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LAFARGE SHAREHOLDER’S GUIDE 2011 THE SHAREHOLDERS THE HEART OF LAFARGE PAGE 1 | LAFARGE | INDIVIDUAL SHAREHOLDER’S GUIDE 2011 1 LAFARGE IN 2010 06 Group Profile 09 Strategy and social commitments 11 Group Businesses BOARD OF DIRECTORS AND The Individual 2 EXECUTIVE COMMITTEE OF LAFARGE Shareholders’ Relations Department is glad to 16 Board of Directors present you the individual 17 Executive Committee shareholders’ guide 2011. The purpose of this guide 3 LAFARGE ON THE STOCK MARKET is to answer your questions about Lafarge. 20 Lafarge stock 23 Dividend Who is the Group? 24 Distribution of capital What is its strategy 25 Actions affecting the shares in the last 10 years and commitments? How to stay informed? 4 LAFARGE SHAREHOLDERS We hope this guide will 28 Lafarge at your service meet your expectations 30 The Shareholders’ Consultative Committee and for further information, 31 General Meeting we recommend that you visit our website at www.lafarge.com, 5 MANAGE YOUR SHARES or contact the Individual Shareholders’ Relations 35 Share account Department 39 Buying or selling Lafarge shares (details on p. 45). 0 800 235 235 toll free number, for calls from France only. 1 Dear shareholders, 2 Bruno Lafont In 2010, numerous people joined us and today Lafarge has Chairman and Chief Executive Officer of Lafarge. more than 270,000 individual shareholders, representing 11.1% of our shareholders base. In a difficult economic and stock market environment, this increase confirms your confidence and loyalty to Lafarge, for which I warmly grateful. For a very long time, individual shareholders have been a major focal point of Lafarge. In 2010, the Group dedicated itself to 3 further improve the quality of the relationship with its individual shareholders and to extend and enlarge the opportunities to communicate with you. I personally had the pleasure to meet you during several conferences which we held in Paris and other regions of France. Also, I regularly meet your representatives of the Consultative Committee. 4 Today, a complete and extensive communication system permits you to be informed of news about the Group and to discover our business skills and our commitments. This guide, specifically prepared for you, is to increase your knowledge of Lafarge and provide you with useful and practical information related to your shareholdings in the Group. Yours sincerely, 5 INDIVIDUAL SHAREHOLDER’S GUIDE 2011 | LAFARGE | PAGE 03 PAGE 04 | LAFARGE | LINDIVIDUE GUIDEA DL ESH L’actAREHOLDIONNAEIRR’SE GINDIVIDUUIDE 2011EL 2008 CAAPORA CEMENT PLANT Brazil. 1 Lafarge in 2010 06 GROUP PROFILE 09 STRATEGY AND SOCIAL COMMITMENTS 11 GROUP BUSINESSES INDIVIDUAL SHAREHOLDER’S GUIDE 2011 | LAFARGE | PAGE 05 Top-ranking positions in Cement, Aggregates & Concrete and Gypsum With a diversified and balanced geographic portfolio and 76,000 employees in 78 countries, Lafarge is at the heart of global growth supporting developing economies and responding to the tremendous need for housing and infrastructure in emerging countries. SALES IN 2010 16,169 million euros GROUP SALES BY GEOGRAPHIC AREA OF DESTINATION Lafarge worldwide % Western Europe 26.7 North America 20.6 Africa and Middle East 24.1 Central and Eastern Europe 6.5 Latin America 5.5 Asia 16.6 PAGE 06 | LAFARGE | INDIVIDUAL SHAREHOLDER’S GUIDE 2011 Lafarge in 2010 1 Key figures REVENUES FREE CASH FLOW (3) 2010 €16,169 m €2,151 m (4) 2009 €15,884 m €2,834 m EBITDA (1) GROUP NET DEBT 2010 €3,614 m €13,993 m 2009 €3,600 m €13,795 m CURRENT OPERATING INCOME (2) NET EARNINGS PER SHARE 2010 €2,441 m €2.89 2009 €2,477 m €2.77 NET INCOME GROUP SHARE DIVIDEND PER SHARE 2010 €827 m €1.00 2009 €736 m €2.00 (1) Defined as the current operating income before depreciation and amortization on tangible and intangible assets. (2) Before capital gains, impairment, restructuring and other. (3) Defined as net operating cash generated by operations less sustaining capital expenditures. (4) Before non-recurring payment in 2010 of the Gypsum competition fine. INDIVIDUAL SHAREHOLDER’S GUIDE 2011 | LAFARGE | PAGE 07 PAGE 08 | LAFARGE | INDIVIDUAL SHAREHOLDER’S GUIDE 2011 ARCOS CEMENT PLANT Brazil. Lafarge in 2010 1 Strategy & Social Commitments Our strategy aims at strengthening our position as world leader in building materials, in terms of market share, innovation, recognition by customers, geographical portfolio, and profitability. 2 STRATEGIC PRIORITIES 3 Cement, primarily in emerging markets, where demography and urbanization drive the needs for housing and infrastructure. 3 Innovative products and solutions, particularly construction systems, including sustainable construction, which is affirming itself as a reality of the markets in an increasing number of countries. 3 OPERATIONAL PRIORITIES 3 The day-to-day health and safety of the women and men who work for the Group, be they on the payroll or with sub-contractors, on site or on the road. 3 The cost-cutting. This was reflected in the resilience of our operating margin permitted by €220 million structural cost savings in 2010, as we continued to optimize our industrial processes and organization. 3 People Development with a focus on filling our talent pipeline, developing our talents, leveraging diversity, and ensuring effective organization. COMMITMENTS TO SUSTAINABLE CONSTRUCTION: 3 Preservation of the environment and combating climate change (limited raw materials extraction, emissions reduction – notably CO2 – and biodiversity promotion). 3 Health protection and medical care for our employees and neighbouring communities. 3 More generally the Group’s social involvement, as illustrated by the Group’s actions following natural disasters. INDIVIDUAL SHAREHOLDER’S GUIDE 2011 | LAFARGE | PAGE 09 NITEROI CONTEMPORARY ART MUSEUM (MAC) Brazil. In 2010 The Group built a strong basis for 2011 STRENGTHENED GEOGRAPHIC PORTFOLIO OF ASSETS 3 Started 12 MT of capacity in emerging markets. 3 Strategic investment which strengthens Lafarge’s position in Brazil, a dynamic and buoyant market. SIGNIFICANT CASH GENERATION 3 Structural cost savings exceeded target, reaching €220 m for the year, above the €200 m commitment. 3 Improved working capital by 11 days, representing €350 m. 3 Secured over €500 m of divestments, meeting target for the year. PAGE 10 | LAFARGE | INDIVIDUAL SHAREHOLDER’S GUIDE 2011 Lafarge in 2010 1 EMPLOYEES, RICHMOND CEMENT PLANT KILN, CAAPORA CEMENT PLANT Canada. Brazil. Cement World leader ACTIVITIES SALES in million euros NUMBER OF EMPLOYEES Cement, hydraulic binders and lime for construction, 9,656 44,253 renovation and NUMBER OF PLANTS PRESENT IN public works. 168 50 countries SALES BY GEOGRAPHIC AREA OF DESTINATION % Western Europe 18 Central and Eastern Europe 8 Africa and Middle East 34 North America 13 Latin America 7 Asia 20 INDIVIDUAL SHAREHOLDER’S GUIDE 2011 | LAFARGE | PAGE 11 AGGREGATES The Philippines. Aggregates & Concrete N° 2 & N° 3 worldwide ACTiviTIEs SALES in million euros NUMBER OF EMPLOYEES Aggregates, ready-mix and precast concrete products, asphalt and paving 5,088 23,438 for engineering structures, NUMBER OF PLANTS PRESENT IN roads and buildings. countries 1,718 36 SALES BY GEOGRAPHIC AREA OF DESTINATION % Western Europe 38 North America 39 Energing markets 23 PAGE 12 | LAFARGE | INDIVIDUAL SHAREHOLDER’S GUIDE 2011 Lafarge in 2010 1 SARABURI PLASTERBOARD PLANT Thaïland. Gypsum N° 3 worldwide NUMBER OF EMPLOYEES ACTIVITIES SALES in million euros NUMBER OF EMPLOYEES Plasterboard systems and gypsum-based 23,438 interior solutions 1,422 7,986 PRESENT IN for new construction NUMBER OF PLANTS PRESENT IN and renovation. countries countries 36 77 30 SALES BY GEOGRAPHIC AREA OF DESTINATION % Western Europe 50 North America 13 Asia 13 Other countries 24 INDIVIDUAL SHAREHOLDER’S GUIDE 2011 | LAFARGE | PAGE 13 PAGE 14 | LAFARGE | LINDIVIDUE GUIDEA DL ESH L’actAREHOLDIONNAEIRR’SE GINDIVIDUUIDE 2011EL 2008 MINAS GERAIS STATE ADMINISTRATIVE CENTER Brazil. Board of Directors and Executive 2 Committee of Lafarge 16 BOARD OF DIRECTORS 17 EXECUTIVE COMMITTEE INDIVIDUAL SHAREHOLDER’S GUIDE 2011 | LAFARGE | PAGE 15 Board of Directors Back row: Michel Bon, Thierry de Rudder, Nassef Sawiris, Appointed by the shareholders, the board of Directors determines the Group’s Jérôme Guiraud, Bertrand Collomb, strategy and supervises its implementation. The Board of Directors of Lafarge has Juan Gallardo, Gérald Frère, Paul Desmarais Jr., 18 members(1), of whom 10 are independent(2). Oscar Fanjul holds the position Colette Lewiner, Pierre de Lafarge*. of Vice-President of the Board of Directors, which is reserved for an indepen- dent director. This decision highlights Lafarge’s determination to implement best Front row: practices in corporate governance. Philippe Dauman*, Oscar Fanjul, Hélène Ploix, The Annual Shareholders’ General Meeting appoints directors for a period of 4 years. Bruno Lafont, Michel Pébereau*, Michel Rollier, Véronique Weill. (Absent: Philippe Charrier). The Board of Directors created 4 Standing Committees in charge of working and issuing recommendations within their specific scope: the Audit Committee; the Corporate Governance and Nominations Committee; the remuneration Committee and the Strategy, Investment and Sustainable Development Committee. * Termination of the position after the General Meeting to approve the financial statements for 2010. (1) At December 31, 2010. (2) According to the Board of Directors’ criteria. PAGE 16 | LAFARGE | INDIVIDUAL SHAREHOLDER’S GUIDE 2011 Board of Directors and Executive Committee of Lafarge Executive Committee