Masterflex SE — Interim / Quarterly Report 2005

Nov 11, 2005

QUARTERLY REPORT 3/2005

Investor Relations

Stephanie Kniep Fon +49 209 97077-44 Fax +49 209 97077-20 E-mail: kniep@masterflex.de www.masterflex.de

Masterflex AG Willy-Brandt-Allee 300 D-45891 Gelsenkirchen GERMANY

Fon +49 209 97077-0 Fax +49 209 97077-33

E-mail: info@masterflex.de www.masterflex.de/com www.masterflex-bz.de

■ Revenue growth	+13.0 %
■ EBIT	+5.2 %
■ Net profit	+4.3 %
■ Outlook for 2005
Revenue	+15-17%
EBIT	+5-12%

	Sept. 30, 2005	Sept. 30, 2004	+/-
Revenue (a thou.)	60,526	53,609	+13.0 %
EBITDA (a thou.)	9,739	9,654	+0.9 %
EBIT (a thou.)	8,087	7,685	+5.2 %
EBT (a thou.)	6,723	6,886	-2.4 %
Net profit (a thou.)	4,480	4,297	+4.3 %
IAS-Earnings per share (a)	1.00	0.95	+5.3 %
EBIT-Margin	13.4 %	14.3 %
Net profit margin	7.4 %	8.0 %
Number of employees	596	445	+33.9 %
	Sept. 30, 2005	Dec 31, 2004	+/-
Equity (a thou.)	30,767	31,968	-3.8 %
Total assets (a thou.)	96,754	83,573	+15.8 %
Equity ratio	31.8 %	38.3 %

Stock development July - November 2005

Dear shareholders,

Masterflex AG again increased its revenue in the first nine months of 2005. Consolidated revenue rose by 13.0% to EUR 60.5 million, while earnings before interest and taxes (EBIT) grew by 5.2% year-on-year, thus failing to meet our expectations. Net profit increased by 4.3% to EUR 4.5 million, resulting in earnings per share of EUR 1.00 (+ 5.3%). At 13.4%, our EBIT margin remains one of the best among listed German public companies.

The year-on-year slowdown in earnings growth is due in particular to a weak third quarter in the Mobile Office Equipment area, part of the Fuel Cell Technology business unit.Although our subsidiary DICOTA GmbH substantially lifted its revenue, its EBIT declined. Several factors were responsible for this: DICOTA pushed forward with its internationalization, resulting in start-up costs for establishing branches and setting up its sales network. Another reason was the surprisingly poor performance of the European and in particular German retail business, which saw a fall in sales in the notebook market during the summer months. Finally, any year-on-year comparison must take into account the fact that 2004 was an outstanding year for DICOTA GmbH.The high-margin project business that it generated with major customers was not repeated in this form in 2005. We are expecting a substantial upturn in DICOTA's business in fiscal year 2006.

These effects at DICOTA GmbH were no more than offset by performance in the hose business, earnings contributions from Medical Technology and the initial contribution by the SURPRO Group. DICOTA GmbH has now largely finished establishing its international presence, and therefore we are expecting high growth rates for revenue and EBIT in the future.

One significant event in the period under review was the acquisition of the SURPRO Group,Wilster, on August 18, 2005, which has been included in consolidation as of this reporting date. With its comprehensive expertise in the field of precious metal coating, SURPRO is one of the leading companies worldwide. The profitable company generated revenue of around EUR 15 million in 2004. Masterflex AG , which focuses strongly on mate-

RESULTS

rials science and new materials in its research and development, expects substantial momentum and synergy effects for product development in its Medical Technology and Fuel Cell Technology business units, as well as for the metallic coating of plastics.

In making this acquisition, we again kept strictly to our strategy of acquiring only technology leaders in their respective markets that are profitable and that will drive forward the development of our business units.

Outlook

With regard to the Company's expected performance for fullyear 2005, the fourth quarter looks set to be strong, as is traditionally the case. Masterflex will continue to grow its revenue and earnings in fiscal year 2005. The Board of Masterflex AG regards the Company's earnings development in the third quarter as temporary. We are therefore reiterating our revenue growth forecast and setting it at +15% to +17%. The fourth quarter is not expected to do more than offset the weak earnings development in the third quarter by the end of the year. We are therefore revising our annual EBIT forecast to an increase of 5% to 12% (previously +15% to +25%).

We are firmly convinced that we will continue to grow more strongly in 2006 and that we will achieve disproportionately high double-digit earnings growth.We are basing our positive assessment on our outstanding market position and innovative products in forward-looking business areas. In addition, our international markets in particular still offer substantial growth potential. We intend to continue bundling the extensive expertise from our individual companies to further leverage our potential.

November 2005

Detlef Herzog Chairman of the Board

Ulrich Wantia Board member

Analysis of financial position, net assets and results of operations

The income statement as of September 30, 2005 shows that we are successfully selling our innovative products and pushing ahead with our internationalization. Our gross revenue increased by almost 17% year-on-year to EUR 63.5 million. In comparison with the prior-year period, it should be noted that the SURPRO Group was included in consolidation for the first time for the period from August 18 to September 30, 2005.

The ratio of cost of materials to revenue was 42.1% as of September 30, 2005 (previous year: 41.4%), while the staff costs ratio was a stable 24.2% (previous year: 24.3%).The number of employees increased by 33.9% to 596, due in particular to the acquisition of the SURPRO Group.

Other operating expenses increased in relation to revenue due to investments in the internationalization of DICOTA's business activities, among other things. Depreciation and amortization expense, which consisted primarily of depreciation and amortization of noncurrent assets, continued to decrease slightly.

As a result of these effects, net profit from ordinary activities (EBT) as of September 30, 2005 fell slightly by 2.4% to EUR 6.7 million (previous year: EUR 6.9 million). Increasing earnings from our foreign subsidiaries in countries with low tax rates resulted in 4.3% growth in consolidated net profit, to EUR 4.5 million.

As of September 30, 2005, Masterflex AG's net assets improved further compared with December 31, 2004 due to the increase in revenue and the consolidation of SURPRO.Total assets rose by 15.8% to EUR 96.8 million.There have been significant changes in noncurrent assets compared with December 31, 2004, in particular due to the consolidation of the SURPRO Group. Current liabilities increased correspondingly because the purchase price for the SURPRO Group had not yet been paid as the transaction had not been closed as of the reporting date.

High-tech Hose Systems

We continued to drive forward the internationalization of our core business unit, High-tech Hose Systems, in Q3 2005.

Masterflex AG successfully presented its product range at the

BUSINESS UNITS

beginning of October at POWTECH in Nuremberg, the international trade fair for mechanical process engineering and analytical chemistry. Special suction and transport hoses for the bulk goods, food and pharmaceutical industries were displayed.

Together with our Polish sales partner, we presented our product range at two of the most important industry trade fairs in Eastern Europe, the international trade fair for the food industry and the trade fair for packaging technology and logistics in Poland.

As already mentioned in our half-yearly report, one of our most innovative new products is a highly flexible plastic hose with an inner coating of ceramic or metal that makes use of nano-particle structures. This hose can be used in the future to replace rigid metal or glass tubing in many areas of application.The first hoses have already been produced and presented to a number of potential customers.The coating for various hose types is currently being tested. The first market analyses will be available next year.

Medical Technology

Following the investments made in recent years, Medical Technology is making an increasing contribution to Masterflex AG's earnings.

Our subsidiary Angiokard Medizintechnik GmbH & Co. KG primarily manufactures special surgery kits for angiography. Since this year, sets for other surgical applications have also been offered. Since the concept of these kits is still unknown in many operations, we see strong growth potential in this area.

Fleima-Plastic GmbH, acquired by Angiokard in August 2004, is making a very positive contribution. The company is an ideal addition to Angiokard's existing activities as it extends the value chain to include the in-house production of kit components. Fleima-Plastic specializes in the manufacture of advanced injection molded plastic parts for the pharmaceutical and medical technology industries.The company has its own toolmaking facility equipped with the latest machinery.

Sales of our medical products such as catheters, multi-lumen tubes and infusion tubing have also continued successfully this year, as the trend towards substituting materials posing a potential health risk is continuing unabated.

The market launch phase of our internationally patented Lary-Vent respiratory mask is still ongoing, as we have decided, following an analysis of our discussions with physicians during the current pre-marketing phase, to implement further design changes to increase its market opportunities. However, even without LaryVent, we will still achieve our targets for 2005 in Medical Technology.

All in all, we see substantial future potential for Medical Technology, as we offer innovative products made from materials with no adverse health effects. In addition, we offer surgery kits at fixed prices, thus providing hospitals with a reliable base for calculation. This accommodates the increasing trend towards enhancing transparency in the healthcare sector.

Fuel Cell Technology and Mobile Office Equipment

Our third business unit will be titled Fuel Cell Technology for the last time in this quarterly report, as it also includes the Mobile Office Equipment area and, with effect from Q3 2005, the newly acquired SURPRO Group.We will present an appropriate, transparent name for this innovative segment in the 2005 Annual Report.

DICOTA GmbH has successfully launched innovative carrying systems that were presented at various trade fairs.The company continued to drive forward its internationalization, in particular in the Asian market. For example, it established a branch in China that is already operating successfully. DICOTA sees the secret of its success in the combination of innovative series products on the one hand, and in special customer-specific projects on the other.This strategy and the entire company's global focus has enabled DICOTA to record clear double-digit growth every year in the past decade, making it one of the most successful companies in the industry.

The investments that contributed to the decline in the development of earnings in the third quarter are designed to form the basis for continuing the Company's successful development in the future.

BUSINESS UNITS

INVESTOR RELATIONS

Stronger development is expected again in the fourth quarter, as the Christmas season is traditionally a strong period for DICOTA. In all probability, however, the results forecast for 2005 will not be achieved.

Our Fuel Cell Technology segment will receive a significant boost in the future from our newly-acquired subsidiary SURPRO, which has state-of-the-art production facilities in Wilster (Schleswig-Holstein, Germany) and Plana (Czech Republic). SURPRO is the recognized specialist in surface processing, particularly for metal coating. We will increase contact between the development departments of our various companies and bundle our knowledge to optimize our existing products and drive forward innovations.

In the original Fuel Cell field, the interest shown by the European Community in supporting this innovative technology has continued to increase. Corresponding programs will be launched over the coming months.We see good opportunities for Masterflex AG's fuel cells to be included in these support measures in the area of light mobility vehicles in particular.

We are confident that we will deliver a test fleet of our electric bikes with fuel cell drive systems to a public-sector customer at the beginning of 2006. This should generate further revenues from this unit, although these will be minor.

We took further decisive steps this year to improve the performance of our fuel cells. However, we are dependant on gas and storage technology suppliers when it comes to the development of a suitable hydrogen infrastructure and storage solutions. In contrast, our fuel cell is already marketable, having demonstrated stable performance over several thousand hours.We would like to stress again that it is difficult to predict the timing of the large-scale market launch of fuel cell systems. For reasons of prudence, we have therefore not included any contributions to revenue and earnings from this area in our forecasts.

Investor Relations

The Company's extremely positive share price performance since July continued in the rest of Q3 2005. The Xetra share price rose by 33.40% as against the share price on July 1 of EUR 27.70 to EUR 36.94 on September 30. This reflects the great interest in Masterflex shares in the course of our continuing investor relations activities. Contacts with European investors were expanded at a roadshow, in one-on-one meetings, and at an investor conference in London, among other things. Another roadshow in Europe and the USA will follow in Q4 2005.

In-depth contact with the financial market, a new research report by Dresdner Kleinwort Wasserstein with a positive investment recommendation, and positive reporting in the media led to a new 52-week high of EUR 37.75 at the beginning of October (Xetra share price). This corresponds to an increase of almost 40% compared with the share price of EUR 27.00 at the beginning of the year. At the end of October Masterflex shares suffered pressure in a weak stock market environment.

We will therefore seek to remain in constant contact with our investors so as to present Masterflex AG's growth potential, and hence ensure that our successful corporate development is also reflected in our share price development. Activities include, for example, our corporate presentation on November 21, 2005 at the Deutsche Börse Eigenkapitalforum, which attracts more than 3,000 visitors from the world of finance, and another roadshow in Europe and the USA.

Key events after the end of the quarter

No key events occurred after the end of the quarter.

Information on material risks to future development

We believe that our core High-tech Hose Systems business unit has a very sound base; there are no material risks to its continued existence.

The main area of risk, which does not affect our core business, is the market risk to which all our growth areas are exposed, i.e., the acceptance of our innovative products by the market. A detailed risk report can be found on page 49f. of the Annual Report 2004.

NOTES

Notes to the Quarterly Report

1. Accounting principles

This quarterly report was prepared in accordance with the International Financial Reporting Standards (IFRSs) and the International Accounting Standards (IASs) promulgated by the International Accounting Standards Board (IASB), and complies with the Company's key accounting principles as presented here.The accounting policies applied were the same as those applied in the preparation of the consolidated financial statements for the fiscal year ended December 31, 2004 and the two previous quarterly reports.

2. Consolidated group

The consolidated group changed in the third quarter. The SURPRO Group, which was acquired on August 18, 2005, was consolidated as of this date.

3. Dividend

The Annual General Meeting of Masterflex AG on June 8, 2005 approved a dividend payment of EUR 0.80. A total of EUR 3,497,615.20 was distributed on June 9, 2005.

4. Segment reporting

The segment reporting is performed in accordance with IAS 14, with the primary reporting format being product-related business units. Masterflex AG has three business units: High-tech Hose Systems, Medical Technology and Fuel Cell Technology.

HTS = High-Tech-Hose Systems
MT = Medical Technology
FCT = Fuel Cell Technology

Sept. 30, 2005	HTS	MT	FCT	ment- aggregate	Seg- Reconci- liation	Group
	a thou.	a thou.	a thou.	a thou.	a thou.	a thou.
Revenue	26,288	12,917	21,321	60,526	0	60,526
Earnings (EBIT)	6,431	96	2,387	8,914	-828	8,087
Investments in property,
plant and equipment and
intangible assets	3,265	248	1,494	5,007	0	5,007
Assets	30,982	23,008	36,613	90,603	6,151	96,754
Depreciation and
amortization	1,122	408	122	1,652	0	1,652
Liabilities	6,524	2,478	18,031	27,033	38,954	65,987

				ment- aggregate	liation
	a thou.	a thou.	a thou.	a thou.	a thou.	a thou.
Revenue	26,856	10,305	16,448	53,609	0	53,609
Earnings (EBIT)	5,801	-440	2,877	8,238	-553	7,685
Investments in property,
plant and equipment and
intangible assets	502	2,372	10	2,884	0	2,884
Assets	29,982	20,589	13,681	64,252	23,361	87,613
Depreciation and
amortization	1,068	676	225	1,969	0	1,969
Liabilities	7,715	4,148	5,567	17,430	39,728	57,158

Sept. 30, 2004 HTS MT FCT Seg- Reconci- Group

5. Earnings per share

In accordance with IAS 33, basic earnings per share are calculated by dividing net profit by the weighted average of shares outstanding during the period under review. Earnings per share as of September 30, 2005 amounted to EUR 1.03 per share on the basis of a weighted average of 4,364,152 shares. Diluted earnings amounted to EUR 1.00. The stock option program (see page 67, section x, in the 2004 Annual Report) expired in the meantime.

6. Own shares

As of September 30, 2005 Masterflex AG held 134,126 own shares.There were no changes to the stock options and other subscription rights disclosed in the 2004 Annual Report during the period under review.

7. Employees

At 596, the number of employees as of September 30, 2005 was up 33.9% on September 30, 2004 (445 employees).

BALANCE SHEET - IFRS

BALANCE SHEET - IFRS

ASSETS	Sept. 30 ,2005*	Dec. 31, 2004
	a thou.	a thou.
NONCURRENT ASSETS
Intangible assets	29,843	17,946
Property, plant and equipment	24,813	18,612
Long-term investments	1,042	2,391
Deferred tax assets	424	394
	56,122	39,343
CURRENT ASSETS
Inventories	19,766	13,804
Prepaid expences	857	639
Trade accounts and notes receivable	15,776	12,189
Securities	62	9,500
Cash and bank balances	4,171	8,098
	40,632	44,230
Total assets	96,754	83,573

* Unaudited

EQUITY AND LIABILITIES	Sept. 30, 2005* Dec. 31,2004 a thou.	a thou.
SHAREHOLDERS´ EQUITY
Consolidated equity	29,963	29,639
Minority interest	804	2,329
Total equity	30,767	31,968
NONCURRENT LIABILITIES
Provisions	1,731	292
Financial liabilities	26,731	29,839
Deferred income	2,671	2,849
Other noncurrent liabilities	3,090	3,280
Deferred tax liabilities	2,859	2,194
	37,082	38,454
CURRENT LIABILITIES
Provisions	4,882	4,419
Financial liabilities	4,058	1,326
Other current liabilities	19,965	7,406
	28,905	13,151
Total equity and liabilities	96,754	83,573

* Unaudited

INCOME STATEMENT - IFRS

INCOME STATEMENT - IFRS

Net profit for the period	4,480	4,297
interests	-79	-177
Income attributable to minority
Other taxes	-175	-159
Deferred taxes	219	-165
Income tax expense	-2,208	-2,088
Profit before taxes	6,723	6,886
	-1,548	-954
Interest and similar expenses
instruments	-417	0
Write-downs of current financial
Other interest and similar income	587	142
Income from investments	14	13
Other operating expenses Total operating expenses	-13,645 -55,380	-9,378 -46,590
Depreciation and amortization expense	-1,652	-1,969
Staff costs	-14,631	-13,048
Cost of materials	-25,452	-22,195
Gross revenue	63,467	54,275
Other operating income	1,515	350
and capitalized	288	179
Work performed by the enterprise
Changes in inventories of finished goods and work in progress	1,138	137
Revenue	60,526	53,609
	a thou.	a thou.
Financial statement as of	Jan.-Sept., 05*	Jan.-Sept., 04*

* Unaudited

Financial statement as of	July-Sept., 05* a thou.	July - Sept., 04* a thou.
Revenue	21,624	18,418
Changes in inventories of finished
goods and work in progress	932	179
Work performed by the enterprise
and capitalized	167	113
Other operating income	287	157
Gross revenue	23,010	18,867
Cost of materials	-8,825	-7,499
Staff costs	-4,975	-4,554
Depreciation and amortization expense	-607	-691
Other operating expenses	-5,677	-3,081
Total operating expenses	-20,084	-15,825
Income from investments	0	0
Other interest and similar income	170	113
Write-downs of current financial
instruments	-159	0
Interest and similar expenses
	-478	-389
Profit before taxes	2,459	2,766
Income tax expense	-920	-725
Deferred taxes	109	-49
Other taxes	-47	-54
Income attributable to minority
interests	-30	-61
Net profit for the period	1,571	1,877

* Unaudited

CASH-FLOW - IFRS FINANCIAL CALENDAR

Net profit for the period 4,480 4,297 Depreciation and amortization expense 1,652 1,969 Change in provisions -698 2,297 Other non-cash expenses/income and gain/loss on disposal of non current assets -213 -6 Changes in inventories, trade receivables and other assets -4,777 -21,887 Changes in trade payables and other equity and liabilities 3,923 7,222 Net cash from/used in operating activities 4,367 -6,108 Proceeds from asset disposals 25 44 Payments to acquire noncurrent assets -3,424 -4,537 Payments to acquire consolidated subsidiaries -8,324 -875 Net cash used in investing activities -11,723 -5,368 Proceeds from additions to equity (capital increases, sales of treasury 1,350 1,407 shares) Dividends paid to owners and minority interests (dividends, -7,600 -7,028 acquisition of treasury shares) Proceeds from securities / term deposits 9,438 0 2,691 23,704 Proceeds from finance facilities raised -3,267 -5,346 Repayment of borrowings Net cash from/used in financing 2,612 12,737 activities Net change in cash and cash -4,744 1,261 equivalents Changes in cash and cash equivalents due to exchange rates and other factors 817 479 Cash and cash equivalents at beginning of period 8,098 3,594 Cash and cash equivalents at end of period 4,171 5,334	Financial statement as of	Sept. 30, 2005* a thou.	Sept. 30,2004* a thou.

* Unaudited

March 2006

March 16-19,WIN Istanbul (exhibitor: Masterflex AG)

April 2006

April 03/04 Annual Press Conference, presentation of the annual report 2005, Düsseldorf

April 06/07 DVFA-Analyst Conference, presentation of the annual report 2005, Frankfurt

International Road show

April 24-28, Hannover fair (exhibitor: Masterflex AG, Novoplast Schlauchtechnik GmbH, Masterflex Brennstoffzellentechnik)

May 2006

Quarterly report I/2006

May 15-19 ACHEMA Frankfurt (exhibitor: Masterflex AG)

June 2006

June 14, General Stockholders' Meeting, Gelsenkirchen

August 2006 Quarterly report 2/2006

November 2006 Quarterly report 3/2006

International Road show

CHANGES IN EQUITY

Consolidated statement of changes in equity

	Issued capital	Share premium	Retained earnings (retained profits	Revaluation reserve of financial	Exchange differences	Total
	a thou.	a thou.	brought forward) a thou.	instruments a thou.	a thou.	a thou.
Equity at December 31, 2003	4,498	20,663	5,625	-559	-1,035	29,192
Net profit	0	0	4,297	0	0	4,297
Changes in fair values of
financial instruments	0	0	0	-132	0	-132
Currency translation gains/losses from translation
of foreign financial statements	0	0	0	0	479	479
Sale of treasury shares	65	1,342	0	0	0	1,407
Purchase of own shares	-146	-3,843	0	0	0	-3,989
Dividend distributions	0	0	-2,700	0	0	-2,700
Other changes	0	0	94	0	0	94
Equity at September 30, 2004	4,417	18,162	7,316	-691	-556	28,648
Equity at December 31, 2004	4,411	18,519	8,960	-671	-1,580	29,639
Net profit	0	0	4,480	0	0	4,480
Changes in fair values of
financial instruments	0	0	0	66	0	66
Currency translation gains/losses from translation
of foreign financial statements	0	0	0	0	817	817
Sale of treasury shares	50	1,300	0	0	0	1,350
Purchase of own shares	-95	-2,403	0	0	0	-2,498
Dividend distributions	0	0	-3,498	0	0	-3,498
Other changes	0	0	-393	0	0	-393
Equity at September 30, 2005	4,366	17,416	9,549	-605	-763	29,963