As filed with the Securities
  and Exchange Commission on April 25, 2002

---

---

SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

---

FORM 20-F

---

REGISTRATION STATEMENT PURSUANT
  TO SECTION 12(B) OR (G)
  OF THE SECURITIES EXCHANGE ACT OF 1934

or

ANNUAL
  REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
  SECURITIES EXCHANGE ACT OF 1934

for the fiscal year ended December
  31, 2002

or

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

---

LAFARGE(Exact name of Registrant as specified
  in its charter)

|N/A                          | France                        
|---------------------------- | ------------------------------
|(Translation of Registrant's | (Jurisdiction of incorporation
|name into English)           | or organization)              

61, rue des Belles Feuilles,
  75116 Paris, France(Address of principal executive offices)

---

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

|                                                                                                            | Name of each exchange      
|----------------------------------------------------------------------------------------------------------- | ---------------------------
|Title of each class:                                                                                        | on which registered:       
|                                                                                                            |                            
|American Depositary Shares, each representing one-fourth of an ordinary share, par value 4 euros per share. | The New York Stock Exchange

|                                                     | 
|---------------------------------------------------- | 
|Ordinary
      Shares, par value 4 euros per share *

| |  | 
| |  | 
| |  | 

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

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

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

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

| |                 | At December 31, 2002 | 
| | --------------- | -------------------- | 
| | Ordinary Shares | 132,880,433          | 

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

Yes                No

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

Item 17                Item
  18

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TABLE OF CONTENTS

PART I

|        | Item 1. Identity
      of Directors, Senior Management and Advisers*                        | 5  
|------- | ------------------------------------------------------------------------------------------- | ---
|        | Item 2. Offer Statistics
      and Expected Timetable*                                      | 5  
|        | Item 3. Key Information                                                                     | 6  
|        | Item 4. Information
      on the Company                                                    | 16 
|        | Item 5. Operating
      and Financial Review and Prospects                                  | 65 
|        | Item 6. Directors,
      Senior Management and Employees                                    | 97 
|        | Item 7. Major
      Shareholders and Related Party Transactions                             | 113
|        | Item 8. Financial
      Information                                                         | 116
|        | Item 9. The Listing                                                                         | 117
|        | Item 10. Additional
      Information                                                       | 121
|        | Item 11. Quantitative
      and Qualitative Disclosures about Market Risk                   | 142
|        | Item 12. Description
      of Securities Other than Equity Securities*                      | 146
|        |                                                                                             |    
|PART II |                                                                                             |    
|        |                                                                                             |    
|        | Item 13. Defaults,
      Dividend Arrearages and Delinquencies                              | 147
|        | Item 14. Material
      Modifications to the Rights of Security Holders and Use of Proceeds | 147
|        | Item 15. Controls
      and Procedures                                                      | 147
|        | Item 16. [Reserved]                                                                         | 147
|        | Item 17. Financial
      Statements*                                                        | 147
|        | Item 18. Financial
      Statements                                                         | 148
|        | Item 19. Exhibits                                                                           | 149
|        |                                                                                             |    

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| |  
| | -
| | *

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PRESENTATION OF INFORMATION

In this document, references to “United States,” the U.S., US or U.S.A. are to the United States of America, references to the “E.U.” are to the European Union and references to “tonnes” are to metric tonnes (1,000 kilograms or 2,204 pounds).

For the convenience of the reader, this registration statement presents certain translations into U.S. dollars (“US$”) of amounts in euros at the December 31, 2002 Noon Buying Rate of 1 euro = U.S.$ 1.0485.  As of April  15, 2003 the Noon Buying Rate was 1 euro = US$  1.0801

Various amounts and percentages set out in this document have been rounded and accordingly may not total.

For a summary of differences between accounting principles we have adopted and U.S. generally accepted accounting principles (“U.S. GAAP”), see Note  31 to our consolidated financial statements included elsewhere in this registration statement.

This registration statement contains certain forward-looking statements regarding prices and demand for the Group's products, the Group's financial results, the Group's plans for divestitures and geographic expansion and certain other matters. More generally, when used in this report, the words “aim(s),” “expect(s),” “intend(s),” “will,” “may,” “believe(s),” “anticipate(s)” and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.  Specifically, statements herein regarding our future strategy, plans, products and process developments, facility expansion and
improvements, synergies, acquisitions, partnerships and general business prospects are subject to uncertainty arising from numerous factors outside of our control, including market conditions, raw material prices, currency fluctuations, customer demand, the actions of competitors and regulators, technological developments and other factors.  The forward-looking statements contained in this document speak only as of the date of this annual report  and we do not intend, except as required by law, to update any forward-looking statements set forth in this registration statement to reflect new information or subsequent events or circumstances.

ENFORCEABILITY OF CIVIL LIABILITIES

We are organized as a société anonyme under the laws of France.  Almost all of our directors and officers, as well as certain of the experts named in this registration statement, are non-U.S. residents, and a substantial portion of our assets and the assets of our directors and officers and these experts are and will be located outside the United States.  As a result, you may not be able to effect service of process within the United States upon these persons or to enforce, in U.S. courts, against these persons judgments of U.S. courts predicated upon any civil liability provisions of the U.S. federal or state securities laws.  In addition, you may not be able to enforce certain civil liabilities predicated upon U.S. federal or state securities laws in France against us, our directors and officers, and the persons named in this prospectus.  If an original action is brought in France, predicated solely
upon the U.S. federal securities laws, French courts may not have the requisite jurisdiction to grant the remedies sought and that actions for enforcement in France of judgments of U.S. courts, rendered against French persons referred to in the second sentence of this paragraph, would require such persons to waive their right under Article 15 of the French Civil Code to be sued in France only.  We believe that none of these persons has waived this right with respect to actions predicated solely upon U.S. federal securities laws.  In addition, actions in the United States under the U.S. federal securities laws could be affected under certain circumstances by the French law of July 16, 1980, which may preclude or restrict the obtaining of evidence in France or from French persons in connection with such actions.

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ITEM 1.  IDENTITY OF
  DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2.  OFFER STATISTICS
  AND EXPECTED TIMETABLE

Not applicable.

5

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ITEM 3.  KEY INFORMATION

Selected Financial Data

You should read the following selected consolidated financial data together with the section entitled “Item 5.  Operating and Financial Review and Prospects” and our consolidated financial statements.

The table below sets forth summary selected consolidated financial data at and for each of the five years ended December 31, 2002, 2001, 2000, 1999 and 1998. The financial information presented in this summary is derived from our consolidated financial statements, which have been audited by Deloitte Touche Tohmatsu.  The audited consolidated financial statements at December 31, 2002, 2001 and 2000 appear in Item 18 of this report.

The consolidated financial statements and the notes thereto have been prepared in accordance with French GAAP, which differs from U.S. GAAP in certain significant respects. For a discussion of significant differences between U.S. GAAP and French GAAP as they relate to our consolidated financial statements and a reconciliation to U.S. GAAP of net income and shareholders' equity, please refer to Notes 31 through 34 to our consolidated financial statements.

As
  of January 1, 2002, the share of net income of equity affiliates determined
  in accordance with equity method consolidation principles is shown in the group
  consolidated statement of income on a specific line “share of net income
  of equity affiliates”. Prior to the adoption of this presentation, the
  Company’s share of net income of equity affiliates was presented in the
  following line-items: “Operating income on ordinary activities”,
  “Gains on disposals, net”, “Other income (expenses), net”,
  “Financial expenses, net” and “Income tax”. The presentation
  of the consolidated statements of income for 1998, 1999, 2000 and 2001 has been
  revised for comparative purposes in the table below.

Beginning January 1, 2002, the historical
  cost of cement plant assets have been reclassified into specific cost categories
  based upon their distinct characteristics. Each cost category represents cement
  plant components with specific useful lives. This new definition was based on
  a detailed technical study performed by the Company. Prior to January 1, 2002,
  cement plant assets had been depreciated over their estimated useful lives,
  using a broader definition of cost classification. The new system of classifying
  costs has been applied prospectively as of January 1, 2002. On average, for
  a new cement plant, this change in estimate has resulted in increasing the depreciable
  useful life from 20 years to 28 years, which more closely reflects actual experience
  with modern cement plants.

Lafarge’s
  consolidated financial statements for 1998 were originally prepared in FRF and
  have been restated into euros at the rate of 1 euro = FRF 6.55957. These restated
  consolidated financial statements depict the same trends as the consolidated
  financial statements prepared using the French franc. The consolidated financial
  statements for 1998 will not be comparable to the financial statements of other
  companies that report in euro and have restated prior periods from currencies
  other than the French franc. Amounts in US$ presented in the table below have
  been translated solely for the convenience of the reader using the Noon Buying
  Rate on December 31, 2002 at the rate of 1 euro = U.S.$ 1.0485.

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|                                                                                                              | Year ended
      December 31                         |  
|------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------- | -
|                                                                                                              |                                                      |  
|                                                                                                              | 2002                                                 |  
|                                                                                                              |                                                      |  
|                                                                                                              | (in millions,
      except per share and share data) |  
|                                                                                                              | US$                                                  |  
|STATEMENTS
      OF INCOME                                                                                    |                                                      |  
|French
      GAAP                                                                                             |                                                      |  
|Sales                                                                                                         | 15,318                                               |  
|Operating income
      on ordinary activities                                                                 | 2,235                                                |  
|Operating income                                                                                              | 1,911                                                |  
|Income before share of net income
      of equity affiliates, amortization of goodwill and minority interests | 895                                                  |  
|Share of net income of equity
      affiliates                                                                | 35                                                   |  
|Amortization
      of goodwill                                                                                | (166                                                 | )
|Minority interests                                                                                            | (286                                                 | )
|Net income                                                                                                    | 478                                                  |  
|Earnings per share — basic                                                                                    | 3.69                                                 |  
|Earnings per
      share — diluted                                                                            | 3.66                                                 |  
|US GAAP                                                                                                       |                                                      |  
|Sales                                                                                                         | 14,056                                               |  
|Operating income                                                                                              | 1,657                                                |  
|Net income                                                                                                    | 457                                                  |  
|Earnings per
      share — basic                                                                              | 3.52                                                 |  
|Earnings per share — diluted                                                                                  | 3.50                                                 |  
|BALANCE
      SHEETS                                                                                          |                                                      |  
|French
      GAAP                                                                                             |                                                      |  
|Long term assets                                                                                              | 22,195                                               |  
|Current assets                                                                                                | 5,736                                                |  
|Total assets                                                                                                  | 27,931                                               |  
|Shareholders'
      equity                                                                                    | 7,320                                                |  
|Long term liabilities                                                                                         | 16,210                                               |  
|Current liabilities                                                                                           | 4,400                                                |  
|Total shareholders' equity
      and liabilities                                                              | 27,931                                               |  
|US GAAP                                                                                                       |                                                      |  
|Current assets                                                                                                | 5,416                                                |  
|Long term assets                                                                                              | 22,620                                               |  
|Total assets                                                                                                  | 28,036                                               |  
|Current liabilities                                                                                           | 4,051                                                |  
|Long term liabilities                                                                                         | 15,251                                               |  
|Minority Interests                                                                                            | 2,030                                                |  
|Shareholders' equity                                                                                          | 6,704                                                |  
|Total liabilities
      and shareholders' equity                                                              | 28,036                                               |  
|STATEMENTS
      OF CASH FLOWS                                                                                |                                                      |  
|French
      GAAP                                                                                             |                                                      |  
|Net cash provided by operating
      activities                                                               | 1,878                                                |  
|Net cash used
      in investing activities                                                                   | (812                                                 | )
|Net cash (used in) provided by
      financing activities                                                     | (971                                                 | )
|Increase (decrease)
      in cash and cash equivalents                                                        | 95                                                   |  
|STATEMENTS
      OF CASH FLOWS                                                                                |                                                      |  
|US GAAP                                                                                                       |                                                      |  
|Net cash provided by operating
      activities                                                               | 1,630                                                |  
|Net cash used
      in investing activities                                                                   | (514                                                 | )
|Net cash (used in) provided by
      financing activities                                                     | (999                                                 | )
|Net effect
      of foreign currency translation on cash and cash equivalents                                 | (178                                                 | )
|(Decrease) increase
      in cash and cash equivalents                                                        | (61                                                  | )

|    |                                                                                     
|--- | ------------------------------------------------------------------------------------
|(a) | Revised, where
      applicable, for the change in presentation of equity affiliates

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The
  following table indicates the dividend amount per share we paid for the years
  2001, 2000, 1999 and 1998. The table also discloses the dividend amount per
  share for 2002 proposed by our board of directors for approval at the annual
  general meeting of shareholders to be held on May 20, 2003. The table shows
  dividend amounts in euros, together with their US$ equivalents translated for
  convenience at the December 31, 2002 Noon Buying Rate of 1 euro = U.S.$ 1.0485,
  for each of the years indicated. Shareholders who are U.S. residents should
  be aware that they will be subject to French withholding tax on dividends received.
  See “Item 10. Additional Information — Taxation.” Dividends
  paid on fully paid-up shares that have been held by the same shareholders in
  registered form for at least two years are increased by 10% over dividends paid
  on other shares. The number of shares eligible to such increased dividend that
  can be held by one shareholder is limited to 0.5% of all outstanding shares,
  at the end of the fiscal year for which the dividend is paid. See “Item
  10. Additional Information — Dividends.”

|                                                  | 2002* |  | 2001 |  | 2000  |  | 1999 |  | 1998  | 
|------------------------------------------------- | ----- |  | ---- |  | ----- |  | ---- |  | ----- | 
|                                                  |       |  |      |  |       |  |      |  |       | 
|                                                  | euros |  | US$  |  | euros |  | US$  |  | euros | 
|                                                  |       |  |      |  |       |  |      |  |       | 
|Total Dividend Payment (in millions)              | 306   |  | 321  |  | 297   |  | 311  |  | 273   | 
|Base Dividend per Share                           | 2.30  |  | 2.41 |  | 2.30  |  | 2.41 |  | 2.20  | 
|Tax Credit on Base Dividend per
      Share       | 1.15  |  | 1.21 |  | 1.15  |  | 1.21 |  | 1.10  | 
|Increased Dividend per Share                      | 2.53  |  | 2.65 |  | 2.53  |  | 2.65 |  | 2.42  | 
|Tax Credit on Increased 
      Dividend Per Share | 1.27  |  | 1.33 |  | 1.27  |  | 1.33 |  | 1.21  | 

* Proposed dividend.
See also “Item 8: Financial
  Information — Dividend Policy.”
Exchange Rate Information
We
  have published our financial statements in euros since 1999. The euro is the
  single European currency of the European Monetary Union (“EMU”).
  The EMU was established under the provisions of the Treaty on European Union
  signed at Maastricht in early 1992. On May 3, 1998, European governments and
  central banks announced that the following 11 Member States would participate
  in the last stage of EMU: Austria, Belgium, Finland, France, Germany, Ireland,
  Italy, Luxembourg, the Netherlands, Portugal and Spain. On January 1, 2001,
  Greece became a member of the EMU. The last stage of EMU, with fixed exchange
  rates between national currencies and the European Currency Unit and the introduction
  of the euro for certain purposes, began on January 1, 1999, at which time the
  exchange rate between the FRF and the euro was established at FRF 6.55957 to
  1.00 euro (or 0.1524 euro to FRF 1.00). Since January 1, 2002, euro banknotes
  and coins have been in circulation within the countries of the EMU. Outstanding
  obligations denominated in national currencies are required to be converted
  at the legal rates established on January 1, 1999 (unless specific contracts
  provide for an alternative conversion rate).
The
  following table sets forth, for the periods and dates indicated, certain information
  concerning the Noon Buying Rate in New York City for cable transfers for foreign
  currencies as certified for customs purposes by the Federal Reserve Bank of
  New York expressed in US$ per 1.00 euro. Such rates are provided solely for
  the convenience of the reader and are not necessarily the rates we used in the
  preparation of our consolidated financial statements included elsewhere in this
  registration statement. Noon buying rates for the euros for periods prior to
  January 1, 1999 have been calculated by applying the fixed exchange rate of
  FRF 6.55957 per 1.00 euro to the Noon Buying Rate for FRF. January 15,
  1999 was the last day that the Federal Reserve Bank of New York published Noon
  Buying Rates for the FRF. No representation is made that the euro could have
  been, or could be, converted into US$ at the rates indicated below or at any
  other rate. As of April 15, 2003 the Noon Buying Rate was 1.00 euro = US$
  1.0801.
8

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US$
      per 1.00 euro
    
    FRF
      per US$ 1.00Year/Month/
      Period
      Closing Rate
    
    Average
      Rate (1)
    
    High
    
    Low
    
    Year/
      Month/
      Period
      Closing Rate
    
    Average
      Rate (1)
    
    High
    
    Low1998 (2)
    1.17
    
    1.11
    
    1.22
    
    1.06
    
    5.59
    
    5.90
    
    6.21
    
    5.391999 (3)
    1.01
    
    1.06
    
    1.18
    
    1.00
    
    
    
    
    
    
    
    2000 (3)
    0.94
    
    0.92
    
    1.03
    
    0.83
    
    
    
    
    
    
    
    2001 (3)
    0.89
    
    0.89
    
    0.95
    
    0.84
    
    
    
    
    
    
    
    2002 (3)
    1.05
    
    0.95
    
    1.05
    
    0.86
    
    
    
    
    
    
    
    2002 (October)  (3)
    0.99
    
    0.98
    
    0.99
    
    0.97
    
    
    
    
    
    
    
    2002 (November) (3)
    0.99
    
    1.00
    
    1.01
    
    0.99
    
    
    
    
    
    
    
    2002(December) (3)
    1.05
    
    1.02
    
    1.05
    
    0.99
    
    
    
    
    
    
    
    2003(January) (3)
    1.07
    
    1.06
    
    1.09
    
    1.04
    
    
    
    
    
    
    
    2003(February) (3)
    1.08
    
    1.08
    
    1.09
    
    1.07
    
    
    
    
    
    
    
    2003(March) (3)
    1.09
    
    1.08
    
    1.11
    
    1.05
    
    
    
    
    
    
    
    (1)
    In the case of a year or partial
      year, the average of the Noon Buying Rates on the last business day of each
      month during such year or partial year; in the case of a month or partial
      month, the average of the Noon Buying Rates on the business days occurring
      during such month or partial month.(2)
    Noon buying rates for the euros
      for periods prior to January 1, 1999 have been calculated by applying the
      fixed exchange rate of FRF 6.55957 per 1.00 euro to the Noon Buying
      Rate for FRF.(3)
    January 15, 1999 was the last
      day that the Federal Reserve Bank of New York published Noon Buying Rates
      for the FRF.Risk Factors
Our results are dependent on the
  level of activity in the construction sector. The construction sector tends
  to be cyclical.
In
  each of our operating divisions our business activity is dependent on the level
  of activity in the construction sector in each of the geographic markets in
  which we operate. The construction industry in a given geographic market tends
  to be cyclical, especially in mature economies, and dependent on the level of
  residential and commercial construction and the level of infrastructure spending.
  The construction industry is sensitive to factors such as interest rates and
  a downturn in economic activity in a particular economy may lead to a recession
  in the construction industry. In addition, the level of construction activity
  can fall even if the economy in general is growing. While we believe that our
  geographical diversification is the best way to ensure stability of returns,
  our results of operations and profitability could be adversely affected by a
  downturn in construction activity on a global scale or in a significant market
  in which we operate.
Demand for our products is seasonal
  because climatic conditions affect the level of activity in the construction
  sector. Abnormal climatic conditions can adversely affect our results.
Adverse
  climatic conditions, such as cold weather, snow and heavy or sustained rainfall
  generally affect the level of construction activity and results in a reduction
  in demand for our products. Thus, demand for our cement, aggregate and concrete
  and roofing products is seasonal (and in North America for gypsum) and tends
  to be lower in the winter months in temperate countries and in the rainy season
  in tropical countries. We usually experience a reduction in sales during the
  first quarter reflecting the effect of the winter season in our principal markets
  in Western Europe and North America and an increase in sales in the second and
  third quarters reflecting the effect of the summer season.
If
  these adverse climatic conditions present unusual intensity, occur at abnormal
  periods or last longer than usual in major geographic markets, especially during
  peak construction periods, this could have a material adverse effect on our
  results of operations and profitability.
We operate in a competitive market,
  which could adversely affect our results of operations and profitability.
The
  competitive environment in which we operate can be significantly affected by
  regional factors, such as the number of competitors and production capacity
  in the regional market, the proximity of natural resources to the regional market
  and economic conditions and product demand in the regional market.
9

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In addition,
  the pricing policies of competitors and the entry of new competitors
  into the regional markets in which we operate can have an adverse effect on
  demand for our products and on our results of operations and profitability.
Our growth strategy exposes us
  to risks in emerging markets.
We
  classify all countries outside of our Western Europe and North America geographic
  sectors, with the exception of Japan, Australia and New Zealand, as emerging
  markets. In 2002, we generated approximately 28.1% of our revenues in emerging
  markets. The emerging markets in which we operate, in order of revenues generated
  in 2002, include Malaysia, Nigeria, Poland, Brazil, South Korea, Chile, India,
  South Africa, the Philippines, Turkey, Jordan, Morocco, Romania, Venezuela,
  Cameroon, Kenya, China, Indonesia, the Czech Republic, Honduras, Egypt, Uganda,
  Russia, Serbia, Sri Lanka, Mexico, Zambia, Mauritius, Slovenia, Hungary, Ukraine,
  Tanzania, Malawi, Thailand and Bangladesh. We believe that growth in the construction
  sector in emerging markets will substantially exceed growth in developed countries
  and we have steadily increased our presence in emerging economies and we expect
  to continue to generate an increasing portion of our revenues in emerging markets.
Our
  expansion in emerging markets exposes us to risks which we do not face in North
  America or Western Europe. In many of these markets, the legal system is less
  certain than the systems in North America and Western Europe and in purchasing
  companies we can become exposed to risks with regard to the enforceability of
  our acquisition contracts and the presence of liabilities, such as liens and
  mortgages, which are not recorded in the public records. In addition, in some
  countries, particularly in the former USSR and its former satellite countries,
  the establishment of accounts compatible with generally accepted accounting
  practices in developed countries may take time.
Once
  we have established ourselves in emerging markets we face additional risks.
  Emerging markets are more likely to suffer from high volatility in GDP and interest
  rates which may negatively affect the level of construction activity and our
  results of operations in a given market. Emerging markets may also suffer from
  factors such as high inflation, unstable exchange rates and interest rates which
  may negatively affect the financial results of our operating subsidiaries in
  a given market as reported in euros. Instability in an emerging market can lead
  to restrictions on currency movements which may adversely affect our emerging
  market operating subsidiaries' ability to pay dividends and restrictions on
  imports of raw materials and machinery which may adversely affect our emerging
  market operating subsidiaries' ongoing maintenance and capital expenditure programs.
Recent
  examples of problems in the past few years include the political, economic and
  financial crisis in Venezuela,high volatility in GDP in many emerging Asian
  countries such as Indonesia and the Philippines, extremely high inflation rates
  in Turkey and unstable exchange rates with respect to the Brazilian real and
  Turkish lira. Other risks presented by emerging markets include civil disturbances,
  nationalization and expropriation of private assets, the imposition of taxes
  or other payments by foreign governments or agencies and other adverse actions
  or restrictions imposed by foreign governments.
Any
  one of these developments in an emerging market in which we have a significant
  presence could result in lower profits and/or a loss in value of our assets.
  This could lead to a reduction in dividends and also adversely affect our stock
  price. There can be no assurance that our financial condition and results of
  operations will not also be materially adversely affected in other ways through
  our exposure to emerging markets.
Our
  acquisition strategy may be unsuccessful due to an inability to identify suitable
  acquisition targets and to integrate acquired companies into our business, which
  could have a material adverse effect on our business, financial condition, results
  of operations and cash flows.
We
  plan to continue making selective acquisitions to strengthen and develop our
  existing activities. The successful implementation of our acquisition strategy
  depends on a range of factors, including our ability to:

    identify appropriate opportunities;
    complete acquisitions at an appropriate cost;
      and
    achieve an acceptable rate of return from
      our acquisitions, including past acquisitions.10

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There
  may also be substantial challenges or delays in integrating and adding value
  to the businesses we acquire. In addition, the costs of integration, which are
  not presently capable of being estimated, could be material and the projected
  synergies resulting from such acquisitions may not be realized. Material costs
  or delays in connection with the integration of the operations that we acquire
  or the inability to realize synergies from those acquisitions could have a material
  adverse effect on our business, financial condition and results of operations.
Our share price may react negatively
  to future acquisitions and investments.
As
  part of our business strategy, we intend to continue to acquire or make strategic
  investments in additional companies to complement and expand our activities
  and accelerate our growth. Announcements concerning potential acquisitions and
  investments could be made at any time. We may pay for part of these acquisitions
  and investments with our shares. These acquisitions and investments, if they
  occur, may have a dilutive effect for existing shareholders and, whether they
  are paid for in cash or shares, may cause our share price to fall.
We do not have a controlling interest
  in certain of the businesses in which we have invested and in the future we
  may invest in businesses in which we will not have a controlling interest. In
  addition, we are subject to restrictions due to minority interests in certain
  of our consolidated subsidiaries.
In
  certain of our operations, we have a significant but not controlling interest.
  Under the governing documents for certain of these partnerships and corporations,
  certain key matters such as the approval of business plans and decisions as
  to the timing and amount of cash distributions may require the consent of our
  partners or may be approved without our consent. These limitations could make
  it difficult for us to pursue corporate objectives in the future.
We
  conduct our business through subsidiaries. In some cases, minority shareholders
  hold significant interests in our subsidiaries. Various disadvantages may result
  from the participation of minority shareholders whose interests may not always
  coincide with ours. The presence of minority interests may, among other things,
  impede our ability to implement organizational efficiencies and transfer cash
  and assets from one subsidiary to another in order to allocate assets most effectively.
Changes in exchange rates could
  have a material adverse effect on our financial condition and results of operations.
In
  the year ended December 31, 2002, approximately 68% of our revenues were
  earned in currencies other than the euro and a significant portion of our revenues
  were denominated in US$. In addition, 68% of our assets are located outside
  the European states participating to the European Monetary Union.
Since
  our results are reported in euros, exchange rate movements may affect our reported
  profits, assets, equity and indebtedness. This effect may be positive or negative
  depending on the nature of the actual exchange rate movement and the nature
  of any currency hedging instruments that we have put in place. Fluctuations
  in exchange rates could have a material adverse effect on our financial condition
  and results of operations.
Increases in our leverage and level
  of indebtedness could have a material adverse effect on our operating and financial
  flexibility.
We
  have entered into a number of debt agreements, which we have used to finance
  the ongoing planned capital expenditures of our activities and for our acquisition
  strategy, including in connection with the acquisition of Blue Circle Industries
  plc (“Blue Circle”) (see “Item 5. Operating and Financial
  Review and Prospects  Liquidity and Capital Resources”). At December
  31, 2002 we had, on a consolidated basis, debt of 10, 216 million euros (net
  of our cash and cash equivalents), total equity (defined as the sum of shareholders
  equity, minority interests and other equity) of 9,270 million euros and net
  cash provided by operating activities of 1,791 million euros for the year ended
  December 31, 2002. Interest expense on our debt for the year ended December
  31, 2002 amounted to about 571 million euros (excluding 40 million euros of
  capitalized interest for construction projects), of which 523 million euros
  were related to long term debt, and represented approximately 32% of our net
  cash provided by operating activities during the year.
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Although
  our total indebtedness has decreased as at December 31, 2002 compared to December
  31, 2001, we confirm our intention to further improve our financial flexibility.
  However to the extent our total indebtedness materially increases, the possible
  negative consequences would include:

| | Higher debt-service costs that adversely
      affect our results of operations;
|- | --------------------------------------------------------------------------------

| | Allocations of increasing amounts of cash
      flow for debt service;
|- | ----------------------------------------------------------------------

| | Increased difficulty in obtaining future
      financing at satisfactory conditions;
|- | ------------------------------------------------------------------------------------

| | Reduction of any credit ratings issued by
      rating agencies in respect of our debt;
|- | ---------------------------------------------------------------------------------------

| | Higher exposure to interest and exchange
      rate fluctuations;
|- | -----------------------------------------------------------------

| | Restrictions on our capital resources and/or
      operations imposed by lenders; and
|- | -------------------------------------------------------------------------------------

| | Reduced flexibility to take advantage of,
      or pursue, other business opportunities.
|- | ----------------------------------------------------------------------------------------

In
  the past some of our debt agreements have contained and in the future they may
  contain financial, operating and other obligations that limit our operating
  and financial flexibility. Our ability to comply with these obligations depends
  on the future performance of our businesses. There can be no assurances that
  the obligations under our debt agreements will not materially adversely affect
  our ability to finance our future operations, or that they will not prevent
  us from engaging in other business activities that may be in our best interest.

As
  at December 31, 2002, no significant financing contract contains covenants which
  might have a material impact on the Group financial situation.

Our ability to pay dividends and
  repay debt depends on our ability to transfer income and dividends from our
  subsidiaries.

Lafarge
  SA is a holding company with no significant assets other than the shares of
  our wholly-owned and non-wholly-owned subsidiaries. In addition, we have a certain
  number of our subsidiaries located in countries that we consider a risk for
  repatriation of dividends either because they currently have in place, or because
  they had in place in the recent past, regulations restricting or limiting the
  payment of dividends outside the country. These subsidiaries represented less
  than 5% of our revenues in 2002. The ability of our subsidiaries to pay dividends
  and make other transfers to us may also be limited by the subsidiaries' existing
  debt agreements, if any, and various regulatory, contractual, legal and tax
  constraints in the countries in which they operate. If as a result of these
  restrictions we are unable to ensure the continued transfer of dividends and
  other income to us from these subsidiaries, this will impair our ability to
  pay dividends and make debt payments.

Increases in energy and fuel costs
  could have a material adverse effect on our results of operations and profitability.

Energy
  is a significant cost factor in most of our operations. We protect ourselves
  to a certain extent, against the risk of energy price inflation through the
  ability of many of our cement plants to switch fuel sources, the use of alternative
  fuels, such as sump oil or tire recycling, in some of our cement plants and
  through the use of long-term supply contracts for certain of our energy needs.
  For example, from time to time we contract for electricity and gas using forward
  contracts. Despite these measures, increases or significant fluctuations in
  energy and fuel costs could have a material adverse effect on our results of
  operations and profitability. See subsection of Item 4 entitled, “Information
  on the Company—Cement—General Information Regarding Our Products,
  Industry and Markets—What Are the Costs of Manufacturing Cement?”
  and Item 11 entitled, “Quantitative and Qualitative Disclosures about
  Market Risk."

We are dependent on third-party
  suppliers for some raw materials used in our manufacturing processes and changes
  in the quantity or conditions for obtaining these raw materials could increase
  our costs, which may adversely affect our financial performance.

Although
  we maintain our own reserves of limestone, gypsum, aggregates and other materials
  used in our manufacturing operations, we have increasingly turned to synthetic
  alternatives generated as byproducts of other industrial processes such as synthetic
  gypsum and slag and fly ash which we obtain from third-party suppliers.

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We generally secure our supply of these
  materials through long-term contracts most of which are renewable, however,
  in certain cases legal constraints require us to contract over shorter periods.
  Should our existing suppliers cease operations or stop producing these byproducts,
  we may be obliged to secure these materials at higher costs, which could adversely
  affect our profitability.

We face substantial market competition
  in the United States for our gypsum products, which may adversely affect our
  results in this market.

We
  estimate that North America, led by the United States, accounts for approximately
  half of the world's demand for gypsum wallboard products. Excluding the Wilmington
  plant idled in November 2002, we currently have five operational gypsum wallboard
  plants in North America. The U.S. gypsum wallboard industry is highly competitive
  and is currently experiencing overcapacity. Historically the industry has experienced
  significant price volatility. We believe our strategy of building low cost plants
  using synthetic gypsum will place us in a strong position once the industry
  recovers . However, in the short-term we may continue to experience losses in
  our North American gypsum operations due to low price levels, lower market volumes
  and higher energy costs.

Changes in government policy or
  legislation, notably regarding zoning and the environment, could have a material
  adverse effect on our business, financial condition and results of operations.

Our
  performance is affected significantly by national and/or local government policy
  and legislation in the regions and territories in which we have operations.

Many
  products manufactured by our operating units are subject to government regulation
  in various jurisdictions regarding their production and sale and our operating
  units are subject to extensive regulation by national and local agencies concerning
  such matters as zoning and environmental compliance. In addition, numerous governmental
  permits and approvals are required for our operations. We believe that our operating
  units are currently operating in substantial compliance with, or under approved
  variances from, various national and local regulations in all applicable jurisdictions.
  In the past, our subsidiaries have made significant capital and maintenance
  expenditures to comply with zoning, water, air and solid and hazardous waste
  regulations and may be required to do so in the future.

In
  addition, national governments' policies with regard to the development of public
  infrastructure and housing have a significant effect on demand for our products
  and, as a result, our profitability. Delays in the implementation of infrastructure
  and housing projects, due to budgetary constraints or problems with implementation
  of projects, could have a material adverse effect on our business, financial
  condition and results of operations.

Changes
  in governmental regulations could increase our operating costs and could have
  a material adverse effect on our business, financial condition and results of
  operations.

Because we are a French company
  subject to French law, the rights of our shareholders may differ from the rights
  of shareholders in companies incorporated in the United States and you may not
  be able to enforce or may have difficulty enforcing rights predicated on U.S.
  Federal or state securities laws.

The
  corporate affairs of Lafarge SA are governed by our by-laws (statuts)
  and by the laws governing corporations incorporated in France. Your rights as
  a shareholder and the responsibilities of members of our board of directors
  are governed by French law and are not the same as such rights and responsibilities
  in a corporation incorporated in the United States. Therefore, you may have
  more difficulty in protecting your interests in the face of actions by our management,
  members of our board of directors or our controlling shareholders than you would
  have if we were incorporated in the United States. In addition, since almost
  all of our directors and officers and a substantial portion of our assets are
  located outside the United States, it may be difficult for you to effect service
  upon us within the United States, or to enforce, in U.S. or in foreign courts,
  certain civil liabilities predicated upon U.S. Federal or state securities laws.
  For more information, see section entitled “Enforceability of Civil Liabilities”
  above.

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The price of our ADSs and the U.S.
  dollar value of any dividends will be affected by fluctuations in the U.S. dollar/euro
  exchange rate.

The
  ADSs trade in U.S. dollars. As the principal trading market for the shares underlying
  the ADSs is the Premier Marché of Euronext Paris, where the shares
  trade in euro, the value of the ADSs will likely fluctuate as the U.S. dollar/euro
  exchange rate fluctuates. If the value of the euro decreases against the U.S.
  dollar, the price at which our ADSs trade will decrease. In addition, since
  any dividends that we may declare will be denominated in euro, exchange rate
  fluctuations will affect the U.S. dollar equivalent of dividends received by
  holders of ADSs. See “—Exchange Rate Information”, above.
  If the value of the euro decreases against the U.S. dollar, the value of the
  U.S. dollar equivalent of any dividend will decrease comparatively.

You may not be able to exercise
  preemptive rights for shares underlying your ADSs.

Under
  French law, shareholders have preemptive rights (“droits préférentiels
  de souscription”) to subscribe for cash for issuances of new shares
  or other securities giving rights, directly or indirectly, to acquire additional
  shares on a pro rata basis. Shareholders may waive their preemptive rights specifically
  in respect of any offering, either individually or collectively, at an extraordinary
  general meeting. Preemptive rights, if not previously waived, are transferable
  during the subscription period relating to a particular offering of shares and
  may be quoted on the Premier Marché. U.S. holders of ADSs may
  not be able to exercise preemptive rights for the shares underlying their ADSs
  unless a registration statement under the U.S. Securities Act of 1933, as amended,
  is effective with respect to such rights or an exemption from the registration
  requirements thereunder is available. We intend to evaluate at the time of any
  rights offering the costs and potential liabilities associated with any such
  registration statement, as well as the indirect benefits of enabling the exercise
  by the holders of ADSs of the preemptive rights associated with the shares underlying
  their ADSs, and any other factors we consider appropriate at the time, and then
  to make a decision as to whether to file such a registration statement. We cannot
  guarantee that any registration statement would be filed, or, if filed, that
  it would be declared effective. If preemptive rights cannot be exercised by
  an ADS holder, JPMorgan Chase Bank, as Depositary, will, if possible, sell such
  holder's preemptive rights and distribute the net proceeds of the sale to the
  holder. If the depositary determines, in its discretion, that such rights cannot
  be sold, the depositary may allow such rights to lapse. In either case, ADS
  holders' interest in us will be diluted and, if the depositary allows rights
  to lapse, holders of ADSs will not realize any value from the granting of preemptive
  rights.

Holders of ADSs may be subject
  to additional risks related to holding ADSs rather than shares.

Because
  holders of ADSs do not hold their shares directly, they are subject to the following
  additional risks:

| |  | In the event of a dividend or
      other distribution, if exchange rates fluctuate during any period of time
      when the depositary cannot convert a foreign currency into dollars, the
      ADS holder may lose some or all of the value of the distribution. There
      can be no assurances that the depositary will be able to convert any currency
      at a specified exchange rate or sell any property, rights, shares or other
      securities at a specified price, nor that any of such transactions can be
      completed within a specified time period.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |   |                                                                                                                                                                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | There can be no guarantee that
      ADS holders will receive voting materials in time to instruct the depositary
      to vote. It is possible that ADS holders, or persons who hold their ADSs
      through brokers, dealers or other third parties, will not have the opportunity
      to exercise a right to vote at all.

| |   |                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | ADS holders may not receive
      copies of all reports from us or the depositary. You may have to go to the
      depositary's offices to inspect any reports issued.

| |   |                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We and the depositary may amend
      or terminate the deposit agreement without ADS holders' consent in a manner
      that could prejudice ADS holders.

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Government regulation and legal
  uncertainties could add additional costs to doing business on the Internet and
  adversely affect our e-commerce ventures.

The
  application of existing laws to the Internet and Internet-related applications
  and services is being clarified and refined in France, the European Union, the
  United States and a number of other jurisdictions. New legislative and regulatory
  proposals applicable to the Internet are under consideration, including in the
  areas of data protection and privacy, content liability, e-commerce, encryption
  and electronic signatures. Depending on the scope and timing of these developments,
  it is possible that they could have a material adverse effect on our plans to
  establish e-commerce ventures.

If
  third parties were able to penetrate the network security of any future e-commerce
  ventures or otherwise misappropriate our users’ personal information,
  we could be subject to liability. These could include claims for unauthorized
  purchases with credit card information, impersonation or other similar fraud
  claims. They could also include claims for violation of privacy rights and data
  protection rights. These claims could result in litigation.

We
  must comply with applicable data protection legislation, including a European
  Union directive, which limits our ability to collect and use personal information
  relating to users of any future e-commerce and our other web sites. Increased
  awareness on the part of the public of privacy issues and changes to legislation
  with which we may have to comply could both limit our ability to use such personal
  information for the benefit of our business and more generally hinder public
  acceptance of the Internet as a marketplace.

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ITEM 4. INFORMATION ON THE COMPANY

Overview

We
  believe, based on our experience in this industry, we are the world leader in
  construction materials and one of France's largest corporations in terms of
  sales. In the financial year 2002, under French GAAP, we achieved sales of 14,610
  million euros and operating income on ordinary activities of 2,132 million euros
  and net income of 456 million euros, and at year end had total assets amounting
  to 26,639 million euros. We currently employ approximately 77,000 people in
  75 countries. Our expertise in efficient industrial production, conservation
  of natural resources and respect for both society and the environment has been
  implemented around the world.

Our
  operations are currently organized into four divisions, each of which holds
  a leading position in its respective market: Cement, Aggregates & Concrete,
  Roofing and Gypsum. We believe, based on our experience in this industry, that
  we are the largest cement producer worldwide, with annual sales of 6.9 billion
  euros and industrial operations in 42 countries. We believe, based on our experience
  in this industry, we are the world's second largest producer of aggregates and
  ready mix concrete. In 2002 our Aggregates & Concrete division achieved
  annual sales of 4.8 billion euros. We believe, based on our experience in this
  industry, our Roofing division is the world's leading producer of concrete and
  clay roofing tiles with annual sales in 2002 of 1.5 billion euros. We believe,
  based on our experience in this industry, our Gypsum division is the third largest
  manufacturer worldwide with annual sales of 1.1 billion euros in 2002.

We
  instituted our current operating structure in 1999, granting each of our divisions
  responsibility for strategy and performance management in its area of business,
  in the context of our strategic guidelines. The division-based organization
  allows greater decentralization and initiative, while maintaining overall coherence
  with respect to innovation, policy and product standards.

Our
  shares have been traded on the Paris stock exchange since 1923 and are a component
  of the French CAC-40 market index. On April 15, 2003 our market capitalization
  was 7.9 billion euros, representing approximately 1.3% of the market capitalization
  of the CAC-40 index, according to Euronext Paris SA.

Corporate Information and History
  and Development of the Company

We
  are a French limited liability company (société anonyme)
  governed by articles L.225-1 to L.225-270 of the French commercial code. Our
  commercial name is “Lafarge.” We were incorporated in 1884 under
  the name “J et A Pavin de Lafarge.” Currently, our by-laws state
  that the duration of our Company is until December 31, 2066, and may be amended
  to extend our corporate life. Our registered office is located at 61 rue des
  Belles Feuilles, 75116 Paris, France. We are registered under the number “542
  105 572 RCS Paris” with the registrar of the Paris Commercial Court (Tribunal
  de Commerce de Paris).

We
  originated in the first half of the nineteenth century in France as a lime exploitation
  enterprise founded by Auguste Pavin de Lafarge. We have been operating internationally
  since the 1860s, when we supplied lime for the building of the Suez Canal. By
  the eve of the First World War, we had grown to become France's largest lime
  producer. From lime production, we expanded early into the production of cement
  and gradually grew in size in France through internal expansion and strategic
  acquisitions, primarily of small cement producers to become France's largest
  cement producer. Our international profile was raised in the 1950s when we expanded
  into North America, first through a new plant in Richmond, British Columbia,
  and then by the acquisition of a Canadian company, and when we commenced operations
  in Brazil. As a result of our acquisition in 1981 of General Portland Inc.,
  we became one of the largest cement manufacturers in North America. Today, our
  North American operations are conducted through our 53.9% owned subsidiary Lafarge
  North America, a New York Stock Exchange listed company. During the 1970s and
  1980s, we concentrated on expanding in Europe to take advantage of the construction
  of a single market with more than 300 million inhabitants. We first turned to
  Germany, raising our stake in Portland Zementwerk at Wössingen. Through
  the purchase of the Swiss company, Cementia, in 1989, we acquired interests
  in Asland (Spain), Perlmooser (Austria) and Bamburi (Kenya). We then turned
  to Eastern Europe, signing an agreement with Karsdorfer Zement, the largest
  cement producer in the new East German states, before German reunification had
  even been invoked and investing in Cizkovicka Cementarna, a cement manufacturer
  in the Czech Republic. We then expanded into Poland, Romania and the Commonwealth
  of Independent States.

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We have since made a number of acquisitions
  in emerging countries with high growth potential, such as the Philippines, India,
  South Korea, Egypt, Jordan, South Africa and Honduras, and in 2002 44.5% of
  our cement sales came from emerging markets. We classify all countries outside
  of our Western Europe and North America geographic sectors, with the exception
  of Japan, Australia and New Zealand, as emerging markets.

At
  the same time as expanding our cement operations internationally we have broadened
  our other longstanding product lines, aggregates (sand, gravel, calcareous and
  igneous materials), concrete and gypsum. The development of the Aggregates &
  Concrete business progressed significantly in 1997 with the acquisition of Redland
  plc (“Redland”) for 1.8 billion British Pounds (which amounted to
  2.7 billion euros at the then current French franc exchange rate). Our Aggregates
  & Concrete business expanded in France and North America and resulted in
  our first major position in building materials in the UK. Furthermore this acquisition
  brought us the core business that now forms the Roofing division, with its leadership
  position in roofing products, particularly in Europe. At the end of 1999 we
  took the additional step of acquiring the minority interests in Lafarge Roofing
  (then Lafarge Braas) for 5.7 million shares and a cash payment of 81 million
  euros. Recently this activity has expanded into emerging markets. We first entered
  the gypsum business in the 1930s through powdered plaster. Our principal product
  in gypsum is now wallboard and we have expanded our operations into the North
  American market and also into emerging countries such as Eastern Europe and
  Asia.

In
  2000, we agreed to sell to three investment funds a majority interest in all
  the businesses in our former Specialty Products division, with the exception
  of the Road Marking Business, the European operations of which were sold to
  the Burelle group in November 2000, and the Lime Business, of which the largest
  part is a 40% equity interest in Carmeuse North America. We have retained 33.36%
  of the capital of the new company, called Materis, which was formed to include
  our former operations in admixtures, aluminates, mortars, paints and refractories.
  The disposition allowed us to concentrate on our core businesses while our continuing
  equity stake allows us to participate in any future value enhancement generated
  by the new structure. The transaction was completed on January 22, 2001.

In
  2001 we acquired Blue Circle Industries plc, the sixth largest cement manufacturer
  in the world, and became the world’s largest cement manufacturer when
  we completed a recommended tender offer for the 77.4% of the shares of Blue
  Circle that we did not already own at a price of 495 pence per share in cash.
  We had previously acquired, in 2000, 22.6% of the shares of Blue Circle. The
  total cost of the acquisition of Blue Circle amounted to 5,322 million euros
  excluding debt. For a more detailed explanation of our investment in Blue Circle
  and our allocation of the purchase price, please see Note 11 (c) to our consolidated
  financial statements.

Certain
  subsidiaries of Blue Circle were subject to change of control provisions which
  obligated us to buy back the shares of minority shareholders. The total cost
  of the acquisition of these minority interests amounted to 147 million euros.
  See the section entitled “Item 5. Operating and Financial Review and Prospects
   Liquidity and Capital Resources  Disclosures about Contractual
  Obligations and Contingent Commitments” and Note 27 to our consolidated
  financial statements for a further discussion of our obligations under change
  of control and other buy-sell agreements.

We
  consolidated Blue Circle from July 11, 2001. The financing of the acquisition
  of Blue Circle was realized through a combination of new equity and additional
  debt. For a discussion of our current debt financing please see “Item
  5. Operating and Financial Review and Prospects — Liquidity and Capital
  Resources”. The acquisition of Blue Circle expanded the presence of our
  Cement division into the United Kingdom, Greece, Chile, Nigeria and Malaysia
  and added to the division's existing presence in North America, Africa and the
  Philippines. In addition the former Blue Circle operations brought to our Aggregates
  & Concrete division significant operations in Georgia and Alabama in North
  America as well as operations in Greece, Malaysia, Singapore and Chile.

Our
  acquisitions amounted to 429 million euros in 2002 and involved our expansion
  in the Balkans with the acquisition of Beocinska Fabrika Cementa in Serbia and
  Cementarna Trbovlje in Slovenia. We also increased our position in South Korea,
  taking a minority stake in Tong Yang Cement through our 39.9% owned subsidiary
  Lafarge Halla Cement. In addition, we spent 704 million euros on the ongoing
  upgrading and modernization of our existing industrial plants , and 380 million
  euros on new production facilities in North America, Poland , Morocco and China.
  Divestments of non-strategic operations yielded 725 million euros.

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Management of Blue Circle Assets
  in North America

We
  have entered into an agreement with Lafarge North America Inc. our majority
  owned North American subsidiary with respect to Blue Circle's assets in North
  America. The agreement’s initial term expired on December 31, 2002 , renewable
  for one-year periods thereafter. It was renewed until December 31, 2003. The
  agreement provides that Lafarge North America will manage the Blue Circle assets
  for a fixed annual management fee plus incentives for improving operating results.
  Lafarge North America is also entitled to be reimbursed for the costs incurred
  on behalf of the Blue Circle operations in North America. In 2002, Lafarge North
  America charged U.S.$ 12.0 million (approximately 12.7 million euros)
  in management fees and U.S.$ 178.8 million (approximately 189.2 million
  euros) in cost reimbursement pursuant to the management agreement. In accordance
  with the terms of the agreement, Lafarge North America paid U.S.$2.5 million
  (approximately 2.6 million euros) to Blue Circle North America as compensation
  for actions taken to optimize the profitability of the combined assets.During
  the period covered by the agreement, the Blue Circle assets remain our property.
  We have, however, granted Lafarge North America an option to purchase the Blue
  Circle assets anytime between July 1, 2002 and December 31, 2004 at a fixed
  call price of $1.4 billion, subject to certain adjustments, for items such as
  capital expenditures and divestments, at the time of the exercise.

| | The assets of Blue Circle covered
      under the management agreement include:
| | -------------------------------------------------------------------------------
| |                                                                               
| |                                                                               
| |                                                                               
| |                                                                               
| |                                                                               
| |                                                                               

Recent Developments

Cement
   South Korea.In March 2002 we formed a joint-venture between our
  39.9% owned subsidiary Lafarge Halla Cement and Tong Yang Major Corporation,
  a Korean-based cement company. Under the terms of the joint-venture, Lafarge
  Halla Cement indirectly owns 24% of the equity of a new company called Tong
  Yang Cement. Tong Yang Major Corporation holds 75% of the equity and has transferred
  its existing cement business, a single plant with a cement production capacity
  of 11 million tonnes per year as well as related indebtedness limited to USD
  710 million, to the new company. Our share of the investment in Tong Yang Cement
  in 2002 amounted to 48 million euros.

Cement
   Serbia.In April 2002, we completed the acquisition of a 69.4% interest
  in the Beocinska Fabrika Cementa cement plant in Serbia for 60 million euros
  as part of the new Serbian government’s privatization policy. With a total
  annual production capacity of 1.5 million tonnes, Beocinska Fabrika Cementa
  is the market leader in Serbia-Montenegro. The plant is located on the Danube
  close to Novi Sad and Belgrade. Subsequent to the acquisition, we sold 49.98%
  of our interest in 2002. Our indirect ownership interest as at December 31,
  2002 was 34.72%.

Cement
   Slovenia.In April 2002, our wholly-owned Austrian subsidiary, Lafarge
  Perlmooser, completed a tender offer for the Slovenian cement company Cementarna
  Trbovlje, which was followed in November 2002 by the acquisition of an additional
  stake in the capital of this company, bringing its ownership to 99.8% of the
  capital, compared to its previous stake of 22.9% as of December 31, 2001. The
  total cost of those acquisitions in 2002 amounted to 40 million euros. Cementarna
  Trbovlje is the second largest cement producer on the Slovenian market, with
  an annual production capacity of 520 000 tonnes. The plant is located close
  to the two major cities of the country (Ljubljana and Maribor) and close to
  Austria.

Cement
   Cementia Holding AG. Between May and December 2002, we acquired the
  residual 2.95% interest in the shares of our subsidiary Cementia Holding AG,
  a Swiss publicly-traded company, under respectively an offer to exchange shares
  and a minority interest buyout process authorized under the Swiss law.

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We issued 453,838 new shares, with
  a fair value of 49 millions euros for all the outstanding shares. As a consequence,
  we owned 100% of Cementia Holding AG’ shares as of December, 31 2002.

Cement
   South Africa. In November 2002, we sold the 33% interest held by
  our wholly-owned subsidiary Lafarge South Africa in Natal Portland Cement (“NPC”)
  to Cimentos de Portugal SGPS, SA (“Cimpor”) for approximately 32
  million euros. NPC operates mainly in the Kwazulu Natal region (Eastern part
  of the country) in cement products. It has a main facility located near Durban.

Cement
   Brazil. In April 2002, we announced the sale of cement assets to
  Cimpor for 67 million euros. Located in the Bahia state, these assets consist
  of the Brumado grinding plant, representing a total annual capacity of 0.6 million
  tonnes, and its distribution network of three cement terminals.

Cement
   Spain. In November 2002, we announced the conclusion of an agreement
  for the sale of cement assets to Cimpor for 225 million euros. Located in Southern
  Spain, these assets consist of two cement plants at Cordoba and Niebla, representing
  a total annual capacity of 0.8 million tonnes of clinker and 1.4 million tonnes
  of cement, a grinding plant at Huelva (which we had acquired in September 2001),
  with an annual capacity of 0.6 million tonnes of cement, and a terminal in Seville,
  Spain.

Cement
   Malaysia. In December 2002, through our 61% owned subsidiary Malayan
  Cement Berhad (MCB), we acquired the remaining 23% in Kedah Cement not already
  owned by MCB, for approximately 61 million euros. Kedah Cement is a company
  based in Malaysia and engaged in the production of cement.

Aggregates
  & Concrete  North America. In May 2002, our subsidiary Lafarge
  North America sold the assets of its concrete paving stones and wall product
  businesses for approximately 40 million euros plus working capital. The assets
  sold include three manufacturing plants in Markham and Milton, Ontario and Wixom,
  Michigan.

Gypsum
   United States. In January 2002, Lafarge North America acquired Continental
  Gypsum. Based in Newark, New Jersey, Continental Gypsum is an independent drywall
  manufacturer with annual capacity of more than 28 million square meters. The
  purchase price for the Continental Gypsum plant and other assets was approximately
  30 million euros. Continental Gypsum strengthens our presence in the Northeast
  of the United States and complements our existing position in the New York City
  area, which we believe, based on our experience in this industry, to be the
  single largest metropolitan drywall market in the world.

Gypsum
   Eastern and Central Europe. In October 2002, we announced we had
  agreed to acquire the wallboard businesses of Gyproc in Germany and Poland from
  the British building materials company BPB. The acquisition was completed in
  2003.

Others
  Sale of properties in Paris. In 2002, we divested properties in France for
  a total amount of 112 million euros, including our headquarters located in Paris
  which we now lease.

Employee
  Share Ownership  Lafarge en action 2002. On April 15, 2002 we launched
  the Lafarge en action 2002 employee stock ownership program reserved
  for our eligible employees outside the United States and Canada and certain
  other countries. As a result of Lafarge en action 2002our employees
  subscribed for 708,718 shares at a price of 81.84 euros per share. In accordance
  with applicable French laws, except in certain specific circumstances, employees
  who subscribed for shares in the program will be required to hold them for at
  least five years. In addition through Lafarge en action 2002eligible
  employees were granted share subscription options to subscribe for 437,373 shares
  at an exercise price of 108.18. The options may be exercised from the fifth
  anniversary of the date they were granted and will expire on the tenth anniversary.
  We provided a subsidy to each of our eligible employees for the purchase of
  up to ten shares under the program. For further information please see the section
  entitled “Item 6. Directors, Senior Management And Employees  Employee
  Share Ownership  Employee Reserved Share Offerings.”



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Our organizational structureFor details
  of our principal subsidiaries, including their full legal name and country of
  incorporation, see Note 34 to our consolidated financial statements.

Our strengths

We
  have focused our business on construction materials, the area we know best.
  We believe we have established a reputation for excellence in each of our divisions
  by providing our customers with quality construction materials, backed by superior
  technical support. We have made a long-term commitment in each of our divisions
  to environmentally friendly solutions which we believe gives us a competitive
  advantage in an increasingly regulated world.

In
  each of our four divisions, we have strived to create a global presence. We
  believe that because demand in our markets is closely related to the business
  cycle, particularly of the construction sector, geographical diversification
  is the best way to ensure stability of returns. We believe that growth in the
  construction sector in emerging markets will substantially exceed growth in
  developed countries in North America and Western Europe and we have steadily
  increased our presence in emerging economies. In cement we already achieve almost
  half of our sales in emerging markets and our Gypsum and Roofing divisions achieved
  20.5% and 14.8% of their respective sales in emerging markets. However, we have
  been selective in our expansion in emerging markets and, for example, in our
  Aggregates & Concrete division we have restricted our expansion to geographic
  areas where, as a global company with a commitment to the environment and fair
  labor standards, we can still be competitive.

We
  believe that our final customer, the construction industry, will continue to
  be a highly fragmented business with significant variations between local markets.
  Through our divisional and geographic structure, we have centralized the monitoring
  of performance while delegating decision making to our local business units.
  We have incentivized the pay of our local managers for over twenty years and
  we aim to tie their remuneration to their efficient use of the funds provided
  by our shareholders. Our key managers have had part of their performance-related
  pay tied to economic value added since January 1, 2000. We have also introduced
  group-wide programs in areas such as purchasing where we believe significant
  synergies can be obtained between our local operations.

We
  believe that innovation is a key to the success of our business and through
  our Central Laboratory in l’Isle d’Abeau, and our other technical
  centers worldwide, we have focused on developing new products for our divisions
  which range from new concretes such as our Agilia® and Ductal® lines,
  which offer superior technical performance, to innovations such as our Big Tile
  and Passe Partout roofing panel lines in our Roofing division which are easier
  and quicker to install providing our customers with significant cost savings.

Our strategy

Our
  strategy is to be a global leader with worldwide market strength in each of
  our four businesses, through emphasizing performance and cost efficiency, and
  by combining organic growth and external development. We believe that this is
  the best way to maximize value for our shareholders.

Emphasizing performance and cost
  efficiency

We
  aim at excellence in performance through:

| |  | continuous improvement in purchasing and
      reduction of production costs;
| | - | -----------------------------------------------------------------------------

| |  | adaptation of our management practices and
      assets to local market conditions;
| | - | -----------------------------------------------------------------------------------

| |  | focus on practical research and development
      which is systematically transformed into new products and processes;
| | - | ----------------------------------------------------------------------------------------------------------------------

| |  | reinforcement of our relationships with our
      customers through a renewed focus on marketing and developing e-business
      solutions and internet based customer assistance; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | involvement of our employees at all levels
      of the organization.
| | - | ---------------------------------------------------------------------

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Combining organic growth and external
  development

The
  markets for many of our products in the developed countries of Western Europe
  and North America are mature, while in emerging markets we are in a growth industry,
  even in such basic products as cement. In developed countries, certain building
  materials are still experiencing substantial growth rates through product substitution,
  such as wallboard in Europe. Hence, our strategy for organic growth is to emphasize
  both emerging countries and product diversification.

In
  addition to organic growth, we have been able to implement a steady program
  of acquisitions which have brought us additional growth. We have focused our
  external development on countries where we already have a significant presence
  and on expanding into new geographic markets, particularly in Asia. However,
  the globalization and increasing consolidation of our industry have occasionally
  presented us with the opportunity to make major acquisitions. We have funded
  these acquisitions through issuing new equity and taking on temporarily higher
  levels of debt. This was the case in late December 1997 with the acquisition
  of Redland (aggregates, lime, tiles), and again in 2001 with our acquisition
  of Blue Circle (cement, aggregates).

Our
  immediate aim is to return by the end of 2003 to the financial ratios we had
  at the end of 2000, prior to the acquisition of Blue Circle. To achieve this
  we intend to take a more selective approach to our investment decisions and
  follow a strategy of selective divestments.

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Cement

With
  sales of approximately 6.9 billion euros, our Cement division contributed
  47.6% of our sales in 2002 and 75.3% of our operating income on ordinary activities.
  The Cement division's after tax return on capital employed in 2002 was 8.4%.
  At December 31, 2002, we had 37,521 employees in the Cement division.

On
  the basis of tonnes of cement capacity in 2002, our cement business is ranked
  by the International Cement Review’s Global Cement Report (fifth edition,
  completed in January 2003) (“Global Cement Report”) as the world’s
  largest producer of cement. At the end of 2002, the companies we consolidated
  (global and proportionate) operated 115 cement plants, 22 clinker
  grinding plants and 5 slag grinding stations in 42 countries. If all the
  companies in which we have an equity participation are included (with the exception
  of Cimpor) our cement operations consisted of 127 cement plants, 26 clinker
  grinding plants and 6 slag grinding stations in 47 countries.

In
  2002, the companies we consolidated (global and proportionate) had sales volumes
  of 105.7 million tonnes of cement. Taking into account 100% of the sales
  volumes of the companies we consolidate proportionally and the sales volumes
  of our equity affiliates total volumes sold would have been 114.1 million
  tonnes.

We
  operate throughout the world. We believe that because cement demand is closely
  related to the business cycle and the level of infrastructure spending, particularly
  of the construction sector, geographical diversification is the best way to
  ensure stability of returns.

Our
  goals for the coming years in cement are to further enhance our operating performance
  in our various geographic markets by improving the upstream operations through
  benchmarking and transfer of best practices. We also wish to continue to participate
  in the consolidation of the industry worldwide.

The
  table below indicates the breakdown of our sales by destination in 2002, 2001
  and 2000:

|                                          |  | Cement Sales
      by DestinationYear ended December 31, | 
|----------------------------------------- |  | -------------------------------------------------------- | 
|                                          |  |                                                          | 
|Geographic Area                           |  | 2002                                                     | 
|                                          |  |                                                          | 
|                                          |  | (in million
      euros, except percentages)             | 
|Western Europe                            |  | 2,274                                                    | 
|North America                             |  | 1,579                                                    | 
|Central and
      Eastern Europe          |  | 401                                                      | 
|Mediterranean
      Basin                 |  | 455                                                      | 
|Latin America                             |  | 502                                                      | 
|Sub-Saharan
      Africa and Indian Ocean |  | 756                                                      | 
|Asia/Pacific                              |  | 981                                                      | 
|                                          |  |                                                          | 
|Total                                     |  | 6,948                                                    | 
|                                          |  |                                                          | 

|                                                                       
|-----------------------------------------------------------------------
|* including the former Blue Circle operations
      from July 11, 2001.

We
  believe emerging markets represent the best prospects for long-term growth in
  the cement industry. We classify all countries outside of our Western Europe
  and North America geographic sectors, with the exception of Japan, Australia
  and New Zealand, as emerging markets. We had sales of 3,092 million euros
  in countries in emerging markets in 2002 compared to 2,799 million euros in
  2001 and 2,078 million euros in 2000. The overall percentage of our sales coming
  from these markets was 44.5% in 2002 compared to 46.7% in 2001 and 47.1% in
  2000.

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General Information Regarding
  Our Products, Industry and Markets

Our Products

Our
  major products are a wide range of cements and hydraulic binders for the construction
  industry. Cement is a fine powder that is the principal strength-giving and
  property-controlling component of concrete. We have developed a broad-based
  product offering for construction industry professionals:

| |  | A range of cements adapted for use in all
      conditions (including cements adapted to exposure to seawater, sulfates
      and hostile natural environments);
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Special cements: silica fume cements, white
      cement, oil-well cements, pozzolanic cements, slag cements;
| | - | -------------------------------------------------------------------------------------------------------------

| |  | Road surfacing hydraulic binders;
| | - | ---------------------------------

| |  | Natural lime hydraulic binders for construction;
      and
| | - | ----------------------------------------------------------

| |  | Masonry cements.
| | - | ----------------

Offered
  alongside this range of products is a series of associated services: technical
  support, ordering and delivery logistics, documentation, demonstrations, training,
  etc.

How do we manufacture cement and
  what are our raw materials?

The
  production of cement can be separated into three main stages.

| |  | The first step is to mix calcium carbonate,
      silica, alumina and iron ore in the correct proportions and grind them to
      produce the “raw meal.”
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | This “raw meal” is then heated
      and calcined in a kiln at a temperature of around 2730° F, and then
      cooled down quickly to obtain an intermediate product in the form of a hard
      pellet, called “clinker.”
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The clinker is then mixed with gypsum and
      finely ground to produce cement. Other cementitious materials can also be
      added at this stage such as slag, fly ash and pozzolana, a naturally occurring
      volcanic cement.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

There
  are two main processes used to produce clinker: the older, less fuel efficient,
  wet process and the modern dry process. In the wet process, the raw materials
  are mixed and ground with water to produce “slurry,” which is then
  heated in the kiln to produce clinker. In the dry process, the raw materials
  are mixed and ground without water (hence “dry”) to produce a very
  fine powder, which is then heated in the kiln. The dry process consumes less
  heat, since there is no need to eliminate the water added in the wet process.
  This substantially reduces fuel costs. Over 85% of our cement plants use the
  dry process.

The
  raw materials required for this process (calcium carbonate, silica, alumina
  and iron ore) are usually present in limestone, chalk, marl, shale and clay
  and are generally readily available in most countries of the world. Based on
  historic trends we do not consider the prices of these raw materials to be volatile.
  Cement plants are normally built beside large deposits of these raw materials.
  We currently estimate we have approximately 5 billion tonnes of proven
  and authorized reserves of raw materials. We believe that the quantities of
  authorized reserves at each of our existing cement plants is adequate for sustainable
  operating levels for the planned life of each of our plants.

In
  addition to naturally occurring raw materials, it is sometimes possible to substitute
  them partially with other cementitious materials produced as by-products from
  other industrial processes, such as blast-furnace slag and fly ash from coal-fired
  power plants. The use of slag and fly ash can improve some characteristics of
  cement and can also help us lower our use of capital. The amounts that can be
  substituted depend on the particular characteristics of the slag or fly ash
  and on the standards and regulations applicable to the particular type of cement.
  The use of these substitute products is part of our environmental objectives
  of pursuing environmentally friendly solutions. We use slag and fly ash principally
  in our plants in North America, France, Spain, Turkey, Poland, Romania, Brazil,
  South Korea, India, South Africa, Greece, United Kingdom, Chile and Malaysia.
  Slag and fly ash represented approximately 13% of our total production in 2002
  and part of our development strategy is to increase the use of slag and fly
  ash in our products.

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What are the costs of manufacturing
  cement?

Cement
  production is capital intensive. The construction of a new dry process cement
  production line with a production capacity of 1 million tonnes per year represents
  an investment of 130 to 190 million euros depending on the country where it
  is located in. From January 1, 2002, cement plants have been depreciated by
  components. Before January 1, 2002, cement plants had been depreciated over
  an unique useful life period without any distinction of components. On average,
  this change in estimate has resulted in increasing the depreciable useful life
  from 20 years to 28 years, which more closely reflects actual experience with
  modern cement plants. The following table sets forth our estimate of a typical
  structure of cement production cost:

|Item                    | Percentage
      of 
      Total Cost |  
|----------------------- | ------------------------------------- | -
|Raw Materials           | 10                                    | %
|Energy                  | 28                                    | %
|Direct production labor | 21                                    | %
|Maintenance             | 21                                    | %
|Other overhead          | 6                                     | %
|Depreciation            | 14                                    | %
|                        |                                       |  
|Total Cost              | 100                                   | %
|                        |                                       |  

We
  have placed special emphasis on becoming, and have become, more efficient in
  our sourcing and use of fuel. Fuel-efficiencies have been gained through improved
  plant design to include techniques such as using air exiting the kiln to preheat
  the blended raw materials as well as through the use of alternate fuels for
  firing the kiln, such as sump oil or tire recycling, as a partial substitute
  for the oil, natural gas, coke or coal otherwise used. As an additional means
  of reducing energy costs, many of our cement plants are equipped to convert
  from one form of fuel to another with very little interruption in production,
  thus avoiding dependence on a single fuel and permitting us to take advantage
  of price variations between fuels. We have 59 plants that use some form
  of alternate fuels and approximately 59% of our cement plants are equipped to
  switch between fuel sources i.e. pet coke and coal. Pet coke is a residue of
  petroleum refining which is used as a fuel.

Who buys our cement, our customer
  orders and backlog?

In
  each of our markets we sell our cement, either bulk or bagged, to several thousand
  unaffiliated customers. Our products are used in three major segments of the
  construction industry: major civil engineering products, residential and commercial
  construction and renovation. Our primary customers are:

| |  | Ready mix concrete producers,
| | - | -----------------------------

| |  | Building materials wholesalers,
| | - | -------------------------------

| |  | Construction and civil engineering contractors,
      and
| | - | ---------------------------------------------------------

| |  | Road building and earthworks contractors.
| | - | -----------------------------------------

We
  also sell to our other divisions, including our Aggregates & Concrete division,
  but we eliminate inter-company sales in reporting sales for the division. In
  2002, sales of our Cement division to our other divisions represented 572 million
  euros.

Sales
  of cement are made generally pursuant to telephone orders from customers who
  purchase quantities sufficient for their immediate requirements. Our sales of
  cement do not typically involve long-term contractual commitments. The amount
  of backlog orders, as measured by written contracts, is normally not significant.

Our markets and industry

The
  world's major cement markets are Asia, Western Europe and North America, and
  the highest growth is expected to be in emerging markets. Historically, cement
  consumption in a given country has been correlated to growth of per-capita income.
  As emerging countries become industrialized, consumption tends to grow rapidly
  as a percentage of per capita income with increased expenditures on public works
  and housing.

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After a certain point of development,
  consumption per capita tends to taper off and may actually fall as the focus
  of development turns away from residential and commercial construction and increases
  in infrastructure.

Demand
  for cement is seasonal and tends to be lower in the winter months in temperate
  countries and in the rainy season in tropical countries. In each country it
  is also closely linked to the condition of the construction industries and public
  infrastructure spending and is sensitive to interest rates and business cycles.
  Demand for cement in specific markets also depends on local considerations such
  as climate, natural resources and consumer tastes (demand for cement is far
  more seasonal in areas with cold winters such as Canada and the mid west United
  States and, for example, U.S. residential construction uses more wood and less
  cement and concrete than Spanish residential construction).

Cement
  is bulky, and, while easy to store, it cannot be transported affordably on land
  farther than about 300 km, although by sea and inland waterway it becomes economical
  to transport over great distances. Price is an important factor in competition.
  Nonetheless, demand for cement in any particular market is inelastic downwards
  in that lower prices do not typically increase market demand. Differentiation
  from competitors can be achieved through consistent quality over time and regular
  deliveries as well as through the marketing of special purpose cements.

The
  capital-intensive nature of the cement industry together with over-capacity
  after the oil shocks of the 1970s led to the consolidation of the cement industry
  in Europe. In the 1980s the major European cement manufacturers expanded into
  the United States and acquired approximately 70% of U.S. cement production.
  The beginning of the 1990s saw the acquisition of Valenciana and Sanson in Spain
  by Cemex S.A. of Mexico. After the Asian crises the consolidation of production
  into the hands of multinationals was then mirrored in Asia's cement industry,
  with the multinationals having a stake in an estimated 60% of Asian cement capacity
  outside of China.

Cement
  is a competitive industry in all of our markets. We consider our major global
  competitors to be: Holcim (Switzerland), Cemex (Mexico), HeidelbergCement (Germany)
  and Italcementi (Italy).

Our Geographic Markets

In
  the discussion that follows, we describe market conditions and our competitive
  position in the principal geographic areas in which we operate. The sales volume
  figures we have provided for each country or geographic zone are the total volumes
  sold in each particular country or zone by our consolidated cement subsidiaries
  (including the former Blue Circle operations from July 11, 2001), including
  volumes sold to our other divisions and adjusted to reflect our percentage of
  interest in our proportionally consolidated subsidiaries. The information as
  to the rated annual cement production capacity of our operating cement manufacturing
  plants is based on management's estimates at December 31, 2002. The production
  of a cement plant might be less than its rated capacity due to product demand,
  plant failures and seasonal factors. The information as to the total industry
  capacity is, unless mentioned otherwise, as estimated by The International Cement
  Review’s Global Cement Report (fifth edition, completed inJanuary 2003)
  (“Global Cement Report”). The Global Cement Report’s estimate
  of our production capacity differs in some respects to our management’s
  estimates, however we have retained the figures in the Global Cement Report
  for our production capacity when calculating total industry capacity.

Western
  Europe. Western Europe represented approximately 32.7% of our cement
  sales in 2002. We have significant operations in France, the United Kingdom,
  Greece, Spain, Germany and Austria. We sold 32.8 million tonnes of cement
  in Western Europe in 2002 compared to 26.0 million tonnes in 2001 and 18.7 million
  tonnes in 2000.

Most
  cement markets in Western Europe are mature and according to Cembureau, the
  European Cement Producers Association, the total consumption for the European
  Union as a whole in 2002 was close to 190 million tonnes or approximately 500 kg
  per capita. However consumption varies dramatically within the region, Greece,
  Spain and Italy having for instance a much higher per capita consumption of
  cement than France. The cement industry in Europe is competitive in all major
  markets, with production generally concentrated within the hands of the major
  international groups.

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The
  table below indicates the number of plants and our production capacity by country
  at December 31, 2002:

|Country                    | Company                       | Number
        of Plants |   | Total Cement Production
        Capacity |                    
|-------------------------- | ----------------------------- | ------------------------ | - | ---------------------------------------- | -------------------
|                           |                               |                         
|                           |                               | Cement                   |   | ClinkerGrinding                          | (in million tonnes)
|                           |                              
|                           |                               |                          |   |                                          |                    
|France                     | Lafarge
      Ciments         | 10                       |   | 2                                        |                    
|                           |                               |                          |   |                                          |                    
|United Kingdom             | Blue Circle                   | 8                        |   | N/A                                      |                    
|                           |                               |                          |   |                                          |                    
|Greece                     | Heracles General
      Cement | 3                        |   | N/A                                      |                    
|                           |                               |                          |   |                                          |                    
|Spain                      | Lafarge Asland                | 4                        |   | N/A                                      |                    
|                           |                               |                          |   |                                          |                    
|Germany                    | Lafarge Zement                | 3                        |   | N/A                                      |                    
|                           |                               |                          |   |                                          |                    
|Austria                    | Lafarge Perlmooser            | 2                        |   | N/A                                      |                    
|                           |                               |                          |   |                                          |                    
|Italy                      | Lafarge Adriasebina           | 2                        |   | N/A                                      |                    
|                           |                               |                          |   |                                          |                    
|Total
      Western Europe | 32                            |                          | 2 |                                          | 37.7               
|                           |                               |                          |   |                                          |                    

France.
  Through our wholly-owned subsidiary Lafarge Ciments we are the leading cement
  producer in France. In 2002, France represented approximately 26.6% of our cement
  sales in Western Europe. The most recent edition available of the Global Cement
  Report estimated that our total installed capacity represented approximately
  36% of the total rated capacity in France.

Our
  ten cement plants and two seaboard clinker grinding plants in France are located
  to serve all of the major urban areas in the country and are dependent upon
  our five separate sales offices covering each of the major regions of the country.
  We also operate a slag grinding plant and a lime plant.

Based
  on figures provided by the Global Cement Report, cement consumption in France
  fell rapidly in the mid 1990s to reach a low of 18.7 million tonnes in 1996
  and 1997 but has partially recovered since the beginning of 1999 and in 2002
  amounted to 20.4 million tonnes compared to 20.7 million tonnes in
  2001. We sold 7.4 million tonnes of cement in metropolitan France in 2002,
  the same level as in 2001 and 2000.

Our
  major competitors in France are Ciments Français (which is 68% owned
  by Italcementi), Vicat (in which HeidelbergCement has a 35% interest) and Origny
  (which is a wholly-owned subsidiary of Holcim).

United
  Kingdom.We acquired our operations in the United Kingdom with our acquisition
  of Blue Circle. Through our wholly owned subsidiary, Blue Circle Industries,
  we are now the leading cement producer in the United Kingdom. In 2002, the United
  Kingdom contributed approximately 25.8% of our cement sales in Western Europe.
  The most recent edition of the Global Cement Report estimated that our total
  installed capacity, taking into account the closure of the Weardale plant at
  the end of 2002, represented approximately 48% of the total rated capacity in
  the United Kingdom.

Our
  eight cement plants in the United Kingdom are located to serve the whole of
  the country including Northern Ireland. The domestic market remained stable
  in 2002. We sold 7.1 million tonnes in the UK in 2002 compared to 3.5 million
  tonnes in 2001 (in 2001 sales of former Blue Circle operations were only consolidated
  from July 11, 2001).

Our
  major competitors in the UK are Castle Cement (which is wholly owned by HeidelbergCement)
  and Rugby Cement (which is wholly owned by RMC).

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Greece.
  We acquired our operations in Greece with our acquisition of Blue Circle. Through
  our majority owned subsidiary, Heracles General Cement, we are the leading cement
  producer in Greece. In 2002, Greece contributed approximately 16.6% of our cement
  sales in Western Europe. The most recent edition of the Global Cement Report
  estimated that our total installed capacity represented approximately 56% of
  the total rated capacity in Greece.

Our
  three cement plants in Greece are located to serve the domestic Greek market
  through seven separate distribution terminals. In 2002 exports accounted for
  approximately 33% of our production.

According
  to the latest figures available from Cembureau, Greece had the fourth highest
  per capita cement consumption rate in the European Union in 2002. This reflects
  the fact that the construction market is very much concrete based. The domestic
  market progressed in 2002. We sold 5.5 million tonnes of cement in Greece
  in 2002 compared to 2.4 million tonnes in 2001 (in 2001 sales of former Blue
  Circle operations were only consolidated from July 11, 2001).

Our
  major competitors in Greece are Titan Cement Co and Halyps Cement Co (which
  is controlled by Italcementi through the 94% equity interest held by Ciments
  Français).

Spain.
  Our operations in Spain are conducted through our majority owned subsidiary
  Lafarge Asland, which we acquired in 1989. In 2002, Spain represented approximately
  16.8% of our cement sales in Western Europe. We are currently the third largest
  cement producer in Spain based on capacity as reported by the most recent edition
  of the Global Cement Report. We sold 6.8 million tonnes of cement in Spain in
  2002 compared to 6.7 million in 2001 and 5.5 million tonnes in 2000.

Our
  four plants are located primarily in the growth regions of the Mediterranean
  coast and of the region of central Spain surrounding Madrid. We also operate
  a network of distribution centers and 3 seaboard terminals. In November 2002,
  we announced the conclusion of an agreement for the sale of cement assets to
  Cimentos de Portugal SGPS, SA (“Cimpor”) for 225 million euros.
  Located in Southern Spain, these assets consist of two cement plants at Cordoba
  and Niebla, representing a total annual capacity of 0.8 million tonnes of clinker
  and 1.4 million tonnes of cement, a grinding plant at Huelva (which we had acquired
  in September 2001), with an annual capacity of 0.6 million tonnes of cement,
  and a terminal in Seville, Spain. According to the Global Cement report, Spain
  is among the leading countries in Europe in terms of cement consumption per
  capita due to the high level of infrastructure and construction spending and
  the market continued to expand in 2002 growing 5% to reach 44.2 million tonnes.
  However, imports have continued to have a significant impact on prices in Spain
  especially in the coastal regions and according to the Global Cement Report,
  imports of cement and clinker represented approximately 17% of the market's
  consumption in 2002.

Our
  major competitors in Spain are Valenciana (which is 99.5% owned by Cemex), Cementos
  Portland (which is 55% owned by Valderrivas), Hisalba (which is 99.9% hold by
  Holcim), Financiera y Minera (which is controlled by Italcementi through Ciments
  Français), Uniland and Cimpor.

We
  also hold a 40.75% interest in Cementos Molins since 1997, which operates a
  plant located near Barcelona with a rated capacity of 1.5 million tonnes according
  to the most recent edition of the Global Cement Report, and has equity interests
  in cement operations in Mexico, Argentina and Uruguay.

Germany.
  Our operations are conducted through our wholly-owned subsidiary Lafarge Zement
  GmbH. In 2002, Germany represented approximately 5.5% of our cement sales in
  Western Europe. We are the sixth largest cement producer in Germany based on
  capacity as reported by the most recent edition of the Global Cement Report.

We
  have three plants in Germany: the Wössingen plant near Karlsruhe, in which
  we initially acquired an interest in 1976, Karsdorf in Sachsen Anhalt, in Eastern
  Germany, which we acquired in 1991 and the Sötenich plant in Nord Rhein-Westphalia
  near the Belgian border, which we acquired in 1998. Our Wössingen plant
  serves Southern Germany including Stuttgart and Munich. Our Karsdorf plant serves
  Central and North Eastern Germany. Sötenich serves South West Germany including
  Cologne and Dusseldorf. We also serve Dresden and South Eastern Germany from
  our Cizkovice plant in the Czech Republic.

The
  construction industry in Germany has suffered a downturn since 1999 and, according
  to the Global Cement Report, the overall cement market in Germany amounted to
  28.7 million tonnes in 2002 a decline of 6% compared to 2001 and a decline of
  approximately 14% compared to 2000.

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We sold 2.7 million tonnes in 2002
  compared to 2.5 million tonnes in 2001 and 2.9 million tonnes in 2000. Our major
  competitors in Germany are Dyckerhoff, HeidelbergCement, Schwenk, Readymix Zement
  (a subsidiary of RMC Group plc) and Holcim.

Austria.
  Our cement business in Austria is conducted through our wholly owned subsidiary,
  Lafarge Perlmooser AG, in which we acquired our initial interest through our
  acquisition of Cementia in 1989. In 2002, Austria represented approximately
  4% of our cement sales in Western Europe. Lafarge Perlmooser AG is the largest
  cement producer in Austria based on capacity as reported by the most recent
  edition of the Global Cement Report. We operate two cement plants in Austria,
  one near Vienna and one in the Styria region. We sold 1.4 million tonnes of
  cement in Austria in 2002, compared to 1.5 million tonnes in 2001 and 2000.
  Our major competitors in Austria are Wietersdorfer, Schretter, Leube, SPZ and
  Gmundner.

We
  also hold a 50% interest in Kirchdorfer Zement, which operates a plant with
  a rated capacity of 0.55 million tonnes, according to the most recent edition
  of the Global Cement Report.

Italy.
  Our cement business in Italy is conducted through our wholly owned subsidiary,
  Lafarge Adriasebina which we acquired in 1996. In 2002, Italy represented approximately
  3.8% of our cement sales in Western Europe. We sold 1.4 million tonnes of cement
  in Italy in 2002, compared to 1.3 million tonnes in 2001 and 1.2 million tonnes
  in 2000.

Our
  20% interest in the cement producer Sacci was sold at the end of 2002 for approximately
  20 million euros.

North
  America.North America represented approximately 22.7% of our cement
  sales in 2002. We are represented in North America through our majority owned
  subsidiary, Lafarge North America Inc., a New York Stock Exchange listed company
  and through our wholly owned subsidiary Blue Circle North America Inc. which
  we acquired as part of the Blue Circle acquisition. The assets of Blue Circle
  North America Inc. are currently managed by Lafarge North America, which has
  an option to purchase such assets anytime between July 1, 2002 and December
  31, 2004 at a fixed call price of USD1.4 billion, subject to certain adjustments
  at the time of the exercise. North America is a mature cement market and sales
  are seasonal in Canada and much of the East Coast and Mid West as temperatures
  in winter fall below minimum setting temperatures for concrete. We sold 17.5 million
  tonnes of cement in North America in 2002 compared to 16.0 million tonnes
  of cement in 2001 and 12.8 million tonnes of cement in 2000.

The
  table below indicates the number of plants and our production capacity by country
  at December 31, 2002:

|Country             | Company                        | Number of Plants |  | Total CementProductionCapacity | 
|------------------- | ------------------------------ | ---------------- |  | ------------------------------ | 
|                    |                                | Cement           |  | ClinkerGrinding                | 
|                    |                                |                  |  |                                | 
|United States       | Lafarge North America          | 8                |  | 2                              | 
|                    | Blue Circle North America Inc. | 5                |  | N/A                            | 
|Canada              | Lafarge Canada Inc.            | 7                |  | N/A                            | 
|                    |                                |                  |  |                                | 
|Total North America |                                | 20               |  | 2                              | 
|                    |                                |                  |  |                                | 

United
  States.In 2002, the United States represented approximately 87.3% of our
  cement sales in North America. On the basis of the figures provided by the Portland
  Cement Association’s “Plant Information Summary” report which
  was prepared at December 31, 2001, we are the second largest cement producer
  based on rated annual active clinker production capacity, with an estimated
  12.7% of the rated annual active clinker production capacity of all U.S. cement
  plants. The acquisition of Blue Circle brought us operations in the South Eastern
  United States that complemented our existing plants which are primarily concentrated
  in the central and Midwestern states, extending from the northern Great Lakes
  southward along the Mississippi River system. Two new production lines became
  operational in 2002 replacing our prior capacities at Sugar Creek, near Kansas
  City, and Roberta, Alabama. We are expanding our use of cementitious products
  and we already have two slag grinding facilities, one being in Florida and the
  other one close to Chicago, where operations started in April 2002.

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Our
  major competitors in the United States are Holnam (which is a subsidiary of
  Holcim), Southdown (which is a subsidiary of Cemex), Ash Grove Cement and HeidelbergCement's
  U.S. subsidiaries.

We
  sold 14.6 million tonnes of cement in the United States in 2002 compared
  to 12.9 million tonnes in 2001 (which included the former Blue Circle operations
  only from July 11, 2001 onwards) and 9.9 million tonnes in 2000. Our most significant
  U.S. markets in 2002 were Illinois, Michigan Wisconsin and Florida.

Canada.In 2002, Canada represented approximately 12.7% of our cement sales in North
  America. We are the leading cement producer in Canada according to the Portland
  Cement Association's “Plant Information Summary” report which was
  prepared at December 31, 2001, with approximately 33.8% of the total active
  industry clinker production capacity in Canada. We are the only cement producer
  serving all regions of Canada. Our major competitors in Canada are St. Lawrence
  Cement (a subsidiary of Holcim) and St Marys Cement (a subsidiary of Votorantim).

We
  sold 3.0 million tonnes of cement in Canada in 2002 compared to 3.1 million
  tonnes in 2001 and 3.0 million tonnes in 2000. We made our most significant
  sales in Canada in Ontario, which accounted for approximately 37% of our total
  Canadian cement shipments in 2002. Other provinces in which we had significant
  sales included Alberta and Quebec. Approximately 40% of our cement shipments
  in Canada were made to our Aggregates & Concrete division.

In
  addition to the plants shown in the table above we also own clinker-producing
  plants that have been shut down in Havelock, New Brunswick and Fort Whyte, Manitoba.
  We also have two slag grinding plants. According to the Portland Cement Association,
  our largest competitor accounted for approximately 17.6% of rated annual active
  clinker production capacity in Canada.

Central
  and Eastern Europe.In 2002, Central and Eastern Europe represented
  approximately 5.8% of our cement sales. We have actively sought to take advantage
  of the opportunities offered in the emerging markets of Central and Eastern
  Europe and are present in Poland, the Czech Republic, Romania, Serbia, Slovenia
  and the Commonwealth of Independent States. We also have an equity interest
  in a plant located in Moldavia. Many of the countries in Central and Eastern
  Europe currently suffer from chronic excess capacity as a result of central
  planning. However, we believe that the expansion of the European Union eastward
  makes the long-term growth prospects good and our operations in Poland and Romania
  are already making significant contributions to our earnings. The companies
  we consolidated sold 8.1  million tonnes of cement in Central and Eastern
  Europe in 2002 compared to 6.2 million tonnes in 2001 and 2000.



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The table below
  indicates the number of plants and our production capacity by country at December
  31, 2002:

|Country                                | Company                           | Number of Plants |   | Total Cement Production
      Capacity |     
|-------------------------------------- | --------------------------------- | ---------------- | - | -------------------------------------- | ----
|                                       |                                   | Cement           |   | ClinkerGrinding                        |     
|                                       |                                   |                  |   |                                        |     
|Poland                                 | Lafarge Cement Polska             | 2                |   | N/A                                    |     
|                                       |                                   |                  |   |                                        |     
|Romania                                | Lafarge Romcim                    | 2                |   | 1                                      |     
|                                       |                                   |                  |   |                                        |     
|Czech Republic                         | Lafarge Cement a.s.               | 1                |   | N/A                                    |     
|                                       |                                   |                  |   |                                        |     
|CIS                                    | Voskresenskcement                 | 1                |   | N/A                                    |     
|                                       | Mykolaivcement                    | 1                |   | N/A                                    |     
|                                       |                                   |                  |   |                                        |     
|Serbia                                 | Lafarge Beocinska Fabrika Cementa | 1                |   | N/A                                    |     
|                                       |                                   |                  |   |                                        |     
|Slovenia                               | Cementarna Trbovlje               | 1                |   | N/A                                    |     
|                                       |                                   |                  |   |                                        |     
|Total Central
      and Eastern Europe | 9                                 |                  | 1 |                                        | 14.7
|                                       |                                   |                  |   |                                        |     

Poland.
  In 2002, Poland represented approximately 35.4% of our cement sales in Central
  and Eastern Europe. We operate through our majority owned subsidiary Lafarge
  Cement Polska which, we believe, based on our experience in this industry, is
  the second largest producer in terms of capacity. We acquired our plants in
  Poland in a series of acquisitions in 1995 and 1996. The European Bank for Reconstruction
  and Development has taken a minority interest in Lafarge Polska, the holding
  company of Lafarge Cement Polska, as well as providing debt financing. We sold
  2.2 million tonnes of cement in Poland in 2002, compared to 2.3 million
  tonnes in 2001 and 3.3 million tonnes in 2000. We have replaced one of
  our old wet process kilns in the Kujawy plant in northern Poland with a new
  dry process kilns, which became operational early in 2003. Our major competitors
  in Poland are CRH, HeidelbergCement, and Dyckerhoff.

Romania.In 2002, Romania represented approximately 22.4% of our cement sales in
  Central and Eastern Europe. We operate two cement plants and one clinker grinding
  station in Romania, through our majority owned subsidiary Lafarge Romcim which
  we acquired in 1997. Following the acquisition of Lafarge Romcim we sold an
  indirect minority interest to the European Bank for Reconstruction and Development.
  In July 2000 we disposed of our Alesd plant in Transylvania to Holcim. We believe,
  based on our experience in this industry, we are the largest cement producer
  in Romania in terms of capacity. Our main competitors are Holcim, HeidelbergCement
  and Romcif Fieni.

Cement
  consumption in Romania dropped after the fall of the communist regime in 1989
  when state-financed dwelling construction almost ceased. As a result, cement
  producers in Romania have large underutilized capacities. The Global Cement
  Report estimates the total market for cement in Romania at 4.6 million
  tonnes in 2002, and a total industry production capacity of 10.7 million tonnes
  in 2002. We exported approximately 44% of production in 2002. We produced 2.9 million
  tonnes of cement in Romania in 2002 compared to 2.7 million tonnes in 2001 and
  2.8 million tonnes in 2000.

Czech
  Republic. In 2002, the Czech Republic represented approximately 8.2% of
  our cement sales in Central and Eastern Europe. Our operations in the Czech
  Republic are conducted through our majority owned subsidiary Lafarge Cement
  AS. We exported approximately 48% of production in 2002. We sold 0.3 million
  tonnes of cement in the Czech Republic in 2002, compared to 0.4 million
  tonnes in 2001 and 2000. Our major competitors in the Czech Republic are HeidelbergCement,
  Holcim and Dyckerhoff.

Commonwealth
  of Independent States.We have plants in the Commonwealth of Independent
  States in Russia and the Ukraine.

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We
  acquired our majority interest in JSC Voskresenskcement which operates a cement
  plant in Voskresensk, near Moscow, in 1996. According to the most recent edition
  of the Global Cement Report, the total market for cement in Russia was 35 million
  tonnes in 2002, compared to a total industry production capacity of 77.3 million
  tonnes. We sold 1.5 million tonnes of cement in Russia in 2002 compared
  to 1.3 million tonnes in 2001 and 1.2 million tonnes in 2000.

We
  acquired a majority interest in Mykolaivcement which operates a cement plant
  in Mykolaiv, near the Black Sea, in 1999 after initially acquiring a minority
  stake in 1998. We sold 0.7 million tonnes of cement in the Ukraine in 2002
  compared to 0.6 million tonnes in 2001.

Recent
  Developments  Serbia.In April 2002, we completed the acquisition
  of a 69.4% interest in the Beocinska Fabrika Cementa cement plant in Serbia
  for 60 million euros as part of the new Serbian government’s privatization
  policy. With a total annual production capacity of 1.5 million tonnes, Beocinska
  Fabrika Cementa is the market leader in Serbia-Montenegro. The plant is located
  on the Danube close to Novi Sad and Belgrade. Subsequent to the acquisition,
  we sold 49.98% of our interest in 2002. Our indirect ownership interest as at
  December 31, 2002 was 34.72%. We sold 0.8 million tonnes of cement in Serbia-Montenegro
  in 2002.

Recent
  Developments  Slovenia.In April 2002, our wholly-owned Austrian subsidiary,
  Lafarge Perlmooser, completed a tender offer for the Slovenian cement company
  Cementarna Trbovlje, which was followed in November 2002 by the acquisition
  of an additional stake in the capital of this company, bringing its ownership
  to 99.8% of the capital, compared to its previous stake of 22.9% as of December
  31, 2001. The total cost of those acquisitions in 2002 amounted to 40 million
  euros. Cementarna Trbovlje is the second largest cement producer on the Slovenian
  market, with an annual production capacity of 0.5 million tonnes. The plant
  is located close to the two major cities of the country (Ljubljana and Maribor)
  and close to Austria. We sold 0.4 million tonnes of cement in Slovenia in 2002.

Mediterranean
  Basin. In 2002, the Mediterranean Basin represented approximately 6.5%
  of our cement sales. We believe the emerging countries of the Mediterranean
  Basin have high growth potential in the medium to long-term as they industrialize
  and urbanize. Many of the cement markets in the region have only been recently
  opened up to competition after years of state ownership. Following the consolidation
  of Lafarge Maroc using the proportionate consolidation method in 2002, the companies
  we consolidated sold 9.5 million tonnes of cement in the region in 2002
  compared to 11.4 million tonnes in 2001 and 10.9 million tonnes in 2000.



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The table below
  indicates the number of plants and our production capacity by country at December
  31, 2002:

|Country                         | Company                          | Number
        of Plants |   | Total Cement Production
      Capacity |     
|------------------------------- | -------------------------------- | ------------------------ | - | -------------------------------------- | ----
|                                |                                  | Cement                   |   | ClinkerGrinding                        |     
|                                |                                  |                          |   |                                        |     
|Morocco                         | Lafarge Maroc                    | 4                        |   | N/A                                    |     
|                                |                                  |                          |   |                                        |     
|Jordan                          | Jordan Cement
      Factories    | 2                        |   | N/A                                    |     
|Turkey                          | Lafarge Aslan                    | 1                        |   | 1                                      |     
|                                | Yibitas Lafarge                  | 3                        |   | 3                                      |     
|                                | Eregli Cimento                   | 0                        |   | 1                                      |     
|                                |                                  |                          |   |                                        |     
|                                | Total Turkey                     | 4                        |   | 5                                      |     
|                                |                                  |                          |   |                                        |     
|Egypt                           | Beni Suef Cement
      Company   | 1                        |   | N/A                                    |     
|                                | Alexandria
      Portland Cement | 1                        |   | N/A                                    |     
|                                |                                  |                          |   |                                        |     
|                                | Total Egypt                      | 2                        |   | N/A                                    |     
|                                |                                  |                          |   |                                        |     
|Total
      Mediterranean Basin | 12                               |                          | 5 |                                        | 16.6
|                                |                                  |                          |   |                                        |     

Morocco.
  In 2002, Morocco represented approximately 25.5% of our cement sales in the
  Mediterranean Basin. We operate four cement plants in Morocco through our subsidiary
  Lafarge Maroc and its operating subsidiaries. Our partner in Lafarge Maroc is
  ONA, the largest Moroccan company. On the basis of the figures produced by the
  most recent edition of the Global Cement Report we are the largest cement producer
  and have approximately 45% of the production capacity in the country. We sold
  1.8 million tonnes of cement in Morocco in 2002 compared to 3.4 million
  tonnes in 2001 and 3.1 million tonnes in 2000 (the reduction in 2002 reflects
  the consolidation of Lafarge Maroc using the proportionate consolidation method
  in 2002 as compared to full consolidation in 2001 and 2000). The market consists
  of international players and our competitors, Italcementi, Holcim and Cimpor,
  operate six cement plants and two grinding plants in Morocco.

The
  Moroccan economy is vulnerable to sharp declines in agriculture resulting from
  lack of rainfall and is in the process of recovering from an economic recession.
  Cement consumption is growing but the growth pattern is heavily influenced by
  the state of agriculture. We are currently in the process of constructing a
  new greenfield cement plant close to Tetouan on the Mediterranean coast and
  when construction is completed, the plant is expected to add an additional capacity
  of 0.7 million tonnes per year. We commenced the construction of the new plant
  in 2001 and expect the plant to start operations in September 2003. The construction
  of the plant is being financed through the internal cash flow of Lafarge Maroc.

Jordan.
  In 2002, Jordan represented approximately 33.6% of our cement sales in the Mediterranean
  Basin. Our operations in Jordan are conducted through Jordan Cement Factories,
  a listed company. In 1998, Jordan Cement Factories was privatized and we purchased
  a 43.3% interest and became the largest shareholder. The Jordanian government
  is the second largest shareholder in Jordan Cement Factories with a 16% interest.

Cement
  consumption has increased over the past few years in Jordan despite socio-economic
  difficulties and the ongoing uncertainty in the Middle East. We sold 2.7 million
  tonnes of cement in Jordan in 2002 compared to 2.4 million tonnes in 2001 and
  2.2 million tonnes in 2000. In addition, we exported 0.9 million tonnes
  of cement and clinker.

Turkey. In 2002, Turkey represented approximately 18.9% of our cement sales in
  the Mediterranean Basin. Through our majority owned subsidiary, Lafarge Aslan
  Cimento AS, we operate a plant in Darica in Marmara and through our wholly-owned
  subsidiary, Agretas Agrega Insaat San.ve Tic.AS, we own a 49.9% interest in
  Yibitas Lafarge, a joint venture with Yibitas Holding which we manage. Yibitas
  Lafarge operates plants in Central Anatolia and the Black Sea region.

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The
  Turkish cement market has been adversely affected by an economic downturn for
  the past three years, which has resulted into a financial crisis. However, we
  believe that in the long term Turkey represents a growing market for cement
  with high consumption per capita. The market is highly competitive with ownership
  fragmented and the Turkish economy and cement markets were greatly affected
  by the earthquakes in 1999. Excess supply from the regional clinker capacity
  has been around 20% for the past few years, resulting in significant export
  volumes. We exported approximately 13% of production in 2002. We sold 2.8 million
  tonnes of cement in Turkey in 2002 compared to 3.1 million tonnes in 2001 and
  3.6 million tonnes in 2000. Our major competitors are Akçansa (a subsidiary
  of Heildelberger Cement and Sabançi), Italcementi, Nuh Cimento, BURSA,
  Vicat and OYAK.

Egypt. Our operations in Egypt are conducted through Lafarge Titan Egyptian Investments
  Ltd., a 50/50 joint venture with the Greek cement group Titan SA. We initially
  joined with Titan to buy 76% of Beni Suef in 1999 and this joint interest was
  raised to 95% in 2000. We included Alexandria Portland Cement which we acquired
  as part of the Blue Circle acquisition within the structure of the joint venture
  in 2002. Beni Suef has a single dry kiln plant located 120 kilometers south
  of Cairo and is the seventh largest producer in Egypt. Alexandria Portland Cement
  serves Egypt’s second city, Alexandria, and is the tenth largest producer
  in Egypt. It has a single plant with several wet kilns and we commenced operation
  of a dry kiln line mid 2002. We sold 1.3 million tonnes of cement in Egypt
  in 2002 compared to 1.6 million tonnes in 2001 and 1.3 million tonnes in 2000.
  Our major competitors are Egyptian Cement (a subsidiary of Holcim), Assiut (a
  subsidiary of Cemex) and Suez (a subsidiary of Italcementi).

Latin
  America. In 2002, Latin America represented approximately 7.2% of our
  cement sales. We first entered the Latin American market in the 1950s when we
  started our operations in Brazil. Following a long period of stagnation in the
  1970s and 1980s the economies in Latin America grew strongly in the 1990s and
  despite the temporary downturn at the end of the decade we expect the trend
  to continue. The companies we consolidated sold 6.5 million tonnes of cement
  in Latin America in 2002 compared to 6.4 million tonnes in 2001 and 5.9 million
  tonnes in 2000.

The
  table below indicates the number of plants and our production capacity by country
  at December 31, 2002:

|Country                   | Company                                      | Number
        of Plants |   | Total Cement Production
      Capacity |    
|------------------------- | -------------------------------------------- | ------------------------ | - | -------------------------------------- | ---
|                          |                                              | Cement                   |   | Clinker Grinding                       |    
|                          |                                              |                          |   |                                        |    
|Brazil                    | CNCP and CMS                                 | 6                        |   | N/A                                    |    
|                          |                                              |                          |   |                                        |    
|Venezuela                 | FNC                                          | 2                        |   | N/A                                    |    
|                          |                                              |                          |   |                                        |    
|Chile                     | Empresas Melon                               | 1                        |   | N/A                                    |    
|                          |                                              |                          |   |                                        |    
|Honduras                  | Industriana Cementera Hondurena              | 1                        |   | N/A                                    |    
|                          |                                              |                          |   |                                        |    
|French Antilles           | Ciments Antillais
      and Ciments Guyanais | N/A                      |   | 3                                      |    
|                          |                                              |                          |   |                                        |    
|Mexico                    | CPBM                                         | 1                        |   | N/A                                    |    
|                          |                                              |                          |   |                                        |    
|Total
      Latin America | 11                                           |                          | 3 |                                        | 9.9
|                          |                                              |                          |   |                                        |    

Brazil.
  In 2002, Brazil represented approximately 36.7% of our cement sales in Latin
  America. We conduct our operations in Brazil through our wholly-owned subsidiary
  Companhia Nacional de Cimento Portland (“CNCP”) and our subsidiary
  Companhia de Materiais Sulfurosos (“CMS”). Our cement plants in
  Brazil are located mainly in the southeast of the country in the states of Rio
  de Janeiro, Minas Gerais and Sao Paolo. In April 2002, we announced the sale
  of cement assets to Cimpor for 67 million euros. Located in the Bahia state,
  these assets consist of the Brumado grinding plant, representing a total annual
  capacity of 0.6 million tonnes, and its distribution network of three cement
  terminals. We estimate we are the 4th largest cement manufacturer in Brazil
  in terms of rated capacity. Our major competitors in Brazil are Votorantim,
  Joa Santos, Holcim and Cimpor.

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The
  cement industry in Brazil slowed in 2002 due to economic and political uncertainties
  caused by the anticipation of the 2003 presidential election. We sold 2.9 million
  tonnes of cement in Brazil in 2002 compared to 3.2 million tonnes of cement
  in 2001 and 3.3 million tonnes in 2000. Retail sales, mainly for individual
  construction use, account for most of the demand.

We
  also own a 20% interest in Cimento Tupi.

Venezuela.
  In 2002, Venezuela represented approximately 17.5% of our cement sales in Latin
  America. We conduct our operations in Venezuela through our majority owned subsidiary,
  Fabrica Nacional de Cementos. Our major competitors in Venezuela are Cemex and
  Holcim. On the basis of figures published by the most recent edition of the
  Global Cement Report, we estimate we are the third largest cement manufacturer
  in Venezuela in terms of rated capacity.

Our
  plants in Venezuela are located in the northern part of the country where 80%
  of the population is concentrated. We sold 0.8 million tonnes of cement
  in Venezuela in 2002 compared to 0.9 million tonnes in each of 2001 and 2000.

We
  also own a 23% interest in Cementos Catatumbo.

Chile.
  We operate in Chile through our majority owned subsidiary, Empresas Melon, which
  we acquired with our acquisition of Blue Circle. In 2002, Chile contributed
  approximately 15.7% of our cement sales in South America. Empresas Melon operates
  a single plant located near the capital Santiago. Our total installed capacity
  represented approximately 24% of the total rated capacity in Chile, based on
  the estimates contained in the most recent edition of the Global Cement Report.
  We sold 1.3  million tonnes of cement in Chile in 2002, compared to 0.6.
  million tonnes in 2001 (as with the rest of the former Blue Circle operations,
  this only represents sales in 2001 consolidated from July 11, 2001 onwards).

Our
  major competitors in Chile are Polpaico (which is 54% owned by Holcim) and Cementos
  Bio-Bio (including Industria Nacional de Cemento).

Honduras.
  In 2002, Honduras represented approximately 10.8% of our cement sales in Latin
  America. We acquired our majority owned subsidiary Industria Cementera Hondurena,
  which has a plant located near the capital Tegucigalpa in March 1998. Our only
  competitor is Cementos del Norte which is controlled by Holcim and which has
  a plant located near the Guatemalan border.

Mexico.
  We operate a single plant in Mexico through our subsidiary Lafarge Cementos
  SA de CV which we acquired in November 1999. Our plant in Mexico is located
  near Mexico City. Our major competitors are Cemex and Holcim.

Sub-Saharan
  Africa and Indian Ocean. We substantially expanded our operations in
  Sub-Saharan Africa and the Indian Ocean with the Blue Circle acquisition, adding
  operations in Nigeria and Zimbabwe to our existing operations which were primarily
  concentrated in South Africa and Kenya. In 2002, the region represented approximately
  10.9% of our cement sales. The companies we consolidated sold 10.2 million
  tonnes of cement in the region in 2002 compared to 7.2 million tonnes in 2001
  and 5.0 million tonnes in 2000.



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The table below
  indicates the number of plants and our production capacity by country at December
  31, 2002:

|Country                        | Company                         |        | Number of Plants |                 | Total Cement
      Production Capacity | 
|------------------------------ | ------------------------------- | ------ | ---------------- | --------------- | -------------------------------------- | 
|                               |                                 | Cement |                  | ClinkerGrinding | (in
        million tonnes)           
|                               |                                 |        |                  |                 |                                        | 
|Nigeria                        | WAPCo                           |        | 2                |                 | N/A                                    | 
|Nigeria                        | Ashakacem                       |        | 1                |                 | N/A                                    | 
|                               |                                 |        |                  |                 |                                        | 
|Total Nigeria                  |                                 |        | 3                |                 | N/A                                    | 
|                               |                                 |        |                  |                 |                                        | 
|South Africa                   | Lafarge South Africa
      Ltd. |        | 1                |                 | 1                                      | 
|                               |                                 |        |                  |                 |                                        | 
|Kenya                          | Bamburi Cement                  |        | 1                |                 | 1                                      | 
|                               |                                 |        |                  |                 |                                        | 
|Cameroon                       | Cimencam                        |        | 1                |                 | 1                                      | 
|                               |                                 |        |                  |                 |                                        | 
|Benin                          | SCB-Lafarge                     |        | 1                |                 | N/A                                    | 
|                               |                                 |        |                  |                 |                                        | 
|Zimbabwe                       | Circle Cement                   |        | 1                |                 | N/A                                    | 
|                               |                                 |        |                  |                 |                                        | 
|Uganda                         | Hima Cement Ltd.                |        | 1                |                 | N/A                                    | 
|                               |                                 |        |                  |                 |                                        | 
|Zambia                         | Chilanga Cement                 |        | 2                |                 | N/A                                    | 
|                               |                                 |        |                  |                 |                                        | 
|Malawi                         | Portland Cement                 |        | 1                |                 | 1                                      | 
|                               |                                 |        |                  |                 |                                        | 
|Tanzania                       | Mbeya Cement                    |        | 1                |                 | N/A                                    | 
|                               |                                 |        |                  |                 |                                        | 
|Madagascar                     | Sanca                           |        | 1                |                 | N/A                                    | 
|                               |                                 |        |                  |                 |                                        | 
|Total Sub-Saharan
      Africa |                                 |        | 14               |                 | 4                                      | 
|                               |                                 |        |                  |                 |                                        | 

Nigeria.
  We acquired our operations in Nigeria through our acquisition of Blue Circle.
  Our operations are conducted through our subsidiaries West African Portland
  Cement Company which serves the Lagos market and Ashakacem plc which serves
  Northern Nigeria. Our total installed capacity represented approximately 46%
  of the total rated capacity in Nigeria, as estimated by the most recent edition
  of the Global Cement Report. In 2002, Nigeria contributed approximately 36.4%
  of our cement sales in Sub-Saharan Africa and Indian Ocean.

The
  domestic market dropped sharply in 2002, prior to the 2003 presidential election.
  We sold 3.3 million tonnes of cement in Nigeria in 2002 compared to 1.3
  million tonnes in 2001 (as with the rest of the former Blue Circle operations,
  sales in 2001 only represent the period consolidated from July 11, 2001 onwards).
  Our competitors in Nigeria are Benue Cement, Nigerian Cement, Cement Co Northern
  Nigeria (which is 40% owned by HeidelbergCement), Bendel Cement, Calabar Cement
  and various importers.

South
  Africa. In 2002, South Africa represented approximately 9.8% of our cement
  sales in Sub-Saharan Africa and Indian Ocean. We acquired our wholly-owned subsidiary,
  Lafarge South Africa Ltd., in 1998. Our operations consist of a cement plant
  which serves the Johannesburg market and a grinding plant near Durban. Over
  the past ten years most producers have been operating at less than 60% of their
  rated capacity.

The
  domestic market improved in 2002 and we sold 1.6 million tonnes of cement
  in South Africa in 2002 compared to 1.5 million tonnes in 2001 and 1.4 million
  tonnes in 2000. Our major competitors in South Africa are Pretoria Portland
  Cement and Alpha (a subsidiary of Holcim). In November 2002, we sold the 33%
  interest held by our wholly-owned subsidiary Lafarge South Africa in Natal Portland
  Cement (“NPC”) to Cimpor for approximately 32 million euros. NPC
  operates mainly in the Kwazulu Natal region (Eastern part of the country). It
  has a main facility located near Durban.

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Kenya.
  In 2002, Kenya represented approximately 9.9% of our cement sales in Sub-Saharan
  Africa and Indian Ocean. Our operations in Kenya are conducted through our subsidiary
  Bamburi Cement Ltd., which was operated as a joint venture with Blue Circle prior
  to our acquisition of Blue Circle in 2001. Bamburi Cement has an integrated
  cement plant in Mombasa and a grinding unit in Nairobi. The market picked up
  in 2002 after a few years of stagnation due to the condition of the economy
  and the lack of government and development funding. Our major competitors in
  this market are Athi River Mining and East African Portland Cement, a state-controlled
  company in which Lafarge and Bamburi have a combined minority interest of approximately
  40%.

Cameroon,
  Benin, Zimbabwe, Madagascar and Uganda.Our subsidiary, Cimenteries du Cameroun,
  known as Cimencam, is the sole cement producer in Cameroon. In Benin, we have
  a 50% interest in SCB-Lafarge which operates a cement plant in Onigbolo. We
  acquired our majority owned subsidiary in Zimbabwe, Circle Cement, with the
  acquisition of Blue Circle. Circle Cement has a single plant that serves the
  capital Harare. Through Bamburi Cement Ltd., we acquired an interest in Hima
  Cement Ltd. in 1999, a company which operates a cement plant in Uganda. We also
  have a majority interest in Nouvelle Cimenterie d’Amboanio (“Sanca”)
  in Madagascar.

Zambia,
  Malawi and Tanzania. In 2001 we acquired Pan African Cement Ltd., which
  holds controlling stakes in Chilanga Cement plc (Zambia), Portland Cement Company
  (Malawi) and Mbeya Cement Company (Tanzania). Pan African Cement was consolidated
  from May 2001. The business was purchased from CDC Capital Partners, formerly
  the Commonwealth Development Corporation, which acquired the shareholdings as
  part of each respective government's privatization program.

Marine
  Cement.Marine Cement acts mainly as an importer and distributor of cement
  in Mauritius, Sri Lanka, the Maldives, Reunion and the Seychelles. Marine Cement
  sold 1.5 million tonnes of cement in 2002, the same volumes as in 2001
  and 2000. Marine Cement purchases its cement from our own subsidiaries, including
  Bamburi Cement in Kenya and Semen Andalas in Indonesia, and from third party
  suppliers.

Asia
  Pacific.In 2002, the Asia Pacific Region represented approximately
  14.1% of our cement sales. The Asia Pacific Region suffered a major downturn
  in cement sales in 1997, from which the region is only gradually recovering.
  We have taken advantage of the downturn to substantially boost our presence
  in the region, since we believe that long-term growth prospects for the region
  remain very favorable. The companies we consolidated sold 21.1 million
  tonnes of cement in the region in 2002 compared to 14.4 million tonnes
  in 2001 and 8.1 million tonnes in 2000.

The
  table below indicates the number of plants and our production capacity by country
  at December 31, 2002:

|Country     | Company                         |  | Number
      of Plants |  | Total Cement Production
      Capacity | 
|----------- | ------------------------------- |  | ---------------------- |  | -------------------------------------- | 
|            |                                 |  | Cement                 |  | Clinker
        Grinding               | 
|            |                                 |  |                        |  |                                        | 
|Malaysia    | Malayan
      Cement Berhad     |  | 3                      |  | 1                                      | 
|            |                                 |  |                        |  |                                        | 
|India       | Lafarge India
      Ltd.        |  | 2                      |  | 1                                      | 
|            |                                 |  |                        |  |                                        | 
|South Korea | Lafarge Halla
      Cement      |  | 2                      |  | 1                                      | 
|            |                                 |  |                        |  |                                        | 
|Philippines | Lafarge Philippines             |  | 6                      |  | 2                                      | 
|            |                                 |  |                        |  |                                        | 
|Indonesia   | P.T. Semen
      Andalas        |  | 1                      |  | N/A                                    | 
|            |                                 |  |                        |  |                                        | 
|China       | Beijing Chinefarge
      Cement |  | 1                      |  | N/A                                    | 
|            | Shunfa Lafarge
      Cement     |  | 1                      |  | N/A                                    | 
|            | Lafarge Dujiangyan
      Cement |  | 1                      |  | N/A                                    | 
|            |                                 |  |                        |  |                                        | 
|            | Total China                     |  | 3                      |  | N/A                                    | 
|            |                                 |  |                        |  |                                        | 
|Total Asia  |                                 |  | 17                     |  | 5                                      | 
|            |                                 |  |                        |  |                                        | 

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Malaysia.
  We operate in Malaysia through our majority owned subsidiary, Malayan Cement
  Berhad, which we acquired with our acquisition of Blue Circle. Malayan Cement
  Berhad is the leading cement producer in Malaysia. In 2002, Malaysia contributed
  approximately 30.0% of our cement sales in Asia Pacific. Our total installed
  capacity represented approximately 45% of the total rated clinker capacity in
  Malaysia, as estimated by the most recent edition of the Global Cement Report.
  Our three cement plants and our grinding plant in Malaysia are located to serve
  the whole of Malaysia and the export market. We exported approximately 29% of
  our production in 2002. We sold 5.5 million tonnes of cement in Malaysia
  in 2002 compared to 2.9 million tonnes of cement in 2001 (as with the rest of
  the former Blue Circle operations, sales in 2001 only represents the period
  consolidated from July 11, 2001 onwards). In 2002, the market remained positively
  oriented in the first half of the year, but it slowed slightly in the second
  half of the year due to the impact on the construction industry of the deportation
  of illegal foreign construction workers.

Our
  major competitors in Malaysia are Tasek Corporation, Renong, CMS Cement, Perak
  Hanjoong and Tenggara (which is 100% owned by Holcim).

India.
  In 2002, India represented approximately 20.2% of our cement sales in Asia Pacific.
  We initially entered the Indian market when we acquired the cement plants of
  the Tata Iron and Steel Co. cement division in November 1999. In January 2001
  we further expanded our operations when we paid approximately 112 million euros
  for the cement division of Raymond Ltd. which has a 2.2 million tonnes capacity
  cement plant located in Chattisgarh state. Following the Raymond acquisition
  we believe, based on our experience in this industry, we are the market leader
  in the Eastern region of India. Currently, there are no cement imports in India.
  We sold 3.9 million tonnes of cement in the region in 2002 compared to
  3.3 million tonnes in 2001 and 2.0 million tonnes in 2000. Our major competitors
  in the region are Associated Cement Company, Gujarat Ambura Cement Ltd., Larsen
  & Toubro, Grasim and Century.

South
  Korea. In 2002, South Korea represented approximately 15.5% of our cement
  sales in Asia Pacific. We acquired our 39.9% interest in Lafarge Halla Cement
  in January 2000. Our partners in Lafarge Halla Cement include the Halla Group
  and The State of Wisconsin Investment Board. We operate a cement plant located
  in the North East of the country on the Sea of Japan, and since May 2002, a
  clinker plant at Samchok , also in the North East of the country, which was
  acquired from KDB (Korea Development Bank). After a severe downturn in 1998
  and 1999 that saw consumption drop by almost a third, the cement market recovered
  in 2000 and stabilized in 2001. In 2002, the overall improvement of economic
  conditions translated into an increase of 8% of the cement consumption. In March
  2002 we formed a joint-venture between our 39.9% owned subsidiary Lafarge Halla
  Cement and Tong Yang Major Corporation, a Korean-based cement company. Under
  the terms of the joint-venture, Lafarge Halla Cement indirectly owns 24% of
  the equity of a new company called Tong Yang Cement Co. Ltd. Tong Yang Major
  Corporation holds 75% of the equity and has transferred its existing cement
  business, a single plant with a cement production capacity of 11 million tonnes
  per year as well as related indebtedness limited to USD 710 million, to the
  new company. Our share of the investment in Tong Yang Cement in 2002 amounted
  to 48 million euros.

Lafarge
  Halla Cement sold 7.2 million tonnes of cement in South Korea in 2002 compared
  to 6.5 million tonnes in 2001 and 5.8 million tonnes in 2000 (2.9, 2.6 and 2.3
  million tonnes in 2002, 2001 and 2000 respectively on the basis of our percentage
  on interest). Our major competitors in the country are Ssanyong, Sungshin, Hyundai
  and Hanil.

Philippines.In 2002, the Philippines represented approximately 16.8% of our cement sales
  in Asia Pacific. We operate in the Philippines through our wholly-owned subsidiary
  Lafarge Philippines and its holdings including those acquired with the acquisition
  of Blue Circle. We believe, based on our experience in this industry, that our
  holdings constitute together the largest producer of cement in the Philippines.
  We first entered the Philippines in 1998 when we acquired interests in both
  Continental Operating Corporation and South East Asia Cement Holdings Inc. (Seacem)
  whose principal plants are located on the island of Luzon near Manila. The four
  cement plants in which we acquired interests through the Blue Circle acquisition
  are located to serve metropolitan Manila, northern and southern Luzon, Visayas
  and Mindanao.



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Cement
  consumption in the Philippines is low by Asian standards, however, we estimate
  cement consumption has been growing at an average rate of over 7% per annum
  over the last decade and according to Global Cement Report
  estimates, the total cement market amounted to approximately 10.9 million tonnes
  in 2002. In 2002, we estimate that the domestic market grew significantly.

We
  sold 3.7 million tonnes of cement in the Philippines in 2002 compared to
  2.0 million tonnes in 2001 (as with the rest of the former Blue Circle operations,
  sales in 2001 only represent the period consolidated from July 11, 2001 onwards)
  and 1.6 million tonnes in 2000. Our major competitors in the country are Holcim
  and Cemex.

Bangladesh.
  In Bangladesh we conduct our operations through our majority owned subsidiary,
  Lafarge Surma Cement. After completing the initial site work in 2001, we are
  currently finalizing turnkey contracts for the construction of a 1.2 million
  tonnes greenfield plant on the Surma river for a total estimated project cost
  of 260 million euros. We expect the new plant to be financed, in part, through
  project financing arrangements with a syndicate organized by the World Bank
  and the Asian Development Bank.

Indonesia.
  We operate in Indonesia through P.T. Semen Andalas of which we acquired control
  in 1994. Our plant is located in Aceh at the Northern tip of Sumatra. Our major
  competitors are Gresik (in which Cemex has a 25.5% interest), Indocement and
  Cibinong (in which Holcim has an equity interest of about 77%). We sold 1.2 million
  tonnes of cement in Indonesia in 2002 compared to 1.1 million tonnes in 2001
  and 0,9 million tonnes in 2000.

China.We currently have two cement plants serving the Beijing market which we
  operate through our majority owned subsidiaries Beijing Chinefarge Cement Ltd.
  and Beijing Shunfa Lafarge Cement. We acquired our Shunfa plant in early 2002.
  The Chinese state development investment company and a Chinese cement company
  respectively hold 15% and 20% of Beijing Chinefarge Cement, and a local Chinese
  partner holds 30% of Beijing Shunfa Lafarge Cement. We have just completed the
  construction of a 1.4 million tonnes integrated cement plant in Chengdu in the
  Sichuan province and commenced commercial operations in mid 2002. The plant
  was financed, in part, through project financing arrangements with the World
  Bank.

We
  have also announced the signature of an agreementto purchase a 70% stake in
  the share capital of a cement plant in Chongqing, a town also situated in the
  Sichuan Province, and submitted the related joint-venture contract to the relevant
  Chinese authorities for regulatory purposes in January 2003. In addition to
  the acquisition cost of USD 30 million Lafarge is to invest USD 20 million in
  2003 and 2004 in order to modernize the plant and double its annual production
  capacity to 1.2 million tonnes.

Japan.
  In September 2001, our majority-owned subsidiary, Lafarge Japan Holding, paid
  70 million euros for a 39.4% of the equity of a new company, Aso Cement, Co.
  Ltd., which took over Aso Corporation’s cement related business assets,
  including two plants in Kyushu with a combined cement capacity of 3 million
  tonnes. We account for our 22.45% ownership interest in Aso Cement, Co. Ltd.
  using the equity method.

Trading Activities

In order to increase our international
  sales and explore new markets without the necessity of immediately making investments
  in new production facilities, we created our Cementia Trading subsidiary, a
  separate entity within Lafarge that focuses on cement trading. Through Cementia
  Trading we purchased and sold approximately 7.1 million tonnes of cement and
  clinker in 2002 (these volumes are included in the volumes reported sold by
  geographic zone above). Approximately 55% of this amount consisted of exports
  from our operations, including those in Greece, Malaysia and Romania, and the
  rest was purchased from third parties in Thailand, Indonesia,Venezuela and Saudi
  Arabia. Our trading network also enables us to distribute cement from countries
  where we have excess capacity to regions around the world where it is in demand.
  This helps us to maximize the capacity utilization of our facilities worldwide
  while reducing our exposure to the inherent cyclical nature of the cement industry.
  Our trading activities constitute a fundamental part of our strategic goals
  by allowing international development through careful, calculated steps, while
  at the same time satisfying worldwide demand where required.



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Capital Expenditures

Cement
  is a capital intensive business. In the periods ended December 31, 2002, 2001
  and 2000 our capital expenditures in the Cement division related to the on-going
  upgrading and modernization of existing industrial operations
  around the world and on organic growth through the building of new production
  facilities totaled 656, 883 and 557 million euros, respectively. We also invested
  approximately 1,337 million euros in the three-year period on various acquisitions
  that expanded our market and geographical presence. These exclude our acquisition
  of Blue Circle, for a combined total of 5,322 million euros and of 10% of the
  equity of Cimpor, the leading cement company in Portugal, for approximately
  311 million euros in 2000. Our capital expenditures in the Cement division accounted
  for approximately 56.1% of our overall capital expenditures in the three-year
  period.

The
  principal investments (in excess of 20 million euros) in the three-year period
  from 2000 to 2002 for the modernization or replacing of existing plants and
  equipment included:

| |  | North America: increased capacity
      at the former Blue Circle Roberta plant (Alabama) (2001 & 2002), increased
      capacity at the Sugar Creek plant (Missouri) (2000, 2001 & 2002), increased
      capacity at the Richmond plant (British Columbia) (2000) and construction
      of slag production and grinding facilities in Chicago (2000, 2001 &
      2002)
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Central Europe: conversion from fuel
      oil to pet coke usage in two plants in Romania (2000), construction of a
      new production line (dry process) in Kujawy, Poland (2001 & 2002)
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Mediterranean Basin: modernization
      of two plants in Morocco at Bouskoura and Meknes (2000 & 2001)
| | - | -------------------------------------------------------------------------------------------------------

| |  | Sub-Saharan Africa and Indian Ocean:
      increased capacity at the former Blue Circle plant at Ewekoro in Nigeria
      (2001 & 2002)
| | - | ---------------------------------------------------------------------------------------------------------------------------------------

| |  | Latin America: renovation of our plant
      in Ocumare, Venezuela (2000)
| | - | -------------------------------------------------------------------------

| |  | Asia Pacific: modernization of one
      plant in the Philippines (2000).
| | - | -------------------------------------------------------------------------

We
  are also constructing a new greenfield plant in Morocco at Tetouan, which we
  expect start operations in September 2003, in order to serve the northern region
  of the market. In Bangladesh, we plan to start construction of the plant in
  Chattak this year, and we expect it to be ready for operation by the end of
  2005. Our new greenfield plant in China (Sichuan province) started commercial
  operations in mid-2002.

In
  2003, the level of our capital expenditures will depend on general market conditions.
  We expect capital expenditures in the division to total approximately 450 to
  580 million euros, excluding new acquisitions. We intend to invest in projects
  that maintain or improve the performance of our plants. Our 2003 capital expenditures
  include portions of the cement plants and facilities in Morocco, Bangladesh
  and China. We also intend to take advantage in 2003 of selected acquisition
  opportunities.

We
  financed our capital expenditures in all of our divisions with operating cash
  flows which totaled 1.8 billion euros, 1.8 billion euros, and 1.5 billion
  euros in 2002, 2001 and 2000, respectively, while investments (capital expenditures
  and acquisitions net of proceeds of disposals) reached 0.8 billion euros,
  4.7 billion euros and 2.4 billion euros, respectively. The difference was funded
  through the divestments already mentioned and additional debt financing.

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Aggregates & Concrete

With
  sales of approximately 4.8 billion euros Aggregates & Concrete (including
  sales of our asphalt, road contracting and pre-cast concrete products) contributed
  32.6 % of our sales in 2002 and 15.8% of our operating income on ordinary activities.
  The Aggregates & Concrete division's after tax return on capital employed
  in 2002 was 6.7%. At December 31, 2002, we had 21,069 employees in the
  Aggregates & Concrete division.

Lafarge
  is a leading international supplier of aggregates, asphalt and ready mix concrete.
  On the basis of the volumes of concrete and aggregates sold in 2002, we estimate
  we are the world's second largest producer of aggregates and ready mix concrete
  with significant market positions in Western Europe and North America. At December
  31, 2002 the companies we consolidated (global and proportionate) operated 674 quarries
  and 1078 ready mix concrete plants in 23 countries. In addition, we
  also produce asphalt and pre-cast concrete products and we are active in road
  contracting and surfacing in North America and the United Kingdom.

In
  2002, the companies we consolidated (global and proportionate) had sales volumes
  of 206.9 million tonnes of aggregates and 35.4 million m3 of ready
  mix concrete. Taking into account 100% of the sales volumes of the companies
  we consolidate proportionally and the sales volumes of our equity affiliates,
  total volumes sold would have been 224.7 million tonnes and 40.6 million
  m3 respectively in 27 countries.

We
  manage our aggregates, concrete and asphalt businesses in the same division
  because:

| |  |  | the customer bases for these three product
      lines are similar,                                                                                                                                                                                                                  
| |  | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  | logistical constraints inherent to these businesses
      require the service of local markets through large numbers of operational
      units, and                                                                                                                                 
| |  |  | it is generally most efficient to produce
      ready mix concrete and asphalt at our aggregate quarries as this co-location
      allows us to share management, equipment, services and marketing and reduces
      our logistic costs, thus reducing our overall production costs.

We
  initially entered the ready mix concrete business as part of our strategy to
  vertically integrate our cement operations and subsequently expanded upstream
  into aggregates. Ready mix concrete producers are the largest consumers of cement
  in some of the major markets in which we are present. Vertical integration was
  pursued to better manage distribution channels, and to give us direct contact
  with the end-users of cement. We expanded into aggregates to secure the supply
  of raw materials and to profitably exploit our core competences in the geological,
  operational, environmental and regulatory aspects of quarrying operations which
  we had acquired through our cement operations. We have now expanded into asphalt
  in North America and the United Kingdom and this provides further outlets for
  our aggregates resources in a less cyclical business. Our goals for the coming
  years are to pursue a growth strategy in aggregates in developed countries and
  to improve our operational performance.

The
  table below indicates the breakdown of our sales by destination in 2002, 2001
  and 2000:

|                |  | Aggregates
      and Concrete Sales(1) by DestinationYear ended December 31, | 
|--------------- |  | ---------------------------------------------------------------------------- | 
|                |  |                                                                              | 
|Geographic Area |  | 2002                                                                         | 
|                |  |                                                                              | 
|                |  | (in
      million euros, except percentages)                                 | 
|Western Europe  |  | 1,856                                                                        | 
|North America   |  | 2,405                                                                        | 
|Other Zones     |  | 507                                                                          | 
|                |  |                                                                              | 
|Total           |  | 4,768                                                                        | 
|                |  |                                                                              | 

| |     |                                                                                       
| | --- | --------------------------------------------------------------------------------------
| | (1) | Including sales of our asphalt, road contracting
      and pre-cast concrete products.
| | (2) | Including the former Blue Circle operations
      from July 11, 2001.                 

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General Information Regarding
  Our Products, Industry and Markets

Our Products

Aggregate
  (sand, gravel and crushed rock) is used as a base material in roads, landfill
  and buildings and as raw material for concrete, masonry, asphalt and many industrial
  processes. In North America and the United Kingdom we also produce asphalt,
  which consists of dried aggregate mixed with a binding medium of 5-10% of heated
  liquid bitumen, a by-product of the petroleum refining process. Asphalt is used
  for road surfacing and paving and we act as road surfacing contractors.

Ready
  mix concrete (a blend of aggregate, water, cement and chemical admixtures) is
  used for a variety of applications from curbs and sidewalks to foundations,
  highways and buildings. Currently, we market a wide range of concrete mixes
  from industry standard mixes, with good tensile strength and durability, to
  specialty concretes which, for example, offer customers ease of placement under
  various weather or construction conditions, cost efficient/fit for purpose products
  and products with specific technical qualities. We have research and development
  resources dedicated to providing differentiated concrete mixes for specific
  purposes, and have recently developed two new products; Agilia®, which offers
  clients such qualities as superior coverage and filling abilities, self-leveling
  surfaces and enhanced durability and appearance, and Ductal® which is a
  ductile concrete, meaning it can “bend” without breaking, and which
  has ten times the compressive strength of traditional concrete. In North America
  and the United Kingdom we also produce pre-cast concrete products. Our pre-cast
  concrete products include paviers and paving slabs used in sidewalks and drives
  and concrete building blocks for residential and commercial construction.

Who buys the products of our Aggregates
  & Concrete division, our customer orders and backlog?

Our
  products are generally supplied at a local level directly to the end user and
  we sell to thousands of unaffiliated customers. Our customers for aggregates
  include ready mix concrete producers, manufacturers of pre-cast concrete products
  (pipes, curbs, building blocks, block pavers), asphalt producers, road contractors,
  masons and construction companies of all sizes. Aggregates also have numerous
  industrial applications and specialty aggregates are used, for example, by the
  steel industry and by numerous industrial, agricultural and manufacturing sectors.
  The primary customers for ready mix concrete and pre-cast concrete products
  are construction and road contractors of all sizes from major international
  construction companies to small residential builders, farmers or do-it-yourself
  enthusiasts. Asphalt is sold to road contractors for the construction of highways,
  driveways and parking lots and directly to state and local authorities.

We
  have no exclusive distribution or long-term supply contracts for ready mix concrete,
  pre-cast concrete products or asphalt, other than supply contracts to specific
  jobs which have been the subject of competitive tender. These are generally
  made on the basis of competitive prices in each market area, pursuant to telephone
  or written orders from customers on short notice who purchase quantities sufficient
  for their requirements. With regard to aggregates, we do have some requirements
  contracts for specific production plants manufacturing ready mix concrete, asphalt
  and pre-cast concrete products. These contracts tend to be negotiated annually.
  The amount of backlog orders, as measured by written contracts, is normally
  not significant.

Where do we get our aggregates
  and what are our reserves?

There
  are essentially three primary sources of aggregates: land-won sand and gravel,
  hard rock and marine sand and gravel. The production of recycled (recycled concrete
  or asphalt) and secondary (such as steel or mine waste) aggregates is also increasing.
  In 2002 approximately 59% of our production was hard rock and 41% was sand and
  gravel.

The
  different types of aggregate are generally substitutable, depending on their
  uses and the corresponding physical specification requirements (granularity,
  hardness, etc). The choice of aggregate for a particular purpose also depends
  largely on the local geology or availability. In certain areas only one or two
  types of aggregate will be readily available. As aggregates are expensive to
  transport relative to their price, the cost of transport will generally limit
  the availability of aggregates to what is readily accessible in the local area.

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The
  aggregate manufacturing process varies slightly depending on whether crushed
  rock or sand and gravel are used. The rock (usually either limestone or granite)
  is blasted from quarries and then crushed, ground and screened to meet end user
  specifications. Sand and gravel requires less crushing but as with rock also
  requires grading and screening to different sizes (generally 8mm to 80mm). Rock
  particularly can have different hardness and crushing characteristics which
  makes it suitable for higher specification uses (e.g. road building).

We
  currently estimate that we have control of approximately 9.2 billion tonnes
  of proven and authorized aggregates reserves in 2002. We have sustained the
  level of our reserves through various acquisitions and successful permit applications.
  We believe that the quantities of proven and authorized reserves at our aggregates
  facilities are sufficient to result in an average life in excess of 35 years
  at present operating levels. We also have access to considerable aggregate reserves
  for which we have either not yet requested or not yet received an extraction
  permit. We expect to gain the necessary permits for a significant portion of
  these in due course.

How are our ready mix concrete
  and pre-cast concrete products made and what are the costs of production?

Ready
  mix concrete generally consists of approximately 85 to 90% of dried aggregate
  which is combined with water and with 10-15% of cement and other cementitious
  substitutes that acts as a binding medium. Ready mix concrete is produced at
  light industrial plants. The plants comprise storage facilities for the main
  raw materials and equipment for combining the dry materials to the required
  specification. The concrete is either mixed at the plant or in special mixer
  trucks. One cubic meter in volume of ready mix concrete can be mixed utilizing
  standard machinery in about three minutes.

Special
  additives may be included to give concrete a particular quality. Computerized
  systems add requisite quantities of additives such as retarding or accelerating
  agents plus water during the mixing process. For example, one of the key ingredients
  of our patented Ductal® concrete is strands of metallic or organic fibers,
  which are a key component in its extraordinary compression and traction strength.

Ready
  mix concrete also has a service aspect involving the on-time delivery of the
  quantity and quality of product ordered at the location specified by the customer.
  This aspect of the business requires significant logistical know-how. In a typical
  ready mix concrete plant raw materials will comprise about 85% of total production
  costs. Raw material prices can vary considerably between the various markets
  in which we operate. Over half of the raw material costs relate to cement and
  in our ready mix concrete operations we have expended great efforts in adjusting
  our formulations to optimize our raw material usage for a given standard of
  concrete. Cement prices have not been volatile in our major markets in Western
  Europe and North America. In order to achieve greater flexibility and better
  control over our transportation costs we have increasingly moved toward subcontracting
  our transport operations and we now subcontract approximately 90% of our ready
  mix concrete transportation outside of North America.

In
  the manufacture of pre-cast block paving and concrete blocks the concrete is
  normally manufactured on site near a source of aggregates and both the paving
  units and the blocks are formed using mould boxes. The material is compacted
  either by pressure or vibration or a combination of the two. The paving and
  blocks are sold in standard sizes, which can vary between markets and the types
  of block are further differentiated according to their end use primarily by
  the materials from which they are manufactured: naturally occurring aggregates
  in the case of dense aggregate blocks, blast furnace slag/clinker or artificial
  aggregates in the case of light aggregate blocks and pulverized fly ash or sand
  in the case of autoclaved aerated blocks.

How is our asphalt made?

Asphalt,
  like ready mix concrete, is produced at light industrial plants. The plants
  comprise storage facilities for the main raw materials (bitumen and different
  grades of aggregates), equipment for combining and hot mixing the materials
  to the required specification and computerized systems for the addition of the
  requisite quantities of bitumen whilst the ingredients are mixed. Our asphalt
  plants range in output from 5,000 to 500,000 tonnes per year. Generally, asphalt
  consists of approximately 90 to 95% of dried aggregate with 5-10% of heated
  liquid bitumen that acts as a binding medium. Bitumen is a by-product of the
  petroleum refining process the price of which is tied to oil prices, which can
  be volatile.

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Our markets and industry

General. We have built up our aggregates and ready mix concrete businesses over
  a number of years but the most significant growth came with our acquisition
  of Redland in 1997 which almost doubled the size of our business. In addition,
  we often acquire new concrete and aggregate operations in connection with a
  cement acquisition. We endeavor to restrict our concrete and aggregate operations
  to countries where the nature and enforcement of regulations ensure that we
  are operating on a “level playing field” . We seek to avoid operating
  in countries where regulations are not enforced or non-existent and where local
  operators are not obliged to follow the same environmental and labor standards
  thus giving them an unfair competitive advantage.

In
  the Western European and North American markets, where we have the bulk of our
  operations, the levels of aggregates, asphalt and ready mix concrete demand
  at a national level generally move in line with the consumption of cement. Demand
  is seasonal and tends to be less in the winter months in temperate countries
  and in the rainy season in tropical countries.

As
  with cement, the aggregates, asphalt and concrete industries are cyclical and
  dependent on the level of activity in the construction industry and level of
  public infrastructure spending. However, it is not economical to ship aggregates
  over large distances and ready mix concrete and asphalt cannot be transported
  over distances that involve more than about one hour of traveling time. Furthermore,
  apart from a few “specialized products” , aggregates, asphalt and
  ready mix concrete are essentially viewed as a commodity. Brand recognition
  and loyalty thus play little role in sales of any of these products. The determining
  factors in the selection of an aggregate, ready mix or asphalt producer are
  thus locality, quality, reliability of service and price rather than brand.
  Demand for all of these products is very fragmented as choice of provider and
  supply takes place within a local market. Demand for aggregates, concrete and
  asphalt thus depends on micro-market conditions and can vary dramatically within
  a national market.

Aggregates.The competitive situation in aggregates is favorable to incumbent producers,
  as the opening of new aggregate sources is constrained by environmental and
  planning laws in many countries. Aggregate producers do frequently have a competitive
  advantage in those local markets where there are limited aggregate reserves.
  Nevertheless, substantial aggregates capacity is already in operation in most
  markets. Additionally, to the extent that new permits can be obtained and deposits
  are available, moderate capital investment is required to bring additional aggregate
  sources into production.

We
  estimate that the cost of a new plant and equipment to extract and process industrial
  minerals for a typical small quarry with an output of 250,000 to 500,000 tonnes
  per annum would be of the order of 2 million euros. With a large quarry with
  an output in excess of 1 million tonnes per annum costs would rise to 7 to 25
  million euros while a super quarry may cost in excess of 45 million euros. These
  figures exclude site and mineral costs.

We
  believe we have a strong competitive position in aggregates. Our market positions
  and operational expertise enable us to optimize returns from our investments.
  We are continuously seeking to improve our operational performance through performance
  improvement programs. We believe our knowledge of the construction markets enables
  us to ensure that we acquire only well located reserves and businesses and we
  believe that our environmental reputation for responsible land restoration enables
  us to obtain new permits more easily and encourages landowners to deal with
  us as operator of choice.

Ready
  mix concrete. Ready mix production has relatively few barriers because
  of the low capital outlay required and the fact that the raw materials are generally
  plentiful and competitively priced. The concrete business in each micro market
  thus tends to be price constrained by the ability of competitors to quickly
  bring new capacity to market.

In
  each country in which we operate we aim to place our ready mix concrete plants
  in clusters in each micro market in which we operate in order to optimize our
  delivery flexibility, capacity and backup capability. The capacity of our plants
  varies depending upon market circumstance from 5 to 300 thousand m3. We evaluate
  each micro market in which we operate periodically and dismantle and move plants
  to locations where they can be used more profitably if we find a micro market
  is suffering from overcapacity or a falling market.

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Recently we have increased the number of mobile plants
  we operate since these plants can be moved more easily and have the flexibility
  to be placed on temporary sites (including our clients' sites) to meet local
  peaks in demand.

We
  believe that developing new ready mix concrete products, such as Ductal ®
  and Agilia ®, will enable us to increasingly compete on the basis of quality
  and product differentiation. We also believe that by providing better technical
  support and service than our competitors we can differentiate ourselves on the
  basis of level of service and charge a corresponding premium. Our performance
  improvement program in our ready mix concrete operations has continued to provide
  benefits of improved performance as through its ongoing implementation.

Asphalt.
  As with ready mix concrete, it is essential to deliver asphalt in usable form
  to the customer within a short period of mixing and customer sites are thus
  generally located within relatively short distances of the asphalt plant. The
  asphalt will usually be mixed from early morning and throughout the day for
  delivery to the road construction site at intervals to enable the contractor
  to maintain a steady flow of work. Sales are on the whole made directly between
  the asphalt producer and the customer, with only very limited use of intermediate
  distributors or agents since prompt and reliable delivery in insulated vehicles
  is a key element of the service provided by asphalt companies to their customers.
  We subcontract delivery of the asphalt to “owner/operators” who
  provide a full haulage service. However, asphalt has a higher entry cost requirement
  than ready mix concrete as the capital cost of a typical asphalt plant is around
  1.2 million euros in comparison to 400,000 euros for a ready mix concrete plant.

Our Geographic Markets

Our major markets in Western Europe
  are France and the United Kingdom, which represented approximately 48.7% and
  32.5 %, respectively, of our Aggregates & Concrete sales in this area in
  2002. We are also present in Germany, Austria, Greece and Italy and through
  a joint venture with RMC in Spain and Portugal. In North America our primary
  markets are in Eastern and Western Canada, Colorado, New Mexico, Kansas, Louisiana,
  Missouri, Ohio, Maryland, Pennsylvania, West Virginia, Wisconsin, Georgia and
  Alabama. We also have operations in Turkey, South Africa, Poland, Romania, Hungary,
  the Middle East, Morocco, China, Malaysia and Singapore. In Central and Southern
  America we have operations in Brazil, Venezuela and Chile.

In
  aggregates and ready mix concrete we regularly acquire small independent operators.
  From time to time we acquire larger operations when the opportunity arises and,
  additionally, assume control of aggregates and concrete assets which have been
  acquired via larger cement acquisitions. For example, the Blue Circle acquisition
  in 2001 brought not only significant aggregates and ready mix positions in Georgia
  and Alabama in North America, but also positions in Greece, Malaysia, Singapore
  and Chile.

In
  2002 we disposed or shutdown most of our ready mix concrete plants in Germany
  in reaction to several years of market shrinkage. We also downsized our ready
  mix concrete presence in Brazil and Greece.

The
  following table shows our volumes and number of sites, broken down by geographic
  area, for 2002. The sales volume figures we have provided for each country or
  geographic zone are the total volumes sold in each particular country or zone
  by all of our consolidated subsidiaries, including volumes sold to our other
  divisions and adjusted to reflect our percentage of interest in our proportionally
  consolidated subsidiaries.

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|                | Number
      of Sites      |  | Volumes
      Sold in 2002 | 
|--------------- | -------------------------- |  | -------------------------- | 
|                |                            |  |                            | 
|Geographic Area | Aggregates                 |  | Ready mixconcrete          | 
|                |                            |  |                            | 
|                | At December 31,
      2002 |  | (in million tonnes)        | 
|Western Europe  | 216                        |  | 560                        | 
|France          | 133                        |  | 252                        | 
|United Kingdom  | 57                         |  | 105                        | 
|Spain/Portugal* | 20                         |  | 159                        | 
|Greece          | 3                          |  | 27                         | 
|Other           | 3                          |  | 17                         | 
|North America   | 385                        |  | 294                        | 
|Canada          | 283                        |  | 157                        | 
|United States   | 102                        |  | 137                        | 
|Other Zones     | 73                         |  | 224                        | 
|South Africa    | 20                         |  | 40                         | 
|Brazil          | 4                          |  | 43                         | 
|Chile           | 2                          |  | 33                         | 
|Malaysia/Sing.  | 1                          |  | 42                         | 
|Turkey          | 4                          |  | 26                         | 
|Other           | 42                         |  | 40                         | 
|                |                            |  |                            | 
|Total           | 674                        |  | 1,078                      | 
|                |                            |  |                            | 

|* | Our Spanish and Portuguese operations
      are conducted through a joint venture with RMC plc.
|- | -----------------------------------------------------------------------------------------------

In
  North America, Western Europe and in emerging markets, we face competition from
  numerous independent operators. However, the aggregates industry in particular
  has started to consolidate and we face competition from regional and international
  producers such as Vulcan Materials and Martin Marietta Materials in the United
  States and Hanson and CRH internationally. In the United Kingdom this process
  of consolidation has reached the stage where the five major producers control
  approximately 75% of the market.

In
  ready mix concrete the tendency towards consolidation is less pronounced but
  we still face competition from firms such as RMC, HeidelbergCement, Holcim,
  Hanson, CRH and CSR both in North America and internationally. Our strategy
  of vertical integration of concrete and cement operations has also been followed
  by our major competitors in the cement markets such as Holcim, Cemex and CRH
  and in the other direction by RMC.

Capital Expenditures

Capital
  expenditures in the periods ended December 31, 2002, 2001 and 2000 in the Aggregates
  & Concrete division related to the on-going upgrading and modernization
  of existing industrial operations around the world and on organic growth through
  the building of new production facilities totaled 204 , 256 and 222 million
  euros. We also invested approximately 483 million euros in the three-year
  period on various acquisitions that expanded our market and geographical presence.
  Our capital expenditures in the Aggregates & Concrete division accounted
  for approximately 18.3% of our overall capital expenditures in the three-year
  period.

Due
  to the micro-market nature and low capital cost of the aggregates and concrete
  industry, there were no individual investment projects in Aggregates & Concrete
  which exceeded 20 million euro in the three-year period from 2000 to 2002.

In
  2003, the level of our capital expenditures will depend on general market conditions.
  We expect capital expenditures to total approximately 170 to 240 million
  euros, excluding new acquisitions.We intend to invest in projects that maintain
  or improve the performance of our plants. We also intend to take advantage in
  2003 of selected acquisition opportunities.

For
  information about our financing of capital expenditures, see “Capital
  Expenditures ― Cement” above.

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Roofing

In
  2002, sales of the Roofing division amounted to approximately 1.5 billion
  euros. Roofing represented 10.5% of our sales in 2002 and 6.2% of our operating
  income on ordinary activities. The Roofing division's after tax return on capital
  employed in 2002 was 4.2%. At December 31, 2002 we had 12,102 employees in the
  Roofing division.

We
  acquired our roofing business in December 1997 as part of our acquisition of
  Redland and we believe, based on our experience in this industry, we are the
  world’s largest producer of concrete and clay roof tiles. At the end of
  2002, the companies we consolidated (global and proportionate) operated 159 production
  sites in 32 countries. Including the companies we account for by the equity
  method, our roofing operations consisted of 208 production sites in 38 countries.
  We are principally based in Western Europe (which represented 75.6 % of
  our sales in 2002) but we are also present in North America, through a joint
  venture with Boral, which represents 7.9 % of our total roofing sales,
  and are expanding into other regions including Asia Pacific, which currently
  represent 16.5 % of our sales.

We
  estimate we provide enough roofs tiles to cover around 1.6 million buildings
  per year and the companies we consolidated (global and proportionate) sold 127.3 million
  m2 of concrete roof tiles, 24.7 million m2 of clay
  roof tiles and 2.7 million meters of chimneys in 2002. Taking into account
  100% of the sales of the companies we consolidate proportionally and the sales
  of our equity affiliates, total volumes sold in 2002 at 100% would have been
  171.9 million m2 of concrete roof tiles, 38.7 million m2
  of clay roof tiles and 2.7 million meters of chimneys, respectively.

Our
  goals for the coming years are to consolidate our positions in Europe in concrete
  roof tiles, clay roof tiles and roofing components and to develop progressively
  in emerging countries.

The
  table below indicates the breakdown of our sales by destination in 2002, 2001
  and 2000:

|                | Roofing Sales
      by Geographic AreaYear ended December 31, | 
|--------------- | ------------------------------------------------------------- | 
|                |                                                               | 
|Geographic Area | 2002                                                          | 
|                |                                                               | 
|                | (in million
      euros, except percentages)                  | 
|Western Europe  | 1,162                                                         | 
|North America   | 121                                                           | 
|Other Zones     | 255                                                           | 
|                |                                                               | 
|Total           | 1,538                                                         | 
|                |                                                               | 

We
  have a significant presence in emerging markets (we define emerging markets
  as our Other Zones excluding Japan, Australia and New Zealand).

Our Roofing Products and Their
  Applications

Our
  roofing products are designed for pitched roofs. Pitched roofs are the traditional
  form of European roofing and predominate in the residential market in Western
  Europe and North America. Pitched roofs are generally covered with tiles, shingles,
  metal sheets, metal tiles or fiber cement. Flat roofs are most commonly used
  in commercial buildings, but are also used in some residential structures, such
  as the row houses of the U.S. Eastern seaboard cities. Flat roofs are normally
  covered with roofing felt and tar and products designed for pitched roof are
  not common on flat roofs.

A
  pitched roof is generally far more expensive to install than a flat roof both
  in terms of materials and labor costs but has a longer life expectancy, with
  clay or concrete tile roofs lasting up to 50 years as compared to the 10-15
  year average for a flat roof.

Roofing
  material markets are characterized by regional needs and traditions. Climatic
  conditions and historic availability of building materials have led to a diversity
  of building traditions between regions.

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Depending on the region, not only do the pitch and construction
  of the roofs vary, but also the profile, material and color of the roofing materials.
  In Europe, concrete and clay tiles dominate the pitched roof market, but the
  style of tile varies considerably between each country. In North America the
  market has traditionally favored low-cost, easily installed cladding materials
  such as asphalt shingles for pitched roofs, which have a shorter life span.

Roofing Products.Our roofing products
  represented approximately 89.2 % of our total sales in the Roofing division
  worldwide. We offer a line of products that comprise entire roofing systems
  providing complete solutions for pitched roofs including:

| |  | Roof tiles.Sales of roof tiles represent
      approximately 68.1% of our overall sales in roofing. Through innovation
      in production and coating technology, we offer a wide spectrum of shapes,
      profiles, surfaces and colors, to meet varying aesthetic, quality and durability
      demands. Recent innovations include improved dirt-repellant surfaces, longer
      color durability, expanded color offerings, as well as larger sizes of tiles
      to achieve greater construction efficiencies on-site. There are generally
      two varieties of materials for roof tiles: concrete and clay.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  | Concrete tiles.Concrete tiles represent
      approximately 51.5 % of our overall sales in the division. Our concrete
      tiles range from classic red monocolored polymer coated tiles to premium
      tiles, which have the same appearance as traditional clay designs, wood
      shingles and slates. The principal advantages of concrete are its durability,
      its general cost-effectiveness and the widespread availability of raw materials
      for its manufacture. Concrete roof tiles are used worldwide, particularly
      by residential building contractors. Usually, ten concrete tiles are laid
      per m2, but there can be as few as seven tiles per m2for
      larger sizes or as many as 60 in the case of small format plain tiles.

| |  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  | Clay tiles.Clay tiles represent approximately
      16.6 % of our overall sales in the division. We offer a variety of sizes
      and surfaces of clay tiles, ranging from large format tiles (10-13 tiles
      per m2) and medium-size and light profile tiles (13-17 pieces
      per m2) to small format tiles (20-60 pieces per m2).
      In addition, we offer a variety of surface finishes, ranging from mono-colored
      to multi-colored tiles that simulate the effect of old tiles, as well as
      premium-glazed tiles.

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Roofing Components.Sales of roofing
      components represent approximately 21.1 % of our overall sales in the division.
      In order to provide complete roofing solutions, we also offer a range of
      complementary products and services to our customers. These include a large
      number of components and accessories that cover all functional aspects of
      roof construction, such as safety gratings, snow guard tiles, ventilation
      underlays, skylights, and prefabricated roof elements. In addition, we also
      offer photovoltaic and solar thermal installations that generate electricity
      and warm water, respectively. In 2001, we acquired the metal roof tile producer
      Kami, with operations in Scandinavia and Eastern Europe and, since 2002,
      in the United Kingdom.

Chimneys.Sales of chimneys represent approximately 10.8 % of our overall sales in
  the division. Based on internal estimates, we believe, based on our experience
  in this industry, we are currently the leading manufacturer of chimney systems
  in Europe, offering both ceramic and steel models.

Our
  chimney products can be divided into two principal categories: mineral-based,
  or ceramic, systems and metal-based, or steel, systems. Our product range in
  ceramic chimneys comprises ready-to-install insulated chimneys (comprising flue
  liner, insulation and blockstones) and ventilation systems as well as a fully
  developed range of complementary accessories. We also offer restoration products
  for chimneys and steel chimney systems in Italy. We manufacture approximately
  88 % of our chimney products in our own factories.

Recent
  innovations include multi-wall insulated chimneys with cavity ventilation that
  prevent against moisture damage, and isostatic ceramic liners that are more
  resistant to temperature variations.

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Where and how our roofing products
  are manufactured and our raw materials

Concrete
  tiles. Concrete tiles are manufactured out of sand-based concrete mix by
  extrusion onto individual molds or pallets. Several layers may be added, by
  extrusion or other means, to obtain a variety of surface textures and colors
  on the weather side of the tiles. Once dried, the tiles are removed from the
  molds and after two to four weeks of curing are ready for installation. Our
  simple tiles are made out of a single layer of concrete whereas several layers
  of concrete may be used in our most expensive tiles. Raw materials amount to
  approximately 50% of our total production costs including depreciation, and
  we have spent a great deal of effort on improving our formulations to optimize
  our use of raw materials as well as introducing practices to improve the quality
  of our finished products. Based on historic trends we do not consider the prices
  of these raw materials to be volatile. Depreciation, direct labor and fixed
  costs represent about 47% of our total production costs. Energy represents less
  than 3% of our total production costs.

At
  December 31, 2002, the companies we consolidated (global and proportionate)
  operated 102 production sites devoted to the manufacture of concrete tiles,
  with a total maximum capacity based on full shifts of 540 million m2.
  The average capacity of our plants is 5.3 million m2. We depreciate
  our new plants on a straight line basis over 20 years. The average capital investment
  for a new plant today would be between 4 and 20 million euros depending on the
  location, capacity, degree of automation and product range. Because of freight
  costs and design differences, most of our concrete tile plants are designed
  to supply a regional market.

Clay
  tiles. Clay tiles are manufactured out of a mix of natural clays, molded
  under pressure and fired in a tunnel kiln at high temperatures. Various types
  of finishes can be achieved for different applications through surface coatings.
  The newer production processes (so called “H Cassette”) require
  significant capital investments, but result in higher quality tiles that can
  be produced in larger sizes. The quality and delivered cost (from the quarry
  to the plant) of clay is critical to the quality of end-product and cost performance
  of the plant. Ownership or control of high-quality clay deposits near the plant
  is determinative of the plant’s overall performance. However, raw materials
  costs are a smaller proportion of our costs than in concrete tiles, representing
  approximately 18% of our total production costs. Based on historic trends we
  do not consider the prices of these raw materials to be volatile. We either
  extract clay from our own reserves or have secured long-term supply contracts
  that endure over the expected life of the relevant plants. Depreciation, direct
  labor and fixed costs represent approximately 67% of our total production costs.
  Due to the use of kilns in manufacturing, energy costs are significant, amounting
  to about 15% of our total costs.

At
  December 31, 2002, the companies we consolidated (global and proportionate)
  operated 23 plants devoted to the manufacture of clay tiles, with a total
  maximum capacity based on full shifts of 39 million m2. The
  average capacity of our plants is 1.7 million m2. The average
  capital investment for a new clay tile plant today would be approximately 40
  to 50 million euros for a capacity of 2 million m2. We depreciate
  our new plants on a straight line basis over 20 years. The geographic reach
  of sales from a given plant is usually restricted by the design of tile which
  it produces and the geographic market for that design. Freight costs have less
  of an influence because of the higher prices charged for clay tiles.

Roofing
  Components.We manufacture or purchase from manufacturers a variety of roofing
  components. Each production process is specific to the type of accessory.

Chimneys. We have 19 production sites devoted to manufacturing chimneys, 6 of
  which are in Germany and the remainder of which are located in Europe. The total
  maximum capacity based on full shifts of our chimney plants is 6.3 million meters.
  Most of our mineral-based chimney products consist of a simple blockstone reinforced
  with a three-layered product comprising a ceramic flue liner, a mineral wool
  insulation and a light weight concrete blockstone. Our mineral-based chimney
  products are delivered either as single parts to be assembled by the mason on
  site or as prefabricated story-high chimneys which can be mounted on the site
  without specialists. Our metal-based chimneys are constructed mainly from stainless
  steel and small amounts of aluminum. The basic construction principles are the
  same as those used in the manufacture of mineral-based chimney systems.

In
  addition, we offer all the accessories necessary to assemble a chimney on the
  building site, including a flue gas connection to the boiler, cleaning doors,
  condensate handling, chimney coverage, glue, mortar and top cover plate. These
  accessories are provided to the customer as prepackaged kits.

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Who buys our roofing products,
  our customer orders and backlog?

We
  believe in establishing long-term relationships with our ultimate customers,
  the building owners, as well as the professionals who cater to them:

| |  | Home owners,                  
| | - | ------------------------------
| |  | Roofing contractors,          
| |  | Architects,                   
| |  | House builders and developers,
| |  | Housing associations,         
| |  | Local government and planners,
| |  | Retailers and merchants,      
| |  | Chimney constructors.         

In
  general, we distribute our products through building products merchants or specialized
  merchants based on current orders. Thus, we do not have a significant backlog.
  In the ordinary course of our business, we usually keep an inventory of finished
  products, in constant turnover, that represents on average slightly more than
  one month of sales, which is mostly due to the curing time of two to four weeks
  to achieve the required strength of the tiles depending on the region and climatic
  conditions.

Our Markets and Industry

Producers
  of roofing products compete primarily on a regional basis and based on factors
  such as price, product quality and customer service. Concrete and clay tiles
  compete against a variety of products in different markets: asphalt shingles
  in the U.S. residential market, fiber cement and corrugated steel in the low-end
  residential segment of developing countries, fiber cement and metal in the non-residential
  sector worldwide, slate in the high-end residential segment in Western Europe
  and in the Northeastern United States. We envision market growth potential in
  developing countries in Asia, South America and Eastern Europe where construction
  activity is expected to increase and to a lesser extent also in North America.

The
  demand for roofing products is linked to overall construction activity within
  a given region, population (measured by the number of households) and demographic
  growth, economic development and growth in average household income, climatic
  conditions, governmental regulations, insurance regulations (e.g. fire protection),
  and availability and affordability of land for new construction. In general,
  demand in developing countries tends to be driven in large part by utility and
  durability, whereas aesthetics tends to be a more significant factor in more
  developed countries.

Western
  European markets are seeing a relative stable market for renovation while the
  new-built markets are declining in many countries. Also we are detecting a growing
  trend towards the utilization of clay tiles. While clay is generally more expensive
  than concrete, it is perceived as having greater decorative value. Clay roof
  tiles are increasingly being used in Northern Europe, mostly for upscale renovations
  of individual houses. Clay roof tiles are also the traditional roofing materials
  in Southern Europe, especially in the Mediterranean region, and Asia. It is
  therefore selected mainly for aesthetic reasons and to preserve architectural
  traditions.

In
  the emerging markets where we operate, we have benefited from the substitution
  of tiles for less expensive corrugated metal and cement fiber products. Developing
  long-term solutions to improve appearance is critical if we want to maintain
  the competitiveness of our concrete tiles in these emerging markets.

The
  seasonality of demand for roofing products parallels that of the construction
  industry at large. Demand is far more seasonal in areas with cold winters than
  in areas with more temperate climates. In our primary markets in Western Europe
  our sales are lower in winter than during the rest of the year.

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Who are our competitors?

According
  to our own internal estimates, we believe, based on our experience in this industry,
  we are the clear market leader in Europe in pitched roofing products. Our principal
  competitors in Europe for pitched roofing products are Etex, Imerys, Terreal
  (Saint Gobain), Uralita, Koramic (the tile business of which will be acquired
  by Wienerberger in 2003) and Creaton. In the European market for chimneys, we
  believe, based on our experience in this industry, we are also the market leader,
  followed by Selkirk, Poujoulat, and Plewa.

We
  believe, based on our experience in this industry, that our Monier Lifetile
  joint venture has more than 50% of the North American market for concrete tiles.
  However, we estimate that concrete and clay tiles represent only around 6% of
  the pitched roofing market in North America. Asphalt shingles represent over
  85% of the total pitched roofing market in North America and the primary manufacturers
  are Owens Corning, GAF and Certain Teed (Saint Gobain). We are currently not
  present in the North American market for chimneys.

Our Geographic Markets

In
  the discussion that follows, we describe market conditions and our competitive
  position in the principal geographic areas in which we operate. The sales volume
  figures we have provided for each country or geographic zone are the total volumes
  sold in each particular country or zone by our consolidated subsidiaries, including
  volumes sold to our other divisions and adjusted to reflect our percentage of
  interest in our proportionally consolidated subsidiaries.

The
  following table illustrates our business operations by geographic zone at December
  31, 2002:

|                      |  | Number
      of Plants       | 
|--------------------- |  | ---------------------------- | 
|                      |  |                              | 
|Geographic
      Area |  | Concrete
        Tiles       | 
|                      |  |                              | 
|                      |  | At
        December 31, 2002 | 
|                      |  |                              | 
|Western Europe        |  | 46                           | 
|Germany               |  | 12                           | 
|United Kingdom        |  | 9                            | 
|France                |  | 5                            | 
|Italy                 |  | 9                            | 
|Other Europe          |  | 11                           | 
|North America         |  | 13                           | 
|Other Zones           |  | 43                           | 
|Eastern Europe        |  | 13                           | 
|Asia/Pacific          |  | 20                           | 
|Latin America         |  | 3                            | 
|Africa /Indian Ocean  |  | 6                            | 
|Mediterranean Basin   |  | 1                            | 
|                      |  |                              | 
|Total                 |  | 102                          | 
|                      |  |                              | 

Concrete and Clay Tiles and
  Roofing Components

Western Europe

We
  believe, based on our experience in this industry, we are the market leader
  in Western Europe, which represented approximately 75.6 % of our total roofing
  products sales worldwide, and which is the first market where we established
  our presence. We sold 71.2 million m2of concrete tiles and 23 million
  m2of clay tiles in the region in 2002. Our four principal markets
  in this region are Germany, the United Kingdom, France and Italy.

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In
  Germany, which represented in 2002 approximately 38.6 % of our roofing products
  sales in Western Europe, we have been facing declining volumes in concrete tiles
  and we have closed down three of our older plants in the past three years.
  These plant closures have allowed us to focus our operations on our most efficient
  plants and reduce our surplus capacity. We have also introduced new products
  such as our Star surface, a concrete tile with a smoother surface. In 2001,
  we restructured our German roofing business by merging our concrete and clay
  tile activities in a single organizational structure while retaining Braas and
  RuppKeramik as product brands. We have also expanded our roofing components
  activities with the acquisition of Kloeber, a large roofing accessories producer.

We
  have restructured our operations in France, Italy and the Netherlands by closing
  down older small-scale plants while expanding capacity at our more modern operations
  and constructing a new clay tile plant in Southern Italy, that became operational
  in June 2001. In 2001, we acquired the metal roof tile producer Kami with operations
  in Scandinavia and Eastern Europe and, since 2002, in the United Kingdom. We
  are also present in Austria, Belgium, Denmark, Finland, Norway, Portugal, Spain,
  Sweden and Switzerland.

North America

North
  America is our second most important regional market, after Europe, for pitched
  roofing products. In 2002, our sales of concrete roofing tiles and roofing accessories
  in North America accounted for 7.9 % of our total sales in roofing products
  worldwide. We operate in North America through our jointly controlled American
  subsidiary, Monier Lifetile LLC which was formed in 1997 as a 50/50 joint venture
  between Redland's subsidiary Monier Inc., which it had acquired in 1987 and
  Boral Lifetile Inc a subsidiary of Boral Limited of Australia. The company is
  the largest manufacturer of premium-quality concrete roof tiles in the United
  States. Currently, Monier Lifetile has 13 active concrete tile manufacturing
  plants in the continental United States, located principally in the Sunbelt
  states. A new plant in Denver was opened last year.

Other Zones

Our
  most substantial presence is in Asia where we are present in Malaysia, Japan,
  China, Indonesia, Cambodia, Philippines, India and Thailand. We have been expanding
  our presence in Asia and we now have six concrete tile plants in China and we
  opened a new clay tile plant in Malaysia in 2002. In 2002, we and Cementhai
  Building Products (member of the Siam Cement Group) set up a joint venture for
  the manufacturing of clay roof tiles in Thailand. We have also been expanding
  into Eastern and Central Europe. In 2002, we opened a clay roof tile plant in
  Hungary. This is one of our main markets in this region beside Czech Republic,
  Poland and Russia. We also have operations in Bulgaria, Croatia, Estonia, Macedonia,
  Slovakia and Slovenia. We have a presence through sales/ administrative offices
  in Bosnia-Herzegovina, Latvia, Lithuania, Romania, Ukraine and Yugoslavia. We
  are present in South and Central America where we have started operating four new
  plants in Brazil in the last three years including our acquisitions in 2001
  of the clay roofing tile business of Ceramica Laranjal Paulista and of a concrete
  plant. In total, we operate three concrete roof tile plants and one clay roof
  tile plant in Brazil. We also have extended our operations in Mexico through
  our investment in local companies. We have substantial operations in South Africa
  where we sold 5.6 million m2of tiles in 2002. We began operations
  in Turkey in 1998 with the construction of a single concrete tile plant and
  we intend to expand our operations in Turkey in the future.

Chimneys

Our
  Schiedel chimney business accounted for 10.8% of our total sales in the Roofing
  division worldwide. We believe, based on our experience in this industry, we
  are Europe’s leading chimney producer and we are four times the size of
  our closest competitor. We have production plants in 12 European countries and
  sales offices in 18 countries. We are the technical leader in ceramic chimneys
  in Europe.

Capital Expenditures

Capital
  expenditures in the periods ended December 31, 2002, 2001 and 2000 in the Roofing
  division related to the on-going upgrading and modernization of existing industrial
  operations around the world and on organic growth through the building of new
  production facilities accounted for 88 million euros, 118 million euros and
  144 million euros, respectively. We also invested 111 million euros on various
  acquisitions over the three-year period to expand our geographical presence
  and strengthen our product range. This excludes the acquisition of the minority
  shareholders of Lafarge Braas. Our capital expenditures in the Roofing division
  accounted for approximately 9.4% of our overall capital expenditures in the
  period.

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The
  only investment in excess of 20 million euros in the three-year period from
  2000 to 2002 for the modernization or replacing of existing plants and equipment
  was the construction of a new clay tile plant in Southern Italy which was completed
  in 2000 and became operational in 2001.

In
  2003, the level of our capital expenditures will depend on general market conditions.
  We expect capital expenditures to total approximately 65 to 95 million
  euros, excluding new acquisitions. We intend to invest in projects that maintain
  or improve the performance of our plants. We also intend to take advantage in
  2003 of selected acquisition opportunities.

For
  information about our financing of capital expenditures, see “Capital
  Expenditures ― Cement” above.

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Gypsum

In
  2002, our sales amounted to 1.1 billion euros. Gypsum represented approximately
  7.8% of our sales in 2002 and 2.4% of our operating income on ordinary activities.
  The Gypsum division's after tax return on capital employed in 2002 was 3.6%.
  At December 31, 2002 we had 5,319 employees in the Gypsum division.

On
  the basis of square meters of wallboard produced in 2002, we believe, based
  on our experience in this industry, we are the third largest manufacturer worldwide.We
  first entered into the market for gypsum products in 1931, with production of
  powdered plaster. We have since extended our product lines, and currently manufacture
  gypsum wallboard, gypsum plasters, plaster block, industrial plasters and anhydrite
  binders for self-leveling floor screeds.

At
  December 31, 2002, the companies we consolidated (global and proportionate)
  operated 67 industrial sites in 22 countries. Of these, 33 were wallboard plants
  with a total production capacity of approximately 888 million m2,
  31 were plants where we produced other plaster products, such as plaster, plaster
  block and jointing compound, and 3 were plants which produced paper. If all
  of the plants in which we have an equity interest are included, our gypsum operations
  include 75 industrial sites in 23 countries.

Our
  goals for the coming years are to develop our presence in strong growth markets,
  to consolidate our position in the U.S. market, reduce costs and improve our
  marketing.

The
  table below indicates the breakdown of our sales by destination in 2002, 2001
  and 2000:

|                        |                                              | Gypsum Sales
      by Geographic AreaYear ended December 31, | 
|----------------------- | -------------------------------------------- | ------------------------------------------------------------ | 
|                        |                                              |                                                              | 
|Geographic
        Area |                                              | 2002                                                         | 
|                        |                                              |                                                              | 
|                        | (in million
      euros, except percentages) |                                                             
|Western Europe          |                                              | 604                                                          | 
|North America           |                                              | 245                                                          | 
|Other Zones             |                                              | 297                                                          | 
|                        |                                              |                                                              | 
|Total                   |                                              | 1,146                                                        | 
|                        |                                              |                                                              | 

We
  have been actively expanding our gypsum operations in emerging markets. We define
  emerging markets as those countries in our other geographical zones, excluding
  Japan, Australia and New Zealand. In 2002, we generated revenues of 235 million
  euros in emerging markets compared to 248 million euros in 2001 and 203 million
  euros in 2000. Emerging markets amounted to 20.5% of our total revenues in gypsum
  worldwide in 2002 compared to 23.1% in 2001 and 20.3% in 2000.

Our Gypsum Products and Their
  Applications

The
  predominant gypsum product sold in the global market is gypsum wallboard or
  plasterboard. Gypsum wallboard, which represents approximately 70% of our sales
  of gypsum products, is used for both new residential and commercial construction
  and for repair and remodeling for:

| |  | partitions,   
| | - | --------------
| |  | paneling,     
| |  | linings, and  
| |  | ceilings, etc.

We
  believe, based on our experience in this industry, that renovation activities
  account for approximately 50% of our gypsum wallboard sales in 2002.

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Gypsum
  wallboard was invented in the United States in the early 1900s but its widespread
  adoption in construction in North America and Europe has largely been a phenomenon
  of the last fifty years. It is available in standard sized sheets in a variety
  of thicknesses and qualities including special sheets for high humidity areas
  such as bathrooms. Due to its naturally low thermal conductivity, wallboard
  is an ideal insulating material, which is why it is used in interior walls.
  It also acts as a flame retardant and absorbs ambient sound. New technologies
  are being exploited to make boards stronger and more flexible. These changes
  mean that for the first time, gypsum wallboard is competing with such materials
  as concrete for commercial jobs.

We
  manufacture over a thousand different types of gypsum wallboard system worldwide.
  We have introduced several innovations recently to our product range to improve
  their ease of use and range of applications. In 1995 in France we introduced
  Prégydéco, a wallboard that is delivered with a primer coat applied
  in the factory. This reduces the customers’ labor cost and eliminates
  the need to wait for the primer to dry. This product was then successfully introduced
  in the United Kingdom in 1999 as Predeco, and then in Poland in 2001, where
  it won a national award for innovation. In 2002, several new products and systems
  have been launched into various countries, such as new compounds to facilitate
  the application of our Deco line systems, new fire proofing plasters, new ceiling
  tiles, etc.

Our
  other gypsum-based products, such as industrial plaster and gypsum blocks, which
  together comprise the remaining 30% of our activity in this sector, are adaptable
  to a wide variety of uses, ranging from a broad variety of decorative applications
  to soil conditioning in agriculture.

We
  tailor our marketing efforts in gypsum products to the specialized needs of
  each market. This marketing effort involves exchanging products or adapting
  our products to various technical specifications unique to each market and to
  differences in American and European fitting habits and production standards.

Who buys our gypsum products, our
  customer orders and backlog?

Our
  gypsum wallboard products are mostly sold through wholesalers, including:

| |  | general building material distributors,            
| | - | ---------------------------------------------------
| |  | specialist dealers,                                
| |  | lumber yards in the United States,                 
| |  | decorating companies in emerging markets,
      and
| |  | do-it-yourself home centers.                       

Sales
  of gypsum wallboard products are made on the basis of competitive prices in
  each market area, generally pursuant to telephone orders from customers. We
  currently do not have any long-term supply contracts and at December 31, 2002
  we had no significant backlog.

Specifiers,
  like architects, also have a significant impact on the choice of the best partition
  or ceiling systems. Depending on the specificity of each country, each business
  unit develops dedicated promotion efforts.

Where and how our gypsum products
  are manufactured

Gypsum
  is the common term for calcium sulfate dihydrate, a naturally occurring industrial
  mineral that is one of the more common minerals in sedimentary environments.
  Deposits of calcium sulfate dihydrate occur in many countries, namely the United
  States, Canada, France, Italy and Great Britain, which are among the leading
  producers. Gypsum can also be obtained as a by-product from chemical manufacture
  and from scrubbers of power plants. This so-called “synthetic” gypsum
  is increasingly being used in wallboard manufacture.

Water
  molecules are physically locked inside the crystal structure of the gypsum molecule
  and when calcined it becomes a fine powder that, when mixed with water, can
  be applied in a plastic state which then sets and hardens by chemical recombination
  of the gypsum with water. Gypsum is unique because it is the only industrial
  mineral that can be calcined, and yet go back to its original state when rehydrated.
  It is this property which is exploited in the manufacturing process.

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In
  the manufacture of wallboard:

| |  | gypsum rock or synthetic gypsum is fed into
      a dryer, where surface moisture is removed;
| | - | ---------------------------------------------------------------------------------------------

| |  | the material is ground to a flour-like consistency
      known as land plaster;
| | - | -------------------------------------------------------------------------------

| |  | the land plaster is then calcined, or heated,
      into calcium sulfate hemihydrate, also known as stucco;
| | - | -----------------------------------------------------------------------------------------------------------

| |  | the stucco is blended with water and other
      ingredients in a mixer to form a slurry;
| | - | -----------------------------------------------------------------------------------------

| |  | this slurry is extruded between two continuous
      sheets of paper at the forming station;
| | - | --------------------------------------------------------------------------------------------

| |  | the product travels down a long line in order
      to give the stucco molecules time to rehydrate and recrystallize into gypsum;
| | - | ---------------------------------------------------------------------------------------------------------------------------------

| |  | as it travels, the gypsum crystals grow into
      each other and into the liner paper, giving the product 3-dimensional strength;
| | - | ----------------------------------------------------------------------------------------------------------------------------------

| |  | when the product has achieved initial “set”
      or firmness (approximately 3 minutes), the product is cut into lengths;
| | - | -------------------------------------------------------------------------------------------------------------------------

| |  | the individual boards are then dried in a
      kiln to remove excess water; and
| | - | --------------------------------------------------------------------------------

| |  | the boards are packaged face to face and
      stored until ready for shipment.
| | - | -------------------------------------------------------------------------------

Our Raw Materials and Production
  Costs

Gypsum
  is a key raw material to wallboard production. To produce one square meter of
  wallboard, we need just under ten kilograms of gypsum. In 2002, we sold 560
  million m2 of wallboard and used approximately 6.9 million tonnes of gypsum.
  We use both naturally occurring gypsum from our own quarries and synthetic gypsum,
  which is produced as a by-product in certain industrial processes, the main
  suppliers being coal-fired power plants.

Our
  plants are designed primarily to use either natural or synthetic gypsum, but
  a synthetic gypsum plant can substitute natural gypsum for up to 30% of its
  raw materials and vice versa. Based on historic trends we do not consider the
  prices of these raw materials to be volatile. We use synthetic gypsum principally
  in some of our plants in the United States, South Korea, France, Germany and
  the Netherlands. We generally aim to situate our production sites as close as
  possible to supply sources to minimize transport costs, but in certain circumstances
  it is economical to transport natural gypsum long distances. For example, we
  supply our plants in the United Kingdom with natural gypsum from our quarry
  located in Spain.

Our
  policy is to secure both our own natural reserves and long-term supply contracts
  for synthetic and natural gypsum in order to diversify our supply risk. At December
  31, 2002, our consolidated companies operated 17 gypsum quarries worldwide including
  11in Western Europe. We currently estimate we have approximately 115 million
  tonnes of proven and authorized reserves of gypsum worldwide. We estimate that
  we have an additional 170 million tonnes of identified reserves for which we
  expect to obtain authorization. In general, we obtain synthetic gypsum through
  long-term contracts that last approximately 20 years, most of which contain
  an option to renew. In certain cases, as a function of our supply needs and
  local market practices, we contract over shorter periods. We have contracts
  outstanding for the supply of over 55 million tonnes of synthetic gypsum
  over the life of the contracts. We believe our current supply of gypsum, both
  natural and synthetic, is adequate for present operating levels.

Gypsum
  represents approximately 13% of our production costs and is a less significant
  input than paper in the manufacture of wallboard, which represents approximately
  25% of our production costs. We mostly use recycled paper in our fabrication
  process, and produce 40% of the paper we use in wallboard production through
  our own paper mills in Sweden, France and the United States. Prices of recycled
  paper are volatile. Energy costs make up approximately 15% of the cost of production.
  We depreciate our wallboard plants on a straight line basis over 20 years.

The Gypsum Products’ Industry

We
  believe, based on our experience in this industry, the total world gypsum wallboard
  market to be in excess of 5 billion m2 per year, with North America
  accounting for about half of the world's demand and industrialized countries
  about 85%. The gypsum industry is an integrated industry worldwide in which
  a few large companies,

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including our own, predominate.Today seven producers hold approximately 80% of the total market in a consolidating
  industry. These companies operate gypsum wallboard plants and usually own the
  gypsum reserves used in manufacturing the wallboard. They also sell gypsum for
  use in portland cement production, agriculture and other manufactured gypsum
  products.

Our
  largest competitors in Europe are BPB of the United Kingdom and Knauf of Germany,
  and in the United States, U.S. Gypsum Corporation, National Gypsum, BPB and
  Georgia Pacific. After having acquired James Hardie’s Gypsum assets in
  the United-States in March 2002, BPB is now the same size as USG, the world's
  largest manufacturer of gypsum and wallboard, on the wallboard market worldwide.

The
  gypsum wallboard industry is highly competitive. Producers compete on a regional
  basis and primarily on factors such as price, product quality and customer service.
  Producers whose customers are located close to their wallboard plants benefit
  from lower transportation costs, which is an important advantage.

The
  demand for gypsum wallboard is closely linked to the gross national product
  of each of our markets and to construction methods employed. Wallboard penetration
  is higher in markets that employ advanced construction methods. In markets that
  use so-called “dry” construction processes (steel or wood materials),
  such as the United States, Japan and Australia, wallboard is used for fire protection,
  to keep installation costs down and for ease of assembly.The average
  consumption per person of gypsum wallboard in these countries is between 6 and
  10 m2. In Western Europe, where “wet” construction is
  more commonly used, i.e. construction using masonry (stone and brick materials),
  the average consumption per person of wallboard is between 3 and 4 m2.

We
  envisage great market growth potential in developing countries where construction
  methods are expected to improve. Factors that stimulate market demand for gypsum
  products are high labor costs, necessitating simpler and less labor-intensive
  assembly methods. In Asia, Eastern Europe and South America wallboard consumption
  is currently at modest levels (less than 1 m2 per person), but growing
  rapidly at rates ranging from 8% to 15%. Gypsum wallboard demand is seasonal
  in North America, as it is tied to the level of construction activity which
  tends to be seasonal.

Our Geographic Markets

In
  the discussion that follows, we describe market conditions and our competitive
  position in the principal geographic areas in which we operate. The sales volume
  figures we have provided for each country or geographic zone are the total volumes
  sold in each particular country or zone by our consolidated subsidiaries, including
  volumes sold to our other divisions and adjusted to reflect our percentage interest
  in our proportionally consolidated subsidiaries.

Western Europe

In
  2002, our sales in Western Europe accounted for 52.7% of our total sales in
  gypsum world-wide. Western Europe is the second largest regional market worldwide
  for wallboard, after North America. Our three principal markets in this region
  are France, the United Kingdom and Germany. Our total production capacity for
  wallboard in Western Europe was approximately 271 million m2 as of
  December 31, 2002 and we sold 206 million m2in Western Europe in
  2002.

France.We operate in France through our wholly owned subsidiary, Lafarge Plâtres.
  We have four wallboard plants in France, one of which is designed to use primarily
  synthetic gypsum and the rest natural gypsum. We have a paper mill and 15 other
  production sites for the rest of our gypsum product lines, which include plaster
  blocks, industrial plaster, insulation and other materials.

United
  Kingdom. We operate in the United Kingdom through our wholly owned subsidiary,
  Lafarge Plasterboard Ltd. We have a single major plant in the United Kingdom
  located in Bristol, with two wallboard production lines designed to primarily
  use natural gypsum. Our plant is supplied with gypsum from our quarry in Spain.
  We also have a jointing compound plant in Frampton.

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Germany
  and Netherlands.We operate in Germany through our wholly owned subsidiary,
  Lafarge Gips GmbH. We have two wallboard plants in Germany, and a wallboard
  plant in the Netherlands which are primarily designed to use synthetic gypsum.
  We also import wallboard products from a plant in France. In October 2002, we
  announced that we had agreed to acquire the wallboard businesses of Gyproc in
  Germany and Poland from the British building materials company BPB. The acquisition
  was completed in 2003. We are in the process of integrating Gyproc’s two
  German wallboard plants located in Peitz and Steinsfeld with a combined ultimate
  capacity of 53 million m2.

Other.We also have a wallboard production plant and a plaster plant in Italy through
  our wholly-owned subsidiary, Lafarge Gessi SA. In 2002 we consolidated for the
  first time Lafarge Profili, a metal studs business. We also operate a paper
  mill in Sweden. In addition, we have a minority interest in Yesos Ibericos which
  operates a wallboard plant and three plaster plants in Spain.

North America

In
  2002, our sales in North America accounted for 21.4% of our total sales in gypsum
  worldwide. Our total production capacity for wallboard in North America was
  approximately 238 million m2 at December 31, 2002 and we sold 184
  million m2in 2002.

We
  first entered the North American gypsum market in 1996 and we estimate, based
  on our experience in the industry, we are now one of the six largest producers
  in this region. We operate in North America through our majority owned subsidiary
  Lafarge North America, Inc. At December 31, 2002 we operatedfour wallboard manufacturing
  plants in the United States, two of which use natural gypsum, located in Newark,
  New Jersey and Buchanan, New York. In 2000, we opened a new state-of-the-art
  plant using 100 percent recycled materials, including synthetic gypsum generated
  from the scrubbers of a nearby power plant in Silver Grove, Kentucky. In early
  2001, our second new state-of-the-art plant in Palatka, Florida, based on the
  same design as our Silver Grove, Kentucky plant, became operational with a capacity
  of 80 million m2. We also commenced operations at a new joint venture
  paper mill in Lynchburg, Virginia in late 2001. In Canada, we operate one gypsum
  wallboard manufacturing plant in Corner Brook, Newfoundland, with a capacity
  of approximately 10 million m2, and a joint compound plant in Quebec.
  We acquired our Newark, New Jersey plant in January, 2002 with the acquisition
  of Continental Gypsum an independent drywall manufacturer for approximately
  30 million euros. The plant has an annual capacity of approximately 28 million
  m2. In order to rationalize our capacity, our subsidiary Lafarge
  North America announced the idling of its Wilmington plant at the end of 2002

Other Zones

Central
  and Eastern Europe and the Mediterranean Basin.We currently have operations
  in Poland, Ukraine and Romania. We acquired our operations in Poland in 2000
  with the acquisition of Dolina Nidy and Nida Gips. Nida Gips had an old wallboard
  plant in Gacki. This plant was closed at the end of 2002. We have completed
  the construction of a new wallboard plant at the same site, which began operations
  at the end of the year 2002. At the end of 2002, we entered into an agreement
  to increase our stake in Lafarge Arcom Gips in Romania. We also have operations
  in the Ukraine: a plaster business, Stromgips, and a commercial office in Kiev
  to sell imported wallboard. In Turkey, we operate two companies through joint
  ventures. One comprises of a wallboard production plant and a construction plaster
  facility near Ankara. The other has a quarry and production facilities near
  Istanbul.

Asia
  Pacific. In June 2001 we formed a joint venture in the Asia Pacific Region
  with the Australian company Boral Limited. Boral currently holds a minority
  interest of 48% in the joint venture, but it may, in the future, increase its
  shareholding to up to 50%, mainly by financing development projects until June
  2003 in the region. At the end of 2002, our wallboard capacity in the region
  increased to 255 millions m2 . The joint venture is managed jointly
  with Boral.

The
  joint venture has three plants in South Korea which mainly manufacture wallboard
  from synthetic gypsum. A new wallboard plant at Dangjin started up in September
  2002. This plant has a production capacity of 28 million m2. In China
  we have one main plant near Shanghai. In addition, the joint venture also has
  two wallboard plants in Indonesia, which use natural gypsum, as well as a metal
  stud plant in Indonesia and a wallboard plant in Malaysia.

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The
  joint venture conducts its operations in Thailand through Siam Gypsum Industry
  (SGI) with three plants and a combined capacity of 77 million m2 of wallboards
  at December 31, 2002. Siam Gypsum Industry announced the idling of its Navanakorn
  plant during the first quarter 2003.

Outside
  of the joint venture we have two plants in Australia located in Melbourne and
  Sydney which exclusively manufacture wallboard from natural gypsum. We entered
  into the Australian market in 1988 through a joint venture with the Pioneer
  Group, which we fully acquired in 1999.

Latin
  America. Our principal markets in this region are Chile, Brazil and Argentina.
  In these countries, we operate through companies we control jointly with the
  Etex Group. We have one wallboard plant in each of Argentina, Brazil and Chile
  and two plaster plants, one in each of Brazil and Chile.

Capital Expenditures

Capital
  expenditure in the periods ended December 31, 2002, 2001 and 2000 in the Gypsum
  division related to the on-going upgrading and modernization of existing operations
  around the world and on organic growth through the building of new production
  facilities totaled 79, 111 and 229 million euros. Our Gypsum division capital
  expenditures accounted for 11.3% of our overall capital expenditures in the
  three-year period. We also invested 128 million euros in the three-year period
  on various acquisitions to expand our capacity and our geographic presence.

The
  principal investments (in excess of 20 million euros) in the three-year period
  from 2000 to 2002 for the modernization or replacing of existing plants and
  equipment included:

| |  | Eastern Europe: construction of a new
      wallboard plant in Gacki, Poland (2001, 2002),                                                  
| | - | --------------------------------------------------------------------------------------------------------------------------------------------
| |  | Western Europe: construction of a new
      wallboard plant in Lippendorf, Germany (2000, 2001)                                             
| |  | Asia: construction of a new wallboard
      plant in Dangjin, Korea (2001, 2002)                                                            
| |  | United States: construction of new
      wallboard manufacturing plants at Silver Grove, Kentucky and in Palatka,
      Florida (2000, 2001)

The
  plant in Korea was completed in September 2002 and the one in Poland at the
  end of 2002.

In
  2003, the level of our capital expenditures will depend on general market conditions.
  We expect capital expenditures to total approximately 55 to 65 million euros,
  excluding new acquisitions. We intend to invest in projects that maintain or
  improve the performance of our plants. We also plan to pursue external growth
  opportunities that will enhance our ability to compete.

For
  information about our financing of capital expenditures, see “Capital
  Expenditures―Cement” above.

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Other Operations

Disposition
  of our Former Specialty Products Division.

In
  2000, we agreed to sell to three investment funds a majority interest in all
  the businesses in our former Specialty Products division, with the exception
  of the Road Marking Business, the European operations of which were sold to
  the Burelle group in November 2000, and the Lime Business, of which the largest
  part is a 40% equity interest in Carmeuse North America. The transaction was
  completed on January 22, 2001.

Through
  our retention of a minority interest of 33.36% in Materis, the new company which
  was formed to include our businesses that were sold to the three investment
  funds, we expect to be able to benefit from future value enhancement opportunities
  created by the new structure. We have made a series of agreements with Materis
  regarding their use of the Lafarge trademark, our provision of research and
  development and the use of certain of our facilities, including offices next
  to our Paris headquarters, during a changeover period. Materis will be entitled
  to continue to use the Lafarge trademark in association with its existing products
  until 2004. In addition, we have concluded a research and development cooperation
  agreement with Materis pursuant to which we have set a coordination committee,
  equally composed of representatives of both parties to choose, fund and monitor
  research and development projects relating to the divested activities. The agreement
  also provides for the sharing of the intellectual property developed through
  these research and development projects among the parties. The agreement's initial
  expiration date is December 31, 2003, unless the parties choose to renew it
  for one year periods.

The
  Specialty Products division was included as a continuing operation for our financial
  year ended December 31, 2000. In accordance with French GAAP, we included the
  operations of the Specialty Products division in our statement of income for
  the year ended December 31, 2000 but for balance sheet purposes the interest
  that we retained in Materis is reflected as an investment in equity affiliates.
  Under US GAAP the assets and liabilities of the Specialty Products division
  are required to be included in our balance sheet at December 31, 2000 (see Note
  31-11 to our consolidated financial statements). In 2001 and 2002, in accordance
  with French and US GAAP, we accounted for our ongoing interest in Materis using
  the equity method.

In
  2000, the Specialty Products division generated sales of 1.4 billion euros.
  Our other operations, including the businesses we retained from our former Specialty
  Products division, generated sales of 0.2 billion euros in 2002 and 0.2 billion
  euros in 2001, representing approximately 1.4% of our sales in 2002. We employed
  417 people in these operations.

Capital Expenditures

In
  the years ended December 31, 2002, 2001 and 2000 our capital expenditures in
  other operations, including our former Specialty Products division, related
  to the on-going upgrading and modernization of existing industrial operations
  around the world and on organic growth through the building of new production
  facilities totaled 5, 7 and 79 million euros, respectively, principally for
  the modernization or replacement of existing plants and equipment. We also invested
  approximately 99 million euros in various acquisitions during the three-year
  period. Our capital expenditures in other operations, including our former Specialty
  Products division, accounted for approximately 0.5% of our overall capital expenditures
  in the three year period ended December 31, 2002.

The
  principal investment (exceeding 20 million euros) in the three-year period from
  2000 to 2002 for the modernization or replacing of existing plants and equipment
  was the construction of a new aluminates plant in China in 2000 which was disposed
  of with the rest of our former Specialty Products division.

For
  information about our financing of capital expenditures, see “Capital
  Expenditures ― Cement” above.

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Environment

We
  are subject to a broad range of environmental laws and regulations in each of
  the jurisdictions in which we operate. These laws and regulations impose increasingly
  stringent environmental protection standards regarding, among other things,
  air emissions, wastewater discharges, the use and handling of hazardous waste
  or materials, waste disposal practices and the remediation of environmental
  damage or contamination. These standards expose us to the risk of substantial
  environmental costs and liabilities, including liabilities associated with divested
  assets and past activities, even where conducted by prior owners or operators
  and, in some jurisdictions, without regard to fault or the lawfulness of the
  original activity. We are also subject to regulations regarding the control
  and removal of asbestos-containing material and identification of potential
  exposure of employees to asbestos.

To
  prevent, control and remediate environmental problems and maintain compliance
  with regulatory requirements, we maintain an environmental policy designed to
  monitor and control environmental matters. Because of the wide variety of environmental
  regulations we face, our policy is decentralized with the group environmental
  department providing advice on environmental compliance, assisting in the recruitment,
  training and retention of personnel experienced in environmental matters and
  ensuring the interchange of ideas between our subsidiaries.

Our
  policy requires each subsidiary to respect local laws and meet our own internal
  standards. Our subsidiaries are encouraged to take a proactive role with respect
  to the environment and cooperate with the regulatory authorities to evaluate
  the costs and benefits of proposed regulations. In each of our plants our policy
  requires that a designated person be responsible for addressing environmental
  matters and that an environmental information system be established in each
  operational unit in order to:

| |  | Assess environmental performance and track
      progress,                     
| | - | -------------------------------------------------------------------------------
| |  | Evaluate identified risks and risk reduction
      measures over time, and     
| |  | Ensure expedited reporting of any incidents
      with an environmental impact.

Our
  environmental policy also requires environmental audits to be performed periodically
  at all of our properties to ensure environmental compliance and to assess whether
  improvements to the site are required to meet environmental laws or our own
  internal standards.

In
  2000, we entered into a voluntary environmental conservation partnership with
  the World Wildlife Fund (“WWF”) and became a founding member of
  its Conservation Partner program and lent our support to the Forest Reborn program.
  In 2001 we worked with the WWF on a number of areas including environmental
  performance indictors (audits, CO2 emissions, energy consummation and the contribution
  of recycling), biodiversity and the restoration of quarries and the development
  of a voluntary CO2 reduction program. On November 6, 2001, we announced, in
  conjunction with the WWF, that we had entered into a voluntary worldwide CO2
  reduction commitment. We agreed with the WWF to a reduction of 20% in CO2 emissions
  per tonne of cement produced worldwide over the period 1990-2010. This corresponds
  to a reduction of our CO2 emissions in the industrialized countries of 15% in
  comparison to 1990 if alternative fuels are considered CO2 neutral, and 10%
  using WWF methodology. We estimate that groupwide we produced 678 kg of CO2
  emissions per tonne of cement produced in 2002, a reduction of 10.7% in comparison
  to 1990, and that in industrialized countries our CO2 emissions amounted to
  46 million tonnes, a reduction of 11.2% in comparison to 1990. In calculating
  our CO2 emissions, we follow European government practice and consider alternative
  fuels, (where in general we incinerate waste and recover the energy), to be
  CO2 neutral.

We
  are currently involved in the remediation of contamination of certain properties.
  Following is a description of the most significant, but we believe, based on
  current information, that these activities, as well as the other less significant
  ones that are not described here, will not have a material adverse effect on
  our financial condition or results of operations. It should be noted, in addition
  and as evidence of our dedication to a strict environmental policy, most of
  these situations arose from alleged events or practices that took place before
  we acquired the relevant properties or subsidiaries.

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In
  The Netherlands, a former subsidiary of the Group, Tollens Coatings B.V., is
  one of the defendants in an action brought in 1990 by the government in connection
  with the discharge of certain waste in the Lekkerker canal between 1968 and 1971. At that time,
  Tollens Coatings B.V. operated a paint manufacturing plant and had hired another
  company to carry and dispose of waste produced by the plant. The government
  is seeking Dutch guilders 160,000,000 (approximately 72.6 million euros) in
  damages, plus interest. Tollens Coatings B.V. contends that it did not instruct
  the disposal company to dump the waste in the Lekkerker canal and that it had
  no knowledge of the disposal company's conduct. With the consent of the parties,
  the proceedings, which are still at the level of first instance, have been postponed
  several times by the court and since late 1993 no proceedings on the merits
  have taken place. In July 2001, the Dutch government took sufficient action
  to delay the running of the statute of limitations, without any other consequence.
  As a result, the case is still pending. Tollens Coating B.V. was disposed of
  with the Specialty Products division. However, pursuant to the disposition arrangements,
  the Group has agreed to indemnify the acquirers for any damages incurred in
  connection with this litigation.

Environmental
  matters cannot be predicted with certainty and there can be no assurance that
  the amounts we have budgeted and reserved will be adequate. In addition, future
  developments, such as the discovery of new facts or conditions or future changes
  in environmental laws, regulations or case law could result in increased environmental
  costs and liabilities that could have a material adverse effect on our financial
  condition or results of operations. We are not currently aware of any environmental
  liabilities or of any non-compliance with environmental regulations that we
  expect will have a material adverse effect on our financial condition or results
  of operations.

We
  regularly incur capital expenditures that have an environmental component or
  that are impacted by environmental regulations. However, we do not keep separate
  accounts for such mixed expenditures. Environmental expenditures that extend
  the life, increase the capacity, improve the safety or efficiency of assets
  or are incurred to mitigate or prevent future environmental contamination may
  be capitalized. Other environmental costs are expensed when incurred. For the
  years ended December 31, 2002, 2001 and 2000, environmental capital expenditures
  and remediation expenses were not material. However, our environmental expenditures
  may increase in the future.

Currently,
  changes to or new environmental laws or regulations and taxation schemes are
  being proposed in various countries to implement the Kyoto Protocol and these
  may require us to reduce CO2 emissions below the levels we have targeted
  in our agreement with the WWF. We cannot presently determine whether these proposed
  changes or new laws and regulations will require capital expenditures or other
  remedial actions, or their effect on our consolidated financial statements.
  We cannot determine at this time whether capital expenditures and other remedial
  actions that we may be required to undertake in the future will materially affect
  our financial position, results of operations or liquidity.

Research and Development

Over
  the past three years, we have focused our research and development efforts on
  meeting our three-fold objective of further developing existing products, broadening
  and improving product application possibilities and creating new products. Our
  research and development efforts are aimed at responding to customer requirements,
  such as reducing construction costs, providing easy and reliable applications,
  improving the appearance of materials and the quality of everyday surroundings
  and the protection of the environment.

We
  expense our research and development expenditures as they are incurred and our
  research and development expenditures amounted to 55 million euros in 2002,
  compared to 53 million euros in 2001 and 43 million euros in 2000. We have a
  Central Research Laboratory which is located at l’Ile d’Abeau near
  Lyon, France which had 188 employees as of December 31, 2002. We have reorganized
  our research and development activities to make them more customer focused.
  In 2001 we expanded the use of our new products center at l’Ile d’Abeau
  when we invited 50 French architects to discover our current solutions and the
  materials we are planning for the future. In 2001 we also reorganized our central
  research activity to better reflect the priority given to product innovation
  as a significant source of future growth and brand differentiation. We have
  created separate project portfolios for each of our divisions, in order to permit
  the research and development team to work directly with the divisions to ensure
  more targeted research and at same time to exploit the synergies between the
  various materials. In addition to our Central Research Laboratory we have over
  twenty testing and applications laboratories in our divisions and subsidiaries
  which are spread across 12 different countries and in total we have over 500
  employees working in research and development.

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We
  have also expanded our resources and in January 2002, we signed a framework
  agreement with the CNRS, the French national center for scientific research.
  The CNRS is the leading center for fundamental research in Europe and employs
  over 25,000 people and has an annual budget of over 2.5 billion euros. We have
  a history of co-operation with the CNRS, and have signed over 40 research collaboration
  contracts during the past six years with CNRS laboratories. Joint projects with
  the CNRS have enabled us to gain a greater understanding of phenomena linked
  to the behavior of hydraulic binders, and have also contributed to our innovations
  such as Ductal®, where some ten different CNRS laboratories backed up the
  partnership between Lafarge, Bouygues and Rhodia. Joint research between the
  CNRS and Lafarge has also resulted in improvements to the strength of our wallboard
  products. We also have cooperation agreements with the Massachusetts Institute
  of Technology (“MIT”), Princeton and the University of California-Berkeley
  in the United States, and Laval and Sherbrooke Universities in Canada.

Among
  the new products we have launched recently are products designed to:

| |  | Reduce the cost of construction,
      through, for example, our Agilia® Vertical concept, which consists of
      self-placing concrete which is pump-applied through a handheld hose, and
      is a further expansion of our new generation Agilia® range of self-placing
      and self-leveling concrete,                                           
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                          
| |  | Improve appearance, thanks to
      products such as our decorative concrete and roof tiles and our products
      for the renovation and restoration of old buildings such as our Frescalys
      hydrated lime-based mortar, etc.,                                                                                                                     
| |   |                                                                                                                                                                                                                                                                                                                                                          
| |  | Improve comfort, whether thermal
      and acoustic (Prégymax 32 liner complex, etc.) or thermal (Span-Alu®
      roof underlay, etc.),                                                                                                                                                                                                                 
| |   |                                                                                                                                                                                                                                                                                                                                                          
| |  | Improve safety, whether through
      the enhancement of the solidity and durability of buildings through products
      such as our Integrated Roofing System which is designed to resist winds
      of over 190 km/h, or directly through fire prevention and protection products
      such as our toxic-fiber-free spray-applied fire-rated plaster.

Intellectual Property

We
  currently own or have licenses to use various trademarks, patents and other
  intellectual property rights that are of value in the conduct of our business,
  but no such intellectual property right is, by itself, material to our activities.
  We own or otherwise have rights to the trademarks and trade names, including
  those mentioned in this document, used in conjunction with the marketing and
  sale of our products.

Our
  Protection of Industrial Property (PIP) Corporate Department aims to enhance
  the value of this intellectual property by establishing our title through patents,
  trademarks, copyright and other relevant laws and conventions and by using legal
  and regulatory recourse in the event of infringement. Each of our divisions
  also has either a corresponding PIP Department or representatives linked in
  a network with the PIP Corporate Department, in order to coordinate our efforts
  to protect our intellectual property position in building materials.

In
  2002, we launched a detailed review of our intellectual property portfolio in
  order to optimize our PIP organization, in particular following the Blue Circle
  acquisition. We expect to be implementing a number of measures following this
  review during the course of 2003.

E-business

Our
  company has over 100 affiliated Internet sites that offer information about
  Lafarge, its partners and subsidiaries, news, shareholder information and product
  and service information. New information and communication technologies have
  been identified as a major opportunity for Lafarge to better serve the strategic
  aims of its existing activities and improve some of their processes in such
  fields as marketing, sales, procurement, internal and external communication,
  knowledge management, etc.

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Our
  most significant investments in e-business technologies have taken the form
  of two major projects: the “Place des Métiers”, involving
  all Lafarge Business Units in France in each of our businesses (Cement, Aggregates
  and Concrete, Roofing and Gypsum), and the “Roofing project”, involving
  all Roofing Division Business Units in Europe. These projects have two primary
  purposes:

| | Addressing strategic challenges
      of communication and interaction (product information, selection guides,
      calculation and configuration tools, etc) with diffuse end-user and customer
      populations (in France, web sites dedicated to distributors, contractors,
      specifiers and home owners for instance), which have previously been difficult
      to reach by traditional marketing methods. For instance, the web site Batirenover.com
      dedicated to home owners has been launched in April 2002 and was awarded
      the Gold Medal in Building Materials web sites for 2002 by both Batiactu
      and the French organization ANAH;
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | Building an infrastructure for
      further e-business developments, not only on the marketing side, but also
      to carry out transactions with our customers and suppliers (e-procurement)
      or share data internally and externally with our partners.                                                                                                                                                                                                                                                                                                                                                                                                        

Similar
  sites are also being launched by our divisions and subsidiaries. The sites are
  backed up by our traditional media publications and off line traditional marketing
  tools and media.

Information Systems

We
  have developed several initiatives over the past few years to integrate through
  our information technology network the highest number of Lafarge personnel possible,
  as well as the economic community and our clients. These initiatives include
  the implementation of:

| |  | Lafarge Net, an Intranet system
      that interconnects our personnel globally (75 countries connected, amounting
      to approximately 30,000 people) and which provides for secured Internet
      access;                                                                                                                                                                                   
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                  
| |  | an Enterprise Resource Planning
      (“ERP”) system, which is a business management software that
      integrates Finance, Marketing, Manufacturing, Purchasing, Logistic and Human
      Resources, complemented by specific systems we have developed to support
      our particular needs, especially in the manufacturing domain (e.g., kiln
      management, concrete plant management);
| |   |                                                                                                                                                                                                                                                                                                                                                                                                  
| |  | the data warehouse concept, which
      enables information sharing for day-to-day needs, including data analysis,
      decision support and information delivery in the area of Finance, Marketing
      and Manufacturing.                                                                                                                                                                    

We
  are also currently developing:

| |  | a system that integrates client
      and vendor relations (CRM) using various tools such as sales follow-up,
      customer follow-up, call centers and e-procurement facilities;                                                                                
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                   
| |  | an enterprise model (information
      methodology, standard parameters, standard documentation) which can be used
      by new operating units in each of our divisions and that would increase
      the ease, rapidity and cost efficiency of new acquisitions.

Litigation

We
  are involved in several legal proceedings, including contract disputes, product
  liability cases, environmental inquiries and remediation actions (see the subsection
  entitled “Environment”) and fair competition proceedings, that have
  arisen in the ordinary course of business. We believe that we have made adequate
  provisions to cover both current or contemplated general and specific litigation
  risks and we believe that these matters will be resolved without any significant
  impact on our activity levels, financial position or results of operations.

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The
  European Commission decided on December 3, 2002, to fine our Group on the grounds
  that some of our subsidiaries had allegedly colluded
  on market shares and prices with its competitors between 1992 and 1998 for wallboard,
  in particular in the United Kingdom and Germany. On that basis, the European
  Commission has ordered the Group to pay a fine of 250 million euros. Lafarge
  vigorously challenges this decision and has brought the case before the Court
  of First Instance (CFI) in Luxembourg, which has jurisdiction over such matters.
  The resolution procedure usually takes several years based on comparable cases.
  As we have given a bank guarantee, no payment will have to be made before the
  decision of the court.

The
  German competition authorities have opened an investigation in 2002 concerning
  German cement companies, including our wholly owned subsidiary, Lafarge Zement.
  On April 14, 2003, the German competition authority, the Bundeskartellamt, announced
  that it was imposing a fine of 86 million euros on Lafarge Zement as a result
  of its alleged anti-competitive practices in Germany. Lafarge Zement believes
  that the amount of the fine is excessive and intends to vigorously defend its
  position through appeal before the Higher Regional Court, the Oberlandesgericht,
  in Düsseldorf.

A
  provision of 300 million euros was recorded in our financial statements closed
  as of December 31, 2002 in connection with the two matters above.

On
  March 28, 2001, Dunn Industrial Group, Inc. (“Dunn Industrial”)
  filed a lawsuit against our subsidiary Lafarge North America and the City of
  Sugar Creek, Missouri in the Circuit Court of Jackson County, Missouri at Kansas
  City. In the suit, Dunn Industrial, the general contractor for the construction
  of our new cement plant in Sugar Creek, Missouri, alleges that we expanded the
  scope of work expected of Dunn Industrial in the construction of the plant without
  commensurate increases in time required for performance and amounts to be paid
  to Dunn Industrial. In connection therewith, the suit alleges breach of contract,
  quantum meruit, breach of warranty and negligent misrepresentation and
  seeks foreclosure of mechanic’s liens against Lafarge North America and
  the City of Sugar Creek, Missouri. Dunn Industrial appears to be seeking in
  excess of $67 million in damages. The amount of the liability of Lafarge North
  America in connection with this suit remains uncertain. The trial court ruled
  that the issues raised by Dunn Industrial need not be arbitrated but rather
  could be litigated. In December 2002, the Missouri appellate court reversed
  the trial court’s ruling and agreed with Lafarge North America that Dunn
  Industrial must arbitrate its claims. Dunn filed a Transfer Motion to the Missouri
  Supreme Court seeking appeal of the Court of Appeals ruling, which motion the
  Missouri Supreme Court has granted. Lafarge North America believes Dunn Industrial’s
  claims are without merit and intends to vigorously defend the suit.

Finally,
  certain of our subsidiaries have litigation and claims pending in the normal
  course of business. Management is of the opinion that these matters will be
  settled without any material adverse effect on the Company's financial statements.

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ITEM 5. OPERATING AND FINANCIAL
  REVIEW AND PROSPECTS

The
  following discussion should be read in conjunction with our consolidated financial
  statements which are included elsewhere in this Form 20-F. Our consolidated
  financial statements have been prepared in accordance with generally accepted
  accounting principles in France (“French GAAP”), which differ in
  significant respects from generally accepted accounting principles in the United
  States (“US GAAP”). See Note 31 to our consolidated financial
  statements included elsewhere in this Form 20-F for a description of the principal
  differences between French GAAP and the US GAAP as they relate to Lafarge.

Our
  functional and reporting currency has been the euro since the introduction of
  the euro on January 1, 1999. The consolidated financial statements for the years
  ended December 31, 2002, 2001 and 2000 have been prepared in euros.

Overview

In
  the three year-period 2000  2002, we have made substantial progress in
  our strategy of combining growth with improved operating performance. After
  further expansion into a number of countries in 2000, such as South Korea, India
  and some Eastern African countries, 2001 culminated with the acquisition of
  the United Kingdom based group Blue Circle Industries plc. This acquisition
  significantly expanded our world-wide cement operations particularly in Asia.

The
  acquisition of what was the world’s sixth largest cement company places
  us in the position of world leader in the cement industry. However, as this
  was a very major acquisition, our financial position has been extended in terms
  of debt and associated ratios. We have therefore established a target of returning
  these ratios to the levels prior to the acquisition by the end of 2003. In 2002
  we were progressing on track to this goal. Since the acquisition we have concentrated
  on the successful integration of the former Blue Circle operations and on improving
  the operating performance. 2002 was the first full year of consolidation of
  these operations.

Our
  benchmarking procedures and cost reduction programs, relating in particular
  to energy consumption, co-ordinated procurement and plant reliability are a
  key element to our improvement in the industrial performance of the former Blue
  Circle operations.

Our
  geographical diversification has helped us to absorb the impact of the various
  downturns in certain of our local markets over the last three years. We have
  continued to improve or maintain returns in many parts of the world even sometimes
  in the face of adverse conditions. This is why we believe in our strategy of
  striving to develop our global presence to ensure the stability of returns.
  We experienced in 2002 a weakening of many of our markets in the last few months
  of the year, particularly in the United States. This has made the improvement
  in results in the former Blue Circle operations more challenging with several
  of the markets being directly impacted by weaker demand.

In
  Germany, the construction market has continued to decline leading to all our
  operations encountering difficult circumstances. In 2002 we continued our restructuring
  of our German businesses with the further restructuring of our roofing and gypsum
  operations and the closure of our concrete business. As a result of the past
  restructuring our German roofing business showed some improvement in results,
  despite further falls in the construction market in 2002.

The
  Gypsum division in the United States suffered from a price war spanning 2000
  and 2001 which resulted in substantial losses being incurred in the United States.
  The price war now appears to be behind us with a steady recovery in prices over
  the last eighteen months and improving plant performance should help us to improve
  our results.

The
  three-year period saw a significant expansion of our presence in emerging markets
  in the Cement, Roofing and Gypsum divisions as we believe emerging markets represent
  the best prospects for sustained long-term growth in each of these businesses.
  We classify all countries outside of our Western Europe and North America geographic
  sectors, with the exception of Japan, Australia and New Zealand, as emerging
  markets.

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In
  Aggregates & Concrete, our acquisitions in North America, particularly in
  asphalt, which tends to be less cyclical than the overall construction industry,
  and specialty aggregates, improved our geographic balance and product diversification.

Significant Acquisitions and
  Divestitures

Blue
  Circle.We have consolidated the operations of Blue Circle since July 11,
  2001, the date the High Court of London approved the scheme of arrangement for
  the recommended tender offer for the 77.4% of the shares of Blue Circle that
  we did not already own, at a price of 495p per share in cash. Final payment
  to the former Blue Circle shareholders was completed on July 25, 2001. The acquisition
  was funded through the issuance of 14,110,592 shares at a price of 80 euro a
  share in a 1 for 8 underwritten rights offering to our shareholders which was
  completed on February 2, 2001 and through bank financing. For a discussion of
  our current bank financing arrangements please see the section entitled “Liquidity
  and Capital Resources” further on in this Item 5. Under French GAAP,
  the 22.6% investment we held in Blue Circle prior to the date of acquisition
  was accounted for under the cost method due to the lack of significant influence
  over Blue Circle as a result of a standstill agreement with the Canadian Competition
  Bureau.

Specialty
  Products.In 2000, we agreed to sell to CVC Capital Partners, Advent
  International and Carlyle, three investment funds, a majority interest in most
  of the businesses in our former Specialty Products division. The transaction
  was completed January 22, 2001. The sales price was based on a valuation
  of 890 million euros including assumed debt. We have retained 33.36% of
  the capital of the new company, called Materis. We realized a net capital
  gain on the sale of 85 million euros. The agreements with respect
  to the disposition became legally binding on December 28, 2000 and under
  French GAAP the transaction was recorded at that date. Under US GAAP the
  transaction is treated as having occurred on January 22, 2001, the date payment
  was received in exchange for the shares. See Note 31-11 to our consolidated
  financial statements.

Seasonality

Demand
  for our cement, aggregate and concrete and roofing products is seasonal and
  tends to be lower in the winter months in temperate countries and in the rainy
  season in tropical countries. We usually experience a reduction in sales on
  a consolidated basis during the first quarter reflecting the effect of the winter
  season in our principal markets in Western Europe and North America and increase
  in sales in the second and third quarters reflecting the summer construction
  season.

Significant Accounting Policies

We
  prepare the consolidated financial statements of Lafarge in conformity with
  French GAAP. We also prepare a reconciliation of our consolidated financial
  statements to US GAAP. In preparing these financial statements we are required
  to make certain estimates, judgments and assumptions that we believe are reasonable
  based upon the information available. These estimates and assumptions affect
  the reported amounts of assets and liabilities at the date of the financial
  statements and the reported amounts of revenues and expenses during the periods
  presented. The notes to our consolidated financial statements summarize the
  significant accounting policies which we believe are the most critical to aid
  in fully understanding and evaluating our reported financial results. See Note 2
  to our consolidated financial statements regarding the significant accounting
  policies we apply under French GAAP and Note 31for a description of the
  principal differences between French GAAP and the US GAAP as they relate
  to Lafarge.

Recent Changes in Accounting
  Treatment

As
  of January 1, 2002, the share of net income of equity affiliates determined
  in accordance with equity method consolidation principles is shown in the group
  consolidated statement of income on a specific line “share of net income
  of equity affiliates”. Prior to the adoption of this presentation, the
  Company’s share of net income of equity affiliates was presented in the
  following line-items: “Operating income on ordinary activities”,
  “Gains on disposals, net”, “Other income (expenses), net”,
  “Financial expenses, net” and “Income tax”. The presentation
  of the consolidated statements of income for 2000 and 2001 has been revised
  for comparative purposes.

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Changes in Accounting Estimates

Beginning
  January 1, 2002, the historical cost of cement plant assets have been reclassified
  into specific cost categories based upon their distinct characteristics. Each
  cost category represents cement plant components with specific useful lives.
  This new definition was based on a detailed technical study performed by the
  Company. Prior to January 1, 2002, cement plant assets had been depreciated
  over their estimated useful lives, using a broader definition of cost classification.
  The new system of classifying costs has been applied prospectively as of January
  1, 2002. On average, for a new cement plant, this change in estimate has resulted
  in increasing the depreciable useful life from 20 years to 28 years, which more
  closely reflects actual experience with modern cement plants.

Origin of sales and Operating
  income on ordinary activities

We
  have provided an analysis of our sales by segment. Our reported segments correspond
  to our operating divisions. We record our revenues from the sales of our goods
  and products when delivery to the customer occurs. Revenues are shown net of
  commercial rebates and discounts. Financial discounts are accounted for as financial
  expenses. We report our revenues on a geographic segment basis by country of
  destination of the sale.

We
  derive the majority of our revenues through the direct sales of products by
  our subsidiaries from plants or from production sites. Consolidated revenues
  represent the value before sales tax of goods, products and services sold by
  consolidated enterprises in ordinary activities and after the elimination of
  intra-group sales. We record our revenues from the sales of our goods and products
  when ownership is transferred.

Sales
  revenues of entities over which we have direct or indirect control of more than
  50% of the outstanding voting shares, or over which we exercise effective control,
  are fully consolidated, except for some companies, not significant in the aggregate,
  that were not consolidated for practical purposes. Control exists where Lafarge
  has the power directly or indirectly to govern the financial and operating policies
  of an enterprise so as to obtain benefits from its activities. Revenues in companies
  in which we and third party investors have agreed to exercise joint control
  are consolidated by the proportionate consolidation method and we include our
  proportionate share of the joint ventures results. Revenues and expenses of
  subsidiaries acquired or disposed of during the year are recognized in the consolidated
  statements of income as from the date of control or up to the date of transfer
  of control, respectively.

We
  have also provided an analysis by segment of operating Income on ordinary activities.
  This item corresponds to our total sales, less cost of goods sold and selling
  and administrative expenses and depreciation. We do not calculate operating
  income on ordinary activities on the basis of sales by destination.

Discussion of Use of Non-GAAP
  Financial Measures  Effects of Changes in the Scope of our Operations
  and Currency Fluctuations

Variations
  in the scope of our operations, such as acquisitions and divestitures, together
  with changes in how we account for our business units, such as a change from
  proportionate to global consolidation, may increase or decrease our consolidated
  sales and operating results in comparison to prior years and thus make it difficult
  to discern the underlying performance of our continuing operations. Similarly,
  as a global business operating in numerous currencies, changes in exchange rates
  against our reporting currency, the euro, may result in an increase or a diminution
  in the sales and operating income on ordinary activities reported in euros by
  a business unit that are separate and apart from its results of operations.
  In order to enable investors to follow the year on year changes in our ongoing
  operations we have provided an analysis of our sales and operating income on
  ordinary activities at constant scope and exchange rates, together with a reconciliation
  showing the amount of the variance attributable to currency effects and to scope
  effects.

Except
  as otherwise noted, we calculate the impact of currency variances by converting
  the previous year’s figures as reported in their local currencies by the
  companies within the scope of consolidation using the current year’s exchange
  rates. We then calculate the exchange rate impact by measuring the difference
  between the previous year’s consolidated figures (historically converted
  using the previous year’s exchange rates) and the result of the above
  conversion using the current year’s exchange rates.

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Except
  as otherwise noted, we calculate the changes in the scope of consolidation (“scope
  effects”) for the year in question, by taking into account changes in
  our scope of operations resulting from acquisitions and dispositions of businesses
  during the period in question. We also include in the calculation of the scope
  effects the impact of the changes in the method of consolidation of the companies
  included within our scope of consolidation. With respect to acquired businesses
  the scope effect for the first year of consolidation (“Year 1”)
  reflects operations subsequent to the initial date of consolidation. For the
  year following Year 1 (“Year 2”), the scope effect reflects Year
  2 operations of those businesses for the period in Year 2 that corresponds to
  the period in Year 1 when such businesses were not within the scope of consolidation.
  With respect to businesses leaving the scope of consolidation and with respect
  to the calculation of the specific scope effect attributable to Blue Circle,
  a similar method is used.

Results of operations for the fiscal
  years ended December 31, 2002 and 2001

In
  the discussion of our results for the years ended December 31, 2002 and 2001
  that follows the sales figures unless noted otherwise are consolidated sales
  by destination and include the adjusted contributions of our proportionately
  consolidated subsidiaries. The gross sales volumes figures we have provided
  for each division or geographic zone are the total volumes sold by destination,
  including the volumes sold to our other divisions and adjusted for the contributions
  of our proportionately consolidated subsidiaries.

Sales

Overview.
  Sales grew by 6.7% between 2001 and 2002, from 13,698 million euros to
  14,610 million euros. Our sales from continuing operations at constant exchange
  rates decreased by 0.3% reflecting the weaker market conditions experienced
  in the latter part of the year and especially in the last quarter. Changes in
  the scope of consolidation at constant exchange rates had a net positive effect
  of 1,493 million euros, or 11.4%. Acquisitions had a positive impact on sales
  of 1,772 million euros, primarily reflecting the full year consolidation of
  the former Blue Circle operations, while disposals had a negative impact of
  160 million euros. The change in accounting treatment of Lafarge Morocco, from
  global consolidation to proportionate consolidation, resulted in a reduction
  in sales of 119 million euros. Currency fluctuations had a negative impact of
  4.4% reflecting the depreciation of the US and Canadian dollars and other currencies
  such as the Brazilian real and South African rand.

Contributions
  to our sales by segment for the years ended December 31, 2002 and 2001 and the
  percentage variation between the two periods were as follows:

|                           | Year ended December 31,
      2002 |   | %Var.2002/ |                            | Year ended December 31,
      2001 |  
|-------------------------- | ---------------------------------- | - | ---------- | -------------------------- | ---------------------------------- | -
|(in
        million euros) |                                    | % | 2001       | (in
        million euros) |                                    | %
|                           |                                    |   |            |                            |                                    |  
|Sales                      |                                    |   |            |                            |                                    |  
|Cement                     | 6,948                              |   | 47.6       |                            | 15.9                               |  
|Aggregates & Concrete      | 4,768                              |   | 32.6       |                            | (0.8                               | )
|Roofing                    | 1,538                              |   | 10.5       |                            | (3.0                               | )
|Gypsum                     | 1,146                              |   | 7.8        |                            | 6.9                                |  
|Other                      | 210                                |   | 1.4        |                            | (12.5                              | )
|                           |                                    |   |            |                            |                                    |  
|Total                      | 14,610                             |   | 100.0      |                            | 6.7                                |  
|                           |                                    |   |            |                            |                                    |  

Cement.
  Sales of the Cement division grew by 15.9% between 2001 and 2002, to 6,948 million
  euros up from 5,995 million euros in 2001. This large increase primarily
  reflects the full year consolidation of the former Blue Circle operations for
  the first time. In 2001, these operations had only been consolidated from July
  11, 2001 (the effective date of the acquisition). The contribution of the former
  Blue Circle cement operations amounted to 2,240 million euros in 2002, compared
  to 1,205 million euros in 2001. At constant scope and exchange rates, our sales
  grew by 1.2%. The slower growth in 2002 reflects the mixed trends in some of
  our markets. Overall changes in the scope of consolidation at constant exchange
  rates increased sales by 20.5% contributing an additional 1,174 million
  euros. Currency fluctuations had a negative impact on sales of 5.8% which amounted
  to 286 million euros and resulted mostly from the decline in strength of the
  US dollar and the Brazilian real against the euro.

Volumes
  sold increased by 21% in 2002 to 106 million tonnes of cement.

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In
  Western Europe sales totaled 2,274 million euros, an increase of 32% over 2001.
  The contribution of the former Blue Circle operations, chiefly in the United
  Kingdom and in Greece, amounted to 986 million euros in 2002, compared to 476
  million euros in 2001. Currency fluctuations had no material effect on sales.
  The volumes sold in the region increased by 26% to 32.8 million tonnes,
  of which the former Blue Circle operations accounted for 13.2 million tonnes
  compared to 6.7 million tonnes in 2001. Volumes in France remained flat, but
  favorable pricing trends resulted in our sales increasing by 5%. Sales in the
  United Kingdom more than doubled, reflecting mainly the full year consolidation
  of the former Blue Circle operations. Favorable pricing trends also contributed
  to the increase in sales. Spain and Italy realized solid growth in volumes and
  positive price trends. The buoyant construction markets in Spain led to another
  year of strong sales growth which increased by 8%. In Italy sales grew by 13%.
  The social relations issues which impacted production at the Halkis plant in
  Greece did not impact our sales in this country and our sales in Greece were
  up by 130%, resulting primarily from the full year consolidation of the former
  Blue Circle operations but also from favorable volumes and pricing trends. In
  Germany, the impact of a highly competitive pricing environment in the context
  of the very weak construction market was significant. Sales were down with prices
  falling significantly.

In
  North America, we achieved sales of 1 579 million euros, an increase of 8%.
  The contribution of the Blue Circle North America operations amounted to 441
  million euros in 2002, compared to 257 million euros in 2001. The weaker US
  and Canadian dollars against the euro in 2002 had a negative impact. Our sales
  volumes in the region increased by 9% to 17.5 million tonnes, of which Blue
  Circle North America accounted for 4.9 million tonnes compared to 3.0 million
  tonnes in 2001.

Sales
  in North America held up well overall in an increasingly more difficult construction
  market. While residential construction has remained robust throughout the year,
  activity in the commercial sector has continued to weaken. The pressure on individual
  State budgets impacted the level of infrastructure spending and some slowing
  of demand from public works and highway projects was felt particularly from
  the third quarter. The impact of the weaker construction market varied from
  region to region. The Western region saw an increase in demand in the mining
  and oil sectors whereas the North East was negatively affected by the decline
  in demand in the Baltimore and Boston markets. Prices overall showed some increase
  in the year with the notable exception of the South East, where aggressive competition
  was experienced in the weak Atlanta market. Sales in the fourth quarter are
  sensitive to weather and the return to more normal winter conditions in the
  last quarter reduced the volumes sold in comparison to the last quarter of 2001
  when the very mild weather helped to stimulate the construction activity.

In
  emerging markets we experienced a positive growth in sales of 10% to 3,092 million
  euros, and these markets accounted for 45% of the division’s sales in
  2002, compared to 47% in 2001. Sales in 2002 varied greatly not only from region
  to region but also within regions. The contribution of the former Blue Circle
  operations in the emerging markets amounted to 813 million euros in 2002, compared
  to 472 million euros in 2001. The currency fluctuations had a negative impact
  on sales.

Our
  sales in Central and Eastern Europe rose by 33% to 401 million euros. The
  operations in Serbia and Slovenia generated additional sales of 74 million euros.
  Our sales volumes in the region increased by 2 million tonnes to 8 million
  tonnes. Sales grew by 20% in Romania, in a context of high demand and increased
  prices. In Poland sales were down by 3% as the recession in the building industry
  continued to affect volumes however, the situation showed signs of improvement
  towards the end of the year. In the Czech Republic our sales were up by 6%,
  due to a favorable foreign exchange impact. In both Russia and the Ukraine sales
  increased significantly.

In
  the Mediterranean Basin we saw a 17% decline in sales to 455 million euros primarily
  reflecting the change in accounting treatment of our Moroccan operations from
  global to proportionate consolidation. The contribution of the former Blue Circle
  operations in the region amounted to 26 million euros in 2002, compared to 25
  million euros in 2001. Our sales volumes in the region were down by 17% to 9.5 million
  tonnes, compared to 11.4 million tonnes in 2001, primarily reflecting the change
  in accounting treatment of our Moroccan operations.

In
  Morocco, the construction market was healthy throughout the year and without
  the impact of the change in accounting treatment, our sales would have increased.
  Jordan delivered solid sales in the year, up 6%, thanks to a buoyant residential
  sector. In Egypt, over supply in the markets continued to create highly competitive
  market conditions with significant price erosion; our sales were down by 20%.
  The economic crisis in Turkey continues to severely impact the market, but an
  improvement in selling prices resulted in an increase of our sales by 4%.

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Our
  sales in Latin America were down by 8% to 502 million euros. This primarily
  reflects the impact on sales in the region of the devaluation of the various
  regional currencies in the year against the euro. The contribution of the former
  Blue Circle operations in Chile amounted to 79 million euros in 2002, compared
  to 32 million euros in 2001. Our sales volumes in the region rose by 1.6% to
  6.5 million tonnes of cement of which former Blue Circle accounted for 1.3 million
  tonnes.

Volumes
  held up well in Brazil. Despite price increases in reals, up 14%, prices were
  down in euros which resulted in our sales falling by 21% overall. In the context
  of the political and economic turmoil in Venezuela sales fell significantly
  by 28%, with volumes down by 17% and prices by 6%. Honduras ended the year with
  sales down 11%. The operations in Chile showed some favorable pricing evolution.
  In Mexico sales were up by 10%.

In
  the Sub-Saharan Africa and Indian Ocean region our sales grew by 16% to 756 million
  euros. The contribution of the former Blue Circle operations in this region
  amounted to 265 million euros in 2002, compared to 173 million euros in 2001.
  Our sales volumes in the area increased by 42% to 10.2 million tonnes of cement,
  of which former Blue Circle accounted for 4 million tonnes, compared to
  1.6 million tonnes in 2001. Currency fluctuations had a negative impact on sales
  in the region. In South Africa our sales were down by 16% primarily reflecting
  the significant devaluation of the rand against the euro. The business recorded
  higher volumes and improved prices in local currency terms. Our operations in
  Kenya and Uganda saw sales improve 10% and 17%, respectively with strong domestic
  market conditions and prices. Sales in Cameroon increased by 5% in the context
  of solid local demand and improved prices. South East Africa, which covers Zambia,
  Malawi, Tanzania and Zimbabwe contributed sales of 72 million euros. Sales volumes
  have generally followed a favorable trend during the year however prices have
  been negatively affected by exchange rate depreciation. The market trends in
  Nigeria have been poor, partly due to a downturn in market conditions, partly
  due to the pre-election situation with flat volumes and weaker prices overall.

Our
  operations in the Asia Pacific region saw sales increase by 30% to 981 million
  euros. The contribution of the former Blue Circle operations in this region,
  mainly in Malaysia and the Philippines, amounted to 432 million euros in 2002,
  compared to 231 million euros in 2001.

Our
  sales volumes in the region increased by 46% to 21.1 million tonnes of cement,
  of which the former Blue Circle operations accounted for 8.9 million tonnes,
  compared to 4.3 million tonnes in 2001. In South Korea, sales continued to show
  strong growth up by 13%. Domestic sales volumes were strong as construction
  spending continued to increase and prices developed favorably over the year.
  The impact of the typhoon that has affected the country was limited mainly to
  the month of September. In the Philippines our sales increased by 42%, primarily
  reflecting the full year consolidation of the former Blue Circle operations,
  with volumes increasing strongly in the context of severe price competition
  where prices have fallen by 21% in the year.

In
  India sales volumes showed a satisfactory level of growth, however prices have
  remained at a low level; sales were up by 5%. China has continued to deliver
  a strong growth in sales of 63% benefiting from the start up of the Dujiangyan
  plant and strong demand on the Beijing market. In Indonesia, sales grew by 28%
  as prices started to show some signs of improvement. In Malaysia, sales increased
  by 79%, primarily reflecting the full year consolidation of the former Blue
  Circle operations. However, our operations were negatively impacted by the slow
  down in the second half, due to the impact of governmental measures relating
  to the employment of foreign workers.

Aggregates
  & Concrete. Sales of the Aggregates & Concrete division slipped
  by 0.8% to 4,768 million euros in 2002 from 4,806 million euros in 2001.
  At constant scope and exchange rates, our sales were down by 1.2%. Changes in
  the scope of consolidation at constant exchange rates increased sales by 4.9%
  reflecting the effect of the full year Blue Circle's aggregates and concrete
  operations and the divestment of concrete product businesses in Canada. Currency
  fluctuations had a negative impact on sales of 4.5%. In Western Europe our sales
  increased by 5% to 1,856 million euros. In North America, our sales fell by
  7% to 2,405 million euros.

Sales
  of our aggregates operations, which also include our asphalt and road contracting
  businesses, were down by 6% between 2001 and 2002, to 2,196 million euros.
  At constant scope and exchange rates our sales from our ongoing operations
  declined by 3%. Currency fluctuations had a negative impact of 4% on sales.

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Our sales volumes of aggregates were down by 1% to
  207 million tonnes in 2002.

Our
  aggregates sales in Western Europe increased by 4% to 789 million euros. In
  France sales declined as a result of lower activity in the road building sector,
  however this decline was limited by the rise in average prices. In the UK, the
  subdued ready mix market and the effect of the aggregates levy from April 1st
  led to a weak aggregates market. Several delays in road building contracts slowed
  the paving operations, although these picked up in the last quarter. Sales increased
  however with buoyant prices and an increase in recycled products sales. Sales
  were up by 11%, including the effect of the aggregates levy. With the healthy
  construction market in Spain sales continued to grow in 2002.

In
  North America, sales fell by 10% to 1,336 million euros. Changes in the
  scope of consolidation (mainly consisting of the full year consolidation of
  the Blue Circle North America operations) generated 50 million euros of additional
  sales. Currency fluctuations had a 6% negative impact on sales in euros. Sales
  at constant scope and exchange rates declined by 7% with much of the weakness
  seen in our road paving activities. In Canada, the residential sector saw a
  good level of growth but the industrial and commercial construction activity
  was weaker. In the West we benefited from favorable residential construction
  activity in Alberta, although the paving sector sales were down, as in 2001
  they had benefited from the second runway project at Vancouver airport. Sales
  in Eastern Canada were favorable in Western Quebec and Ottawa, but softer in
  Central Ontario. Our road paving operations experienced a significant decline
  in the year due to delays in road building projects brought about by a civil
  servants strike early in the year. In the United States we experienced weak
  market conditions. A significant softening in activity was seen in New Mexico,
  Colorado and Missouri, Georgia, and in the Great Lakes. Average prices saw some
  increase in both countries in 2002.

Sales
  of our concrete operations which include ready mix concrete and our pre-cast
  concrete products, increased by 4% between 2001 and 2002, from 2,481 million
  euros to 2,572 million euros. At constant scope and exchange rates our sales
  increased by 0.8%. Changes in the scope of consolidation at constant exchange
  rates had a positive impact of 7% on sales with the consolidation of the Blue
  Circle concrete operations in Greece, North America, Chile and Malaysia. Currency
  fluctuations had a negative impact on sales of 5%. Our sales volumes of ready
  mix concrete increased by 9.5% to 35 million m3.

In
  Western Europe concrete sales improved 6% to 1,067 million euros. In France,
  sales grew favorably due to the strong level of activity in the first half,
  despite a softening in demand levels in the second half of the year. In the
  United Kingdom sales grew favorably with overall market demand being positive
  in the year. Sales in Spain and Portugal were marginally down in 2002 as the
  rate of growth in the Spanish market was not sufficient to offset the slowdown
  in Portugal were both volumes and prices were under pressure.

Net
  changes in the scope of consolidation in Western Europe had a positive impact
  on our sales. These additional sales result primarily from the full year consolidation
  of the former Blue Circle operations in Greece, partially offset with the divestiture
  of our operations in Germany and Italy.

In
  North America, sales were down by 4% from 1,116 million euros in 2001 to 1,069
  million euros in 2002. Changes in the scope of consolidation impacted sales
  by 63 million euros with the additional sales primarily from the full year consolidation
  of Blue Circle North America operations more than offsetting the impact of the
  divestment of concrete product businesses in Canada. Currency fluctuations had
  a negative impact on sales of 6%. In Canada, we experienced a sharp decline
  in commercial construction in Toronto and the overcapacity in the industry led
  to a difficult pricing environment. In Montreal, we suffered from a five month
  strike. In the USA, weak markets conditions were experienced in the West with
  declining economic conditions in Colorado and New Mexico. In the Eastern US,
  most of the shortfall occurred in the fourth quarter with wintry weather and
  slowing activity in Maryland and New York state.

In
  the rest of the world, sales grew significantly due mainly to the scope effect
  of the full year consolidation of the former Blue Circle operations in Chile,
  Malaysia and Singapore. Sales grew strongly in Turkey due to increased volumes
  and prices, and held up well, at constant scope and exchange rates, in Brazil.

Roofing
  The Roofing division experienced another year of difficult market conditions.
  Sales declined by 3% between 2001 and 2002, from 1,585 million euros to 1,538 million
  euros.

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At constant scope and exchange rates sales fell by
  5.9%. Currency fluctuations had a negative impact on sales of 1.2%. Sales of
  concrete tiles were down 7.5% to 792 million euros and clay tiles down 5.9%
  to 255 million euros. Roof System Components continued to expand by 20% to 246
  million euros primarily reflecting the impact of full year consolidation of
  Kloeber. Chimney sales decreased by 2% to 166 million euros.

In
  2002, new operations included the acquisition of a concrete tile producer in
  Scotland and the construction of a new concrete tile plant in Denver, Colorado.
  New clay tile activities comprised of a production line for a “Nordic”
  clay tile, and the entry into the prosperous Thai market. We have expanded the
  business of the roofing accessories producer Kloeber which was acquired in 2001
  and it is now active in six countries. In the chimneys segment sales offices
  in Eastern and Northern Europe have been opened. Kami metal roof tiles, a business
  which was acquired in 2001, began operations in the United Kingdom.

In
  Western Europe sales (including chimneys) were down by 8% to 1,162 million euros
  which was mainly due to a further decline in Germany, were overall sales were
  down 9% and France, where sales dropped by 4% in a weakening market. In Scandinavia
  sales were up but were marginally down in the UK and were stable in Italy.

In
  North America, emphasis was given to price increases which improved results,
  excluding the impact of central cost allocations. However, the decrease in volumes
  led to a decrease in our sales of 7%.

In
  Eastern Europe, sales increased to 128 million euros in 2002 which in part reflects
  the growth in sales in the Czech Republic and Hungary. Sales of concrete roof
  tiles continued to decline in Poland, but chimney sales improved. After several
  years of growth Poland saw a declining market in which sales of clay tiles continued
  to increase, but concrete tiles sales declined.

In
  Asia sales remained stable with strong growth in Malaysia but with lower sales
  in China and in Japan.

Gypsum.In 2002, sales of the Gypsum division grew by 6.9% from 1,072 million euros
  in 2001 to 1,146 million euros. At constant exchange rates and scope sales grew
  by 7.2%. Changes in the scope of consolidation at constant exchange rates increased
  sales by 2%. Currency fluctuations had a negative impact on sales of 2%. The
  volumes of wallboard grew by 10% to 560 million m2helped by the
  increased production efficiency of the recently built plants in the United States,
  the acquisition of the Continental plant in Newark, New Jersey and growth in
  many of our markets.

In
  Western Europe, the division performed relatively well, given the continued
  weakness in the German construction market, with sales up by 0.3% to 604  million
  euros. In France and the United Kingdom, market conditions were generally favorable
  and sales were up in 2002. In Germany, the weak construction market continued
  to affect sales with significantly lower volumes, however prices did improve
  from the low of December 2001.

In
  North America, sales grew to 245 million euros, up by 45% compared to 2001,
  due mainly to the recovery in prices. The acquisition of Continental in Newark
  in the first quarter increased sales by 31 million euros. Prices improved significantly
  in the year to an average $96 per thousand square feet (1,000 square feet is
  roughly 93 square meters), in comparison with an average price of $72 per thousand
  square feet in 2001.

In
  our other zones our sales in the division were down slightly to 297 million
  euros. This decline reflects the difficult market conditions in Poland and weak
  markets in Latin America. However, in the Asia Pacific region, sales grew as
  a result of generally good market conditions across the region.

Other
  (including Specialty Products).Sales of our other operations fell by 12.5%
  between 2001 and 2002, from 240 million euros to 210 million euros principally
  reflecting the difficult year experienced by our road marking operations in
  the United States as well as the scope effect related to the divestment at the
  end of 2002 of our former mortar operations in Spain.

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Operating Income on Ordinary
  Activities

Operating
  income on ordinary activities takes into account Sales, Cost of Goods Sold,
  Selling and Administrative Expenses and Depreciation. We do not report Cost
  of Goods Sold, Selling and Administrative Expenses and Depreciation by segment.

Cost
  of Goods Sold grew by 5.1% between 2001 and 2002, from 9,258 million euros
  to 9,734 million euros. Changes in the scope of consolidation accounted
  for a net increase of 12.4 %. This increase was principally due to the full
  year consolidation of the former Blue Circle operations. Fluctuations in exchange
  rates accounted for a net decrease of 3.7% reflecting principally the depreciation
  of the US and Canadian dollars, and to a minor extent of the Brazilian real
  and the South African rand, against the euro. The 3.6% decrease in cost of goods
  sold at our ongoing operations at constant exchange rates primarily reflects
  the lower volumes we recorded over the year in our aggregates and roofing operations
  as well as cost reductions achieved in our four divisions.

Selling
  and Administrative Expenses increased by 12.5% between 2001 and 2002, from 1,578
  million euros to 1,775 million euros. Changes in the scope of consolidation
  accounted for a net increase of 8.9%, primarily reflecting the full year consolidation
  of the former Blue Circle operations. Fluctuations in exchange rates accounted
  for a net decrease of 3.1%. Selling and Administrative Expenses increased by
  6.7% at our ongoing operations at constant exchange rates, partly due to the
  increase at our Aggregates & Concrete division associated with the efforts
  made in the field of information systems, management of performance and reinforcement
  of the sales force. The increase also reflects the reclassification in 2002,
  as selling and administrative expenses, of certain costs at our Aggregates &
  Concrete division which were recorded as cost of goods sold in previous years
  as well as the negative impact of pension cost adjustments, especially in the
  United Kingdom.

Depreciation
  increased by 4.4% between 2001 and 2002, from 928 million euros to
  969 million euros. Changes in the scope of consolidation together with
  the change in the depreciation estimate of cement plant assets accounted for
  a net increase of 5.9%. The impact of the new definition of cost categories
  and related useful lives was a reduction of the annual depreciation expense
  by 83 million euros in 2002. Fluctuations in exchange rates accounted for a
  net decrease of 3.1%. Depreciation increased by 1.6% at our ongoing operations
  at constant exchange rates.

Operating
  income on ordinary activities grew by 10.2% between 2001 and 2002, from 1,934  million
  euros to 2,132 million euros. The increase was principally due to the full
  year consolidation in 2002 of the former Blue Circle operations as well as the
  overall improved performance of our cement division and the reduced losses of
  our gypsum operations in North America. At constant exchange rates and depreciable
  lives, our ongoing operations saw an increase of 1.9%. As a percentage of our
  sales, operating income on ordinary activities represented 14.6% in 2002, compared
  to 14.1% in 2001.

Contributions
  to our operating income on ordinary activities by segment for the years ended
  December 31, 2002 and 2001, and the percentage change between the periods were
  as follows:

|                         | Year ended December
      31,
      2002 |   | %Var.2002/2001           |  | Year ended December
      31, 
      2001 (a) |  
|------------------------ | ---------------------------------------- | - | ------------------------ |  | --------------------------------------------- | -
|(in million
      euros) |                                          | % | (in million
      euros) |  | %                                            
|                         |                                          |   |                          |  |                                               |  
|Cement                   | 1,606                                    |   | 75.3                     |  | 12.0                                          |  
|Aggregates & Concrete    | 336                                      |   | 15.8                     |  | (11.1                                         | )
|Roofing                  | 132                                      |   | 6.2                      |  | 3.1                                           |  
|Gypsum                   | 51                                       |   | 2.4                      |  |                                              |  
|Others                   | 7                                        |   | 0..3                     |  |                                              |  
|                         |                                          |   |                          |  |                                               |  
|Total                    | 2,132                                    |   | 100.0                    |  | 10.2                                          |  
|                         |                                          |   |                          |  |                                               |  

|(a) | Revised for the change in presentation
      of equity affiliates
|--- | -----------------------------------------------------------------

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Cement.Operating income on ordinary activities of the Cement division increased
  by 12.0% to 1,606 million euros in 2002 compared to 1,434 in 2001. At constant
  scope, depreciable lives and exchange rates, operating income on ordinary activities
  rose by 3%. The change in the estimated
  useful life of cement plant assets had a favorable impact of 83 million euros
  on operating income. The change in the treatment of Morocco from the global
  to proportional consolidation method reduced operating income in the Mediterranean
  Basin by 41 million euros. Currency fluctuations had a negative impact of 5%
  or 73 million euros. As a percentage of the division’s gross sales (see
  Note 3(a) to our consolidated financial statements), operating income on ordinary
  activities represented 21.4% in 2002, compared to 22.1% in 2001.

We
  estimate that we achieved synergies of 117 million euros in 2002 as a result
  of the integration of the operations of Blue Circle Industries, of which one
  third related to overhead synergies and two thirds related to operational synergies.
  Unfortunately, the effect of these synergies was only partly evident at the
  operating income level due to specific negative circumstances in countries such
  as Nigeria (due to downturn and poor operating performance), the Philippines
  (due to price war), Malaysia (due to governmental measures against illegal immigrants
  in the construction industry) and the United States (due to sharp decline in
  infrastructure projects in the Boston area, lower prices in the southeast, kiln
  failure at the Ravena Plant and start-up costs at new the Roberta facility).

Operating
  income on ordinary activities in Western Europe grew by 27% to 656 million euros
  compared to 517 million euros in 2001. The scope effect resulting from the full
  year consolidation of the former Blue Circle operations amounted to 111 million
  euros. Operating income on ordinary activities at constant scope, depreciable
  lives and exchange rates increased by 1.5% compared to 2001 due to improved
  margins in France, Spain and Italy. Operating income in the United Kingdom was
  favorably impacted by the improvement in operational performance. In Germany,
  as a direct result of the economic slowdown and highly competitive pricing environment,
  operating income fell to one fourth of the 2001 level.

Operating
  income on ordinary activities in North America declined by 6% to 330 million
  euros compared to 350 million euros in 2001. Currency fluctuations had a negative
  impact on operating income on ordinary activities of 20 million euros. The scope
  effect resulting from the full year consolidation of Blue Circle North America
  amounted to 12 million euros. At constant scope, depreciable lives and exchange
  rates, operating income in North America was down by 7%.

In
  emerging markets, operating income on ordinary activities rose by 9% to 620
  million euros compared to 567 million euros in 2001, representing 39% of the
  Cement division's operating income, compared to 40% in 2001. The scope impact
  resulting from the full year consolidation of the former Blue Circle operations
  in emerging markets amounted to 56 million euros. Operating income on ordinary
  activities at constant scope, depreciable lives and exchange rates grew by 10%.

In
  Central and Eastern Europe operating income on ordinary activities continued
  to improve with an increase of 39% to 86 million euros compared to 62 million
  euros in 2001. The impact of negative currency fluctuations on the region's
  operating income on ordinary activities amounted to 2 million euros. Operating
  income on ordinary activities at constant scope, depreciable lives and exchange
  rates grew by 21%, with strong growth in Romania where both margins and operating
  income grew substantially due to favorable market conditions coupled with reductions
  in variable costs. Operating income in Poland increased as operating margins
  improved due to cost reductions, partly due to the full impact on the year of
  the reduction in headcount following the closure of one plant in 2001. In the
  Czech Republic, the level of prices of export sales to Germany resulted in lower
  operating income. Margins improved in Russia and the Ukraine with both countries
  increasing their operating income.

The
  operating income on ordinary activities from the Mediterranean Basin countries
  decreased by 10% to 112 million euros compared to 125 million euros in 2001 due to the change in accounting treatment
  of our Moroccan operations from global to proportionate consolidation. Operating
  income on ordinary activities at constant scope, depreciable lives and exchange rates, and excluding
  the impact of the change in the accounting treatment of our Moroccan operations
  grew by 21%. The impact of negative currency fluctuations on the region's operating
  income on ordinary activities amounted to 7 million euros. Strong growth in
  income was realized in Morocco and Jordan due to favorable market conditions in these two countries.
  The small loss incurred in Turkey in 2001 was reversed to record an operating
  profit. Egypt saw a decline in operating income in the context of the poor price
  trends partly offset by the positive impact on variable costs of the new production
  line at Alexandria.

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The
  operating income on ordinary activities from Latin America was slightly down
  from 205 million euros in 2001 to 202 million euros in 2002. The positive scope
  effect resulting from the full year consolidation of the former Blue Circle
  operations in Chile amounted to 22 million euros. The negative foreign exchange
  impact on the region's operating income on ordinary activities amounted to 30
  million euros. At constant scope, depreciable lives and exchange rates, operating income
  grew by 5%. Operating income was down in Brazil due to the foreign exchange
  impact which offset the improvement in operating income in reals and to the
  scope effect resulting from the divestment of Brumado. In Venezuela the local
  turmoil and bolivar devaluation have resulted in operating income being down
  by 21%, in spite of drastic cost control measures taken internally. A small
  decline was recorded in Honduras. Both Chile and Mexico increased their operating
  income.

Operating
  income on ordinary activities in Sub-Saharan Africa and the Indian Ocean increased
  by 8% to 120 million euros. The scope effect resulting from the full year consolidation
  of the former Blue Circle operations in Nigeria and Zimbabwe amounted to 5 million
  euros. The negative foreign exchange impact on the region's operating income
  on ordinary activities amounted to 10 million euros. At constant scope, depreciable
  lives and exchange rates, operating income on ordinary activities grew by 22%.
  Existing operations in Kenya, Cameroon and South Africa achieved higher operating
  margins. The operations in Nigeria however recorded a significant decline in
  operating income due to a market decrease and to significant cost and production
  issues relating to delays with the start up of the new plant at Ewekoro.

The
  Asia Pacific region saw operating income on ordinary activities on ordinary
  activities grow by 56% to 100 million euros. The scope effect resulting from
  the full year consolidation of the former Blue Circle operations in Malaysia
  and the Philippines amounted to 30 million euros. The negative foreign exchange
  impact on the region's operating income on ordinary activities amounted to 3
  million euros. At constant scope, depreciable lives and exchange rates, operating income
  fell by 11%. South Korea delivered a strong growth in operating income mainly
  due to the favorable market conditions. India improved operating income as a
  consequence of continued production performance improvement. Operating income
  in the Philippines was weak due to deteriorated pricing. In Indonesia a small
  operating loss was incurred, though much reduced from the loss incurred in 2001.

Aggregates
  & Concrete.Operating income on ordinary activities of the Aggregates
  & Concrete division declined by 11.1% between 2001 and 2002, from 378 million
  euros to 336 million euros. The scope effect from the full year consolidation
  of the former Blue Circle operations was 16 million euros. At constant scope
  and exchange rates, operating income on ordinary activities declined by 10%.
  Currency fluctuations had a negative impact of 4%. As a percentage of the division’s
  gross sales (see Note 3(a) to our consolidated financial statements), operating
  income on ordinary activities represented 7.0% in 2002, compared to 7.9% in
  2001. The operating income on ordinary activities for aggregates totaled 246
  million euros down 9% from 270 million euros in 2001. While currency fluctuations
  had a negative impact of 10 million euros the remainder of the decline was due
  to the weaker North American results. The operating income on ordinary activities
  for Concrete totaled 90 million euros down 17% from 108 million euros in 2001.
  Currency fluctuations had a negative impact of 4 million euros with the remainder
  of the decline also due to the weaker North American results.

In
  Western Europe, operating income on ordinary activities grew by 3% to 148 million
  euros. Operating income in France was at a similar level to 2001. In the UK
  operating income grew as operating margins improved in the concrete activity.

In
  North America, operating income on ordinary activities was down by 25% to 178
  million euros. The net effect of changes in the scope of consolidation on the
  operating income on ordinary activities from the former Blue Circle operations
  and divestments was 3 million euros. The impact on operating income on ordinary
  activities of the weakening dollar against the euro amounted to 12 million euros
  or 5%. The decline in operating income on ordinary activities occurred primarily
  in three markets: the Western USA where the weak market conditions prevailed
  throughout the second half of the year, the South Eastern USA and Canada
  with the difficult year experienced in Toronto and Montreal.

Elsewhere
  in the world, operating income on ordinary activities continued to improve up
  to 10 million euros from 2 million euros in 2001. The effect of changes in the
  scope of consolidation of the former Blue Circle operations was 16 million euros.
  In South Africa, operating income continued to grow strongly and in Turkey,
  while the market remains very unstable and competitive, the operating loss was
  reduced significantly.

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Roofing.The division's operating income on ordinary activities was up 3.1% to 132
  million euros from 128 million euros in 2001 largely as a result of the cost
  management efforts and extensive restructuring carried out across the operations,
  particularly in Germany where the sales forces of the two leading brands were
  merged in 2002. Germany accounted for 25% of operating profits in 2002, all
  other European markets for 61% and non-European operations for 14%. As a percentage
  of the division’s gross sales (see Note 3(a) to our consolidated financial
  statements), Operating income on ordinary activities represented 8.6% in 2002,
  compared to 8.1% in 2001.

Operating
  income on ordinary activities in Western Europe rose 6% to 103 million euros.
  In Germany, following the extensive restructuring, the operating income increased
  from 15 million euros to 33 million euros including the effect of a change in
  the central cost allocation method within the division. The underlying increase
  in German operating income amounted to 2 million euros or 13%. In other Western
  European countries operating income declined from 82 million euros in 2001 to 70 million
  euros in 2002 due to the same change in cost allocation method. The underlying decrease
  of 6 million euros or 7% was a result of weaker markets in France and in the
  Netherlands that could not be entirely compensated by the improvement recorded
  in Scandinavia and further growth in Italy.

Outside
  Western Europe, operating income on ordinary activities was down marginally
  to 29 million euros in 2002 from 31 million euros in 2001 which also reflects the change in the central cost
  allocation. At constant scope and exchange rates, underlying operating income on ordinary activities was up 9 million
  euros excluding change in central allocation costs. Major contributors were Eastern Europe, Malaysia and North America.

Gypsum.Operating income on ordinary activities grew strongly after the very difficult
  year in 2001, and was up from 3 million euros to 51 million euros. This
  was mainly as a result of the reduction of losses in North America, helped by
  better pricing coupled with our division wide performance plans, particularly
  in the area of purchasing and manufacturing efficiency. As a percentage of the
  division’s gross sales (see Note 3(a) to our consolidated financial statements),
  operating income on ordinary activities represented 4.4% in 2002, compared to
  0.3% in 2001.

Operating
  income on ordinary activities in Western Europe improved strongly to 59 million
  euros from 44 million euros including the effect of a change in the central
  cost allocation method within the division. The underlying increase in operating
  income amounted to 2 million euros or 5%. France and the United Kingdom continued
  to increase operating margins as a consequence of their operating performance
  plans, however Germany continued to make losses reflecting the difficult market
  conditions.

In
  North America, the operating loss in 2002 was significantly reduced to 28 million
  euros, compared to a loss of 76 million euros in 2001. This reduction in losses
  was due to the increase in prices and also to the improvement in production
  performance benefiting sales volumes and reducing our cost base. The level of
  demand for wallboard remained stable during the year with a sound residential
  construction market. At the end of 2002 the decision was taken to mothball the
  Wilmington plant in the North East region allowing us to concentrate our production
  at lower cost facilities. The idling of this plant is expected to save 10 million
  US dollars per annum and contribute significantly to returning the operations
  to profitability.

In
  our other regions operating income on ordinary activities fell to 20 million
  euros, compared to 32 million euros in 2001. This decline was mainly attributable
  to Poland where the very poor market conditions led to a significant increase
  in losses. However the old Gacki plant was closed and a more efficient production
  facility, also at Gacki, started operations in the fourth quarter. Our operating
  income on ordinary activities in the Asia Pacific region benefited from good
  performances seen in Australia and continuing benefits of our joint venture
  in Asia resulting in a significant improvement in profits at constant scope.
  In particular, in 2002 the joint venture benefited from the successful integration
  of Siam Gypsum Industry, which was acquired in June 2001, and the construction
  of our new facility in Korea using equipment transferred from our Chinese operations
  following the restructuring of the two businesses in Shanghai.

Other
  (including Specialty Products).Operating income on ordinary activities
  of our other operations improved between 2001 and 2002, from a loss of 9 million
  euros to 7 million euros of operating income on ordinary activities.

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Operating Income and Net Income

Operating
  Income takes into account operating income on ordinary activities, gains (losses)
  on disposals and other revenues (expenses). The table below shows the evolution
  of our operating income and net income:

|                                               | Year endedDecember 31, 2002(in million euros) |   | %Var.2002/2001 |   | Year endedDecember 31, 2001 (a)(in million euros) |  
|---------------------------------------------- | --------------------------------------------- | - | -------------- | - | ------------------------------------------------- | -
|                                               |                                               |   |                |   |                                                   |  
|Operating income on ordinary
      activities  | 2,132                                         |   | 10.2           |   | 1,934                                             |  
|Gains on disposals, net                        | 216                                           |   | (21.2          | ) | 274                                               |  
|Other income (expenses), net                   | (525                                          | ) |                |   | (152                                              | )
|                                               |                                               |   |                |   |                                                   |  
|Operating income                               | 1,823                                         |   | (11.3          | ) | 2,056                                             |  
|                                               |                                               |   |                |   |                                                   |  
|Financial expenses, net                        | (521                                          | ) | (4.2           | ) | (544                                              | )
|Income tax                                     | (448                                          | ) | 21.7           |   | (368                                              | )
|Share of net income in equity
      affiliates | 33                                            |   | 83.3           |   | 18                                                |  
|Amortization of goodwill                       | (158                                          | ) | 11.3           |   | (142                                              | )
|Minority interests                             | (273                                          | ) | 1.1            |   | (270                                              | )
|                                               |                                               |   |                |   |                                                   |  
|Net income                                     | 456                                           |   | (39.2          | ) | 750                                               |  
|                                               |                                               |   |                |   |                                                   |  

|(a) Revised for the change in
      presentation of equity affiliates
|---------------------------------------------------------------------

Gains
  on disposals, net represented a net gain of 216 million euros in 2002, compared
  to 274 million euros in 2001. The most significant capital gains were earned
  on:

| |  | The sale of certain cement assets
      in Southern Spain, Brazil and South Africa which generated aggregate capital
      gains of 148 million euros;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The sale of property in Paris, namely our
      headquarters building, which we now lease, which generated a capital gain
      of 51 million euros;  

Other
  income (expenses), net, represented a net loss of 525 millions euros in
  2002, compared to a net loss of 152 million euros in 2001. This primarily
  results from a provision of 300 million euros recorded in 2002. This provision
  has been recorded to cover the risks related to the European Commission decision
  against our Gypsum activities in Europe, and to the German competition authority
  (Bundeskartellamt) decision to fine our subsidiary Lafarge Zement for its Cement
  activities in Germany, both of which Lafarge has appealed against. Other non
  recurring charges relate to restructuring charges and write offs. Restructuring
  and closure charges for our businesses in Germany and Poland amounted to 69
  million euros, split between Roofing at 39 million euros, Concrete at 17 million
  euros and Gypsum at 13 million euros. An amount of 27 million euros was accounted
  for as a charge in relation to the idling of the Wilmington plant in Delaware, USA.
  Other non recurring items relating to the reorganization of our businesses amounted
  to 60 million euros.

Operating
  income decreased by 11.3 % between 2001 and 2002, from 2,056 million
  euros to 1,823 million euros. Operating income represented 12.5% of sales
  in 2002, compared to 15.0% in 2001.

Financial
  expenses, net, decreased by 4.2% between 2001 and 2002, from 544 million euros
  to 521 million euros. The average interest rate on our debt was 5.2% on
  December 31, 2002 as compared to 5.4% on December 31, 2001. In connection with
  the major plant modernizations that occurred in 2002, an amount of 40 million euros
  of financial expenses was capitalized in 2002 compared to 16 million euros in
  2001. Dividends received amounted to 14 million euros in 2002 compared to 47
  million euros in 2001. The dividends received in 2001 included the dividends
  received from Blue Circle during the first half of the year.

Income
  tax increased by 21.7% between 2001 and 2002, from 368 million euros to
  448 million euros. The increase of the effective tax rate for 2002
  to 34.4% is mainly due to the exceptional provision of 300 million euros that
  was recorded in 2002 (in connection with the competition law issues discussed
  above) and which is not tax deductible. Moreover, we had one-off gains of 10 million
  euros in 2002 compared to 40 million euros in 2001.



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Share
  of net income in equity affiliates grew by 83% between 2001 and 2002, from 18 million
  euros to 33 million euros. The share of net income in equity affiliates
  in our Cement division amounted to 49 million euros, of which Molins accounted
  for 37 million euros. The share of net income in equity affiliates in our Roofing
  and Gypsum divisions amounted to 18 million euros. The share of the net loss
  of Carmeuse North America amounted to 28 million euros.

Amortization
  of goodwill grew by 11.3% between 2001 and 2002, from 142 million euros
  to 158 million euros. The increase primarily reflects the scope impact
  resulting from the acquisition of Blue Circle.

Minority
  interests increased by 1.1% between 2001 and 2002, from 270 million euros
  to 273 million euros, reflecting primarily the full year consolidation
  of the former Blue Circle operations, partially offset by the change in consolidation
  method of our Moroccan operations.

Net
  Income decreased by 39.2% between 2001 and 2002, from 750 million euros
  to 456 million euros, reflecting primarily the impact of the exceptional
  provision of 300 million euros. Net income represented 3.1% of sales in 2002,
  compared to 5.5% in 2001.

Earnings per Share

Earnings
  per share were down 41.0% at 3.52 euros compared to 5.97 euros in 2001. The
  average number of shares outstanding during the year was 129.6 million, as compared
  to 125.6 million in 2001.

Results of operations for the fiscal
  years ended December 31, 2001 and 2000

In
  the discussion of our results for the years ended December 31, 2001 and 2000
  that follows the sales figures unless noted otherwise are consolidated sales
  by destination and include the adjusted contributions of our proportionately
  consolidated subsidiaries and sales of the former Blue Circle operations from
  July 11, 2001. The gross sales volumes figures we have provided for each division
  or geographic zone are the total volumes sold by destination, including the
  volumes sold to our other divisions and adjusted for the contributions of our
  proportionately consolidated subsidiaries.

Sales

Overview.
  Sales grew by 12.1% between 2000 and 2001, from 12,216 million euros to
  13,698 million euros. Our sales from continuing operations at constant
  exchange rates increased by 2.9% reflecting generally favorable construction
  markets and demonstrating the benefits derived by the Group from the worldwide
  geographical spread of its operations. The expansion of markets in Asia and
  in certain European countries coupled with the stability of the North American
  market enabled us to absorb the impact of a significant decline in some markets
  in 2001 as well as the continuing decline of the German market. Changes in the
  scope of consolidation at constant exchange rates had a positive effect of 1,246
  million euros, or 9.9%, primarily reflecting the acquisition of Blue Circle
  which was consolidated from July 11, 2001, offset in part by the divestment
  of a majority of our former Specialty Products division. Currency fluctuations
  had a negative impact of 0.7% reflecting the positive appreciation of the US
  dollar which was offset by the weakness in the Brazilian real, the South African
  rand and the Korean won.

Contributions
  to our sales by segment for the years ended December 31, 2001 and 2000 and the
  percentage variation between the two periods were as follows:

|                         | Year
      ended December 31, 2001 |       | %Var.2001/ 2000 |                          | Year
      ended December 31, 2000 |  
|------------------------ | ---------------------------------- | ----- | --------------- | ------------------------ | ---------------------------------- | -
|(in million
      euros) |                                    | **%** |                 | (in million
      euros) |                                    | %
|                         |                                    |       |                 |                          |                                    |  
|**Sales**                |                                    |       |                 |                          |                                    |  
|Cement                   | 5,995                              |       | 43.8            |                          | 35.6                               |  
|Aggregates & Concrete    | 4,806                              |       | 35.1            |                          | 29.0                               |  
|Roofing                  | 1,585                              |       | 11.6            |                          | (5.9                               | )
|Gypsum                   | 1,072                              |       | 7.8             |                          | 7.2                                |  
|Other                    | 240                                |       | 1.8             |                          | (82.7                              | )
|                         |                                    |       |                 |                          |                                    |  
|Total                    | 13,698                             |       | 100.0           |                          | 100.0                              |  
|                         |                                    |       |                 |                          |                                    |  

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Cement.
  Sales of the Cement division grew by 35.6% between 2000 and 2001, to 5,995 million
  euros up from 4,420 million euros in 2000. This large increase is primarily
  a result of the consolidation of the former Blue Circle operations from July
  11, 2001, and which contributed sales of 1,205 million euros. At constant
  exchange rates, our ongoing operations contributed 5.1% to the increase of sales,
  reflecting the relatively robust trends in most of our worldwide markets. Overall
  changes in the scope of consolidation at constant exchange rates increased sales
  by 31.6% contributing an additional 1,385 million euros. Currency fluctuations
  had a negative impact on sales of 1.1%. Our gross sales volumes increased by
  29.6% in 2001 to 87.6 million tonnes of cement including the former Blue Circle
  operations from July 11, 2001.

The
  former Blue Circle operations increased the production capacity of the Cement
  division by approximately 35% and expanded the presence of the Cement division
  into the United Kingdom, Greece, Chile, Nigeria, Malaysia and Zimbabwe. In addition
  the former Blue Circle operations added to the division's existing presence
  in North America, Africa and Asia (the Philippines).

Elsewhere,
  the Cement division has continued to pursue its development program in strategic
  regions. The completion of the acquisition of the cement operations of Raymond
  Ltd. early in the year enhanced the Group's presence in the Northeast of the
  Indian subcontinent. The acquisition of Pan African Cement was completed later
  in the first half of the year, expanding the Group’s regional presence
  in Africa to Malawi, Tanzania and Zambia.

In
  Western Europe sales totaled 1,725 million euros, an increase of 47.6%
  over 2000. The former Blue Circle operations in the United Kingdom and
  Greece contributed 476 million euros of additional sales. Currency fluctuations
  had no material effect on sales. The gross sales volumes in the region increased
  by 38.7% to 26.0 million tonnes of which the former Blue Circle operations
  accounted for 6.7 million tonnes. Our sales excluding the former Blue Circle
  operations increased by 6.8%. We recorded improved sales in France, Spain and
  Italy. In France and Italy our sales, in stable markets, increased by 7.7% and
  8.6% respectively, essentially due to favorable pricing trends in both countries;
  in Spain the continuing strength of the construction industry resulted in sales
  ending the year 17.5% up on 2000. In Germany, however, weakness in the domestic
  construction market, which continued to decline throughout the year, resulted
  in a fall in sales of 9.0% in comparison to 2000. Sales by the former Blue Circle
  operations in the United Kingdom increased as a result of favorable volume trends.
  In Greece our operations benefited from strong growth in domestic demand in
  a positive pricing environment.

In
  North America, we achieved sales of 1,469 million euros, an increase of 25.4%.
  The former Blue Circle operations accounted for 257 million euros of this increase.
  Our sales volumes in the region increased by 24.9% to 16.0 million tonnes, of
  which former Blue Circle accounted for 3.0 million tonnes. The increase
  in our sales from our ongoing operations resulted from two factors: the continued
  strength of the dollar against the euro as well as the relatively robust demand
  for cement in 2001, despite the weakened economic climate in the United States.
  The impact of weather on the North American operations varied considerably over
  the year. The return to more normal winter conditions in the first quarter reduced
  the volumes sold in comparison to the record sales in the previous year. In
  the last quarter of 2001, however, the very mild weather helped to stimulate
  sales. The continual decrease in interest rates in the United States throughout
  the year resulted in housing starts holding up well, down only marginally from
  the all time high in 2000, while infrastructure spending programs favorably
  impacted the demand for cement from the public works sector. Average prices
  during the year fell marginally short of 2000 levels. Our operations in Canada
  experienced good market growth, with buoyant demand in Alberta and British Colombia
  and a high level of construction activity in Ontario. Prices increased in Canada
  by an average of 3.6 %. The former Blue Circle operations in North America generally
  experienced solid demand, with strong volume and sales growth, despite some
  pressure on prices in the Southern states. Overall prices were down for the
  former Blue Circle North America units.

In
  emerging markets we experienced a positive growth in sales of 34.7%, and these
  markets accounted for 46.7% of the division’s sales in 2001 compared to
  47.1% in 2000. In several countries such as Brazil, South Africa and South Korea
  the extent of the growth in sales was offset by the weakening of the local currency
  against the euro. Particularly strong sales growth was achieved in Romania,
  Morocco, Jordan and Venezuela. The former Blue Circle operations in Chile, Nigeria,
  Zimbabwe and Malaysia contributed 304 million euros of new sales.



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Our
  sales in Central and Eastern Europe rose by 14.4% to 301 million euros.
  Our sales volumes in the area were essentially unchanged at 6.2 million
  tonnes. Sales grew substantially in Romania, up by 25.0%, in a context of high
  demand and increased prices. In Poland sales were down by 5.2% as the recession
  in the building industry continued to affect volumes, which were down by 30.3%,
  though this was partially offset by price increases. In the Czech Republic our
  sales rose 6.9% and in Russia they increased by 42.1%. Ukraine was consolidated
  for the first time in 2001.

In
  the Mediterranean Basin we saw by 7.4% rise in sales to 550 million euros, with
  the former Blue Circle operations contributing 25 million euros. Our sales volumes
  in the region increased by 4.3% to 11.4 million tonnes. In Morocco sales
  grew by 11.7% due to a healthy construction market in which prices rose significantly.
  Jordan enjoyed a substantial rise in sales, up 17.9%, thanks to a buoyant residential
  sector. In Egypt the impact of the increase in volumes and the former Blue Circle
  operations was almost entirely offset by the price erosion caused by highly
  competitive market conditions and our sales were up 13.5%. The economic crisis
  in Turkey severely impacted the market and sales declined 19.4%.

Our
  sales in Latin America increased by 10.1% to 547 million euros of which the
  former Blue Circle operations accounted for 40 million euros. Our sales volumes
  in the region rose by 9.6% to 6.4 million tonnes of cement of which former Blue
  Circle accounted for 0.6 million tonnes. Volumes were down by 3.3% in Brazil,
  but substantial price increases were implemented largely compensating for the
  impact of the devaluation of the real on sales expressed in euros, and overall
  our sales fell by 6.5%. Venezuela continued to show strong growth in sales,
  up 17.3% due to both increased volumes and prices, in spite of the country’s
  uncertain economic and political environment. Honduras ended the year with sales
  up 7.0% on 2000 due to stronger prices. However, demand weakened in the latter
  half of the year as pressure was brought to bear on the government to bring
  the country's deficit under control and this impacted construction projects.
  The former Blue Circle operations in Chile saw some increase in volumes and
  favorable pricing.

In
  the Sub-Saharan Africa and Indian Ocean region our sales grew by 72.0% to 650 million
  euros, of which the former Blue Circle operations accounted for 173 million
  euros. Our sales volumes in the area increased by 43.1% to 7.2 million tonnes
  of cement, of which former Blue Circle accounted for 1.6 million tonnes.
  In South Africa our sales increased by 3.5% with higher volumes and improved
  prices being offset by the fall in the rand. Our operations in Kenya and Uganda
  saw sales improve 6.3% and 13.9%, respectively with better domestic market conditions
  and prices. Sales in Cameroon increased by 13.2% in the context of strong local
  demand and improved prices. Pan African Cement, consolidated from May 2001,
  which covers Zambia, Malawi and Tanzania contributed sales of 55 million euros.
  The former Blue Circle operations in Nigeria contributed sales of 101 million
  euros while those in Zimbabwe contributed sales of 7 million euros.

Our
  operations in the Asia Pacific region saw sales increase by 75.1% to 753 million
  euros, including 231 million euros of additional sales contributed by the former
  Blue Circle operations in Malaysia and the Philippines. Our sales volumes in
  the area increased by 78.7% to 14.4 million tonnes of cement, of which the former
  Blue Circle operations accounted for 4.3 million tonnes. In South Korea,
  sales continued to show strong growth up 9.8%. Domestic sales volumes were robust
  as the Government sought to boost construction spending, while prices developed
  favorably over the year. In the Philippines our sales increased by 26.1% as
  a result of the 42 million euros generated by the former Blue Circle operations.
  The rapid growth in imports into the country in the context of an already weak
  economic climate seriously impacted the level of sales of domestic producers.
  As a result the Government implemented an import tariff and quality controls
  in return for a reduction in local prices of about 10%. In India demand was
  disappointing in 2001 and prices deteriorated. Our sales however grew considerably
  as a result of the acquisition of the cement operations of Raymond Ltd. and
  were up 45.4%. China saw a substantial rise in sales of 41.2% with demand for
  cement remaining strong. In Indonesia, sales grew by 5.4% as prices remained
  extremely weak in spite of strong growth in volumes. The former Blue Circle
  operations in Malaysia enjoyed a sharp rise in sales, largely as a result of
  favorable price trends.

Aggregates
  & Concrete. Sales of the Aggregates & Concrete division increased
  by 29.0% from 2000 to 2001 from 3,725 million euros to 4,806 million
  euros. At constant exchange rates, our sales from ongoing operations rose by
  3.9%. Changes in the scope of consolidation at constant exchange rates increased
  sales by 26.1% reflecting further expansion in North America. Currency
  fluctuations had a negative impact of 1.0%. In Western Europe our sales increased
  by 6.6% to 1,770 million euros. In North America, sales increased by 55.9% to
  2,594 million euros.

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The
  development of the division's activities in North America continued in 2001
  with the acquisition of Rocky Mountain aggregates business in Colorado and Pine
  Hill in New York. The Blue Circle acquisition enhanced the division's activities
  in the South East of the United Sates. These acquisitions increased the annual
  aggregates volumes by 10.8 million tonnes. The operations of Warren Paving generated
  sales of 449 millions euros in 2001. Warren's operations stretch across Canada
  from Ontario to Vancouver and greatly reinforce our position in Canada in aggregates,
  asphalt and paving.

Sales
  of our aggregates operations, which also include our asphalt and road contracting
  businesses, increased by 50.4% between 2000 and 2001, to 2,325 million
  euros. At constant exchange rates our ongoing operations achieved growth
  in sales of 9.2%. Currency fluctuations had a slightly positive impact of 0.1%
  on sales.

Our
  aggregates sales in Western Europe increased by 7.1% to 759 million euros. This
  rise reflected strong pricing improvements in our primary markets, despite volumes
  being marginally down overall in France and in the United Kingdom largely as
  a result of poor weather in the first half of the year and during the month
  of December in France. In France, sales have continued to increase in the South
  West, South East and West; in the United Kingdom, strong asphalt and railway
  ballast sales have supported sales levels, though the first half was affected
  by poor weather and the effects of the foot and mouth crisis. In Spain we saw
  strong growth in volumes and prices.

In
  North America, sales increased by 89.5% to 1,478 million euros. Changes
  in the scope of consolidation (chiefly consisting of the acquisitions of Warren,
  Rocky Mountain, Pine Hill and Blue Circle North America) were responsible for
  79.6% of the increase in sales. We also benefited from the relative strength
  of the dollar against the euro which had a positive impact of 3.1% on sales.
  In Canada, we benefited from the strong level of demand in Central Ontario and
  in Northern Alberta, with average prices up on the previous year. In the United
  States, while the Great Lakes and Denver markets softened somewhat over the
  year, Maryland and New York remained buoyant. Average prices remained on an
  upward trend.

Our
  sales volumes of aggregates increased by 18.5 % to 208.8 million tonnes in 2001.

Sales
  of our concrete operations which include ready mix concrete and our pre-cast
  concrete products, increased by 13.9% between 2000 and 2001, from 2,178 million
  euros to 2,481 million euros. At constant scope and exchange rates our ongoing
  operations saw sales decrease marginally by 0.2%. Changes in the scope of consolidation
  at constant exchange rates had a positive impact of 15.4% on sales, while the
  impact of currency fluctuations had a negative impact on sales of 1.3%. Our
  sales volumes of ready mix concrete rose by 11.8% to 32.4 million m3.

In
  Western Europe concrete sales improved 6.2% to 1,011 million euros. In France,
  a decline in sales volumes by comparison with 2000 was offset by higher prices,
  due notably to a growing share of value added products, such as our Agilia concrete.
  Despite a generally weak market, sales increased marginally on 2000 in the United
  Kingdom. With a very buoyant construction market in Spain and Portugal, volumes
  and sales grew strongly in 2001. Changes in the scope of consolidation contributed
  an additional 50 million euros. These additional sales chiefly derive from the
  former Blue Circle operations in Greece.

In
  North America we achieved sales of 1,116 million euros, an improvement of 26.2%.
  Changes in the scope of consolidation had a positive impact of 204 million euros
  on sales, chiefly as a result of the acquisition of Blue Circle. During the
  course of the year, we also divested our Milwaukee ready-mix operation and Centennial
  Pipe in Ontario, a 50-50 joint venture between Blue Circle and Lafarge. The
  impact on sales of the strength of the dollar against the euro was marginally
  positive, at 0.9%. The growth in sales in Canada was primarily achieved by operations
  in eastern Canada; in western Canada, the level of business remained at similar
  levels to 2000. In the United States, sales rose in the majority of our markets.
  Selling prices increased in both Canada and the United States.

Sales
  in Turkey were significantly lower than in 2000, owing to devaluation and the
  economic crisis. Sales held up well in Brazil, at constant scope and exchange
  rates. During the year, concrete operations were divested in São Paulo,
  Brasilia and the southern part of the country, resulting in a decrease in sales
  of 26 million euros.



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Roofing.The Roofing division experienced a very difficult year, primarily because
  of increasingly severe recession in the construction market in Germany, one
  of its core marketplaces. The worsening situation was reflected by a fall in
  sales in 2001, in spite of significant actions taken to restructure the German
  operations and good results reported in many other countries.

In
  this context sales of the Roofing division fell by 5.9% between 2000 and 2001,
  from 1,684 million euros to 1,585 million euros. At constant exchange
  rates sales at our ongoing operations fell by 7.5%. Currency fluctuations had
  a marginally negative impact on sales. Our sales of roofing tiles declined 6.4%
  to 1,127 million euros, with sales of concrete tiles down 6.3% to 856 million
  euros and clay tiles down 6.9% to 271 million euros. This reflects lower volumes
  of both concrete and clay tiles, down 4.6% and 5.5% respectively to 131.6 and
  25.8 million m2 respectively. Sales of chimneys were down by 6.0% to 169 million
  euros, on volumes down by 4.4% at 2,823 kilometers.

Although
  the top priority in 2001 was given to implementing vigorous restructuring actions
  designed to tackle the difficult conditions encountered on the German market,
  we also pressed ahead with our acquisition policy with the aim of strengthening
  our range and development, particularly in emerging countries with high growth
  potential. The acquisition of Kloeber in Germany in September 2001, a company
  with annual sales of 51 million euros, enabled us to position ourselves more
  strongly on the roofing components market. Other acquisitions concluded in Brazil,
  Indonesia and South Africa complemented an investment policy focusing on internal
  development, with the reopening of a mothballed facility in Malaysia to meet
  increased demand and the construction of a new plant in Mexico. Meanwhile, we
  pulled out of a joint venture in Argentina and divested our brick businesses
  in Austria and Northern Ireland.

In
  Western Europe our sales (including chimneys) slipped by 6.0% to 1,261 million
  euros. In Germany, our sales were down 18.3% as a result of the continued decline
  in the German construction market. Sales of our concrete roof tile operations
  fell by 18%; the decline in concrete roof tile volumes of 23% was to some extent
  offset by prices holding up well and by increased volumes of high added value
  products. Volumes of the large-format BIG roof tile rose 35% and now represent
  12% of concrete tile sales. Our clay roof tile sales in Germany also declined
  sharply, by 20%.

A
  variety of different factors impacted sales in most of the division’s
  other Western European markets. Sales in France in 2001 failed to match the
  exceptional levels achieved in 2000 in the wake of devastating storm damage,
  and dropped 1.8%. However, in comparison to 1999 our sales in 2001 were up by
  13.3%. In Italy, sales increased by 10.9%, boosted by a buoyant concrete tile
  market in the North and favorable clay tile sales in the South, as well as the
  start-up of the new Salandra plant. Price trends were positive for both products.
  In the United Kingdom, sales of both concrete and clay roof tiles were close
  to those reported in 2000. Sales in Scandinavia were down 3% in difficult market
  conditions, while the Netherlands continued to suffer from German imports, which
  were reflected in a 3.5% drop in sales.

In
  North America, our Monier Lifetile joint venture, contributed sales of 131 million
  euros an increase of 8.3% over 2000. The sustained level of housing starts throughout
  the year enabled us to strengthen our business. Our volumes in North America
  grew by 1.3% to 20.4 million m2.

In
  Eastern Europe, sales fell from 100 million euros in 2000 to 68 million euros
  in 2001. Sales of concrete roof tile operations suffered from the economic situation
  in Poland, but sales of clay roof tiles improved. Our operations in other countries
  continued to enjoy growth. Sales rose 36.7% in Malaysia and 14.3% in China.
  Brazil experienced a more difficult year, however, with sales down 12.5%.

Gypsum.In 2001, sales of the Gypsum division grew by 7.2% from 1,000 million euros
  in 2000 to 1,072 million euros. At constant exchange rates and scope sales grew
  by 6.0%. The volumes of wallboard sold rose strongly in 2001, up 22.8% to 509
  million m2 largely as a result of the new production capacity brought
  on stream in the United States. However, the division suffered the consequences
  of the wallboard price war in North America which started in the second half
  of 2000 and continued through the first half of 2001.

In
  Western Europe, the division performed relatively well with sales up by 2.9%
  to 602 million euros in spite of difficult conditions in Germany, where
  the continued weakness of the construction market pulled prices down. In France,
  prices increased slightly by comparison with 2000. In the United Kingdom, they
  remained stable but volumes rose. In Italy, sales were at a similar level to
  2000.

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Our
  Gypsum operations in North America reported sales of 169 million euros, up by
  12.7% compared to 2000. This increase is accounted for by the progressive build-up
  of production at the Silver Grove, Kentucky plant and the start-up of the facility
  at Palatka, Florida. The two plants were responsible for 92 million m2 of additional
  production. Although volumes sold rose 77% to 148 million m2, this was not reflected
  by a comparable improvement in sales because of a collapse in prices. The average
  price in 2001 was $72/thousand square feet (1,000 square feet is roughly 93
  square meters), in comparison with an average price of $122/thousand square
  feet in 2000. The low point was reached in June 2001, when the price bottomed
  out at $51/thousand square feet. A price recovery was observed in the second
  half of the year, and has continued through the early months of 2002.

In
  our other zones our sales in the division increased by 13.6% to 301 million
  euros. In the Asia Pacific region, our new joint venture with Boral is now fully
  operational and sales rose by 18.6% as a result of a good performance in the
  majority of markets, most notably in South Korea, although our operations in
  Australia, which are not part of the joint venture, experienced a difficult
  year due to a weak construction market in the first half. In Eastern Europe
  sales improved in 2001 reflecting the full year consolidation of the Nida Gips
  and Dolina Nidy operations partially offset by the weakness of the Polish construction
  market. Our sales in Latin America fell as a result of currency effects and
  the economic problems in Argentina.

Other
  (including Specialty Products).Sales of our other operations fell by 82.7%
  between 2000 and 2001, from 1,387 million euros to 240 million euros.
  This primarily reflects the divestment of the majority of the former activities
  in our former Specialty Products division at the end of 2000. The activities
  that were retained by the Group experienced a difficult year. The Lime operations
  in the United States and United Kingdom were impacted by the decline of the
  steel industry. Road marking operations in the United States continue to suffer
  from a price war.

Operating Income on Ordinary
  Activities

Operating
  income on ordinary activities takes into account Sales, Cost of Goods Sold,
  Selling and Administrative Expenses and Depreciation. We do not report Cost
  of Goods Sold, Selling, and Administrative Expenses and Depreciation by segment.

Cost
  of Goods Sold grew by 16.0% between 2000 and 2001, from 7,980 million euros
  to 9,258 million euros. Changes in the scope of consolidation accounted
  for a net increase of 11.9%, this increase was principally due to the consolidation
  of the former Blue Circle operations and Warren Paving offset in part by the
  divestment of a majority interest in most of the businesses in our former Specialty
  Products division at the end of 2000. The 4.8% increase in cost of goods sold
  at our ongoing operations at constant exchange rates primarily reflects the
  higher volumes we achieved over the year and the additional costs we experienced
  in North America, due primarily to the costs associated with production at new
  plants in our Gypsum division and clinker purchases in our Cement division.

Selling
  and Administrative Expenses fell by 4.0% between 2000 and 2001, from 1,644 million
  euros to 1,578 million euros. Changes in the scope of consolidation accounted
  for a net decrease of 5.4%, reflecting our divestment of the majority of our
  Specialty Products operations offset in part by the former Blue Circle operations.
  Selling and Administrative Expenses increased by 2.0% at our ongoing operations
  at constant exchange rates.

Depreciation
  increased by 17.8% between 2000 and 2001, from 788 million euros to
  928 million euros. with the former Blue Circle operations accounting for
  130 million euros. Changes in the scope of consolidation accounted for a net
  increase of 16.4%.

Operating
  income on ordinary activities grew by 7.2% between 2000 and 2001, from 1,804 million
  euros to 1,934 million euros. The increase was principally due to the consolidation
  of the former Blue Circle operations offset in part by the divestment of a majority
  interest in most of the businesses in our former Specialty Products division
  at the end of 2000. At constant exchange rates, our ongoing operations saw a
  decrease of 3.9% reflecting the strong performance of our Cement and Aggregates
  & Concrete divisions, which was more than offset by the weak performance
  of our Roofing and Gypsum divisions. As a percentage of our sales, Operating
  income on ordinary activities represented 14.1% in 2001, compared to 14.8% in
  2000.

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Contributions
  to our operating income on ordinary activities by segment for the years ended
  December 31, 2001 and 2000, and the percentage change between the periods were
  as follows:

|                                              | Year
      ended December 31, 2001 (a) |   |       |   | Year
      ended December 31, 2000 (a) |  
|--------------------------------------------- | -------------------------------------- | - | ----- | - | -------------------------------------- | -
|%Var.2001/2000                               
|                                              | (in million
      euros)               |   | %     |   | (in million
      euros)               |  
|                                              |                                        |   |       |   |                                        |  
|                                             
|                                             
|                                              |                                        |   |       |   |                                        |  
|Operating income on ordinary
      activities |                                        |   |       |   |                                        |  
|Cement                                        | 1,434                                  |   | 74.1  |   | 29.9                                   |  
|Aggregates & Concrete                         | 378                                    |   | 19.5  |   | 24.3                                   |  
|Roofing                                       | 128                                    |   | 6.6   |   | (37.6                                  | )
|Gypsum                                        | 3                                      |   | 0.2   |   | (94.2                                  | )
|Others                                        | (9                                     | ) | (0.5  | ) | (106.5                                 | )
|                                              |                                        |   |       |   |                                        |  
|Total                                         | 1,934                                  |   | 100.0 | % | 7.2                                    |  
|                                              |                                        |   |       |   |                                        |  

|    |                                                                  
|--- | -----------------------------------------------------------------
|(a) | Revised for the change in presentation
      of equity affiliates

Cement.Operating income on ordinary activities of the Cement division grew by 29.9%
  between 2000 and 2001, from 1,104 million euros to 1,434 million.
  On a constant exchange rate basis, operating income on ordinary activities from
  our ongoing operations increased by 9.1%. Changes in the scope of consolidation
  at constant exchange rates added a further 22.1%. The operations acquired in
  the Blue Circle acquisition accounted for 222 million euros of this increase.
  Currency fluctuations had a negative impact of 1.3%. As a percentage of the
  division’s gross sales (see Note 3(a) to our consolidated financial statements),
  operating income on ordinary activities represented 22.1% in 2001, compared
  to 23.0% in 2000.

Energy
  costs were largely contained in 2001, as efforts to increase the use of alternative
  fuels continued. There was a substantial increase in the use of waste in Western
  Europe, especially in France, Germany, Italy and Spain, with, for instance,
  a marked increase in the co-incineration of bone-meal. In Romania, our Medgidia
  plant was converted from fuel to petcoke. Elsewhere, the modernization of industrial
  facilities continued with the aim of reducing calorific consumption.

Operating
  income in Western Europe grew by 31.9% to 517 million euros. This strong rise
  is largely due to the Blue Circle acquisition with the United Kingdom and Greece
  contributing 128 million euros. Ongoing operations saw some margin improvement
  in France and Italy, although in Spain, an increase in imports to meet the market’s
  continued growth in demand prevented us from improving margins. In Germany,
  with the very depressed market conditions, operating income was down on the
  2000 level.

Operating
  income in North America increased by 14.0% to 350 million euros including
  41 million euros of operating income of generated by the former Blue Circle
  operations. Operating income generated by our ongoing operations at Lafarge
  North America only saw a marginal improvement over 2000 in dollar terms but
  rose to 311 million euros with the positive impact of the dollar euro exchange
  rate.

In
  emerging markets, operating income on ordinary activities rose by 36.6% to 567 million
  euros compared to 415 million euros in 2000, representing 39.5% of the
  Cement division's operating income. The former Blue Circle operations contributed
  66 million euros to the increase. On a constant exchange rate basis, operating
  income on ordinary activities from our ongoing operations increased by 20.2%.
  Changes in the scope of consolidation at constant exchange rates added a further
  21.0% while currency fluctuations had a negative impact of 4.6%. Furthermore,
  operating income on ordinary activities was largely spread across the emerging
  markets in the various regions, therefore reducing the Group's exposure to one
  particular geographical region.

In
  Eastern and Central Europe, operating income on ordinary activities continued
  to improve with an increase of 19.2% to 62 million euros, with a turnaround
  occurring in Romania where both margins and operating income grew substantially
  thanks to favorable market conditions coupled with variable cost reductions.
  Of particular note was the reduction in energy costs in Romanian plants. Operating
  income in Poland fell below 2000 levels.

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In the Czech Republic, a decline
  in exports to Germany resulted in lower operating income. Margins improved in
  Russia, and the country recorded positive operating income.

Mediterranean
  Basin countries achieved an increase of 9.6% to 125 million euros. Strong
  growth in income was realized in Morocco and Jordan due to the favorable market
  conditions and good improvement in margins as well as an increase in exports
  from Jordan. The overall performance in the region was held back by Turkey which
  incurred a small loss in 2001.

Latin
  America achieved strong income growth of 19.9% to 205 million euros. The
  former Blue Circle operation in Chile contributed 14 million euros to this
  increase. In Brazil, margins remained very strong so despite devaluation of
  the real, operating income was only marginally below 2000. Operating income
  grew strongly in Venezuela and Honduras.

Operating
  income on ordinary activities in Sub-Saharan Africa and the Indian Ocean increased
  by 117.6% to 111 million euros. Existing operations in Kenya, Cameroon,
  South Africa and Uganda all achieved higher operating margins. The former Blue
  Circle operations in Nigeria and Zimbabwe and Pan African Cement accounted for
  36 million euros of this increase.

The
  Asia Pacific region saw operating income on ordinary activities grow by 137.0%
  to 64 million euros. The former Blue Circle operations in Malaysia and
  Philippines accounted for 29 million euros of this increase. South Korea
  saw income grow, while in India the benefits of the acquisition of the cement
  operations of Raymond Ltd. helped to improve margins. Operating income in the
  Philippines was again weak due to market conditions. Following the acquisition
  of Blue Circle the industrial reorganization was started with the temporary
  closure of the Lloyd grinding plant and the clinker production facility at Continental.
  The objective is to reduce capacity until such time as conditions improve.

Aggregates
  & Concrete. Operating income on ordinary activities of the Aggregates
  & Concrete division grew by 24.3% between 2000 and 2001, from 304 million
  euros to 378 million euros. At constant exchange rates, operating income
  on ordinary activities from our ongoing operations increased by 4.3%. Changes
  in the scope of consolidation added 20.1%, while currency fluctuations had no
  overall impact. As a percentage of the division’s gross sales (see Note
  3(a) to our consolidated financial statements), operating income on ordinary
  activities represented 7.9% in 2001, compared to 8.1% in 2000.

In
  Western Europe, operating income on ordinary activities grew by 17.1% to 144
  million euros. Operating income in France grew strongly thanks to higher prices.
  In concrete operations, operating margins per cubic meter improved by 7%. In
  France, this progress was mainly due to a higher level of value added products.

In
  North America, operating income on ordinary activities grew by 24.7% to 237 million
  euros, 15 million euros of which was generated by former Blue Circle operations.
  Newly acquired companies, including Warren and Blue Circle, contributed 56 million
  euros of operating income. While the substantial rise in operating income can
  be largely attributed to acquisitions, we have also seen the results of the
  implementation of performance improvement programs developed for each of our
  product lines. These programs focus both on enhancing sales and reducing and
  optimizing costs. The marginal decline in operating income at our ongoing operations
  was in part due to lower profitability in concrete operations in eastern Canada,
  primarily caused by a very fierce competitive environment in Toronto. We also
  had to contend with higher costs and low-margin projects in certain western
  United States markets, such as Denver and New Mexico. We improved our margins
  in the West of Canada and the East of the United States.

Elsewhere
  in the world, we experienced a very contrasting situation. Overall, we returned
  to a positive operating income of 5 million euros compared to a loss of the
  same amount in 2000. In South Africa, in particular, we succeeded in developing
  higher margins and operating income as a result of the implementation of the
  division’s performance improvement program. As in 2000, Turkey once again
  experienced difficulties in a very unstable and competitive market.

Roofing.Operating income for the Roofing division declined by 37.6% to 128 million
  euros. At constant exchange rates, operating income on ordinary activities from
  our ongoing operations also decreased by 39.0%.

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Currency fluctuations had a marginally
  positive impact of 1 million euros. As a percentage of the division’s
  gross sales (see Note 3(a) to our consolidated financial statements), operating
  income on ordinary activities represented 8.1% in 2001, compared to 12.2% in
  2000.

The
  Roofing division experienced a very difficult year, particularly in its core
  marketplace in Germany where the continued decline of the construction market
  severely cut our sales and was the principal cause of the significant shortfall
  in performance in 2001 and operating income generated by our German operations
  declined significantly, collapsing by 79.2% to 15 million euros from 72 million
  euros the previous year. Germany contributed only 12% of the division's operating
  income in 2001 compared to 35% in 2000. Operating income in the rest of Western
  Europe and in Eastern and Central Europe was also down, in part due to the pressure
  of German over-capacity on margins in neighboring markets. In our other zones
  operating income saw significant improvements. Seeking to counteract the ongoing
  decline in the German market, the division continued to implement restructuring
  measures in 2001, which focused on a reorganization of sales forces, back office
  functions and both concrete roof tile and clay roof tile operations in Germany.
  The production capacities of our concrete roof tile plants were reduced and
  eight chimney plants were closed. Corresponding savings in overheads began to
  feed through to operating income in the second half of 2001.

Gypsum.Operating income on ordinary activities of the Gypsum division fell by 94.2%
  between 2000 and 2001, from 52 million euros to 3 million euros. As
  a percentage of the division’s gross sales (see Note 3(a) to our consolidated
  financial statements), operating income on ordinary activities represented 0.3%
  in 2001, compared to 5.2% in 2000.

Operating
  income on ordinary activities in the division in Western Europe fell by 12.2%
  from 49 million euros to 43 million euros due to the weakness in Germany
  impacting the profitability of the business. Outside of Germany operating income
  in Western Europe grew by 6.9% with strong performances in France and the United
  Kingdom.

In
  North America the division had an operating loss of 76 million euros, compared
  to a loss of 19 million euros in 2000. This operating loss was largely
  attributable to the serious price deterioration that incurred during the first
  six months of the year, although prices recovered slightly in the second half
  of the year. The Silver Grove and Palatka plants consistently improved their
  efficiency throughout the year and production costs have progressively come
  down.

In
  our other regions the division achieved operating income on ordinary activities
  of 32 million euros compared to 18 million euros in 2000. Our operating income
  in the Asia Pacific region rose significantly as a result both of the strong
  growth in the results posted by a number of our operations within the joint
  venture with Boral and as a result of the joint venture’s acquisition
  of Siam Gypsum. Overall, the change in the scope of consolidation resulting
  from the creation of the joint venture with Boral had no significant impact
  on the level of operating income in 2001.

Other
  (including Specialty Products).Operating income on ordinary activities
  of our other operations fell between 2000 and 2001, from 139 million euros
  to a loss of 9 million euros. This reflects the disposition of a majority
  interest in most of the businesses in our former Specialty Products division
  and the reduced contributions of the activities that we retained, the lime operations
  and the road marking operations in the United States, which experienced a difficult
  year.



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Operating Income and Net Income

Operating
  Income takes into account operating income on ordinary activities, gains (losses)
  ond and other revenues (expenses). The table below shows the evolution
  of our operating income and net income:

|                                               | Year endedDecember 31, 2001 (a)(in million euros) |   | %Var.2001/2000 |   | Year
      ended December
      31, 2000 (a)(in million euros) |  
|---------------------------------------------- | ------------------------------------------------- | - | -------------- | - | -------------------------------------------------------------- | -
|                                               |                                                   |   |                |   |                                                                |  
|Operating
      income on ordinary activities  | 1,934                                             |   | 7.2            |   | 1,804                                                          |  
|Gains
      on disposals, net                  | 274                                               |   | 0.7            |   | 272                                                            |  
|Other income
      (expenses), net             | (152                                              | ) | (37.4          | ) | (243                                                           | )
|                                               |                                                   |   |                |   |                                                                |  
|Operating
      income                         | 2,056                                             |   | 12.2           |   | 1,833                                                          |  
|                                               |                                                   |   |                |   |                                                                |  
|Financial expenses, net                        | (544                                              | ) | 16.2           |   | (468                                                           | )
|Income tax                                     | (368                                              | ) | 3.4            |   | (356                                                           | )
|Share of net income in equity
      affiliates | 18                                                |   | (64.0          | ) | 50                                                             |  
|Amortization of goodwill                       | (142                                              | ) | 18.3           |   | (120                                                           | )
|Minority interests                             | (270                                              | ) | 26.8           |   | (213                                                           | )
|                                               |                                                   |   |                |   |                                                                |  
|Net income                                     | 750                                               |   | 3.3            |   | 726                                                            |  
|                                               |                                                   |   |                |   |                                                                |  

|(a)  Revised for the change in presentation
      of equity affiliates
|----------------------------------------------------------------------

Gains
  on disposals, net represented a net gain of 274 million euros in 2001,
  compared to 272 million euros in 2000, representing an increase of 0.7%.
  The most significant capital gains were earned on:

| |  | The sale of financial investments for 205
      million euros;
| | - | --------------------------------------------------------------

| |  | The sale of a 20.2% interest in Lafarge India
      to a third party investor for 29 million euros;
| | - | ---------------------------------------------------------------------------------------------------

| |  | The sale of non-core construction material
      businesses in North America for 35 million euros; and
| | - | ------------------------------------------------------------------------------------------------------

| |  | The sale of certain Brazilian ready-mix activities
      for 14 million euros.
| | - | ------------------------------------------------------------------------------

Other
  income (expenses), net represented a net loss of 152 millions euros in
  2001, compared to a net loss of 243 million euros in 2000, representing
  a decrease of 37.4%. The most significant expense items were the costs relating
  to restructuring charges of 69 million euros and an exceptional amortization
  of 33 million euros.

Operating
  income grew by 12.2 % between 2000 and 2001, from 1,833 million euros
  to 2,056 million euros. Operating income represented 15.0% of sales in
  2001, the same as in 2000.

Financial
  expenses, net, grew by 16.2% between 2000 and 2001, from 468 million euros
  to 544 million euros. This reflects the increase in our outstanding debt
  primarily as a result of the acquisition of our interest in Blue Circle offset
  in part by a decrease in the average cost of funding. The average spot interest
  rate on our debt was 5.4% on December 31, 2001 as compared to 6.6% on December
  31, 2000.

Income
  tax increased by 3.4% between 2000 and 2001, from 356 million euros to
  368 million euros. At January 1, 2000, we changed the accounting for
  deferred taxes to the full liability method and we had one-off gains of 60 million
  euros in 2001, compared to 40 million euros in 2000. The effective
  tax rate for 2001 of 24.3% was down marginally on 2000.

Share
  of net income in equity affiliates decreased by 64.0% between 2000 and 2001,
  from 50 million euros to 18 million euros. This primarily reflects
  the increase of our share of the net loss of our Carmeuse North America joint
  venture in the lime business.

Amortization
  of goodwill grew by 18.3% between 2000 and 2001, from 120 million euros
  to 142 million euros. The goodwill amortization relating to the Blue Circle
  acquisition amounted to 24 million euros.

Minority
  interests increased by 26.8% between 2000 and 2001, from 213 million euros
  to 270 million euros. The improved performance of the Group's operations
  in Morocco, Jordan and Venezuela contributed to this increase. In addition,
  within the former Blue Circle operations there are significant minorities in
  the operations in Greece, Nigeria and to a lesser extent Malaysia and Chile.

Net
  Income grew by 3.3% between 2000 and 2001, from 726 million euros to 750 million
  euros. Net income represented 5.5% of sales in 2001, compared to 5.9% in 2000.

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Earnings per Share

Earnings
  per share were down 11.9% at 5.97 euros compared to 6.78 euros in 2000. The
  reduction in part represents the increased number of shares outstanding following
  the partial financing of the Blue Circle resulting in the issuance of 14.1 million
  shares in a rights offering, but also reflects the fact that the rights offering
  took place in February 2001, whilst Blue Circle results were consolidated only
  from July 11, 2001. The average number of shares in the year was 125.6 million,
  as compared to 107.1 million in 2000.

Liquidity and Capital Resources

Our
  senior management establishes our overall funding and capital policies. The
  intent of these policies is to ensure our capability to meet our obligations
  by maintaining a strong financial structure. This policy takes into consideration,
  our expectations on the required level of leverage, coverage ratios, the average
  maturity of debt, and the acceptable sensitivity of our operating results to
  interest rate fluctuations. These targets are monitored on a regular basis.
  As a consequence of this policy a significant portion of our indebtedness is
  issued on a long-term basis. Most of this debt has been raised at fixed rates
  or has been converted into fixed rates using interest rate derivatives. We constantly
  maintain a significant amount of unused long-term committed credit lines.

Our
  policies emphasize diversification of funding sources. Our main funding sources
  are long-term debenture loans, long term notes, private placements, bank loans,
  committed and uncommitted credit lines and short-term commercial paper.

We
  are subject to limited foreign exchange risks as a result of our subsidiaries’
  purchase and sale transactions in currencies other than their operating currencies.
  Our general policy is for subsidiaries to borrow and invest excess cash in the
  same currency as their functional currency. Typically, a portion of our subsidiaries’
  debt funding is borrowed in euros at the parent company level then converted
  into foreign currencies through currency swaps.

For
  the past three years, our main sources of liquidity have been:

| |  | Cash provided by operating activities, and
| | - | ------------------------------------------

| |  | Cash provided by the issuance of debt and
      the increase of the amount of our share capital.
| | - | ------------------------------------------------------------------------------------------------

These
  funds have been mainly used to finance a significant investment program (capital
  expenditures and acquisitions). Even though our level of debt has increased
  significantly, we believe, based on our current financial projections, that
  we have sufficient resources for our ongoing operations in both the near term
  and the long term.

Components of our cash flows are set
  forth below:

|                                                           | Year endedDecember 31,
      2002 |   | Year endedDecember 31,
      2001 |   | Year endedDecember 31,
      2000 |  
|---------------------------------------------------------- | --------------------------------- | - | --------------------------------- | - | --------------------------------- | -
|                                                           | (in
        million euros)        |  
|Net cash provided by operating
      activities            | 1,791                             |   | 1,842                             |   | 1,484                             |  
|Net cash used in investing activities                      | (774                              | ) | (4,679                            | ) | (2,417                            | )
|Net cash (used in) provided by
      financing activities  | (926                              | ) | 2,310                             |   | 1,602                             |  
|                                                           |                                   |   |                                   |   |                                   |  
|Net increase (decrease) in cash
      and cash equivalents | 91                                |   | (527                              | ) | 669                               |  
|                                                           |                                   |   |                                   |   |                                   |  

Net cash provided by operating
  activities

Net
  cash provided by operating activities decreased by 51 million euros in
  2002 to 1,791 million euros. This compares to 1,842 million euros in 2001
  and 1,484 million euros in 2000. The decrease is mainly due to an increase in
  working capital requirements between December 31, 2001 and December 31, 2002.

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Net cash used in investing activities

Funds
  used in investing activities amounted to 774 million euros in 2002 (compared
  to 4,679 million euros and 2,417 million euros in 2001 and 2000, respectively).
  Investing activities is comprised of capital expenditures, investment in consolidated
  companies, investment in non-consolidated companies, disposals and the net decrease
  in long term receivables.

In
  2002, investment in consolidated companies amounted to 337 million euros
  and disposals amounted to approximately 725 million euros. The most significant
  acquisitions included (amounts are converted using the average yearly exchange
  rates):

In
  the Cement division:

| |  | Kedah minority shareholders in Malaysia for
      61 million euros,
| | - | -------------------------------------------------------------------
| |  | Cementia minority shareholders for 49 million
      euros          
| |  | Beocinska Fabrika Cementa in Serbia for 60 million
      euros,    
| |  | Tong Yang Cement, in South Korea for 48 million
      euros,       
| |  | Cementarna Tbrovlje, in Slovenia, for 40 million
      euros.      

In
  the Gypsum division:

| |  | Continental Gypsum in Newark, New Jersey
      for 30 million euros
| | - | -------------------------------------------------------------------

Investment
  in non-consolidated companies includes investments accounted for using the cost
  method. For 2000, this item included the acquired equity interests in Blue Circle
  and Cimpor.

The
  principal disposals in 2002 were connected to our program to dispose of non-strategic
  assets. The most significant disposals included:

| |  | Cement assets in Southern Spain for 225 million
      euros,                                                             
| | - | -------------------------------------------------------------------------------------------------------------------------
| |  | A grinding station and its distribution network
      of three cement terminals at Brumado in Brazil for 67 million euros
| |  | The shareholding in Natal Portland Cement
      in South Africa for 32 million euros,                                    
| |  | Concrete product businesses in North America
      for 66 million euros                                                  
| |  | Sale of property in France, including our
      headquarters building in Paris which we now lease, for 112 million euros 

Capital expenditures
  (in which we include external development expenditures) totaled 1,149 million
  euros in 2002, compared with 1,455 million euros in 2001 and 1,307 million euros
  in 2000. Of these capital expenditures 62% were in the Cement division, 18%
  were in the Aggregates and Concrete division, 7% were in the Gypsum division,
  8% were in the Roofing division and 5% were for holdings and other activities.
  Approximately 26% of our capital expenditures were for operations in North America.

Our
  expenditures for the ongoing upgrading and modernization of our existing industrial
  plants totaled 704 million euros in 2002, compared with 816 million euros
  in 2001 and 693 million euros in 2000. In 2002, 54% of our sustaining capital
  expenditures were in the Cement division, 25% were for Aggregates and Concrete,
  8% were for Roofing, 5% were for Gypsum, with the rest for holding companies
  and other activities.

In
  2002, we also invested 380 million euros in new production facilities including:

| |  | The new dry line in Kujawy, Poland  for
      48 million euros,                                  
| | - | -------------------------------------------------------------------------------------------------
| |  | The new kiln in Ewekoro, Nigeria  for
      78 million euros                                     
| |  | The new kiln in Tetouan, Morocco for 20 million
      euros                                      
| |  | The new production lines in Sugar Creek, Kansas,
      and Roberta, Alabama, in the United States
| |  | The new cement plant in Dujiangyan, China                                                        

Long term receivables
  include loans to our equity affiliates and to companies in which our investment
  is accounted for using the cost method.

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Net cash (used in) provided by
  financing activities

Net
  cash utilized in financing activities (in particular debt reimbursement) amounted
  to 926 million euros in 2002 (compared to cash provided by financing activities
  in 2001 and 2000 respectively: 2,310 million euros and 1,062 million euros).
  At December 31, 2002, our total gross indebtedness amounted to 11,325 million
  euros (compared to 12,904 million euros and 8,376 million euros, respectively,
  in 2001 and 2000). Long-term indebtedness (excluding current portion) totaled
  10,271 million euros, compared with 11,041 million euros and 7,490 million euros,
  respectively, in 2001 and 2000. Approximately 31 % of the 2002 long-term indebtedness
  (excluding current portion) will mature after 2007. Long-term indebtedness largely
  comprises fixed rate debt (after taking into account interest rate swaps). Most
  of this debt is denominated in euros, partially converted into foreign currencies
  through currency swaps (see Item 11 and Notes 25 and 26 of our consolidated
  financial statements for further discussion of our financial indebtedness).

At
  the end of 2002, we reclassified 1,664 million euros of short-term debt (1,662
  million euros and 981 million euros, respectively at the end of 2001 and 2000)
  into medium and long-term debt, on the basis of our ability to refinance this
  obligation using the available funding provided by medium and long-term committed
  credit lines.

At
  December 31, 2002, our short-term debt (including the current portion of long-term
  debt) amounted to 1,054 million euros. We are subject to fluctuation of our
  short-term debt due to the significant seasonality of our operations. We usually
  experience a slowdown in building activity during winter season in our principal
  markets in Western Europe and North America, while working capital requirements
  tend to increase during the first semester.

In
  general, we meet our long-term financing needs through bond issuances and the
  use of long-term instruments such as our Euro Medium-Term Note program and bank
  loans. Short-term needs are mainly met through the issuance of domestic commercial
  paper as well as the use of credit lines.

The
  principal programs currently at our disposal in order to issue financial market
  debt are as follows:

| |  | A Euro Medium-Term Notes program with a maximum
      available amount of 7,000 million euros. At December 31, 2002, the Euro
      Medium-Term Note issuances amounted to approximately 3,465 million euros                                                                         
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | A euro denominated Commercial Paper program,
      with a maximum available amount of 4,000 million euros. At the end of 2002,
      1,508 million euros of commercial paper were outstanding under this program.                                                                    
| |  | A U.S. dollar denominated Commercial Paper
      program, set up by our subsidiary Lafarge North America, for a maximum amount
      of 300 million U.S. dollars (286 million euros). At the end of 2002, commercial
      paper issued under this program totaled 119 million euros.

We maintain
  committed long-term credit lines from various banks at the parent and subsidiary
  level to ensure the availability of funding on an as-needed basis. At December
  31, 2002, these credit lines on a consolidated basis amounted to approximately
  4,000 million euros (compared to approximately 4,200 million euros and 4,100
  million euros, respectively at December 31, 2001 and 2000), of this amount,
  approximately 3,800 million euros were available at December 31, 2002 (compared
  to approximately 2,900 million and 2,400 million euros, respectively, at December
  31, 2001 and 2000). The average maturity of these credit facilities was approximately
  2.5 years at the end of 2002.

Our
  net financial debt totaled 10,216 million euros at December 31, 2002 (11,703
  million euros and 6,636 million euros at December 31, 2001 and 2000, respectively).
  Our cash and cash equivalents amounted to 1,109 million euros at year end and
  are mainly denominated in euros, U.S. dollars and Canadian dollars. At December
  31, 2002 the average interest rate on our gross indebtedness was 5.2%, compared
  to 5.4% and 6.6% at December 31, 2001 and 2000, respectively.

Our
  net-debt-to-equity ratio stood at 110% at December 31, 2002, (compared to 110%
  and 84% respectively at December 31, 2001 and 2000). The current level of our
  debt to equity ratio is essentially due to the financing of the acquisition
  of Blue Circle in 2001, which we financed through a combination of new equity
  and additional debt. In 2002, despite the substantial reduction in our net debt,
  our net-debt-to-equity ratio remained constant, as a result of a stronger impact
  at December 31, 2002 of changes in exchange rates on our equity than on our
  net debt.

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On
  June 29th, 2001, we issued an aggregate amount of approximately 1,300 million
  euros of OCEANE bonds. Each bond is convertible and/or exchangeable into new
  or existing shares, and has a nominal value of 127 euros. The bonds are currently
  convertible and/or exchangeable into approximately 10.2 million shares. The
  bonds bear an effective interest rate of 3.5% per annum. They will mature on
  January 1, 2006, with a redemption price of 139.17 euros, representing approximately
  109.58 per cent of the nominal value of the bonds. Early redemption will be
  possible after two years at our option under specific conditions.

In
  addition, we issued the following debt securities in 2001 and 2002:

| | on November 6th, 2001, 1,000 million in euro
      bonds bearing a fixed interest rate of 5.875% with a 7-year maturity,
|- | ------------------------------------------------------------------------------------------------------------------------

| | on November 6th and December 20th, 2001,
      350 million in British pound bonds bearing a fixed interest rate of 6.875%
      with an 11-year maturity,
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

| | on December 4th, 2001, 250 million in euro
      bonds bearing a fixed interest rate of 4.625% with a 3.25-year maturity.
|- | -------------------------------------------------------------------------------------------------------------------------

| | on November 29th, 2002, 200 million in British
      pound bonds bearing a fixed interest rate of 6.625% with a 15-year maturity,
|- | ---------------------------------------------------------------------------------------------------------------------------------

In
  2001, we also conducted private placements of debt securities under existing
  programs and incurred additional bank indebtedness, including 50 million euros
  of notes issued under our Euro Medium-Term Note program with a two year maturity,
  and a 100 million euro bank loan with a five year maturity.

We
  have also significantly increased our equity over the last three years. In February
  2001, we raised 1,113 million euros, net of issuance expenses, through the issuance
  of 14,110,592 shares at a price of 80 euros a share in a 1 for 8 underwritten
  rights offering to our shareholders. Furthermore, in 2000 we had previously
  issued, in an underwritten rights offering to our shareholders, bonds with stock
  subscription warrants attached. The bonds were to be used to finance our initial
  bid for Blue Circle in February 2000 and were redeemed when the bid was rejected.
  The stock subscription warrants remained outstanding after the redemption of
  the bonds and were exercisable for a total of 5,833,086 shares at a rate of
  4 subscription warrants for 1 share and a price of 74 euros per share and had
  to be exercised before April 2001. Approximately 3,763,000 shares were issued
  as result of the exercise of these warrants in 2000 for a total amount of 278
  million euros. The remaining warrants were exercised in 2001, which led to the
  issuance of 2,099,000 shares for a total amount of 152 million euros.

Some
  of our loan agreements contain restrictions on the ability of subsidiaries to
  transfer funds to the parent company in certain specific situations. The nature
  of these restrictions can be either regulatory, when the transfers of funds
  are subject to approval of local authorities, or contractual, when the loan
  agreements include restrictive provisions such as negative covenants on the
  payment of dividends. However, we do not believe that any of these covenants
  or restrictions will have any material impact on our ability to meet our cash
  obligations. Please see the risk factor in Item 3 entitled “Our ability
  to pay dividends and repay debt depends on our ability to transfer income and
  dividends from our subsidiaries."

Our
  reliance on external sources to finance a significant portion of our capital
  requirements makes our access to global sources of financing important. The
  cost and availability of unsecured financing are generally dependent on our
  short term and long term credit rating. Factors that are significant in the
  determination of our credit ratings or that otherwise could affect our ability
  to raise short-term and long-term financing include: our level and volatility
  of earnings, our relative positions in the markets in which we operate, our
  global and product diversification, our risk management policies, and our leverage
  ratios such as debt to total capital and interest coverage. We expect, credit
  rating agencies will focus, in particular, on our ability to generate sufficient
  operating cash flows to provide for future reductions in our indebtedness. A
  deterioration in any of the previously mentioned factors or combination of these
  factors may lead rating agencies to downgrade our credit ratings, thereby increasing
  our costs in obtaining unsecured financing.



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As
  of February 28, 2003, the credit ratings for our short and long term debt were
  as follows:

|                  | Short term | Long term
|----------------- | ---------- | ---------
|Standard & Poor’s | A-2        | BBB      

|Moody’s | - | Baa1
|------- | - | ----

In 2002 Standard & Poor’s
  downgraded our long term credit rating from BBB+ to BBB. However, this change
  had a very limited impact on the price of our outstanding bonds and no impact
  on our short term financing costs.

Cash surpluses

We
  do not operate a worldwide centralized cash management program, and each company
  within the group manages its own cash surpluses in accordance with policies
  set by senior management. In order to ensure that cash surpluses are used efficiently
  we have adopted in a number of cases cash pooling structures on a country-by-country
  basis. Moreover, with the introduction of the euro, we have established a daily
  process for centralizing cash surplus for most of the euro-zone countries.

As
  a general policy, cash surpluses are to be invested in liquid short-term instruments
  with at least two-thirds of any cash surplus being invested in instruments with
  a maturity of less than 3 months.

Effect of currency fluctuations
  on our results and balance sheet

We
  publish our consolidated financial statements in euros. In 2002, approximately
  32% of our sales were realized in euro-zone countries. The principal portion
  of our assets, liabilities, sales and earnings are denominated in currencies
  other than euro, particularly the U.S. dollar and U.S. dollar-influenced currencies,
  such as certain South American and Asian currencies as well as the British pound.
  As a result, we are exposed to fluctuations in the values of such currencies
  against the euro, with respect to the translation into euros of amounts to be
  reflected in our consolidated financial statements.

Disclosures about Contractual Obligations
  and Contingent Commitments

The
  following table sets forth our estimate of our exposure to our significant contractual
  obligations with respect to repayment of short term and long term debt, exercisable
  put options held by third party shareholders, and payments under operating leases.
  We expect to have the ability to refinance our debt obligations as they fall
  due and we do not expect all of such put options to be exercised immediately
  when they become exercisable. Our main other contractual commitments consist
  of capital expenditure and other purchase commitments. Capital expenditure and
  other purchase commitments amounted to 295 million euros at December 31, 2002
  (compared to 337 million euros and 98 million euros at December 31, 2001 and
  2000, respectively). For more information about expected capital expenditures
  please see the subsections entitled Capital Expenditures in the description
  of our divisions in “Item 4. Information on the Company” .

|                                 | 2003               |  | 2004  |  | 2005  |  | 2006  |  | 2007  |  | Beyond 5years |  | Totalcommitment | 
|-------------------------------- | ------------------ |  | ----- |  | ----- |  | ----- |  | ----- |  | ------------- |  | --------------- | 
|                                 | (in million euros)
|Short term borrowings*           | 530                |  |      |  |      |  |      |  |      |  |              |  | 530             | 
|Long term debt*                  | 524                |  | 1,208 |  | 1,646 |  | 2,619 |  | 1,613 |  | 3,185         |  | 10,795          | 
|Put options to purchase shares** | 183                |  | 101   |  | 328   |  | 133   |  |      |  |              |  | 745             | 
|Operating leases                 | 133                |  | 107   |  | 83    |  | 67    |  | 54    |  | 291           |  | 735             | 
|                                 |                    |  |       |  |       |  |       |  |       |  |               |  |                 | 
|TOTAL COMMITMENT                 | 1,370              |  | 1,416 |  | 2,057 |  | 2,819 |  | 1,667 |  | 3,476         |  | 12,805          | 
|                                 |                    |  |       |  |       |  |       |  |       |  |               |  |                 | 

|   |                                                                
|-- | ---------------------------------------------------------------
|*  | Excludes interest payments and includes convertible
      debt.
|** | Sets forth year option first becomes exercisable.              

The
  put options relate to certain companies in which we have an investment and where
  we have entered into shareholders and buy-sell agreements which grant some or
  all of the other shareholders the option to require us to purchase their shares
  at a fixed price or a price determined according to a formula.

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The options have been concluded either
  with international institutions, such as the EBRD, or with private investors
  and most of these agreements relate to our consolidated subsidiaries. In the
  event the shareholders exercise these options our percentage ownership interest
  in the relevant company would increase.

We
  have implemented new procedures with respect to outstanding commitments and
  contingencies which provide information about material collateral and other
  guarantees. At December 31, 2002 we had outstanding collateral and other guarantees
  amounting to 1,009 million euros, comprising of 77 million euros of pledged
  securities and other assets, 766 million euros of property subject to mortgages
  and 166 million euros of guarantees provided.

Disclosure about derivative instruments

Our
  policy is in general to use derivative instruments only to hedge against our
  exposure to exchange rate and interest rate risk. However, to manage our exposure
  to commodity risks we enter, from time to time, into derivative instruments.
  With the prior authorization of our senior management, we have occasionally
  entered into agreements to reduce our exposure to equity risk. We have also
  entered into a number of shareholders agreements with written call and put options
  as discussed above.

We
  have defined strict policies and procedures to measure, manage and monitor our
  market risk exposures. Our policies do not permit any speculative market position.
  We have instituted management rules based on a segregation of operations, financial
  and administrative control and risk measurement. We have also instituted, for
  all operations managed at corporate level, an integrated system that permits
  real time monitoring of hedging strategies.

For
  additional information, please refer to the Item 11 “Quantitative and
  Qualitative Disclosures About Market Risk”, and Note 26 of our consolidated
  financial statements.

Discussion of difference in
  Operating income under French GAAP and U.S. GAAP

We
  prepare our financial statements in accordance with French GAAP, which differs
  in certain significant respects from US GAAP, as discussed in Notes 31, 32,
  33 and 34 to the consolidated financial statements. The individual differences
  discussed in Notes 31 and 32 describe the main adjustments to the French GAAP
  consolidated financial statements.

Reclassification
  between French GAAP and US GAAP of fully consolidated and proportionately consolidated
  entities.

We
  account for various entities as either proportionately consolidated or fully
  consolidated for purposes of French GAAP and as equity method investees for
  US GAAP. The statement of income and balance sheet effects of these and other
  US GAAP reclassifications and adjustments are included in the condensed US GAAP
  financial statements presented in Note 32 to the consolidated financial statements.

If
  the above noted entities were accounted for under the equity method in our French
  GAAP financial statements, we would have reported revenues of 13,406 million
  euros (1,204 million euros less than under French GAAP) for the year ended December
  31, 2002, 12,363 million euros (1,335 million euros less than under French GAAP)
  for the year ended December 31, 2001 and 10,857 million euros (1,359 million
  euros less than under French GAAP) for the year ended December 31, 2000. Our
  operating income after reflecting our proportionately consolidated and fully
  consolidated entities as equity method investees would have been 1,624 
  million euros (199 million euros less than under French GAAP), 1,967 million
  euros (204 million euros less than under French GAAP) and 1,729 million
  euros (198 million euros less under French GAAP) for the years ended December
  31, 2002, 2001 and 2000, respectively.



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Reclassification
  of income statement items between French GAAP and US GAAP for the year ended
  December 31, 2002

The
  variation between French and US GAAP operating income, apart from the effect
  of the proportionately consolidated and fully consolidated entities discussed
  above was primarily due to the following items:

Items
  classified as non operating income under French GAAP have been reclassified
  as operating income under US GAAP including amortization of goodwill of 158
  million euros which is not a component of operating income under French GAAP
  has been reclassified as operating income under US GAAP.

Adjustments
  related to differences in accounting for business combinations under French
  GAAP and US GAAP.

For
  purposes of US GAAP and accordance with the SFAS 142 Goodwill and Other Intangible
  Assets, goodwill is no longer amortized. The result is a decrease in the French
  GAAP goodwill amortization of 158 million of euros which relates to such acquisitions.

We
  also present the impact of negative goodwill amortization as non operating in
  French GAAP, whereas under US GAAP, negative goodwill is offset against long
  lived assets which in turn impacts depreciation expense recorded as operating
  expense. The net result of the above adjustments is an increase in operating
  income of 23 million euros.

Adjustments
  resulting from accounting for stock based compensation under US GAAP.

We
  do not record compensation expense under French GAAP for our employee stock
  compensation plans. Under US GAAP we record the change in intrinsic value for
  the period as compensation expense or recovery of prior period expense. The
  effect upon operating income for the year was an increase under US GAAP of 60
  million euros.

Adjustments
  related to differences in accounting for provisions under French GAAP and US
  GAAP.

Differences
  between French and US GAAP with respect to accounting for restructuring provisions
  results in a decrease of 87 million euros to French GAAP operating income.

Reclassification
  of income statement items between French GAAP and US GAAP for the year ended
  December 31, 2001.

The
  variation between French and US GAAP operating income, apart from the effect
  of the proportionately consolidated and fully consolidated entities discussed
  above was primarily due to the following items:

Items
  classified as operating income under French GAAP have been reclassified as non
  operating income under US GAAP including:

| | Realized gains from disposals of long-term
      equity investments (marketable securities under US GAAP) amounting to 205 million
      euros,
|- | -----------------------------------------------------------------------------------------------------------------------------------------------

|  |                                                                                                                                                                                  
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Amortization of goodwill of 128 million euros
      which is not a component of operating income under French GAAP has been
      reclassified as operating income under US GAAP.

Adjustments
  related to differences in accounting for business combinations under French
  GAAP and US GAAP.

For
  French GAAP, we included in operating income the gain on disposal of the Specialty
  Products division in the year ended December 31, 2000. The sale of these entities
  was not considered to be consummated under US GAAP until January 22, 2001, the
  formal date of closing. Accordingly, for the year ended December 31, 2001 there
  is an increase in operating income of 88 million euros under US GAAP.

For
  US GAAP we recorded goodwill amortization expense related to amounts classified
  as market share and trademarks and which are not amortized under French GAAP.
  For purposes of US GAAP, goodwill resulting from business combinations subsequent
  to June 30, 2001 is not amortized. The result is a decrease in the French GAAP
  goodwill amortization which relates to such acquisitions, the most significant
  effect resulting from the acquisition of Blue Circle on July 11, 2001.

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We
  also present the impact of negative goodwill amortization as non operating in
  French GAAP, whereas under US GAAP, negative goodwill is offset against long
  lived assets which in turn impacts depreciation expense recorded as operating
  expense. The net result of the above adjustments is an increase in operating
  income of 3 million euros.

French
  GAAP provides that where a business combination results in regional over capacity,
  costs associated with restructuring the acquirer’s operations should be
  included as a cost of the acquisition. US GAAP specifically excludes from costs
  of an acquisition those costs associated with closing duplicate facilities and
  restructuring operations of the acquirer. As a result, US GAAP operating income
  is decreased by 94 million euros related to certain of our plant closure costs
  which result from the purchase of Blue Circle and which are included as a cost
  of the acquisition under French GAAP.

Adjustments
  resulting from accounting for stock based compensation under US GAAP.

We
  do not record compensation expense under French GAAP for our employee stock
  compensation plans. Under US GAAP we record the change in intrinsic value for
  the period as compensation expense or recovery of prior period expense. The
  effect upon operating income for the year was a decrease under US GAAP of 50
  million euros.

Adjustments
  related to differences in accounting for provisions under French GAAP and US
  GAAP.

Differences
  between French and US GAAP with respect to accounting for restructuring provisions
  results in a decrease of 71 million euros to French GAAP operating income.

Reclassification
  of income statement items between French GAAP and US GAAP for the year ended
  December 31, 2000.

The
  variation between French and US GAAP operating income, apart from the effect
  of the proportionately consolidated and fully consolidated entities discussed
  above was primarily due to the following items:

Items
  classified as operating income under French GAAP have been reclassified as non
  operating income under US GAAP including:

| | Realized gains from disposals of long-term
      equity investments (marketable securities under US GAAP) amounting to 106 million
      euros,
|- | -----------------------------------------------------------------------------------------------------------------------------------------------

|  |                                                                                                                                                                                  
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Amortization of goodwill of 117 million euros
      which is not a component of operating income under French GAAP has been
      reclassified as operating income under US GAAP.

Adjustments
  related to differences in accounting for business combinations under French
  GAAP and US GAAP.

For
  French GAAP, we included in operating income the gain on disposal of the Specialty
  Products division. The sale of these entities was not considered to be consummated
  under US GAAP at December 31, 2000, resulting in a decrease in operating income
  of 77 million euros.

For
  US GAAP we recorded goodwill amortization expense related to amounts classified
  as market share and trademarks under French GAAP which are not amortized. We
  also present the impact of negative goodwill amortization as non operating in
  French GAAP, whereas under US GAAP, negative goodwill is offset against long
  lived assets which in turn impacts depreciation expense recorded as operating
  expense. The net result is a decrease in operating expense of 23 million euros.

Adjustments
  resulting from accounting for stock based compensation under US GAAP.

We
  do not record compensation expense under French GAAP for our employee stock
  compensation plans. Under US GAAP we record the change in intrinsic value for
  the period as compensation expense or recovery of prior period expense. The
  effect upon operating income for the year was a recovery of 22 million euros.

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Adjustments
  related to differences in accounting for provisions under French GAAP and US
  GAAP.

Differences
  between French and US GAAP with respect to accounting for restructuring provisions
  results in a decrease of 15 million euros to French GAAP operating income.

Summary

Our
  operating income under US GAAP taking into consideration the above effects,
  totaled 1,580 million euros (243 million euros lower than under French
  GAAP), 1,403 million euros (768 million euros lower than under French GAAP)
  and 1,312 million euros (615 million euros lower than under French GAAP) for
  the years ended December 31, 2002, 2001 and 2000, respectively.

Adjustments
  are discussed in Notes 31 and 32 to the financial statements. Summarized US
  GAAP consolidated statements of income and balance sheet information is provided
  in Note 32 to our consolidated financial statements.

Forward Looking Discussion of
  Available Trend Information

After
  the slowing down of many of our markets in countries with mature economies in
  the second half of 2002, the prospects for 2003 do not point towards a return
  to growth in these markets given the uncertain macroeconomic situation. In Western
  Europe we anticipate that the major markets are likely to be soft, but with
  a further deterioration in Germany. In North America, we expect a slight decline
  in cement and aggregates volumes as commercial construction remains weak and
  infrastructure spending is held back by state budgetary constraints. However
  the solid housing market will support the demand for gypsum wallboard. In emerging
  markets we expect growth overall if the macroeconomic situation does not worsen
  with good growth in much of Asia. With regard to prices, we see the outlook
  as generally positive albeit with a few difficult markets, in particular for
  cement in Germany and the Philippines.

In
  this context we will concentrate on performance improvement, with particular
  attention on building on the progress made with the former Blue Circle operations.
  Further synergies will be generated and the Group as a whole will continue to
  benefit from this acquisition. We will continue to improve the operational performance
  of these operations after the results in 2002 were impacted by deteriorating
  market conditions and short term production issues.

A
  major challenge at the beginning of the year has been the impact of the Venezuelan
  and Middle Eastern crises on oil prices. While we use gas in our gypsum wallboard
  plants, we use very little oil and gas in our cement plants, with our main sources
  of fuel being coal and petcoke as well as alternative fuels. Petcoke prices
  have seen a significant increase, much of which is due to the shortfall in supply
  resulting from the Venezuelan situation, while coal prices have declined. Therefore,
  we do not expect this situation to have a material effect on our cement costs
  unless prices remain at exceptionally high levels for a prolonged period.

The
  underperformance of pension plan assets in recent years as compared to expectations
  will result in the need to increase our pension expense by approximately 100
  million euros in 2003, with an effect of some 55 million euros at the net income,
  group share level. This will also result in a moderate increase of around 25
  million euros in the amount contributed in cash to the pension plans in 2003
  as compared to 2002, if we exclude from this comparison the exceptional contribution
  of 39 million euros made in Spain in 2002.

Our
  objective of returning to a financial structure similar to the structure we
  had prior to the Blue Circle acquisition remains our primary goal. Our capacity
  to generate strong cash flows, our particular focus in 2003 on working capital
  management associated with a strict monitoring of capital expenditures and further
  selective divestments will contribute to another significant reduction in the
  level of debt at year-end 2003.

The
  new organization of senior management, consisting in the separation of the duties
  of Chairman and Chief Executive Officer effective upon our annual general meeting
  in May 2003, will ensure continuity and continue to play on the strengths and
  the traditions of the Group.

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ITEM 6.   DIRECTORS,
  SENIOR MANAGEMENT AND EMPLOYEES

Directors and Executive Officers

In
  accordance with French law governing a société anonyme,
  as amended on May 15, 2001, and our by-laws (statuts) our affairs are
  managed by the board of directors, the Chairman of the board (président)
  and the Chief Executive Officer (directeur général), with
  the Chairman and the Chief Executive Officer being the same person or different
  persons as may be decided from time to time by the board of directors. The board
  of directors sets forth our business strategy and monitors its implementation.
  Within the limit of our corporate purpose and subject to the powers expressly
  reserved to our shareholders by law and by our statuts it can make decisions
  on any matter regarding our company.

The
  Chairman represents the board of directors and ensures that the directors are
  capable of fulfilling their tasks, organizes and presides over its proceedings
  and reports on these proceedings to the meetings of shareholders, monitors the
  compliance with our corporate governance principles and presides over general
  meetings of shareholders.

The
  Chief Executive Officer, has full executive authority to manage the affairs
  of our company and has broad powers to act on behalf of our company and to represent
  Lafarge in dealings with third parties, subject only to the powers expressly
  reserved to its board of directors or its shareholders by law, by our statuts,
  by decision of the board of directors or by decision of the shareholders.

Pursuant
  to the May 15, 2001 act amending French law governing a société
  anonyme, and after approval by the extraordinary general meeting of shareholders
  on November 5, 2002, we have amended our by-laws (statuts) to set forth
  the conditions pursuant to which the Board of Directors can decide, by a majority
  decision, to vest the management of our company either in a single Chairman
  of the Board and Chief Executive Officer, or in a Chief Executive Officer that
  is distinct from the Chairman of the Board. Pursuant to these amendments, the
  board of directors decided on February 26, 2003 to appoint a Chief Executive
  Officer distinct from the Chairman of the Board, such appointment being effective
  as of May 20, 2003, the date on which the annual meeting of our shareholders
  is to be held. In the interval, the Chairman of the Board, Mr. Bertrand Collomb,
  will remain Chief Executive Officer. The board may subsequently change the form
  of general management pursuant to the same conditions as to majority voting;
  in any event, the board shall render a decision as to the form of general management
  at the time of the appointment or the renewal of the term of office of the Chief
  Executive Officer if such person is not the Chairman. The amendments to our
  statutsalso include provisions regarding the appointment of up to five
  chief operating officers (directeurs généraux délégués),
  pursuant to a proposal by the Chief Executive Officer.

Directors and Senior Management

Board of Directors

Presently,
  the board of directors consists of fifteen members. Our by-laws (statuts)
  currently provide that there must be at least three directors and no more than
  18 directors elected by the general meeting of shareholders, that the term of
  office of directors elected in 2002 and in subsequent years shall be four years,
  that the term of office of directors elected in 2001 is five years and that
  directors elected prior to 2001 have a term of office of six years. Our board
  of directors met four times during the course of fiscal year 2002. None of our
  shareholders has the right to appoint a director to the board of directors.
  There is no arrangement or understanding with major shareholders, customers,
  suppliers or others, pursuant to which any person referred to below was selected
  as a director or an executive officer.

The
  board of directors cannot increase the actual number of members serving on the
  board. Only the shareholders, acting as a simple majority, can do so. Each director
  must also be a shareholder and must hold such number of shares of the Company
  in registered form as represent in the aggregate a nominal value of at least
  4,572 euros, which, at the current par value of 4 euros, amounts to 1,143 shares
  per director. Under French law, a director may be an individual or a legal entity,
  but the Chairman and the Chief Executive Officer must be an individual or individuals.
  The Chairman and the Chief Executive Officer are elected by the board of directors.

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Directors
  are elected by the shareholders and serve until the expiry of their respective
  term, or until their resignation, death or removal, with or without cause by
  the shareholders. Under certain conditions, the board of directors may fill
  vacancies on the board of directors, pending the next shareholders' meeting.
  The board of directors has the power to appoint and remove the Chairman or the
  Chief Executive Officer at any time.

In
  consideration for their services on the board, directors are entitled to receive
  directors' fees. The total annual amount of directors' fees is fixed by the
  shareholders' meeting, but the board of directors determines their allocation
  among the directors. In addition, remuneration may be granted to directors who
  serve as members of committees formed from among board members or who are entrusted
  with specific tasks or duties . In such event, such remuneration is charged
  to operating costs, notified to the auditors, submitted for prior authorization
  of the board of directors and subsequently approved by the shareholders’
  meeting. The board may also authorize the reimbursement of travel and accommodation
  expenses as well as other expenses incurred by directors in the corporate interest.

Under
  French law, the board of directors presents the year-end accounts to the shareholders
  and convenes shareholders' meetings. In addition, the board of directors reviews
  and monitors the economic, financial and technical strategies of the company.

Meetings
  of the board of directors, which are held as often as required in the corporate
  interest, and in any case at least four times a year, are normally convened
  and presided over by the Chairman. Our statuts provide, in accordance
  with French company law, that if our board of directors has not met for over
  two months, at least one-third of the members of the board may request that
  the Chairman convene the board regarding matters listed in the agenda for the
  meeting. A quorum consists of one-half of the members of the board of directors
  and decisions are made by a vote of the majority of the members present or represented
  by other members of the board of directors. A director may give a proxy to another
  director but a director cannot represent more than one other member at any particular
  meeting. Members of the board of directors represented by another member at
  meetings do not count for purposes of determining the existence of a quorum.
  However, members participating via authorized videoconference are deemed present
  for such purposes, except where the vote concerns the appointment or reappointment
  of the directeur général, or in the event of the adoption of the
  decisions enumerated in Art. L 225-37 of the French Commercial Code. A director
  may not vote for an arrangement or contract in which he or she is materially
  interested. If he or she does vote, the decision will be void.

Under
  French law and the Company’s statuts, any accommodation with respect
  to a negotiable instrument, or any other type of guaranty or surety by the company
  requires the prior authorization of the board of directors. Under French law,
  the directors and the Chief Executive Officer are liable for violations of French
  legal and regulatory requirements applicable to sociétés anonymes,
  violations of our by-laws and negligent mismanagement. A director or the Chief
  Executive Officer may be held liable for such actions both individually and
  jointly with the other directors.

French
  law prohibits us from making, directly or indirectly, any type of loan, including
  in the form of an open account or guaranty, to our directors (including permanent
  representatives of companies on the board of directors). Furthermore, this prohibition
  extends to their spouses, parents and grandparents and descendants. This provision
  also applies to certain of our executive officers (Directeur Généraland Directeurs Généraux Délégués).

The
  table below sets forth, at March 31, 2003, the names and ages of our directors,
  their current positions with our company, the dates of their initial appointment
  as directors, the expiration dates of their current terms and their current
  principal occupation or employment. There is no family relationship between
  any of the persons listed in this chart. The address of each person listed is
  61, rue des Belles Feuilles, BP 40-75782 Paris Cedex 16, France.

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|Name                    |  | Age |  | Current
      Position withLafarge                                        |  | Principal
      Business ActivitiesPerformed Outside Lafarge                                                                                                                                              |  | Initial
      Year ofAppointment |  | Expiration
      ofTerm of Office: General Meeting approving financial
      statements for financial year ended |    
|----------------------- |  | --- |  | ------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------- |  | ---------------------------------------------------------------------------------------------------------------- | ---
|                        |  |     |  |                                                                           |  |                                                                                                                                                                                                           |  |                                  |  |                                                                                                                  |    
|                        |  |     |  |                                                                           |  |                                                                                                                                                                                                           |  |                                  |  |                                                                                                                  |    
|Bertrand Collomb        |  | 60  |  | Chairman
      of the Board and Chief Executive Officer of the Company(1) |  | Director
      of Total Fina Elf SA, Vivendi Universal and AtcoMember
      of the Supervisory Board of Allianz and Advisory Director of Unilever                                                         |  | 1987                             |  | 2004                                                                                                             |    
|                        |  |     |  |                                                                           |  |                                                                                                                                                                                                           |  |                                  |  |                                                                                                                  |    
|Bernard Kasriel         |  | 56  |  | Vice-Chairman of
      the Company(2)                                     |  | Director of Sonoco
      Products Company                                                                                                                                                                 |  | 1989                             |  | 2005                                                                                                             |    
|                        |  |     |  |                                                                           |  |                                                                                                                                                                                                           |  |                                  |  |                                                                                                                  |    
|Jacques Lefèvre         |  | 64  |  | Vice-Chairman                                                             |  | Chairman of the
      Supervisory Board of Compagnie de Fives Lille, Director of Société
      Nationale d'Investissement (Morocco), Cimentos de Portugal and Hurricane
      Hydrocarbons                |  | 1989                             |  | 2005                                                                                                             |    
|                        |  |     |  |                                                                           |  |                                                                                                                                                                                                           |  |                                  |  |                                                                                                                  |    
|Michael Blakenham       |  | 65  |  | Director                                                                  |  | Chairman of Royal
      Botanic Gardens KewDirector of Sotheby's Holdings Inc and UK Japan
      Twenty First Century Group                                                                               |  | 1997                             |  | 2002                                                                                                             | (3)
|                        |  |     |  |                                                                           |  |                                                                                                                                                                                                           |  |                                  |  |                                                                                                                  |    
|Michel Bon              |  | 59  |  | Director                                                                  |  | Honorary Chairman
        of France Télécom
      Chairman of the Supervisory Board of Editions
        du CerfDirector of SoneparMember of the Supervisory Board of Grand Vision
        and Air Liquide |  | 1993                             |  | 2004                                                                                                             |    
|                        |  |     |  |                                                                           |  |                                                                                                                                                                                                           |  |                                  |  |                                                                                                                  |    
|Guilherme Frering       |  | 44  |  | Director                                                                  |  | Chairman of Cimento
      Maua                                                                                                                                                                            |  | 1997                             |  | 2002                                                                                                             | (3)
|                        |  |     |  |                                                                           |  |                                                                                                                                                                                                           |  |                                  |  |                                                                                                                  |    
|Richard Haythornthwaite |  | 46  |  | Director                                                                  |  | Chief Executive
      Officer of Invesys plcDirector of
      Cookson Group plc and ICI plc                                                                                                               |  | 2001                             |  | 2004                                                                                                             | (4)
|                        |  |     |  |                                                                           |  |                                                                                                                                                                                                           |  |                                  |  |                                                                                                                  |    
|Patrice le Hodey        |  | 58  |  | Director                                                                  |  | Vice Chairman of
      Libre Belgique Dernière Heure (IPM),Chairman
      of Audiopresse and Derouk CartographieDirector
      of RTL-TVI and the press agency Belga                                      |  | 1987                             |  | 2004                                                                                                             |    
|                        |  |     |  |                                                                           |  |                                                                                                                                                                                                           |  |                                  |  |                                                                                                                  |    
|Bernard Isautier        |  | 60  |  | Director                                                                  |  | Chairman of Hurricane
      Hydrocarbons Ltd.                                                                                                                                                             |  | 1989                             |  | 2005                                                                                                             |    
|                        |  |     |  |                                                                           |  |                                                                                                                                                                                                           |  |                                  |  |                                                                                                                  |    

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|Name               |  | Age |  | Current
      Position withLafarge |  | Principal
      Business ActivitiesPerformed Outside Lafarge                                                                                                                                       |  | Initial
      Year ofAppointment |  | Expiration
      ofTerm of Office: General Meeting approving financial
      statements for financial year ended |    
|------------------ |  | --- |  | ---------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------- |  | ---------------------------------------------------------------------------------------------------------------- | ---
|                   |  |     |  |                                    |  |                                                                                                                                                                                                    |  |                                  |  |                                                                                                                  |    
|Alain Joly         |  | 65  |  | Director                           |  | Chairman of the Supervisory
      Board of Air LiquideDirector of Banque Nationale de Paris                                                                                                        |  | 1993                             |  | 2004                                                                                                             |    
|                   |  |     |  |                                    |  |                                                                                                                                                                                                    |  |                                  |  |                                                                                                                  |    
|Jean Keller        |  | 68  |  | Director                           |  | Member of the Standards Advisory
      Council of the International Accounting Standards Board and member of the
      Supervisory Council of the European Financial and Accounting Advisory Group |  | 1998                             |  | 2003                                                                                                             |    
|                   |  |     |  |                                    |  |                                                                                                                                                                                                    |  |                                  |  |                                                                                                                  |    
|Raphaël de Lafarge |  | 60  |  | Director                           |  | Director of Borgey SA                                                                                                                                                                              |  | 1982                             |  | 2002                                                                                                             | (3)
|                   |  |     |  |                                    |  |                                                                                                                                                                                                    |  |                                  |  |                                                                                                                  |    
|Robert W. Murdoch  |  | 61  |  | Director                           |  | Director of Lafarge North America,
      Lafarge Canada, Sierra Systems Group Inc, Lallmand Inc., A.P. Plasman, Inc.
      and Timber West Forest Corp.                                            |  | 1993                             |  | 2004                                                                                                             |    
|                   |  |     |  |                                    |  |                                                                                                                                                                                                    |  |                                  |  |                                                                                                                  |    
|Michel Pébereau    |  | 61  |  | Director                           |  | Chairman of BNP-ParibasDirector of Total Fina Elf and Saint-GobainMember of the Supervisory Board of Axa, Dresdner Bank
      and Galeries Lafayette                                               |  | 1991                             |  | 2002                                                                                                             | (3)
|                   |  |     |  |                                    |  |                                                                                                                                                                                                    |  |                                  |  |                                                                                                                  |    
|Hélène Ploix       |  | 58  |  | Director                           |  | Chairman of Pechel Industries
      S.A.S.Director of Publicis, Chairman of the Association
      Française des Investisseurs en Capital                                                           |  | 1999                             |  | 2004                                                                                                             |    

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(1)
  Mr. Bertrand Collomb will remain Chairman and Chief Executive Officer until
  May 20, 2003, after which date he will no longer be Chief Executive Officer
  although he will remain Chairman of the board.
  (2)Mr. Bernard Kasriel
  has been appointed Chief Executive Officer by the board of directors on February
  26, 2003, such appointment being effective as of May 20, 2003, the date on which
  our shareholders’ meeting is to be held.
  (3) Directors whose term of office is to be renewed for an additional period
  of four years by the shareholder’s meeting to be held on May 20, 2003.
  (4) Richard Haythornthwaite was co-opted by the board of directors as the replacement
  for Mr. Lindsay Owen-Jones who resigned as a director effective as of September
  3, 2001. His appointment was ratified by the annual general meeting of shareholders
  held on May 28, 2002.

Board Practices and Committees

The
  board of directors held four meetings in 2002. During 2002, the directors' attendance
  rate was 95%. The board of directors comprises the following committees:

The
  Organization and Management Committee assists the Chairman and the board
  of directors with decisions concerning the composition of the board of directors
  and its remuneration, management remuneration policy, the allocation of stock
  subscription and purchase options and the organizational structure of management.
  The committee also drafts resolutions of the board of directors concerning the
  remuneration of executive officers and nominates new directors and executive
  officers when appropriate.

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The
  Organization and Management Committee met twice in 2002 (in February and in
  December) and issued recommendations to the board of directors in relation to
  the status of our executive officers (mandataires sociaux), the granting
  to stock options and the allocation of director’s fees for 2002. The following
  directors are currently members of the Organization and Management Committee:
  Michel Pébereau, Michael Blakenham and Alain Joly, who is the Chairman
  of the Committee.

The
  Strategy and Investment Committee examines in detail important strategic
  issues and major investment and divestment projects. The Strategy and Investment
  Committee met twice in 2002 (in May and in September) and reviewed our performance
  as compared to our competitors and our development strategy in our different
  activities. The following directors are currently members of the Strategy and
  Investment Committee: Michel Bon, Jacques Lefèvre, Patrice le Hodey,
  Bernard Isautier, Alain Joly, Robert W. Murdoch, Guilherme Frering and Bertrand
  Collomb, who is the Chairman of the Committee.

The
  Finance Committee performs a preliminary review of the semi-annual and
  annual financial statements and holds meetings with the statutory auditors and
  with general and financial management. Our management provides the Finance Committee
  with regular updates on our financial position, the main thrust of current financial
  policy and advises the committee on the terms of major financial transactions
  prior to their completion. The committee also receives copies of all earnings
  press releases prior to their issue. The committee reviews the report prepared
  by the statutory auditors and can request to hear members of our internal audit
  department with such hearing taking place without the presence of our management,
  provided our Chairman so agrees. More generally, the Finance Committee may be
  consulted by our management in relation to various other issues. The Finance
  Committee met twice in 2002 (in February and in September) and performed a preliminary
  review of our financial statements for 2001 and our semi-annual financial statements
  for 2002. The committee issued a recommendation in relation to the appointment
  of a new statutory auditor by the shareholders’ meeting held on May 28,
  2002. In February 2003, the Finance Committee performed a preliminary review
  of our financial statements for 2002 and held meetings with the statutory auditors
  and general financial management. The following directors are currently members
  of the Finance Committee: Michel Bon, Jacques Lefèvre, Patrice le Hodey,
  Jean Keller, Bernard Isautier, Raphaël de Lafarge, Robert W. Murdoch, Guilherme
  Frering, Hélène Ploix and Michel Pébereau, who is the Chairman
  of the Committee.

During
  2002, the average attendance rate at committee meetings was over 95%.

The
  following directors are also executive officers at March 31, 2003:

Bertrand
  Collomb and Bernard Kasriel.

Directors' fees

Policy regarding directors’
  fees

The
  combined ordinary and extraordinary general meeting of May 28, 2001 established
  the maximum amount of directors fees to be paid in 2001 and in subsequent years
  at FRF 4 million (609,796 euros).

Each
  of our directors is entitled to receive a fixed fee of 15,245 euros per year
  (increased by 25% for the chairmen of our committees, except for the Chairman
  of our Strategy and Investment Committee, Mr. Bertrand Collomb). A director
  who is appointed or whose office terminates in the course of the year is entitled
  to 50% of the fixed fee.

In
  2002, an additional fee of 2,327 euros was payable to each director who attended
  a meeting of our board of directors or one of its committees.

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Fees paid

The
  following table presents the fees paid to our directors in 2003 with respect
  to the 2002 fiscal year:

|Director                |  | Fees received in 2003 | 
|----------------------- |  | --------------------- | 
|                        |  |                       | 
|                        |  | (amounts in euros)    | 
|Bertrand Collomb        |  | 24,553                | 
|Bernard Kasriel         |  | 24,553                | 
|Jacques Lefèvre         |  | 33,861                | 
|Michael Blakenham       |  | 29,207                | 
|Michel Bon              |  | 29,207                | 
|Guilherme Frering       |  | 33,861                | 
|Richard Haythornthwaite |  | 19,899                | 
|Patrice le
      Hodey  |  | 33,861                | 
|Bernard Isautier        |  | 33,861                | 
|Alain Joly              |  | 37,673                | 
|Jean Keller             |  | 29,207                | 
|Raphaël de Lafarge      |  | 29,207                | 
|Robert W. Murdoch       |  | 33,861                | 
|Michel Pébereau         |  | 35,346                | 
|Hélène Ploix            |  | 29,207                | 
|                        |  |                       | 
|TOTAL                   |  | 457,364               | 
|                        |  |                       | 

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In
  comparison, in 2002 we paid 609 thousand euros in directors fees with respect
  to the 2001 fiscal year.

Directors Share Ownership

The
  following table presents share ownership information for each member of our
  board of directors at December 31, 2002:

|Director                |  | Number of
      shares held at December 31, 2002* | 
|----------------------- |  | ------------------------------------------------- | 
|                        |  |                                                   | 
|Bertrand Collomb        |  | 14,784                                            | 
|Bernard Kasriel         |  | 13,192                                            | 
|Jacques Lefèvre         |  | 5,441                                             | 
|Michael Blakenham       |  | 1,462                                             | 
|Michel Bon              |  | 2,579                                             | 
|Guilherme Frering       |  | 1,702                                             | 
|Richard Haythornthwaite |  | 1,200                                             | 
|Patrice le Hodey        |  | 3,255                                             | 
|Bernard Isautier        |  | 1,466                                             | 
|Alain Joly              |  | 1,994                                             | 
|Jean Keller             |  | 1,281                                             | 
|Raphaël de Lafarge      |  | 42,451                                            | 
|Robert W. Murdoch       |  | 1,593                                             | 
|Michel Pébereau         |  | 1,565                                             | 
|Hélène Ploix            |  | 1,441                                             | 

---

|* | Each director owns less than
      0.05% of the 132,880,433 shares outstanding at December 31, 2002. Collectively
      our directors hold approximately 0.07% of our share capital as at December
      31, 2002 and 0.10 % of our voting rights.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Senior Management and Executive
  Officers

French
  law governing a société anonyme, as amended on May 15,
  2001, and our revised statuts, permit the board of directors to appoint
  up to five chief operating officers (directeurs généraux délégués)
  proposed by the Chief Executive Officer. The board of directors, upon with the
  recommendation by the Chief Executive Officer, determines the extent and the
  duration of the powers of the directeurs généraux délégués.

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Currently, Bernard Kasriel and Michel
  Rose are directeurs généraux délégués
  with Bernard. Kasriel becoming Chief Executive Officer effective on May 20,
  2003. In April 2003, we also announced that the appointment of Bruno Lafont
  as directeur general délégué will be proposed by
  the Chairman to our Board of Directors to be held on May 20, 2003.Under French
  law, a directeur général délégué,
  like the Chairman and Chief Executive Officer, has broad powers to represent
  and bind the company in dealing with third parties. A directeur général
  délégué may be removed by the board of directors at
  any time upon proposal of the Chief Executive Officer. A directeur général
  délégué may be held responsible individually for actions
  he takes that are contrary to the company's interests

The
  table below shows, at March 31, 2003, the names and ages of our executive officers
  and their responsibilities at Lafarge.

|Name                    |  | Age |  | Position with Lafarge                                             
|----------------------- |  | --- |  | ------------------------------------------------------------------
|                        |  |     |  |                                                                   
|Direction Générale      |  |     |  |                                                                   
|                        |  |     |  |                                                                   
|Bertrand Collomb        |  | 60  |  | Chairman of the Board
      and Chief Executive Officer* (1)      
|                        |  |     |  |                                                                   
|Bernard Kasriel         |  | 56  |  | Vice Chairman of the Board and
      Chief Operating Officer* (1) 
|                        |  |     |  |                                                                   
|Michel Rose             |  | 60  |  | Senior Executive Vice President*                                  
|                        |  |     |  |                                                                   
|Executive Committee     |  |     |  |                                                                   
|                        |  |     |  |                                                                   
|Jean-Jacques Gauthier   |  | 43  |  | Executive Vice President, Finance                                 
|                        |  |     |  |                                                                   
|Ulrich Glaunach         |  | 46  |  | Executive Vice President, Roofing                                 
|                        |  |     |  |                                                                   
|Christian Herrault      |  | 52  |  | Executive Vice President, Human
      Resources & Organization    
|                        |  |     |  |                                                                   
|Bruno Lafont            |  | 46  |  | Executive Vice President, Gypsum(2)                               
|                        |  |     |  |                                                                   
|Charles de Liedekerke   |  | 49  |  | Executive Vice President, Aggregates
      & Concrete             
|                        |  |     |  |                                                                   
|Isidoro Miranda         |  | 44  |  | Executive Vice President, Cement                                  
|                        |  |     |  |                                                                   
|Other Senior Executives |  |     |  |                                                                   
|                        |  |     |  |                                                                   
|Jean Carlos Angulo      |  | 53  |  | Executive Vice President, Regional
      President, Western Europe
|                        |  |     |  |                                                                   
|Yves de Clerck          |  | 60  |  | Executive Vice President, Regional
      President, Central Europe
|                        |  |     |  |                                                                   
|Miguel del Campo        |  | 61  |  | Executive Vice President, Regional
      President, Latin America 
|                        |  |     |  |                                                                   
|Philippe Rollier        |  | 60  |  | Executive Vice President, Regional
      President, North America 
|                        |  |     |  |                                                                   
|Jean-Marie Schmitz      |  | 59  |  | Executive Vice President, Morocco                                 

|*   | also members of the Executive Committee                                                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Effective as of May 20, 2003, the date on
      which our shareholders’ meeting is to be held, Bernard Kasriel will
      become Chief Executive Officer and Bertrand Collomb will remain Chairman
      of the Board.
|(2) | The appointment of Bruno Lafont as directeur
      général délégué will be proposed
      by the Chairman to our Board of Directors to be held on May 20, 2003.                                                       

The
  following is a brief biography of each of our executive officers:

Direction Générale

Bertrand
  Collomb, Chairman and Chief Executive Officer. Mr. Collomb was named Vice
  Chairman and Chief Executive Officer in 1989, and in July of that year, Chief
  Executive Officer of the Group. Also in 1987, he was named Chief Executive Officer
  of Lafarge North America, before which he served as Chief Executive Officer
  of our U.S. subsidiary, General Portland, from 1985. From 1983 to 1985, he was
  Chairman of Orsan, a former subsidiary of Lafarge and the parent company of
  our former bioactivities division, where he was in charge of bioactivities.

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He
  first joined Lafarge in 1975, and held various positions in Lafarge Ciments
  including Regional Director, then Chief Operating Officer and then President.
  From 1966 to 1975, he occupied different administrative functions in the French
  Ministry of Industry.

Bernard
  Kasriel, Vice Chairman since 1995 and Chief Operating Officer since 1987.
  Mr. Kasriel served as President and Chief Operating Officer of National Gypsum
  in Dallas, Texas, from 1987 to 1989. He was named Senior Executive Vice President
  of the Group in 1982. He first joined Lafarge in December 1977 in the then Sanitary
  division, Allia, where he became Chief Operating Officer. From 1975 to 1977,
  he served as deputy president of the Société Phocéenne
  de Métallurgie, and from 1972 to 1974, he served as senior executive
  vice president of Braud Establishments. Mr. Kasriel began his career in 1970
  at the Institut du Développement Industriel.

Michel
  Rose, Senior Executive Vice President since 1989. Appointed directeur
  général délégué in February 2002. Mr.
  Rose has served as Senior Executive Vice President of Lafarge in charge of emerging
  countries since 1996 and is currently the President of the Cement Committee.
  Prior to this, Mr. Rose was Chief Executive Officer of Lafarge North America
  from 1992 to 1996. He has held various positions within the Group, including
  Chief Executive Officer of Orsan, which has since been divested, Executive Vice
  President in charge of Human Resources and Internal Communications and Chief
  Executive Officer of our activities in Brazil. He first joined Lafarge in 1970,
  as a plant engineer.

Executive Committee

Jean-Jacques
  Gauthier,Executive Vice President, Finance, since March 2001. Prior to
  joining Lafarge in March 2001, Mr. Gauthier had been working since the beginning
  of 2000 for the Astrium group, which resulted from the merger of Matra Marconi
  Space with the space activities of Daimler Benz. From 1996 to 2000, he served
  as Executive Vice President, Finance, of Matra Marconi Space. Prior to this
  appointment, he held various financial positions both in France and the United
  States with the Matra group from 1986.

Ulrich
  Glaunach,Executive Vice President, Roofing, and member of the executive
  committee since May 2000. Prior to holding his current position, Mr. Glaunach
  was Chief Operating Officer of the Roofing division in charge of concrete tiles
  since July 1998, after holding the position of Chief Executive Officer of Lafarge
  Perlmooser, our Austrian subsidiary, since December 1995.

Christian
  Herrault, Executive Vice President, Human Resources and Organization, since
  October 1998. Prior to holding his current position, Mr. Herrault was General
  Manager of the Aluminates and Admixtures business area from 1995. From 1985
  until 1995, he assumed successive managerial responsibilities in our bioactivities
  sector. Prior to joining Lafarge in 1985, he occupied several positions in French
  Ministries.

Bruno
  Lafont,Executive Vice President, Gypsum, since October 1998. Prior to holding
  his current position, Mr. Lafont occupied the position of Executive Vice President,
  Finance, from 1995 to 1998. Mr. Lafont previously served in a variety of financial
  and managerial positions with Lafarge, including in Turkey and the Eastern Mediterranean
  and with our German sanitary subsidiary, Allia. Mr. Lafont joined Lafarge in
  January 1983.

Charles
  de Liedekerke, Executive Vice President, Aggregates & Concrete, since
  October 1998. Prior to holding his current position, Mr. de Liedekerke was in
  charge of integrating our aggregates activities in the United Kingdom since
  early 1998. In 1992, he left Lafarge to take up a position as Chief Financial
  Officer of Bekaert, a Belgian group (of which he has been a director since 1988),
  and held this position until his return to Lafarge in 1998. From 1982, when
  he first joined Lafarge, until 1992, Mr. de Liedekerke held various managerial
  positions in France and North America.

Isidoro
  Miranda,Executive Vice President, Cement, and member of the executive committee
  since March 2001. Prior to holding his current position, Mr. Miranda served
  as General Manager of Lafarge Asland, our cement subsidiary in Spain. He joined
  Lafarge in 1995 as Group Director of Strategic Studies. Prior to this, he worked
  in London and in Paris in a strategic consulting firm.



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Other Senior Executive Officers

Jean
  Carlos Angulo, Executive Vice President since September 2000 and Regional
  President of Western Europe since January 1, 2000. From 1997 to 2000, he was
  Chief Executive Officer of Lafarge Ciments, our French cement subsidiary. Mr.
  Angulo joined Lafarge in 1975, and subsequently held various positions including
  Managing Director of our Brazilian operations. He is member of the Board of
  Cimentos de Portugal.

Yves
  de Clerck, Executive Vice President and Regional President of Central Europe
  since March 2001. From February 1997 to March 2001, Mr. De Clerck served as
  Executive Vice President in charge of the Cement division. Prior to this, he
  was Chief Executive Officer of Lafarge Ciments, our French cement subsidiary,
  from September 1, 1988. From September 1983 until September 1988, he was responsible
  for social development at our headquarters.

Miguel
  del Campo, Executive Vice President and Regional President of Latin America
  since March 2001. Prior to holding his current position, Mr. Del Campo served
  as Executive Vice President, Finance since October 1998. From 1970, when he
  joined Lafarge, to 1998, he held various managerial positions, including Chief
  Executive Officer of Asland and Regional President, Western Mediterranean region
  (Spain, Portugal, Morocco and Tunisia).

Philippe
  Rollier, Executive Vice President and Regional President of North America
  since May 2001. Prior to holding his current position, Mr. Rollier was named
  Executive Vice President in charge of Central Europe in January 1999, before
  which he served as Regional President of Central Europe from January 1, 1995.
  From 1989 to 1994, he was Chief Executive Officer of Orsan, which has since
  been divested.

Jean-Marie
  Schmitz, Executive Vice President, Morocco since January 1999. Prior to
  holding his current position, Mr. Schmitz was Executive Vice President in charge
  of Human Resources and Communication from 1988 to the end of 1998. He served
  as a member of the executive committee until September 1, 1998.

Compensation of Executive Officers

Remuneration policy of Senior
  Management

Our
  Organization and Management Committeeis responsible for recommending
  a remuneration policy for our Chairman and Chief Executive Officer and our directeurs
  généraux délégués(chief operating officers)
  to our board of directors. The Organization and Management Committee,
  in establishing the remuneration policy, seeks guidance from outside consultants
  on the market practices of comparable companies.

The
  remuneration is composed of a fixed portion and a performance related portion
  which may be up to 160% of the fixed remuneration for our Chairman and 120%
  of the fixed remuneration for our directeurs généraux délégués.
  All remuneration received by the officers with respect to the various offices
  they hold within our consolidated subsidiaries is imputed with respect to the
  fixed portion.

The
  performance related pay is established in light of the financial results of
  the group in comparison to the objectives established at the beginning of the
  year as well as on the basis of individual performance over the course of the
  year. For 2002, the financial criteria used were the increase in economic value
  added, which reflects the return on capital employed, the relative performance
  of Lafarge as compared to its competitors, and BCI integration synergies. The
  portion based on individual performance is determined in part by reference to
  the personal targets set at the beginning of the year with respect to the major
  tasks to be undertaken.

Global remuneration paid to
  executive officers in 2002

The
  aggregate amount of compensation paid to our executive officers for the fiscal
  year 2002 (14 persons) for services in all capacities was approximately 7.4
  million euros. This amount:

| |  | includes the fixed share of executive officers’
      salaries in 2002 as well as the bonuses paid in 2002 in respect of 2001;
| | - | ------------------------------------------------------------------------------------------------------------------------------

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| | concerns all those who were executive officers
      in 2002, for the time during that year during which they were executive
      officers.
|- | --------------------------------------------------------------------------------------------------------------------------------------------

This
  compares to the aggregate amount of compensation paid to our executive officers
  for the fiscal year 2001 (14 persons, including two appointed in 2001,
  and two who left Lafarge in 2001) of approximately 8.6 million euros.

In
  addition, the aggregate amount set aside or accrued to provide pension, retirement
  or similar benefits for persons who were executive officers at December 31,
  2002, 14 persons in all, was approximately 24.0 million euros at December
  31, 2002.

The
  compensation we paid to our Chairman of the Board and Chief Executive Officer
  and our Vice-Chairman of the Board and Chief Operating Officer for the fiscal
  year 2002 was the following:

|           | Fixed
      remuneration paid
      in 2002(*) |  | Variable
      remunerationdue for 2002paid in 2003 | 
|---------- | ---------------------------------------------- |  | --------------------------------------------------- | 
|           |                                                |  |                                                     | 
|           | (in thousands
      euros)                     | 
|B. Collomb | 875                                            |  | 889                                                 | 
|B. Kasriel | 500                                            |  | 325                                                 | 
|M. Rose    | 400                                            |  | 260                                                 | 

---

|(*) | Including directors' fees for
      directorships in our subsidiaries.
|--- | ----------------------------------------------------------------------

Stock options granted to executive
  officers

The
  table below shows the number of subscription or purchase stock options held
  by our executive officers (14 persons) at December 31, 2002. The number and
  price of stock options featured in this table have been readjusted since their
  grant, each time that we have entered into financial transactions which have
  had an effect on the value of the shares, such as certain increases in share
  capital or the issue of bonus shares, so as to maintain a constant total stock
  option value for each beneficiary. For more information about our share capital
  increases in 2003, see “Item 10. Additional Information ― Description
  of Share Capital.”

The
  number of options granted to executive officers outstanding as at December 31,
  2002 is, therefore, not equal to the difference between the number outstanding
  on December 31, 2001 and the number exercised in 2002.

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|Allotment authorized by the
      shareholders’ meeting of |  | Dateofallotment by the board of directors |  | Typeofoption    |  | Number of options out-standing
      at December 31, 2001 |  | Number of shares purchased
      or subscribed between January 1, 2002 and December 31, 2002 |  | Options granted in 2002 |  | Totaloutstandingoptions atDecember 31,2002 |  | Number ofmanagersholdingtheseoptions atDecember 31,2002 |  | Available forexercisefrom |  | Optionexerciseperiodlapses |  | Exercise price atDecember 31, 2002(in euros) | 
|---------------------------------------------------------- |  | ----------------------------------------- |  | --------------- |  | --------------------------------------------------------- |  | -------------------------------------------------------------------------------------------- |  | ----------------------- |  | ------------------------------------------ |  | ------------------------------------------------------- |  | ------------------------- |  | -------------------------- |  | -------------------------------------------- | 
|                                                           |  |                                           |  |                 |  |                                                           |  |                                                                                              |  |                         |  |                                            |  |                                                         |  |                           |  |                            |  |                                              | 
|06/15/92                                                   |  | 12/17/92                                  |  | Subscription*   |  | 2,504                                                     |  | 2,504                                                                                        |  | N/A                     |  | 0                                          |  | 0                                                       |  |                           |  |                            |  |                                              | 
|06/15/92                                                   |  | 12/15/93                                  |  | Subscription    |  | 5,408                                                     |  |                                                                                              |  | N/A                     |  | 5,408                                      |  | 2                                                       |  | 12/15/93                  |  | 12/15/03                   |  | 50.98                                        | 
|06/15/92                                                   |  | 09/27/94                                  |  | Subscription    |  | 21,983                                                    |  |                                                                                              |  | N/A                     |  | 21,983                                     |  | 4                                                       |  | 09/27/94                  |  | 09/27/04                   |  | 51.67                                        | 
|05/22/95                                                   |  | 05/22/95                                  |  | Subscription    |  | 1,685                                                     |  |                                                                                              |  | N/A                     |  | 1,685                                      |  | 2                                                       |  | 05/22/95                  |  | 05/22/05                   |  | 46.97                                        | 
|05/22/95                                                   |  | 12/13/95                                  |  | Subscription    |  | 69,445                                                    |  |                                                                                              |  | N/A                     |  | 69,445                                     |  | 7                                                       |  | 12/13/99                  |  | 12/13/05                   |  | 45.80                                        | 
|05/22/95                                                   |  | 12/13/95                                  |  | Subscription**  |  | 555                                                       |  |                                                                                              |  | N/A                     |  | 555                                        |  | 5                                                       |  | 12/13/95                  |  | 12/13/05                   |  | 45.80                                        | 
|05/21/96                                                   |  | 12/18/96                                  |  | Subscription    |  | 5,466                                                     |  |                                                                                              |  | N/A                     |  | 5,466                                      |  | 4                                                       |  | 12/18/00                  |  | 12/18/06                   |  | 45.24                                        | 
|05/21/97                                                   |  | 12/17/97                                  |  | Subscription    |  | 10,918                                                    |  |                                                                                              |  | N/A                     |  | 10,918                                     |  | 1                                                       |  | 12/17/02                  |  | 12/17/07                   |  | 53.34                                        | 
|05/21/97                                                   |  | 12/17/97                                  |  | Purchase        |  | 170,104                                                   |  |                                                                                              |  | N/A                     |  | 170,104                                    |  | 11                                                      |  | 12/17/02                  |  | 12/17/07                   |  | 53.34                                        | 
|05/21/97                                                   |  | 05/26/98                                  |  | Subscription    |  |                                                          |  |                                                                                              |  | N/A                     |  |                                           |  | 0                                                       |  | 05/26/03                  |  | 05/26/08                   |  | 79.41                                        | 
|05/21/97                                                   |  | 12/10/98                                  |  | Purchase        |  | 6,489                                                     |  |                                                                                              |  | N/A                     |  | 6,489                                      |  | 3                                                       |  | 12/10/03                  |  | 12/10/08                   |  | 78.84                                        | 
|05/27/99                                                   |  | 12/15/99                                  |  | Subscription    |  | 162,681                                                   |  |                                                                                              |  | N/A                     |  | 162,681                                    |  | 13                                                      |  | 12/15/04                  |  | 12/15/09                   |  | 87.89                                        | 
|05/27/99                                                   |  | 12/13/00                                  |  | Purchase        |  | 72,220                                                    |  |                                                                                              |  | N/A                     |  | 72,220                                     |  | 11                                                      |  | 12/13/05                  |  | 12/13/10                   |  | 84.75                                        | 
|05/28/00                                                   |  | 05/28/01                                  |  | Purchase        |  | 12,000                                                    |  |                                                                                              |  | N/A                     |  | 12,000                                     |  | 1                                                       |  | 05/28/06                  |  | 05/28/11                   |  | 108.53                                       | 
|05/28/01                                                   |  | 12/13/01                                  |  | Subscription    |  | 277,000                                                   |  |                                                                                              |  | N/A                     |  | 277,000                                    |  | 13                                                      |  | 12/13/05                  |  | 12/13/11                   |  | 102.20                                       | 
|05/28/01                                                   |  | 05/28/02                                  |  | Subscription*** |  |                                                          |  |                                                                                              |  | 1,100                   |  | 1,100                                      |  | 11                                                      |  | 05/28/06                  |  | 05/28/12                   |  | 108.18                                       | 
|05/28/01                                                   |  | 12/11/02                                  |  | Subscription    |  |                                                          |  |                                                                                              |  | 98,000                  |  | 98,000                                     |  | 11                                                      |  | 12/11/06                  |  | 12/11/12                   |  | 79.15                                        | 
|TOTAL                                                      |  |                                           |  |                 |  | 818,458                                                   |  | 2,504                                                                                        |  | 99,100                  |  | 915,054                                    |  | 14                                                      |  |                           |  |                            |  |                                              | 

|    |                                       
|--- | --------------------------------------
|*   | Plan, terminated on December 17, 2002.
|**  | Lafarge en Action 1995.               
|*** | Lafarge en Action 2002.               

Stock
  options granted to our Senior Management

The
  following table sets forth the options granted to our senior management, Messrs.
  Collomb, Kasriel and Rose, by all of our consolidated subsidiaries and all options
  exercised by them in 2002.

|                   |                       |  | Total number
      of shares covered |  | Price        |  | Option Exercise
      Period and Vesting Period | 
|------------------ | --------------------- |  | ------------------------------------ |  | ------------ |  | ----------------------------------------------- | 
|                   |                       |  |                                      |  |              |  |                                                
|Options Granted:   |                       |  |                                      |  |              |  |                                                
|B. Collomb:        |                       |  |                                      |  |              |  |                                                
|                   | Lafarge               |  | 0                                    |  |              |  |                                                 | 
|                   | Lafarge North America |  | 20,000                               |  | USD 41.05    |  | 10 years and 25% per year                       | 
|B. Kasriel:        |                       |  |                                      |  |              |  |                                                
|                   | Lafarge               |  | 0                                    |  |              |  |                                                 | 
|                   | Lafarge North America |  | 15,000                               |  | USD 41.05    |  | 10 years and 25% per year                       | 
|M. Rose            |                       |  |                                      |  |              |  |                                                
|                   | Lafarge               |  | 100                                  |  | 108.18 euros |  | 10 years and 100% after 
      4 years          | 
|                   |                       |  | 20,000                               |  | 79.15 euros  |  | 10 years and 100% after 
      4 years          | 
|                   | Lafarge North America |  | 1,000                                |  | USD 41.05    |  | 10 years and 25% per year                       | 
|Options Exercised: |                       |  |                                      |  |              |  |                                                
|B. Collomb:        |                       |  |                                      |  |              |  |                                                
|                   | Lafarge North America |  | 15,000                               |  | USD 15.75    |  |                                                 | 

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Ten
  Highest Options Grants to Our Employees Other Than Our Senior Management

The
  following table shows the options granted by us and our consolidated subsidiaries
  to our ten highest paid employees, other than Messrs. Collomb, Kasriel and Rose,
  and the options they exercised in 2002.

|                      |  | Total
      number of shares covered |  | Weighted
      Average Price | 
|--------------------- |  | ------------------------------------ |  | ---------------------------- | 
|                      |  |                                      |  |                              | 
|Options Granted:      |  |                                      |  |                              | 
|Lafarge               |  | 86,900                               |  | 79.48 euros                  | 
|Lafarge North America |  | 202,500                              |  | USD 41.05                    | 
|Options Exercised:    |  |                                      |  |                              | 
|Lafarge               |  | 38,509                               |  | 49.74 euros                  | 
|Lafarge North America |  | 70,750                               |  | USD 43.72                    | 

None
  of our directors and officers owns 1% or more of outstanding shares.

Stock
  options held by our executive officers including our senior management in our
  consolidated subsidiaries

Four
  of our executive officers hold 385,000 subscription options in Lafarge North
  America. Our executive officers including our senior management exercised 15,000
  options in Lafarge North America in 2002, at an average price of USD 15.75 per
  share.

Employees

The
  following tables set forth our number of employees at December 31, 2002, 2001
  and 2000 by area of primary activity and our number of employees at December
  31, 2002, 2001 and 2000 by geographical region:

Employees by Division

|                      | Year
      endedDecember 31, 2002 |  | %Var. 2002/2001 |  | Year
      endedDecember 31, 2001 |   | %Var. 2001/2000 |  | Year
      endedDecember 31, 2000 | 
|--------------------- | --------------------------------- |  | --------------- |  | --------------------------------- | - | --------------- |  | --------------------------------- | 
|                      |                                   |  |                 |  |                                   |   |                 |  |                                   | 
|                      | Number                            |  | %               |  | in %                              |   | Number          |  | %                                 | 
|Cement                | 37,521                            |  | 48.4            |  | (10.3                             | ) | 41,832          |  | 50.5                              | 
|Aggregates & Concrete | 21,069                            |  | 27.2            |  | (3.6                              | ) | 21,852          |  | 26.4                              | 
|Roofing               | 12,106                            |  | 15.6            |  | (4.0                              | ) | 12,620          |  | 15.2                              | 
|Gypsum                | 5,319                             |  | 6.9             |  | 7.6                               |   | 4,944           |  | 6.0                               | 
|Specialty Products**  | 417                               |  | 0.5             |  | (49.8                             | ) | 830             |  | 1.0                               | 
|Others*               | 1,114                             |  | 1.4             |  | 36.9                              |   | 814             |  | 1.0                               | 
|                      |                                   |  |                 |  |                                   |   |                 |  |                                   | 
|Total                 | 77,547                            |  | 100.0           |  | (6.4                              | ) | 82,892          |  | 100.0                             | 
|                      |                                   |  |                 |  |                                   |   |                 |  |                                   | 
|                      |                                   |  |                 |  |                                   |   |                 |  |                                   | 

---

|*  | Including employees at our corporate office
      and in research and development.                       
|-- | ---------------------------------------------------------------------------------------------------------
|** | Figures for the 2002 fiscal year reflect only
      the unsold portion of our Specialty Products division

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Employees by Geographical Zone

|                                          | Year
      endedDecember 31, 2002 |  | %Var. 2001/2002 |  | Year
      endedDecember 31, 2001 |   | %Var. 2001/2000 |  | Year
      endedDecember 31, 2000 | 
|----------------------------------------- | --------------------------------- |  | --------------- |  | --------------------------------- | - | --------------- |  | --------------------------------- | 
|                                          |                                   |  |                 |  |                                   |   |                 |  |                                   | 
|                                          | Number                            |  | %               |  | in %                              |   | Number          |  | %                                 | 
|Western Europe                            | 25,676                            |  | 33.1            |  | (3.9                              | ) | 26,730          |  | 32.2                              | 
|North America                             | 15,573                            |  | 20.1            |  | (5.3                              | ) | 16,451          |  | 19.8                              | 
|Mediterranean
      Basin                 | 4,277                             |  | 5.5             |  | (27.0                             | ) | 5,859           |  | 7.1                               | 
|Central and
      Eastern Europe          | 9,301                             |  | 12.0            |  | 11.9                              |   | 8,315           |  | 10.0                              | 
|Sub-Saharan
      Africa and Indian Ocean | 7,632                             |  | 9.8             |  | (23.3                             | ) | 9,954           |  | 12.0                              | 
|Latin America                             | 4,626                             |  | 6.0             |  | (9.4                              | ) | 5,105           |  | 6.2                               | 
|Asia/Pacific                              | 10,463                            |  | 13.5            |  | (0.1                              | ) | 10,479          |  | 12.6                              | 
|                                          |                                   |  |                 |  |                                   |   |                 |  |                                   | 
|Total                                     | 77,547                            |  | 100.0           |  | (6.5                              | ) | 82,892          |  | 100.0                             | 
|                                          |                                   |  |                 |  |                                   |   |                 |  |                                   | 

The
  significant increase in total number of employees from December 31, 2000 to
  December 31, 2001 was due principally to the acquisition of Blue Circle.

Labor Policy

A
  significant percentage of our non-managerial employees in Europe and the United
  States are members of labor unions. As required by French and European law,
  our management holds annual meetings with a delegation of French union representatives
  and a delegation of European establishments of the employees in order to respond
  to questions regarding our economic and employment situation. While we have
  experienced some strikes in the past five years, we have not experienced any
  strikes, walkouts or work stoppages which have had a material negative impact
  on our financial condition, results of operations or cash flows. We believe
  that we enjoy good relations with our employees.

In
  accordance with the regulation (“ordonnance”) No. 86-1134
  of October 21, 1986 concerning employee profit-sharing schemes, almost every
  one of our subsidiaries has, over the past few years, passed on renewed profit
  sharing agreements with their employees. Such arrangements allocate a portion
  of the profits to employees based partly on financial results and partly on
  specific performance criteria, such as cost reduction and quality of products
  or services provided to the customer. The employees’ share of the profits
  may be invested in the different mutual funds of the savings scheme of Lafarge.
  The employees’ share of the profits that is invested in the savings scheme
  of our company, as well as personal investments of French and foreign employees,
  benefit from an additional contribution by us.

We
  believe that our organization in decentralized divisions encourages individual
  initiatives and participation in our development strategy, as well as good overall
  relationships with our employees. To these ends, we have strived to follow a
  policy of social responsibility in all of the countries where we operate.

As
  a result of our presence in a large number of countries and our acquisition
  strategy, integration of our employees within one global enterprise is a key
  element of our human resource policy. Our intranet portal, numerous seminars
  and “Meet the Group” conferences are a part of this effort.

Internally,
  in line with our social responsibility statement, we encourage employee participation
  and social dialogue. We are devoted to maintaining healthy and safe working
  conditions, particularly as we expand to developing markets. We have also developed
  apprenticeship and on-the-job training programs targeted toward young employees,
  as well as training by business lines for others. We consider our efforts in
  continuing education as a way to both enhance the personal experience and development
  of our employees and increase their skills and qualifications for our own benefit.
  In addition, in most of our subsidiaries, employees are given an interest in
  operational results through our profit-sharing programs.

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Employee Share Ownership

Employee
  shareholding, through wide ranging reserved share offerings and stock option
  plans is an important part of our strategy for motivating our employees. At
  December 31, 2002, more than 48,000 of our employees were shareholders of Lafarge.
  Following our latest Lafarge en action 2002 employee stock ownership
  program our employee share ownership levels were raised to approximately 1.7%
  of our outstanding shares. Our long-term goal is to raise employee ownership
  to 3% of our outstanding shares.

Employee Reserved Share Offerings

On
  April 15, 2002 we launched the Lafarge en action 2002 an employee stock
  ownership program reserved for our employees outside the United States and Canada
  and certain other countries. The Lafarge en action 2002 program was adopted
  pursuant to the authorization given by our shareholders at the extraordinary
  general meeting held on May 28, 2001.

Under
  Lafarge en action 2002 our eligible employees were able to subscribe
  for 1 to 110 shares, with every share from the eleventh purchased, giving right
  to receive one option. The maximum number of shares offered directly under the
  program was 3,425,000 shares at a price of 81.84 euros per share (a 20% discount
  to the market price over the reference period of the twenty trading days prior
  to March 29, 2002). In accordance with French laws governing a Plan d’Epargne
  Groupe (Group Savings Scheme), except in certain specific circumstances,
  employees who subscribed for shares in the program will be required to hold
  them for at least five years. The price at which the options can be exercised
  was set at 108.15 per share on May 28, 2002 by reference to price over the reference
  period of the preceding twenty trading days preceding this date, without any
  discount. The options will be exercisable from the fifth anniversary of the
  date they are granted and will expire on the tenth anniversary.

We
  subsidized each of our eligible employees purchase of up to ten shares under
  the program. The amount of the subsidy depended on the GNP of the country the
  employee in question was domiciled in for tax purposes. The subsidy was 30%
  in countries in which the GNP was more than U.S.$10,000 and 60% in countries
  in which the GNP was less than U.S.$10,000. We also agreed to provide, where
  legally permitted, to each eligible employee who requested it, an interest free
  loan to purchase shares in the program, repayable over 24 months. The associated
  capital increase was completed in June 2002.

Stock Options

Allotment policy

The
  allotment policy is recommended to the board of directors by the Organization
  and Management Committee. Stock options are allotted to the executive officers
  and senior management, as well as to middle management and other employees who
  have contributed significantly to our performance.

Stock
  options are allotted at times decided by the board of directors. Generally,
  stock options are allotted once per year at the December meeting of the board
  of directors. The number of beneficiaries varies from year to year.

Over
  the last two fiscal years, the average number of stock options allocated annually
  represented approximately 1,055,294 shares, or, on average, 0.8 % of our outstanding
  shares. A total of 438 employees received options in 2000, 1,703 in 2001, and
  14,785 in 2002. The significant increase in the number of beneficiaries in 2002
  was due to the option grants under the Lafarge en action 2002 employee
  stock ownership program.

A
  total of 5,379,723 allotted stock options had still to be exercised at the end
  of December 2002, representing approximately 4 % of our outstanding shares.
  Executive Officers ( 14 persons in all) held 17 % of these options.

The board of directors may allot either
  subscription or purchase stock options.

Stock options characteristics

All
  stock options are valid for a period of 10 years.

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The
  exercise price is set, without discount or reduction, at the average trading
  price for our shares during the twenty trading days preceding the date of allotment.

Stock
  options may be exercised in whole or in part.

Stock options exercise conditions

Stock
  options allotted up to and including May 1995 may be exercised freely.

In
  December 1995, the board of directors decided that all stock options granted
  from then on would not be exercisable for the first four years following the
  date of allotment. The board of directors nonetheless decided that options allotted
  under the Lafarge en action 95 employee stock ownership program (share
  offering reserved for employees under which employees could subscribe for 1
  to 110 shares, with every share from the eleventh purchased one, giving right
  to receive one option), could be exercised from the date of allotment.

In
  December 1997, the board of directors increased the period during which stock
  options cannot be exercised from four to five years for all options allotted
  from 1997 onwards.

The
  board of directors also decided that stock options that were not yet exercisable
  could be nevertheless exercised upon retirement, early retirement or redundancy
  of the beneficiary or in the event of a takeover bid for Lafarge or its merger
  into another company.

In
  December 2001, the board of directors reduced the period during which stock
  options cannot be exercised from five to four years for all options allotted
  from December 2001 onwards in conformity with the statutory requirements. Such
  period during which stock options cannot be exercised also applies to options
  allocated under the Lafarge en action 2002 employee stock ownership program
  (share offering reserved for employees under which employees could subscribe
  for 1 to 110 shares, with every share from the eleventh purchased one, giving
  right to receive one option).

Loss or retention of stock options

Stock
  options lapse if not exercised within the ten years following their date of
  allotment.

Dismissal
  or resignation of the beneficiary for cause invalidates all outstanding options
  granted the beneficiary. Stock options can remain valid after the beneficiary
  has left employment with Lafarge with the approval of his or her employer, or,
  if applicable, in the event of the disposal of our subsidiary employing the
  beneficiary.

Subscription and purchase stock
  options at December 31, 2002

The
  number and price of stock options featured in this table have been readjusted
  since their allotment, each time that we have entered into financial transactions
  which have had an effect on the value of the shares, such as certain increases
  in share capital or the issue of bonus shares, so as to maintain a constant
  total option value for each beneficiary. For more information about our share
  capital increases in 2002, see “Item 10. Additional Information ―
  Description of Share Capital.”

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|Allotment authorized by
      the shareholders’ meeting of |  | Dateofallotment by the board of
      directors |  | Typeofoption    |  | Number of
      options out-standing at December 31, 2001 |   | Number of shares purchased
      or subscribed between January 1, 2002 and December 31, 2002 |  | Options
      granted in
      2002 |  | Totaloutstandingoptions atDecember 31,2002 |  | Available forexercise from |  | Optionexercise periodlapses |  | Exercise price atDecember 31, 2002(in euros) | 
|---------------------------------------------------------- |  | ----------------------------------------------- |  | --------------- |  | --------------------------------------------------------- | - | -------------------------------------------------------------------------------------------- |  | ----------------------------------- |  | ------------------------------------------ |  | -------------------------- |  | --------------------------- |  | -------------------------------------------- | 
|                                                           |  |                                                 |  |                 |  |                                                           |   |                                                                                              |  |                                     |  |                                            |  |                            |  |                             |  |                                              | 
|06/15/92                                                   |  | 12/17/92                                        |  | Subscription    |  | 30,875                                                    | * | 28,938                                                                                       |  | N/A                                 |  | 0                                          |  |                            |  |                             |  |                                              | 
|06/15/92                                                   |  | 12/15/93                                        |  | Subscription    |  | 84,104                                                    |   | 10,260                                                                                       |  | N/A                                 |  | 73,844                                     |  | 12/15/93                   |  | 12/15/03                    |  | 50.98                                        | 
|06/15/92                                                   |  | 09/27/94                                        |  | Subscription    |  | 145,462                                                   |   | 16,882                                                                                       |  | N/A                                 |  | 128,580                                    |  | 09/27/94                   |  | 09/27/04                    |  | 51.67                                        | 
|05/22/95                                                   |  | 05/22/95                                        |  | Subscription    |  | 17,365                                                    |   | 1,363                                                                                        |  | N/A                                 |  | 16,002                                     |  | 05/22/95                   |  | 05/22/05                    |  | 46.97                                        | 
|05/22/95                                                   |  | 12/13/95                                        |  | Subscription    |  | 420,613                                                   |   | 57,857                                                                                       |  | N/A                                 |  | 362,756                                    |  | 12/13/99                   |  | 12/13/05                    |  | 45.80                                        | 
|05/22/95                                                   |  | 12/13/95                                        |  | Subscription**  |  | 196,225                                                   |   | 25,862                                                                                       |  | N/A                                 |  | 170,363                                    |  | 12/13/95                   |  | 12/13/05                    |  | 45.80                                        | 
|05/21/96                                                   |  | 12/18/96                                        |  | Subscription    |  | 66,234                                                    |   | 11,583                                                                                       |  | N/A                                 |  | 54,651                                     |  | 12/18/00                   |  | 12/18/06                    |  | 45.24                                        | 
|05/21/97                                                   |  | 12/17/97                                        |  | Subscription    |  | 365,029                                                   |   | 7,979                                                                                        |  | N/A                                 |  | 357,050                                    |  | 12/17/02                   |  | 12/17/07                    |  | 53.34                                        | 
|05/21/97                                                   |  | 12/17/97                                        |  | Purchase        |  | 429,765                                                   |   | 7,558                                                                                        |  | N/A                                 |  | 422,207                                    |  | 12/17/02                   |  | 12/17/07                    |  | 53.34                                        | 
|05/21/97                                                   |  | 05/26/98                                        |  | Subscription    |  | 131,196                                                   |   | 4,688                                                                                        |  | N/A                                 |  | 126,508                                    |  | 05/26/03                   |  | 05/26/08                    |  | 79.41                                        | 
|05/21/97                                                   |  | 12/10/98                                        |  | Purchase        |  | 105,761                                                   |   | 2,218                                                                                        |  | N/A                                 |  | 103,543                                    |  | 12/10/03                   |  | 12/10/08                    |  | 78.84                                        | 
|05/27/99                                                   |  | 12/15/99                                        |  | Subscription    |  | 990,179                                                   |   | 6,171                                                                                        |  | N/A                                 |  | 984,008                                    |  | 12/15/04                   |  | 12/15/09                    |  | 87.89                                        | 
|05/27/99                                                   |  | 12/13/00                                        |  | Purchase        |  | 469,623                                                   |   | 0                                                                                            |  | N/A                                 |  | 469,623                                    |  | 12/13/05                   |  | 12/13/10                    |  | 84.75                                        | 
|05/28/00                                                   |  | 05/28/01                                        |  | Purchase        |  | 12,000                                                    |   | 0                                                                                            |  | N/A                                 |  | 12,000                                     |  | 05/28/06                   |  | 05/28/11                    |  | 108.53                                       | 
|05/28/01                                                   |  | 12/13/01                                        |  | Subscription    |  | 1,188,825                                                 |   | 0                                                                                            |  | N/ A                                |  | 1 188,825                                  |  | 12/13/05                   |  | 12/13/11                    |  | 102.20                                       | 
|05/28/01                                                   |  | 05/28/02                                        |  | Subscription*** |  |                                                           |   | 0                                                                                            |  | 437,373                             |  | 437,373                                    |  | 05/28/06                   |  | 05/28/12                    |  | 108.15                                       | 
|05/28/01                                                   |  | 12/11/02                                        |  | Subscription    |  |                                                           |   | 0                                                                                            |  | 472,390                             |  | 472,390                                    |  | 12/11/06                   |  | 12/11/12                    |  | 79.15                                        | 
|TOTAL                                                      |  |                                                 |  |                 |  | 4,653,256                                                 |   | 181,359                                                                                      |  | 909,763                             |  | 5,379,723                                  |  |                            |  |                             |  |                                              | 

|    |                                             
|--- | --------------------------------------------
|*   | Plan, terminated on December 17,
      2002.
|**  | Lafarge en Action 1995.                     
|*** | Lafarge en Action 2002.                     

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ITEM 7.  MAJOR SHAREHOLDERS
  AND RELATED PARTY TRANSACTIONS

Major Shareholders

The
  following table sets out to the best of our knowledge the principal holders
  of Lafarge's share capital at December 31, 2002 as well as the percentage ownership
  over the past three years:

|Group
        of Shareholders                             |  | At December
      31, 2002  |  | At December 31, 2001       |  | At December 31, 2000           |  
|--------------------------------------------------------- |  | --------------------------- |  | -------------------------- |  | ------------------------------ | -
|                                                          |  |                             |  |                            |  |                                |  
|                                                          |  | Number of
      Shares Held |  | Number of
      Votes Held |  | % of Total
      Issued Shares |  
|                                                          |  |                             |  |                            |  |                                |  
|Private individuals                                       |  | 17,364,883                  |  | 22,672,937                 |  | 13.1                           | %
|Resident institutionalinvestors (France)                  |  | 40,718,142                  |  | 45,231,405                 |  | 30.6                           | %
|Non-residentinstitutional investors(outside
      France) |  | 72,928,512                  |  | 73,661,982                 |  | 54.9                           | %
|Treasury shares 1                                         |  | 1,868,896                   |  | 0                          |  | 1.4                            | %
|                                                          |  |                             |  |                            |  |                                |  
|Total                                                     |  | 132,880,433                 |  | 141,566,324                |  | 100.0                          | %
|                                                          |  |                             |  |                            |  |                                |  

|   |                                                                                                                                                                                                                                                                                            
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. | At December 31,
      2002, we held directly in treasury 1,025,641 shares purchased pursuant to
      prior authorizations from our shareholders. In addition our subsidiaries
      held 843,255 shares which under French law are considered outstanding but
      have no voting rights.

For
  share ownership information for members of the board of directors, see “Item
  6. Directors, Senior Management and Employees — Share Ownership."

To
  our knowledge, at December 31, 2002 no individual or entity, or group of individuals
  or entity acting together in concert held more than 5% of the outstanding capital
  shares or total voting rights. All of our shares bear the same conditions as
  to voting rights, except for our treasury shares, which bear no voting rights
  and except for shares held in registered form for over two years which have
  double voting rights (see “Item 10. Additional Information — Shareholders'
  Meetings and Voting Rights — Attendance and Voting at Shareholders' Meetings”).

To
  our knowledge, we are not directly or indirectly owned or controlled by another
  corporation, any government or any other natural or legal person severally or
  jointly. There is no arrangement known to us, the operation of which may at
  any subsequent date result in a change in control of Lafarge.

To
  our knowledge, at December 31, 2002, (i) the portion of our outstanding shares
  held in the United States was approximately 0.3% and (ii) the number of record
  holders of our shares in the United States was 13 and (iii) the number of our
  ADRs outstanding was 1,468,688.

Potential Shares — Dilution

At
  December 31, 2002, the number of our outstanding shares could be increased by
  up to 14,608,571new shares as a consequence of:

| | The exercise of subscription
      stock options granted to our employees. At December 31, 2002, the maximum
      number of shares issuable under currently exercisable subscription options
      was 1,163,246 shares. In addition there were subscription options covering
      3,209,104 shares that were issued after 1997 and not currently exercisable
      (see “ Item 6. Directors, Senior Management And Employees —
      Share Ownership — Stock Options”).
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | The exercise of the conversion rights attached
      to the OCEANE bonds issued in June 2001. The maximum number of shares issuable
      under the OCEANE bonds is 10,236,221 shares. Pursuant to the terms of the
      OCEANE bonds, upon a bondholders exercise of his conversion right, we have
      the option of converting the bond into new shares or exchanging the bonds
      for existing treasury shares.                                                  

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At
  December 31, 2002, there were no other securities convertible, redeemable or
  otherwise exchangeable in newly issued shares.

Related Party Transactions

Agreements
  between Lafarge and one of our directors, the Chairman of the Board and Chief
  Executive Officer or the Vice Chairman of the Board and Chief Operating Officer
  or a company in which our directors or these executive officers hold directorships
  or senior executive positions are, pursuant to the applicable laws and regulations
  in force, subject to the prior approval of the board of directors and then,
  on a special report from the statutory auditors, to the approval of the ordinary
  shareholders’ meeting. The director or executive officer concerned is
  required to inform the board of all agreements covered by the law. The May 15,
  2001 act amending French law governing a société anonyme
  extended the definition of related party transactions to agreements between
  Lafarge and a shareholder holding more than 5% of the voting rights or, if such
  shareholder is a corporation, with the corporation controlling such shareholder.

These
  procedures do not apply to agreements concerning the day-to-day business of
  the company reached under normal conditions. However, the May 15, 2001 act requires
  that such agreements must be provided by any interested party to the Chairman
  of our Board and that the Chairman of the Board provide a list of such agreements
  and the purpose of each to the members of the Board and to the statutory auditors.

For
  fiscal year 2000, our statutory auditors, listed the following agreements in
  their March 1, 2001 report to our shareholders:

| | The board of directors, during
      its December 13, 2000 meeting, authorized the indemnification by us of the
      directors of Lafarge North America against damages and attorneys fees they
      would have to pay if they were to be held liable as directors, except in
      case of gross negligence or willful misconduct. Our directors, Messrs. Collomb,
      Kasriel, Lefèvre and Murdoch are also executive officers or directors
      of Lafarge North America.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | The Board of directors, during its January
      27, 2000 meeting authorized:                                                                                                                                                                                                                                                                                                                                                                                                    

| |   |                                                                                                                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | - | an underwriting agreement relating
      to our convertible bonds redeemable in shares or in cash, with warrants
      attached with BNP-Paribas and Dresdner Kleinwort Benson, two international
      banks, as lead underwriters, and
| |   |                                                                                                                                                                                                                                         
| | - | a Term and Revolving
      Credit Facility with BNP-Paribas and Dresdner Kleinwort Benson, relating
      to our February 2000 tender offer on Blue Circle resulting in our acquisition
      of a 19.9% participation. 1               

1This Term and Revolving Credit Facility was cancelled and replaced by the
  3,600,000,000 British Pound syndicated multi-currency Term and Revolving Credit
  Facility subsequently authorized by our Board of directors on January 5, 2001.

For
  fiscal year 2001, our statutory auditors, listed the following agreements in
  their February 28, 2002 report to our shareholders:

| | The Board of directors, during
      its January 5, 2001 meeting, in connection with the launch of the tender
      offer for Blue Circle Industries and the related capital increase authorized:
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |   |                                                                                                                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | - | an underwriting agreement with
      BNP-Paribas and Dresdner Kleinwort Benson, as lead underwriters relating
      to our issuance of 14,110,592 shares at a price of 80 euros a share in a
      1 for 8 underwritten rights offering to our shareholders which was completed
      on February 2, 2001, and
| |   |                                                                                                                                                                                                                                                                                                               
| | - | a 3,600,000,000
      British Pound syndicated multi-currency Term and Revolving Credit Facility
      with BNP-Paribas and Dresdner Kleinwort Benson.2                                                                                                                                                       

2We terminated this agreement on December 10, 2001.

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| | The board of directors, during
      its September 3, 2001 meeting, authorized:
|- | -------------------------------------------------------------------------------
|  |                                                                                
|  | -                                                                              
|  |                                                                                
|  | -                                                                              
|  |                                                                                

3This agreement
  was renewed for 2003.

For
  fiscal year 2002, our statutory auditors, listed the agreements previously authorized
  by the Board of directors on September 3, 2001 and listed above, in their February
  17, 2003 report to our shareholders:

Our
  director, Mr. Pébereau, is chairman and chief executive officer of BNP-Paribas
  and a member of the supervisory board of Dresdner Bank AG, and our director,
  Mr. Joly, is a director of BNP-Paribas. We have had and we will continue to
  have business relationships with BNP-Paribas, including for the conclusion of
  financings, credit facilities and agreements relating to securities offerings.
  These agreements were and will be, when applicable, approved by our Board of
  Directors and communicated to our auditors and our shareholders in compliance
  with French law on related party transactions.

In
  addition, we have entered into several agreements with Materis, the holding
  company to whom we sold part of our Specialty Products division and of which
  we own 33.36%. These agreements relate principally to the use of certain brand
  names and trademarks, to our collaboration in the fields of research and development
  and purchasing and to the leasing of certain facilities. On January 22, 2001,
  we made a 1.1 million euro loan to a Luxembourg partnership constituted of certain
  directors and officers of Materis to enable them to buy Materis shares. The
  loan bears interest at 5% and is due on January 21, 2013. Interest is capitalized
  over the term of the loan. The reimbursement of the loan is linked to the improvement
  of the valuation of Materis, with a reimbursement premium if Materis' value
  reaches certain thresholds and no reimbursement if it falls below certain thresholds.

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ITEM 8. FINANCIAL INFORMATION

Consolidated Statements and Other
  Financial Information

See
  “Item 18. Financial Statements” for a list of financial statements
  filed with this registration statement.

Legal Proceedings

See
  “Item 4. Information on the Company — Litigation."

Dividends Policy

We
  have no stated dividend policy. For historical information with respect to our
  dividend distributions, see “Item 3: Key Information — Selected
  Financial Data.”

Significant Changes

See
  “Item 4. Information on the Company — Recent Developments”
  and “Item 5. Operating and Financial Review and Prospects — Recent
  Developments.”

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ITEM 9. THE LISTING

Listing Details

The
  primary market for trading in our shares is Euronext (Paris). Our shares have
  traded on the New York Stock Exchange in the form of American Depositary Shares,
  or ADSs under the symbol “LR” since July 23, 2001. Each ADS represents
  one-fourth of one share. The ADSs are evidenced by American Depositary Receipts,
  or ADRs, which are issued by Morgan Guaranty Trust Company of New York, as Depositary,
  under a Deposit Agreement dated at July 18, 2001, among us, the Depositary
  and the registered holders of the ADRs from time to time. Our shares are also
  traded on the London Stock Exchange and the Frankfurt Stock Exchange.

The
  following tables set forth the volume and high and low last sales prices of
  our shares of common stock as reported on Euronext Paris S.A.

Trading Prices for our shares of
  common stock on Euronext Paris S.A. for the five most recent full financial
  years.

|        |         |  |       |  |                     |  |                                         |  |                                      |  |                                        | 
|------- | ------- |  | ----- |  | ------------------- |  | --------------------------------------- |  | ------------------------------------ |  | -------------------------------------- | 
|        | High    |  | Low   |  | High                |  | Low                                     |  | Average
        Daily
        Volume |  | Average
        Monthly
        Volume | 
|        |         | 
|        | (euros) |  | (FRF) |  | (in
        shares) |  | (in
        millions
        of shares) | 
|        |         |  |       |  |                     |  |                                         |  |                                      |  |                                        | 
|1998(1) | 100.31  |  | 54.73 |  | 657.99              |  | 359.00                                  |  | 326,369                              |  | 6.74                                   | 
|1999(1) | 115.60  |  | 70.10 |  | 758.29              |  | 459.83                                  |  | 368,218                              |  | 7.82                                   | 
|2000    | 118.40  |  | 73.75 |  | 776.65              |  | 483.77                                  |  | 521,670                              |  | 11.00                                  | 
|2001    | 114.00  |  | 74.00 |  | 747.79              |  | 485.41                                  |  | 667,518                              |  | 14.05                                  | 
|2002    | 111.20  |  | 67.00 |  | 729.42              |  | 439.49                                  |  | 772,173                              |  | 16.40                                  | 





| |  | (1) | Prior to January 4, 2000, our shares were
      traded in FRF on the Paris Bourse. We have translated stock prices
      prior to this date for convenience by applying the fixed exchange rate of
      FRF 6.55957 per 1.00 euro.
| |  | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Trading Prices for our shares of
  common stock on Euronext Paris S.A. for each full financial quarter for the
  two most recent full financial years.

|     |             |         |  |       |  |                                      |  |                                         | 
|---- | ----------- | ------- |  | ----- |  | ------------------------------------ |  | --------------------------------------- | 
|     |             | High    |  | Low   |  | Average
        Daily
        Volume |  | Average
        Monthly
        Volume  | 
|     |             |         |  |       |  |                                      |  |                                         | 
|     |             | (euros) |  |       |  | (in
        shares)                  |  | (in
        millions of
        shares) | 
|2002 |             |         |  |       |  |                                      |  |                                         | 
|     |             |         |  |       |  |                                      |  |                                         | 
|     | 1st quarter | 107.00  |  | 96.85 |  | 552,430                              |  | 11.42                                   | 
|     | 2nd quarter | 111.20  |  | 97.50 |  | 764,000                              |  | 16.04                                   | 
|     | 3rd quarter | 102.80  |  | 74.00 |  | 693,541                              |  | 15.26                                   | 
|     | 4th quarter | 84.50   |  | 67.00 |  | 880,454                              |  | 18.78                                   | 
|2003 |             |         |  |       |  |                                      |  |                                         | 
|     | 1st quarter | 76.25   |  | 43.26 |  | 928,469                              |  | 19.50                                   | 

---

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Trading Prices for our shares of
  common stock on Euronext Paris S.A. for each month for the most recent six months.

|        |          |             |  |                            |  |                             |  |       | 
|------- | -------- | ----------- |  | -------------------------- |  | --------------------------- |  | ----- | 
|High    |          | Low         |  | Average Daily
      Volume |  | Actual Monthly
      Volume
|       
|(euros) |          | (in shares) |  | (in millions of shares)   
|2002    |          |             |  |                            |  |                             |  |       | 
|        | October  | 83.60       |  | 67.00                      |  | 1,283,080                   |  | 29.51 | 
|        | November | 83.50       |  | 75.10                      |  | 863,922                     |  | 18.14 | 
|        | December | 84.50       |  | 73.10                      |  | 742,816                     |  | 14.86 | 
|2003    |          |             |  |                            |  |                             |  |       | 
|        | January  | 76.25       |  | 55.10                      |  | 985,870                     |  | 21.69 | 
|        | February | 60.40       |  | 47.33                      |  | 1,151,606                   |  | 23.03 | 
|        | March    | 58.00       |  | 43.26                      |  | 887,147                     |  | 18.63 | 

---

The
  following tables set forth the volume and high and low last sales prices of
  our shares of American Depositary Shares as reported on the New York Stock Exchange
  since they were initially listed on July 23, 2001.

Trading Prices for our American
  Depositary Shares on the New York Stock Exchange for each full financial quarter
  since the initial listing on July 23, 2001.

|     |             |           |  |                            |  |                               |  |         | 
|---- | ----------- | --------- |  | -------------------------- |  | ----------------------------- |  | ------- | 
|High |             | Low       |  | Average Daily
      Volume |  | Average Monthly 
      Volume
|    
|     |             | (dollars) |  | (in ADSs (1))              |  | (in ADSs (1))                 | 
|2001 |             |           |  |                            |  |                               |  |         | 
|     | 3rd quarter | 29.50     |  | 17.35                      |  | 3,191                         |  | 35,100  | 
|     | 4th quarter | 24.25     |  | 19.90                      |  | 11,661                        |  | 229,333 | 
|2002 |             |           |  |                            |  |                               |  |         | 
|     | 1st quarter | 24.20     |  | 21.05                      |  | 4,848                         |  | 96,967  | 
|     | 2nd quarter | 25.92     |  | 21.90                      |  | 4,198                         |  | 89,567  | 
|     | 3rd quarter | 25.55     |  | 19.91                      |  | 5,484                         |  | 117,000 | 
|     | 4th quarter | 21.00     |  | 16.80                      |  | 11,183                        |  | 238,567 | 
|2003 |             |           |  |                            |  |                               |  |         | 
|     | 1st quarter | 20.05     |  | 12.10                      |  | 13,400                        |  | 273,700 | 

---

| | (1) | Each ADS represents one-fourth
      of one share.
| | --- | --------------------------------------------------

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Trading Prices for our American
  Depositary Shares on the New York Stock Exchange for each month for the most
  recent six months.

|     |          |           |  |                             |  |                             |  |         | 
|---- | -------- | --------- |  | --------------------------- |  | --------------------------- |  | ------- | 
|High |          | Low       |  | Average Daily 
      Volume |  | Actual Monthly
      Volume
|    
|2002 |          | (dollars) |  | (in ADSs (1))               |  | (in ADSs (1))               | 
|     | October  | 20.50     |  | 16.80                       |  | 8,183                       |  | 188,200 | 
|     | November | 21.00     |  | 18.98                       |  | 11,350                      |  | 227,000 | 
|     | December | 20.65     |  | 18.00                       |  | 14,310                      |  | 300,500 | 
|2003 |          |           |  |                             |  |                             |  |         | 
|     | January  | 20.05     |  | 15.10                       |  | 15,581                      |  | 327,000 | 
|     | February | 16.25     |  | 12.73                       |  | 10,747                      |  | 205,400 | 
|     | March    | 15.70     |  | 12.10                       |  | 13,619                      |  | 286,000 | 

---

| | (1) | Each ADS represents
      one-fourth of one share.
| | --- | --------------------------------------------------

MarketsOur
  shares of common stock have been listed on the Premier Marché
  of Euronext Paris S.A. (“Euronext Paris”) since July 4, 1923. Lafarge
  has been included in the SBF 250 index since its creation in December 1990 and
  in the CAC 40 index since its creation in December 31, 1987. The SBF 250 is
  an index of shares of 250 companies selected by Euronext Paris as the most representative
  of the French equities listed on Euronext Paris, from twelve economic sectors.
  The CAC 40 index is an index of shares of the 40 largest companies traded on
  Euronext Paris in terms of market capitalization.

On
  September 22, 2000, upon successful completion of an exchange offer, the Société
  des Bourses Françaises(known as Paris Bourse SBF S.A.),
  the Amsterdam Stock Exchange and the Brussels Stock Exchange merged to create
  Euronext N.V., a Dutch holding company and the first pan-European stock exchange.
  Subsequently, Paris Bourse SBF S.A. changed its name to Euronext
  Paris. Securities quoted on any of the stock exchanges participating in Euronext
  are traded through common Euronext platforms; NSC is the common platform for
  trading and Clearing 21 for clearing. Euronext Paris anticipate, but not before
  2008, implementing central clearinghouse, settlement and custody structures.
  However, these securities will remain listed on their respective local exchanges.
  Euronext Paris retains responsibility for the admission of securities to Euronext
  Paris’ trading markets, as well as the regulation of these markets.

Securities
  approved for listing by Euronext Paris are traded in one of three regulated
  markets, the Premier Marché, the Second Marché and
  the Nouveau Marché. These markets are all operated and managed
  by Euronext Paris, a market enterprise (entreprise de marché)
  responsible for the admission of securities and the supervision of trading in
  listed securities. Euronext Paris publishes a daily official price list that
  includes price information on listed securities. The securities of most large
  public companies are listed on the Premier Marché, with the Second
  Marché available for small and medium-sized companies. Trading on
  the Nouveau Marché was introduced in March 1996 to allow small
  capitalization and start-up companies to access the stock market. In addition,
  securities of certain other companies are traded on a non-regulated, over-the-counter
  market, the Marché Libre OTC.

Premier Marché

Securities
  listed on the Premier Marché of Euronext Paris are officially
  traded through authorized financial institutions that are members of the Paris
  Stock Exchange. Securities are traded continuously on each business day from
  9:00 a.m. to 5:25 p.m. (Paris time), with a pre-opening session from 7:15 a.m.
  to 9:00 a.m. and, for some securities, a pre-closing session from 5:25 p.m.
  to 5:30 p.m. during which transactions are recorded but not executed and a closing
  auction at 5:25 p.m. Any trade of a security that occurs after a stock exchange
  session closes is recorded on the next Euronext Paris trading day at the previous
  session’s closing price for that security. Euronext Paris has introduced
  continuous electronic trading during trading hours for most listed securities.

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Euronext
  Paris places securities listed on the Premier Marché in one of
  the two categories depending on their trading volume. Our shares are placed
  in the category known as Continu, which includes the most actively traded
  securities. The minimum yearly trading volume required for a security to be
  in Continu is 2,500 trades, i.e., 10 trades per business day.

Euronext
  Paris may temporarily reserve trading in a security listed in Continuon
  the Premier Marchéif purchases and sales recorded in the system
  would inevitably result in a price beyond a certain threshold, determined on
  a basis of a percentage fluctuation from a reference base. The duration of the
  so-called reservation period and the relevant thresholds vary depending on whether
  the price fluctuation occurs when trading commences or during the trading session.
  Euronext Paris may display an indicative trading price during such reservation
  period. Euronext Paris also may suspend trading of a security listed on the
  Premier Marché in other limited circumstances, including, for
  example, where there is unusual trading activity in the security. In addition,
  in exceptional cases, the Conseil des Marchés Financiers and the
  Commission des Opérations de Bourse may also request a suspension
  in trading.

Trades
  of securities listed on the Premier Marché are settled on a cash
  basis on the third trading day following the trade. Market intermediaries are
  also permitted to offer investors a deferred settlement service (ordre stipulé
  à règlement différé) for a fee. The deferred
  settlement service is only available for trades in securities that either (i)
  are a component of the Index SBF 120 or (ii) have both a total market capitalization
  of at least 1 billion euros and a daily average volume of trades of at least
  1 million euros. Investors can elect on the determination date (date de liquidation),
  which is the fifth trading day before the end of the month, either to settle
  by the last trading day of the month or to pay an additional fee and postpone
  the settlement decision to the determination date of the following month.

Equity
  securities traded on a deferred settlement basis are considered to have been
  transferred only after they have been registered in the purchaser’s account.
  Under French securities regulations, any sale of a security traded on a deferred
  settlement basis during the month of a dividend payment date is deemed to occur
  after the dividend has been paid. If the sale takes place before, but during
  the month of, a dividend payment date, the purchaser’s account will be
  credited with an amount equal to the dividend paid and the seller’s account
  will be debited by the same amount.

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ITEM 10. ADDITIONAL INFORMATION

Description of Share CapitalNot Applicable

By-laws (statuts)In this section, we summarize material
  information concerning our share capital, together with material provisions
  of applicable French law and our by-laws (statuts) as amended on November
  5, 2002. An unofficial English translation of our statuts is included
  as an exhibit to this report. Only the official French version of our statuts
  governs our affairs. You may obtain copies of our statuts in French from
  Lafarge Legal Affairs Department, Siège social: 61, rue des Belles Feuilles
  75116 Paris, France. In order to comply with amendments to French company law
  enacted in 2001, our statuts have been amended to allow us to authorize
  our directors and shareholders to attend meetings by videoconference and to
  allow our directors to separate the function of chairman of the board (président)and chief executive officer (directeur général) and
  to include provisions regarding the appointment of up to five directeurs
  généraux délégués(chief operating officers).
  The amended statuts were approved by the extraordinary general meeting
  of shareholders convened on initial notice on October 22, 2002, and on second
  notice on November 5, 2002.

Corporate Purpose

We
  are registered under the number “542 105 572” with the company and
  commercial register of the Paris Commercial Court (Tribunal de Commerce de
  Paris). Our corporate purpose is described in Article 2 of our statuts.

Directors

The
  following is a summary of provisions in our by-laws (statuts) pertaining
  to directors:

Directors’ power to vote
  compensation Our by-laws authorize the board of directors to distribute such
  remuneration among its members as it sees fit, within the limits established
  by our shareholders. Our shareholders decided on May 28,2001, to set the maximum
  amount of directors' fees payable in fiscal year 2001 and in subsequent fiscal
  years at FRF 4million (609,796 euros). The board of directors may also authorize
  the reimbursement of traveling expenses and expenses incurred by directors in
  the interests of Lafarge.

The
  remuneration of the chairman of the board of directors and of the executive
  officers is set by the board of directors. Such remuneration may be fixed and/or
  proportional.

The
  board of directors may award exceptional remuneration to directors who are members
  of committees formed from among its members or who are entrusted with specific
  tasks or duties. In this case, such remuneration is charged to operating costs,
  indicated to the statutory auditors, submitted for prior authorization of the
  board of directors and subsequently approved by the shareholders’ meeting.

Borrowing powers exercisable
  by directorsOur by-laws (statuts)
  authorize the board of directors to accomplish all financial transactions, open
  all accounts with banking institutions, make and receive all payments, subscribe
  all negotiable instruments and notes, agree to all credits and request all loans.

The
  board of directors may not contract loans in the form of bonds except with the
  authorization of the ordinary shareholders’ meeting, nor may it issue
  convertible bonds, bonds exchangeable for shares or bonds with share warrants
  except with the authorization of the extraordinary shareholders’ meeting.

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Age requirement for retirement
  of directorsOur by-laws (statuts)
  provide that the directors may be dismissed at any time by a duly convened shareholders’
  meeting. Otherwise our statutsprovide that our directors shall serve
  a multi-year term of office and each director’s term of office may be
  renewed subject the condition that directors may not be more than 70 years of
  age. Our shareholders at our general shareholders' meeting convened on May 28,
  2001, approved a resolution which amended our statutsand progressively
  reduced the duration of our directors' terms of office. Under this resolution,
  directors currently serving and originally appointed for six-year terms will
  serve out the remainder of their six year mandate; directors appointed or renewed
  in office in 2001 shall serve five-year terms; and those appointed or renewed
  in years subsequent shall serve four-year terms. Each director’s term
  of office expires at the end of the ordinary shareholders’ meeting called
  to approve the previous year’s accounts held in the year during which
  the director’s term of office normally expires or during which the director
  reaches the age limit of 70 years.

The
  Chairman of the Board and the Chief Executive Officer may not be more than 65
  years of age. The office of each expires automatically on December 31 of the
  year in which he reaches the age of 65.

However,
  the board of directors may decide to extend the term of office of the Chairman
  of the Board beyond the above-mentioned age limit for successive one-year periods
  provided that his term of office as director continues for such periods. In
  this case, the term of office of the Chairman of the Board shall expire definitively
  on December 31 of the year in which he reaches the age of 67.

Number of shares required for
  a director’s qualificationAll
  members of the board of directors must hold, in registered form, a number of
  shares representing a total nominal value of at least 4,572 euros. The par value
  of our shares is 4 euros.

Shareholders’ Meetings
  and Voting Rights

GeneralIn
  accordance with the French company law, there are two types of shareholders'
  general meetings, ordinary and extraordinary.

Ordinary
  general meetings of shareholders are required for matters such as:

| |  | electing, replacing and removing directors,
| | - | -------------------------------------------

| |  | appointing independent auditors,
| | - | --------------------------------

| |  | approving the annual accounts,
| | - | ------------------------------

| |  | declaring dividends or authorizing dividends
      to be paid in shares,
| | - | ------------------------------------------------------------------------

| |  | issuing debt securities, and
| | - | ----------------------------

| |  | authorizing the company to trade in its equity
      securities
| | - | ---------------------------------------------------------------

Extraordinary
  general meetings of shareholders are required for approval of matters such as
  amendments to our statuts, including any amendment required in connection
  with extraordinary corporate actions. Extraordinary corporate actions include:

| |  | changing our company’s name or corporate
      purpose,
| | - | -------------------------------------------------------

| |  | increasing or decreasing our share capital,
| | - | -------------------------------------------

| |  | creating a new class of equity securities,
| | - | ------------------------------------------

| |  | authorizing the issuance of investment certificates,
      convertible or exchangeable securities,
| | - | --------------------------------------------------------------------------------------------------

| |  | creating securities giving the holder the
      right to acquire our shares such as warrants or convertible or exchangeable
      debt,
| | - | ---------------------------------------------------------------------------------------------------------------------------------------

| |  | amending or modifying the terms and conditions
      of existing securities, and
| | - | --------------------------------------------------------------------------------

| |  | the voluntary liquidation of our company.
| | - | -----------------------------------------

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Annual Ordinary MeetingsThe French company law requires
  our board of directors to convene an annual ordinary general meeting of shareholders
  for approval of the annual accounts and the consolidated accounts. 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 President of the Tribunal de Commerce
  (Commercial Court). The board of directors may also convene an ordinary or extraordinary
  meeting of shareholders upon proper notice at any time during the year. If the
  board of directors fails to convene a shareholders' meeting, our independent
  auditors may call the meeting. In a bankruptcy, the liquidator or court-appointed
  agent may also call a shareholders' meeting in some instances. Any of the following
  may request the court to appoint an agent:

| |  | one or several shareholders holding at least
      5% of our share capital,
| | - | ---------------------------------------------------------------------------

| |  | any interested party in cases of urgency,
| | - | -----------------------------------------

| |  | registered associations 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 of our company, or
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | the Comité d’enterprise
      (workers’ council) in cases of urgency.
| | - | ---------------------------------------------------------------------

In
  addition, shareholders representing a majority of the share capital or voting
  rights may convene a meeting after the completion of a public tender offer for
  our shares or the acquisition of a controlling block of our shares.

Notice of Ordinary and Extraordinary
  Shareholders’ MeetingsOrdinary
  and extraordinary general meetings of shareholders are convened in the same
  manner, according to the rules and procedures set forth by applicable law. We
  must announce general meetings at least 30 days in advance by means of
  a preliminary notice published in the Bulletin des Annonces Légales
  Obligatoires, or “BALO.” The preliminary notice must first be
  sent to the Commission des Opérations de Bourse (the “COB”).
  The COB also recommends that the preliminary notice should be published in a
  newspaper of national circulation in France. It must contain, among other things,
  the time, date and place of the meeting, the agenda, a draft of the resolutions
  to be submitted to the shareholders, a description of the procedures which holders
  of bearer and registered shares must follow to attend the meeting and the procedure
  for voting by mail.

At
  least 15 days prior to the date set for the meeting on first call, and
  at least six days before any second call, we must send a final notice containing
  the final agenda and other information for the meeting. The final notice must
  be sent by mail to all registered shareholders who have held shares for more
  than one month prior to the date of the preliminary notice and published in
  a newspaper authorized to publish legal announcements in the local administrative
  department (département) in which our company is registered as
  well as in the BALO, with prior notice having been given to the COB.

In
  general, shareholders can only take action at shareholders' meetings on matters
  listed on the agenda for the meeting. In an exception to this rule, shareholders
  may take action with respect to the dismissal of directors and various other
  matters even though these actions have not been included on the agenda. Additional
  resolutions to be submitted for approval by the shareholders at the meeting
  may be proposed to the board of directors within 10 days of the publication
  of the preliminary notice in the BALO by:

| |  | one or several shareholders holding 0.54%
      of our total outstanding shares,
| | - | --------------------------------------------------------------------------------

| |  | a registered association of shareholders
      who have held their shares in registered form for at least two years and
      who together hold at least 1% of our voting rights, or
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | the Comité d’enterprise
      (workers’ council).
| | - | -------------------------------------------------

The
  board of directors must submit these resolutions to a vote of the shareholders.

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

Attendance and Voting at Shareholders’
  MeetingsEach
  share confers to the shareholder the right to one vote. Fully paid-up shares
  that have been held by the same shareholder in registered form for at least
  two years have a double voting right.

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Shareholders may attend ordinary general meetings and extraordinary general
  meetings and exercise their voting rights subject to the conditions specified
  in the French company law and our statuts. There is no requirement that
  a shareholder have a minimum number of shares in order to attend or to be represented
  at an ordinary or extraordinary general meeting.

Access
  to the meeting is open to such shareholders, as well as to their proxies and
  registered intermediaries who have provided evidence of their entitlement to
  attend no later than 3:00 p.m. (Paris time) the day before the date of the assembly,
  including an attestation that their shares are registered in a share account.
  The board of directors may shorten or eliminate such time limit. In addition,
  the board may, where deemed appropriate, provide shareholders with personal
  admission cards bearing the name of the shareholder and require the production
  of such cards at the meeting. Shareholders’ meetings may also be attended
  by videoconferencing or other telecommunications means, as may be decided by
  the board of directors. In organizing attendance of shareholders by videoconferencing
  or other telecommunications means, the board of directors needs to provide for
  a site entirely dedicated to this end and ensure the effectiveness of means
  enabling the identification of shareholders and guaranteeing their effective
  participation at the meeting.

The
  total voting rights of one shareholder during a shareholders' meeting, including
  voting rights held by other shareholders with whom this shareholder is acting
  in concert, is limited to 1% of the total number of existing voting rights calculated,
  and, for the balance, according to the quorum obtained, by application of the
  percentage exceeding 1% to the number of voting rights corresponding to such
  quorum (calculated taking into account the restriction resulting from this provision).

Proxies and Votes by MailIn
  general, all shareholders who have properly registered their shares or duly
  presented a certificate from their accredited financial intermediary may participate
  in general meetings. Shareholders may participate in general meetings either
  in person, which includes by videoconference or by a means of telecommunication
  that permits them to be identified, or by proxy. Shareholders may vote in person,
  by proxy or by mail. Shareholders not domiciled in French territory may be represented
  by an intermediary registered in accordance with applicable French company law.

Proxies
  will be sent to any shareholder on request. In order to be counted, such proxies
  must be received at our registered office, or at any other address indicated
  on the notice convening the meeting, prior to the date of the meeting. A shareholder
  may grant proxies to his or her spouse or to another shareholder. A shareholder
  that is a corporation may grant proxies to a legal representative. Alternatively,
  the shareholder may send us a blank proxy without nominating any representative.
  In this case, the chairman of the meeting will vote the blank proxies in favor
  of all resolutions proposed by the board of directors and against all others.

With
  respect to votes by mail, we must send shareholders a voting form. The completed
  form must be returned to us at least three days prior to the date of the shareholders’
  meeting.

Any
  shareholder who previously submitted a vote by correspondence or granted a proxy
  may still attend a general meeting and participate in the vote, in which case
  the correspondence or proxy vote is invalidated.

Quorum

The
  French company law requires that a number of shareholders having at least 25%
  of the shares entitled to voting rights must be present in person or voting
  by mail, by proxy or by videoconference to fulfill the quorum requirement for:

| |  | an ordinary general meeting, and
| | - | --------------------------------

| |  | 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 33-1/3% of the shares entitled to voting rights, on the
  same basis, for any other extraordinary general meeting.

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If
  a quorum is not present at a meeting, the meeting is adjourned. When an adjourned
  ordinary meeting is resumed, there is no quorum requirement. No quorum is required
  when an adjourned extraordinary general meeting is resumed only to approve an
  increase in our share capital through incorporation of reserves, profits or
  share premium. In the case of any other resumed extraordinary general meeting,
  a number of shareholders having at least 25% of outstanding voting rights must
  be present in person or voting by mail, by proxy or by videoconference for a
  quorum. If a quorum is not present, the reconvened meeting may be adjourned
  for a maximum of two months. However, only questions which were on the agenda
  of the adjourned meeting may be discussed and voted upon. No deliberation by
  the shareholders may take place without a quorum.

MajorityA
  simple majority of the shareholders’ votes cast (taking into account,
  as the case may be, double voting rights and limitations on voting rights) may
  pass a resolution concerning a capital increase by incorporation of reserves,
  profits or share premium at either an ordinary general meeting or an extraordinary
  general meeting. At any other extraordinary general meeting, a two-thirds majority
  of the shareholder votes cast (taking into account, as the case may be, double
  voting rights and limitations on voting rights) is required.

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

Abstention
  from voting by those present or those represented by proxy, voting by mail or
  by videoconference is counted as a vote against the resolution submitted to
  a shareholder vote.

Under
  the French company law, shares of a company held by entities controlled directly
  or indirectly by that company are not entitled to voting rights and do not count
  for quorum or majority purposes.

Financial Statements and Other
  Communications with ShareholdersIn
  connection with any shareholders’ meeting, we must provide a set of documents
  including our annual report and a summary of the results of the five previous
  fiscal years to any shareholder who so requests.

Dividends

We
  may only distribute dividends out of our “distributable profits,”
  plus any amounts held in our reserves which the shareholders decide to make
  available for distribution, other than those reserves which are specifically
  required by law or our statuts. “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 contributions
  to the reserve accounts pursuant to law or our statuts. Dividends not
  claimed within five years of the date of payment escheat to the French state.

Dividends
  paid on fully paid-up shares that have been held by the same shareholders in
  registered form for at least two years are increased by 10% over dividends paid
  on other shares, rounded down to the nearest centime. Similarly, any stockholder
  who, at the year end, has held such stock, in registered form, for a minimum
  of two years and still holds it at the date of a bonus issue performed by way
  of capitalization of reserves, retained earnings or additional paid-in capital,
  shall receive additional shares equal to 10% of the number distributed. Where
  this gives rise to fractions the number of shares allotted shall be rounded
  down to the nearest whole number.

The
  two-year holding period for the increased dividend runs from January 1 of the
  year following the date the shares were placed in registered form. To benefit
  from the increased dividend with respect to the 2002 financial year, shareholders
  must have held their shares in registered form since December 31, 2000, at the
  latest.

The
  number of shares eligible to such increased dividend that can be held by one
  shareholder is limited to 0.5% of all outstanding shares, at the end of the
  fiscal year for which the dividend is paid. In the event of a share dividend
  or bonus issue any additional shares shall rank pari passu with the shares
  previously held by the shareholder and shall be included in future loyalty bonus
  calculations. In the event of fractions:

| |  | where the shareholder opts for payment of
      dividends in shares, the shareholder meeting the legal conditions may pay
      the balancing amount in cash to receive an additional share;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| |  | in the event of a bonus issue, the rights
      attaching to fractional shares arising as a result of the loyalty bonus
      cannot be traded and the corresponding shares shall be sold and the proceeds
      distributed to the holders of these rights no later than thirty days after
      the registration in the share account of the whole number of shares allocated
      to them.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Legal ReserveThe
  French company law provides that French sociétés anonymes
  such as our company must allocate 5% of their unconsolidated statutory net profit
  for each year to their legal reserve fund before dividends may be paid 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 the issued and outstanding
  share capital. This restriction on the payment of dividends also applies to
  each of our French subsidiaries on an unconsolidated basis. At December 31,
  2002, our legal reserve was 52 million euros. The legal reserve of any company
  subject to this requirement may only be distributed to shareholders upon liquidation
  of the company.

Approval of DividendsAccording
  to the French company law, the board of directors may propose a dividend for
  approval by the shareholders at the annual general meeting of shareholders.
  If we have earned distributable profits since the end of the preceding fiscal
  year, as reflected in an interim statement of income certified by our auditors,
  the board of directors may distribute interim dividends, to the extent of the
  distributable profits for the period covered by the interim statement of income.
  The board of directors may declare interim dividends payable in cash, without
  prior shareholder approval. However, for interim dividends paid in shares, prior
  authorization by a shareholders’ meeting is required.

Distribution of DividendsDividends
  are distributed to shareholders pro rata according to their respective holdings
  of shares. Outstanding dividends are payable to shareholders on the date of
  the shareholders' meeting at which the distribution of dividends is approved.
  In the case of interim dividends, distributions are made to shareholders on
  the date of the board of directors’ meeting in which the distribution
  of interim dividends is approved. The actual dividend payment date is decided
  by the shareholders in an ordinary general meeting, or by the board of directors
  in the absence of such a decision by the shareholders.

Timing of PaymentAccording
  to the French company law, 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 State.

Changes in Share Capital

Increases in Share CapitalAs
  provided by the French company law, our share capital may be increased only
  with the shareholders’ approval at an extraordinary general meeting following
  a recommendation of the board of directors.

Increases
  in our share capital may be effected by:

| |  | issuing additional shares,
| | - | --------------------------

| |  | increasing the nominal value of existing
      shares, or
| | - | ---------------------------------------------------------

| |  | creating a new class of equity securities.
| | - | ------------------------------------------

Increases
  in share capital by issuing additional securities may be effected by issuing
  such securities:

| |  | for cash,
| | - | ---------

| |  | for assets contributed in kind,
| | - | -------------------------------

| |  | for securities contributed through a tender
      offer,
| | - | --------------------------------------------------------

| |  | by conversion, exchange or redemption of
      debt securities previously issued,
| | - | ---------------------------------------------------------------------------------

| |  | by capitalization of profits, reserves or
      share premiums,
| | - | ---------------------------------------------------------------

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| |  | subject to various
      conditions, in satisfaction of debt incurred by our company, or
| | - | ----------------------------------------------------------------------------------------
| |  | by any combination of the above.                                                        

Decisions
  to increase the share capital through the capitalization of reserves, profits
  and/or share premiums require the approval of an extraordinary general meeting,
  acting under the quorum and majority requirements applicable to shareholders'
  meetings. Increases effected by an increase in the nominal value of shares require
  unanimous approval of the shareholders, unless effected by capitalization of
  reserves, profits or share premiums. All other capital increases require the
  approval of an extraordinary general meeting. See “Shareholders’
  Meetings and Voting Rights.”

The
  shareholders may delegate the right to carry out certain types of capital increases
  to the board of directors, with a maximum amount and for a certain period of
  time. The board of directors may further delegate this right to the Chairman.

Each
  time the shareholders decide to carry out a capital increase or decide to delegate
  to the board of directors the right to carry out a capital increase, they must
  also decide whether to proceed with a capital increase reserved to employees
  of our company and its subsidiaries, or whether to delegate to the board of
  directors the right to carry out such a reserved capital increase.

Decreases in Share CapitalAccording
  to the French company law, any decrease in our share capital requires approval
  by the shareholders entitled to vote at an extraordinary general meeting. In
  the case of a capital reduction, other than a reduction to absorb losses or
  a reduction as part of a program to purchase our own shares, all holders of
  shares must be offered the possibility to participate in such a reduction. The
  share capital may be reduced either by decreasing the nominal value of the outstanding
  share capital or by reducing the number of outstanding shares. The number of
  outstanding shares may be reduced either by an exchange of shares or by the
  repurchase and cancellation of shares. Holders of each class of shares must
  be treated equally unless each affected shareholder agrees otherwise.

Preemptive Subscription RightsAccording
  to the French company law, if we issue specific kinds of additional securities,
  current shareholders will have preemptive subscription rights to these securities
  on a pro rata basis. These preemptive rights require us to give priority treatment
  to those shareholders. The rights entitle the individual or entity that holds
  them to subscribe to an issue of any securities that may increase the share
  capital of our company by means of a cash payment or a settling of cash debts.
  Preemptive subscription rights are transferable during the subscription period
  relating to a particular offering. These rights may also be listed on the Euronext
  Paris.

A
  two-thirds majority of the shares entitled to vote at an extraordinary general
  meeting may vote to waive preemptive subscription rights with respect to any
  particular offering. French law requires that the board of directors and our
  independent auditors present reports that specifically address any proposal
  to waive preemptive subscription rights. In the event of a waiver, the issue
  of securities must be completed within the period prescribed by law. The shareholders
  may also decide at an extraordinary general meeting to give the existing shareholders
  a non-transferable priority right to subscribe to the new securities, during
  a limited period of time. A two-thirds majority of the shares entitled to vote
  at an extraordinary general meeting may also grant to existing shareholders
  a non-transferable form of preemptive rights to subscribe to any new securities
  that may affect our share capital. Individual shareholders may also notify us
  that they wish to waive their own preemptive subscription rights with respect
  to any particular offering.

Form, Holding and Transfer of SharesForm of SharesOur
  statuts provide that the shares may be held in registered or bearer form.

Holding of SharesIn
  accordance with French law concerning dematerialization of securities, shareholders’
  ownership rights are represented by book entries instead of share certificates.
  We maintain a share account with Euroclear France for all shares in registered
  form, which is administered by Crédit Commercial de France.

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In addition,
  we maintain separate accounts in the name of each shareholder either directly
  or, at a shareholder’s request, through the shareholder’s accredited intermediary. Each shareholder
  account shows the name of the holder and the number of shares held and, in the
  case of shares held through an accredited intermediary, the shareholder account
  shows that the shares are held through such intermediary. Crédit Commercial
  de France, as a matter of course, issues confirmations to each registered shareholder
  as to shares registered in the shareholder’s account, but these confirmations
  are not documents of title.

Shares
  held in bearer form are held on the shareholder’s behalf in an account
  maintained by an accredited intermediary and are registered in an account which
  the accredited intermediary maintains with Euroclear France. That account is
  separate from our company’s share account with Euroclear France. Each
  accredited intermediary maintains a record of shares held through it and will
  issue certificates of registration for the shares that it holds. Shares held
  in bearer form may only be transferred through accredited intermediaries and
  Euroclear France. Our statuts permit us to request that Euroclear France
  provide us at any time with the identity of the holders of our shares or other
  securities, held in bearer form, granting immediate or future voting rights,
  with the number of shares or other securities so held and any restrictions on
  such securities.

In
  addition, pursuant to the May 15, 2001 act amending French company law, shares
  held, in registered form or bearer form, by non-French residents may be held
  on the shareholder’s behalf in a collective account or in several individual
  accounts by an intermediary. This intermediary must declare that it is acting
  as an intermediary and may be requested by us to provide the identity of the
  shareholders on whose behalf it is acting. Failure to declare that it is acting
  as an intermediary or the provision of inaccurate or incomplete information
  about the shareholders can result in the deprivation of both the right to vote
  and the right to receive dividends.

Transfer of SharesOur
  statuts do not contain any restrictions relating to the transfer of shares,
  other than those provided for by law, regulation or statute.

Registered
  shares must be converted into bearer form before being transferred on Euronext
  Paris and, accordingly, must be registered in an account maintained by an accredited
  intermediary. A shareholder may initiate a transfer by giving instructions to
  the relevant accredited intermediary. A fee or commission is payable to the
  broker involved in the transaction, regardless of whether the transaction occurs
  inside or outside of France. Normally, no registration duty is payable in France,
  unless a transfer instrument has been executed in France.

Liquidation Rights

In
  the event of a liquidation, any assets remaining after payment of our debts,
  liquidation expenses and all of our remaining obligations would first be distributed
  to repay in full the nominal value of our shares. Any surplus would then be
  distributed pro rata among shareholders in proportion to the nominal value of
  their shareholdings.

Requirements for Holdings Exceeding
  Certain Percentages

The
  French company law provides that any individual or entity, acting alone or in
  concert with others, that becomes the owner, directly or indirectly, of more
  than 5%, 10%, 20%, 33 1/3%, 50% or 66 2/3% 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 the company within 15 calendar days of the
  date it crosses the threshold of the number of shares and ADSs it holds and
  their voting rights. The individual or entity must also notify the Conseil
  des Marchés Financiers, or “CMF,” within five trading
  days of the date it crosses the threshold.

French
  law and the COB regulations impose additional reporting requirements on persons
  who acquire more than 10% or 20% of the outstanding shares or voting rights
  of a listed company. These persons must file a report with the company,
  the COB and the CMF within 15 days of the date they cross the threshold. In
  the report, the acquirer must specify its intentions for the following 12-month
  period, including whether or not it intends to continue its purchases, to acquire
  control of the company in question or to seek nomination to the board of directors.
  The CMF must make the notice public. The acquirer must also publish a press
  release stating its intentions in a financial newspaper of national circulation
  in France. The acquirer may amend its stated intentions, provided that it does
  so on the basis of significant changes in its own situation or shareholders.

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Upon any change of intention, it must file a new report. These
  requirements also apply to registered intermediaries who hold stock on behalf
  of non-resident shareholders.

Under
  CMF regulations, and subject to limited exemptions granted by the CMF, any person
  or persons acting in concert owning in excess of 33 1/3% 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 such company.

In
  addition, provisions have been included in our statuts to the effect
  that any person acting alone or in concert who becomes, directly or indirectly,
  the owner of more than 1% of our share capital or voting rights must notify
  us within 15 days by registered mail with return receipt requested, fax or telex,
  of the number of shares or voting rights it holds. The same notification requirement
  applies to each subsequent increase or decrease in ownership of 1% or whole
  multiples of 1%. If a person does not comply with this notification requirement,
  one or more shareholders holding 1% or more of our share capital or voting rights
  may require a shareholders' meeting to deprive the shares in excess of the relevant
  threshold of voting rights for all shareholders' meetings for two years following
  the date on which the owner complies with the notification requirements. Such
  sanction is independent of any legal sanction which may be issued by a court
  upon the request of the Chairman, a shareholder or the COB.

In
  order to permit holders or intermediaries to give the required notice, we must
  publish in the BALO, not later than 15 calendar days after the annual ordinary
  general meeting of shareholders, information with respect to the total number
  of voting rights outstanding as of the date of such meeting. In addition, if
  the number of outstanding voting rights changes by 5% or more between two annual
  ordinary general meetings, we must publish in the BALO, within 15 calendar days
  of such change, the number of voting rights outstanding and provide the CMF
  with a written notice. The CMF publishes the total number of voting rights so
  notified by all listed companies in a weekly notice (avis), mentioning
  the date each such number was last updated. In order to facilitate compliance
  with the notification requirements, a holder of ADSs may deliver any such notification
  to the depositary and the depositary shall, as soon as practicable, forward
  such notification to us and to the CMF.

If
  any person fails to comply with the legal notification requirement, 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 the owner thereof complies with the notification requirements.
  In addition, any shareholder who fails to comply with these requirements may
  have all or part of its voting rights suspended for up to five years by the
  Commercial Court at the request of our Chairman of the Board, any shareholder
  or the COB. In addition, individuals who are shareholders, the chairman, members
  of the board, members of the management board, managers and managing directors
  of corporate shareholders may be subject to a fine of 18,000 euros.

There
  have been no public takeover offers by third parties for our shares during the
  last or the current financial year.

Purchase of Our Own Shares

Under
  French law, our company may not issue shares to itself. However, we may, either
  directly or through a financial intermediary acting on our behalf, purchase
  our shares for one of three purposes:

|(1) | to reduce our share capital by canceling the
      shares we purchase, with our shareholders’ approval at an extraordinary
      general meeting,                                                                                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(2) | to provide shares to our employees under a
      profit-sharing plan or stock option plan, with our shareholders’ approval
      at an extraordinary general meeting, or                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(3) | to acquire up to 10% of our share capital
      in connection with a corporate share repurchase program, with our shareholders’
      approval at an ordinary general meeting and the publication in a daily newspaper
      with a national audience, either at the latest 15 days before such meeting
      or right after the board of directors implements the share repurchase program,
      of a notice (Note d’Information) approved by the COB.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                         

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On
  May 28, 2002, the shareholders authorized a share repurchase program as described
  in (3) above for up to 10% of our outstanding shares. The purchase price may
  not exceed 200 euros per share and the selling price must be at least 30 euros
  per share. The shares purchased pursuant to this program can be used to:

| |  | stabilize the price of our shares on the
      market,
| | - | ------------------------------------------------------

| |  | provide shares for distribution to employees
      under a profit sharing, employee offering or stock option plan,
| | - | ------------------------------------------------------------------------------------------------------------------

| |  | provide consideration in the context of an
      acquisition or of the issuance of securities exchangeable, redeemable or
      otherwise convertible into our shares.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

These
  shares can be also kept as treasury shares or cancelled. This authorization
  will expire on November 28, 2003.

In
  2002 we acquired through transactions conducted on the Paris Bourse 14,300 shares
  at an average price of 87.95 euros a share. In the same period we sold 9,776
  shares pursuant to the exercise of outstanding purchase stock options at an
  average price of 54.87 euros a share.

At
  December 31, 2002, we held directly in treasury 1,025,641 shares purchased pursuant
  to prior authorizations from our shareholders. In addition, our subsidiaries
  held 843,255 shares, which under French law are considered outstanding but have
  no voting rights. These shares represented 0.77% of our outstanding shares for
  a total book value of approximately 72.5 million euros. 1,007,373 of these shares
  are reserved to be attributed to our employees upon exercise of stock options
  granted in December 1997, 1998, 2000, 2001 and 2002.

We
  may not cancel more than 10% of our outstanding share capital over any 24-month
  period. In addition, we may not repurchase under either (2) or (3) above an
  amount of shares that would result in our company holding, directly or through
  a person acting on our behalf, more than 10% of our outstanding share capital,
  or, if we have different classes of shares, 10% of the shares in each class.

We
  must hold any shares we repurchase in registered form. These shares also must
  be fully paid up. Shares repurchased by us are deemed outstanding under French
  law but are not entitled to dividends or voting rights, and we may not exercise
  the preemptive subscription rights attached to them.

The
  shareholders, at an extraordinary general meeting, may decide not to take these
  shares into account in determining the preemptive subscription rights attached
  to the other shares. However, if the shareholders do decide to take them into
  account, we must either sell the rights attached to the shares we hold on the
  market before the end of the subscription period or distribute them to the other
  shareholders on a pro rata basis.

Trading in Our Own Shares

Under
  Règlement no. 90-04 of the COB, as amended, we may not trade in
  our own shares for the purpose of manipulating the market. There are three requirements
  in order for trades by a company in its own shares to be considered valid. Specifically,
  in order to be valid:

| |  | trades must be executed on our behalf by
      only one intermediary in each trading session, except if we use derivatives
      in our share repurchase progam, in which case trades can be executed by
      two intermediaries in each trading session, provided we ensure that they
      coordinate their interventions,
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | any block trades may not be made at a price
      above the current market price, and
| | - | -------------------------------------------------------------------------------------

| |  | each trade must be made at a price that falls
      between the lowest and the highest trading price of the trading session
      during which such trade is executed.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

If
  a company’s shares are continuously quoted (cotation en continu),
  such as ours are, then a trade must meet the following further requirements
  to be considered valid:

| |  | the trade must not influence the determination
      of the quoted price before the opening of trading, at the opening of the
      trading session, at the first trade of the shares, at the reopening of trading following a suspension, or, as applicable,
      in the last half-hour of any trading session or at the fixing of the closing
      price,
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| |  | the trade must not be carried out in order
      to influence the price of a derivative instrument relating to the company’s
      shares, and                                                                                                                                                                                                                                                                                                                                                          
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the trade must not account for more than
      25% of the average total daily trading volume on the Premier Marché
      in the shares during the three trading days immediately preceding the trade
      for shares that, like our shares, are eligible for the deferred settlement
      service; this requirement is not applicable to block trades and to trades
      executed pursuant to an agency agreement with an intermediary that complies
      with a code of ethics approved by the COB.

In
  addition, there are two periods during which we are not permitted to trade in
  our own securities: the 15-day period before the date on which we make our consolidated
  or annual accounts public, and the period beginning on the date at which we
  become aware of information that, if disclosed, would have a significant impact
  on the market price of our securities and ending on the date this information
  is made public.

After
  making an initial purchase of our own shares, we must file monthly reports with
  the COB and the CMF that contain specified information about subsequent transactions.
  The CMF makes this information publicly available.

Ownership of Shares by Non-French
  Persons

Under
  French law, there is no limitation on the right of non-residents or non-French
  shareholders to own or, where applicable, to vote securities of a French company.

A
  French law dated February 14, 1996 abolished the requirement that a person
  who is not a resident of the European Union (“E.U.”) obtain an autorisation
  préalable, or prior authorization, prior to acquiring a controlling interest
  in a French company. However, pursuant to the Decree n°2003-196 of March
  7, 2003 both E.U. and non-E.U. residents must file a déclaration
  administrative, or administrative notice, with French authorities in connection
  with the realization of certain investments in French companies. Under existing
  administrative rules, for example, any transaction realized in the share capital
  of a French company by a non-resident person or company, that will result, after
  the completion of the contemplated transactions, in the aggregate amount of
  the share capital or voting rights held by such non-resident person or company
  exceeding 33.33% of the share capital or voting rights, is considered as a foreign
  investment subject to the filing of a déclaration administrative.

In
  addition, pursuant to the May 15, 2001 act amending French company law, shares
  held, in registered form or bearer form, by non-French residents may be held
  on the shareholder's behalf in a collective account or in several individual
  accounts by an intermediary. This intermediary must declare that it is acting
  as an intermediary and may be requested by us to provide the identity of the
  shareholders on whose behalf it is acting. Failure to declare that it is acting
  as an intermediary or the provision of inaccurate or incomplete information
  about the shareholders can result in the deprivation of both the right to vote
  and the right to receive dividends.

Material Contracts

On
  August 1, 2000, we transferred our interests in Lafarge North America, our U.S.
  subsidiary and Fàbrica Nacional de Cementos SACA, our Venezuelan subsidiary,
  to voting trusts set up under the laws of the State of New York. These trusts
  are designed to make available to the public shareholders of these subsidiaries,
  for a period of ten years, an opportunity comparable to that presently enjoyed
  under French Law and regulations by public shareholders of French subsidiaries
  of French corporations to receive a tender offer for their shares in the event
  of a tender or exchange offer under French law for the shares of Lafarge SA,
  if at the time of commencement of such offer Lafarge SA’s beneficial interest
  in these subsidiaries comprises 20% or more of the voting power represented
  by the outstanding voting securities of the relevant subsidiary.

The
  minority shareholders of Lafarge North America benefited from a similar protection
  from July 31, 1990 until July 31, 2000.

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The
  common shares of Lafarge North America are listed on the New York Stock Exchange.
  The exchangeable preference shares of Lafarge Canada Inc., a subsidiary of Lafarge
  North America, are listed on the Montreal stock exchange, and they are exchangeable,
  at any time and at the option of the holder, into common shares of Lafarge North
  America. The common shares of Fàbrica Nacional de Cementos SACA are listed
  on the Caracas stock exchange.

Each
  of the trust agreements provides, among other things, that unless an acquiror
  of Lafarge SA, or Lafarge SA itself consummates a comparable tender offer for
  all publicly held voting securities, or securities convertible, redeemable or
  otherwise exchangeable into voting securities, of the relevant subsidiary, the
  trustees will, for a five year protective period, exercise our voting rights
  with respect to the voting securities held in the trust, in general, by voting
  those securities in favor of any resolution proposed by the subsidiary’s
  board of directors and in opposition to any resolutions opposed by the subsidiary’s
  board of directors.

Before
  an acquiror commences a tender or exchange offer for Lafarge SA, we have the
  power to direct the trustees how to vote all of the voting securities held in
  the trust.

A
  “comparable tender offer” is defined in each trust agreement to
  be a tender offer for any or all of the outstanding voting securities, or securities
  convertible, redeemable or otherwise exchangeable into voting securities, held
  by public shareholders of the relevant subsidiary upon specified terms and conditions,
  including, but not limited to, the requirement that the price offered to the
  holders of such securities reflects a premium to the current market price for
  such securities at least equal to the highest premium publicly offered or paid
  by the acquiror (or publicly offered by any other person making a tender or
  exchange offer for Lafarge SA after the acquiror commences a tender or exchange
  offer for Lafarge SA) in making its tender or exchange offer to acquire a controlling
  interest in Lafarge SA. The tender offer may be conditioned only on the acquiror’s
  acquisition of more than 50% of Lafarge SA’s voting shares (which condition
  is not waivable).

Pursuant
  to each trust agreement, until a potential acquiror commences an offer for Lafarge
  SA, we (i) are permitted to transfer the voting securities held by the relevant
  trust to establish another comparable trust and (ii), through the trust, are
  permitted to sell all or some of the voting securities held by the trust to
  a person or an entity who or which is not affiliated with us. Other than as
  specifically provided in the trust agreement, we shall not have the right to
  withdraw, sell, assign, transfer or otherwise dispose of the whole or any part
  of the corpus of the trust. In the event that we beneficially own less than
  20% of the voting power represented by the then outstanding voting shares of
  the relevant subsidiary, we may revoke the trust agreement.

Each
  trust agreement also provides that, unless otherwise directed by us, all income
  received by the relevant trust shall be distributed to us, provided that during
  a protective period, the trustees shall be permitted to use income from the
  trust to pay certain expenses.

Exchange Controls and Other Limitations
  Affecting Security Holders

Under
  current French exchange control regulations, there are no limitations on the
  amount of payments that may be remitted by us to non-residents of France. 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 authorized intermediary bank. All credit establishments in
  France, including all registered banks, are accredited intermediaries.

Neither
  French law nor our statuts presently imposes any restrictions on the
  ability of non-French holders to hold or vote the Shares.

Other

For
  other limitations affecting shareholders, see “Requirements for Holdings
  Exceeding Certain Percentages.”

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Taxation

French Taxation

The
  following is a general summary of the material French tax consequences of owning
  and disposing of the shares of our company. This summary may only be relevant
  to you if you are not a resident of France and you do not hold your shares in
  connection with a permanent establishment or a fixed base in France through
  which you carry on a business or perform personal services.

This
  discussion is intended only as a descriptive summary. It does not address all
  aspects of French tax laws that may be relevant to you in light of your particular
  circumstances. It is based on the laws, conventions and treaties in force as
  of the date of this prospectus, all of which are subject to change, possibly
  with retroactive effect, or different interpretations.

If
  you are considering buying shares of our company, you should consult your own
  tax adviser about the potential tax effects of owning or disposing of shares
  in your particular situation.

Taxation on Sale or Disposal
  of Shares

Generally,
  you will not be subject to any French income tax or capital gains tax when you
  sell or dispose of shares of our company if both of the following apply to you:

| | (1) | you are not a French resident
      for French tax purposes, and
| | --- | ----------------------------------------------------------------

| | (2) | you have held not more than
      25% of our company’s dividend rights, known as droits aux bénéfices
      sociaux, at any time during the preceding five years, either directly
      or indirectly, alone or with relatives.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Subject
  to specific conditions, foreign states, international organizations and a number
  of foreign public bodies are not considered French residents for these purposes.

If
  a double tax treaty between France and your country contains more favorable
  provisions, you may not be subject to any French income tax or capital gains
  tax when you sell or dispose of any shares of our company, even if one or both
  of the above statements applies to you.

If
  you transfer listed shares using a written agreement, that agreement must generally
  be registered. You will be required to pay a registration duty of 1% of either
  the purchase price or the market value of the shares transferred, whichever
  is higher. The maximum duty is 3,049 euros per transfer. However, in some circumstances,
  if the agreement is executed outside France, you will not be required to
  pay this duty.

Taxation of Dividends

In
  France, companies may only pay dividends out of income remaining after tax has
  been paid. When shareholders resident in France receive dividends from French
  companies, they are generally entitled to a tax credit, known as the avoir
  fiscal.

The
  amount of the avoir fiscal is generally equal to:

| | (1) | 50% of the dividend paid for
      (i) individuals and (ii) companies which own at least 5% of the capital
      of the French distributing company and meet the conditions to qualify under
      the French parent-subsidiary regime; or
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | 15% of the dividend paid for
      the other shareholders who used the avoir fiscal in 2002, and 10%
      of the dividend paid for such other shareholders who will use the avoir
      fiscal as of January 1, 2003.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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In
  addition, if the distribution of dividends by us gives rise to the précompte,
  shareholders entitled to the avoir fiscal at the rate of 15%, and
  then 10%, will generally be entitled to an additional amount of avoir fiscal
  equal to:

| | (1) | 70% of the précompte
      paid in cash by the company for shareholders entitled to use the avoir
      fiscal at the rate of 15%; and
| | --- | --------------------------------------------------------------------------------------------------------------------------------------

| | (2) | 80% of the précompte
      paid in cash by the company for shareholders entitled to use theavoir
      fiscal at the rate of 10%.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------

As
  indicated below, the précompte is a tax which is paid by French
  companies when they distribute dividends out of certain profits (see paragraph
  below relating to the précompte) and such dividends carry an avoir
  fiscal.

Under
  French domestic law, French companies must generally deduct a 25% French withholding
  tax from dividends paid to non-residents and shareholders who are not resident
  in France are not eligible for the avoir fiscal. Under most tax
  treaties between France and other countries, the rate of this withholding tax
  may be reduced in specific circumstances. Generally, a holder who is a non-French
  resident is subsequently entitled to a tax credit in his or her country of residence
  for the amount of tax actually withheld. Under some tax treaties, the withholding
  tax is eliminated altogether.

The
  following countries, French overseas territories, known as Territoires d’Outre-Mer,
  and other territories have entered into income tax treaties with France that
  provide for the arrangements summarized below:

|Australia    | Germany(1)  | Malaysia    | Senegal        | United States     
|------------ | ----------- | ----------- | -------------- | ------------------
|Austria      | Ghana       | Mali        | Singapore      | Venezuela         
|Belgium      | Iceland     | Malta       | South Korea    |                   
|Bolivia      | India       | Mauritius   | Spain          | French Territoires
|Brazil       | Israel      | Mexico      | Sweden         | d’Outre-Mer and   
|Burkina Faso | Italy       | Namibia     | Switzerland    | Other:            
|Canada       | Ivory Coast | Netherlands | Togo           | Mayotte           
|Estonia      | Japan       | New Zealand | Turkey         | New Caledonia     
|Finland      | Latvia      | Niger       | Ukraine        | Saint-Pierre et   
|Gabon        | Lithuania   | Norway      | United Kingdom | Miquelon          
|             | Luxembourg  | Pakistan    |                |                   
|             |             |             |                |                   

(1)      According
  to a common statement of the French and German tax authorities dated July 13,
  2001, German resident holders other than individuals are no longer entitled
  to the avoir fiscal for dividends paid as of January 1, 2001. As regards
  German resident individuals, a supplementary agreement to the tax treaty between
  France and Germany was signed by the French Republic and the Federal Republic
  of Germany on December 20, 2001, which provides that German resident holders,
  including German resident individual holders, should no longer be entitled to
  the avoir fiscal. Such supplementary agreement has been adopted
  but has not yet been published and, when published, should apply retroactively
  as of January 1, 2002.

Under
  these treaties, a shareholder who fulfills specific conditions may generally
  apply to the French tax authorities for the following:

| | (1) | a lower rate of withholding
      tax, generally 15%, and
| | --- | ---------------------------------------------------------

| | (2) | a refund equal to the avoir
      fiscal, after deduction of withholding tax payable on the avoir fiscal.
| | --- | ---------------------------------------------------------------------------------------------------------

Except
  for the United States, none of the countries or territories listed above has
  a treaty granting benefits to holders of ADSs, as opposed to shares. Accordingly,
  this discussion of treaty benefits does not apply to ADS holders.

If
  these arrangements provided for by any of the above-listed treaties apply to
  a shareholder, we will withhold tax from the dividend at the lower rate,
  provided that the shareholder has established, before the date of payment of
  the dividend, that he or she is entitled to the lower rate and has complied
  with the filing formalities. Otherwise, we must withhold tax at the full rate
  of 25%, and the shareholder may subsequently claim the excess tax paid.

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Some
  of the countries and territories listed above impose additional conditions for
  corporate entities wishing to receive the avoir fiscal. In other countries
  and territories, individual residents may receive the avoir fiscal but
  corporate entities may not.

ThePrécompte

A
  French company must pay a tax known as the précompte to the French
  tax authorities if it distributes dividends which carry an avoir fiscal
  out of:

| | (1) | profits which have not been
      taxed at the ordinary corporate income tax rate; or
| | --- | -------------------------------------------------------------------------------------

| | (2) | profits which have been earned
      and taxed more than five years before the distribution.
| | --- | --------------------------------------------------------------------------------------------

The amount of the précompte
  is 50% of the net dividends before withholding tax.

A
  shareholder that is not a French resident for French tax purposes may generally
  obtain a refund of all or part of the précompte we actually pay
  in cash, net of applicable withholding tax, in two cases:

| | (1) | if the shareholder is entitled
      to the benefits of a tax treaty but the treaty does not provide for a refund
      of the avoir fiscal, or
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | if the shareholder is entitled
      to the benefits of a tax treaty but is not entitled to a refund of all of
      the avoir fiscal.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------

Estate and Gift Tax

France
  imposes estate and gift tax where an individual or entity acquires shares of
  a French company 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 exempt from this tax
  or obtain a tax credit, assuming specific conditions are met. You should consult
  your own tax adviser about whether French estate and gift tax will apply to
  you and whether you may claim an exemption or tax credit.

Wealth Tax

You
  will not be subject to French wealth tax, known as impôt de solidarité
  sur la fortune, on your shares if both of the following apply to you:

| | (1) | you are not a French resident
      for the purpose of French taxation, and
| | --- | ---------------------------------------------------------------------------

| | (2) | you own less than 10% of our
      company’s capital stock, either directly or indirectly, provided that your
      shares do not enable you to exercise influence on our company.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

If
  a double tax treaty between France and your country of residence contains more
  favorable provisions, you may not be subject to French wealth tax even if one
  or both of the above statements applies to you.

Taxation of U.S. Investors

The
  following is a general summary of the material U.S. federal income tax and French
  tax consequences of owning and disposing of our shares or ADSs. This discussion
  applies only to U.S. holders. You will be a U.S. holder if you are the
  beneficial owner of shares or ADSs and all of the following five points
  apply to you:

| | (1) | You own, directly, indirectly
      or by attribution, less than 10% of our company’s share capital or voting
      stock;
| | --- | --------------------------------------------------------------------------------------------------------------------------

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| | (2) | You are any one of the following
      below:
| | --- | ---------------------------------------------

| |  | a) | an individual who is a citizen or resident
      of the United States for U.S. federal income tax purposes,
| |  | -- | -----------------------------------------------------------------------------------------------------------

| |  | b) | a corporation or certain other entities created
      or organized under the laws of the United States,
| |  | -- | -------------------------------------------------------------------------------------------------------

| |  | c) | an estate the income of which is subject
      to U.S. federal income taxation regardless of its source, or
| |  | -- | -----------------------------------------------------------------------------------------------------------

| |  | d) | a trust if a court within the United States
      is able to exercise primary supervision over the administration of the trust,
      and if one or more U.S. persons have the authority to control all substantial
      decisions of the trust;
| |  | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | You are entitled to the benefits
      of the “Convention between the Government of the United States of
      America and the Government of the French Republic for the Avoidance of Double
      Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income
      and Capital”, signed August 31, 1994 (the “U.S.-France
      income tax treaty”) under the “Limitation on Benefits”
      article of that treaty;
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | You hold your shares or ADSs
      of our company as capital assets; and
| | --- | ------------------------------------------------------------------------

| | (5) | Your functional currency is
      the US dollar.
| | --- | ------------------------------------------------

If
  a partnership holds shares or ADSs, the tax treatment of a partner generally
  will depend upon the status of the partner and the activities of the partnership.
  If you are a partner in a partnership that holds shares or ADSs, you are urged
  to consult your own tax adviser regarding the specific tax consequences of owning
  and disposing of such share or ADS.

Special
  rules may apply to U.S. expatriates, insurance companies, tax-exempt organizations,
  financial institutions, persons subject to the alternative minimum tax, securities
  broker-dealers, persons holding shares or ADS as part of a hedging transaction,
  straddle or conversion transaction, persons who acquired their shares or ADSs
  pursuant to the exercise of employee stock options or otherwise as compensation,
  among others. Those special rules, except certain rules applicable to certain
  tax-exempt investors, are not discussed in this annual report. Furthermore,
  this discussion is based upon current U.S. and French law and practice, including
  the U.S. Internal Revenue Code of 1986, as amended (the “Internal Revenue
  Code”), the Treasury regulations promulgated thereunder, rulings, judicial
  decisions and administrative pronouncements. This summary is subject to any
  changes to or changes in interpretation of U.S. or French law or practice occurring
  after the date hereof, which may have retroactive effect. In addition, this
  summary is based, in part, upon representations made by the depositary to us
  and assumes that the Deposit Agreement, and all other related agreements, will
  be performed in accordance with its terms. Investors should consult their own
  tax advisers concerning the U.S. federal, state and local tax consequences of
  the ownership or disposition of our shares or ADSs in light of their particular
  situations as well as any consequences arising under the laws of any other taxing
  jurisdiction.

Taxation of Dividends

Withholding Tax andAvoir
  Fiscal

In
  France, companies may only pay dividends out of income remaining after tax has
  been paid. When shareholders resident in France receive dividends from French
  companies, they are generally entitled to a tax credit, known as the avoir
  fiscal.

The amount of the avoir fiscal
  is generally equal to:

| | (1) | 50% of the dividend paid for
      (i) individuals and (ii) companies which own at least 5% of the capital
      of the French distributing company and meet the conditions to qualify under
      the French parent-subsidiary regime; or
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| | (2) | 15% of the dividend paid for
      the other shareholders who used the avoir fiscal in 2002, and 10%
      of the dividend paid for such other shareholders who will use the avoir
      fiscal as of January 1, 2003.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In
  addition, if the distribution of dividends by us gives rise to the précompte,
  shareholders entitled to the avoir fiscal at the rate of 15%, and then
  10%, will generally be entitled to an additional amount of avoir fiscal
  equal to:

| | (1) | 70% of the précompte
      paid in cash by the company for shareholders entitled to use the avoir
      fiscal at the rate of 15%; and
| | --- | --------------------------------------------------------------------------------------------------------------------------------------

| | (2) | 80% of the précompte
      paid in cash by the company for shareholders entitled to use the avoir
      fiscal at the rate of 10%.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------

As
  indicated below, the précompte is a tax, which is paid by French
  companies when they distribute dividends out of certain profits (see paragraph
  below relating to the précompte) and such dividends carry an avoir
  fiscal.

Under
  French domestic law, French companies must normally deduct a 25% French withholding
  tax from dividends paid to non-residents, and shareholders who are not resident
  in France are not eligible for the avoir fiscal. Under the U.S.-France
  income tax treaty, this withholding tax is reduced to 15% if your ownership
  of the shares or ADSs is not effectively connected with a permanent establishment
  or a fixed base that you have in France and certain other requirements are satisfied.

Additional
  provisions of the U.S.-France income tax treaty apply if you are considered
  an “eligible” U.S. holder of shares or ADSs. You are “eligible”
  if your ownership of the shares or ADSs is not effectively connected with a
  permanent establishment or a fixed base that you have in France and any one
  of the following four points applies to you:

| | (1) | You are an individual or other
      non-corporate holder that is a resident of the United States for purposes
      of the U.S.-France income tax treaty;
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | You are a U.S. corporation,
      other than a regulated investment company;
| | --- | ----------------------------------------------------------------------------

| | (3) | You are a U.S. corporation which
      is a regulated investment company, provided that less than 20% of your shares
      are beneficially owned by persons who are neither citizens nor residents
      of the United States; or
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | You are a partnership, estate
      or trust that is a resident of the United States for purposes of the U.S.-
      France income tax treaty, but only to the extent that your partners, beneficiaries
      or grantors would qualify as “eligible” under point 1 or point
      2 above.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

If
  you are an eligible U.S. holder, we will withhold tax from your dividend at
  the reduced rate of 15%, provided that you have previously established that
  you are a resident of the United States under the U.S.-France income tax treaty
  in accordance with the following procedures:

| | (1) | You must complete French Treasury
      Form RF I A EU-No. 5052 and send it to the French tax authorities before
      the date of payment of the dividend. If you are not an individual, you must
      also send the French tax authorities an affidavit attesting that you
      are the beneficial owner of all the rights attached to the full ownership
      of the shares or ADSs, including, among other things, the dividend rights.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | If you cannot complete Form
      RF I A EU-No. 5052 before the date of payment of the dividend, you may complete
      a simplified certificate and send it to the French tax authorities. This
      certificate must state all of the following five points:
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | a) | You are a resident of the United States for
      purposes of the U.S.-France income tax treaty;
| |  | -- | ------------------------------------------------------------------------------------------------

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| |  | b) | Your ownership of our shares or ADSs is not
      effectively connected with a permanent establishment or a fixed base in
      France;
| |  | -- | ---------------------------------------------------------------------------------------------------------------------------------------

| |  | c) | You own all the rights attached to the full
      ownership of the shares or ADSs, including, among other things, the dividend
      rights;
| |  | -- | --------------------------------------------------------------------------------------------------------------------------------------------

| |  | d) | You fulfill all the requirements under the
      U.S.-France income tax treaty to be entitled to the reduced rate of withholding
      tax and to be entitled to receive the avoir fiscal; and
| |  | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | e) | You claim the reduced rate of withholding
      tax and payment of the avoir fiscal.
| |  | -- | ------------------------------------------------------------------------------------

If
  you are not an eligible U.S. holder, or if you have not completed Form RF I
  A EU-No. 5052 or the five-point certificate before the dividend payment
  date, we will deduct French withholding tax at the rate of 25%. In that case,
  you may claim a refund from the French tax authorities of the excess withholding
  tax.

If
  you are an eligible U.S. holder, you may also be entitled to a payment from
  the French Treasury equal to the avoir fiscal, which you may claim by
  completing Form RF I A EU-No. 5052 and sending it to the French tax authorities
  before December 31 of the second year following the year during which the
  dividend is paid. You will be entitled to a payment equal to the avoir fiscal,
  less a 15% withholding tax on the avoir fiscal. As noted below, you will
  not receive this payment until after the close of the calendar year in
  which the dividend was paid. To receive the payment, you must submit a claim
  to the French tax authorities and attest that you are subject to U.S. federal
  income taxes on the payment of the avoir fiscal and the related dividend.
  For partnerships, estates or trusts, the partners, beneficiaries or grantors
  must make the attestation.

Specific
  rules apply to the following:

| | (1) | tax-exempt U.S. pension funds,
      which include the exempt pension funds established and managed in order to
      pay retirement benefits subject to the provisions of Section 401(a)
      of the Internal Revenue Code (qualified retirement plans), Section 403(b)
      of the Internal Revenue Code (tax deferred annuity contracts) or Section 457
      of the Internal Revenue Code (deferred compensation plans), and
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | various other tax-exempt entities,
      including certain state-owned institutions, not-for-profit organizations
      and individuals with respect to dividends which they beneficially own and
      which are derived from an investment retirement account.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Entities
  in these two categories are eligible for the reduced withholding tax rate of
  15% on dividends, subject to the same withholding tax filing requirements
  as eligible U.S. holders, except that they may have to supply additional documentation
  evidencing their entitlement to these benefits. These entities are not entitled
  to the full avoir fiscal. However, such entities may claim a partial
  avoir fiscal equal to 30/85 of the gross avoir fiscal, less withholding
  tax on such amount, provided that they own, directly or indirectly, less
  than 10% of our company's capital and they satisfy the filing requirements specified
  in Internal Revenue Service regulations.

The
  avoir fiscal or partial avoir fiscal and any French withholding
  tax refund are generally expected to be paid within 12 months after the
  holder of shares or ADSs files Form RF I A EU-No. 5052. However,
  they will not be paid before January 15 following the end of the calendar
  year in which the dividend is paid.

The
  Form RF I A EU-No. 5052 or the certificate, together with its respective
  instructions, will be provided by the depositary to all U.S. Holders of ADSs
  registered with the depositary and is also available from the United States
  Internal Revenue Service. The depositary will arrange for the filing with the
  French tax authorities of all Forms or Certificates completed by U.S. Holders
  of ADSs that are returned to the depositary in sufficient time.

For
  U.S. federal income tax purposes, the gross amount of any distribution and any
  related avoir fiscal, including any French tax withheld, will be included
  in your gross income as ordinary income when any such payment is received by
  you (or the depositary, if you hold ADSs), to the extent they are paid or deemed
  paid out of our current or accumulated earnings and profits as calculated for
  U.S. federal income tax purposes.

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To the extent (if any) that the amount of any such distribution exceeds our
  current and accumulated earnings and profits as calculated for U.S. federal
  income tax purposes, it will be treated first as a tax-free return of capital
  and thereafter any excess will be treated as capital gain. Dividends paid by
  our company will not give rise to the dividends received deduction generally
  allowed to U.S. corporations with respect to dividends received from other U.S. corporations.
  Such dividends generally constitute foreign source “passive” income
  for foreign tax credit purposes (or, for some holders, foreign source “financial
  services” income).

Further,
  for U.S. federal income tax purposes, the amount of any dividend paid in euros
  including any French tax withheld will be equal to the US dollar value of the
  euro amount received calculated by reference to the exchange rate in effect
  on the date the dividend is received by you, in the case of shares, or by the
  depositary, in the case of ADSs, regardless of whether the payment is in fact
  converted into US dollar. If you do not convert any such foreign currency that
  is distributed to you into US dollars on the date you receive it, you will
  have a basis in that foreign currency equal to its US dollar value on the
  date of receipt. Any gain or loss resulting from currency exchange fluctuations
  during the period from the date the dividend is includible in your gross income
  to the date such payment is converted into US dollars will be treated as
  U.S. source ordinary income or loss. You also may be required to recognize foreign
  currency gain or loss if you receive a refund under the U.S.-France income tax
  treaty of tax withheld in excess of the treaty rate. This foreign currency gain
  or loss generally will be U.S. source ordinary income or loss.

French
  withholding tax imposed on the dividends you receive and on any avoir fiscal
  at 15% under the U.S.-France income tax treaty is treated as payment of a foreign
  income tax. You may take this amount as a credit against your U.S. federal income
  tax liability, subject to complex conditions and limitations, or you may alternatively
  choose to deduct all foreign taxes paid by you in a particular year as an itemized
  deduction.

The Précompte

A
  French company must generally pay an equalization tax known as the précompte
  to the French tax authorities if it distributes dividends which carry an avoir
  fiscal out of:

| | (1) | profits which have not been
      taxed at the ordinary corporate income tax rate; or
| | --- | -------------------------------------------------------------------------------------

| |     |                                                                                             
| | --- | --------------------------------------------------------------------------------------------
| | (2) | profits which have been earned
      and taxed more than five years before the distribution.

The
  amount of the précompte is 50% of the net dividends before withholding
  tax.

If
  you are not entitled to the full avoir fiscal, you may generally obtain
  a refund from the French tax authorities of any précompte
  paid by us with respect to dividends distributed to you. Under the U.S.-France
  income tax treaty, the amount of the précompte refunded to U.S.
  residents is reduced by the 15% withholding tax applicable to dividends and
  by the partial avoir fiscal, if any. You are entitled to a refund
  of any précompte, which we actually pay in cash, but not to any précompte,
  which we pay by off-setting French and/or foreign tax credits. To apply for
  a refund of the précompte, you should file French Treasury Form
  RF I B EU-No. 5053 before the end of the second year following the year
  in which the dividend was paid. The form and its instructions are available
  from the United States Internal Revenue Service or from the French Centre
  des Impôts des Non-Résidents whose address is 9, rue d’Uzès,
  75094 Paris Cedex 2, France.

For
  U.S. federal income tax purposes, the gross amount of the précompte
  will be included in your gross income as ordinary income in the year you
  receive it. It generally will constitute foreign source “passive”
  income for foreign tax credit purposes (or, for some holders, foreign source
  “financial services” income). The amount of any précompte
  paid in euros, including any French withholding taxes, will be equal to the
  US dollar value of the euro on the date the précompte is
  included in income which, for a U.S. holder of ADSs, will be the date of receipt
  by the depositary, regardless of whether the payment is in fact converted into
  US dollars. Any gain or loss resulting from currency exchange fluctuations
  during the period from the date the dividend is included in your gross income
  to the date such payment is converted into US dollars will be treated as
  U.S. source ordinary income or loss.

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Taxation of Capital Gains

If
  you are a resident of the United States for purposes of the U.S.-France income
  tax treaty, you will not be subject to French tax on any capital gain if you
  sell or exchange your shares or ADSs, unless you have a permanent establishment
  or fixed base in France and the shares or ADSs you sold or exchanged were part
  of the business property of that permanent establishment or fixed base. Special
  rules apply to individuals who are residents of more than one country.

In
  general, for U.S. federal income tax purposes, you will recognize capital gain
  or loss if you sell or exchange your shares or ADSs in an amount equal to the
  US dollar value of the difference between the amount realized for the share
  or ADS and your basis (determined in US dollars) in the share or ADS. Such
  gain or loss generally will be U.S. source gain or loss and will be treated
  as long-term capital gain or loss if your holding period in the shares or ADSs
  exceeds one year at the time of disposition. The deductibility of capital
  losses is subject to significant limitations. If you are an individual, any
  capital gain generally will be subject to U.S. federal income tax at preferential
  rates if you meet specified minimum holding periods.

Deposits
  or withdrawals of shares by you for ADSs will not be subject to U.S. federal
  income tax.

Passive Foreign Investment Company
  Status

A
  non-U.S. corporation will be classified as a Passive Foreign Investment Company
  (a “PFIC”) for any taxable year if at least 75% of its gross income
  consists of passive income (such as dividends, interest, rents, royalties, or
  gains on the disposition of certain minority interests), or at least 50% of
  the average value of its assets consist of assets that produce, or are held
  for the production of, passive income. If we were characterized as a PFIC for
  any taxable year, you would suffer adverse tax consequences. These consequences
  may include having gains realized on the disposition of shares or ADSs treated
  as ordinary income rather than capital gains and being subject to punitive interest
  charges on certain dividends and on the proceeds of the sale or other disposition
  of the shares or ADSs.

You
  should consult your own tax adviser regarding the potential application of the
  PFIC rules to your ownership of our shares or ADSs.

French Estate and Gift Taxes

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,” if you transfer your shares or ADSs by gift, or if they are transferred
  by reason of your death, that transfer will only be subject to French gift
  or inheritance tax if one of the following applies:

| | (1) | you are domiciled in France
      at the time of making the gift or at the time of your death, or
| | --- | -------------------------------------------------------------------------------------------------

| |     |                                                                                                                                                                         
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | you used the shares or ADSs
      in conducting a business through a permanent establishment or fixed base
      in France, or you held the shares or ADSs for that use.

French Wealth Tax

The
  French wealth tax does not generally apply to shares or ADSs if the holder is
  a “resident” of the United States for purposes of the U.S.-France
  income tax treaty.

United States Information Reporting
  and Backup Withholding

Dividend
  payments made to you and proceeds paid from the sale, exchange, redemption or
  disposal of your shares or ADSs may be subject to information reporting to the
  Internal Revenue Service and possible U.S. federal backup withholding imposed
  at a current rate of 30%. Certain exempt recipients (such as corporations) are
  not subject to these information reporting requirements. Backup withholding
  will not apply to a holder who furnishes a correct taxpayer identification number
  or certificate of foreign status and makes any other required certification,
  or who is otherwise exempt from backup withholding. U.S. persons who are required
  to establish their exempt status generally must provide Internal Revenue Service
  Form W-9 (Request for Taxpayer Identification Number and Certification).
  Non-U.S. holders generally are not subject to U.S. information or backup withholding.

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However,
  such holders may be required to provide certification of non-U.S. status in
  connection with payments received in the United States or through U.S.-related
  financial intermediaries. Backup withholding is not an additional tax. Amounts
  withheld as backup withholding may be credited against your U.S. federal
  income tax liability. You may obtain a refund of any excess amounts withheld
  under the backup withholding rules by filing the appropriate claim for refund
  with the Internal Revenue Service and furnishing any required information.

Dividends and Paying Agents

Not
  Applicable.

Experts

Not
  Applicable.

Documents on Display

Please
  see “Item 19. Exhibits.”

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ITEM 11. QUANTITATIVE AND QUALITATIVE
  DISCLOSURES ABOUT MARKET RISK

We
  are exposed to foreign currency risk and interest rate risk. Other market risk
  exposures are generated by our equity investments and commodity prices.

We
  have defined strict policies and procedures to measure, manage and monitor our
  market risk exposures. Our policies do not permit any speculative market position.
  We have instituted management rules based on a segregation of operations, financial
  and administrative control and risk measurement. We have also instituted, for
  all operations managed at corporate level, an integrated system that permits
  real time monitoring of hedging strategies.

Our
  policy is in general to use derivative instruments only to hedge against our
  exposure to exchange rate and interest rate risks. However, to manage our exposure
  to commodity risks we enter into long-term contracts and, from time to time,
  we also have recourse to derivative instruments. With the prior authorization
  of our senior management, we have occasionally entered into agreements to limit
  our or another party’s exposure to equity risk.

We
  are subject to commodity risk with respect to price changes principally in the
  coal, pet coke, gas, and electricity market. We attempt to limit our exposure
  to changes in commodity prices by entering into long-term contracts and increasing
  our use of alternative fuels. For further information on our use of alternative
  fuels please see “Item 4—Information About the Company.” From
  time to time, we use forward contracts to manage our exposure to these commodity
  risks. Such contracts are not normally accounted for as derivative instruments
  as they are subject to the normal purchases or sales exception, as contracts
  that provide for the purchase or sale of something other than a financial instrument
  or derivative instrument that will be delivered in quantities expected to be
  used or sold by us over a reasonable period in the normal course of business.
  When the normal purchases or sales exception is not applied, the derivatives
  are recognized on the balance sheet at their fair value. At December 31, 2002,
  such commitments were limited to forward purchase contracts for electricity
  and natural gas, and the amount of our exposure under such contracts was not
  significant.

We
  are subject to equity risk with respect to our minority holdings in certain
  public companies. We occasionally enter into transactions with respect to our
  equity investments with financial institutions. We account for such instruments
  by taking the fair value at period end in accordance with applicable valuation
  rules, and in accordance with French GAAP we record any negative variation between
  the fair value and the book value under the line item “Financial expenses,
  net.” For the year ended December 31, 2002 we recorded a loss of 32 million
  euros with respect to contracts limiting our exposure to equity risk and we
  believe we had no additional material exposure to such contracts. In addition,
  in respect of certain joint ventures and other acquisitions we have also entered
  into shareholders agreements which have written call and put options with respect
  to our and our partners' interests. For a discussion of our exposure to these
  options see “Item 5. Operating and Financial Review and Prospects —
  Liquidity and Capital Resources — Disclosures about Contractual Obligations
  and Contingent Commitments” .

Derivative InstrumentsIn
  order to reduce our exposure to the risks of currency and interest rate fluctuations,
  we manage our exposure both on a central basis through our treasury department
  and in conjunction with some of our subsidiaries. We use various standard derivative
  financial instruments, such as forward exchange contracts, interest rate and
  currency swaps and forward rate agreements, to hedge currency and interest rate
  fluctuations on assets, liabilities and future commitments, in accordance with
  guidelines established by our senior management.

We
  use financial instruments only to hedge existing or anticipated financial and
  commercial exposures. We undertake this hedging in the over-the-counter market
  with a limited number of highly rated counterparties. Our positions in derivative
  financial instruments are monitored using various techniques, including the
  fair value approach.

Foreign Currency Risk

Translation
  Risks. The assets, liabilities, income and expenses of our operating entities
  are denominated in various currencies. Our financial statements are presented
  in euros. Thus, assets, liabilities, income and expenses denominated in currencies other than
  the euro must be translated into euros at the applicable exchange rate to be
  included in our financial statements.

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If
  the euro increases in value against a currency, the value in euros of assets,
  liabilities, income and expenses originally recorded in such other currency
  will decrease. Conversely, if the euro decreases in value against a currency,
  the value in euros of assets, liabilities, income and expenses originally recorded
  in such other currency will increase. Thus, increases and decreases in the value
  of the euro can have an impact on the value in euros of our non-euro assets,
  liabilities, income and expenses, even if the value of these items has not changed
  in their original currency.

In
  2002, approximately 27% of our net income was contributed by subsidiaries which
  prepare their financial statements in US dollars and Canadian dollars. As such,
  a 10% change in the US$/euro exchange rate and in the Canadian dollar/euro exchange
  rate would have an impact on our net income of approximately 12 million euros,
  net of any other impact.

Transaction
  Risks. We are subject to limited foreign exchange risks as a consequence
  of commercial exposures as a result of our subsidiaries purchase and sale transactions
  in currencies other than their operating currencies.

With
  regard to transactional foreign currency exposures, our policy is to hedge all
  material foreign currency exposures through derivative instruments at the latest
  when a firm commitment is entered into or known. These derivative instruments
  are generally limited to forward contracts and standard foreign currency options,
  with terms generally less than one year. We also from time to time hedge cash
  flows in foreign currencies relating to the operational budget of some of our
  entities, forecast investments or dividends, using forward contracts, when such
  flows are highly probable. We do not enter into foreign currency exchange contracts
  for other than hedging purposes.

Each
  subsidiary is responsible for managing the foreign exchange positions arising
  as a result of commercial and financial transactions performed in currencies
  other than its domestic currency. Exposures are hedged with banks using foreign
  currency forward contracts and occasionally foreign currency options. However,
  our corporate treasury department attempts, when possible, to act as a direct
  counterparty of the Group subsidiaries and immediately return its position in
  the market. It also attempts to reduce our overall exposure by netting purchases
  and sales in each currency on a global basis when feasible.

As
  far as financing is concerned, our general policy is for subsidiaries to borrow
  and invest excess cash in the same currency as their functional currency. A
  significant portion of our financing is in US$, British pounds and other US$
  related currencies, reflecting our significant operations in these countries.
  Part of this debt was initially borrowed in euros at the parent company level
  then converted into foreign currencies through currency swaps. At December 31,
  2002, before these currency swaps, 9% of our consolidated gross indebtedness
  was denominated in US$ and 12% was denominated in British Pounds. After taking
  into account the swaps, our consolidated US$ denominated long-term debt amounted
  to 27% of our total consolidated long-term debt, while our British Pound-denominated
  debt represented 15%.

For
  a further discussion of the financial instruments we use, see notes 25 and 26
  to our consolidated financial statements.

Interest Rate Risk

We
  are exposed to interest rate risk through our debt and cash. Our interest rate
  exposure can be sub-divided into the following risks:

Price
  risk for fixed-rate financial assets and liabilities. By contracting a fixed-rate
  liability, for example, we are exposed to an opportunity cost in the event of
  a fall in interest rates. Changes in interest rates impact the market value
  of fixed-rate assets and liabilities, leaving the associated financial income
  or expense unchanged.

Cash-flow
  risk for floating rate assets and liabilities. Changes in interest rates
  have little impact on the market value of floating-rate assets and liabilities,
  but directly influence the future income or expense flows of the company.

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In
  accordance with the general policy established by our senior management we seek
  to manage these two types of risks, including by using interest rate swaps and
  forward rate agreements. Our corporate treasury department manages our financing
  by applying procedures established by management, and hedges interest rate risk
  exposure in accordance with target ratios of fixed to floating debt.

We
  are exposed to credit risk in the event of a counterparty’s default. We
  attempt to limit our exposure to counterparty risk by rigorously selecting the
  counterparties with which we trade, through regularly monitoring the ratings
  assigned by credit rating agencies as well as the nature and maturity of operations
  with them. We establish counterparty limits which are regularly reviewed. We
  believe we have no material concentration of risk with any counterparty. We
  do not anticipate any third party default that might have a significant impact
  on our financial positions and results of operations.

Before
  taking into account the interest rate swaps, at December 31, 2002, 69% of our
  consolidated indebtedness was at fixed rate. After taking into account these
  swaps, the portion of fixed debt in our consolidated indebtedness amounted to
  74%.

For
  a further discussion of our financial policy and interest rate exposure, see
  Notes 25 and 26 to our consolidated financial statements.

Interest Rate Sensitivity

The
  table below provides information about our derivative financial instruments
  and other financial instruments that are sensitive to changes in interest rates,
  including interest rate swaps and debt obligations. For debt obligations, the
  table presents principal cash flows by expected maturity dates and related weighted
  average interest rates before swaps. For interest rate swaps, the table presents
  notional amounts by contractual maturity dates and related weighted average
  fixed interest rates. Notional amounts are used to calculate the contractual
  payments to be exchanged under the contract. Weighted average floating rates
  are based on effective rates at year-end.

|                                             | At
      December 31, 2002 |     
|-------------------------------------------- | -------------------------- | ----
|Maturities
      of notional contract values
|Average 
      Rate                          |                            | 2003
|                                             | (in million euros)        
|Liabilities                                  |                            |     
|Long-term debt                               | 5.3                        | %   
|Fixed rate portion                           | 5.6                        | %   
|Floating
      rate portion                  | 4.3                        | %   
|Short-term borrowing                         | 6.5                        | %   
|Interest rate derivatives                    |                            |     
|Interest Rate swapsPay Fixed                 |                            |     
|Euro                                         | 8.1                        | %   
|Other currencies                             | 8.8                        | %   
|Receive Fixed                                |                            |     
|Euro                                         | 5.1                        | %   
|Other currencies                             | 5.2                        | %   
|Pay & Receive Floating                       |                            |     
|Euro                                         | N/A                        |     

Exchange Rate Sensitivity

The
  table below provides information about our derivative financial instruments
  and other financial instruments that are sensitive to exchange rates, and presents
  such information in euro equivalents. This table includes foreign exchange forward
  instruments (forward contracts and foreign currency swaps) and debt obligations.
  For debt obligations, the table presents principal cash flows in foreign currencies
  by expected maturity dates. For foreign exchange forward agreements, the table
  presents the notional amounts by contractual maturity dates. These notional
  amounts are generally used to calculate the contractual payments to be exchanged
  under the contract.

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|                             | At December
      31, 2002                                     | 
|---------------------------- | -------------------------------------------------------------- | 
|                             | Maturities
      of notional contract values(in million euros) | 
|                             | 2003                                                           | 
|Liabilities                  |                                                                | 
|Debt in foreign currencies   | 690                                                            | 
|US$                          | 129                                                            | 
|British Pounds               | 154                                                            | 
|Other currencies             | 407                                                            | 
|                             |                                                                | 
|Foreign Exchange Derivatives |                                                                | 
|Forward purchase agreements  |                                                                | 
|US dollar (USD)              | 47                                                             | 
|British pound (GBP)          | 74                                                             | 
|Other currencies             | 13                                                             | 
|TOTAL:                       | 134                                                            | 
|                             |                                                                | 
|Forward sales agreements     |                                                                | 
|US$                          | 2,028                                                          | 
|British Pounds               | 443                                                            | 
|Other currencies             | 172                                                            | 
|TOTAL:                       | 2,643                                                          | 

Assumptions

Debt:The fair values of long-term debt were determined by estimating future cash
  flows on a borrowing-by-borrowing basis, and discounting these future cash flows
  using an interest rate which takes into consideration the Company’s incremental
  borrowing rate at year end for similar types of debt arrangements. Market price
  is used to determine the fair value of publicly traded instruments.

Off
  balance sheet financial instruments:The fair values of forward exchange
  contracts and interest and currency swaps have been calculated, using market
  prices that the Company would pay or receive to settle the related agreements.
  Primarily, dealer quotes have been used to estimate the fair values of these
  instruments at the reporting dates.

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ITEM 12. DESCRIPTION OF SECURITIES
  OTHER THAN EQUITY SECURITIES

Not
  applicable.

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PART II

ITEM 13. DEFAULTS, DIVIDENDS
  ARREARAGES AND DELINQUENCIES

To
  our knowledge, there has been no material default in the payment of principal
  or interest or any other material default not cured within 30 days relating
  to indebtedness of Lafarge or any of its subsidiaries.

ITEM 14. MATERIAL
  MODIFICATIONS OF THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Other
  than set forth herein (including the financial statements and notes thereto),
  there have been no material modifications in the rights of our security holders
  and there are no specific assets securing any class of our securities.

ITEM 15. CONTROLS
  AND PROCEDURES

Bertrand
  Collomb, our Chief Executive Officer, and Jean-Jacques Gauthier, our Executive
  Vice President for Finance (Chief Financial Officer), have carried out an evaluation
  of the effectiveness of the design and operations of Lafarge’s disclosure
  controls and procedures pursuant to Exchange Act requirements as of a date within
  90 days prior to the filing of this annual report on form 20-F (the “Evaluation
  Date”). Based upon and as of the date of that evaluation, both Mr. Collomb
  and Mr. Gauthier have concluded that our disclosure controls and procedures
  are adequate and effective in ensuring that all material information relating
  to Lafarge and its consolidated subsidiaries, and which is required to be filed
  in the annual report, has been made known to them, particularly during the period
  in which this annual report was being prepared.

There
  have been no significant changes in Lafarge’s internal controls and procedures,
  nor, to our knowledge, have there been any changes to other factors that could
  significantly affect the disclosure controls and procedures subsequent to the
  Evaluation Date. There were no significant deficiencies or material weaknesses
  in our internal controls and procedures requiring corrective actions.

ITEM 16. [RESERVED]

ITEM 17. FINANCIAL
  STATEMENTS

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ITEM 18.  FINANCIAL STATEMENTS

The following financial statements
  are filed as part of this registration statement:

|Lafarge Financial Statements                                                                                                | Page
|--------------------------------------------------------------------------------------------------------------------------- | ----
|Independent Auditors’
      Report                                                                                          | F-1 
|Report of Independent
      Auditors (Ernst & Young)                                                                        | F-2 
|Reports of Independent
      Public Accountants (Arthur Andersen)                                                           | F-3 
|Consolidated Statements
      of Income for the years ended December 31, 2002, 2001 and 2000                                | F-5 
|Consolidated Balance
      Sheets at December 31, 2002, 2001 and 2000                                                       | F-6 
|Consolidated Statements
      of Cash Flows for the years ended December 31, 2002, 2001 and 2000                            | F-7 
|Consolidated Statements
      of Changes in Shareholders’ Equity for the years ended December 31,
      2002, 2001 and 2000 | F-8 
|Notes to the Consolidated
      Financial Statements                                                                        | F-9 

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ITEM 19.  EXHIBITS

Exhibits

| | 1 | By-laws
      (statuts), as amended, of Lafarge S.A. (English translation).*
| | - | ----------------------------------------------------------------------------

| |   |                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2 | Deposit Agreement, dated July 18,
      2001 among Lafarge S.A., Morgan Guaranty Trust Company of New York, as depositary,
      and the holders of American Depositary Receipts.**

| |   |                                                                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 3 | Instruments with respect to
      long-term debt which do not exceed 10 percent of the total assets of the
      company and its consolidated subsidiaries have not been filed. The company
      agrees to furnish a copy of such instruments to the Commission upon request.

| |     |                                                                                               
| | --- | ----------------------------------------------------------------------------------------------
| | 4.1 | Merger Agreement, dated January
      2001, between Lafarge S.A. and Blue Circle Industries.**

| |     |                                                                                                                                                                                                                
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 4.2 | Lafarge (U.S.) Holdings Agreement
      and Articles of Trust, dated August 1, 2000, among Lafarge S.A. and Alfred
      J. Ross, John H. F. Haskell and The United States Trust Company, as trustees.
      **

| |     |                                                                                                                                                                                                                                                          
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 4.3 | Lafarge Paris-Zurich Holdings
      Agreement and Articles of Trust, dated August 1, 2000, among Lafarge (U.S.)
      Holdings, Lafarge (Swiss) Holdings and Alfred J. Ross, John H. F. Haskell
      and The United States Trust Company, as trustees.**

| |     |                                                                                                                                                                                                                       
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 4.4 | Lafarge (Swiss) Holdings Agreement
      and Articles of Trust, dated August 1, 2000, among Financière Lafarge
      and Alfred J. Ross, John H. F. Haskell and The United States Trust Company,
      as trustees. **

| |     |                                                                                                                                                                                                                           
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 4.5 | Lafarge (Venezuela) Holdings
      Agreement and Articles of Trust, dated August 1, 2000, among Lafarge Asland
      S.A. and Alfred J. Ross, John H. F. Haskell and The United States Trust
      Company, as trustees.**

| |   |                                         
| | - | ----------------------------------------
| | 8 | List
      of significant subsidiaries.*

| |      |                                                                                                                                    
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------
| | 10.1 | Certification
      of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002 (10 U.S.C. § 1350).*

|   |                                                                                                                                                                 |                                                                                                                                    
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------
|   | 10.2                                                                                                                                                            | Certification
      of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002 (10 U.S.C. § 1350).*
|   |                                                                                                                                                                 |                                                                                                                                    
|*  | Provided herewith.                                                                                                                                             
|** | Incorporated by reference to the
      Registration Statement on Form 20-F filed by Lafarge with the Securities
      and Exchange Commission on July 19, 2001.

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SIGNATURE

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.

| | LAFARGE
| | -------

| |    
| | ---
| |    
| | By:

| |                           
| | --------------------------
| |                           
| | /s/ Bertrand
      Collomb

| | Bertrand Collomb
| | ----------------

| | Chairman and Chief
      Executive Officer
| | ------------------------------------------

Date: April 25, 2003

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CERTIFICATION

I,   Bertrand Collomb
  , certify that:

1.   I have reviewed
  this annual report on Form 20-F of Lafarge;

2.   Based on my knowledge,
  this annual report does not contain any untrue statement of a material fact
  or omit to state a material fact necessary to make the statements made, in light
  of the circumstances under which such statements were made, not misleading with
  respect to the period covered by this annual report;

3.   Based on my knowledge,
  the financial statements, and other financial information included in this annual
  report, fairly present in all material respects the financial condition, results
  of operations and cash flows of the registrant as of, and for, the periods presented
  in this annual report;

4.   The registrant’s
  other certifying officers and I are responsible for establishing and maintaining
  disclosure controls and procedures (as defined in Exchange Act Rules 13a-14
  and 15d-14) for the registrant and have:

| | a. | designed such disclosure
      controls and procedures to ensure that material information relating to
      the registrant, including its consolidated subsidiaries, is made known to
      us by others within those entities, particularly during the period in which
      this annual report is being prepared;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                     
| | b. | evaluated the effectiveness of
      the registrant's disclosure controls and procedures as of a date within
      90 days prior to the filing date of this annual report (the “Evaluation
      Date”); and                                                                                                        
| |    |                                                                                                                                                                                                                                                                                                                     
| | c. | presented in this annual report
      our conclusions about the effectiveness of the disclosure controls and procedures
      based on our evaluation as of the Evaluation Date;                                                                                                                                    

5.   The registrant’s
  other certifying officers and I have disclosed, based on our most recent evaluation,
  to the registrant’s auditors and the audit committee of registrant’s
  board of directors:

| | a. | all significant deficiencies
      in the design or operation of internal controls which could adversely affect
      the registrant’s ability to record, process, summarize and report
      financial data and have identified for the registrant’s auditors any
      material weakness in internal controls; and
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                     
| | b. | any fraud, whether
      or not material, that involves management or other employees who have a
      significant role in the registrant’s internal controls; and                                                                                                                                                  

6.   The registrant’s
  other certifying officers and I have indicated in this annual report whether
  or not there were significant changes in internal controls or in other factors
  that could significantly affect internal controls subsequent to the date of
  our most recent evaluation, including any corrective actions with regard to
  significant deficiencies and material weaknesses.



Date: April 25, 2003

| |                                
| | -------------------------------
| | Bertrand
        Collomb       
| | Chief Executive
        Officer

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CERTIFICATION

I,   Jean-Jacques Gauthier,
  certify that:

1.   I have reviewed
  this annual report on Form 20-F of Lafarge;

2.   Based on my knowledge,
  this annual report does not contain any untrue statement of a material fact
  or omit to state a material fact necessary to make the statements made, in light
  of the circumstances under which such statements were made, not misleading with
  respect to the period covered by this annual report;

3.   Based on my knowledge,
  the financial statements, and other financial information included in this annual
  report, fairly present in all material respects the financial condition, results
  of operations and cash flows of the registrant as of, and for, the periods presented
  in this annual report;

4.   The registrant’s
  other certifying officers and I are responsible for establishing and maintaining
  disclosure controls and procedures (as defined in Exchange Act Rules 13a-14
  and 15d-14) for the registrant and have:

| | d. | designed such disclosure
      controls and procedures to ensure that material information relating to
      the registrant, including its consolidated subsidiaries, is made known to
      us by others within those entities, particularly during the period in which
      this annual report is being prepared;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                     
| | e. | evaluated the effectiveness of
      the registant’s disclosure controls and procedures as of a date within
      90 days prior to the filing date of this annual report (the “Evaluation
      Date”); and                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                     
| | f. | presented in this annual report
      our conclusions about the effectiveness of the disclosure controls and procedures
      based on our evaluation as of the Evaluation Date;                                                                                                                                    

5.   The registrant’s
  other certifying officers and I have disclosed, based on our most recent evaluation,
  to the registrant’s auditors and the audit committee of registrant’s
  board of directors:

| | c. | all significant deficiencies
      in the design or operation of internal controls which could adversely affect
      the registrant’s ability to record, process, summarize and report
      financial data and have identified for the registrant’s auditors any
      material weakness in internal controls; and
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                     
| | d. | any fraud, whether or not material,
      that involves management or other employees who have a significant role
      in the registrant’s internal controls; and                                                                                                                                                  

6.   The registrant’s
  other certifying officers and I have indicated in this annual report whether
  or not there were significant changes in internal controls or in other factors
  that could significantly affect internal controls subsequent to the date of
  our most recent evaluation, including any corrective actions with regard to
  significant deficiencies and material weaknesses.



Date: April 25, 2003

| |                                          
| | -----------------------------------------
| | Jean-Jacques
        Gauthier            
| | Executive
        Vice President, Finance

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INDEPENDENT AUDITORS’ REPORT

To the Board of Directors and shareholders of Lafarge

We have audited the accompanying consolidated
  balance sheets of Lafarge S.A. and subsidiaries (the "Company") at December
  31, 2002, 2001 and 2000, and the related consolidated statements of income,
  changes in shareholders' equity, and cash flows for each of the three years
  in the period ended December 31, 2002, (all expressed in euros). 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 did not audit the consolidated financial statements of Lafarge
  North America Inc. (formerly Lafarge Corporation, a consolidated subsidiary),
  which statements reflect total assets constituting 14 %, 14 % and 17 %,
  respectively, of consolidated total assets at December 31, 2002, 2001 and 2000,
  and total sales constituting 24%, 28% and 24%, respectively, of consolidated
  total sales for each of the three years in the period ended December 31, 2002.
  We did not audit the consolidated balance sheet of Blue Circle North America
  Inc. (a consolidated subsidiary) at December 31, 2001 or the related consolidated
  statements of income, changes in shareholders’ equity or cash flows of
  Blue Circle North America Inc. for the period from July 11, 2001 to December
  31, 2001, which statements reflect total assets constituting 3 % of total consolidated
  assets at December 31, 2001 and total sales constituting 3% of total consolidated
  sales for the year ended December 31, 2001. Those statements, prepared in accordance
  with accounting principles generally accepted in the United States of America,
  were audited by other auditors whose reports have been provided to us, and our
  opinion, insofar as it relates to the amounts included for Lafarge North America
  Inc. and Blue Circle North America Inc., is based solely on the reports of such
  other auditors. The consolidated financial statements of Lafarge North America
  Inc. at December 31, 2002, and for the year then ended, were audited by other
  auditors whose report dated February 3, 2003 expressed an unqualified opinion
  on those statements and included explanatory paragraphs regarding the adoption
  of Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and
  OIther Intangible Assets, and the application of procedures by such other auditors
  to the SFAS No. 142 transitional disclosures in the 2001 and 2000 financial
  statements. The consolidated financial statements of Lafarge North America Inc.
  at December 31, 2001 and 2000 and for each of the two years in the period ended
  December 31, 2001, were audited by other auditors who have ceased operations
  and whose report dated January 22, 2002 expressed an unqualified opinion on
  those statements before restatement for the transitional disclosures required
  by SFAS No. 142.

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

In our opinion, based on our audits and the reports of the other auditors, such consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2002, 2001 and 2000, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in France.

Our audits also included auditing the adjustments to convert the consolidated financial statements of Lafarge North America Inc. and Blue Circle North America Inc. into accounting principles generally accepted in France for purposes of consolidation.

Accounting principles generally accepted in France vary in certain significant respects from accounting principles generally accepted in the United States of America.  The application of the latter would have affected the determination of net income for each of the three years in the period ended December 31, 2002, and the determination of shareholders' equity at December 31, 2002, 2001 and 2000, to the extent summarized in Notes 31, 32, 33 and 34.

As discussed in Note 2 (t) to the consolidated financial statements, in 2000, the Company changed its accounting policy with respect to the recording of deferred taxes.

Our audits also included the translation of the euro amounts into United States dollar amounts and, in our opinion, such translation has been made in conformity with the basis stated in Note 2 (v). Such United States dollar amounts are presented solely for the convenience of the readers in the United States of America.

DELOITTE TOUCHE TOHMATSUParis, FranceApril 15, 2003

F - 1

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REPORT OF INDEPENDENT AUDITORS

Board of Directors and ShareholdersLafarge North America Inc.:

We have audited the consolidated balance
  sheet of Lafarge North America Inc. (a Maryland corporation) and subsidiaries
  as of December 31, 2002, and the related consolidated statement of income, shareholders’
  equity, comprehensive income and cash flows for the year ended December 31,
  2002 (not presented separately herein). These financial statements are the responsibility
  of the company’s management. Our responsibility is to express an opinion
  on these financial statements based on our audit. The consolidated financial
  statements of Lafarge North America Inc. as of December 31, 2001 and for each
  of the two years in the period then ended were audited by other auditors who
  have ceased operations and whose report dated January 22, 2002 expressed an
  unqualified opinion on those statements and schedule before the restatement
  disclosures described in Note 5.

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

In our opinion, the 2002 financial
  statements referred to above (not presented separately herein) present fairly,
  in all material respects, the financial position of Lafarge North America Inc.
  and subsidiaries as of December 31, 2002, and the results of their operations
  and their cash flows for the year ended December 31, 2002, in conformity with
  accounting principles generally accepted in the United States.

As discussed above, the financial
  statements of Lafarge North America, Inc. and subsidiaries for the years ended
  December 31, 2001 and 2000 were audited by other auditors who have ceased operations.
  As described in Note 1, these financial statements have been revised to include
  the transitional disclosures required by Statement of Financial Accounting Standards
  No. 142, Goodwill and Other Intangible Assets,which was adopted by the
  Company as of January 1, 2002. Our audit procedures with respect to the disclosures
  in Note 5 with respect to 2001 and 2000 included (a) agreeing the previously
  reported net income to the previously issued financial statements and the adjustments
  to reported net income representing amortization expense (including any related
  tax effects) recognized in those periods related to goodwill and intangible
  assets that are no longer being amortized to the Company’s underlying
  records obtained from management, and (b) testing the mathematical accuracy
  of the reconciliation of adjusted net income to reported net income, and the
  related earnings-per-share amounts. In our opinion, the disclosures for 2001
  and 2000 in Note 5 are appropriate. However, we were not engaged to audit, review,
  or apply any procedures to the 2001 or 2000 financial statements of the Company
  other than with respect to such disclosures and, accordingly, we do not express
  an opinion or any form of assurance on the 2001 or 2000 financial statements
  taken as a whole.

As discussed in Note 1 to the consolidated
  financial statements (not presented separately herein), effective January 1,
  2002, the company adopted Statement of Financial Accounting Standards No. 142,
  “Goodwill and Other Intangible Assets”.

ERNST & YOUNG LLP

McLean, VirginiaFebruary 3, 2003

F - 2

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THIS REPORT SET FORTH BELOW IS A COPY OF A PREVIOUSLY ISSUED AUDIT REPORT BY ARTHUR ANDERSEN LLP. THIS REPORT HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN LLP IN CONNECTION WITH ITS INCLUSION IN THIS FORM 20-F.



REPORT OF INDEPENDENT PUBLIC ACCOUNTANT



To Lafarge North America Inc.:

We have audited the consolidated balance sheets of Lafarge North America Inc. (formerly Lafarge Corporation)  (a Maryland corporation) and subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of income, shareholders’ equity, comprehensive income and cash flows for each of the three years in the period ended December 31, 2001 (not presented separately herein). These 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 auditing standards generally accepted in the United States. Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above (not presented separately herein) present fairly, in all material respects, the financial position of Lafarge North America Inc. and subsidiaries as of December 31, 2001 and 2000, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States.

ARTHUR ANDERSEN LLP

Vienna, VirginiaJanuary 22, 2002

F - 3

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REPORT OF INDEPENDENT  AUDITORS

Board of Directors and ShareholderBlue Circle North America Inc.

We have audited the consolidated balance sheets of Blue Circle North America Inc. (a wholly-owned subsidiary of Blue Circle Industries PLC) and Subsidiaries as of July 10, 2001 and December 31, 2001, and the related consolidated statements of income and retained earnings and cash flows for the periods of January 1, 2001 through July 10, 2001 and July 11, 2001 through December 31, 2001 and for the year ended December 31, 2001 (not presented separately herein). These 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 auditing standards generally accepted in the 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above (not presented separately herein) present fairly, in all material respects, the consolidated financial position of Blue Circle North America Inc. and Subsidiaries at July 10, 2001 and December 31, 2001, and the consolidated results of their operations and their cash flows for the periods of January 1, 2001 through July 10, 2001 and July 11, 2001 though December 31, 2001 and for the year ended December 31, 2001 in conformity with accounting principles generally accepted in the United States.

Ernst & Young LLP

Atlanta, GeorgiaFebruary 11, 2002

F - 4

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CONSOLIDATED STATEMENTS OF INCOME

|                                                                                                                                |       |   | Years
      ended December 31,               |  
|------------------------------------------------------------------------------------------------------------------------------- | ----- | - | -------------------------------------------- | -
|                                                                                                                                |       |   |                                              |  
|                                                                                                                                | Notes |   | 2002(Note 2 v)                               |  
|                                                                                                                                |       |   |                                              |  
|                                                                                                                                |       |   | (in
      million USD except per share data) |  
|Sales                                                                                                                           | (3    | ) | 15,318                                       |  
|Cost of goods
      sold                                                                                                        |       |   | (10,206                                      | )
|Selling and
      administrative expenses                                                                                       |       |   | (1,861                                       | )
|                                                                                                                                |       |   |                                              |  
|Gross operating
      income                                                                                                    |       |   | 3,251                                        |  
|Depreciation                                                                                                                    | (3    | ) | (1,016                                       | )
|Operating
      income on ordinary activities                                                                                   | (3    | ) | 2,235                                        |  
|Gains on disposals,
      net                                                                                                   | (6    | ) | 226                                          |  
|Other (expenses)
      income, net                                                                                              | (7    | ) | (550                                         | )
|                                                                                                                                |       |   |                                              |  
|Operating
      income                                                                                                          | (3    | ) | 1,911                                        |  
|Financial expenses,
      net                                                                                                   | (8    | ) | (546                                         | )
|                                                                                                                                |       |   |                                              |  
|Income before
      income tax, share of net income of equity affiliates, amortization of goodwill
      and minority interests |       |   | 1,365                                        |  
|Income tax                                                                                                                      | (9    | ) | (470                                         | )
|                                                                                                                                |       |   |                                              |  
|Income before
      share of net income of equity affiliates, amortization of goodwill and minority
      interests             |       |   | 895                                          |  
|Share of net
      income of equity affiliates                                                                                  | (4    | ) | 35                                           |  
|Amortization
      of goodwill                                                                                                  | (11   | ) | (166                                         | )
|Minority interests                                                                                                              | (21   | ) | (286                                         | )
|                                                                                                                                |       |   |                                              |  
|Net income                                                                                                                      |       |   | 478                                          |  
|                                                                                                                                |       |   |                                              |  
|Earnings per share (euros)                                                                                                      | (10   | ) | 3.69                                         |  
|Diluted earnings per share
      (euros)                                                                                        | (10   | ) | 3.66                                         |  
|Average number of outstanding
      shares (in thousands)                                                                       | (10   | ) | 129,629                                      |  
|                                                                                                                                |       |   |                                              |  

(a)  Revised for the change in
  presentation of equity affiliates (Note 4).

The proforma statement of income including Blue Circle Industries Plc from January 1, 2000 is set forth in Note 5.

The accompanying Notes are an integral part of these Financial Statements

F - 5

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CONSOLIDATED BALANCE SHEETS

|                                                 |       |   | At
      December 31,  |  
|------------------------------------------------ | ----- | - | ---------------------- | -
|                                                 |       |   |                        |  
|                                                 | Notes |   | 2002(Note 2 v)         |  
|                                                 |       |   |                        |  
|                                                 |       |   | (in
      million USD) |  
|ASSETS                                           |       |   |                        |  
|Goodwill, net                                    | (11   | ) | 4,858                  |  
|Intangible assets, net                           | (11   | ) | 2,972                  |  
|Property, plant and equipment,
      net         | (12   | ) | 12,233                 |  
|Investments in equity affiliates                 | (13   | ) | 684                    |  
|Other investments                                | (14   | ) | 484                    |  
|Long-term receivables                            | (15   | ) | 964                    |  
|                                                 |       |   |                        |  
|Long-term assets                                 |       |   | 22,195                 |  
|                                                 |       |   |                        |  
|Inventories, net                                 | (16   | ) | 1,668                  |  
|Accounts receivable-trade, net                   | (17   | ) | 1,904                  |  
|Other receivables                                | (18   | ) | 1,001                  |  
|Cash and cash equivalents                        | (19   | ) | 1,163                  |  
|                                                 |       |   |                        |  
|Current assets                                   |       |   | 5,736                  |  
|                                                 |       |   |                        |  
|Total assets                                     | (3    | ) | 27,931                 |  
|                                                 |       |   |                        |  
|                                                 |       |   |                        |  
|SHAREHOLDERS’ EQUITY
      AND LIABILITIES       |       |   |                        |  
|Common stock                                     | (20   | ) | 558                    |  
|Additional paid-in capital                       | (20   | ) | 4,766                  |  
|Retained earnings                                |       |   | 3,720                  |  
|Cumulative translation adjustments               |       |   | (1,724                 | )
|                                                 |       |   |                        |  
|Shareholders’ equity                             |       |   | 7,320                  |  
|                                                 |       |   |                        |  
|Minority interests                               | (21   | ) | 2,260                  |  
|Other equity                                     | (22   | ) | 140                    |  
|Deferred taxes                                   | (9    | ) | 1,026                  |  
|Provisions                                       | (23   | ) | 2,015                  |  
|Long-term debt                                   | (25   | ) | 10,769                 |  
|                                                 |       |   |                        |  
|Long-term liabilities                            |       |   | 16,210                 |  
|                                                 |       |   |                        |  
|Accounts payable, trade                          |       |   | 1,264                  |  
|Other payables                                   | (24   | ) | 2,032                  |  
|Current portion of long-term
      debt          | (25   | ) | 549                    |  
|Short-term bank borrowings                       | (25   | ) | 556                    |  
|                                                 |       |   |                        |  
|Current liabilities                              |       |   | 4,401                  |  
|                                                 |       |   |                        |  
|Total shareholders’
      equity and liabilities |       |   | 27,931                 |  
|                                                 |       |   |                        |  

The accompanying Notes are an integral part of these Financial Statements

F - 6

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CONSOLIDATED STATEMENTS OF CASH
  FLOWS

|                                                                                        |       |   | Years
      ended December 31, |  
|--------------------------------------------------------------------------------------- | ----- | - | ------------------------------ | -
|                                                                                        |       |   |                                |  
|                                                                                        | Notes |   | 2002(Note 2 v)                 |  
|                                                                                        |       |   |                                |  
|                                                                                        |       |   | (in
      million USD)         |  
|NET CASH PROVIDED
      BY OPERATING ACTIVITIES                                         |       |   |                                |  
|Net income                                                                              |       |   | 478                            |  
|Adjustments to
      reconcile net income to net cash provided by operating activities: |       |   |                                |  
|Minority interests                                                                      | (21   | ) | 286                            |  
|Depreciation and
      amortization of goodwill                                         |       |   | 1,182                          |  
|Share of net income
      of equity affiliates less dividends received                  |       |   | (18                            | )
|Gains on disposals,
      net (excluding those of equity affiliates)                    |       |   | (226                           | )
|Deferred income
      taxes and tax provisions                                          |       |   | 96                             |  
|Other, net                                                                              |       |   | 253                            |  
|Changes in operating
      working capital items (see analysis below)                   |       |   | (173                           | )
|                                                                                        |       |   |                                |  
|Net cash provided
      by operating activities                                         |       |   | 1,878                          |  
|                                                                                        |       |   |                                |  
|NET CASH USED
      IN INVESTING ACTIVITIES                                             |       |   |                                |  
|Capital expenditures                                                                    | (3    | ) | (1,205                         | )
|Investment in consolidated
      companies (1)*                                         |       |   | (354                           | )
|Investment in non-consolidated
      companies                                          |       |   | (28                            | )
|Disposals (2)                                                                           |       |   | 760                            |  
|Net decrease (increase)
      in long-term receivables                                  |       |   | 15                             |  
|                                                                                        |       |   |                                |  
|Net cash used
      in investing activities                                             |       |   | (812                           | )
|                                                                                        |       |   |                                |  
|NET CASH (USED
      IN) PROVIDED BY FINANCING ACTIVITIES                               |       |   |                                |  
|Proceeds from issuance
      of common stock                                            |       |   | 273                            |  
|(Increase) decrease
      in treasury stock                                             |       |   | (4                             | )
|Increase (decrease)
      in other equity                                               |       |   |                               |  
|Dividends paid (including
      those paid to minority interests in subsidiaries)       |       |   | (407                           | )
|Proceeds from long-term
      debt                                                      |       |   | 673                            |  
|Repayment of long-term
      debt                                                       |       |   | (788                           | )
|(Decrease) increase
      in short-term debt                                            |       |   | (718                           | )
|                                                                                        |       |   |                                |  
|Net cash (used
      in) provided by financing activities                               |       |   | (971                           | )
|                                                                                        |       |   |                                |  
|Increase (decrease)
      in cash and cash equivalents                                  |       |   | 95                             |  
|Net effect of foreign
      currency translation on cash and cash equivalents           |       |   | (191                           | )
|Cash and cash equivalents
      at beginning of year                                    |       |   | 1,259                          |  
|                                                                                        |       |   |                                |  
|Cash and cash
      equivalents at end of year                                          | (19   | ) | 1,163                          |  
|                                                                                        |       |   |                                |  
|(1) Net of cash
      and cash equivalents of companies acquired                        |       |   |                               |  
|(2) Net of cash
      and cash equivalents of companies disposed of                     |       |   | 1                              |  
|SUPPLEMENTAL
      DISCLOSURES                                                          |       |   |                                |  
|Analysis of changes
      in operating working capital items                            |       |   |                                |  
|(Increase) decrease
      in inventories                                                |       |   | (42                            | )
|Decrease (increase)
      in accounts receivable-trade                                  |       |   | 468                            |  
|Decrease (increase)
      in other receivables                                          |       |   | 12                             |  
|(Decrease) increase
      in accounts payable-trade                                     |       |   | (558                           | )
|(Decrease) increase
      in other payables                                             |       |   | (53                            | )
|                                                                                        |       |   |                                |  
|Cash payments
      during the period for                                               |       |   |                                |  
|Interest
      expense                                                                  |       |   | 633                            |  
|Income
      taxes                                                                      |       |   | 463                            |  

* including BCI (3,804) for the year 2001

The accompanying Notes are an integral part of these Financial Statements

F - 7

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CONSOLIDATED STATEMENTS OF CHANGES
  IN SHAREHOLDERS’ EQUITY

|                                                                                     |                                 |  |                          |  |                          |  |                                  |   |                         |   |                                          |   |                            |   |                            |  
|------------------------------------------------------------------------------------ | ------------------------------- |  | ------------------------ |  | ------------------------ |  | -------------------------------- | - | ----------------------- | - | ---------------------------------------- | - | -------------------------- | - | -------------------------- | -
|                                                                                     | Outstanding
      
      shares |  | Treasury
      stock     |  | Common
      stock       |  | Additional
      paid-in capital |   | Retained
      earnings |   | Cumulative
      translation adjustments |   | Shareholders’
      equity |   | Comprehensive
      income |  
|                                                                                     |                                 |  |                          |  |                          |  |                                  |   |                         |   |                                          |   |                            |   |                            |  
|                                                                                     | (in
      number of shares)     |  | (in
      million euros) |  | (in
      million euros) | 
|                                                                                     |                                 |  |                          |  |                          |  |                                  |   |                         |   |                                          |   |                            |   |                            |  
|Balance at January 1, 2000                                                           | 104,978,206                     |  | 1,519,185                |  | 400                      |  | 2,459                            |   | 3,180                   |   | (188                                     | ) | 5,851                      |   | 869                        |  
|Cumulative effect of change in
      accounting for deferred taxes                   |                                |  |                         |  |                         |  |                                 |   | (759                    | ) |                                         |   | (759                       | ) | (759                       | )
|Net income                                                                           |                                |  |                         |  |                         |  |                                 |   | 731                     |   | (5                                       | ) | 726                        |   | 726                        |  
|Dividends paid                                                                       |                                |  |                         |  |                         |  |                                 |   | (215                    | ) |                                         |   | (215                       | ) |                           |  
|Issuance of common stock (dividend
      reinvestment plan)                          | 365,771                         |  |                         |  | 2                        |  | 28                               |   |                        |   |                                         |   | 30                         |   |                           |  
|Issuance of common stock                                                             | 3,180,000                       |  |                         |  | 12                       |  | 274                              |   |                        |   |                                         |   | 286                        |   |                           |  
|Exercise of stock options                                                            | 154,818                         |  |                         |  | 1                        |  | 7                                |   |                        |   |                                         |   | 8                          |   |                           |  
|Exercise of stock subscription
      warrants                                        | 3,763,140                       |  |                         |  | 14                       |  | 260                              |   |                        |   |                                         |   | 274                        |   |                           |  
|Purchase of treasury stock                                                           |                                |  | 318,655                  |  |                         |  |                                 |   | (37                     | ) |                                         |   | (37                        | ) |                           |  
|Goodwill previously written off
      against retained earnings on subsidiaries sold |                                |  |                         |  |                         |  |                                 |   | 10                      |   |                                         |   | 10                         |   | 10                         |  
|Change in translation adjustments                                                    |                                |  |                         |  |                         |  |                                 |   |                        |   | (131                                     | ) | (131                       | ) | (131                       | )
|                                                                                     |                                 |  |                          |  |                          |  |                                  |   |                         |   |                                          |   |                            |   |                            |  
|Balance at December 31, 2000                                                         | 112,441,935                     |  | 1,837,840                |  | 429                      |  | 3,028                            |   | 2,910                   |   | (324                                     | ) | 6,043                      |   | (154                       | )
|                                                                                     |                                 |  |                          |  |                          |  |                                  |   |                         |   |                                          |   |                            |   |                            |  
|                                                                                     |                                 |  |                          |  |                          |  |                                  |   |                         |   |                                          |   |                            |   |                            |  
|Net income                                                                           |                                |  |                         |  |                         |  |                                 |   | 752                     |   | (2                                       | ) | 750                        |   | 750                        |  
|Dividends paid                                                                       |                                |  |                         |  |                         |  |                                 |   | (273                    | ) |                                         |   | (273                       | ) |                           |  
|Issuance of rights (conversion
      to common stock)                                | 14,110,592                      |  |                         |  | 54                       |  | 1,059                            |   |                        |   |                                         |   | 1,113                      |   |                           |  
|Issuance of common stock (dividend
      reinvestment plan)                          | 1,125,007                       |  |                         |  | 5                        |  | 103                              |   |                        |   |                                         |   | 108                        |   |                           |  
|Exercise of stock options                                                            | 369,455                         |  |                         |  | 1                        |  | 16                               |   |                        |   |                                         |   | 17                         |   |                           |  
|Exercise of stock subscription
      warrants                                        | 2,098,811                       |  |                         |  | 8                        |  | 142                              |   |                        |   |                                         |   | 150                        |   |                           |  
|Purchase of treasury stock                                                           |                                |  | 26,532                   |  |                         |  |                                 |   |                        |   |                                         |   |                           |   |                           |  
|Change in translation adjustments                                                    |                                |  |                         |  | 24                       |  | (24                              | ) |                        |   | (26                                      | ) | (26                        | ) | (26                        | )
|                                                                                     |                                 |  |                          |  |                          |  |                                  |   |                         |   |                                          |   |                            |   |                            |  
|Balance at December 31, 2001                                                         | 130,145,800                     |  | 1,864,372                |  | 521                      |  | 4,324                            |   | 3,389                   |   | (352                                     | ) | 7,882                      |   | 724                        |  
|                                                                                     |                                 |  |                          |  |                          |  |                                  |   |                         |   |                                          |   |                            |   |                            |  
|                                                                                     |                                 |  |                          |  |                          |  |                                  |   |                         |   |                                          |   |                            |   |                            |  
|Net income                                                                           |                                |  |                         |  |                         |  |                                 |   | 460                     |   | (4                                       | ) | 456                        |   | 456                        |  
|Dividends paid                                                                       |                                |  |                         |  |                         |  |                                 |   | (297                    | ) |                                         |   | (297                       | ) |                           |  
|Issuance of common stock (dividend
      reinvestment plan)                          | 1,400,494                       |  |                         |  | 5                        |  | 127                              |   |                        |   |                                         |   | 132                        |   |                           |  
|Exercise of stock options                                                            | 171,583                         |  |                         |  | 1                        |  | 7                                |   |                        |   |                                         |   | 8                          |   |                           |  
|Employee stock purchase plan                                                         | 708,718                         |  |                         |  | 3                        |  | 42                               |   |                        |   |                                         |   | 45                         |   |                           |  
|Issuance of common stock (Cementia
      exchange offer)                             | 453,838                         |  |                         |  | 2                        |  | 46                               |   |                        |   |                                         |   | 48                         |   |                           |  
|Purchase of treasury stock                                                           |                                |  | 56,587                   |  |                         |  |                                 |   | (4                      | ) |                                         |   | (4                         | ) |                           |  
|Change in translation adjustments                                                    |                                |  |                         |  |                         |  |                                 |   |                        |   | (1,289                                   | ) | (1,289                     | ) | (1,289                     | )
|                                                                                     |                                 |  |                          |  |                          |  |                                  |   |                         |   |                                          |   |                            |   |                            |  
|Balance at December 31, 2002                                                         | 132,880,433                     |  | 1,920,959                |  | 532                      |  | 4,546                            |   | 3,548                   |   | (1,645                                   | ) | 6,981                      |   | (833                       | )
|                                                                                     |                                 |  |                          |  |                          |  |                                  |   |                         |   |                                          |   |                            |   |                            |  

The accompanying Notes are an integral part of these Financial Statements

F - 8

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS

Note 1  Business Description

As used herein, the terms “Lafarge
  S.A.” or “the parent Company” refers to Lafarge, a société
  anonyme organized under French law, without its consolidated subsidiaries.
  The terms the “Company” or “Lafarge” refer to Lafarge
  S.A. together with its consolidated subsidiaries.

The Company is headquartered in France and specializes in the production of materials for the construction industry in all the world's major markets. At December 31, 2002, the Company operated in the following business segments: Cement, Aggregates and Concrete, Roofing, and Gypsum. The Company's customers are from both the private and public sector. Until December 31, 2000, the Company also operated in the Specialty Products segment (Note 3).

Lafarge is listed on the “Premier Marché” of Euronext Paris S.A. and, since July 23, 2001, on the New York Stock Exchange (“NYSE”).

Note 2  Summary of Significant Accounting Policies

|(a) | Basis of preparation
|--- | --------------------

The consolidated financial statements of the Company have been prepared in accordance with the provisions of French accounting legislation and standards (“French GAAP”).

French GAAP differs in certain respects
  from accounting principles generally accepted in the United States of America
  (“US GAAP”). A description of the main differences is set forth
  in Notes 31, 32 and 33.Effective January
  1, 2000, the Company adopted the new accounting standard CRC n° 99-02 on
  Consolidated Financial Statements published by the French Accounting Standards
  Committee (“Comité de la Réglementation Comptable”).
  The standard requires that the balance-sheet liability method be applied for
  the recognition of deferred income taxes. The cumulative effect of change in
  accounting for deferred taxes is presented in Note 9.

|(b) | Principles of consolidation
|--- | ---------------------------

Investments over which the Company has direct or indirect control of more than 50% of the outstanding voting shares, or over which it exercises effective control, are fully consolidated, except for some companies, not significant in the aggregate, that were not consolidated for practical purposes. Control exists where the Company has the power directly or indirectly, to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities.

Investments in companies in which the Company and third party investors have agreed to exercise joint control are consolidated by the proportionate consolidation method with the Company's share of the joint ventures results, assets and liabilities recorded in the consolidated financial statements.

Investments in which the Company has an equity interest representing a voting right of more than 20% and over which the Company exercises significant influence, but not control are accounted for under the equity method.

All other investments in affiliates, which are not consolidated, are accounted for at cost.

Revenues and expenses of subsidiaries acquired or disposed of during the year are recognized in the consolidated statements of income as from the date of control or up to the date of transfer of control, respectively.

All significant inter-company balances and transactions have been eliminated on consolidation. With respect to proportionately consolidated companies, intercompany transactions are eliminated on the basis of the Company's interest in the entity involved.

F-9

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

|(c) | Use of estimates
|--- | ----------------

The preparation of financial statements in conformity with French GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, such as depreciation and provisions, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses. Management reviews its estimates on an ongoing basis using currently available information. Changes in facts and circumstances may result in revised estimates, and actual results could differ from the estimates.

|(d) | Translation of financial statements denominated in foreign currencies
|--- | ---------------------------------------------------------------------

The functional currency of the Company's foreign subsidiaries is the applicable foreign currency except for enterprises operating in hyper-inflationary economies.

The accounts of foreign subsidiaries outside the Euro zone are translated into the Euro using the year end closing rate of exchange for all balance sheet accounts and the average annual rate of exchange is applied to revenues, expenses and amounts presented on the statements of cash flows. The resulting translation adjustments are included as a separate component of shareholders' equity.

For companies that operate in countries which have been designated as hyper-inflationary, fixed assets, investments and operating supplies are not revalued and the original values are translated to the US dollar which is considered by the Company as the functional currency in these countries, at historical rates of exchange. Revenues and expenses are translated to this functional currency using the exchange rates of the month of the transaction date. Translation gains and losses arising from the translation of revenues and expenses are included in income. In defining hyper-inflationary, the Company employs criteria which include characteristics of the economic environment such as inflation and foreign currency exchange rate fluctuations and evaluates this information in relation to its economic exposure related to the subsidiaries' operations.

The exchange rates for the translation of main currencies were as follows:

|1
      for euro monetary unit |                    | 2002   |                           | 2001               |  | 2000                      | 
|------------------------------ | ------------------ | ------ | ------------------------- | ------------------ |  | ------------------------- | 
|                               |                    |        |                           |                    |  |                           | 
|                               | Average
      rate |        | Year
      end
      rate | Average
      rate |  | Year
      end
      rate | 
|                               |                    |        |                           |                    |  |                           | 
|Brazilian real (BRL)           |                    | 0.3619 |                           | 0.2690             |  | 0.4745                    | 
|Canadian dollar (CAD)          |                    | 0.6743 |                           | 0.6065             |  | 0.7209                    | 
|Chilean Peso (CLP)             |                    | 0.0015 |                           | 0.0013             |  | 0.0018                    | 
|Chinese yuan (CNY)             |                    | 0.1279 |                           | 0.1152             |  | 0.1349                    | 
|Egyptian pound (EGP)           |                    | 0.2290 |                           | 0.2062             |  | 0.2768                    | 
|British pound (GBP)            |                    | 1.5903 |                           | 1.5373             |  | 1.6081                    | 
|Moroccan dirham (MAD)          |                    | 0.0961 |                           | 0.0937             |  | 0.1000                    | 
|Malaysian ringitt (MYR)        |                    | 0.2784 |                           | 0.2509             |  | 0.2937                    | 
|Nigerian naira (NGN)           |                    | 0.0088 |                           | 0.0075             |  | 0.0096                    | 
|Philippine peso (PHP)          |                    | 0.0205 |                           | 0.0178             |  | 0.0219                    | 
|Polish zloty (PLN)             |                    | 0.2595 |                           | 0.2487             |  | 0.2725                    | 
|US dollar (USD)                |                    | 1.0582 |                           | 0.9536             |  | 1.1165                    | 
|South African rand (ZAR)       |                    | 0.1010 |                           | 0.1110             |  | 0.1296                    | 

F-10

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

|(e) | Business combinations, goodwill and intangible assets
|--- | -----------------------------------------------------

Since January 1, 1989, all business combinations have been accounted for using the purchase method of accounting. Under this method, assets and liabilities acquired by the Company are recorded at their fair value. Under the purchase method, the excess of the purchase price over the fair value of the net assets of businesses acquired, if any, is allocated to goodwill. Before January 1, 1989, positive and negative goodwill were written off against retained earnings.

When the Company initially acquires a controlling interest in a business, any portion of the assets and liabilities retained by minority shareholders is also recorded at its fair value.

Accordingly, if the Company subsequently acquires the assets and liabilities considered held by minority shareholders, no additional fair value adjustment is recorded at that time.

Initial estimates of fair values are finalized within a one year allocation period. Subsequent to this period, releases of estimated provisions in excess of the actual costs incurred related to the purchase price allocation are applied to goodwill.

Non-amortizable intangible assets, such as market share and trademarks, are recognized through the purchase price allocation to the extent that they can be valued using a sufficiently accurate and objective method based on economic benefits.

The Company amortizes goodwill on
  a straight-line basis over the estimated period of benefit, not exceeding
  40 years.

Negative goodwill is amortized into income on a rational, systematic basis, based upon estimates of future operating results of the acquiree at the date of the acquisition.

|(f) | Revenue recognition
|--- | -------------------

Consolidated revenues represent the value, before sales tax, of goods, products and services sold by consolidated companies in the ordinary activities and after elimination of intra-group sales.

Revenues from the sale of goods, and products are recorded when ownership is transferred.

|(g) | Other income (expenses)
|--- | -----------------------

Other income (expenses) results from
  operations and includes net restructuring costs, provisions for litigation
  and other non recurring items.

|(h) | Intangible assets
|--- | -----------------

Intangible assets include patents, licenses, and leaseholds which are amortized using the straight-line method over periods not exceeding their estimated useful lives and assets such as market share and trademarks which are not amortized.

F - 11

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

|(i) | Property, plant and equipment
|--- | -----------------------------

Property, plant and equipment is recorded
  at historical cost.

The Company capitalizes assets financed
  through capital leases where the lease arrangement transfers to the Company
  substantially all the benefits and risks of ownership. Lease arrangements are
  evaluated based upon the leased assets expected period of future benefit in
  relation to the assets' useful lives, the total future payments in relation
  to the fair value of the financed asset and whether transfer of ownership or
  favorable purchase options exist.

Interest on borrowings directly related to the financing of construction projects and incurred during development activities is capitalized to project costs.

Depreciation on property, plant and equipment is calculated as follows:

| | Land is not depreciated.
|- | ------------------------

| | Mineral reserves consisting of proven and probable limestone, gypsum and aggregates reserves are depleted using the units-of-production method.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------

| | Buildings are depreciated using the straight-line method over estimated useful lives varying from twenty years for industrial buildings to fifty years for offices or residential properties.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Plant, machinery, equipment and installation costs are depreciated using the straight-line method over their estimated useful lives, ranging from 8 to 30 years.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

Beginning January 1, 2002, the historical cost of cement plant assets are reclassified into specific cost categories based upon their distinct characteristics. Each cost category represents cement plant components with specific useful lives. This new definition was based on a detailed technical study performed by the Company. Prior to January 1, 2002, cement plant assets had been depreciated over estimated useful lives, using a broader definition of cost classification.

The new system of classifying costs has been applied prospectively as of January 1, 2002. On average, for a new cement plant, this change in estimate has resulted in increasing the depreciable useful life from 20 years to 28 years, which more closely reflects actual experience with modern cement plants.

Accordingly, the new definition of
  cost categories and related useful lives has reduced the annual depreciation
  expense. The impact on the current year results are as follows: operating income
  on ordinary activities improved by 83 million euros ; income before income tax,
  share of net income of equity affiliates, amortization of goodwill and minority
  interests increased by 58 million euros; net income increased by 46 million
  euros; basic earnings per share increased by 0.36 euro.

|(j) | Other investments
|--- | -----------------

Other investments, which consist either of shares held in non consolidated companies or shares in listed companies treated as long-term equity investments are recorded at the lower of historical cost or net realizable value, assessed on an individual investment basis. The net realizable value is measured according to such criteria as the Group share of net assets, the stock price or expected future profitability, weighted by the effects of holding these investments in terms of the Company’s strategy, or synergy with existing businesses.

F - 12

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  – (Continued)

|(k) | Impairment of long-lived assets
|--- | -------------------------------

Goodwill and Intangible Assets

The net book value of intangible assets
  are reviewed annually for a decrease in the fair value of the assets, due to
  factors that may affect the assets value and recoverability. The net book value
  of intangible assets are compared to the fair value of the assets and liabilities
  to which the intangible asset has been allocated. The Company’s measurement
  of fair value of the related assets and liabilities is based on an evaluation
  of future discounted cash flows. If the net book value of an intangible asset
  is higher than the measured fair value of the related assets and liabilities,
  the Company records extraordinary amortization to reduce the carrying value
  of the intangible asset to its determined fair value.

Property, plant and equipment

Whenever events or changes in circumstances indicate that the carrying amount of property, plant and equipment may not be recoverable, the carrying value is compared with the estimated undiscounted future cash flows expected to result from the use of the assets and their possible disposition. If the sum of expected future cash flows is less than the carrying amount of these assets, an impairment loss is recognized, based on the fair value of these assets, derived from the present value of expected future cash flows.

|(l) | Inventories
|--- | -----------

Inventories are stated at the lower of cost or market. Cost is determined using the weighted average method.

|(m) | Cash and cash equivalents
|--- | -------------------------

Cash and cash equivalents consist of cash and highly liquid investments with an original maturity date of generally less than three months from the time of purchase.

|(n) | Financial instruments
|--- | ---------------------

The Company enters into financial derivative contracts for hedging purposes only. These transactions are executed in order to reduce its exposure to changes in interest rates and foreign currency exchange rates on firm or highly probable commitments.

Forward exchange contracts and foreign currency swaps are used to hedge foreign currency exchange rate exposures. Unrealized gains and losses on these investments are recorded in the carrying amount of the hedged asset or liability on firm commitments. Contract premiums are amortized rateably over the term of the hedge arrangement.

The Company enters into various interest rate swaps to manage its interest rate exposure. The objective of the swaps are, depending on the circumstances, to modify instruments from fixed rate to floating and floating rate to fixed. The difference between interest payable and receivable is recognized as interest expense or interest income.

F - 13

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  – (Continued)

|(o) | Pensions, end of service benefits and other post retirement benefits
|--- | --------------------------------------------------------------------

Defined contribution plans

The Company accounts for pension costs related to defined contribution pension plans as they are incurred.

Defined benefit plans

Estimates of the Company’s pension and end of service benefit obligations are calculated annually with the assistance of independent actuaries, using the projected unit credit method. This method considers best estimate actuarial assumptions including, the probable future length of the employees’ service, the employees’ final pay, and the expected average life span of the employees.

The Company’s obligations are discounted by country based upon discount rates appropriate in the circumstances. The obligations are recognized based upon the proportion of benefits earned by employees as services rendered.

Fair values are used to determine the market value of fund assets.

For most defined benefit plans, changes in actuarial assumptions which affect the value of the obligations and the differences between expected and actual long term return on plan assets are accounted for as actuarial gains and losses.

Current period pension expense is comprised of, the increase in the obligation which results from the additional benefit earned by employees in the period and interest expense which results from the outstanding pension obligation. The amounts described above are reduced by the expected return on plan assets. Actuarial gains and losses which exceed a corridor corresponding to 10% of the greater of the fair value of plans assets or plan obligations are amortized to income over future periods.

Modifications of pension plans are amortized over the expected average remaining service lives of the related employees.

Other post retirement benefits

Certain of the Company’s subsidiaries offer to employee’s supplementary post-retirement medical coverage. These costs are calculated based upon actuarial determinations and are recorded over the expected average remaining service lives of the employees.

|(p) | Restructuring
|--- | -------------

Reserves for restructuring costs are provided when the restructuring plans have been finalized and approved by the company’s management, have been announced before the balance sheet date and result in an obligation to third parties.

Where a business combination has occurred, restructuring costs related to capacity reductions of the acquirer which are a consequence of overcapacity and costs related to capacity reductions of the acquiree are included in the cost of the acquisition.

F - 14

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED
  FINANCIAL STATEMENTS – (Continued)

|**(q)** | Site restoration
|------- | ----------------

Where the Company is legally or contractually
  required to restore a quarry site, the estimated costs of site restoration are
  accrued and amortized to income rateably, on a unit-of-production basis, over
  the operating life of the quarry. The estimated future costs for known restoration
  requirements are determined on a site by site basis and, when determinable,
  are calculated based on the present value of estimated future costs.

|**(r)** | Product warranties
|------- | ------------------

The Company’s warranty policy
  generally provides a 30-year coverage for roofing tile. The Company’s
  policy is to accrue the undiscounted estimated cost of warranty coverage at
  the time the sale is recorded.

|**(s)** | Environmental costs
|------- | -------------------

When the Company determines that it
  is possible that a liability for environmental costs exists, an undiscounted
  estimate of the future remediation is recorded as a provision without the offset
  of potential insurance recoveries. Costs that result in future economic benefits
  such as extending useful lives, increased capacity, safety or, those costs incurred
  to mitigate or prevent future environmental contamination are capitalized. Environmental
  costs, which are not included above, are expensed as incurred.

|**(t)** | Deferred income taxes
|------- | ---------------------

The Company changed its method of
  accounting for income taxes effective at January 1, 2000. Deferred income taxes
  are accounted for using the balance-sheet liability method on temporary differences
  between the tax basis of assets and liabilities and their carrying amounts in
  the balance-sheet (including tax losses available for carry forward). Deferred
  taxes are measured by applying currently enacted tax laws. Deferred tax assets
  are recognized when it is reasonably certain that they will be recovered in
  future years.

Before January 1, 2000, the deferred
  tax provision was calculated using the partial allocation method whereby deferred
  taxes are provided only where timing differences were expected to reverse in
  the foreseeable future. This method only takes into account timing differences
  arising between the adjusted net accounting profit of consolidated subsidiaries
  and net taxable income. A cumulative adjustment was recognized for the adoption
  of the new accounting principle and the effect of this change is shown in the
  consolidated statements of changes in shareholders' equity (Note 9).

|**(u)** | Research and development
|------- | ------------------------

The Company is committed to improving
  its manufacturing process, maintaining product quality and meeting existing
  and future customer needs. These objectives are pursued through various programs.
  Research and development costs which are expensed as incurred, were 55 million
  euros, 53 million euros and 43 million euros for 2002, 2001 and 2000, respectively.

F - 15

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED
  FINANCIAL STATEMENTS – (Continued)

|**(v)** | Convenience translation
|------- | -----------------------

The consolidated balance sheet and
  consolidated statements of income and cash flows include the presentations of
  amounts as of and for the year ended December 31, 2002 denominated in millions
  US dollars. These amounts are presented for the convenience of the reader and
  have been prepared using an exchange rate of 1.00 euro to 1.0485 USD which
  was the Noon Buying Rate on December 31, 2002. Such translation should not be
  construed as representations that the euro amount has been, could have been
  or could in the future be converted into US dollar at that or any other exchange
  rate.

|**(w)** | Recently issued accounting pronouncement
|------- | ----------------------------------------

In December 2000, the “Comité
  de la Réglementation Comptable” issued the regulation (règlement)
  n° 2000-06 which requires French publicly traded companies to adopt new
  accounting rules related to the recognition of liabilities for fiscal years
  beginning on or after January 1, 2002. The regulation defines a liability as
  future sacrifices of economic benefits and assets and requires that a liability
  should be recognized when, and only when an enterprise has a present obligation
  (legal, regulatory, or contractual) with a third party as a result of a past
  event and it is probable or certain that an outflow of resources embodying economic
  benefits will be required to settle the obligation. The adoption of this regulation
  had no effect on the consolidated financial statements.

F - 16

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

Note 3  Business Segment and Geographic Area Information

Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the Company's chief operating decision makers in order to allocate resources and assess performance.

Since January 1, 2001, the Company
  has operated in the following four business segments: Cement, Aggregates and
  Concrete, Roofing, and Gypsum which represent separately managed strategic business
  units that have different capital requirements and marketing strategies. Until
  December 31, 2000, the Company also operated in the Specialty Products
  segment which produced and sold a variety of component products used in the
  construction industry. The Company’s retained minority interest in this
  business is now included in the segment described as “Other”.Each of the business segments are managed
  separately because each business segment develops, manufactures and sells distinct
  products.

Company management evaluates internally its performance on operating income on ordinary activities (defined as operating income before net gains on disposals and other expenses, net) and capital employed (defined as the total of goodwill, intangible and tangible assets, investments in equity affiliates and working capital) as disclosed in its business segment and geographic area information.

| | The Cement segment produces and sells a wide range of cement and hydraulic binders adapted to the needs of the construction industry.
|- | -------------------------------------------------------------------------------------------------------------------------------------

| | The Aggregates and Concrete segment produces and sells construction aggregates, ready mix concrete and other concrete products.
|- | -------------------------------------------------------------------------------------------------------------------------------

| | The Roofing segment produces and sells roof tiles, roofing accessories and chimney systems.
|- | -------------------------------------------------------------------------------------------

| | The Gypsum segment mainly produces and sells drywall for the commercial and residential construction sectors.
|- | -------------------------------------------------------------------------------------------------------------

F - 17

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

The accounting policies applied to the segment earnings are in agreement with those described in Note 2.

(a)  Business segment
  information

|                                                  |                          |  
|------------------------------------------------- | ------------------------ | -
|                                                  | Cement                   |  
|                                                  |                          |  
|                                                  | (in
      million euros) |  
|2002                                              |                          |  
|Gross sales                                       | 7,520                    |  
|Less: intersegment                                | (572                     | )
|                                                  |                          |  
|Sales                                             | 6,948                    |  
|Depreciation                                      | (545                     | )
|Operating income on ordinary
      activities     | 1,606                    |  
|Operating income                                  | 1,694                    |  
|Investments in equity affiliates                  | 248                      |  
|Capital employed                                  | 13,584                   |  
|Total assets                                      | 15,417                   |  
|Capital expenditures                              | 707                      |  
|                                                  |                          |  
|2001                                              |                          |  
|Gross sales                                       | 6,476                    |  
|Less: intersegment                                | (481                     | )
|                                                  |                          |  
|Sales                                             | 5,995                    |  
|Depreciation                                      | (511                     | )
|Operating income on ordinary
      activities (a) | 1,434                    |  
|Operating income (a)                              | 1,397                    |  
|Investments in equity affiliates                  | 250                      |  
|Capital employed                                  | 14,825                   |  
|Total assets                                      | 17,416                   |  
|Capital expenditures                              | 894                      |  
|                                                  |                          |  
|2000                                              |                          |  
|Gross sales                                       | 4,798                    |  
|Less: intersegment                                | (378                     | )
|                                                  |                          |  
|Sales                                             | 4,420                    |  
|Depreciation                                      | (385                     | )
|Operating income on ordinary
      activities (a) | 1,104                    |  
|Operating income (a)                              | 1,090                    |  
|Investments in equity affiliates                  | 211                      |  
|Capital employed                                  | 6,789                    |  
|Total assets                                      | 9,242                    |  
|Capital expenditures                              | 559                      |  

*These amounts exclude the part of the Specialty Products segment that was considered sold on December 28, 2000.

(a)  Revised for the change
  in presentation of equity affiliates (Note 4).

The capital employed and the total assets for the Specialty Products segment at December 31, 2000 without adjustment for this subsequent sale are as follows (in million euros):

|Capital employed | 957   | 
|---------------- | ----- | 
|Total assets     | 1,482 | 

F - 18

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  – (Continued)

|(b) | Geographic area information
|--- | ---------------------------

|                           |                                
|-------------------------- | -------------------------------
|                           |                                
|                           | 2002                           
|                           |                                
|Sales                      | Property,plant andequipment,net
|                           |                                
|                           | (in million
      euros)       
|Western Europe             | 6,005                          
|Of which:                  |                                
|France                     | 2,007                          
|Germany                    | 642                            
|Spain                      | 616                            
|United
      Kingdom       | 1,483                          
|                           |                                
|North America              | 4,405                          
|Of which:                  |                                
|United
      States        | 3,071                          
|Canada                     | 1,334                          
|                           |                                
|Mediterranean Basin        | 562                            
|                           |                                
|Central and Eastern Europe | 661                            
|                           |                                
|Latin America              | 720                            
|                           |                                
|Africa                     | 869                            
|                           |                                
|Asia / Pacific             | 1,388                          
|                           |                                
|Total                      | 14,610                         
|                           |                                

* These amounts exclude the part of the Specialty Products segment that was considered sold on December 28, 2000.

F - 19

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  – (Continued)

The geographic area property plant and equipment and capital employed information including the part of the Specialty Products segment considered sold on December 28, 2000 are as follows:

|                           |                         
|-------------------------- | ------------------------
|2000                      
|                           |                         
|Property, plant            | Capital                 
|and equipment,             | employed                
|net                        |                         
|                           |                         
|                           | (in million
      euros)
|Western Europe             | 3,683                   
|Of which:                  |                         
|France                     | 1,245                   
|Germany                    | 978                     
|Spain                      | 348                     
|United Kingdom             | 579                     
|                           |                         
|North America              | 2,390                   
|Of which:                  |                         
|United States              | 1,567                   
|Canada                     | 823                     
|                           |                         
|Mediterranean Basin        | 747                     
|                           |                         
|Central and Eastern Europe | 524                     
|                           |                         
|Latin America              | 469                     
|                           |                         
|Africa                     | 240                     
|                           |                         
|Asia / Pacific             | 1,102                   
|                           |                         
|Total                      | 9,155                   
|                           |                         

Sales are presented by destination.

F - 20

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED
  FINANCIAL STATEMENTS – (Continued)

Note 4  Share of Net Income of Equity
  Affiliates

PRESENTATION OF SHARE OF NET INCOME
  OF EQUITY AFFILIATES

As of January 1, 2002, the share of
  net income of equity affiliates determined in accordance with equity method
  consolidation principles is shown in the group consolidated statement of income
  on a specific line “share of net income of equity affiliates”.

Prior to the adoption of this presentation,
  the Company’s share of net income of equity affiliates was presented in
  the following line-items : “Operating income on ordinary activities”,
  “Gains on disposals, net”, “Other income (expenses), net”,
  “Financial expenses, net” and “Income tax”.

The presentation of the consolidated
  statements of income for 2000 and 2001 have been revised for comparative purposes
  in the schedule below:

|                                                                                                                                | Years ended
      December 31, |  
|------------------------------------------------------------------------------------------------------------------------------- | ------------------------------ | -
|                                                                                                                                |                                |  
|                                                                                                                                | 2001                           |  
|                                                                                                                                |                                |  
|                                                                                                                                | Published                      |  
|                                                                                                                                |                                |  
|                                                                                                                                |                                |  
|Sales                                                                                                                           | 13,698                         |  
|Cost of goods sold                                                                                                              | (9,258                         | )
|Selling and administrative expenses                                                                                             | (1,578                         | )
|                                                                                                                                |                                |  
|Gross operating income                                                                                                          | 2,862                          |  
|Depreciation                                                                                                                    | (928                           | )
|Share of operating income on
      ordinary activities of equity affiliates                                                     | 131                            |  
|                                                                                                                                |                                |  
|Operating income on ordinary
      activities                                                                                   | 2,065                          |  
|Gains on disposals, net                                                                                                         | 275                            |  
|Other income (expenses), net                                                                                                    | (169                           | )
|                                                                                                                                |                                |  
|Operating income                                                                                                                | 2,171                          |  
|Financial expenses, net                                                                                                         | (595                           | )
|                                                                                                                                |                                |  
|Income before income tax,
      share of net income of equity affiliates, amortization of goodwill and minority
      interests | 1,576                          |  
|Income tax                                                                                                                      | (414                           | )
|                                                                                                                                |                                |  
|Income before share of net
      income of equity affiliates, amortization of goodwill and minority interests                   | 1,162                          |  
|Share of net income of equity
      affiliates                                                                                  |                               |  
|Amortization of goodwill                                                                                                        | (142                           | )
|Minority interests                                                                                                              | (270                           | )
|                                                                                                                                |                                |  
|Net income                                                                                                                      | 750                            |  
|                                                                                                                                |                                |  

F - 21

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED
  FINANCIAL STATEMENTS – (Continued)

The following details the Company’s
  share of the operations of equity affiliates:

|                                               | Years ended
      December 31, |  
|---------------------------------------------- | ------------------------------ | -
|                                               |                                |  
|                                               | 2002                           |  
|                                               |                                |  
|                                               | (in million
      euros)       |  
|Operating income on ordinary
      activities  | 146                            |  
|Gain on disposals, net                         |                               |  
|Other expenses, net                            | (21                            | )
|Financial expenses, net                        | (41                            | )
|Income tax                                     | (51                            | )
|                                               |                                |  
|Share of net income of equity
      affiliates | 33                             |  
|                                               |                                |  

Note 5  Pro Forma Financial
  Information

The following unaudited pro forma
  condensed consolidated statements of income present the results of operations
  for the years ended December 31, 2001 and December 31, 2000 assuming the acquisition
  of the retained businesses of Blue Circle Industries Plc (“Blue Circle”)
  (Note 11 (c)) and the disposal of the majority portion of the Specialty Products
  segment had taken place at the beginning of each of those fiscal years.

This pro forma information does not
  purport to be indicative of the historical performance that would have resulted
  had the acquisition actually occurred at such dates, nor is it necessarily indicative
  of future operating results. The other purchase and sale transactions that occurred
  during these fiscal years have no significant effects on these pro forma results.

These unaudited pro forma results
  have been prepared based upon the historical consolidated financial statements
  of the Company and Blue Circle Industries Plc. The historical consolidated financial
  statements have been adjusted (see the « pro forma adjustments »
  columns) in order to reflect increases or decreases in financing costs and other
  adjustments related to the acquisitions and dispositions of Blue Circle. The
  pro-forma adjustments reflect the effects of the following acquisitions:

| | - acquisition of
      the Egyptian entity APCC in January 2000,                                               
| | ---------------------------------------------------------------------------------------------------------------
| | - acquisition of the Greek entities
      Heracles/Halkis in April 2000,                                       
| | - increase in ownership in the
      Nigerian entities Wapco and Ashaka in April 2000,                         
| | - and the minority interests
      acquisition in Republic Cement Company in the Philippines in September 2001.

|                                                                                     
|-------------------------------------------------------------------------------------
|The pro forma adjustments also
      include the effects of the following disposals :
|                                                                                     
|                                                                                     
|                                                                                     

The pro forma disclosures also reflect
  the amortization of acquisition goodwill and the effects of other adjustments
  and reclassifications necessary to present the historical accounts of Blue Circle
  on a basis consistent with the Company’s accounting policies.

F - 22

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

Condensed consolidated statements of income for the years ended December 31, 2002 and pro forma condensed consolidated statements of income for the years ended December 31, 2001 and December 31, 2000

|                                                                                                              |                                                 |  
|------------------------------------------------------------------------------------------------------------- | ----------------------------------------------- | -
|                                                                                                              | 2002                                            |  
|                                                                                                              |                                                 |  
|                                                                                                              | (in
      million euros, except per share data) |  
|                                                                                                              |                                                 |  
|Sales                                                                                                         | 14,610                                          |  
|Depreciation                                                                                                  | (969                                            | )
|                                                                                                              |                                                 |  
|Operating income on ordinary
      activities                                                                 | 2,132                                           |  
|Gains on disposals, net/other
      income (expenses), net                                                    | (309                                            | )
|Financial expenses, net                                                                                       | (521                                            | )
|Income tax                                                                                                    | (448                                            | )
|                                                                                                              |                                                 |  
|Income before share of net
      income of equity affiliates, amortization of goodwill and minority interests | 854                                             |  
|Share of net income of equity
      affiliates                                                                | 33                                              |  
|Amortization of goodwill                                                                                      | (158                                            | )
|Minority interests                                                                                            | (273                                            | )
|                                                                                                              |                                                 |  
|Net income                                                                                                    | 456                                             |  
|                                                                                                              |                                                 |  
|Earnings per share (euros)                                                                                    | 3.52                                            |  
|Diluted earnings per share
      (euros)                                                                      | 3.49                                            |  
|                                                                                                              |                                                 |  

|(1) | Unaudited
|--- | ---------

Additional information on the pro forma consolidated statement of income for the year ended December 31, 2001

|                                                                                                                    |                                  |  
|------------------------------------------------------------------------------------------------------------------- | -------------------------------- | -
|                                                                                                                    | Lafarge
      historical2001 (a) |  
|                                                                                                                    |                                  |  
|                                                                                                                    | (in
      million euros)         |  
|                                                                                                                    |                                  |  
|Sales                                                                                                               | 13,698                           |  
|Depreciation                                                                                                        | (928                             | )
|Share of operating income on
      ordinary activitiesof
      equity affiliates                                    |                                 |  
|                                                                                                                    |                                  |  
|Operating
      income on ordinary activities                                                                       | 1,934                            |  
|Gains on disposals,
      net/other income (expenses), net                                                          | 122                              |  
|Financial expenses,
      net                                                                                       | (544                             | )
|Income tax                                                                                                          | (368                             | )
|                                                                                                                    |                                  |  
|Income before
      share of net income of equity affiliates, amortization of goodwill and minority
      interests | 1,144                            |  
|Share of net
      income of equity affiliates                                                                      | 18                               |  
|Amortization
      of goodwill                                                                                      | (142                             | )
|Minority interests                                                                                                  | (270                             | )
|                                                                                                                    |                                  |  
|Net income                                                                                                          | 750                              |  
|                                                                                                                    |                                  |  

(a)  Revised
  for the change in presentation of equity affiliates (Note 4)

(1)  Unaudited

F - 23

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Back to Contents

| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

Additional information on the pro
  forma consolidated statement of income for the year ended December 31, 2000

|                                                                                                              |                           |  
|------------------------------------------------------------------------------------------------------------- | ------------------------- | -
|                                                                                                              | LafargeHistorical2000 (a) |  
|                                                                                                              |                           |  
|                                                                                                              | (in
      million euros)  |  
|                                                                                                              |                           |  
|Sales                                                                                                         | 12,216                    |  
|Depreciation                                                                                                  | (788                      | )
|Share of operating income on
      ordinary activities of equity affiliates                                   |                          |  
|                                                                                                              |                           |  
|Operating income on ordinary
      activities                                                                 | 1,804                     |  
|Gains on disposals, net/other
      income (expenses), net                                                    | 29                        |  
|Financial expenses, net                                                                                       | (468                      | )
|Income tax                                                                                                    | (356                      | )
|                                                                                                              |                           |  
|Income before share of net
      income of equity affiliates, amortization of goodwill and minority interests | 1,009                     |  
|Share of net income of equity
      affiliates                                                                | 50                        |  
|Amortization of goodwill                                                                                      | (120                      | )
|Minority interests                                                                                            | (213                      | )
|                                                                                                              |                           |  
|Net income                                                                                                    | 726                       |  
|                                                                                                              |                           |  

(a)  Revised
  for the change in presentation of equity affiliates (Note 4)

(1)  Unaudited(2)  As published

F - 24

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Back to Contents

| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

Note 6  Gains on Disposals,
  Net

Components of gains on disposals are as follows:

|                                                          | Years
      ended December 31, | 
|--------------------------------------------------------- | ------------------------------ | 
|                                                          |                                | 
|                                                          | 2002                           | 
|                                                          |                                | 
|                                                          | (in
      million euros)       | 
|Gain on disposals of consolidated
      subsidiaries, net | 24                             | 
|Gain on sale of shares in listed
      companies, net     |                               | 
|Gain on sale of other long-term
      assets, net         | 192                            | 
|                                                          |                                | 
|Gains on disposals, net                                   | 216                            | 
|                                                          |                                | 

(a)   Revised for the
  change in presentation of equity affiliates (Note 4)

Note 7  Other Income (Expenses), Net

Components of other income (expenses) are as follows:

|                             | Years
      ended December 31, |  
|---------------------------- | ------------------------------ | -
|                             |                                |  
|                             | 2002                           |  
|                             |                                |  
|                             | (in
      million euros)       |  
|Restructuring costs          | (89                            | )
|Depreciation                 | (47                            | )
|Other expenses, net          | (389                           | )
|                             |                                |  
|Other income (expenses), net | (525                           | )
|                             |                                |  

(a)   Revised for the
  change in presentation of equity affiliates (Note 4)

Depreciation consists principally of increases to depreciation expense resulting from revisions in depreciable lives to reflect changes in operating lives of assets including changes due to planned replacements of assets.

In 2002, “Other expenses, net” includes a provision of 300 million euros related to the risk arising from the “competition” litigation risk (Note 28  Litigations).

In 2000, “Other expenses, net” includes non-capitalizable costs, totaling approximately 91 million euros, associated with the initial tender offer to acquire the shares of Blue Circle. These non-capitalizable costs include non-refundable fees incurred for financing never utilized, the cost of foreign currency exchange contracts and other indirect costs related to acquiring the Blue Circle shares.

F - 25

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

Note 8  Financial Expenses,
  Net

Components of financial expenses are as follows:

|                              | Years
      ended December 31, |  
|----------------------------- | ------------------------------ | -
|                              |                                |  
|                              | 2002                           |  
|                              |                                |  
|                              | (in
      million euros)       |  
|Interest income               | 103                            |  
|Interest expense              | (571                           | )
|                              |                                |  
|Net interest (expense) income | (468                           | )
|Other financial expenses, net | (53                            | )
|                              |                                |  
|Financial expenses, net       | (521                           | )
|                              |                                |  

(a)   Revised for the
  change in presentation of equity affiliates (Note 4)

Interest expense is reported net of capitalized interest costs for construction projects of 40 million euros in 2002,16 million euros in 2001 and 12 million euros in 2000.

F - 26

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Back to Contents

| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

Note 9  Income Tax and Deferred Income Taxes

The income tax expense for the year is equal to the amount paid or payable in the short term to the tax authorities in respect of the financial year, in accordance with currently applicable tax rules and rates in the various countries, taking into account the taxation regime described below.

Pursuant to the provisions of the
  French Tax Code (Article 209 quinquies) and in accordance with a tax agreement
  from the French Tax Authorities, the parent company files a world-wide consolidated
  tax return. This regime provides that the basis for income tax computation of
  the parent company is not limited to French consolidated subsidiaries but also
  applies to foreign entities in which Lafarge owns more than 50%. Under this
  provision, the parent company's consolidated taxable income is calculated based
  upon the rules of French Tax Law for its operations in France as well as those
  of its greater than 50% owned foreign subsidiaries.

Within certain limits, the French
  Tax Code allows for the reduction of the taxable income of profitable companies
  by the offsetting of taxable losses of other entities. French income tax payable,
  as determined by the method described above, allows for the application of foreign
  taxes, due in local jurisdictions and related to greater than 50% owned foreign
  entities, to be applied as a credit to income taxes due in France. This tax
  agreement covers the years presented and expires on December 31, 2003.

|**(a)** | Cumulative effect of change in accounting for deferred taxes
|------- | ------------------------------------------------------------

As discussed in Note 2(t), effective
  January 1, 2000, the Company changed its method of accounting for income taxes
  from the partial allocation method to the balance-sheet liability method. Prior
  years’ financial statements have not been revised to apply the new method.

As a result of adoption, the Company decreased
  retained earnings by 759 million euros, representing the cumulative effect of
  the change for years prior to January 1, 2000.

|**(b)** | Income tax
|------- | ----------

Components of the income tax are as follows:

|                        | Years ended
      December 31, | 
|----------------------- | ------------------------------ | 
|                        |                                | 
|                        | 2002                           | 
|                        |                                | 
|                        | (in million
      euros)       | 
|Current income tax      | 346                            | 
|French companies        | 34                             | 
|Foreign
      companies | 312                            | 
|                        |                                | 
|Deferred income tax     | 102                            | 
|French companies        | 15                             | 
|Foreign
      companies | 87                             | 
|                        |                                | 
|Income tax              | 448                            | 
|                        |                                | 

(a) Revised for the change in presentation of equity affiliates (Note 4)

F - 27

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Back to Contents

| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

|**(c)** | Deferred tax assets and liabilities
|------- | -----------------------------------

Components of the deferred tax balances are as follows:

|                                                  | At December
      31, |     
|------------------------------------------------- | --------------------- | ----
|                                                  |                      
|2002                                              |                       | 2001
|                                                  |                       |     
|(in million
      euros)                          |                      
|Pensions and other post-retirement
      benefits | 177                   |     
|Property, plant and equipment                     | 361                   |     
|Provisions and other current
      liabilities    | 195                   |     
|Restructuring provisions                          | 61                    |     
|Net operating loss carryforwards                  | 196                   |     
|                                                  |                       |     
|Deferred tax assets                               | 990                   |     
|                                                  |                       |     
|Property, plant and equipment                     | 1,522                 |     
|Prepaid pension assets                            | 205                   |     
|Other, net                                        | 242                   |     
|                                                  |                       |     
|Deferred tax liabilities                          | 1,969                 |     
|                                                  |                       |     
|Net deferred tax liabilities                      | 979                   |     
|                                                  |                       |     

|**(d)** | Effective tax rate
|------- | ------------------

A reconciliation of the world-wide
  tax consolidation rate to the Company’s effective tax rate is as follows:

|                                                                                        | Years ended
      December 31, |  
|--------------------------------------------------------------------------------------- | ------------------------------ | -
|                                                                                        |                                |  
|                                                                                        | 2002                           |  
|                                                                                        | %                              |  
|                                                                                        |                                |  
|World-wide tax consolidation
      rate                                                 | 33.3                           |  
|Capital gains taxed at a reduced
      rate                                             | (1.3                           | )
|Provision for “Competition”
      litigation risk                                       | 7.6                            |  
|Effect of foreign tax rate differentials                                                |                               |  
|Changes in enacted tax rates
      in France and Germany (in 2000) and Canada (in 2001) |                               |  
|Change in valuation allowance
      on deferred tax assets                              | (1.8                           | )
|Other                                                                                   | (3.4                           | )
|                                                                                        |                                |  
|Effective tax rate                                                                      | 34.4                           |  
|                                                                                        |                                |  

(a) Revised for the change in presentation of equity affiliates (Note 4)

F - 28

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Back to Contents

| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS  (Continued)

Note 10  Earnings Per Share

Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the year.

Diluted earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the year adjusted to include any dilutive potential common shares.

Potential common shares include share options, warrants, and convertible securities issued by the Company on its own common shares.

The computation and reconciliation of basic and diluted earnings per share for the years ended December 31, 2002, 2001 and 2000 are as follows:

|                                                                    | Years
      ended December 31, |     
|------------------------------------------------------------------- | ------------------------------ | ----
|                                                                    |                                |     
|2002                                                                | 2001                           | 2000
|                                                                    |                                |     
|Numerator (in million euros)                                        |                                |     
|                                                                    |                                |     
|Net income                                                          | 456                            |     
|                                                                    |                                |     
|Interest expense on convertible
      debt (OCEANE)                 |                               |     
|                                                                    |                                |     
|Adjusted net income                                                 | 456                            |     
|                                                                    |                                |     
|Denominator (share amounts)                                         |                                |     
|                                                                    |                                |     
|Weighted average number of shares
      outstanding                 | 129,629,000                    |     
|                                                                    |                                |     
|Effect of dilutive securities
       stock options                 | 918,000                        |     
|Effect of dilutive securities
       stock subscription warrants   |                               |     
|Effect of dilutive securities
       convertible debt (OCEANE)     |                               |     
|                                                                    |                                |     
|Total potential dilutive shares                                     | 918,000                        |     
|                                                                    |                                |     
|                                                                    |                                |     
|Weighted average number of shares
      outstanding  fully diluted | 130,547,000                    |     
|                                                                    |                                |     
|                                                                    |                                |     
|Basic earnings per share (euros)                                    | 3.52                           |     
|                                                                    |                                |     
|                                                                    |                                |     
|Diluted earnings per share
      (euros)                            | 3.49                           |     
|                                                                    |                                |     

F-29

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Back to Contents

| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS  (Continued)

Note 11  Goodwill and Intangible Assets, Net

|(a) | Changes in goodwill, net
|--- | ------------------------

|                                    |                          |      |       |      |       |  
|----------------------------------- | ------------------------ | ---- | ----- | ---- | ----- | -
|2002                                |                          | 2001 |       | 2000
|                                    |                          |     
|                                    | (in
      million euros) |     
|Goodwill, net, at January
      1   | 4,974                    |      | 2,820 |      | 3,157 |  
|Amortization                        | (158                     | )    | (142  | )    | (120  | )
|Additions                           | 145                      |      | 2,284 |      | 309   |  
|Disposals                           | (35                      | )    | (6    | )    | (185  | )
|Acquisition adjustments             | 134                      |      | (14   | )    | (352  | )
|Translation adjustments             | (427                     | )    | 32    |      | 11    |  
|                                    |                          |      |       |      |       |  
|Goodwill, net, at December
      31 | 4,633                    |      | 4,974 |      | 2,820 |  
|                                    |                          |      |       |      |       |  

The acquisition adjustments include the adjustments which arise from the finalization of the purchase price allocation to the fair value of acquired assets and liabilities assumed on business combinations.

Goodwill recognized before January 1, 1989 was written off against retained earnings. The analysis of the residual net amount of this goodwill had it been recorded in the balance sheet and subsequently amortized, is as follows:

|                                    |                          |      |    |      |     |  
|----------------------------------- | ------------------------ | ---- | -- | ---- | --- | -
|2002                                |                          | 2001 |    | 2000
|                                    |                          |     
|                                    | (in
      million euros) |     
|Goodwill, net, at January
      1   | 63                       |      | 66 |      | 79  |  
|Amortization                        | (3                       | )    | (3 | )    | (3  | )
|Disposals                           |                         |      |   |      | (10 | )
|                                    |                          |      |    |      |     |  
|Goodwill, net, at December
      31 | 60                       |      | 63 |      | 66  |  
|                                    |                          |      |    |      |     |  

F-30

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Back to Contents

| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS  (Continued)

|(b) | Changes in intangible assets, net
|--- | ---------------------------------

|                                          |                                   |   |       |   |        |  
|----------------------------------------- | --------------------------------- | - | ----- | - | ------ | -
|                                          | Market
      share and trademarks |   | Other |   | Total  |  
|                                          |                                   |   |       |   |        |  
|                                          | (in
      million euros)          |  
|At January 1, 2000                        | 877                               |   | 343   |   | 1, 220 |  
|Additions                                 | 76                                |   | 79    |   | 155    |  
|Disposals                                 | (52                               | ) | (28   | ) | (80    | )
|Other changes                             | 9                                 |   | (25   | ) | (16    | )
|Translation adjustments                   | (7                                | ) | 5     |   | (2     | )
|                                          |                                   |   |       |   |        |  
|At December 31, 2000                      | 903                               |   | 374   |   | 1, 277 |  
|Accumulated amortization                  |                                  |   | (150  | ) | (150   | )
|                                          |                                   |   |       |   |        |  
|Net book value at December
      31, 2000 | 903                               |   | 224   |   | 1, 127 |  
|                                          |                                   |   |       |   |        |  
|At January 1, 2001                        | 903                               |   | 374   |   | 1,277  |  
|Additions                                 | 2,070                             |   | 100   |   | 2,170  |  
|Disposals                                 | (1                                | ) | (24   | ) | (25    | )
|Other changes                             | (13                               | ) | 32    |   | 19     |  
|Translation adjustments                   | (10                               | ) | 4     |   | (6     | )
|                                          |                                   |   |       |   |        |  
|At December 31, 2001                      | 2,949                             |   | 486   |   | 3,435  |  
|Accumulated amortization                  |                                  |   | (210  | ) | (210   | )
|                                          |                                   |   |       |   |        |  
|Net book value at December
      31, 2001 | 2,949                             |   | 276   |   | 3,225  |  
|                                          |                                   |   |       |   |        |  
|At January 1, 2002                        | 2,949                             |   | 486   |   | 3,435  |  
|Additions                                 | 6                                 |   | 52    |   | 58     |  
|Disposals                                 | (58                               | ) | (56   | ) | (114   | )
|Other changes                             | (42                               | ) | 6     |   | (36    | )
|Translation adjustments                   | (252                              | ) | (33   | ) | (285   | )
|                                          |                                   |   |       |   |        |  
|At December 31, 2002                      | 2,603                             |   | 455   |   | 3,058  |  
|Accumulated amortization                  |                                  |   | (223  | ) | (223   | )
|                                          |                                   |   |       |   |        |  
|Net book value at December
      31, 2002 | 2,603                             |   | 232   |   | 2,835  |  
|                                          |                                   |   |       |   |        |  

F - 31

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS  (Continued)

|(c) | Acquisitions
|--- | ------------

|  |                                  
|- | ---------------------------------
| | Acquisition of Kedah Cement Group

In December 2002, the Company through
  its 60.83% owned subsidiary Malayan Cement Berhad (MCB), acquired the remaining
  22.59% equity interest in the Kedah Cement group not already owned by MCB, for
  approximately 57 million euros. Kedah Cement is a group based in Malaysia and
  engaged in the production of cement.

This transaction has been accounted for using the purchase method of accounting. The resulting goodwill arising from this transaction was 37 million euros.

| | Acquisition of Cementia Holding AG minorities
|- | ---------------------------------------------

In May 2002, Lafarge proposed to acquire the residual 2.95% interest in the shares of its subsidiary Cementia Holding AG, a Swiss publicly-traded company, pursuant to an offer to exchange shares and a minority interest buyout as required by Swiss law. The Company issued 453,838 new shares, with a fair value of 49 million euros for all the outstanding shares. As a consequence, the Company owns 100% of Cementia Holding AG shares as of December, 31 2002.

This transaction has been accounted for using the purchase method of accounting. The resulting goodwill arising from this transaction was 19 million euros.

| | Acquisition of Cementarna Trbovlje
|- | ----------------------------------

In April and November 2002, our wholly owned Austrian subsidiary, Lafarge Perlmooser acquired an additional 76.9% of Cementarna Trbovlje, increasing its interest to 99.80%. The purchase price totaled 40 million euros.

This transaction has been accounted for using the purchase method of accounting. The purchase price, at December 31, 2002, has been allocated as follows (in million euros):

|                                            |    | 
|------------------------------------------- | -- | 
|Purchase
      price                        | 40 | 
|Fair value
      of the net assets acquired | 39 | 
|                                            |    | 
|Goodwill,
      net                         | 1  | 
|                                            |    | 

| | Acquisition of Beocinska Fabrika Cementa
|- | ----------------------------------------

In April 2002, in connection with the Serbian government’s privatization policy, the Company acquired a 69.4% interest in the Beocinska Fabrika Cementa company for 60 million euros.

This transaction has been accounted for using the purchase method of accounting. The purchase price, at December 31, 2002, has been allocated as follows (in million euros):

|                                            |    | 
|------------------------------------------- | -- | 
|Purchase price                              | 60 | 
|Fair value of the net assets
      acquired | 12 | 
|                                            |    | 
|Goodwill, net                               | 48 | 
|                                            |    | 

Subsequently to the acquisition, the Company sold 49.98% of its interest in 2002. The Company’s indirect ownership interest at December 31, 2002 is 34.72%.

| | Acquisition of PT Semen Andalas Indonesia
|- | -----------------------------------------

In January 2002, the Company acquired
  for approximately 11 million euros, an additional 12.33% interest in PT Semen
  Andalas Indonesia, a company based in Indonesia and engaged in the production
  of cement. Previously, the Company held an 87.66% interest in PT Semen Andalas
  Indonesia. Following the transaction, the Company’s interest increased
  to 99.99%.

F - 32

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  – (Continued)

This transaction has been accounted for using the
  purchase method of accounting. The resulting goodwill arising from this transaction
  was 7 million euros.

| | Acquisition of Continental Gypsum
|- | ---------------------------------

In January 2002, Lafarge North America acquired Continental Gypsum. Continental Gypsum is an independent drywall manufacturer, based in Newark, New Jersey. The purchase price for the Continental Gypsum plant and other assets was approximately 32 million euros.

This transaction has been accounted
  for using the purchase method of accounting. The purchase price, at December
  31, 2002, has been allocated as follows (in million euros):

|                                            |    | 
|------------------------------------------- | -- | 
|Purchase price                              | 32 | 
|Fair value of the net assets
      acquired | 20 | 
|                                            |    | 
|Goodwill, net                               | 12 | 
|                                            |    | 



| | Acquisition of Blue Circle Industries Plc
|- | -----------------------------------------

On July 11, 2001, pursuant to a merger agreement between the Company and the Board of Directors of Blue Circle Industries Plc (BCI) dated January 8, 2001, which was approved by the shareholders of Blue Circle on February 19, 2001, and after the completion of regulatory approvals in Europe and North America, the Company consummated the acquisition of Blue Circle, an international producer of cement and related construction materials headquartered and publicly listed in the United Kingdom.

The Company initiated this acquisition
  when it acquired approximately 20% of the common stock of Blue Circle, in April 2000,
  through an unsolicited tender offer which was subsequently rejected by the shareholders
  of Blue Circle. In conjunction with that offer, Dresdner Bank (“Dresdner”)
  acquired, for its own account, approximately 10% of BCI’s outstanding
  common stock. Based upon a contractual agreement between the Company and Dresdner,
  any profits resulting from Dresdner’s disposal of its holding in BCI’s
  common stock were to be shared between Dresdner and the Company.

|Total consideration for the acquisition
      of Blue Circle amounted to 5,322 million euros at December 31, 2002 (5,280
      million euros at December 31, 2001). It mainly includes:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                       

| |  the shares acquired in 2001
      for 3,804 million euros (net of cash acquired),
| | -----------------------------------------------------------------------------------

| |  the cash acquired for 248
      million euros,
| | ------------------------------------------------

| |  additional minority interests
      acquisition for 147 million euros
| | -----------------------------------------------------------------------

It was substantially financed from the proceeds of the February 9, 2001 rights offering (Note 20 (b)), the issuance of a convertible note (Note 25), the Company’s short term credit facilities and short term borrowings.

The acquisition was accounted for using the purchase method of accounting with the results of operations of BCI, other than those entities referred to below, included in the Company’s consolidated statements of income from the date of acquisition.

As a consequence of the regulatory
  approval process in North America, the Company was required by the Canadian
  Competition Bureau and by the U.S. Federal Trade Commission to dispose of certain
  Blue Circle operations in Canada and in the United States, primarily in the
  Great Lakes region. The Company, for accounting purposes, has treated these
  assets as held for sale from the date of acquisition. The results of operations
  associated with these entities, for the period from acquisition to disposal,
  are not reflected in the Company’s consolidated income statement.

F - 33

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  – (Continued)

The carrying value of these assets on acquisition was recorded at an amount which reflected the expected proceeds of disposition after taking into consideration the net effect of operations during the hold period and interest costs associated with the incremental borrowings related to the acquisition of these entities. As a consequence of the above accounting, no gain or loss was recorded on the disposal of these operations subsequent to the acquisition date. These dispositions have resulted in net proceeds to the Company of 882 million euros which was used to reduce the Company debt at December 31, 2001.

All required dispositions resulting from the rulings of the Canadian and American regulatory authorities were completed as of December 31, 2001.

Restructuring provision

Management has adopted formal plans to reduce the capacity of specific operations acquired as well as its own operations. These costs most significantly relate to impairment charges, employee relocation and severance, facility closure costs, and contract terminations. In some regions, the acquisition resulted in overcapacity for the combined entities. In order to reduce overcapacity, some plants owned by the Company before the acquisition were closed. Future costs associated with the cessation of these activities are recorded as obligations related to the acquisition and included in the cost of acquisition.

Purchase price allocation

In 2002, the Company finalized the allocation of the purchase price. The purchase price has been allocated as follows (in million euros):

|                                            | At
      December 31, |  
|------------------------------------------- | --------------------- | -
|                                            |                       |  
|                                            | 2001                  |  
|                                            |                       |  
|                                            |                       |  
|Purchase price                              | 5,280                 |  
|Intangible assets (Market share)            | (1,995                | )
|Property, plant and equipment               | (5,445                | )
|Inventories, net                            | (464                  | )
|Accounts receivable-trade, net              | (738                  | )
|Other receivables                           | (201                  | )
|Cash and cash equivalents                   | (248                  | )
|Minority interests                          | 635                   |  
|Provisions                                  | 761                   |  
|Long term debt                              | 746                   |  
|Accounts payable, trade                     | 381                   |  
|Other payables                              | 627                   |  
|Current liabilities                         | 2,737                 |  
|Fair value of the net assets
      acquired | (3,204                | )
|                                            |                       |  
|Goodwill, net                               | 2,076                 |  
|                                            |                       |  

F - 34

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

|• | Acquisition of Cementos El Monte
|- | --------------------------------

On September 8, 2001, the Company acquired 100% of Cementos El Monte for a total consideration of 43 million euros. The company owns grinding plants in the South of Spain. Cementos El Monte is fully consolidated since September 8, 2001.

Cementos El Monte has been accounted for using the purchase method of accounting. The purchase price, at December 31, 2001, has been allocated as follows (in million euros):

|                                            |     |  
|------------------------------------------- | --- | -
|Purchase price                              | 43  |  
|Fair value of the net assets
      acquired | (15 | )
|                                            |     |  
|Goodwill                                    | 28  |  
|                                            |     |  

In conjunction with a disposal plan the Company sold its entire interest in Cementos El Monte in December 2002.

| | Acquisition of Kloeber
|- | ----------------------

On September 4, 2001, the Company announced the acquisition of the Kloeber Group, a German manufacturer of roofing components. Kloeber owns two plants in Germany, a joint venture in South Africa and distribution channels in various European countries. The purchase price totaled 16 million euros.

This transaction has been accounted for using the purchase method of accounting. The purchase price, at December 31, 2001, has been allocated as follows (in million euros):

|                                            |    |  
|------------------------------------------- | -- | -
|Purchase price                              | 16 |  
|Fair value of the net assets
      acquired | (6 | )
|                                            |    |  
|Goodwill                                    | 10 |  
|                                            |    |  
|                                            |    |  

| | Acquisition of Pan African Cement Limited
|- | -----------------------------------------

At the end of April 2001, the Company acquired, jointly with Blue Circle Industries, 100% of Pan African Cement Ltd (PAC). PAC owns 84% of Chilanga Cement in Zambia, 75.2% of Portland Cement in Malawi and 63% of Mbeya Cement in Tanzania. These three companies are fully consolidated since April 2001 and have been accounted for using the purchase method of accounting.

The purchase price, at December 31, 2001, has been allocated as follows (in million euros):

|                                            |     |  
|------------------------------------------- | --- | -
|Purchase price                              | 52  |  
|Fair value of the net assets
      acquired | (23 | )
|Market share                                | (23 | )
|                                            |     |  
|Goodwill                                    | 6   |  
|                                            |     |  

|  |                                                            
|- | -----------------------------------------------------------
| | Acquisition of the Cement division of
      Raymond Limited

On August 26, 2000, the Company signed an agreement with Raymond Ltd, to acquire a cement plant located in the East of India. The acquisition of 65.26% became effective on January 22, 2001 for a total consideration of 112 million euros.

Raymond is fully consolidated since January 2001. This transaction has been accounted for using the purchase method of accounting. The purchase price, at December 31, 2001, has been allocated as follows (in million euros):

|                                            |     |  
|------------------------------------------- | --- | -
|Purchase price                              | 112 |  
|Fair value of the net assets
      acquired | (72 | )
|Market share                                | (37 | )
|                                            |     |  
|Goodwill                                    | 3   |  
|                                            |     |  

On December 31, 2001, the Company
  has increased its interests in Raymond assets (merged with Tisco assets) to
  73.13 %. This additional acquisition has resulted in a goodwill of 12 million
  euros.

F - 35

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

| | Acquisition of the Warren Paving Materials Group Limited ("Warren")
|- | -------------------------------------------------------------------

In October 2000, the Company acquired
  Warren, a Kilmer Van Nostrand Co. Limited's wholly owned subsidiary, for a total
  consideration of 280 million euros in cash and preferred stock. Warren is a
  supplier of construction aggregates and provides asphalt and paving services
  in five Canadian provinces.

This transaction has been accounted for using the purchase method of accounting.

The purchase price, at December 31, 2001, has been allocated as follows (in million euros):

|                              |      |  
|----------------------------- | ---- | -
|Purchase price                | 280  |  
|Property, plant and equipment | (173 | )
|Working capital               | (44  | )
|Long-term liabilities         | 48   |  
|                              |      |  
|Goodwill                      | 111  |  
|                              |      |  

|  |                                        
|- | ---------------------------------------
| | Acquisition of Presque Isle Corporation

In June, 2000, the Company, through its 54% owned subsidiary Lafarge North America, formerly Lafarge Corporation, acquired 100% of Presque Isle Corporation, a Michigan-based company engaged in the production of aggregates for a total cash consideration of approximately 67 million euros.

This transaction has been accounted for using the purchase method of accounting.

The purchase price, at December 31, 2001, has been allocated as follows (in million euros):

|                             |     |  
|---------------------------- | --- | -
|Purchase price               | 67  |  
|Property plant and equipment | (40 | )
|Working capital              | 16  |  
|Long term liabilities        | 6   |  
|                             |     |  
|Goodwill                     | 49  |  
|                             |     |  

|  |                                 
|- | --------------------------------
| | Acquisition of La Habra Products

In June 2000, the Company acquired 100% of La Habra Products a company based in the United States engaged in the production of stucco products. Total cash consideration was 26 million euros. The Company has accounted for this transaction using the purchase method of accounting. The allocation of the purchase price resulted in a step-up primarily to fixed assets of 8 million euros and a goodwill of 13 million euros. Since the majority of the Specialty Products Division was sold on December 2000, the Company has no majority interests.

| | Acquisition of Baldini
|- | ----------------------

In March 2000, the Company acquired 100% of Baldini, a company based in Italy engaged in the production of paint products. The total cash consideration was 19 million euros. The Company has accounted for this transaction using the purchase method of accounting. The purchase price allocation resulted in 8 million euros being allocated to trademarks not previously valued and 11 million euros to goodwill. Since the majority of the Specialty Products Division was sold on December 2000, the Company has no majority interests.

F - 36

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  – (Continued)

|• | Acquisition of Beni Suef Cement Company
|- | ---------------------------------------

In February, 2000, the Company acquired
  for cash consideration of approximately 15 million euros, an additional 9.5%
  interest in the former Beni Suef cement facilities, following a former acquisition
  of shares made jointly with the cement Greek group Titan, for cash consideration
  of approximately 57 million euros. In July 1999, the Company's share of this
  investment increased to 47.5% and was subsequently accounted for on the proportionate
  consolidation method.This transaction has been accounted for using
  the purchase method of accounting.The purchase price, at December 31, 2001, has been
  allocated as follows (in million euros):

|                                    |     |  
|----------------------------------- | --- | -
|Purchase price                      | 72  |  
|Market share                        | (60 | )
|Property, plant
      and equipment | (71 | )
|Debt                                | 94  |  
|Working capital                     | (16 | )
|Cash and cash equivalents           | (20 | )
|Provisions                          | 1   |  
|                                    |     |  
|Goodwill                            |    |  
|                                    |     |  



| | Acquisition of RH Cement Corporation renamed
      Lafarge Halla Cement
|- | -----------------------------------------------------------------------

In January, 2000, the Company acquired for a total cash consideration of approximately 110 million euros, 39.9 % of RH Cement Corporation, a company based in Korea and engaged in the production of cement. Lafarge Halla Cement is consolidated under the proportionate consolidation method.

This transaction has been accounted for using the purchase method of accounting.

The allocation of the purchase price to the individual assets and liabilities purchased resulted in a step-up primarily to fixed assets of 96 million euros. The Company did not record an asset for market share or goodwill in connection with this acquisition.

| | Other acquisitions
|- | ------------------

In addition to the acquisitions described separately in this Note, several other relatively minor acquisitions in all of the Company’s segments were consummated in 2002, 2001 and 2000. All such acquisitions were accounted for using the purchase method of accounting. The aggregate cost of these acquisitions was 88 million euros, 377 million euros and 83 million euros in 2002, 2001 and 2000, respectively.

|(d) | Pro forma information
|--- | ---------------------

The table below reflects unaudited pro forma combined results of the Company as if acquisitions had taken place at the beginning of each period presented:

|                                | Years
        ended December 31,                 | 
|------------------------------- | ------------------------------------------------ | 
|                                |                                                  | 
|                                | 2002                                             | 
|                                |                                                  | 
|                                | (in
        million euros except per share data) | 
|Sales                           | 14,617                                           | 
|Net
      income                | 455                                              | 
|Earnings per share              | 3.51                                             | 
|Diluted
      earning per share | 3.49                                             | 

The pro-forma results are for illustrative purposes only and are not necessarily indicative of the operating results that would have occurred had the business acquisitions been consummated at that date, nor are they necessarily indicative of future operating results.

A detailed presentation of Blue Circle pro forma information is included in Note 5.

F-37

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  – (Continued)

Note 12  Property, Plant
  and Equipment, Net

|(a) | Changes in property, plant and equipment
|--- | ----------------------------------------



|                                          |                                
|----------------------------------------- | -------------------------------
|                                          | Mineral
      reserves and land
|                                          |                                
|                                          | (in
        million euros)     
|At January
      1, 2000                  | 1,569                          
|Additions                                 | 61                             
|Disposals                                 | (21                            
|Change in scope of consolidation          | 144                            
|Other changes                             | 45                             
|Translation adjustments                   | 28                             
|                                          |                                
|At December
      31, 2000                | 1,826                          
|Accumulated depreciation                  | (200                           
|                                          |                                
|Net book
      value at December 31, 2000 | 1,626                          
|                                          |                                
|                                          |                                
|At January
      1, 2001                  | 1,826                          
|Additions                                 | 55                             
|Disposals                                 | (72                            
|Change in scope
      of consolidation    | 369                            
|Other changes                             | 46                             
|Translation
      adjustments             | 20                             
|                                          |                                
|At December 31, 2001                      | 2,244                          
|Accumulated depreciation                  | (269                           
|                                          |                                
|Net book value at December
      31, 2001 | 1,975                          
|                                          |                                
|                                          |                                
|At January
      1, 2002                  | 2,244                          
|Additions                                 | 17                             
|Disposals                                 | (90                            
|Change in scope of consolidation          | (9                             
|Other changes                             | 84                             
|Translation adjustments                   | (276                           
|                                          |                                
|At December
      31, 2002                | 1,970                          
|Accumulated depreciation                  | (280                           
|                                          |                                
|Net book
      value at December 31, 2002 | 1,690                          
|                                          |                                

|(b) | Depreciation of property, plant and equipment
|--- | ---------------------------------------------

Depreciation on property plant and
  equipment is as follows:

|                   | Years
      ended December 31, | 
|------------------ | ------------------------------ | 
|                   |                                | 
|                   | 2002                           | 
|                   |                                | 
|                   | (in
      million euros)       | 
|Depreciation       | 897                            | 
|Impairment charges | 48                             | 
|                   |                                | 
|Total              | 945                            | 
|                   |                                | 

F-38

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  – (Continued)

|(c) | Capital leases
|--- | --------------

The gross value of property, plant and equipment includes 21 million euros, 37 million euros and 41 million euros of assets under capital leases for the years ended December 31, 2002, 2001 and 2000, respectively. The remaining obligations on such assets total 14 million euros, 20 million euros and 22 million euros for the years ended December 31, 2002, 2001 and 2000, respectively.

Note 13  Investments in Equity Affiliates

|(a) | Changes in the balance of equity affiliates
|--- | -------------------------------------------



|                                                            |                            |  
|----------------------------------------------------------- | -------------------------- | -
|                                                            | 2002                       |  
|                                                            |                            |  
|                                                            | (in
        million euros) |  
|                                                            |                            |  
|Balance of equity affiliates
      at January 1             | 439                        |  
|Share in net income of affiliates                           | 33                         |  
|Dividends received from equity
      affiliates             | (16                        | )
|New investments or share capital
      increases            | 88                         |  
|Disposals and reduction in ownership
      percentage       | (22                        | )
|Change from equity method to
      consolidation            | (20                        | )
|Change from consolidation method
      to equity            |                           |  
|Other changes (*) (including
      translation adjustments) | 150                        |  
|                                                            |                            |  
|Balance of equity affiliates
      at December 31           | 652                        |  
|                                                            |                            |  

(*) Includes 240 million euros generated by BCI opening balance sheet finalization

|(b) | Summarized combined balance sheet and income statement information of equity affiliates
|--- | ---------------------------------------------------------------------------------------

Combined balance sheet information

|                                                 |       |  | At
      December 31,    | 
|------------------------------------------------ | ----- |  | ------------------------ | 
|                                                 |       | 
|                                                 | 2002  |  | 2001                     | 
|                                                 |       |  |                          | 
|                                                 |       |  | (in
      million euros) | 
|                                                 |       |  |                          | 
|                                                 | Total |  | Of
      whichMolins     | 
|                                                 |       |  |                          | 
|Long-term assets                                 | 3,802 |  | 318                      | 
|Current assets                                   | 1,656 |  | 367                      | 
|                                                 |       |  |                          | 
|Total assets                                     | 5,458 |  | 685                      | 
|                                                 |       |  |                          | 
|Total equity                                     | 2,182 |  | 338                      | 
|Long-term liabilities                            | 2,061 |  | 164                      | 
|Current liabilities                              | 1,215 |  | 183                      | 
|                                                 |       |  |                          | 
|Total shareholders’
      equity and liabilities | 5,458 |  | 685                      | 
|                                                 |       |  |                          | 

Combined income statement information

|                                              | Years
        ended December 31, | 
|--------------------------------------------- | -------------------------------- | 
|                                              |                                  | 
|                                              | 2002                             | 
|                                              |                                  | 
|                                              | (in
        million euros)       | 
|Sales                                         | 3,504                            | 
|Operating income on ordinary
      activities | 452                              | 
|Operating income                              | 405                              | 
|Net income                                    | 86                               | 

F - 39

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  – (Continued)

Note 14  Other Investments

Components of other investments are as follows:

|                                                      | At
        December 31,    | 
|----------------------------------------------------- | -------------------------- | 
|                                                      |                            | 
|                                                      | 2002                       | 
|                                                      |                            | 
|                                                      | (in
        million euros) | 
|                                                      |                            | 
|Blue Circle (1)                                       |                           | 
|Cimpor                                                | 319                        | 
|Other investments in non-consolidated
      companies | 143                        | 
|Long-term equity investments                          |                           | 
|                                                      |                            | 
|Total                                                 | 462                        | 
|                                                      |                            | 

(1) Notes 5 and 11 (c)

|(a) | Cimpor
|--- | ------

At December 31, 2002, Lafarge owns 13,433,000 shares of the Portuguese cement producer Cimpor, which represents 9.99% of its common shares. The market value of these shares amounted to 215 million euros based upon the stock market price at December 31, 2002.

|(b) | Long term equity investments
|--- | ----------------------------

Long-term equity investments represent interests of between 0.5% and 3% in several listed companies. Changes in the balance of long-term equity investments are as follows:

|                               |                              |  
|------------------------------ | ---------------------------- | -
|                               | Gross
      book
      value |  
|                               |                              |  
|                               | (in
        million euros)   |  
|At January 1, 2000             | 120                          |  
|Net disposals                  | (10                          | )
|Change in net realizable value |                             |  
|                               |                              |  
|At December 31, 2000           | 110                          |  
|Net disposals                  | (110                         | )
|Change in net realizable value |                             |  
|                               |                              |  
|At December 31, 2001           |                             |  
|                               |                              |  
|At December 31, 2002           |                             |  
|                               |                              |  

Note 15  Long Term Receivables

|                         | At
        December 31,     | 
|------------------------ | --------------------------- | 
|                         |                             | 
|                         | 2002                        | 
|                         |                             | 
|                         | (
        in million euros) | 
|Prepaid pension expenses | 617                         | 
|Other                    | 302                         | 
|                         |                             | 
|Long term receivables    | 919                         | 
|                         |                             | 

F - 40

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

Note 16  Inventories

Components of inventories are as follows:

|                                   | At
      December 31,      |     
|---------------------------------- | -------------------------- | ----
|                                  
|2002                               |                            | 2001
|                                   |                            |     
|                                   | (in
        million euros) |     
|Raw materials                      | 327                        |     
|Work-in-progress                   | 178                        |     
|Finished and semi-finished goods   | 632                        |     
|Maintenance and operating supplies | 611                        |     
|                                   |                            |     
|Inventories, gross                 | 1,748                      |     
|Valuation allowance                | (157                       | )   
|                                   |                            |     
|Inventories, net                   | 1,591                      |     
|                                   |                            |     

Note 17  Accounts Receivable-Trade, Net

Components of accounts receivable-trade, net are as follows:

|                               | At
        December 31,    |     
|------------------------------ | -------------------------- | ----
|                              
|2002                           |                            | 2001
|                               |                            |     
|                               | (in
        million euros) |     
|Accounts receivable-trade      | 2,019                      |     
|Valuation allowance            | (203                       | )   
|                               |                            |     
|Accounts receivable-trade, net | 1,816                      |     
|                               |                            |     

The change in the valuation allowance for doubtful receivables is as follows:

|                        |                            |     
|----------------------- | -------------------------- | ----
|2002                    |                            | 2001
|                        |                            |     
|                        | (in
        million euros) |     
|At January 1            | (221                       | )   
|Current year addition   | (105                       | )   
|Current year release    | 77                         |     
|Cancellation            | 22                         |     
|Other changes           |                           |     
|Translation adjustments | 24                         |     
|                        |                            |     
|At December 31          | (203                       | )   
|                        |                            |     

In January 2000, the Company entered
  into multi-year securitization agreements with respect to trade receivables,
  without recourse. Accounts receivable are presented net of securitized receivables
  of 399 million euros, 438 million euros and 410 million euros at December 31,
  2002, 2001 and 2000, respectively.

The agreements are guaranteed by subordinated
  deposits classified in long-term receivables for 85 million euros, 125 million
  euros and 66 million euros at December 31, 2002, 2001 and 2000, respectively.

F - 41

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

Note 18  Other Receivables

Components of other receivables are as follows:

|                          | At December 31,    | 
|------------------------- | ------------------ | 
|                          |                    | 
|                          | 2002               | 
|                          |                    | 
|                          | (in million euros) | 
|Other taxes               | 202                | 
|Prepaid expenses          | 93                 | 
|Interest receivables      | 10                 | 
|Other current receivables | 650                | 
|                          |                    | 
|Other receivables         | 955                | 
|                          |                    | 

Note 19  Cash and Cash Equivalents

In order to give a true and fair view
  of the accounts, in accordance with Article L. 123-14 (formerly Art. 9) of the
  French Commercial Code for the year ended December 31, 2000, the Company included
  in cash and cash equivalents a receivable of 667 million euros representing
  the cash received on January 22, 2001, related to the sale of the major part
  of the Specialty Products Division. The agreement between the Company and the
  counterpart to the sale was effectively a note with a 30-day maturity period.
  Due to the imminent maturity of the note, the Company believes that the presentation
  as a cash equivalent more accurately depicts its financial position at December
  31, 2000. This presentation is consistent with that of previous major acquisitions
  occurring immediately prior to and after the end of the Company’s year.

F - 42

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED
  FINANCIAL STATEMENTS – (Continued)

Note 20  Shareholders’ Equity

|**(a)** | Common stock
|------- | ------------

At December 31, 2002, Lafarge common
  stock comprised 132,880,433 shares with a stated value of 4 euros each.At
  December 31, 2002, voting rights attributed to the outstanding shares totaled
  141,566,324 , after inclusion of the double voting rights attached to registered
  shares held at least two years and cancellation of the voting rights associated
  with treasury stock.

|**(b)** | Stock rights issue
|------- | ------------------

On June 11, 2002, the Company issued
  708,718 shares pursuant to its employee stock purchase plan. Proceed totaled
  approximately 45 million euros, net of issuance costs.

On February 9, 2001, the Company issued
  stock rights in a 1 for 8 underwritten rights offering to shareholders at a
  price of 80 euros per share. These rights were subsequently converted to 14,110,592
  shares. The total proceeds from this offering, net of issuance costs, approximated
  1,113 million euros.

|**(c)** | Warrants
|------- | --------

At December 31, 2000, the Company
  had 8,279,784 warrants outstanding. These warrants resulted from the issuance,
  on March, 20, 2000, of debt redeemable in shares. The warrants were convertible
  into common stock of the Company at a conversion ratio of 4 warrants per common
  share and expired on March 20, 2001. The warrants were converted into approximately
  2,098,811 common shares.

|**(d)** | Public exchange offer Cementia
|------- | ------------------------------

On May 14, 2002 , the Company tendered
  a public exchange offer for all the outstanding shares of its Swiss publicly-traded
  subsidiary Cementia Holding AG. The offer consisted of exchange of 1 share or
  1 warrant for 11 shares of the Company.

The offer resulted in the issuance
  of 401,775 Lafarge shares at 104.94 euros each, with a total market value of
  approximately 42.2 million euros.

Following
  the public exchange offer and in accordance with the Swiss law, the company
  initiated a minority interest buyout to acquire the remaining outstanding shares.As a result, 52,063 additional shares were
  issued with a total market value of approximately 5.5 million euros.

Note 21  Minority Interests

|                                                            |                          |  
|----------------------------------------------------------- | ------------------------ | -
|                                                            | 2002                     |  
|                                                            |                          |  
|                                                            | (in million
      euros) |  
|At January 1                                                | 2,551                    |  
|Share of net income                                         | 273                      |  
|Translation adjustments                                     | (368                     | )
|Dividends paid                                              | (91                      | )
|Other changes                                               | (210                     | )
|Effect of the change in accounting
      for deferred taxes |                         |  
|                                                            |                          |  
|At December 31                                              | 2,155                    |  
|                                                            |                          |  

Note 22  Other Equity

Other equity includes investment subsidies.

F - 43

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Back to Contents

| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

Note 23  Provisions

|(a) | Changes in the balance of provisions
|--- | ------------------------------------

|                                 |                                                              |   |                                |   |                                                          |   |                        |   |       |  
|-------------------------------- | ------------------------------------------------------------ | - | ------------------------------ | - | -------------------------------------------------------- | - | ---------------------- | - | ----- | -
|                                 |                                                              |   |                                |   |                                                          |   |                        |   |       |  
|                                 | Pensions
      andother
      post-retirement
      benefits |   | Restructuring
      provisions |   | Site
      restorationand environmental
      provisions |   | Other
      provisions |   | Total |  
|                                 |                                                              |   |                                |   |                                                          |   |                        |   |       |  
|                                 | (in
      million euros)                                     |  
|At January 1,
      2000         | 587                                                          |   | 95                             |   | 190                                                      |   | 296                    |   | 1,168 |  
|Current year addition,
      net | 74                                                           |   | 28                             |   | 22                                                       |   | 79                     |   | 203   |  
|Current year release             | (56                                                          | ) | (52                            | ) | (32                                                      | ) | (77                    | ) | (217  | )
|Other changes                    | (19                                                          | ) | 27                             |   | 9                                                        |   | 40                     |   | 57    |  
|Translation adjustments          | 13                                                           |   | 3                              |   | 1                                                        |   |                       |   | 17    |  
|                                 |                                                              |   |                                |   |                                                          |   |                        |   |       |  
|At December 31,
      2000       | 599                                                          |   | 101                            |   | 190                                                      |   | 338                    |   | 1,228 |  
|                                 |                                                              |   |                                |   |                                                          |   |                        |   |       |  
|Current year addition,
      net | 88                                                           |   | 39                             |   | 42                                                       |   | 136                    |   | 305   |  
|Current year release             | (80                                                          | ) | (148                           | ) | (42                                                      | ) | (217                   | ) | (487  | )
|Other changes                    | 164                                                          |   | 219                            |   | (8                                                       | ) | 259                    |   | 634   |  
|Translation adjustments          | 7                                                            |   |                               |   | 2                                                        |   | (1                     | ) | 8     |  
|                                 |                                                              |   |                                |   |                                                          |   |                        |   |       |  
|At December 31,
      2001       | 778                                                          |   | 211                            |   | 184                                                      |   | 515                    |   | 1,688 |  
|                                 |                                                              |   |                                |   |                                                          |   |                        |   |       |  
|Current year addition,
      net | 105                                                          |   | 45                             |   | 46                                                       |   | 395                    |   | 591   |  
|Current year release             | (95                                                          | ) | (179                           | ) | (37                                                      | ) | (86                    | ) | (397  | )
|Other changes                    | 8                                                            |   | 94                             |   | 28                                                       |   | 61                     |   | 191   |  
|Translation adjustments          | (74                                                          | ) | (17                            | ) | (16                                                      | ) | (44                    | ) | (151  | )
|                                 |                                                              |   |                                |   |                                                          |   |                        |   |       |  
|At December 31,
      2002       | 722                                                          |   | 154                            |   | 205                                                      |   | 841                    |   | 1,922 |  
|                                 |                                                              |   |                                |   |                                                          |   |                        |   |       |  

|    |                                                                                
|--- | -------------------------------------------------------------------------------
|(b) | Pension plans, end of service benefits
      and other post retirement benefits

The Company sponsors both defined
  benefit and defined contribution plans, in accordance with local legal requirements
  and each specific subsidiaries benefit policies.

For defined contribution plans, the Company’s obligations are limited to periodic payments to third party organizations, which are responsible for the financial and administrative management of the funds.

Only defined benefit plans create future obligations for the Company. Defined benefit pension plans and end of service benefits constitute 93% of the Company’s post-retirement obligations while the remaining 7% relates to other post retirement benefits mainly post employment medical plans. For these plans, the Company’s obligations are estimated with the assistance of independent actuaries using assumptions, which may vary over time. The obligations related to these plans are often funded through Company and employee contributions to third party legal entities and are then invested in equity and bond portfolios, which are subject to fluctuations in the financial markets.

The following schedule shows the accounting treatment for defined benefit pension plans and end of service benefits under the column “pension benefits” and the accounting treatment for other post retirement benefits under the column “other benefits”.

F - 44

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Back to Contents

| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

|                                                                           | At
      December 31,    |    
|-------------------------------------------------------------------------- | ------------------------ | ---
|                                                                           |                          |    
|                                                                           | Pension
      benefits   |    
|                                                                           |                          |    
|                                                                           | 2002                     |    
|                                                                           |                          |    
|                                                                           | (in
      million euros) |    
|AMOUNTS RECOGNIZED IN THE
      STATEMENT OF FINANCIAL POSITION CONSIST OF |                          |    
|Prepaid pension
      asset                                                | 617                      |    
|Accrued pension
      liability                                            | (478                     | )  
|Net amount
      recognized at end period                                  | 139                      |    
|                                                                           |                          |    
|COMPONENTS OF NET PERIODIC
      PENSION COST                              |                          |    
|Prior service
      cost                                                   | 98                       |    
|Interest cost                                                              | 226                      |    
|Expected return
      on plan assets                                       | (281                     | )  
|Amortization of prior service
      cost                                   | 3                        |    
|Amortization
      of transition (asset) obligation                        | 1                        |    
|Amortization of actuarial (gain)
      loss                                | 7                        |    
|Actuarial (gain)
      loss                                                | 10                       |    
|Special termination benefits                                               | 1                        |    
|Curtailment
      (gain) loss                                              |                         |    
|Settlement (gain) loss                                                     | (5                       | )  
|Divestitures                                                               |                         |    
|Net periodic pension cost                                                  | 60                       |    
|                                                                           |                          |    
|CHANGE IN PROJECTED BENEFIT
      OBLIGATION                               |                          |    
|Projected
      benefit obligation at January 1                            | 4,206                    |    
|Foreign currency translations                                              | (324                     | )  
|Service cost                                                               | 98                       |    
|Interest cost                                                              | 226                      |    
|Employee contributions                                                     | 11                       |    
|Plan amendments                                                            | 15                       |    
|Curtailments                                                               |                         |    
|Settlements                                                                | (21                      | )  
|Business combinations                                                      | 3                        |    
|Divestitures                                                               |                         |    
|Special termination
      benefits                                         | 1                        |    
|Benefits paid                                                              | (236                     | )  
|Actuarial (gain)
      loss                                                | (87                      | )  
|Projected benefit obligation
      at December 31                          | 3,892                    |    
|                                                                           |                          |    
|CHANGE IN PLAN ASSETS                                                      |                          |    
|Fair value
      of plan assets at January 1                               | 3,842                    |    
|Foreign currency translations                                              | (309                     | )  
|Actual return
      on plan assets                                         | (396                     | )  
|Employer contributions                                                     | 105                      | (a)
|Employee contributions                                                     | 11                       |    
|Benefits paid                                                              | (236                     | )  
|Settlements                                                                | (21                      | )  
|Business combinations                                                      |                         |    
|Divestitures                                                               |                         |    
|Administrative expenses                                                    | (5                       | )  
|Fair value
      of plan assets at December 31                             | 2,991                    |    
|                                                                           |                          |    
|RECONCILIATION OF PREPAID
      (ACCRUED) BENEFIT COST                     |                          |    
|Funded status of the plan                                                  | (901                     | )  
|Unrecognized actuarial (gain)
      loss                                   | 1,019                    |    
|Unrecognized actuarial transition
      (asset) obligation                 | 1                        |    
|Unrecognized actuarial prior
      service cost                            | 20                       |    
|                                                                           |                          |    
|Prepaid (accrued) pension
      cost at December 31                        | 139                      |    
|                                                                           |                          |    

|    |                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | including contributions paid
      in 2002 for the establishment of a separate legal entity pension fund and
      annuity contracts in Spain for 39 million euros.

F - 45

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Back to Contents

| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

The primary assumptions made to account for pension
  and end of service benefits are as follows:

|                               |      |  |        |  |      |  |                                                   |  |        |  |       |  |        |  |      |  |      |  |              |  |              |  |      |  |              |  |              |  |      |  |      |  |      |  |      |  |      |  |      |  |      | 
|------------------------------ | ---- |  | ------ |  | ---- |  | ------------------------------------------------- |  | ------ |  | ----- |  | ------ |  | ---- |  | ---- |  | ------------ |  | ------------ |  | ---- |  | ------------ |  | ------------ |  | ---- |  | ---- |  | ---- |  | ---- |  | ---- |  | ---- |  | ---- | 
|                               | USA  |  | Canada |  | UK   |  | Euro
      Zone (except France, Spain and Greece) |  | France |  | Spain |  | Greece | 
|                               |      |  |        |  |      |  |                                                   |  |        |  |       |  |        |  |      |  |      |  |              |  |              |  |      |  |              |  |              |  |      |  |      |  |      |  |      |  |      |  |      |  |      | 
|                               | 2002 |  | 2001   |  | 2000 |  | 2002                                              |  | 2001   |  | 2000  |  | 2002   |  | 2001 |  | 2000 |  | 2002         |  | 2001         |  | 2000 |  | 2002         |  | 2001         |  | 2000 |  | 2002 |  | 2001 |  | 2000 |  | 2002 |  | 2001 |  | 2000 | 
|                               |      |  |        |  |      |  |                                                   |  |        |  |       |  |        |  |      |  |      |  |              |  |              |  |      |  |              |  |              |  |      |  |      |  |      |  |      |  |      |  |      |  |      | 
|                               |      |  | %      |  |      |  |                                                   |  | %      |  |       |  |        |  | %    |  |      |  |              |  | %            |  |      |  |              |  | %            |  |      |  |      |  | %    |  |      |  |      |  | %    |  |      | 
|Discount Rate                  | 6.80 |  | 7.75   |  | 7.75 |  | 6.35                                              |  | 6.50   |  | 6.95  |  | 5.75   |  | 5.50 |  | 5.50 |  | 5.50         |  | 5.75         |  | 6.00 |  | 5.50         |  | 5.75         |  | 6.00 |  | 5.50 |  | 5.75 |  | 6.00 |  | 5.75 |  | 6.25 |  | *    | 
|Expected return rate on assets | 9.00 |  | 9.00   |  | 9.00 |  | 9.00                                              |  | 9.00   |  | 9.00  |  | 7.50   |  | 7.50 |  | 7.50 |  | 7.00         |  | 8.00         |  | *    |  | 5.82         |  | 5.82         |  | 4.50 |  | 4.85 |  | 5.75 |  | 5.50 |  | *    |  | *    |  | *    | 
|Salary increase                | 4.00 |  | 4.50   |  | 4.50 |  | 3.50                                              |  | 3.50   |  | 3.50  |  | 4.25   |  | 4.50 |  | 5.00 |  | 2.00 to 3.50 |  | 2.00 to 3.50 |  | 2.50 |  | 2.00 to 3.50 |  | 2.00 to 3.50 |  | 2.50 |  | 2.40 |  | 2.40 |  | 2.40 |  | 4.25 |  | 4.75 |  | *    | 

*not
  applicable

For the year 2003, the expected return rates on assets are as follows:

|USA       | 8.50%
|--------- | -----
|Canada    | 8.50%
|UK        | 7.00%
|Euro zone | 7.00%
|France    | 5.82%
|Spain     | 4.85%

The expected rates of investment return
  on pension assets and the discount rates used to calculate the Company’s
  pension related obligations are established in close consultation with independent
  advisors.

| | Pension Plans
|- | -------------

The main defined benefit pension plans provided to employees by the Company are in the United Kingdom, North America (The United States of America and Canada) and Germany. The related pension obligations represent 67%, 20% and 5%, respectively, of the Company’s total defined benefit plan obligations.

In the United Kingdom, pension related obligations result primarily from three pension plans. Two of these plans result from the acquisition of Blue Circle Industries in 2001. Pension benefits generally incorporate linear formulas and are based upon employee’s final career pay and the length of employment with the Company. The resulting pension obligations are funded through employee and employer contributions to legally separate entities managed by representatives of both management of the Company and its employees. The contribution rate of both the Company and its employees are revised every three years by independent actuarial consultants. Funding of the obligation is based upon both local minimum funding requirements as well as long term funding objectives to settle the future statutory pension obligations. Historically, approximately 65% of the pension fund assets are invested in equity instruments based upon the fact that equities have
historically provided a superior long-term rate of return, which is consistent with the long-term nature of the pension obligations. The residual 35% of these funds are invested in bond portfolios.

In the United States and Canada defined pension benefits are granted through various distinct plans. Contributions are based upon required amounts to fund the various plans as well as tax-deductible minimum and maximum amounts. At the end of 2002, in the United States, 70% of the pension fund assets were invested in equity instruments and 30% in bond portfolios and in Canada 55% were invested in equity instruments and 45% in bond portfolios.

For all funded plans in the United
  Kingdom and in North America, the recent poor performance of financial markets
  will result in a moderate increase in 2003 of approximately 25 million euros
  in the Company’s cash contributions.

F - 46

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Back to Contents

| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

In Germany, defined benefit pension plans are based
  upon the employees’ final career pay and the length of employment with
  the Company. German law does not require that pension obligations be funded
  through employer contributions to external third party funds. In case of corporate
  insolvency by an employer the employees’ vested benefits are guaranteed
  by an insurance fund sponsored by German companies with defined benefit pension
  plans. These defined benefit plans in Germany have been closed to new entrants
  since 2001. The Company now provides defined contribution pension arrangements
  to new employees who will be entitled to future pension benefits. Accordingly,
  the Company believes that the future amount of pension expense in Germany will
  progressively decline.

In conformity with the Company’s accounting policies, (Note 2 (o)) the difference between actual and expected returns on fund assets is treated as actuarial losses. At the end of 2002, these actuarial losses are particularly significant due to the recent poor performance of financial markets.

The losses in excess of the “10% corridor” will be amortized and reflected in the 2003 pension expense.

Should equity market markets improve the amount of actuarial losses to be recognized would reduce.

In 2003, pension expense is also expected to increase as a result of the decrease in fund assets at the end of 2002 and the downward revisions in actuarial assumptions related to expected return.

The Company expects that the pension expense for 2003 will increase by approximately 100 million euros with an unfavorable effect on net income of 55 million euros.

| | End of service benefits
|- | -----------------------

End of service benefits are generally lump sum payments based upon an individual’s years of credited service and annual salary at retirement or termination of employment. The primary obligations for end of service benefits are in France, Italy, Greece and Chile.

| | Other post retirement benefits
|- | ------------------------------

In the United States and to some extent in France, certain subsidiaries provide healthcare and insurance benefits to retired employees. These obligations are not funded.

Note 24  Other Payables

Components of other payables are as follows:

|                                     | At
      December 31,    | 
|------------------------------------ | ------------------------ | 
|                                     |                          | 
|                                     | 2002                     | 
|                                     |                          | 
|                                     | (in
      million euros) | 
|Accrued payroll
      expenses       | 365                      | 
|Accrued interest                     | 223                      | 
|Corporate income
      tax           | 332                      | 
|Other taxes                          | 230                      | 
|Customer rebates
      and discounts | 61                       | 
|Other accrued
      liabilities      | 727                      | 
|                                     |                          | 
|Other payables                       | 1,938                    | 
|                                     |                          | 

F - 47

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Back to Contents

| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

Note 25  Debt

|(a) | Analysis of debt by type
|--- | ------------------------
|    |                         

|                                        | At
      December 31,    |  
|--------------------------------------- | ------------------------ | -
|                                        |                          |  
|                                        | 2002                     |  
|                                        |                          |  
|                                        | (in
      million euros) |  
|                                        |                          |  
|Debenture loans and senior notes        | 6,780                    |  
|Bank loans and credit facilities        | 1,929                    |  
|Commercial paper                        | 1.681                    |  
|Other notes                             | 483                      |  
|Other                                   | 452                      |  
|                                        |                          |  
|Total debt                              | 11,325                   |  
|Current portion of long-term
      debt | (524                     | )
|Short-term borrowings                   | (530                     | )
|                                        |                          |  
|Total long-term debt                    | 10,271                   |  
|                                        |                          |  

|  |                                 
|- | --------------------------------
| | Debenture loans and senior notes

At December 31, 2002, debentures consist
  of fixed rate bonds which bear a weighted average interest rate of 5.6%. The
  maturities on debenture loans range from 2004 to 2017, with the average maturity
  being 2008. In November 2002, in order to re-finance part of the short term
  debt, the Company issued 200 million British pound sterling bonds bearing a
  fixed interest rate of 6.625% with a 15-year maturity.

The Company has also set up an Euro Medium-Term Note program (EMTN), which allows for a maximum issuable amount of 7 billion euros in 2002. At December 31, 2002, Euro Medium-Term Notes issuance amounts to 3,465 billion euros, including 3,295 billion euros of debenture loans and 170 million of private placement debt included in other notes.

| | Bank loans and credit facilities
|- | --------------------------------

At December 31, 2002, bank loans total 1.8 billion euros and drawdowns on medium and long term committed credit facilities amount to 0.1 billion euros out of a maximum amount available of 4.0 billion euros. The credit facilities are used primarily as a hedging for short term financing of the Company and contribute to secure its liquidity.

The weighted average interest rate
  on these credit facilities and bank loans is approximately 5.5%.

| | Commercial paper
|- | ----------------

The Company’s euro denominated
  commercial paper program at December 31, 2002 allows for a maximum issuable
  amount of 4.0 billion euros. Commercial paper can be issued in euros, US dollars,
  Canadian dollars, Swiss francs and British pounds sterling. At December 31,
  2002, the commercial paper issued under this program totals 1.5 billion euros.
  The commercial paper, mainly issued in euros, bears an average interest rate
  based upon the European inter-bank offer rate ("Euribor”), plus an average
  of about 3 basis points and has initial maturities ranging from 3 to 6 months.
  At year end, the average interest rate of the euro denominated commercial paper
  is 3.2%.

The Company also has a US dollar denominated commercial paper program issued through its subsidiary Lafarge North America. This program allows for a maximum issuable amount of 300 million US dollars (286 million euros). At December 31, 2002, the commercial paper issued under this program totals 119 million euros. The interest rate is based upon the London inter-bank offer rate (“Libor”), plus an average of approximately 32 basis points and has initial maturities ranging from 2 to 4 weeks. At December 31, 2002, the average interest rate on this commercial paper program is 1.7%.

| | Other notes
|- | -----------

Other notes principally consist of
  Euro notes with a weighted average interest rate of 5.1%. The average date of
  maturity is 2005.

F - 48

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Back to Contents

| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

|(b) | Analysis of debt by maturity
|--- | ----------------------------
|    |                             

|               | At
      December 31, 2002 | 
|-------------- | -------------------------- | 
|               |                            | 
|               | (in
      million euros)   | 
|               |                            | 
|2003           | 1,054                      | 
|2004           | 1,208                      | 
|2005           | 1,646                      | 
|2006           | 2,619                      | 
|2007           | 1,613                      | 
|Beyond 5 years | 3,185                      | 
|               |                            | 
|               | 11,325                     | 
|               |                            | 

At December 31, 2002, 1,664 million euros of short-term debt (mainly commercial paper) have been classified as long-term based upon the Company's ability to refinance at any moment these obligations on a long-term basis.

|(c) | Analysis of debt by currency
|--- | ----------------------------
|    |                             

|                             | At
      December 31,    | 
|---------------------------- | ------------------------ | 
|                             |                          | 
|                             | 2002                     | 
|                             |                          | 
|                             | (in
      million euros) | 
|                             | Before
      swaps       | 
|Euro (EUR)                   | 7,714                    | 
|US dollar (USD)              | 1,048                    | 
|British pound sterling (GBP) | 1,391                    | 
|Malaysian ringgit (MYR)      | 259                      | 
|Japanese yen (JPY)           | 94                       | 
|Other                        | 819                      | 
|                             |                          | 
|Total                        | 11,325                   | 
|                             |                          | 

|    |                             
|--- | ----------------------------
|(d) | Analysis of debt by category
|    |                             

|                              | At
      December 31,    | 
|----------------------------- | ------------------------ | 
|                              |                          | 
|                              | 2002                     | 
|                              |                          | 
|                              | (in
      million euros) | 
|                              | Before
      swaps       | 
|Floating rate                 | 3,523                    | 
|Fixed rate below 6%           | 4,726                    | 
|Fixed rate between 6% and 10% | 2,641                    | 
|Fixed rate 10% and over       | 435                      | 
|                              |                          | 
|Total                         | 11,325                   | 
|                              |                          | 

The average spot interest rate of the gross indebtedness, as at December 31, 2002, is 5.2% (5.4% as at December 31, 2001 and 6.6% as at December 31, 2000).

Some of our debt agreements contain a number of terms that require permanent compliance with covenants. As at December 31, 2002, no significant financing contract contains covenants which might have a material impact on the Company’s financial position.

F - 49

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Back to Contents

| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

Note 26  Financial Instruments

The Company uses derivative financial instruments with off-balance sheet risk to manage market risk exposures. Financial instruments are entered into by the Company solely to hedge such exposures on anticipated transactions or firm commitments. The Company does not enter into derivative contracts for speculative purposes.

|(a) | Foreign currency risk
|--- | ---------------------

In the course of its operations, the
  Company’s policy is to hedge all material foreign currency exposures arising
  from its transactions, using derivative instruments as soon as a firm or highly
  probable commitment is entered into or known. These derivative instruments are
  limited to forward contracts and foreign currency options, with a term generally
  less than one year.

This policy is implemented in all the Company’s subsidiaries which have to follow through and, when allowed by the local regulations and when necessary, hedge their exposures with the Company’s central treasury.

The Company’s operating policies
  reduce potential foreign currency exposures by requiring all liabilities and
  assets of controlled companies to be denominated in the same currency as the
  cash flows generated from operating activities, the functional currency. The
  Company may amend this general rule under special circumstances in order to
  take into account specific economic conditions in a specific country such as,
  inflation rates, interest rates, and currency related issues such as convertibility
  and liquidity. When needed, currency swaps are used to convert debts most often
  incurred in euros, into foreign currencies.

Foreign currency hedging activity

At December 31, 2002, most forward contracts had a maturity date less than one year. The nominal value of hedging instruments outstanding at year-end is as follows:

|                                 | At
      December 31,    |     
|-------------------------------- | ------------------------ | ----
|                                 |                          |     
|2002                             |                          | 2001
|                                 |                          |     
|Forward
      contract purchases | (in
      million euros) |     
|US dollar (USD)                  | 47                       |     
|British pound sterling (GBP)     | 74                       |     
|Other currencies                 | 13                       |     
|                                 |                          |     
|Total                            | 134                      |     
|                                 |                          |     

|                             | At
      December 31,    |     
|---------------------------- | ------------------------ | ----
|                             |                          |     
|2002                         |                          | 2001
|                             |                          |     
|Forward
      contract sales | (in
      million euros) |     
|US dollar (USD)              | 2,040                    |     
|British pound sterling (GBP) | 443                      |     
|Other currencies             | 172                      |     
|                             |                          |     
|Total                        | 2,655                    |     
|                             |                          |     

F - 50

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

|(b) | Interest rate risk
|--- | ------------------

The Company is primarily exposed to fluctuations in interest rates based upon the following:

|- | price risk with respect to fixed-rate financial assets and liabilities. Interest rate fluctuations impact the market value of fixed-rate assets and liabilities.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

|- | cash flow risk for floating rate assets and liabilities. Interest rate fluctuations have a direct effect on the financial income or expense of the Company.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------

In accordance with established policies, the Company seeks to mitigate these risks, using to a certain extent interest rate swaps when necessary.

Interest rate hedging activity

The notional value of hedging instruments outstanding at year-end is as follows:

|                                             |     |      | At
      December 31, 2002 |     
|-------------------------------------------- | --- | ---- | -------------------------- | ----
|                                            
|Maturities
      of notional contract values
|                                            
|2003                                         |     | 2004 |                            | 2005
|                                             |     |      |                            |     
|(in
      million euros)                    
|                                            
|Pay fixed ; euro                             | 8.1 | %    | 77                         |     
|Other interest rate swaps                    |    |      | 77                         |     
|                                             |     |      |                            |     
|Total                                        |     |      | 154                        |     
|                                             |     |      |                            |     

|                                             |     |      | At
      December 31, 2001 |     
|-------------------------------------------- | --- | ---- | -------------------------- | ----
|                                            
|Maturities
      of notional contract values
|                                            
|2002                                         |     | 2003 |                            | 2004
|                                             |     |      |                            |     
|(in
      million euros)                    
|                                            
|Pay fixed ; euro                             | 7.7 | %    | 234                        |     
|Other interest rate swaps                    |    |      | 286                        |     
|                                             |     |      |                            |     
|Total                                        |     |      | 520                        |     
|                                             |     |      |                            |     

|                                             |     |      | At
      December 31, 2000 |     
|-------------------------------------------- | --- | ---- | -------------------------- | ----
|                                            
|Maturities
      of notional contract values
|                                            
|2001                                         |     | 2002 |                            | 2003
|                                             |     |      |                            |     
|                                             |     |      | (in
      million euros)   |     
|Pay fixed ;
      euro                       | 7.1 | %    | 99                         |     
|Other interest
      rate swaps              |    |      | 74                         |     
|                                             |     |      |                            |     
|Total                                        |     |      | 173                        |     
|                                             |     |      |                            |     
|                                             |     |      |                            |     

The notional amounts of derivatives represent the face value of financial instruments. They do not represent actual amounts exchanged by the counterparties and thus are not a direct measure of the Company's exposure to interest rate risk. Notional amounts in foreign currency are expressed in euros at the year-end exchange rate.

The financial assets of the Company mainly comprise short term investments managed on a short term basis, either through bank deposits, or negotiable instruments.

A 1% increase or decrease in short term interest rates would have a maximum impact on the consolidated pre-tax income (taking into account financial assets and swap arrangements) of approximately 18 million euros.

A 1% increase or decrease in the rate
  curves related to the currencies in which the Company has significant fixed
  rate debts would have an estimated maximum impact on their fair value (calculated
  after derivative instruments’ impact) of approximately 345 million euros.

F - 51

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

|(c) | Commodity risk
|--- | --------------

The Company is subject to risk of price changes in certain commodities principally in the coal, pet coke, gas, clinker and electricity markets. The Company may, from time to time, use derivatives to manage its exposure to commodity risk. At December 31, 2002, such commitments were limited to forward purchase contracts for electricity and were not significant.

|(d) | Counterparty risk
|--- | -----------------

The Company is exposed to credit risk
  in the event of a counterparty’s default. The Company limits its exposure
  to counterparty risk by rigorously selecting the counterparties with which it
  executes agreements. Counterparty risk is monitored by using exposure limits
  calculated according to several criteria (rating assigned by rating agencies,
  assets and equity), as well as the nature and maturity of operations. The Company's
  exposure to credit risk is limited and the Company believes that there is no
  material concentration of risk with any counterparty. The Company does not anticipate
  any third party default that might have a significant impact on the Company’s
  financial statements.

|(e) | Share risk
|--- | ----------

The Company is subject to risk of price changes in certain of its investments in common shares. The Company may, from time to time, use derivatives to manage its exposure to share risk. At December 31, 2002, such commitments were limited to equity swaps for 155 million euros with a fair value of (22) million euros and which is fully provided for.

|**(e)** | Fair values
|------- | -----------

The fair values of financial instruments have been estimated on the basis of available market quotations, or using various valuation techniques, such as present value of future cash flows. However, the methods and assumptions followed to disclose fair values are inherently judgmental. Thus, estimated fair values do not necessarily reflect amounts that would be received or paid in case of immediate settlement of these instruments.

The use of different estimations, methodologies and assumptions may have a material effect on the estimated fair value amounts. The methodologies used are as follows:

Cash and cash equivalents, accounts receivables, accounts payable, short-term bank borrowings: due to the short-term nature of these balances, the recorded amounts approximate fair values.

Marketable securities and investment securities: estimated fair value of publicly traded securities are based on quoted market prices at December 31, 2002, 2001 and 2000. For other investments for which there is no quoted price, a reasonable estimate of fair value could not be made without incurring excessive costs.

Debenture loans: the fair values of the debenture loans were estimated at the quoted value for borrowings listed on a sufficiently liquid market.

Long-term debt: the fair values of long-term debt were determined by estimating future cash flow on a borrowing-by-borrowing basis, and discounting these future cash flows using an interest rate which takes into consideration the Company's incremental borrowing rate at year end for similar types of debt arrangements.

Derivative instruments: the fair values of forward exchange contracts and interest and currency swaps were calculated, using market prices that the Company would pay or receive to settle the related agreements. Primarily, dealer quotes have been used to estimate the fair values of these instruments at the reporting dates.

F - 52

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

The following details the cost and fair values of recorded and unrecorded financial instruments:

|                                                | At December
        31,    |                      
|----------------------------------------------- | -------------------------- | ---------------------
|                                               
|2002                                            |                            | 2001                 
|                                                |                            |                      
|Carrying Amount                                 |                            | Net Fair 
      Value
|                                                |                            |                      
|                                                | (in million
        euros) |                      
|Balance sheet financial instruments             |                            |                      
|Assets                                          |                            |                      
|Cash and cash equivalents                       | 1,109                      |                      
|Accounts receivable-trade, net                  | 1,816                      |                      
|Other investments                               | 462                        |                      
|                                                |                            |                      
|Liabilities                                     |                            |                      
|Short-term bank borrowings                      | 530                        |                      
|Accounts payable, trade                         | 1,205                      |                      
|Debenture loans                                 | 6,640                      |                      
|Other long-term debt                            | 4,155                      |                      
|                                                |                            |                      
|Derivative instruments                          |                            |                      
|Interest rate swaps and forward rate agreements |                           |                      
|Forward exchange contracts                      |                           |                      

F - 53

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

Note 27  Commitments and
  Contingencies

The following details collateral guarantees
  and other guarantees provided by the Company.

|                              | At December
      31,    | 
|----------------------------- | ------------------------ | 
|                              |                          | 
|                              | 2002                     | 
|                              |                          | 
|                              | (in million
      euros) | 
|Securities and assets pledged | 77                       | 
|Property collateralizing debt | 766                      | 
|Guarantees given              | 166                      | 
|                              |                          | 
|TOTAL                         | 1,009                    | 
|                              |                          | 

The following details the Company’s
  significant commitments.

|                                | At December
      31,    | 
|------------------------------- | ------------------------ | 
|                                |                          | 
|                                | 2002                     | 
|                                |                          | 
|                                | (in million
      euros) | 
|Capital expenditure commitments | 139                      | 
|Operating leases                | 735                      | 
|Other commitments               | 138                      | 
|                                |                          | 
|TOTAL                           | 1,012                    | 
|                                |                          | 

The Company has entered into supply
  agreements for the procurement of various commodities used in the normal course
  of its businesses. The agreements call for minimum annual purchases spread over
  periods up to 20 years. At December 31, 2002, commitments related to these contracts
  amount to 474 million euros and the related maturity of these contracts is as
  follows: 15% within one year, 48% between 1 and 5 years, and 37% after 5 years.

The Company leases certain land, building
  and equipment. Total rental expense under operating leases was 84 million
  euros, 41 million euros and 64 million euros for each of the three years ended
  December 31, 2002, 2001 and 2000, respectively. The table below shows the future
  minimum lease payments due under non-cancelable operating leases. At December
  31, 2002, such payments total 735 million euros:

|                 | Year ended
      December 31, | 
|---------------- | ----------------------------- | 
|                 |                               | 
|                 | 2003                          | 
|                 |                               | 
|                 | (in million
      euros)      | 
|Operating leases | 133                           | 
|                 |                               | 

The Company, as part of its activities
  in purchasing certain entities, has granted co-investors put options. The exercise
  of these options would result in the third parties requiring the Company to
  purchase, at a predetermined price, the shares held by them. The result would
  increase the Company’s percentage of ownership interest in these companies.
  Assuming that all of these options were exercised, the additional purchase price
  to be paid in cash by the Company resulting from such exercise would amount
  to 745 million euros as of December 31, 2002. Based upon the terms of these
  agreements, a portion of the total amount could be exercised in 2003 and 2004
  for 183 million euros and 101 million euros respectively. The residual can be
  exercised commencing in 2005.

F - 54

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

Note 28  Litigation

| | Litigation
|- | ----------

The European Commission decided on
  December 3, 2002 to fine the Company on the grounds that it allegedly colluded
  on market share and sales prices with its competitors between 1992 and 1998
  for plasterboard, in particular in the United Kingdom and Germany. On that basis,
  the European Commission has ordered the Company to pay a fine of 250 million
  euros. Lafarge vigorously challenges this decision and has brought the case
  before the Court of First Instance (CFI) in Luxembourg, which has jurisdiction
  over such matters. The resolution procedure usually takes several years based
  upon comparable cases. As the Company has given a bank guarantee, no payment
  will have to be made before the decision of the court.

In 2002, German competition authorities
  commenced an investigation concerning German cement companies, including our
  wholly owned subsidiary, Lafarge Zement. On April 14, 2003, the German competition
  authority, the Bundeskartellamt, informed the Company that it was imposing a
  fine of 86 million euros on Lafarge Zement as a result of its alleged anti-competitive
  practices in Germany. The Company believes that the amount of the fine is excessive
  and intends to vigorously defend its position through appeal before the Higher
  Regional Court, the Oberlandesgericht, in Düsseldorf.

In the financial statements for the
  year ended December 31, 2002 a provision of 300 million euros has been recorded
  in connection with the two matters above.

On March 28, 2001, Dunn Industrial
  Group, Inc. (“Dunn Industrial”) filed a lawsuit against Lafarge
  North America and the City of Sugar Creek, Missouri in the Circuit Court of
  Jackson County, Missouri at Kansas City. In the suit, Dunn Industrial, the general
  contractor for the construction of our new cement plant in Sugar Creek, Missouri,
  alleges that we expanded the scope of work expected of Dunn Industrial in the
  construction of the plant without commensurate increases in time required for
  performance and amounts to be paid to Dunn Industrial. In connection therewith,
  the suit alleges breach of contract, quantum meruit, breach of warranty and
  negligent misrepresentation and seeks foreclosure of mechanic’s liens
  against Lafarge North America and the City of Sugar Creek, Missouri. Dunn Industrial
  appears to be seeking in excess of 67 million US dollars in damages. The amount
  of the liability of Lafarge North America in connection with this suit remains
  uncertain. The trial court ruled that the issues raised by Dunn Industrial need
  not be arbitrated but rather could be litigated. In December 2002, the Missouri
  appellate court reversed the trial court’s ruling and agreed with Lafarge
  North America that Dunn Industrial must arbitrate its claims. Dunn filed a Transfer
  Motion to the Missouri Supreme Court seeking appeal of the Court of Appeals
  ruling, which motion the Missouri Supreme Court has granted. Lafarge North America
  believes Dunn Industrial’s claims are without merit and intends to vigorously
  defend the suit.

| | Environment
|- | -----------

In The Netherlands, a former subsidiary
  of the Group, Tollens Coatings B.V., is one of the defendants in an action brought
  in 1990 by the government in connection with the discharge of certain waste
  in the Lekkerkerk canal between 1968 and 1971. At that time, Tollens Coatings
  B.V. operated a paint manufacturing plant and had hired another company to carry
  and dispose of waste produced by the plant. The government is seeking Dutch
  guilders 160,000,000 (approximately 72.6 million euros) in damages, plus interest.
  Tollens Coatings B.V. contends that it did not instruct the disposal company
  to dump the waste in the Lekkerkerk canal and that it had no knowledge of the
  disposal company's conduct. With the consent of the parties, the proceedings,
  which are still at the level of first instance, have been postponed several
  times by the court and since late 1993 no proceedings on the merits have taken
  place. In July 2001, the Dutch government took sufficient action to delay the
  running of the statute of limitations, without any other consequence. As a result,
  the case is still pending. Tollens Coating B.V. was disposed of with the Specialty
  Products Division. However, pursuant to the disposition arrangements, the Company
  has agreed to indemnify the acquirers for any damages incurred in connection
  with this litigation.

F - 55

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

Finally, certain subsidiaries have litigation and claims pending in the normal course of business. Management is of the opinion that these matters will be settled without any material adverse effect on the Company's financial position or results of operations.

Note 29  Related Party Transactions

Transactions with equity affiliates were not material in 2002. The transactions entered into with other related parties were made under normal terms and conditions, similar to those normally granted to comparable groups.

With respect to the acquisition of Blue Circle on July 11, 2001, Lafarge S.A. granted Lafarge North America (formerly Lafarge Corporation) the right to buy certain cement and construction material activities in North America formerly owned by Blue Circle. The option to purchase these assets can be exercised between July 1, 2002 and December 31, 2004 at a purchase price of 1,400 million of US dollars, subject to certain adjustments as of the date of acquisition.

In addition, pursuant to an agreement signed between Lafarge North America and Blue Circle North America, Lafarge North America manages in exchange for a management fee, the aforementioned assets subsequent to December 31, 2002, the agreement is subject to annual renewal.

Note 30  Employees Costs
  and Directors’ and Executive Officers’ Compensation for Services

|(a) | Employees and employees costs
|--- | -----------------------------

|                           |                               
|-------------------------- | ------------------------------
|                           |                               
|                           | 2002                          
|                           |                               
|Management staff           | 11,647                        
|Non-management staff       | 65,900                        
|                           |                               
|Total number of employees. | 77,547                        
|                           |                               
|                           |                               
|                           | Years
      ended December 31,
|                           |                               
|                           | 2002                          
|                           |                               
|                           | (in million
      euros)      
|Employees costs            | 2,749                         
|                           |                               

|(b) | Directors’ and executive officers’ compensation for services
|--- | ------------------------------------------------------------

|                       |                                | 
|---------------------- | ------------------------------ | 
|                       | Years
      ended December 31,
|                       |                                | 
|                       | 2002                           | 
|                       |                                | 
|                       | (in million
      euros)       | 
|Board of Directors*    | 0.5                            | 
|Senior Executives      | 7.4                            | 
|                       |                                | 
|Total                  | 7.9                            | 
|                       |                                | 
|                       |                                | 
|*Directors’
      fees |                                | 

F - 56

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

Note 31  Summary of Differences Between Accounting Principles Followed by the Company and US GAAP

The accompanying consolidated financial
  statements of the Company have been prepared in accordance with the accounting
  principles described in Note 2 above (“French GAAP”) which differ
  in certain significant respects from those applicable in the United States of
  America (“US GAAP”). These differences relate mainly to the items
  which are described below and which are summarized in the following tables.

|1. | Differences in accounting for business combinations under French GAAP and US GAAP
|-- | ---------------------------------------------------------------------------------

|    |                                                                                      
|--- | -------------------------------------------------------------------------------------
|(a) | Goodwill recorded as a reduction of shareholders’
      equity before January 1, 1989

Before January 1, 1989, as described in Note 2 (e), under French GAAP, the excess of the purchase price over the fair value of the net assets acquired was written off directly to shareholders’ equity upon acquisition. This goodwill is tracked from that date through memo accounts as disclosed in Note 11 (a) where it is amortized over the estimated period of benefit. The net amortized value of such goodwill is subsequently deducted when and if the related underlying business is sold, for purposes of calculating the gain (loss) on the disposal. Under US GAAP, these goodwill amounts have been recognized as an asset, and as of January 1, 2002 are no longer amortized based upon the provisions of SFAS 142, Goodwill and other intangible assets (“SFAS 142”) (Note 31-18 (a)).

|(b) | Determination of the purchase price in case of share consideration
|--- | ------------------------------------------------------------------

Under French GAAP and US GAAP, the purchase price of a transaction accounted for as an acquisition is based on the fair value of the consideration exchanged. In the case of acquisitions involving the issuance of the Company’s shares, under French GAAP the fair value of such consideration is based on the agreed-upon share price at completion of the acquisition or at the date when the transaction becomes unconditional. Under US GAAP, the fair value of the share consideration is based on the average share price on the two trading days prior to and subsequent to the announcement of the proposed acquisition. This difference in valuation of the shares results in a difference in the fair value of consideration and consequently in the amount of goodwill capitalized and amortized. As described above, as of January 1, 2002, goodwill is no longer amortized under US GAAP.

|(c) | Negative goodwill arising on acquisitions
|--- | -----------------------------------------

As described in Note 2 (e), negative goodwill is amortized into income on a rational systematic basis based upon estimates of future operating results of the acquiree. Negative goodwill is presented as a liability on the balance sheet. Under US GAAP, negative goodwill has been recorded as a reduction in the fair value of long-lived assets acquired and the related depreciation expense is adjusted accordingly.

|(d) | Fair value adjustments related to minority interests
|--- | ----------------------------------------------------

Under French GAAP, when the Company initially acquires a controlling interest in a business, any portion of the assets and liabilities considered retained by minority shareholders is recorded at their fair value. Under US GAAP, only the portion of the assets and liabilities acquired by the Company is recorded at its fair value. This gives rise to two differences:

|(i) | Operating income is different under French GAAP than it would be under US GAAP, because of the difference in basis of assets that are amortized. This difference is offset entirely by a difference in the minority interest's participation in the income of the subsidiary.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|     |                                                                                                                                                                                                                                                                                                                                                                                                           
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(ii) | After an initial acquisition of a subsidiary,
      if an additional portion of that subsidiary is subsequently acquired, under
      French GAAP, the purchase consideration in excess of the net assets acquired
      is recorded as goodwill. Under US GAAP, the incremental portion of the assets
      and liabilities is recorded at fair value, with any excess being allocated
      to goodwill.

F - 57

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

|**(e)** | Acquisition goodwill, market share and trademark amortization
|------- | -------------------------------------------------------------

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                      
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Goodwill amortization
|Under French GAAP, acquired goodwill
      is amortized over the expected period of benefit, which does not exceed
      forty years. SFAS 142 requires that goodwill acquired in a purchase business
      combination completed after June 30, 2001 is not to be amortized. Subsequent
      to January 1, 2002, all previously recorded goodwill is no longer amortized.
      The French GAAP amortization of goodwill for the year ended December 31,
      2001 is reduced by 24 million euros to reflect the non-amortization of goodwill
      resulting from business combinations subsequent to June 30, 2001 and by
      158 million euros for the year ended December 31, 2002 (Note 31-18 (a)).

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                       
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Trademark amortization
|Under French GAAP as described
      in Note 2 (e), the trademarks which have been separately identified on the
      acquisition of subsidiaries are not amortized. Based upon the provisions
      of SFAS 142, intangible assets such as trademark names must be amortized
      over the period the asset is expected to contribute directly or indirectly
      to future cash flows, which is considered to be its useful life. The Company’s
      policy for US GAAP is to amortize trademarks over their useful lives using
      straight-line method. The Company’s accounting for intangible assets
      was not affected by the adoption of SFAS 142.

|                                                                                                                                                                                                                                                                                                                                                                                                       |                          
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                      | Market share amortization
|Under French GAAP as described
      in Note 2 (e), market share which have been separately identified on the
      acquisition of subsidiaries are not amortized. Under US GAAP, market share
      would not be considered as a separately identifiable intangible asset, but
      as a component of goodwill and is accounted for based upon the provisions
      of SFAS 142, as described above.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                           
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------
|**(f)**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Restructuring costs related to business
      combinations
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|French GAAP provides that where
      a business combination results in regional over capacity, costs associated
      with restructuring the acquirer’s operations should be included as
      a cost of the acquisition. As a result of the Blue Circle acquisition, the
      Company has closed certain of its own operations in regions where it has
      determined that over capacity will result from the duplication of its operations
      with those of the former Blue Circle. US GAAP specifically excludes from
      costs of an acquisition those costs associated with closing duplicate facilities
      and restructuring operations of the acquirer, such costs are charged to
      income as a period cost under US GAAP.

|                                                                                                                                                                                                                                                                                |                                                                   
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------
|**(g)**                                                                                                                                                                                                                                                                         | Goodwill relating to the acquisition of
      foreign subsidiaries
|                                                                                                                                                                                                                                                                               
|Prior to January 1, 2001, the
      Company recorded goodwill relating to the acquisition of foreign subsidiaries,
      joint ventures and equity investments in the currency of the acquirer. Under
      US GAAP, such goodwill is recorded in the currency of the acquiree.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                     
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------
|**(h)**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Amortization period for goodwill related
      to the aggregates businesses prior to January 1, 2002
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|The difference between the purchase
      price of the aggregates businesses and the underlying fair value of net
      assets is mainly allocated to mineral reserves acquired based on their fair
      values at the time of acquisition. Under French GAAP, the remaining goodwill
      is generally amortized over 40 years whereas under US GAAP, this goodwill
      is accounted for based upon the provisions of SFAS 142, as described above.
      Prior to January 1, 2002, under US GAAP, this goodwill was amortized over
      the residual lives of the quarries acquired which approximated the expected
      future benefit of the goodwill.

F - 58

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

|**2.** | Deferred income taxes
|------ | ---------------------

|        |                                                                  
|------- | -----------------------------------------------------------------
|**(a)** | Accounting for deferred income taxes before
      January 1, 2000

As described in Note 2 (t), before
  January 1, 2000, the Company’s deferred tax provision was calculated using
  the partial allocation method. Effective January 1, 2000, as required under
  French GAAP, the Company adopted the balance sheet liability method, which among
  other changes, requires that deferred taxes be recorded on all temporary differences
  between the tax basis of assets and liabilities and their carrying amount in
  the balance sheet. The adoption of this methodology required that all deferred
  tax assets or liabilities be accounted for with the offsetting amount recorded
  as an adjustment to equity. Under US GAAP, which also applies the balance sheet
  liability method, temporary differences arising in connection with fair value
  adjustments on business combinations typically result in deferred taxes and
  a corresponding adjustment to goodwill. Consequently, an adjustment is required
  in the reconciliation to US GAAP to record goodwill arising from deferred tax
  liabilities related to past business combinations and charged to equity under
  French GAAP on adoption of the balance sheet liability method.

|**(b)** | Accounting for deferred tax assets
|------- | ----------------------------------

The Company recognizes deferred tax
  on tax loss carry-forwards and on temporary differences when it is reasonably
  certain that the assets will be recovered in future years. Realization is dependent
  on generating sufficient taxable income in order to recover the deferred tax
  balances. The amount of the net deferred tax assets considered realizable could
  be reduced in the near term if estimates of future taxable income in the related
  taxing jurisdiction are reduced. Under US GAAP, such deferred tax assets are
  recognized when it is “more likely than not” that the related tax
  assets will be recovered, a lower threshold than under French GAAP. This conceptual
  difference between French and US GAAP did not give rise to a significant reconciling
  difference in either 2002, 2001 or 2000.

Under French GAAP, deferred tax assets
  are disclosed based on the net estimated recoverable amount. Pursuant to Statement
  of Financial Accounting Standards 109, Accounting for Income Taxes (“SFAS
  109”), US GAAP requires the deferred tax assets to be disclosed at the
  gross amount and reduced by the appropriate valuation allowance. Disclosures
  of the gross deferred tax assets and related valuation allowance based on US
  GAAP amounts are presented in Note 33-3 (a).

|**(c)** | Accounting for business combinations in
      highly inflationary economies
|------- | ---------------------------------------------------------------------------

Pursuant to SFAS 109, US GAAP prohibits
  recognition of a deferred tax liability or asset for differences related to
  assets and liabilities that under Statement of Financial Accounting Standards
  52,Foreign Currency Translation(“SFAS 52”), are remeasured
  from the local currency into the functional currency using historical rates
  and that result from changes in exchange rates or indexing for tax purposes.

Under French GAAP, the Company recorded
  a deferred tax liability on the basis differences created as a result of allocating
  the excess of the purchase price over the carrying value of non monetary assets
  acquired in highly inflationary economies (essentially fixed assets).

F - 59

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

|3. | Pension obligations
|-- | -------------------

Under US GAAP, pension costs are accounted for in accordance with Statement of Financial Accounting Standards 87, Employers’ Accounting for Pensions (“SFAS 87”). SFAS 87 requires that companies located outside the United States adopt the provisions of SFAS 87 for fiscal years beginning after December 15, 1988. Due to the significant period of time that has elapsed from the date when SFAS 87 would have been required to be adopted, the Company, as permitted, has adopted SFAS 87 on January 1, 1999. At the date of adoption, the Company’s net transition obligation was 15.5 million euros. Such transition obligation is being amortized over a five year period, which represents the remaining amortization period between the required adoption date of January 1, 1989 and January 1, 1999. Accordingly, approximately 11 million euros of the transition obligation was recorded as an adjustment to shareholders’ equity at January 1,
1999 as this amount would be recognized under SFAS 87. The residual amount of the transition obligation is being amortized systematically over the period to January 1, 2004.

The Company applies the second approach
  of Emerging Issues Task Force Abstract 88-1, Determination of Vested Benefit
  Obligation to a Defined Benefit Pension Plan (“EITF 88-1”) for
  those pension arrangements in countries where the statutes require severance
  payments on accrued service benefits immediately upon separation. Under this
  methodology, the vested benefit obligation is determined based upon the expected
  date of separation or retirement rather than the measurement date.

Additional disclosures in accordance
  with Statement of Financial Accounting Standards 132, Employers’ Disclosures
  about Pensions and Other Post-Retirement Benefits (“SFAS 132”)
  are presented in Note 33-1.

F - 60

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

|4. | Restructuring provisions
|-- | ------------------------

Restructuring plans are subject to social and legal obligations in addition to administrative authorizations in certain circumstances. Consequently, the implementation of restructuring plans is typically spread over several months. In this environment all the US GAAP criteria for recognizing restructuring liabilities may not be fulfilled in the same period required. The table below reconciles the income statement expense for restructuring costs as determined under French and US GAAP, prior to the effects of income taxes and minority interests.

|                                                                        | Years
      ended December 31, |     
|----------------------------------------------------------------------- | ------------------------------ | ----
|                                                                        |                                |     
|2002                                                                    |                                | 2001
|                                                                        |                                |     
|                                                                        | (in
      million euros)       |     
|French GAAP restructuring
      expense (Note 7)                        | 89                             |     
|Adjustments required for US GAAP
      purposes:                        |                                |     
|-  New plan provision
      and adjustments to prior year estimates (1) | 5                              |     
|-  Costs charged against
      goodwill under French GAAP (2)           | 82                             |     
|                                                                        |                                |     
|US GAAP restructuring expense                                           | 176                            |     
|-  Reclassifications                                                    | (20                            | )   
|                                                                        |                                |     
|US GAAP restructuring expense
      after reclassifications             | 156                            |     
|-  Impact on amortization
      of goodwill (2)                         |                               |     
|                                                                        |                                |     
|Total effect on US GAAP income
      statement                          | 156                            |     
|                                                                        |                                |     

Under the French GAAP presentation, all costs classified as restructuring are presented under the caption other income (expenses) net. For US GAAP purposes, those costs that qualify for expense treatment under US GAAP are presented as operating costs (cost of goods sold or selling and administrative expenses). The table below details the impact of restructuring adjustments on shareholders’ equity pursuant to US GAAP, prior to the effects of income taxes and minority interests.

|                                                                                                                     | At
      December 31, |     
|-------------------------------------------------------------------------------------------------------------------- | --------------------- | ----
|                                                                                                                    
|2002                                                                                                                 |                       | 2001
|                                                                                                                     |                       |     
|(in
      million euros)                                                                                            
|                                                                                                                     |                       |     
|Provision per French GAAP
      (Note 23 (a))                                                                        | 154                   |     
|Provision per US GAAP                                                                                                | (95                   | )   
|Impact of reclassifications                                                                                          | (26                   | )   
|Impact of change in consolidation
      method between French and US GAAP                                            |                      |     
|                                                                                                                     |                       |     
|Difference between US and French
      GAAP provisions                                                               | 33                    |     
|Restructuring costs charged against
      goodwill under French GAAP and which do not qualify under EITF 95-3 (2)    | (31                   | )   
|                                                                                                                     |                       |     
|Cumulative adjustment on new
      plan provisions and adjustment on prior estimates (1)                             | 2                     |     
|Cumulative costs originally charged
      against goodwill (French GAAP) and subsequently expensed under US GAAP (2) | (235                  | )   
|Cumulative amortization of goodwill
      (2)                                                                        | 13                    |     
|Cumulative translation adjustments                                                                                   |                      |     
|                                                                                                                     |                       |     
|Impact on shareholders’
      equity of US GAAP restructuring restatement                                            | (220                  | )   
|                                                                                                                     |                       |     

|(1) | Under French GAAP, prior to
      January 1, 2002, the Company recorded restructuring liabilities during the
      period when decisions have been approved by the appropriate level of management.
      Commencing January 1, 2002, except for the recognition of restructuring
      charges related to business combinations, there is no longer a difference
      in the recognition of restructuring liabilities between French and US GAAP
      (Note 2(p)). Under US GAAP, the Company has applied the provisions of Statement
      of Financial Accounting Standards 112, Employer’s Accounting for
      Postemployment Benefits (“SFAS 112”) and Emerging Issues
      Task Force 94-3, Liability Recognition for Certain Employee Termination
      Benefits and Other Costs to Exit an Activity (“EITF 94-3”),
      in accounting for its employee layoffs and restructuring costs. Under EITF
      94-3, a provision for restructuring can only be recorded during the period
      when certain conditions are satisfied, including the specific identification
      and approval by the appropriate level of management of the operations and
      activities to be restructured, and notification to the employees of the
      benefit arrangement. In addition, costs associated with an exit plan are
      recognized as restructuring provisions only if the related costs are not
      associated with or do not benefit continuing activities of the Company.
      The foregoing creates a timing difference between (i) the recording of provisions
      of new French GAAP charges to the extent that such provisions are not accrued
      for US GAAP purposes, (ii) restructuring charges accrued under US GAAP that
      were expensed for French GAAP purposes in a prior period, and (iii) changes
      in estimates on prior year French GAAP provisions that did not qualify for
      accrual under US GAAP.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | For the purpose of the US GAAP
      reconciliation, the Company has applied Emerging Issues Task Force 95-3,
      Recognition of Liabilities in Connection with a Purchase Business Combination(“EITF 95-3”), in accounting for restructuring costs associated
      with businesses it has acquired. As discussed in (1) above, the requirements
      for recording restructuring costs and liabilities are more specific under
      US GAAP. Therefore, certain restructuring provisions included in the fair
      value of businesses acquired under French GAAP are not accruable under US
      GAAP, generating a difference in goodwill, and liabilities acquired for
      restructuring costs charged against goodwill under French GAAP. Those restructuring
      charges originally charged to goodwill under French GAAP are subsequently
      expensed under US GAAP once the US GAAP criteria have been satisfied for
      recording the costs. For years prior to January 1, 2002 a reduction in the
      amortization of goodwill results from the difference between the French
      and US GAAP treatment (Note 31-18 (a)).
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F - 61

---




Back to Contents

| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

The table below reconciles the balance
  sheet movements in the restructuring provision as determined under US GAAP for
  the year ended December 31, 2002. The column entitled “Currency translation
  adjustments and others” includes translation adjustments generated by
  foreign subsidiaries on the variation of the provisions and reclassification
  of provisions. All amounts indicated in the table below are expressed in million
  euros, unless otherwise stated:

|                                                                                         | January1, 2002 |   | Current
      year expense, net |   | Cash
      payments |   | Recognition
      upon business combination |   | Removaluponbusinessdisposals |  | Currency
      translationadjustment
      and others |   | December
      31, 2002 |  
|---------------------------------------------------------------------------------------- | -------------- | - | ------------------------------- | - | ------------------- | - | ------------------------------------------- | - | ---------------------------- |  | ----------------------------------------------------- | - | ----------------------- | -
|                                                                                         |                |   |                                 |   |                     |   |                                             |   |                              |  |                                                       |   |                         |  
|                                                                                         |                |   |                                 |   |                     |   |                                             |   |                              |  |                                                       |   |                         |  
|- Restructuring
      provisions                                                         | 211            |   | 45                              |   | (179                | ) | 94                                          |   |                             |  | (17                                                   | ) | 154                     |  
|- Costs incurred
      under both French and US GAAP, and 
        paid in the same year |               |   | 44                              |   | (44                 | ) |                                            |   |                             |  |                                                      |   |                        |  
|                                                                                         |                |   |                                 |   |                     |   |                                             |   |                              |  |                                                       |   |                         |  
|Total French
      GAAP                                                                  | 211            |   | 89                              |   | (223                | ) | 94                                          |   |                             |  | (17                                                   | ) | 154                     |  
|                                                                                         |                |   |                                 |   |                     |   |                                             |   |                              |  |                                                       |   |                         |  
|- Voluntary
      termination offer not accepted at
        balance sheet date           | (36            | ) | 66                              |   |                    |   | (41                                         | ) |                             |  | 3                                                     |   | (8                      | )
|- Plans not
      announced at balance sheet date                                        | (8             | ) | 17                              |   |                    |   | (31                                         | ) |                             |  | 1                                                     |   | (21                     | )
|- Cost to train
      or relocate employees to another site                              | (1             | ) | 1                               |   |                    |   |                                            |   |                             |  |                                                      |   |                        |  
|- Cost to move
      inventory or tangible assets to
        another location            |               |   |                                |   |                    |   |                                            |   |                             |  |                                                      |   |                        |  
|- Reengineering and consulting
      costs                                               | (2             | ) | 2                               |   |                    |   |                                            |   |                             |  |                                                      |   |                        |  
|- Other exit costs that do not
      qualify for accrual                                 | (2             | ) | 1                               |   |                    |   | (4                                          | ) |                             |  | 1                                                     |   | (4                      | )
|                                                                                         |                |   |                                 |   |                     |   |                                             |   |                              |  |                                                       |   |                         |  
|US GAAP
      adjustments                                                                | (49            | ) | 87                              |   |                    |   | (76                                         | ) |                             |  | 5                                                     |   | (33                     | )
|                                                                                         |                |   |                                 |   |                     |   |                                             |   |                              |  |                                                       |   |                         |  
|US GAAP
      reclassification                                                           | (4             | ) | (20                             | ) | (8                  | ) | 4                                           |   |                             |  | 2                                                     |   | (26                     | )
|                                                                                         |                |   |                                 |   |                     |   |                                             |   |                              |  |                                                       |   |                         |  
|US GAAP
      provisions                                                                 | 158            |   | 156                             |   | (231                | ) | 22                                          |   |                             |  | (10                                                   | ) | 95                      |  
|                                                                                         |                |   |                                 |   |                     |   |                                             |   |                              |  |                                                       |   |                         |  
|-Employee termination
      benefits                                                     | 87             |   | 78                              |   | (146                | ) | (6                                          | ) |                             |  | (4                                                    | ) | 9                       |  
|-Other costs                                                                             | 24             |   | 4                               |   | (28                 | ) | 39                                          |   |                             |  | (2                                                    | ) | 37                      |  
|                                                                                         |                |   |                                 |   |                     |   |                                             |   |                              |  |                                                       |   |                         |  
|Total Cement                                                                             | 111            |   | 82                              |   | (174                | ) | 33                                          |   |                             |  | (6                                                    | ) | 46                      |  
|                                                                                         |                |   |                                 |   |                     |   |                                             |   |                              |  |                                                       |   |                         |  
|- Employee
      termination benefits                                                    | 10             |   | 5                               |   | (5                  | ) | (1                                          | ) |                             |  | (2                                                    | ) | 7                       |  
|- Other costs                                                                            | 7              |   | 6                               |   | (7                  | ) |                                            |   |                             |  | (1                                                    | ) | 5                       |  
|                                                                                         |                |   |                                 |   |                     |   |                                             |   |                              |  |                                                       |   |                         |  
|Total Aggregates
      & Concrete                                                        | 17             |   | 11                              |   | (12                 | ) | (1                                          | ) |                             |  | (3                                                    | ) | 12                      |  
|                                                                                         |                |   |                                 |   |                     |   |                                             |   |                              |  |                                                       |   |                         |  
|- Employee
      termination benefits                                                    | 16             |   | 35                              |   | (21                 | ) | (7                                          | ) |                             |  |                                                      |   | 23                      |  
|- Other costs                                                                            | 13             |   | 17                              |   | (16                 | ) | (3                                          | ) |                             |  | (1                                                    | ) | 10                      |  
|                                                                                         |                |   |                                 |   |                     |   |                                             |   |                              |  |                                                       |   |                         |  
|Total Roofing                                                                            | 29             |   | 52                              |   | (37                 | ) | (10                                         | ) |                             |  | (1                                                    | ) | 33                      |  
|                                                                                         |                |   |                                 |   |                     |   |                                             |   |                              |  |                                                       |   |                         |  
|-Employee termination
      benefits                                                     |               |   | 12                              |   | (8                  | ) |                                            |   |                             |  |                                                      |   | 4                       |  
|-Other costs                                                                             |               |   |                                |   |                    |   |                                            |   |                             |  |                                                      |   |                        |  
|                                                                                         |                |   |                                 |   |                     |   |                                             |   |                              |  |                                                       |   |                         |  
|Total Gypsum                                                                             |               |   | 12                              |   | (8                  | ) |                                            |   |                             |  |                                                      |   | 4                       |  
|                                                                                         |                |   |                                 |   |                     |   |                                             |   |                              |  |                                                       |   |                         |  
|- Employee
      termination benefits                                                    |               |   |                                |   |                    |   |                                            |   |                             |  |                                                      |   |                        |  
|- Other costs                                                                            | 1              |   | (1                              | ) |                    |   |                                            |   |                             |  |                                                      |   |                        |  
|                                                                                         |                |   |                                 |   |                     |   |                                             |   |                              |  |                                                       |   |                         |  
|Total Specialty
      Products                                                           | 1              |   | (1                              | ) |                    |   |                                            |   |                             |  |                                                      |   |                        |  
|                                                                                         |                |   |                                 |   |                     |   |                                             |   |                              |  |                                                       |   |                         |  
|US GAAP
      provisions                                                                 | 158            |   | 156                             |   | (231                | ) | 22                                          |   |                             |  | (10                                                   | ) | 95                      |  
|                                                                                         |                |   |                                 |   |                     |   |                                             |   |                              |  |                                                       |   |                         |  

Restructuring provisions under US
  GAAP consist of the following at December 31, 2002 : long-term portion for 23
  million euros, and current portion for 72 million euros. Cash payments for the
  long term portion of restructuring costs, at December 31, 2002, under US GAAP
  are expected to be incurred in 2004.

The 95 million euros restructuring
  provisions determined in accordance with US GAAP at December 31, 2002 includes
  43 million euros for employee termination benefits, which can be analyzed, as
  follows:

|             | Number
      of
      employees | 
|------------ | ------------------------------- | 
|             |                                 | 
|German plans | 407                             | 
|US plans     | 90                              | 
|UK plans     | 40                              | 
|Other plans  | 4                               | 
|             |                                 | 
|Total        | 541                             | 
|             |                                 | 

F - 62

---




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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)



During the year ended December 31,
  2002, the US GAAP restructuring expense was approximately 156 million euros.
  Such restructuring expense included the following major actions:

|                                            |                                                                                                                                                          | Year endedDecember 31, 2002 | 
|------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------- | 
|                                            |                                                                                                                                                          |                             | 
|CEMENT                                      | (in million euros)                                                                                                                                       |                            
|Greece                                      |                                                                                                                                                          |                            
|                                            | - Voluntary
      termination benefits for 174 employees at Blue Circle Greece cement companies                                                          | 30                          | 
|Serbia                                      |                                                                                                                                                          |                            
|                                            | - Voluntary
      termination benefits for 1,009 employees                                                                                               | 14                          | 
|Spain                                       |                                                                                                                                                          |                            
|                                            | - Early
      retirement benefits in Lafarge Asland for 31 employees                                                                                     | 8                           | 
|Nigeria                                     |                                                                                                                                                          |                            
|                                            | - Voluntary
      termination benefits for 790 employees in Ashaka and other redundancy costs
      in Ewekoro                                           | 6                           | 
|Romania                                     |                                                                                                                                                          |                            
|                                            | - Termination
      benefits and other exit costs related to the downsizing of Lafarge Romcim                                                            | 4                           | 
|                                            |                                                                                                                                                          |                             | 
|AGGREGATES
      & CONCRETE                 |                                                                                                                                                          |                            
|UK                                          |                                                                                                                                                          |                            
|                                            | - Involuntary
      termination benefits for 12 employees in Thirslington quarry and other costs
      related to Watermead Park restructuring           | 4                           | 
|Germany                                     |                                                                                                                                                          |                            
|                                            | - Involuntary
      termination benefits for 33 employees and other plant closure costs                                                                  | 2                           | 
|Greece                                      |                                                                                                                                                          |                            
|                                            | - Voluntary
      termination benefits for 11 employees at Blue Circle Greece concrete companies                                                         | 1                           | 
|                                            |                                                                                                                                                          |                             | 
|ROOFING                                     |                                                                                                                                                          |                            
|Germany                                     |                                                                                                                                                          |                            
|                                            | - Involuntary
      termination benefits for 175 employees with respect to Lafarge Dachsysteme
      GmbH and Ruppkeramik GmbH downsizing plans          | 10                          | 
|                                            | - Involuntary termination benefits
      related to Kloeber acquisition                                                                                  | 8                           | 
|                                            | - Involuntary
      termination benefits at Schiedel GmbH & Co with respect to the downsizing
      program implemented in these companies               | 4                           | 
|                                            | - Termination benefits for 48
      employees with respect to the downsizing program implemented at Lafarge
      Roofing Technical Centers GmbH         | 3                           | 
|Benelux                                     |                                                                                                                                                          |                            
|                                            | - Termination
      benefits for 30 employees and other exit costs at Lafarge Roofing Benelux
      B.V. with respect to the closure of production sites | 2                           | 
|France                                      |                                                                                                                                                          |                            
|                                            | - Involuntary
      termination benefits at Lafarge Couverture with respect to the downsizing
      program implemented in these companies               | 1                           | 
|                                            |                                                                                                                                                          |                             | 
|GYPSUMPoland                                |                                                                                                                                                          |                            
|                                            | -Termination
      benefits in Lafarge Gyps Polska                                                                                                       | 4                           | 
|USA                                         |                                                                                                                                                          |                            
|                                            | - Welmington
      plant closure  Involuntary termination benefits for 99 employees                                                                     | 4                           | 
|Other
      plans less than 1 million euros | 51                                                                                                                                                       |                            
|                                            |                                                                                                                                                          |                             | 
|Current
      year restructuring expense    | 156                                                                                                                                                      |                            
|                                            |                                                                                                                                                          |                             | 

F - 63

---




Back to Contents

| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

The table below reconciles the balance
  sheet movements in the restructuring provision as determined under US GAAP for
  the year ended December 31, 2001. The column entitled “Currency translation
  adjustments and others” includes translation adjustments generated by
  foreign subsidiaries on the variation of the provisions and reclassification
  of provisions. All amounts indicated in the table below are expressed in million
  euros, unless otherwise stated:

|                                                                                        |  | January1,2001 |   | Current
      year 
      expense, net |   | Cash
      payments |   | Recognition
      upon
      business 
      combination |   | Removal
      uponbusinessdisposals |   | Currency
      
      translationadjustments
      and others |   | December
      31, 2001 |  
|--------------------------------------------------------------------------------------- |  | ------------- | - | -------------------------------------- | - | ------------------- | - | -------------------------------------------------------- | - | ----------------------------------- | - | ------------------------------------------------------------- | - | ----------------------- | -
|                                                                                        |  |               |   |                                        |   |                     |   |                                                          |   |                                     |   |                                                               |   |                         |  
|-
      Restructuring provisions                                                        |  | 101           |   | 41                                     |   | (150                | ) | 226                                                      |   |                                    |   | (7                                                            | ) | 211                     |  
|- Costs
      incurred under both French and US GAAP,
        and paid in the same year |  |              |   | 28                                     |   | (28                 | ) |                                                         |   |                                    |   |                                                              |   |                        |  
|                                                                                        |  |               |   |                                        |   |                     |   |                                                          |   |                                     |   |                                                               |   |                         |  
|Total
      French GAAP                                                                 |  | 101           |   | 69                                     |   | (178                | ) | 226                                                      |   |                                    |   | (7                                                            | ) | 211                     |  
|                                                                                        |  |               |   |                                        |   |                     |   |                                                          |   |                                     |   |                                                               |   |                         |  
|Change
      in consolidation method for
      US GAAP purposes (Note 31-11)            |  | 12            |   |                                       |   |                    |   |                                                         |   | (12                                 | ) |                                                              |   |                        |  
|                                                                                        |  |               |   |                                        |   |                     |   |                                                          |   |                                     |   |                                                               |   |                         |  
|- Voluntary
      termination offer not accepted at balance
         sheet date         |  | (9            | ) | 61                                     |   |                    |   | (88                                                      | ) | 1                                   |   | (1                                                            | ) | (36                     | )
|- Plans not announced at balance
      sheet date                                       |  | (52           | ) | 4                                      |   |                    |   | 38                                                       |   | 2                                   |   |                                                              |   | (8                      | )
|-
      Cost to train or relocate employees to another site                             |  | (1            | ) |                                       |   |                    |   |                                                         |   |                                    |   |                                                              |   | (1                      | )
|- Cost to move inventory or tangible
      assets to another
        location           |  |              |   |                                       |   |                    |   |                                                         |   |                                    |   |                                                              |   |                        |  
|- Reengineering
      and consulting costs                                              |  |              |   | (2                                     | ) |                    |   |                                                         |   |                                    |   |                                                              |   | (2                      | )
|- Other exit costs that do not
      qualify for accrual                                |  | (10           | ) | 8                                      |   |                    |   | (2                                                       | ) | 2                                   |   |                                                              |   | (2                      | )
|                                                                                        |  |               |   |                                        |   |                     |   |                                                          |   |                                     |   |                                                               |   |                         |  
|US
      GAAP adjustments                                                               |  | (72           | ) | 71                                     |   |                    |   | (52                                                      | ) | 5                                   |   | (1                                                            | ) | (49                     | )
|                                                                                        |  |               |   |                                        |   |                     |   |                                                          |   |                                     |   |                                                               |   |                         |  
|US
      GAAP reclassifications                                                         |  | (6            | ) | (33                                    | ) | 21                  |   | 6                                                        |   |                                    |   | 8                                                             |   | (4                      | )
|                                                                                        |  |               |   |                                        |   |                     |   |                                                          |   |                                     |   |                                                               |   |                         |  
|US
      GAAP provisions                                                                |  | 35            |   | 107                                    |   | (157                | ) | 180                                                      |   | (7                                  | ) |                                                              |   | 158                     |  
|                                                                                        |  |               |   |                                        |   |                     |   |                                                          |   |                                     |   |                                                               |   |                         |  
|-
      Employee termination benefits                                                   |  | 2             |   | 46                                     |   | (102                | ) | 142                                                      |   |                                    |   | (1                                                            | ) | 87                      |  
|- Other costs                                                                           |  | 10            |   | 2                                      |   | (3                  | ) | 19                                                       |   |                                    |   | (4                                                            | ) | 24                      |  
|                                                                                        |  |               |   |                                        |   |                     |   |                                                          |   |                                     |   |                                                               |   |                         |  
|Total
      Cement                                                                      |  | 12            |   | 48                                     |   | (105                | ) | 161                                                      |   |                                    |   | (5                                                            | ) | 111                     |  
|                                                                                        |  |               |   |                                        |   |                     |   |                                                          |   |                                     |   |                                                               |   |                         |  
|-
      Employee termination benefits                                                   |  | 2             |   | 10                                     |   | (7                  | ) | 1                                                        |   |                                    |   | 4                                                             |   | 10                      |  
|- Other costs                                                                           |  | 1             |   | 1                                      |   |                    |   | 4                                                        |   |                                    |   | 1                                                             |   | 7                       |  
|                                                                                        |  |               |   |                                        |   |                     |   |                                                          |   |                                     |   |                                                               |   |                         |  
|Total
      Aggregates & Concrete                                                       |  | 3             |   | 11                                     |   | (7                  | ) | 5                                                        |   |                                    |   | 5                                                             |   | 17                      |  
|                                                                                        |  |               |   |                                        |   |                     |   |                                                          |   |                                     |   |                                                               |   |                         |  
|-
      Employee termination benefits                                                   |  | 6             |   | 28                                     |   | (29                 | ) | 9                                                        |   |                                    |   | 2                                                             |   | 16                      |  
|- Other costs                                                                           |  | 6             |   | 16                                     |   | (12                 | ) | 5                                                        |   |                                     |   | (2                                                            | ) | 13                      |  
|                                                                                        |  |               |   |                                        |   |                     |   |                                                          |   |                                     |   |                                                               |   |                         |  
|Total
      Roofing                                                                     |  | 12            |   | 44                                     |   | (41                 | ) | 14                                                       |   |                                    |   |                                                              |   | 29                      |  
|                                                                                        |  |               |   |                                        |   |                     |   |                                                          |   |                                     |   |                                                               |   |                         |  
|-
      Employee termination benefits                                                   |  |              |   | 2                                      |   | (2                  | ) |                                                         |   |                                    |   |                                                              |   |                        |  
|- Other costs                                                                           |  |              |   |                                       |   |                    |   |                                                         |   |                                    |   |                                                              |   |                        |  
|                                                                                        |  |               |   |                                        |   |                     |   |                                                          |   |                                     |   |                                                               |   |                         |  
|Total
      Gypsum                                                                      |  |              |   | 2                                      |   | (2                  | ) |                                                         |   |                                    |   |                                                              |   |                        |  
|                                                                                        |  |               |   |                                        |   |                     |   |                                                          |   |                                     |   |                                                               |   |                         |  
|-
      Employee termination benefits                                                   |  | 1             |   | 1                                      |   | (1                  | ) |                                                         |   | (1                                  | ) |                                                              |   |                        |  
|- Other costs                                                                           |  | 7             |   | 1                                      |   | (1                  | ) |                                                         |   | (6                                  | ) |                                                              |   | 1                       |  
|                                                                                        |  |               |   |                                        |   |                     |   |                                                          |   |                                     |   |                                                               |   |                         |  
|Total
      Specialty Products                                                          |  | 8             |   | 2                                      |   | (2                  | ) |                                                         |   | (7                                  | ) |                                                              |   | 1                       |  
|                                                                                        |  |               |   |                                        |   |                     |   |                                                          |   |                                     |   |                                                               |   |                         |  
|US
      GAAP provisions                                                                |  | 35            |   | 107                                    |   | (157                | ) | 180                                                      |   | (7                                  | ) |                                                              |   | 158                     |  
|                                                                                        |  |               |   |                                        |   |                     |   |                                                          |   |                                     |   |                                                               |   |                         |  

Cash payments for restructuring costs provided at December 31, 2001, under US GAAP are expected to be incurred in 2002.

The 158 million euros restructuring provisions determined in accordance with US GAAP at December 31, 2001 includes 113 million euros for employee termination benefits, which can be analyzed, as follows:

|             | Number
      of
      employees | 
|------------ | ------------------------------- | 
|             |                                 | 
|German plans | 513                             | 
|US plans     | 273                             | 
|UK plans     | 233                             | 
|Other plans  | 416                             | 
|             |                                 | 
|Total        | 1,435                           | 
|             |                                 | 

F - 64

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| | LAFARGE                                                            | 
| | ------------------------------------------------------------------ | 
| |                                                                    | 
| | NOTES TO THE CONSOLIDATED
      FINANCIAL STATEMENTS – (Continued) | 

During the year ended December 31,
  2001, the US GAAP restructuring expense was approximately 107 million euros.
  Such restructuring expense included the following major actions:

|                                            |                                                                                                                                                                                                               | Year
      endedDecember
      31, 2001 | 
|------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------- | 
|                                            |                                                                                                                                                                                                               |                                         | 
|CEMENT                                      | (in million euros)                                                                                                                                                                                            |                                        
|Philippines                                 |                                                                                                                                                                                                               |                                        
|-                                           | Severance costs due to the closure
      of production lines in Lafarge Philippines companies with respect tothe integration of Blue Circle Philippines                                                       | 1                                       | 
|USA                                         |                                                                                                                                                                                                               |                                        
|-                                           | Closing of Sugar Creek cement
      plant                                                                                                                                                                     | 2                                       | 
|Greece                                      |                                                                                                                                                                                                               |                                        
|-                                           | Voluntary termination benefits
      for 313 employees at Blue Circle Greece cement companies                                                                                                                 | 24                                      | 
|                                            |                                                                                                                                                                                                               |                                         | 
|AGGREGATES
      & CONCRETE                 |                                                                                                                                                                                                               |                                        
|                                            |                                                                                                                                                                                                               |                                         | 
|USA                                         |                                                                                                                                                                                                               |                                        
|-                                           | Elimination
      of positions upon the integration of BCI North America                                                                                                                                      | 8                                       | 
|Canada                                      |                                                                                                                                                                                                               |                                        
|-                                           | Cost
      of change from a full production to a swing production of Kamloops plant
      in Lafarge North America                                                                                            | 1                                       | 
|Greece                                      |                                                                                                                                                                                                               |                                        
|-                                           | Voluntary
      termination benefits for 26 employees at Blue Circle Greece cement companies                                                                                                                  | 2                                       | 
|                                            |                                                                                                                                                                                                               |                                         | 
|ROOFING                                     |                                                                                                                                                                                                               |                                        
|                                            |                                                                                                                                                                                                               |                                         | 
|Germany                                     |                                                                                                                                                                                                               |                                        
|-                                           | Termination
      benefits for 186 employees with respect to Dachsysteme GmbH andRuppkeramik GmbH downsizing plans                                                                                            | 12                                      | 
|-                                           | Involuntary termination benefits
      at Lafarge couverture, Lafarge Roofing system components & Co and Schiedel
      GmbH & Co with respect to the downsizing program implemented in these
      companies | 4                                       | 
|-                                           | Termination benefits for 24 employees
      with respect to the downsizing program implemented at RBB production technology
      Ltd                                                                         | 2                                       | 
|Netherlands                                 |                                                                                                                                                                                                               |                                        
|-                                           | Termination benefits for 32 employees
      and other exit costs at Redland Dakproducten BV with respect to the closure
      of production sites                                                             | 5                                       | 
|                                            |                                                                                                                                                                                                               |                                         | 
|GYPSUM                                      |                                                                                                                                                                                                               |                                        
|                                            |                                                                                                                                                                                                               |                                         | 
|Poland                                      |                                                                                                                                                                                                               |                                        
|-                                           | Termination
      benefits in Lafarge Gyps Polska                                                                                                                                                             | 2                                       | 
|                                            |                                                                                                                                                                                                               |                                         | 
|Other
      plans less than 1 million euros | 44                                                                                                                                                                                                            |                                        
|                                            |                                                                                                                                                                                                               |                                        
|Current
      year restructuring expense    | 107                                                                                                                                                                                                           |                                        
|                                            |                                                                                                                                                                                                               |                                         | 

F - 65

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

The table below reconciles the balance
  sheet movements in the restructuring provision as determined under US GAAP for
  the year ended December 31, 2000. The column entitled “Currency translation
  adjustments and others” includes translation adjustments generated by
  foreign subsidiaries on the variation of the provisions and reclassification
  of provisions. All amounts indicated in the table below are expressed in million
  euros, unless otherwise stated:

|                                                                                | January1, 2000 |   | Current
      year expense, net |   | Cash
      payments |   | Recognition
      
      upon
      business
      combination |   | Removaluponbusinessdisposals |   | Currency
      translationadjustments
      and others |   | December
      31, 2000 |  
|------------------------------------------------------------------------------- | -------------- | - | ------------------------------- | - | ------------------- | - | -------------------------------------------------------------- | - | ---------------------------- | - | ------------------------------------------------------ | - | ----------------------- | -
|                                                                                |                |   |                                 |   |                     |   |                                                                |   |                              |   |                                                        |   |                         |  
|- Restructuring provisions                                                      | 95             |   | 28                              |   | (52                 | ) | 42                                                             |   | (15                          | ) | 3                                                      |   | 101                     |  
|- Costs incurred under both French and US
      GAAP, and paid in the same year |               |   | 16                              |   | (16                 | ) |                                                               |   |                             |   |                                                       |   |                        |  
|                                                                                |                |   |                                 |   |                     |   |                                                                |   |                              |   |                                                        |   |                         |  
|Total French GAAP                                                               | 95             |   | 44                              |   | (68                 | ) | 42                                                             |   | (15                          | ) | 3                                                      |   | 101                     |  
|                                                                                |                |   |                                 |   |                     |   |                                                                |   |                              |   |                                                        |   |                         |  
|Change in consolidation method for
      US GAAP purposes (Note 31-11)          |               |   |                                |   |                    |   |                                                               |   | 12                           |   |                                                       |   | 12                      |  
|                                                                                |                |   |                                 |   |                     |   |                                                                |   |                              |   |                                                        |   |                         |  
|                                                                                |                |   |                                 |   |                     |   |                                                                |   |                              |   |                                                        |   |                         |  
|- Voluntary termination offer not accepted
      at balance sheet date          | (8             | ) | (1                              | ) |                    |   |                                                               |   |                             |   |                                                       |   | (9                      | )
|- Plans not announced at balance sheet date                                     | (19            | ) | (4                              | ) |                    |   | (28                                                            | ) |                             |   | (1                                                     | ) | (52                     | )
|- Cost to train or relocate employees to another
      site                     | (2             | ) | 1                               |   |                    |   |                                                               |   |                             |   |                                                       |   | (1                      | )
|- Cost to move inventory or tangible assets
      to another location           | (1             | ) | 1                               |   |                    |   |                                                               |   |                             |   |                                                       |   |                        |  
|- Reengineering and consulting costs                                            | (1             | ) | 1                               |   |                    |   |                                                               |   |                             |   |                                                       |   |                        |  
|- Other exit costs that do not qualify for
      accrual                        | (24            | ) | 17                              |   |                    |   | (3                                                             | ) |                             |   |                                                       |   | (10                     | )
|                                                                                |                |   |                                 |   |                     |   |                                                                |   |                              |   |                                                        |   |                         |  
|US GAAP adjustments                                                             | (55            | ) | 15                              |   |                    |   | (31                                                            | ) |                             |   | (1                                                     | ) | (72                     | )
|                                                                                |                |   |                                 |   |                     |   |                                                                |   |                              |   |                                                        |   |                         |  
|US GAAP reclassifications                                                       | (9             | ) |                                |   |                    |   | 3                                                              |   |                             |   |                                                       |   | (6                      | )
|                                                                                |                |   |                                 |   |                     |   |                                                                |   |                              |   |                                                        |   |                         |  
|US GAAP provisions                                                              | 31             |   | 59                              |   | (68                 | ) | 14                                                             |   | (3                           | ) | 2                                                      |   | 35                      |  
|                                                                                |                |   |                                 |   |                     |   |                                                                |   |                              |   |                                                        |   |                         |  
|- Employee termination benefits                                                 | 6              |   | 15                              |   | (19                 | ) |                                                               |   |                             |   |                                                       |   | 2                       |  
|- Other costs                                                                   | 5              |   | 12                              |   | (14                 | ) | 7                                                              |   |                             |   |                                                       |   | 10                      |  
|                                                                                |                |   |                                 |   |                     |   |                                                                |   |                              |   |                                                        |   |                         |  
|Total Cement                                                                    | 11             |   | 27                              |   | (33                 | ) | 7                                                              |   |                             |   |                                                       |   | 12                      |  
|                                                                                |                |   |                                 |   |                     |   |                                                                |   |                              |   |                                                        |   |                         |  
|- Employee termination benefits                                                 | 1              |   | 1                               |   |                    |   |                                                               |   |                             |   |                                                       |   | 2                       |  
|- Other costs                                                                   | 2              |   | 2                               |   | (3                  | ) |                                                               |   |                             |   |                                                       |   | 1                       |  
|                                                                                |                |   |                                 |   |                     |   |                                                                |   |                              |   |                                                        |   |                         |  
|Total Aggregates & Concrete                                                     | 3              |   | 3                               |   | (3                  | ) |                                                               |   |                             |   |                                                       |   | 3                       |  
|                                                                                |                |   |                                 |   |                     |   |                                                                |   |                              |   |                                                        |   |                         |  
|- Employee termination benefits                                                 | 5              |   | 6                               |   | (4                  | ) | (1                                                             | ) |                             |   |                                                       |   | 6                       |  
|- Other costs                                                                   | 5              |   | 9                               |   | (7                  | ) | 2                                                              |   | (3                           | ) |                                                       |   | 6                       |  
|                                                                                |                |   |                                 |   |                     |   |                                                                |   |                              |   |                                                        |   |                         |  
|Total Roofing                                                                   | 10             |   | 15                              |   | (11                 | ) | 1                                                              |   | (3                           | ) |                                                       |   | 12                      |  
|                                                                                |                |   |                                 |   |                     |   |                                                                |   |                              |   |                                                        |   |                         |  
|- Employee termination benefits                                                 |               |   |                                |   |                    |   |                                                               |   |                             |   |                                                       |   |                        |  
|- Other costs                                                                   | 1              |   | 1                               |   | (3                  | ) |                                                               |   |                             |   | 1                                                      |   |                        |  
|                                                                                |                |   |                                 |   |                     |   |                                                                |   |                              |   |                                                        |   |                         |  
|Total Gypsum                                                                    | 1              |   | 1                               |   | (3                  | ) |                                                               |   |                             |   | 1                                                      |   |                        |  
|                                                                                |                |   |                                 |   |                     |   |                                                                |   |                              |   |                                                        |   |                         |  
|- Employee termination benefits                                                 | 3              |   | 3                               |   | (9                  | ) | 4                                                              |   |                             |   |                                                       |   | 1                       |  
|- Other costs                                                                   | 3              |   | 10                              |   | (9                  | ) | 2                                                              |   |                             |   | 1                                                      |   | 7                       |  
|                                                                                |                |   |                                 |   |                     |   |                                                                |   |                              |   |                                                        |   |                         |  
|Total Specialty Products                                                        | 6              |   | 13                              |   | (18                 | ) | 6                                                              |   |                             |   | 1                                                      |   | 8                       |  
|                                                                                |                |   |                                 |   |                     |   |                                                                |   |                              |   |                                                        |   |                         |  
|US GAAP provisions                                                              | 31             |   | 59                              |   | (68                 | ) | 14                                                             |   | (3                           | ) | 2                                                      |   | 35                      |  
|                                                                                |                |   |                                 |   |                     |   |                                                                |   |                              |   |                                                        |   |                         |  

Restructuring provisions under US GAAP consist of the following at December 31, 2000: long-term portion for 3 million euros, and current portion for 32 million euros. Cash payments for the long term portion of restructuring costs, at December 31, 2000, under US GAAP are expected to be incurred in 2002. The 35 million euros restructuring provisions determined in accordance with US GAAP at December 31, 2000 includes 11 million euros for employee termination benefits, which can be analyzed, as follows:

|                          | Number
      of employees | 
|------------------------- | ------------------------- | 
|                          |                           | 
|German plans              | 163                       | 
|Polish plans              | 104                       | 
|South African
      plans | 63                        | 
|Other plans               | 69                        | 
|                          |                           | 
|Total                     | 399                       | 
|                          |                           | 

F - 66

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

During the year ended December 31, 2000, the US
  GAAP restructuring expense was approximately 59 million euros. Such restructuring
  expense included the following major actions:

|                                                                                                                                                                                                                                                | Year endedDecember 31,
      2000 | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------- | 
|                                                                                                                                                                                                                                                |                                   | 
|CEMENT                                                                                                                                                                                                                                          | (in million
      euros)          | 
|USA                                                                                                                                                                                                                                             |                                   | 
|-
      Cost of closing Sugar Creek 1, a cement manufacturing plant in Lafarge North
      America.                                                                                                                                             | 2                                 | 
|Canada                                                                                                                                                                                                                                          |                                   | 
|-
      Costs with respect to the restructuring of Kamloops, a cement manufacturing
      plan in Lafarge Canada.                                                                                                                               | 2                                 | 
|Romania                                                                                                                                                                                                                                         |                                   | 
|-
      This plan was compliant with EITF 95-3 in 2000 and related to the downsizing
      of Lafarge Romcim.                                                                                                                                   | 2                                 | 
|France                                                                                                                                                                                                                                          |                                   | 
|-
      Early retirement benefits in Lafarge Ciments.                                                                                                                                                                                           | 3                                 | 
|Spain                                                                                                                                                                                                                                           |                                   | 
|-
      Early retirement benefits in Lafarge Asland corresponding to the departure
      of 20 employees.                                                                                                                                       | 4                                 | 
|Morocco                                                                                                                                                                                                                                         |                                   | 
|-
      Termination benefits in Lafarge Ciment Maroc.                                                                                                                                                                                           | 2                                 | 
|                                                                                                                                                                                                                                                |                                   | 
|ROOFING                                                                                                                                                                                                                                         |                                   | 
|                                                                                                                                                                                                                                                |                                   | 
|Germany                                                                                                                                                                                                                                         |                                   | 
|- Termination benefits for 65 employees and other exit costs at Lafarge Braas
      Dachsysteme GmbH with respect to the closure of two plants (Oldenburg and
      Hirschfel)
         in March 2001. The plan was announced in December 2000. | 4                                 | 
|- Termination benefits for 37
      employees and other exit costs at Schiedel GmbH with respect to the closure
      of the plants at Ferhbellin and Lübschütz.                                                                                | 2                                 | 
|                                                                                                                                                                                                                                                |                                   | 
|SPECIALTY PRODUCTS                                                                                                                                                                                                                              |                                   | 
|Germany                                                                                                                                                                                                                                         |                                   | 
|-
      Termination costs and other termination benefits with respect to the closure
      of the Bösenberg facility.                                                                                                                           | 3                                 | 
|Other plans less than 1 million
      euros                                                                                                                                                                                                     | 35                                | 
|                                                                                                                                                                                                                                                |                                   | 
|Current
      year restructuring expense                                                                                                                                                                                                        | 59                                | 
|                                                                                                                                                                                                                                                |                                   | 

F - 67

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

|5. | Other provisions
|-- | ----------------

|    |                                                                       
|--- | ----------------------------------------------------------------------
|(a) | Accounting for provisions for unrealized
      foreign exchange losses

French GAAP allows for the limitation of foreign currency exchange losses on debt negotiated in foreign currencies where the interest rate on the foreign debt is less than that available on the local currency. In such situations, the loss is limited to the difference between the actual interest expense recorded and the amount of interest expense that would have been recorded if the debt was originally negotiated in the local currency.

US GAAP requires that the foreign currency translation gain or loss on the foreign denominated debt be included in income for the period.

|(b) | Accounting for site restoration provisions
|--- | ------------------------------------------

French GAAP allows provisions for site restoration and environmental liabilities to be determined on a discounted basis if the effect of the time value of money is material. Under US GAAP, based on American Institute of Certified Public Accountants Statement of Position 96-1, Environmental Remediation Liabilities, (“SOP 96-1”), a company can elect to discount environmental liabilities and site restoration provisions only when the timing and amounts of payments are fixed and reliably determinable. Under US GAAP, the Company does not discount these liabilities.

|(c) | Other
|--- | -----

Prior to January 1, 2002, the Company
  recorded provisions based on management's estimates of other possible risks,
  such as tax litigation, employee claims, indemnification for companies sold,
  possible exchange losses, and environmental risks. Under US GAAP, these provisions
  have been reversed to the extent that they do not meet specific criteria of
  Statement of Financial Accounting Standards 5, Accounting for Contingencies
  (“SFAS 5”) for accrual under US GAAP at the balance sheet date.
  Pursuant to SFAS 5, when the risk of loss is considered reasonably possible
  of occurrence under US GAAP, only disclosure of the contingent liability
  is required.

As of January 1, 2002 the Company has adopted the new French accounting regulation Comité de la Réglementation Comptable 2000-06 (“CRC 00-06”). The new French standard defines loss contingencies substantially the same as SFAS 5.

|6. | Stock based compensation and employee stock plans
|-- | -------------------------------------------------

|    |                            
|--- | ---------------------------
|(a) | Employee stock option plans

Under French GAAP, compensation cost
  is not recorded for stock options and stock purchase plans. Under US GAAP, the
  Company accounts for stock based compensation awards pursuant to Accounting
  Principles Board Opinion 25, Accounting for Stock Issued to Employees
  (“APB 25”) which requires that compensation expense be recorded
  when the market price of the stock at the measurement date exceeds the amount
  the employee is required to pay upon exercise of the option. The stock options
  granted to employees have been repriced in situations where there would be a
  theoretical dilution of the option holder’s percentage interest in the
  Company. Typically, these repricing events arise from the Company’s issuance
  of common stock or warrants. Under US GAAP, the repricing of the Company‘s
  stock option plan causes the plan to be considered a variable plan under APB
  25. As a result, the Company has recorded a recovery of previously recognized
  compensation expense of 60 million euros in the year ended December 31, 2002,
  recorded compensation expense of 50 million euros in the year ended December
  31, 2001 and recorded a recovery of previously recognized compensation expense
  of 22 million euros in the year ended December 31, 2000. Additional disclosures
  in accordance with APB 25 and Statement of Financial Accounting Standards 123,
  Accounting for Stock Issued to Employees (“SFAS 123”) are
  presented in Note 33-2.

In accordance with SFAS 123, the Company
  discloses compensation cost based on the estimated fair value of the options
  on the grant dates. Compensation cost is estimated to be the fair value of all
  options granted based on the binomial option-pricing model for the Lafarge S.A.
  options and the Black Scholes model for the Lafarge North America options.

F - 68



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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

As of December 31, 2002, the Company
  adopted the disclosure requirements of SFAS 148, Accounting for Stock-Based
  Compensation  Transition and Disclosure.The costs associated with options granted
  in each of the three years ended December 31, 2002, 2001 and 2000 are 35.7 million
  euros, 34.8 million euros and 21.0 million euros, respectively. The pro-forma
  amounts below reflect the fair value effect as if the options granted had been
  charged to income for the years presented.

|                                                                                                                    | Years
      ended December 31,                    |     
|------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------- | ----
|                                                                                                                   
|2002                                                                                                                |                                                   | 2001
|                                                                                                                    |                                                   |     
|                                                                                                                    | (in million
      euros except per share amounts) |     
|Numerator                                                                                                           |                                                   |     
|US GAAP (Note 32 (c))                                                                                               |                                                   |     
|Net earnings
      for purposes of :                                                                                |                                                   |     
|-
      basic earnings per share                                                                                    | 436                                               |     
|-
      diluted earnings per share                                                                                  | 436                                               |     
|                                                                                                                    |                                                   |     
|Stock-based
      employee compensation (recovery) expense included in net earnings                                 | (53                                               | )   
|Total stock-based
      employee compensation expense determined under fair value based method for
      all awards | (36                                               | )   
|                                                                                                                    |                                                   |     
|Net effect on basic and diluted
      earnings                                                                      | (89                                               | )   
|                                                                                                                    |                                                   |     
|                                                                                                                    |                                                   |     
|Pro forma                                                                                                           |                                                   |     
|Net earnings
      for purposes of :                                                                                |                                                   |     
|-
      basic earnings per share                                                                                    | 347                                               |     
|-
      diluted earnings per share                                                                                  | 347                                               |     
|                                                                                                                    |                                                   |     
|Earnings per share                                                                                                  |                                                   |     
|US GAAP                                                                                                             |                                                   |     
|Basic                                                                                                               | 3.36                                              |     
|                                                                                                                    |                                                   |     
|Diluted                                                                                                             | 3.34                                              |     
|                                                                                                                    |                                                   |     
|Pro forma                                                                                                           |                                                   |     
|Basic                                                                                                               | 2.68                                              |     
|                                                                                                                    |                                                   |     
|Diluted                                                                                                             | 2.66                                              |     
|                                                                                                                    |                                                   |     
|Number of shares                                                                                                    |                                                   |     
|US GAAP: basic                                                                                                      | 129,629,000                                       |     
|                                                                                                                    |                                                   |     
|US GAAP: diluted                                                                                                    | 130,547,000                                       |     
|                                                                                                                    |                                                   |     

The SFAS No. 123 method of accounting does not apply to options granted before January 1, 1995. The pro forma compensation cost may not be representative of that to be expected in future years.

|(b) | Employee stock plans
|--- | --------------------

The Company’s shares are offered
  to employees, as determined by management, at a maximum discount of 20% under
  the plan “Lafarge in Action”. Under French GAAP, no compensation
  expense is recorded for the discount. Under US GAAP, such discount must be recorded
  as compensation expense pursuant to APB 25 with a corresponding increase in
  additional paid-in capital. An amount of 25 million euros has been charged to
  income for US GAAP purposes in 2002. There were no such shares issued to employees
  in 2001 and 2000.

In conjunction with the Company stock purchase plan described above, the Company has granted loans to employees for the purpose of subscribing to the offered shares. Pursuant to APB 25, such loans are recorded as a reduction of shareholders’ equity. At December 31, 2002 an amount of approximately 21 million euros remains outstanding on these loans.

F - 69

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

|7. | Debt instruments
|-- | ----------------

On March 20, 2000, the Company issued
  debt redeemable in shares with detachable stock purchase warrants in conjunction
  with the acquisition of the Blue Circle shares. For the purposes of French GAAP,
  the proceeds of the issuance were not separately allocated between the fair
  values of the warrants and the debt. Under US GAAP, Accounting Principles Board
  Opinion 14, Accounting for Convertible Debt and Debt Issued with Stock Purchase
  Warrants,(“APB 14”) requires that the fair value of detachable
  warrants be allocated to permanent equity with a corresponding discount to the
  issued debt. The discounted debt is amortized to expense over the repayment
  term using the interest method. Based upon quoted market prices of the debt
  and the warrants, proceeds allocated to the warrants approximated 97 million
  euros at the date of issuance. The debt was fully repaid in 2000. Consequently,
  the difference between the carrying amount of the debt and the cash paid to
  extinguish the debt was charged to expense for purposes of US GAAP in May 2000.
  Accordingly, the US GAAP reconciliation for the year ended December 31, 2000
  includes an extraordinary charge to the income statement of 97 million euros.
  As there is no expense recognition for French tax purposes, no income tax benefit
  results from this extraordinary charge under US GAAP.

|8. | Investments in marketable securities
|-- | ------------------------------------

In accordance with French GAAP, as
  described in Note 2 (j), the Company’s policy is to value marketable securities
  and other equity securities at the lower of historical cost or net realizable
  value with any resulting unrealized losses recorded in the statement of income.
  French GAAP does not permit upward adjustments in the value of these securities
  to reflect their fair market value.

Under US GAAP, Statement of Financial
  Accounting Standards 115, Accounting for Certain Investments in Debt and
  Equity Securities (“SFAS 115”), requires that investments in
  marketable securities be divided into three categories: trading (securities
  that are bought and held principally for the purpose of selling them in the
  near term), held to maturity (securities that the Company has a positive intent
  and ability to hold to maturity), and securities available for sale (all other
  securities). Most of the marketable debt and equity securities of the Company
  are classified as available for sale with unrealized gains and losses excluded
  from earnings and reported as a component of shareholders’ equity (other
  comprehensive income). Unrealized losses that are other than temporary are charged
  to income.

Available-for-sale securities

At December 31, 2002, 2001 and 2000, the Company’s cost, gross unrealized gains, gross unrealized losses and fair value of the available-for-sale investment securities by major security type are as follows:

|     | Cost                       |  | Gross
        unrealized gains |  | Gross
        unrealized losses |  | Fair
        value | 
|---- | -------------------------- |  | ------------------------------ |  | ------------------------------- |  | ------------------ | 
|     |                            |  |                                |  |                                 |  |                    | 
|     | (in
        million euros) | 
|     |                            |  |                                |  |                                 |  |                    | 
|2002 | 319                        |  |                               |  | 105                             |  | 214                | 
|     |                            |  |                                |  |                                 |  |                    | 
|2001 | 317                        |  |                               |  | 53                              |  | 264                | 
|     |                            |  |                                |  |                                 |  |                    | 
|2000 | 420                        |  | 216                            |  |                                |  | 636                | 
|     |                            |  |                                |  |                                 |  |                    | 

The change in the net unrealized gains or losses on available for sale securities that have been included in a separate component of shareholders’ equity for 2002, 2001 and 2000 is a decrease of 52 million euros, a decrease of 269 million euros and a decrease of 4 million euros, respectively.

F - 70

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

Gross realized gains and losses on marketable securities classified as available-for-sale are included in the Company’s consolidated statements of income. Realized gains and losses for securities held by the Company are determined using the average cost method. Gross realized gains and losses for the years ended December 31, 2002, 2001 and 2000 are as follows:

|     |                            | 
|---- | -------------------------- | 
|     | Proceeds                   | 
|     |                            | 
|     | (in
        million euros) | 
|     |                            | 
|2002 |                           | 
|     |                            | 
|2001 | 314                        | 
|     |                            | 
|2000 | 154                        | 
|     |                            | 



|   |                          
|-- | -------------------------
|9. | Equity method investments

|    |                       
|--- | ----------------------
|(a) | US GAAP reconciliation

Under French GAAP, the Company accounts for its investments on the equity method using the investees local GAAP adjusted as necessary to be in accordance with French GAAP. Under US GAAP, the results of operations and financial position of these investees must be accounted for in accordance with US GAAP prior to the Company’s recognition of its share in income of companies accounted for under equity method. The adjustments to present investees under US GAAP relate primarily to accounting for business combinations, deferred income taxes, marketable securities, derivative instruments, provisions for restructuring, pensions, general provisions, maintenance and other provisions, start-up costs and fixed asset revaluations.

|(b) | Amortization of goodwill
|--- | ------------------------

Under French GAAP, the excess of the purchase price of equity method investments over the historical net book value of the investment is generally considered as goodwill, and is amortized over 40 years. Under US GAAP, such excess purchase price is allocated to the corresponding underlying assets of the investee and amortized over their respective useful lives, ranging from 15 to 25 years.

|(c) | Acquisition of Blue Circle Industries, plc
|--- | ------------------------------------------

Prior to the date of acquisition, under French GAAP, the Company’s 22.58 % investment in Blue Circle, was accounted for using the cost method. For purposes of US GAAP, prior to the date of acquisition this investment was accounted for using the equity method of accounting.

|10. | Start-up costs
|--- | --------------

Start-up costs capitalized by the
  Company under French GAAP have been expensed under US GAAP following the requirements
  of American Institute of Certified Public Accountants Statement of Position
  98-5, Reporting of Costs of Start-Up Activities(“SOP 98-5”).
  As a result, there is a timing difference in the expense recognition between
  French and US GAAP. For the years ended December 31, 2002, 2001, and 2000 start-up
  costs expensed under US GAAP were greater than (less than) the amortization
  of previously capitalized costs in French GAAP as follows; 2002, (9) million
  euros; 2001, (3) million euros; 2000, 3 million euros.

F - 71

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

|11. | Disposal of the Specialty Products division
|--- | -------------------------------------------

On December 28, 2000, the Company entered into a legally binding agreement to dispose of 65.31% of the Specialty Products division, with the exception of the US Road Marking Business and the Lime Business.

Under French GAAP, the gain on disposal of these businesses has been included in the statement of income for the year ended December 31, 2000, since the conditions outstanding at year end, independent of the will of the parties, were fulfilled at the date the accounts were approved and finalized. Under US GAAP, this gain was not recognized in the year-ended December 31, 2000, but at the date of the formal closing and transfer of shares, which occurred upon cash settlement on January 22, 2001.

Because under French GAAP the Company considers it has sold the majority of this division, all companies in the part of the division considered sold are presented as equity method investments under French GAAP at December 31, 2000. In US GAAP however, all companies included in the Specialty Products division remain fully consolidated at December 31, 2000 as the disposal is not considered effective until January 22, 2001.

|12. | Derivative instruments
|--- | ----------------------

|    |                                      
|--- | -------------------------------------
|(a) | Accounting for derivative instruments

Under French GAAP, the fair value of derivative instruments are recorded in the Company’s accounting records when the assets and liabilities of an acquiree are fair valued as the result of a business combination. In all other situations, French GAAP does not require the recognition of the fair value of derivative instruments. As of January 1, 2001 pursuant to the guidance in Statement of Financial Accounting Standards 133 Accounting for Derivative Instruments and Hedging Activities(“SFAS 133”), as interpreted and amended, the Company records financial instruments which meet the criteria for recognition as derivatives. Derivative instruments are marked to market and recorded on the balance sheet. The accounting for changes in fair value of a derivative depends on the intended use of the derivative and the resulting designation. The Company designates its derivatives based upon the criteria established by SFAS 133. For a derivative
designated as a fair value hedge, the gain or loss is recognized in earnings in the period of change together with the offsetting loss or gain on the hedged item attributed to the risk being hedged. For a derivative designated as a cash flow hedge, the effective portion of the derivatives gain or loss is initially reported as a component of other comprehensive income (loss) and subsequently reclassified into earnings when the hedged exposure affects earnings. The ineffective portion of the gain or loss is reported in earnings immediately.

As a result of the application of SFAS 133, for the years ended December 31, 2002 and 2001, the Company has recognized the net amount of 5 million euros recorded as a decrease in income and 3 million euros recorded as an increase in other comprehensive income and 12 million euros as a decrease in income and 137 million euros as a decrease in other comprehensive income, respectively.

|(b) | Blue Circle transaction
|--- | -----------------------

In June 2000, the Company and Dresdner
  entered into an agreement whereby the Company agreed to compensate Dresdner
  for any loss on the sale of their Blue Circle shares and, any profit on the
  sale of the shares held by Dresdner will be shared between the Company and Dresdner.
  French GAAP does not require the valuation and recording of this agreement in
  the Company's accounts. For the year ended December 31, 2000, pursuant to US
  GAAP, specifically the 1986 AICPA issues paper, Accounting for Options
  (since superceded by SFAS 133, as interpreted and amended) this agreement was
  considered to be the equivalent of two derivative contracts: (i) a written put
  option and (ii) a call option, which must be recorded at market value with the
  gain or loss recorded in income. The net market value of these options at December
  31, 2000, using the Black-Scholes option pricing model was a loss of 12 million
  euros. Accordingly, the US GAAP reconciliation for the year ended December 31,
  2000 includes this amount as a decrease in US GAAP net income. This contract
  was settled in 2001, under French GAAP the net proceeds received by the Company
  were treated as a reduction of the purchase price of Blue Circle. For purposes
  of US GAAP, there is an increase in US GAAP income of 49 million euros (before
  taxes) resulting from the net increase in the fair value of the two derivative
  contracts in 2001.

F - 72

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

|(c) | Options on shares of investees
|--- | ------------------------------

In connection with the Company’s
  acquisitions of shares in certain investees, the related shareholder agreements
  contain call options and written put options on shares owned by other co-investors.
  French GAAP does not require the valuation and recording of these options in
  the Company’s accounts. For the year ended December 31, 2000 under US
  GAAP, specifically the 1986 AICPA issues paper, Accounting for Options,
  (since superceded by SFAS 133 as interpreted and amended) upon acquisition of
  the shares in each of these investees, the written put options would be recorded
  at their fair market values and recorded as liabilities, and a portion of the
  acquisition price would be allocated to the related call options. Subsequent
  to acquisition, the options would be marked to market, with gains and losses
  recorded in net income. The application of SFAS 133 did not change the method
  of accounting for these options. The market value of options are as follows:

|             | At
      December 31,    |     
|------------ | ------------------------ | ----
|            
|2002         |                          | 2001
|             |                          |     
|             | (in
      million euros) |     
|Put options  | 3.1                      |     
|Call options | —                        |     

|    |                     
|--- | --------------------
|13. | Investment subsidies

Under French GAAP, certain government investment subsidies were recorded in income when received, or were deferred and amortized over the remaining service periods of the employees at the related facilities. Under US GAAP, investment subsidies are deferred and amortized over the useful lives of the property plant and equipment in which the funds were invested.

|14. | Other items
|--- | -----------

Other differences between accounting principles followed by the Company and US GAAP are not individually significant, and are presented in the aggregate in the reconciliation of net income and shareholders’ equity.

|15. | Lafarge Roofing GmbH (formerly Lafarge Braas) minority interests acquisition in 1999 and 2000
|--- | ---------------------------------------------------------------------------------------------

The acquisition by the Company of the 43.5% minority interests in Lafarge Braas through a share for share exchange was accounted for under French GAAP from the date of the contract signing which was December 22, 1999. Approximately 44% of the total share consideration for this transaction was issued in December 1999. The remainder, approximately 286 million euros, was issued on June 20, 2000 after an authorized increase in share capital. For purposes of US GAAP, the transaction is to be accounted for as a two step acquisition based upon the dates the shares were exchanged with the minority shareholders. Consequently, an additional 82 million euros of goodwill was recorded under US GAAP based upon the different methodologies used to determine the purchase price under French and US GAAP (Note 31-1 (b)).

In addition, there is an effect on
  the Company’s net income under US GAAP because the investment in 2000
  was recorded without minority interests for purposes of French GAAP. Under US
  GAAP the effects of minority interests would be reflected until the final exchange
  of shares on June 20, 2000. Due to the above, the effect upon the Company’s
  French GAAP income for 2000 is a reduction of 11 million euros.

F - 73

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

|16. | Accounting for hyper-inflationary
      economies
|--- | -------------------------------------------------

For the period from December 31, 1997
  to January 1, 2001 for French GAAP, Indonesia was designated as hyper-inflationary
  by the Company and accounted for as described in Note 2 (d). The expectation,
  during that period, was that the worsening economic and political situation
  along with the strong devaluation of the Indonesian rupiah would lead to a hyper-inflationary
  economic environment.

The US GAAP criteria used to determine
  hyper-inflation is a cumulative inflation rate of 100% or greater for the three
  years prior to the year of conversion. Based upon various indices, the Indonesian
  economy did not exceed the 100% inflation threshold in the three years prior
  to 1997. Accordingly, for US GAAP purposes, Indonesia should not have been considered
  highly inflationary. Amounts related to the differences in accounting policies
  between French and US GAAP are included in the reconciliation line item “Other
  items”. The effects on US GAAP net income for the years ended December
  31, 2002, 2001 and 2000 are an increase of 4 million euros, an increase of 4
  million euros and a decrease of 9 million euros, respectively. The effects on
  US GAAP equity at December 31, 2002, 2001 and 2000 are a decrease of 22 million
  euros, a decrease of 26 million euros and a decrease of 31 million euros, respectively.

|17. | Items affecting the presentation of consolidated
      financial statements
|--- | ---------------------------------------------------------------------------

|    |                                                         
|--- | --------------------------------------------------------
|(a) | Consolidation of less than majority owned
      entities

Under US GAAP, control is normally
  defined as voting control (over 50%) although there may be facts and circumstances
  that permit consolidation in other cases. In the case of the companies indicated
  by (1) in Note 34, full consolidation is considered appropriate under French
  GAAP while under US GAAP equity accounting is considered appropriate because
  the criteria in Statement of Financial Accounting Standards 94, Consolidation
  of all Majority Owned Subsidiaries, (“SFAS 94”) and Emerging
  Issues Task Force 97-2, Application of FASB Statement N°94 and APB Opinion
  N°16 to Physician Practice Management Entities and Certain Other Entities
  with Contractual Management Arrangements (“EITF 97-2”), are
  not satisfied to justify consolidation under US GAAP.

This difference in accounting policy
  has no effect on net income or shareholders’ equity. However, this difference
  would reduce net sales by 253 million euros, 496 million euros and 705 million
  euros for 2002, 2001 and 2000, respectively and operating income by 37 million
  euros, 98 million euros and 112 million euros for 2002, 2001 and 2000, respectively.

|(b) | Accounting for joint-venture investments
      and use of proportionate consolidation method
|--- | --------------------------------------------------------------------------------------------

Companies indicated by (2) in Note
  34, that are accounted for using the proportionate consolidation method under
  French GAAP are accounted for by the equity method for US GAAP purposes.

This difference in accounting policy
  has no effect on net income or shareholders’ equity. However, this difference
  would reduce net sales by 950 million euros, 839 million euros and 654 million
  euros for the years ended December 31, 2002, 2001 and 2000, respectively, and
  reduce operating income by 166 million euros, 106 million euros and 86 million
  euros for the same periods, respectively.

|(c) | Reclassification to operating income under
      US GAAP
|--- | --------------------------------------------------------

Under US GAAP, certain items such
  as restructuring expenses, non recurring pension costs, net gains on disposals
  of fixed assets, other non recurring provisions and costs classified as other
  income (expense) would be classified as part of operating income. Additionally,
  prior to January 1, 2002, amortization of goodwill would be reclassified as
  operating expense under US GAAP. According to Securities and Exchange Commission
  (“SEC”) Staff Accounting Bulletin 101, Revenue Recognition in Financial
  Statements (“SAB 101”), and SEC Regulation S-X, Article 5-03 (b),
  capital gains or losses on sales of consolidated entities or equity affiliates
  are also classified for US GAAP purposes as operating income (loss). Under French
  GAAP the items mentioned in this paragraph are not included in operating income
  on ordinary activities.

F - 74

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

|(d) | Reclassification to non operating
      income (loss) under US GAAP
|--- | -------------------------------------------------------------------

Under US GAAP, gains and losses from
  disposals of long-term equity investments classified in the caption gains on
  disposals under French GAAP, would be considered gains and losses from the sale
  of marketable securities and therefore classified as part of non operating income.
  Additionally, dividends received, classified as financial expenses, net under
  French GAAP would also be classified as part of non operating income under US
  GAAP.

|(e) | Impairment charges
|--- | ------------------

As described in Note 2 (k), the Company
  evaluates the recoverability of long-lived assets, including goodwill and records
  a charge if the assets are considered impaired.

In 2002 and 2001, under French GAAP,
  the Company did not record any significant impairment charge. In 2000, the Company
  recorded two impairment charges for an aggregate amount of 30 million euros.
  One impairment charge (16 million euros) was recorded related to Turmgips, a
  wholly owned subsidiary in Germany, due to continued poor operating results
  subsequent to its acquisition in 1994. The impairment charge was based on a
  valuation resulting from an analysis of discounted cash flows. A second impairment
  charge (14 million euros) was recorded related to Lafarge Road Marking System,
  a wholly owned subsidiary in the US acquired by the Company in 1998. The sale
  of similar businesses in 2000, provided an indicator of potential impairment
  and the Company with the assistance of its investment advisors, determined that
  the carrying value of its investment in Lafarge Road Making System was in excess
  of its fair value. Under French GAAP impairment charges are recorded in the
  line item “amortization of goodwill” and included in other operating
  expenses for US GAAP purposes.

|(f) | Reclassification of preferred shares issued
      by consolidated subsidiaries in the caption minority interests (US GAAP)
|--- | --------------------------------------------------------------------------------------------------------------------------

French GAAP requires that preferred
  shares issued by consolidated subsidiaries be presented as debt on the parent
  company’s balance sheet where the shares are redeemable by the shareholder
  and where the related dividends are not based upon profits. Accordingly, the
  dividend applicable to the preferred shareholders is presented in interest expense
  on the statement of income. Pursuant to US GAAP, equity interests in consolidated
  subsidiaries owned by third parties are classified as minority interests on
  the balance sheet. Dividends applicable to such equity interests are presented
  within the caption minority interests on the consolidated statements of income.
  The Company has reclassified from long-term debt to minority interests 119 million
  euros, 113 million euros and 102 million euros as at December 31, 2002, 2001
  and 2000, respectively. The amount reclassified relates to preferred shares
  issued by a subsidiary of Lafarge North America Inc. on December 29, 2000, in
  conjunction with the Warren merger. Therefore, minority interests under US GAAP
  include 166.4 million shares of no par value preferred stock (the “Preferred
  Shares”). The holder of the Preferred Shares is entitled to receive cumulative,
  preferential cash dividends at the annual rate of 6.0 percent of the issue price
  (of USD 113 million) from 2001 to 2003, 5.5 percent of the issue price from
  2004 to 2005 and 5 percent of the issue price thereafter. The Preferred Shares
  are redeemable at the original issue price, in whole or in part, on or after
  December 29, 2005 at the option of the holder thereof. Further, at any time
  following December 29, 2015, Lafarge North America Inc. may redeem all or a
  portion of the then outstanding preferred shares at an amount equal to the issuance
  price. The preferred shares are entitled to a preference over the common stock
  and exchangeable shares of Lafarge North America Inc. with respect to the payment
  of dividends and to the distribution of assets of Lafarge North America Inc.
  in the event of Lafarge North America Inc.’s liquidation or dissolution.

|(g) | Gross up of deferred tax assets and liabilities
|--- | -----------------------------------------------

As discussed in Note 9, the parent
  company's tax liability is determined on a world-wide basis in accordance with
  a tax agreement with the French Tax Authorities. As required per this agreement,
  the book and tax basis differences that exist in various foreign subsidiaries
  are in certain circumstances adjusted at the parent company level when preparing
  the world-wide tax return. Such basis adjustments create additional deferred
  tax assets and liabilities which under French GAAP are offset and reflected
  as a net amount in the caption other, net in Note 9 (c). Under US GAAP, those
  additional deferred tax assets and liabilities are disclosed separately at their
  gross amounts in Note 33-3 (a).

F - 75

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

|(h) | Cash and cash equivalents
|--- | -------------------------

The Company accounts for cash and cash equivalents as described in Note 19. At December 31, 2000, under US GAAP, cash and cash equivalents does not include a receivable of 667 million euros representing the cash received on January 22, 2001, related to the sale of the majority of the Specialty Products segment.

|(i) | Intangible assets
|--- | -----------------

Under French GAAP certain amounts are included in the balance sheet caption “Intangible assets” which do not meet the definition of an intangible asset under SFAS 141 and SFAS 142. Accordingly, these amounts are reclassified for purposes of US GAAP (Note 31-18 (a)).

|18. | Other items related to US GAAP accounting
|--- | -----------------------------------------

|    |                                                  
|--- | -------------------------------------------------
|(a) | Adoption of new US GAAP accounting pronouncements

|  |                                  
|- | ---------------------------------
| | Adoption of SFAS 141 and SFAS 142

Under French GAAP, acquired goodwill
  is amortized over the expected period of benefit, which does not exceed forty
  years. In June 2001, The Financial Accounting Standards Board (“FASB”)
  issued SFAS No. 141, “Business Combinations” and SFAS No. 142, “Goodwill
  and Other Intangible Assets.” These statements establish new accounting
  and reporting standards for business combinations and associated goodwill and
  intangible assets. They require, among other things, elimination of the pooling
  of interests method of accounting, no amortization of acquired goodwill, and
  a periodic assessment for impairment of all goodwill and intangible assets acquired
  in a business combination. SFAS 141 and SFAS 142 supersede APB Opinions No.
  16 “Business Combinations” and No. 17 “Intangible Assets”,
  respectively. As required by these new standards, the Company adopted SFAS 141
  for all acquisitions subsequent to June 30, 2001. SFAS 142 was adopted as of
  January 1, 2002.

In the year of adoption, SFAS 142
  required that the Company perform a transitional goodwill impairment evaluation.
  To do this, the Company identified its reporting units and determined the carrying
  value of each by assigning the Company’s assets and liabilities, including
  existing goodwill, to them. The Company calculated the fair value of each reporting
  unit by using a combination of present value and multiple of earnings valuation
  techniques and compared it to the reporting unit's carrying value. The multiple
  of earnings valuation uses public company trading multiples and merger and acquisition
  transaction multiples, whereas, the present value technique is based on an evaluation
  of future discounted cash flows. The Company's discounted cash flow evaluation
  used discount rates that corresponds to the credit and risk profile for each
  reporting unit. Certain other key assumptions utilized, including sales volume,
  revenue, and operating expenses, are based on management estimates, are consistent
  with those utilized in the Company’s annual planning process, and take
  into account the specific and detailed operating plans and strategies of each
  reporting unit. Completion of the initial evaluation indicated that goodwill
  recorded on the Roofing reporting segment was impaired for purposes of US GAAP
  as of January 1, 2002.

The circumstances leading to the goodwill impairment for reporting units of the Roofing segment, include in mature markets an overcapacity, and weaker demand for roofing products, due to worsening global economic trends. These circumstances caused lower than expected operating profits, cash flows, and are evidence that initial growth expectations assumed when the reporting units were acquired have changed.

As a consequence of the above, the
  Company has recognized a goodwill impairment charge of 160 million euros as
  a cumulative effect of a change in accounting principle. For purposes of French
  GAAP, a goodwill impairment charge was not required based upon the fact that
  the carrying amount of Roofing segment goodwill is substantially less under
  French GAAP due to the US GAAP application of the balance sheet liability method
  of accounting for deferred taxes prior to January 1, 2000 (Notes 31-2 (a)),
  and different methods employed under French and US GAAP to determine the purchase
  price in business combinations (Notes 31-1 (b), 31-15).

The following table presents details
  of intangible assets:

F - 76

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)



|                        | At
      December 31, 2002  | 
|----------------------- | --------------------------- | 
|                        |                             | 
|                        | Gross
      carrying amount | 
|                        |                             | 
|                        | (in
      million euros)    | 
|                        |                             | 
|Mineral rights          | 44                          | 
|Customer lists          | 15                          | 
|Non-compete contracts   | 13                          | 
|Other intangible assets | 59                          | 
|                        |                             | 
|Intangible assets       | 131                         | 
|                        |                             | 

The following table displays the changes in the carrying amount of goodwill by reportable segment:

|                                | Cement                   |   | Aggregates
      & Concrete |   | Roofing |   | Gypsum |   | Other |   | Unallocated |   | Total |  
|------------------------------- | ------------------------ | - | --------------------------- | - | ------- | - | ------ | - | ----- | - | ----------- | - | ----- | -
|                                |                          |   |                             |   |         |   |        |   |       |   |             |   |       |  
|                                | (in
      million euros) |  
|                                |                          |   |                             |   |         |   |        |   |       |   |             |   |       |  
|At January 1, 2002              | 4,794                    |   | 845                         |   | 1,252   |   | 95     |   | 23    |   | 761         |   | 7,770 |  
|Additions                       | 92                       |   | 6                           |   | 7       |   | 17     |   |      |   |            |   | 122   |  
|Disposals                       | (111                     | ) |                            |   |        |   |       |   | (1    | ) |            |   | (112  | )
|Impairment charges              |                         |   |                            |   | (160    | ) |       |   |      |   |            |   | (160  | )
|Purchase accounting adjustments | 686                      |   | 31                          |   | (42     | ) | (5     | ) | 6     |   | (737        | ) | (61   | )
|Reclassifications               |                         |   | 110                         |   | (110    | ) |       |   |      |   |            |   |      |  
|Translation adjustments         | (604                     | ) | (99                         | ) | (34     | ) | (4     | ) | (4    | ) | (24         | ) | (769  | )
|                                |                          |   |                             |   |         |   |        |   |       |   |             |   |       |  
|At December 31, 2002            | 4,857                    |   | 893                         |   | 913     |   | 103    |   | 24    |   |            |   | 6,790 |  
|                                |                          |   |                             |   |         |   |        |   |       |   |             |   |       |  

Goodwill is recorded as of the date of acquisition based upon a preliminary purchase price allocation. The Company typically makes adjustments to the preliminary purchase price allocation during the one year allocation period  as the Company finalizes the determination of fair value of certain assets and liabilities such as property, plant and equipment, intangible assets, pension and other post-retirement benefit obligations, contingent liabilities, and deferred and current tax balances.

F - 77

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

SFAS 142 requires disclosure of what reported income before extraordinary items and net income would have been in all periods presented including amortization expense (including any related tax effects) recognized in those periods related to goodwill, or intangible assets that are no longer being amortized.

The effects of the above is presented in the table below.

|                                                                    | Years
      ended December 31,                     |     
|------------------------------------------------------------------- | -------------------------------------------------- | ----
|                                                                   
|2002                                                                |                                                    | 2001
|                                                                    |                                                    |     
|                                                                    | (in
      million euros, except per share amounts) |     
|Reported income before cumulative
      effect of accounting change | 596                                                |     
|Add back amortization of goodwill                                   |                                                   |     
|Adjusted income before cumulative
      effect of accounting change | 596                                                |     
|Cumulative effect of accounting
      change                        | (160                                               | )   
|                                                                    |                                                    |     
|Adjusted net income                                                 | 436                                                |     
|                                                                    |                                                    |     
|Net income per share  basic:                                       |                                                    |     
|Reported income
      before cumulative effect of accounting change | 4.59                                               |     
|Add back amortization
      of goodwill                             |                                                   |     
|Adjusted income
      before cumulative effect of accounting change | 4.59                                               |     
|Cumulative
      effect of accounting change                        | (1.23                                              | )   
|                                                                    |                                                    |     
|Adjusted net income per share
       basic                         | 3.36                                               |     
|                                                                    |                                                    |     
|Net income per share  diluted:                                     |                                                    |     
|Reported income
      before cumulative effect of accounting change | 4.56                                               |     
|Add back amortization
      of goodwill                             |                                                   |     
|Adjusted income
      before cumulative effect of accounting change | 4.56                                               |     
|Cumulative
      effect of accounting change                        | (1.22                                              | )   
|                                                                    |                                                    |     
|Adjusted net income per share
       diluted                       | 3.34                                               |     
|                                                                    |                                                    |     

|    |                                                              
|--- | -------------------------------------------------------------
|(b) | Disposal of a portion of the Specialty
      Products segment

Effective December 28, 2000, for purposes
  of French GAAP, the Company disposed of a majority portion of its Specialty
  Products segment. The Company plans to report only four business segments on
  a prospective basis as the retained 33.36% interest in the businesses comprising
  the former Specialty Products segment (“Materis”) is not considered
  reportable pursuant to Statement of Financial Accounting Standards 131, Disclosures
  about Segments of an Enterprise and Related Information(“SFAS 131”).
  Under US GAAP, based upon the fact that the Company has retained an equity method
  investment in its former segment and therefore has not disposed of a segment,
  the Company has not accounted for the disposal of these assets as discontinued
  operations.

|(c) | Revenue recognition
|--- | -------------------

The following revenue recognition
  policy disclosure is provided to supplement the disclosure in the French GAAP
  footnotes, to comply with the requirements of Securities and Exchange Commission
  (“SEC”) Staff Accounting Bulletin 101, “Revenue Recognition
  in Financial Statements” (“SAB 101”).

| | Accounting for sales returns
|- | ----------------------------

| | Under both US GAAP and French GAAP, provisions for returns are recorded in the same period as the related sales.
| | ----------------------------------------------------------------------------------------------------------------

|  |                                                 
|- | ------------------------------------------------
| | Accounting for shipping and handling
      costs

| | Under US GAAP, the Company applies
      the provisions of the Emerging Issues Task Force 00-10 (“EITF 00-10”),
      “Accounting for Shipping and Handling Costs”, which provides
      guidance regarding how shipping and handling costs incurred by the seller
      and billed to a customer should be treated. EITF 00-10 requires that all
      amounts billed to a customer in a sales transaction related to shipping
      and handling be classified as revenue, and the costs incurred by the seller
      for shipping and handling be classified as an expense. There is no material
      difference in the Company’s accounting for shipping and handling costs
      between French and US GAAP.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F - 78

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

| | Accounting for rebates
|- | ----------------------

| | The Company offers certain rebates
      to its customers. Under US GAAP the Company applies the provisions of Emerging
      Issue Task Force 00-14 (“EITF 00-14”), “Accounting for
      Certain Sales Incentives”, which requires the recognition of the cost
      of a sales incentive, such as a rebate, at the date at which the related
      revenue is recorded, or at the date at which the incentive is offered, if
      later. The Company also offers certain volume-based sales incentives to
      its customers. The value of such awards historically has been insignificant
      in relation to the value of the transactions necessary to earn the awards.
      The Company records a liability for the estimated cost of such awards when
      the incentive is offered. All sales incentives are classified as a reduction
      of revenue. There is no material difference in the Company’s accounting
      for sales incentives between French and US GAAP.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|    |                           
|--- | --------------------------
|(d) | Securitization arrangement

During 2000, Lafarge North America
  Inc. entered into a receivables securitization program to provide Lafarge North
  America Inc. with a cost-effective source of working capital and short-term
  financing. Under the program, Lafarge North America Inc. agreed to sell, on
  a revolving basis, certain of its accounts receivable to a wholly-owned, special
  purpose subsidiary (the “SPS”). The SPS in turn entered into an
  agreement to transfer, on a revolving basis, an undivided percentage ownership
  interest in a designated pool of accounts receivable to unrelated third-party
  purchasers up to a maximum of USD 200 million (190.7 million euros). On
  April 1, 2001, the Company adopted the provisions of Statement of Financial
  Accounting Standards 140, “Accounting for Transfers and Servicing of Financial
  Assets and Extinguishments of Liabilities, a replacement of FASB Statement 125”
  which is effective for transfers and servicing of financial assets and extinguishments
  of liabilities occurring after March 31, 2001. In accordance with SFAS 140,
  the receivables securitization transactions have been accounted for as sales
  and, as a result, the related receivables and debt have been excluded from the
  accompanying consolidated balance sheets. The Company has received proceeds
  from the sale of trade receivables of USD 1,889.2 million (1,801.5 million euros),
  USD 1,990.9 million (2,259.0 million euros) and USD 713.8 million (767.1 million
  euros) for the years ended December 31, 2002, 2001 and 2000, respectively. At
  December 31, 2002, 2001 and 2000, the Company administered USD 143.4 million
  (136.7 million euros), USD 116.5 million (132.2 million euros) and USD 146.0
  million (156.9 million euros), respectively, of outstanding receivables that
  were sold under this arrangement. At December 31, 2002, 2001 and 2000, the related
  fees and discounting expense of USD 3.4 million (3.6 million euros), USD 7.1
  million (7.9 million euros) and USD 3.0 million (3.3 million euros), respectively,
  have been recorded as “Other operating income (expenses), net” in
  the accompanying consolidated statements of income. The SPS holds a subordinated
  retained interest in the receivables not sold to third parties amounting to
  USD 54.6 million (52.1 million euros), USD 87.0 million (98.7 million euros)
  and USD 36.6 million (39.3 million euros), at December 31, 2002, 2001 and 2000,
  respectively. The subordinated interest in receivables is recorded at fair value,
  which is determined based on the present value of future expected cash flows
  estimated using management's best estimates of credit losses, and discount rates
  commensurate with the risk involved. Due to the short term nature of trade receivables,
  the carrying amount, less allowances, approximates fair value. Variations in
  the credit and discount assumptions would not significantly impact fair value.

The amount available under the receivables securitization program is determined in the middle of each month based on the actual receivables outstanding as of the prior month end. Periodically, the amount available under the terms of the program falls below the amount borrowed for the prior month. In such cases, amounts borrowed in excess of amounts available at month end are reflected as a payable on the balance sheet. As of 31 December, 2002 and 2001, amounts payable under this arrangement were USD 42.3 million (40.3 million euros) and USD 68.7 million (78.0 million euros), respectively.

F - 79

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

(e)   Related party
  transactions

As disclosed in Note 29, transactions with companies accounted for under the equity method of accounting in French GAAP are not significant. Transactions and balances, in the ordinary course of business, with companies accounted for under the equity method of accounting for purposes of US GAAP are as follows:

|                               | At December
      31,    | 
|------------------------------ | ------------------------ | 
|                               |                          | 
|                               | 2002                     | 
|                               |                          | 
|                               | (in million
      euros) | 
|Assets                         |                          | 
|Accounts receivable-trade, net | 47                       | 
|Other current receivables      | 37                       | 
|Long-term receivables          | 114                      | 
|                               |                          | 
|Total Assets                   | 198                      | 
|                               |                          | 
|Liabilities                    |                          | 
|Accounts payable, trade        | 8                        | 
|Other current payables         | 2                        | 
|Long-term liabilities          |                         | 
|                               |                          | 
|Total Liabilities              | 10                       | 
|                               |                          | 

|                                    | Years ended
      December 31, | 
|----------------------------------- | ------------------------------ | 
|                                    |                                | 
|                                    | 2002                           | 
|                                    |                                | 
|                                    | (in million
      euros)       | 
|                                    |                                | 
|Sales                               | 142                            | 
|Cost of goods sold                  |                               | 
|Selling and administrative expenses |                               | 

F - 80

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

Note 32  Reconciliation of
  French GAAP to US GAAP and Presentation of Condensed Financial Statements

The following is a summary reconciliation
  of net income as reported in the consolidated statements of income to net income
  as adjusted for the approximate effects of the application of US GAAP for the
  years ended December 31, 2002, 2001 and 2000 and shareholders’ equity,
  as reported in the consolidated balance sheets to shareholders' equity as adjusted
  for the approximate effects of the application of US GAAP at December 31, 2002,
  2001 and 2000.

|(a) | Reconciliation of net income
|--- | ----------------------------

|                                                                                                                                                                   |                                                         |                                |    
|------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------- | ------------------------------ | ---
|                                                                                                                                                                   |                                                         | Years
      ended December 31, |    
|                                                                                                                                                                  
|2002                                                                                                                                                               |                                                         | 2001                           |    
|                                                                                                                                                                   |                                                         |                               
|                                                                                                                                                                   |                                                         | (in
      million euros)       |    
|Net
      income as reported in the consolidated statements of income                                                                                              | 456                                                     |                                | 750
|1                                                                                                                                                                 | Business combinations                                   | 168                            |    
|2                                                                                                                                                                 | Deferred income
      taxes                             | (2                             | )  
|3                                                                                                                                                                 | Pension obligations                                     | 1                              |    
|4                                                                                                                                                                 | Restructuring
      provisions                          | (87                            | )  
|5                                                                                                                                                                 | Other provisions                                        | (15                            | )  
|6                                                                                                                                                                 | Stock based
      compensation and employee stock plans | 35                             |    
|7                                                                                                                                                                 | Debt instruments                                        |                               |    
|8                                                                                                                                                                 | Investment
      in marketable securities               |                               |    
|9                                                                                                                                                                 | Equity method
      investments                         |                               |    
|10                                                                                                                                                                | Start up costs                                          | 9                              |    
|11                                                                                                                                                                | Disposal of
      the Specialty Products division       |                               |    
|12                                                                                                                                                                | Derivative
      instruments                            | (8                             | )  
|13                                                                                                                                                                | Investment
      subsidies                              |                               |    
|14                                                                                                                                                                | Other items                                             | (3                             | )  
|                                                                                                                                                                   |                                                         |                                |    
|Total
      US GAAP adjustments before income tax, minority interests, extraordinary
      item and cumulative effect of change in 
         accounting principles | 98                                                      |                                | (85
|                                                                                                                                                                   |                                                         |                                |    
|Tax
      effects of the above US GAAP adjustments                                                                                                                 | 35                                                      |                                | 14 
|Minority
      interests (Note 31-15)                                                                                                                              | 7                                                       |                                | 23 
|                                                                                                                                                                   |                                                         |                                |    
|Net
      income before extraordinary item and cumulative effect of change in accounting
      principles according to US GAAP                                     | 596                                                     |                                | 702
|                                                                                                                                                                   |                                                         |                                |    
|Extraordinary
      item (Note 31-7)                                                                                                                               |                                                        |                                |   
|Goodwill impairment
      on adoption of SFAS 142 (Note 31-18 (a))                                                                                                 | (160                                                    | )                              |   
|                                                                                                                                                                   |                                                         |                                |    
|Net
      income according to US GAAP                                                                                                                              | 436                                                     |                                | 702
|                                                                                                                                                                   |                                                         |                                |    

F - 81

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

|(b) | Statements of income according to US GAAP
|--- | -----------------------------------------

For purposes of presenting consolidated statements of income for the years ended December 31, 2002, 2001 and 2000 consistent with US GAAP, the Company has reflected the financial statement impact of the above reconciling items between French GAAP and US GAAP presented in the above mentioned notes.

|                                                                                                                                                                                          | Years
      ended December 31, |     
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------ | ----
|                                                                                                                                                                                         
|2002                                                                                                                                                                                      |                                | 2001
|                                                                                                                                                                                          |                                |     
|(in million
      euros)                                                                                                                                                                 
|Sales                                                                                                                                                                                     | 13,406                         |     
|Cost of goods
      sold                                                                                                                                                                  | (9,820                         | )   
|Selling and
      administrative expenses                                                                                                                                                 | (1,711                         | )   
|Other operating
      (expenses) income, net                                                                                                                                              | (295                           | )   
|Operating
      income                                                                                                                                                                    | 1,580                          |     
|Interest expense                                                                                                                                                                          | (565                           | )   
|Interest income                                                                                                                                                                           | 103                            |     
|Foreign currency
      exchange gains (losses), net                                                                                                                                       | 83                             |     
|Non operating
      (expenses) income, net                                                                                                                                                | (117                           | )   
|                                                                                                                                                                                          |                                |     
|Income before
      income tax, share of net income of equity affiliates, minority interests,
      cumulative effect of change in
         accounting principles and extraordinary items | 1,084                          |     
|Income tax                                                                                                                                                                                | (370                           | )   
|Share of net
      income of equity affiliates                                                                                                                                            | 122                            |     
|Minority interests                                                                                                                                                                        | (240                           | )   
|                                                                                                                                                                                          |                                |     
|Income before extraordinary
      items and cumulative effect of change in accounting principles                                                                                          | 596                            |     
|Extraordinary items                                                                                                                                                                       |                               |     
|Goodwill impairment on adoption
      of SFAS 142 (Note 31-18 (a))                                                                                                                        | (160                           | )   
|                                                                                                                                                                                          |                                |     
|Net income                                                                                                                                                                                | 436                            |     
|                                                                                                                                                                                          |                                |     

F - 82

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

|(c) | Earnings per share according to US GAAP
|--- | ---------------------------------------

In accordance with Statement of Financial
  Accounting Standards 128, Earnings per Share(“SFAS 128”),
  basic earnings per share is computed by dividing income available to common
  shareholders by the weighted average number of common shares outstanding. The
  computation of diluted earnings per share is adjusted to include any potential
  common shares. Potential common shares include stock options, warrants, and
  convertible securities issued by the Company on its own stock. For the year
  ended December 31, 2000, the weighted average number of basic shares outstanding
  differs from the French GAAP amount as the shares authorized and issued on the
  acquisition of the minority shareholders' of Lafarge Braas are reflected as
  outstanding from January 1, 2000 for French GAAP whereas for US GAAP, they are
  reflected as outstanding from the date of issuance, June 20, 2000 (Note 31-15).

The computation and reconciliation of basic and diluted earnings per share for the years ended December 31, 2002, 2001 and 2000 prepared in accordance with US GAAP is as follows:

|                                                                                                              | Years
        ended December 31,                            |  
|------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------- | -
|                                                                                                              |                                                             |  
|                                                                                                              | 2002                                                        |  
|                                                                                                              |                                                             |  
|                                                                                                              | (in
        million euros, except share and per share data) |  
|Numerator                                                                                                     |                                                             |  
|Earnings before
      extraordinary item and cumulative effect of adoption of SFAS 142 (Note 31-18
      (a)) | 596                                                         |  
|Extraordinary
      loss on early extinguishment of debt                                                      |                                                            |  
|Cumulative
      effect of adoption of SFAS 142 (Note 31-18 (a))                                              | (160                                                        | )
|                                                                                                              |                                                             |  
|Net earnings  basic earnings
      per share                                                                 | 436                                                         |  
|Interest expense on convertible
      debt (OCEANE)                                                           |                                                            |  
|                                                                                                              |                                                             |  
|Net earnings  diluted earnings
      per share                                                               | 436                                                         |  
|                                                                                                              |                                                             |  
|Denominator
      (share amounts)                                                                             |                                                             |  
|Weighted average
      number of shares outstanding                                                           | 129,629,000                                                 |  
|Dilutive effect
      of rights issue subsequent to year end                                                  |                                                            |  
|                                                                                                              |                                                             |  
|Weighted average
      number of shares outstanding  basic                                                   | 129,629,000                                                 |  
|                                                                                                              |                                                             |  
|Weighed average
      of dilutive effect of:                                                                  |                                                             |  
|- Stock options                                                                                               | 918,000                                                     |  
|- Stock warrants                                                                                              |                                                            |  
|- Assumed conversion
      of convertible debt (OCEANE)                                                       |                                                            |  
|                                                                                                              |                                                             |  
|Total potential dilutive shares                                                                               | 918,000                                                     |  
|                                                                                                              |                                                             |  
|Weighed average
      number of shares outstanding  fully diluted                                            | 130,547,000                                                 |  
|                                                                                                              |                                                             |  
|Basic earnings
      per share                                                                                |                                                             |  
|- Earnings
      before extraordinary item and cumulative effect of adoption of SFAS 142                      | 4.59                                                        |  
|- Extraordinary
      loss on early extinguishment of debt                                                    |                                                            |  
|- Cumulative
      effect of adoption of SFAS 142                                                             | (1.23                                                       | )
|                                                                                                              |                                                             |  
|- Net earnings                                                                                                | 3.36                                                        |  
|                                                                                                              |                                                             |  
|Diluted
      earnings per share                                                                              |                                                             |  
|- Earnings
      before extraordinary item and cumulative effect of adoption of SFAS 142                      | 4.56                                                        |  
|- Extraordinary
      loss on early extinguishment of debt                                                    |                                                            |  
|- Cumulative
      effect of adoption of SFAS 142                                                             | (1.22                                                       | )
|                                                                                                              |                                                             |  
|- Net earnings                                                                                                | 3.34                                                        |  
|                                                                                                              |                                                             |  

F - 83

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

|(d) | Reconciliation of shareholders'
      equity
|--- | --------------------------------------------

|                                                                                                                                     |                                                   |                            |      
|------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------- | -------------------------- | -----
|                                                                                                                                     |                                                   | At
        December 31,    |      
|                                                                                                                                     |                                                   |                            |      
|                                                                                                                                     |                                                   | 2002                       |      
|                                                                                                                                     |                                                   |                            |      
|                                                                                                                                     |                                                   | (in
        million euros) |      
|Shareholders’equity as reported in the consolidated balance sheets                                                                   | 6,981                                             |                            | 7,882
|                                                                                                                                     |                                                   |                            |      
|1                                                                                                                                   | Business combinations                             | 118                        |      
|2                                                                                                                                   | Deferred income taxes                             | 15                         |      
|3                                                                                                                                   | Pension obligations                               | (536                       | )    
|4                                                                                                                                   | Restructuring provisions                          | 33                         |      
|5                                                                                                                                   | Other provisions                                  | (15                        | )    
|6                                                                                                                                   | Employee stock purchase loans                     | (21                        | )    
|7                                                                                                                                   | Debt instruments                                  |                           |      
|8                                                                                                                                   | Investments in marketable securities              | (105                       | )    
|9                                                                                                                                   | Equity method investments                         | (26                        | )    
|10                                                                                                                                  | Start up costs                                    | (5                         | )    
|11                                                                                                                                  | Disposal of the Specialty Products
      division |                           |      
|12                                                                                                                                  | Derivative instruments                            | (154                       | )    
|13                                                                                                                                  | Investment subsidies                              | (27                        | )    
|14                                                                                                                                  | Other items                                       | (4                         | )    
|                                                                                                                                     |                                                   |                            |      
|Total US GAAP
      adjustments before income tax, minority interests and cumulative effect
      of change in accounting principles | (727                                              | )                          | (139 
|                                                                                                                                     |                                                   |                            |      
|Tax effects of the
      above US GAAP adjustments                                                                                   | 236                                               |                            | 42   
|Minority interests
      (Note 31-15)                                                                                                | 64                                                |                            | 26   
|                                                                                                                                     |                                                   |                            |      
|Shareholders’equity according to US GAAP before cumulative effect of change in accounting
      principles                           | 6,554                                             |                            | 7,811
|                                                                                                                                     |                                                   |                            |      
|Goodwill impairment
      on adoption of SFAS 142 (Note 31-18 (a))                                                                   | (160                                              | )                          |     
|                                                                                                                                     |                                                   |                            |      
|Shareholders’equity according to US GAAP                                                                                             | 6,394                                             |                            | 7,811
|                                                                                                                                     |                                                   |                            |      

The information below discloses the items effecting shareholders’ equity under US GAAP for the year ended December 31, 2002 (in million euros).

|Balance at January
      1, 2002                            | 7,811  |  
|----------------------------------------------------------- | ------ | -
|Net
      income                                            | 436    |  
|Dividends
      paid                                        | (297   | )
|Issuance
      of common stock (dividend reinvestment plan) | 132    |  
|Exercise
      of stock options                             | 8      |  
|Employee
      stock purchase plan                          | 45     |  
|Issuance
      of common stock (Cementia exchange offer)    | 50     |  
|Purchase
      of treasury stock                            | (4     | )
|Deferred
      stock based compensation                     | (35    | )
|Employee
      stock purchase loans                         | (21    | )
|Changes
      in other comprehensive income                 | (328   | )
|Changes
      in translation adjustments                    | (1,403 | )
|                                                            |        |  
|Balance at December 31, 2002                                | 6,394  |  
|                                                            |        |  

F - 84

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED
      FINANCIAL STATEMENTS – (Continued)

|(e) | Comprehensive income for the years ended
      December 31, 2002, 2001 and 2000 under US GAAP
|--- | ---------------------------------------------------------------------------------------------

Comprehensive income is a concept
  that is not addressed by French GAAP. Under US GAAP, comprehensive income is
  the term used to define all non-owner changes in shareholders’ equity.
  Comprehensive income includes, in addition to net income, net unrealized gains
  and losses arising during the period on available for sale securities, movements
  in cumulative translation adjustments and additional minimum pension liability.

|                                                                                                                     |                          |  
|-------------------------------------------------------------------------------------------------------------------- | ------------------------ | -
|                                                                                                                     | 2002                     |  
|                                                                                                                     |                          |  
|                                                                                                                     | (in million
      euros) |  
|Net income                                                                                                           | 436                      |  
|Net unrealized gains and losses
      arising during the period on available for sale securities, net of tax benefit | (55                      | )
|Net unrealized loss on derivative
      instruments                                                                  | 2                        |  
|Additional minimum pension liability
      adjustment net of income taxes                                            | (275                     | )
|Changes in cumulative translation
      adjustments                                                                  | (1,403                   | )
|                                                                                                                     |                          |  
|Comprehensive (loss) income
      for the year ended December 31                                                     | (1,295                   | )
|                                                                                                                     |                          |  

F - 85

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

|(f) | Balance sheets according to US GAAP
|--- | -----------------------------------

Certain reclassifications have been made to the prior periods to conform the 2002 presentation.

|                                                                              |       |     | At
      December 31,    |  
|----------------------------------------------------------------------------- | ----- | --- | ------------------------ | -
|                                                                              |       |     |                          |  
|                                                                              |       |     | 2002                     |  
|                                                                              |       |     |                          |  
|                                                                              | Notes |     | (in
      million euros) |  
|ASSETS                                                                        |       |     |                          |  
|Cash and cash
      equivalents                                               |       |     | 959                      |  
|Accounts receivable
      – trade, net                                        |       |     | 1,644                    |  
|Other receivables                                                             |       |     | 1,043                    |  
|Inventories                                                                   |       |     | 1,459                    |  
|Deferred taxes                                                                | 33-3  |     | 60                       |  
|                                                                              |       |     |                          |  
|Current
      assets                                                          |       |     | 5,165                    |  
|                                                                              |       |     |                          |  
|Goodwill, net                                                                 |       |     | 6,790                    |  
|Intangible
      assets, net                                                  | 31-18 | (a) | 68                       |  
|Property, plant
      and equipment, net                                      |       |     | 10,327                   |  
|Investments
      in equity affiliates                                        |       |     | 1,827                    |  
|Other investments                                                             |       |     | 245                      |  
|Deferred taxes                                                                | 33-3  |     | 1,383                    |  
|Long-term receivables                                                         |       |     | 934                      |  
|                                                                              |       |     |                          |  
|Long-term
      assets                                                        |       |     | 21,574                   |  
|                                                                              |       |     |                          |  
|Total assets                                                                  |       |     | 26,739                   |  
|                                                                              |       |     |                          |  
|LIABILITIES
      AND SHAREHOLDERS’ EQUITY                                    |       |     |                          |  
|Accounts payable
      – trade                                                |       |     | 1,083                    |  
|Other payables                                                                |       |     | 1,864                    |  
|Current portion
      of long-term debt                                       |       |     | 467                      |  
|Short-term
      bank borrowings                                              |       |     | 450                      |  
|                                                                              |       |     |                          |  
|Current
      liabilities                                                     |       |     | 3,864                    |  
|                                                                              |       |     |                          |  
|Deferred taxes                                                                | 33-3  |     | 2,122                    |  
|Pension liability                                                             | 33-1  |     | 1,241                    |  
|Provisions                                                                    | 33-4  |     | 1,047                    |  
|Long-term debt                                                                |       |     | 10,135                   |  
|                                                                              |       |     |                          |  
|Long-term
      liabilities                                                   |       |     | 14,545                   |  
|                                                                              |       |     |                          |  
|Minority
      interests                                                      |       |     | 1,936                    |  
|Common stock (par value: 4 euros
      ; authorized: 132,880,433)             |       |     | 532                      |  
|Outstanding 2002 : 132,880,433
      ; 2001: 130,145,800 ; 2000: 112,441,935  |       |     |                          |  
|Additional paid-in capital                                                    |       |     | 4,805                    |  
|Retained earnings                                                             |       |     | 3,193                    |  
|Cumulative translation adjustments                                            |       |     | (1,497                   | )
|Accumulated other comprehensive
      (loss) income                           |       |     | (501                     | )
|Employee loans receivables                                                    |       |     | (21                      | )
|Treasury stock (2002 : 1,920,959
      ; 2001 : 1,864,372 ; 2000 : 1,837,840) |       |     | (117                     | )
|                                                                              |       |     |                          |  
|Total shareholders’equity                                                     |       |     | 6,394                    |  
|                                                                              |       |     |                          |  
|Total liabilities
      and shareholders’equity                               |       |     | 26,739                   |  
|                                                                              |       |     |                          |  

F - 86

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

|(g) | Consolidated statements of
      cash flows according to US GAAP
|--- | ----------------------------------------------------------------

For purposes of presenting consolidated statements of cash flows for the years ended December 31, 2002, 2001 and 2000 in a format consistent with US GAAP, the Company has reflected the financial statement impact of the reconciling items between French GAAP and US GAAP presented in the above mentioned notes.

|                                                                                                  | Years
      ended December 31, |  
|------------------------------------------------------------------------------------------------- | ------------------------------ | -
|                                                                                                  |                                |  
|                                                                                                  | 2002                           |  
|                                                                                                  |                                |  
|                                                                                                  | (in
      million euros)       |  
|NET CASH
      PROVIDED BY OPERATING ACTIVITIES                                                   |                                |  
|Net income                                                                                        | 436                            |  
|Adjustments
      to reconcile net income to net cash provided by operating activities:           |                                |  
|Minority interests                                                                                | 240                            |  
|Depreciation
      and amortization of goodwill                                                   | 851                            |  
|Cumulative
      effect of adoption of SFAS 142 (Note 31-18 (a))                                  | 160                            |  
|Share of net
      income of equity affiliates                                                    | (122                           | )
|Gains on disposals,
      net                                                                     | (212                           | )
|Deferred income
      taxes and tax provisions                                                    | 70                             |  
|Stock based
      compensation                                                                    | (35                            | )
|Other, net                                                                                        | 359                            |  
|Extraordinary
      loss on extinguishment of debt                                                |                               |  
|Changes in
      operating assets and liabilities, net of effects from acquisitions of businesses |                                |  
|(Increase)
      decrease in inventories                                                          | (39                            | )
|Decrease
      (increase) in accounts receivable-trade                                            | 460                            |  
|(Increase)
      decrease in other receivables                                                    | (51                            | )
|(Decrease)
      increase in accounts payable-trade                                               | (517                           | )
|(Decrease)
      increase in other payables                                                       | (45                            | )
|                                                                                                  |                                |  
|Net cash
      provided by operating activities                                                   | 1,555                          |  
|                                                                                                  |                                |  
|NET CASH
      USED IN INVESTING ACTIVITIES                                                       |                                |  
|Capital expenditures                                                                              | (1,010                         | )
|Acquisitions
      of subsidiaries (1)                                                            | (263                           | )
|Investments
      in equity affiliates                                                            | (32                            | )
|Dividends received
      from equity affiliates                                                   | 57                             |  
|Proceeds from
      sale of property plant and equipment                                          | 514                            |  
|Proceeds from
      sale of companies (2)                                                         | 247                            |  
|Net (decrease)
      increase in long-term receivables                                            | (3                             | )
|                                                                                                  |                                |  
|Net cash
      used in investing activities                                                       | (490                           | )
|                                                                                                  |                                |  
|NET CASH
      PROVIDED BY FINANCING ACTIVITIES                                                   |                                |  
|Proceeds from
      issuance of common stock                                                      | 185                            |  
|Proceeds from
      issuance of common stock  minority interests subscription                    | 48                             |  
|Issuance of
      warrants                                                                        |                               |  
|Purchase of
      treasury stock                                                                  | (4                             | )
|Dividends paid                                                                                    | (297                           | )
|Dividends paid
      by subsidiaries to minority interests                                        | (69                            | )
|Proceeds from
      issuance of long-term debt                                                    | 582                            |  
|Repayment of
      long-term debt                                                                 | (734                           | )
|(Decrease)
      increase in short-term debt                                                      | (664                           | )
|                                                                                                  |                                |  
|Net cash
      (used in) provided by financing activities                                         | (953                           | )
|                                                                                                  |                                |  
|Net effect
      of foreign currency translation on cash and cash equivalents                     | (170                           | )
|                                                                                                  |                                |  
|(Decrease)
      increase in cash and cash equivalents                                            | (58                            | )
|Cash and cash
      equivalents at beginning of year                                              | 1,017                          |  
|                                                                                                  |                                |  
|Cash and
      cash equivalents at end of year                                                    | 959                            |  
|                                                                                                  |                                |  
|(1) Net
      of cash and cash equivalents of companies acquired                                  |                                |  
|(2) Net
      of cash and cash equivalents of companies disposed of                               |                                |  
|                                                                                                  |                                |  
|SUPPLEMENTAL
      DISCLOSURES                                                                    |                                |  
|Cash payments
      during the period for                                                         |                                |  
|Interest                                                                                          | 574                            |  
|Income taxes                                                                                      | 409                            |  
|Non-cash
      transactions:                                                                      |                                |  
|Preferred shares
      issued in connection with the Warren acquisition                           |                               |  
|Warrants issued
      in connection with the Warren acquisition                                   |                               |  
|Exercise of
      stock subscription warrants                                                     |                               |  
|Issuance of
      shares in connection with the acquisition of Lafarge Braas                      |                               |  
|Issuance of
      shares in connection with the acquisition of Cementia                           | 50                             |  

F - 87

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

Note 33  Additional US GAAP
  Disclosure Information

|1. | Pensions and employee benefits
|-- | ------------------------------

The liability with respect to defined
  benefit pension plans is in substantially all instances the defined benefit
  obligation calculated annually by independent actuaries using the projected
  unit credit method and applying, when relevant, all provisions of Statement
  of Financial Accounting Standards 87, Employers’ Accounting
  for Pensions (“SFAS 87”), Statement of Financial Accounting
  Standards 88, Employers Accounting for Settlements and Curtailments of Defined
  Pension Plans and for Termination Benefits (“SFAS 88”), Statement
  of Financial Accounting Standards 106, Employers Accounting for Post-retirement
  Benefits Other than Pensions (“SFAS 106”) and Statement of Financial
  Accounting Standards 112, Employers Accounting for Post-employment Benefits
  (“SFAS 112”).

The projected benefit obligation,
  accumulated benefit obligation and fair value of plan assets for the pension
  plans with accumulated benefit obligations in excess of plan assets were 2,492.4
  million euros, 2,331.6 million euros and 2,049.2 million euros respectively,
  at December 31, 2002; 375.2 million euros, 238.3 million euros and 169.4 million
  euros, respectively, at December 31, 2001, and 409.4 million euros, 347.3 million
  euros and 44.4 million euros, respectively, at December 31, 2000.

The Company has recorded additional minimum liability adjustments as reductions (increases) in other comprehensive income of 275 million, 13 million and (5) million euros, net of tax and minority interests, for the years ended December 31, 2002, 2001 and 2000 respectively. The additional minimum liability results from plans where the accumulated benefit obligation exceeds the fair value of plan assets. Accounting for pension costs under French GAAP does not require the recording of a minimum liability adjustment.

The difference between the net amount accrued under US GAAP and the net amount accrued under French GAAP can be summarized as follows:

|                                                                                 | Pension
      benefits   |   | Other
      benefits |   | Total  |  
|-------------------------------------------------------------------------------- | ------------------------ | - | -------------------- | - | ------ | -
|                                                                                 |                          |   |                      |   |        |  
|                                                                                 | 2002                     |   | 2001                 |   | 2000   |  
|                                                                                 |                          |   |                      |   |        |  
|                                                                                 | (in
      million euros) |  
|Net amount recognized under
      US GAAP                                        | 140.2                    |   | 131.4                |   | (47.2  | )
|Minimum liability adjustment
      (MLA)                                         | (538.4                   | ) | (34.5                | ) |       |  
|Net amount accrued for under
      US GAAP                                       | (398.2                   | ) | 96.9                 |   | (47.2  | )
|Accrued benefit liability
      (including MLA)                                  | (997.7                   | ) | (548.8               | ) | (401.8 | )
|Prepaid benefit cost (including
      MLA)                                       | 599.5                    |   | 645.7                |   | 354.6  |  
|                                                                                 |                          |   |                      |   |        |  
|US GAAP adjustments,
      see Note 32(d)(3)*                                    | 536.1                    |   | 34.1                 |   | 12.8   |  
|                                                                                 |                          |   |                      |   |        |  
|Change in scope
      of consolidation                                           | (13.6                    | ) | (15.1                | ) |       |  
|                                                                                 |                          |   |                      |   |        |  
|Reclassifications
      **                                                       | 14.5                     |   | 25.7                 |   | 11.8   |  
|                                                                                 |                          |   |                      |   |        |  
|Net amount
      accrued in consolidated financial statements under French GAAP. | 138.8                    |   | 141.6                |   | (22.6  | )
|Accrued                                                                          | (478.1                   | ) | (511.4               | ) | (374.0 | )
|Prepaid                                                                          | 616.9                    |   | 653.0                |   | 351.4  |  

|                                                                                                                                                                                                             | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | 
|*   Adjustments
      include impacts of transition obligation, prior service cost, actuarial
      gains recognized with a different timing under local regulations and minimum
      liability adjustment.
|**   Reclassifications
      include amounts recorded for French GAAP within other payables                                                                                                                 

The company provides certain retiree
  health and life insurance benefits to eligible employees who retire in the U.S.
  or Canada. Salaried participants generally become eligible for retiree health
  care benefits when they retire from active service at age 55 or later, although
  there are some variances by plan or unit in the U.S. and Canada. Benefits, eligibility
  and cost-sharing provisions for hourly employees vary by location and/or bargaining
  unit. Generally, the health care plans pay a stated percentage of most medical
  and dental expenses reduced for any deductible, copayment and payments made
  by government programs and other group coverage. These plans are unfunded. An
  eligible retiree’s health care benefit coverage is coordinated in Canada with
  provincial health and insurance plans and

F - 88

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

in the U.S., after attaining age
  65, with Medicare. Certain retired employees of businesses acquired by the company
  are covered under other health care plans that differ from current plans in
  coverage, deductibles and retiree contributions.

In the U.S., salaried retirees and
  dependents under age 65 have a 2.0 million US dollars (approximately 1.9 million
  euros) health care lifetime maximum benefit. At age 65 or over, the maximum
  is 50,000 US dollars (approximately 47,700 euros). Lifetime maximums for hourly
  retirees are governed by the location and/or bargaining agreement in effect
  at the time of retirement. In Canada, some units have maximums, but in most
  cases there are no lifetime maximums. In some units in Canada, spouses of retirees
  have lifetime medical coverage.

In Canada, both salaried and nonsalaried employees are generally eligible for postretirement life insurance benefits.  In the U.S., postretirement life insurance is provided for a number of hourly employees as stipulated in their hourly bargaining agreements, but it is not provided for salaried employees, except those of certain acquired companies.

The assumed health care cost trend rate used in measuring the accumulated postretirement benefit obligation differs between U.S. and Canadian plans.  In 2002, the pre-65 assumed rate was 13.0 percent, decreasing to 5.5 percent over ten years, in the U.S. plan, and 9.8 percent, decreasing to 4.7 percent over seven years, in the Canadian plan.  In 2001, the pre-65 assumed rate was 10.0 percent, decreasing to 5.5 percent over ten years, in the U.S. plan, and 10.2 percent, decreasing to 4.7 percent over seven years in the Canadian plan.  For post-65 retirees in the U.S., the assumed rate was 13.0 percent, decreasing to 5.5 percent over ten years, in 2002, and 10.0 percent, decreasing to 5.5 percent over ten years, in 2001, with a Medicare assumed rate for the same group of 13.0 percent, decreasing to 5.5 percent over ten years, in 2002, and 10.0 percent, decreasing to 5.5 percent over ten years, in 2001.  For post-65 retirees in Canada, the assumed rate was 9.8
percent, decreasing to 4.7 percent over seven years, in 2002, and 10.2 percent, decreasing to 4.7 percent over seven years, in 2001.

F - 89

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

|2. | Accounting for
      stock-based compensation
|-- | ---------------------------------------------

Lafarge S.A. maintains a variable
  stock option plan and an employee stock purchase plan. The stock option plan
  grants options to purchase shares of the Company’s common stock to executives,
  senior management, and other employees who have contributed significantly to
  the performance of the Company. The option exercise price approximates market
  value on the grant date. The options expire ten years from the grant date. The
  vesting period of the options range from immediate, to five years. The Company
  accounts for employee stock options using the intrinsic value method prescribed
  by APB 25.

Information relating to the Lafarge S.A. stock options granted during 2002, 2001 and 2000 is summarized as follows:

|                                                                     | 2002      |                            | 2001             |  | 2000                       |       
|-------------------------------------------------------------------- | --------- | -------------------------- | ---------------- |  | -------------------------- | ------
|                                                                     |           |                           
|Shares                                                               |           | Average
      option price | Shares           |  | Average
      option price | Shares
|                                                                     |           |                            |                  |  |                           
|                                                                     |           |                            | (in
      euros) |  |                            |       
|At January
      1                                                   | 4,653,256 |                            | 77.34            |  | 3,758,414                  |       
|Options granted                                                      | 909,763   |                            | 93.11            |  | 1,270,427                  |       
|Options exercised                                                    | (181,359  | )                          | 42.66            |  | (372,923                   | )     
|Options cancelled                                                    | (1,937    | )                          | 32.43            |  | (2,662                     | )     
|                                                                     |           |                            |                  |  |                            |       
|At December
      31                                                 | 5,379,723 |                            | 81.22            |  | 4,653,256                  |       
|                                                                     |           |                            |                  |  |                            |       
|Options exercisable at December
      31                             | 1,585,453 |                            | 50.22            |  | 960,878                    |       
|                                                                     |           |                            |                  |  |                            |       
|Weighted
      average fair value of options granted during the year |           |                            | 31.38            |  |                            |       
|                                                                     |           |                            |                  |  |                            |       

F - 90

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

Information relating to the Lafarge
  S.A. stock options outstanding at December 31, 2002 is summarized as follows:

|                               |  |                                           |  |                                                       |  |                                           | 
|------------------------------ |  | ----------------------------------------- |  | ----------------------------------------------------- |  | ----------------------------------------- | 
|Exercise
      price(in euros) |  | Number of
      options
      outstanding |  | Weighted
      average
      remaining life in months |  | Number of
      options
      exercisable | 
|                               |  |                                           |  |                                                       |  |                                           | 
|50.98                          |  | 73,844                                    |  | 12                                                    |  | 73,844                                    | 
|51.67                          |  | 128,580                                   |  | 22                                                    |  | 128,580                                   | 
|46.97                          |  | 16,002                                    |  | 29                                                    |  | 16,002                                    | 
|45.80                          |  | 362,756                                   |  | 36                                                    |  | 362,756                                   | 
|45.80                          |  | 170,363                                   |  | 36                                                    |  | 170,363                                   | 
|42.24                          |  | 54,651                                    |  | 49                                                    |  | 54,651                                    | 
|53.34                          |  | 357,050                                   |  | 61                                                    |  | 357,050                                   | 
|53.34                          |  | 422,207                                   |  | 61                                                    |  | 422,207                                   | 
|79.41                          |  | 126,508                                   |  | 66                                                    |  |                                          | 
|78.84                          |  | 103,543                                   |  | 73                                                    |  |                                          | 
|87.89                          |  | 984,008                                   |  | 85                                                    |  |                                          | 
|84.75                          |  | 469,623                                   |  | 97                                                    |  |                                          | 
|108.53                         |  | 12,000                                    |  | 101                                                   |  |                                          | 
|102.20                         |  | 1,188,825                                 |  | 107                                                   |  |                                          | 
|108.18                         |  | 437,373                                   |  | 113                                                   |  |                                          | 
|79.19                          |  | 472,390                                   |  | 119                                                   |  |                                           | 
|                               |  |                                           |  |                                                       |  |                                           | 
|                               |  | 5,379,723                                 |  |                                                       |  | 1,585,453                                 | 
|                               |  |                                           |  |                                                       |  |                                           | 

In addition to the Lafarge S.A. plan
  described above, the following information describes the stock-based compensation
  plans of Lafarge North America Inc., a 54% owned subsidiary of Lafarge S.A.
  The stock-based compensation plans of Lafarge North America Inc. are denominated
  in its own stock.

Lafarge North America Inc. and
  its subsidiaries stock option and purchase plans

Lafarge North America Inc. maintains
  a fixed stock option plan and an employee stock purchase plan. Under the fixed
  stock option plan, directors and key employees of Lafarge North America Inc.
  may be granted stock options that entitle the holder to receive shares of Lafarge
  North America Inc.’s common stock based on the market price of the securities
  at the date of grant. Director’s options are exercisable based on the
  length of a director’s service on the Board of Directors and become fully
  exercisable when a director has served on the Board for over four years. Employee
  options vest ratably over a four-year period. The options expire ten years after
  the date of grant. There were approximately 4.3 million, 4.0 million and 3.8
  million outstanding options at December 31, 2002, 2001 and 2000, respectively.

The employee stock purchase plan allows
  substantially all employees to purchase common stock of Lafarge North America
  Inc., through payroll deductions, at 90 percent of the lower of the beginning
  or end of the plan year market prices. During 2002, 56,395 shares were issued
  at a price of 28.09 euros, in 2001, 65,555 shares were issued at a share price
  of 26.04 euros and in 2000, 93,500 shares were issued at a price of 24 euros.
  At December 31, 2002, 2001 and 2000, 1.9 million euros, 1.6 million euros and
  1.3 million euros, respectively, were allocated for future share purchases.

The Company accounts for the Lafarge
  North America Inc.’s stock option plans under APB 25. Accordingly, no
  compensation expense was recognized for these plans.

F - 91

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

Information relating to Lafarge North
  America Inc.’s stock options granted during 2002, 2001 and 2000 is summarized
  as follows:

|                                  | 2002      |   | 2001                |  | 2000      |  
|--------------------------------- | --------- | - | ------------------- |  | --------- | -
|                                  |           |   |                     |  |           |  
|                                  | Shares    |   | Averageoption price |  | Shares    |  
|                                  |           |   |                     |  |           |  
|                                  |           |   | (in euros)          |  |           |  
|At January 1                      | 3,978,950 |   | 32.25               |  | 3,835,175 |  
|Options granted                   | 1,167,500 |   | 39.20               |  | 1,088,750 |  
|Options exercised                 | (762,720  | ) | 26.60               |  | (801,850  | )
|Options cancelled                 | (123,437  | ) | 29.71               |  | (143,125  | )
|                                  |           |   |                     |  |           |  
|At December 31                    | 4,260,293 |   | 31.08               |  | 3,978,950 |  
|                                  |           |   |                     |  |           |  
|Options exercisable atDecember 31 | 1,775,593 |   | 28.55               |  | 1,716,933 |  
|                                  |           |   |                     |  |           |  

At December 31, 2002, the 4.3 million
  stock options outstanding under Lafarge North America Inc.’s stock option
  plans have an exercise price between 15.02 euros per share and 41.83 euros per
  share and a weighted average remaining contractual life of 7.10 years.

The Company estimates the fair value
  of the options granted in 2002, 2001 and 2000 based on the following assumptions:

|                                       | Lafarge
        S.A. options
      Years ended December
        31, |   | Lafarge
        North America Inc. options
      Years ended December
        31, |  
|-------------------------------------- | ------------------------------------------------------------------- | - | --------------------------------------------------------------------------------- | -
|                                       |                                                                     |   |                                                                                   |  
|                                       | 2002                                                                |   | 2001                                                                              |  
|                                       |                                                                     |   |                                                                                   |  
|Expected dividend yield                | 2.5                                                                 | % | 2.0                                                                               | %
|Expected volatility
      of stock     | 36.2                                                                | % | 36.5                                                                              | %
|Risk-free interest rate                | 4.0                                                                 | % | 5.0                                                                               | %
|Expected life of theoptions (in years) | 8.0                                                                 |   | 8.0                                                                               |  

The Company assumes that the equivalent
  risk-free interest rate is the closing market rate, on the last trading day
  of the year, for treasury notes with a maturity similar to the expected life
  of the options.

The Lafarge S.A. stock incentive plan
  was introduced on November 29, 1989. The Company assumes the estimated life
  of the outstanding option agreements based upon the number of options historically
  exercised and cancelled since the plan’s inception.

The Company uses the treasury stock
  method for purposes of determining the number of shares to be issued in conjunction
  with the Company’s stock incentive plan. Based upon the number and amounts
  of vested and unvested options outstanding, the dilutive effect on the Company’s
  outstanding shares for the years ended December 31, 2002, 2001 and 2000 was
  918,000, 1,241,000 and 947,000 shares respectively.

F - 92

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

|3.  | Income taxes (SFAS 109)            
|--- | -----------------------------------
|    |                                    
|(a) | Deferred tax assets and liabilities

The net deferred tax liabilities under US GAAP are as follows:

|                                                                     | At
      December 31,    |  
|-------------------------------------------------------------------- | ------------------------ | -
|                                                                     |                          |  
|                                                                     | 2002                     |  
|                                                                     |                          |  
|                                                                     | (in
      million euros) |  
|Net capital
      loss carry forwards                                | 245                      |  
|Net operating
      loss and tax credit carry forwards               | 815                      |  
|Net world-wide
      consolidation foreign tax credit carry forwards | 75                       |  
|Pensions and
      other post-retirement benefits                    | 409                      |  
|Property, plant
      and equipment                                  | 374                      |  
|Provisions
      and other current liabilities other                 | 259                      |  
|Restructuring
      provisions                                       | 56                       |  
|                                                                     |                          |  
|Deferred
      tax assets                                            | 2,233                    |  
|Valuation allowance                                                  | (790                     | )
|                                                                     |                          |  
|Net deferred
      tax assets                                        | 1,443                    |  
|                                                                     |                          |  
|Property, plant
      and equipment                                  | (1,611                   | )
|Prepaid pension assets                                               | (193                     | )
|Other                                                                | (324                     | )
|                                                                     |                          |  
|Deferred
      tax liabilities                                       | (2,128                   | )
|                                                                     |                          |  
|Net deferred
      tax liabilities                                   | (685                     | )
|                                                                     |                          |  
|                                                                     |                          |  
|                                                                     |                         
|Deferred
      income taxes under US GAAP are summarized as follows: |                         
|                                                                     | At
      December 31,    |  
|                                                                     |                          |  
|                                                                     | 2002                     |  
|                                                                     |                          |  
|                                                                     | (in
      million euros) |  
|Current deferred
      tax assets                                    | 60                       |  
|Long-term deferred
      tax assets                                  | 1,383                    |  
|Current deferred
      tax liabilities                               | (6                       | )
|Long-term deferred
      tax liabilities                             | (2,122                   | )
|                                                                     |                          |  
|Net deferred
      tax liabilities                                   | (685                     | )
|                                                                     |                          |  

|    |                   
|--- | ------------------
|(b) | Effective tax rate

A reconciliation of the French statutory tax rate to the Company's effective tax rate under US GAAP is as follows:

|                                                           | Years
      ended December 31, |  
|---------------------------------------------------------- | ------------------------------ | -
|                                                           |                                |  
|                                                           | 2002                           |  
|                                                           | %                              |  
|                                                           |                                |  
|Statutory tax
      rate                                   | 33.3                           |  
|Capital gains
      taxed at a reduced rate                | (1.6                           | )
|Provision for
      “competition” litigation risk          | 9.2                            |  
|Effect of foreign
      tax rate differentials             | (0.6                           | )
|Changes in
      enacted tax rates                         |                               |  
|Change in valuation
      allowance on deferred tax assets | (2.3                           | )
|Permanent differences                                      | (0.7                           | )
|Non deductible
      amortization of goodwill              |                               |  
|Other items,
      net                                     | (3.2                           | )
|                                                           |                                |  
|Effective tax rate                                         | 34.1                           |  
|                                                           |                                |  

F - 93

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

As disclosed in Note 28, Lafarge SA
  recorded a provision for “competition” litigation risk at December
  31, 2002 in the amount of 300 million euros. This reserve is non-deductible
  under French tax law. Consequently, the effective tax rate of the Company increased
  by 9.2%.

The current year change in the valuation allowance for the deferred tax assets includes a 24 million euro decrease arising from Lafarge North America. The Company considers that the continued favorable long-term outlook of the United States market for the Company's products, particularly in light of the Company's ability to generate taxable income during the recent economic downturn, and management's projections of future taxable income in the United States, management has determined that there is no longer sufficient reason to believe that the recorded deferred tax assets will not be realized. Based on the provisions of SFAS 109, this change in judgement about the realizability of the deferred tax assets in future years is treated as arising from continuing operations and is included as a component of income tax expense in 2002. The change in the valuation allowance has resulted in a 2.3% decrease in the effective tax rate.

|(c) | Operating loss and tax credit carry forwards
|--- | --------------------------------------------

At December 31, 2002, the Company has net operating loss carry forwards (NOLs) and tax credit carry forwards of approximately 2,615 million euros, which will expire as follows:

|                    | NOLs
      and tax credits carry forwards | 
|------------------- | ----------------------------------------- | 
|                    |                                           | 
|                    | (in
      million euros)                  | 
|2003                | 160                                       | 
|2004                | 124                                       | 
|2005                | 320                                       | 
|2006                | 352                                       | 
|2007                | 175                                       | 
|2008 and thereafter | 1,484                                     | 
|                    |                                           | 
|Total               | 2,615                                     | 
|                    |                                           | 

At December 31, 2002, the Company
  has capital loss carry forwards of approximately 1,287 million euros, which
  will expire as follows:

|                    | Capital
      loss carry forwards | 
|------------------- | --------------------------------- | 
|                    |                                   | 
|                    | (in
      million euros)          | 
|2003                | 12                                | 
|2004                | 5                                 | 
|2005                | 1                                 | 
|2006                | 2                                 | 
|2007                | 981                               | 
|2008 and thereafter | 286                               | 
|                    |                                   | 
|Total               | 1,287                             | 
|                    |                                   | 

Under French tax law, capital gains and losses are taxed at a rate of 19%.

|(d) | Taxes not accrued on undistributed earnings
|--- | -------------------------------------------

The Company has not provided any deferred income taxes on the undistributed earnings of its foreign subsidiaries based upon its determination that such earnings will be indefinitely reinvested. At December 31, 2002, the cumulative undistributed earnings of these subsidiaries were approximately 11,700 million euros. Company management has decided that the determination of the amount of any unrecognized deferred tax liability for the cumulative undistributed earnings of the foreign subsidiaries is not practical since it would depend on a number of factors that cannot be known until such time as a decision to repatriate the earnings might be made. In addition, no provision for income taxes has been made for approximately 786 million euros of unremitted earnings of the Company’s French subsidiaries in that:

|- | the remittance of such earnings would be tax exempt for 95% or more owned subsidiaries,
|- | ---------------------------------------------------------------------------------------

|- | the income tax which would be paid upon distribution of the undistributed earnings of 95% or less owned subsidiaries and equity investees could be offset by foreign tax credits in the world-wide consolidated tax return as described in Note 9 and reimbursed to the Company.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F - 94

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

|4. | Provisions
|-- | ----------

|    |                                           
|--- | ------------------------------------------
|(a) | Changes in the balance of
      provisions

|                                   |                                  |   |                                                       |   |                          |   |                          |  
|---------------------------------- | -------------------------------- | - | ----------------------------------------------------- | - | ------------------------ | - | ------------------------ | -
|                                   | Restructuring
        provisions |   | Site
        restoration and environmental provisions |   | Other
        provisions |   | Total
        provisions |  
|                                   |                                  |   |                                                       |   |                          |   |                          |  
|                                   | (in
      million euros)         |  
|Balance at January 1, 2000         | 31                               |   | 138                                                   |   | 200                      |   | 369                      |  
|Current year addition, net         | 59                               |   | 21                                                    |   | 61                       |   | 141                      |  
|Current year release               | (68                              | ) | (32                                                   | ) | (77                      | ) | (177                     | )
|Other changes                      | 11                               |   | 18                                                    |   | 36                       |   | 65                       |  
|Translation adjustments            | 2                                |   | 1                                                     |   |                         |   | 3                        |  
|                                   |                                  |   |                                                       |   |                          |   |                          |  
|Balance at December 31, 2000       | 35                               |   | 146                                                   |   | 220                      |   | 401                      |  
|Current year addition, net         | 107                              |   | 38                                                    |   | 149                      |   | 294                      |  
|Current year release               | (157                             | ) | (40                                                   | ) | (212                     | ) | (409                     | )
|Other changes                      | 173                              |   | 28                                                    |   | 253                      |   | 454                      |  
|Translation adjustments            |                                 |   | 2                                                     |   | (1                       | ) | 1                        |  
|                                   |                                  |   |                                                       |   |                          |   |                          |  
|Balance at December 31, 2001       | 158                              |   | 174                                                   |   | 409                      |   | 741                      |  
|Current year addition, net         | 156                              |   | 52                                                    |   | 421                      |   | 629                      |  
|Current year release               | (231                             | ) | (43                                                   | ) | (106                     | ) | (380                     | )
|Changes in scope and other changes | 22                               |   | 34                                                    |   | 60                       |   | 116                      |  
|Translation adjustments            | (10                              | ) | (16                                                   | ) | (33                      | ) | (59                      | )
|                                   |                                  |   |                                                       |   |                          |   |                          |  
|Balance at December 31, 2002       | 95                               |   | 201                                                   |   | 751                      |   | 1,047                    |  
|                                   |                                  |   |                                                       |   |                          |   |                          |  

|   |                                                                                              
|-- | ---------------------------------------------------------------------------------------------
|5. | Summarized Combined Balance
      Sheet and Income Statement Information of Equity Affiliates

The following tables present balance
  sheet and income statement information, on a combined basis, for those entities
  that are accounted for using the equity method under US GAAP. The combined information
  for those entities that are proportionately consolidated under French GAAP is
  separately presented.

|(a) | Combined balance sheet information
|--- | ----------------------------------

|                                          |                          |  |                                    | 
|----------------------------------------- | ------------------------ |  | ---------------------------------- | 
|                                          | Equity
      affiliates  |  | Proportionately
      consolidated | 
|                                          |                          |  |                                    | 
|                                          | At
      December 31,    |  | At
      December 31,              | 
|                                          |                          |  |                                    | 
|                                          | 2002                     |  | 2001                               | 
|                                          |                          |  |                                    | 
|                                          | (in
      million euros) |  | (in
      million euros)           | 
|Current assets                            | 1,721                    |  | 2,018                              | 
|Long-term assets                          | 4,154                    |  | 3,159                              | 
|                                          |                          |  |                                    | 
|Total assets                              | 5,875                    |  | 5,177                              | 
|                                          |                          |  |                                    | 
|Current liabilities                       | 1,277                    |  | 1,271                              | 
|Long-term liabilities                     | 2,117                    |  | 1,668                              | 
|Total equity                              | 2,481                    |  | 2,238                              | 
|                                          |                          |  |                                    | 
|Total liabilitiesand shareholders’ equity | 5,875                    |  | 5,177                              | 
|                                          |                          |  |                                    | 

|    |                                      
|--- | -------------------------------------
|(b) | Combined income statement information

|                 |                                |  |                                    | 
|---------------- | ------------------------------ |  | ---------------------------------- | 
|                 | Equity
      affiliates        |  | Proportionately
      consolidated | 
|                 |                                |  |                                    | 
|                 | Years
      ended December 31, |  | Years
      ended December 31,     | 
|                 |                                |  |                                    | 
|                 | 2002                           |  | 2001                               | 
|                 |                                |  |                                    | 
|                 | (in
      million euros)       |  | (in
      million euros)           | 
|Sales            | 3,804                          |  | 3,566                              | 
|Operating income | 446                            |  | 413                                | 
|Net income       | 116                            |  | 134                                | 

F - 95

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| | LAFARGE                                                            | 
| | ------------------------------------------------------------------ | 
| |                                                                    | 
| | NOTES TO THE CONSOLIDATED
      FINANCIAL STATEMENTS – (Continued) | 

|   |                                                
|-- | -----------------------------------------------
|6. | Recently issued accounting
      pronouncements

|  |                                                             
|- | ------------------------------------------------------------
| | SFAS 143 “Accounting for Asset Retirement
      Obligations”

In June 2001, the FASB issued Statement
  of Financial Accounting Standards No. 143 “Accounting for Asset
  Retirement Obligations” (“SFAS 143”). This statement addresses
  financial accounting and reporting for obligations associated with the retirement
  of tangible long-lived assets and the associated asset retirement costs. SFAS
  143 requires that the fair value of asset retirement obligations be recognized
  as a liability when they are incurred.The Company will be required to
  implement SFAS No. 143 on January 1, 2003. The adoption of this standard is
  not expected to have a material impact on the Company’s financial position
  and results of operations.

| | SFAS 144 “Accounting for Impairment
      or Disposal of Long-Lived Assets”
|- | ---------------------------------------------------------------------------

In August 2001, the FASB issued Statement
  of Financial Accounting Standards No. 144 “Accounting for Impairment
  or Disposal of Long-Lived Assets” (“SFAS 144”). SFAS 144
  supersedes SFAS 121 “Accounting for the Impairment of Long-Lived Assets
  and for Long-Lived Assets to be Disposed Of,” addressing financial
  accounting and reporting for the impairment or disposal of long-lived assets.
  This statement is effective for fiscal years beginning after December 15, 2001.
  The adoption of SFAS 144 did not have a significant impact on the Company's
  financial position and results of operations.

| | SFAS 146 “Accounting for Costs Associated
      with Exit or Disposal Activities”
|- | ---------------------------------------------------------------------------------

In June 2002, the FASB issued Statement of Financial Accounting Standards No. 146 “Accounting for Costs Associated with Exit or Disposal Activities”(“SFAS 146”). This statement nullifies 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 principal difference between Statement 146 and Issue 94-3 relates to Statement 146’s requirements for recognition of a liability for a cost associated with an exit or disposal activity. SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. Under EITF 94-3, a liability is recognized at the date an entity commits to an exit plan. SFAS No. 146 also establishes that the liability should initially be measured and recorded at fair
value. The provisions of SFAS 146 are effective for any exit and disposal activities initiated after December 31, 2002. The adoption of this standard is not expected to have a material impact on the Company’s financial position and results of operations.

| | FASB Interpretation No. 45 “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others”
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------

In November 2002, the FASB issued FASB Interpretation No. 45 “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others”(“FIN 45”). This statement requires additional disclosures by guarantors about obligations under guarantees that it has issued. The statement also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of obligations undertaken in issuing guarantees.

The disclosure requirements of FIN 45 are effective for financial statements of interim and annual periods ending after December 15, 2002. The initial recognition and the initial measurement requirements are applicable on a prospective basis for guarantees issued or modified after December 31, 2002. The Company has not determined the effect if any the adoption of FIN 45 will have on its financial position and results of operation.

F - 96

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

| | FASB Interpretation No. 46 “Consolidation of Variable Interest Entities”
|- | ------------------------------------------------------------------------

In December 2002, the FASB issued FASB Interpretation No. 46“Consolidation of Variable Interest Entities”(“FIN 46”). This interpretation clarifies the application of Accounting Research Bulletin No. 51, “Consolidated Financial Statements”, to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The provisions of FIN 46 are applicable no later than July 1, 2003. The adoption of FIN 46 is not expected to have an effect on the Company’s financial position and results of operations.

F - 97

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

Note 34  Scope of Consolidation  Major Companies

|                                                          |  |            |  |        |  | Aggreg.            |  |         |  |        |  |         |  |          |  | Owner- |  | Consolidation
        method
|--------------------------------------------------------- |  | ---------- |  | ------ |  | ------------------ |  | ------- |  | ------ |  | ------- |  | -------- |  | ------ |  | ----------------------------
|Companies                                                 |  | Countries  |  | Cement |  | and
      Concrete |  | Roofing |  | Gypsum |  | Others  |  | Control% |  | ship%  |  | FrenchGAAP                  
|                                                          |  |            |  |        |  |                    |  |         |  |        |  |         |  |          |  |        |  |                             
|Colpa                                                     |  | Algeria    |  |        |  |                    |  |         |  | ▪      |  |         |  | 100.00   |  | 57.15  |  | Full                        
|Durlock SA(2)                                             |  | Argentina  |  |        |  |                    |  |         |  | ▪      |  |         |  | 40.00    |  | 40.00  |  | Proportionate               
|Lafarge Australia (Pty) Ltd                               |  | Australia  |  |        |  |                    |  |         |  | ▪      |  |         |  | 100.00   |  | 100.00 |  | Full                        
|Lafarge Perlmooser AG                                     |  | Austria    |  | ▪      |  | ▪                  |  |         |  |        |  |         |  | 100.00   |  | 100.00 |  | Full                        
|Schiedel Kaminwerke GmbH                                  |  | Austria    |  |        |  |                    |  | ▪       |  |        |  |         |  | 100.00   |  | 100.00 |  | Full                        
|Bramac Dachsysteme International
      GmbH (2)           |  | Austria    |  |        |  |                    |  | ▪       |  |        |  |         |  | 50.00    |  | 50.00  |  | Proportionate               
|Tondach Gleinstätten
      AG                             |  | Austria    |  |        |  |                    |  | ▪       |  |        |  |         |  | 25.00    |  | 25.00  |  | Equity                      
|Lafarge Surma Cement Limited                              |  | Bangladesh |  | ▪      |  |                    |  |         |  |        |  |         |  | 100.00   |  | 100.00 |  | Full                        
|RBB NV (2)                                                |  | Belgium    |  |        |  |                    |  | ▪       |  |        |  |         |  | 50.00    |  | 50.00  |  | Proportionate               
|Schiedel Sistemi Dimnjaka
      d.o.o                     |  | Bosnia     |  |        |  |                    |  | ▪       |  |        |  |         |  | 100.00   |  | 100.00 |  | Full                        
|Bramac Krovni Sistemi d.o.o
      (2)                     |  | Bosnia     |  |        |  |                    |  | ▪       |  |        |  |         |  | 50.00    |  | 50.00  |  | Proportionate               
|Companhia Nacional de Cimento
      Portland              |  | Brazil     |  | ▪      |  |                    |  |         |  |        |  |         |  | 99.75    |  | 99.75  |  | Full                        
|Cimento Maua                                              |  | Brazil     |  | ▪      |  |                    |  |         |  |        |  |         |  | 99.90    |  | 90.84  |  | Full                        
|Lafarge Brazil SA                                         |  | Brazil     |  | ▪      |  | ▪                  |  |         |  |        |  |         |  | 99.52    |  | 90.46  |  | Full                        
|Centralbeton Ltda                                         |  | Brazil     |  |        |  | ▪                  |  |         |  |        |  |         |  | 100.00   |  | 90.45  |  | Full                        
|Cimento Tupi SA                                           |  | Brazil     |  | ▪      |  |                    |  |         |  |        |  |         |  | 20.00    |  | 19.95  |  | Equity                      
|Gipsita SA Mineraçào,
      Industria e Commercio (2)     |  | Brazil     |  |        |  |                    |  |         |  | ▪      |  |         |  | 60.00    |  | 60.00  |  | Proportionate               
|Lafarge Roofing Brazil Ltda                               |  | Brazil     |  |        |  |                    |  | ▪       |  |        |  |         |  | 100.00   |  | 100.00 |  | Full                        
|Bramac Prokrovni Sistemi EOOD
      (2)                   |  | Bulgaria   |  |        |  |                    |  | ▪       |  |        |  |         |  | 50.00    |  | 50.00  |  | Proportionate               
|CPAC Monier (Cambodia) Co
      Ltd                       |  | Cambodia   |  |        |  |                    |  | ▪       |  |        |  |         |  | 25.00    |  | 25.00  |  | Equity                      
|Cimenteries du Cameroun                                   |  | Cameroon   |  | ▪      |  |                    |  |         |  |        |  |         |  | 56.73    |  | 56.73  |  | Full                        
|Lafarge Canada                                            |  | Canada     |  | ▪      |  | ▪                  |  |         |  | ▪      |  |         |  | 53.52    |  | 53.52  |  | Full                        
|Sociedad Industrial Romeral
      SA (2)                  |  | Chile      |  |        |  |                    |  |         |  | ▪      |  |         |  | 40.00    |  | 40.00  |  | Proportionate               
|Empresas Melon SA                                         |  | Chile      |  | ▪      |  | ▪                  |  |         |  |        |  | Mortars |  | 84.21    |  | 84.14  |  | Full                        
|Beijing Chinefarge Cement
      Limited Liability Company |  | China      |  | ▪      |  |                    |  |         |  |        |  |         |  | 65.00    |  | 57.25  |  | Full                        
|Beijing Ycheng Lafarge Concrete                           |  | China      |  |        |  | ▪                  |  |         |  |        |  |         |  | 76.71    |  | 67.57  |  | Full                        
|Dujiangyan                                                |  | China      |  | ▪      |  |                    |  |         |  |        |  |         |  | 75.00    |  | 66.05  |  | Full                        
|Lafarge Onoda Gypsum Shangaï
      (2)                    |  | China      |  |        |  |                    |  |         |  | ▪      |  |         |  | 50.00    |  | 31.29  |  | Proportionate               
|Lafarge Roofing System China
      Ltd                    |  | China      |  |        |  |                    |  | ▪       |  |        |  |         |  | 100.00   |  | 100.00 |  | Full                        
|Bramac Pokrovni Sistemi Doo
      (2)                     |  | Croatia    |  |        |  |                    |  | ▪       |  |        |  |         |  | 50.00    |  | 50.00  |  | Proportionate               
|Lafarge Cement AS                                         |  | Czech Rep. |  | ▪      |  | ▪                  |  |         |  |        |  |         |  | 96.37    |  | 96.36  |  | Full                        
|Bramac Spol sro (2)                                       |  | Czech Rep  |  |        |  |                    |  | ▪       |  |        |  |         |  | 50.00    |  | 50.00  |  | Proportionate               
|Lafarge Tekkin A/S                                        |  | Denmark    |  |        |  |                    |  | ▪       |  |        |  |         |  | 100.00   |  | 100.00 |  | Full                        
|Alexandria Portland Cement
      Company (2)              |  | Egypt      |  | ▪      |  |                    |  |         |  |        |  |         |  | 44.50    |  | 44.50  |  | Proportionate               
|Beni Suef Cement Company (2)                              |  | Egypt      |  | ▪      |  |                    |  |         |  |        |  |         |  | 47.50    |  | 47.50  |  | Proportionate               

|    |                                                                                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------
|(1) | These companies
      are consolidated under French GAAP, but accounted for under the equity method
      under US GAAP [see Note 31-17 (a)]
|(2) | These companies
      are proportionately consolidated under French GAAP, but accounted for under
      the equity method under US GAAP     
|    | [see
      Note 31-17 (b)]                                                                                                                  

F - 98

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| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

|Companies                                        |            | Countries |        | Cement |  | Aggreg.andConcrete |  | Roofing |  | Gypsum |  | Others                   |  | Control% |  | Owner-Ship% |  | Consolidation
      method
|------------------------------------------------ | ---------- | --------- | ------ | ------ |  | ------------------ |  | ------- |  | ------ |  | ------------------------ |  | -------- |  | ----------- |  | --------------------------
|                                                 | FrenchGAAP |           | USGAAP
|                                                 |            |           |        |        |  |                    |  |         |  |       
|Lafarge
      Tekkin OY                          |            | Finland   |        |        |  |                    |  | ▪       |  |        |  |                          |  | 100.00   |  | 100.00      |  | Full                      
|Schiedel
      Savuhormistot OY                  |            | Finland   |        |        |  |                    |  | ▪       |  |        |  |                          |  | 100.00   |  | 100.00      |  | Full                      
|Lafarge
      Ciments                            |            | France    |        | ▪      |  |                    |  |         |  |        |  |                          |  | 100.00   |  | 100.00      |  | Full                      
|Société
      des Ciments Antillais              |            | France    |        | ▪      |  | ▪                  |  |         |  |        |  |                          |  | 69.44    |  | 69.44       |  | Full                      
|Lafarge
      Bétons                             |            | France    |        |        |  | ▪                  |  |         |  |        |  |                          |  | 100.00   |  | 100.00      |  | Full                      
|Lafarge Granulats                                |            | France    |        |        |  | ▪                  |  |         |  |        |  |                          |  | 100.00   |  | 100.00      |  | Full                      
|Lafarge Plâtres                                  |            | France    |        |        |  |                    |  |         |  | ▪      |  |                          |  | 100.00   |  | 100.00      |  | Full                      
|Materis                                          |            | France    |        |        |  |                    |  |         |  |        |  | Specialty
      Products |  | 33.36    |  | 33.36       |  | Equity                    
|Lafarge Couverture SA                            |            | France    |        |        |  |                    |  | ▪       |  |        |  |                          |  | 100.00   |  | 100.00      |  | Full                      
|Cie Réunionaise
      d'importation              |            | France    |        | ▪      |  |                    |  |         |  |        |  |                          |  | 100.00   |  | 82.88       |  | Full                      
|Sobex                                            |            | France    |        |        |  | ▪                  |  |         |  |        |  |                          |  | 100.00   |  | 93.30       |  | Full                      
|Lafarge
      Zement GmbH (Holding)              |            | Germany   |        | ▪      |  | ▪                  |  |         |  |        |  |                          |  | 100.00   |  | 100.00      |  | Full                      
|Wössinger Zement GmbH                            |            | Germany   |        | ▪      |  |                    |  |         |  |        |  |                          |  | 100.00   |  | 100.00      |  | Full                      
|Karsdorfer
      Zement GmbH                     |            | Germany   |        | ▪      |  |                    |  |         |  |        |  |                          |  | 100.00   |  | 100.00      |  | Full                      
|Lafarge Beton Rheinland                          |            | Germany   |        |        |  | ▪                  |  |         |  |        |  |                          |  | 100.00   |  | 100.00      |  | Full                      
|Lafarge
      Beton GmbH                         |            | Germany   |        |        |  | ▪                  |  |         |  |        |  |                          |  | 100.00   |  | 100.00      |  | Full                      
|Turmgips                                         |            | Germany   |        |        |  |                    |  |         |  | ▪      |  |                          |  | 100.00   |  | 100.00      |  | Full                      
|Lafarge
      Gips GmbH                          |            | Germany   |        |        |  |                    |  |         |  | ▪      |  |                          |  | 100.00   |  | 100.00      |  | Full                      
|Lafarge Roofing GmbH                             |            | Germany   |        |        |  |                    |  | ▪       |  |        |  |                          |  | 100.00   |  | 100.00      |  | Full                      
|Lafarge
      Dachsysteme GmbH                   |            | Germany   |        |        |  |                    |  | ▪       |  |        |  |                          |  | 100.00   |  | 100.00      |  | Full                      
|Lafarge Roofing Components
         GmbH & Co KG |            | Germany   |        |        |  |                    |  | ▪       |  |        |  |                          |  | 100.00   |  | 100.00      |  | Full                      
|RuppKeramik
      GmbH                           |            | Germany   |        |        |  |                    |  | ▪       |  |        |  |                          |  | 100.00   |  | 100.00      |  | Full                      
|Schiedel GmbH & Co                               |            | Germany   |        |        |  |                    |  | ▪       |  |        |  |                          |  | 100.00   |  | 100.00      |  | Full                      
|BTG Schornsteintechnik
      GmbH                |            | Germany   |        |        |  |                    |  | ▪       |  |        |  |                          |  | 100.00   |  | 100.00      |  | Full                      
|Kloeber GmbH & Co KG                             |            | Germany   |        |        |  |                    |  | ▪       |  |        |  |                          |  | 100.00   |  | 100.00      |  | Full                      
|Hellamat                                         |            | Greece    |        |        |  | ▪                  |  |         |  |        |  |                          |  | 53.17    |  | 53.12       |  | Full                      
|Heracles General Cement                          |            | Greece    |        | ▪      |  | ▪                  |  |         |  |        |  |                          |  | 53.17    |  | 53.12       |  | Full                      
|Industria Cementera Hondurena                    |            | Honduras  |        | ▪      |  |                    |  |         |  |        |  |                          |  | 53.00    |  | 52.80       |  | Full                      
|Bramac KFT (2)                                   |            | Hungary   |        |        |  |                    |  | ▪       |  |        |  |                          |  | 50.00    |  | 50.00       |  | Proportionate             
|Lafarge
      India Ltd                          |            | India     |        | ▪      |  |                    |  |         |  |        |  |                          |  | 70.78    |  | 70.78       |  | Full                      
|P.T. Semen Andalas Indonesia                     |            | Indonesia |        | ▪      |  |                    |  |         |  |        |  |                          |  | 100.00   |  | 100.00      |  | Full                      
|P.T. Lafarge
      Roofing Indonesia             |            | Indonesia |        |        |  |                    |  | ▪       |  |        |  |                          |  | 100.00   |  | 100.00      |  | Full                      
|P.T. Petrojaya Boral PlasterboardIndonesia (2)   |            | Indonesia |        |        |  |                    |  |         |  | ▪      |  |                          |  | 50.00    |  | 42.90       |  | Proportionate             
|Lafarge
      Plasterboard Ireland Ltd           |            | Ireland   |        |        |  |                    |  |         |  | ▪      |  |                          |  | 100.00   |  | 100.00      |  | Full                      
|Schiedel Chimneys Systems
         Ireland Ltd   |            | Ireland   |        |        |  |                    |  | ▪       |  |        |  |                          |  | 100.00   |  | 100.00      |  | Full                      
|Lafarge
      Adriasebina                        |            | Italy     |        | ▪      |  | ▪                  |  |         |  |        |  |                          |  | 100.00   |  | 99.62       |  | Full                      
|Lafarge Gessi SpA                                |            | Italy     |        |        |  |                    |  |         |  | ▪      |  |                          |  | 100.00   |  | 100.00      |  | Full                      
|Lafarge
      Roofing Italia SpA                 |            | Italy     |        |        |  |                    |  | ▪       |  |        |  |                          |  | 100.00   |  | 100.00      |  | Full                      

|    |                                                                                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------
|(1) | These companies are consolidated under French
      GAAP, but accounted for under the equity method under US GAAP [see Note
      31-17 (a)]
|(2) | These companies
      are proportionately consolidated under French GAAP, but accounted for under
      the equity method under US GAAP     
|    | [see
      Note 31-17 (b)]                                                                                                                  

F - 99

---




Back to Contents

| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

|Companies                                                |  | Countries   |  | Cement |  | Aggreg.andConcrete |  | Roofing |  | Gypsum |  | Others |  | Control% |  | Owner-Ship% |  | Consolidation
      method
|-------------------------------------------------------- |  | ----------- |  | ------ |  | ------------------ |  | ------- |  | ------ |  | ------ |  | -------- |  | ----------- |  | --------------------------
|FrenchGAAP                                               |  | USGAAP     
|                                                         |  |             |  |        |  |                    |  |         |  |       
|Lafarge Braas Roofing Japan
      Co Ltd                 |  | Japan       |  |        |  |                    |  | ▪       |  |        |  |        |  | 100.00   |  | 75.10       |  | Full                      
|ASO Cement                                               |  | Japan       |  | ▪      |  | ▪                  |  |         |  |        |  |        |  | 39.40    |  | 22.45       |  | Equity                    
|Jordan Cement Factories(1)                               |  | Jordan      |  | ▪      |  |                    |  |         |  |        |  |        |  | 48.01    |  | 48.01       |  | Full                      
|Bamburi Cement Ltd                                       |  | Kenya       |  | ▪      |  |                    |  |         |  |        |  |        |  | 73.31    |  | 58.61       |  | Full                      
|Lafarge Buycksan Gypsum(2)                               |  | Korea       |  |        |  |                    |  |         |  | ▪      |  |        |  | 65.86    |  | 49.70       |  | Proportionate             
|Lafarge Halla Cement (2)                                 |  | Korea       |  | ▪      |  |                    |  |         |  |        |  |        |  | 39.90    |  | 39.90       |  | Proportionate             
|Tong Yang Cement Corp                                    |  | Korea       |  | ▪      |  |                    |  |         |  |        |  |        |  | 25.00    |  | 9.78        |  | Equity                    
|Lafarge Roofing (Korea) Ltd                              |  | Korea       |  |        |  |                    |  | ▪       |  |        |  |        |  | 100.00   |  | 100.00      |  | Full                      
|Lafarge Tekkin SIA                                       |  | Lithuania   |  |        |  |                    |  | ▪       |  |        |  |        |  | 100.00   |  | 100.00      |  | Full                      
|Nouvelle Cimenterie d'Amboanio
      SA
         (Sanca) |  | Madagascar  |  | ▪      |  |                    |  |         |  |        |  |        |  | 100.00   |  | 65.97       |  | Full                      
|Portland Malawi                                          |  | Malawi      |  | ▪      |  |                    |  |         |  |        |  |        |  | 75.17    |  | 75.17       |  | Full                      
|Lafarge Roofing Malaysia Sdn
      Bhd                   |  | Malaysia    |  |        |  |                    |  | ▪       |  |        |  |        |  | 100.00   |  | 100.00      |  | Full                      
|Associated Pan Malaysia Cement
         Sdn Bhd          |  | Malaysia    |  | ▪      |  |                    |  |         |  |        |  |        |  | 100.00   |  | 60.83       |  | Full                      
|Malaysian Cement Industries
      Sdn Bhd                |  | Malaysia    |  | ▪      |  |                    |  |         |  |        |  |        |  | 100.00   |  | 60.83       |  | Full                      
|Supermix Concrete Malaysia
      Sdn Bhd                 |  | Malaysia    |  |        |  | ▪                  |  |         |  |        |  |        |  | 70.00    |  | 37.55       |  | Full                      
|Boral Plasterboard Malaysia
      (2)                    |  | Malaysia    |  |        |  |                    |  |         |  | ▪      |  |        |  | 50.00    |  | 30.03       |  | Proportionate             
|California Clay Tile de Mexico
         SA de C.V.       |  | Mexico      |  |        |  |                    |  | ▪       |  |        |  |        |  | 50.00    |  | 50.00       |  | Equity                    
|Lafarge Cementos SA de C.V.                              |  | Mexico      |  | ▪      |  |                    |  |         |  |        |  |        |  | 100.00   |  | 99.62       |  | Full                      
|Lafarge Maroc (2)                                        |  | Morocco     |  | ▪      |  | ▪                  |  |         |  |        |  |        |  | 50.00    |  | 49.99       |  | Proportionate             
|Lafarge Ciment Maroc (2)                                 |  | Morocco     |  | ▪      |  |                    |  |         |  |        |  |        |  | 50.00    |  | 34.92       |  | Proportionate             
|Lafarge Cementos (2)                                     |  | Morocco     |  | ▪      |  |                    |  |         |  |        |  |        |  | 50.00    |  | 33.99       |  | Proportionate             
|Lafarge Béton (2)                                        |  | Morocco     |  |        |  | ▪                  |  |         |  |        |  |        |  | 50.00    |  | 34.49       |  | Proportionate             
|Gyvlon BV                                                |  | Netherlands |  |        |  |                    |  |         |  | ▪      |  |        |  | 100.00   |  | 100.00      |  | Full                      
|Lafarge Gips BV                                          |  | Netherlands |  |        |  |                    |  |         |  | ▪      |  |        |  | 100.00   |  | 100.00      |  | Full                      
|Lafarge Roofing Benelux BV                               |  | Netherlands |  |        |  |                    |  | ▪       |  |        |  |        |  | 100.00   |  | 100.00      |  | Full                      
|West African Portland Cement
         Company            |  | Nigeria     |  | ▪      |  |                    |  |         |  |        |  |        |  | 50.01    |  | 49.96       |  | Full                      
|Ashakacem Plc                                            |  | Nigeria     |  | ▪      |  |                    |  |         |  |        |  |        |  | 50.16    |  | 50.11       |  | Full                      
|Lafarge Tekkin AS                                        |  | Norway      |  |        |  |                    |  | ▪       |  |        |  |        |  | 100.00   |  | 100.00      |  | Full                      
|Schiedel Skorsteiner AS                                  |  | Norway      |  |        |  |                    |  | ▪       |  |        |  |        |  | 100.00   |  | 100.00      |  | Full                      
|Lafarge Philippines                                      |  | Philippines |  | ▪      |  |                    |  |         |  |        |  |        |  | 100.00   |  | 100.00      |  | Full                      
|CPAC Monier Phillipines Inc.
      (2)                   |  | Philippines |  |        |  |                    |  | ▪       |  |        |  |        |  | 50.00    |  | 50.00       |  | Proportionate             
|Boral Philippines (2)                                    |  | Philippines |  |        |  |                    |  |         |  | ▪      |  |        |  | 50.00    |  | 42.90       |  | Proportionate             
|Lafarge Polska Spolka Akcyja                             |  | Poland      |  | ▪      |  | ▪                  |  |         |  |        |  | Lime   |  | 77.57    |  | 77.57       |  | Full                      
|Lafarge Cement Polska                                    |  | Poland      |  | ▪      |  | ▪                  |  |         |  |        |  | ▪      |  | 100.00   |  | 77.57       |  | Full                      
|Lafarge Beton Polska                                     |  | Poland      |  |        |  | ▪                  |  |         |  |        |  |        |  | 100.00   |  | 77.57       |  | Full                      
|Lafarge Kruszywa sp z.o.o                                |  | Poland      |  |        |  | ▪                  |  |         |  |        |  |        |  | 100.00   |  | 77.57       |  | Full                      
|Braas Polska Sp z.o.o.                                   |  | Poland      |  |        |  |                    |  | ▪       |  |        |  |        |  | 100.00   |  | 100.00      |  | Full                      
|Rupp Ceramika Polska Sp z.o.o.                           |  | Poland      |  |        |  |                    |  | ▪       |  |        |  |        |  | 100.00   |  | 100.00      |  | Full                      
|Lafarge Gips Polska                                      |  | Poland      |  |        |  |                    |  |         |  | ▪      |  |        |  | 100.00   |  | 100.00      |  | Full                      
|Dolina Nidy                                              |  | Poland      |  |        |  |                    |  |         |  | ▪      |  |        |  | 100.00   |  | 91.31       |  | Full                      
|Nida Gips                                                |  | Poland      |  |        |  |                    |  |         |  | ▪      |  |        |  | 100.00   |  | 94.78       |  | Full                      
|Betecna Betao Pronto (2)                                 |  | Portugal    |  |        |  | ▪                  |  |         |  |        |  |        |  | 50.00    |  | 49.81       |  | Proportionate             
|Britas do Alenquer (2)                                   |  | Portugal    |  |        |  | ▪                  |  |         |  |        |  |        |  | 50.00    |  | 49.81       |  | Proportionate             

|    |                                                                                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------
|(1) | These companies
      are consolidated under French GAAP, but accounted for under the equity method
      under US GAAP [see Note 31-17 (a)]
|(2) | These companies
      are proportionately consolidated under French GAAP, but accounted for under
      the equity method under US GAAP     
|    | [see
      Note 31-17 (b)]                                                                                                                  

F - 100

---




Back to Contents

| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

|                                                         |  |              |  |        |  | Aggreg.            |  |         |  |        |  |              |  |          |  | Owner- |  | Consolidation
        method
|-------------------------------------------------------- |  | ------------ |  | ------ |  | ------------------ |  | ------- |  | ------ |  | ------------ |  | -------- |  | ------ |  | ----------------------------
|Companies                                                |  | Countries    |  | Cement |  | and
      Concrete |  | Roofing |  | Gypsum |  | Others       |  | Control% |  | Ship%  |  | FrenchGAAP                  
|                                                         |  |              |  |        |  |                    |  |         |  |        |  |              |  |          |  |        |  |                             
|Thomas Eurobetao (2)                                     |  | Portugal     |  |        |  | ▪                  |  |         |  |        |  |              |  | 50.00    |  | 49.81  |  | Proportionate               
|Lafarge Romcim SA                                        |  | Romania      |  | ▪      |  | ▪                  |  |         |  |        |  | Lime         |  | 91.24    |  | 72.03  |  | Full                        
|Arcom Gips (2)                                           |  | Romania      |  |        |  |                    |  |         |  | ▪      |  |              |  | 50.00    |  | 50.00  |  | Proportionate               
|OAO Voskresenskcement                                    |  | Russia       |  | ▪      |  |                    |  |         |  |        |  |              |  | 83.85    |  | 83.85  |  | Full                        
|OOO Braas DSK 1                                          |  | Russia       |  |        |  |                    |  | ▪       |  |        |  |              |  | 67.10    |  | 67.10  |  | Full                        
|Beocinska Fabrika Cementa                                |  | Serbia       |  | ▪      |  |                    |  |         |  |        |  |              |  | 69.41    |  | 34.72  |  | Full                        
|Schiedel Dimnjaki Sistemi
      d.o.o                    |  | Serbia       |  |        |  |                    |  | ▪       |  |        |  |              |  | 100.00   |  | 100.00 |  | Full                        
|Blue Circle Materials Singapore                          |  | Singapore    |  | ▪      |  |                    |  |         |  |        |  |              |  | 100.00   |  | 60.83  |  | Full                        
|Supermix Singapore                                       |  | Singapore    |  |        |  | ▪                  |  |         |  |        |  |              |  | 51.00    |  | 33.83  |  | Full                        
|Boral Singapore (2)                                      |  | Singapore    |  |        |  |                    |  |         |  | ▪      |  |              |  | 50.00    |  | 30.03  |  | Proportionate               
|Bramac Dachsteinproduktion
      Baustoff (2)            |  | Slovenia     |  |        |  |                    |  | ▪       |  |        |  |              |  | 33.80    |  | 33.80  |  | Proportionate               
|Schiedel d.o.o                                           |  | Slovenia     |  |        |  |                    |  | ▪       |  |        |  |              |  | 100.00   |  | 100.00 |  | Full                        
|Cementarna Trbovlje                                      |  | Slovenia     |  | ▪      |  |                    |  |         |  |        |  |              |  | 99.80    |  | 99.80  |  | Full                        
|Lafarge South Africa Ltd                                 |  | South Africa |  | ▪      |  | ▪                  |  |         |  |        |  |              |  | 100.00   |  | 100.00 |  | Full                        
|Lafarge Roofing (Pty) Ltd                                |  | South Africa |  |        |  |                    |  | ▪       |  |        |  |              |  | 100.00   |  | 100.00 |  | Full                        
|Lafarge Asland SA                                        |  | Spain        |  | ▪      |  | ▪                  |  |         |  |        |  |              |  | 99.62    |  | 99.62  |  | Full                        
|Readymix Asland (2)                                      |  | Spain        |  |        |  | ▪                  |  |         |  |        |  |              |  | 50.00    |  | 49.81  |  | Proportionate               
|Yesos Ibericos                                           |  | Spain        |  |        |  |                    |  |         |  | ▪      |  |              |  | 40.69    |  | 40.69  |  | Equity                      
|Cementos Molins                                          |  | Spain        |  | ▪      |  |                    |  |         |  |        |  |              |  | 40.91    |  | 40.75  |  | Equity                      
|Redland Ibérica SA                                       |  | Spain        |  |        |  |                    |  | ▪       |  |        |  |              |  | 47.00    |  | 47.00  |  | Equity                      
|Mahawehli Marine Cement Co                               |  | Sri Lanka    |  | ▪      |  |                    |  |         |  |        |  |              |  | 90.00    |  | 84.96  |  | Full                        
|Orebrö Kartongbruck AB                                   |  | Sweden       |  |        |  |                    |  |         |  | ▪      |  |              |  | 100.00   |  | 100.00 |  | Full                        
|Lafarge Tekkin AB                                        |  | Sweden       |  |        |  |                    |  | ▪       |  |        |  |              |  | 100.00   |  | 100.00 |  | Full                        
|Cementia Trading Ltd AG                                  |  | Switzerland  |  | ▪      |  |                    |  |         |  |        |  |              |  | 100.00   |  | 100.00 |  | Full                        
|Marine Cement Ltd                                        |  | Switzerland  |  | ▪      |  |                    |  |         |  |        |  |              |  | 100.00   |  | 99.96  |  | Full                        
|Braas Schweiz AG                                         |  | Switzerland  |  |        |  |                    |  | ▪       |  |        |  |              |  | 100.00   |  | 100.00 |  | Full                        
|M’Beya                                                   |  | Tanzania     |  | ▪      |  |                    |  |         |  |        |  |              |  | 62.76    |  | 62.76  |  | Full                        
|Lafarge Prestia Co Ltd (2)                               |  | Thailand     |  |        |  |                    |  |         |  | ▪      |  |              |  | 50.00    |  | 42.90  |  | Proportionate               
|CPAC Roof Tiles Co. Ltd                                  |  | Thailand     |  |        |  |                    |  | ▪       |  |        |  |              |  | 24.90    |  | 24.90  |  | Equity                      
|Siam Gypsum Industry (2)                                 |  | Thailand     |  |        |  |                    |  |         |  | ▪      |  |              |  | 50.00    |  | 30.46  |  | Proportionate               
|Thailand Interroof Holding                               |  | Thailand     |  |        |  |                    |  | ▪       |  |        |  |              |  | 25.00    |  | 25.00  |  | Equity                      
|Thailand Interroof                                       |  | Thailand     |  |        |  |                    |  | ▪       |  |        |  |              |  | 100.00   |  | 75.00  |  | Full                        
|Lafarge Aslan Cimento AS                                 |  | Turkey       |  | ▪      |  | ▪                  |  |         |  |        |  |              |  | 96.84    |  | 96.72  |  | Full                        
|Agretas Agrega Insaat San.
      Ve Tic. AS              |  | Turkey       |  | ▪      |  | ▪                  |  |         |  |        |  |              |  | 100.00   |  | 99.85  |  | Full                        
|Dalsan Alçy AS (2)                                       |  | Turkey       |  |        |  |                    |  |         |  | ▪      |  |              |  | 50.00    |  | 50.00  |  | Proportionate               
|Yloac Cement (1)                                         |  | Turkey       |  | ▪      |  |                    |  |         |  |        |  |              |  | 50.00    |  | 49.92  |  | Full                        
|Yloac AS (1)                                             |  | Turkey       |  | ▪      |  | ▪                  |  |         |  |        |  |              |  | 50.00    |  | 49.92  |  | Full                        
|Lafarge Ybitas (1)                                       |  | Turkey       |  |        |  | ▪                  |  |         |  |        |  |              |  | 50.00    |  | 49.92  |  | Full                        
|Lafarge Entegre Harç
      Sanayi veTicaret AS
      (2) |  | Turkey       |  |        |  |                    |  |         |  |        |  | Mortars/Lime |  | 50.00    |  | 50.00  |  | Proportionate               
|Lafarge Cati Cözümleri
      Sanayi ve Ticaret AS        |  | Turkey       |  |        |  |                    |  | ▪       |  |        |  |              |  | 100.00   |  | 100.00 |  | Full                        
|Hima Cement Ltd                                          |  | Uganda       |  | ▪      |  |                    |  |         |  |        |  |              |  | 100.00   |  | 71.01  |  | Full                        
|Mykolaivcement                                           |  | Ukraine      |  | ▪      |  |                    |  |         |  |        |  |              |  | 98.10    |  | 98.10  |  | Full                        
|Lafarge Gypsum Ukraine                                   |  | Ukraine      |  |        |  |                    |  |         |  | ▪      |  |              |  | 100.00   |  | 100.00 |  | Full                        
|Stromgips                                                |  | Ukraine      |  |        |  |                    |  |         |  | ▪      |  |              |  | 100.00   |  | 81.44  |  | Full                        
|Lafarge Redland Aggregates
      Ltd                     |  | UK           |  |        |  | ▪                  |  |         |  |        |  | Lime         |  | 100.00   |  | 100.00 |  | Full                        
|Lafarge Plasterboard Ltd                                 |  | UK           |  |        |  |                    |  |         |  | ▪      |  |              |  | 100.00   |  | 100.00 |  | Full                        
|Redland Roofing Systems Ltd                              |  | UK           |  |        |  |                    |  | ▪       |  |        |  |              |  | 100.00   |  | 100.00 |  | Full                        
|Blue Circle Industries Plc                               |  | UK           |  | ▪      |  |                    |  |         |  |        |  |              |  | 99.91    |  | 99.91  |  | Full                        
|Britannia Aggregates Limited
      (2)                   |  | UK           |  |        |  | ▪                  |  |         |  |        |  |              |  | 50.00    |  | 25.00  |  | Proportionate               
|Bluewater Concrete Ltd(2)                                |  | UK           |  |        |  | ▪                  |  |         |  |        |  |              |  | 50.00    |  | 50.00  |  | Proportionate               
|Redland Westminster Aggregates
      Ltd (2)             |  | UK           |  |        |  | ▪                  |  |         |  |        |  |              |  | 50.00    |  | 50.00  |  | Proportionate               
|Scotcem Roof Tiles Ltd                                   |  | UK           |  |        |  |                    |  | ▪       |  |        |  |              |  | 100.00   |  | 100.00 |  | Full                        

|    |                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | These
        companies are consolidated under French GAAP, but accounted for under
        the equity method under US GAAP [see Note 31-17 (a)]
|(2) | These companies
      are proportionately consolidated under French GAAP, but accounted for under
      the equity method under US GAAP         
|    | [see
      Note 31-17 (b)]                                                                                                                      

F - 101

---




Back to Contents

| | LAFARGE | 
| | ------- | 

NOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS – (Continued)

|                                   |  |           |  |        |  | Aggreg.            |  |         |  |        |  |                     |  |          |  | Owner- | Consolidation
        method
|---------------------------------- |  | --------- |  | ------ |  | ------------------ |  | ------- |  | ------ |  | ------------------- |  | -------- |  | ------ | ----------------------------
|Companies                          |  | Countries |  | Cement |  | and
      Concrete |  | Roofing |  | Gypsum |  | Others              |  | Control% |  | Ship%  |                             
|                                   |  |           |  |        |  |                    |  |         |  |        |  |                     |  |          |  |        |                             
|Lafarge North
      America        |  | USA       |  | ▪      |  | ▪                  |  |         |  | ▪      |  |                     |  | 53.52    |  | 53.52  |                             
|Carmeuse North
      America       |  | USA       |  |        |  |                    |  |         |  |        |  | Lime                |  | 40.00    |  | 40.00  |                             
|Monier Inc.                        |  | USA       |  |        |  |                    |  | ▪       |  |        |  |                     |  | 100.00   |  | 100.00 |                             
|Lafarge Road
      Marking System  |  | USA       |  |        |  |                    |  |         |  |        |  | Road
      markings |  | 100.00   |  | 100.00 |                             
|Monier Lifetile
      LLC (2)      |  | USA       |  |        |  |                    |  | ▪       |  |        |  |                     |  | 50.00    |  | 50.00  |                             
|Blue Circle
      North America    |  | USA       |  | ▪      |  | ▪                  |  |         |  |        |  |                     |  | 100.00   |  | 99.91  |                             
|Bulk Materials
      Inc           |  | USA       |  | ▪      |  |                    |  |         |  |        |  |                     |  | 48.24    |  | 48.24  |                             
|Fabrica Nacional
      de Cementos |  | Venezuela |  | ▪      |  |                    |  |         |  |        |  |                     |  | 61.14    |  | 60.93  |                             
|Cementos Catatumbo
      CA        |  | Venezuela |  | ▪      |  |                    |  |         |  |        |  |                     |  | 23.32    |  | 23.32  |                             
|Tachira Cementos                   |  | Venezuela |  | ▪      |  |                    |  |         |  |        |  |                     |  | 99.75    |  | 75.44  |                             
|Induconagre                        |  | Venezuela |  |        |  | ▪                  |  |         |  |        |  |                     |  | 100.00   |  | 60.93  |                             
|Supermix
      Concrete Co Ltd     |  | Vietnam   |  |        |  | ▪                  |  |         |  |        |  |                     |  | 70.00    |  | 23.68  |                             
|Chilanga                           |  | Zambia    |  | ▪      |  |                    |  |         |  |        |  |                     |  | 84.00    |  | 84.00  |                             
|Circle Cement                      |  | Zimbabwe  |  | ▪      |  |                    |  |         |  |        |  |                     |  | 76.45    |  | 76.39  |                             

|    |                                                                                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------
|(1) | These companies
      are consolidated under French GAAP, but accounted for under the equity method
      under US GAAP [see Note 31-17 (a)]
|(2) | These companies
      are proportionately consolidated under French GAAP, but accounted for under
      the equity method under US GAAP     
|    | [see
      Note 31-17 (b)]                                                                                                                  

F - 102

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EXHIBIT INDEX



|ExhibitNumber | Description of Document                                                                                                                                                                                                                                                       | PageNumber
|------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------
|              |                                                                                                                                                                                                                                                                               |           
|1             | By-laws
      (statuts), as amended, of Lafarge S.A. (English translation)*                                                                                                                                                                                                   |           
|              |                                                                                                                                                                                                                                                                               |           
|2             | Deposit Agreement, dated July
      18, 2001 among Lafarge S.A., Morgan GuarantyTrust
      Company of New York, as depositary, and the holders of American Depositary
      Receipts.**                                                                                      |           
|              |                                                                                                                                                                                                                                                                               |           
|3             | Instruments with respect to long-term
      debt which do not exceed 10 percent of the total assets of the company and
      its consolidated subsidiaries have not been filed. The company agrees to
      furnish a copy of such instruments to the Commission upon request |           
|              |                                                                                                                                                                                                                                                                               |           
|4.1           | Lafarge (U.S.) Holdings Agreement
      and Articles of Trust, dated August 1, 2000, among Lafarge S.A. and Alfred
      J. Ross, John H. F. Haskell and The United States Trust Company, as trustees**                                                                       |           
|              |                                                                                                                                                                                                                                                                               |           
|4.2           | Lafarge Paris-Zurich Holdings
      Agreement and Articles of Trust, dated August 1, 2000, among Lafarge (U.S.)
      Holdings, Lafarge (Swiss) Holdings and Alfred J. Ross, John H. F. Haskell
      and The United States Trust Company, as trustees**                      |           
|              |                                                                                                                                                                                                                                                                               |           
|4.3           | Lafarge (Swiss) Holdings Agreement
      and Articles of Trust, dated August 1, 2000, among Financière Lafarge
      and Alfred J. Ross, John H. F. Haskell and The United States Trust Company,
      as trustees**                                                          |           
|              |                                                                                                                                                                                                                                                                               |           
|4.4           | Lafarge (Venezuela) Holdings
      Agreement and Articles of Trust, dated August 1, 2000, among Lafarge Asland
      S.A. and Alfred J. Ross, John H. F. Haskell and The United States Trust
      Company, as trustees**                                                     |           
|              |                                                                                                                                                                                                                                                                               |           
|8             | List
      of significant subsidiaries*                                                                                                                                                                                                                                       |           
|              |                                                                                                                                                                                                                                                                               |           
|10.1          | Certification
      of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002 (10 U.S.C. § 1350)*                                                                                                                                            |           
|              |                                                                                                                                                                                                                                                                               |           
|10.2          | Certification
      of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002 (10 U.S.C. § 1350)*                                                                                                                                            |           

|   |                                                                                                                                                                
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|*  | Provided herewith.                                                                                                                                             
|** | Incorporated by reference to the Registration
      Statement on Form 20-F filed by Lafarge with the Securities and Exchange
      Commission on July 19, 2001.



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