CONTENTS

02 Letter from the Executive Board

04 Insider Interviews

06 Business and Strategy

08 Markets and Competition

10 Sales and Customers

11 Partnerships and Joint Ventures

12 Products and Services

17 Revenues and Earnings

18 Awards

20 Quality and Food Safety

22 Worldwide Presence

26 Corporate Social Responsibility

27 Environmental Management

29 Environmental Successes

30 Outlook

33 Consolidated Income Statement

34 Executive Board Responsibilities

35 Key Figures Letter from the Executive Board

DEAR READER,

The year 2014 was a good one for our industry. Passenger volumes continued to grow in all regions. We also saw a slight tendency to upgrade service concepts thanks to the improved financial situation of many carriers, even in mature markets but especially in North America. While benefitting from this growth across our network, LSG Sky Chefs was also able to strengthen its position in the increasingly important onboard retail sector and in some adjacent markets.

Over the past few years, the company has enjoyed a solid and sustainable operational and financial performance, providing a strong basis for our future. Looking ahead, we have the clear goal of becoming more market- and customer-focused in order to stay ahead and live up to our obligation to develop the market further with innovative products and service concepts. In order to get there, we have launched several worldwide initiatives that revolve around innovation, consumer data and onboard retail programs. They will prepare us to better deal with the increasingly divergent customer and consumer demands we must meet today.

We look forward to continue working with you and proactively define common goals and opportunities. At the same time, we would like to thank you for your trust and personal contributions, which have helped us remain the top player in our core yours business while tackling new ventures to achieve the profitable growth we aim for Jochen Müller Erdmann Rauer Dr. Kristin Neumann Chief operating officer Chief Executive officer Chief FINANCIAL officer in our Mission and our Strategy. sincerely,

PAGE 02 | 03 ...... LSG SKY CHEFS | annual review 2014 INSIDER INTERVIEWS

We would like to invite you to take ceo an in-depth look at LSG Sky Chefs – our erdmann SCAN THE CODE way of thinking and and Watch JÖRG'S what motivates us. RAUER Jörg INTerview! SCAN THE CODE and Watch erdmann'S Get to know five INTerview! Tüttelmann individuals who VP Culinary Excellence represent various areas of our company. Pinar Meitzner Discover their actual VP Sales, Design and SCAN THE CODE Engineering SPIRIANT and Watch PINAR'S statements, revealing INTerview! what drives them and why their skills and expertise benefit customers and VP Sales and Steering consumers alike. SCAN THE CODE and Watch michael'S Florian von INTerview! VP Product Marketing Oertzen and Innovation SCAN THE CODE Michael and Watch FloRIAN'S INTerview! Wahl an in-depth look at L SG Sky Chef s Market Leader Portfolio E x pansion Worldwide Presence Global Quality Profitable Growth Business and Strategy Performance Customer Centricity LSG Sky Chefs broadens its presence and expands its portfolio Standardization Innovat i on Process and Product Strong Partnerships

LSG Sky Chefs is the global market leader in airline catering in for Finance, Human Resources, Procurement, Information terms of market share, quality, innovative drive and worldwide Technology and the German retail shops “Ringeltaube”. Rich Diversity presence. With 210 customer service centers based in 51 countries, the LSG Sky Chefs Group has the largest network On October 1, Erdmann Rauer, who had been a Member of the

of production sites in the industry. In both of its home markets Executive Board in his role as Chief Sales Officer since January (Germany and the United States) the company is present at 2011, assumed the helm of the company as the new Chief almost all major airports. In the emerging markets of Latin Executive Officer (CEO). Strategy and Business Development, America, Asia/Pacific, Africa and Eastern Europe, the network Sales and Products, Communications and Marketing, Legal of units is being continuously extended via joint ventures and and Corporate Affairs as well as Internal Audit all fall within his management agreements with local partners. area of responsibility.

At the end of the year 2014, the Group comprised 159 Jochen Müller remains the company’s Chief Operating Officer companies that supply a considerable roster of airlines at 214 (COO) and Member of the Executive Board since March 2005. airports. LSG Lufthansa Service Holding AG (headquartered in He is responsible for the group’s worldwide operations. based on market maturity or growth, expansion opportunities Additionally, LSG Sky Chefs continues to offer its extensive Neu-Isenburg, Germany) is the parent company. Changes in the Additionally, he supervises the SPIRIANT/SkylogistiX equipment and cultural differences are adequately met. Over the past expertise in culinary excellence and logistics to new customer group of consolidated companies this year included the first-time and logistics subsidiaries, LSG Sky Chefs Lounge and Air few years, LSG Sky Chefs has expanded its portfolio with a groups such as train operators, convenience retail chains consolidation of Chelyabinsk Catering Service in the third quarter Security businesses as well as the Corporate Operational special focus on its core competencies – culinary excellence and school and university canteens. In seeking to complement of 2013 and of Starfood Finland Oy on March 1, 2014. Excellence function. and logistics. its internal competencies, the company actively cooperates with business partners around the globe. In order to further In the course of the business year 2014, the composition of the The airline catering activities are managed by five regional In terms of culinary excellence, the company enhanced its secure its continued success, LSG Sky Chefs is building Executive Board changed and was reduced from four to three management teams with responsibility for North America, Latin services in order to accommodate the changing requirements on its profitable growth through geographic and knowledge- members. On July 1, Dr. Kristin Neumann took over as Chief America, Europe, Asia/Pacific and the Emerging Markets. This of its airline customers. This entailed the further refinement of based expansion. To heighten customer benefits and Financial Officer (CFO) and Chief HR Officer with responsibility structure ensures that the highly diverse customer requirements its culinary excellence philosophy to include the preparation of satisfaction, the company mostly relies on product and ethnic meals, which are increasingly in demand. In the area of process innovation, coupled with optimized service quality logistics, the company – via its subsidiary, SPIRIANT – provides and consistency. a growing number of airlines with the development, procurement, planning, transportation and warehouse handling of catering At the same time, LSG Sky Chefs pursues consistent cost LSG Sky Chefs equipment. These include point-to-point, legacy and start-up management with the ongoing optimization of process flows low-cost carriers in all regions. and the growing standardization of its highly decentralized has expanded its portfolio with a network. Cost management concerns all personnel levels, special focus on its core competencies – The portfolio expansion also includes gaining the capacity to business areas and locations of the company. The focal points handle the complete management of onboard retail processes, include the management of material costs by converging culinary excellence and logistics. from analyzing and recording the needs of consumers to the volumes and applying modern supplier management, more selection of products, demand forecasting, logistics and sales flexible labor costs and the introduction of new business processes, as well as invoicing. models based on customer requirements.

PAGE 06 | 07 ...... LSG SKY CHEFS | annual review 2014 Markets and Competition Growth in demand supports expansion plans

In the coming years, the company In terms of airline catering, LSG Sky Chefs continues to hold The company’s network grew further during the year under the industry’s leading position with a global market share of 29 review. Its far-reaching presence in Russia now includes expects growing passenger percent. The market share in America and Europe, according 10 locations after entering Rostov-on-Don as part of its joint volumes that will vary greatly to internal calculations, totals around 40 and 45 percent venture with Aeroflot, Aeromar. In China, LSG Sky Chefs respectively. In Asia, where catering is commonly provided at launched a new joint venture in Wenzhou, which entails the depending on the region. the hubs by the hub carriers, LSG Sky Chefs has been active construction of a new catering unit. Within the context of Low-cost and charter airlines for almost 25 years and still is the market leader. In Eastern additional new joint ventures, the company was able to enter continue to hold a disproportionate Europe and Africa, the company continues to build its market the markets in Sofia, Bulgaria, and the Tokyo Narita and presence at a number of rapidly growing airports. Haneda airports in Japan. In South Korea, the company is now share in this growth. Based on present at the country’s three busiest airports after opening a this general development in the The LSG Sky Chefs worldwide network of companies comprises new location in Busan. Furthermore, the company acquired the a number of proprietary locations and a wide range of joint pre-production unit for LSG Sky Chefs Finland in Helsinki, and airline industry, LSG Sky Chefs is ventures with airlines, airport operators and local businesses, opened new modern production sites in Panama City, Panama, forecasting growth in the market especially in Latin America, China, Russia and the UK. Some and Nanjing, China – two locations with rich potential. volume for airline catering. of these partnerships have been in place for several decades and continue to grow. SPIRIANT, a subsidiary in the field of onboard service equipment development and logistics, opened its first branch in Dubai, UAE, Network airlines are increasingly looking to upgrade their service LSG Sky Chefs’ competition remains fragmented. There is in order to cater to the growing demand in the region for quality concepts in order to position the in-flight experience as an only one global competitor and a transparent number of local onboard services. In New Zealand, LSG Sky Chefs acquired additional differentiation opportunity. Low-cost and charter airlines and/or regional suppliers that are gradually expanding. The Naturezone, a retail supplier, thereby creating a second business favor so-called hybrid models, which combine traditional free-of- past several years have seen a few new companies from the pillar for the company in that country. charge in-flight services for passengers with innovative onboard logistics segment and the restaurant business enter the airline retail programs that have already proven highly successful with catering market with a different product portfolio and aggressive some customers. Comprehensive, intelligent onboard retail pricing. They offer services specifically geared towards the programs that go far beyond the food and beverage offer with onboard retail programs of low-cost carriers and less complex entertainment choices and convenient shopping are increasingly onboard services on short-haul flights. They also target the in demand. They improve the guest’s travelling experience and economy class service where freshness and culinary excellence open up additional revenue streams for airlines. are not a priority in relation to the food selection.

PAGE 08 | 09 ...... LSG SKY CHEFS | annual review 2014 Sales and Customers Partnerships and Joint Ventures Sharper focus on new business models strengthens position Global expertise combined with local market access

The financial year 2014 was marked by a stronger demand LSG Sky Chefs is proud of its partnerships around the Aerococina de Mexico – established in 1997 with a current for airline catering services. This was due to higher passenger globe, many of which last for decades. The company was shareholding of 51 percent and present in Bajio, Cancun, volumes and the slight upgrading of onboard services by some the industry’s pioneer in entering the Chinese and Russian Cozumel, Guadalajara, Merida, Mexicali, Mexico City, Monterrey, airlines. Consequently, LSG Sky Chefs was able to increase markets in the 1980s and has since continued to seek new Puerto Vallarta, San Jose del Cabo and Tijuana. the financial sales in almost all markets. The sole exception was Eastern opportunities wherever they come up by combining global year 2014 Europe, where demand declined as the result of the present expertise with local market access. Major partnerships covering Alpha LSG Limited – In 2012, LSG Sky Chefs founded a political instability. more than one location include: new joint venture with the Alpha Flight Group in Great Britain, was marked by serving 21 airports throughout the UK: Belfast, Birmingham, a stronger demand LSG Sky Chefs closed the year under review with a customer Aeromar – the 51/49 joint venture with Russian carrier Blackpool, Bristol, Cardiff, Doncaster, Durham, East Midlands, retention rate of close to 90 percent and a three-digit million net Aeroflot, established in 1989 in Moscow-Sheremetyevo, Edinburgh, Glasgow, Humberside, Leeds-Bradford, Liverpool, for airline new business figure. New customer contracts were signed for today comprises six locations in Rostov-on-Don (new in 2014), London Gatwick, London Heathrow, London Stansted, Luton, catering services. airline catering services as well as areas beyond. Sheremetyevo, Simferopol (new in January 2015), Sochi, Manchester, Newcastle, Norwich and Prestwick. St. Petersburg and Vladivostok and is the number one Standout deals include the global agreement with Delta Airlines caterer in Russia. Joint venture with Asiana Airlines – established in 2003 with and the expansion of the business relationship with JetBlue a shareholding of 80 percent at the fast-growing Seoul-Incheon Airlines in the United States. There were also catering contract Thirteen joint ventures with major Chinese airlines, airport, today it is also present at the other two major airports in The company’s customers include virtually all international extensions with Emirates, Singapore Airlines and Qantas in authorities and local partners at 19 airports in China – South Korea: Seoul-Gimpo and Busan. airlines and numerous national and regional carriers. The types New Zealand. New onboard retail agreements were signed with established between 1990 and 2014, they include units in of business relationships, in terms of scope and duration, vary Germanwings, SunExpress and Air Baltic in their respective Beijing, Chengdu, Dunhuang, Guangzhou, Hangzhou, Hefei, Through these partnerships, LSG Sky Chefs benefits from the among the roughly 300 key customer accounts. They span markets, as well as with Spirit Airlines in North and South Hong Kong, Kunming, Lanzhou, Lijiang, Nanchang, Nanjing, local network and market access of its partners. The partners, everything from global contracts to agreements for individual America. Meanwhile, closer cooperation was achieved with Sanya, Shanghai-Hongqiao, Shanghai-Pudong, Shangri-La, in turn, receive access to a global network of expertise in locations only. Built on the company’s reputation as an industry the fast-growing airlines in the Middle East, particularly at their Urumqi, Wenzhou (new in 2014) and Xian. important areas such as operations, quality, human resources leader in quality and sustainability, the strength of these newest destinations in North America. and technology, as well as research and development. relationships is confirmed periodically by a solid retention rate Goddard Catering Group – established in 1997 with in the core catering business segment. While the company LSG Sky Chefs was also able to further consolidate its market a shareholding of 49 percent and comprising locations in While these partnerships bolster the geographical presence of continues to sharpen its focus on innovation and new business position in the train catering segment. Thanks to innovative 17 countries in Latin America and the Caribbean: Antigua, LSG Sky Chefs, the company also engages in collaborations models, it has also managed to make inroads in the onboard service concepts, two new agreements were obtained with Barbados, Bermuda, Cayman Islands, Colombia, Ecuador, with specialized partners that can complement its capabilities, retail sector in Europe and North America. French high-speed train operator iDTGV and the Italian NTV. El Salvador, Grenada, Guatemala, Jamaica, Netherlands primarily in its core airline catering business. These partnerships Antilles, Paraguay, St. Lucia, Trinidad and Tobago, Uruguay, are described in more detail in the Products and Services Venezuela and the U.S. Virgin Islands. section of this report.

PAGE 10 | 11 ...... LSG SKY CHEFS | annual review 2014 meals 2014

1.6MEA Mio.LS PER DAY Products and Services 5781.6 Mio.TOTA MioL A diverse portfolio that can promote differentiation and individualization

LSG Sky Chefs’ commitment to live up to its vision (“To deliver the taste Airline Catering Onboard Retail of the world to make your customers’ At the heart of LSG Sky Chefs’ broad range of activities is its A successful onboard retail offering is built on a foundation of day better”) is strongly supported proven expertise in airline catering, which spans more than 70 providing passengers with the right product mix. This increases by the dedication and diversity of its 1years of history. It rests on the company’s culinary excellence 2customer satisfaction and improves brand perception. But it philosophy and experience in day-to-day logistics. Today, that has to be done with technology that makes those products workforce, worldwide locations and legacy is carried on by more than 700 chefs representing easy to sell and buy. That is why LSG Sky Chefs partners with expanded portfolio. different cuisines in 210 customer service centers in 51 countries. Retail inMotion (RIM), a leading retail technology provider, to By applying that expertise, the company is able to offer airlines, support airlines and train operators in optimizing their onboard The company consistently works on broadening its portfolio in passengers and consumers high-quality culinary choices every sales processes and increasing their ancillary revenues. order to deliver a more memorable experience for passengers day, anywhere. along the entire travel chain, starting with the booking through The company has developed an ideal onboard retail product arrival at the final destination. The travel chain concept, which Depending on a customer’s needs, LSG Sky Chefs utilizes the mix for its customers based on demographics, culture and was initially conceived for airlines and their passengers, has expertise of a team of in-flight specialists that will work hand-in- specific routes that generate income. It has also defined the been successfully translated to meet the needs of other target hand with an airline on a number of key activities, such as: optimal stock levels of goods, ranging from luxury items to groups, such as high-speed train and bus travelers. At the basic products, in order to minimize waste. same time, customers (airline, train and bus companies) expect Carrying out in-depth research on trends, consumer a well-balanced portfolio that leads to passenger satisfaction demands and passenger expectations on a global scale Services include the selection of the product mix, menu while delivering efficiency and generating revenues. Translating short, medium and long-haul strategies into planning, procurement, packaging design and cabin crew sales value-adding catering concepts training. All process steps are supported by state-of-the-art LSG Sky Chefs’ vast experience, coupled with its continuous Benchmarking with other airlines to ensure products technology, which is a key success factor for onboard retail quest for innovation has generated an array of products and are “on brand” programs. In addition, the company offers end-to-end retail services that go beyond classic airline catering. Presently, the Implementing special programs such as Celebrity IT-solutions that include the technology, software back-up and company’s portfolio includes: Chefs’ menus. back-office analysis.

PAGE 12 | 13...... LSG SKYLSG CHEFS SKY CHEFS | annua | annual relvi reewvie 2014w 2014 Equipment Sourcing and Design/Development Airports served LSG Sky Chefs’ equipment brand, SPIRIANT is a leading global provider of in-flight products, equipment and logistics 4aimed at optimizing an airline’s entire supply chain. SPIRIANT adds value by designing concepts that meet customers’ practical needs. With nearly 20 years of experience Equipment Logistics Food Solutions working with major airlines around the world, the SPIRIANT SkylogistiX, a joint venture between LSG Sky Chefs and The range of services used by customers varies considerably – team has the insight and knowledge to source, design and Kuehne+Nagel, one of the world’s leading logistics providers, some require full-service, others prefer convenient meal options deliver a variety of product concepts. Those include meal service 5creates transparency in materials management. The combination 3or meal boxes. As a proactive response to changing market equipment (trays, cutlery and tableware), comfort items (linens of Kuehne+Nagel's logistics excellence and LSG Sky Chefs' requirements, LSG Sky Chefs has built a robust line of products and amenities), galley equipment (trolleys/carts and drawers) expertise in equipment management provides customers that can complement or replace traditional catering solutions as and comfort items. All of them are designed to strengthen the comprehensive operational experience in in-flight services and well as onboard retail programs: airline’s specific brand values while addressing the practical airline management. needs of the crew and passengers. With frozen food production units in China, Germany and SkylogistiX offers outsourcing and logistics expertise for the the U.S., the company is the only global provider of frozen airline With dedicated teams across Europe, the Americas, Asia and supply chain management of in-flight catering equipment, all meals. The frozen-meal product catalog includes over 900 the Middle East, SPIRIANT employs more than 200 people. supported by state-of-the-art custom-designed IT systems. The different dishes representing 100 ethnic varieties. Customers In June 2014, the subsidiary officially opened its first branch aim is to integrate and optimize all elements of the supply chain benefit from increased flexibility in terms of availability and high in Dubai, UAE, in answer to the rising demand for enhanced to minimize total cost without compromising service levels. LSG Sky Chefs consistency. in-flight services in the Middle East. Services include forecasting (demand and order management), consistently LSG Sky Chefs is also a leading provider of meal-box Last year SPIRIANT was also honored with the prestigious transport management by using worldwide logistics networks solutions that can be tailored to the customer’s needs and “Good Design” award for four different products at the “Good and warehousing (stock management, inbound quality checks, works on brand values through its ownership and shareholding in Design Awards” competition in Chicago. SPIRIANT’s Slot restocking and repacking of returned deliveries). Those services broadening Oakfield Farms Solutions. Individually designed meal boxes tray and tableware, Lufthansa’s bread basket, salt & pepper aim at bringing innovation into the in-flight service supply chain can hold a free-to-choose assortment of nutritional snacks shakers and "Berlin" gourmet b ox stood out against product through leading-edge systems, dedicated expertise and the its portfolio. and meal components. designs from several thousand companies from 48 countries. company’s global network.

PAGE 14 | 15 ...... LSG SKY CHEFS | annual review 2014 Consumer Insight Logistics Onboard Retail Culinary Individualization Diverse Excellence F ocus Customer Portfolio Memorable Equipment Experiences Innovation Lounge Services Revenues and Earnings Solid performance in a highly competitive environment

Supported by a favorable, yet highly competitive market LSG Group achieved an operating profit of EUR 100 million

environment and in line with the company’s strategy, in 2014, EUR 5 million below the previous year’s figure of Lounge Services the LSG Group was able to continue its path of profitable EUR 105 million. This reflects the ongoing price and cost Years of experience in operating and managing lounges have growth. LSG Group’s consolidated revenue rose by pressure in the industry which could not be fully absorbed given LSG Sky Chefs a clear and competitive lead in this area. 4.7 percent (adjusted for currency effects: +6.8 percent) to by productivity gains and process optimization. 7The company currently manages 65 lounges and provides food EUR 2,633 million in the 2014 financial year. Changes in the and beverage services to around 30 additional lounges at 36 group of consolidated businesses increased revenues by The results of investments, accounted for using the equity airports around the world. The lounge portfolio features various EUR 22 million compared to previous year. method, decreased by EUR 11 million to EUR 8 million modules ranging from food and beverage to service, uniforms due to unfavorable exchange rates fluctuations of the and equipment. As a one-stop-shop, it delivers a seamless Other operating income rose by EUR 7 million to EUR 93 million. Russian Ruble. The interest result remained unchanged at brand experience for passengers and a more efficiently-handled Overall, total operating income increased by 4.9 percent to EUR minus 18 million compared to the previous year. area for the airline or train operator. EUR 2,727 million. Consulting and Innovation Other non-operating result of EUR minus 37 million was The key to understanding consumers is not just knowing Cost of materials and services rose by EUR 52 million to mainly influenced by the effect of negative exchange rates and what they want, but where, when and how they want it. EUR 1,156 million. This development was mainly due to impairments which led to an overall drop of EUR 18 million 6LSG Sky Chefs is passionate about people, food and travelling. Security Services the increased business volume. The cost of materials ratio compared to 2013. Listening to consumers, conducting market research and The company’s U.S.-based SCIS Air Security subsidiary remained unchanged at 43.9 percent. monitoring global trends as they emerge form the basis of our provides the airline industry with solutions for the requirements The developments mentioned above, especially in the non- approach to innovation. 8of the post-9/11 world. In fact, it is recognized as the leader The average number of employees rose to 32,526, meaning operating result, led to a decrease in the result (after taxes) by in airline catering security in North America. And it continues 3.7 percent more than the year before. In total, personnel EUR 21 million to EUR 36 million. This involves more than just looking for the latest culinary to expand its portfolio to include airport operations area security, expenses climbed by 4.0 percent to EUR 964 million. This can trends; it also includes analyzing social, lifestyle and cultural aircraft security, cargo security, personnel screening, in-flight be attributed to the increased business volume and the changes trends. When emerging trends are identified, proven entertainment and point-of-sale solutions, duty-free management in the consolidated companies in Europe. Operating result innovation extrapolation techniques are applied to translate and cash management services. (EUR/Million) them into a service vision. Within the framework of co- The amortization and depreciation ratio amounted to 2.5 percent, innovation workshops, the service vision is then turned into corresponding to the 2013 figure (2.5 percent). The nominal concrete concepts that fit with the customer’s brand and amount slightly rose by EUR 3 million to EUR 65 million. goals. In order to achieve the best results from the innovation “Ringeltaube” Retail Shops process, all consumer touch points are analyzed. This lays LSG-Food & Nonfood Handel operates 24 retail shops under the Other operating expenses increased by 9.7 percent to the ground for the creation of a seamless brand experience „Ringeltaube“ brand at German airports, offering a huge variety EUR 441 million on a year-to-year basis. This was mainly 72 76 85 101 105 100 for the traveler and increased awareness about the customer 9of beverages, perfumes and cosmetics, travel accessories and driven by the higher business volume and higher expenses services available. gourmet food, exclusively to airport and airline employees. for external personnel. 2009 2010 2011 2012 2013 2014

PAGE 16 | 17 ...... LSG SKY CHEFS | annual review 2014 LSG SKY CHeFS – SPIRIANT – Where INSPIRATION PROVEN EXCELLENCE mEETS PERFORMANCE

The LSG Sky Chefs global network delivers consistent service quality and culinary The innovative and unique products designed by SPIRIANT excellence worldwide. Our customers acknowledge our commitment to excellence take into account the growing environmental awareness. through their loyalty and the awards they bestow upon us, such as: This is increasingly recognized by a number of renowned international design awards, such as: 2014 2014 QSAI Platinum Award for best worldwide airline catering facility according to QSAI standards | Munich, Germany 2014 2014 QSAI Award of Excellence for Europe, Middle East & Africa ‘Gold Medal’ | Munich, Germany Travel Plus Gold Winner for Lufthansa Children’s Goody Bag Pilotenkoffer 2014 QSAI Award of Excellence for the Americas ‘Gold Medal’ | Buenos Aires, Argentina Travel Plus Gold Winner (Formia & SPIRIANT) for Qatar Airways Business Class amenity kits 2014 QSAI Award of Excellence for the Americas ‘Silver Medal’ | Bonaire, Netherlands Antilles ‘Good Design Award' for Lufthansa Premium Economy Class tableware Delta “Caterer of the year” as Best Small Kitchen (<500 flights/month) | Anchorage, USA Delta “Caterer of the year” as Best Medium Kitchen (> 501-999 flights/month) | Mexico City, Mexico KLM Catering Performance Award 2014 for Africa | Cape Town, South Africa 2013 KLM Catering Performance Award 2014 for Americas | Buenos Aires, Argentina ‘Good Design Award’ for the “Slot” tray and tableware Singapore Airline Excellence Award 2014 | Munich, Germany ‘Good Design Award’ for the Lufthansa bread basket Oman Air Certificate of Appreciation for consistent performance 2014 | Kathmandu, Nepal ‘Good Design Award’ for the Lufthansa salt & pepper shakers ‘Good Design Award’ for the Lufthansa "Berlin" gourmet box 2013 ‘Dieline Package Design’ Award – 1st in Fresh Food category for the Lufthansa “Metropolitan“ meal box ‘Gute Gestaltung/Good Design 14’ – Silver Award in the product category for the “Slot“ tray and tableware 2013 QSAI Award of Excellence for the Americas ‘Gold Medal’ | Bonaire, Netherlands Antilles 2013 QSAI Award of Excellence for the Americas ‘Silver Medal’ | Buenos Aires, Argentina 2013 QSAI Award of Excellence for the Americas ‘Bronze Medal’ | Santiago de Chile, Chile 2013 QSAI Award of Excellence for Europe, Middle East & Africa ‘Silver Medal’ | Munich, Germany 2013 QSAI Award of Excellence for Europe, Middle East & Africa ‘Bronze Medal’ | Kiev, Ukraine 2013 ANA Overseas Caterer Award – Silver Prize for best long-haul/middle haul caterer | Washington, USA Delta Airlines ‘Caterer of the Year Award 2013’ | Milan Malpensa, Italy Chartered Institute (Australia) ‘Best Supplier Partnership’ for cooperation between Air New Zealand and LSG Sky Chefs | LSG Sky Chefs, New Zealand Lufthansa ‘Best Caterer Award 2013’ in the category Asia/Pacific and worldwide award | Hong Kong, China Lufthansa ‘Best Caterer Award 2013’ in the category North and South America | Dallas, USA Lufthansa ‘Best Caterer Award 2013’ in the category Europe | Frankfurt, Germany United Airlines ‘Quality First Awards’ – Crystal Award Premium International (top performer in United’s Quarterly Awards) | Birmingham, UK United Airlines ‘Quality First Awards’ – Crystal Award Hub/Large – over 10,000 departures per month | Denver, USA United Airlines ‘Quality First Awards’ – Crystal Award Medium – 500 to 10,000 departures per month | Mexico City, Mexico United Airlines ‘Quality First Awards’ – Silver Medal Medium – 500 to 10,000 departures per month | Bogota, Colombia United Airlines ‘Quality First Awards’ – Bronze Medal Medium – 500 to 10,000 departures per month | Guatemala City, Guatemala United Airlines ‘Charter Caterer of the Year | Frankfurt, Germany

PAGE 18 | 19 ...... LSG SKY CHEFS | annual review 2014 Quality and Food Safety Corporate Social Responsibility Awareness earns trust and respect Quality is a fundamental element of the company’s philosophy

Offering customers the highest levels of quality and efficiency is loops and problem-solving techniques that focus on the From a purely business perspective, acting as a responsible LSG Sky Chefs has also shaped its company culture to create a fundamental element of LSG Sky Chefs’ philosophy. In order factors that matter to the airlines’ in-flight success. Through corporate citizen helps contain risks, enhance employee an environment in which a social responsibility mentality can to achieve global consistency, the company builds the optimal this proprietary system, LSG Sky Chefs can monitor the entire satisfaction, strengthen customer loyalty and directly affects thrive. This is why it introduced a set of company values in 2007. measure of quality into each and every aspect of the supply supply chain. the bottom line. Furthermore, by acting responsible on a daily The values are designed to promote responsible behaviors and chain, from innovation, product development, operations, costs basis the company can enhance its reputation and earn the attitudes as guidelines for employees. At the same time, they and supplier management to measuring passenger satisfaction. LSG Sky Chefs has Quality Managers at all of its locations respect of the communities in which it operates while creating intend to harmonize the company’s strengths. The company It also continuously optimizes processes and services to drive around the world who conduct regular inspections and use shared value. values emphasize: efficiency and increase quality in close cooperation with its the Global Quality System to verify quality and food safety business partners and suppliers. practices. Additionally, the systems are checked and verified LSG Sky Chefs has a social responsibility program, backed by Respect through a series of audits, some of which are conducted the company’s Executive Board and the senior management Trust A key part of this effort is the industry-leading Global Quality unannounced by an external hygiene institute, state and local team, which impacts the entire organization. Reaching for Excellence System. It guarantees consistency regarding the factors that authorities, customers and third-party vendors. Customer Commitment are most important to the customer’s success: customer LSG Sky Chefs employs more than 32,000 people from more Innovation satisfaction, on-time and safety performance, product and LSG Sky Chefs’ strict focus on quality and food safety was than 100 countries. This rich diversity of cultures, backgrounds Economic Health process quality and food safety and hygiene. once again recognized by customers and third parties alike. and experiences lends a unique identity to the company that In 2014, five LSG Sky Chefs units were chosen as winners strengthens its ability to compete effectively wherever it operates. The progress made in implementing a values-based culture The Global Quality System not only adheres to the strictest during the presentation of the Medina Quality Awards for their Understanding the worth of this unique asset, the company is is measured every two years through worldwide surveys that standards but it also incorporates quality assessment and compliance with quality and food safety standards. A number supportive of its eclectic workforce and broad culture. It also underline achievements and improvement areas by location. feedback into the production processes. It provides built-in of LSG Sky Chefs facilities were also honored by Lufthansa and recognizes the value of the wide backgrounds of its suppliers, The participation rate has increased from 58 percent in 2008 checks and controls and is supported by internal feedback United Airlines for their outstanding product and service quality. customers and business partners. to 65 percent in 2010, 71 percent in 2012 and an outstanding 73 percent in 2014. This reflects the commitment of employees around the world to contribute to further shaping the company’s future. Customer Commitment was rated as the strongest and most defining value which clearly supports the company’s goal of becoming even more customer centric.

LSG Sky Chefs strives to make the company a good place to work. With higher employee satisfaction it can ensure better, more consistent results for its clients while retaining more employees in a traditionally high-turnover industry.

PAGE 20 | 21 ...... LSG SKY CHEFS | annual review 2014 we deliver the taste of the world to make your customers' day better. LSG Sky Chef s

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LSG SKY CHEFS | annual review 2014 WORLDWID E PR E S NC ANC HEL OSL LED ARN RYG TLL NYO GOT KJA RIX OVB PIK EDI CPH SVO NCL BLL EUROPE / GLA MMX DME CEK MME VNO VKO BFS LBA Middle east BLK DSA Asia / MAN HUY BRE HAM LPL EMA BHX NWI FMO HAJ TXL / Africa LTN STN SXF Pacific NRN PAD Luanda (LAD) CWL LHR DUS DTM DRS Beijing (PEK) Chengdu (CTU) ANGOLA BELGIUM BRS LGW OST CGN LEJ China BRU LGG FRA Brussels (BRU) Charleroi (CRL) Liege (LGG) CRL XZY NUE Dunhuang (DNH) Guangzhou (CAN) Hangzhou (HGH) YVR PAR STR Oostende (OST) Bulgaria Sofia (SOF) MUC Hefei (HFE) Hong Kong (HKG) Kunming (KMG) SEA DENMARK Billund (BLL) Copenhagen (CPH) ZRH ROW Lanzhou (LHW) Lijiang (LJG) Nanchang (KHN) BGY XVY PDX Egypt Cairo (CAI) ESTONIA Tallinn (TLL) MXP SIP Nanjing (NKG) Qingdao (TAO) Sanya (SYX) MSP YYZ FINLAND Helsinki (HEL) FRANCE Paris - AER URC Shanghai - Hongqiao (SHA) Shanghai - Pudong (PVG) VVO NORTH BOS SOF DTW Gare de Lyon Rail Station (PAR) Shangri-La (DIG) Urumqi (URC) Wenzhou (WNZ) ORD JFK GERMANY FCO LGA SAW/IST SLC MAD INP AMERICA PIT PHL Alzey (XZY) Berlin - Schoenefeld (SXF) Berlin Xian (XIY) INDIA Bangalore (BLR) Cochin (COK) DEN ESB DNH PEK CANADA Toronto (YYZ) Vancouver (YVR) BWI LIS SMF - Tegel (TXL) Bremen (BRE) Cologne (CGN) Hyderabad (HYD) JAPAN Tokyo - Haneda (HND) ADB GMP SFO OAK IAD/DCA United States Anchorage (ANC) ICN SJC Dortmund (DTM) Dresden (DRS) Dusseldorf (DUS) BJV AYT Tokyo - Narita (NRT) LAS TAO NRT MICRONESIA TUL RDU DLM LHW Atlanta (ATL) Austin (AUS) Baltimore (BWI) PUS HND BUR CLT Frankfurt (FRA) Hamburg (HAM) Hanover (HAJ) Guam (GUM) Saipan (SPN) Myanmar LAX Boston (BOS) Burbank (BUR) Charlotte (CLT) ONT XIY SNA PSP PHX ATL Yangon (RGN) Kathmandu (KTM) DFW Leipzig (LEJ) Munich (MUC) Muenster-Osnabrueck (FMO) Nepal SAN MXL BDA NKG Chicago (ORD) Dallas (DFW) Denver (DEN) HFE TIJ Nuremberg (NUE) Paderborn (PAD) Stuttgart (STR) PVG/SHA New Zealand Auckland (AKL) CTU HGH Detroit (DTW) Fort Lauderdale (FLL) Fort Myers (RSW) AUS CAI IAH Weeze (NRN) ITALY Bergamo (BGY) Christchurch (CHC) Queenstown (ZQN) Rarotonga MCO KHN WNZ Houston (IAH) Las Vegas (LAS) Los Angeles (LAX) TPA DIG Milan - Malpensa (MXP) Naples - Central KTM (RAR) Wellington (WLG) Busan (PUS) RSW FLL LJG South Korea Miami (MIA) Minneapolis (MSP) New York - JFK (JFK) MTY MIA Rail Station (INP) Rome (FCO) Venice - Mestre KMG Seoul - Gimpo (GMP) Seoul - Incheon (ICN) Thailand New York - La Guardia (LGA) Oakland (OAK) Ontario (ONT) CAN SJD Rail Station (XVY) LATVIA Riga (RIX) HKG Bangkok - Donmuang (DMK) Bangkok - Suvarnabhumi (BKK) Orlando (MCO) Palm Springs (PSP) Philadelphia (PHL) BJX CUN PVR GDL Lithuania Vilnius (VNO) Phoenix (PHX) Pittsburgh (PIT) Portland (PDX) Raleigh- GCM MBJ STT MEX Oslo (OSL) Rygge (RYG) SYX KIN SXM NORWAY Durham (RDU) Sacramento (SMF) Salt Lake City (SLC) HYD ANU PORTUGAL Lisboa (LIS) RGN San Diego (SAN) San Francisco (SFO) San Jose (SJC) GUA Chelyabinsk (CEK) SPN SAL UVF Russia DMK BKK GUM Santa Ana (SNA) Seattle (SEA) Tampa (TPA) Tulsa (TUL) BON BGI BLR CUR GND Krasnoyarsk (KJA) Washington - International (IAD) Washington - National (DCA) TAB CCS POS Moscow - Domodedovo (DME) COK PTY PMV Antigua & Barbuda Moscow - Sheremetyevo (SVO) LATIN AMERICA Moscow - Vnukovo (VKO) Novosibirsk (OVB) Antigua (ANU) Argentina Buenos Aires (EZE) Barbados BOG Rostov-on-Don (ROV) Barbados (BGI) Bermuda (UK TERRITORY) Bermuda (BDA) Simferopol (SIP) Sochi (AER) Brazil Belém (BEL) Campinas (CPQ) Fortaleza (FOR) Natal (NAT) UIO BEL St. Petersburg (LED) Vladivostok (VVO) SOUTH AFRICA Recife (REC) Rio de Janeiro - International (GIG) GYE FOR Cape Town (CPT) Durban (DUR) Johannesburg (JNB) Rio de Janeiro - Santos Dumont (SDU) Salvador (SSA) NAT SPAIN Madrid (MAD) SWEDEN São Paulo (GRU) Cayman Islands DAR REC Gothenburg (GOT) Malmo (MMX) Stockholm - (UK TERRITORY) Grand Cayman (GCM) LAD Arlanda (ARN) Stockholm - Skavska (NYO) Chile Antofagasta (ANF) Puerto SSA Switzerland Montt (PMC) Santiago de Chile (SCL) Zurich (ZRH) TANSANIA Colombia Santa Fe de Bogotá (BOG) Dar es Salaam (DAR) TURKEY Ecuador Guayaquil (GYE) Quito (UIO) Ankara (ESB) Antalya (AYT) El Salvador San Salvador (SAL) CPQ GIG Bodrum (BJV) Dalaman (DLM) Grenada Grenada (GND) Guatemala SDU GRU Istanbul - Kurtköy (SAW) Guatemala City (GUA) Jamaica Kingston (KIN) ANF ASU Istanbul - Sefaköy (IST) Izmir (ADB) Montego Bay (MBJ) Mexico Bajio (BJX) JNB UNITED KINGDOM Cancún (CUN) Guadalajara (GDL) Mexicali (MXL) RAR Belfast (BFS) Birmingham (BHX) DUR Mexico City (MEX) Monterrey (MTY) Blackpool (BLK) Bristol (BRS) Puerto Vallarta (PVR) San José del Cabo (SJD) SCL MVD Cardiff (CWL) Doncaster (DSA) CPT Tijuana (TIJ) Netherlands EZE Durham Tees Valley (MME) East Midlands (EMA) Edinburgh (EDI) Antilles Bonaire (BON) Curacao (CUR) AKL Glasgow (GLA) Humberside (HUY) Leeds/Bradford (LBA) St. Maarten (SXM) Panama Liverpool (LPL) London - Gatwick (LGW) London - Heathrow (LHR) Panama City (PTY) Paraguay PMC Luton (LTN) Manchester (MAN) Newcastle (NCL) WLG Asunción (ASU) St. Lucia St. Lucia (UVF) Norwich (NWI) Prestwick (PIK) Stansted (STN) Trinidad & Tobago Port of CHC

Spain (POS) Tobago (TAB) Uruguay ZQN Montevideo (MVD) Venezuela Caracas (CCS) Isla Margarita (PMV) Virgin Islands (US TERRITORY) St. Thomas (STT) the e-lift trucks Environmental Management can reduce fuel consumption, EnviroNmental Measuring performance to guarantee sustainable progress co and noise emissions 2 significantly. successes

Over the past 20 years, Best-practice examples of LSG Sky Chefs’ LSG Sky Chefs has developed Environmental Care include: what today is considered the REDUCTION OF in-flight service industry’s most Energy Emissions A combined heat and power unit in Frankfurt that enables the Development of an electric driving system for highloader ENERGY structured and expansive Customer Service Center to use the co-generation principle trucks that includes integrated components like an e-lifting REDUCTION approach to Environmental Care. and produce both electrical and thermal energy with natural mechanism for the truck’s cargo area. The e-lift trucks CONSUMPTION gas. Natural gas is less expensive and more eco-friendly can reduce fuel consumption, CO and noise emissions 2 OF WASTE PER SQM* than other fossil fuels (e.g. coal and oil). The thermal energy significantly. This project is further proof that economic * This approach permeates everything the company does to produced as a by-product in the generation of electrical efficiency and environmental protection do not have to be PER MEAL ensure wide-scale awareness and continuous improvement power is recovered and used for heating the building and the exclusive of each other. throughout its worldwide organization. water used in the dishwashing area of the unit.

LSG Sky Chefs’ Environmental Policy is the basis of its environmental activities and contains the mission, guidelines Waste Water/Energy/Chemicals and key elements of the Environmental Management System. The Zero-to-Landfill (ZLF) Rollout of a custom-designed software tool that measures 16% Ratified in 2008 by the Executive Board, it clearly states the project in the U.S. a dishwasher’s energy, water, chemical use and temperature. company’s commitment to preventing pollution, reducing its kicked off in 2014 with The software is able to capture data at 16 different points environmental footprint, improving its environmental performance the aim of diverting throughout the dishwashing cycle. If defined target values are and complying with any related regulations. This policy is 100 percent of the exceeded, the system sends an alert. Today, the system is used 25% prominently displayed in all Customer Service Centers (CSCs) recyclable waste from at the majority of LSG Sky Chefs’ facilities around the world. INCREASE OF around the globe and can be easily accessed by employees, previously designated REDUCTION OF customers and visitors alike. landfills at all of the 41 LSG Sky Chefs recycled In order to measure progress in environmental care, the company locations across the WATER USAGE has defined a set of stringent Key Performance Indicators (KPIs) country by 2015. The ZLF PER MEAL* for energy, water and waste. All wholly-owned LSG Sky Chefs program is the first of its kind in WASTE as percentage of total waste* CSCs worldwide collate this information on an annual basis. the region, enabling LSG Sky Chefs to substantially reduce its environmental impact through the implementation of new recycling methods, state-of-the-art equipment and comprehensive employee training. 30% 30% *Comparison 2013 vs. 2012

27 | 29 ...... LSG SKY CHEFS | annual review 2014 In the coming years, innovative products to LSG Sky Chefs will logistics and fulfillment. expand its market In the future, it will place proximity and commitment even more emphasis in order to meet on further improving its customers’ increasingly service quality, developing eclectic requirements new products and for tailored onboard concepts based on service programs and modern technology retail models. The and the acquisition of company is already comprehensive insight capable of covering about trends and the entire value chain, consumer needs in order from the development to fulfill its mission of and procurement of profitable growth. Consolidated Income Statement For the financial year 2014

2014 2014 2013

k € k € k € Group financial Revenue 2,633,307 2,513,846 Other operating income (including changes in inventories) 93,391 85,566

INFormation Total operating income 2,726,698 2,599,412

Cost of materials and services -1,156,448 -1,104,177

Staff costs -964,184 -926,651

Depreciation and amortization -64,740 -62,049

Other operating expenses -440,934 -401,719

Total operating expenses -2,626,306 -2,494,596

Operating result 100,392 104,816

Result from investments accounted for using the equity method 8,034 18,440

Interest result -17,573 -18,177

Other non-operating result -37,356 -18,945

Profit/Loss before income taxes 53,497 86,134

Income taxes -17,177 -29,194

Result after taxes 36,320 56,940

Result attributable to minority shareholders -18,649 -17,039

Result attributable to shareholder of LSG Lufthansa Service Holding AG 17,671 39,901

PAGE 32 | 33 ...... LSG SKY CHEFS | annual review 2014 Executive Board responsibilities Key Figures

Key Figures 2014 2013 2012 2011 2010 Erdmann Rauer Dr. Kristin Neumann Jochen Müller Chief Executive Officer Chief Financial Officer/Labor Director Chief Operating Officer Revenues (EUR m) 2,633 2,514 2,503 2,299 2,249

Operating result (EUR m) 1) 100 105 1012) 85 76 Corporate Communications/ Accounting, Controlling and Risk Management Operational Excellence Employees as of Dec. 31 32,843 32,307 30,088 29,586 28,499 Functions Marketing

Internal Audit Human Resources Product Engineering

Legal, Corporate Affairs Information and Process Management Company Data 2014 and Compliance Meals produced 578 million Marketing and Sales Mergers and Acquisitions Customer Service Centers 210 Airports served 214 Strategy and Business Procurement Development Countries 51 Companies comprised 159 Shared Service Center Customers more than 300 Treasury Corporate Headquarters Neu-Isenburg (Frankfurt), Germany

Regions, Onboard Retail Retail Markets (Ringeltaube) Asia Pacific Executive Board Erdmann Rauer, Chief Executive Officer Divisions Dr. Kristin Neumann, Chief Financial Officer and Programs SCORE Program Eastern Europe/ Jochen Müller, Chief Operating Officer Middle East/Africa Supervisory Board Simone Menne (Chairman), Prof. Dr. Ingrid Göpfert, Dr. Reinhold Huber, Dirk Reich, 3) 3) Europe Axel Tillman, Dr. Bettina Volkens, Gerold Schaub (Deputy), Frauke Bendokat , Mathias Kilzer 3), Paul Laslop 3), Michael Rüschenbaum 3), Christina Weber 3) Latin America Core business activities Catering In-flight Equipment Sourcing and Design North America In-flight Equipment Logistics Airport Services Air Security Adjacent market activities Retail Lounges Train Services Institutional Catering SPIRIANT

1 ) Result from operating activities minus book profits (and losses), write-backs of provisions, currency gains and losses on valuation at the balance sheet date of long-term financial liabilities, and other periodic expenses and income 2 ) 2012 numbers are restated due to a change in IFRS accounting standards in connection with employee benefits 3 ) Employee Representative

PAGE 34 | 35 ...... LSG SKY CHEFS | annual review 2014 we deliver the taste of the world to make your customers' day better. LSG Sky Chefs | Corporate Communications | Dornhofstraße 38 | 63263 Neu-Isenburg | Germany Phone +49 (0)6102 240-880 | Fax +49 (0)6102 240-885 | [email protected] | www.lsgskychefs.com