1. Pension consultation Proposed changes to the Lafarge UK Pension Plan – Final Pay Section

2. June 2011 2 To explain:  Proposed changes to the Lafarge UK Pension Plan - Final Pay Section  Reasons for the proposed change  How the proposed alternative - PensionBuilderplus - works  What happens next – the consultation process  Questions Today’s presentation

3. Proposed Changes [1] We’re proposing that, after 31 October 2011:  No new benefits would build up in the Final Pay Section  The pension you have built up to 31 October 2011 based on your pay at that date is not affected  This pension would then broadly increase in line with inflation, up to 5% a year June 2011 3

4. Proposed Changes [2] From 1 November 2011:  You would be able to join PensionBuilderplus, the defined contribution (DC) section of the Plan  Lafarge will continue to contribute into this plan  You would no longer be contracted-out of the State Second Pension (S2P) and will build up an additional State Pension  The proposal also changes ill-health benefits June 2011 4

5. How the Plan’s deficit has increased June 2011 5 £210 million

6. Why do we need to propose changes to the Final Pay Section? The Plan’s deficit has increased over time Despite an increase in contributions from both you and Lafarge, the cost of providing pensions continues to increase Lafarge no longer wants to add further to its liabilities Many other companies, including some within our industry have made similar changes; this change helps to maintain the competitiveness of our business June 2011 6

7. The proposed changes and the Joint Venture  The proposed changes are not as a result of the Joint Venture and are not dependent upon the completion of the Joint Venture  Reflecting on the conclusion of the actuarial valuation in 2010, this is a proposal we would be making anyway  However, it is true that the announcement of the proposed Joint Venture with Tarmac in the UK has accelerated our decision to make these proposals  It is a condition that neither Joint Venture partner takes their pension liability into the Joint Venture  Lafarge, not the Joint Venture, will remain responsible for meeting the Final Pay benefits under the Lafarge UK Pension Plan June 2011 7

8. In Summary Lafarge is committed to meeting its obligation to fund the benefits already built up by members and will continue to fund the deficit. Deficit contributions to date total £182 million More are planned at between £20 million - £30 million a year for the next 15 – 20 years Lafarge has kept the Final Pay Section open in the face of deficits, but is no longer able to continue to do so  The proposed change will help to:  Manage risk: stop Lafarge adding further to its pension liability  Manage costs: help reduce the impact of the current volatile pension costs on business planning and budgets and help keep the UK businesses competitive June 2011 8

9. How PensionBuilderplus works June 2011 9

10. Summary of the Plan today Two membership sections: Final Pay Section Defined benefit Closed to new members in December 2006 Just under 2,000 members Members currently contribute 10% of pensionable pay Defined contribution Open to all new employees since January 2007 Just over 600 members Members contribute between 3% and 6% of pensionable pay (depending on their length of service) PensionBuilderplus June 2011 10

11. PensionBuilderplus  It is a competitive defined contribution plan within our industry  It sits within the top 25% of similar schemes offered by UK companies in the FTSE 250  Lafarge pays double your contributions  Lafarge pays for ill-health and death benefits  Lafarge also pays the investment and administration charges June 2011 11

12. How PensionBuilderplus works June 2011 12

13. PensionBuilderplus contributions You contribute (% of pensionable pay) Lafarge contributes (% of pensionable pay) Lafarge also pays 3%6% The cost of life assurance, ill- health benefits, investment and administration costs, which is currently 3% of pensionable pay. 5%10% And after 10 years’ Company service: 6% 12%  Although your contribution will be reduced, your take-home pay is likely to stay the same  This is because your National Insurance contributions will increase as you will cease to be contracted-out of the State Second Pension (S2P)  Lafarge will also pay higher National Insurance contributions June 2011 13

14. The impact of the changes on take-home pay Before the change After change (PenXchange) Contribution rate10%6% Basic Pay£25,000 Pension contribution£1,970£1,182 National Insurance (NI) payable £1,613£1,991 Tax payable£3,111£3,269 Annual take-home pay£18,306£18,558 Monthly take-home pay£1,526£1,547 As you can see, there is little change in take-home pay as a result of these changes, when members contribute through PenXchange Increased NI (to build S2P) June 2011 14

15. Death in service and ill-health benefits under PensionBuilderplus  If you join PensionBuilderplus and die in service:  A lump sum of four times your death benefit pay will be paid, and  If you leave dependants, they will receive:  Pensions from PensionBuilderplus and  your Final Pay deferred dependants’ pension.  Ill-health benefits to be provided by a Group Income Protection Plan provided by an insurance company  If you are incapable of carrying out your own job or one to which you are reasonably suited, you will:  receive a benefit of 33% of your basic pay up to age 65  In addition, whilst you are a pension plan member, contributions (both your own and your employer’s) will continue to be paid on your behalf to PensionBuilderplus June 2011 15 For most of you, there is no change to the death in service benefits

16. State Pension benefits You currently build up a Basic State Pension  Flat rate pension is £5,310 a year for a single person  Full amount requires a minimum of 30 ‘qualifying years’ (i.e. years in which NI contributions are paid) You will start building up the State Second Pension (S2P) for contracted-in periods of employment before State Pension age  Earnings-related pension – earnings between £5,304 and £40,040 apply (2011/12)  It’s proposed that the S2P will eventually become a flat-rate benefit instead of one related to earnings  PensionBuilderplus Section is contracted in to S2P June 2011 16

17. What happens next – the consultation process June 2011 17

18. Consultation Timeline  The consultation will run from 3 June to 2 September 2011 and is open to all affected employees.  Key dates  3 June Consultation starts, packs sent to homes, website launched  Late June: Personal illustrations sent, ‘helpline’ live  July: Frequently asked questions updated [on website]  2 Sept: Consultation period ends  Mid Sept: Lafarge issues outcome of consultation letter  1 Nov: Agreed changes take effect June 2011 18

19. Look out for your Personal illustration Examples in the guide Personal illustration June 2011 19

20. Your feedback is important  Pensions Consultative Council  Feedback form posted to the Pensions Department by Freepost or handed in today  Pension forum online – See Consultation Guide and Feedback Form  Email to info@lafargeukpensions.com  Via your local Union representative if you have one June 2011 20

21. Questions