# EDGAR Filing Document

**Accession Number:** 0001125259
**File Stem:** 0001125259-23-000005
**Filing Date:** 2023-2
**Character Count:** 511979
**Document Hash:** b2e96a6f3d3d92b35caae17088436219
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001125259-23-000005.hdr.sgml**: 20230228

**ACCESSION NUMBER**: 0001125259-23-000005

**CONFORMED SUBMISSION TYPE**: ARS

**PUBLIC DOCUMENT COUNT**: 1

**CONFORMED PERIOD OF REPORT**: 20221130

**FILED AS OF DATE**: 20230228

**DATE AS OF CHANGE**: 20230228

**EFFECTIVENESS DATE**: 20230228

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** CARNIVAL PLC
- **CENTRAL INDEX KEY:** 0001125259
- **STANDARD INDUSTRIAL CLASSIFICATION:** WATER TRANSPORTATION [4400]
- **IRS NUMBER:** 000000000
- **FISCAL YEAR END:** 1130

**FILING VALUES:**
- **FORM TYPE:** ARS
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-15136
- **FILM NUMBER:** 23678914

**BUSINESS ADDRESS:**
- **STREET 1:** 100 HARBOUR PARADE
- **STREET 2:** CARNIVAL HOUSE
- **CITY:** SOUTHAMPTON SO15 1ST
- **STATE:** X0
- **ZIP:** 00000
- **BUSINESS PHONE:** 011 44 23 8065 5000

**MAIL ADDRESS:**
- **STREET 1:** 100 HARBOUR PARADE
- **STREET 2:** CARNIVAL HOUSE
- **CITY:** SOUTHAMPTON SO15 1ST
- **STATE:** X0
- **ZIP:** 00000

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** P&O PRINCESS CRUISES PLC
- **DATE OF NAME CHANGE:** 20000929

### Attached PDF Documents

**Attachment 1:** `a2022carnivalplcannualrepo.pdf`

![img-0.jpeg](img-0.jpeg)

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
- Booking levels
- Occupancy
- Interest, tax and fuel expenses
- Currency exchange rates
- Goodwill, ship and trademark fair values
- Liquidity and credit ratings
- Adjusted earnings per share
- Adjusted EBITDA
- Adjusted Net Income (Loss)
- 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 |
| --- | --- |
| 1. Business | 2 |
| A. Overview | 2 |
| I. Summary | 2 |
| II. Mission (Purpose), Vision, Values and Priorities | 2 |
| B. Global Cruise Industry | 4 |
| I. Overview | 4 |
| II. Passenger Capacity by Ocean Going Vessels | 4 |
| C. Our Global Cruise Business | 5 |
| I. Segment Information | 5 |
| II. Passengers Carried | 5 |
| III. Ships Under Contract for Construction | 6 |
| IV. Cruise Brands | 7 |
| V. Principal Source Geographic Areas | 9 |
| VI. Cruise Programs | 9 |
| VII. Cruise Pricing and Payment Terms | 9 |
| VIII. Seasonality | 10 |
| IX. Onboard and Other Revenues | 10 |
| X. Marketing Activities | 10 |
| XI. Sales Channels | 11 |
| XII. Human Capital Management and Employees | 11 |
| XIII. Port Destinations and Private Islands | 13 |
| XIV. Ethics and Compliance | 13 |
| XV. Sustainability and Environmental Impact | 13 |
| XVI. Information Technology | 29 |
| XVII. Supply Chain | 30 |
| XVIII. Insurance | 30 |
| XIX. Governmental Regulations | 31 |
| XX. Taxation | 38 |
| XXI. Trademarks and Other Intellectual Property | 39 |
| XXII. Competition | 39 |
| D. Website Access to Carnival Corporation & plc SEC Reports | 39 |
| E. Industry and Market Data | 39 |
| F. Properties | 40 |
| G. Legal Proceedings | 40 |
| H. Executive Officers and Corporate Governance | 40 |
| I. Dividends | 41 |
| J. Repurchase Authorizations | 41 |
| 2. Business Review | 42 |
| 3. Internal Control and Risk Assessment | 50 |

# **CARNIVAL PLC ANNUAL REPORT**

# **PAGE NO.**

| 4. Risk Management and/or Mitigation of Principal and Emerging Risks | 52 |
| --- | --- |
| 5. Going Concern Confirmation and Viability Statement | 64 |
| 6. Non-Financial Information Statement | 67 |
| 7. Section 172(1) Statement | 68 |

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

| Carnival plc Group Financial Statements | 74 |
| --- | --- |
| 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 | 39 |
| 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.

Strategic Report

## 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

1

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 StyleTM, 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.

## 1. Business.

### A. Overview

#### I. 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.

2

Strategic Report

## 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,

3

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 disproportionately 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.

**B. Global Cruise Industry**

**I. 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**

| Calendar Year | Passenger Capacity as of December 31 (a) (b) |  |
| --- | --- | --- |
|  | 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.

4

Strategic Report

# **C. Our Global Cruise Business**

# **I. 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% | 24 |
| Princess Cruises | 46,280 | 18 | 15 |
| Holland America Line | 22,920 | 9 | 11 |
| P&O Cruises (Australia) | 7,230 | 3 | 3 |
| Seabourn | 2,840 | 1 | 6 |
|  | 154,800 | 61 | 59 |
| Europe and Asia (“EA”) Segment |  |  |  |
| Costa Cruises (“Costa”) | 39,580 (b) (c) | 16 | 11 |
| AIDA Cruises (“AIDA”) | 33,540 (d) | 13 | 12 |
| P&O Cruises (UK) | 19,020 | 7 | 6 |
| Cunard | 6,820 | 3 | 3 |
|  | 98,960 | 39 | 32 |
|  | 253,760 | 100% | 91 |

- (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.

5

### 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) Powered by LNG

6

#### IV. Cruise Brands

![img-0.jpeg](img-0.jpeg)

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 StyleTM debuts in the spring of 2023. Carnival Fun Italian StyleTM will marry the great service, food and entertainment that Carnival’s guests enjoy with Costa’s Italian design features.

![img-1.jpeg](img-1.jpeg)

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.

![img-2.jpeg](img-2.jpeg)

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.

![img-3.jpeg](img-3.jpeg)

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

7

## SEABOURN®

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.

![img-4.jpeg](img-4.jpeg)

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.

![img-5.jpeg](img-5.jpeg)

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.

![img-6.jpeg](img-6.jpeg)

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.

![img-7.jpeg](img-7.jpeg)

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.

8

Strategic Report

## V. Principal Source Geographic Areas

| (in thousands) | Carnival Corporation & plc Cruise Guests Carried |  |  | Brands Mainly Serving |
| --- | --- | --- | --- | --- |
|  | 2022 | 2021 | 2019 |  |
| 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 | 0 | 920 | Carnival Cruise Line, Princess Cruises and P&O Cruises (Australia) |
| Asia . . . . . | 10 | - | 1,110 | Princess Cruises and Costa |
| Other . . . . . | 80 | 10 | 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% | 32% |
| Europe without Mediterranean . . . . . | 20 | 23 | 14 |
| Mediterranean . . . . . | 18 | 29 | 13 |
| Alaska . . . . . | 8 | 4 | 6 |
| Australia and New Zealand . . . . . | 3 | - | 7 |
| China . . . . . | - | - | 4 |
| Other . . . . . | 18 | 12 | 25 |
|  | 100% | 100% | 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.

9

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
- Shore excursions
- Air packages
- Specialty restaurants
- Internet packages
- Photo packages
- Onboard spending credits
- 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
- Casino gaming
- Shore excursions
- Retail sales
- Photo sales
- Internet and communication services
- Full service spas
- Specialty restaurants
- Art 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.

### X. 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

10

Strategic Report

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.

11

## 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 | 4 | 9 |
| Non-Director Senior Management and Company Secretary | 6 | 7 |
| Non-Director Senior Management and Company Secretary Direct Reports | 27 | 57 |

(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.

### a. 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.

### b. 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.

12

Strategic Report

### **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.

13

### *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 2 e per ALB-km and kilograms of CO 2 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% |

14

Strategic Report

| 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 |

15

| 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 CO$_{2}$e per available lower berth kilometer ('ALB-km') and kilograms of CO$_{2}$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$_{2}$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$_{2}$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.

16

Strategic Report

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 CO2 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 CO2 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).

17

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 CO2e) 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.

18

Strategic Report

# **a. Summary of our Environmental Impact**

|  | Unit | Global Emissions 2022 (a) | Global Emissions 2021 (a) | Global Emissions 2019 | UK Emissions 2022 | UK Emissions 2021 | UK Emissions 2019 |
| --- | --- | --- | --- | --- | --- | --- | --- |
| GHG Emissions (in thousands) |  |  |  |  |  |  |  |
| Scope 1 - Direct GHG Emissions | Metric Tons CO 2 e | 8,539 | 4,409 | 10,723 | 1,027 | 480 | 1,223 |
| Scope 2 - Indirect GHG Emissions - Location based | Metric Tons CO 2 e | 43 | 29 | 47 | 1 | 1 | 1 |
| Total GHG Emissions (Scope 1&2) - Location based | Metric Tons CO 2 e | 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 | 82 | 114 | 3 | 2 | 3 |
| Total Energy Consumption (Scope 1&2) | Kwh | 30,960 | 15,834 | 38,412 | 3,736 | 1,723 | 4,408 |
| Intensity Ratio | Grams of CO 2 e/ ALB-Km | 241 | 330 | 246 | 267 | 385 | 284 |
| Intensity Ratio | Kilograms of CO 2 e/ ALBD | 115 | (b) | 120 | 123 | (b) | 140 |

(a) The CO$_{2}$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$_{2}$e conversion factors.

(b) Intensity ratio measured in kilograms of CO$_{2}$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$_{2}$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.

19

(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.

#### **b. 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 |

20

Strategic Report

| 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).

21

![img-0.jpeg](img-0.jpeg)

### *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.

22

Strategic Report

# *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?'

23

# *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.

24

Strategic Report

*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:

- 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).

25

### *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*

#### **Key**

Transition Risk (TR); Physical Risk (PR); Opportunity (O)

Risk Financial Impact: Low ![Lowphi]() Medium ![Mediumphi]() High ![Highphi]()
Opportunity Financial Impact: Low ![Mediumphi]() Medium ![Highphi]()

|  |  | 2025 | 2030 | 2050 |
| --- | --- | --- | --- | --- |
| Scenario 1 | (TR) How does a low-carbon transition impact the price of the fuels needed to power our ship engines? | ↔ | ↑ | ↑ |
|  | (TR) How would changing consumer sentiment drive changes in demand for our offering? | ↑ | ↑ | ↑ |
|  | (PR) 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 | (TR) How does a low-carbon transition impact the price of the fuels needed to power our ship engines? | ↑ | ↑ | ↓ |
|  | (TR) How would changing consumer sentiment drive changes in demand for our offering? | ↓ | ↓ | ↓ |
|  | (PR) 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 | (TR) How does a low-carbon transition impact the price of the fuels needed to power our ship engines? | ↓ | ↓ | ↓ |
|  | (TR) How would changing consumer sentiment drive changes in demand for our offering? | ↓ | ↓ | ↓ |
|  | (PR) 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? | ↔ | ↔ | ↔ |

### *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.

26

Strategic Report

# *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.

27

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.

![img-0.jpeg](img-0.jpeg)

### *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.

28

Strategic Report

## 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$_{2}$e per ALB-km and kilograms of CO$_{2}$e 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$_{2}$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$_{2}$e per ALB-km remains the same.

![img-1.jpeg](img-1.jpeg)

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.

29

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

### a. 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.

### b. 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.

### c. 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.

### d. 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

30

Strategic Report

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.

# **e. 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**

# **a. Maritime Regulations**

# **1. 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

31

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

## 2. 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
- Construction and materials
- Refurbishment standards
- Radio communications
- Life-saving and other equipment
- Fire protection and detection
- Safe management and operation
- 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

32

Strategic Report

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

### 3. 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

### 4. 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.

#### i. International Regulations

The principal international convention governing marine pollution prevention and response is MARPOL.

##### a. 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

33

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.

### b. 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.

### c. 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

34

Strategic Report

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$_{2}$ 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$_{2}$ 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.

#### **d. 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

35

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

36

Strategic Report

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.

### 5. 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.

### 6. 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.

#### b. 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.

37

## **XX. Taxation**

A summary of our principal taxes and exemptions in the jurisdictions where our significant operations are located is as follows:

### **a. 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.

#### **1. 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.

#### **2. 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.

#### **3. 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.

#### **b. 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.

38

Strategic Report

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.

### c. 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.

### d. 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.

## D. 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.

## E. 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

39

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.

### F. 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. | 61 | Lease | Princess Cruises |
| Sydney, NSW, Australia | 37 | 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.

### G. 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.

### H. 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.

40

Strategic Report

|  | Age | Years of Service (a) | Title |
| --- | --- | --- | --- |
| Micky Arison | 73 | 51 | Chair of the Boards of Directors |
| David Bernstein | 65 | 24 | Chief Financial Officer and Chief Accounting Officer |
| Vice Admiral William R. Burke (Ret.) | 66 | 9 | Chief Maritime Officer |
| Enrique Miguez | 58 | 25 | General Counsel |
| Michael Thamm | 59 | 29 | Group Chief Executive Officer of Costa Group and Carnival Asia |
| Josh Weinstein | 48 | 20 | 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.

#### **I. Dividends**

On March 30, 2020, we suspended the payment of dividends on Carnival Corporation common stock and Carnival plc ordinary shares.

#### **J. Repurchase Authorizations**

##### **I. 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.

41

## **2. 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
  - Casino gaming
  - Shore excursions
  - Retail sales
  - Photo sales
  - Internet and communication services
  - Full service spas
  - Specialty restaurants
  - Art 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

42

Strategic Report

- • 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.

43

# **2022 Compared to 2021**

# **Carnival plc Group IFRS Key Measures**

| (in millions) | Years Ended November 30, |  |
| --- | --- | --- |
|  | 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**

| (in millions) | Years Ended November 30, |  | Change |
| --- | --- | --- | --- |
|  | 2022 | 2021 |  |
| 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 | 43 |
| Goodwill impairment | - | 226 | (226) |
|  | 16,547 | 8,997 | 7,550 |
| Operating Income (Loss) | (4,379) | (7,089) | 2,710 |
| Nonoperating Income (Expense) |  |  |  |
| Interest income | 74 | 12 | 62 |
| 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) | 8 |
|  | (1,701) | (2,433) | 732 |
| Income (Loss) Before Income Taxes | $(6,080) | $(9,522) | $3,443 |

44

Strategic Report

# NAA

| (in millions) | Years Ended November 30, |  |  |
| --- | --- | --- | --- |
|  | 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 | 55 |
|  | 10,451 | 5,036 | 5,415 |
| Operating Income (Loss) | $(2,170) | $(3,928) | $1,758 |

# EA

| (in millions) | Years Ended November 30, |  |  |
| --- | --- | --- | --- |
|  | 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.

45

### **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

46

Strategic Report

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

47

• 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.

| (in millions) | Payments Due by |  |  |  |  | Total |
| --- | --- | --- | --- | --- | --- | --- |
|  | 2023 | 2024 | 2025 | 2026 | 2027 |  |
| 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.

48

Strategic Report

## 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

49

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 | 1% |

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.

### 3. Internal Control and Risk Assessment.

![img-0.jpeg](img-0.jpeg)

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

50

Strategic Report

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.

51

#### **4. 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**

- *a. 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

52

Strategic Report

b. 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

c. 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

53

- 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

*d. 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

54

Strategic Report

**Key stakeholders considered:**

- Communities we serve

e. *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

55

- 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

*f. 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

56

Strategic Report

g. 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

h. 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

57

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

*i. 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

58

Strategic Report

- 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

*j. 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

*k. 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

59

1. 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

m. 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**

a. 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.

60

Strategic Report

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

*b. 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

*c. 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

61

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

d. 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.

62

Strategic Report

**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

*e. 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

*f. 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).

63

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

**5. 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

64

Strategic Report

- 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.

65

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

66

Strategic Report

in future periods. Refer to “Carnival Corporation & plc’s Liquidity, Financial Condition and Capital Resources” Section for further discussion.

# 6. 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

67

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

7. 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

68

Strategic Report

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

69

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 CO2e per ALB-km and kilograms of CO2e 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 CO2 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.

70

Strategic Report

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.

71

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 StyleTM, 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

72

Strategic Report

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

Chair of the Board of Directors

73

# **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.

74

# **CARNIVAL PLC**  
 **GROUP STATEMENTS OF INCOME (LOSS)**  
 (in millions, except per share data)

|  | Notes | Years Ended November 30, |  |
| --- | --- | --- | --- |
|  |  | 2022 | 2021 |
| Revenues |  |  |  |
| Passenger ticket |  | $2,792 | $491 |
| Onboard and other |  | 1,149 | 270 |
|  | 3 | 3,941 | 760 |
| Operating Costs and Expenses |  |  |  |
| Commissions, transportation and other |  | 569 | 104 |
| Onboard and other |  | 277 | 79 |
| Payroll and related |  | 913 | 557 |
| Fuel |  | 825 | 257 |
| Food |  | 246 | 72 |
| Property and equipment impairments | 10 | 1,161 | 607 |
| Other operating |  | 1,216 | 566 |
|  |  | 5,208 | 2,242 |
| Selling and administrative | 3 | 857 | 658 |
| Depreciation and amortisation | 3 | 781 | 795 |
| Goodwill impairment | 12 | - | 280 |
|  |  | 6,846 | 3,975 |
| Operating Income (Loss) |  | (2,905) | (3,215) |
| Nonoperating Income (Expense) |  |  |  |
| Interest income |  | 2 | - |
| Income (loss) from investments in associates |  | (34) | (129) |
| Interest expense, net of capitalised interest |  | (140) | (96) |
| Other income (expense), net | 4 | 280 | 47 |
|  |  | 108 | (178) |
| Income (Loss) Before Income Taxes |  | (2,797) | (3,393) |
| Income Tax Benefit (Expense), Net | 5 | (15) | (13) |
| Net Income (Loss) |  | $(2,813) | $(3,406) |
| Earnings (Loss) Per Share |  |  |  |
| Basic | 6 | $(15.14) | $(18.49) |
| Diluted | 6 | $(15.14) | $(18.49) |

Carnival plc  
Financial Statements

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.

75

# **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) | 55 |
| 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 | 73 | 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.

76

# **CARNIVAL PLC**  
 **GROUP BALANCE SHEETS**  
 (in millions)

|  | Notes | November 30, |  |
| --- | --- | --- | --- |
|  |  | 2022 | 2021 |
| ASSETS |  |  |  |
| Current Assets |  |  |  |
| Cash and cash equivalents | 7 | $251 | $434 |
| Trade and other receivables, net | 8 | 202 | 140 |
| Inventories | 9 | 193 | 146 |
| Prepaid expenses and other |  | 215 | 109 |
| Total current assets |  | 862 | 829 |
| Property and Equipment, Net | 10 | 13,469 | 14,953 |
| Right-of-Use Assets | 11 | 283 | 333 |
| Investments in Associates | 13 | 144 | 220 |
| Other Assets | 14 | 775 | 517 |
|  |  | $15,532 | $16,851 |
| LIABILITIES AND SHAREHOLDERS' EQUITY |  |  |  |
| Current Liabilities |  |  |  |
| Current portion of long-term debt | 15 | $1,329 | $486 |
| Current portion of lease liabilities | 11 | 33 | 35 |
| Accounts payable |  | 471 | 376 |
| Accrued liabilities and other | 16 | 526 | 487 |
| Customer deposits | 2 | 1,589 | 831 |
| Amount owed to the Carnival Corporation group | 25 | 5,624 | 6,204 |
| Total current liabilities |  | 9,571 | 8,419 |
| Long-Term Debt | 15 | 6,361 | 5,484 |
| Long-Term Lease Liabilities | 11 | 256 | 298 |
| Contingencies | 23 | 84 | 94 |
| Other Long-Term Liabilities | 17 | 200 | 210 |
| Shareholders' Equity |  |  |  |
| Share capital | 18 | 361 | 361 |
| Share premium |  | 143 | 143 |
| Retained earnings |  | 1,175 | 4,092 |
| Other reserves |  | (2,619) | (2,249) |
| Total shareholders' (deficit) equity | 24 | (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

Chair of the Boards of Directors

**Josh Weinstein**

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.

77

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 | 17 | 30 |
| Interest expense, net | 156 | 132 |
| (Income) loss from investments in associates | 34 | 129 |
| Other, net | 38 | 51 |
|  | (580) | (1,352) |
| Changes in operating assets and liabilities |  |  |
| Receivables | (103) | 18 |
| Inventories | (72) | (50) |
| Prepaid expenses and other | (337) | (182) |
| Accounts payable | 106 | 53 |
| 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 | 2 | - |
| Interest paid | (131) | (96) |
| Income tax benefit received (paid), net | 12 | - |
| 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 | 83 | (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.

78

# **CARNIVAL PLC**  
 **GROUP STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY**  
 (in millions)

|  | Reserves |  |  |  |  |  |  |  |  | Total shareholders' (deficit) equity |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | Share capital | Share premium | Retained earnings | Translation reserve | Cash flow hedges | Treasury shares | Other reserves | Merger reserve | Total |  |
| At November 30, 2020 . . . . . | $361 | $185 | $7,568 | $(1,930) | $8 | $(1,945) | $41 | $1,503 | $(2,323) | $5,791 |
| Comprehensive income (loss) |  |  |  |  |  |  |  |  |  |  |
| Net income (loss) . . . . . | - | - | (3,406) | - | - | - | - | - | - | (3,406) |
| Changes in foreign currency translation adjustment . . . . . | - | - | - | (332) | - | - | - | - | (332) | (332) |
| Net gains on cash flow derivative hedges . . . . . | - | - | - | - | 3 | - | - | - | 3 | 3 |
| Net gains on hedges of net investments in foreign operations . . . . . | - | - | - | 213 | - | - | - | - | 213 | 213 |
| Remeasurements of post-employment benefit obligations . . . . . | - | - | 55 | - | - | - | - | - | - | 55 |
| Total comprehensive income (loss) . . . . . | - | - | (3,351) | (119) | 3 | - | - | - | (116) | (3,467) |
| Issuance of treasury shares for vested share based awards . . . . . | - | - | (126) | - | - | 126 | - | - | 126 | - |
| Other, net . . . . . | - | (42) | - | - | - | - | 64 | - | 64 | 22 |
| At November 30, 2021 . . . . . | 361 | 143 | 4,092 | (2,049) | 11 | (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) | (538) |
| Net gains on cash flow derivative hedges . . . . . | - | - | - | - | 9 | - | - | - | 9 | 9 |
| Net gains on hedges of net investment in foreign operations . . . . . | - | - | - | 64 | - | - | - | - | 64 | 64 |
| Remeasurements of post-employment benefit obligations . . . . . | - | - | (19) | - | - | - | - | - | - | (19) |
| Total comprehensive income (loss) . . . . . | - | - | (2,832) | (474) | 9 | - | - | - | (466) | (3,298) |
| Issuance of treasury shares for vested share-based awards . . . . . | - | - | (85) | - | - | 85 | - | - | 85 | - |
| Other, net . . . . . | - | - | (1) | (3) | 3 | - | 11 | - | 11 | 11 |
| At November 30, 2022 . . . . . | $361 | $143 | $1,175 | $(2,526) | $22 | $(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

79

## 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.

80

Carnival plc
Financial Statements

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.

81

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:

82

Carnival plc^{}[] Financial Statements

| 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 | 30 | 15% |
| Ship improvements | 3 - 30 | 0% |
| Buildings and improvements | 10 - 40 | 0% |
| Computer hardware and software | 2 - 12 | 0% |
| Transportation equipment and other | 3 - 20 | 0% |
| Leasehold improvements, including port facilities | Shorter of the remaining lease term or related asset life (3 - 30) | 0% |

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.

83

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.

84

Carnival plc^{}[] Financial Statements

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.

85

### *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.

86

Carnival plc^{}[] Financial Statements

### *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

87

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

88

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

89

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 |
| EA | 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 | 27 | 36 | (64) | 4 | 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 |
| EA | 712 | 1,807 | 568 | 728 | (2,617) (b) | 515 | 16,088 |
| Cruise Support | 42 | 55 | 335 | 129 | (477) | 660 | 11,014 |
| Tour and Other | 46 | 63 | 27 | 23 | (67) | 35 | 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.

90

Carnival plc^{}[] Financial Statements

Revenues by geographic areas, which are based on where our guests are sourced, were as follows:

| (in millions) | Years Ended November 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Europe | $3,357 | $710 |
| North America | 311 | 27 |
| Australia and Asia | 232 | 17 |
| Others | 41 | 6 |
|  | $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

| (in millions) | Years Ended November 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Foreign exchange remeasurements, net | $311 | $67 |
| Impairment in associates and other | (30) | (20) |
| Other income (expense), net | $280 | $47 |

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

| (in millions) | Years Ended November 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Current taxes | $(20) | $(36) |
| Deferred taxes | 5 | 24 |
| 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:

| (in millions) | Years Ended November 30, |  |
| --- | --- | --- |
|  | 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.

91

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**

| (in millions, except per share data) | Years Ended November 30, |  |
| --- | --- | --- |
|  | 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.

92

## NOTE 7 - Cash and Cash Equivalents

| (in millions) | November 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Cash | $190 | $343 |
| Cash equivalents (money market funds and time deposits) (a) | 61 | 92 |
|  | $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

| (in millions) | November 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Trade | $163 | $89 |
| VAT, income taxes and other | 39 | 51 |
|  | $202 | $140 |

The ageing of trade receivables was as follows:

| (in millions) | November 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Current | $118 | $59 |
| 1 to 30 days | 24 | 20 |
| 31 days and thereafter | 42 | 35 |
|  | 184 | 114 |
| Allowance for expected credit losses | (21) | (26) |
|  | $163 | $89 |

## NOTE 9 - Inventories

| (in millions) | November 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Food, beverages and hotel supplies, net | $93 | $77 |
| Fuel | 76 | 48 |
| Other | 24 | 21 |
|  | $193 | $146 |

Carnival plc  
Financial Statements

93

# **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 | 55 | 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 | 53 | 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 | 23 | 252 |
| Depreciation | (650) | (97) | (747) |
| Disposals | 242 | 49 | 291 |
| Impairments | (607) | - | (607) |
| At November 30, 2021 | (6,129) | (946) | (7,075) |
| Exchange movements | 529 | 43 | 572 |
| Depreciation | (640) | (101) | (741) |
| Disposals | 398 | 69 | 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.

94

Carnival plc
Financial Statements

## 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.

95

## Significant Estimate - Determination of ship useful lives and residual values

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 period end or whenever events or circumstances significantly change. Since the pause of our guest cruise operations, we have disposed of ships for amounts significantly below their book value. Management has estimated that this trend will normalize in the coming years.

The IMO is currently considering various proposals which build on existing regulations and aim to further reduce GHG emissions within the global shipping industry. In addition, the EU has proposed several regulations that will likely impact the cost of fossil fuels, including the recently agreed inclusion of maritime shipping in the EU's Emission Trading System which is in the process of being adopted. We have established Climate Action Goals, which include a carbon intensity reduction goal of 20% by 2030 from the 2019 baseline and aspire to achieve net carbon-neutral ship operations by 2050. Given a 30-year estimated useful life for our ships, our most recently delivered vessels' lives will extend beyond this 2050 date. Fossil fuels are currently the only viable option for our industry and it is not clear when alternative fuels or other technologies will be commercially viable. 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 closely monitoring technology developments and partnering with key organizations on research and development to support our sustainability goals and aspirations. Our fleet's engines are capable of being modified for use with certain alternative fuels and we have begun to test the use of marine biofuel blends on certain ships in our fleet. In addition, and in support of our Climate Action Goals, we invest in technologies, including the use of LNG powered cruise ships, the installation of Advanced Air Quality Systems on board our ships to aid in the reduction of sulfur emissions, the use of shore power, enabling ships to use shoreside electric power where available while in port and various other efficiency related upgrades intended to reduce our emissions. It is uncertain how proposed and possible regulatory changes related to the environment and climate change and our 2050 aspirations, may impact our ships' useful lives and residual values and the impact is dependent on future regulatory actions and technological advances. As of November 30, 2022, the Directors concluded that there were no changes in our ship useful lives and residual value estimates.

The Directors considered, if materially different conditions existed, or if there was a material change in the assumption of ship useful lives, then depreciation expense, loss on retirement of ship components and net book value of ships would be materially different.

Our 2022 ship depreciation expense would have increased by approximately:

- $19 million assuming management reduced its estimated 30-year ship useful life estimate by one year at the time it took delivery or acquired each of its ships
- $96 million assuming management had estimated its ships to have no residual value

### *Ship Sales*

During 2022, we entered into an agreement to sell one EA segment ship and completed the sale of one EA segment ship, which collectively represents a passenger-capacity reduction of 4,110 berths. In December 2022, we entered into an agreement to sell one EA segment ship, which represents a passenger-capacity reduction of 1,270 berths.

96

Carnival plc  
Financial Statements

## NOTE 11 - Leases

The balance sheet shows the following amounts:

| (in millions) | November 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Right-of-use assets |  |  |
| Port facilities | $155 | $185 |
| Real estate | 111 | 132 |
| Other | 16 | 16 |
|  | $283 | $333 |
| Lease liabilities |  |  |
| Current | $33 | $35 |
| Non-current | 256 | 298 |
|  | $289 | $333 |

The Statements of Income (Loss) includes the following amounts:

| (in millions) | Year Ended November 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Depreciation charge for right-of-use assets |  |  |
| Port facilities | $21 | $23 |
| Real estate | 15 | 17 |
| Other | 2 | 2 |
|  | $38 | $42 |
| Interest expense | $14 | $14 |

Variable and short-term costs related to leases were not material to our consolidated financial statements. The cash outflow for leases was materially consistent with lease expense recognized during 2022 and 2021. Refer to Note 25 - “Supplemental Cash Flow Information” for more details.

During 2022 and 2021, we obtained $21 million and $61 million of right-of-use assets in exchange for new lease liabilities.

Refer to Note 24 “Fair Value Measurements, Derivative Instruments and Hedging Activities and Financial Risk” for Maturities of Lease Liabilities.

## NOTE 12 - Goodwill

The changes in the carrying amounts of our goodwill were as follows:

| (in millions) |  |
| --- | --- |
| At November 30, 2020 | $284 |
| Impairment charges | (280) |
| Exchange movements | (5) |
| At November 30, 2021 | $ - |

As a result of the continued resumption of guest cruise operations and its effect on our expected future operating cash flows, we performed interim discounted cash flow analyses for all cash-generating units with goodwill as of May 31, 2021 and determined there was no impairment. As of July 31, 2021, we performed our annual goodwill and impairment reviews and determined there was no impairment.

As of November 30, 2021, as a result of the continued resumption of guest cruise operations, ongoing impacts of COVID-19 and its effect on our expected future operating cash flows and the heightened risk of future regulatory costs associated with climate change, we performed impairment analyses using discounted cash flows for two of our EA segment CGUs and accordingly we have determined their estimated fair values

97

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 as of November 30, 2021.

For the impairment reviews, the estimated recoverable amounts were based on the higher of the cruise brands' fair value less cost of disposal and its value in use. Recoverable amounts for our brands that carried goodwill were determined using a discounted future cash flow analysis, after which a terminal growth rate was applied.

#### **NOTE 13 - Investments in Associates**

We have a minority interest in the White Pass & Yukon Route ('White Pass') that includes port, railroad and retail operations in Skagway, Alaska. White Pass provided an immaterial amount of services to Carnival Corporation & plc in 2022 and 2021. As a result of the effects of the pause and subsequent resumption of our guest cruise operations on the 2022 and 2021 Alaska seasons, we evaluated whether our investment in White Pass was other than temporarily impaired and performed impairment assessments. As a result of our assessments, we recognized impairment charges for 2022 and 2021 of \$30 million and \$17 million in other income (expense), net. As of November 30, 2022, our investment in White Pass was \$50 million, consisting of \$18 million in equity and a loan of \$32 million. As of November 30, 2021, our investment in White Pass was \$76 million, consisting of \$49 million in equity and a loan of \$27 million.

We have a minority interest in CSSC Carnival Cruise Shipping Limited ('CSSC-Carnival'), a China-based cruise company which will operate its own fleet designed to serve the Chinese market. We provided an immaterial amount of services to CSSC-Carnival during both 2022 and 2021 and we paid CSSC-Carnival a total of \$55 million for the lease of ships during 2021. As of November 30, 2022 and 2021, our investment in CSSC-Carnival was \$70 million and \$119 million. During 2022 we did not make any capital contributions to CSSC-Carnival. During 2021 we made capital contributions to CSSC-Carnival in the amount of \$90 million.

In addition, the Group holds other immaterial investments in associates for a total carrying value of \$24 million and \$25 million as of November 30, 2022 and November 30, 2021 for total investment in associates balance of \$144 million and \$220 million as of November 30, 2022 and November 30, 2021.

#### **NOTE 14 - Other Assets**

| (in millions) | November 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Credit card reserves | $296 | $110 |
| Long-term deposit | 229 | 99 |
| VAT receivables | 98 | 84 |
| Debt issuance costs | 38 | 71 |
| Pension assets | 19 | 56 |
| Other long-term assets and other receivables | 95 | 97 |
|  | $775 | $517 |

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. Although the agreements vary, these requirements may generally be satisfied either through a withheld percentage of customer payments or providing cash funds directly to the credit card processor. As of November 30, 2022 and 2021, we had \$296 million and \$110 million, respectively, in reserve funds related to our customer deposits provided to satisfy these requirements which are included within other assets. We continue to expect to provide reserve funds under these agreements.

Debt issuance costs included in the table above are for undrawn facilities.

The Group had gross deferred tax assets of \$141 million at November 30, 2022 (\$132 million at November 30, 2021), which were not recognized.

98

# **NOTE 15 - Debt and Interest Expense**

| (in millions) | Maturity | Rate (a) (b) | November 30, |  |
| --- | --- | --- | --- | --- |
|  |  |  | 2022 | 2021 |
| Secured Debt |  |  |  |  |
| Loans |  |  |  |  |
| EUR fixed rate . . . . . | Nov 2022 | 5.5 - 6.2% | $ - | $98 |
| EUR floating rate . . . . . | Nov 2022 | EURIBOR + 2.7% | - | 57 |
| Total Secured Debt . . . . . |  |  | - | 155 |
| Unsecured Debt |  |  |  |  |
| Notes |  |  |  |  |
| EUR Notes . . . . . | Oct 2029 | 1.0% | 620 | 679 |
| Loans |  |  |  |  |
| Floating rate . . . . . | Feb 2023 | LIBOR + 4.5% | 290 | 290 |
| GBP floating rate . . . . . | Feb 2025 | SONIA + 0.9% (c) | 419 | 467 |
| EUR floating rate . . . . . | Dec 2022 - Mar 2026 | EURIBOR + 1.8 - 2.4% | 827 | 1,132 |
| Export Credit Facilities |  |  |  |  |
| Floating rate . . . . . | Dec 2026 | LIBOR + 1.5% | 46 | 26 |
| Fixed rate . . . . . | Dec 2032 | 2.7% | 569 | 623 |
| EUR fixed rate . . . . . | Feb 2031 - Jan 2034 | 1.1 - 1.6% | 2,592 | 1,551 |
| EUR floating rate . . . . . | May 2024 - Nov 2034 | EURIBOR + 0.2 - 1.6% | 2,622 | 1,200 |
| Total Unsecured Debt . . . . . |  |  | 7,985 | 5,967 |
| Total Debt . . . . . |  |  | 7,985 | 6,122 |
| Less: unamortized debt issuance costs . . . . . |  |  | (310) | (198) |
| Plus: debt modification loss . . . . . |  |  | 15 | 45 |
| Total Debt, net of unamortized debt issuance costs and debt modification loss . . . . . |  |  | 7,690 | 5,969 |
| Less: current portion of long-term debt . . . . . |  |  | (1,329) | (486) |
| Long-Term Debt . . . . . |  |  | $6,361 | $5,484 |

- (a) The reference rates for substantially all of our LIBOR and EURIBOR based variable debt have 0% floors.
- (b) The above debt tables do not include the impact of our interest rate swaps. The interest rates on some of our debt, including Carnival Corporation & plc's Revolving Facility, fluctuate based on the applicable rating of senior unsecured long-term securities of Carnival Corporation or Carnival plc.
- (c) As of November 30, 2022 the interest rate for the GBP unsecured loan was linked to SONIA and subject to a credit adjustment spread ranging from 0.03% to 0.28%. The referenced SONIA rate with the credit adjustment spread is subject to a 0% floor. As of November 30, 2021, the reference rate used was GBP LIBOR.

The scheduled maturities of our debt are as follows:

| (in millions) | Principal Payments |
| --- | --- |
| Year |  |
| 2023 . . . . . | $1,322 |
| 2024 . . . . . | 879 |
| 2025 . . . . . | 1,085 |
| 2026 . . . . . | 638 |
| 2027 . . . . . | 521 |
| Thereafter . . . . . | 3,540 |
| Total . . . . . | $7,985 |

Carnival plc
Financial Statements

99

### *Export Credit Facility Borrowings*

During the year ended November 30, 2022, we borrowed $3.1 billion under export credit facilities due in semi-annual installments through 2034. As of November 30, 2022, the net book value of the vessels subject to negative pledges was $6.3 billion.

### *Revolving Credit Facilities*

As of November 30, 2022 and November 30, 2021, Carnival Corporation & plc's short-term borrowings consisted of $0.2 billion and $2.8 billion and Carnival plc had no short-term borrowings under the Carnival Corporation & plc's $1.7 billion, €1.0 billion and £0.2 billion revolving credit facility (the "Revolving Facility"). Carnival Corporation & plc may continue to re-borrow or otherwise utilize available amounts under the Revolving Facility through August 2024, subject to satisfaction of the conditions in the facility. As of November 30, 2022 and November 30, 2021, Carnival Corporation and Carnival plc had $2.6 billion and $0.2 billion available for borrowing under the Revolving Facility. The Revolving Facility also includes an emissions linked margin adjustment whereby, after the initial applicable margin is set per the margin pricing grid, the margin may be adjusted based on performance in achieving certain agreed annual carbon emissions goals. Carnival Corporation & plc is required to pay a commitment fee on any unutilized portion.

### *Debt Holidays*

In 2021, we amended all of our export credit facilities to defer approximately $0.3 billion of principal payments that would otherwise have been due over a period commencing April 1, 2021 until May 31, 2022, with repayments to be made over the following five years. The cumulative deferred principal amount of the debt holiday amendments, inclusive of the amendments entered into in 2020, was approximately $0.3 billion as of November 30, 2022. In addition, these amendments aligned the financial covenants of all our export credit facilities with our other facilities.

### *Collateral Pool*

The secured debt of Carnival Corporation & plc is secured on either a first or second-priority basis, depending on the instrument, by certain collateral of Carnival Corporation & plc, which includes vessels and certain assets related to those vessels and material intellectual property. The net book value of Carnival plc's vessels and certain assets related to those vessels which form part of the Carnival Corporation & plc collateral pool is $7.4 billion as of November 30, 2022.

### *Covenant Compliance*

As of November 30, 2022, Carnival Corporation & plc's Revolving Facility, unsecured loans and export credit facilities contain certain covenants listed below.

- Maintain minimum interest coverage (adjusted EBITDA to consolidated net interest charges, as defined in the agreements) (the "Interest Coverage Covenant") at the end of each fiscal quarter from August 31, 2023, at a ratio of not less than 2.0 to 1.0 for the August 31, 2023 testing date, 2.5 to 1.0 for the November 30, 2023 testing date, and 3.0 to 1.0 for the February 29, 2024 testing date onwards, or through their respective maturity dates.
- Maintain minimum issued capital and consolidated reserves (as defined in the agreements) of $5.0 billion
- Limit its debt to capital (as defined in the agreements) percentage from the November 30, 2021 testing date until the May 31, 2023 testing date, to a percentage not to exceed 75%, following which it will be tested at levels which decline ratably to 65% from the May 31, 2024 testing date onwards
- Maintain minimum liquidity of $1.5 billion through November 30, 2026
- Adhere to certain restrictive covenants through November 30, 2024
- Limit the amounts of our secured assets as well as secured and other indebtedness

During 2022, Carnival Corporation & plc entered into letter agreements to waive compliance with the Interest Coverage Covenant under its Revolving Facility and $11.8 billion of $12.1 billion of its unsecured loans and export credit facilities which contain this covenant through the February 29, 2024 testing date.

100

Carnival plc^{}[] Financial Statements

Subsequent to November 30, 2022, Carnival Corporation & plc entered into further letter agreements to waive compliance with the Interest Coverage Covenant under the remaining $0.3 billion of its unsecured loans and export credit facilities which contain the covenant through the February 29, 2024 testing date and its Revolving Facility through the May 31, 2024 testing date. Carnival Corporation & plc will be required to comply beginning with the next testing date of May 31, 2024 or August 31, 2024, as applicable.

At November 30, 2022, Carnival Corporation & plc was in compliance with the applicable covenants under its debt agreements. Generally, if an event of default under any debt agreement occurs, then, pursuant to cross-default and/or cross-acceleration clauses therein, substantially all of its outstanding debt and derivative contract payables could become due, and our debt and derivative contracts could be terminated. Any financial covenant amendment may lead to increased costs, increased interest rates, additional restrictive covenants and other available lender protections that would be applicable.

Carnival Corporation or Carnival plc and certain of our subsidiaries have guaranteed substantially all of our indebtedness.

### *Modifications*

During the years-ended November 30, 2022 and November 30, 2021, we recognized a gain on modification of debt of $23 million and $9 million as part of interest expense, net of capitalised interest in the accompanying Group Statements of Income (Loss). Our interest expense, net of capitalised interest is primarily related to our debt balance.

### **NOTE 16 - Accrued Liabilities and Other**

| (in millions) | November 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Compensation and benefits | $192 | $196 |
| Taxes | 44 | 36 |
| Interest | 32 | 25 |
| Port fees | 50 | 23 |
| Other | 208 | 208 |
|  | $526 | $487 |

### **NOTE 17 - Other Long-Term Liabilities**

| (in millions) | November 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Customer deposits | $79 | $98 |
| Income tax uncertainty reserve | 59 | 50 |
| Deferred income taxes | 13 | 17 |
| Post-employment benefits | 21 | 32 |
| Other long-term liabilities | 29 | 13 |
|  | $200 | $210 |

Deferred income taxes are principally related to differences between (1) the book and tax methods of calculating depreciation expense in our Holland America Princess Alaska Tours business and other North America operations, (2) the timing of recognizing our Cozumel, Mexico port hurricane insurance settlement, and (3) the ship depreciation and profit reserve of Costa Crociere S.p.A. and its subsidiaries.

101

## NOTE 18 - Share Capital and Reserves

| (in millions) | Number of Shares | Share Capital |
| --- | --- | --- |
| At November 30, 2020 | 217.4 | $361 |
| Ordinary shares issued and fully paid | - | - |
| At November 30, 2021 | 217.4 | 361 |
| Ordinary shares issued and fully paid | - | - |
| At November 30, 2022 | 217.4 | $361 |

There were 31.2 million shares held as treasury stock at November 30, 2022 (32.4 million shares were held as treasury stock at November 30, 2021).

At November 30, 2022 there were 13.3 million ordinary shares at $1.66 each of Carnival plc (3.2 million at November 30, 2021) authorized for future issuance under its employee benefit plans.

The Group merger reserve arose from the difference between the book value and the fair value of certain businesses sold to Carnival Corporation during 2004 as part of a DLC corporate restructuring, which was accounted for as a group reconstruction.

## NOTE 19 - Post-Employment Benefits

### *Employee Benefit Plans*

The Group is a contributing employer to three defined benefit pension plans: the P&O Princess Cruises (UK) Pension Scheme (“Company’s UK Plan”), the multiemployer Merchant Navy Officers Pension Fund (“MNOPF”) and the multiemployer Merchant Navy Ratings Pension Fund (“MNRPF”). The defined benefit plans are formally valued triennially by external qualified actuaries as required by the applicable UK regulations.

The Company’s UK Plan’s assets are managed on behalf of the trustee by independent fund managers. The Company’s UK Plan is closed to new membership and to future benefit accrual and is undergoing its triennial valuation. Based on the most recent valuation of the Company’s UK Plan at March 31, 2022, it was determined that this plan was 97% funded which triggered a funding obligation under UK regulations, and resulted in the creation of an escrow account for risk mitigation. The valuation of the Company’s UK Plan at March 31, 2022 is currently in process and accordingly, the results are not available at this stage.

The MNOPF is a funded defined benefit multiemployer plan in which British officers employed by companies within the Group have participated and continue to participate. The MNOPF is divided into two sections, the “Old Section” and the “New Section”, each of which covers a different group of participants. Both the Old Section and New Section are closed to new membership and to future benefit accrual.

The Old Section covers predecessor employers’ officers employed prior to 1978 and is fully funded. In December 2012, the fund’s trustee completed a buy-in of the Old Section liabilities with a third-party insurer, whereby the insurer will pay the officers’ pension liabilities as they become due. Therefore, we have no further obligation to fund this Section.

The New Section is accounted for as a defined benefit plan. Based on the most recent valuation of the New Section at March 31, 2021, it was determined that this plan was 102% funded.

The MNRPF is also a defined benefit multiemployer pension plan available to certain of P&O Cruises (UK)’s shipboard British personnel. This plan is closed to new membership and to future benefit accrual and based on the most recent valuation at March 31, 2020, it was determined that this plan was 93% funded and the deficits are to be recovered through funding contributions from participating employers. Following a review by the new trustee board at the end of 2021, additional liabilities have been identified due to benefit rectifications that may be required. In addition, a settlement agreement was reached in February 2022 for rectifications in relation to ill health early retirement benefits. The Group’s share of the additional liabilities for these items has been estimated at $23 million for which the Group recognized at November 30, 2021.

102

Carnival plc^{}[] Financial Statements

The recorded long-term assets (liabilities) on the Balance Sheets for the Company's UK Plan, the Group's share of the MNOPF New Section and the MNRPF and other post-employment benefit liabilities were as follows:

| (in millions) | November 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Employee benefit plans' assets (deficits) | $18 | $47 |
| Other post-employment benefits | (21) | (24) |
|  | $(3) | $24 |

The employee benefit plans' information provided below relates to the Company's UK Plan, the Group's share of the MNOPF New Section and the MNRPF.

The pension liabilities for accounting purposes were calculated by the Group's qualified external actuary. The principal assumptions used were as follows:

|  | Company's UK Plan (%) |  | MNOPF New Section (%) |  | MNRPF (%) |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
| Discount rates | 4.3 | 1.6 | 4.4 | 1.6 | 4.4 | 1.6 |
| Expected rates of salary increases | 2.9 | 2.7 | n/a | n/a | n/a | n/a |
| Pension increases |  |  |  |  |  |  |
| Deferment | 2.9 | 2.7 | 2.9 | 2.7 | 2.9 | 2.7 |
| Payment | 2.8 | 2.6 | 3.1 | 3.1 | 3.1 | 3.1 |
| Inflation | 3.3 | 2.7 - 3.4 | 3.3 | 3.4 | 3.3 | 3.4 |

Assumptions regarding future mortality experience are set based on the Self-Administered Pension Schemes tables for the 'base' mortality tables. The weighted-average life expectancy in years of a 65-year old pensioner on the balance sheet dates was as follows:

|  | November 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Male | 21.4 | 21.2 |
| Female | 23.9 | 23.5 |

The weighted-average life expectancy in years of a 45-year old future pensioner retiring at age 65 was as follows:

|  | November 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Male | 22.7 | 22.6 |
| Female | 25.4 | 25.1 |

The amounts recognized in the Balance Sheets for these plans were determined as follows:

| (in millions) | November 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Present value of obligations | $(379) | $(623) |
| Fair value of plans' assets | 412 | 684 |
| Net assets (liabilities) before restriction on assets | 33 | 61 |
| Restriction on assets | (15) | (13) |
| Net assets (liabilities) recognized in Balance Sheets | $18 | $47 |

103

The amounts recognized in the Statements of Income (Loss) for these plans were as follows:

| (in millions) | November 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Service cost | $ - | $26 |
| Interest cost on defined benefit obligation | 9 | 10 |
| Interest income on plans' assets | (10) | (10) |
| Net interest on defined benefit liability | (1) | - |
| Administrative expenses | 4 | 4 |
| Cost recognized in Statements of Income (Loss) | $3 | $30 |

Our estimated contribution to be paid into the Company's UK Plan during 2023 is immaterial. We do not expect to make contributions into the MNOPF or MNRPF in 2023.

The weighted average duration of the defined benefit obligation of all employee benefit plans is 14 years. Estimated future benefit payments to be made during each of the next five fiscal years and in the aggregate during the succeeding five fiscal years for all employee benefit plans are as follows:

| (in millions) |  |
| --- | --- |
| 2023 | $21 |
| 2024 | $21 |
| 2025 | $21 |
| 2026 | $22 |
| 2027 | $22 |
| 2028 - 2032 | $120 |

Analysis of the movements in the Balance Sheet assets (liabilities) for these plans was as follows:

| (in millions) | November 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Net assets (liabilities) at December 1, | $47 | $22 |
| Expenses (see above) | (3) | (30) |
| Amounts recognized in the Group Statements of Comprehensive Income (Loss) | (22) | 54 |
| Employer contributions | 2 | 1 |
| Exchange movements | (5) | - |
| Net assets (liabilities) at November 30, | $18 | $47 |

The cumulative actuarial losses recognized in the Group Statements of Changes in Shareholders' Equity at November 30, 2022 for these plans were $6 million ($16 million of gains at November 30, 2021).

104

Carnival plc
Financial Statements

Changes in the present value of defined benefit obligations for these plans were as follows:

| (in millions) | November 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Present value of obligations at December 1, | $(623) | $(629) |
| Past Service Costs | - | (26) |
| Interest cost | (9) | (9) |
| Benefits paid | 36 | 25 |
| Administrative expenses | (4) | - |
| Gain (loss) due to experience | (15) | 15 |
| Gain (loss) due to changes in financial assumptions | 173 | (2) |
| Gain (loss) due to changes in demographic assumptions | (3) | 5 |
| Exchange movements | 66 | (2) |
| Present value of obligations at November 30, | $(379) | $(623) |

The defined benefit plans expose the Group to actuarial risks, such as longevity risk, interest rate risk, inflation risk and market (investment) risk, including currency risk.

The sensitivity of the plans' liabilities to reasonable changes in certain key assumptions were as follows:

- 0.5% reduction in the discount rate results in an increase of $26 million
- 0.5% increase in inflation rate results in an increase of $14 million
- 1 year increase in life expectancy would result in an increase of $16 million

Changes in the fair value of these plans' assets were as follows:

| (in millions) | November 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Fair value of plans' assets at December 1, | $684 | $669 |
| Interest income on plans' assets | 10 | 10 |
| Return (loss) on plans' assets greater than discount rate | (174) | 32 |
| Employer contributions | 2 | 1 |
| Benefits paid | (36) | (25) |
| Administrative expenses | - | (4) |
| Exchange movements | (74) | 1 |
| Fair value of plans' assets at November 30, | $412 | $684 |

The actual gains (losses) on these plans' assets in 2022 were $164 million ($42 million in 2021).

These plans' assets were comprised as follows:

| (in millions, except percentages) | November 30, |  |  |  |
| --- | --- | --- | --- | --- |
|  | 2022 |  | 2021 |  |
| Equities | $44 | 11% | $133 | 19% |
| Corporate bonds | 44 | 11% | - | -% |
| Liability matching investments | 324 | 79% | 551 | 81% |
|  | $412 | 100% | $684 | 100% |
| Restriction on assets (a) | (15) |  | (13) |  |
|  | $397 |  | $671 |  |

(a) These assets are restricted in line with the trustee agreements of the two multiemployer schemes.

Our net pension balance represents substantially all of our funded employee benefit plans.

#### **Defined Contribution Plans**

The Group has several defined contribution plans available to its employees. During 2022, the Group expensed $13 million ($11 million in 2021) for these plans.

105

## NOTE 20 - Employees and Directors

The average number of our employees, which excludes shipboard employees who are on leave, was as follows:

|  | Years Ended November 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Shore employees | 6,694 | 5,174 |
| Shipboard employees | 29,093 | 13,536 |
|  | 35,787 | 18,710 |

The aggregate payroll and related expenses included in both cruise operating expenses and selling and administrative expenses were as follows:

| (in millions) | Years Ended November 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Salaries, wages and benefits | $1,074 | $713 |
| Social security and payroll taxes | 59 | 50 |
| Post-Employment Benefits | 20 | 49 |
| Share-based compensation | 17 | 29 |
|  | $1,170 | $842 |

Carnival Corporation & Carnival plc operate as if they are a single economic enterprise with a single senior executive management team and identical Boards of Directors (“Key Management”). These individuals have the responsibility and authority for controlling, directing and planning Carnival Corporation and Carnival plc’s activities. Except for some share-based compensation and some fees for UK-based services, the majority of Key Management’s remuneration was borne by other companies within the DLC. Details of the Group’s Directors’ remuneration and share-based compensation are disclosed in the Carnival plc Directors’ Remuneration Report and any relevant transactions are given in the “Related Person Transactions” section. Additional disclosures of related party transactions are discussed in Note 1 - “General, DLC Arrangement” and Note 21 - “Related Party Transactions.” The aggregate compensation for our Key Management includes amounts paid by both Carnival Corporation and Carnival plc and was as follows:

| (in millions) | Years Ended November 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 restated* |
| Fees | $1 | $1 |
| Non-Equity Incentive Plan Compensation* | 9 | 12 |
| Salaries and benefits | 7 | 5 |
| Total short-term employment benefits | 17 | 19 |
| Share-based compensation | 13 | 16 |
|  | $30 | $35 |

* The 2021 aggregate compensation has been restated to include $12 million of non-equity incentive plan compensation, which was omitted in the 2021 presentation of this table. This amount was correctly included within payroll and related expenses in the 2021 Statements of Income (Loss).

### *Government Assistance*

For the years ended November 30, 2022 and 2021, the Group received government assistance under schemes provided by various governments. The total amounts recognized by the Group during the years ended November 30, 2022 and 2021 from these schemes were immaterial and is offset in payroll and related expenses as well as selling and administrative expenses in the accompanying Statements of Income (Loss).

### *Equity Plans*

We issue our share-based compensation awards, which at November 30, 2022 included time-based share awards (restricted stock awards and restricted stock units), performance-based share awards and market-based

106

Carnival plc^{}[] Financial Statements

share awards (collectively “equity awards”) under the Carnival plc stock plan. Equity awards are principally granted to management level employees and members of our Boards of Directors. The plan is administered by a committee of independent directors (the “Committee”) that determines which employees are eligible to participate, the monetary value or number of shares for which equity awards are to be granted and the amounts that may be exercised or sold within a specified term. We had an aggregate of 4.3 million shares available for future grant at November 30, 2022. We fulfill our equity award obligations using shares purchased in the open market or with unissued or treasury shares. Our equity awards generally vest over a three-year period, subject to earlier vesting under certain conditions.

The Group granted 699,010 equity awards at a weighted-average price of £13.03 in 2022 (1,595,820 equity awards at a weighted-average price of £14.01 in 2021).

## NOTE 21 - Related Party Transactions

### *Transactions with Carnival Corporation and its Subsidiaries*

During 2022, Holland America Line and Princess Cruises purchased land tours from us totalling $83 million. During 2021, Holland America Line and Princess Cruises did not purchase land tours from us. In addition, during 2022 we sold pre- and post-cruise vacations, shore excursions and transportation services to the Carnival Corporation group. During 2021 we did not sell pre- and post-cruise vacations, shore excursions or transportation services to the Carnival Corporation group.

During 2022, the Group had ship charter agreements with Princess Cruises and Carnival Cruise Line for ships operating in Australia. The total charter expense in 2022 was $88 million which was included in other operating expenses. The Group did not have ship charter expense in 2021.

During 2022, the Group continued to provide a guarantee to the Merchant Navy Officers Pension Fund for certain employees who have transferred from Carnival plc to a subsidiary of Carnival Corporation.

Carnival Corporation and its subsidiary, Carnival Investments Limited owned 40.6 million or 18.7% at November 30, 2022 and 34.6 million or 15.9% at November 30, 2021 of Carnival plc’s ordinary shares, which are non-voting.

Carnival Corporation & plc has a program that allows it to realize a net cash benefit when Carnival Corporation common stock is trading at a premium to the price of Carnival plc ordinary shares (the “Stock Swap Program”). Under the Stock Swap Program, Carnival Corporation & plc 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.

Within the DLC arrangement, there are instances where the Group provides services to Carnival Corporation and also where Carnival Corporation provide services to the Group. Additional disclosures of related party transactions are discussed in Note 1 - “General, DLC Arrangement”.

During 2022, we completed the sale of one ship to Carnival Corporation, which represents a passenger-capacity reduction of 2,260 berths for $301 million. Subsequent to November 30, 2022, we sold two ships to Carnival Holdings (Bermuda) Limited, a subsidiary of Carnival Corporation, for $1.5 billion. These two ships will be chartered back to Carnival plc. We plan to sell two ships to Carnival Corporation, one in 2023 and another in 2024, in connection with Carnival Fun Italian StyleTM. As of the balance sheet date, we determined that the IFRS 5 *Non-current assets Held for Sale and Discontinued operations* criteria had not been met for these planned ship sales.

## NOTE 22 - Commitments

(in millions)

| November 30, 2022 | November 30, |  |  |  |  |  | Total |
| --- | --- | --- | --- | --- | --- | --- | --- |
|  | 2023 | 2024 | 2025 | 2026 | 2027 | Thereafter |  |
| Newbuild capital expenditures . . . | $932 | $561 | $ - | $ - | $ - | $ - | $1,493 |

(in millions)

| November 30, 2021 | November 30, |  |  |  |  |  | Total |
| --- | --- | --- | --- | --- | --- | --- | --- |
|  | 2022 | 2023 | 2024 | 2025 | 2026 | Thereafter |  |
| Newbuild capital expenditures . . . | $1,947 | $1,030 | $583 | $ - | $ - | $ - | $3,560 |

107

## NOTE 23 - Contingencies

### Provisions

The Group's contingencies include estimated liabilities for crew, guest and other third-party claims. The liabilities associated with crew illnesses and crew and guest injury claims, including all legal costs, are estimated based on the specific merits of the individual claims or actuarially estimated based on historical claims experience, loss development factors and other assumptions.

The changes in our contingencies were as follows:

*(in millions)*

| At November 30, 2021 | $ | 120 |
| --- | --- | --- |
| Additional provisions |  | 18 |
| Paid losses |  | (13) |
| Reversals |  | (13) |
| Changes in the discounted amount |  | 1 |
| At November 30, 2022 | $ | 113 |

*(in millions)*

Provisions

|  | November 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Current | $29 | $25 |
| Non-current | 84 | 94 |
|  | $113 | $120 |

### COVID-19 Actions

As a result of the impact of COVID-19, litigation claims, enforcement actions, regulatory actions and investigations, including, but not limited to, those arising from personal injury and loss of life, have been and may, in the future, be asserted against us. We expect many of these claims and actions, or any settlement of these claims and actions, to be covered by insurance and historically the maximum amount of our liability, net of any insurance recoverables, has been limited to our self-insurance retention levels.

We have been named in a number of individual actions related to COVID-19. These actions include tort claims based on a variety of theories, including negligence and failure to warn. The plaintiffs in these actions allege a variety of injuries: some plaintiffs confined their claim to emotional distress, while others allege injuries arising from testing positive for COVID-19. A smaller number of actions include wrongful death claims. Substantially all of these individual actions have now been dismissed or settled for immaterial amounts.

As of November 30, 2022 nine purported class actions have been brought by former guests in several U.S. federal courts, the Federal Court in Australia, and in Italy. These actions include tort claims based on a variety of theories, including negligence, gross negligence and failure to warn, physical injuries and severe emotional distress associated with being exposed to and/or contracting COVID-19 onboard. As of November 30, 2022, seven of these class actions have either been settled individually for immaterial amounts or had their class allegations dismissed by the courts and only the Australian and Italian matters remain.

All COVID-19 matters seek monetary damages and most seek additional punitive damages in unspecified amounts.

We continue to take actions to defend against the above claims.

### Regulatory or Governmental Inquiries and Investigations

Legal proceedings and government investigations are subject to inherent uncertainties, and unfavorable rulings or other events could occur. Unfavorable resolutions could involve substantial monetary damages. In addition, in matters for which conduct remedies are sought, unfavorable resolutions could include an injunction or other order prohibiting us from selling one or more products at all or in particular ways, precluding particular business practices or requiring other remedies. An unfavorable outcome might result in a material adverse impact on our business, results of operations, financial position or liquidity.

108

Carnival plc
Financial Statements

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 inadvertent events to malicious motivated attacks.

We detected ransomware attacks in December 2020 in which an unauthorized third party gained access to certain of our information security systems, deployed ransomware, and obtained personal information related to guests, employees and crew for some of our operations. We engaged a major cybersecurity firm to investigate the matter and notified relevant law enforcement and regulators of the incident. The investigation, communication and reporting phases are complete.

On June 24, 2022, we finalized a settlement with the New York Department of Financial Services (“NY DFS”) in connection with previously disclosed cybersecurity events, pursuant to which we have paid an amount that did not have a material impact on our financial statements. All previously disclosed cyber incidents have now been resolved.

We have incurred legal and other costs in connection with cyber incidents that have impacted us. The penalties and settlements paid in connection with cyber incidents over the last three years were not material. While these incidents did not have a material adverse effect on our business, results of operations, financial position or liquidity, no assurances can be given about the future and we may be subject to future litigation, attacks or incidents that could have such a material adverse effect.

On March 14, 2022, the U.S. Department of Justice and the U.S. Environmental Protection Agency notified Carnival Corporation & plc of potential civil penalties and injunctive relief for alleged Clean Water Act violations by owned and operated vessels covered by the 2013 Vessel General Permit. Carnival Corporation & plc is working with these agencies to reach a resolution of this matter. We believe the ultimate outcome will not have a material impact on our financial statements.

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 financial statements.

#### Other Contingent Obligations

Some of the debt contracts we enter into include indemnification provisions obligating us to make payments to the counterparty if certain events occur. These contingencies generally relate to changes in taxes or changes in laws which increase the lender’s costs. There are no stated or notional amounts included in the indemnification clauses, and we are not able to estimate the maximum potential amount of future payments, if any, under these indemnification clauses.

Refer to Note 2 - “Significant Accounting Policies” for additional information on contingencies and insurance.

#### NOTE 24 - Fair Value Measurements, Derivative Instruments and Hedging Activities and Financial Risk

##### Fair Value Measurements

Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and is measured using inputs in one of the following three categories:

- Level 1 measurements are based on unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access. Valuation of these items does not entail a significant amount of judgement.
- Level 2 measurements are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active or market data other than quoted prices that are observable for the assets or liabilities.
- Level 3 measurements are based on unobservable data that are supported by little or no market activity and are significant to the fair value of the assets or liabilities.

109

Considerable judgement may be required in interpreting market data used to develop the estimates of fair value. Accordingly, certain estimates of fair value presented herein are not necessarily indicative of the amounts that could be realised in a current or future market exchange.

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. The fair value of cross guarantees within the DLC arrangement were not significant at November 30, 2022 or 2021, and are not expected to result in any material loss.

# *Financial Instruments that are not Measured at Fair Value*

| (in millions) | November 30, 2022 |  | November 30, 2021 |  |
| --- | --- | --- | --- | --- |
|  | Carrying Value | Fair Value | Carrying Value | Fair Value |
| Liabilities |  |  |  |  |
| Fixed rate debt (a) . . . . . | $3,781 | $2,020 | $2,951 | $2,271 |
| Floating rate debt (a) . . . . . | 4,204 | 3,087 | 3,171 | 2,763 |
| Total . . . . . | $7,985 | $5,107 | $6,122 | $5,034 |

(a) The debt amounts above do not include the impact of interest rate swaps or debt issuance costs. The fair values of our other debt were estimated based on current market interest rates being applied to this debt.

# *Financial Instruments that are Measured at Fair Value on a Recurring Basis*

| (in millions) | November 30, 2022 |  |  | November 30, 2021 |  |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 |
| Assets |  |  |  |  |  |  |
| Derivative financial instruments . . . . . | $ - | $1 | $ - | $ - | $ - | $ - |
| Total . . . . . | $ - | $1 | $ - | $ - | $ - | $ - |
| Liabilities |  |  |  |  |  |  |
| Derivative financial instruments . . . . . | $ - | $ - | $ - | $ - | $5 | $ - |
| Total . . . . . | $ - | $ - | $ - | $ - | $5 | $ - |

# **Derivative Instruments and Hedging Activities**

| (in millions) | Balance Sheet Location | November 30, |  |
| --- | --- | --- | --- |
|  |  | 2022 | 2021 |
| Derivative assets |  |  |  |
| Derivatives designated as hedging instruments |  |  |  |
| Interest rate swaps (a) . . . . . | Prepaid expenses and other | $1 | $ - |
|  | Other assets | 1 | - |
| Total derivative assets . . . . . |  | $1 | $ - |
| Derivative liabilities |  |  |  |
| Derivatives designated as hedging instruments |  |  |  |
| Interest rate swaps (a) . . . . . | Accrued liabilities and other | $ - | $3 |
|  | Other long-term liabilities | - | 2 |
| Total derivative liabilities . . . . . |  | $ - | $5 |

(a) The Group has euro interest rate swaps designated as cash flow hedges whereby we receive floating interest rate payments in exchange for making fixed interest rate payments. These interest rate swap agreements effectively changed $89 million at November 30, 2022 ($147 million at November 30, 2021) of EURIBOR-based floating rate euro debt to fixed rate euro debt. At November 30, 2022, these interest rate swaps settle through 2025.

110

Our derivative contracts generally include rights of offset with our counterparties. We net certain of our derivative assets and liabilities within counterparties, when applicable.

|  | November 30, 2022 |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
| (in millions) | Gross Amounts | Gross Amounts Offset in the Balance Sheet | Total Net Amounts Presented in the Balance Sheet | Gross Amounts not Offset in the Balance Sheet | Net Amounts |
| Assets | $1 | $ - | $1 | $ - | $1 |
| Liabilities | $ - | $ - | $ - | $ - | $ - |

|  | November 30, 2021 |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
| (in millions) | Gross Amounts | Gross Amounts Offset in the Balance Sheet | Total Net Amounts Presented in the Balance Sheet | Gross Amounts not Offset in the Balance Sheet | Net Amounts |
| Assets | $ - | $ - | $ - | $ - | $ - |
| Liabilities | $5 | $ - | $5 | $ - | $5 |

The effect of our derivatives qualifying and designated as hedging instruments recognized in other comprehensive income (loss) and in net income (loss) was as follows:

|  | Years Ended November 30, |  |
| --- | --- | --- |
| (in millions) | 2022 | 2021 |
| Gains (losses) recognized in reserves: |  |  |
| Interest rate swaps - cash flow hedges | $9 | $4 |
| Gains (losses) reclassified from reserves - cash flow hedges: |  |  |
| Interest rate swaps - Interest expense, net of capitalised interest | $(1) | $(4) |
| Foreign currency zero cost collars - Depreciation and amortisation | $1 | $1 |

There are no credit risk related contingent features in our derivative agreements. The amount of estimated cash flow hedges' unrealised gains and losses that are expected to be reclassified to earnings in the next twelve months is not material.

## Financial Risks

Carnival Corporation & plc manages its financial risks on a consolidated basis. The Group's activities expose it to a variety of financial risks such as fuel price risks, foreign currency exchange rate risk, interest rate risk, credit risk and liquidity risk.

The annual financial statements do not include all financial risk management information and disclosures; as such, they should be read in conjunction with the DLC Financial Statements, which are included in the Carnival plc Annual Report, but do not form part of these Carnival plc financial statements.

### Fuel Price Risks

We manage our exposure to fuel price risk by managing our consumption of fuel. Substantially all of our exposure to market risk for changes in fuel prices relates to the consumption of fuel on our ships. We manage fuel consumption through ship maintenance practices, modifying our itineraries and implementing innovative technologies.

### Foreign Currency Exchange Rate Risks

#### Overall Strategy

We manage our exposure to fluctuations in foreign currency exchange rates through our normal operating and financing activities, including netting certain exposures to take advantage of any natural offsets and, when considered appropriate, through the use of derivative and non-derivative financial instruments. Our

Carnival plc
Financial Statements

111

primary focus is to monitor our exposure to, and manage, the economic foreign currency exchange risks faced by our operations and realised if we exchange one currency for another. We consider hedging certain of our ship commitments and net investments in foreign operations. The financial impacts of our hedging instruments generally offset the changes in the underlying exposures being hedged.

### *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 affect our financial statements.

### *Investment Currency Risks*

We consider our investments in foreign operations to be denominated in stable currencies and of a long-term nature. We partially mitigate the currency exposure of our investments in foreign operations by designating a portion of our foreign currency debt and derivatives as hedges of these investments. As of November 30, 2022, we have designated $419 million of our sterling-denominated debt and $139 million of amounts owed to the Carnival Corporation group as non-derivative hedges of our net investments in foreign operations. In 2022, we recognized $64 million of gains on these non-derivative net investment hedges in the cumulative translation adjustment section of other comprehensive income (loss). We also have euro-denominated debt which provides an economic offset for our operations with euro functional currency.

The exchange rates for each of our major currencies were as follows:

|  | November 30, 2022 | 2022 average exchange rate | November 30, 2021 | 2021 average exchange rate |
| --- | --- | --- | --- | --- |
| USD to 1: |  |  |  |  |
| AUD | $0.66 | $0.70 | $0.71 | $0.75 |
| CAD | $0.74 | $0.77 | $0.78 | $0.80 |
| EUR | $1.03 | $1.06 | $1.13 | $1.19 |
| GBP | $1.20 | $1.25 | $1.33 | $1.38 |

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 $1.5 billion and our total liabilities would have been higher by $1.0 billion.

In addition, based on a 10% change in the U.S. dollar to Euro, Sterling and the Australian dollar exchange rates at November 30, 2022, which are the functional currencies we translate into our U.S. dollar reporting currency, we estimate our 2022 cumulative translation adjustment would have changed by $260 million.

### *Newbuild Currency Risks*

Our shipbuilding contracts are typically denominated in euros. Our decision to hedge a non-functional currency ship commitment for our cruise brands is made on a case-by-case basis, considering the amount and duration of the exposure, market volatility, economic trends, our overall expected net cash flows by currency and other offsetting risks.

At November 30, 2022, our remaining newbuild currency exchange rate risk primarily relates to euro-denominated newbuild contract payments for non-euro functional currency brands, which represent a total unhedged commitment of $1.4 billion for newbuilds scheduled to be delivered through 2024.

The cost of shipbuilding orders that we may place in the future that are denominated in a different currency than our cruise brands' will be affected by foreign currency exchange rate fluctuations. These foreign currency exchange rate fluctuations may affect our decision to order new cruise ships.

112

### *Interest Rate Risks*

We manage our exposure to fluctuations in interest rates through our debt portfolio management and investment strategies. We evaluate our debt portfolio to determine whether to make periodic adjustments to the mix of fixed and floating rate debt through the use of interest rate swaps and the issuance of new debt. The composition of our debt, after the effect of interest rate swaps, was as follows:

|  | November 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Fixed rate | 7% | 10% |
| EUR fixed rate | 41% | 40% |
| Floating rate | 4% | 5% |
| EUR floating rate | 42% | 37% |
| GBP floating rate | 5% | 8% |

The interest rate profiles and maturities of financial assets at November 30, 2022 solely relate to cash and cash equivalents of $251 million in the year 2023. The interest rate profiles and maturities of financial assets at November 30, 2021 solely relate to cash and cash equivalents of $434 million in the year 2022.

Refer to Note 15 - “Debt and Interest Expense” for debt interest rate profiles and maturities at November 30, 2022 and November 30, 2021.

We have fixed and floating rate debt and use interest rate swaps to manage our interest rate exposure in order to achieve a desired proportion of fixed and floating rate debt. Based upon 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 $11 million.

### *Concentrations of Credit Risks*

As part of our ongoing control procedures, we monitor concentrations of credit risk associated with financial and other institutions with which we conduct significant business. We seek to manage these credit risk exposures, including counterparty nonperformance primarily associated with our cash equivalents, investments, notes receivables, reserve funds related to customer deposits, future financing facilities, contingent obligations, derivative instruments, insurance contracts, long-term ship charters and new ship progress payment guarantees, by:

- • Conducting business with well-established financial institutions, insurance companies and export credit agencies
- • Diversifying our counterparties
- • Having guidelines regarding credit ratings and investment maturities that we follow to help safeguard liquidity and minimise risk
- • Generally requiring collateral and/or guarantees to support notes receivable on significant asset sales, long-term ship charters and new ship progress payments to shipyards

At November 30, 2022, our exposures under derivative instruments were not material. We also monitor the creditworthiness of travel agencies and tour operators in Australia and Europe and credit and debit card providers to which we extend credit in the normal course of our business. Concentrations of credit risk associated with trade receivables and other receivables, charter-hire agreements and contingent obligations are not considered to be material, principally due to the large number of unrelated accounts, the nature of these contingent obligations and their short maturities. Normally, we have not required collateral or other security to support normal credit sales. Historically, we have not experienced significant credit losses, including counterparty nonperformance; however, because of the continued effects the pandemic is having on economies, we have experienced, and may continue to experience, an increase in credit losses.

Our credit exposure also includes contingent obligations related to cash payments received directly by travel agents and tour operators for cash collected by them on cruise sales in Australia and most of Europe where we are obligated to honour our guests’ cruise payments made by them to their travel agents and tour operators regardless of whether we have received these payments.

Carnival plc  
Financial Statements

113

### *Capital Management*

Carnival Corporation and Carnival plc operate a DLC arrangement. The two companies operate as a single economic enterprise. 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.

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. Accordingly, capital is managed at the Carnival Corporation & plc level.

As of November 30, 2022, Carnival Corporation & plc had $8.6 billion of liquidity (see Note 1 - “General” for further details on liquidity). 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. Since March 2020, Carnival Corporation & plc has raised $28.5 billion through a series of financing transactions.

The net debt to capital percentage of the Carnival plc Group was calculated as follows:

| (in millions) | November 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Total debt | $7,690 | $5,969 |
| Cash equivalents | (61) | (92) |
| Net debt | 7,629 | 5,878 |
| Shareholders’ (deficit) equity | (940) | 2,347 |
| Total capital | $6,689 | $8,224 |
| Net debt to capital percentage | 114% | 71% |

### *Liquidity Risks*

Typically, Carnival Corporation & plc debt financing agreements allow for either Carnival Corporation or Carnival plc to draw under the facilities, with the non-borrowing entity as guarantor.

As of November 30, 2022, Carnival plc had $2.9 billion of liquidity, including cash and borrowings available to draw by either Carnival Corporation or Carnival plc under the Revolving Facility. As of November 30, 2022 and November 30, 2021, Carnival plc had no short-term obligations. In addition, Carnival Corporation & plc had $8.6 billion of liquidity and has an additional $2.2 billion of undrawn export credit facilities to fund ship deliveries planned through 2024, of which $1.4 billion were for Carnival plc planned ship deliveries. See 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 |

The unfunded export credit facilities are subject to the same covenants as disclosed in Note 15 - “Debt and Interest Expense”.

114

Carnival plc^{}[] Financial Statements

The summary of the maturity profiles of the financial liabilities at November 30, 2022 and 2021 were as follows:

| (in millions) | 2023 | 2024 | 2025 | 2026 | 2027 | Thereafter | Total |
| --- | --- | --- | --- | --- | --- | --- | --- |
| November 30, 2022 |  |  |  |  |  |  |  |
| Debt including future interest . . | $1,498 | $1,045 | $1,205 | $730 | $598 | $3,767 | $8,843 |
| Trade payables, accrued liabilities and other . . . . . | 997 | - | - | - | - | - | 997 |
| Lease liabilities . . . . . | 44 | 43 | 40 | 37 | 33 | 165 | 363 |
| Contingencies and other long-term liabilities . . . . . | - | 51 | 31 | 15 | 28 | 63 | 188 |
| At November 30, 2022 . . . . . | $2,539 | $1,139 | $1,276 | $782 | $659 | $3,995 | $10,390 |
| (in millions) | 2022 | 2023 | 2024 | 2025 | 2026 | Thereafter | Total |
| November 30, 2021 |  |  |  |  |  |  |  |
| Debt including future interest . . | $528 | $1,324 | $795 | $984 | $469 | $2,455 | $6,554 |
| Trade payables, accrued liabilities and other . . . . . | 863 | - | - | - | - | - | 863 |
| Lease liabilities . . . . . | 50 | 48 | 44 | 39 | 35 | 206 | 423 |
| Contingencies and other long-term liabilities . . . . . | - | 47 | 31 | 24 | 19 | 61 | 183 |
| At November 30, 2021 . . . . . | $1,442 | $1,419 | $870 | $1,047 | $524 | $2,722 | $8,023 |

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. Amounts owed between Carnival Corporation and Carnival plc do not have a stated maturity date, as the two companies operate as a single economic enterprise and are therefore not included in the above table. Substantially all financial liabilities are held at amortized cost. The fair values of our financial liabilities not included in the table above approximate their book values.

#### NOTE 25 - Supplemental Cash Flow Information

##### *Reconciliation of Liabilities Arising from Financing Activities*

| (in millions) | November 30, 2021 | Financing Cash Flows Receipts/ (Payments) | Exchange Movements | Other Movements | November 30, 2022 |
| --- | --- | --- | --- | --- | --- |
| Debt . . . . . | $6,122 | $2,492 (a) | $(629) | $ - | $7,985 |
| Unamortized debt issuance costs . . . . . | $(198) | $(147) | $20 | $14 (b) | $(310) |
| Amount owed to the Carnival Corporation group . . . . . | $6,204 | $(368) | $(211) | $ - | $5,624 |
| Lease Liabilities . . . . . | $333 | $(33) | $(28) | $18 (c) | $289 |

(a) Issuances and repayments of long-term debt.

(b) Includes debt issuance cost accruals, amortization and debt issuance costs recorded in other assets.

(c) Includes additions, terminations and remeasurements of lease liabilities.

115

|  | November 30, 2020 | Financing Cash Flows Receipts/ (Payments) | Exchange Movements | Other Movements | November 30, 2021 |
| --- | --- | --- | --- | --- | --- |
| (in millions) |  |  |  |  |  |
| Debt | $4,398 | $2,006 (a) | $(280) | $(2) (b) | $6,122 |
| Unamortized debt issuance costs | $(81) | $(173) | $8 | $48 (c) | $(198) |
| Amount owed to the Carnival Corporation group | $6,183 | $207 | $(188) | $2 | $6,204 |
| Lease Liabilities | $320 | $(45) | $(8) | $66 (d) | $333 |

(a) Issuances and repayments of long-term debt.

(b) Non-cash movements of long-term debt, including a EUR floating rate loan redenominated to a USD floating rate loan and changes to interest profiles on deferred tranches of our export credit facilities created as part of debt holiday amendments.

(c) Includes amortization and debt issuance costs recorded in other assets.

(d) Includes additions, terminations and remeasurements of lease liabilities.

116

# **CARNIVAL PLC**
**PARENT COMPANY BALANCE SHEETS**
(in millions)

Carnival plc
Financial Statements

|  | Notes | November 30, |  |
| --- | --- | --- | --- |
|  |  | 2022 | 2021 |
| ASSETS |  |  |  |
| Current Assets |  |  |  |
| Cash and cash equivalents | 2 | $68 | $99 |
| Trade and other receivables, net | 3 | 75 | 50 |
| Inventories |  | 72 | 38 |
| Prepaid expenses and other |  | 116 | 46 |
| Total current assets |  | 332 | 232 |
| Property and Equipment, Net | 4 | 4,047 | 4,408 |
| Right-of-Use Assets | 5 | 218 | 253 |
| Investments in Associates |  | 50 | 76 |
| Other Assets | 6 | 635 | 389 |
| Receivables from Subsidiaries |  | 116 | 119 |
| Loans Owed from Subsidiaries |  | 2,795 | 2,986 |
| Investments in Subsidiaries | 7 | 7,013 | 7,141 |
|  |  | $15,206 | $15,605 |
| LIABILITIES AND SHAREHOLDERS' EQUITY |  |  |  |
| Current Liabilities |  |  |  |
| Current portion of long-term debt |  | $1,238 | $264 |
| Current portion of lease liabilities | 5 | 21 | 22 |
| Accounts payable |  | 169 | 108 |
| Accrued liabilities and other | 8 | 209 | 203 |
| Customer deposits |  | 1,012 | 489 |
| Amount owed to the Carnival Corporation group |  | 5,662 | 6,255 |
| Total current liabilities |  | 8,312 | 7,341 |
| Long-Term Debt |  | 5,925 | 4,738 |
| Long-Term Lease Liabilities | 5 | 208 | 241 |
| Contingencies |  | 40 | 47 |
| Other Long-Term Liabilities | 9 | 84 | 102 |
| Shareholders' Equity |  |  |  |
| Share capital | 10 | 361 | 361 |
| Share premium |  | 143 | 143 |
| Retained earnings |  | 1,903 | 4,559 |
| Other reserves |  | (1,769) | (1,926) |
| Total shareholders' equity |  | 637 | 3,136 |
|  |  | $15,206 | $15,605 |

Net income (loss) for the Carnival plc Parent Company was ($2.6) billion in 2022 and ($3.0) billion in 2021.

The accompanying notes are an integral part of the Carnival plc Parent Company financial statements.

The Carnival plc Parent Company 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**
Chair of the Boards of Directors

**Josh Weinstein**
President, Chief Executive Officer and Chief
Climate Officer and Director

117

# **CARNIVAL PLC**  
 **PARENT COMPANY STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY**  
 (in millions)

|  | Share capital | Share premium | Retained earnings | Reserves |  |  |  |  |  | Total shareholders' equity |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  | Translation reserve | Cash flow hedges | Treasury shares | Other reserves | Merger reserve | Total |  |
| At November 30, 2020 . . . | $361 | $185 | $7,609 | $(257) | $8 | $(1,945) | $36 | $36 | $(2,122) | $6,032 |
| Comprehensive income (loss) |  |  |  |  |  |  |  |  |  |  |
| Net income (loss) . . . . . | - | - | (2,980) | - | - | - | - | - | - | (2,980) |
| Changes in foreign currency translation adjustment . . . . . | - | - | - | (4) | - | - | - | - | (4) | (4) |
| Net gains on cash flow derivative hedges . . . | - | - | - | - | 3 | - | - | - | 3 | 3 |
| Remeasurements of post-employment benefit obligations . . . | - | - | 55 | - | - | - | - | - | - | 55 |
| Total comprehensive income (loss) . . . . . | - | - | (2,925) | (4) | 3 | - | - | - | (2) | (2,926) |
| Issuance of treasury shares for vested share-based awards . . . | - | - | (126) | - | - | 126 | - | - | 126 | - |
| Other, net . . . . . | - | (42) | 1 | - | - | - | 71 | - | 71 | 30 |
| At November 30, 2021 . . . | 361 | 143 | 4,559 | (261) | 11 | (1,818) | 107 | 36 | (1,926) | 3,136 |
| Comprehensive income (loss) |  |  |  |  |  |  |  |  |  |  |
| Net income (loss) . . . . . | - | - | (2,552) | - | - | - | - | - | - | (2,552) |
| Changes in foreign currency translation adjustment . . . . . | - | - | - | 53 | - | - | - | - | 53 | 53 |
| Net gains on cash flow derivative hedges . . . | - | - | - | - | 9 | - | - | - | 9 | 9 |
| Remeasurements of post-employment benefit obligations . . . | - | - | (19) | - | - | - | - | - | - | (19) |
| Total comprehensive income (loss) . . . . . | - | - | (2,571) | 53 | 9 | - | - | - | 62 | (2,510) |
| Issuance of treasury shares for vested share-based awards . . . | - | - | (85) | - | - | 85 | - | - | 85 | - |
| Other, net . . . . . | - | - | - | (2) | 2 | - | 10 | - | 10 | 11 |
| At November 30, 2022 . . . | $361 | $143 | $1,903 | $(211) | $22 | $(1,734) | $117 | $36 | $(1,769) | $637 |

The accompanying notes are an integral part of the Parent Company financial statements.

118

# NOTE 1 - Significant Accounting Policies

# *Basis of Preparation*

Carnival plc was incorporated in England and Wales in 2000 and is domiciled in the UK with its headquarters located at Carnival House, 100 Harbour Parade, Southampton, Hampshire, SO15 1ST, UK (registration number 04039524). The Parent Company is a public limited company which is listed on the London Stock Exchange. In addition, the Parent Company's shares are traded on the New York Stock Exchange in the form of American Depositary Shares (ADSs). The Parent Company financial statements are presented in U.S. dollars unless otherwise noted. They are prepared on a going concern basis under the historical cost convention, except for certain financial assets and liabilities (including derivative instruments) that are stated at fair value.

These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework ("FRS 101"). In preparing these financial statements, the Parent Company applies the recognition, measurement and disclosure requirements of international accounting standards in conformity with the requirements of the Companies Act 2006 ("UK-adopted IFRSs"), but makes amendments where necessary in order to comply with Companies Act 2006 and has set out below where FRS 101 disclosure exemptions have been taken.

Under section 408 of the Companies Act 2006 the Parent Company is exempt from the requirement to present its own profit and loss account. In the transition to FRS 101 from EU-adopted IFRS pursuant to Regulation (EC) No 1606/2002, the Parent Company has made no measurement and recognition adjustments. The Parent Company is included in the consolidated Group financial statements of Carnival plc. In accordance with FRS 101, the following exemptions from the requirements of IFRS have been applied in the preparation of these financial statements:

- Cash Flow Statement and related notes
- Certain disclosures regarding leases
- Comparative period reconciliations for share capital, property and equipment and intangible assets
- Disclosures in respect of transactions with wholly owned subsidiaries
- Disclosures in respect of capital management
- The effects of new but not yet effective IFRSs
- Disclosures in respect of the compensation of Key Management Personnel

As the consolidated Group financial statements include the equivalent disclosures, the Parent Company has also taken the exemptions available under FRS 101 in respect of the following disclosures:

- IFRS 2 Share Based Payments in respect of group settled share-based payments
- Certain disclosures required by IFRS 13 Fair Value Measurement, and the disclosures required by IFRS 7 Financial Instrument Disclosures

Unless otherwise stated, the accounting policies set out below have been applied consistently to all periods presented in these financial statements.

# *Significant Accounting Estimates, Assumptions and Judgements*

The preparation of these financial statements 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.

# *Significant Judgements and Estimates*

Key judgements, estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized 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 areas of key sources of estimation uncertainty for the year ended 2022 were as follows:

Carnival plc
Financial Statements

119

| Area (a) | Key Sources of estimation uncertainty | Reference (b) |
| --- | --- | --- |
| Impairment review of Investments in Subsidiaries | Determination of the recoverable value of our investment | Note 7 - “Investments in Subsidiaries” |

(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.

### *Property and Equipment*

The Parent Company’s Property and Equipment accounting policies are the same as Carnival plc Group’s. Refer to Note 2 - “Significant Accounting Policies” in the Carnival plc Group financial statements.

### *Leases*

The Parent Company’s Lease accounting policies are the same as Carnival plc Group’s. Refer to Note 2 - “Significant Accounting Policies” in the Carnival plc Group financial statements.

### *Debt and Debt Issuance Costs*

The Parent Company’s Debt and debt issuance costs accounting policies are the same as Carnival plc Group’s. Refer to Note 2 - “Significant Accounting Policies” in the Carnival plc Group financial statements.

### *Investments in Subsidiaries*

Investments in subsidiaries are stated at cost, less any provision for impairment. Judgement is required in assessing whether the Parent Company’s investment carrying values are impaired. We review our long-lived assets for impairment whenever events or circumstances indicate potential impairment. In determining the recoverable amount of investments in subsidiaries, we first consider if the investment balance exceeds the net asset value of the subsidiary and if it does, we determine the recoverable amount by assessing the higher of the fair value less cost to sell of the investment and its value in use. We perform a fair value assessment of the subsidiary using discounted cash flows and applying a terminal growth rate. Refer to Note 7 - “Investments in Subsidiaries” for additional information related to our impairments of investments in subsidiaries.

### *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.

### *Foreign Currency Translation and Transactions*

The Parent Company financial statements are presented in U.S. dollars. The Parent Company is comprised of a number of foreign entities which utilize the U.S. dollar, Euro, Sterling or the Australian dollar as their functional currencies. Each foreign entity determines its functional currency by reference to its primary

120

Carnival plc^{}[] Financial Statements

economic environment. The Parent Company 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 Parent Company' financial statements will fluctuate from period to period, depending on the changing value of the U.S. dollar versus these currencies.

The Parent Company 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. 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.

### *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. 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 $1.1 billion as of November 30, 2022 and $0.6 billion as of November 30, 2021, which includes approximately $30 million of unredeemed FCCs as of November 30, 2022. 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 $0.3 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 $42 million as of November 30, 2022 and $10 million as of November 30, 2021.

### *2021 Cash Flow Reclassification*

Following a review of the Group's 2020 Annual Report by the Directors, subsequent to the receipt of a letter from the Financial Reporting Council ('FRC') (following a review by the FRC as described further below), the Parent Company has reconsidered the cash flows for 2021 associated with long-term loans between the Parent Company and certain of its subsidiaries within the Parent Company statement of cash flows from financing activities to investing activities.

We previously presented these cash flows within the line 'changes in amounts owed to the Carnival Corporation group and from Group companies' within financing activities of the Parent Company statement of cash flows along with cash flows associated with short-term funding activity between Group companies. Following the review performed, we reconsidered the treatment of the cash flows associated with loans between the Parent Company and Group and concluded that these cash flows for 2021 should have been classified within investing activities in accordance with IAS 7.

For the purposes of the 2022 Annual Report and going forward, the Parent Company has adopted FRS 101 and is not required to include a cash flow statement. Had the Parent Company presented a cash flow statement, it would have restated these figures for 2021 as displayed in the table below.

121

| (in millions) | As previously stated | Reclassification of loan activity | Restated |
| --- | --- | --- | --- |
| Net cash provided by (used in) investing activities | $(2,979) | $470 | $(2,509) |
| Net cash provided by (used in) financing activities | $2,342 | $(470) | $1,872 |

The scope of the review performed by the FRC was to consider the Group's compliance with the UK reporting requirements, it did not verify all the information provided. The review by the FRC was based solely on the 2020 and 2021 Annual Report and Accounts and does not benefit from a detailed understanding of underlying transactions, and provides no assurance that the Annual Report and Accounts are correct in all material respects.

#### NOTE 2 - Cash and Cash Equivalents

| (in millions) | November 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Cash | $39 | $20 |
| Cash equivalents (money market funds and time deposits) | 29 | 78 |
|  | $68 | $99 |

Substantially all material cash balances are held with financial institutions that are investment grade rated. Refer to Note 1 - 'General' in the Carnival plc Group financial statements for additional information regarding the cross guarantees within the DLC arrangement.

#### NOTE 3 - Trade and Other Receivables

| (in millions) | November 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Trade | $53 | $43 |
| VAT, income taxes and other | 22 | 7 |
|  | $75 | $50 |

#### NOTE 4 - Property and Equipment

| (in millions) | Ships and ship improvements | Other property and equipment | Total |  |
| --- | --- | --- | --- | --- |
|  | Cost |  |  |  |
| At November 30, 2021 | $6,541 | $179 | $6,720 |  |
| Exchange movements | (659) | (24) | (683) |  |
| Additions | 310 | 24 | 334 |  |
| Disposals | (38) | (11) | (49) |  |
| At November 30, 2022 | $6,154 | $168 | $6,322 |  |
| Accumulated depreciation |  |  |  |  |
| At November 30, 2021 | $(2,207) | $(105) | $(2,312) |  |
| Exchange movements | 211 | 17 | 228 |  |
| Depreciation | (211) | (24) | (235) |  |
| Disposals | 33 | 11 | 44 |  |
| At November 30, 2022 | $(2,174) | $(101) | $(2,275) |  |
| Net book value |  |  |  |  |
| At November 30, 2022 | $3,980 | $67 | $4,047 |  |

122

Carnival plc  
Financial Statements

# **NOTE 5 - Leases**

The balance sheet shows the following amounts related to leases:

|  | November 30, |  |
| --- | --- | --- |
| (in millions) | 2022 | 2021 |
| Right-of-use assets |  |  |
| Port facilities | $150 | $175 |
| Real estate | 59 | 72 |
| Other | 9 | 6 |
|  | $218 | $253 |
| Lease liabilities |  |  |
| Current | $21 | $22 |
| Non-current | 208 | 241 |
|  | $230 | $263 |

During 2022 and 2021, we obtained $15 million and $76 million of right-of-use assets in exchange for new lease liabilities.

As of November 30, 2022, maturities of lease liabilities were as follows:

| (in millions) |  |
| --- | --- |
| 2023 | $31 |
| 2024 | 32 |
| 2025 | 32 |
| 2026 | 29 |
| 2027 | 28 |
| Thereafter | 140 |
| Total lease payments | $293 |

As of November 30, 2021, maturities of lease liabilities were as follows:

| (in millions) |  |
| --- | --- |
| 2022 | $34 |
| 2023 | 34 |
| 2024 | 34 |
| 2025 | 33 |
| 2026 | 30 |
| Thereafter | 181 |
| Total lease payments | $346 |

# **NOTE 6 - Other Assets**

|  | November 30, |  |
| --- | --- | --- |
| (in millions) | 2022 | 2021 |
| Credit card reserves | $296 | $110 |
| Long-term deposit | 229 | 99 |
| Debt issuance costs | 38 | 71 |
| Post-employment benefits (a) | 19 | 56 |
| Other long-term assets and other receivables | 53 | 53 |
|  | $635 | $389 |

123

(a) All assets and obligations of Carnival plc pension plans are held by the parent company. As a result, the balances for Group and Parent Company are the same. See Note 19 - “Post-Employment Benefits” in the Carnival plc Group financial statements for additional information on the UK post-employment plans and the principal risks and assumptions applicable.

# NOTE 7 - Investments in Subsidiaries

| (in millions) | November 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| At December 1 | $7,141 | $6,240 |
| Additions | 2,061 | 2,647 |
| Impairments | (2,189) | (1,717) |
| Exchange movements | - | (29) |
| At November 30 | $7,013 | $7,141 |

At November 30, 2022, the Parent Company’s principal operating subsidiary was Costa Crociere S.p.A. (“Costa Crociere”), which owns and operates the Costa and AIDA cruise brands. During the year, the company made contributions of $2.1 billion to its subsidiary Costa Crociere, to provide liquidity, including for the purchase of two new ships. As a result of the investment balance exceeding the net asset value of the subsidiary, we performed impairment analyses using discounted cash flows for our investment in Costa Crociere.

Management performed impairment analyses using discounted cash flows for the two CGUs within Costa Crociere, Costa and AIDA. For the impairment reviews, the estimated recoverable amounts were based on the higher of the cruise brands’ fair value less cost of disposal and its value in use. As a result, the Parent Company recorded impairment charges of $2.1 billion.

# Significant Estimate - Determination of the recoverable value of our investment

We have identified the determination of the recoverable value of one of our subsidiaries, which consists of multiple 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 perform fair value assessments of the CGUs using discounted cash flows and applying a terminal growth rate. We believe that we have made reasonable estimates and judgments as part of our assessment. The assumptions resulting in key sources of estimation uncertainty, all of which are considered Level 3 inputs, used in our cash flow analyses consisted of:

- Short-term continued improvement in net cruise revenue (cruise revenues net of our most variable cost) per ALBD to pre-pause levels adjusted for deployment changes and inflation
- WACC ranged from 12% to 14.1% in the most recent analyses from 8.6% to 9.4% in 2021.
- Long-term marginal growth in net cruise revenue (cruise revenues net of our most variable cost) per ALBD beyond inflationary changes based on long term historical averages

We performed quantitative sensitivity analyses as of November 30, 2022, to determine the effect of changes in the key sources of estimation uncertainty. The following table summarizes the sensitivity analysis performed on the CGUs and its impact on the 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 $461 million | Additional impairment of $590 million | Additional impairment of $641 million |

124

Refer to Note 2 - “Significant Accounting Policies, Significant Accounting Estimates, Assumptions and Judgements” for additional information.

The Parent Company’s direct and indirect undertakings, whose ownership interest is through ordinary shares, including the UK subsidiaries exempt from the requirement to prepare individual audited accounts or individual accounts at November 30, 2022 were as follows:

| Companies (Countries of Incorporation) | Ownership Interest | UK Companies House Registration Number | Address of Companies’ Registered Office |
| --- | --- | --- | --- |
| United Kingdom |  |  |  |
| Carnival (UK) Limited | 100% | 03141044 | 3rd Floor, 1 Ashley Road, Altrincham, Cheshire, WA14 2DT |
| Carnival Port Holdings Limited (a) (b) | 100% | 11523367 | Carnival House, 100 Harbour Parade, Southampton, Hampshire, SO15 1ST |
| Carnival Technical Services (UK) Limited (b) | 100% | 10613960 | Carnival House, 100 Harbour Parade, Southampton, Hampshire, SO15 1ST |
| Costa Cruise Lines UK Limited (a) (c) | 99.9% | 02482631 | Carnival House, 100 Harbour Parade, Southampton, Hampshire, SO15 1ST |
| P&O Princess American Holdings (a) | 100% | 01453164 | 3rd Floor, 1 Ashley Road, Altrincham, Cheshire, WA14 2DT |
| P&O Princess Cruises International Limited (b) | 100% | 03902746 | 3rd Floor, 1 Ashley Road, Altrincham, Cheshire, WA14 2DT |
| P&O Princess Cruises Pension Trustee Limited (a) | 100% | 04069014 | 3rd Floor, 1 Ashley Road, Altrincham, Cheshire, WA14 2DT |
| P&O Travel Limited (a) (b) (c) | 100% | 00773151 | 3rd Floor, 1 Ashley Road, Altrincham, Cheshire, WA14 2DT |
| SeaVacations Limited (a) (b) | 100% | 03681272 | Carnival House, 100 Harbour Parade, Southampton, Hampshire, SO15 1ST |
| SeaVacations UK Limited (b) (c) | 100% | 03633566 | Carnival House, 100 Harbour Parade, Southampton, Hampshire, SO15 1ST |
| Argentina |  |  |  |
| Costa Cruceros S.A. (c) | 99.9% |  | Avenida Corrientes, 327, Piso 10°, Buenos Aires |
| Australia |  |  |  |
| A. C. N. 098 290 834 Pty. Ltd. | 100% |  | Level 5, 465 Victoria Avenue Chatswood NSW 2067 |
| Bermuda |  |  |  |
| Fleet Maritime Services (Bermuda) Limited | 100% |  | 3rd Floor, Par-La-Ville Place, 14 Par-La-Ville Road, Hamilton |
| Fleet Maritime Services Holdings (Bermuda) Limited | 100% |  | 3rd Floor, Par-La-Ville Place, 14 Par-La-Ville Road, Hamilton |
| Fleet Maritime Services International Limited | 100% |  | 3rd Floor, Par-La-Ville Place, 14 Par-La-Ville Road, Hamilton |

Carnival plc  
Financial Statements

125

| Companies (Countries of Incorporation) | Ownership Interest | UK Companies House Registration Number | Address of Companies' Registered Office |
| --- | --- | --- | --- |
| Brazil |  |  |  |
| Costa Cruzeiros Agencia Maritime e Turismo Ltda. (c) | 99.9% |  | Av. Paulista, 460, 10o andar, Bela Vista, São Paulo, SP 01310.100 |
| Ibero Cruzeiros Ltda. (c) | 99.9% |  | Av. Paulista, 460, 10o andar, Bela Vista, São Paulo, SP 01310.100 |
| Canada |  |  |  |
| Westmark Hotels of Canada, Ltd. (c) | 100% |  | 2900-550 Burrard Street, Vancouver, British Columbia, V6C0A3 |
| China |  |  |  |
| Carnival Corporation Hong Kong Limited | 100% |  | Unit 1207, The Gateway Tower 1, Harbour City, Kowloon, Hong Kong |
| Costa Cruises Shipping Services (Shanghai) Company Limited (c) | 99.9% |  | Room 276, No 58 Wu Hua Road, Hongkou District, Shanghai |
| Costa Cruises Travel Agency (Shanghai) Co., Ltd. (c) | 99.9% |  | Room 712, Floor 7, No 710 Siping Road, Hongkou District, Shanghai |
| CSSC Carnival Cruise Operations Limited (c) | 40.0% |  | 3806 Central Plaza, 18 Harbour Road, Wanchai, Hong Kong |
| CSSC Carnival Cruise Shipping Limited (c) | 40.0% |  | 3806 Central Plaza, 18 Harbour Road, Wanchai, Hong Kong |
| CSSC Carnival (Shanghai) Cruise Shipping Limited (c) | 40.0% |  | Floor 1, Building 2, No. 1328 Yixian Road, Baoshan District, Shanghai, 200439 |
| Global Shipping Service (Shanghai) Co., Ltd. | 100% |  | Room 3601L, No. 9, Lane 360 Feihong Road, Hongkou District, Shanghai |
| Shanghai Coast Cruise Consulting Co. Lda (c) | 50.0% |  | Room 274, No 58 WuHua Road, Hongkou District, Shanghai |
| World Leading Cruise Management (Shanghai) Co., Ltd. (c) | 99.5% |  | Room 1501-36, No. 8, Lane 803, Shuang Cheng Road, Baoshan District, Shanghai |
| Curacao |  |  |  |
| Cruise Ships Catering & Services International N.V. (c) | 99.9% |  | Kaya Flamboyan 9, Curaçao, P.O. Box 812 |
| Milestone N.V. (c) | 99.9% |  | Kaya Flamboyan 9, Curaçao, P.O. Box 812 |
| Prestige Cruises N.V. (c) | 99.9% |  | Kaya Flamboyan 9, Curaçao, P.O. Box 812 |
| Spanish Cruise Services N.V. (c) | 99.9% |  | Kaya Flamboyan 9, Curaçao, P.O. Box 812 |
| Dominican Republic |  |  |  |
| Operadora Catalina S.r.L. (c) | 99.9% |  | Muelle Turistico Buena Vista Sur S/n La Romana |
| Finland |  |  |  |
| Carnival Technical Services Finland Limited (c) | 100% |  | Vattuniemenranta 2, 00210 Helsinki, FI-00210 |

126

| Companies (Countries of Incorporation) | Ownership Interest | UK Companies House Registration Number | Address of Companies' Registered Office |
| --- | --- | --- | --- |
| France |  |  |  |
| Chantier Naval de Marseille SAS (c) | 33.3% |  | Terre Plein de Mourepiane - Porte 4, 13015 Marseille Cedex 15 |
| Marseille Provence Cruise Terminal SAS (c) | 50.0% |  | Marseille Provence Cruise Terminal, Terminal Croisieres, 13316 Marseille Cedex 15 |
| French Polynesia |  |  |  |
| F.P.M. SAS (c) | 100% |  | C/O Mamao Bureaux, 121 Avenue Georges Clemenceau, BP 43503 Fare Tony, Papeete |
| Germany |  |  |  |
| AIDA Kundencenter GmbH (c) | 99.9% |  | Am Strande 4, 18055 Rostock |
| Carnival Maritime GmbH (c) | 99.9% |  | Großer Grasbrook 9, 20457 Hamburg |
| Carnival Technical Services GmbH (c) | 100% |  | Am Strande 4, 18055 Rostock |
| AIDAradio GmbH (c) | 99.9% |  | Seilerstrasse 41-43, 20359 Hamburg |
| HSE Hamburg School of Entertainment GmbH (c) | 99.9% |  | Seilerstraße 41-43, 20359 Hamburg |
| India |  |  |  |
| Carnival Support Services India Private Limited (c) | 100% |  | Kohinoor City, Tower 2, Floor 5, Kirol Road, Off. LBS. Marg, Kurla West, Mumbai - 400070 |
| Italy |  |  |  |
| APVS S.r.L. (c) | 12.2% |  | Fondamenta San Basilio, Fabbricato 16, 30123 Venezia |
| Costa Crociere S.p.A. | 99.9% |  | Piazza Piccapietra 48, 16121 Genova |
| Costamed Ship Services S.r.L. (c) | 50.0% |  | Calata delle Vele, Darsena Nuova, Palacrociere, 17100 Savona |
| CSSC Carnival Italy Cruise Investment S.r.L (c) | 40.0% |  | Piazza Piccapietra, 48 , 16121 Genova |
| Ecospray Technologies S.r.L. (c) | 38.2% |  | Via Ricotti, 5, 27058, Voghera, Pavia |
| Finpax S.r.L. (c) | 21.5% |  | Ses San Marco 2568, 30124 Venezia |
| Navitrans S.R.L. | 100% |  | Via Alcide de Gaspari 45, 80311 Napoli |
| Piccapietra Finance S.r.l. | 100% |  | Piazza Piccapietra, 48 , 16121 Genova |
| Roma Cruise Terminal S.r.L. (c) | 33.3% |  | Via Darsena Romana, 11, 00053 Civitavecchia, Roma |
| Spezia & Carrara Terminal S.R.L. (c) | 33.0% |  | Largo Michele Fiorillo 19124 La Spezia |
| Stazioni Maritime S.p.A. (c) | 13.3% |  | Ponte Dei Mille 1, 16126 Genova |
| Terminal Napoli S.p.A. (c) | 22.5% |  | Stazione Marittima Molo Angioino, 80133 Napoli |
| Trieste Adriatic Maritime Initiatives S.r.L. (c) | 43.4% |  | Punto Franco Vecchio SNC, 34145, Capannone 1, Trieste |

Carnival plc  
Financial Statements

127

| Companies (Countries of Incorporation) | Ownership Interest | UK Companies House Registration Number | Address of Companies' Registered Office |
| --- | --- | --- | --- |
| Venezia Investimenti S.r.L (c) | 25.0% |  | Via Domenico Fiasella 16/5, 16121, Genova |
| Venezia Terminal Passeggeri S.p.A. (c) | 11.1% |  | Strada Marittima Sant'Andrea 248 30135 Venezia |
| Welcome Travel Group S.p.A. (c) | 50.0% |  | Via Ernesto Lugaro 15, 10126 Torino |
| Welcome Travel Sud S.r.L (c) | 50.0% |  | Via Salvatore Tommasi, 62 CAP, 80135 Napoli |
| Welcome Travel Store S.r.L (c) | 50.0% |  | Via Lugaro 15 - 10126, Torino |
| West Sicily Gate S.r.L. (c) | 50.0% |  | Via Trapani I/D, 90141, Palermo |
| Zena Cruise Terminal S.R.L (c) | 40.0% |  | Piazza Piccapietra 48, 16121 Genova |
| Japan |  |  |  |
| Carnival Corporation Ports Group Japan KK (c) | 99.9% |  | Sanno Park Tower 12F, 2-11-1 Nagata-cho, Chiyoda-ku, Tokyo |
| Carnival Japan, Inc. | 100% |  | Daiwa Ginza Bldg., 6F., 6-2-1 Ginza Chuo-Ku, Tokyo 104-0061 |
| Mexico |  |  |  |
| Cozumel Cruise Terminal S.A. de C.V. | 100% |  | Carretera a Chankannab Km 4.5 Interior Puerta Maya Cozumel, Quintana Roo |
| Cruise Terminal Services S.A. de C.V. (c) | 100% |  | Carretera a Chankannab Km 4.5 Interior Puerta Maya Cozumel, Quintana Roo |
| International Cruise Services, S.A. de C.V. | 100% |  | c/o RVA Abogados, S.C., Rio Duero 31, Col. Cuauhtemoc, Del. Cuauhtemoc, Mexico City 06500 |
| International Maritime Recruitment Agency, S.A. de C.V. | 100% |  | c/o RVA Abogados, S.C., Rio Duero 31, Col. Cuauhtemoc, Del. Cuauhtemoc, Mexico City 06500 |
| Monaco |  |  |  |
| Prestige Cruises Management S.A.M. (c) | 96.0% |  | Siège de la liquidation: 42 Boulevard d'Italie Monte-Carlo |
| Netherlands |  |  |  |
| Costa International B.V. (c) | 99.9% |  | Telestone 8 - Teleport, Naritaweg 165, 1043 BW, Amsterdam |
| CSMART Real Estate B.V. (c) | 99.9% |  | Zeeduinweg 9, 1361BG Almere |
| CSMART Real Estate C.V. | 100% |  | Zeeduinweg 9, 1361BG Almere |
| Philippines |  |  |  |
| Cruise Administration Services, Inc. | 100% |  | 4th Floor Delrosario Law Centre 21st Dr cor. 20th Dr. Bonifacio Global City, Taguig City 1645, Metro Manila |
| Portugal |  |  |  |
| Grand Cruise Shipping Unipessoal LdA | 100% |  | Rua Dr. Brito Câmara n°20, 1o - 9000-039 Funchal, Madeira |
| Singapore |  |  |  |
| Carnival Corporation & plc Asia Pte. Ltd. | 100% |  | One Raffles Place, Tower 1, 1 Raffles Place, #21-01, Singapore 048616 |

128

| Companies (Countries of Incorporation) | Ownership Interest | UK Companies House Registration Number | Address of Companies' Registered Office |
| --- | --- | --- | --- |
| Costa Crociere PTE Ltd. (c) | 99.9% |  | One Raffles Place, Tower 1, 1 Raffles Place, #21-01, Singapore 048616 |
| South Korea Carnival Corporation Korea Ltd. | 100% |  | 6F (Mugyo-dong), 21 Mugyo-ro, Jung-gu, Seoul |
| Spain Barcelona Cruise Terminal SLU (c) | 99.9% |  | Vial Moll Adossat, 122 Terminal D&E, Port de Barcelona 08039 Barcelona |
| Costa Cruises Customer Center SLU (c) | 99.9% |  | Torre Mapfre, Carrer de la Marina, 16-18, Barcelona |
| Holding Division Iberocruceros SLU (c) | 100% |  | Calle Pedro Teixeira, 8 Planta 5 28020 Madrid |
| Iberocruceros SLU (c) | 100% |  | Calle Pedro Teixeira, 8 Planta 5 28020 Madrid |
| Santa Cruz Terminal, S.L (c) | 99.9% |  | Muelle de Ribera de la Dársena de Anaga del Puerto de Santa Cruz de Tenerife - 38001 Santa Cruz de Tenerife |
| Switzerland Air-Sea Holiday GmbH (c) | 99.9% |  | Dornacherplatz 7, 4500 Solothurn |
| Costa Kreuzfahrten GmbH (c) | 99.9% |  | Stampfenbachstrasse 61, 8006 Zurich |
| Turkey Costa Cruises Turkey Turizm Gelisim A.S. (c) | 90.0% |  | Bestepe Mah, Mertebe Sok., Caycay Apt. No 13/3, Yenimahalle / Ankara |
| United Arab Emirates Shamal Venture Cruise Terminal LLC (c) | 49.0% |  | 303 Emaar Square Building Bur Dubai Burj Khalifa, Dubai |
| United States 1972 Productions, Inc. (c) | 100% |  | 3655 N.W. 87th Avenue, Miami, Florida 33178 |
| A.J. Juneau Dock, LLC (c) | 50.0% |  | 1429 Tongass Avenue, Ketchikan, Alaska 99901 |
| Alaska Hotel Properties LLC (c) | 100% |  | Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801 |
| CC U.S. Ventures, Inc. (c) | 100% |  | 3655 N.W. 87th Avenue, Miami, Florida 33178 |
| Costa Cruise Lines Inc. (c) | 99.9% |  | 880 SW 145th Ave, Suite 102, Pembroke Pines, Florida 33027 |
| Gibs, Inc. (c) | 100% |  | Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware, 19801 |
| Global Experience Innovators, Inc. (c) | 100% |  | 3655 N.W. 87th Avenue, Miami, Florida 33178 |
| Global Fine Arts, Inc. (c) | 100% |  | 24305 Town Center Drive, Santa Clarita, California 91355 |

Carnival plc  
Financial Statements

129

| Companies (Countries of Incorporation) | Ownership Interest | UK Companies House Registration Number | Address of Companies' Registered Office |
| --- | --- | --- | --- |
| Holland America Line Inc. (c) | 100% |  | 450 Third Avenue West, Seattle, Washington 98119 |
| Holland America Line U.S.A., Inc. (c) | 100% |  | 450 Third Avenue West, Seattle, Washington 98119 |
| Ketchikan Dock Company, LLC (c) | 30.0% |  | 55 Schoenbar Ct, Suite 201, Ketchikan, Alaska 99901 |
| Klondike Holdings, LLC | 45.0% |  | 251 Little Falls Drive, Wilmington, Delaware 19808 |
| Odds On Gaming Corporation | 100% |  | Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801 |
| P&O Properties (California), Inc. (c) | 100% |  | 24305 Town Center Drive, Santa Clarita, California 91355 |
| Princess Cruises and Tours, Inc. (c) | 100% |  | 1201 North Market Street, 18th Floor, Wilmington, Delaware 19081 |
| Princess U.S. Holdings, Inc. (c) | 100% |  | 24305 Town Center Drive, Santa Clarita, California 91355 |
| Royal Hyway Tours, Inc. (c) | 100% |  | C/O CT Corporation System, 9630 Glacier Highway, Suite 202, Juneau, Alaska 99801 |
| Skagway Port & Rail, Inc. (c) | 45.0% |  | 601 Union Street #3920, Seattle, Washington 98101 |
| Tour Alaska, LLC (c) | 100% |  | Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801 |
| Westmark Hotels, Inc. (c) | 100% |  | C/O CT Corporation System, 9630 Glacier Highway, Suite 202, Juneau, Alaska 99801 |
| Vanuatu |  |  |  |
| Carnival Vanuatu Limited | 100% |  | Law Partners House, Kumul Highway, Port Vila, Vanuatu |

(a) Exempt from preparing individual accounts by virtue of Section 394A of the Companies Act 2006 and from filing individual accounts by virtue of Section 448A of the Companies Act 2006.

(b) Exempt from preparing individual audited accounts by virtue of Section 479A of the Companies Act 2006.

(c) Not directly owned by Carnival plc.

In order to obtain the above filing exemptions, the Parent Company will guarantee the outstanding liabilities to which each of the above companies is subject at November 30, 2022.

130

## NOTE 8 - Accrued Liabilities and Other

| (in millions) | November 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Compensation and benefits | $50 | $55 |
| Interest | 29 | 17 |
| Port fees | 20 | 5 |
| Other | 109 | 126 |
|  | $209 | $203 |

## NOTE 9 - Other Long-Term Liabilities

| (in millions) | November 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Customer deposits | $65 | $79 |
| Post-employment benefits | 6 | 16 |
| Other long-term liabilities | 14 | 6 |
|  | $84 | $102 |

## NOTE 10 - Share Capital and Reserves

| (in millions) | Number of Shares | Share Capital |
| --- | --- | --- |
| At November 30, 2021 | 217.4 | $361 |
| Ordinary shares issued and fully paid | - | - |
| At November 30, 2022 | 217.4 | $361 |

There were 31.2 million shares held as treasury stock at November 30, 2022 (32.4 million shares were held as treasury stock at November 30, 2021).

At November 30, 2022 there were 13.3 million ordinary shares at $1.66 each of Carnival plc (3.2 million at November 30, 2021) authorized for future issuance under its employee benefit plans.

The Parent Company has two allotted and issued subscriber shares of £1 each, that carry no voting rights and no right to receive any dividend or any amount paid on return of capital. The Parent Company has one special voting share of £1 issued to Carnival Corporation in connection with the DLC transaction to enable Carnival Corporation's shareholders to vote as a group on Parent Company shareholder matters. The Parent Company has one Equalization Share of £1 that carry's no voting rights. At November 30, 2022 and 2021, the Parent Company had 50,000 allotted but unissued redeemable preference shares of £1 each. The preference shares, which carry no voting rights, rank behind other classes of shares in relation to the payment of capital on certain types of distributions from the Parent Company.

Carnival plc  
Financial Statements

131

# *Independent auditors' report to the members of Carnival plc*

# **Report on the audit of the financial statements**

# **Opinion**

In our opinion, Carnival plc's Group financial statements and Company financial statements (the "financial statements"):

- give a true and fair view of the state of the Group's and of the Company's affairs as at 30 November 2022 and of the Group's loss and the Group's cash flows for the year then ended;
- the Group financial statements have been properly prepared in accordance with UK-adopted international accounting standards as applied in accordance with the provisions of the Companies Act 2006;
- the Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, including FRS 101 "Reduced Disclosure Framework", and applicable law); and
- the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements, included within the Annual Report which comprise: the Group and Parent Company Balance Sheets as at 30 November 2022; the Group Statements of Income (Loss) and Group Statements of Comprehensive Income (Loss), the Group Statements of Cash Flows, and the Group and Parent Company Statements of Changes in Shareholders' Equity for the year then ended; and the notes to the financial statements, which include a description of the significant accounting policies.

Our opinion is consistent with our reporting to the Audit Committee.

The Carnival Corporation & plc consolidated financial statements for 2022, prepared under U.S. Generally Accepted Accounting Principles (referred to as either the "Carnival Corporation & plc U.S. GAAP consolidated financial statements" or the "DLC Financial Statements"), which are included in the Carnival plc Annual Report, as other information, do not form part of the Carnival plc Financial Statements. Accordingly, they are not within the scope of this opinion.

# **Basis for opinion**

We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

# **Independence**

We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, which includes the FRC's Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC's Ethical Standard were not provided.

Other than those disclosed in the Corporate Governance Report, we have provided no non-audit services to the Company or its controlled undertakings in the period under audit.

# **Our audit approach**

# **Context**

The prolonged pause in guest operations as a result of the COVID-19 pandemic continued to have a material negative impact on the Group's and Company's financial results and liquidity during 2022. With the easing of travel restrictions, the Group has resumed guest cruise operations and is focused on driving revenue growth and returning to strong profitability.

As explained in the Strategic Report, a key focus of the Group is climate action, which includes their commitment to reduce carbon emissions and their aspiration to achieve net carbon-neutral operations by 2050. More detail of how we have responded to the impact of climate change can be found in the section entitled 'The impact of climate risk on our audit' below.

132

## Overview

# Audit scope

- There are thirteen components in the Carnival plc consolidation.
- Three consolidation components were subject to an audit of their complete financial information due to their size, namely AIDA, Costa and Carnival UK.
- Specific audit procedures were performed by the Group team on certain balances and transactions in respect of four other components.
- Certain specific audit procedures were also performed at the Group's head office in Miami, Florida by the PwC US Carnival Corporation & plc audit engagement team across balances and transactions in a number of the consolidation components and over certain disclosures in the Annual Report.
- For all the component auditors for financially significant components and the members of the PwC US Carnival Corporation & plc team, we engaged in regular telephone and video calls. In addition, we conducted site visits to both the AIDA and Costa components in conjunction with senior members of the PwC US Carnival Corporation & plc audit engagement team.

# Key audit matters

- Impairment review of the carrying value of ships (Group and Company)
- Investment in subsidiaries impairment assessment (Company)
- Impact of COVID-19 pandemic (Group and Company)

# Materiality

- Overall Group materiality: US$70 million (2021: US$56 million) based on approximately 4.4% of the absolute net loss before income taxes and impairment charges. In the prior year this was restricted to the overall materiality applied in 2019 and 2020. This approach was appropriate whilst the Group was in recovery following the pandemic, due to the majority of the fleet now back in operation and in the increase in occupancy rates we have concluded the restriction is no longer necessary.
- Overall Company materiality: US$65 million (2021: US$53 million) based on 1% of total assets. For the purposes of the audit of the Group financial statements, we determined a component materiality for the Company of US$65 million on the basis that the Company should not have a higher materiality than the overall Group.
- Performance materiality: US$53 million (2021: US$42 million) (Group) and US$49 million (2021: US$39 million.) (Company).

## The scope of our audit

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.

## Key audit matters

Key audit matters are those matters that, in the auditors' professional judgement, were of most significance in the audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

This is not a complete list of all risks identified by our audit.

Impairment review of goodwill (Group and Company), which was a key audit matter last year, is no longer included because of the goodwill carrying value being written down to nil in the prior year. Otherwise, the key audit matters below are consistent with last year.

133

| Key audit matter | How our audit addressed the key audit matter |
| --- | --- |
| Impairment review of the carrying value of ships (Group and Company) (see note 2 to the financial statements for the disclosures of the related accounting policies and note 10 and note 4 in the parent company financial statements) | We have obtained an understanding from management as to how the models have been constructed and the rationale for each key assumption. As part of our work, we also ensured they are mathematically accurate. We assessed management's ability to forecast by reviewing against historical accuracy. |
| The Group and Company hold significant amounts of property and equipment in the form of cruise ships, as detailed in note 10 to the financial statements. There is a risk that, as a result of a slower than anticipated recovery in demand post COVID-19, as well as other macro economic factors, the carrying value of these ships is overstated and should be impaired. | We considered, and when needed challenged, each core assumption in order to assess those most significant to the conclusion reached and hence which assumptions, if inaccurate, would indicate impairment was not required or indeed would indicate a further shortfall which may lead to further impairment. This included: forecast ship revenues and costs, by comparing them against available industry data and expectations, historical results, as well as current revenue booking and cost trends; the discount rates applied by engaging our valuation experts to assess their appropriateness; the long-term growth rates in the forecasts, by engaging our valuation experts to assess the reasonableness of such assumptions; and the impact climate change is anticipated to have on future cash flows and assessed the appropriateness of how management had considered these in the construction of the impairment assessments. This included considering the appropriateness of the value and timing of climate change related regulatory costs. |
| Due to the factors above, the Directors considered that an indication of potential impairment had occurred and an assessment of the carrying value of ships across each of the EA segment CGUs ('brands') was performed. The ship valuation models, constructed at a CGU level, are dependent on a number of key assumptions including forecast ship revenue net of significant variable costs, discount rate and other assumptions including; fuel prices and potential future regulatory costs associated with climate change. In addition, management considered the impairment of individual ships, planned for disposal. | We considered the reasonableness of the remaining assumptions, including tying back to long term trends and assessing against the wider economic factors and global economic uncertainty when considering demand and cost projections. |
| In total, in 2022, impairment charges on ships of US$1,149m were recognised by the Group. No ship impairment charges were recorded in the Company. | We conducted a range of sensitivity analyses to ascertain what would lead to a materially different outcome and to challenge management regarding their assumptions. We held meetings with component management teams to corroborate that the assumptions made by Group management align with their views of their respective brands. We challenged disclosures made in the financial statements in relation to ship impairment, including with regard to the key accounting estimates relevant to the assessments made. We considered management's assessment of the ship's economic lives in the context of the risks posed by climate change. With regard to impairments recorded against specific ships, we considered the appropriateness of estimated sales prices based on sales contracts or comparable recent sales. Overall, we are satisfied that the impairments recorded in the year and associated disclosures are appropriate. |

134

| Investment in subsidiaries impairment assessment (Company) (See note 1 to the parent company financial statements for the Directors' disclosures of the related accounting policies and note 7) | We obtained management's impairment assessments for the investments in subsidiaries held by the Company. For the investment in Costa Crociere SpA, we tested its recoverable amount determined with reference to its discounted future cash flows, prepared utilising the same methodology as those models used within the CGU models used to assess ship impairments. We tested the reasonableness of the key assumptions used, including revenue and cost growth rates, discount rates and costs associated with climate change. |
| --- | --- |
| Investments in subsidiaries are accounted for at cost less provision for impairment in the Company. The Directors identified the slower than anticipated recovery in demand post COVID-19 as well as other macro-economic factors as an indicator of potential impairment, and therefore assessed whether the investments' carrying values could be supported by their recoverable amount. | As a result of our work, we found the assumptions applied in management's analysis to be reasonable and we are satisfied the impairment recorded in the year is appropriate. |
| In developing the cash flow forecasts, the Directors utilised consistent assumptions with those described for ship impairments, most significantly forecast ship revenue net of significant variable costs, discount rate and other assumptions including; fuel prices and potential future regulatory costs associated with climate change. |  |
| Impairment charges totalling US$2.2bn were identified primarily in respect of the Company's investment in Costa Crociere SpA |  |
| Impact of COVID-19 pandemic (Group and Company) (See note 1 to the financial statements for the Directors' disclosures of the related accounting policies, and note 2) | Our procedures in respect of investments and ship impairments are set out in the respective key audit matters above. |
| As described in Note 1 to the consolidated financial statements, the continued effects of the COVID-19 pandemic, inflation, higher fuel prices, higher interest rates, fluctuations in foreign currency rates and the Group's substantial debt balance have had and may continue to have a material negative impact on the Group's financial results. For almost three years, management has taken actions to manage the Group'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. | With respect to the Directors' going concern assessment, the procedures we performed, and our findings are set out in the 'Conclusions relating to going concern' section below |
| The principal assumptions used in management's estimate of future liquidity requirements consisted of (i) continued cruise operations and expected timing of cash collections for cruise bookings; (ii) expected increases in revenue in 2023 on a per passenger basis compared with 2019 with the relaxation of COVID-19 related protocols; (iii) expected improvement in occupancy on a year-over-year basis returning to historical levels in the summer of 2023; (iv) expected stabilisation of fuel prices around November 2022 year-end prices; (v) continued stabilisation of inflationary pressures on costs, moderated by a larger-more efficient fleet as compared with 2019; and include other assumptions such as; (vi) new ship deliveries, improvements and removals. |  |

135

Based on these actions and assumptions, and considering the liquidity including cash and borrowings available under the multi-currency revolving credit facility at 30 November 2022, the Directors believe that they have sufficient liquidity to fund obligations and expect to remain in compliance with the Group's financial covenants for at least the next twelve months from the issuance of the financial statements.

We considered the disclosures in the Going Concern and Viability statements along with the financial statements in respect of the impact of COVID-19 regarding liquidity and concluded that these are appropriate.

### **How we tailored the audit scope**

We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole, taking into account the structure of the group and the company, the accounting processes and controls, and the industry in which they operate.

Carnival plc has thirteen consolidation components. Three consolidation components, AIDA, Costa and Carnival UK (Cunard and P&O Cruises (UK)), which are considered financially significant and together contribute over 87% of net loss before income taxes and impairment charges to the Group results, were subject to an audit of their complete financial information, due to their size, by local component teams. We met with local management, and we performed file reviews of the component teams' work via telephone and video calls for each of the AIDA, Costa and Carnival UK components.

In addition, specific audit procedures over the following FSLIs, onboard and other revenue, onboard and other costs and Property plant and equipment in HAP Alaska as well as customer deposits in Princess Charters were performed by the Group engagement team.

We also used a US team, who are primarily responsible for the audit of Carnival Corporation & plc, to perform certain specified procedures across balances and transactions in a number of the consolidation components and over certain disclosures in the Annual Report from the Group's head office in Miami, Florida. Such procedures performed included contributing to our assessment of the going concern basis of preparation, intercompany balances and transactions, cash and debt balances held, and equity and reserves. We met with the US team and Group management via regular telephone and video calls.

These, together with additional procedures performed at the Group level, including auditing the consolidation and financial statement disclosures, gave us the evidence we needed for our opinion on the financial statements as a whole.

### **The impact of climate risk on our audit**

As part of our audit we made enquiries of management to understand the process management adopted to assess the extent of the potential impact of climate risk on the Group's financial statements and support the disclosures made within note 2 in the financial statements. In addition to enquiries with management, we also read additional reporting made by the entity on climate including its sustainability report, and it's Carbon Disclosure Project public submission.

We challenged the completeness of management's climate risk assessment by challenging the consistency of management's climate impact assessment with internal climate plans and board minutes, including whether the time horizons management have used take account of all relevant aspects of climate change such as transition risks. In addition, we read the communications for details of climate related impacts.

Management has stated aspirations of achieving net zero carbon emissions by 2050 and is working on how to achieve this. Given the stage of development of this work and the medium to long term horizon, the future financial impacts are uncertain. We confirmed with management and the Audit Committee that the estimated financial impacts of climate change will be reassessed prospectively and our expectation that climate change disclosures will evolve as the understanding of the actual and potential impacts on the Group's future operations are established with greater certainty.

In planning and executing our audit, we considered the Group's climate change risk assessment process and this, together with involvement of our own sustainability specialists, provided us with an understanding of the potential impact of climate change on the financial statements. We assessed that the key financial statement line items and estimates which are more likely to be materially impacted by climate risks are those associated with future cash flows, given the more notable impacts of climate change on the business are expected to arise in the medium to long term. These include the carrying value of ships and the carrying value of the Company's investments in subsidiaries, as well as specific consideration of the impact of climate change on likely ship ownership periods, residual value estimates for ships, and the related impact on annual depreciation charges. Our key audit matters further explain how we evaluated the impact of climate change.

### **Materiality**

The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.

136

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

|  | Financial statements - Group | Financial statements - Company |
| --- | --- | --- |
| Overall materiality | US$70 million (2021:US$56 million). | US$65 million (2021:US$53 million). |
| How we determined it | Approximately 4.4% of the absolute net loss before income taxes and impairment charges, in the prior year this was restricted to the overall materiality applied in 2019 and 2020. This approach was appropriate whilst the Group was in recovery following the pandemic, due to the majority of the fleet now back in operation and in the increase in occupancy rates we have concluded the restriction is no longer necessary. | 1% of total assets. For the purposes of the audit of the Group financial statements, we determined a component materiality for the Company of US$65million on the basis that the Company should not have a higher materiality than the overall Group. |
| Rationale for benchmark applied | The primary measure of the business performance is loss before tax and impairment. We have used the same benchmark as for 2021 but given the recovery of the operations, we have not restricted the quantum to 2019 levels as we did in 2021 | We believe that total assets is an appropriate benchmark for the Company as this entity is principally an investment and financing holding Company with some operational activity. For the purposes of the audit of the Group financial statements, we determined a component materiality for the Company of US$65 million on the basis that the Company should not have a higher materiality than the overall Group. |

For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The range of materiality allocated across components was between $52 million and $65 million.

We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our performance materiality was 75% (2021: 75%) of overall materiality, amounting to US$53 million (2021: US$42 million) for the Group financial statements and US$49 million (2021:US$39 million.) for the Company financial statements.

In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment and aggregation risk and the effectiveness of controls - and concluded that an amount at the upper end of our normal range was appropriate.

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above $7 million (Group audit) (2021: $5 million) and $6 million (Company audit) (2021: $5 million) as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.

### Conclusions relating to going concern

Our evaluation of the Directors' assessment of the Group's and the Company's ability to continue to adopt the going concern basis of accounting included:

- Assessing management's base case and severe but plausible downside scenario models supporting the Board's going concern assessment, evaluating the process by which the assessments have been drawn up, ensuring that the calculations in the model were mathematically accurate and that the overall methodology used was appropriate;
- Evaluating management's base case by ensuring that the forecasts being used were aligned with the Board's most recent forecasts. In evaluating the inputs used in the base case scenario, we considered the key assumptions including, occupancy levels and forecast ticket prices;
- We considered the likelihood of the severe but plausible downside scenario modelled and whether other scenarios including a reduced level of occupancy could arise and the associated impact on liquidity and covenant headroom. We considered management's ability to forecast by assessing both historical performance, current levels of forward bookings and the impact of the global economic outlook on pricing.
- Evaluating the committed financing facilities currently available to the Carnival Corporation & plc group and ensuring that the models appropriately included all contractual debt repayments and committed capital expenditures;

137

• Agreeing to debt agreements and associated amendments secured, the covenants attached to each facility and considering the Group's and Company's forecast compliance at the measurement dates included in the going concern assessment period;
• Agreeing the cash on hand and available facilities included in the going concern assessment to our year end audit work; and
• Reading the Directors' basis of preparation note in note 1 and the disclosures provided in the Viability statement and Going concern statement and evaluating whether they appropriately describe the Board's consideration of this matter.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's and the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

In auditing the financial statements, we have concluded that the Directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

As not all future events or conditions can be predicted, this conclusion is not a guarantee as to the group's and the company's ability to continue as a going concern.

In relation to the Directors' reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the directors' statement in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.

### Reporting on other information

The other information comprises all of the information in the Annual Report other than the financial statements and our auditors' report thereon. The Directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on these responsibilities.

With respect to the Strategic report and Directors' Report, we also considered whether the disclosures required by the UK Companies Act 2006 have been included.

Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as described below.

### Strategic report and Directors' report

In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Directors' report for the year ended 30 November 2022 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements.

In light of the knowledge and understanding of the group and company and their environment obtained in the course of the audit, we did not identify any material misstatements in the Strategic report and Directors' report.

### Directors' Remuneration

In our opinion, the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006.

### Corporate governance statement

The Listing Rules require us to review the Directors' statements in relation to going concern, longer-term viability and that part of the corporate governance statement relating to the company's compliance with the provisions of the UK Corporate Governance Code specified for our review. Our additional responsibilities with respect to the corporate governance statement as other information are described in the Reporting on other information section of this report.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement is materially consistent with the financial statements and our knowledge obtained during the audit, and we have nothing material to add or draw attention to in relation to:

138

- The Directors' confirmation that they have carried out a robust assessment of the emerging and principal risks;
- The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks and an explanation of how these are being managed or mitigated;
- The Directors' statement in the financial statements about whether they considered it appropriate to adopt the going concern basis of accounting in preparing them, and their identification of any material uncertainties to the Group's and Company's ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements;
- The Directors' explanation as to their assessment of the Group's and Company's prospects, the period this assessment covers and why the period is appropriate; and
- The Directors' statement as to whether they have a reasonable expectation that the company will be able to continue in operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.

Our review of the Directors' statement regarding the longer-term viability of the Group and Company was substantially less in scope than an audit and only consisted of making inquiries and considering the Directors' process supporting their statement; checking that the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the statement is consistent with the financial statements and our knowledge and understanding of the group and company and their environment obtained in the course of the audit.

In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement is materially consistent with the financial statements and our knowledge obtained during the audit:

- The Directors' statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides the information necessary for the members to assess the group's and company's position, performance, business model and strategy;
- The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and
- The section of the Annual Report describing the work of the Audit Committee.

We have nothing to report in respect of our responsibility to report when the directors' statement relating to the company's compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified under the Listing Rules for review by the auditors.

## **Responsibilities for the financial statements and the audit**

### **Responsibilities of the Directors for the financial statements**

As explained more fully in the Statement of Directors' Responsibilities, the Directors are responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The Directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Group's and the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the company or to cease operations, or have no realistic alternative but to do so.

### **Auditors' responsibilities for the audit of the financial statements**

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws and regulations related to the requirement of the Group to comply with the complexities of listing and UK and international tax regulations, as well as a series of environmental regulations and unethical and prohibited business practices, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the financial statements such as the Companies Act 2006. We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to

139

posting inappropriate journal entries to increase revenue or reduce expenditure, and management bias in accounting estimates. The group engagement team shared this risk assessment with the component auditors so that they could include appropriate audit procedures in response to such risks in their work. Audit procedures performed by the group engagement team and/or component auditors included:

- Review of the financial statement disclosures to underlying supporting documentation;
- Discussions with management at multiple levels across the business and the Group's internal legal counsel throughout the year, as well as at year end. These discussions included consideration of known or suspected instances of non-compliance with laws and regulations and fraud;
- Making enquiries of external counsel in order to understand the nature of existing legal cases;
- Review of significant component auditors' work and review of internal audit reports in so far as they related to the financial statements;
- Substantive testing of significant accounting estimates, particularly in relation to the impairment assessments of ships and the going concern assessments (see related key audit matters above); and
- Identifying and testing journal entries, in particular any journal entries posted to revenue and expenditure accounts with unusual account combinations, to identify any unusual or irregular items.

There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected.

A further description of our responsibilities for the audit of the financial statements is located on the FRC's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors' report.

### **Use of this report**

This report, including the opinions, has been prepared for and only for the company's members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

### **Other required reporting**

#### **Companies Act 2006 exception reporting**

Under the Companies Act 2006 we are required to report to you if, in our opinion:

- we have not obtained all the information and explanations we require for our audit; or
- adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not visited by us; or
- certain disclosures of Directors' remuneration specified by law are not made; or
- the company financial statements and the part of the Directors' Remuneration Report to be audited are not in agreement with the accounting records and returns.

We have no exceptions to report arising from this responsibility.

### **Appointment**

Following the recommendation of the Audit Committee, we were appointed by the members on 23 June 2003 to audit the financial statements for the year ended 30 November 2003 and subsequent financial periods. The period of total uninterrupted engagement is 20 years, covering the years ended 30 November 2003 to 30 November 2022.

140

# **Other matter**

As required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial statements form part of the ESEF-prepared annual financial report filed on the National Storage Mechanism of the Financial Conduct Authority in accordance with the ESEF Regulatory Technical Standard ('ESEF RTS'). This auditors' report provides no assurance over whether the annual financial report has been prepared using the single electronic format specified in the ESEF RTS.

John Waters (Senior Statutory Auditor)  
for and on behalf of PricewaterhouseCoopers LLP  
Chartered Accountants and Statutory Auditors  
London  
27 January 2023

141

# **CARNIVAL CORPORATION & PLC**  
 **CONSOLIDATED STATEMENTS OF INCOME (LOSS)**  
 (in millions, except per share data)

|  | Years Ended November 30, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Revenues |  |  |  |
| Passenger ticket | $7,022 | $1,000 | $3,684 |
| Onboard and other | 5,147 | 908 | 1,910 |
|  | 12,168 | 1,908 | 5,595 |
| Operating Costs and Expenses |  |  |  |
| Commissions, transportation and other | 1,630 | 269 | 1,139 |
| Onboard and other | 1,528 | 272 | 605 |
| Payroll and related | 2,181 | 1,309 | 1,780 |
| Fuel | 2,157 | 680 | 823 |
| Food | 863 | 187 | 413 |
| Ship and other impairments | 440 | 591 | 1,967 |
| Other operating | 2,958 | 1,346 | 1,518 |
|  | 11,757 | 4,655 | 8,245 |
| Selling and administrative | 2,515 | 1,885 | 1,878 |
| Depreciation and amortization | 2,275 | 2,233 | 2,241 |
| Goodwill impairments | - | 226 | 2,096 |
|  | 16,547 | 8,997 | 14,460 |
| Operating Income (Loss) | (4,379) | (7,089) | (8,865) |
| Nonoperating Income (Expense) |  |  |  |
| Interest income | 74 | 12 | 18 |
| Interest expense, net of capitalized interest | (1,609) | (1,601) | (895) |
| Gain (loss) on debt extinguishment, net | (1) | (670) | (459) |
| Other income (expense), net | (165) | (173) | (52) |
|  | (1,701) | (2,433) | (1,388) |
| Income (Loss) Before Income Taxes | (6,080) | (9,522) | (10,253) |
| Income Tax Benefit (Expense), Net | (14) | 21 | 17 |
| Net Income (Loss) | $(6,093) | $(9,501) | $(10,236) |
| Earnings Per Share |  |  |  |
| Basic | $(5.16) | $(8.46) | $(13.20) |
| Diluted | $(5.16) | $(8.46) | $(13.20) |

The accompanying notes are an integral part of these consolidated financial statements.

142

# **CARNIVAL CORPORATION & PLC**  
 **CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)**  
 (in millions)

|  | Years Ended November 30, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Net Income (Loss) | $(6,093) | $(9,501) | $(10,236) |
| Items Included in Other Comprehensive Income (Loss) |  |  |  |
| Change in foreign currency translation adjustment | (503) | (118) | 578 |
| Other | 22 | 53 | 51 |
| Other Comprehensive Income (Loss) | (481) | (65) | 630 |
| Total Comprehensive Income (Loss) | $(6,574) | $(9,567) | $(9,606) |

The accompanying notes are an integral part of these consolidated financial statements.

DLC Financial Statements  
 and Other Information

143

# **CARNIVAL CORPORATION & PLC**  
 **CONSOLIDATED BALANCE SHEETS**  
 (in millions, except par values)

|  | November 30, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| ASSETS |  |  |
| Current Assets |  |  |
| Cash and cash equivalents | $4,029 | $8,939 |
| Restricted cash | 1,988 | 14 |
| Short-term investments | - | 200 |
| Trade and other receivables, net | 395 | 246 |
| Inventories | 428 | 356 |
| Prepaid expenses and other | 652 | 379 |
| Total current assets | 7,492 | 10,133 |
| Property and Equipment, Net | 38,687 | 38,107 |
| Operating Lease Right-of-Use Assets | 1,274 | 1,333 |
| Goodwill | 579 | 579 |
| Other Intangibles | 1,156 | 1,181 |
| Other Assets | 2,515 | 2,011 |
|  | $51,703 | $53,344 |
| LIABILITIES AND SHAREHOLDERS' EQUITY |  |  |
| Current Liabilities |  |  |
| Short-term borrowings | $200 | $2,790 |
| Current portion of long-term debt | 2,393 | 1,927 |
| Current portion of operating lease liabilities | 146 | 142 |
| Accounts payable | 1,050 | 797 |
| Accrued liabilities and other | 1,942 | 1,641 |
| Customer deposits | 4,874 | 3,112 |
| Total current liabilities | 10,605 | 10,408 |
| Long-Term Debt | 31,953 | 28,509 |
| Long-Term Operating Lease Liabilities | 1,189 | 1,239 |
| Other Long-Term Liabilities | 891 | 1,043 |
| Commitments and Contingencies |  |  |
| Shareholders' Equity |  |  |
| Carnival Corporation common stock, $0.01 par value; 1,960 shares authorized; 1,244 shares at 2022 and 1,116 shares at 2021 issued | 12 | 11 |
| Carnival plc ordinary shares, $1.66 par value; 217 shares at 2022 and 2021 issued | 361 | 361 |
| Additional paid-in capital | 16,872 | 15,292 |
| Retained earnings | 269 | 6,448 |
| Accumulated other comprehensive income (loss) ('AOCI') | (1,982) | (1,501) |
| Treasury stock, 130 shares at 2022 and 2021 of Carnival Corporation and 72 shares at 2022 and 67 shares at 2021 of Carnival plc, at cost | (8,468) | (8,466) |
| Total shareholders' equity | 7,065 | 12,144 |
|  | $51,703 | $53,344 |

The accompanying notes are an integral part of these consolidated financial statements.

144

# **CARNIVAL CORPORATION & PLC**  
 **CONSOLIDATED STATEMENTS OF CASH FLOWS**  
 (in millions)

|  | Years Ended November 30, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| OPERATING ACTIVITIES |  |  |  |
| Net income (loss) | $(6,093) | $(9,501) | $(10,236) |
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities |  |  |  |
| Depreciation and amortization | 2,275 | 2,233 | 2,241 |
| Impairments | 470 | 834 | 4,063 |
| (Gain) loss on debt extinguishment | 1 | 668 | 459 |
| (Income) loss from equity-method investments | 38 | 129 | 20 |
| Share-based compensation | 101 | 121 | 105 |
| Amortization of discounts and debt issue costs | 171 | 172 | 119 |
| Noncash lease expense | 148 | 140 | 172 |
| Other, net | 57 | 137 | (56) |
|  | (2,832) | (5,067) | (3,114) |
| Changes in operating assets and liabilities |  |  |  |
| Receivables | (171) | (7) | 125 |
| Inventories | (95) | (63) | 77 |
| Prepaid expenses and other | (874) | (1,070) | (209) |
| Accounts payable | 283 | 206 | (165) |
| Accrued liabilities and other | 341 | 601 | (311) |
| Customer deposits | 1,679 | 1,291 | (2,703) |
| Net cash provided by (used in) operating activities | (1,670) | (4,109) | (6,301) |
| INVESTING ACTIVITIES |  |  |  |
| Purchases of property and equipment | (4,940) | (3,607) | (3,620) |
| Proceeds from sales of ships and other | 70 | 351 | 334 |
| Purchase of minority interest | (1) | (90) | (81) |
| Purchase of short-term investments | (315) | (2,873) | - |
| Proceeds from maturity of short-term investments | 515 | 2,673 | - |
| Other, net | (96) | 3 | 127 |
| Net cash provided by (used in) investing activities | (4,767) | (3,543) | (3,240) |
| FINANCING ACTIVITIES |  |  |  |
| Proceeds from (repayments of) short-term borrowings, net | (2,590) | (293) | 2,852 |
| Principal repayments of long-term debt | (2,075) | (5,956) | (1,621) |
| Premium paid on extinguishment of debt | (1) | (545) | - |
| Proceeds from issuance of long-term debt | 7,209 | 13,042 | 15,020 |
| Dividends paid | - | - | (689) |
| Purchases of common stock | - | - | (12) |
| Issuance of common stock, net | 1,180 | 1,009 | 3,249 |
| Issuance of common stock under the Stock Swap Program | 95 | 206 | - |
| Purchase of treasury stock under the Stock Swap Program | (87) | (188) | - |
| Debt issue costs and other, net | (154) | (327) | (150) |
| Net cash provided by (used in) financing activities | 3,577 | 6,949 | 18,650 |
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (79) | (13) | 53 |
| Net increase (decrease) in cash, cash equivalents and restricted cash | (2,940) | (715) | 9,161 |
| Cash, cash equivalents and restricted cash at beginning of year | 8,976 | 9,692 | 530 |
| Cash, cash equivalents and restricted cash at end of year | $6,037 | $8,976 | $9,692 |

The accompanying notes are an integral part of these consolidated financial statements.

DLC Financial Statements  
 and Other Information

145

# **CARNIVAL CORPORATION & PLC**  
 **CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY**  
 (in millions)

|  | Common stock | Ordinary shares | Additional paid-in capital | Retained earnings | AOCI | Treasury stock | Total shareholders’ equity |
| --- | --- | --- | --- | --- | --- | --- | --- |
| At November 30, 2019 . . . . . | $7 | $358 | $8,807 | $26,653 | $(2,066) | $(8,394) | $25,365 |
| Net income (loss) . . . . . | - | - | - | (10,236) | - | - | (10,236) |
| Other comprehensive income (loss) . . . . . | - | - | - | - | 630 | - | 630 |
| Cash dividends declared . . . . . | - | - | - | (342) | - | - | (342) |
| Issuances of common stock, net . . . . . | 2 | - | 3,247 | - | - | - | 3,249 |
| Issuance and repurchase of Convertible Notes (net settled through a registered direct offering) . . . . . | 2 | - | 1,798 | - | - | - | 1,799 |
| Purchases of treasury stock under the Repurchase Program and other . . . . . | - | 2 | 97 | - | - | (10) | 89 |
| At November 30, 2020 . . . . . | 11 | 361 | 13,948 | 16,075 | (1,436) | (8,404) | 20,555 |
| Net income (loss) . . . . . | - | - | - | (9,501) | - | - | (9,501) |
| Other comprehensive income (loss) . . . . . | - | - | - | - | (65) | - | (65) |
| Issuance of common stock, net . . . . . | - | - | 1,009 | - | - | - | 1,009 |
| Conversion of Convertible Notes . . . . . | - | - | 15 | - | - | - | 15 |
| Purchases and issuances under the Stock Swap program . . . . . | - | - | 206 | - | - | (188) | 19 |
| Issuance of treasury shares for vested share-based awards . . . . . | - | - | - | (126) | - | 126 | - |
| Share-based compensation and other . . . . . | - | - | 113 | - | - | - | 113 |
| At November 30, 2021 . . . . . | 11 | 361 | 15,292 | 6,448 | (1,501) | (8,466) | 12,144 |
| Net income (loss) . . . . . | - | - | - | (6,093) | - | - | (6,093) |
| Other comprehensive income (loss) . . . . . | - | - | - | - | (481) | - | (481) |
| Issuances of common stock, net . . . . . | 1 | - | 1,178 | - | - | - | 1,180 |
| Issuance of Convertible Notes . . . . . | - | - | 229 | - | - | - | 229 |
| Purchases and issuances under the Stock Swap program, net . . . . . | - | - | 95 | - | - | (87) | 8 |
| Issuance of treasury shares for vested share-based awards . . . . . | - | - | - | (85) | - | 85 | - |
| Share-based compensation and other . . . . . | - | - | 79 | (1) | - | - | 78 |
| At November 30, 2022 . . . . . | $12 | $361 | $16,872 | $269 | $(1,982) | $(8,468) | $7,065 |

The accompanying notes are an integral part of these consolidated financial statements.

146

**Time limit hit – remaining pages or documents were skipped.**