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	I. Developments in the 1st half of the fiscal year ending March 31, 2003
	II. Market conditions and results by business segment
	III. Outlook for the fiscal year ending March 31, 2003

I. Developments in the 1st half of the fiscal year ending March 31, 2003

New Subsidiaries

Building Performance Consulting Co., Ltd. was jointly established with Nikken Sekkei, a leading architecture and engineering firm, in May 2002. It aims to develop a consultation business of reducing energy consumption and maintenance cost as well as minimizing the environmental load of customers' buildings and facilities.

New Business

1.	Yamatake has enhanced its care service business with the development of an interactive "care" robot to communicate with elderly persons in nursing homes and assisted care facilities. This 1-meter tall robot can move about autonomously and carry on a brief, meaningful conversation.
2.	To better serve and support Japan's food industry, Yamatake has added more functions to its unique PC-based data tracking and management system for produce traceability and food safety. The company has also strengthened its promotion activities in order to increase the number of outlets for field-testing this system.

Research & Development

1.	Yamatake developed a built-in commercial air cleaner equipped with a device that generates H-minus ion, an element proven to reduce fatigue and stress. Research on the benefits of H-minus ion was conducted by Hokkaido University, School of Medicine.
2.	Yamatake together with a venture company have jointly developed a microchannel silicon chip used as a key device in screening systems for drug discovery in the pharmaceutical market. These systems sort out proteins and inhibitors for drug candidates.

Environmental Activities

The Fujisawa factory has been designated as a model factory for Yamatake's energy-saving activities, where the company's unique energy-monitoring systems and environmental solutions are contributing to significant reductions in energy consumption. The company is organizing tours of Fujisawa factory for customers who are interested in implementing Yamatake's energy-saving systems and solutions at their own factories.

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II. Market conditions and results by business segment

Summary of consolidated financial results

Consolidated net sales for the first half of this fiscal year were 73.2 billion yen, a 6.5% decrease compared with the same period last year, due mainly to the declining business in Building Automation.

A consolidated operating loss of 1.4 billion yen was recorded, a deterioration of 1.9 billion yen from the same period last year, affected primarily by reduced sales and increase in expenses related to employees' retirement benefits and other selling, general and administrative expenses.

Net loss for the first half of this fiscal year was 2.8 billion yen, reflecting mainly the loss on impairment of investment securities.

Building Automation

Building Automation sales were 32.1 billion yen, a 13.4% decrease compared with the first half of the previous year. Operating income was 611 million yen, a 73.8% decline from the same period last year.

The business environment of Japan's building industry remains severe, reflecting depressed capital investments in both the public and private sector markets. Under such difficult conditions, Yamatake focused its business on the existing buildings sector and shifted more of its resources to this market.

Sales in the new building market dropped because of the market depression in areas other than Tokyo, as well as a tendency of new buildings to be completed in the latter half of the fiscal year.
Sales in the existing building market declined, however, sales of service and maintenance increased steadily.

In overseas markets, sales fell slightly compared with the same period last year.

Industrial Automation

Industrial Automation sales were 24.5 billion yen, a slight increase from the first half of the previous year. Operating loss was 398 million yen, less 163 million yen from the same term last year, thanks to the growth in sales in the domestic market as well as improvement in cost of sales through cost cuts in purchasing.

In the oil refinery market, sales increased sharply compared with the first half of the previous year, driven by the demand for environmental protection measures and the renewal of oil stock systems.
Sales in the food and beverage were boosted by greater investment in safety-enhancing equipment.
Sales in the shipping and paper & pulp markets also grew.

In contrast, sales in the electric power market decreased, affected by a freeze and postponement of new plant construction.
In the chemical market, sales fell due to restrained investments in production equipment.

In overseas markets, sales decreased due to weak sales of automation systems. In China, however, sales of field instruments and control valves increased thanks to the strengthening of the sales network of Chinese subsidiaries.

Control Products

Control Products sales were 12.9 billion yen, a 4.2% decrease compared with the first half of the previous year. Operating loss was 1,005 million yen, a deterioration of 335 million yen compared to the same period last year.

Business conditions for control products were still harsh, impacted by the lingering recession and sluggish capital investment mainly in IT-related fields.

In the industrial sector market, sales fell slightly compared with the first half of the previous year due to the slump in industrial controllers and sensors.
Sales of Yamatake's unique gas flow control products, such as microflow sensors and mass flow controllers, increased over 40% to 0.5 billion yen compared with the same period last year.
In the residential market, although sales of radiant floor heating were brisk, lower sales of air cleaners resulted in decreased sales overall.

Outside Japan, sales increased in China, Taiwan and Southeast Asia. However, due to the delayed recovery in the semiconductor market, sales decreased in the US and Europe, resulting in a decline in overseas sales.
The manufacture of several basic types of proximity sensors and fiberoptic sensors was transferred to China, resulting in cost reduction in the first half of this fiscal year.

Other businesses

Other businesses consist of new businesses, such as care services and environment business, as well as the import of industrial machines and equipment. Sales in new businesses increased slightly, while the sales of imported machines and equipments declined.

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III. Outlook for the fiscal year ending March 31, 2003

		FY2001 Mar.2002	FY2002 Mar.2003	Inc.(Dec)	%
Building Automation
	Sales	815	816	1	0.1
	Operating Income(Loss)	75	54	(21)	(28.5)
Industrial Automation
	Sales	527	537	9	1.8
	Operating Income(Loss)	(2)	0	2	---
Control Products
	Sales	264	278	13	5.2
	Operating Income(Loss)	(16)	(13)	3	---
Other businesses
	Sales	112	124	11	10.4
	Operating Income(Loss)	(11)	(11)	0	---
Consolidation
	Sales	1,671	1,700	28	1.7
	Operating Income(Loss)	45	30	(15)	33.7
	Net Income	21	2	(19)	(90.6)

Building Automation

Sales for this fiscal year are estimated to be the same as the previous fiscal year due to the completion of many new buildings in the redevelopment areas of Tokyo during the second half of the fiscal year.
Operating income for this fiscal year, however, is expected to decrease, reflecting severe market conditions.

Industrial Automation

Sales and operating income are forecasted to increase from the previous fiscal year, driven by expanding sales in the food and beverage, pulp and paper markets as well as the recovering oil refinery market.

Control Products

Both sales and operating income are estimated to improve from the previous fiscal year due to the moderate recovery in the semiconductor and electric/electronics markets.

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