RATIONAL : Non-financial consolidated report 2023

50 years of

RATIONAL

50 years of

innovations

50 years of

customer benefit

Non-financial consolidated report 2023

02	RATIONAL Non-financial consolidated report 2023

RATIONAL Non-financial consolidated report 2023

03

Contents

05 About this report

1. Disclosures in accordance with the EU Taxonomy Regulation

1. The RATIONAL Group's business model

1. Risk analysis

1. Our materiality process
2. Environmental matters - energy-efficient cooking systems

1. Employee matters - safe and healthy working conditions

1. Social matters - sustainable economic stability

1. Business ethics and compliance with the law

1. Annex 1: Tables in accordance with the EU Taxonomy Regulation

1. Annex 2: Abbreviations and explanations
2. Report of the independent practitioner

04	RATIONAL Non-financial consolidated report 2023

About this report

05

About this report

Information on the separate non-financial consolidated report

This separate non-financial consolidated report pursuant to Section 315b (3) of the German Commercial Code (HGB) serves to fulfil the legal requirements. The contents have been prepared in accordance with Section 315c in conjunction with Sections 289c to 289e of the German Commercial Code (HGB).

In accordance with Section 289c (3) of the German Commercial Code (HGB), the contents of this report are based on the current materiality analysis, which shows the interests of our stakeholders (see below).

Both national and international frameworks cover a large number of aspects that must be reported on, but are not compatible with RATIONAL AG's corporate structure and data collection processes. We therefore see no existing framework as appropriate at this time.

The reporting period corresponds to the fiscal year from­ 1 January to 31 December 2023.

Auditing the non-financial consolidated report

The separate non-financial consolidated report was the subject of a limited assurance engagement under ISAE 3000 (Revised) by Deloitte GmbH Wirtschaftsprüfungsgesellschaft,­ Munich. This audit was commissioned by the Supervisory Board of RATIONAL AG. The scope of the audit and the ­opinion are set out in the "Independent auditor's report on a limited assurance engagement for non-financial reporting". The results of the audit were presented to the Supervisory Board in the framework of a Supervisory Board meeting.

Publication

The separate non-financial consolidated report will be published on time in April 2024. It is published annually and is available online at rat.ag/publications in PDF form.

Relevant non-financial performance control indicators The relevant non-financialperformance control indicators of­ the separate non-financialreport are presented in the fol- lowing. They are the most important relevant non-financialperformance control indicators in accordance with Section 289 (3) of the German Commercial Code (HGB) and have been audited with a level of reasonable assurance as part of the audit of the annual financial statements.

• Employee satisfaction: employee turnover rate
• Customer satisfaction› net promotor score (NPS)
• Ratio of cooking systems holding the U.S. ENERGY STAR

06	RATIONAL Non-financial consolidated report 2023

Disclosures in accordance with the EU Taxonomy Regulation

RATIONAL AG is covered by the reporting obligation according to Section 315c in conjunction with Sections 289c to 289e of the German Commercial Code (HGB) and is therefore also obligated to report in accordance with the EU ­Taxonomy ­Regulation.

In view of this, it is RATIONAL AG's responsibility to publish information on how and to what extent the Group's activities are associated with economic activities that qualify as environmentally sustainable under Articles 3 and 9 of the EU Taxonomy Regulation (Regulation 2020/852 of the European Parliament and of the Council). According to Article 3 of the above Regulation, the criteria for determining whether an economic activity qualifies as environmentally sustainable are whether the economic activity contributes substantially to one or more of the environmental objectives set out in ­Article 9 of the Regulation. The taxonomy is still under devel- opment, and interpretations on its application change regu- larly. Great care has been taken in compiling the following information. Nevertheless, it should be noted that the EU Taxonomy Regulation is still fluid in nature.

As of the reporting year 2023, this assessment is to be carried out for all six objectives of the regulation. Technical screening criteria for determining the conditions under which a specific economic activity qualifies as contributing substantially to the environmental objectives have been set out in several annexes on delegated acts to supplement the EU Taxonomy Regulation.

Economic activities that are defined as such and make a direct and substantial contribution to one or also more objectives are listed on the basis of classes of economic activity (NACE codes). Which economic activities are "enabling activities" that can make a substantial contribution to fulfil certain ­objectives are also described, likewise on the basis of NACE codes.

A detailed review of the newly added objectives as of the ­reporting year 2023 - sustainable use and protection of

water­ and marine resources, transition to a circular economy, avoidance and reduction of environmental pollution, and protection and restoration of biodiversity and ecosystems - and of their technical screening criteria presented in the above-mentioned delegated acts was carried out. It can be concluded from the review that only the objective of climate change mitigation within the meaning of the EU Taxonomy Regulation continues to be relevant for RATIONAL AG's ­operations, in other words, the sets of criteria for the objectives three to six of the regulation cannot be applied and are hence non-taxonomy eligible for RATIONAL's operations.

Sales revenues

RATIONAL cooking systems are used exclusively in the commercial sector. RATIONAL's main activities can thus be assigned to the NACE code C28.9.3 (Manufacture of machinery for food, beverage and tobacco processing). The NACE code C28.9.3 is not explicitly listed in Annex 1 of the delegated act made under Article 10 of the EU Taxonomy Regulation. The manufacture and distribution of RATIONAL cooking systems may be "enabling economic activities" and thus taxonomy-­ eligible.

Disclosures in accordance with the EU Taxonomy Regulation

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RATIONAL cooking systems are used in extremely different applications, a broad range of food is thermally prepared in them, and RATIONAL has only limited influence on how its cooking systems are used. The "best performing alternative technology or solution available on the market" within the meaning of the EU taxonomy cannot be identified on the ­basis of the available set of criteria. According to our analysis, the described set of criteria cannot therefore be applied.

RATIONAL products and the Group-wide sales revenues of 1,125.8 million euros generated from them are classified as "not eligible under EU taxonomy" as the EU Taxonomy Regulation stands at present.

Capital expenditures (CapEx) and operating expenses (OpEx)

A detailed examination of CapEx (42.1 million euros) has ­revealed that there were taxonomy-eligible capital expenditures with regard to the following economic activities:

• 6.5 Transport by motorcycle, passenger car and light com- mercial vehicle
• 7.3 Installation, maintenance and repair of energy efficient equipment
• 7.4 Installation, maintenance and repair of charging stations for electric vehicles in buildings (and parking spaces attached to buildings)
• 7.7 Acquisition and ownership of buildings

The total volume of taxonomy-eligible capital expenditures in fiscal year 2023 amounts to 2,948 thousand euros. That equates to 7.0% of total capital expenditure (excluding assets under construction).

Analysis of the relevant operating expenses within the meaning of the EU Taxonomy Regulation (see the annex to this re- port) revealed that only a small amount of taxonomy-eligible costs (103 thousand euros) were incurred in fiscal year 2023. That equates to less than 1% of the total operating expenses.

The extent to which both capital expenditures and operating expenses meet the technical screening criteria defined in the delegated act under Article 10 of the EU Taxonomy Regulation was examined. The DNSH examination was likewise performed for the other environmental objectives specified in the EU Taxonomy Regulation. Finally, whether and to what extent the company complies with the minimum social standards in accordance with the Regulation was also exam- ined. All the examinations were successful in the sense that the described criteria were fulfilled. In this respect, all identified taxonomy-eligible capital expenditures and operating expenses are also taxonomy-aligned.

The relevant report tables are presented in the annex to this report.

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The RATIONAL Group's business model

The RATIONAL Group's organisational structure and sites The Group's parent company is RATIONAL Aktiengesell­ schaft (RATIONAL AG), whose registered office is located in Landsberg am Lech, Germany. Alongside RATIONAL AG, the Group comprises 32 subsidiaries, of which 22 are sales com- panies. Through the sales companies and local trading part- ners, the Group markets its products in almost all regions­ of the world. It also has production and development sites­ in Germany (Landsberg am Lech) and France (Wittenheim, ­Alsace).

Products and services

The RATIONAL Group provides products and solutions for thermal food preparation in professional kitchens. Around 70% (2022: 71%) of sales revenues were generated in the past fiscal year through the sale of cooking appliances.

We generate most of our sales revenues with combi-steamers with intelligent cooking profiles and the iCombi Pro model. Combi-steamer technology involves transferring the heat during cooking via steam, hot air or a combination of the two. The software of the iCombi Pro recognises the size and consistency of the food and controls the cooking process ­until the desired cooking result is attained. In addition, we ­offer our customers a basic combi-steamer model, the ­iCombi Classic. All models are produced at the company's headquarters in Landsberg am Lech and distributed worldwide.

We also offer technology to complement that of the ­combi-steamer, namely the iVario. It uses direct contact heat for boiling, frying, deep-frying and (pressure) cooking and is therefore able to replace conventional cooking appliances such as tippers, kettles, fryers and pressure cooker braisers. The iVario is produced in Wittenheim, France, and distributed worldwide.

We generated around 30% (2022: 29%) of sales revenues in the past fiscal year with accessories, service parts and services for our combi-steamers and the iVario, as well as with care products for combi-steamers.

With ConnectedCooking, we offer our customers digital kitchen management for the professional kitchen, comprising a free, cloud-based connectivity solution. Our customers can use it to connect their RATIONAL cooking systems, control them remotely, update their software, transfer cooking programs and manage their hygiene processes data. As a result, they simplify their work processes, save time and money and have the assurance that they have everything under control.

The RATIONAL Group's business model

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Our customers can benefit from a large range of free and fee­ -based services. These include the free-of-charge iCombi and iVario live events, the Academy RATIONAL and expert kitchens in our training centres, at trade fairs or on site at our customers. Digital formats such as webinars, live streams and uploaded videos have grown significantly in importance since 2020. We also provide our customers with expert tips on our ChefLine. Fee-based consulting offerings include Academy events on specific topics and in-depth process consulting as part of post-installation support at the customer.

Segments

We report on the regional segments DACH (Germany,

Austria,­ Switzerland), EMEA (Europe, Middle East, Africa), North America, Asia and Other segments in accordance with the RATIONAL Group's internal control system.

Markets, customers and competitive situation

Our products are targeted at commercial kitchens and

businesses­ of all kinds that prepare at least 20 hot meals a day. The customer base ranges from restaurants and hotels, large-scale catering operations such as company canteens, hospitals, schools, universities, military facilities, prisons and retirement homes right through to quick service restaurants, caterers and delivery services, as well as supermarkets, ­bakeries, snack outlets, butchers' shops and service stations.

To make headway into the untapped potential in the global market, we are expanding our global sales, marketing and service network organically, step by step. In addition to higher penetration of already well-developed markets, we are also addressing the growing potential presented by emerging markets.

We generated a total of 54% (2022: 58%) of our sales

revenues­ in DACH and EMEA in the past fiscal year. In 2023, the North America segment accounted for around 26% (2022: 20%) of sales revenues, while Asia contributed 17%

(2022: 14%).

We estimate that there are around 100 manufacturers of competitor products worldwide. Our market and competitive structure and the competitive situation vary from country to country.

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Risk analysis

Definition of the risk areas

Risk management is a task of the entire Executive Board, which has delegated it to the Risk Manager. The Risk Manager is authorised to specify methods and set guidelines, and ­coordinates risk reporting in the RATIONAL Group. The Risk Manager is responsible for documenting the activities relating to identification, analysis, assessment, management and monitoring of risks at Group level. The process managers and executives are responsible for identifying and measuring risks and for formulating and implementing risk management measures. To this end, they are equipped with guidelines that give them direction in the identification, analysis, assessment- monitoring and reporting of risk.

Risk is understood to refer to any transactions internal and external to the Company that may have a negative impact on the achievement of business targets during a defined observation period or negatively affect areas outside the Group (environment, society, customers, employees, suppliers, etc.) as a result of their own business activities. Risks are assessed using the net approach. When assessing risks, we include countermeasures which or reduce the probability of their ­occurring, the extent of damage or both.

Risk identification, analysis and assessment

As a company with a long-term focus, we set store by a holistic assessment of risk, which means a balanced assessment­ of non-financial and the resulting financial risks, as well as primary financial risks. The risk analysis includes potential risks that can arise from the business activity of producing companies in general and from the business activity of ­RATIONAL AG in particular.

As part of the six-monthly risk analysis (risk inventory), risks that appear relevant for the RATIONAL Group's tasks and ­objectives are captured for a period of 36 months in terms of their short- and/or medium-term relevance and assessed by the Executive Board.

Both the company-specific risk tolerance and risk-bearing

capacity­ have been derived from the risk strategy. The extent to which the interaction of several risks that are not existential when considered separately could lead to developments that threaten the continued existence of the business is considered analytically. Existing risks assessments of the functional areas were consulted to this end and discussed with the help of the risk manager. One outcome of these discussions is to group the individual risks in a sensible manner. Quantitative and ­stochastic risk aggregation methods were not used. Based on many years of experience and the simplicity and clear focus of our business model, this approach seems more helpful to us than quantitative or stochastic assessment.

The Executive Board considers that there are no material risks arising from the RATIONAL Group's business activities in accordance with Section 289c (3) Nos. 3 and 4 of the ­German Commercial Code (HGB).