Carnival PLC

Annual Report

Year Ended November 30, 2022

The Carnival plc Annual Report comprises the Strategic Report, Carnival plc consolidated Group and

Company Financial Statements, the DLC Financial Statements and certain parts of the Proxy Statement,

including its Annexes (the “Proxy Statement”).

The Directors consider that, within the Carnival Corporation and Carnival plc dual listed company (

“

DLC

”

)

arrangement, the most appropriate presentation of Carnival plc’s results and financial position is by reference to

the Carnival Corporation & plc U.S. GAAP consolidated financial statements (

“

DLC Financial Statements

”

Accordingly, the DLC Financial Statements are included as part of the Carnival plc Annual Report.

Cautionary Note Concerning Factors That May Affect Future Results

Some of the statements, estimates or projections contained in this document are “forward-looking

statements”that involve risks, uncertainties and assumptions with respect to us, including some statements

concerning future results, operations, outlooks, plans, goals, reputation, cash flows, liquidity and other events

which have not yet occurred. These statements are intended to qualify for the safe harbors from liability

provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of

1934, as amended. All statements other than statements of historical facts are statements that could be

deemed forward-looking. These statements are based on current expectations, estimates, forecasts and

projections about our business and the industry in which we operate and the beliefs and assumptions of our

management. We have tried, whenever possible, to identify these statements by using words like “will,”

“may,” “could,” “should,” “would,” “believe,” “depends,” “expect,” “goal,” “aspiration,” “anticipate,”

“forecast,” “project,” “future,” “intend,” “plan,” “estimate,” “target,” “indicate,” “outlook,” and similar

expressions of future intent or the negative of such terms.

Forward-looking statements include those statements that relate to our outlook and financial position

including, but not limited to, statements regarding:

• Pricing

• Liquidity and credit ratings

• Booking levels

• Adjusted earnings per share

• Occupancy

• Adjusted EBITDA

• Interest, tax and fuel expenses

• Adjusted Net Income (Loss)

• Currency exchange rates

• Goodwill, ship and trademark fair values

• Estimates of ship depreciable lives and

residual values

Because forward-looking statements involve risks and uncertainties, there are many factors that could cause

our actual results, performance or achievements to differ materially from those expressed or implied in this

Strategic Report. This Strategic Report contains important cautionary statements and a discussion of the

known factors that we consider could materially affect the accuracy of our forward-looking statements

and adversely affect our business, results of operations and financial position. Additionally, many of these

risks and uncertainties are currently, and in the future may continue to be, amplified by our substantial debt

balance as a result of the pause of our guest cruise operations. It is not possible to predict or identify all

such risks. There may be additional risks that we consider immaterial or which are unknown.

Forward-looking statements should not be relied upon as a prediction of actual results. Subject to any

continuing obligations under applicable law or any relevant stock exchange rules, we expressly disclaim any

obligation to disseminate, after the date of this document, any updates or revisions to any such forward-

looking statements to reflect any change in expectations or events, conditions or circumstances on which

any such statements are based. Forward-looking and other statements in this document may also address our

sustainability progress, plans, and goals (including climate change- and environmental-related matters). In

addition, historical, current, and forward-looking sustainability- and climate-related statements may be based

on standards and tools for measuring progress that are still developing, internal controls and processes

that continue to evolve, and assumptions and predictions that are subject to change in the future and may

not be generally shared.

Strategic Report

The Directors consider that within the DLC arrangement, the most appropriate presentation of Carnival

plc’s business strategy is by reference to the consolidated strategy of Carnival Corporation & plc. Accordingly,

this Strategic Report presents the required strategy and business review for Carnival Corporation & plc in

order to satisfy reporting requirements of the Companies Act 2006.

CARNIVAL PLC ANNUAL REPORT

PAGE NO.

Strategic Report

Executive Overview

.....................................................

1. Business

...........................................................

A. Overview

........................................................

I. Summary

.......................................................

II. Mission (Purpose), Vision, Values and Priorities

...........................

B. Global Cruise Industry

...............................................

I. Overview

.......................................................

II. Passenger Capacity by Ocean Going Vessels

..............................

C. Our Global Cruise Business

...........................................

I. Segment Information

...............................................

II. Passengers Carried

................................................

III. Ships Under Contract for Construction

.................................

IV. Cruise Brands

...................................................

V. Principal Source Geographic Areas

.....................................

VI. Cruise Programs

.................................................

VII. Cruise Pricing and Payment Terms

....................................

VIII. Seasonality

...................................................

IX. Onboard and Other Revenues

........................................

X. Marketing Activities

...............................................

XI. Sales Channels

..................................................

XII. Human Capital Management and Employees

............................

XIII. Port Destinations and Private Islands

.................................

XIV. Ethics and Compliance

...........................................

XV. Sustainability and Environmental Impact

...............................

XVI. Information Technology

..........................................

XVII. Supply Chain

.................................................

XVIII. Insurance

...................................................

XIX. Governmental Regulations

........................................

XX. Taxation

......................................................

XXI. Trademarks and Other Intellectual Property

............................

XXII. Competition

..................................................

D. Website Access to Carnival Corporation & plc SEC Reports

.....................

E. Industry and Market Data

............................................

F. Properties

........................................................

G. Legal Proceedings

..................................................

H. Executive Officers and Corporate Governance

..............................

I. Dividends

........................................................

J. Repurchase Authorizations

............................................

2. Business Review

.....................................................

3. Internal Control and Risk Assessment

......................................

CARNIVAL PLC ANNUAL REPORT

PAGE NO.

4. Risk Management and/or Mitigation of Principal and Emerging Risks

...............

5. Going Concern Confirmation and Viability Statement

...........................

6. Non-Financial Information Statement

......................................

7. Section 172(1) Statement

...............................................

Carnival plc Financial Statements for the year ended November 30, 2022

Carnival plc Group Financial Statements

......................................

Carnival plc Parent Company Financial Statements

...............................

117

PricewaterhouseCoopers LLP Independent Auditors’ Report

........................

132

DLC Financial Statements and Other Information

DLC Financial Statements

................................................

142

Common Stock and Ordinary Shares

........................................

186

Stock Performance Graphs

................................................

187

Shareholder Benefit

.....................................................

189

Corporate and Other Information

...........................................

190

Proxy

Statement

Page No.

Other Information from the Proxy Statement

Carnival plc Directors’ Report

..............................................

A-1

Carnival plc Directors’ Remuneration Report – Part I

..............................

Carnival plc Directors’ Remuneration Report – Part II

.............................

B-1

Carnival plc Corporate Governance Report

.....................................

C-1

The Carnival plc Annual Report has been submitted to the National Storage Mechanism in European

Single Electronic Format (“ESEF”) and is available for inspection at

data.fca.org.uk/#/nsm/nationalstoragemechanism and will be included in the Annual Meeting materials

available to the Carnival plc shareholders. Only the Carnival plc Annual Report in ESEF is the official version

for the purposes of the ESEF Regulation. The Form 10-K is not set forth within this document but is

available for viewing at www.carnivalcorp.com or www.carnivalplc.com.

2022 Executive Overview

During 2022, we completed a monumental 18-month journey marking our full return to guest cruise

operations. Over the past 18 months we have:

• Returned 90 ships to service

• Re-boarded over 100,000 team members to our ships

• Restarted our unmatched portfolio of eight private island and port destinations

• Restarted our unrivaled land-based footprint in Alaska and the Yukon

• Welcomed back nearly nine million guests

Throughout 2022, we progressed on an upward trajectory as we continued to close the gap to 2019, our

most recent full year of guest cruise operations, and believe we are gaining momentum on our return to

profitability.

• For our cruise segments, revenue per passenger cruise day (“PCD”) for the fourth quarter of 2022

increased 0.5% compared to a strong 2019, overcoming the dilutive impact of future cruise credits

(“FCCs”) and fluctuations in foreign currency. This was better than the third quarter of 2022 which

decreased 4.1% compared to 2019.

• Occupancy in the fourth quarter of 2022 was 19 percentage points below 2019 levels, this was better

than the first quarter of 2022 which was 50 percentage points below 2019 levels. We achieved this on

growing capacity as we returned another 35% of our fleet to service in 2022, reaching 99% of our

2019 capacity levels during the fourth quarter.

• Revenue in the fourth quarter of 2022 was $3.8 billion, which was 80% of 2019 levels. This was

better than the third quarter of 2022 which was 66% of 2019 levels, an improvement of 14 percentage

points.

The uneven reopening of cruise travel around the world following the effects of COVID-19 and the impact

the invasion of Ukraine has had on European countries have had a material impact on our results of

operations. While all of our brands are on an upward trajectory, the pace of the recovery has trailed for

those brands most heavily exposed to these factors as the impacts have weighed on consumer confidence in

those regions resulting in greater uncertainty and closer-in booking patterns. To mitigate these impacts, we

have made strategic deployment decisions to increase our closer-to-home and shorter duration itineraries

to help reduce the friction of air travel, lower the overall cost of our vacations and facilitate a closer-in

booking environment. We believe these decisions have positioned us well to attract more new-to-cruise guests

and make us even more of a value proposition compared to land-based alternatives. Additionally, based on

the evolving nature of COVID-19 and our ongoing collaboration with local and national public health

authorities, our brands responsibly relaxed their COVID-19 related protocols aligning towards land-based

vacation alternatives and strengthening our competitiveness.

To help support our growth, drive overall revenue generation, elevate awareness and consideration and

enhance demand for both the near- and long-term, we have significantly increased our advertising activities,

including a nearly 20% increase in our investment during the fourth quarter of 2022 compared to the

fourth quarter of 2019. Our brands are utilizing pricing philosophies to maximize revenue and are sharing

best practices across brands. Having been in pause status for nearly two years, we are also rebuilding demand

by providing our guests with extraordinary cruise vacations, which we believe will increase the likelihood

of our guests recommending our cruise vacations. In addition, we have a renewed focus on our travel agent

partner relationships and a growing sales force. While building back demand and enhancing our revenue

management tools and strategies, we are working to optimize the combination of occupancy levels with

ticket and onboard prices to deliver revenue growth in the near-term while maintaining price integrity for

the long-term. We are also not losing sight of our expense base as we have worked through our restart and

continue to absorb and mitigate the impacts of the high inflationary environment we have all been living in.

During 2022, we continued to focus on minimizing our environmental impact and achieved a 2% reduction

in carbon intensity compared to 2019 (11% reduction for ships in guest cruise operations), a 30% reduction in

food waste compared to 2019 and used 290 million fewer single use items compared to 2018. We announced

the rollout of Service Power Packages, global fleet upgrades which will improve energy and fuel efficiency

and support our sustainability goals and announced the expansion of Air Lubrication Systems, which are

expected to generate savings in fuel consumption and reductions in carbon emissions. Additionally, AIDA

Cruises and Holland America Line achieved milestones in their decarbonization strategies piloting the use

of a blend of marine biofuel. These investments, along with the company’s fleet optimization and itinerary

Strategic Report

reviews, are expected to drive a 15% reduction in fuel consumption per ALBD in 2023, along with a 15%

reduction in carbon emissions per ALBD on an annualized basis, both as compared to 2019.

Our fleet optimization efforts included welcoming stunning new flagships for six of our brands including

Carnival Celebration

AIDAcosma

Costa Toscana

Discovery Princess

and

Arvia

, as well as our first luxury

expedition ship,

Seabourn Venture

. All of these ships were purpose-built to generate higher returns. In addition,

we announced the removal of additional ships from our fleet, bringing the cumulative number of smaller-less

efficient ships to be removed from our fleet since the pause to 26. Once completed, these efforts will result

in nearly a quarter of our fleet consisting of newly delivered, larger-more efficient ships. We also announced

Carnival Fun Italian Style™, a new concept for Carnival Cruise Line’s North American guests which will

debut in the spring of 2023 with

Costa Venezia

followed by

Costa Firenze

in the spring of 2024. Additionally

during 2022,

Costa Luminosa

was transferred to Carnival Cruise Line and began guest operations as

Carnival Luminosa

During 2022, we reduced our capital expenditures by over $500 million as compared to our previous

guidance. We have re-prioritized our expected spend to reflect the current environment, while maintaining

our commitment to seek excellence in compliance, environmental protection, and in looking after the safety,

health and well-being of every life we touch. In addition, we broke ground on a new exclusive destination

in Grand Bahama Port for our Carnival Cruise Line brand, which will be an important addition to our current

existing private islands and unique port destinations which had 6 million visits from our guests in 2022.

Going forward, we are committed to using our expected cash provided by operating activities to strengthen

the balance sheet over time and expect to be disciplined and rigorous in making newbuild decisions. We

have just four larger ships on order through 2025, plus our second Seabourn luxury expedition ship to be

delivered in 2023. This is our lowest order book in decades.

Overall, we remain focused on driving revenue growth and accelerating our return to strong profitability. We

believe that over time, this revenue generation and our more focused capital expenditure profile will

support significant free cash flow, and propel us on the path to deleveraging, investment grade credit ratings

and higher return on invested capital. This has been a truly remarkable year and we have come a long way

in an incredibly short amount of time. We look forward to continuing to deliver unforgettable happiness to

our guests by providing extraordinary cruise vacations in 2023, while honoring the integrity of every ocean we

sail, place we visit and life we touch.

Business.

Overview

Summary

Carnival Corporation was incorporated in Panama in 1974 and Carnival plc was incorporated in England

and Wales in 2000. Carnival Corporation and Carnival plc operate a dual listed company (“DLC”), whereby

the businesses of Carnival Corporation and Carnival plc are combined through a number of contracts and

through provisions in Carnival Corporation’s Articles of Incorporation and By-Laws and Carnival plc’s

Articles of Association. The two companies operate as if they are a single economic enterprise with a

single executive management team and identical Boards of Directors, but each has retained its separate

legal identity. Carnival Corporation and Carnival plc are both public companies with separate stock exchange

listings and their own shareholders. Together with their consolidated subsidiaries, Carnival Corporation

and Carnival plc are referred to collectively in this Strategic Report as “Carnival Corporation & plc,”

“company,” “our,” “us” and “we.” We are the largest global cruise company and among the largest leisure

travel companies with a portfolio of world-class cruise lines. With operations in North America, Australia,

Europe and Asia, our portfolio features — AIDA Cruises, Carnival Cruise Line, Costa Cruises, Cunard,

Holland America Line, Princess Cruises, P&O Cruises (Australia), P&O Cruises (UK) and Seabourn.

II.

Mission (Purpose), Vision, Values and Priorities

Mission (Purpose)

To deliver unforgettable happiness to our guests by providing extraordinary cruise vacations, while honoring

the integrity of every ocean we sail, place we visit and life we touch.

Vision

As the global leader in the cruise industry, we will lead the way in innovative and sustainable cruising to

deliver memorable vacations and build borderless connections.

Culture Essentials (our Core Values)

•

Speak Up

— Our voice is our strength. Every one of us, regardless of level or role, speaks up when

we have questions, comments, concerns, or new ideas. If we see something wrong or that doesn’t seem

right, we say something and trust our voices will be heard without fear of retaliation.

•

Respect & Protect

— The health, safety and well-being of our people and the planet are vital. We

choose to take decisive actions to respect and protect every life we touch, the places we sail and the

laws that govern us.

•

Empower

— We and our team members have the time, tools and support we need to do our best

work. We’re empowered to take personal ownership and accountability to succeed, and we take pride

in our work.

•

Improve

— Our business is built on forward motion. We have the courage to dream big, driving

innovation and continuous improvement in guest and team member experiences, operations,

compliance, sustainability and beyond.

•

Listen & Learn

— We listen actively and seek to understand before responding, because the more

perspectives we have, the better decisions we make. We value and respect the words and ideas of others,

keeping an open mind, and learning from our successes and failures.

•

Communicate

— We openly share our knowledge, skills and information across brands, functions

and the entire company to further our collective success. Together we champion our mission, vision,

values and company priorities.

Priorities

Ensure each of our world-class brands owns its space in the vacation market by delivering extraordinary

experiences tailored to its guests.

We understand vacation expectations and preferences vary widely among our diverse audience of potential

guests. To fulfill our mission, and in the process achieve outstanding guest satisfaction levels, industry-leading

demand and greatly improved pricing, each of our brands must carve out a distinct identity for delivering

cruise experiences. Our brands must effectively market their uniqueness to existing and potential guests and

deliver on their promise across the entire guest journey.

Become travel and leisure’s employer of choice.

We celebrate our diverse team of over 160,000 team members representing approximately 150 countries and

are committed to providing a welcoming and inclusive environment where people from different

backgrounds, experiences and walks of life can succeed. We care deeply for our team members and must

always cultivate an atmosphere of openness, respect and trust. We know our team members are at the heart

of inspiring unforgettable happiness, so we strive to be the world’s number-one choice for hospitality,

travel and leisure careers.

Maintain our commitment to seek excellence in compliance, environmental protection and in looking after the

safety, health and well-being of every life we touch.

Achieving our mission depends on being good corporate citizens and stewards of the environment.

Safeguarding the planet we call home, our guests, the communities we serve, and our Carnival family, and

complying with the laws and regulations that govern our business, is vital to our success.

Set the pace with the industry’s smartest solutions that deliver on our sustainability roadmap to 2030.

Our earth, ecosystem and environment mean everything to us. Without the incredible communities and

scenic spaces we operate in, our mission of inspiring unforgettable happiness would be impossible. We’re

determined to lead the way in sustainable cruising by promoting positive climate action, contributing to a

circular economy, partnering with the communities we sail to and from and reducing our carbon footprint.

To do this, we are investing in technology upgrades and fleet improvements, piloting alternative fuel types,

Strategic Report

optimizing itineraries and cultivating a workforce that mirrors the diversity of the communities we encounter

along the way.

Strengthen our balance sheet and deliver long-term shareholder value.

In recent years, travel and leisure has endured volatility unlike anything seen in modern history, including

unique obstacles that disproportionally affected the cruise industry. With our operations now approaching

full strength and the continued support of our guests, team members, investors and other stakeholders, we are

focused on our financial fitness. We’re determined to drive revenue, operate effectively and efficiently at

scale, generate record levels of cash from operations and invest our capital wisely. We believe this will allow

us to responsibly reduce our debt over time and return to strong profitability and investment-grade credit

ratings.

Global Cruise Industry

Overview

In the face of the global impact of COVID-19, we paused our guest cruise operations in March 2020 and

began resuming guest cruise operations in 2021. As of November 30, 2022, 97% of our capacity is currently

serving guests.

We believe cruising offers a broad range of products and services to suit vacationing guests of many ages,

backgrounds and interests. Each brand in our portfolio meets the needs of a unique set of consumer

psychographics and vacation needs which allows us to penetrate large addressable customer segments. The

mobility of cruise ships enables us to move our vessels between regions in order to meet changing demand

across different geographic areas.

Cruise brands can be broadly classified as offering contemporary, premium and luxury cruise experiences.

The contemporary experience has a more casual ambiance and historically includes cruises that last seven

days or less. The premium experience emphasizes quality, comfort, style and more destination-focused

itineraries and appeals to those who are more affluent. The premium experience generally includes cruises

that last from seven to 14 days. The luxury experience is usually characterized by very high standards of

accommodation and service, smaller vessel size and exotic itineraries to ports that are inaccessible by larger

ships. We have product and service offerings in each of these three broad classifications.

II.

Passenger Capacity by Ocean Going Vessels

Passenger Capacity as of

December 31 (a) (b)

Calendar Year

Global Cruise

Industry (c)

Carnival

Corporation & plc

2019

..............................................

589,820

254,010

2020

..............................................

607,500

246,450

2021

..............................................

636,270

253,950

2022

..............................................

663,970

259,060

2023

..............................................

701,490

263,730

2024

..............................................

729,820

268,050

2025

..............................................

764,440

272,360

(a)

Includes ships which have resumed guest cruise operations and ships expected to resume guest cruise

operations. 2023-2025 excludes four ships which will be removed from our fleet. 2023-2025 data is

estimated based on announced newbuilds and ship retirements and does not include an estimate for

unannounced ship retirements.

(b)

In accordance with cruise industry practice, passenger capacity is calculated based on the assumption

of two passengers per cabin even though some cabins can accommodate three or more passengers.

(c)

Global cruise industry data was obtained from Cruise Industry News.

Our Global Cruise Business

Segment Information

Ships in Service or Expected to Return to Service as of

November 30, 2022 (a)

Passenger

Capacity

Percentage of

Total Capacity

Number of

Cruise Ships

North America and Australia (“NAA”) Segment

Carnival Cruise Line

.....................

75,530 (b)

30%

Princess Cruises

........................

46,280

Holland America Line

....................

22,920

P&O Cruises (Australia)

...................

7,230

Seabourn

.............................

2,840

154,800

Europe and Asia (“EA”) Segment

Costa Cruises (“Costa”)

...................

39,580 (b) (c)

AIDA Cruises (“AIDA”)

..................

33,540 (d)

P&O Cruises (UK)

......................

19,020

Cunard

..............................

6,820

98,960

253,760

100%

(a)

As of January 12, 2023, includes three Costa ships, with a passenger capacity of 10,880, which are not

in guest cruise operations and are expected to return to service.

(b)

Costa Venezia

with a passenger capacity of 4,200 and

Costa Firenze

with a passenger capacity of 4,240

will be transferred to Carnival Cruise Line in 2023 and 2024, respectively.

(c)

Excludes

Costa Magica,

with a passenger capacity of 2,700, which was previously expected to transfer

to Carnival Cruise Line and will not resume guest cruise operations. Includes

Costa Fortuna

, with a

passenger capacity of 2,700, which is expected to stop guest cruise operations in April 2023.

(d)

Excludes

AIDAvita

, with a passenger capacity of 1,270, which will not resume guest cruise operations.

Includes

AIDAaura

, with a passenger capacity of 1,270, which is expected to stop guest cruise operations

in September 2023.

We also have a Cruise Support segment that includes our portfolio of leading port destinations and other

services, all of which are operated for the benefit of our cruise brands.

In addition to our cruise operations, we own Holland America Princess Alaska Tours, the leading tour

company in Alaska and the Canadian Yukon, which complements our Alaska cruise operations. Our tour

company owns and operates hotels, lodges, glass-domed railcars and motorcoaches which comprise our Tour

and Other segment.

II.

Passengers Carried

In 2022, we carried 7.7 million passengers, consisting of 5.6 million carried by our NAA segment and

2.1 million carried by our EA segment, which was lower than our historical levels as a result of the pause

and subsequent resumption of our guest cruise operations. In 2019, our most recent full year of guest cruise

operations, our brands carried 12.9 million passengers, 8.6 million carried by our NAA segment and

4.2 million carried by our EA segment.

Strategic Report

III.

Ships Under Contract for Construction

As of November 30, 2022, we have a total of 6 cruise ships expected to be delivered through 2025. Our ship

construction contracts are with Fincantieri and MARIOTTI in Italy and Meyer Werft in Germany.

Expected

Delivery Date

Passenger Capacity

Lower Berth

Carnival Cruise Line

Carnival Jubilee

(a)

................................

December 2023

5,370

Princess Cruises

Sun Princess

(a)

..................................

January 2024

4,320

Newbuild (a)

....................................

July 2025

4,320

Seabourn

Seabourn Pursuit

.................................

July 2023

260

P&O Cruises (UK)

Arvia

(a)

.......................................

December 2022

5,290

Cunard

Queen Anne

.....................................

April 2024

3,000

(a)

IV.

Cruise Brands

Carnival Cruise Line is “The World’s Most Popular Cruise Line

” and has provided multi-generational

family entertainment at exceptional value to its guests for 50 years. Carnival Cruise Line creates an environment

where guests can be their most playful selves on ships that are designed to inspire the experience of bringing

people together, with limitless opportunities for guests to create their own fun. Carnival Cruise Line is

teaming up with Costa Cruises to create a new concept for Carnival’s North American guests when Carnival

Fun Italian Style™ debuts in the spring of 2023. Carnival Fun Italian Style™ will marry the great service,

food and entertainment that Carnival’s guests enjoy with Costa’s Italian design features.

For over 55 years, Princess has sailed the world connecting guests to what matters most — the people they

love, the people they meet and the destinations they visit. Princess delivers effortless, personalized cruising

thanks to the Princess Medallion, a revolutionary wearable that anticipates guests’needs, wants and

desires so guests can enjoy more of what they love.

Holland America Line has been exploring the world for 150 years and was the first cruise line to offer

adventures in Alaska and Yukon. Its fleet offers an ideal mid-sized ship experience. Holland America Line’s

ships feature a diverse range of enriching experiences focused on destination exploration and personalized

travel. Live music at sea fills each evening at Music Walk, and dining venues feature exclusive selections from

a Culinary Council of world-famous chefs.

For 90 years, P&O Cruises (Australia) has taken Australians & New Zealanders on dream holidays to the

most incredible destinations along the Australian coast as well as the idyllic South Pacific. The home-grown

cruise line delivers a holiday with great entertainment, world-class dining and unforgettable onboard

experiences. Delivered in the Aussie way, guests can choose to do everything, or nothing at all, with P&O

Cruises (Australia).

Strategic Report

Seabourn, the most modern luxury fleet at sea, sails to legendary cities and less-traveled ports. Its smaller,

more intimate ships allow guests to discover the unexpected — about the world and about themselves. Guests

enjoy ocean-front suites and epicurean dining is theirs on demand. With nearly one team member for every

guest, its guests make meaningful connections. With Seabourn, they go further, deeper and experience luxury

in action. On a voyage so seamless, so all-inclusive and so far beyond compare, guests never want it to end.

For more than 70 years, Costa’s ships have sailed the seas of the world, offering a diverse choice of cruise

holidays. Costa primarily serves guests from Continental Europe, enriching them through the exploration of

the most beautiful destinations on five continents. Costa brings a modern Italian lifestyle to its ships and

provides guests with a true European experience that embodies a uniquely Italian passion for life through

warm hospitality, entertainment and gastronomy, that makes Costa different from any other cruise experience.

AIDA is the leading and most recognized brand in the German cruise market. AIDA delivers unique travel

experiences with modern comfort, where guests of all ages feel at home and enjoy consistently excellent service

accompanied by the AIDA smile. Guests across generations enjoy the German-inspired modern premium

lifestyle cruise experience with a wide variety of culinary delights, first-class entertainment, unforgettable

shore excursions, numerous sports activities, and spacious wellness areas to relax.

P&O Cruises (UK) is Britain’s biggest cruise line, welcoming guests to extraordinary travel experiences

designed in a distinctively British way — through a blend of discovery, relaxation and exceptional service

catered towards British tastes. P&O Cruises (UK)’s fleet of premium ships deliver authentic travel experiences

around the globe, combining style, quality and innovation with a sense of occasion and attention to detail,

to create a truly memorable holiday.

For over 180 years, the iconic Cunard fleet has perfected the timeless art of luxury ocean travel. While

onboard, Cunard guests experience unique signature moments, from Cunard’s white gloved afternoon tea

service to spectacular gala evening balls to its renowned Insights Speaker program. Guest expectations are

exceeded through Cunard’s exemplary White Star Service

. From the moment a guest steps onboard, every

detail of their voyage is curated to ensure they feel special and are inspired by unique events. Onboard

Cunard, guests are free to do as much or as little as they please.

Principal Source Geographic Areas

Carnival Corporation & plc

Cruise Guests Carried

(in thousands)

2022

2021

2019

Brands Mainly Serving

United States and Canada

5,140

660

7,170

Carnival Cruise Line, Princess Cruises,

Holland America Line, Seabourn and

Cunard

Continental Europe

.......

1,610

390

2,590

Costa and AIDA

United Kingdom

.........

660

170

780

P&O Cruises (UK) and Cunard

Australia and New Zealand . .

230

920

Carnival Cruise Line, Princess Cruises and

P&O Cruises (Australia)

Asia

..................

—

1,110

Princess Cruises and Costa

Other

.................

300

Total

.................

7,730

1,220

12,870

As a result of the resumption of guest cruise operations, data for 2022 and 2021 is not representative of a

full year of operations. Due to the pause of our guest cruise operations, data for 2020 is not meaningful and

is not included in the table. We have provided 2019 data as it is our most recent full year of guest cruise

operations.

VI.

Cruise Programs

Carnival Corporation & plc

Percentage of Passenger Capacity by Itinerary

2022

2021

2019

Caribbean

..............................

34%

32%

Europe without Mediterranean

...............

Mediterranean

...........................

Alaska

................................

Australia and New Zealand

..................

—

China

.................................

—

Other

.................................

100%

Due to the resumption of guest cruise operations, data for 2022 and 2021 is not representative of a full year

of operations. Due to the pause of our guest cruise operations, data for 2020 is not meaningful and is not

included in the table. We have provided 2019 data as it is our most recent full year of guest cruise operations.

VII.

Cruise Pricing and Payment Terms

Each of our cruise brands publishes prices for the upcoming seasons primarily through the internet,

although published materials such as direct mailings are also used. Our brands have multiple pricing levels

that vary by source market, category of guest accommodation, ship, season, duration and itinerary. Cruise

prices frequently change in a dynamic pricing environment and are impacted by a number of factors,

including the number of available cabins for sale in the marketplace and the level of guest demand. We offer

a variety of special promotions, including early booking, past guest recognition and travel agent programs.

Our bookings are generally taken several months in advance of the cruise departure date. Generally, the longer

the cruise itinerary the further in advance the bookings are made. This lead time allows us to manage our

prices in relation to demand for available cabins through the use of advanced revenue management capabilities

and other initiatives.

Strategic Report

The cruise ticket price typically includes the following:

• Accommodations

• Most meals, including snacks at numerous venues

• Access to amenities such as swimming pools, water slides, water parks, whirlpools, a health club, and

sun decks

• Child care and supervised youth programs

• Entertainment, such as theatrical and comedy shows, live music and nightclubs

• Visits to multiple destinations

We offer value added packages to induce ticket sales to guests and groups and to encourage advance

purchase of certain onboard items. These packages are bundled with cruise tickets and sold to guests for a

single price rather than as a separate package and may include one or more of the following:

• Beverage packages

• Internet packages

• Shore excursions

• Photo packages

• Air packages

• Onboard spending credits

• Specialty restaurants

• Service charges

Our brands’payment terms generally require that a guest pay a deposit to confirm their reservation and

then pay the balance due before the departure date.

VIII.

Seasonality

Our passenger ticket revenues are seasonal. Historically, demand for cruises has been greatest during our

third quarter, which includes the Northern Hemisphere summer months. This higher demand during the third

quarter typically results in higher ticket prices and occupancy levels and, accordingly, the largest share of

our operating income is typically earned during this period. This historical trend was disrupted in 2020 by the

pause and in 2021 and 2022 by the subsequent resumption of our guest cruise operations. In addition,

substantially all of Holland America Princess Alaska Tours’revenue and net income (loss) is generated from

May through September in conjunction with Alaska’s cruise season.

IX.

Onboard and Other Revenues

Onboard and other activities are provided either directly by us or by independent concessionaires, from

which we receive either a percentage of their revenues or a fee. Concession revenues do not have direct

expenses because the costs and services incurred for concession revenues are borne by our concessionaires.

In 2022, we earned 42% of our cruise revenues from onboard and other revenue goods and services including:

• Beverage sales

• Internet and communication services

• Casino gaming

• Full service spas

• Shore excursions

• Specialty restaurants

• Retail sales

• Art sales

• Photo sales

• Laundry and dry cleaning services

In 2019, our most recent full year of guest cruise operations, we earned 30% of our cruise revenues from

onboard and other revenues.

Marketing Activities

Guest feedback and research support the development of our overall marketing and business strategies to

drive demand for cruises and increase the number of first-time cruisers. Our goal has always been to increase

consumer awareness for cruise vacations and further grow our share of their vacation spend. We measure

and evaluate key drivers of guest loyalty and their satisfaction with our products and services that provide

valuable insights about guests’cruise experiences. We closely monitor our net promoter scores, which reflect

the likelihood that our guests will recommend our brands’ cruise products and services to friends and

family, including those new-to-cruise.

During 2022, in connection with the resumption of guest cruise operations, we increased our marketing and

advertising programs after significantly reducing both during 2020 and 2021. Our brands have comprehensive

marketing and advertising programs across diverse mediums to promote their products and services to

vacationers and our travel agent partners. Each brand’s marketing activities have generally been designed to

reach a local region in the local language. We are focused on driving further brand differentiation and

clarity around each of our brand’s optimal target segments, ensuring that our creative marketing speaks to

each brand’s target audience and launching more effective digital performance marketing and lead generation

approaches. Our marketing efforts historically have allowed us to attract new guests online by leveraging

the reach and impact of digital marketing and social media. Over time, we have invested in new marketing

technologies to deliver more engaging and personalized communications. This has helped us cultivate guests

as advocates of our brands, ships, itineraries and onboard products and services.

Substantially all of our cruise brands offer past guest recognition programs that reward repeat guests with

special incentives such as reduced fares, gifts, onboard activity discounts, complimentary laundry and internet

services, expedited ship embarkation and disembarkation and special onboard activities.

XI.

Sales Channels

We sell our cruises through travel agents, tour operators, company vacation planners and our websites. Our

individual cruise brands’relationships with their travel agent partners are generally independent of each of

our other brands. Our travel agents relationships are generally not exclusive and travel agents generally

receive a base commission, plus the potential of additional commissions, including discounts or

complimentary tour conductor cabins, based on the achievement of pre-defined sales volumes.

Travel agent partners are an integral part of our long-term cruise distribution network and are critical to

our success. We utilize local sales teams to motivate travel agents to support our products and services with

competitive pricing, promotional policies and joint marketing and advertising programs. During 2022, no

group of travel agencies under common control accounted for 10% or more of our revenues. We also

employ a wide variety of educational programs, including websites, seminars and videos, to train agents on

our cruise brands and their products and services. In 2022, we held a variety of virtual and in-person trainings

and educational programs to continue to support and develop our travel agent partners, including ship

visits to familiarize our travel agent partners with our enhanced health and safety protocols.

All of our brands have internet booking engines to allow travel agents to book our cruises. Additionally, all

of our cruise brands have their own consumer websites that provide access to information about their products

and services to users and enable their guests to quickly and easily book cruises and other products and

services online. These sites interface with our brands’social networks, blogs and other social media sites,

which allow them to develop greater contact and interaction with their guests before, during and after their

cruise. We also employ vacation planners who support our sales initiatives by offering our guests one-on-one

cruise planning expertise and other services.

XII.

Human Capital Management and Employees

Our shipboard and shoreside employees are sourced from approximately 150 countries. In connection with

our resumption of guest cruise operations in 2022, we increased the number of employees onboard our ships

from the reduced levels during 2021 and 2020. In 2022, we had an average of 75,000 employees onboard

our ships, excluding employees on leave. Our shoreside operations had an annual average of 10,000 full-time

and 2,000 part-time/seasonal employees. In 2019, our most recent full year of guest cruise operations, we

had an average of 92,000 employees on our ships, excluding employees on leave and our shoreside operations

had an annual average of 12,000 full-time and 2,000 part-time/seasonal employees. Holland America

Princess Alaska Tours significantly increases its work force during the late spring and summer months in

connection with Alaska’s cruise season.

Strategic Report

Gender Diversity

Approximate Average for 2022 (a)

Female

Male

Shoreside Employees

...................................

7,000

5,000

Shipboard Employees

..................................

13,000

62,000

Total Employees

......................................

20,000

67,000

As of November 30, 2022

Female

Male

Boards of Directors

....................................

Non-Director Senior Management and Company Secretary

........

Non-Director Senior Management and Company Secretary Direct

Reports

...........................................

(a)

These amounts are approximations and at times, fluctuate significantly due to the seasonality of our

business.

We have entered into agreements with unions covering certain employees on our ships and in our shoreside

hotel and transportation operations. The percentages of our shipboard and shoreside employees that are

represented by collective bargaining agreements are 55% and 24%, respectively. We consider our employee

and union relationships to be strong.

A team of highly motivated and engaged employees is key to providing extraordinary cruise vacations. To

facilitate the recruitment, development and retention of our valuable employees, we strive to make Carnival

Corporation & plc a diverse, inclusive and safe workplace, with opportunities for our employees to grow

and develop in their careers.

Talent Development

We believe in the investment in our team members through the training and development of both shoreside

and shipboard employees. We leverage a combination of virtual and in-person training to ensure that our

teams are well-prepared to carry out their individual and collective responsibilities.

For our shipboard employees, our goal is to be a leader in delivering high quality professional maritime

training, as evidenced by the Arison Maritime Center. The Center is home to the Center for Simulator

Maritime Training (“CSMART”). The leading-edge CSMART Academy features the most advanced bridge

and engine room simulator technology and equipment available, with the capacity to provide annual

professional training for all our bridge, engineering and environmental officers. CSMART participants

receive a maritime training experience that fosters advanced knowledge and skills development, critical

thinking and problem solving; all in a professional learning environment where our corporate culture is

reinforced. CSMART also offers training related to liquefied natural gas (“LNG”) technology as well as an

environmental officer training program and additional environmental courses for bridge and engineering

officers to further enhance our training on environmental awareness and protection.

Succession Planning

Our Boards of Directors believe that planning for succession is an important function. Our multi-brand

structure enhances our succession planning process. At the corporate level, a highly-skilled management team

oversees a collection of cruise brands. We continually strive to foster the professional development of

management and team members in other critical roles. As a result, we have developed a very experienced

and strong group of leaders, with their performance subject to ongoing monitoring and evaluation, as

potential successors to all of our executive positions, including our CEO.

In August 2022, Josh Weinstein, previously our Chief Operations Officer, was appointed President, CEO

and Chief Climate Officer. Josh Weinstein has a long history of success in critical senior-level roles for our

company. In his most recent assignment for the past two years as Chief Operations Officer he oversaw all

major operational functions including global maritime, global ports and destinations, global sourcing,

global IT and global auditing. During this time, he also oversaw Carnival UK, the operating company for

P&O Cruises (UK) and Cunard, which he previously managed directly for three years as president. Prior to

his role with Carnival UK, he was our company’s treasurer for 10 years.

XIII.

Port Destinations and Private Islands

We operate a portfolio of port destinations and private islands enabling us to offer exceptional guest

experiences by creating a wide variety of high quality destinations around the world that are uniquely tailored

to our guests’preferences. In addition, to secure preferential berth access to third-party ports, we enter

into berthing agreements and commitments.

In May 2022, Carnival Cruise Line broke ground on its new Carnival Grand Bahama cruise port destination,

expected to open in 2025 and located on the south side of Grand Bahama Island. The new cruise port

development will include a pier able to accommodate up to two of our largest ships simultaneously,

welcoming guests to a stunning beach and further expanding our experience offerings for our guests.

Additionally, our investment in this cruise port destination will support our efforts to design more energy

efficient itineraries based on its strategic location. Carnival Grand Bahama will be an important addition to

our current portfolio of six corporate operated ports and destinations in the Caribbean:

• Puerta Maya in Cozumel, Mexico

• Grand Turk Cruise Center in Turks & Caicos

• Mahogany Bay in Isla Roatan, Honduras

• Amber Cove in the Dominican Republic

• Half Moon Cay, a private island in The Bahamas

• Princess Cay, a private island in The Bahamas

XIV.

Ethics and Compliance

We believe a strong ethics and compliance culture is imperative for the success of any company. Our

compliance framework includes a Global Ethics and Compliance (“GE&C”) department, which is led by

our Chief Risk and Compliance Officer who leads the effort to promote and monitor a strong ethics and

compliance culture throughout the company. The main responsibilities of the GE&C department are to

collaboratively:

• Identify, assess, monitor, prevent, detect and report on compliance risk

• Ensure compliance accountabilities and responsibilities are clear across the company

• Promote a strong culture of ethics and compliance

• Drive ethics and compliance continuous improvements

To further heighten the focus on ethics and compliance, our Boards of Directors have Compliance

Committees, which oversee the GE&C department and maintain regular communications with our Chief

Risk and Compliance Officer. Refer to Item 3. Internal Control and Risk Assessment on page 50 for additional

details.

XV.

Sustainability and Environmental Impact

We strive to be a company that people want to work for and to be an exemplary global corporate citizen.

Our commitment and actions to keep our guests and crew members safe and well, protect the environment,

develop and provide opportunities for our workforce, strengthen stakeholder relations and enhance both

the communities where we work as well as the port communities that our ships visit, are reflective of our

brands’ core values and vital to our success.

In 2021, we established goals for 2030 which incorporate six key focus areas listed below that align with

elements of the United Nation’s Sustainable Development Goals and build on the momentum of our

successful achievement of our 2020 sustainability goals.

Strategic Report

Sustainability Goals Progress

The tables below represent our progress on each of our six key focus areas:

2030 Climate Action Goals

Status (a)

Our Progress

Achieve 20% carbon intensity reduction

relative to our 2019 baseline measured in

both grams of CO

e per ALB-km and

kilograms of CO

e per ALBD

On Track

Achieved 2% carbon intensity reduction on

an ALB-km basis and 4% on an ALBD

basis. For ships in guest cruise operations,

achieved 11% carbon intensity reduction on

an ALB-km basis and 13% on an ALBD

basis

Reduce absolute particulate matter air

emissions by 50% relative to our 2015

baseline

Achieved

Increase fleet shore power connection

capability to 60% of the fleet

On Track

57% of the fleet has shore power connection

capability

Expand our LNG program

On Track

Seven LNG ships across the fleet

Optimize the reach and performance of our

Advanced Air Quality System program

On Track

93% of the fleet has Advanced Air Quality

Systems installed (b)

Expand battery, fuel cell and biofuel

capabilities

Ongoing

Piloted the use of biofuels as a replacement

for fossil fuel on two ships

Reduce Scope 3 (indirect) emissions

associated with food procurement and waste

management

Ongoing

Completed an inventory of our Scope 3

emissions. Following the Greenhouse Gas

Protocol, we estimate that our Scope 3

emissions represent approximately half of

our total emissions

Identify carbon offset options only when

energy efficiency options have been

exhausted

Ongoing

Continuing to monitor the carbon offset

market and options, as well as exploring

carbon capture and storage opportunities

2030 Circular Economy Goals

Status (a)

Our Progress

Achieve 50% single-use plastic item

reduction in 2021

Achieved

Achieve 30% unit food waste reduction by

2022 and 50% unit food waste reduction by

2030

• 2022 goal

achieved

• 2030 goal

on track

• Established interim goal to achieve 40%

unit food waste reduction by 2025

Increase Advanced Waste Water Treatment

System coverage to >75% of our fleet

capacity

On Track

Achieved 64% coverage of fleet capacity

Send a larger percentage of waste to

waste-to-energy facilities where practical

Ongoing

Completed a baseline of our waste

programs in the U.S.

Partner with primary vendors to reduce

upstream packaging volumes

Ongoing

Completed a packaging reduction pilot

program with our primary engine supplier

and achieved a reduction of approximately

44%

2030 Good Health and Well-Being Goals

Status (a)

Our Progress

Committed to continued job creation

Ongoing

• Increased the number of employees on

board our ships from the reduced levels

during the pause in guest cruise

operations

• Opened and filled a significant number of

shoreside positions

Establish measurable Company Culture

metrics and set annual improvement targets

Ongoing

Established Company Culture metrics with

semi-annual Culture surveys and are in the

process of establishing improvement targets

Implement global well-being standards by

2023

Ongoing

• Continued to work with authorities to

arrange for COVID-19 vaccinations and

boosters for our crew members, many of

whom may not have had access to

vaccines

• Maintained and evolved onboard public

health protocols to reflect the changing

nature of the pandemic while protecting

our guests and crew members responsibly

Reduce the number of guest and crew

work-related injuries

Ongoing

Continued to implement initiatives to

prevent guest and crew injuries

2030 Sustainable Tourism Goals

Status (a)

Our Progress

Animal Welfare – responsible sourcing

• Achieve 100% cage free eggs by the end of

2025.

• Achieve 100% responsible chicken

sourcing by the end of 2025

• Achieve 100% gestation crate-free pork by

the end of 2025

On Track

Continued to work with our supply chain

and met our glidepath targets for FY2022 –

achieved 58% cage free eggs, 25%

responsible chicken and 29% gestation

crate-free pork purchases

Establish partnerships with destinations

focused on sustainable economic

development, preservation of local

traditions, and capacity management

Ongoing

• Broke ground on a new cruise port

destination on Grand Bahama Island,

which is expected to open in 2025. The

new port will provide business

opportunities for the residents of Grand

Bahama with an estimated 1,000 local

jobs

• Working with ports of Miami, Galveston,

Barcelona, Savona and Genoa to support

their shore power development efforts

• Joined the Alaska Green Corridor

partnership to explore methods to

accelerate the reduction of greenhouse gas

emissions

• Costa Cruises continued with the

“Traditions in the Future” project which

supports the preservation of traditional

arts and crafts to a new generation of

artisans

Strategic Report

2030 Sustainable Tourism Goals

Status (a)

Our Progress

Continue to support disaster resilience,

relief, and recovery efforts

Ongoing

• Provided temporary housing for 1,500

Ukrainian refugees on a Holland America

Line ship for five months

• Launched brand specific projects and

provided overall support to our Ukrainian

crew members and their families

Build stronger community relationships in

our employment bases and destinations via

employee volunteering programs

Ongoing

Conducted multiple costal cleanups

involving shipboard- and shoreside

employees and partners in various locations

around the world

2030 Biodiversity and Conservation Goals

Status (a)

Our Progress

Support biodiversity and conservation

initiatives through select NGO partnerships

Ongoing

Continued working with the Ocean 100

Dialogues to support ocean stewardship

with a focus on climate change and

biodiversity

Conduct audits and monitor animal

encounter excursions regularly

Ongoing

Published Animal Welfare Statement for

Excursions & Experiences on our website

2030 Diversity, Equity and Inclusion Goals

Status (a)

Our Progress

Ensure our overall shipboard and shoreside

employee base reflects the diversity of the

world

Ongoing

Continued to employ shipboard crew

members from approximately 150 countries

around the world

Expand shipboard and shoreside diversity,

equity, and inclusion across all ranks and

departments

Ongoing

• Half of the global direct reports to our

CEO are women

• Named as one of the World’s Top

Female-Friendly Companies by Forbes

• Named as one of the World’s Best

Employers by Forbes Recognized as one

of America’s Best Employers for Diversity

by Forbes Named among Best Companies

for Latinos to Work by Latino Leaders

Magazine

• Earned a perfect score of 100 from the

Human Rights Campaign (HRC) and

designation as one of the Best Places to

Work for LGBTQ+ equality

(a)

On Track — Quantifiable/numerical goals that are showing a positive trend towards achieving the goal.

Ongoing — Qualitative/non-numerical goals which are currently in progress.

(b)

Excluding LNG ships.

A key focus of our sustainability efforts is climate action, which includes our commitment to reduce carbon

emissions and our aspiration to achieve net carbon-neutral operations. We have made significant progress

towards our 2030 carbon intensity reduction goals of 40% from a 2008 baseline, measured in both grams of

e per available lower berth kilometer (“ALB-km”) and kilograms of CO

e per available lower berth

day (“ALBD”). During 2022, we updated the baseline year for both goals to 2019 from 2008. Both 2030 goals

now require a 20% improvement from 2019. With the updated baseline year, we strengthened our 2030

goal measured in kilograms of CO

e per ALBD since the initial 2030 goal would only have required a further

15% reduction from 2019 levels. Our goal measured in grams of CO

e per ALB-km remains the same. In

addition, this new baseline year helps us better communicate recent progress against our climate goals to our

investors and stakeholders as well as modernize our disclosures in alignment with developing best practice

and reporting standards.

We plan to achieve our 2030 carbon intensity goals based on the following planned actions:

• The delivery of larger-more efficient ships, as part of our ongoing newbuild program, some of which

will replace existing ships in our fleet

• Designing more energy-efficient itineraries

• Investing in port and destination projects

• Continuing to invest in new technologies and energy efficiency projects for our existing fleet; since

2016, we have invested over $350 million

We have considered the above planned actions in connection with the preparation of our financial statements

and any estimates used in the preparation of our financial statements, include projections (where applicable)

consistent with the above planned actions.

In addition to our 2030 sustainability goals, we are committed to continuing our reduction of carbon

emissions and have aspirations to achieve net carbon-neutral operations by 2050, well ahead of current

International Maritime Organization (“IMO”) targets. While fossil fuels are currently the only viable option

for our industry, we are closely monitoring technology developments and partnering with key organizations

to help identify and scale new technologies not yet ready for the cruise industry. For example, we are piloting

maritime scale battery technology and methanol powered fuel cells and working with classification societies

and other stakeholders to assess lower carbon fuel options for cruise ships, which includes methanol,

bioLNG, eLNG, hydrogen, and biofuels. During 2022, we piloted the use of biofuel as a replacement for

fossil fuel on two of our ships.

AIDAprima

became the first larger-scale cruise ship to be powered with a blend

of marine biofuel, made from 100% sustainable raw materials, and marine gasoil (“MGO”). Additionally,

Holland America Line completed two pilots on

Volendam

, one using a blend of marine biofuel and another

using 100% biofuel, becoming the first larger-scale cruise ship to be powered 100% by biofuel. The certified

biofuels used in these pilots offer environmental benefits compared to using fossil fuels alone through their

lifecycle CO

reductions. These biofuels can be used in existing ship engines without modifications to the

engine or fuel infrastructure, including on ships already in service. While alternative fuels may provide a path

to decarbonization for the maritime industry, there are significant supply challenges that must be resolved

before viability is reached. We are working with suppliers to encourage investment in a reliable supply

infrastructure.

During 2022, we also announced the global rollout of Service Power Packages, a comprehensive set of

technology upgrades, which will be implemented over the next several years across a portion of the fleet.

These upgrades include the following elements designed to reduce both fuel usage and greenhouse gas

(“GHG”) emissions while also contributing to cost savings:

• Comprehensive upgrades to each ship’s hotel HVAC systems

• Technical systems upgrades on each ship

• State-of-the-art LED lighting systems

• Remote monitoring and optimization of energy usage and performance

The Service Power Package upgrades are part of our ongoing energy efficiency investment program and are

expected to further improve energy savings and reduce fuel consumption. Upon completion, these upgrades

are expected to deliver an average of 5-10% fuel savings per ship.

In addition, we have five Air Lubrication Systems (“ALS”) currently operating in our fleet, we are currently

installing ALS on six ships and we are planning at least eight more installations. ALS cushion the flat

bottom of a ship’s hull with air bubbles, which reduces the ship’s frictional resistance and the propulsive

power required to drive the ship through the water, which is expected to generate approximately 5% savings

in fuel consumption and reductions in carbon emissions on ALS equipped ships.

As part of our plan for carbon footprint reduction, we have 11 LNG powered cruise ships that are expected

to join the fleet through 2025, including seven ships already in operation as of November 30, 2022. In

total, these ships are expected to represent 20% of our total future capacity by summer 2025. All of our

LNG ships also have the capability to run on conventional fuels. The price of LNG in certain markets has

been unattractive compared to other alternatives, and as such, at times we use conventional fuels to power our

LNG ships.

LNG is a fossil fuel and generates carbon emissions. Its direct CO

emissions are lower than those of

conventional fuels and it emits effectively zero sulfur oxides (only the sulfur in the pilot fuel is present),

reducing nitrogen oxides by 85% and particulate matter by 95%-100%. The types of engines that we use are

subject to small amounts of methane slip (the passage of un-combusted methane through the engine).

Strategic Report

There are different views relating to the measurement of the environmental impact of LNG, including the

methane slip. Our disclosures report our emissions, including methane slip, as part of our total carbon

emissions (reported as CO

e) using the 100-year global warming potential time frame and measured on a

“tank to wake” basis. We are working closely with our engine manufacturers and other technology providers

to further mitigate methane slip, and have recently joined the Methane Abatement in Maritime (“MAM”)

Innovation Initiative, where we will partner with other major maritime players to seek solutions for this

challenge.

We pioneered the use of Advanced Air Quality Systems on board our ships to aid in the reduction of sulfur

and lifecycle GHG emissions and are promoting the use of shore power. Shore power enables our ships to

use shoreside electric power, where available, while in port rather than running their engines to power their

onboard services, resulting in reduced ship air emissions. We have continued our work with several local

port authorities to utilize cruise ship shore power connections.

As part of our sustainability strategy, we have voluntarily reported our carbon footprint via the CDP

(formerly, the Carbon Disclosure Project) each year since 2006. The CDP rates companies on the depth and

scope of their disclosures and the quality of their reporting. We developed a GHG inventory management

plan in 2010 in accordance with the requirements of International Organization for Standardization (“ISO”)

14064-1:2018(E) standard and The Greenhouse Gas Protocol. Our submission includes details of our

most recently compiled emissions data and reduction efforts, along with the results of an independent,

third-party verification of our GHG emissions inventory. We also disclose our water stewardship through

the CDP water program.

Carnival Corporation & plc’s environmental management system is certified in accordance with the

ISO 14001:2015 Environmental Management System standard.

We voluntarily publish Sustainability Reports that address governance, stakeholder engagement,

environmental, labor, human rights, society, product responsibility, economic and other sustainability-

related issues and performance indicators. These reports, which are not incorporated in this document but

can be viewed at www.carnivalcorp.com, www.carnivalplc.com and www.carnivalsustainability.com, were

developed in accordance with the Global Reporting Initiative (“GRI”) Standards, the global standard for

sustainability reporting.

Summary of our Environmental Impact

Unit

Global

Emissions

2022 (a)

Global

Emissions

2021 (a)

Global

Emissions

2019

Emissions

2022

Emissions

2021

Emissions

2019

GHG Emissions

(in thousands)

Scope 1 – Direct GHG

Emissions

..............

Metric Tons

8,539

4,409

10,723

1,027

480

1,223

Scope 2 – Indirect GHG

Emissions – Location

based

.................

Metric Tons

Total GHG Emissions

(Scope 1&2) – Location

based

.................

Metric Tons

8,582

4,438

10,770

1,028

481

1,225

Energy Consumption

(in millions)

Scope 1 – Energy

Consumption

...........

Kwh

30,853

15,752

38,298

3,733

1,721

4,404

Scope 2 – Energy

Consumption

...........

Kwh

107

114

Total Energy Consumption

(Scope 1&2)

............

Kwh

30,960

15,834

38,412

3,736

1,723

4,408

Intensity Ratio

...........

Grams of

ALB-Km

241

330

246

267

385

284

Intensity Ratio

...........

Kilograms of

ALBD

115

(b)

120

123

(b)

140

(a)

The CO

e conversion factors were adjusted in May 2021 following a review of the latest studies from

outside sources. The 2022 and 2021 GHG emissions were calculated using the adjusted CO

e conversion

factors.

(b)

Intensity ratio measured in kilograms of CO

e per ALBD for 2021 is not meaningful due to the

resumption of guest cruise operations.

GHG emissions data collection and calculations were performed in accordance with our GHG inventory

management plan, the Greenhouse Gas Protocol, emission factors from the International Energy Agency,

IMO and ISO14064 — Part 3 standard. Ship fuel emissions represent over 97% of our total global emissions.

UK ship fuel emissions represent over 98% of their total emissions. Total emissions include both scope 1

and scope 2 combined.

Scope 1 emissions include direct emissions from the combustion of ship fuel, inadvertent release of

ship refrigerants, and other direct emissions generated by sources owned or controlled by Carnival

Corporation & plc (global number as per above table) as well as ships operated and facilities owned and

leased by our UK-based and marketed brands — P&O Cruises (UK number as per above table) and Cunard

(UK number as per above table).

Scope 2 emissions include emissions from the consumption of electricity for facilities and ships as well as

heat or steam purchased by sources owned or controlled by Carnival Corporation & plc (global number as

per above table) as well as ships operated and facilities owned and leased by our UK-based and marketed

brands — P&O Cruises (UK) and Cunard (UK number as per above table).

We measure and report the ship fuel GHG emission rate in terms of grams of CO

e per ALB-Km. This

indicator enables us to make meaningful GHG emission reduction comparisons that take into account

changes in fleet size, itineraries and passenger capacity during normal operations. As a result of the resumption

of guest cruise operations, data for 2022 and 2021 is not representative of a full year of operations. Due to

the pause of our guest cruise operations, data for 2020 is not meaningful and is not included in the table. We

have provided 2019 data as it is our most recent full year of guest cruise operations.

Strategic Report

(in thousands, except percentages)

Unit

2022

2021

2019

Water Consumption

...............................

Metric Tons

17,867

5,730

27,122

Wastewater

.....................................

Metric Tons

17,395

5,437

26,787

Waste Disposal

..................................

Metric Tons

231

122

371

Percent of Waste Recycled

..........................

Percent

30.2%

35.8%

27.6%

As a result of the resumption of guest cruise operations, data for 2022 and 2021 is not representative of a

full year of operations. Due to the pause of our guest cruise operations, data for 2020 is not meaningful and

is not included in the table. We have provided 2019 data as it is our most recent full year of guest cruise

operations.

Climate-Related Financial Disclosures

Under the UK Listing Rule LR 9.8.6R, which is mandatory for Carnival plc for the year ended November 30,

2022, we set out below our climate-related financial disclosures fully consistent with 10 out of the 11 Task

Force on Climate-Related Financial Disclosures (“TCFD”) Recommendations and Recommended

disclosures. For Metrics and Targets recommended disclosures b), we are partially consistent, as further

work is underway to fully measure and disclose our Scope 3 GHG emissions, which we expect to disclose in

our 2023 Strategic Report. Our consistency with the TCFD’s four pillars, Governance, Strategy, Risk

Management and Metrics and Targets, and the recommendations thereof, are represented in the table below.

TCFD Pillar

Recommended disclosures

Section Reference

Governance

a) Describe the Boards’ oversight

of climate-related risks and

opportunities.

Governance

b) Describe management’s role in

assessing and managing climate-

related risks and opportunities.

Strategy

a) Describe the climate-related

risks and opportunities the

organisation has identified over

the short, medium, and long

term.

Strategy: Qualitative scenario

analysis

b) Describe the impact of

climate-related risks and

opportunities on the

organisation’s businesses,

strategy, and financial planning.

Strategy: Quantitative Scenario

Analysis

c) Describe the resilience of the

organisation’s strategy, taking

into consideration different

climate-related scenarios,

including a 2°C or lower

scenario.

Risk Management

a) Describe the organisation’s

processes for identifying and

assessing climate-related risks.

Risk Management: Climate Risk

and Opportunity Identification,

Owner Assignment and

Assessment

b) Describe the organisation’s

processes for managing climate-

related risks.

Risk Management: Climate Risk

and Opportunity Monitoring,

Management and Reporting

c) Describe how processes for

identifying, assessing, and

managing climate-related risks

are integrated into the

organisation’s overall risk

management.

Risk Management: Integration

into our overall risk management

TCFD Pillar

Recommended disclosures

Section Reference

Metrics and Targets

a) Disclose the metrics used by

the organisation to assess

climate-related risks and

opportunities in line with its

strategy and risk management

process.

Metrics and Targets

b) Disclose Scope 1, Scope 2,

and, if appropriate, Scope 3

GHG emissions, and the related

risks.

c) Describe the targets used by

the organisation to manage

climate-related risks and

opportunities and performance

against targets.

Governance

The Chief Climate Officer (“CCO”) and the Boards of Directors are responsible for the oversight of

climate-related matters and are directly supported by members of executive management. In addition, the

CCO and the Boards of Directors set the tone at the top with regards to embedding a climate risk culture

through fulfilling their responsibilities as outlined in the climate risk management framework (see page 27).

In January 2022, the Boards of Directors appointed Arnold Donald, President and CEO at the time, to

the additional role of CCO. In August 2022, Josh Weinstein, our Chief Operations Officer assumed the roles

of President, CEO and CCO. The CCO leads the identification of climate-related risks and opportunities

and oversees how these are embedded in our strategic decision-making and risk management processes.

To further support our climate-related efforts, we created a Strategic Risk Evaluation (“SRE”) Committee.

The SRE Committee consists of members of executive management and an advisor and reports to the CEO,

who in turn, reports to the Boards of Directors. At its establishment in January 2022, the SRE Committee

was comprised of David Bernstein (Chief Financial Officer), Josh Weinstein (then Chief Operations Officer),

William Burke (Chief Maritime Officer), and Stein Kruse (Advisor to the CEO & Chair of the Boards).

Following the August 2022 changes in leadership, Richard Brilliant (Chief Risk and Compliance Officer)

was added to the SRE Committee, David Bernstein was appointed as Chair of the SRE Committee, and Josh

Weinstein, who remained on the SRE Committee, assumed the role of CCO. The primary responsibility of

the SRE Committee is to assist the CCO in fulfilling his responsibility to identify, monitor and review the

management of climate-related risks and opportunities. Common recurring activities of the SRE

Committee include:

• Discussing climate considerations in the planning processes to further support its focus on

decarbonization, such as the recently adopted Corporate Itinerary Decarbonization Reviews.

• Considering if any new climate risks or opportunities should be included in the list of identified

climate risks and opportunities.

• Ensuring appropriate assignment of identified climate risks and opportunities to risk owners, who

are responsible for their day-to-day evaluation and management.

• Obtaining at least annual reporting from the risk owners on the monitoring and management of

identified risks and opportunities and reviewing, scrutinizing and challenging management of climate

risks and opportunities.

• Reviewing and approving the climate risk management framework.

An SRE Committee Charter was adopted and 12 SRE Committee meetings have taken place between its

creation in January 2022 and November 2022. From these discussions, the SRE Committee has provided a

quarterly update to the Boards of Directors on climate-related matters such as:

• Resetting our GHG baseline year to 2019 from 2008 and a strengthening of our 2030 goals relative

to the new baseline.

• Establishment of a climate risk framework.

• Completion of the qualitative and quantitative scenario analysis assessments.

• Commissioning of the port analysis study (see page 27).

Strategic Report

Role

Boards of Directors

Compensation

Compliance

Health,

Environmental,

Safety & Security

Ultimate oversight of climate-related

risks and opportunities

Committees responsible for

oversight of relevant aspects

of risks and opportunities

which may include climate

related issues

Assist in identifying,

monitoring and reviewing

climate-related risks and

opportunities

Lead integration of

climate into key

business functions

Support integration of

climate-related oversight

and management

Audit

Nominating &

Governance

Strategic Risk Evaluation Committee (SRE)

Executive Management

Management

Climate Risk Owners

CEO and

CCO

Management

Boards

Climate-Related Function

Board Education Program

To enable the CCO and Boards of Directors to fulfil their responsibility to oversee climate-related risks and

opportunities, a Board Environmental, Social and Governance (“ESG”) and TCFD education program

has been established, with core education components and optional self-study courses. This ESG and TCFD

education program has been developed with support from external advisors and the Senior Independent

Director. The core education components of the program were completed in November 2022. An annual

refresher education program, including updates to ESG and TCFD considerations, has been established.

Strategy

During 2022, we performed a qualitative and quantitative scenario analysis to assess our climate-related

risks and opportunities over the short, medium and long term.

Qualitative scenario analysis

We qualitatively applied two (and quantitatively applied three) distinct plausible climate scenarios, global

warming limited to below 1.5

C above pre-industrial levels by 2100 “Steady Path to Sustainability” and global

warming of 2.8

C above pre-industrial levels by 2100 “Regional Rivalry.” The scenarios were used to

generate the climate-related risks and opportunities listed in the table below.

As part of our qualitative scenario analysis, a series of workshops with the SRE Committee and a cross-

section of management was conducted to identify material climate-related risks and opportunities, based on

likelihood and degree of potential financial impact, over the following time horizons:

• Present – 2025 (short-term) — consistent with the period we use for our Viability Statement

• 2025 – 2035 (medium-term) — aligns with our existing sustainability goals

• 2035 – 2050 (long-term) — consistent with the useful life of our ships

Following the workshops, the SRE Committee selected certain risks and opportunities for further assessment

and quantification. The process of selecting these risks and opportunities included an in-depth assessment

by each participant of the proposed risks and opportunities. The process incorporated the use of a feasibility

matrix and subsequent group discussion to arrive at consensus on which risks and opportunities were most

appropriate for quantification. Feasibility was evaluated on the availability of internal and external

climate-related data, the estimated number of assumptions required and the magnitude of impact and

likelihood of occurrence.

Climate-related risks identified through qualitative scenario analysis

Our initial selected risks and opportunities for quantification are in

bold

TCFD risk categories

Risk summary

Impact time horizon

Markets and Products / Shifting

Markets (1)

Cruising no longer aligns to

consumers’ climate values

Medium Term

Reduced availability and access to

fuel*

Long Term

Unable to meet climate-related

requirements reduces access to

capital / insurance

Medium Term

Policy and Legal (1)

Increased costs driven by

climate-related regulations*

Short-Medium Term

Risk is that cruising (as a

carbon-intensive industry) is

severely restricted or subject to

bans

Medium Term

Reputation (1)

Failure to attract and retain

talent due to climate credentials

Medium Term

Increased demand for reducing

carbon-intensive practices

Short Term

Technology (1)

Lack of viable low carbon

technology to replace fossil fuels

Medium Term

Physical

Chronic climate change impacting

supply chain availability and price

Medium Term with expected

increases in the Long Term

Itineraries are not viable due to

extreme weather and/or sea level

rise

Medium Term with expected

increases in the Long Term

(1)

Transition Risks

Due to the similar nature of these risks, we have combined them for the quantitative analysis into a

combined risk: “How does a low-carbon transition impact the price of the fuels needed to power our ship

engines?”

Strategic Report

Climate-related opportunities identified through qualitative scenario analysis

TCFD opportunity categories

Opportunity summary

Realisation time horizon

Energy Source

Support the adaptation of

sustainable technological

advances for the cruise industry

Medium Term

Market Access

Access to new financing options

available for organisations

working on decarbonisation

Short-Medium Term

Access to private destinations or

islands with infrastructure built

by us

Short-Medium Term

Attract and retain new customers

and improve reputation through

sustainable itineraries and

activities for changing climate-

induced preferences

Short-Medium Term

Positioning as a sustainability

leader

Short-Medium Term

Products & Services

Opportunities for the ship to be

the destination

Long Term

Resilience

Engage with more sustainable

and economically favourable

alternative suppliers

Short Term

Improve resilience to physical

climate risk through adaptation

of itinerary routes and

investment in port infrastructure

Short Term

Resource Efficiency

Improved operational efficiencies

arising from technological

advancements

Medium Term

Increased fuel efficiency through

alternative itinerary planning and

reduced energy use

Short-Medium Term

Increased resource efficiency

through reduced on-board energy

demand and consumption

Medium Term

We presently consider transition risks to be the most significant in terms of likelihood and impact. The

risks with the highest impact and likelihood of occurrence are associated with the transition to a low-carbon

emission future, in a scenario where low-carbon technologies do not exist, or where we have not been able

to access these technologies and where we have reduced availability and access to fuel.

The climate-related opportunities with the highest impact are a mix of mitigation and adaptation

opportunities. These include the positive impacts of supporting the adaptation of sustainable technological

advances for our business, improved operational efficiencies from technological advancements, and more

energy efficient itineraries from investing in port and destination projects.

Quantitative Scenario Analysis

We quantitatively applied three distinct plausible climate scenarios to determine the potential impacts of the

risks and opportunities assessed. Using transition scenario assumptions from the International Energy

Agency (“IEA”) and climate and transition scenarios from the Intergovernmental Panel on Climate Change

(“IPCC”), we utilised two interlocking types of pathways, the Representative Concentration Pathways

(“RCPs”) and Shared Socioeconomic Pathways (“SSPs”) to create three sets of scenarios to understand the

relative materiality and possible range of impacts to the business from the selected climate-related risks

and opportunities under different potential futures.

Scenario 1: Steady Path to Sustainability (average temperature increase limited to 1.5°C above pre-industrial

levels by 2100) SSP1 / RCP1.9

Under this scenario, the world takes the rapid and strong policy measures required to meet the ambition

of the 2015 Paris Agreement (keep mean annual temperature rise well below 2°C warming above

pre-industrial levels by 2100). Under this scenario, low carbon technologies take over from fossil-fuels,

and reduced economic growth is also important for reaching net zero emissions by 2050.

We selected this scenario, as it provides us insight into a low-carbon world that would benefit us and our

Climate Action Goals. Under this scenario, transition risks identified are material and our resilience is

dependent on our ability to effectively adopt low carbon technologies. This would help us adhere to increasing

decarbonization requirements, including existing and emerging regulations, consumer preferences, and

talent market expectations. Our most impactful opportunity is the enhancement of our reputation and

competitiveness, by supporting the adaptation of sustainable technological advances for the cruise industry.

This would also further help us to mitigate our transition risks.

Scenario 2: Regional Rivalry (average temperature increase limited to below 2.8°C above pre-industrial levels

by 2100) SSP3 / RCP7.0

This scenario explores a possible route in which the world is seeing an emergence of tribalism and

nationalism. Low international priority for addressing environmental concerns leads to strong

environmental degradation in some regions. The combination of impeded development and limited

environmental concern results in poor progress toward climate sustainability. Growing resource

intensity and fossil fuel dependency along with difficulty in achieving international cooperation and

slow technological change imply high challenges to mitigation.

We selected this scenario, as it provides an indication of the world we would operate in if we do not achieve

the Paris Agreement target. This scenario presents a higher emissions future where physical risks are

material. Business resilience under this scenario is dependent on our ability to adapt to extreme weather

events and chronic physical risks. Under this scenario we can remain resilient by taking advantage of the

mobility of our cruise ships, which enables us to move our vessels between regions and adapt itineraries in

cases of extreme weather events. Additionally, based on a study performed, we are well placed to respond to

increased physical risks at our new port development projects, see

Investment in Port and Destination

Projects

Scenario 3: Fossil-fueled growth (average temperature increase limited to below 4°C above pre-industrial levels

by 2100) SSP5 / RCP8.5

The 4°C scenario explores a possible route in which as countries emerge from the coronavirus

pandemic, governments around the world focus on restoring growth through direct support to fossil

fuels and reverting to the tried and tested methods of the past.

This scenario presents the highest emissions future where physical risks have the potential to be most

significant and would therefore allow us to model the impact of these extreme climate risks. Akin to

Scenario 2, business resilience under Scenario 3 will be dependent on our ability to adapt to extreme weather

events and chronic physical risks as well as the impacts to our supply chain across different geographical

areas. Our experience with the current supply chain crisis suggests that under this scenario, we would be

resilient to these supply chain risks given our ability to adapt to supply chain disruptions.

Key assumptions and limitations

The results of our quantitative scenario analysis have a high degree of uncertainty as there are assumptions

made for all modelling inputs. This means that results should be taken as an indicative “order of risk”.

Furthermore, the analysis assumes that the future conditions from climate change are shifted to today to

contextualize impacts in relation to the current business size. The analysis does not include:

• Forward-looking forecasting of our business operations; or

• Potential mitigation or adaptation measures that could be taken either by us, or by other parties over

the period considered (e.g., sustainable ship fuel development, governments building flood defenses).

Strategic Report

Estimations and projections

We completed several scenario analyses over three time horizons (2025, 2030, and 2050). Any assumption

made about fuel prices acknowledges the current energy crisis and assumes that by 2025, oil prices will

stabilize in line with IEA price projections. We have also projected physical and transition risks at a global level

due to the high mobility of our assets.

The degree of potential impact was determined on a linear scale range of “Low”, having no material impact

or “High”having a material impact on Carnival Corporation & plc’s financial statements. Refer to page 82

in our Group financial statements for our analysis of the impact of climate change on the Group financial

statements.

Results of the Quantitative Scenario Analysis: Potential Impact on Operating Income

2025

2030

2050

Scenario 1

(

) How does a low-carbon transition impact the price of the

fuels needed to power our ship engines?

(

) How would changing consumer sentiment drive changes

in demand for our offering?

(

) How are our profits affected by an increase in food

commodity prices?

(O)

What are the future savings associated with operational

efficiency improvements?

(O)

How could providing a service geared towards changing

consumer sentiment drive long-term growth for us?

Scenario 2

(

) How does a low-carbon transition impact the price of the

fuels needed to power our ship engines?

(

) How would changing consumer sentiment drive changes

in demand for our offering?

(

) How are our profits affected by an increase in food

commodity prices?

(O)

What are the future savings associated with operational

efficiency improvements?

(O)

How could providing a service geared towards changing

consumer sentiment drive long-term growth for us?

Scenario 3

(

) How does a low-carbon transition impact the price of the

fuels needed to power our ship engines?

(

) How would changing consumer sentiment drive changes

in demand for our offering?

(

) How are our profits affected by an increase in food

commodity prices?

(O)

What are the future savings associated with operational

efficiency improvements?

(O)

How could providing a service geared towards changing

consumer sentiment drive long-term growth for us?

Key

Transition Risk (

); Physical Risk (

); Opportunity (

)

Risk Financial Impact:

Low

Medium

High

Opportunity Financial Impact:

Low

Medium

High

How does a low-carbon transition impact the price of the fuels needed to power our ship engines?

While fossil fuels are currently the only viable option for our industry at present, we are closely monitoring

technology developments and partnering with key organizations to help identify and scale new technologies

not yet ready for the cruise industry. Refer to XV. Sustainability and Environmental Impact on pages 16 to

18.

How would changing consumer sentiments drive changes in demand for our offering?

To mitigate the impact of this risk, our short and medium-term decarbonization goals focus on reducing

carbon emissions per ALBD and carbon emissions per ALB-km. In addition, we are committed to our

reduction of carbon emissions and have aspirations to be net carbon-neutral ship operations by 2050. Refer

to XV. Sustainability and Environmental Impact on pages 13 to 18.

How are our profits affected by an increase in commodity prices?

Under Scenarios 1 and 2, the impacts on food prices are indistinguishable from the historical commodity

market volatility. Under Scenario 3, we could face higher food costs which may impact our value chain and

operating profit. Our existing supply chain management strategies have remained resilient through the

more recent supply chain issues experienced globally, demonstrating our ability to mitigate global-scale

disruptions. In addition, our Circular Economy 2030 Goals include achieving a 30% food waste reduction

per person by 2022 and 50% by 2030. Refer to XV. Sustainability and Environmental Impact on page 14 and

XVII. Supply Chain on page 30.

What are the future savings associated with operational efficiency improvements?

Under each scenario, the estimated total price of the fuel is the same, but the amount of fuel demanded

differs based on assumptions about operational efficiency improvements. To capture this potential upside,

we are investing in projects that improve the energy efficiency of our fleet. An Internal Decarbonization

Premium is being added to the cost of fuel during the itinerary, strategic and capital planning processes and is

used to evaluate the payback period and return on investment for capital projects. We are also ensuring

that our brands design more energy efficient itineraries through our Corporate Itinerary Decarbonization

Reviews. For further details of our strategies in place to capture this opportunity, refer to XV. Sustainability

and Environmental Impact on pages 16 to 18.

How could providing a service geared towards changing consumer sentiment drive long-term growth for us?

Under scenarios 2 and 3, an immaterial number of consumers would align to low-carbon services. Under

Scenario 1, from 2025 to 2050 across all countries, there is an increase in the expected price per Passenger

Cruise Days that we will be able to charge. By continuing to reduce our carbon emissions through our strategies

such as investing in energy efficiency projects, fleet changes, itinerary changes, and port developments, we

can remain resilient under Scenario 1. For further details of our strategies to capture this opportunity, refer

to XV. Sustainability and Environmental Impact on pages 16 to 18.

Investment in Port and Destination Projects

Utilizing the latest IPCC 6 report, a climate study was undertaken, by a third party, for two of our port

development projects at Grand Port (Grand Bahama Island) and Half Moon Cay Pier Project (The Bahamas),

to enhance climate resilience. Based on the results of this study, we are well placed to respond to the

physical risks of climate change at the two planned port locations and that we will have a number of measures

in place to address physical climate impacts. These results were reviewed by the SRE Committee and

presented to the Boards of Directors for an investment decision. Furthermore, our investments in these

ports and destinations will support our efforts to design more energy efficient itineraries based on their

strategic locations.

Risk Management

We utilize a process for managing our climate risks and opportunities which begins with climate risk and

opportunity identification then follows with owner assignment, assessment, monitoring, management and

reporting. This process is ongoing and iterative.

Climate Risk and Opportunity Identification, Owner Assignment and Assessment

The qualitative scenario analysis is the foundation of our climate risk and opportunities identification and

assessment process and began with the evaluation of a long list of climate-related risks and opportunities we

may face, to generate an initial list of possible risks and opportunities. As discussed above, we considered a

high-carbon and a low-carbon scenario. Input from key stakeholders in the business was obtained through

facilitated workshops to identify additional climate risks and opportunities and refine the list before

prioritizing those identified. Assessment of these risks and opportunities was performed by the SRE

Committee and a cross section of management, who qualitatively evaluated the impact and likelihood of

these risks and opportunities. Certain financial, regulatory, reputational and physical risks and opportunities,

as described on pages 22 to 24, were then selected for more detailed quantitative scenario analysis.

Strategic Report

The SRE Committee reviews the selected risks and opportunities from our qualitative scenario analysis

quarterly and considers if any risks or opportunities no longer need monitoring, and if any new climate risks

or opportunities should be identified. Each climate risk has been assigned an owner who has responsibility

for the day-to-day evaluation and management of the risk. Following the climate risk identification process,

climate risks are assessed based on expected impact, likelihood, time horizon and speed of onset.

Risk summary (Ordered alphabetically)

Lack of viable low carbon technology to replace fossil fuels

Risk is that cruising (as a carbon-intensive industry) is severely restricted or subject to bans

Increased demand for reducing carbon-intensive practices

Chronic climate change impacting supply chain availability and price

Itineraries are not viable due to extreme weather and/or sea level rise

Cruising no longer aligns to consumers climate values

Unable to meet climate-related requirements reduces access to capital / insurance

Reduced availability and access to fuel

Increased demand for reducing carbon-intensive practices

Failure to attract and retain talent due to climate credentials

Risks or opportunities that were selected for quantification

Key

Higher

likelihood

Lower

likelihood

Lower

impact

Higher

impact

Scenario key

Likelihood

Impact

S1 – Steady Path to Sustainability

S2 – Regional Rivalry

Opportunity summary (Ordered alphabetically)

Positioning as a sustainability leader

Opportunities for the ship to be the destination

Improved operational efficiencies arising from technological advancements

Increased fuel efficiency through alternative itinerary planning and reduced energy use

Access to new financing options available for organisations working on decarbonisation

Attract and retain new customers and improve reputation through sustainable itineraries and activities for changing

climate-induced preferences

Support the adaptation of sustainable technological advances for the cruise industry

Increased resource efficiency through reduced on-board energy demand and consumption

Engage with more sustainable and economically favourable alternative suppliers

Improve resilience to physical climate risk through adaptation of itinerary routes and investment in port

infrasrtucture

Access to private destinations or islands with infrastructure built by us

Risks or opportunities that were selected for quantification

Key

Harder

Easier

Lower

impact

Higher

impact

Scenario key

Ease of realisation

Impact

S1 – Steady Path to Sustainability

S2 – Regional Rivalry

Climate Risk and Opportunity Monitoring, Management and Reporting

The primary method for review, scrutiny, and challenge of climate risks, involves the risk owners monitoring,

assessing and reporting how each risk and opportunity is changing over time based on climate risk indicators

and discussing options with the SRE Committee to reduce, accept, avoid or transfer risk.

Integration into our overall risk management

Overall, the Boards of Directors are responsible for determining the strategic direction of the company and

the nature and extent of the risk assumed by it. The Boards of Directors carry out a risk assessment to

ensure that principal and emerging risks, including those that would threaten our business model, future

performance, solvency or liquidity are effectively managed and/or mitigated. Within our risk management

framework, the Boards of Directors have ultimate oversight of climate-related risks, which have been identified

as a principal risk. Refer to the Governance pillar for a description of how climate-related risks are

overseen.

Metrics and Targets

Our most material risks quantified, are the transition risks

To mitigate the impact of these risks, we have

identified four strategic actions, including energy efficiency projects, fleet changes, itinerary changes, and port

developments, to reduce our reliance on fossil fuels. Refer to XV. Sustainability and Environmental Impact

on pages 16 to 18. The metrics and Climate Action Goals associated with these risks and opportunities, are

outlined above within XV. Sustainability and Environmental Impact on page 14. To demonstrate our

commitment to achieving our Climate Action Goals, we will be updating our executive compensation target

linked to our progress toward achieving certain of our 2030 Sustainability Goals.

Our Scope 1 and 2 emissions are disclosed on page 19. We quantify and report, using the GHG Protocol

and obtain third-party assurance (under ISO-14064-3:2006) of our GHG emissions, including our direct

(Scope 1) and indirect (Scope 2) emissions. During 2022, we performed an inventory of our Scope 3 GHG

emissions using a baseline year of 2019 (our last full year of guest cruise operations) and determined that

Scope 3 emissions were estimated to be approximately one half of our total emissions. We expect to

disclose our Scope 3 emissions in our 2023 Carnival plc Annual Report. We plan to review the cross-

industry metrics recommended by TCFD’s 2021 Implementation Guidance and will consider additional

relevant metrics in 2023.

We have made progress over the past 15 years reducing our carbon emission intensity and achieved our

2020 goal three years early (in 2017). We have also made progress towards our 2030 carbon intensity reduction

goals of 40% from a 2008 baseline, measured in both grams of CO

e per ALB-km and kilograms of CO

per ALBD. Through 2019, we reduced our carbon emission intensity on a lower berth distance basis by 25%

relative to 2008 all while growing our capacity by 48%. Furthermore, because of our efforts, we peaked our

absolute Scope 1 and 2 emissions in 2011.

During 2022, we updated the baseline year for both goals to 2019 from 2008. This new baseline year will

help us better communicate recent progress against our Climate Action Goals to our investors and stakeholders

and modernizes our disclosures in alignment with developing best practice and reporting standards. Both

2030 goals require a 20% decrease from 2019. With the updated baseline year, we have strengthened our goal

measured in kilograms of CO

e per ALBD since the initial 2030 goal would only have required a further

15% reduction from 2019 levels. Our goal measured in grams of CO

e per ALB-km remains the same.

Carnival Corporation & plc Carbon Intensity

(g CO2e / ALB-km)

350

175

150

125

100

300

250

200

150

100

327

2008

246

2019

196

2030 goal

170

2008

120

2019

29.4%

20%

44%

2030 goal

Carbon Intensity

(kg CO2e / ALBD)

24.9%

40%

20%

To support the mitigation of the climate-related risks identified relating to the restriction of carbon-

intensive industries and fossil fuels, we have set 2030 Climate Action Goals.

XVI.

Information Technology

With the increasing size and sophistication of cruise ships, the technologies employed to enhance guest

experiences and operate ships have grown ever more complex and integrated. We have a Chief Information

Officer (“CIO”) who is responsible for leading three critical global functions across our brands: information

technology, innovation, and cybersecurity/compliance. Our Boards of Directors have Audit Committees

whose responsibility includes oversight of risk management relating to information technology, cybersecurity

and data privacy. The CIO briefs the Audit Committees on these matters on a regular basis and generally

at least quarterly.

Our global information technology model is designed to contribute to exceeding expectations of our guests,

crew, shoreside team members and other stakeholders. All of our brands are actively collaborating to

maximize the business value of our information technology solutions, standards and processes to eliminate

redundancies and drive process efficiencies, while increasingly leveraging our scale and common technologies.

Strategic Report

In order to achieve our goals, we are focusing on several key factors including applications, compliance,

connectivity, cybersecurity, data privacy, infrastructure, modernization and innovation.

In response to the increasing threat of continuously evolving cybersecurity risks, we have continued to

invest in our information technology and operational technology cybersecurity programs, managing risk

and protecting our company’s business operations through targeted people, process and technology-focused

improvements. This includes the implementation of routine data privacy and security focused training for

our shoreside and certain shipboard team members. We have a Chief Information Security Officer who

reports to the CIO and is responsible for leading global cybersecurity risk reduction efforts and compliance.

In light of numerous jurisdictional data privacy and security laws/regulations, we have data privacy and

security standards across the corporation. We have a Chief Privacy Officer and Data Protection Officers who

oversee our focus on the proper processing of personal information in alignment with our Privacy Policy.

XVII.

Supply Chain

We incur expenses for goods and services to deliver exceptional cruise experiences to our guests. In addition,

we incur significant capital expenditures for materials to support the refurbishment and enhancements of

our vessels as well as to build new ships. We approach our spend strategically and look for suppliers who

demonstrate the ability to help us leverage our scale in terms of cost, quality, service, innovation and

sustainability. We are focused on the creation of strategic partnerships and will streamline our supplier base

where it is prudent and on a risk-based basis. Our largest capital investments are for the construction of

new ships.

Global supply markets and supply chains have been impacted by certain events, resulting in shortages,

extended lead times and increased inflation impacting our operations and profitability. We continue to apply

a number of different strategies to mitigate the impact of these challenges on our operations, including

extending our demand planning, placing purchase orders earlier, leveraging corporate contracts, utilizing

short-term or long-term contracts as needed, seeking alternative sources, utilizing substitute products and

leveraging our supplier relationships.

XVIII.

Insurance

General

We maintain insurance to cover a number of risks associated with owning and operating our vessels and

other non-ship related risks. All such insurance policies are subject to coverage limits, exclusions and deductible

levels. Insurance premiums are dependent on our own loss experience and the general premium requirements

of our insurers. We maintain certain levels of deductibles for substantially all the below-mentioned

coverages. We may increase our deductibles to mitigate future premium increases. We do not carry coverage

related to loss of earnings or revenues from our ships or other operations.

Protection and Indemnity (“P&I”) Coverages

Liabilities, costs and expenses for illness and injury to crew, guest injury, pollution and other third-party

claims in connection with our cruise activities are covered by our P&I clubs, which are mutual indemnity

associations owned by ship owners.

We are members of three P&I clubs, Gard, Steamship Mutual and UK Club, which are part of a worldwide

group of 13 P&I clubs, known as the International Group of P&I Clubs (the “IG”). The IG insures

directly, and through broad and established reinsurance markets, a large portion of the world’s shipping

fleets. Coverage is subject to the P&I clubs’rules and the limits of coverage are determined by the IG.

Hull and Machinery Insurance

We maintain insurance on the hull and machinery of each of our ships for reasonable amounts as determined

by management. The coverage for hull and machinery is provided by large and well-established international

marine insurers. Insurers make it a condition for insurance coverage that a ship be certified as “in class”

by a classification society that is a member of the International Association of Classification Societies

(“IACS”). All of our ships are routinely inspected and certified to be in class by an IACS member.

War Risk Insurance

We use a combination of insurance and self-insurance to cover war risk for legal liability to crew, guests and

other third parties as well as loss or damage to our vessels arising from war or war-like actions. Our

primary war risk insurance coverage is provided by international marine insurers and our excess war risk

insurance is provided by our three P&I clubs. Under the terms of our war risk insurance coverage, which are

typical for war risk policies in the marine industry, insurers can give us no less than three days’notice that

the insurance policies will be canceled. However, the policies may be reinstated at different premium rates.

Other Insurance

We maintain property insurance covering our shoreside assets and casualty insurance covering liabilities to

third parties arising from our hotel and transportation business, shore excursion operations and shoreside

operations, including our port and related commercial facilities. We also maintain worker’s compensation,

director’s and officer’s liability and other insurance coverages.

XIX.

Governmental Regulations

Maritime Regulations

General

Our ships are regulated by numerous international, national, state and local laws, regulations, treaties and

other legal requirements, as well as voluntary agreements, which govern health, environmental, safety and

security matters in relation to our guests, crew and ships. These requirements change regularly, sometimes on

a daily basis, depending on the itineraries of our ships and the ports and countries visited. If we violate or

fail to comply with any of these laws, regulations, treaties and other requirements, we could be fined or

otherwise sanctioned by regulators. We are committed to complying with, or exceeding, all relevant

requirements.

The primary regulatory bodies that establish maritime laws and requirements applicable to our ships

include:

The IMO:

All of our ships, and the maritime industry as a whole, are subject to the maritime safety,

security and environmental regulations established by the IMO, a specialized agency of the United

Nations. The IMO’s principal sets of requirements are mandated through its International Convention

for the Safety of Life at Sea (“SOLAS”) and its International Convention for the Prevention of

Pollution from Ships (“MARPOL”).

Flag States:

Our ships are registered, or flagged, in The Bahamas, Bermuda, Italy, the Netherlands,

Panama and the UK, which are also referred to as Flag States. Our ships are regulated by these Flag

States through international conventions that govern, among other things, health, environmental, safety

and security matters in relation to our guests, crew and ships. Representatives of each Flag State

conduct periodic inspections, surveys and audits to verify compliance with these requirements.

Ship classification societies:

Class certification is one of the necessary documents required for our

cruise ships to be flagged in a specific country, obtain liability insurance and legally operate as passenger

cruise ships. Our ships are subject to periodic class surveys, including dry-dock inspections, by ship

classification societies to verify that our ships have been maintained in accordance with the rules of the

classification societies and that recommended repairs have been satisfactorily completed. Dry-dock

frequency is a statutory requirement mandated by SOLAS. Our ships dry-dock once or twice every

five years, depending on the age of the ship.

National, regional and other authorities:

We are subject to the decrees, directives, regulations and

requirements of the European Union (“EU”), the UK, the U.S., other countries and hundreds of other

authorities, including international ports that our ships visit every year.

Port regulatory authorities (Port State Control):

Our ships are also subject to inspection by the port

regulatory authorities, which are also referred to as Port State Control, in the various countries that they

visit. Such inspections include verification of compliance with the maritime safety, security,

environmental, customs, immigration, health and labor requirements applicable to each port, as well as

with regional, national and international requirements. Many countries have joined together to form

regional Port State Control authorities.

As members of the Cruise Lines International Association (“CLIA”), we helped to develop and have

implemented policies that are intended to enhance shipboard safety and environmental protection throughout

the cruise industry. In some cases, this calls for implementing best practices, which exceed existing legal

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requirements. Further details on these and other policies, which are not incorporated into this document,

can be found on www.cruising.org.

Our Boards of Directors have Health, Environment, Safety and Security (“HESS”) Committees, which

were comprised of six independent directors as of November 30, 2022. The principal function of the HESS

Committees is to assist the boards in fulfilling their responsibility to supervise and monitor our health,

environment, safety, security and sustainability related policies, programs and initiatives at sea and ashore

and compliance with related legal and regulatory requirements. The HESS Committees and our management

team review significant HESS relevant risks or exposures and associated mitigating actions.

We are committed to implementing appropriate measures to manage identified risks effectively. We have a

Chief Maritime Officer to oversee our global maritime operations, including maritime policy, maritime affairs,

maritime standards, training, shipbuilding, asset management, health operations, and research and

development. In addition, we have a Chief Risk and Compliance Officer who leads the effort to promote

and monitor a strong ethics and compliance culture throughout the company, including all areas of HESS.

To help ensure that we are compliant with legal and regulatory requirements and that these areas of our

business operate in an efficient and effective manner, we:

• Provide regular health, environmental, safety and security support, training, guidance and information

to guests, team members and others working on our behalf

• Develop and implement effective and verifiable management systems to fulfill our health,

environmental, safety, security and sustainability commitments

• Perform regular shoreside and shipboard audits and take appropriate action when deficiencies are

identified

• Report and investigate health, environmental, safety and security incidents and strive to take

appropriate action to prevent recurrence

• Identify those team members responsible for managing health, environment, safety, security and

sustainability programs and aim to establish clear lines of accountability

• Identify the aspects of our business with potential to impact the environment and continue to take

appropriate action to minimize that impact

• Monitor an anonymous hotline for any reported allegations or concerns and the related responses

• Review and work to improve policies and procedures designed to prevent, detect, respond and

correct various regulatory violations and other misconduct

Maritime Safety Regulations

The IMO has adopted safety standards as part of SOLAS. To help ensure guest and crew safety, SOLAS

establishes requirements for the following:

• Vessel design and structural features

• Life-saving and other equipment

• Construction and materials

• Fire protection and detection

• Refurbishment standards

• Safe management and operation

• Radio communications

• Musters

All of our crew undergo regular safety training that meets or exceeds all international maritime regulations,

including SOLAS requirements, which are periodically revised.

SOLAS requires implementation of the International Safety Management Code (“ISM Code”), which

provides an international standard for the safe management and operation of ships and for pollution

prevention. The ISM Code is mandatory for passenger vessel operators. Under the ISM Code, vessel operators

are required to:

• Develop and implement a Safety Management System (“SMS”) that includes, among other things,

the adoption of safety and environmental protection policies setting forth instructions and procedures

for operating vessels safely and describing procedures for responding to emergencies and protecting

the environment. In addition, our SMS includes health and security procedures

• Obtain a Document of Compliance (“DOC”) for the vessel operator, as well as a Safety Management

Certificate (“SMC”) for each vessel they operate. These documents are issued by the vessel’s Flag

State and evidence compliance with the ISM Code and the SMS

• Verify or renew DOCs and SMCs periodically in accordance with the ISM Code

We have implemented and continue to develop policies and procedures that we believe enhance our

commitment to the safety of our guests and crew. These initiatives include the following:

• Training of our bridge, engineering and environmental officers in maritime related best practices

facilitated by our CSMART Academy, the Center for Simulator Maritime Training located within

our Arison Maritime Center in Almere, Netherlands

• Further standardization of our detailed bridge and engine resource management procedures on our

ships

• Expansion of our existing oversight function to monitor and assist operations through our state-of-

the-art fleet operations centers in Miami and Hamburg

• Identifying and promoting the use of international standards and best-practice policies and

procedures in health, environmental, safety and security disciplines across the organization including

on all our ships

• Further enhancement of our processes for auditing our HESS performance throughout our operations

Maritime Security Regulations

Our ships are subject to numerous security requirements. These requirements include the International Ship

and Port Facility Security Code, which is part of SOLAS, the U.S. Maritime Transportation Security Act

of 2002, which addresses U.S. port and waterway security and the U.S. Cruise Vessel Security and Safety Act

of 2010, which applies to all of our ships that embark or disembark passengers in the U.S. These regulations

include requirements as to the following:

• Implementation of specific security measures, including onboard installation of a ship security alert

system

• Assessment of vessel security

• Efforts to identify and deter security threats

• Training, drills and exercises

• Security plans that may include guest, vehicle and baggage screening procedures, security patrols,

establishment of restricted areas, personnel identification procedures, access control measures and

installation of surveillance equipment

• Establishment of procedures and policies for reporting and managing allegations of crimes

Maritime Environmental Regulations

We are subject to numerous international, multi-national, national, state and local environmental laws,

regulations and treaties that govern air emissions, waste management, and the storage, handling, use and

disposal of hazardous substances such as chemicals, solvents and paints.

As a means of managing and improving our environmental performance and compliance, we adhere to

standards set by the International Organization for Standardization (“ISO”), an international standard-

setting body, which produces worldwide industrial and commercial standards. The environmental management

system of our company and ships is certified in accordance with ISO 14001, the environmental management

standard that was developed to help organizations manage the environmental impacts of their processes,

products and services. ISO 14001 defines an approach to setting and achieving environmental objectives and

targets, within a structured management framework.

International Regulations

The principal international convention governing marine pollution prevention and response is MARPOL.

Preventing and Minimizing Pollution

MARPOL includes six annexes, four of which are applicable to our cruise ships, containing requirements

designed to prevent and minimize both accidental and operational pollution by oil, sewage, garbage and air

emissions and sets forth specific requirements related to vessel operations, equipment, recordkeeping and

reporting that are designed to prevent and minimize pollution. All of our ships must carry an International

Oil Pollution Prevention Certificate, an International Sewage Pollution Prevention Certificate, an

International Air Pollution Prevention Certificate and a Garbage Management Plan. The ship’s Flag State

issues these certificates, which evidence their compliance with the MARPOL regulations regarding prevention

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of pollution by oil, sewage, garbage and air emissions. Certain jurisdictions have not adopted all of these

MARPOL annexes but have established various national, regional or local laws and regulations that apply

to these areas.

As noted above, MARPOL governs the prevention of pollution by oil from operational measures, as well as

from accidental discharges. MARPOL requires that discharges of machinery space bilge water pass

through pollution prevention equipment that separates oil from the water and monitors the discharged

water to ensure that the effluent does not exceed 15 parts per million oil content. During 2019, we voluntarily

completed the upgrade of oily water separation equipment to the latest MARPOL standards as set forth

by the IMO onboard all of our ships. Our ships have oily water separators with oil content monitors installed

and maintain a record of certain engine room operations in an Oil Record Book. In addition, we have

voluntarily installed redundant systems on all of our ships that monitor processed bilge water a second time

prior to discharge to help ensure that it contains no more than 15 parts per million oil content. This

system also provides additional controls to prevent improper bilge water discharges. MARPOL also requires

that our ships have Shipboard Oil Pollution Emergency Plans.

MARPOL also governs the discharge of sewage from ships and contains regulations regarding the ships’

equipment and systems for the control of sewage discharge, the provision of facilities at ports and terminals

for the reception of sewage and requirements for survey and certification.

MARPOL also governs the discharge of garbage from ships and requires the implementation of Garbage

Management Plan and the maintenance of a Garbage Record Book.

Furthermore, MARPOL addresses air emissions from vessels, establishes requirements for the prevention of

air pollution from ships to reduce emissions of sulfur oxides (“SOx”), nitrogen oxides (“NOx”), particulate

matter and GHG emissions. It also contains restrictions on the use of ozone depleting substances (“ODS”)

and requires the recording of ODS use, equipment containing ODS and the emission of ODS.

Sulfur Emissions

The IMO has adopted a global 0.5% sulfur cap for marine fuel which began in January 2020. The EU

Parliament and Council has also adopted 0.5% sulfur content fuel requirement (the “EU Sulfur Directive”).

The options to comply with both the global 0.5% sulfur cap and the EU Sulfur Directive include the

installation of Advanced Air Quality Systems, or the use of low sulfur or alternative fuels.

MARPOL addresses air emissions from both auxiliary and main propulsion diesel engines on ships and

further specifies requirements for Emission Control Areas (“ECAs”) with stricter limitations on sulfur

emissions content in these areas, requiring ships to use fuel with a sulfur content of no more than 0.1%, or

to use alternative emission reduction methods, such as Advanced Air Quality Systems.

We have Advanced Air Quality Systems on most of our ships, which are aiding in partially mitigating the

financial impact from the ECAs and global 0.5% sulfur requirements. We use Advanced Air Quality Systems

wherever possible subject to local laws and regulations. Additionally, Advanced Air Quality Systems used

with heavy fuel oil (“HFO”) results in as good or better SOx, NOx, and particulate emissions compared to

MGO while also resulting in a marginal reduction of well-to-wake carbon emissions. These refer to the

emissions generated throughout the entire process of fuel production, delivery and use onboard ships.

Greenhouse Gas Emissions

In 2013, the IMO approved measures to improve energy efficiency and reduce emissions of GHGs from

international shipping by adopting technical and operational measures for all ships. The technical measures

apply to the design of new vessels, and the operational reduction measures apply to all vessels. Operational

reduction measures have been implemented through a variety of means, including a Ship Energy Efficiency

Management Plan, improved voyage planning and more frequent propeller and hull cleanings. We have

established objectives within the ISO 14001 environmental management system for each of our brands to

further reduce fuel consumption rates and the resulting GHG emissions.

In 2016, the IMO approved the implementation of a mandatory data collection system (“DCS”) for fuel oil

consumption. The DCS requires ships of 5,000 gross tons and above to provide fuel consumption data to

their respective Flag State at the end of each calendar year, beginning in 2019. Flag States validate the data

and transfer it to an IMO database. The IMO will produce a summary annual report with anonymous data. In

2018, the IMO also set aspirations to achieve several shipping industry GHG emission reduction goals

with 2030 and 2050 target dates. In November 2020, the IMO’s Marine Environment Protection Committee

approved further MARPOL changes in support of its GHG emission reduction goals, which have entered

into force on January 1, 2023 and include the Carbon Intensity Indicator (“CII”), an annual ship-level CO

intensity emissions performance measure, and the Energy Efficiency Existing Ship Index (“EEXI”), a one-

off measure similar to the Energy Efficiency Design Index (“EEDI”) for newbuilds, that confirms for a

specific condition that a ship meets a target CO

emission intensity. The EEXI is not expected to have a

material impact and the impact for CII is uncertain as the enforcement mechanism of the regulation is still

to be defined. In addition, the IMO is currently considering various other proposals which aim to reduce

GHG emissions within the global shipping industry. These proposals include a range of measures including

possible fuel standards and market-based measures, such as a carbon levy, that, if enacted, could result in

changes to itineraries or increased compliance related costs which may individually and collectively have a

material impact on our profitability.

Ballast Water

Ballast water is water used to stabilize ships at sea and maintain safe operating conditions throughout a

voyage. Ballast water can carry a multitude of marine species. In 2017, the IMO’s Ballast Water Management

Convention entered into force, which governs the discharge of ballast water from ships. Subsequent

amendments effectively extended the implementation date for installation of ballast water management

systems for existing ships by about two years, though other requirements went into effect immediately,

including requirements for ballast water exchange, record keeping, and maintaining an approved Ballast

Water Management Plan. The Convention is designed to regulate the treatment of ballast water prior to

discharging overboard in order to avoid the transfer of marine species to new environments, as well as

establishing other ballast water management practices for monitoring and environmental protection.

ii.

U.S. Federal and State Regulations

The Act to Prevent Pollution from Ships implements several MARPOL Annexes in the U.S. and imposes

numerous requirements on our ships, as discussed above. Administrative, civil and criminal penalties may be

assessed for violations.

The Oil Pollution Act of 1990 (“OPA 90”) established a comprehensive federal liability regime, as well as

prevention and response requirements, relating to discharges of oil in U.S. waters. The major requirements

include demonstrating financial responsibility up to the liability limits set by OPA 90 and having oil spill

response plans in place. We have Certificates of Financial Responsibility (“COFR”) that demonstrate our

ability to meet the liability limits of OPA 90 based on the gross tonnage of our ships for removal costs and

damages, such as from an oil spill. The COFR also covers releases of hazardous substances. It is possible,

however, for our liability limits to be broken, which could expose us to unlimited liability. Under OPA 90,

owners or operators of vessels operating in U.S. waters must file Vessel Response Plans with the U.S. Coast

Guard (“USCG”) and must operate and conduct any response action in compliance with these plans. As

OPA 90 expressly allows coastal states to impose liabilities and requirements beyond those imposed under

federal law, many U.S. states have enacted laws more stringent than OPA 90. Some of these state laws impose

unlimited liability for oil spills and contain more stringent financial responsibility and contingency planning

requirements. Most coastal states have also enacted environmental regulations that impose strict liability

for removal costs and damages resulting from a discharge of oil or a release of a hazardous substance, similar

to OPA 90.

The Clean Water Act (“CWA”) provides the U.S. Environmental Protection Agency (“EPA”) with the

authority to regulate incidental discharges from commercial vessels, including discharges of ballast water,

bilge water, gray water, anti-fouling paints and other substances during normal operations within the U.S.

three mile territorial sea and inland waters. Pursuant to the CWA authority, the U.S. National Pollutant

Discharge Elimination System was designed to minimize pollution within U.S. territorial waters. For our

affected ships, the incidental discharge requirements are set forth in EPA’s Vessel General Permit (“VGP”) for

discharges incidental to the normal operations of vessels. The VGP establishes effluent limits for specific

discharges incidental to the normal operation of a vessel, many of which apply to our cruise ships. In addition

to the requirements associated with these discharges and more stringent vessel-specific requirements, the

VGP includes requirements for inspections, monitoring, reporting and record-keeping. In 2018, the Vessel

Incidental Discharge Act (“VIDA”) was signed into law and was intended to clarify and streamline discharge

requirements for the incidental discharges covered by the VGP and certain USCG regulations for ballast

water. More specifically, a new section was added to the CWA called “Uniform National Standards for

Discharges Incidental to Normal Operation of Vessels.” Once fully implemented, VIDA will replace the VGP;

however, while the standards and regulations are being developed the 2013 VGP has been administratively

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extended and will remain in effect. VIDA requires the standards and regulations to be at least as stringent

as the existing requirements in the 2013 VGP and USCG regulations, unless information becomes available

that was not reasonably available when the initial standard of performance was issued, and that information

would have justified a less stringent standard. In October 2020, the EPA posted its notice of proposed

rulemaking to set standards for 20 types of vessel discharges incidental to normal operations. The discharge

standards are organized into three categories: (1) general operation and maintenance; (2) biofouling

management; and (3) oil management. These standards mandate overall minimization of discharges and

prescribe associated best management practices. No training or education requirements are included, as these

will be set by the USCG in its rulemaking once EPA’s standards are finalized. Notably, EPA incorporated

discharge standards applicable to exhaust gas cleaning system discharges based substantially on applicable

IMO guidelines, which better harmonizes the VGP and IMO requirements. While the proposed rule provides

clarity into the likely structure of VIDA, there is uncertainty over the mechanism through which state-

specific standards may be implemented.

We are subject to the requirements of the U.S. Resource Conservation and Recovery Act for the disposal of

both hazardous and non-hazardous solid wastes that are generated by our ships. In general, vessel owners

are required to determine if their wastes are hazardous and, when landing waste ashore, comply with certain

standards for the proper management of hazardous wastes, including the use of hazardous waste manifests

for shipments to approved disposal facilities.

The U.S. National Invasive Species Act (“NISA”) was enacted in 1996 in response to growing reports of

harmful organisms being released into U.S. waters through ballast water taken on by vessels in foreign waters.

The USCG adopted regulations under NISA that impose mandatory ballast water management practices

for all vessels equipped with ballast water tanks entering U.S. waters. Depending on a vessel’s compliance date

for installation of a USCG type-approved ballast water management system, these requirements may now

be met by performing mid-ocean ballast exchange, by retaining ballast water onboard the vessel or by using

a ballast water management system authorized or approved by the USCG. In the near future, ballast

exchange will no longer be permissible. These USCG regulations, however, will ultimately be replaced with

the new regulatory regime being developed under VIDA, which is expected to contain similar requirements.

The state of Alaska has enacted legislation that prohibits certain discharges in designated Alaskan waters

and sets effluent limits on others, which are applicable to cruise ships. Further, the state of Alaska requires

that certain discharges be reported and monitored to verify compliance with the standards established by the

legislation. Environmental regimes in Alaska are more stringent than the U.S. federal requirements with

regard to discharges from vessels. The legislation also provides that repeat violators of the regulations could

be prohibited from operating in Alaskan waters. The state of California also has environmental

requirements significantly more stringent than federal requirements for water discharges and air emissions.

iii.

EU Regulations

The EU has adopted a broad range of substantial environmental measures aimed at improving the quality

of the environment for European citizens. To support the implementation and enforcement of European

environmental legislation, the EU has adopted directives on environmental liability and enforcement and

a recommendation providing for minimum criteria for environmental inspections.

The European Commission’s (“EC”) strategy is to reduce emissions from ships. The EC strategy seeks to

implement SOx Emission Control Areas set out in MARPOL, as discussed above via their own Sulphur

Directive.

The EC has also implemented regulations aimed at reducing GHG emissions from maritime shipping

through a Monitoring, Reporting and Verification regulation, which involves collecting emissions data from

ships over 5,000 gross tons to monitor and report carbon emissions on all voyages to, from and between

European Union ports.

The EU is in the process of adopting a series of significant carbon reforms as a part of its Fit for 55

package to meet its 2030 emissions reduction goal. The main instruments for reducing emissions are the

Emissions Trading System (“ETS”), Energy Taxation Directive (“ETD”) and the newly proposed FuelEU

Maritime initiative as well as amendments to the alternative fuels infrastructure and renewable energy

directives.

The ETS regulates carbon emissions through a “cap and trade”principle, where a cap is set on the total

amount of certain GHGs that can be emitted. The recently agreed inclusion of the maritime shipping sector

within the scope of ETS will become effective from January 2024 and introduces a mechanism whereby we

will be required to procure carbon emission allowances covering 40% of emissions inside EU waters, to be

surrendered in 2025, 70% of 2025 emissions to be surrendered in 2026 and 100% of annual emissions thereafter,

to be surrendered in the following year.

The ETD is a framework for the taxation of energy products and sets minimum rates of excise duty to

encourage a low-carbon economy. Proposed amendments to the ETD will introduce new tax rates based on

the energy content and environmental impact rather than volume. If adopted, these amendments will also

widen the directive to include maritime fuels, which were previously exempt.

The recently proposed FuelEU Maritime initiative is a long-term framework to reduce maritime emissions

by increasing the use of sustainable alternative fuels, and for the cruise industry, the use of shore power. The

proposal also requires compliance with the maximum limits of GHG intensity of energy used on board.

The stringency of these limits increases over time and there are financial penalties for non-compliance. The

initiative also includes requirements for ships to connect to shore power when at EU ports.

The Fit for 55 regulations may individually and collectively result in increased costs and have an impact on

our profitability beginning in 2024, and increasing to have a material impact on our profitability beginning in

2025. The exact impact is uncertain as elements of the proposals have not yet been finalized and enacted

and the costs of ETS allowances will depend on future markets.

Maritime Health Regulations

We are committed to providing a healthy environment for all of our guests and crew. We collaborate with

public health inspection programs throughout the world, such as the Centers for Disease Control and

Prevention (“CDC”) in the U.S. and the SHIPSAN Project in the EU, to ensure that development of these

programs leads to enhanced health and hygiene onboard our ships. Through our collaborative efforts, we work

with the authorities to develop and revise guidelines, review plans and conduct on-site inspections for all

newbuilds and significant ship renovations. We work closely with governments and health authorities around

the world to ensure that our health and safety protocols comply with the requirements of each location. In

addition, we continue to maintain our ships by meeting, and often exceeding, applicable public health

guidelines and requirements, complying with inspections, reporting communicable illnesses and conducting

regular crew training and guest education programs.

Maritime Labor Regulations

The International Labor Organization develops and oversees international labor standards and includes a

broad range of requirements, such as the definition of a seafarer, minimum age of seafarers, medical

certificates, recruitment practices, training, repatriation, food, recreational facilities, health and welfare,

hours of work and rest, accommodations, wages and entitlements.

The International Convention on Standards of Training, Certification and Watchkeeping for Seafarers, as

amended, establishes additional minimum standards relating to training, including security training,

certification and watchkeeping for our seafarers.

Other Governmental Regulations

Compliance with GHG regulations and the associated potential cost is complicated by the fact that various

countries and regions are following different approaches to climate-related regulations.

In most countries where we source the majority of our guests, we are required to establish financial

responsibility, such as obtaining a guarantee from stable financial institutions and insurance companies, to

satisfy liability in cases of our non-performance of obligations to our guests. The amount of financial

responsibility varies by jurisdiction based on the amount mandated by the applicable local legislation,

regulatory agency or association.

In Australia and most of Europe, we may be obligated to honor our guests’cruise payments made by them

to their travel agents and tour operators regardless of whether we receive these payments.

We are, or may in the future become, subject to other laws and regulations which require our compliance,

including those addressing antitrust, anti-money laundering, bribery, corruption, data privacy, human rights,

securities and sanctions, reporting on sustainability matters, as well as human resources related matters.

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XX.

Taxation

A summary of our principal taxes and exemptions in the jurisdictions where our significant operations are

located is as follows:

U.S. Income Tax

We are primarily foreign corporations engaged in the business of operating cruise ships in international

transportation. We also own and operate, among other businesses, the U.S. hotel and transportation business

of Holland America Princess Alaska Tours through U.S. corporations.

Our North American cruise ship businesses and certain ship-owning subsidiaries are engaged in a trade or

business within the U.S. Depending on its itinerary, any particular ship may generate income from sources

within the U.S. We believe that our U.S. source income and the income of our ship-owning subsidiaries,

to the extent derived from, or incidental to, the international operation of a ship or ships, is currently exempt

from U.S. federal income and branch profit taxes.

Our domestic U.S. operations, principally the hotel and transportation business of Holland America

Princess Alaska Tours, are subject to federal and state income taxation in the U.S.

Application of Section 883 of the Internal Revenue Code

In general, under Section 883 of the Internal Revenue Code, certain non-U.S. corporations (such as our

North American cruise ship businesses) are not subject to U.S. federal income tax or branch profits tax on

U.S. source income derived from, or incidental to, the international operation of a ship or ships. Applicable

U.S. Treasury regulations provide in general that a foreign corporation will qualify for the benefits of

Section 883 if, in relevant part, (i) the foreign country in which the foreign corporation is organized grants

an equivalent exemption to corporations organized in the U.S. in respect of each category of shipping income

for which an exemption is being claimed under Section 883 (an “equivalent exemption jurisdiction”) and

(ii) the foreign corporation meets a defined publicly-traded corporation stock ownership test (the “publicly-

traded test”). Subsidiaries of foreign corporations that are organized in an equivalent exemption

jurisdiction and meet the publicly-traded test also benefit from Section 883. We believe that Panama is an

equivalent exemption jurisdiction and that Carnival Corporation currently satisfies the publicly-traded test

under the regulations. Accordingly, substantially all of Carnival Corporation’s income is exempt from

U.S. federal income and branch profit taxes.

Regulations under Section 883 list certain activities that the Internal Revenue Service (“IRS”) does not

consider to be incidental to the international operation of ships and, therefore, the income attributable to

such activities, to the extent such income is U.S. source, does not qualify for the Section 883 exemption.

Among the activities identified as not incidental are income from the sale of air transportation, transfers,

shore excursions and pre- and post-cruise land packages to the extent earned from sources within the U.S.

Exemption Under Applicable Income Tax Treaties

We believe that the U.S. source transportation income earned by Carnival plc and its subsidiaries currently

qualifies for exemption from U.S. federal income tax under applicable bilateral U.S. income tax treaties.

U.S. State Income Tax

Carnival Corporation, Carnival plc and certain subsidiaries are subject to various U.S. state income taxes

generally imposed on each state’s portion of the U.S. source income subject to U.S. federal income taxes.

However, the state of Alaska imposes an income tax on its allocated portion of the total income of our

companies doing business in Alaska and certain of their subsidiaries.

UK and Australian Income Tax

Cunard, P&O Cruises (UK) and P&O Cruises (Australia) are divisions of Carnival plc and have elected to

enter UK tonnage tax under a rolling ten-year term and, accordingly, reapply every year. Companies to which

the tonnage tax regime applies pay corporation taxes on profits calculated by reference to the net tonnage

of qualifying ships. UK corporation tax is not chargeable under the normal UK tax rules on these brands’

relevant shipping income. Relevant shipping income includes income from the operation of qualifying ships

and from shipping related activities.

For a company to be eligible for the regime, it must be subject to UK corporation tax and, among other

matters, operate qualifying ships that are strategically and commercially managed in the UK. Companies

within UK tonnage tax are also subject to a seafarer training requirement.

Our UK non-shipping activities that do not qualify under the UK tonnage tax regime remain subject to

normal UK corporation tax.

P&O Cruises (Australia) and all of the other cruise ships operated internationally by Carnival plc for the

cruise segment of the Australian vacation region are exempt from Australian corporation tax by virtue of the

UK/Australian income tax treaty.

Italian and German Income Tax

In 2015, Costa and AIDA re-elected to enter the Italian tonnage tax regime through 2024 and can reapply

for an additional ten-year period beginning in early 2025. Companies to which the tonnage tax regime applies

pay corporation taxes on shipping profits calculated by reference to the net tonnage of qualifying ships.

Most of Costa’s and AIDA’s earnings that are not eligible for taxation under the Italian tonnage tax regime

will be taxed at an effective tax rate of 4.8% in 2022 and 2021.

Substantially all of AIDA’s earnings are exempt from German income taxes by virtue of the Germany/Italy

income tax treaty.

Other

In addition to or in place of income taxes, virtually all jurisdictions where our ships call impose taxes, fees

and other charges based on guest counts, ship tonnage, passenger capacity or some other measure.

XXI.

Trademarks and Other Intellectual Property

We own, use and/or have registered or licensed numerous trademarks, patents and patent pending designs

and technology, copyrights and domain names, which have considerable value and some of which are widely

recognized throughout the world. These intangible assets enable us to distinguish our cruise products and

services, ships and programs from those of our competitors. We own or license the trademarks for the trade

names of our cruise brands, each of which we believe is a widely-recognized brand in the cruise industry,

as well as our ship names and a wide variety of cruise products and services.

XXII.

Competition

We compete with land-based vacation alternatives throughout the world, such as hotels, resorts (including

all-inclusive resorts), theme parks, organized tours, casinos, vacation ownership properties, and other

internet-based alternative lodging sites. Based on 2022 Cruise Industry News statistics, as of December 31,

2022, we, along with our principal cruise competitors Royal Caribbean Group, Norwegian Cruise Line

Holdings, Ltd. and MSC Cruises, represented approximately 80% of the cruise industry capacity, including

ships operating with guests onboard and ships in pause status expected to return to guest cruise operations.

Website Access to Carnival Corporation & plc SEC Reports

We use our websites as channels of distribution of company information. Our Form 10-K, Carnival plc

Annual Report, joint Quarterly Reports on Form 10-Q, joint Current Reports on Form 8-K, joint Proxy

Statement related to our annual shareholders meeting, Section 16 filings and all amendments to those reports

are available free of charge at www.carnivalcorp.com and www.carnivalplc.com and on the SEC’s website

at www.sec.gov as soon as reasonably practicable after we have electronically filed or furnished these reports

with the SEC. In addition, you may automatically receive email alerts and other information when you

enroll your email address by visiting the Investor Services section of our websites. The content of any website

referred to in this document is not incorporated by reference into this document.

Industry and Market Data

This document includes market share and industry data and forecasts that we obtained from industry

publications, third-party surveys and internal company surveys. Industry publications, including those from

Cruise Industry News, and surveys and forecasts, generally state that the information contained therein

has been obtained from sources believed to be reliable. Cruise Industry News is a for profit magazine company

Strategic Report

that covers all aspects of cruise operations. Their magazines and annual report cover all cruise lines and

shipyards and report on all aspects of cruise operations including relevant issues, financial results, ship

building, ship reviews, etc. All other references to third party information are publicly available at nominal

or no cost. We use the most currently available industry and market data to support statements as to our

market positions. Although we believe that the industry publications and third-party sources are reliable,

we have not independently verified any of the data. Similarly, while we believe our internal estimates with

respect to our industry are reliable, they have not been verified by any independent sources. While we are not

aware of any misstatements regarding any industry data presented herein, our estimates, in particular as

they relate to market share and our general expectations, involve risks and uncertainties and are subject to

change based on various factors, including those discussed under Item 4. Risk Management and/or Mitigation

of Principal and Emerging Risks within this Strategic Report.

Properties

As of November 30, 2022, the Carnival Corporation and Carnival plc headquarters and our larger shoreside

locations are as follows:

Location

Square Footage

(in thousands)

Own/Lease

Principal Operations

Miami, FL, U.S.A.

463/18

Own/Lease

Carnival Corporation & plc and Carnival

Cruise Line

Genoa, Italy

229/46

Own/Lease

Costa and AIDA

Almere, Netherlands

253

Own

Arison Maritime Center

Rostock, Germany

224

Own

Costa and AIDA

Seattle, WA, U.S.A.

175

Lease

Princess Cruises, Holland America Line and

Seabourn

Southampton, England

150

Lease

Carnival plc, P&O Cruises (UK) and

Cunard

Santa Clarita, CA, U.S.A.

134

Lease

Princess Cruises, Holland America Line and

Seabourn

Hamburg, Germany

108

Lease

Costa and AIDA

Fort Lauderdale, FL,

U.S.A.

Lease

Princess Cruises

Sydney, NSW, Australia

Lease

Princess Cruises and P&O Cruises

(Australia)

Information about our cruise ships, including the number each of our cruise brands operate, as well as

information regarding our cruise ships under construction may be found under Part I. Item 1. Business. C.

“Our Global Cruise Business.”In addition, we own, lease or have controlling interests in port destinations,

private islands, hotels, and lodges.

Legal Proceedings

The legal proceedings described in Note 7 — “Contingencies”of our DLC Financial Statements, including

those described under “COVID-19 Actions,” are shown in our IFRS Financial Statements in Note 23—

“Contingencies”and are incorporated by reference into this Strategic Report.

On June 20, 2022, Princess Cruises notified the Australian Maritime Safety Authorization (“AMSA”) and

the flag state, Bermuda, regarding approximately six cubic meters of comminuted food waste (liquid

biodigester effluent) inadvertently discharged by

Coral Princess

inside the Great Barrier Reef Marine Park.

On June 23, 2022, the UK P&I Club N.V. provided a letter of undertaking for approximately $1.9 million

(being the estimated maximum combined penalty). We believe the ultimate outcome will not have a material

impact on our consolidated financial statements.

Executive Officers and Corporate Governance

Information About Our Executive Officers

The table below sets forth the name, age, years of service and title of each of our executive officers as of

January 27, 2023. Titles listed relate to positions within Carnival Corporation and Carnival plc unless

otherwise noted.

Age

Years of

Service (a)

Title

Micky Arison

Chair of the Boards of Directors

David Bernstein

Chief Financial Officer and Chief Accounting Officer

Vice Admiral William R.

Burke (Ret.)

Chief Maritime Officer

Enrique Miguez

General Counsel

Michael Thamm

Group Chief Executive Officer of Costa Group and

Carnival Asia

Josh Weinstein

President, Chief Executive Officer and Chief Climate

Officer

(a)

Years of service with us or Carnival plc predecessor companies.

Business Experience of Executive Officers

Micky Arison has been Chair of the Boards of Directors since 1990 and a Director since 1987. He was

Chief Executive Officer from 1979 to 2013.

David Bernstein has been Chief Financial Officer since 2007 and Chief Accounting Officer since 2016.

William R. Burke, retired Vice Admiral, has been Chief Maritime Officer since 2013.

Enrique Miguez has been General Counsel since 2021. He was Vice President and Deputy General Counsel

from 2003 to 2021.

Michael Thamm has been Group Chief Executive Officer of Costa Group since 2012 and of Carnival Asia

since 2017.

Josh Weinstein has been President, Chief Executive Officer and Chief Climate Officer since August 2022.

He was Chief Operations Officer from 2020 to July 2022, President of Carnival UK from 2017 to 2022 and

Treasurer from 2007 to 2017.

Corporate Governance

Our Code of Business Conduct and Ethics applies to all our team members and our Boards of Directors

and states our commitment to conduct business ethically, without the influence of bribes or acts of corruption.

We are committed to complying with the laws prohibiting bribery and other corrupt practices that apply

everywhere we operate. Additionally, we provide trainings on anti-corruption laws and regulations and how

to identify bribery to our team members. This Code of Business Conduct and Ethics is posted on our

website, which is located at www.carnivalcorp.com and www.carnivalplc.com. We intend to satisfy the

disclosure requirements regarding any amendments to, or waivers from, provisions of this Code of Business

Conduct and Ethics by posting such information on our website, at the addresses specified above. Refer to

Annex C — Carnival plc Corporate Governance Report of the Proxy Statement on page C-1.

Dividends

On March 30, 2020, we suspended the payment of dividends on Carnival Corporation common stock and

Carnival plc ordinary shares.

Repurchase Authorizations

Stock Swap Program

We have a program that allows us to realize a net cash benefit when Carnival Corporation common stock is

trading at a premium to the price of Carnival plc ordinary shares. Under the Stock Swap Program, we

may elect to offer and sell shares of Carnival Corporation common stock at prevailing market prices in

ordinary brokers’transactions and repurchase an equivalent number of Carnival plc ordinary shares in the

UK market.

II.

Carnival plc Shareholder Approvals

Carnival plc ordinary share repurchases under the Stock Swap Program require annual shareholder

approval. The existing shareholder approval was limited to a maximum of 18.5 million ordinary shares and

is valid until the earlier of the conclusion of the Carnival plc 2023 annual general meeting or October 7, 2023.

Strategic Report

Business Review.

The Directors consider that within the DLC arrangement, the most appropriate presentation of Carnival

plc’s Group Business Review is by reference to the DLC Financial Statements. Accordingly, the below presents

the required Business Review for Carnival Corporation & plc in order to satisfy reporting requirements of

the Companies Act 2006. Refer to Note 3 — Segment Information, for a reconciliation of the Carnival

Corporation & plc U.S. GAAP amounts to the corresponding Carnival plc Group IFRS amounts as of and

for the years ended November 30, 2022 and 2021.

Known Trends and Uncertainties

• We believe the increased cost of fuel and other related costs are reasonably likely to continue to

impact our profitability in both the short and long-term.

• We believe inflation and higher interest rates are reasonably likely to continue to impact our

profitability.

• We believe the increasing global focus on climate change, including the reduction of carbon emissions

and new and evolving regulatory requirements, is reasonably likely to have a material negative

impact on our future financial results. The full impact of climate change to our business is not yet

known.

Results of Operations

We have historically earned substantially all of our cruise revenues from the following:

• Sales of passenger cruise tickets and, in some cases, the sale of air and other transportation to and

from airports near our ships’home ports and cancellation fees. We also collect fees, taxes and other

charges from our guests. The cruise ticket price typically includes the following:

• Accommodations

• Most meals, including snacks at numerous venues

• Access to amenities such as swimming pools, water slides, water parks, whirlpools, a health club

and sun decks

• Child care and supervised youth programs

• Entertainment, such as theatrical and comedy shows, live music and nightclubs

• Visits to multiple destinations

• Sales of onboard goods and services not included in the cruise ticket price. This generally includes

the following:

• Beverage sales

• Internet and communication services

• Casino gaming

• Full service spas

• Shore excursions

• Specialty restaurants

• Retail sales

• Art sales

• Photo sales

• Laundry and dry cleaning services

These goods and services are provided either directly by us or by independent concessionaires, from which

we receive either a percentage of their revenues or a fee. Concession revenues do not have direct expenses

because the costs and services incurred for concession revenues are borne by our concessionaires. In 2022,

we earned 42% of our cruise revenues from onboard and other revenue goods and services. In 2019, our most

recent full year of guest cruise operations, we earned 30% of our cruise revenues from onboard and other

revenues.

We earn our tour and other revenues from our hotel and transportation operations and other revenues.

We incur cruise operating costs and expenses for the following:

• The costs of passenger cruise bookings, which include travel agent commissions, cost of air and

other transportation, port fees, taxes, and charges that directly vary with guest head counts and credit

and debit card fees

• Onboard and other cruise costs, which include the costs of beverage sales, costs of shore excursions,

costs of retail sales, internet and communication costs, credit and debit card fees, other onboard costs,

costs of cruise vacation protection programs and pre- and post-cruise land packages

• Payroll and related costs, which include the costs of officers and crew in bridge, engineering and

hotel operations. Substantially all costs associated with our shoreside personnel are included in selling

and administrative expenses

• Fuel costs, which include fuel delivery costs

• Food costs, which include both our guest and crew food costs

• Other ship operating expenses, which include port costs that do not vary with guest head counts;

repairs and maintenance, including minor improvements and dry-dock expenses; hotel costs;

entertainment; gains and losses on ship sales; ship impairments; freight and logistics; insurance

premiums and all other ship operating expenses

We incur tour and other costs and expenses for our hotel and transportation operations and other expenses.

Statistical Information

Years Ended

November 30,

2022

2021

PCDs

(in millions)

(a)

..........................................

54.6

8.2

ALBDs

(in millions)

(b)

........................................

72.5

14.6

Occupancy percentage (c)

.......................................

75%

56%

Passengers carried

(in millions)

...................................

7.7

1.2

Fuel consumption in metric tons

(in millions)

.........................

2.6

1.3

Fuel consumption in metric tons per thousand ALBDs

...................

36.1

(d)

Fuel cost per metric ton consumed

.................................

830

515

Currencies (USD to 1)

AUD

....................................................

0.70

0.75

CAD

....................................................

0.77

0.80

EUR

....................................................

1.06

1.19

GBP

....................................................

1.25

1.38

The resumption of guest cruise operations has impacted the comparability of all aspects of our business.

Notes to Statistical Information

(a)

PCD represents the number of cruise passengers on a voyage multiplied by the number of revenue-

producing ship operating days for that voyage.

(b)

ALBD is a standard measure of passenger capacity for the period that we use to approximate rate

and capacity variances, based on consistently applied formulas that we use to perform analyses

to determine the main non-capacity driven factors that cause our cruise revenues and expenses to

vary. ALBDs assume that each cabin we offer for sale accommodates two passengers and is computed

by multiplying passenger capacity by revenue-producing ship operating days in the period.

(c)

Occupancy, in accordance with cruise industry practice, is calculated using a numerator of PCDs

and a denominator of ALBDs, which assumes two passengers per cabin even though some cabins

can accommodate three or more passengers. Percentages in excess of 100% indicate that on

average more than two passengers occupied some cabins.

(d)

Fuel consumption in metric tons per thousand ALBDs for 2021 and 2020 are not meaningful.

Strategic Report

2022 Compared to 2021

Carnival plc Group IFRS Key Measures

Years Ended November 30,

(in millions)

2022

2021

Revenue

..............................................

3,941

760

Operating income (loss)

...................................

(2,905)

(3,215)

Total assets

............................................

15,532

16,851

The Directors consider that within the DLC arrangement, the most appropriate presentation of Carnival

plc’s Group Business Review is by reference to the DLC Financial Statements. Accordingly, the below presents

the required Business Review for Carnival Corporation & plc in order to satisfy reporting requirements of

the Companies Act 2006.

Consolidated

Years Ended November 30,

(in millions)

2022

2021

Change

Revenues

Passenger ticket

...........................

7,022

1,000

6,022

Onboard and other

........................

5,147

908

4,239

12,168

1,908

10,260

Operating Costs and Expenses

Commissions, transportation and other

..........

1,630

269

1,360

Onboard and other

........................

1,528

272

1,256

Payroll and related

.........................

2,181

1,309

871

Fuel

...................................

2,157

680

1,477

Food

..................................

863

187

676

Ship and other impairments

..................

440

591

(151)

Other operating

...........................

2,958

1,346

1,612

11,757

4,655

7,103

Selling and administrative

....................

2,515

1,885

630

Depreciation and amortization

................

2,275

2,233

Goodwill impairment

.......................

—

226

(226)

16,547

8,997

7,550

Operating Income (Loss)

......................

(4,379)

(7,089)

2,710

Nonoperating Income (Expense)

Interest income

...........................

Interest expense, net of capitalized interest

........

(1,609)

(1,601)

(8)

Gains (losses) on debt extinguishment, net

........

(1)

(670)

670

Other income (expense), net

..................

(165)

(173)

(1,701)

(2,433)

732

Income (Loss) Before Income Taxes

...............

(6,080)

(9,522)

3,443

NAA

Years Ended November 30,

(in millions)

2022

2021

Change

Revenues

Passenger ticket

...........................

4,692

555

4,137

Onboard and other

........................

3,589

553

3,036

8,281

1,108

7,173

Operating Costs and Expenses

..................

7,526

2,730

4,796

Selling and administrative

.....................

1,517

953

564

Depreciation and amortization

..................

1,408

1,352

10,451

5,036

5,415

Operating Income (Loss)

......................

(2,170)

(3,928)

1,758

Years Ended November 30,

(in millions)

2022

2021

Change

Revenues

Passenger ticket

...........................

2,660

491

2,169

Onboard and other

........................

872

221

651

3,531

712

2,820

Operating Costs and Expenses

..................

3,925

1,807

2,118

Selling and administrative

.....................

745

568

177

Depreciation and amortization

..................

692

728

(37)

Goodwill impairment

........................

—

226

(226)

5,361

3,329

2,032

Operating Income (Loss)

......................

(1,830)

(2,617)

787

In the face of the global impact of COVID-19, we paused our guest cruise operations in mid-March 2020

and began resuming guest cruise operations in 2021. As of November 30, 2022, 97% of our capacity was

serving guests compared to 61% as of November 30, 2021. Our NAA segment’s full fleet was serving guests as

of November 30, 2022 compared to 60% of its capacity as of November 30, 2021. Our EA segment had

93% of its capacity serving guests as of November 30, 2022, compared to 63% as of November 30, 2021.

The effects of the pause and subsequent resumption of our guest cruise operations, inflation, higher fuel

prices, higher interest rates and fluctuations in foreign currency rates are collectively having a material negative

impact on all aspects of our business, including our results of operations, liquidity and financial position.

We have a substantial debt balance and require a significant amount of cash to service our debt and sustain

our operations, and our ability to generate cash will be affected by our ability to successfully implement

our business strategy, which includes increasing our occupancy levels and pricing of our cruises, as well as

general macroeconomic, financial, geopolitical, competitive, regulatory and other factors beyond our control.

The full extent of these impacts is uncertain and may be amplified by our substantial debt balance.

Revenues

Consolidated

Cruise passenger ticket revenues made up 58% of our total revenues in 2022 while onboard and other

revenues made up 42%. Revenues for the year ended November 30, 2022 increased by $10.3 billion to

$12.2 billion from $1.9 billion in 2021 due to the ongoing resumption of guest cruise operations and the

significant increase of ships in service. ALBDs increased to 72.5 million in 2022 as compared to 14.6 million

in 2021. Occupancy for 2022 was 75.3%, compared to 56% in 2021.

Strategic Report

NAA Segment

Cruise passenger ticket revenues made up 57% of our NAA segment’s total revenues in 2022 while onboard

and other cruise revenues made up 43%. NAA segment revenues for 2022 increased by $7.2 billion to

$8.3 billion from $1.1 billion in 2021 due to the ongoing resumption of guest cruise operations and the

significant increase of ships in service. ALBDs increased to 44.3 million in 2022 as compared to 7.2 million

in 2021. Occupancy for 2022 was 82% compared to 63% in 2021.

EA Segment

Cruise passenger ticket revenues made up 75% of our EA segment’s total revenues in 2022 while onboard

and other cruise revenues made up 25%. EA segment revenues for 2022 increased by $2.8 billion to $3.5 billion

from $0.7 billion in 2021 due to the ongoing resumption of guest cruise operations and the significant

increase of ships in service. ALBDs increased to 28.2 million in 2022 as compared to 7.4 million in 2021.

Occupancy for 2022 was 65% compared to 50% in 2021.

Operating Cost and Expenses

Consolidated

Operating costs and expenses increased by $7.1 billion to $11.8 billion in 2022 from $4.7 billion in 2021.

These increases were driven by our resumption of guest cruise operations and restart related expenses,

including the cost of returning ships to guest cruise operations and returning crew members to our ships, the

cost of maintaining enhanced health and safety protocols and inflation.

Fuel costs increased by $1.5 billion to $2.2 billion in 2022 from $0.7 billion in 2021. $0.7 billion of this

increase was driven by higher fuel consumption of 1.3 million metric tons, due to the resumption of guest

cruise operations, and $0.8 billion was driven by an increase in fuel prices and changes in fuel mix of $315 per

metric ton consumed in 2022 compared to 2021.

We recognized ship and other impairment charges of $440 million in 2022 compared to $591 million in

2021.

Selling and administrative expenses increased by $0.6 billion to $2.5 billion in 2022 from $1.9 billion in

2021. This increase was primarily driven by increased advertising and promotional spend to continue to build

demand while the remainder was driven by higher administrative expenses incurred as part of our

resumption of guest cruise operations.

There were no goodwill impairment charges recognized in 2022 and $226 million of goodwill impairment

charges recognized in 2021.

The drivers in changes in costs and expenses for our NAA and EA segments are the same as those described

for our consolidated results.

Nonoperating Income (Expense)

Interest expense, net of capitalized interest, was $1.6 billion in 2022 and 2021.

Losses on debt extinguishment, net decreased to $1 million in 2022 from $670 million in 2021.

Liquidity, Financial Condition and Capital Resources

The Directors consider that within the DLC arrangement, the most appropriate presentation of Carnival

plc’s Group Liquidity, Financial Condition and Capital Resources is by reference to the DLC Financial

Statement. Accordingly, the below presents the required disclosures for Carnival Corporation & plc in order

to satisfy reporting requirements of the Companies Act 2006.

As of November 30, 2022, we had $8.6 billion of liquidity including cash, restricted cash from the 2028

Senior Priority Notes which became unrestricted in December 2022 and borrowings available under our

Revolving Facility (Refer to Note 1 — “Liquidity and Management’s Plans”within the plc Group Financial

Statements on page 80). We will continue to pursue various opportunities to raise additional capital to

fund obligations associated with future debt maturities and/or to extend the maturity dates associated with

our existing indebtedness including our Revolving Facility and obtain relevant financial covenant amendments

or waivers, if needed. Actions to raise capital may include issuances of debt, convertible debt or equity in

private or public transactions or entering into new and extended credit facilities.

Since December 2021, we have completed the following:

• In December 2021, we borrowed $1.7 billion under export credit facilities due in semi-annual

installments through 2034.

• In January 2022, we borrowed $637 million under an export credit facility due in semi-annual

installments through 2034.

• In May 2022, we issued an aggregate principal amount of $1.0 billion senior unsecured notes that

mature on June 1, 2030. The 2030 Senior Unsecured Notes bear interest at a rate of 10.5% per year.

• In August 2022, we completed a public offering of 117.5 million shares of Carnival Corporation

common stock at a price per share of $9.95, resulting in net proceeds of $1.2 billion.

• In August 2022, we issued $339 million aggregate principal amount of the 2024 Convertible Notes in

a privately negotiated non-cash exchange for existing convertible notes.

• In October 2022, we issued an aggregate principal amount of $2.0 billion senior priority notes that

mature on May 1, 2028. The 2028 Senior Priority Notes bear interest at a rate of 10.4% per year.

• In November 2022, we issued an additional $87 million aggregate principal amount of the 2024

Convertible Notes in a privately negotiated non-cash exchange for existing convertible notes.

• In November 2022, we issued $1.1 billion aggregate principal amount of the 2027 Convertible Notes.

• In November 2022, we borrowed $799 million under an export credit facility due in semi-annual

installments through 2034.

Refer to Note 5 — “Debt”of the DLC Financial Statements, Note 15 — “Debt and Interest Expense”

within the plc Group Financial Statements and “Funding Sources”below for additional details.

Certain of our debt instruments contain provisions that may limit our ability to incur or guarantee additional

indebtedness.

We had a working capital deficit of $3.1 billion as of November 30, 2022 compared to a working capital

deficit of $0.3 billion as of November 30, 2021. The increase in working capital deficit was caused by a

decrease in cash and cash equivalents, a decrease in short-term investments, an increase in customer deposits

and an increase in current portion of long-term debt, and was partially offset by an increase in restricted

cash and a decrease in short-term borrowings. We operate with a substantial working capital deficit. This

deficit is mainly attributable to the fact that, under our business model, substantially all of our passenger

ticket receipts are collected in advance of the applicable sailing date. These advance passenger receipts generally

remain a current liability until the sailing date. The cash generated from these advance receipts is used

interchangeably with cash on hand from other sources, such as our borrowings and other cash from

operations. The cash received as advanced receipts can be used to fund operating expenses, pay down our

debt, make long-term investments or any other use of cash. Included within our working capital are $4.9 billion

and $3.1 billion of customer deposits as of November 30, 2022 and 2021, respectively. We have agreements

with a number of credit card processors that transact customer deposits related to our cruise vacations. Certain

of these agreements allow the credit card processors to request, under certain circumstances, that we

provide a reserve fund in cash. In addition, we have a relatively low level of accounts receivable and limited

investment in inventories.

Sources and Uses of Cash

Operating Activities

Our business used $1.7 billion of net cash flows in operating activities during 2022, a decrease of $2.4 billion,

compared to $4.1 billion used in 2021. This was due to a decrease in the net loss compared to the same

period in 2021 and other working capital changes.

Investing Activities

During 2022, net cash used in investing activities was $4.8 billion. This was driven by:

• Capital expenditures of $3.9 billion for our ongoing new shipbuilding program

• Capital expenditures of $1.1 billion for ship improvements and replacements, information technology

and buildings and improvements

• Proceeds from sales of ships and other of $70 million

Strategic Report

• Purchases of short-term investments of $315 million

• Proceeds from maturity of short-term investments of $515 million

During 2021, net cash used in investing activities was $3.5 billion. This was caused by:

• Capital expenditures of $3.0 billion for our ongoing new shipbuilding program

• Capital expenditures of $602 million for ship improvements and replacements, information technology

and buildings and improvements

• Proceeds from sales of ships and other of $351 million

• Purchases of short-term investments of $2.9 billion

• Proceeds from maturity of short-term investments of $2.7 billion

Financing Activities

During 2022, net cash provided by financing activities of $3.6 billion was caused by:

• Issuances of $7.2 billion of long-term debt

• Repayments of $2.1 billion of long-term debt

• Payments of $153 million related to debt issuance costs

• Net repayments of short-term borrowings of $2.6 billion

• Net proceeds of $1.2 billion from the public offering of Carnival Corporation common stock

• Purchases of $87 million of Carnival plc ordinary shares and issuances of $95 million of Carnival

Corporation common stock under our Stock Swap Program

During 2021, net cash provided by financing activities of $6.9 billion was caused by:

• Issuances of $13.0 billion of long-term debt

• Repayments of $6.0 billion of long-term debt

• Premium payments of $545 million related to the extinguishment of debt

• Net proceeds of $1.0 billion from Carnival Corporation common stock

• Purchases of $188 million of Carnival plc ordinary shares and issuances of $206 million of Carnival

Corporation common stock under our Stock Swap Program

• Payments of $319 million related to debt issuance costs

Material Cash Requirements

The Directors consider that within the DLC arrangement, the most appropriate presentation of Carnival

plc’s Group Material Cash Requirements, Funding Sources and Quantitative and Qualitative Disclosures

About Market Risk is by reference to the DLC Financial Statements. Accordingly, the below presents the

required disclosures for Carnival Corporation & plc in order to satisfy reporting requirements of the

Companies Act 2006.

Payments Due by

(in millions)

2023

2024

2025

2026

2027

Total

Debt (a)

....................

4,344

4,564 (c) $

6,082

5,875

6,755

$ 27,620

Newbuild capital expenditures (b) . .

1,755

2,400

895

—

5,050

Total

......................

6,099

6,964

6,977

5,875

6,755

$ 32,670

(a)

Includes principal as well as estimated interest payments and does not include the impact of any future

possible refinancings. Excludes undrawn export credits.

(b)

As of November 30, 2022, we have committed undrawn export credit facilities of $2.2 billion which

fund a portion of our Newbuild contractual commitments. Subsequent to November 30, 2022, we

obtained additional committed undrawn export credit facilities related to ship deliveries scheduled in

2024 and 2025.

(c)

Includes $0.2 billion of borrowings under the Revolving Facility as of November 30, 2022 which

mature in 2024.

Funding Sources

As of November 30, 2022, we had $8.6 billion of liquidity including cash, restricted cash from the 2028

Senior Priority Notes which became unrestricted in December 2022 and borrowings available under our

Revolving Facility. In addition, we had $2.2 billion of undrawn export credit facilities to fund ship deliveries

planned through 2024. Refer to Note 1 — “General”for further details on our liquidity risk and how we

plan to fund our cash requirements, which is assessed for Carnival Corporation & plc combined, given the

DLC arrangement.

(in billions)

2023

2024

Future export credit facilities at November 30, 2022

......................

0.8

1.4

Subsequent to November 30, 2022, we obtained additional undrawn export credit facilities related to ship

deliveries scheduled in 2024 and 2025.

Our export credit facilities contain various financial covenants as described in Note 5 — “Debt” within the

DLC Financial Statements and Note 15 — “Debt and Interest Expense within the plc Group Financial

Statements. At November 30, 2022, we were in compliance with the applicable covenants under our debt

agreements.

Quantitative and Qualitative Disclosures About Market Risk

For a discussion of our hedging strategies and market risks, see the discussion below and the consolidated

financial statements.

Fuel Price Risks

Substantially all our exposure to market risk for changes in fuel prices relates to the consumption of fuel on

our ships. We have installed Advanced Air Quality Systems on most of our ships, which has aided in the

mitigation of the financial impact from the ECAs and global 0.5% sulfur requirements. The blended spot price

included in our selected forecast information within our Business Update from December 2022 was $673

per metric ton, and we expect our total fuel consumption for 2023 to be 2.9 million metric tons. If fuel prices

changed by 10%, our 2023 total expected fuel cost would change by $185 million.

Foreign Currency Exchange Rate Risks

Operational Currency Risks

Our operations primarily utilize the U.S. dollar, Euro, Sterling or the Australian dollar as their functional

currencies. Our operations also have revenue and expenses denominated in non-functional currencies.

Movements in foreign currency exchange rates will affect our financial statements.

Investment Currency Risks

The foreign currency exchange rates were as follows:

November 30,

2022

2021

USD to 1:

AUD

......................................................

0.66

0.71

CAD

......................................................

0.74

0.78

EUR

......................................................

1.03

1.13

GBP

......................................................

1.20

1.33

If the November 30, 2021 currency exchange rates had been used to translate our November 30, 2022

non-U.S. dollar functional currency operations’assets and liabilities (instead of the November 30, 2022 U.S.

dollar exchange rates), our total assets would have been higher by $1.6 billion and our total liabilities

would have been higher by $1.1 billion.

Newbuild Currency Risks

At November 30, 2022, our remaining newbuild currency exchange rate risk primarily relates to euro-

denominated newbuild contract payments, which represent a total unhedged commitment of $4.4 billion

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and relate to newbuilds scheduled to be delivered through 2025 to non-euro functional currency brands. The

functional currency cost of each of these ships will increase or decrease based on changes in the exchange

rates until the unhedged payments are made under the shipbuilding contract. We may enter into additional

foreign currency derivatives to mitigate some of this foreign currency exchange rate risk. Based on a 10%

change in euro to U.S. dollar exchange rates as of November 30, 2022, the remaining unhedged cost of

these ships would have a corresponding change of $445 million.

Interest Rate Risks

The composition of our debt and interest rate swaps was as follows:

November 30, 2022

Fixed rate

.....................................................

54%

EUR fixed rate

..................................................

12%

Floating rate

...................................................

17%

EUR floating rate

................................................

15%

GBP floating rate

................................................

At November 30, 2022, we had interest rate swaps that have effectively changed $89 million of EURIBOR-

based floating rate euro debt to fixed rate euro debt. Based on a 10% change in the November 30, 2022 market

interest rates, our 2022 interest expense on floating rate debt, including the effect of our interest rate swaps,

would have changed by $48 million.

Internal Control and Risk Assessment.

Management

BOARDS OF DIRECTORS

Oversee strategy and risk management.

Boards of Directors Committees

Oversee strategy and risk management.

AUDIT COMMITTEES

Oversee risk management realted to

financial, IT, (including cybersecurity and

data privacy) and non-HESS related

operational risks, as well as monitoring

changes to and compliance with related

legal and regulatory requirements.

EXECUTIVE MANAGEMENT

Responsible for managing the business,

providing the Boards of Directors and

Committees with appropriate information

to enable them to carry out their

responsibilities. Performs remediation

actions resulting from investigations by

RAAS as well as the Global Ethics and

Compliance function.

GLOBAL ETHICS

AND COMPLIANCE

Responsible for supporting a high level of

rthics and integrity and helping

management maintain compliance with

applicable laws, regulations standards.

RISK ADVISORY AND

ASSURANCE SERVICES

Responsible for providing independent

assurance that controls are well designed and

operating effectively.

HESS COMMITTEES

Oversee risk management realted to HESS

and sustainability risks as well as

monitoring changes to and complianes

with related legal and regulatory

requirements.

COMPLIANCE COMMITTEES

Oversee risk management realted to complianes

with applicable laws and regulations, including

our compliance monitoring activities, supporting

a high level of ethics and integrity.

Note: The Boards of Directors Compensation and Nominating & Governance Committees are also responsible

for some strategy and risk management activities.

Our Risk Management Framework

The Boards of Directors have overall responsibility for determining the strategic direction of our business

and have established a framework to manage risk and determine the nature and extent of the principal and

emerging risks acceptable to our business. Our framework is designed to identify and manage, rather than

eliminate, risk to the achievement of our strategic objectives. The Boards of Directors, through their

Committees and executive management, have carried out a robust assessment of our principal and emerging

risks, including to ensure that they are effectively managed and/or mitigated.

Risk management is embedded in all areas of our business and is reflected across our policies and procedures.

Our risk management framework includes an organization wide, multi-layered approach and consists of

the Boards of Directors, their Committees, Risk Advisory and Assurance Services (“RAAS”), Global Ethics

and Compliance and executive management.

The diagram above, illustrates the interaction between the Boards of Directors, their Committees and our

executive management to continuously assess, mitigate and manage risks. The Boards of Directors leverage

their Committees, principally the Audit Committees, the HESS Committees and the Compliance

Committees, to oversee our risk management activities. Each area of our business reports via executive

management to these Committees. The Committees of the Boards of Directors and the executive management

of each area of our business are supported by RAAS and Global Ethics and Compliance.

Refer to Annex C — Carnival plc Corporate Governance Report of the Proxy Statement on pages C-5 to

C-9 for additional information on the Committees of the Boards.

How we identify and manage risk

Risk assessment processes are integrated within our business operations at every level. Risks are identified

by individuals across all businesses and functions and at many layers of the organization by considering what

could prevent us from achieving our strategic, operational or compliance objectives or impact the

sustainability of our business model. In deciding which risks are principal and emerging risks, our executive

management considers the potential impact and probability of the related events or circumstances, and

the timescale over which they may occur. In addition, under the supervision of the Boards of Directors and

their Committees, executive management is responsible for ensuring that we have active plans and adequate

resources to manage and/or mitigate the principal and emerging risks, including HESS and compliance related

risks, identified by the business. As new risks arise, executive management seeks to ensure they are properly

reviewed and monitored.

Internal Control

Internal control and risk management is an ongoing process embedded in each of our operations. It is

designed to identify, evaluate and manage the principal and emerging risks faced by the business units. A

system of internal controls designed to be capable of responding quickly to evolving risks in the business has

been established, comprising procedures for the prompt reporting of significant and material internal

control deficiencies together with the appropriate remedial actions. Carnival Corporation & plc has adopted

the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) guidance for

implementing its internal controls as part of its SOX compliance plan. COSO is considered to be the

leading internal control framework and references the same internal control objectives and components as

are used by the UK Corporate Governance Code in assessing the effectiveness of a company’s risk and control

processes.

Our system of internal control was in place throughout 2022 and has continued in place up to the date of

approval of this Strategic Report. The Boards of Directors confirm that they have performed their annual

review of its effectiveness and that it is in compliance with the UK Corporate Governance Code. The Boards

of Directors review of the system of internal controls has not identified any significant failings or

weaknesses, and therefore, no remedial actions are required.

Emerging Risks

We continuously evaluate potential emerging risks that could significantly impact or challenge our strategy

and business model. Emerging risks identified are managed and monitored alongside our existing principal

risks. An example of this in practice are the direct and indirect risks arising from climate change which

continue to evolve. To further address the evolving and emerging risks associated with climate change, we

created a Strategic Risk Evaluation (“SRE”) Committee to assist in identifying, monitoring and reviewing the

management of climate-related risks and opportunities. Refer to subsection “a.”of section XV. Sustainability

and Environmental Impact on page 19 and Operating Risk Factor “e.”on page 55 for additional details

on how we manage risks arising from climate change.

Strategic Report

Risk Management and/or Mitigation of Principal and Emerging Risks.

You should carefully consider the following discussion of material factors, events and uncertainties that

make an investment in the company’s securities risky and provide important information for the understanding

of the “forward-looking”statements discussed in this Annual Report and elsewhere. These risk factors

should be read in conjunction with other information in this Annual Report.

The events and consequences discussed in these risk factors could have a material adverse effect on the

company’s business, financial condition, operating results and stock price. These risk factors do not identify

all risks that the company faces; operations could also be affected by factors, events, or uncertainties that

are not presently known to the company or that the company currently does not consider to present material

risks to its operations. In addition to the effects of the COVID-19 pandemic and resulting global disruptions

on our business and operations discussed in this Annual Report and in the risk factors below, additional

or unforeseen effects from our substantial debt balance as a result of the pause of our guest cruise operations

could give rise to or amplify many of the risks discussed below. Some of the statements in this item and

elsewhere in this document are “forward-looking statements.”For a discussion of those statements and of

other factors to consider see the “Cautionary Note Concerning Factors That May Affect Future Results”

section.

The ordering and lettering of the risk factors set forth below is not intended to reflect any company

indication of priority or likelihood.

Operating Risk Factors

Events and conditions around the world, including war and other military actions, such as the invasion of

Ukraine, inflation, higher fuel prices, higher interest rates and other general concerns impacting the ability

or desire of people to travel have led, and may in the future lead, to a decline in demand for cruises,

impacting our operating costs and profitability.

We have been, and may continue to be, impacted by the public’s concerns regarding the health, safety and

security of travel, including government travel advisories and travel restrictions, political instability and civil

unrest, terrorist attacks, war and military action, most recently the invasion of Ukraine, and other general

concerns. The invasion of Ukraine and its resulting impacts, including supply chain disruptions, increased

fuel prices, impact on demand for cruises to neighboring regions and international sanctions and other

measures that have been imposed, have adversely affected, and may continue to adversely affect, our business.

These factors may also have the effect of heightening many other risks to our business, any of which could

materially and adversely affect our business and results of operations. Additionally, we have been, and may

continue to be, impacted by heightened regulations around customs and border control, travel bans to

and from certain geographical areas, voluntary changes to our itineraries in light of geopolitical events,

government policies increasing the difficulty of travel and limitations on issuing international travel visas.

We may be impacted by adverse changes in the perceived or actual economic climate, such as inflation, global

or regional recessions, higher unemployment and underemployment rates and declines in income levels.

Examples of how we manage and/or mitigate this risk:

• We coordinate with law enforcement and intelligence agencies around the globe and endeavor to

identify security-related threats at sea and ashore

• We have communications programs to help mitigate the adverse impacts of publicity

• We have put in place various strategies and initiatives, including increasing our marketing and

advertising programs in efforts to drive incremental demand for cruising

• We have extended our demand planning and are placing purchase orders earlier to compensate for

current extended lead times for supplies

• We optimize itineraries through our itinerary planning reviews and have the ability to change

itineraries to increase demand and/or to reduce fuel consumption

Key stakeholders considered:

• Communities we serve

• Guests and travel agent partners

Pandemics have in the past and may in the future have a significant negative impact on our financial

condition and operations..

Pandemics have in the past and may in the future have a significant negative impact on our financial

condition and operations. We could:

• be forced to re-implement a pause of our guest cruise operations

• be negatively impacted by travel advisories, restrictions, recommendations and regulations set by

various governmental authorities, which could impact our occupancy levels

• be subject to enhanced health and hygiene requirements in attempts to counteract future outbreaks,

and these requirements may be costly, take a significant amount of time to implement across our global

cruise operations and may result in disruptions in guest cruise operations, incremental costs and

loss of revenue

• be subject to negative publicity, along with the cruise industry, which could have a long-term impact

on the appeal of our cruises

• be subject to lawsuits, other governmental investigations and other actions

• reassess our ship deployment options and our fleet, which could lead to the removal of additional

ships from our fleet and may result in incremental ship impairment charges and losses on ship sales

• be negatively impacted as a result of the adverse impact on our partners, counterparties and joint

ventures

• be negatively impacted by the inability to attract and retain the loyalty of our guests and hire and

retain our crew

Examples of how we manage and/or mitigate this risk:

• We have insurance coverage for certain liabilities, costs and expenses related to COVID-19 through

our participation in Protection and Indemnity (“P&I”) clubs

• We report health, environmental, safety and security incidents and take appropriate action to reduce

the risk of recurrence

• We have taken significant operational actions to preserve cash, prioritize capital expenditures, reduce

interest rates and extend maturities to increase liquidity

Key stakeholders considered:

• Communities we serve

• Team members

• Guests and travel agent partners

• Investors

Incidents concerning our ships, guests or the cruise industry have in the past and may, in the future,

negatively impact the satisfaction of our guests and crew and lead to reputational damage.

Our operations involve the risk of incidents and media coverage thereof. Such incidents include, but are not

limited to, the improper operation or maintenance of ships, motorcoaches and trains; guest and crew

illnesses; mechanical failures, fires and collisions; repair delays, groundings and navigational errors; oil spills

and other maritime and environmental issues as well as other incidents at sea, while in port or on land

which may generate negative publicity or cause guest and crew discomfort, injury, or death. Although our

commitment to the safety and comfort of our guests and crew is paramount to the success of our business, our

ships have been involved in outbreaks, accidents and other incidents in the past and we may experience

similar or other incidents in the future. Our ability to attract and retain the loyalty of our guests, our ability

to hire and the amounts we must pay our crew depend, in part, upon the perception and reputation of

our company and our brands and the public’s concerns regarding the health and safety of travel generally,

as well as the cruising industry and our ships specifically. In addition, these and any other events which impact

the travel industry more generally may negatively impact our guests’ and/or crew’s ability or desire to travel

to or from our ships and/or interrupt the supply of critical goods and services.

Examples of how we manage and/or mitigate this risk:

• We provide training to team members related to their job responsibilities to ensure understanding of

and compliance with our policies and procedures

• We report health, environmental, safety and security incidents and take appropriate action to reduce

the risk of recurrence

Strategic Report

• We have appropriate policies that govern, encourage and reinforce the right behavior

• We have communications programs to help mitigate the adverse impacts of publicity

• We promote a culture that encourages team members to speak up about concerns and opportunities

which are addressed appropriately

Key stakeholders considered:

• Team members

• Guests and travel agent partners

Changes in and non-compliance with laws and regulations under which we operate, such as those relating

to health, environment, safety and security, data privacy and protection, anti-corruption, economic sanctions,

trade protection, labor and employment, and tax have in the past and may, in the future, lead to litigation,

enforcement actions, fines, penalties and reputational damage.

We are subject to numerous international, national, state and local laws, regulations, treaties and other legal

requirements that govern health, environmental, safety and security matters in relation to our guests, crew

and ships. These requirements change regularly, depending on the itineraries of our ships and the ports and

countries visited. Implementing these and any subsequent requirements may be costly and take time to

implement across our global cruise operations. In addition, the accelerating pace of regulatory changes may

affect our ability to comply in the future. If we violate or fail to comply with any of these laws, regulations,

treaties and other requirements we could be, and have previously been, fined, placed on probation or otherwise

sanctioned by regulators. In addition, there is increased global focus on climate change, which may lead to

additional regulatory requirements. Refer to Operating Risk Factor “e.” below for additional discussion on

climate change regulation risks. We were subject to a court-ordered environmental compliance plan

supervised by the U.S. District Court for the Southern District of Florida, which was operative until

April 2022 and subjected our operations to additional review and other obligations.

We are subject to laws and requirements related to the treatment and protection of personal, sensitive

and/or other regulated data in the jurisdictions where we operate. Various governments, agencies and

regulatory organizations have enacted or are considering new rules and regulations and we expect to continue

to incur costs to comply with these rules and regulations. In the course of doing business, we collect guest,

team member, company and other third-party data, including personally identifiable information and other

sensitive data. We have incurred legal and other costs in connection with cyber incidents relating to such

sensitive data. Refer to Operating Risk Factor “g.”below for additional discussion of data security risks.

Our operations subject us to potential liability under anti-corruption laws and regulations. We may also be

affected by economic sanctions, trade protection laws, policies and other regulatory requirements affecting

trade and investment.

We are subject to compliance with tax laws, regulations and treaties in the jurisdictions in which we are

incorporated or operate. These tax laws, regulations and treaties are subject to change at any time, which

may result in substantially higher tax expense. For example, the Organization for Economic Co-operation and

Development (“OECD”) has proposed a multi-jurisdictional inclusive framework to address base erosion

and profit sharing that, if enacted by relevant jurisdictions, may result in increased tax expense.

Examples of how we manage and/or mitigate this risk:

• We monitor for changes in laws and regulations and changes in interpretation of these laws and

regulations relating to our business. Where necessary, we obtain specialist advice to implement

programs to help ensure compliance

• We have appropriate policies and procedures that encourage and reinforce the right behavior

• We provide training to team members related to their job responsibilities to ensure understanding of

and compliance with our policies and procedures

• We have a system of internal controls to prevent and/or detect risks and we perform risk assessments,

audits and other evaluations of our control design and performance

• We monitor our own compliance and where incidents occur, take appropriate action, including

conducting investigations, to prevent recurrence

• We promote a culture that encourages team members to speak up about concerns and opportunities

which are addressed appropriately

Key stakeholders considered:

• Communities we serve

Factors associated with climate change, including evolving and increasing regulations, increasing global

concern about climate change and the shift in climate conscious consumerism and stakeholder scrutiny, and

increasing frequency and/or severity of adverse weather conditions could adversely affect our business.

Growing concerns regarding climate change have resulted in increased global regulatory focus on GHG and

other emissions which may have material impacts on our business. For example, the EU’s Fit for 55

package, which includes recently agreed updates to the ETS relating to the need to acquire carbon emission

allowances for maritime shipping related emissions inside EU waters, proposed reforms to the EU’s ETD,

which imposes taxes on fuel purchased in the EU, as well as a new regulatory proposal, the FuelEU Maritime

initiative, which sets out a long-term framework to reduce emissions by increasing the use of sustainable

alternative fuels and shore power. In addition, the IMO is currently considering various other proposals which

aim to reduce emissions within the global shipping industry. If finalized and enacted, these regulations and

reforms may individually or collectively have a material impact on our operating costs and profitability.

Regulatory efforts, both internationally and in the U.S., are evolving, including the international alignment

of such efforts, and we cannot determine what final regulations will be enacted or their ultimate impact on our

business. Climate change-related regulatory activity and developments that require us to reduce our

emissions, which includes both the EU and IMO proposals discussed above, may adversely affect our

business and financial results by requiring us to make capital investments in new equipment or technologies,

pay for carbon emissions, purchase carbon offset credits, or otherwise incur additional costs or take

additional actions related to our emissions. Such activity may also impact us indirectly by increasing our

operating costs, including fuel costs. Regulatory developments may also result in the inability to operate ships

that do not meet certain standards, the acceleration of the removal of less fuel-efficient ships from our fleet

and impact the resale value of our ships in the future. In addition, regulatory developments may restrict or

limit our access to certain destinations and/or countries or curtail our freedom to operate.

Growing recognition among consumers globally of the negative effects of climate change and the impact of

GHG and other emissions may lead to material changes in consumer preferences. For instance, our guests

may choose a vacation option that they perceive as operating in a manner that is more sustainable for the

climate, seek alternative methods of travel, or reduce the amount and frequency of their travel. In addition,

some environmental focused groups have and may continue to generate negative publicity regarding the

environmental impact of the cruise industry and are advocating for more stringent regulation of ship

emissions while the ship is docked and at sea. Growing environmental scrutiny of our operations and the

industry from the investment community, other stakeholders, and the media have impacted and may continue

to impact how we are perceived, which may have a material impact on our operations and financial results.

Certain climate-related actions and investments we make today may not lead us to our intended future

emissions related goals or may not be favorably perceived in future years based on continuing evolving

regulations and perceptions around effective emissions mitigation strategies and technologies.

Our cruise ships, hotels, land tours, port and related commercial facilities and shore excursions have been

and may continue to be impacted by adverse weather patterns or other natural disasters, such as hurricanes,

earthquakes, floods, fires, tornadoes, tsunamis, typhoons and volcanic eruptions. Climate change is

expected to increase the frequency and intensity of certain adverse weather patterns, possibly making

certain destinations less desirable or impacting our business in other ways. We have been forced to, and in

the future may be forced to, alter itineraries or cancel a cruise or a series of cruises or tours due to these or

other types of disruptions. The physical climate-related risks to our business include increased hurricane/

typhoon intensity and frequency, increases in global temperatures and rising sea levels which may adversely

impact our shoreside facilities, our investments in ports or the availability or desirability of ports and

destinations in which we operate. These effects may also disrupt the supply of critical goods and services to

our facilities and ships. Any of these events could have a material impact on our business and profitability.

Examples of how we manage and/or mitigate this risk:

• We continue to investigate alternative lower carbon fuel options and technology and invest in energy

efficiency improvements

• We monitor for changes in laws and regulations and changes in interpretation of these laws and

regulations relating to our business. Where necessary, we obtain specialist advice to implement

programs to help ensure compliance

• We provide training to team members related to their job responsibilities to ensure understanding of

and compliance with our policies and procedures

Strategic Report

• We monitor weather conditions and have the ability to change our ship itineraries to avoid adverse

weather or regions impacted by adverse weather or in preparation of or response to significant climate

change impacts to particular regions

• We partner with key organizations and stakeholders on research and development to support carbon

emissions reduction efforts

• We have a CCO who is responsible for the oversight of climate-related matters and an SRE Committee,

which consists of members of executive management and an advisor, that reports to the CEO, who

in turn, reports to the Boards of Directors

Key stakeholders considered:

• Communities we serve

• Guests and travel agent partners

• Investors

Inability to meet or achieve our sustainability related goals, aspirations, initiatives, and our public

statements and disclosures regarding them, may expose us to risks that may adversely impact our business.

We have developed and will continue to establish goals, targets, aspirations, and other objectives

(“sustainability objectives”) related to sustainability matters. These statements reflect our current plans and

do not constitute a guarantee that they will be achieved. Our efforts to research, establish, accomplish,

and accurately report on these sustainability objectives expose us to numerous operational, reputational,

financial, legal, and other risks, any of which could have a negative impact on our business. Our ability to

achieve any of our stated sustainability objectives, particularly with respect to environmental emissions, is

subject to numerous factors and conditions, many of which are outside of our control. Examples of such

factors include the availability and costs of low- or non-carbon-based energy sources, evolving regulatory

requirements affecting sustainability standards or disclosures, the availability of future financing and the

availability of suppliers that can meet our sustainability standards.

Our business may face increased scrutiny from our guests, our team members, the investment community,

governments, regulators, destinations and other stakeholders that we serve related to our sustainability

activities, including the sustainability objectives that we adopt, our methodologies and timelines for pursuing

them and our ability to document and support the achievement of those objectives. If our sustainability

practices do not meet, or are perceived to fall short of, the expectations of our guests, team members, investors

or other stakeholders, demand for cruising, our reputation, our ability to attract or retain team members,

and our attractiveness as an investment could be negatively impacted. Similarly, our failure or perceived

failure to pursue or fulfill our sustainability objectives within the timelines we announce, or at all, could have

the same negative impacts as well as expose us to government enforcement actions and private litigation.

Examples of how we manage and/or mitigate this risk:

• We continue to make investments in technology related to our sustainability initiatives

• We provide training to team members related to their job responsibilities to ensure understanding of

and compliance with our policies and procedures

• We incentivize meeting our sustainability goals through compensation

• We have HESS policies in place that govern our approach to sustainability

• We partner with key organizations and stakeholders on research and development to support carbon

emissions reduction efforts

• We promote a culture that encourages team members to speak up about concerns and opportunities

which are addressed appropriately

Key stakeholders considered:

• Communities we serve

• Guests and travel agent partners

• Investors

Breaches in data security and lapses in data privacy as well as disruptions and other damages to our

principal offices, information technology operations and system networks and failure to keep pace with

developments in technology may adversely impact our business operations, the satisfaction of our guests

and crew and may lead to reputational damage.

We have been and may continue to be impacted by breaches in data security and lapses in data privacy,

which occur from time to time. These can vary in scope and intent from motivated driven attacks to malicious

attacks intended to disrupt or compromise our shoreside and shipboard operations by targeting our key

operating systems. Breach or circumvention of our systems or the systems of third parties, including by

ransomware or malware, through vulnerabilities in licensed software or hardware, or as a result of other

attacks, results in disruptions to our business operations; unauthorized access to (or the loss of company

access to) competitively sensitive, confidential or other critical data (including sensitive financial, medical

or other personal or business information) or systems; loss of customers; financial losses; regulatory

investigations, enforcement actions and fines; litigation and misuse or corruption of critical data and

proprietary information, any of which could be material.

We have been subject to past attacks which resulted in unauthorized access to systems and/or data and

regulatory investigations regarding such incidents. We have incurred legal, settlement and other costs in

connection with cyber incidents that have impacted us. While these incidents did not have a material adverse

effect on our business, operations or financial results, no assurances can be given about future incidents,

attacks and related litigation or regulatory investigations that could have such a material adverse effect.

Our principal offices, information technology operations, system networks and various remote work locations

may be impacted by actual or threatened natural disasters (for example, hurricanes, earthquakes, floods,

fires, tornadoes, tsunamis and typhoons) or other disruptive events. Our maritime and/or shoreside operations,

including our ability to manage our inventory of cabins held for sale and set pricing, control costs and

serve our guests, depends on the reliability of our information technology operations and system networks,

as well as our ability to refine and update to more advanced systems and technologies. In addition, we may be

unable to obtain appropriate technology in a timely manner or at all or we may incur significant costs in

doing so. A failure to adopt the appropriate technology, or a failure or obsolescence in the technology that

we do adopt, could have adverse effects on our business.

Examples of how we manage and/or mitigate this risk:

• We have policies and procedures that govern data security, data privacy and disaster recovery

• We provide training to team members related to their job responsibilities to ensure understanding of

and compliance with our policies and procedures related to data security, data privacy and disaster

recovery

• We incorporate security and privacy-by-design in the development of new systems and infrastructure

• We actively, and will continue to, invest in cybersecurity, talent and third party service providers to

enhance our data security

• We monitor and test our own ability to detect and respond to an incident which could cause a

breach in data security, lapse in data privacy or natural disaster and where incidents occur, take

appropriate remedial action

• We continue to align our technology planning, infrastructure, security, data privacy and applications

to maximize the business value of our information technology investments

Key stakeholders considered:

• Team members

• Guests and travel agent partners

The loss of key team members, our inability to recruit or retain qualified shoreside and shipboard team

members and increased labor costs could have an adverse effect on our business and results of operations.

Our success depends, in large part, on the skills and contributions of our team members, and on our ability

to recruit, develop and retain high quality, diverse team members. We may not be successful in recruiting,

developing or retaining key or other highly qualified team members. In addition, carbon-intensive industries

may become a less attractive employment opportunity. As a result of the reduction in our workforce

during our pause in guest cruise operations, general macroeconomic factors and an increasingly competitive

labor market, at times we may experience difficulty in hiring sufficient qualified team members. For

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example, there is particularly high competition for recruiting and retaining qualified team members needed

to support our information technology systems and infrastructure which is critical to our successful operations.

In addition, we hire a significant number of qualified shipboard team members each year and, thus, our

ability to adequately recruit, develop and retain these individuals is critical to our success. Incidents involving

cruise ships, including disease outbreaks on our ships and increasing demand as a result of the industry’s

projected growth could negatively impact our ability to recruit, develop and retain sufficient qualified

shipboard team members.

A prolonged shortage of qualified shoreside and shipboard team members and/or increased turnover rates

has in the past inhibited, and in the future could inhibit, our ability to operate our business in an optimal

manner. The competitive labor market is resulting in increased costs from the need to hire temporary

personnel and we are often required to increase wages and/or benefits in order to attract and retain team

members, all of which may negatively impact our results of operations. In connection with our resumption

of guest cruise operations, we have hired and intend to continue hiring a significant number of qualified team

members for the foreseeable future, and we expect to continue to face these challenges.

Examples of how we manage and/or mitigate this risk:

• We have programs to attract, develop and retain top talent and use team member feedback tools to

monitor team members’ perspectives and take appropriate actions

• We provide training to continue the development of our team members related to their job

responsibilities and to ensure understanding of and compliance with our policies and procedures

• We provide total compensation that allows us to be competitive in the labor markets in which we

operate

• We continue to expand the number of countries from which we recruit our team members

• We promote a culture that encourages team members to speak up about concerns and opportunities

which are addressed appropriately

Key stakeholders considered:

• Team members

• Guests and travel agent partners

Increases in fuel prices, changes in the types of fuel consumed and availability of fuel supply may adversely

impact our scheduled itineraries and costs.

We have been and may continue to be impacted, by economic, market and political conditions around the

world, such as fuel demand, regulatory requirements including climate-induced regulations, supply disruptions

and related infrastructure needs, which make it difficult to predict the future price and availability of fuel.

The supply and availability of different fuel types in various markets in which we operate have experienced

increased volatility and have led to increased fuel prices and reduced profitability. Future increases in the

global price of fuel would increase the cost of our cruise ship operations as well as some of our other

expenses, such as crew travel, freight and commodity prices. Increases in airfares, such as those resulting

from increases in the price of fuel, would increase our guests’ overall vacation costs and could reduce demand

for cruises, as many of our guests depend on airlines to transport them to or from the airports near the

ports where our cruises embark and disembark.

Many of our vessels have exhaust gas cleaning systems that allow them to operate on high sulfur fuel oil

that is less expensive than low sulfur fuel; however, the significant drop in demand for higher sulfur fuel

directly related to the pause in guest cruise operations has made it more difficult to source going forward

which may result in higher operating costs. Additionally, certain of our ships are designed to use LNG as their

primary fuel source. The price of LNG in certain markets has been and may continue to be unattractive

compared to other alternatives, and as such, at times we have used and may continue to use conventional fuels

to power our LNG ships. Refer to Operating Risk Factor “e.”for additional discussion on the impact of

climate change and regulation changes on fuel costs.

Examples of how we manage and/or mitigate this risk:

• We manage fuel consumption through ship maintenance practices

• We optimize itineraries through our itinerary planning reviews and have the ability to change

itineraries to reduce fuel consumption

• We research and implement innovative technologies to reduce fuel consumption

• We are adding new, more fuel-efficient ships to our fleet and have removed smaller, less fuel-efficient

ships

• We enter into supply agreements to help ensure availability and seek alternative sources if necessary

• We are upgrading our fleet with more energy efficient technologies

• Our LNG ships are all dual fuel and can burn MGO

• We have the ability to purchase fuel in different ports we visit

Key stakeholders considered:

• Communities we serve

• Guests and travel agent partners

We rely on supply chain vendors who are integral to the operations of our businesses. These vendors and

service providers are also affected by COVID-19 and may be unable to deliver on their commitments which

could negatively impact our business.

We rely on supply chain vendors to deliver key products to the operations of our businesses around the

world. Any event impacting a vendor’s ability to deliver quality goods at the location and time needed could

negatively impact our ability to operate our business. Events impacting our supply chain could be caused

by factors beyond the control of our suppliers or us, including labor actions, increased demand, problems in

production or distribution and/or disruptions in third-party logistics, information technology or

transportation systems. In addition, the effects from COVID-19 and other global events have resulted in

widespread global supply chain disruptions to vendors including critical supply chain shortages, labor

shortages, significant material cost inflation and extended lead times for items that are required for our

operations. Any such interruptions to our supply chain could increase our costs and could limit the availability

of products critical to our operations.

Examples of how we manage and/or mitigate this risk:

• We enter into supply agreements to help ensure availability and seek alternative sources if necessary

• We have extended our demand planning and are placing purchase orders earlier to compensate for

current extended lead times

• We utilize substitute products where appropriate

• We leverage corporate contracts and our supplier relationships

• We source locally to mitigate logistics costs and delays

• We utilize short-term or long-term contracts as needed

Key stakeholders considered:

• Team members

• Guests and travel agent partners

Fluctuations in foreign currency exchange rates may adversely impact our financial results.

We earn revenues, pay expenses, purchase and own assets and incur liabilities in currencies other than the

U.S. dollar. Additionally, our shipbuilding contracts are typically denominated in euros. Movements in foreign

currency exchange rates, which have recently been more volatile, will affect our financial results.

Examples of how we manage and/or mitigate this risk:

• We net certain exposures to take advantage of natural offsets with our business and continuously

evaluate the use of financial instruments

• We consider and may hedge certain of our ship commitments and net investments in foreign

operations

• We sell/buy foreign currencies throughout the year to manage the economic impact of foreign

currency exchange volatility

• We adjust our procurement activities

Key stakeholders considered:

• Investors

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Overcapacity and competition in the cruise and land-based vacation industry may negatively impact our

cruise sales, pricing and destination options.

We may be impacted by increases in capacity in the cruise and land-based vacation industry, which may

result in capacity growth beyond demand, either globally or for a region, or for a particular itinerary. For

example, Asia, specifically China, remains closed to the cruise industry and it is uncertain when or if we will

resume operations in the region. As a result, we along with other cruise operators, have had to find itineraries

in alternative regions for the ships that were previously serving the Asia market, which could lead to

overcapacity in other regions. We face competition from other cruise brands on the basis of overall experience,

destinations, types and sizes of ships and cabins, travel agent partner preferences and value. We also

compete with land-based vacation alternatives throughout the world on the basis of overall experience,

destinations and value. In addition, certain ports and destinations have faced a surge of both cruise and non-

cruise tourism and in certain destinations, countermeasures to limit the number of tourists have been

contemplated and/or put into effect, including proposed limits on cruise ships and cruise passengers. Potential

restrictions in ports and destinations could limit the itinerary and destination options we can offer our

passengers going forward.

Examples of how we manage and/or mitigate this risk:

• We have the ability to change our itineraries to alternative regions of the world

• We offer a wide variety of brands, itineraries, products and services to our guests

• We work alongside government and local regulators to ensure compliance with limitations placed on

tourism

Key stakeholders considered:

• Communities we serve

• Guests and travel agent partners

Inability to implement our shipbuilding programs and ship repairs, maintenance and refurbishments may

adversely impact our business operations and the satisfaction of our guests.

We may be impacted by unforeseen events, such as work stoppages, supply chain issues, insolvencies, “force

majeure”events or other financial difficulties experienced by shipyards, their subcontractors and our

suppliers. This may result in less shipyard availability resulting in delays or preventing the delivery of our

ships under construction and/or the completion of the repair, maintenance or refurbishment of our existing

ships. This may lead to potential delays or cancellations of cruises. In addition, the prices of various

commodities that are used in the construction of ships and for repair, maintenance and refurbishment of

existing ships, such as steel, are subject to volatility which may increase our costs.

Examples of how we manage and/or mitigate this risk:

• Our newbuild contracts are fixed price and are not sensitive to cost fluctuations of materials,

including steel

• We ensure access and priority for ship repairs as part owners and part of the governance teams of

two shipyards

• We require shipyards to obtain insurance

• Our shipbuilding contracts include a combination of refund and performance guarantees

• Pricing for ship repair yards, subcontractors and required materials are agreed in advance of

scheduled dry-docks

Key stakeholders considered:

• Guests and travel agent partners

• Investors

Debt Related Risk Factors

Failure to successfully implement our business strategy following our resumption of guest cruise operations

would negatively impact the occupancy levels and pricing of our cruises and could have a material

adverse effect on our business. We require a significant amount of cash to service our debt and sustain our

operations. Our ability to generate cash depends on many factors, including those beyond our control,

and we may not be able to generate cash required to service our debt and sustain our operations.

Our ability to meet our debt service obligations, refinance our debt or sustain our business needs and

operations depends on our future operating and financial performance and our ability to generate cash.

This will be affected by our ability to successfully implement our business strategy, which if unsuccessful,

would negatively impact the occupancy levels and pricing of our cruises, as well as general macroeconomic,

financial, geopolitical, competitive, regulatory and other factors beyond our control, such as the disruption

caused by the COVID-19 pandemic, the invasion of Ukraine, inflation, higher fuel prices and higher interest

rates. If we cannot generate sufficient cash to meet our debt service obligations or fund our other business

needs, we may, among other things, need to refinance all or a portion of our debt, obtain additional financing,

delay planned capital expenditures or sell assets. We cannot make assurances that we will be able to

generate sufficient cash through any of the foregoing. If we are not able to refinance any of our debt,

obtain additional financing or sell assets on commercially reasonable terms or at all, we may not be able to

satisfy our obligations with respect to our debt. Refer to “Liquidity, Financial Condition and Capital

Resources”.

Examples of how we manage and/or mitigate this risk:

• We have put in place various strategies and initiatives, including increasing our marketing and

advertising programs in efforts to drive incremental demand for cruising

• We have taken significant operational actions to preserve cash, prioritize capital expenditures, reduce

interest rates and extend maturities to increase liquidity

• We have suspended the payment of dividends on, and the repurchase of, Carnival Corporation

common stock and Carnival plc ordinary shares, except pursuant to the Stock Swap Program

• We have obtained and will continue to request, if necessary, waivers and amendments for certain

covenants for our export credit facilities, loans and the Revolving Facility

Key stakeholders considered:

• Investors

Our substantial debt could adversely affect our financial health and operating flexibility.

We have a substantial amount of debt and significant debt service obligations. Our substantial debt has had

and could continue to have important negative consequences for us. Our substantial debt could:

• require us to dedicate a large portion of our cash flow from operations to service debt and fund

repayments on our debt, thereby reducing the availability of our cash flow to fund working capital,

capital expenditures and other general corporate purposes;

• increase our vulnerability to adverse general economic or industry conditions;

• limit our flexibility in planning for, or reacting to, changes in our business or the industry in which

we operate;

• place us at a disadvantage compared to others that have less debt;

• make us more vulnerable to downturns in our business, the economy or the industry in which we

operate;

• limit our ability to raise additional debt or equity capital in the future to satisfy our requirements

relating to working capital, capital expenditures, development projects, strategic initiatives or other

purposes;

• restrict us from making strategic acquisitions, introducing new technologies or exploiting business

opportunities;

• make it difficult for us to satisfy our obligations with respect to our debt; and

• expose us to the risk of increased interest rates as certain of our borrowings are (and may be in the

future) at a variable rate of interest.

Examples of how we manage and/or mitigate this risk:

• We have taken significant operational actions to preserve cash, prioritize capital expenditures, reduce

interest rates and extend maturities to increase liquidity

• We have obtained additional capital through various equity offerings

Key stakeholders considered:

• Investors

Despite our leverage, we may incur more debt, subject to certain restrictions, which could adversely affect

our business and prevent us from fulfilling our obligations with respect to our debt.

We may incur additional debt in the future. Although the instruments governing our existing indebtedness

contain restrictions on the incurrence of additional debt, including certain additional restrictions which went

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into effect in 2023, these restrictions are subject to a number of significant qualifications and exceptions,

and under certain circumstances, the amount of debt that could be incurred in compliance with these

restrictions could be substantial and a portion of such debt currently is, and may in the future be, secured. The

instruments governing our existing indebtedness do not prevent us from incurring liabilities that do not

constitute “Indebtedness”as defined therein. If new debt is added to our existing debt levels, our business

could be adversely affected, which may prevent us from fulfilling our obligations with respect to our debt.

Examples of how we manage and/or mitigate this risk:

• We have taken significant operational actions to preserve cash, prioritize capital expenditures, reduce

interest rates and extend maturities to increase liquidity

• We have obtained additional capital through various equity offerings

Key stakeholders considered:

• Investors

We are subject to maintenance covenants, as well as restrictive debt covenants, that may limit our ability

to finance future operations and capital needs and pursue business opportunities and activities. We are also

subject to financial covenants that could lead to an acceleration of the indebtedness of our debt facilities

if we fail to comply. If we fail to comply with any of these covenants, it could have a material adverse effect

on our business.

Certain of our debt instruments limit our flexibility in operating our business. For example, some of our

debt instruments limit the ability of Carnival Corporation, Carnival plc and certain of their respective

subsidiaries to, among other things:

• incur or guarantee additional indebtedness;

• pay dividends or distributions on or redeem or repurchase capital stock and make other restricted

payments;

• make certain investments;

• consummate certain asset sales;

• engage in certain transactions with affiliates;

• grant or assume certain liens; and

• consolidate, merge or transfer all or substantially all of our assets.

All of these limitations are subject to significant exceptions and qualifications. Despite these exceptions and

qualifications, we cannot provide assurance that the operating and financial restrictions and covenants in

certain of our debt instruments will not adversely affect our ability to finance our future operations or capital

needs or engage in other business activities that may be in our interest. Any future indebtedness may

include similar or other restrictive terms.

In addition, many of our debt agreements contain one or more financial covenants that require us to

maintain a minimum liquidity, interest coverage, and shareholders’equity and/or limit our debt to

capital percentage. Our ability to comply with our debt covenants, including the financial maintenance

covenants described above, and restrictions may be affected by events beyond our control, including global

macroeconomic, financial and industry conditions, such as the continued resumption of our guest cruise

operations and our ability to issue additional equity. If we breach any of these covenants or restrictions

and are not able to receive waivers for these covenants, we could be in default under the terms of certain of

our debt facilities and the relevant lenders would have the right to declare the debt, together with accrued and

unpaid interest and other fees, if any, immediately due and payable (or cancel any unfunded commitments,

if applicable) and proceed against any collateral, if any, securing that debt. If the debt under certain of our

debt instruments that we enter into were to be accelerated, our assets may be insufficient to repay our debt

in full. Borrowings under other debt instruments that contain cross-default provisions may also be accelerated

or become payable on demand. In these circumstances, our assets may not be sufficient to repay our

indebtedness then outstanding in full.

At November 30, 2022, we were in compliance with the applicable covenants under our debt agreements.

However, we cannot provide assurance that we will be able to maintain compliance with such debt facilities

as of future testing dates. Failure to comply with the financial covenants of our debt facilities would have a

material adverse effect as described above. Refer to Note 15 — Debt and Interest Expense for additional

information.

Examples of how we manage and/or mitigate this risk:

• We have taken significant operational actions to preserve cash, prioritize capital expenditures, reduce

interest rates and extend maturities to increase liquidity

• We have suspended the payment of dividends on, and the repurchase of, Carnival Corporation

common stock and Carnival plc ordinary shares, except pursuant to the Stock Swap Program

• We have obtained and will continue to request, if necessary, waivers and amendments for certain

covenants on certain export credit facilities, loans and the Revolving Facility

Key stakeholders considered:

• Investors

Our variable rate indebtedness exposes us to interest rate volatility, which could cause our debt service

obligations to increase significantly.

Borrowings under certain of our facilities are at variable rates of interest and expose us to interest rate

volatility. As interest rates increase, our debt service obligations on certain of our variable rate indebtedness

will increase even though the amount borrowed remains the same, and our net income and cash flows,

including cash available for servicing our indebtedness, will correspondingly decrease.

At the end of 2021, the ICE Benchmark Administration, the administrator for London Interbank Offered

Rate (“LIBOR”), ceased publishing one-week and two-month U.S. dollar LIBOR and will cease publishing

all remaining U.S. dollar LIBOR tenors in mid-2023. Concurrently, the United Kingdom’s Financial

Conduct Authority announced the cessation or loss of representativeness of the U.S. dollar LIBOR tenors

from those dates. The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee,

a steering committee comprised of, among other entities, large U.S. financial institutions, has recommended

replacing U.S. dollar LIBOR with a new index that measures the cost of borrowing cash overnight,

backed by U.S. Treasury securities (“SOFR”). SOFR is observed and backward-looking, which stands in

contrast with LIBOR, which is an estimated forward-looking rate and relies, to some degree, on the expert

judgment of submitting panel members. While we continue to monitor market developments to assess

replacement rate options, the consequences of these developments with respect to LIBOR cannot be entirely

predicted and may result in the level of interest payments on the portion of our indebtedness that bears

interest at variable rates to be affected, which may adversely impact the amount of our interest payments

under such debt.

Examples of how we manage and/or mitigate this risk:

• We have taken significant operational actions to preserve cash, prioritize capital expenditures, reduce

interest rates and extend maturities to increase liquidity

• We have obtained and will continue to request, if necessary, waivers and amendments for certain

covenants for our export credit facilities, loans and the Revolving Facility

• We take advantage of natural offsets with our business and continuously evaluate the use of financial

instruments

Key stakeholders considered:

• Investors

The covenants in certain of our export credit facilities may require us to secure those facilities in the

future.

Our export credit facilities contain provisions which may require that we provide a security interest in

certain assets and in particular the relevant vessels that are the subject matter of those financings (or a

comparable vessel). In certain of our export credit facilities, there is a requirement that if the credit rating of

our senior indebtedness falls below investment grade (which occurred on June 24, 2020 and remained the

case as of November 30, 2022) and at such time we have granted liens or security interests in respect of

indebtedness exceeding 25% of our total assets (excluding for these purposes the value of any intangible

assets) as shown in our most recent Consolidated Balance Sheet, we will be required to provide a first-

priority security interest in the relevant vessel that is the subject matter of that export credit facility (or a

comparable vessel). In addition, under all our export credit facilities, there is also a requirement that if a

security interest or lien is granted in respect of a vessel to secure borrowed money under any other export

credit facility, then a first-priority security interest may be required to be provided over the relevant vessel

which is the subject matter of that export credit facility (or a comparable vessel).

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If the events described above were to occur, we may be unable to comply with this requirement and would

expect to seek covenant amendments from the lenders under the relevant facilities. Any such amendment may

lead to increased costs, increased interest rates, additional restrictive covenants and other available lender

protections that would be applicable to us under these debt facilities, and such increased costs, restrictions and

modifications may vary among debt facilities. Our ability to give additional lender protections under these

facilities, including the granting of security interests in collateral, will be limited by the restrictions in our

indebtedness and security interest we have already granted. If we were not able to obtain amendments, the

occurrence of such events may result in an event of default under these facilities and other debt facilities that

contain cross default provisions that would be triggered.

Examples of how we manage and/or mitigate this risk:

• We have obtained and will continue to request, if necessary, waivers and amendments for certain

covenants for our export credit facilities, loans and the Revolving Facility

• We constantly monitor the covenants for compliance

Key stakeholders considered:

• Investors

Going Concern Confirmation and Viability Statement.

The Boards of Directors consider that, within the DLC arrangement, the most appropriate presentation of

Carnival plc’s going concern and viability is by reference to the consolidated liquidity position of Carnival

Corporation & plc. Accordingly, this going concern confirmation and viability statement presents Carnival

Corporation & plc.

Going Concern Assessment

The Boards of Directors have assessed the prospects of Carnival Corporation & plc over an assessment

period of at least the next twelve months from the date of approval of the financial statements as required

by the UK Corporate Governance Code.

Carnival Corporation & plc has a substantial debt balance as a result of the pause in guest cruise operations

and requires a significant amount of liquidity or cash provided by operating activities to service its debt.

In addition, the continued effects of the pandemic, inflation, higher fuel prices, higher interest rates and

fluctuations in foreign currency rates are collectively having a material negative impact on its financial results.

The full extent of the collective impact of these items is uncertain and may be amplified by its substantial

debt balance.

Over the past almost three years, and in light of the COVID-19 pandemic, management and the Directors

have taken appropriate actions to manage Carnival Corporation & plc’s liquidity, including completing various

capital market transactions, obtaining relevant financial covenant amendments or waivers, accelerating the

removal of certain ships from the fleet and during the pause in guest cruise operations, reducing capital

expenditures and operating expenses. In addition, based on the evolving nature of COVID-19 and ongoing

collaboration with local and national public health authorities, Carnival Corporation & plc has responsibly

relaxed its related protocols, including greatly reducing or eliminating testing requirements and vaccination

protocols to more closely align with the broader travel industry and strengthening its competitiveness. As of

November 30, 2022, 97% of Carnival Corporation & plc’s capacity had resumed guest cruise operations

and is serving guests.

In performing their going concern assessment, the Boards of Directors have considered the circumstances

likely to impact Carnival Corporation & plc during the coming year, current liquidity, projected compliance

with financial covenants (refer to Note 15 — Debt and Interest Expense for additional details on covenant

compliance) and estimates of future liquidity. The Directors have considered the following assumptions used

to estimate Carnival Corporation & plc’s future liquidity:

• Its continued cruise operations and expected timing of cash collections for cruise bookings

• Expected increases in revenue in 2023 on a per passenger basis compared to 2019, particularly with

the responsible relaxation of COVID-19 related protocols aligning towards land-based vacation

alternatives

• Expected improvement in occupancy on a year-over-year basis returning to historical levels in the

summer of 2023

• Stabilization of fuel prices around November 2022 year-end prices

• Continued stabilization of inflationary pressures on costs, moderated by a larger-more efficient fleet

as compared to 2019.

In addition, the Directors make certain assumptions about new ship deliveries, improvements and removals,

and consider the future export credit financings that are associated with the new ship deliveries.

The Directors do not consider going concern to be a critical accounting judgement for the year ended

November 30, 2022. In determining that going concern is not a critical accounting judgement, the Directors

have considered:

• $8.6 billion of liquidity including cash, restricted cash from the 2028 Senior Priority Notes which

became unrestricted in December 2022 and borrowings available under its $1.7 billion, €1.0 billion and

£0.2 billion multi-currency revolving credit facility (the “Revolving Facility”) at November 30, 2022

• Known financial commitments, debt maturities and other cash requirements and obligations over

the assessment period.

Management has considered a severe but plausible scenario which assessed the effects of lower pricing,

resulting in lower expected revenues and adjusted EBITDA, as compared to the base case. In this downside

case, management modeled a 3% decrease in pricing during the period under review as compared to the

base case. In addition, management has performed further downside scenarios including assuming a scenario

which they have concluded is well beyond severe but plausible of break even adjusted EBITDA for 2023.

Even in these scenarios, the assessment still demonstrated Carnival Corporation & plc’s ability to meet its

obligations over the going concern period and remain in compliance with its financial covenants. As a result

of this assessment, management along with the Boards of Directors have concluded that it remains

appropriate to adopt the going concern basis of accounting in preparing the Carnival plc consolidated

financial statements without any material uncertainty.

Going Concern Statement

In adopting the going concern basis for preparing these financial statements, the Directors have considered

Carnival Corporation & plc’s business activities, together with factors likely to affect its future development

and performance. After reviewing the current liquidity position, financial forecasts, and considering the

results of various downside scenarios, the Boards of Directors have concluded that Carnival Corporation &

plc has sufficient liquidity to satisfy its obligations and are forecasted to be in compliance with its debt

covenants for at least the next twelve months from the approval of the financial statements. Accordingly, the

Directors continue to adopt the going concern basis without any material uncertainty in preparing the

Carnival plc consolidated IFRS financial statements.

Viability Assessment

Whilst the Boards of Directors have no reason to believe Carnival Corporation & plc will not be viable over

a longer period, the period over which they considered viability is three years. The principal reasons why

this period was selected are as follows:

• It aligns with management’s typical strategic planning cycle

• Management typically plans its guest sourcing and ship itinerary strategies over a two-to-three-year

horizon

In performing their viability assessment, the Boards of Directors have considered the circumstances

impacting Carnival Corporation & plc during the year, current liquidity and projected compliance with

financial covenants. In addition, the Directors considered Carnival Corporation & plc’s access to capital

markets and expected ability to obtain financial covenant amendments or waivers (when or if needed) as well

as the continued expected improvement of its financial results.

In performing their assessments, the Boards of Directors highlighted forecast uncertainty during the

viability period. Uncertainty exists over future forecasts caused by the continued effects of the pandemic,

inflation, higher fuel prices, higher interest rates and fluctuations in foreign currency. These items may be

further amplified by Carnival Corporation & plc’s substantial debt balance. Given the significant collective

impacts of these items on the business, management has prepared various planning scenarios using a

range of potential outcomes and assumptions.

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Management has identified the following critical assumptions and judgements as part of its viability

assessment (“base case”):

• Ability to obtain additional financial covenant waivers or amendments, when or if needed. We are

currently seeking further letter agreements to waive compliance with the Interest Coverage Covenant

for the May 31, 2024 testing date. Refer to Note 15 — Debt and Interest Expense for additional

details on covenant compliance.

• Ability to pursue various opportunities to raise additional capital. Actions to raise capital may

include issuances of debt, convertible debt or equity in private or public transactions or entering into

new and extended credit facilities

• Continued estimated improvement in its financial results

The base case also includes the following other assumptions used to estimate future liquidity:

• Its continued cruise operations and expected timing of cash collections for cruise bookings

• Expected increases in revenue in 2023 on a per passenger basis compared to 2019, particularly with

the responsible relaxation of COVID-19 related protocols aligning towards land-based vacation

alternatives

• Expected improvement in occupancy on a year-over-year basis returning to historical levels in the

summer of 2023

• Stabilization of fuel prices around November 2022 year-end prices

• Continued stabilization of inflationary pressures on costs, moderated by a larger-more efficient fleet

as compared to 2019

• Anticipated direct and indirect impacts of climate change including costs associated with upcoming

regulations, which management does not expect to have a material impact on liquidity during the

viability assessment period

In addition, the Directors make certain assumptions about new ship deliveries, improvements and removals

and consider the future export credit financings that are associated with the new ship deliveries.

As part of their viability assessment, management along with the Boards of Directors, considered various

scenarios and sensitivity analyses. As a severe but plausible scenario, they considered the effects of lower

pricing, resulting in lower expected revenues and adjusted EBITDA, as compared to the base case. In this

downside case, management modeled a 3% decrease in pricing during the viability period as compared to

the base case. Management also considered various other scenarios, the principal risks identified in Item 4.

Risk Management and/or Mitigation of Principal and Emerging Risks and the impact on liquidity and

covenant headroom. In addition to these scenarios, while making their final conclusion on viability, which

is summarized below, the Boards of Directors considered its $8.6 billion of liquidity including cash, restricted

cash from the 2028 Senior Priority Notes which became unrestricted in December 2022 and borrowings

available under its $1.7 billion, €1.0 billion and £0.2 billion multi-currency Revolving Facility at November 30,

2022.

Viability Statement

Having undertaken their robust assessment as described above, including a review of their principal risks,

risk appetite and how these risks are managed or mitigated, the Boards of Directors have a reasonable

expectation that Carnival Corporation & plc will be able to continue in operation and meet its liabilities as

they fall due over the three-year period of their assessment. In making this statement, the Boards of

Directors highlight forecasting uncertainty concerning the impact of the continued effects of the pandemic,

inflation, higher fuel prices, higher interest rates and fluctuations in foreign currency rates in the three-year

plan. The full extent of the collective impact of these items is uncertain and may be amplified by Carnival

Corporation & plc’s substantial debt balance.

In addition, the Directors have identified the critical accounting assumptions and judgements they have

exercised in performing their assessment. The Boards of Directors have considered that management expects

to obtain additional financial covenant waivers or amendments, if needed, have access to additional capital

to maintain its target level of minimum liquidity through the measurement period ending January 28, 2026

and continued improvement in its financial results.

The Boards of Directors believes they have made reasonable estimates, assumptions and judgements in

determining its liquidity requirements and cannot make assurances that assumptions used may not change

in future periods. Refer to “Carnival Corporation & plc’s Liquidity, Financial Condition and Capital

Resources” Section for further discussion.

Non-Financial Information Statement.

Refer to the sections below for more information relating to non-financial matters, as required by

sections 414CA and 414CB of the Companies Act 2006.

Description of Business Model:

• II. Mission (Purpose), Vision, Values and Priorities on page 2

• C. Our Global Cruise Business on page 5

Environmental Matters:

• XV. Sustainability and Environmental Impact on page 13 which includes:

• Sustainability goals progress

• Summary of our environmental impact

• Climate-related Financial Disclosures

• Annex A — Carnival plc Directors’ Report of the Proxy Statement: Corporate and Social

Responsibility on page A-7

Team members:

• XII. Human Capital Management and Employees on page 11

• XV. Sustainability and Environmental Impact: 2030 Diversity, Equity and Inclusion goals on page 16

• Annex C — Carnival plc Corporate Governance Report of the Proxy Statement: Workforce

Engagement on page C-15

Human Rights:

• II. Mission (Purpose), Vision, Values and Priorities on page 2

• XIV. Ethics and Compliance on page 13

• XV. Sustainability and Environmental Impact: 2030 Good Health and Well-Being Goals on page 15

• Annex A — Carnival plc Directors’ Report of the Proxy Statement: Corporate and Social

Responsibility on page A-7

Anti-corruption and Anti-bribery:

• XIX. Governmental Regulations on page 31

• H. Executive Officers and Corporate Governance on page 40

• Item 4. Risk Management and/or Mitigation of Principal and Emerging Risks on page 52

• Annex C — Carnival plc Corporate Governance Report of the Proxy Statement: Hotline for

reporting concerns on page C-19

Social and Community Matters:

• II. Mission (Purpose), Vision, Values and Priorities on page 2

• XV. Sustainability and Environmental Impact: 2030 Sustainable Tourism Goals on page 15

• XV. Sustainability and Environmental Impact: 2030 Biodiversity and Conservation Goals on page 16

• Annex A — Carnival plc Directors’ Report of the Proxy Statement: Corporate and Social

Responsibility on page A-7

Policy Embedding, Due Diligence and Outcomes:

• Item 3. Internal Controls and Risk Assessment on page 50

• Item 5. Going Concern Confirmation and Viability Statement on page 64

• Annex C — Carnival plc Corporate Governance Report of the Proxy Statement: Committees of the

Board on Page C-5

Principal Risks and Impact of Business Activity:

• Item 4. Risk Management and/or Mitigation of Principal and Emerging Risks on page 52

Strategic Report

Non-Financial Key Performance Indicators:

• XV. Sustainability and Environmental Impact: Summary of our Environmental Impact on page 19

• Item 2. Business Review Carnival plc Group IFRS Key Measures on page 44

Section 172(1) Statement.

This statement describes how the Directors have performed their duty in the way they consider, in good

faith, would most likely promote the success of the company for the benefit of its members as a whole having

regard to the stakeholders and matters set out in section 172(1)(a)-(f) of the Companies Act 2006. This

statement sets out the Directors’approach to decision-making, its stakeholder engagement and details the

matters considered as part of the decision-making process of some of the key decisions made during 2022. To

provide further insight, we have provided clear cross-referencing to where more detailed information can

be found in this Annual Report.

Discussions between management and the Directors regarding decisions relating to our business strategy,

including the potential impact of those decisions on our financial results, decisions relating to our capital

structure and other business-related activities also include careful consideration of potential risks associated

with those decisions. In addition, as part of our risk assessment framework, our key stakeholders are

considered as part of the evaluation of our principal and emerging risks. Refer to Item 4. Risk Management

and/or Mitigation of Principal and Emerging Risks on page 52 for additional discussion of our risks and

key stakeholder considerations.

During 2022, the Directors’oversight of stakeholder relationships and other matters was informed by

regular briefings by management and its Committees on our liquidity, resumption of guest cruise operations

for each of our nine brands, compliance with laws and regulations, our ESG performance, principal and

emerging risks including those related to climate change and other critical matters.

Key Stakeholders

The Directors and their Committees recognize the strategic importance of building and maintaining strong

relationships with our stakeholders. We have identified the following key stakeholders considering their

impact on the success of our business model and strategy:

• Communities we serve

• Team members

• Guests and travel agent partners

• Investors

When making decisions, the Directors have regard to the interests of our key stakeholders and recognize

that effective engagement with our stakeholders is essential to the long-term success of our business. The

Directors consider many factors and balance competing interests in reaching strategic decisions. Refer to the

Key Decisions Made by the Directors During the Year on page 71 for examples of the Directors

considerations.

While the Directors are able to engage directly with key stakeholders on some issues, the size and distribution

of our stakeholder group means that stakeholder engagement often happens through management. The

Directors regularly receive information and feedback from management to help understand how our

operations and decisions affect our stakeholders’interests and in turn, how those interests should impact

future decisions.

a) the likely consequences of any decision in the long-term

The Directors recognize that the decisions made today will have an effect on both our short- and long-term

success. The Directors seek to balance meeting the more critical short-term objectives while also carefully

ensuring we are on course to achieve our long-term strategic vision. During 2022, the Directors and executive

management had particular regard to our long-term success and remained focused on resuming operations

as quickly as practical for each of our nine brands, while at the same time demonstrating prudent stewardship

of capital. The Directors believe that resuming operations and returning to profitability will help preserve

and grow value for each of our key stakeholders.

The Directors also believe that planning for succession is an important function that will impact our

long-term success. We continually strive to foster the professional development of management and team

members in other critical roles. As a result, we have developed a very experienced and strong group of

leaders, with their performance subject to ongoing monitoring and evaluation, as potential successors to all

of our executive positions, including our CEO. In August 2022 the Directors appointed Josh Weinstein,

previously our Chief Operations Officer, to the role of President, CEO and Chief Climate Officer. Josh

Weinstein is a 20-year veteran of our company with a long history of success in critical senior-level roles for

our company.

Refer to:

• 2022 Executive Overview on page 1

• XII. Human Capital Management and Employees on page 11

• XV. Sustainability and Environmental Impact on page 13

• Item 5. Going Concern Confirmation and Viability Statement on page 64

• Key Decisions Made by the Directors During the Year on page 71

b) the interests of our team members

We celebrate our diverse team and are committed to providing a welcoming and inclusive environment

where people from different backgrounds, experiences and walks of life can succeed. We care deeply for our

team members and must always cultivate an atmosphere of openness, respect and trust. We continue to

focus on our Culture Essentials, which are the key actions and behaviors we encourage and reinforce to further

strengthen our culture. We have pulse surveys, which we use to track company culture, measure change

over time and obtain team member feedback. The results of the surveys are communicated to management

and the Directors. Further, in 2022 with the full support of the Directors, we continued our initiatives

designed to engage with and care for our workforce. Key areas of focus include Outreach & Wellness, Culture

and Staffing. The Directors consider and assess the implications of their decisions on our people.

Refer to:

• II. Mission (Purpose), Vision, Values and Priorities on page 2

• XII. Human Capital Management and Employees on page 11

• XIV. Ethics and Compliance on page 13

• Workforce Engagement in Annex C — Carnival plc Corporate Governance Report of the Proxy

Statement on page C-15

• Key Decisions Made by the Directors During the Year on page 71

c) the need to foster our business relationships with guests and travel agent partners, suppliers and others

Guests and Travel Agent Partners

Guest feedback and research supports the development of our overall strategies to exceed our guests’

expectations and at the same time, drive demand for cruises and increase the number of first-time cruisers.

We measure and evaluate guest satisfaction with our products and services through our net promoter scores

(“NPS”), which provides valuable insight into our guests’cruise experiences and drivers of guest loyalty.

Our NPS take into account a number of products and services our brands offer including; embarkation and

disembarkation experiences, shipboard team member service, dining options, entertainment and onboard

activities. NPS reflects the likelihood that our guests will recommend our brands’ cruise products and services

to friends and family, including those who have not cruised before. Evaluating our NPS allows our

management to make important strategic business decisions. To reward loyal and repeat guests, substantially

all of our cruise brands offer past recognition programs with various special incentives.

Strong relationships with our travel agent partners are also an integral part of our long-term cruise

distribution network and are critical to our success. We utilize local sales teams to motivate travel agents to

support our products and services with competitive pricing, promotional policies and joint marketing and

advertising programs. All of our brands have internet booking engines to allow travel agents to book our

cruises.

Suppliers

Our relationships with suppliers are key to our business as these critical goods and services are paramount

in our ability to deliver exceptional cruise experiences to our guests. Our suppliers provide a range of goods

from materials to support the refurbishment and enhancements of our ships and to build new and

Strategic Report

innovative ships to the reliable and consistent supply of fuel and food and beverage globally. We aim to

engage with suppliers to build mutually beneficial relationships and to create strategic partnerships across

our global organization.

Global supply markets and supply chains have been impacted by certain events, resulting in shortages,

extended lead times and increased inflation impacting our operations and profitability. We have leveraged

our business relationships with our suppliers, where possible, to mitigate the impact of these challenges on our

operations while still fulfilling our mission of creating happiness by delivering unforgettable and much

needed vacations to our guests.

Others

Our ships and operations are subject to numerous international, national, state and local laws, regulations,

treaties and other legal requirements, as well as voluntary agreements, which govern health, environmental,

safety and security matters in relation to our guests, crew and ships. We are committed to complying with

all relevant requirements.

We continue to work closely with governments and regulators, including those of the communities we serve,

as we resume guest cruise operations. We maintain our commitment to seek excellence in compliance,

environmental protection and in looking after the safety, health and well-being of every life we touch.

Refer to:

• II. Mission (Purpose), Vision, Values and Priorities on page 2

• X. Marketing Activities on page 10

• XI. Sales Channels on page 11

• XVII. Supply Chain on page 30

• XIX. Governmental Regulations on page 31

• Key Decisions Made by the Directors During the Year on page 71

(d) the impact of our operations on the community and the environment

Achieving our mission (purpose) depends on being good corporate citizens and stewards of the environment.

Safeguarding the planet we call home, our guests, the communities we serve, and our Carnival family, and

complying with the laws and regulations that govern our business, is vital to our success.

In 2021, with the support of the Directors, we established goals which focused on advancing six critical

sustainability areas — climate action; circular economy; sustainable tourism; good health and well-being;

diversity, equity and inclusion; and biodiversity and conservation. We have made significant progress towards

our 2030 carbon intensity reduction goals of 40% from a 2008 baseline, measured in both grams of CO

per ALB-km and kilograms of CO

e per ALBD. During 2022, the Directors approved an update to the

baseline year for both goals to 2019 from 2008. This new baseline year will help us better communicate recent

progress against our climate goals to our investors and stakeholders as well as modernize our disclosures in

alignment with developing best practice and reporting standards and better engage with stakeholders.

We are committed to continuing our reduction of carbon emissions and have aspirations to achieve net

carbon-neutral ship operations by 2050, well ahead of the current IMO target. While fossil fuels are currently

the only viable option for our industry, we are closely monitoring technology developments and partnering

with key organizations to help identify and scale new technologies not yet ready for the cruise industry. For

example, we are piloting maritime scale battery technology and methanol powered fuel cells and working

with classification societies and other stakeholders to assess lower carbon fuel options for cruise ships, which

includes methanol, bioLNG, eLNG, hydrogen, and biofuels. During 2022, we piloted the use of biofuel as

a replacement for fossil fuel on two of our ships.

AIDAprima

became the first larger-scale cruise ship to be

powered with a blend of marine biofuel, made from 100% sustainable raw materials, and marine gasoil

(“MGO”). Additionally, Holland America Line completed two pilots on

Volendam

, one using a blend of

marine biofuel and another using 100% biofuel, becoming the first larger-scale cruise ship to be powered 100%

by biofuel. The certified biofuels used in these pilots offer environmental benefits compared to using fossil

fuels alone through their lifecycle CO

reductions. These biofuels can be used in existing ship engines without

modifications to the engine or fuel infrastructure, including on ships already in service. While alternative

fuels may provide a path to decarbonization for the maritime industry, there are significant supply challenges

that must be resolved before viability is reached. We are working with suppliers to encourage investment in

a reliable supply infrastructure. The Directors continue to believe our scale will support our effort to lead the

industry in climate action.

Refer to:

• II. Mission (Purpose), Vision, Values and Priorities on page 2

• XV. Sustainability and Environmental Impact on page 13

• Key Decisions Made by the Directors During the Year on page 71

(e) the desirability of maintaining a reputation for high standards of business conduct

The health, safety and well-being of our people and the planet are vital to the reputation of our business.

We choose to take decisive actions to respect and protect every life we touch, the places we sail and the laws

that govern us. Achieving our mission (purpose) depends on being good corporate citizens and stewards

of the environment. Safeguarding the planet we call home, our guests, the communities we serve, and our

Carnival family, and complying with the laws and regulations that govern our business is vital to our success.

The Directors and executive management acknowledge their responsibility for setting and monitoring the

culture, values and reputation of our business. We have a Code of Business Conduct and Ethics that applies

to all of our team members, including our executive management and the Directors. We also have Culture

Essentials, which are the key actions and behaviors we encourage and reinforce to further strengthen our

culture and have initiatives where brand leaders and executive management meet with their direct reports to

discuss these key behaviors.

Refer to:

• II. Mission (Purpose), Vision, Values and Priorities on page 2

• XIV. Ethics and Compliance on page 13

• XV. Sustainability and Environmental Impact on page 13

• H. Executive Officers and Corporate Governance on page 40

• Annex A — Carnival plc Directors' Report of the Proxy Statement: Corporate and Social

Responsibility on page A-7

• Annex C — Carnival plc Corporate Governance Report of the Proxy Statement: Workforce

Engagement on page C-15

(f) the need to act fairly between our members

It is critical that both existing and potential investors understand our strategy especially as we resumed our

guest cruise operations and continued to manage our liquidity. During 2022, the Directors and certain

members of management held various meetings with investors. These meetings gave investors the opportunity

to discuss views on our compensation decisions, our environmental impact, including sustainability and

climate change and other topics of importance to our business and our stakeholders. Our Investor Relations

team maintains open communication with equity, credit and ESG research analysts to understand investors’

views of our business. Our Treasury team has regular interactions with credit analysts, global banks, debt

investors and credit rating agencies. Additionally, presentations are made to representatives of the

investment community periodically in the U.S., the UK and elsewhere.

Refer to:

• II. Mission (Purpose), Vision, Values and Priorities on page 2

• Annex C — Carnival plc Corporate Governance Report of the Proxy Statement: Relations with

Shareholders on page C-14

Key Decisions Made by the Directors During the Year

Climate Impact

During 2022, the Directors appointed our President and CEO to the role of Chief Climate Officer (“CCO”)

to lead the identification of climate-related risks and opportunities and oversee how these are embedded in

our strategic decision-making and risk management processes. The CCO and the Directors are responsible for

the oversight of climate-related risks and opportunities and are directly supported by members of executive

management. The Directors discussed the need for clear targets associated with our climate-related goals

and their outcomes for the business.

Climate-related matters were a recurring discussion item during 2022. To enable the CCO and Directors to

fulfil their responsibility to oversee climate-related risks and opportunities, a Board ESG and TCFD

Education Program has been established, with core education components and optional self-study courses.

Strategic Report

To further support our climate-related efforts, we created the SRE Committee to assist the CCO in fulfilling

his responsibility to identify, monitor and review the management of climate-related risks and opportunities.

The SRE Committee consists of members of executive management and advisors and reports directly to the

CCO. The primary responsibilities and recurring activities of the SRE Committee are to recommend

climate strategy, goals and metrics to the CCO, who makes ultimate recommendations to the Directors and

to enable practical implementation of climate goals approved by the Directors. Refer to XV. Sustainability and

Environmental Impact on page 13 for additional information.

Section 172 considerations:

Long-term success, Team members, Community and Environment

Key stakeholders considered:

Communities we serve, Guests and travel agent partners, and Investors

Portfolio Optimization

Portfolio optimization is an important factor in our operating strategy. Executive management routinely

reviews our global fleet, by brand and as a whole, to make strategic decisions to optimize our long-term

success. The strategic deployment of our ships requires careful consideration to ensure we are meeting our

business objectives while also meeting the needs of our various stakeholders. The mobility of cruise ships

enables us to move our vessels between regions in order to meet changing demand across different

geographic areas.

Several key portfolio optimization decisions were made during 2022 relating to some Costa ships. During

2022, the Directors approved Carnival Fun Italian Style™, a new concept for Carnival Cruise Line’s North

American guests which will debut in the spring of 2023. Carnival Cruise Line will operate

Costa Venezia

transferring in the spring of 2023, and

Costa Firenze

, transferring in the spring of 2024, which will combine

the great service, food and entertainment that Carnival Cruise Line’s guests enjoy with Costa’s Italian design

features. Additionally during 2022,

Costa Luminosa

was transferred to Carnival Cruise Line and began

guest operations as

Carnival Luminosa

in November 2022. This decision allowed Carnival Cruise Line to

start highly anticipated itineraries from Brisbane and have two ships operating in Australia for its high season.

The Directors considered the impacts these portfolio decisions would have and ultimately determined

these changes were in the best interest of our short and long-term success and would optimize our financial

performance.

Due to the continued uncertainty regarding the full restart of international cruises in Asia, specifically

China, it is uncertain when or if we will resume operations in the region. As a result, the Directors evaluated

deployment options and fleet optimization alternatives for certain Costa ships that were previously serving

the region. The decision was made to remove two additional ships in Costa’s fleet. Management and the

Directors decided it was the appropriate decision for the company’s overall portfolio and its long-term

success.

Section 172 considerations:

Long-term success and Guests

Key stakeholders considered:

Guests and travel agent partners

Annual Bonus Compensation

During 2021, the Compensation Committees of the Boards of Directors temporarily modified the historical

approach of setting quantitative targets for incentive compensation as it was determined it was impractical

to set pre-established quantitative financial goals on either a short- or long-term basis for 2021 compensation.

This decision was considered due to the continuing business disruption caused by the COVID-19 pandemic,

uncertainty relating to performance during the resumption of guest cruise operations and promoting

retention and leadership stability. The Compensation Committees determined that the 2021 annual bonus

compensation payout would instead temporarily reward performance against four critical qualitative

objectives:

• Managing Liquidity and Cash

• Managing a Successful Restart

• Maintaining a Strong Compliance Culture

• Maintaining and Building on our ESG Goals

During 2022, the Compensation Committees and members of executive management held discussions with

various shareholders and requested feedback on the decision to temporarily modify the historical approach to

incentive compensation to qualitative objectives for 2021. In determining the approach for 2022, the

Compensation Committees considered the continued progress made in the resumption of guest cruise

operations throughout 2022 and the feedback provided by the shareholders, who expressed their desire for

the company to return to setting and measuring performance against pre-established quantitative financial

targets as soon as practical. As a result, the Directors determined it was appropriate to return to our historical

approach of establishing and utilizing quantitative performance-based targets for our Executive Officers’

2022 annual bonus and are committed to continuing this approach for a broader population in 2023. The

Compensation Committees believe the decision relating to the 2022 bonus compensation appropriately

responded to shareholder feedback while still providing appropriate award compensation to our Executive

Officers, aligned with our long-term strategy.

Section 172 considerations:

Long-term success and Team members

Key stakeholders considered:

Team members and Investors

This Strategic Report has been approved by the Board.

By order of the Board

Micky Arison

Chair of the Board of Directors

January 27, 2023

Strategic Report

INTRODUCTORY NOTE TO THE CARNIVAL PLC IFRS FINANCIAL STATEMENTS

FOR THE YEAR ENDED NOVEMBER 30, 2022

The Carnival plc consolidated Group IFRS Financial Statements on pages 74 to 116 and standalone

parent company Financial Statements on pages 117 to 131 are required to satisfy reporting

requirements of the Companies Act 2006 and incorporate the results of Carnival plc and its subsidiaries

and, accordingly, do not include the IFRS consolidated results and financial position of Carnival

Corporation and its subsidiaries.

The Directors of Carnival plc consider that within the Carnival Corporation and Carnival plc dual

listed company arrangement, the most appropriate presentation of Carnival plc’s results and financial

position is by reference to the Carnival Corporation & plc U.S. GAAP consolidated financial

statements (“DLC Financial Statements”), which are included in the Annual Report, but do not form

part of these Carnival plc financial statements.

CARNIVAL PLC

GROUP STATEMENTS OF INCOME (LOSS)

(in millions, except per share data)

Years Ended November 30,

Notes

2022

2021

Revenues

Passenger ticket

...........................

2,792

491

Onboard and other

........................

1,149

270

3,941

760

Operating Costs and Expenses

Commissions, transportation and other

..........

569

104

Onboard and other

........................

277

Payroll and related

.........................

913

557

Fuel

...................................

825

257

Food

..................................

246

Property and equipment impairments

...........

1,161

607

Other operating

...........................

1,216

566

5,208

2,242

Selling and administrative

....................

857

658

Depreciation and amortisation

................

781

795

Goodwill impairment

.......................

—

280

6,846

3,975

Operating Income (Loss)

......................

(2,905)

(3,215)

Nonoperating Income (Expense)

Interest income

...........................

—

Income (loss) from investments in associates

.......

(34)

(129)

Interest expense, net of capitalised interest

........

(140)

(96)

Other income (expense), net

..................

280

108

(178)

Income (Loss) Before Income Taxes

...............

(2,797)

(3,393)

Income Tax Benefit (Expense), Net

...............

(15)

(13)

Net Income (Loss)

...........................

(2,813)

(3,406)

Earnings (Loss) Per Share

Basic

..................................

(15.14)

(18.49)

Diluted

.................................

(15.14)

(18.49)

The accompanying notes are an integral part of these financial statements.

These financial statements only present the Carnival plc consolidated Group IFRS Financial

Statements and, accordingly, do not include the consolidated IFRS results of Carnival Corporation.

Within the DLC arrangement the most appropriate presentation of Carnival plc’s results and financial

position is considered to be by reference to the DLC Financial Statements.

Carnival plc

Financial Statements

CARNIVAL PLC

GROUP STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions)

Years Ended November 30,

2022

2021

Net Income (Loss)

.......................................

(2,813)

(3,406)

Other Comprehensive Income (Loss)

Items that will not be reclassified through the Statements of Income

(Loss)

Remeasurements of post-employment benefit obligations

........

(19)

Items that may be reclassified through the Statements of Income (Loss)

Changes in foreign currency translation adjustment

............

(538)

(332)

Net gains on hedges of net investment in foreign operations and

other

...........................................

216

(466)

(116)

Other Comprehensive Income (Loss)

..........................

(485)

(61)

Total Comprehensive Income (Loss)

...........................

(3,298)

(3,467)

The accompanying notes are an integral part of these financial statements.

These financial statements only present the Carnival plc consolidated Group IFRS Financial

Statements and, accordingly, do not include the consolidated IFRS results of Carnival Corporation.

Within the DLC arrangement the most appropriate presentation of Carnival plc’s results and financial

position is considered to be by reference to the DLC Financial Statements.

CARNIVAL PLC

GROUP BALANCE SHEETS

(in millions)

November 30,

Notes

2022

2021

ASSETS

Current Assets

Cash and cash equivalents

.............................

251

434

Trade and other receivables, net

.........................

202

140

Inventories

........................................

193

146

Prepaid expenses and other

............................

215

109

Total current assets

................................

862

829

Property and Equipment, Net

.............................

13,469

14,953

Right-of-Use Assets

...................................

283

333

Investments in Associates

................................

144

220

Other Assets

........................................

775

517

15,532

16,851

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current Liabilities

Current portion of long-term debt

.......................

1,329

486

Current portion of lease liabilities

........................

Accounts payable

...................................

471

376

Accrued liabilities and other

............................

526

487

Customer deposits

..................................

1,589

831

Amount owed to the Carnival Corporation group

.............

5,624

6,204

Total current liabilities

..............................

9,571

8,419

Long-Term Debt

.....................................

6,361

5,484

Long-Term Lease Liabilities

.............................

256

298

Contingencies

.......................................

Other Long-Term Liabilities

.............................

200

210

Shareholders’ Equity

Share capital

......................................

361

Share premium

.....................................

143

Retained earnings

...................................

1,175

4,092

Other reserves

.....................................

(2,619)

(2,249)

Total shareholders’ (deficit) equity

......................

(940)

2,347

15,532

16,851

The accompanying notes are an integral part of these financial statements. These financial statements only

present the Carnival plc consolidated Group IFRS Financial Statements and, accordingly, do not include the

consolidated IFRS results of Carnival Corporation.

The Carnival plc Group financial statements (registered number 04039524) were authorised for issue by the

Boards of Directors on January 27, 2023 and signed on their behalf by

Micky Arison

Josh Weinstein

Chair of the Boards of Directors

President, Chief Executive Officer and Chief

Climate Officer and Director

Within the DLC arrangement the most appropriate presentation of Carnival plc’s results and financial

position is considered to be by reference to the DLC Financial Statements.

Carnival plc

Financial Statements

CARNIVAL PLC

GROUP STATEMENTS OF CASH FLOWS

(in millions)

Years Ended

November 30,

2022

2021

OPERATING ACTIVITIES

Income (Loss) before income taxes

...............................

(2,797)

(3,393)

Adjustments to reconcile income (loss) before income taxes to net cash

provided by (used in) operating activities

Depreciation and amortisation

................................

781

795

Impairments

.............................................

1,191

904

Share-based compensation

...................................

Interest expense, net

........................................

156

132

(Income) loss from investments in associates

.......................

129

Other, net

...............................................

(580)

(1,352)

Changes in operating assets and liabilities

Receivables

..............................................

(103)

Inventories

..............................................

(72)

(50)

Prepaid expenses and other

...................................

(337)

(182)

Accounts payable

..........................................

106

Accrued liabilities, other and contingencies

........................

125

273

Customer deposits

.........................................

855

260

Cash provided by (used in) operations before interest and income taxes

......

(4)

(978)

Interest received

..........................................

—

Interest paid

.............................................

(131)

(96)

Income tax benefit received (paid), net

...........................

—

Net cash provided by (used in) operating activities

.................

(121)

(1,075)

INVESTING ACTIVITIES

Purchases of property and equipment

...........................

(2,293)

(1,687)

Proceeds from sales of ships

..................................

346

255

Investments in associates

....................................

(1)

(90)

Other, net

...............................................

(139)

128

Net cash provided by (used in) investing activities

..................

(2,087)

(1,395)

FINANCING ACTIVITIES

Changes in amounts owed to the Carnival Corporation group, net

........

(368)

207

Principal repayments of long-term debt

..........................

(654)

(792)

Proceeds from issuance of long-term debt

.........................

3,146

2,798

Finance lease principal payments

...............................

(33)

(45)

Debt issuance cost and other, net

...............................

(147)

(174)

Net cash provided by (used in) financing activities

.................

1,943

1,995

Effect of exchange rate changes on cash and cash equivalents

.............

(10)

Net increase (decrease) in cash and cash equivalents

................

(183)

(484)

Cash and cash equivalents at beginning of year

......................

434

918

Cash and cash equivalents at end of year

........................

251

434

The accompanying notes are an integral part of these financial statements. These financial statements only

present the Carnival plc consolidated Group IFRS Financial Statements and, accordingly, do not include the

consolidated IFRS results of Carnival Corporation.

Within the DLC arrangement the most appropriate presentation of Carnival plc’s results and financial

position is considered to be by reference to the DLC Financial Statements.

CARNIVAL PLC

GROUP STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(in millions)

Reserves

capital

premium

Retained

earnings

Translation

reserve

Cash

flow

hedges

Treasury

Other

reserves

Merger

reserve

Total

shareholders’

(deficit)

equity

At November 30, 2020

....

361

185

$ 7,568

(1,930) $

$ (1,945) $

$ 1,503

$ (2,323)

5,791

Comprehensive income (loss)

Net income (loss)

.....

—

(3,406)

—

(3,406)

Changes in foreign

currency translation

adjustment

.......

—

(332)

—

(332)

Net gains on cash flow

derivative hedges

....

—

Net gains on hedges of net

investments in foreign

operations

........

—

213

—

213

Remeasurements of

post-employment

benefit obligations

...

—

Total comprehensive

income (loss)

......

—

(3,351)

(119)

—

(116)

(3,467)

Issuance of treasury

shares for vested share

based awards

......

—

(126)

—

126

—

126

—

Other, net

.........

—

(42)

—

At November 30, 2021

....

361

143

4,092

(2,049)

(1,818)

105

1,503

(2,249)

2,347

Comprehensive income (loss)

Net income (loss)

.....

—

(2,813)

—

(2,813)

Changes in foreign

currency translation

adjustment

.......

—

(538)

—

(538)

Net gains on cash flow

derivative hedges

....

—

Net gains on hedges of net

investment in foreign

operations

........

—

Remeasurements of

post-employment

benefit obligations

...

—

(19)

—

(19)

Total comprehensive

income (loss)

......

—

(2,832)

(474)

—

(466)

(3,298)

Issuance of treasury

shares for vested

share-based awards . . .

—

(85)

—

Other, net

.........

—

(1)

(3)

—

At November 30, 2022

....

361

143

$ 1,175

(2,526) $

$ (1,734) $

116

$ 1,503

$ (2,619)

(940)

The accompanying notes are an integral part of these financial statements. These financial statements only

present the Carnival plc consolidated Group IFRS Financial Statements and, accordingly, do not include the

consolidated IFRS results of Carnival Corporation.

Within the DLC arrangement the most appropriate presentation of Carnival plc’s results and financial

position is considered to be by reference to the DLC Financial Statements.

Carnival plc

Financial Statements

CARNIVAL PLC

NOTES TO GROUP FINANCIAL STATEMENTS

NOTE 1 — General

Description of Business

Carnival plc and its subsidiaries and associates are referred to collectively in these financial statements as

the “Group,” “our,” “us” and “we.” Carnival Corporation and Carnival plc, together with their consolidated

subsidiaries, are referred to collectively in these financial statements as “Carnival Corporation & plc.”

Carnival Corporation & plc is the largest global cruise company and among the largest leisure travel

companies with a portfolio of world-class cruise lines. With operations in North America, Australia, Europe

and Asia, its portfolio features — AIDA Cruises, Carnival Cruise Line, Costa Cruises, Cunard, Holland

America Line, Princess Cruises, P&O Cruises (Australia), P&O Cruises (UK) and Seabourn.

DLC Arrangement

Carnival Corporation and Carnival plc operate a dual listed company (“DLC”) arrangement, whereby the

businesses of Carnival Corporation and Carnival plc are combined through a number of contracts and

provisions in Carnival Corporation’s Articles of Incorporation and By-Laws and Carnival plc’s Articles

of Association. The two companies operate as a single economic enterprise with a single senior management

team and identical Boards of Directors, but each has retained its separate legal identity. Each company’s

shares are publicly traded on the New York Stock Exchange (“NYSE”) for Carnival Corporation and the

London Stock Exchange for Carnival plc. The Carnival plc American Depositary Shares are traded on the

NYSE.

The constitutional documents of each company provide that, on most matters, the holders of the common

equity of both companies effectively vote as a single body. The Equalization and Governance Agreement

between Carnival Corporation and Carnival plc provides for the equalization of dividends and liquidation

distributions based on an equalization ratio and contains provisions relating to the governance of the DLC

arrangement. Because the equalization ratio is 1 to 1, one share of Carnival Corporation common stock

and one Carnival plc ordinary share are generally entitled to the same distributions.

Under deeds of guarantee executed in connection with the DLC arrangement, as well as stand-alone

guarantees executed since that time, each of Carnival Corporation and Carnival plc have effectively cross

guaranteed all indebtedness and certain other monetary obligations of each other. Once the written demand

is made, the holders of indebtedness or other obligations may immediately commence an action against

the relevant guarantor.

Under the terms of the DLC arrangement, Carnival Corporation and Carnival plc are permitted to transfer

assets between the companies, make loans to or investments in each other and otherwise enter into

intercompany transactions. In addition, the cash flows and assets of one company are required to be used

to pay the obligations of the other company, if necessary.

The Boards of Directors consider that, within the DLC arrangement, the most appropriate presentation of

Carnival plc’s results and financial position is by reference to the U.S. generally accepted accounting principles

(“U.S. GAAP”) DLC Financial Statements because all significant financial and operating decisions

affecting the DLC companies are made on a joint basis to optimize the consolidated performance as a

single economic entity. Accordingly, the DLC Financial Statements are provided to shareholders as

supplementary information, which are included in the Carnival plc Annual Report, but do not form part of

these Carnival plc financial statements.

Liquidity and Management’s Plans

In the face of the global impact of COVID-19, Carnival Corporation & plc paused its guest cruise operations

in March 2020 and began resuming guest cruise operations in 2021.

Based on the evolving nature of COVID-19 and Carnival Corporation & plc’s ongoing collaboration with

local and national public health authorities, it has responsibly relaxed its related protocols, including greatly

reducing or eliminating testing requirements and vaccination protocols to more closely align with the

broader travel industry and strengthening its competitiveness.

As part of Carnival Corporation & plc’s liquidity management, it relies on estimates of its future liquidity,

which includes numerous assumptions that are subject to various risks and uncertainties. The principal

assumptions used to estimate its future liquidity consist of:

• Its continued cruise operations and expected timing of cash collections for cruise bookings

• Expected increases in revenue in 2023 on a per passenger basis compared to 2019, particularly with

the responsible relaxation of COVID-19 related protocols aligning towards land-based vacation

alternatives

• Expected improvement in occupancy on a year-over-year basis returning to historical levels in the

summer of 2023

• Stabilization of fuel prices around November 2022 year-end prices

• Continued stabilization of inflationary pressures on costs, moderated by a larger-more efficient fleet

as compared to 2019

In addition, Carnival Corporation & plc makes certain assumptions about new ship deliveries, improvements

and removals, and consider the future export credit financings that are associated with the new ship

deliveries.

Carnival Corporation & plc has a substantial debt balance as a result of the pause in guest cruise operations

and requires a significant amount of liquidity or cash provided by operating activities to service its debt.

In addition, the continued effects of the pandemic, inflation, higher fuel prices, higher interest rates and

fluctuations in foreign currency rates are collectively having a material negative impact on its financial results.

The full extent of the collective impact of these items is uncertain and may be amplified by its substantial

debt balance. Carnival Corporation & plc believes it has made reasonable estimates and judgments of the

impact of these events within its consolidated financial statements and there may be changes to those estimates

in future periods.

For almost three years, Carnival Corporation & plc has taken appropriate actions to manage its liquidity,

including completing various capital market transactions, obtaining relevant financial covenant amendments

or waivers (refer to Note 15 — “Debt and Interest Expense”), accelerating the removal of certain ships

from its fleet and during the pause in guest cruise operations, reducing capital expenditure and operating

expenses. As of November 30, 2022, 97% of its capacity has resumed guest cruise operations and is serving

guests.

Based on these actions and Carnival Corporations & plc’s assumptions, and considering Carnival

Corporation & plc’s $8.6 billion of liquidity including cash, restricted cash which became unrestricted in

December 2022 and borrowings available under its $1.7 billion, €1.0 billion and £0.2 billion multi-currency

revolving credit facility (the “Revolving Facility”) at November 30, 2022, it believes it has sufficient liquidity

to fund its obligations and expects to remain in compliance with its financial covenants for at least the next

twelve months from the issuance of these financial statements.

Carnival Corporation & plc will continue to pursue various opportunities to raise additional capital to fund

obligations associated with future debt maturities and/or to extend the maturity dates associated with its

existing indebtedness including its Revolving Facility and obtain relevant financial covenant amendments or

waivers, if needed. Actions to raise capital may include issuances of debt, convertible debt or equity in

private or public transactions or entering into new and extended credit facilities. In light of these

circumstances, the Boards of Directors of the Group have a reasonable expectation that Carnival

Corporation & plc has adequate resources to continue its operational existence, for at least the next

twelve months from the issuance of these financial statements and continue to adopt the going concern

basis of preparing the Carnival plc annual Financial Statements.

Refer to the Strategic Report — Item 5. “Going Concern Confirmation and Viability Statement”for

additional discussion regarding Carnival Corporation & plc’s liquidity assessment.

NOTE 2 — Significant Accounting Policies

Basis of Preparation

The Carnival plc Group financial statements are presented in U.S. dollars unless otherwise noted. They are

prepared on the historical cost basis, except for certain financial assets and liabilities (including derivative

instruments) that are stated at fair value.

Carnival plc

Financial Statements

On December 31, 2020, IFRS as adopted by the European Union was brought into UK law and became UK-

adopted International Accounting Standards, with future changes being subject to endorsement by the

UK Endorsement Board.

The Group transitioned to UK-adopted International Accounting Standards in its Group financial

statements on December 1, 2021. This change constitutes a change in accounting framework. However,

there is no impact on recognition, measurement or disclosure in the period reported as a result of the change

in framework. The financial statements of the Group have been prepared in accordance with UK-adopted

International Accounting Standards and with the requirements of the Companies Act 2006 as applicable to

companies reporting under those standards.

Basis of Consolidation

The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its

involvement with the entity and has the ability to affect those returns through its power to direct the activities

of the entity. All significant intra-Group balances and transactions are eliminated in consolidation. These

financial statements are required to satisfy reporting requirements of the Companies Act 2006 and do not

include the IFRS consolidated results and financial position of Carnival Corporation and its subsidiaries.

Significant Accounting Estimates, Assumptions and Judgements

The preparation of these financial statements in conformity with IFRS as adopted in the UK requires

management to make judgements, estimates and assumptions that affect the application of policies and

reported and disclosed amounts in these financial statements. These judgments, estimates and assumptions

are based on management’s best knowledge of the relevant facts and circumstances, having regard to previous

experience, but actual results may differ materially from the amounts included in the financial statements.

Climate change

In preparing these financial statements, management has considered the expected impacts of climate change

and the achievement of the Carnival Corporation & plc 2030 sustainability goals. Management has

considered the expected impacts of climate change on a number of key estimates within the financial

statements, including:

• Estimates related to our future liquidity requirements and viability (refer to Note 1 — “General-

Liquidity and Management’s Plans”and Item 5. “Going Concern Confirmation and Viability

Statement” of the Strategic Report)

• Estimates of future cash flows used in the valuation of ships (refer to Note 10 — “Property and

Equipment”

• Estimates related to the useful life and residual value of ships (refer to Note 10 — “Property and

Equipment”)

The following specific points were considered:

• Carnival Corporation & plc’s ongoing newbuild program, which includes deliveries of larger-more

efficient ships over the coming years, some of which will replace existing ships in its fleet, has been and

will continue to be a factor in management’s expected ability to achieve Carnival Corporation &

plc’s 2030 carbon intensity reduction goals

• Carnival Corporation & plc continues to invest in energy efficiency projects for its existing fleet with

expected future investments consistent with its historical annual level of investment

• The current status of various pending environmental regulations which, if enacted, will materially

impact Carnival Corporation & plc’s future cash flows beginning in 2025

Refer to XIX. Governmental Regulations on page 31 of the Strategic Report.

Significant Judgements and Estimates

Key judgements, estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to

accounting estimates are recognised in the period in which the estimate is revised if the revision affects only

that period or in the period of the revision and future periods if the revision affects both current and

future periods. The significant accounting estimates are those with a significant risk of resulting in a material

adjustment to the carrying amounts of assets and liabilities within the next year. The significant areas of

key sources of estimation uncertainty for the year ended 2022 were as follows:

Area (a)

Significant Estimates

Reference (b)

Valuation of Ships

Determination of the recoverable

value of our ships and CGUs

Note 10 — “Property and

Equipment”

Ship Useful Life and Residual Value

Determination of useful life and

residual value

Note 10 — “Property and

Equipment”

(a)

There were no critical accounting judgements as defined under IAS 1 for 2022.

(b)

Further details, together with sensitivities for key sources of estimation uncertainty, where appropriate

and practicable, are included within the references in the table.

Cash and Cash Equivalents

Cash and cash equivalents include investments with maturities of three months or less at acquisition that

are readily convertible to known amounts of cash, which are stated at cost and present insignificant risk of

changes in value.

Trade and Other Receivables

Although we generally require full payment from our customers prior to or concurrently with their cruise,

we grant credit terms to a relatively small portion of our revenue source. We have receivables from credit card

merchants and travel agents for cruise ticket purchases and onboard revenue. These receivables are included

within trade and other receivables, net. We have agreements with a number of credit card processors that

transact customer deposits related to our cruise vacations. Certain of these agreements allow the credit card

processors to request, under certain circumstances, that we provide a reserve fund in cash. These reserve

funds are included in other assets.

Inventories

Inventories consist substantially of food, beverages, hotel supplies, fuel and retail merchandise, which are all

carried at the lower of cost or net realisable value. Cost is determined using the weighted-average or first-

in, first-out methods.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and any impairment charges. We

capitalize interest as part of the cost of capital projects incurred during construction. Depreciation is computed

using the straight-line method over our estimated useful lives of the assets to a residual value, as a percentage

of original cost, as follows:

Years

Residual

Values

Ships

..................................

15%

Ship improvements

........................

3 – 30

Buildings and improvements

..................

10 – 40

Computer hardware and software

..............

2 – 12

Transportation equipment and other

............

3 – 20

Leasehold improvements, including port facilities . . .

Shorter of the remaining lease term or

related asset life (3 – 30)

The cost of ships under construction includes progress payments for the construction of new ships, as well

as design and engineering fees, capitalised interest, construction oversight costs and various owner supplied

items. Any liquidated damages received from shipyards are recorded as reductions to the cost basis of the

ship.

We have a capital program for the improvement of our ships and for asset replacements to enhance the

effectiveness and efficiency of our operations; to comply with, or exceed, all relevant legal and statutory

requirements related to health, environment, safety, security and sustainability; and to gain strategic benefits

or provide improved product innovations to our guests. We account for ship improvement costs, including

replacements of certain significant components and parts by capitalising those costs we believe add value to

our ships and have a useful life greater than one year and depreciating those improvements over their

estimated remaining useful life.

Carnival plc

Financial Statements

The costs of repairs and maintenance, including minor improvement costs and expenses incurred during dry-

docks, are charged to expense as incurred and included in other operating expenses. These minor dry-dock

expenses primarily represent maintenance activities that are incurred when a ship is taken out-of-service for

scheduled maintenance.

In addition, specifically identified or estimated cost and accumulated depreciation of previously capitalised

ship components are written-off upon retirement, which may result in a loss on disposal that is also included

in other operating expenses.

Given the large size and complexity of our ships, ship accounting estimates require considerable judgment

and are inherently uncertain. We do not have cost segregation studies performed to specifically componentize

our ships. In addition, since we do not separately componentize our ships, we do not identify and track

depreciation of original ship components. Therefore, we typically have to estimate the net book value of

components that are retired, based primarily upon their replacement cost, their age and their original estimated

useful lives.

We have estimated our ships’useful lives at 30 years and residual values at 15% of our original ship cost.

Our ship useful life and residual value estimates take into consideration the estimated weighted-average useful

lives of the ships’ major component systems, such as hull, superstructure, main electric, engines and

cabins. We also take into consideration the impact of technological changes, historical useful lives of similarly-

built ships, long-term cruise and vacation market conditions and regulatory changes, including those

related to the environment and climate change. We determine the residual value of our ships based on our

long-term estimates of their resale value at the end of their useful life to us but before the end of their physical

and economic lives to others, historical resale values of our and other cruise ships as well as our expectations

of the long-term viability of the secondary cruise ship market. We review estimated useful lives and

residual values for reasonableness at the period end or whenever events or circumstances significantly

change.

Occasionally we transfer ships between Carnival Corporation and Carnival plc. The group’s accounting

policy with regard to such transfers is that they take place at the US GAAP net book value of the ship at

the point of transfer.

We evaluate ship asset impairments either at the individual ship level, when it is considered to be the lowest

level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities,

for example when we have plans to dispose of a ship, or at the cash generating unit (“CGU”) (or cruise

brand) level, when the cash flows of a given ship are not considered to be largely independent of the cash

flows of other assets and liabilities. We review our ships for impairment whenever events or circumstances

indicate that the carrying value of a ship may not be recoverable. The recoverable amount is considered to be

the higher of value in use or fair value less costs of disposal.

Where an assessment is performed at the individual ship level, the fair value is typically estimated based

either on ship sales price negotiations and/or estimated sales prices from previous ship sales.

Where an assessment is performed at the CGU level, we compare the carrying amount of the net assets

allocated to each CGU (inclusive of ships) with its recoverable amount. The estimated recoverable amount

is the higher of the cruise brands’ fair value less costs of disposal and its value in use. If the recoverable

amount is greater than the cruise brand net asset carrying value, then the value of the assets is deemed

recoverable. A significant amount of judgement is required in estimating the recoverable amounts of our

CGUs. Assessments are made at a CGU level as individual ships cash flows are dependent both upon shore-

based assets that support the operation of the ships and the itineraries each ship operates, which is

determined based upon plans for ships in the CGU and for which we have the ability to change over time.

If estimated discounted future cash flows are less than the carrying value of a ship, an impairment charge is

recognized to the extent its carrying value exceeds its estimated recoverable amount.

If, subsequent to impairment, there has been a change in the estimates used to determine our ships’

recoverable amount, then the carrying amount of the ship may be increased by the reversal of the impairment.

The reversal is limited to the carrying amount that would have been determined had no impairment loss

been recognized for the ship in prior years. Determination of future cash flows and fair values of our cruise

ships involves estimates and assumptions.

Leases

Substantially all of our leases for which we are the lessee are leases of port facilities and real estate and are

included within right-of-use assets, long-term lease liabilities and the current portion of lease liabilities in our

Consolidated Balance Sheets.

We have port facilities and real estate lease agreements with lease and non-lease components, and in such

cases, we account for the components as a single lease component.

We do not recognize lease assets and lease liabilities for any leases with an original term of less than one

year. For some of our port facilities and real estate lease agreements, we have the option to extend our current

lease term by 1 to 10 years. Generally, we do not include renewal options as a component of our present

value calculation as we are not reasonably certain that we will exercise the options.

As most of our leases do not have a readily determinable implicit rate, we estimate the incremental borrowing

rate (“IBR”) to determine the present value of lease payments. We apply judgement in estimating the IBR

including considering the term of the lease, the currency in which the lease is denominated, and the impact of

collateral and our credit risk on the rate.

Certain of our agreements stipulate potential future increases in variable lease payments based on an index

or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments

based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use

asset.

We depreciate our lease assets on a straight-line basis over the shorter of the asset’s useful life and the lease

term. Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or

loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of

the liability for each period.

Goodwill

Our historical goodwill represented the excess of the purchase price over the fair value of identifiable net

assets acquired in a business acquisition. Historically, we reviewed our goodwill for impairment as of July 31

every year, or more frequently if events or circumstances dictated. As of November 30, 2021 we performed

impairment analyses for two of our EA segment CGUs and as a result of this analysis, we determined their

estimated fair values no longer exceeded their carrying values. As a result, we recognized goodwill

impairment charges of $280 million and accordingly have no remaining goodwill for our EA segment

CGUs. Refer to Note 12 — “Goodwill”for additional information.

Contingencies

We are routinely involved in legal proceedings, claims, disputes, regulatory matters and governmental

inspections or investigations arising in the ordinary course of or incidental to our business, including those

noted below. While it is typically very difficult to determine the timing and ultimate outcome of these matters,

we use our best judgement to determine the appropriate amounts to record in our consolidated financial

statements. We accrue a liability and establish a reserve when we believe a loss is probable and the amount

of the loss can be reasonably estimated. In assessing probable losses, we make estimates of the amount of

probable insurance recoveries, if any, which are recorded as assets where appropriate. Such accruals and

reserves and the estimated timing of settlement are typically based on developments to date, historical

claims experience, and actuarially determined estimates of liabilities. Given the inherent uncertainty related

to the eventual outcome of these matters and potential insurance recoveries, it is possible that all or some

of these matters may be resolved for amounts different from any provisions or disclosures that we may have

made. In addition, as new information becomes available, we may need to reassess the amount of asset or

liability that needs to be accrued related to our contingencies. Refer to Note 23 — “Contingencies” for

additional information.

Investments in Associates

Investments in Associates are accounted for using the equity method of accounting and are initially

recognized at cost. Interest in the net assets of such investments is included in investments in associates in

the Consolidated Balance Sheets and our proportionate interest in their results is included in income (loss)

from investments in associates in the Consolidated Statements of Income.

Carnival plc

Financial Statements

Debt and Debt Issuance Costs

Debt is recorded at initial fair value, which normally reflects the proceeds received by us, net of debt

issuance costs. Debt is subsequently stated at amortized cost. Debt issuance costs are generally amortized to

interest expense using the straight-line method, which approximates the effective interest method, over the

term of the debt. Debt issue discounts and premiums are generally amortized to interest expense using the

effective interest rate method over the term of the debt.

Derivatives and Other Financial Instruments

We have in the past and may in the future utilize derivative and non-derivative financial instruments, such as

foreign currency forwards, options and swaps, foreign currency debt obligations and foreign currency cash

balances, to manage our exposure to fluctuations in certain foreign currency exchange rates. We use interest

rate swaps primarily to manage our interest rate exposure to achieve a desired proportion of fixed and

floating rate debt. Our policy is to not use financial instruments for trading or other speculative purposes.

All derivatives are recorded at fair value. If a derivative is designated as a cash flow hedge, then the change in

the fair value of the derivative is recognized as a component of other comprehensive income (“OCI”) until

the underlying hedged item is recognized in earnings or the forecasted transaction is no longer probable. If a

derivative or a non-derivative financial instrument is designated as a hedge of our net investment in a

foreign operation, then changes in the effective portion of the fair value of the financial instrument are

recognized as a component of OCI to offset the change in the translated value of the designated portion of

net investment being hedged until the investment is sold or substantially liquidated, while the impact

attributable to components excluded from the assessment of hedge effectiveness is recorded in interest

expense, net of capitalised interest, on a systematic and rational basis. For derivatives that do not qualify for

hedge accounting treatment, the change in fair value is recognized in earnings.

We classify the fair value of all our derivative contracts as either current or long-term, depending on the

maturity date of the derivative contract. The cash flows from derivatives treated as cash flow hedges are

classified in our Consolidated Statements of Cash Flows in the same category as the item being hedged.

Derivative valuations are based on observable inputs such as interest rates forward currency exchange rates,

credit spreads, maturity dates, volatilities, and cross currency basis spreads. We use the income approach

to value derivatives for foreign currency options and forwards, interest rate swaps and cross currency swaps

using observable market data for all significant inputs and standard valuation techniques to convert future

amounts to a single present value amount, assuming that participants are motivated but not compelled to

transact.

Foreign Currency Translation and Transactions

The Carnival plc Group financial statements are presented in U.S. dollars. Each foreign entity determines its

functional currency by reference to its primary economic environment. The Group’s most significant

foreign entities utilize the U.S. dollar, Euro, Sterling or the Australian dollar as their functional currencies.

The Group translates the assets and liabilities of its foreign entities that have functional currencies other than

the U.S. dollar at exchange rates in effect at the balance sheet date. Revenues and expenses of these foreign

entities are translated at the average rate for the period. Equity is translated at historical rates and the resulting

foreign currency translation adjustments are included in the translation reserve, which is a separate

component of other reserves within shareholders’equity. Therefore, the U.S. dollar value of the non-equity

translated items in the Group’s consolidated financial statements will fluctuate from period to period,

depending on the changing value of the U.S. dollar versus these currencies.

The Group executes transactions in a number of different currencies. At the date that the transaction is

recognized, each asset, liability, revenue, expense, gain or loss arising from the transaction is measured and

recorded in the functional currency of the recording entity using the exchange rate in effect at that date. At

each balance sheet date, recorded monetary balances denominated in a currency other than the functional

currency are adjusted using the exchange rate at the balance sheet date, with gains or losses recorded in other

income or other expense, unless such monetary balances have been designated as hedges of net investments

in our foreign entities. The unrealised gains or losses on our long-term intercompany receivables and payables

which are denominated in a non-functional currency and are not expected to be repaid in the foreseeable

future are recorded in translation reserves.

Revenue and Expense Recognition

Guest cruise deposits and advance onboard purchases are initially included in customer deposits when

received. Customer deposits are subsequently recognized as cruise revenues, together with revenues from

onboard and other activities, and all associated direct costs and expenses of a voyage are recognized as cruise

costs and expenses, upon completion of voyages with durations of ten nights or less and on a pro rata

basis for voyages in excess of ten nights. The impact of recognizing these shorter duration cruise revenues

and costs and expenses on a completed voyage basis versus on a pro rata basis is not material. Certain of our

product offerings are bundled and we allocate the value of the bundled services and goods between

passenger ticket revenues and onboard and other revenues based upon the estimated standalone selling

prices of those goods and services. Guest cancellation fees, when applicable, are recognized in passenger ticket

revenues at the time of cancellation.

Our sales to guests of air and other transportation to and from airports near the home ports of our ships

are included in passenger ticket revenues, and the related costs of purchasing these services are included in

transportation costs. The proceeds that we collect from the sales of third-party shore excursions are included

in onboard and other revenues and the related costs are included in onboard and other costs. The amounts

collected on behalf of our onboard concessionaires, net of the amounts remitted to them, are included in

onboard and other revenues as concession revenues. All of these amounts are recognised on a completed

voyage or pro rata basis as discussed above.

Revenues and expenses from our hotel and transportation operations, which are included in our Tour and

Other segment, are recognized at the time the services are performed.

Customer Deposits

Our payment terms generally require an initial deposit to confirm a reservation, with the balance due prior

to the voyage. Cash received from guests in advance of the cruise is recorded in customer deposits and in other

long-term liabilities on our Consolidated Balance Sheets. These amounts include refundable deposits. In

certain situations, we have provided flexibility to guests by allowing guests to rebook at a future date, receive

future cruise credits (“FCCs”) or elect to receive refunds in cash. We have at times issued enhanced FCCs.

Enhanced FCCs provide the guest with an additional credit value above the original cash deposit received, and

the enhanced value is recognized as a discount applied to the future cruise in the period used. We record a

liability for unexpired FCCs to the extent we have received and not refunded cash from guests for cancelled

bookings. We had total customer deposits of $1.7 billion as of November 30, 2022 and $0.9 billion as of

November 30, 2021, which includes approximately $35 million of unredeemed FCCs as of November 30,

2022. The increase in customer deposits in 2022 is primarily driven by the resumption of guest cruise

operations. Given the uncertainty of travel demand caused by COVID-19 and lack of comparable historical

experience of FCC redemptions, we are unable to estimate the number of FCCs that will not be used in

future periods. Refunds payable to guests who have elected cash refunds are recorded in accounts payable.

During 2022 and 2021, we recognized revenues of $0.6 billion and an immaterial amount related to our

customer deposits as of November 30, 2021 and 2020. Historically, our customer deposits balance changes

due to the seasonal nature of cash collections, the recognition of revenue, refunds of customer deposits

and foreign currency changes.

Contract Costs

We recognize incremental travel agent commissions and credit and debit card fees incurred as a result of

obtaining the ticket contract as assets when paid prior to the start of a voyage. We record these amounts

within prepaid expenses and other and subsequently recognize these amounts as commissions, transportation

and other at the time of revenue recognition or at the time of voyage cancellation. We had incremental

costs of obtaining contracts with customers recognized as assets of $59 million as of November 30, 2022

and $13 million as of November 30, 2021.

Insurance

We maintain insurance under Carnival Corporation & plc’s insurance programs to cover a number of risks

including illness and injury to crew, guest injuries, pollution, other third-party claims in connection with our

cruise activities, damage to hull and machinery for each of our ships, war risks, workers’compensation,

directors’and officers’liability, property damage and general liability for shoreside third-party claims. We

recognize insurance recoverables from third-party insurers for recorded losses at the time the recovery is

Carnival plc

Financial Statements

virtually certain or upon settlement for amounts in excess of the recorded losses. All of our insurance

policies are subject to coverage limits, exclusions and deductible levels.

Selling and Administrative Expenses

Selling expenses include a broad range of advertising, marketing and promotional expenses. Advertising is

charged to expense as incurred. Selling expenses totalled $309 million in 2022 and $153 million in 2021.

Administrative expenses represent the costs of our shoreside support, reservations and other administrative

functions, and include salaries and related benefits, professional fees and building occupancy costs, which are

typically expensed as incurred.

Share-Based Compensation

We recognize compensation expense for all, equity settled, share-based compensation awards using the fair

value method. For time-based share awards, we recognize compensation cost ratably using the straight-line

attribution method over the expected vesting period or to the retirement eligibility date, if earlier than the

vesting period. For performance-based share awards, we estimate compensation cost based on the probability

of the performance condition being achieved and recognize expense ratably using the straight-line

attribution method over the expected vesting period. If all or a portion of the performance condition is not

expected to be met, the appropriate amount of previously recognized compensation expense is reversed

and future compensation expense is adjusted accordingly. For market-based share awards, we recognize

compensation cost ratably using the straight-line attribution method over the expected vesting period. If the

target market conditions are not expected to be met, compensation expense will still be recognized.

Earnings Per Share

Basic earnings per share is computed by dividing net income (loss) by the weighted-average number of

shares outstanding during each period. Diluted earnings per share is computed by dividing net income (loss)

by the weighted-average number of shares and common stock equivalents outstanding during each period.

Post-Employment Benefits

The Group operates both defined benefit and defined contribution plans. The net deficit or surplus for each

defined benefit pension plan is calculated based on the present value of the defined benefit obligation at

the balance sheet date less the fair value of the plan assets. The calculation is performed by a qualified external

actuary using the projected unit credit method. The discount rate is the yield at the balance sheet date on

AA credit rated bonds or local equivalents that have maturity dates approximating the terms of the pension

plans’ obligations.

Actuarial gains and losses that arise in calculating the defined benefit pension plans’ obligations are

recognized in the period in which they arise directly in the Group’s comprehensive income (loss).

The operating and financing costs of defined benefit pension plans are recognized in the Statements of

Income (Loss); current service costs are spread systematically over the expected average remaining service

lives of employees and financing costs are recognized in the periods within which they arise. To the extent that

the benefits vest immediately, the expense is recognized immediately.

Defined contribution plan expenses are recognized in the period to which they relate. We contribute to these

plans based on employee contributions, salary levels and length of service. The assets of these plans are

held separately from the Group in independently administered funds.

Income Taxes

Deferred income taxes are provided using the balance sheet liability method. Deferred income tax assets are

recognized to the extent that it is probable that future taxable income will be available against which the

temporary differences can be utilised. Deferred income taxes are measured at the average tax rates that are

expected to apply in the periods in which the timing differences are expected to reverse based on tax rates and

laws that have been enacted or substantially enacted by the balance sheet date. Current income taxes are

the taxes payable on the taxable income for the year, applying current rates and any adjustments in respect

of previous years.

Dividends

When applicable, dividend distributions are recognized in the period in which the dividends are declared

because, under the DLC arrangement, the declaration of a dividend by the Boards of Directors of Carnival

Corporation & plc establishes a liability for Carnival plc. If declared, Carnival plc dividends are declared in

U.S. dollars and holders of Carnival plc American Depositary Shares receive a dividend payable in U.S.

dollars.

Transactions with Carnival Corporation

We present the cash flow items “Changes in amounts owed to the Carnival Corporation group, net”on a

net basis as this presentation is most appropriate to reflect the nature of these underlying cash flows between

Carnival Corporation and Carnival plc and their respective subsidiaries, being large amounts, with a high

volume of transactions, and which are unsecured and repayable on demand (of a short-term nature).

Accounting Pronouncements

The International Accounting Standards Board (“IASB”) issued amendments to the standards, IFRS 9

Financial Instruments

, IAS 39

Financial Instruments: Recognition and Measurement

, IFRS 7

Financial

Instruments: Disclosures

, IFRS 4

Insurance Contracts

and IFRS 16

Leases,

that address issues that might

affect financial reporting when an existing interest rate benchmark is replaced with an alternative interest rate.

The changes relate to the modification of financial assets, financial liabilities and lease liabilities, specific

hedge accounting requirements, and disclosure requirements applying IFRS 7

Financial Instruments:

Disclosures

to accompany the amendments regarding modifications and hedge accounting.

The amendments require that, for financial instruments measured using amortised cost measurement (that

is, financial instruments classified as amortised cost), changes to the basis for determining the contractual

cash flows required by interest rate benchmark reform are reflected by adjusting their effective interest

rate. No immediate gain or loss is recognised. These expedients are only applicable to changes that are

required by interest rate benchmark reform, which is the case if, and only if, the change is necessary as a direct

consequence of interest rate benchmark reform and the new basis for determining the contractual cash

flows is economically equivalent to the previous basis (that is, the basis immediately preceding the change).

Where some or all of a change in the basis for determining the contractual cash flows of a financial liability

does not meet the above criteria, the above practical expedient is first applied to the changes required by

interest rate benchmark reform, including updating the instrument’s effective interest rate. Any additional

changes are accounted for in the normal way (that is, assessed for modification or derecognition, with the

resulting modification gain / loss recognised immediately in profit or loss where the instrument is not

derecognised).

In December 2021, we amended our £350 million long-term debt agreement which referenced the British

Pound sterling (“GBP”) LIBOR to the Sterling Overnight Index Average (“SONIA”) and applied the practical

expedient. This amendment did not have a material impact on our consolidated financial statements. As of

November 30, 2022, approximately $46 million of our outstanding indebtedness bears interest at floating

rates referenced to U.S. dollar LIBOR and matures after the transition date and have not yet transitioned

to SOFR or an alternative interest rate benchmark. We are currently evaluating our contract referenced to

U.S. dollar LIBOR and working with our creditors on updating credit agreements as necessary to include

language regarding the successor or alternate rate to LIBOR. We do not expect the adoption of this

standard to have a material impact on our consolidated financial statements during the LIBOR transition

period.

The IASB has issued amendments to the standard, IAS 1,

Presentation of Financial Statements

—

Classification of Liabilities as Current or Non-current

, providing a more general approach to the classification

of liabilities based on the contractual agreements in place at the reporting date. These amendments are

required to be adopted by us for the financial year commencing on January 1, 2024 and must be applied

retrospectively. We do not expect the adoption of this guidance to have a material impact on our consolidated

financial statements.

NOTE 3 — Segment Information

As previously discussed, within the DLC arrangement, the most appropriate presentation of Carnival plc’s

results and financial position is by reference to the DLC Financial Statements, which are included in the

Carnival plc Annual Report, but do not form part of these Carnival plc financial statements. The operating

segments are reported on the same basis as the internally reported information that is provided to the chief

operating decision maker (“CODM”), who is the President, Chief Executive Officer and Chief Climate

Officer of Carnival Corporation and Carnival plc. The CODM assesses performance and makes decisions

Carnival plc

Financial Statements

to allocate resources for Carnival Corporation & plc based upon review of the results across all of the

segments. Carnival Corporation & plc has four reportable segments comprised of (1) North America and

Australia cruise operations (“NAA”), (2) Europe and Asia cruise operations (“EA”), (3) Cruise Support and

(4) Tour and Other.

The operating segments within each of the NAA and EA reportable segments have been aggregated based

on the similarity of their economic and other characteristics, including geographic guest sourcing. The Cruise

Support segment includes Carnival Corporation & plc’s portfolio of leading port destinations and other

services, all of which are operated for the benefit of its cruise brands. The Tour and Other segment represents

the hotel and transportation operations of Holland America Princess Alaska Tours and other operations.

Selected information for the Carnival Corporation & plc segments and the reconciliation to the corresponding

Carnival plc amounts as of and for the years ended November 30 was as follows:

(in millions)

Revenues

Operating

costs and

expenses

Selling and

administrative

Depreciation

and

amortisation

Operating

income

(loss)

Capital

expenditures

Total

assets

2022

NAA

.............

$ 8,281

$ 7,526

1,517

1,408

(2,170)

2,568 $ 27,413

..............

3,531

3,925

745

692

(1,830)

2,213

15,317

Cruise Support

.......

171

120

225

140

(315)

155

8,461

Tour and Other

......

185

187

(64)

512

Carnival Corporation &

plc – U.S. GAAP

....

12,168

11,757

2,515

2,275

(4,379)

4,940

51,703

Carnival

Corporation – U.S.

GAAP (a)

.......

(8,228)

(7,249)

(1,646)

(1,492)

2,159

(2,648)

(34,717)

Carnival plc

Group – U.S.

GAAP vs IFRS

differences (b)

....

—

699

(12)

(2)

(686)

—

(1,454)

Carnival plc – IFRS

...

$ 3,941

$ 5,208

857

781

(2,905)

2,293 $ 15,532

2021

NAA

.............

$ 1,108

$ 2,730

953

1,352

(3,928)

2,397 $ 25,606

..............

712

1,807

568

728

(2,617) (b)

515

16,088

Cruise Support

.......

335

129

(477)

660

11,014

Tour and Other

......

(67)

637

Carnival Corporation &

plc – U.S. GAAP

....

1,908

4,655

1,885

2,233

(7,089)

3,607

53,344

Carnival

Corporation – U.S.

GAAP (a)

.......

(1,148)

(2,566)

(1,213)

(1,435)

4,067

(1,919)

(35,656)

Carnival plc

Group – U.S.

GAAP vs IFRS

differences (b)

....

—

154

(13)

(3)

(192)

—

(837)

Carnival plc – IFRS

...

760

$ 2,242

658

795

(3,215)

1,687 $ 16,851

(a)

Carnival Corporation consists primarily of cruise brands that do not form part of the Group; however,

these brands are included in Carnival Corporation & plc and thus represent substantially all of the

reconciling items.

(b)

The U.S. GAAP vs IFRS accounting differences primarily relate to differences in the carrying value of

ships, lease accounting, pension accounting and differences in depreciation expense due to differences in

the carrying value of ships.

Revenues by geographic areas, which are based on where our guests are sourced, were as follows:

Years Ended November 30,

(in millions)

2022

2021

Europe

..................................................

3,357

710

North America

............................................

311

Australia and Asia

..........................................

232

Others

..................................................

3,941

760

Substantially all of our long-lived assets consist of our ships and move between geographic areas. Segment

information relating to liabilities is not reported to or used by the CODM in order to assess performance and

allocate resources to a segment.

NOTE 4 — Other Income and Expense

Years Ended November 30,

(in millions)

2022

2021

Foreign exchange remeasurements, net

............................

311

Impairment in associates and other

..............................

(30)

(20)

Other income (expense), net

...................................

280

In addition, fees payable to the Group’s auditor for the audit of the financial statements in 2022 were

$2 million (2021: $2 million). Non-audit service fees paid to our auditors in 2022 were $0.1 million (2021:

$0.3 million), relating to audit-related assurance services.

NOTE 5 — Taxation

Years Ended November 30,

(in millions)

2022

2021

Current taxes

.............................................

(20)

(36)

Deferred taxes

.............................................

Income tax benefit (expense), net

................................

(15)

(13)

Total income tax benefit (expense) is reconciled to income taxes calculated at the UK standard tax rate as

follows:

Years Ended November 30,

(in millions)

2022

2021

Income (loss) before income taxes

...............................

(2,797)

(3,393)

Notional tax benefit (expense) at UK standard tax rate (19% in 2022 and

2021)

.................................................

532

645

Effect of Italian and UK tonnage tax and other taxes at different rates

.....

(547)

(657)

(15)

(13)

A summary of our principal taxes and exemptions in the jurisdictions where our significant operations are

located is as follows:

UK and Australian Income Tax

Cunard, P&O Cruises (UK) and P&O Cruises (Australia) are divisions of Carnival plc and have elected to

enter UK tonnage tax under a rolling ten-year term and, accordingly, reapply every year. Companies to which

the tonnage tax regime applies pay corporation taxes on profits calculated by reference to the net tonnage

of qualifying ships. UK corporation tax is not chargeable under the normal UK tax rules on these brands’

relevant shipping income. Relevant shipping income includes income from the operation of qualifying ships

and from shipping related activities.

Carnival plc

Financial Statements

For a company to be eligible for the regime, it must be subject to UK corporation tax and, among other

matters, operate qualifying ships that are strategically and commercially managed in the UK. Companies

within UK tonnage tax are also subject to a seafarer training requirement.

Our UK non-shipping activities that do not qualify under the UK tonnage tax regime remain subject to

normal UK corporation tax.

P&O Cruises (Australia) and all of the other cruise ships operated internationally by Carnival plc for the

cruise segment of the Australian vacation region are exempt from Australian corporation tax by virtue of the

UK/Australian income tax treaty.

Italian and German Income Tax

In 2015, Costa and AIDA re-elected to enter the Italian tonnage tax regime through 2024 and can reapply

for an additional ten-year period beginning in early 2025. Companies to which the tonnage tax regime applies

pay corporation taxes on shipping profits calculated by reference to the net tonnage of qualifying ships.

Most of Costa’s and AIDA’s earnings that are not eligible for taxation under the Italian tonnage tax regime

will be taxed at an effective tax rate of 4.8% in 2022 and 2021.

Substantially all of AIDA’s earnings are exempt from German income taxes by virtue of the Germany/Italy

income tax treaty.

U.S. Income Tax

Our domestic U.S. operations, principally the hotel and transportation business of Holland America

Princess Alaska Tours, are subject to federal and state income taxation in the U.S.

We believe that the U.S. source transportation income earned by Carnival plc and its subsidiaries currently

qualifies for exemption from U.S. federal income tax under applicable bilateral U.S. income tax treaties.

Other

We recognize income tax provisions for uncertain tax positions, based solely on their technical merits, and

the most likely outcome to be sustained upon examination by the relevant tax authority. Based on all known

facts and circumstances and current tax law, we believe that the total amount of our uncertain income tax

position liabilities and related accrued interest are not material to our financial position. All interest expense

related to income tax liabilities is included in income tax expense.

In addition to or in place of income taxes, virtually all jurisdictions where our ships call impose taxes, fees

and other charges based on guest counts, ship tonnage, passenger capacity or some other measure, and these

taxes, fees and other charges are included in commissions, transportation and other costs and other

operating expenses.

NOTE 6 — Earnings (Loss) Per Share

Years Ended November 30,

(in millions, except per share data)

2022

2021

Net income (loss) for basic and diluted earnings (loss) per share

..........

(2,813)

(3,406)

Weighted-average shares outstanding

.............................

186

184

Diluted weighted-average shares outstanding

.......................

186

184

Basic earnings (loss) per share

..................................

(15.14)

(18.49)

Diluted earnings (loss) per share

................................

(15.14)

(18.49)

Antidilutive shares excluded from our 2022 and 2021 diluted earnings (loss) per share computations were

immaterial.

NOTE 7 — Cash and Cash Equivalents

November 30,

(in millions)

2022

2021

Cash

........................................................

190

343

Cash equivalents (money market funds and time deposits) (a)

.................

251

434

(a)

Money market funds are carried at their fair value, which approximates its carrying value.

Substantially all material cash balances are held with financial institutions that are investment grade rated.

NOTE 8 — Trade and Other Receivables

November 30,

(in millions)

2022

2021

Trade

.........................................................

163

VAT, income taxes and other

........................................

202

140

The ageing of trade receivables was as follows:

November 30,

(in millions)

2022

2021

Current

.......................................................

118

1 to 30 days

....................................................

31 days and thereafter

.............................................

184

114

Allowance for expected credit losses

...................................

(21)

(26)

163

NOTE 9 — Inventories

November 30,

(in millions)

2022

2021

Food, beverages and hotel supplies, net

..................................

Fuel

..........................................................

Other

..........................................................

193

146

Carnival plc

Financial Statements

NOTE 10 — Property and Equipment

(in millions)

Ships

and ship

improvements

Other

property

and

equipment

Total

Cost

At November 30, 2020

...............................

19,813

1,676

$ 21,489

Exchange movements

..............................

(829)

(40)

(869)

Additions

......................................

1,672

1,727

Disposals

......................................

(268)

(51)

(319)

At November 30, 2021

.............................

20,388

1,640

22,028

Exchange movements

..............................

(2,021)

(72)

(2,093)

Additions

......................................

2,225

2,278

Disposals

......................................

(734)

(72)

(806)

At November 30, 2022

.............................

19,858

1,549

$ 21,407

Accumulated depreciation

At November 30, 2020

...............................

(5,343)

(921)

(6,264)

Exchange movements

..............................

229

252

Depreciation

....................................

(650)

(97)

(747)

Disposals

......................................

242

291

Impairments

....................................

(607)

—

(607)

At November 30, 2021

...............................

(6,129)

(946)

(7,075)

Exchange movements

..............................

529

572

Depreciation

....................................

(640)

(101)

(741)

Disposals

......................................

398

467

Impairments

....................................

(1,149)

(12)

(1,161)

At November 30, 2022

.............................

(6,991)

(947)

(7,938)

Net book value

At November 30, 2021

.............................

14,259

694

$ 14,953

At November 30, 2022

.............................

12,867

602

$ 13,469

At November 30, 2022, the cost of assets under construction, which are included in the above table, totalled

$0.6 billion ($1.1 billion at November 30, 2021).

At November 30, 2022, the net book value of assets is shown after deducting government construction

grants of an immaterial amount ($50 million at November 30, 2021).

Capitalised interest amounted to $18 million in 2022 ($43 million in 2021). The interest capitalisation rate is

based on the weighted-average interest rates applicable to borrowings within the DLC during each period.

During 2022, the average capitalisation rate was 4.7% (2021 5.8%).

The continued effects of the pandemic on our business and certain Asia markets, which remain closed to

cruising (particularly China), and our updated expectations for the removal of two ships from our fleet

resulted in an impairment trigger relating to these two ships. We determined that these two ships each had a

net carrying value which exceeded its respective recoverable value based on estimated sales prices and

recognized ship impairment charges of $0.2 billion during 2022.

In addition, as a result of the continued effects of the pandemic, inflation, higher fuel prices and higher

interest rates on our business, we performed an impairment assessment for our remaining EA segment ships

at the CGU (or cruise brand) level. We determined that for one of the four CGUs assessed, the carrying

value exceeded its recoverable value and we recognized additional ship impairment charges of $0.9 billion in

the current year. The 2022 impairment charge was related to the Costa Cruises (“Costa”) CGU.

In total, we recognized $1.1 billion of ship impairment charges during 2022 compared to $0.6 billion of

charges during 2021.

Significant Estimate — Determination of the recoverable value of one of our CGUs

We have identified the determination of the recoverable value of one of our CGUs as a significant estimate

in 2022. The determination of the fair value of our CGUs includes numerous estimates and underlying

assumptions that are subject to various risks and uncertainties. We believe we have made reasonable estimates

and judgements as part of our assessments. The assumptions resulting in key sources of estimation

uncertainty, all of which are considered Level 3 inputs, used in our discounted cash flow analyses consisted

of:

• Short-term continued improvement in net cruise revenue (cruise revenues net of our most variable

costs) per ALBD to pre-pause levels adjusted for deployment changes and inflation

• Weighted-average cost of capital of market participants, adjusted for the risk attributable to the

geographic regions in which the cruise brand operates (“WACC”). For the one CGU with a recognized

impairment, WACC was 14.1% in the most recent analyses from 9.4% in 2021. Had the 2021

WACC been applied to the 2022 expected cash flows, no impairment would have been indicated.

Both the discounted cash flows and the WACC used in our assessments are adjusted for the impact

of inflation.

• Long-term marginal growth in net cruise revenue (cruise revenues net of our most variable costs) per

ALBD beyond inflationary changes based on long-term historical averages

Other assumptions in our cash flow analyses consisted of:

• Fuel price

• Climate change related regulatory costs within a range of current market expectations (starting at

$70 per metric ton of carbon emissions in 2025 and increasing over time)

• Capital expenditures for our ships, including in relation to anticipated newbuilds and ongoing costs

required for us to comply with, or exceed, all relevant legal and statutory requirements related to HESS

and sustainability

• Newbuilds on order

We performed quantitative sensitivity analyses as of November 30, 2022 to determine the effect of changes

in the key sources of estimation uncertainty. For one of the four CGUs assessed, the sensitivities performed

resulted in further impairment. For the other CGUs, the sensitivities performed resulted in no change to

our conclusion that no impairment was indicated. The following table summarizes the sensitivity analysis

performed on the CGU which was most sensitive and its impact on impairment:

Key assumptions

Short-term continued

improvement in net cruise

revenue per ALBD to

pre-pause levels adjusted

for deployment changes and

inflation

WACC

Long-term marginal

growth in net cruise revenue

per ALBD beyond

inflationary changes based

on long-term historical

averages

Revenue

per

ALBD

10%

lower in 2023 and 2024

1% increase

Revenue growth per ALBD

limited to inflation

Impact

Additional impairment of

$191 million

Additional impairment of

$215 million

Additional impairment of

$523 million

In 2021, we performed impairment reviews on certain ships in our fleet, selected utilizing our judgement

through a risk-based approach taking into consideration the remaining life (less than 15 years) of each ship

or an expectation of probable disposal significantly ahead of the end of its useful life. If the net carrying

value of the ship exceeded its estimated recoverable amount, we recognized an impairment charge. The

estimated recoverable amount reflects the higher of the ship’s fair value less cost to sell and its value in use. In

the majority of cases, this resulted in an impairment based on the ships estimated selling value, less cost of

disposal. In total, we recognized ship impairment charges of $0.6 billion during 2021.

Refer to Note 2 — “Significant Accounting Policies, Significant Accounting Estimates, Assumptions and

Judgements” for additional discussion.

Carnival plc

Financial Statements

Significant Estimate — Determination of ship useful lives and residual values