Masterflex SE — Interim / Quarterly Report 2005

Aug 17, 2005

QUARTERLY REPORT 2/2005

■ Revenue growth	+10.5 %
■ EBIT	+11.2 %
■ Net profit	+20.2 %
■ Outlook for 2005
Board confirms forecast:
Revenue	+15-20%
EBIT	+15-25%

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

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

Investor Relations

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

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

MASTERFLEX AT A GLANCE (IFRS)

	June 30, 2005	June 30, 2004	+/-
Revenue (a thou.)	38,902	35,191	+10.5 %
EBITDA (a thou.)	6,206	5,921	+4.8 %
EBIT (a thou.)	5,161	4,643	+11.2 %
EBT (a thou.)	4,264	4,120	+3.5 %
Net profit (a thou.)	2,909	2,420	+20.2 %
IAS-Earnings per share (a)	0.67	0.54	+24.1 %
EBIT-Margin	13.3 %	13.2 %	+0.8 %
Net profit margin	7.5 %	6.9 %	+8.7 %
Number of employees	483	423	+14.2 %

	June 30, 2005	Dec 31, 2004	+/-
Equity (a thou.)	29,406	31,968	-8.0 %
Total assets (a thou.)	84,421	83,573	+1.0 %
Equity ratio	34.8 %	38.3 %	-9.1 %

Stock development January - August 2005

2

Dear shareholders,

Masterflex AG again continued its growth path in the first six months of 2005. Consolidated revenue rose 10.5% year-on-year to EUR 38.9 million.This is partly due to the increasing contributions from the Medical Technology business unit, which we expect to produce an even more significant effect in the second half of the year. Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 4.8% year-on-year in H1 2005 to EUR 6.2 million; earnings before interest and taxes (EBIT) increased by 11.2% to EUR 5.2 million. The EBIT margin improved slightly on H1 2004, reaching an above-average 13.3%.This continues to be one of the best figures for any German listed company. Net profit rose by 20.2% to EUR 2.9 million. Earnings per share climbed as a result from EUR 0.54 to EUR 0.67 (+24.1%).

Our innovative product portfolio and the increasingly international approach of our business activities were our key growth drivers in the first half of 2005.We expect further growth in the second half of the year, as this is traditionally when we see stronger revenue.The market launch of new, innovative, high-margin products primarily from the High-tech Hose Systems business unit is also imminent.

The Board of Masterflex AG is therefore confirming its forecasts for full-year 2005 of a growth in revenue of 15% to 20%, and an increase in EBIT of between 15% and 25%.

Analysis of financial position, net assets and results of operations

Our income statement as of June 30, 2005 shows once again that we are successfully focusing on the sale of innovative, premium-priced products with high margins. Internationalization is also contributing to the positive development.

The ratio of cost of materials to revenue was 42.7% in H1 2005 (previous year: 41.8%), while the staff costs ratio was a stable 24.8% (previous year: 24.1%).The number of employees increased by 14.2% to 483.

EDITORIAL

BUSINESS UNITS

RESULTS

Other operating expenses increased slightly in relation to revenue. Depreciation and amortization expense, which consisted primarily of depreciation and amortization of non-current assets, decreased slightly.

June 30, 2004 June 30, 2005

As a result of these effects, net profit from ordinary activities (EBT) improved by 3.5% as of June 30, 2005 to EUR 4.3 million (previous year: EUR 2.2 million). Increasing earnings from our foreign subsidiaries in countries with low tax rates resulted in 20.2% growth in consolidated net profit, to EUR 2.9 million.

Masterflex AG's net assets improved further as of June 30, 2005. Total assets rose by 1% to EUR 84.4 million.There were two significant changes on the assets side of the balance sheet as against December 31, 2004: intangible assets were up by EUR 7.2 million, while securities were down by EUR 6.3 million. Both are connected with the acquisition of the outstanding shares in DICOTA GmbH and Novoplast Schlauchtechnik GmbH in January 2005.

On the equity and liabilities side of the balance sheet, current liabilities rose by EUR 5.8 million as against December 31, 2004. This was largely due to the increase in current financial liabilities.As a result of the restructuring of the Company's equity and liabilities, the equity ratio fell year-on-year to 34.8% of total assets.

High-tech Hose Systems

We continued to drive forward the internationalization of our core business unit, High-tech Hose Systems, in H1 2005 and expanded our marketing and sales activities in Eastern Europe and in the USA.

One of our most innovative new products is a highly flexible plastic hose with an inner coating of ceramic and metal that makes use of nano-particle structures.These flexible hoses can replace rigid metal pipes in many areas of application. Given these outstanding qualities, we see huge business opportunities in the automotive and electronics industries.We have developed a proprietary production facility that will be ready to start production as from September.

Medical Technology

We intend to continuously increase the contribution to earnings from our second business unit, Medical Technology in 2005 thanks to the innovative and wide range of products that we have developed.

Our subsidiary Angiokard Medizintechnik GmbH & Co. KG focuses on manufacturing angiography kits.The business unit was expanded this year to include the manufacture of sets for surgical applications.We see great potential for growth here, because this market has yet to be developed. We are already successfully generating initial revenue here.

Our internationally patented respiratory mask LaryVent will be actively sold following conclusion of the pre-marketing phase.To accelerate the market launch of this innovative system, a medical technology expert will be joining the project management team with effect from September 1, 2005.

Sales of our medical products such as catheters, multi-lumen tubes and infusion tubing increased further in the first half of 2005, as the trend towards substituting materials posing a potential health risk is continuing unabated.

On the whole, we believe that Medical Technology offers considerable potential for the future, as we work with innovative materials. On the other hand, we offer products and sets at fixed prices; thus providing a reliable base for calculation.This accommodates the increasing trend in hospitals of judging purchases according to economic considerations.

BUSINESS UNITS

Fuel Cell Technology and Mobile Office Equipment

Our third business unit, Fuel Cell Technology, with its Mobile Office Systems subdivision, features a range of new developments.While DICOTA GmbH's innovative carrying systems will hit the market this year, we see the prospects for the use of electric bikes powered by fuel cells as being more medium term.The breakthrough for fuel cells will initially occur in niche markets where the hydrogen infrastructure is being established as a stand-alone solution.This includes the market for electric bikes. Global sales of battery-powered electric bikes in 2004 already amounted to around one million units, of which around 120,000 were sold in Europe.

The establishment of a hydrogen infrastructure and suitable storage technology is a pre-requisite for the introduction of electric bikes powered by fuel cell technology. We have to rely on the corresponding gas and cartridge suppliers for this. However, our fuel cell is already marketable, having demonstrated stable performance over several thousand hours. Interest in our fuel cell is already huge - including at an international level. We presented our fuel cell system at various trade fairs in the first half of 2005, and made promising contacts to several European cities, including London. Interest in the use of electric bikes with fuel cell systems is growing here, as discussions about, and calls for, a ban on cars in city centers because of the fine dust problem are currently on the increase. Our vehicle system is an ideal solution.

We would like to stress again that it is difficult to predict the timing of a large-scale market launch of fuel cell systems, although we share the almost unanimous opinion of the experts

that fuel cells will play a key role in the future, particularly in traffic engineering. Thus, for reasons of prudence and seriousness, we have not included any contributions to revenue and earnings in our forecasts.

INVESTOR RELATIONS

Investor relations

Following our announcement of our results for fiscal 2004 at our annual earnings press conference on April 27 in Düsseldorf, and the next day at the analyst conference in Frankfurt, the Board and the Investor Relations manager met with institutional investors in Germany, Europe and, for the first time, in the USA over the course of several weeks.These discussions were extremely successful and aroused a great deal of interest. Our share price improved in line with this to over EUR 30.00 (as of August).

Another contributing factor to this was the placement with institutional investors in the USA and Europe of an additional 560,000 shares from the holdings of existing shareholders by WestLB AG, Düsseldorf at the beginning of July.The order book was over-subscribed several times, underlining the substantial interest in Masterflex shares.

The free float increased from 56% to its current figure of over 83%.This high free float is likely to increase investor awareness further.

Share price development in H1 2005

Over the past few months, Masterflex shares (ISIN DE0005492938, WKN 549293, exchange symbol mzx) moved within what chartists refer to as a symmetrical triangle for a long time. The share price fluctuated continuously between EUR 25.00 and EUR 28.00, breaking up and out of this range at the beginning of July. Most recently, it topped EUR 32.00. Analysts covering Masterflex shares see further upside potential. In line with this, we will continue to strengthen our investor relations activities in Germany and abroad. For example, we will again be presenting at the Deutsche Börse Eigenkapitalforum in Frankfurt on Monday, November 21, 2005.

Encouragingly, newly published research reports by WestLB and Bankhaus Lampe both contained buy recommendations for Masterflex AG shares. Other banks have also announced the publication of research reports, or have already started internal coverage. These studies, along with increasing media coverage, are certain to further stimulate interest among investors.

INVESTOR RELATIONS

Annual General Meeting 2005

The Annual General Meeting took place in Schloss Horst in Gelsenkirchen (the same venue as last year) on June 8, 2005.The event was very well attended, with 300 participants.

All items on the agenda were passed by large majorities. One of the items for resolution was the modernization of the Articles of Association to include, for example, the use of electronic media. The Annual General Meeting also approved a dividend payment of EUR 0.80 per share, which was distributed on June 9, 2005.

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 and that 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.

Outlook

We are satisfied with developments in H1 2005.We were able to continue our positive development and are convinced that 2005 will be another successful year, despite a slight lack of momentum in our growth.As the second half of the year is tra-

8

OUTLOOK

ditionally the stronger, we see no reason to revise our forecasts. We are basing our positive estimate on our outstanding market position and the investments in forward-looking business areas. With regard to corporate development, we place great importance on qualitative growth.This applies to both internal development and the expansion of our business units through acquisitions.

As a result, we still expect revenue to rise by between 15% and 20% and EBIT by between 15% and 25% in fiscal 2005.

August 2005

Detlef Herzog Chairman of the Board

Ulrich Wantia Board member

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 report on the first quarter of 2005.

The new accounting standards from the IASB (International Accounting Standards Board) Improvements Project were applied with effect from January 1, 2005.

NOTES

The main change in the Improvements Project affecting Masterflex relates to the revised IAS 1, which requires the reclassification of assets and liabilities in the balance sheet by maturity.The other changes do not have a material effect on the Group's net assets, financial position and results of operation.

2. Consolidated group

There were no changes to the consolidated group during the first half of 2005.

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

Segment reporting is performed in accordance with IAS 14, with the primary segment 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

June 30, 2005	HTS	MT	FCT	ment-	Seg- Reconci- liation	Group
				aggregate
	a thou.	a thou.	a thou.	a thou.	a thou.	a thou.
Revenue	17,586	8,688	12,628	38,902	0	38,902
Earnings (EBIT)	4,152	49	1,512	5,713	-552	5,161
Investments in property,
plant and equipment and
intangible assets	2,018	197	1,049	3,264	0	3,264
Assets	30,415	22,810	20,794	74,019	10,402	84,421
Depreciation and
amortization	718	271	56	1,045	0	1.045
Liabilities	7,142	2,210	4,028	13,380	41,635	55,015

June 30, 2004	HTS	MT	FCT	ment- aggregate	Seg- Reconci- liation	Group
	a thou.	a thou.	a thou.	a thou.	a thou.	a thou.
Revenue	17,659	6,538	10,994	35,191	0	35,191
Earnings (EBIT)	3,591	-534	2,040	5,097	-454	4,643
Investments in property,
plant and equipment and
intangible assets	226	58	25	309	0	309
Assets	29,193	16,900	11,848	57,941	6,615	64,556
Depreciation and
amortization	710	424	144	1,278	0	1,278
Liabilities	8,147	2,440	4,103	14,690	19,147	33,837

5. Earnings per share

In accordance with IAS 33, basic earnings per share are calculated by dividing the consolidated net profit by the weighted average of shares outstanding during the period under review. Earnings per share as of June 30, 2005 amounted to EUR 0.67 on the basis of a weighted average of 4,364,186 shares. Diluted earnings amounted to EUR 0.65. The stock option program (see page 67, section x of the 2004 Annual Report), which is taken into account in the calculation of diluted earnings per share, does not result in any significant dilution of earnings as the number of options granted is relatively low.

6. Own shares

As of June 30, 2005 Masterflex AG held 133,926 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 483, the number of employees as of June 30, 2005 was up 14.2% on June 30, 2004 (423 employees).

11

NOTES

BALANCE SHEET - IFRS

BALANCE SHEET - IFRS

ASSETS	June 30 ,2005*	Dec. 31, 2004
	a thou.	a thou.
NONCURRENT ASSETS
Intangible assets	25,097	17,946
Property, plant and equipment	20,159	18,612
Long-term investments	1,006	2,391
Deferred tax assets	425	394
	46,687	39,343
CURRENT ASSETS
Inventories	16,092	13,804
Prepaid expences	875	639
Trade accounts and notes receivable	12,248	12,189
Securities	3,162	9,500
Cash and bank balances	5,357	8,098
	37,734	44,230
Total assets	84,421	83,573

* Unaudited

EQUITY AND LIABILITIES	June 30, 2005* Dec. 31,2004
	a thou.	a thou.
SHAREHOLDERS´ EQUITY
Consolidated equity	28,563	29,639
Minority interest	843	2,329
Total equity	29,406	31,968
NONCURRENT LIABILITIES
Provisions	310	292
Financial liabilities	27,766	29,839
Deferred income	2,730	2,849
Other noncurrent liabilities	3,153	3,280
Deferred tax liabilities	2,099	2,194
	36,058	38,454
CURRENT LIABILITIES
Provisions	3,746	4,419
Financial liabilities	5,928	1,326
Other current liabilities	9,283	7,406
	18,957	13,151
Total equity and liabilities	84,421	83,573

* Unaudited

INCOME STATEMENT - IFRS

Financial statement as of	Jan.-June 05* a thou.	Jan.-June, 04* a thou.
Revenue	38,902	35,191
Changes in inventories of finished
goods and work in progress	206	-42
Work performed by the enterprise
and capitalized	121	66
Other operating income	1,228	193
Gross revenue	40,457	35,408
Cost of materials	-16,627	-14,696
Staff costs	-9,656	-8,494
Depreciation and amortization expense	-1,045	-1,278
Other operating expenses	-7,968	-6,297
Total operating expenses	-35,296	-30,765
Income from investments	14	13
Other interest and similar income	417	29
Write-downs of current financial instruments	-258	0
Interest and similar expenses	-1,070	-565
Profit before taxes	4,264	4,120
Income tax expense	-1,288	-1,363
Deferred taxes	110	-116
Other taxes	-128	-105
Income attributable to minority
interests	-49	-116
Net profit for the period	2,909	2,420

* Unaudited

INCOME STATEMENT - IFRS

Net profit for the period	1,626	1,377
interests	-22	-60
Income attributable to minority
Other taxes	-73	-54
Deferred taxes	37	-24
Income tax expense	-720	-754
Profit before taxes	2,404	2,269
Interest and similar expenses	-560	-293
Write-downs of current financial instruments	-98	0
Other interest and similar income	202	7
Income from investments	6	6
Total operating expenses	-17,903	-14,740
Other operating expenses	-4,166	-3,232
Depreciation and amortization expense	-551	-648
Staff costs	-4,889	-4,188
Cost of materials	-8.297	-6,672
Gross revenue	20,757	17,289
Other operating income	718	82
Work performed by the enterprise and capitalized	60	24
Changes in inventories of finished goods and work in progress	292	-157
Revenue	19,687	17,340
Financial statement as of	a thou.	April-June, 05 April - June, 04 a thou.

* Unaudited

Financial statement as of	June 30, 2005* a thou.	June 30,2004* a thou.
Net profit for the period	2,909	2,420
Depreciation and amortization
expense	1,045	1,278
Change in provisions	-655	544
Other non-cash expenses/income and gain/loss on disposal of non
current assets	-76	46
Changes in inventories, trade
receivables and other assets	-2,294	-3,866
Changes in trade payables and other
equity and liabilities	1,479	5,192
Net cash from/used in operating
activities	2,408	5,614
Proceeds from asset disposals	1,381	40
Payments to acquire noncurrent assets	-1,569	-1,841
Payments to acquire consolidated
subsidiaries	-8,324	0
Net cash used in investing
activities	-8,512	-1,801
Proceeds from additions to equity
(capital increases, sales of treasury
shares)	1,350	1,092
Dividends paid to owners and
minority interests (dividends,
acquisition of treasury shares)	-7,525	-4,534
Proceeds from securities /
term deposits	6,338	0
Proceeds from finance facilities raised	4,602	822
Repayment of borrowings	-2,206	-2,127
Net cash from/used in financing
activities	2,559	-4,747
Net change in cash and cash
equivalents	-3,545	-934
Changes in cash and cash equivalents
due to exchange rates and other
factors Cash and cash equivalents at	804	590
beginning of period	8,098	3,594
Cash and cash equivalents at end of period	5,357	3,250

* Unaudited

CASH-FLOW - IFRS FINANCIAL CALENDAR

March 2005

March 10-16, CEBIT (exhibitor: Dicota GmbH)

March 17-20,WIN Istanbul (exhibitor: Masterflex AG)

April 2005

April 11-15, Hannover fair (exhibitor: Masterflex AG, Novoplast Schlauchtechnik GmbH, Masterflex Brennstoffzellentechnik)

April 27, Annual Press Conference, presentation of the annual report 2004, Düsseldorf

April 28, DVFA-Analyst-Meeting, Frankfurt

May 2005 International road show

Quarterly report I/2005

May 24-27, Industria Budapest (exhibitor: Masterflex AG, Novoplast Schlauchtechnik GmbH)

June 2005 June 8, Annual General Meeting, Gelsenkirchen

Road show in the USA

August 2005 Quarterly report 2/2005

September 2005 Road shows

October 2005 11-13, Powtech Nuremberg (exhibitor: Masterflex AG)

November 2005 November 21, Eigenkapitalforum Frankfurt

Quarterly report 3/2005

CHANGES IN EQUITY

CHANGES IN EQUITY

Consolidated statement of changes in equity

	Issued capital a thou.	Share premium a thou.	Retained earnings (retained profits brought forward) a thou.	Revaluation reserve of financial instruments a thou.	Exchange differences a thou.	Total a thou.
Equity at December 31, 2003	4,498	20,663	5,625	-559	-1,035	29,192
Net profit	0	0	2,420	0	0	2,420
Changes in fair values of
financial instruments	0	0	0	-95	0	-95
Currency translation gains/losses from translation of foreign financial statements	0	0	0	0	590	590
Sale of treasury shares	50	1,042	0	0	0	1,092
Purchase of own shares	-61	-1,434	0	0	0	-1,495
Dividend distributions	0	0	-2,700	0	0	-2,700
Other changes	0	0	-32	0	0	-32
Equity at June 30, 2004	4,487	20,271	5,313	-654	-445	28,972
Equity at December 31, 2004	4,411	18,519	8,960	-671	-1,580	29,639
Net profit Changes in fair values of	0	0	2,909	0	0	2,909
financial instruments	0	0	0	41	0	41
Currency translation gains/losses from translation
of foreign financial statements	0	0	0	0	804	804
Sale of treasury shares	50	1,300	0	0	0	1,350
Purchase of own shares	-95	-2,397	0	0	0	-2,492
Dividend distributions	0	0	-3,498	0	0	-3,498
Other changes	0	0	-190	0	0	-190
Equity at June 30, 2005	4,366	17,422	8,181	-630	-776	28,563