Chairman's Statement

Yule Catto & Co PLC
23 May 2000



At the Annual General Meeting of Yule Catto & Co plc earlier today, the
Chairman made the following remarks:

The world economy is currently going through a period of unprecedented change
and the Yule Catto group in many ways is reflecting that situation.  We are
ever conscious that a company must continuously evolve to survive and grow,
and today I should like to outline to you a number of important changes.

Before doing so, however, I must pay tribute to something that never changes. 
The unfailing loyalty and hard work of our dedicated employees worldwide is
one of our greatest assets.  On your behalf may I again take the opportunity
to thank all of them for their support and effort over the past 12 months that
has enabled the delivery of another good performance by Yule Catto.

The first change I should like to highlight is the acquisition last November
of the other 50% shareholding in our SB latex operation, Synthomer, from
Reichhold of the United States.  This business is one in which the group has
been engaged in a joint venture since the 1960s.

In recent years the technical and marketing team within Synthomer have
reshaped the company to become a major force in the field of speciality liquid
polymers based upon styrene, butadiene and acrylonitrile.  Restrictions that
existed due to the joint venture nature of the business have now fallen away
and opportunities to create a business with real global reach may now be
grasped.

The company holds a world lead in the supply of latex to make synthetic thin
wall gloves for medical and clean room applications, with the  largest
manufacturers of these products located in the Far East.  I am pleased to
announce that, better to serve our customers, your board yesterday approved
the construction of a state of the art synthetic latex facility in Malaysia. 
This has received the necessary governmental approvals with generous pioneer
status and will be constructed at our main chemical site in Kluang in Johor. 
Scheduled to come on stream in early 2002, this will be an important
contributor to future group profits.

The funding of the Synthomer acquisition was assisted by another excellent
year of cash generation by the group.  The move to deepen and widen our
activities in polymer chemistry, however, made it appropriate to reconsider
our business portfolio and this occasioned the second change I wish to
highlight.

In March of this year we agreed the disposal of our rooflights business in UK,
Ireland, Holland and Germany for a consideration of £47Million.  From small
beginnings as part of a plastics fabrication company, these operations were
grown to be significant profit and cash generators for Yule Catto.  As part of
a larger group concentrated upon Building Products, we are sure that these
businesses will develop and prosper.  In a separate transaction, we have also
sold our plastics distribution operation, Williaam Cox Plastics Stockholding,
for £7.8 million.  We wish our previous colleagues well under their new
ownership.

The review of our activities is ongoing and I would like to indicate that
discussions are in progress with regard to possible divestment of our other
building products companies.  This will, however, only take place when the
right valuation can be achieved.

The funds released by these disposals have mainly been directed to reduce
borrowings and create headroom for investment in the future development of our
chemical activities.  The recent fashion and high level of interest in
high-tech equities has caused a dramatic fall in the value of shares in the
chemical sector.  Yule Catto has not escaped this change in sentiment, but
your board has seen it as an opportunity to reinvest funds received from
disposals.  To date, we have purchased for cancellation some 4,860,036 shares
and you will note our proposal to extend the powers of the board in this
regard which will be to the benefit of shareholders.

Returning to the theme of change, may I record a number of important changes
to the board of directors.  Having reached retirement age, Allister McLeish
stepped down as Finance Director in March of this year.  His twenty years with
the group was a period of great growth in no small measure made possible by
Allister's prudent financial management and sound business judgement.  May I
particularly thank him for his outstanding contribution.  Sean Cummins has
joined the board as Finance Director and we look forward to his contribution
in the years ahead.

Changes to the non-executive element of the board have also taken place. 
Jan-Michiel Hessels resigned in March after 10 years on the board and Lee Hau
Hian today moves to the position of an alternate director.  To fill these
vacancies we are fortunate to welcome Richard Hunting and John Napier, both of
whom have a wealth of international industrial business experience.

May I, at this point, comment on one of the greatest changes facing businesses
in the world today.  I, of course, refer to e-commerce and the revolution
being brought about by the cheap and flexible communication afforded by the
Internet.  In Yule Catto we invested heavily in IT systems during the two
years running up to the Millennium.  This was extremely successful and has had
the added benefit of our companies now operating with the very latest hardware
and software.  

The challenge now is to build on that solid platform.  The approach being
taken is the establishment of an IT task force who have already developed and
disseminated a route map to take us forward in a consistent way to reap the
benefits of e-business and e-commerce.  The coming months should be exciting
as the implementation of these new business techniques roll out across the
group.

Now to something that does not change and that is our commitment to the health
and safety of our employees and the communities in which we operate.  Coupled
with a total respect for the environment, these are areas that remain a
constant in terms of receiving the highest priority.  From the annual report
you will note that considerable progress was achieved over the course of 1999.
 We strive for continuous improvement and the monitoring and reporting systems
installed in recent months will contribute to sustaining a positive momentum.

In terms of performance, 1999 was one of solid achievement with many of our
operations achieving fine results.  Turnover growth was held back through the
exit from certain highly competitive markets.  However, profit growth was
achieved reflecting the benefits of a continued concentration on speciality
products and a focus on customer service.

The start to the New Millennium has seen high levels of demand right across
our chemical activities.  This is particularly true of the Polymer business
where excellent volume is largely offsetting the well-reported increases in
the prices of our major raw materials.

Pharma and Fine Chemicals has seen a good start to the year, and the
Performance Chemical operations are benefiting from the hard work of
restructuring that has been undertaken.  

The sale of the rooflights and plastics distribution businesses has greatly
benefited our balance sheet and strengthened the focus of Yule Catto, but
inevitably in the short-term will impact group profitability.

Economic conditions in our main markets are largely favourable but this is
tempered by caution over raw material prices and the strength of Sterling.  We
are, therefore, seeing a challenging start to the 21st Century and the first
half of the year may see profits close to last year.  

Now to the final change that I wish to bring to your attention.  After nearly
40 years as chairman of Yule Catto & Co plc and its predecessor, Yule Catto &
Co Ltd, I shall be retiring from the board at the end of this meeting.  I am
delighted that my successor will be Anthony Richmond-Watson, who has been a
director of the company for many years.  He, I am sure, will be an extremely
able chairman and will work diligently to ensure the group grows and prospers.

In my long association with Yule Catto I have seen it change and evolve from a
small family business with a large shareholding in Andrew Yule & Co, a major
Indian managing agency, to the industrial company we are today.  In 1971 Yule
Catto merged with the listed Malaya General Company, which owned Yule family
rubber plantations in Malaysia.  Then two decades ago we made a major move
into the chemicals business through the acquisition of Revertex Chemicals.  In
1991 following a series of further investments in building products, we
disposed of most of the plantations.  The acquisition of Holiday Chemicals two
years ago showed our confidence in the future of the speciality chemicals
industry.  We have further consolidated our position by increasing
substantially our investment in Synthomer, which led to the sale of our
roof-lights business earlier this year.

I have worked with many fine colleagues over the years but I would like to
mention in particular two people.  First, Bill Catto, my cousin, who as
chairman of Malaya General played a pivotal role in the merger with Yule
Catto.  And second, Tan Sri Lee Loy Seng, the late chairman of Kuala Lumpur
Kepong, our largest shareholder, without whose help and encouragement we could
not have acquired Revertex.

It only remains for me to wish continued success to my old and new colleagues,
to say a fond farewell to you, our shareholders, and give my thanks to the
staff all over the world for their hard work and loyalty.


Catto
23 May 2000
Saddlers' Hall, Gutter Lane, EC2