AGM Statement

Yule Catto & Co PLC
26 May 2005


AGM Statement: 'Demand across our major activities is good'


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 entered 2004 in the full knowledge that profitability would be lower
than the prior year, largely due to the changed circumstances for Omeprazole in
the United States as competitors to our major customer entered the market.  We
were also conscious that escalating raw material prices, driven by a rising oil
price, and a weak US Dollar might also place margins under pressure.

'These negative factors were a persistent feature throughout the whole year, in
addition to which we faced an extremely tight monomer supply position for our
Polymer chemical operations.   Against these headwinds, we therefore view the
achievement of £31 million of profit before taxation as a solid performance; and
the 5% rise in turnover (at constant currency), despite the change in the
Omeprazole situation, as progress in the underlying development of our business.

'This result was achieved through the hard work and commitment of our management
and employees and may I therefore, on behalf of all shareholders, once again
formally thank them for their dedication and effort.

'Despite the testing market conditions we remain confident in the fundamental
strategic direction of the group.  We continue to push for global growth for our
water-based polymers, widen the breadth and depth of our pharmaceutical product
portfolio and concentrate on developing the most potentially rewarding of our
niche performance chemical businesses.

'I shall now make a few comments on each of these three business sectors.

Polymer Chemicals

'Across our Polymer operations, double-digit volume growth was delivered in
2004.  Of particular note was the 15% volume rise in the sales of nitrile latex
for use in the manufacture of allergy free gloves.  This market remains strong
and our Malaysian latex facility is now running at full nameplate capacity.  To
meet this demand, recent product and process engineering developments have been
identified that will enable capacity to be raised by over 15% with minimal
investment.

'In Europe, sales of emulsions grew satisfactorily, but the rate of growth was
constrained due to particularly tight raw material supply which accentuated the
rapid rise of input prices.  Inevitably, a disproportionate amount of management
time was devoted, albeit successfully, to ensuring continuity of supply to
customers and negotiating selling price revisions.

'Overseas, the robust economies of Saudi Arabia, Malaysia and South Africa
enabled us to produce improved results in these markets despite similar
feedstock issues.

We continue to enjoy good increases in sales volumes in the opening months of
2005 but the pressure on margin remains.  Selling prices have been successfully
raised but, while monomer availability is somewhat easier, raw material prices
have risen in both the first and second quarters.

Pharma and Fine Chemicals

'It was no surprise that the sales of our Pharma and Fine Chemicals activities
fell by 13.5% in 2004 as the full impact of the changes in the US Omeprazole
market were absorbed.

'This product continues to play an important part in our portfolio and good
development of sales to other territories enabled overall volumes to be
sustained.  In addition, a new patented immediate release product was launched
in the United States for which we hold an exclusive supply contract.  Initial
sales were more modest than anticipated but new variants being launched in 2005
should deliver steady volume growth.

'Sales of other generic actives, such as Ranitidine, continue to develop, aided
by development of cost effective production processes.  A boost to sales was
also provided by Ciprofloxacine as it ended patented status in the USA .

'The key to the future of this division is the number of generic products we can
offer.  It is pleasing to report that last year we successfully accelerated our
drug master file registration programme.  This new level of registration
activity will continue in 2005.  The impact of this investment should be felt
progressively from late 2006 onwards, when the antipsychotic Zolpidem, amongst a
number of other opportunities, is scheduled to come off patent.

'In common with other companies involved in supplying major pharmaceutical
manufacturers, we continue to see delays in the commencement of contracts as
these large scale companies reorganise their activities.  However, we did have
notable success last year in rapidly scaling up some complex processes,
providing us with new product opportunities and helping customers to rationalise
their manufacturing facilities.

'With our three largest pharmaceutical manufacturing sites based in the Eurozone
selling to a US Dollar denominated market, it is of no surprise that performance
will be affected as long as that currency remains weak.

Performance Chemicals

'The effect of the strength of Sterling on exports and aggressive overseas
competition in the UK market had a disappointing impact on the results from our
Performance Chemicals operations in 2004.

'Considerable effort has been put into reshaping a number of this division's
activities in recent years.  Examples are the establishment of a low cost
operating base for photographic developers in India, the investment in state of
the art environmental equipment in our ultramarine pigment business in France
and the reduction of the cost base in our speciality inorganics business.

'Much of this is bearing fruit, but there is scope for further initiatives to
review under performing and non-core activities.  One such review has already
resulted in the disposal of Brencliffe, which was involved in supplying
house-ware and automotive products to the retail sector.

'The start of 2005 is still showing far from easy trading conditions for our
performance chemical businesses, but performance should improve from the weak
results of the last months of 2004.

International Financial Reporting Standards

'A feature of the reporting of all UK listed companies in 2005 will be the
migration to the new International Financial Reporting Standards.  I can confirm
that work is progressing satisfactorily on this complex and time consuming
process and we are on schedule for the 2004 restated results to be audited prior
to their release on 8th September with the 2005 interim figures.

Board Changes

'I now come to two items regarding your Board.  Firstly, I very much regret that
Gianni Montezemolo has resigned as a director.  Since joining our Board in 2001
Gianni moved to Chicago.  Unfortunately, owing to a recent illness, he is unable
to travel by air for the foreseeable future.  We shall miss his input and
enthusiasm and wish him a speedy recovery.  We will seek to replace him with
another independent non-executive director as soon as possible.

'Secondly, Alex Walker, our Chief Executive for the past 19 years, will reach
normal company retirement age in August 2006.  To strengthen our senior
management, I am pleased to announce that George Letman will join us as Chief
Operating Officer and become a director of the company.  He has wide industrial
management experience, including senior roles at Siebe and Laporte.

Outlook

'Demand across our major activities is good.  However, margin development
remains difficult while raw materials continue to rise and the weakness of the
US Dollar offers challenges in some important areas.

'We are benefiting from another year of lower capital requirement, but are
nevertheless maintaining our focus on careful cash control. As we entered 2005
we anticipated a moderation in input cost increases leading to enhanced
profitability and cash generation supporting our development plans and
progressive dividend policy. This has not yet happened and, while things can
change rapidly in today's volatile markets, trading in 2005 is at a similar
level to that of the second half of last year.

'Near term, therefore, we keep all aspects of the business under close review,
but are reassured by the higher sales volumes that are being achieved and we are
confident that the strategy for our group remains sound.'

                                                                     26 May 2005



Enquiries:

Yule Catto                              01279 442791
Alex Walker, Chief Executive
Sean Cummins, Finance Director

College Hill                            020 7457 2020
Gareth David                            [e-mail]


NOTE TO EDITORS: George Letman

George Letman will shortly join the Yule Catto Board as Chief Operating Officer.
He is 52 years of age and an engineer by background.

His career at senior management level began in 1986 with Siebe plc where, over a
six-year period, he rose to Divisional Managing Director of the European
Pneumatic Controls business.  Joining Low & Bonar plc in 1992, he headed a
British/Austrian joint venture making flexible packaging.

In 1996 he assumed the role of a Divisional Managing Director with Laporte plc
looking after firstly Industrial Products and later the Global Electronic
chemicals activities.  This latter business was acquired by a private equity
house and became Rockwood Inc.  The experienced gained led to an approach from
Doncaster Ltd, itself a private equity backed business, where he became CEO of
the core Power Systems Division.

George brings valuable experience over a wide range of international industrial
activities to assist in furthering the development of the Yule Catto Group.


                      This information is provided by RNS
            The company news service from the London Stock Exchange