As filed with the Securities and Exchange Commission on June 9, 2006
================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549
                                -----------------

                                    FORM 20-F

(Mark One)

|_|   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, 2005


                                       OR

|_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

                        Commission file number 001-16081

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

                                      HAVAS
               (Exact name of Registrant as specified in charter)

                               Republic of France
                 (Jurisdiction of incorporation or organization)

                              2 allee de Longchamp
                          92281 Suresnes Cedex, France
                    (Address of principal executive offices)

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

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

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

<TABLE>
<CAPTION>
                  Title of each class                     Name of each exchange on which registered
                  -------------------                     -----------------------------------------
<S>                                                                  <C>
  American Depositary Shares, each representing one                  NASDAQ National Market
 ordinary share, nominal value (euro)0.40 per share
</TABLE>

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

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

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

      The  number of  outstanding  shares  of each of the  issuer's  classes  of
capital or common stock as of December 31, 2005:  425,608,078  ordinary  shares,
nominal value (euro)0.40 per share.

      Indicate by check mark if the registrant is a well-known  seasoned issuer,
as defined in Rule 405 of the Securities Act .

                                                                  |X| Yes |_| No

If this is an  annual  or  transition  report,  indicate  by  check  mark if the
registrant  is not required to file  reports  pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.

                                                                   |_| Yes |X|No

Note - Checking the box above will not relieve any  registrant  required to file
reports  pursuant to Section 13 or 15(d) of the Securities  Exchange Act of 1934
from their obligation under those Sections.

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.

                                                                  |X| Yes |_| No

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated  filer, or a  non-accelerated  filer. See definition of "accelerated
filer and large  accelerated  filer" in Rule 12b-2 of the Exchange  Act.  (Check
one)

     |X| Large accelerated filer |_| Accelerated filer |_| Non-accelerated filer

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

                                                         |_| Item 17 |X| Item 18

If this is an annual report,  indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act).

                                                                  |_| Yes |X| No

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                           Page
                                                                                                           ----
<S>                                                                                                          <C>
FORWARD-LOOKING STATEMENTS....................................................................................1
NON-U.S. GAAP FINANCIAL INFORMATION...........................................................................1
NOTE REGARDING DISCONTINUED OPERATIONS........................................................................1

PART I
    ITEM 1.    IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS..........................................2
    ITEM 2.    OFFER STATISTICS AND EXPECTED TIMETABLE........................................................2
    ITEM 3.    KEY INFORMATION................................................................................2
         3A.    Selected financial data.......................................................................2
         3B.    Capitalization and Indebtedness...............................................................3
         3C.    Reasons for the offer and use of proceeds.....................................................3
         3D.    Risk factors..................................................................................3
    ITEM 4.    INFORMATION ON THE COMPANY....................................................................10
    ITEM 4A.   UNRESOLVED STAFF COMMENTS.....................................................................21
    ITEM 5.    OPERATING AND FINANCIAL REVIEW AND PROSPECTS..................................................21
    ITEM 6.    DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES....................................................43
    ITEM 7.    MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS.............................................58
         7A.    Major Shareholders...........................................................................58
         7B.    Related Party Transactions...................................................................59
    ITEM 8.    FINANCIAL INFORMATION.........................................................................61
         8A.    Consolidated statements and other financial information......................................61
    ITEM 9.    THE OFFER AND LISTING.........................................................................63
         9A.    Listing details..............................................................................63
         9B.    Plan of distribution.........................................................................64
         9C.    Markets......................................................................................64
         9D.    Selling shareholders.........................................................................64
         9E.    Dilution.....................................................................................64
         9F.    Expenses of the issue........................................................................65
    ITEM 10.   ADDITIONAL INFORMATION........................................................................65
         10A.   Share capital................................................................................65
         10B.   Memorandum and Articles of Association.......................................................65
         10C.   Material contracts...........................................................................71
         10D.   Exchange controls............................................................................72
         10E.   Taxation.....................................................................................72
         10F.   Dividends and paying agents..................................................................76
         10G.   Statement by experts.........................................................................76
         10H.   Documents on display.........................................................................77
         10I.   Subsidiary information.......................................................................77
    ITEM 11.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK....................................77
    ITEM 12.   DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES........................................78

PART II
    ITEM 13.   DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES...............................................79
    ITEM 14.   MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS..................79
    ITEM 15.   CONTROLS AND PROCEDURES.......................................................................79
    ITEM 16.   [RESERVED]....................................................................................79
    ITEM 16A.   AUDIT COMMITTEE FINANCIAL EXPERT.............................................................79
    ITEM 16B.   CODE OF ETHICS...............................................................................79
    ITEM 16C.   PRINCIPAL ACCOUNTANT FEES AND SERVICES.......................................................79
    ITEM 16D.   EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES...................................80
    ITEM 16E.   PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS.......................80

PART III
    ITEM 17.   FINANCIAL STATEMENTS..........................................................................81
    ITEM 18.   FINANCIAL STATEMENTS..........................................................................81
    ITEM 19.   EXHIBITS......................................................................................81
</TABLE>


                                        i
<PAGE>

                           FORWARD-LOOKING STATEMENTS

      This  annual  report on Form  20-F may  contain  certain  "forward-looking
statements"  within the meaning of Section 27A of the Securities Act of 1933, as
amended,  which  we refer  to as the  Securities  Act,  and  Section  21E of the
Securities  Exchange Act of 1934, as amended,  which we refer to as the Exchange
Act,  relating to our  business and the industry and sectors in which we and our
subsidiaries operate. In particular,  among other statements,  the statements in
Item 4  "Information  on the  Company"  with  regard to  management  objectives,
industry  trends,  market standing and business risks,  the statements in Item 5
"Operating and Financial  Review and Prospects" with regard to trends in results
of  operations,  margins and overall  market  trends,  the  statements in Item 8
"Financial Information" relating to legal proceedings and the statements in Item
11   "Quantitative   and   Qualitative   Disclosures   about  Market  Risk"  are
forward-looking in nature.  Forward-looking  statements can be identified by the
use of  forward-looking  words,  such as "may," "will,"  "project,"  "estimate,"
"anticipate,"  "plan," "believe," "expect," "intend,"  "continue,"  "potential,"
"opportunity,"  "objective,"  "goal"  or the  negative  of those  terms or other
variations of those terms or comparable  words or expressions.  By their nature,
forward-looking  statements  involve  risks and  uncertainties  because they are
based  on our  current  expectations,  estimates,  projections  and  assumptions
concerning events and circumstances  that will occur in the future.  There are a
number of factors that could cause our actual results and developments to differ
materially from those expressed or implied by these forward-looking  statements.
These factors include, but are not limited to, the following:

      o     the general economic conditions in our principal markets,  including
            any economic  disruption or uncertainty  resulting from geopolitical
            events or terrorist  attacks or similar events that may occur in the
            future;

      o     the level of worldwide  spending on advertising  and  communications
            services by advertisers;

      o     our ability to retain existing clients and attract new ones;

      o     the  unanticipated  loss of an  important  client or a portion of an
            important  client's   business,   changes  in  the  advertising  and
            communications  services  budgets  of  clients,  and  the  financial
            performance and condition of clients;

      o     our  ability to retain key  personnel  while  continuing  to control
            labor costs;

      o     the impact of competition in our industry;

      o     our ability to implement our strategy and to successfully  integrate
            businesses we have acquired; and

      o     our ability to adjust to the changing trends in our industry.

      Forward-looking statements speak only as of the date they are made, and we
undertake  no  obligation  to  update  publicly  any of  them  in  light  of new
information or future events or circumstances, except as required by law.

                       NON-U.S. GAAP FINANCIAL INFORMATION

      Our  audited  consolidated  financial  statements  included in this annual
report on Form  20-F have been  prepared  using  generally  accepted  accounting
principles in the United  States,  which we refer to as U.S.  GAAP.  This annual
report  on Form  20-F may also  contain  financial  information  calculated  and
presented in accordance with international financial reporting standards,  which
we refer to as  IFRS,  as well as  financial  information  calculated  on a "pro
forma" basis,  including  information  that is restated to exclude the impact of
specified historical events. Because this financial information by its nature is
not  calculated  and  presented in accordance  with U.S.  GAAP, it should not be
viewed as a substitute for, and should be read in conjunction  with, our audited
consolidated  financial  statements  and the notes to the  financial  statements
included in this annual report.

                     NOTE REGARDING DISCONTINUED OPERATIONS

      A  reorganization  of  our  business  operations  that  was  announced  in
September  2003 was  finalized  in  2004.  As part of this  reorganization,  the
management  targeted for sale or  cessation of  operations a number of companies
that  were  not  engaged  primarily  in  activities  within  our  core  areas of
competence,  were  not  strategic


                                       1
<PAGE>

investments,  did not meet our financial  performance  criteria or otherwise did
not  fit  into  our  new  organization.   Accordingly,   we  have  reported  our
discontinued  operations in accordance  with  Statement of Financial  Accounting
Standards, which we refer to as SFAS, No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." The results of operations of the businesses sold
or closed during 2003 and 2004 have been reported as discontinued operations for
the years  ended  December  31, 2004 and 2003.  (See Note 9 to the  consolidated
financial  statements  included in this annual report.) The results presented in
our consolidated  financial  statements have been adjusted to exclude the impact
of discontinued  operations,  and the selected  financial data set forth in Item
3.A below have been adjusted to reflect discontinued  operations,  for the years
ended December 31, 2004 and 2003, 2002 and 2001.

                                     PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

      Not applicable

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

      Not applicable

ITEM 3. KEY INFORMATION

3.A   Selected financial data

      The  following  tables  summarize  our  selected  financial  data  and are
qualified in their  entirety by reference to, and should be read in  conjunction
with,  our  audited  consolidated  financial  statements  and the  notes  to the
financial  statements  included in this annual report. The historical  financial
data as of and for the years ended December 31, 2005,  2004, 2003, 2002 and 2001
have been derived from our audited consolidated financial statements prepared in
accordance with U.S. GAAP.

<TABLE>
<CAPTION>
                                                              For the Years Ended December 31,
                                            ---------------------------------------------------------------------
                                                2005          2004          2003          2002          2001
                                               -----         -----         -----         -----         -----
                                                       (in millions of euros, except per share data)
                                            ---------------------------------------------------------------------
<S>                                            <C>           <C>           <C>           <C>           <C>
Consolidated Statement of Operations Data:
Net revenues                                   1,461         1,449         1,525         1,811         1,956
Operating Income (loss)                          115           112          (119)         (217)         (149)

Income (loss) from continuing operations          55            50          (334)         (312)         (176)
Net income (loss)                                 55            33          (423)       (1,433)         (175)
Per share data:
    Operating income (loss), basic(1)           0.27          0.33         (0.34)        (0.69)        (0.49)
    Income (loss) from continuing
    operations, basic(1)                        0.13          0.15         (1.05)        (0.99)        (0.58)
    Net income (loss), basic (1)                0.13          0.10         (1.33)        (4.53)        (0.58)
    Net income (loss), diluted (1)              0.13          0.10         (1.33)        (4.53)        (0.58)
    Dividend per share(1)(2)                    0.07          0.07          0.07          0.13          0.24
</TABLE>

----------
(1)   Per share data have been adjusted by a factor of 0.93254,  reflecting  the
      distribution  of  preferential  subscription  rights to our  shareholders,
      following our share offering with preferential  subscription rights, which
      we sometimes refer to as a rights  offering,  that occurred on October 19,
      2004.

(2)   These  amounts  reflect  the  dividend  accrued  for the  year  indicated,
      including,  for 2003 and prior  years,  the French  avoir  fiscal  (before
      deduction of any French  withholding  tax).  Actual  payment of the annual
      dividend  for each  fiscal  year occurs  following  our annual  meeting of
      shareholders  in the  subsequent  year.  For an  explanation of the French
      avoir  fiscal,  see "Item 10.  Additional  Information  --Taxation--French
      taxation--Taxation  of Dividends and Taxation of U.S.  investors--Taxation
      of dividends".


                                       2
<PAGE>

<TABLE>
<CAPTION>
                                                                       As of December 31,
                                       --------------------------------------------------------------------------------
                                            2005             2004             2003             2002             2001
                                        -----------      -----------      -----------      -----------      -----------
                                                         (in millions of euros, except per share data)

                                       --------------------------------------------------------------------------------
<S>                                     <C>              <C>              <C>              <C>              <C>
Consolidated Statement of
Operations Data:
Current Assets                                2,301            1,961            2,285            2,729            2,724
     Total Assets                             4,358            3,947            4,376            5,337            7,091
Financial Debt (1)                              971              803            1,336            1,481            1,086
Shareholders' Equity                          1,272            1,154              778            1,347            3,049
Number of shares outstanding,
nominal value (euro)0.40 per share      425,608,078      421,398,323      298,581,996      295,589,481      294,018,722
</TABLE>

----------
(1)   Our  financial  debt  consists  of  short-term  and  long-term  bank debt,
      convertible and/or exchangeable bonds and capitalized lease obligations.

Exchange rate information

      Euro into U.S.  dollars.  The exchange  rate for the euro against the U.S.
dollar  on June 6,  2006 was  (euro)1.00  to  $1.2828  at the noon  buying  rate
certified by the Federal Reserve Bank of New York for customs purposes (the Noon
Buying Rate).  The following table sets forth the high, low and average exchange
rates for the euro against the U.S. dollar based on the Noon Buying Rate in each
of the last five years and in each of the last six months.

<TABLE>
<CAPTION>
                                                                    High           Low        Average (1)
                                                                    ----           ---        -----------
<S>                                                                <C>           <C>             <C>
Euro to U.S. Dollar:                                                ($)            ($)            ($)
June 2006 (through June 6).................................        1.2953        1.2824          1.2879
May 2006...................................................        1.2888        1.2607          1.2767
April 2006.................................................        1.2624        1.2091          1.2273
March 2006.................................................        1.2197        1.1886          1.2028
February 2006..............................................        1.2100        1.1860          1.1940
January 2006...............................................        1.2287        1.1980          1.2126
December 2005..............................................        1.2041        1.1699          1.1861
2005.......................................................        1.3476        1.1667          1.2400
2004.......................................................        1.3625        1.1801          1.2438
2003.......................................................        1.2597        1.0361          1.1411
2002.......................................................        1.0485        0.8594          0.9495
2001.......................................................        0.9535        0.8370          0.8909
</TABLE>

----------
(1)   Monthly  averages  represent the average of the Noon Buying Rates for euro
      for each business day during the relevant month. Annual averages represent
      the average of the Noon Buying Rates for euro on the last  business day of
      each month during the relevant year.

3.B   Capitalization and indebtedness

      Not applicable.

3.C   Reasons for the offer and use of proceeds

      Not applicable.

3.D   Risk factors

      You should  carefully  consider all of the  information  set forth in this
annual  report and in the following  risk  factors.  The risks below are not the
only  ones we  face.  Additional  risks  not  currently  known  by us or that we
currently deem immaterial may also significantly impair our business operations.
If any  of  the  following  risks  actually  occurs,  our  business,  prospects,
financial  condition,  results of operations,  ability to service and re-


                                       3
<PAGE>

finance debt and ability to pay  expected  dividends  to  shareholders  could be
materially adversely affected.  In any such case, the market price of our shares
and our American  Depositary  Shares,  or ADSs, could decline and you could lose
all or part of your investment in our company.  This annual report also contains
forward-looking  statements  that involve risks and  uncertainties.  Our results
could  materially  differ  from  those  anticipated  in  these   forward-looking
statements  as a result  of  various  factors,  including  the  risks we face as
described below and elsewhere. See "Forward-Looking Statements" on page 1.

Our  operating  results are highly  susceptible  to economic  conditions,  and a
downturn  in the  overall  economy  or our  industry  could  seriously  harm our
performance.

      The   amount  of  money  that   companies   spend  for   advertising   and
communications services to promote their brands, products and services is highly
sensitive  to  fluctuations  in general  economic  conditions.  During  economic
downturns,   companies   may  find  that   expenditures   on   advertising   and
communications  services  are easier to reduce  than other  expenses  related to
their operations.  As a result, we have found that our industry may experience a
disproportionately  larger adverse impact from a downturn in the overall economy
than other  industries.  In addition,  we may face  increased  pricing  pressure
during economic downturns.

      For example,  in 2002, the downturn in the overall economy was accompanied
by a severe drop in demand for  services in our  industry,  which had a material
adverse  affect on our results of operations for each year. We cannot assure you
that a further decline in our industry or the economy, or economic disruption or
uncertainty  resulting from geopolitical  events or terrorist attacks or similar
events,  will not have a material  adverse  affect on our  prospects,  business,
financial condition or results of operations.

We have  substantial  scheduled  debt payments and may need to refinance some of
our debt at maturity.

      As of December 31, 2005,  the total  principal  amount of our  outstanding
financial  debt,  which  consisted of short-term  and long-term  bank debt,  two
series  of  convertible  and/or   exchangeable   bonds,  and  capitalized  lease
obligations, was approximately (euro)971 million. Based on the bonds outstanding
as of December 31, 2005 from our  convertible  and/or  exchangeable  bonds,  and
assuming no  conversion,  exchange or repurchase  prior to maturity,  we will be
required to pay (euro)468  million when this series  matures on January 1, 2009.
On January  1,  2006,  we repaid a total of  (euro)220.9  million in  principal,
interest  and  redemption  premiums in  connection  with the  redemption  of our
convertible  bonds maturing on such date. Our cash flow from  operations may not
be sufficient to meet these required payments of principal and interest.  We may
need, therefore,  to refinance our existing debt. In such event, there is a risk
that we may not be able to  secure  refinancing  in whole or in part or that the
terms of any such refinancing might not be as favorable as the terms of existing
debt,  if we are able to  refinance  our  existing  debt at all.  If  principal,
premium and  interest  payments  due at maturity  on any of our  financial  debt
cannot  be  refinanced,   extended  or  paid  with  proceeds  of  other  capital
transactions,  including new equity  capital,  our cash flow from operations may
not be sufficient in all years to repay all maturing debt.

A  continuing   default  under  our  credit   facilities  could  result  in  the
acceleration of payment under various of our other debts.

      At December 31, 2003 and 2002,  we were not in compliance  with  financial
ratio covenants under two of our credit facilities,  for an aggregate  principal
amount of (euro)22.6 million and (euro)33.8 million,  respectively.  At June 30,
2004, we were not in compliance  with financial ratio covenants under one of our
credit facilities for an aggregate  principal amount of (euro)9.6 million. As of
December  31, 2004 and 2005,  we were in  compliance  with all  financial  ratio
covenants.  Although  our credit  facility  banks have waived any  default  with
respect to the past  noncompliance  with such covenants,  if they do not grant a
waiver in the event of future  noncompliance,  these  defaults could trigger the
acceleration  of  payment  under one or more of our credit  facilities.  Such an
acceleration  could result in the  acceleration of payment under our convertible
and/or  exchangeable bonds due January 1, 2009, which had an aggregate principal
amount and interest of (euro)471.5 million at December 31, 2005. In the event of
such an  acceleration  under our credit  facilities  or our  convertible  and/or
exchangeable bonds, we may be unable to meet our obligations under those debts.

Our typical  contracts  provide clients with the right to cancel for any reason,
which  has  enabled  clients  to move  freely to other  agencies,  and which has
resulted and may continue to result in lost revenues.

      Our clients  typically have the right to cancel  contracts with us for any
reason upon prior  written  notice,  usually  ranging  from 90 days to 180 days.
Clients are also generally free to move from one agency to another with relative
ease. As is typical in the advertising and communications  services industry, we
have lost or


                                       4
<PAGE>

resigned  client  accounts and assignments in the past for a variety of reasons,
including conflicts with newly acquired clients,  and we may continue to lose or
resign client accounts in the future for similar or other reasons.  In addition,
clients  generally are able to reduce  advertising and  communications  services
spending or cancel  projects at any time for any reason.  Sometimes  our clients
may withdraw  their  products from the market or they may be restricted in their
ability  to  advertise  and  promote  their   products   because  of  regulatory
requirements.  We may not successfully  replace  revenues  stemming from clients
that  leave  or   significantly   reduce  their  spending  on  advertising   and
communications  services.  Any loss of one or more of our largest  clients could
harm our  results  of  operations,  slow our  growth  and cause a decline in our
revenues.

We may be  unable  to  collect  balances  due from any  client  that  files  for
bankruptcy, becomes insolvent or is otherwise unable to pay for our services.

      We  generally  provide  advertising  and  communications  services  to our
clients in advance of our receipt of payment.  The invoices  for these  services
are typically payable within 30 to 60 days. In addition,  we commit to media and
production  purchases  on behalf of some of our  clients.  If one or more of our
clients files for bankruptcy, or becomes insolvent or otherwise is unable to pay
for the services we provide, we may be unable to collect balances due to us on a
timely  basis or at all.  In  addition,  in that  event,  media  and  production
companies may look to us to pay for media purchases and production work to which
we  committed  as an  agent on  behalf  of these  clients  (see  "Item 8 - Legal
Proceedings - Bankruptcy of Worldcom Inc.").

We may need to make  further  impairment  charges,  which  could have an adverse
impact on our reported earnings.

      As of December 31, 2005, there was  approximately  (euro)1,926  million of
goodwill  and other  intangible  assets on our balance  sheet.  We  periodically
evaluate the  realizability of all of our goodwill and other intangible  assets.
Future events,  including strategic decisions of our company,  could cause us to
conclude that impairment  indicators exist and that the asset values  associated
with a given operation have become impaired. Any resulting impairment loss would
have an adverse impact on our reported earnings in the period of such charge.

We are facing increased competition from existing multinational  advertising and
communications  services  companies  as  well  as  new  competitors  in  related
industries, which may harm our performance.

      The   advertising   and   communications   services   industry  is  highly
competitive,  and we expect it to remain so. Our  principal  competitors  in the
advertising,  communications  services  and related  businesses  are other large
multinational  advertising and  communications  services  companies,  as well as
numerous  smaller agencies that operate only in a small number of local markets,
regions or  countries.  In addition,  with  respect to media  planning and media
buying  activities,  we compete  with  divisions  of other  large  multinational
advertising and  communications  services companies as well as specialized media
buying  and  planning  companies.   We  also  encounter  competition  from  some
consulting firms that have developed  practices in marketing and communications.
New  competitors  also include  smaller  companies such as systems  integrators,
database  marketing  and  modeling  companies  and  telemarketers,  which  offer
technological solutions to marketing and communications issues faced by clients.
As a result of the increasingly competitive environment, we may lose clients and
potential  clients to our competitors,  which would negatively affect our growth
and harm our business.

We have lost client  accounts in the past and may  continue to lose  accounts in
the future as a result of clients periodically conducting competitive reviews of
their  accounts,  which may cause our  revenues to decline  and our  business to
suffer.  For  example,  in  2005,  we lost  our  second  biggest  client,  Intel
Corporation, following a competitive review.

      In the  advertising and  communications  services  industry,  some clients
require  agencies  to compete  for  business  periodically.  We have lost client
accounts  in the  past as a  result  of such  periodic  open  competitions.  For
example, in 2005 we lost our second biggest client, Intel Corporation, following
a  competitive  review.  To the extent  that our  existing  clients  continue to
require  us to  participate  in  open  competitions  to  maintain  accounts,  it
increases the risk of losing those accounts,  which losses may harm our business
and reduce our revenues.

If we fail to attract and retain  qualified  key creative,  research,  media and
account personnel, our operating results may suffer.

      Our success depends significantly on the skills of our creative, research,
media and account  personnel  and their  relationships  with our clients.  These
employees may resign from their  positions at any time.  Many of these employees
may be difficult to replace. If we lose one or more key personnel, we may not be
able to find


                                       5
<PAGE>

suitable  replacements and we may lose important  clients,  which may negatively
affect our ability to sustain and grow our business.  In addition,  since demand
among advertising and communications  services companies for qualified personnel
is very high,  to retain our  personnel  we may have to increase  the  salaries,
bonuses,  fringe  benefits and other  compensation  we offer to them,  which may
negatively affect our operating results.

The loss of  services  of one or more key  management  personnel  may  adversely
affect our ability to manage and  coordinate  our diverse  group of  businesses,
which could harm our performance.

      We depend on the  services  of our  senior  management  team to manage and
coordinate the global activities of our three principal  operating divisions and
to  implement  our  business  strategies.  The  services  provided by our senior
management  team are  critical  to our  success,  and the  members of our senior
management  team  may be  difficult  to  replace.  The  members  of  our  senior
management  team may  resign  from  their  positions  at any  time.  Loss of the
services of one or more members of our senior  management  team could  seriously
disrupt our ability to manage and coordinate  effectively the global  activities
of our  three  principal  operating  divisions  and to  implement  our  business
strategies, and may adversely affect our ability to retain key clients.

An important component of our business strategy has been external growth through
acquisitions,  which  involves  numerous  risks and could result in  shareholder
dilution.

      We acquired more than 40 companies in 1999, more than 35 companies in 2000
and more than 20 companies in 2001. Although the pace of our acquisitions slowed
substantially   from  2001  though  2005,   we  intend  to  continue  to  pursue
acquisitions in the future to enhance our capabilities and expand our geographic
reach.  Acquisitions involve a number of risks,  including:

      o     the  difficulty of  integrating  the  activities,  technologies  and
            service offerings of the acquired businesses;

      o     the diversion of our management's resources to difficult integration
            issues rather than the other aspects of our businesses;

      o     the  management of  physically  and  culturally  distant and diverse
            entities;

      o     the possible loss of key personnel in the businesses acquired;

      o     the failure of acquired companies to perform as expected;  and

      o     the loss or resignation of business due to client conflicts.

Failure to overcome  these  risks or other  problems  encountered  in any of our
acquisitions  could  negatively  affect our  growth or lower the  quality of our
services, which could reduce customer demand and harm our revenues and operating
results.

      In addition, we may pay the purchase price for some of our acquisitions by
issuing  Havas  shares or ADSs,  which  could  result in dilution to our current
shareholders.  We may also incur additional debt and contingent  liabilities and
recognize increased  amortization or impairment expenses related to goodwill and
other  intangible  assets  in  connection  with our  acquisitions,  which  could
negatively affect our financial condition and our operating results.

Fluctuations  in the exchange rates between the euro and the various  currencies
in which we conduct business may adversely affect our operating  results and the
value of our ADSs.

      The Group's  consolidated  companies operate in more than 70 countries and
most of their  business is conducted  locally.  Their  revenues and expenses are
therefore denominated in local currency. Nevertheless, our revenues are incurred
38.0% in  euro,  37.4% in US  dollars  and  12.0%  in  British  pounds,  and our
operating  income is  incurred  22.6% in euro,  46.5% in US dollars and 16.0% in
British pounds. A significant portion of our revenues and expenses are therefore
booked in a currency other than the euro and converted into euro when we prepare
our financial statements.

      As a result,  fluctuations in foreign  currency  exchange rates in markets
where  we  derive  significant  revenues  or  have  significant  operations  may
adversely affect our revenues, expenses and results of operations as well as the
value of our assets and liabilities as reported in euro.  Fluctuations  may also
adversely affect the comparability of period-to-period results. In periods where
the dollar has depreciated against the euro, since


                                       6
<PAGE>

each U.S.  dollar  converted  to fewer euro,  our revenue  expressed in euro has
correspondingly been lower during these periods. In addition,  the currencies of
many Latin American countries in which we have operations,  including Argentina,
Brazil and Mexico in particular,  have experienced  substantial  devaluation and
volatility in the past.

      Moreover, a decline in the following values may adversely affect the value
of our ADSs:

      o     the U.S.  dollar  equivalent of the euro trading price of our shares
            in France,  which may  consequently  cause the trading  price of our
            ADSs in the United States also to decline;

      o     the U.S. dollar equivalent of the proceeds that a holder of our ADSs
            would receive upon the sale in France of any of our shares withdrawn
            from the depositary for the ADSs; and

      o     the U.S. dollar equivalent of any cash dividends paid in euro on our
            shares represented by the ADSs.

Political and economic  instability in Latin  American,  Asia-Pacific  and other
international  markets may  disrupt  our  operations  and  adversely  affect our
results.

      We derived  approximately  8% of our revenues in 2005 from Latin  American
and Asia-Pacific markets, and the portion of our revenues from these markets may
increase in the future.  Both Latin  America  and the  Asia-Pacific  region have
experienced periods of political and economic instability,  historically as well
as  recently,  and  experience  has shown that  negative  economic or  political
developments  in one country in a region can lead to or  exacerbate  economic or
political crises elsewhere in the region,  and at times, the global economy.  If
these conditions were to re-occur, our business could be adversely affected.

      Further, our current or future  international  operations are subject more
generally  to risks  relating to, and might not succeed for a number of reasons,
including:

      o     difficulties in staffing and managing foreign operations, as well as
            in implementing uniform cross-border information technology systems;

      o     operational  issues  such as  longer  customer  payment  cycles  and
            greater difficulties in collecting accounts receivable;

      o     seasonal reductions in business activity;

      o     language and cultural differences;

      o     taxation issues;

      o     unexpected changes in trading policies and regulatory requirements;

      o     issues relating to uncertainties of laws and enforcement relating to
            the regulation and protection of intellectual property; and

      o     general political and economic trends.

Holders of our ADSs may have limited  ability to influence the governance of our
company.

      Holders of our ADSs may have less ability to influence  the  governance of
our  company  than  direct  holders of our  shares.  Holders of our ADSs may not
receive  voting  materials in time from our  depositary  to ensure that they can
instruct the  depositary to vote their  shares.  In addition,  our  depositary's
liability to holders of our ADSs for failing to carry out voting instructions or
for the manner of carrying out voting instructions is limited by contract.

      If  holders  of  our  shares  or  ADSs  fail  to  comply  with  the  legal
notification requirements under French law or our bylaws, they could be deprived
of some or all of their voting rights and be subject to a fine.

      Pursuant to French law,  any person who acquires  more than 5%, 10%,  15%,
20%, 25%, one-third,  one-half, two-thirds, 90% or 95% of our outstanding shares
or voting  rights is required to file a report with us within five  trading days
of crossing the threshold percentage.  Such persons must also file a report with
us whenever their


                                       7
<PAGE>

share ownership drops below one of these  thresholds.  Any person acquiring more
than 10% or 20% of our share capital or voting rights must include in the report
a  statement  of the  person's  intentions  relating to future  acquisitions  or
participation  in the  management  of our  company  for the  following  12-month
period. If any shareholder  fails to comply with this  notification  requirement
under  French  law,  the  shares  or voting  rights  in  excess of the  relevant
notification  threshold  will  be  deprived  of  voting  power  as  long  as the
declaration is not made and for a period of two years starting from the date the
declaration  is properly  made,  on the demand of any  interested  party who has
suffered a loss. In addition, all or part of the shareholder's voting rights may
be  suspended  for up to five  years by the  French  commercial  court,  and the
shareholder may be subject to a fine at the request of our chairman,  any of our
shareholders  or the French  securities  regulator,  the  Autorite  des  Marches
Financiers, which we refer to as the AMF.

      Under our bylaws,  which we refer to under French law as our statuts,  any
person who becomes a direct or indirect  holder of at least 2%, or any  multiple
of 2%, of our outstanding shares or voting rights must provide written notice to
us within 15 days after such threshold is crossed.  At the request of any one or
more  of  our  shareholders  owning  at  least  5% of  our  share  capital,  any
shareholder  that fails to provide this  required  notice may be deprived of the
voting  rights for all shares in excess of the relevant  notification  threshold
from the date the  declaration  is made for up to two years and be  subject to a
fine.

      These  requirements  and the  consequences of any failure to abide by them
could have the effect of  discouraging  or preventing a change in control of our
company.

Regulatory  restrictions  in  various  countries  in which we  operate  restrict
specific  types of services we offer to clients,  which may harm our revenue and
operating results.

      Our agencies are located in numerous  countries with  different  levels of
governmental  regulation relating to the advertising and communications services
industry, including laws or regulations that:

      o     prohibit various practices in our industry;

      o     restrict the media, content, form or duration of advertising;

      o     restrict the collection, use and disclosure of personal information;

      o     assess fees, taxes or tariffs on advertisements;

      o     allow  individuals  or classes of  individuals to bring legal action
            against companies for allegedly violating laws and regulations; or

      o     otherwise  harm our  business,  financial  condition  and  operating
            results.

      Laws and  regulations  in  France,  the  United  States  and  other of our
significant  markets  affecting  our  services  could place us at a  competitive
disadvantage relative to other advertising and communications services companies
having a larger  portion of their  business  conducted  in  countries  with less
regulation of our industry.

Civil  liabilities or judgments against our company or our directors or officers
based on U.S.  federal or state  securities  laws may not be  enforceable in the
U.S. or in France.

      Holders of our shares or ADSs may not be able to effect service of process
within the  United  States  upon our  directors  and  officers  and our  outside
auditors.  As a result,  it may not be  possible  to  enforce,  in U.S.  courts,
judgments  against  these  persons or  against  our  company  based on any civil
liability  provisions of the U.S. federal or state securities laws. In addition,
civil  liabilities  based on U.S.  federal or state  securities  laws may not be
enforceable  against our company and our directors and officers in France. If an
original  action is  brought in France,  based  solely on U.S.  federal or state
securities laws, French courts may not have the necessary  jurisdiction to grant
the  remedies  sought.  Actions for  enforcement  in France of judgments of U.S.
courts  rendered  against these French persons would require them to waive their
right  under the French  Civil Code to be sued only in France.  We believe  that
none of these French persons has waived this right with respect to actions based
solely on the U.S. federal or state securities laws.

We are  subject to  corporate  disclosure  standards  in the U.S.  that are less
demanding than those applicable to some U.S. companies.


                                       8
<PAGE>

      As a French  company,  we are not  required  to comply with the notice and
disclosure  requirements  of the Exchange Act  relating to the  solicitation  of
proxies for  shareholders'  meetings.  Although  we are subject to the  periodic
reporting  requirements of the Exchange Act, the periodic disclosure required of
non-U.S.  companies  under the  Exchange  Act is more  limited than the periodic
disclosure  required of U.S.  companies.  Therefore,  there may be less publicly
available  information about our company than is regularly published by or about
other public companies in the United States.

Future  sales or the  possibility  of future  sales of a  substantial  amount of
shares by  significant  shareholders  could  depress the price of our shares and
ADSs.

      Future  sales  of a  substantial  amount  of  shares  by  our  significant
shareholders or the availability  for sale of a substantial  amount of shares in
the public  market could  adversely  affect the  prevailing  market price of the
shares and ADSs and could impair the Company's  ability to raise capital through
future sales of our securities.

Our business and operations may be negatively affected by the seasonal nature of
our industry.

      Our  business  tends to be seasonal  in nature,  with  increased  revenues
during the first and especially the fourth quarters.  As a result,  our cash and
cash equivalents,  accounts receivable, debt and provisions are generally higher
at the end of the  fiscal  year or the end of the last  quarter as  compared  to
other  quarters.  Consequently,  a  downturn  or  interruption  in our  business
occuring in the second or fourth quarters could have a  disproportionate  impact
on our results of operations and our financial position.

We may be required to issue a substantial  number of shares in  connection  with
stock options granted to certain managers and employees of Euro RSCG SA, and may
be required to make substantial  future payments in connection with the exercise
by certain directors and managers of "conscience clauses".

      The Group  granted on  September  29, 2004  104,733  options to  subscribe
shares in its  subsidiary  Euro RSCG SA to 35 managers and employees of the Euro
RSCG SA group.  These options will be  exercisable  under certain  conditions of
performance and the presence of the beneficiaries  over the vesting period,  and
will be either  vested partly in September  2008 or entirely in September  2009.
The  beneficiaries  undertook  to sell to Havas SA, and Havas SA to buy the Euro
RSCG SA shares  issued when these options are exercised in exchange for Havas SA
shares for an  equivalent  value of Euro RSG SA shares  issued.  These  purchase
agreements  were signed on June 8, 2005, the day before the Havas'  shareholders
meeting on June 9, 2005,  where they were not discussed.  On March 10, 2006, the
Board of  Directors  was  informed  of this plan.  The Board of  Directors  will
re-examine their provisions in 2006.

      Today,  assuming the  forecasted  performances  of Euro RSCG SA Group from
2006 to 2008 equal those achieved in 2005,  the Group  estimates that the number
of Havas SA shares to be exchanged,  net of subscription  exercise price,  could
represent an amount of (euro)45 million.

      This  amount may vary  depending  on the  organic  revenue  growth and the
operating  margin rate attained in the financial years from 2006 to 2008. If the
average  performances  were lower by one point,  both in terms of organic growth
and average  operating  margin rate,  than those  retained  for the  assumptions
above, the amount to be paid could amount to (euro)25 million.  On the contrary,
if they  were  greater  by one  point,  the  amount to be paid  could  amount to
(euro)56  million.  A  mechanism  is  implemented  for  limiting  the payment to
approximately  one-third of the cumulative  operating margin of the Euro RSCG SA
group over the period from 2004 to 2008.

      A director's employment agreement contains a "Conscience clause" which can
be exercised  following  the  departure of Havas SA's former  Chairman and Chief
Executive  Officer before December 21, 2006 or in case of significant  change in
MPG shareholding causing a change in the management structure or a change in its
main business.  The exercise of this clause would provide an indemnity  equal to
the  contractual  indemnity for employment  termination.  This  indemnity  could
amount to approximately (euro)3 million.  Eleven managers are also entitled to a
"Conscience  clause" exercisable within 3 to 6 months after the departure of the
Chief Executive Officer of Media Planning Group SA or in the case of significant
change in MPG  shareholding  causing a change in the  management  structure or a
change in its main business.  These clauses  provide them  indemnities  equal to
those due in case of employment  termination.  If the  conditions for exercising
these clauses were met and if these eleven  managers  decided to exercise  them,
the total amount of indemnities to be paid would amount to approximately (euro)9
million.


                                       9
<PAGE>

ITEM 4. INFORMATION ON THE COMPANY

Overview

      We are a global advertising and communications  services company. With our
headquarters located in Suresnes,  France, two operating divisions headquartered
in the United States and the third  headquartered  in Spain,  we believe that we
bring a multicultural  approach to our business that distinguishes us from other
major  advertising  and  communication  services  companies.  Through  our three
operating  divisions,  we  offer  a  broad  range  of  communications  services,
including integrated communications,  traditional advertising, direct marketing,
media planning and buying, healthcare advertising and communications,  corporate
communications,  internal communications,  sales promotion,  design,  television
sponsorship,  human resources,  multimedia interactive communications and public
relations.  We have  operations  in more than 70 countries  through our agencies
located  throughout  Europe,  North America,  the Asia-Pacific  region and Latin
America,  as  well  as  contractual   affiliations  with  agencies  in  numerous
additional countries.

      We conduct our business  primarily  through the following  three principal
operating divisions:

      Euro RSCG  Worldwide.  From its  divisional  headquarters  in New York and
Paris, Euro RSCG Worldwide manages our principal international  brand--Euro RSCG
Worldwide--and operates our global network of agencies in Europe, North America,
Latin  America and the  Asia-Pacific  region.  Through this  network,  Euro RSCG
Worldwide offers integrated  communications  services encompassing a broad range
of advertising and communications services.

      Media Planning Group. With its divisional headquarters in Barcelona, Media
Planning Group  provides  media planning and buying  services to its clients and
operates primarily in Europe, North America,  Latin America and the Asia-Pacific
region.

      Arnold Worldwide  Partners.  Arnold Worldwide  Partners has its divisional
headquarters in Boston and offers primarily traditional  advertising services to
clients  through  agencies  located in the United States,  Europe,  Canada,  and
China.  Arnold  Worldwide  Partners  emphasizes  creativity in  advertising  and
marketing  techniques  and seeks to  establish  a strong  local  identity in the
markets it serves.

ORGANIZATIONAL STRUCTURE

      Role of our Parent Company, Havas SA

      Our parent company provides its subsidiaries with technical assistance and
other services, including the use of brands and logos, that are invoiced in line
with market prices.  Similarly,  some  subsidiaries  lease office space from our
parent company at rental rates calculated based on prevailing real estate market
prices.  Finally,  guarantees  granted by our parent company are  remunerated at
rates comparable to those charged by banks for similar  services.  The nature of
these  services  and their  remuneration  are not  affected by the  existence or
non-existence of minority interests in our subsidiaries' share capital.

      Although  our  company  is  organized  into  three   principal   operating
divisions, we conduct our operations primarily through the following significant
subsidiaries.
<TABLE>
<CAPTION>

                                                                                        Our Ownership and
                                                                                      Voting Interest as of
                          Name                              Country of Formation        December 31, 2005
-------------------------------------------------------     --------------------      ---------------------
<S>                                                               <C>                        <C>
MEDIA PLANNING GROUP SA................................             Spain                      100%
HAVAS INTERNATIONAL....................................            France                      100%
EURO RSCG C&O..........................................            France                    99.17%
BETC EURO RSCG.........................................            France                      100%
EURO RSCG 4D...........................................            France                      100%
EHS BRANN Ltd..........................................             U.K.                       100%
EWDB Ltd...............................................             U.K.                       100%
MEDIA PLANNING Ltd.....................................             U.K.                       100%
HAVAS UK Ltd...........................................             U.K.                       100%
HAVAS HOLDINGS Ltd.....................................             U.K.                       100%
EURO RSCG LONDON.......................................             U.K.                       100%
EURO RSCG RILEY........................................             U.K.                       100%
SNYDER COMMUNICATIONS HOLDING..........................             U.K.                       100%
</TABLE>


                                       10
<PAGE>

<TABLE>
<S>                                                               <C>                        <C>
EURO RSCG HEALTHVIEW, Inc..............................             U.S.                       100%
EURO RSCG WORLDWIDE, Inc...............................             U.S.                       100%
EURO RSCG NEW YORK Inc.................................             U.S.                       100%
MPG USA LLC............................................             U.S.                       100%
EURO RSCG DIRECT RESPONSE LLC..........................             U.S.                      71.32%
MCKINNEY & SILVER LLC..................................             U.S.                       100%
HAVAS HOLDINGS, Inc....................................             U.S.                       100%
ARNOLD WORLDWIDE LLC...................................             U.S.                       100%
BRANN LLC..............................................             U.S.                       100%
</TABLE>

      Our principal  operating  subsidiaries  are held through  country-specific
holding companies,  as shown in the following chart. As most of our subsidiaries
are held 100%,  as of  December  31,  2005 there  were no  significant  minority
interests in the share capital structure of our subsidiaries.

The  following  chart  depicts the  organizational  structure  of our  principal
subsidiaries and agency groups, organized by country of operation:

                                [CHART OMITTED]


                                       11
<PAGE>

      Our total  revenues  were  (euro)1,461  million,  (euro)1,449  million and
(euro)1,525  million  for the years  ended  December  31,  2005,  2004 and 2003,
respectively.

      The table  below sets forth a  breakdown  of our  revenues  by  geographic
region,  expressed  as a  percentage  of our total  revenues for the years ended
December 31, 2005, 2004 and 2003.

                   Percentage of Revenue by Geographic Region

<TABLE>
<CAPTION>
Geographic Region(1)(2)                                                              2005            2004            2003
-----------------------                                                              ----            ----            -----
<S>                                                                                  <C>             <C>              <C>
North America...............................................................         40%             40%              42%
United Kingdom..............................................................         12%             13%              16%
Europe (excluding France and United Kingdom)................................         20%             18%              17%
France......................................................................         20%             21%              17%
Asia Pacific................................................................          4%              4%              4%
Latin America...............................................................          4%              4%              4%
</TABLE>

----------
(1)   Revenues  are  allocated  to the  country  or  region  of  the  subsidiary
      realizing the revenues.

(2)   Because our revenues from the Middle East and Africa  represent  less than
      1% of our total revenues,  our geographic  breakdown of revenues currently
      includes,  and historically has included,  revenues in the western part of
      the Middle  East and in Africa with those of Europe,  and  revenues in the
      eastern part of the Middle East with those of the Asia-Pacific region.

      Our 10 largest clients  represented 21% of our revenues for the year ended
December 31, 2005. During this period, none of our clients represented more than
4% of our total revenues.

      We  operate  in  a  single   category   of   activity,   advertising   and
communications services.

HISTORY AND DEVELOPMENT OF THE COMPANY

      Havas is a societe  anonyme,  a form of  corporation  organized  under the
French  Commercial  Code.  Our  registered  office  is  located  at 2  allee  de
Longchamp,  92281 Suresnes Cedex, France, and the telephone number of our office
is  +33-1-58-47-80-00.  Under our bylaws, our corporate existence  terminates on
July 15, 2050 unless  extended by the approval of our  shareholders at a meeting
of shareholders.

      We were incorporated in 1968 under the name "Havas Conseil". Havas Conseil
rapidly expanded its operations and, in 1975, under the name Eurocom, became the
holding  company of a group of companies  specialized in various  communications
activities.

      In 1982, our shares were first listed on Euronext  Paris S.A.,  previously
known as the Paris Bourse,  which is the French  national  stock  exchange.  Our
shares  currently trade on the  Compartiment A of the Eurolist by Euronext Paris
S.A., which is the principal  trading market for securities in France.  Our ADSs
began trading on the NASDAQ National Market System on September 27, 2000.

      At the time of our  original  incorporation,  our  business  activity  was
concentrated  in France and was  focused on  traditional  advertising  and media
buying   services.   Since  the   mid-1970s,   we  have  expanded  our  business
significantly,  both geographically and in terms of the breadth of services that
we offer.  Our  expansion  has been  achieved  through  internal  growth and the
selective acquisition of complementary  agencies.  Over the last thirteen years,
the portion of our total revenues  derived  outside of France has increased from
approximately 52% in 1992 to 80% in 2005.

      Over the past fourteen years, we have made a number of significant changes
to our organization that we believe have  substantially  expanded our geographic
reach, the scope of our services,  and our positioning in an increasingly global
market. The principal milestones in our strategic development are the following:

      o     1991. Eurocom acquires the French advertising group RSCG, leading to
            the creation of the Euro RSCG Worldwide advertising network in 1996.


                                       12
<PAGE>

      o     1996.  We changed our name to Havas  Advertising  and  created  four
            operating  divisions,  the  largest  of  which  is Euro  RSCG  whose
            headquarters were moved to New York in 1997.

      o     1998.   Implementation   of  an  acquisition   plan  to  expand  and
            consolidate   our  businesses   and  services  in  various   markets
            worldwide.  This resulted in a large number of acquisitions in North
            America, Europe, South America and the Asia-Pacific region from 1998
            through early 2001.

      o     1999.  Creation  of Media  Planning  Group by  combining  the  media
            planning and buying  activities of Media  Planning,  S.A., a Spanish
            company,   with  our  then  existing  media  planning  business.  We
            initially controlled 45% of this new group, increasing our ownership
            to 100% in May 2001. Through Media Planning Group, we believe we are
            able to  offer a wide  range  of media  services  in  major  markets
            worldwide.

      o     2000.  We  made a  successful  bid  for the  acquisition  of  Snyder
            Communications,   Inc.  This  U.S.   group,  a  provider  of  direct
            marketing,  advertising and communications  services,  was organized
            around three divisions:  Bounty SCA Worldwide, Arnold Communications
            and Brann Worldwide.

      o     2002.  The  Company's  name is changed from "Havas  Advertising"  to
            "Havas" by decision of the annual shareholders;  meeting held on May
            23, 2002.

      o     September 2003. Implementation of a restructuring and reorganization
            of our  group  around  three  main  operating  divisions:  Euro RSCG
            Worldwide,   a  worldwide  network  for  continuing  development  of
            integrated  communications  through Creative  Business  Ideas(R) and
            designed to bolster  the new  organization  implemented  through the
            Power of One. Media Planning Group, our worldwide  network for media
            expertise  and  traditional   advertising  and  marketing  services,
            continues to develop for its direct clients as well as those of Euro
            RSCG Worldwide and Arnold  Worldwide  Partners  through a reinforced
            network  in  a  number  of  countries.   Arnold  Worldwide  Partners
            concentrates  its  development  efforts on local markets with strong
            potential,  both in the United  States  where it enjoys an excellent
            reputation for creativity,  as well as in key international  markets
            where  creativity is an important  factor and where Arnold Worldwide
            Partners already has a strong local presence.

      o     2004.  Completion of the restructuring and  reorganization  plan. In
            July, Bollore Group acquired a stake in the Company's share capital.
            In  October,  the  Company  completed  a  (euro)404  million  rights
            offering which significantly reduced our debt level.

      o     2005 is a transition year marked by significant changes in the Havas
            management team.

Principal acquisitions and divestitures

      Our investment strategy involves reinforcing our integrated  communication
and media  expertise  networks,  by  leveraging  geographical  diversity and the
development of services offered by our different agencies. Our acquisitions over
the last three years reflect this strategy of focusing on selective acquisitions
rather than external  growth.  In 2005,  we spent a total of (euro)3  million on
investments,  including acquisition costs (corresponding to three acquisitions),
(euro)10 million in 2004 (for seven  acquisitions)  and (euro)12 million in 2003
(for nine acquisitions).

      In response to difficult economic  conditions,  a financial  restructuring
and  reorganization   plan  was  implemented  in  2003  aimed  at  strengthening
integrated  communications services,  simplifying organization and significantly
reducing  costs.  This  reorganization  resulted in the disposal or closure of a
number  of  companies  which no longer  fit  within  the  group's  strategic  or
financial  performance  criteria.  Seven companies were disposed of or closed in
2005 for an amount net of disposal  costs of (euro)14  million,  26 companies in
2004 for an amount net of disposal  costs of (euro)68  million and two companies
in 2003 for an amount net of disposal costs of (euro)8 million.

      In  2005  and  2006,  we  did  not  firmly  commit  to  any  new  material
investments,  nor are any material  acquisitions  or  divestitures  currently in
progress.


                                       13
<PAGE>

      There have been no public  takeover  offers by third parties in respect of
our shares since January 1, 2005, nor have we made any public takeover offers in
respect of other companies' shares since that date.

BUSINESS OVERVIEW

Business strategy

      Our long-term business strategy is to continue our development into one of
the leading global advertising and communications  groups with levels of revenue
growth and  profitability  that are  comparable  to the best among our principal
competitors. To accomplish this, we have identified the following key goals:

      o     Grow revenues from existing clients by capitalizing on opportunities
            to provide integrated communications;

      o     Focus  on   attracting   and  serving  new   clients,   particularly
            multinational  clients,  through an  emphasis  on  coordinating  the
            worldwide efforts of our constituent advertising, media planning and
            buying, interactive, corporate communications and marketing services
            agencies;

      o     Develop synergies between the advertising and media advisers ("Media
            Inside");

      o     Expand and consolidate our positions in various  markets,  including
            through  targeted   acquisitions  or  strategic  alliances  to  take
            advantage  of  opportunities  to increase the  geographic  scope and
            service offerings of our existing networks;

      o     Maintain a multicultural  approach to our business to better respond
            to client needs and to attract and retain key personnel; and

      o     Improve our financial  performance by controlling  costs,  including
            through a consolidated  purchasing initiative,  a rationalization of
            our holding company and divisional  headquarters  structures,  and a
            reinforced  emphasis on  improving  operating  margins and free cash
            flow.

Advertising and communications services

      We offer the following principal products and services:

      o     Traditional advertising. Traditional advertising services consist of
            defining the nature,  content and target  audience of an appropriate
            advertising  message  for  the  promotion  of  brands,  products  or
            services;  creating work product;  advising clients in the choice of
            media to  disseminate  creative work  product;  and  monitoring  the
            effectiveness  of the  advertising  message and work product through
            studies and research.

      o     Direct  marketing.  Direct  marketing  services consist of providing
            communications,  such as direct mail, and related  database  support
            that are  designed  to develop  and  maintain a  measurable  contact
            between the message sender and the receiver.

      o     Corporate communications.  Corporate communications services consist
            of providing  communications  relating to a company,  such as annual
            reports  to  stockholders,  that are  intended  to make the  company
            better known or improve its image to stockholders,  suppliers or the
            financial markets.

      o     Internal communications. Internal communications services consist of
            providing  communications  for use within an  organization,  such as
            communications  designed to disseminate  important information or to
            motivate employees.

      o     Sales  promotion.  Sales  promotion  services  consist of  designing
            communications  that  aim to  induce  consumer  purchasing,  promote
            consumer  loyalty,  increase consumer interest in a product or react
            to competitive pressures.

      o     Design.  Design  services  are  intended  to  increase  the sales of
            products  or services  through  the design of  products  themselves,
            their   packaging,   the  visual   identity  of   companies  or  the
            architecture of business establishments.


                                       14
<PAGE>

      o     Television  sponsorship.   Television  sponsorship  services  are  a
            relatively   recent   communications   specialty   and   consist  of
            associating a brand or a product to a television program.

      o     Human resources.  Human resources  services are a specialty provided
            to  companies  for their  hiring,  training,  promotion  and related
            internal communications.

      o     Multimedia   interactive   communication.   Multimedia   interactive
            communication  services  consist of providing  communications  using
            on-line, off-line and interactive multimedia.

      o     Healthcare  communications.  Healthcare  Communications  are used to
            promote  health brands,  namely  prescription  and  over-the-counter
            drugs,  with  specialized  expertise  in the areas of  advertisement
            communications,  medical education and public relations both locally
            and internationally.

      o     Public  relations.  Public  relations  services consist of providing
            news releases and other  communications,  and organizing  events, to
            foster a positive understanding of a client and its brands, products
            or services or to highlight newsworthy events regarding the client.

      o     Integrated   communications.   Integrated   communications  services
            consist  of  coordinating   traditional  advertising  services  with
            marketing,   interactive,   corporate   communications   and   other
            communications services.

      o     Media  expertise and media buying.  Media  expertise is the study of
            techniques  permitting  optimization  of efficiency  of  advertising
            announcements by determining the most suitable media and support for
            reaching  the largest  number of readers,  listeners  or  television
            viewers within the defined target audience.  Media expertise took on
            significant   importance   with  the   development   of   television
            advertising due to the large volume of advertising expenditure using
            this media and the  complexity of the data relative to the audience.
            Media   expertise  and  media  buying  provides  to  the  advertiser
            qualitative  services such as  efficiency of purchases  according to
            the target audience,  and quantitative services such as optimization
            of purchase conditions.

2003 reorganization

      In the fourth  quarter  of 2003,  a  reorganization  of our  business  was
undertaken, which was completed in 2004.

      Following this reorganization, our business is organized around three core
operating divisions:  Euro RSCG Worldwide,  our worldwide network for continuing
development of integrated  communications,  Media Planning Group,  our worldwide
network for media expertise and traditional  advertising and marketing  services
and Arnold Worldwide Partners, a creative force in key strategic countries. As a
result of the reorganization:

      o     Nearly all of our specialized  agencies have been either  integrated
            into Euro  RSCG  Worldwide  or Media  Planning  Group  or,  where we
            determined that they were engaged primarily in activities outside of
            our core areas of competence,  were not strategic  investments,  did
            not meet our financial performance criteria or otherwise did not fit
            into our new organization, they have been sold or closed.

      o     A small number of companies  within Euro RSCG  Worldwide  and Arnold
            Worldwide  Partners  that we  determined  were engaged  primarily in
            activities  outside  of our  core  areas  of  competence,  were  not
            strategic  investments  or  otherwise  did  not  fit  into  our  new
            organization have been sold or closed.

      o     Almost all of the marketing  services  agencies that were previously
            part of Arnold  Worldwide  Partners have been  integrated  into Euro
            RSCG  Worldwide.  Arnold  Worldwide  Partners  is now  refocused  on
            offering  highly  creative,  integrated,  idea-driven  communication
            solutions on a local basis in the countries in which it operates.

Organization into three operating divisions

      Set forth below is a presentation of our three operating divisions.


                                       15
<PAGE>

Euro RSCG Worldwide

The EURO RSCG Worldwide model

      The  EURO  RSCG  Worldwide   division  was  founded  in  1996.  It  offers
advertising,  marketing, corporate communications and interactive communications
solutions  to  its  global,   regional  and  local  clients  through  completely
integrated units called "Power of One".

      Euro RSCG Worldwide has 10,000  employees  working in 233 agencies in over
70  countries.  The  network  is divided  into six  operational  regions:  North
America,  Europe,  Asia Pacific,  India/Middle East, Latin America and Euro RSCG
Life. Euro RSCG Worldwide's services are available in every geographical region,
and the company is among the world's leading communications networks.

Tripartite Strategy

      In a market where there are two main kinds of  advertising  agencies - the
major  networks  that  operate  on a  global  scale  but  do not  specialize  in
innovative,  creative and completely  integrated ideas, and smaller  independent
agencies  that  can  offer  creative  ideas  but do not  have a large  corporate
infrastructure - the place of Euro RSCG is unique because it combines the two.

      Euro RSCG Worldwide's strategy is organized around three major axes:

      o     providing innovative and profit-enhancing Creative Business Ideas(R)
            to its clients;

      o     developing    these   ideas   by   focusing   on   the    Prosumers:
            information-empowered, influential consumers who set the pace of the
            market;

      o     implementing  these  ideas via an  integrated  and  novel  marketing
            model: the Power of One.

      In 2005, Creative Business Ideas(R), Prosumers and Power of One remain the
basic  principles  that set Euro RSCG Worldwide  apart from the other  agencies.
They  offer the  ability  to  anticipate  changes in the  market,  a  structured
approach to the creation and  promotion of brands,  a high level of  creativity,
the  ability to  implement  projects  on global  scale,  full  integration,  and
flexibility of execution in all areas.  As a result,  EURO RSCG Worldwide  knows
how to respond to the needs of its  clients,  who expect  tangible  proof of the
profitability of their marketing investments and integrated marketing solutions.

      This  original  approach  has been an engine for growth that has been made
available to major international groups such as Airbus, Air France, BNP Paribas,
Capgemini,  Charles Schwab,  Dannon Group,  Diageo, IBM, Jaguar,  L'Oreal,  LVMH
Louis  Vuitton,   PSA  Peugeot  Citroen,   Reckitt  Benckiser,   Sanofi-Aventis,
Schering-Plough, Verizon and Volvo, to name but a few.

      Even  though  agency  size  is of  great  importance  in  the  advertising
industry,  quality of service is of greater concern to Euro RSCG Worldwide. This
means  recruiting  and  training  talented  people  with  the  aim of  continued
production of integrated growth-generating ideas on a global scale.

Developments in 2005

      In  2005,  Euro  RSCG  Worldwide  continued  to  consolidate  and  use its
groundbreaking  studies on the opinions and behavior of Prosumers,  today's most
proactive and influential consumers.  The division extended the geographic scope
of its reference study and gained in-depth  knowledge of future  developments in
key marketing  sectors such as automobiles,  food,  pharmaceuticals,  and luxury
items.  The study was carried out in the United  States,  the United Kingdom and
France and has been launched in Germany,  Russia,  India, China, Japan,  Mexico,
Brazil and Australia.

      New clients won in 2005 by Euro RSCG Worldwide's agencies around the world
are proof of the success of the company's  strategy.  In the United States,  the
addition of the  worldwide  accounts for Jaguar and Verizon,  in addition to new
accounts such as Charles Schwab, GlaxoSmithKline, Novartis, Schering-Plough, Dos
Equis (Heineken), Vichy (L'Oreal), and Howard Stern (Sirius) have helped to make
Euro RSCG New York one of the leading local agencies.

      In 2005,  Euro RSCG  Worldwide  made its best  showing  at Cannes to date,
winning 15 Lion awards. For its work for its clients around the world, Euro RSCG
Worldwide won ten Cyber Lions, the highest number of


                                       16
<PAGE>

awards  for  interactive  work for that  year.(1)  In  addition,  the agency was
honored with  receiving one of the very first Lions in the  "Titanium"  category
for the best integrated campaign.

Two Spots in the Top 10

      Euro RSCG  Worldwide  is the only  organization  in the  world  (including
independent  creative agencies) to have had two of its TV spots ranked among the
top ten most internationally awarded advertisements,  according to the 2005 Gunn
Report.

      Euro RSCG 4D Brazil received second place in the Interactive Agency of the
Year Award at Cannes.

      Euro RSCG Life,  an  international  network  that  specializes  in medical
marketing,  was  named  Agency  of the  Year in the  trade  publication  Medical
Marketing & Media.

      These  creative  successes  made it possible for Euro RSCG to attract such
international  clients as Jaguar on a worldwide basis,  Euro Disneyland Paris in
Europe  and  Danone  who  selected  Euro  RSCG  for  their  worldwide  marketing
activities.

Media Planning Group

      In keeping  with its  approach  based on  understanding  the  relationship
between  consumers  and brands,  MPG  continued  the  development  of its market
awareness  tools  by  combining   econometric   simulations   with   proprietary
decision-making  computer  systems.  The group has focused on strengthening  and
redefining this capability as a brand,  which is now operational  under the name
MPG Intelligence. The positioning of MPG Intelligence as an internal resource is
fundamental as it differentiates MPG on the market.  This resource is accessible
to all MPG  networks  and to their  clients.  As a result,  it is marketed  both
internally and externally.

      MPG  Intelligence  continues  to  consolidate  partnerships  with  leading
specialists in both the private and  university  sectors to deepen its knowledge
of Integrated Market Planning and optimize its clients'  investments by offering
them 360-degree media strategies. MPG is also developing best managing practices
for marketing investments to maximize brand value.

      To assure the effective integration of this knowledge within its division,
MPG has strengthened its Human Resources department. A fortified Human Resources
team has developed a new program called Dare to Know,  which will be used in all
MPG  networks.  This new complete  management  training  program is conducted in
conjunction with MPG  Intelligence and a group of university  partners to ensure
complete  application of the primary consumer awareness tools and methodologies.
It was also designed to aid in the  transformation  of the MPG organization into
an entirely  client-oriented  structure, in the image of the economic simulation
tool Concert(TM). Concert(TM) is an MPG-exclusive, consumer-oriented methodology
applied by all of its networks.  MPG Catalyst teams are  responsible  for making
both existing and new markets aware of its existence.

      MPG  has  also  created  the  position  of  CCO  (Chief  Client   Officer)
responsible for the distribution of this methodology  within the group. CCOs are
assigned  according to clients' cultural  environment and specific needs and are
tasked  with  making  their  clients  aware  of how to get the  most  out of MPG
products and services.

      The  new  role  of  the  CCOs  is to  work  in  close  cooperation  with a
strengthened and centralized Global Marketing Department. The role of the Global
Marketing  Department  is to market  MPG's  products  and services and develop a
clear   and   coherent   marketing   strategy   for   MPG.   As  part  of  these
responsibilities,  the  Marketing  team and the  CCOs  adapt  current  marketing
strategies  to allow MPG clients and  employees to take full  advantage of MPG's
research programs.

      Associates of the  Centralized  Media Buying  Department,  which  includes
specialists in TV and print media buying,  now work with each of the networks to
allow clients to take advantage of the synergies  that are  implemented on every
market.  MGP is also  developing its  capabilities  in brand content  through an
investment in personnel  (following the  recruitment of a worldwide  manager for
the Brand Entertainment  branch) and its networks and establishments  throughout
the world.

----------
(1) Source: Adweek, January, 16 2006

                                       17
<PAGE>

International development

      MPG is continuing to expand from its network in 1999 which  included eight
countries (Spain,  Portugal,  Mexico,  Colombia,  Argentina,  France, the United
Kingdom and the Netherlands). Today, MPG is a truly international network with a
presence,  either through  group  owned  companies,  franchises  or  cooperation
agreements,  in more than 91 countries. MPG is a leading agency in seven markets
(Argentina, France, Mexico, Portugal, Spain, Slovakia and Ukraine) and among the
top five agencies in several of the markets where it has a presence.

      In  2005,  MPG  finalized  its  international   presence  through  several
transactions  on new markets.  In Australia and New Zealand,  MPG signed a joint
venture  agreement  with Mitchell & Partners,  Australia's  largest  independent
media agency.  In the Middle East,  the agency signed a joint venture  agreement
with Euro RSCG Promopub.  This regional entity, which is headquartered in Dubai,
will cover fourteen  countries,  including the countries in the Gulf Cooperation
Council (GCC), Lebanon and Egypt. MPG is also serving clients based in Japan and
Korea, in parallel with its partnership with Motivator in North,  South and East
Asia.

      At the  beginning of the year,  MPG  initiated  the 2MV joint venture with
WPP's  GroupM  in two  European  markets  to  serve  the  client  PSA in all the
countries  covered by the joint  venture  (France,  Spain,  the United  Kingdom,
Germany,  Italy,  Switzerland,  Denmark and Russia)  where the PSA budget was in
question.  Yves Del Frate was  appointed  manager  of this  operation.  MPG also
strengthened  its  operations  in Germany,  where a new agency  model called MPG
Werbekraft was launched in November  2005.  MPG also  reinforced its position in
the United  Kingdom,  the United  States and India  through  reorganization  and
recruitments at the highest levels of management.

      MPG intends to concentrate in 2006 on the  consolidation and strengthening
of its operations.

Arnold Worldwide Partners

The Arnold model

      Arnold Worldwide  Partners consists of agencies offering clients marketing
and  advertising  services that are renowned for being highly  creative.  It has
majority or wholly-owned  subsidiaries in the United States,  Canada, Europe and
China.

      Arnold  Worldwide  Partners's major clients include  international  groups
such as Hershey's, Lee Jeans, McDonald's, Pfizer, Levi's and Fidelity.

Strategy and development

      The growth  strategy of Arnold  Worldwide  Partners arose from focusing on
highly creative services and strengthening its position in this area. As part of
its reactive and dynamic structure,  it offers its clients unique solutions that
combine locally integrated marketing services with a high level of creativity.

      The sale of  Arnold's  holdings  in WCRS  terminated  the  United  Kingdom
activities of Arnold Worldwide Partners. As a result, at the end of 2006, Arnold
will focus  solely on its North  American and French  activities  as well as its
agencies in Italy and China.

Developments in 2005

      In  2005,  Arnold  Worldwide   Partners   implemented  a  new  operational
organization  plan in  order to  create  a  "unique  Arnold"  and to  align  the
interests of its entire structure in the United States, both with respect to all
of its integrated  offers (design,  direct marketing,  interactive  advertising,
promotion, etc.) as well as the four multi-service United States agencies.

      At the  local  level,  although  the  Boston  agency  lost the  Volkswagen
account,  it was able to win back a portion of the lost revenue  through the win
of the Radioshack  account in 2005, among others. As Arnold provides  Radioshack
with traditional and interactive advertising services and brand promotion,  this
account will strengthen Arnold's list of multidisciplinary clients.

      With  more than 600  awards  and  distinctions  received  in 2005,  Arnold
Worldwide  Partners  has more than  doubled  its score from 2004.  In 2005,  the
United  States  agencies  retained  their  distinction  of being the most


                                       18
<PAGE>

highly awarded agencies in the world. Arnold Worldwide Partners United States is
among the nine global  agencies  listed every year in the Gunn Report honor roll
which, since its creation seven years ago, provides an exhaustive ranking of the
most awarded agencies.

      Arnold  Worldwide  Partners  agencies in 2005  received  awards in all the
major  competitions  in which they  participated.  In  particular,  the American
agency won the following awards:  New York Festival (gold), The One Show (gold),
Effies (gold),  Cannes (silver),  as well as several other major distinctions in
the advertising industry.

      o     Arnold Worldwide  Partners  launched a new Business  Consulting unit
            devoted to strategic corporate activities.

      o     Arnold  launched a unit in Los  Angeles  that  specializes  in Brand
            Entertainment.

      o     In  France,  Devarrieuxvillaret  received  a Grand  Prix  in  Poster
            Advertising and a Grand Prix in Strategies.

      o     United States  agency  McKinney won the  prestigious  prize for best
            interactive campaign of the year for its work for Audi.

Seasonality

      Our  business  is  subject  to  seasonal  effects  and we  have  generally
experienced  the greatest  level of business in the fourth  quarter of each year
and, to a lesser extent, the second quarter of each year.

Competition

      The   advertising   and   communications   services   industry  is  highly
competitive,  and we expect it to remain so. At the holding  company level,  our
principal   competitors   are  other   large   multinational   advertising   and
communications  services  companies,  including  Omnicom Group,  WPP Group,  The
Interpublic Group of Companies,  Publicis Groupe and Dentsu.  Actual competition
for clients,  however,  generally takes place at the agency level. Our principal
agency networks in the  advertising  industry are Euro RSCG Worldwide and Arnold
Worldwide Partners,  which compete with other similar multinational agencies and
networks of agencies,  including McCann-Erickson Worldwide (Interpublic),  TBWA,
BBDO Worldwide,  DDB Worldwide  (Omnicom),  Ogilvy & Mather  Worldwide (WPP), J.
Walter  Thompson  Company  (WPP),  Young & Rubicam,  Grey (WPP),  Publicis,  Leo
Burnett  Worldwide  (Publicis)  and  Saatchi  & Saatchi  (Publicis),  as well as
numerous  smaller agencies that operate only in a small number of local markets,
regions or countries.  In addition,  for media planning and buying  clients,  we
compete  with   divisions   of  other  large   multinational   advertising   and
communications  groups,  as  well  as  specialized  media  buying  and  planning
companies.

      We compete with these other  companies  and agencies to maintain  existing
client  relationships  and to obtain new clients and  assignments.  In addition,
some clients require agencies to compete for business  periodically.  We believe
that we compete principally on the basis of the following factors:

      o     quality and breadth of services;

      o     geographic coverage and diversity;

      o     creative reputation;

      o     knowledge of media;

      o     experience and expertise in interactive services;

      o     relationships with clients; and

      o     size and financial resources.

      We also  encounter  competition  from  some  consulting  firms  that  have
developed  practices in marketing and communications  services.  New competitors
also include smaller companies such as systems  integrators,  database marketing
and modeling companies and telemarketers, which offer technological solutions to


                                       19
<PAGE>

advertising and communications  issues faced by clients. In addition,  the trend
among multinational  companies towards consolidation of global accounts also has
required  us  and  other  companies  seeking  to  compete   effectively  in  the
international   advertising  and   communications   services  industry  to  make
significant  investments.  These  investments  include  additional  offices  and
personnel  around the world,  through  acquisitions  or  otherwise,  and new and
improved technology for linking these offices and people.

      We had  revenues of  (euro)1,461  million for the year ended  December 31,
2005, and ranked sixth among major  communications  consulting groups worldwide,
according  to the results of the 2005 and 2004 annual  reports of our  principal
competitors.

Intellectual property

      In May of  2002,  we  purchased  all  rights  held  by  Vivendi  Universal
Publishing to the "Havas"  trademark,  except for specified  derivative names of
Havas,  including "Havas Voyages," for (euro)4.6  million.  Before that time, we
licensed  the use of the name "Havas  Advertising"  from  Vivendi  under  annual
license  agreements.  The name  "Havas" is  registered,  or is in the process of
being registered, in 98 countries and the European Union.

      We also have trademark protections for each of our three divisional names.
Our "Euro RSCG  Worldwide"  name is a  registered  trademark  owned by us and is
registered,  or is in the process of being  registered,  in 109  countries.  Our
"Arnold Worldwide" name is a registered  trademark owned by us and registered in
the U.S. Our "Arnold Worldwide Partners" name is a registered trademark owned by
us and is  registered,  or is in the  process  of  being  registered,  in  seven
countries  and  the  European  Union.  Our  "Media  Planning  Group"  name  is a
registered  trademark  owned by us and is  registered,  or is in the  process of
being registered, in 29 countries and the European Union.

      Havas is not dependent on any patents or licenses, industrial,  commercial
or financial contracts or new manufacturing processes.

Government regulation

      Our agencies are located in numerous  countries with  different  levels of
governmental  regulation relating to the advertising and communications services
industry, including laws or regulations that:

      o     prohibit various practices in our industry;

      o     restrict the media, content, form or duration of advertising;

      o     restrict the collection, use and disclosure of personal information;

      o     assess fees, taxes or tariffs on advertisements;

      o     allow  individuals  to bring  legal  action  against  companies  for
            allegedly violating laws and regulations; or

      o     otherwise  harm our  business,  financial  condition  and  operating
            results.

      For  example,  in some of the markets in which we operate,  including  the
United  States,   there  are  laws  and  regulations  that  impose   significant
liabilities  upon  advertisers and advertising  agencies for false or misleading
advertising.  If any  advertising  that  we  create  is  found  to be  false  or
misleading, we could face potential liability.

      As another example, laws and regulations in the European Union, the United
States and a number of U.S. states limit the  collection,  use and disclosure of
personal  information,  including personal information regarding Internet users,
students,  minors and personal health matters. Due to our substantial  marketing
services  business,   which  relies  on  the  collection  and  use  of  personal
information,  these laws and  regulations,  and any future laws and regulations,
may substantially harm our operations or significantly  reduce our revenues from
marketing services.


                                       20
<PAGE>

PROPERTIES

      We lease,  and in a few locations  own,  office space in various cities in
which we do business throughout the world.

      In April 2003, we relocated our headquarters to Suresnes, France, where we
leased  approximately  228,000 square feet of space for our principal  corporate
office and several of our agencies. The lease expires on February 21, 2012.

      Our  Arnold  Worldwide   division   headquarters  is  located  in  Boston,
Massachusetts,   where  the  division   and  several  of  its  agencies   occupy
approximately 200,700 square feet. The lease expires on August 31, 2014.

      Our Euro RSCG Worldwide division  headquarters are located in New York and
in  Suresnes,  France.  In New York,  the  division  and several of our agencies
occupy  approximately  137,900 square feet. The lessee under the lease is one of
our wholly owned  subsidiaries and our company has guaranteed this  subsidiary's
obligations under the lease. The lease expires on December 31, 2007.

      Our Media Planning Group division  headquarters  are located in Barcelona,
Spain,  where the  division  and several of our  agencies  occupy  approximately
18,740 square feet. The leases relating to these locations expire in 2009.

      In addition to these leases, we have entered into leases for our principal
offices located in the United States,  the United  Kingdom,  France and in other
countries in which we do business.  In the United States,  we lease office space
in over 20 locations.  The leases for our U.S.  offices  expire on various dates
ranging from February 2006 to December  2015.  In the United  Kingdom,  we lease
office space in over 11 cities.  Our U.K. leases expire on various dates ranging
from January 2007 through  December  2018.  In France,  we lease office space in
over 10 cities.  Our French  leases expire on various dates ranging from January
2006 to November 2016.

      We believe that all of our facilities are suitable for their use, and that
we generally have sufficient space for our existing needs and expected near-term
growth.  As a  service  provider,  we do not face any  environmental  issues  in
connection with the utilization of these office spaces.

Marketing channels

      We market our services,  including our integrated communications services,
primarily by evaluating the advertising and communications  needs of our clients
and  prospective  clients and by  demonstrating  to our clients and  prospective
clients how we propose to meet those needs. Our development of strong brands and
a global reputation are key elements of our marketing strategy.

ITEM 4A. UNRESOLVED STAFF COMMENTS

      Not applicable.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

      The  following  discussion  of our  results of  operations  and  financial
condition should be read together with our consolidated financial statements and
the accompanying notes included elsewhere in this annual report.  When comparing
performance between years, we sometimes discuss non-GAAP financial measures such
as organic revenue growth.

OVERVIEW

      We are a holding company.  We conduct our business  primarily  through our
three operating divisions: Euro RSCG Worldwide,  Media Planning Group and Arnold
Worldwide Partners. Through these operating divisions, we offer a broad range of
advertising and communications  services,  including integrated  communications,
traditional advertising, direct marketing, media planning and buying, healthcare
advertising   and    communications,    corporate    communications,    internal
communications,   sales  promotion,   design,   television  sponsorship,   human
resources,  multimedia interactive  communications and public relations. We have
operations  in more than 70 countries  through our agencies  located  throughout
Europe,  North America,  the Asia-Pacific  region and Latin America,  as well as
contractual  affiliations  with agencies in numerous  additional  countries.  We
provide these services to a wide variety of clients,  and are not  significantly
dependent on any single client or industry  group.  We operate in one reportable
business segment, advertising and communications services.


                                       21
<PAGE>

      Globally,  over the past few  years,  our  industry  has  continued  to be
affected by lagging economic  conditions,  geopolitical unrest, lack of consumer
confidence and cautious client spending.  All of these factors  contributed to a
difficult business environment and industry-wide margin contraction.  As part of
our reorganization, we closed or sold a number of companies during 2003 and 2004
that  were  not  engaged  primarily  in  activities  within  our  core  areas of
competence,  were  not  strategic  investments,   did  not  meet  our  financial
performance  criteria or otherwise did not fit into our new organization.  These
companies,  together with a small number of other companies we sold in 2004, had
aggregate net revenues in 2004 and 2003 of approximately  (euro)51.6 million and
(euro)157.4 million,  respectively,  of which (euro)45.1 million and (euro)152.1
million respectively, is reflected in discontinued operations.

      Compared  with  2004,  our net  revenue  for  2005  improved  slightly  to
(euro)1,460.7  million  from  (euro)1,448.6  million.  At a  constant  scope  of
consolidation  and  constant  exchange  rates,  our  revenue  increased  by 2.5%
compared with 2004.

      When we discuss  amounts on a constant  currency  basis,  the prior period
results  are  adjusted  to remove the  impact of  changes  in  foreign  currency
exchange  rates during the current  period that are being  compared to the prior
period. The impact of changes in foreign currency exchange rates on prior period
results is removed  by  converting  the prior  period  results  into euro at the
average exchange rate for the current period.

      We derive  organic  revenue  change for a  specified  period by  adjusting
reported revenue for the prior period by:

      o     excluding the impact of foreign  currency effects over the course of
            the period to provide  revenues  on a constant  currency  basis,  as
            described in the preceding paragraph;

      o     excluding the impact of acquisitions,  sales and closures, including
            closures of departments within companies,  that were completed after
            the  first day of the prior  period  by adding  the  pre-acquisition
            revenues of acquired  businesses to, and subtracting the pre-sale or
            pre-closure  revenues of sold or closed  businesses  or  departments
            from, the prior period revenues; and

      o     comparing  the  resulting  adjusted  prior  period  revenue  to  the
            reported revenue for the specified period.

      Significant events for us during 2005 included:

      Acquisition of Significant Shareholding by Bollore Medias Investissements

      During 2004 and 2005, Bollore Medias  Investissements and its predecessors
acquired  beneficially  29.3% of our  outstanding  shares  including  16,929,649
shares  beneficially  owned by CSCS Limited,  a subsidiary of Sebastian Holdings
Inc.  which  may be  considered  to be  beneficially  owned  by  Bollore  Medias
Investissements.  For additional  information,  see "Item 7 - Major Shareholders
and Related Party Transactions".

      Management Changes

      On July 12, 2005, Mr. Vincent Bollore was appointed as the Chairman of the
Board of  Directors,  replacing  Mr.  Richard  Colker who served as our  interim
Chairman  and  Chief  Executive  Officer  following  the  end  of Mr.  Alain  de
Pouzilhac's  term of office as our Chairman and Chief Executive  Officer on June
21, 2005.

      The functions of Chairman of the Board of Directors and of Chief Executive
Officer are held by two  different  individuals,  with Mr.  Fernando  Rodes Vila
serving as Chief  Executive  Officer since March 10, 2006 and Mr.  Philippe Wahl
having served as Chief  Executive  Officer from July 12, 2005 to March 10, 2006.
Mr.  Fernando Rodes Vila has served as Director on our Board since January 2001.
Mr.  Fernando  Rodes Vila  earned a degree in  economics  from UCB and began his
professional  career  in  finance  at  Manufacturers  Hanover  Trust in  capital
markets.  In 1988, he joined Banco Espanol de Credito. In 1994 he became a Chief
Executive  Officer of Media  Planning  SA,  which he helped to develop  into the
premier media agency on the Iberian peninsula and in Latin America.  We acquired
Media Planning SA in 1999,  which became Media  Planning Group (MPG),  our media
division, where Mr. Fernando Rodes Vila also serves as Chief Executive Officer.

      Various other  appointments and changes to our management  occurred within
our operating divisions.

      Redemption of Convertible and/or  Exchangeable Bonds (OCEANEs) Due January
1, 2006


                                       22
<PAGE>

      On January 1, 2006,  we  redeemed  the  remainder  of our  outstanding  1%
OCEANEs,  maturing on January 1, 2006.  As of December 31, 2005,  the  aggregate
amount of these OCEANEs outstanding amounted to (euro)220.9 million,  comprising
(euro)219.1 million in aggregate principal and (euro)1.8 million in interest.

OUTLOOK

      Our results of operations are dependent upon:

      o     maintaining and growing our revenue;

      o     retaining existing clients and gaining new clients;

      o     overall economic and industry conditions;

      o     continuously aligning our costs to our revenue; and

      o     retaining and attracting key personnel.

      For a discussion  of these and other factors that could affect our results
of operations and financial  conditions,  see  "Forward-Looking  Statements" and
"Item 3. Key Information--Risk Factors".

      Industry forecasters predict world advertising expenditures in major media
will  increase  by 6% in 2006 at  current  prices  (Source:  Zenith  Optimedia).
Although there can be no assurance that this forecast  ultimately  will prove to
be accurate,  nor that our revenue will grow to the same extent as the growth in
media income,  our  management  believes that  conditions  for the industry as a
whole in 2006 should  continue to be  favorable.  We have already  achieved some
notable  successes  in new account  wins since the  beginning  of 2005.  In this
positive  environment,  we remain confident about its prospects in 2006, despite
the loss of clients Intel Corporation and Volkswagen in 2005 which will continue
to adversely  affect our results during the first half of 2006. Our objective is
to continue  the  positive  development  of our organic  growth  globally and to
further improve our  profitability  through new account wins, the development of
existing clients and a continuing emphasis on cost control.

      We believe that a number of industry  trends have had and will continue to
have a fundamental impact on our business and prospects. These trends include:

      o     Continued  client  demand for  integrated  communications  services,
            which consists of coordinating traditional advertising services with
            marketing,   interactive,   corporate   communications   and   other
            communications  services.  In response to this trend, we reorganized
            Euro  RSCG  beginning  in  2002 by  bringing  together  agencies  in
            different  disciplines,  such as  advertising,  marketing  services,
            interactive  and corporate  communications,  in the same  geographic
            region,  into one "Power of One" functional business unit having one
            set of objectives and management incentives;

      o     Globalization of many industries and the resulting  globalization of
            the   advertising   and   communications   services   industry   and
            polarization  of our  industry  into a  relatively  small  number of
            global  networks  and a large  number of smaller  local and regional
            agencies.  We have  pursued,  and continue to pursue,  a strategy of
            expanding  and  consolidating  our  positions  in  various  markets,
            including  through targeted  acquisitions or strategic  alliances to
            take advantage of opportunities to increase the geographic scope and
            service  offerings  of our  existing  networks  in  response to this
            trend;

      o     Continued  fragmentation  of media  audiences and  proliferation  of
            media channels, increasing the opportunities to reach consumers, but
            also  increasing  the  complexity  of doing  so. As a result of this
            trend,  we  continue  to invest in market  research  and  efficiency
            measurement  tools and techniques,  primarily through Media Planning
            Group;

      o     Growth  of  marketing  services,  as the  rapid  development  of new
            communications  technologies has enabled  advertisers to reach their
            intended   audiences   using  means  that  are  more  targeted  than
            traditional  mass marketing.  In response to this trend, we expanded
            our  marketing  services  capabilities  over the past several  years
            primarily through acquisitions,  including the acquisition of Snyder
            Communications in 2000, and, in 2004 we launched Euro RSCG 4D, a new
            global


                                       23
<PAGE>

            marketing  services  brand  integrating  under  one  banner  various
            marketing services agencies within Euro RSCG Worldwide;

      o     Continued  evolution of the  Internet,  interactive  television  and
            other   emerging  media  as  a  new  market  for   advertising   and
            communications services. In response to this trend, we have expanded
            our  multimedia  interactive  communications  services over the past
            several  years,   including  through   acquisitions,   such  as  the
            acquisition  in  2001  of  the  Snyder  Communications   interactive
            professional services business, Circle.com;

      o     Evolution of media  planning  and buying from an  ancillary  service
            within   traditional   advertising   agencies   into  a  specialized
            autonomous service. In response to this trend, we created a separate
            division, Media Planning Group, in 1999 to handle our media planning
            and buying activities. We believe that operating these activities as
            separate entities rather than as departments  within our agencies is
            the most effective  structure to capitalize on growth  opportunities
            in the media business;

      o     Pressure on fees, particularly as client procurement departments, as
            opposed to  marketing  departments,  are  increasingly  involved  in
            negotiating  pricing.  To counteract  this trend,  we have sought to
            increase  revenues by expanding the  geographic  markets in which we
            are  present,  and the  categories  of  services  we provide to, our
            clients,  to continually adapt our costs to the fees negotiated with
            our  clients,   and  to  attempt  to  negotiate  fees  that  include
            incentives  based  on  the  effectiveness  of  our  advertising  and
            marketing campaigns; and

      o     Increasing demands by major international clients for exclusivity in
            their  relationships  with advertising and  communications  services
            groups,  calling into question the traditional  advertising  holding
            company  structure  made up of  multiple  independent  international
            networks  representing  clients with competing products and services
            within the same group. As a result of this trend, we decided to make
            Euro RSCG our unique global advertising agency network,  with Arnold
            Worldwide Partners  concentrating its efforts on developing a strong
            creative presence in local markets in a smaller number of countries.

SEASONALITY

      Our business is subject to limited  seasonal  effects.  We have  generally
experienced  the greatest  level of business in the fourth  quarter of each year
and, to a lesser extent, in the second quarter of each year. As a result,  cash,
accounts receivable,  accounts payable and accrued expenses are typically higher
on our  year-end  balance  sheet than at the end of any of the  preceding  three
quarters.

CRITICAL ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS

      Our  financial  statements  contained in this report have been prepared in
accordance with U.S. generally accepted accounting principles, which we refer to
as U.S. GAAP. The preparation of these financial  statements  requires estimates
and judgments that affect the reported amounts of assets,  liabilities,  revenue
and expenses as well as the disclosure of contingent assets and liabilities. Our
significant  accounting  polices  are  described  in the notes to the  financial
statements.  We  believe  that,  of our  significant  accounting  policies,  the
following  may  involve a higher  degree of judgment  or  complexity:

      o     revenue recognition;

      o     allowances for doubtful accounts;

      o     restructuring charges;

      o     provisions for litigation;

      o     contingent acquisition obligations;

      o     impairment of goodwill;

      o     impairment  of long lived  assets and  accounting  for  discontinued
            operations; and

      o     deferred taxes.


                                       24
<PAGE>

         Revenue recognition. Substantially all revenue is derived from fees and
commissions for advertising and communication services and for the planning and
purchase of media. Revenue is recognized when the services are rendered, in
accordance with the terms of the contractual arrangement, and upon completion of
the earnings process. The earnings process is complete when services are
rendered, on the date the media is published or aired, when costs are incurred
for production and when collection is reasonably assured. Some contractual
arrangements with clients include performance incentives which allow us to earn
additional revenues based on performance relative to both qualitative and
quantitative objectives. We recognize the incentive portion of revenue under
these arrangements when the clients achieve these qualitative and quantitative
goals.

      Substantially  all of our  revenue  is  recorded  as the net amount of our
gross billings less pass through expenses charged to the clients.  In most cases
the amount that is billed to clients significantly exceeds the amount of revenue
that is earned and reflected in the financial statements because of various pass
through expenses such as production and media costs. In compliance with Emerging
Issues Task Force (EITF) 99.19  "Reporting  revenue gross as a principal  versus
net as an agent" we assess whether the agency or the third party supplier is the
primary  obligator.  We evaluate the terms of its clients  agreements as part of
this assessment.  In addition,  we give appropriate  consideration to either key
indicators  such as  latitude  in  establishing  price,  discretion  in supplier
selection  and credit  risk to the  vendor.  Because  we  broadly  operate as an
advertising agency based on our primary lines of business and given the industry
practice to generally  record  revenue on a net versus  gross basis,  we believe
that there must be strong  evidence in place to overcome the  presumption of net
revenue accounting. Accordingly, we generally record revenue net of pass through
charges.

      Allowance  for  doubtful  accounts.  We maintain  allowances  for doubtful
accounts for estimated losses that result from the inability of our customers to
make  required   payments.   We  base  our   allowances  on  the  likelihood  of
recoverability  of accounts  receivable based upon past  experience,  reviews of
aging and analysis of specific accounts. If economic or specific industry trends
worsen beyond our estimates or any of our clients'  financial  condition becomes
tenuous,  we will  increase our  allowances  for doubtful  accounts by recording
additional expense.

      Restructuring  charges.  During 2003, we recorded  significant  charges in
connection with our reorganization and worldwide restructuring plan. The related
reserves  reflect  many  estimates,   including  those  pertaining  to  employee
severance and other  personnel-related  costs and obligations  under real estate
leases, net of estimated  sublease income. We reassess the reserve  requirements
to complete our restructuring  plan at the end of each reporting period.  Actual
experience  has been and may continue to be different from these  estimates.  As
real estate market  conditions  change,  we may have further  refinements in the
future,  either  upward or downward,  to the  original  charge  recorded.  As of
December 31, 2005, reserves associated with our 2003 and 2001 reorganization and
restructuring   programs  were   (euro)21.3   million  and  (euro)9.4   million,
respectively.  As of December 31, 2004,  reserves associated with these programs
were (euro)37.8 million and (euro)9.9 million,  respectively. As of December 31,
2003,  reserves  associated  with these  programs  were  (euro)59.7  million and
(euro)15.4 million,  respectively.  For more information, see Note 8 to our 2005
consolidated financial statements included in this annual report.

      Provisions for litigation. During 2005, we recorded significant charges in
connection  with the  departure of some of our former  executive  officers for a
total amount of (euro)10.4 million. The related provisions involve a high degree
of judgment or complexity, and issues involved in connection with litigation are
complex and the outcome of any litigation involves a high degree of uncertainty.
As a  result,  our  liability  could be  higher  or lower  than the  established
reserves. Total indemnities,  damages and social charges which have been claimed
or could be claimed from us amount to (euro)14.0 million.

      Contingent acquisition  obligations.  Certain of our acquisition contracts
provide for contingent  consideration based on earnings, which we refer to as an
earn-out.  We utilize  earn-out  structures  in an effort to  minimize  our risk
associated  with potential  future  negative  changes in the  performance of the
acquired  company.   In  addition,   owners  of  interests  in  certain  of  our
subsidiaries or affiliates have the right, in certain circumstances,  to require
us to purchase their interests, which we refer to as a buy-out.

      We currently  estimate that the amount of contingent  future  earn-out and
buy-out payments we will be required to make for past acquisitions, assuming the
acquired  companies  perform over the relevant  earn-out and buy-out  periods at
their current profit levels, is (euro)80.5  million as of December 31, 2005. The
ultimate  amounts  payable are  dependent  upon future  results of the  acquired
companies.  In accordance with U.S. GAAP, we do not record a liability for these
items on our balance sheets until the applicable contingency is resolved and the
additional payment is determinable.  However, if the contingent consideration is
conditioned on the employment of any selling shareholder, we accrue compensation
expense  based on the estimated  contingent  payment.  Actual  results for these
companies  may  differ  from our  estimates,  in which  case the  amounts we are
required to pay


                                       25
<PAGE>

may be different than the amounts we estimate. These contingent obligations also
change from period to period as a result of  earn-out or buy-out  payments  made
during the current  period,  changes in the  previous  estimate of the  acquired
companies'  performances,  changes in foreign exchange rates and the addition of
new contingent  obligations resulting from acquisitions with earn-out or buy-out
structures completed in the current period. These differences could be material.
See "--Liquidity and capital resources -- Contractual obligations" below.

      Impairment of goodwill.  Beginning on January 1, 2002, in accordance  with
the  provisions of SFAS No. 142,  "Goodwill  and Other  Intangible  Assets",  we
ceased amortizing goodwill or excess basis related to equity-method investments.
Instead,  we began  testing  intangible  assets,  including  goodwill,  at least
annually for impairment by comparing the fair value of our reporting  units over
their carrying  values,  in accordance  with SFAS No. 142. The fair value of the
reporting units has been computed using the "discounted  cash flow" method,  and
is based on estimates of future  earnings.  Actual  earnings may differ from our
estimates. The excess of the carrying amount over the fair value is deemed to be
impaired and is written off. As a result of the annual  impairment  testing,  we
wrote  off  (euro)69.5  million  of  goodwill  in 2003.  There  was no  goodwill
impairment charge in 2004 or 2005.

      Impairment  of  long  lived  assets  and   accounting   for   discontinued
operations. The long lived assets are reviewed for impairment whenever events or
circumstances  indicate their carrying values may not be  recoverable.  Whenever
such  events or  circumstances  arise,  an  estimate of the future cash flows is
compared to the asset's  carrying  value to  determine if an  impairment  exists
pursuant to the requirements of SFAS No. 144,  "Accounting for the Impairment or
Disposal of Long-Lived-Assets."

      In accordance with SFAS No. 144, we include in assets and liabilities held
for sale and in  discontinued  operations the assets and  liabilities  that meet
certain criteria with respect to our plans for their sale or abandonment.

      Depreciation and  amortization  cease when the asset meets the criteria to
be  classified  as held for  sale.  A  component's  results  of  operations  are
presented as discontinued operations for all periods if:

      o     a planned or completed  disposal involves a component of our company
            whose operations and cash flows can be  distinguished  operationally
            and for financial reporting purposes;

      o     such  operations  and cash flows  will be (or have been)  eliminated
            from our ongoing operations; and

      o     we will not  have  any  significant  continuing  involvement  in the
            component.

      Operating losses from discontinued operations are recognized in the period
in which  they  occur.  Long-lived  assets  (or  groups  of assets  and  related
liabilities)  classified as held for sale, are measured at the lower of carrying
amount or fair value less costs to sell.

      Deferred  taxes.  We record  deferred  tax  assets and  liabilities  using
enacted tax rates for the effect of temporary  differences  between the book and
tax bases of assets and liabilities. If enacted tax rates change, we will adjust
our deferred tax assets and  liabilities  through the provision for income taxes
in the period of the change to reflect the  enacted  tax rate  expected to be in
effect when the deferred tax items reverse. A one percentage point change in the
enacted  tax rates  would  increase  or  decrease  net  income by  approximately
(euro)0.9 million.

      In accordance with SFAS No. 109,  "Accounting for Income Taxes," we record
deferred tax assets and liabilities using enacted tax rates that account for the
effect of  temporary  differences  between  the book and tax bases of assets and
liabilities.  If enacted tax rates  change,  we would  adjust our  deferred  tax
assets and  liabilities  through the provision for income taxes in the period of
the change to reflect  the  enacted  tax rate  expected to be in effect when the
deferred tax items are reversed. We record a valuation allowance on deferred tax
assets when it is more likely than not that some  portion or all of the deferred
tax assets will not be realized. Forming a conclusion that a valuation allowance
is not needed is difficult  when there is negative  evidence  such as cumulative
losses  in  recent  years.  Cumulative  losses  weigh  heavily  in  the  overall
assessment.

We  determined  that  positive  evidence  was not  sufficient  to overcome  such
negative evidence and concluded that it was therefore appropriate to establish a
full  valuation  allowance for our deferred tax assets related to our French tax
group.  Deferred tax assets  related to our US tax group were  recognized to the
extent of future  taxable  temporary  differences  and  future  taxable  income,
exclusive of reversing temporary  differences and  carry-forwards,  for a period
not  exceeding  approximately  two years.  Management  is  confident  to achieve
profitability  in the next years and that we will be able to  utilize  these tax
assets to minimize the US taxes for the next years.

      We base our estimates and  judgments on  historical  experience  and other
factors that we believe to be reasonable under the circumstances. Actual results
or outcomes may differ from these estimates.


                                       26
<PAGE>

New accounting pronouncements

      In December 2004, the Financial Accounting Standards Board, which we refer
to as FASB,  issued SFAS No. 123R,  "Share-based  payment".  This statement is a
revision  of SFAS  No.  123,  "Accounting  for  stock-based  compensation,"  and
establishes  standards for the  accounting for  transactions  in which an entity
exchanges its equity  instruments for goods or services.  This statement focuses
primarily on accounting for  transactions  in which an entity  obtains  employee
services in share-based payment transactions.  The application of this statement
is required as of the beginning of the first annual reporting period that begins
after  December 15, 2005. We expect to adopt this  statement on January 1, 2006.
While we are in the process of  assessing  the impact that this  statement  will
have on our financial position and results of operations, we do not expect it to
have a material impact on our cash flows. Statement 123R permits us to adopt its
requirements using one of two methods:

      -     A  "modified  prospective"  method  in  which  compensation  cost is
            recognized for all share-based  payments granted after the effective
            date and for all awards granted to employees  prior to the effective
            date that remain unvested on the effective date.

      -     A "modified retrospective" method which includes the requirements of
            the modified prospective method described above, but also permits us
            to  restate,  based  on  the  amounts  previously  recognized  under
            Statement  123 for  purposes  of pro  forma  disclosures,  all prior
            periods presented.

We  plan  to  adopt  Statement  123R on  January  1,  2006  using  the  modified
prospective  method.  The impact of adoption of SFAS 123R cannot be predicted at
this time because it will depend on levels of  share-based  payments  granted in
the future.  However,  had we adopted SFAS 123R in prior periods,  the impact of
that standard would have approximated the impact of SFAS 123 as described in the
disclosure  of proforma  net income and  earnings  per share in Note 2.19 to the
consolidated financial statements included in this annual report.

      In  December  2004,  FASB issued SFAS No. 153  "Exchanges  of  nonmonetary
assets".  This statement is an amendment of Account  Principles  Board (which we
refer to as APB) Opinion No. 29, "Accounting for nonmonetary transactions". This
statement is based on the principle that exchanges of nonmonetary  assets should
be measured at the fair value of the assets  exchanged  and provides  exceptions
for exchanges of nonmonetary assets that are not of commercial  substance.  SFAS
No. 153 is effective for nonmonetary asset exchanges occurring in fiscal periods
beginning  after June 15, 2005.  The adoption of this statement did not have any
material effect on our financial position and results of operations.

      In May 2005,  FASB  issued  SFAS No.  154,  "Accounting  changes and error
corrections". This statement is a replacement of APB Opinion No. 20, "Accounting
changes"  and FASB No. 3,  "Reporting  accounting  changes in interim  financial
statements".  SFAS No. 154 provides guidance on the accounting for and reporting
of  accounting  changes and error  corrections.  Statement  154 is effective for
accounting  changes and  corrections  of errors made in fiscal  years  beginning
after December 15, 2005. We are in the process of assessing the impact that this
statement will have on our financial  position and results of operations.  We do
not  expect  the  adoption  of  SFAS  154  to  have  a  material  impact  on our
consolidated balance sheet or statement of operations.

      In June 2005, the Emerging  Issues Task Force,  which we refer to as EITF,
reached a  consensus  on EITF 05-6,  "Determining  the  amortization  period for
leasehold  improvements".   EITF  05-6  clarifies  that  leasehold  improvements
acquired in a business  combination or purchased  subsequent to the inception of
the lease should be amortized over the lesser of the useful life of the asset or
the lease term that includes  reasonably assured lease renewals as determined on
the date of the acquisition of the leasehold  improvement.  The guidance in this
consensus should be applied prospectively for leasehold improvements acquired in
periods  beginning  after July 1, 2005.  The adoption of this  statement did not
have any material impact on our financial position or results of operations.

      In November 2005,  FASB issued FASB Staff  Position  (which we refer to as
FSP) FAS 115-1 and FAS 124-1 "The meaning of other than temporary impairment and
its application to certain investments". This FSP addresses the determination as
to when an investment is considered  impaired,  whether that impairment is other
than  temporary,  and the  measurement  of an  impairment  loss.  This  FSP also
includes  accounting   considerations   subsequent  to  the  recognition  of  an
other-than-temporary   impairment  and  certain   required   disclosures   about
unrealized  losses  that  have  not  been  recognized  as   other-than-temporary
impairments.  The  guidance  in this FSP is to be applied to  reporting  periods
beginning after December 15, 2005. We are in the process of assessing the impact
that this FSP will have on our financial position and results of operations.  No
material impact is expected on our cash flows from the adoption of this FSP.


                                       27
<PAGE>

RESULTS OF OPERATIONS

      Our  financial  statements  contained in this report have been prepared in
accordance with U.S. GAAP. When comparing performance between years, however, we
also discuss certain non-GAAP financial measures such as the impact that foreign
currency rate changes,  acquisitions/  dispositions  and organic  growth have on
reported results.

Explanation of Key Line Items

      Net  revenues.  Substantially  all of our revenue is derived from fees and
commissions for advertising and communication  services and for the planning and
purchase of media. Revenues are presented net of amounts that our clients pay to
us to cover costs that are incurred on their behalf with third parties,  such as
for the purchase of  television  and radio time or print  advertising  space and
production costs.

      Compensation and related costs. Our compensation costs consist principally
of  salaries,  bonuses and  benefits  to  employees.  Compensation  costs do not
include  stock-based  compensation.  Compensation  costs  also  do  not  include
earn-out or buy-out payments made or accrued to employees who were  shareholders
of  businesses  we  acquired.  See  "--Compensation  to former  shareholders  of
acquired  businesses"  below,  as well  as Note  2.23  and  Note 12 to our  2005
consolidated  financial  statement included in this annual report.  Compensation
costs  include,  however,  all  other  compensation  paid  or  payable  to  such
individuals.

      Compensation  to former  shareholders  of acquired  businesses.  This item
consists of earn-out and buy-out  payments made or accrued to employees who were
shareholders  of  businesses  we acquired,  to the extent that such payments are
conditioned on the continued employment of those employees.

      Goodwill and other intangible impairment. Beginning on January 1, 2002, in
accordance with the provisions of SFAS No. 142,  "Goodwill and Other  Intangible
Assets," we no longer amortize goodwill or excess basis related to equity-method
investments, but rather we test these assets at least annually for impairment by
comparing  the fair value of the  reporting  units over their  carrying  values.
Since 2002, we have been applying SFAS No. 144,  "Accounting  for the Impairment
or Disposal of Long-Lived  Assets," to the other intangibles which require us to
review the intangibles for impairment whenever events or circumstances  indicate
their carrying values may not be recoverable.  Therefore,  since 2002, this item
consists  of the  goodwill  impairment  charge as  determined  at the end of the
period as well as the other intangible impairment charge.

      Discontinued  Operations.  In accordance with SFAS No. 144, the results of
operations of the businesses we sold or disposed of as of December 31, 2004 have
been reported as "Discontinued" in the current and prior periods.

      Restructuring  and other charges.  These charges are  associated  with our
reorganization   and  worldwide   restructuring   plan  in  2003  and  our  2001
restructuring  plan,  and  consist  primarily  of employee  severance  and other
personnel-related costs in connection with employee terminations,  occupancy and
facilities-related  costs in connection with asset write-downs and other charges
related  primarily to lease  abandonment,  lease  terminations  and related exit
costs. See Note 2.22 to our 2005 consolidated  financial  statements included in
this annual report.


                                       28
<PAGE>

Results of Operations

      The following  table  summarizes  certain  financial  information  for our
company:

<TABLE>
<CAPTION>
                                                                                            (In (euro) million, except
                                                                                                 per share amounts)
                                                                                     --------------------------------------
                                                                                      2005             2004            2003
                                                                                     ------          ------          ------
<S>                                                                                  <C>             <C>             <C>
Net revenues ...............................................................          1,461           1,449           1,525
Operating expenses:
   Compensation and related costs ..........................................           (911)           (865)           (974)
   Stock-based compensation ................................................            (13)             (8)             (5)
   General and administrative non-payroll costs ............................           (395)           (416)           (433)
   Compensation to former shareholders of acquired businesses ..............             (1)             (3)             (3)
   Amortization of intangible assets (2) ...................................            (26)            (29)            (31)

<CAPTION>
                                                                                            (In (euro) million, except
                                                                                                 per share amounts)
                                                                                     --------------------------------------
                                                                                      2005             2004            2003
                                                                                     ------          ------          ------
<S>                                                                                  <C>             <C>             <C>
   Goodwill and other intangible impairment ................................             --              --            (100)
   Restructuring and other charges .........................................             --             (16)            (98)
   Total operating expenses ................................................         (1,346)         (1,337)         (1,644)
Operating income (loss) ....................................................            115             112            (119)
   Interest expense ........................................................            (43)            (71)            (78)
   Interest income .........................................................             15              16              28
   Exchange rate gain (loss) ...............................................             --               3              (9)
   Net gain on trading securities ..........................................              3               7               9
   Other ...................................................................             (2)             (7)            (53)
Financial expense-net ......................................................            (27)            (52)           (103)
Income (loss) from operations before income tax ............................             88              60            (222)
   Provision for income tax ................................................            (19)             (3)           (108)
   Minority interests ......................................................            (10)             (8)             (5)
   Equity in earnings of investees .........................................             (4)              1               1
Income (loss) from continuing operations ...................................             55              50            (334)
Loss from discontinued operations (net of tax) .............................             --             (17)            (89)
Net income (loss) ..........................................................             55              33            (423)
Per common share income (loss) from continuing operations, basic (1) .......           0.13            0.15           (1.05)
Per common share income (loss) from continuing operations, diluted (1) .....           0.13            0.14           (1.05)
Per common share basic and diluted income (loss) from discontinued
operations (1) .............................................................             --           (0.05)          (0.28)
Per common share basic and diluted net income (loss) .......................           0.13            0.10           (1.33)
</TABLE>

----------
(1)   2003  earnings  per  share  have  been  adjusted  by a factor  of  0.93254
      following  the issue of  preferential  subscription  rights on October 19,
      2004.

(2)   Corresponds  solely to the amortization of intangible assets in connection
      with a business combination.

      The following are some of the key factors that drove our financial results
in 2005:

      Operating Income (loss)

      o     Organic net revenue  increase,  primarily  as a result of  increased
            demand  for  our  advertising  and  communications  services  by our
            clients,  although  pressure  on fee  and  commission  rates  by our
            clients continued;

      o     The  increase  in 2005 in revenue was  partially  offset by one time
            charges,  leading to a stable  operating  income in 2005 compared to
            2004.

      Financial expense (net)

      o     Interest expense  decrease,  primarily due to the rights offering we
            initiated  in  October  2004,  the  proceeds  of which we applied to
            repurchase  a portion of our OCEANEs  due  January 1, 2006,  thereby
            reducing our interest expense in 2005.

      Provision for income tax

      o     Provision  for income tax  increase,  primarily  due to a higher net
            profit before tax in 2005 compared to 2004, thus generating a higher
            tax charge in 2005.


                                       29
<PAGE>

NET REVENUES

      We offer advertising and communications services in more than 70 countries
through our agencies located throughout Europe,  North America, the Asia-Pacific
region  and Latin  America,  and  through  contractual  affiliations  with other
agencies in a number of  countries.  The  following  analysis  provides  further
detail on revenue:

2005 vs. 2004

      Our net revenues were (euro)1,460.7  million for 2005, an increase of 0.8%
compared with (euro)1,448.6 million for 2004. While our revenues were relatively
stable,  they were  negatively  affected by the loss of revenues from  companies
that  we  sold  or  discontinued  in  connection  with  the   restructuring  and
reorganization  completed in 2004. Excluding the effects of changes in the scope
of  consolidation,  such  as  acquisitions  and  disposals  (a net  decrease  of
(euro)33.0  million)  and  currency  fluctuations  (a net  increase of (euro)9.7
million,  due  primarily to the  strengthening  of the British  pound and the US
dollar against the euro), our net revenues increased by (euro)35.4  million,  or
2.5% on an organic  basis.  Organic  growth is calculated by  calculating  total
growth and adjusting for currency fluctuations with respect to the euro, as well
as acquisitions and disposals of consolidated companies.

      The following table sets forth a geographic  breakdown of our revenues for
2005 and 2004. In preparing the table, we have allocated revenues to the country
or region of the subsidiary realizing the revenues.

<TABLE>
<CAPTION>
                                                                         2005          2004
                                                                         % of           % of
                                   Region(1)                             Total          Total
--------------------------------------------------------------          -------       --------
<S>                                                                        <C>           <C>
North America.................................................              40%           40%
Europe (excluding France and the United Kingdom)..............              20%           18%
France........................................................              20%           21%
United Kingdom................................................              12%           13%
Asia Pacific region...........................................               4%            4%
Latin America.................................................               4%            4%
TOTAL.........................................................             100%          100%
</TABLE>

----------
(1)   Because our revenues from the Middle East and Africa  represent  less than
      1% of our total revenues,  our geographic  breakdown of revenues currently
      includes,  and historically has included,  revenues in the western part of
      the Middle  East and in Africa with those of Europe,  and  revenues in the
      eastern part of the Middle East with those of the Asia-Pacific region.

      As in  2004,  North  America,  Europe  (excluding  France  and the  United
Kingdom)  and  France  remained  our three  most  important  regions in terms of
revenue  in 2005.  Both  France and North  America  reported  slightly  positive
organic growth while organic growth in Europe  (excluding  France and the United
Kingdom)  and Latin  America  increased  sharply.  This  strong  performance  in
revenues was partly offset by declining organic growth in the United Kingdom and
in Asia-Pacific.

2004 vs. 2003

      Our net  revenues  were  (euro)1,448.6  million for 2004, a decrease of 5%
compared with (euro)1,525.1  million for 2003. Our revenues were impacted by the
U.S.  dollar's  continued decline against the euro which was partially offset by
increased  demand for advertising and  communications  services in many regions,
reflecting  the  improved  global  economic  conditions  in  most  of our  major
geographic markets. Excluding the currency effect, our revenues decreased by 1%.
Excluding  the  effects  of  changes  in the  scope  of  consolidation,  such as
acquisitions  and  dispositions  (a net  decrease  of  (euro)52.8  million)  and
currency  fluctuations (a net decrease of (euro)61.7 million),  our net revenues
increased by (euro)38 million, or 2.7% on an organic basis.

      The following table sets forth a geographic  breakdown of our revenues for
2004 and 2003. In preparing the table, we have allocated revenues to the country
or region of the subsidiary realizing the revenues.


                                       30
<PAGE>

<TABLE>
<CAPTION>
                                                                                          2004           2003
                                                                                          % of           % of
                                   Region(1)                                             Total          Total
--------------------------------------------------------------------------------        -------        -------
<S>                                                                                       <C>            <C>
North America...................................................................          40%            42%
Europe (excluding France and the United Kingdom)................................          18%            17%
France..........................................................................          21%            17%
United Kingdom..................................................................          13%            16%
Asia Pacific region.............................................................           4%             4%
Latin America...................................................................           4%             4%
TOTAL...........................................................................          100%           100%
</TABLE>

----------
(1)   Because our revenues from the Middle East and Africa  represent  less than
      1% of our total revenues,  our geographic  breakdown of revenues currently
      includes,  and historically has included,  revenues in the western part of
      the Middle  East and in Africa with those of Europe,  and  revenues in the
      eastern part of the Middle East with those of the Asia-Pacific region.

      As in  2003,  North  America,  Europe  (excluding  France  and the  United
Kingdom) and France remained our most important  regions in terms of revenues in
2004. In France, our business activities performed well over the year, primarily
due to significant new business wins in 2004. In both Europe  (excluding  France
and the United  Kingdom) and the United  States,  organic growth during 2004 was
slightly  positive,  although  within  Europe  (excluding  France and the United
Kingdom)  organic growth was strongly  positive.  This performance was partially
off-set by a substantial  decline in organic  growth in the United  Kingdom.  In
Latin America and the Asia-Pacific  region,  organic growth remained strong.  In
the aggregate, 2004 organic growth reflected a better than expected performance,
primarily  at Arnold  Worldwide  Partners  (which  posted a record  year for new
business), at Media Planning Group, and in the healthcare and marketing services
sectors at Euro RSCG.

OPERATING EXPENSES

      Our 2005  operating  expenses  increased  (euro)8.5  million,  or 0.6%, to
(euro)1,345.5   million   compared   to   (euro)1,337.0   million  in  2004  and
(euro)1,643.9  million in 2003. The increase is mainly attributable to the costs
associated  with the  departure of the Chief  Executive  Officer in June 2005 as
well as provisions for departure of certain other managers,  which was partially
offset by a decrease  in  restructuring  charges  compared  to 2004 and  certain
capital gains recognized in 2005 on the sale of assets.

      Our 2004 operating expenses  decreased  (euro)306.9  million,  or 18.7% to
(euro)1,337.0  million in 2004 from (euro)1,643.9 million in 2003. Our operating
expenses  compared with 2003 were impacted  primarily by the absence of goodwill
and  other   intangible   impairment  in  2004,  a   significant   reduction  of
restructuring charges in 2004 compared with 2003, the effects of staff reduction
in late  2003  and  early  2004 in  connection  with the  implementation  of the
organization  and  restructuring  plan to  reduce  our cost  structure,  and the
decline in the U.S. dollar against the euro.

Compensation and Related Costs and Stock-Based Compensation

      In 2005, our compensation  and related costs and stock-based  compensation
amounted to  approximately  63.2% of revenue,  compared with 60.3% of revenue in
2004. Compensation and related costs and stock-based compensation increased as a
percentage  of  revenue  as a result  of one time  expenses  recognized  in 2005
primarily in connection with management changes.

      2005 vs. 2004

      In 2005,  our  expenses  relating to  compensation  and related  costs and
stock-based  compensation were (euro)923.7 million, an increase of 5.8% compared
with (euro)873.0  million for 2004. This increase was primarily  attributable to
the cost associated with the departure of the former Chief Executive  Officer in
June 2005 as well as provisions  for the departure of certain other managers for
a total amount of (euro)20.7 million and redundancy costs in connection with the
losses of the Intel and Volkswagen accounts that were effective in 2005.

      2004 vs. 2003

      In 2004,  our  expenses  relating to  compensation  and related  costs and
stock-based  compensation were (euro)873.0 million, a decrease of 10.8% compared
with (euro)978.7  million for 2003. This decrease was primarily


                                       31
<PAGE>

attributable   to  staff   reductions  in  late  2003  in  connection  with  the
implementation of the  reorganization  and restructuring plan to reduce our cost
structure and to the effects of currency  translation for (euro)37.5 million. As
a  percentage  of  revenue,  compensation  and  related  costs  and  stock-based
compensation was 60.3% for 2004 compared with 64.2% for 2003.

General and Administrative Non-Payroll Costs

      2005 vs. 2004

      General and administrative  non-payroll costs were (euro)395.0 million for
2005, a decrease of 5.1%  compared with  (euro)416.1  million for 2004. In 2005,
general and administrative  non-payroll costs include a total gain of (euro)11.4
million related to both the disposal of two buildings in Spain and the sale of a
minority  owned  subsidiary  in the  UK.  Expressed  as a  percentage  of  total
revenues,  general  and  administrative  non-payroll  costs  were 27.0% for 2005
compared with 28.7% for 2004.

      2004 vs. 2003

      General and administrative  non-payroll costs were (euro)416.1 million for
2004,  a decrease of 4.0%  compared  with  (euro)433.4  million  for 2003.  This
decrease was attributable to the effects of currency  translation for (euro)23.2
million  partially offset by an overall  increase in general and  administrative
non-payroll  costs (including  (euro)5.3  million in fees in connection with the
preparation  of our  unsuccessful  offer and related  financing  to acquire Grey
Global Group in September  2004.  Expressed as a percentage  of total  revenues,
general and  administrative  non-payroll costs were 28.7% for 2004 compared with
28.4% for 2003.

Compensation to Former Shareholders of Acquired Businesses

      Compensation to former  shareholders of acquired  businesses was (euro)1.4
million for 2005,  compared to (euro)3.4  million for 2004 and (euro)2.5 million
for 2003.

Amortization of Intangible Assets

      Amortization  of  intangible  assets  was  (euro)25.8   million  in  2005,
(euro)28.9 million in 2004 and (euro)31.1 million in 2003.

Goodwill and Other Intangible Impairment

      No goodwill  and other  intangible  impairments  were  recorded in 2005 or
2004. We recorded goodwill and other intangible impairment of (euro)99.8 million
for 2003.

Restructuring and Other Charges

      During the third and fourth  quarters  of 2003 and  continuing  into early
2004, we implemented a  restructuring  plan,  primarily in the United States and
the United Kingdom,  to reduce costs through headcount reduction and real estate
restructuring. For 2003, we recorded approximately (euro)92.4 million in pre-tax
restructuring  and  other  charges  relating  to this  worldwide  restructuring,
including  (euro)37.8  million to restructure our real estate lease  obligations
and (euro)39.3  million to reduce our headcount by  approximately  1,150.  As of
December 31, 2005 and 2004, reserves associated with this restructuring  program
were (euro)21.3 million and (euro)37.8 million, respectively.

      Personnel  positions  were  eliminated or identified  for  elimination  by
December  31,  2003.  A remaining  reserve  balance of  approximately  (euro)1.4
million as of December 31, 2005 million reflects costs relating to severance and
other termination benefits to be settled in 2006.

      The  remaining  balance in occupancy  and  facilities-related  reserves of
(euro)19.5  million at December 31, 2005  (compared to (euro)33.9  million as of
December 31, 2004)  relates to  non-cancelable  lease  commitments  in excess of
estimated  sublease  income for abandoned  facilities that will be paid out over
the  remaining  lease  periods,  ranging  from one to eight years.  In 2004,  we
recorded  an  additional  expense of  (euro)15.2  million  corresponding  to the
completion  of the plan (the  space was  identified  to be  vacated  but not yet
vacant at December 31, 2003).  We also recorded  income of (euro)4.5  million in
2004 due to a 2004 decision to sublease to some of our subsidiaries  part of the
UK space left  vacant at December  31,  2003.  In 2005,  the changes in original


                                       32
<PAGE>

estimate  were  offset by a reversal  of the  provision  as a result of sublease
agreements negotiated on terms that are more favorable than originally expected.

FINANCIAL EXPENSE, NET

Other

      Our net  financial  expense  amounted to  (euro)27.7  million for the year
ended  December  31,  2005,  compared to  (euro)51.8  million for the year ended
December 31, 2004.  The decrease in our financial  expenses in 2005 is primarily
due to the rights  offering we initiated in October 2004,  the proceeds of which
we applied to  repurchase a portion of our OCEANEs due January 1, 2006,  thereby
reducing our interest expense in 2005. During December 2004, we re-purchased and
cancelled  a total of  17,570,404  of these  bonds,  paying an average  price of
(euro)25.17  per bond for a total  purchase price of  approximately  (euro)442.3
million.  As a result,  we recorded a loss of (euro)8.7 million in 2004 which is
reflected  as  "Other  financial  expense"  in  the  accompanying   consolidated
statements  of  operations.  As of December 31, 2005,  the  aggregate  amount of
outstanding 2006 OCEANEs amounted to (euro)220.9 million, comprising (euro)219.1
million in  principal  and  (euro)1.8  million in interest.  These  OCEANEs were
redeemed at maturity on January 1, 2006.

      In December  2003,  at a general  meeting of holders of the 4% OCEANEs due
January 1, 2009,  the  holders  approved  the  payment by us of  (euro)1.20  per
OCEANE,  payable in cash in a single installment on January 1, 2004, in exchange
for a waiver of the  option  they had to cause us to redeem  the  OCEANEs at its
nominal value plus accrued interest on January 1, 2006, which we refer to as the
"put". Our total expense  amounted to (euro)51.1  million,  including  (euro)0.9
million in consulting fees which are reflected as "other  financial  expense" in
the 2003  consolidated  statements of operations.  Based on the Emerging  Issues
Task Force, which we refer to as EITF,  consensus on issue no. 96-19,  "Debtor's
Accounting for a Modification or Exchange of Debt  Instruments,"  this operation
has been  accounted  for in  accordance  with  paragraph  16 of  statement  125,
resulting  in a  (euro)10.7  million  loss  which is also  reflected  as  "Other
financial  expense"  in the 2003  consolidated  statements  of  operations.  The
aggregate  amount of these  OCEANEs  outstanding  at December  31, 2005 and 2004
amounted to (euro)471.5 million and (euro)472.6 million, respectively, comprised
of  (euro)453.5  million and  (euro)454.6  million,  respectively  in  aggregate
principal and (euro)18 million in interest for both years.

OTHER ITEMS

Provision for Income Tax

      Provision for income tax was  (euro)18.8  million for 2005,  compared with
(euro)2.5 million for 2004. The increase was primarily  attributable to a higher
net profit before tax in 2005,  thus generating a higher tax charge in 2005. The
2004 tax charge was very low due to the  recognition  of deferred  tax assets in
some countries that were not recorded previously.

      Provision  for income tax was  (euro)2.5  million for 2004,  compared with
(euro)107.6  million for 2003.  The decrease was primarily  attributable  to the
much lower valuation  allowance  recorded in 2004 ((euro)30.1  million) compared
with the substantial valuation allowance recorded in 2003 ((euro)164.2 million).

Minority interests

      Minority  interests  were  (euro)9.7  million  for  2005,   compared  with
(euro)8.5 million for 2004.  Minority interests were (euro)8.5 million for 2004,
compared  with   (euro)5.5   million  for  2003.   This  increase  is  primarily
attributable to the increase in earnings in 2004 compared with 2003.

LIQUIDITY AND CAPITAL RESOURCES

      At  December  31,  2005,  cash  and cash  equivalents  and  highly  liquid
investments  amounted to (euro)602.8 million, an increase of 12.8% from December
31,  2004 of  (euro)534.2  million.  Our total  debt at  December  31,  2005 was
(euro)971.6  million, an increase of 21.0% compared to total debt of (euro)803.2
million at December  31,  2004.  Both the increase in our total debt and cash is
primarily  attributable  to the  drawdown  of a credit  line  ("Club  Deal") for
(euro)100  million  in  December  2005  (out of a total  capacity  of  (euro)150
million) to finance the  redemption  of the  2000/2006  OCEANEs that was made on
January 1, 2006.

      We collect  funds from  clients  to pay for  media,  production  and other
third-party  expenses incurred on behalf of our clients.  As a result,  our cash
receipts and disbursements substantially exceed our net revenue


                                       33
<PAGE>

related to these  activities.  The working  capital amounts shown on our balance
sheet and the cash flows from operating  activities reflect these "pass-through"
of expenses.

      Our primary sources of funds in 2005 were cash from operating  activities,
the sale of two  buildings,  the disposal by our holding  company of some of its
treasury shares and the disposal of certain  subsidiaries.  In addition,  at the
end of December  2005,  we drew down  (euro)100  million of a (euro)150  million
credit facility in order to finance the redemption of our OCEANEs due January 1,
2006.

      In addition to the redemption of our convertible  bonds,  our primary uses
of cash were to finance general corporate needs,  including capital  expenditure
requirements,  dividend  payments and earn-out and buy-out  payments  related to
prior acquisitions.

      We believe that net cash provided by operating  activities  and additional
borrowing under existing bank facilities,  complemented if necessary through the
renewal of such facilities or the  establishment  of additional bank facilities,
will be sufficient to meet our present liquidity needs,  including  repayment of
short-term credit facilities, working capital requirements, capital expenditures
and payment of dividends.

Operating activities

      Our net cash provided by operating  activities was  (euro)(42.2)  million,
(euro)123.2  million and  (euro)176.5  million for the years ended  December 31,
2005, 2004 and 2003, respectively.

      2005 vs. 2004

      Negative  cash  provided by  operating  activities  in 2005 was  primarily
attributable  to  exceptional  events  which had the  effect of  increasing  our
working   capital   requirements  in  2005  and  reducing  our  working  capital
requirements  in 2004.  The media  business  generates  large cash  flows  which
significantly exceed revenues from the business. For example, a cash position at
a given  date  does not  necessarily  correspond  to an  average  cash  position
observed over a year. In 2005, cash provided by operating activities represented
a negative  (euro)162.8  million  variation  from working  capital  requirements
compared to an excess amount of (euro)86.1  million in 2004.  This difference in
variations  from working  capital  requirements  is explained by one-time events
which, on the one hand,  favored the cash flow requirements at December 31, 2004
and, on the other hand, exacerbated cash flow requirements at December 31, 2005.
The one-time  nature of this change is confirmed by a nearly stable  average net
debt between 2004 and 2005.

      2004 vs. 2003

      The  decrease  in 2004 was  primarily  attributable  to the portion of the
payments made in connection  with our  repurchases of our 1% OCEANEs due January
1, 2006 considered to be interest  repayments,  corresponding to accrued premium
and  interest  at  the  repurchase   date,  and  the  cash  impact  in  2004  of
restructuring  charges taken in 2003, partially offset by higher earnings levels
in 2004 resulting from improved global market conditions compared with 2003.

Investing activities

      We  have  pursued   acquisitions   in  the  past,  and  intend  to  pursue
acquisitions in the future,  some of which could be significant,  to enhance our
capabilities   and  expand  our  geographic   reach.  We  generally  fund  these
acquisitions using our shares, cash or a combination of both.

      Net  cash  provided  by  investing  activities  was  (euro)181.4  million,
(euro)130.3 million and (euro)11.5 million in 2005, 2004 and 2003, respectively.

      2005 vs. 2004

      Cash provided by investing  activities  increased in 2005 compared to 2004
due primarily to the decrease in earn- out and buy- out payments.  Proceeds from
disposals of fixed  assets rose sharply due to the disposal of two  buildings in
Spain for an amount of  (euro)17.6  million.  Conversely,  proceeds from sale of
subsidiaries  fell considerably due to the disposals of companies carried out as
part of the restructuring  plan in 2004.  Proceeds from the sale of subsidiaries
in 2005  exclusively  concerned  the  disposal  of an  entity in which we held a
minority interest in the United Kingdom for an amount of (euro)11.5 million.

      2004 vs. 2003


                                       34
<PAGE>

      Cash provided by investing  activities  increased in 2004 due primarily to
the sale of substantial highly liquid  investments  partially offset by earn-out
and  buy-out  payments  related  to  prior   acquisitions.   The  proceeds  from
divestitures in connection with the reorganization  were offset by the cash used
for the capital expenditures.

Financing activities

      Net cash  provided by financing  activities  was  (euro)140.3  million for
2005,  while net cash used in  financing  activities  amounted to  (euro)(176.6)
million and (euro)(175.4) million for 2004 and 2003, respectively.

      2005 vs. 2004

      In 2005, we drew down (euro)100.0  million from a (euro)150.0 million bank
facility in order to finance the  redemption  of the balance of our  outstanding
OCEANEs due January 1, 2006.

      2004 vs. 2003

      The  significant  amount of cash used to re-purchase and cancel a total of
17,570,404  of our 1% OCEANEs due January 1, 2006 in December 2004 was partially
offset by significant cash generated by our rights offering in October 2004.

      At December 31, 2005,  total financial debt,  which consists of bank debt,
obligations  under our two outstanding  series of OCEANEs and capitalized  lease
obligations,  was (euro)971.6  million,  an increase of (euro)168.4 million from
(euro)803.2  million  at  December  31,  2004.  This  total  financial  debt was
comprised  of:

      o     (euro)692.4  million aggregate  principal amount and accrued premium
            and interest under our OCEANEs;

      o     (euro)129.9 million in long-term borrowings; and

      o     (euro)149.3 million in short-term borrowings.

      Approximately  95% of our financial debt  outstanding at December 31, 2005
was denominated in euro, 3% was denominated in U.S. dollars,  1% was denominated
in British pounds and 1% was denominated in other currencies.

      Convertible and/or exchangeable bonds (OCEANEs)

      At December  31, 2005,  we had a total of  (euro)692.4  million  aggregate
principal  amount and accrued  premium and interest under our unsecured  OCEANEs
outstanding,  comprised of (euro)220.9  million  aggregate  principal amount and
accrued  premium and interest  under our 1% OCEANEs  issued in December 2000 and
(euro)471.5 million aggregate principal amount and interest under our 4% OCEANEs
issued in May 2002.

      In February  1999, we issued  1,223,405  unsecured  OCEANEs due January 1,
2004, each with a nominal value of (euro)188,  for an aggregate principal amount
at issuance of  (euro)230.0  million.  We received net  proceeds of  (euro)225.3
million from this issuance. We paid (euro)89.4 million to redeem the outstanding
OCEANEs at their maturity on January 1, 2004.

      In December 2000, we issued 32,817,012 OCEANEs,  each with a nominal value
of  (euro)21.60,  for an aggregate  principal  amount at issuance of (euro)708.9
million. We received net proceeds of (euro)694.9 million from this issuance.  In
December  2004,  we  re-purchased  and  cancelled a total of 17,570,404 of these
OCEANEs,  and during 2003,  we  re-purchased  and  cancelled  5,290,000 of these
OCEANEs.  The maturity date of the OCEANEs was January 1, 2006, at which time we
redeemed the remaining  8,610,951 OCEANEs for a total of (euro)219.1  million in
aggregate principal.

      On May 22,  2002,  we issued  41,860,465  unsecured  OCEANEs,  each with a
nominal value of  (euro)10.75,  for an aggregate  principal  amount of (euro)450
million. We received net proceeds of approximately (euro)443.5 million from this
issuance.  The coupon rate of the OCEANEs is 4.0% per annum, payable annually in
arrears  on  January 1 of each year,  beginning  January 1, 2003,  and the gross
yield to maturity also is 4.0% per annum, assuming no conversion,  redemption or
re-purchase  occurs prior to maturity.  The implicit  interest  rate,  including
issue costs, is 4.26% per annum.  The OCEANEs have a maturity date of January 1,
2009.  Each  OCEANE  currently is  exercisable  at any time at the option of the
holder for 1.13 Havas shares,  subject to specified  anti-dilution  adjustments,
which exercise may, at our option,  be a conversion for newly issued shares,  an
exchange for treasury shares or a combination thereof. In accordance with French
law, the conversion/exchange ratio has been adjusted from 1 to


                                       35
<PAGE>

1.02 to 1.035 and then to 1.047 due to the  distribution of a portion of paid-in
capital in connection with our payment of our annual dividend to shareholders on
June 11, 2002, June 18, 2003 and June 17, 2004, respectively, from 1.047 to 1.13
due to our rights offering in October 2004 and from 1.13 to 1.147 as a result of
the  distribution of a portion of paid-in capital in connection with our payment
of our annual dividend to shareholders on June 14, 2005. For a discussion of the
future  distribution  of  paid-in-capital  in  connection  with our  payment  of
dividends  to  shareholders,  see  "Item  8.  Financial  Information  --Dividend
Policy".  The OCEANEs have a redemption value at maturity equal to their nominal
value.  We have the  option  to  redeem  all,  but not  less  than  all,  of the
outstanding  OCEANEs  between  January 1, 2005 and  December  31,  2008 at their
nominal   value   plus   accrued   interest   if  the   product   of   (1)   the
conversion/exchange  ratio and (2) the arithmetic  mean of the closing prices of
Havas  shares on the  Eurolist by Euronext  during 20  consecutive  trading days
chosen by us from among the  40-trading  day period  preceding  publication of a
notice of early redemption, exceeds 125% of the nominal value of the OCEANEs. We
also have the option to redeem  all,  but not less than all,  of the  OCEANEs at
their nominal value plus accrued  interest at any time when less than 10% of the
OCEANEs issued remain outstanding.  In connection with this issuance,  we agreed
not to give any other bonds any preference  over the bonds,  or reduce our share
capital or alter the way we allocate  profits.  As of  December  31,  2005,  930
OCEANEs  had been  converted  into our  shares.  As of December  31,  2005,  our
remaining (euro)471.5 million aggregate principal amount and accrued interest on
these OCEANEs was comprised of (euro)453.5 million in aggregate principal amount
and (euro)18.0 million in accrued interest through that date.

      In  December  2003,  at a general  meeting of holders of the  OCEANEs  due
January 1, 2009,  the  holders  approved  the  payment by us of  (euro)1.20  per
OCEANE,  payable in cash in a single installment on January 1, 2004, in exchange
for a waiver of the  option  they had to cause us to redeem  the  OCEANEs at its
nominal value plus accrued interest on January 1, 2006, which we refer to as the
"put". Our total expense  amounted to (euro)51.1  million,  including  (euro)0.9
million in consulting fees, which are reflected as "Other financial  expense" in
our 2003 consolidated  statements of operations.  Based on the EITF consensus on
issue No. 96-19,  "Debtor's  Accounting for a  Modification  or Exchange of Debt
Instruments,"  this operation was accounted for in accordance  with paragraph 16
of statement 125,  resulting in a (euro)10.7 million loss which was reflected as
"Other financial expense" in our 2003 consolidated statements of operations.

      For a discussion  of our OCEANEs as of December  31, 2005,  see Note 11 to
our 2005 consolidated financial statements contained in this annual report.

      Long-term borrowings

      As of December 31, 2005 and 2004, we had outstanding  long-term borrowings
of  (euro)129.9  million and  (euro)34.2  million,  respectively.  The  weighted
average  interest  rate on  these  long-term  borrowings  was  3.8%  and 4.2% at
December 31, 2005 and 2004,  respectively.  Of the total  outstanding  long-term
borrowings  at December  31, 2005,  (euro)79.6  million was due within one year,
(euro)50.2  million was due in 2007 and (euro)0.1  million was due after January
1,  2010.  (euro)4.2  million  of the  outstanding  long-term  borrowings  as of
December 31, 2005 bore  interest at fixed rates,  and  (euro)125.7  million bore
interest at variable rates.

      In June 1999, one of our indirect, wholly owned subsidiaries,  Havas North
America,  Inc.,  formerly EWDB North  America,  Inc.,  borrowed $30 million from
Banque  Nationale de Paris,  New York Branch.  In connection  with this loan, we
agreed to deposit with Banque Nationale de Paris,  New York Branch,  $30 million
to allow Havas North America to borrow the funds.  The loan bears  interest at a
rate equal to the London Inter-bank  Offered Rate, or LIBOR, plus a margin.  The
deposit  earns  interest at a rate of LIBOR less a margin.  The deposit and loan
mature simultaneously in six equal annual installments from June 4, 2001 through
June 5, 2006 and the  borrowing  and  collateral  deposit  have  therefore  been
reduced to $5 million at December 31, 2005.  In order to hedge the currency risk
with  respect to our U.S.  dollar  deposit,  we also entered into a currency and
interest  rate swap  arrangement,  which we refer to as  "CIRCUS,"  with  Banque
Nationale de Paris.  The CIRCUS has the effect of  transforming  our U.S. dollar
deposit  of $5  million  into a euro  deposit of  (euro)4.8  million  that earns
interest at the European Inter-bank Offered Rate, or EURIBOR, less a margin. The
maturities  of the  CIRCUS  are  identical  to those of the  deposit in terms of
dates,  currency and amounts.  As of December 31, 2005,  we recorded an exchange
rate loss on the CIRCUS in the amount of (euro)1.6 million, and an exchange rate
gain on the deposit in the amount of (euro)1.7 million. As of December 31, 2004,
we  recorded  an  exchange  rate gain on the CIRCUS in the  amount of  (euro)2.2
million  and an  exchange  rate loss on the  deposit in the amount of  (euro)2.2
million.

      On January 19, 2000, one of our indirect, wholly owned subsidiaries, Havas
UK plc, formerly Evelink plc, issued a (pound)40.0 million unsecured convertible
bond due July 19, 2007 to Banque  Nationale de Paris S.A. This  convertible bond
bears interest at a rate of 7.6% per annum and is convertible,  at the option of
the holder,  at any time from  January 19,  2000  through  January 19, 2007 into
117,131  ordinary  shares  of  Havas  UK,  subject  to


                                       36
<PAGE>

specified anti-dilution  adjustments.  In conjunction with the bond issuance, we
guaranteed the obligations of Havas UK under the bond.

      Also on January 19, 2000, Havas UK issued a warrant to Banque Nationale de
Paris S.A.  authorizing  the holder of the warrant,  upon payment of (pound)40.0
million,  to purchase  117,131 Havas UK shares on January 19, 2007. The right to
purchase Havas UK shares under the warrant will lapse if the  conversion  rights
of the  (pound)40.0  million  convertible  bond  issued on January  19, 2000 are
exercised.  In addition, our wholly owned subsidiary,  Havas International S.A.,
formerly Havas  Advertising  International  S.A., and Banque  Nationale de Paris
S.A. (as the initial  holder of the bond) entered into a forward sale  agreement
under which Havas  International paid (pound)25.2 million to Banque Nationale de
Paris S.A. for the future purchase of the Havas UK shares issuable on conversion
of the (pound)40.0  million convertible bond, and Banque Nationale de Paris S.A.
agreed to convert,  or arrange for a third  party to  convert,  the  (pound)40.0
million  convertible  bond into Havas UK shares on January 19, 2007 (or prior to
January 19, 2007 under  specified  circumstances)  and to sell, or arrange for a
third party to sell, those shares to Havas  International.  The number of shares
subject to the forward sale agreement will be determined by dividing (pound)40.0
million by the Havas UK share price on the date Banque  Nationale  de Paris S.A.
sells,  or  arranges  for a third  party to sell,  the  Havas UK shares to Havas
International.

      In 2004,  one of our  German  subsidiaries  made a fixed  cash  deposit of
(euro)3.5 million with an international bank in order to secure fixed term loans
granted  by this bank to certain of our other  subsidiaries  in Germany  for the
same amount and maturity. The deposit has been classified as restricted deposits
under "Other assets" and amounted to (euro)1.2 million as of December 31, 2005.

      In December 2004, we entered into a (euro)150 million floating rate credit
agreement with a pool of banks in France ("Club Deal") consisting of:

      o     a (euro)100  million  amortization  loan,  with a final  maturity on
            November 30, 2007,  dedicated to financing the repurchase and/or the
            redemption of our 1% OCEANEs due January 1, 2006; and

      o     a (euro)50 million  revolving  credit facility,  maturing on October
            31, 2008, dedicated to our general financing needs.

      The amortization loan was drawn down in the amount of (euro)100 million as
of December 31, 2005 in order to finance the  redemption at maturity of our 2000
OCEANEs on January 1, 2006.

      In December 2005, we entered into a (euro)100 million floating rate credit
agreement with one of our regular banking partners.  The agreement has a term of
364 days,  and renews  automatically  each year unless  terminated by one of the
parties.  This credit facility is dedicated for our general corporate  purposes.
This facility was not used in 2005.

      For a discussion of our long-term  borrowings as of December 31, 2005, see
Note 11 to our 2005 consolidated  financial  statements contained in this annual
report.

      Short-term borrowings

      As of December 31, 2005 and 2004, we had  outstanding  (euro)33.7  million
and (euro)29.7 million,  respectively, in short-term borrowing arrangements. The
weighted average interest rate on these short-term  borrowings was 3.4% and 2.7%
at December 31, 2005 and 2004, respectively.

      In  addition,  through  some  of  our  subsidiaries,  we  had  outstanding
(euro)115.6  million and (euro)50.7 million in borrowings under various lines of
credit as of  December  31, 2005 and 2004,  respectively.  These lines of credit
bear  interest  at  the  prevailing   market  rates  in  the  countries  of  the
subsidiaries.  Where required,  we guaranteed the repayment of borrowings by our
subsidiaries.  We had unused  lines of credit  available  under  short-term  and
overdraft borrowing  arrangements of (euro)332.6 million and (euro)152.2 million
at December 31, 2005 and 2004, respectively.

      For a discussion of our short-term borrowings as of December 31, 2005, see
Note 11 to our 2005 consolidated  financial  statements  included in this annual
report.

      Financial covenants

      We and our subsidiaries are subject to various  financial  covenants under
our borrowing  arrangements.  In addition,  we frequently guarantee  significant
loans of our subsidiaries.


                                       37
<PAGE>

      The financial  covenants under our (euro)150  million floating rate credit
agreement,  which are applied to our company on a consolidated basis under IFRS,
include:

      o     a ratio of net debt to earnings before depreciation and amortization
            and share-based  payments of less than an amount between 3.0 and 2.5
            to one depending on the period; and

      o     a  ratio  of  earnings  before  depreciation  and  amortization  and
            share-based  payments to net  financial  expenses of greater than an
            amount between 3.5 and 5.3 to one depending on the period.

      The financial covenants  applicable to our borrowing  subsidiaries,  which
are applied to the applicable subsidiaries' financial statements, include:

      o     A ratio of  earnings  before  interest,  taxes and  amortization  to
            interest expense of greater than three to one;

      o     A ratio of total debt to equity of less than 2.5 to one;

      o     A  ratio  of  earnings  before  interest,  taxes,  depreciation  and
            amortization to interest  expenses of greater than three to one; and

      o     A  ratio  of  total  debt  to  earnings  before   interest,   taxes,
            depreciation and amortization of less than 3.0 to one.

      Under one of our  subsidiaries'  loans,  we are  subject to the  following
financial covenants applied to our company on a consolidated basis under IFRS:

      o     A ratio of net financial debt to equity of less than 1.0 to one.

      At December 31, 2003, we were not in compliance  with financial  covenants
under two credit  facilities,  for an aggregate  principal  amount of (euro)22.6
million and at June 30, 2004, we were not in compliance with financial covenants
under one credit facility for a principal amount of (euro)9.6 million. See "Item
3  --Key  Information--Risk  Factors--A  continuing  default  under  our  credit
facilities  could result in the  acceleration  of payment  under  various of our
borrowings."  However, the credit facility banks waived any default with respect
to the noncompliance.

      As of  December  31,  2005  and  2004,  we and  our  subsidiaries  were in
compliance  with  all  financial  covenants  related  to all  of the  borrowings
described above.

Lease obligations

      We lease premises and equipment  under both capital and operating  leases.
As of December 31, 2005 assets held under capital leases were (euro)1.6 million,
and  (euro)5.1  million as of  December  31,  2004.  Net rental  expense for all
operating leases was (euro)102.0  million,  (euro)101.6  million and (euro)106.7
million in 2005, 2004 and 2003, respectively.

      In 2005,  we entered into a sale and leaseback  transaction  regarding two
buildings  located in Madrid and  Barcelona  used for some of the  businesses of
MPG. These  transactions have been qualified for sales  recognition  pursuant to
FAS 98 and have been  accounted  for using  sale-leaseback  accounting.  The two
buildings  were sold for a total amount of  (euro)17.6  million (net of costs to
sell) resulting in a gain of (euro)8.0  million,  of which (euro)4.4  million is
reflected as "General and administrative  non-payroll costs" in the accompanying
consolidated  statement of operations.  An amount of (euro)3.6  million has been
deferred  over the  remaining  lease terms.  We will  continue to use the leased
properties for our business for the term of the lease, which ends June 30, 2010,
with the  ability  to extend  for two  additional  five-year  periods.  Our rent
payment  commitments for the first five-year period amount to (euro)5.4  million
(which is subject to an annual  increase based on the General  National Index of
the System of Prices to consumption).  In case of renewal of the lease after the
first five-year period, the rent will be adjusted according to market rent every
five years.

      For a discussion  of our lease  obligations  as of December 31, 2005,  see
Note 18 to our 2005 consolidated  financial  statements  included in this annual
report.


                                       38
<PAGE>

Share and bond repurchases

      In the first half of 2005,  we disposed of 3,861,325 of our own shares for
an aggregate sales price of (euro)16.8  million,  generating a loss of (euro)9.6
million.  11,720 of these treasury shares were used to pay a portion of the 2004
board fees to our directors.  We repurchased 27,600 and 104,400 of our shares in
the open market in 2004 and 2003, respectively.  The aggregate purchase price of
these  shares was  (euro)0.1  million  and  (euro)0.4  million in 2004 and 2003,
respectively. In 2004, we used 19,878 of our treasury shares to pay a portion of
the 2003 board fees to our directors, and we used 188,268 of our treasury shares
to pay a portion of the purchase  price of two small  acquisitions.  In 2003, we
sold  89,400 of our  treasury  shares in the open market for an  aggregate  sale
price of (euro)0.4 million.

      On January 1, 2006, we redeemed at maturity our outstanding OCEANEs for an
aggregate amount in principal and accrued interest of (euro)220.9 million.

      In December 2004, we  re-purchased  and cancelled a total of 17,570,404 of
our 1%  OCEANEs,  maturing  on  January 1,  2006.  We paid an  average  price of
(euro)25.17  per bond for a total  purchase price of  approximately  (euro)442.3
million. These OCEANEs were convertible into a total of 19,854,557 shares at the
conversion exchange ratio of 1 to 1.13 in effect on December 31, 2004.

      In 2003, we repurchased in the secondary market and cancelled 5,290,000 of
these bonds. We paid an aggregate purchase price of (euro)109.7  million.  These
OCEANEs  were  convertible  into a total of 5,475,150  shares at the  conversion
exchange ratio of 1 to 1.035 in effect on December 31, 2003.

      Our  future  repurchases  of bonds  or  shares,  if any,  will  depend  on
prevailing market conditions, our liquidity requirements, applicable contractual
restrictions and other factors. The amounts involved may be material.

Other

      We may declare dividends upon the recommendation of our board of directors
and the approval of our shareholders at their annual general meeting.  Under the
French  Commercial  Code, a company's  right to pay dividends is limited in some
circumstances.  Our board of directors will propose to the shareholders' meeting
to be held on June 12, 2006 to pay a dividend  in respect of 2005 of  (euro)0.03
per share.

      At  our  annual  meeting  of  shareholders  held  on  June  9,  2005,  our
shareholders  approved a  resolution,  among  others,  to  authorize  a dividend
payment of  (euro)0.07  per share.  This amount  reflects both the gross and net
dividend  since the French  avoir  fiscal tax credit was phased out in 2004.  We
paid the dividend to shareholders on or about June 14, 2005.  Under the terms of
the  anti-dilution  provisions  of our two  series of  OCEANEs,  the  applicable
conversion/exchange  ratio was adjusted as of that date to reflect the component
of the dividend  payment that  represents a distribution of a portion of paid-in
capital.  In addition,  under the terms of the  anti-dilution  provisions of our
option plans, the number of options and exercise prices for outstanding  options
under our plans were  adjusted  on that date to  reflect  the  component  of the
dividend payment that represents a distribution of a portion of paid-in capital.
In the  future,  we  also  may  submit  for  the  approval  of our  shareholders
resolutions to authorize  dividend  payments that represent  distributions  of a
portion of paid-in capital.

      In 2004, we paid a dividend of (euro)0.075 per share, of which  (euro)0.05
represents the net dividend and  (euro)0.025  represents the French avoir fiscal
tax credit.  In 2003,  we paid a dividend  of  (euro)0.135  per share,  of which
(euro)0.09  represented the net dividend and (euro)0.045  represented the French
avoir fiscal tax credit.

      The changes in our dividends over the last several years  corresponds with
our Board's  policy of adjusting  our dividend in relation to the results of our
operations  and the  pay-out  ratios (the  amount of  dividends  compared to net
earnings  before  goodwill  amortization)  and yields (the  amount of  dividends
compared to the share price on the last day of the previous  fiscal year) of our
principal competitors.

Treasury policies

      Our  policy is for our  subsidiaries  worldwide  to hold  cash and  highly
liquid investments in the currency of their principal operating expenses.

      Where permitted by applicable law,  preference is given to holding cash in
interest bearing accounts that offer returns in line with monetary indices.


                                       39
<PAGE>

      Our  policy  is  to  implement   cash  pooling   arrangements   among  our
subsidiaries  in the  countries  in which the size of our  operations  justifies
these  arrangements.  These  pooling  arrangements  are  intended to reduce bank
financing and optimize interest income in these countries.

      For a discussion  of our use of derivative  securities in connection  with
foreign  currency and interest rate risk as of December 31, 2005,  see "Item 11.
Quantitative  and Qualitative  Disclosure  About Market Risk" and Note 20 to our
2005 consolidated financial statements included in this annual report.

Material commitments for capital expenditures

      The Company  had not entered  into any  material  commitments  for capital
expenditures as of December 31, 2005.

Trend Information

      In 2005, no major changes occurred in the communications consulting market
in terms of the main players.

      Media advertising spending is estimated at $404 billion for 2005 worldwide
(source: ZenithOptimedia press release of December 5, 2005).

      This  market is shared by the media  (television,  radio,  print,  display
media, cinema, internet, and new media),  communications consulting agencies and
all stakeholders in the production of advertising campaigns,  such as actors and
models, directors, producers and photographers.

      The  communications  consulting  market is broken down by major  region as
follows (according to ZenithOptimedia):

         -----------------------------------------------------------
         North America:                                         43%
         -----------------------------------------------------------
         Europe:                                                27%
         -----------------------------------------------------------
         Asia - Pacific:                                        20%
         -----------------------------------------------------------
         South America:                                          5%
         -----------------------------------------------------------
         Africa/Middle East/Rest of the world:                   5%
         -----------------------------------------------------------
         Total:                                                100%
         -----------------------------------------------------------

      ZenithOptimedia  anticipates  advertising  spending  growth in the  global
media market of 5.9% in 2006, following estimated growth of 4.8% in 2005. Growth
in the world's leading market is expected once again to accelerate with a growth
of 5.1% expected in North America  following  growth of 3.0% in 2005 and 6.1% in
2004.  Europe is expected to follow  this trend with 4.6%  estimated  growth for
2006.  The rest of the world is a expected  to act as a growth  driver with 6.0%
growth  expected  in Asia  Pacific  which now  represents  20% of  global  media
advertising  expenditure,  8.1% growth in Latin America and 16.3% growth for the
rest of the  world.  According  to  estimates  from  ZenithOptimedia,  marketing
services  totaled $414  billion in 2005,  slightly  more than media  advertising
expenditure  alone.  According  to  ZenithOptimedia,  the growth of this  market
should be identical to that of media advertising expenditure alone.

      Revenues of communications consulting agencies is becoming less correlated
with  overall  growth  in media  advertising  spending.  With  respect  to media
investments,  agency  revenues are more  structured on fees than on commissions,
with the  exception of media buying  which  generally  continues to operate on a
commission  basis.  Fees are by their  nature a more  stable  source of revenues
(whether  increasing  or  decreasing)  than  commissions  directly tied to media
investment.  At the same time, a growing proportion of communications consulting
revenues is generated from marketing services.

      With revenues of (euro)1,461 million for the year ended December 31, 2005,
we ranked 6th worldwide among leading communications consulting firms, according
the annual reports filed by our principal competitors.


                                       40
<PAGE>

Contractual obligations

Commercial commitments

      The following table summarizes our commercial  commitments at December 31,
2005:

<TABLE>
<CAPTION>
           Commercial
 Commitments Given (in (euro)
            million)
                                                   Less than                                         More than
                                      Total         1 year          1-3 years        3-5 years        5 years
<S>                                    <C>            <C>              <C>              <C>             <C>
Security for media space buying         11             2                8               --                1

Marketing rights                        14             6                6                2               --

Guarantees related to business
disposed of                             65            --               --               43               22

Other commitments                      119             6                1               --              112

Total                                  209            14               15               45              135
</TABLE>

      Security for media space buying. In certain countries, particularly in the
United Kingdom and Asia, media space buying  operations  carried out by agencies
are  guaranteed  by the parent  company,  as  required by local  practices.  The
security provided is reflected in the table.

      Marketing rights.  Marketing rights reflects commitments related to one of
our subsidiaries that acquires exclusive  marketing rights from soccer clubs for
periods  generally  ranging from one to seven  years,  and then  re-sells  those
rights to sponsors.  These  marketing  right  agreements  typically  provide for
payments to be made on a monthly  basis during the  exclusive  marketing  rights
period.  At  December  31,  2005,  the  aggregate  amount  payable  under  these
agreements was (euro)6.4  million,  and our subsidiary had received  commitments
from sponsors for (euro)4.1 million.

      Guarantees  related to business  disposed of. In connection with our sales
of companies and businesses,  including sales as part of the  reorganization  in
2004, we have given  representations and warranties to the purchasers  regarding
the sold  companies and  businesses  and agreed to indemnify  the  purchasers in
certain  circumstances.  The amounts indicated in the table reflect our estimate
of the  maximum  indemnification  obligations  under the  terms of the  relevant
agreements.  The  indemnification  obligations in these agreements are generally
capped at the  amount of the  applicable  sales  price  and  limited  in time to
between one and two years following the date of sale,  except for certain topics
such as tax risks which generally extend for the relevant statute of limitations
period  (for  example,  seven years in the United  Kingdom).  As a result of the
extended duration of the indemnification obligations related to these sales, the
majority of these indemnification  obligations have been classified as more than
5 years.

      Other  commitments.  In order  to allow  our  subsidiaries  in the  United
Kingdom to use electronic  banking payment systems,  we were required to provide
guarantees to certain banks in an aggregate amount of (euro)108.4 million.


                                       41
<PAGE>

Other contractual obligations and off balance-sheet arrangements

      The table below sets forth our other  contractual  obligations,  including
off-balance sheet arrangements, as of December 31, 2005:


<TABLE>
<CAPTION>
Payments due per period                                   Less than                                    More than
(in (euro) million)                            Total        1 year      1-3 years        3-5 years      5 years
-------------------------------------        -------      --------      ---------        ---------     ---------
<S>                                           <C>             <C>           <C>             <C>             <C>
OCEANEs                                         692           240             2             450              --
Long-term borrowings                            129            79            50              --              --
Other financial debt                              8             6             1              --               1
Stock option plans                               59             7             7              45              --
Operating leases                                497            95           153             113             136
Additional payments ("Earn-out")                 12             9             3              --              --
Purchase of minority interests                   69            44            23               2              --
Indemnity for conscience clause                  12            12            --              --              --
Total                                         1,478           492           239             610             137
</TABLE>

      Estimated  obligations  under  earn-outs/buy-outs.   As  noted  above,  in
connection with business  combinations,  we typically enter into agreements with
some or all of the selling  shareholders  or the selling entity that provide for
future  "earn-out"  payments and, in the case of partial  acquisitions,  put and
call "buy-out"  payments.  The earn-out and buy-out payments are generally based
upon a formula  using a multiple of future  earnings,  with the multiple in some
cases  increasing  when  organic  growth  or   profitability   exceed  specified
thresholds.  In determining the estimated  obligations  under both earn-outs and
buy-outs,  the  applicable  earn-out or buy-out  formula has been applied to the
latest  available  earnings data or estimates.  The payment date for our buy-out
obligations has been assumed to be the date the applicable buy-out put provision
can first be exercised, or in less than one year if the buy-out obligation first
becomes  exercisable  when the minority  shareholder  leaves our employ.  We can
provide no assurance,  however,  that these  estimated  obligations  will not be
exceeded in any specified period.

      Stock option plan obligations, Some of our subsidiaries have granted stock
options to some of their  employees  with respect to the stock of the applicable
subsidiary.  In some  cases the strike  price is based on a multiple  of current
earnings of the subsidiary at the award date (the "Multiple").  Such options are
generally  exercisable  five to seven  years  after the award  date and  require
continuing employment. The parent companies of such subsidiaries have the option
to buy back the shares if and when  acquired by the  employees and the employees
have the option to put these shares to such parent companies.  The buyback price
is  generally  based  upon the  Multiple  applied to the  earnings  level of the
subsidiary  when the option is exercised.  The employees are required to put the
shares to such parent  companies when they leave the subsidiary.  In determining
the  estimated  obligations  under  these stock  option  plans,  the  applicable
multiple has been applied to the latest available earnings data or estimates.

      In some other  cases,  both  exercise  price and  repurchase  price by the
parent  company  are  determined  at fair  market  value and the  employees  are
required to keep the issued shares during a six months, minimum period after the
options are exercised.  The estimated obligations under these stock option plans
have been determined using the fair market value at the closing date.

      On September 29, 2004,  104,733 options were also granted to subscribe for
shares of its subsidiary  Euro RSCG SA to 35 managers and employees of Euro RSCG
SA  Group.  These  options  will be  exercisable  under  certain  conditions  of
performance and the continuing  employment of the beneficiaries over the vesting
period,  and will be either  vested  partly in  September  2008 or  entirely  in
September 2009. The beneficiaries undertook to sell to Havas SA, and Havas SA to
buy the Euro RSCG SA shares  issued when  options are  exercised in exchange for
Havas SA shares for an  equivalent  value of Euro RSCG SA shares  issued.  Under
U.S.  GAAP,  such plans are  performance  plans and variable plan  accounting is
required.  Accordingly, the Company makes an interim measurement of compensation
at the end of each period based upon the most recent available earnings data and
allocates  such costs to  expenses  over the period  from award date to exercise
date.

      These purchase  agreements were signed on June 8, 2005, the day before the
Company's  shareholders  annual  meeting  on June 9,  2005,  where they were not
brought up. On March 10, 2006, the Board of Directors was informed of this plan.
The Board of Directors shall re-examine their provisions in 2006.

      Today,  assuming the  forecasted  performances  of Euro RSCG SA Group from
2006 to 2008 are in line with those  achieved in 2005, we estimate the number of
Havas SA shares to be  exchanged,  net of  subscription


                                       42
<PAGE>

exercise price, would amount to approximately  (euro)45 million.  This amount is
likely to vary  depending on the rate of revenue,  organic  growth and operating
margin achieved in the financial years 2006 to 2008. If the average performances
of organic growth and average  operating  margin were to decrease one percentage
point,  compared to the estimates used in the assumptions  set forth above,  the
amount to be paid could amount to (euro)25  million.  On the  contrary,  if such
rates were to increase one  percentage  point  compared to the estimates used in
the assumptions set forth above,  the amount to be paid could amount to (euro)56
million.  A mechanism is implemented  for limiting the payment to  approximately
one-third of the cumulative  operating margin of the Euro RSCG SA group over the
period from 2004 to 2008. These options are accounted for according to APB25.

      OCEANEs. OCEANEs reflects the aggregate principal amount outstanding as of
December 31, 2005 under our OCEANEs,  together with accrued premium and interest
on these bonds through maturity, assuming no conversion,  exchange or repurchase
from January 1, 2005  through  maturity.  As our 2000  OCEANEs were  redeemed at
maturity  on  January  1,  2006,  obligations  relating  to these  bonds are not
reflected in the above table.

      Conscience  clauses.  The  employment  contract for one of our  executives
includes a "Conscience  clause" that may be exercised until December 21, 2006 in
the event of the departure of the former Chairman and Chief  Executive  Officer.
Exercising this clause would entitle the executive to compensation  equal to his
contractual severance pay, amounting to approximately (euro)3 million.

      In addition,  eleven of our  managers  similarly  benefit from  conscience
clauses that they may exercise within a period of three to six months  following
the  departure  of their  division's  managing  director.  These  clauses  grant
managers  the right to  receive  compensation  equal to the amount to which they
would be  entitled  in the  event of a  severance  commitment.  If these  eleven
managers  were to exercise  their rights under these  conscience  clauses in the
event of the departure of their division's  managing director,  the total amount
of compensation due to them would amount to approximately (euro)9 million.

      To the knowledge of our group's  executives who are contesting their legal
value, there are no other conscience clauses.

Future cash needs

      To meet  short-term  liquidity  needs (less than one year),  a significant
amount  of cash  (602.8  million),  is  available,  as well  as  undrawn  credit
facilities totaling 150.0 million at December 31, 2005.

      In  making  this  determination,  we  have  taken  into  account  expected
near-term  uses  of  cash,  including  working  capital,   capital  expenditures
(including  acquisitions),  debt service,  contractual  obligations and dividend
payments.  In  addition,  we expect to be able to renew  our  existing  lines of
credit or enter into new lines of credit if necessary.

      We will be required to pay (euro)468  million when our 2002 OCEANEs mature
on January 1, 2009,  assuming no  conversion,  exchange or  repurchase  prior to
maturity.  We  redeemed  our 2000  OCEANEs at maturity on January 1, 2006 for an
aggregate amount of (euro)219.1 million.

Continuing interest in WCRS Limited

      On April 1, 2004,  we sold an indirect  75.1%  interest in WCRS Limited to
the management of WCRS Limited and other investors. We retained a 24.9% interest
in WCRS, which was accounted for using the equity method until November 2005, on
which date we sold our remaining 24.9% interest.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

Our board of directors

      In  accordance  with French  law,  our affairs are managed by our board of
directors and a chief  executive  officer,  who has full authority to manage our
affairs and has broad powers to act on our behalf within our  corporate  purpose
and to represent us in dealings with third  parties,  subject only to the powers
expressly  reserved to our board of  directors or our  shareholders  by law, our
bylaws or by decision of our board of directors or our  shareholders.  See "Item
10B Additional Information--Memorandum and Articles of Association".

      Under our bylaws, our board of directors must consist of between three and
18 directors. The board of directors appoints a chairman from among its members,
who is responsible  for organizing  and directing the board's  proceedings.  Our
board of directors currently consists of 16 directors.  At our annual meeting of
shareholders  held on June 9, 2005,  Mr. Thierry Meyer was not re-elected to our
board and Mrs. Laurence  Parisot(1) and Mr. Pierre Bouchut and the four nominees
proposed by Bollore Medias Investissements (Bollore


                                       43
<PAGE>

Investissement,  represented  by Mr.  Cedric de  Bailliencourt,  Bollore  Medias
Investissements,  represented  by Mr. Marc Bebon,  Mr.  Vincent  Bollore and Mr.
Thierry  Marraud)  were  elected to our  board.  Our  bylaws  provide  that each
director is elected for a term of three years,  and is eligible for  re-election
when the term  expires.  The board of  directors  has the power to  appoint  and
remove the chairman and chief executive officer at any time.

(1)   Pursuant to a letter  dated June 8, 2006 and  received by Havas on June 9,
      2006,  Laurence  Parisot  announced  her  resignation  from  the  Board of
      Directors.

      There  are  no  family  relationships  among  our  executive  officers  or
directors,  other than with respect to Leopoldo Rodes Castane, who is the father
of Fernando Rodes Vila, and with respect to Cedric de Bailliencourt,  who is the
nephew of Vincent  Bollore.  Mr. Vincent  Bollore  indirectly  controls  Bollore
Group, Bollore Investissement and Bollore Medias Investissements. According to a
Schedule 13D (Amendment No. 6) filed with the Securities and Exchange Commission
on January 18, 2006, Bollore  Investissement  indirectly controls Bollore Medias
Investissements.   See  "Item  7  -  Major   Shareholders   and  Related   Party
Transactions."

      Set forth in the table below is  information  regarding the members of our
board of directors as of the date hereof.

<TABLE>
<CAPTION>
                                                                                                  Term Expires
                                                                                                    (date of
                                                                                      Director    shareholders'
        Name           Age        Principal Occupation          Business address        Since       meeting)
-----------------------------------------------------------------------------------------------------------------
<S>                     <C>  <C>                            <C>                         <C>           <C>
Mr. Vincent Bollore     54      Chairman of the Board of      Tour Bollore, 31/32,      2005          2008
                                       Directors              quai de Dion Bouton
                                                                  92800 Puteaux
-----------------------------------------------------------------------------------------------------------------
Mr. Jacques Seguela     72        Vice-President Chief       2, allee de Longchamp      1992          2008
                                 Creative Officer Chief          92150 Suresnes
                              Communication Officer Havas

 Mr. Ed Eskandarian     69      Vice-President Chairman      101 Huntington avenue      2000          2007
                                Chief Executive Officer      Boston MA 02199 (USA)
                               Arnold Worldwide Partners

 Mr. Fernando Rodes     45      Chief Executive Officer      2, allee de Longchamp      2001          2006
        Vila                                                     92150 Suresnes

   Mr. Cedric de        36    Permanent representative of     Tour Bollore, 31/32       2005          2008
   Bailliencourt                 Bollore Investissement       quai de Dion Bouton
                                                                   92800 Puteaux
   Mr. Marc Bebon       58    Permanent representative of     Tour Bollore, 31/32,      2005          2008
                                     Bollore Medias           quai de Dion Bouton
                                    Investissements              92 800 Puteaux

 Mr. Pierre Bouchut     50     Chief Financial Officer of     43-45, bld Franklin       2005          2008
                                    Schneider Group                Roosevelt
                                                             92500 Rueil Malmaison

     Mr. Michel         60    Vice-President of Gallimard   5, rue Sebastien Bottin     1997          2008
 Boutinard Rouelle                       Group                    75007 Paris

 Mr. Richard Colker     60     Managing Partner, Colker,         6 Pelham Place         1995          2006
                                     Gelardin & Co           London SW72NH (United
                                                                    Kingdom)

 Mr. Pierre Lescure     60     Chairman and CEO Anna Rose      c/o Endemol France       1994          2007
                                       Production              10, rue Torricelli
                                                                  75017 Paris
</TABLE>


                                       44
<PAGE>

<TABLE>
<CAPTION>
                                                                                                  Term Expires
                                                                                                    (date of
                                                                                      Director    shareholders'
        Name           Age        Principal Occupation          Business address        Since       meeting)
-----------------------------------------------------------------------------------------------------------------
<S>                     <C>   <C>                           <C>                         <C>           <C>
Mr. Thierry Marraud     64     Chief Financial Officer of     Tour Bollore, 31/32,      2005          2008
                                     Bollore Group            quai de Dion Bouton
                                                                   92800 Puteaux

   Mrs. Laurence        46       Chairman of the Medef       6-8, rue Eugene Oudine     2005          2008
      Parisot(1)                    Chairman of IFOP              75013 Paris

    M. Alain de         60        Chairman of the CFII       9, rue Maurice Mallet      1989          2006
     Pouzilhac                      management board             92798 Issy les
                                                                Moulineaux Cedex

 Mr. Leopoldo Rodes     71     Chairman of the MPG Board       Escoles Pies 118,        2001          2007
      Castane                        of Directors           08017 Barcelona (Spain)

Mr. Patrick Soulard     54       Deputy Chief Executive         17, cours Valmy         1999          2007
                               Officer of the Investment       Paris la Defense 7
                               Banking Division, Societe      Valmy 92972 Paris La
                                        Generale                 Defense Cedex

 Mr. Clement Vaturi     65    Permanent representative of      119, rue de Paris        1988          2007
                                    Societe Centrale             92100 Boulogne
                               Immobiliere et Fonciere -
                                         SOCIF
</TABLE>

(1)   Pursuant to a letter  dated June 8, 2006 and  received by Havas on June 9,
      2006,  Laurence  Parisot  announced  her  resignation  from  the  Board of
      Directors.

The following directors' and officers' terms have come to an end:

Mr. Alain  Cayzac,  director,  resigned from the Board of Directors on March 10,
2006. He served as our Chief Communications Officer until December 31, 2005.

Mr.  Jacques Herail served as Executive  Vice-President  until June 21, 2005 and
the Group's Chief Financial Officer until November 25, 2005.

Mr.  Thierry Meyer served as director from 1995 to 2005.  From 1995 to 2002, Mr.
Meyer  served as a director of several  multinational  companies,  mainly in the
communications sector.

Mr. Jacques Mayoux, who had served as a director since 1988, resigned on January
20,  2006.  Mr.  Mayoux is Vice  Chairman of Goldman  Sachs  Europe and Honorary
Chairman of Societe Generale.

Mr. Alain de Pouzilhac served as our Chairman and Chief Executive  Officer until
June 21, 2005.  Mr. de Pouzilhac  indicated  that he did not wish to propose the
renewal  of  his   appointment   to  the  board  of  directors  at  the  general
shareholders' meeting convened on June 12, 2006.

Mr.  Philippe Wahl served as our Chief  Executive  Officer from July 12, 2005 to
March 10, 2006.

The  following  are summary  biographies  of each of the members of our board of
directors and our principal executive officers:

      o     Vincent Bollore
            Director since June 2005,  Chairman of the Board of Directors  since
            July 12, 2005.
            Mr.  Vincent  Bollore,  industrialist,  is  Chairman of the Board of
            Directors of Bollore  Investissement  and Financiere de l'Odet,  and
            Chairman and CEO of Bollore SA. He is a director of Natexis  Banques
            Populaires,  Vallourec, Mediobanca, Generali France and also advisor
            to Banque de France.


                                       45
<PAGE>

      o     Jacques Seguela
            Director since June 1992.
            Jacques Seguela, who holds a Ph.D. in Pharmacy,  began his career as
            a reporter  for Paris  Match,  then for  France  Soir.  In 1969,  he
            created  RSCG,  which  merged with Eurocom in 1992 to form Euro RSCG
            Worldwide,  today known as Havas, where he became Vice-President and
            Chief  Creative  Officer.  He is the  author  of  numerous  books on
            advertising  and has been involved in political  campaigns in France
            and abroad.

      o     Ed Eskandarian
            Director since September 2000.
            A graduate of Villanova  and Harvard  Universities,  Ed  Eskandarian
            began his career as a scientist with NASA. In 1971, he became Senior
            Vice-President  of  the  Humphrey  Browning  MacDougall  advertising
            agency where he was  appointed  Chairman  and CEO in 1981.  When the
            agency was acquired by  London-based  WCRS,  he became  Chairman and
            Chief Executive of the new entity. In 1990, he decided to launch his
            own  communications  agency and acquired  Arnold & Co. He joined the
            Havas group in 2000 following the  acquisition  of Snyder,  becoming
            Chairman and Chief  Executive  Officer of the new  division,  Arnold
            Worldwide Partners.

      o     Fernando Rodes Vila
            Director  since January 2001,  Chief  Executive  Officer since March
            2006.
            After earning an economics degree from U.C. Berkeley, Fernando Rodes
            Vila began his career in finance in the capital  markets  department
            of Manufacturers  Hanover Trust. In 1988, he joined Banco Espanol de
            Credito.  Appointed Chief Executive  Officer of Media Planning SA in
            1994,  he,  along with his brother  Alfonso and the  managing  team,
            helped to build the company into the leading  media agency in Spain,
            Portugal and Latin America.  When Media Planning SA joined the Havas
            Group in 1999 to form  the  Media  Planning  Group  (MPG),  Fernando
            became Chief Executive  Officer of the new division.  Fernando Rodes
            Vila was appointed our Chief Executive Officer on March 10, 2006.

      o     Cedric de Bailliencourt
            Permanent  representative  on the  Board  of  Directors  of  Bollore
            Investissement, director since June 2005.
            Mr.  de  Bailliencourt   is  Chief  Executive   Officer  of  Bollore
            Investissement  and of Financiere de l'Odet,  and director of Equity
            Interests and  Communications for the Bollore Group, which he joined
            in 1996.  He is a graduate of the Institut  d'Etudes  Politiques  de
            Bordeaux,   and  holds  a  DESS  degree  in  Political   and  Social
            Communications from the Universite Paris I Sorbonne.

      o     Marc Bebon
            Permanent  representative  on the  Board  of  Directors  of  Bollore
            Investissement, director since June 2005.
            Chairman  of  Bollore  Medias  Investissements,  Marc Bebon is Chief
            Treasury and Financing Officer of Bollore Group,  which he joined in
            1982.

      o     Pierre Bouchut
            Director since June 9, 2005.
            Pierre Bouchut  graduated from the HEC School of Management in Paris
            and holds a masters' degree in applied economic  sciences from Paris
            Dauphine.  In 1979 he began his career with Citibank  Paris and then
            joined Bankers Trust France SA as Vice-President, Corporate Finance.
            In 1988, he became a consultant for Mc Kinsey & Company in the areas
            of Corporate Finance and Integrated Logistics. In 1990, he was hired
            as Chief  Financial  Officer of the Casino  Group,  which he left in
            2005 when he was Director and Chief Executive  Officer.  Mr. Bouchut
            was recently  appointed  Chief  Financial  Officer of the  Schneider
            group.

      o     Michel Boutinard Rouelle
            Director since March 1997.
            A graduate of the Institut  d'Etudes  Politiques  de Paris (IEP) and
            the Ecole Nationale  d'Administration  (ENA), Mr. Boutinard  Rouelle
            began his career in government and public  affairs  before  becoming
            Advisor  to the Prime  Minister  of France  in 1986.  After  joining
            Vivendi Universal Publishing,  a French media group, in 1989, he was
            appointed  Chairman  and Chief  Executive  Officer of its  affiliate
            Havas  Media   Communication   from  1995  to  1999.  He  served  as
            Vice-Chairman  of  the  Executive  Committee  of  Vivendi  Universal
            Publishing in 1997 and 1998. He


                                       46
<PAGE>

            became an  independent  consultant  in 1999,  then from June 2003 to
            September 2005, was  Vice-President in charge of Print media for the
            La Poste group.

      o     Richard Colker
            Director since June 1995.
            A graduate of Michigan  State  University,  Richard Colker began his
            career in 1969 in the Finance  Department of Wells Fargo Bank.  From
            1976 to 1983,  he served as  Vice-President  of Banque de la Societe
            Financiere Europeenne, a French financial institution.  From 1983 to
            1990, he was Managing Director, Investment Banking and member of the
            Management   Committee  of  the   investment   bank  Kidder  Peabody
            International  Ltd., and of two of its affiliates.  He served as our
            Chairman and Chief Executive  Officer from June 21 to July 12, 2005.
            He is  currently  Managing  Partner  of  Colker,  Gelardin  & Co., a
            private investment company.

      o     Pierre Lescure
            Director since June 1994.
            A graduate of the Paris Centre de Formation de Journalistes,  Pierre
            Lescure started his career as a radio journalist. He then moved into
            television,  where he held a  variety  of  positions.  In  1984,  he
            participated  in the launch of  France's  first  private TV channel,
            Canal+,  becoming Chief Executive  Officer in 1986. Then in 1994, he
            was  appointed  Chairman  and CEO of the Canal+  group and, in 2001,
            Chief  Operating  Officer  of  Vivendi  Universal.  He left  Vivendi
            Universal  and the Canal+  group in April  2002.  In November of the
            same  year,  he was  elected  to the Board of  Directors  of Thomson
            Multimedia.  He is currently Chairman and Chief Executive Officer of
            Anna Rose Productions.

      o     Thierry Marraud
            Director since June 2005.
            Thierry Marraud was Chief Financial Officer of Saint-Gobain,  then a
            member of the Executive Committee of Credit Lyonnais (1995-2000) and
            Chairman  of the  Board of  Directors  of  Marsh  S.A.,  the  French
            subsidiary  of Marsh Inc.,  world leader in insurance  brokerage and
            risk  management  (2000-2002).  Thierry  Maraud is  currently  Chief
            Financial Officer of the Bollore Group.

      o     Laurence Parisot
            Director since June 2005.
            Laurence Parisot holds a Masters in Public Law and a DEA (equivalent
            to an M-Phil) in  Politics  and is also a graduate  of the  Institut
            d'Etudes  Politiques  de Paris.  She  began her  career in 1985 as a
            researcher.  In 1986,  she  became  Chief  Executive  Officer of the
            Institut  Louis  Harris  France.   In  addition  to  her  duties  as
            Chairwoman of the French Institute of Public Opinion, a position she
            has held since 1990, Ms. Parisot has served as Chairman of the MEDEF
            (Mouvement des  Entreprises de France) since July 2005, a federation
            of  French  businesses.  Ms.  Parisot  has also been a member of the
            supervisory  board of Eurodisney  SCA since 2000 and of Michelin SCA
            since 2005.

            Pursuant  to a letter  dated June 8, 2006 and  received  by Havas on
            June 9, 2006,  Laurence  Parisot  announced her resignation from the
            Board of Directors.

      o     Alain de Pouzilhac
            Director since June 1989.
            Alain de Pouzilhac  began his career at Publicis  Conseil,  a French
            advertising  company, in 1969 as an Assistant Account Executive.  In
            1970,  he joined  the  French  advertising  company  DDB as  Account
            Executive,  later  becoming  Account  Supervisor.  In  1975,  he was
            appointed Chief Executive Officer of Havas Conseil,  a subsidiary of
            Eurocom  later  named HCM,  then HDM,  becoming  Chairman  and Chief
            Executive  Officer in 1982.  In 1989 he was  appointed  Chairman and
            Chief Executive Officer of Eurocom,  today known as Havas,  where he
            remained  until June 21, 2005.  At the end of 2005, he was appointed
            Chairman of the Management Board of CFII.

      o     Leopoldo Rodes Castane
            Director since May 2001.
            A graduate of Barcelona  University,  Leopoldo Rodes established the
            Tiempo  advertising  agency in 1958 where he served as Chairman  and
            Chief  Executive  Officer until 1984. In 1985, he was named Chairman
            of  "Barcelona   92,"  the   organization   he  founded  to  support
            Barcelona's  bid for the 1992 Summer Olympic Games and he went on to
            become a member of the  Barcelona  Summer  Olympic  Games  executive
            committee  from 1986 to 1992.  From 1994 to 1996, he was a member of
            the  international  advisory board of Repsol, a Spanish oil company,
            and was Vice-Chairman of the Spanish bank Urquijo until 2004.


                                       47
<PAGE>

            In 1978, he became founding Chairman of Media Planning SA, a company
            we acquired in 2001. Since 1999, he has been Chairman of the Spanish
            group Media  Planning  Group.  He is also  Chairman of the  Fundacio
            Museu d'Art Contemporani of Barcelona.

      o     Patrick Soulard
            Director since December 1999.
            A graduate  of the  Institut  d'Etudes  Politiques  de Paris and the
            Ecole Nationale  d'Administration,  Patrick Soulard began his career
            in government,  holding various positions in the Ministry of Finance
            from  1977 to  1986.  In  1986,  he  joined  BNP  where  he held the
            positions of Financial Affairs Director, CEO of Banexi and member of
            the BNP General  Management  Committee.  In 1996, he joined  Societe
            Generale as Senior Banker.  He is currently  Deputy Chief  Operating
            Officer  of  Banque  de  Financement  et  d'investissement   Societe
            Generale.

      o     Clement Vaturi
            Representative of SOCIF, Havas Director since August 1988.
            A graduate of the  Massachusetts  Institute of  Technology,  Clement
            Vaturi has served as Chairman of the Board of  Directors  of Societe
            Immobiliere   Hoteliere  since  1983  and  the  Chairman  and  Chief
            Executive Officer of its subsidiary, SOCIF, since 1984.

Executive committees

      Our executive committee is currently composed of the following members

Mr. Fernando Rodes Vila             Chief Executive Officer
Mr. Jacques Seguela                 Vice-President
Mr. Ed Eskandarian                  Vice-President
Mr. Remi Babinet                    Chief Creative Officer of Euro RSCG
Ms. Mercedes Erra                   Executive Co Chairman of Euro RSCG
Mr. Stephane Fouks                  Executive Co Chairman of Euro RSCG
Mr. David Jones                     Global CEO Euro RSCG
Mr. Herve Philippe                  Chief Financial Officer

Mr.  Vincent  Bollore,  Chairman of the Board,  also attends the meetings of the
executive committee.

      Creative  executive  committee.  This  committee  is made up of our  chief
executive officer,  chief creative officer, chief performance officer, the chief
executive  officers of each of our  divisions,  and the leaders of the  creative
teams in all the categories of our communications  activities.  The existence of
an executive committee  dedicated to creation is an additional  testament to the
importance we place on creativity.  The committee  ensures that the needs of the
creative  teams  are  considered  at the  highest  level of our  company.  It is
invested in the search for new talent,  analyzes both the successes and failures
of the  creative  teams,  judges,  classifies  and  distributes  the  best  work
in-house, and selects the campaigns that will be entered in award competitions.

      Investments committee. The investments committee, created in July 2005, is
responsible  for agreeing on proposed  investments to be made by the group,  and
provides a report to the Board of Directors to this effect.

Our audit committee

      Our board of directors has a standing audit committee.  The purpose of the
audit committee is to:

      o     make recommendations concerning the engagement of independent public
            accountants;

      o     review with our management and  independent  public  accountants the
            plans for,  and scope of, the audit  procedures  to be utilized  and
            results of audits;

      o     approve the professional services provided by the independent public
            accountants;

      o     approve all related  party  transactions;  and

      o     review the adequacy and effectiveness of our internal controls.


                                       48
<PAGE>

      The members of our audit committee are Mr. Pierre Bouchut,  Chairman;  Ms.
Laurence  Parisot,   and  Mr.  Michel  Boutinard  Rouelle,  who  are  considered
"independent"  under  NASDAQ   independence   criteria  as  well  as  under  the
independence  criteria  of the French  report of the  working  group  chaired by
Daniel Bouton,  "Promoting  Better  Corporate  Governance in Listed  Companies,"
which we refer to as the Bouton Report.

      Pursuant to a letter  dated June 8, 2006 and  received by Havas on June 9,
2006, Laurence Parisot announced her resignation from the Board of Directors. As
a result of Ms. Parisot's  resignation,  our Audit Committee  currently does not
meet  the  audit  committee   composition   requirements  set  forth  in  NASDAQ
Marketplace Rule  4350(d)(2),  which requires issuers to have an audit committee
of at least three members.  The Company is currently searching for a replacement
board member to serve on the audit committee.

      In 2005, two members left the audit committee  because they were no longer
considered  "independent"  pursuant to the  independence  criteria of the Bouton
report and NASDAQ:  Mr. Richard Colker, due to his duties as our Chief Executive
Officer,  a position he held from June to July 2005, and Mr. Clement Vaturi, due
to the duration of his position as director. In addition to the three members of
the  audit  committee,  audit  committee  meetings  are  attended  by the  Chief
Executive  Officer,  the  Chief  Financial  Officer,  and those of our legal and
financial  officers  whose presence may be required for purposes of advising the
audit committee. The audit committee met seven times in 2005. In addition to the
publication of the financial statements,  the Committee considered the following
issues:

      - the  completion  of the 2005 Internal  Audit Plan and  discussion of the
2006  Internal  Audit Plan,  a review of  resources  and the 2006 budget for the
Internal Audit;

      - the  progress  of the Helios  project  intended to prepare the Group for
compliance with the  requirements of the French  Financial  Security law and the
Sarbanes Oxley Act (Section 404) regarding internal controls.

      - the monitoring of our compliance with financial covenants in some of our
credit agreements;

      - approval of the missions performed by and a review of the fees allocated
to the auditors;

      - review and approval of transactions with affiliated parties;

      - review of the most  significant  litigation and the provisions set aside
for such litigation; and

      - a review of cases reported through whistleblowing procedures.

Our Compensation and Selection Committee

      By decision  dated March 10, 2006,  the board of directors  terminated the
functions of the Compensation and Selection Committee.

Compensation of Havas SA directors and officers

      Components of compensation  packages.  The compensation  packages of Havas
SA's executive  officers  comprise a fixed salary,  an annual bonus, a long-term
incentive payment (for a minority of executives) and stock options.

      1) Fixed  salary.  Fixed  salaries are  determined  by reference to market
rates of pay for comparable positions.  No salary increases have been awarded to
our executive officers for 2005.

      2)  Annual  bonus.  Annual  bonuses  are  determined  based  primarily  on
quantitative criteria determined in accordance with IFRS, such as:

      o     Operating  margin  (earnings  before  interest,  taxes and  goodwill
            amortization expressed as a percentage of revenue);

      o     Organic growth; and

      o     Cash criterias as free cash flow, and working capital requirements.

      These targets are set at either group or division level,  depending on the
executive's  position in the  organization.  Annual  bonuses are also  partially
based on both quantitative and qualitative non-financial criteria.

      Depending on the executive's  position and the division,  the total annual
bonus, assuming that all the targets are met, represents between 50% and 100% of
the individual's salary. If the targets are exceeded, the bonus may represent up
to a maximum of 200% of base salary.

      3) Long-term Incentive Plan


                                       49
<PAGE>

      Following the departures of Messrs. de Pouzilhac,  Herail and Heekin,  the
long-term   incentive  plan  from  which  these  directors  benefited  has  been
terminated.

      4) Stock options.

      We did not  grant any stock  options  in 2005,  nor did we award any bonus
shares.

      Directors' fees

      As of 2005,  regulatory  changes  limiting  the use of shares  repurchased
under our share buyback program will no longer permit payment of director's fees
with Havas treasury  shares.  Directors' fees are now therefore paid entirely in
cash. In 2005, the distribution of director's fees as approved by the meeting of
the board of directors on March 10, 2006,  amounted to (euro)1,000  per year and
per  director,  and  (euro)5,000  for the Chairman of the Audit  Committee.  Our
employee directors do not receive director's fees.

      The tables below set forth information with respect to gross  compensation
for each of our directors and executive  officers for 2005,  which  includes all
regular  compensation,  benefits in kind and contingent or deferred compensation
accrued in 2005, even if payable at a later date.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
                                                       Variable            Other               Havas
(in euros)                         Base Salary     Compensation     Compensation     Directors' Fees          Total 2005
-------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>              <C>              <C>                    <C>             <C>
Executive Directors
-------------------------------------------------------------------------------------------------------------------------

Jacques Seguela                        450,000          900,000            4,937              N/A              1,354,937
-------------------------------------------------------------------------------------------------------------------------

Ed Eskandarian **                      602,517          321,342           39,314              N/A                963,173
-------------------------------------------------------------------------------------------------------------------------

Fernando Rodes Vila                    600,000        1,155,934          215,531              N/A              1,971,465
-------------------------------------------------------------------------------------------------------------------------

Leopoldo Rodes Castane                 700,000          326,250          283,113              N/A              1,309,363
-------------------------------------------------------------------------------------------------------------------------

Philippe Wahl*                         236,111           56,000            2,383              N/A                294,494
-------------------------------------------------------------------------------------------------------------------------

Subtotal                             2,588,628        2,759,526          545,278                               5,893,432
-------------------------------------------------------------------------------------------------------------------------

Former executive directors
-------------------------------------------------------------------------------------------------------------------------

Alain de Pouzilhac                     471,234       N/A               4,951,718              225              5,423,177
-------------------------------------------------------------------------------------------------------------------------

Alain Cayzac                           446,951       N/A                  41,894              N/A                488,845
-------------------------------------------------------------------------------------------------------------------------

Jacques Herail                         678,553       N/A                  39,818              N/A                718,371
-------------------------------------------------------------------------------------------------------------------------

TOTAL                                4,185,366        2,759,526        5,578,708              225             12,523,825
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Compensation  pro-rated  based on attendance  between July 12 and December 31,
2005.

** Amounts paid in U.S. dollars have been converted to euros at the 2005 average
exchange rate of (euro)1 = $1.2448.


                                       50
<PAGE>

        ------------------------------------------------------------------------
                                       Directors'          Other
                    (in euros)               Fees   Compensation     Total 2005
        ------------------------------------------------------------------------

        Non-executive directors
        ------------------------------------------------------------------------
        Vincent Bollore                      445                            445
        ------------------------------------------------------------------------
        Bollore Investissement               445                            445
        ------------------------------------------------------------------------
        Bollore Media Investissements        445                            445
        ------------------------------------------------------------------------
        Pierre Bouchut                     2,480                          2,480
        ------------------------------------------------------------------------
        Michel Boutinard-Rouelle           1,000                          1,000
        ------------------------------------------------------------------------
        Richard Colker                     3,860          40,000 (1)     43,860
        ------------------------------------------------------------------------
        Pierre Lescure                       670                            670
        ------------------------------------------------------------------------
        Thierry Maraud                       445                            445
        ------------------------------------------------------------------------
        Jacques Mayoux                       445                            445
        ------------------------------------------------------------------------
        Thierry Meyer                        560                            560
        ------------------------------------------------------------------------
        Laurence Parisot(2)                  115                            115
        ------------------------------------------------------------------------
        SOCIF                                890                            890
        ------------------------------------------------------------------------
        Clement Vaturi                        --                             --
        ------------------------------------------------------------------------
        Patrick Soulard                      890                            890
        ------------------------------------------------------------------------
        TOTAL                             12,690          40,000         52,690
        ------------------------------------------------------------------------

----------
(1)   Richard  Colker  served as Chairman and CEO of Havas from June 21, 2005 to
      July 12, 2005, on which date Vincent Bollore was appointed Chairman of the
      Board of Directors and Philippe Wahl was appointed Chief Executive Officer
      of Havas.

(2)   Pursuant to a letter  dated June 8, 2006 and  received by Havas on June 9,
      2006,  Laurence  Parisot  announced  her  resignation  from  the  Board of
      Directors.

      Certain of our  officers  and  directors  benefit  from  special  benefits
pursuant  to their  employment  agreements  with us.  These  are  summarized  as
follows:

      Philippe Wahl.  Philippe Wahl was appointed as our Chief Executive Officer
on July 12, 2005 and ceased his  functions on March 10, 2006.  Mr. Wahl had been
assigned a chauffeur-driven company vehicle.

      Jacques Seguela.  Jacques Seguela had signed a services  agreement with us
which will come into  effect  when he retires.  The  agreement  was valid for 24
months and renewable at our option. Pursuant to this agreement,  Jacques Seguela
would have received fixed fees of (euro)80,000 excluding VAT per quarter as well
as variable fees that may amount to  (euro)128,000  excluding  VAT. Mr.  Seguela
might have also received up to (euro)130,000  for generating new business.  This
agreement  was  terminated  as of  May 4,  2006.  Jacques  Seguela's  employment
agreement also includes a 24-month  non-compete  clause during which he is to be
paid 50% of the  average of the fixed and  variable  compensation  owed by Havas
under the last  calendar  year in which his  agreement  will end.  However,  the
Company  reserves  the right to release Mr.  Seguela from this  obligation  and,
should that occur,  not pay him the  non-compete  indemnity.  Jacques  Seguela's
employment agreement included a conscience clause under which he was entitled to
claim  two years of his total  salary  in the event of a  significant  change in
management  unilaterally  decided  by  the  Company,  including  termination  or
non-renewal  of the office of the Chairman  and CEO of the Company.  This clause
could  have  been  exercised  within  six  months  after the  occurrence  of the
above-mentioned  events. Jacques Seguela did not exercise this conscience clause
following  the  departure  of Alain de  Pouzilhac  from his post as Chairman and
Chief  Executive  Officer.  Mr.  Seguela also benefits  from a  chauffeur-driven
company vehicle.

      Ed  Eskandarian.  Ed Eskandarian  has signed a services  agreement with us
which will come into  effect  when he retires.  This  agreement  is valid for 36
months and  stipulates  compensation  of  $500,000  per year.  In the event of a
breach of his employment agreement, Mr. Eskandarian will be entitled to his full
compensation  until  January 31, 2007,  with a guaranteed  minimum of six months
compensation.  Mr.  Eskandarian's  fringe  benefits  also  include club fees and
payment of supplementary health and disability plans.

      Leopoldo Rodes. In the event of a termination of the employment  agreement
signed  with  Media  Planning  Group,  Leopoldo  Rodes  will be  entitled  to an
indemnity representing two years of his total annual compensation. His agreement
(which is regulated by Spanish law) includes a conscience  clause under which he
can  claim  two  years  of his  total  salary  in the  event of  termination  or
non-renewal  of the duties of Alain de Pouzilhac.  This clause has been extended
to December 31, 2006. His  conscience  clause is also triggered by a significant
change in the  shareholding  of Media  Planning  Group which  would  result in a
replacement  of  management  bodies or a change of its principal  business.  Mr.
Rodes also benefits from a supplementary disability and health plan.


                                       51
<PAGE>

      Fernando Rodes. In the event of a termination of his employment  agreement
with Media  Planning  Group,  Fernando  Rodes will be entitled  to an  indemnity
representing  two  years  of  his  total  annual  compensation.   Following  his
appointment  as our Chief  Executive  Officer on March 10, 2006,  Fernando Rodes
waived in full his conscience clause. In addition, his expatriation expenses are
refunded  in an  amount  of  (euro)75,000  per  year,  and  he  benefits  from a
defined-benefit   supplementary   retirement   plan  to  which   we   contribute
(euro)60,000 per year. Mr. Rodes also benefits from a  chauffeur-driver  company
vehicle.

      Alain de  Pouzilhac.  Alain de Pouzilhac  served as our Chairman and Chief
Executive Officer until June 21, 2005. The line item "Other Compensation" in the
table above  includes  total  indemnities  paid to him at the end of his term of
office in an amount of (euro)4,384,615.  In addition,  Mr. de Pouzilhac signed a
non-compete  agreement  for a  period  of  36  months  as  from  his  departure.
Therefore,  he will receive an overall gross indemnity of  (euro)3,392,000,  and
has already  received a gross  indemnity of  (euro)565,333,  reflected in "Other
Compensation"  in the above table.  The Company has set aside provisions for the
outstanding  balance of  (euro)2,826,667  (reflecting a gross up to cover social
charges the company  will be required  to pay on the  indemnity).  Finally,  Mr.
Pouzilhac cashed out a supplementary  retirement plan we established in 1978 and
in respect of which we stopped paying contributions as from January 1, 1992.

      Alain Cayzac.  Alain Cayzac's employment  agreement terminated on December
28, 2005. He remained one of our directors  until his  resignation  on March 10,
2006. Mr.Cayzac signed a non-compete agreement for a period of 24 months as from
his departure. Accordingly, Alain Cayzac will receive an overall gross indemnity
of  (euro)924,000.  Since the payments for this indemnity began in January 2006,
they have not been  recorded in "Other  Compensation"  in the table  above.  The
Company  has set  aside  provisions  for this  indemnity  (increased  by  social
security  contributions).  An amount equal to  (euro)37,500  set forth in "Other
Compensation"  in the table above  corresponds  to the payment of statutory paid
leave.  The  circumstances  relating to the  termination  of Mr. Alain  Cayzac's
employment  are  the  subject  of  litigation.  Please  see  "Item  8A7 -- Legal
Proceedings".

      Jacques Herail.  Jacques Herail served as Executive  Vice-President  until
June 21, 2005.  He also served as Chief  Financial  Officer  until  November 25,
2005.  In the  table  above,  (euro)34,511  of the  amount  recorded  in  "Other
Compensation"  corresponds to payment of statutory paid leave. The circumstances
relating to the departure of Mr.  Jacques  Herail are the subject of litigation.
Please see "Item 8A7 -- Legal Proceedings".

      In addition to contributions to defined contribution  retirement plans, as
of December 31, 2005, amounts accrued for retirement or similar benefits for our
directors and executive officers totaled (euro)1.6 million.

      Options of Executive Officers of Havas Exercised in 2005

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
                              Number of options      Purchase or      Issuing           Exercise
         Optionees                exercised         Subscription      Company            Price             Plan
-----------------------------------------------------------------------------------------------------------------
<S>                                <C>              <C>                <C>            <C>               <C>
Alain de Pouzilhac                 796,848            Purchase         Havas          (euro)4.05        06/19/1997
-----------------------------------------------------------------------------------------------------------------
Alain de Pouzilhac                 109,690          Subscription       Havas          (euro)3.67        07/04/2003
-----------------------------------------------------------------------------------------------------------------
</TABLE>

Share ownership

      As of December 31, 2005,  all our directors  and  executive  officers as a
group, comprising 19 persons, beneficially owned 119,782,379 shares, or 27,9% of
our  outstanding  shares  (including   119,039,744   shares,  or  27,7%  of  our
outstanding  shares,  held by Mr. Bollore,  Bollore Medias  Investissements  and
Bollore  Investissement,  which includes 16,929,649 shares beneficially owned by
CSCS  Limited that  Bollore   Medias   Investissements   may  be  considered  to
beneficially  own),  but  not  including  9,393,989  shares,  which  represented
approximately  2.2% of our outstanding  shares on that date,  owned by companies
controlled by the families of Leopoldo Rodes Castane and Fernando Rodes Vila. As
of that date,  none of our other  directors or executive  officers  beneficially
owned more than 1% of our outstanding shares.


                                       52
<PAGE>

      The table below shows the shareholdings and stock options of our directors
and executive officers as of December 31, 2005:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
                                                         Outstanding stock options       Number of shares held
                                                               at 12/31/2005                  at 12/31/2005
---------------------------------------------------------------------------------------------------------------
<S>                                                                      <C>                       <C>
Alain de Pouzilhac                                                       1,677,351                     123,277
---------------------------------------------------------------------------------------------------------------
Jacques Seguela                                                          1,518,807                       3,645
---------------------------------------------------------------------------------------------------------------
Fernando Rodes Vila                                                        747,530                     515,849
---------------------------------------------------------------------------------------------------------------
Ed Eskandarian                                                             615,908                       3,020
---------------------------------------------------------------------------------------------------------------
Alain Cayzac                                                               595,755                      23,805
---------------------------------------------------------------------------------------------------------------
Bollore Investissement                                                           0                       3,100
---------------------------------------------------------------------------------------------------------------
Bollore Medias Investissements                                                   0                 102,110,095
---------------------------------------------------------------------------------------------------------------
Vincent Bollore                                                                  0                       5,000
---------------------------------------------------------------------------------------------------------------
Pierre Bouchut                                                                   0                       3,000
---------------------------------------------------------------------------------------------------------------
Cedric de Baillancourt                                                           0                         100
(representative of Bollore Investissement)
---------------------------------------------------------------------------------------------------------------
Marc Bebon                                                                       0                         100
(representative of Bollore Medias Investissements)
---------------------------------------------------------------------------------------------------------------
Michel Boutinard Rouelle                                                         0                      24,029
---------------------------------------------------------------------------------------------------------------
Richard Colker                                                                   0                       4,011
---------------------------------------------------------------------------------------------------------------
Pierre Lescure                                                                   0                       5,925
---------------------------------------------------------------------------------------------------------------
Thierry Marraud                                                                  0                       3,100
---------------------------------------------------------------------------------------------------------------
Jacques Mayoux                                                                   0                       5,345
---------------------------------------------------------------------------------------------------------------
Laurence Parisot(1)                                                              0                       3,000
---------------------------------------------------------------------------------------------------------------
Leopoldo Rodes Castane                                                           0                       3,809
---------------------------------------------------------------------------------------------------------------
SOCIF                                                                            0                       5,705
---------------------------------------------------------------------------------------------------------------
Patrick Soulard                                                                  0                       6,815
---------------------------------------------------------------------------------------------------------------
Clement Vaturi                                                                   0                           0
(representative of SOCIF)
---------------------------------------------------------------------------------------------------------------
Philippe Wahl                                                                    0                           0
---------------------------------------------------------------------------------------------------------------
TOTAL                                                                    5,155,351                 102,852,730
---------------------------------------------------------------------------------------------------------------
</TABLE>

(1)   Pursuant to a letter  dated June 8, 2006 and  received by Havas on June 9,
      2006,  Laurence  Parisot  announced  her  resignation  from  the  Board of
      Directors.

Employees and labor relations

      Our  business  is  highly  dependent  upon  the  skills  of our  creative,
research,  media and account personnel and their relationships with our clients.
Many of our employees have employment contracts, some of which contain covenants
not to solicit employees and clients.  Our senior management  employees also are
generally  bound by  covenants  not to  solicit  employees  and  clients.  Those
employees who are not subject to covenants are typically able to move within the
industry with relative  ease.  Competition  with our  competitors  for qualified
personnel is intense, and we, like our principal competitors,  are vulnerable to
any  failure  to  attract  or  retain  qualified   personnel.   We  believe  the
compensation  arrangements  for our key  employees are highly  competitive  with
those of other advertising and communications services companies.

      The tables below set forth our total  number of  employees  by  geographic
location.  The  figures  in these  tables  are  based on the  average  number of
employees  employed  during the year by each of our  agencies as of December 31,
2003, 2004 and 2005:


                                       53
<PAGE>

                        Employees by Geographic Location

<TABLE>
<CAPTION>
                                        Total
                                        Number                                         Asia            Latin
  Year Ended December 31,           of Employees       Europe           U.S.          Pacific         America
---------------------------         ------------       ------         -------         -------         -------
<S>                                    <C>              <C>            <C>             <C>             <C>
2003.......................            16,343           8,055          5,409           1,583           1,296
2004.......................            14,898           7,174          5,057           1,394           1,273
2005.......................            14,230           6,733          5,085           1,283           1,129
</TABLE>

      Some of our U.S.  employees  in one of our  subsidiaries  are  covered  by
collective  bargaining  agreements  with two separate  labor unions.  In Europe,
membership of our employees in labor unions varies from country to country,  and
a number of countries  prohibit us from keeping records of union membership.  We
are  subject to various  collective  bargaining  agreements  in Europe.  In most
continental European countries,  collective bargaining agreements are imposed by
law on the entire  industry.  We believe  that our  relationship  with the labor
unions is good.

      As of December 31, 2005, our principal  collective  bargaining  agreements
are as follows:

<TABLE>
<CAPTION>
                                        Number of
Country                                 Covered Employees                     Expiration Date
------------------------------          --------------------------            --------------------------
<S>                                     <C>                                   <C>
Argentina                               265                                   No expiration
Austria                                 69                                    No expiration
Belgium                                 153                                   No expiration
Brazil                                  265                                   April 1st of each year
France                                  2,548                                 No expiration
Italy                                   81                                    December 31, 2005
Italy                                   13                                    December 31, 2006
Italy                                   129                                   December 31, 2007
Portugal                                109                                   No expiration
Portugal                                147                                   December 31, 2006
Spain                                   207                                   December 31, 2005 (1)
Spain                                   668                                   December 31, 2006
United States                           36                                    June 13, 2007
United States                           40                                    April 30, 2008
</TABLE>

----------
(1)   A new collective  bargaining agreement is currently being negotiated.  The
      existing   agreement  has  been  extended   pending  the  outcome  of  the
      negotiations.

Option plans

      The annual  shareholders'  meeting of May 21, 2003 authorized the board of
directors  to grant  to  employees  or  board  members  of the  company  and its
subsidiaries, as chosen by it, options to subscribe to shares of the company, up
to a maximum of 2.5% of the capital on an annual average valued over a period of
three years ended July 21,  2006.  The meetings of May 26, 2004 and June 9, 2005
did not grant any new authorization. At December 31, 2005, the number of options
authorized and not yet granted was 6,745,280.  As of December 31, 2005,  options
to purchase an aggregate of 31,136,822 Havas shares were outstanding,  including
options  to  purchase  an  aggregate  of  6,260,876  Havas  shares  held  by our
mandataires  sociaux,  which includes our directors and executive officers other
than Jim Heekin  (who was the Chief  Executive  Officer  of Euro RSCG  Worldwide
until  August  1,  2005) at that  date,  but  excluding  the  converted  SNC and
Circle.com options described below. All of the options we granted are subject to
specified anti-dilution adjustments,  including anti-dilution adjustments in the
event of a rights offering and distributions of a portion of paid-in capital. As
a result of our rights  offering on October 19, 2004 and our  distribution  of a
portion of paid-in capital in connection with our payment of our annual dividend
to  shareholders  on June 11, 2002,  June 18,  2003,  June 17, 2004 and June 14,
2005,  the number of options and the  exercise  prices for  outstanding  options
under all our  plans  except  the  converted  SNC and  Circle.com  options  were
adjusted on those dates. For a discussion of the possible future distribution of
paid-in-capital in connection with our payment of dividends to shareholders, see
"Item 8. Financial Information -- Dividend Policy" on page 68.

      Our board of  directors  determines  the  number of Havas  shares  and the
exercise  price  for  option  grants,  which  we refer to as  plans,  under  our
shareholder authorizations in accordance with the laws in effect at the time the
board of  directors  decides to grant the  options.  At that time,  our board of
directors  also will establish the conditions for exercising the options and the
periods during which the options may be exercised.

      Our shareholder  authorizations typically permit our board of directors to
grant  options to purchase up to an aggregate  percentage  of our issued  shares
from time to time. Each  shareholder  authorization is effective for a specified
period from the date of  authorization  or until all of the  options  authorized
have been granted. On


                                       54
<PAGE>

May 21,  2003,  our  shareholders  gave our board of directors  authority  for a
period of 38 months to grant  options to purchase up to an annual  average  over
the term of the authorization of 2.5% of the then issued Havas shares, including
treasury shares, from time to time, provided that the aggregate number of shares
purchasable  under options  outstanding  from time to time may not exceed 12% of
the then issued Havas  shares,  including  treasury  shares.  As of December 31,
2005,  the only new  options  that may be  granted  by the board are  options to
purchase shares under our May 2003 shareholder authorization.

      Upon  the  completion  of the  acquisition  of  Snyder  Communications  in
September 2000, all  outstanding  options to purchase shares of SNC common stock
of Snyder Communications were converted into options to purchase an aggregate of
9,494,613  Havas ADSs,  of which  options to purchase an  aggregate of 1,959,948
Havas ADSs were  outstanding  as of December  31,  2005.  These  options are not
considered  to be  part  of  any  of  our  option  plans,  are  not  subject  to
anti-dilution  adjustments  and do not affect the  calculation  of the limits on
option grants described above.

      In addition,  upon the completion of the acquisition of Circle.com in June
2001, all outstanding  options to purchase shares of Circle.com  common stock of
Snyder  Communications  were  converted into options to purchase an aggregate of
273,220  Havas ADSs,  of which  options to purchase an aggregate of 68,334 Havas
ADSs were  outstanding as of December 31, 2005. These options are not considered
to be  part  of any of our  option  plans,  are  not  subject  to  anti-dilution
adjustments  and do not affect the  calculation  of the limits on option  grants
described above.


                                       55
<PAGE>

The table below shows information relating to our various options plans and the
converted SNC options and Circle.com options as of December 31, 2005:

<TABLE>
<CAPTION>
                        6/19/1997      2/25/1999          6/17/1999     9/30/1999      12/02/1999       3/02/2000        5/23/2000
                         Plan (2)        Plan               Plan           Plan           Plan            Plan              Plan
<S>                      <C>            <C>               <C>            <C>            <C>             <C>               <C>
Date of
shareholders'
meeting
authorizing
plans                    6/19/1997      6/19/1997         6/19/1997      6/19/1997      6/19/1997       6/17/1999         6/17/1999
------------------------------------------------------------------------------------------------------------------------------------
Date of board
meeting
granting options         6/19/1997      2/25/1999         6/17/1999      9/30/1999     12/02/1999       3/02/2000         5/23/2000
------------------------------------------------------------------------------------------------------------------------------------
Number of
shares over
which options
granted (1)              6,687,084        818,128           343,274        230,494        991,436       1,024,459           461,112
------------------------------------------------------------------------------------------------------------------------------------
Number of
shares over
which options
granted to our
mandataires
sociaux                  3,460,249        373,888                --             --        576,986         332,323           461,112
------------------------------------------------------------------------------------------------------------------------------------
Number of
mandataires
sociaux
receiving
options                          5              2                --             --              2               2                 1
------------------------------------------------------------------------------------------------------------------------------------
Exercisable date         6/19/2002      2/25/1999         1/01/2000      1/01/2000      1/01/2000       1/01/2001         5/23/2000
------------------------------------------------------------------------------------------------------------------------------------
Expiration date          6/19/2006      2/24/2006         6/16/2006      9/29/2006     12/01/2006       3/01/2007         5/22/2007
------------------------------------------------------------------------------------------------------------------------------------
Exercise
price per
share (1)              (euro) 3.99    (euro) 6.61       (euro) 7.88    (euro) 9.42   (euro) 13.60    (euro) 23.97       (euro)21.68
------------------------------------------------------------------------------------------------------------------------------------
Discount
from
average
market
price                            5%             5%                5%             5%             5%              0%                0%
------------------------------------------------------------------------------------------------------------------------------------
Vesting rules                   --             --                --             --             --              --                --
------------------------------------------------------------------------------------------------------------------------------------
Number of
shares issued
on exercise as
of 12/31/2005              997,605             --            20,000             --         24,000              --                --
------------------------------------------------------------------------------------------------------------------------------------
Number of
shares over
which options
terminated as
of 12/31/2005            2,229,041          6,000                --             --         20,000              --                --
------------------------------------------------------------------------------------------------------------------------------------
Number of
options
outstanding as
of 12/31/2005            3,460,438        812,128           323,274        230,494        947,436       1,024,459           461,112

<CAPTION>

                          10/23/2000         3/01/2001         5/22/2001           2/14/2002        12/12/2002       3/24/2003
                             Plan              Plan              Plan              Plan (3)            Plan             Plan
<S>                     <C>               <C>                <C>                  <C>               <C>              <C>
Date of
shareholders'
meeting
authorizing
plans                      6/17/1999         5/23/2000          5/23/2000           5/22/2001         5/22/2001        5/22/2001
------------------------------------------------------------------------------------------------------------------------------------
Date of board
meeting
granting options          10/23/2000         3/01/2001          5/22/2001           2/14/2002        12/12/2002        3/24/2003
------------------------------------------------------------------------------------------------------------------------------------
Number of
shares over
which options
granted (1)                4,361,320         4,968,091          3,764,266           6,820,904            32,144        3,000,140
------------------------------------------------------------------------------------------------------------------------------------
Number of
shares over
which options
granted to our
mandataires
sociaux                           --         1,699,046            108,460           1,586,511                --          225,517
------------------------------------------------------------------------------------------------------------------------------------
Number of
mandataires
sociaux
receiving
options                           --                 7                  1                   7                --                1
------------------------------------------------------------------------------------------------------------------------------------
Exercisable date          10/23/2000         3/01/2001          1/01/2002           1/01/2003         1/01/2003        3/24/2004
------------------------------------------------------------------------------------------------------------------------------------
Expiration date           10/22/2007         2/29/2008          5/21/2008           2/13/2009        12/11/2009        3/24/2010(5)
------------------------------------------------------------------------------------------------------------------------------------
Exercise
price per
share (1)               (euro) 15.39      (euro) 13.44       (euro) 12.87         (euro) 7.46       (euro) 4.30      (euro) 2.39
------------------------------------------------------------------------------------------------------------------------------------
Discount
from
average
market
price                              0%                0%                 0%                  0%                0%               0%
------------------------------------------------------------------------------------------------------------------------------------
Vesting rules                                                          --                  --                --               (4)
------------------------------------------------------------------------------------------------------------------------------------
Number of
shares issued
on exercise as
of 12/31/2005                     --                --                 --                  --                --          293,970
------------------------------------------------------------------------------------------------------------------------------------
Number of
shares over
which options
terminated as
of 12/31/2005              2,083,682         2,639,137          1,429,842           3,258,589            27,629          684,923
------------------------------------------------------------------------------------------------------------------------------------
Number of
options
outstanding as
of 12/31/2005              2,277,638         2,328,954          2,334,424           3,562,315             4,515        2,021,247

<CAPTION>
                                                                                                                     Converted
                         7/4/2003          12/10/2003         5/26/2004        12/01/2004          Converted         Circle.com
                           Plan               Plan               Plan             Plan            SNC Options         Options
<S>                   <C>                   <C>               <C>               <C>               <C>              <C>
Date of
shareholders'
meeting
authorizing
plans                    5/23/2002           5/23/2002          5/23/2002         5/23/2002         8/25/2000          5/22/2001
------------------------------------------------------------------------------------------------------------------------------------
Date of board
meeting
granting options         7/04/2003          12/10/2003          5/26/2004        12/01/2004         8/25/2000          5/22/2001
------------------------------------------------------------------------------------------------------------------------------------
Number of
shares over
which options
granted (1)               349,120            1,671,030            418,133        10,260,553(14)     9,494,613            273,220
------------------------------------------------------------------------------------------------------------------------------------
Number of
shares over
which options
granted to our
mandataires
sociaux                   332,415                   --            334,505         2,283,953                --                 --
------------------------------------------------------------------------------------------------------------------------------------
Number of
mandataires
sociaux
receiving
options                         1                   --                  1                 6                --                 --
------------------------------------------------------------------------------------------------------------------------------------
Exercisable date         7/4/2013           12/10/2004          5/26/2005        12/01/2004         9/29/2000          7/02/2001
------------------------------------------------------------------------------------------------------------------------------------
Expiration date          7/4/2013           12/10/2010(8)       5/26/2014               (10)        9/13/2010          8/03/2010
------------------------------------------------------------------------------------------------------------------------------------
Exercise
price per
share (1)             (euro) 3.62           (euro) 3.93       (euro) 4.00       (euro) 4.11       (euro) 9.63(13)  (euro) 151.78(14)
------------------------------------------------------------------------------------------------------------------------------------
Discount
from
average
market
price                           0%                   0%                 0%                0%              N/A                N/A
------------------------------------------------------------------------------------------------------------------------------------
Vesting rules                  (6)                  (7)                (9)              (11)               --                 --
------------------------------------------------------------------------------------------------------------------------------------
Number of
shares issued
on exercise as
of 12/31/2005             109,690               43,800                 --                --         1,779,893                 --
------------------------------------------------------------------------------------------------------------------------------------
Number of
shares over
which options
terminated as
of 12/31/2005                  --              181,867                 --         1,015,091         5,754,772            204,886
------------------------------------------------------------------------------------------------------------------------------------
Number of
options
outstanding as
of 12/31/2005             239,430            1,445,363            418,133         9,245,462(12)     1,959,948             68,334
</TABLE>


                                       56
<PAGE>

(1)   As  a  result  of  our  rights  offering  on  October  19,  2004  and  our
      distribution  of a portion  of  paid-in  capital  in  connection  with our
      payment of our annual  dividend to shareholders on June 11, 2002, June 18,
      2003,  June 17,  2004 and June 14,  2005,  the number of  options  and the
      exercise  prices for  outstanding  options  under all our plans except the
      converted  SNC and  Circle.com  options  were  adjusted  on  those  dates.
      Information in this table reflects these adjustments prior to December 31,
      2005.   For  a  discussion  of  the  possible   future   distribution   of
      paid-in-capital   in   connection   with  our  payment  of   dividends  to
      shareholders, see "Item 8. Financial Information -- Dividend Policy".

(2)   Upon  exercise  of the options  under this plan,  option  holders  receive
      treasury  shares rather than newly issued  shares.  On March 3, 2004,  our
      board of  directors  decided  to  postpone  the  expiration  date of these
      options from June 19, 2004 to June 19, 2006.

(3)   This plan includes grants under two separate programs:  the second half of
      the 2001 option program and the first half of the 2002 option program.

(4)   1,000,047 of these options became exercisable on March 24, 2004, 1,000,047
      on March 24, 2005 and all the  options  will be  exercisable  on March 24,
      2006.

(5)   For French residents the expiration date is March 24, 2013.

(6)   116,373 of these options became  exercisable on July 4, 2004, 221,610 will
      become exercisable on June 23, 2005, 5,568 will become exercisable on July
      4, 2005 and all the options will be exercisable on July 4, 2006.

(7)   557,010 of these options became  exercisable on December 10, 2004, 557,010
      became  exercisable  on  December  10,  2005 and all the  options  will be
      exercisable on December 10, 2006.

(8)   For French residents the expiration date is December 10, 2013.

(9)   139,378 of these options became  exercisable on May 26, 2005, 223,003 will
      become  exercisable on June 23, 2005, 27,876 options become exercisable on
      May 26, 2006, and all the options will be exercisable on May 26, 2007.

(10)  Sub-plan A, consisting of 9,947,903 options,  expires on December 1, 2011,
      sub-plan B,  consisting of 304,528  options,  expires on December 1, 2009,
      and sub-plan C, consisting of 8,122 options, expires on December 1, 2014.

(11)  For sub-plan A, 4,973,951 options became  exercisable on December 1, 2004,
      355,281  will  become  exercisable  on June  23,  2005,  2,309,335  became
      exercisable  on December 1, 2005,  and all the options will be exercisable
      on December 1, 2006.  For  sub-plan B, all of the options may be exercised
      on December 2, 2008. For sub-plan C, 2,707 options  became  exercisable on
      December 1, 2004,  2,707 become  exercisable  on December 1, 2005, and all
      the options will be exercisable on December 1, 2006.

(12)  8,932,812 of these options were granted as part of our exceptional  option
      grant of December 1, 2004.

(13)  Represents the weighted  average  exercise price of $11.40  converted into
      euro at the noon buying rate of (euro)1.00 = $1.1842 on December 31, 2005.

(14)  Represents the weighted average  exercise price of $179.74  converted into
      euro at the noon buying rate of (euro)1.00 = $1.1842 on December 31, 2005.



                                       57
<PAGE>

In addition to the above plans, some of our subsdiaries granted stock options to
some of their employees, as described in "Item 5 Liquidity and Capital Resources
-- Contractual obligations".

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

7.A   Major Shareholders

      The following table shows, to our knowledge, as of May 31, 2006, except as
otherwise  indicated  below,  the number of Havas shares and the  percentage  of
outstanding Havas shares owned by:

      o     each  person  known  to us to be the  owner  of more  than 5% of the
            outstanding Havas shares; and

      o     our directors and executive officers as a group.

      All of our  shareholders  have the same voting  rights with respect to the
Havas  shares  that they hold.  (However,  see "Item 3. Key  Information--  Risk
Factors  --  Holders  of our ADSs may have  limited  ability  to  influence  the
governance of our  company".)  As of May 31, 2006, we held  3,572,792 of our own
shares as treasury  stock.  These Havas shares do not have voting  rights.  As a
result,  the  percentage  of the  issued  Havas  shares  owned  by  each  of our
shareholders  translates  into a slightly  greater  percentage  of total  voting
rights.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
                                                                            Percentage    Percentage
                                                             Number of      of Issued      of Voting
Identity of Person or Group                                  Shares         Shares         Rights
---------------------------------------------------------------------------------------------------------
<S>                                                          <C>            <C>           <C>
Bollore Medias Investissements(1)......................      125,672,285    29.3%         29.5%
---------------------------------------------------------------------------------------------------------

CSCS Limited (2).......................................      16,929,649     3.9%          4.0%
---------------------------------------------------------------------------------------------------------

All directors and executive officers of Havas as a group(21)
  persons, including SOCIF, Bollore Medias Investissements
  and Bollore Investissement)(3).......................      126,414,920    29.5%         29.7%
---------------------------------------------------------------------------------------------------------
</TABLE>

----------
(1)   Includes 16,929,649 shares beneficially owned by CSCS Limited that Bollore
      Medias Investissements may be considered to beneficially own.

(2)   Based on information  provided in a Schedule 13D filed with the Securities
      and  Exchange  Commission  on January 18, 2006.


                                       58
<PAGE>

(3)   Includes  126,414,920   shares,  or  29.5%  of  our  outstanding   shares,
      beneficially  owned by Mr.  Bollore,  Bollore  Investissement  and Bollore
      Medias  Investissements,  which includes  16,929,649  shares  beneficially
      owned by CSCS Limited  Inc.  that Bollore  Medias  Investissements  may be
      considered to beneficially own. Does not include  9,393,984 shares,  which
      represented  approximately  2.2%  of  our  outstanding  shares,  owned  by
      companies  controlled  by the  families  of  Leopoldo  Rodes  Castane  and
      Fernando Rodes Vila.

      Below is a table showing the percentage interest in our company of each of
the individuals listed above as of December 31, 2003, 2004 and 2005:

-------------------------------------------------------------------------------
Identity of Person or Group                 Percentage of Issued Shares
-------------------------------------------------------------------------------
                                         2003         2004              2005
-------------------------------------------------------------------------------
Bollore Medias Investissements(1)          0         20.16%          27.67%(1)
-------------------------------------------------------------------------------
CSCS Limited (2)                           0           0                3.9%
-------------------------------------------------------------------------------

----------
(1)   Includes  16,929,649 Ordinary Shares then owned by Sebastian Holdings Inc.
      that Bollore Medias Investissements may be considered to beneficially own.

(2)   Pursuant  to a  Schedule  13D  filed  with the SEC on  January  20,  2006,
      Sebastian  Holdings Inc.  transferred the Havas ordinary shares it held to
      CSCS, a  wholly-owned  subsidiary of Sebastian  Holdings Inc., in order to
      refinance its investment in Havas.

      According  to a Schedule  13D filed by  Sebastian  Holdings  Inc.  and Mr.
Alexander M. Vik with the Securities  and Exchange  Commission on June 17, 2005,
Bollore  Investissement,   on  its  behalf  and  on  behalf  of  Bollore  Medias
Investissements,  and Sebastian  Holdings Inc. entered into an agreement on June
9,  2005,  which  we  refer  to as  the  Sebastian  Holdings  Agreement.  In the
agreement, they agreed to vote in favor of the other party's nominee resolutions
at our company's annual meeting of shareholders and to cooperate with each other
with respect to the strategic decisions  concerning our company,  including with
respect  to  issues to be  considered  by our  board of  directors.  In a second
agreement,  Mr.  Bollore  and  Sebastian  Holdings  Inc.  agreed that it will be
possible for Sebastian  Holdings Inc.'s  participation on our board of directors
to take place through the  appointment of one of the  representatives  of one of
the  two  legal   entities   (Bollore   Medias   Investissements   and   Bollore
Investissements)  that had been proposed by Bollore Medias  Investissements  and
elected to our board of  directors.  According  to the Schedule  13D,  Sebastian
Holdings Inc. has declined for the present Mr.  Bollore's  invitation to appoint
one of the  representatives  of the two legal entities that had been proposed by
Bollore Medias Investissements and elected to our board of directors.  As of the
date  hereof,  Sebastian  Holdings  Inc. has no  representation  on our board of
directors.

      According to the Schedule 13D  (Amendment No. 6) filed with the Securities
and  Exchange  Commission  on January 18, 2006,  on November  18, 2005,  Bollore
Investissement,  on its behalf and on behalf of Bollore Medias  Investissements,
entered  into an  amendment  to the  Sebastian  Holdings  Agreement  dated as of
November  18,  2005.  Pursuant to the terms of this  amendment,  each party must
notify the other  party of any change in its  holdings  of our  shares.  A party
contemplating  the  consummation  of an  acquisition  of Havas shares that would
result in the parties'  aggregate  holdings exceeding 33.2% of our share capital
or voting  rights will be obliged to consult  with the other party prior to such
acquisition. If the non-acquiring party is opposed to such acquisition,  and the
acquiring  party  wishes  nevertheless  to  proceed  with  the  acquisition,   a
"fundamental  disagreement"  under the Sebastian  Holdings  Agreement would then
result  and the  Sebastian  Holdings  Agreement  would be deemed  null and void,
except with respect to the  preemption  right granted by Sebastian  Holdings (if
Sebastian Holdings is the acquiring party) or the put right granted to Sebastian
Holdings (if Bollore  Investissement is the acquiring  party).  Also on November
18, 2005, Bollore Investissement,  on its behalf and on behalf of Bollore Medias
Investissements,  Sebastian Holdings and CSCS Limited, a subsidiary of Sebastian
Holdings Inc.,  entered into an additional  amendment to the Sebastian  Holdings
Agreement,  pursuant to which CSCS  Limited  became a party to, and bound by the
terms and conditions of, the Sebastian Holdings Agreement.

      To our knowledge, as of December 31, 2005,  approximately 22.0 million, or
5.21%, of our outstanding  shares  (including  shares  represented by ADSs) were
held by shareholders in the United States. In addition, to our knowledge,  there
were approximately 347 registered ADR holders in the United States as of June 6,
2006.

7.B   Related Party Transactions

      Media Planning Group and its subsidiaries  have entered into the following
transactions  with  members of the families of Fernando  Rodes Vila,  one of our
directors,  the Chief  Executive  Officer of Media  Planning Group and our


                                       59
<PAGE>

Chief Executive  Officer and with his father Leopoldo Rodes Castane,  one of our
directors and Chairman of the Board of Media  Planning  Group,  or with entities
controlled by them.

      The Rodes family holds,  directly or indirectly,  95% of the share capital
of In Store Media, a company that provides "point of sale" advertising  services
and space in Spain, Mexico, Argentina and Portugal. In Store Media leases its ad
spaces directly to advertisers or through media  consulting  companies.  In this
capacity,  In Store Media may act as a supplier of  advertising  spaces to Media
Planning  Group which then  reinvoices  its clients for these  spaces.  In 2005,
these invoices totaled  (euro)1,625,000  and (euro)627,000 for the first quarter
of 2006 ((euro)1,703,265 in 2004).

      The Rodes  family  holds,  directly  or through  Inversiones  y  Servicios
Publicitarios SL, 75% of the share capital of Accesogroup.  Media Planning Group
holds a 15% stake in the  share  capital  of this  company.  Accesogroup  is the
leader in the Spanish market for providing surveillance and analysis services of
information  published in the media as well as for supplying  content  regarding
institutional  information  for  Internet  publications.  In  2005,  Accesogroup
provided  services to Media Planning Group and to other Havas group companies in
the amount of (euro)199,000 and (euro)34,000 for the first quarter of 2006.

      Through Inversiones Servicios Publicitarios SL, the Rodes family holds 60%
of the capital of Neo Metrics,  a company which  specializes  in data mining and
the supply of software designed to enhance the decision-making process. In 2005,
Neo Metrics  provided  services to Media Planning Group and to other Havas Group
companies for a total of  (euro)45,000.  No services  were  invoiced  within the
first quarter of 2006.

      The Rodes family indirectly holds 28% of the share capital of Antevenio, a
company which provides interactive advertising and direct marketing services. In
2005  Antevenio  provided  services to Media  Planning Group and to other of our
group companies for an amount of (euro)477,622  and of an amount of (euro)87,764
for the first quarter of 2006.

      The Rodes family is majority  shareholder  of Gestora de  Viviendas  where
Leopoldo  Rodes  Castane  serves as a director.  Gestora de  Viviendas  is a 50%
shareholder of Vigilancia y Sistemas de Seguridad,  which provides  security and
administrative  outsourcing  services to Media  Planning  Group in Spain and for
which Media Planning Group paid  (euro)423,631 in 2005 and (euro)127,041  within
the  first  quarter  of  2006.  The same  services  amounted  to  (euro)422,503,
excluding taxes, in 2004 and to (euro)440,185,  excluding taxes, in 2003. At the
request of our Audit Committee,  a request for proposals  relating to these same
services was launched in September 2005,  following  which, in  consideration of
the various bids  received,  Vigilancia y Sistema de Seguridad  was retained for
the provision of these services.

      Rodes y Sala is a law firm that provided  legal services to Media Planning
Group and to other Group companies in Spain for the amount of  (euro)275,980  in
2005 and (euro)54,969 in the first quarter of 2006.  These services  amounted to
(euro)233,295 in 2004 and (euro)330,800 in 2003.

      In December  2005,  Media  Planning  Group in Spain launched a request for
proposals for providing legal and tax services  following which Rodes y Sala was
selected.  Gonzalo  Rodes  Vila,  partner  of Rodes y Sala,  is the  brother  of
Fernando  Rodes Vila and the son of Leopoldo Rodes  Castane.  Moreover,  Gonzalo
Rodes Vila is Secretary to the board of directors of Media  Planning  Group,  in
which capacity he received  (euro)55,075  in 2005, and  (euro)48,000 in 2004 and
2003. He received (euro)15,025 in the first quarter of 2006.

      Media  Planning  Group and certain other of our group  companies  received
legal  services  from  Rodes y Sala  Abogados  S.L.  in Spain  for an  amount of
(euro)275,980  in 2005 and  (euro)54,969  for the first  quarter of 2006.  These
services  amounted  to  (euro)233,295  in 2004 and  (euro)330,800  in  2003.  In
December  2005,  Media  Planning Group in Spain launched a request for proposals
for the  provision of legal and tax services,  following  which Rodes y Sala was
retained for the provision of these  services.  Gonzalo  Rodes Vila,  partner of
Rodes y Sala,  is the  brother of  Fernando  Rodes Vila and the son of  Leopoldo
Rodes  Castane.  Moreover,  Gonzalo  Rodes  Vila is  secretary  to the  board of
directors of Media Planning Group and as such received  (euro)55,075 in 2005 and
(euro)48,000 in 2004 and 2003. He received  (euro)15,025 in the first quarter of
2006.

      On June 30, 2005,  following a favorable decision from our Audit Committee
on June  27,  2005,  Media  Planning  Group  sold  to  Inversiones  y  Servicios
Publicitarios  SL its current  premises  in  Barcelona  (Doctor  Fleming 17) for
(euro)6,240,000.  On the same day, Media Planning Group signed a five year lease
with  Inversiones y Publicitarios  for annual rent of  (euro)387,936.  The share
capital of Inversiones y Publicitarios is entirely held by the Rodes family.

      In October 1991,  the  predecessor to Media Planning Group entered into an
agreement  with  Gestora de  Viviendas  S.A.  under which  Gestora de  Viviendas
provides   client   development   services  to  Media  Planning  Group  and  its
subsidiaries in exchange for  commissions on new clients  developed by it. Under
this  agreement,  Media Planning Group paid Gestora de Viviendas  commissions of
(euro)325,472,  excluding  taxes,  for these  services  provided  in 2004.  This


                                       60
<PAGE>

agreement  was  terminated  as of December  31,  2004.  Fernando  Rodes Vila and
Leopoldo  Rodes  Castane,  together  with other members of their  families,  are
controlling shareholders of Gestora de Viviendas.

ITEM 8. FINANCIAL INFORMATION

8.A   Consolidated statements and other financial information

8.A.1 See Item 18 "Financial Statements."

8.A.2 See Item 18 "Financial Statements."

8.A.3 See Report of Independent Public Accountants, page F-2.

8.A.4 We have complied with this requirement.

8.A.5 Not applicable.

8.A.6 Not applicable.

8.A.7 Legal proceedings

Bankruptcy of WorldCom Inc.

      On July 21, 2002, WorldCom,  one of our largest clients, now known as MCI,
Inc., filed for reorganization  under Chapter 11 of the United States Bankruptcy
Code. We provide both  advertising and marketing  services and media services to
MCI.  With  respect  to  the  media,  we  act  as an  agent  for  MCI  and as an
intermediary  in the transfer of the client's  payments to the applicable  media
suppliers,  which is  consistent  with the  concept  of  "sequential  liability"
adopted by the  American  Association  of  Advertising  Agencies  in 1991 as its
standard for the industry.

      On August 4, 2003, we and MCI entered into an agreement to compromise  the
pre-bankruptcy  amounts  due  to us.  Under  its  terms,  the  agreement  became
effective upon MCI emerging from U.S.  Chapter 11 protection,  which occurred on
April 20, 2004. On May 26, 2004,  MCI paid Havas $14.3  million  pursuant to the
agreement.  Havas has  distributed a substantial  portion of the amount received
from MCI to media and production vendors. Consequently, as of December 31, 2004,
we offset the  remaining  receivables  against  the  payables  in our  financial
statements  in a residual  amount of $18 million and reversed a provision in the
amount of $6.5 million corresponding to the excess amount of the provision taken
in 2002 for  production  fees.  Nevertheless,  the risk that we will face claims
from other vendors remains.  One production vendor filed a complaint against one
of our  subsidiaries.  In  addition,  an  action  was filed  against  one of our
subsidiaries  seeking to recover  pension and welfare  and other  benefits  with
respect  to  certain  celebrity  performers  who  performed  on  behalf  of  MCI
pre-bankruptcy. These two proceedings were settled for an insignificant amount.

As of the date hereof, no media vendors have instigated  proceedings against us,
nor requested  that they be paid amounts owing to them in order to renounce such
proceedings.  It is not possible to determine the nature, the probability or the
outcome of any actions that may be initiated against us in this regard,  nor the
amount of any losses that could result to our group.  Therefore,  although it is
possible  that  we  could  be  required  to pay  damages  as a  result  of  such
litigation,  we are not able to determine the probability of any future damages.
As a result, we have not recorded a provision in this respect.

American Student List LLC class action lawsuit

      On February 18, 2004,  a purported  class action  lawsuit was filed in the
United States District Court for the Middle District of Florida against American
Student List LLC, one of our  subsidiaries.  The lawsuit  alleged that  American
Student  List  obtained,   disclosed  and  used  information  from  the  Florida
Department of Highway Safety and Motor Vehicles in alleged violation of the U.S.
Driver's Privacy Protection Act. The named plaintiff sought to represent a class
of 876,665  individuals  whose personal  information from Florida  Department of
Highway  Safety and Motor Vehicles  records was obtained,  disclosed or used for
allegedly  impermissible  uses by  American  Student  List  without  the express
consent of the individual.  The lawsuit sought  certification as a class action,
liquidated  damages in the amount of $2,500 per alleged violation of the Act, as
well as punitive  damages,  attorneys' fees and costs,  and injunctive and other
relief. The plaintiff later amended his complaint to include a claim for damages
for invasion of privacy.


                                       61
<PAGE>

      After dismissal of the lawsuit for a procedural  error,  American  Student
List settled the case with the named plaintiff, ending the litigation.

Snyder Communications LP class action lawsuit

      Former employees of Snyder  Communications LP have filed a purported class
action lawsuit in the Texas State Court. The lawsuit alleged, in substance, that
Snyder improperly  denied commission  payments to former employees in connection
with alleged  sales  activities.  The motion to certify the  purported  class of
former  employees in Texas was granted by the Texas trial court in January 2002,
affirmed on appeal by the Texas  intermediate  appellate  court in November 2002
and was  reversed  by the Texas  Supreme  Court on appeal.  The  litigation  was
dismissed  with prejudice by the Texas State Court in March 2005 and the lawsuit
with the named plaintiffs has been settled.

      A settlement agreement ending this lawsuit was signed for an insignificant
amount. The case was removed from the docket in March 2005.

American Student List consent order

      In September  2002,  American  Student List LLC, one of our  subsidiaries,
signed a consent order issued by the U.S. Federal Trade  Commission  relating to
the  use of  information  collected  from a  survey  conducted  by the  National
Research  Center for College  and  University  Admissions,  which we refer to as
NRCCUA.  For a number of years,  American  Student List  provided  funding for a
portion of the out-of-pocket  expenses incurred by NRCCUA in connection with its
post-secondary  education  planning survey.  The FTC argued that the disclosures
made by NRCCUA to the high schools that distributed the surveys to students, and
the  disclosures  in the survey  completed by the students,  were  inadequate to
advise the schools and students that the results of the survey would be used for
marketing and  non-educational  uses.  American  Student List signed the consent
order without admitting that it engaged in any deceptive  practices that violate
the law. The consent order became  effective on January 31, 2003. As of the date
hereof, the FTC has not taken any further action against American Student List.

      Litigation relating to the departure of former executives and employees.

      On June  28,  2005,  following  the  decision  of the  Company's  board of
directors  on June  21,  2005 to  terminate  the  appointment  of Mr.  Alain  de
Pouzilhac,  our former Chairman and Chief Executive  Officer,  Mr. Alain Cayzac,
our former Chief  Communications  Officer,  considered  that the  conditions for
invoking the provisions of Article 13 of his employment agreement (as amended on
January 19, 2005), the "conscience clause", had been triggered.  As a result, he
considered  that his  employment  agreement  had been  breached and demanded the
payment  of  contractual  severance  pay in the  amount  of  (euro)1,692,580  in
addition  to  damages  for  "dismissal   without   cause",   in  the  amount  of
(euro)313,000   plus  the  payment  of  a  bonus  for  2005  in  the  amount  of
(euro)176,000.

      We are contesting  the merits of Mr. Alain Cayzac's  claims as we consider
that he resigned  from his office.  Mr. Alain  Cayzac filed a petition  with the
Nanterre  Workers'  Tribunal  (Conseil de Prud'hommes) on November 21, 2005. The
case has not yet been adjudicated.

      Furthermore,  pursuant  to a  non-competition  clause,  Mr.  Alain  Cayzac
receives monthly gross compensation of (euro)38,500, paid over a total period of
24 months.  The total gross amount of this  compensation  is  (euro)924,000  and
represents a total cost of (euro)1,302,840,  including social charges applicable
to these amounts.

      On July 19, 2005, following the departure of Mr. Alain de Pouzilhac,  Mrs.
Agnes Audier,  our former Chief Performance  Officer,  considered that there had
been a breach of her  employment  agreement  pursuant to Article 12,  "Change of
Control",  of her agreement dated October 29, 2003. Mrs. Audier filed a petition
with the Nanterre Workers'  Tribunal on January 6, 2006 demanding  severance pay
in the amount of  (euro)1,100,000  (to be revised) before social charges as well
as the  payment  of  incentive-based  compensation  for  2005 in the  amount  of
(euro)300,000 (to be revised) before social charges.

      We are  contesting  the demands of Mrs.  Audier as we  consider  that Mrs.
Audier resigned from her duties.  The case has not yet been adjudicated.

      Mr.  Jacques Herail was dismissed on November 25, 2005. Mr. Jacques Herail
has  contested  this  decision and filed a petition  with the Nanterre  Workers'
Tribunal  on  January  13,  2006 and is asking for the  payment  of  indemnities
(namely dismissal, notice, and contractual severance pay) in addition to damages
in a total amount of (euro)6,647,046 before social charges, as estimated at this
stage of the proceedings. The case has not yet been adjudicated.


                                       62
<PAGE>

      In addition,  on December 23, 2005,  Mr. David Smail,  our former  General
Counsel,  notified  Havas North America and the Company that he was  terminating
his  employment  agreement  dated  October  22,  2001 (as amended on January 22,
2004).  Mr. Smail based this  decision on the  provisions of Section 4.3 (vi) of
his  agreement  concerning  change of control.  On February 22, 2006,  Mr. David
Smail's counsel contacted us with a mediation proposal.  Mr. Smail is asking for
the payment of salary, bonuses and severance pay.

      Total indemnities,  damages and social charges which have been or could be
claimed in connection with this  litigation  amount to (euro)14  million.  After
consulting our legal counsel on these cases, we set aside what we consider to be
provisions (see Note 2.15 to the consolidated financial statements).

      In the normal course of our  activities,  we are party to a certain number
of legal,  administrative or arbitration  proceedings.  The expenses that may be
incurred  by  these  proceedings  are  provisioned  for to the  extent  they are
probable and  quantifiable.  Such provisions are determined by risk  assessments
conducted on a case by case basis.

8.A.8 Dividend policy

      We may declare dividends upon the recommendation of our board of directors
and the approval of our  shareholders at our annual general  meeting.  Under the
French  Commercial  Code, a company's  right to pay dividends is limited in some
circumstances.

      At  our  annual  meeting  of  shareholders  held  on  June  9,  2005,  our
shareholders  approved a  resolution,  among  others,  to  authorize  a dividend
payment of  (euro)0.07  per share.  This amount  reflects both the gross and net
dividend  since the French  avoir  fiscal tax credit was phased out in 2004.  We
paid the dividend to shareholders on or about June 14, 2005.  Under the terms of
the  anti-dilution  provisions  of our two  series of  OCEANEs,  the  applicable
conversion/exchange  ratio was adjusted as of that date to reflect the component
of the dividend  payment that  represents a distribution of a portion of paid-in
capital.  In addition,  under the terms of the  anti-dilution  provisions of our
option plans, the number of options and exercise prices for outstanding  options
under our plans were  adjusted  on that date to  reflect  the  component  of the
dividend payment that represents a distribution of a portion of paid-in capital.
In the  future,  we  also  may  submit  for  the  approval  of our  shareholders
resolutions to authorize  dividend  payments that represent  distributions  of a
portion of paid-in capital.

      At the  general  shareholders'  meeting  to be held on June  12,  2006 the
shareholders will be asked to approve a resolution  authorizing the payment of a
dividend of (euro)0.03 per share.

ITEM 9. THE OFFER AND LISTING

9.A   Listing details

      The principal  trading  market for Havas shares is  Compartiment  A of the
Eurolist by Euronext  Paris S.A.  (which  resulted from the merger of the Paris,
Brussels and Amsterdam stock  exchanges on October 27, 2000), a  self-regulatory
organization  responsible  for  supervision  of trading in listed  securities in
France.  Havas shares have been traded on the Paris stock exchange since October
23,  1982.  The Havas  shares are quoted  under the symbol  "HAV." Prior to this
date, Havas shares were not publicly traded. Havas shares are currently included
in the "SBF 80," "SBF 120" and "SBF 250" indices.

      Havas shares are also quoted in the form of American Depositary shares, or
ADSs, on the NASDAQ  National  Market System under the symbol "HAVS." We sponsor
our ADSs in the United States with J.P.  Morgan Chase & Co.  (formerly  known as
Morgan  Guaranty Trust  Company),  as depositary.  Each Havas ADS represents one
Havas share.

      The table  below  indicates  the range of the high and low  prices in U.S.
dollars for the ADSs on NASDAQ from December 31, 2001 to June 6, 2006. The table
below  also  provides  the high and low  prices in euro for the Havas  shares on
Eurolist by Euronext  from  December 31, 2001 to June 6, 2006.  The high and low
market  prices have been adjusted to reflect our 20 for 1 stock split on May 26,
2000.


                                       63
<PAGE>

<TABLE>
<CAPTION>
                                                         NASDAQ                       Eurolist by Euronext
                                                     price per ADS                     price per Share(1)
                                                     -------------                     ------------------

Period                                                    High          Low                   High               Low
------                                               -------------  -----------           ------------       -----------
<S>                                                      <C>          <C>                 <C>                <C>
Annual information for the past five years:
2001........................................             $17.20       $ 4.85              (euro) 17.25       (euro) 4.94
2002........................................             $ 9.49       $ 2.75              (euro) 10.26       (euro) 2.61
2003........................................             $ 5.86       $ 2.26              (euro)  4.64       (euro) 1.93
2004........................................             $ 6.62       $ 4.30              (euro)  5.03       (euro) 3.34
2005........................................             $ 6.48       $ 4.10              (euro)  5.12       (euro) 3.62

Quarterly information for the past two years:

2004
First quarter...............................             $ 6.62       $ 5.02              (euro)  5.03       (euro) 3.41
Second quarter..............................             $ 5.89       $ 4.75              (euro)  4.63       (euro) 3.78
Third quarter...............................             $ 5.66       $ 4.30              (euro)  4.51       (euro) 3.34
Fourth quarter..............................             $ 5.85       $ 5.05              (euro)  4.55       (euro) 4.00

2005
First quarter...............................             $ 6.48       $ 5.12              (euro)  4.71       (euro) 4.02
Second quarter..............................             $ 6.39       $ 5.36              (euro)  5.12       (euro) 4.34
Third quarter...............................             $ 5.83       $ 4.71              (euro)  4.69       (euro) 4.01
Fourth quarter..............................             $ 5.30       $ 4.10              (euro)  4.33       (euro) 3.62

2006
First Quarter                                            $ 4.90       $ 4.15              (euro)  4.10       (euro) 3.58

Monthly information for most recent six months:
December 2005...............................             $ 5.11       $ 4.10              (euro)  4.19       (euro) 3.62
January 2006................................             $ 4.63       $ 4.15              (euro)  3.90       (euro) 3.58
February 2006...............................             $ 4.90       $ 4.37              (euro)  4.10       (euro) 3.75
March 2006..................................             $ 4.90       $ 4.14              (euro)  4.03       (euro) 3.75
April 2006..................................             $ 5.34       $ 4.51              (euro)  4.19       (euro) 3.77
May 2006....................................             $ 4.14       $ 3.69              (euro)  5.40       (euro) 4.61
June 2006 (through June 6)..................             $ 3.93       $ 3.76              (euro)  5.04       (euro) 4.70
</TABLE>

----------
(1)   Euronext  has applied an  adjustment  coefficient  of 0.93254 to the price
      prior to September  27, 2004,  in order to take into account the impact of
      the distribution of preemptive  subscription rights to our shareholders on
      that date in  connection  with our rights  offering that closed on October
      19, 2004.

      There is not active trading market for our OCEANEs.

9.B   Plan of distribution

      Not applicable.

9.C   Markets

      See Item 9.A "Listing details."

9.D   Selling shareholders

      Not applicable.

9.E   Dilution

      Not applicable.


                                       64
<PAGE>

9.F   Expenses of the issue

      Not applicable.

ITEM 10. ADDITIONAL INFORMATION

10.A  Share capital

      Not applicable.

10.B  Memorandum and Articles of Association

      Under Article 2 of our bylaws, our corporate purposes are to:

      o     provide advertising and communication services in all forms;

      o     provide  all  forms of  services,  including  technical,  financial,
            commercial or administrative studies;

      o     engage  in any  activities  of  production,  sale  or  distribution,
            particularly  in sectors that are  developing  rapidly or have great
            communication power;

      o     manage,  acquire,  construct,  develop or improve  real  property or
            related assets or rights and conduct  studies  relating to such real
            estate transactions; and

      o     carry  out  industrial,  commercial  or  financial,  real  estate or
            securities  transactions  directly  or  indirectly  related  to  our
            corporate purposes.

      We may also acquire  interests  in other  businesses,  regardless  of such
businesses' purposes.

      Directors

      Our bylaws  provide  that our board  must be  composed  of at least  three
members but not more than 18, except for exceptions provided by law. Each member
of our  board is  required  to own at least one of our  shares  for so long they
serve as a  director.  Members  of our  board  serve  three-year  terms  and are
eligible for reappointment upon the expiration of their term of office. There is
no  requirement  under the French  Commercial  Code or our bylaws that directors
serve concurrent terms. Accordingly,  fewer than all of the members of our board
will ordinarily stand for reelection at any particular shareholders' meeting. No
more than  one-third of our directors may be over the age of 70. We will propose
at our annual general shareholders' meeting to be held June 12, 2006 to increase
this age limit to 80. Our board elects a chairman from among our natural  person
directors. The chairman is eligible for reappointment upon the expiration of his
or her term of office.  Since July 12,  2005,  the  functions of chairman of the
board of directors and chief executive officer have been separated.

      Our CEO must obtain the prior approval of the Board of Directors  prior to
engaging in certain transactions,  including purchases and sales of real estate,
businesses or equity  interests,  entering into finance leases,  the creation of
subsidiaries,  entering into certain borrowing arrangements, granting loans, and
transactions involving the acquisition or transfer of title to assets, where the
value of any of these transactions exceeds (euro)23 million.

      Our board is  authorized to meet at its  discretion,  upon notice from its
chairman  or vice  chairman.  If our board has not met for more than two months,
directors  representing  one-third  of our board may require  that our  chairman
convene a meeting.

      Under the  French  Commercial  Code,  the prior  approval  of our board is
required before one of our directors, executive officers or shareholders holding
more  than  10%  of our  voting  rights  (or  any  company  that  controls  such
shareholder),  whom we refer to  collectively as interested  parties,  may enter
into a transaction with us that cannot be reasonably  considered in the ordinary
course of  business  and the  product  of an  arms-length  negotiation.  Similar
limitations  apply to any  transaction  between our company and another  company
which has one or more  officers or  directors  in common with our  company.  The
transaction  must also be approved by our  shareholders at the following  annual
shareholders'  meeting. Any interested party must inform our chairman as soon as
it  has  knowledge  of the  transaction  and  may  not  vote  at  the  board  or
shareholders' meeting called to authorize the transaction, nor may the shares of
an interested party be taken into account in determining the outcome of the vote
or whether a quorum is present.  In the event the transaction  authorized by the
board is not approved by our  shareholders at a shareholders'  meeting,  it will
remain  enforceable  by third  parties  against  us, but we may in turn hold the
interested party and, in some


                                       65
<PAGE>

circumstances,  the other  directors  liable for any  damages it may suffer as a
result. In addition, the transaction may be canceled if it is fraudulent.

      For  transactions  that can be  considered  within our ordinary  course of
business and the product of  arms-length  conditions,  an interested  party must
provide a copy of the governing agreement to the chairman of our board, who will
then provide a summary of these transactions to the members of our board and the
statutory auditors.

      Certain  transactions  between our company  and one of its  directors  are
prohibited under the French Commercial Code.

      Rights, preferences and restrictions applicable to our shares

      Dividends

      Dividends  on our shares are  distributed  to  shareholders  on a pro rata
basis.  Outstanding  dividends are generally payable to shareholders on the date
of the shareholders' meeting at which the distribution of dividends is approved,
subject to any conditions  imposed by the  shareholders  at the meeting.  In the
case of interim dividends, we make distributions to our shareholders on the date
of the board meeting in which the distribution of interim dividends is approved.
The dividend  payment date is decided by the shareholders at an ordinary general
meeting or by our board in the absence of such a decision  by the  shareholders.
Under the French  Commercial  Code, we must pay any dividends within nine months
of the end of our  fiscal  year  unless  otherwise  authorized  by court  order.
Dividends  on  shares  that are not  claimed  within  five  years of the date of
declared payment revert to the French government.

      We may only distribute  dividends out of our distributable  profits,  plus
any amounts held in reserve which our shareholders  decide to make available for
distribution, other than those reserves that are specifically required by law or
our bylaws.  Our distributable  profits consist of our unconsolidated net profit
in each  fiscal  year,  as  increased  or reduced by any profit or loss  carried
forward  from  prior  years,  less any  amounts  which  French law or our bylaws
require to be placed in a reserve account.

      In addition,  the French Commercial Code requires us to allocate 5% of our
unconsolidated statutory net profit for each year to a legal reserve fund before
we may pay dividends  with respect to that year.  Funds must be allocated  until
the amount in the legal reserve is equal to 10% of the  aggregate  nominal value
of our issued and outstanding share capital.  This restriction on the payment of
dividends also applies to our French  subsidiaries on an  unconsolidated  basis.
Our  legal  reserve  may  only  be  distributed  to our  shareholders  upon  our
liquidation,  and the legal reserve of each of our French  subsidiaries may only
be distributed to their respective shareholders upon their liquidation.

      The French Commercial Code also prohibits us from  distributing  dividends
when our net equity is or would become as a result of any such distribution less
than the amount of our stated capital increased by reserve funds required by law
or our bylaws.

      Voting rights

      In general,  each of our shares  carries the right to cast one vote on all
matters submitted to a vote of shareholders.

      Liquidation rights

      If our company is liquidated,  any assets  remaining  after payment of our
debts,  liquidation  expenses  and  all of our  remaining  obligations  will  be
distributed first to repay in full the nominal value of our shares.  Any surplus
will be distributed pro rata among our shareholders in proportion to the nominal
value of their shareholdings.


                                       66
<PAGE>

      Preferential subscription rights

      According to the French Commercial Code, if we issue additional shares, or
other specific kinds of additional  securities,  current  shareholders will have
preferential  subscription rights to those securities on a pro rata basis. These
preferential  rights  will  require  us to  give  priority  treatment  to  those
shareholders  over other persons  wishing to subscribe for the  securities.  The
rights  entitle the holder to subscribe to an issue of any  securities  that may
increase  our share  capital  by means of a cash  payment  or a set-off  of cash
debts. Preferential subscription rights are transferable during the subscription
period relating to a particular offering. These rights may also be traded during
the  subscription  period  usually by transfer  from one  account to another.  A
two-thirds  majority of our shares entitled to vote at an extraordinary  general
meeting may vote to cancel preferential  subscription rights with respect to any
particular offering. French law requires our board and the statutory auditors to
present reports that  specifically  address any proposal to cancel  preferential
subscription  rights.  In the event of a cancellation,  the relevant  securities
issuance must be completed within the period prescribed by law.

      Our shareholders  may also decide at an  extraordinary  general meeting to
give existing  shareholders a  non-transferable  priority right to subscribe for
the new securities  during a limited period of time. Our  shareholders  may also
waive their own preferential  subscription rights with respect to any particular
offering.

      Amendments to rights of holders

      The  rights  of our  shareholders  can be  amended  only by  action  at an
extraordinary  general meeting of shareholders.  Two-thirds of the shares voting
must approve any proposal to amend shareholder  rights,  except that a unanimous
vote is required to increase liabilities of shareholders.  The voting and quorum
requirements  for this type of special meeting are the same as those  applicable
to an extraordinary  general meeting,  except that the quorum requirements for a
special  meeting  are 50% of the voting  shares,  or 25% upon  resumption  of an
adjourned meeting.

Ordinary and extraordinary meetings

      In  accordance  with the French  Commercial  Code,  there are two types of
shareholders' general meetings: ordinary and extraordinary.

      Ordinary  general  meetings of shareholders  are required for matters that
are not specifically reserved by law to extraordinary general meetings, such as:

      o     electing, replacing and removing members of the board of directors;

      o     appointing statutory auditors;

      o     declaring dividends or authorizing dividends to be paid in shares;

      o     approving our annual financial statements; and

      o     issuing specific types of debt securities.

      Extraordinary  general  meetings of shareholders are required for approval
of matters such as  amendments to our bylaws,  including any amendment  required
for an extraordinary corporate action.  Extraordinary corporate actions include:

      o     changing our company's name or corporate purpose;

      o     increasing or decreasing our share capital;

      o     creating a new class of equity securities;

      o     authorizing  the issuance of investment  certificates or convertible
            or exchangeable securities;

      o     establishing any other rights to equity securities;

      o     selling  or  transferring  substantially  all of our  assets;  and

      o     voluntarily liquidating our company.

      Calling shareholders' meetings


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<PAGE>

      The  French  Commercial  Code  requires  our  board to  convene  an annual
ordinary  general meeting of shareholders  for approval of our annual  financial
statements.  This  meeting  must be held  within  six  months of the end of each
fiscal year.  This period may be extended by an order of the Presiding  Judge of
the Commercial  Court.  Our board may also convene an ordinary or  extraordinary
meeting of  shareholders  upon proper notice at any time during the year. If our
board  fails  to  convene  an  annual  shareholders'  meeting,  our  independent
statutory auditors or a court-appointed  agent may call the meeting.  Any of the
following persons may request the court to appoint an agent:

      o     one or  several  shareholders  holding  at  least  5% of  our  share
            capital;

      o     in cases of urgency, any interested party, including any member of a
            special management  committee consisting of one manager appointed by
            us and a series of representatives  elected by our employees,  which
            we refer to as the Works' Council; or

      o     duly qualified  associations of our shareholders who have held their
            shares in  registered  form for at least two years and who  together
            hold at least 1% of the voting rights of our company.

      An ordinary or extraordinary  meeting of shareholders may also be convened
by:

      o     in a bankruptcy,  our liquidator or  court-appointed  agent may also
            call a shareholders' meeting in some instances; or

      o     any shareholder  that holds a majority of our outstanding  shares or
            voting rights  following a public  tender or exchange  offer for our
            shares or the sale of a majority of our shares.

      Notice of shareholders' meetings

      We must announce  general meetings at least 30 days in advance by means of
a   preliminary   notice   published  in  the  Bulletin  des  Annonces   Legales
Obligatoires,  or the "BALO." The  preliminary  notice must first be sent to the
Autorite des Marches  Financiers,  or the "AMF." The AMF also  recommends that a
summary of such  preliminary  notice be  published  in a  newspaper  of national
circulation in France. The preliminary notice must disclose, among other things,
the time, date and place of the meeting, whether the meeting will be ordinary or
extraordinary,  the agenda,  a draft of the  resolutions  to be submitted to the
shareholders,  a description  of the  procedures  which holders of bearer shares
must follow to attend the meeting, the procedure for voting by mail, the address
of the  web  site  permitting  the  vote by  electronic  means  and a  statement
informing our shareholders that they may propose  additional  resolutions to our
board within 10 days of the publication of the preliminary notice.

      We must send a final notice  containing  the agenda and other  information
about the  meeting  at least 15 days  prior to the  meeting or at least six days
prior to the resumption of any meeting adjourned for lack of a quorum. The final
notice  must be sent by mail or, to  shareholders  who have  agreed  thereto  in
writing,  by electronic  means,  to all  registered  shareholders  who have held
shares for more than one month before the date of the  preliminary  notice.  The
final notice must also be sent by registered mail with acknoledgement of receipt
to the Works Council and the statutory  auditors.  The final notice must also be
published  in  the  BALO  and  in  a  newspaper   authorized  to  publish  legal
announcements  in the local  administrative  department  in which our company is
registered, with prior notice having been given to the AMF.

      In general,  our shareholders  can take action at  shareholders'  meetings
only on matters  listed in the agenda for the  meeting.  As an exception to this
rule, our  shareholders may take action with respect to the dismissal of members
of our board  regardless  of whether  this action is on the  agenda.  Additional
resolutions to be submitted for approval by our  shareholders at the meeting may
be proposed to our board,  within ten days of the publication of the preliminary
notice in the BALO by:

      o     a member of the Works' Council designated by the Works' Council;

      o     one or several shareholders holding a specified percentage of shares
            provided for by law; or

      o     a duly  qualified  association of  shareholders  who have held their
            shares in  registered  form for at least two years and who  together
            hold at least 1% of the voting rights in our company.

      Our board must submit these resolutions to a vote of our shareholders.

      During the two weeks preceding a meeting of shareholders,  any shareholder
may  submit  written  questions  to our board  relating  to the  agenda  for the
meeting. Our board must respond to these questions during the meeting.

      Attendance and voting at shareholders' meetings


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<PAGE>

      Each of our shares confers on the  shareholder  the right to cast one vote
on all  matters  submitted  to a vote of  shareholders,  except  that we are not
entitled to vote our  treasury  shares.  Our  shareholders  may attend  ordinary
meetings and  extraordinary  shareholders'  meetings  and exercise  their voting
rights subject to the conditions specified in the French Commercial Code and our
bylaws.  There is no requirement that our shareholders  have a minimum number of
shares in order to attend, or to be represented at, an ordinary or extraordinary
general meeting.

      In addition,  two members of the Works' Council are entitled to attend any
shareholders'  meeting.  They are also  permitted  to address  our  shareholders
before  the  vote of any  resolution  requiring  the  unanimous  consent  of the
shareholders.

      To  participate  in any  general  shareholders'  meeting,  a holder of our
registered  shares must have its shares  registered in its name in a shareholder
account maintained by us, or on our behalf by an agent appointed by us, at least
five days  before the date set for the  meeting.  A holder of our bearer  shares
must obtain a certificate from the accredited  intermediary with whom the holder
has deposited its shares.  This  certificate  must indicate the number of bearer
shares the holder owns.  The holder must deposit this  certificate  at the place
specified  in the notice of the meeting at least five days  before the  meeting.
However,  our board of  directors  has the right to accept  deposits  after this
deadline or to shorten the deadline.

      Once  a  shareholder  has  registered  its  shares  or  duly  presented  a
certificate  from its  accredited  financial  intermediary,  any transfer of the
shares prior to the relevant shareholders' meeting must be notified to our agent
or the accredited financial intermediary.  The notice must be delivered no later
than 3 p.m. Paris time on the day before such meeting.

      Proxies and voting by mail or electronic means

      In general,  all of our shareholders  that have properly  registered their
shares  or  duly  presented  a  certificate  from  their  accredited   financial
intermediary  may  participate  and vote in general  shareholders'  meetings  in
person,  by proxy,  by  videoconference  or by any electronic  telecommunication
device enabling their identification.

      Proxies will be sent via mail or electronic  means to any  shareholder  on
request.  To be counted,  the proxies must be received at our registered office,
or at any other address  indicated on the notice  convening the meeting,  before
the date of the meeting.  Voting instructions must be received by us in the form
provided  by law no later  than  3:00  p.m.  Paris  time on the day  before  the
shareholders'  meeting.  Any legal  respresentative  of a shareholder  that is a
corporation  may grant  proxies  to any  third  party,  even a  non-shareholder.
Alternatively,  the shareholder may send to us a blank proxy without  nominating
any  representative.  In that  case,  the chair of the  meeting  will vote blank
proxies in favor of all resolutions  proposed by our board and against all other
resolutions.

      With respect to votes by mail or other  electronic  means, we are required
to send  shareholders  a voting form. The completed form must be returned to us,
if by mail,  at least three days before the date of the  shareholders'  meeting.
However,  forms may be sent  electronically  to us until 3:00 p.m. Paris time on
the day before the shareholders' meeting.

      Quorum

      The French Commercial Code requires that shareholders  having at least 20%
of the shares  entitled to voting  rights must be present in person or be voting
by mail, by electronic means or by proxy to fulfill the quorum requirement for:

      o     an ordinary general meeting; or

      o     an  extraordinary  general  meeting  where an  increase in our share
            capital is proposed through  incorporation  of reserves,  profits or
            share premium.

      The quorum  requirement  is 25% of the shares  entitled to voting  rights,
determined on the same basis, for any other extraordinary general meeting.

      If a quorum is not present at a meeting, the meeting is adjourned. When an
adjourned  meeting is resumed,  there is no quorum  requirement  for an ordinary
meeting or for an  extraordinary  general meeting where an increase in our share
capital is proposed through incorporation of reserves, profits or share premium.
However,  only questions that were on the agenda of the adjourned meeting may be
discussed  and voted  upon.  In the case of any other  reconvened  extraordinary
general  meeting,  shareholders  having at least 20% of the shares  entitled  to
voting  rights  must be  present in person or be voting by mail,  by  electronic
means or by proxy  for a  quorum.  If a quorum is not  present,  the  reconvened
meeting may be adjourned for a maximum of two months.  Any  deliberation  by the
shareholders taking place without a quorum is void.


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<PAGE>

      Majority

      Holders of a simple majority of our voting power present in person, voting
by mail,  by  electronic  means or by proxy may pass any  resolution  on matters
required to be  considered  at an ordinary  general  meeting,  or  concerning  a
capital increase by  incorporation  of reserves,  profits or share premium at an
extraordinary  general meeting.  At any other  extraordinary  general meeting, a
two-thirds  vote of our  voting  power  present in  person,  voting by mail,  by
electronic means or by proxy is required.

      A  unanimous  shareholder  vote is required  to  increase  liabilities  of
shareholders.

      Abstention from voting by shareholders present in person,  voting by mail,
by  electronic  means or by proxy is counted as a vote  against  the  resolution
submitted to the shareholder vote.

      In general, our shareholders are entitled to one vote per share on matters
submitted to a vote at any general  meeting.  Under the French  Commercial Code,
shares of a company held by entities  controlled  directly or indirectly by that
company are not  entitled  to voting  rights and are not  considered  for quorum
purposes.

Limitations on right to own our securities

      The  French  Commercial  Code  currently  does  not  limit  the  right  of
non-residents  of France or  non-French  persons  to own and vote our  shares or
ADSs. However,  non-residents of France must file an administrative  notice with
French authorities for any acquisition of a controlling interest in our company.
Under existing administrative rulings,  ownership of 33.33% or more of our share
capital or voting  rights  would be regarded as a  controlling  interest,  but a
lower  percentage  might  be  held to be a  controlling  interest  in  specified
circumstances depending upon factors such as:

      o     the acquiring party's intentions;

      o     the acquiring party's ability to elect directors; or

      o     our financial reliance on the acquiring party.

      Anti-takeover effects of applicable law and regulations

      The French  Commercial  Code provides that any person,  acting alone or in
concert with others,  that becomes the owner,  directly or  indirectly,  of more
than 5%, 10%, 15%,  20%,  25%,  one-third,  50%,  two-thirds,  90% or 95% of the
outstanding  shares or voting rights of a listed company in France,  such as our
company,  or that increases or decreases its shareholding or voting rights above
or below any of those  percentages,  must notify our company within five trading
days of the date it crosses any of these  thresholds  of the number of shares it
holds and the voting  rights of the shares.  The  individual or entity must also
notify the AMF,  within  five  trading  days of the date it crosses any of these
thresholds.

      In addition, article 11 of our bylaws provides that any person who becomes
the  direct or  indirect  owner of at least 2%,  or any  multiple  of 2%, of our
outstanding shares or voting rights, or who decreases its shareholdings below 2%
or any multiple of 2% of our outstanding  shares or voting rights,  must provide
written  notice to us within  fifteen  trading  days  after  such  threshold  is
crossed.

      French law and AMF regulations impose additional reporting requirements on
any  person  who  becomes  the owner of more than 10% or 20% of our  outstanding
shares or voting rights. Any such person must file a report with us and with the
AMF within five trading days of the date it crosses either of these  thresholds.
In the report,  the  acquiror  must  specify its  intentions  for the  following
12-month period,  including whether or not it intends to continue its purchases,
to acquire control of our company or to nominate  candidates for our board.  The
AMF makes the notice  public.  The acquiror  must also  publish a press  release
stating its  intentions  in a financial  newspaper  of national  circulation  in
France. The acquiror may amend its stated  intentions,  so long as it does so on
the  basis  of  significant  changes  in  its  own  situation  or  that  of  its
shareholders. Upon any change of intention, it must file a new report subject to
the same conditions.

      To permit holders to give the required notice,  we are required to publish
in  the  BALO  no  later  than  15  days  after  the  annual  ordinary   general
shareholders'  meeting  information  with  respect to the total number of voting
rights outstanding as of the date of the meeting. In addition,  if the number of
outstanding  voting  rights  changes by 5% or more  between two annual  ordinary
general meetings, we are required to publish in the BALO, within 15 days of such
change, the number of voting rights outstanding and provide the AMF with written
notice of this information.  The AMF publishes the total number of voting rights
so  notified  by all  listed  companies,  noting  the date each  number was last
updated.


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<PAGE>

      If any person fails to comply with the legal notification requirement with
respect to the holding of 5%, 10%, 15%, 20%, 25%,  one-third,  50%,  two-thirds,
90% or 95% of our shares or voting rights, the shares or voting rights in excess
of  the  relevant   threshold   will  be  deprived  of  voting  rights  for  all
shareholders'  meetings until the end of a two-year period following the date on
which their owner complies with the notification  requirements.  Any shareholder
who fails to comply with these  requirements may have all or part of his, her or
its voting rights suspended by the French  commercial court for up to five years
at the request of our chairman,  any  shareholder or the AMF, and may be subject
to a fine.

      Pursuant  to the French  Commercial  Code,  we are  authorized  to require
persons holding voting shares in bearer form to disclose the beneficial owner(s)
of those shares,  the number of shares held by each of the  shareholders and any
restrictions to which these shares may be subject. We may suspend the voting and
dividend rights associated with these shares until the required  disclosures are
made.

      Pursuant to the French  Commercial  Code, we are authorized to require any
entity  holding  more than 2.5% of our shares or voting  rights to disclose  the
identity of the persons who directly or indirectly  hold more than  one-third of
the outstanding shares or voting rights of that entity.

      Under AMF regulations,  and subject to limited  exemptions  granted by the
AMF, any person or persons  acting in concert that own in excess of one-third of
the share capital or voting  rights of a French  listed  company must initiate a
public tender offer for the balance of the share capital of that company.

      In addition, a number of provisions of the French Commercial Code allow us
to adopt bylaws that have certain  anti-takeover  effects,  including provisions
that allow us to:

      o     limit the voting power of our shareholders; and

      o     execute shareholders'  agreements that provide for preemptive rights
            in case of a sale of shares by a shareholder.

      The French Commercial Code also permits us to take other corporate actions
that may discourage or prevent a change of control of our company, including:

      o     authorizing our board to reserve for issuance to a limited number of
            holders  securities  that  contain  rights to receive an  additional
            number of our shares,  contingent upon the agreement of our existing
            shareholders  to waive any  preemptive  rights with  respect to such
            issuance; and

      o     authorizing  our  board,   upon  receipt  of  the  approval  of  our
            shareholders,  to acquire  our shares in open market  purchases  for
            purposes of cancelling such shares.

      On June 9, 2005, our shareholders authorized our board of directors, for a
period  of 18  months,  to  purchase  up to  10%  of  our  capital  stock.  Such
authorization is valid until December 9, 2006, and no similar authorization will
be requested at the annual shareholders' meeting to be held on June 12, 2006.

      At the annual  meeting of  shareholders  to be held on June 12, 2006,  our
shareholders  will be asked to  delegate  to the board the powers  necessary  to
proceed, at such times and in such amounts as it may determine, in France and in
any other  country,  to issue Havas shares as well as any  securities  that give
their holders access,  immediately  and/or in the future,  to our share capital,
including  securities  that may be issued  pursuant  to  Article L 228-93 of the
French Commercial Code. The amount of the capital increase which may be realized
immediately  and/or in the future  pursuant to this  delegation may not exceed a
nominal value of (euro)43 million  representing 107 million  potential shares or
25% of our existing  share  capital.  In the case of issuances of shares  giving
access to our share capital,  with preemtive  subscription  rights,  the maximum
global  nominal  amount  of the  debt  portion  to our  company  may not  exceed
(euro)750 million. These authorizations are valid for a period of 26 months.

10.C  Material contracts

      The  following  summarizes  each of our  material  contracts,  other  than
contracts that we entered into in the ordinary  course of our business,  for the
two years before the date of filing of this annual report.

      On January 1, 2000, Havas North America, Inc., formerly EWDB North America
Inc.,  one of our U.S.  subsidiaries,  entered into a Fourth  Amendment of Lease
with The Rector,  Church-Wardens  and Vestrymen of Trinity Church in the City of
New York. Under this lease, Havas North America occupies  approximately  139,000
square feet for its  headquarters  for a fixed  annual rent which  escalated  to
$4,127,443 starting on January 1, 2003. The amended lease terminates on December
31, 2007.


                                       71
<PAGE>

      On April 2, 2001,  we entered  into a Protocol  Agreement  and  Commercial
Lease with Suresnes  Immobilier for the lease of our new corporate  headquarters
in  Suresnes,  France.  The lease is for  approximately  228,000  square feet of
leasable  area,  for a  period  of nine  years,  commencing  on the date we took
possession  of the  leased  building.  The  net  annual  rent  is  approximately
(euro)8.3  million,  which  may be  adjusted  annually  based  on  the  national
construction cost index.

      On May 14, 2001, in connection  with our  acquisition of the remaining 55%
interest  in  Media  Planning  Group,  we  entered  into a  registration  rights
agreement with Acacia ISP, S.L., Banco Santander Central Hispano, S.A., Compania
de Cartera e Inversiones  S.A., Deya S.A.,  Jose  Martinez-Rovira  Vidal,  Maria
Luisa Munoz Alvarez,  Cristina  Martinez-Rovira Munoz and Sandra Martinez-Rovira
Munoz,  under which we granted to the sellers certain  registration  rights with
respect to Havas shares they received as consideration for the acquisition.

      As of October 1, 2003, Arnold Worldwide LLC, one of our U.S. subsidiaries,
entered into a lease with BP Prucenter  Acquisitions  LLC,  which was amended in
September 2004 and January 2005. Under this lease,  Arnold leases  approximately
200,727  square  feet  for its  headquarters  for a fixed  rent  annual  rent of
$5,586,902. The lease terminates on August 31, 2014.

10.D  Exchange controls

      French exchange control  regulations  currently do not limit the amount of
payments  that we may remit to  non-residents  of France,  with the exception of
certain  persons  connected  with  terrorist  activities.  Laws and  regulations
concerning foreign exchange controls do require,  however,  that all payments or
transfers of funds made by a French  resident to a non-resident be handled by an
accredited  intermediary.  In  France,  all  registered  banks  and most  credit
establishments are accredited intermediaries.

10.E  Taxation

      French taxation

      The following is a description  of the French tax  consequences  of owning
and  disposing  of Havas  shares or Havas  ADSs.  This  description  may only be
relevant  to holders  of Havas  shares or Havas  ADSs who are not  residents  of
France  and do not hold  their  shares or ADSs in  connection  with a  permanent
establishment  or a fixed base in France  through  which the holders  carry on a
business or perform personal services.

      This  description  may not address all aspects of French tax laws that may
be relevant in light of the particular  circumstances of holders of Havas shares
or Havas ADSs. It is based on the laws,  conventions and treaties in force as of
the date of this Annual  Report,  all of which are  subject to change,  possibly
with retroactive effect, or different interpretations.

      The following  description of tax  consequences of owning and disposing of
Havas shares or Havas ADSs should be  considered  only as a summary and does not
purpot to be a complete analysis of all potential tax effects of the purchase or
ownership of Havas  shares or Havas ADSs.  Holders of Havas shares or Havas ADSs
should  consult their own tax advisors about the potential tax effects of owning
or disposing of Havas shares or Havas ADSs in any particular situation.

      Taxation on sale or disposal of Havas shares or Havas ADSs

      Generally,  a holder of Havas  shares or Havas ADSs will not be subject to
any French  income tax or capital gains tax when the holder sells or disposes of
Havas shares or Havas ADSs if both of the following apply:

      o     the holder is not a French resident for French tax purposes; and

      o     the holder has held not more than 25% of  Havas's  dividend  rights,
            known as  droits  aux  benefices  sociaux,  at any time  during  the
            preceding five years, either directly or indirectly.

      If a double tax treaty  between  France and the country of  residence of a
holder of Havas  shares or Havas ADSs  contains  more  favorable  provisions,  a
holder may not be subject to any French income tax or capital gains tax when the
holder sells or disposes of any Havas shares or Havas ADSs.

      Subject to various conditions, foreign states, international organizations
and a number of foreign  public  bodies are not subject to capital  gains tax on
sale or disposition of Havas shares or Havas ADSs.


                                       72
<PAGE>

      If a holder of Havas shares or Havas ADSs transfers shares using a written
agreement,  that  agreement  must  generally be  registered.  The holder will be
required to pay a registration  duty of 1.1% of either the purchase price or the
market value of the shares transferred, whichever is higher. The maximum duty is
(euro)4,000 per transfer.  However, if the agreement is executed outside France,
the holder of Havas shares or Havas ADSs will not be required to pay this duty.

      Taxation of Dividends

      In France,  dividends are paid out of after-tax income.  Dividends paid to
non-residents  normally are subject to a 25% French  withholding  tax.  However,
non-resident  holders  that are entitled to and comply with the  procedures  for
claiming  benefits  under an  applicable  tax treaty may be subject to a reduced
rate  (generally  15%) of  French  withholding  tax.  If a  non-resident  holder
establishes  its  entitlement  to  treaty  benefits  prior to the  payment  of a
dividend,  then  French tax  generally  will be  withheld  at the  reduced  rate
provided  under the tax treaty.  Until  December 31, 2004,  when  dividends were
received by  shareholders  resident in France,  such persons were under  certain
circumstances  entitled to a tax credit (Avoir Fiscal) representing a portion of
the underlying tax paid at the corporate level.

      The French Finance Law of 2004,  which reformed the taxation of dividends,
repealed the benefit of the Avoir Fiscal.  Instead,  for  dividends  received in
2005  and  for  those  received  as  from  January  1,  2006,   French  resident
shareholders  who are individuals are taxed  respectively on only 50% and 60% of
the amount of  dividends.  In addition,  French  resident  shareholders  who are
individuals are entitled to a tax credit (Tax Credit) equal to 50% of the amount
of dividends  they received with an overall  annual cap of (euro)230 for married
couples and members of a union agreement subject to joint taxation and (euro)115
for single persons, widows or widowers,  divorcees or married persons subject to
separate taxation.

      Dividends paid to non-residents  are not normally eligible for the benefit
of the Tax Credit described above. However,  qualifying non-resident individuals
who were  previously  entitled to a refund of the Avoir Fiscal pursuant to a tax
treaty may benefit,  under the same  conditions as for the Avoir Fiscal,  from a
refund of the Tax Credit (net of applicable withholding tax).

      With  respect to  dividends  distributed  as from  January  1,  2005,  the
administrative  guidelines issued on February 25, 2005 (4 J-1-05) (the "February
25, 2005  Administrative  Guidelines")  set forth the conditions under which the
reduced  French  withholding  tax  at the  rate  of 15%  may be  available.  The
immediate application of the 15% reduced rate is available to those non-resident
holders that may benefit from the so-called  "simplified"  procedure (within the
meaning of February 25, 2005 Administrative Guidelines).

      Under  the  "simplified  procedure",  non-resident  holders  may claim the
immediate  application of withholding tax at the rate of 15% on French dividends
to be received by them, provided that:

      o     they furnish to the financial  institution managing their securities
            account  a  certificate  of  residence  conforming  with  the  model
            attached to the February  25, 2005  Administrative  Guidelines.  The
            immediate  application of the 15%  withholding tax will be available
            only if the  certificate  of  residence  is  sent  to the  financial
            institution  managing their  securities  account before the dividend
            payment date.  Furthermore,  each financial institution managing the
            non-resident  holder's  securities  account  must  also  send to the
            French  paying  agent the figure of the total amount of dividends to
            be received which are eligible to the reduced  withholding  tax rate
            before the dividend payment date;

      o     the  non-resident  financial  institution  managing the non-resident
            holder's  securities  account  provides to the French paying agent a
            list of the  eligible  non-resident  holders  and  other  pieces  of
            information  set  forth  in the  February  25,  2005  Administrative
            Guidelines.  Furthermore,  the  financial  institution  managing the
            non-resident  holder's  securities  account should certify that each
            non-resident holder is, to the best of its knowledge,  a resident of
            the country he claims to be within the meaning of the applicable tax
            treaty.  These  documents  must be sent as soon as possible,  in all
            cases before the end of the third month  computed as from the end of
            the month of the dividend payment date.

      Where the  non-resident  holder's  identity and tax residence are known by
the French paying agent,  the latter may release such  non-resident  holder from
furnishing  to the financial  institution  managing its  securities  account the
above-mentioned certificate of residence, and apply the 15% withholding tax rate
to dividends it pays to such non-resident holder.

      For a  non-resident  holder  that  is not  entitled  to  the  "simplified"
procedure,  the 25% withholding tax will be levied at the time the dividends are
paid.  Such  non-resident  holder may,  however,  be entitled to a refund of the
withholding  tax in excess of the 15% rate under the  "standard",  as opposed to
the  "simplified",   procedure,   provided  he  or  she  complies  with  certain
formalities.


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<PAGE>

      Distributions  made as from  2006  will  not  give  rise to  precompte  or
equalization tax liability.

      Estate and gift tax

      France imposes estate and gift tax where an individual or entity  acquires
real and personal  property from a non-resident  of France by way of inheritance
or gift.  France has entered into estate and gift tax treaties  with a number of
countries.  Under these  treaties,  residents of those countries may be exempted
from this tax or obtain a tax credit,  assuming  specified  conditions  are met.
Holders of Havas  shares or Havas ADSs  should  consult  their own tax  advisors
about  whether  French estate and gift tax will apply and whether they may claim
an exemption or tax credit.

      Under "The Convention  Between the United States of America and the French
Republic for the  Avoidance  of Double  Taxation  and the  Prevention  of Fiscal
Evasion with Respect to Taxes on Estates,  Inheritance and Gifts of November 24,
1978" (the "Estate Tax Treaty"),  if a qualifying  U.S.  holder under the Estate
Tax Treaty  transfers  its Havas  shares or Havas  ADSs by gift,  or if they are
transferred by reason of the holder's death,  that transfer will only be subject
to French gift or inheritance tax if one of the following applies:

      o     the holder is domiciled in France at the time of making the gift, or
            at the time of the holder's death; or

      o     the  holder  used the Havas  shares or Havas  ADSs in  conducting  a
            business through a permanent  establishment or fixed base in France,
            or the holder held the Havas shares or Havas ADSs for that use.

      Wealth tax

      French  individual  residents  are  taxable  on  their  worldwide  assets.
Non-resident  individuals  are taxable only on their assets which are located in
France. However,  financial investments made by non-resident individuals,  other
than in real  property  companies,  are exempt  from  wealth  tax under  certain
conditions.

      If a double tax treaty between France and a holder's  country of residence
contains  more  favorable  provisions,  the  holder may not be subject to French
wealth tax.

      The French  wealth tax does not  generally  apply to Havas shares or Havas
ADSs if the holder is a  "resident"  of the United  States for  purposes  of the
France-U.S.A.  Income and  Capital  Tax Treaty  signed on August 31,  1994 which
entered into force on December 30, 1995 (the  "Treaty")  who own,  alone or with
related persons,  directly or indirectly,  Havas shares or Havas ADSs which give
rights to less than 25% of Havas earnings.

      Taxation of U.S. investors

      The  following is a discussion  of the material  U.S.  federal  income tax
consequences  relating to the ownership and disposition of Havas shares or Havas
ADSs by a U.S. Holder (as defined below).  This discussion deals only with Havas
shares  or Havas  ADSs  held as  capital  assets  and does not deal with the tax
consequences  applicable to all categories of investors,  some of which (such as
tax-exempt   entities,    passive   foreign   investment    companies,    banks,
broker-dealers,  investors owning directly,  indirectly or constructively 10% or
more of our outstanding voting shares,  investors who hold ordinary Havas shares
or Havas ADSs as part of hedging or conversion  transactions and investors whose
functional  currency is not the U.S. dollar) may be subject to special rules. In
addition,  the discussion  does not address any  alternative  minimum tax or any
state, local or non-United States tax consequences.

      This discussion is based on the Internal  Revenue Code of 1986, as amended
to  the  date  hereof,   final,   temporary  and  proposed  Treasury  Department
regulations  promulgated,  administrative and judicial  interpretations thereof,
and the Treaty, changes to any of which subsequent to the date hereof,  possibly
with retroactive  effect,  may affect the tax consequences  described herein. In
addition,  there can be no  assurance  that the  Internal  Revenue  Service (the
"IRS") will not challenge one or more of the tax consequences  described herein,
and we have not obtained,  nor do we intend to obtain,  a ruling from the IRS or
an opinion of counsel with respect to the U.S.  federal income tax  consequences
of acquiring or holding  Havas shares or Havas ADSs.  Prospective  purchasers of
Havas  shares or Havas  ADSs are  advised  to consult  their tax  advisers  with
respect to their  particular  circumstances  and with  respect to the effects of
U.S. federal, state, local or non-U.S. tax laws to which they may be subject.

      As used herein,  the term "U.S.  Holder" means a beneficial owner of Havas
shares or Havas ADSs that for U.S. federal income tax purposes is:

      o     an individual citizen or resident of the United States;

      o     a  corporation  or other entity  treated as a  corporation  for U.S.
            federal  income tax  purposes  created or  organized in or under the
            laws of the United States or of any political subdivision thereof;


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<PAGE>

      o     an estate of which the  income is  subject  to U.S.  federal  income
            taxation regardless of its source;

      o     a  trust  (i)  whose   administration  is  subject  to  the  primary
            supervision of a court within the United States and which has one or
            more U.S.  persons  who have the  authority  to  control  all of its
            substantial  decisions  or (ii)  that  made a valid  election  to be
            treated as a U.S. person for U.S. federal income tax purposes.

      If an entity treated as a partnership for U.S. federal income tax purposes
owns Havas  shares or Havas ADSs,  the U.S.  federal  income tax  treatment of a
partner in such partnership will generally depend upon the status of the partner
and the activities of the  partnership.  A partnership that owns Havas shares or
Havas  ADSs and the  partners  in such  partnership  should  consult  their  tax
advisors about the U.S. federal income tax consequences of holding and disposing
of the Havas shares or Havas ADSs.

      For  purposes of U.S.  federal  income tax,  holders of Havas ADSs will be
treated as holders of the shares which their Havas ADSs represent.

      Holders  of Havas  shares  or Havas  ADSs  should  consult  their  own tax
advisers as to the particular tax consequences to them of owning Havas shares or
Havas ADSs,  including  their  eligibility  for the benefits of the Treaty,  the
applicability  and  effect  of  state,  local,  foreign  and  other tax laws and
possible changes in tax law.

      Taxation of dividends

      The gross amount of dividend  (including any Tax Credit) payments that you
receive (prior to deduction of French withholding tax) generally will be subject
to U.S.  federal income taxation as foreign source dividend income to the extent
paid out of current or accumulated  earnings and profits of Havas, as determined
for U.S.  federal  income tax purposes.  Such dividends will not be eligible for
the dividends received deduction generally allowed to U.S. corporations. Subject
to the discussion below under  "--Passive  Foreign  Investment  Company," to the
extent that an amount  received by a U.S.  Holder exceeds the allocable share of
Havas's  current  and  accumulated  earnings  and  profits,  such excess will be
applied  first to reduce  such U.S.  Holder's  tax basis in his Havas  shares of
Havas ADSs and then, to the extent such distribution  exceeds such U.S. Holder's
tax basis, it will be treated as capital gain.

      Havas does not maintain its calculations of its earnings and profits under
U.S. federal income tax principles.  Therefore, a U.S. Holder should expect that
a  distribution  will  generally  be  treated as a  dividend.  The amount of any
distribution  of property  other than cash will be the fair market value of that
property on the date of the distribution.

      Certain dividends received by individual U.S. Holders before 2011, will be
subject to a maximum  income tax rate of 15%.  This  reduced  income tax rate is
only  applicable  to dividends  paid by "qualified  corporations"  and only with
respect  to  Havas  shares  or Havas  ADSs  held for a  minimum  holding  period
(generally,  61 days  during the  121-day  period  beginning  60 days before the
ex-dividend date).  Havas would expect to be considered a qualified  corporation
for this  purpose.  Accordingly,  dividends  paid by Havas  to  individual  U.S.
Holders on Havas shares or Havas ADSs held for the minimum holding period should
be eligible for the reduced income tax rate.  U.S.  Holders are urged to consult
their own advisors  regarding the availability of the reduced income tax rate on
dividends under their particular circumstances.

      Dividends  paid in euro will be included  in your income in a U.S.  dollar
amount  calculated  by reference to the exchange  rate in effect on the date you
receive the dividend (or the date the depositary  receives the dividend,  in the
case of the ADSs),  regardless of whether the payment is in fact  converted into
U.S.  dollars.  If such a dividend is converted into U.S. dollars on the date of
receipt, you generally should not be required to recognize foreign currency gain
or loss in respect of the dividend  income.  Any gain or loss  recognized upon a
subsequent disposition of Euro will generally be ordinary income or loss.

      The French tax  authorities  are expected to issue new guidelines  setting
out  formalities  to be  complied  with by U.S.  holders  in order to obtain the
reduced  withholding  tax rate on  distributions  made  from  2005.  You  should
nevertheless  be entitled to benefit from the application of the reduced rate of
withholding  tax of 15% provided  that you complete and file with the French tax
authorities  Form RF 1B EU-No.  5053 before the payment of the dividend.  If the
form is not filed  prior to the  dividend  payment,  withholding  tax  should be
levied at the 25% rate and you would have to claim for a refund of the excess by
filing  an  application  in  this  respect.  As  noted  above,  the  French  tax
authorities  have not yet issued any  guidance  with regard to the refund of the
Tax  Credit to  non-resident  individuals,  which  may  entail  compliance  with
cumbersome formalities.


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<PAGE>

      Taxation on Sale or Other Disposition of Havas shares or Havas ADSs

      Upon a sale or other  disposition  of Havas  shares or Havas ADSs,  a U.S.
Holder will generally recognize capital gain or loss for U.S. federal income tax
purposes in an amount equal to the difference  between the amount  realized,  if
paid  in  U.S.  dollars,  or  the  U.S.  dollar  value  of the  amount  realized
(determined at the spot rate on the settlement date of the sale) if proceeds are
paid in currency  other than the U.S.  dollar,  as the case may be, and the U.S.
Holder's tax basis  (determined  in U.S.  dollars) in such Havas shares or Havas
ADSs. Generally, the capital gain or loss will be long-term capital gain or loss
if the  holding  period of the U.S.  Holder in the  Havas  shares or Havas  ADSs
exceeds one year at the time of the sale or other disposition. The deductibility
of capital losses is subject to significant  limitations for U.S. federal income
tax purposes. Gain or loss from the sale or other disposition of Havas shares or
Havas ADSs  generally  will be treated  as U.S.  source  income or loss for U.S.
foreign tax credit purposes. Generally, any gain or loss resulting from currency
fluctuations  during the period between the date of the sale of the Havas shares
or Havas ADSs and the date the sale  proceeds are  converted  into U.S.  dollars
will be  treated  as  ordinary  income or loss from  sources  within  the United
States.  Each U.S.  Holder  should  consult its tax  advisor  with regard to the
translation  rules of its adjusted basis and the amount  realized upon a sale or
other  disposition of its Havas shares or Havas ADSs if purchased in, or sold or
disposed of for, a currency other than U.S. dollars.

      Passive Foreign Investment Company

      We believe  that we will not be treated  as a passive  foreign  investment
company,  or PFIC, for U.S.  federal income tax purposes for the current taxable
year or for future  taxable  years.  However,  an actual  determination  of PFIC
status is fundamentally  factual in nature and cannot be made until the close of
the  applicable  taxable  year.  We will be a PFIC for any taxable year in which
either:

      o     75% or more of our gross income is passive income; or

      o     our assets which  produce  passive  income or which are held for the
            production of passive  income amount to at least 50% of the value of
            our total assets on average.

      If we were to become a PFIC, the tax applicable to  distributions on Havas
shares or Havas ADSs and any gains a holder realizes when the holder disposes of
Havas  shares or Havas ADSs may be less  favorable  to the  holder.  Each holder
should consult its own tax advisors regarding the PFIC rules and their effect on
the holder if they purchase Havas shares or Havas ADSs.

      United States information reporting and backup withholding

      Non-corporate  U.S.  Holders may be subject to the  information  reporting
requirements  of the Code,  as well as to backup  withholding  on the payment of
dividends on, and the proceeds  received from the disposition of Havas shares or
Havas ADSs.  Backup  withholding may apply if a U.S. Holder (i) fails to furnish
its taxpayer identification number ("TIN"),  which, for an individual,  would be
his or her social security number, (ii) fails to provide certification of exempt
status,  (iii) is  notified  by the IRS that he or she has  failed  properly  to
report  payments of interest and  dividends,  (iv) under certain  circumstances,
fails to  certify,  under  penalty of  perjury,  that he or she has  furnished a
correct TIN or Havas has been notified by the IRS that such US Holder is subject
to backup  withholding  for failure to furnish a correct  TIN, or (v)  otherwise
fails to comply  with the  applicable  requirements  of the  backup  withholding
rules.

      U.S.   Holders   should  consult  their  tax  advisors   regarding   their
qualification  for  exemption  from backup  withholding  and the  procedure  for
obtaining such an exemption,  if applicable.  The amount withheld from a payment
to a U.S. Holder under the backup withholding rules generally will be allowed as
a credit against such holder's U.S. federal income tax liability and may entitle
such holder to a refund,  provided that the required information is furnished to
the IRS.

10.F  Dividends and paying agents

      Not applicable.

10.G  Statement by experts

      Not applicable.


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<PAGE>

10.H  Documents on display

      We are  subject to the  reporting  requirements  of the  Exchange  Act and
accordingly  are  required to file  reports and other  information  with the SEC
relating to our business,  financial condition and other matters. It is possible
to read and copy  documents  referred to in this annual report on Form 20-F that
have been filed with the SEC at the SEC's public  reference  room located at 450
Fifth Street, NW, Washington,  D.C. 20549. Please call the SEC at 1-800-SEC-0330
for further  information on the public  reference  rooms and their copy charges.
You may also view our annual reports and other  documents  filed with the SEC on
the internet at  http://www.sec.gov.  In addition,  you may obtain a copy of any
foreign language  document for which we have filed an English  translation as an
exhibit to this annual  report on Form 20-F by sending a written  request to our
corporate  headquarters at 2, allee de Longchamp,  92281 Suresnes Cedex, France,
attention: Corporate Communications.

10.I  Subsidiary information

      Not applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Impact of changes in foreign currency exchange rates and interest rates

      Foreign  currency  exchange  rates.  As  of  December  31,  2005,  we  had
operations in more than 70 countries  through  agencies in countries  throughout
Europe,  North America,  Latin America and the Asia-Pacific  region,  as well as
contractual  affiliations with agencies in numerous  additional  countries.  The
geographic  diversity of our  operations  is  reflected in the  diversity of the
currencies  that  make up our  results  of  operations.  In  2005,  62.0% of our
revenues  were  realized  in  currencies  other than the euro,  including  37.4%
realized in U.S. dollars and 12.0% realized in British pounds. In 2004, 63.5% of
our revenues were realized in currencies  other than the euro,  including  38.2%
realized in U.S. dollars and 13.0% realized in British pounds.

      The majority of our subsidiaries carry out businesses that are essentially
local,  with almost all of their revenues  received in local currency and almost
all of their expenses  incurred in local currency.  For those  subsidiaries that
are involved in more international  businesses,  non-local currency expenses are
generally  billed to the clients for whom those expenses are incurred on a basis
which protects the subsidiary from currency exchange rate  fluctuations  between
the time that it incurs the expenses and the time that it receives  payment from
the client. In addition,  most of our acquisitions for cash in the United States
and the United Kingdom have been funded through local  borrowings,  resulting in
financial  expenses and repayment  obligations in the same local  currency.  For
these reasons,  our exposure to currency  exchange risks arising from mismatches
between the currencies in which we receive  revenues and the currencies in which
we incur expenses tends to be limited. There can be no assurance,  however, that
currency  exchange risks from such  mismatches  will not increase in the future,
which could materially affect our results of operations.

      Because our foreign currency  mismatches tend to be limited,  we generally
do not hedge our exposure to foreign  currencies  except in connection with some
intercompany  loans including those described below. As at December 31, 2005 and
December 31, 2004, we had not entered into any foreign currency hedges, with the
exception of the following:

      o     We are a party to a currency  and  interest  rate swap  arrangement,
            which we refer to as "CIRCUS,"  that we entered into in June 1999 in
            connection with a collateral  deposit in the initial amount of $30.0
            million  we made  to  secure  a  borrowing  made by one of our  U.S.
            subsidiaries in the same amount from Banque  Nationale de Paris, New
            York  Branch.  This  arrangement  is  repayable  in six equal annual
            installments from June 4, 2001 to June 5, 2006 and the borrowing and
            collateral  deposit have  therefore  been reduced to $5.0 million at
            December 31, 2005.  The CIRCUS has the effect of  transforming  this
            U.S. dollar deposit of $5.0 million,  which earns interest at a rate
            of LIBOR less a margin,  into a euro deposit of  (euro)4.8  million,
            which earns  interest at EURIBOR  less a margin.  As of December 31,
            2005,  an  exchange  rate loss on the  CIRCUS  was  recorded  in the
            Consolidated  Statements of Operations under "exchange rate loss" in
            the  amount of  (euro)1.6  million.  As of  December  31,  2005,  an
            exchange  gain  on the  deposit  was  recorded  in the  consolidated
            statements of operations under "exchange rate gain" in the amount of
            (euro)1.7 (compared to a loss of (euro)2.2 million in 2004).

      o     We are a party to a forward sale contract of Canadian  $10.7 million
            against  British  pounds that we entered into in 2000 in  connection
            with a Canadian $10.7 million  intercompany  loan made by one of our
            U.K.  subsidiaries  to a newly acquired  Canadian  subsidiary.  This
            forward sale  contract  matured in 2004 and was extended to 2005 for
            an amount of Canadian $20.5 million.  In 2005, part of this contract
            was capitalized, reducing the amount of the forward sale contract to
            Canadian $13.4 million against the British pound. This


                                       77
<PAGE>

            forward sale  contract was  extended to  September  29, 2006.  As at
            December  31,  2005 and 2004,  the fair value of this  forward  sale
            contract  was  (euro)(0.3)   million  and   (euro)(0.078)   million,
            respectively.

      o     We are a party to a forward  sale  contract of  (pound)10.3  million
            against the euro that we entered  into in  December  2005 and is due
            January 19, 2006.  As at December  31, 2005,  the fair value of this
            forward sale contract was (euro)0.3 million.

      o     We are a party to a forward  sale  contract of  (pound)17.0  million
            against the euro that we entered  into in  December  2005 and is due
            February 27, 2006.  As at December 31, 2005,  the fair value of this
            forward sale contract was (euro)0.2 million.

      o     We are a party to a forward sale  contract of Canadian  $3.1 million
            against the euro that we entered into in March 2005 and is due March
            21, 2006.  As at December  31, 2005,  the fair value of this forward
            sale contract was (euro)(0.4) million.

      For a discussion of the terms of our financial  instruments as at December
31,  2005,  see  Notes  2.21,  11  and  20 to our  2005  consolidated  financial
statements included in this annual report.

      Because of the geographic  diversity of our operations,  our  subsidiaries
record their revenues, expenses, assets and liabilities in a number of different
currencies.  When we prepare our consolidated financial statements, the value of
these different  revenues,  expenses,  assets and liabilities is translated into
euro.  Fluctuations in the value of the euro will have an impact on the value of
the  amounts at which  these  revenues,  expenses,  assets and  liabilities  are
recorded  in our  financial  statements.  For this  reason,  changes  in foreign
currency  exchange  rates  can  have a  significant  impact  on our  results  of
operations and financial position as reported in euro. This is particularly true
with  respect to changes in U.S.  dollar to euro  exchange  rate and the British
pound to euro exchange rate.

      Interest  rates.  In the  course  of our  operations,  we are  exposed  to
interest rate changes,  primarily as a result of our credit  facilities  used to
finance our investment activity and to maintain financial  liquidity.  We borrow
at both fixed and variable rates.

      As of  December  31,  2005,  we had  (euro)129.9  million  of  outstanding
long-term borrowings, including current maturities, consisting principally of:

      o     (euro)25.4  million  in  U.S.  dollar  denominated  bank  loans,  at
            variable rates ranging from 4.79% to 5.36%, due 2006;

      o     (euro)4.0 million in a British pound denominated convertible bond at
            a fixed rate of 7.6%, due 2007; and

      o     (euro)99.8 million in euro denominated bank loans ("Club Deal") at a
            variable interest rate (3.31% as of December 31, 2005)

      o     (euro)0.7 million in other borrowings,  including  (euro)0.2 million
            at fixed rates and (euro)0.5 million at variable rates.

      We generally do not hedge our interest rate  exposure,  with the exception
of the following:

      o     the currency and interest rate swap  arrangement,  which we refer to
            as "CIRCUS," described above;

      o     Based on approximately  (euro)125.7 million of outstanding long-term
            borrowings at variable  rates as at December 31, 2005, the impact on
            pre-tax earnings  resulting from a one-percentage  point increase or
            decrease in interest rates would be approximately (euro)1.3 million,
            holding other variables constant.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

         Not applicable.


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<PAGE>

                                    PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

      None.

ITEM 14.  MATERIAL  MODIFICATIONS  TO THE RIGHTS OF SECURITY  HOLDERS AND USE OF
          PROCEEDS

      None.

ITEM 15. CONTROLS AND PROCEDURES

      Our Chief Executive Officer and our Chief Financial Officer have evaluated
the  effectiveness  of the design and operation of our  disclosure  controls and
procedures  (as defined in Exchange Act Rule  13a-15(e) and 15d-15(e)) as of the
end of the period  covered  by this  annual  report on Form 20-F.  Based on that
evaluation,  our Chief Executive  Officer and our Chief  Financial  Officer have
concluded  that,  as  of  the  evaluation  date,  our  disclosure  controls  and
procedures were effective to ensure that material information relating to us and
our consolidated subsidiaries would be made known to them by others within these
entities,  particularly  during the period in which this annual report was being
prepared, in order to allow timely decisions regarding required disclosure.

      There have been no significant changes in our internal controls or, to our
knowledge,  other factors that could significantly  affect our internal controls
subsequent to the evaluation date. Therefore, no corrective actions were taken.

ITEM 16. [RESERVED]

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

      Our board of directors has determined that Pierre Bouchut qualifies as the
"audit  committee  financial  expert" as defined in the applicable  rules of the
Securities  and Exchange  Commission.  Mr.  Bouchot is considered  "independent"
under NASDAQ independence criteria as well as under the independence criteria of
the Bouton Report.

ITEM 16B. CODE OF ETHICS

      In March 2004, our board adopted a Code of Ethics, a code that applies to,
among others, our chief executive officer and chief financial officer. This code
is publicly available on our website at www.havas.com. In addition, we undertake
to  provide a copy of our code of  ethics  to any  person  without  charge  upon
request. Such requests may be directed to our corporate headquarters at  2 allee
de Longchamp, 92281 Suresnes Cedex, France, attention: Investor Relations.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

      Ernst & Young served as our contractual  independent auditors for auditing
our 2005 consolidated financial statements.  A description of the fees billed to
us by Ernst & Young for  professional  services  in each of the last two  fiscal
years is set forth below:

                                          Year Ended December 31,
                                     ----------------- -----------------
                                       2005                     2004
                                       ----                     ----
                                              (in (euro) million)
           Audit Fees                    5                       5
           Audit-Related Fees            1                       1
           Tax Fees                      1                       1
                                      -------                 -------
           Total                         7                       7


                                       79
<PAGE>

      "Audit Fees" are the  aggregate  fees billed by our auditors for the audit
of  our  consolidated  and  annual  financial  statements,  reviews  of  interim
financial  statements and  attestation  services that are provided in connection
with statutory and regulatory filings or engagements.  "Audit-Related  Fees" are
fees  charged by our  auditors  for  assurance  and  related  services  that are
reasonably  related to the  performance  of the audit or review of our financial
statements and are not reported under "Audit Fees." This category comprises fees
billed for the audit of employee benefit plans and pension schemes,  agreed-upon
procedure  engagements  and other  attestation  services  subject to  regulatory
requirements, certifications of accounting-related internal controls, as well as
advisory services associated with our financial  reporting.  "Tax Fees" are fees
for  professional  services  rendered by our  auditors for tax  compliance,  tax
planning and tax advice on actual or contemplated transactions.

      In May 2003, our audit committee established policies and procedures which
require all audit and non-audit services performed by our principal  accountants
to be approved by the audit committee.

      All  audit  services  have  been  approved  by the  audit  committee.  All
non-audit  services  since May 2003 have been  approved  under the  pre-approval
policies of the audit committee.

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

      Not applicable.

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

We did not purchase any of our equity  securities,  nor were any such securities
purchased on our behalf, in the year ended December 31, 2005.

On January 1, 2006,  we redeemed the  remainder of our  outstanding  convertible
and/or  exchangeable  1% bonds,  maturing on January 1, 2006. As of December 31,
2005, the aggregate  amount of these bonds  outstanding  amounted to (euro)220.9
million,  comprising  (euro)219.1  million in aggregate  principal and (euro)1.8
million in interest.


                                       80
<PAGE>

                                    PART III

ITEM 17. FINANCIAL STATEMENTS

      Not applicable.

ITEM 18. FINANCIAL STATEMENTS

      The following financial statements are filed as part of this annual report
on Form 20-F:

<TABLE>
<S>                                                                                             <C>
Report of Independent Public Accountants...................................................     F-2

Consolidated Statements of Operations......................................................     F-3

Consolidated Balance Sheets................................................................     F-4

Consolidated Statements of Changes in Shareholders' Equity and Comprehensive Income........     F-5

Consolidated Statements of Cash Flows......................................................     F-6

Notes to Consolidated Financial Statements.................................................     F-7
</TABLE>

ITEM 19. EXHIBITS

Exhibit No.     Description
-----------     ----------------------------------------------------------------

1.1             Statuts (bylaws) of Havas (English translation) (incorporated by
                reference to Exhibit 1.1 to Havas's  annual  report on Form 20-F
                for the year ended December 31, 2003 (SEC File No. 001-16081)).

2.1             Form of Deposit  Agreement  among Havas,  Morgan  Guaranty Trust
                Company of New York and all  holders  from time to time of Havas
                ADSs  (incorporated  by  reference  to  Exhibit  4.1 to  Havas's
                registration statement on Form F-4 (Reg. No. 333-43362)).

2.2             Note  d'Operation  (Prospectus)  dated  February 3, 1999 for the
                issuance  of  convertible  and/or  exchangeable  bonds  by Havas
                (English translation)  (incorporated by reference to Exhibit 4.2
                to  Havas's  registration   statement  on  Form  F-4  (Reg.  No.
                333-43362)).

2.3             Note  d'Operation  (Prospectus)  dated December 12, 2000 for the
                issuance  of  convertible  and/or  exchangeable  bonds  by Havas
                (English translation)  (incorporated by reference to Exhibit 4.3
                to  Havas's  registration   statement  on  Form  F-4  (Reg.  No.
                333-59880)).

2.4             Final  Prospectus  dated  May  15,  2002  for  the  issuance  of
                convertible   and/or   exchangeable   bonds  by  Havas  (English
                translation)  (incorporated  by  reference  to  Exhibit  4.19 to
                Havas's  annual report on Form 20-F for the year ended  December
                31, 2001 (SEC File No. 001-16081)).

4.1             Fourth  Amendment to Lease dated  January 1, 2000 between  Havas
                North  America,  Inc.,  formerly EWDB North America Inc. and The
                Rector,  Church-Wardens  and Vestrymen of Trinity  Church in the
                City of New York  (incorporated  by  reference to Exhibit 4.1 to
                Havas's  annual report on Form 20-F for the year ended  December
                31, 2000 (SEC File No. 001-16081)).

4.2             Protocol  Agreement  and  Commercial  Lease dated as of April 2,
                2001 between Havas Advertising and Suresnes  Immobilier (English
                summary)  (incorporated  by  reference to Exhibit 4.2 to Havas's
                annual report on Form 20-F for the year ended  December 31, 2000
                (SEC File No. 001-16081)).

4.3             Supplemental  Agreement No. 1 to the Memorandum of Understanding
                of April 2, 2001 dated May 3, 2002 between  Suresnes  Immobilier
                and Havas (English  translation)  (incorporated  by reference to
                Exhibit 4.18 to Havas's  annual report on Form 20-F for the year
                ended December 31, 2001 (SEC File No. 001-16081)).


                                       81
<PAGE>

4.4             Registration  Rights  Agreement  dated as of May 14,  2001 among
                Acacia  ISP,  S.L.,  Banco  Santander  Central  Hispano,   S.A.,
                Compania  de  Cartera  e  Inversiones   S.A.,  Deya  S.A.,  Jose
                Martinez-Rovira  Vidal,  Maria  Luisa  Munoz  Alvarez,  Cristina
                Martinez-Rovira   Munoz   and   Sandra   Martinez-Rovira   Munoz
                (incorporated  by reference  to Exhibit  4.14 to Havas's  annual
                report on Form 20-F for the year ended  December  31,  2000 (SEC
                File No. 001-16081)).

4.5             Amended and Restated Employment  Agreement dated January 1, 2002
                between  Euro  RSCG  Worldwide,  Inc.  and  Alain  de  Pouzilhac
                (incorporated  by  reference  to Exhibit  4.9 to Havas's  annual
                report on Form 20-F for the year ended  December  31,  2002 (SEC
                File No. 001-16081)).

4.6             Memorandum of  Understanding  executed on June 28, 2005 by Havas
                and Alain de Pouzilhac (incorporated by reference to Exhibit 4.7
                to  Havas's  annual  report  on Form  20-F  for the  year  ended
                December 31, 2004 (SEC File No. 001-16081)).

4.7             Letter Agreement dated as of June 28, 2005 between EURO RSCG New
                York, Inc. and Alain de Pouzilhac  (incorporated by reference to
                Exhibit 4.8 to Havas's  annual  report on Form 20-F for the year
                ended December 31, 2004 (SEC File No. 001-16081)).

4.8             Non-Competition  Agreement executed on June 28, 2005 by Alain de
                Pouzilhac  (incorporated  by reference to Exhibit 4.9 to Havas's
                annual report on Form 20-F for the year ended  December 31, 2004
                (SEC File No. 001-16081)).

4.9             Amended  Employment  Agreement  executed  on  January  19 , 2005
                between Havas and Jacques Herail  (incorporated  by reference to
                Exhibit 4.10 to Havas's  annual report on Form 20-F for the year
                ended December 31, 2004 (SEC File No. 001-16081)).

4.10            Agreement  dated  February  1,  2003  between  Arnold  Worldwide
                Partners and Edward  Eskandarian  (incorporated  by reference to
                Exhibit 4.11 to Havas's  annual report on Form 20-F for the year
                ended December 31, 2002 (SEC File No. 001-16081)).

4.11            Amended Employment  Agreement dated as of April 13, 2005 between
                Arnold   Worldwide   Partners,   LLC.  and  Edward   Eskandarian
                (incorporated  by reference  to Exhibit  4.12 to Havas's  annual
                report on Form 20-F for the year ended  December  31,  2004 (SEC
                File No. 001-16081)).

4.12            Employment  Agreement  made as of October 1, 2004 between  James
                Heekin and EURO RSCG  Worldwide  (incorporated  by  reference to
                Exhibit 4.13 to Havas's  annual report on Form 20-F for the year
                ended December 31, 2004 (SEC File No. 001-16081)).

4.13            Deferred Compensation Plan Trust Agreement made October 31, 2004
                between Euro RSCG Worldwide,  Inc. and Circle Advisors, Inc. for
                the  benefit  of James  Heekin  (incorporated  by  reference  to
                Exhibit 4.14 to Havas's  annual report on Form 20-F for the year
                ended December 31, 2004 (SEC File No. 001-16081)).

4.14            Amendment to Employment  Agreement  executed on January 19, 2005
                between Havas and Jacques Seguela  (incorporated by reference to
                Exhibit 4.15 to Havas's annual  report on Form 20-F for the year
                ended December 31, 2004 (SEC File No. 001-16081)).

4.15            Amendment to Employment  Agreement  executed on January 19, 2005
                between  Havas and Alain  Cayzac  (incorporated  by reference to
                Exhibit 4.16 to Havas's  annual report on Form 20-F for the year
                ended December 31, 2004 (SEC File No. 001-16081)).

4.16            Lease Agreement  dated October 1, 2003 between Arnold  Worldwide
                LLC and BP Prucenter  Acquisition LLC (incorporated by reference
                to Exhibit  4.17 to Havas's  annual  report on Form 20-F for the
                year ended December 31, 2004 (SEC File No. 001-16081)).

4.17            First  Amendment to Lease Agreement dated September 2004 between
                Arnold   Worldwide   LLC  and  BP  Prucenter   Acquisition   LLC
                (incorporated  by  reference  to Exhibit  4.18 to Havas's annual
                report on Form 20-F for the year ended  December  31,  2004 (SEC
                File No. 001-16081)).

4.18            Second  Amendment to Lease  Agreement dated January 2005 between
                Arnold   Worldwide   LLC  and  BP  Prucenter   Acquisition   LLC
                (incorporated  by  reference  to Exhibit  4.19 to Havas's annual
                report on Form 20-F for the year ended  December  31,  2004 (SEC
                File No. 001-16081 )).

4.19*           Employment Agreement executed on November 28, 2005 between Havas
                and Herve Philippe (English Translation).

4.20*           Employment  Agreement  executed  on  January  20,  2001  between
                Fernando  Rodes Vila and Media  Planning  Group,  S.A.  (English
                Translation).

4.21*           Novation of Clause 6.3,  executed on December 19,  2005,  of the
                Employment  Agreement  dated  January 20, 2001 between  Fernando
                Rodes Vila and Media Planning Group, S.A. (English Translation).

4.22*           Letter  Agreement  dated March 10, 2006 from Fernando Rodes Vila
                to Vincent  Bollore,  waiving  the  provisions  of Article  6.2,
                paragraphs  7 and 8, and Article  6.3 (as  amended by  Amendment
                dated  December  19,  2003) of the  Employment  Agreement  dated
                January 20, 2001 between  Fernando Rodes Vila and Media Planning
                Group, S.A. (English Translation).

8.1*            List of subsidiaries.

12.1*           Certification of Chief Executive Officer pursuant to Section 302
                of the Sarbanes-Oxley Act of 2002.

12.2*           Certification of Chief Financial Officer pursuant to Section 302
                of the Sarbanes-Oxley Act of 2002.

13.1*           Certification  of Chief Executive  Officer pursuant to 18 U.S.C.
                Section  1350,  as  adopted  pursuant  to  Section  906  of  the
                Sarbanes-Oxley Act of 2002.

13.2*           Certification  of Chief Financial  Officer pursuant to 18 U.S.C.
                Section  1350,  as  adopted  pursuant  to  Section  906  of  the
                Sarbanes-Oxley Act of 2002.

15*             NASDAQ Corporate Governance Exemptions.

----------
*Filed herewith.


                                       82
<PAGE>

                                   SIGNATURES

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

                                           Havas


                                           By: /s/ Fernando Rodes Vila
                                                   -------------------
                                               Name: Fernando Rodes Vila
                                               Title: Chief Executive Officer

Dated: June 9, 2006


                                       83
<PAGE>

INDEX TO FINANCIAL STATEMENTS

 Havas and Subsidiaries

<TABLE>
<S>                                                                                              <C>
Report of Independent Public Accountants.......................................................  F-2
Consolidated Statements of Operations..........................................................  F-3
Consolidated Balance Sheets....................................................................  F-4
Consolidated Statements of Changes in Shareholders' Equity and Comprehensive Income............  F-5
Consolidated Statements of Cash Flows..........................................................  F-6
Notes to Consolidated Financial Statements.....................................................  F-7
</TABLE>


                                      F-1
<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of Havas

      We have audited the accompanying  consolidated balance sheets of Havas and
subsidiaries  (the  "Company") as of December 31, 2005 and 2004, and the related
consolidated  statements  of  operations,  changes in  shareholders'  equity and
comprehensive  income and cash  flows for each of the three  years in the period
ended  December  31,  2005.  These  consolidated  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

      We conducted  our audits in  accordance  with the  standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain  reasonable  assurance about whether the
financial statements are free of material  misstatement.  We were not engaged to
perform an audit of the Company's internal control over financial reporting. Our
audits included  consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the  circumstances,
but not for the purpose of  expressing  an opinion on the  effectiveness  of the
Company's internal control over financial reporting.  Accordingly, we express no
such  opinion.  An audit also  includes  examining,  on a test  basis,  evidence
supporting the amounts and  disclosures in the financial  statements,  assessing
the accounting principles used and significant estimates made by management, and
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 consolidated financial position of
Havas and  subsidiaries  at  December  31, 2005 and 2004,  and the  consolidated
results of their  operations and their cash flows for each of the three years in
the period ended December 31, 2005 in conformity  with U.S.  generally  accepted
accounting principles.

                                            ERNST & YOUNG AUDIT


                                            By: /s/ CHRISTIAN CHIARASINI
                                                --------------------------------
                                                Name: Christian Chiarasini

Neuilly-sur-Seine, France
May 23, 2006


                                      F-2
<PAGE>

                             HAVAS AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                         Years ended December 31,
                                                                          (In millions of euros except share and per share data)
                                                                   -------------------------------------------------------------
                                                                      Note          2005                2004                2003

                                                                             ---------------------------------------------------
<S>                                                                  <C>     <C>                 <C>                 <C>
Net revenues                                                                       1,461               1,449               1,525
Operating expenses
      Compensation and related costs                                                (911)               (865)               (974)
      Stock-based compensation                                         13            (13)                 (8)                 (5)
      General and administrative non-payroll costs                                  (395)               (416)               (433)
      Compensation to former shareholders of acquired businesses       12             (1)                 (3)                 (3)
      Amortization of intangible assets (2)                             6            (26)                (29)                (31)
      Goodwill and other intangible impairment                        5, 6            --                  --                (100)
      Restructuring and other charges                                   8             --                 (16)                (98)
                                                                             ---------------------------------------------------
      Total operating expenses                                                    (1,346)             (1,337)             (1,644)
                                                                             ---------------------------------------------------
Operating income (loss)                                                              115                 112                (119)
                                                                             ---------------------------------------------------
      Interest expense                                                               (43)                (71)                (78)
      Interest income                                                                 15                  16                  28
      Exchange rate gain (loss)                                                       --                   3                  (9)
      Net gain on trading securities                                                   3                   7                   9
      Other                                                            11             (2)                 (7)                (53)
                                                                             ---------------------------------------------------
Financial expense - net                                                              (27)                (52)               (103)
                                                                             ---------------------------------------------------
Income (loss) from operations before income tax                                       88                  60                (222)
      Provision for income tax                                         15            (19)                 (3)               (108)
      Minority interests                                                             (10)                 (8)                 (5)
      Equity in earnings (losses) of investees                         10             (4)                  1                   1
                                                                             ---------------------------------------------------
Income (Loss) from continuing operations                                              55                  50                (334)
                                                                             ---------------------------------------------------
Loss from discontinued operations (net of tax)                          9             --                 (17)                (89)
                                                                             ---------------------------------------------------
Net income (loss)                                                                     55                  33                (423)
                                                                             ---------------------------------------------------

Income (loss) from continuing operations (1)
      basic                                                                         0.13                0.15               (1.05)
      diluted                                                                       0.13                0.14               (1.05)

Loss from discontinued operations (basic and diluted) (1)                             --               (0.05)              (0.28)

Net income (loss) (basic and diluted)                                               0.13                0.10               (1.33)

Weighted average common shares outstanding
      Basic                                                                  424,280,479         340,534,449         318,494,944
      Diluted                                                                436,222,064         343,932,324         318,494,944
</TABLE>

(1)   2003  earnings  per  share  have  been  adjusted  by a factor  of  0.93254
      following  the  preferential  subscription  rights issue on October  19th,
      2004.

(2)   Corresponds  only  to  amortization  of  intangible   assets  acquired  in
      connection with a business combination.

The accompanying notes are an integral part of these consolidated financial
statements.


                                      F-3
<PAGE>

                             HAVAS AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                                            As of December 31,
                                                                                                          (In millions of euros)
                                                                                           ----------------------------------------
                                                                                              Note          2005           2004
                                                                                           ----------------------------------------
<S>                                                                                           <C>              <C>            <C>
                                             ASSETS
Current assets:
       Cash and cash equivalents                                                                                 603            311
       Highly liquid investments                                                                                  --            223
       Accounts receivable, net of allowance for doubtful accounts of 28.9 and 33.9
       as of December 31, 2005 and 2004, respectively                                            24            1,219          1,011
       Costs billable to clients                                                                                  59             46
       Prepaid expenses and advances to suppliers                                                                 47             38
       Other receivables                                                                                          91             93
       Deferred tax assets                                                                       15               26             34
       Other current assets                                                                                      256            205
                                                                                                         --------------------------
                                    Total current assets                                                       2,301          1,961
                                                                                                         ==========================
Noncurrent assets:
       Property and equipment, net                                                                4              103            114
       Goodwill                                                                                   5            1,730          1,620
       Other intangible assets, net                                                               6              196            212
       Equity investments                                                                        10                8              8
       Noncurrent deferred tax assets                                                            15                3              8
       Other assets                                                                               7               17             24
                                                                                                         --------------------------
                                   Total noncurrent assets                                                     2,057          1,986
                                                                                                         --------------------------
Total assets                                                                                                   4,358          3,947
                                                                                                         ==========================
                     LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
       Short-term borrowings                                                                     11              150             80
       Current maturities of convertible bonds                                                   11              240             21
       Current maturities of long-term borrowings                                                11               79             26
       Short-term obligations under capital leases                                               18               --              1
       Accounts payable                                                                                        1,107          1,035
       Other payables                                                                                            671            615
       Advances from clients                                                                                     117            112
       Accrued compensation                                                                    12, 13              8             13
       Deferred income                                                                                            20             23
                                                                                                         --------------------------
                                  Total current liabilities                                                    2,392          1,926
                                                                                                         --------------------------
Noncurrent liabilities
       Long-term borrowings                                                                      11               50              8
       Convertible bonds                                                                         11              452            666
       Long-term obligations under capital leases                                                18               --              1
       Accrued compensation                                                                    12, 13             19              9
       Deferred tax liabilities                                                                  15               19             24
       Accrued pensions and other benefits costs                                                 14               54             41
       Other liabilities                                                                                          81             98
                                                                                                         --------------------------
                                Total noncurrent liabilities                                                     675            847
                                                                                                         --------------------------
Minority interests                                                                                                19             20
                                                                                                         --------------------------
Shareholders' equity
       Common stock:  (euro)0.40 par value, 429,180,870 and 428,832,440 shares issued
       at December 31, 2005 and 2004, respectively and 425,608,078 and 421,398,323
       shares outstanding at December 31, 2005 and 2004, respectively                                            171            171
       Additional paid-in capital                                                                              3,572          3,573
       Retained earnings                                                                                      (2,192)        (2,214)
       Unrealized losses on securities                                                                            (1)            --
       Deferred compensation                                                                                      --             (2)
       Accumulated other comprehensive income                                                                   (271)          (347)
       Treasury stock, at cost, 3,572,792 and 7,434,117 shares at Dec. 31, 2005 and
       2004, respectively                                                                                         (7)           (27)
       Total shareholders' equity                                                                              1,272          1,154
                                                                                                         --------------------------
Total liabilities and shareholders' equity                                                                     4,358          3,947
                                                                                                         ==========================
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


                                      F-4
<PAGE>

                             HAVAS AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                            AND COMPREHENSIVE INCOME

                 (In millions of euros except number of shares)

<TABLE>
<CAPTION>
                                                         Number of                 Additional
                                                           shares       Common       paid-in      Retained      Treasury
                                                           (000's)       stock       capital      earnings        stock
                                                        ------------------------------------------------------------------
<S>                                                       <C>              <C>         <C>          <C>             <C>
Balance at December 31, 2002                              295,590          122         3,224        (1,766)         (63)
                                                        ==================================================================
Comprehensive income:
       Net loss                                                                                       (423)
       Currency translation adjustment
       Minimum  Liability Adjustment, gross
       Minimum Liability Adjustment, tax
       Total comprehensive income (loss)                                                              (423)
Dividends (per share amount: (euro)0.08) and                                                           (30)
   equalization tax
Treasury stock transactions                                 2,015                                      (14)          31
Exercise of stock options                                     975                          4
Share issuance--convertible bonds                               2
                                                        ------------------------------------------------------------------
Balance at December 31, 2003                              298,582          122         3,228        (2,233)         (32)
                                                        ==================================================================
Comprehensive income:
       Net income                                                                                       33
       Currency translation adjustment
       Minimum  Liability Adjustment, gross
       Minimum Liability Adjustment, tax
       Total comprehensive income (loss)                                                                33
Dividends (per share amount: (euro)0.05) and                                                           (11)
   equalization tax
Treasury stock transactions                                   181                                       (3)           5
Exercise of stock options                                     121
Impact of variable accounting related to
stock options repricing                                                                    6
Share issuance--convertible bonds                               1
              --other                                     122,513           49           339
                                                        ------------------------------------------------------------------
Balance at December 31, 2004                              421,398          171         3,573        (2,214)         (27)
                                                        ==================================================================
Comprehensive income:
       Net income                                                                                       55
       Currency translation adjustment
       Unrealized losses on available for sale investments
       Minimum  Liability Adjustment, gross
       Minimum Liability Adjustment, tax
       Total comprehensive income (loss)                                                                55
Dividends (per share amount: (euro)0.07) and                                                           (30)
   equalization tax
Treasury stock transactions                                 3,862                                       (3)          20
Exercise of stock options                                     345                          1
Impact of variable accounting related to
stock options repricing                                                                   (2)
Share issuance--convertible bonds                               3
              --other
                                                        ------------------------------------------------------------------
Balance at December 31, 2005                              425,608          171         3,572        (2,192)          (7)
                                                        ==================================================================

<CAPTION>

                                                           Unrealized                       Other              Total
                                                           losses on      Deferred      comprehensive     shareholders'
                                                         AFS securities compensation       income             equity
                                                         -------------------------------------------------------------
<S>                                                                             <C>           <C>               <C>
Balance at December 31, 2002                                                    (1)           (169)             1,347
                                                         =============================================================
Comprehensive income:
       Net loss                                                                                                  (423)
       Currency translation adjustment                                                        (134)              (134)
       Minimum  Liability Adjustment, gross                                                     (4)                (4)
       Minimum Liability Adjustment, tax                                                         1                  1
       Total comprehensive income (loss)                                                      (137)              (560)
Dividends (per share amount: (euro)0.08) and                                                                      (30)
   equalization tax
Treasury stock transactions                                                                                        17
Exercise of stock options                                                                                           4
Share issuance--convertible bonds
                                                          ------------------------------------------------------------
Balance at December 31, 2003                                     --             (1)           (306)               778
                                                          ============================================================
Comprehensive income:
       Net income                                                                                                  33
       Currency translation adjustment                                                         (38)               (38)
       Minimum  Liability Adjustment, gross                                                     (4)                (4)
       Minimum Liability Adjustment, tax                                                         1                  1
       Total comprehensive income (loss)                                                       (41)                (8)
Dividends (per share amount: (euro)0.05) and                                                                      (11)
   equalization tax
Treasury stock transactions                                                      1                                  3
Exercise of stock options
Impact of variable accounting related to
stock options repricing                                                         (2)                                 4
Share issuance--convertible bonds
              --other                                                                                             388
                                                          ------------------------------------------------------------
Balance at December 31, 2004                                     --             (2)           (347)             1,154
                                                          ============================================================
Comprehensive income:
       Net income                                                                                                  55
       Currency translation adjustment                                                          83                 83
       Unrealized losses on available for sale investments       (1)                                               (1)
       Minimum  Liability Adjustment, gross                                                    (10)               (10)
       Minimum Liability Adjustment, tax                                                         3                  3
       Total comprehensive income (loss)                         (1)                            76                130
Dividends (per share amount: (euro)0.07) and                                                                      (30)
   equalization tax
Treasury stock transactions                                                                                        17
Exercise of stock options                                                                                           1
Impact of variable accounting related to
stock options repricing                                                          2                                 --
Share issuance--convertible bonds
              --other
                                                          ------------------------------------------------------------
Balance at December 31, 2005                                     (1)            --            (271)             1,272
                                                          ============================================================
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


                                      F-5
<PAGE>

                             HAVAS AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                                   Years ended December 31,
                                                                                                    (in millions of euros)
                                                                                           ----------------------------------------
                                                                                             2005            2004              2003
                                                                                             ----            ----              ----
<S>                                                                                          <C>              <C>              <C>
Cash flows from operating activities
Net income (loss) from continuing operations                                                   55              50              (334)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
      Minority interests                                                                       10               8                 5
      Amortization, depreciation and impairment                                                73              74               184
      Gain on repurchase of convertible bonds                                                  --             (30)               (5)
      Restructuring                                                                            --             (26)               72
      Stock-based compensation-Parent company plan                                             --               3                --
      Gain on sale of highly liquid investments                                                (3)             (7)               (9)
      Gain on sale of assets                                                                  (16)             (2)               --
      Loss in equity method investees, net of dividends                                         5              --                --
      Deferred tax                                                                             (2)            (32)               93
      Change in assets and liabilities:
                        (Increase) / decrease in accounts receivable                         (145)             76                51
                        Increase / (decrease) in accounts payable                              (1)             11                96
                        Increase / (decrease) in advances from clients                         (7)             (6)               (8)
                        Net change in other assets / liabilities                              (11)              4                32
                                                                                           ========================================
                        Net cash (used in) provided by operating activities                   (42)            123               177
Cash flows from investing activities
Purchase of tangible and intangible assets                                                    (37)            (37)              (51)
Purchase of subsidiaries net of cash acquired                                                 (44)            (79)              (15)
Proceeds from sale of tangible and intangible assets                                           21               6                30
Proceeds from sale of subsidiaries                                                             14              36                 8
Net proceeds from financial assets                                                              2              --                --
Net proceeds from highly liquid investments                                                   226             204                39
                                                                                           ========================================
                        Net cash provided by investing activities                             182             130                11
Cash flows from financing activities
Dividends paid in cash                                                                        (37)            (20)              (39)
Proceeds from issuance of stock and disposal of treasury stock                                 18             391                 6
Net payments under line-of-credit agreements                                                   66             (16)               (9)
Principal payments under capital lease obligations                                             --              (2)               (9)
Purchase of convertible bonds                                                                  --            (472)             (109)
Proceeds from long-term borrowings                                                            108              31                 1
Repayment of long-term borrowings                                                             (15)            (89)              (17)
                                                                                           ========================================
                        Net cash (used in) / provided by financing activities                 140            (177)             (176)
Effect of change in consolidation method                                                       (5)             --                --
Effect of exchange rate changes on cash and cash equivalents                                   17              (7)              (21)
Net cash used in discontinued operations                                                       --              --               (45)
Net increase (decrease) in cash and cash equivalents                                          292              69               (54)
Cash and cash equivalents at beginning of the year                                            311             242               296
Cash and cash equivalents at end of the year                                                  603             311               242
Income tax paid                                                                                22              26                30
Interest paid (1)                                                                              36             106                28
</TABLE>

(1)   The 2004 amount  includes  55.5 of interest  paid related to the Company's
      repurchase of 17,570,404 of its convertible bonds in December 2004.


                                      F-6
<PAGE>

                             HAVAS AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (In millions of euro except per share amounts and as otherwise indicated)

1. NATURE OF OPERATIONS

      Havas, a French  corporation  listed on the Compartiment A of the Eurolist
of Euronext and on the NASDAQ National Market system,  and its subsidiaries (the
"Company" or "Havas") operate as a global advertising and  communications  group
with  worldwide   networks  that  offer  a  broad  range  of   advertising   and
communications  services,   including  integrated  communications,   traditional
advertising,   direct   marketing,   media   planning   and  buying,   corporate
communications,  internal communications,  sales promotion,  design,  television
sponsorship,  human resources,  multimedia interactive communications and public
relations.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      The consolidated financial statements of the Company have been prepared in
accordance with accounting principles generally accepted in the United States of
America.

      All  figures  are  presented  in  millions  of  euros,   unless  otherwise
indicated.

2.1. Principles of Consolidation

      The consolidated  financial statements include the accounts of the Company
and its  majority  owned  subsidiaries.  Investments,  in which the Company owns
20-50%  of the  share  capital  and  has the  ability  to  exercise  significant
influence over the operating and financial policies, are accounted for using the
equity method of accounting.  They are initially  accounted for at cost and then
will be increased by the future results. All significant  intercompany  balances
and transactions are eliminated upon consolidation.

2.2. Foreign Currency Translation

      The balance sheets of foreign  subsidiaries  are  translated  into euro at
year-end exchange rates and their income and cash-flow statements are translated
at average exchange rates for the year.  Differences  arising on translation are
recorded in other comprehensive income.

2.3. Estimates and Judgments

      The  preparation  of financial  statements in conformity  with  accounting
principles   generally  accepted  in  the  United  States  of  America  requires
management to make estimates and judgments  that affect the reported  amounts of
assets,  liabilities,  revenue  and  expenses  as  well  as  the  disclosure  of
contingent  assets and  liabilities.  Actual  results  could  differ  from those
estimates.  The following may involve a higher degree of judgment or complexity:
revenue recognition,  allowances for doubtful accounts,  restructuring  charges,
contingent  acquisition   obligations,   impairment  of  intangible  assets  and
goodwill, employee stock option plans and income taxes.

2.4. Revenue Recognition

      Substantially  all  revenue  is  derived  from  fees and  commissions  for
advertising  and  communication  services  and for the  planning and purchase of
media.  Revenue is recognized  when the service is rendered,  in accordance with
the terms of the  contractual  arrangement,  and upon completion of the earnings
process.  The earnings  process is complete when  services are rendered,  on the
date the media is published or aired, when costs are incurred for production and
when  collection is  reasonably  assured.  Some  contractual  arrangements  with
clients  include  performance   incentives  which  allow  the  Company  to  earn
additional  revenues based on its performance  relative to both  qualitative and
quantitative objectives. The Company recognizes the incentive portion of revenue
under  these  arrangements  when  the  clients  achieve  these  qualitative  and
quantitative goals.


                                      F-7
<PAGE>

Substantially  all of the Company's revenue is recorded as the net amount of the
Company's gross billings less pass through expenses  charged to its clients.  In
most cases the amount that is billed to clients significantly exceeds the amount
of revenue that is earned and reflected in the financial  statements  because of
various pass through  expenses such as production and media costs. In compliance
with  Emerging  Issues Task Force (EITF)  99.19  "Reporting  revenue  gross as a
principal  versus  net as an agent" we assess  whether  the  agency or the third
party supplier is the primary obligator.  The Company evaluates the terms of its
clients  agreements as part of this assessment.  In addition,  the Company gives
appropriate   consideration  to  either  key  indicators  such  as  latitude  in
establishing  price,  discretion  in supplier  selection  and credit risk to the
vendor.  Because the Company broadly operates as an advertising  agency based on
its  primary  lines of business  and given the  industry  practice to  generally
record revenue on a net versus gross basis, the Company believes that there must
be  strong  evidence  in  place  to  overcome  the  presumption  of net  revenue
accounting.  Accordingly,  the  Company  generally  records  revenue net of pass
through charges.

2.5. Accounts Receivable

      Accounts  receivable  include both amounts due from customers for services
provided in the normal course of business operations as well as actual media and
production costs which are paid by the Company and rebilled to clients.

2.6. Allowance for Doubtful Accounts

      The Company  maintains  allowances  for doubtful  accounts  for  estimated
losses  that  result  from  the  inability  of its  customers  to make  required
payments.  The Company bases its allowances on the likelihood of  recoverability
of  accounts  receivable  based upon past  experience  and  reviews of aging and
analysis of specific  accounts.  If economic or specific  industry trends worsen
beyond its  estimates,  the Company will  increase its  allowances  for doubtful
accounts by recording additional expense.

2.7. Highly liquid investments / cash and cash equivalents

      Highly liquid investments  include variable interest notes and investments
in money market mutual funds which include monetary Societe  d'Investissement  a
Capital Variable  ("SICAVs") and Fonds Communs de Placement ("FCP") that qualify
as "Euro monetary" mutual funds under the French Autorite des Marches Financiers
regulations, under which:

      -     the  sensitivity,  defined as  duration  divided  by (1 +  effective
            rate),  of the  investment  portfolio  should be within the range of
            0.5,

      -     the  investment  strategy  disclosed  should refer to one or several
            indicators for the monetary market of the euro zone,

      -     the  portfolio  should  not  be  subject  to  foreign-exchange  risk
            exposure and should not include equity securities.

      Cash and cash equivalents  consist of cash and marketable  securities with
an original maturity of 90 days or less.

2.8. Costs Billable to Clients

      Costs incurred on behalf of clients when providing advertising,  marketing
and other  services  are  accounted  for in "Costs  billable  to clients" in the
consolidated  balance  sheets at the lower of cost and fair  market  value until
revenue resulting from expenditures is recognized.

2.9. Property and Equipment, net

      Property and  equipment are carried at historical  cost.  Depreciation  is
calculated either on a straight-line basis or using the declining-balance method
over the  estimated  useful life of the related  asset.  Assets  acquired  under
capital lease agreements are capitalized.

      The Company  estimates  the useful lives of its property and  equipment in
order to determine the amount of depreciation  expense to be recorded during the
reporting period.


                                      F-8
<PAGE>

2.10. Goodwill and Other Intangible Assets

      Goodwill corresponds to the excess of the acquisition cost of subsidiaries
over the fair value of the related  assets  acquired  and  liabilities  assumed.
Beginning on January 1, 2002, in accordance  with the provisions of Statement of
Financial  Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible
Assets," the Company no longer amortizes goodwill, but rather tests these assets
at least  annually for  impairment  by comparing the fair value of the reporting
units over their carrying values. The fair value of the reporting units has been
computed using the discounted cash flow method. Such projections require the use
of  estimates  and  assumptions  as to matters  such as future  revenue  growth,
product margins, capital expenditures,  working capital requirements,  tax rates
and discount rates. Actual earnings may differ from the Company's estimates.  If
the fair value of the reporting  unit is determined to be less than its carrying
value, a second step is performed to compute the amount of goodwill  impairment,
if any. As a result of the annual  impairment  testing,  the Company  determined
that there was no goodwill impairment charge in 2005 and 2004 whereas a goodwill
impairment charge of 69.5 was recorded in 2003.

      Other  intangibles  consist  mainly of trademarks  and customer  lists and
customer  relationships,  which are amortized over their estimated  useful lives
using the straight-line method.

2.11. Impairment of Long Lived Assets and Accounting for Discontinued Operations

      The long lived  assets are  reviewed  for  impairment  whenever  events or
circumstances  indicate their carrying values may not be  recoverable.  Whenever
such events or circumstances  arise, an estimate of the future undiscounted cash
flows is compared to the  asset's  carrying  value to  determine  if  impairment
exists pursuant to the requirements of SFAS 144,  "Accounting for the Impairment
or Disposal of Long-Lived-Assets."

      In  accordance  with  SFAS  144,  the  Company   includes  in  assets  and
liabilities  held  for  sale  and in  discontinued  operations  the  assets  and
liabilities  that meet certain  criteria with respect to the Company's plans for
their sale or abandonment.  Depreciation and  amortization  cease when the asset
meets  the  criteria  to be  classified  as held for sale.  If (1) a planned  or
completed disposal involves a component of the Company whose operations and cash
flows can be distinguished  operationally and for financial  reporting purposes;
(2) such  operations and cash flows will be (or have been)  eliminated  from the
Company's ongoing operations;  and (3) the Company will not have any significant
continuing  involvement  in the  component,  then  the  component's  results  of
operations are presented as discontinued  operations for all periods.  Operating
losses from  discontinued  operations are recognized in the period in which they
occur.   Long-lived  assets  (or  groups  of  assets  and  related  liabilities)
classified  as held for sale,  are  measured at the lower of carrying  amount or
fair value less costs to sell.

2.12. Equity investments

      The equity method is used to account for  investments in entities in which
the Company has an ownership of less than 50% and has significant influence over
the operating and  financial  policies.  The excess of the cost of the Company's
investment  over the Company's  share of the fair value of the net assets at the
acquisition  date is recognized as goodwill and included in the carrying  amount
of the investment.  The Company annually assesses these investments to determine
if there has been a decline in the fair value below the  carrying  amount and if
the  decline  is  deemed  to be  other  than  temporary.  In 2005,  the  Company
determined  that there was an equity method  goodwill  impairment  charge of 3.0
whereas no equity method goodwill  impairment  charge was recognized in 2004 and
2003.

2.13. Available for sale securities

      The available for sale  securities are included in the line "Other assets"
in the accompanying  consolidated  balance sheets and mainly include investments
in  non-consolidated  companies  over which the Company  does not  exercise  any
significant  influence or control.  These  securities are assessed at fair value
and any change is recognized in other comprehensive income as "Unrealized losses
on  avalaible  for sale  investments"  until  their date of sale.  The  currency
exchange  difference of non monetary assets  denominated in foreign  currency is
also recorded in other  comprehensive  income.  The fair value of the marketable
securities is determined based on the share price.


                                      F-9
<PAGE>

      The Company annually assesses these investments to determine if there have
been any other than temporary  declines in market value below book value. If the
impairment is determined to be other than temporary, then the Company recognizes
a loss equal to the difference  between the investment's  cost and fair value in
the consolidated statement of operations.  Impairment losses cannot be reversed.
Subsequent  increases in fair value are included in other  comprehensive  income
until realized.

2.14. Pension, Retirement and Post Employment Obligations

      In accordance  with the laws and  practices of each  country,  the Company
participates in various  employee benefit plans offering  pensions,  retirement,
termination  and death and  disability  benefits.  Pension  plans  include  flat
benefits, final pay plans and multi-employer plans.

      Defined  contribution plans are post-employment  benefit plans under which
an entity  pays fixed  contributions  into an  insurance  company or an external
pension funds and will have no legal or  constructive  obligation to pay further
contributions  if the fund does not hold  sufficient  assets to pay all employee
benefits  relating to employee  service in the current and prior periods.  These
contributions are recorded as expenses when incurred. No provision is recognized
since no further commitment is required.  Multi-employer plans are accounted for
as  defined  contribution  plans  due to the lack of  information  required  for
assessing the plans as defined benefit plans.

      Defined  benefit  plans are  post-employment  benefit  plans which provide
additional  contractual  benefits.  These  benefits  may be  settled  either  in
one-time  (indemnity  for  employment   agreement   termination)  or  in  annual
instalments  (in  particular  in  the  United-Kingdom).   A  provision  is  then
recognized  over the  period  the  employees  are  rendering  service  using the
projected credit unit method. The provision  represents the accumulated benefits
the  employees  will have  earned  during  the  rendering  service  period.  The
provision is measured on a  discounted  basis and  accounted  for in the balance
sheet,  net of the fair value of the related  assets.  The discount rate used at
the closing date corresponds to the AA rated bonds yield rate.

      Individual  employment  contracts,  collective  bargaining  agreements and
statutes in certain  countries where the Company operates  generally provide for
severance  indemnities  in  the  event  of  involuntary  employee  terminations.
Indemnities  may range  generally  from  several  months  to,  for  certain  key
employees,  several  years  of  the  related  employee's  annual  salary.  Those
severance  indemnities that are provided for by collective  bargaining agreement
or  statutes  generally  accumulate  and  when  they  are  probable  and  can be
reasonably  estimated,  they are accrued ratably over the service period.  Those
severance indemnities that are allowed through individual contracts generally do
not vest or accumulate and are therefore  accrued when the decision to sever the
individual is made. Key employees are also generally subject to  non-competition
agreements.

2.15. Deferred Taxes

      In accordance  with the SFAS No. 109,  "Accounting  for Income Taxes," the
Company records deferred tax assets and liabilities using enacted tax rates that
account for the effect of temporary  differences  between the book and tax bases
of assets and liabilities. If enacted tax rates change, the Company would adjust
its deferred tax assets and  liabilities  through the provision for income taxes
in the period of the change to reflect the  enacted  tax rate  expected to be in
effect when the deferred tax items are reversed. The Company records a valuation
allowance  on  deferred  tax assets  when it is more  likely  than not that some
portion  or all of the  deferred  tax  assets  will not be  realized.  Forming a
conclusion  that a valuation  allowance is not needed is difficult when there is
negative evidence such as cumulative  losses in recent years.  Cumulative losses
weigh heavily in the overall assessment.

2.16. Foreign Currency Transactions

      Foreign  currency   transactions  are  converted  at  the  exchange  rates
prevailing at the dates of the  transactions.  Monetary  assets and  liabilities
denominated in foreign currencies are converted at the respective exchange rates
prevailing at the balance sheet date. Any exchange  differences are reflected as
"Exchange  rate gain  (loss)" in the  accompanying  consolidated  statements  of
operations,  unless they relate to net investments in foreign  subsidiaries,  in
which case they are accounted for in retained earnings as "Currency  translation
adjustment" until the date of sale of the subsidiaries.


                                      F-10
<PAGE>

2.17.   Earnings per share

      Basic  earnings  per share is computed  by dividing  the net income by the
weighted-average  number  of Havas  shares  outstanding  during  the year  after
deducting  the  number  of  treasury  shares.  Diluted  earnings  per  share  is
calculated  by using the  "treasury  stock"  method for stock options (Note 13),
subscription options and equivalents and convertible bonds (Note 11):

      -     the numerator: the earnings are adjusted by adding back the interest
            expenses (net of tax) relating to the convertible bonds;

      -     the  denominator:  the number of basic  shares is adjusted by adding
            the number of potentially dilutive shares.

The equity  instruments which give access to the capital stock are only included
in the  calculation  of the diluted  earnings  per share if they have a dilutive
effect on the basic earnings per share.

For comparison  purposes of earnings per share disclosure,  the weighted average
numbers of outstanding  shares of each period  disclosed are adjusted in case of
capital increases with preferential subscription rights.

2.18. Treasury Stock

      Treasury  share  purchases are accounted for at cost. The sale of treasury
shares is accounted for at first in first out cost method.  Gains on the sale of
treasury  shares are accounted for as additional  paid-in capital whereas losses
on the sale of treasury shares are accounted for as retained earnings and do not
affect reported results of operations.

2.19. Stock Options

      At December 31, 2005, the Company had  stock-based  employee  compensation
plans, which are more fully described in Note 13. The Company accounts for those
plans under the recognition and measurement  principles of Accounting  Practices
Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees."

      The following table  illustrates the effect on net income and earnings per
share if the Company had applied the fair value  recognition  provisions of SFAS
No 123, "Accounting for Stock-Based Compensation," to stock-based compensation.

<TABLE>
<CAPTION>
                                                                                               2005         2004         2003
                                                                                               ----         ----         ----
<S>                                                                                           <C>           <C>         <C>
      Net income (loss), as reported ..................................................          55           33         (423)
         Deduct: Stock-based compensation expense under fair value
          method, net of related tax effects ..........................................         (27)         (18)         (12)
         Add: Stock-based compensation expense included in "Net
          income (loss)" reported, net of related tax effects .........................          13            8            5
      Net income (loss), pro forma ....................................................          41           23         (430)
      Net income (loss) per share basic, as reported (1) ..............................        0.13         0.10        (1.33)
      Net income (loss) per share diluted, as reported (1) ............................        0.13         0.10        (1.33)
      Net income (loss) per share basic, pro forma (1) ................................        0.10         0.07        (1.35)
      Net income (loss) per share diluted, pro forma (1) ..............................        0.10         0.07        (1.35)
</TABLE>

(1) 2003 earnings per share have been adjusted by a factor of 0.93254  following
the preferential subscription rights issue on October 19, 2004.

      The fair value of each option  granted is  estimated on the date of grant.
Until December 31, 2003 the Company used the Black-Scholes  option-pricing model
to compute the fair value of its options.  In 2004,  the Company  decided to use
the binomial  method  which is more  relevant to compute the fair value of stock
options.  This  method  allows the  Company to make  assumptions  during all the
window periods  instead of estimating an expected life of the options.  In 2004,
the  Company  computed  for all its plans not vested at January 1, 2004,  a fair
market value of the options  using the  binomial  method  whereas 2003  proforma
figures  have not been  restated,  the impact of this change of method being not
significant.

No stock-based employee compensation plans have been granted in 2005.


                                      F-11
<PAGE>

                                                    2004              2003
                                                    ----              ----
            Expected life (in years)........         N/A                4
            Risk-free interest rates........   3.22 to 4.60%      2.81 to 3.35%
            Expected dividend yield.........        1.50%         2.00 to 3.35%
            Expected volatility.............         30%               30%

2.20. Concentration of Credit Risk

      The Company  provides  advertising and  communications  services to a wide
range of clients  that operate in many  different  industry  sectors  around the
world.  The Company grants credit to all qualified  clients and does not believe
it is  exposed to any undue  concentration  of credit  risk  related to either a
specific country or customer.  Consequently,  concentrations of credit risk with
accounts  receivable  are  limited.   The  Company  uses  derivative   financial
instruments  to manage its exposure to interest  rate and foreign  exchange rate
risks,  which are negotiated  with leading banks,  thus limiting the counterpart
risks.  The  Company  invests  its excess  cash in  short-term  securities  with
financial  institutions  and  limits the  amount of credit  exposure  to any one
counterpart.

2.21. Derivative Financial Instruments

      To manage its exposure to interest rates and foreign  exchange risks,  the
Company has negotiated derivatives with leading banks, thus limiting counterpart
risks.

      The Company adopted SFAS No. 133,  "Accounting for Derivative  Instruments
and Hedging Activities," on January 1, 2001. SFAS 133 establishes accounting and
reporting  standards  requiring  that  every  derivative   financial  instrument
(including certain derivative financial instruments embedded in other contracts)
be recorded on the balance sheet as either an asset or liability measured at its
fair value.

      Derivatives that are not hedges must be adjusted to fair value through the
consolidated statement of income. If the derivative is a hedge, depending on the
nature of the hedge,  changes in the fair value of the derivative will either be
offset  against the change in fair value of the hedged  assets,  liabilities  or
firm commitments  through earnings or recognized in other  comprehensive  income
until the hedged item is recognized in earnings.  The ineffective portion of the
change  in  fair  value  of a  derivative  used  as a hedge  is  required  to be
recognized immediately in the statement of income.

      For derivative financial instruments to qualify for hedge accounting,  the
following criteria must be met: (1) the hedging instrument must be designated as
a hedge;  (2) the hedged exposure must be specifically  identifiable  and expose
the Company to risk;  and (3) it must be highly  probable  that a change in fair
value of the derivative  financial instrument and an opposite change in the fair
value of the hedged exposure will have a high degree of correlation.

      Currently,  the Company does not have any derivative financial instruments
outstanding that are designated as hedges.  Therefore,  the Company's derivative
financial  instruments  are  recorded on the balance  sheet as either  assets or
liabilities  and are  revalued to the current  market rate,  with any  resulting
gains or losses recorded in the statement of income in the current period.

2.22. Restructuring Charges

      Restructuring  charges were recorded in 2001 and in 2003,  associated with
the Company's  formal  restructuring  plan.  The related  reserves  reflect many
estimates,  including those pertaining to separation costs and obligations under
real estate leases, net of estimated sublease income. The Company reassesses the
reserve  requirements  to  complete  its  restructuring  plan at the end of each
reporting period.  The 2001  restructuring  plan has been recorded in accordance
with Emerging Issues Task Force ("EITF") Issue No. 94-3, "Liability  Recognition
for Certain  Employee  Termination  Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a  Restructuring.)"  The 2003 restructuring
plan has been  recorded in  accordance  with SFAS No.146  "Accounting  for Costs
Associated with Exit or Disposal  Activities." As real estate market  conditions
change, the Company may have further refinements in the future, either upward or
downward, to the original charge recorded.


                                      F-12
<PAGE>

2.23. Contingent Acquisition Obligations

      Certain of the  Company's  acquisition  contracts  provide for  contingent
consideration  based on earnings (an "earn-out").  The Company utilizes earn-out
structures  in an effort to  minimize  the risk to the Company  associated  with
potential future negative changes in the performance of the acquired entity. The
ultimate  amounts  payable are  dependent  upon future  results of the  acquired
entity.  The Company does not record the contingent  consideration as additional
purchase  price for  these  items on its  balance  sheet  until  the  applicable
contingency is resolved and additional  consideration is determinable.  However,
if the contingent  consideration is conditioned on the employment of any selling
shareholder,  the Company applies EITF consensus on issue No. 95-8,  "Accounting
for Contingent Consideration Paid to Shareholders of an Acquired Enterprise in a
Purchase  Business  Combination,"  which requires that  compensation  expense be
accrued as more fully described in Note 12.

      Actual  results can differ  from these  estimates  and,  as a result,  the
actual amount that the Company pays may be different from these estimates. These
obligations  change from period to period as a result of earn-out  payments made
during the current  period,  changes in the  previous  estimates of the acquired
entities'  performances,  changes in foreign  exchange rates and the addition of
new contingent  obligations resulting from acquisitions with earn-out structures
that were completed in the current period.  These  differences could be material
(See Note 22).

      In addition,  owners of interests in certain subsidiaries or affiliates of
the Company  have the right in certain  circumstances  to require the Company to
purchase  their  interests (a  "buy-out").  The purchase  price for a buy-out is
generally  based  upon a  multiple  of  future  earnings  and in some  cases  is
conditioned on the continued employment of the related shareholders. The Company
accounts for these  arrangements as restricted  stock plans. The ultimate amount
payable in the future  relating to these  transactions  will vary  because it is
generally  dependent  on  the  future  results  of  operations  of  the  subject
businesses and the timing the buy-out is exercised.  The actual amounts that the
Company pays may be different from these estimates.  These  differences could be
material (See Note 22).

2.24. Provisions for litigation

      During 2005, the Company recorded  significant  charges in connection with
the  departure  of some of its former  executive  officers for a total amount of
10.4.  The related  provisions  involve a high degree of judgment or complexity,
and issues involved in connection with litigation are complex and the outcome of
any litigation  involves a high degree of  uncertainty.  The liability  could be
higher or lower than the established  reserves.  Total indemnities,  damages and
social  charges  which have been  claimed or could be claimed  from the  Company
amount to 14.0.

2.25. Advertising Costs

      Advertising costs are expensed as incurred.  Advertising  expense amounted
to 9.4,  10.7 and 13.5 for the years ended  December  31,  2005,  2004 and 2003,
respectively.

2.26. Recently Issued Accounting Pronouncements

      In December 2004, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 123R  "Share-based  payment".  This statement is a revision of SFAS No.
123 "Accounting for stock-based  compensation" and establishes standards for the
accounting for transactions in which an entity exchanges its equity  instruments
for goods or  services.  This  statement  focuses  primarily on  accounting  for
transactions in which an entity obtains employee services in share-based payment
transactions.  The application of this statement is required as of the beginning
of the first annual  reporting  period that begins after  December 15, 2005. The
Company  expects to adopt this  Statement  on  January 1, 2006.  The  Company is
assessing the impact that this  statement  will have on the Company's  financial
position and results of operations.  No material  impact is expected on the cash
flows. Statement 123R permits the Company to adopt its requirements using one of
two methods:

      -     A  "modified  prospective"  method  in  which  compensation  cost is
            recognized for all share-based  payments granted after the effective
            date and for all awards granted to employees  prior to the effective
            date that remain unvested on the effective date.

      -     A "modified retrospective" method which includes the requirements of
            the modified  prospective  method  described above, but also permits
            the Company to restate,  based on the amounts previously  recognized
            under Statement 123 for purposes of pro forma disclosures, all prior
            periods presented.

The Company plans to adopt  Statement 123R on January 1, 2006 using the modified
prospective  method.  The impact of adoption of SFAS 123R cannot be predicted at
this time because it will depend on levels of  share-based  payments  granted in
the future.  However,  had the Company  adopted SFAS 123R in prior periods,  the
impact  of that  Standard  would  have  approximated  the  impact of SFAS 123 as
described  in the  disclosure  of pro forma net income and earnings per share in
Note 2.19.


                                      F-13
<PAGE>

      In  December  2004,  FASB issued SFAS No. 153  "Exchanges  of  nonmonetary
assets".  This statement is an amendment of APB Opinion No. 29  "Accounting  for
nonmonetary  transactions".  This  statement  is  based  on the  principle  that
exchanges  of  nonmonetary  assets  should be  measured at the fair value of the
assets  exchanged and provides  exceptions for exchanges of  nonmonetary  assets
that do not have commercial substance. SFAS No. 153 is effective for nonmonetary
asset exchanges  occurring in fiscal periods  beginning after June 15, 2005. The
adoption of this  statement  did not have any material  impact on the  Company's
financial position and results of operations.

      In May 2005,  FASB  issued  SFAS No.  154  "Accounting  changes  and error
corrections".  This statement is a replacement of APB Opinion No. 20 "Accounting
changes"  and FASB No. 3  "Reporting  accounting  changes in  interim  financial
statements".  SFAS No. 154 provides guidance on the accounting for and reporting
of  accounting  changes and error  corrections.  Statement  154 is effective for
accounting  changes and  corrections  of errors made in fiscal  years  beginning
after  December  15,  2005.  The  Company  does not expect the  adoption of this
statement  to have a material  impact on the  Company's  financial  position and
results of operations.

      In June 2005, the EITF reached a consensus on EITF 05 -6 "Determining  the
amortization  period  for  leasehold  improvements".  EITF 05-6  clarifies  that
leasehold   improvements   acquired  in  a  business  combination  or  purchased
subsequent to the inception of the lease should be amortized  over the lesser of
the useful life of the asset or the lease term that includes  reasonably assured
lease  renewals as  determined on the date of the  acquisition  of the leasehold
improvement.  The guidance in this consensus should be applied prospectively for
leaseholds  improvements  acquired in periods  beginning after July 1, 2005. The
adoption of this  statement  did not have any material  impact on the  Company's
financial position and results of operations.

      In November 2005,  FASB issued FSP FAS 115-1 and FAS 124-1 "The meaning of
other than  temporary  impairment and its  application to certain  investments".
This FSP  addresses  the  determination  as to when an  investment is considered
impaired,  whether that impairment is other than temporary,  and the measurement
of  an  impairment  loss.  This  FSP  also  includes  accounting  considerations
subsequent to the recognition of an other-than-temporary impairment and required
certain  disclosures  about  unrealized  losses that have not been recognized as
other-than-temporary  impairments.  The guidance in this FSP is to be applied to
reporting  periods  beginning  after  December 15,  2005.  The Company is in the
process of assessing the impact that this  statement  will have on the Company's
financial position and results of operations.

2.27. Reclassifications

      Certain  amounts  applicable  to prior periods have been  reclassified  to
conform to the classifications followed in 2005.

2.28. Change in accounting policy

      In 2004, the Company changed its policy relating to the definition of cash
and cash  equivalents  for the  purpose of cash flow  preparation  and  excludes
highly liquid  investments (see note 2.7) from cash and cash  equivalents.  This
change has been effected by restating financial  statements for 2003 fiscal year
presented for comparative purposes. Consequently, highly liquid investments have
been presented in a separate line item below "cash and cash  equivalents" in the
consolidated balance sheets at December 31, 2004.

3. ACQUISITIONS

      The  Company did not acquire any  significant  subsidiaries  in 2005.  The
Company  acquired  3 small  entities  in 2005 for an  aggregate  amount  of 2.7,
including  acquisition costs,  resulting in a preliminary  aggregate goodwill of
6.7.  Revenues  from  such  acquisitions  reflected  in  the  2005  consolidated
statements  of  operations  amount to 8.6.  The  Company  is in the  process  of
finalizing  the  purchase  price  allocation  of the  net  assets  acquired  and
liabilities assumed in connection with the above acquisitions.

      The  Company did not acquire any  significant  subsidiaries  in 2004.  The
Company  acquired  7 small  entities  in 2004 for an  aggregate  amount  of 9.6,
including  acquisition costs,  resulting in a preliminary  aggregate goodwill of
5.4.  Revenues  from  such  acquisitions  reflected  in  the  2004  consolidated
statements of operations amount to 3.9.


                                      F-14
<PAGE>

4. PROPERTY AND EQUIPMENT, NET

      Property and equipment, net are comprised of the following:

<TABLE>
<CAPTION>
                                                       Useful lives        As of December 31,
                                                       ------------       --------------------
                                                                           2005           2004
                                                                          -----          -----
<S>                                                    <C>                 <C>            <C>
      Buildings..................................      25-33 years           31             38
      Furniture, fixtures and equipment..........       3-10 years          285            276
                                                                          -----          -----
                                                                            316            314
      Less: Accumulated depreciation.............                          (213)          (200)
                                                                          -----          -----
                                                                            103            114
                                                                          =====          =====
</TABLE>

      Included in property and equipment are  buildings  recorded  under capital
leases with costs of approximately 1.6 and 5.1 as of December 31, 2005 and 2004,
respectively. The accumulated depreciation of these assets amounted to 1.1 and 2
as of December 31, 2005 and 2004, respectively.

      Depreciation  expense  amounted to 33.7, 34.2 and 46.6 for the years ended
December 31, 2005, 2004 and 2003, respectively.

5. GOODWILL

      During  2005,  the  Company  performed  its annual  impairment  review for
goodwill. As in 2004, no impairment charge was recorded.

      During  2003,  the  Company  performed  its annual  impairment  review for
goodwill  and  recorded a charge of 69.5,  which is recorded  as a component  of
operating income in the accompanying consolidated statements of operations.  The
2003  impairment  was the  result  of the  elimination  of one of the  company's
reporting units in connection with its strategic reorganization.

      The changes in the carrying  amount of goodwill for each of the  two-years
in the period ended December 31, 2005 are as follows:

<TABLE>
<CAPTION>
<S>                                                                           <C>
Balance as of January 1, 2004                                                 1,640
       Currency translation adjustment ................................         (33)
       Goodwill acquired during the year ..............................           6
       Goodwill arising from earn-out and buy-out payments ............          76
       Goodwill written off related to business sold or abandoned .....         (52)
       Goodwill adjustment (1) ........................................         (17)
Balance as of December 31, 2004                                               1,620
       Currency translation adjustment ................................          77
       Goodwill acquired during the year ..............................           7
       Goodwill arising from earn-out and buy-out payments ............          32
       Goodwill written off related to business sold or abandoned .....          (6)
Balance as of December 31, 2005                                               1,730
</TABLE>

      (1)  During  2004,  the  Company  reversed  a 17.4  tax  reserve  that was
previously  recorded  against  goodwill since the Company acquired Snyder SNC in
2000.


                                      F-15
<PAGE>

6. OTHER INTANGIBLE ASSETS, NET

Other intangible assets subject to amortization consist of the following:

<TABLE>
<CAPTION>
                                                                   As of December 31,
                                                                   ------------------
                                                                   2005           2004          Estimated useful life
                                                                  -----          -----          ---------------------
<S>                                                                <C>            <C>                <C>
      Customer base...................................              209            205                6 to 12 years
      Database........................................               31             27                      6 years
      Trademarks......................................               83             75               20 to 40 years
      Patents, licenses and other intangibles.........               70             66                1 to 10 years
            Less: Accumulated amortization............             (197)          (161)
                                                                  -----          -----
                                                                    196            212
                                                                  =====          =====
</TABLE>

      Amortization   expense  related  to  the  intangible  assets  acquired  in
connection  with a business  combination  for the year ended  December 31, 2005,
2004 and 2003 is 25.8,  28.9 and 31.1,  respectively.  The  estimated  aggregate
amortization expense for each of the five succeeding years is as follows: 25 for
2006; 17 for 2007; 17 for 2008; 17 for 2009 and 17 for 2010.

      Amortization  expense related to the other intangible  assets for the year
ended December 31, 2005, 2004 and 2003 is 7.4, 10.1 and 8.4, respectively.

7. AVAILABLE FOR SALE SECURITIES

      The available for sale  securities are included in the line "Other assets"
of the accompanying  consolidated  balance sheets for a total amount of 10.8 and
14.1 at December 31, 2005 and 2004,  respectively.  As of December 31, 2005,  an
unrealized loss of 1.3 was reported in other  comprehensive  income reducing its
book value to 4.5.

      In  addition,  the Company  recognized  a loss of 3.5 in the  consolidated
statements  of  operations  to reflect an other  than  temporary  decline of the
market value of another investment, reducing its book value to 1.6.

8. RESTRUCTURING AND OTHER CHARGES

      In the  fourth  quarter  of 2003,  the  Company  completed  the  strategic
reorganization of its business  operations that was announced in September 2003.
The Company initiated the strategic  reorganization to strengthen its integrated
communications  capability,  to simplify its  organizational  structure,  and to
promote greater synergies among the agencies by refocusing its activities around
its two global  networks,  Euro RSCG Worldwide and Media Planning Group, and its
creativity-focused network, Arnold Worldwide Partners.

      The Company also implemented a restructuring plan, primarily in the United
States and the United  Kingdom,  to reduce costs.  This plan resulted in pre-tax
restructuring  costs and  other  charges  in the  amount  of 92.4.  This  charge
includes pre-tax severance and other  personnel-related  costs of 39.3,  pre-tax
occupancy and facilities-related  costs of 37.8 as well as other charges of 15.3
including 8.8 asset write downs.

      The severance and other  personnel  related  charges of 39.3 reflected the
elimination  of 1,158  positions  worldwide,  most of them in  Europe  and North
America.  The employee groups affected  included all levels and functions across
the Company. All positions were identified for elimination at December 31, 2003,
and the remaining  reserve  balance of 1.4 at December 31, 2005  reflects  costs
relating to severance and other termination benefits to be settled in 2006.


                                      F-16
<PAGE>

      The  plan  resulted  in  the   abandonment   and  closure  of  40  offices
representing about 70,000 m(2) principally located in Great Britain and in North
America.  Such termination costs were based upon an estimate of the amounts that
the  Company  expected  to pay over the  terms  of  these  leases,  based on its
assumptions  regarding  offsetting  sublease  income.  The remaining  balance in
occupancy and facilities-related  reserves of 19.5 and 33.9 at December 31, 2005
and December 31, 2004, respectively, relates to non-cancelable lease commitments
in excess of estimated  sublease  income for abandoned  facilities  that will be
paid out over the remaining  lease periods,  ranging from one to eight years. In
2004, the Company  recorded an additional  expense of 15.2  corresponding to the
completion of the plan (the space was identified to be vacant but not yet vacant
at December 31, 2003). Conversely,  the Company recorded an income of 4.5 due to
a 2004 decision to sublease to some companies  within the group,  part of the UK
space left  vacant at  December  31,  2003 . In 2005,  the  changes in  original
estimate  have been  offset  by the  reversal  of  provisions  (due to  sublease
agreements negotiated at better conditions than expected).

      The  following  table  displays  the  activity  and  balances  of the 2003
restructuring reserve account:

<TABLE>
<CAPTION>
                                       Severance and
                                          other            Occupancy
                                         personnel      and facilities-
                                         related            related          Other      Total
<C>                                        <C>                <C>             <C>        <C>
2003 Charge                                 39                 38              15         92
Foreign exchange translation                (2)                (2)             (1)        (5)
Non cash items                              --                 --              (9)        (9)
Amount used                                (12)                (4)             (3)       (19)
Balance at December 31, 2003                25                 32               2         59
Foreign exchange translation                 1                 (1)             --         --
2004 Additional expense                      4                 15              --         19
Non cash items                              --                 (2)             --         (2)
Amount used                                (25)               (13)             (1)       (39)
Reversals                                   (1)                (4)             --         (5)
Change in original estimate                 --                  2              --          2
Change in consolidation scope               (1)                 5              --          4
Balance at December 31, 2004                 3                 34               1         38
Foreign exchange translation                --                  3              --          3
Amount used                                 (2)               (16)             (1)       (19)
Reversals                                   --                 (2)             --         (2)
Change in original estimate                 --                  2              --          2
Change in consolidation scope               --                 (1)             --         (1)
Balance at December 31, 2005                 1                 20              --         21
</TABLE>

      During  2001,  the  Company   recorded  51.5  in  pre-tax   occupancy  and
facilities-related costs associated with lease terminations and other exit costs
resulting   primarily  from  the   abandonment   and  closure  of  office  space
predominantly  located in North America.  Lease  terminations  include remaining
lease obligations net of estimated sublease income.  Such termination costs were
based upon an estimate of the amounts that the Company  expected to pay over the
terms of these leases, based on the Company's  assumptions  regarding offsetting
sublease income. During 2004 and 2003, as local real estate markets changed, the
Company  adjusted its  estimated  sublease  income over the related lease terms,
which  resulted  in  an  additional   restructuring  reserve  of  1.0  and  5.9,
respectively and in a reversal of previously  recorded  reserves of 1.0 and 0.2,
respectively. The remaining balance in occupancy and facilities-related reserves
of 9.4 and 10.0 at  December  31,  2005 and  December  31,  2004,  respectively,
relates to  non-cancelable  lease  commitments  in excess of estimated  sublease
income for abandoned  facilities  that will be paid out over the remaining lease
periods, ranging from one to 10 years.


                                      F-17
<PAGE>

      The  following  table  displays  the  activity  and  balances  of the 2001
restructuring reserve account:

                                                 Occupancy and
                                               facilities-related
Balance at December 31, 2003                            15
Foreign exchange translation adjustment                 (1)
Deductions:
   - Amounts used                                       (3)
   - Reversals                                          (1)
Change in original estimate                              1
Change in consolidation scope                           (1)
Balance at December 31, 2004                            10
Foreign exchange translation adjustment                  1
Deductions:
   - Amounts used                                       (2)
   - Reversals                                          --
Balance at December 31, 2005                             9

9. DISCONTINUED OPERATIONS

      In the  fourth  quarter  of 2003,  the  Company  completed  the  strategic
reorganization of its business  operations that was announced in September 2003.
As part of its strategic  reorganization,  the Company's management targeted for
sale or  cessation of  operations  a number of  companies  that were not engaged
primarily in activities within its core areas of competence,  were not strategic
investments,  did not meet  the  Company's  financial  performance  criteria  or
otherwise  did not  fit  into  the new  organization.  This  reorganization  was
finalized during 2004.

      In accordance  with SFAS 144, the results of operations of the  businesses
sold at December 31, 2004 have been  reported as  "Discontinued"  in the current
and prior  periods.  The table below reports the  breakdown of the  discontinued
operations:

<TABLE>
<CAPTION>
                                                                                            Year ended December 31,
                                                                                            -----------------------
DISCONTINUED OPERATIONS                                                                         2004        2003
<S>                                                                                              <C>         <C>
Loss on disposal, including costs to sell                                                        (13)        (67)
Income (loss) from discontinued operations (excluding loss on disposal)                           (3)        (29)
Benefit (provision) for income taxes                                                              (1)           7
Loss from discontinued operations (net of tax)                                                   (17)        (89)
</TABLE>

10. EQUITY INVESTMENTS

      The   Company   owns  a  few   subsidiaries   over   which  it   exercises
non-controlling  significant  influence (9 in 2005 compared to 5 in 2004). These
subsidiaries  are  accounted  for  by the  equity  method  due  to its  minority
interests  or minority  representative  within the Board of these  subsidiaries.
Their  contributions  to  the  consolidated   balance  sheet  and  statement  of
operations are not material.  The only significant one is a Brazilian subsidiary
in which the Company has a 49% stake, and has the following characteristics:

      -     2005 net revenue amounted to (euro)13.7  million against  (euro)14.7
            million in 2004.

      -     2005 net income  was a loss of  (euro)3.7  million  against a profit
            (euro)1.7 million in 2004.

      -     2005 total assets amounted to (euro)13.4  million against (euro)14.2
            million in 2004.


                                      F-18
<PAGE>

                                 2005                         2004
                                 ----                         ----
                         Investment  Equity in net  Investment  Equity in net
                           amount        loss         Amount        income
                         ----------  -------------  ----------  -------------
Miscellaneous........        8            (4)           8            1

As a result of the annual impairment testing,  the Company determined that there
was an equity  method  goodwill  impairment  charge in 2005 for an amount of 3.0
related to 2  associates  which has been  recorded  in "Equity  in  earnings  of
investees" in the accompanying  consolidated statements of operations. No equity
method goodwill impairment charge was recognized in 2004.

11. CONVERTIBLE BONDS, LONG-TERM AND SHORT-TERM BORROWINGS

      Convertible Bonds

      On May 22,  2002,  the Company  issued  41,860,465  unsecured  convertible
and/or  exchangeable  bonds,  each with a nominal value of  (euro)10.75,  for an
aggregate  principal  amount  of 450.  The  Company  received  net  proceeds  of
approximately 443.5 from this issuance. The coupon rate of the bonds is 4.0% per
annum,  payable annually in arrears on January 1 of each year, beginning January
1, 2003,  and the gross  yield to maturity  also is 4.0% per annum,  assuming no
conversion or redemption  occurs prior to maturity.  The implicit interest rate,
including  issue costs,  is 4.26% per annum.  The bonds have a maturity  date of
January 1, 2009. Each bond currently is exercisable at any time at the option of
the  holder  for  1.13  Havas   shares,   subject  to  specified   anti-dilution
adjustments,  which exercise may, at the Company's  option,  be a conversion for
newly issued shares, an exchange for treasury shares or a combination thereof.

      In  accordance  with French law,  the  conversion/exchange  ratio has been
adjusted from 1 to 1.13 due to the  distribution of a portion of paid-in capital
in connection with the Company's  payment of its annual dividend to shareholders
as well as the  increase  in  capital  on  October  19,  2004.  The bonds have a
redemption  value at maturity equal to their nominal value.  The Company has the
option to redeem all, but not less than all, of the  outstanding  bonds  between
January 1, 2005 and  December  31,  2008 at their  nominal  value  plus  accrued
interest  if the  product  of (1)  the  conversion/exchange  ratio  and  (2) the
arithmetic  mean of the closing  prices of Havas  shares on Eurolist by Euronext
during  20  consecutive  trading  days  chosen  by the  Company  from  among the
40-trading day period  preceding  publication  of a notice of early  redemption,
exceeds 125% of the nominal value of the bonds.  The Company also has the option
to redeem,  all, but not less than all, of the bonds at their nominal value plus
accrued  interest  at any time when less  than 10% of the  bonds  issued  remain
outstanding.  In connection  with this issuance,  the Company agreed not to give
any other bonds any  preference  over the bonds,  or reduce its share capital or
alter the way it allocates profits.

      The  General  Meeting of holders of these  Havas  bonds met on December 1,
2003 and approved the payment by the Company of (euro)1.20 per bond,  payable in
cash in a single installment on January 1, 2004, in exchange for a waiver of the
option they had to cause the  Company to redeem the bonds at its  nominal  value
plus accrued interest on January 1, 2006 (Put). As a result of this transaction,
the maturity date of the 450 series of bonds is postponed with  certainty  until
January 1, 2009.  The total expense for the Company  amounted to 51.1  including
0.9 consulting fees reflected as "Other  financial  expense" in the Consolidated
Statements of Operations as of December 31, 2003.  Based on the Emerging  Issues
Task Force  ("EITF")  consensus on issue No. 96-19  "Debtor's  accounting  for a
modification or exchange of debt instruments," this operation has been accounted
for in accordance  with paragraph 16 of Statement 125,  resulting in a 10.7 loss
which is reflected as "Other financial expense" in the accompanying Consolidated
Statements of Operations as of December 31, 2003.  930 bonds had been  exercised
since its issuance.  The aggregate  amount of the outstanding  bonds at December
31, 2005 amounted to 471.5 comprised of 453.5 in aggregate principal and 18.0 of
interest.

      On December 22, 2000, the Company issued 32,817,012 unsecured  convertible
and/or  exchangeable  bonds,  each with a nominal value of  (euro)21.60,  for an
aggregate  principal  amount at issuance  of 708.9.  The  Company  received  net
proceeds of 694.9 from this  issuance.  The coupon rate of the bonds is 1.0% per
annum,  payable annually in arrears on January 1 of each year, beginning January
1,  2002,  and the gross  yield to  maturity  is 4.25% per  annum,  assuming  no
conversion or redemption  occurs prior to maturity.  The implicit interest rate,
including  issue costs,  is 4.67% per annum.  The bonds have a maturity  date of
January 1, 2006.


                                      F-19
<PAGE>

Between 2002 and 2004,  the Company  repurchased  24,202,450 of its  convertible
bonds issued in December 2000:

-     1,342,046 during the last quarter of 2002 resulting in a gain of 4.8

-     5,290,000 during the first quarter of 2003 resulting in a gain of 12.2

-     17,570,404  during  December  2004  resulting  in a loss of 8.7

which are reflected as "Other  financial income and expense" in the accompanying
consolidated statements of operations.

The aggregate  amount of the outstanding  bonds at December 31, 2005 amounted to
220.9  comprised  of 219.1  in  aggregate  principal  and 1.8 in  interest.  The
redemption of bonds was made on January 1, 2006.

      On February 12, 1999, the Company issued 1,223,405  unsecured  convertible
and/or  exchangeable  bonds due  January 1, 2004,  each with a nominal  value of
(euro)188,  for an  aggregate  principal  amount at issuance of 230. The Company
received net proceeds of 225.3 from this issuance.  The coupon rate of the bonds
was 1.0% per annum,  payable  annually in arrears on January 1 of each year, and
the gross  yield to maturity  was 1.75% per annum,  assuming  no  conversion  or
redemption  occured prior to maturity.  The implicit  interest  rate,  including
issue costs,  was 2.18% per annum.  The bonds had a maturity  date of January 1,
2004.  At December 31,  2003,  the  aggregate  amount of the  outstanding  bonds
amounted  to 89.4,  comprised  of 85.3 in  aggregate  principal,  3.2 in accrued
premium through that date and 0.9 in interest.  The redemption of bonds was made
on January 1, 2004.

      Long-Term Borrowings

      Long-term borrowings consist of the following:

<TABLE>
<CAPTION>
                                                                                                           As of December 31,
                                                                                                           ------------------
                                                                                                          2005           2004
                                                                                                          ----           ----
<S>                                                                                                         <C>           <C>
      U.S. dollar denominated bank loans, at variable rates ranging from 4.79%
      to 5.36%, due 2006 (2.81% to 3.19%, due 2005 to 2006 as of 2004) ..........................            25            26
      Convertible bond of a subsidiary (Havas UK plc) with a fixed rate of 7.6% .................            58            57
            Less: Forward sale agreement on Havas UK shares .....................................           (54)          (49)
      Euros denominated bank loans, "Club Deal" at variable rate (3.31% as of 2005) .............           100            --
      Total .....................................................................................           129            34
                                                                                                           ----           ---
            Less: Current maturities of long-term borrowings ....................................           (79)          (26)
                                                                                                           ----           ---
      Long-term borrowings ......................................................................            50             8
                                                                                                           ====           ===
</TABLE>

      Future minimum  payments as of December 31, 2005, on long-term  borrowings
and convertible bonds are as follows:

      Year                                       2005
      ----                                       ----
      2006 ............................           319
      2007 ............................            51
      2008 ............................             1
      2009 ............................           450
      2010 ............................            --
      Thereafter ......................            --
                                                 ----
                                                  821
                                                 ----
      Less: Current maturities ........          (319)
                                                 ----
                                                  502

      Convertible bond of Havas UK plc

      On January 19,  2000,  Havas UK plc,  formerly  Evelink  plc, an indirect,
wholly owned subsidiary of the Company,  issued a 58.3 convertible bond due July
19, 2007 to Banque Nationale de Paris S.A. ("BNP").  This convertible bond bears
interest at the rate of 7.6% per annum and is convertible,  at the option of the
holder,  at any time from January 19, 2000 through January 19, 2007 into 117,131
ordinary shares of Havas UK plc, subject to specified anti-dilution adjustments.
In addition,  Havas UK plc issued a warrant to BNP authorizing the holder of the
warrant,  upon payment of (pound)40 million (58.3) to purchase from Havas UK plc
117,131  ordinary  shares  of Havas  UK plc on  January  19,  2007,  subject  to
specified anti-dilution adjustments.  The right to purchase such ordinary shares
under the  warrant  will  lapse in the event that the  conversion  right of this
convertible bond is exercised.


                                      F-20
<PAGE>

      On the same date, Havas  International  S.A., a wholly owned subsidiary of
the Company,  and BNP, as the initial holder of the bond, entered into a forward
sale  agreement  under which Havas  International  S.A. paid 54.3 to BNP for the
future  purchase of the same number of Havas UK plc ordinary  shares as issuable
on conversion of this convertible bond.

      In the  absence  of a right  of  setoff,  this  convertible  bond  and the
investment  of 54.3  resulting  from the forward sale  agreement  are  presented
separately in the table above.  The interest expense related to this convertible
bond is determined  using the net proceeds (4.0 and 7.7 at December 31, 2005 and
2004  respectively)  as a basis for applying the effective rate of 7.605%.  Such
net proceeds are presented  under proceeds from  borrowings in the  Consolidated
Statements of Cash Flows.

      CIRCUS agreement

      In 1999, a U.S. subsidiary of the Company borrowed $30 million (25.4) from
an  international  bank (the "Bank").  In connection with this loan, the Company
agreed  with  the  Bank to make a  deposit  in the  same  amount  to  allow  the
subsidiary  to borrow the funds.  The terms of the  agreement  provide  that the
deposit and debt mature  simultaneously  in six equal annual  installments  from
June 4, 2001 to June 5,  2006,  and the debt and  deposit  have  therefore  been
reduced  to $5  million  (4.2)  at  December  31,  2005.  The  deposit  has been
classified as restricted  deposits under "other assets" (4.2 as converted at the
spot rate at the closing date for the loan) in the balance  sheet as of December
31, 2005 (7.3 as of December 31, 2004).  The debt bears interest at LIBOR plus a
margin,  and  interest  on the  deposit is at LIBOR less a margin.  The  Company
entered into a combined interest and currency swap  arrangement,  referred to as
"CIRCUS",  with the Bank with the effect of transforming this $5 million deposit
into a euro  deposit  of 4.8 at EURIBOR  less a margin.  The  maturities  of the
CIRCUS are  identical to those of the deposit  both in terms of dates,  currency
and  amounts.  As of  December  31,  2005,  an  exchange  loss on the CIRCUS was
recorded in the Consolidated Statements of Operations under "exchange rate loss"
for 1.6. As of December 31, 2005,  an exchange  gain on the deposit was recorded
in the consolidated  statements of operations under "exchange rate gain" for 1.7
(a loss of 2.2 in 2004).

      HSBC deposit

      In 2004, a German subsidiary of the Company made a fixed cash deposit (1.2
as of December 31, 2005 and 3.5 as of December  31, 2004) with an  international
bank in order to secure fixed term loans  granted by this bank to certain of the
Company's other  subsidiaries  in Germany for the same amount and maturity.  The
deposit has been classified as restricted deposits under "other assets".

      Short-Term Borrowings

      Included  in  short-term  borrowings  in the  amounts  of 33.7 and 29.7 at
December  31,  2005  and  2004,   respectively,   are  primarily  borrowings  by
subsidiaries under the terms of various short-term borrowing  arrangements.  The
weighted-average  interest rates on these short-term  borrowings  outstanding at
December 31, 2005 and 2004 were 3.4% and 2.7%,  respectively.  Also  included in
short-term  borrowings in the amounts of 115.6 and 50.7 at December 31, 2005 and
2004, respectively, are overdraft amounts resulting from various lines of credit
of subsidiaries.  These overdraft amounts bear interest at the prevailing market
rates in the countries of the  subsidiaries.  In the aggregate,  the Company had
unused  lines of credit  available  under  short  term and  overdraft  borrowing
arrangements  of 332.6 and 152.2 at December  31,  2005 and 2004,  respectively,
carrying interest at prevailing market rates.

      Floating rate credit facility agreements

      In December  2004,  the Company  entered into a 150  floating  rate credit
agreement with a pool of banks ("Club Deal"), consisting of:

-     a 100 credit  facility,  reaching  final  maturity on November  30,  2007,
      dedicated to finance the  repurchase  and/or the  redemption of the 2000 /
      2006 convertible bonds ;

-     a 50 revolving credit facility, maturing on October 31, 2008, dedicated to
      the general corporate purposes of the Company.

      This  agreement  is  subject to  restrictive  covenants,  commitments  and
restrictions  that mainly  relate to warranties to be granted by the Company and
the planification of acquisitions or disposals of assets until credit maturity.


                                      F-21
<PAGE>

      The Company  used 100 of this line of credit in  December  2005 to finance
the  redemption of the 2000/2006  convertible  bond.  The Company is required to
make equal payments on November 2006 and on November 2007.

      In December 2005, the Company  entered into a (euro)100  million  floating
rate credit  agreement with one of its regular  banking-partners.  The agreement
has a term of 364 days, and renews  automatically each year unless terminated by
one of the parties.  This credit facility is dedicated for its general corporate
purposes. This facility was not used in 2005.

      Covenants

      The  Company  and some of its  subsidiaries  are  subject  to  restrictive
covenants under  borrowings at the subsidiary  level.  Covenants on Company debt
include  total  borrowing  levels in some  countries  and minimum  shareholders'
consolidated  equity,   among  others.  In  addition,   the  Company  guarantees
significant loans of its subsidiaries.

      As of December 31, 2005 and 2004,  the Company was in compliance  with all
its financial covenants.

12. COMPENSATION TO FORMER SHAREHOLDERS OF ACQUIRED BUSINESSES

      In  connection  with the  acquisition  of private  companies,  the Company
typically  enters into agreements  with some or all of the selling  shareholders
that provide for the payment of contingent  consideration  based upon a multiple
of future  earnings of the acquired  company.  In certain cases,  their right to
such contingent consideration is conditioned on the continued employment of such
selling  shareholders (an "Earn-Out") and are partially or totally  forfeited if
they leave the acquired  company before certain future dates.  EITF consensus on
issue No. 95-8 requires that in those circumstances the amount paid in excess of
what the selling  shareholders are entitled to if they left the acquired company
at the date of the relevant agreement be recorded as compensation  expense.  The
amounts  recorded in each of the periods  presented have been  determined on the
basis of the earnings  formula upon which the contingent  consideration is based
and  allocated  on a  straight-line  basis  over the period  the  employees  are
required to stay with the acquired  company to obtain the maximum  amount of the
Earn-Out. Estimates used in connection with such computations are based upon the
latest  available  earnings data and the related  formulas and are revised every
year.

      In the case of partial  acquisitions,  the  purchase  contracts  generally
include  put and call  provisions  to buy the  remainder  of the  equity  of the
acquired company at some future date (the "Buy-Out"). The purchase price for the
Buy-Out is generally  based upon a multiple of future  earnings (the  "Formula")
and in certain cases is conditioned  on the continued  employment of the related
shareholders  (the  "Minority  Shareholders").  The Company  accounts  for these
arrangements  as  restricted  stock plans.  The Formula is applied at the end of
every period on the basis of latest  available  earnings  data and any amount in
excess of what the  Minority  Shareholders  would get if they left the  acquired
company at the date of the purchase contract is treated as compensation expense,
which is allocated to every period  presented  under a method similar to the one
used  for  Earn-Out  provisions.  The  share  in the  earnings  of  the  related
subsidiaries  attributable  to  the  Minority  Shareholders,  included  in  such
amounts, is presented as "Minority interests."

      Compensation expense related to the arrangements described above was:

<TABLE>
<CAPTION>
                                                                                      2005       2004        2003
                                                                                      ----       ----        ----
<S>                                                                                      <C>        <C>        <C>
      Earn-out ................................................................         --         --          2
      Buy-out .................................................................          1          3          1
                                                                                       ===        ===        ===
      Recorded as compensation to shareholders of acquired businesses .........          1          3          3
      Recorded as minority interests ..........................................          1          2          1
</TABLE>

      As of December 31, 2005, the contingent payments expected to be made based
upon the assumptions used for the determination of compensation expense amounted
to  approximately  3.6 which were  fully  accrued as of the same date (6.0 as of
2004 of which 5.4 were accrued).

      For tax purposes, the above expenses are generally included as part of the
purchase price of the acquired company. The tax effect of this excess of the tax
basis over the financial reporting basis is not recognized until the disposition
of such acquired company.


                                      F-22
<PAGE>

13. EMPLOYEE STOCK OPTION PLANS

Havas share options

      The following table sets forth  information  with respect to the status of
outstanding options granted under Havas's stock option plans for the years ended
December 31, 2005,  2004 and 2003 (except  options issued in connection with the
acquisitions  of the SNC common stock and the Circle.com  common stock of Snyder
Communications which are disclosed separately below).  Pursuant to the Company's
incentive  plan, the exercise price of options awarded may not be less than 100%
of the market price of the stock at the date of grant and the option term cannot
be longer  than ten years for  French  employees  and seven  years for the other
employees  from the date of  grant.  The terms of each  option  and the times at
which each option will be  exercisable  is  determined by the  Compensation  and
Selection  Committee.  The plans  generally vest as follows:  one third over one
year, one third over two years and the remaining third over three years.

<TABLE>
<CAPTION>
                                                                                Year ended December 31,
                                                                                -----------------------
                                                          2005                         2004                        2003
                                                          ----                         ----                        ----
                                                                Weighted                    Weighted                     Weighted
                                                  Shares     Average Price     Shares    Average Price      Shares    Average Price
                                                  ------     -------------     ------    -------------      ------    -------------
                                                        (in (euro))               (in (euro))                     (in (euro))
<S>                                             <C>               <C>        <C>               <C>        <C>              <C>
Outstanding at the beginning of the year        37,057,658        8.05       30,734,948        9.96       28,965,694       11.09
      Options granted ...................               --          --       10,483,000        4.18        4,525,250        3.35
      Options exercised .................       (1,339,837)       3.79         (105,228)       2.59         (970,940)       4.09
      Options forfeited .................       (5,100,568)       9.41       (6,645,412)       7.73       (2,169,925)      12.12
      Equity restructuring adjustment (1)          519,569          --        2,590,350          --          384,869          --
                                                ----------                   ----------                   ----------
Outstanding at the end of the year ......       31,136,822        7.88       37,057,658        8.05       30,734,948        9.96
                                                ==========                   ==========                   ==========
Exercisable at the end of the year ......       27,510,490        8.43       26,886,681        9.43       20,393,481       11.22
                                                ==========                   ==========                   ==========
Weighted-average fair value of options
Granted during the year .................                           --                         1.29                         0.75
</TABLE>

(1)   In  accordance  with  French law,  the number of options and the  exercise
      price have been adjusted due to the  distribution  of a portion of paid-in
      capital in connection with the Company's payment of its annual dividend to
      shareholders  on June 14,  2005,  June 17,  2004,  June 18,  2003 and also
      following the Company's  share  offering  with  preferential  subscription
      rights that occurred on October 19, 2004.


                                      F-23
<PAGE>

      The following table  summarizes  information with respect to stock options
outstanding under the Company's stock option plans at December 31, 2005:

<TABLE>
<CAPTION>

       Exercise            Number Outstanding              Weighted-Average            Number Exercisable
        Prices            at December 31, 2005        Remaining Contractual Life      at December 31, 2005
        ------            --------------------        --------------------------      --------------------
    (in (euro))                                                   (in years)
<S>                                <C>                                   <C>                    <C>
           3.99                    3,460,438                             0.5                    3,460,438
           6.61                      812,128                             0.1                      812,128
           7.88                      323,274                             0.5                      323,274
           9.42                      230,494                             0.7                      230,494
          13.60                      947,436                             0.9                      947,436
          23.97                    1,024,459                             1.2                    1,024,459
          21.68                      461,112                             1.4                      461,112
          15.39                    2,277,638                             1.8                    2,277,638
          13.44                    2,328,954                             2.2                    2,328,954
          12.87                    2,334,424                             2.4                    2,334,424
           7.46                    3,562,315                             3.1                    3,562,315
           4.30                        4,515                             3.9                        4,515
           2.39                    2,021,247                             5.4                    1,303,883
           3.62                      239,430                             7.5                      233,860
           3.93                    1,445,363                             5.8                      960,539
           4.00                      418,133                             8.4                      362,377
           4.11                    9,245,462                             5.8                    6,882,644
                                  ----------                                                   ----------
                                  31,136,822                                                   27,510,490
                                  ==========                                                   ==========
</TABLE>

      Based on  recent  trading  prices  of the  Company's  shares,  most of the
outstanding  options to  purchase  the  Company's  shares have become out of the
money.  As  of  December  31,  2005,  of  the  31,136,822  options  outstanding,
28,876,145  options had an exercise price above the 20-day average trading price
of the Company's shares on Euronext Paris as of that date.

      As a result of the Company's  acquisition of all of the outstanding shares
of SNC common  stock of Snyder  Communications  on September  26, 2000,  all SNC
options  outstanding  on that date were converted into options to purchase Havas
shares.  Each SNC option was  converted  into an option to acquire  1.371  Havas
shares,  which was the same ratio  used to  exchange  SNC  common  stock for the
Company's ADSs.

      As a result of the Company's  acquisition of all of the outstanding shares
of  Circle.com  common  stock of Snyder  Communications  on June 26,  2001,  all
Circle.com  options  outstanding  on that date were  converted  into  options to
purchase Havas shares.  Each  Circle.com  option was converted into an option to
acquire  0.0937  Havas  shares,  which  was the  same  ratio  used  to  exchange
Circle.com common stock for the Company's ADSs.

      A summary of the Company's  option  activity with respect to the converted
SNC options for 2005 and 2004 is set forth below:

Converted SNC stock options

<TABLE>
<CAPTION>
                                                            Weighted         Weighted                   Weighted        Weighted
                                              Options        Average          Average       Options      Average         Average
                                          Outstanding       Exercise         Exercise   Outstanding     Exercise        Exercise
                                                 2005     Price 2005       Price 2005          2004   Price 2004      Price 2004
                                                 ----     ----------       ----------          ----   ----------      ----------
                                            (In 000s)       (In USD)    (In Euro) (1)     (In 000s)     (In USD)   (In Euro) (2)
<S>                                            <C>            <C>                <C>         <C>          <C>               <C>
Outstanding at beginning of year ......        2,413          11.57              9.77        3,192        11.58             8.55
      Exercised .......................           (3)          2.20              1.86          (16)        1.45             1.07
      Forfeited or expired ............         (450)         12.39             10.46         (763)       11.83             8.74
                                                              -----             -----       ------        -----            -----
Outstanding at end of year ............        1,960          11.40              9.63        2,413        11.57             8.55
                                              ======          -----             -----       ======        -----            -----
Exercisable at end of year ............        1,960          11.40              9.63        2,413        11.57             8.55
                                              ======          -----             -----       ======        -----            -----
</TABLE>


                                      F-24
<PAGE>

(1)   Translation  of  amounts  from USD into Euro has been made  solely for the
      convenience  of the reader at the noon buying rate of (euro)1 = $1.1842 on
      December 31, 2005.

(2)   Translation  of  amounts  from USD into Euro has been made  solely for the
      convenience  of the reader at the noon buying rate of (euro)1 = $1.3538 on
      December 31, 2004.

      The  converted SNC options  outstanding  at December 31, 2005 had exercise
prices that ranged from $3.45 to $13.94 (at  December  31,  2004,  the range was
from $2.20 to $13.94) with a five-year maximum remaining contractual life.

      A summary of the Company's  option  activity with respect to the converted
Circle.com options for 2005 and 2004 is set forth below:

Converted Circle.com stock options

<TABLE>
<CAPTION>
                                                            Weighted        Weighted                      Weighted        Weighted
                                              Options        Average         Average         Options       Average         Average
                                          Outstanding       Exercise        Exercise     Outstanding      Exercise        Exercise
                                                 2005     Price 2005      Price 2005            2004    Price 2004      Price 2004
                                                 ----     ----------      ----------            ----    ----------      ----------
                                            (In 000s)       (In USD)   (In Euro) (1)       (In 000s)      (In USD)   (In Euro) (1)
<S>                                              <C>          <C>             <C>                <C>        <C>             <C>
Outstanding at beginning of year .....            79          188.41          159.10             106        181.92          134.38
      Exercised ......................            --              --              --              --            --              --
      Forfeited or expired ...........           (11)         245.30          207.14             (27)       163.50          120.77
                                                                                                ----        ------          ------
Outstanding at end of year ...........            68          179.74          151.78              79        188.41          139.17
                                                 ===          ======          ======            ====        ======          ======
Exercisable at end of year ...........            68          179.74          151.78              79        188.41          139.17
                                                 ===          ======          ======            ====        ======          ======
</TABLE>

(1)   Translation  of  amounts  from USD into Euro has been made  solely for the
      convenience  of the reader at the noon buying rate of (euro)1 = $1.1842 on
      December 31, 2005.

(2)   Translation  of  amounts  from USD into Euro has been made  solely for the
      convenience  of the reader at the noon buying rate of (euro)1 = $1.3538 on
      December 31, 2004.

      The  converted  Circle.com  options  outstanding  at December 31, 2005 had
exercise  prices that ranged from $11.54 to $272.43 (at December  31, 2004,  the
range was $0.08 to $272.43) with a five-year maximum remaining contractual life.

      The compensation expense related to the Company's stock-based compensation
is presented under  "Stock-based  compensation"  and amounted to 0, 3.1 and 0 in
2005,  2004 and 2003,  respectively.  Due to the Company's  share  offering with
preferential  subscription  rights  that  occurred  on October  19, 2004 and the
Company's  payment of its annual  dividend  to  shareholders  on June 17,  2004,
variable  accounting  was required on all options that were  outstanding at that
date.

Subsidiaries stock options

      In addition,  certain  subsidiaries  have granted stock options to some of
their employees with respect to their own stock.

In some cases the strike price is based on a multiple of current earnings of the
subsidiary  at the award  date (the  "Multiple").  Such  options  are  generally
exercisable  five to seven  years  after the award date and  require  continuing
employment.  The parent  companies of such  subsidiaries  have the option to buy
back the shares if and when acquired by the employees and the employees have the
option to put these  shares  to such  parent  companies.  The  buyback  price is
generally  based  upon  the  Multiple  applied  to  the  earnings  level  of the
subsidiary  when the option is exercised.  The employees are required to put the
shares to such parent companies when they leave the subsidiary. Under U.S. GAAP,
such plans are  performance  plans and  variable  plan  accounting  is required.
Accordingly,  the Company makes an interim  measurement of  compensation  on the
basis of the formula  price at the end of each period based upon the most recent
available  earnings  data and  allocates  such costs to expenses over the period
from award date to exercise date.

In some other cases,  both  exercise  price and  repurchase  price by the parent
company are  determined  at fair market value and the  employees are required to
keep the issued shares during a six months  minimum period after the options are
exercised. Under U.S. GAAP, fixed plan accounting is required for these plans.

On September 29, 2004, the Company also granted 104,733 options to subscribe for
shares of its subsidiary  Euro RSCG SA to 35 managers and employees of Euro RSCG
SA  Group.  These  options  will be  exercisable  under  certain  conditions  of


                                      F-25
<PAGE>

performance and the continuing  employment of the beneficiaries over the vesting
period,  and will be either  vested  partly in  September  2008 or  entirely  in
September 2009. The beneficiaries undertook to sell to Havas SA, and Havas SA to
buy the Euro RSCG SA shares  issued when  options are  exercised in exchange for
Havas SA shares for an  equivalent  value of Euro RSCG SA shares  issued.  Under
U.S.  GAAP,  such plans are  performance  plans and variable plan  accounting is
required.  Accordingly, the Company makes an interim measurement of compensation
at the end of each period based upon the most recent available earnings data and
allocates  such costs to  expenses  over the period  from award date to exercise
date.

These  purchase  agreements  were  signed on June 8,  2005,  the day  before the
Company's  shareholders  annual  meeting  on June 9,  2005,  where they were not
brought up. On March 10, 2006, the Board of Directors was informed of this plan.
The Board of Directors shall re-examine their provisions in 2006.

Today,  assuming the forecasted  performances of Euro RSCG SA Group from 2006 to
2008 are in line with those achieved in 2005,  the Company  estimates the number
of Havas SA shares to be exchanged,  net of subscription  exercise price,  could
represent an amount of approximately 45.0.

This amount is likely to vary  depending on the revenue  organic  growth and the
operating  margin rate achieved in the financial years from 2006 to 2008. If the
average performances of organic growth and operating margin were to decrease one
percentage  point,  compared to the estimates used in the  assumptions set forth
above,  the amount to be paid could  represent  25.0. On the  contrary,  if such
rates were to increase one  percentage  point  compared to the estimates used in
the assumptions  set forth above,  the amount to be paid could represent 56.0. A
mechanism is implemented for limiting the payment to approximately  one-third of
the cumulative  operating  margin of the Euro RSCG SA group over the period from
2004 to 2008.

As of December 31, 2005,  2004 and 2003,  accrued  compensation  related to such
plans amounted to 17.8,  5.2, and 3.1,  respectively.  The related  compensation
recorded for the years ended December 31, 2005,  2004 and 2003 amounted to 13.0,
5.0, and 5.4, respectively, and is presented under "Stock-based compensation."


                                      F-26
<PAGE>

14. PENSIONS AND OTHER BENEFITS

      In accordance  with the laws and  practices of each  country,  the Company
participates in employee  benefits  pension plans offering death and disability,
retirement and special  termination  benefits.  Those plans provide  benefits of
various types from flat currency  amounts per year of service to final pay plans
integrated with social security.

      For  defined  contribution  plans  and  multi-employer   plans,   expenses
correspond to the contributions  paid. The  contributions  paid amounted to 19.6
and 18.0 in 2005 and 2004,  respectively.  For defined  benefit  pension  plans,
accruals and prepaid  expenses are  determined  using the projected  unit credit
method.

      Defined  benefit  pension  plans in  France  are  unfunded.  In 2005,  the
measurement date is as of December 31, 2005.

<TABLE>
<CAPTION>
                                                                           Pension Benefits           Other Benefits
                                                                           ----------------           --------------
                                                                           2005        2004          2005        2004
                                                                         ------       ------       ------       ------
<S>                                                                        <C>           <C>           <C>         <C>
      Change in benefit obligation
      Benefit obligation at beginning of the year .................         (98)         (93)          (4)         (13)
      Service cost ................................................          (3)          (3)          --           (1)
      Interest cost ...............................................          (5)          (5)          --           (1)
      Plan participants' contributions ............................          --           --           --           --
      Amendments ..................................................          --           --           --           --
      Acquisitions/disposals ......................................          --           --           --           --
      Curtailments / settlements ..................................           1            1           --           12
      Actuarial loss ..............................................         (17)          (4)          (1)          (1)
      Benefits paid ...............................................           3            5           --           --
      Others (foreign currency translation) .......................          (3)           1           --           --
                                                                         ------       ------       ------       ------
      Benefit obligation at end of the year .......................        (122)         (98)          (5)          (4)
      Accumulated Benefit obligation ..............................        (116)         (92)          --           --

      Change in plan assets
      Fair value of plan assets at beginning of the year ..........          59           54           --           --
      Expected return on plan assets ..............................           4            4           --           --
      Company contributions .......................................           3            3           --           --
      Plan participants' contributions ............................          --           --           --           --
      Acquisitions/disposals ......................................          --           --           --           --
      Curtailments /settlements ...................................          (1)          --           --           --
      Benefits paid ...............................................          (3)          (4)          --           --
      Actuarial gain ..............................................           7            3           --           --
      Others (foreign currency translation) .......................           2           (1)          --           --
                                                                         ------       ------       ------       ------
      Fair value of plan assets at end of the year ................          71           59           --           --
                                                                         ======       ======       ======       ======
      Funded status of the plan ...................................         (51)         (39)          (5)          (4)
      Unrecognized actuarial loss .................................          30           20            1           --
      Unrecognized actuarial prior service cost ...................          --           --           --           --
      Unrecognized actuarial transition obligation ................          --           --           --           --
                                                                         ------       ------       ------       ------
      Accrued benefit cost ........................................         (21)         (19)          (4)          (4)
                                                                         ======       ======       ======       ======
</TABLE>


                                      F-27
<PAGE>

      Plans for which the  accumulated  benefit  obligation and defined  benefit
obligation exceeds the fair value of the assets :

<TABLE>
<CAPTION>
                                                              ABO in excess of    PBO in excess
                                2005                            plan assets      of plan assets
                                                                -----------      --------------
<S>                                                                 <C>                <C>
      Accumulated benefit obligation (ABO)...............           112                115
      Defined benefit obligation (DBO)...................           118                122
      Fair value of plan assets..........................            67                 71
</TABLE>

      Actuarial assumptions were as follows:

<TABLE>
<CAPTION>
                                                                       Pension Benefits                    Other Benefits
                                                                       ----------------                    --------------
                                                               2005         2004           2003       2005      2004        2003
                                                               ----         ----           ----       ----      ----        ----
<S>                                                            <C>          <C>            <C>        <C>       <C>          <C>
      Discount rate......................................      4.59%        4.99%          5.43%      4.25%     4.75%        5.1%
      Rate of compensation increase......................      2.37%         2.4%          3.68%        na        na          na
      Expected return on plan assets.....................       5.8%        6.01%          6.59%        na        na          na
</TABLE>

      The expected return of plan assets rate is based on the expected return of
assets of similar duration in the domestic market of the plan.

<TABLE>
<CAPTION>
                                                                      Pension Benefits                   Other Benefits
                                                                      ----------------                   --------------
                                                                2005        2004        2003         2005      2004        2003
                                                                ----        ----        ----         ----      ----        ----
<S>                                                               <C>         <C>         <C>       <C>          <C>          <C>
      Annual cost
      Service cost ......................................          3           3           4          --           1           1
      Expected interest cost ............................          5           5           5          --           1           1
      Expected return on plan assets ....................         (4)         (4)         (3)         --          --          --
      Amortization of unrecognized prior service cost ...         --          --          --          --          --          --
      Amortization of actuarial net loss ................          1           1           1          --          --          --
      Amortization of net transition obligation .........         --          --          --          --          --          --
      Curtailments/settlements ..........................          1          --          --          --         (10)         --
                                                               -----       -----       -----       -----       -----       -----
      Net periodic benefit cost .........................          6           5           7          --          (8)          2
                                                               =====       =====       =====       =====       =====       =====
</TABLE>

      Health care costs are assumed to increase (inflation  included) by 4.4% in
2006 and to decrease gradually to 2.3% (ultimately in 2030).

      Amounts recognized in the consolidated balance sheet were as follows:

<TABLE>
<CAPTION>
                                                                     Pension Benefits                      Other Benefits
                                                                     ----------------                      --------------
                                                                2005        2004       2003         2005        2004        2003
                                                               -----       -----       -----       -----       -----       -----
<S>                                                              <C>         <C>         <C>          <C>         <C>        <C>
      Accrued benefit liability .........................        (51)        (38)        (34)         (4)         (4)        (12)
      Prepaid benefit cost ..............................          2           2           2          --          --          --
                                                               -----       -----       -----       -----       -----       -----
      Net amount accrued after MLA ......................        (49)        (36)        (32)         (4)         (4)        (12)
                                                               -----       -----       -----       -----       -----       -----
      Accumulated other comprehensive income ............         28          17          14          --          --          --
                                                               -----       -----       -----       -----       -----       -----
      Net amount recognized before MLA ..................        (21)        (19)        (18)         (4)         (4)        (12)
                                                               =====       =====       =====       =====       =====       =====
</TABLE>

      The net accruals  accounted for as of December 31, 2005,  2004 and 2003 in
the  accompanying  Consolidated  Balance  Sheets can be compared  with  balances
determined under U.S. GAAP as follows:

<TABLE>
<CAPTION>
                                                                     Pension Benefits                     Other Benefits
                                                                     ----------------                     --------------
                                                                2005        2004        2003         2005       2004       2003
                                                                ----        ----        ----         ----       ----       ----
<S>                                                              <C>         <C>         <C>          <C>         <C>        <C>
      Net amount accrued under U.S. GAAP ................        (49)        (36)        (32)         (4)         (4)        (12)
                                                                 ---         ---
      Minimum liability adjustment ......................         28          17          14          --          --          --
                                                                 ---         ---         ---         ---         ---         ---
      Net amount accrued for before MLA .................        (21)        (19)        (18)         (4)         (4)        (12)
                                                                 ---         ---
      Accrued ...........................................        (23)        (21)        (20)         (4)         (4)        (12)
      Prepaid ...........................................          2           2           2          --          --          --
</TABLE>


                                      F-28
<PAGE>

      Regarding  the other  benefits  plans,  a  one-percentage-point  change in
assumed health care cost trend rates would have the following effects:

<TABLE>
<CAPTION>
                                                                                  One-Percentage-Point       One-Percentage-
                                                                                         Increase             Point Decrease
                                                                                   --------------------      ---------------
                                                                                    2005        2004         2005        2004
                                                                                    ----        ----         ----        ----
<S>                                                                                    <C>         <C>        <C>          <C>
      Effect on total of service and interest cost components ..............          --           1          --           (1)
      Effect on the post-retirement benefit obligation .....................           1           1          (1)          (1)
</TABLE>

The benefits expected to be paid over the next years are detailed below :

            Year                                Benefits expected to be paid
            ----                                ----------------------------
            2006......................                       4
            2007......................                       5
            2008......................                       4
            2009......................                       6
            2010......................                       4
            2011-2015.................                      11

The employer's contributions are expected to be around 5.7 for 2006.

As of December 31, 2005, the fair value of total plan assets held is invested in
equity  securities  for  51.7%,  in bonds for 31.2%  and other  assets  (insured
annuities) for 17.1%, approximately.

The  investment  policies  of the  Company's  funds  tend to be  adapted  to the
structure of the  beneficiaries of the plans and are accordingly  reviewed.  For
the largest plan in the U.K.,  the target  allocation is 30% in bonds and 70% in
equity with a long term  strategy to increase  the  allocation  into bonds.  The
second largest plan, also in the U.K., having a larger proportion of pensioners,
its policy is to allocate around 30% to equity,  with the rest equally allocated
to bonds and insured annuities.

15. INCOME TAX

      As of December 31, 2005 and 2004, the deferred tax assets and  liabilities
in the balance sheet were as follows:

                                                        As of December 31,
                                                        ------------------

                                                         2005        2004
                                                         ----        ----
      Deferred tax asset--Current ................         26          34
      Deferred tax asset--Noncurrent .............          3           8
      Deferred tax liability--Noncurrent .........        (19)        (24)
                                                          ---         ---
         Net deferred tax asset                            10          18
                                                          ===         ===

Some reclassifications between "deferred tax asset" and "deferred tax liability"
and between "current" and "noncurrent" have been made in the balance sheet as of
December  31,  2004  without  any  impact  on  the  consolidated  statements  of
operations.


                                      F-29
<PAGE>

      The Company's provision for income tax includes the following components:

<TABLE>
<CAPTION>
                                                            As of December 31,
                                                            ------------------
                                                     2005          2004          2003
                                                     ----          ----          ----
<S>                                                    <C>           <C>          <C>
      Current
            France .........................            2             5             3
            State ..........................            4             2            --
            Foreign ........................           15            27            11
                                                     ----          ----          ----
                  Total ....................           21            34            14
                                                     ----          ----          ----
      Deferred
            France .........................           --             6            35
            State ..........................            1             2            (2)
            Foreign ........................           (3)          (39)           61
                                                     ----          ----          ----
                  Total ....................           (2)          (31)           94
                                                     ----          ----          ----
      Provision for income tax .............           19             3           108
                                                     ====          ====          ====
</TABLE>

      The provision for income tax differs from the amount  computed by applying
the French income tax rate as a result of the following:

<TABLE>
<CAPTION>
                                                                                    Year ended December 31,
                                                                                    -----------------------
                                                                                     2005             2004          2003
                                                                                     ----             ----          ----
<S>                                                                                    <C>              <C>         <C>
      Net income (loss) from continuing operations .........................           55               50          (334)
      Minority interests ...................................................           10                8             5
      Provision for income tax .............................................           19                3           108
      Equity in (earnings) losses of investees .............................            4               (1)           (1)
                                                                                     ----             ----          ----
      Income from operations before income tax (1) .........................           88               60          (222)
                                                                                     ====             ====          ====
      Provision for income tax using rates of 34.43%, 34.9% and 35.43% in
         2005, 2004 and 2003, respectively .................................           30               21           (79)
      Stock-based compensation .............................................            4                3             2
      Compensation to former shareholders of acquired businesses ...........           --                1             1
      Non deductible goodwill amortization and impairment ..................           --               --            24
       Gain (loss) on intercompany sale of consolidated company / waive of
       intercompany debt ...................................................            6              (30)           --
      Other permanent differences ..........................................          (19)             (26)            3
      Change in tax rate ...................................................            7                6            --
       Tax losses used .....................................................           --               (4)           (2)
      Difference between French and foreign rates ..........................            5                2            (5)
      Change in valuation allowance ........................................          (14)              30           164
                                                                                     ----             ----          ----
      Provision for income tax .............................................           19                3           108
                                                                                     ====             ====          ====
</TABLE>

(1)   Of which (5.0),  (117.3) and (77.8)  originated from French  companies for
      2005, 2004 and 2003, respectively.


                                      F-30
<PAGE>

      Temporary   differences   that  give  rise  to  deferred  tax  assets  and
liabilities consist of the following:

<TABLE>
<CAPTION>
                                                                        Year ended
                                                                        December 31,
                                                                            2005                  2004
                                                                            ----                  ----
<S>                                                                          <C>                   <C>
      Tax effect on tax loss carry forward
            Ordinary tax losses carry forward .............                  618                   618

      Temporary differences
            Long-term incentive plan ......................                    5                     5
            Accrued pension costs .........................                   18                    10
            Amortization ..................................                   24                    31
            Accrued expenses and others ...................                   50                    77
                                                                            ----                  ----
      Total temporary differences .........................                   97                   123
      Deferred tax assets, gross ..........................                  715                   741
                                                                            ====                  ====
      Tax effect of temporary differences related to:
            Deductible goodwill amortization ..............                   26                    16
            Intangibles ...................................                   58                    65
            Other .........................................                    5                    18
                                                                            ----                  ----
      Deferred tax liabilities ............................                   89                    99
                                                                            ====                  ====
            Less: valuation allowances ....................                 (616)                 (624)
      Net deferred tax asset ..............................                   10                    18
                                                                            ====                  ====
</TABLE>

      The Company has 927.5 long term  capital  losses that will be lost in 2007
due to a 2004 change in French tax law. As the Company does not anticipate using
any of these tax losses in 2006,  no deferred  tax has been  recognized  on this
amount.

      SFAS 109 "Accounting for Income Taxes" requires that a valuation allowance
be established when it is more likely than not that all or a portion of deferred
tax assets will not be realized.  All available  positive and negative  evidence
needs  to  be  considered,  including  the  Company's  performance,  the  market
environment  in which the Company  operates,  the  utilization  of past tax loss
carry  forwards,  length of carry back and carry  forward  periods and  existing
contracts that will result in future  profits.  It further states that forming a
conclusion  that a valuation  allowance is not needed is difficult when there is
negative  evidence  such  as  cumulative  losses  in  recent  years.  Therefore,
cumulative losses weigh much more heavily in the overall assessment. The Company
determined  that positive  evidence was not sufficient to overcome such negative
evidence and  concluded  that it was therefore  appropriate  to establish a full
valuation  allowance for its deferred tax assets related to the Company's French
tax group.  Deferred  tax  assets  related  to the  Company's  US tax group were
recognized  to the extent of future  taxable  temporary  differences  and future
taxable income, exclusive of reversing temporary differences and carry-forwards,
for a period not exceeding  approximately two years.  Management is confident to
achieve  profitability  in the next years and that the Company  will be  able to
utilize these tax assets to minimize the US taxes for the next years.

      The Company's share of undistributed earnings of foreign subsidiaries that
could be subject to additional  income tax if remitted was  approximately  223.2
and 217.6 as of December 31, 2005 and 2004, respectively.  No provision has been
recorded for the French and foreign taxes that could result from the  remittance
of such  undistributed  earnings since the earnings are  permanently  reinvested
outside  of France  and it is not  practicable  to  estimate  the amount of such
taxes.


                                      F-31
<PAGE>

      As of December 31, 2005, the  expiration  dates of tax loss carry forwards
are as follows:

                                                     As of
                                                 December 31,
                                                     2005
                                                     ----
            December 31, 2006..........                 63
            December 31, 2007..........                 18
            December 31, 2008..........                  5
            December 31, 2009..........                  7
            December 31, 2010..........                  5
            Thereafter.................              1,775
                                                     -----
                                                     1,873

16. RELATED PARTY TRANSACTIONS

Transactions involving directors, officers and shareholders of Havas

      Transactions  involving the Rodes  Family.  Media  Planning  Group and its
subsidiaries  have entered into the following  transactions  with members of the
families  of Fernando  Rodes Vila,  one of the  Company's  directors,  the Chief
Executive  Officer of Media  Planning  Group and the Company's  Chief  Executive
Officer since March 2006, and with his father Leopoldo Rodes Castane, one of the
Company's  directors and Chairman of the Board of Media Planning  Group, or with
entities controlled by them.

      The Rodes family holds,  directly or indirectly,  95% of the share capital
of In Store Media, a company that provides "point of sale" advertising  services
and space in Spain, Mexico, Argentina and Portugal. In Store Media leases its ad
spaces directly to advertisers or through media  consulting  companies.  In this
capacity,  In Store Media may act as as supplier of advertising  spaces to Media
Planning  Group which then  reinvoices  its clients for these  spaces.  In 2005,
these invoices totaled (euro)1,625,000 ((euro)1,703,265 in 2004).

      The Rodes  family  holds,  directly  or through  Inversiones  y  Servicios
Publicitarios SL, 75% of the share capital of Accesogroup.  Media Planning Group
holds a 15% stake in the  share  capital  of this  company.  Accesogroup  is the
leader in the Spanish market for providing surveillance and analysis services of
information  published in the media as well as for supplying  content  regarding
institutional  information  for  Internet  publications.  In  2005,  Accesogroup
provided  services to Media Planning Group and to other Havas group companies in
the amount of (euro)199,000.

      Through Inversiones Servicios Publicitarios SL, the Rodes family holds 60%
of the capital of Neo Metrics,  a company which  specializes  in data mining and
the supply of software designed to enhance the decision-making process. In 2005,
Neo Metrics  provided  services to Media Planning Group and to other Havas group
companies for a total of (euro)45,000.

      The Rodes family indirectly holds 28% of the share capital of Antevenio, a
company which provides interactive advertising and direct marketing services. In
2005,  Antevenio  provided  services to Media  Planning Group and to other Havas
group companies for an amount of (euro)477,622.

      The Rodes family is majority  shareholder  of Gestora de  Viviendas  where
Leopoldo  Rodes  Castane  serves as a director.  Gestora de  Viviendas  is a 50%
shareholder of Vigilancia y Sistemas de Seguridad,  which provides  security and
administrative  outsourcing  services to Media  Planning  Group in Spain and for
which Media Planning Group paid  (euro)423,631 in 2005  ((euro)422,503 in 2004).
At the  request  of the  Company's  Audit  Committee,  a request  for  proposals
relating to these same services was launched in September 2005, following which,
in  consideration  of the  various  bids  received,  Vigilancia  y  Sistemas  de
Seguridad was retained for the provisions of these services.

      Media  Planning  Group and certain other of the group  companies  received
legal  services  from  Rodes y Sala  Abogados,  S.L.  in Spain  for an amount of
(euro)275,980  in 2005.  These services  amounted to  (euro)233,295  in 2004 and
(euro)330,800  in 2003. In December 2005, Media Planning Group in Spain launched
a request for proposals  for the provision of legal and tax services,  following
which Rodes y Sala was retained for the  provision  of these  services.  Gonzalo
Rodes Vila,  partner of Rodes y Sala, is the brother of Fernando  Rodes Vila and
the son of Leopoldo Rodes Castane.  Moreover, Gonzalo Rodes Vila is secretary


                                      F-32
<PAGE>

to the  board  of  directors  of  Media  Planning  Group  and as  such  received
(euro)55,075 in 2005 and (euro)48,000 in 2004 and 2003.

      On June 30, 2005,  following a favorable decision from the Company's Audit
Committee on June 27, 2005, Media Planning Group sold to Inversiones y Servicios
Publicitarios  SL its current  premises  in  Barcelona  (Doctor  Fleming 17) for
(euro)6,240,000.  On the same day, Media Planning Group signed a five-year-lease
with  Inversiones  y Servicios  Publicitarios  for annual rent of  (euro)387,936
((euro)193,968   for  2005).  The  share  capital  of  Inversiones  y  Servicios
Publicitarios is entirely held by the Rodes family.

      In October 1991,  the  predecessor to Media Planning Group entered into an
agreement  with  Gestora de  Viviendas  S.A.  under which  Gestora de  Viviendas
provides   client   development   services  to  Media  Planning  Group  and  its
subsidiaries in exchange for  commissions on new clients  developed by it. Under
this  agreement,  Media Planning Group paid Gestora de Viviendas  commissions of
(euro)325,472,  excluding  taxes,  for these  services  provided  in 2004.  This
agreement  was  terminated  as of December  31,  2004.  Fernando  Rodes Vila and
Leopoldo  Rodes  Castane,  together  with other members of their  families,  are
controlling shareholders of Gestora de Viviendas.

17. NET INCOME (LOSS) PER SHARE AS IN CONSOLIDATED STATEMENTS OF OPERATIONS

      Basic  net  income  (loss)  per  share  is  computed  on the  basis of the
weighted-average  number of Havas  shares  issued after  deducting  the weighted
average number of treasury shares.

      Diluted net income (loss) per share takes into account  share  equivalents
having a dilutive effect,  including the effect of: convertible bonds (Note 11),
stock options granted to employees (Note 13), converted stock options granted by
Snyder  Communications  for SNC and  Circle.com  shares  (Note  13) and  options
granted to subsidiaries (Note 13). Net income is adjusted for after tax interest
expense related to the convertible  bonds.  The dilutive effect of stock options
is calculated using the treasury stock method.


                                      F-33
<PAGE>

      The following tables present the  reconciliation of the net income (loss),
basic,  per share and the net income  (loss),  diluted per share for each of the
years ended December 31:

<TABLE>
<CAPTION>
                                                        Net income                         Per share                     Per share
                                                          (loss)        Number of shares    Amount    Number of shares     Amount
                                                          ------        ----------------    ------    ----------------     ------
                                                                           AS ADJUSTED                   AS REPORTED
<S>                                                            <C>         <C>               <C>          <C>              <C>
      2005
      Basic net income per share ....................          55          424,280,479       0.13
            Havas stock options .....................          --            2,140,308         --
            SNC stock options .......................          --                4,909         --
            Circle stock options ....................          --                    2         --
            Euro RSCG stock options (3) .............          --            9,796,366         --
            Convertible bonds (1) ...................          --                   --         --
                                                           ------          -----------       -----
      Diluted net income per share ..................          55          436,222,064       0.13
                                                           ======          ===========       =====

      2004
      Basic net income per share ....................          33          340,534,449       0.10         340,534,449      0.10
            Havas stock options .....................          --            1,483,420         --           1,483,420        --
            SNC stock options .......................          --               13,716         --              13,716        --
            Circle stock options ....................          --                   35         --                  35        --
            Euro RSCG stock options (3) .............          --            1,900,704         --                  --        --
            Convertible bonds (1) ...................          --                   --         --                  --        --
                                                           ------          -----------       ----         -----------      ----
      Diluted net income per share ..................          33          343,932,324       0.10         342,031,620      0.10
                                                           ======          ===========       ====         ===========      ====

      2003
      Basic net loss per share (2) ..................        (423)         318,494,944      (1.33)
            Havas stock options .....................          --                   --         --
            SNC stock options .......................          --                   --         --
            Convertible bonds (1) ...................          --                   --         --
                                                           ------          -----------      -----
      Diluted net loss per share ....................        (423)         318,494,944      (1.33)
                                                           ======          ===========      =====
</TABLE>

      (1)   As these  items  are  anti-dilutive,  they are not  included  in the
            calculation.

      (2)   2003  earnings  per share have been  adjusted by a factor of 0.93254
            following the preferential  subscription rights issue on October 19,
            2004.

      (3)   Please refer to Note 13.

      The  increase  of the  average  number  of  shares  between  2004 and 2005
resulted  from the capital  increase  on October  19,  2004 whose fully  diluted
effect occurred in 2005. The 2005 weighted average number of outstanding  shares
comprised  the total of the 122 million  shares  issued in 2004 whereas the 2004
figure only  included the weighted  average  number of shares  issued during the
period between October 19, 2004 and December 31, 2004.

18. LEASES

      The Company leases certain premises and equipment under operating  leases.
The  following is a schedule of future  minimum  lease  payments  for  operating
leases in effect at December 31, 2005:

                                                            Operating
      Year Ending December 31,                               Leases
      ------------------------                               ------
      2006...........................................           95
      2007...........................................           79
      2008...........................................           74
      2009...........................................           61
      2010...........................................           52
      Thereafter.....................................          136
                                                               ---
      Total minimum lease payments...................          497
                                                               ===


                                      F-34
<PAGE>

      Net rental expenses for all operating leases were 102.0,  101.6, and 106.7
for the years ended December 31, 2005, 2004 and 2003, respectively.

      In  2005,  the  Company  entered  into a sale  and  leaseback  transaction
regarding two buildings located in Madrid and Barcelona and used for some of the
businesses of MPG. These  transactions have been qualified for sales recognition
pursuant to FAS 98 and have been accounted for using sale-leaseback  accounting.
The two  buildings  were sold for a total  amount of 17.6 (net of costs to sale)
resulting  in a  gain  of  8.0  of  which  4.4  is  reflected  as  "General  and
administrative  non-payroll costs" in the accompanying consolidated statement of
operations.  An amount of 3.6 has been deferred over the remaining  lease terms.
The Company will continue to use the leased  properties for its business for the
term of the lease,  which ends June 30,  2010 with the ability to extend for two
additional  five-year  periods.  The  rent  payment  commitments  for the  first
five-year  period  amount to 5.4 (which is subject to an annual  update based on
the General Nacional Index of the System of Prices to  consumption).  In case of
renewal of the lease after the first five-year period, the rent will be adjusted
according to market rent every five years.

19. SEGMENT DATA

      The  Company's  revenues  and  operating  results are  derived  from three
operating  divisions  utilizing  independent brands plus a number of specialized
agencies.  This  organization is mainly designed in order that the Company could
provide  advertising  and  communications  services  to clients  with  competing
products  and  services  and  to  permit  the  expansion  of  certain  specialty
advertising and communications  services.  These three operating  divisions have
substantial  similarities  in the  nature of  services  provided,  the  delivery
process  for  rendering  their  services,  the  customers  they  serve and their
economics.  The Company  aggregates  its operating  segments into one reportable
segment.

      Geographical  information  required by SFAS 131, "Disclosure about Segment
of an Enterprise and Related  Information," for each of the years ended December
31, is as follows:

<TABLE>
<CAPTION>
                                                                     United      United       Rest of
                                                       France        States      Kingdom       Europe       Other        Total
                                                       ------        ------      -------       ------       -----        -----
<S>                                                       <C>          <C>          <C>          <C>          <C>        <C>
      2005
      Net revenues .............................          305          541          176          292          147        1,461
      Property and equipment, net ..............           23           44           13           14            9          103
       Goodwill, net ...........................          239          463          339          596           93        1,730
       Other intangible assets, net ............           35           66           14           67           14          196
       Equity investments ......................           --           --            6           --            2            8

      2004
      Net revenues .............................          301          548          189          263          148        1,449
      Property and equipment, net ..............           27           43           14           22            8          114
       Goodwill, net ...........................          236          391          320          586           87        1,620
       Other intangible assets, net ............           37           67           16           78           14          212
       Equity investments ......................           --           --            7           --            1            8

      2003
      Net revenues .............................          260          612          237          261          155        1,525
</TABLE>

      Net revenues and long-lived  assets are  attributed to countries  based on
the location of the applicable operating unit.


                                      F-35
<PAGE>

20. FINANCIAL INSTRUMENTS AND DERIVATIVE INSTRUMENTS

Fair value of financial instruments

      The following methods and assumptions were used to estimate the fair value
of each class of financial instruments:

      Highly liquid investments and short-term borrowings

      The carrying value of highly liquid investments and short-term  borrowings
approximates  fair  value  because of the  relatively  short  maturity  of these
instruments.

      Restricted deposit

      Restricted  deposit  carries a variable  interest  rate and its fair value
approximates its carrying amount.

      Long-term borrowings

      The fair value of long-term  borrowings is  substantially  the same as its
carrying  amount  in  the  financial  statements  because  the  majority  of the
Company's long-term borrowings is at variable rates and approximates fair value.

      Convertible and/or exchangeable bonds

      The fair value of convertible and/or  exchangeable bonds was determined by
reference  to  quotations  available  in  markets  where the bonds  were  traded
estimated using quoted market prices and amounts.

      Combined interest and currency swap ("CIRCUS")

      The estimation of the CIRCUS fair value  involves  splitting the swap into
its borrowing and lending elements and discounting the future expected  currency
cash flows relating to each element. The fair value of the CIRCUS was calculated
by third party banks. Please refer to Note 11.

      Interest rate swaps and caps

      The fair  value of  interest  rate  swaps and caps has been  estimated  by
third-party banks.

      Forward contracts

      Due to the short maturities of forward exchange contracts,  the fair value
of the contracts were determined to be the difference  between the contract rate
and the market forward rate multiplied by the foreign currency amount.

      The  following  table  presents the carrying  amounts and  estimated  fair
values of the Company's financial  instruments as of December 31, 2005 and 2004.
Amounts in parentheses represent liabilities.

<TABLE>
<CAPTION>
                                                                                  2005                          2004
                                                                                  ----                          ----
                                                                        Carrying           Fair       Carrying           Fair
                                                                          Amount          Value         amount          Value
                                                                          ------          -----         ------          -----
<S>                                                                         <C>            <C>            <C>            <C>
      Cash and cash equivalents ..................................           603            603            311            311
      Highly liquid investments ..................................            --             --            223            223
      Restricted deposit .........................................             4              4              7              7
      Long-term borrowings including current maturities ..........          (129)          (129)           (34)           (34)
      Convertible bonds ..........................................          (692)          (677)          (687)          (685)
      CIRCUS .....................................................             1              1              2              2
      British pound denominated forward contracts ................             1              1             --             --
      US dollar denominated forward contracts ....................            --             --             (1)            (1)
</TABLE>


                                      F-36
<PAGE>

Purposes for which derivative financial instruments are held or issued

      The Company uses  derivative  instruments  primarily to mitigate  interest
rate and foreign currency exposures.  Currently,  the Company hedges intra-group
loans  denominated in foreign currency with forward  contracts.  The intra-group
loans are  recorded  at spot  rates  before  being  eliminated  and the  forward
contracts are  marked-to-market  in earnings (natural hedge). As of December 31,
2005, changes in fair value of forward contracts amounted to (1.1).

      The  Company  hedges  a  foreign-currency  variable  rate  deposit  with a
combined  interest and currency swap  ("CIRCUS").  This strategy is described in
Note 11. The  foreign-currency  deposit is accounted  for at a spot rate and the
swap is  marked-to-market  in  earnings.  As of December  31,  2005,  the CIRCUS
impacted  earnings by 0.032 (before tax) which are  reflected as "exchange  rate
gain (loss)" in the Consolidated Statement of Operations.

21. SUPPLEMENTAL CASH FLOWS INFORMATION

<TABLE>
<CAPTION>
                                                                                 Years ended December 31,
                                                                                 ------------------------
                                                                                2005      2004         2003
                                                                                ----      ----         ----
<S>                                                                               <C>       <C>        <C>
      Non cash items:
         Equipment purchased under capital lease .........................        --         1           --

         Increase in shareholders' equity related to:
             Acquisition of minority interests ...........................        --         1            9
         Extinguishment of convertible debt (Note 11) ....................        --        --         (450)
         Issuance of convertible debt (Note 11) ..........................        --        --          456
</TABLE>

22. CONTRACTUAL OBLIGATIONS

Commercial commitments

<TABLE>
<CAPTION>
                                                                                                        Thereafter or
                                                    2006       2007       2008      2009       2010     Undetermined      Total
                                                    ----       ----       ----      ----       ----     ------------      -----
<S>                                                   <C>         <C>       <C>         <C>       <C>       <C>            <C>
Given

Security for media space buying (1)                    2         --          8         --         --          1             11

Marketing rights (2)                                   6          3          3          2         --         --             14

Guarantees for businesses disposed of (3)             --         --         --         --         43         22             65

Other commitments (4)                                  6          1         --         --         --        112            119

Total                                                 14          4         11          2         43        135            209

Received

Authorized unused credit lines (5)                   100         --         50         --         --         --            150

Marketing rights (2)                                   4          1          1         --         --         --              6

Total                                                104          1         51         --         --         --            156
</TABLE>

(1) In certain countries, such as the UK and Asia, media space buying operations
carried  out by  agencies  are  secured by the  Company,  as  required  by local
practices.


                                      F-37
<PAGE>

(2) Two  subsidiaries  of the  Company  purchase  marketing  rights  from  their
clients,  which are  primarily  soccer and rugby clubs,  for periods from one to
seven years,  and then re-sells these rights to sponsors.  At December 31, 2005,
these purchases  amounted to 6.4 (1.7 as of December 31, 2004), which are due in
2006. These  subsidiaries  have received  commitments from sponsors of 4.1 as of
December 31, 2005 (0.5 as of December 31, 2004).

(3) In connection with the disposal of companies in 2004,  guarantees were given
to the buyers.  Maximum  guarantees  are  presented  in the table  below.  Their
characteristics are the following:

      -     guarantees are capped to the considerations received,

      -     other  guarantees  are claimable  over a maximum period of two years
            from the completion date,

      -     tax  guarantees  are claimable  over a maximum period of seven years
            from the  completion  date for  disposals  performed  in the  United
            Kingdom.

(4) In order to allow  the  Company's  British  subsidiaries  to use  electronic
banking  payment  systems,  the Company was  required to provide  guarantees  to
certain banks in an aggregate amount of 108.4.

(5) This amount corresponds to the floating rate credit facility agreement "Club
Deal" described in Note 11.

Other contractual obligations and off- balance sheet arrangements

<TABLE>
<CAPTION>
                                                 2006        2007        2008        2009        2010     THEREAFTER    TOTAL
                                                 ----        ----        ----        ----        ----     ----------    -----
<S>                                               <C>         <C>          <C>        <C>          <C>        <C>       <C>
Convertible bonds                                 240           1           1         450          --          --         692
Long term borrowings                               79          50          --          --          --          --         129
Other financial debt                                6          --           1          --          --           1           8
Stock option plans (6)                              7           1           6          45          --          --          59

Operating leases                                   95          79          74          61          52         136         497
Additional payments ("Earn out") (7)                9           1           2          --          --          --          12
Purchase of minority interests (7)                 44           9          14          --           2          --          69
Indemnity for conscience clause (8)                12          --          --          --          --          --          12
Total                                             492         141          98         556          54         137       1,478
</TABLE>

(6) See description of the stock option plans in Note 13.

(7) As more fully  described  in Notes 2.23 and 12, the Company has entered into
contingent  consideration  arrangements  in  connection  with  certain  business
combinations.  At December 31, 2005 and 2004,  the related  total  commitment is
estimated at 80.3 and 99.0,  respectively,  of which 3.6 and 5.4 were accrued at
December  31,  2005  and  2004,  respectively.   Minority  interest  related  to
subsidiaries  subject to buy-out agreements  amounted to 17.1 as of December 31,
2005 (19.9 as of December 31, 2004). As these  agreements do not include maximum
amounts  to be paid and are  based on future  earnings,  it is not  possible  to
determine a maximum potential amount of future payments.  Therefore, the amounts
indicated  above  represent the Company's  best estimate and actual  amounts may
differ.  Payments made under these agreements were approximately  38.7, 74.8 and
38.8 in 2005, 2004 and 2003 respectively.

      The payment date for the Company's buy-out obligations has been assumed to
be the date the applicable buy-out option can first be exercised by the minority
shareholder.


                                      F-38
<PAGE>

(8) The  employment  contract for one of our  executives  includes a "Conscience
clause"  that may be  exercised  until  December  21,  2006 in the  event of the
departure of the former  Chairman and Chief Executive  Officer.  Exercising this
clause would  entitle the  executive to  compensation  equal to his  contractual
severance pay, amounting to approximately (euro)3 million.

In addition,  eleven of our managers  similarly benefit from conscience  clauses
that they may  exercise  within a period of three to six  months  following  the
departure of their division's  managing  director.  These clauses grant managers
the right to  receive  compensation  equal to the  amount to which they would be
entitled in the event of severance commitment.  If these eleven managers were to
exercise  their  rights  under  these  conscience  clauses  in the  event of the
departure  of  their  division's   managing   director,   the  total  amount  of
compensation due to them would amount to approximately (euro)9 million.

23. CONTINGENCIES

Bankruptcy of WorldCom, Inc.

      On July 21, 2002,  WorldCom,  one of the Company's  largest  clients,  now
known as MCI,  Inc.,  filed for  reorganization  under  Chapter 11 of the United
States  Bankruptcy  Code. The Company  provided both  advertising  and marketing
services and media services to MCI. With respect to the media,  the Company acts
as an agent  for MCI and as an  intermediary  in the  transfer  of the  client's
payments to the applicable media suppliers, which is consistent with the concept
of  "sequential  liability"  adopted by the American  Association of Advertising
Agencies in 1991 as its standard for the industry.

      On August 4, 2003,  the  Company  and MCI  entered  into an  agreement  to
compromise the pre-bankruptcy  amounts due to the Company.  Under its terms, the
agreement  became  effective  upon MCI emerging from  U.S.Chapter 11 protection,
which  occurred on April 20, 2004.  On May 26,  2004,  MCI paid the Company 14.3
pursuant to the agreement.  The Company has distributed a substantial portion of
the amount received from MCI to media and production vendors.  Consequently,  as
of December 31, 2004, the Company offset the remaining  receivables  against the
payables in its financial statements in a residual amount of 18.0 and reversed a
provision  in the  amount  of 6.5  corresponding  to the  excess  amount  of the
provision  taken in 2002 for production  fees.  Nevertheless,  the risk that the
Company will face claims from other vendors remains. One production vendor filed
a complaint against the Company. In addition, an action was filed against one of
its subsidiaries  seeking to recover pension and welfare and other benefits with
respect  to  certain  celebrity  performers  who  performed  on  behalf  of  MCI
pre-bankruptcy. These two proceedings were settled for an insignificant amount.

      As of the  date  hereof,  no media  vendors  have  instigated  proceedings
against the Company,  nor  requested  that they be paid amounts owing to them in
order to renounce such proceedings.  It is not possible to determine the nature,
the  probability or the outcome of any actions that may be initiated  against us
in  this  regard,  nor  the  amount  of any  losses  that  could  result  to the
Company.Therefore, although it is possible that the Company could be required to
pay damages as a result of such litigation, the Company is not able to determine
the probability of any future damages.As a result,  the Company has not recorded
a provision in this respect.


                                      F-39
<PAGE>

American Student List Class Action lawsuit

      On February 18, 2004,  a purported  class action  lawsuit was filed in the
United States District Court for the Middle District of Florida against American
Student List LLC, one of the Company's  subsidiaries.  The lawsuit  alleged that
American  Student List LLC  obtained,  disclosed and used  information  from the
Florida  Department of Highway Safety and Motor Vehicles in alleged violation of
the U.S.  Driver's  Privacy  Protection  Act.  The  named  plaintiff  sought  to
represent a class of 876,665 individuals whose personal information from Florida
Department of Highway Safety and Motor Vehicles records was obtained,  disclosed
or used for allegedly  impermissible  uses by American  Student List without the
consent of the individuals.  The lawsuit sought certification as a class action,
liquidated  damages in the amount of $2,500 per alleged violation of the Act, as
well as punitive  damages,  attorneys' fees and costs,  and injunctive and other
relief. The plaintiff later amended his complaint to include a claim for damages
for invasion of privacy.

      After dismissal of the lawsuit for a procedural  error,  American  Student
List settled the case with the named plaintiff, ending the litigation.

Snyder Communications LP class action lawsuit

      Former employees of Snyder  Communications LP have filed a purported class
action lawsuit in the Texas State Court. The lawsuit alleged, in substance, that
Snyder improperly  denied commission  payments to former employees in connection
with alleged  sales  activities.  The motion to certify the  purported  class of
former  employees in Texas was granted by the Texas trial court in January 2002,
affirmed on appeal by the Texas  intermediate  appellate  court in November 2002
and was  reversed  by the Texas  Supreme  Court on appeal.  The  litigation  was
dismissed  with prejudice by the Texas State Court in March 2005 and the lawsuit
with the named plaintiffs has been settled.

      A settlement agreement ending this lawsuit was signed for an insignificant
amount. The case was removed from the docket in March 2005.

American Student List consent order

      In  September  2002,  American  Student  List  LLC,  one of the  Company's
subsidiaries, signed a consent order issued by the U.S. Federal Trade Commission
relating to the use of  information  collected  from a survey  conducted  by the
National Research Center for College and University  Admissions,  which we refer
to as NRCCUA. For a number of years,  American Student List provided funding for
a portion of the  out-of-pocket  expenses  incurred by NRCCUA in connection with
its   post-secondary   education  planning  survey.  The  FTC  argued  that  the
disclosures  made by NRCCUA to the high schools that  distributed the surveys to
students,  and the  disclosures  in the survey  completed by the students,  were
inadequate  to advise the  schools and  students  that the results of the survey
would be used for  marketing and  non-educational  uses.  American  Student List
signed the consent  order  without  admitting  that it engaged in any  deceptive
practices  that violate the law. The consent  order became  effective on January
31,  2003.  As of the date  hereof,  the FTC has not  taken any  further  action
against American Student List.

Litigations relating to the departure of former executives and employees

      On June  28,  2005,  following  the  decision  of the  Company's  board of
directors  on June  21,  2005 to  terminate  the  appointment  of Mr.  Alain  de
Pouzilhac, the Chairman and Chief Executive Officer, Mr. Alain Cayzac considered
that the  conditions for invoking the provisions of Article 13 of his employment
agreement  (agreement amended on January 19, 2005), the "Conscience clause", had
been triggered.  As a result,  he considered  that his employment  agreement had
been  breached  and  demanded the payment of  contractual  severance  pay in the
amount of 1.7 in addition to damages for  dismissal  without cause in the amount
of 0.3, plus the payment of a bonus for 2005 in the amount of 0.2.

      The Company is contesting  the merits of Mr. Alain  Cayzac's  claims as it
considers  that he resigned  from his office.  Mr. Alain Cayzac filed a petition
with the Nanterre  Workers'  Tribunal  (Conseil de  Prud'hommes) on November 21,
2005. The case has not yet been adjudicated.

      Furthermore,  pursuant  to a  non-competition  clause,  Mr.  Alain  Cayzac
receives monthly gross compensation of (euro)38,500, paid over a total period of
24 months.  The total gross amount of this  compensation is 0.9 and represents a
total cost for the Company of 1.3,  including social charges applicable to these
amounts.

      On July 19, 2005, following the departure of Mr. Alain de Pouzilhac,  Mrs.
Agnes Audier considered that there had been a breach of her employment agreement
pursuant to article 12 "change of control" of her agreement  (dated  October 29,
2003).  Mrs.  Audier  filed a petition  with the Nanterre  Workers'  Tribunal on
January 6, 2006  demanding  severance  pay in the amount of 1.1 (to be  revised)
before social charges as well as the payment of incentive-based compensation for
2005 in the amount of 0.3 (to be revised) before social charges.

      The Company is contesting the demands of Mrs.  Audier as it considers that
Mrs. Audier resigned from her duties. The case has not yet been adjudicated.


                                      F-40
<PAGE>

      Mr.  Jacques Herail was dismissed on November 25, 2005. Mr. Jacques Herail
has  contested  this  decision and filed a petition  with the Nanterre  Workers'
Tribunal  on  January  13,  2006 and is asking for the  payment  of  indemnities
(namely dismissal, notice, and contractual severance pay) in addition to damages
in a total amount of 6.6 before  social  charges,  as estimated at this stage of
the proceedings. The case has not yet been adjudicated.

      In addition,  on December 23, 2005,  Mr. David Smail  notified Havas North
America and the Company that he was terminating  his Employment  Agreement dated
October 22, 2001 (as amended on January 22, 2004). Mr. Smail based this decision
on the  provisions  of Section 4.3 (vi) of his  agreement  concerning  change of
control.  On February 22, 2006, Mr. David Smail's counsel  contacted the Company
with a mediation proposal.  Mr. David Smail is asking for the payment of salary,
bonuses and severance pay.

      Total  indemnities,  damages and social charges which have been claimed or
could be claimed from the Company  amount to 14.0.  After  consulting  its legal
counsel on these cases,  the Company has set aside provisions for litigation for
a  total  amount  of  10.4  recorded  in the  2005  consolidated  statements  of
operations under "Compensation and related costs".

Other

      In the normal course of its activities,  the Company is party to a certain
number of legal,  administrative or arbitration  proceedings.  The expenses that
may be incurred by these  proceedings are provisioned for to the extent they are
probable and  quantifiable.  Such provisions are determined by risk  assessments
conducted on a case by case basis.

24. ALLOWANCE FOR DOUBTFUL ACCOUNTS

      Changes in the  Company's  allowance  for doubtful  accounts for the years
ended December 31, 2005, 2004 and 2003 were as follows:

<TABLE>
<CAPTION>
                                           Charge to
                               Opening     Costs and                                 Other      Closing
                               Balance      Expense    Reversal     Deductions     Movements    Balance
                               -------      -------    --------     ----------     ---------    -------
<S>                               <C>           <C>       <C>           <C>           <C>          <C>
      Year 2005 ........          34            4         (1)           (6)           (2)          29
      Year 2004 ........          37           10          0           (11)           (2)          34
      Year 2003 ........          58           11         (6)          (14)          (12)          37
</TABLE>


                                      F-41