 1991       142,973        135p                  To Jun 2001
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Sep 1991        19,209        135p                  To Sep 2001
----------------------------------------------- --------------- ------------- ----------- ----------------------------
Demerger Number 2 Scheme                              Apr 1992       112,204        107p                  To Apr 2002
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Jun 1991      339,818*        134p                  To Jun 2001
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Apr 1992        78,895        107p                  To Apr 2002
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Apr 1992        6,174*        107p                  To Apr 2002
----------------------------------------------- --------------- ------------- ----------- ----------------------------
Performance Option Scheme                             May 1995       236,562         73p         May 1998 To May 2005
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Aug 1995       236,561         95p         Aug 1998 To Aug 2005
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Apr 1996       255,000        130p         Apr 1999 To Apr 2006
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Apr 1996      515,000*        130p         Apr 2001 to Apr 2003
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Apr 1997       537,500        131p         Apr 2000 to Apr 2007
----------------------------------------------- --------------- ------------- ----------- ----------------------------
Demerger Performance Option Scheme                    Apr 1997      615,000*        131p         Apr 2002 to Apr 2004
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      May 1995        41,462         73p         May 1998 To Dec 2004
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      May 1995      109,926*         73p         May 2000 to May 2002
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Aug 1995        41,463         95p         Aug 1998 To Dec 2004
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Apr 1996        98,750        130p         Apr 1999 To Dec 2004
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Apr 1996      248,750*        130p         Apr 2001 to Apr 2003
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Apr 1997       165,000        131p         Apr 2000 to Dec 2004
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Apr 1997      186,250*        131p         Apr 2002 to Apr 2004
----------------------------------------------- --------------- ------------- ----------- ----------------------------
Performance Share Option Scheme                       Dec 1997     5,512,423        105p         Dec 2000 to Dec 2004
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      May 1998       819,434        124p         May 2001 to May 2005
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Mar 1999     1,502,527        164p         Mar 2002 to Mar 2006
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Aug 1999        93,483        176p         Aug 2002 to Aug 2006
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Mar 2000     1,210,835        358p         Mar 2003 to Mar 2007
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Jun 2000       145,684        302p         Jun 2003 to Jun 2007
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Aug 2000       145,820        347p         Aug 2003 to Aug 2007
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Dec 2000       485,858        246p         Dec 2003 to Dec 2007
----------------------------------------------- --------------- ------------- ----------- ----------------------------
Equity Participation Plan                             Dec 1997    10,461,108        105p         Dec 2000 to Dec 2004
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Mar 1999        80,029        105p         Mar 2002 to Mar 2006
----------------------------------------------- --------------- ------------- ----------- ----------------------------
Zenith Executive Incentive Plan                       Dec 1997     1,047,984        109p         Dec 2000 to Dec 2004
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Apr 1999        61,646        160p         Apr 2002 to Apr 2006
----------------------------------------------- --------------- ------------- ----------- ----------------------------
Healthworld Grants                                    Nov 1997       205,777        129p         Mar 2000 to Nov 2004
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Nov 1997       586,589        130p         Mar 2000 to Nov 2007
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Nov 1997       108,305        143p         Mar 2000 to Nov 2007
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Feb 1998       259,957        216p         Mar 2000 to Feb 2005
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Feb 1998        59,192        217p         Mar 2000 to Feb 2008
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Feb 1998        31,503        238p         Mar 2000 to Feb 2003
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Feb 1998        11,809        239p         Mar 2000 to Feb 2003
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Jul 1998       129,966        218p         Mar 2000 to Jul 2008
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Jul 1998        75,470        216p         Mar 2000 to Jul 2005
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Dec 1998        78,224        155p         Mar 2000 to Dec 2008
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Dec 1998       243,021        156p         Mar 2000 to Dec 2008
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Jan 1999        10,830        198p         Mar 2000 to Jan 2006
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Feb 1999       143,656        209p         Mar 2000 to Feb 2006
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Apr 1999         8,664        173p         Mar 2000 to Apr 2006
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      May 1999        10,829        189p         Mar 2000 to May 2009
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Jul 1999       216,609        167p         Mar 2000 to Jul 2009
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Aug 1999       104,620        180p         Mar 2000 to Aug 2009
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Nov 1999       866,440        252p         Apr 2001 to Nov 2009
----------------------------------------------- --------------- ------------- ----------- ----------------------------
</TABLE>
                                      F-34


<PAGE>
<TABLE>
<S>                                             <C>             <C>           <C>         <C>
1999 Lighthouse Global Network Grants                 Jan 1999        62,538         31p         Sep 2000 to Jan 2009
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Aug 1999         5,212         31p         Sep 2000 to Sep 2009
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Sep 1999       260,575        127p         Sep 2000 to Sep 2009
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Sep 1999        78,173         31p         Sep 2000 to Sep 2009
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Sep 1999        78,173        165p         Sep 2000 to Sep 2009
----------------------------------------------- --------------- ------------- ----------- ----------------------------
2000 Lighthouse Global Network Grants                 Apr 2000     2,645,969        165p         Sep 2000 to Apr 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Apr 2000       107,162        190p         Sep 2000 to Apr 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Apr 2000        37,742        216p         Sep 2000 to Apr 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Apr 2000        88,456        241p         Sep 2000 to Apr 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Apr 2000         7,818        165p         Sep 2000 to Apr 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Apr 2000        20,847        165p         Sep 2000 to Apr 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Apr 2000        85,991        165p         Sep 2000 to Apr 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Apr 2000        16,846        216p         Sep 2000 to Apr 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Apr 2000        30,227        165p         Sep 2000 to Apr 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Apr 2000        39,088        216p         Sep 2000 to Apr 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Apr 2000        15,635        165p         Sep 2000 to Apr 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Apr 2000        10,423        165p         Sep 2000 to Apr 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Apr 2000         9,040        165p         Sep 2000 to Apr 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Apr 2000        15,636        241p         Sep 2000 to Apr 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Apr 2000       240,262        165p         Sep 2000 to Apr 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Apr 2000        26,058        190p         Sep 2000 to Apr 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      May 2000        54,723        165p         Sep 2000 to Jan 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      May 2000        11,356        216p         Sep 2000 to Jan 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      May 2000       736,700        241p         Sep 2000 to Oct 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      May 2000         2,606        165p         Sep 2000 to May 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      May 2000         2,606        241p         Sep 2000 to May 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      May 2000        31,269        165p         Sep 2000 to May 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      May 2000         3,909        241p         Sep 2000 to May 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      May 2000         2,606        165p         Sep 2000 to May 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      May 2000        13,717        241p         Sep 2000 to May 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      May 2000         2,606        165p         Sep 2000 to May 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      May 2000        61,722        241p         Sep 2000 to May 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Jun 2000        10,424        241p         Sep 2000 to Jun 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Jul 2000         2,606        165p         Sep 2000 to Jul 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Jul 2000       315,272        241p         Sep 2000 to Jul 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Jul 2000        10,423        241p         Sep 2000 to Jul 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Aug 2000        15,635        241p         Sep 2000 to Aug 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Aug 2000         7,818        241p         Sep 2000 to Aug 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
                                                      Aug 2000       125,077        318p         Sep 2000 to Aug 2010
----------------------------------------------- --------------- ------------- ----------- ----------------------------
</TABLE>


     o    The options  marked * are super options.
     o    Exercise  prices have been rounded to the nearest  penny.
     o    In the case of the various  demerger schemes, the date of grant shown
          is that of the  original option replaced under the demerger scheme.

                                      F-35

<PAGE>

                         CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES

Note 25 - Post Retirement Benefits

The Group operates a number of pension schemes throughout the world.

The  majority of the schemes  are  externally  funded and the assets are held in
separately administered trusts or are insured.

None of the externally  funded schemes holds  investments  in, or has made loans
to, the Company or any of its subsidiary undertakings.

The major  schemes,  which  cover the  majority of scheme  members,  are defined
contribution schemes.

Following  the Demerger  from Saatchi & Saatchi plc in 1997,  the Group has only
one material defined benefit scheme with active  membership,  the Cordiant Group
Pension  Scheme.  This UK  scheme  was  closed to new  members  in 1990 with new
employees after that date joining a defined  contribution  scheme.  Employees of
Saatchi & Saatchi and Zenith  remain  members of the scheme  under  transitional
arrangements.  The latest actuarial valuation,  based on the attained age method
and assuming an investment  return of 8% and salary increases of 6%, was carried
out as at April 1, 1999 when the actuarial  value of  investments  in the scheme
were L27.7  million  and the level of funding  was 91.2%.  The  deficit  will be
principally  borne by the Group over the  remaining  service  lives of  existing
employees.  Employer's  contributions  to the  scheme in 2000 were  L0.2million.
Contributions and expense are based on recommendations of a qualified actuary.

In  addition  to  pension  schemes  the  Group  operates  an  unfunded  deferred
compensation plan under which salary sacrifices are deferred and accrue interest
until the accumulated  benefit is fully  withdrawn.  The cost of this during the
year was L0.2 million  (1999:  L0.3 million).  At December 31, 2000  accumulated
fund was L3.3 million  (1999:  L3.3 million) which is included in provisions for
pensions and similar employment obligations (note 18).

The pension expense for the year was as follows:
<TABLE>
<CAPTION>

                                                     2000         1999          1998
                                                      Lm           Lm            Lm
                                               ------------ --------------- -------------
<S>                                            <C>          <C>             <C>

Defined benefit schemes                               0.4          0.2           0.3
Defined contribution schemes                          7.7          4.5           4.1
                                               ------------ --------------- -------------
                                                      8.1          4.7           4.4
                                               ============ =============== =============
</TABLE>

                                      F-36
<PAGE>

                         CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


Note 26 - Leases

The Group leases certain properties and equipment under operating leases.

Minimum  payments for operating  leases,  before  provisions for vacant property
(see Note 18), having initial or remaining non-cancelable terms in excess of one
year are as follows:

<TABLE>
<CAPTION>
                                                                             Sublease
                                                            Minimum           Rental             Net
                                                           Payments           Income          Payments
Years Ending December 31                                      Lm                Lm               Lm
------------------------------------------------------ ------------------ ---------------- ----------------
<S>                                                    <C>                <C>              <C>

2001                                                          38.5              9.1              29.4
2002                                                          37.0              8.9              28.1
2003                                                          34.1              8.3              25.8
2004                                                          29.7              8.9              20.8
2005                                                          26.7              9.2              17.5
Thereafter                                                   161.4             73.9              87.5
                                                       ------------------ ---------------- ----------------
Total minimum lease payments                                 327.4            118.3             209.1
                                                       ================== ================ ================
</TABLE>

Total expense for all operating leases was:
<TABLE>
<CAPTION>
                                                                     Year ended December 31,
                                                       ----------------------------------------------------
<S>                                                    <C>                <C>              <C>

                                                             2000              1999             1998
Net operating lease expense                                   Lm                Lm               Lm
                                                       ------------------ ---------------- ----------------
Total operating lease expense                                 32.2              30.8             27.0
Sublease rental income                                        (9.7)            (10.2)            (8.2)
                                                       ------------------ ---------------- ----------------
Net operating lease expense                                   22.5              20.6             18.8
                                                       ================== ================ ================
</TABLE>

Note 27 - Consolidated Statements of Cash Flows - Supplemental Information

Reconciliation of trading profit to net cash flow from operating activities
<TABLE>
<CAPTION>
                                                                     Year ended December 31,
                                                       ----------------------------------------------------
                                                             2000              1999             1998
                                                              Lm                Lm               Lm
                                                       ------------------ ---------------- ----------------
<S>                                                    <C>                <C>              <C>

Trading profit                                                61.4              33.5             26.0
Depreciation                                                  13.6              10.4              9.7
Loss/(profit) on sale of tangible fixed assets                 -                 0.1             (0.1)
Prepaid property lease                                        (8.3)              -                -
(Increase)/decrease in billable production                     1.4              (4.7)             2.0
Increase in receivables                                       (1.8)            (30.0)            (1.4)
Increase/(decrease) creditors                                (17.0)             45.5             (9.6)
Utilization of property provisions                            (4.0)             (4.8)            (7.0)
Non-cash item - goodwill write-off                             -                 -                0.2
                                                       ------------------ ---------------- ----------------
Net cash inflow from operating activities                     45.3              50.0             19.8
                                                       ================== ================ ================
</TABLE>
                                      F-37

<PAGE>


                         CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES

<TABLE>
<CAPTION>

                                                                                    Year ended December 31,
                                                                       --------------------------------------------------
                                                                                 2000            1999            1998
                                                                                 L m             L m             L m
-------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>                       <C>              <C>

Returns on investments and servicing of finance
Interest received                                                                 3.7              1.5             1.9
Interest paid                                                                   (10.7)            (5.7)           (3.8)
Interest element of finance leases rental payments                               (0.1)            (0.1)           (0.1)
Bank fees                                                                        (2.3)            (1.7)           (0.4)
Dividends paid to minorities                                                     (2.1)            (1.0)           (2.5)
                                                                       --------------------------------------------------
Net cash outflow from returns on investments and servicing of finance           (11.5)            (7.0)           (4.9)
                                                                       ==================================================

Taxation paid
UK corporation tax paid                                                          (1.3)            (0.3)           (0.7)
Overseas tax paid                                                               (10.0)            (6.4)           (7.6)
                                                                       --------------------------------------------------
Net tax paid                                                                    (11.3)            (6.7)           (8.3)
                                                                       ==================================================

Capital expenditure and financial investment
Purchase of tangible fixed assets                                               (19.6)           (19.4)           (8.7)
Sale of tangible fixed assets                                                     1.5              1.1             1.2
Purchase of other fixed asset investments                                        (5.6)            (0.5)            -
Sale of other fixed asset investments                                             0.2              0.2             0.1
                                                                       --------------------------------------------------
Net cash outflow from capital expenditure and financial investment              (23.5)           (18.6)           (7.4)
                                                                       ==================================================

Acquisitions and disposals
Purchase of subsidiary undertakings                                             (70.2)           (23.6)           (7.5)
Purchase of associated undertakings                                              (1.0)            (2.4)           (0.2)
Cash acquired with subsidiaries                                                  24.4              3.8             0.7
Cash in businesses sold                                                           -                -              (0.4)
                                                                       --------------------------------------------------
Net cash outflow from acquisitions and disposals                                (46.8)           (22.2)           (7.4)
                                                                       ==================================================

Management of liquid resources
Cash deposits                                                                     5.2             (5.5)           (0.8)
                                                                       --------------------------------------------------
Net cash inflow/(outflow) from management of liquid resources                     5.2             (5.5)           (0.8)
                                                                       ==================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

Analysis of changes in net funds
                                                                                       Exchange &
                                                At Jan 1,              Acquisitions     non cash     At Dec 31,
                                                  2000      Cash flows     *            movements      2000
                                                   Lm          Lm          Lm              Lm           Lm
                                              ---------- ------------ ------------- ------------- ------------
<S>                                               <C>          <C>       <C>              <C>         <C>
Cash at bank and in hand                           80.0       21.5          -             (1.7)        99.8
Bank overdrafts                                    (3.2)      (5.4)         -             (0.4)        (9.0)
                                              ---------- ------------ ------------- ------------- ------------
                                                   76.8       16.1          -             (2.1)        90.8
                                              ---------- ------------ ------------- ------------- ------------
External debt due within one year                  (4.3)     (56.8)       (66.2)           -         (127.3)
External debt due after one year                  (75.8)       3.5          -             (0.7)       (73.0)
Finance leases                                     (0.7)      (3.0)         -              -           (3.7)
                                              ---------- ------------ ------------- ------------- ------------
                                                  (80.8)     (56.3)       (66.2)          (0.7)      (204.0)
                                              ---------- ------------ ------------- ------------- ------------
Cash deposits - current asset investments           6.4       (5.2)         -              0.1          1.3
                                              ---------- ------------ ------------- ------------- ------------
Net funds/(debt)                                    2.4      (45.4)       (66.2)          (2.7)      (111.9)
                                              ========== ============ ============= ============= ============
</TABLE>



                                      F-38
<PAGE>
                         CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


<TABLE>
<CAPTION>

                                                                                       Exchange &
                                                 At Jan 1,             Acquisitions     non cash     At Dec 31,
                                                  1999     Cash flows       *           movements       1999
                                                   Lm          Lm           Lm             Lm            Lm
                                              ---------- ------------ ------------- ------------- ------------
<S>                                              <C>         <C>          <C>             <C>         <C>
Cash at bank and in hand                          62.3        16.0          -              1.7         80.0
Bank overdrafts                                  (21.2)       18.0          -              -           (3.2)
                                              ---------- ------------ ------------- ------------- ------------
                                                  41.1        34.0          -              1.7         76.8
                                              ---------- ------------ ------------- ------------- ------------
External debt due within one year                 (0.5)       (2.0)        (1.7)          (0.1)        (4.3)
External debt due after one year                 (36.4)      (28.2)       (10.2)          (1.0)       (75.8)
Finance leases                                    (0.4)       (0.3)         -              -           (0.7)
                                              ---------- ------------ ------------- ------------- ------------
                                                 (37.3)      (30.5)       (11.9)          (1.1)       (80.8)
                                              ---------- ------------ ------------- ------------- ------------
Cash deposits - current asset investments          0.8         5.5          -              0.1          6.4
                                              ---------- ------------ ------------- ------------- ------------
Net funds/(debt)                                   4.6         9.0        (11.9)           0.7          2.4
                                              ========== ============ ============= ============= ============

<CAPTION>
                                                                       Acquisitions   Exchange &
                                                At Jan 1,                  and         non cash     At Dec 31,
                                                  1998     Cash flows   disposals *    movements       1998
                                                   Lm          Lm           Lm            Lm            Lm
                                              ---------- ------------ ------------- ------------- ------------
<S>                                              <C>         <C>          <C>             <C>         <C>
Cash at bank and in hand                          61.7        2.6           -            (2.0)         62.3
Bank overdrafts                                   (7.7)     (13.4)          -            (0.1)        (21.2)
                                              ---------- ------------ ------------- ------------- ------------
                                                  54.0      (10.8)          -            (2.1)         41.1
                                              ---------- ------------ ------------- ------------- ------------
External debt due within one year                 (0.7)       0.7          (0.5)          -            (0.5)
External debt due after one year                 (28.4)      (9.3)          1.1           0.2         (36.4)
Finance leases                                    (0.2)       0.2           -            (0.4)         (0.4)
                                              ---------- ------------ ------------- ------------- ------------
                                                 (29.3)      (8.4)          0.6          (0.2)        (37.3)
                                              ---------- ------------ ------------- ------------- ------------
Cash deposits - current asset investments          -          0.8           -             -             0.8
                                              ---------- ------------ ------------- ------------- ------------
Net funds/(debt)                                  24.7      (18.4)          0.6          (2.3)          4.6
                                              ========== ============ ============= ============= ============
</TABLE>


*        Excluding cash and overdrafts




                                      F-39
<PAGE>
                         Cordiant Communications Group
                                and Subsidiaries


Note 28 - Operations by Geographic Area
<TABLE>
<CAPTION>
                                                                                         Asia Pacific
                                                     United        North     Continental     and
                                                     Kingdom      America      Europe    Latin America       Total
                                                       Lm           Lm           Lm           Lm              Lm
                                                 ------------ ------------ ------------ ---------------- ----------
<S>                                                  <C>          <C>          <C>          <C>             <C>
Year ended December 31, 2000:
Revenue                                               84.1        148.5        133.1        147.3            513.0
Operating profit                                       7.9         15.9         16.0         21.6             61.4
Total assets employed                                186.8        662.8        144.3        402.7           1396.6
Net assets before financial items                     26.4        467.1         37.5         53.0            584.0

Year ended December 31, 1999:
Revenue                                               40.2         83.1        121.9         90.6            335.8
Operating profit                                       4.4         10.9         12.5          5.7             33.5
Total assets employed                                 40.7        123.7        111.5        313.7            589.6
Net assets/(liabilities) before financial items      (41.8)       (19.5)         6.8         11.9            (42.6)

Year ended December 31, 1998:
Revenue                                               39.8         71.8        108.4        81.8             301.8
Operating profit                                       4.5          8.2         10.1         3.2              26.0
Total assets employed                                 44.2        104.7         95.8       142.0             386.7
Net assets/(liabilities) before financial items      (48.4)       (10.6)         5.9       (12.8)            (65.9)
</TABLE>

The Group's customers are located throughout the world. During 2000, 1999, and
1998 no clients accounted for more than 10% of Cordiant's ongoing revenue.

The Directors consider that it is more appropriate to show a geographical
analysis of revenue than turnover. Revenue by geographic destination is not
materially different from revenue by geographic origin.


Geographical analysis of Group share of joint ventures and associated
undertakings operating profits:

                                                          2000          1999
                                                           Lm            Lm
                                                    ------------- --------------
UK                                                         3.9           3.7
Asia Pacific and Latin America                             1.7           1.2
                                                    ------------- --------------
                                                           5.6           4.9
                                                    ============= ==============




                                      F-40
<PAGE>

Note 29 - Directors' emoluments

The total  emoluments,  pension costs and fees for the year ending  December 31,
2000   wereL4,187,000   (1999:    L4,147,000)   of   whichL152,000   were   fees
(1999:L118,000).

The emoluments,  excluding  pension  contributions,  of the Chairman and highest
paid Director, were:

Year ended December 31, 2000
----------------------------
Charles Scott (Chairman)                                        L220,000
Michael Bungey (Highest paid Director)                        L1,249,000

Year ended December 31, 1999
----------------------------
Charles Scott (Chairman)                                        L206,000
Michael Bungey (Highest paid Director)                        L1,024,000


Note 30 - Directors' Interests

The  interests  of the  directors  who  were in  office  at the  year end in the
Company's  share  capital  appearing in the register  maintained  by the Company
pursuant to Section 325 of the Companies Act of 1985 were as set out below.

<TABLE>
<CAPTION>
                                                                          Ordinary share options and equity
                                     Beneficially owned ordinary shares           participation rights
                                      December 31,        December 31,       December 31,     December 31,
                                          2000               1999                2000             1999
                                   ---------------- -------------------- ------------------- ----------------
<S>                                   <C>                <C>                <C>                 <C>
M Bungey                                 55,990           55,990            1,537,130           1,537,130
A D'Angelo                                  960              960              810,255             810,255
J de Yturbe                                   -                -              854,397             854,397
D Fishburn                                    -                -                    -                   -
T Levitt                                 18,796           18,796                    -                   -
P M Schoning                             59,926                -              665,901             725,827
I Smith(1)                            1,106,094                -              450,382                   -
C Scott(2)                               85,172           85,172              731,905             731,905
R Stomberg                                    -                -                    -                   -
J Tyrrell                                     -                -                    -                   -
W Whitehead                                 787              787              815,827             815,827
---------------------------------- ---------------- -------------------- ------------------- ----------------
(1)   For disclosure purposes, Mr. Smith is deemed to be interested in all of
      the 1,106,094 shares held by TCG Employee Investment Pty Ltd. His
      beneficial interest is limited to approximately 9% of the shares held by
      TCG Employee Investment Pty Ltd at any given time. On January 8, 2001, TCG
      Employee Investment Pty Ltd disposed of 700,000.
(2)      Includes options and shares in spouse's name.

The directors' interests in the Company's share capital have not changed since
December 31, 2000.
</TABLE>




                                      F-41
<PAGE>
                         Cordiant Communications Group
                                and Subsidiaries


Note 31 - Related Parties

During 2000, 1999 and 1998 transactions in the ordinary course of business with
associated companies were as follows:

                                                  2000       1999       1998
                                                   Lm         Lm         Lm
                                             ----------- ---------- ----------
              Media services                      116.6      182.1      214.0
              Production                           11.0       13.8        9.5
                                             ----------- ---------- ----------
                                                  127.6      195.9      223.5
                                             =========== ========== ==========


The year end balances  with  associated  companies are disclosed in Notes 10 and
17.

Contracts  of  significance  which were  entered  into by the Group during 2000,
1999,  and 1998 in which the  directors of a  subsidiary  company had a material
interest, details of which are given in Note 2, were as follows:

In January  2000,  the Group  acquired  the  remaining  10% interest in Scholz &
Friends, in Germany, for consideration of DEM 9.0 million (L2.9 million).

In January 2000, the Group  acquired a further 19% interest in Bates Yomiko,  in
Japan, for consideration of JPY 19.0 million (L0.1 million).

In December 2000, the Group acquired a further 19% interest in Newcomm Bates, in
Brazil, for consideration of BRL 23.7 million (L8.1 million).

In August 1999,  the Group  acquired a 100%  interest in Bates Clarion in India,
for  consideration  of  INR17.0  million  (L0.2  million).   Bates  Clarion  was
previously an affiliate.

In November  1999,  the Group  acquired the remaining 20% interest in Dr Puttner
Bates, in Austria, for consideration of ATS5.8 million (L0.3 million).

In November 1999, the Group acquired the remaining 40% interest in Bates Poland,
for consideration of POZ0.7 million (L0.1 million).

In November  1999,  the Group acquired a further 7% interest in Verdino Bates in
Argentina, for no consideration.

In  November  1998,  the Group  acquired  the  remaining  24.9%  interest in The
Communications Group in Australia,  for initial  consideration of A$16.9 million
(L6.2 million).

In October 1998,  the Group  acquired a further 75% interest in Verdino Bates SA
or Argentina, for consideration of ARP2.3 million (L1.4 million).



                                      F-42
<PAGE>
                         Cordiant Communications Group
                                and Subsidiaries


Note 32 - Derivatives and Fair Value of Financial Instruments

Set out below is an outline of the objectives,  policies and strategies  pursued
by the Group in relation to financial instruments:

Financial instruments - Group policy

The Group  finances  its  operations  by a mixture of  retained  earnings,  bank
borrowings  and  fixed  rate  long-term  loans.  The  bank  borrowings  comprise
borrowings  under the central  US$400.0  million (L268.5  million) bank facility
(1999 US$250.0  million,  L155.0  million) and other  short-term  bank overdraft
borrowings.  All bank borrowings  incur floating rates of interest.  On April 5,
2001 the Group issued  US$175.0  million  (L117.4  million) of 7.61%  Guaranteed
Senior Notes via private placement, as detailed later in this note. The proceeds
of this issue were used to repay and cancel US$175.0 million (L117.4 million) of
the committed facilities detailed above.

Group policy  relating to the use of financial  instruments,  including types of
instruments  used  and  amounts  invested,  is  determined  by  the  Board.  The
instruments  used by the Group in the year under  review are fixed and  floating
rate borrowings,  interest rate caps and forward foreign currency contracts. The
main risks  arising from the Group's  financial  instruments  are interest  rate
risks, liquidity risks and foreign currency risks. The Group does not enter into
transactions  of a  speculative  nature or unrelated  to the Group's  investment
activities.

Interest rate risk

The Group is exposed to interest  rate  fluctuations  due to the  floating  rate
borrowings.  The majority of these floating rate  liabilities are denominated in
sterling or US dollars.  This  exposure is currently  managed via interest  rate
caps denominated in both sterling and US dollars. The current interest rate caps
mature between June 2001 and June 2002.

Liquidity risk

The Group's  objective is to maintain a balance between  continuity of financing
and  flexibility  through  the use of  borrowings  with a range  of  maturities.
Targets for minimum liquidity  against committed banking  facilities are managed
on a daily basis, and performance is regularly reported to the Board.

Foreign currency risk
The Group has significant  and diverse  investments in foreign  operations,  the
Group's  balance sheet and profit and loss can therefore be materially  affected
by  movements  in exchange  rates.  It is not the  Group's  policy to manage net
assets via balance sheet hedging, or to hedge international  profits.  The Group
seeks to mitigate the effect of translation  currency  exposures by borrowing in
the  same  currencies  as the  profits  used to  service  the  borrowings  where
practicable.

The Group uses foreign exchange contracts to hedge translation exposures on cash
repatriations from its international operations and cross border trading.



                                      F-43
<PAGE>
                         Cordiant Communications Group
                                and Subsidiaries


The following  numerical  disclosures relate to the Group's financial assets and
financial  liabilities  as defined in FRS 13  "Derivatives  and Other  Financial
Instruments".

For the  purpose  of the  disclosures,  which  follow in this  note,  short-term
debtors and creditors,  which arise directly from the Group's operations,  apart
from the currency disclosures,  have been excluded as permitted under FRS 13. As
defined, short-term intragroup debtors, creditors, financing, pensions and other
post-retirement  benefit  assets and  liabilities  that fall within the scope of
SSAP24 are also excluded from the analysis.  The disclosures  therefore focus on
those financial  instruments,  which play a significant medium to long term role
in the financial risk profile of the Group. An analysis of the carrying value of
all financial assets and liabilities is given in the fair value table at the end
of this note.

Foreign exchange and Interest rate management
Foreign  exchange  and  interest  rate  exposures  are managed  centrally by the
Group's  treasury  operations  based in London.  The Board  determines  policies
governing the use of financial instruments.

Interest  rate  management  is  undertaken  to ensure  that the  majority of the
Group's  borrowing  requirement  is  protected  from  significant  increases  in
interest rates.

Interest rate profile
The interest rate profile of the financial liabilities of the Group was:
<TABLE>
<CAPTION>
                                                      Financial                                          Financial
                        Floating       Fixed        liabilities              Floating       Fixed       liabilities
                          rate          rate          on which                 rate          rate         on which
                       financial      financial      no interest             financial     financial     no interest
                      liabilities    liabilities      is paid      Total    liabilities   liabilities      is paid       Total
                          2000          2000           2000        2000        1999          1999            1999         1999
Currency                  L m           L m            L m          L m         L m           L m            L m          L m
------------------ ------------- ------------- --------------- --------- ------------- ------------- --------------- ---------
<S>                      <C>           <C>             <C>         <C>         <C>            <C>            <C>         <C>
Sterling                 63.3           0.3             4.5         68.1       49.6            -              -           49.6
US Dollars              121.1           0.8            19.9        141.8       16.2            -             11.9         28.1
Korean Won                -            10.2             -           10.2        -             13.4            2.5         15.9
Other                    14.8           2.6            20.7         38.1        4.2            0.7            3.6          8.5
                   ------------- ------------- --------------- --------- ------------- ------------- --------------- ---------
Total                   199.2          13.9            45.1        258.2       70.0           14.1           18.0        102.1
                   ============= ============= =============== ========= ============= ============= =============== =========
</TABLE>


                                      F-44
<PAGE>
                         Cordiant Communications Group
                                and Subsidiaries



<TABLE>
Fixed rate financial liabilities
<CAPTION>
                                                                                    Weighted                        Weighted
                                                                    Weighted         average        Weighted         average
                                                                     average          period         average          period
                                                               interest rate     to maturity   interest rate     to maturity
                                                                           %        (months)               %        (months)
Currency                                                                2000            2000            1999            1999
-------------------------------------------------------------- --------------- --------------- --------------- ---------------
<S>                                                            <C>             <C>             <C>
Korean Won                                                              11.0            13              11.0             20
Other                                                                    7.4            41              11.6             37
                                                               --------------- --------------- --------------- ---------------
Total                                                                   10.3            19              11.0             20
                                                               =============== =============== =============== ===============
</TABLE>

The  floating  rate  financial  liabilities  comprise  bank  borrowings  bearing
interest  at fixed rates in advance  for  periods  ranging  from one week to six
months by reference to LIBOR for the sterling and US dollar liabilities,  or the
applicable  inter-bank  offer  rates  or  prime  lending  rates  for  all  other
liabilities.

The  financial  liabilities,  on which no  interest  is  paid,  are  liabilities
relating  to  committed  future  acquisition  payments  due after one year.  The
weighted average period to maturity of these  liabilities is 25 months (1999: 28
months).

The interest rate profile of the financial assets of the Group was:

<TABLE>
<CAPTION>
                                                 Financial                                           Financial
                     Floating        Fixed          assets                Floating        Fixed         assets
                         rate         rate        on which                    rate         rate       on which
                    financial    financial     no interest               financial    financial    no interest
                       assets       assets         is paid      Total       assets       assets        is paid      Total
                         2000         2000            2000       2000         1999         1999           1999       1999
Currency                  L m          L m             L m        L m          L m          L m            L m        L m
------------------ ------------ ------------ --------------- ---------- ------------ ------------ -------------- ----------
<S>                <C>          <C>          <C>             <C>        <C>          <C>          <C>            <C>
Sterling                  0.3          -              -             0.3        4.5          -              1.2         5.7
US Dollars                2.5          -              -             2.5       14.9          -              -          14.9
Korean Won                -            0.2            -             0.2        -            1.8            -           1.8
Other                     2.1          -              -             2.1        1.3          -              1.1         2.4
                   ------------ ------------ --------------- ---------- ------------ ------------ -------------- ----------
Total                     4.9          0.2            -             5.1       20.7          1.8            2.3        24.8
                   ============ ============ =============== ========== ============ ============ ============== ==========
</TABLE>


                                      F-45
<PAGE>
                         Cordiant Communications Group
                                and Subsidiaries



<TABLE>
Fixed rate financial assets

<CAPTION>
                                                                                    Weighted                        Weighted
                                                                    Weighted         average        Weighted         average
                                                                     average          period         average          period
                                                               interest rate     to maturity   interest rate     to maturity
                                                                           %        (months)               %        (months)
Currency                                                                2000            2000            1999            1999

-------------------------------------------------------------- --------------- --------------- --------------- ---------------
<S>                                                            <C>             <C>             <C>             <C>
Korean Won                                                               11.0            30               4.1             2
                                                               =============== =============== =============== ===============
</TABLE>


The floating rate financial assets comprise primarily of short-term money market
deposits  bearing  interest at rates fixed on an overnight basis by reference to
the applicable  inter-bank  reference  rates.  The remainder  comprises loans to
employees and other third parties,  on which  interest is fixed  quarterly on an
arm's length basis by reference to the appropriate inter-bank rate.

The financial  assets on which no interest is paid comprise  interest free loans
and fixed asset  investments.  The  weighted  average  period to maturity of the
interest free loans was 12 months in 1999.

Currency exposures
The Group's  currency  exposures,  that give rise to the net currency  gains and
losses recognised in the profit and loss account,  comprise the financial assets
and  financial  liabilities  of the  Group  which  are  not  denominated  in the
functional  currency of the individual  operating entity to the extent these are
not  matched.  As at  December  31,  2000,  after  taking into  account  forward
contracts, the Group had no material currency exposures.

The Group enters into foreign  currency  contracts  primarily for the purpose of
hedging the  remaining  known  cross-currency  cash flows.  Certain other items,
which could  materially  impact the Group's profit and loss account if unhedged,
are also covered by foreign currency contracts.  Foreign exchange contracts with
a total value of L40.0  million  were  outstanding  at December  31, 2000 (1999:
L6.8m).  It is Group policy to hedge only known,  certain  exposures  and not to
speculate on foreign currency movements.


                                      F-46

<PAGE>
                         Cordiant Communications Group
                                and Subsidiaries



Maturity of financial liabilities
The maturity profile of the Group's financial liabilities,  excluding short-term
creditors as defined, is as follows:
<TABLE>
<CAPTION>
                                                                                                     2000            1999
Expiring                                                                                             L m             L m
--------------------------------------------------------------------------------------------- --------------- ---------------
<S>                                                                                           <C>             <C>
In one year or less, or on demand                                                                   146.3            7.8
In more than one year but not more than  two years                                                   23.2            6.0
In more than two years but not more than five years                                                  88.6           88.2
In more than five years                                                                               0.1            0.1
                                                                                              --------------- ---------------
Total                                                                                               258.2          102.1
                                                                                              =============== ===============
</TABLE>

Borrowing facilities
The  Group  has  various  borrowing  facilities  available  to it.  The  undrawn
committed  facilities available in respect of which all conditions precedent had
been met at that date were as follows:

<TABLE>
<CAPTION>
                                                                                                     2000           1999
Expiring                                                                                              L m            L m
--------------------------------------------------------------------------------------------- --------------- ---------------
<S>                                                                                           <C>             <C>
In one year or less                                                                                  17.4           70.7
In more than two years but not more than five years                                                  89.0           19.4
                                                                                              --------------- ---------------
Total                                                                                               106.4           90.1
                                                                                              =============== ===============
</TABLE>

The Group had  committed  central bank  facilities of L268.5  million,  of which
L179.4 million was drawn at December 31, 2000 (1999:  L65.2 million).  The Group
also had other  committed bank  facilities of L17.4  million,  none of which was
drawn at December  31, 2000.  Of these  facilities,  the maturity  profile is as
follows:



                                      F-47

<PAGE>

                         Cordiant Communications Group
                                and Subsidiaries
<TABLE>
<CAPTION>
                                                                                                      2000          1999
Expiring                                                                                               L m           L m
---------------------------------------------------------------------------------------------- --------------- --------------
<S>                                                                                            <C>             <C>
In one year or less                                                                                  117.4          77.6
In more than one year but not more than  two years                                                    17.4           -
In more than two years but not more than five years                                                  151.1          77.7
                                                                                               --------------- --------------
Total                                                                                                285.9         155.3
                                                                                               =============== ==============
</TABLE>

On April 5, 2001, the Group issued US$175.0  million  (L117.4  million) of 7.61%
Guaranteed Senior Notes, via private placement. The Guaranteed Senior Notes will
mature in April 2011 and have an average life of eight years taking into account
scheduled  repayments of US$35.0  million  (L23.5  million) per annum from April
2007.  The proceeds of this issue were used to repay and cancel  committed  bank
facilities of US$175.0 million (L117.4 million) maturing in November 2001.

The above facilities are expected to provide the Group with sufficient liquidity
over the foreseeable future.

Group borrowings other than those detailed above are uncommitted borrowings, and
as such could  become  repayable on demand at December 31, 2000. A total of L9.0
million of such  borrowings  were  outstanding at December 31, 2000 (1999:  L3.2
million).  An allowance  for  repayment of  uncommitted  borrowings is made when
evaluating the Group's liquidity against central committed facilities.

Fair values of financial assets and liabilities
Set out below is a  comparison  by  category  of the book  values of the Group's
financial assets and liabilities:

<PAGE>
<TABLE>
<CAPTION>

                                                                                Book         Fair         Book       Fair
                                                                              values       values       Values     values
                                                                                2000         2000         1999       1999
Primary instruments held to finance the Group's operations:                      L m          L m          L m        L m
------------------------------------------------------------------------- ------------ ------------ ------------ ----------
<S>                                                                           <C>          <C>            <C>        <C>
Short-term borrowings and current portion of long-term borrowings             (136.4)      (136.4)        (7.5)      (7.5)
Long-term borrowings                                                           (73.0)       (73.0)       (75.9)     (75.9)
Cash deposits                                                                    3.5          3.5         21.0       21.0
Other financial liabilities                                                    (48.8)       (48.8)       (18.7)     (18.7)
Other financial assets                                                           1.6          1.6          3.8        3.8
------------------------------------------------------------------------- ------------ ------------ ------------ ----------

Derivative instruments held to manage the interest rate and currency profile:
Interest rate caps                                                               -            0.1          -          0.4
Foreign currency contracts                                                       -           (0.3)         -          -
------------------------------------------------------------------------- ------------ ------------ ------------ ----------
</TABLE>

Market values have been used to determine the fair value of forward foreign
currency contracts. The fair values of interest rate caps have been calculated
using indicative bank valuations of applicable contracts outstanding as at
December 31, 2000. The Group had various interest rate and foreign exchange
hedging contracts outstanding at


                                      F-48
<PAGE>

                         Cordiant Communications Group
                                and Subsidiaries

the year end in relation to underlying currency and interest rate exposures. The
Group had no  material  unrecognised  gains or  losses on such  hedges at either
December 31, 2000 or December 31, 1999.


Note 33 - Principal Subsidiaries

Except where  otherwise  indicated,  the Company  indirectly  owned 100% of each
class of the issued shares of the  subsidiary  undertakings  listed  below.  All
these subsidiary  undertakings are advertising and marketing services companies.
The country of operation and registration of the principal  undertakings were as
follows:

England               Bates UK Ltd
Australia             George Patterson Pty Ltd
Germany               Scholz & Friends Group GmbH
Korea                 Diamond Ad Ltd (80% Ordinary)
US                    Bates Advertising USA, Inc
                      GHBM, Inc

In the  opinion of the  Directors,  these  undertakings  principally  affect the
results and assets of the Group. In addition to the companies  shown above,  the
Group also holds investments in other subsidiaries and associated  undertakings.
A full list of subsidiaries,  joint ventures and associated undertakings will be
filed with the Registrar of Companies.

As provided for in the Zenith  shareholders'  agreement 75% of the distributable
profits of Zenith will be distributed to  shareholders  and divided between them
in part by reference to the  proportions in which Zenith  receives  revenue from
clients of each shareholder. The remainder will be retained in Zenith.

Note 34 - Subsequent Events

There have been no material subsequent events, except as noted below:

On  January  5, 2001,  the Group  acquired  100% of  MicroArts  Corporation,  an
e-business  consultancy  company based in New Hampshire,  United  States,  for a
maximum total consideration of US$88.1 million (L59.1 million).

On April 5, 2001, the Group issued US$175.0  million  (L117.4  million) of 7.61%
Guaranteed  Senior Notes, via a private  placement.  The Guaranteed Senior Notes
will mature in April 2011 and will have an average  life of eight  years  taking
into account  scheduled  repayments of US$35.0 million (L23.5 million) per annum
from  April  2007.  The  proceeds  of this  issue  were used to repay and cancel
committed  bank  facilities of US$175.0  million  (L117.4  million)  maturing in
November 2001.


                                      F-49
<PAGE>
                         Cordiant Communications Group
                                and Subsidiaries


Note 35 - United States Generally Accepted Accounting Principles

The consolidated  financial  statements have been prepared in accordance with UK
generally  accepted  accounting  principles  (UK GAAP)  which  differ in certain
significant respects from US generally accepted accounting principles (US GAAP).
A  description  of the  significant  differences  between  UK GAAP  and US GAAP,
including presentation differences,  that are applicable to the Group is set out
below:

(a) Dividends

Under UK GAAP,  ordinary  dividends  proposed  are  provided  for in the year in
respect of which they are  recommended by the Board of Directors for approval by
the  shareholders.  Under US GAAP,  such  dividends  are not  provided for until
declared by the Board of Directors.

(b) Goodwill and US purchase accounting

Under US GAAP,  goodwill  (which  excludes all  contingent  capital  payments of
approximately L79.4 million in 2000 and approximately L46.0 million in 1999) and
identifiable  intangible  assets acquired are capitalized and amortized  against
income;  identified intangible assets acquired in business  combinations,  which
are  accounted for under the purchase  method,  are being  amortized  over their
economic  lives which range from three to 20 years,  and the remaining  goodwill
being  amortised  over 20 years for current year  acquisitions  and 40 years for
previous year acquisitions.  In addition to systematic amortization,  management
also reviews on an annual basis the carrying value of goodwill and  identifiable
intangibles for impairment by a comparison of the carrying amount of an asset to
future net cash flows expected to be generated by the asset.  If such assets are
considered  to be impaired,  the  impairment to be recognized is measured by the
amount by which the carrying  amount of the assets  exceed the fair value of the
assets.

Under UK GAAP,  purchased  goodwill  arising in respect of  acquisitions  before
January 1, 1998  (including  any  additional  goodwill  estimated  to arise from
contingent  capital  payments),  when FRS 10 was  adopted,  was  written  off to
reserves in the year of acquisition.  A charge would be recognized in respect of
any  permanent  diminution  in the  value of  goodwill  previously  written  off
directly to reserves.  Purchased  goodwill arising from acquisitions on or after
January 1, 1998 has been  capitalized as an intangible fixed asset and amortized
over its useful  economic  life.  As the  Directors  are of the opinion that the
intangible  fixed  assets of the Group have an  indefinite  economic  life,  the
goodwill has not been  amortized but is subject to annual review for  impairment
by a comparison of the discounted future net cash flows expected to be generated
by the asset.

Under UK GAAP the gain or loss on disposal is calculated after taking account of
goodwill previously written off to reserves for acquisitions prior to January 1,
1998.  Under US GAAP,  the gain or loss on disposal is  calculated  after taking
account  of  any  related  unamortized   goodwill  and  intangible  assets.  For
acquisitions  on or after  January 1, 1998 the profit or loss on disposal  under
both US and UK GAAP is calculated  after taking account of unamortized  goodwill
and intangible assets.

Under UK GAAP purchase  consideration issued in the form of shares or options is
valued  based on the  market  price of the  share  at the  date of  transfer  of
control.  Under US GAAP the consideration is valued based on the market price of
the share for a  reasonable  period  before  and after the date the terms of the
acquisition are agreed to and announced.



                                      F-50
<PAGE>
                         Cordiant Communications Group
                                and Subsidiaries


Under UK GAAP, a fair value adjustment was made for the committed costs relating
to the relocation of acquired  enterprises  prior to the acquisition by Cordiant
Communications  Group  plc.  Under US GAAP,  costs  that have a future  economic
benefit to the combined company are expensed as incurred.

(c) Deferred taxation

UK GAAP requires that no provision for deferred  taxation  should be recorded if
there is  reasonable  evidence  that such  taxation  will not be  payable in the
foreseeable  future.  Deferred  tax  assets  are only  recognized  when they are
expected to be  recoverable  without  replacement  by  equivalent  deferred  tax
assets.

US GAAP requires full  provision of deferred  taxation  liabilities  and permits
deferred tax assets to be  recognized if their  realization  is considered to be
more likely than not.

(d) Compensation costs

Under UK GAAP the  Company  does not  recognize  any  compensation  for  certain
performance based share options. Under US GAAP, compensation expense is recorded
for all  performance  based share options over the vesting period for the excess
of the market price of underlying shares over the exercise price.

(e) Long term property provisions

Under US GAAP,  provisions are made on a gross basis for  properties,  which are
vacant and surplus to  requirements  after  allowing  for  estimated  sub-rental
income.

Under UK GAAP the Group's  property  provisions are discounted using a risk free
rate to the present value of future net lease  obligations  and related costs of
leasehold  property (net of estimated  sublease income and certain risk factors)
where the  space is vacant or  currently  not  planned  to be used for  on-going
operations.  The  periodic  unwinding  of the  discount is treated as an imputed
interest charge.

(f) Research and development costs

Under UK GAAP research and development  costs may be capitalised,  and amortised
over their estimated useful life.  Under US GAAP research and development  costs
are written off as incurred.

(g) Employee share schemes

The Company has adopted SFAS 123, Accounting for Stock-Based Compensation, which
permits  entities to recognize as expense over the vesting period the fair value
of all  stock-based  awards on the date of grant.  Alternatively,  SFAS 123 also
allows  entities to continue to apply the  provisions  of APB Opinion No. 25 and
provide pro forma net income and pro forma  earnings per share  disclosures  for
share  option  grants made in 1995 and future  years as if the  fair-value-based
method  defined in SFAS 123 had been  applied.  The  Directors  have  elected to
continue  to apply the  provisions  of APB  Opinion No. 25 and provide pro forma
disclosure provisions of SFAS 123. Accordingly, compensation expense is recorded
on the date of grant only if the current  market price of the  underlying  stock
exceeded the exercise price.  Under SFAS 123 the calculation of the option value
is  made  using  an  acceptable   pricing  model  to  include  certain  expected
parameters.



                                      F-51
<PAGE>
                         Cordiant Communications Group
                                and Subsidiaries

<TABLE>
<CAPTION>

Net profit/(loss) in Lmillion                                                        2000         1999       1998
------------------------------------------------------------------------------------- ------------ ---------- ----------
<S>                                                                                  <C>           <C>        <C>
Reported                                                                              4.9         (21.2)      4.6
Revised                                                                              16.6          (1.3)      4.6

Earnings per Ordinary share (in pence)
Basic                                                                                 1.6p         (9.5)p     2.1p
Diluted                                                                               1.5p         (9.5)p     2.1p
Basic - revised                                                                       5.6p         (0.6)p     2.1p
Diluted - revised                                                                     5.1p         (0.6)p     2.1p
------------------------------------------------------------------------------------- ------------ ---------- ----------
</TABLE>

If the  compensation  cost of the options had been determined  based on the fair
value at the grant dates for 2000 and 1999 consistent with the method prescribed
by SFAS No. 123,  the  Company's US GAAP net profit and earnings per share would
have been adjusted to the revised amounts  indicated  above. The revised amounts
were  determined  based on employee  share  scheme  awards in 1995 to 2000 only.
Compensation  cost is  recognized  over the vesting  period of the  option.  The
revised  amounts for  compensation  cost may not be indicative of the effects on
net earnings and  earnings per share for future  years.  Under SFAS No. 123, the
weighted average fair value of each option grant is estimated to be 96.7p, 62.8p
and 34.8p for options  granted  during the year ended  December 31,  2000,  year
ended December 31 1999, and year ended December 31, 1998, respectively. The fair
values have been estimated using the Black-Scholes option-pricing model with the
following  weighted average  assumptions used for grants in 2000, 1999 and 1998,
respectively;  dividend yield of nil per cent,  expected  volatility of 35%, 33%
and 26% in 2000, 1999 and 1998,  respectively,  risk-free interest rate of 4.9%,
4.7% and 5.8% and expected lives of between 3.5 and 6.5 years.

(h) Cash flows

The  Consolidated  Cash Flow Statement is prepared in accordance  with Financial
Reporting  Standard  No. 1  (revised)  `Cash Flow  Statements'  ("FRS  1").  Its
objectives and principles are similar to those set out in SFAS 95. The principal
difference  between the standards  relates to  classification.  Under FRS 1, the
Group presents its cash flows for: (a) operating activities;  (b) dividends from
associated  undertakings;  (c)  dividends  from joint  ventures;  (d) returns on
investments and servicing of finance; (e) taxation:  (f) capital expenditure and
financial investment;  (g) acquisition and disposals;  (h) equity dividend paid;
and (i) financing. SFAS 95 requires only three categories of cash flow activity:
(a) operating;  (b) investing;  and (c) financing.  Cash flows from  exceptional
non-operating  items,  dividends  from  associated   undertakings,   returns  on
investments  and servicing of finance,  and taxation  shown under FRS 1 would be
included as operating  activities  under SFAS 95. The payment of dividends would
be included as a financing  activity under SFAS 95.  Changes in bank  overdrafts
are  included  within cash  equivalents  under FRS 1 and would be  considered  a
financing  activity  under  SFAS  95.  Under US GAAP,  capital  expenditure  and
financial  investments  and  acquisitions  and  disposals  are  reported  within
investing activities.  Had bank overdrafts been shown as a financing activity in
the Consolidated Cash Flow Statement,  Net cash inflow from Financing would have
increased by L5.4  million in the year ended  December  31, 2000  (December  31,
1999: decrease by L18.0 million).  Under UK GAAP, short-term investments include
short-term  money  market  deposits of L1.3  million in 2000 and L6.4 million in
1999 that would be classified as cash equivalents under US GAAP.



                                      F-52
<PAGE>
                         Cordiant Communications Group
                                and Subsidiaries


(i) Statement of comprehensive income

Under UK GAAP, the Company  presents a statement of Total  Recognized  Gains and
Losses,  which is  equivalent  to a Statement of  Comprehensive  Income under US
GAAP.

(j) Prospective accounting changes

Accounting for derivative instruments and hedging activities

The Company is required to adopt  Statement  of  Financial  Accounting  Standard
(SFAS) No. 133 "Accounting for Derivative Instruments and Hedging Activities" as
amended by SFAS No. 138 for US GAAP  reporting  as of year ending  December  31,
2001.  SFAS  133  and 138  establish  accounting  and  reporting  standards  for
derivative  instruments,  including certain derivative  instruments  embedded in
other contracts (collectively referred to as derivatives).

In accordance  with SFAS No. 133,  entities are required to carry all derivative
instruments on the balance sheet at fair value.  The accounting for movements in
fair  value of  derivatives  depends  upon  whether it has been  designated  and
qualifies as part of a hedging  relationship  and, if so, the reason for holding
it.  If  certain  conditions  are met,  the  Company  may elect to  designate  a
derivative instrument as a hedge of exposures.  If the hedged exposure is a fair
value  exposure,  movements in fair value are  recognized  in earnings  with the
offsetting  gain or loss on the hedged item  attributable to the hedged risk. If
the  hedged  exposure  is a cash flow  exposure,  the  effective  portion of the
movement in fair value of the derivative  instrument is initially  reported as a
component  of other  comprehensive  income and  subsequently  reclassified  into
earnings  at the time  the  forecasted  transaction  impacts  earnings.  Amounts
excluded from the assessment of hedge  effectiveness  as well as the ineffective
portion of movements in fair value of the derivative  instrument are reported in
earnings in the  current  period.  Accounting  for  foreign  currency  hedges is
similar to the accounting  for fair value and cash flow hedges.  If a derivative
instrument  is not  designated  as a  hedge,  movements  in the  fair  value  of
derivative instruments are recognized in earnings.

The Company has identified the following types of derivative  instruments  which
were recorded on the balance sheet at January 1, 2001

o    Interest rate cap agreements are used to manage the Company's  exposures to
     interest rate movements.

o    Short term forward  foreign  exchange  contracts  are used to hedge foreign
     currency  exposures  arising from specific  transactions  such as temporary
     loans to or from  subsidiary  companies which are recognised on the balance
     sheet as assets or liabilities and re-measured at the spot rate at the year
     end.

A certain number of the Company's derivative  instruments meet the criteria of a
hedging relationship stipulated in SFAS No.133 but others do not. All derivative
contracts are recognized at fair value in the balance sheet.  Interest rate caps
which meet the cash flow hedge  criteria  will be  remeasured to fair value with
the  effective  portion of the  movement  in the fair  value of these  contracts
initially recorded in Other  Comprehensive  Income and subsequently  released to
earnings in the period in which the hedged transaction impacts earnings. Changes
in the fair value of the derivative contracts that do not meet the hedging


                                      F-53
<PAGE>
                         Cordiant Communications Group
                                and Subsidiaries


requirements of SFAS 133 will be immediately recorded in earnings.

The net fair  value of  L(0.2)m  of these  derivative  instruments  recorded  as
assets/(liabilities) on January 1, 2001 may be analyzed as follows:

                                                                           Lm
Fair value of interest rate caps recorded as assets                        0.1
Fair value of foreign exchange derivatives recorded as assets              0.1
Fair value of foreign exchange derivatives recorded as liabilities        (0.4)
                                                                     -----------
Net fair value                                                            (0.2)
                                                                     -----------

The impact to earnings resulted in a loss of approximately  L0.2m,  after taking
account of tax  credits of L0.1m.  This was  recorded  in earnings on January 1,
2001 as a cumulative adjustment for a change in accounting principle. On January
1, 2001, there were L0.1m deferred gains included in other comprehensive income.
Reclassification  of this amount to earnings  within the next 12 months will not
be material.

Accounting for transfers and servicing of financial  assets and  extinguishments
of liabilities

The US Financial  Accounting Standards Board has issued SFAS 140, Accounting for
Transfers and Servicing of Financial Assets and  Extinguishments of Liabilities,
a replacement  of SFAS 125. SFAS 140 revises the  standards for  accounting  for
securitisations  and other  transfers of  financial  assets and  collateral  and
requires certain disclosures.  SFAS 140 is effective for transfers and servicing
of financial assets and extinguishments of liabilities occurring after March 31,
2001 and is effective for recognition and reclassification of collateral and for
disclosures  relating to  securitisation  transactions and collateral for fiscal
years ending after  December  15, 2000.  The Company is reviewing  the impact of
SFAS 140 but does not expect any  material  impact to the  financial  statements
from the adoption of this standard.



                                      F-54
<PAGE>
                         Cordiant Communications Group
                                and Subsidiaries


<TABLE>
Effects on net earnings of differences between US and UK GAAP
<CAPTION>
                                                                               Year ended December 31,
                                                                        -------------------------------------

                                                                            2000         1999         1998
                                                                             Lm           Lm           Lm
                                                                        ------------ ------------ -----------
<S>                                                                     <C>          <C>         <C>
Profit for the year in conformity with UK GAAP                              33.6         18.6         13.8
US GAAP adjustments:
Amortisation of goodwill and other intangibles                   (b)       (19.0)        (7.3)        (6.3)
Deferred taxation                                                (c)         1.8          -            -
Relocation provision                                             (b)        (0.4)         -            -
Compensation costs                                               (d)       (11.4)       (18.9)        (1.0)
Amortisation of discount on property provisions                  (e)         1.1          1.3         (1.9)
Write off of research and development costs capitalised          (f)        (0.8)         -            -
                                                                        ------------ ------------ -----------
Net profit/(loss) applicable to Ordinary shareholders in
conformity with US GAAP before cumulative effect of change in
accounting principle                                                         4.9         (6.3)         4.6
                                                                        ------------ ------------ -----------
Cumulative effect of change in accounting principle (1)                      -          (14.9)         -
                                                                        ------------ ------------ -----------
Net  profit/(loss)  applicable  to  Ordinary  shareholders  in               4.9        (21.2)         4.6
conformity with US GAAP
                                                                        ============ ============ ===========
Net profit/(loss) per Ordinary Share - basic                                 1.6p        (9.5)p        2.1p
Average number of Ordinary Shares (in millions)                            294.0        226.6        222.4
Net profit/(loss) per Ordinary Share - diluted (2)                           1.5p        (9.5)p        2.1p
Average number of Ordinary Shares - diluted (in millions) (2)              328.6        239.6        223.3

(1)      During 1999, the Group reviewed its accounting for property provisions
         under US GAAP and determined that it is preferable under US GAAP to
         record property provisions on a gross basis rather than on a discounted
         basis. The cumulative effect of this change in accounting policy for
         periods through December 31, 1998 was a charge to profit under US GAAP
         of L14.9 million.

(2)      Potential common stock equivalents have been excluded from the
         computation of diluted net loss per Ordinary share for 1999, because to
         do so would be anti-dilutive for the information presented.
</TABLE>


<PAGE>

Cumulative  effect  on  shareholders'  funds  (deficiency)  of  differences
between US and UK GAAP
<TABLE>
<CAPTION>
                                                                                     ------------------------
                                                                                        2000         1999
                                                                                         Lm            Lm
                                                                                     ------------ -----------
<S>                                                                                    <C>           <C>
Equity shareholders' deficiency in conformity with UK GAAP                              463.3        (45.8)
US GAAP adjustments:
Dividends                                                                     (a)         8.4          5.1
Goodwill and US purchase accounting in respect of acquisitions                (b)        32.8         67.6
Deferred taxation                                                             (c)         1.8          -
Discount on property provisions                                               (e)        (5.2)        (6.3)
Write off of research and development costs capitalised                       (f)        (0.8)         -
                                                                                     ------------ -----------
Equity shareholders' funds in conformity with US GAAP                                   500.3         20.6
                                                                                     ============ ===========
</TABLE>





                                      F-55