Measure first 6 ingredients in order listed into a bread machine baking pan. Select Dough/Pasta Setting and press start.
When the cycle is complete, remove dough to a lightly floured surface. If necessary, knead in enough flour to make dough easy to handle. Roll into a rectangle about 21cm x 29cm and with a sharp knife, cut into eighteen 2 1/2 cm strips. Gently pull each strip into a rope 40cm long.
To shape into pretzels: Curve ends of each rope to make a circle; cross ends at top. Twist ends once and lay over bottom of circle. Place on greased baking trays. Do not let rise.
Combine egg and 1 tablespoon water; brush on pretzels. Sprinkle with sea salt flakes. Bake in a preheated 180 degrees C oven for 18 to 20 minutes or until cooked. Remove from sheets and let pretzels cool on wire rack.