Masterflex SE — Interim / Quarterly Report 2006

Aug 15, 2006

QUARTERLY REPORT 2/2006

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	+41.6 %
■ EBIT	+12.2 %
■ Net profit	+4.5 %
■ Outlook 2006
Board confirms forecast:
Revenue	+20-30 %
EBIT	+10-20 %

	June 30, 2006	June 30, 2005	+/-
Revenue (a thou.)	55,082	38,902	41.6%
EBITDA (a thou.)	7,197	6,206	16.0%
EBIT (a thou.)	5,791	5,161	12.2%
EBT (a thou.)	4,697	4,264	10.2%
IAS-Net profit (a thou.)	3,041	2,909	4.5%
Earnings per share (a)	0.70	0.67	4.5%
Number of employees	661	483	36.9%
	June 30, 2006	Dec 31, 2005	+/-
Equity (a thou.)	30,022	31,040	-3.3%
Total assets (a thou.)	103,164	97,832	5.5%
Equity ratio	29.1%	31.7%	-8.2%

Stock development April - August 2006

Dear shareholders,

Masterflex AG continued its successful growth course in the first half of 2006. Consolidated revenues rose by 41.6 percent yearon-year to EUR 55.1 million.This is particularly positive, as the second quarter in the previous year was very strong. In particular, revenues increased in the High-Tech Hose Systems and Mobile Office Systems business units.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) in the first half of 2006 rose by 16.0 percent year-onyear to EUR 7.2 million, earnings before interest and taxes (EBIT) increased by 12.2 percent to reach EUR 5.8 million. Net profit also rose by 4.5 percent to EUR 3.0 million. Earnings per share thus increased from EUR 0.67 to EUR 0.70 (+ 4.5 percent).

Our growth is essentially based on new products, which we also presented at various trade fairs in the second quarter of 2006, as well as on the increasing internationalism of our business activities. We presented our products at major trade fairs such as the Hanover Fair industrial trade show and ACHEMA. Our fuel cell drive bicycle, Cargobike, was presented at the World Hydrogen Energy Conference in Lyon.

On the basis of the positive development, the Management Board of Masterflex AG is confirming its forecasts for full-year 2006 both in terms of a revenue increase of 20 percent to 30 percent and an EBIT increase of between 10 and 20 percent.

Analysis of financial position, net assets and results of operations

The income statement as at 30 June 2006 reflects the successful business development.

The ratio of cost of materials to revenue rose in the first half of 2006 to 47.3 percent (previous year: 42.7 percent) due to the consolidation of SURPRO GmbH, acquired in August 2005. Adjusted for the SURPRO Group figures, the ratio remained stable. The staff costs ratio was stable at 24.0 percent (previous

RESULTS

year: 24.8 percent). The number of employees increased by 36.9 percent to 661.

The impact of consolidation can also be seen on other cost items.

On the whole, pre-tax income for the period (EBT) as at 30

June 2006 improved by 10.2 percent to EUR 4.7 million (previous year: EUR 4.3 million).The tax rate was 32 percent, reflecting increasing business activity in countries subject to higher tax rates. Consolidated net profits rose by 4.5 percent to EUR 3.0 million. We forecast that the tax rate will improve for the year as a whole.

Change in individual balance sheet items

As at 30 June 2006, the Masterflex AG balance sheet continued to develop well. Total assets came to EUR 103.1 million. There were no material changes to the balance sheet as at the end of fiscal 2005.The equity ratio came in at 29.1 percent.The Company still holds 134,126 treasury shares, the cost of which reduces equity.

High-Tech Hose Systems

The core High-Tech Hose Systems business unit also performed encouragingly in the second quarter of 2006. However, as we also had an outstanding second quarter last year, the year-on-

year comparison does not appear as dynamic as in the first quarter. In the first half of 2006, revenues increased by 14.8 percent to EUR 10.1 million, EBIT rose by 7.0 percent to EUR 4.4 million. The EBIT margin is 22.0 percent, thus exceeding the margin of 19.2 percent for the first quarter of 2006, but slightly below the margin of 23.6 percent as at 30 June 2005.

The comparison with the six-month figures of the previous year should take into account the fact that fuel cell technology, now part of the High-Tech Hose Systems business unit, dilutes the margin.The important factor is that the rise in oil prices did not impact the margin. While many manufacturers of mass plastics have to struggle with the high commodities prices, we maintained stable purchase prices thanks to long-term supplier conditions, greater material efficiency and a good negotiating position as one of the qualified purchasers of polyurethane.

Our product innovations were presented in April 2006 at the Hanover Fair and in May 2006 at the international exhibition congress on chemical engineering, environmental protection and biotechnology, ACHEMA. A further product innovation, which we will present at the FAKUMA trade show from 17 to 21 October 2006, is a new generation of hose technology that sets a new benchmark: hoses are coated with an inner layer of plastic (inliner), so that the hose walls are extremely smooth and wall thicknesses of up to 10 millimetres - which can withstand severe abrasion - can also be produced.We are anticipating considerable potential for these hose types, including, for example, in the food industry.

Our subsidiary Matzen & Timm celebrated the topping-out ceremony of the new administrative and production building at Hamburg airport at the beginning of June. Production expansion was necessary in light of the continuing good order situation. Matzen & Timm produce highly specialised hose systems, in particular for the aerospace industry as well as the automotive and rail industry. Production at the new location will commence in August.

With these measures, Masterflex AG further drove forward the core business in the second quarter of 2006. Internationalism was also rolled out, especially with Eastern Europe, where new business contacts were established.

Fuel Cell Technology

Fuel Cell Technology, now included in the High-Tech Hose Systems business unit, was also driven forward. On 28 May

BUSINESS UNITS

BUSINESS UNITS

2006, the world's first HyBikeHerten bike station was opened in North Rhine-Westphalia, which leases bikes with Masterflex AG's fuel cell drive.

45 grammes of hydrogen, stored in metal hydrides, results in a five-times higher bike range at the same weight compared with standard battery solutions, thus opening up new areas of application for electric bikes.

Another success was the use of our Cargobike taxis at the 2006 World Cup in Germany. T-Com, the broadband/fixed-network business unit of Deutsche Telekom, opted for innovative, climate-friendly fuel-cell-based mobility with fuel cell propulsion and used the Cargobikes as service vehicles in and around the championship stadiums in Berlin and Dortmund.

The Cargobikes are fitted with integrated fuel cells and have a modular construction, so that the vehicle can be equipped with various accessories depending on where it is applied. A 250 watt fuel cell system can provide additional power in addition to drive energy, for the vehicle's lighting or to cool transported goods, for example. The Cargobike was also presented at the World Hydrogen Energy Conference in Lyon, France, in June 2006.

Medical Technology

In Medical Technology, we are systematically nearing our objective of sustainably improving the earnings contribution. However, the doctors' strike in Germany had a negative impact on business. Our medical hose systems which are made from safe plastics, such as catheters, multi-lumen tubes and infusion tubing, also recorded an unerring upward trend in the second quarter of 2006. For example, Novoplast Schlauchtechnik now also supplies hoses for electromedical leads that are used for internal bleeding and stomach ulcers, among other things.

Our subsidiary Angiokard Medizintechnik GmbH & Co. KG focuses on manufacturing angiography kits: kits for other surgical applications are provided by the subsidiary Medic Health Care. The focus this year is on penetrating these markets. A series of new hospitals in Germany and abroad have already been won as customers. For example, Angiokard received an order from one of the largest hospitals in the Netherlands. As we are still in the starting position, further marketing and sales efforts are required here, which means that clear effects on the overall profit development in the medical area will only be felt in the medium term.

The clinical trials of LaryVent showed that the premium quality of our innovative respiratory mask is consistently recognised, but that significantly greater potential may be expected by expanding with a stomach tube.The advantages of this design will be confirmed by further clinical trials.

Mobile Office Equipment

The Mobile Office Equipment business unit is formed by the activities of DICOTA GmbH. Our subsidiary, based in Bietigheim-Bissingen near Stuttgart, is one of the world's leading full service providers of system cases and bags for transporting notebooks and office systems. Revenue increased by 33.6 percent year-on-year as at 30 June 2006.

DICOTA further expanded its international presence in the second quarter of 2006, particularly in Asia. Indonesia and the Philippines were also won as new countries. DICOTA is also performing very successfully in Russia. One of the largest retail distributors in Europe was gained as a partner there. In addition, a master agreement was concluded with a large insurance company in Germany.

Although DICOTA was trailing behind the prior-year figures in terms of EBIT as at half-year 2006, the Company has achieved its target figures.The forecasts for the Mobile Office Computing business unit remain excellent. Experts from market research firm IDC announced in June 2006 that they anticipate growth rates for the European notebook market of 15 percent in the next five years in Western Europe alone. We are optimistic about these figures, as DICOTA will further successfully expand its business activities.

Our subsidiary DICOTA was acquired in 2001 in the context of integrating our fuel cells into DICOTA's notebook carrying systems.We developed the technical solution for this, but so far have lacked a functioning hydrogen infrastructure, which can

INVESTOR RELATIONS

INVESTOR RELATIONS

only be developed by international fuelling station operators. For this reason, we are reviewing whether DICOTA GmbH should continue as a consolidated Group company.The company is still included in our quantitative forward-looking estimates.

Advanced Material Design

SURPRO GmbH has been part of the Masterflex Group since 15 August 2005. Therefore, its performance cannot be compared with the previous year. However, we are satisfied with its performance as at half-year 2006. It generated revenues of EUR 9.0 million and EBIT of EUR 0.5 million. The outlook remains positive, as surface finishing is a growing market on which SUR-PRO GmbH has established itself with its recognised high technology expertise. Together with Masterflex AG, initial development projects have been launched with the aim of combining precious metals and plastics.

Investor Relations

Following the publication of the figures for financial year 2005 on 31 March at the financial press conference in Düsseldorf and on 3 April at the analyst conference in Frankfurt, the Management Board and Investor Relations met institutional investors in Germany and Europe over several weeks to explain Masterflex AG's business operations and the various aspects of its future potential. However, the positive business development is not currently reflected in the share price. Following the announcement of the extremely positive revenue and earnings figures of the first quarter on 15 May 2006, the share price rose briefly to EUR 29.00 only to fall as of June in the pull of the generally difficult stock market situation, although the Management Board of Masterflex AG had confirmed the positive business prospects at the Annual General Meeting on 14 June 2006. On 21 June 2006, the share price reached its lowest level of EUR 23.42 (Xetra). Until mid-August, the share price fluctuated between this level and EUR 26.00.

The continuing objective of our investor relations activities remains to create confidence in business developments and to highlight the prospects of Masterflex AG.

Annual General Meeting 2006

The ordinary Annual General Meeting took place on 14 June 2006 in Horst Castle in Gelsenkirchen and was very well attended with over 300 participants. All items on the agenda were passed by large majorities.The Annual General Meeting approved the payment of a dividend of EUR 0.80 per share, which was distributed on 15 June 2006.

Significant events after the end of the quarter

No significant 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. market acceptance. A detailed risk report can be found on page 66f of the Annual Report 2005.

Outlook

We are satisfied with the development of H1 2006. New products were successfully launched and our internationalism was advanced further. We are convinced that we will continue our growth course, and we are therefore confirming our forecast for full-year 2006 of a revenue increase of 20 to 30 percent and a rise in EBIT of 10 to 20 percent.

August 2006

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 International Financial Reporting Standards (IFRS) and International Accounting Standards (IAS) as promulgated by the International Accounting Standards Board (IASB) and is in line with the Company's key accounting principles presented here. The same accounting policies were applied as for the consolidated financial statements for the past financial year ended 31 December 2005 and as in the quarterly report 1/2006.

2. Consolidated group

The acquisition of SURPRO GmbH in August 2005 served to expand the group of consolidated companies reported for the quarterly report 2/2006 as against the previous year.

3. Dividend

The Masterflex AG Annual General Meeting on 14 June 2006 approved payment of a dividend of EUR 0.80.A total amount of EUR 3,492,699.20 was distributed on 15 June 2006.

4. Segment reporting

IAS 14 states that primary segment reporting must be prepared on the basis of product-related business units. Masterflex AG has four business units: High-Tech Hose Systems, Medical Technology, Mobile Office Systems and Advanced Material Design.

June 30, 2006 HTS MT MOS AMD Seg- Reconci- Group a thou. a thou. a thou. a thou. a thou. a thou. a thou. HTS = High-Tech-Hose Systems MT = Medical Technology MOS = Mobile Office Systems AMD = Advanced Material Design

Revenue	20,184	9,018	16,872	9,008	55,082	0	55,082
Earnings (EBIT)	4,441	57	1,225	498	6,221	-430	5,791
Investments in
property, plant and
equipment and
intangible assets	2,517	214	72	192	2,995	0	2,995
Assets	35,720	22,384	20,042	18,259	96,405		6,759 103,164
Depreciation
and amortization	837	212	43	314	1,406	0	1,406
Liabilities	5,719	2,873	5,232	7,797	21,621	51,521	73,142

ment- liation aggregate

June 30, 2005	HTS	MT	MOS	AMD	ment- aggregate	Seg- Reconci- liation	Group
						a thou. a thou. a thou. a thou. a thou. a thou. a thou.
Revenue	17,586	8,688	12,628	0	38,902	0	38,902
Earnings (EBIT)	4,152	49	1,512	0	5,713	-552	5,161
Investments in
	property, plant and
equipment and
intangible assets	2,018	197	1,049	0	3,264	0	3,264
Assets	30,415	22,810	20,794	0	74,019	10,402	84,421
Depreciation and
amortization	718	271	56	0	1,045	0	1045
Liabilities	7,142	2,210	4,028	0	13,380	41,635	55,015

5. Earnings per share

Basic earnings per share are calculated by dividing consolidated net profit by the average weighted number of shares outstanding during the period under review in accordance with IAS 33. As at 30 June 2006, basic earnings per share came to EUR 0.70 based on a weighted average number of shares of 4,365,874.

As the stock option programme expired in 2005, there is no calculation of diluted earnings.

6.Treasury shares

As at 30 June 2006, Masterflex AG held 134,126 treasury shares.

7. Employees

At 661 as at 30 June 2006, the number of employees was 36.9 percent higher than the figure for the same period last year (483 employees).

BALANCE SHEET - IFRS

BALANCE SHEET - IFRS

ASSETS	June 30, 2006* Dec. 31, 2005
	a thou.	a thou.
NONCURRENT ASSETS
Intangible assets	33,027	32,716
Property, plant and equipment	24,228	23,221
Long-term investments	1,213	1,315
Deferred tax assets	549	709
	59,017	57,961
CURRENT ASSETS
Inventories	20,884	20,573
Prepaid expenses	985	743
Trade accounts and notes receivable	17,759	13,660
Cash and bank balances	4,519	4,895
	44,147	39,871
Total assets	103,164	97,832

EQUITY AND LIABILITIES	June 30, 2006*	Dec. 31, 2005
	a thou.	a thou.
SHAREHOLDERS´ EQUITY
Consolidated equity	29,626	30,606
Minority interest	396	434
Total equity	30,022	31,040
NONCURRENT LIABILITIES
Provisions	1,351	1,289
Financial liabilities	24,259	25,783
Deferred income	2,132	2,616
Other noncurrent liabilities	3,034	3,016
Deferred tax liabilities	2,327	2,444
	33,103	35,148
CURRENT LIABILITIES
Provisions	4,647	4,504
Financial liabilities	20,338	14,327
Deferred income	602	233
Other current liabilities	14,452	12,580
	40,039	31,644
Total equity and liabilities	103,164	97,832
* Unaudited

* Unaudited

INCOME STATEMENT - IFRS INCOME STATEMENT - IFRS

Financial statement as of	Jan.-June, 06* a thou.	Jan.-June, 05* a thou.
Revenue	55,082	38,902
Changes in inventories of finished
goods and work in progress	-200	206
Work performed by the enterprise
and capitalized	224	121
Other operating income	1,353	1,228
Gross revenue	56,459	40,457
Cost of materials	-26,094	-16,627
Staff costs	-13,221	-9,656
Depreciation and amortization expense	-1,406	-1,045
Other operating expenses	-9,947	-7,968
Total operating expenses	-50,668	-35,296
Income from investments	645	14
Other interest and similar income	81	417
Write-downs of current financial
instruments	0	-258
Interest and similar expenses	-1,820	-1,070
Profit before taxes	4,697	4,264
Income tax expense	-1,588	-1,288
Deferred taxes	97	110
Other taxes	-103	-128
Income attributable to minority
interests	-62	-49
Net profit for the period	3,041	2,909

* Unaudited

Financial statement as of	April-June, 06* a thou.	April-June, 05* a thou.
Revenue	27,147	19,687
Changes in inventories of finished
goods and work in progress	-201	292
Work performed by the enterprise
and capitalized	160	60
Other operating income	663	718
Gross revenue	27,769	20,757
Cost of materials	-12,885	-8,297
Staff costs	-6,578	-4,889
Depreciation and amortization
expense	-694	-551
Other operating expenses	-4,740	-4,166
Total operating expenses	-24,897	-17,903
Income from investments	637	6
Other interest and similar income	20	202
Write-downs of current financial
instruments	0	-98
Interest and similar expenses Profit before taxes	-1,299 2,230	-560 2,404
Income tax expense	-804	-720
Deferred taxes	74	37
Other taxes	-49	-73
Income attributable to minority
interests	-36	-22
Net profit for the period	1,415	1,626

* Unaudited

Financial statement as of	June 30, 2006* a thou.	June 30,2005* a thou.
Net profit for the period	3,041	2,909
Depreciation and amortization
expense	1,406	1,045
Change in provisions	205	-655
Other non-cash expenses/income
and gain/loss on disposal of non
current assets	-174	-76
Changes in inventories, trade
receivables and other assets	-3,776	-2,294
Changes in trade payables and other
equity and liabilities	1,804	1,479
Net cash from/used in operating
activities	2,506	2,408
Proceeds from asset disposals	14	1,381
Payments to acquire noncurrent assets	-3,133	-1,569
Payments to acquire consolidated
subsidiaries	0	-8,324
Net cash used in investing
activities	-3,119	-8,512
Proceeds from additions to equity
(capital increases, sales of treasury
shares)	0	1,350
Dividends paid to owners and
minority interests (dividends,
acquisition of treasury shares)	-3,593	-7,525
Proceeds from securities /
term deposits	0	6,338
Proceeds from finance facilities raised	6,011	4,602
Repayment of borrowings	-1,667	-2,206
Net cash from/used in financing
activities	751	2,559
Net change in cash and cash
equivalents	138	-3,545
Changes in cash and cash equivalents
due to exchange rates and other
factors	-514	804
Cash and cash equivalents at
beginning of period	4,895	8,098
Cash and cash equivalents at end of period
	4,519	5,357

* Unaudited

CASH-FLOW - IFRS FINANCIAL CALENDAR

March 2006

0 March 9-15 March 16-19	CeBit (exhibitor: DICOTA GmbH) WIN,World of Industry, Istanbul (exhibitor: Masterflex AG)
March 31	Annual earnings press conference
April 2006 April 3 April 4-7	DVFA analysts' meeting Anuga FoodTec, Cologne
April 24-28	(exhibitor: Masterflex AG) Hanover Fair Industry (exhibitor: Masterflex AG, Novoplast Schlauchtechnik GmbH, Masterflex Brennstoffzellentechnik GmbH)
April/May	International road show
May 2006 May 15 May 15-19	Quarterly report 1/2006 Achema, Frankfurt
May 16-19	(exhibitor: Masterflex AG) Industria, Budapest (exhibitor: Masterflex AG)
June 2006 June 14 June 15	Annual General Meeting, Gelsenkirchen Dividend payment
August 2006 August 15	Quarterly report 2/2006
October 2006 October 17-21	FAKUMA, Friedrichshafen (exhibitor: Masterflex AG)
November 2006 Mid November November 29	Quarterly report 3/2006 Deutsches Eigenkapitalforum
November/ December	International road show

CHANGES IN EQUITY

Consolidated statement of changes in equity

	Issued capital	Share premium	Retained earnings (retained profits brought forward)	Revaluation reserve of financial instruments	Exchange differences	Minority interest	Total
	a thou.	a thou.	a thou.	a thou.	a thou.	a thou.	a thou.
Equity at December 31, 2004	4,411	18,519	7,360	-671	-1,580	809	28,848
Net profit	0	0	2,909	0	0	49	2,958
Changes in fair values of financial instruments	0	0	0	41	0	0	41
Currency translation gains/losses from trans
lation of foreign financial statements	0	0	0	0	804	0	804
Sale of treasury shares	50	1,300	0	0	0	0	1,350
Purchase of own shares	-95	-2,397	0	0	0	0	-2,492
Dividend distributions	0	0	-3,498	0	0	-120	-3,618
Change due to equity decreases	0	0	0	0	0	-448	-448
Other changes	0	0	-190	0	0	0	-190
Equity at June 30, 2005	4,366	17,422	6,581	-630	-776	290	27,253
Equity at December 31, 2005	4,366	17,521	9,795	-504	-572	434	31,040
Net profit	0	0	3,041	0	0	62	3,103
Changes in fair values of
financial instruments	0	0	0	-17	0	0	-17
Currency translation gains/losses from trans
lation of foreign financial statements	0	0	0	0	-514	0	-514
Sale of treasury shares	0	0	0	0	0	0	0
Purchase of own shares	0	0	0	0	0	0	0
Dividend distributions	0	0	-3,493	0	0	-100	-3,593
Change due to equity decreases	0	0	0	0	0	0	0
Other changes	0	0	3	0	0	0	3
Equity at June 30, 2006	4,366	17,521	9,346	-521	-1,086	396	30,022