As filed with the Securities and Exchange Commission on June 29, 1999

================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 20-F

             [ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR
                   (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, 1998
                                       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:
 Ordinary shares of 50p each represented          New York Stock Exchange, Inc.
 by American Depositary Shares

              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: 225,461,044
                                  -------------

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>

                                      TABLE OF CONTENTS
<TABLE>
<CAPTION>


                                                                                          Page
<S>                                                                                         <C>
PART I  4

        Item 1.  Description of Business.....................................................4
        Item 2.  Description of Property....................................................22
        Item 3.  Legal Proceedings..........................................................22
        Item 4.  Control of Registrant......................................................22

        Item 5.  Nature of Trading Markets..................................................23
        Item 6.  Exchange Controls and Other Limitations Affecting Security Holders.........24
        Item 7.  Taxation...................................................................24
        Item 8.  Selected Financial Data....................................................29

        Item 9.  Managements Discussion and Analysis ofFinancial Condition and Results
                 of Operations..............................................................32
        Item 9A. Quantitative and Qualitative Disclosures About Market Risk.................46
        Item 10. Directors and Officers of Registrant.......................................46
        Item 11. Compensation of Directors and Officers.....................................52
        Item 12. Options to Purchase Securities from Registrant or Subsidiaries.............55
        Item 13. Interest of Management in Certain Transactions.............................72

PART II.....................................................................................73

        Item 14.Description of Securities to be Registered..................................73

PART III....................................................................................73

        Item 15.  Defaults Upon Senior Securities...........................................73

        Item 16.  Changes in Securities, Changes in Security
                  for Registered Securities and Use of Proceeds.............................73

PART IV 73

        Item 17.  Financial Statements......................................................73
        Item 18.  Financial Statements......................................................73
        Item 19.  Financial Statements and Exhibits.........................................74
</TABLE>

<PAGE>

INTRODUCTION

          Unless the context otherwise requires, the following definitions shall
have the following meanings in this document:

          "Company"  shall mean Cordiant  Communications  Group plc  (previously
called Cordiant plc until December 14, 1997).

          "Consolidated  Financial  Statements" shall mean audited  consolidated
financial  statements  and notes  thereto of the Company as of December 31, 1998
and 1997 and for each of the years in the three year period  ended  December 31,
1998 included elsewhere herein.

          "Consolidation"  shall mean the share consolidation that occurred as a
result of the Demerger.

          "Cordiant" shall mean Cordiant plc (now called Cordiant Communications
Group plc) and its subsidiaries in relation to the period prior to the Demerger.

          "Cordiant  Ordinary  Shares"  shall  mean  ordinary  shares  of 25p of
Cordiant prior to the Demerger.

          "Demerger" shall mean the demerger on December 14, 1997 by Cordiant of
Saatchi & Saatchi Holdings Limited in accordance with the Demerger Agreement (as
defined herein).

          "Disposed"  operations refers to businesses  demerged from Cordiant to
form the Saatchi & Saatchi Group, Zenith and other businesses disposed of.

          "Group",  "CCG"  and  "CCG  Group"  shall  mean  the  Company  and its
subsidiaries from the date of the Demerger.

          "NRG" shall mean National  Research Group,  Inc. and its subsidiaries,
NRG-UK Ltd. and Movie View, Inc.

          "ongoing"  operations  refers to businesses that remain with the Group
following the Demerger and the disposal of other businesses and excludes Zenith.

          "Ordinary Shares" shall mean ordinary shares of 50p of the Company.

          "Saatchi & Saatchi" or "Saatchi & Saatchi  Group" shall mean Saatchi &
Saatchi plc and, where the context requires, its subsidiaries,  from the date of
the Demerger.

          "Saatchi Ordinary Shares" shall mean ordinary shares of 10p of Saatchi
& Saatchi plc.

          "Zenith"  shall mean Zenith  Media  Holdings  Limited  and,  where the
context requires, its subsidiary undertakings from time to time.

          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. The
noon  buying  rate in the  City of New  York  for  cable  transfers  in  foreign
currencies  as  announced  by the Federal  Reserve  Bank of New York for customs
purposes  (the "Noon  Buying  Rate") on  December  31,  1998 was L1.00 to $1.66.
Unless otherwise  specified,  translations  into US dollars contained herein are
made at the Noon Buying Rate on December 31, 1998.  The Noon Buying Rate on June
18, 1999 was L1.00 to $1.59.

          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 the Company's Memorandum and Articles of Association.


FORWARD LOOKING AND CAUTIONARY STATEMENTS

          This report contains certain "forward looking  statements"  within the
meaning of the Private  Securities  Litigation Reform Act of 1995. These forward
looking  statements  include  statements  in the  "Management's  Discussion  and
Analysis of Financial Conditions and Results of Operations--Industry Background"
section 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
"Description  of  Business  -  Organization  and  Services"  and   "Management's
Discussion and Analysis of Financial  Condition and Results of Operations."  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
general level of advertising  expenditures in the Company's  markets referred to
above,  the ability of the Group and its significant  customers and suppliers to
successfully  implement  timely Year 2000  solutions  and the  overall  level of
economic  activity in the Group's major markets as discussed  above. 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.

<PAGE>

                                     PART I

Item 1.  Description of Business.


GENERAL

          CCG is a global creative  communications  group.  The Group comprises:
Bates Worldwide,  one of the largest  advertising and integrated  communications
networks in the world; Scholz & Friends, the largest  multinational  advertising
network  headquartered  in Germany;  HP:ICM,  event  conference  and  exhibition
managers;  a 30% shareholding in The Facilities Group, a pre-production  agency;
and a 50%  shareholding in Zenith Media  Worldwide,  a global  specialist  media
services and planning agency.

          CCG comprises the ongoing businesses of Cordiant after the Demerger of
the Saatchi & Saatchi Group in December  1997.  Prior to the Demerger,  Cordiant
was the  holding  company  for a group of  advertising  and  creative  marketing
communication  businesses,  the  two  largest  of  which  were  the  advertising
networks, Bates Worldwide ("Bates Worldwide") and Saatchi & Saatchi ("S&S").

          The  origins  of Bates  Worldwide  date  back to 1940 when Ted Bates &
Company  was  founded in New York by Theodore  Bates and Rosser  Reeves.  It was
Rosser Reeves who first developed the concept of the Unique Selling  Proposition
("U.S.P.(TM)")  and this philosophy  still drives the advertising  strategies of
Bates Worldwide  today. 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.  Earlier that
year, Cordiant 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. The combined network formed a second
major component of Cordiant which, at that time, was also  establishing  another
substantial  advertising  network,  S&S. Throughout their period of ownership by
Cordiant, the two networks operated independently.

          During the mid 1980s,  Cordiant  also  acquired a number of specialist
marketing  communications  businesses.  In 1985, it acquired  HP:ICM, a business
based in London providing  creative and production  services for conferences and
exhibitions.  In 1987, The Facilities  Group was formed through the amalgamation
of a group of companies providing specialist  advertising production services in
design, print and television.  Following the Demerger, CCG retained a 30 percent
shareholding  in The  Facilities  Group  with the  remainder  held by  Saatchi &
Saatchi.

          In 1988,  Cordiant  formed a single media  buying  operation in the UK
called Zenith Media Buying Services. This was created through the acquisition of
Ray Morgan & Partners  which was merged  with the media  buying  departments  of
Cordiant's London advertising  agencies.  This was the first time a major agency
group had  consolidated  its media buying  operations  into a discrete unit. The
operation  was renamed  Zenith Media  Worldwide in 1991 and in 1992 extended its
services  to  include  media  planning.   Zenith  had  expanded  its  operations
internationally  by  opening  offices  in  Europe in 1994 and in the US and Asia
Pacific in 1995.  This  expansion was achieved by combining and  rebranding  the
in-house media  operations of S&S and Bates  Worldwide.  Following the Demerger,
CCG and Saatchi & Saatchi  each  retained a 50 percent  shareholding  in Zenith,
which is accounted for as a joint venture.

          From  the  late  1980s  to the end of  1995,  Cordiant's  history  was
characterized by a period of financial and management  instability  which had an
adverse  effect on Cordiant's  businesses.  During the late 1980s,  poor trading
conditions in the advertising industry,  coupled with the requirement to service
debt incurred to fund a number of acquisitions, contributed to a serious decline
in Cordiant's  financial  position.  By 1990,  Cordiant's  accounts  showed that
financial  liabilities had reached almost L700 million. As a result,  during the
early  1990s,  Cordiant  embarked  on a series of  refinancings  and  disposals,
culminating  in a  rights  issue  in  November  1995.  This  series  of  actions
substantially  eliminated  Cordiant's net financial liabilities and restored its
financial stability.

          The rights issue in 1995 enabled  Cordiant to be in a better  position
to focus on  revenue  growth and margin  improvement.  As part of this  process,
Cordiant decided in April 1997 to propose to Cordiant  Shareholders the demerger
of Cordiant into two autonomous advertising and marketing communications groups.
As a result of the Demerger, the CCG Group comprised of the advertising business
of Bates  Worldwide  and Scholz & Friends,  together  with HP:ICM,  a 30 percent
shareholding  in The Facilities  Group and a 50 percent  shareholding  in Zenith
Media Worldwide.

          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 in 40 offices in 31 countries.

          The  Group's  principal  corporate  offices  are  located  at  121-141
Westbourne    Terrace,    London    W2   6JR,    England,    telephone    number
011-44-171-262-4343.  Information  about  the  Group  can be  found  on the  CCG
website, www.ccgww.com.

Strategic Objectives

          The Group has three key strategic  objectives designed to position its
business  for  profitable  growth.  By the end of year 2000,  CCG aims to:  grow
revenues from multinational  clients (where CCG represents the client in five or
more  countries)  to  40%  of  CCG's  business;   grow  the  share  of  revenues
attributable to the Group's North American  operations to 30% of Group revenues;
and  grow the  revenues  from  diversified  marketing  services  to 30% of total
revenues.

Multinational Business

          CCG possesses a truly global  advertising  network.  Bates  Worldwide,
with 156  offices  in over 70  countries,  has both the  global  reach and local
creative expertise to provide the Group's clients with the competitive advantage
Bates' "Think Global. Act Local."(R) philosophy asserts. While the proportion of
revenues coming from multinational  clients increased to 33 percent in 1998 from
30  percent in 1997,  CCG's  revenue  contribution  from  multinational  clients
remains  below  that of its major  competitors.  The  Company  seeks to  exploit
opportunities  to build  existing  local client  relationships  into  profitable
regional and global partnerships. This has been, in the Company's experience, an
important source of new multinational  business in 1998, and an avenue we intend
to exploit further in 1999.

North America

          In 1998, revenue attributable to the Group's North American operations
represented  24 percent  of total  revenues,  up from 22 percent in 1997.  North
America  has  been the  Group's  best  performing  region  in terms of  improved
profitability  in 1998,  with  strong  organic  growth  being  bolstered  by the
acquisition of diversified services businesses.

          Taking  the  industry  as  a  whole,   North  America   accounted  for
approximately 40 percent(1) of worldwide  advertising  expenditure in 1998, with
an even greater  proportion of global spending being controlled from the region.
With approximately 24 percent of the Group's revenues coming from North America,
CCG is currently  under-represented  in this  important  market.  CCG intends to
further build its  operations in the region to 30 percent of Group revenues by a
combination of organic growth and value-enhancing acquisitions.

----------------
(1)  Source: Zenith Media Worldwide,  Advertising Expenditure Forecasts, January
     1999.

Diversified Marketing Services

          Although,  according to industry sources,  approximately 45 percent of
worldwide  advertising  expenditure  in 1998 was  directed  towards  major media
advertising,  the Group believes that an increasing proportion is spent on other
marketing disciplines such as direct marketing, sales promotion,  consulting and
research,  public  relations and other  specialist  communications.  The rapidly
increasing cost of traditional media,  combined with clients'  increasing desire
for integrated marketing solutions, suggests that diversified services will grow
more rapidly than  traditional  media  advertising over the next five years. CCG
has  sought  to  capitalize  on these  market  developments  by  developing  141
Worldwide into a highly effective  global network offering common  methodologies
in sales promotion,  direct  marketing,  events  marketing,  interactive  media,
merchandising  and  sponsorship  across the globe.  141 Worldwide  increased its
representation  to 40 offices in 31 countries in 1998. The Group intends to open
a further 10 offices in 1999, servicing multinational clients across Continental
Europe, Asia Pacific and Latin America. In 1998,  diversified marketing services
represented  22 percent of Group  revenues,  an increase of 2 percent over 1997,
towards our target of 30 percent by 2000.


CORPORATE DEVELOPMENTS

The Demerger

          On April 21, 1997,  the Board of Directors of Cordiant  announced  its
decision  to  recommend  to its  shareholders  that they  approve  a spinoff  or
demerger of Saatchi & Saatchi from Cordiant (the  "Demerger") with the remaining
businesses  renamed CCG. The Demerger was  motivated by the desire to allow each
of CCG and  Saatchi  &  Saatchi  to stand on its own and to  allow  the  primary
advertising  agencies of the CCG Group and the Saatchi & Saatchi  Group,  namely
Bates   Worldwide  and  S&S,  to  respond  more  quickly  to  client  needs  and
opportunities.  The  Demerger  took  effect on December  15, 1997 and,  from the
effective date of the Demerger (the "Effective Date"), CCG and Saatchi & Saatchi
have operated as separate public companies and neither CCG nor Saatchi & Saatchi
beneficially owns any shares of the other. As a result of the Demerger,  CCG and
Saatchi & Saatchi each own a 50 percent shareholding in Zenith.

Relationship Between CCG and Saatchi & Saatchi Following the Demerger

          As a result of the  Demerger,  the  Company  and Saatchi & Saatchi are
separate  publicly  traded  companies and operate  independently  of each other.
Neither  company  has any  interest  in the  shares of the other.  However,  the
Company  and  certain  companies  within  the CCG  Group  entered  into  certain
agreements and arrangements with the Saatchi & Saatchi Group and Zenith in order
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.  The terms of these  agreements and
arrangements are principally governed by the Demerger Agreement, dated September
30,  1997,  between  Cordiant,  Saatchi &  Saatchi,  Holdings  and  Zenith  (the
"Demerger  Agreement"),  and  certain  agreements  required  to be entered  into
pursuant to the Demerger Agreement.  The principal terms of these agreements and
arrangements are described below.

          Property Guarantees

          The following  outstanding  guarantees by CCG companies of obligations
of  certain  companies  in the  Saatchi & Saatchi  Group  were not  released  in
connection  with the  Demerger:  (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 is L255,882,  subject
to periodic rent reviews. In the Demerger Agreement, Saatchi & Saatchi agreed to
give additional,  or in some cases  substitute,  guarantees and to indemnify CCG
against any liability in its preexisting guarantees.

          Bank Facilities

          In connection with the Demerger,  the management of Cordiant allocated
the  consolidated  indebtedness  of Cordiant  between CCG, the Saatchi & Saatchi
Group and Zenith.  Under an Agreement dated September 30, 1997 between Cordiant,
various  other  members of the CCG Group,  The Bank of New York and Midland Bank
Plc as  Arrangers  and  certain  banks and  financial  institutions  (the  "Bank
Facility Agreement"),  the CCG Group established new banking  arrangements.  The
banking arrangements are described in greater detail in "Management's Discussion
and Analysis of Financial  Condition  and Results of  Operations--Liquidity  and
Capital Resources."

          In addition,  Zenith entered into an agreement  (the "Zenith  Facility
Agreement") providing a L21.5 million secured reducing multi-currency  revolving
credit  facility  (the  "Zenith  Facility").  The  Company and Saatchi & Saatchi
provided  unlimited  guarantees to the lenders in respect of the Zenith Facility
and agreed between  themselves that any liability under such guarantees is to be
shared equally.

          At December 31, 1998 the amount  outstanding under the Zenith Facility
was L20.5 million.  These facilities  amortize by L2 million in each of 1999 and
2000 and 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.

Ownership and Operation of Zenith Media Worldwide

          Zenith Shareholders' Agreement

          The Company,  Saatchi & Saatchi,  Saatchi & Saatchi  Holdings  Limited
("Holdings")  and Zenith,  with effect from the Effective  Date,  entered into a
shareholders'  agreement (the "Zenith Shareholders'  Agreement") to regulate the
relationship between the Company and Holdings as shareholders of Zenith. Saatchi
& Saatchi is a party to the Zenith Shareholders' Agreement in order to guarantee
the obligations of Holdings.

          The Zenith  Shareholders'  Agreement makes provision for the operation
of Zenith including: the composition of executive and non-executive  management;
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);  the
transfer of shares of Zenith;  resolution of disputes both between  shareholders
and Zenith and clients of the shareholders and Zenith.

          Seventy-five  percent 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 may be retained by Zenith.

          The Zenith Shareholders' Agreement prohibits the transfer of shares in
Zenith,  except in  certain  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:  (i)  the  other  shareholder  becomes
insolvent;  (ii) 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
(iii) 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.

          Both CCG and  Saatchi & Saatchi  have  guaranteed  the new Zenith bank
facilities described above.

          Zenith Media Services Agreements

          Pursuant  to  the   Demerger   Agreement,   at  the  time  the  Zenith
Shareholders'  Agreement  was  entered  into,  each of the Group  and  Saatchi &
Saatchi entered into a media services agreement with Zenith.  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,
2000 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.

Ownership and Operation of The Facilities Group

          The Company,  Saatchi & Saatchi,  Saatchi & Saatchi (Central Services)
Limited  ("SSCSL") and The Facilities  Group Limited ("The  Facilities  Group"),
with effect from the  Effective  Date,  entered into a  shareholders'  agreement
("The Facilities Group Agreement") in order to regulate the relationship between
the Company and SSCSL as shareholders of The Facilities Group. Saatchi & Saatchi
is a party to that agreement in order to guarantee the obligations of SSCSL. The
Company holds 30 percent of the outstanding  shares of The Facilities  Group and
Saatchi &  Saatchi  holds 70  percent.  The  Facilities  Group  Agreement  makes
provision for the operation of The Facilities  Group,  including the composition
of executive management and the transfer of shares.

          The  distributable  profits  of The  Facilities  Group will be divided
between  shareholders in the proportions in which The Facilities  Group receives
revenue from clients of each  shareholder.  Revenue of The Facilities  Group not
attributable to clients of either  shareholder  will be divided in proportion to
the shareholdings.  It also contains options whereby one shareholder is entitled
to acquire all of the shares in The Facilities  Group of the  shareholder in the
event  that:  (i) the other  shareholder  becomes  insolvent;  or (ii) the other
shareholder suffers a change in control.

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

Employee Benefits Plans

          CCG  employees are members of a number of pension  schemes  throughout
the world,  but  principally  in the UK and the US. CCG  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 Pension Plan). Since the Demerger,  CCG employees have remained members
of these schemes.

          Employees  of the Saatchi & Saatchi  Group and Zenith  have  continued
their  membership  in both schemes  during the year  pursuant to Inland  Revenue
approval.  The Company and Saatchi & Saatchi have agreed  that,  at the end of a
transitional  period,  Saatchi &  Saatchi's  members  within  the two UK pension
schemes will be given the  opportunity  to transfer to new pension  arrangements
being set up by Saatchi & Saatchi.  A transfer payment determined by the trustee
of the two UK pension schemes,  having taken actuarial  advice,  will be made to
the new Saatchi & Saatchi pension  arrangements in respect of the accrued rights
under the  relevant UK pension  scheme of those  members who request a transfer.
The same  provisions  apply to  employees  of Zenith who are members of CCG's UK
pension schemes.

          The  arrangements  with respect to options under the CCG Share Schemes
are   described  in  "Options  to  Purchase   Securities   From   Registrant  or
Subsidiaries."

Other Provisions of the Demerger Agreement

          Network Affiliates

          Prior to the Demerger,  there were over 40 affiliated  agencies of S&S
around  the world in which the  Saatchi &  Saatchi  Group  held only a  minority
interest or no equity interest.  Prior to the Demerger,  the  relationship  with
these affiliates was in most cases governed by a "network membership  agreement"
between the affiliate and Cordiant,  on behalf of S&S.  Under these  agreements,
the  affiliate was given the sole license to use the "Saatchi & Saatchi" name in
relation to advertising  services in a specified  territory and received certain
services  and  referrals  of clients  from S&S, in return for paying to Cordiant
fees based on income earned by the affiliate.  In most cases,  these  agreements
provided for termination by either party on 3 months' notice.

          Pursuant  to the  Demerger  Agreement,  CCG and the  Saatchi & Saatchi
Group  endeavored to obtain the agreement of the S&S  affiliates to the novation
of their network membership  agreements,  so that Saatchi & Saatchi succeeded to
all of the rights and obligations of Cordiant under these agreements with effect
from  completion  of the  Demerger.  To the extent that such  agreement  was not
obtained prior to the Effective Date, CCG continues to hold these agreements for
the benefit of the Saatchi & Saatchi Group pending  novation or termination  and
the Saatchi & Saatchi Group is responsible  for ensuring that all obligations of
CCG  thereunder  are  performed.  Similar  arrangements  exist  in  relation  to
agreements with Zenith affiliates.

          Disputes

          The Demerger  Agreement  sets out agreed  procedures to be followed by
the Company, Saatchi & Saatchi and Zenith in seeking to resolve any dispute that
may  arise  between  any of  them  under  or in  connection  with  the  Demerger
Agreement, other than disputes arising under the Zenith Shareholders' Agreement.


ORGANIZATION AND SERVICES

          The  Group's  operations  consist of  advertising  and other  creative
marketing services including direct marketing,  media services, sales promotion,
production services, interactive media and market research. In 1998, the Group's
largest five  clients  accounted  for 19.6 percent of revenues.  The two largest
clients  accounted  for 5.7  percent  and 5.3  percent,  respectively,  of total
revenues. The Group's principal activities are organized as follows:

         Organization                         Activities

Bates Worldwide                   Advertising and integrated communications
Scholz & Friends                  Advertising and integrated communications
The Campaign Palace               Advertising and integrated communications
141 Worldwide                     Diversified marketing services
The Decision Shop                 Strategic marketing and research
HP:ICM                            Live communications
Zenith Media Worldwide(1)         Media services
The Facilities Group(2)           Production services

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

(1)  Owned 50 percent by the Company, 50 percent by Saatchi & Saatchi
(2)  Owned 30 percent by the Company, 70 percent by Saatchi & Saatchi


          During 1998,  advertising  services  accounted for 78 percent of CCG's
ongoing  revenues and other  diversified  marketing  services  accounted  for 22
percent.

 Advertising and Integrated 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 integrated  communications
network. With 156 owned or affiliated offices located in over 70 countries,  the
network is  characterized  by a strong  local  presence  and an  entrepreneurial
management  style.  In 1998,  Bates  Worldwide  (including  141  Worldwide,  The
Campaign  Palace  and The  Decision  Shop)  accounted  for 86  percent  of CCG's
revenues.

          Bates  Worldwide's  creative  approach is derived from each  product's
Unique Selling Proposition ("U.S.P.(TM)"), in the belief that the foundation for
effective  communication is a strong selling proposition.  Bates Worldwide,  the
U.S.P.  agency,  adheres  to the  operating  philosophy  of "Think  Global,  Act
Local"(R),  which  reflects  both the  networks'  global  reach and its creative
expertise at a local level.

          Organizational Developments

          Expanding  out  from  its   advertising   base,   Bates  Worldwide  is
energetically  building its total integrated service capacity.  Most notably, in
1997 141 Worldwide was established as a separately  branded network with special
expertise  in  sales  promotion,   direct  marketing,   interactive  media,  and
associated  activities.  Strategic  acquisitions  were  also  made  in  1998  to
strengthen  Bates  Worldwide's  diversified  services  capabilities.   In  North
America,  Churchill Public Relations, a business to business PR, advertising and
research company, and The Criterion Group, a travel and tourism specialist, were
acquired.

          As part of CCG's  commitment  to  provide an  enhanced  service to its
international  clients, a number of acquisitions were made in Latin America.  In
Argentina,  Bates  Worldwide  purchased  Fernando  Fernandez  and merged it with
Verdino Bates.  It also acquired an equity  interest in Newcomm Bates in Brazil.
During 1998, a regional new business  team was  established  in Miami to develop
pan regional Latin American business.

          In  addition,  a number of small  "in-fill"  acquisitions  were  made,
primarily  in  Continental  Europe,  either to support  the  development  of 141
Worldwide or to strengthen existing operations.

          Clients

          Bates Worldwide has a broad client base. In 1998, Bates Worldwide's 10
largest clients accounted for 24 percent of CCG's revenues in 1998.

          A representative  selection of Bates Worldwide's current major clients
is set forth in the table below:

          Client                                           Years a Client
          ------                                           --------------

          Allied Domecq                                          1
          B.A.T. Industries                                      31
          Estee Lauder                                           31
          Fort James                                             4
          HSBC                                                   19
          Hyundai                                                14
          Kingfisher                                             17
          Nokia                                                  5
          Ralston Purina                                         18
          Roche Nicholas                                         22
          Safeway Stores plc                                     13
          SEAT International                                     1
          Warner-Lambert                                         40
          Wendy's International                                  12

          Bates Worldwide enjoyed strong new business  performance in 1998, both
from new  clients  (including  SEAT and  Allied  Domecq)  and  existing  clients
(including  Warner-Lambert and B.A.T.).  This new business performance coincided
with the formation of a dedicated  global new business team. This team's twofold
task is to pursue new global clients and to actively  encourage the expansion of
local client business into regional and global partnerships.

          Reputation and awards

          During  1998  Bates   Worldwide   agencies   around  the  network  won
recognition at a number of international and creative awards competitions. Bates
Norway and Delvico  Bates won awards at Cannes and at the Clio Awards.  In Asia,
regional client Nokia won the  "Advertiser of the Year" award,  while Bates Hong
Kong won several  awards at the Hong Kong  AAAA's  awards,  including  the Grand
Prize for Best of Show. Bates Midwest won recognition at the regional Midwestern
Addy's, while Bates Southwest won the prestigious American Research Federation's
David Ogilvy award, and Bates Canada took numerous awards,  including one at the
International   Advertising   Festival  in  Montreux  for  its  Dentyne  Ice  TV
advertising.

          The Campaign Palace

          The Campaign Palace is a full-service  advertising agency operating in
Australia and New Zealand as a separately  branded  creative agency within Bates
Worldwide.

          In 1998,  Australia's  marketing  magazine,  `B&T  Weekly'  chose  The
Campaign Palace as Agency of the Year,  which added to a number of international
creative awards from prestigious  festivals such as Cannes,  the Clio Awards and
the Australian  Television Awards. During 1998, the Campaign Palace had a number
of new business wins, including Cable & Wireless,  Gatorade,  DHL and department
store, Georges.

          Part of The Campaign Palace is The Media Palace,  a media planning and
strategy  consultancy.  The Media Palace has a core philosophy that media should
be  a  lead  discipline  in  advertising   developments  and  should  drive  the
communications  process.  New clients in 1998  included  Pepsico,  Lion  Nathan,
Whitehall  Laboratories  and Paramount Foods. The Media Palace was successful at
the  1998  Australian  Advertising  Media  Awards,  winning  four of the  silver
categories  including  Best  Use of  Outdoor,  Best  Use of  Radio,  Best Use of
Magazine and Best Use of  Multimedia.  In 1999,  The Media  Palace  operation is
planned to extend to New Zealand.

          Scholz & Friends

          Scholz & Friends is the largest German-based  multinational network(2)
with 13 offices operating across Europe.  Scholz & Friends provides clients with
a wide range of  marketing  services  including  advertising,  sales  promotion,
public relations,  direct marketing,  design,  consulting and interactive media.
CCG  currently  owns 90 percent of Scholz & Friends.  During  1998,  the network
accounted for approximately 12 percent of CCG's revenue.

------------
(2)  Source:  Advertising Age, Agency Report April 1999.

          With its  headquarters in Germany,  Scholz & Friends' most significant
clients include major German companies such as Deutsche Bank,  Deutsche Telekom,
Frankfurter  Allgemeine  Zeitung,  Lufthansa,  Mercedes,  Schwarkopf/Henkel  and
Tchibo.

          In 1998,  Scholz &  Friends  won new  business  from new and  existing
clients including Yellow Pages, RWE Energie,  CNBC,  Bastos,  Berliner Sparkasse
and Deutsche Telekom. Its only significant loss in 1998 was BMW.

          Scholz  &  Friends  further   consolidated  its  integrated  marketing
services  capabilities to clients in 1998,  acquiring Market Lab AG, a corporate
consulting firm, and Scholz & Friends NeuMarkt,  an agency  specializing in mail
order and sales.

          In 1995,  Scholz & Friends moved from operating  independently  within
the Bates Worldwide network to operating as an independent network. The Scholz &
Friends  network has  expanded  to include 13 offices in 11 European  countries,
with the Asia Pacific  region served by a central  office in  Singapore.  In the
Middle  East,  the  Balkan  region and the  Baltic  countries,  Scholz & Friends
operates affiliate  relationships with partner agencies. The expansion of Scholz
& Friends  was  further  developed  in 1998 with the  opening of a new office in
London and Moscow.

          Scholz & Friends  has  developed  a "family"  system by  dividing  the
agency  into  independent   agency  units.   Each  unit  or  "family"   operates
autonomously  within the  agency,  headed by a managing  director  and  creative
director.  This concept has been extended  across the Scholz & Friends  network,
providing clients with a coordinated response from experienced local management.

          Scholz & Friends' creative  abilities have been recognized by over 150
awards in competitions such as Cannes, the Clio Awards, Epica, Effie, the Moscow
and New York  Festivals  and  ADC.  In  1998,  its  campaign  on  behalf  of the
Frankfurter  Allgemeine Zeitung became the first ever to be voted "Best Campaign
of the Year" on three different occasions.

Diversified Marketing Services

          CCG has been developing a number of its diversified marketing services
as  separately   branded   operations.   These  businesses  have  potential  for
high-margin revenue growth and the Company expects them to enhance the network's
ability to generate global client  accounts.  The services  provided are set out
below.

          141 Worldwide

          141  Worldwide  is  a  global  network   specializing  in  diversified
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 40
offices in 31 countries.

          The network has over 250  clients  worldwide,  with over 50 percent of
revenues coming from  multinational  clients.  Major clients include 3M, British
American  Tobacco,  Coca-Cola,  Heineken,  Roche,  Warner Lambert and Nokia. New
business was gained in 1998 from both new and existing clients, including Heinz,
Coca-Cola,  Philips,  HSBC and Moet et Chandon.  New assignments in 1999 include
the design of the Lucky Strike and 555 liveries  for British  American  Racing's
Formula 1 team.

          141  Worldwide  has  developed  internet  marketing  expertise in four
regional  centers:  New York,  London,  Sydney and Singapore.  Work includes the
design,  creation and  maintenance of websites and the  development of marketing
opportunities on the Internet for clients' products.  Internet-related  revenues
accounted for 5 percent of 141 Worldwide's business in 1998.

          141 Worldwide's  international  network operates to standard practices
and a unified  philosophy  utilizing two operating  systems:  the 141 Management
system  is used by the  network  to guide  clients  from  strategic  development
through to the execution of creative  work;  the 141 Creative  Project Flow is a
methodology used to help clients  understand better the creative process used by
the network. There is also a central 141 Networking office in London to transfer
knowledge of the latest research and legislation across the network.

          The development of 141 Worldwide is key to CCG's  strategic  objective
that 30 percent of total Group  revenues be derived from  diversified  marketing
services by the year 2000. The Company expects continued  development of the 141
Worldwide brand from both organic growth and strategic acquisitions.

Strategic Marketing and Research

          The Decision Shop

          The  Decision  Shop is a strategic  marketing  and  research  business
within Bates Worldwide  specializing in brand positioning research,  consultancy
and  econometric  modeling.  The Decision Shop provides  analytical  skills that
assist multinational clients to reposition their key brands for future growth.

          The Decision Shop's work has included the global repositioning project
for Smirnoff  Vodka,  which  followed  work for other IDV brands such as Baileys
Irish Cream,  J&B Whisky and Metaxa.  The Decision  Shop has also  conducted the
European  repositioning  of the  Electrolux  white goods range and the launch of
Nicorette and Zovirax in the pharmaceutical  fields,  alongside similar work for
clients such as B&Q, Mars,  Bang & Olufsen,  Tchibo Coffee,  Esso,  Diners Club,
Miller beer, 3M Scotchgard and Hyundai.  In all, The Decision Shop has conducted
over 100 brand positioning  studies around the world using its proprietary Brand
Essence Programme technology.

          In 1998, the company  launched the N-Vision  positioning  program,  an
integrated  solution in brand  positioning.  This followed the  introduction  of
Brand Health,  a program to assess the value to brands of alternative  marketing
and  communications  strategies.  Brand  Health,  which is both  evaluative  and
diagnostic,  is of increasing relevance in the increasingly accountable world of
marketing  communication.  A major  project was completed for Shell in this area
during the year.

Live Communications

          HP:ICM

          HP:ICM  is  a  leading  specialist   communications  agency  providing
creative and production  consultancy  in the areas of live events,  exhibitions,
film, video, multimedia and brand experience. The agency provides a full service
to its  clients,  from  strategic  and creative  development  through to design,
production and implementation.  HP:ICM provides a complete service to clients to
successfully  operate live events,  embracing  all key supports such as delegate
management,  film and video  production,  graphic design,  print and interactive
media.  The company's end products take many forms,  such as displays at visitor
centers, exhibition stands, conferences, internal corporate television networks,
trans-continental roadshows, multi-media training programs and corporate videos.
The agency is based in London  although  approximately  half of its revenues are
generated outside the UK.

          During 1998,  HP:ICM earned creative  recognition at awards ceremonies
including the ITMA Gold Award for Delegate  Management  and the Marketing  Event
Gold Award for Best Product launch. In 1998, Televisual Magazine named HP:ICM as
the UK's number one Live Communications agency for the fourth consecutive year.

          Major assignments in 1998 included the Global Dealer launch of the new
Opel/Vauxhall Astra for General Motors, the second Asia-Europe summit meeting in
London,  and the British  Pavilion  at Expo '98 in Lisbon.  The company has also
staged dealer  launches for General Motors'  Frontera,  Zafira and Vectra models
throughout Europe, and designed two zones within the much publicized  Millennium
Dome in London.

Production Services

          The Facilities Group

          Based in central London,  The Facilities  Group provides a broad range
of  technical  and creative  services to clients in the areas of design,  print,
production,  artwork, audio visual,  multimedia and television  production.  The
Facilities Group was created to offer clients a quicker,  more efficient service
by maximizing  the potential of new  technology in the management of advertising
production  processes.  The Facilities Group is jointly owned by the Company and
Saatchi & Saatchi, with the Company holding a 30 percent stake.

          In addition to providing for the majority of press, television, design
and new media production  requirements of it shareholders,  The Facilities Group
has continued to expand its list of external clients.

          New business  wins from  external  clients  during 1998 included an 18
month  assignment  to  produce  brochures  for  Toyota  Europe  and a  two  year
assignment  from  Woolworth's to produce home shopping and corporate  brochures.
Other wins included retail advertising and production projects for Staples,  the
production of annual reports for Premier Oil and Signet plc, property  brochures
for  the  Millennium  Dome/Greenwich  Peninsula  project  and  assignments  from
Cosmopolitan magazine.

Media Services

          Zenith Media Worldwide

          Zenith Media Worldwide is a specialist  media agency,  providing media
planning,  buying, evaluation and consultancy services to its clients. Zenith is
headquartered  in  London  and  has 51  offices  or  affiliated  agencies  in 28
countries across the world.

          Zenith provides its services to clients of Bates Worldwide and S&S. In
addition,  in 1998  approximately 60 percent of its revenues were generated from
Zenith's list of direct clients.

          Zenith has invested in recruiting,  training and retaining  talent and
in providing these people with sophisticated proprietary media systems under the
brand name Zenith Optimization of Media,  ZOOM(TM).  This includes the upgrading
and the  standardization  of hardware and software platforms across its network,
the development of Intranet Communications with clients and the launch of global
and national optimization systems and research such as ZOOM Wizard, ZOOM Merlin,
ZOOM Mediamaps and ZOOM Director.

          CCG and  Saatchi &  Saatchi  each have a 50  percent  shareholding  in
Zenith,  and both companies account for Zenith as a joint venture.  In addition,
both CCG and Saatchi & Saatchi  entered into an agreement in which they agree to
use  Zenith as their  exclusive  media  services  supplier,  subject  to certain
exceptions, until at least December 31, 2000. Each media services agreement will
introduce  revised  commercial  terms for the  purchase of media  services  from
Zenith.  See "Description of  Business--Ownership  and Operation of Zenith Media
Worldwide."


PERSONNEL

          As of June 1, 1999, CCG employed approximately 5,100 people worldwide.
The success of CCG's advertising and media services businesses, like that of all
other advertising agencies, depends largely on the skill and creativity of their
personnel  and  their   relationships  with  clients.   CCG  believes  that  its
relationship with its employees is good.

ACQUISITIONS & DISPOSALS

          Acquisitions

          During 1998, CCG 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  the  Company's  Australian  businesses),  was
acquired, giving the Group 100 percent control.

          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;  the effect of this
acquisition will be reflected in the Group's 1999 financial results.

          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.

          During 1997,  Cordiant made the following  acquisitions:  a 51 percent
interest in Grapple Group 141 (Pty) Ltd., a South African company;  a further 25
percent interest in X/M Harrow Pty Limited, an Australian  company,  raising its
holding to 75 percent;  and Scholz & Friends GmbH  acquired a further 33 percent
interest in Scholz & Friends  Dresden GmbH, in Germany,  increasing  the Group's
effective holding of Scholz & Friends Dresden to 76.5 percent.

          During 1996 the minority  47.4 percent of the share capital of Saatchi
& Saatchi Advertising SA in France was acquired by Cordiant. The acquisition was
completed  in  September  1996,  but for  accounting  purposes  the minority was
treated as having been acquired on January 1, 1996.

          In May 1996,  Cordiant acquired a further 10.7 percent interest in the
share capital of Scholz & Friends GmbH in Germany,  increasing its holding to 90
percent.   During  the  second  half  of  1996,   Cordiant  made  the  following
acquisitions: 51 percent in each of two South African agencies, BLGK Advertising
(Proprietary)   Limited  and  Saatchi  &  Saatchi   Klerk  &  Barrett   Holdings
(Proprietary) Limited; the minority interest in BSB Saatchi & Saatchi MC Limited
in Poland; and a 50 percent stake in X/M Harrow Pty Limited.

          Disposals

          During 1998,  CCG divested  itself of a controlling  interest in Bates
Japan Ltd to retain a 31 percent  share of the company now  operating as a joint
venture and renamed  Saatchi & Saatchi Bates Yomiko KKK.  Neither a profit nor a
loss arose from this restructuring.

          In October 1997, Cordiant completed the sale of NRG. See Note 2 in the
Notes to Consolidated Financial Statements.

          In September 1995, the Kobs & Draft Worldwide network ("KDW") was sold
to its  management  by Cordiant.  In 1996 KDW was sold by its  management to The
Interpublic  Group of  Companies.  This  transaction  resulted in the receipt of
contingent  consideration  by Cordiant,  as specified in the 1995 sale agreement
between Cordiant and KDW Management.  As a result,  Cordiant  recognized further
gains in 1996 and 1997.

GEOGRAPHIC COVERAGE

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

               Geographic analysis of CCG ongoing revenue in 1998

                                                        Percentage of
                                                    worldwide major media
                               Percentage of             advertising
                                CCG revenue            expenditure(1)
                                    (%)                      (%)
--------------------------------------------------------------------------
UK                                13.2                     4.1
The Americas                      24.3                    48.3
Continental Europe                35.9                    26.0
Asia Pacific                      26.6                    21.6
Total                            100.0                   100.0


(1)  Source: Zenith Media Worldwide,  Advertising Expenditure Forecasts, January
     1999.

          CCG's global reach is reflected in its geographical revenue mix.

          North  America was CCG's best  performing  region in 1998, in terms of
improved  profitability.  Taking the industry as a whole, North America accounts
for approximately 40 percent of worldwide advertising expenditure. With only 24%
of its revenues coming from North America, CCG is currently  underrepresented in
this important market. The Group intends to further build its operations in this
region,  with an initial target of 30 percent of Group revenues set for the year
2000.

          Continental  Europe  represents  approximately  36  percent  of  Group
revenues,  reflecting  CCG's  principal  businesses,  Bates  Europe and Scholz &
Friends.

          Asia Pacific  represents  approximately  27 percent of Group revenues,
with Australasia alone representing  approximately 17 percent of Group revenues.
The worst affected economies of South East Asia represent less than 2 percent of
Group revenues.

COMPETITION

          The   advertising   industry   is  highly   competitive   at  both  an
international  and local level.  CCG'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.

          The Company  believes that the Group is well  positioned to compete in
the  advertising  industry.   From  a  client  perspective,   Bates  Worldwide's
reputation is enhanced by being the original U.S.P.(TM) agency. The Company also
believes that the  combination  of the Group's local  presence and its worldwide
network  provides it with one of the  strongest  operating  formats to implement
advertising strategies on a worldwide basis. Furthermore, the process of clients
consolidating  their business in the  advertising  market will continue to offer
opportunities for Bates Worldwide to win new business.

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.


Item 2.  Description of Property.

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


<TABLE>
<CAPTION>

---------------------------------------------- ------------ --------------------- ------------------ ----------------
                  Location                        Area          Annual Base           Next Rent        Expiration
                                                 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 to Landsdowne House,  Berkeley Square London,
England CCG leases 103,000 square feet at an annual rental of L6.5 million which
is sublet for mainly coterminous  periods as CCG at an average annualized rental
of  approximately  L6.1 million  during 1998. A further 72,000 square feet at an
annual  rental of L3.1  million  is sublet on a  short-term  basis at an average
annualized rental of approximately L1.9 million during 1998.

          At December 31, 1998,  CCG's owned and leased  properties and fixtures
(including furniture and equipment) had a net book value of L11.9 million ($19.8
million).

          CCG  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, 1998, L33.2 million ($55.1 million) had been
reserved by the Group for potential costs of surplus space,  primarily in London
and New York City.


Item 3.   Legal Proceedings.

          CCG has no material pending legal proceedings.


Item 4.   Control of Registrant.

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

          The  following  table lists,  as of June 1, 1999,  the total number of
Ordinary Shares owned by the Directors and officers of the Company as a group.

                     Identity of
Title of Class       Person or Group           Amount Owned    Percent of Class

Ordinary Shares      Directors and officers of     183,218            0.1%
                     the Company as a group

          The Directors have also been notified of the following  non-beneficial
holdings  of ten  percent or more of the issued  Ordinary  Share  capital of the
Company as of June 1, 1999:

                     Identity of
 Title of Class      Person or Group           Amount Owned    Percent of Class

 Ordinary Shares     Phillips & Drew Fund       46,378,279          20.4%
                     Management

Item 5.   Nature of Trading Markets.

          The Company's  Ordinary Shares are quoted on the London Stock Exchange
Limited  (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.


                                              Pence Per        Translated into
                                           Ordinary Share        US Dollars
                                           High      Low       High       Low
  1997    First Quarter..............      123.5      98.5     2.01       1.60
          Second Quarter.............      135.5     120.0     2.22       1.97
          Third Quarter..............      135.0     118.0     2.27       1.90
          Fourth Quarter.............      134.5     100.0     2.20       1.67

  1998    First Quarter..............      123.5      88.5     2.07       1.46
          Second Quarter.............      135.5     115.5     2.26       1.93
          Third Quarter..............      133.5     101.5     2.20       1.67
          Fourth Quarter..............     112.5      95.0     1.86       1.62

  1999    First Quarter..............      167.0     107.5     2.72       1.78
          Second Quarter.............
           (through June 23, 1999)         192.0   155.5       3.11       2.49

          The Ordinary  Shares  trade in the US on the New York Stock  Exchange,
Inc. in the form of American  Depositary  Shares ("ADSs") which are evidenced by
American Depositary Receipts ("ADRs"). Each ADS represents five Ordinary Shares.
The  depositary  for the ADSs is The Bank of New York  (the  "Depositary").  The
table below sets forth the high and low sales prices for the ADSs as reported in
the New York Stock Exchange-Composite  Transactions.  The Company believes that,
as of June 1, 1999, 14.27 percent of the outstanding  Ordinary Shares, which are
represented by ADSs,  were held in the US by 647 record holders and 0.16 percent
of the Ordinary Shares were held in the US by  approximately  45 record holders.
CCG  estimates  that,  as of June 1, 1999,  an  additional  11.28 percent of the
Ordinary  Shares are owned  beneficially  by US persons  giving an  aggregate US
holding of 25.7 percent.

                                                           US dollars per
                                                                 ADS
                                                           High       Low
1997
    First Quarter ........................................ 6          4 5/8
    Second Quarter ....................................... 6 7/8      5 5/8
    Third Quarter......................................... 6 11/16    5 1/2
    Fourth Quarter........................................ 9 1/2      5 3/8
1998
    First Quarter........................................ 10 11/16    7
    Second Quarter....................................... 12 1/4      9 1/2
    Third Quarter........................................ 11.13/16    8.1/2
    Fourth Quarter....................................... 10 3/8      8 1/4

1999
    First Quarter........................................ 13 5/8      9 1/4
    Second Quarter........................................15 1/2     12 7/16
       (through June 23, 1999)


Item 6.   Exchange Controls and Other
          Limitations Affecting Security Holders.

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


Item 7.   Taxation.

          The  following is a summary of certain UK tax  consequences  generally
applicable to a beneficial  owner of American  Depository  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 1999. The Chancellor of the  Exchequer's  Budget was
delivered on March 9, 1999,  containing  proposals  for enactment in the Finance
Act 1999.


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.  As from April 6, 1999,  the rate of the tax credit is
10% 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,  as from April 6, 1999, as a result of a reduction in
the rate of tax credit to 10%, 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 as from April 6, 1999.

          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  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
L223,000 (for  chargeable  transfers made on or after April 6, 1998).  The March
1999 Budget has proposed that this should be increased to L231,000 as from April
6, 1999. 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 L223,000 (or L231,000)  "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% on lifetime chargeable transfers
and 40% 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.


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.
In the case of stamp duty,  the charge is normally at the rate of L0.50 per L100
(or part of L100) of the  amount  or value of the  consideration  given  for the
transfer  and, in the case of SDRT,  0.5  percent of such  amount or value.  The
March 1999 Budget  proposes to change the rate of stamp duty to 0.5 percent with
rounding up to a 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 canceled.

          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 L1.50 per L100 (or part of
L100) or, in the case of SDRT, 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.

Transfers of Ordinary Shares within the depositary arrangements

          No UK stamp duty will be payable on an instrument  transferring an ADR
or on a written  agreement to transfer an ADR,  provided that the  instrument of
transfer or the  agreement  to  transfer  is  executed  and remains at all times
outside  the UK.  Where  these  conditions  are not met,  the  transfer  of,  or
agreement to transfer, an ADR could,  depending on the circumstances,  give rise
to a charge to ad valorem stamp duty.

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

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 50p per  instrument  of transfer.  The March
1999 Budget has proposed  that this should be  increased  to L5. 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 50p L5) per instrument of transfer.

Item 8.   Selected Financial Data.(3)

          The  selected  financial  data set  forth  below is  derived  from the
Consolidated  Financial  Statements  of  the  Company  and  should  be  read  in
conjunction  with,  and is  qualified  in its  entirety  by  reference  to, such
Consolidated  Financial  Statements,  including the notes thereto. The Company's
Consolidated  Financial Statements as of December 31, 1998 and 1997 and for each
of the years in the three year period ended  December 31, 1998,  which have been
audited by KPMG Audit Plc, are included elsewhere herein.

          In respect to 1997,  significant  changes  were made to the  Company's
capital structure as a result of the Demerger.  The selected  financial data set
forth below reflects the capital structure in place prior to the Demerger, which
was  appropriate  historically  to Cordiant  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
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations."

--------------------
(3)  The  Consolidated  Financial  Statements  of the  Company  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 37 in the Notes to Consolidated Financial Statements. The per share
     data have been translated into dollars per ADS where appropriate.

<TABLE>
<CAPTION>

                                                Year Ended December 31,

                                     1998      1998    1997    1996     1995     1994
                                    US$(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
   Commission and fee income
      Continuing operations          $501.0  L301.8   L736.1  L754.9  L761.1   L775.4
      Discontinued operations
      Total                          $501.0  L301.8   L736.1  L754.9  L761.1   L775.4
   Profit (loss) before tax, and
   minority interests(3)              $43.0   L25.9    L34.6   L41.8  L(22.6)   L32.4
   Net profit (loss)                  $24.9   L15.0    L15.1   L24.2  L(37.3)   L13.9
   Net profit (loss) per Cordiant
   Ordinary Share basic(4)            $0.11    6.7p     3.4p    5.5p  (12.8)p    4.9p

Approximate Amounts in Accordance
  with US GAAP
   Profit (loss) from continuing       $7.9    L4.8     L6.8    L6.9  L(46.8)  L(11.5)
   operations
   Profit from discontinued operations
   Net profit (loss)                   $7.9    L4.8     L6.8    L6.9  L(46.8)  L(11.5)
   Net profit (loss) per Ordinary
     Share:(2)
     Continuing operations             $0.04    2.2p     3.1p    3.1p  (32.0)p   (8.2)p
     Discontinued operations
     Net profit (loss) per             $0.04    2.2p     3.1p    3.1p  (32.0)p   (8.2)p
     Ordinary Share(2)
   Net profit (loss) per ADS:(2)
     Continuing operations             $0.20   11.0p    15.5p   15.5p (160.0)p  (40.6)p
     Discontinued operations
     Net profit (loss) per ADS(2)      $0.20   11.0p    15.5p   15.5p (160.0)p  (40.6)p
   Dividends including tax credit
     Per Ordinary Share                $0.06    3.5p     3.0p    2.6p    -        -
     Per ADS                           $0.29   17.5p    15.0p   13.0p    -        -



</TABLE>

<TABLE>
<CAPTION>

                                                      Year Ended December 31,

                                              1998       1998      1997      1996      1995       1994
                                             US$(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
    Commission and fee income
       Continuing operations                   $501.0   L301.8    L736.1   L754.9     L761.1     L775.4
       Discontinued operations                     -
                                               ------   ------    ------   ------     ------     ------
       Total                                   $501.0   L301.8    L736.1   L754.9     L761.1     L775.4
    Profit (loss) before tax, and
    minority   interests(3)                     $43.0    L25.9     L34.6    L41.8     L(22.6)     L32.4
    Net profit (loss)                           $24.9    L15.0     L15.1    L24.2     L(37.3)     L13.9
    Net profit (loss) per Cordiant
    Ordinary   Share basic(4)                    $0.11     6.7p      3.4p     5.5p     (12.8)p      4.9p

Approximate Amounts in Accordance with
  US GAAP
    Profit (loss) from continuing                $7.9     L4.8      L6.8     L6.9     L(46.8)    L(11.5)
    operations
    Profit from discontinued operations            -        -         -        -          -          -
                                               ------   ------    ------   ------     ------     ------
    Net profit (loss)                            $7.9     L4.8      L6.8     L6.9     L(46.8)    L(11.5)
    Net profit (loss) per Ordinary
      Share:(2)
      Continuing operations                     $0.04      2.2p      3.1p     3.1p     (32.0)p     (8.2)p
      Discontinued operations
      Net profit (loss) per Ordinary            $0.04      2.2p      3.1p     3.1p     (32.0)p     (8.2)p
      Share(2)
    Net profit (loss) per ADS:(2)
      Continuing operations                     $0.20     11.0p     15.5p    15.5p    (160.0)p    (40.6)p
      Discontinued operations                      -        -         -        -          -          -
      Net profit (loss) per ADS(2)              $0.20     11.0p     15.5p    15.5p    (160.0)p    (40.6)p
    Dividends including tax credit
      Per Ordinary Share                        $0.06      3.5p      3.0p     2.6p        -          -
      Per ADS                                   $0.29     17.5p     15.0p    13.0p        -          -


                                                                 December 31,
                                              1998       1998      1997      1996      1995       1994
                                             US$(1)       L         L         L          L          L
                                        ---------------------------------------------------------------------
                                                                 (In millions)

CONSOLIDATED BALANCE SHEET DATA:
Amounts in Accordance with UK GAAP
Working capital asset (deficiency)              19.6      11.8       2.8    (59.8)     (25.3)     (32.4)
Total assets                                   641.9     386.7     377.8    912.4      992.9      972.7
Long term liabilities, including               239.9     144.5     132.0    290.1      343.8      474.7
  minority interests
Shareholder's deficiency                      (118.7)    (71.5)    (85.7)  (215.3)    (224.9)    (355.5)
Approximate Amounts in Accordance
  with US GAAP
Shareholder's funds (deficiency)                17.4      10.6       3.8     (0.4)     (19.0)     (99.4)
</TABLE>
------------
(1)  These figures have been  translated into US Dollars at the Noon Buying Rate
     on December 31, 1998 (L1.00-$1.66).
(2)  Per share and per ADS  amounts  have been  adjusted  to  reflect  the share
     consolidation in connection with the Demerger.
(3)  The  profit  (loss)  before  taxes and  minority  interests  reflects:  (a)
     exceptional costs of Lnil, L2.2 million,  L16.5 million,  L20.3 million and
     Lnil that were incurred in 1998, 1997,  1996, 1995 and 1994,  respectively;
     (b) a profit on disposal of  operations  of L20.8 million and L17.8 million
     in 1997  and 1996  respectively;  (c)  costs  relating  to the  fundamental
     reorganization of the Group as a result of the Demerger of L33.0 million in
     1997  (details  of (b) and (c) are set out in Note 2 and 6 in the  Notes to
     Consolidated  Financial  Statements);   and  (d)  a  loss  on  disposal  of
     operations of L34.3 million in 1995. (4) Earnings per CCG Ordinary Share on
     a fully  diluted basis have not been  disclosed as they are not  materially
     different.

DIVIDENDS

          Dividends   recommended  by  the  Company's  Board  in  respect  of  a
particular  fiscal year are paid in the following fiscal year if approved by the
Company's  shareholders.  The  Company  has  paid  and  proposed  the  following
dividends on the Ordinary Shares in respect of the years indicated:

         Year          Dividend per Ordinary Share       Total Dividend Amount
                               (in pence)                     (L million)

        1994                       --                             --
        1995                       --                             --
        1996                       2.0                            4.4
        1997                       1.2                            2.7
        1998(1)                    1.4                            3.1
------------

(1)  If approved by the  Company's  shareholders,  such dividend will be paid in
     July 1999.

          Under UK company  law,  the ability to pay a dividend is  dependent on
whether the Company has distributable reserves. At December 31, 1998 the Company
had distributable reserves of L30.8 million.

          The Directors make dividend determinations taking into account the CCG
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.


EXCHANGE RATES

          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 ADSs in the US.  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 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.


                                   Average*      High        Low      Period End
1994...........................      1.54        1.64       1.46          1.57
1995...........................      1.58        1.64       1.53          1.55
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
------------
*    The average of the exchange  rates on the last day of each month during the
     period.

The Noon Buying Rate for pounds sterling on June 18, 1999 was L1.00 = $1.59.



Item 9.  Management's Discussion and Analysis of
         Financial Condition and Results of Operations.


GENERAL

          The information in "Management's  Discussion and Analysis of Financial
Condition and Results of  Operations"  concerning  the results of operations and
the financial condition of CCG refers to the Consolidated  Financial  Statements
included in this Form 20-F which 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. A discussion of the principal  differences is
set out in Note 37 in the Notes to Consolidated Financial Statements.

          CCG's ongoing  revenue is generated from  commissions and fees paid by
clients.  In each of the last three years,  between 35 and 55 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 by the
client.   Bates   Worldwide  and  Scholz  &  Friends   generally   have  ongoing
relationships with their clients which last a number of years. In contrast,  the
majority  of  revenue  from  clients  of  HP:ICM  is 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 CCG'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)  equated to  approximately  60 percent.  When
revenue  growth is slow or declining in any  particular  operating  unit, CCG is
able over 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.

          CCG has offices or  affiliated  agencies in over 70 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. CCG'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 CCG's tax charges arise.

          For  the  purpose  of  this  section,   references   to   "underlying"
performance  refers to ongoing  businesses  and  excludes the effect of exchange
rate movements.

          As part of the Demerger,  CCG entered into a new trading  relationship
with Zenith,  the commercial  terms of which differ from the  historical  terms.
These new  trading  arrangements  introduced  revised  commercial  terms for the
purchase  of media  services  from  Zenith.  See  "Description  of  Business  --
Corporate Developments."

          Prospective  changes to UK GAAP for the year ended  December  31, 1999
and their anticipated impact are as follows:

                  (i)  Financial  Reporting  Standard  ("FRS")  12  (Provisions,
         Contingent  Liabilities  and Contingent  Assets) will be adopted by the
         Group in the 1999  interim  accounts.  The  only  anticipated  material
         impact will be that the Group's property  provisions will be discounted
         to the present value of future net lease  obligations.  The recognition
         of this discount in subsequent years will be included as a finance item
         within net interest payable and similar items.

                  (ii) FRS 13  (Derivatives  and  other  Financial  Instruments)
         requires the  disclosure of certain  information  relating to financial
         instruments and will be adopted in our 1999 full year accounts.  FRS 13
         has been introduced to allow users of financial statements to judge the
         impact of  financial  instruments  on the  Group's  risk  profile,  and
         evaluate how such risks are managed.

                  (iii)  FRS  15  (Tangible  Fixed  Assets)  codifies   existing
         practice relating to the capitalization of costs as well as appropriate
         depreciation and revaluation policies.  The Group's existing accounting
         policies are consistent with FRS 15.


INDUSTRY BACKGROUND(4)

          Zenith  estimates that the outlook is for advertising  expenditures in
major media  (television,  print,  radio,  cinema and  outdoor) is one of stable
growth to 2000.

          Zenith  estimates that worldwide major media  advertising  expenditure
grew by 3.9 percent in 1998. Looking forward, Zenith forecasts nominal growth of
4.2 percent in 1999 accelerating to 5.3 percent in 2000 and 5.8 percent in 2001.

------------
(4)  Expenditure  information  in this  section  is based  solely  on  estimates
     published by Zenith Media  Worldwide  Ltd. (a  wholly-owned  subsidiary  of
     Zenith) in its Advertising  Expenditure Forecasts,  January 1999. YEAR 2000
     COMPLIANCE

          The inability of  computers,  software and other  equipment  utilizing
microprocessors  to recognize  and  properly  process  information  because such
equipment  recognizes a year only by the last two digits is commonly referred to
as the "Year  2000  issue." As the year 2000  approaches,  such  systems  may be
unable to accurately process certain date-based information.

          The Group has been  conducting  a  wide-ranging  Year 2000  compliance
program  since  mid-1997.  CCG's  Year 2000  compliance  effort  is  coordinated
centrally by a project team and is focused on seeking 100 percent compliance for
business  critical  systems  from a total of 84  business  units  of the  Group,
including 44 majority owned units, 37 affiliates and 3 minority owned units. The
role of the central  project team is to provide  guidance and monitor  progress.
Assessment, review and remediation plans are developed and implemented locally.

          The  Group's  Year 2000  compliance  program  has six key stages  with
respect to internal IT systems: inventory, impact assessment, compliance review,
corrective action, testing and implementation. CCG is focused on five categories
of internal IT systems:  (i) desktop  hardware,  (ii)  desktop  software,  (iii)
network  operations  systems  (i.e.,  base  operating  software),  (iv) business
critical  applications (i.e., software products that directly affect the Group's
ability to serve its  clients)  and (v)  communications  devices.  As at June 1,
1999, of the 84 units,  70 percent have  reported  full  compliance in the areas
listed above. Of the 10 largest units (which together account for  approximately
80 percent of the Group's revenues),  six have reported 100 percent  compliance;
the remaining four units expect to achieve 100 percent  compliance no later than
October 1999 (and, in most cases, earlier).

          With respect to internal non-IT systems  (primarily systems in offices
and  buildings),  CCG is taking  steps to certify Year 2000  compliance  between
March and June 1999. The Group's major  reporting units intend to finalize their
compliance  certificates  and report  their  findings  to CCG by the end of June
1999.  The Group will then ensure that any potential  risks  identified  will be
closely  monitored to ensure that any potential  disruption to the operations is
minimized. In addition, the risk of an internal Year 2000 failure in Bates North
America,  the Group's  largest  office,  has been minimized by its move in March
1999 into new offices which have been certified to be Year 2000 compliant.

          The Group intends to solicit Year 2000 compliance information from its
banks to ensure minimal risk of failure from a treasury  perspective.  The Group
has  also  solicited  written  confirmation  of Year  2000  compliance  from its
software suppliers and certain other key suppliers such as those supplying power
and media.  Because  the Group must rely on the  information  provided  to it by
third parties and cannot verify the accuracy of such information,  there remains
a risk that third parties will experience Year 2000 failures.

          Year 2000  compliance  is being  achieved  by a mixture of  corrective
actions and the  replacing  and  enhancing of existing  systems.  In many cases,
systems are being replaced  within the normal  capital  replacement  cycle.  The
incremental  cost to the Group of achieving Year 2000 compliance is estimated to
be L1.3  million,  of which L0.7  million will be charged to the profit and loss
account as incurred and L0.6 million of systems enhancement will be capitalized.
These  costs,  as with all  estimates,  are  subject to change as the project is
implemented.(5) All funds used in achieving Year 2000 compliance are expected to
come from the Group's working capital facilities.
----------------------

(5)  Costs charged to the profit and loss account in 1998 are L100,000.

          The Group's  Year 2000 project is based upon a plan to have all of its
business  critical systems compliant well before the end of 1999. Based upon the
work carried out so far, the group believes that once corrective action, testing
and  implementation  is  complete,  internal  IT  systems  will not give rise to
significant operational problems as a result of the Year 2000 issue.

          The Group  believes  that a reasonable  worst case Year 2000  scenario
would  involve (i) the failure of the systems of third  parties  such as utility
companies,  resulting in a temporary equipment shutdown at the Group's operating
locations  and (ii) the  failure of the  systems of major  clients of the Group,
resulting in the temporary  inability of the Group to collect payments from such
parties. In addition, the general effect of Year 2000 compliance failures in the
economy  could  adversely  affect the  Group.  The  amount of  potential  losses
resulting  from the worst case scenario  cannot be reasonably  estimated at this
time. The project team expects to develop a contingency plan by December 1999 to
be followed in the event of a Year 2000 failure.

          There can be no assurance  that Year 2000  remediation by the Group or
third parties will be properly and timely completed,  and failure to do so could
have a  material  adverse  effect on the  financial  condition  and  results  of
operations  of the Group.  The actual effect of the Year 2000 issue on the Group
depends on  uncertainties,  including,  but not limited to, the  following:  (i)
uncertainties  relating to the ability of the Group to identify and address Year
2000 issues successfully and in a timely manner and at costs that are reasonably
in line with the Group's estimates; and (ii) the ability of the Group's vendors,
suppliers,  other  service  providers  and  customers  to  identify  and address
successfully their Year 2000 compliance issues.

CONVERSION TO THE EURO

          On January 1, 1999,  certain  member  countries of the European  Union
established  fixed  conversion  rates between their existing  currencies and the
European  Union's common  currency (the "Euro").  The transition  period for the
introduction  of the Euro will be between January 1, 1999 and June 30, 2002. The
Group has  significant  operations  within the  European  Union.  A project team
considered the  implications  of the  introduction  of the Euro during 1998. The
areas covered by the team included client service, computer systems,  accounting
and reporting,  financing and treasury, legal, human resources and training. The
Group  has  not  encountered  any  significant  problems  in  preparing  for the
introduction of the Euro. The Company believes that the use of the Euro will not
have a  significant  impact on the manner in which it conducts  its business and
processes its business and accounting records.

LIQUIDITY AND CAPITAL RESOURCES

General

          At the time of the Demerger,  the  capitalization and financing of the
Group changed. Prior to the Demerger, operations of CCG were run separately from
the parts of  Cordiant  that  were  demerged  or sold.  However,  CCG's  ongoing
operations  were neither  capitalized  nor financed as an independent  group. In
connection with the Demerger, the Group adopted a new capital structure that was
put in place on December 14, 1997.

          The Group's  primary  liquidity  sources are cash flow  generated from
operations, the issuance of equity and its banking facilities.

          The  capital  structure  post-Demerger  consists  of  senior  debt and
equity.  At  December  31,  1998 the Group's  senior  debt  consisted  of a bank
facility (the  "Facility") of $108.8  million and a bank  guarantee  facility of
$3.1 million.  The Facility provides,  among other things,  committed  revolving
credit  facilities at a rate going forward between 0.75-1.5 per cent over LIBOR,
depending on results.  The Facility  reduced to $108.8  million in December 1998
and will continue to reduce at  six-monthly  intervals  with a final maturity in
September  2002. The Bank Facility  Agreement  requires the Group to comply with
certain  financial and other covenants  relating to gross interest cover,  total
cash cover and maximum gross debt. It also contains  provisions  whereby, on the
happening  of certain  specified  events of default,  the amount made  available
could be declared  immediately due and payable.  These events of default include
breach of the above covenants and cross default by certain  companies in the CCG
Group in  respect  of  indebtedness  over a  specified  amount or any  change of
control of the  Company.  The  Facility is secured by  guarantees  from  certain
members of the CCG Group (or, where  guarantees are not possible,  share charges
over such  companies)  such that at all times,  the aggregate of the revenues of
those  companies that have given  guarantees (or whose shares have been charged)
will equal at least 60 percent of the CCG Group's consolidated  revenues.  Fixed
and  floating  charges  over the  assets of the  Company  and  certain of its UK
subsidiaries and share pledges over the shares owned by members of the CCG Group
in various subsidiaries have also been given.

          On December 31, 1998,  CCG had drawings of $60 million,  compared with
drawings of $42 million on December 31, 1997.  The primary reason for the higher
drawings were the payment of costs relating to the Demerger.

          The undrawn element of CCG's  facilities is required in part for CCG's
cyclical  working  capital  needs  and in  part  to  allow  CCG to  finance  any
contingency.  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 CCG'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  to allow the
agencies to buy media on behalf of their  clients.  While 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.

          Cash Flows from Operating Activities

          Cash  generated  from  operating  activities in 1998 was L19.8 million
compared  with L61.7 million in 1997, a reduction of L41.9  million.  A total of
L56.1  million  of the cash  generated  in 1997  was  attributable  to  demerged
companies and the ongoing companies increased their operating cash flow by L14.2
million in 1998 over  1997.  Of this  increase,  L3.8  million  is derived  from
increased  operating  profits,  although the 1997  operating  profit  included a
non-cash exceptional expense of L2.2 million.  There was a marginal reduction in
the payments in respect of unutilized  property,  which had been provided for in
prior years, for ongoing  operations from L7.3 to L7.0 million.  The payments in
respect of unutilized  property in general represent the difference  between the
payments  being made by CCG relating to excess space and the income CCG 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  the  L14.2  million  increase  is  derived  from  improved  working  capital
management although there was still a working capital outflow of L8.8 million in
the year.

          In 1997 a static level of operating profit of L24.1 million was offset
by a deterioration  in cash flow from working capital of L2.3 million.  Payments
in respect of unutilized  property which had been provided for in previous years
were L19.2 million for Cordiant  compared with L16.9 million in 1996.  There was
an  increased  payment in 1997  because a premium was paid to  terminate a lease
early.

          Net Cash Outflows Arising from External Demerger Costs

          In 1998, L8.2 million of external  demerger costs incurred and accrued
in the previous year were paid.  Payments in 1997 were L13.8  million,  of which
L13.6  million were paid by the ongoing  businesses.  These  payments  were made
primarily to external advisers of the Group.

          Cash Outflows from Returns on Investments and Servicing of Finance

          In 1998,  cash  outflows  from net interest  expense and  dividends to
minorities were L4.9 million  compared to L12.3 million in 1997, L4.0 million of
which  related  to the  ongoing  companies.  Net  interest  paid by the  ongoing
companies  increased  from  L2.2  million  to  L2.4  million  and  dividends  to
minorities   increased  from  L1.9  million  to  L2.5  million.   Following  the
acquisition of the minority  interest in Australia,  dividends to minorities are
expected to be lower in 1999.

          In 1997,  consolidated  cash  outflows  were  L12.3  which  showed  an
increase of L2.2 million over the previous  year largely due to higher bank fees
paid under the 1995 facilities agreement.

          Taxation

          Tax payments in 1998 were L8.3 million  compared with L15.1 million in
1997.  The 1997 payment  included  L9.8 million for ongoing  companies  and L5.3
million for  demerged  companies,  showing a reduction  in payments  for ongoing
companies in 1998 of L1.5 million.

          In 1997, tax payments were lower than the tax charges in the statement
of operations due to nonrecurring recoveries relating to prior years.

          Provisions for tax exist in respect of prior years.  Payments of these
amounts may increase  tax  payments in future years to a greater  amount than in
the statement of operations.

          Cash Flows from Investing Activities

          In 1998, payments for the acquisition of tangible fixed assets, net of
receipts from disposals  amounted to L7.5 million compared with L23.2 million in
1997, of which L10.1 million related to ongoing companies.

          In 1997,  the L23.2 million net payments for  acquisition  of tangible
fixed assets reflected a slight decrease from L24.0 million in 1996.

          In 1998,  there was a cash inflow of L0.1 million from the acquisition
and disposal of miscellaneous  other  investments  compared with a net inflow of
L0.7 million in 1997

          Payments  for  the   acquisition  of  investments  in  subsidiary  and
associated  undertakings  in 1998,  net of cash in  companies  acquired was L7.0
million  compared  with L8.7  million in 1997,  of which only L0.8  million  was
incurred  by ongoing  companies.  Additional  acquisition  costs were met by the
issue of shares with a market  value of L3.4  million and costs of L5.8  million
were   accrued.   Additional   costs  of  L4.6  million   relating  to  deferred
consideration  for prior year  acquisitions  were also accrued  during the year.
These  accruals will result in cash payments in future years.  See Note 2 to the
Consolidated Financial Statements.

          There were no proceeds from the sale of subsidiaries during 1998 but a
subsidiary  was  reclassified  as an investment  in a joint venture  following a
share  restructuring  resulting in an outflow in respect of net cash balances of
L0.4 million in its balance sheet. In 1997 net proceeds from disposals  amounted
to L40.5  million due to the  disposal  of NRG and the sale of shares  issued to
Cordiant when its interest in KDW was sold in 1996.  Of this,  L23.3 million for
the sale of NRG, was received by ongoing companies.

          Equity Dividends Paid

          In 1998,  a dividend to equity  shareholders  of L2.7 million was paid
compared  with  the  pre-Demerger  dividend  of  L4.4  million  paid  in 1997 by
Cordiant.

          Cash Flows from Financing Activities

          In 1998,  shares  were  issued for cash of L0.5  million  (1997 - L0.1
million) following the exercise of employee share options.  The net draw down of
Group  borrowing  facilities  was  L8.6  million  (1997 -  L17.3  million)  and
repayments of finance lease borrowings was L0.2 million (1997 - L0.3 million).

          In 1997,  the L17.3 million net draw down of loans  consisted of loans
drawn of L115.7  million and  repayments of L98.4 million  representing  the new
financing arrangements put in place as part of the demerger.


RESULTS OF OPERATIONS(6)

          As CCG has offices or affiliated  agencies in over 70  countries,  its
revenues  and costs are  denominated  in a number of  currencies.  Consequently,
exchange rate movements  between pounds  sterling and several other  currencies,
the most important being the US dollar and Australian dollar,  have an impact on
the results of the Group.  The Group's  costs are generally  denominated  in the
same currency as the  associated  revenues,  however,  mitigating  the impact of
exchange rate movements on operating profit.

          During 1998,  the Company has adopted the new  standards on accounting
for  goodwill,  namely  FRS 10  (Goodwill  and  Intangible  Assets)  and  FRS 11
(Impairment of Fixed Assets and Goodwill). The impact of these standards is that
goodwill for  acquisitions  on or after January 1, 1998 has been  capitalized on
the balance sheet as an intangible  fixed asset. The Company believes that these
assets  have  an  indefinite  economic  life,  therefore,  goodwill  related  to
acquisitions to date has not been amortized, but is subject to annual review for
impairment.  Any subsequent acquisitions will be assessed on an individual basis
to determine the appropriate treatment of any related goodwill.

          The Company has also adopted FRS 14 (Earnings  per Share).  The impact
of this  standard is to change the method of  calculating  diluted  earnings per
share. As in previous years, the Group also provides headline earnings per share
which excludes  exceptional items. The basis of calculations of all earnings per
share figures is described in Note 10 to the Consolidated Financial Statements.

------------
(6)  See Note 37 in the Notes to Consolidated Financial Statements for a summary
     of differences between UK GAAP and US GAAP.

<PAGE>
Year Ended December 31, 1998 vs. Year Ended December 31, 1997

          To facilitate a more meaningful  comparison,  the 1998 trading results
are compared to the results of ongoing businesses in 1997.

          Revenue

          Revenue  decreased by 2 percent to L301.8  million in 1998 from L308.2
million in 1997. On an underlying basis, revenue increased by 5 percent.

          In the UK  revenues  increased  by 2 percent  to L39.8  million  which
represents 13 percent of Group  revenues  (1997:13  percent).  Lost revenue from
client  losses in 1997 were more than  replaced  by a mixture of client wins and
expansion of existing client relationships.

          In the Americas  revenues  increased by 9 percent and on an underlying
basis by 10 percent.  The region  represents 24 percent of the Group's  revenues
(1997:22  percent).  Approximately  half  of  this  increase  is the  result  of
acquisitions  of  diversified  services  businesses  in  North  America  and  an
acquisition  in Argentina.  The effect of these  acquisitions  will not be fully
reflected until 1999.

          In Continental Europe revenues increased by 3 percent and by 7 percent
on an underlying basis. This region (which includes revenues derived from Africa
and the Middle  East)  represents  36 percent of the Group's  revenues  (1997:34
percent). In Bates Europe revenues increased by 5 percent on an underlying basis
primarily  reflecting  new business  wins which  impacted the second half of the
year. Scholz & Friends continued to perform well with underlying  revenue growth
of 15 percent reflecting a strong performance in the Berlin office and expansion
and development of the international network.

          Asia  Pacific  revenues  fell by 17  percent  and by 2  percent  on an
underlying  basis  primarily  due to economic  conditions in South East Asia. In
1998 this  region  accounted  for 27 percent of the  Group's  revenues  (1997:31
percent).  Australasian  (Australia and New Zealand) revenues  (approximately 63
percent of Asia Pacific revenues) were unchanged on an underlying basis.

          Greater China (China, Hong Kong and Taiwan) reported revenue growth of
4 percent on an underlying  basis. The worst affected South East Asian economies
represent 8 percent of Asia Pacific revenues and 2 percent of Group revenues. In
response  to South  East  Asia's  contraction  in  revenue  the  Group has taken
significant steps to rationalize  costs, with overall staff levels in Asia being
reduced by 16 percent by the end of 1998.

          Trading Profit Before Exceptional Items

          Trading  profit  before  exceptional  items  increased by 6 percent to
L26.0  million  in 1998 from  L24.6  million in 1997.  On an  underlying  basis,
trading profits increased by 15 percent.

          In the UK,  trading  profits  were down 31 percent to L4.5  million in
1998. This anticipated  decline reflects the impact of a number of non-recurring
projects on 1997 profits.

          In the Americas  trading  profit grew by 30 percent to L8.2 million in
1998  (also  30  percent  on an  underlying  basis).  This  growth  reflected  a
combination  of  new  business,  cost  control  and  acquisitions.   The  latter
contributed  approximately  one  third  of the  growth  in  underlying  regional
profits.

          In Continental  Europe trading profit increased by 21 percent to L10.1
million in 1998.  On an underlying  basis the increase was 30 percent.  In Bates
Europe the increase of 46 percent on an underlying  basis  reflected  underlying
revenue increases in Germany, Italy and Spain primarily reflecting a significant
pan region  account win and improved  trading  margins.  In Scholz & Friends the
increase of 16 percent on an underlying  basis reflected a strong  conversion of
revenue gains in Berlin being partially  offset by development  costs related to
the international agencies.

          In Asia Pacific  trading profit  declined by 9 percent to L3.2 million
in 1998.  On an  underlying  basis trading  profit  increased by 20 percent.  In
Australasia  trading profit increased by 25 percent on an underlying basis. This
primarily reflected a tighter control of costs. In Asia trading losses reflected
the reduced revenue performance and associated restructuring costs.

          Trading Margins Before Exceptional Items

          Trading  margin before  exceptional  items was 8.6 percent in 1998, an
increase from 8.0 percent in 1997.

          On a geographic basis trading margins were as follows:

                                        1998                       1997
                                        %                          %
UK                                      11.3                       16.7
Americas                                11.2                       9.3
Continental Europe                      9.3                        7.9
Asia Pacific                            4.0                        3.6
                                        ---                        ---
Group                                   8.6                        8.0


          Joint Ventures and Associates

          CCG has joint ventures and associates in all four geographic  regions.
The Group's share of operating profits, primarily from Zenith and The Facilities
Group, amounted to L2.6 million.

          Year Ended December 31, 1997 vs. Year Ended December 31, 1996

          Revenue

          Consolidated  revenue decreased by 2 percent to L736.1 million in 1997
from L754.9  million in 1996. On an  underlying  basis,  revenue  increased by 7
percent.

          For the ongoing  businesses  revenue decreased by 6 percent and, on an
underlying  basis,  increased by 4 percent.  The UK growth of only 3 percent was
disappointing  and reflected a number of account losses and a transition  period
in the  management  of Bates  Dorland  which  impacted  the ability to pitch new
business.  On an  underlying  basis,  Asia  Pacific  increased  by  15  percent,
Australasia  increased  by 6  percent,  China  by 28  percent,  and  Japan by 86
percent.  Malaysia  and Thailand  declined by a combined 9 percent.  The revenue
performances  in China and Japan  reflected  new  accounts  won and Malaysia and
Thailand  reflected  the  economic  conditions  in those  markets.  Acquisitions
contributed 4 percent.  The Americas was down 9 percent on an  underlying  basis
due to the  loss of  Miller  Brewing,  which  had  been a loss  making  account.
Excluding Miller Brewing,  the Americas increased by 7 percent reflecting growth
from existing clients.  Continental Europe increased 3 percent. Germany was up 7
percent,  Italy up 29 percent,  Spain up 1 percent,  but  Scandinavia was down 2
percent.  There was a 1 percent contribution to revenue growth from acquisitions
in this region.

          The businesses  demerged into Saatchi & Saatchi increased revenue by 1
percent  to L378.2  million  in 1997 from  L375.3  million  in 1996.  Continuing
Saatchi & Saatchi revenue was up 1 percent to L376.7 million from L373.2 million
in 1996,  and,  on a constant  exchange  rate  basis,  revenues  increased  by 9
percent.  This  increase  reflected  both an  improved  level of  business  from
existing  clients and a number of new business wins, most notably Delta Airlines
at the start of the year. On a constant  exchange rate basis,  growth in all the
regions was between 7 percent and 10 percent.

          Trading Profit Before Exceptional Items

          Consolidated  trading profit before  exceptional items increased by 20
percent to L57.8  million in 1997 from L48.0  million in 1996.  On an underlying
basis, trading profit before exceptional items increased by 40 percent.

          For the ongoing  businesses  trading profit before  exceptional  items
increased by 14 percent and, on an  underlying  basis,  increased by 33 percent.
The UK increased by 71 percent  primarily due to a tighter  control of costs and
an unusually high level of non-recurring  revenues. Asia Pacific decreased by 26
percent to L3.5  million in 1997 from L4.7  million  in 1996.  On an  underlying
basis, Asia Pacific declined by 21 percent.  Australasia  increased by 4 percent
on an  underlying  basis,  but the  performance  elsewhere  in Asia  Pacific was
disappointing due to the economic crisis.  The Americas  increased by 58 percent
to L6.3  million in 1997 from L4.0  million  in 1996.  On an  underlying  basis,
profits  increased 70 percent  despite the fall in revenue.  This  reflected the
departure  of two major  loss  making  accounts  and  tighter  cost  management.
Continental  Europe  decreased  by 9 percent  to L8.3  million in 1997 from L9.1
million in 1996. On an underlying basis,  Continental Europe showed growth of 24
percent,  which outpaced the overall revenue growth and reflected the control of
costs.

          Continuing  Saatchi & Saatchi trading profit before  exceptional items
increased  by 28  percent to L29.7  million in 1997 from L23.3  million in 1996.
Continuing  Saatchi & Saatchi trading profit before  exceptional items was up 21
percent to L30.6 million from L25.3 million in 1996, and, on a constant exchange
rate basis,  trading profit before  exceptional  items  increased by 34 percent.
This increase  reflected an improved level of business from existing clients and
a number of new business  wins,  most notably Delta Airlines at the start of the
year. On a constant exchange rate basis, the performance by region varied widely
with Asia Pacific moving into a loss of L1.0 million,  the UK flat, the Americas
increasing by 38 percent and Continental Europe increasing by 132 percent.

          Trading Margins Before Exceptional Items

          The consolidated  trading margin before  exceptional items in 1997 was
7.9 percent,  an increase from 6.4 percent in 1996.  For the ongoing  businesses
trading margins before  exceptional items increased by 1.4 percentage  points, a
21  percent  improvement  from  6.6  percent  in 1996 to 8.0  percent  in  1997,
primarily  due to improved  cost  management.  The UK  achieved  margins of 16.7
percent in 1997 against 10 percent in 1996,  reflecting the level of spending by
particular  clients  and the tight  control of costs.  Margins  in Asia  Pacific
declined to 3.6 percent in 1997 from 5.1 percent in 1996.  The Americas  margins
nearly doubled to 9.3 percent in 1997 from 5.1 percent in 1996. The  Continental
Europe  margins  increased  to 7.9  percent  in 1997 from 7.5  percent  in 1996.
Overall the margin  improvement was as the Company expected,  but the UK and the
Americas were better than expected and Asia Pacific was worse than expected .

          The improvement in trading margins before  exceptional  items occurred
for  ongoing  operations  despite an adverse  impact of 0.3  percent  due to new
trading arrangements with Zenith.

          The  businesses  demerged  into  Saatchi & Saatchi  increased  trading
margins  before  exceptional  items to 7.9  percent in 1997 from 6.2  percent in
1996. For the continuing  Saatchi & Saatchi  businesses trading margin increased
to 8.1 percent in 1997 from 6.8 percent in 1996.

          Joint Ventures and Associates

          On a  consolidated  basis  there were no  material  joint  ventures or
associates.  The Demerger  resulted in Zenith becoming a joint venture  interest
between CCG and Saatchi & Saatchi and CCG having a 30 percent associate interest
in The Facilities Group, a subsidiary of Saatchi & Saatchi.

Exceptional Operating Items and Disposals

          Exceptional  operating  expenses  for CCG in 1998 were  Lnil,  and for
Cordiant in 1997 and 1996 were L2.2 million, and L16.5 million, respectively. In
1997 the exceptional  expense of L2.2 million  reflected a provision against the
goodwill relating to ongoing operations in Indonesia, which was taken in view of
the economic  uncertainty in that country.  In 1996 the exceptional  expenses of
L16.5 million  included L0.2 million related to the closure of a US pension plan
in ongoing  operations and L16.3 million which related to the demerged Saatchi &
Saatchi businesses.  The L16.3 million comprised L8.1 million for the closure of
a US pension plan and L8.2 million for property provisions.

          Profits on  businesses  disposed of by CCG were Lnil in 1998,  and for
Cordiant  were  L20.8  million in 1997 and L17.8  million  in 1996.  In 1997 the
profit of L20.8  million  included a profit of L16.5  million on the sale of NRG
and a L4.3 million profit on the sale of shares received as  consideration  when
Cordiant sold its interest in KDW. In 1996 the profit of L17.8  million  related
primarily to the sale of Cordiant's interest in KDW.

          In 1997  there  were  non-operating  expenses  of  L33.0  million  for
Cordiant due to the fundamental  reorganization of the business to implement the
Demerger.  The amounts payable in relation to the Demerger  including  advisors'
fees,   temporary  staff  and  other  costs  amounted  to  L20.2  million.   The
reorganization  of the Cordiant  head office and its  combination  with the head
offices of Bates  Worldwide  and S&S to form the two successor  operations  cost
L6.7 million. The Demerger also resulted in an inter-group property provision of
L6.1  million.  This  represented  the  difference  between the rent  payable by
Saatchi & Saatchi  and the amount  receivable  from  Zenith for space  sublet to
them.

Net Interest Expense and Similar Items

          Net  interest  expense and similar  items for CCG in 1998  amounted to
L2.7  million and for  Cordiant  were L8.8  million in 1997 and L7.5  million in
1996.  The decrease in 1998 is a result of the  Demerger  and the new  financing
arrangements  related to the Demerger.  For details,  see "Liquidity and Capital
Resources  General"  earlier in this report.  In 1997 the increase over 1996 was
due to a lower level of interest  received and  increased  bank fees offset by a
foreign exchange gain.

          Despite  an  overall  average  net  cash  position,  CCG  incurs a net
financing charge. This is primarily attributable to the geographic  distribution
of cash and  borrowing  resulting  from the need to maintain  cash  balances for
media  accreditation  and for local  funding  purposes and the inclusion of bank
fees and similar items in the net finance charge.

Taxation

          In 1998 CCG's tax charge for the year was L9.2  million,  representing
an effective tax rate of 35.5 percent.  Excluding  disposals,  exceptional items
and demerger costs,  Cordiant's  effective tax rate was 35.7 percent in 1997 and
36.5 percent in 1996.  Since 87 percent of CCG's business is located outside the
UK, the UK is not the dominant tax regime for the Group.

          Direct comparison between the effective tax rate of CCG to Cordiant is
difficult as the two groups were structured  differently  both in terms of legal
entities and the geographical distribution of profits.

Equity Minority Interests

          Equity minority interests from ongoing businesses were L1.7 million in
1998,  L1.8  million in 1997 and L2.6  million  in 1996.  The  decrease  in 1998
reflects   the  purchase  of  the  24.9   percent   minority   interest  in  The
Communications  Group. The decline in ongoing equity minority  interests in 1997
reflected  the impact of exchange  rate  movements  and the poor  trading of one
unit.

Return Attributable to Shareholders

          The Group's net profit for 1998 was L15.0 million,  resulting in
earnings per share of 6.7p.

          Cordiant's  net profit for 1997 and 1996 was L15.1  million  and L24.2
million  respectively,  resulting in earnings per share of 3.4p in 1997 and 5.5p
in 1996.  Excluding  exceptional  items the earnings per share were 6.6p in 1997
and 5.2p in 1996.  The earnings per share figures are  unadjusted  for the share
consolidation that took place as part of the Demerger.

          A dividend of 1.4p per share has been  recommended in respect of 1998.
The  comparable  1997 figure was a net  dividend of 1.2p.  Earnings  covered the
recommended dividend 4.8 times in 1998.


Item 9A.  Quantitative and Qualitative Disclosures About Market Risk.

Financial Risk Management

          The Group does not speculate in derivative financial instruments.

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 (32 percent of 1998 operating 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.

          Trading foreign exchange  exposures,  where they arise, are hedged via
the spot and forward exchange markets.

          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 debt at
December 31, 1998 was US$60 million.

          The following  sensitivity  shows the impact on the reported  value of
long term debt of an  instantaneous  10%  change in the  foreign  currency  rate
between  sterling and US Dollar from their levels at December 31, 1998, with all
other variables held constant.


                       Fair value          Impact of a + 10%   Impact of a - 10%
                       reported at            movement in         movement in
                    December 31, 1998        exchange rate       exchange rate

                        L million             L million           L million
Long term debt             36.4                 (3.3)                3.3

Interest Rates

          In order to reduce  the  Group's  exposure  to adverse  interest  rate
movements,  the Group has  entered  into  interest  rate caps which  protect the
majority of core borrowings. The Group's weighted average interest rate for 1998
was 6.1%.  The  Company  estimates  that if the 1998  interest  rates had been 1
percentage  point  higher,  the net  interest  expense  would have  increased by
L0.3 million.


Item 10.  Directors and Officers of Registrant.

          The Directors and Executive Officers of CCG are as follows:


Name                    Position                                           Age


Michael Bungey*         Director and Chief Executive Officer of the         59
                        Company and Chairman and Chief Executive
                        Officer, Bates Worldwide
Arthur D'Angelo*        Finance Director of the Company                     47
Jean de Yturbe*         Director, Chairman, Bates Europe                    52
Alex Hamill*            Director, Chief Executive Officer, Bates Asia       56
                        Pacific
Peter M Schoning*       Director, Chairman and Chief Executive              53
                        Officer, Scholz & Friends
William Whitehead*      Director, Chief Executive Officer, Bates North      53
                        America
Charles Scott           Chairman of the Company                             50
Dudley Fishburn         Non-executive Director                              53
Professor Theodore      Non-executive Director                              74
Levitt
James Tyrrell           Non-executive Director                              58
Dr. Rolf Stomberg       Non-executive Director                              59
Stuart Howard           Deputy Finance Director, Treasurer and Company      37
                        Secretary
David F. Ham            Group Controller                                    33
Stanley Bendelac*       Chief Operating Officer, Bates Europe and           57
                        Chairman, Bates Latin America
Les Stern*              Worldwide Planning Director, Bates Worldwide        51
John Fawcett*           Worldwide Creative Director                         49
Ian Smith*              President, International, Bates Worldwide           43
Colin Hearn*            Chairman and Chief Executive Officer, 141           48
                         Worldwide
------------
*     Member of the Executive Committee


Executive Directors

          Michael Bungey,  Chief  Executive  Officer of the Company and Chairman
and Chief Executive Officer, Bates Worldwide. In 1971, Michael Bungey set up his
own agency, Michael Bungey & Partners.  This was merged with Dorland Advertising
in 1984. In 1988 he became Chairman and Chief Executive Officer of Bates Dorland
and Bates Europe.  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 joined the Board of Cordiant in January 1995.

          Arthur  D'Angelo,  Finance  Director of the Company.  Arthur  D'Angelo
joined  Saatchi & Saatchi  Holdings  USA in October 1987 as Tax Director and was
subsequently  appointed  President  and Chief  Executive  Officer  of  Saatchi &
Saatchi  Holdings USA. He joined Bates USA as Executive Vice President and Chief
Financial  Officer in April 1994 and later that year was named  Chief  Financial
Officer  of Bates  North  America.  In July  1995 he was named  Chief  Financial
Officer of Bates Worldwide.

          Jean de Yturbe,  Chairman,  Bates Europe. Jean de Yturbe was 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.

          Alex Hamill, Chief Executive Officer,  Bates Asia Pacific. Alex Hamill
joined the Ted Bates group in 1968. In 1978 he was appointed  General Manager of
George  Patterson in Australia.  In 1984 he was appointed  Managing  Director of
George  Patterson's  Sydney  office  and in 1987  Managing  Director  of  George
Patterson  Australia.  In 1991 he was  appointed  Chairman  and Chief  Executive
Officer of George  Patterson Bates and Regional  Director for Bates Worldwide in
Asia-Pacific.

          Peter M  Schoning,  Chairman  and Chief  Executive  Officer,  Scholz &
Friends. Prior to joining Scholz & Friends, Peter M Schoning worked in a variety
of advertising agencies in Munich,  Paris and Hamburg,  where he, most recently,
was a member of the Lintas  management  team. He joined Scholz & Friends in 1984
as Managing  Director  and was named  Managing  Partner in 1987.  In 1993 he was
appointed  Chief  Executive  Officer at the agency and since 1995 he has led the
agency as Chairman and Chief Executive Officer.

          William Whitehead, Chief Executive Officer, Bates North America. Prior
to  joining  the Ted Bates  group in 1971,  Bill  Whitehead  worked  for  Foster
Advertising. In 1983 he joined Bates Canada and in 11 years with the agency held
a number of senior  positions,  most  recently as Chairman  and Chief  Executive
Officer.  In May  1994 he was  named  Executive  Director  of  Worldwide  Client
Services  at Bates  Worldwide  and at the same time  Regional  Director of Latin
America for Bates Worldwide.  In December 1994, he was appointed Chief Operating
Officer for Bates North America. In September 1995 he became President and Chief
Operating  Officer of Bates USA. In July 1996 he became Chief Executive  Officer
of Bates North America.

          Charles Scott, Chairman of the Company.  Charles Scott worked for Itel
Corporation  before joining IMS  International,  Inc. in 1977 where he was Chief
Financial  Officer  from 1986 until  joining  Cordiant  as Finance  Director  in
January  1990.  He was promoted to Chief  Operating  Officer of Cordiant in July
1991 and  Chief  Executive  Officer  in April  1993.  In  January  1995,  he was
appointed  Chief  Executive  Officer  and Acting  Chairman.  In July 1995 he was
appointed  executive  Chairman  and in  December  1997 he  became  non-executive
Chairman.  He was also  non-executive  Chairman  of Saatchi & Saatchi  plc until
January 1, 1999.  He is a  non-executive  director of  adidas-Salomon  AG and of
Joe's  Developments  Limited.  In  addition,  he has been a  director  of Emcore
Corporation since February 1998 and of TBI plc since May 1998.

Non Executive Directors

          Dudley  Fishburn,  Director.  Dudley  Fishburn  has been a  Member  of
Parliament and Parliamentary  Private Secretary at the Foreign Office and at the
Department  of Trade and  Industry.  He 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 Trustee of the Prison  Reform Trust,
all of which are based in the UK. He is a  non-executive  director of  Household
International, Inc., Euclidian plc and Philip Morris.

          Professor  Theodore  Levitt,  Director.  Theodore  Levitt is Edward W.
Carter Professor of Business Administration, Emeritus, of the Harvard University
Business School and serves on the board of Sandford C. Bernstein Funds,  Inc. in
the US.  He is also the  author of  numerous  articles  and books on  economics,
management and marketing and was formerly Editor of the Harvard Business Review.

          James Tyrrell,  Director.  James Tyrrell joined the Board in May 1998.
He was Group Finance Director of London  International  Group plc until November
1997 and an executive director there until August 1998.  Previously he was Group
Finance  Director  of Abbey  National  Plc and  Managing  Director  of HMV Shops
Limited.  He is  Chairman  of  Ferguson  International  PLC and a  non-executive
director of Point Group Ltd.

          Dr. Rolf  Stomberg,  Director.  Rolf Stomberg  joined the Board in May
1998.  From 1970 to 1997, when he retired from the Main Board, he worked for The
British  Petroleum Company plc where he was Chief Executive Officer for B.P. Oil
International  and a B.P. Group Managing  Director.  He serves on a number of UK
and  continental  boards  and  is  a  Visiting  Professor  at  Imperial  College
Management  School,  London and the  Business  School of  Institut  Francais  du
Petrole in Paris.

Executive Officers

          Ian Smith is President, International, Bates Worldwide and a member of
the Executive Committee. He joined the George Patterson Bates agency in 1989 and
was named  General  Manager and New Business  Director in 1990.  In 1996, he was
appointed Managing Director of George Patterson Bates Australia.

          Stuart  Howard,   Deputy  Finance  Director,   Treasurer  and  Company
Secretary of the Company.  Stuart  Howard joined the Company on May 1, 1998 from
WPP  where  he was  International  Treasurer.  From  1992 he was  Group  Finance
Director  for  Metrovideo  and from  1990 to 1992  Deputy  Finance  Director  at
McColls.  Prior to that,  he spent two years as Regional  Controller  at WPP and
four  years  with KPMG  London.  In 1998,  he became  Company  Secretary  of the
Company.

          David F. Ham  joined  the  Company  in May  1996 as  Manager  of Group
Reporting.  Prior to that he was Group  Accountant  at Alfred  McAlpine plc from
1994 and spent six years at Coopers & Lybrand.  In 1997, he was appointed  Group
Controller of the Company.

          Stanley Bendelac,  Chief Operating Officer, Bates Europe and Chairman,
Bates Latin  America.  In 1971,  Stanley  Bendelac  founded  Delvico  Bates,  an
operating unit within CCG. In addition to his  responsibilities on the Executive
Committee,  he is currently  Chairman and Chief Executive Officer of Grupo Bates
S.A., Spain.

          Les Stern, Worldwide Planning Director, Bates Worldwide. Les Stern was
a graduate trainee at Procter & Gamble before embarking on an advertising career
that included spells at FCB, Saatchi & Saatchi and WCRS. He joined Bates Dorland
in 1990 as Executive Planning Director.  Following  secondment to Bates New York
he was made Worldwide  Planning  Director in 1994. Les Stern is also a member of
the Executive Committee.

          John  Fawcett,  Worldwide  Creative  Director.  John Fawcett began his
advertising  career with George Patterson Bates, and has worked in various roles
around the world for Leo  Burnett  and J. Walter  Thompson.  He rejoined  George
Patterson Bates as a creative group head and became the company's first National
Creative  Director in March 1989.  He was  appointed  as its  Managing  Director
Australia  in June 1992 and Chief  Executive  Officer in July  1996.  He is also
currently Chairman of the Bates Worldwide Creative Board.

          Colin Hearn, Chairman and Chief Executive, 141 Worldwide.  Colin Hearn
joined the Bates network in 1985 from Ogilvy & Mather. In addition to his duties
in respect of 141, he is responsible  for two of Bates' largest global  clients,
BAT and Allied Domecq. He was appointed to the Bates Worldwide Board in 1994 and
elected to the Executive Committee in 1998.


Re-election of Directors

          The Articles of the Company provide that at the Annual General Meeting
in every year, one-third of the Directors for the time being, or if their number
is not three or a multiple of three then the number nearest to one-third,  shall
retire from  office,  the  Directors to retire in each year being 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 shall  (unless they  otherwise
agree among  themselves)  be  determined  by lot. 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 this
place, or if it does not appoint a replacement, until the end of the Meeting.

Corporate Governance

          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. The Board
has taken note of the  recommendations  contained in the Combined Code and fully
endorses the general principles behind the recommendations made.

          The Board has complied throughout the year with the provisions set out
in Section 1 of the Combined Code with the following exceptions:

     o    Paragraph  B.2.2 of the Combined Code  requires that the  Remuneration
          Committee consists exclusively of independent non-executive directors.
          Charles Scott,  who is not an independent  director (as defined in the
          Combined Code),  was a member of the Committee  during the period.  In
          line with his new role as executive chairman, Mr. Scott ceased to be a
          member of the Committee with effect from January 1, 1999;

     o    No senior independent non-executive director was recognized during the
          year.  However,  Rolf Stomberg was formally appointed to that position
          on March 4, 1999;

     o    The Board has not considered  setting as an objective the reduction of
          service periods to one year or less;

     o    The  provisions of the Company's  Articles of  Association  concerning
          retirement of Directors by rotation would not necessarily  ensure that
          all  Directors  are required to stand for  re-election  at least every
          three years. The Board intends to implement  procedures to ensure,  so
          far as practicable,  that this is the case and will consider proposing
          an amendment to the Articles in due course.

          A  separate  Audit  Committee  and  a  Remuneration   and  Nominations
Committee exist, both of which are comprised solely of non-executive directors.

          The Audit  Committee was chaired  during 1998 by Charles  Scott.  With
effect  from  January 1, 1999,  chairmanship  of the  Committee  passed to James
Tyrrell.

          The main duties of the Audit Committee are to:

     o    Review,  on behalf of the Board,  the  Group's  financial  statements,
          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    Direct the internal audit function; and

     o    Make  recommendations  to the Board  concerning  the  appointment  and
          remuneration of the external auditors.

          The Audit Committee met on four occasions during 1998.

          The principal functions of the Remuneration and Nominations  Committee
are to determine on behalf of the Board and the shareholders the Company's broad
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 six  occasions  in 1998,  is  chaired by
Dudley Fishburn.

          The Executive Committee consists of the executive Directors,  with the
exception of the Chairman, together with other senior executives of the Group.

          The  Executive   Committee's   purpose  is  to  deal  with  day-to-day
operational issues and to improve the  communications  and coordination  between
the Company and the principal  operating  divisions of the Group.  The Committee
met on nine occasions in 1998.

          The  following  table  lists,  as of  June  1,  1999,  the  Directors'
interests in Ordinary  Shares,  Ordinary Share Options and Equity  Participation
Rights.

Directors' Interests
                     Beneficially Owned   Ordinary Share   Equity Participation
                      Ordinary Shares         Options               Rights

A. D'Angelo                 960                 216,854               593,401
M. Bungey                55,990                 647,020               890,110
D. Fishburn                   -                       -                     -
A. Hamill                     -                 273,854               593,401
T. Levitt                18,796                       -                     -
P. Schoning                   -                 132,426               593,401
C. Scott*                85,172                 731,905                     -
R. Stomberg                   -                       -                     -
J. Tyrrell                    -                       -                     -
W. Whitehead                787                 222,426               593,401
J. de Yturbe                  -                 260,996               593,401
--------------------
*Includes spouse's interests



Item 11.  Compensation of Directors and Officers.

          In 1998, the aggregate amount of compensation  paid or accrued for all
Directors and  executive  officers as a group (19 persons) who served during the
year, was L4,915,057  ($8,158,994).  Such compensation was mainly in the form of
salaries and fees and included L176,438 ($292,887) set aside for pension plans.

          The table below reports remuneration by the Company for the year ended
December  31,  1998.  The  compensation  for  executive  directors  for 1998 was
approved by the Remuneration Committee.


<TABLE>
<CAPTION>
                                                         As         Long Term
                            Salary                   Percentage     Incentive     Benefits     Pension        Total
                           and fees      Bonus       of Salary        Plans      in Kind(1)    Costs(2)   Remuneration
                             L000        L000             %           L000         L000          L000         L000
                         ----------- -------------   ----------    ----------   ----------   ----------   ----------

<S>                           <C>         <C>            <C>            <C>           <C>         <C>          <C>
Executive Directors
Michael Bungey (CEO)          478(3)      120            25             14            89          52(4)        753
Arthur D'Angelo               213          48            23              9             7           8           285
Jean de Yturbe                212          48            23             14            32          20           326
Alex Hamill                   323          48            15              -             -           2           373
Peter M Schoning              270         232            86              -            10           -           512
William Whitehead             315          48            15              9            30           3           405

Non-executive Directors:
Charles Scott (Chairman)      165           -             -              -             4           4           173
Dudley Fishburn                31           -             -              -             -           -            31
Professor Theodore             28           -             -              -             -           -            28
Levitt
Dr. Rolf Stomberg(5)           19           -             -              -             -           -            19
James Tyrrell(5)               19           -             -              -             -           -            19

</TABLE>

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


(1)  Benefits in kind include such items as company cars,  medical insurance and
     life insurance.  Mr. Bungey, who is a UK citizen and who has been relocated
     to the US,  receives  a sum  equivalent  to  school  fees in the UK for his
     children and a travel  allowance for flights  between the US and UK for his
     wife and children.
(2)  The  amounts  for  pension  costs  disclosed  in the  executive  Directors'
     remuneration are based on the cash cost to the employing company of defined
     contribution schemes.

(3)  Mr.  Bungey's  salary  includes  an  amount  of  L29,919  as  part of a tax
     equalization scheme in respect of tax paid on his remuneration under US tax
     law.

(4)  Mr.  Bungey was a member of the Cordiant  Group Pension  Scheme,  a defined
     benefit  scheme,  during the year.  In addition  to the  amounts  disclosed
     above,  the  amount  of  the  increase  in  pension  during  the  year  was
     L4,337.  The total annual accrued pension (including inflation) as at
     December  31, 1998 was  L57,160.  The  accrued  benefit is that which
     would be paid  annually  on  retirement  based on service to the end of the
     year.  The transfer value (net of members'  contributions)  of the relevant
     increase in accrued benefit is L55,456.
(5)  Appointed May 1, 1998.

          Salaries  are  reviewed  annually.  In addition to salary,  all senior
executives  are  eligible  for  an  annual  performance-related  bonus  that  is
non-pensionable.  For the year ended  December 31, 1998 the annual bonus paid to
each  executive  Director was a  percentage  of salary based on, with respect to
Messrs. Bungey and D'Angelo,  the performance of CCG and with respect to Messrs.
Hamill, de Yturbe and Whitehead, a combination of the performance of CCG and the
business  that  each  director  heads  and with  respect  to Mr.  Schoning,  the
performance of Scholz and Friends.

          For all executive  Directors  only base salary is  pensionable;  their
pension arrangements are as follows:

     a)   Mr.  Bungey is a member  of the  Cordiant  Group  Pension  Scheme.  In
          addition,  CCG  contributes  6 percent of his salary plus  L15,000 per
          annum to a self-administered fund.

     b)   Mr.  Hamill is a member of the George  Patterson  1993  Holding  Board
          Superannuation Plan.

     c)   Mr.  D'Angelo is entitled to an annual pension  contribution of $7,500
          and in addition is a member of the Bates  Advertising  USA,  Inc. 401k
          plan.

     d)   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.

     e)   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.

     f)   Mr. Scott received pension contributions from the Company at a rate of
          14 percent of salary to March 31, 1998.  From April 1, 1998,  the fees
          payable for his  services  included an  equivalent  amount.  Under Mr.
          Scott's  new  contract  effective  from  January 1, 1999,  the company
          contributes 10 percent of his salary into a personal pension scheme.

Service Agreements

          No  executive  Director  has a service  agreement  containing a notice
period exceeding one year, except Mr. Schoning,  whose notice period is at least
one year ending on a  financial  year end,  and Mr.  Hamill,  whose  contract is
terminable on two years' notice.

          If the service  agreements  are  terminated by the Company  within two
years of a change of control,  the Directors,  with the exception of Mr. Hamill,
are entitled to payments based on up to two years' remuneration.  On termination
for any reason, Mr. Hamill is entitled to consultancy fees payable from the date
of termination to his sixtieth birthday.

          During 1998, Mr. Scott had parallel  contracts as Chairman of both the
Company  and Saatchi & Saatchi  plc. He  relinquished  his  directorship  of the
latter  with  effect  from  December  31,  1998.  The  terms of his new  service
agreement with the Company reflect his position as part-time executive Chairman.

          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 the Company,  and the changes
undergone by the Company 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   contractual   position.  In  other  cases  the  Remuneration  and
Nominations  Committee will recommend  that the  contractual  entitlement of the
individual be paid in installments following termination.

Non-executive Directors

          The  Board of  Directors  agrees  the  remuneration  of  non-executive
Directors for their services as members of the Board and its  committees  within
the limits imposed by the Company's  Articles.  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.

Item 12.  Options to Purchase Securities from Registrant or Subsidiaries.

Share Schemes Prior to the Demerger and Demerger Schemes

          The  Cordiant  share  schemes  consist of one savings  related  scheme
(described  below) and two  executive  share option  schemes,  specifically  the
Performance  Share Option  Scheme (the  "Performance  Scheme") and the Executive
Share  Option  Scheme  No 2 (the  "Executive  Scheme"  and,  together  with  the
Performance Scheme, the "Share Schemes").

          The  Executive  Scheme was  approved by the Inland  Revenue  under the
terms of the Finance Act 1984 and was intended only for  executives  resident in
the UK. The Executive  Scheme  expired in April 1994 although  existing  options
subsisting at the date of expiration  remain  exercisable in accordance with its
terms. The Performance  Scheme was adopted at the Extraordinary  General Meeting
of Cordiant held on March 16, 1995 and was approved by the Inland Revenue on May
1, 1995. It was intended for executives resident throughout the world.

          Options  granted  to  participants  in the  Executive  Scheme  and the
Performance  Scheme (which  includes super  options) were for Cordiant  Ordinary
Shares  at a  price  equivalent  to the  London  Stock  Exchange  middle  market
quotation on the day preceding the date of grant of the options.

          The  performance  targets for options  granted  under the  Performance
Scheme  depend on whether  the option is an ordinary  option or a super  option.
Ordinary  options require the CCG Group's  earnings per share to grow over three
years at between 2 percent  and 6 percent  more than the growth in the UK Retail
Price  Index  over the same  period.  Super  options  require  growth in the CCG
Group's  earnings  per share which over a five year period would place it in the
top  quartile of the FTSE 100  companies  ranked by growth in earnings per share
over the same period.

          No further  options were granted  under these  schemes  following  the
Demerger.  Holders of executive  options  employed by the Company retained their
options under the Share Schemes following the Demerger.

          Holders of  executive  options  under the Share  Schemes  employed  by
Saatchi & Saatchi were  invited to cancel their  options in return for the grant
of replacement options over Saatchi Ordinary Shares. Each replacement option was
for the same number of Saatchi  Ordinary Shares and has the same exercise price,
exercise period and performance  conditions as the relevant existing option. The
intention was that the replacement options be, as far as practicable, equivalent
to the existing options. For Charles Scott,  employees who ceased to be employed
as a result of the Demerger and employees of Zenith and The Facilities Group who
held executive  options under the Share  Schemes,  the same  principles  applied
except that their  replacement  options  were split 50/50  between  options over
Ordinary Shares and options over Saatchi Ordinary Shares.

          Cordiant's  savings related share option scheme ("Sharesave 1995") was
adopted at  Cordiant's  Extraordinary  General  Meeting  held on March 16, 1995.
Inland  Revenue  approval  for  Sharesave  1995 was  obtained  on May 15,  1995.
Eligible employees in the UK were invited to save a fixed amount per month for a
period of five  years and  applied  for an  option at a  predetermined  exercise
price.  The exercise  price was fixed at the date of invitation at a price which
was not less than the  higher of a share's  nominal  value or 80  percent of its
market value at the time. When the option is exercised,  the accumulated savings
and interest/bonus are used to pay the exercise price.

          Under Sharesave 1995,  employees of CCG retained their original number
of  options  without  adjustment  for the share  consolidation  pursuant  to the
Demerger.  Employees of Saatchi & Saatchi who held such  options  also  retained
them but were granted parallel  unapproved  options over Saatchi Ordinary Shares
which are exercisable  with the  accumulated  savings and  interest/bonus  under
Sharesave 1995.  (Sharesave 1995,  together with such parallel schemes being the
"SAYE Schemes")  Employees of Zenith and The Facilities Group had their parallel
options split 50/50 between Ordinary Shares and Saatchi Ordinary Shares.

          The  replacement  options  described  above were granted under schemes
(the "Demerger Schemes") which mirrored, as far as practicable, the terms of the
Share  Schemes to which they  related.  None of the  Demerger  Schemes have been
approved by the Inland Revenue.

          No  options  can be  granted  under a  Demerger  Scheme  other than to
replace an option  which an option  holder  under one of the Share  Schemes  has
agreed to cancel (or, in the case of the SAYE  Schemes,  to run in parallel with
an option under Sharesave 1995).

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  have been  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  under  the  ownership  schemes  were  valued as
follows:


                    Value at       Crystallized    1998 Cash      Value at
                December 31, 1997     Value        Payment     December 31, 1998

M. Bungey             113,936           56,968       14,242        42,726
A. D'Angelo            68,361           34,181        8,545        25,636
J. de Yturbe          113,936           56,968       14,242        42,726
P.M. Schoning         113,936           56,968       ---           56,968
W. Whitehead           68,361           34,181        8,545        25,636

          No awards were made under the schemes during 1998.

New CCG Share Schemes

(a)  The Cordiant  Communications  Group Equity  Participation Plan (the "Equity
     Participation Plan")

          The  principal  terms  of the  Equity  Participation  Plan are set out
below.

(i)   Administration

          The Equity  Participation  Plan is  operated in  conjunction  with the
Cordiant  Communications  Group  Employee  Benefit Trust (the "Trust") which was
established at the same time as the Equity Participation Plan.

          The Trustee of the Trust,  in exercising  its  discretion,  takes into
account the recommendations of the Remuneration Committee.

          Further details of the Trust are set out below.

(ii)  Eligibility

          Employees and executive Directors of the Company,  who are required to
devote  substantially  all their  working time to the business of any company in
CCG, are eligible to participate in the Equity Participation Plan.

(iii)  Participation in the Equity Participation Plan

          The Trustee invites selected eligible employees and Directors to pay a
certain amount of money (not  exceeding  Ll50,000) to enable them to participate
in the Equity Participation Plan. The payment made by participants to the Trust,
which must be made within 120 days of the award being made, is non-refundable.

          Normally,  awards to participants  will only be made within the period
of 42 days following the announcement of the Company's results for any period or
at any time if the Trustee  determines that exceptional  circumstances  (such as
the recruitment of a senior employee or executive director) so warrant.

          The maximum number of Ordinary  Shares which  participants  may become
entitled  to acquire  will be eight times the number that could have been bought
with the original  investment  at market value on the day  preceding the date of
award.  The exact  number of  Ordinary  Shares  which  may be  acquired  will be
determined by the performance formula described below.

          No new awards were made under the Equity Participation Plan during the
year.  At  December  31,  1998,  there were 52  participants  with awards over a
maximum of 11,084,170 Ordinary Shares.

(iv)  Performance Formula and number of shares vesting

          With the exception of Directors of the Company, the number of Ordinary
Shares that a participant may acquire will be determined by measuring the growth
in  earnings  per  share   ("EPS")  of  CCG  over  a  three  year  period  ("EPS
Performance").  EPS will be the fully  diluted  EPS  calculated  on the basis of
"headline  earnings"  using the Institute of Investment  Management and Research
guidelines  (although the Trustee will have the ability to adjust this figure if
the Trustee considers it appropriate to exclude  exceptional  items, such as the
costs of the Demerger and other significant non-recurring items).

          If EPS Performance is less than the annual percentage growth in the UK
Retail Price Index plus 2 percent (the "Hurdle Rate") then the participant  will
be entitled to acquire 10 Ordinary Shares.

          If EPS Performance is equal to or greater than the Hurdle Rate then:

     (a)  where EPS  Performance  is 5 percent  per annum,  12.5  percent of the
          award  vests,  which is the same number of Ordinary  Shares  which the
          participant could have bought with his original investment;

     (b)  where EPS Performance is 15 percent per annum, 40 percent of the award
          vests,  so the  participant  will be entitled to acquire 3.2 times the
          number of Ordinary Shares which he could have bought with his original
          investment; and

     (c)  where EPS Performance is 25 percent per annum, all of the award vests,
          so the participant  will be entitled to acquire eight times the number
          of  Ordinary  Shares  which he could  have  bought  with his  original
          investment.

          The percentage of the award that vests for EPS  Performance  between 5
percent  per annum and 15 percent per annum and for EPS  Performance  between 15
percent per annum and 25 percent per annum increases on a straight line basis.

          For  participants  who are Directors of the Company,  only one half of
their awards will vest based on EPS Performance.  The other half of their awards
will vest based on the total shareholder return ("TSR") of CCG over a three year
period  ("TSR  Performance")  relative  to the TSR of a group of major  publicly
traded  advertising  groups  (the  "Comparator  Group")  over the  same  period.
Initially the Comparator  Group  consisted of the following 10 groups:  CCG, GGT
Group, Grey Advertising,  Havas Advertising,  Omnicom Group, Publicis, Saatchi &
Saatchi,  The Interpublic Group of Companies,  True North Communications and WPP
Group.

          The percentage of the award that vests will be determined by reference
to the ranking attained by CCG as follows:

                                                             Percentage
                                                             of award
                                                            that vests
Ranking                                                            (%)


1ST or 2ND...........................................               100
3RD..................................................                75
4TH..................................................                50
5TH..................................................                25
6TH..................................................             18.75
7TH..................................................              12.5
8TH..................................................             9.375
9TH..................................................             3.125
10TH.................................................               nil

(v)   Acquisition of Ordinary Shares

          Once the  performance  formula  has been  applied  and the  number  of
Ordinary  Shares  determined,  a participant  may acquire one half of the vested
number of Ordinary  Shares.  The remaining  half may only be acquired  after the
fourth  anniversary  of the date the award was made.  Ordinary  Shares cannot be
acquired after the seventh anniversary of the date of the award.

(vi)  Takeover

          In the event of a takeover of the Company prior to the announcement of
the CCG  Group's  results  for its  financial  year  ending in 2000  (the  "2000
results"),  a  participant  who received an award prior to the  announcement  of
CCG's results for its financial year ending in 1998 (the "1998 results") will be
entitled to acquire the number of Ordinary Shares  determined in accordance with
the following provisions:

     (a)  If the takeover occurs after the  announcement of the 1998 results but
          before the announcement of CCG's results for its financial year ending
          in 1999 (the "1999 results"), the participant may acquire:

     (i)  one third of the maximum possible number of Ordinary Shares; plus

     (ii) one third of the number of Ordinary  Shares which would have vested if
          the EPS Performance  (and, if appropriate,  TSR Performance) for CCG's
          1998 financial year had been achieved over the full three years of the
          performance measurement period; and

     (b)  if the takeover occurs after the  announcement of the 1999 results but
          before the  announcement  of the 2000  results,  the  participant  may
          acquire:

     (i)  one third of the maximum possible number of Ordinary Shares; plus

     (ii) two thirds of the number of CCG Shares  which would have vested if the
          EPS Performance (and, if appropriate,  TSR Performance) over CCG's two
          financial  years 1998 and 1999 had been  achieved  over the full three
          years of the performance measurement period.

          Equivalent provisions will apply for participants who receive an award
after the announcement of the 1998 results.

(vii)   Cessation of employment

          If a  participant  ceases to be employed by CCG or a subsidiary of CCG
before the award  vests  because  of  injury,  disability,  ill  health,  death,
redundancy,  retirement,  because the company which employs him or with which he
holds  office  leaves  CCG or  because  the  business  to which  his  office  or
employment  relates is transferred  outside CCG, or other  circumstances  at the
Trustee's  discretion,  the participant will be entitled to acquire a proportion
of the  maximum  number of Ordinary  Shares  which  would  ultimately  have been
receivable.  For the purpose of  determining  the  proportion  of the award that
vests,  the cessation of employment will be treated as occurring on the next day
on which CCG  announces  its results for its  financial  year.  The  Performance
Formula will then be applied as if the EPS Performance (and, if appropriate, the
TSR  Performance) had been achieved over the full three years of the performance
measurement period.

          A participant  who was granted an award prior to the  announcement  of
the 1998  results  will be able  immediately  following  such  determination  to
acquire:

     (a)  one third of the number of Ordinary Shares so determined, if cessation
          occurs on or before the announcement of the 1998 results;

     (b)  two  thirds  of the  number  of  Ordinary  Shares  so  determined,  if
          cessation  occurs after the announcement of the 1998 results but on or
          before the announcement of the 1999 results; and

     (c)  all of the Ordinary  Shares so determined,  if cessation  occurs after
          the announcement of the 1999 results.

          Equivalent provisions will apply for participants who receive an award
after the announcement of the 1998 results.

          However, if a participant ceases employment for other reasons, he will
only be  entitled to receive 10  Ordinary  Shares,  with the result that he will
effectively lose his initial investment.

(viii)   Variation of share capital

          The   rights  of   participants   following   any   rights   issue  or
capitalization  issue or other  variation  of share  capital will be adjusted in
such manner as the Trustee may determine  subject to written  confirmation  from
CCG's auditors that such adjustment is in their opinion fair and reasonable.

(ix)    Limits on the Equity Participation Plan

          The number of shares which may be issued or become  issuable  pursuant
to the Equity  Participation  Plan,  when  aggregated  with the number of shares
which may be issued or become issuable under the Performance Share Option Scheme
may not exceed 9.5 percent of the issued share  capital of the Company from time
to time.

(x)     Amendments to the Scheme

          The  Board  has the  power  to  administer,  interpret  and,  with the
concurrence  of the Trustee,  amend the  provisions of the Equity  Participation
Plan. However, no amendment may be made to provisions relating to:

     (a)  the eligibility conditions;

     (b)  the limit rules;

     (c)  the  calculation  of a  participant's  entitlement  under  the  Equity
          Participation Plan;

     (d)  the terms of the awards or the Ordinary  Shares  received  pursuant to
          them; or

     (e)  the variation of share capital rule

to the advantage of participants  without the prior approval of the shareholders
in general meeting (except for minor amendments to benefit the administration of
the Equity  Participation Plan, to take account of a change in legislation or to
obtain or maintain  favorable tax, exchange control or regulatory  treatment for
participants or for CCG or for subsidiaries of CCG).

          No amendment to the limits  mentioned  above may be made without prior
approval of the shareholders. No amendment may be made which adversely affects a
participant's  rights  under an award made  prior to the date of such  amendment
without the participant's consent. (xi) Pension

          The  benefits  received  under the Equity  Participation  Plan are not
pensionable.

(xii)   Termination

          The  Trustee  will  invite  no  further  participation  in the  Equity
Participation Plan after December 15, 2000 and the Board may terminate it at any
time, but the rights of existing participants will not thereby be affected.

(b)  The Cordiant  Communications  Group  Performance  Share Option  Scheme (the
     "Performance Option Scheme")

          The  principal  terms of the  Performance  Option  Scheme  are set out
below.

(i)      Administration

          The Performance Option Scheme will normally be operated in conjunction
with the Trust.  The Trustee  will,  in  exercising  its  discretion,  take into
account the recommendations of the Remuneration Committee.

          However, the rules provide that the Performance Option Scheme may also
be  operated by CCG,  in which case  references  to the Trust and the Trustee in
this  summary  should be read as being  references  to CCG and the  Remuneration
Committee as appropriate.

          Further details of the Trust are set out below.

(ii)     Eligibility

          Employees and  executive  Directors of the Company who are required to
devote  substantially  all their  working time to the business of any company in
CCG will be eligible to participate in the Performance  Option Scheme.  However,
participants in the Equity Participation Plan will not be eligible to be granted
options under the Performance Option Scheme.

          Participants  in the  Performance  Option  Scheme are  selected at the
discretion of the Trustee.

          In May 1998, a further 15 employees were invited to participate in the
Performance Option Scheme.  Options over 1,523,078 shares were issued subject to
salary or bonus  sacrifices  amounting to L171,000.  At December 31, 1998, there
were 81 participants holding options over a maximum of 7,772,140 shares. None of
the Directors of the Company are members of the Scheme.

(iii)    Exercise price

          The exercise price for an option will be determined by the Trustee but
may not be less than the higher of the nominal  value of an  Ordinary  Share (if
the option is an option to  subscribe  for an  Ordinary  Shares)  and its market
value.  Market  value  will be taken to be the  middle  market  quotation  of an
Ordinary  Share on the  dealing  day of the London  Stock  Exchange  immediately
preceding  the date of grant as  derived  from the  Daily  Official  List of the
London Stock Exchange.

(iv)     Grant of options

          Normally, options may only be granted by the Trustee within the period
of 42 days following the announcement of CCG's results for any period and at any
time if the  Trustee  determines  that  exceptional  circumstances  (such as the
recruitment of a senior employee or executive Director) so warrant.

          Options will lapse unless the option  holder agrees within 120 days of
the grant of the option to sacrifice an aggregate  amount of salary and/or bonus
(not  exceeding  L50,000) over a period not  exceeding  three years equal to one
eleventh of the aggregate  exercise  price of the Ordinary  Shares under option.
The amount so sacrificed is not offset against the exercise price payable.

(v)      Performance Formula and number of shares vesting

          The number of  Ordinary  Shares to be  acquired  on  exercise  will be
determined by measuring EPS Performance,  as for the Equity  Participation Plan.
The EPS Performance  and the Hurdle Rate for the Performance  Option Scheme will
be the same as for the Equity Participation Plan.

          If EPS Performance is less than the Hurdle Rate then the option holder
will not be entitled to acquire any Ordinary Shares and the option will lapse.

          If EPS Performance is equal to or greater than the Hurdle Rate then:

          (a)  where EPS  Performance is 5 percent per annum,  the option holder
               may exercise his option in respect of 30 percent of the number of
               Ordinary Shares under option;

          (b)  where EPS Performance is 15 percent per annum,  the option holder
               may exercise his option in respect of 65 percent of the number of
               Ordinary Shares under option; and

          (c)  where EPS Performance is 25 percent per annum,  the option holder
               may exercise his option in full.

          The  percentage  of Ordinary  Shares over which the option  holder may
exercise  his  option  for EPS  Performance  between 5 percent  per annum and 15
percent  per annum and for EPS  Performance  between 15 percent per annum and 25
percent per annum increases on a straight line basis.

(vi)     Exercise of options

          Once the  Performance  Formula has been  applied an option  holder may
exercise his option over one half of the number of Ordinary Shares determined by
the  Performance  Formula.  The  remaining  half may only be acquired  after the
fourth anniversary of the date of grant.

          Options may not be  exercised in any event more than seven years after
the date of grant.

(vii)    Takeover

          In the event of a takeover of the Company prior to the announcement of
CCG's 2000  results,  an option  holder who was  granted an option  prior to the
announcement  of CCG's 1998  results  will be entitled to exercise his option in
accordance with the following provisions:

     (a)  if the takeover occurs after the  announcement of the 1998 results but
          before the  announcement  of the 1999  results,  the option holder may
          exercise his option in respect of:

          (i)  one third of the number of Ordinary Shares under option; plus

          (ii) one third of the number of Ordinary Shares in respect of which he
               could have  exercised his option if the EPS  Performance  for the
               CCG Group's 1998  financial  year had been achieved over the full
               three years of the performance measurement period; and

     (b)  if the takeover occurs after the  announcement of the 1999 results but
          before the  announcement  of the 2000  results,  the option holder may
          exercise his option in respect of:

          (i)  one third of the number of Ordinary Shares under option; plus

          (ii) two thirds of the number of  Ordinary  Shares in respect of which
               he could have  exercised his option if the EPS  Performance  over
               the CCG  Group's  two  financial  years  1998  and  1999 had been
               achieved over the full three years of the performance measurement
               period.

          Equivalent  provisions  will apply for option  holders who are granted
options after the announcement of the 1998 results.

(viii)   Cessation of employment

          If an  option  holder  ceases  to be  employed  by  the  Company  or a
subsidiary  of CCG  before  his  option  may be  exercised  because  of  injury,
disability, ill health, death, redundancy, retirement, because the company which
employs him or with which he holds office  leaves CCG or because the business to
which his office or  employment  relates is  transferred  outside  CCG, or other
circumstances at the Trustee's discretion, the option holder will be entitled to
exercise his option in respect of a proportion of the number of Ordinary  Shares
under option.  For the purpose of determining  the number of Ordinary  Shares in
respect of which the option  holder may  exercise his option,  the  cessation of
employment  will be treated as  occurring on the next day on which the CCG Group
announces its results for its financial year. The Performance  Formula will then
be applied as if the EPS Performance had been achieved over the full three years
of the performance measurement period.

          An option  holder who was granted an option prior to the  announcement
of the 1998 results will be able  immediately  following such  determination  to
exercise his option in respect of:

     (a)  one third of the number of Ordinary Shares so determined, if cessation
          occurs on or before the announcement of the 1998 results;

     (b)  two  thirds  of the  number  of  Ordinary  Shares  so  determined,  if
          cessation  occurs after the announcement of the 1998 results but on or
          before the announcement of the 1999 results; and

     (c)  all of the Ordinary  Shares so determined,  if cessation  occurs after
          the announcement of the 1999 results.

          Equivalent  provisions  will apply for option  holders who are granted
options after the announcement of the 1998 results.

          However,  if a participant  ceases  employment for other reasons,  his
option will lapse.

(ix)     Variation of share capital

          On a variation of the Company's share capital by way of capitalization
or rights issue,  subdivision,  consolidation or a reduction, the exercise price
and the number of shares  comprised in an option can be varied at the discretion
of the  Trustee  subject  to  certification  from CCG's  auditors  that in their
opinion the variation is fair and reasonable.

(x)      Limits on the Performance Option Scheme

          The number of shares which may be issued or become  issuable  pursuant
to the  Performance  Option Scheme,  when  aggregated  with the number of shares
which may be issued or become  issuable  pursuant  to the  Equity  Participation
Plan,  may not exceed 9.5 percent of the issued  Ordinary  Share  capital of the
Company from time to time.

(xi)     Amendments to the Performance Option Scheme

          The Board of Directors has power to  administer,  interpret  and, with
the approval of the Trustee,  amend the Performance  Option Scheme. No amendment
may be made to provisions relating to:

     (a)  the eligibility conditions;

     (b)  the limit rules;

     (c)  the variation of share capital rule;

     (d)  the rules  governing the terms of the options or shares to be received
          by option holders; or

     (e)  the  rules   governing  the   calculation   of  the  option   holder's
          entitlements under the Performance Option Scheme

to the advantage of option holders without the prior approval of shareholders in
general meeting (except for minor  amendments to benefit the  administration  of
the  Performance  Option Scheme or to take account of a change in legislation or
to obtain or maintain  favorable tax,  exchange control or regulatory  treatment
for option holders, the Company or subsidiaries of CCG).

          No amendment may be made which  adversely  affects an option  holder's
rights under options granted to him prior to the date of such amendment  without
his consent.

(xii)    Pension

          The benefits  received  under the  Performance  Option  Scheme are not
pensionable.

(xiii)   Termination

          The Trustee will grant no further options under the Performance Option
Scheme after  December 15, 2000 and the Board of Directors  may  terminate it at
any  time,  but the  rights of  existing  option  holders  will not  thereby  be
affected.

(c)      The Cordiant Communications Group Employee Benefit Trust (the "Trust")

          The Trust was  established  prior to the Effective Date. The principal
terms of the Trust are as set out below.

     (i)  The  Trust is a  discretionary  employee  benefit  trust of which  all
          employees of CCG will be potential beneficiaries.

     (ii) The  trustee  of the Trust (the  "Trustee")  is a  corporate  trustee.
          Executive  Directors of the Company will not be directors of, nor have
          a direct or indirect interest in, the trustee company.

     (iii)The main  purpose of the Trust is to operate the Equity  Participation
          Plan   and  the   Performance   Option   Scheme.   Having   considered
          recommendations  received from the Remuneration Committee, the Trustee
          will  make  awards  (which  may or may not be in the form of  options)
          under which  participants will be entitled to acquire Ordinary Shares.
          Alternatively  the  Trustee  may  agree  to  deliver  Ordinary  Shares
          following the exercise of awards made by CCG.

     (iv) The Trustee may purchase Ordinary Shares in the market for the purpose
          of awards made under the Equity Participation Plan and the Performance
          Option Scheme. Alternatively, the Company may grant to the Trustee one
          or more options to subscribe for Ordinary  Shares.  The exercise price
          under such options will not be less than the middle  market  quotation
          of Ordinary  Shares as derived  from the London Stock  Exchange  Daily
          Official List for the dealing day preceding the date of grant.

     (v)  The Trustee is not permitted to purchase Ordinary Shares in the market
          without prior  shareholder  approval if such purchase  would result in
          the Trust  holding  (excluding  any Ordinary  Shares which the Trustee
          subscribed for) more than 5 percent of the Company.

     (vi) The Trustee will fund the  acquisition of Ordinary  Shares through one
          or more of the following:

          (a)  by non-recourse loan or loans from CCG companies:

          (b)  by contributions from CCG companies; and

          (c)  by payments  from the  participants  in the Equity  Participation
               Plan and the Performance Option Scheme.

    (vii) The  Trustee  is  required  to waive  its  right to any  dividends  on
          Ordinary Shares while they are held within the Trust.

(d)  The Zenith Executive Incentive Plan (the "Zenith Incentive Plan")

          The Zenith  Incentive Plan was  established to enable  participants to
acquire  Ordinary  Shares and Saatchi  Ordinary  Shares  through the exercise of
options and/or in certain  circumstances  to be paid a cash bonus. The principal
terms of the Zenith Incentive Plan are set forth below:

          The Zenith  Incentive Plan is operated in conjunction  with the Zenith
Employee  Benefit  Trust  (the  "Zenith  Trust"),  the  Trustee  of  which  (the
"Trustee")   will,  in  exercising  its   discretion,   take  into  account  the
recommendations of the non-executive Directors of Zenith.

          The Trustee can invite  selected  eligible  employees and directors to
invest a certain  amount of money  (not  exceeding  L70,000)  to enable  them to
participate  in the  Zenith  Incentive  Plan.  Awards  will  lapse  unless  such
investment is, at the discretion of the Trustee, either made by a payment to the
Trustee  within 120 days of the award  being made or is made by the  participant
agreeing  to  sacrifice  that  amount of salary  and/or  bonus over a period not
exceeding  three  years.  The  investment  is  non-refundable  and is not offset
against the exercise price payable.

          The non-refundable  investment to be provided by participants who wish
to  participate  in the  Zenith  Incentive  Plan  shall  be one  sixteenth  of a
participant's  maximum  entitlement  under the Zenith  Incentive  Plan. An award
comprises:

               (a) an option  over the same  proportion  of the total  number of
          Ordinary  Shares  available  for  the  Zenith  Incentive  Plan  as the
          participant's  maximum  entitlement  bears to L3.6  million  being the
          aggregate maximum entitlement for all participants available under the
          Zenith Incentive Plan (the "CCG Option");

                  (b) an option over the same number of Saatchi  Ordinary Shares
          as the number of Ordinary  Shares under the  participant's  CCG Option
          (the "Saatchi Option"); and

               (c) a  contingent  cash  award of up to a  participant's  maximum
          entitlement.

          The  exercise  price for the CCG Option and the Saatchi  Option is the
middle market  quotation of the underlying  shares on the day preceding the date
the options are granted.

          The exact number of shares which may be acquired and/or the cash award
payable will be determined by the performance formula described below.

          A participant's maximum entitlement will be reduced proportionately if
one month after the end of the third year of the performance period the FTSE 100
Index is lower  than on the date the  award  was made.  A  participant's  actual
entitlement  will be determined by measuring the growth in operating  profit (as
defined in the rules of the  Zenith  Incentive  Plan) over a three year  period,
with the base year being the year ending December 31, 1997 for the initial award
("Operating Profit Performance") as follows:

               (a) If Operating  Profit  Performance  is less than 5 percent per
          annum, the award lapses;

               (b) If  Operating  Profit  Performance  is 5 percent  per annum a
          participant's  entitlement  will be  determined as 12.5 percent of his
          maximum entitlement;

               (c) if  Operating  Profit  Performance  is 15 percent per annum a
          participant's  entitlement  will be  determined  as 40  percent of his
          maximum entitlement; and

               (d) if  Operating  Profit  Performance  is equal to or exceeds 25
          percent per annum a  participant's  entitlement  will be determined as
          100 percent of the maximum entitlement.

          A participant's entitlement in respect of Operating Profit Performance
between 5 percent  per annum and 15 percent per annum and between 15 percent per
annum and 25 percent per annum increases on a straight line basis.

          Awards  will be  satisfied  so far as  possible by the CCG Options and
Saatchi Options becoming exercisable to the same extent. The balance, if any, of
a  participant's  entitlement  will be  satisfied  by the payment of cash by the
Zenith Trust or any company in the Zenith group.

          Once the Performance Formula have been applied,  the extent of vesting
of the CCG Option and the Saatchi  Option  determined  and the cash sum, if any,
quantified,  a  participant  will  be  entitled  to  receive  one  half  of  his
entitlement.   The  remaining  half  can  only  be  acquired  after  the  fourth
anniversary  of the date the award was made. The award will lapse on the seventh
anniversary of the date of grant.

          The Trustee  will be  required to waive its rights to any  dividend on
Ordinary Shares or Saatchi Ordinary Shares while they are held within the Trust.

          No new  invitations  were made to participate in the Zenith  Incentive
Plan during 1998.

<PAGE>


                  The following  chart shows as of June 1, 1999 the total number
of Ordinary  Shares  subject to outstanding  options,  the purchase price of the
Ordinary Shares pursuant to the options and the expiration date of the options:


<TABLE>
<CAPTION>

                                                        Exercise       Number of
Scheme                          Date of Grant          Price (p)        Shares       Exercisable

<S>                             <C>                       <C>         <C>            <C>

Executive No. 2 Scheme          June 18, 1991             134         369,231        June 18, 2001
                                September 6, 1991         134          91,929        September 6, 2001
                                April 10, 1992            107          34,301        April 10, 2002
                                April 10, 1992            107 *       186,984        April 10, 2002
Demerger No. 2 Scheme           June 18, 1991             134         343,248        June 18, 2001
                                April 10, 1992            107          78,895        April 10, 2002
                                April 10, 1992            107 *         6,174        April 10, 2002

Sharesave 1995                  June 30, 1995              64       1,202,304        July 1, 2000 - December 31, 2000
Performance Option Scheme       May 3, 1995                73         257,775        May 3, 2005
                                August 11, 1995            95         257,774        August 11, 2005
                                April 19, 1996            130         487,500        April 19, 2006
                                April 19, 1996            130 *       515,000        April 19, 2001 - April 19, 2003
                                April 23, 1997            131         722,500        April 23, 2000 - April 23, 2007
                                April 23, 1997            131 *       692,500        April 23, 2002 - April 23, 2004
Demerger Performance Option     May 3, 1995                73          54,961        December 16, 2004
Scheme
                                May 3, 1995                73 *       109,926        May 3, 2000 - May 3, 2002
                                August 11, 1995            95          54,963        December 16, 2004
                                April 19, 1996            130         122,500        December 16, 2004
                                April 19, 1996            130 *       263,750        April 19, 2001 - April 19, 2003
                                April 23, 1997            131         195,000        April 23, 2000 - December 16, 2004
                                April 23, 1997            131 *       186,250        April 23, 2002 - April 23, 2004
Performance Share Option        December 18, 1997         105       6,208,401        December 18, 2000 - December 18, 2004
Scheme (PSOS)
                                May 14, 1998              124       1,294,468        May 14, 2001 - May 14, 2005
                                March 11, 1999            165       1,868,580        March 11, 2002 - March 11, 2006
Equity Participation Plan       December 18, 1997         105       11,034,720       December 18, 2000 - December 18, 2004
(EPP)
                                March 11, 1999            165          80,029        March 11, 2002 - March 11, 2006
Zenith Executive Incentive      December 16, 1997         109       1,109,630        December 16, 2000 - December 16, 2004
Plan


</TABLE>

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

         Exercise prices have been rounded to the nearest pence.
         Options marked * are super options as defined on pages 57 and 58.
         In the case of the various demerger schemes, the date of grant shown is
         that of the original option replaced under the demerger scheme.


<PAGE>

          Changes  in the  number of  Ordinary  Shares  issuable  under  options
outstanding  under  the  Share  Schemes,   the  Demerger  Schemes,   the  Equity
Participation  Plan,  the  Performance  Option  Scheme,  the  Zenith  Scheme and
Sharesave 1995 during the financial year are as follows:

                                       Executive Schemes          Sharesave
                                        Ordinary Shares        Ordinary Shares

Balance at beginning of year                  28,045,239          1,624,662
Options exercised                               (499,877)           (84,612)
Options granted                                1,523,078                  -
Option lapsed                                 (2,931,514)          (248,507)
                                              -----------          ---------
At year end                                   26,136,926          1,291,543
                                              ==========          =========
---------------------

          As of June 1, 1999, the number of Ordinary  Shares subject to options,
excluding  phantom options,  granted to the Directors and executive  officers of
the Company was 9,197,238.



<PAGE>

          The table below  describes the various  share  options  awarded to the
Directors of the Company as of June 1, 1999.

<TABLE>
<CAPTION>

Scheme                         Date of Grant    Exercise Price(p)       Number Shares              Total Price   Exercise Period
<S>                            <C>                    <C>                   <C>                     <C>          <C>
C. Scott
Replacement Executive No. 2    06/18/1991             134                   222,502                 L298,153     To Jun 2001
Replacement Executive No. 2    06/18/1991             134                    20,582                  L27,580     To Jun 2001
Replacement Executive No. 2    04/10/1992             107                    68,605                  L73,407     To Apr 2002
Replacement Executive No. 2*   04/10/1992             107                    10,290                  L11,010     To Apr 2002
Replacement Performance*       05/03/1995              73                   109,926                  L80,246     May 2000-May 2002
Replacement Performance*       04/19/1996             130                   150,000                 L195,000     Apr 2001-Apr 2003
Replacement Performance        04/23/1997             131                    75,000                  L98,250     Apr 2002-Dec 2004
Replacement Performance*       04/23/1997             131                    75,000                  L98,250     Apr 2000-Dec 2004

J. de Yturbe
Performance Option Scheme     05/03/1995               73                    40,498                  L29,564     To May 2005
Performance Option Scheme     08/11/1995               94                    40,498                  L38,068     Aug 1998-Aug 2005
Performance Option Scheme     04/19/1996              130                    45,000                  L58,500     Apr 1999-Apr 2006
Performance Option Scheme*    04/19/1996              130                    45,000                  L58,500     Apr 2001-Apr 2003
Performance Option Scheme     04/23/1997              131                    45,000                  L58,950     Apr 2000-Apr 2007
Performance Option Scheme*    04/23/1997              131                    45,000                  L58,950     Apr 2002-Apr 2007

W. Whitehead
Performance Option Scheme     05/03/1995               73                    21,213                  L15,485     To May 2005
Performance Option Scheme     08/11/1995               94                    21,213                  L19,940     Aug 1998-Aug 2005
Performance Option Scheme     04/19/1996              130                    45,000                  L58,500     Apr 1999-Apr 2006
Performance Option Scheme*    04/19/1996              130                    45,000                  L58,500     Apr 2001-Apr 2003
Performance Option Scheme     04/23/1997              131                    45,000                  L58,950     Apr 2000-Apr 2007
Performance Option Scheme*    04/23/1997              131                    45,000                  L58,950     Apr 2002-Apr 2007

P. Schoning
Performance Option Scheme     05/03/1995               73                    21,213                  L15,485     To May 2005
Performance Option Scheme     08/11/1995               94                    21,213                  L19,940     Aug 1998-Aug 2005
Performance Option Scheme     04/19/1996              130                    17,500                  L22,750     Apr 1999-Apr 2006
Performance Option Scheme*    04/19/1996              130                    17,500                  L22,750     Apr 2001-Apr 2003
Performance Option Scheme     04/23/1997              131                    27,500                  L36,025     Apr 2000-Apr 2007
Performance Option Scheme*    04/23/1997              131                    27,500                  L36,025     Apr 2002-Apr 2007

A. Hamill
Performance Option Scheme    05/03/1995                73                    46,927                  L34,257     To May 2005
Performance Option Scheme    08/11/1995                94                    46,927                  L44,111     Aug 1998-Aug 2005
Performance Option Scheme    04/19/1996               130                    45,000                  L58,500     Apr 1999-Apr 2006
Performance Option Scheme*   04/19/1996               130                    45,000                  L58,500     Apr 2001-Apr 2003
Performance Option Scheme    04/23/1997               131                    45,000                  L58,950     Apr 2000-Apr 2007
Performance Option Scheme*   04/23/1997               131                    45,000                  L58,950     Apr 2002-Apr 2007

A. D'Angelo
Performance Option Scheme    05/03/1995                73                    33,427                L24,402     To May 2005
Performance Option Scheme    08/11/1995                94                    33,427                L31,421     Aug 1998-Aug 2005
Performance Option Scheme    04/19/1996               130                    37,500                L48,750     Apr 1999-Apr 2006
Performance Option Scheme*   04/19/1996               130                    37,500                L48,750     Apr 2001-Apr 2003
Performance Option Scheme    04/23/1997               131                    37,500                L49,125     Apr 2000-Apr 2007
Performance Option Scheme*   04/23/1997               131                    37,500                L49,125     Apr 2002-Apr 2007

M. Bungey
Executive No. 2 Scheme       06/18/1991               134                   137,211               L183,863     To Jun 2001
Executive No. 2 Scheme*      04/10/1992               107                    74,814                L80,051     To Apr 2002
Performance Option Scheme    05/03/1995                73                    67,498                L49,274     To May 2005
Performance Option Scheme    08/11/1995                94                    67,497                L63,447     Aug 1998-Aug 2005
Performance Option Scheme*   04/19/1996               130                   150,000               L195,000     Apr 2001-Apr 2003
Performance Option Scheme    04/23/1997               131                    75,000                L98,250     Apr 2000-Apr 2007
Performance Option Scheme*   04/23/1997               131                    75,000                L98,250     Apr 2002-Apr 2007

----------------------
During 1998,  the Ordinary  Shares traded on the London Stock Exchange at a high
of 136p, a low of 88.5p and closed at 107p on December 31, 1998.

All exercise  prices for the share option  schemes have been rounded down to the
nearest pence.

The options marked * are super options.

During the year, Charles Scott's spouse exercised options over 45,958 shares at
exercise  prices of between 64.5p and 107.5p per share arising from her previous
employment with the Group.  Other than disclosed  above, no Directors  exercised
options  under any of the  share  option  schemes  during  the year.  A total of
159,279 options held by the above directors lapsed during the year.
</TABLE>


Item 13.  Interest of Management in Certain Transactions.

          Mr. Hamill is a director and  shareholder  of a trust  company,  which
held a 24.9 percent  interest in the issued share capital of The  Communications
Group.  Mr. Hamill was  personally  entitled to 11.6 percent of the  outstanding
units in the trust.  In November 1998 the Group  purchased  the  remaining  24.9
percent  interest in The  Communications  Group. Mr. J. Fawcett and Mr. I. Smith
were entitled to 10.3 percent and 8.2 percent  respectively  of the  outstanding
units in the trust.


                                     PART II



Item 14.  Description of Securities to be Registered.

          Not Applicable.

                                    PART III



Item 15.  Defaults Upon Senior Securities.

          None.

Item 16.  Changes in Securities, Changes in
          Security for Registered Securities and Use of Proceeds.

          None.


                                     PART IV



Item 17.  Financial Statements.

          The Company has elected to provide  financial  statements for 1998 and
the related information pursuant to Item 18.

Item 18.  Financial Statements.

          The  Company's  financial  statements  and the  report  thereon by its
Independent  Auditor  listed below and set forth on pages F-1 to F-51 herein are
hereby incorporated by reference into this Item 18.

     (a)  Independent Auditor's Report dated April 29, 1999.

     (b)  Consolidated  balance  sheets of the  Company and  subsidiaries  as at
          December 31, 1998 and 1997.

     (c)  Consolidated  statements of operations,  shareholders'  deficiency and
          other share capital,  total recognized gains and losses and cash flows
          of the Company and subsidiaries for the years ended December 31, 1998,
          1997 and 1996.

     (d)  Notes to consolidated financial statements.


Item 19.  Financial Statements and Exhibits.

     (a)  Financial Statements

          (1)  Consolidated balance sheets of the Company and subsidiaries as at
               December 31, 1998 and 1997. (Page F-5)

          (2)  Consolidated statements of operations,  shareholders'  deficiency
               and other share capital,  total  recognized  gains and losses and
               cash flows of the  Company and  subsidiaries  for the years ended
               December 31, 1998, 1997 and 1996.  (Page F-2, F-3, F-4, F-6, F-7,
               F-8)

          (3)  Notes to consolidated financial statements. (Pages F-9 to F-51)

     (b)  Exhibits

          (1)  Consent of Independent Auditor.

          (3)  Upon the request of the Securities and Exchange  Commission,  the
               Company  hereby agrees to provide the  Commission  with a list of
               subsidiaries of Cordiant Communications Group plc.



<PAGE>

                                   SIGNATURES


          Pursuant to the requirements of Section 12 of the Securities  Exchange
Act of 1934, the registrant  certifies that it meets all of the requirements for
filing on Form 20-F and has duly caused  this annual  report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                              CORDIANT COMMUNICATIONS GROUP PLC


                                              By:/s/ David F. Ham
                                                 --------------------------
                                                 NAME:  David F. Ham
                                                 TITLE: Group Controller


Date:  June 29, 1999
<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


                          INDEPENDENT AUDITOR'S REPORT


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

We have audited the accompanying balance sheets of Cordiant Communications Group
plc  and  subsidiaries  as of  31  December  1997  and  1998,  and  the  related
consolidated statements of operations,  shareholders' deficiency and other share
capital,  total recognised gains and losses and cash flows for each of the years
in the three year period ended 31 December 1998.  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 audit in accordance with generally  accepted auditing standards
in the United Kingdom which are substantially  equivalent to generally  accepted
auditing  standards in the United States.  Those standards  require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statement 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 31 December 1997 and 1998, and the
results  of their  operations  and their cash flows for each of the years in the
three year period ended 31 December 1998, 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.  Application of generally accepted  accounting  principles in the United
States would have affected  results of  operations  for each of the years in the
three year period  ended 31 December  1998 and  shareholders'  deficiency  at 31
December 1997 and 1998 to the extent  summarised in note 37 to the  consolidated
financial statements.



                                                     /s/ KPMG AUDIT PLC
London, England                                      CHARTERED ACCOUNTANTS
29 April 1999                                        REGISTERED AUDITOR


<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                 Year ended December 31, 1998
                                                 ------------------------------

                                                             Total

                                     Notes                 L million

Group and share of joint                                   1,847.4
  ventures
Less: share of joint ventures                               (281.8)
                                                            -------
Group Turnover                                             1,565.6
                                                           -------
Group and share of joint                                     316.0
  ventures
Less: share of joint ventures                                (14.2)
                                                             ------
Commission and fee income                                    301.8
Operating and administration           3                    (266.1)
  expenses
Depreciation                                                  (9.7)
                                                             ------
Operating profit                                              26.0
Share of operating profits:
Joint venture                                                  1.4
Associated undertakings                                        1.2
                                                          --------
Profit before interest and                                    28.6
  taxation
Net interest payable and               8                      (2.7)
  similar charges                                         ---------
Profit before taxation                                        25.9
Taxation                               9                      (9.2)
                                                          ---------
Profit after taxation                                         16.7
Minority interests                                            (1.7)
                                                          ---------
Net profit                                                    15.0
Dividend proposed on equity shares                            (3.1)
                                                          ---------
Profit retained for year                                      11.9
Net earnings per Ordinary Share                           ========

- Basic                               10                       6.7p
- Diluted                             10                       6.7p


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.

<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>


                                                                             Year ended December 31, 1997
                                                                -------------------------------------------------------

                                                                    Ongoing           Disposed
                                                                   operations        operations           Total
                                                     Notes          L million         L million          L million
                                                     -----
<S>                                                  <C>             <C>               <C>               <C>
Turnover                                                             1,576.1           2,630.1           4,206.2
                                                                     -------           -------           -------
Commission and fee income                                              308.2             427.9             736.1
Operating and administration expenses                  3              (276.2)           (378.1)           (654.3)
Depreciation                                                            (9.6)            (16.6)            (26.2)
                                                                   ----------         ---------        ----------
Operating profit                                                        22.4              33.2              55.6
Profit on disposal of businesses                       2                16.5               4.3              20.8
Fundamental reorganization - demerger                  6              (970.6)            937.6             (33.0)
                                                                     --------          -------         ----------
Profit (loss) before interest and taxation                            (931.7)            975.1              43.4
Net interest payable and similar charges               8                 3.5             (12.3)             (8.8)
                                                                   ---------          ---------        ----------
Profit (loss) before taxation                                         (928.2)            962.8              34.6
Taxation                                               9                (8.1)             (9.4)            (17.5)
                                                                   ----------         ---------         ---------
Profit (loss) after taxation                                          (936.3)            953.4              17.1
Minority interests                                                      (1.8)             (0.2)             (2.0)
                                                                   ----------         ---------        ----------
Net profit (loss)                                                     (938.1)            953.2              15.1
                                                                      =======          =======
Dividend proposed on equity shares                                                                          (2.7)
Dividend on demerger                                                                                       134.6
                                                                                                         -------
Profit retained for year                                                                                   147.0
                                                                                                         =======
Net earnings per Cordiant Ordinary Share
   - Basic                                            10                                                     3.4p
   - Diluted                                          10                                                     3.4p
</TABLE>

To assist in the  understanding  of the Group the  Company  has  classified  the
results of Cordiant into ongoing and disposed operations.

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.



<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>



                                                                                  Year ended December 31, 1996
                                                                   ------------------------------------------------------------

                                                                       Ongoing              Disposed
                                                                      operations           operations              Total
                                                    Notes             L million             L million            L million
                                                    -----
<S>                                                 <C>                 <C>                   <C>                   <C>
Turnover                                                                1,568.7               2,555.0               4,123.7
                                                                        -------               -------               -------
Commission and fee income                                                 329.5                 425.4                 754.9
Operating and administration expenses                 3                  (298.4)               (399.2)               (697.6)
Depreciation                                                               (9.7)                (16.1)                (25.8)
                                                                           -----                ------              --------
Operating profit                                                           21.4                  10.1                  31.5
Profit on disposal of businesses                      2                    -                     17.8                  17.8
                                                                          ----                   ----                  ----
Profit before interest and taxation                                        21.4                  27.9                  49.3
Net interest payable and similar charges              8                     5.8                 (13.3)                 (7.5)
                                                                            ---                 ------             ---------
Profit before taxation                                                     27.2                  14.6                  41.8
Taxation                                              9                    (9.6)                 (5.2)                (14.8)
                                                                           -----                 -----             ---------
Profit after taxation                                                      17.6                   9.4                  27.0
Minority interests                                                         (2.6)                 (0.2)                 (2.8)
                                                                           -----                 -----             ---------
Net profit                                                                 15.0                   9.2                  24.2
                                                                           ====                   ===
Dividend proposed on equity shares                                                                                     (4.4)
                                                                                                                   ---------
Profit retained for year                                                                                               19.8
                                                                                                                  =========
Net earnings per Cordiant Ordinary Share
   - Basic                                           10                                                                 5.5p
   - Diluted                                         10                                                                 5.4p
</TABLE>

To assist in the  understanding  of the Group the  Company  has  classified  the
results of Cordiant into ongoing and disposed operations.

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.



<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                                         December 31,
                                                                Notes                1998               1997
                                                                -----                ----               ----
                                                                                  L million          L million
ASSETS
<S>                                                               <C>             <C>                  <C>

Current assets:
   Cash and short-term deposits                                                    62.3                 61.7
   Short-Term Investments                                         11                1.5                  0.2
   Accounts and other receivables, prepayments and accrued
     income                                                       12/13           246.3                254.3
   Billable production                                            13               15.4                 18.1
                                                                                 ------               ------
     Total current assets                                                         325.5                334.3

Long-Term Investments                                             14                4.0                  3.5

Long-term receivables:
   Accounts and other receivables, prepayments and accrued
     income                                                       12               18.3                 15.5
Property and equipment                                            15               22.7                 24.5
Goodwill                                                                           16.2                  -
                                                                                -------              -------
     Total assets                                                                 386.7                377.8
                                                                                =======              =======

LIABILITIES AND SHAREHOLDERS' DEFICIENCY
   Current liabilities:
   Bank loans, overdrafts and other loans                         16               21.7                  8.4
   Accounts payable, other liabilities and accrued expenses       17              268.0                301.5
   Taxation and social security                                   22               24.0                 21.6
                                                                                  -----                -----
     Total current liabilities                                                    313.7                331.5
                                                                                  -----                -----

Long-term liabilities:
   Accounts payable, other liabilities and accrued expenses       17               13.5                  1.6
   Provision for joint venture deficit                            18               14.7                 14.3
   Property, pension and other provisions                         18               51.2                 57.3
   Long-term debt                                                 19               36.4                 28.4
   Deferred taxation                                              21                2.2                  0.5
   Taxation                                                       22               23.9                 23.8
   Minority interests                                                               2.6                  6.1
                                                                                  -----                -----
     Total long-term liabilities                                                  144.5                132.0
                                                                                  -----                -----

     Total liabilities                                                            458.2                463.5
                                                                                  -----                -----
Shareholders' deficiency:
   Share capital
     Allotted, called up and fully paid:
       225,461,044 Ordinary Shares of 50p each (1997:
           221,926,993 Ordinary Shares of 50p each)               23              112.7                111.0
   Share premium                                                                    2.3                  -
   Shares to be issued                                                              1.3                  -
   Special reserve                                                                 25.7                 25.7
   Goodwill reserves                                                                -                 (113.2)
   Accumulated deficit                                                           (213.5)              (109.2)
                                                                                 -------              -------
     Shareholders' deficiency                                                     (71.5)               (85.7)
                                                                                  ------               ------
Total liabilities and shareholders' deficiency                                    386.7                377.8
                                                                                  =====                =====
See accompanying notes to the consolidated financial statements.
</TABLE>



<PAGE>


                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES

               CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIENCY
                             AND OTHER SHARE CAPITAL

                  Years ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>

                                                                                                       Accumu-
                                        Premiums    Shares      Capital                                 lated          Total
                             Share     in Excess     to be    Redemption     *Special    Goodwill      Earnings    Shareholders'
                            Capital   of Par Value  Issued      Reserve      Reserves    Reserves     (Deficit)      Deficiency
                           L million   L million   L million   L million    L million    L million    L million      L million
                           ---------   ---------   ---------   ---------    ---------    ---------    ---------      ---------
<S>                          <C>         <C>          <C>        <C>           <C>         <C>          <C>           <C>

At January 1, 1996            230.0       137.0        -          86.5          -          (218.2)      (460.2)       (224.9)
Profit for the year             -           -          -           -            -             -           19.8          19.8
Shares issued net of            0.1         0.3        -           -            -             -            -             0.4
   expenses
Goodwill acquired and           -           -          -           -            -           (17.4)         -           (17.4)
   written off
Translation adjustment          -           -          -           -            -             -            6.8           6.8
                            -------     -------     -------     -------      -------      -------      -------       -------

At December 31, 1996          230.1       137.3        -          86.5          -          (235.6)      (433.6)       (215.3)
Issues of Ordinary shares       0.1        -           -           -            -             -            -             0.1
   net of expenses
Net goodwill arising in        -           -           -           -            -            (1.7)         -            (1.7)
   year
Elimination of goodwill
   reserves on demerger        -           -           -           -            -           124.1       (124.1)          -
Profit retained for the        -           -           -           -            -            -           147.0         147.0
   year
Translation adjustment         -           -           -           -            -            -           (15.8)        (15.8)
*Reduction of capital        (119.2)     (137.3)       -         (86.5)        25.7          -           317.3           -
                             -------     -------    -------      ------        ----       -------        -----        -------

At December 31, 1997          111.0         -          -           -           25.7        (113.2)      (109.2)        (85.7)
Issues of Ordinary shares       1.7       2.3          -           -            -            -             -             4.0
   net of expenses
Transfer of Goodwill            -           -          -           -            -           113.2       (113.2)          -
   reserve
Option payments for             -           -         1.3          -            -            -             -             1.3
   employee share scheme
Goodwill arising on
   acquisitions made in         -           -          -           -            -            -            (2.2)         (2.2)
   previous periods
Profit retained for the         -           -          -           -            -            -            11.9          11.9
   period
Reversal of imputed
   employee share scheme        -           -          -           -            -            -             0.9           0.9
   cost
Translation adjustment          -           -          -           -            -            -            (1.7)         (1.7)
                            -------     -------     -------     -------       ----        -------         -----         -----

At December 31, 1998          112.7       2.3         1.3          -           25.7           -         (213.5)        (71.5)
                             -------     -------    -------      ------        ----       -------        -----        -------

As at December 31, 1998, the Accumulated Deficit included  cumulative  exchange  translation losses of L28.7 million (1997:
L27.0 million; 1996:  L11.2 million).  There is no tax effect of these movements.

* Relates to the  reduction of capital  which took place as part of the demerger in 1997. The 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>




<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


          CONSOLIDATED STATEMENTS OF TOTAL RECOGNIZED GAINS AND LOSSES
<TABLE>
<CAPTION>


                                                                            Year ended
                                                                           December 31,
                                                     ----------------------------------------------------------
                                                             1998                 1997               1996
                                                             ----                 ----               ----
                                                           L million           L million          L million
<S>                                                          <C>                 <C>                 <C>

Profit for the financial year                                15.0                 15.1               24.2
Translation adjustment                                       (1.7)               (15.8)               6.8
                                                             -----               ------              ----
Total gains (losses) recognized for the
  financial year                                             13.3                 (0.7)              31.0
                                                             ====                 =====              ====

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


<PAGE>




                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                Year ended December 31,
                                                            Notes          1998             1997         1996
                                                                           ----             ----         ----
                                                                        L million        L million    L million
<S>                                                                          <C>             <C>          <C>

Ongoing operations                                                           19.8              5.6         17.5
Disposed operations                                                           -               56.1         39.4
                                                                            -----            -----        -----

Net cash inflow from operating activities                     27             19.8             61.7         56.9
                                                                             ----            -----        -----

Net cash outflow arising from external Demerger costs                        (8.2)           (13.8)         -
                                                                             -----           ------        ----


Returns on investments and servicing of finance
Interest received                                                             1.9              5.3          7.3
Interest paid (including bank fees)                                          (3.8)           (13.6)       (15.2)
Interest element of finance lease rental payments                            (0.1)            (0.1)        (0.1)
Dividends paid to minorities                                                 (2.5)            (2.0)        (1.2)
Bank fees                                                                    (0.4)            (1.9)        (0.9)
                                                                             -----          -------      -------
Net cash outflow from returns on investments and
   servicing of finance                                                      (4.9)           (12.3)       (10.1)
                                                                             -----           ------       ------
Taxation
UK corporation tax (paid) repaid                                                                            0.1
                                                                             (0.7)             -
Overseas tax paid                                                            (7.6)           (15.1)        (9.4)
                                                                             -----          -------       ------
Tax paid                                                                     (8.3)           (15.1)        (9.3)
                                                                             -----          -------       ------
Capital expenditure and financial investment

Purchase of tangible fixed assets                                            (8.7)           (25.8)       (26.9)
Sale of tangible fixed assets                                                 1.2              2.6          2.9
Purchase of other fixed asset investments                                     -               (0.5)        (0.9)
Sale of other fixed asset investments                                         0.1              1.2          0.1
                                                                              ---            -----        -----

Net cash outflow from capital expenditure and financial investment           (7.4)           (22.5)       (24.8)
                                                                             -----           ------       ------
Acquisitions and disposals

Purchase of subsidiary undertakings                                          (7.5)            (9.3)       (25.3)
Purchase of associated undertakings                                          (0.2)             -            -
Cash acquired with subsidiaries                                               0.7              0.6          1.7
Sale of subsidiary undertakings                                               -               41.6          9.9
Cash in businesses sold                                                      (0.4)            (1.1)         -
Cash in businesses demerged                                                   -              (43.4)         -
                                                                            -----           -------       ------
Net cash outflow from acquisitions and disposals                             (7.4)           (11.6)       (13.7)
                                                                             -----           ------       ------
Dividends from associated undertakings                                        0.2              -            -

Equity dividends paid                                                        (2.7)            (4.4)         -
                                                                             -----            -----       ------

Total net cash outflow before financing                                     (18.9)           (18.0)        (1.0)
                                                                            ------           ------       ------

Financing activities

Issues of Ordinary Share capital                                              0.5              0.1          -
Capital subscribed by minorities                                              -                -            0.2
Net borrowings (loan repayments)                                              8.6             17.3        (11.0)
Capital element of finance lease rental payments                             (0.2)            (0.3)        (0.4)
                                                                            ------           ------      -------
Net cash inflow (outflow) from financing                                      8.9             17.1        (11.2)
                                                                            -----            -----        ------

Decrease in cash                                                            (10.0)            (0.9)       (12.2)
                                                                            ======            =====       ======

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


<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 (as is the case
with the  management of all companies) 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.

The following  paragraphs  describe the significant  accounting policies used in
preparing the consolidated financial statements.

Basis of Accounting

The financial statements have been prepared under the historical cost accounting
rules and in accordance with applicable  accounting  standards.  FRS 12, FRS 13,
and FRS 15 will be  adopted  for the  financial  statements  for the year  ended
December 31, 1999.

Consolidation

The consolidated  financial  statements  incorporate the financial statements of
Cordiant Communications Group plc and all its subsidiary undertakings made up to
December 31, 1998. All material  intragroup  transactions and balances have been
eliminated on consolidation.

Turnover

Turnover  comprises  amounts  billed  to  clients,  excluding  sales  taxes  and
intragroup  transactions.  Billings are usually rendered upon  presentation date
for media  advertising  and upon the  completion of radio,  television and print
production.

Revenue

Revenue  represents  the fees  and  commissions,  excluding  sales  taxes,  from
services provided to clients, and is recognized generally when work is billed.

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 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 cost is transferred from reserves to share capital.

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 FRS10 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.

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 CCG'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:

Long leasehold properties:                                50 years

Short leasehold  properties with terms of less than       Period of lease
50 years:

Furniture and equipment:                                  Between 4 and 10 years

Motor vehicles:                                           4 years


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 on
a gross equity and equity accounting basis  respectively.  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 valued at the lower of cost and net realizable value, and
comprises mainly outlays incurred on behalf of clients.

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.

Property provisions

Provision  is made on an  undiscounted  basis for the future  rent  expense  and
related costs of leasehold property (net of estimated sublease income) where the
space is vacant or currently not planned to be used for ongoing operations.

Foreign currencies

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.

Gains  or  losses  on   translation  of  the  opening  net  assets  of  overseas
subsidiaries  are  taken to  reserves.  Exchange  differences  arising  from the
retranslation of long-term  foreign currency  borrowings used to finance foreign
currency investments are also taken to reserves.  All other exchange differences
are taken to the profit and loss account.

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


                          Average rate                           Closing rate
                          ------------                           ------------
                              1998       1997       1996        1998       1997
                              ----       ----       ----        ----       ----
US Dollar                     1.66       1.64       1.56        1.66       1.65
French Franc                  9.77       9.55       7.99        9.29       9.90
Deutschmark                   2.91       2.84       2.35        2.77       2.96
Australian Dollar             2.64       2.21       2.00        2.71       2.52
Spanish Peseta                 247        240        198         236        251
Italian Lira                 2,877      2,790      2,409       2,743      2,909


<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


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

Acquisitions

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  (pound)6.7  million,  of which  (pound)3.3
million  was paid in cash and  (pound)3.4  million by the issue of  shares.  The
agreement  provides for a further  payment in 2000 based on the profits for 1998
and 1999.

In July  1998,  Bates  Advertising  USA,  Inc.  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 ((pound)l.2 million) and further payments
are due in the years 1999,  2000 and 2001 based on the  average  profits for the
preceding  three years.  Estimated total  additional  payments of US$4.3 million
((pound)2.6 million) have been accrued.

In October 1998, Bates  Advertising  USA, Inc.  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 ((pound)0.8  million) and further payments are due in
the years 1999,  2000, 2001 and 2002 based on the average revenue of the 4 years
ended June 30,  2002.  Estimated  total  additional  payments of US$5.4  million
((pound)3.3 million) have been accrued.

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  CCG's  holding  to  63%.  The  initial  payment  for the
additional shares was (pound)1.4 million and this is adjustable based on average
profits for the years  1997-1999.  Put and call options have been granted for an
additional 7% of the shares.

During 1998, CCG 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 (pound)0.7 million in cash and with further consideration which
is not yet quantifiable.


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

*    Where applicable in this Note, translations from US dollars are made at the
     rates at which the transactions were concluded.
<PAGE>

Disposals

The profit (loss) on disposal of businesses is discussed by year below:

(a)      1998

No  disposals  took  place in 1998.  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.

(b)      The profit on disposal of businesses in 1997

The profit on disposal of businesses in 1997 of  (pound)20.8  million arose from
the sale of NRG and the disposal of the Interpublic  Group of Companies  ("IPG")
shares  received by Cordiant due to clauses in the sale agreement of KDW in 1995
(see (c) below).

In  October  1997,  Cordiant  sold NRG for a gross cash  consideration  of $53.1
million ((pound)32.4  million).  The gross consideration  included $13.1 million
((pound)8.0  million)  payable to certain of NRG's  directors  under terms of an
agreement  entered into in 1995.  Net assets  disposed of were estimated at $7.5
million  ((pound)4.6  million).  After  accounting for provisions  totaling $5.4
million  ((pound)3.3   million)  for  additional  tax,   professional  fees  and
determination  of the  disposed  balance  sheet,  the  profit  on sale was $27.1
million ((pound)16.5 million).

(c)      The profit on disposal of businesses in 1996

The profit on disposal of businesses in 1996 of  (pound)17.8  million arose from
additional  consideration  received  regarding  the  sale  of  KDW  and  further
consideration of (pound)1.3 million for disposals in prior years.

In 1995, shareholders approved the sale of KDW to its management.  Consideration
was  $13.7  million  ((pound)8.8  million)  in cash,  $9.5  million  ((pound)6.1
million) in the form of a 10 per cent  subordinated  loan note of the purchaser,
$4.0 million ((pound)2.5  million) in the form of redeemable  preferred stock in
the  purchaser  and  warrants  to  subscribe  for shares of common  stock in the
purchaser representing approximately 25% of the purchaser's fully diluted equity
share capital, exercisable at a price of $250,000 ((pound)161,000) in aggregate.

In 1996 KDW was sold to IPG and, as a result,  Cordiant  exercised  its right to
take up the warrants and recognized a further gain of (pound)16.5  million.  The
additional consideration received was $13.5 million ((pound)8.7 million) in cash
from the  repayment of a loan note and  redeemable  preferred  stock,  and $18.5
million ((pound)11.9 million) in shares of IPG.

In July 1997,  all the IPG shares were  disposed of for  consideration  of $28.0
million  ((pound)17.1  million) in cash  resulting in a further gain on disposal
of(pound)4.3 million.

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  pay  certain   deferred
consideration  payments.  CCG estimates that, at the rates of exchange ruling at
December 31, 1998, the total payments (including  interest) that may be made are
as follows:


                            Contingent      Deferred       1998          1997
                             Payments       Payments       Total         Total
                            ---------       --------       -----         -----
                             L million     L million     L million     L million
Due within 1 year               4.1            -            4.1           0.1
Due within years 2-5            6.4            -            6.4           3.6
                                ---           ---           ---           ---
                               10.5            -           10.5           3.7
                               ====           ===          ====           ===


<PAGE>
                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


Note 3 - Operating and Administrative Expenses

Operating and administrative  expenses from continuing  operations  included the
following:
<TABLE>
<CAPTION>

                                                                        Year ended
                                                                       December 31,
                                                       ------------------------------------------
                                                          1998            1997             1996
                                                          ----            ----             ----
                                                       L million       L million        L million
<S>                                                       <C>             <C>             <C>

Staff and associated costs (see note 7)                   168.9           407.3           426.4
Hire of plant and machinery - operating leases
   (see note 26)                                            1.6             2.9             3.1
Hire of other assets - leasehold property net of
   sublease income (see note 26)                           17.2            47.7            48.3
(Profit) loss on sale of tangible fixed assets             (0.1)           (0.8)            0.2
Goodwill written off                                        0.2             2.2             -
Auditor's remuneration, including expenses                  1.0             2.6             2.5
Auditor's remuneration, other than audit fees*              0.3             0.4             0.9
Other administrative expenses, including
   exceptional items                                       77.0           192.0           216.2
                                                         ------           -----           -----
                                                          266.1           654.3           697.6
                                                          =====           =====           =====
</TABLE>

*In  1997 in  addition  to  non-audit  fees  paid to our  auditor  shown  above,
additional  fees of  (pound)6.8  million  relating  to work  in  respect  of the
Demerger are included in the fundamental  reorganization cost (see note 6). Work
performed primarily included due-diligence, work associated with the circular to
shareholders  relating to the demerger and the listing  particulars of Saatchi &
Saatchi, and advice on the fundamental reorganization of Cordiant.

CCG made charitable  donations in the United Kingdom of (pound)14,000 in 1998 in
the year ended  December 31, 1998.  Cordiant  made  charitable  donations in the
United Kingdom of  (pound)58,000  and  (pound)34,000 in the years ended December
31, 1997 and 1996, respectively.


<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:
<TABLE>
<CAPTION>

                            Total     Ongoing     Disposed     Total       Ongoing      Disposed     Total
                            1998   operations   operations      1997    operations    operations      1996
                              Lm           Lm           Lm        Lm            Lm            Lm        Lm
<S>                            <C>        <C>           <C>      <C>           <C>          <C>       <C>

Termination of a defined
benefits pension plan          -            -            -         -           0.2           8.1       8.3

Leasehold property
provisions                     -            -            -         -             -           8.2       8.2

Goodwill written off           -          2.2            -       2.2             -             -         -


                               -          2.2            -       2.2           0.2          16.3      16.5
                               =          ===            =       ===           ===          ====      ====
</TABLE>


The  pension  plan  costs  arose  from a  decision  taken as part of  Cordiant's
efficiency program to terminate the defined benefits plan in the USA. The scheme
was frozen at June 30, 1996 and terminated on December 31, 1996.

The  leasehold  property  provision  arose from the  decision to vacate  surplus
office  space  with an  estimated  future  net rental  shortfall  of  (pound)8.2
million.

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

Note 5 - Discontinued Operations

All the Group's  operations  throughout 1998 were considered by the Directors to
be ongoing.
<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


Note 6 - Fundamental Reorganization - Demerger

In order to implement the Demerger,  inter-group debt and subsidiaries had to be
eliminated.  This was carried out by sale,  assignment,  waiver or other  means.
Surpluses and losses arising from these transactions are shown below.
<TABLE>
<CAPTION>

                                                                           Ongoing         Disposed
                                                          Total 1998      operations      operations     Total 1997
                                                           Lmillion        Lmillion        Lmillion       Lmillion
                                                           --------        --------        --------       --------
<S>                                                        <C>              <C>          <C>               <C>

Surplus (loss) on inter-group debt                            -             875.0        (1,011.8)         (136.8)

Surplus on transfer of subsidiaries                           -              72.7            64.1           136.8

Amounts payable in relation to the demerger                   -              16.3             3.9            20.2

Head office reorganization                                    -               6.6             0.1             6.7

Inter-group property provisions                               -                -              6.1             6.1
                                                            -----           ---------     -------         -------

Fundamental reorganization - demerger                         -             970.6          (937.6)           33.0
                                                            =====           =====          =======           ====

</TABLE>

Amounts  payable in relation to the Demerger  include  external  advisors' fees,
temporary staff and other costs.

Property  provisions,  which  have no cash  impact,  arose  as a  result  of the
Demerger and  represented  the  difference  between  rental payable by Saatchi &
Saatchi and the amounts receivable from Zenith for space sublet to them.



<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


Note 7 - Employees


Average number of employees of CCG by geographic area:

                                                   Year ended
                                                  December 31,
                                  ----------------------------------------------
                                       1998               1997             1996
                                       ----               ----             ----
UK                                      478                509              574
The Americas                            933                914            1,096
Continental Europe                    1,634              1,565            1,601
Asia Pacific                          1,772              1,672            1,595
                                      -----              -----            -----
Ongoing operations                    4,817              4,660            4,866
Disposed operations                       -              5,938            5,343
                                     ------              -----            -----
                                      4,817             10,598           10,209
                                      -----             ------           ------

<TABLE>
<CAPTION>

                               Total       Ongoing      Disposed      Total          Ongoing        Disposed       Total
                                1998    operations    operations       1997       operations      operations        1996
                                  Lm            Lm            Lm         Lm               Lm              Lm          Lm
<S>                            <C>           <C>           <C>        <C>              <C>             <C>         <C>

Wages and salaries             150.0         156.1         204.5      360.6            162.4           204.9       367.3
Social security costs           14.5          15.6          18.7       34.3             17.0            20.2        37.2
Pension costs - see  note 25     4.4           4.5           7.9       12.4              5.7            16.2        21.9*
                               -----         -----         -----      -----            -----           -----       -----
                               168.9         176.2         231.1      407.3            185.1           241.3       426.4
                               -----         -----         -----      -----            -----           -----       -----
</TABLE>


*    Included  in the  pension  cost  for  1996 of L21.9  million  there  was an
     exceptional  charge of L8.3  million  to  terminate  the  defined  benefits
     pension plan in the US (see note 4).



<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


Note 8 - Net Interest and Similar Charges

<TABLE>
<CAPTION>

                                                                         Year ended
                                                                        December 31,
                                                         ----------------------------------------
                                                            1998           1997            1996
                                                            ----           ----            ----
                                                         L million      L million       L million
<S>                                                           <C>          <C>             <C>


Interest payable and similar charges:
On bank loans, overdraft facilities and other loans
required to be repaid within five years                       3.6           13.4           13.1
On capitalized leases and hire purchase                       0.1            0.1            0.1
On other loans                                                 -             0.4            0.4
Bank fees                                                     0.7            1.9            1.1
Foreign exchange                                              0.3             -              -
                                                              ---            ---           ----
                                                              4.7           15.8           14.7
                                                              ---           ----           ----
Interest receivable and similar items:
On cash and deposits                                         (1.7)          (5.3)          (6.5)
Note interest                                                (0.1)          (0.3)          (0.7)
Foreign exchange                                               -            (1.4)            -
                                                            -------         -----            --
                                                             (1.8)          (7.0)          (7.2)
                                                             -----          -----          -----
Group net interest payable                                    2.9            8.8            7.5

Net interest (receivable)/payable
- Joint ventures                                             (0.1)            -              -
- Associated undertakings                                    (0.1)            -              -
                                                             -----         ------           ----
Net interest payable and similar items                        2.7            8.8            7.5
                                                              ===            ===            ===
</TABLE>


Note 9 - Taxes on Income

Taxes on income were made up as follows:
<TABLE>
<CAPTION>

                                                                         Year ended
                                                                        December 31,
                                                         -----------------------------------------
                                                            1998           1997             1996
                                                            ----           ----             ----
                                                         L million      L million        L million
<S>                                                         <C>               <C>           <C>

UK corporation tax:
ACT written off                                              -                 -             1.1
Currently payable                                            1.3               0.7           1.1
Relief for overseas tax                                     (0.1)             (0.5)         (0.6)
Deferred                                                     -                 0.2          (0.5)
                                                            -----             -----         -----
                                                             1.2               0.4           1.1
Overseas taxation:
Currently payable                                            5.7              17.9          13.1
Deferred                                                     1.4              (0.8)          0.6
                                                             ---              -----         ----
Group taxation                                               8.3              17.5          14.8
Joint ventures                                               0.5                -            -
Associated undertakings                                      0.4                -             -
                                                             ---              -----         ----
Tax on ordinary activities                                   9.2              17.5          14.8
                                                             ===              ====          ====
</TABLE>


<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,
                                                  --------------------------------------------
                                                     1998              1997             1996
                                                     ----              ----             ----
                                                  L million         L million        L million
<S>                                                    <C>            <C>               <C>

Tax charge in financial statements                     (9.2)          (17.5)            (14.8)
Tax charge (credit) on pre-tax  profit
   (loss) at 31% (1997:  31.5%, 1996:  33%)             8.0            10.9              13.8
                                                        ---           ------            -----
Difference                                             (1.2)           (6.6)             (1.0)
                                                       =====          ======             =====

Deferred tax credits not available                      2.3             6.0               1.5
Permanent differences between
   expenditures charged in arriving at
   income and expenditures allowed for
     tax purposes:

    UK                                                 (1.4)            2.1               0.8
    US                                                  0.1            (0.5)              0.4
    Rest of World                                      (1.1)            0.7              (1.1)
    Demerger                                            -             (10.4)              -
    Goodwill                                            -              (0.7)              -
    Unrelieved profit/(losses)                         (1.3)            3.1               1.4
Difference between UK and
   overseas standard tax rates                         (1.8)           (4.0)             (2.3)
Irrecoverable ACT                                       -               -                (1.1)
Other items                                             2.0            (2.9)             (0.6)
                                                        ---            -----             -----
Difference above                                       (1.2)           (6.6)             (1.0)
                                                       =====           =====             =====
</TABLE>

The components of income (loss) before taxation are as follows:
<TABLE>
<CAPTION>

                                                                          Year Ended
                                                                         December 31,
                                                    ----------------------------------------------------
                                                       1998                1997                  1996
                                                       ----                ----                  ----
                                                    L million           L million             L million
<S>                                                     <C>               <C>                    <C>

Domestic (UK)                                            4.2              (17.0)*                11.5
Foreign                                                 21.7               51.6                  30.3
                                                        ----               ----                  ----
                                                        25.9               34.6                  41.8
                                                        ====               ====                  ====


*   The loss  before  taxation  in the UK in 1997  incorporated L26.5  million of the  fundamental  reorganization
expense of L33.0 million (see note 6).
</TABLE>


At  December  31,  1998,  the Group had  (pound)91  million  of  operating  loss
carryforwards  expiring  between  1999 and  2010.  Additionally,  the  Group had
(pound)25 million of operating loss carryforwards  which had no expiration date.
It is possible that all or part of the  operating  loss  carryforwards  expiring
between  1999 and 2010 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.

<PAGE>
                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


Note 10 - Earnings Per Ordinary Share

Basic  earnings  per  Ordinary  Share has been  calculated  on earnings of L15.0
million (1997:  L15.1 million,  1996: L24.2 million) based on 222,436,033 shares
(1997:  443,852,410 shares; 1996: 443,615,772 shares) being the weighted average
number of Ordinary  Shares in issue during the  periods.  The number of Ordinary
Shares  in issue in 1997 has not been  adjusted  to  reflect  the  Consolidation
following  the  Demerger.  The Company  believes  that as the  earnings for 1997
include the demerged  businesses for substantially the whole year, the number of
Cordiant  Ordinary  Shares  in  issue in 1997  used to  calculate  earnings  per
Cordiant Ordinary Share should remain  unaltered.  The number of Ordinary Shares
in issue at December 31, 1998 was 225,461,044 (1997: 221,926,993).

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.

Earnings per share on the nil  distribution  (earnings  exclude any  irrevocable
advance  corporation tax (ACT) and any unrelieved  overseas tax arising from the
payment or proposed  payment of dividends) and fully diluted bases have not been
disclosed as they are not materially different.

Diluted earnings per ordinary share have been based on 223,337,644 shares (1997:
445,868,612 shares; 1996: 445,269,276).

Note 11 - Short-Term Investments

Short-term  investments  comprised  overseas unlisted  investments of (pound)0.7
million and cash deposits of (pound)0.8 million. In 1997, short-term investments
comprised overseas unlisted investments of (pound)0.2 million.

Note 12 - Accounts and Other Receivables, Prepayments and Accrued Income
<TABLE>
<CAPTION>

                                                                      1998               1997
                                                                      ----               ----
                                                                   L million          L million
<S>                                                                   <C>               <C>

Due within one year:
Trade receivables (net of allowances for doubtful debts)             212.8              219.0
Amounts due from joint ventures and associated undertakings            1.1                0.4
Other receivables                                                      9.9               16.5
Prepayments and accrued income                                        22.5               18.4
                                                                     -----               ----
                                                                     246.3              254.3
                                                                     =====              =====
Due after one year:
Other receivables                                                     16.7               14.8
Prepayments and accrued income                                         1.6                0.7
                                                                      ----              -----
                                                                      18.3               15.5
                                                                      ====               ====
Reference  should be made to Note 13 concerning  the amounts of allowances for doubtful debts for each
of the years presented.
</TABLE>

<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


Note 13 - Valuation and Qualifying Accounts
<TABLE>
<CAPTION>


                                                                     Additions
                                                   Balance at        charged to
                                                   beginning         costs and                              Balance
                  Description                      of period         expenses         Deductions*       at end of period
                  -----------                      ---------         ---------        -----------       ----------------
                                                   L million         L million         L million            L million
<S>                                                <C>                 <C>               <C>                <C>

Year ended December 31, 1998:
   Allowance for doubtful accounts (deducted
   from accounts receivable)                        L7.3               L0.2               L -                 L7.5
                                                     ---                ---                ---                 ---
   Allowance for nonrecoverable billable
   production (deducted from billable               L3.2               L -                L(1.1)              L2.1
   production)                                                  ---                ---                -----               ---
   Year ended December 31, 1997:
   Allowance for doubtful accounts (deducted
   from accounts receivable)                       L18.0               L -               L(10.7)**            L7.3
                                                    ----                ---               ------               ---
   Allowance for non-recoverable billable
   production (deducted from billable               L4.6               L -                L(1.4)**            L3.2
   production)                                                  ---                ---                -----               ---
   Year ended December 31, 1996:
   Allowance for doubtful accounts (deducted
   from accounts receivable)                       L20.0               L -                L(2.0)            L18.0
                                                    ----                ---                -----             ----
   Allowance for nonrecoverable billable
   production (deducted from billable
   production)                                     L 3.5               L1.1               L -               L4.6
                                                     ---                ---                ---               ---

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

**   The  deductions in 1997 include  demerged  allowances  of L8.1 million for doubtful  accounts and L2.0 million for
     nonrecoverable billable production.
</TABLE>


<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


Note 14 - Long-Term Investments
<TABLE>
<CAPTION>


                                          Associated undertakings
                                     ----------------------------------
                                         Share of tangible    Share of                     Long term
                                            net assets        Goodwill         Total      investments      Total
                                            ----------        --------         -----      -----------      -----
                                                Lm               Lm             Lm            Lm            Lm
<S>                                           <C>                <C>            <C>          <C>           <C>

Cost or valuation
At beginning of year                           2.4               -              2.4           3.6           6.0
Additions                                     (0.1)              0.1            -             0.4           0.4
Disposals                                      -                 -              -            (3.2)         (3.2)
Share of retained profit                       0.8               -              0.8           -             0.8
                                               ---             -----            ---          -----          ---
At end of year                                 3.1               0.1            3.2           0.8           4.0
                                               ---               ---            ---           ---           ---
Amounts written off
At beginning of year                           -                 -              -              2.5          2.5
Disposals                                      -                 -              -             (2.5)        (2.5)
                                             -----             -----            -----         -----        -----
At end of year                                 -                 -              -             -            -
                                             -----             -----            -----         -----        ---
Net book value
At beginning of year                           2.4               -              2.4            1.1          3.5
                                               ===             =====            ===            ===          ===
At end of year                                 3.1               0.1            3.2            0.8          4.0
                                               ===               ===            ===            ===          ===
</TABLE>

Long term  investments  include  unlisted loan notes and  redeemable  preference
shares with a face value of approximately  (pound)nil (1997: (pound)2.4 million)
issued by the purchasers of companies disposed of by the Group which were due on
various dates commencing in 1998 and which were fully provided.

The Group's  investment in Zenith and Saatchi & Saatchi Bates Yomiko (S&SBY) are
joint  ventures,  and  are  represented  by a net  deficit  and  disclosed  as a
provision (see Note 18).



<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


Note 15 - Property and Equipment
<TABLE>
<CAPTION>

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

Cost
At beginning of year           0.3            19.2             25.9             32.8              4.7               82.9
Translation adjustment         -               -               (0.5)            (0.2)             -                 (0.7)
Additions                      -               1.6              5.2              1.9              0.3                9.0
Companies acquired             -               0.7              0.5              0.8              -                  2.0
Companies disposed of          -               -                -               (0.9)             -                 (0.9)
Disposals                      -              (0.6)            (2.5)            (1.9)            (1.4)              (6.4)
                               ---            -----            -----            -----            -----              -----
At end of year                 0.3            20.9             28.6             32.5              3.6               85.9
                               ---            ----             ----             ----              ---               ----
Depreciation
At beginning of year           0.2            13.8             17.1             24.3              3.0               58.4
Translation adjustment         -               -               (0.3)            (0.1)             -                 (0.4)
Companies acquired             -               0.5              0.3              0.5              -                  1.3
Companies disposed of          -               -                -               (0.4)             -                 (0.4)
Charge for the year            -               2.3              4.5              2.2              0.7                9.7
Disposals                      -              (0.4)            (2.8)            (1.1)            (1.1)              (5.4)
                               ---            -----            -----            -----            -----              -----
At end of year                 0.2            16.2             18.8             25.4              2.6               63.2
                               ---            ----             ----             ----              ---               ----
Net book value

At beginning of year           0.1             5.4              8.8              8.5              1.7               24.5
                               ===             ===              ===              ===              ===               ====
At end of year                 0.1             4.7              9.8              7.1              1.0               22.7
                               ===             ===              ===              ===              ===               ====
Net book value of
assets held under
finance leases
included above
At beginning of year            -               -                -                -               0.1                0.1
                              =====           =====            =====            =====             ===                ===
At end of year                  -               -               0.3              0.1               -                 0.4
                              =====           =====             ===              ===             =====               ===

Net book value of land and buildings at end of year was L4.8 million (1997: L5.5 million).

Depreciation   attributable  to  owned  property  and  equipment  was  L9.5  million  (1997:  L25.9  million); and depreciation
attributable to assets held under finance leases was L0.2 million (1997: L0.3 million).

At  December  31,  1998 the  commitments  in respect of capital  expenditure  on properties,  furniture and equipment was
L0.2  million  (1997:  L0.5 million).
</TABLE>

<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


Note 16 - Bank Loans, Overdrafts and Other Loans


                                       Balance at end of     Weighted average
                                             period           interest rate

                                             Year ended December 31, 1998

                                           L million                %
                                           ---------                -
Bank loans and overdrafts                   21.7                  6.1
Other loans                                   -                    -
                                            ----                   --
                                            21.7                  6.1
                                            ====                  ===

                                             Year ended December 31, 1997

                                           L million                %
                                           ---------                -
Bank loans and overdrafts                    7.8                  4.8
Other loans                                  0.6                  8.0
                                             ---                  ---
                                             8.4                  5.0
                                             ===                  ===

An amount of (pound)2.0  million  (1997:  (pound)4.6  million)  included in bank
loans and  overdrafts is secured by guarantees  from and charges over the assets
of the Company and a number of its subsidiaries.



<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


Note 17 - Accounts Payable, Other Liabilities and Accrued Expenses
<TABLE>
<CAPTION>

                                                                  December 31, 1998            December 31, 1997
                                                            ------------------------------  ---------------------------
                                                            Due Within        Due After      Due Within    Due After
                                                               one year       one year       one year      one year
                                                               --------       --------       --------      --------
                                                              L million       L million      L million     L million
<S>                                                              <C>             <C>           <C>           <C>

Accounts payable                                                 185.0            -            194.2         -
Amounts payable:  Associated companies and joint ventures          7.6            -             11.3         -
Payments on account                                               25.8            -             28.9         -
Finance leases                                                     0.2            0.2            0.1         0.1
Proposed dividends - equity shareholders                           3.1            -              2.7         -
Other payables                                                    46.3           13.3           64.3         1.5
                                                                 -----           ----      ---------         ---
                                                                 268.0           13.5          301.5         1.6
                                                                 =====           ====      =========         ===

An amount of L3.5 million (December 31, 1997:L4.0  million) included in accounts payable is secured by related trade
receivables.  Liabilities under finance leases are secured on the assets leased.
</TABLE>

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>

At beginning of year                                40.2         16.6           0.5          57.3          (14.3)
Company transferred to joint ventures                -           (0.2)          -            (0.2)          (1.2)
Profit and loss account                              -            1.2           0.3           1.5            0.8
Utilized                                            (7.0)        (0.4)          -            (7.4)           -
                                                    -----        -----          ---          -----           ---
At end of year                                      33.2         17.2           0.8          51.2          (14.7)
                                                    ====         ====           ===          ====          ======

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

                                                        1998         1997
                                                     L million    L million

     Under one year                                     4.5         6.0
     One to two years                                   3.3         5.0
     Two to five years                                 10.3         9.6
     Over five years                                   15.1        19.6
                                                       ----        ----
                                                       33.2        40.2
                                                       ====        ====

<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


Provisions for joint venture deficit:
The Group share of net liabilities of Zenith and S&SBY is shown below.

                                                     1998              1997
                                                     ----              ----
                                                      Lm                Lm
Fixed assets                                         1.7                1.8
Current assets                                      81.9               49.8
                                                    ----               ----
Share of gross assets                               83.6               51.6
                                                    ----               ----
Liabilities due within one year                    (97.0)             (64.3)
Liabilities due after one year                      (1.3)              (1.6)
                                                    -----              -----
Share of gross liabilities                         (98.3)             (65.9)
                                                   ------             ------
Share of joint venture net liabilities             (14.7)             (14.3)
                                                   ======             ======


Note 19 - Long-Term Debt
                                                   1998              1997
                                                   ----              ----
                                                L million          L million
Bank loans                                         36.4              25.2
Other loans                                          -                3.2
                                                    ---             -----
                                                   36.4              28.4
                                                   ====              ====
An amount of  (pound)36.4  million  (1997:(pound)25.2  million)  of the  Group's
borrowings  is secured by  guarantees  from and  charges  over the assets of the
Company and a number of its subsidiaries.

At December 31, 1998, the Group had committed core banking  facilities  totaling
(pound)65.6  million  (1997:(pound)53.6  million) of which  (pound)36.4  million
(1997:(pound)25.2 million) were being utilized. These facilities will be reduced
in accordance with the following schedule:

                    1999           2000         2001         2002
                    ----           ----         ----         ----
US$m                6.0            15.0         20.0         the balance
Lm                  3.6             9.1         12.1         the balance

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 0.75% and 1.5% per annum
depending upon the ability of the Group to improve certain financial ratios.

The facilities  agreement  contains certain covenants  relating to the financial
performance of the Group.  As of December 31, 1998 there had been no breaches of
covenants or other defaults under the agreement  which have caused or are likely
to cause an early repayment of the debt to be enforced.

In addition, the Group has various uncommitted facilities.
<PAGE>


                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


Note 20 - Guarantees and Contingent Liabilities

L37.6 million  (1997:  L29.7  million) of the Group's  borrowings are secured by
guarantees from and charges over the assets of the Group.

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,
1998  amounted to L152.9  million  (1997:L163.4  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 L27.3
million (1997:L26.0 million).

Cordiant  gave a number of  guarantees  in respect of  obligations  of Saatchi &
Saatchi  companies  which remain in force.  Saatchi & Saatchi has  undertaken to
indemnify CCG 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, 1998
were L189.5 million (1997: L202.5 million).

CCG and Saatchi & Saatchi have each  guaranteed  Zenith's bank facility of L20.5
million and have  agreed  between  themselves  to share  equally  any  liability
arising  therefrom.  Borrowings drawn down under the Zenith facility at December
31, 1998 were L5.1 million.  There is no  comparative as Zenith was a subsidiary
of Cordiant and did not have its own bank facility.

Other  guarantees given by the Group to third parties amounted toL4.9 million at
December 31, 1998 (1997:L5.9 million).

On June 18, 1998,  Miller Brewing Company  ("Miller"),  a former client of Bates
Worldwide,  commenced  an action in the  United  States  District  Court for the
Eastern  District of Wisconsin  against Bates  Advertising  USA, Inc. and Zenith
Media  Services,  Inc.  (the  "Defendants").   The  suit  seeks  damages  in  an
unspecified  amount,  attorneys' costs and seeks equitable relief, as necessary,
to cause the  Defendants  to fulfill their alleged  obligations  to Miller.  The
Company  believes  that  the  Defendants  have   meritorious   defenses  to  the
allegations and intends to pursue them vigorously. The Directors believe that in
the event of the claimant being successful,  the liability of the Group would be
limited to its self-insured retention of US$125,000.

At December 31, 1998, the Group had the following  other  commitments in respect
of capital  expenditure and  non-cancelable  operating  leases for the following
year:

                                                    1998             1997
                                                      L                L
Capital expenditure committed but not
provided for                                         0.2              0.5
                                                --------------------------------

<PAGE>
                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES

<TABLE>
<CAPTION>

                                                 Land and
                                                buildings
                                    Gross       provisions        Net          Other          1998          1997
                                      Lm            Lm            Lm             Lm            Lm            Lm
<S>                                  <C>           <C>            <C>            <C>          <C>           <C>

Non-cancelable operating
lease which expire:
Within one year                       2.6          (0.8)           1.8           0.8           2.6           2.6
Within two to five years              9.7          (1.1)           8.6           0.6           9.2           7.6
Over five years                      16.3          (2.6)          13.7           -            13.7          13.3
                                 ------------------------------------------------------------------------------------
                                     28.6          (4.5)          24.1           1.4          25.5          23.5
                                 ====================================================================================

Of the above  operating  lease  property  commitments,  an amount of  L8.2 million is recoverable from
subtenants (1997: L8.1 million).
</TABLE>


Note 21 - Deferred Taxation

                                                  1998          1997
                                                  ----          ----
                                                L million     L million

Provisions for UK deferred taxation                -             -
Provisions for overseas deferred taxation          2.2           0.5
                                                   ---           ---
                                                   2.2           0.5
                                                   ===           ===

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 L63 million (1997: L67 million).

Under US GAAP temporary  differences at the appropriate tax rate at December 31,
1998 and 1997 are as follows:
<TABLE>
<CAPTION>

                                                                           Assets (Liabilities)
                                                                           --------------------
                                                                           1998           1997
                                                                           ----           ----
                                                                         L million      L million

Deferred Tax Assets
-------------------
<S>                                                                         <C>            <C>
Accrued property rental expense                                              7.9            7.8
Accrued compensation                                                         4.7            5.2
Capital loss carryforwards                                                  10.1           12.1
Operating loss carryforwards*                                               47.1           48.2
Interest disallowed under Section 163(j) of the IRC                          -              -
Provision for notes receivable and other long term  receivables              -              -
Other                                                                        9.2           13.1
                                                                           -----           ----
Total deferred tax assets                                                   79.0           86.4
Valuation allowance                                                        (79.0)         (85.8)
                                                                           ------         ------
Net deferred tax asset                                                      -               0.6
                                                                         =======          =====
</TABLE>


<TABLE>
<CAPTION>

                                                                           Assets (Liabilities)
                                                                           --------------------
                                                                           1998           1997
                                                                           ----           ----
                                                                         L million      L million
Deferred Tax Liabilities
------------------------
<S>                                                                        <C>            <C>
Difference in basis of intangible assets                                    -             (0.4)
Other                                                                      (2.2)          (0.7)
                                                                           -----          -----
Total deferred tax liabilities                                             (2.2)          (1.1)
                                                                           -----          -----

Net deferred tax liability                                                 (2.2)          (0.5)
                                                                           =====          =====
</TABLE>


* See Note 9 for a  discussion  of  potential  restrictions  on  operating  loss
carryforwards.

There are no  material  differences  between  UK GAAP and US GAAP.  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 1998
amounted to a decrease of L6.8 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,
                                                   -----------------------------
                                                        1998             1997
                                                        ----             ----
                                                      L million        L million

Authorized share capital of the Company                 150.5             150.5
                                                        =====             =====
Allotted, called up and fully paid:

225,461,044 Ordinary Shares of 50p each
(1997:  221,926,993 Ordinary Shares of 50p each)        112.7             111.0
                                                        =====             =====


During the year the Company issued 600,000  Ordinary Shares of 50p each pursuant
to receipt of notices to exercise options from employees of the Group.



<PAGE>


Note 24 - Employee Share Schemes

Changes in the number of CCG Ordinary Shares issuable under options  outstanding
under the Company's  executive share option schemes during the three year period
ended December 31, 1998 were as follows:
<TABLE>
<CAPTION>


                                                                 Year ended
CCG Ordinary Shares:                                            December 31,
                                       ---------------------------------------------------------------
                                                1998                  1997                1996
                                                ----                  ----                ----
                                                             (Number of Shares)
<S>                                          <C>                     <C>                <C>

At beginning of year                         28,045,239              12,589,854         10,190,722
Options issued during year                    1,523,078              26,037,467          3,645,000
Options exercised during year                  (499,877)               (159,692)           (13,722)
Options lapsed during year                   (2,931,514)             (1,064,485)        (1,232,146)
Options canceled during year                      -                  (9,357,905)             -
                                           ------------------        -----------        -----------

At end of year                               26,136,926              28,045,239         12,589,854
                                             ==========              ==========         ==========
</TABLE>

Changes in the number of CCG Ordinary Shares issuable under options  outstanding
under  Sharesave  1995 during the three year period ended December 31, 1998 were
as follows:
<TABLE>
<CAPTION>

                                                                 Year ended
CCG Ordinary Shares:                                            December 31,
                                       ---------------------------------------------------------------
                                                1998                  1997                1996
                                                ----                  ----                ----
                                                             (Number of Shares)
<S>                                           <C>                     <C>              <C>

At beginning of year                          1,624,662               1,963,435        2,205,916
Options issued during year                       -                      196,117*           -
Options exercised during year                   (84,612)                (13,211)          (9,093)
Options lapsed during year                     (248,507)               (325,562)        (233,388)
                                               ---------               ---------        ---------

At end of year                                1,291,543               1,624,662        1,963,435
                                              =========               =========        =========
</TABLE>

* These are parallel  options issued in connection with the Demerger and are not
reflected  in the total  options  outstanding  at the year end,  as they will be
exercisable in lieu of, and not in addition to, the original options.


<PAGE>
                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


Options  outstanding  at December  31,  1998 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 1 Scheme                                     Apr 1992       501,757*        107p                  To Apr 1999
Demerger Number 1 Scheme                            Apr 1992        20,925*        107p                  To Apr 1999
Number 2 Scheme                                     Jun 1991        441,952        134p                  To Jun 2001
                                                    Sep 1991        107,022        134p                  To Sep 2001
                                                    Apr 1992         34,301        107p                  To Apr 2002
                                                    Apr 1992       258,676*        107p                  To Apr 2002
Demerger Number 2 Scheme                            Jun 1991        363,829        134p                  To Jun 2001
                                                    Apr 1992         78,895        107p                  To Apr 2002
                                                    Apr 1992        13,892*        107p                  To Apr 2002
Sharesave                                           Jun 1995      1,291,543         64p         Jul 2000 to Dec 2000
Performance Option Scheme                           May 1995        300,201         73p                  To May 2005
                                                    Aug 1995        550,905         95p                  To Aug 2005
                                                    Apr 1996        502,500        130p                  To Apr 2006
                                                    Apr 1996       560,000*        130p         Apr 2001 to Apr 2003
                                                    Apr 1997        722,500        131p         Apr 2000 to Apr 2007
                                                    Apr 1997       692,500*        131p         Apr 2002 to Apr 2004
Demerger Performance Option Scheme                  May 1995         75,210         73p                  To Dec 2004
                                                    May 1995       109,926*         73p         May 2000 to May 2002
                                                    Aug 1995         99,318         95p                  To Dec 2004
                                                    Apr 1996        122,500        130p                  To Dec 2004
                                                    Apr 1996       263,750*        130p         Apr 2001 to Apr 2003
                                                    Apr 1997        195,000        131p         Apr 2000 to Dec 2004
                                                    Apr 1997       186,250*        131p         Apr 2002 to Apr 2004
Performance Share Option Scheme                     Dec 1997      6,427,199        105p         Dec 2000 to Dec 2004
                                                    May 1998      1,344,941        124p         May 2001 to May 2005
Equity Participation Plan                           Dec 1997     11,084,170        105p         Dec 2000 to Dec 2004
Zenith Executive Incentive Plan                     Dec 1997      1,078,807        109p         Dec 2000 to Dec 2004
</TABLE>


      Further  details  together  with the  performance  targets  for the  above
      schemes  are set out on pages 55 to 73.  The  options  marked * are  super
      options.
      Exercise prices have been rounded to the nearest penny.
      In the case of the various  demerger  schemes,  the date of grant shown is
     that of the original option replaced under the demerger scheme.



<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,  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 9% and salary  increases of 7%, was carried out as
     at April 1, 1996 when the market  value of  investments  of the scheme were
     (pound)26.2  million  and  the  level  of  funding  was  108%.   Employer's
     contributions to the scheme in 1998 were (pound)0.3 million.  Contributions
     and expenses 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 (pound)0.3  million  (1997:  (pound)0.3  million).  The
     accumulated  fund at  December  31,  1998  was  (pound)3.0  million  (1997:
     (pound)2.8  million)  which is  included in  provisions  for  pensions  and
     similar employment obligations (note 18).

      The pension expense for the year was as follows:

                                             1998            1997        1996
                                             ----            ----        ----
                                          L million       L million    L million
Defined benefit schemes                      0.3              1.4        10.6
Defined contribution schemes                 4.1             11.0        11.3
                                             ---             ----        ----
                                             4.4             12.4        21.9
                                             ===             ====        ====

<PAGE>


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:

Years Ending                                         Sublease
December 31                          Minimum         Rental         Net
                                     Payments        Income       Payments
                                     --------        ------       --------
                                    L million       L million    L million

1999                                    30.1            9.3          20.8
2000                                    27.6            9.4          18.2
2001                                    24.0            8.9          15.1
2002                                    22.4            8.7          13.7
2003                                    19.8            8.2          11.6
Thereafter                             156.2           91.9          64.3
                                       -----           ----          ----
Total minimum lease payments            280.1          136.4        143.7
                                        =====          =====        =====

Total expense for all operating leases was:

                                                     Year ended
                                                    December 31,
                                      ------------------------------------------
                                           1998           1997           1996
                                           ----           ----           ----
                                        L million      L million      L million

Total operating lease expense             21.8             65.2          65.7
Sublease rental income                    (3.0)           (14.6)        (14.3)
                                          -----           ------        ------

Net operating lease expense               18.8             50.6          51.4
                                          ====             ====          ====

<PAGE>
                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES



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,
                                                           ------------------------------------------
                                                              1998            1997             1996
                                                              ----            ----             ----
                                                           L million       L million        L million
<S>                                                             <C>           <C>               <C>
Trading profit                                                  26.0           55.6             31.5
Depreciation                                                     9.7           26.2             25.8
(Profit) loss on sale of tangible fixed assets                  (0.1)          (0.8)             0.2
Decrease (increase) in billable production                       2.0           (5.5)             3.5
(Increase) decrease in receivables                              (1.4)         (35.3)             0.2
(Decrease) increase creditors                                   (9.6)          38.5             12.6
Utilization of property and reorganization
  provisions                                                    (7.0)         (19.2)           (16.9)
Non-cash item - goodwill write-off                               0.2            2.2              -
                                                                ----          ------           ------
Net cash inflow from operating
  activities                                                    19.8           61.7             56.9
                                                                ====          =====             ====
</TABLE>

<PAGE>


Analysis of changes in net funds
<TABLE>
<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
Cash deposits - current asset investments           -         0.8              -             -         0.8
Bank overdrafts                                  (7.7)      (13.4)             -           (0.1)     (21.2)
                                                 -----      ------             --          -----     ------
Cash                                             54.0       (10.0)             -           (2.1)      41.9
                                                 ----       ------             --          -----      ----
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)
                                                 -----        ---              --          -----      -----
Financing                                       (29.3)       (8.4)           0.6           (0.2)     (37.3)
                                                ------       -----           ---           -----     ------
Net funds                                        24.7       (18.4)           0.6           (2.3)       4.6
                                                 ====       ======           ===           =====       ===
</TABLE>


<TABLE>
<CAPTION>


                                                                                  Exchange &
                                             At Jan 1                               non cash     At Dec 31
                                               1997     Cash flows    Demerger      movements       1997
                                               ----     ----------    --------      ---------       ----
                                            L million   L million    L million    L million       L million
<S>                                            <C>        <C>           <C>          <C>             <C>

Cash at bank and in hand                       113.7      (41.6)         -           (10.4)          61.7
Bank overdrafts                                (47.8)      40.7          -            (0.6)          (7.7)
                                              -------     -----        -----        ------         ------
Cash                                            65.9       (0.9)         -           (11.0)          54.0
                                              ------     -------       -----         ------         -----
External debt due within 1 year                 (5.0)       3.2          0.6           0.5           (0.7)
External debt due after 1 year                 (88.9)     (20.5)        83.8          (2.8)         (28.4)
Finance leases                                  (0.5)       0.3          0.2          (0.2)          (0.2)
                                             --------    ------        -----        -------        -------
Financing                                      (94.4)     (17.0)        84.6          (2.5)         (29.3)
                                              -------     ------        ----        -------         ------
Net funds                                      (28.5)     (17.9)        84.6         (13.5)          24.7
                                              =======     ======        ====         ======         =====


On  December  14,  1997,  the net  assets of Saatchi & Saatchi  and Zenith  were demerged.  On  demerger,  they had net  debt of
L41.2  million.  Net cash amounting  to  L43.4  million  is shown  as an  outflow  in the cash  flow statement,  external debt of
L84.6  million is included in the analysis of movement in net debt above.
</TABLE>


<TABLE>
<CAPTION>


                                        At Jan. 1, 1996     Cash flows       Exchange      At Dec. 31, 1996
                                        ---------------     ----------       --------      ----------------
                                           L million        L million        L million         L million
<S>                                          <C>              <C>              <C>               <C>
Cash at bank and in hand                      134.5            (9.4)           (11.4)            113.7
Overdrafts                                    (48.2)           (2.8)             3.2             (47.8)
                                              ------           -----             ---             ------
Cash                                           86.3           (12.2)            (8.2)             65.9
                                               ----           ------            -----             ----
External debt due within 1 year                (0.8)           (4.8)             0.6              (5.0)
External debt due after 1 year               (113.7)           15.8              9.0             (88.9)
Finance leases                                 (0.5)            0.1             (0.1)             (0.5)
                                               -----            ---             -----             -----
Financing                                    (115.0)           11.1              9.5             (94.4)
                                             -------           ----              ---             ------
Net funds                                     (28.7)           (1.1)             1.3             (28.5)
                                              ------           -----             ---             ------
</TABLE>


<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>         <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  - CCG shares issued                     3.4           -
                                                              - investments                           0.4           -
                                                              - accruals                             10.4           -
                                           ----        ------                                        ----          ---
                                           29.5        (15.3)                                        29.5        (15.3)
                                           ====        ======                                        ====        ======
</TABLE>

The effects of disposals relate mainly to the reclassification of Bates Japan as
a joint venture following a capital  restructuring during the year which created
neither a profit nor a loss. Goodwill of (pound)4.6 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.



<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


Note 28 - Operations by Geographic Area
<TABLE>
<CAPTION>

                                             United         The      Continental     Asia
                                             Kingdom     Americas       Europe      Pacific     Total
                                             -------     --------       ------      -------     -----
                                             L million   L million    L million    L million  L million
<S>                                            <C>          <C>          <C>          <C>         <C>
Year ended December 31, 1998:
Commission and fee income                       39.8         73.5        108.4         80.1       301.8
Trading profit                                   4.5          8.2         10.1          3.2        26.0

Exceptional operating expense                     -            -            -            -           -
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 liabilities (assets) before                 58.0         10.9         (5.9)        12.8        75.8
financial items
Depreciation expense                             1.7          2.9          2.6          2.5         9.7
Additions to properties, furniture, etc.         2.0          1.6          3.2          2.2         9.0

Year ended December 31, 1997:
Commission and fee income                      115.4        268.7        203.3        148.7       736.1
Trading profit                                  14.0         29.2         12.1          2.5        57.8
Exceptional operating expense                     -            -            -           2.2         2.2
Operating profit                                14.0         29.2         12.1          0.3        55.6
Total assets employed                           41.2         83.2         92.4        161.0       377.8
Net liabilities (assets) before                 73.1         20.1         (1.4)        12.5       104.3
financial items
Depreciation expense                             6.0         11.0          4.8          4.4        26.2
Additions to properties, furniture, etc.         4.4          8.3          4.5          7.5        24.7

Year ended December 31, 1996:
Commission and fee income                      113.4        269.1        218.1        154.3       754.9
Trading profit                                  12.4         17.0         14.2          4.4        48.0
Exceptional operating expense                     -          16.5           -            -         16.5
Operating profit                                12.4          0.5         14.2          4.4        31.5
Total assets employed                          135.4        316.2        213.6        247.2       912.4
Net liabilities before financial items          72.6         82.7         22.6          0.8       178.7
Depreciation expense                             6.3          9.8          5.3          4.4        25.8
Additions to properties, furniture, etc.         6.3          6.7          4.8          6.2        24.0

</TABLE>

<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


Ongoing geographic analysis

To  enable  a  fuller  understanding  of  the  trading  performance   additional
geographic analysis of ongoing operations is provided below:
<TABLE>
<CAPTION>

                                            United        North       Rest of       Asia
                                            Kingdom      America       Europe     Pacific     Total
                                            -------      -------       ------     -------     -----
                                            L million   L million    L million   L million  L million
<S>                                            <C>          <C>        <C>            <C>       <C>

Year ended December 31, 1998:
Commission and fee income                      39.8         73.5        108.4         80.1      301.8
Trading profit                                  4.5          8.2         10.1          3.2       26.0
Exceptional operating expense                   -            -            -            -         -
Operating profit                                4.5          8.2         10.1          3.2       26.0
Depreciation expense                            1.7          2.9          2.6          2.5        9.7
</TABLE>

<TABLE>
<CAPTION>

                                            United        North       Rest of       Asia
                                            Kingdom      America       Europe     Pacific     Total
                                            -------      -------       ------     -------     -----
                                           L million    L million    L million   L million  L million
<S>                                            <C>          <C>         <C>           <C>       <C>
Year ended December 31, 1997:
Commission and fee income                      39.0         67.7        105.0         96.5      308.2
Trading profit                                  6.5          6.3          8.3          3.5       24.6
Exceptional operating expense                   -            -            -            2.2        2.2
Operating profit                                6.5          6.3          8.3          1.3       22.4
Depreciation expense                            1.8          2.8          2.4          2.6        9.6
</TABLE>


<TABLE>
<CAPTION>

                                            United        North       Rest of       Asia
                                            Kingdom      America       Europe     Pacific     Total
                                            -------      -------       ------     -------     -----
                                          L million     L million    L million   L million  L million
<S>                                            <C>          <C>         <C>           <C>       <C>

Year ended December 31, 1996:
Commission and fee income                      38.0         77.8        120.7         93.0      329.5
Trading profit                                  3.8          4.0          9.1          4.7       21.6
Exceptional operating expense                   -            0.2          -            -          0.2
Operating profit                                3.8          3.8          9.1          4.7       21.4
Depreciation expense                            1.9          2.8          2.6          2.4        9.7
</TABLE>


The Directors  consider  that there is only one  continuing  business  activity,
namely  advertising and marketing  services,  and that it is more appropriate to
show a geographic  analysis of revenue than turnover,  which reflects the manner
in which the  Directors  manage the Group's  operations.  Revenue by  geographic
destination is not materially different from revenue by geographic origin.

The Group's  customers are located  throughout the world.  During 1998, 1997 and
1996 no clients  accounted for more than 10% of either CCG's ongoing  revenue or
Cordiant's revenue.

Turnover between segments is not material.
<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


Geographical   analysis  of  Group  share  of  joint   ventures  and  associated
undertakings operating profits:

                                                     1998
                                                      Lm
UK                                                    2.2
The Americas                                          -
Continental Europe                                    0.1
Asia Pacific                                          0.3
                                           --------------------------
                                                      2.6
                                           ==========================


The following countries contribute individually to over 10% of Group Revenues:
<TABLE>
<CAPTION>

                                             Revenue                                     Long lived assets


                          1998                1997               1996               1998                1997
                            Lm                  Lm                 Lm                 Lm                  Lm
<S>                          <C>               <C>                <C>                  <C>                <C>

UK                           39.8              101.1               96.5                4.0                4.1
US                           67.9              245.1              249.4                3.9                5.1
Australia                    48.7               70.7               69.4                4.6                5.5
Germany                      36.3               40.5               45.9                1.3                1.2
</TABLE>


Note 29 - Directors' emoluments

The total  emoluments,  pension costs and fees for the year ending  December 31,
1998 were  L2,924,957  (1997:  L3,918,318)  of which  L231,146  were fees (1997:
L150,800).

The emoluments,  excluding  pension  contributions,  of the Chairman and highest
paid UK Director, were:

Year Ended December 31, 1998
----------------------------

Charles Scott (Chairman and highest paid UK Director):        L169,165

Year ended December 31, 1997
----------------------------

Charles Scott (Chairman and highest paid UK Director):        L864,115



<PAGE>


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,
                                         1998               1997               1998                1997
                                         ----               ----               ----                ----
<S>                                    <C>               <C>                <C>               <C>
M Bungey                               55,990            55,990             1,537,130         1,537,130
A D'Angelo                                960               960               860,337           922,082
J de Yturbe                                 -                 -               854,397           854,397
D Fishburn                                  -                 -                     -                 -
A Hamill                                    -                 -               922,139           990,744
T Levitt                               18,796            18,796                     -                 -
P M Schoning                                -                 -               725,827           725,827
C Scott(1)                             85,172            39,214               731,905           787,583
R Stomberg                                  -                -*                     -                -*
J Tyrrell                                   -                -*                     -                -*
W Whitehead                               787               787               829,548           848,757
(1)  Includes options and shares in spouse's name.
*    On appointment.
</TABLE>

With the exception of W Whitehead,  who exercised options over, and sold, 13,721
shares on January 9, 1999, A D'Angelo,  who  exercised  options  over,  and sold
50,082 shares on March 11, 1999 and A Hamill,  who exercised  options over,  and
sold 54,884 on March 31, 1999, the Directors'  interests in the Company's  share
capital have not changed since December 31, 1998.



<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


Note 31 - Related Parties

During  1998 and 1997  transactions  in the  ordinary  course of  business  with
associated companies were as follows:

                                                       1998              1997
                                                       ----              ----
                                                        Lm                Lm

                Media services                        214.0              30.1
                Production                              9.5               7.8
                                                     ------  --           ---
                                                      223.5              37.9
                                                      =====              ====

The year end balances  with  associated  companies are disclosed in Notes 12 and
17.

Contracts of  significance  which were entered into by the Group during 1998 and
1997 in which the  directors  of a subsidiary  company had a material  interest,
details of which are given in Note 2, were as follows:

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).

In March 1997,  Cordiant made a deferred payment of L0.4 million relating to the
acquisition in 1996 of the minority interest in BSB Saatchi & Saatchi MC Limited
in Poland.

In July 1997,  Cordiant  acquired a 51% interest in the share capital of Grapple
Group 141 (Pty) Ltd for consideration of R1.8 million (L0.2 million).

In November 1997, Cordiant acquired a further 25% minority interest in the share
capital of X/M Harrow Pty Ltd in  Australia.  Estimated  cash  payments of A$0.6
million (L0.3 million) will be made in 2000.

In December 1997,  Cordiant  acquired a further 33% interest in Scholz & Friends
Dresden GmbH, in Germany.  Deferred  consideration of L2.2 million is payable in
2000.

During 1997 Cordiant  made  deferred  payments  totaling  FFR31.3  million (L2.9
million) relating to the acquisition in 1996 of the minority interest in Saatchi
& Saatchi Advertising SA in France.

During 1997 Cordiant  made deferred  payments  totaling  Pts1,206  million (L5.0
million)  relating to the acquisition in 1994 of the minority  interest in Grupo
Bates SA in Spain.

In October 1997,  Cordiant sold NRG. NRG provided services to the film industry.
Consideration  of (pound)24.4  million was received which was after  deducting a
fee of L8.0 million  payable to certain of NRG's directors under the terms of an
agreement entered into in 1995.

Note 32 - Fair Value of Financial Instruments

Long-Term  Investments - Long-term investments also included unlisted loan notes
and redeemable  preference shares with a face value of approximately  (pound)0.8
million (1997:  L2.4 million) issued by the purchasers of companies  disposed of
by Cordiant  which are due on various  dates.  The Group has made full provision
for these financial instruments.

Net borrowings  (excluding foreign exchange contracts) - The book value of cash,
short term deposits and short term  borrowings  approximate to their fair values
because of the short term maturity of these instruments.  The fair value of long
term borrowings approximates to their carrying value at December 31, 1998.

Foreign exchange forward contracts - Foreign exchange forward contracts are used
to hedge  existing  and  identified  future  foreign  currency  commitments.  At
December 31, 1998 the Group had L23.0 million  (1997:  L18.3 million) of forward
contracts  outstanding,  the fair value was not material.  Financial instruments
are only used to hedge underlying commercial  exposures.  Realized or unrealized
gains and losses on forward contracts, which hedge firm third party commitments,
are recognized in income in the same period as the underlying  transaction.  The
Group does not speculate in derivative financial instruments.

The counterparties to the Group's financial  instruments are major international
financial  institutions.  It is Group practice to monitor the financial standing
of these  counterparties on an on-going basis. The Group does not anticipate any
material adverse effect on its financial position resulting from its involvement
in  the  agreements,  nor  does  it  anticipate  non-performance  by  any of its
counterparties.

Fair value  estimates  are made at a specific  point in time,  based on relevant
market  information  and  information  about  the  financial  instrument.  These
estimates  are  subjective  in nature and involve  uncertainties  and matters of
significant judgment and therefore cannot be determined with precision.  Changes
in assumptions could significantly affect the estimates.

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   subsidiary
undertakings were as follows:

England               Bates Dorland Ltd.
                      The Facilities Group Ltd.
                      (30% Ordinary)
                      Zenith Media Holdings Ltd.
                      (50% Ordinary)

Australia             The Communications Group Pty Ltd.

Denmark               Bates Gruppen AS

Germany               Scholz & Friends GmbH
                      (90% Ordinary)

Norway                Bates Gruppen AS

Spain                 Grupo Bates SA

US                    Bates Advertising USA, Inc.

In the opinion of the Company, 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.

The  results  of the Group  were  principally  affected  by the above  companies
together  with the Saatchi & Saatchi  Group which was demerged from the Group on
December 14, 1997.

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.

Note 35 - Nature of Business

The Group is a  multi-national  advertising  and  marketing  services  business.
Ninety-eight  percent of the Group's  ongoing  revenue is  generated  by its two
advertising  networks. An analysis of revenue and assets by geographic region is
set out in Note 28 to the consolidated financial statements.

Note 36 - Companies Act 1985

The Consolidated  Financial  Statements do 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, 1998.  Statutory  accounts for 1996 and 1997 have
been filed with the United  Kingdom's  Registrar  of  Companies;  the  statutory
accounts for 1998 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.



<PAGE>


Note 37 - 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 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  contingent  capital  payments)  and
identifiable  intangible  assets acquired are capitalized and amortized  against
income;  intangible assets being amortized over their economic lives which range
from three to 20 years and the remaining  goodwill  amortized over 40 years.  In
addition to systematic  amortization,  management also review 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.

(c) Property leases

Under US GAAP, total rental  payments,  inclusive of increases in rental charges
specified in the lease, are recognized on a straight line basis over the term of
the lease. Under UK GAAP, these increases have been recognized when payable.

(d) Long-term property provisions

Under US GAAP,  provisions  for  properties  which are  vacant  and  surplus  to
requirements or let at a loss are provided on a discounted  basis after allowing
for estimated  subrental income,  and amortization of the discount is charged to
interest expense.

Under UK GAAP,  provision has been made on an undiscounted  basis for the future
rent expense and related cost of leasehold  property (net of estimated  sublease
income)  where the  property is vacant or  currently  not planned to be used for
ongoing operations.

From  1999 the  Company  will be  required  under UK GAAP to  discount  property
provisions which cover a significant time period.

(e) 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. There are no deferred  taxation  differences  presented in
the  reconciliation  below  because the Company has net  deferred tax assets and
considers that it is more likely than not that they will not be recovered.

(f) 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.

(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.
<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES
<TABLE>
<CAPTION>


                                                                            Year ended December 31,
                                                                   1998              1997               1996
                                                                   ----              ----               ----
<S>                                                                <C>               <C>                <C>
Net profit in(pound)million       - as reported                    L4.8              L6.8               L6.9
                                  - revised                        L4.8              L5.5               L6.5

Earnings per share which reflect Consolidation

Earnings per share in pence       - as reported                    2.2p              3.1p               3.1p
                                  - as revised                     2.2p              3.1p               2.9p
</TABLE>


If the  compensation  cost of the options had been determined  based on the fair
value at the grant dates for 1998 and 1997 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 1998 only.
Compensation  cost is  recognized  over the  expected  life of the option  (i.e.
between 3.5 and 6.5 years). 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 34.8p and 33.6p for options  granted  during the year ended
December  31, 1998 and year ended  December  31,  1997,  respectively.  The fair
values have been estimated using the Black-Scholes option-pricing model with the
following  weighted  average  assumptions  used  for  grants  in 1998  and  1997
respectively; dividend yield of nil and nil per cent, expected volatility of 26%
and 22% in 1998 and 1997 respectively,  risk-free interest rate of 5.8% and 6.9%
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)  exceptional
non-operating items; (c) dividends from associated undertakings;  (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. Had bank overdrafts been shown as a financing
activity in the Consolidated  Cash Flow Statement the overdrafts  (drawn) repaid
would have been  (pound)(13.4)  million and  (pound)(40.7)  million in the years
ended  December 31, 1998 and 1997  respectively.  The  repayment of  (pound)40.7
million in 1997 includes overdrafts of (pound)23.4 million that were demerged.

(i) Pension

The  Statement of Financial  Accounting  Standards  ("SFAS") No. 88,  Employers'
Accounting for  Settlements  and  Curtailment  of Defined  Benefit Plans and for
Termination  Benefits  specifies  the  accounting  treatment  under  US GAAP for
circumstances  in which there has been an irrevocable  transaction that relieves
the employer of primary  responsibility  for a pension  benefit  obligation  and
eliminates  significant  risks related to the  obligation and the assets used to
effect the settlement.  As a result of the curtailment and termination of the US
scheme during 1996, the related termination  liability was accrued in full under
UK GAAP and the additional US GAAP accrual was reversed.  Additionally, under US
GAAP, CCG has previously  recognized an additional minimum pension liability for
the  US  underfunded  plan,  representing  the  excess  of  accumulated  benefit
obligations over the plan's assets. As result of the curtailment and termination
of the plan during 1996, Cordiant recorded the full termination  liability under
UK GAAP and the additional US GAAP accrual was reversed.

(j) Newly adopted US accounting principles

The Group  adopted SFAS No. 130,  "Reporting  Comprehensive  Income" in 1998. It
requires  that all items that are  required to be  recognized  under  accounting
standards  as  components  of  comprehensive  income be  reported in a financial
statement  that is  displayed  with  the  same  prominence  as  other  financial
statements.  It  requires  that  an  enterprise  (a)  classify  items  of  other
comprehensive  income by their nature in a financial  statement  and (b) display
the accumulated balance of other  comprehensive  income separately from retained
earnings and additional  paid-in capital in the equity section of a statement of
financial position. Required disclosures have been made in the Group's financial
statements  in the  statement  of total  recognized  gains  and  losses  and the
consolidated  statements of shareholders  deficiency and other share capital and
prior years  information has been restated.  The effect of adopting SFAS No. 130
was not material.

(k) Prospective accounting changes

In June  1998,  the  FASB  issued  SFAS  No.  133,  "Accounting  for  Derivative
Instruments and Hedging  Activities" which  establishes  standards of accounting
for these  transactions.  SFAS No. 133 is effective for the Company beginning on
July 1, 1999. The Company is currently assessing the effects of SFAS No. 133.


<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES

<TABLE>
<CAPTION>

                                                                                    Year ended
                                                                                   December 31,
                                                                       -------------------------------------
Effects on net earnings of differences between US and                     1998         1997         1996
UK GAAP                                                                    Lm           Lm           Lm
                                                                       -------------------------------------
<S>                                                             <C>        <C>          <C>           <C>

Profit for the year in conformity with UK GAAP                             15.0         15.1          24.2
US GAAP adjustments:
Amortization of goodwill and other intangibles                  (b)        (6.3)        (9.5)         (9.5)
Straight lining of property leases                              (c)         -           (1.0)         (2.4)
Change in long-term property provisions                         (d)        (2.2)         2.5          (7.2)
Pension                                                         (i)         -            -             1.8
Compensation costs                                              (f)        (1.7)        (0.3)          -
                                                                           -----      -------         -----
Net profit  applicable to Ordinary  shareholders in conformity
   with US GAAP                                                             4.8          6.8           6.9
                                                                         ======        =====       =======

Net profit per Ordinary Share - basic                                       2.2p         3.1p          3.1p
Average number of Ordinary Shares (in millions)(1)                        222.4        221.9         221.8
Net profit per Ordinary Share - diluted                                     2.2p         3.1p          3.1p
Average number of Ordinary Shares - diluted (in millions)(1)              223.3        222.9         222.7
                                                                          =====        =====         =====


(1)  Average  number  of  Ordinary  Shares  has been  adjusted  to  reflect  the Consolidation.
</TABLE>


<PAGE>

                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES

<TABLE>
<CAPTION>

                                                                                  December 31,
                                                                           -------------------------
Cumulative effect on shareholders' funds (deficiency) of                      1998         1997
differences between US and UK GAAP                                             Lm           Lm

Equity shareholders' deficiency in conformity with UK GAAP
<S>                                                                 <C>       <C>          <C>

                                                                              (71.5)       (85.7)
US GAAP adjustments:
Dividends                                                           (a)         3.1          2.7
Goodwill and US purchase accounting in respect of acquisitions      (b)        64.0         76.9
Discount on property provisions                                     (d)         7.6          9.9
Contingent capital payments                                         (b)         7.4          -
                                                                              -----        -----
Equity shareholders' funds (deficiency) in conformity with US
   GAAP                                                                        10.6          3.8
                                                                             ======       ======
</TABLE>


<PAGE>




                          CORDIANT COMMUNICATIONS GROUP
                                AND SUBSIDIARIES


                                  EXHIBIT INDEX

2.1      Upon the request of the Securities and Exchange Commission, the Company
         hereby agrees to provide a list of subsidiaries of the Company.

3.1      Consent of Independent Auditor.