The Lafarge success story in North America Voyage aux Etats-Unis (7-11 mars 2005)

CONTENTS

The Lafarge Group

Lafarge in North America

• Key stages of Lafarge’s development in North America

• Our North American business lines

Continuous improvement in performance

Sustainable development, the key to performance

Research & Development and innovation

Biographies

Group presentation sheet

Press kit – March 2005

LAFARGE OVERVIEW World leader in building materials, Lafarge holds top-ranking positions in its four

divisions: world no. 1 in Cement and in Roofing, world no. 2 in Aggregates and

Concrete, , and world no. 3 in Gypsum.

Established in 75 countries and with a workforce of 77,000, the Group operated over

2,100 industrial sites around the world in 2004.

Listed on the Paris and New York stock exchanges, it posted sales of €14.4 billion

euros in 2004.

The Cement Division produces cement, cementing materials and lime for construction,

renovation and public works.

The Aggregates and Concrete Division produces aggregates, ready-mixed and

prefabricated concretes, plant mixes for civil engineering works, roads, buildings, etc.

The Roofing Division produces concrete, clay and metal roof tiles, roofing components

and accessories, chimney systems for new constructions and renovations.

The Gypsum Division produces gypsum wallboard systems, tiles and

building/decoration gypsum for finishing work on new constructions and renovation

projects.

The Group’s strategy is founded on the twin pillars of growth and performance, in order

to achieve the kind of profitable growth which can create value for shareholders,

customers, employees and the communities in which operations are based.

Lafarge stands apart for its multisector strategy underpinned by top-ranking positions in

each of its activities (Cement, Aggregates & Concrete, Roofing, and Gypsum), and a

balanced geographical breakdown between developed and growing markets. Lafarge

has the financial capacity to pursue a development strategy which combines organic

growth with acquisitions.

The Group is currently involved to an unprecedented degree in creating new capacities

in Cement (6 plants), Gypsum (4 plants) and Roofing (3 plants). In the course of the

last five years, annual organic growth rose by an average of over 5% in all divisions

with the exception of Roofing which was held back by the German recession. Organic

growth was just under 8% in 2004.

At the same time, the Group plans to push ahead with growth via small- and medium-

scale acquisitions. Over the last ten years, annual growth generated by our small- and

medium-scale acquisitions came to 5.6% on average (excluding Redland and Blue

Circle).

An excellent performance in 2004:

Our strategy is producing the expected results

• Organic growth +7.7%

• Double-digit growth in earnings and cash flow

• Current earnings before interest & tax

at constant scope and exchange rates +12.8%

• Marked upturn in net income +19.2%

• Cash flow +17.5%

• Return on capital employed 8.4%

(vs. 7.1% in 2003, after tax, at the 2003 rate)

• Net earnings per share of €5.20 +5.0%

LAFARGE IN NORTH AMERICA

Lafarge gained its first foothold in North America when it entered the Canadian market

in 1956. It set up in the United States from 1973 onwards by means of successive

partnerships with other manufacturers. In 1982, the group became the leading US

cement producer, following the takeover of General Portland Cement. That same year,

the two Canadian and American companies merged into a structure which was listed

on the New York stock exchange. The 1990s saw the group develop in Aggregates,

Gypsum and Roofing while pursuing growth in Cement. 1997 and 2001 were marked

by the acquisition of Redland and Blue Circle.

Industrial sites in the United States

cement grinding plant cement plant concrete roof tile plant gypsum wallboard plant

(Blue Circle assets are shown

in bold)

Key stages of Lafarge’s development in North America UELQUES DATE 1833 Founding of Lafarge in France. 1956 The Lafarge group enters the North American market by building a cement plant in Richmond, British Columbia, near Vancouver and forming Lafarge Cement North America (LCNA). 1970 LCNA merges with Canada's largest cement producer, Canada Cement Company (est. 1909), creating Canada Cement Lafarge Ltd. (CCL). With 11 plants stretching from coast-to-coast, CCL becomes Canada's largest cement producer. 1973 Lafarge enters the US market through a joint venture involving its Canadian subsidiary (Canada Cement Lafarge) that creates Citadel Cement Corporation. 1977 The venture dissolves, but CCL keeps Citadel and two cement plants. 1982 Acquisition of Portland, the second largest US cement producer with 10 plants and a 6 million tonnes annual capacity. 1983 Creation of Lafarge Corporation which is listed on the New York, Toronto and Montreal stock exchanges. 1986 Lafarge acquires the Huron Division of National Gypsum including 14 cement terminals and an idle cement plant. 1989 Lafarge purchases seven subsidiaries of Standard Slag (11 million tonnes of annual aggregate production), and thus becomes one of the largest aggregate producers in the US. 1991 Acquisition of two cement producers and related assets in Aggregates & Concrete (3 dry-process cement plants, 15 terminals, 2 quarries and some 30 ready-mixed concrete facilities). 1993 Divestment of assets in Texas and Alabama. 1995 Acquisition of a 600,000 tonnes capacity cement grinding plant in Florida.

1996 Lafarge enters the Gypsum market with the acquisition of Georgia Pacific (2 gypsum wallboard plants) and Tews Company (including 14 ready-mixed concrete plants). 1997 Acquisition of Redland (consolidation effective in 1998) which enables Lafarge to become the largest construction materials company in North America. 2000 Acquisition of one of the largest quarries on the Great Lakes. Lafarge Gypsum opens its state-of-the-art drywall plant in Silver Grove, Kentucky using 100% substitute raw materials (synthetic gypsum). 2001 Acquisition of Blue Circle and related assets in Aggregates and Concrete (Pine Hill and American Ready-Mix Concrete) Lafarge Corporation becomes Lafarge North America Inc. The Gyspsum activity opens its second state-of-the-art drywall plant (Palatka, Floride). Start-up of papermaking plant to supply gypsum wallboard plants as part of a joint venture. 2002 Acquisition of Continental Gypsum (with an annual capacity in excess of 27 million m²). 2003 Disposal of Florida-based businesses (two cement-grinding units and import terminals), for around 142 million euros, with the aim of geographical rationalisation of our assets. 2004 Lafarge announces the acquisition of assets belonging to the Concrete Company in the Southeast of the United States. Upgrading of the Buchanan gypsum wallboard plant. Continued management by Lafarge North America of Blue Circle assets in the United States.

Strong growth trend in North America during the past ten years

Une croissance continue

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Lafarge, the leading global player in North America

Lafarge has carved out a position as North America’s leading player on the

construction materials market.

Group plants are concentrated in several US regions. In the region of the Great Lakes,

the Group is leader with a 35% market share. In the Southeast region, around the

Mississippi and Iowa rivers, the Group acquired new positions via three sites at

Harleyville, Atlanta and Calera. In the Northeast region, Lafarge has consolidated its

position. Finally, the Group has also consolidated its presence in Quebec.

On a fragmented market , with local companies competing for business, Lafarge has

become the leading global player and has achieved significant geographical and

cultural coverage.

This new position meant that in 2002, all cement activities in the North America zone

were reorganised into five regions (Northeast, Southeast, River, Great Lakes and

Northwest). Each region comprises three to five plants and therefore manages

comparable capacities (between 3 and 5 million tonnes). This restructuring has

enabled Lafarge to gradually become a big company capable of operating on a small-

scale by getting closer to the local structures of its client base and staying in tune with

local market requirements with support from strengthened central functions, particularly

with regard to marketing.

Lafarge North America is listed on the New York, Toronto and Montreal stock

exchanges and 53%-owned by Lafarge. The Roofing business has traditionally been

owned by Lafarge via a joint venture and managed at Group level.

Blue Circle’s former assets in North America are held by Lafarge SA, which delegates

management to Lafarge North America within the framework of a management

agreement. This arrangement favours integrated management of all Cement,

Aggregates & Concrete assets in North America.

Our North American business lines

Lafarge materials sold in North America accounted for 27% of the Group’s worldwide

sales in 2004.

Lafarge North America is the largest diversified supplier of construction materials such

as cement and related products, ready-mixed concrete, gypsum wallboards,

aggregates, asphalt and concrete-based products in the United States and Canada. Its

products are used in the construction of houses and apartment blocks, commercial and

non-residential premises and infrastructures. Its head office is located in Herndon,

Virginia, close to Washington DC. Lafarge North America has a workforce of

approximatly 15,000 spread across 1,000 or so sites. The three main business sectors

for Lafarge North America are: Cement and related products, Aggregates & Concrete,

and Gypsum.

Cement and related products 5,448 employees in North America Sales volumes: 21 million tonnes

Lafarge is the leading supplier of top-quality cement and related products in the United

States and Canada. With over 20 types of cement and mixtures, Lafarge provides

imaginative solutions for contractors, manufacturers, local authorities, ready-mixed

concrete producers, manufacturers of concrete-based products and builders.

Specialties such as NewCem®, MaxCem™, Tercem 3000™ and SF™ cement have

been designed to meet the challenges created by bridge-building, subsea structures,

skyscrapers and industrial flooring. Lafarge cement used for concrete masonry and as

mortar mix have applications in all types of residential or commercial construction work

in brick or concrete blocks. Lafarge manages the most extensive manufacturing and

distribution network in Canada and the United States thus ensuring that its cement and

related products are made available to its customers.

Aggregates and Concrete 8,653 employees in North America Sales volume: 133 million tonnes

Aggregates are fundamental to the construction chain. Lafarge is one of North

America’s largest producers of aggregates offering one of the most sophisticated

product ranges in the construction industry with new series of top-quality products.

Lafarge produces an extensive range of ready-mixed concrete (a mix of cement,

aggregates, water and admixtures) for various applications such as the new high-

performance Ultra™ Series mixtures. Lafarge is also at the cutting-edge for the

development of special patented mixes like Agilia®, a revolutionary self-placing

concrete. Lafarge is also a major producer of asphalt, road construction and road

surfaces in regions and ensures the correct operation in all kinds of building sites.

Ductal®, the new ultra-high-performance material from Lafarge, combines resistance,

long life, aesthetics and ductility in a unique manner and provides engineers and

architects with extensive options in terms of design and applications.

Gypsum 707 employees in North America Production capacity: 204 million m²

Construction work would be virtually impossible without gypsum. The US market

accounts for 50% of the global market in gypsum wallboards. Lafarge’s Gypsum

division offers its customers a broad range of products, whether architects, specifiers,

distributors, constructors, contractors or applicators. Lafarge products come in all sorts

of shapes and sizes and the applications are extremely varied. Protecta® AR 100,

gypsum wallboard which is resistant to shock, denting and surface abrasion, benefits

the entire industry by reducing maintenance and replacement costs. Protecta AR 100 is

recommended for buildings with high through flows such as schools and hospitals.

Lafarge’s gypsum products are manufactured as per current environmental

construction standards enabling compliance with the LEED standard of the U.S. Green

Building Council which corresponds to the international standards of the ASTM

(American Society for Testing and Materials).

Its cutting-edge plants use manufacturing processes based on recycled products,

particularly 100% recycled paper. They are thus able to recycle gypsum wallboard. In

addition, the plants in Palatka, Florida, and Silver Grove, Kentucky, use synthetic

gypsum and deliver "green" products, which are among the most environmentally

friendly on the market. As a supplement to its extensive gypsum wallboard range,

Lafarge offers a full range of highly innovative finishing products: Rapid Coat®, Classic

Coat™ and Rapid Joint™ which meet the varied requirements of the finishing trade. In

2004, Lafarge launched Rapid Deco ® Level 5 ™ Skim-Coated Dryawall and the Joint

Finishing System, fast and easy in terms of technical performance and design of

lighting and paint solutions.

Roofing 576 employees in North America

The Lafarge Group Roofing activity is present in the United States but is not

managed by Lafarge North America. It is represented by MonierLifetile, founded

in 1997 as part of a joint venture between Monier and Boral Lifetile. Monier was

formally part of the Redland group before being acquired by Lafarge at end

1997. MonierLifeTile offers customer-oriented solutions on a high-potential

market (substitution in favour of concrete roof tiles and the market in new

constructions).

PERFORMANCE AS THE KEY DRIVER FOR PROFITABLE GROWTH

In the past ten years, the Group has established a position as the world leader in

construction materials. This rise to the top has been built on the tried and tested twin

pillars of growth and performance.

Whether we are talking about Top, Rock, Pave, SpiD, FIRST or Advance, the

performance programmes, which have been tailored to the various business lines and

are therefore specific to each division, have enabled Lafarge to channel all of its

energy, continually move forward and integrate newcomers rapidly.

For Lafarge, performance is not just about tools and processes. It is first and foremost

about behaviour. The Group has stepped up efforts to switch from a cost-cutting

industrial approach to one founded on research and overall performance in order to

remain the uncontested leader in its sector well into the future.

The new performance-related challenges There is nothing new about the Group’s performance-centred approach. In 15 years, it

has established itself as a key aspect of management. The notion of performance is no

longer restricted to the technical field and has spread to strategy, marketing, security

and environmental protection. Our performance plans are integrated into the units’

management tools alongside strategic plans and budgets.

Our employees are key players in the performance drive which is why the Group has

made every effort to ensure that each employee makes the connection between his

everyday tasks and his contribution to performance overall. Communication, training

and development of a performance culture vis-à-vis staff, have enabled objectives to

be understood and shared by all and will continue to do so, which represents a major

challenge in local business lines and within a highly decentralised organisation.

So that everyone adopts good practices and tools developed in their Division and is

able to take the right decisions locally with a view to ensuring continuous progress, a

number of resources have been established: decentralised networks which oversee

programmes on the ground, creation of ad hoc training programmes, particularly for

managers, awards for excellence, …

An unprecedented collective effort In 2003, Lafarge initiated an approach aimed at building unity: the gradual mobilisation

of all staff with the aim of changing behaviour in order to embrace a performance-

centred culture. Banking on the gradual appropriation by all staff, the Group rolled out

this project in stages: in 2003, senior management at Group and Division levels, the

150 operational and functional managers then its 800 top executives set the ball in

motion. In 2004, 10,000 managers took up the challenge by deploying the project’s four

key priorities. They all took part in a “Leader for Tomorrow” team-working day:

customer orientation; continuous improvement in performance; implementation of a

more effective organisation and staff development.

All kinds of initiatives were launched on the ground with each unit building its own

project around the specific context and local challenges. This made it possible to create

positive dynamics which are starting to bear fruit at all levels of the organisation.

The performance ingredients The performance programmes launched in each Division are founded on similar

principles but tailored to very different business lines and contexts.

It is firstly about providing all players in the same business line with the same language and defining common performance indicators. How can productivity at a

cement plant furnace be defined? How do you evaluate the cost of maintenance at an

aggregates quarry? What are the profitability criteria for a ready-mixed concrete plant?

How can customer satisfaction be gauged when it comes to roofing products? By

providing one-stop answers to all of these questions, we were able to provide the sites

with the means to run comparisons, point by point, and therefore work out where they

stood in relation to overall performance and to a target.

If a site has weaknesses in a particular field, asking advice from those who know better

and making use of their recipes for success then becomes a matter of course. Thanks

to its long history and broad international experience, the Group has just about seen it

all so when a problem arises on a site, you can be sure that the solution exists

elsewhere.

Transfer of good practices: this is the second ingredient in the performance-centred

approach. But where can you find out about them? The Cement and Aggregates &

Concrete divisions have set up good practice databases (how do you build a silo for

wet sand? or how do you lay cement in cold or hot weather? for instance). But, it is not

enough to make this information available since being willing to turn the experience of

others to full account forms part of the performance culture.

Other key components of the "Made in Lafarge" approach to performance: respecting a

number of rules which have proved their worth in other business sectors –

segmentation, cost analysis, diversification of customer portfolios, use of

subcontractors. These rules have sometimes been overlooked but experience shows

that their application is effective. Performance also means setting ambitious but

realistic targets as well as regular monitoring of results in order to fine-tune where

necessary. This approach may not be particularly original but it does require stringency

and continuity.

From commodity products to tailored solutions: aggregates, concrete, gypsum,

cement, roof tiles, etc., these products are often considered to be "commodities". One

of the key challenges for the Division performance plans is to break away from this

outmoded image and provide all products with increasing levels of added value by

means of quality, service and innovation. For instance, in the past ten years, research

into concrete has led to major innovations which are transforming construction

methods. Customers are developing a taste for innovative products such as Agilia®

and what sets competitors apart is service quality and the qualitative added value of

the material. Faced with these often small-scale business rivals it would be pointless to

compete on pricing alone. Our competitiveness is being built on differentiation and the

added value of our products and services.

Each of our business lines is endeavouring to make the change from being product

manufacturers to being providers of differentiated solutions depending on the type of

application and customer: thermal or acoustic insulation of a room, erecting a water-

resistant partition in a bathroom, installing a sustainable, coloured roof with insulating

properties, using self-placing concrete for foundations or deactivated concrete for a

terrace, etc. This requires a different approach to both production and performance

with innovation playing a central role…

From an industrial approach to overall performance The Cement Division has prioritised exchange of know-how and performance

measurement, assigning them the status of a fully-fledged management tool.

As of 1990, efforts were focused on achieving technical expertise at all plants, but

expertise was often all about “having the knack” in a way which was not particularly

formalised and therefore difficult to pass on. A plant self-assessment process was

conducted throughout the Division to enable each site to identify its strong points (for

transfer of its know-how to others) and its weak points (where it could benefit from

others’ know-how).

The first 3-year technical plans were centred on technical progress: a cement plant

which was both costly (between US$ 150 and 200 million per unit) and a high energy

user (the flame of the kiln must burn at 2000°C so that the clay and limestone burning

in the 1500°C furnace turn into clinker). Almost 200 indicators enabling evaluation of a

cement plant’s performance at every level were defined: energy consumption,

maintenance costs, productivity of furnaces, etc. Thanks to this “common language”, it

is now possible to compare performances of all plants, point by point, and therefore

identify good practices and areas for improvement. Several improvement plans have

since been introduced with significant results. For instance: the cost of producing a

tonne of cement has fallen by around one euro per year in the course of five years.

In 2003, the Cement Division launched a broader performance programme dubbed

Advance, incorporating aspects other than those covered by an industrial approach

alone. This programme has five pillars: strategy (improve the appeal of our markets);

marketing (become an acknowledged benchmark supplier); industrial (consolidate our

leading position in industrial plant expertise); performance culture (rally staff around the

performance banner in an increasingly open-ended environment); and finally,

sustainable development (be recognised as a responsible entity) and relations with

communities. Each of these areas has been assigned detailed targets. Moreover,

systematic benchmarking is conducted between the 46 units on key parameters so that

each is able to position itself vis-à-vis the others and focus on a number of priorities.

The Aggregates & Cement Division began by tackling performance from an angle

which, in addition to industrial factors, included aspects such as strategy, marketing

and the sales approach. The Division analysed practices at profitable units so as to

identify factors which were key to their success: a dozen or so for each business line,

such as the commercial segmentation in aggregates, formula optimisation in concrete,

etc. These key factors were then formatted and systematically disseminated to all units

around the world. Strongly attached to the notion of behaviour, the Division implements

performance programmes while drawing a clear distinction between what comes under

performance and what comes under environmental impact.

The Roofing Division also focused on industrial performance with the launch of the

SPiD programme which aimed to empower each employee vis-à-vis progress

indicators. It then launched Booster, a programme centred on the commercial

performance of sales and marketing.

The Gypsum Division placed a strong emphasis on priorities related to the customer

approach: management of pricing and product quality. The Division launched the

FIRST programme. The performance plans result from the strategic guidelines; they

are supplemented by action plans (for implementation) and remedy plans (when

objectives have not been attained). Certain plans are focused on functions while others

are more cross-cutting (security, environment, communication).

Thanks to its performance programmes, the Lafarge Group is now capable of

distinguishing between factors arising from its environment (the effects of inflation on

raw materials or changes in volumes, for instance) and what is due to the performance

of Group employees (positive, such as increased market share or negative, such as the

decision to reduce our prices). It should be noted that it is up to managers to draw the

distinction between the environment and operational performance since gauging

performance is a management process rather than an accounting method.

SUSTAINABLE DEVELOPMENT, THE KEY TO PERFORMANCE For many years, Lafarge has incorporated the three key dimensions of sustainable

development, economics, and social/environmental factors into its strategy and culture.

We are convinced that our performance will only be sustainable if we manage to

combine profitability with environmental quality while remaining turned outwards

towards society and striving to help it advance.

In the economic field, optimised use of our non-renewable resources, responsible use

of recycled materials and substitute fuels enable us to save rare resources and reduce

production costs. The same is true of use of alternative raw materials, subproducts

from other industries, such as fly ash or slag originating from the coal or steel industries

which due to their similar hydraulic characteristics, replace cementing materials in the

cement industry and also help to reduce our C02 emissions.

In social terms, openness towards society, active dialogue and the construction of

ambitious partnerships with our stakeholders, NGOs, populations and local

governments, etc. allow us to integrate our operations into the local economy in close

collaboration with the communities adjacent to our production sites. Programmes on

health, accommodation, education and local development are deployed in support of

our sites in less developed countries, making it possible to improve local living

conditions.

Finally, in environmental terms, our commitment to reducing our CO2 emissions

requires us to identify innovative technical solutions both in terms of processes and

products. At end 2004, the result was a 11.8% reduction in our net emissions of CO2 in

relation to 1990. Similarly, the successful redevelopment of quarries ensures optimum

integration of our operations into local landscapes and helps preserve the biodiversity

of our operating sites.

For several years, Lafarge has developed an ambitious policy of active partnerships

with the various players in society so that these activities which are vital to the

development of communities form part of a general strategy to build a modern society.

For instance, we have been working with WWF International for five years on improving

our environmental performances and are tackling health-related problems in

developing countries alongside the Care NGO.

Our industry is a key development industry: concrete is the second most consumed

product in the world after water, present in all infrastructure projects which are essential

to the economic and social development of communities; it meets the rightful

expectations of populations for accommodation, health, education and mobility thanks

to roads, schools, hospitals, water supply infrastructures, etc. Fully aware of our

responsibilities in this regard, we are developing solutions to ensure that this

development does not occur to the detriment of the environment or quality of life.

We have decided to place this recognised experience as a responsible company

involved for many years in sustainable development and in dialogue and partnerships

with civil society. We are keen to promote technical solutions for construction which

respect the environment and local populations both in terms of the worksites which are

better integrated, more effective, quicker to completion and safer, and in terms of the

choice of materials and systems in order to minimise the global footprint of buildings

and temporary or permanent structures.

A FEW EXAMPLES IN NORTH AMERICA Habitat for Humanity In 2001, Lafarge North America (LNA) and Habitat for Humanity signed a five-year deal

making Lafarge the biggest supplier of cement, concrete, aggregates and gypsum

wallboards to NGOs. Through this partnership, LNA has undertaken to provide one

million US dollars in financial aid and materials. This partnership is part of the Habit for

Humanity’s “More than Houses” campaign, whose objective is to collect US$ 500

million in order to build 100,000 houses by 2005.

Objective: In August 2003, Lafarge had already fulfilled its undertaking, having

contributed US$ 1 million to the Habitat For Humanity initiative two years ahead of

schedule. The partnership has remained solid, with the group’s respecting its

commitment to helping build a better world.

Summary: An example of this project is the support for the “Jimmy Carter Work Project”

in 2003. Lafarge donated all the materials (cement, aggregates, concrete, gypsum)

required for the project. Around 50 employees from various sites gave up their time for

one week. In addition, many employees from the southeast and the Palatka gypsum

plant worked on producing and supplying materials during company hours. Some even

collected donations thus contributing several thousand dollars in additional funds to

Habitat for Humanity.

Result: 92 houses were built in one week in Alabama and Georgia, offering families the

chance to live in a modern, comfortable home. The worksites also provided volunteers

with an opportunity to gain first-hand experience of how Lafarge products are used.

Redevelopment of quarries: creation of a nature park

The Limestone Valley Park was created on a part of the Texas Quarry, in Maryland,

which has reached the end of its operational life. In addition to attractive landscaping,

the quality of the water in the park is excellent, as reflected in the presence of trout,

perch and beavers.

Objective: redevelop part of the quarry which has reached the end of its useful life.

Protect water quality in a trout stream.

Context: some sections of the Texas Quarry in Maryland reached the end of their

operational life in the late 1970s. In addition, the Goodwin Run, a small trout stream,

passes alongside the quarry, an asphalt production plant and a concrete plant, before

feeding into a reservoir which supplies the city of Baltimore with drinking water.

Solution: In 1995, Lafarge North America launched a competition for projects to

redevelop the site. The winning project, which was awarded 10,000 dollars, resulted in

the opening of Limestone Valley Park. In this new nature park, dotted with ponds and

wooded areas, wildlife habitats have been given special attention. The Goodwin Run,

which feeds into the park’s wetlands and while also supplying the quarry installations,

is protected by stringent controls of pH levels, suspended particulates, and waste-water

temperature as well as by numerous installations designed to prevent accidental

pollution.

Results: Today, Limestone Valley Park is home to a wide variety of wildlife including

deer and beaver, as well as numerous bird species. Lafarge internal training courses

and customer visits are organised at the site. The Goodwin Run and the ponds are

inhabited by numerous species of fish, including trout.

Saving resources: Use of desulfogypsum

Use of desulfogypsum (reprocessed waste from thermal power plants) in the

manufacture of gypsum wallboards helps preserve natural resources.

Objective: Save natural resources by conversion of a substitute for natural gypsum,

desulfogypsum, for use in the manufacture of gypsum wallboards.

Context: The burning of coal and lignite in electricity generating thermal power plants

results in significant emissions of sulphur oxides. Power plants must eliminate this gas

in order to comply with environmental standards. They perform this purification process

by washing gas through addition of calcium carbonate or limestone, which produces a

synthetic gypsum (or desulfogypsum) of high quality and excellent regularity.

Solution: Built in 2001, the new gypsum wallboard plant in Palatka, Florida, sits

alongside a thermal power plant belonging to Seminole Electric. A partnership was

established between Lafarge North America and Seminole Electric in order to

transform the desulfogypsum, in accordance with precise specifications.

Results: Since it began operations, the Palatka used 410,000 tonnes of gypsum in

2001 and 530,000 tonnes in 2002. The gypsum wallboards are 100% produced using

synthetic gypsum. The use of a substitute raw material helps to preserve natural

resources. A growing number of Gypsum Division’s units around the world use

desulfogypsum.

Saving resources: converting slag

Waste from the steel industry, termed slag, is converted by Lafarge for use in three

products: cement, concrete and aggregates.

Objective: converting slag from the steel industry into raw material for cement or

concrete or as a substitute in aggregates.

Context: When iron ore is heated up in blast furnaces, the separated impurities become

slag. This slag is generally dumped. However, if it is quickly cooled with water, it takes

on properties similar to cement.

Solution: Lafarge converts the liquid slag into pellets using specialist installations on

the site of the Ispat-Inland Steel plant in Indiana. The pellets are then transported to the

Lafarge installations in South Chicago, Illinois for grinding. The end product is either

converted or used as a concrete additive (NewCem), or added to the clinker at the

Davenport cement plant. Finally, some of the pellets are calibrated for use as substitute

material for sand, gravel and stone chips.

Results: In 2002, the South Chicago plant ground 120,000 tonnes of slag converted

into a concrete additive (NewCem). Around 15,000 tonnes were shipped to Lafarge

cement plants as a cement additive (MaxCem). 10,000 tonnes were recycled as

aggregates (True Lite Lightweight Aggregate™) directly at the Ispat-Inland steel plant.

Conversion of slag reduces dumping, cuts greenhouse gas emissions, reduces energy

consumption and preserves natural resources.

Reducing air pollution and nuisances: modernisation of a cement plant A major modernisation programme is making it possible to significantly reduce

emissions released into the atmosphere as well as the amount of energy required to

produce cement.

Objective: Take advantage of a cement plant modernisation programme to improve

environmental performances.

Context: Built in 1905, the Sugar Creek plant is located close to Kansas City, an urban

area with over 1.8 million inhabitants. In 1999, a major modernisation programme was

launched aimed at reducing costs, increasing the production capacity and significantly

reducing the environmental impact.

Solution: Lafarge has replaced two production lines dating from the 1950s. This new

system reduces energy consumption: the extremely hot exhaust gases emitted by the

furnace are recovered for reheating and precalcination of the raw mix (ground raw

materials). The improved combustion reduces the nitrogen oxide emissions while the

installation of bag filters reduces dust emissions. In addition, the opening of an

underground limestone quarry measuring 210 metres in depth makes it possible to

protect the landscape, flora and fauna.

Results: Officially opened on 30 July 2002, the plant is now one of the most modern

cement plants in the United States. Energy consumption has been reduced by 50% per

tonne of cement produced. Emissions of SOx and NOx were reduced by 53% and 18%

respectively.

Protection of water: Mississippi clean-up

Employees at the Davenport plant “adopted" a mile of the Mississippi river and

undertook to clean up their section.

Objective: Increase staff awareness of environmental issues through practical

initiatives.

Context: The cement plant in Davenport, Iowa, is located on the banks of the

Mississippi and ships part of its production along this major trade route. However, this

river has become polluted by large quantities of waste abandoned on the banks by all

types of users.

Solution: Since 1999, staff at the Davenport plant have become increasingly aware of

environmental issues in the context of the “You… & the Environment” programme. In

2000, an association gave Lafarge the chance to turn this awareness into action with

an “Adopt-a-mile” project for the Mississippi River (in the United States, many sections

of roadways and waterways are adopted by volunteers who clean and maintain them).

Twelve Lafarge employees volunteered and have committed to maintaining this stretch

of the river. Several months later, this same association asked Lafarge for help with

dismantling and removing a barge which sank over twenty years ago. This week-long

operation was ultimately successful.

Results: The equivalent of four containers of waste (tyres, cans, refrigerators,

televisions, bicycles, chairs, motorbikes, etc.) was collected on the banks of the

Mississippi River by twelve volunteers. The sunken barge was dismantled and

removed. The plant’s staff are now even more aware of environmental issues.

RESEARCH & DEVELOPMENT AND INNOVATION

Lafarge, the world leader in construction materials, is keen to develop innovative

products and new solutions for all players in the construction sector. 500 staff dedicated to Research & Development In total, almost 500 people work in R&D at the Lafarge Group. In order to carry its

projects through to completion, R&D is founded on fundamental research related to

physical and chemical properties of construction materials.

The R&D activities of the Lafarge Group are organised around the Lafarge Centre of

Research (LCR), founded in 1887, and a network of technical centres and specialised

laboratories by division and geographical zone. The Lafarge Centre of Research is

located in Lyon and its Director is Denis Maitre.

Lafarge R&D has a team of 200 researchers, from various countries (United States,

Russia, China, Germany … over 20 nationalities in total), all recognised experts in their

field, for instance:

• chemical hydration processes;

• rheology (study of viscosity);

• micromechanics. Customer-oriented R&D Lafarge’s R&D is customer oriented which is reflected by the recent marketing of

innovative products such as the new cements and cementing materials, self-placing

(Agilia ®) or ultra high performance (Ductal®) concretes, innovative roof tiles (Big®),

multifunction gypsum wallboards (Prégydéco®, Prégydro®)… To develop these new

generations of products, researchers and technicians are in constant contact with

Group Divisions (Cement, Aggregates and Concrete, Roofing and Gypsum). The

divisions identify new trends and have responsibility for improving performance and the

long-term success of their business.

Research programmes tailored to the needs and aspirations of our

customers The entire Lafarge research effort is focused on high quality materials, which respect

the environment and social conditions: minimal environmental impact; preservation of

natural resources and increased level of use of recycled raw materials; reduction in

energy bills; maintenance; health protection.

Among the main research programmes at present:

• tomorrow’s concrete product ranges which deal with customers’ principal

concerns: cracking, control of when setting or hardening starts, productiveness of

the worksite, robustness, durability;

• obtaining better controlled and more suitable cements by improving their

characteristics (regularity, workability, setting time, resistance for the first few

hours, etc.) and by a greater differentiation which enables the various

applications to be covered;

• new generation roof tiles, with long-term aesthetics and heightened

performances, for which LCR carries out upstream research;

• gypsum wallboard with mechanical and acoustic performances enhanced by

microstructure optimisation.

No innovation is ever taken through to manufacture as an end product if it is not better

or at least equivalent to existing products in terms of sustainable development. R&D at the service of sustainable development Lafarge is strongly committed to sustainable development underpinned by significant

efforts in terms of R&D aimed at developing materials which are more respectful of the

environment and social conditions. This commitment has already achieved the

following results:

• Reduction in emissions of CO2 gases: in 2000 Lafarge joined forces with WWF to

commit to reducing its emissions by tonne of cement produced by 20% for the

period 1990-2010.

• Limitation of the impact on the environment of materials (preservation of natural

resources, recycling, reduced energy consumption).

• Improvement of conditions for implementation of its products: routing of its

products and development of alternatives to road transport; reduction of dust,

noise, nuisance related to worksites (new Agilia® self-placing concretes;

Pregymax® gypsum wallboards with lighter and easier-to-install thermoacoustic

lining); recycling of waste on worksites.

• Continual improvement in health and safety conditions and increased training for

staff and subcontractors.

International partners Lafarge develops partnerships with the world’s leading research and laboratory

centres. In France, Lafarge is a partner of the Ecole Polytechnique and signed a

framework agreement with the CNRS (French national centre for scientific research) in

2002. Internationally, Lafarge cooperates with the MIT, and the universities of

Princeton and Berkeley in the United States, the universities of Laval and Sherbrooke,

in Canada and the Ecole Polytechnique Fédérale in Switzerland.

BIOGRAPHIES

Bruno Lafont

Deputy managing director at Lafarge since May 2003, Bruno Lafont (1956) is a graduate of the Ecole des Hautes Etudes Commerciales (HEC 1977, Paris) and former student at the Ecole Nationale d'Administration (ENA 1982, Paris).

Bruno Lafont began his career at Lafarge in 1983 as an internal auditor in the finance department. In 1984, he joined the Sanitary division as administrative and financial director of a subsidiary in Germany. He subsequently served as financial director of the division (1986-1988) then director of development, based in Germany (1988-1989). In 1990, he was appointed director of operations Cement and Concrete & Aggregates for Lafarge, covering Turkey and the Eastern Mediterranean zone.

He served as assistant managing director charged with finance from 1994 to 1998. From 1998 to 2003, Bruno Lafont was assistant managing director responsible for the Gypsum division. Since May 2003, he has been deputy managing director for the Group. He co-manages the Cement division with Michel Rose, and oversees the Aggregates and Concrete division as well as Lafarge North America.

The Lafarge Board of Directors, which met on 23 February 2005, has revealed that among the renewals and appointments to be voted on at the shareholders General Meeting (25 May 2005) it will put forward Bruno Lafont as a director.

Philippe Rollier

Director of the North America zone and president of Lafarge North America and assistant managing director of the Group. Agronomic engineer, graduate of the Institut d’Études Politiques de Paris, Philippe Rollier joined the the administrative and finance division of the Lafarge Group at the start of his professional career in 1969. After conducting an audit for the Group’s senior management, he was appointed regional manager of sales and financial director of Canada Cement Lafarge Ltd in 1973. In 1979, he became deputy managing director of Allia Doulton, then from 1982 to 1988 managing director of Allia, the Lafarge Group subsidiary specialised in sanitary equipment. Managing director of Orsan, a company active in the biotechnology field from 1989 to 1994, Philippe Rollier then headed up the Cement activities of Lafarge for Central and Eastern Europe between 1995 and 2001. He has been at the helm of Lafarge North America since May 2001.

THE WORLD LEADER IN CONSTRUCTION MATERIALSWorld N°1 in Cement

Wide range of cements, hydraulic binders and lime for building, renovation and public works.

World N°2 in Aggregates & ConcreteRange of aggregates, standard concrete, « specialty » concrete (such as ready to use or prefabricated) for civil engineering, for roads and for buildings.

World N°1 in RoofingComprehensive offer of roofing products (concrete/clay roof tiles), accessories and chimney systems.

World N°3 in GypsumGypsum blocks and wallboard, plaster coating for finishing worksfor all kinds of buildings, be the new constructions or renovations.

STOCK DATA (at 06/30/2005, Paris Stock Exchange)

Tickers: LG (Paris), LAF (New York) * Subject to approval of AGM

CORPORATE ACTIVITY & STRATEGYWith 77,000 employees and operations in 75 countries, Lafarge holds top ranking positions in each of its four divisions : Cement, Aggregates & Concrete, Roofing, Gypsum, thus offering all construction industry sectors a comprehensive range of products and solutions. The growth of the world leader in building materials is founded on a sustainable development policy: Group know-how encompasses industrial efficiency, value creation while respecting people and cultures, protection of the environment, preservation of natural resources and energy.

BUSINESS BREAKDOWN in 2004

GEOGRAPHICAL BREAKDOWN in 2004

KEY FIGURES

LAFARGE GROUP SENIOR EXECUTIVESChairman: Bertrand Collomb Chief Executive Officer: Bernard KasrielDirection Générale :

- Bernard Kasriel : Chief Executive Officer - Michel Rose : Chief Operating Officer- Bruno Lafont: Chief Operating Officer

Executive Committee:- Jean-Jacques Gauthier : Executive Vice-President, Finance- Ulrich Glaunach : Executive Vice-President, Roofing - Christian Herrault : Executive Vice-President, HR and Organization - Isidoro Miranda : Executive Vice-President, Gypsum - Jean-Charles Blatz : Executive VP, Aggregates & Concrete

FINANCIAL CALENDAR 2005

10/20/05: 3rd quarter sales 9/8/05: Half-year results

LATEST CORPORATE EVENTS

Cement: -South Korea, India and Japan: buyout of minority interests-Ecuador: acquisition of “Cementos Selva Alegre”-Serbia and Montenegro: inauguration of a cement plant-Vietnam: construction of a cement grinding plant-Morocco: a cement plant directly supplied by a wind farm andinauguration of an ultra modern cement plant in Tetouan and a new production line in Bouskoura-Lafarge and Shui On form Joint Venture in China to create the newcement leader in South West Region

Roofing-Schiedel expands its business activities in chimney and flue systems

Gypsum-Lafarge Boral Gypsum in Asia (LBGA) to double its capacity in China-Lafarge to invest €300 million to increase Gypsum production by morethan 20%-Lafarge to increase its plasterboard capacity by 50% in the UK-USA: Upgrade and expansion of Buchanan Gypsum Drywall Plant

• Corporate- Lafarge and WWF renew their partnership-Lafarge successfully completes a Eurobond exchange offer and Euro 500 Million of 15 year bonds

LAFARGE KEY DATES

1833 Lafarge founded in France1956 Lafarge starts operating in North America1997 Acquisition of Redland (Aggregate & Concrete and Roofing)2001 Acquisition of Blue Circle

Reuters: LAFP.PABloomberg: LG FPWebsite: www.lafarge.com

61, rue des Belles Feuilles - B.P. 4075782 Paris cedex 16 – FRANCETelephone: + 33 1 44 34 18 18 / Fax: + 33 1 44 34 12 23

* Operating Income from ordinary activities

Sales

Western Europe

North America

Central and Eastern Europe

Emerging Mediterranean

Asia /Pacific

Latin America & theCaribbeanSub Saharan Africa/IndianOcean/Others Operating

Result

(in euros million) 31/12/2004 31/12/2003Sales 14, 436 13,658Operating Income* 2,124 1,934Group Net Result 868 728EPS 5.2 4.9Gearing 59% 67%Employees 77,000 75,000

Market Cap € 13,186 mShare Price € 71.35Highest/Lowest share price (in 2003) € 74.5 / € 62.3Dividend per share (2003) 2.40*

-3%Operating

Result

74%

6%16%

7%

Sales

11%

0%

33%

9%

47%

Cement

Aggregates & Concrete

Roofing

Gypsum

Other

Contact: Stéphanie TessierGroup VP, External CommunicationsStephanie.tessier@lafarge.com

LAFARGE GROUP

43%

20%

6%

8%

6%

7%

10%

5%4%

27%

4%

8%

10%

42%

August 2005