Report of the Supervisory Board of RATIONAL AG

Dear Shareholders,

For RATIONAL, 2011 was a very special year. We rolled out a totally new, trendsetting generation of cooking units worldwide in the shape of the SelfCookingCenter® whitefficiency® and the VarioCookingCenter MULTIFICIENCY®, in the process further expanding our position as the product and technology leader in the sector.

Dialogue and communication as a basis for advice and monitoring

In 2011, we complied with the duties incumbent on the Supervisory Board by law and under the articles of association and the Corporate Governance Code. We regularly advised the Executive Board on the management of the Company and monitored its activities. The Supervisory Board was direct - ly involved in all decisions of strategic importance to the RATIONAL Group. Cooperation between the Executive Board and the Supervisory Board was characterised by comprehensive, timely and regular communication, both written and verbal. The Executive Board also reported on major business transactions outside the meetings. The Supervisory Board received monthly and quarterly reports on market developments, the competitive situation, price developments, and the Company’s marketing, sales, and profit trends. In addition, the Supervisory Board and the Chairman of the Supervisory Board took steps to ensure that at all times it was informed by the Executive Board about current developments in the business situation, significant transactions and important decisions. With this aim in mind, the Supervisory Board was in close and regular contact with all members of the Executive Board to exchange information and ideas.

Where called for by law, articles of association and rules of procedure, the Supervisory Board voted, following detailed consultation and scrutiny, on the reports and draft resolutions of the Executive Board. All operations requiring consent were approved. In 2011 and in 2012 to date, this in particular entailed decisions relating to technology and product development, the sales and marketing organisation, the global product launch and staff development.

Changes in the Supervisory Board

With effect from August 31, 2011, Mr. Roland Poczka relinquished his post as member of the Supervisory Board. Dr. Hans Maerz took his place with effect from September 1, 2011. Dr. Maerz is an auditor and tax consultant. He was delegated onto the Supervisory Board by the shareholders Mr. Siegfried Meister and Mr. Walter Kurtz in accordance with their right of delegation as set down in section 8 (6) of the articles of association until the next regular Supervisory Board elections by the General Meeting of Shareholders in 2014.

The Supervisory Board thanks Mr. Roland Poczka for his many years of commendable service as a member of the Supervisory Board of RATIONAL Aktiengesellschaft.

In-depth work in plenary meetings

The Supervisory Board held ten meetings in 2011. In 2012, one further meeting was held up to the time of the meeting of the Supervisory Board on February 29, 2012, which objective it was to adopt the financial statements. In addition, the members of the Supervisory Board consulted one another in writing and by telephone. Where applicable, the Supervisory Board also passed resolutions outside the ordinary meetings. During the past fiscal year, the Supervisory Board regularly examined and further improved the efficiency of its activities, in particular the procedures and the timely provision of sufficient information.

Since the RATIONAL AG Supervisory Board consists of just three members, no committees have been formed.

At all times in fiscal year 2011 the composition of the RATIONAL AG Supervisory Board has met the legal requirement that at least one Supervisory Board member must be an independent financial expert.

All the members of the Supervisory Board attended all meetings. No conflicts of interest in respect of individual Supervisory Board members occurred in the 2011 reporting year in connection with consultations, draft resolutions and the audit mandate.

Key areas of consultation

The consultations with the Executive Board and the internal discussions dealt with all relevant aspects of the development of the business, including financial, investment, and HR planning, business trends, the economic situation of the Company and of the consolidated group, the risk situation, risk management, and last but not least the current cost and earnings position. In addition, numerous individual topics were on the agenda of the Supervisory Board meetings, and were discussed in depth. These included:

• The selection of the auditors for 2011,
• The key account strategy,
• Appropriation of earnings and proposed dividend,
• Staff development and management culture (U.i.U.® – Entrepreneur in the Company),
• Business planning for fiscal year 2012,
• Market development strategy for new markets,
• The product launch of the new generations of appliances: the SelfCookingCenter® whitefficiency® and the VarioCookingCenter MULTIFICIENCY®.

At the Supervisory Board meeting to adopt the financial statements on February 29, 2012, the principal topics included not only the audit and adoption of the annual and consolidated group financial statements but also, in particular, the draft resolutions to be proposed to the 2012 General Meeting of Shareholders.

PricewaterhouseCoopers AG, Wirtschaftsprüfungsgesellschaft, Munich, will be proposed as auditors for the 2012 audit. We also adopted the remaining draft resolutions for the ordinary General Meeting of Shareholders.

Our duties in 2011, and, in particular, at the 2012 meeting to adopt the fi nancial statements, covered not only the audit plus the entire accounting process in RATIONAL AG and the consolidated group, but also the supervision of the internal control system and the effectiveness of the internal audit and the risk management system.

Corporate Governance

There were no changes to the Executive Board in 2011. The Supervisory Board of RATIONAL AG continues to comprise three members. With effect from August 31, 2011, Mr. Roland Poczka relinquished his post as member of the Supervisory Board pursuant to section 8 (5) of the articles of association of RATIONAL AG. Dr. Hans Maerz took his place with effect from September 1, 2011. Dr. Maerz is an auditor and tax consultant. He was delegated by the shareholders Mr. Siegfried Meister and Mr. Walter Kurtz in accordance with their right of delegation as set down in the articles of association until the next regular Supervisory Board elections by the General Meeting of Shareholders in 2014.

Section 8 of the articles of association of RATIONAL AG grants Mr. Meister and Mr. Kurtz a joint right of delegation. In the event that a Supervisory Board member steps down prematurely, Mr. Meister and Mr. Kurtz have the joint right to delegate a member to the Supervisory Board in place of the Supervisory Board member who has stepped down, as long as they remain shareholders of RATIONAL AG. No further amendments to the German Corporate Governance Code have been resolved on since publication of the new version dated May 26, 2010. The May 26, 2010 version of the German Corporate Governance Code therefore remains valid for fiscal year 2011. RATIONAL AG largely complies with the recommendations and suggestions set out in the Code. As a result the declaration of compliance dated February 2012 was issued, following the decision in this respect pursuant to section 161 AktG at the meeting of the Supervisory Board on February 1, 2012. The declaration of compliance is published in the 2011 Annual Report and under Investor Relations on the RATIONAL website www.rational-online.com.

Audit of the annual financial statements and consolidated financial statements

As proposed by the Supervisory Board and elected by the General Meeting of Shareholders on May 11, 2011, PricewaterhouseCoopers AG, Wirtschaftsprüfungsgesellschaft, Munich, audited the financial statements of RATIONAL AG and of the Group for fiscal year 2011. The audit engagement was awarded by the Supervisory Board. Prior to the proposal for election, the Supervisory Board obtained a declaration of independence from the auditors. No reasons were apparent to doubt the independence of the auditors. The auditors were additionally obliged to inform us immediately of any circumstances which could give rise to a lack of impartiality on their part and, where appropriate, to notify us of services which they have performed in addition to the audit. The Supervisory Board reported prior to and during the audit in discussions with the auditor on the latter’s approach to the audit and the progress of the audit.

The annual financial statements for the fiscal year from January 1 to December 31, 2011, prepared in accordance with the provisions of the Handelsgesetzbuch (HGB, German Commercial Code), and the Company’s management report, which also refers to the Declaration of Corporate Governance on the Company’s website, were audited by the auditors and given an unqualified audit opinion. The Executive Board drew up a consolidated financial statement for the consolidated group in accordance with the International Financial Reporting Standards (IFRS), supplemented by the commercial law regulations applicable under section 315a (1) of the HGB. In addition, a Group management report was prepared. The auditors audited the consolidated financial statements and the group management report and issued an unqualified audit opinion.

The annual financial statements, the consolidated financial statements, the management reports, the auditors’ reports, and the Executive Board’s proposal on the appropriation of unappropriated profits were forwarded in good time to all Supervisory Board members for examination. They were the subject of intensive deliberations at the meeting of the Supervisory Board held on February 29, 2012. In particular, the Supervisory Board concerned itself thoroughly with the results of the audit by the auditors.

The auditors took part in the discussion of the Company’s annual financial statements and the consolidated financial statements. They reported on the results of the audits, in particular on the points on which it was agreed the 2011 audit would focus, and were available to the Supervisory Board for questions and supplementary information. One area on which the auditors’ explanations concentrated was the assessment of the accounts-related internal control and risk management system. Both the Executive Board and the auditors provided us with comprehensive answers to all our questions to our satisfaction.

The Supervisory Board raises no objections further to its own final results of the deliberations and its own examination. The Supervisory Board approves the results of the audit. At its meeting held on February 29, 2012, the Supervisory Board approved the annual financial statements, prepared by the Executive Board, for RATIONAL AG as of December 31, 2011, including the certified version, dated February 15, 2012, of the management report for fiscal year 2011, as well as the consolidated financial statements as of December 31, 2011 and the certified version, dated February 15, 2012, of the consolidated management report. The 2011 annual financial statements for RATIONAL AG, including the management report, are thereby adopted in accordance with section 172 sentence 1 of the AktG.

Dependent company report

The dependent company report, prepared by the Executive Board pursuant to section 312 of the AktG, on RATIONAL AG’s relations with associated companies was examined by the auditor. The auditor issued the following audit opinion: “Based on our statutory audit and our judgement, we confirm that the actual information in the report is correct and the consideration the Company paid for the legal transactions listed in the report was not inappropriately high.” The auditors’ report on the dependent company report was available to all members of the Supervisory Board in good time before the meeting to approve the financial statements and was examined by us and discussed in detail with the auditors present. Following its own examination, the Supervisory Board concluded that there were no objections to the report on relations with associated companies and the final statement by the Executive Board contained therein.

Appropriation of earnings

After consideration of the operating environment, the situation on the global financial and capital markets, the financial position of the Company, and the expectations of the shareholders, we approve the appropriation of earnings proposed by the Executive Board.

From RATIONAL AG’s net retained profits of 133.1 million euros, a dividend of 5.50 euros per share or a total of 62.5 million euros should be distributed and the remainder should be carried forward to new account.

The Supervisory Board would like to thank the management for their close and constructive cooperation, and the trust they have placed in us. In particular we want to thank all our employees, who once again in 2011 succeeded in convincing our existing and new customers of the benefits and added value of RATIONAL products and in making excellent use of the market opportunities that present themselves around the world.

Landsberg am Lech, March 7, 2012

Siegfried Meister

Chairman of the Supervisory Board