AGM Statement

Yule Catto & Co PLC
18 May 2006



Yule Catto & Company plc


AGM Statement


Yule Catto is an international producer of speciality chemicals, which are
supplied to global customers, ranging from manufacturers of medical gloves,
paint and adhesives to the pharmaceuticals and cosmetics industries


At today's Annual General Meeting of Yule Catto & Company plc, Anthony
Richmond-Watson, Chairman, made the following comments:


Yule Catto made good progress in 2005 towards the long-term development of the
group.  The strategic development of our water-based Polymer activities moved
forward with strong volume growth and improved margins, despite the relentless
rise in petrochemical based raw material prices.  Our Pharmaceutical businesses
maintained investment in the future with an enhanced level of drug master file
registrations and new pilot plant and R&D facilities.  The main feature of our
Performance Chemicals division was the successful execution of a number of
restructuring initiatives.

In general, market conditions were far from easy last year and, therefore, the
results produced by the group we view as satisfactory.  Underlying group sales
rose by 6% to £532.1m, profit before taxation at £34.5m was up 7% and earnings
per share grew by 20% to 16.7p.  In addition, our customary focus on cash
reduced borrowings by 12% assisted by disposal proceeds of £22m from the
restructuring programme within Performance Chemicals.


Before proceeding to say a few words on each of our key operating sectors, may I
again, on behalf of shareholders, pay tribute to our management and employees.
It is only through their dedication and effort that we can sustain the
development of Yule Catto.


Polymer Chemicals


Recent years have been a turbulent period for both the availability and price
volatility of the raw materials from which our water-based polymers are
manufactured.  Throughout this period we have sustained a focus on growing sales
volumes into new markets and territories.  This was done with confidence in our
ability to develop new product offerings to meet the performance demands of our
customers and, over time, enhance unit margins.


The benefits of this approach emerged in 2005 with Polymer Chemicals turnover up
by 15.4% and operating profit growing by 23.5%.  Of particular note in this
performance was the 35% rise in nitrile latex sold in the Far East to glove
dipping customers.  The growth of emulsions and latex in Europe by over 8% is
also particularly pleasing given that industry statistics show little or no
growth for these products in UK and continental Europe.


In the early months of 2006 we continue to see satisfactory growth in sales
volumes across the markets we serve.  This is particularly true of nitrile latex
in the Far East and supports the recently announced expansion of our Malaysian
facility by approximately one third at a cost of £5.5m.


Pharma & Fine Chemicals


The impact of the normal price erosion as products mature post patent expiry was
again experienced last year by our Pharma business.  Volume growth was achieved
across the range of generic products and process development reduced product
cost.  However, as expected, this did not provide full mitigation and both
overall sales value and margin declined.


The strategy remains to invest in the creation of a long-term pipeline of
generic products and to that end excellent progress was achieved with a 50%
increase in registrations in 2005.  This new higher level of activity will be
pursued in 2006.


The timing of the benefits of this programme is difficult to predict, but the
next product to lose patent status in USA is an anti-psychotic, Zolpidem.  This
was expected to occur in late 2006, but due to the originator of the drug
seeking to extend the patent, it may be delayed by some months.


Recent investments in R&D and pilot plant facilities are not only supporting the
product development programme, but are attracting both early stage and low
volume high value supply contracts from major Pharma companies.  One of these
has resulted in investment in a high potency unit at our Italian facility.  This
will provide a differentiated offering through an ability to meet the stringent
safety requirements to manufacture ingredients for the new lower dosage highly
active drugs presently under development by major customers.


Performance Chemicals


Last year was a period of significant restructuring activity within the
Performance Chemicals operations.  Three companies were sold, the closure of two
manufacturing sites in UK announced and Autoclenz, our non-core vehicle
preparation company, was listed on the alternative investment market.  This
latter exercise was particularly successful, grossing £18M.


As a consequence of this activity, underlying sales fell by 6% in 2005, but
operating profits benefited and rose 8%.


Efforts continue in 2006 to manage change within the remaining Performance
Chemicals operations.  William Blythe will consolidate its speciality inorganics
business on to a single manufacturing site, James Robinson will close its
Huddersfield plant with production transferred to Germany and India and the
ultramarine business is engaged in improving output from the Hull facility.


Pensions



The subject of company pensions and, more specifically, deficits within UK
pension schemes remains a topical subject.  As indicated in the annual report,
Yule Catto's UK pension fund had a sizeable deficit at 31st December 2005 as
measured under the IAS19 accounting standard.  Outside UK, where the majority of
our business is located, the issue is not significant due to the nature of
pension provisions in place.



A full actuarial valuation of the UK fund will take place this year and, in
conjunction with the Trustees, we shall be working to develop a balanced
approach to any deficit that may emerge.  To monitor the performance of the
scheme, a quarterly review is conducted.  Interestingly, the first quarter of
2006 has seen a sharp reduction in the deficit due to a shift in long-term bond
rates reducing liabilities and a further strong return from equity investments.


Board Changes



We welcome Colin Williams, who joined the Board as an independent non-executive
director in December 2005 and stands for re-appointment today.  Colin was one of
the most senior executives of SCA, a leading producer of packaging and hygiene
products.



Alex Walker who has been our Chief Executive since 1986 will retire this August
after 34 years with the group.  This is the last AGM that he will attend as a
director.  There has been tremendous change in the activities of the group
during his time as Chief Executive.  I should like to pay tribute to him, on
behalf of the Board and all shareholders, for the skill and dedication with
which he exercised his responsibilities.



Adrian Whitfield joined the group in March as Chief Executive Designate and is
due to take over from Alex Walker in August.  Adrian has extensive international
industrial management experience, most recently with D S Smith.  I am sure he
will make an invaluable contribution to the group and I look forward to working
with him in his new role.  He comes up for re-appointment as a director today.



Outlook



Sales volumes continue to grow for our Polymer Chemical businesses and raw
material price volatility has subsided for the present.  That said, world
markets remain in uncharted territory with crude oil prices above US$70 per
barrel.  The Pharma & Fine Chemical companies have seen a reasonable start to
the year and substantial growth will emerge in time as our investment in the
development portfolio delivers sales of new products.  The reshaping of our
other companies continues in the quest for improved results.



Group results in the first quarter are slightly ahead of the corresponding
period last year and looking further forward we remain confident that our basic
strategy remains sound and will deliver long-term shareholder benefit.



                                                                     18 May 2006


Enquiries:

Yule Catto                                                          01279 442791

Alex Walker, Chief Executive
Sean Cummins, Finance Director

College Hill                                                       020 7457 2020

Gareth David


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