Filed pursuant to Rule 424(b)(3)
                                                    Registration No. 333-102443

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in
any doubt about the Partial Share Offer, the DLC transaction or the action you
should take, you are recommended to seek your own financial advice immediately
from your stockbroker, bank manager, solicitor, accountant or other independent
financial adviser duly authorised, in the United Kingdom, under the Financial
Services and Markets Act 2000. This document should be read in conjunction with
the accompanying Form of Acceptance or Letter of Transmittal (as appropriate).

If you have sold or otherwise transferred all your P&O Princess shares or P&O
Princess ADSs, please send this document, the Form of Acceptance or the Letter
of Transmittal (as appropriate) and any accompanying documents, as soon as
possible, to the purchaser or transferee or to the stockbroker, bank or other
agent through whom the sale or transfer was effected for delivery to the
purchaser or transferee.

Application will be made for the Carnival shares offered in connection with the
Partial Share Offer to be listed on the NYSE, where they will trade together
with the currently outstanding Carnival shares under the symbol "CCL".

--------------------------------------------------------------------------------

                              Partial Share Offer

                                      by

                             Carnival Corporation

         to acquire up to 20 per cent. of the issued share capital of

                           P&O Princess Cruises plc

--------------------------------------------------------------------------------

Merrill Lynch International and UBS Limited, a subsidiary of UBS AG, are acting
as joint financial advisers and joint corporate brokers exclusively to Carnival
and no-one else in connection with the DLC transaction and the Partial Share
Offer and will not be responsible to anyone other than Carnival for providing
the protections afforded to clients respectively of Merrill Lynch International
and UBS Limited, as the case may be, or for providing advice in relation to the
DLC transaction and the Partial Share Offer.

Schroder Salomon Smith Barney is acting as sole financial adviser for P&O
Princess and no one else in connection with the DLC transaction and will not be
responsible to anyone other than P&O Princess for providing the protections
afforded to clients of Schroder Salomon Smith Barney, or for providing advice
in relation to the DLC transaction.

YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS SET OUT ON PAGES 27 TO 34 OF
THIS DOCUMENT.

THE PROCEDURE FOR ACCEPTANCE OF THE PARTIAL SHARE OFFER IS SET OUT ON PAGES 76
TO 80 OF THIS DOCUMENT AND IN THE ACCOMPANYING FORM OF ACCEPTANCE AND LETTER OF
TRANSMITTAL.

NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OF THE DISCLOSURES IN THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.



                                   CONTENTS


                                                                        
EXPECTED TIMETABLE OF EVENTS FOR THE PARTIAL SHARE OFFER AND THE DLC
  TRANSACTION                                                                      1
SHAREHOLDER HELPLINE                                                               1
IMPORTANT INFORMATION                                                              2

PART I       SUMMARY                                                               5

             Section A These materials                                             5

             Section B Summary information on the Combined Group, Carnival and
                       P&O Princess                                                6

             Section C Summary of the terms of the Partial Share Offer             7

             Section D Summary of the DLC transaction                             13

             Section E Carnival selected historical financial and operating data  19

             Section F P&O Princess selected historical financial data            21

             Section G Selected unaudited pro forma financial data in accordance
                       with U.S. GAAP                                             23

             Section H Comparative per share data and stock prices                25

PART II      RISK FACTORS                                                         27
PART III     INFORMATION ON THE COMBINED GROUP                                    35

             Section A Description of the Combined Group                          35

             Section B Unaudited pro forma financial information of the Combined
                       Group                                                      48

             Section C Where you can find additional information about the
                       Combined Group and the DLC transaction                     71

PART IV      INFORMATION ON CARNIVAL                                              72

PART V       INFORMATION ON P&O PRINCESS                                          73

PART VI      THE PARTIAL SHARE OFFER                                              74

             Section A The Partial Share Offer                                    74

             Section B Form of Acceptance                                         85

             Section C Brokerage Account Election Form                            89

Appendix I   CONDITIONS AND FURTHER TERMS OF THE PARTIAL SHARE OFFER              90

             Part A    Conditions of the Partial Share Offer                      91

             Part B    Further terms of the Partial Share Offer                   92

             Part C    Procedures for tendering P&O Princess ordinary shares     102

             Part D    Procedures for tendering P&O Princess ADSs                108

Appendix II  DETAILS OF THE DLC TRANSACTION                                      111

             Part A    Background to the DLC Transaction and Partial Share Offer 111

             Part B    Advice of P&O Princess' Financial Adviser                 115

             Part C    Considerations in respect of the DLC transaction          122

Appendix III MATERIAL DIFFERENCES AMONG THE EXISTING RIGHTS OF HOLDERS
             OF P&O PRINCESS SHARES, THE RIGHTS OF HOLDERS OF CARNIVAL
             SHARES FOLLOWING IMPLEMENTATION OF THE DLC STRUCTURE
             AND THE RIGHTS OF HOLDERS OF P&O PRINCESS SHARES
             FOLLOWING IMPLEMENTATION OF THE DLC STRUCTURE                       124

Appendix IV  ADDITIONAL INFORMATION ON CARNIVAL AND P&O PRINCESS                 149

Definitions                                                                      156




           EXPECTED TIMETABLE OF EVENTS FOR THE PARTIAL SHARE OFFER
                            AND THE DLC TRANSACTION


                                                                              
Posting of this document                                                                                            17 March 2003
Carnival Special Meeting                                                         10:00 a.m. (New York City time) on 14 April 2003
P&O Princess EGM                                                                        10:00 a.m. (London time) on 16 April 2003
Expected closing date of the Partial Share Offer                                        10:00 a.m. (London time) on 17 April 2003
Completion of the DLC transaction                                                                                   17 April 2003
Reorganisation of the P&O Princess shares                                               10:00 p.m. (London time) on 17 April 2003
Dealings commence in consolidated P&O Princess shares                                    8:00 a.m. (London time) on 22 April 2003
Settlement                                                                                                             1 May 2003


These expected dates and times are indicative only and may be subject to change.

                             SHAREHOLDER HELPLINE

  If you have any queries in relation to the DLC transaction and/or the Partial
  Share Offer, you may call the UK shareholder helpline from within the UK on
  0800 953 0083 between 9:00 a.m. and 5:30 p.m. (London time) on any business
  day until completion of the DLC transaction. If you are calling from the
  U.S., the helpline number is 1 866 203-2636. If you are calling from anywhere
  else, the helpline number is +44 870 889 3147 (calls will be charged at the
  applicable rate). For legal reasons, the helpline will only be able to assist
  you with information contained in this document and the helpline cannot
  provide advice on the merits of the proposals or give any financial advice.
  Calls may be monitored for quality control purposes.

                                      1



                             IMPORTANT INFORMATION

Certain definitions

Certain words and terms used in this document are defined in the section headed
"Definitions" on pages 156 to 160 of this document.

Cautionary note concerning factors that may affect future results

Certain statements contained in this document are "forward-looking statements"
that involve risks, uncertainties and assumptions with respect to P&O Princess
and Carnival and their respective subsidiaries and the Combined Group,
including certain statements concerning the transactions described in this
document, future results, plans and goals and other events which have not yet
occurred. You can find many (but not all) of these statements by looking for
words like "will", "may", "believes", "expects", "anticipates", "forecast",
"future", "intends", "plans" and "estimates" and for similar expressions.

Because forward-looking statements involve risks and uncertainties, there are
many factors that could cause the transactions described in this document not
to occur and/or each of P&O Princess', Carnival's and the Combined Group's
actual results, performance or achievements to differ materially from those
expressed or implied in this document. These factors include, but are not
limited to:

..   shareholder approvals of the DLC transaction;

..   achievement of expected benefits from the DLC transaction;

..   risks associated with the combination of Carnival's and P&O Princess'
    businesses by means of the DLC structure;

..   liquidity and index inclusion as a result of the implementation of the DLC
    structure, including a possible mandatory exchange;

..   risks associated with the uncertainty of the tax status of the DLC
    structure;

..   general economic and business conditions which may impact levels of
    disposable income of consumers and the net revenue yields for the cruise
    brands of Carnival, P&O Princess and the Combined Group;

..   conditions in the cruise and land-based vacation industries, including
    competition from other cruise ship operators and providers of other
    vacation alternatives and increases in capacity offered by cruise ship and
    land-based vacation alternative capacities;

..   the impact of operating internationally;

..   the international political and economic climate, armed conflict, terrorist
    attacks and other world events and negative publicity and their impact on
    the demand for cruises;

..   accidents and other incidents at sea affecting the health, safety, security
    and vacation satisfaction of passengers;

..   the ability of Carnival, P&O Princess and the Combined Group to implement
    their shipbuilding programmes and brand strategies and to continue to
    expand their businesses worldwide;

..   the ability of Carnival, P&O Princess and the Combined Group to attract and
    retain shipboard crew;

..   the ability to obtain financing on terms that are favourable or consistent
    with Carnival's, P&O Princess' and the Combined Group's expectations;

..   the impact of changes in operating and financing costs, including changes
    in foreign currency and interest rates and security, fuel, food and
    insurance costs;

..   changes in the tax, environmental and other regulatory regimes under which
    each company operates; and

..   the ability of a small group of shareholders effectively to control the
    outcome of shareholder voting.

These risks and other risks are detailed in the section entitled "Risk factors"
in Part II of this document and in Carnival's and P&O Princess' SEC reports.
That section and those reports contain important

                                      2



cautionary statements and a discussion of many of the factors that could
materially affect the accuracy of each company's forward-looking statements
and/or adversely affect their respective businesses, results of operations and
financial positions, which statements and factors are incorporated in this
document by reference.

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 listing rules, Carnival and P&O Princess 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.

Shareholder disclosure obligations

Any person who, alone or acting together with any other person(s) pursuant to
an agreement or understanding (whether formal or informal) to acquire or
control securities of Carnival or P&O Princess, owns or controls, or becomes
the owner or controller, directly or indirectly, of one per cent. or more of
any class of securities of Carnival or P&O Princess is generally required under
the provisions of Rule 8 of the Takeover Code to disclose to a Regulatory
Information Service and the Panel every dealing in such securities during the
period from 16 December 2001, the date of Carnival's announcement of its
original offer for P&O Princess, until the completion of the DLC transaction.
Dealings by Carnival or P&O Princess or by their respective "associates"
(within the definitions set out in the Takeover Code) in any class of
securities of Carnival or P&O Princess must also be disclosed. Please consult
your financial adviser immediately if you believe this rule may be applicable
to you.

Disclosure should be made on an appropriate form before 12 noon (London time)
on the business day following the date of the dealing transaction. These
disclosures should be registered with a Regulatory Information Service (e.g.
the Company Announcements Office of the London Stock Exchange (fax number: +44
20 7588 6057)) and to the Panel (fax number: +44 20 7256 9386).

Rules prohibiting tendering borrowed stock

Under applicable U.S. securities laws, you must have a "net long position" in
P&O Princess shares at least equal to the number of shares you tender both at
the time of tender and at completion of the Partial Share Offer. Your net long
position is equal to the excess, if any, of your long position in P&O Princess
shares over your short position in P&O Princess shares, in each case as defined
in the applicable regulations. For the purposes of these rules, borrowed shares
will count towards both your long position and your short position in P&O
Princess shares. Accordingly, borrowing shares will not increase your net long
position. The effect of these rules is to restrict your ability to tender
borrowed shares in the Partial Share Offer. The application of these rules can
be complex. If you have any questions regarding whether you will have a net
long position in P&O Princess shares upon participating in the Partial Share
Offer, you should contact your legal or financial advisers prior to tendering
your shares.

Financial information

The extracts from the consolidated financial statements of, and the other
financial information about, Carnival and P&O Princess appearing or
incorporated by reference in this document are presented in U.S. dollars.
Carnival's historical financial statements are prepared in accordance with U.S.
generally accepted accounting principles, or U.S. GAAP, and P&O Princess'
historical financial statements are prepared in accordance with UK generally
accepted accounting principles, or UK GAAP. U.S. GAAP and UK GAAP differ from
one another in some significant respects. A description of the principal
differences between U.S. GAAP and UK GAAP as they relate to P&O Princess is
contained in Part C of Section B of Part III of this document and in the notes
to the P&O Princess consolidated financial statements for the year ended 31
December 2002 which are incorporated by reference in this document.

Unaudited pro forma financial information of the Combined Group that gives
effect to the DLC transaction and that has been prepared in accordance with
U.S. GAAP is contained in Part A of Section B of Part III of this document.
Unaudited pro forma financial information on the Combined Group that gives
effect to the DLC transaction and that has been prepared in accordance with UK
GAAP is contained in Part B of Section B of Part III of this document.

                                      3



Incorporation of documents by reference

Carnival and P&O Princess have filed a registration statement on Form S-4/F-4
to register with the SEC:

..   the Carnival shares to be delivered to P&O Princess shareholders in
    exchange for their P&O Princess shares and P&O Princess ADSs pursuant to
    the Partial Share Offer; and

..   the P&O Princess shares deemed to be exchanged as a result of the DLC
    transaction.

This document is a part of that registration statement and constitutes a
prospectus of Carnival and a prospectus of P&O Princess as well as Carnival's
offer to exchange. In addition, Carnival has filed with the SEC a Tender Offer
Statement on Schedule TO under the Exchange Act to furnish certain information
about the Partial Share Offer.

This document incorporates important business and financial information about
Carnival and P&O Princess, and about the DLC transaction and the Combined
Group, by reference to documents that Carnival and P&O Princess have previously
filed with the SEC and that are not included in or delivered with this
document. This means that:

..   incorporated documents are considered part of this document;

..   Carnival and P&O Princess can disclose important information to you by
    referring you to those documents;

..   information in this document automatically updates and supersedes
    information in earlier documents that are incorporated by reference in this
    document;

..   information in a document incorporated by reference in this document
    automatically updates and supersedes information in earlier documents that
    are incorporated by reference in this document; and

..   information that Carnival and P&O Princess file with the SEC after the date
    of this document that is incorporated by reference in this document
    automatically updates and supersedes information in this document.

Any references to statutory safe harbours from liability for forward-looking
statements in any of the documents we incorporate by reference in this document
are specifically excluded from this document.

In connection with the P&O Princess EGM to approve the implementation of the
DLC structure, P&O Princess has prepared a shareholder circular which is being
distributed to you separately. That circular has been furnished to the SEC
under cover of a Form 6-K, and certain portions of that circular are
incorporated in this document by reference.

You may obtain copies of the Form S-4/F-4 and the Schedule TO (and any
amendments or supplements to those documents) and copies of documents filed by
Carnival with the SEC that are incorporated by reference in this document from
Carnival as set forth in "Where you can find additional information about
Carnival" in Part IV of this document and copies of the Form S-4/F-4 (and any
amendments or supplements to that document) and copies of documents filed with,
or furnished to, the SEC by P&O Princess that are incorporated by reference in
this document from P&O Princess as set forth in "Where you can find additional
information about P&O" in Part V of this document. As allowed by SEC rules,
this document does not contain all the information you can find in the
registration statement on Form S-4/F-4 or the exhibits to the registration
statement.

You may also contact the U.S. Information Agent, Georgeson Shareholder, at: 17
State Street, 10th Floor, New York, NY 10004. You may also call the U.S.
Information Agent toll-free from the U.S., at 1 866 203-2636. Calls from
outside the U.S. will be charged at the applicable rate. IN ORDER TO ENSURE
TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY 7 APRIL 2003.

Applicable disclosure requirements

Investors should be aware that this document has been prepared to comply with
both English and U.S. securities laws, regulations and requirements and
accordingly may not be in the standard format and style for a document of this
type.

                                      4



                                    PART I

                                    SUMMARY

This summary highlights selected information from this document in question and
answer format and does not contain all of the information that is important to
you. To understand the DLC proposal fully, you should read this document and
the other documents to which you are referred.

Section A.  These materials

Why am I receiving these materials?

On 24 October 2002, Carnival announced the terms of a pre-conditional offer to
enter into the DLC transaction with P&O Princess and make the Partial Share
Offer for up to, in aggregate, a maximum of 20 per cent. of the issued share
capital of P&O Princess. On 8 January 2003, P&O Princess and Carnival announced
that the P&O Princess board had accepted and recommended Carnival's offer to
enter into the DLC transaction with P&O Princess.

As a P&O Princess shareholder, you are entitled to vote on whether to approve
the implementation of the DLC structure and to participate in the Partial Share
Offer. The purpose of this document is to explain the terms and conditions of
the Partial Share Offer and DLC transaction. See Section C below for questions
and answers concerning the Partial Share Offer and Section D below for
questions and answers concerning the DLC transaction.

You do not need to participate in the Partial Share Offer in order to
participate as a shareholder in the Combined Group. If you would prefer to
continue to hold P&O Princess shares and do not want to hold Carnival shares
listed on the NYSE, you should not accept the Partial Share Offer. However, the
board of P&O Princess urges you to exercise your voting rights to approve the
DLC transaction.

If the DLC transaction is not completed due to lack of shareholder approval or
for any other reason, the Partial Share Offer will not be completed.

                                      5



Section B.  Summary information on the Combined Group, Carnival and P&O Princess

The Combined Group

The Combined Group, which reflects the businesses of Carnival and P&O Princess
that will be managed and operated as if they were a single economic enterprise,
will be the largest cruise vacation group in the world, based on revenues,
passengers carried and available capacity. It will have a wide portfolio of
complementary brands, both by geography and product offering, and will include
some of the best known cruise brands globally. Carnival and P&O Princess
together had, as at 31 January 2003, a combined fleet of 65 cruise ships
offering 99,982 lower berths, with 18 additional cruise ships with 42,260 lower
berths scheduled to be added over the next three and a half years, and will be
a leading provider of cruises to all major cruise destinations outside the Far
East. Carnival and P&O Princess together carried approximately 4.7 million
passengers in fiscal 2002.

Carnival

Carnival is a global cruise vacation and leisure travel company. Carnival
offers a broad range of cruise brands serving the vacation market through
Carnival Cruise Lines, Holland America Line, Costa Cruises, Cunard Line,
Seabourn Cruise Line and Windstar Cruises. Carnival's various brands operate 45
cruise ships, offering a total of 67,282 lower berths, in Alaska, Australia,
Bahamas, Bermuda, Canada, the Caribbean, Europe, the Hawaiian Islands, the
Mexican Riviera, the Mediterranean, New England, the Panama Canal, South
America and other exotic destinations worldwide. Carnival has 13 additional
cruise ships on order, which will offer a further 30,580 lower berths. These
ships are expected to enter service over the next three and a half years. In
addition to its cruise operations, Carnival operates a tour business through
Holland America Tours, which markets sightseeing tours both separately and as a
part of its cruise/tour packages. Holland America Tours operates 13 hotels in
Alaska and the Canadian Yukon, two luxury dayboats and a fleet of over 300
motorcoaches and 13 rail cars. Carnival's business strategy is to use this
wide, diverse range of vacation options to attract passengers from other
land-based vacation choices.

Carnival was incorporated under the laws of the Republic of Panama in November
1974 and is listed on the NYSE. Its shares trade under the symbol "CCL". The
address of Carnival's principal executive offices is 3655 N.W 87/th/ Avenue,
Miami, Florida 33178-2428, and its telephone number is +1 305 599 2600.

P&O Princess

P&O Princess is a global cruise vacation company operating under the following
brand names: Princess Cruises in North America; P&O Cruises, Ocean Village and
Swan Hellenic in the UK; AIDA and A'ROSA in Germany; and P&O Cruises in
Australia. P&O Princess provides cruises to Alaska, the Caribbean, Europe, the
Mediterranean, the Panama Canal and other exotic destinations. The P&O Princess
group had a fleet of 20 ocean cruise ships and two river boats offering a total
of 33,100 lower berths as at 31 January 2003, with five additional ocean cruise
ships and two river boats on order as of that date, offering a further 12,080
lower berths. The new ships are expected to be delivered over the next two
years. P&O Princess' tour division, Princess Tours, is a tour operator in
Alaska with five riverside lodges, a fleet of motorcoaches and Midnight Sun
Express rail cars.

P&O Princess was incorporated and registered in England and Wales in July 2000
and P&O Princess shares are listed on the London Stock Exchange and P&O
Princess ADSs are listed on the NYSE. Both P&O Princess shares and P&O Princess
ADSs trade under the symbol "POC" on their respective exchanges. The address of
P&O Princess' principal executive office is 11-12 Charles II Street, London
SW1Y 4QU, England, and its telephone number is +44 20 7805 1200.

Where can I find more information about Carnival and P&O Princess?

You can find more information about Carnival and P&O Princess from various
sources described in the sections entitled "Where you can find additional
information about Carnival" and "Where you can find additional information
about P&O Princess" in Parts IV and V of this document.

                                      6



Section C.  Summary of the terms of the Partial Share Offer

If you want to continue to hold your P&O Princess shares, you should not accept
the Partial Share Offer, and the information in this Section C will not be
relevant to you. Please see Section D for a discussion of the DLC transaction.

What is the Partial Share Offer?

In connection with the DLC transaction, Carnival is making an offer to P&O
Princess shareholders to exchange all or part of their P&O Princess shares for
Carnival shares, subject to an aggregate maximum of 20 per cent. of P&O
Princess' issued share capital. This offer is referred to in this document as
the "Partial Share Offer." Whether or not you accept the Partial Share Offer
will not influence whether or not the DLC transaction will proceed. If the DLC
transaction is not completed due to lack of shareholder approval or for any
other reason, the Partial Share Offer will not be completed. If the DLC
transaction is completed, then your participation in the Partial Share Offer
will only affect how you participate in the Combined Group, whether through
ownership of Carnival shares, P&O Princess shares or both. The Partial Share
Offer is open to all shareholders of P&O Princess, whether you hold P&O
Princess shares directly or in the form of P&O Princess ADSs. Please see "The
Partial Share Offer" in Section A of Part VI of this document.

Why is Carnival making the Partial Share Offer?

The Partial Share Offer is being made in connection with the DLC transaction.
It is designed to allow those P&O Princess shareholders who would prefer to
hold their interest in the Combined Group through Carnival shares listed on the
NYSE to exchange P&O Princess shares for Carnival shares if the DLC transaction
is completed. The extent to which a P&O Princess shareholder will be able to do
this will depend on how many shares are tendered into the Partial Share Offer.
The board of directors of Carnival believes that the DLC transaction is
advantageous for Carnival and in the best interests of Carnival and its
shareholders. Carnival has agreed to enter into the DLC transaction with P&O
Princess in order to create the Combined Group. The transaction will allow the
Combined Group to offer a wider range of vacation choices for its passengers
and is expected to enhance its ability to attract more passengers from
land-based vacations.

What would I receive in exchange for my P&O Princess shares?

Under the terms of the Partial Share Offer, Carnival will issue 0.3004 Carnival
shares for each P&O Princess share and 1.2016 Carnival shares for each P&O
Princess ADS tendered. P&O Princess shareholders may elect to accept the
Partial Share Offer in respect of all or a portion of their P&O Princess
shareholdings. If more than 20 per cent. of the issued P&O Princess shares are
tendered into the Partial Share Offer, then the proration procedures described
in paragraph 4 of Section A of Part VI of this document will apply.

If the Partial Share Offer is oversubscribed, how will the scaling down work?

P&O Princess shareholders who tender at least 20 per cent. of the P&O Princess
shares they hold will have at least 20 per cent. accepted. The extent to which
tenders in excess of 20 per cent. are accepted will depend on how many P&O
Princess shares each individual shareholder tenders and how many P&O Princess
shares all P&O Princess shareholders tender. If less than 20 per cent. of the
issued share capital of P&O Princess is tendered, all shares tendered by
tendering P&O Princess shareholders will be accepted. If more than 20 per cent.
is tendered, each tendering shareholder will have its 20 per cent. accepted.
The remaining amount tendered will be accepted pro rata for each shareholder
based on the proportion of the number of shares available once acceptances of
up to 20 per cent. have been satisfied to the total number of shares tendered
in excess of 20 per cent. See paragraph 4 of Section A of Part VI.

How will fractional P&O Princess shares and P&O Princess ADSs be treated in the
Partial Share Offer?

Fractional entitlements to Carnival shares arising under the Partial Share
Offer will be aggregated and sold in the market and the proceeds (converted
into pounds sterling at the prevailing exchange rate)

                                      7



remitted to the persons entitled to them, except that individual entitlements
of less than (Pounds)3 will be retained for the benefit of the Combined Group.

Does the P&O Princess board recommend the Partial Share Offer?

No. The P&O Princess board is not making any recommendation as to whether you
should tender or refrain from tendering your P&O Princess shares. The P&O
Princess board is not making any recommendation because, once the DLC structure
has been implemented, both P&O Princess shares and Carnival shares will
represent an investment with respect to the Combined Group and the decision by
each P&O Princess shareholder about which type of shares he or she should hold
will depend upon the individual shareholder's particular preferences and
circumstances. You must decide whether you want to receive Carnival shares and,
if so, how many P&O Princess shares to tender. To the best of the knowledge of
P&O Princess, some, but not all, of its directors and executive officers intend
to participate in the Partial Share Offer. If you are in any doubt about the
Partial Share Offer or the action you should take, you should seek your own
financial advice immediately from your stockbroker, bank manager, solicitor,
accountant or other independent financial adviser duly authorised, in the UK,
under the Financial Services and Markets Act 2000.

P&O Princess shareholders should be aware of certain factors that could
influence whether they wish to accept the Partial Share Offer:

   .   Listing and index inclusion - P&O Princess shares will continue to be
       listed on the London Stock Exchange and are expected to remain included
       in the FTSE series of indices, while the Carnival shares issued to those
       accepting the Partial Share Offer will be listed on the NYSE and are
       expected to remain included in the S&P 500;

   .   Relative market prices - the relative market prices of the shares of P&O
       Princess and Carnival may not exactly reflect the equalisation ratio and
       P&O Princess shares could therefore trade at either a premium or
       discount to the Carnival shares. This is because although the economic
       interests of the shares of the two companies will be contractually
       aligned in accordance with the equalisation ratio, the shares of the two
       companies will remain outstanding, will not be exchangeable for each
       other at the option of the shareholder and will primarily trade in
       separate markets with different characteristics and in different
       currencies;

   .   Liquidity - the liquidity and aggregate market value of P&O Princess
       shares could decrease following the completion of the DLC transaction
       and the Partial Share Offer, and could be further reduced by any future
       repurchase or buy-backs of P&O Princess shares. However, under the terms
       of the DLC transaction, other than with the approval of both companies'
       shareholders, voting separately, neither Carnival nor P&O Princess may
       buy-back P&O Princess shares in the two-year period following the date
       on which the DLC structure is implemented and, after the end of this
       initial two-year period, neither Carnival nor P&O Princess may buy-back
       P&O Princess shares in excess of five per cent. of the then issued P&O
       Princess shares in each of the subsequent three years.

       The liquidity of the market for the P&O Princess shares could also be
       adversely affected if they were to cease to be eligible for inclusion in
       the FTSE series of indices, including the FTSE 100, which could occur if
       P&O Princess' market capitalisation were to fall significantly compared
       to other constituents of the index; and

   .   Taxation - the tax consequences of accepting the Partial Share Offer may
       differ according to the tax positions of different shareholders. See
       paragraphs 2 and 3 of Appendix IV, although shareholders are encouraged
       to seek their own advice in this regard.

Will any vote by Carnival shareholders be required to approve the issuance of
the Carnival shares?

No. Carnival shareholders will not be required to approve the proposed issuance
of the Carnival shares in the Partial Share Offer.

How long do I have to decide whether to accept the Partial Share Offer?

You initially will have until 10:00 a.m., London time, 5:00 a.m., New York City
time, on 17 April 2003, to decide whether to accept the Partial Share Offer (at
which time the Partial Share Offer will be declared unconditional), unless the
Partial Share Offer is extended by Carnival. It is expected that 16 April 2003

                                      8



will be the date of the P&O Princess EGM, and that there will be no need to
extend the Partial Share Offer. In the event that the Partial Share Offer is
extended, it is likely to be for a period of less than 14 days.

Can the Partial Share Offer be extended and under what circumstances?

Yes. If all of the conditions to the Partial Share Offer (including the
completion of the DLC transaction) have not been either satisfied, fulfilled
or, to the extent permitted, waived by Carnival by 10:00 a.m., London time,
5:00 a.m., New York City time, on 17 April 2003, Carnival will extend the
period for acceptances for an additional period by making an announcement on a
Regulatory Information Service. However, in no event will Carnival extend the
Partial Share Offer after it is declared unconditional. See paragraph 3 of Part
B of Appendix I to this document.

How do I participate in the Partial Share Offer?

If you hold P&O Princess shares in certificated form (that is, you hold a share
certificate) and wish to accept the Partial Share Offer you must deliver the
certificate(s) representing the P&O Princess shares you wish to tender,
together with a completed Form of Acceptance, to Computershare Investor
Services PLC, the UK Receiving Agent, as soon as possible and, in any event, so
as to be received by no later than the time the Partial Share Offer expires.
See paragraph 3(a) of Section A of Part VI of this document and the Form of
Acceptance in Section B of Part VI.

If you hold P&O Princess shares in uncertificated form (that is, in CREST) and
wish to accept the Partial Share Offer you must send (or, if you are a CREST
sponsored member, procure that your CREST sponsor sends) a TTE instruction in
accordance with the procedure set out in paragraph 3(b) of Section A of Part VI
of this document, as soon as possible and, in any event, so as to be received
by no later than the time the Partial Share Offer expires.

If you hold P&O Princess ADSs in book-entry form through your broker or
otherwise and wish to accept the Partial Share Offer, you should contact the
institution promptly and instruct it to accept the Partial Share Offer on your
behalf not later than the time the Partial Share Offer expires. If you hold P&O
Princess ADRs evidencing P&O Princess ADSs that are registered in your name and
wish to accept the Partial Share Offer, you must complete and deliver the
Letter of Transmittal to Computershare Trust Company of New York, the U.S.
Exchange Agent, no later than the time the Partial Share Offer expires. See
paragraph 3(c) of Section A of Part VI of this document.

Do not send your share certificate(s), P&O Princess ADRs, Forms of Acceptance
or Letters of Transmittal to Carnival or P&O Princess. See Part VI and Parts B,
C and D of Appendix I to this document.

If you wish to have your Carnival shares credited to an existing U.S. brokerage
account rather than receiving a share certificate, you may do so provided that
you have an existing U.S. brokerage account and validly complete and timely
return the Brokerage Account Election Form.

If I accept the Partial Share Offer, can I still vote on the DLC transaction?

Yes. You are entitled to vote all of your P&O Princess shares in the vote on
the DLC transaction, regardless of whether you tender any or all of your shares
in the Partial Share Offer.

Until what time can I withdraw my acceptance of the Partial Share Offer?

You can withdraw your acceptance at any time until the Partial Share Offer is
declared unconditional. See paragraph 5 of Section A of Part VI and paragraph 4
of Part B of Appendix I to this document.

How do I withdraw my acceptance of the Partial Share Offer?

To withdraw your acceptance and P&O Princess shares or P&O Princess ADSs
tendered, you must deliver a written notice of withdrawal with the required
information to the UK Receiving Agent or the U.S. Exchange Agent while you
still have the right to withdraw the P&O Princess shares or P&O Princess ADSs.
See paragraph 4 of Part B of Appendix I to this document.

                                      9



When will I receive my Carnival shares?

Assuming that the Partial Share Offer is declared unconditional, Carnival will
provide the consideration for the P&O Princess shares taken up in the Partial
Share Offer within 14 calendar days of the Partial Share Offer being declared
unconditional. If proration is required, Carnival will determine the proration
factor as soon as practicable following the Partial Share Offer becoming
unconditional.

In what form will I receive my Carnival shares?

Unless you have an existing U.S. brokerage account and complete and return a
Brokerage Account Election Form, you will receive a share certificate
evidencing your Carnival shares. If you have an established U.S. brokerage
account and validly complete and timely return a Brokerage Account Election
Form, your Carnival shares will be credited to your U.S. brokerage account.

What is a U.S. brokerage account?

This is an account with a registered U.S. broker-dealer in which you can
deposit securities. Rather than holding certificates, securities deposited in
such an account will be evidenced in electronic form by book entry. Such
securities can be traded, subject to applicable rules through a book entry
transfer facility.
Does the closing of the Partial Share Offer require any regulatory approvals?

No. The closing of the Partial Share Offer does not require any regulatory
approvals.

Can I tender borrowed stock?

Under applicable U.S. securities laws, you must have a "net long position" in
P&O Princess shares at least equal to the number of shares you tender both at
the time of tender and at completion of the Partial Share Offer. Your net long
position is equal to the excess, if any, of your long position in P&O Princess
shares over your short position in P&O Princess shares, in each case as defined
by the applicable regulations. For the purposes of these rules, borrowed shares
will count towards both your long position and your short position in P&O
Princess shares. Accordingly, borrowing shares will not increase your net long
position. The effect of these rules is to restrict your ability to tender
borrowed shares in the Partial Share Offer. The application of these rules can
be complex. If you have any questions regarding whether you will have a net
long position in P&O Princess shares upon participating in the Partial Share
Offer, you should contact your legal or financial advisers prior to tendering
your shares.

Do I have any appraisal rights with respect to P&O Princess shares?

Under English law, shareholders do not generally have appraisal rights as that
concept is understood under U.S. corporate law or any similar specific
statutory right to have a court determine the fair value of securities subject
to a business combination. In many U.S. jurisdictions, shareholders who are
disappointed with the consideration being offered for their shares in
connection with a merger or consolidation of the company have the option to
seek appraisal rights and have a court determine the fair value of their
shares. In addition, as is common among UK companies, P&O Princess' articles of
association do not contain any such rights.

Will I have to pay any fees or commissions?

If you are the registered or record owner of your P&O Princess shares and/or
P&O Princess ADSs and you accept the Partial Share Offer, you will not have to
pay brokerage fees or similar expenses. If you own your P&O Princess shares
and/or P&O Princess ADSs through a broker or other nominee, and your broker
accepts the Partial Share Offer on your behalf, your broker or nominee may
charge you a fee for doing so. You should consult your broker or nominee to
determine whether any charges will apply.

If I accept the Partial Share Offer, will this be a taxable transaction to me
for UK or U.S. tax purposes?

The tax implications of the Partial Share Offer on P&O Princess shareholders
will depend on each shareholder's particular circumstances. Holders of P&O
Princess shares and P&O Princess ADSs

                                      10



should consult their independent professional advisers in the light of their
particular circumstances as to the UK tax and U.S. federal income tax
consequences of the DLC transaction, the P&O Princess share reorganisation and
the Partial Share Offer, as well as to the effect of any state, local or
applicable foreign tax law.

UK tax

UK P&O Princess shareholders who accept the Partial Share Offer will make a
taxable disposal or part disposal of their P&O Princess shares taken up by
Carnival in the Partial Share Offer for the purposes of UK tax on chargeable
gains. This disposal or part disposal may give rise to a liability to UK tax on
chargeable gains depending on the shareholder's circumstances (including the
availability of exemptions or allowable losses). Acceptance of the Partial
Share Offer will give rise to the exchange of P&O Princess shares for shares
issued by Carnival, and any future dividends received will therefore be
Carnival dividends, which are taxed differently from P&O Princess dividends
received by shareholders who are resident or ordinarily resident in the UK.

General information on the application of current UK tax law and Inland Revenue
practice applicable to UK P&O Princess shareholders in respect of the Partial
Share Offer is set out in paragraph 2 of Appendix IV.

U.S. federal income taxation

The exchange of P&O Princess shares or P&O Princess ADSs for Carnival shares
pursuant to the Partial Share Offer will likely be a taxable transaction for
U.S. federal income tax purposes in which U.S. P&O Princess shareholders
recognise gain or, subject to the possible application of the "wash sale" rule
as described below, loss in an amount equal to the difference between the fair
market value of such Carnival shares received and the shareholder's adjusted
tax basis in the P&O Princess shares or P&O Princess ADSs, as the case may be.
If the P&O Princess shares or P&O Princess ADSs are deemed to be "substantially
identical", for the purposes of the wash sale rule of the Internal Revenue Code
and applicable Treasury Regulations, to the Carnival shares received by a U.S.
holder pursuant to the Partial Share Offer, such holder will not be able to
recognise a loss on such exchange. Any loss that is disallowed through the
application of the wash sale rule would not be eliminated but would rather be
deferred and a U.S. holder's holding period and tax basis in their P&O Princess
shares exchanged pursuant to the Partial Share Offer would carry over to the
Carnival shares received pursuant to such exchange. See paragraph 3 of Appendix
IV to this document.

If I accept the Partial Share Offer, how will my rights as a Carnival
shareholder differ from my rights as a P&O Princess shareholder?

P&O Princess is a company organised under the laws of England and Wales, while
Carnival is a company organised under the laws of the Republic of Panama. Since
the Partial Share Offer is conditional on approval of the DLC transaction, the
rights accompanying the Carnival shares you receive will change to give effect
to the DLC transaction. A summary of the material differences between the
existing rights of P&O Princess shareholders and the rights of Carnival
shareholders following implementation of the DLC structure is contained in
Appendix III to this document.

What is the timing of the votes on the DLC transaction relative to the Partial
Share Offer?

The vote of Carnival shareholders on the DLC transaction is scheduled for 14
April 2003, and the vote of P&O Princess shareholders on the DLC transaction is
scheduled for 16 April 2003. The Partial Share Offer will be declared
unconditional (that is, it will expire) at 10:00 a.m., London time, on the day
after the P&O Princess EGM, unless the Partial Share Offer is extended as
described above.

Who can answer questions I might have about the Partial Share Offer?

If you have any queries in relation to the DLC transaction and/or the Partial
Share Offer, you may call the UK shareholder helpline from within the UK on
0800 953 0083 between 9:00 a.m. and 5:30 p.m., London time, on any business day
until completion of the DLC transaction. If you are calling

                                      11



from the U.S., the helpline number is 1 866 203-2636 (calls will be toll-free
within the U.S.). If you are calling from anywhere else, the helpline number is
+44 870 889 3147 (calls will be charged at the applicable rate). For legal
reasons, the helpline will only be able to assist you with information
contained in this document and the helpline cannot provide advice on the merits
of the proposals or give any financial advice. Calls may be monitored for
quality control purposes.

If I am a shareholder resident outside the UK or the U.S., what do I need to do?

P&O Princess shareholders that are citizens or residents of jurisdictions
outside the UK or the U.S., or who are nominees of, or custodians or trustees
for, such persons, or who intend to forward this document to any jurisdiction
outside the UK or the U.S., should refer to paragraph 7 of Part B of Appendix I
and the relevant provisions of the Form of Acceptance and Letter of Transmittal.

                                      12



Section D.  Summary of the DLC transaction

This summary of the DLC transaction highlights selected information in question
and answer format and does not contain all of the information that is important
to you. To understand the DLC transaction fully, you should read the
shareholder circular for the P&O Princess EGM and the other documents to which
you are referred.

What is the DLC transaction?

The DLC transaction is a means of enabling P&O Princess and Carnival to combine
their management and operations as if they were a single economic enterprise,
while retaining their separate legal identities. This will be accomplished
through contractual arrangements and amendments to each company's
constitutional documents. In addition, the constitutional documents of the two
companies will be harmonised, to the extent practicable and permitted by law,
to ensure their corporate procedures are substantially similar. As part of the
DLC transaction, P&O Princess intends to change its name to Carnival plc at the
P&O Princess EGM. You will receive a shareholder circular in connection with
the P&O Princess EGM to approve the implementation of the DLC structure, which
describes the DLC transaction in greater detail.

What is the premium implied by the DLC transaction?

The "look through" value per P&O Princess share under the DLC transaction,
based on the closing price of $26.00 per Carnival share on 23 October 2002, the
last business day prior to the announcement of the DLC transaction, was 504
pence. This represents a premium of 59.1 per cent. to the closing middle-market
price of 317 pence per P&O Princess share on 19 November 2001, the last
business day prior to the announcement of the Royal Caribbean DLC transaction,
a premium of 40.1 per cent. to the closing middle-market price of 360 pence per
P&O Princess share on 14 December 2001, the last business day prior to the
announcement of Carnival's first pre-conditional offer for P&O Princess and a
premium of 10.8 per cent. to the closing middle-market price of 455 pence per
P&O Princess share on 23 October 2002.

The "look through" value per P&O Princess share under the DLC transaction,
based on the closing price of $20.75 per Carnival share on 12 March 2003, the
latest practicable day prior to the publication of this document, was 386
pence. This represents a premium of 21.9 per cent. to the closing middle-market
price of 317 pence per P&O Princess share on 19 November 2001, the last
business day prior to the announcement of the Royal Caribbean DLC transaction,
a premium of 7.4 per cent. to the closing middle-market price of 360 pence per
P&O Princess share on 14 December 2001, the last business day prior to the
announcement of Carnival's first pre-conditional offer for P&O Princess and a
discount of 15.1 per cent. to the closing middle-market price of 455 pence per
P&O Princess share on 23 October 2002 and values the entire existing share
capital of P&O Princess at approximately (Pounds)2.7 billion.

The look through value is, however, based upon the closing price of Carnival
shares on the applicable date, and P&O Princess shares may trade at a discount
to Carnival shares.

What votes are required to approve the DLC transaction?

The DLC transaction must be approved by the shareholders of both P&O Princess
and Carnival. P&O Princess shareholders must approve the resolution required to
implement the DLC structure by not less than three-quarters of the votes that
are cast at the P&O Princess EGM. Carnival shareholders must approve the
resolutions required to implement the DLC structure by the affirmative vote of
a majority of all outstanding Carnival shares entitled to vote at the Carnival
Special Meeting. Micky Arison, other members of the Arison family and trusts
for their benefit have entered into undertakings under which they will be
required to cause shares beneficially owned by them representing approximately
47 per cent. of the voting power of Carnival to vote in favour of the
resolutions to implement the DLC structure at the Carnival Special Meeting.
These undertakings are irrevocable except in circumstances where the DLC
proposal is withdrawn or lapses.

Does the P&O Princess board recommend the approval of the DLC transaction?

Yes. The P&O Princess directors consider the DLC transaction to be in the best
interests of the P&O Princess shareholders as a whole and recommend that you
vote in favour of the resolution to approve, among other matters, the DLC
transaction at the P&O Princess EGM. Horst Rahe excused himself

                                      13



from the vote due to a potential conflict of interest. As at the date of this
document, the directors and executive officers of P&O Princess beneficially
hold approximately 0.2 per cent. of P&O Princess' existing issued ordinary
share capital. Such directors and executive officers intend to vote their
beneficial holdings in favour of the resolution.

Does the Carnival board recommend the approval of the DLC transaction?

Yes. The Carnival board of directors has unanimously approved the DLC
transaction and has recommended to its shareholders that they vote for the
resolutions set out in its notice of the Carnival Special Meeting. As of 11
March 2003, the directors and executive officers of Carnival and their
affiliates beneficially held an aggregate of 234,661,927 Carnival shares, which
represent 39.8 per cent. of Carnival's outstanding shares entitled to vote.
Such directors and executive officers intend to vote their beneficial holdings
in favour of these resolutions.

What will happen to my P&O Princess shares?

Except to the extent that you elect to exchange P&O Princess shares for
Carnival shares in the Partial Share Offer described above, following the
completion of the DLC transaction you will continue to own your P&O Princess
shares. P&O Princess shares will continue to have a primary listing on the
London Stock Exchange and it is currently intended that P&O Princess ADSs will
continue to be listed on the NYSE for the foreseeable future. The existing full
index participation of P&O Princess in the FTSE 100 index is expected to be
retained. However, the rights accompanying your P&O Princess shares will change
to give effect to the DLC transaction described below.

The economic and voting interests represented by an individual share in each
company will be equalised based on an "equalisation ratio". Initially, the
equalisation ratio will be one P&O Princess share for each 0.3004 Carnival
shares, which is the same as the exchange ratio in Carnival's pre-conditional
share exchange offer of 7 February 2002. On completion of the DLC transaction,
P&O Princess will reorganise and consolidate its share capital so that the
equalisation ratio will adjust to 1:1. This will be achieved by consolidating
each 3.3289 existing P&O Princess shares of $0.50 into one reorganised P&O
Princess share of $1.66 each. If you hold fewer than four P&O Princess shares,
you will not receive any P&O Princess shares under the reorganisation. Instead,
you will receive a cash sum reflecting the market value of your P&O Princess
shares sold into the market. After this reorganisation one Carnival share will
have the same rights to distributions of income and capital and the same voting
rights as one P&O Princess share. Following the reorganisation of P&O Princess
shares, the equalisation ratio will be subject to adjustment only in a limited
number of circumstances. In no event will the take-up of the Partial Share
Offer affect the equalisation ratio.

Why is the number of P&O Princess shares I hold reducing?

The number of P&O Princess shares in issue will be reduced as a result of the
P&O Princess share reorganisation which will take effect at 10:00 p.m., London
time, on the day that the Partial Share Offer becomes or is declared
unconditional. This share reorganisation will not result in any change in your
ownership percentage of P&O Princess shares. To enable the economic and voting
rights of each share in P&O Princess to be equal to the economic and voting
rights of each share in Carnival, P&O Princess' share capital is being
reorganised on completion of the DLC transaction. This will be achieved by
consolidating each 3.3289 existing P&O Princess shares of $0.50 into one
reorganised P&O Princess share of $1.66 each. If you hold fewer than four P&O
Princess shares, you will not receive any P&O Princess shares under the
reorganisation. Instead, you will receive a cash sum reflecting the market
value of your P&O Princess shares sold into the market. In addition, any
entitlement to fractions of P&O Princess shares arising out of the
reorganisation will be aggregated, consolidated and sold into the market and
the net proceeds distributed to the relevant P&O Princess shareholders.

The current P&O Princess shareholders will hold approximately 26 per cent. of
the equity in the Combined Group in the form of P&O Princess shares or, to the
extent that they participate in the Partial Share Offer, Carnival shares.

                                      14



What are P&O Princess ADSs?

In the U.S., P&O Princess shares trade on the NYSE in the form of P&O Princess
ADSs. Each P&O Princess ADS currently represents four P&O Princess shares.
Simultaneously with the reorganisation of P&O Princess shares, the ratio of P&O
Princess shares to P&O Princess ADSs will also be adjusted to 1:1 in order to
have a 1:1 ratio with Carnival shares. The rights of P&O Princess ADS holders
are derivative of the rights of holders of P&O Princess shares because P&O
Princess ADSs represent underlying P&O Princess shares. As described in the
prospectus issued at the time the P&O Princess ADSs were offered to the public
in the U.S., the rights of P&O Princess ADS holders are not, however, identical
to the rights of holders of ordinary shares. For example, the rights of P&O
Princess ADS holders are based on the deposit agreement with the ADS depositary
bank, as P&O Princess ADS holders are not in the P&O Princess share register
and voting is effected through the ADS depositary bank and not directly by the
P&O Princess ADS holders. These differences are not impacted by the DLC
transaction or the reorganisation of P&O Princess shares. P&O Princess ADS
holders will be impacted to the same extent as holders of P&O Princess shares
by the implementation of the DLC structure.

What will happen to my future dividends?

After the completion of the DLC transaction, P&O Princess shareholders will
continue to receive dividends declared by P&O Princess and Carnival
shareholders will continue to receive dividends declared by Carnival. However,
no dividend or other distribution may be made by either company in respect of
its shares unless an equivalent per share dividend or other distribution
(before taxes and other deductions) is made by the other company. Dividends and
other distributions will be equalised on a per share basis in accordance with
the equalisation ratio. The payment of dividends by P&O Princess in the future
will depend on business conditions, its financial condition and earnings and
the financial condition and earnings of the Combined Group, the ability of
Carnival to pay an equivalent dividend and other factors. It is intended that
the first dividend to be paid by the Combined Group will be declared in April
2003, with a record date in May 2003 and a payment date in June 2003.

What will happen to Carnival shares?

Carnival shareholders will continue to hold their Carnival shares. In addition,
Carnival shareholders will be receiving trust shares of beneficial interest in
a trust that Carnival will form, the trustee of which will hold a "special
voting share" issued by P&O Princess. Through the special voting share, the
votes of Carnival shareholders at Carnival shareholder meetings will be
reflected at P&O Princess shareholder meetings on joint electorate actions and
class rights actions. These voting rights are described below under "Will my
voting rights change?" The trust shares will be paired with the Carnival shares
and will be listed and traded on the New York Stock Exchange together with the
Carnival shares.

Will P&O Princess shareholders also receive trust shares?

No. Carnival will issue a special voting share through which the votes of P&O
Princess shareholders at P&O Princess shareholder meetings will be reflected at
Carnival shareholder meetings, but it will be held by a special voting
corporation rather than the trustee of a trust. However, the absence of these
trust shares in respect of the Carnival "special voting share" will in no way
affect the operation of the special voting share or the ability of P&O Princess
shareholders to have their votes reflected at Carnival shareholder meetings for
purposes of joint electorate actions and class rights actions.

Will my voting rights change?

Yes. On most matters that affect all of the shareholders of the Combined Group,
the shareholders of P&O Princess and Carnival will effectively vote together as
a single decision-making body on matters requiring the approval of shareholders
of either company. These matters will be specified in the constitutional
documents of each company as "joint electorate actions". Combined voting will
be accomplished through a special voting share that will be issued by each
company. Certain matters where the interests of the two shareholder bodies may
diverge will be specified in the constitutional documents of each company as
"class rights actions". These class rights actions will be voted on separately
by the shareholders of each company. If either group of shareholders does not
approve a class rights action, that action generally cannot be taken by either
company.

                                      15



What impact will the implementation of the DLC structure have on me for UK or
U.S. tax purposes?

The tax consequences of the DLC transaction, the P&O Princess share
reorganisation and the Partial Share Offer on P&O Princess shareholders will
depend upon each shareholder's particular circumstances, including whether such
shareholder is a UK P&O Princess shareholder or a U.S. P&O Princess
shareholder. Holders of P&O Princess shares and P&O Princess ADSs should
consult with their tax advisers to determine the particular UK, U.S. federal,
state, local, or other applicable foreign tax consequences of the DLC
transaction, the P&O Princess share reorganisation and the Partial Share Offer.

UK P&O Princess shareholders

Under current UK tax law, UK P&O Princess shareholders who do not accept the
Partial Share Offer will not be treated as having disposed of their P&O
Princess shares for UK capital gains tax purposes by virtue of either the
implementation of the DLC structure or the P&O Princess share reorganisation.
UK P&O Princess shareholders who continue to hold P&O Princess shares after
completion of the DLC transaction will be taxed on dividends received in
respect of their P&O Princess shares on the same basis as that in effect prior
to the DLC transaction.

UK P&O Princess shareholders who accept the Partial Share Offer will make a
taxable disposal or part disposal of their P&O Princess shares for the purposes
of UK tax on chargeable gains.

General information on the application of current UK tax law and Inland Revenue
practice applicable to UK P&O Princess shareholders in respect of the DLC
transaction, the P&O Princess share reorganisation and the Partial Share Offer
is set out in paragraph 2 of Appendix IV.

U.S. P&O Princess shareholders

Although there is no U.S. federal income tax authority addressing the tax
consequences of a dual listed company transaction, the DLC transaction should
not give rise to taxable income or gain for U.S. P&O Princess shareholders for
U.S. federal income tax purposes. However, the Internal Revenue Service may
assert that U.S. P&O Princess shareholders received taxable income as a result
of the various voting and equalisation provisions necessary to implement the
DLC structure. Such voting and other rights, if any, received by shareholders
are expected to have only nominal value and, therefore, the receipt of such
rights by U.S. P&O Princess shareholders would only result in a nominal amount
of income. It is possible, however, that the Internal Revenue Service may
disagree with this conclusion.

The P&O Princess share reorganisation should not give rise to taxable gain or
income to U.S. P&O Princess shareholders except with respect to gain, if any,
upon the disposition of fractional shares. U.S. P&O Princess shareholders who
dispose of fractional shares under the P&O Princess share reorganisation will
recognise gain or loss in an amount equal to the difference between the cash
received and the shareholder's adjusted tax basis in his/her P&O Princess
shares or P&O Princess ADSs allocable to the fractional share, as the case may
be.

The exchange of P&O Princess shares or P&O Princess ADSs for Carnival shares
pursuant to the Partial Share Offer will likely be a taxable transaction for
U.S. federal incomes tax purposes.

U.S. P&O Princess shareholders will be taxed on dividends received in respect
of their P&O Princess shares or P&O Princess ADSs after completion of the DLC
transaction on the same basis as they were prior to the DLC transaction.

General information on the application of current U.S. tax laws applicable to
U.S. P&O Princess shareholders in respect of the DLC transaction, the P&O
Princess share reorganisation and the Partial Share Offer, if accepted, is set
out in paragraph 3 of Appendix IV.

What percentage of the Combined Group will be controlled by existing P&O
Princess shareholders?

If the DLC transaction is approved, existing P&O Princess shareholders will
hold 26 per cent. of the equity of the Combined Group following its
implementation. This percentage will not be affected by the take up of the
Partial Share Offer. However, depending on the extent that P&O Princess shares
are exchanged for Carnival shares under the Partial Share Offer, part of the
interest in the Combined Group held by existing P&O Princess shareholders will
be in the form of Carnival shares rather than

                                      16



P&O Princess shares. If the Partial Share Offer is taken up in full,
approximately 21 per cent. of the equity of the Combined Group will be held
through P&O Princess shares and the balance of the equity in the Combined Group
will be held through Carnival shares.

Will P&O Princess become a subsidiary of Carnival?

No. P&O Princess will continue to exist as a separate publicly quoted company
and its shares will continue to be listed on the London Stock Exchange. The
boards of Carnival and P&O Princess will be identical and the Combined Group
will be managed by a single senior executive management team. The two companies
will pursue a common set of business objectives established by the identical
boards and single management team, who will evaluate these strategies and other
operational decisions from the perspective of all shareholders.

Will there be any transfer of assets between P&O Princess and Carnival in
connection with the DLC transaction?

The implementation of the DLC structure will not result in the transfer of any
assets between P&O Princess and Carnival. Following completion of the DLC
transaction, management of the Combined Group will determine whether assets
will be owned by Carnival or P&O Princess as is most efficient and appropriate
under the then prevailing circumstances. The Combined Group will comprise all
of the assets held by P&O Princess and Carnival immediately prior to the
implementation of the DLC transaction. No transfer of assets between the two
companies will affect the equalisation ratio or the relative economic interests
of P&O Princess shareholders and Carnival shareholders in the Combined Group.

What accounting treatment and reporting requirements will be applicable to the
Combined Group?

It is expected that under U.S. GAAP the DLC transaction will be accounted for
using the purchase method of accounting in accordance with Statement of
Financial Accounting Standards No. 141 "Business Combinations". In accordance
with the purchase method of accounting, the P&O Princess U.S. GAAP accounting
policies will be conformed to Carnival's accounting policies upon completion of
the DLC transaction.

Following the completion of the DLC transaction, P&O Princess will change its
financial year end from 31 December to 30 November so that it will be the same
as Carnival's current fiscal year end. The Combined Group intends to publish
combined financial statements denominated in U.S. dollars and prepared in
accordance with U.S. GAAP. It is envisaged that these combined financial
statements will be included in a combined annual report. P&O Princess also
expects to include summary balance sheet information and summary income
statement information prepared in accordance with UK GAAP, without notes, in
the combined annual report. P&O Princess shareholders will be able to request
an additional document containing P&O Princess financial statements prepared in
accordance with UK GAAP, which together with the other published information
would constitute the full annual report and financial statements.

In addition, Carnival and P&O Princess will file periodic and current reports
with the SEC on a joint basis in accordance with the rules applicable to U.S.
domestic reporting companies. The financial statements presented in the
periodic reports will consist of combined financial statements of the Combined
Group prepared in accordance with U.S. GAAP.

Who will be the directors and senior executive management team of the Combined
Group?

Carnival and P&O Princess will be managed and operated as if they were a single
economic enterprise. Although each of Carnival and P&O Princess will continue
to exist as a separate company with its own board of directors and senior
executive management, the boards and senior executive management of each
company will be identical. The proposed directors of each of Carnival and P&O
Princess following implementation of the DLC structure are set out in paragraph
8 of Section A of Part III. In addition to their normal fiduciary duties to the
company and obligation to have regard to the interests of its shareholders, the
directors of each company will be entitled to have regard to the interests of
the other company and its shareholders. Micky Arison, the Chairman and Chief
Executive

                                      17



Officer of Carnival, will be Chairman and Chief Executive Officer of both
Carnival and P&O Princess, Howard S. Frank, the Vice-Chairman and the Chief
Operating Officer of Carnival, will be the Vice-Chairman and Chief Operating
Officer of both Carnival and P&O Princess and Gerald R. Cahill, the Chief
Financial Officer and Chief Accounting Officer of Carnival, will be the Chief
Financial Officer and Chief Accounting Officer of both Carnival and P&O
Princess. The headquarters of the Combined Group will be in Miami with a
corporate office in London.

How will the directors of Carnival and P&O Princess be elected?

Resolutions relating to the appointment, removal and re-election of directors
will be considered as a joint electorate action and voted upon by the
shareholders of each company effectively voting together as a single
decision-making body. No person may be a member of the board of directors of
Carnival or P&O Princess without also being a member of the board of directors
of the other company.

When will we elect the new directors of Carnival and P&O Princess?

Carnival and P&O Princess expect to hold their next annual meetings in June
2003 at which the re- election of each of the directors will be considered as
joint electorate actions.

What corporate governance requirements will apply to the Combined Group?

Carnival and P&O Princess comply with, and the Combined Group will comply with,
the applicable corporate governance requirements of the U.S. Sarbanes-Oxley Act
of 2002 and the NYSE. These are the corporate governance rules applicable to
U.S. public companies. P&O Princess will also continue to comply with the rules
of the UK Listing Authority (including certain annual disclosure requirements
regarding compliance with the Combined Code, appended to those rules) and the
London Stock Exchange. It is expected that P&O Princess will, upon completion
of the DLC transaction, not comply with the recommendation of the Combined Code
to have a separate chairman and chief executive officer.

When do you expect to complete the DLC transaction?

P&O Princess and Carnival are working to complete the DLC transaction as soon
as possible. P&O Princess and Carnival hope to complete the DLC transaction as
soon as practicable after the P&O Princess EGM and the Carnival Special Meeting
if the required shareholder approvals are obtained at those meetings. In
addition to shareholder approvals, the companies must satisfy all of the other
closing conditions specified in the Implementation Agreement. Subject to these
conditions, the completion of the DLC transaction is expected to take place
early in the second quarter of 2003.

                                      18



Section E.  Carnival selected historical financial and operating data

The selected consolidated financial data presented below for fiscal 1998
through 2002 and as of the end of each such fiscal year are derived from
Carnival's audited consolidated financial statements, and should be read in
conjunction with the audited consolidated financial statements and the related
notes, including those incorporated in this document by reference to Carnival's
Annual Report on Form 10-K/A for the year ended 30 November 2002. Carnival's
consolidated financial statements have been prepared in accordance with U.S.
GAAP, using Carnival's accounting policies.



                                                        Years ended 30 November
                                   -------------------------------------------------------------
                                        2002           2001         2000       1999         1998
                                   ---------      ---------      ---------  ---------  ---------
                                          dollars in thousands, except per share and operating
                                                                 data)
                                                                        
Statement of operations data/(a)/:
Revenues                           4,368,269      4,535,751      3,778,542  3,497,470  3,009,306
Operating income                   1,042,059        891,731        982,958  1,019,699    896,524
Net income /(b)/                   1,015,941/(c)/   926,200/(c)/   965,458  1,027,240    835,885
Earnings per share /(b)/
  Basic                                 1.73           1.58           1.61       1.68       1.40/(d)/
  Diluted                               1.73           1.58           1.60       1.66       1.40/(d)/
Dividends declared per share            .420           .420           .420       .375       .315/(d)/
Cash from operations               1,469,032      1,238,936      1,279,535  1,329,724  1,091,840
Capital expenditures               1,986,482        826,568      1,003,348    872,984  1,150,413

Other operating data:
Available lower berth days/ (e)/      21,436         20,685         15,888     14,336     12,237
Passengers carried                     3,549          3,385          2,669      2,366      2,045
Occupancy percentage /(f)/             105.2%         104.7%         105.4%     104.3%     106.3%




                                                                  As of 30 November
                                          ----------------------------------------------------------------
                                             2002/(a)/       2001 /(a)/    2000 /(a)/    1999       1998
                                          ----------      -----------      ---------  ---------  ---------
                                                             (U.S. dollars in thousands)
                                                                                  
Balance sheet and other data:
Total assets                              12,334,848/(g)/ 11,563,552 /(g)/ 9,831,320  8,286,355  7,179,323
Long-term debt, excluding current portion  3,011,969        2,954,854      2,099,077    867,515  1,563,014
Total shareholders' equity                 7,417,903        6,590,777      5,870,617  5,931,247  4,285,476
Debt to capital/ (h)/                           29.9%            31.1%          28.6%      15.3%      27.6%


(a)From June 1997 through 28 September 2000, Carnival owned 50 per cent. of
   Costa Cruises. On 29 September 2000, Carnival completed the acquisition of
   the remaining 50 per cent. interest in Costa. Carnival accounted for this
   transaction using the purchase accounting method. Prior to the fiscal 2000
   acquisition, Carnival accounted for its 50 per cent. interest in Costa using
   the equity method. Commencing in fiscal 2001, Costa's results of operations
   have been consolidated in the same manner as Carnival's other wholly-owned
   subsidiaries. Carnival's 30 November 2000 and subsequent consolidated
   balance sheets include Costa's balance sheet. All statistical information
   prior to 2001 does not include Costa. See Notes 5 and 17 in Carnival's 2002
   consolidated financial statements, which are incorporated by reference in
   this document.

(b)Effective 1 December 2001, Carnival adopted Statement of Financial
   Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible
   Assets", which requires that companies stop amortising goodwill and requires
   an annual, or when events or circumstances dictate a more frequent,
   impairment review of goodwill. Accordingly, as of 1 December 2001, Carnival
   no longer amortises its goodwill. If goodwill had not been recorded for
   periods prior to 1 December 2001, Carnival's adjusted net income and
   adjusted basic and diluted earnings per share would have been as follows
   (U.S. dollars in thousands, except per share data):



                                          Years Ended 30 November
                                     ---------------------------------
                                      2001    2000     1999     1998
         -                           ------- ------- --------- -------
                                                   
         Net income                  926,200 965,458 1,027,240 835,885
         Goodwill amortisation        25,480  23,046    20,666  17,074
                                     ------- ------- --------- -------
         Adjusted net income         951,680 988,504 1,047,906 852,959
                                     ======= ======= ========= =======
         Adjusted earnings per share
         Basic                          1.63    1.65      1.71    1.43
         Diluted                        1.62    1.64      1.70    1.43

(c)Carnival's net income for fiscal 2001 and 2002 includes an impairment charge
   of $140 million and $20 million, respectively, and fiscal 2001 includes a
   nonoperating net gain of $101 million from the sale of Carnival's investment
   in Airtours. In addition, fiscal 2002 included a $51 million income tax
   benefit as a result of a new Italian investment incentive, which allows
   Costa to receive an income tax benefit based on contractual expenditures
   during 2002 on construction of new ships. See Notes 4, 5 and 9 in Carnival's
   2002 consolidated financial statements, which are incorporated by reference
   in this document.

(d)The 1998 per share amounts have been adjusted to reflect a two-for-one stock
   split effective 12 June 1998.

(e)Represents the total annual passenger capacity, assuming two passengers per
   cabin, that Carnival's ships offered for sale, which is computed by
   multiplying passenger capacity by ship operating days.

                                      19



(f)In accordance with cruise industry practice, occupancy percentage is
   calculated based upon two passengers per cabin even though some cabins can
   accommodate three or more passengers. The percentages in excess of 100 per
   cent. indicate that more than two passengers occupied some cabins.

(g)Effective 1 December 2000, Carnival adopted SFAS No. 133, which requires
   that all derivative instruments be recorded on Carnival's balance sheet.
   Total assets at 30 November 2001 and 2002 included $567 million and $178
   million, respectively, which represents the fair value of hedged firm
   commitments. See Note 2 in Carnival's 2002 consolidated financial
   statements, which are incorporated by reference in this document.

(h)Represents the percentage of total debt to the sum of total debt and
   shareholders' equity.

                                      20



Section F.  P&O Princess selected historical financial data

The selected financial data of P&O Princess presented below for financial 1998
through 2002 and as of the end of each such financial year are derived from P&O
Princess' audited consolidated financial statements and should be read in
conjunction with the audited consolidated financial statements and notes to
those accounts incorporated by reference in this document.

P&O Princess' consolidated financial statements are presented on the basis that
P&O Princess' cruise business and subsidiaries were part of its business and
subsidiaries for all years presented or, if not owned by P&O Princess at all
times during such period, from the date such businesses and subsidiaries were
acquired by P&O Princess and/or until the date on which P&O Princess disposed
of them, as applicable.

P&O Princess' consolidated financial statements have been prepared using P&O
Princess' accounting policies in accordance with UK GAAP, which differ in some
respects from U.S. GAAP. The notes to the P&O Princess consolidated financial
statements for the year ended 31 December 2002, which are incorporated by
reference in this document, contain a description of the principal differences
between U.S. GAAP and UK GAAP as they relate to P&O Princess and a
reconciliation to U.S. GAAP of certain financial statement items.



                                                                    Years ended 31 December (restated)/(c)/
                                                           ---------------------------------------------------------
                                                                2002          2001        2000    1999/(a)/ 1998/(a)/
                                                           --------       --------      --------  --------  --------
                                                                           (U.S. dollars in millions,
                                                                   except per share and per ADS information)
                                                                                             
Selected profit and loss information:
UK GAAP
Turnover                                                    2,526.8        2,451.0       2,423.9   2,111.6   1,852.4
Net operating costs                                        (2,228.1)/(b)/ (2,089.7)     (2,050.8) (1,723.3) (1,509.2)
                                                           --------       --------      --------  --------  --------
Group operating profit                                        298.7          361.3         373.1     388.3     343.2
Share of operating results of joint ventures                     --            0.1           0.5        --       0.3
                                                           --------       --------      --------  --------  --------
Total operating profit                                        298.7          361.4         373.6     388.3     343.5
Non-operating profit/(loss)                                     1.2           (1.9)         (6.5)     (4.8)       --
                                                           --------       --------      --------  --------  --------
Profit on ordinary activities before interest                 299.9          359.5         367.1     383.5     343.5
Net interest and similar items                                (74.0)         (58.0)        (49.1)    (25.7)    (31.4)
                                                           --------       --------      --------  --------  --------
Profit on ordinary activities before taxation                 225.9          301.5         318.0     357.8     312.1
Taxation/(c)/                                                 (17.1)       81.7/(f)/       (57.2)    (73.6)    (88.8)
                                                           --------       --------      --------  --------  --------
Profit on ordinary activities after taxation                  208.8          383.2         260.8     284.2     223.3
Equity minority interests                                        --           (0.1)         (2.6)     (0.5)       --
                                                           --------       --------      --------  --------  --------
Profit for the financial year attributable to shareholders    208.8          383.1         258.2     283.7     223.3
                                                           --------       --------      --------  --------  --------
Basic earnings per ordinary share (cents)                      30.2        55.4/(f)/        38.1      41.7      32.8
Diluted earnings per share (cents)                             30.0        55.2/(f)/        38.1      41.7      32.8
Basic earnings per ADS (cents)                                120.8          221.6         152.4     166.8     131.2
Diluted earnings per ADS (cents)                              120.0          220.8         152.4     166.8     131.2
Fixed charge cover/(d)/                                         2.9            3.8           4.8       8.7       6.6
Dividend per share (cents)                                     12.0           12.0          12.0        --        --
Dividend per ADS (cents)                                       48.0           48.0          48.0        --        --
U.S. GAAP
Net income//                                                  212.9       425.2/(e)(f)/    253.7     267.7     222.4
Basic earnings per share (cents)/(g)/                          30.7           61.5          37.1      39.3      32.6
Diluted earnings per share (cents)/(g)/                        30.6           61.2          37.1      39.3      32.6
Basic earnings per ADS (cents)                                122.8          246.0         148.4     157.1     130.5
Diluted earnings per ADS (cents)                              122.4          244.8         148.4     157.1     130.5


(a)Prior to the de-merger of P&O Princess from The Peninsular and Oriental
   Steam Navigation Company in 2000, no combined financial statements had been
   prepared for the companies and businesses comprising P&O Princess. The
   financial information for financial years 1998 and 1999 has been extracted
   from KPMG Audit Plc's accountants' report on P&O Princess contained in the
   listing particulars dated 26 September 2000 which were prepared for the
   de-merger.
(b)  Infiscal 2002, net operating costs under UK GAAP included U.S.$117.0
       million of transaction costs.

                                      21



(c)At 1 January 2002, P&O Princess adopted FRS 19. The 2001 balance sheet was
   restated to reflect full provision for deferred tax, an increase in deferred
   tax liabilities of $108.1 million. The tax credit for the year ended 31
   December 2001 has been increased to reflect the elimination of the majority
   of future potential tax liabilities upon P&O Princess' election to enter the
   UK tonnage tax regime by $96.8 million. The profit and loss account and
   balance sheet information for each of the three years ended 31 December 2000
   have also been restated for the adoption of Financial Reporting Standard 19:
   Deferred Tax.
(d)Defined as profit before fixed charges (excluding capitalised interest) and
   taxation divided by fixed charges. Fixed charges consist of the net interest
   expense in the profit and loss account, interest capitalised in respect of
   ships and other fixed assets and an estimate of the interest implicit in
   operating lease rentals.
(e)At 1 January 2001, P&O Princess adopted SFAS No. 133. The cumulative effect
   of the change in this accounting policy at that date was a charge of $9.0
   million, which is included in net income for the financial year ended 31
   December 2001. The basic and diluted earnings per share for financial 2001
   is after the cumulative effect of the change in this accounting principle.
(f)Under UK GAAP, the year ended 31 December 2001 includes a tax credit of
   $97.5 million, comprising a credit from the release of deferred tax on entry
   into the tonnage tax regime of $192.5 million and tax charges arising from
   internal corporate restructuring of $95.0 million. The U.S. GAAP tax credit
   for the year ended 31 December 2001 is for the release of deferred taxes.
(g)Effective 1 January 2002, P&O Princess adopted SFAS No. 142, which requires
   that companies stop amortizing goodwill and requires an annual, or when
   events or circumstances dictate a more frequent, impairment review of
   goodwill. Accordingly, as of 1 January 2002, P&O Princess no longer
   amortizes its goodwill. If goodwill had not been recorded for periods prior
   to 1 January 2002, P&O Princess' adjusted net income and adjusted basic and
   diluted earnings per share would have been as follows:



                                          Years Ended 31 December
                                          ---------------------------
                                          2001   2000   1999   1998
                                          -----  -----  -----  -----
                                          (U.S. dollars in thousands,
                                          except per share data)
                                                   
              Net income                  425.2  253.7  267.7  222.4
              Goodwill amortization         2.9    2.0    1.0    0.8
                                          -----  -----  -----  -----
              Adjusted net income         428.1  255.7  268.7  223.2
                                          -----  -----  -----  -----
              Adjusted earnings per share
              Basic                        61.9   37.4   39.4   32.7
              Diluted                      61.6   37.4   39.4   32.7




                                                       At 31 December (restated)/(c)/
                                              ------------------------------------------------
                                                2002      2001      2000      1999      1998
                                              --------  --------  --------  --------  --------
                                                                       
Selected balance sheet information:
UK GAAP
Fixed assets                                   5,772.8   4,418.3   3,959.5   3,258.3   2,949.7
Current assets                                   558.9     451.4     649.3     406.7     382.4
                                              --------  --------  --------  --------  --------
Total assets                                   6,331.7   4,869.7   4,608.8   3,665.0   3,332.1
                                              --------  --------  --------  --------  --------
Other creditors and provisions                (1,000.9)   (847.0) (1,190.4) (1,343.8) (1,494.4)
Creditors: amounts falling due after one year (2,516.8) (1,393.1) (1,062.7)   (216.7)   (139.7)
                                              --------  --------  --------  --------  --------
Total liabilities                             (3,517.7) (2,240.1) (2,253.1) (1,560.5) (1,634.1)
Equity minority interests                         (0.2)     (0.2)     (0.2)     (7.7)       --
                                              --------  --------  --------  --------  --------
Consolidated shareholders' funds               2,813.8   2,629.4   2,355.5   2,096.8   1,698.0
                                              --------  --------  --------  --------  --------
U.S. GAAP
Total assets                                   6,368.9   4,996.3   4,460.7   3,571.3   3,252.1
Long-term obligations                         (2,623.6) (1,641.8) (1,275.5)   (416.1)   (296.8)
Consolidated shareholders' equity              2,724.9   2,551.8   2,296.3   2,006.8   1,622.0
                                              --------  --------  --------  --------  --------


                                      22



Section G.  Selected unaudited pro forma financial data in accordance with U.S.
GAAP

The following selected unaudited pro forma financial data give pro forma effect
to the DLC transaction, after giving effect to the pro forma adjustments
described in the notes accompanying the unaudited pro forma financial
information of the Combined Group in accordance with U.S. GAAP included in Part
A of Section B of Part III of this document. The unaudited pro forma financial
data have been prepared from, and you should read the data in conjunction with,
the historical consolidated financial statements, including the related notes,
of Carnival and P&O Princess that have been incorporated by reference in this
document.

The following selected unaudited pro forma financial data have been prepared in
accordance with Carnival's accounting policies under U.S. GAAP. U.S. GAAP
differs in certain respects from UK GAAP, and Carnival's accounting policies
under U.S. GAAP differ in certain respects from P&O Princess' accounting
policies under UK GAAP and U.S. GAAP. The notes to the P&O Princess
consolidated financial statements for the year ended 31 December 2002, which
are incorporated by reference in this document, describe the principal
differences between U.S. GAAP and UK GAAP as they relate to P&O Princess.

                                      23



                  Selected Unaudited Pro Forma Financial Data
                      For the Combined Group in U.S. GAAP
               (U.S. dollars in millions, except per share data)



                                                          For the Year
                                                            Ended 30
                                                          November 2002
        Pro Forma Combined Statement of Operations Data: -------------
                                                      
        Revenues                                                6,891.2
        Costs and expenses
        Operating                                              (3,892.7)
        Selling and administrative                               (972.8)
        Depreciation and amortisation                            (551.5)
        Impairment charge                                         (20.0)
                                                         --------------
                                                               (5,437.0)
                                                         --------------
        Operating income                                        1,454.2

        Nonoperating (expense) income
        Net interest expense                                    (157.4 )
        Other expense                                              (3.0)
                                                         --------------
                                                                 (160.4)
        Income before income taxes                              1,293.8

        Income tax benefit                                         39.5
                                                         --------------
        Net income                                              1,333.3
                                                         ==============

        Earnings per share
        Basic earnings per share (U.S.$)                           1.67
        Diluted earnings per share (U.S.$)                         1.67

        Pro Forma Combined Balance Sheet Data:

        Assets                                           At 30 November
        Current assets                                        2002
                                                         --------------
        Cash and cash equivalents                                 828.8
        Short-term investments                                     39.0
        Accounts receivable, net                                  237.6
        Inventories                                               178.7
        Prepaid expenses and other                                320.1
        Fair value of derivative contracts                          7.3
        Fair value of hedged firm commitments                      78.4
                                                         --------------
           Total current assets                                 1,689.9

        Property and Equipment, Net                            15,733.9
        Goodwill and Intangible Assets, Net                     3,605.5
        Other Assets                                              294.3
        Fair Value of Hedged Firm Commitments                     109.1
        Fair value of derivative contracts                         54.6
                                                         --------------
                                                               21,487.3
                                                         ==============
        Liabilities and Shareholders' Equity
        Current Liabilities
        Current portion of long-term debt                         275.6
        Accounts payable                                          452.9
        Accrued liabilities                                       543.8
        Customer deposits                                       1,253.3
        Dividends payable                                          61.6
        Fair value of derivative contracts                        125.4
                                                         --------------
           Total current liabilities                            2,712.6

        Long-Term Debt                                          5,576.7
        Deferred Income and Other Long-Term Liabilities           283.9
        Fair Value of Derivative Contracts                        115.4

        Shareholders' Equity                                   12,798.7
                                                         --------------
                                                               21,487.3
                                                         ==============


                                      24



Section H.  Comparative per share data and stock prices

The following table sets forth selected historical and pro forma per share data
for Carnival and historical and pro forma equivalent per share data for P&O
Princess prepared in accordance with U.S. GAAP. The unaudited pro forma net
income and book value data give effect to the transaction as if it was
completed on 30 November 2002 for balance sheet purposes and 1 December 2001
for statement of operations purposes and are based on the unaudited combined
pro forma financial information of Carnival and P&O Princess prepared in
accordance with U.S. GAAP included in Part A of Section B of Part III this
document. The unaudited pro forma per share data should be read in conjunction
with the historical audited and unaudited consolidated financial statements and
related notes of Carnival incorporated by reference in this document and the
historical audited and unaudited consolidated financial statements and related
notes of P&O Princess incorporated by reference in this document. The P&O
Princess pro forma equivalent per share data were calculated by multiplying the
Carnival pro forma per share data by an exchange ratio of 0.3004.

The unaudited pro forma combined per share data may not be indicative of the
operating results or financial position that would have occurred if the DLC
transaction had been completed at the beginning of the period indicated, and
may not be indicative of future operating results or financial position.

Statement of Operations Data:



                                                 For the
                                               Year Ended
                                               30 November
                                                  2002
                                               -----------
                                                (in U.S.
                                                dollars)
                                            
                      CARNIVAL--HISTORICAL
                      Net income per share:
                         Basic                    1.73
                         Diluted                  1.73
                      Cash dividends per share    0.42

                      CARNIVAL--PRO FORMA
                      Net income per share:
                         Basic                    1.67
                         Diluted                  1.67
                      Cash dividends per share    0.42




                                                  For the
                                               Year Ended 31
                                               December 2002
                                             -----------------
                                                 (in U.S.
                                                 dollars)
                                          
                  P&O PRINCESS--HISTORICAL
                  Net income per share/(1)/:
                     Basic                         0.307
                     Diluted                       0.306
                  Cash dividends per share          0.12

                                                  For the
                                               Year Ended 30
                                               November 2002
                                             -----------------
                                             (in U.S. dollars)
                  P&O PRINCESS--PRO FORMA
                   EQUIVALENT
                  Net income per share:
                     Basic                          0.50
                     Diluted                        0.50
                  Cash dividends per share         0.126

Balance Sheet Data:



                                           At 30 November
                                                2002
                                          ----------------
                                                       Pro
                                          Historical  Forma
                                          ----------  -----
                                          (in U.S. dollars)
                                                
                     CARNIVAL
                     Book value per share   12.64     16.01




                                                     Pro Forma
                                     Historical at Equivalent at
                                      31 December   30 November
                                         2002          2002
                                     ------------- -------------
                                          (in U.S. dollars)
                                             
                P&O PRINCESS
                Book value per share     3.93          4.81

--------
/(1)/The historical net income per share includes $0.15 per share under U.S.
    GAAP related to $105.1 million of P&O Princess transaction costs and break
    up fees related to the Royal Caribbean terminated transaction and the
    Carnival DLC transaction.

                                      25



Comparative stock prices

The following table sets out (i) the closing middle-market quotations for P&O
Princess shares as derived from the London Stock Exchange Daily Official List,
(ii) the closing price per P&O Princess ADSs as reported on the NYSE Composite
Transactions Tape, (iii) the closing stock price of Carnival shares as reported
on the NYSE Composite Transactions Tape, (iv) the "equivalent per ordinary
share price" (as defined below) of P&O Princess shares and (v) the "equivalent
per ADS price" (as defined below) of P&O Princess ADSs on:

..   19 November 2001 (the last business day prior to the date of the
    announcement that P&O Princess and Royal Caribbean announced that they had
    entered into an agreement to implement a dual-listed company structure);

..   23 October 2002 (the last business day prior to the public announcement of
    Carnival's pre-conditional proposal for the DLC transaction and the Partial
    Share Offer); and

..   12 March 2003 (the latest practicable date prior to the posting of this
    document).

The "equivalent per ordinary share price" of the P&O Princess shares and the
"equivalent per ADS price" of P&O Princess ADSs represents the value that would
have been received by a P&O Princess shareholder accepting the Partial Share
Offer for each P&O Princess share or P&O Princess ADS at these prices of
Carnival shares, calculated by multiplying the applicable middle-market
quotation for Carnival shares by 0.3004 and 1.2016, respectively, which is the
fraction of a Carnival share being offered in exchange for each of the issued
P&O Princess shares and P&O Princess ADSs, respectively, in the Partial Share
Offer.



                                                                   P&O
                                                       P&O       Princess
                         P&O       P&O    Carnival   Princess   equivalent
                       Princess  Princess  common   equivalent   per ADS
                       ordinary    ADSs    shares  per ordinary   price
                        shares   (in U.S. (in U.S. share price   (in U.S.
                      (in pence) dollars) dollars)  (in pence)   dollars)
                      ---------- -------- -------- ------------ ----------
                                                 
     19 November 2001   317.00    18.10    26.11      554.5       31.37
     23 October 2002    455.00    29.35    26.00      504.3       31.24
     12 March 2003      343.25    22.68    20.75      386.5       24.93


Since the announcement of Carnival's pre-conditional offer on 16 December 2001
to date, Carnival's share price has traded at prices ranging from approximately
$20 to $35. The following table illustrates the implied value of a P&O Princess
share over that range under the terms of the DLC transaction and the Partial
Share Offer (using an exchange rate of $1.62 =(Pounds)1.00).


                                                                      
CCL share price ($)         20.00 21.00 22.00 23.00 24.00 25.00 26.00 27.00 28.00 29.00 30.00 31.00 32.00 33.00 34.00 35.00
Implied POC share price (p)   371   389   408   426   445   464   482   501   519   538   556   575   593   612   630   649


The foregoing table illustrates certain historical data with respect to the
Carnival shares. Following completion of the DLC transaction, however, P&O
Princess shares may not trade in accordance with the original equalisation
ratio as expressed above or in line with Carnival shares. Please see the "Risk
Factors" in Part II of this document.

                                      26



                                    PART II

                                 RISK FACTORS

In addition to the other information contained or incorporated by reference in
this document (including the risk factors contained in Carnival's Annual Report
on Form 10-K for the year ended 30 November 2002 and P&O Princess' Annual
Report on Form 20-F for the year ended 31 December 2001), P&O Princess
shareholders should consider the following risk factors before deciding whether
to accept the Partial Share Offer or how to vote on the DLC transaction.

Risks relating to the DLC transaction

Benefits from the DLC structure may not be achieved to the extent or within the
time period currently expected, which could eliminate, reduce and/or delay the
improvements in cost savings and operational efficiencies expected to be
generated by the DLC structure

Following completion of the DLC transaction, P&O Princess and Carnival will be
managed as if they were a single economic enterprise. Carnival and P&O Princess
expect the combination under the DLC structure to enable them to achieve cost
savings through synergies as well as enhanced operational efficiencies.
However, the companies may encounter substantial difficulties during this
process that could eliminate, reduce and/or delay the realisation of the cost
savings and synergies that they currently expect. Among other things, these
difficulties could include:

..   loss of key employees;

..   inconsistent and/or incompatible business practices, operating procedures,
    information systems, financial controls and procedures, cultures and
    compensation structures between Carnival and P&O Princess;

..   unexpected integration issues and higher than expected integration costs;
    and

..   the diversion of management's attention from day-to-day business as a
    result of the need to deal with integration issues.

As a result of these difficulties, the actual cost savings and synergies
generated by the DLC structure may be less, and may take longer to realise,
than the companies currently expect.

The structure of the DLC transaction involves risks not associated with the
more common ways of combining the operations of two companies and these risks
may have an adverse effect on the economic performance of the companies and/or
their respective share prices

The DLC structure is a relatively uncommon way of combining the operations and
management of two companies and it involves different issues and risks than
those associated with the other more common ways of effecting such a
combination. In the DLC transaction, the combination will be effected primarily
by means of contracts between the two companies and not by operation of a
statute or court order. The legal effect of these contractual rights may be
different than the legal effect of a merger or amalgamation under statute or
court order and there may be difficulties in enforcing these contractual
rights. In addition, the contracts will be enforceable only by the companies
and not directly by their shareholders. Nevertheless, shareholders of either
company might challenge the validity of the contracts or their lack of standing
to enforce rights under these contracts, and courts may interpret or enforce
these contracts in a manner inconsistent with the express provisions and
intentions of Carnival and P&O Princess expressed in such contracts. In
addition, shareholders of other companies might successfully challenge other
dual listed company structures and establish legal precedents that could
increase the risk of a successful challenge to the DLC transaction. The
Combined Group will maintain two separate public companies and comply with both
Panamanian corporate law and English company and securities laws and different
regulatory and stock exchange requirements in the UK and the U.S. This is
likely to require more administrative time and cost than is currently the case
for each company, which may have an adverse effect on the Combined Group's
operating efficiency.

The shares of Carnival and P&O Princess may not trade in line with the
equalisation ratio

The economic interests of the shares of Carnival and P&O Princess will be
contractually aligned in accordance with the equalisation ratio. However,
because the shares of the two companies will remain outstanding, will not be
exchangeable for each other at the option of the shareholder and will primarily
trade in separate markets with different characteristics and in different
currencies, the relative market

                                      27



prices of the shares of P&O Princess and Carnival may not exactly reflect the
equalisation ratio. P&O Princess shares could trade at a discount to the
Carnival shares because P&O Princess shares will represent between 21 and 26
per cent. of the equity of the Combined Group.

Courts may interpret or enforce the contracts and other instruments that effect
the DLC structure in a manner inconsistent with the express provisions and
intentions of Carnival and P&O Princess

Various provisions of the Equalization and Governance Agreement, the companies'
articles and the cross guarantees are intended to ensure that, as far as
practicable, the shareholders of the Combined Group are treated equitably in
the event of insolvency of either or both companies and in accordance with the
equalisation ratio, regardless of where the assets of the Combined Group
reside. Courts may interpret or enforce these contracts in a manner
inconsistent with the express provisions and intentions of Carnival and P&O
Princess expressed in such contracts. For instance, a bankruptcy court may not
choose to follow the companies' contractual way of allocating liabilities and
assets. Therefore, were assets transferred between the two companies, a court,
faced with the liquidation or dissolution of either company, may not adhere to
the equalisation ratio and the rights of shareholders of the company from which
assets were transferred may be adversely affected.

Economic returns on shares of Carnival and P&O Princess will be dependent upon
the economic performance of the Combined Group and the inability of one company
to pay dividends may limit or prevent the payment of dividends by the other

Upon implementation of the DLC structure, the dividends paid on shares of
Carnival and P&O Princess will depend primarily on the economic performance of
the assets of both companies of the Combined Group. Therefore, the past
performance of P&O Princess shares and Carnival shares may not reflect the
future performance of these shares. Additionally, if one company is unable to
pay dividends on its shares, the other company must make such payments to the
other and/or scale back its dividend in order to equalise the distributions in
accordance with the equalisation ratio. After taking into consideration the
actions necessary to equalise such distributions, both companies may be limited
in their ability, or unable, to pay dividends.

The liquidity and market value of P&O Princess shares could decrease following
the DLC transaction and the Partial Share Offer, and this could affect the
inclusion of P&O Princess shares in the FTSE series of indices or their full
weighting

As a result of the DLC transaction, P&O Princess shares will account for
approximately 26 per cent. of the total outstanding equity of the Combined
Group. To the extent P&O Princess shares are exchanged for Carnival shares
under the Partial Share Offer this percentage would be further reduced to not
less than 21 per cent. of the total outstanding equity of the Combined Group.
Any such exchange would reduce the liquidity of the market for P&O Princess
shares below its level immediately prior to the DLC transaction. In addition,
the liquidity of the market for P&O Princess shares would also be further
reduced by any future repurchases or buy-back of P&O Princess shares by
Carnival or P&O Princess. Reductions in liquidity could adversely affect the
market value of the P&O Princess shares.

The liquidity of the market for the P&O Princess shares would also be adversely
affected if they became no longer eligible for inclusion in the FTSE series of
indices, including the FTSE 100 index. Based on the thresholds currently
required to remain in the FTSE 100, this could occur if the aggregate market
value of the outstanding P&O Princess shares falls significantly compared to
other constituents of the index. In addition, in order to maintain its full
weighting in the FTSE indices, including the FTSE 100, a minimum percentage of
P&O Princess shares must qualify as free float as determined by FTSE
International. Purchases of P&O Princess shares by Carnival, for example, would
reduce the free float. Failure to be included and/or to receive full weighting
in the FTSE indices could significantly reduce the demand for, and therefore
the liquidity of, P&O Princess shares and lead to significant sales of P&O
Princess shares. These could adversely affect the market value of P&O Princess
shares.

                                      28



Changes under the Internal Revenue Code, the applicable U.S. income tax
treaties, and the uncertainty of the DLC structure under the Internal Revenue
Code may adversely affect the U.S. federal income taxation of the U.S. source
shipping income of the Combined Group

Carnival and P&O Princess believe that substantially all of the U.S. source
shipping income of each respective company and its subsidiaries qualifies for
exemption from U.S. federal income tax, either under:

..   Section 883 of the Internal Revenue Code;

..   as appropriate in the case of P&O Princess and its UK resident
    subsidiaries, under the UK-U.S. Income Tax Treaty; or

..   other applicable U.S. income tax treaties,

and should continue to so qualify after completion of DLC transaction. There
is, however, no existing U.S. federal income tax authority that directly
addresses the tax consequences of implementation of a dual listed company
structure such as the DLC structure for purposes of Section 883 or any other
provision of the Internal Revenue Code or any income tax treaty and,
consequently, the matters discussed above are not free from doubt. See
paragraph 11 of Section A of Part III under the heading "U.S. taxation".

To date no final U.S. Treasury regulations or other definitive interpretations
of the relevant portions of Section 883 have been promulgated, although
regulations have been proposed. Any such final regulations or official
interpretations could differ materially from Carnival's and P&O Princess'
interpretation of this Internal Revenue Code provision and, even in the absence
of differing regulations or official interpretations, the Internal Revenue
Service might successfully challenge either or both Carnival's and P&O
Princess' interpretation. In addition, the provisions of Section 883 are
subject to change at any time by legislation. Moreover, changes could occur in
the future with respect to the trading volume or trading frequency of Carnival
shares and/or P&O Princess shares on their respective exchanges or with respect
to the identity, residence, or holdings of Carnival's and/or P&O Princess'
direct or indirect shareholders that could affect the eligibility of Carnival
and its subsidiaries and/or certain members of the P&O Princess group otherwise
eligible for the benefits of Section 883 to qualify for the benefits of the
Section 883 exemption. Accordingly, it is possible that Carnival and its
shipowning or operating subsidiaries and/or the members of the P&O Princess
group whose tax exemption is based on Section 883 may lose this exemption. If
any such corporation were not entitled to the benefit of Section 883, it would
be subject to U.S. federal income taxation on a portion of its income, which
would reduce the net income of such corporation.

As noted above, P&O Princess believes that substantially all of the U.S. source
shipping income of P&O Princess and its UK resident subsidiaries qualifies for
exemption from U.S. federal income tax under the UK-U.S. Income Tax Treaty. The
UK-U.S. Income Tax Treaty has been renegotiated and signed but is pending
ratification by the U.S. P&O Princess believes that substantially all of the
U.S. source shipping income of the companies referred to above should qualify
for exemption from U.S. federal income tax under such treaty if, and as of
when, the pending treaty comes into force. In addition, certain companies of
the Combined Group may rely on other U.S. income tax treaties for similar
exemptions from U.S. taxation on U.S. source shipping income. Neither Carnival
nor P&O Princess believe that the DLC transaction will affect the ability of
these corporations to continue to qualify for such treaty benefits. There is,
however, no authority that directly addresses the effect, if any, of DLC
arrangements on the availability of benefits under any applicable U.S. income
tax treaty and, consequently, the matter is not free from doubt.

These treaties may be abrogated by either applicable country, replaced or
modified with new agreements that treat shipping income differently than under
the agreements currently in force. If any of the corporations discussed in the
paragraph above that currently qualify for exemption from U.S. source shipping
income under any applicable U.S. income tax treaty do not qualify for benefits
under the existing treaties or the existing treaties are abrogated, replaced or
materially modified in a manner adverse to the interests of any such
corporation and, with respect to U.S. federal income tax only, such corporation
does not qualify for Section 883 exemption, such corporation may be subject to
U.S. federal income taxation on a portion of its income, which would reduce the
net income of any such corporation.

                                      29



After the DLC transaction is completed, P&O Princess shares could be subject to
a mandatory exchange into Carnival shares and this would adversely affect
holders to the extent they are required, or prefer, to hold UK shares

In certain limited circumstances following implementation of the DLC structure,
P&O Princess shares, other than those held by Carnival, may be subject to a
mandatory exchange for Carnival shares at the then prevailing equalisation
ratio. These circumstances include:

..   a change in tax law that has a material adverse impact on the DLC structure
    which cannot be avoided by other commercially reasonable means; and

..   the illegality or unenforceability of all or a substantial part of the DLC
    documents.

In both cases, board action is required and in the case of a change in tax law,
shareholder approval is also required. Upon a mandatory exchange, P&O Princess
shareholders would no longer hold their investment in the Combined Group in the
form of P&O Princess shares listed on the London Stock Exchange and included in
the FTSE series of indices, but would instead hold their investment in the form
of Carnival shares listed on the NYSE. The exchange by UK P&O Princess
shareholders of P&O Princess shares for Carnival shares following mandatory
exchange should not constitute a taxable disposal for the purposes of UK
taxation on chargeable gains. However, the exchange would adversely affect the
holders to the extent they are required, or prefer to hold shares in a UK
company with its primary listing on the London Stock Exchange. Additionally,
for UK resident or ordinarily resident shareholders dividends paid on Carnival
shares are taxed differently than dividends paid on P&O Princess shares and
this difference in tax treatment may adversely affect certain P&O Princess
shareholders subject to a mandatory exchange.

Under current law, depending on the facts or circumstances at the particular
time, the mandatory exchange offer may or may not be a taxable transaction for
U.S. federal income tax purposes for U.S. P&O Princess shareholders.

A small group of shareholders will collectively own approximately 35 per cent.
of the total combined voting power of the outstanding shares of the Combined
Group and may be able to effectively control the outcome of shareholder voting

A group of shareholders, comprising certain members of the Arison family,
including Micky Arison, and trusts established for their benefit, that
currently beneficially owns approximately 47 per cent. of the voting power of
Carnival, will own shares entitled to constitute a quorum at shareholder
meetings and to cast approximately 35 per cent. of the total combined voting
power of the outstanding shares of the Combined Group. Depending upon the
nature and extent of the shareholder vote, this group of shareholders may have
the power to effectively control, or at least to influence substantially, the
outcome of shareholder votes and, therefore, the corporate actions requiring
such votes.

Following completion of the DLC transaction, fewer shares of P&O Princess will
be required to approve resolutions at P&O Princess shareholder meetings than
would otherwise be the case because:

..   P&O Princess shares acquired by Carnival in the Partial Share Offer
    (potentially up to 20 per cent. of its shares in issue) or otherwise
    generally will not have voting rights; and

..   votes at P&O Princess shareholder meetings generally will be carried out
    based on the percentage of shares voting, rather than based on the number
    of shares in issue.

Provisions in the Carnival and P&O Princess constitutional documents may
prevent or discourage takeovers and business combinations that shareholders in
the Combined Group might consider in their best interests

Carnival's articles and by-laws and P&O Princess' articles contain provisions
that may delay, defer, prevent or render more difficult a takeover attempt that
shareholders in the Combined Group might consider to be in their best
interests. For instance, these provisions may prevent shareholders in the
Combined Group from receiving a premium to the market price of Carnival shares
and/or P&O Princess shares offered by a bidder in a takeover context. Even in
the absence of a takeover attempt, the existence of these provisions may
adversely affect the prevailing market price of Carnival shares or P&O Princess
shares if they are viewed as discouraging takeover attempts in the future.

                                      30



Specifically, Carnival's articles of incorporation contain provisions that
prevent third parties, other than the Arison family and trusts for their
benefit, from acquiring beneficial ownership of more than 4.9 per cent. of the
outstanding Carnival shares without the consent of the Carnival board of
directors and provide for the lapse of rights, and sale, of any shares acquired
in excess of that limit. In addition, the Carnival and P&O Princess
constitutional documents contain provisions that would apply some of the
anti-takeover protections provided by the Takeover Code to both companies. No
third party, other than the Arison family and related entities, may acquire
additional shares or voting control over shares in either company, if such
person would then be able to cast 30 per cent. or more of the votes which could
be cast on a joint electorate action without making an equivalent offer for the
other company. The combined effect of these provisions may preclude third
parties from seeking to acquire a controlling interest in either company in
transactions that shareholders might consider to be in their best interests and
may prevent them from receiving a premium above market price for their shares.
These provisions may only be amended by both sets of shareholders, voting
separately as a class, in a class rights action.

Risks relating to the Combined Group's businesses

The Combined Group may lose business to competitors throughout the vacation
market

The Combined Group will operate in the vacation market and cruising is one of
many alternatives for people choosing a vacation. The Combined Group will
therefore risk losing business not only to other cruise lines, but also to
other vacation operators that provide other leisure options including hotels,
resorts and package holidays and tours.

The Combined Group will face significant competition from other cruise lines,
both on the basis of cruise pricing and also in terms of the nature of ships
and services it will offer to cruise passengers. The Combined Group's principal
competitors within the cruise vacation industry will include:

..   Royal Caribbean, which owns Royal Caribbean International and Celebrity
    Cruises;

..   Norwegian Cruise Line and Orient Lines;

..   Disney Cruise Line;

..   MyTravel's Sun Cruises, Thomson, Saga and Fred Olsen in the UK;

..   Festival Cruises, Hapag-Lloyd, Peter Deilmann and Phoenix Reisen in Germany;

..   Festival Cruises, Mediterranean Shipping Cruises, Royal Olympia Cruises and
    Louis Cruise Line in southern Europe;

..   Crystal Cruises;

..   Radisson Seven Seas Cruise Lines; and

..   Silversea Cruises.

The Combined Group will also compete with land-based vacation alternatives
throughout the world, including, among others, resorts and hotels located in
Las Vegas, Nevada, Orlando, Florida, various Caribbean, Mexican, Bahamian and
Hawaiian Island destination resorts and numerous vacation destinations
throughout Europe and the rest of the world.

In the event that the Combined Group does not compete effectively with other
vacation alternatives and cruise companies, its market share could decrease and
its results of operations and financial condition could be adversely affected.

Overcapacity within the cruise and competing land-based vacation industry could
have a negative impact on net revenue yields, increase operating costs, result
in ship asset impairments and could adversely affect profitability

Cruising capacity has grown in recent years and Carnival and P&O Princess
expect it to continue to increase over the next three and a half years as all
of the major cruise vacation companies are expected to introduce new ships. In
order to utilise new capacity, the cruise vacation industry will need to
increase its share of the overall vacation market. The overall vacation market
is also facing increases in land-based vacation capacity, which also will
impact the Combined Group. Failure of the

                                      31



cruise vacation industry to increase its share of the overall vacation market
could have a negative impact on the Combined Group's net revenue yields. Should
net revenue yields be negatively impacted, the Combined Group's results of
operations and financial condition could be adversely affected, including the
impairment of the value of its ship assets. In addition, increased cruise
capacity could impact the Combined Group's ability to retain and attract
qualified crew at competitive costs and, therefore, increase the Combined
Group's shipboard employee costs.

The international political and economic climate and other world events
affecting safety and security could adversely affect the demand for cruises and
could harm the Combined Group's future sales and profitability

Demand for cruises and other vacation options has been and is expected to
continue to be affected by the public's attitude towards the safety of travel,
the international political climate and the political climate of destination
countries. Events such as the terrorist attacks in the U.S. on September 11,
2001 and the threat of additional attacks, the outbreak of hostilities or war
or concerns that such hostilities or war might break out, including the
possibility of military action against Iraq, and national government travel
advisories, together with the resulting political instability and concerns over
safety and security aspects of travelling, have had a significant adverse
impact on demand and pricing in the travel and vacation industry and may
continue to do so in the future. Demand for cruises is also likely to be
increasingly dependent on the underlying economic strength of the countries
from which cruise companies source their passengers. Economic or political
changes that reduce disposable income or consumer confidence in the countries
from which the Combined Group will source its passengers may affect demand for
vacations, including cruise vacations, which are a discretionary purchase.
Decreases in demand could lead to price discounting which, in turn, could
reduce the profitability of its business.

The debt rating of the Combined Group may be downgraded from Carnival's current
rating, and for this or other reasons the Combined Group may not be able to
obtain financing on terms that are favourable or consistent with its
expectations

Access to financing for the Combined Group will depend on, among other things,
the maintenance of strong long-term credit ratings. Carnival's debt is
currently rated "A" by Standard & Poor's, "A2" by Moody's Investor Services and
"A" by FitchRatings. P&O Princess' debt is currently rated "BBB" by Standard &
Poor's, "Baa3" by Moody's and "BBB+" by FitchRatings. As a result of the DLC
transaction, the debt rating of the Combined Group may be downgraded from
Carnival's current ratings although it is expected to remain a strong
investment grade rating.

Carnival and P&O Princess believe their current external sources of liquidity,
including committed financings, and cash on hand, together with forecasted cash
flows from future operations, will be sufficient to fund most or all of the
capital projects, debt service requirements, dividend payments and working
capital needs of the Combined Group.

The forecasted cash flow from future operations for the Combined Group, as well
as the credit ratings of each of Carnival and P&O Princess, may be adversely
affected by various factors, including, but not limited to, declines in
customer demand, increased competition, overcapacity, the deterioration in
general economic and business conditions, terrorist attacks, ship incidents,
adverse publicity and increases in fuel prices, as well as other factors noted
under these "Risk factors" and the "Cautionary note concerning factors that may
effect future results" section of this document. To the extent that the
Combined Group is required, or chooses, to fund future cash requirements,
including future shipbuilding commitments, from sources other than cash flow
from operations, cash on hand and current external sources of liquidity, the
Combined Group will have to secure such financing from banks or through the
offering of debt and/or equity securities in the public or private markets.

The future operating cash flow of the Combined Group may not be sufficient to
fund future obligations, and the Combined Group may not be able to obtain
additional financing, if necessary, at a cost that meets its expectations.
Accordingly, the financial results of the Combined Group could be adversely
affected.

If P&O Princess loses eligibility for inclusion in the FTSE 100 or Carnival is
removed from the S&P 500, it may become more difficult for either company to
access the equity capital markets



Carnival's shares will remain listed on the NYSE and are expected to continue
to be included in the S&P 500. P&O Princess' shares will remain listed on the
London Stock Exchange and are expected to remain

                                      32



eligible for inclusion in the FTSE series of indices and are expected to
continue to be included with full weighting in the FTSE 100. If P&O Princess
loses eligibility for inclusion in the FTSE 100 or Carnival is removed from the
S&P 500, it may become more difficult for either company to access the equity
capital markets.

Conducting business internationally can result in increased costs

The Combined Group will operate the businesses of Carnival and P&O Princess
internationally and plans to continue to develop its international presence.
Operating internationally exposes the Combined Group to a number of risks,
including:

..   currency fluctuations;
..   interest rate movements;
..   the imposition of trade barriers and restrictions on repatriation of
    earnings;
..   political risks;
..   risk of increases in duties, taxes and governmental royalties; and
..   changes in laws and policies affecting cruising, vacation or maritime
    businesses or the governing operations of foreign-based companies.

If the Combined Group is unable to address these risks adequately, its results
of operations and financial condition could be adversely affected.

Accidents and other incidents at sea or adverse publicity concerning the cruise
industry or the Combined Group could affect the Combined Group's reputation and
harm its future sales and profitability

The operation of cruise ships involves the risk of accidents, illnesses,
mechanical failures and other incidents at sea, which may bring into question
passenger safety, health, security and vacation satisfaction and thereby
adversely affect future industry performance. Incidents involving passenger
cruise ships could occur and could adversely affect future sales and
profitability. In addition, adverse publicity concerning the vacation industry
in general or the cruise industry or the Combined Group in particular could
impact demand and, consequently, have an adverse impact on the Combined Group's
profitability.

Operating, financing and tax costs are subject to many economic and political
factors that are beyond the Combined Group's control, which could result in
increases in operating and financing costs

Some of the Combined Group's operating costs, including fuel, food, insurance
and security costs, are subject to increases because of market forces and
economic or political instability beyond the Combined Group's control. In
addition, interest rates and the Combined Group's ability to secure debt or
equity financing, including in order to finance the purchase of new ships, are
dependent on many economic and political factors. Actions by U.S. and non-U.S.
taxing jurisdictions, could also cause an increase in the Combined Group's
costs. Increases in operating, financing and tax costs could adversely affect
the Combined Group's results because the Combined Group may not be able to
recover these increased costs through price increases of its cruise vacations.

Environmental legislation and regulations could affect operations and increase
operating costs

Some environmental groups have lobbied for more stringent regulation of cruise
ships. Some groups also have generated negative publicity about the cruise
industry and its environmental impact. The U.S. Environmental Protection Agency
is considering new laws and rules to manage cruise ship waste. Alaskan
authorities are currently investigating an incident that occurred in August
2002 on board Holland America's Ryndam involving a wastewater discharge from
the ship. As a result of this incident, various Ryndam ship officers have
received grand jury subpoenas from the U.S. Attorney's office in Alaska. If the
investigation results in charges being brought, sanctions could include a
prohibition of operations in Alaska's Glacier Bay National Park and Preserve
for a period of time.

In addition, pursuant to a settlement with the U.S. government in April 2002,
Carnival pled guilty to certain environmental violations. Carnival was
sentenced under a plea agreement pursuant to which it

                                      33



paid fines in fiscal 2002 totalling $18 million to the U.S. government and
other parties. Carnival accrued for these fines in fiscal 2001. Carnival was
also placed on probation for a term of five years. Under the terms of the
probation, any future violation of environmental laws by Carnival may be deemed
a violation of probation. In addition, Carnival was required as a special term
of probation to develop, implement and enforce a worldwide environmental
compliance programme. Carnival is in the process of implementing the
environmental compliance programme and expects to incur approximately
$10 million in additional annual environmental compliance costs in 2003 and
yearly thereafter as a result of the programme. If the DLC transaction is
approved, the terms of the environmental compliance programme will become
applicable to P&O Princess, resulting in higher environmental compliance costs
for P&O Princess.

The Combined Group's costs of complying with current and future environmental
laws and regulations, or liabilities arising from past or future releases of,
or exposure to, hazardous substances or to vessel discharges, could increase
the cost of compliance or otherwise materially adversely affect the Combined
Group's business, results of operations or financial condition.

New regulation of health, safety and security issues could increase operating
costs and adversely affect net income

The Combined Group is subject to various international, national, state and
local health, safety and security laws, regulations and treaties. The
International Maritime Organization, sometimes referred to as the IMO, which
operates under the United Nations, has adopted safety standards as part of the
Safety of Life at Sea, sometimes referred to as SOLAS, which is applicable to
all of Carnival's and P&O Princess' ships. Generally SOLAS establishes vessel
design, structural features, materials, construction and life saving equipment
requirements to improve passenger safety and security.

In addition, ships that call on U.S. ports are subject to inspection by the
U.S. Coast Guard for compliance with the SOLAS Convention and by the U.S.
Public Health Service for sanitary standards. Carnival's and P&O Princess'
ships are also subject to similar inspections pursuant to the laws and
regulations of various other countries such ships visit. Finally, the U.S.
Congress recently enacted the Maritime Transportation Security Act of 2002
which implements a number of security measures at U.S. ports, including
measures that relate to foreign flagged vessels calling at U.S. ports.

Carnival and P&O Princess believe that health, safety and security issues will
continue to be areas of focus by relevant government authorities both in the
U.S. and abroad. Resulting legislation or regulations, or changes in existing
legislation or regulations, could impact the operations of the Combined Group
and would likely subject the Combined Group to increasing compliance costs in
the future.

Delays in ship construction and problems encountered at shipyards could reduce
the Combined Group's profitability

The construction of cruise ships is a complex process and involves risks
similar to those encountered in other sophisticated construction projects,
including delays in completion and delivery. In addition, industrial actions
and insolvency or financial problems of the shipyards building the Combined
Group's ships could also delay or prevent the delivery of its ships under
construction. These events could adversely affect the Combined Group's
profitability. However, the impact from a delay in delivery could be mitigated
by contractual provisions and refund guarantees obtained by the Combined Group.

In addition, Carnival and P&O Princess have entered into forward foreign
currency contracts to fix the cost in U.S. dollars of certain of Carnival's and
P&O Princess' foreign currency denominated shipbuilding contracts. If any of
the shipyards are unable to perform under the related contract, the foreign
currency forward contracts related to that shipyard's shipbuilding contracts
would still have to be honoured. This might require Carnival or P&O Princess to
realise a loss on an existing contract without having the ability to have an
offsetting gain on its foreign currency denominated shipbuilding contract, thus
adversely affecting the financial results of the Combined Group.

                                      34



                                   PART III

                       INFORMATION ON THE COMBINED GROUP

Section A.  Description of the Combined Group
This description of the Combined Group assumes completion of the DLC
transaction. The DLC transaction is conditional on certain events, including
approval by the shareholders of both P&O Princess and Carnival.

The DLC transaction is a means of enabling P&O Princess and Carnival to combine
their management and operations as if they were a single economic enterprise,
while retaining their separate legal identities. This will be accomplished
through contractual arrangements and amendments to each company's
constitutional documents. In addition, the constitutional documents of the two
companies will be harmonised, to the extent practicable and permitted by law,
to ensure their corporate procedures are substantially similar. You will
receive a shareholder circular in connection with the P&O Princess EGM to
approve the implementation of the DLC structure, which describes the DLC
transaction in greater detail.

1.  The Combined Group

The Combined Group will be the largest cruise vacation group in the world,
based on revenue, passengers carried and available capacity. It will have a
wide portfolio of complementary brands, both by geography and product offering,
and will include some of the best known cruise brands globally. The directors
of each of Carnival and P&O Princess believe that the combination will allow
the Combined Group to offer a wider range of vacation choices for its
passengers and will enhance its ability to attract passengers from land-based
vacations to cruise vacations.

As at 31 January 2003, Carnival and P&O Princess together had a combined fleet
of 65 cruise ships offering 99,982 lower berths, with 18 additional cruise
ships having 42,260 lower berths scheduled to be added over the next three and
a half years. In addition, the Combined Group will be a leading provider of
cruises to all major cruise destinations outside the Far East. The Combined
Group will have one of the youngest and most modern fleets in the cruise
industry, with an average vessel age (weighted by lower berths) of 7.5 years as
of 31 January 2003. The Combined Group will also operate two private
destination ports of call in the Caribbean for the exclusive use of its
passengers and two river boats in Germany (with a further two on order at 31
January 2003), and will offer land-based tour packages as part of its vacation
product alternatives. Carnival and P&O Princess together carried approximately
4.7 million passengers in fiscal 2002.

On a pro forma basis in accordance with U.S. GAAP, the Combined Group would
have reported revenues of $6.9 billion and net income of $1.3 billion for the
fiscal year ended 30 November 2002 (Carnival's fiscal year end). On the same
basis, the Combined Group would have reported shareholders' equity of $12.8
billion as at 30 November 2002. On a pro forma basis in accordance with UK
GAAP, the Combined Group would have reported revenues of $6.9 billion and net
income of $1.3 billion for the financial year ended 31 December 2002 (P&O
Princess' financial year end) (in effect, the same periods as Carnival's but
reflecting P&O Princess' different year-end). On the same basis, the Combined
Group would have reported net assets of $12.1 billion as at 31 December 2002.

2.  Brands

The Combined Group will offer thirteen complementary brands with leading
positions in North America, the UK, Germany, Italy, France, Spain, Brazil,
Argentina and Australia. These brands operate itineraries in the following
regions: Alaska, Australia, Bahamas, Bermuda, Canada, the Caribbean, Europe,
the Hawaiian Islands, the Mexican Riviera, the Mediterranean, New England, the
Panama Canal, South America and other exotic destinations worldwide.

                                      35



The Combined Group's principal brands will include:


                           
    Carnival Cruise Lines        -- primarily marketed in North America
    Princess Cruises
    Holland America Line
    Cunard Line
    Windstar Cruises
    Seabourn Cruise Line

    P&O Cruises (UK)             --primarily marketed in the UK
    Swan Hellenic
    Ocean Village

    AIDA                         --primarily marketed in Germany
    A'ROSA

    Costa Cruises                --primarily marketed in southern Europe and Germany

    P&O Cruises (Australia)      --primarily marketed in Australia


Both Carnival and P&O Princess have historically managed their brands on a
decentralised basis. The Combined Group intends to take a similar approach
while integrating certain back office activities and taking other steps to
achieve economies of scale and cost synergies.

3.  Fleet

At 31 January 2003, Carnival and P&O Princess together operated a fleet of 65
cruise ships with an aggregate capacity of 99,982 lower berths. As of that
date, Carnival and P&O Princess together had an additional 18 cruise ships on
order, with an aggregate capacity of 42,260 lower berths, scheduled for
delivery during the next three and a half years. In addition, the Combined
Group will operate two river boats on the Danube and at 31 January 2003 had two
new river boats on order representing a further 400 lower berths.

As at 31 January 2003, the fleet of the Combined Group (excluding river boats)
would have had an average vessel age (weighted by lower berths) of 7.5 years
and an average vessel size of approximately 1,540 lower berths. Based on the
existing fleet and announced additions and withdrawals, and excluding river
boats, the average vessel age (weighted by lower berths) of the Combined
Group's fleet will be 8.7 years at 30 November 2006 and its average vessel size
will have increased to approximately 1,720 lower berths.

                                      36



The table below summarises the Combined Group's fleet capacity measured in
lower berths by brand as at 31 January 2003 and the projected fleet capacity at
30 November 2006, taking into account existing cruise ships on order and
announced transfers and withdrawals. In accordance with industry practice,
capacity is based on two passengers occupying the lower berths in each cabin,
even though some cabins can accommodate more than two passengers.

Lower berths



                                                                         Projected
                        Capacity                                         capacity
                         at 31                                             at 30
                        January   Vessel      Announced      Announced   November
Brands                    2003   additions withdrawals/(4)/  transfers     2006
                                                          
Carnival Cruise Lines    38,348   11,046          --             --        49,394
Princess Cruises         19,920   10,410          --         (3,600)       26,730
Holland America Line     14,494    7,392          --             --        21,886
Cunard Line               2,458    4,588          --             --         7,046
Windstar Cruises            604       --          --             --           604
Seabourn Cruise Line        624       --          --             --           624
P&O Cruises (UK)          7,170       --          --            560/(3)/    7,730
Swan Hellenic/(1)/          360      676        (360)            --           676
Ocean Village/(2)/           --      160          --          1,450         1,610
Costa Cruises            10,754    7,554          --             --        18,308
AIDA                      2,460    1,270          --             --         3,730
A'ROSA                    1,590       --          --          1,590         3,180
P&O Cruises (Australia)   1,200       --          --             --         1,200
A'ROSA (River Cruises)      400      400          --             --           800
                        -------   ------        ----         ------       -------
Total                   100,382   43,496        (360)            --       143,518

--------
(1)The charter for the 360-berth Minerva ends in April 2003. The ship will be
   replaced by a new chartered ship, Minerva II, which was built in 2001 and
   has 676 lower berths.
(2)Arcadia, which is currently sailing in the P&O Cruises (UK) fleet, is due to
   be transferred to Ocean Village in the second quarter of 2003. Her refit
   will result in the creation of an additional 160 lower berths.
(3)This figure reflects the net result of the transfer of Adonia, with 2,010
   lower berths, from the Princess fleet to the P&O Cruises (UK) fleet in the
   second quarter of 2003 and the redeployment of Arcadia, with 1,450 lower
   berths, to the Ocean Village fleet in the second quarter of 2003.
(4)The Combined Group is expected to withdraw additional capacity from service
   through 2006.

4.  Strategy

Carnival and P&O Princess operate multi-brand strategies that are intended to
differentiate themselves from their competitors and provide products and
services appealing to the widest possible target audience across all major
segments of the vacation industry.

Having established the contemporary Carnival Cruise Lines brand in 1972,
Carnival entered the premium/luxury segment with the acquisition of Holland
America Line/Windstar Cruises in 1989. Carnival continued to acquire and build
brands and expand its geographic reach through the acquisition of the ultra
luxury Seabourn brand, the contemporary European brand Costa Cruises and the
premium/luxury British brand Cunard. These six brands are managed by four
distinct management groups which operate on a decentralised basis. Carnival has
found this decentralised management approach to be highly successful and
expects the Combined Group to be managed in a similar fashion.

Similarly, P&O Princess has established a multi-brand strategy targeting a wide
customer base. From established positions in the UK and Australian cruise
industries, P&O Princess improved its position in the North American cruise
industry in the 1970s and 1980s through the acquisitions of Princess Cruises
and Sitmar Cruises and in Germany through the acquisition in 1999 of a majority
stake in AIDA Cruises, one of the best known cruise brands in Germany. P&O
Princess acquired the remainder of AIDA Cruises in 2000 and commenced the
operation of a new German brand, A'ROSA, in 2002. In the UK, P&O Princess has
recently launched Ocean Village, a new brand for the contemporary segment.

The Combined Group will seek to be the leading global cruise vacation operator
with brands appealing to the widest target audience, focused on sourcing
passengers from developed vacation markets where cruising is one of the largest
and fastest growing vacation alternatives. Carnival and P&O

                                      37



Princess also expect to market certain of the Combined Group's brands to enter
into and expand developing vacation markets.

In pursuit of this strategy, the companies of the Combined Group will seek to:

Build on brand strengths

The Combined Group will have some of the most widely recognised cruise brands
in North America, Europe, South America (primarily Brazil and Argentina) and
Australia and will be a leading provider of cruise vacations to all of the key
cruise destinations outside the Far East, including Alaska, Australia, Bahamas,
Bermuda, Canada, the Caribbean, Europe, the Hawaiian Islands, the Mexican
Riviera, the Mediterranean, New England, the Panama Canal, South America and
other exotic destinations worldwide. Carnival and P&O Princess intend to
continue to grow the Combined Group's brands and broaden and develop the range
of destinations, itineraries, tours and vacation alternatives offered by the
Combined Group. The Combined Group intends to provide greater choice and
options for its passengers among these well-recognised brands in order to
continue to attract passengers from the wider vacation market.

Increase global presence

It is expected that the brand offerings and diversified fleet of the Combined
Group will enable it to accelerate the entry of cruising into existing and new
geographical vacation markets.

Both Carnival and P&O Princess believe that there is a significant opportunity
to continue to build the Combined Group's presence in the relatively
underdeveloped cruise vacation industry within continental Europe. The Combined
Group will be one of the leading cruise vacation companies in the UK, Germany
and southern Europe, which are three of the largest vacation markets outside of
North America. In the UK, P&O Cruises and Cunard are two of the most recognised
cruise brands. AIDA is one of the best known cruise brands in Germany, and
Costa is one of the most widely recognised cruise brands in Europe.

Maximise growth through strategic deployment of its brands and fleet

The Combined Group expects to strategically deploy its diversified fleet in
order to increase its global reach and enter new and developing markets. Such
strategic deployment is expected to allow the Combined Group to appeal to the
largest target audience with brands, products and itineraries with the widest
appeal in a particular geographic region.

Carnival and P&O Princess have traditionally constructed purpose-built ships
for each of their brands, consistent with the passenger demographics and
product features of the particular brand. In addition, in order to take
advantage of the rapidly expanding demand in Europe for cruises, several
vessels have been transferred within the Carnival and P&O Princess groups over
the last several years. For example, Carnival's Tropicale was transferred to
Costa and now operates as the Costa Tropicale and Holland America's Westerdam
was transferred to Costa and now operates as the Costa Europa. P&O Princess has
successfully deployed vessels in order to build its brands in the UK and
Australia and to launch a new brand in Germany. For instance, in 2002 P&O
Princess transferred the Ocean Princess and the Crown Princess to the P&O
Cruises (UK) and A'ROSA brands in the UK and Germany, respectively, and intends
to transfer the Sea Princess to the P&O Cruises (UK) fleet in 2003. In 2000,
Princess Cruises' Sky Princess was redeployed to P&O Cruises (Australia) and
now operates as the Pacific Sky.

Carnival and P&O Princess expect the Combined Group to continue to explore
opportunities to utilise its vessels in such a manner consistent with providing
the overall best return for the Combined Group.

Realise cost savings

Carnival has consistently been one of the most efficient cruise operators in
the cruise vacation industry. Carnival believes it has been able to achieve
these efficiencies through its decentralised management approach, economies of
scale, highly experienced management team and the ability to disseminate best
practices across its operating companies. Since its demerger from The Peninsular

                                      38



and Oriental Steam Navigation Company in October 2000, P&O Princess has pursued
a cost reduction programme aimed at bringing its cost structure more into line
with other major cruise operators. This programme enabled underlying costs to
be reduced by 13 per cent. per available berth day over two years.

Carnival and P&O Princess expect that the Combined Group will generate
significant cost savings, estimated to be at least $100 million on an
annualised basis, commencing in the first full financial year following
completion of the DLC transaction. Carnival and P&O Princess expect that these
cost savings will be generated principally through the dissemination of best
practices between the companies, economies of scale and the rationalisation of
certain shoreside operations. Carnival and P&O Princess expect that the
majority of cost savings will come from the following areas:

..  rationalising each of sourcing and logistics, tour operations, certain back
   office functions and other offices and activities, such as sales and support
   offices globally;

..  reducing selling, general and administrative costs from areas such as
   insurance, rent and other administrative costs;

..  rationalising port activities;

..  rationalising information technology across the group; and

..  disseminating best practices across shipboard and shoreside operations.

One-time cash costs of achieving these cost savings are expected to be
approximately $30 million.

5.  Industry background

Since 1970, cruising has been one of the fastest growing segments of the
vacation market. According to Cruise Lines International Association, or CLIA,
a leading industry trade group, in 1970 approximately 0.5 million North
American-sourced passengers took cruises of two consecutive nights or more.
CLIA estimates that this number reached approximately 7.4 million passengers in
2002, a compound annual growth rate of approximately 9 per cent. since 1970.

Outside North America, the principal sources of passengers for the industry are
the UK, Germany, Italy, France, Spain, South America and Australia. In all of
these areas, cruising represents a smaller proportion of the overall vacation
market than it does in North America but, based on industry data, is generally
experiencing higher growth rates.

Cruising offers a broad range of products to suit vacationing passengers of
many ages, backgrounds and interests. Cruise brands can be broadly divided into
the contemporary, premium and luxury segments. The Combined Group will have
significant product offerings in each of these segments. The contemporary
segment is the largest segment and typically includes cruises that last seven
days or less, have a more casual ambience and are less expensive than premium
or luxury cruises. The premium segment is smaller than the contemporary segment
and typically includes cruises that last from seven to 14 days. Premium cruises
emphasise quality, comfort, style and more destination-focused itineraries and
the average pricing on these cruises is typically higher than those in the
contemporary segment. The luxury segment is the smallest segment and is
typically characterised by smaller vessel size, very high standards of
accommodation and service, generally with higher prices than the premium
segment. Notwithstanding these marketing segment classifications, there is
overlap and competition among cruise segments.

The Combined Group will provide cruise vacations in most of the largest
vacation markets in the world: North America, the UK, Germany and southern
Europe. A brief description of the principal vacation regions in which the
Combined Group intends to operate is as follows:

North America

The largest vacation market in the world is North America. According to CLIA,
approximately 7.4 million North American passengers took cruises for two
consecutive nights or more in 2002.

                                      39



Estimates of North American-sourced cruise passengers and the number of lower
berths marketed in North America compiled by CLIA from1997 to 2002 are as
follows:



                                  Cruise
                              Passengers/(1)/   Lower Berths
                                Sourced in    Marketed in North
                Calendar Year North America     America/(2)/
                                        
                    1997        5,051,000          118,000
                    1998        5,428,000          138,000
                    1999        5,894,000          149,000
                    2000        6,882,000          166,000
                    2001        6,906,000          176,000
                    2002        7,400,000          193,000


(1)Based on passengers carried for at least two consecutive nights for the
   calendar year (2002 estimates are preliminary).
(2)As of the end of the calendar year. These figures include some ships which
   are marketed in North America and elsewhere.

The principal itineraries visited by North American cruise passengers in 2002
were the Caribbean, Bahamas and Mexico. In addition, North American cruise
passengers visited Alaska, Europe, the Mediterranean, Bermuda, the Panama Canal
and other exotic locations, including South America, Africa, the South Pacific,
the Orient and India.

Based on the number of ships that are currently on order worldwide and
scheduled for delivery between 2003 and 2006, Carnival and P&O Princess expect
that the net capacity serving North American consumers will increase
significantly over the next several years. Projections compiled by CLIA
indicate that by the end of 2003, 2004 and 2005, North America will be served
by 187, 197 and 199 ships, respectively, having an aggregate passenger capacity
of approximately 213,000, 236,000 and 240,000 lower berths, respectively. These
figures include some ships that are expected to be marketed in North America
and elsewhere. CLIA's estimates of capacity do not include assumptions related
to unannounced ship withdrawals due to factors such as the age of ships or
changes in the location from where ships' passengers are predominately sourced
and, accordingly, could indicate a higher percentage growth in North American
capacity than will actually occur. Nonetheless, Carnival and P&O Princess
expect that net capacity serving North American-sourced cruise passengers will
increase over the next several years.

Europe

Carnival and P&O Princess estimate that Europe is one of the largest vacation
markets, but cruising in Europe has achieved a much lower penetration rate than
in North America. Carnival and P&O Princess estimate that approximately 2.3
million European-sourced passengers took cruise vacations in 2002 compared to
approximately 7.4 million North American-sourced passengers. However, from 1990
to 2002, the number of cruise passengers sourced from Europe has been growing
faster than the number of cruise passengers sourced from North America. From
1997 through 2001, the rate at which Europeans took a cruise grew at a compound
annual growth rate of 12 per cent. compared to an 8 per cent. growth rate with
respect to North Americans. With respect to the European countries from which
the most cruise passengers are sourced, from 1997 through 2001 the compound
annual growth rate in cruise passengers was 10 per cent. in the UK, 14 per
cent. in France, 8 per cent. in Germany and 11 per cent. in Italy. Cruise
vacation companies are continuing to expand their offerings in Europe. For
example, more cruise vacations were marketed to European passengers in 2002
than in 2001. Carnival and P&O Princess expect that a number of additional new
or existing ships will be introduced into Europe over the next several years.

Carnival and P&O Princess also believe that Europe will represent a significant
area for the growth for the Combined Group because, among other things, the
vacation markets in Europe are large but the level of penetration of cruising
is low.

UK

The UK is one of the largest sources for cruise passengers in the world.
According to G.P. Wild (International) Limited, approximately 0.8 million UK
passengers took cruises in 2001. Cruising was relatively under-developed as a
vacation option for UK consumers until the mid-1990s, but since then there has
been strong growth in the number of cruise passengers sourced from the UK.

                                      40



The number of UK cruise passengers increased by a compound annual growth rate
of approximately 10 per cent. between 1997 and 2001. The main destination for
UK cruise passengers is the Mediterranean. Other popular destinations for UK
cruise passengers include the Caribbean, the Atlantic Islands (including the
Canary Islands and the Azores) and Scandinavia. The Combined Group will have
two of the most widely recognised brands in the UK: P&O Cruises (UK) and Cunard.

Germany

Germany is one of the largest sources for cruise passengers in continental
Europe with approximately 0.4 million cruise passengers in 2001. Germany
exhibited a compound annual growth rate in the number of cruise passengers
carried of approximately 8 per cent. between 1997 and 2001. Carnival and P&O
Princess believe that German cruising is an underdeveloped region for the
cruise industry. The main destinations visited by German cruise passengers are
the Mediterranean and the Caribbean. Other popular destinations for German
cruise passengers include Scandinavia and the Atlantic Islands. The Combined
Group will have four brands marketed in Germany: AIDA, A'ROSA, Costa and Cunard.

Southern Europe

The main regions in southern Europe for sourcing cruise passengers are Italy,
France and Spain. Together, these countries generated approximately 0.7 million
cruise passengers in 2001. Cruising in Italy, France and Spain exhibited a
compound annual growth rate in the number of passengers carried of
approximately 15 per cent. between 1997 and 2001. Carnival and P&O Princess
believe that these regions are also relatively underdeveloped for the cruise
industry. The Combined Group intends to increase its penetration in southern
Europe through Costa Cruises, the largest and one of the most recognised cruise
brands marketed in Europe.

South America

Cruising has been marketed in South America for many years, although the region
remains in an early stage of development. Cruises from South America typically
occur during the southern hemisphere summer months of November through March,
and are primarily seven to nine days in duration. The Combined Group expects
its presence in this region will be primarily represented through the Costa
brand, which currently operates two vessels in this region, Costa Classica and
Costa Tropicale, offering approximately 2,324 lower berths.

Australia

Cruising in Australia is relatively small but well established. Carnival and
P&O Princess estimate that approximately 0.1 million Australians took cruise
vacations in 2001. The Combined Group expects to continue to serve this region
through the P&O Cruises (Australia) brand, which currently operates Pacific Sky
and, for a portion of the year, Pacific Princess in this region, and through
Cunard and Holland America, which market their world and other cruises in
Australia.

Characteristics of the cruise vacation industry

Strong growth

Cruise vacations have experienced significant growth in recent years. The
number of new cruise ships currently on order from shipyards indicates that the
growth in supply of cruise capacity is set to continue for a number of years.
As a result of this continuing growth in supply, continued growth in demand
across the industry, particularly in North America, will be required in order
to take up this increase in supply. Given the historical growth rate of
cruising and the relative low penetration levels in major vacation markets, the
Combined Group believes that there are significant areas for growth. However,
in order for demand to meet available capacity, for the past few years there
has been pressure on cruise pricing. See Part II, "Risk Factors - Risks
relating to the DLC transaction.''

                                      41



Wide appeal of cruising

Cruising appeals to a broad demographic range of passengers. Industry surveys
estimate that the principal passengers for cruising in North America (defined
as households with income of $40,000 or more headed by a person who is at least
25 years old) now comprise approximately 128 million people. About half of
these individuals have expressed an interest in a cruise as a vacation
alternative.

Relatively low penetration levels

North America has the highest cruising penetration rates per capita.
Nevertheless, CLIA estimates that only 15 per cent. of the U.S. population has
ever taken a cruise. In the UK, where there has been significant expansion in
the number of cruise passengers carried over the last five years, cruising
penetration levels per capita are only approximately three-fifths of those of
North America. In the principal vacation regions in continental Europe,
cruising penetration levels per capita are approximately one-fifth of those in
North America. Elsewhere in the world cruising is at an early stage of
development and has far lower penetration rates.

Satisfaction rates

Cruise passengers tend to rate their overall satisfaction with a cruise-based
vacation higher than comparable land-based hotel and resort vacations. In North
America, industry studies indicate that cruise passengers experience a high
level of satisfaction with their cruise product, with 69 per cent. of cruisers
finding the value of the cruise vacation experience to be as good as, or better
than, the value of other vacations.

6.  Competition

Carnival and P&O Princess compete, and the Combined Group will compete, both
with a wide array of land-based vacation alternatives and with other cruise
lines for consumers' disposable leisure time dollars.

The Combined Group will compete with land-based vacation alternatives
throughout the world, including, among others, resorts and hotels located in
Las Vegas, Nevada, Orlando, Florida, various Caribbean, Mexican, Bahamian and
Hawaiian Island destination resorts and numerous vacation destinations
throughout Europe and the rest of the world. Specifically, the Combined Group's
land-based competitors will include, among many others, MyTravel, Club
Mediterranee, GoGo Tours, Fairfield Communities Vacation Ownership Club, First
Choice, Harrah's Entertainment, Hilton Hotels, Hyatt Hotels, Kuoni Travel,
Mandalay Resort Group, Disney, Universal Studios, Marriott International
Resorts and the Marriott Vacation Ownership Club, MGM Grand, Nouvelle
Frontieres, Perillo Tours, Ritz-Carlton Hotels, Saga Tours, Six Flags, Starwood
Hotels and Resorts, Sandals Resorts, Sun City Resorts, Thomas Cook, Trafalgar
and companies in the TUI Group, as well as various other theme parks.

The Combined Group's primary cruise competitors in the contemporary and/or
premium cruise segments for North American-sourced passengers will be Royal
Caribbean, which owns Royal Caribbean International and Celebrity Cruises, Star
Cruises plc, which owns Norwegian Cruise Line and Orient Lines, and Disney
Cruise Line.

The Combined Group's primary cruise competitors for European-sourced passengers
will be MyTravel's Sun Cruises, Fred Olsen, Saga and Thomson in the UK;
Festival, Hapag-Lloyd, Peter Deilmann and Phoenix Reisen in Germany; and
Mediterranean Shipping Cruises, Royal Olympia Cruises, Louis Cruise Line and
Festival Cruises in southern Europe. The Combined Group will also compete for
passengers throughout Europe with Norwegian Cruise Line, Orient Lines, Royal
Caribbean International and Celebrity Cruises.

The Combined Group's primary competitors in the luxury cruise segment for its
Cunard, Seabourn and Windstar brands will include Crystal Cruises, Radisson
Seven Seas Cruise Line, and Silversea Cruises.

The Combined Group's brands also will compete with similar or overlapping
product offerings across all of the Combined Group's segments.

                                      42



7.  Employees

The Combined Group is expected to have approximately 11,400 full and
part-time/seasonal employees engaged in shoreside operations upon
implementation of the DLC structure. Carnival and P&O Princess will also
employ, in the aggregate, approximately 45,800 officers, crew and staff on its
combined fleet of 65 cruise ships and two river boats. A significant proportion
of employees that work in Carnival's and P&O Princess' ship, hotel, and motor
coach operations are unionised and/or are party to collective bargaining
agreements. Each of Carnival and P&O Princess consider its respective employee
and union relations generally to be good.

The Combined Group is expected to source its shipboard officers primarily from
Italy, Holland, the UK and Norway. The remaining crew positions are manned by
persons from around the world. The Combined Group is expected to utilise
various manning agencies in many countries and regions to help secure its
shipboard employees.

Carnival confirms that, following implementation of the DLC structure, it will
procure that the rights of all P&O Princess employees, including pension
rights, will be fully safeguarded.

8.  Board and management

Carnival and P&O Princess will be managed and operated as if they were a single
economic enterprise. Although each of Carnival and P&O Princess will continue
to exist as a separate company with its own board of directors and senior
executive management, the boards and senior executive management of each
company will be identical. In addition to their normal fiduciary duties to the
company and obligation to have regard to the interests of its shareholders, the
directors of each company will be entitled to have regard to the interests of
the other company and its shareholders. Micky Arison, the Chairman and Chief
Executive Officer of Carnival, will be Chairman and Chief Executive Officer of
both Carnival and P&O Princess and Howard S. Frank, the Vice Chairman and Chief
Operating Officer of Carnival, will be the Vice Chairman and Chief Operating
Officer of both Carnival and P&O Princess. Peter Ratcliffe, P&O Princess' Chief
Executive Officer, will be an executive director of both Carnival and P&O
Princess. In addition, Gerald R. Cahill, the Chief Financial Officer and Chief
Accounting Officer of Carnival, will be the Chief Financial Officer and Chief
Accounting Officer of both Carnival and P&O Princess. The Combined Group
expects to take advantage of the best management practices across the two
companies. The headquarters of the Combined Group will be in Miami with a
corporate office in London.

Following completion of the DLC transaction, the directors of Carnival and P&O
Princess and their respective functions will be:

             Name                       Function
             ----                       --------
             Micky Arison /(1)/         Chairman and Chief
                                        Executive Officer
             Howard S. Frank /(1)/      Vice-Chairman and Chief
                                        Operating Officer
             Robert Dickinson /(1)/     Executive Director
             Pier Luigi Foschi /(3)/    Executive Director
             A. Kirk Lanterman /(1)/    Executive Director
             Peter Ratcliffe /(2)/      Executive Director

             Ambassador Richard G.
               Capen, Jr. /(1)/         Non-Executive Director
             Arnold W. Donald /(1)/     Non-Executive Director
             Baroness Hogg /(2)/        Non-Executive Director
             Modesto A. Maidique /(1)/  Non-Executive Director
             Sir John Parker /(2)/      Non-Executive Director
             Stuart Subotnick /(1)/     Non-Executive Director
             Uzi Zucker /(1)/           Non-Executive Director
--------
Notes:

(1)Existing Carnival director
(2)Existing P&O Princess director
(3)New director

On completion of the DLC transaction, Stuart Subotnick will be designated as
the Senior Non-Executive Director. This is a newly-created position which the
non-executive directors as a body will select, on an annual basis, from one of
their number.

                                      43



9.  Dividends

Following completion of the DLC transaction, P&O Princess shareholders will
continue to receive dividends declared by P&O Princess and Carnival
shareholders will continue to receive dividends declared by Carnival. Dividends
in respect of both P&O Princess shares and Carnival shares declared after
completion of the DLC transaction will be paid at about the same time and in
equalised amounts in accordance with the equalisation ratio disregarding any
amounts required to be deducted or withheld in respect of taxes and the amount
of any applicable tax credits.

Carnival will continue to pay dividends in U.S. dollars. P&O Princess
shareholders will continue to have the option to elect to receive dividends in
U.S. dollars or pounds sterling in accordance with P&O Princess' existing
procedures.

It is intended that the first dividend to be paid by the Combined Group will be
declared in April 2003, with a record date in May 2003 and a payment date in
June 2003.

10.  On-going reporting

It is expected that the DLC transaction will be accounted for under U.S. GAAP
using the purchase method of accounting in accordance with Statement of
Financial Accounting Standards No. 141 "Business Combinations". In accordance
with the purchase method of accounting, the P&O Princess U.S. GAAP accounting
policies will be conformed to Carnival's accounting policies upon completion of
the DLC transaction.

Following implementation of the DLC structure, P&O Princess will change its
financial year end to 30 November so that it will be the same as Carnival's
current fiscal year end. The Combined Group intends to publish combined
financial statements denominated in U.S. dollars and prepared in accordance
with U.S. GAAP. It is envisaged these combined financial statements will be
included in a combined annual report. P&O Princess also expects to include
summary balance sheet information and summary income statement information
prepared in accordance with UK GAAP, without notes, in the annual report. P&O
Princess shareholders will be able to request an additional document containing
P&O Princess financial statements prepared in accordance with UK GAAP, which
together with the other published information would constitute the full annual
report and financial statements.

Carnival and P&O Princess will file periodic and current reports with the SEC
on a joint basis in accordance with the rules applicable to U.S. domestic
reporting companies. The financial statements presented in the periodic reports
will consist of combined financial statements of the Combined Group prepared in
accordance with U.S. GAAP.

11.  Taxation

Taxation of the Combined Group

UK taxation

Following the DLC transaction, P&O Princess will continue to be tax resident in
the UK and should continue to qualify for the tonnage tax regime in respect of
its relevant shipping profits. Further information relating to the UK tonnage
tax regime is set out in the shareholder circular for the P&O Princess EGM.

In order for the tonnage tax regime to apply to relevant shipping profits, it
is necessary, among other matters, that the strategic and commercial management
of P&O Princess vessels currently within the tonnage tax regime remain located
in the UK. P&O Princess believes that after implementation of the DLC
transaction, sufficient strategic and commercial management activities will
remain located in the UK to satisfy this test.

P&O Princess has been advised by its tax advisers that the DLC transaction
should not affect the application of the motive test exemption to the UK's
controlled foreign company rules, which currently applies to the non-UK
resident Princess Cruises brand vessel owning and operating subsidiaries.

                                      44



U.S. taxation

Exemption under Section 883 of the Internal Revenue Code

In general, under Section 883, certain non-U.S. corporations are not subject to
U.S. federal income tax or branch profits tax on certain U.S. source income
derived from the international operation of a ship or ships. Carnival and many
of its ship-owning and operating subsidiaries are non-U.S. corporations that
are organised in foreign countries that the Internal Revenue Service has
recognised as having granted an equivalent exemption to U.S. corporations for
the purposes of Section 883 and that derive income from sources within the U.S.
In addition, certain companies within the P&O Princess group are organised in
foreign countries that the Internal Revenue Service has recognised as having
granted an equivalent exemption to U.S. corporations for the purposes of
Section 883 and which derive income from sources within the U.S.

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
organised grants an equivalent exemption to corporations organised in the U.S.
and (ii) either (a) more than 50 per cent. of the value of the corporation's
stock is owned, directly or indirectly, by individuals who are residents of
that country or of another foreign country that grants an equivalent exemption
to corporations organised in the U.S., referred to as the "stock ownership
test" (such individuals are referred to as "Qualified Shareholders"), or (b)
the foreign corporation meets the publicly-traded test described below. In
addition, to the extent a foreign corporation's shares are owned by a direct or
indirect parent corporation which itself meets the publicly-traded test, then
in analysing the stock ownership test with respect to such subsidiary, stock
owned directly or indirectly by such parent corporation will be deemed owned by
individuals resident in the country of incorporation of such parent corporation.

A company whose shares are considered to be "primarily and regularly traded on
an established securities market" in the U.S., the UK or another qualifying
jurisdiction will meet the publicly-traded test (the "publicly-traded test").
Pursuant to recently revised proposed Treasury Regulations issued under Section
883, stock will be considered "primarily traded" on one or more established
securities markets if, with respect to each class of stock of the particular
corporation, the number of shares in each such class that are traded during a
taxable year on any such market exceeds the number of shares in each such class
traded during that year on any other established securities market. Stock of a
corporation will generally be considered "regularly traded" on one or more
established securities markets under the proposed regulations if (i) one or
more classes of stock of the corporation that, in the aggregate, represent more
than 50 per cent. of the total combined voting power of all classes of stock of
such corporation entitled to vote and of the total value of the stock of such
corporation are listed on such market; and (ii) with respect to each class
relied on to meet the more than 50 per cent. requirement in (i) above, (x)
trades in each such class are effected, other than in de minimis quantities, on
such market on at least 60 days during the taxable year, and (y) the aggregate
number of shares in each such class of the stock that are traded on such market
during the taxable year is at least 10 per cent. of the average number of
shares of the stock outstanding in that class during the taxable year. A class
of stock that otherwise meets the requirements outlined in the preceding
sentence is not treated as meeting such requirements for a taxable year if, at
any time during the taxable year, one or more persons who own, actually or
constructively, at least 5 per cent. of the vote and value of the outstanding
shares of the class of stock, own, in the aggregate, 50 per cent. or more of
the vote and value of the outstanding shares of the class of stock (the "5 per
cent. Override Rule"). However, the 5 per cent. Override Rule does not apply
(a) where the foreign corporation establishes that Qualified Shareholders own
sufficient shares of the closely-held block of stock to preclude non-Qualified
Shareholders of the closely-held block of stock from owning 50 per cent. or
more of the total value of the class of stock for more than half of the taxable
year; or (b) to certain investment companies provided that no person owns,
directly or through attribution, both 5 per cent. or more of the value of the
outstanding interests in such investment company and 5 per cent. or more of the
value of the shares of the class of stock of the foreign corporation.

Carnival will continue to qualify as a publicly-traded foreign corporation for
these purposes after the DLC transaction and, consequently its foreign
subsidiaries that are organised in foreign jurisdictions that grant an
equivalent exemption will, subject to the discussion in the following
paragraph, continue to qualify for Section 883 benefits. P&O Princess believes
that it also should continue to qualify as a publicly-traded foreign
corporation for these purposes after the DLC transaction and, consequently,
that, if relevant, certain members of the P&O Princess group that are organised
in foreign jurisdictions

                                      45



that grant an equivalent exemption should, subject to the discussion in the
following paragraphs, continue to qualify for Section 883 benefits.

It is possible that the Combined Group may be characterised for U.S. federal
income tax purposes as a partnership between Carnival and P&O Princess or,
conceivably, among their shareholders, notwithstanding the express intention of
the parties that the DLC structure shall not constitute a partnership or other
similar entity for any purpose. While either such characterisation could affect
the technical application of certain rules, neither should have a material
impact under Section 883 or applicable U.S. income tax treaties, as appropriate.

In addition, the DLC structure has a number of features, including the special
voting shares and other features, with respect to which there is limited or no
authority under the Internal Revenue Code or the applicable U.S. income tax
treaties. Although the Internal Revenue Service could take a different
position, Carnival and P&O Princess believe that the special voting share
structure is not inconsistent with the publicly-traded test of Section 883 and
that the DLC transaction should not adversely affect their respective
abilities, nor the abilities of their respective subsidiaries, to qualify for
the benefits of Section 883 or any applicable U.S. income tax treaties, as
appropriate.

Exemption under applicable U.S. income tax treaties

Article 8 of the UK-U.S. Income Tax Treaty provides substantially the same
exemption from tax for UK resident companies for U.S.-source shipping income as
Section 883. P&O Princess and its UK resident subsidiaries should continue to
qualify for such benefits after the DLC transaction has been completed.
Although the UK-U.S. Income Tax Treaty has been renegotiated and signed (though
it still has not entered into force as it is pending ratification by the U.S.),
the provisions of Article 8, as renegotiated, are essentially the same as the
provisions in the existing treaty. Unlike the current treaty, however, the
pending UK-U.S. Income Tax Treaty contains a Limitations on Benefits article
that requires one of certain alternative tests to be satisfied in order for a
party to be eligible for benefits under the treaty. P&O Princess believes that
it and its UK resident subsidiaries should satisfy the Limitation on Benefits
article if, and as of when, the pending treaty comes into force. The pending
treaty also contains other limitations that would deny the availability of
treaty benefits for income earned through certain entities. While these other
limitations would apply to income earned through certain P&O Princess entities,
P&O Princess believes, based on its current circumstances, that it will be able
to reorganise by, for example, moving the affected operations into a UK entity
or one formed in another equivalent exemption jurisdiction such that the
relevant U.S. source shipping income should qualify for an exemption from U.S.
federal income tax, either under the pending treaty or pursuant to Section 883.

In addition, certain members of the Combined Group rely on other U.S. income
tax treaties for similar exemptions from U.S. taxation on U.S.-source shipping
income. Carnival and P&O Princess do not believe that the DLC transaction will
affect the ability of these corporations to continue to qualify for such treaty
benefits.

There is, however, no authority that directly addresses the impact of a dual
listed company arrangement or the availability of benefits under Section 883 or
any applicable U.S income tax treaty and, consequently, the matters discussed
above are not entirely free from doubt.

Taxation in the absence of an exemption under Section 883 or any applicable
U.S. income tax treaty

Shipping income that is attributable to transportation of passengers which
begins or ends in the U.S. is considered to be 50 per cent. derived from U.S.
sources. Shipping income that is attributable to transportation of passengers
which begins and ends in foreign countries is considered 100 per cent. derived
from foreign sources and not subject to U.S. federal income tax. Shipping
income that is attributable to the transportation of passengers which begins
and ends in the U.S. without stopping at an intermediate foreign port is
considered to be 100 per cent. derived from U.S. sources.

The legislative history of the transportation income source rules suggests that
a cruise that begins and ends in a U.S. port, but that calls on more than one
foreign port, will derive U.S. source income only from the first and last legs
of the cruise. Because there are no regulations or other IRS interpretations of
these rules, the applicability of the transportation income source rules in the
aforesaid manner is not free from doubt.

                                      46



In the event that Carnival or P&O Princess or any of their respective
subsidiaries were to fail, in part or in whole, to meet the requirements of
Section 883 of the Internal Revenue Code or Article 8 of the UK-U.S. Income Tax
Treaty or other applicable U.S. income tax treaty, as appropriate, then the
non-exempt U.S. source shipping income of any such corporation would be subject
to either the four per cent of gross income tax regime of Section 887 of the
Internal Revenue Code (the "four per cent. tax regime") or the net income and
branch profits tax regimes of Section 882 and Section 884 of the Internal
Revenue Code (collectively, the "net tax regime").

The net tax regime is only applicable where the relevant foreign corporation
has, or is considered to have, a fixed place of business in the U.S. that is
involved in the earning of U.S.-source shipping income and substantially all of
this shipping income is attributable to regularly scheduled transportation.
Under the net tax regime, U.S.-source shipping income, net of applicable
deductions, would be subject to a corporate tax of up to 35 per cent. and the
net after-tax income would be potentially subject to a further branch tax of 30
per cent. In addition, interest paid by these corporations, if any, would
generally be subject to a 30 per cent. branch interest tax.

Under the four per cent. tax regime, which should be the tax regime applicable
to vessel owning subsidiaries, the U.S.-source shipping income of each of the
vessel owning subsidiaries would be subject to a four per cent. tax imposed on
a gross basis, without benefit of deductions. Under the four per cent. tax
regime, the maximum effective rate of tax on the gross shipping income of these
subsidiaries attributable to transportation that either begins or ends in the
U.S. would not exceed two per cent.

German and Australian taxation

P&O Princess' German and Australian branches' tax position should not be
affected by the DLC transaction. The majority of their profits should continue
to be exempt from local tax by virtue of the UK/Germany and UK/Australia double
tax treaties.

Equalisation payments

Carnival and P&O Princess do not anticipate that any material amounts of
equalisation payments are likely to be made between them in accordance with the
Equalisation and Governance Agreement for the foreseeable future. However, if
it becomes necessary to make equalisation payments, any such payments received
in the UK are likely to be taxable. Further, the treatment from a U.S. federal
income tax perspective of such equalisation payments is not without doubt. The
payment is to be grossed up in respect of any tax thereon. On the basis that
payments will not be material, any tax cost should not be significant.

Taxation of shareholders

UK tax

General information on the application of current UK tax law and Inland Revenue
practice applicable to UK P&O Princess shareholders in respect of the DLC
transaction, the P&O Princess share reorganisation and if accepted, the Partial
Share Offer is set out in paragraph 2 of Appendix IV.

Holders of P&O Princess shares and P&O Princess ADSs should consult their
independent professional advisers in the light of their particular
circumstances as to the UK tax consequences of the DLC transaction, the P&O
Princess share reorganisation and the Partial Share Offer as well as to the
effect of any other state, local or applicable foreign tax law.

U.S. federal income taxation

General information on the application of current U.S. federal income tax laws
applicable to U.S. P&O Princess shareholders in respect of the DLC transaction,
the P&O Princess share reorganisation, and, if accepted, the Partial Share
Offer is set out in paragraph 3 of Appendix IV.

Holders of P&O Princess shares and P&O Princess ADSs should consult their
independent professional advisers in the light of their particular
circumstances as to the U.S. federal income tax consequences of the DLC
transaction, the P&O Princess share reorganisation and the Partial Share Offer,
as well as to the effect of any state, local or applicable foreign tax law.

                                      47



Section B.  Unaudited pro forma financial information of the Combined Group

Part A.  Unaudited pro forma financial information of the Combined Group in
       accordance with U.S. GAAP

Introduction

The following unaudited pro forma financial information gives pro forma effect
to the proposed DLC transaction, after giving effect to the pro forma
adjustments described in the accompanying notes. The unaudited pro forma
financial information has been prepared from, and you should read it in
conjunction with, the historical consolidated financial statements, including
the related notes, of Carnival and P&O Princess that are incorporated by
reference in this document. For more information on how to obtain copies of
information incorporated by reference, see "Incorporation of documents by
reference" on page 4 of this document.

The unaudited pro forma financial information has been prepared in accordance
with U.S. GAAP and in accordance with Carnival's accounting policies under U.S.
GAAP. U.S. GAAP differs in certain respects from UK GAAP, and Carnival's
accounting policies under U.S. GAAP differ in certain respects from P&O
Princess' accounting policies under UK GAAP and U.S. GAAP. The notes to the P&O
Princess consolidated financial statements for the year ended 31 December 2002
which are incorporated by reference in this document, describe the principal
differences between U.S. GAAP and UK GAAP as they relate to P&O Princess.

It is expected that under U.S. GAAP the DLC transaction will be accounted for
using the purchase method of accounting in accordance with Statement of
Financial Accounting Standards No. 141 "Business Combinations". The business
combination adjustments include provisional estimates of the fair value of the
identifiable assets and liabilities acquired. On completion of the DLC
transaction, adjustments will be made to these provisional estimates to reflect
their estimated fair values at that time. In accordance with the purchase
method of accounting, the P&O Princess U.S. GAAP accounting policies will be
conformed to Carnival's accounting policies upon completion of the DLC
transaction.

The unaudited pro forma statement of operations for the year ended 30 November
2002 has been prepared as if the DLC transaction had occurred on 1 December
2001. The unaudited pro forma balance sheet as of 30 November 2002 has been
prepared as if the DLC transaction had occurred on that date. The historical
financial information for P&O Princess used in the unaudited pro forma
financial information of the Combined Group is as at and for the year ended 31
December 2002.

The following unaudited pro forma financial information:

..   has been included for illustrative purposes only and, because of its
    nature, may not give a true picture of the results and the financial
    position of the Combined Group;

..   does not purport to represent what the combined results of operations
    actually would have been if the DLC transaction had occurred on 1 December
    2001 or what those results will be for any future periods. The pro forma
    adjustments are based upon currently available information;

..   does not reflect the results of business operations or trading since 30
    November 2002 for Carnival and 31 December 2002 for P&O Princess; and

..   has not been adjusted to reflect any net transaction benefits referred to
    in other sections of this document.

                                      48



                  Unaudited Pro Forma Statement of Operations
                      For the Year Ended 30 November 2002
               (U.S. dollars in millions, except per share data)



                                                                   Pro forma adjustments
                                                          -----------------------------
                                                                                                   Pro forma
                              Carnival                    Accounting           Business            Combined
                               (U.S.      P&O Princess      policy            combination            Group
                               GAAP)    (U.S. GAAP) /(1)/ adjustments         adjustments         (U.S. GAAP)
                              --------  ----------------  -----------       -----------           -----------
                                                                                   
Revenues                       4,368.3           2,526.8         (3.9)/(a)/                           6,891.2
Costs and expenses
Operating                     (2,311.9)         (1,576.6)        (5.2)/(b)/                          (3,892.7)
                                                               1.0/(a)/

Selling and administrative      (612.0)           (472.1)      4.3/(c)/          105.1/(k)/            (972.8)
                                                                                 1.9/(i)/
Depreciation and amortisation   (382.3)           (169.2)                                              (551.5)
Impairment charge                (20.0)               --                                                (20.0)
                              --------         ---------       ------            ------              --------
                              (3,326.2)         (2,217.9)         0.1             107.0              (5,437.0)
                              --------         ---------       ------            ------              --------
Operating income               1,042.1             308.9         (3.8)            107.0               1,454.2
Nonoperating (expense) income
Net interest expense             (78.6)            (77.3)                          (1.5)/(f)/          (157.4)
Other (expense) income, net       (4.2)              1.2                                                 (3.0)
                              --------         ---------       ------            ------              --------
                                 (82.8)            (76.1)                          (1.5)               (160.4)
                              --------         ---------       ------            ------              --------
Income before income taxes       959.3             232.8         (3.8)            105.5               1,293.8
Income tax benefit (expense)      56.6             (19.9)                        2.8/(g)/                39.5
                              --------         ---------       ------            ------              --------
Net income                     1,015.9             212.9         (3.8)            108.3               1,333.3
                              ========         =========       ======            ======              ========
Earnings per share/(n)/
Basic (U.S.$)                     1.73                                                                   1.67
Diluted (U.S.$)                   1.73                                                                   1.67

--------
(1)P&O Princess information is for the year ended 31 December 2002

See accompanying notes to unaudited pro forma financial information of the
Combined Group in accordance with U.S. GAAP.

                                      49



                       Unaudited Pro Forma Balance Sheet
                            As of 30 November 2002
                     (U.S. dollars and shares in millions)


                                                                        Pro forma adjustments
                                                              ---------------------------------
                                                                                                          Pro forma
                                   Carnival                     Accounting             Business           Combined
                                    (U.S.     P&O Princess        policy              combination           Group
                                    GAAP)   (U.S. GAAP) /(1)/   adjustments           adjustments        (U.S. GAAP)
                                   -------- ----------------  -----------           -----------          -----------
                                                                                          
Assets
Current Assets
Cash and cash equivalents             666.7            162.1                                                 828.8
Short-term investments                 39.0               --                                                  39.0
Accounts receivable, net              108.3            125.9          3.4/(a)/                               237.6
Inventories                            91.3             87.4                                                 178.7
Prepaid expenses and other            148.3            165.3         18.9/(c)/            (66.0)/(g)/        320.1
                                                                    (16.5)/(b)/            70.1/(l)/
Fair value of derivative contracts       --              7.3                                                   7.3
Fair value of hedged firm
  commitments                          78.4             41.4                              (41.4)/(e)/         78.4
                                   --------          -------        -----               -------           --------
Total current assets                1,132.0            589.4          5.8                 (37.3)           1,689.9
Property and Equipment, Net        10,115.4          5,618.5                                              15,733.9
Goodwill and Intangible Assets,
  Net                                 681.1             75.4                            2,924.4/(d)/       3,605.5
                                                                                          (75.4)/(j)/
Other Assets                          297.2             31.0                              (17.6)/(f)/        294.3
                                                                                           13.9/(l)/
                                                                                          (30.2)/(d-ii)/
Fair Value of Hedged Firm
  Commitments                         109.1               --                                                 109.1
Fair Value of Derivative Contracts       --             54.6                                                  54.6
                                   --------          -------        -----               -------           --------
                                   12,334.8          6,368.9          5.8               2,777.8           21,487.3
                                   ========          =======        =====               =======           ========
Liabilities and Shareholders'
  Equity
Current liabilities
Current portion of long-term debt     148.6            127.0                                                 275.6
Accounts payable                      268.7            184.2                                                 452.9
Accrued liabilities                   290.4            194.7         (0.1)/(a)/            29.0/(k)/         543.8
                                                                                           29.8/(d-ii)/
Customer deposits                     770.6            467.2         15.5/(a)/                             1,253.3
Dividends payable                      61.6               --                                                  61.6
Fair value of derivative contracts     79.8             45.6                                                 125.4
Fair value of hedged firm
  commitments                            --              1.5                               (1.5)/(e)/           --
                                   --------          -------        -----               -------           --------
Total current liabilities           1,619.7          1,020.2         15.4                  57.3            2,712.6
Long-Term Debt                      3,012.0          2,569.7                               (5.0)/(f)/      5,576.7
Deferred Income and Other Long-
  Term Liabilities                    170.8             28.1                               85.0/(h)/         283.9
Fair Value of Derivative Contracts    114.4              1.0                                                 115.4
Fair Value of Hedged Firm
  Commitments                            --             24.8                              (24.8)/(e)/           --
Shareholders' Equity                7,417.9          2,725.1         (9.6)/(d-iii)/     2,665.3/(m)/      12,798.7
Common stock: 960 shares, 750
  shares and 1,185 shares
  authorized; 586.8 shares,
  693.5 shares and 799.4 shares
  issued and outstanding for
  Carnival, P&O Princess and Pro
  Forma Combined Group,
  respectively
                                   --------          -------        -----               -------           --------
                                   12,334.8          6,368.9          5.8               2,777.8           21,487.3
                                   ========          =======        =====               =======           ========

--------
(1)P&O Princess information is as of 31 December 2002

See accompanying notes to unaudited pro forma financial information of the
Combined Group in accordance with U.S. GAAP.

                                      50



    Notes to the unaudited pro forma financial information of the Combined
                      Group in accordance with U.S. GAAP

1.  Basis of Presentation

The unaudited pro forma financial information has been prepared on the basis
that the DLC transaction will be accounted for using the purchase method of
accounting under U.S. GAAP with Carnival as the acquirer. The pro forma
financial information is based upon the U.S. GAAP accounting policies of
Carnival.

The historical financial information in relation to Carnival as at and for the
year ended 30 November 2002 has been derived from the financial information on
Carnival that is incorporated by reference in this document.

The historical financial information in relation to P&O Princess as at and for
the year ended 31 December 2002 has been derived from the financial information
on P&O Princess that is incorporated by reference in this document after making
certain adjustments. The adjustments, which are set out in note 2, relate to
the conversion of such information on P&O Princess' accounting policies under
UK GAAP to P&O Princess' accounting policies under U.S. GAAP.

2.  Conversion of P&O Princess' financial information to U.S. GAAP

This note provides details of adjustments required to convert P&O Princess'
previously reported financial information as at and for the year ended 31
December 2002 that was prepared in accordance with P&O Princess' accounting
policies under UK GAAP to information in accordance with U.S. GAAP. Further
details of the adjustments are set out in P&O Princess' financial statements
for the year ended 31 December 2002, which are incorporated by reference in
this document.

(i)  Profit and loss accounts

For the year ended 31 December 2002



                                     P&O Princess  U.S. GAAP  P&O Princess
                                       UK GAAP    adjustments  U.S. GAAP
                                     ------------ ----------- ------------
                                          (U.S. dollars in millions)
                                                     
      Revenues                          2,526.8                  2,526.8
      Costs and expenses
      Operating                        (1,576.6)                (1,576.6)
      Selling and administrative         (477.6)      5.5         (472.1)
      Depreciation and amortisation      (173.9)      4.7         (169.2)
                                       --------      ----       --------
                                       (2,228.1)     10.2       (2,217.9)
                                       --------      ----       --------
      Operating income                    298.7      10.2          308.9
      Non-operating (expense) income
      Net interest expense                (74.0)     (3.3)         (77.3)
      Other income                          1.2                      1.2
                                       --------      ----       --------
                                          (72.8)     (3.3)         (76.1)
                                       --------      ----       --------
      Income before income taxes          225.9       6.9          232.8
      Income tax expense                  (17.1)     (2.8)         (19.9)
                                       --------      ----       --------
      Net income                          208.8       4.1          212.9
                                       ========      ====       ========


                                      51



    Notes to the unaudited pro forma financial information of the Combined
                Group in accordance with U.S. GAAP--(Continued)


(ii)  Net assets

As of 31 December 2002



                                                P&O Princess  U.S. GAAP  P&O Princess
                                                  UK GAAP    adjustments  U.S. GAAP
                                                ------------ ----------- ------------
                                                     (U.S. dollars in millions)
                                                                
Assets
Current assets
   Cash and cash equivalents                        162.1          --        162.1
   Accounts receivable, net                         125.9          --        125.9
   Inventories                                       87.4          --         87.4
   Prepaid expenses and other                       183.5       (18.2)       165.3
   Fair value of derivative contracts                  --         7.3          7.3
   Fair value of hedged firm commitments               --        41.4         41.4
                                                  -------       -----      -------
   Total current assets                             558.9        30.5        589.4
Property and Equipment, Net                       5,629.4       (10.9)     5,618.5
Goodwill and Intangible Assets, Net                 127.1       (51.7)        75.4
Other Assets                                         16.3        14.7         31.0
Fair Value of Derivative Contracts                     --        54.6         54.6
                                                  -------       -----      -------
                                                  6,331.7        37.2      6,368.9
                                                  =======       =====      =======
Liabilities and Shareholders' Equity
Current liabilities
   Current portion of long-term debt                120.3         6.7        127.0
   Accounts payable                                 184.2          --        184.2
   Accrued liabilities                              215.5       (20.8)       194.7
   Customer deposits                                467.2          --        467.2
   Fair value of derivative contracts                  --        45.6         45.6
   Fair value of hedged firm commitments               --         1.5          1.5
                                                  -------       -----      -------
   Total current liabilities                        987.2        33.0      1,020.2
Long-Term Debt                                    2,516.8        52.9      2,569.7
Deferred Income and Other Long-Term Liabilities      13.7        14.4         28.1
Fair Value of Derivative Contracts                     --         1.0          1.0
Fair Value of Hedged Firm Commitments                  --        24.8         24.8
Shareholders' Equity                              2,814.0       (88.9)     2,725.1
                                                  -------       -----      -------
                                                  6,331.7        37.2      6,368.9
                                                  =======       =====      =======


3.  Accounting policy adjustments

The pro forma financial information has been prepared in accordance with the
accounting policies of Carnival under U.S. GAAP, which differ in certain
respects from the U.S. GAAP accounting policies of P&O Princess as noted below.
Upon completion of the DLC transaction, Carnival and P&O Princess will perform
a detailed review of their accounting policies and financial statement
classifications. As a result of this detailed review, it may become necessary
to make certain reclassifications to the Combined Group's financial statements
to conform the P&O Princess financial statements to the Carnival accounting
policies and classifications. Although Carnival and P&O Princess do not expect
that this detailed review will result in material changes to accounting
policies or classifications other than as noted below, no such assurance can be
given at this time.

(a)  Cruise revenues and expenses

    P&O Princess' accounting policy is initially to record deposits received on
    sales of cruises as deferred income and recognise them, together with
    revenues from onboard activities and all associated direct costs of a
    voyage, on a pro rata basis at the time of the voyage. Carnival's
    accounting policy is to recognise these items generally upon completion of
    voyages with durations of ten days or less and on a pro rata basis for
    voyages in excess of ten days. For the year ended

                                      52



    Notes to the unaudited pro forma financial information of the Combined
                Group in accordance with U.S. GAAP--(Continued)

    and as of 30 November 2002 adjustments of $(2.9) million, (affecting
    revenues by $(3.9) million and operating expenses by $1.0 million) and
    $(12.0) million (affecting accounts receivable by $(3.4) million accrued
    liabilities by $(0.1) million and customer deposits by $15.5 million) have
    been made to conform P&O Princess' policy to Carnival's policy.

(b)  Dry-docking

    P&O Princess' accounting policy is to capitalise dry-docking costs and
    amortise them to operating expense using the straight-line method through
    the date of the next scheduled dry-dock, which typically is over two to
    three years. Carnival's dry-dock accounting policy is the same as P&O
    Princess' except that the capitalised dry-dock costs are amortised to
    expense generally over one year. For the year ended and as of 30 November
    2002 adjustments of $(5.2) million and $(16.5) million have been made to
    conform P&O Princess' policy to Carnival's policy.

(c)  Marketing and promotion costs

    P&O Princess' accounting policy under U.S. GAAP is to expense all marketing
    and promotion costs as incurred. Carnival expenses all such costs as
    incurred except for brochures and media production costs, which are
    recorded as prepaid expenses and charged to expense as the brochures are
    consumed or upon the first airing of the advertisement, respectively. For
    the year ended and as of 30 November 2002 adjustments of $4.3 million and
    $18.9 million have been made to conform P&O Princess' policy to Carnival's
    policy.

4. Business combination adjustments

(d) Purchase consideration and related goodwill and intangible assets are as
follows:



                                                             (U.S.$m)  Notes
                                                                 
   Purchase consideration                                     5,380.8    (i)
   Costs of acquisition                                          60.0   (ii)
                                                             --------
   Total purchase consideration                               5,440.8
   Less fair value of net assets acquired                    (2,516.4) (iii)
                                                             --------
   Excess of purchase consideration over net assets acquired  2,924.4   (iv)
                                                             ========

--------
(i)The purchase consideration is expected to be based upon the average of the
   quoted closing market price of Carnival's shares beginning two days before
   and ending two days after 8 January 2003, the date its DLC transaction offer
   announcement was agreed to by the P&O Princess board. In addition, the
   number of P&O Princess shares is adjusted for the proposed share
   reorganisation of 3.3289 existing P&O Princess shares for one new P&O
   Princess share, including P&O Princess stock options, which will vest in
   full on completion of the DLC transaction. A Carnival share price of $25.31
   has been used for purposes of this pro forma presentation and an estimated
   number of P&O Princess shares in issue of 212.6 million after adjusting for
   the the share reorganisation.
(ii)Represents Carnival's estimated direct costs of carrying out the proposed
    DLC transaction, including costs related to the registration of Carnival
    shares pursuant to the Partial Share Offer, of which $30.2 million has been
    incurred by Carnival and is included as other assets. An adjustment has
    been made to remove this $30.2 million from other assets as it will be
    included in the purchase consideration upon completion of the DLC
    transaction. Of the total $60.0 million of acquisition costs $29.8 million
    had not been incurred as of 30 November 2002 and, accordingly, an
    adjustment has been made to increase accrued liabilities for this amount.
(iii)Based upon preliminary estimates of the fair value of the identifiable
     assets acquired and liabilities assumed given current information. On
     completion of the DLC transaction, adjustments will be made to these
     preliminary estimates to reflect their estimated fair values at that time.
     Carnival and P&O Princess expect to have independent appraisals performed
     to assist them in establishing the fair value of P&O Princess' ships and
     amortisable and non-amortisable intangible assets. However, based on the
     information currently available, it is not expected that the amount of
     separately identifiable amortisable intangible assets will be material to
     the Combined Group's financial statements. No assurance can be given that
     the preliminary fair value estimates included in this pro forma financial
     information will not be materially changed as a result of these
     valuations. Fair value adjustments are detailed in the notes and table
     below.

                                      53



    Notes to the unaudited pro forma financial information of the Combined
                Group in accordance with U.S. GAAP--(Continued)


   P&O Princess fair value of net assets acquired



                                                  Accounting                        Pro
                                          P&O       policy                         forma
                                       Princess   adjustments      Fair value      fair
                                      (U.S. GAAP)  (Note 3)        adjustments     value
                                      ----------- -----------      -----------    -------
                                                            U.S. $m
                                                                      
Assets
Current Assets
Cash and cash equivalents                 162.1                                     162.1
Accounts receivable, net                  125.9           3.4/(a)/                  129.3
Inventories                                87.4                                      87.4
Prepaid expenses and other                165.3          18.9/(c)/      70.1/(l)/   171.8
                                                       (16.5)/(b)/    (66.0)/(g)/
Fair value of derivative contracts          7.3                                       7.3
Fair value of hedged firm commitments      41.4                       (41.4)/(e)/      --
                                        -------        ------        -------      -------
Total current assets                      589.4           5.8         (37.3)        557.9
Property and Equipment, Net             5,618.5                                   5,618.5
Goodwill and Intangible Assets, Net        75.4                       (75.4)/(j)/      --
Other Assets                               31.0                       (17.6)/(f)/    27.3
                                                                        13.9/(l)/
Fair Value of Derivative Contracts         54.6                                      54.6
                                        -------        ------        -------      -------
                                        6,368.9           5.8        (116.4)      6,258.3
                                        =======        ======        =======      =======
Liabilities and Shareholders' Equity
Current liabilities
Current portion of long-term debt         127.0                                     127.0
Accounts payable                          184.2                                     184.2
Accrued liabilities                       194.7         (0.1)/(a)/      29.0/(k)/   223.6
Customer deposits                         467.2          15.5/(a)/                  482.7
Fair value of derivative contracts         45.6                                      45.6
Fair value of hedged firm commitments       1.5                        (1.5)/(e)/      --
                                        -------        ------        -------      -------
Total current liabilities               1,020.2          15.4           27.5      1,063.1
Long-term Debt                          2,569.7                        (5.0)/(f)/ 2,564.7
Other long-term liabilities                28.1                         85.0/(h)/   113.1
Fair Value of Derivative Contracts          1.0                                       1.0
Fair Value of Hedged Firm Commitments      24.8                       (24.8)/(e)/      --
Shareholders' Equity                    2,725.1         (9.6)*       (199.1)**    2,516.4
                                        -------        ------        -------      -------
                                        6,368.9           5.8        (116.4)      6,258.3
                                        =======        ======        =======      =======

   -----
  (*)Represents the net shareholders' equity decrease due to accounting policy
     adjustments.
 (**)Represents the net shareholders' equity decrease due to fair value
     adjustments.

 (iv)The excess of purchase consideration over net assets acquired is primarily
     estimated to include the value attributed to P&O Princess' trademarks,
     brand names and goodwill. Carnival and P&O Princess believe that these
     trademarks and brand names have indefinite lives and, accordingly, based
     on SFAS No. 142, "Goodwill and Other Intangible Assets", no adjustment for
     pro forma amortisation is required. It is not possible at this time to
     reasonably estimate the separate amounts attributable to identifiable
     intangible assets or goodwill since the measurement of these assets
     requires the expertise of an independent appraiser, who will not be
     engaged until after the completion of the DLC transaction. Accordingly,
     the entire amount of the excess of the purchase consideration has
     currently been allocated to goodwill, but is expected to be allocated
     between goodwill and other identifiable intangible assets such as brand
     names and trademarks, subsequent to the completion of the DLC transaction
     based primarily on the appraiser's valuation. However, since it is
     expected that the material intangibles that will be identified and valued
     will have indefinite lives, no material impact on the pro forma statement
     of operations is expected as a result of this presentation on the Combined
     Group's balance sheet, as neither goodwill nor these indefinite lived
     intangibles are allowed to be amortised.


(e) A net adjustment of $15.1 million has been made against the fair value of
    hedged firm commitments. These adjustments relate to contractual
    commitments for ships which were

                                      54



    Notes to the unaudited pro forma financial information of the Combined
                Group in accordance with U.S. GAAP--(Continued)

    ordered, and hedged, at a time when the euro exchange rate was different,
    and hence, these contracts could be replaced today at a euro price that
    would convert to a different U.S. dollar cost at current exchange rates.

    Otherwise, the book value, including prepaid dry-dock costs, and fair value
    of ships in use and under construction are preliminarily estimated to be
    the same in all material respects. However, Carnival intends to have an
    appraisal of all the P&O Princess ships, so it is possible that the fair
    value of some of P&O Princess' ships could be less than or greater than
    their carrying value.

(f) An adjustment of $5.0 million has been made to the book value of P&O
    Princess fixed interest rate long-term debt to reflect current interest
    rates, without giving effect to any possible changes in credit ratings. The
    fair value of this debt is based upon quoted market prices or the
    discounted present value of future amounts payable on the debt. The fair
    value adjustment is amortised over the remaining term of the debt as
    applicable, which results in a pro forma increase of $1.5 million in
    interest expense for 2002. In addition, an adjustment has been made to
    write-off the book value of P&O Princess' historical deferred financing
    costs of $17.6 million related to its existing borrowings, as such costs
    have been considered in determining the fair value of P&O Princess debt.

(g) An adjustment of $66.0 million has been made to the book value of other tax
    assets to reflect recoverable value to the Combined Group and to reverse
    $2.8 million of P&O Princess' related tax expense.

(h) An adjustment of $85.0 million has been made to record the fair value of
    P&O Princess' pension plan liabilities. This relates to the Merchant Navy
    Officers Pension Fund and is calculated based on, among other things, P&O
    Princess' current share of total employer contributions.

(i) On completion of the DLC transaction all awards and options granted under
    the P&O Princess employee share incentive plans will vest in full. An
    adjustment has been made to reverse the P&O Princess employee share
    incentive and matching award charge of $1.9 million for the year ended 30
    November 2002.

(j) An adjustment has been made to eliminate $75.4 million of P&O Princess'
    historical goodwill related to prior business acquisitions.

(k) P&O Princess expects to incur and expense approximately $146.0 million of
    costs related to its terminated Royal Caribbean transaction and the
    completion of the DLC transaction with Carnival, including costs incurred
    to register P&O Princess ordinary shares with the U.S. Securities
    and Exchange Commission. Under U.S. GAAP, $11.9 million was expensed in the
    year ended 31 December 2001, and $105.1 million was expensed in 2002. An
    adjustment has been made to reverse this $105.1 million in the pro forma
    statement of operations for 2002 since Carnival and P&O Princess believe
    that the Royal Caribbean and Carnival costs are non-recurring charges
    directly attributable in all material respects to the DLC transaction. Of
    the total $146.0 million of P&O Princess' costs, $29.0 million has not been
    incurred as at 31 December 2002 and an adjustment has been made to increase
    accrued liabilities for this amount.

(l) An adjustment of $84.0 million ($70.1 million current and $13.9 million
    long term) has been made to record the fair value of P&O Princess'
    contractual commitments to receive probable and estimable liquidated
    damages and business interruption insurance proceeds related to the delayed
    delivery of the Diamond Princess. This ship was initially scheduled for
    delivery in May 2003, but has been delayed as a result of a fire in October
    2002.

(m) The shareholders' equity adjustment of $2,665.3 million represents the net
    equity increase due to the application of business combination adjustments,
    as detailed below:



                                                                          U.S.$m   Notes
                                                                            
Excess of purchase consideration over net assets acquired                2,924.4    4(d)
Reduction in P&O Princess shareholders' funds for fair value adjustments  (199.1)   4(d-iii)
Costs of acquisition                                                       (60.0)   4(d-ii)
                                                                         -------
Shareholders' equity adjustment                                          2,665.3
                                                                         =======


                                      55



    Notes to the unaudited pro forma financial information of the Combined
                Group in accordance with U.S. GAAP--(Continued)


(n) The pro forma weighted average number of shares has been calculated as if
    the DLC transaction had occurred on 1 December 2001 and after adjusting for
    the proposed P&O Princess share reorganisation of 3.3289 existing P&O
    Princess shares for one new P&O Princess share.

    Based upon the weighted average number of shares outstanding of 706.6
    million, including 14.2 million of share options which all vest upon
    completion of the DLC transaction (706.6 million diluted), or 212.3 million
    (212.3 million diluted) after the proposed P&O Princess share
    reorganisation, for P&O Princess and 586.6 million (588.1 million diluted)
    for Carnival for the years ended 31 December 2002 and 30 November 2002,
    respectively, the pro forma weighted average number of shares for the
    Combined Group is calculated as 798.9 million (800.4 million diluted).

   The pro forma earnings per share amounts have been calculated using the pro
   forma weighted average number of shares, calculated as described above, and
   the pro forma earnings for the Combined Group.

(o)Certain restructuring and integration expenses may be recorded subsequent to
   the completion of the DLC transaction. The amount of these charges has not
   yet been determined, although they have been preliminarily estimated to be
   approximately $30 million, as they will be the subject of a detailed plan of
   restructuring and integration to be completed subsequent to the consummation
   of the DLC transaction. A portion of these charges may subsequently be
   determined to be part of the purchase consideration. These charges are not
   reflected in the unaudited pro forma financial information because they are
   not expected to have a continuing impact on the combined results.

                                      56



Part B.  Unaudited pro forma financial information of the Combined Group in
         accordance with UK GAAP

Introduction

The following unaudited pro forma financial information gives pro forma effect
to the proposed DLC transaction, after giving effect to the pro forma
adjustments described in the accompanying notes.

The unaudited pro forma financial information has been prepared based upon the
accounting policies of P&O Princess under UK GAAP. It is expected that under
the accounting policies of P&O Princess under UK GAAP the DLC transaction would
be accounted for using acquisition accounting principles, with P&O Princess as
acquiree. The business combination adjustments include provisional estimates of
the fair value of the identifiable assets and liabilities acquired. On
completion of the DLC transaction, adjustments will be made to these
provisional estimates to reflect their estimated fair values at that time.

The unaudited pro forma profit and loss account for the year ended 31 December
2002 has been prepared as if the DLC transaction had occurred on 1 January
2002. The unaudited pro forma net asset statement as at 31 December 2002 has
been prepared as if the DLC transaction had occurred on that date. The
historical financial information for Carnival used in the unaudited pro forma
financial information of the Combined Group is as at and for the year ended 30
November 2002.

The following unaudited pro forma financial information:

..  has been included for illustrative purposes only and, because of its nature,
   may not give a true picture of the results and the financial position of the
   Combined Group;

..  does not purport to represent what the combined results of operations
   actually would have been if the DLC transaction had occurred on 1 January
   2002 or what those results will be for any future periods. The pro forma
   adjustments are based upon currently available information;

..  does not reflect the results of business operations or trading since 31
   December 2002 for P&O Princess and 30 November 2002 for Carnival; and

..  has not been adjusted to reflect any net transaction benefits referred to in
   other sections of this document.

                                      57



                  Unaudited Pro Forma Profit and Loss Account

                      For the Year Ended 31 December 2002
               (U.S. dollars in millions, except per share data)



                                                                           Business        Pro forma
                                                   P&O                    combination      Combined
                                                Princess    Carnival      adjustments        Group
                                                (UK GAAP) (UK GAAP)/(1)/   (UK GAAP)       (UK GAAP)
                                                --------- -------------  -----------       ---------
                                                                               
Turnover                                         2,526.8        4,374.3                      6,901.1
Direct operating costs                          (1,576.6)      (2,313.7)                    (3,890.3)
Selling and administrative expenses               (477.6)        (614.9)       117.0/(g)/     (971.8)
                                                                                 3.7/(e)/
Depreciation and amortisation                     (173.9)        (381.8)         4.3/(f)/     (551.4)
Impairment charge                                     --          (28.5)                       (28.5)
                                                --------       --------      -------        --------
Operating costs                                 (2,228.1)      (3,338.9)       125.0        (5,442.0)
                                                --------       --------      -------        --------
Operating profit                                   298.7        1,035.4        125.0         1,459.1
Profit on disposal of fixed assets                   1.2             --                          1.2
Profit on sale of businesses                          --            4.2                          4.2
                                                --------       --------      -------        --------
Profit on ordinary activities before interest      299.9        1,039.6        125.0         1,464.5
Net interest and similar items                     (74.0)         (78.6)        (1.5)/(c)/    (154.1)
                                                --------       --------      -------        --------
Profit on ordinary activities before taxation      225.9          961.0        123.5         1,310.4
Taxation                                           (17.1)          56.6                         39.5
                                                --------       --------      -------        --------
Profit on ordinary activities after taxation       208.8        1,017.6        123.5         1,349.9
Equity minority interests                             --             --                           --
                                                --------       --------      -------        --------
Profit for the financial period attributable to
  shareholders                                     208.8        1,017.6        123.5         1,349.9
Ordinary dividends                                 (83.2)        (246.4)                      (329.6)
                                                --------       --------      -------        --------
Retained profit for the financial period           125.6          771.2        123.5         1,020.3
                                                ========       ========      =======        ========

Earnings per share/(j)/
Basic earnings per share (U.S.$)                                                                1.69
Diluted earnings per share (U.S.$)                                                              1.69

--------
(1)Carnival information is for the year ended 30 November 2002.

All profits and losses arise from continuing activities.

See accompanying notes to unaudited pro forma financial information of the
Combined Group in accordance with UK GAAP.

                                      58



                    Unaudited Pro Forma Net Asset Statement

                            As at 31 December 2002
                          (U.S. dollars in millions)



                                                                          Business       Pro forma
                                             P&O                         combination     Combined
                                          Princess       Carnival        adjustments       Group
                                          (UK GAAP)    (UK GAAP)/(1)/     (UK GAAP)      (UK GAAP)
                                          ---------    -------------  -----------        ---------
                                                                             
Fixed assets
Intangible assets                             127.1         662.3        (127.1)/(f)/     2,628.7
                                                                       1,966.4 /(a)/
Tangible assets:
 Ships                                      5,380.0       9,638.3                        15,018.3
 Properties and other fixed assets            249.4         477.1                           726.5
                                          ---------      --------      --------          --------
                                            5,629.4      10,115.4                        15,744.8
Investments                                    16.3            --                            16.3
                                          ---------      --------      --------          --------
                                            5,772.8      10,777.7       1,839.3          18,389.8
Current assets
Stocks                                         87.4          89.2                           176.6
Debtors due in less than one year             289.0         425.2         70.1 /(h)/        784.3
Debtors due in greater than one year           20.4         313.3         13.9 /(h)/        317.4
                                                                          (30.2)/(a-ii)/
Cash at bank and in hand                      162.1       1,753.8                         1,915.9
                                          ---------      --------      --------          --------
                                              558.9       2,581.5          53.8           3,194.2
                                          ---------      --------      --------          --------
Creditors: amounts falling due within one    (987.2)     (1,597.1)        (29.0)/(g)/    (2,643.1)
  year                                                                    (29.8)/(a-ii)/
                                          ---------      --------      --------          --------
Net current (liabilities)/assets             (428.3)        984.4          (5.0)            551.1
                                          ---------      --------      --------          --------
Total assets less current liabilities       5,344.5      11,762.1       1,834.3          18,940.9
Creditors: amounts falling due after one
  year                                     (2,516.8)     (4,218.1)         (1.4)/(c)/    (6,736.3)
Provisions for liabilities and charges        (13.7)           --        (104.0)/(d)/      (134.4)
                                                                          (16.7)/(b)/
                                          ---------      --------      --------          --------
Net assets                                  2,814.0       7,544.0      1,712.2 /(i)/     12,070.2
                                          =========      ========      ========          ========

--------
(1)Carnival information is as at 30 November 2002.

See accompanying notes to unaudited pro forma financial information of the
Combined Group in accordance with UK GAAP.

                                      59



Notes to the unaudited pro forma financial information of the Combined Group in
accordance with UK GAAP:

1.  Basis of preparation

The unaudited pro forma financial information has been prepared on the basis
that the DLC transaction will be accounted for using acquisition accounting
principles under UK GAAP with P&O Princess as the acquiree. The pro forma
financial information is based upon the UK GAAP accounting policies of P&O
Princess.

The historical financial information in relation to P&O Princess as at and for
the year ended 31 December 2002 has been extracted without material adjustment
from the financial information on P&O Princess that has been incorporated by
reference in this document.

The historical financial information in relation to Carnival as at and for the
year ended 30 November 2002 has been derived from the financial information of
Carnival that has been incorporated by reference in this document, after making
certain adjustments. The adjustments, which are set out in note 2, relate to
the conversion of such information on Carnival's accounting policies under U.S.
GAAP to P&O Princess' accounting policies under UK GAAP.

2.  Conversion of Carnival's financial information to UK GAAP

This note provides details of adjustments required to convert Carnival's
previously reported financial information as at and for the year ended 30
November 2002 that was prepared in accordance with Carnival's accounting
policies under U.S. GAAP to information in accordance with P&O Princess'
accounting policies under UK GAAP. A description of the adjustments is set out
in Part C of this Section B.

(a)  Profit and loss accounts



                                                          Year ended
                                                       30 November 2002
                                               -------------------------------
                                                  (U.S. dollars in millions)

                                                                      Carnival
                                                                     using P&O
                                                                     Princess'
                                               Carnival              accounting
                                                 U.S.                 policies
                                                 GAAP    Adjustments  UK GAAP
                                               --------  ----------- ----------
                                                            
 Turnover                                       4,368.3       6.0      4,374.3
 Direct operating costs                        (2,311.9)     (1.8)    (2,313.7)
 Selling and administration expenses             (612.0)     (2.9)      (614.9)
 Depreciation and amortisation                   (382.3)      0.5       (381.8)
 Impairment charge                                (20.0)     (8.5)       (28.5)
                                               --------     -----    ---------
 Operating costs                               (3,326.2)    (12.7)    (3,338.9)
                                               --------     -----    ---------
 Operating profit                               1,042.1      (6.7)     1,035.4
 Profit on disposal of businesses                    --       4.2          4.2
 Other (expense)/income, net                       (4.2)      4.2           --
                                               --------     -----    ---------
 Profit on ordinary activities before interest  1,037.9       1.7      1,039.6
 Net interest and similar items                   (78.6)       --        (78.6)
                                               --------     -----    ---------
 Profit on ordinary activities before taxation    959.3       1.7        961.0
 Taxation                                          56.6        --         56.6
                                               --------     -----    ---------
 Profit on ordinary activities after taxation   1,015.9       1.7      1,017.6
 Ordinary dividends                              (246.4)       --       (246.4)
                                               --------     -----    ---------
 Retained profit for the financial period         769.5       1.7        771.2
                                               ========     =====    =========


                                      60



Included in the adjustments are reclassifications, which have been made to the
statement of operations that are incorporated by reference in this document in
order to present such information in the UK GAAP profit and loss account format
above. The most significant of these reclassifications in that under U.S. GAAP
other nonoperating (expense)/income is shown below operating profit, whereas
under UK GAAP it is shown in the respective income or expense line.

(b)  Net assets



                                                     As at 30 November 2002
                                               ---------------------------------
                                                   (U.S. dollars in millions)
                                                                       Carnival
                                                                      using P&O
                                                                      Princess'
                                                                      accounting
                                               Carnival                policies
                                                 U.S.                     UK
                                                 GAAP    Adjustments     GAAP
                                               --------  -----------  ----------
                                                             
Fixed assets
Intangible assets                                 681.1        (18.8)      662.3
Tangible assets:
 Ships                                          9,638.3           --     9,638.3
 Properties and other fixed assets                477.1           --       477.1
                                               --------     --------    --------
                                               10,115.4           --    10,115.4
Fair value of hedged firm commitments             109.1       (109.1)         --
                                               --------     --------    --------
                                               10,905.6       (127.9)   10,777.7
Current assets
Stocks                                             91.3         (2.1)       89.2
Debtors due in less than one year                 256.7        168.5       425.2
Debtors due in greater than one year              297.2         16.1       313.3
Cash at bank and in hand                          705.7      1,048.1     1,753.8
Fair value of hedged firm commitments              78.4        (78.4)         --
                                               --------     --------    --------
                                                1,429.3      1,152.2     2,581.5
Creditors: amounts falling due within one year (1,540.0)       (57.1)   (1,597.1)
Fair value of derivative contracts                (79.8)        79.8          --
                                               --------     --------    --------
Net current (liabilities) /assets                (190.5)     1,174.9       984.4
                                               --------     --------    --------
Total assets less current liabilities          10,715.1      1,047.0    11,762.1
Creditors: amounts falling due after one year  (3,182.8)    (1,035.3)   (4,218.1)
Fair value of derivative contracts               (114.4)       114.4          --
                                               --------     --------    --------
Net assets                                      7,417.9        126.1     7,544.0
                                               ========     ========    ========


Reclassifications have been made to the balance sheet that are incorporated by
reference in this document in order to present such information in the UK GAAP
format above. The most significant of these reclassifications are:

..  Cash at bank and in hand includes amounts classified as short-term
   investments for U.S. GAAP purposes.

..  Cash at bank and in hand includes $1.05 billion of restricted cash and
   creditors: amounts falling due after one year includes $1.05 billion of
   finance leases. Under U.S. GAAP, the restricted cash is considered to have
   extinguished the finance lease liabilities.

..  Debtors due in less than one year includes amounts classified as trade and
   other receivables and prepaid and other expenses for U.S. GAAP purposes.

..  Debtors due in greater than one year includes amounts classified as
   long-term other assets for U.S. GAAP purposes.

                                      61



..  Creditors: amounts falling due within one year includes amounts classified
   as current portion of long-term debt, accounts payable, accrued liabilities,
   dividends payable and customer deposits for U.S. GAAP purposes.

..  Creditors: amounts falling due after one year includes amounts classified as
   long-term debt and other long-term liabilities for U.S. GAAP purposes.

3.  Business combination adjustments

(a)Purchase consideration and related goodwill and intangible assets are as
   follows:



                                                             (U.S. $m) Notes
                                                                 
   Purchase consideration                                     4,526.2    (i)
   Costs of acquisition                                          60.0   (ii)
                                                             --------
   Total purchase consideration                               4,586.2
   Less fair value of net assets acquired                    (2,619.8) (iii)
                                                             --------
   Excess of purchase consideration over net assets acquired  1,966.4   (iv)
                                                             ========  ====


    (i)The purchase consideration is based upon the quoted closing market price
       of Carnival's shares and the proposed share reorganisation of 3.3289
       existing P&O Princess shares for one new P&O Princess share, including
       P&O Princess stock options which will vest in full on completion of the
       DLC transaction. Under UK GAAP the market price of Carnival's shares is
       measured on the date the DLC transaction occurs. A Carnival share price
       of $21.29 has been used for the purposes of this pro forma presentation
       and an estimated number of P&O Princess' shares in issue of 212.6
       million, after adjusting for the share reorganization. For every $1.00
       increase or decrease in the Carnival share price, the purchase
       consideration will increase or decrease by approximately $212.6 million.

   (ii)Represents Carnival's estimated direct costs of carrying out the
       proposed DLC transaction, including the costs relating to the
       registration of Carnival shares pursuant to the Partial Share Offer, of
       which $30.2 million has been incurred by Carnival and is included in
       debtors due in greater than one year. An adjustment has been made to
       remove this $30.2 million from debtors falling due after one year as it
       will be included in the purchase consideration upon completion of the
       DLC transaction. Of the total $60.0 million of acquisition costs, $29.8
       million had not been incurred as of 31 December 2002 and accordingly, an
       adjustment has been made to increase Creditors: amounts falling due
       within one year for this amount.

  (iii)Based upon provisional estimates of the fair value of the identifiable
       assets acquired and liabilities assumed given current information. On
       completion of the DLC transaction, adjustments will be made to these
       provisional estimates to reflect their estimated fair values at that
       time. Carnival and P&O Princess expect to have independent appraisals
       performed to assist them in establishing the fair values of P&O
       Princess' ships and intangible assets. No assurance can be given that
       the provisional fair value estimates included in this pro forma
       financial information will not be materially changed as a result of
       these valuations. Fair value adjustments are detailed in the notes and
       table below.

                                      62



   P&O Princess fair value of net assets aquired



                                                  P&O    Fair  value    Pro forma
                                               Princess  adjustments    fair value
                                               (UK GAAP)  (UK GAAP)     (UK GAAP)
                                               --------- -----------    ----------
                                                             U.S. $m
                                                               
Fixed Assets
Intangible assets                                  127.1   (127.1)/(f)/        --

Tangible assets:
   Ships                                         5,380.0                  5,380.0
   Properties and other fixed assets               249.4                    249.4
                                               ---------   -------      ---------
                                                 5,629.4                  5,629.4
Investments                                         16.3                     16.3
                                               ---------   -------      ---------
                                                 5,772.8   (127.1)        5,645.7

Current Assets
Stocks                                              87.4                     87.4
Debtors due in less than one year                  289.0      70.1/(h)/     359.1
Debtors due in greater than one year                20.4      13.9/(h)/      34.3

Cash at bank and in hand                           162.1                    162.1
                                               ---------   -------      ---------
                                                   558.9      84.0          642.9
                                               ---------   -------      ---------
Creditors: amounts falling due within one year   (987.2)    (29.0)/(g)/ (1,016.2)
                                               ---------   -------      ---------
Net current (liabilities)/assets                 (428.3)      55.0        (373.3)
                                               ---------   -------      ---------
Total assets less current liabilities            5,344.5    (72.1)        5,272.4
Creditors: amounts falling due after one year  (2,516.8)     (1.4)/(c)/ (2,518.2)
Provisions for liabilities and charges            (13.7)   (104.0)/(d)/   (134.4)
                                                            (16.7)/(b)/
                                               ---------   -------      ---------
Net assets                                       2,814.0   (194.2)        2,619.8
                                               =========   =======      =========


   (iv)The excess of purchase consideration over net assets acquired is
       primarily estimated to represent the value attributed to P&O Princess'
       goodwill. The useful economic life of the goodwill arising on this
       transaction is expected to be indefinite and, therefore, no adjustment
       for amortisation has been recorded.

(b)A provision of $16.7 million has been made primarily in respect of foreign
   exchange hedge commitments for ship build contracts. This adjustment
   primarily relates to ships which were ordered, and hedged, at a time when
   the Euro exchange rate was different, and hence, these ships could be
   ordered today at a Euro price that would convert to a different U.S. dollar
   cost at current exchange rates.

   Otherwise, the book value, including prepaid dry dock costs, and fair value
   of ships in use and under construction are provisionally estimated to be the
   same in all material respects. However, Carnival and P&O Princess intend to
   have an appraisal of all the P&O Princess ships, so it is possible that the
   fair value of some of P&O Princess' ships could be less than or greater than
   their carrying value.

(c)An adjustment of $1.4 million has been made to the book value of P&O
   Princess' fixed interest rate long-term debt to reflect current interest
   rates, without giving effect to any possible changes in credit ratings. The
   fair value of this debt is based upon quoted market prices at the balance
   sheet date, or the discounted present value of future amounts payable on the
   debt. The fair value adjustment is amortised over the remaining term of the
   debt as applicable, which results in a pro forma increase of $1.5 million in
   interest expense for the year ended 31 December 2002.

(d)A $104.0 million adjustment has been made to record the fair value of P&O
   Princess pension plan liabilities, within provisions for liabilities and
   charges. This primarily relates to the Merchant Navy Officers' Pension Fund,
   calculated based, among other things, upon P&O Princess' current share of
   total employer contributions.

                                      63



(e)On completion of the DLC transaction all awards and options granted under
   the P&O Princess employee share incentive plans will vest in full. An
   adjustment has been made to reverse the P&O Princess employee share
   incentive and matching awards charge of $3.7 million for the year ended 31
   December 2002.

(f)An adjustment has been made to eliminate $127.1 million of P&O Princess'
   historical goodwill relating to prior business acquisitions. The goodwill
   amortization charge in the year ended 31 December 2002 of $4.3 million in
   respect of that goodwill has been reversed.

(g)P&O Princess expects to incur and expense approximately $146.0 million of
   costs related to its terminated Royal Caribbean transaction and the
   completion of the DLC transaction with Carnival, including costs incurred to
   register P&O Princess ordinary shares with the U.S. Securities and Exchange
   Commission. Under UK GAAP, $117.0 million was expensed in the year ended 31
   December 2002. The pro forma financial information has been prepared on
   acquisition accounting principles with P&O Princess as the acquiree. As
   acquiree P&O Princess will have charged to its profit and loss account all
   its transaction costs relating to the DLC transaction prior to completion of
   the transaction. The Combined Group pro forma profit and loss account has
   been prepared as if the DLC transaction had occurred on 1 January 2002, in
   which case none of P&O Princess' transaction costs would have appeared in
   the Combined Group profit and loss account for the year ended 31 December
   2002. Accordingly, an adjustment has been made to reverse the $117.0 million
   of transaction costs incurred by P&O Princess in 2002. Of the total $146.0
   million of P&O Princess' costs, $29.0 million has not been incurred as at
   31 December 2002 and an adjustment has been made to increase Creditors:
   amounts falling due within one year for this amount.

(h)An adjustment of $84.0 million ($70.1 million in current debtors and $13.9
   million in debtors due after one year) has been made to record the fair
   value of P&O Princess' contractual commitments to receive probable and
   estimable liquidated damages and business interruption insurance proceeds
   related to the delayed delivery of the Diamond Princess. This ship was
   initially scheduled for delivery in May 2003, but has been delayed as a
   result of a fire in October 2002.

(i)The net assets adjustment represents the net equity increase due to the
   application of business combination adjustments, as detailed below:



                                                                           U.S.$m   Notes
-                                                                         -------  -----
                                                                             
Excess of purchase consideration over net assets acquired                 1,966.4    3(a)
Reduction in P&O Princess' shareholders' funds for fair value adjustments  (194.2)   3(a-iii)
Costs of acquisition                                                        (60.0)   3(a-ii)
                                                                          -------
Net assets adjustment                                                     1,712.2
                                                                          =======


(j)Earnings per share

   The pro forma weighted average number of shares has been calculated as if
   the DLC transaction had occurred on 1 January 2002 and after adjusting for
   the proposed P&O Princess share reorganisation of 3.3289 existing P&O
   Princess shares for one new P&O Princess share.

   Based upon the weighted average number of shares outstanding of 706.6
   million, including 14.2 million of share options which will vest upon
   completion of the DLC transaction (706.6 million diluted), or 212.3 million
   (212.3 million diluted) after the proposed P&O Princess share
   reorganisation, for P&O Princess for the year ended 31 December 2002 and
   586.6 million (588.1 million diluted) for Carnival for the year ended 30
   November 2002, the pro forma weighted average number of shares for the
   Combined Group is calculated as 798.9 million (800.4 million diluted).

   The pro forma earnings per share amounts have been calculated using the pro
   forma weighted average number of shares, calculated as described above, and
   the pro forma earnings for the Combined Group. Pro forma earnings represent
   the profit for the financial period.

(k)Certain restructuring and integration expenses may be recorded subsequent to
   the completion of the DLC transaction. The amount of these charges has not
   yet been determined, although they have been preliminarily estimated to be
   approximately $30 million, as they will be the subject of a detailed plan of
   restructuring and integration to be completed subsequent to the completion
   of the DLC transaction. No adjustment has been made for these expenses in
   the pro forma financial information.

4.  Summary of differences between UK and U.S. GAAP

The pro forma financial information has been prepared in accordance with P&O
Princess' accounting policies under UK GAAP which differ in certain respects
from U.S. GAAP and Carnival's accounting policies. The following is a summary
of the material adjustments to profit attributable to shareholders

                                      64



and net assets which would have been required to adjust for significant
differences between UK GAAP and U.S. GAAP relevant to the Combined Group and
other differences in accounting policies.



                                                                           Business    Pro Forma
                                                          P&O             combination  Combined
Reconciliation of pro forma profit attributable to      Princess Carnival adjustments    Group
shareholders for the year ended 31 December 2002        -------- -------- -----------  ---------
                                                               (U.S. dollars in millions)
                                                                           
Attributable profit under UK GAAP                         208.8  1,017.6        123.5    1,349.9
U.S. GAAP adjustments
 Depreciation                                               0.4                              0.4
 Goodwill and contingent consideration                      4.3                  (4.3)        --
 Marketing and promotion costs                             (3.2)     1.7                    (1.5)
 Relocation costs                                          (2.0)                            (2.0)
 Employee share incentives                                  1.8                  (1.8)        --
 Pensions                                                  (3.0)                            (3.0)
 Derivative instruments and hedging activities             (3.3)                            (3.3)
 Taxes                                                     (2.8)                  2.8         --
 Transaction costs                                         11.9                 (11.9)        --
                                                        -------  -------        -----  ---------
Profit attributable to shareholders under U.S. GAAP as
  applied by P&O Princess                                 212.9  1,019.3        108.3    1,340.5
Other accounting policy adjustments
 Cruise revenues and expenses                              (2.9)     1.0                    (1.9)
 Drydocking                                                (5.2)    (4.4)                   (9.6)
 Marketing and promotion costs                              4.3                              4.3
                                                        -------  -------        -----  ---------
Profit attributable to shareholders under U.S. GAAP and
  Carnival's accounting policies                          209.1  1,015.9        108.3    1,333.3
                                                        =======  =======        =====  =========




                                                                        Business     Pro forma
                                                       P&O             combination   Combined
Reconciliation of pro forma net assets at            Princess Carnival adjustments     Group
31 December 2002                                     -------- -------- -----------  ----------
                                                             (U.S. dollars in millions)
                                                                        
Net assets under UK GAAP                             2,814.0  7,544.0      1,712.2    12,070.2
U.S. GAAP adjustments
 Treasury stock                                         (2.9)                             (2.9)
 Depreciation                                          (10.9)                            (10.9)
 Goodwill and contingent consideration                 (51.7)              1,009.7       958.0
 Marketing and promotion costs                         (87.9)  (135.9)                  (223.8)
 Pensions                                              (15.3)   (14.7)        19.0       (11.0)
 Derivative instruments and hedging activities         (11.6)    (8.1)                   (19.7)
 Taxes                                                  70.6                 (66.0)        4.6
 Dividends                                              20.8     61.6                     82.4
 Unrealised gain on marketable securities                 --      1.9                      1.9
 Other fair value adjustments                             --                  (9.6)       (9.6)
                                                     -------  -------      -------  ----------
Net assets under U.S. GAAP as applied by P&O
  Princess                                           2,725.1  7,448.8      2,665.3    12,839.2
Other accounting policy adjustments
 Cruise revenues and expenses                          (12.0)    (7.5)                   (19.5)
 Drydocking                                            (16.5)   (23.4)                   (39.9)
 Marketing and promotion costs                          18.9                              18.9
                                                     -------  -------      -------  ----------
Net assets under U.S. GAAP and Carnival's accounting
  policies                                           2,715.5  7,417.9      2,665.3    12,798.7
                                                     =======  =======      =======  ==========


Differences between UK GAAP and U.S. GAAP as applied by P&O Princess which have
a significant effect on the Combined Group are set out in Part C of this
Section B. Other differences between P&O Princess' and Carnival's accounting
policies and details of the business combination adjustments are described in
Part A and this Part B of Section B.

                                      65



Part C.  Carnival Corporation UK GAAP Reconciliation

Unaudited summary of differences between U.S. GAAP and UK GAAP for each of the
years ended 30 November 2002, 2001, 2000

Carnival's financial statements have been prepared in accordance with U.S. GAAP
and Carnival's accounting policies, which differ in certain material respects
from UK GAAP and P&O Princess' accounting policies.

The following is a summary of the material adjustments to attributable profit
(net income) and shareholders' funds, which would have been required to adjust
for significant differences between Carnival's accounting policies under U.S.
GAAP and P&O Princess' accounting policies under UK GAAP.

Reconciliations of consolidated profit and loss account for the years ended 30
November:



                                                                           2002      2001    2000
                                                                   Notes -------    -----   -----
                                                                         (U.S. dollars in millions)
                                                                                
Net income under U.S. GAAP                                               1,015.9    926.2   965.5
UK GAAP adjustments:
Cruise revenues and expenses                                         A      (1.0)    (2.4)    3.8
Dry-docking                                                          B       4.4      4.4     3.7
Marketing and promotion costs                                        C      (1.7)    21.8     3.3
Income from affiliated operations                                    H               (7.7)   (8.8)
Adjustment to gain on sale of affiliated operation                   I               26.0
                                                                           -------  -----   -----
Profit attributable to shareholders in accordance with UK GAAP and
  P&O Princess' accounting policies                                      1,017.6    968.3   967.5
                                                                           =======  =====   =====

Earnings
Basic earnings per share in accordance with UK GAAP (in cents) and
  P&O Princess' accounting policies                                        173.5    165.5   161.3
Weighted average number of shares used in basic earnings per share
  calculation (millions)                                                   586.6    585.1   599.7


Reconciliations of consolidated shareholders' funds at 30 November:



                                                                2002      2001      2000
                                                        Notes -------   -------   -------
                                                              (U.S. dollars in millions)
                                                                      
Shareholders' equity in accordance with U.S. GAAP             7,417.9   6,590.8   5,870.6
UK GAAP adjustments:
Cruise revenues and expenses                              A       7.5       8.5      10.9
Dry-docking                                               B      23.4      19.1      14.7
Marketing and promotion costs                             C     135.9     137.6     115.8
Unrealised (gains)/losses on marketable securities, net   D      (1.9)      0.7       7.1
Derivative instruments and hedging activities             E       8.1       8.5
Dividends                                                 F     (61.6)    (61.6)    (61.4)
Minimum pension liability adjustment                      G      14.7       5.5
Income from affiliated operations                         H                           3.0
Treasury stock                                            J               727.6     705.1
                                                              -------   -------   -------
Shareholders' funds in accordance with UK GAAP and P&O
  Princess' accounting policies                               7,544.0   7,436.7   6,665.8
                                                              =======   =======   =======


The differences in accounting treatment as a result of differences between
Carnival's accounting policies under U.S. GAAP and P&O Princess' accounting
policies under UK GAAP are noted below.

A. Cruise revenues and expenses

   Carnival's accounting policy under U.S. GAAP is to initially record deposits
   received on sales of guest cruises as customer deposits and recognise them,
   together with revenues from onboard activities and all associated direct
   costs of a voyage, generally upon completion of voyages with

                                      66



   durations of ten days or less and on a pro rata basis for voyages in excess
   of ten days. P&O Princess' accounting policy under UK GAAP is to recognise
   these items on a pro rata basis at the time of the voyage.

B. Dry-docking

   Carnival's accounting policy under U.S. GAAP is to capitalise dry-docking
   costs and amortise them to operating expense using the straight-line method
   generally over one year. P&O Princess' accounting policy under UK GAAP is
   the same as Carnival's, except that the capitalised costs are amortised to
   expense through the date of the next scheduled dry-dock, which typically is
   over two to three years.

C. Marketing and promotion costs

   Carnival's accounting policy under U.S. GAAP is to expense marketing and
   promotion costs as incurred except those costs which result in tangible
   assets, such as brochures, which are recorded as prepaid expenses and
   charged to expense as consumed. Media production costs are also recorded as
   prepaid expenses and charged to expense upon the first airing of the
   advertisement. P&O Princess' accounting policy under UK GAAP is to expense
   marketing and promotion costs over the period of benefit, not exceeding one
   year from the end of the year the cost is incurred.

D. Unrealised gains and losses on marketable securities

   Under U.S. GAAP, unrealised gains and losses on marketable securities are
   included within shareholders' equity until realised. P&O Princess'
   accounting policy under UK GAAP is that marketable securities are carried at
   the lower of cost or net realisable value.

E. Derivative instruments and hedging activities

   Under U.S. GAAP, Statement of Financial Accounting Standards ("SFAS") No.
   133, "Accounting for Derivative Instruments and Hedging Activities", as
   amended, requires that all derivative instruments be recorded on the balance
   sheet at their fair value. This statement became effective for Carnival on 1
   December 2000. SFAS No. 133 requires that changes in the fair value of
   instruments that are designated as cash flow hedges be recognised as a
   component of shareholders' equity until the underlying hedged item is
   recognised in earnings. P&O Princess' accounting policy under UK GAAP is
   that gains and losses on instruments used for hedging are not recognised
   until the exposure that is being hedged is itself recognised.

F. Dividends

   Under U.S. GAAP, dividends are accounted for in the period in which they are
   declared. Under UK GAAP, dividends are recognised in the period to which
   they relate, which may be earlier than the date of declaration.

G. Minimum pension liability adjustment

   Under U.S. GAAP, an additional defined benefit plan liability is recorded
   for the actuarially determined unfunded accumulated benefit obligation if it
   exceeds the fair value of plan assets. U.S. GAAP also requires that an
   intangible asset be recorded to effectively offset this liability, to the
   extent that the intangible asset is not in excess of the unrecognised prior
   service cost and unrecognised transition obligation. Any excess is recorded
   as a minimum pension liability adjustment within shareholders' equity. Under
   UK GAAP, no such additional adjustment is required.

H. Income from affiliated operations

   Carnival's share of the net income of its affiliated operations have been
   adjusted from U.S. GAAP to UK GAAP on the basis of the adjustments described
   herein.

                                      67



   In addition, Carnival recorded its share of the net income of its foreign
   affiliates on a two-month lag basis. Under U.S. GAAP, when Carnival adjusted
   for the two-month lag of these affiliates, these affiliates' net losses for
   the two-month lag period were charged directly to retained earnings. Under
   UK GAAP, when a change is made to conform year ends, the net income or loss
   for the lag period is recorded within the profit and loss accounts.

I. Adjustment to gain on sale of affiliated operation

   Carnival's investment balance differs under U.S. GAAP and UK GAAP as
   described herein. Carnival's gain on sale of its investment in Airtours
   under U.S. GAAP is adjusted to reflect Carnival's UK GAAP investment balance
   as of the sale date. Under U.S. GAAP, the $59 million cumulative foreign
   currency translation loss that related to Carnival's investment in Airtours
   was considered in determining the gain on sale of its investment. Under UK
   GAAP, this cumulative translation loss is not taken into consideration in
   determining the gain.

J. Treasury stock

   Under U.S. GAAP, shares of Carnival's common stock, which have been
   purchased by Carnival ("treasury stock") are treated as a reduction to
   shareholders' equity. Under UK GAAP, treasury stock has been classified as a
   long-term asset.


                                      68



Part D.  P&O Princess Cruises plc

Carnival Accounting Policies Reconciliation

Unaudited summary of differences between P&O Princess' accounting policies
under U.S. GAAP and Carnival's accounting policies for each of the three years
ended 31 December 2002, 2001 and 2000

P&O Princess' accounting policies under U.S. GAAP differ in certain material
respects from Carnival's accounting policies.

The following is a summary of the material adjustments to attributable profit
(net income) and shareholders' funds which would have been required to adjust
for significant differences between P&O Princess' accounting policies under
U.S. GAAP and Carnival's accounting policies.

Reconciliations of profit attributable to ordinary shareholders for the years
ended 31 December



                                                                           2002   2001   2000
                                                                     Note U.S.$m U.S.$m U.S.$m
                                                                            
Profit attributable to ordinary shareholders in accordance with U.S.
  GAAP and P&O Princess accounting policies                               212.9  434.2  253.7
Carnival accounting policy adjustments
   Cruise revenues and expenses                                       A    (2.9)  (5.1)  13.4
   Dry-docking                                                        B    (5.2)   6.4   (7.5)
   Marketing and promotion costs                                      C     4.3   (1.4)   2.4
                                                                          -----  -----  -----
Profit attributable to ordinary shareholders in accordance with U.S.
  GAAP and Carnival accounting policies                                   209.1  434.1  262.0
                                                                          -----  -----  -----
Earnings per share
Basic earnings per share in accordance with U.S. GAAP and
  Carnival accounting policies (in cents)                                  30.2   62.8   38.3
Diluted earnings per share in accordance with U.S. GAAP and
  Carnival accounting policies (in cents)                                  30.1   62.5   38.3
                                                                          -----  -----  -----
Weighted average number of shares used in basic earnings per
  share calculation (millions)                                            692.4  691.5  684.2
Weighted average number of shares used in diluted earnings per
  share calculation (millions)                                            695.6  694.8  684.2



Reconciliations of shareholders' funds at 31 December



                                                                     2002     2001     2000
                                                              Note  U.S.$m   U.S.$m   U.S.$m
                                                                         
Shareholders' funds in accordance with U.S. GAAP and P&O
  Princess accounting policies                                     2,724.9  2,551.8  2,296.3
Carnival accounting policy adjustments
 Cruise revenues and expenses                                  A     (12.0)    (8.8)    (3.7)
 Dry-docking                                                   B     (16.5)   (10.4)   (17.0)
 Marketing and promotion costs                                 C      18.9     18.1     19.1
                                                                   -------  -------  -------
Shareholders' funds in accordance with U.S. GAAP and Carnival
  accounting policies                                              2,715.3  2,550.7  2,294.7
                                                                   -------  -------  -------


The differences in accounting treatment as a result of differences between P&O
Princess' accounting policies under U.S. GAAP and Carnival's accounting
policies are noted below.

(A) Cruise revenues and expenses

P&O Princess' accounting policy is to record deposits received on sales of
cruises as deferred income initially and recognise them, together with revenues
from shipboard activities and all associated direct costs of a voyage, on a pro
rata basis at the time of the voyage. Carnival's accounting policy is to
recognise these items upon completion of voyages for voyages with durations of
10 days or less, and on a pro rata basis for voyages in excess of 10 days.

                                      69



(B) Dry-docking

P&O Princess' accounting policy is to capitalise dry-docking costs and expense
them on a straight-line basis to the date of the next scheduled dry-dock.
Carnival's accounting policy is to capitalise dry-docking costs and expense
them generally over one year.

(C) Marketing and promotion costs

For U.S. GAAP, P&O Princess expenses all marketing and promotion costs as
incurred. Carnival expenses all such costs as incurred except costs which
result in tangible assets, such as brochures, which are treated as prepaid
expenses and charged to expense as consumed.

                                      70



Section C.  Where you can find additional information about the Combined Group
and the DLC transaction


For additional information about the Combined Group and the DLC transaction,
you should refer to the shareholder circular for the P&O Princess EGM. In
particular, please note that the following information is incorporated by
reference from the shareholder circular for the P&O Princess EGM, which has
been furnished to the SEC on Form 6-K on 14 March 2003:

   .   Details of the DLC structure;

   .   Summary of the agreements relating to the DLC structure; and

   .   Summary of the proposed changes to the P&O Princess memorandum and
       articles.

                                      71



                                    PART IV

                            INFORMATION ON CARNIVAL

1.  General

Carnival is a global cruise vacation and leisure travel company that offers a
broad range of cruise brands serving the contemporary cruise sector through
Carnival Cruise Lines and Costa Cruises, the premium sector through Holland
America Line, the premium/luxury cruise sector through Cunard Line, and the
luxury cruise sector through Seabourn Cruise Line and Windstar Cruises.

2.  Where you can find additional information about Carnival

SEC FILINGS

Carnival is required to comply with the reporting requirements of the Exchange
Act and, in accordance with those requirements, Carnival files reports, proxy
statements and other information with the SEC. You can inspect and copy these
reports, proxy statements and other information at the SEC's Public Reference
Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain
information on the operation of the Public Reference Room by calling the SEC on
1-800-732-0330. In addition, the SEC maintains a website (www.sec.gov) that
contains the reports, proxy statements and other information that Carnival has
filed. Material that Carnival has filed may also be inspected at the library of
the NYSE, 20 Broad Street, New York, New York 10005.

As previously described in "Incorporation of documents by reference," the SEC
allows Carnival to "incorporate by reference" information in this document.
This document incorporates by reference the documents set forth below that
Carnival has previously filed with the SEC. These documents contain important
information about Carnival and its finances and are on display at the document
viewing facility at the UKLA.

..   Carnival's annual report on Form 10-K for the year ended 30 November 2002;

..   Carnival's amended annual report on Form 10-K/A for the year ended 30
    November 2002; and

..   Carnival's current reports on Form 8-K dated 2 December 2002, 19 December
    2002 and 8 January 2003.

Carnival is also incorporating by reference all documents that it files with
the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
between the date of this document and the date the Partial Share Offer becomes
or is declared unconditional in all respects (or the date that the Partial
Share Offer expires).

Any references to statutory safe harbours from liability for forward-looking
statements in any of the documents Carnival incorporates by reference in this
document are specifically excluded from this document.

You can obtain any of these documents through Carnival or the SEC. Documents
incorporated by reference are available from Carnival without charge, excluding
all exhibits unless Carnival has specifically incorporated by reference an
exhibit in this document. You also may obtain documents incorporated by
reference in this document by either inspecting them during normal business
hours on any weekday (public holidays excepted) while the Partial Share Offer
remains open for acceptance or requesting them in writing or orally from
Carnival, at the following address and telephone number:

      Carnival Corporation
      3655 N.W. 87th Avenue
      Miami, Florida 33178-2428

      Attention: The Corporate Secretary

      Telephone: 1-(305) 599-2600 Ext. 18018

You may rely only on the information concerning Carnival contained or
incorporated by reference in this document in determining whether to accept the
Partial Share Offer. Carnival has not authorised anyone to provide you with
information that is different from what is contained in this document. This
document is dated. You should not assume that the information contained in this
document is accurate as of any date other than such date, and neither the
mailing of this document to P&O Princess shareholders nor the delivery of the
Carnival shares in exchange for P&O Princess shares and P&O Princess ADSs will
create any implication to the contrary.

                                      72



                                    PART V

                          INFORMATION ON P&O PRINCESS

1.  General

P&O Princess is an international cruise vacation company, with operations in
North America, the UK, Germany and Australia. It is a leading provider of
cruises to Alaska, the Caribbean, Europe, the Mediterranean, the Panama Canal
and other locations (principally South America, Africa, the South Pacific, the
Orient and India).

2.  Where you can find additional information about P&O Princess

SEC FILINGS

P&O Princess is subject to the reporting requirements of the Exchange Act and,
in accordance with those requirements, files reports and other information with
the SEC. However, as a foreign registrant, P&O Princess and its shareholders
are exempt from some of the Exchange Act reporting requirements. The reporting
requirements that do not apply to P&O Princess or its shareholders include
proxy solicitation rules, the short-swing profit disclosure rules of Section 16
of the Exchange Act and the rules regarding filing quarterly reports with the
SEC, which are required to be filed only if required in P&O Princess' home
country. You can inspect and copy the reports and other information filed by
P&O Princess with the SEC at the SEC's Public Reference Room at 450 Fifth
Street, N.W., Washington, D.C. 20549. You may obtain information on the
operation of the Public Reference Room by calling from the U.S. the SEC on
1-800-732-0330. In addition, the SEC maintains a website (www.sec.gov) that
contains the reports, proxy statements and other information that P&O Princess
has filed. Material that P&O Princess has filed may also be inspected at the
library of the NYSE, 20 Broad Street, New York, New York 10005.

As previously described in "Incorporation of documents by reference," the SEC
allows P&O Princess to "incorporate by reference" information in this document.
This document incorporates by reference the documents set forth below that P&O
Princess has previously filed with or furnished to the SEC. These documents
contain important information about P&O Princess and its finances.

..   P&O Princess' annual report on Form 20-F for the year ended 31 December
    2002; and

..   P&O Princess' report of foreign issuer on Form 6-K, dated 14 March 2003.

P&O Princess is also incorporating by reference all documents that it files
with, or furnishes to (and are so designated as being incorporated by
reference), the SEC pursuant to Sections 13(a), 13(c) and 15(d) of the Exchange
Act between the date of this document and the date the Partial Share Offer
becomes or is declared unconditional in all respects (or the date that the
Partial Share Offer expires).

Any references to statutory safe harbours from liability for forward-looking
statements in any of the documents P&O Princess incorporates by reference in
this document are specifically excluded from this document.

You may obtain any of these documents through P&O Princess or the SEC.
Documents incorporated by reference are available from P&O Princess without
charge, excluding all exhibits unless Carnival has specifically incorporated by
reference a P&O Princess exhibit in this document. You also may obtain
documents incorporated by reference in this document by either inspecting them
during normal business hours on any weekday (public holidays excepted) while
the Partial Share Offer remains open for acceptance or by requesting them in
writing or orally from P&O Princess, at the following address and telephone
number:

P&O Princess Cruises plc
77 New Oxford Street
London WC1A 1PP
United Kingdom
Attention: Company Secretary
Telephone: +44 20 7805 1200

You may rely only on the information concerning P&O Princess contained or
incorporated by reference in this document in determining whether to accept the
Partial Share Offer. P&O Princess has not authorised anyone to provide you with
information that is different from what is contained in this document. This
document is dated 17 March 2003. You should not assume that the information
contained in this document is accurate as of any date other than such date, and
neither the mailing of this document to P&O Princess shareholders nor the
delivery of the Carnival shares in exchange for P&O Princess shares and P&O
Princess ADSs will create any implication to the contrary.

                                      73



                                    PART VI

                            THE PARTIAL SHARE OFFER

Section A.  The Partial Share Offer

1.  Introduction

In connection with the DLC transaction, Carnival is making an offer to P&O
Princess shareholders to exchange all or part of their P&O Princess shares for
Carnival shares, subject to an aggregate maximum of 20 per cent. of P&O
Princess' issued share capital. If the DLC transaction is not completed due to
lack of shareholder approval or for any other reason, the Partial Share Offer
will not be completed. Whether or not P&O Princess shareholders accept the
Partial Share Offer will not influence whether or not the DLC transaction will
proceed. If the DLC transaction is completed, then the participation by P&O
Princess shareholders in the Partial Share Offer will only affect how they
participate in the Combined Group. The Partial Share Offer is open to all
shareholders of P&O Princess, whether they hold P&O Princess shares directly or
in the form of P&O Princess ADSs.

The board of P&O Princess is not making a recommendation with regard to the
Partial Share Offer. The P&O Princess board is not making any recommendation
because once the DLC structure has been implemented both P&O Princess shares
and Carnival shares will represent an investment with respect to the Combined
Group and the decision by each P&O Princess shareholder about which type of
shares he or she should hold will depend upon the individual shareholder's
particular preferences and circumstances. Each P&O Princess shareholder must
decide whether he or she wants to receive Carnival shares and, if so, how many
P&O Princess shares to tender. To the best of the knowledge of P&O Princess,
some, but not all, of its directors and executive officers intend to
participate in the Partial Share Offer. P&O Princess shareholders who are in
any doubt as to whether they should accept the Partial Share Offer should seek
independent financial advice from their stockbroker, bank manager, solicitor,
accountant or other independent professional financial adviser authorised in
the UK under the Financial Services and Markets Act 2000.

The Partial Share Offer is designed to allow those P&O Princess shareholders
who would prefer to hold their interest in the Combined Group in the form of
Carnival shares to exchange their P&O Princess shares for Carnival shares if
the DLC transaction is completed. The extent to which a P&O Princess
shareholder will be able to do this will depend on how many shares are tendered
into the Partial Share Offer. If more than 20 per cent. of the issued P&O
Princess shares are tendered into the Partial Share Offer, then the proration
procedures described in paragraph 4 below will apply.

Any P&O Princess shareholder who accepts the Partial Share Offer will receive
Carnival shares listed on the NYSE and will receive dividends denominated in
U.S. dollars.

The Partial Share Offer is being made on the basis of 0.3004 Carnival shares
for each P&O Princess share and 1.2016 Carnival shares for each P&O Princess
ADS (prior to P&O Princess' reorganisation of its share capital).

This Part VI contains the formal Partial Share Offer by Carnival and should be
read in conjunction with the instructions and the notes on the Form of
Acceptance contained in Section B of this Part VI or, in respect of holders of
P&O Princess ADSs, the Letter of Transmittal, which are deemed to form part of
the terms of the Partial Share Offer. If you hold P&O Princess ADSs, you should
have received a Letter of Transmittal.

If you wish to accept the Partial Share Offer in respect of P&O Princess shares
in certificated form (that is, you hold a share certificate), please return the
Form of Acceptance duly completed, by post or by hand to Computershare Investor
Services PLC at The Pavilions, Bridgwater Road, Bristol, BS13 8FB, or (during
normal business hours) by hand only to 7/th/ floor, Jupiter House, Triton
Court, 14 Finsbury Square, London, EC2A 1BR, as soon as possible and, in any
event, to be received by no later than 10:00 a.m., London time, on 17 April
2003 or by hand only to representatives of Computershare Investor Services PLC
at the P&O Princess EGM to be held at 10:00 a.m., London time, on 16 April
2003. The procedure for acceptance is set out in paragraph 3(a) of this Section
A of Part VI of this document, in the Form of Acceptance and the Brokerage
Account Election Form included as Sections B and C of this Part VI.

                                      74



If you wish to accept the Partial Share Offer in respect of your P&O Princess
shares in uncertificated form (that is, in CREST), please send (or, if you are
a CREST sponsored member procure that your CREST sponsor sends) a TTE
Instruction in accordance with the procedure set out in paragraph 3(b) of this
Section A of Part VI of this document, as soon as possible and in any event so
that the TTE Instruction settles not later than 10:00 a.m., London time, on 17
April 2003. If you wish to have your Carnival shares credited to an existing
U.S. brokerage account you should also complete and return the Brokerage
Account Election Form.

If you wish to accept the Partial Share Offer in respect of P&O Princess ADSs
that you hold in certificated form, please send a Letter of Transmittal, duly
completed, by post to the U.S. Exchange Agent at Computershare Trust Company of
New York, 88 Pine Street, 19th floor, New York, New York 10005 as soon as
possible and in any event so that the Letter of Transmittal and any documents
required by the Letter of Transmittal are received by the U.S. Exchange Agent
not later than 5:00 a.m., New York City time, on 17 April 2003. The procedure
for acceptance is set out in paragraph 3(c) of this Section A of Part VI of
this document and in the Letter of Transmittal.

If you wish to accept the Partial Share Offer in respect of P&O Princess ADSs
that you hold in book-entry form, please duly complete and return to your
broker (by the date stated in the letter from your broker), the instruction
form sent to you by your broker.

2.  The Partial Share Offer

The Partial Share Offer, which is subject to the conditions and further terms
set out in Appendix I to this document, the Form of Acceptance and Brokerage
Account Election Form included as Sections B and C of this Part VI and, if
appropriate, the accompanying Letter of Transmittal, is being made for up to 20
per cent. of the issued share capital of P&O Princess on the following basis:


                                               
        for each P&O Princess share               0.3004 Carnival shares

        for each P&O Princess ADS                 1.2016 Carnival shares
        (each representing 4 P&O Princess shares)


and so in proportion for any other number of P&O Princess shares and P&O
Princess ADSs held.

P&O Princess shareholders may elect to accept the Partial Share Offer in
respect of all or a portion of their P&O Princess shareholdings. If acceptances
of the Partial Share Offer are received in respect of in excess of 20 per cent.
of P&O Princess' issued share capital, acceptances will be scaled down. See
paragraph 4 below.

If the Partial Share Offer is taken up in full, approximately 79 per cent. of
the equity of the Combined Group will be held through Carnival shares
(including approximately five per cent. held by those P&O Princess shareholders
who elect to accept the Partial Share Offer) and approximately 21 per cent.
through P&O Princess shares. In no event will the level of the take-up of the
Partial Share Offer affect the equalisation ratio.

The Partial Share Offer is conditional on, and will close on, completion of the
DLC transaction, which is expected to occur the day after the P&O Princess EGM.
The DLC transaction is conditional on the closing of the Partial Share Offer
(except the condition relating to completion of the DLC transaction). The
conditions of the Partial Share Offer are set out in Part A of Appendix I to
this document.

P&O Princess shares acquired under the Partial Share Offer will be acquired
free from all liens, charges and encumbrances and with all rights attached
thereto. P&O Princess shareholders will be entitled to retain all dividends
paid or payable on such P&O Princess shares in all respects of the period until
the date the Partial Share Offer becomes unconditional in all respects.

The Carnival shares issued in connection with the Partial Share Offer will be
issued credited as fully paid and will rank pari passu in all respects with the
existing Carnival shares as affected by the DLC transaction.

Fractions of Carnival shares will not be issued. Therefore, P&O Princess
shareholders who hold fewer than four P&O Princess shares will not be able to
tender their shares in the Partial Share Offer.

                                      75



Fractional entitlements to Carnival shares arising under the Partial Share
Offer will be aggregated and sold in the market and the proceeds (converted
into pounds sterling at the prevailing exchange rate) remitted to the persons
entitled thereto, except that individual entitlements of less than (Pounds)3.00
will be retained for the benefit of the Combined Group.

3.  Procedures for acceptance of the Partial Share Offer

This section should be read together with the instructions and the notes on the
Form of Acceptance and, for holders of P&O Princess ADSs, the Letter of
Transmittal, which are deemed to form part of the terms of the Partial Share
Offer.

Holders of P&O Princess shares in certificated form (that is, you hold a share
certificate) may only accept the Partial Share Offer in respect of such shares
by completing and returning the enclosed Form of Acceptance in accordance with
the procedure set out in paragraph (a) below. Holders of P&O Princess shares in
certificated form, but under different designations, should complete a separate
Form of Acceptance and, if required, Brokerage Account Election Form, for each
designation. Additional Forms of Acceptance and Brokerage Account Election
Forms are available from Computershare Investor Services PLC by calling the
shareholder helpline at the front of this document.

Holders of P&O Princess shares in uncertificated form (that is, in CREST) may
only accept the Partial Share Offer in respect of such shares by TTE
instruction in accordance with the procedure set out in paragraph (b) below
and, if those shares are held under different member account IDs, a separate
TTE instruction and, if required, Brokerage Account Election Form should be
sent for each member account ID. Additional Brokerage Account Election Forms
are available from Computershare Investor Services PLC by calling the
shareholder helpline at the front of this document.

Holders of P&O Princess ADSs may only accept the Partial Share Offer in respect
of such P&O Princess ADSs by complying with the procedures set out in paragraph
(c) below and in Part D of Appendix I.

You should note that if you hold P&O Princess shares in both certificated form
and uncertificated form, you should follow the procedures set out in (a) and
(b) below for each type of holding separately.

(a)  Holders of P&O Princess shares in certificated form (that is, you hold a
share certificate)

(1)To accept the Partial Share Offer in respect of your P&O Princess shares
   held in certificated form

To accept the Partial Share Offer in respect of P&O Princess shares held in
certificated form you should complete Boxes 1 and 3 and you must sign Box 2 of
the Form of Acceptance. If you sign Box 2 but do not insert a number in Box 1 a
valid acceptance will be deemed to be made in respect of 20 per cent. of P&O
Princess shares in certificated form held by you; or if you insert a number in
excess of the number of P&O Princess shares in certificated form held by you a
valid acceptance will be deemed to be made in respect of 100 per cent. of P&O
Princess shares in certificated form held by you.

In all cases you must sign Box 2 on the Form of Acceptance in the presence of a
witness, who should also sign in accordance with the instructions printed on
the Form of Acceptance.

If you have any questions as to how to complete the Form of Acceptance or wish
to receive additional Forms of Acceptance, please telephone Computershare
Investor Services PLC in its capacity as UK Receiving Agent on the shareholder
helpline at the front of this document.

(2)Return of Form of Acceptance and Brokerage Account Election Form.

To accept the Partial Share Offer in respect of P&O Princess shares in
certificated form, the completed Form of Acceptance should be returned, by post
or by hand to Computershare Investor Services PLC at The Pavilions, Bridgwater
Road, Bristol, BS13 8FB or (during normal business hours) by hand only to 7/th/
floor, Jupiter House, Triton Court, 14 Finsbury Square, London, EC2A 1BR,
together with the relevant share certificate(s) for such P&O Princess shares
and/or other document(s) of title (see paragraph (4) below), as soon as
possible, but in any event so as to be received by no later than 10:00 a.m.,
London time, on 17 April 2003 or by hand only to representatives of
Computershare Investor Services PLC at the P&O Princess EGM to be held at 10:00
a.m., London time on 16 April 2003. A reply-paid envelope for use within the UK
only is enclosed for your convenience. No acknowledgement of receipt of
documents will be given.

Any Form of Acceptance received in an envelope postmarked in the Excluded
Territories or otherwise appearing to have been sent from the Excluded
Territories may be rejected as an invalid

                                      76



acceptance of the Partial Share Offer. For further information on overseas
shareholders see paragraph 7 of Part B of Appendix I.

If you wish to have your Carnival shares credited to an existing U.S. brokerage
account you should also complete and return the Brokerage Account Election Form.

(3)P&O Princess shares in certificated form - documents of title

If your P&O Princess shares are in certificated form, the completed, signed and
witnessed Form of Acceptance should be accompanied by the relevant share
certificate(s) and/or other document(s) of title. If for any reason the
relevant share certificate(s) and/or the other documents of title is/are lost
or not readily available, you should nevertheless complete, sign and return the
Form of Acceptance as stated above so as to be received by Computershare
Investor Services PLC no later than 10:00 a.m., London time, on 17 April 2003.

You should send with the Form of Acceptance any share certificate(s) and/or
other document(s) of title which you may have available and a letter stating
that the remaining document(s) will follow as soon as possible or that you have
lost one or more of your share certificate(s) and/or other document(s) of
title. You should then arrange for the relevant share certificate(s) and/or
other document(s) of title to be forwarded as soon as possible. If you have
lost your share certificate(s) and/or other document(s) of title, you should
contact P&O Princess' registrars, Computershare Investor Services PLC, at PO
Box 435, Owen House, 8 Bankhead Crossway North, Edinburgh, EH11 4BR (calls
within the UK to 0800 953 0083 and calls from elsewhere to +44 870 889 3147
(calls will be charged at the applicable rate)) for a letter of indemnity for
lost share certificate(s) and/or other document(s) of title which, when
completed in accordance with the instructions given, should be returned to
Computershare Investor Services PLC at either of the addresses set out in
paragraph (2) above.

(4)Validity of acceptance

Without prejudice to Appendix I of this document, Carnival reserves the right
(subject to the provisions of the Takeover Code) to treat as valid in whole or
in part any acceptance of the Partial Share Offer in relation to P&O Princess
shares in certificated form which is not entirely in order or which is not
accompanied by the relevant share certificate(s) and/or other document(s) of
title. In that event, no allotment of Carnival shares or payment of cash
consideration (in respect of fractional entitlements) under the Partial Share
Offer will be made until after (as applicable) the relevant share
certificate(s) and/or other document(s) of title or indemnities satisfactory to
Carnival have been received.

If you are in any doubt as to the procedure for acceptance, please contact
Computershare Investor Services PLC in its capacity as UK Receiving Agent on
the shareholder helpline at the front of this document.

(5)Overseas shareholders

The attention of P&O Princess shareholders holding P&O Princess shares in
certificated form and who are citizens or residents of jurisdictions outside
the UK or U.S., or who are nominees of, or custodians or trustees for, any such
person, or who intends to forward this document to any jurisdiction outside the
UK or the U.S. is drawn to paragraph 7 of Part B of Appendix I of this
document, and to the relevant provisions of the Form of Acceptance, Brokerage
Account Election Form and Letter of Transmittal, which they should read before
taking any action.

The availability of the Partial Share Offer to persons not resident in the UK
or the U.S. may be affected by the laws of the jurisdictions in which such
persons are resident. Persons who are subject to the laws of any jurisdiction
other than the UK or the U.S. should inform themselves about and observe any
applicable requirements.

The Partial Share Offer is not being made, directly or indirectly, in or into,
or by the use of the mails or any means or instrumentality (including, without
limitation telephonically or electronically of interstate or foreign commerce
of, or any facilities of a national securities exchange of, the Excluded
Territories. Accordingly, copies of this document are not being, and may not
be, mailed or otherwise distributed in the Excluded Territories. Accordingly,
any accepting P&O Princess shareholder who holds certificated shares and who is
unable to give the representation and warranty set out in paragraph 1(c) of
Part C of Appendix I of this document may be deemed not to have accepted the
Partial Share Offer.

                                      77



The Carnival shares to be issued pursuant to the Partial Share Offer have not
been, and will not be, registered under the relevant securities laws of Japan
and the relevant clearances have not been, and will not be, obtained from the
securities commission of any province of Canada or from the relevant bodies in
the Excluded Territories. No prospectus in relation to the Carnival shares has
been, or will be, lodged with, or registered by, the Australian Securities and
Investments Commission or with the relevant bodies in any of the other Excluded
Territories. Accordingly, the Carnival shares are not being, and may not be,
offered, sold, resold, delivered or distributed, directly or indirectly in or
into the Excluded Territories or any other jurisdiction if to do so would
constitute a violation of relevant laws of, or require registration thereof in,
such jurisdiction (except pursuant to an exemption, if available, from any
applicable registration requirements or otherwise in compliance with all
applicable laws).

(b)  P&O Princess shares in uncertificated form (that is, in CREST)

If your P&O Princess shares are in uncertificated form (that is, in CREST), to
accept the Partial Share Offer you should take (or procure the taking of) the
action set out below to transfer the P&O Princess shares in respect of which
you wish to accept the Partial Share Offer to the appropriate escrow
balance(s), specifying the UK Receiving Agent (in its capacity as a CREST
participant under the Escrow Agent's participant ID referred to below) as the
Escrow Agent, as soon as possible and in any event so that the TTE Instruction
settles not later than 10:00 a.m., London time, on 17 April 2003. Note that
settlement cannot take place on weekends or bank holidays (or other times at
which the CREST system is non-operational) - you should therefore ensure you
time the input of any TTE Instructions accordingly.

The input and settlement of a TTE Instruction in accordance with this paragraph
(b) will (subject to satisfying the requirements set out in Part C of Appendix
I) constitute an acceptance of the Partial Share Offer in respect of the number
of P&O Princess shares so transferred to escrow.

If you are a CREST sponsored member, you should refer to your CREST sponsor
before taking any action. Only your CREST sponsor will be able to send the TTE
Instruction(s) to CRESTCo in relation to your P&O Princess shares.

After settlement of a TTE Instruction, you will not be able to access the P&O
Princess shares concerned in CREST for any transaction or charging purposes. If
the Partial Share Offer becomes or is declared unconditional in all respects,
the Escrow Agent will transfer the P&O Princess shares concerned to itself in
accordance with paragraph 2(d) of Part C of Appendix I of this document.

You are recommended to refer to the CREST manual published by CRESTCo for
further information on the CREST procedures outlined below.

You should note that CRESTCo does not make available special procedures, in
CREST, for any particular corporate action. Normal system timings and
limitations will therefore apply in connection with a TTE Instruction and its
settlement. You should therefore ensure that all necessary action is taken by
you (or by your CREST sponsor) to enable a TTE Instruction relating to your P&O
Princess shares to settle prior to 10:00 a.m., London time, on 17 April 2003.
In this connection you are referred in particular to those sections of the
CREST manual concerning practical limitations of the CREST system and timings.

If you wish to have your Carnival shares credited to an existing U.S. brokerage
account you should also complete and return the Brokerage Account Election Form.

(1)To accept the Partial Share Offer in respect of your P&O Princess shares
   held in uncertificated form

To accept the Partial Share Offer in respect of P&O Princess shares held in
uncertificated form, you should send (or if you are a CREST sponsored member,
procure that your CREST sponsor sends) to CRESTCo a Basic Offer TTE Instruction
in relation to such shares.

A Basic Offer TTE Instruction to CRESTCo must be properly authenticated in
accordance with CRESTCo's specifications for transfers to escrow and must
contain the following details:

..   the ISIN number for the P&O Princess shares; this is GB0009635904;

..   the number of P&O Princess shares in respect of which you wish to accept
    the Partial Share Offer (i.e. the number of P&O Princess shares to be
    transferred to escrow);

                                      78



..   your member account ID;

..   your participant ID;

..   the participant ID of the UK Receiving Agent in its capacity as the Escrow
    Agent; this is 3RA19;

..   the member account ID of the UK Receiving Agent in its capacity as the
    Escrow Agent for the Partial Share Offer; this is CARPOP01; and

..   the intended settlement date. This should be as soon as possible and in any
    event not later than 17 April 2003.

If you wish to have your Carnival shares credited to an existing U.S. brokerage
account you should also complete and return the Brokerage Account Election Form.

(2)Validity of acceptances in respect of P&O Princess shares in uncertificated
   form

A Form of Acceptance which is received in respect of P&O Princess shares held
in uncertificated form will not constitute a valid acceptance and will be
disregarded. Holders of P&O Princess shares in uncertificated form (that is, in
CREST) who wish to accept the Partial Share Offer should note that a TTE
Instruction will only be a valid acceptance of the Partial Share Offer as at
the relevant closing date if it has settled on or before that date.

(3)Overseas shareholders

The attention of P&O Princess shareholders holding P&O Princess shares in
uncertificated form and who are citizens or residents of jurisdictions outside
the UK or U.S., or who are nominees of, or custodians or trustees for, any such
person, or who intends to forward this document to any jurisdiction outside the
UK or the U.S. is drawn to paragraph 7 of Part B and paragraphs 1(c) and 2(c)
of Part C of Appendix I of this document, which they should read before taking
any action.

The availability of the Partial Share Offer to persons not resident in the UK
or the U.S. may be affected by the laws of the jurisdictions in which such
persons are resident. Persons who are subject to the laws of any jurisdiction
other than the UK or the U.S. should inform themselves about and observe any
applicable requirements.

The Partial Share Offer is not being made, directly or indirectly, in or into,
or by the use of the mails or any means or instrumentality (including, without
limitation telephonically or electronically of interstate or foreign commerce
of, or any facilities of a national securities exchange of, the Excluded
Territories. Accordingly, copies of this document are not being, and may not
be, mailed or otherwise distributed in the Excluded Territories. Accordingly,
any accepting P&O Princess shareholder who holds uncertificated shares and who
is unable to give the representation and warranty set out in paragraph 2(c) of
Part C of Appendix I of this document may be deemed not to have accepted the
Partial Share Offer.

The Carnival shares to be issued pursuant to the Partial Share Offer have not
been, and will not be, registered under the relevant securities laws of Japan
and the relevant clearances have not been, and will not be, obtained from the
securities commission of any province of Canada or from the relevant bodies in
the Excluded Territories. No prospectus in relation to the Carnival shares has
been, or will be, lodged with, or registered by, the Australian Securities and
Investments Commission or with the relevant bodies in any of the other Excluded
Territories. Accordingly, the Carnival shares are not being, and may not be,
offered, sold, resold, delivered or distributed, directly or indirectly in or
into the Excluded Territories or any other jurisdiction if to do so would
constitute a violation of relevant laws of, or require registration thereof in,
such jurisdiction (except pursuant to an exemption, if available, from any
applicable registration requirements or otherwise in compliance with all
applicable laws).

(c)  Holders of P&O Princess ADSs

The attention of holders of P&O Princess ADSs is drawn to Part D of Appendix I
to this document and to the relevant provisions of the Letter of Transmittal.

For a holder of P&O Princess ADSs evidenced by P&O Princess ADRs validly to
accept the Partial Share Offer, a properly completed and duly executed Letter
of Transmittal, together with any required signature guarantees or, in the case
of a book-entry transfer, an Agent's Message, and any other documents required
by the Letter of Transmittal, must be received by the U.S. Exchange Agent at its

                                      79



address set out in the Letter of Transmittal and either the P&O Princess ADRs
evidencing such P&O Princess ADSs must be received by the U.S. Exchange Agent
at such address or such P&O Princess ADRs evidencing such P&O Princess ADSs
must be delivered pursuant to the procedure for book-entry transfer set out in
paragraph (c) of Part D of Appendix I to this document (and a book-entry
confirmation received by the U.S. Exchange Agent in accordance with such
procedures).

(d)  General

Carnival will make an appropriate announcement if any of the details contained
in paragraph 3 (a), (b) or (c) above alter for any reason.

Normal CREST procedures (including timings) apply in relation to any P&O
Princess shares that are, or are to be, converted from uncertificated to
certificated form, or from certificated to uncertificated form, during the
course of the Partial Share Offer (whether any such conversion arises as a
result of a transfer of P&O Princess shares or otherwise). Holders of P&O
Princess shares who are proposing so to convert any such shares are recommended
to ensure that the conversion procedures are implemented in sufficient time to
enable the person holding or acquiring the shares as a result of the conversion
to take all necessary steps in connection with an acceptance of the Partial
Share Offer (in particular, as regards delivery of share certificate(s) or
other documents of title or transfers to an escrow balance as described above)
prior to 10:00 a.m., London time, on 17 April 2003.

If you are in any doubt as to the procedure for acceptance, please contact
Computershare Investor Services PLC in its capacity as UK Receiving Agent on
the shareholder helpline at the front of this document.

You are reminded that, if you are a CREST sponsored member, you should contact
your CREST sponsor before taking any action.

4.  Proration

Subject to the Partial Share Offer becoming unconditional in all respects,
acceptances of the Partial Share Offer by P&O Princess shareholders which are
otherwise valid in all respects (or are deemed to be valid), will be met in
full to the extent they are made in respect of up to 20 per cent. of the
relevant P&O Princess shareholder's registered holding of P&O Princess shares
at 10:00 a.m., London time, on 17 April 2003. Acceptances by P&O Princess
shareholders, to the extent they are made in respect of more than 20 per cent.
of the relevant P&O Princess shareholder's registered holding of P&O Princess
shares at 10:00 a.m., London time, on 17 April 2003, will be met only to the
extent that other P&O Princess shareholders do not accept the Partial Share
Offer or accept the Partial Share Offer in respect of less than 20 per cent. of
their P&O Princess shares held at 10:00 a.m., London time, on that date. If
more than 20 per cent. is tendered, each tendering shareholder will have its 20
per cent. accepted. The remaining amount tendered will be accepted pro rata for
each shareholder based on the proportion of the number of shares available once
acceptances of up to 20 per cent. have been satisfied to the total number of
shares tendered in excess of 20 per cent. No such acceptance will be scaled
down below 20 per cent. of the relevant registered holding of P&O Princess
shares at 10:00 a.m., London time, on 17 April 2003.

In relation to any calculation involving numbers or percentages of P&O Princess
shares, the number of P&O Princess shares which is not a whole number may be
rounded down or rounded up provided that all P&O Princess shareholders are
treated on a consistent basis.

5.  Rights of withdrawal

The Partial Share Offer is subject to the U.S. tender offer rules applicable to
securities registered under the Exchange Act, as well as to the Takeover Code.
This has necessitated certain changes from the procedures which normally apply
to offers for companies governed by the Takeover Code, including those
applicable to the rights of holders of P&O Princess shares to withdraw their
acceptance of the Partial Share Offer.

Under the Partial Share Offer, holders of P&O Princess shares will be able to
withdraw their acceptances at any time prior to the Partial Share Offer being
declared unconditional. The Partial Share Offer will be deemed not to have been
validly accepted in respect of any P&O Princess shares

                                      80



in respect of which acceptances have been validly withdrawn. However, the
Partial Share Offer may be accepted again in respect of any withdrawn P&O
Princess shares following one of the procedures described in paragraph 3 of
this Section A of Part VI at any time prior to expiry or lapse of the Partial
Share Offer. It is expected that 16 April 2003 will be the date of the P&O
Princess EGM, and that there will be no need to extend the Partial Share Offer,
but in the event that an extension is made, it is likely to be for a period of
less than 14 days.

Further details of these rights of withdrawal and the procedure for effecting
withdrawals are set out in paragraph 4 of Part B of Appendix I to this document.

6.  Settlement and Dealings

(a)Listing and issue of Carnival shares

Application will be made for the Carnival shares issued pursuant to the Partial
Share Offer to be listed on the NYSE.

(b)Settlement

The settlement procedure in respect of the Partial Share Offer will be
consistent with UK practice which differs from U.S. domestic tender offer
procedures in certain material respects, particularly with regard to the date
of settlement. Subject to the Partial Share Offer becoming or being declared
unconditional in all respects (and except as provided in paragraph 7 of Part B
of Appendix I to this document in the case of certain overseas P&O Princess
shareholders) settlement under the Partial Share Offer will be effected (i) in
the case of acceptances received, valid and complete in all respects, by the
date on which the Partial Share Offer becomes or is declared unconditional in
all respects, within 14 days of the later of such date and 17 April 2003; or
(ii) in the case of acceptances received, valid and complete in all respects,
after the later of 17 April 2003 and the date on which the Partial Share Offer
becomes or is declared unconditional in all respects within 14 days of such
receipt, in the following manner.

(c)P&O Princess shares in certificated form (that is, you hold a share
   certificate) and P&O Princess ADRs

Where an acceptance relates to P&O Princess shares in certificated form (that
is, you hold a share certificate) the Carnival shares to which such accepting
P&O Princess shareholder is entitled will be issued in certificated form unless
such accepting P&O Princess shareholder has validly completed and timely
returned a Brokerage Account Election Form, in which case they will be credited
to the nominated U.S. brokerage account. Where an acceptance relates to P&O
Princess ADSs evidenced by P&O Princess ADRs, the Carnival shares to which such
accepting P&O Princess shareholder is entitled will be issued in certificated
form. Cheques for any cash consideration (in respect of fractional
entitlements) and definitive certificates for Carnival shares will be
despatched by post (or by such other method as the Panel may approve). All cash
payments (in respect of fractional entitlements) will be made in pounds
sterling by cheque drawn on a branch of a UK clearing bank. Certificates for
Carnival shares and cheques in respect of fractional entitlements will not be
dispatched into the Excluded Territories.

Temporary documents of title will not be issued pending the despatch by post of
definitive certificates for such Carnival shares as referred to above. Pending
the issue of definitive certificates for the Carnival shares, transfers will be
certified against the register.

(d)P&O Princess shares in uncertificated form (that is, in CREST)

Where an acceptance relates to P&O Princess shares in uncertificated form:

    (i)the Carnival shares to which the accepting P&O Princess shareholder is
       entitled under the Partial Share Offer will be issued to such P&O
       Princess shareholder in certificated form and share certificates and/or
       other documents of title will be despatched by post (or by such other
       method as may be approved by the Panel) to the address of the CREST
       member whose member ID and member account ID appeared in the TTE
       instructions concerned unless such accepting P&O Princess shareholder
       has validly completed and timely returned a Brokerage Account Election
       Form, in which case they will be credited to the nominated U.S.
       brokerage account; and

   (ii)any cash consideration (in respect of fractional entitlements) to which
       the accepting P&O Princess shareholder is entitled will be paid by means
       of a CREST payment in favour of the accepting P&O Princess shareholder's
       payment bank in respect of such cash consideration due, in accordance
       with the CREST payment arrangements.

                                      81



Carnival reserves the right to settle all or any part of the consideration
referred to in this paragraph 6(d) for all or any accepting P&O Princess
shareholder(s) in the manner referred to in paragraph 6(c) above if, for any
reason, it wishes to do so.

(e)Market makers

Merrill Lynch, Schroder Salomon Smith Barney and UBS Warburg are connected
exempt market makers or connected exempt principal traders with regards to P&O
Princess shares as those terms are used in the Takeover Code. U.S. security
holders can obtain information regarding market making or principal purchases
by such market maker or principal trader to the extent that this information is
required to be made public in the UK by calling the shareholder helpline.

(f)General

All mandates, instructions and other instruments in force relating to holdings
of P&O Princess shares will, unless and until revoked, continue in force in
relation to payments or notices in respect of the Carnival shares.

If the Partial Share Offer does not become or is not declared unconditional in
all respects (i) share certificate(s) and/or other document(s) of title will be
returned by post (or such other method as may be approved by the Panel), within
14 days of the Partial Share Offer lapsing, to the person or agent whose name
and address (outside the Excluded Territories) is set out in Box 5 of the Form
of Acceptance or to the person or agent whose name and address (outside the
Excluded Territories) is set out in the Letter of Transmittal (as applicable),
or if none is set out, to the first named or sole holder at his registered
address (outside the Excluded Territories), (ii) the Escrow Agent will,
immediately after the lapsing of the Partial Share Offer (or within such longer
period, not exceeding 14 days after the Partial Share Offer lapses, as the
Panel may approve), give TFE Instructions to CRESTCo to transfer all P&O
Princess shares held in escrow balances and in relation to which it is the
Escrow Agent for the purposes of the Partial Share Offer to the original
available balances of the shareholders concerned; and (iii) in respect of P&O
Princess ADSs delivered by book-entry transfer into the U.S. Exchange Agent's
account at a Book-Entry Transfer Facility, P&O Princess ADSs will be credited
to an account maintained at the appropriate Book-Entry Transfer Facility.

All documents and remittances sent by, to or from P&O Princess shareholders or
their appointed agents will be sent at their own risk.

7.  Taxation

General information on the application of current UK tax law and Inland Revenue
practice, and current U.S. federal income tax law applicable to P&O Princess
shareholders who accept the Partial Share Offer is set out in paragraphs 2 and
3, respectively, of Appendix IV to this document.

Holders of P&O Princess shares or P&O Princess ADSs should consult their
independent professional advisers in the light of their particular
circumstances as to the UK and U.S. tax consequences of the Partial Share
Offer, as well as to the effect of any state, local or applicable foreign tax
law.

8.  Rules prohibiting the tender of borrowed shares

Under applicable U.S. securities law, a P&O Princess shareholder must have a
"net long position" in P&O Princess shares at least equal to the number of
shares it tenders both at the time of tender and at completion of the Partial
Share Offer. A P&O Princess shareholder will have a net long position equal to
the excess, if any, of his or her long position in P&O Princess shares over his
or her short position in P&O Princess shares. For purposes of these rules,
borrowed shares will count towards both such shareholder's long position and
short position in P&O Princess shares, each as defined in the applicable
regulations. Accordingly, borrowing shares will not increase a P&O Princess
shareholder's net long position. The effect of these rules is to restrict the
ability of P&O Princess shareholders to tender borrowed shares in the Partial
Share Offer. The application of these rules can be complex. Any P&O Princess
shareholder who has any questions regarding whether it will have a net long
position in P&O Princess shares upon participating in the Partial Share Offer
should consult its legal or financial advisers prior to tendering its shares.

                                      82



9.  Further information

Your attention is drawn to the further information contained in Part B of
Appendix I of this document and the Form of Acceptance, or in the case of P&O
Princess ADS holders, the accompanying Letter of Transmittal, or in the case of
holders of P&O Princess shares in uncertificated form, paragraph 2 of Part C of
Appendix I, which contain further information on the Partial Share Offer.

Shareholders should read the whole of this document and not just rely on the
information contained in this Part VI.

10.  Action to be taken

If you do not wish to accept the Partial Share Offer and wish to retain your
P&O Princess shares and/or your P&O Princess ADSs you should not complete a
Form of Acceptance, Brokerage Account Election Form, Letter of Transmittal,
instruction to your broker or send a TTE Instruction.

If you wish to vote on the DLC transaction at the P&O Princess EGM please refer
to the shareholder circular for the P&O Princess EGM.

If you wish to accept the Partial Share Offer and exchange your P&O Princess
shares for Carnival shares listed on the NYSE in respect of P&O Princess shares
in certificated form (that is, you hold a share certificate), please detach and
return page III of the Form of Acceptance at page 87 of this document duly
completed, to Computershare Investor Services PLC at The Pavilions, Bridgwater
Road, Bristol, BS13 8FB, or (during normal business hours) by hand only to
7/th/ floor, Jupiter House, Triton Court, 14 Finsbury Square, London, EC2A 1BR,
as soon as possible and, in any event, to be received by no later than 10:00
a.m., London time, on 17 April 2003 or by hand only to representatives of
Computershare Investor Services PLC at the P&O Princess EGM to be held at 10:00
a.m., London time on 16 April 2003. The procedure for acceptance is set out in
paragraph 3(a) of this Section A of Part VI of this document and in the Form of
Acceptance contained in Section B of Part VI of this Document. If you wish to
have your Carnival shares credited to an existing U.S. brokerage account you
should complete and return the Brokerage Account Election Form.

If you wish to accept the Partial Share Offer and exchange your P&O Princess
shares for Carnival shares listed on the NYSE in respect of P&O Princess shares
in uncertificated form (that is, in CREST), please send (or, if you are a CREST
sponsored member, procure that your CREST sponsor sends) a TTE Instruction in
accordance with the procedure set out above in paragraph 3(b) of this Section A
of Part VI of this document, as soon as possible and in any event so that the
TTE Instruction settles not later than 10:00 a.m., London time, on 17 April
2003. If you wish to have your Carnival shares credited to an existing U.S.
brokerage account you should complete and return the Brokerage Account Election
Form.

If you wish to accept the Partial Share Offer and exchange your P&O Princess
ADSs that you hold in certificated form for Carnival shares listed on the NYSE,
please send a Letter of Transmittal, duly completed, by post to Computershare
Trust Company of New York at 88 Pine Street, 19/th/ floor, New York, New York
10005, as soon as possible and in any event so that the Letter of Transmittal
and any documents required by the Letter of Transmittal are received by the
U.S. Exchange Agent not later than 5:00 a.m., New York City time, on 17 April
2003. The procedure for acceptance is set out in paragraph (c) of Part D of
Appendix I to this document and in the Letter of Transmittal.

If you wish to accept the Partial Share Offer and exchange your P&O Princess
ADSs that you hold in book-entry form for Carnival shares listed on the NYSE,
please duly complete and return to your broker (by the date set out in the
letter from your broker), the instruction form sent to you by your broker.

                                      83



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                                      84



                                                                         Page I

Section B.  Form of Acceptance

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in
any doubt about the Partial Share Offer or the action you should take, you are
recommended immediately to seek your own financial advice from your
stockbroker, bank manager, solicitor, accountant or other independent financial
adviser duly authorised under the Financial Services and Markets Act 2000.
This document should be read in conjunction with the accompanying Partial Share
Offer document dated 17 March 2003. Unless the context otherwise requires, the
definitions contained in the accompanying Partial Share Offer document also
apply in this Form of Acceptance.
If you have sold or otherwise transferred all your P&O Princess shares, please
send this Form of Acceptance and the accompanying Partial Share Offer document,
as soon as possible, to the purchaser or transferee or to the stockbroker, bank
or other agent through whom the sale or transfer was effected, for delivery to
the purchaser or transferee. However, such documents should not be distributed,
forwarded or transmitted in or into Australia, Belgium, Canada, France,
Germany, Ireland, Japan, New Zealand, Singapore, South Africa, Spain or The
Netherlands.
The Partial Share Offer is not being made, directly or indirectly, in or into
or by the use of the mails or any means or instrumentality (including, without
limitation, telephonically or electronically) of interstate or foreign commerce
of, or any facilities of a national securities exchange of, Australia, Belgium,
Canada, France, Germany, Ireland, Japan, New Zealand, Singapore, South Africa,
Spain or The Netherlands. and the Partial Share Offer should not be accepted by
any such use, means, instrumentality or facility or from within Australia,
Belgium, Canada, France, Germany, Ireland, Japan, New Zealand, Singapore, South
Africa, Spain or The Netherlands. Doing so may render invalid any purported
acceptance. Accordingly, neither this Form of Acceptance nor the accompanying
Partial Share Offer document is being, nor may they be, mailed or otherwise
forwarded, distributed or sent in, into or from (whether by use of the mails or
any means or instrumentality (including, without limitation, telephonically or
electronically) of interstate or foreign commerce of, or any facilities of a
national securities exchange of) Australia, Belgium, Canada, France, Germany,
Ireland, Japan, New Zealand, Singapore, South Africa, Spain or The Netherlands.
Accordingly, any accepting P&O Princess shareholder who is unable to give the
representation and warranty set out in paragraph 1 of Part C of Appendix I of
the accompanying Partial Share Offer document may be deemed not to have
accepted the Partial Share Offer.
All P&O Princess shareholders (including, without limitation, nominees,
trustees or custodians) who would, or otherwise intend to, or who may have a
contractual or legal obligation to, forward this Form of Acceptance and/or the
accompanying Partial Offer Document to any jurisdiction other than the UK or
the U.S., should read the details in this regard which are contained in
paragraph 5 of Section A of Part VI and in paragraph 7 of Part B and in
paragraph 1 of Part C of Appendix 1 of the accompanying Partial Share Offer
document before taking any action.
The Carnival shares to be issued pursuant to the Partial Share Offer have not
been and will not be registered under the relevant securities laws of Japan and
the relevant clearances have not been, and will not be, obtained from the
securities commission of any province of Canada or from the relevant bodies in
Belgium, France, Germany, Ireland, New Zealand, Singapore, South Africa, Spain
or The Netherlands. No prospectus in relation to the Carnival shares has been
or will be lodged with or registered by the Australian Securities and
Investments Commission or with the relevant bodies in Australia, Belgium,
Canada, France, Germany, Ireland, Japan, New Zealand, Singapore, South Africa,
Spain or The Netherlands. Accordingly, the Carnival shares are not being, and
may not be offered, sold, resold, delivered or distributed, directly or
indirectly, in or into Australia, Belgium, Canada, France, Germany, Ireland,
Japan, New Zealand, Singapore, South Africa, Spain or The Netherlands or any
other jurisdiction if to do so would constitute a violation of relevant laws
of, or require registration thereof in, such jurisdiction (except pursuant to
an exemption, if available, from any applicable registration requirements or
otherwise in compliance with all applicable laws).
If you are a citizen or resident or national of a jurisdiction outside the UK
or the U.S. you should inform yourself about and observe any applicable legal
requirements. It is your responsibility, if you wish to accept the Partial
Share Offer, to satisfy yourself as to the full observance of the laws of the
relevant jurisdiction in connection therewith.

                               -----------------
                              FORM OF ACCEPTANCE
                  Partial Share Offer by Carnival Corporation
   to acquire up to 20 per cent. of the issued share capital of P&O Princess
                                  Cruises plc

You do not need to participate in the Partial Share Offer in order to approve
the DLC transaction or to participate as a shareholder in the Combined Group.
If you would prefer to continue to hold P&O Princess shares and do not want to
hold Carnival shares listed on the NYSE, you should NOT accept the Partial
Share Offer and should NOT complete this document. Any P&O Princess shareholder
who accepts the Partial Share Offer will receive Carnival shares listed on the
NYSE. Holders of P&O Princess Shares in uncertificated form (that is, in CREST)
should NOT complete this Form of Acceptance.

                              ACTION TO BE TAKEN

 .  To accept the Partial Share Offer in respect of P&O Princess shares held in
    certificated form (that is, not in CREST), complete the third page of this
    Form of Acceptance by following the instructions and notes for guidance set
    out on pages II and IV.
 .  Return page III of this Form of Acceptance, duly completed and signed and
    accompanied, if your P&O Princess shares are in certificated form, by your
    share certificate(s) and/or other document(s) of title, by post or by hand
    to Computershare Investor Services PLC at, The Pavilions, Bridgwater Road,
    Bristol, BS13 8FB or by hand only (during normal business hours) to 7th
    floor, Jupiter House, Triton Court, 14 Finsbury Square, London, EC2A 1BR as
    soon as possible, or by hand only to representatives of Computershare
    Investor Services PLC at the P&O Princess EGM to be held at 10:00 a.m.,
    London time, on 16 April 2003, but in any event to be received by not later
    than 10:00 a.m., London time, on 17 April 2003. A reply-paid envelope is
    enclosed for use in the UK for your convenience for documents lodged by
    post. No acknowledgement of receipt of documents will be given.
 .  You should complete a separate Form of Acceptance for P&O Princess shares
    held in certificated form but under different designations. Additional
    Forms of Acceptance are available from Computershare Investor Services PLC.
 .  If your P&O Princess shares are in uncertificated form (that is, in CREST),
    you should NOT complete this Form of Acceptance and you may only accept the
    Partial Share Offer in respect of such shares by sending a TTE Instruction
    in accordance with the procedure set out in paragraph 3(b) of Part VI of
    the accompanying Partial Share Offer document dated 17 March 2003.
 .  Completing and returning a Form of Acceptance in relation to P&O Princess
    shares in uncertificated form (that is, in CREST) will NOT constitute a
    valid acceptance and will be disregarded.
 .  If you hold P&O Princess shares in both certificated and uncertificated
    form, you should complete a Form of Acceptance for your P&O Princess shares
    in certificated form and in addition you should send a TTE Instruction for
    your P&O Princess shares held in uncertificated form.
 .  If your P&O Princess shares are in certificated form and your share
    certificate(s) and/or other document(s) of title are with your bank,
    stockbroker or other agent, you should complete and sign this Form of
    Acceptance and arrange for it to be lodged by such agent with the relevant
    document(s), unless your share certificate(s) and/or other documents of
    title are not readily available, in which case please refer to note 5 on
    page IV of this Form of Acceptance.
 .  Please read Parts B and C of Appendix 1 of the accompanying Partial Share
    Offer document dated 17 March 2003 the terms of which are incorporated in
    and form part of this Form of Acceptance.
 .  If you hold P&O Princess shares jointly with others, you must arrange for
    all your co-holders to sign this Form of Acceptance.
 .  If you have any questions as to how to fill in this Form of Acceptance,
    please telephone Computershare Investor Services PLC on the shareholder
    helpline details of which are set out at the front of the Partial Share
    Offer document.
 .  A Form of Acceptance received in an envelope postmarked in Australia,
    Belgium, Canada, France, Germany, Ireland, Japan, New Zealand, Singapore,
    South Africa, Spain or The Netherlands or otherwise appearing to have been
    sent from Australia, Belgium, Canada, France, Germany, Ireland, Japan, New
    Zealand, Singapore, South Africa, Spain or The Netherlands may be rejected
    as an invalid acceptance of the Partial Share Offer.
 .  If you wish to have your Carnival shares credited to an existing U.S.
    brokerage account you should complete and return the Brokerage Account
    Election Form.

                                      85



Page II
                    How to complete this Form of Acceptance

 The provisions of Parts A, B and C of Appendix I of the accompanying Partial
   Share Offer document are incorporated into and form part of this Form of
                                  Acceptance.

You do not need to participate in the Partial Share Offer in order to approve
the DLC transaction or to participate as a shareholder in the Combined Group.
If you would prefer to continue to hold P&O Princess shares and do not want to
hold Carnival shares listed on the NYSE, you should NOT accept the Partial
Share Offer and should NOT complete this document. Any P&O Princess shareholder
who accepts the Partial Share Offer will receive Carnival shares listed on the
NYSE. Holders of P&O Princess Shares in uncertificated form (that is, in CREST)
should NOT complete this Form of Acceptance.


  
 ------------------------------------------------------------------------------
 1   THE PARTIAL SHARE OFFER
     To accept the Partial Share Offer in respect of P&O Princess shares held
     in certificated form (that is, not in CREST), insert in Box 1 the total
     number of P&O Princess shares in respect of which you wish to accept the
     Partial Share Offer. You must also sign Box 2 which will constitute your
     acceptance of the Partial Share Offer, and complete Box 3 and, if
     appropriate Box 4 and/or Box 5. If you sign Box 2 but do not insert a
     number in Box 1 a valid acceptance will be deemed to be made in respect
     of 20 per cent. of P&O Princess shares in certificated form held by you;
     or if you insert a number in excess of the number of P&O Princess shares
     in certificated form held by you a valid acceptance will be deemed to be
     made in respect of 100 per cent. of P&O Princess shares in certificated
     form held by you.

 ------------------------------------------------------------------------------
 2   SIGNATURE(S)

     YOU MUST SIGN BOX 2 REGARDLESS OF WHICH OTHER BOXES YOU COMPLETE.

     In the case of joint holders ALL must sign.

     EACH SIGNATURE BY AN INDIVIDUAL MUST BE SIGNED IN THE PRESENCE OF A
     WITNESS who must not be a joint registered holder and must be over the
     age of eighteen and not your spouse or a member of your immediate family.
     The witness should state his or her name and address and sign where
     indicated. The same witness may witness each signature of joint holders.
     If the acceptance is not made by the registered holder(s), the acceptor
     should insert his name(s) and capacity (e.g. executor) in which he is
     making the acceptance (refer to the notes on page 4 of this Form of
     Acceptance).

     A company may affix its common seal which should be affixed and witnessed
     in accordance with its articles of association or other regulations.
     Alternatively, a company to which section 36A of the Companies Act
     applies may execute this Form of Acceptance as a deed by two directors or
     one director and the company secretary signing in the execution part of
     Box 2 or, in the case of a company incorporated outside Great Britain,
     may execute this Form of Acceptance by any person duly authorised who may
     sign in accordance with the laws of the territory in which the relevant
     company is incorporated and, in all cases, inserting the name of the
     company above their signatures.

 ------------------------------------------------------------------------------
 3   FULL NAME(S) AND ADDRESS(ES)

     Complete Box 3 with the full name and address of the sole or first-named
     holder together with the full name(s) and address(es) of any joint
     holders in BLOCK CAPITALS. Your attention is also drawn to Box 5.

 ------------------------------------------------------------------------------
 4   OVERSEAS SHAREHOLDERS
     If you are unable to give the representations and warranty set out in
     paragraph 1 of Part C of Appendix I of the accompanying Partial Share
     Offer document you must put "NO" in Box 4. Unless you put "NO" in Box 4
     then, by signing and returning this Form of Acceptance, you will be
     deemed to have given the representation and warranty required by
     paragraph 1 of Part C of Appendix I of the accompanying Partial Share
     Offer document. If you put "NO" in Box 5 then you may be deemed not to
     have validly accepted the Partial Share Offer or to have made a valid
     election thereunder. Your attention is also drawn to Box 5.

 ------------------------------------------------------------------------------
 5   ALTERNATIVE ADDRESS
     If you want your consideration to which you are entitled under the
     Partial Share Offer or returned documents to be sent to someone (who must
     be outside Australia, Belgium, Canada, France, Germany, Ireland, Japan,
     New Zealand, Singapore, South Africa, Spain or The Netherlands) other
     than the sole or first-named registered holder at the address set out in
     Box 3 (e.g. your bank manager or stockbroker), you should complete Box 5.

     Box 5 must be completed with an address outside Australia, Belgium,
     Canada, France, Germany, Ireland, Japan, New Zealand, Singapore, South
     Africa, Spain or The Netherlands by holders with registered addresses in
     Australia, Belgium, Canada, France, Germany, Ireland, Japan, New Zealand,
     Singapore, South Africa, Spain or The Netherlands and by holders who have
     completed Box 3 with an address in Australia, Belgium, Canada, France,
     Germany, Ireland, Japan, New Zealand, Singapore, South Africa, Spain or
     The Netherlands.

 ------------------------------------------------------------------------------


                                      86




                                                                       Page III

Please detach this page and complete it as explained on pages II and IV of this
                              Form of Acceptance


                                  
-------------------------------------------------------------------------------------------------------------------
1   TO ACCEPT THE PARTIAL SHARE OFFER                                      Box 1
    Complete Boxes 1 and 3 and sign     Total number of P&O Princess shares held in certificated form (that is, not
    Box 2 in the presence of a          in CREST) by you for which you wish to accept the Partial Share Offer
    witness. If appropriate, also
    complete Boxes 4 and 5.
                                        ---------------------------------------------------------------------------
                                        ---------------------------------------------------------------------------



                                                                                                        
-------------------------------------------------------------------------------------------------------------------
2   SIGN HERE TO ACCEPT THE PARTIAL SHARE OFFER                                                               Box 2
    You do not need to participate in the Partial Share Offer in order to approve the DLC transaction or to
    participate as a shareholder in the Combined Group. If you would prefer to continue to hold P&O Princess
    shares and do not want to hold Carnival shares listed on the NYSE, you should NOT accept the Partial Share
    Offer and should NOT complete this document. Any P&O Princess shareholder who accepts the Partial Share Offer
    will receive Carnival shares listed on the NYSE. Holders of P&O Princess Shares in uncertificated form (that
    is, in CREST) should NOT complete this Form of Acceptance.



                                                                             
-------------------------------------------------------------------------------------------------------------------
                                                  Witnessed by: see paragraph 3 on page 2 for details as to who
Execution by individual(s) Executed as a deed by: may act as witness:
1. ______________________________________________ 1. Name: _______________________ Signature: _____________________
                                                    Address: ______________________________________________________
2. ______________________________________________ 2. Name: _______________________ Signature: _____________________
                                                    Address:_______________________________________________________
3. ______________________________________________ 3. Name: _______________________ Signature: _____________________
                                                    Address: ______________________________________________________
4. ______________________________________________ 4. Name: _______________________ Signature: _____________________
N.B. THE SIGNATURE OF EACH REGISTERED               Address: ______________________________________________________
HOLDER SHOULD BE WITNESSED
-------------------------------------------------------------------------------------------------------------------


                                                                                
Execution by a company
The common seal of the company named below was affixed/executed as a deed on behalf of the company name below:
Name of company     _______________________________________________________________________________________________
In the presence of: _______________________ _______________________ _______________________ _______________________
                    Signature               Name of director        Signature               Name of director
                    _______________________ _______________________ _______________________ _______________________
                    Signature               Name of director        Signature               Name of director
-------------------------------------------------------------------------------------------------------------------


---------------------------------------------
3   FULL NAME(S) AND ADDRESS(ES)
    (to be completed in BLOCK CAPITALS) Box 3


                                                                              
-------------------------------------------------------------------------------------------------------------------
First-named registered
holder                       Joint registered holders
-------------------------------------------------------------------------------------------------------------------
1. Mr. Mrs. Ms or title      2. Mr. Mrs. Ms or title      3. Mr. Mrs. Ms or title      4. Mr. Mrs. Ms or title

---------------------        ---------------------        ---------------------        ---------------------
Forename(s)_________________ Forename(s)_________________ Forename(s)_________________ Forename(s)_________________
Surname_____________________ Surname_____________________ Surname_____________________ Surname_____________________
Address_____________________ Address_____________________ Address_____________________ Address_____________________

---------------------        ---------------------        ---------------------        ---------------------
Postcode____________________ Postcode____________________ Postcode____________________ Postcode____________________
Tel No______________________ Tel No______________________ Tel No______________________ Tel No______________________

-------------------------------------------------------------------------------------------------------------------



                                                                 
--------------------------------------------------------------------------------
4   OVERSEAS SHAREHOLDERS                                              Box 4
    Please put "NO" in Box 4 if you are unable to give the warranty
    set out in paragraph (c) of Part C of Appendix I of the Partial
    Share Offer document.
                                                                       --------
                                                                       --------



                                                         
-------------------------------------------------------------------------------
5   ADDRESS (OUTSIDE AUSTRALIA, BELGIUM, CANADA, FRANCE,          Box 5
    GERMANY, IRELAND, JAPAN, NEW ZEALAND, SINGAPORE, SOUTH
    AFRICA, SPAIN OR THE NETHERLANDS) TO WHICH CONSIDERATION   ----------------
    TO WHICH YOU ARE ENTITLED OR RETURNED DOCUMENTS SHOULD BE  Name________
    SENT IF NOT AS SET OUT IN BOX 4                            Full address
                                                               ____Postcode____
    (to be completed in BLOCK CAPITALS)

                                                               ----------------


-------------------------------------------------------------------------------


                                      87



Page IV

 FURTHER NOTES REGARDING THE COMPLETION AND LODGING OF THIS FORM OF ACCEPTANCE

In order to avoid delay and inconvenience to yourself, the following points may
assist you:

1. If a holder is away from home (e.g. abroad or on holiday)

Send this Form of Acceptance together with the accompanying Partial Share Offer
document (and reply-paid envelope for use in the UK only) by the quickest means
(e.g. air mail), but not in or into Australia, Belgium, Canada, France,
Germany, Ireland, Japan, New Zealand, Singapore, South Africa, Spain or The
Netherlands, to the holder for execution or, if he has executed a power of
attorney, have this Form of Acceptance signed by the attorney, in the presence
of a witness. In the latter case, the power of attorney (or a copy thereof duly
certified in accordance with the Powers of Attorney Act 1971 by, for example, a
solicitor) must be lodged with this Form of Acceptance. No other signatures are
acceptable.

2. If you have sold or otherwise transferred all your P&O Princess shares

You should at once pass this Form of Acceptance, together with the accompanying
Partial Share Offer document and reply-paid envelope, to the purchaser or
transferee but not in or into Australia, Belgium, Canada, France, Germany,
Ireland, Japan, New Zealand, Singapore, South Africa, Spain or The Netherlands.
If your P&O Princess shares are in certificated form, and you wish to sell part
of your holding of P&O Princess shares and also wish to accept the Partial
Share Offer in respect of the balance but are unable to obtain the balance
certificate by 17 April 2003 you should ensure that the stockbroker or other
agent through whom you make a sale obtains the appropriate endorsement or
indication, signed on behalf of P&O Princess' registrars, Computershare
Investor Services PLC, PO Box 435, Owen House, 8 Bankhead Crossway North,
Edinburgh, EH11 4BR in respect of the balance of your holding of P&O Princess
shares.

3. If the sole holder has died

If a grant of probate or letters of administration has/have been registered
with P&O Princess' registrars, Computershare Investor Services PLC, PO Box 435,
Owen House, 8 Bankhead Crossway North, Edinburgh, EH11 4BR, this Form of
Acceptance must be signed by the personal representative(s) of the deceased,
each in the presence of a witness, and lodged with Computershare Investor
Services PLC at either of the addresses set out in paragraph 11 below. If a
grant of probate or letters of administration has/have not been registered with
P&O Princess' registrars, the personal representative(s) or the prospective
personal representative(s) should sign this Form of Acceptance, each in the
presence of a witness, and forward it with the share certificate(s) or other
document(s) of title to Computershare Investor Services PLC at any of the
addresses set out in paragraph 11 below. However, the grant of probate or
letters of administration must be lodged with Computershare Investor Services
PLC before the consideration due under the Partial Share Offer can be forwarded
to the personal representative(s).

4. If one of the joint holders has died

This Form of Acceptance must be signed by all the surviving holders, each in
the presence of a witness, and lodged with Computershare Investor Services PLC
at any of the addresses set out in paragraph 11 below with the share
certificate(s) and/or other document(s) and accompanied by the death
certificate, grant of probate or letters of administration in respect of the
deceased holder.

5. If your P&O Princess shares are in certificated form and your share
   certificate(s) are held by your bank or other agent

Complete this Form of Acceptance and, if the share certificate(s) is/are
readily obtainable, deliver this completed Form of Acceptance to your bank,
stockbroker or other agent for lodging with Computershare Investor Services PLC
at [any of] the addresses set out in paragraph 11 below, accompanied by the
share certificate(s). If the share certificate(s) is/are not readily
obtainable, send this Form of Acceptance duly completed to Computershare
Investor Services PLC, at any of the addresses set out in paragraph 11 below
with a note saying, for example "Share certificate(s) to follow", and arrange
for the share certificate to be forwarded to Computershare Investor Services
PLC at any of the addresses set out in paragraph 11 below as soon as possible
thereafter. It is helpful for your agent to be informed of the full terms of
the Partial Share Offer.

6. If your P&O Princess shares are in certificated form and the share
   certificate(s) have been lost

Complete this Form of Acceptance and lodge it, together with any share
certificate(s) available, with Computershare Investor Services PLC, at any of
the addresses set out in paragraph 11 below. At the same time you should
contact P&O Princess' registrars, Computershare Investor Services PLC, PO Box
435, Owen House, 8 Bankhead Crossway North, Edinburgh, EH11 4BR calls within
the UK to 0800 953 0083 and calls from elsewhere to +44 870 889 3147 (calls
will be charged at the applicable rate) for a letter of indemnity for
completion for lost share certificates and/or other document(s) of title which,
when completed in accordance with the instructions given should be returned to
Computershare Investor Services PLC at any of the addresses set out in
paragraph 11 below in support of this Form of Acceptance.

7. If your P&O Princess shares are in CREST

DO NOT COMPLETE THIS FORM OF ACCEPTANCE. Instead, you should take the action
set out in paragraph 3(b) of Section A of Part VI of the accompanying Partial
Share Offer document to send a TTE Instruction.
If you are a CREST sponsored member, you should refer to your CREST sponsor, as
only your CREST sponsor will be able to send the necessary TTE Instruction to
CRESTCo.

8. If the Form of Acceptance is signed under a power of attorney

The completed Form of Acceptance, together with the share certificate(s) and/or
other document(s) of title, should be lodged with Computershare Investor
Services PLC at any of the addresses set out in paragraph 11 below, accompanied
by the original power of attorney (or a copy thereof duly certified in
accordance with the Powers of Attorney Act 1971 by, for example, a solicitor).
The power of attorney will be noted by Computershare Investor Services PLC and
returned as directed.

9. If your name or other particulars differ from those appearing on the share
   certificate(s), for example:

(a)Name on the share certificate..................... Stephen Jones
  Correct name.............................................. Steven Jones
  Complete this Form of Acceptance with the correct name and lodge it,
  accompanied by a letter from your bank, stockbroker or solicitor confirming
  that the person described on the share certificate(s) and the person who
  signed this Form of Acceptance are one and the same.

(b)Incorrect address on the share certificate(s)
  Write the correct address in Box 1 of this Form of Acceptance.

(c)Change of name
  If you have changed your name, lodge your marriage certificate or the deed
  poll with the Form of Acceptance for noting.

10. If you are not resident in the UK

The attention of P&O Princess shareholders not resident in the UK is drawn to
paragraph 7 of Part B of Appendix I of the accompanying Partial Share Offer
document.

11. Payment of Consideration

The consideration payable under the Partial Share Offer cannot be sent to you
until all relevant documents have been properly completed and sent by post or
by hand to Computershare Investor Services PLC, The Pavilions, Bridgwater Road,
Bristol, BS13 8FB or by hand only (during normal business hours) to
Computershare Investor Services PLC, 7/th/ floor, Jupiter House, Triton Court,
14 Finsbury Square, London, EC2A 1BR, or by hand only to representatives of
Computershare Investor Services PLC at the P&O Princess EGM to be held at 10:00
a.m., London time, on 16 April 2003.

12. Form of Consideration

If you wish to have your Carnival shares credited to an existing U.S. brokerage
account you should complete and return the Brokerage Account Election Form.

                                      88



Section C.  Brokerage Account Election Form.

                        BROKERAGE ACCOUNT ELECTION FORM

  Please detach and complete this form if you have accepted the Partial Share
 Offer and wish to have ALL of the Carnival shares you receive as a result of
   the Partial Share Offer forwarded to your existing U.S. brokerage account

 Please provide all of the following information including, where appropriate,
       full name(s) and address(es) (to be completed in BLOCK CAPITALS)


                                                    
                      ------------------------------------
                      Brokerage Firm:

                      Broker's DTC Participant Number:

                      Brokerage Account Number:

                      Broker Contact Name:

                      Broker Phone Number:

                      Broker Fax Number:
                      ------------------------------------




                               --------------------------------
                               First-named registered holder
                                                  
                               --------------------------------

                               1. Signature:

                               Full Name:

                               Address:


                               Postcode:

                               Tel. No.:
                               --------------------------------


If you hold P&O Princess shares jointly with others, you must arrange for all
your co-holders to sign this Brokerage Account Election Form below, and to
supply the details required below:

------------------------------------------------------------------------------
Joint registered holders
------------------------------------------------------------------------------

2. Signature             3. Signature               4. Signature
________________________ __________________________ __________________________

Full Name_______________ Full Name_________________ Full Name_________________
________________________ __________________________ __________________________

Address_________________ Address___________________ Address___________________
________________________ __________________________ __________________________

Postcode________________ Postcode__________________ Postcode__________________

Tel. No.________________ Tel. No.__________________ Tel. No.__________________
------------------------------------------------------------------------------

NOTES for P&O Princess shareholders

In completing this form you agree that ALL of the Carnival shares which you are
to receive following the calculation of your entitlement in accordance with the
terms of the Partial Share Offer in respect of those P&O Princess shares
tendered by you by submitting a Form of Acceptance or Transfer to Escrow
instruction (as appropriate) shall be credited to your existing U.S. brokerage
account. You must send this Brokerage Account Election Form together with your
completed Form of Acceptance (if applicable) to Computershare Investor Services
PLC in accordance with the instructions set out in the Partial Share Offer
document. You should also send a copy of this completed form to your broker. We
recommend that you retain a copy of this form for your records. If this form is
not fully and correctly completed or is not received before 10:00 a.m., London
time, on 17 April 2003 (or such later time as the Partial Share Offer shall
close) or in the event that it is not possible to credit your shares to your
U.S. brokerage account, you will receive your Carnival shares in certificated
form.

NOTES for Brokers

The number of Carnival shares to be credited to your U.S. brokerage account
will be calculated by Computershare Investor Services PLC, who will inform you
prior to delivery of the Carnival shares, of the amount to be credited to your
U.S. brokerage account. These shares are expected to be available via DWAC on
22 April 2003. Please initiate the pick-up of these shares by 3:00 p.m. Eastern
Standard Time. If you have questions regarding this transaction, please contact
Computershare at 0800 953 0083.

                                      89




                                  APPENDIX I

            CONDITIONS AND FURTHER TERMS OF THE PARTIAL SHARE OFFER

As used in this Appendix I:


                            
"Agent's Message"              a message transmitted by a Book-Entry Transfer Facility to,
                               and received by, the U.S. Exchange Agent and forming part
                               of a Book-Entry Confirmation that states that such Book-
                               Entry Facility has received an express acknowledgement
                               from the participant in such Book-Entry Facility tendering
                               the interests in P&O Princess ADSs that such participant
                               has received and agrees to be bound by the terms of the
                               Letter of Transmittal and that Carnival may enforce such
                               agreement against the participant

"Book-Entry Confirmation"      the confirmation of a book-entry transfer of P&O Princess
                               ADSs into the U.S. Exchange Agent's account at a Book-
                               Entry Transfer Facility

"Book-Entry Transfer Facility" each of The Depository Trust Company and any other
                               book-entry transfer facility, collectively referred to as the
                               "Book-Entry Transfer Facilities"

"Eligible Institution"         a financial institution which is a participant in the Securities
                               Transfer Agents Medallion Program, the NYSE Medallion
                               Program, or the Stock Exchange Medallion Program

"ESA instruction"              an Escrow Account Adjustment Input (AESN), transaction
                               type "ESA" (as described in the CREST manual issued by
                               CRESTCo)

"Escrow Agent"                 Computershare Investor Services PLC in its capacity as
                               escrow agent (as defined by the CREST Manual issued by
                               CRESTCo)

"Offer Period"                 the period commencing on (and including) 16 December
                               2001 until whichever of the following times and dates shall
                               be the latest:
                               (i)  10:00a.m. (London time) on the date which falls 20
                               U.S. Business Days after the date of posting of this
                               document; and
                               (ii)  theearlier of:
                                   (a)the time and date at which the Partial Share Offer
                                      lapses; and
                                   (b)the time and date at which the Partial Share Offer
                                      becomes unconditional in all respects

"wider Carnival group"         means Carnival and any of its subsidiary undertakings or
                               any associated undertaking or company of which 20 per
                               cent. or more of the voting capital is held by the Carnival
                               group or any partnership, joint venture, firm or company in
                               which any member of the Carnival group may be interested

"wider P&O Princess group"     means P&O Princess and any of its subsidiary
                               undertakings or any associated undertaking or company of
                               which 20 per cent. or more of the voting capital is held by
                               the P&O Princess group or any partnership, joint venture,
                               firm or company in which any member of the P&O Princess
                               group may be interested


                                      90



Part A.  Conditions of the Partial Share Offer

The Partial Share Offer is subject to the following conditions:

1. the DLC transaction having been completed under the terms of the
   Implementation Agreement;

2. all registration statements required by the SEC in connection with the DLC
   proposal being declared effective by the SEC and remaining effective and not
   being the subject of a stop order or other proceeding by the SEC to suspend
   their effectiveness;

3. the NYSE agreeing to list the Carnival shares to be issued in connection
   with the Partial Share Offer, subject only to official notice of issuance;

4. there not being outstanding any governmental action or court order which
   would or might make the Partial Share Offer or the acquisition of any P&O
   Princess shares void, illegal or unenforceable or materially and adversely
   affect the assets, business, profits or prospects of any member of the wider
   Carnival group or of any member of the wider P&O Princess group; and

5. all authorisations, orders, recognitions, grants, consents, licences,
   confirmations, clearances, permissions and approvals ("Authorisations")
   necessary in any jurisdiction for, or in respect of, the Partial Share Offer
   having been obtained, in terms and in a form reasonably satisfactory to
   Carnival, from all necessary governmental entities and from any relevant
   persons or bodies with whom any member of the wider Carnival group or the
   wider P&O Princess group has entered into contractual arrangements and all
   such Authorisations remaining in full force and effect at the time at which
   the Partial Share Offer becomes unconditional in all respects.

Carnival reserves the right to waive, in whole or in part, either or both of
conditions 4 and 5 to the Partial Share Offer.

Invocation of conditions 4 and 5 to the Partial Share Offer will be subject to
the approval of the Panel under Note 2 to Rule 13 of the Takeover Code.

                                      91



Part B.   Further terms of the Partial Share Offer

The following further terms apply, unless the context otherwise requires, to
the Partial Share Offer.

Except where the context requires otherwise, any reference in this document:

    (i)to the "Partial Share Offer" means the Partial Share Offer and includes
       any revision, variation or renewal thereof or extension thereto and any
       election in connection therewith;

   (ii)to the Partial Share Offer "becoming unconditional" includes the Partial
       Share Offer being or becoming or being declared unconditional in all
       respects; and

  (iii)to a time is to the time in London, unless otherwise indicated.

1.   Number of P&O Princess shares for which acceptance will be met

Subject to the Partial Share Offer becoming unconditional in all respects,
acceptances of the Partial Share Offer by P&O Princess shareholders, which are
otherwise valid in all respects (or are deemed to be valid), will be met in
full to the extent they are made in respect of up to 20 per cent. of the
relevant P&O Princess shareholder's registered holding of P&O Princess shares
at 10:00 a.m. on 17 April 2003. Acceptances by P&O Princess shareholders, to
the extent they are made in respect of more than 20 per cent. of the relevant
P&O Princess shareholder's registered holding of P&O Princess shares, will be
met only to the extent that other P&O Princess shareholders do not accept the
Partial Share Offer or accept the Partial Share Offer in respect of less than
20 per cent. of their P&O Princess shares held on that date. To the extent that
acceptances of the Partial Share Offer above the 20 per cent. threshold cannot
be so met, they will be scaled down, pro rata, as nearly as practicable, based
on the number of shares tendered in the Partial Share Offer and the overall
level of acceptances. No such acceptance will be scaled down below 20 per cent.
of the relevant registered holding of P&O Princess shares.

In relation to any calculation involving numbers or percentages of P&O Princess
shares, the number of P&O Princess shares which is not a whole number may be
round down or round up provided that all P&O Princess shareholders are treated
on a consistent basis.

2.   Acceptance period

(a)The Partial Share Offer will initially be open for acceptance until 10:00
   a.m., London time, 5:00 a.m., New York City time, on 17 April 2003. If the
   result of the shareholder vote at the P&O Princess EGM has not been
   announced by 10:00 a.m., London time, 5:00 a.m., New York City time, on 17
   April 2003, or if any other condition to the Partial Share Offer has not
   been satisfied or waived by such date and time, Carnival will, with the
   permission of the Panel, extend the acceptance deadline for the Partial
   Share Offer. It is not expected that it will be necessary to extend the
   Partial Share Offer, but in the event that an extension is made, it is
   likely to be for a period of less than 14 days.

(b)Although no revision is envisaged, if the Partial Share Offer is revised it
   will remain open for acceptance for a period of at least 14 days (or such
   other period as may be permitted by the Panel) following the date on which
   the written notification of the revised Partial Share Offer is posted to P&O
   Princess shareholders. Except with the consent of the Panel, no revision of
   the Partial Share Offer may be made or posted to P&O Princess shareholders
   after 2 May 2003 or, if later, the date which is 14 days before the last
   date on which the Partial Share Offer can become unconditional.

(c)The Partial Share Offer, whether revised or not, shall not (without the
   consent of the Panel) be capable of becoming unconditional after midnight on
   16 May 2003 (or any other earlier time and/or date beyond which Carnival has
   stated (and not withdrawn such statement) that the Partial Share Offer will
   not be extended), nor of being kept open for acceptance after that time
   and/or date, unless it has previously become unconditional, provided that
   Carnival reserves the right, with the permission of the Panel, to extend the
   time for the Partial Share Offer to become unconditional to any later
   time(s) and/or date(s).

(d)Carnival reserves the right to treat as valid in whole or in part
   acceptances of the Partial Share Offer which are not entirely in order, or,
   in respect of P&O Princess shares held in certificated

                                      92



   form, which are not accompanied by the relevant share certificate(s) and/or
   other relevant document(s) of title, or which are subject to verification.

(e)If the Partial Share Offer becomes or is declared unconditional as to
   acceptances, it will not remain open for acceptances for any further period.

3.   Announcements

(a)Without prejudice to paragraph 4(a) below, by 8.00 a.m. on the next business
   day (the "relevant day") following the day on which the Partial Share Offer
   is due to expire or becomes or is declared unconditional or is revised or
   extended (or such later time or date as the Panel may agree), Carnival will
   make an appropriate announcement to the London Stock Exchange (through a
   Regulatory Information Service) and through the Dow Jones News Service. Such
   announcement will also state (unless otherwise permitted by the Panel) the
   total number of P&O Princess shares and rights over P&O Princess shares (as
   nearly as practicable):

    (i)for which acceptances of the Partial Share Offer have been received
       (showing the extent, if any, to which such acceptances have been
       received from any person acting in concert or deemed to be acting in
       concert with Carnival for the purposes of the Partial Share Offer);

   (ii)acquired or agreed to be acquired by or on behalf of Carnival or any
       person acting in concert or deemed to be acting in concert with Carnival
       for the purposes of the Partial Share Offer during the course of the
       Offer Period; and

  (iii)held by or on behalf of Carnival or any person acting in concert or
       deemed to be acting in concert with Carnival for the purposes of the
       Partial Share Offer prior to the Offer Period,

   and will specify the percentage of the P&O Princess shares represented by
   each of these figures.

   Any decision to extend the time and/or date by which the conditions to the
   Partial Share Offer have to be fulfilled may be made at any time up to, and
   will be announced not later than, 8.00 a.m. on the relevant day (or such
   later time and/or date as the Panel may agree) and the announcement will
   state the next expiry date. In computing the number of P&O Princess shares
   represented by acceptances and/or purchases, there may be included or
   excluded for announcement purposes, acceptances and purchases not in all
   respects in order or not accompanied by the relevant share certificate(s)
   and/or other document(s) of title, in respect of P&O Princess shares held in
   certificated form, or which are subject to verification.

(b)In this Appendix I, references to the making of an announcement or the
   giving of notice by or on behalf of Carnival includes the release of an
   announcement by public relations consultants or by Merrill Lynch and UBS
   Warburg, in each case on behalf of Carnival, and the delivery by hand or
   telephone, telex or facsimile or other electronic transmission of an
   announcement to the London Stock Exchange (through a Regulatory Information
   Service) and the Dow Jones News Service, as the case may be. An announcement
   made otherwise than to the London Stock Exchange shall be notified
   simultaneously (unless the Panel agrees otherwise) to the London Stock
   Exchange (through a Regulatory Information Service) and through the Dow
   Jones News Service.

(c)Without limiting the manner in which Carnival may choose to make any public
   announcement and, subject to Carnival's obligations under applicable law
   (including Rules 14d-4(c) and 14d-6(c) under the Exchange Act relating to
   Carnival's obligations to disseminate promptly public announcements
   concerning material changes to the Partial Share Offer), Carnival will have
   no obligation to publish, advertise or otherwise communicate any such public
   announcement other than by making a release to the London Stock Exchange and
   the Dow Jones News Service.

4.   Rights of withdrawal

(a)P&O Princess shares in respect of which valid acceptances have been received
   may be withdrawn pursuant to the procedures set out below at any time prior
   to the Partial Share Offer becoming unconditional and in certain other
   circumstances described below. P&O Princess shares in respect of which valid
   acceptances have been received prior to the Partial Share Offer becoming
   unconditional and that are not validly withdrawn prior to the Partial Share
   Offer becoming unconditional may not be withdrawn.

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(b)Withdrawal rights will terminate upon the declaration by Carnival that the
   Partial Share Offer has become unconditional, unless Carnival then fails to
   comply by 8:00 a.m. on the relevant day (as defined in paragraph 3(a) of
   this Part B) (or such later time and/or date as the Panel may agree) with
   any of the other requirements specified in paragraph 3(a) of this Part B, in
   which case a P&O Princess shareholder who has previously accepted the
   Partial Share Offer may withdraw his acceptance of the Partial Share Offer
   by written notice in compliance with paragraphs 4(c) and (d) of this Part B
   (if appropriate) given by post or by hand to the UK Receiving Agent or the
   U.S. Exchange Agent at the addresses set out in the Letter of Transmittal.
   Alternatively, in the case of P&O Princess shares held in uncertificated
   form, withdrawals can also be effected in the manner set out in paragraph
   4(g) below.

(c)To be effective, a written notice of withdrawal must be received, subject to
   paragraph 4(b) of this Part B, prior to the time the Partial Share Offer
   becomes unconditional by the party (either the UK Receiving Agent or the
   U.S. Exchange Agent) to whom the Form of Acceptance or Letter of Transmittal
   (as appropriate) was originally returned by the relevant P&O Princess
   shareholder and must specify the name of the person from whom the acceptance
   was received, the number of P&O Princess shares to be withdrawn and (if
   share certificates or P&O Princess ADRs, as the case may be, have been
   provided) the name of the registered holder of the relevant P&O Princess
   shares, if different from the name of the person from whom the acceptance
   was received.

(d)In respect of P&O Princess ADSs, if P&O Princess ADRs have been delivered or
   otherwise identified to the U.S. Exchange Agent, then, prior to the physical
   release of such P&O Princess ADRs, the serial numbers shown on such P&O
   Princess ADRs must be submitted and, unless the P&O Princess ADSs evidenced
   by such P&O Princess ADRs have been delivered by an Eligible Institution,
   the signatures on the notice of withdrawal must be guaranteed by an Eligible
   Institution. If interests in P&O Princess ADSs evidenced by P&O Princess
   ADRs have been delivered pursuant to the procedures for book-entry transfer
   set out in paragraph (c) of Part D of this Appendix, any notice of
   withdrawal must specify the name and number of the account at the
   appropriate Book-Entry Transfer Facility to be credited with the withdrawn
   P&O Princess ADSs and must otherwise comply with such Book-Entry Transfer
   Facility's procedures.

(e)Withdrawals of P&O Princess shares in respect of which valid acceptances
   have been received may not be rescinded (without Carnival's consent) and any
   P&O Princess shares properly withdrawn and in respect of which valid
   acceptances have not been received thereafter will thereafter be deemed not
   to be the subject of a valid acceptance for the purposes of the Partial
   Share Offer. Withdrawn P&O Princess shares may be subsequently the subject
   of a valid acceptance, however, by following one of the procedures described
   in either Part C or Part D of this Appendix, as the case may be, at any time
   whilst the Partial Share Offer remains open.

(f)In this paragraph 4, "written notice" (including any letter of appointment,
   direction or authority) means notice in writing bearing the original
   signature(s) of the relevant accepting P&O Princess shareholder(s) or
   his/their agent(s) duly appointed in writing (satisfactory evidence of whose
   appointment must be produced with the notice). Notification by telex or
   facsimile or other electronic transmission or copies will not be sufficient
   to constitute written notice. No notice which is postmarked in, or otherwise
   appears to Carnival or its agents to have been sent from, the Excluded
   Territories will be treated as valid.

(g)In the case of P&O Princess shares held in uncertificated form, if
   withdrawals are permitted pursuant to this paragraph 4 of this Part B, an
   accepting P&O Princess shareholder may withdraw his acceptance through CREST
   by sending (or, if a CREST sponsored member, procuring that his CREST
   sponsor sends) an ESA instruction to settle in CREST in relation to each
   Electronic Acceptance to be withdrawn. Each ESA instruction must, in order
   for it to be valid and settle, include the following details:

   .   the number of P&O Princess shares to be withdrawn, together with their
       ISIN number;

   .   the member account ID of the accepting shareholder, together with his
       participant ID;

   .   the member account ID of the Escrow Agent included in the relevant
       Electronic Acceptance, together with the Escrow Agent's participant ID;

   .   the transaction reference number of the Electronic Acceptance to be
       withdrawn;

   .   the intended settlement date for the withdrawal; and

   .   the corporate action number for the Partial Share Offer.

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   Any such withdrawal will be conditional upon the UK Receiving Agent
   verifying that the withdrawal request is validly made. Accordingly, the UK
   Receiving Agent will on behalf of Carnival reject or accept the withdrawal
   by transmitting in CREST a receiving agent reject (AEAD) or receiving agent
   accept (AEAN) message.

(h)All questions as to the validity (including time of receipt) of any notice
   of withdrawal or ESA instruction will be determined by Carnival, whose
   determination (except as required by the Panel) will be final and binding.
   None of Carnival, any of its advisers, the UK Receiving Agent, the U.S.
   Exchange Agent or any other person will be under any duty to give
   notification of any defects or irregularities in any notice of withdrawal or
   incur any liability for failure to give such notification or for any
   determination under this paragraph.

5.  Revised Partial Share Offer

(a)Although no such revision is envisaged, if the Partial Share Offer (in its
   original or any previously revised form(s)) is revised (either in its terms
   or conditions or in the value or form of the consideration offered or
   otherwise), and any such revised Partial Share Offer(s) represent(s) on the
   date on which such revision is announced (on such basis as Carnival may
   consider appropriate) an improvement (or no diminution) in the value of the
   consideration compared with that previously offered, the benefit of the
   revised Partial Share Offer will, subject as provided in paragraphs 5(b),
   5(c) and 6 below, be made available to any P&O Princess shareholder who has
   validly accepted the Partial Share Offer in its original or previously
   revised form(s), and not validly withdrawn such acceptance in accordance
   with paragraph 4 of this Part B (each a "Previous Acceptor"). The acceptance
   by or on behalf of a Previous Acceptor of the Partial Share Offer in its
   original or any previously revised form(s) shall be deemed to be an
   acceptance of the Partial Share Offer as so revised and shall also
   constitute a separate appointment of each of Carnival and its directors as
   his attorney and/or agent with authority to accept any such revised Partial
   Share Offer on behalf of such Previous Acceptor and, if such revised Partial
   Share Offer includes alternative forms of consideration, to make on his
   behalf elections for and/or to accept such alternative forms of
   consideration on his behalf in such proportion as such attorney and/or agent
   in his absolute discretion thinks fit and to execute on behalf of and in the
   name of such Previous Acceptor all such further documents (if any) and take
   such further actions (if any) as may be required to give effect to such
   acceptances and/or elections. In making any such acceptances or making any
   such election, the attorney and/or agent shall take into account the nature
   of any previous acceptances and/or elections made by or on behalf of the
   Previous Acceptor and such other facts or matters as he may reasonably
   consider relevant.

(b)The deemed acceptances and elections referred to in this paragraph 5 shall
   not apply and the authorities conferred by paragraph 5(a) above shall not be
   exercised if, as a result thereof, the Previous Acceptor would (on such
   basis as Carnival may consider appropriate) thereby receive and/or retain
   (as appropriate) less consideration in aggregate under the Partial Share
   Offer or otherwise than would have been received and/or retained (as
   appropriate) in aggregate consideration as a result of acceptance of the
   Partial Share Offer in the form in which it was originally accepted and/or
   elected by such Previous Acceptor or on his behalf (unless such Previous
   Acceptor has previously agreed to receive and/or retain (as appropriate)
   less in aggregate consideration).

(c)The deemed acceptances and elections referred to in this paragraph 5 shall
   not apply and the authorities conferred by this paragraph 5 shall be
   ineffective to the extent that a Previous Acceptor:

    (i)in respect of P&O Princess shares in certificated form, lodges with the
       UK Receiving Agent at its address set out in the Letter of Transmittal,
       within 14 days of the posting of the document pursuant to which the
       revision of the Partial Share Offer is made available to P&O Princess
       shareholders (or such later date as Carnival may determine), a Form of
       Acceptance or some other form issued by or on behalf of Carnival in
       which he validly elects to receive the consideration receivable by him
       under such revised Partial Share Offer in some other manner; or

   (ii)in respect of P&O Princess shares in uncertificated form, sends (or, if
       a CREST sponsored member, procures that his CREST sponsor sends) an ESA
       instruction to settle in CREST in

                                      95



       relation to each Electronic Acceptance in respect of which an election
       is to be varied. Each ESA instruction must, in order for it to be valid
       and settle, include the following details:

      .   the number of P&O Princess shares in respect of which the changed
          election is made, together with their ISIN number;

      .   the member account ID of the Previous Acceptor, together with his
          participant ID;

      .   the member account ID of the UK Receiving Agent in its capacity as
          Escrow Agent included in the relevant Electronic Acceptance, together
          with the UK Receiving Agent's participant ID;

      .   the transaction reference number of the Electronic Acceptance in
          respect of which the election is to be changed;

      .   the intended settlement date for the changed election;

      .   the corporate action number for the Partial Share Offer;

   and, in order that the desired change of election can be effected, must
   include:

      .   the member account ID of UK Receiving Agent in its capacity as Escrow
          Agent relevant to the new election.

   Any such change of election will be conditional upon the UK Receiving Agent
   verifying that the request is validly made. Accordingly, the UK Receiving
   Agent will on behalf of Carnival reject or accept the requested change of
   election by transmitting in CREST a receiving agent reject (AEAD) or
   receiving agent accept (AEAN) message.

(d)The authorities conferred by this paragraph 5 and any acceptance of a
   revised Partial Share Offer and/or any election pursuant thereto shall be
   irrevocable unless and until the Previous Acceptor becomes entitled to
   withdraw his acceptance under paragraph 4 above and duly does so.

(e)Carnival reserves the right to treat an executed Form of Acceptance, TTE
   Instruction or Letter of Transmittal (as appropriate) relating to the
   Partial Share Offer (in its original or any previously revised form(s))
   which is received (or dated) on or after the announcement or issue of the
   Partial Share Offer in any revised form as a valid acceptance of the revised
   Partial Share Offer and, where applicable, a valid election for any
   alternative form of consideration made available pursuant thereto, and such
   acceptance shall constitute an authority in the terms of paragraph 5(a)
   above on behalf of the relevant P&O Princess shareholder.

(f)If Carnival makes a material change in the terms of the Partial Share Offer
   or if it waives a material condition of the Partial Share Offer prior to the
   time the Partial Share Offer becomes unconditional, Carnival will
   disseminate additional tender offer materials and extend the Partial Share
   Offer to the extent required by Rules 14d-4(d), 14d-6(c) and 14e-1 under the
   Exchange Act. The minimum period during which an offer must remain open
   following material changes in the terms of the Partial Share Offer, other
   than a change in price or a change in the percentage of securities sought,
   will depend upon the facts and circumstances then existing, including the
   materiality of the changes. With respect to a change in price or, subject to
   certain limitations, a change in the percentage of securities sought, a
   minimum of ten U.S. business days is generally required to allow for
   adequate dissemination to P&O Princess shareholders.

6.  General

(a)Except with the consent of the Panel, the Partial Share Offer will lapse
   unless all conditions relating to the Partial Share Offer have been
   satisfied or (if capable of waiver) waived or, where appropriate, have been
   determined by Carnival in its reasonable opinion to be or remain satisfied,
   by midnight on 7 May 2003 or such later date as Carnival may, with the
   consent of the Panel, decide. If the Partial Share Offer lapses for any
   reason, the Partial Share Offer will cease to be capable of further
   acceptance and P&O Princess shareholders and Carnival will cease to be bound
   by prior acceptances.

(b)Subject to the Partial Share Offer becoming or being declared unconditional
   in all respects, settlement of the consideration to which any P&O Princess
   shareholder is entitled under the Partial Share Offer will be effected in
   the case of acceptances received, valid and complete in all respects, within
   14 days of the date on which the Partial Share Offer becomes or is declared

                                      96



   unconditional in all respects. If the Partial Share Offer does not become or
   is not declared unconditional in all respects (i) share certificate(s), P&O
   Princess ADRs and/or other document(s) of title will be returned by post (or
   such other method as may be approved by the Panel) within 14 days of the
   Partial Share Offer lapsing, to the person or agent whose name and address
   (outside the Excluded Territories) is set out in the Form of Acceptance or
   Letter of Transmittal (as appropriate) or, if none is set out, to the first
   named or sole holder at his registered address (outside the Excluded
   Territories), (ii) the relevant escrow agent will, immediately after the
   lapsing of the Partial Share Offer (or within such longer period, not
   exceeding 14 days after the Partial Share Offer lapses, as the Panel may
   approve), give the appropriate instruction to CRESTCo to transfer all P&O
   Princess shares held in escrow balances and in relation to which it is the
   escrow agent for the purposes of the Partial Share Offer to the original
   available balances of the P&O Princess shareholders concerned, and (iii) in
   respect of P&O Princess ADSs delivered by book-entry transfer into the U.S.
   Exchange Agent's account at a Book Entry Transfer Facility, P&O Princess
   ADSs will be credited to an account maintained at the appropriate Book Entry
   Transfer Facility.

(c)Except with the consent of the Panel, settlement of the consideration to
   which any P&O Princess shareholder is entitled under the Partial Share Offer
   will be implemented in full in accordance with the terms of the Partial
   Share Offer without regard to any lien, right of set-off, counterclaim or
   other analogous right to which Carnival may otherwise be, or claim to be,
   entitled as against such P&O Princess shareholder. Subject to paragraph 7
   below, no consideration will be sent to an address in the Excluded
   Territories.

(d)The Partial Share Offer and all acceptances and elections in respect of the
   Partial Share Offer, or pursuant thereto, and all contracts made pursuant
   thereto and any action taken or made or deemed to be taken or made under any
   of the foregoing shall be governed by and construed in accordance with
   English law. Execution by or on behalf of a P&O Princess shareholder of a
   Form of Acceptance or a Letter of Transmittal or the sending of a TTE
   Instruction by or on behalf of a P&O Princess shareholder (as appropriate)
   constitutes his irrevocable submission in relation to all matters arising
   out of or in connection with the Partial Share Offer to the jurisdiction of
   the courts of England and his agreement that nothing shall limit the right
   of Carnival to bring any action, suit or proceeding arising out of or in
   connection with the Partial Share Offer in any other manner permitted by law
   or in any court of competent jurisdiction. However, the conduct of the
   Partial Share Offer is also subject to U.S. federal securities laws and the
   securities laws of the States and other jurisdictions in the U.S. in which
   the Partial Share Offer is being made if, and to the extent, applicable to
   the Partial Share Offer.

(e)All references in this document to 17 April 2003 shall (except in the
   definition of "Offer Period" and in paragraph 2(a) above and where the
   context otherwise requires) be deemed, if the expiry date of the Partial
   Share Offer is extended, to refer to the expiry date of the Partial Share
   Offer as so extended.

(f)Any omission or failure to dispatch this document, the Form of Acceptance,
   the Letter of Transmittal or any notice required to be dispatched under the
   terms of the Partial Share Offer to, or any failure to receive the same by,
   any person to whom the Partial Share Offer is made, or should be made, shall
   not invalidate the Partial Share Offer in any way or create any implication
   that the Partial Share Offer has not been made to any such person.

(g)Subject to the Takeover Code, notwithstanding any other provision in this
   Part B of Appendix I, Carnival reserves the right to treat acceptances of
   the Partial Share Offer and/or elections pursuant thereto as valid if
   received by the UK Receiving Agent, the U.S. Exchange Agent or otherwise by
   or on behalf of Carnival at any place or places or in any manner determined
   by it otherwise than as set out in this document or in the Form of
   Acceptance, Brokerage Account Election Form or Letter of Transmittal (as
   appropriate).

(h)All powers of attorney, appointments of agents and authorities in the terms
   conferred by or referred to in this Appendix I or in the Form of Acceptance
   or Letter of Transmittal (as appropriate) are given by way of security for
   the performance of the obligations of the P&O Princess shareholder concerned
   and are irrevocable in accordance with section 4 of the Powers of Attorney
   Act 1971 unless and until the donor of such power of attorney or authority
   or appointment validly withdraws his acceptance in accordance with paragraph
   4 above.

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(i)No acknowledgement of receipt of any Form of Acceptance, Letter of
   Transmittal, TTE Instruction, ESA Instruction, Brokerage Account Election
   Form, share certificate(s), P&O Princess ADRs and/or other document(s) of
   title will be given. All communications, notices, certificates, documents of
   title and remittances to be delivered by or sent to or from P&O Princess
   shareholders (or their designated agent(s)) will be delivered by or sent to
   or from such P&O Princess shareholders (or their designated agent(s)) at
   their own risk.

(j)In relation to any acceptance of the Partial Share Offer in respect of a
   holding of P&O Princess shares which is in uncertificated form, Carnival
   reserves the right to make such alterations, additions or modifications as
   may be necessary or desirable to give effect to any purported acceptance of
   the Partial Share Offer, whether in order to comply with the facilities or
   requirements of CREST or otherwise, provided such alterations, additions or
   modifications are consistent with the requirements of the Code or are
   otherwise made with the consent of the Panel.

(k)For the purposes of this document, the time of receipt of a TTE Instruction,
   an ESA Instruction or an Electronic Acceptance shall be the time at which
   the relevant instruction settles in CREST.

(l)All references in this Appendix I to any statute or statutory provision
   shall include a statute or statutory provision which amends, consolidates or
   replaces the same (whether before or after the date hereof).

(m)The Partial Share Offer is made on 17 March 2003 and is capable of
   acceptance thereafter. The Partial Share Offer is being made by means of
   this document and by means of an advertisement inserted in the Financial
   Times (UK edition) dated 18 March 2003. Additional copies of this document,
   the Form of Acceptance, the Letter of Transmittal and any related documents
   may be collected from the UK Receiving Agent and the U.S. Exchange Agent.

(n)The Partial Share Offer extends to all the P&O Princess shares
   unconditionally allotted or issued on 17 March 2003 and any further P&O
   Princess shares unconditionally allotted or issued while the Partial Share
   Offer remains open for acceptance (or such earlier date or dates as Carnival
   may decide).

(o)The instructions, terms, provisions and authorities contained in or deemed
   to be incorporated in the Form of Acceptance, Brokerage Account Election
   Form, or Letter of Transmittal (as appropriate) will also constitute part of
   the terms of the Partial Share Offer. Words and expressions defined in this
   document have the same meaning when used in the Form of Acceptance or Letter
   of Transmittal (as appropriate) unless the context otherwise require. The
   provisions of this Appendix I shall be deemed to be incorporated in and form
   part of each Form of Acceptance or Letter of Transmittal (as appropriate).

(p)The P&O Princess shares are to be acquired by Carnival fully paid and free
   from all liens, charges and encumbrances, rights of pre-emption and any
   other third party rights of any nature, whatsoever and together with all
   rights attaching thereto, including the right to all dividends or other
   distributions declared, paid or made after the date the Partial Share Offer
   becomes unconditional in all respects. For the avoidance of doubt, P&O
   Princess shareholders on the P&O Princess share register on 21 February 2003
   shall be entitled to payment of the dividend declared by the P&O Princess
   board on 7 January 2003.

(q)The Carnival shares will be issued credited as fully paid and will rank pari
   passu in all respects with the Carnival shares in issue at the date the
   Partial Share Offer becomes unconditional in all respects.

(r)Fractions of Carnival shares will not be issued to accepting P&O Princess
   shareholders. Therefore, P&O Princess shareholders who hold less than four
   P&O Princess shares will not be able to tender their shares in the Partial
   Share Offer. Fractional entitlements to Carnival shares will be aggregated
   and sold in the market and the net proceeds of sale distributed pro rata to
   the P&O Princess shareholders entitled thereto, except that individual
   entitlements of less than (Pounds)3.00 will be retained for the benefit of
   the Combined Group.

(s)If the Partial Share Offer lapses:

    (i)in respect of P&O Princess shares held in certificated form, share
       certificate(s) and/or other document(s) of title will be returned by
       post (or such other method as may be approved by the Panel) within 14
       days of the Partial Share Offer lapsing, at the risk of the person
       entitled thereto, to the person or agent whose name and address outside
       the Excluded Territories is set out in the relevant box in the Form of
       Acceptance or, if none is set out, to the first-

                                      98



       named or sole holder at his registered address outside the Excluded
       Territories. No such document will be sent to an address in the Excluded
       Territories;

   (ii)in respect of P&O Princess shares held in uncertificated form, the UK
       Receiving Agent will, immediately after the lapsing of the Partial Share
       Offer (or within such longer period as the Panel may permit, not
       exceeding 14 days after the lapsing of the Partial Share Offer), give
       instructions to CRESTCo to transfer all P&O Princess shares held in
       escrow balances and in relation to which it is the Escrow Agent for the
       purposes of the Partial Share Offer to the original available balances
       of the P&O Princess shareholders concerned.

7.  Overseas shareholders

(a)The making of the Partial Share Offer in, or to P&O Princess shareholders
   resident in, or citizens or nationals of, jurisdictions outside the UK or
   the U.S., or to persons who are custodians, nominees of or trustees for,
   citizens, residents or nationals of such jurisdictions, may be prohibited or
   affected by the laws of the jurisdiction in which such persons are resident.
   Such persons should inform themselves about and observe any applicable legal
   requirements. It is the responsibility of any such person wishing to accept
   the Partial Share Offer to satisfy himself as to the full observance of the
   laws of the relevant jurisdiction in connection therewith, including the
   obtaining of any governmental, exchange control or other consents, which may
   be required and the compliance with other necessary formalities and the
   payment of any issue, transfer or other taxes due in such jurisdiction. Any
   such person will be responsible for any such issue, transfer or other taxes
   or other requisite payments by whomsoever payable and Carnival and Merrill
   Lynch and UBS Warburg and any person acting on their behalf shall be fully
   indemnified and held harmless by such person for any such issue, transfer or
   other taxes as Carnival (or its agents) may be required to pay.

(b)In particular, the Partial Share Offer will not be made, directly or
   indirectly, in or into the Excluded Territories, or by use of the mails of,
   or by any means or instrumentality (including, without limitation,
   telephonically or electronically) of interstate or foreign commerce of, or
   of any facilities of a national securities exchange of, the Excluded
   Territories, and the Partial Share Offer should not be accepted by any such
   use, means, instrumentality or facility or otherwise from within the
   Excluded Territories. Accordingly, copies of this document, the Form of
   Acceptance or Letter of Transmittal (as appropriate) and any related
   offering documents are not being, and should not be, mailed or otherwise
   forwarded, distributed or sent in the Excluded Territories. Persons
   receiving such documents (including, without limitation, custodians,
   nominees and trustees) should not distribute them in, into or from the
   Excluded Territories or use such mails or any such means, instrumentality or
   facility for any purpose directly or indirectly in connection with the
   Partial Share Offer, and so doing may render invalid any related purported
   acceptance of the Partial Share Offer. Persons wishing to accept the Partial
   Share Offer should not use the mails of any of the Excluded Territories or
   any such means, instrumentality or facility for any purpose directly or
   indirectly relating to acceptance of the Partial Share Offer. Envelopes
   containing the Form of Acceptance or Letter of Transmittal (as appropriate),
   evidence of title or other documents relating to the Partial Share Offer
   should not be postmarked in the Excluded Territories or otherwise dispatched
   from the Excluded Territories and all acceptors must provide addresses
   outside the Excluded Territories for the receipt of the consideration to
   which they are entitled under the Partial Share Offer or for the return of
   Forms of Acceptance or Letters of Transmittal (as appropriate) and (in
   relation to P&O Princess shares in certificated form) share certificate(s),
   and/or other document(s) of title. For more detail, overseas shareholders
   (i) completing a Form of Acceptance should refer to paragraph 1 of Part C of
   this Appendix I, (ii) accepting electronically should refer to paragraph 2
   of Part C of this Appendix I, and (iii) tendering P&O Princess ADSs should
   refer to Part D of this Appendix I.

(c)A P&O Princess shareholder holding P&O Princess ordinary shares may be
   deemed NOT to have accepted the Partial Share Offer if (i) he puts "NO" in
   Box 4 of the Form of Acceptance and therefore does not give the
   representation and warranty set out in paragraph 1(c) of Part C of this
   Appendix I; or (ii) he completes Box 4 of the Form of Acceptance with an
   address in the Excluded Territories or has a registered address in the
   Excluded Territories and in each case does not insert in Box 4 of the Form
   of Acceptance the name and address of a person or agent outside the Excluded
   Territories to whom he wishes the consideration to which he is entitled
   under the Partial Share Offer to be sent; or (iii) he inserts in Box 4 of
   the Form of Acceptance the name and

                                      99



   address and/or telephone number of a person or agent in the Excluded
   Territories to whom he wishes the consideration to which he is entitled
   under the Partial Share Offer to be sent; or (iv) the Form of Acceptance
   received from him is received in an envelope postmarked in, or which
   otherwise appears to Carnival or its agents to have been sent from the
   Excluded Territories; or (v) he makes a Restricted Escrow Transfer pursuant
   to paragraph 7(d) below unless he also makes a related Restricted ESA
   instruction which is accepted by the UK Receiving Agent. Carnival reserves
   the right, in its sole discretion, to investigate, in relation to any
   acceptance, whether the representation and warranty set out in paragraph
   1(c) or, as the case may be, 2(c) of Part C of this Appendix I could have
   been truthfully given by the relevant P&O Princess shareholder and, if such
   investigation is made and as a result Carnival determines (for any reason)
   that such representation and warranty could not have been so given, such
   acceptances and any election thereunder may be rejected as invalid.

(d)If a P&O Princess shareholder holding P&O Princess ordinary shares in
   uncertificated form is unable to give the warranty set out in paragraph 2(c)
   of Part C of this Appendix I, but nevertheless can provide evidence
   satisfactory to Carnival that he is able to accept the Partial Share Offer
   in compliance with all relevant legal and regulatory requirements, he may
   only purport to accept the Partial Share Offer by sending (or if a CREST
   sponsored member, procuring that his CREST sponsor sends) both (1) a
   Transfer to Escrow instruction to a designated escrow balance detailed below
   (a "Restricted Escrow Transfer") and (2) one or more valid ESA instructions
   (a "Restricted ESA instruction") which specify the form of consideration
   which he wishes to receive (consistent with the alternatives offered under
   the Partial Share Offer). Such purported acceptance will not be treated as a
   valid acceptance unless both the Restricted Escrow Transfer and the
   Restricted ESA instruction(s) settle in CREST and Carnival decides, in its
   absolute discretion, to exercise its right described in this paragraph 7 of
   Part B of Appendix I to waive, vary or modify the terms of the Partial Share
   Offer relating to overseas shareholders, to the extent required to permit
   such acceptance to be made in each case during the acceptance period set out
   in paragraph 1 of this Part B of Appendix I. If Carnival accordingly decides
   to permit such acceptance to be made, the UK Receiving Agent will on behalf
   of Carnival accept the purported acceptance as an Electronic Acceptance on
   the terms of this document (as so waived, varied or modified) by
   transmitting in CREST a receiving agent accept (AEAN) message. Otherwise,
   the UK Receiving Agent will, on behalf of Carnival, reject the purported
   acceptance by transmitting in CREST a receiving agent reject (AEAD) message.
   Each Restricted Escrow Transfer must, in order for it to be valid and
   settle, include the following details: the ISIN number for the P&O Princess
   shares; the number of P&O Princess shares in respect of which the Partial
   Share Offer is to be accepted; the member account ID and participant ID of
   the P&O Princess shareholder; the participant ID of the Escrow Agent (this
   is 3RA19) and its member account ID specific to a Restricted Escrow Transfer
   (this is CARPOPO1); and the intended settlement date. Each Restricted ESA
   instruction must, in order for it to be valid and settle, include the
   following details: the ISIN number for the P&O Princess shares; the number
   of P&O Princess shares relevant to that Restricted ESA instruction; the
   member account ID and participant ID of the accepting P&O Princess
   shareholder; the member account ID and participant ID of the Escrow Agent
   set out in the Restricted Escrow Transfer; the participant ID and the member
   account ID of the Escrow Agent relevant to the form of consideration
   required; the transaction reference number of the Restricted Escrow Transfer
   to which the Restricted ESA instruction relates; the intended settlement
   date; and the corporate action number for the Partial Share Offer.

(e)Carnival reserves the right to notify any matter, including the fact that
   the Partial Share Offer has been made, to all or any P&O Princess
   shareholders:

    (i)with a registered address outside the UK; or

   (ii)whom Carnival knows to be a custodian, trustee or nominee holding P&O
       Princess shares for persons who are citizens, residents or nationals of
       jurisdictions outside the UK,

   by announcement or by paid advertisement in a daily national newspaper
   published and circulated in the UK (in which event such notice shall be
   deemed to have been sufficiently given, notwithstanding any failure by any
   such P&O Princess shareholder to receive or see such notice) and all
   references in this document to notice or the provision of information in
   writing by or on behalf of Carnival shall be construed accordingly.

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(f)The provisions of this paragraph 7 override any terms of the Partial Share
   Offer inconsistent with them. The provisions of this paragraph 7 and/or any
   other terms of the Partial Share Offer relating to overseas P&O Princess
   shareholders may be waived, varied or modified as regards specific P&O
   Princess shareholder(s) or on a general basis by Carnival in its absolute
   direction. In particular, without limitation, Carnival reserves the right in
   its sole discretion to treat as valid an acceptance received from a person
   unable to give the representation and warranty set out in paragraphs 1(c) or
   2(c) of Part C of Appendix I, and, in the event of such acceptance being
   treated as valid then such person shall be deemed to have given an authority
   to Carnival and its agents, as agent(s) of such shareholder in respect of
   the Carnival shares to which such shareholder becomes entitled, to sell or
   arrange for the sale or allotment of Carnival shares to which any such
   shareholder may otherwise be entitled pursuant to or in connection with the
   Partial Share Offer, to receive the share certificates or other documents of
   title and to execute instruments of transfer in respect of the same and to
   remit the cash proceeds of such sale or allotment, net of expenses, to any
   such shareholder instead, save that proceeds of less than (Pounds)3.00
   attributable to any shareholder shall be retained for the benefit of the
   Carnival group. Carnival will not have any obligations or liability
   whatsoever in relation to the timing of such sales or allotments or the
   price or prices obtained or for any loss or alleged loss arising therefrom
   or otherwise arising in connection therewith and such sales or allotments
   may be made individually or together with other shares to which such
   provisions apply. In such circumstances such shareholder shall be deemed to
   have appointed any director of Carnival to effect any such sale as his or
   her attorney with full power (including the power of delegation) to do all
   such things as may be necessary for or ancillary to such purpose.

(g)References in this paragraph 7 to a P&O Princess shareholder shall include
   the person or persons executing a Form of Acceptance and, in the event of
   more than one person executing a Form of Acceptance, the provisions of this
   paragraph shall apply to them jointly and to each of them.

(h)In connection with the commencement of the Partial Share Offer to P&O
   Princess shareholders resident in the U.S., Carnival has filed a
   registration statement with the SEC on Form S-4 (which registration
   statement is also a registration of P&O Princess on Form F-4) and a
   statement on Schedule TO. This document will constitute the prospectus
   contained in the registration statement. The registration statement, when
   declared effective by the SEC, will register under the Securities Act, among
   other securities, the Carnival shares offered in connection with the Partial
   Share Offer to holders of P&O Princess shares and P&O Princess ADSs.

Overseas shareholders should inform themselves about and observe any applicable
legal or regulatory requirements. If you are in any doubt about your position
you should consult your professional adviser in the relevant jurisdiction.

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Part C.  Procedures for tendering P&O Princess ordinary shares

1.  Form of Acceptance

Each P&O Princess shareholder by whom, or on whose behalf, a Form of Acceptance
is executed irrevocably and lodged with UK Receiving Agent undertakes,
represents, warrants and agrees to and with Carnival and UK Receiving Agent (so
as to bind him, his personal representatives, heirs, successors and assigns) to
the following effect:

(a)that the execution of the Form of Acceptance, whether or not any other boxes
   are completed shall constitute:

    (i)an acceptance, subject to paragraph 7 of Part B of this Appendix I of
       the Partial Share Offer in respect of 20 per cent. of the relevant P&O
       Princess shareholder's entire holding of P&O Princess shares in
       certificated form (or such other number as may have been inserted in Box
       1 of the Form of Acceptance provided that if no number is inserted in
       Box 1 the acceptance will be deemed to have been made in respect of the
       20 per cent. of P&O Princess shareholder's entire holding of P&O
       Princess shares in certificated form or if a number is inserted in Box 1
       which exceeds such P&O Princess shareholder's holding of P&O Princess
       shares in certificated form the acceptance will be deemed to have been
       made in respect of the P&O Princess shareholder's entire holding of P&O
       Princess shares in certificated form);

   (ii)an undertaking to execute any further documents, take any further action
       and given any further assurances which may be required to enable
       Carnival to obtain the full benefit of the terms of this Appendix I
       and/or to perfect any of the authorities expressed to be given hereunder
       or otherwise in connection with such P&O Princess shareholder's
       acceptance of the Partial Share Offer; and

   in each case on and subject to the terms and conditions set out or referred
   to in this document and the Form of Acceptance and that, subject only to the
   rights of withdrawal set out in paragraph 4 of Part B of this Appendix I,
   each such acceptance and election shall be irrevocable;

(b)that the P&O Princess shares in certificated form in respect of which the
   Partial Share Offer is accepted or deemed to be accepted are sold free from
   all liens, charges, equitable interests, encumbrances, rights of pre-emption
   and any other third party rights and interests of any nature whatsoever and
   together with all rights attaching thereto on or after the date the Partial
   Share Offer becomes unconditional in all respects, including, without
   limitation, voting rights and the right to receive and retain all dividends
   or other distributions (if any) declared, made or paid on or after the date
   the Partial Share Offer becomes unconditional in all respects. For the
   avoidance of doubt, P&O Princess shareholders on the P&O Princess register
   on 21 February 2003 shall be entitled to payment of the dividend declared by
   the board of P&O Princess on 7 January 2003;

(c)that, unless "NO" is inserted in Box 4 of the Form of Acceptance:

    (i)the Form of Acceptance and any related offering documents have not been
       mailed or otherwise distributed or sent (directly or indirectly) in,
       into or from the Excluded Territories or any other jurisdiction where
       such actions may constitute a breach of any legal or regulatory
       requirements of such jurisdiction;

   (ii)in connection with the Partial Share Offer, there has been no use,
       directly or indirectly, of the mails of, or any means or instrumentality
       (including, without limitation, electronic mail, or any electronic
       publication or advertisement, facsimile transmission, telex or
       telephone) of interstate or foreign commerce of, or any facility of a
       national securities exchange of the Excluded Territories or such other
       jurisdiction;

  (iii)such P&O Princess shareholder was outside the Excluded Territories when
       the Form of Acceptance was sent and at the time of accepting the Partial
       Share Offer in respect of the P&O Princess shares to which such Form of
       Acceptance relates;

   (iv)in respect of the P&O Princess shares to which the Form of Acceptance
       relates, such P&O Princess shareholder is not, and is not accepting the
       Partial Share Offer through, an agent or fiduciary acting on a
       non-discretionary basis for a principal, unless such principal is a
       corporation or partnership and such agent or fiduciary is an authorised
       employee of such principal or such principal has given any instructions
       with respect to the Partial Share Offer from outside the Excluded
       Territories; and

                                      102



    (v)such accepting P&O Princess shareholder has observed the laws of all
       relevant jurisdictions, obtained all requisite governmental, exchange
       control or other required consents, complied with all requisite
       formalities and paid any issue, transfer or other taxes or other
       requisite payments due from him in each case in connection with such
       acceptance, in any jurisdiction and that he has not taken or omitted to
       take any action which will or may result in Carnival or any other person
       acting in breach of the legal or regulatory requirements of any such
       jurisdiction in connection with the Partial Share Offer or his
       acceptance thereof;

(d)that, in relation to P&O Princess shares in certificated form, the execution
   of the Form of Acceptance and its delivery to UK Receiving Agent
   constitutes, subject to the Partial Share Offer becoming unconditional in
   all respects in accordance with its terms and to an accepting P&O Princess
   shareholder not having validly withdrawn his acceptance, the irrevocable
   separate appointment of each of Carnival and its respective directors,
   authorised representatives and agents as such P&O Princess shareholder's
   attorney and/or agent (the "attorney"), and an irrevocable instruction to
   the attorney (in accordance with section 4 of the Powers of Attorney Act
   1971) (i) to complete and execute all or any form(s) of transfer and/or
   other document(s) at the discretion of the attorney in relation to the P&O
   Princess shares referred to in paragraph 1(a)(i) above in favour of Carnival
   or such other person or persons as Carnival or its agents may direct and
   (ii) to deliver such form(s) of transfer and/or other document(s) at the
   discretion of the attorney together with any share certificate(s) and/or
   other document(s) of title relating to such P&O Princess shares for
   registration within six months of the Partial Share Offer becoming
   unconditional in all respects (iii) and to do all such other acts and things
   as may in the opinion of the attorney be necessary or expedient for the
   purposes of, or in connection with, the acceptance of the Partial Share
   Offer and to vest in Carnival or its nominee(s) the P&O Princess shares as
   aforesaid;

(e)that, in relation to P&O Princess shares in certificated form, the execution
   of the Form of Acceptance and delivery to the UK Receiving Agent
   constitutes, subject to the Partial Share Offer becoming unconditional in
   all respects in accordance with its terms and to the accepting P&O Princess
   shareholder not having validly withdrawn the acceptance, a separate and
   irrevocable authority and request:

    (i)to P&O Princess or its agents to procure the registration of the
       transfer of the P&O Princess shares referred to in paragraph 1(a)(i)
       above in certificated form pursuant to the Partial Share Offer and the
       delivery of the share certificate(s) and/or any document(s) of title in
       respect thereof to Carnival or as it may direct; and

   (ii)if the P&O Princess shares concerned are in certificated form (subject
       to the provisions of paragraph 7 of Part B of this Appendix I), to
       Carnival or its respective agents, to procure the dispatch by post (or
       such other method as may be approved by the Panel) of a cheque in
       respect of any cash consideration (in relation to fractional
       entitlements) to which such P&O Princess shareholder is entitled, at the
       risk of such P&O Princess shareholder, to the person or agent whose name
       and address outside the Excluded Territories is set out in Box 5 of the
       Form of Acceptance or, if none is set out, to the first-named or sole
       holder at his registered address outside the Excluded Territories.

(f)that, in relation to P&O Princess shares in certificated form, the execution
   of the Form of Acceptance and its delivery to the UK Receiving Agent
   constitutes a separate authority to each of Carnival and its respective
   directors in the terms of paragraph 5 of Part B of this Appendix I;

(g)that, subject to the Partial Share Offer becoming or being declared
   unconditional in all respects in accordance with its terms in respect of the
   P&O Princess shares in certificated form in respect of which the Partial
   Share Offer has been accepted, or is deemed to be accepted, which acceptance
   has not been validly withdrawn, and which have not been registered in the
   name of Carnival or as it may direct:

    (i)subject to any restrictions in the articles of association of P&O
       Princess, Carnival or its agents shall be entitled to direct the
       exercise of any votes and any or all other rights and privileges
       (including the right to requisition the convening of a general meeting
       or separate class meeting of P&O Princess) attaching to any such P&O
       Princess shares in certificated form in respect of which the Partial
       Share Offer has been accepted or is deemed to have been accepted and not
       validly withdrawn;

                                      103



   (ii)the execution of a Form of Acceptance by a P&O Princess shareholder in
       respect of the P&O Princess shares in certificated form comprised in
       such acceptance and in respect of which such acceptance has not been
       validly withdrawn shall constitute with regard to such P&O Princess
       shares:

       (A)an authority to P&O Princess or its agents from such P&O Princess
          shareholders to send any notice, circular, warrant or other document
          or communication which may be required to be sent to him as a member
          of P&O Princess to Carnival at its registered office or as Carnival
          or its agents may direct;

       (B)an authority to Carnival or its agents to sign any consent to short
          notice of a general meeting or separate class meeting on his behalf
          and/or to execute a form of proxy in respect of such P&O Princess
          shares appointing any person nominated by Carnival to attend general
          meetings and separate class meetings of P&O Princess or its members
          or any of them (and any adjournment thereof) and to exercise the
          votes attaching to such P&O Princess shares on his behalf; and

       (C)the agreement of such P&O Princess shareholder not to exercise any of
          such rights without the consent of Carnival and the irrevocable
          undertaking of such P&O Princess shareholder not to appoint a proxy
          for or to attend any such general meeting or separate class meeting;

(h)that he will deliver to UK Receiving Agent at either of the addresses set
   out in the Letter of Transmittal, his share certificate(s) and/or other
   document(s) of title in respect of the P&O Princess shares in certificated
   form referred to in paragraph 1(a)(i) of this Part C and in relation to
   which acceptance has not been validly withdrawn, or an indemnity acceptable
   to Carnival in lieu thereof, as soon as possible and in any event within six
   months of the Partial Share Offer becoming unconditional in all respects;

(i)that he will do all such acts and things as shall, in the opinion of
   Carnival or the UK Receiving Agent be necessary or expedient to vest in
   Carnival or its nominee(s) or such other person as Carnival may decide title
   to the number of P&O Princess shares in certificated shares inserted or
   deemed to be inserted in Box 1 of the Form of Acceptance;

(j)that the terms and conditions of the Partial Share Offer contained in this
   document shall be incorporated in and form part of the Form of Acceptance,
   which shall be read and construed accordingly;

(k)that he agrees to ratify each and every act or thing which may be done or
   effected by Carnival or any of its respective directors or agents or P&O
   Princess or its agents, as the case may be, in the proper exercise of any of
   the powers and/or authorities hereunder;

(l)that on execution and delivery, any Form of Acceptance shall take effect as
   a deed;

(m)that if any provision of Part B or this paragraph 1 of Part C of this
   Appendix I shall be unenforceable or invalid or shall not operate so as to
   afford Carnival or UK Receiving Agent or any authorised representative of
   any of them or their respective agents the benefit or authority expressed to
   be given therein, he shall with all practicable speed do all such acts and
   things and execute all such documents as may be required to enable those
   persons to secure the full benefits of Part B or this paragraph 1 of Part C
   of this Appendix I; and

(n)that he submits, in relation to all matters arising out of the Partial Share
   Offer and the Form of Acceptance, to the jurisdiction of the English courts.

References in this paragraph 1 of Part C to a P&O Princess shareholder shall
include references to the person or persons executing a Form of Acceptance and
in the event of more than one person executing a Form of Acceptance, the
provisions of paragraph 1 of this Part C shall apply to them jointly and to
each of them.

2.  Electronic Acceptances

Each P&O Princess shareholder by whom, or on whose behalf, an Electronic
Acceptance is made irrevocably undertakes, represents, warrants and agrees to
and with Carnival and the UK Receiving Agent (so as to bind him, his personal
representatives, heirs, successors and assigns) to the following effect:

(a)that the Electronic Acceptance shall constitute an acceptance of the Partial
   Share Offer in respect of the number of P&O Princess shares in
   uncertificated form to which a TTE Instruction relates,

                                      104



   subject to the terms and conditions set out or referred to in this document
   and that, subject only to the rights of withdrawal set out in paragraph 4 of
   Part B of this Appendix I, each such acceptance and election shall be
   irrevocable;

(b)that the P&O Princess shares in uncertificated form in respect of which the
   Partial Share Offer is accepted or deemed to be accepted are sold free from
   all liens, charges, equitable interests, encumbrances, rights of pre-emption
   and any other third party rights and interests of any nature whatsoever and
   together with all rights attaching thereto on or after the date the partial
   share offer becomes unconditional in all respects, including, without
   limitation, voting rights and the right to receive and retain all dividends
   or other distributions declared, made or paid on or after the date the
   partial share offer becomes unconditional in all respects; for the avoidance
   of doubt P&O Princess shareholders on the P&O Princess share register on 21
   February 2003 shall be entitled to the dividend declared by the board of P&O
   Princess on 7 January 2003;

(c)(i)  in connection with the Partial Share Offer, there has been no use,
   directly or indirectly, any  facility of a national securities exchange of,
   the Excluded Territories or such other  jurisdiction;

   (ii)such P&O Princess shareholder was outside the Excluded Territories at
       the time of the input and settlement of the relevant TTE Instruction;

  (iii)in respect of the P&O Princess shares to which the Electronic Acceptance
       relates, such P&O Princess shareholder is not, and is not accepting the
       Partial Share Offer through, an agent or fiduciary acting on a
       non-discretionary basis for a principal, unless such principal is a
       corporation or partnership and such agent or fiduciary is an authorised
       employee of such principal or such principal has given any instructions
       with respect to the Partial Share Offer from outside the Excluded
       Territories; and

   (vi)if such accepting P&O Princess shareholder is not a citizen, resident or
       national of the UK, he has observed the laws of all relevant
       jurisdictions, obtained all requisite governmental, exchange control or
       other required consents, complied with all requisite formalities and
       paid any issue, transfer or other taxes or other requisite payments due
       from him in each case in connection with such acceptance, in any
       jurisdiction and that he has not taken or omitted to take any action
       which will or may result in Carnival or any other person acting in
       breach of the legal or regulatory requirements of any such jurisdiction
       in connection with the Partial Share Offer or his acceptance thereof;

(d)that the Electronic Acceptance constitutes the irrevocable separate
   appointment of each of Carnival, and its directors, authorised
   representatives and agents as such P&O Princess shareholder's attorney
   and/or agent (the "attorney"), and an irrevocable instruction to the
   attorney (in accordance with section 4 of the Powers of Attorney Act 1971)
   (i) if the Partial Share Offer becomes unconditional in all respects in
   accordance with its terms, and subject to the accepting P&O Princess
   shareholder not having validly withdrawn the acceptance, to do all such acts
   and things as may in the opinion of the attorney be necessary or expedient
   for the purposes of, or in connection with, the acceptance of the Partial
   Share Offer and to vest in Carnival or its nominee(s) the P&O Princess
   shares referred to in paragraph 2(a) above, and (ii) if the Partial Share
   Offer does not become unconditional in all respects, to give instructions to
   CRESTCo, immediately after the lapsing of the Partial Share Offer (or within
   such longer period as the Panel may permit, not exceeding 14 days from the
   lapsing of the Partial Share Offer), to transfer all Relevant P&O Princess
   shares to the original available balance of an accepting P&O Princess
   shareholder;

(e)that the Electronic Acceptance constitutes, subject to the Partial Share
   Offer becoming unconditional in all respects in accordance with its terms
   and to the accepting P&O Princess shareholder not having validly withdrawn
   the acceptance, a separate and irrevocable authority and request:

    (i)to P&O Princess or its agents to procure the transfer to Carnival, or as
       it may direct, by means of CREST all or any of the P&O Princess shares
       in uncertificated form referred to in paragraph (a) above;

   (ii)(subject to the provisions of paragraph 7 of Part B of this Appendix I)
       to Carnival or its agents to procure, if applicable, that such P&O
       Princess shareholder's name is entered in the register of holders of
       Carnival Shares in respect of the Carnival Shares to which he becomes
       entitled pursuant to the Partial Share Offer;


                                      105



  (iii)to Carnival, or its agents, to record and act upon any instructions with
       regard to payments or notices which have been entered in the records of
       P&O Princess in respect of such P&O Princess shareholder's holding(s) of
       P&O Princess shares as if such mandates had been given in respect of his
       holding of Carnival shares (if any); and

   (iv)to Carnival, or its agents (subject to the provisions of paragraph 7 of
       Part B of this Appendix I) to procure the making of a CREST payment
       obligation in favour of the P&O Princess shareholder's payment bank in
       accordance with the CREST payment arrangements in respect of any cash
       consideration (in relation to fractional entitlements) to which such P&O
       Princess shareholder is entitled, provided in relation to a CREST member
       whose registered address is in the Excluded Territories, Carnival shall
       instead procure that all of, and in relation to any other P&O Princess
       shares Carnival may (if, for any reason, it wishes to do so) determine
       that all or any part of, any such cash consideration shall be paid by
       cheque despatched by post and to procure the despatch by post (or such
       other method as may be approved by the Panel) of the documents of title
       for any Carnival shares to which such P&O Princess shareholder is
       entitled to the first-named or sole holder at his registered address
       outside the Excluded Territories;

(f)that in relation to P&O Princess shares in uncertificated form, the
   Electronic Acceptance constitutes a separate authority to each of Carnival,
   and its directors in the terms of paragraph 5 of Part B of this Appendix I;

(g)that, subject to the Partial Share Offer becoming unconditional in all
   respects in accordance with its terms, in respect of the P&O Princess shares
   in uncertificated form in respect of which the Partial Share Offer has been
   accepted, or is deemed to be accepted, which acceptance has not been validly
   withdrawn, and which have not been registered in the name of Carnival or as
   it may direct:

    (i)subject to any restrictions in the articles of association of P&O
       Princess, Carnival or its agents shall be entitled to direct the
       exercise of any votes and any or all other rights and privileges
       (including the right to requisition the convening of a general meeting
       or separate class meeting of P&O Princess) attaching to any such P&O
       Princess shares in uncertificated form in respect of which the Partial
       Share Offer has been accepted or is deemed to have been accepted and not
       validly withdrawn;

   (ii)the Electronic Acceptance by a P&O Princess shareholder shall constitute
       with regard to such P&O Princess shares in uncertificated form in
       respect of which the Partial Share Offer has been accepted or is deemed
       to have been accepted and not validly withdrawn:

       (A)an authority to P&O Princess or its agents from such P&O Princess
          shareholders to send any notice, circular, warrant or other document
          or communication which may be required to be sent to him as a member
          of P&O Princess (including any share certificate(s) or other
          document(s) of title issued as a result of conversion of such P&O
          Princess shares into certificated form) to Carnival at its registered
          office or as Carnival or its agents may direct;

       (B)an authority to Carnival or its agents to sign any consent to short
          notice of a general meeting or separate class meeting on his behalf
          and/or to execute a form of proxy in respect of such P&O Princess
          shares appointing any person nominated by Carnival to attend general
          meetings and separate class meetings of P&O Princess or its members
          or any of them (and any adjournment thereof) and to exercise the
          votes attaching to such P&O Princess shares on his behalf, such votes
          (where relevant) to be cast so far as possible to satisfy any
          outstanding condition of the Partial Share Offer; and

       (C)the agreement of such P&O Princess shareholder not to exercise any of
          such rights without the consent of Carnival and the irrevocable
          undertaking of such P&O Princess shareholder not to appoint a proxy
          for or to attend any such general meeting or separate class meeting;

(h)that if, for any reason, any P&O Princess shares in respect of which a TTE
   Instruction has been effected in accordance with paragraph 3(b) of Section A
   of Part VI of this document are converted to certificated form, he will
   (without prejudice to paragraph 2(h)(ii)(A) above immediately deliver or

                                      106



   procure the immediate delivery of the share certificate(s) or other
   document(s) of title in respect of all such P&O Princess shares as so
   converted to the UK Receiving Agent at either of the addresses referred to
   in paragraph 3(b) of Section A of Part VI of this document or to Carnival at
   its registered office or as Carnival or its agents may direct; and he shall
   be deemed upon conversion to undertake, represent, warrant and agree in the
   terms set out in Part C of this Appendix I in relation to such P&O Princess
   shares;

(i)that the creation of a CREST payment obligation in favour of his payment
   bank in accordance with the CREST payment arrangements referred to in
   paragraph 2(f)(iv) above shall, to the extent of the obligation so created,
   discharge in full any obligation of Carnival to pay to him the cash
   consideration (in relation to fractional entitlements) to which he is
   entitled pursuant to the Partial Share Offer;

(j)that, he will do all such acts and things as shall in the opinion of
   Carnival or the UK Receiving Agent be necessary or expedient to vest in
   Carnival, or its nominee(s) or such other persons as Carnival may decide,
   title to the number of P&O Princess shares comprised in the Electronic
   Acceptance and all such acts and things as may be necessary or expedient to
   enable the UK Receiving Agent to perform its functions as Escrow Agent for
   the purposes of the Partial Share Offer;

(k)that he agrees to ratify each and every act or thing which may be done or
   effected by Carnival or the UK Receiving Agent or any of their respective
   directors or agents or P&O Princess or its agents, as the case may be, in
   the exercise of any of his powers and/or authorities hereunder;

(l)that if any provision of Part B or this paragraph 2 of Part C of this
   Appendix I shall be unenforceable or invalid or shall not operate so as to
   afford Carnival or the UK Receiving Agent or any authorised representative
   of any of them or their respective agents the benefit or authority expressed
   to be given therein, he shall with all practicable speed do all such acts
   and things and execute all such documents that may be required to enable
   those persons to secure the full benefits of Part B and this paragraph 2 of
   Part C of this Appendix I;

(m)that he submits in relation to all matters arising out of the Partial Share
   Offer and the Electronic Acceptance, to the jurisdiction of the English
   courts; and

(n)that, by virtue of the Regulations, the making of an Electronic Acceptance
   constitutes an irrevocable power of attorney by the relevant holder of P&O
   Princess shares in the terms of all the powers and authorities expressed to
   be given by Part B, this paragraph 2 of Part C and (where applicable by
   virtue of paragraph 2(i) above) paragraph 1 of Part C of this Appendix I to
   Carnival, the UK Receiving Agent and any of their respective agents.

References in this paragraph 2 of Part C to a P&O Princess shareholder shall
include references to the person or persons making an Electronic Acceptance,
and in the event of more than one person making an Electronic Acceptance the
provisions of this paragraph 2 of Part C shall apply to them jointly and to
each of them.

3.  Brokerage Account Election

If you are a holder of P&O Princess shares and wish to have your Carnival
shares credited to your existing U.S. brokerage account instead of receiving a
share certificate, you should complete and return a Brokerage Account Election
Form to the UK Receiving Agent prior to the Partial Share Offer becoming
unconditional. If you hold P&O Princess shares in uncertificated form (that is,
in CREST), you must also send a TTE instruction. If you hold P&O Princess
shares in certificated form you should also return a Form of Acceptance.

Carnival reserves the right to deliver a share certificate in respect of
Carnival shares to a P&O Princess shareholder whose Brokerage Account Election
Form is not entirely in order, where Carnival is unable to credit Carnival
shares to the nominated U.S. brokerage account or if for any other reason it
wishes to do so.

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Part D.  Procedures for tendering P&O Princess ADSs

(a)Letter of Transmittal

If you are a holder of P&O Princess ADSs evidenced by P&O Princess ADRs, you
will have also received a Letter of Transmittal for use in connection with the
Partial Share Offer. This section should be read together with the instructions
on the Letter of Transmittal. The provisions of this Part D shall be deemed to
be incorporated in, and form a part of, the relevant Letter of Transmittal. The
instructions printed on the relevant Letter of Transmittal shall be deemed to
form part of the terms of the Partial Share Offer.

(b)Valid tendering

For a holder of P&O Princess ADSs evidenced by P&O Princess ADRs to validly
tender such P&O Princess ADSs pursuant to the Partial Share Offer, a properly
completed and duly executed Letter of Transmittal, together with any required
signature guarantees or, in the case of a book-entry transfer, an Agent's
Message, and any other documents required by the Letter of Transmittal, must be
received by the U.S. Exchange Agent at its address set out in the Letter of
Transmittal and either the P&O Princess ADRs evidencing such P&O Princess ADSs
must be received by the U.S. Exchange Agent at such address or such P&O
Princess ADRs evidencing such P&O Princess ADSs must be delivered pursuant to
the procedure for book-entry transfer set forth below (and a Book-Entry
Confirmation received by the U.S. Exchange Agent in accordance with such
procedures).

The acceptance of the Partial Share Offer by a tendering holder of P&O Princess
ADSs evidenced by P&O Princess ADRs pursuant to the procedures described above,
subject to the withdrawal rights described below, will be deemed to constitute
a binding agreement between such tendering holder of P&O Princess ADSs and
Carnival upon the terms and subject to the conditions to the Partial Share
Offer.

Accordingly, references in this document and in the Letter of Transmittal to a
tender of P&O Princess ADSs shall be construed to mean an acceptance of the
Partial Share Offer in respect of such P&O Princess ADSs upon the terms and
subject to the conditions to the Partial Share Offer. If a P&O Princess ADR
evidencing a P&O Princess ADS has been tendered by a holder of P&O Princess
ADSs, the P&O Princess shares represented by such P&O Princess ADSs may not be
tendered independently by such holder of P&O Princess ADSs. A Letter of
Transmittal and other required documents contained in an envelope postmarked in
the Excluded Territories or otherwise appearing to Carnival or its agents to
have been sent from the Excluded Territories may be rejected as invalid.

(c)Book-entry transfer

The U.S. Exchange Agent will establish an account at each of the Book-Entry
Transfer Facilities with respect to interests in P&O Princess ADSs evidenced by
P&O Princess ADRs held in book-entry form for the purposes of the Partial Share
Offer within two U.S. business days from the date of this document. Any
financial institution that is a participant in any of the Book-Entry Transfer
Facility's systems may make book-entry delivery of interests in P&O Princess
ADSs by causing a Book-Entry Transfer Facility to transfer such interests in
P&O Princess ADSs into the U.S. Exchange Agent's account at such Book-Entry
Transfer Facility in accordance with that Book-Entry Transfer Facility's
procedures for such transfer.

Although delivery of interests in P&O Princess ADSs evidenced by P&O Princess
ADRs may be effected through book-entry transfer into the U.S. Exchange Agent's
account at a Book-Entry Transfer Facility, either:

    (i)the Letter of Transmittal, properly completed and duly executed,
       together with any required signature guarantees; or

   (ii)an Agent's Message,

and, in either case, any other required documents, must in any case be
transmitted to, and received by, the U.S. Exchange Agent at its address set out
in the Letter of Transmittal before P&O Princess ADSs evidenced by P&O Princess
ADRs will be either counted as a valid acceptance, or purchased. Delivery of
documents to a Book-Entry Transfer Facility does not constitute delivery to the
U.S. Exchange Agent.

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(d)Method of delivery

The method of delivery of P&O Princess ADRs, Letters of Transmittal and all
other required documents is at the option and risk of the tendering holder of
P&O Princess ADSs. P&O Princess ADSs will be deemed delivered only when the P&O
Princess ADRs representing such P&O Princess ADSs are actually received by the
U.S. Exchange Agent (including in the case of a book-entry transfer, by
Book-Entry Confirmation). If delivery is by mail, registered mail with return
receipt requested, properly insured, is recommended. In all cases, sufficient
time should be allowed to ensure timely delivery. No alternative, conditional
or contingent deliveries will be accepted and no fractional P&O Princess ADSs
will be purchased. No acknowledgement of receipt of documents will be given by,
or on behalf of, Carnival.

(e)Signature guarantees

No signature guarantee is required on the Letter of Transmittal if:

    (i)the Letter of Transmittal is signed by the registered holder of the P&O
       Princess ADSs tendered therewith and such registered holder has not
       completed either the box entitled "Special Delivery Instructions" or the
       box entitled "Special Issuance Instructions" in the Letter of
       Transmittal; or

   (ii)such P&O Princess ADSs are tendered for the account of an Eligible
       Institution.

In all other cases, all signatures on Letters of Transmittal must be guaranteed
by an Eligible Institution. See Instructions 1 and 5 to the Letter of
Transmittal.

(f)P&O Princess ADSs and ADRs

If the P&O Princess ADSs are registered in the name of a person other than the
person who signs the Letter of Transmittal, then the tendered P&O Princess ADRs
must be endorsed or accompanied by appropriate stock powers, signed exactly as
the name or names of the registered owner or owners appear on the P&O Princess
ADRs, with the signatures on the P&O Princess ADRs or stock powers guaranteed
as aforesaid. See Instruction 5 to the Letter of Transmittal.

(g)Partial acceptances (not applicable to book-entry holders of P&O Princess
   ADSs)

If a number other than 20 per cent. of the P&O Princess ADSs evidenced by any
P&O Princess ADRs delivered to the U.S. Exchange Agent are to be tendered, the
holder thereof should so indicate in the Letter of Transmittal by filling in
the number of P&O Princess ADSs which are tendered in the Box entitled "Number
of P&O Princess ADSs Tendered". A new P&O Princess ADR for the remainder (if
any) of the P&O Princess ADSs represented by the former P&O Princess ADR will
be sent to the person(s) signing such Letter of Transmittal (or as such person
properly indicates thereon) as promptly as practicable following the date the
tendered P&O Princess ADSs are taken up by Carnival in the Partial Share Offer.
If no number of shares is specified in the Letter of Transmittal, 20 per cent.
of the P&O Princess ADSs delivered to the U.S. Exchange Agent will be deemed to
have been tendered. See Instruction 4 to the Letter of Transmittal. In the case
of partial tenders, P&O Princess ADSs not tendered will not be reissued to a
person other than the registered holder.

(h)Other requirements

By executing the Letter of Transmittal as set out above, the tendering holder
of P&O Princess ADSs evidenced by P&O Princess ADRs will agree that, effective
from and after the time and date all conditions to the Partial Share Offer are
satisfied, fulfilled or, where permitted, waived (unless the tendering holder
shall have validly withdrawn his tender prior to that time):

    (i)subject to any restrictions in the P&O Princess articles, Carnival or
       its agents shall be entitled to direct the exercise of any votes and any
       or all other rights or privileges (including the right to requisition
       the convening of a general meeting or separate class meeting of P&O
       Princess) attaching to P&O Princess shares represented by any P&O
       Princess ADSs in respect of which the Partial Share Offer has been
       accepted or is deemed to have been accepted and not validly withdrawn
       (the "Accepted ADSs");

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   (ii)the execution of the Letter of Transmittal (together with any signature
       guarantees) and its delivery to the U.S. Exchange Agent or the
       completion of the book-entry transfer procedures shall constitute:

       (A)an authority to P&O Princess or its agents from the tendering holder
          of Accepted ADSs to send any notice, circular, warrant, document or
          other communication that may be required to be sent to him as a
          holder of P&O Princess ADSs, to Carnival at its registered office or
          as Carnival or its agents may direct;

       (B)an authority to Carnival or its agent to sign any consent to short
          notice of a general meeting or separate class meeting on behalf of
          the tendering holder of Accepted ADSs and/or to execute a form of
          proxy in respect of such Accepted ADSs appointing any person
          nominated by Carnival to attend general meetings and separate class
          meetings of P&O Princess and any adjournment thereof and to exercise
          the votes attaching to the P&O Princess shares represented by such
          Accepted ADSs on his behalf;

       (C)the agreement of such tendering holder of Accepted ADSs not to
          exercise any of such rights without the consent of Carnival and the
          irrevocable undertaking of such tendering holder of Accepted ADSs not
          to appoint a proxy for or to attend any such general meetings or
          separate class meetings;

       (D)a representation and warranty that such holder of P&O Princess ADSs:
          (i) has not received or sent copies or originals of this document or
          any Letter of Transmittal or any related documents in, into or from,
          the Excluded Territories; (ii) has not used in connection with the
          Partial Share Offer or the execution or delivery of the Letter of
          Transmittal, directly or indirectly, the mails of, or any means or
          instrumentality (including, without limitation, e-mail, facsimile
          transmission, telex and telephone) of interstate or foreign commerce
          of, or any facility of a national securities exchange of the Excluded
          Territories; (iii) is accepting the Partial Share Offer from outside
          the Excluded Territories; and (iv) is not an agent or fiduciary
          acting on a non-discretionary basis for a principal, unless such
          agent or fiduciary is an authorised employee of such principal or
          such principal has given any instructions with respect to the Partial
          Share Offer from outside the Excluded Territories;

       (E)a representation and warranty that such holder of P&O Princess ADSs
          understands that delivery of P&O Princess ADSs to the U.S. Exchange
          Agent pursuant to the Letter of Transmittal will constitute such
          holder's acceptance of the terms and conditions to the Partial Share
          Offer, including the representation and warranty that:

           (1)such P&O Princess ADS holder has a net long position in P&O
              Princess ADSs or equivalent securities at least equal to the P&O
              Princess ADSs delivered within the meaning of Rule 14e-4 under
              the Exchange Act; and

           (2)the delivery of P&O Princess ADSs complies with Rule 14e-4 under
              the Exchange Act.

       (F)confirmation that such holder of P&O Princess ADSs is entitled to
          sell and transfer the beneficial ownership of the Accepted ADSs and
          that such Accepted ADSs are sold fully paid and free from all liens,
          equitable interests, charges, and encumbrances and together with all
          rights attaching thereto including voting rights and the right to all
          dividends and other distributions declared, paid or made on or after
          24 October 2002 including, without limitation, the right to receive
          and retain all dividends and other distributions declared, made or
          payable after that date; and

       (G)the execution of the Letter of Transmittal (together with any
          signature guarantees) and its delivery to the U.S. Exchange Agent (or
          the completion of the book-entry transfer procedures) shall
          constitute an authority to any director of Carnival and to Carnival
          and/or its agents in accordance with the terms of paragraph 5 of Part
          B of this Appendix.

References in this Part D to a holder of P&O Princess ADSs shall include
references to the person or persons executing a Letter of Transmittal and in
the event of more than one person executing a Letter of Transmittal the
provisions of this Part D shall apply to them jointly and to each of them.

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                                  APPENDIX II

                        DETAILS OF THE DLC TRANSACTION

Part A.  Background to the DLC transaction and Partial Share Offer

In the past, both P&O Princess and Carnival have sought to identify, explore
and, where appropriate, implement strategies to develop and broaden their
cruise product offerings. The senior management of each company has regularly
reviewed with its board of directors the strategic objectives of its company
and the possible means of achieving those objectives. Both management teams
have regularly updated their boards on the changing structure and dynamics of
the cruise industry and the overall vacation market.

In the summer of 2001, Mr. Peter Ratcliffe, Chief Executive Officer of P&O
Princess, met with Mr. Richard Fain, Chairman and Chief Executive Officer of
Royal Caribbean. During these meetings, the possibility of a business
combination between P&O Princess and Royal Caribbean was discussed. In
subsequent meetings, senior executives of the two companies discussed the
changes and developments in their respective companies, and in the cruise
industry generally, particularly in light of the events of September 11, 2001
and their effect on the global vacation market, and continued to explore a
business combination of the two companies.

On 24 September 2001, during the early stages of the discussions between P&O
Princess and Royal Caribbean, Mr. Howard Frank, Vice Chairman and Chief
Operating Officer of Carnival, made a telephone call to Mr. Ratcliffe in which
he inquired whether P&O Princess would be interested in pursuing discussions
towards a business combination with Carnival. Given that P&O Princess' share
price was at or near its all time low at the time of the call, P&O Princess did
not follow up on this call.

On 20 November 2001, P&O Princess and Royal Caribbean announced that they had
entered into agreements to implement a dual listed company transaction. Those
agreements, which were not publicly available at that time, included
non-solicitation provisions restricting P&O Princess and Royal Caribbean from
entering into discussions with third parties except in specified circumstances
involving a third party's offer determined by the relevant board to be a
Superior Proposal as explained below. The dual listed company transaction
provided for a combination of equals in which P&O Princess shareholders would
have held approximately 50.7 per cent. of the equity in a dual listed company
structure that was substantially similar to the DLC transaction.

On 13 December 2001, following the announcement of the Royal Caribbean
transaction, Carnival submitted a detailed private proposal to the P&O Princess
board regarding an offer to acquire P&O Princess. The offer was for 200 pence
in cash and 0.1361 Carnival shares per P&O Princess share. Based on the prior
business day's closing price for Carnival shares of $26.55 per share and an
exchange rate of $1.00 = (Pounds)0.692, the Carnival shares were valued at 250
pence, valuing the offer at 450 pence per P&O Princess share. In preparation
for its decision to launch a counterbid for P&O Princess, Carnival had
performed financial analyses to identify the maximum amount it would be willing
to pay to acquire P&O Princess. These analyses were based on public information
and Carnival's own internal estimates, and included discounted cash flow
analyses and assessments of the financial effects of the transaction. However,
this offer and each of Carnival's subsequent offers were ultimately based on an
assessment of what price would be acceptable to the P&O Princess board and the
P&O Princess shareholders.

Carnival also proposed as part of the proposal the possibility of effecting a
combination via alternative structures, including a dual listed company
structure. The P&O Princess board carefully considered Carnival's proposal with
Sullivan & Cromwell LLP and Freshfields Bruckhaus Deringer, its legal advisors,
and Schroder Salomon Smith Barney, its financial adviser, and, at its meeting
on 15 December 2001, the P&O Princess board determined that Carnival's proposal
was not more favourable from a financial point of view to P&O Princess'
shareholders than the transaction with Royal Caribbean and was not reasonably
likely to be consummated (that is, it was not a "Superior Proposal" as defined
under P&O Princess' agreement with Royal Caribbean). In particular, the P&O
Princess board believed that Carnival's proposal would result in P&O Princess
shareholders receiving shares that would not be included in the FTSE indices,
and consequently a significant portion of P&O Princess shareholders,
particularly UK institutional shareholders, would be unable or unwilling to
hold such shares. As a result of this, the board believed that the proposed
Carnival transaction would deprive such P&O Princess shareholders of the
ability to retain an investment in the cruise industry and to share in the
potential benefits of combining with Carnival, making it less financially
favorable than the Royal Caribbean transaction in which all P&O

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Princess shareholders were expected to be able to share in the upside potential
expected to be generated by that transaction. Further, the board believed that
Carnival's proposal did not represent an irrevocable commitment to make and
maintain an offer because it was subject to a number of pre-conditions,
including financing and regulatory approvals. The board also believed that
Carnival's proposal faced greater regulatory risk in the U.S. and Europe.

On 16 December 2001, P&O Princess announced that its board had concluded that
the Royal Caribbean transaction was the more attractive alternative for P&O
Princess shareholders, because it believed that Carnival's pre-conditional cash
and share proposal was less favourable financially to P&O Princess shareholders
and would face greater execution risk than the Royal Caribbean transaction. In
response to P&O Princess' rejection of its proposal, Carnival publicly
announced a pre-conditional offer for all of the issued share capital of P&O
Princess on the same terms as its 13 December proposal.

On 19 December 2001, P&O Princess announced that, in light of Carnival's offer
and in order to give its shareholders time to consider fully their
alternatives, it would hold an extraordinary general meeting to vote on the
Royal Caribbean transaction on 14 February 2002.

Carnival announced on 24 December 2001 that it had made the necessary U.S.
antitrust filings in relation to its offer for P&O Princess.

On 27 December 2001, P&O Princess posted its circular to its shareholders with
respect to the Royal Caribbean transaction and made its implementation
agreement and Joint Venture Agreement with Royal Caribbean publicly available,
including the non-solicitation provisions described above.

On 6 January 2002, Carnival sent a letter to the P&O Princess board requesting
a meeting with P&O Princess to discuss Carnival's offer and seeking clarity on
a number of issues in connection with the Royal Caribbean transaction,
including further details regarding termination of the Joint Venture Agreement.
P&O Princess responded by letter on 8 January 2002. In its response, P&O
Princess referred Carnival to the publicly available agreements between P&O
Princess and Royal Caribbean and informed Carnival that those agreements
prevented P&O Princess from discussing any acquisition proposal with Carnival
that was not a Superior Proposal and that its board continued to believe that
Carnival's proposal was neither financially superior to the Royal Caribbean
transaction nor deliverable. Consequently, P&O Princess declined Carnival's
request for a meeting.

Mr. Ratcliffe publicly clarified on 10 January 2002 that P&O Princess could
unilaterally terminate the Joint Venture Agreement with Royal Caribbean in
January 2003 at no cost as long as no change of control of P&O Princess had
been completed prior to the termination date. On 10 January 2002, Carnival sent
another letter to the P&O Princess board asking it for further clarification of
this statement.

On 17 January 2002, Carnival indicated in a letter to P&O Princess that
Carnival would, subject to certain conditions, be willing to increase its
pre-conditional offer to 250 pence in cash and 0.1380 Carnival shares for each
P&O Princess share. Based on the prior business day's closing price for
Carnival shares of $26.06 per share and an exchange rate of $1.00 =
(Pounds)0.695, the Carnival shares were valued at 250 pence, valuing the offer
at 500 pence per P&O Princess share. After reviewing Carnival's new proposal in
detail with its advisers, the P&O Princess board reaffirmed its view that
Carnival's revised proposal was not a Superior Proposal and that, accordingly,
P&O Princess continued to be unable to meet with Carnival to discuss its
proposal without breaching its contractual obligations to Royal Caribbean.

On 30 January 2002, Carnival announced a revised pre-conditional offer of
0.2684 Carnival shares for each P&O Princess share, valuing each P&O Princess
share at 515 pence (based on the prior business day's closing price for
Carnival shares of $27.05 per share and an exchange rate of $1.00 =
(Pounds)0.709). The revised offer included a partial cash alternative of 250
pence for each P&O Princess share, pre-conditional on financing being arranged
on terms satisfactory to Carnival by no later than the date of posting of the
offer document.

On 31 January 2002, Carnival wrote to P&O Princess shareholders urging them to
vote to adjourn the extraordinary general meeting scheduled for 14 February
2002. Carnival suggested this adjournment in order to postpone the vote on the
Royal Caribbean transaction until the various antitrust authorities could rule
on both transactions.

The P&O Princess board carefully reviewed Carnival's revised offer with its
legal and financial advisers and, at its meeting on 3 February 2002, determined
that Carnival's revised offer, as revised, was not a

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Superior Proposal on both value and deliverability grounds. P&O Princess
publicly announced its board's conclusions on 4 February 2002 and, under its
contractual obligations to Royal Caribbean, remained unable to meet with
Carnival. Carnival responded by restating its commitment to proceed with its
revised offer and to obtain the necessary regulatory approvals in the U.S. and
Europe.

On 7 February 2002, Carnival announced the terms of a further increased offer
of 0.3004 Carnival shares for each P&O Princess share, valuing each P&O
Princess share at 550 pence (based on the prior business day's closing price
for Carnival shares of $25.86 per share and an exchange rate of $1.00 =
(Pounds)0.708), and again raised the possibility of alternative structures,
including a dual listed company structure. Carnival's increased offer was
pre-conditional only on the receipt of regulatory approval. The increased offer
included a partial cash alternative of 250 pence for each P&O Princess share,
pre-conditional on the availability of financing on terms satisfactory to
Carnival.

The P&O Princess board carefully reviewed the increased offer with its legal
and financial advisers and, at its meeting on 8 February 2002, the P&O Princess
board determined that it was not a Superior Proposal. On 8 February 2002, P&O
Princess announced that it continued to recommend that its shareholders approve
the dual listed company transaction with Royal Caribbean. While the P&O
Princess board acknowledged the improvement of Carnival's increased offer in
terms of value, it noted that it remained concerned about the structure and
deliverability of the Carnival transaction.

P&O Princess convened its extraordinary general meeting with respect to the
Royal Caribbean transaction on 14 February 2002. Before resolutions to approve
the Royal Caribbean transaction were voted upon, P&O Princess shareholders
proposed and passed a resolution to adjourn the meeting. The Chairman of P&O
Princess then announced that the meeting would be adjourned for an indefinite
period.

On 27 February 2002, Carnival announced that it had formally notified its
proposed combination with P&O Princess to the European Commission for review
under the EC Merger Regulation. The European Commission cleared the proposed
combination on 24 July 2002.

On 24 September 2002, prior to the U.S. Federal Trade Commission closing its
investigation into both transactions, the P&O Princess board met to consider
the relative merits of the Royal Caribbean transaction and Carnival's proposal
in light of currently available information. At that meeting, representatives
of Schroder Salomon Smith Barney, P&O Princess' financial advisor, advised the
board that it believed that, based on the valuation and share price analyses
discussed with the board at that meeting, Carnival's prior proposal to enter
into a dual listed company transaction with P&O Princess on the same financial
terms as Carnival's latest share exchange proposal was more favourable to P&O
Princess' shareholders from a financial point of view than the transaction with
Royal Caribbean.

On 4 October 2002, the U.S. Federal Trade Commission voted not to oppose
Carnival's acquisition of P&O Princess or the Royal Caribbean transaction. As a
result, the only pre-condition to Carnival's increased offer was satisfied.

Following the U.S. Federal Trade Commission announcement, P&O Princess
re-examined Carnival's increased offer, including Carnival's prior proposal to
enter into a dual listed company transaction with P&O Princess as an
alternative to the share exchange offer. After consulting with its financial
and legal advisers and considering the analyses discussed with its financial
advisor on 24 September 2002, at a meeting on 4 October 2002 the P&O Princess
board determined that Carnival's dual listed company proposal was more
favourable from a financial point of view to P&O Princess' shareholders than
the transaction with Royal Caribbean and was reasonably likely to be
consummated given that all regulatory clearances had been obtained. On 4
October 2002, P&O Princess announced that its board had determined Carnival's
dual listed company proposal to be a Superior Proposal and that it was willing
and able under its agreement with Royal Caribbean to enter into talks with
Carnival to discuss this proposal.

On 11 October 2002, executives of Carnival and P&O Princess met together with
their respective advisers to discuss a combination of their companies through a
dual listed company structure. Discussions also focused on a partial share
offer to be launched in conjunction with seeking shareholder approval for the
dual listed company structure that would permit P&O Princess shareholders who
wished to exchange some of their P&O Princess shares for Carnival shares to do
so. On the same date, Carnival and P&O Princess entered into a confidentiality
agreement that contemplated the exchange of confidential information between
them.

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Executives of Carnival and P&O Princess and their respective advisers continued
to meet throughout the weeks of 14 October and 21 October 2002. During this
time, the boards of directors of Carnival and P&O Princess each held meetings,
at which their respective management teams and advisers provided updates on the
discussions to date and on the strategic implications and possible benefits and
risks of the dual listed company transaction involving the two companies.

On 24 October 2002, Carnival issued a press release announcing its
pre-conditional offer to enter into the DLC transaction based on the form of
agreements and instruments that it had negotiated with P&O Princess. In order
for P&O Princess to be able to accept this offer, its board had to withdraw its
recommendation of the Royal Caribbean transaction within 48 hours of Carnival's
announcement and not subsequently reinstate such recommendation, the Royal
Caribbean transaction had to be voted down by P&O Princess shareholders or
otherwise abandoned, the Joint Venture Agreement had to terminate at no cost
(other than the break fee under its implementation agreement with Royal
Caribbean), the P&O Princess board of directors had to approve and recommend
the DLC transaction by 10 January 2003, and P&O Princess had to enter into the
negotiated form of the offer and implementation agreement by 10 January 2003.
The DLC proposal included the Partial Share Offer for up to, in aggregate, a
maximum of 20 per cent. of the issued share capital of P&O Princess. The making
of the Partial Share Offer, including the establishment of the 20 per cent.
limit, was the subject of negotiation between the parties, and was designed to
allow those P&O Princess shareholders who would prefer to participate in the
Combined Group through holding Carnival shares an opportunity to do so, while
at the same time maintaining the liquidity and market value of the P&O Princess
shares.

On 25 October 2002, the P&O Princess board held a meeting to consider the
announcement of the DLC proposal and decided to withdraw its recommendation of
the Royal Caribbean dual listed company transaction. Subsequent to that
meeting, P&O Princess announced that its board welcomed Carnival's announcement
of its dual listed company proposal and had determined that the DLC proposal
would be financially superior for P&O Princess shareholders compared with the
Royal Caribbean dual listed company transaction. It also announced that its
board had withdrawn its recommendation of the Royal Caribbean dual listed
company transaction.

P&O Princess also entered into an agreement with Royal Caribbean on 25 October
2002 which terminated the implementation agreement with Royal Caribbean
immediately, terminated the Joint Venture Agreement on 1 January 2003 as long
as no change of control of P&O Princess occurred prior to this date, and
provided mutual releases from liabilities arising under the two agreements.
Pursuant to the agreement, P&O Princess paid Royal Caribbean $62.5 million as a
break fee under its implementation agreement with Royal Caribbean. The P&O
Princess board announced that it would formally consider satisfaction of the
remaining pre-conditions to the DLC proposal, including entry into an offer and
implementation agreement with Carnival, in early January 2003.

On 29 October 2002, Lord Sterling of Plaistow, Chairman of P&O Princess, sent a
letter to P&O Princess shareholders informing them of the announcement of the
DLC proposal, the withdrawal of the P&O Princess board's recommendation of the
Royal Caribbean transaction and the subsequent arrangements with Royal
Caribbean for, among other things, the termination of existing agreements
between them. Lord Sterling also informed P&O Princess shareholders that he no
longer intended to reconvene the adjourned extraordinary general meeting
convened on 14 February 2002 to approve the dual listed company combination
with Royal Caribbean.

On 2 January 2003, P&O Princess announced that the Joint Venture Agreement had
been terminated, and Carnival issued a press release acknowledging and
welcoming the termination of the Joint Venture Agreement.

On 7 January 2003, the P&O Princess board approved the DLC transaction and
agreed to recommend to the P&O Princess shareholders that they vote in favour
of the resolution to implement the DLC structure. Later that day, the senior
executive management teams of P&O Princess and Carnival and their respective
advisers finalised the agreements and documentation to implement the DLC
structure. In the early morning of 8 January 2003, Carnival and P&O Princess
signed the Implementation Agreement. P&O Princess then issued a press release
announcing that its board had agreed and recommended the DLC transaction and
that P&O Princess had signed the Implementation Agreement. Carnival issued a
press release announcing the execution of the Implementation Agreement,
acknowledging P&O Princess' announcement of its board's recommendation and
setting forth its offer to enter into the DLC transaction based on the
Implementation Agreement and related agreements and instruments and the terms
of the Partial Share Offer.

                                      114



Part B.  Advice of P&O Princess' Financial Adviser

The P&O Princess board retained Schroder Salomon Smith Barney to act as its
financial adviser with respect to the DLC transaction and the proposed Royal
Caribbean DLC combination. In connection with this engagement, P&O Princess
requested that Schroder Salomon Smith Barney be named in connection with the
P&O Princess board's recommendation of the DLC transaction on 8 January 2003 in
the following terms:

"The P&O Princess board, which has been so advised by Schroder Salomon Smith
Barney, considers the terms of the proposed DLC transaction to be fair and
reasonable. In providing advice to the P&O Princess board, Schroder Salomon
Smith Barney has taken account of the P&O Princess board's commercial
assessments of the proposed DLC transaction."

In providing this advice to the P&O Princess board, Schroder Salomon Smith
Barney:

..   reviewed the Implementation Agreement dated 8 January 2003, including the
    agreed forms of the Equalisation and Governance Agreement and SVE Special
    Voting Deed;

..   held discussions with certain senior officers, directors and other
    representatives and advisers of P&O Princess and certain senior officers,
    directors and other representatives and advisers of Carnival concerning the
    business operations and prospects of P&O Princess and Carnival;

..   examined publicly available business and financial information relating to
    P&O Princess and Carnival;

..   reviewed certain internal financial statements and other financial and
    operating data concerning P&O Princess and Carnival respectively;

..   reviewed the pro forma impact of the DLC transaction on P&O Princess'
    financial results;

..   reviewed the financial terms of the DLC transaction in relation to, among
    other things, current and historical market prices of P&O Princess, the
    financial condition and historical and projected earnings and other
    operating data of P&O Princess and the market capitalisation of P&O
    Princess;

..   analysed certain financial, stock market, and other publicly available
    information relating to the businesses of other companies whose operations
    Schroder Salomon Smith Barney considered relevant in evaluating those of
    P&O Princess and Carnival;

..   considered, to the extent publicly available, the financial terms of
    certain other similar transactions recently effected which Schroder Salomon
    Smith Barney considered relevant in evaluating the DLC transaction;

..   conducted other analyses and examinations and considered other information
    and financial, economic and market criteria as Schroder Salomon Smith
    Barney deemed appropriate in providing its advice; and

..   considered the P&O Princess board's commercial assessments of the DLC
    transaction, including, among other things, the creation of a Combined
    Group which will have the largest and one of the most modern and most
    efficient fleets in the cruise industry and the ability to deploy that
    fleet strategically; a wide portfolio of complementary brands, both by
    geography and product offering and that will include some of the best known
    cruise brands globally; operating expertise reflecting the combined
    management of two of the leading global cruise operations; and the
    potential to generate costs savings of at least $100 million on an
    annualized basis, in the first full year following completion of the
    transaction.

Previously, in September 2002, the P&O Princess board sought advice from
Schroder Salomon Smith Barney in connection with the board's examination of
whether Carnival's dual listed company proposal, which Schroder Salomon Smith
Barney refers to as Carnival's DLC Proposal, was more favourable from a
financial point of view than the proposed Royal Caribbean DLC combination.

In providing this advice to the P&O Princess board, Schroder Salomon Smith
Barney:

..   reviewed the Implementation Agreement including the equalization and
    governance agreement and special voting deed entered into by P&O Princess
    and Royal Caribbean on 19 November 2001

                                      115



..   reviewed the terms of Carnival's dual listed company proposal dated 7
    February 2002

..   held discussions with certain senior officers, directors and other
    representatives and advisers of P&O Princess;

..   examined publicly available business and financial information relating to
    P&O Princess, Royal Caribbean and Carnival;

..   reviewed certain internal financial statements and other financial and
    operating data concerning P&O Princess;

..   reviewed the financial terms of Carnival's DLC Proposal and the proposed
    Royal Caribbean DLC combination in relation to, among other things, current
    and historical market prices of P&O Princess, the financial condition and
    historical and projected earnings and other operating data of P&O Princess
    and the market capitalisation of P&O Princess;

..   analysed certain financial, stock market, and other publicly available
    information relating to the businesses of other companies whose operations
    Schroder Salomon Smith Barney considered relevant in evaluating those of
    P&O Princess, Royal Caribbean and Carnival;

..   considered, to the extent publicly available, the financial terms of
    certain other similar transactions recently effected which Schroder Salomon
    Smith Barney considered relevant in evaluating the proposed Royal Caribbean
    DLC combination and Carnival's DLC Proposal; and

..   conducted other analyses and examinations and considered other information
    and financial, economic and market criteria as Schroder Salomon Smith
    Barney deemed appropriate in providing its advice.

In rendering its advice, Schroder Salomon Smith Barney assumed and relied,
without independent verification, on the accuracy and completeness of all
financial and other information and data that it reviewed or considered. With
respect to financial forecasts and other information and data provided to or
otherwise reviewed by or discussed with Schroder Salomon Smith Barney, the
management of P&O Princess advised Schroder Salomon Smith Barney that they were
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the management of P&O Princess as to the future financial
performance of P&O Princess. Schroder Salomon Smith Barney did not make and was
not provided with an independent evaluation or appraisal of the assets or
liabilities, contingent or otherwise, of P&O Princess, Royal Caribbean or
Carnival, and did not make any physical inspection of the properties or assets
of P&O Princess, Royal Caribbean or Carnival. Schroder Salomon Smith Barney was
advised by representatives of P&O Princess, and Schroder Salomon Smith Barney
assumed, that the final terms of the draft Equalisation and Governance
Agreement and the SVE Special Voting Deed will not vary materially from those
set forth in the drafts reviewed by Schroder Salomon Smith Barney.

Schroder Salomon Smith Barney's advice was necessarily based on information
available to it, and financial, stock market and other conditions and
circumstances existing and disclosed to Schroder Salomon Smith Barney as of the
dates that it provided its advice. Although Schroder Salomon Smith Barney
evaluated the DLC transaction, the proposed Royal Caribbean DLC combination and
Carnival's DLC Proposal from a financial point of view, Schroder Salomon Smith
Barney was not asked to and did not recommend the specific financial terms of
the DLC transaction, which were determined through negotiation between P&O
Princess and Carnival, and was not asked to and did not recommend the specific
financial terms of the proposed Royal Caribbean DLC combination, which were
determined through negotiation between P&O Princess and Royal Carribbean. In
addition, Schroder Salomon Smith Barney was not asked to and did not advise the
board of P&O Princess as to whether P&O Princess shareholders should accept the
Partial Share Offer. With respect to its advice to the P&O Princess board at a
meeting of the P&O Princess board held on 7 January 2003 in connection with the
P&O Princess board's recommendation of the DLC transaction, Schroder Salomon
Smith Barney's advice does not address the relative merits of the DLC
transaction as compared to any alternative business strategies that might exist
for P&O Princess or the effect of any other transaction in which P&O Princess
might engage. With respect to its advice to the P&O Princess board at a meeting
of the P&O Princess board held on 24 September 2002, Schroder Salomon Smith
Barney only considered the relative merits from a financial point of view of
Carnival's DLC Proposal and the proposed Royal Caribbean DLC combination and
did not consider the merits of any other transaction or any alternative
business strategies that might exist for P&O Princess or the effect of any
other transaction in which P&O Princess might engage. No other instructions or
limitations were imposed by P&O Princess on Schroder Salomon Smith Barney with
respect to the investigations made or procedures followed by Schroder Salomon
Smith Barney in rendering its advice.

                                      116



In preparing its advice, Schroder Salomon Smith Barney performed a variety of
financial and comparative analyses, including those described below. The
following discussion of these analyses is a summary description of the material
financial analyses underlying Schroder Salomon Smith Barney's advice. The
preparation of financial advice is a complex analytical process involving
various determinations as to the most appropriate and relevant methods of
financial analysis and the application of those methods to the particular
circumstances and, therefore, is not readily susceptible to summary
description. Accordingly, Schroder Salomon Smith Barney believes that its
analyses must be considered as a whole and that selecting portions of its
analyses and factors, without considering all analyses and factors, could
create a misleading or incomplete view of the processes underlying its analyses
and advice.

In its analyses, Schroder Salomon Smith Barney considered industry performance,
general business, economic, market and financial conditions and other matters
existing as of the date of its advice, many of which are beyond the control of
P&O Princess, Royal Caribbean and Carnival. No company, transaction or business
used in those analyses as a comparison is identical to P&O Princess, Royal
Caribbean, Carnival, the DLC transaction, the proposed Royal Caribbean DLC
combination or Carnival's DLC Proposal and an evaluation of those analyses is
not entirely mathematical. Rather, the analyses involve complex considerations
and judgments concerning financial and operating characteristics and other
factors that could affect the acquisition, public trading or other values of
the companies, business segments or transactions analysed.

The estimates contained in Schroder Salomon Smith Barney's analyses and the
valuation ranges resulting from any particular analysis are not necessarily
indicative of actual values or predictive of future results or values, which
may be significantly more or less favourable than those suggested by its
analyses. In addition, analyses relating to the value of businesses or
securities do not necessarily purport to be appraisals or to reflect the prices
at which businesses or securities actually may be sold. Accordingly, Schroder
Salomon Smith Barney's analyses and estimates are subject to inherent
uncertainty.

Advice of 7 January 2003

Schroder Salomon Smith Barney's advice and analyses were only one of various
factors considered by the P&O Princess board in its evaluation of the DLC
transaction and should not be viewed as determinative of the views of the P&O
Princess board or management with respect to the DLC transaction. In
particular, the P&O Princess board's reasons for recommending the DLC
transaction are detailed in Part C of this Appendix II.

The following is a summary of the material financial analyses performed by
Schroder Salomon Smith Barney with respect to its advice to the P&O Princess
board at a meeting of the P&O Princess board held on 7 January 2003 in
connection with the P&O Princess board's recommendation of the DLC transaction.
Schroder Salomon Smith Barney:

..   analysed the implied value of a P&O Princess share under the terms of the
    DLC transaction. Based on the Carnival share price of $25.63 and an
    exchange rate of (Pounds)1.00:U.S.$1.5938 as at 2 January 2003, this
    analysis resulted in an implied per share value of 483 pence;

..   considered the median one week premia paid in 149 UK public recommended and
    14 UK public hostile offers between 1 January 2000 and 30 September 2002
    and compared these premia to the premia resulting from comparing the
    implied P&O Princess per share value of 483 pence under the terms of the
    DLC transaction to the P&O Princess share price over a range of periods
    prior to 20 November 2001. This analysis resulted in median premia in UK
    recommended and hostile offers of 36 per cent. and 56 per cent.
    respectively relative to the one week prior price compared with implied
    premia of 52 per cent. for the 1 day prior price and 55 per cent. for the
    12 month prior price under the terms of the DLC transaction, as set out in
    the table below;



                                                P&O Princess share price prior to 20 November
-                                               ---------------------------------------------
                                         1 day prior 1 month average 3 month average 12 month average
-                                        ----------- --------------- --------------- ----------------
                                                                         
P&O Princess pre-transaction share price    317.0p        295. p          271.3p          312.1p
Value of Carnival proposal                  483.0p        483.0p          483.0p          483.0p
Premium of Carnival proposal to P&O
Princess pre-transaction share price         52.4%         63.7%           78.0%           54.8%


                                      117



..   using publicly available information, reviewed the value of P&O Princess
    implied by the revenue and EBITDA multiples of comparable leisure sector
    companies, plus a representative control premium. The comparable leisure
    sector companies chosen were Harrah's Entertainment Inc., MGM Mirage, Royal
    Caribbean Cruises Ltd., Six Flags Inc., The Walt Disney Company and Vail
    Resorts Inc. Although none of these companies is directly comparable to P&O
    Princess, the companies included were chosen because they are publicly
    traded companies with operations that, for purposes of analysis, may be
    considered similar to P&O Princess. This analysis indicated an implied per
    share reference range for P&O Princess of approximately 374 to 511 pence
    including a 35 per cent. control premium;

..   using publicly available information, reviewed the transaction values
    implied by the multiples paid in selected merger and acquisition
    transactions in the leisure sector from July 1997 to December 2002 in
    relation to the target companies' EBITDA and number of berths. The
    comparable transactions chosen were:

   - Carnival Corporation's acquisition of Costa Crociere SpA in August 2000
   - P&O Princess Cruises plc's acquisition of Seetours in April 2000
   - MGM Grand's acquisition of Mirage Resorts Inc. in May 2000
   - Star Cruises Ltd.'s acquisition of NCL Holdings ASA in March 2000
   - Park Place Entertainment Corp's acquisition of Caesars World in December
   1999
   - P&O Princess Cruises plc's acquisition of AIDA Cruises in November 1999
   - Royal Caribbean Cruises Ltd.'s acquisition of Celebrity Cruises in July
   1997

   Although none of the target companies are directly comparable to P&O
   Princess, these transactions were chosen because they include target
   companies with operations that, for the purposes of analysis, may be
   considered similar to P&O Princess. This analysis indicated an implied per
   share reference range for P&O Princess of approximately 309 to 415 pence;

..   using publicly available information, reviewed the value of P&O Princess
    and the value of P&O Princess' proposed maximum of 26 per cent. share of
    the equity of the Combined Group using a five year discounted cash flow
    analysis. In performing these analyses, Schroder Salomon Smith Barney used
    a weighted average cost of capital, sometimes referred to as WACC, range of
    9.5 -10.5 per cent. For the valuation of P&O Princess, Schroder Salomon
    Smith Barney used a terminal EBITDA multiple range of 8.0x - 10.0x, while
    for the valuation of 26 per cent. of the equity of a P&O Princess dual
    listed company combination with Carnival, Schroder Salomon Smith Barney
    used a terminal EBITDA multiple range of 9.0 - 11.0x. The WACC and EBITDA
    multiple ranges were chosen based on Schroder Salomon Smith Barney's
    knowledge of the cruise and leisure sector (including current trading
    ranges for companies in the cruise and leisure sector), experience and
    professional judgement. This analysis indicated an implied per share
    reference range of approximately 331 to 465 pence for P&O Princess on a
    standalone basis and 467 to 597 pence for P&O Princess' maximum of 26 per
    cent. share of the equity of the Combined Group;

..   considered the performance of P&O Princess' stock price over the period
    from 19 November 2001 to 2 January 2003 compared to the stock price
    performance of Royal Caribbean and Carnival and the performance of the FTSE
    100 and S&P 500 indexes. This analysis showed that P&O Princess' share
    price outperformed the share prices of Royal Caribbean and Carnival by 8
    per cent. and 19 per cent. respectively over this period and outperformed
    the FTSE 100 index and the S&P 500 index by 42 per cent. and 38 per cent.
    respectively over this period;

..   reviewed and considered other factors, including the historical trading
    valuations of P&O Princess, Royal Caribbean and Carnival, and the revenue,
    EBITDA and net income contribution of P&O Princess in the context of the
    Combined Group;

..   considered P&O Princess' historical implied ownership of the Combined Group
    given the relative public market trading performance of P&O Princess and
    Carnival. This analysis resulted in a P&O Princess average implied
    ownership of the Combined Group of 16.0 per cent. for the period 1 October
    2000 to 19 November 2001 (the day before the announcement of a DLC
    combination with Royal Caribbean), 21.5 per cent. for the post-announcement
    period 20 November 2001 to 2 January 2003 and 18.8 per cent. for the period
    1 October 2000 to 2 January 2003, compared to approximately 26 per cent. in
    the DLC transaction; and

..   analysed for various levels of acceptance of the Partial Share Offer by P&O
    Princess shareholders, the percentage of the Combined Group's equity share
    capital and free float and the likely equity market capitalisation of the
    P&O Princess side of the DLC structure assuming completion of the DLC
    transaction.

                                      118





                                              % of Combined Group free
Take up of Partial % of Combined Group equity         float            Market capitalisation of P&O
------------------ -------------------------  -----------------------    Princess side of the DLC
   Share Offer     P&O Princess    Carnival   P&O Princess   Carnival     ((Pounds) in Millions)
   -----------     ------------    --------   ------------   --------  ----------------------------
                                                        
      15.0%            22.3%         77.7%        33.6%        66.4%             2,566.7
      17.5%            21.6%         78.4%        32.6%        67.4%             2,491.2
      20.0%            20.9%         79.1%        31.6%        68.4%             2,415.8


As set out in the table above, assuming the maximum 20 per cent. acceptance of
the Partial Share Offer by P&O Princess shareholders, this analysis resulted in
a P&O Princess percentage of the Combined Group's equity share capital and
freefloat of 20.9 per cent. and 31.6 per cent. respectively and an implied
equity market capitalisation of the P&O Princess side of the DLC of
(Pounds)2.416 billion as at 2 January 2003. This equity market capitalisation
would have ranked the P&O Princess side of the DLC at 71st out of the companies
contained in the FTSE 100 index as at 2 January 2003.

Schroder Salomon Smith Barney provided its advice at the meeting of the P&O
Princess board held on 7 January 2003 for the information of the Board of P&O
Princess in its evaluation of the DLC transaction, and the advice is not
intended to be and does not constitute a recommendation to any shareholder as
to how such shareholder should vote on any matters relating to the proposed DLC
transaction or whether any shareholder should accept the Partial Share Offer.

Advice of 24 September 2002

Schroder Salomon Smith Barney's advice and analyses were only one of various
factors considered by the P&O Princess board in its comparison of the proposed
Royal Caribbean DLC transaction and Carnival's DLC Proposal and should not be
viewed as determinative of the views of the P&O Princess board or management
with respect to the P&O Princess board's determination that Carnival's DLC
Proposal was more favourable from a financial point of view to P&O Princess'
shareholders than the proposed Royal Caribbean DLC combination and was
reasonably likely to be consummated in the event that all outstanding
regulatory clearances were to be obtained.

The following is a summary of the material financial analyses performed by
Schroder Salomon Smith Barney in connection with its discussions with the P&O
Princess board at a meeting of the P&O Princess board held on 24 September 2002.

Schroder Salomon Smith Barney:

..   analysed the implied value of a P&O Princess share under the terms of
    Carnival's DLC Proposal compared with the implied value of a P&O Princess
    share under the terms of the Royal Caribbean DLC combination. Based on the
    Carnival share price of $25.18, the Royal Caribbean share price of $15.15
    and an exchange rate of (Pounds)1.00:U.S.$1.5541 each as at 20 September
    2002, this analysis resulted in an implied per share value of 487 pence for
    Carnival's DLC Proposal and an implied per share value of 281 pence for the
    proposed Royal Caribbean DLC combination;

..   using publicly available information, reviewed the value of P&O Princess
    implied by the revenue and EBITDA multiples of comparable leisure sector
    companies, plus a representative control premium. The comparable leisure
    sector companies chosen were Royal Caribbean Cruises Ltd. and Carnival
    Corporation. This analysis indicated an implied per share reference range
    for P&O Princess of approximately 493 to 638 pence including a 35 per cent.
    control premium;

..   using publicly available information, reviewed the transaction values
    implied by the multiples paid in selected merger and acquisition
    transactions in the leisure sector from July 1997 to September 2002 in
    relation to the target companies' EBITDA and number of berths. The
    comparable transactions chosen were:

   - Carnival Corporation's acquisition of Costa Crociere SpA in August 2000
   - P&O Princess Cruises plc's acquisition of Seetours in April 2000
   - MGM Grand's acquisition of Mirage Resorts Inc. in May 2000
   - Star Cruises Ltd.'s acquisition of NCL Holdings ASA in March 2000
   - Park Place Entertainment Corp's acquisition of Caesars World in December
   1999
   - P&O Princess Cruises plc's acquisition of AIDA Cruises in November 1999
   - Royal Caribbean Cruises Ltd.'s acquisition of Celebrity Cruises in July
   1997

                                      119



   Although none of the target companies are directly comparable to P&O
   Princess, these transactions were chosen because they include target
   companies with operations that, for the purposes of analysis, may be
   considered similar to P&O Princess. This analysis indicated an implied per
   share reference range for P&O Princess of approximately 408 to 515 pence;

..   reviewed the value of P&O Princess, the value of 26 per cent. of the equity
    of a P&O Princess dual listed company combination with Carnival and the
    value of P&O Princess' proposed 51 per cent. share of the equity of the
    proposed Royal Caribbean DLC combination using a five year discounted cash
    flow analysis. In performing these analyses, Schroder Salomon Smith Barney
    used a WACC, range of 9.5-10.5%. For the valuation of P&O Princess,
    Schroder Salomon Smith Barney used a terminal EBITDA multiple range of 8.0x
    - 10.0x, while for the valuation of 26 per cent. of the equity of a P&O
    Princess dual listed company combination with Carnival and the value of P&O
    Princess' proposed 51 per cent. share of the equity of the proposed Royal
    Caribbean DLC combination, Schroder Salomon Smith Barney used a terminal
    EBITDA multiple range of 9.0 - 11.0x. The WACC and EBITDA multiple ranges
    were chosen based on Schroder Salomon Smith Barney's knowledge of the
    cruise and leisure sector (including ranges for companies in the cruise and
    leisure sector), experience and professional judgement. This analysis
    indicated an implied per share reference range of approximately 408 to 553
    pence for P&O Princess on a standalone basis, 519 to 658 pence for 26 per
    cent. of the equity of a P&O Princess dual listed company combination with
    Carnival and 439 to 612 pence for P&O Princess' 51 per cent. share of the
    equity of the proposed Royal Caribbean DLC combination;

..   considered the performance of P&O Princess' stock price over the period
    from 19 November 2001 to 20 September 2002 compared to the stock price
    performance of Royal Caribbean and Carnival and the performance of the FTSE
    100 and S&P 500 indexes. This analysis showed that P&O Princess' share
    price outperformed the share prices of Royal Caribbean and Carnival by 25
    per cent. and 22 per cent. respectively over this period and outperformed
    the FTSE 100 index and the S&P 500 index by 47 per cent. and 46 per cent.
    respectively over this period; and

..   reviewed and considered other factors, including the historical trading
    valuations of P&O Princess, Royal Caribbean and Carnival.

Schroder Salomon Smith Barney concluded that, on the basis of the analysis it
had performed, it believed Carnival's DLC Proposal was more favourable from a
financial point of view to P&O Princess shareholders than the proposed Royal
Caribbean DLC combination.

Schroder Salomon Smith Barney provided its advice at the meeting of the P&O
Princess Board held on 24 September 2002 for the information of the Board of
P&O Princess in its evaluation of whether Carnival's DLC Proposal was more
favourable from a financial point of view than the proposed Royal Caribbean DLC
combination. This advice does not form part of any fairness opinion rendered by
Schroder Salomon Smith Barney, and the advice is not intended to be and does
not constitute a recommendation to any shareholder as to how such shareholder
should vote on any matters relating to the DLC transaction or whether any
shareholder should accept the Partial Share Offer.

In the ordinary course of business, Schroder Salomon Smith Barney and its
affiliates may actively trade or hold the securities of P&O Princess and
Carnival for their own account or for the account of customers and,
accordingly, may at any time hold a long or short position in such securities.
Schroder Salomon Smith Barney in the past has provided services to P&O Princess
and Carnival unrelated to the DLC transaction, for which services Schroder
Salomon Smith Barney has received compensation. In addition, Schroder Salomon
Smith Barney and its affiliates, including Citigroup Inc. and its affiliates,
may maintain relationships with P&O Princess, Carnival and their respective
affiliates.

Schroder Salomon Smith Barney is an internationally recognised investment
banking firm and was selected by P&O Princess based on its experience,
expertise and familiarity with P&O Princess and its business. Schroder Salomon
Smith Barney regularly engages in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive bids, secondary distributions of listed and unlisted
securities, private placements and valuations for estate, corporate and other
purposes.

Pursuant to the terms of an engagement letter, dated 18 November 2001, as
supplemented by a letter dated 30 July 2002, between Schroder Salomon Smith
Barney and P&O Princess, P&O Princess has

                                      120



agreed to pay Schroder Salomon Smith Barney a transaction fee of $20 million
payable upon completion of the DLC transaction or a fee of $10 million if the
DLC transaction is abandoned or terminated payable upon announcement of such
abandonment or termination. In addition, P&O Princess may, at its discretion,
pay to Schroder Salomon Smith Barney an additional amount up to $5 million to
reflect the performance by Schroder Salomon Smith Barney in carrying out the
execution of the DLC transaction. In addition, P&O Princess has agreed to
reimburse Schroder Salomon Smith Barney for reasonable travel and other
expenses, including reasonable fees and expenses of its legal counsel, and to
indemnify Schroder Salomon Smith Barney and related parties against certain
liabilities arising out of Schroder Salomon Smith Barney's engagement.

                                      121



Part C. Considerations in respect of the DLC transaction

1.  Reasons for the DLC transaction

Carnival and P&O Princess have agreed to enter into the DLC transaction in
order to create the Combined Group. Carnival and P&O Princess believe the
principal benefits of the creation of the Combined Group by means of the DLC
structure are as set forth below and that the DLC structure is the optimal
structure to seek to achieve all of these benefits:

Complementary well-known brands operating globally

The Combined Group will be the largest cruise vacation group in the world,
based on revenues, passengers carried and available capacity. It will have a
wide portfolio of complementary brands, both by geography and product offering,
and will include some of the best known cruise brands globally. The combination
will allow the Combined Group to offer a wider range of vacation choices for
its passengers. In addition, the combination is expected to enhance the
Combined Group's ability to attract more passengers from land-based vacations,
based on its ability to provide vacations in most of the largest vacation
markets in the world, and its strategy of entering new and developing markets
by building on its brand strength, global presence and ability to strategically
deploy its brands and diversified fleet.

The Combined Group's brands will include Carnival Cruise Lines, Princess
Cruises, Holland America Line, P&O Cruises, Costa Cruises, Cunard Line,
Seabourn Cruise Line, Windstar Cruises, AIDA, A'ROSA, Swan Hellenic, Ocean
Village and P&O Cruises (Australia). The Combined Group will serve all of the
key cruising destinations outside the Far East, including the Caribbean,
Alaska, Australia, Europe, New England, Canada, Bahamas, Bermuda, the Hawaiian
islands, the Mediterranean, the Mexican Riviera, the Panama Canal, South
America and other exotic destinations worldwide.

Benefits of sharing best practices and generating cost savings

The Combined Group will be managed as if the two companies were a single
economic enterprise by a single senior executive management team and identical
boards of directors.

Carnival and P&O Princess expect that the combination will generate significant
cost savings, estimated to be at least $100 million on an annualised basis,
commencing in the first full financial year following completion of the DLC
transaction. Carnival and P&O Princess expect that these cost savings will be
generated principally through the dissemination of best practices between the
companies, economies of scale and the rationalisation of certain shoreside
operations. One-time cash costs of achieving these cost savings are expected to
be approximately $30 million.

Financial flexibility and access to capital markets

The Combined Group will have substantial financial flexibility, with strong
operating cash flow, low leverage and a strong balance sheet, and expects to
maintain a strong investment grade credit rating.

The Combined Group is also expected to have greater access to capital markets.
Carnival's shares will remain listed on the NYSE and are expected to continue
to be included in the S&P 500. P&O Princess' shares will remain listed on the
LSE and are expected to remain eligible for inclusion in the FTSE series of
indices and are expected to continue to be included with full weighting in the
FTSE 100.

High quality combined fleet to enhance growth within the cruise industry

As of January 31, 2003, Carnival and P&O Princess together had a fleet of 65
cruise ships with an aggregate capacity of 99,982 lower berths. At that date,
Carnival and P&O Princess together had an additional 18 new cruise ships on
order, with an aggregate capacity of 42,260 lower berths, scheduled for
delivery in the next three and a half years. Carnival and P&O Princess also
expect that the Combined Group will have one of the youngest and most modern
fleets in the cruise industry, with an average vessel age (weighted by lower
berths) of 7.5 years as at January 31, 2003.

The Combined Group expects to deploy its diversified fleet strategically in
order to increase its global reach and enter new and developing markets. This
strategic deployment is expected to allow the Combined Group to appeal to the
largest target audience by providing brands, products and itineraries with the
widest appeal in a particular geographic region.

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The DLC structure allows continued participation in the global cruise industry
for P&O Princess shareholders who wish to continue to hold shares in a
UK-listed company

Following the implementation of the DLC structure, P&O Princess is expected to
remain included in the FSTE 100. This will allow P&O Princess shareholders who
are required, or wish, to hold shares in a UK-listed company included in the
FTSE indices to continue to do so, and, as a result, to continue to participate
as a shareholder in the global cruise industry through P&O Princess. A share
acquisition or exchange offer or other more common means of combining the
businesses of Carnival and P&O Princess in which all P&O Princess shareholders
would receive Carnival shares, which are not eligible for inclusion in the FTSE
series of indices, and/or a partial cash alternative would not have afforded
all P&O Princess shareholders this opportunity. Additionally, the Partial Share
Offer for up to 20 per cent. of P&O Princess' outstanding shares allows those
P&O Princess shareholders who would prefer to participate in the Combined Group
by holding shares in a U.S.-listed company the opportunity to do so.

2.  OtherConsiderations of Carnival and P&O Princess with respect to the DLC
         transaction

In addition to the factors described above that supported Carnival's and P&O
Princess' decisions to approve the Implementation Agreement and to recommend
that shareholders vote to approve the DLC transaction, the Carnival board and
the P&O Princess board each also considered potential factors that weighed
against proceeding with the transaction, in general, and against using a DLC
structure, in particular. These included:

..   the risk that the benefits and synergies anticipated from the DLC
    transaction might not be achieved to the extent or within the time period
    expected;

..   risks associated with the structure of the DLC transaction that are not
    associated with the more common ways of combining operations of two
    companies;

..   the risk that the London-listed shares of P&O Princess may trade at a
    discount to the New York-listed shares of Carnival;

..   the possibility that each company's shareholders might achieve more value
    over the long-term from continued operation of such company as an
    independent company or by combining with a different company;

..   risks concerning the uncertainty of the DLC structure under the Internal
    Revenue Code; and

..   the fact that a small group of shareholders would collectively own
    approximately 35 per cent. of the total combined voting power of the
    Combined Group and may be able to effectively control the outcome of
    shareholder voting.

A number of these factors are described in more detail in Part II "Risk Factors
- Risks relating to the DLC transaction".

The Carnival board and the P&O Princess board did not assign particular weight
or ranking to any of the factors that they considered. Also, in making their
determination, individual directors may have assigned a different level of
importance to each factor.

3.  Recommendation of the Boards of Directors of Carnival and P&O Princess

Carnival's board and P&O Princess' board each weighed both the potential
advantages of the DLC transaction and the potential factors against the DLC
transaction and determined that the potential advantages of the DLC transaction
outweighed the potential factors against the DLC transaction. Consequently, it
was the judgment of the Carnival board and the P&O Princess board that the DLC
transaction is in the best interests of Carnival and its shareholders and P&O
Princess and its shareholders, respectively. Both the Carnival board and the
P&O Princess board have recommended that their respective shareholders vote in
favour of the DLC transaction.

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                                 APPENDIX III

MATERIAL DIFFERENCES AMONG THE EXISTING RIGHTS OF HOLDERS OF P&O PRINCESS
SHARES, THE RIGHTS OF HOLDERS OF CARNIVAL SHARES FOLLOWING IMPLEMENTATION OF
THE DLC STRUCTURE AND THE RIGHTS OF HOLDERS OF P&O PRINCESS SHARES FOLLOWING
IMPLEMENTATION OF THE DLC STRUCTURE

If you accept the Partial Share Offer and the DLC structure is implemented, you
will receive Carnival shares in exchange for your P&O Princess shares that are
taken up and paid for by Carnival and you will become a shareholder of
Carnival. As a shareholder of Carnival after implementation of the DLC
structure, you will have the rights that other Carnival shareholders have,
which are different from those you previously had as a shareholder of P&O
Princess. If you do not accept the Partial Share Offer, you will continue to
hold your P&O Princess shares following the implementation of the DLC
structure. However, your rights will change in a number of respects to reflect
the implementation of the DLC structure.

The rights of holders of Carnival shares will be defined and governed by the
Carnival articles, the Carnival by-laws and Panamanian corporate law. The
rights of holders of P&O Princess shares will be defined and governed by the
P&O Princess memorandum and articles and English corporate law. This Appendix
describes the capital stock of Carnival and P&O Princess after giving effect to
the DLC transaction (assuming all of the resolutions being presented to
Carnival shareholders at the Carnival special meeting are approved) and
summarises the material differences between your existing rights as a P&O
Princess shareholder and the rights you will have following the implementation
of the DLC structure, either as a P&O Princess shareholder or as a Carnival
shareholder. This summary is not complete and you are encouraged to refer to
the relevant parts of the Carnival articles, the Carnival by-laws, the relevant
provisions of Panamanian law, the P&O Princess memorandum and articles, and the
relevant provisions of English law. A more detailed description of the DLC
transaction and its component elements is described in the shareholder circular
for the P&O Princess EGM, certain portions of which are incorporated by
reference in this document.

Carnival's authorised capital stock consists of 960,000,000 shares of common
stock and 40,000,000 shares of preferred stock. On 9 January 2003, there were
586,773,138 shares of common stock and no shares of preferred stock
outstanding. Carnival's transfer agent and registrar is SunTrust Bank. In
connection with the DLC transaction, Carnival is increasing its authorised
capital stock to 2,000,000,000 shares, of which 1,959,999,998 are shares of
common stock, and 40,000,000 are shares of preferred stock. Carnival will also
issue one share of special voting stock, which is referred to in this document
as a special voting share, and one share of special stock, which is referred to
in this document as the "equalisation share."

P&O Princess' authorised share capital is $375 million divided into 750,000,000
ordinary shares of $0.50 each, and two subscriber shares and 49,998 preference
shares, all of (Pounds)1 nominal value. As of 9 January 2003, there were
693,596,865 ordinary shares allotted and issued. P&O Princess' registrar is
Computershare Investor Services PLC. In the U.S., P&O Princess shares trade on
the NYSE in the form of P&O Princess ADSs. Each P&O Princess ADS currently
represents four P&O Princess shares. Simultaneously with the reorganisation of
P&O Princess shares, the ratio of P&O Princess shares to P&O Princess ADSs will
also be adjusted to 1:1 in order to have a 1:1 ratio with Carnival shares. The
rights of P&O Princess ADS holders are derivative of the rights of holders of
P&O Princess shares because P&O Princess ADSs represent underlying P&O Princess
shares. As described in the prospectus issued at the time the P&O Princess ADSs
were offered to the public in the U.S., the rights of P&O Princess ADS holders
are not, however, identical to the rights of holders of ordinary shares. For
example, the rights of P&O Princess ADS holders are based on the deposit
agreement with the ADS depositary bank, as P&O Princess ADS holders are not in
the P&O Princess share register and voting is effected through the ADS
depositary bank and not directly by P&O Princess ADS holders. These differences
are not impacted by the DLC transaction or the reorganisation of P&O Princess
shares. P&O Princess ADS holders will be impacted to the same extent as holders
of P&O Princess shares by the implementation of the DLC structure.

1.  Voting Rights

(a)Existing rights as a P&O Princess shareholder

Under English law, the voting rights of shareholders are usually regulated by
the company's articles of association. Except as provided below, all
resolutions put forth at a shareholders' meeting are decided

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on a show of hands and each shareholder entitled to vote at the meeting is
entitled to one vote regardless of the number of shares he or she holds. Each
shareholder would be entitled to one vote for each share held on a particular
resolution if a poll is properly demanded. A poll may be demanded by:

..   the Chairman of the meeting;

..   any group of five shareholders having the right to vote at the meeting;

..   any shareholder, or group of shareholders, representing not less than
    one-tenth of the total voting rights of all the shareholders having the
    right to vote at the meeting; or

..   any shareholder, or group of shareholders, holding shares conferring a
    right to vote at the meeting being shares on which an aggregate sum has
    been paid up equal to not less than one-tenth of the total sum paid up on
    all the shares conferring that right.

Ordinary resolutions must be approved, on a show of hands, by a majority of the
shareholders present in person or by proxy and voting at the meeting. If a poll
is demanded, the resolution conducted on a poll must be approved by holders of
a majority of the votes cast at the meeting. Both special and extraordinary
resolutions require the affirmative vote of at least 75 per cent. of the votes
cast at the meeting (either in person or by proxy).

The existing articles of association of P&O Princess currently provide that in
the case of an equality of votes, whether on a show of hands or on a poll, the
Chairman is entitled to cast the decisive vote.

(b)Rights of Carnival shareholders following the implementation of the DLC
   structure

Under Panamanian law, unless the articles of incorporation provide otherwise,
each shareholder is entitled to one vote for each share of capital stock held
by the shareholder, and the articles of incorporation may provide that in
elections of directors and other specified circumstances, shareholders are
entitled to cumulative voting. At any meeting of shareholders, all matters,
except as otherwise provided by Panamanian law, will be decided by a majority
of the votes cast by shareholders present in person or by proxy.

Following completion of the DLC transaction, all matters, except as otherwise
expressly provided by Panamanian law, the articles or by-laws, will be decided
by a majority of the votes cast by all shareholders entitled to vote
(including, where applicable, the Carnival Special Voting Entity) who are
present in person or by proxy at such meeting; provided that votes recorded as
abstentions will not be counted as having been "cast." In connection with the
DLC transaction, special voting arrangements will be implemented so that the
shareholders of Carnival and P&O Princess will vote together as a single
decision making body on all actions submitted to a shareholder vote, other than
matters designated as class rights actions or resolutions on procedural or
technical matters.

These are called joint electorate actions and will include:

..   the appointment, removal or re-election of any director of Carnival or P&O
    Princess, or both of them;

..   if required by law, the receipt or adoption of the financial statements of
    Carnival or P&O Princess, or accounts prepared on a combined basis of both
    companies;

..   the appointment or removal of the auditors of either company, or both of
    them;

..   a change of name by P&O Princess or Carnival, or both of them; or

..   the implementation of a mandatory exchange based on a change in tax laws,
    rules or regulations.

The following table illustrates how these voting arrangements would affect
joint electorate actions needing to be passed by a majority vote, assuming 100%
of each company's shareholders vote and the Partial Share Offer is taken up in
full:



                Carnival             P&O Princess          Outcome
                --------        ---------------------- ----------------
                                                 
          64% or more approve      100% disapprove       Action taken
         63% or less disapprove      100% approve        Action taken
          51% or less approve   55% or more disapprove Action not taken
         51% or less disapprove  54% or more approve     Action taken


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A change in the equalisation ratio resulting from a share reorganisation or
otherwise would only affect voting rights on a per share basis. In the
aggregate, such a change would not affect the relative weighting between the
current shareholders of Carnival and P&O Princess. Assuming the Partial Share
Offer is taken up in full, approximately 79 per cent. of the equity (and hence
of the vote in a joint electorate action) would remain with the holders of
Carnival shares, while approximately 21 per cent. of the equity and the vote in
a joint electorate action would remain with the holders of P&O Princess shares.

The relative voting rights of the P&O Princess shares and Carnival shares will
be determined by the equalisation ratio. Based on an equalisation ratio of 1:1,
each Carnival share will have the same voting rights as one P&O Princess share
on joint electorate actions.

In the case of class rights actions, the company wishing to carry out the class
rights action would require the prior approval of shareholders of both
companies, each voting separately as a class. If shareholders of either company
do not approve the action, it will generally fail. Class rights actions will
include:

..   the voluntary liquidation, dissolution or winding up (or equivalent) of
    either company for which shareholder approval is required, (other than as
    part of the voluntary liquidation, dissolution or winding up (or
    equivalent) of both companies at or about the same time with the purpose or
    effect of no longer continuing the operation of the business of the
    companies as a combined going concern and not as part of a scheme, plan,
    transaction or series of related transactions the primary purpose or effect
    of which is to reconstitute all or a substantial part of such businesses in
    one or more successor entities);

..   an adjustment to the equalisation ratio, other than in accordance with the
    Equalisation and Governance Agreement;

..   the sale, lease, exchange or other disposition of all or substantially all
    of the assets of either company other than in a bona fide commercial
    transaction undertaken for a valid business purpose in which such company
    receives consideration with a fair market value reasonably equivalent to
    the assets disposed of and not as part of a scheme, plan, transaction or
    series of related transactions, the primary purpose of which is to collapse
    or unify the DLC structure;

..   any amendment, removal or alteration of the effect of any provisions of the
    P&O Princess articles and the Carnival articles and by-laws which entrench
    specified core provisions of the DLC structure;

..   any amendment or termination of the DLC Agreements (except where otherwise
    specifically provided in the relevant DLC Agreement);

..   any amendment to, removal or alteration of the effect of certain
    tax-related provisions of Carnival articles that would cause, or at the
    time of implementation would be likely to cause, a mandatory exchange; and

..   anything which the boards of both companies agree (either in a particular
    case or generally) should be approved as a class rights action.

The following table illustrates how these voting arrangements would affect
class right actions:



                    Carnival    P&O Princess
                  shareholders  shareholders     Outcome
                  ------------  ------------ ----------------
                                       
                  Approve /(1)/  Disapprove  Action not taken
                   Disapprove    Disapprove  Action not taken
                   Disapprove   Approve/(2)/ Action not taken
                     Approve      Approve      Action taken

--------
(1)Assumes that holders of at least approximately 2 per cent. or more of the
   outstanding Carnival shares do not cast votes on the action. In contrast, if
   all Carnival shareholders voted in favour of the action, it would be taken.
(2)Assumes that holders of at least approximately 2 per cent. or more of the
   outstanding P&O Princess shares do not cast votes on the action, or in the
   case of a special resolution that at least one vote is cast against the
   action. In contrast, if all P&O Princess shareholders voted in favour of the
   action, it would be taken.

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When a quorum for the transaction of business is present at any meeting, a
resolution duly approved at a meeting of Carnival's shareholders by the
affirmative vote of a majority of all the votes cast on such resolution by all
shareholders of Carnival entitled to vote on it (including, where applicable,
the Carnival Special Voting Entity as holder of the Carnival special voting
share described below) who are present in person or by proxy at the meeting
will decide such question brought before such meeting, unless the question is
one upon which, by express provision of applicable law or regulation, the
articles of incorporation or the by-laws, a greater vote is required, in which
case such express provision will govern. Every resolution put to a vote at any
meeting of Carnival shareholders is conducted on a poll.

No resolution to approve a class rights action or a joint electorate action
will be approved unless a parallel P&O Princess shareholders' meeting is held
to vote on an equivalent resolution.

(c)Rights of P&O Princess shareholders following the implementation of the DLC
   structure

The provisions described in paragraph 1(b) above under the heading "Rights of
Carnival shareholders following the implementation of the DLC structure" would
equally apply in relation to P&O Princess shares following implementation of
the DLC structure insofar as the shareholders of Carnival and P&O Princess will
vote together as a single decision-making body on all joint electorate actions
and the prior approval of the shareholders of each company voting separately as
a class will be required prior to carrying out a class rights action. No
resolution to approve a class rights action or a joint electorate action at a
P&O Princess shareholders' meeting may be approved unless a parallel Carnival
shareholders' meeting is held to vote on an equivalent resolution.

Every resolution put to the vote of a general meeting on which the holder of
the P&O Princess special voting share is or may be entitled to vote (that is,
to approve a joint electorate action or class rights action) will be decided on
a poll. The poll shall be kept open for such time as to allow the parallel
Carnival shareholders' meeting to be held and for the votes attaching to the
P&O Princess special voting share to be calculated and cast on such polls.

Every P&O Princess shareholder will continue to have one vote for each fully
paid P&O Princess share for each resolution decided on a poll and one vote on a
show of hands (regardless of the number of P&O Princess shares he or she holds)
for those limited resolutions that may be decided on a show of hands. The
holder of the P&O Princess special voting share will have the rights described
below in order to implement the voting arrangements of the DLC structure. The
Chairman will no longer have the casting vote in the case of an equality of
votes.

2.  Special voting share

(a)Existing rights as a P&O Princess shareholder

P&O Princess does not currently have a special voting share in issue and
accordingly its articles of association have no provisions relating to special
voting share rights.

(b)Rights of Carnival shareholders following the implementation of the DLC
   structure

In connection with the DLC transaction, Carnival's articles of incorporation
will be amended to authorise one special voting share. Upon completion of the
DLC transaction, Carnival will issue the Carnival special voting share to the
Carnival Special Voting Entity.

In order for any joint electorate action or class rights action to be voted
upon at a meeting of Carnival shareholders, the holder of the Carnival special
voting share must be present and at least one-third of the total votes entitled
to be cast by the Carnival shareholders and the holder of the Carnival special
voting share (assuming all holders of P&O Princess shares voted at the parallel
P&O Princess shareholders' meeting) must be cast.

For joint electorate actions, the Carnival special voting share will represent
the number of votes cast at the parallel P&O Princess shareholders' meeting (as
adjusted by the equalisation ratio and rounded up to the nearest whole number)
and will represent "yes" votes, "no" votes and abstentions, in accordance with
the votes cast at the P&O Princess meeting.

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For class rights actions, the Carnival Special Voting Entity, as holder of the
Carnival special voting share, will only vote if the proposed action has not
been approved at the parallel P&O Princess meeting. In that event, the Carnival
special voting share will represent that number of votes equal to the largest
whole percentage that is less than the percentage of the number of votes
necessary to defeat the resolution at the Carnival meeting if the total votes
capable of being cast by all outstanding Carnival shares able to vote were cast
in favour of the resolution at the Carnival meeting. In most cases, this will
be 49 per cent. (for a majority vote, 49 per cent. is the largest whole
percentage that is less than the 50 per cent. needed to defeat the resolution).
As a result, in the case of a majority vote, the Carnival special voting share
will represent the number of votes equal to 98 per cent. of the votes capable
of being cast by all Carnival shares (excluding the votes represented by the
Carnival special voting share). Therefore, assuming holders of approximately 2
per cent. or more of the Carnival shares do not cast votes on such class rights
action, it will fail. If the P&O Princess shareholders approve the proposed
action, the Carnival special voting share will not represent any votes.

The Carnival special voting share will not represent any votes on any
resolution of a procedural or technical nature, which will be known as
"procedural resolutions". Procedural resolutions are those resolutions that do
not adversely affect the shareholders of P&O Princess in any material respect
and are put to the Carnival shareholders at a meeting. The Chairman of the
Carnival board will, in his absolute discretion, determine whether a resolution
is a procedural resolution. To the extent that such matters require the
approval of Carnival shareholders, any of the following will be procedural
resolutions:

..   that certain people be allowed to attend or be excluded from attending the
    meeting;

..   that discussion be closed and the question put to the vote (provided no
    amendments have been raised);

..   that the question under discussion not be put to the vote (where a
    shareholder feels the original motion should not be put to the meeting at
    all, if such original motion was brought during the course of that meeting);

..   to proceed with matters in an order other than that set out in the notice
    of the meeting;

..   to adjourn the debate (for example, to a subsequent meeting); and

..   to adjourn the meeting.

(c)Rights of P&O Princess shareholders following the implementation of the DLC
   structure

P&O Princess' articles will be amended to authorise one special voting share.
Upon completion of the DLC transaction, the P&O Princess special voting share
will be transferred to the trustee of the P&O Princess Special Voting Trust.
Trust shares of beneficial interest in the P&O Princess Special Voting Trust
will be transferred to Carnival. Immediately following this transfer, Carnival
will distribute the trust shares of beneficial interest in the P&O Princess
Special Voting Trust by way of dividend to Carnival shareholders of record at
the close of business on 17 April 2003.

In order for any joint electorate action or a class rights action to be voted
upon at the meeting of P&O Princess shareholders, the holder of the P&O
Princess special voting share must be present and at least one-third of the
total votes entitled to be cast by the P&O Princess shareholders and the holder
of the P&O Princess special voting share (assuming all holders of Carnival
shares voted at the parallel Carnival shareholders' meeting voted) must be cast.

..   For joint electorate actions, the P&O Princess special voting share will
    represent the number of votes cast at the parallel Carnival shareholders
    meeting multiplied by the equalisation ratio expressed as a fraction
    rounded up to the nearest whole number (which will initially equal 1.0) and
    will represent "yes" votes, "no" votes and abstentions, in accordance with
    the votes cast at the Carnival meeting.

..   For class rights actions, if the Carnival shareholders do not approve the
    proposed action as a separate class, the P&O Princess special voting share
    will represent that number of votes equal to the largest whole percentage
    that is less than the percentage of the number of votes as would be
    necessary to defeat the resolution at the P&O Princess meeting, if the
    total votes capable of being cast by the P&O Princess shares in issue were
    cast in favour of the resolution at the P&O Princess meeting. In most
    cases, this will be 49 per cent. (for a majority vote, 49 per cent. is the
    largest whole percentage that is less than the 50 per cent. needed to
    defeat the resolution). As a

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   result, in the case of a majority vote, the P&O Princess special voting
   share will represent the number of votes equal to 98 per cent. of the votes
   capable of being cast by all P&O Princess shares (excluding the votes
   represented by the P&O Princess special voting share). Therefore, assuming
   holders of approximately 2 per cent. or more of the P&O Princess shares do
   not cast votes on such class rights action, it will fail. If the Carnival
   shareholders approve the proposed action, the P&O Princess Special Share
   will not represent any votes.

The P&O Princess special voting share will not represent any votes with respect
to Procedural Resolutions which are of the same nature described in paragraph
2(b) above. The chairman of the P&O Princess board will, in his absolute
discretion, determine whether a resolution is a Procedural Resolution. To the
extent that such matters require the approval of P&O Princess shareholders, any
of the following will be Procedural Resolutions:

..   that certain people be allowed to attend or be excluded from attending the
    meeting;

..   that discussion be closed and the question put to the vote (provided no
    amendments have been raised);

..   that the question under discussion not be put to the vote (where a
    shareholder feels the original motion should not be put to the meeting at
    all, if such original motion was brought during the course of that meeting);

..   to proceed with matters in an order other than that set out in the notice
    of the meeting;

..   to proceed to the next item of business;

..   to adjourn the debate (for example, to a subsequent meeting); and

..   to adjourn the meeting.

3.  Quorum Requirements

(a)Existing rights as a P&O Princess shareholder

The existing articles of association of P&O Princess currently specify a quorum
of two shareholders, present in person or by proxy and entitled to vote on the
business to be transacted which is the minimum requirement under English law.

(b)Rights of Carnival shareholders following the implementation of the DLC
   structure

Following completion of the DLC transaction, the presence in person or by proxy
at any meeting of Carnival shareholders holding at least one-third of the total
votes entitled to be cast will constitute a quorum for the transaction of
business at such meeting, except as otherwise required by applicable law or
regulation, the articles of incorporation or the by-laws.

For purposes of determining whether a quorum exists at any meeting of Carnival
shareholders where a joint electorate action or a class rights action is to be
considered:

..   if the meeting of Carnival shareholders convenes before the parallel
    shareholder meeting of P&O Princess, the Carnival special voting share
    will, at the commencement of the meeting, have no votes and therefore will
    not be counted for purposes of determining the total number of shares
    entitled to vote at such meeting or whether a quorum exists at such
    meeting, although the Carnival special voting share itself must be present,
    either in person (through a representative of the Carnival Special Voting
    Entity) or by proxy;

..   if the meeting of the Carnival shareholders convenes at substantially the
    same time as or after the parallel shareholder meeting of P&O Princess with
    respect to one or more joint electorate actions, the Carnival special
    voting share will have the maximum number of votes attached to it as were
    cast on such joint electorate actions, either for, against or abstained, at
    the parallel shareholder meeting of P&O Princess, and such maximum number
    of votes (including abstentions) will constitute shares entitled to vote
    and present for purposes of determining whether a quorum exists at such
    meeting; and

..   if the meeting of Carnival shareholders convenes at substantially the same
    time as or after the parallel shareholder meeting of P&O Princess with
    respect to a class rights action, the Carnival special voting share will,
    at the commencement of the meeting, have no votes and therefore will not be
    counted for purposes of determining the total number of shares entitled to
    vote at such meeting or whether a quorum exists at such meeting, although
    the Carnival special voting share itself must be present, either in person
    (through a representative of the Carnival Special Voting Entity) or by
    proxy.

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In addition, in order for a quorum to be validly constituted with respect to
meetings of Carnival shareholders convened to consider a joint electorate
action or class rights action, the Carnival Special Voting Entity must be
present at such meeting.

(c)Rights of P&O Princess shareholders following the implementation of the DLC
   structure

In order for a quorum to be validly constituted at any P&O Princess general
meeting, at least three shareholders must be present in person or by proxy. If
a joint electorate action or a class rights action is to be considered at the
general meeting, one of those shareholders must be the holder of the P&O
Princess special voting share.

Despite the presence of a quorum for purposes of convening a meeting, no
resolution will be approved as a joint electorate action unless one-third of
the total votes capable of being cast by (i) the holders of P&O Princess shares
and (ii) the holder of the P&O Princess special voting share (assuming all
holders of outstanding Carnival shares vote at the parallel shareholder meeting
of Carnival), are cast on the resolution proposing such joint electorate
action. Formal abstentions will be counted as votes cast for the purposes of
determining the presence of a quorum.

4.  Shareholder Action by Written Consent

(a)Existing rights as a P&O Princess shareholder

Under English law, the unanimous consent of all shareholders is required in
order to approve, without a meeting, a matter requiring shareholder approval.
The existing articles of association of P&O Princess currently provide that a
resolution in writing executed by or on behalf of each shareholder who would
have been entitled to vote on it if it had been proposed at a general meeting
at which he was present, shall be as effective as if it had been passed at a
general meeting properly convened and held.

(b)Rights of Carnival shareholders following the implementation of the DLC
   structure

Panamanian law provides that shareholders may act by written consent and
Carnival's current by-laws allow action to be taken by written consent.
Following completion of the DLC transaction, the Carnival by-laws will provide
that Carnival shareholders will not have the ability to act by written consent.

(c)Rights of P&O Princess shareholders following the implementation of the DLC
   structure

Similarly, following completion of the DLC transaction, the P&O Princess
articles will not provide P&O Princess shareholders with the ability to pass a
resolution in writing without a meeting of shareholders.

5.  Shareholder Proposals

(a)Existing Rights as a P&O Princess shareholder

Under English law, shareholders may propose a resolution to be voted on at a
general meeting if the proposition is made:

..   by shareholders holding not less than one-twentieth of the total voting
    rights of all the shareholders having at such time a right to vote at the
    meeting to which the proposal relates; or

..   by not less than 100 shareholders holding shares on which there has been
    paid up an average sum per shareholder of not less than (Pounds)100. In
    order to be valid, a signed copy of the proposal must be deposited at the
    company's registered office not less than six weeks before the general
    meeting to which it relates.

Notwithstanding the rights described above, under English law shareholders may
not propose a single resolution to appoint more than one director without a
separate resolution, which must be unanimously approved as to whether the
matter may be voted upon. The existing articles of association of P&O Princess
currently provide that the appointment of any person proposed as a director
shall be effected by a separate resolution.

(b)Rights of Carnival shareholders following the implementation of the DLC
   structure

Panamanian law does not specifically address the issue of shareholder proposals
and Carnival's by-laws do not expressly permit shareholder proposals to be
considered at the annual meeting of shareholders.

Under the rules under the Exchange Act, shareholders may submit proposals,
including director nominations, for consideration at shareholder meetings. Such
proposals will need to comply with SEC regulations regarding the inclusion of
shareholder proposals in company sponsored proxy materials. In order for
shareholder proposals to be considered for inclusion in Carnival's proxy
statement for an

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annual meeting, the written proposals must be received by Carnival not less
than 120 calendar days before the first anniversary of the date of mailing of
the proxy statement from the previous year's annual meeting.

Carnival's by-laws provide that at any special meeting of shareholders only
such business may be transacted as is related to the purpose or purposes of
such meeting set forth in the notice of the special meeting. Carnival's by-laws
provide that special meetings of shareholders may only be called by the
Carnival board or the President or the Secretary of Carnival.

(c)Rights of P&O Princess shareholders following the implementation of the DLC
   structure

No changes with respect to shareholder proposals will be made to P&O Princess'
articles in connection with the implementation of the DLC structure.
Accordingly, P&O Princess shareholders will have the same rights under the P&O
Princess articles as described above at paragraph 5(a) under the heading
"Existing rights as a P&O Princess shareholder".

6.  Standard of Conduct for Directors and Directors' Duties

(a)Existing rights as a P&O Princess shareholder

Under English law, a director has a fiduciary duty to act in good faith in the
best interests of the company as a whole, which includes the following
obligations:

..   not to allow personal interests to conflict with those of the company;

..   not to profit from his position;

..   to maintain independence of judgment and not fetter his discretion;

..   to act fairly between members; and

..   to exercise his/her powers only in accordance with the memorandum and
    articles of association of the company.

In addition, a director must exercise reasonable care and skill. The precise
scope of this duty is unclear, but in broad terms the level of skill and care
required is based on that of a reasonably diligent person considering both (a)
the general knowledge, skill and experience that may be expected of a person
carrying out the same functions as are carried out by that director in relation
to the company and (b) the general knowledge, skill and experience of that
particular director. The first criterion is an objective test that all
directors must meet. The second criterion is a subjective factor that
acknowledges a particular director's experience and skills.

The Companies Act also imposes certain other requirements, including:

..   an obligation on directors to disclose any interests they may have in
    proposed company dealings or transactions;

..   a requirement for shareholder approval before a director, or person
    connected with a director, can acquire non-cash assets from the company (or
    vice versa) if the value of the assets exceeds (Pounds)100,000 or 10 per
    cent. of net value of the company (and is not less than (Pounds)2,000); and

..   restrictions on a company's power to make loans to and confer other
    benefits on directors and persons connected with them.

(b)Rights of Carnival shareholders following the implementation of the DLC
   structure

Panamanian law imposes a general fiduciary duty on directors to act prudently
and in the best interests of the company. Among other things, directors are
responsible for the authenticity of the payments which appear to have been made
on behalf of the company, for the validity of dividends to be paid, general
book-keeping and effecting the operation of the company in accordance with
applicable laws, its articles of incorporation, its by-laws, and resolutions of
the General Assembly of shareholders.

Following completion of the DLC transaction, the Carnival board will be
authorised to operate and carry into effect the Equalisation and Governance
Agreement, including the DLC principles, the SVE Special Voting Deed and the
Carnival Deed of Guarantee and, subject to applicable laws and regulations,
nothing done by any director in good faith pursuant to such authority and
obligations will constitute a breach of the fiduciary duties of such director
to Carnival or its shareholders. In particular, the directors will, in addition
to their normal fiduciary duties to Carnival, be entitled to have regard to
interests of both companies and their shareholders. Following completion of the
DLC transaction, the boards of directors of Carnivals and P&O Princess will be
comprised of the same members.

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(c)Rights of P&O Princess shareholders following the implementation of the DLC
   structure

In addition to its obligations under English law described under paragraph 6(a)
above, under the P&O Princess articles, the P&O Princess board will be
authorised to carry into effect the provisions of the Equalisation and
Governance Agreement, including the DLC principles, the SVE Special Voting Deed
and the P&O Princess Deed of Guarantee and any further agreement or arrangement
that P&O Princess is party to which are mentioned in or contemplated by such
agreements. Subject to the provisions of the Companies Act, nothing done in
good faith by any P&O Princess director pursuant to such authority and
obligations shall constitute a breach of the fiduciary duties of such director
to P&O Princess or its shareholders. In addition, the P&O Princess directors
shall, in addition to their duties to P&O Princess, be entitled to have regard
to the interests of the shareholders of both P&O Princess and Carnival as if
P&O Princess and Carnival were a single legal entity. Following completion of
the DLC transaction, the boards of directors of Carnival and P&O Princess will
be comprised of the same members. Further to their obligation to effect the DLC
structure, P&O Princess directors are authorised to provide Carnival and any
officer employee or agent of Carnival any information relating to P&O Princess.

Under the new P&O Princess articles, directors are allowed to vote on certain
contracts of P&O Princess and Carnival in which they are interested. These are
basically contracts from which P&O Princess or Carnival may benefit or
contracts which the director is entitled to participate in as a shareholder.

7.  Meetings of the Board of Directors

(a)Existing rights as a P&O Princess shareholder

Under English law directors may hold their meetings wherever they wish,
including overseas, subject to the company's articles of association providing
otherwise. A company's articles of association specify the responsibilities of
directors at such meetings.

The existing articles of association of P&O Princess currently provide that the
business of P&O Princess shall be managed by the P&O Princess board which may
exercise all the powers of the company at a meeting of the board at which a
quorum is present. The P&O Princess articles of association do not limit the
location of such meetings. The P&O Princess articles of association provide
that the quorum for a meeting of the P&O Princess board shall be two persons
unless the board fixes any other number and that questions arising at a meeting
shall be decided by a majority of votes, with the chairman having a second or
deciding vote, in the case of an equality of votes. The articles of association
also provide that a person entitled to be present at a meeting of the board
shall be deemed to be present if he is able to speak and be heard by all those
present by telephone (or other form of communication). The existing P&O
Princess articles of association also provide that a resolution in writing
signed by all the directors entitled to receive notice and vote at a meeting of
the board shall be as valid and effectual as if it had been passed at a meeting
of the P&O Princess board. That is, the P&O Princess board may act by unanimous
written consent. The articles of association further provide that any director
may appoint any other director, or any other person approved by resolution of
the board, and willing to act to be an alternate director and an alternate is
entitled to notice of all meetings of the board and to attend and vote at any
such meeting at which his appointor is not present.

(b)Rights of Carnival shareholders following the implementation of the DLC
   structure

Under Panamanian law, the business of every corporation is to be managed and
directed by a board of directors whom, subject to the provisions of Panamanian
law and the articles of incorporation, will have absolute control and full
direction over the corporation's affairs. The Carnival articles provide that
meetings of the board of directors may be held in the Republic of Panama or in
any other country and any director can be represented and vote by proxy. The
board of directors may act by written consent of a majority of the directors or
their proxies in lieu of a meeting.

At all meetings of each board, the presence in person or by proxy, of at least
one-third of the total number of directors will constitute a quorum for the
transaction of business except as may be otherwise specifically provided by
applicable law, the articles of incorporation or by-laws. The act of a simple
majority of the directors present in person or by proxy at any meeting at which
there is a quorum will constitute a valid act of the board, except as may be
otherwise specifically provided by applicable law or regulation, the articles
of incorporation or by-laws. The Carnival board will continue to be permitted
to act by written consent.

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(c)Rights of P&O Princess shareholders following the implementation of the DLC
   structure

Following completion of the DLC transaction, meetings of the P&O Princess board
will be conducted in substantially the same manner and under the same
guidelines as described in paragraph 7(a) above. However, the quorum for the
transaction of business will be one-third of the directors of P&O Princess and
the person who holds office as an alternate director shall, if his appointer is
not present, be counted in the quorum in his capacity as an alternate director
(on behalf of his appointer) in addition to in his capacity as a director of
the company. Decisions at board meetings will still be decided by a majority of
directors present at any board meeting, but the chairman will no longer have a
second or deciding vote in the case of an equality of votes. Upon
implementation of the DLC structure, meetings may only be convened by the
chairman or any two (or more) directors rather than any single director.

8.  General Meetings of Shareholders

(a)Existing rights as a P&O Princess shareholder

The existing articles of association of P&O Princess currently provide that all
general meetings of the company other than annual general meetings shall be
called extraordinary general meetings and that annual general meetings shall be
held in accordance with the provisions of the Companies Act. The relevant
provision of the Companies Act requires an annual general meeting to be held in
each year and that later than 15 months after the date of the previous annual
general meeting.

(b)Rights of Carnival shareholders following the implementation of the DLC
   structure

The by-laws of Carnival provide that the annual meeting of shareholders be held
on a date and at a time fixed by the Carnival board. Under Panamanian law, the
President, Vice-president, Secretary, or Assistant-Secretary may also determine
the place of such meeting which may be within or without of the Republic of
Panama.

Written notice of all meetings of Carnival shareholders will have to state the
purpose of the meetings, including whether joint electorate actions or class
rights actions will be considered.

In addition, if Carnival proposes to undertake a joint electorate action or
class rights action, Carnival must immediately give notice to P&O Princess of
the nature of the joint electorate action or the class rights action it
proposes to take. Unless such action is proposed to be taken at the annual
meeting of shareholders, the Carnival board must convene a special meeting for
the purpose of considering a resolution to approve the joint electorate action
or class rights action. Such meeting will be held as close in time as
practicable with the parallel shareholder meeting convened by P&O Princess for
purposes of considering such joint electorate action or class rights action. If
Carnival receives notice from P&O Princess that P&O Princess proposes to
undertake a joint electorate action or a class rights action, the Carnival
board must convene a meeting of Carnival shareholders as close in time as
practicable to the P&O Princess meeting and must propose an equivalent
resolution as that proposed at the P&O Princess meeting. Carnival must
co-operate fully with P&O Princess in preparing resolutions, explanatory
memoranda or any other information or material required in connection with the
proposed joint electorate action or class rights action.

(c)Rights of P&O Princess shareholders following the implementation of the DLC
   structure

Following completion of the DLC transaction, meetings of P&O Princess
shareholders will remain subject to the provisions of the Companies Act
described in paragraph 8(a) above. In addition, if P&O Princess proposes to
undertake a joint electorate action or class rights action, it must immediately
give notice to Carnival of the nature of the joint electorate action or the
class rights action it proposes to take. The P&O Princess board must convene a
general meeting for the purpose of considering any joint electorate action or
class rights action to be held as close in time as practicable with the
parallel shareholder meeting convened by Carnival (for the purposes of
considering an equivalent resolution in respect of the same joint electorate
action or class rights action). If P&O Princess receives notice that Carnival
proposes to undertake a joint electorate action or class rights action, the P&O
Princess board must convene a general meeting as close in time as practicable
with the Carnival shareholders' meeting and that is equivalent to the
resolution being proposed at the Carnival shareholders' meeting to approve such
joint electorate action or class rights action. P&O Princess must co-operate
fully with Carnival in the preparation of any information or material required
in connection with any general meeting to consider a proposed joint electorate
action or class rights action.


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9.  Notice Periods; Special Meetings of Shareholders

(a)Existing rights as a P&O Princess shareholder

Under English law, an extraordinary general meeting of shareholders may be
called by:

..   the board of directors if the articles of association of the company so
    provide;

..   the directors on the requisition, duly made in accordance with the
    provisions of the Companies Act, of shareholders holding not less than
    one-tenth of the paid-up capital of the company carrying the right of
    voting at general meetings; or

..   two or more members holding not less than one-tenth of the issued share
    capital.

Pursuant to the Companies Act, the minimum notice requirements, for the annual
general meeting and for an extraordinary general meeting for the passing of an
ordinary resolution, an extraordinary resolution, or a special resolution are
as follows:

..   annual general meeting - 21 days' notice

..   extraordinary general meeting for the passing of an ordinary resolution -
    14 days' notice;

..   extraordinary general meeting for the passing of an extraordinary
    resolution - 14 days' notice; and

..   extraordinary general meeting for the passing of a special resolution - 21
    days' notice.

Notwithstanding the minimum notice requirements of the Companies Act, a meeting
may be called upon shorter notice:

..   in the case of an annual general meeting, with the agreement of all the
    shareholders who are permitted to attend and vote; and

..   in the case of an extraordinary general meeting, with the agreement of the
    requisite majority.

The articles of association of P&O Princess currently require 21 clear days'
notice for an annual general meeting and for an extraordinary general meeting
called for the passing of a special resolution, and require 14 clear days'
notice for all other extraordinary general meetings. "Clear days" refers to the
period excluding the day on which a notice is sent and the day for which it is
sent. "Extraordinary resolutions" are relatively unusual and are confined to
matters out of the ordinary course of business, such as a proposal to wind up
the affairs of P&O Princess. "Special resolutions" generally involve proposals
to:

..   change the name of P&O Princess;

..   alter its capital structure;

..   change or amend the rights of shareholders;

..   permit P&O Princess to issue new shares for cash without applying the
    shareholders' pre-emptive rights,

..   amend P&O Princess' objects, or purpose, clause in its memorandum of
    association;

..   amend P&O Princess' articles of association; or

..   carry out other matters for which P&O Princess' articles of association or
    the Companies Act prescribe that a "special resolution" is required.

Other proposals relating to the ordinary course of a company's business, such
as the election of directors, and transactions such as mergers, acquisitions
and dispositions are the subject of an "ordinary resolution".

(b)Rights of Carnival shareholders following the implementation of the DLC
   structure

Panamanian law provides that special meetings of shareholders may be called by:
(1) the President, Vice-president, Secretary, or Assistant-Secretary of the
corporation; or (2) any person or persons authorised by the corporation's
articles of incorporation or by-laws. The by-laws of Carnival provide that
special meetings of shareholders may be called at any time by the board of
directors, the President or the Secretary. Shareholders may not call special
meetings. Carnival's by-laws provide that written notice of each meeting of the
shareholders, stating the date, hour, place and purpose or purposes thereof,
will be given, personally or by mail, to each shareholder entitled to notice of
or to vote at the meeting not less than ten nor more than 60 days before the
date of the meeting. If mailed, such notice will be deposited in the U.S. mail,
postage prepaid, directed to the shareholder at his/her address as it appears
on the records of Carnival.

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Following completion of the DLC transaction, written notice of all meetings of
shareholders will state the purpose of any special meeting, including whether a
joint electorate action or class rights action will be considered. In addition,
if Carnival proposes to undertake a joint electorate action or class rights
action, Carnival must immediately give notice to P&O Princess of the nature of
the joint electorate action or the class rights action it proposes to take.
Unless such action is proposed to be taken at the annual meeting of
shareholders, the board of directors is to convene a special meeting for the
purpose of considering a resolution to approve the joint electorate action or
class rights action. Such meeting will be held as close in time as practicable
with the parallel shareholder meeting convened by P&O Princess for purposes of
considering such joint electorate action or class rights action. If Carnival
receives notice from P&O Princess that P&O Princess proposes to undertake a
joint electorate action or a class rights action the Carnival board of
directors must convene a meeting of Carnival shareholders as close in time as
practicable to the P&O Princess meeting and must propose an equivalent
resolution as that proposed at the P&O Princess meeting. Carnival must
cooperate fully with P&O Princess in preparing resolutions, explanatory
memoranda or any other information or material required in connection with the
proposed joint electorate action or class rights action.

(c)Rights of P&O Princess shareholders following the implementation of the DLC
   structure

No changes with respect to notice periods and special meetings will be made to
the P&O Princess articles in connection with the implementation of the DLC
structure. Accordingly, P&O Princess shareholders will have the same rights
described in paragraph 9(a) above under the heading "Existing rights as a P&O
Princess shareholder".

10.  Sources and Payment of Dividends

(a)Existing rights as a P&O Princess shareholder

Subject to the prior rights of holders of preference shares, under English law
a company may pay dividends on its ordinary shares only out of its
distributable profits. Generally speaking, distributable profits include
accumulated, realised profits to the extent not previously utilised by
distribution or capitalisation less its accumulated, realised losses, so far as
not previously written off in a reduction or reorganisation of capital. In
addition, under English law, P&O Princess will not be permitted to make a
distribution (including any dividend) if, at the time, the amount of its net
assets is less than the aggregate of its called-up share capital and
undistributable reserves, or the making of the distribution would reduce its
net assets to less than the aggregate of its called-up share capital and
undistributable reserves. Generally, "undistributable reserves" include the
share premium account (the excess of the consideration for the issue of shares
over the aggregate nominal amount of such shares), the capital redemption
reserve and the amount by which the company's accumulated, unrealised profits
include accumulated unrealised losses to the extent not previously utilised by
capitalisation.

(b)Rights of Carnival shareholders following the implementation of the DLC
   structure

Under Panamanian law, a corporation may pay dividends to the extent of a
corporation's net earnings or capital surplus.

Following completion of the DLC transaction, Carnival expects to continue to
pay quarterly dividends and that there will be no change in the entitlement of
quarterly dividends for shareholders of either company. Carnival shareholders
and P&O Princess shareholders will have rights to income and capital
distributions from the combined entity based on the equalisation ratio. In
order for the companies to pay a dividend or make a cash distribution, the
ratio of dividends and cash distributions paid per Carnival share to dividends
and cash distributions paid per P&O Princess share must be made in accordance
with the equalisation ratio, taking account the applicable currency exchange
rate. The Carnival board and the P&O Princess board will co-operate to agree
the amount of any dividend or cash distribution and will both make payments as
close together in time as is practicable.

Dividends will be equalised according to the equalisation ratio, and any
balancing transactions between the companies will be determined and made,
before deduction of any amounts in respect of the tax required to be deducted
or withheld and excluding the amounts of any tax credits or other tax benefits.
If one company has insufficient profits or is otherwise unable to pay a
dividend, Carnival and P&O Princess will, as far as practicable, enter into
such balancing transactions as are necessary to enable both companies to pay
dividends in accordance with the equalisation ratio. This may take the form of
a payment from one company to the other or a dividend payment on an
equalisation share. Following completion of the DLC transaction, Carnival and
P&O Princess expect that dividends received by P&O Princess shareholders will
be consistent with Carnival's regular quarterly dividend.

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(c)Rights of P&O Princess shareholders following the implementation of the DLC
   structure

No changes with respect to the ability to pay lawful dividends under English
law will be made to the P&O Princess articles in connection with the
implementation of the DLC structure. Accordingly, the restrictions described in
paragraph 10(a) above under the heading "Existing rights as a P&O Princess
shareholder" will remain applicable. In addition, the standards and mechanics
with respect to the equalisation of dividends and other cash distributions,
including the timing of such payments, will be the same as those described in
paragraph 10(b) above in relation to Carnival shareholders following the
implementation of the DLC structure.

11.  Rights of Purchase and Redemption

(a)Existing rights as a P&O Princess shareholder

Under English law, a company may issue redeemable shares if authorised by its
memorandum and articles of association, subject to any conditions stated
therein. A company may purchase its own shares, including any redeemable
shares, if the purchase:

..   is authorised by its memorandum and articles of association; and

..   (i) in the case of an off-market purchase (defined as a purchase otherwise
    than on a recognised investment exchange, or a purchase on a recognised
    investment exchange which is not subject to a marketing arrangement on that
    investment exchange), the proposed contract must be authorised by a special
    resolution before the contract is entered into; or (ii) in all other cases,
    the purchase must first be authorised by an ordinary resolution.

A company may redeem or purchase shares only if the shares are fully paid and,
in the case of public companies (such as P&O Princess), only out of either
distributable profits or the proceeds of a new issue of shares undertaken for
the purpose of the repurchase or redemption. Any premium payable on redemption
must be paid out of distributable profits of the company. Under English law, a
company may not redeem or purchase shares if as a result there would no longer
be any member of the company holding shares other than redeemable shares. The
Listing Rules impose further requirements on a company which has issued shares
that are listed on the Official List which, in certain circumstances, include
the following:

..   a company may not purchase or redeem its own shares at a time when a
    director of the company would be prohibited from dealing in the shares by
    the Model Code appended to the Listing Rules;

..   purchases, or a series of purchases, by a company of 15 per cent. or more
    of any class of its equity shares must be made by way of either a tender or
    a partial offer to all shareholders of that class on the same terms, at a
    stated maximum or fixed price;

..   purchases, or a series of purchases, by a company of less than 15 per cent.
    may be made through the market only if the price to be paid is not more
    than five per cent. above the average of the middle-market quotations for
    that security for the five business days before the purchase is made; and

..   where there are in issue listed securities convertible into, exchangeable
    for, or carrying a right to subscribe for, equity shares of the class
    proposed to be purchased, a separate meeting of the holders of those
    securities must be held and the proposed purchase approved by an
    extraordinary resolution at that meeting.

The existing articles of association of P&O Princess currently authorise the
issue of redeemable shares, subject to the Companies Act, and the purchase of
its own shares, subject to and in accordance with the Companies Act and to any
relevant special rights attached to any class of shares.

(b)Rights of Carnival shareholders following the implementation of the DLC
   structure

Under Panamanian law, except as otherwise provided in the articles of
incorporation, any corporation may purchase, redeem and dispose of its own
shares. If the acquisition of shares is made with funds or property other than
the excess of assets over the liabilities or the net earnings of the
corporation, the acquired shares of stock will be cancelled by the reduction of
the issued stock, but such shares may be sold again if the authorised capital
stock is not decreased by the cancellation of such shares. Shares of its own
stock acquired by any corporation using funds derived from the excess of its
assets over its liabilities or net earnings, may be retained by the corporation
as treasury stock and sold by it or may be cancelled or reissued by resolution
passed by the board of directors.

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The Carnival articles do not prohibit the corporation from purchasing,
redeeming and disposing of its own shares. The NYSE requires that prompt
publicity be given and prompt notice be sent to the NYSE of action which will
result in, or which looks toward, either the partial or full call for
redemption of a listed security. NYSE rules provide that when a listed security
is fully redeemed, trading is suspended as soon as the redemption funds become
available to the holders of the security. When only a part of the listed
securities are redeemed, the amount authorised to be listed is reduced by the
amount redeemed as soon as the redemption funds become available to holders of
the redeemed securities.

(c)Rights of P&O Princess shareholders following the implementation of the DLC
   structure

Following implementation of the DLC structure, the restrictions under English
law described in paragraph 11(a) above under the heading "Existing rights as a
P&O Princess shareholder" will continue to apply to P&O Princess. In addition,
(under the Equalisation and Governance Agreement) neither Carnival nor P&O
Princess may acquire any P&O Princess shares in addition to those acquired by
Carnival in the Partial Share Offer until the second anniversary of the date of
the Equalisation and Governance Agreement. Thereafter, until the fifth
anniversary of the date of the Equalisation and Governance Agreement, Carnival
or P&O Princess may only acquire a maximum of 5 per cent. of the issued P&O
Princess shares in any 12-month period. Further, any P&O Princess shares
acquired by Carnival, including those acquired in the Partial Share Offer, will
carry no rights to vote or any rights in a liquidation unless Carnival holds 90
per cent. or more of all P&O Princess shares in issue.

12.  Appraisal Rights

(a)Existing Rights as a P&O Princess shareholder

Under English law, shareholders do not generally have appraisal rights, as the
concept is understood under U.S. law, and the existing articles of association
of P&O Princess do not contain any appraisal rights.

Certain limited rights exist where an offeror, pursuant to a takeover offer for
all the shares of an English company, has acquired or contracted to acquire not
less than nine-tenths in value of the shares to which the offer relates, within
four months of the date of the offer, in which case the offeror has a right to
buy and a minority shareholder has the right to require the offeror to buy, the
outstanding minority shareholdings and, in accordance with the compulsory
acquisition provisions under the Companies Act. Similarly, in the context of a
special resolution to implement a scheme of reconstruction under Section 110 of
the UK Insolvency Act 1986, a dissenting shareholder can require the liquidator
to abstain from carrying the resolution into effect, or to purchase his/her
interest at a price agreed or determined by arbitration. Additionally, any
shareholder who complains that the affairs of the company are being conducted,
or that the directors' powers are being exercised, in a manner unfairly
prejudicial to him/her or some part of the shareholders (including
himself/herself), or in disregard of his/her proper interests as a shareholder,
may in certain circumstances, apply to the High Court in England for relief. If
the High Court finds the complaint to be justified, it may exercise its
discretion and order the purchase of the shares on such terms, including as to
price, as the High Court may determine.

(b)Rights of Carnival shareholders following the implementation of the DLC
   structure

Under Panamanian law, shareholders of a corporation do not have appraisal
rights.

(c)Rights of P&O Princess shareholders following the implementation of the DLC
   structure

Following completion of the DLC transaction, P&O Princess shareholders will not
have appraisal rights, but will continue to have the other rights described in
paragraph 12(a) above under the heading "Existing rights as a P&O Princess
shareholder".

13.  Pre-Emptive Rights

(a)Existing rights as a P&O Princess shareholder

Under English law, the issue or grant for cash of (i) equity securities, or
(ii) rights to subscribe for, or convert into, equity securities must be
offered first to the existing equity shareholders on the same or more
favourable terms in proportion to the respective nominal value of their
holdings unless a special resolution to the contrary has been passed by
shareholders in a general meeting, or the articles of association provide
otherwise. It is customary for many English companies listed on the Official
List (such as P&O Princess) to pass a resolution on an annual basis to
authorise the board of directors to dis-apply pre-emption rights in respect of
a specified amount of share capital, generally 5 per cent. of issued share
capital.

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(b)Rights of Carnival shareholders following the implementation of the DLC
   structure

Under Panamanian law, a shareholder is entitled to pre-emptive rights to
subscribe for additional issuances of common stock or any security convertible
into stock in proportion to the shares that are owned unless there is a
provision to the contrary in the articles of incorporation. Carnival's articles
provide that Carnival shareholders are not entitled to pre-emptive rights. In
addition, pursuant to Equalisation and Governance Agreement, neither Carnival
nor P&O Princess may issue any shares carrying voting rights to the other or
its subsidiaries (except on a pre-emptive basis) during the first two years
following the date of the Equalisation and Governance Agreement. After
expiration of the initial two-year period, for each of the subsequent three
years neither Carnival nor P&O Princess may issue shares to the other company,
or any of that company's subsidiaries, except on a pre-emptive basis to all
shareholders, in excess of 5 per cent. per year of the issued or outstanding
shares (calculated as at the first day in such annual period). Thereafter,
there will be no restriction on the issuance of shares to the other company or
any of that company's subsidiaries. These restrictions may be varied by a class
rights action.

(c)Rights of P&O Princess shareholders following the implementation of the DLC
   structure

Following completion of the DLC transaction, P&O Princess shareholders will
continue to have the pre-emptive rights described in paragraph 13(a) above
under the heading "Existing rights as a P&O Princess shareholder". In addition,
pursuant to Equalisation and Governance Agreement, neither Carnival nor P&O
Princess may issue any shares carrying voting rights to the other or its
subsidiaries (except on a pre-emptive basis) during the first two years
following the date of the Equalisation and Governance Agreement. Thereafter
until the fifth anniversary issue of more than 5 per cent. of its shares to the
other or its subsidiaries (unless such issuance is made on a pre-emptive basis)
in any 12 month period.

14.  Amendment of Governing Instruments

(a)Existing Rights as a P&O Princess shareholder

Under English law, shareholders have the power to amend by special resolution:

..   the objects, or purpose, clause in a company's memorandum of association;
    and

..   any provisions of the company's articles of association.

In the case of amendments to the objects clause of the memorandum of
association, dissenting shareholders holding not less than in aggregate 15 per
cent. in nominal value of the issued share capital or any class of it have the
right to apply to the court within 21 days of the passing of the resolution for
the amendments to be cancelled. Under English law, the board of directors is
not authorised to change the memorandum or articles of association.

The Companies Act provides that amendments varying or abrogating the rights of
the holders of any class of shares also require the consent in writing of
three-quarters in nominal value of that class or the passing of an
extraordinary resolution of the classes affected in separate class meetings.
The existing articles of association of P&O Princess follow the requirements of
the relevant provisions of the Companies Act.

(b)Rights of Carnival shareholders following the implementation of the DLC
   structure

Under Panamanian law, unless the articles of incorporation require a greater
vote, an amendment to the articles of incorporation may be made: (i) by the
holders or their proxies of all the issued and outstanding stock of the
corporation entitled to vote; (ii) by means of a resolution passed by holders
or their proxies of the majority of the outstanding stock of the corporation
entitled to vote; and (3) in case the amendment to the articles consists in any
change in the preference of shares of any class, by means of a resolution
passed by holders or their proxies of majority of the outstanding stock of the
corporation entitled to vote of each class.

Following completion of the DLC transaction, any amendment to the provisions of
the Carnival articles which entrench the DLC structure will require approval of
the shareholders of Carnival and P&O Princess as a class rights action. The
entrenched provisions of the Carnival articles include matters relating to:

..   the special voting share;

..   takeover restrictions;

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..   dividends and distributions;

..   amendments to the Carnival articles and by-laws; and

..   liquidation.

All other provisions of the Carnival articles (except as provided below) may be
amended by the shareholders of Carnival and P&O Princess voting together in a
joint electorate action.

Amendments to the Carnival articles require approval, whether in a class rights
action or joint electorate action, by a majority of all votes entitled to be
cast with respect thereto (including votes entitled to be cast by the Carnival
special voting share) at a meeting of Carnival shareholders.

Notwithstanding the foregoing, any amendment of the Carnival articles (1) to
specify or change the location of the office or registered agent of Carnival,
or (2) to make, revoke or change the designation of a registered agent, or to
specify or change the registered agent, may be approved and effected by the
Carnival board without the approval of Carnival shareholders or P&O Princess
shareholders.

Following completion of the DLC transaction, any amendment to or repeal of the
provisions of Carnival's by-laws which entrench the DLC structure will also
require the approval of Carnival shareholders and P&O Princess shareholders as
a class rights action. The entrenched provisions of the Carnival by-laws
include matters relating to:

..   the transferability of the Carnival special voting share;

..   the scope of, and voting rights and procedures in relation to joint
    electorate actions, class rights actions and Procedural Resolutions;

..   election, qualification and disqualification of directors.

Any amendment to or repeal of any by-law of Carnival other than any of the
Carnival entrenched by-laws may be approved and effected by the Carnival board
without the approval of Carnival shareholders or P&O Princess shareholders.

Upon completion of a mandatory exchange, Carnival's articles and by-laws will
be automatically amended without any further action of Carnival or Carnival
shareholders to conform to the articles of incorporation and by-laws of
Carnival prior to the implementation of the DLC structure.

(c)Rights of P&O Princess shareholders following the implementation of the DLC
   structure

Following completion of the DLC transaction, except as described below, the P&O
Princess articles and memorandum will be subject to the same restrictions
described in paragraph 14(a) above. However, any amendment to the entrenched
provisions of P&O Princess' articles which entrench the DLC structure will
require the approval of P&O Princess and Carnival shareholders as a class
rights action. The entrenched provisions of the amended articles include
matters relating to:

..   the scope of, and voting rights and procedures in relation to, joint
    electorate actions;

..   the scope of, and voting rights and procedures in relation to, class rights
    actions;

..   the rights attaching to the P&O Princess special voting share;

..   the mechanisms for equalisation on liquidation;

..   the appointment and vacation of office of directors;

..   cash dividends and other cash distributions; and

..   takeover restrictions.

Any other amendment to the provisions of the P&O Princess articles (which are
not amendments to entrenched provisions) may be amended by approval of the
shareholders of P&O Princess and Carnival voting together in a joint electorate
action.

No amendment to the P&O Princess articles, by class rights action or by joint
electorate action, may be effected unless at least three-quarters of the votes
of those shareholders voting in person or by proxy (including votes to be cast
by the P&O Princess special voting share) have been voted in favour of such
amendment at a meeting of the P&O Princess shareholders.

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15.  Stock Class Rights

(a)Existing rights as a P&O Princess shareholder

The Companies Act and the articles of association of P&O Princess currently
provide that amendments varying or abrogating the rights of the holders of any
class of shares require the consent of the holders of three-quarters in nominal
value of the issued shares of that class or the passing of an extraordinary
resolution of the classes affected in separate class meetings.

There are currently 49,998 redeemable preference shares of (Pounds)1 each in
P&O Princess which were allotted (but not issued) to Nicholas Luff (Chief
Financial Officer of P&O Princess) on 22 September 2000 against an undertaking
by Mr Luff to pay just over a quarter of the aggregate par value of those
shares plus interest on or before 22 September 2005. These shares were allotted
in connection with the formation of P&O Princess to enable it to obtain a
certificate to commence business under Section 117 of the Companies Act. These
shares are not listed on any stock exchange.

The existing articles of association of P&O Princess currently provide that
holders of the redeemable preference shares (once issued) shall be entitled, in
priority to the holders of any other class of shares, to receive a fixed
cumulative preferential dividend. That dividend shall accrue on a daily basis
at the rate of 8 per cent. per annum on the amount paid up on each redeemable
preference share, and is payable annually in arrears on 31 December. P&O
Princess has the power, under the current articles of association, to redeem
any redeemable preference shares at any time, on giving the registered holder
written notice in accordance with the terms of the articles of association and
on payment of an amount equal to the amount paid up on the redeemable
preference share(s). The existing articles of association of P&O Princess also
provide that on a distribution of assets of P&O Princess among shareholders on
a winding up or other return of capital (other than a redemption or purchase by
the company of its own shares), the redeemable preference shareholders shall
rank behind other shareholders in relation to capital paid up or credited as
paid up on the redeemable preference shares. The existing articles of
association of P&O Princess also provide that the holders of the redeemable
preference shares have no voting rights.

(b)Rights of Carnival shareholders following the implementation of the DLC
   structure

Under Panamanian law, any change to the rights of holders of Carnival shares or
any series of preferred stock requires an amendment to the Carnival articles.
Panamanian law provides that the holders of shares of a class or series will be
entitled to vote as a class upon a proposed amendment if the amendment consists
in any change in the preference of the outstanding shares of any class, or
would authorise the issuance of shares with preferences which are in any
respect superior to those of outstanding shares of any class.

Under its articles of incorporation, Carnival has the right to issue shares of
common stock and shares of preferred stock for such consideration and for such
corporate purposes as the board of directors may from time to time determine.
The shares of authorised common stock shall be identical in all respects and
have equal rights and privileges. The shares of preferred stock may be issued
from time to time in one or more series of any number of shares, provided that
the aggregate number of shares issued and not cancelled of any and all such
series shall not exceed the total number of shares of preferred stock
authorised, and with distinctive serial designations, all as shall be stated
and expressed in the resolution or resolutions providing for the issue of such
shares of preferred stock. Each series of shares of preferred stock:

..   may have such voting powers, full or limited, or may be without voting
    powers;

..   may be subject to redemption at such time or times and at such prices;

..   may be entitled to receive dividends (which may be cumulative or
    non-cumulative) at such rate or rates, in such consideration (including,
    without limitation, shares of capital stock), on such conditions and at
    such times, and payable in preference to, or in such relation to, the
    dividends payable on any other class or classes or series of stock;

..   may have such rights upon the dissolution of, or upon any distribution of
    the assets of Carnival;

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..   may be made convertible into or exchangeable for, shares of any other class
    or classes or of any other series of the same or any other class or classes
    of shares of Carnival or any other person at such price or prices or at
    such rates of exchange and with such adjustments;

..   may be entitled to the benefit of a sinking fund to be applied to the
    purchase or redemption of shares of such series in such amount or amounts;

..   may be entitled to the benefit of conditions and restrictions upon the
    creation of indebtedness of Carnival or any subsidiary, upon the issue of
    any additional shares (including additional shares of such series or of any
    other series) and upon the payment of dividends or the making of other
    distributions on, and the purchase, redemption or other acquisition by
    Carnival or any subsidiary of, any outstanding shares of Carnival; and

..   may have such other relative, participating, optional or other special
    rights, qualifications, limitations or restrictions, all as shall be stated
    in the resolution or resolutions providing for the issue of such shares of
    preferred stock.

Following the implementation of the DLC structure, Carnival's articles will
provide that the holders of Carnival shares be entitled, in accordance with the
Equalisation and Governance Agreement and to the exclusion of the holders of
shares of preferred stock, to receive such dividends as from time to time may
be declared by the Carnival board, except as otherwise provided by the
resolution or resolutions providing for the issue of any series of shares of
preferred stock.

(c)Rights of P&O Princess shareholders following the implementation of the DLC
   structure

Following implementation of the DLC structure, and except as described below,
P&O Princess will continue to be subject to the restrictions and provisions
described in paragraph 15(a) above under the heading "Existing rights as a P&O
Princess shareholder".

Following the implementation of the DLC structure, the P&O Princess articles
will provide that no preferential dividend will accrue in respect of any
redeemable preference shares not in issue, and that the holder of the
redeemable preference shares will not have any rights to vote. In addition, the
holder of the redeemable preference shares will be able to require P&O Princess
to redeem them within three months' notice.

The P&O Princess articles will also provide for the creation and issue of two
new classes of share - a P&O Princess special voting share and an equalisation
share in addition to the creation of an extra 50,000 redeemable preference
shares (described above).

The nominal value of the P&O Princess special voting share will be
(Pounds)1.00. The P&O Princess special voting share will carry no rights to a
dividend and will have a right to payment of the amount paid up or credited as
being paid up on such share on the winding up of P&O Princess, ranking behind
the P&O Princess shares and P&O Princess redeemable preference shares, but
ahead of the equalisation share. The P&O Princess board may not register any
transfer of the P&O Princess special voting share unless the transfer has been
approved in accordance with, and the transferee complies with, a trust deed
governing the trust which will hold that share.

The rights attaching to the equalisation share will be prescribed under the new
P&O Princess articles as follows:

..   the equalisation share will carry such dividends as are expressly declared
    or paid on the equalisation share for the purposes of assisting or enabling
    the making of any payment to Carnival, if Carnival is unable to make a cash
    dividend or other cash distribution to its shareholders which is equivalent
    (in accordance with the equalisation ratio and, if relevant, having regard
    to the appropriate exchange rate agreed by the boards of the Combined
    Group) to that being made by P&O Princess (the "Equivalent Distribution")
    and P&O Princess is required to make a payment, which after payment of any
    tax liability associated with such payment by both parties, enables
    Carnival to make or pay an Equivalent Distribution;

..   the nominal value of the equalisation share will be (Pounds)1. It will have
    a right only to payment of the amount paid up or credited as being paid up
    on such share on the winding up of P&O Princess ranking behind the holders
    of all other classes of shares;

..   the equalisation share will not entitle its holder to receive notice of,
    attend or vote at, any general meeting; and

..   the board of P&O Princess shall refuse to register the transfer of the
    equalisation share unless the transfer is to a member of the Carnival group
    or a trustee for the benefit of one or more members of the Carnival group.

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16.  Rights of Inspection

(a)Existing rights as a P&O Princess shareholder

Under English law, except when closed under the provisions of the Companies
Act, the register of members and index of names must be open to inspection by:

..   any shareholder in the company, without charge; or

..   any other person, on payment of a fee.

In both cases, the documents may be copied for a fee. The existing articles of
association of P&O Princess currently permit the holding of shares in
uncertificated form and the electronic transfer of title to shares by means of
a relevant system, which is currently operated by CRESTCo Limited in the UK.
The effect of this, under English law, is that the register of members is kept
and maintained by CRESTCo Limited and P&O Princess maintains a copy of that
register, which is required to be regularly reconciled with the register of
members maintained by CRESTCo Limited. The rights of inspecting the register of
members described above only apply to P&O Princess's copy.

Any shareholders of an English company may also inspect, without charge:

..   minutes of proceedings of any general meetings of the company and obtain
    copies of the minutes, for a fee; and

..   service contracts of the company's directors, provided that the contracts
    do not have less than 12 months to run or cannot be terminated by the
    company within the next ensuing 12 months without payment of compensation.

In addition, shareholders are entitled to receive copies of the audited,
published annual accounts of a company in advance of the annual general meeting.

(b)Rights of Carnival shareholders following the implementation of the DLC
   structure

Panamanian law does not regulate the right to inspect the corporate books and
records. Accordingly, any shareholder may inspect the corporation's stock
ledger, a list of its shareholders and its other books and records and make
copies or extracts of those materials during normal business hours, subject to
applicable provisions, if any, in a corporation's articles of incorporation or
by-laws. However, a shareholder holding at least 5 per cent. of the issued and
outstanding capital stock of the corporation may request the General Assembly
of Shareholders to appoint auditors for examination of the balance sheet, or
the incorporation records of the corporation, or the management thereof, but if
such proposal is rejected, a Judge may without further proceeding appoint such
auditors.

Following completion of the DLC transaction, every Carnival shareholder will,
upon written demand stating the purpose thereof, have a right to inspect, in
person or by agent or attorney, during the usual hours of business, for a
purpose reasonably related to his interests as a shareholder, the share
register, books of account, and minutes of all proceedings, and make copies or
extracts therefrom.

(c)Rights of P&O Princess shareholders following the implementation of the DLC
   structure

No changes with respect to rights of inspection will be made to the P&O
Princess articles in connection with the implementation of the DLC structure.
Accordingly, the restrictions, described in paragraph 16(a) above under the
heading "Existing rights as a P&O Princess shareholder" will remain in effect.

17.  Classification of the Board of Directors

(a)Existing rights as a P&O Princess shareholder

There are no provisions under English law concerning classes of directors.
However, the existing articles of association of P&O Princess provide that at
every annual general meeting one-third of the directors must retire by
rotation. These retiring directors may be re-appointed by ordinary resolution
of the P&O Princess shareholders at that meeting.

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(b)Rights of Carnival shareholders following the implementation of the DLC
   structure

Panamanian law permits the articles of incorporation or the by-laws of a
corporation to provide that directors be divided into one, two or three
classes, with the term of office of one class of directors to expire each year.
Carnival's current articles of incorporation do not provide for classification
of its board of directors and each member of the Carnival board is elected
annually to serve until the next annual meeting of shareholders.

(c)Rights of P&O Princess shareholders following the implementation of the DLC
   structure

Following the implementation of the DLC structure, the provisions in P&O
Princess' articles regarding the term of office of directors will remain the
same as described at paragraph 17(a) above under the heading "Existing rights
as a P&O Princess shareholder". Accordingly, each member of the P&O Princess
board will continue to be elected annually to serve until the next annual
general meeting of shareholders.

18.  Election of Directors

(a)Existing rights as a P&O Princess shareholder

Under English law, every public company must have at least two directors and
matters relating to the appointment of directors are usually set out in the
company's articles of association. The existing articles of association of P&O
Princess currently provide that the number of directors must not be less than
two and not more than twenty (or such lesser number as the directors may from
time to time resolve) and a person who is willing to act to be a director may
be appointed, either to fill a vacancy or as an additional director, by the P&O
Princess board or by P&O Princess shareholders by ordinary resolution at a
general meeting. A director appointed by the P&O Princess board may only hold
office until the next following annual general meeting and he must vacate his
office if he is not re-appointed at such meeting. The existing articles of
association also provide that no person shall be appointed a director at any
general meeting unless he is recommended by the board of directors or has been
proposed by a P&O Princess shareholder qualified to vote at the meeting in
accordance with the terms of the articles of association. The Companies Act and
the articles of association of P&O Princess provide that each director must be
appointed pursuant to a separate resolution. The existing articles of
association also provide that a director need not be a shareholder of P&O
Princess to serve as a director.

(b)Rights of Carnival shareholders following the implementation of the DLC
   structure

Panamanian law provides that the directors of a corporation will be elected in
such manner, at such place and in such time as the articles of incorporation or
the by-laws determine, and that vacancies existing in the board of directors
will be filled in the manner prescribed by the articles of incorporation or the
by-laws. If the directors are not elected on the day designated for that
purpose, the directors in office will continue to serve as such until their
respective successors are elected.

Following completion of the DLC transaction, resolutions relating to the
appointment, removal and re-election of Carnival's directors will be considered
as a joint electorate action and voted upon by the shareholders of each company
voting at separate meetings but acting together as a joint electorate. The
number of directors will be a minimum of three and a maximum of 25. No person
may be elected or appointed to serve on the Carnival board unless that person
is also elected to be a member of the P&O Princess board. Any director of
Carnival who resigns from the Carnival board must also resign from the P&O
Princess board.

(c)Rights of P&O Princess shareholders following the implementation of the DLC
   structure

Following implementation of the DLC structure, the appointment, removal and
re-election of the directors of P&O Princess will be considered as a joint
electorate action and voted upon by the shareholders of each company voting at
separate meetings but acting as a joint electorate. The number of directors
will be a minimum of three and a maximum of 25. No person may be elected or
appointed to serve on the P&O Princess board unless that person is also elected
to be a member of the Carnival board. Any director of P&O Princess who resigns
from the P&O Princess board must also resign from the Carnival board.

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19.  Removal of Directors

(a)Existing rights as a P&O Princess shareholder

Under the Companies Act, shareholders may remove a director without cause by
ordinary resolution, irrespective of any provisions of the company's articles
of association or service contract the director has with the company, provided,
special notice of the resolution is given to the company. The existing articles
of association of P&O Princess provide that P&O Princess shareholders may
remove any director from office by ordinary resolution without any special
notice. The existing articles of association also provide that a director's
office shall be vacated if:

..   he ceases to be a director by virtue of the Companies Act or the articles
    of association of P&O Princess or he becomes prohibited by applicable law
    from being a director;

..   he becomes bankrupt or makes an arrangement with his creditors generally or
    shall apply to the court for an interim order under the UK Insolvency Act
    1986 (in connection with a voluntary arrangement under that Act);

..   he is, or may be, suffering from a mental disorder and either (i) he is
    admitted to hospital in certain prescribed circumstances, or (ii) a court
    order is made (by a court having jurisdiction) in matters concerning mental
    disorder for his detention or for the appointment of a receiver, curator
    bonis or other person with respect to his property or affairs;

..   he resigns from office or his term expires and he is not re-elected;

..   he has been absent for over six consecutive months without the P&O Princess
    board's permission; or

..   not less than three-quarters of the other directors so request in writing.
    Any such removal is without prejudice to any claim the director may have
    for damages for such termination.

(b)Rights of Carnival shareholders following the implementation of the DLC
   structure

Panamanian law provides that a director may be removed with or without cause by
the holders of a majority in voting power of the shares entitled to vote at an
election of directors. Following completion of the DLC transaction, subject to
the provisions of Panamanian law, directors of Carnival may be removed with or
without cause only by a majority vote of a quorum of the Carnival shareholders.

(c)Rights of P&O Princess shareholders following the implementation of the DLC
   structure

Except as described below, shareholders of P&O Princess will continue to have
the ability to remove directors under the circumstances described in paragraph
19(a) above under the heading "Existing rights as a P&O Princess shareholder"
following the implementation of the DLC structure.

Under the new P&O Princess articles, a director of P&O Princess will also be
removed if:

..   he ceases to be a director of Carnival; or

..   such removal is duly approved as a joint electorate action.

20.  Vacancies on the Board of Directors

(a)Existing rights as a P&O Princess shareholder

As set out above in relation to the election of directors, the existing
articles of association of P&O Princess provide that the number of directors
must not be less than two and not more than twenty (or such lesser number as
the directors may from time to time resolve) and a person who is willing to act
to be a director may be appointed, either to fill a vacancy or as an additional
director, by the P&O Princess board or by the P&O Princess shareholders by
ordinary resolution at a general meeting. A director appointed by the board may
only hold office until the next following annual general meeting and he must
vacate his office if he is not re-appointed at such meeting.

(b)Rights of Carnival shareholders following the implementation of the DLC
   structure

Under Panamanian law, vacancies existing in the board of directors will be
filled in the manner prescribed by a company's articles of incorporation or the
by-laws.

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Following completion of the DLC transaction, vacancies on the Carnival board
will be filled by a majority of the directors then in office, even though less
than a quorum, provided that any such person is appointed to both the Carnival
board and the P&O Princess board at the same time. If only one director remains
in office, that director will have the power to fill all vacancies. If there
are no directors, the Secretary of Carnival may call a meeting at the request
of any two shareholders for the purpose of appointing one or more directors.

(c)Rights of P&O Princess shareholders following the implementation of the DLC
   structure

Following the implementation of the DLC structure, vacancies on the P&O
Princess board may be filled by either the P&O Princess board, by action of a
majority of directors then in office, or by the P&O Princess shareholders by
ordinary resolution at a general meeting (as a joint electorate action)
provided that any such person is appointed to both the P&O Princess board and
Carnival board at the same time.

21.  Indemnification of Directors and Officers

(a)Existing rights as a P&O Princess shareholder

A UK company is not permitted under the Companies Act to indemnify a director
or officer of the company (or any person employed by the company as an auditor)
against any liability in respect of any negligence, default, breach of duty or
breach of trust of which he may be guilty in relation to the company. UK
companies, however, may:

..   purchase and maintain liability insurance for officers and directors; and

..   indemnify officers and directors against any liability incurred by him
    either in defending any proceedings in which judgment is given in his
    favour or he is acquitted, or in connection with the court granting him
    relief from liability in the case of honest and reasonable conduct.

The existing articles of association of P&O Princess grant directors and every
officer of the company such an indemnity, in accordance with and subject to the
provisions of the Companies Act.

(b)Rights of Carnival shareholders following the implementation of the DLC
   structure

Panamanian law does not specifically address the issue of indemnification of
directors and officers. Carnival may indemnify any officer or director who is
made a party to any suit or proceeding on account of being a director, officer
or employee of the corporation against expenses, including attorney's fees,
judgments, fines and amounts paid in settlement reasonably incurred by him/her
in connection with the action, through, among other things, a majority vote of
a quorum consisting of directors who were not parties to the suit or proceeding
if the officer or director: (1) acted in good faith and in a manner he/she
reasonably believed to be in the best interests of the corporation; and (2) in
a criminal proceeding, had no reasonable cause to believe his/her conduct was
unlawful.

Following completion of the DLC transaction, the indemnification provisions in
Carnival's articles of incorporation will be amended to reflect the fact that
Carnival's directors and officers will also serve as directors and/or officers
of P&O Princess. Accordingly:

Each person who was or is a party to or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, by reason of the
fact that such person is or was a director or an officer of Carnival or P&O
Princess or is or was serving at the request of Carnival or P&O Princess as a
director or officer of another corporation, partnership, joint venture, trust
or other enterprise, shall be indemnified and held harmless by Carnival against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding to the fullest extent and in the manner set forth in
and permitted by Panamanian law, and any other applicable law, as from time to
time in effect. Carnival will continue to have the power to purchase and
maintain insurance in respect of its indemnification obligations.

A member of the Carnival board, or a member of any committee designated by the
Carnival board, will, in the performance of his duties, be fully protected in
relying in good faith upon the records of Carnival or P&O Princess and upon
such information, opinions, reports or statements presented to Carnival by any
of Carnival's or P&O Princess' officers or employees, or committees of the
board of directors, or by any other person as to matters the member reasonably
believes are within such other person's

                                      145



professional or expert competence and who has been selected with reasonable
care by or on behalf of Carnival. In discharging their duties, directors and
officers, when acting in good faith, may rely upon financial statements of
Carnival or P&O Princess represented to them to be correct by the chief
financial officer or the controller or other officer of Carnival or P&O
Princess having charge of its books or accounts, or stated in a written report
by an independent public or certified public account or firm of such
accountants fairly to reflect the financial condition of Carnival or P&O
Princess.

(c)Rights of P&O Princess shareholders following the implementation of the DLC
   structure

Following implementation of the DLC structure, P&O Princess will have the
ability to purchase directors' indemnity insurance for its directors and
officers and those of Carnival, to the fullest extent permitted by English law.
The limitations described above in paragraph 21(a) will remain application to
P&O Princess.

22.  Takeover Restrictions

(a)Existing rights as a P&O Princess shareholder

Under the Takeover Code, after (i) a bona fide offer has been communicated to
the board of directors, or (ii) the board of directors has reason to believe
that a bona fide offer might be imminent, the board of directors is prohibited
from taking any action without the approval of the shareholders in general
meeting that could effectively result in the offer being frustrated or in the
shareholders being denied an opportunity to decide on its merits. The Takeover
Code provides a number of protections for shareholders, particularly in
relation to mandatory offers where a person or group of persons acting in
concert acquires in excess of 30 per cent. of the voting rights of a company.

(b)Rights of Carnival shareholders following the implementation of the DLC
   structure

Under Panamanian law, directors are responsible for the good management and in
general for the execution or faulty fulfilment of their obligations to
administer the corporation's affairs. There is limited legislative or judicial
guidance on takeover issues in Panama and it is difficult to anticipate how a
Panamanian court will react or resolve a matter concerning application of a
policy of judicial deference to board of directors decisions to adopt
anti-takeover measures in the face of a potential takeover where the directors
are able to show that (i) they had reasonable grounds for believing that there
was a danger to corporate policy and effectiveness from an acquisition
proposal, and (ii) the board action taken was reasonable in relation to the
threat posed.

Following completion of the DLC transaction, the Carnival articles will contain
provisions which would apply to any person, or group of persons acting in
concert, that acquires shares in the Combined Group which would trigger a
mandatory offer obligation as if the Takeover Code applied to the Combined
Group on a combined basis. Where:

..   a person or group of persons acquired, or acquires voting rights over 30
    per cent. or more of the combined votes which would be cast on a joint
    electorate action; or

..   any person or group of persons that already holds not less than 30 per
    cent. but not more than 50 per cent. of the combined votes which would be
    cast on a joint electorate action, acquired, or acquires voting rights
    over, any shares which increase the percentage of votes which such
    person(s) could cast on a joint electorate action

such shares acquired would be disenfranchised (that is, the owner of those
shares could cease to have any economic or voting rights on those shares)
unless an offer for all the shares in the Combined Group at a price equivalent
to that applicable to the acquisition has been made by the person or group.
These takeover restrictions would not apply to:

..   acquisitions of shares of the other company by either P&O Princess or
    Carnival or their respective subsidiaries;

..   if the restrictions are prohibited by applicable law and regulations;

..   any acquisition by the Arison family and trusts for their benefit within
    the thresholds described below; and

..   any acquisition pursuant to a mandatory exchange.

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There are certain exceptions to these provisions in the case of the Arison
family and trusts for their benefit which together will hold approximately 35
per cent. of the total voting power of the Combined Group immediately following
implementation of the DLC structure. The Arison family and trusts for their
benefit may acquire shares in the Combined Group without triggering the
mandatory offer provisions provided that, as a result, their aggregate holdings
do not increase by more than one per cent. of the voting power of the Combined
Group in any period of 12 consecutive months, subject to their combined
holdings not exceeding 40 per cent. of the voting power of the Combined Group.
However, these parties may acquire additional shares or voting power without
being subject to these restrictions if they comply with the mandatory offer
requirement described above.

Carnival's articles also contain restrictions that prevent any person(s) (other
than the Arison family and its permitted transferees) from acquiring more than
4.9 per cent. of the beneficial ownership of Carnival shares. While both the
mandatory offer protection and Section 883 4.9 per cent. protection remain in
place, no third party other than the Arison family and trusts for their benefit
will be able to acquire control of the Combined Group.

(c)Rights of P&O Princess shareholders following the implementation of the DLC
   structure

The Panel on Takeovers and Mergers in the UK has confirmed that, on the basis
of information available to it, after completion of the DLC transaction neither
P&O Princess nor Carnival will be a company to which the UK Takeover Code
applies. Consequently, P&O Princess will no longer have a number of takeover
protections afforded by the UK Takeover Code. Nevertheless, following
completion of the DLC transaction, the P&O Princess articles will contain
similar anti-takeover provisions to those described at paragraph 22(a) above
under the heading "Carnival shareholders following the implementation of the
DLC".

23.  Liquidation

(a)Existing rights as a P&O Princess shareholder

The existing articles of association of P&O Princess provide that, on a winding
up of P&O Princess, the liquidator may, with the sanction of an extraordinary
resolution of P&O Princess shareholders, divide among the members the whole or
any part of the assets of P&O Princess and may value assets for that purpose
and determine how the division shall be carried out as between the shareholders
of different classes of shares. The existing articles of association of P&O
Princess also provide that on a distribution of assets of P&O Princess among
shareholders on a winding up, the redeemable preference shareholders shall rank
behind other shareholders in relation to capital paid up or credited as paid up
on the redeemable preference shares.

(b)Rights of Carnival shareholders following the implementation of the DLC
   structure

Under Panamanian law, if the board of directors deems it advisable that the
corporation be dissolved, it is to propose by a majority of the votes of the
members thereof an Agreement of Dissolution and within 10 days shall call or
cause to be called, in accordance with law, a meeting of stockholders, to vote
on the resolution passed by the board of directors proposing the dissolution.
At the stockholders' meeting, the holders of a majority of shares with voting
rights on the matter can adopt the resolution for the dissolution of the
company. The dissolution of the company may also be adopted by written consent
in lieu of meeting of the holders of all shares having voting power.

Following completion of the DLC transaction, in the event of a voluntary or
involuntary liquidation of Carnival, to the extent assets are available for
distribution the holders of Carnival shares and P&O Princess shares will be
entitled to a liquidation distribution equivalent on a per share basis in
accordance with the equalisation ratio then in effect and disregarding any tax
consequences.

In giving effect to the principles regarding a liquidation of Carnival,
Carnival may:

..   make a payment (of cash or in specie) to P&O Princess in accordance with
    the provisions of the Equalisation and Governance Agreement;

..   issue shares to P&O Princess or to holders of P&O Princess shares and make
    a distribution or return on such shares; or

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..   take any other action that each of the Carnival board and P&O Princess
    board consider appropriate to give effect to such principles.

Any action other than a payment of cash by one company to the other company
will require the prior approval of the board of directors of each company.

(c)Rights of P&O Princess shareholders following the implementation of the DLC
   structure

Similarly, following the implementation of the DLC structure, the holders of
P&O Princess shares and Carnival shares will be entitled to a liquidation
distribution equivalent on a per share basis in accordance with the
equalisation ratio then in effect and disregarding any tax consequences.

In giving effect to the principles regarding a liquidation of P&O Princess, P&O
Princess may:

..   make a payment (of cash or in specie) to Carnival in accordance with the
    provisions of the Equalisation and Governance Agreement;

..   issue shares to Carnival or to holders of Carnival shares and make a
    distribution or return on such shares; or

..   take any other action that the boards of Carnival and P&O Princess consider
    appropriate to give effect to such principles.

The new P&O Princess articles will also provide that on a distribution of
assets of P&O Princess among shareholders on a winding up:

..   the redeemable preference shares shall rank behind the ordinary shares but
    ahead of other classes of shares in relation to capital paid up or credited
    as paid up;

..   the P&O Princess special voting share shall rank behind the shares and the
    redeemable preference shares but ahead of other classes of shares in
    relation to capital paid up or credited as paid up; and

..   the equalisation share shall rank behind the shares, the redeemable
    preference shares and the P&O Princess special voting share in relation to
    capital paid up or credited as paid up.

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                                  APPENDIX IV

              ADDITIONAL INFORMATION ON CARNIVAL AND P&O PRINCESS

1.  Responsibility for purposes of the Takeover Code

(a)For purposes of the Takeover Code, the directors of Carnival accept
   responsibility for the information contained in this document (other than
   information relating to the P&O Princess group, the directors of P&O
   Princess, and members of their immediate families, related trusts and
   persons connected with them). To the best of the knowledge and belief of the
   directors of Carnival (who have taken all reasonable care to ensure that
   such is the case), the information contained in this document for which they
   take responsibility is in accordance with the facts and does not omit
   anything likely to affect the import of such information.

(b)For purposes of the Takeover Code, the directors of P&O Princess accept
   responsibility for the information contained in this document (other than
   information relating to Carnival, the directors of Carnival, and members of
   their immediate families, related trusts and persons connected with them).
   To the best of the knowledge and belief of the directors of P&O Princess
   (who have taken all reasonable care to ensure that such is the case), the
   information contained in this document for which they take responsibility is
   in accordance with the facts and does not omit anything likely to affect the
   import of such information.

(c)The statements set out in paragraphs (a) and (b) above are made in
   accordance with the requirements of the Takeover Code and shall not be
   deemed to limit, establish or expand liability under applicable law,
   including liability under U.S. securities laws or under the laws of any
   state of the U.S.

2.  UK taxation

The following paragraphs are intended as a general guide only and are based on
current legislation and current Inland Revenue practice. They summarise the
position of P&O Princess shareholders who (unless the position of non-UK
resident P&O Princess shareholders is expressly referred to) are resident or
ordinarily resident in the UK for tax purposes and who hold their P&O Princess
shares as an investment.

The tax implications of the Partial Share Offer on P&O Princess shareholders
will depend on each particular shareholder's particular circumstances. Holders
of the P&O Princess shares and P&O Princess ADSs should consult their
independent professional advisers in the light of their particular
circumstances as to the UK tax consequences of the DLC transaction, the P&O
Princess share reorganisation and the Partial Share Offer, as well as to the
effect of any state, local or applicable foreign tax law.

(a)Tax consequences for UK P&O Princess shareholders as a result of the DLC
   transaction

The DLC transaction will not give rise to a taxable disposal of shares for UK
shareholders who do not accept the Partial Share Offer. UK P&O Princess
Shareholders who do not accept the Partial Share Offer will continue to hold
their P&O Princess shares and will be taxed on dividends payable in respect of
their P&O Princess shares in the same way as they were taxed on such dividends
before the implementation of the DLC transaction.

(b)Taxation of the P&O Princess share reorganisation

The P&O Princess share reorganisation will not give rise to a taxable disposal
of P&O Princess shares for UK P&O Princess shareholders. Instead, for UK tax
purposes, the existing P&O Princess shares and the reorganised P&O Princess
shares will be treated as the same asset, acquired when the existing P&O
Princess shares were acquired. Where a P&O Princess shareholder becomes
entitled to a small cash payment in relation to fractional entitlements arising
as a result of the P&O Princess share reorganisation, this will not be treated
as a disposal or part disposal for UK taxation purposes. Instead, the amount of
the small cash payment will be deducted from the base cost of the reorganised
P&O Princess shares.

(c)Taxation of the P&O Princess shareholders who accept the Partial Share Offer

    (i)Taxation of chargeable gains

   The Partial Share Offer does not qualify for roll-over relief for the
   purposes of UK taxation of chargeable gains.

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   Acceptance by P&O Princess shareholders of the Partial Share Offer and the
   transfer of P&O Princess shares in exchange for the issue of Carnival shares
   will constitute a disposal or part disposal of P&O Princess shares for the
   purposes of UK tax on chargeable gains. Such a disposal or part disposal may
   give rise to a liability to UK tax on chargeable gains depending on the
   shareholder's circumstances (including the availability of exemptions or
   allowable losses).

   The value of the consideration received will be determined for the purposes
   of UK tax on chargeable gains by aggregating the value for UK tax purposes
   of the Carnival shares received in exchange for P&O Princess shares and the
   amount of any cash received in respect of fractional entitlements.

   For corporate P&O Princess shareholders, indexation allowance on the
   acquisition cost of the P&O Princess shares should be available until the
   date of disposal of the P&O Princess shares. Broadly, indexation allowance
   increases the acquisition cost of an asset for tax purposes in line with the
   rise in the retail prices index. Indexation allowance can not be used to
   create or increase a loss for tax purposes.

   Where an individual P&O Princess shareholder acquired his P&O Princess
   shares prior to 1 April 1998 indexation allowance on the acquisition cost of
   the shares in P&O Princess will be available up to and including April 1998.
   No indexation allowance will be available where an individual P&O Princess
   shareholder acquired his shares in P&O Princess after 31 March 1998. For
   periods after April 1998 the rate of capital gains tax paid by an individual
   is effectively reduced the longer he has owned the P&O Princess shares after
   5 April 1998, up to a maximum of, generally, ten years. This is known as
   taper relief. P&O Princess shares held on 17 March 1998 will generally be
   treated as having been held for one extra year for the purposes of taper
   relief. Where an individual acquired his shares after 31 March 1998 taper
   relief runs from the date of acquisition. In general no taper relief is
   given until shares have been held for at least three years.

   (ii)Dividends payable in respect of the Carnival shares

   An individual holder of Carnival shares will, in general, be liable to UK
   income tax on dividends received from Carnival. For the purposes of
   computing his or her UK tax liability, the amount included as income is the
   gross amount of the dividend (including any withholding tax) and is taxed at
   the appropriate marginal rate (ten per cent. in the case of a basic or lower
   rate taxpayer and 32.5 per cent. in the case of a higher rate taxpayer).
   Credit is generally given against UK tax on the gross dividend for foreign
   tax withheld.

   UK resident P&O Princess shareholders who are individuals not domiciled in
   the UK will only be liable to income tax on a dividend from Carnival to the
   extent that it is remitted to the UK. The taxation of dividends so remitted
   to the UK is not considered in this summary and non-domiciled P&O Princess
   shareholders should refer to their professional advisers for an explanation.

   UK resident P&O Princess shareholders who are companies will, in general, be
   liable to UK corporation tax on dividends received from Carnival. For the
   purpose of computing the liability to UK corporation tax, the amount
   included as the income is the gross amount of the dividend

  (iii)P&O Princess Employee Share Incentive Plans

   Special tax provisions may apply to P&O Princess shareholders who have
   acquired or acquire their P&O Princess shares by exercising options under
   the P&O Princess Employee Share Incentive Plans, including provisions
   imposing a charge to income tax.

(d)Stamp duty and stamp duty reserve tax (SDRT)

No stamp duty or SDRT will be payable by P&O Princess shareholders in respect
of (i) the completion of the DLC transaction, (ii) the P&O Princess share
reorganisation (including any cash payments in respect of fractional
entitlements) or (iii) the Partial Share Offer.

(e)Non-residents

The tax treatment of non-UK resident P&O Princess shareholders may differ from
that described in paragraphs 2(a)-(d) above. Persons who are not resident in
the UK should consult their own tax advisers concerning their tax liabilities
(in the UK and any other jurisdiction).

3.  U.S. federal income tax considerations

The following is a discussion of the material U.S. federal income tax
consequences which, in the opinion of KPMG LLP, are generally applicable to a
U.S. holder of P&O Princess shares or P&O

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Princess ADSs (collectively referred to as "U.S. P&O Princess shareholders")
with respect to (a) the DLC transaction; (b) the P&O Princess share
reorganisation; (c) the exchange of such holder's P&O Princess shares or P&O
Princess ADSs pursuant to the Partial Share Offer; and (d) ownership of
Carnival shares. This discussion is based upon existing U.S. federal income tax
law, including the Internal Revenue Code, administrative pronouncements,
judicial decisions and Treasury Regulations, as in effect as of the date
hereof, all of which are subject to change, possibly with retroactive effect.
This discussion assumes that each of the P&O Princess shares and P&O Princess
ADSs has been held as a capital asset as defined in Section 1221 of the
Internal Revenue Code in the hands of the U.S. holder at all relevant times and
that any Carnival shares to be received by such U.S. holder as a result of the
Partial Share Offer will be held as a capital asset. This discussion assumes
that neither Carnival nor P&O Princess is a "controlled foreign corporation,"
"foreign personal holding company" or "passive foreign investment company"
("PFIC") for U.S. federal income tax purposes. This discussion does not address
state, local or foreign tax consequences to U.S. holders, nor does this
discussion address all the tax consequences that may be relevant to a U.S.
holder in light of such holder's particular circumstances or to U.S. holders
subject to special rules, including certain financial institutions, regulated
investment companies, insurance companies, dealers in securities, tax-exempt
organisations, persons who hold P&O Princess shares or P&O Princess ADSs as
part of a position in a "straddle" or "appreciated financial position" or as
part of a "hedging" or "conversion" transaction, persons that own or have
owned, actually or constructively, 10 per cent. or more of the P&O Princess
shares and P&O Princess ADSs, persons who acquired their P&O Princess shares or
P&O Princess ADSs through the exercise or cancellation of employee stock
options or otherwise as compensation for services, and U.S. holders whose
functional currency is not the U.S. dollar. This discussion assumes that no
holder of P&O Princess shares or P&O Princess ADSs will hold (including
existing holdings, and after applying certain attribution rules) more than 5
per cent. of Carnival shares or P&O Princess shares or P&O Princess ADSs, by
vote or value, after the Partial Share Offer. This discussion does not address
U.S. tax considerations that may apply to P&O Princess shareholders that are
not U.S. holders.

Carnival and P&O Princess have not sought and will not seek a ruling from the
Internal Revenue Service with respect to the U.S. federal income tax
consequences described below and, as a result, there can be no assurance that
the Internal Revenue Service will agree with, or that a court will uphold, any
of the conclusions set forth herein.

Holders of P&O Princess shares and P&O Princess ADSs should consult their
independent professional advisers in the light of their particular
circumstances as to the U.S. federal income tax consequences of the DLC
transaction, the P&O Princess share reorganisation and the Partial Share Offer,
as well as to the effect of any state, local or applicable foreign tax law.

(a)The DLC transaction

Although there is no U.S. federal income tax authority addressing the tax
consequences of a dual listed company transaction, the DLC transaction should
not give rise to taxable income or gain for U.S. P&O Princess shareholders for
U.S. federal income tax purposes. However, the Internal Revenue Service may
assert that U.S. P&O Princess shareholders received taxable income as a result
of the various voting and equalisation provisions necessary to implement the
DLC structure. The P&O Princess directors believe that such voting and other
rights, if any, received by shareholders are expected to have only nominal
value and, therefore, the receipt of such rights by U.S. P&O Princess
shareholders would only result in a nominal amount of income. It is possible,
however, that the Internal Revenue Service may disagree with this conclusion.

U.S. P&O Princess shareholders will be taxed on dividends received in respect
of their P&O Princess shares or P&O Princess ADSs after completion of the DLC
transaction on the same basis as they were prior to the DLC transaction.

(b)The P&O Princess share reorganisation

The P&O Princess share reorganisation should not give rise to taxable income or
gain to U.S. P&O Princess shareholders for U.S. federal income tax purposes
except with respect to the gain, if any, recognised by a U.S. P&O Princess
shareholder on the disposition of fractional shares. A U.S. P&O Princess
shareholder will recognise gain or loss for U.S. federal income tax purposes in
an amount equal to the difference between the cash received and the
shareholder's adjusted tax basis in its P&O Princess shares or ADSs allocable
to the fractional share, as applicable. Generally, such gain will be

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capital in nature, and will be long-term capital gain or loss if, on the date
of the consummation of the P&O Princess share reorganisation, the P&O Princess
shares were held for more than one year. Gain or loss, if any, realised by a
U.S. P&O Princess shareholder generally will be treated as U.S. source. For
U.S. federal income tax purposes, a U.S. P&O Princess shareholder's adjusted
tax basis in its P&O Princess shares or P&O Princess ADSs received as part of
the P&O Princess share reorganisation will be equal to its adjusted basis in
its former P&O Princess shares or P&O Princess ADSs, as the case maybe.

(c)The exchange of P&O Princess shares or P&O Princess ADSs pursuant to the
   Partial Share Offer

The receipt of Carnival shares (and any consideration received in lieu of
fractional Carnival shares) by a P&O Princess shareholder in exchange for P&O
Princess shares or P&O Princess ADSs pursuant to the Partial Share Offer will
likely be a taxable transaction for U.S. federal income tax purposes. In
general, a U.S. holder will recognise gain or, subject to the possible
application of the "wash sale" rule as described below, loss equal to the
difference between (i) the amount realised (i.e., the fair market value of the
Carnival shares and any consideration received in lieu of fractional Carnival
shares), and (ii) such holder's adjusted tax basis in its P&O Princess shares
and/or P&O Princess ADSs, as applicable. Generally, such gain or loss will be
capital gain or loss and will be long-term capital gain or loss if on the date
of the consummation of the Partial Share Offer the P&O Princess shares and/or
P&O Princess ADSs were held for more than one year. Gain or loss, if any,
realised by a U.S. holder in connection with the Partial Share Offer generally
will be treated as having a U.S. source. Subject to the possible application of
the "wash sale" rule as described below, for U.S. federal income tax purposes,
a U.S. holder's basis in the Carnival shares received pursuant to the Partial
Share Offer will be equal to the fair market value of such shares on the date
of the consummation of the Partial Share Offer and a U.S. holder's holding
period with respect to such shares will begin on the next day.

If the P&O Princess shares or P&O Princess ADSs are deemed to be "substantially
identical", for the purposes of the wash sale rule of the Internal Revenue Code
and applicable Treasury Regulations, to the Carnival shares received by a U.S.
holder pursuant to the Partial Share Offer, such holder will not be able to
recognise a loss on such exchange. Any loss that is disallowed through the
application of the wash sale rule would not be eliminated but would rather be
deferred and a U.S. holder's holding period and tax basis in their P&O Princess
shares exchanged pursuant to the Partial Share Offer would carry over to the
Carnival shares received pursuant to such exchange.

(d)Ownership of Carnival shares

A U.S holder that exchanges P&O Princess shares or P&O Princess ADSs for
Carnival shares pursuant to the Partial Share Offer will generally be taxable,
for U.S. federal income tax purposes, in the same manner with respect to
dividends paid on any Carnival share received by such holder as such holder was
with respect to dividends paid on its former P&O Princess shares or P&O
Princess ADSs.

4.  Related party transactions

Transaction with Micky Arison.  Mr. Arison is also the Chairman and Chief
Executive Officer and the indirect sole shareholder of Florida Basketball
Associates, Inc., the sole general partner of the Miami Heat Limited
Partnership ("MHLP"), the majority owner of the Miami Heat, a professional
basketball team. Pursuant to a sponsorship agreement between Carnival and MHLP,
Carnival paid MHLP approximately $543 thousand during fiscal 2002 in exchange
for various sponsorship, marketing and advertising services and the use of
floor level season tickets.

Carnival also provided aircraft management services to MHLP. During fiscal
2002, Carnival received approximately $1.5 million from MHLP as compensation
for providing such services and reimbursement of costs. It is expected that
Carnival will continue to provide such aircraft management services to MHLP in
the future.

Transaction with Funair Corporation.  Carnival provided aircraft management
services to Funair Corporation ("Funair"), a company beneficially owned by a
trust established for the benefit of Shari Arison, a member of the Carnival
board. During fiscal 2002, Carnival received approximately $1.5 million from
Funair as compensation for providing such services and reimbursement of costs.
It is expected that Carnival will continue to provide such aircraft management
services to Funair in the future.

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Registration Rights.  Pursuant to registration rights agreements, Carnival has
granted standard registration rights to certain trusts established for the
benefit of members of the Arison Family with respect to Carnival shares held
for investment by such trusts, requiring it to register such shares under
certain circumstances.

Transactions with Cruise Specialists.  Janet Olczak Lanterman, the wife of A.
Kirk Lanterman, an executive officer and director of Carnival, is the owner of
a travel agency located in Seattle, Washington, named Cruise Specialists. Under
the laws of the state of Washington, Mrs. Lanterman's ownership interest in
Cruise Specialists is her separate property and, accordingly, Mr. Lanterman
does not have any ownership interest in the agency. Cruise Specialists sells
cruises and other similar products for various travel providers, including
Carnival, under arrangements that are common throughout the travel industry
whereby Cruise Specialists receives a commission based on sales generated. In
fiscal 2002, Cruise Specialists generated approximately $16.6 million million
of gross revenues (before commission) for Carnival. In connection with such
revenues, Cruise Specialists received commissions of approximately $2.6
million. Carnival believes that the commissions paid to Cruise Specialists are
comparable to those paid to other travel agents for comparable services.

Loan to Howard S. Frank.  On 28 December 2001, Carnival loaned Howard S. Frank,
Vice Chairman of the Carnival board and Chief Operations Officer of Carnival,
the sum of $110,000. Interest accrued on the loan at the rate of 2.48 per cent.
per annum and was evidenced by a promissory note. Mr. Frank repaid the loan in
full on 18 January 2002.

Loan to Pamela C. Conover.  On 22 July 2002, Carnival entered into a loan
agreement with Pamela C. Conover, President and Chief Executive Officer of
Cunard Line. The loan is set up as a line of credit for $250,000. Repaid
amounts may not be reborrowed. Interest on amounts borrowed accrues at 2.82 per
cent. per annum and the loan is payable on demand by Carnival.

Transaction with the Brother of Robert H. Dickinson.  John Dickinson, the
brother of Robert H. Dickinson, President and Chief Operating Officer of CCL
and a director of Carnival, was retained by Waste Management, Inc., a company
which provides waste disposal services, to act as a consultant in negotiating a
two-year agreement with CCL. Waste Management compensated John Dickinson for
his consulting services. Carnival does not know how much compensation John
Dickinson earned for these services. During fiscal 2002, Carnival paid
approximately $780,000 to Waste Management.

Transactions with Trustees.  James M. Dubin is the sole shareholder of JMD
Delaware, Inc., JMD Protector and Balluta Limited, which act either as trustee
or protector of certain Arison family trusts. By virtue of being the sole
shareholder of JMD Delaware, Inc., JMD Protector and Balluta Limited, Mr. Dubin
may be deemed to own the aggregate of 142,111,562 Carnival shares beneficially
owned by such entities, as to which he disclaims beneficial ownership. Mr.
Dubin is a director of Carnival and a partner in the New York firm of Paul,
Weiss, Rifkind, Wharton & Garrison LLP, which firm serves as counsel to
Carnival, Micky Arison and Shari Arison.

Redemption of Carnival's interest in CHH

Mr. Weiser is currently a managing member of, and owns a membership interest
in, Continental Hospitality Holdings, LLC ("CHH"). In June 2002, CHH redeemed
Carnival's entire 55% interest in CHH for $1.1 million paid in cash, a $4.3
million interest-bearing secured promissory note and certain additional
contingent consideration. The note is personally guaranteed by Mr. Weiser and
certain other owners of CHH. Mr. Weiser is a director of Carnival.

Transactions with Affiliated Entities.  Carnival has adopted a policy of
dealing with affiliated entities on an arm's-length basis and it may not engage
in business transactions with any affiliate on terms and conditions less
favourable to Carnival than terms and conditions available at the time for
comparable transactions with unaffiliated persons.

Transaction by Horst Rahe

On 18 December 2002, Deutsche Seereederei GmbH ("DS"), a company wholly-owned
by Mr. Horst Rahe and his family, entered into a share sale agreement (the
"Agreement") with Commerzbank AG ("Commerzbank") for German tax-planning
purposes. The Agreement is in respect of the 11,366,415 ordinary shares of P&O
Princess owned by DS (the "Relevant Shares") which comprise 1.64 per cent.

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of the total of, and the whole of Mr. Rahe's interest in, the issued share
capital of P&O Princess. It will result in DS disposing of its interest in the
Relevant Shares on 23 June 2003, or earlier if it so elects, but until then,
through DS, Mr. Rahe retains full economic interest in the Relevant Shares.

Under the Agreement, on 18 December 2002, DS transferred the Relevant Shares to
Commerzbank for (Pounds)50,580,547 ((Pounds)4.45 per share). At the same time,
DS entered into a total return swap agreement with Commerzbank under which the
Relevant Shares will be valued on 23 June 2003 or earlier, if DS so elects (the
"Valuation Date"). To the extent that the valuation of the Relevant Shares on
the Valuation Date (the "Final Price") exceeds (Pounds)4.478 per share (the
"Initial Price"), Commerzbank will pay the difference to DS. Conversely, if the
Final Price is less than the Initial Price, DS will pay the difference to
Commerzbank. Any dividends receivable in respect of the Relevant Shares prior
to the Valuation Date will be for the benefit of DS.

Under the total return swap agreement, the Valuation Date will not be earlier
than the P&O Princess EGM. Furthermore, Commerzbank has irrevocably agreed with
P&O Princess that at the P&O Princess EGM it will exercise the votes attaching
to the Relevant Shares it then holds in accordance with the P&O Princess
board's recommendation to shareholders.

In a related transaction on 18 December 2002, DS assigned its right to receive
deferred consideration from POPCIL, in respect of the purchase by POPCIL of
Aida Cruises Limited pursuant to a sale and purchase agreement dated 25
September 2000, to Paradies Touristik AG ("PT"). PT is a Swiss company also
wholly-owned by Mr. Rahe and his family.

5.  Legal matters

The validity of the Carnival shares offered hereby will be passed upon for
Carnival by Tapia Linares y Alfaro and certain matters will be passed upon by
Paul, Weiss, Rifkind, Wharton & Garrison LLP. See "Related party transactions"
in paragraph 4 of this Appendix IV to this document for information relating to
Carnival shares which may be deemed to be beneficially owned by James M. Dubin,
a director of Carnival and a partner at Paul, Weiss, Rifkind, Wharton &
Garrison LLP, but as to which he disclaims beneficial ownership. The validity
of the P&O Princess special voting share will be passed upon by Freshfields
Bruckhaus Deringer.

6.  Experts

The consolidated financial statements of Carnival incorporated in this
prospectus by reference to Carnival's amended Annual Report on Form 10-K/A for
the year ended 30 November 2002 have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent certified public accountants,
given on authority of said firm as experts in auditing and accounting.

The consolidated financial statements of P&O Princess as of 31 December 2002
and 2001 and for each of the years in the three year period ended 31 December
2002 have been incorporated by reference herein in reliance upon the report of
KPMG Audit Plc, chartered accountants and registered auditor incorporated by
reference herein and upon the authority of said firm as experts in auditing and
accounting. The audit report covering the 31 December 2002 financial statements
refers to the adoption of FRS 19 Deferred Tax.

7.  Consents

7.1Each of Merrill Lynch and UBS Warburg has given and has not withdrawn its
   written consent to the issue of this document with the inclusion of and the
   references to its name in the form and context in which they appear.

7.2Schroder Salomon Smith Barney has given and has not withdrawn its written
   consent to the issue of this document with the inclusion of and the
   references to its name in the form and context in which they appear.

8.  Limitations on enforceability of civil liabilities under U.S. federal
securities laws

P&O Princess is a company organised under the laws of England and Wales with
headquarters in London, England. Most of P&O Princess' directors and many of
its officers and certain of the experts named in this document are residents of
the UK and not the U.S. In addition, a number of the directors

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of P&O Princess after completion of the DLC transaction will be residents of
the UK and not the U.S. A large portion of the assets of P&O Princess and of
such other persons are located outside of the U.S. As a result, U.S. investors
may find it difficult in a lawsuit based on the civil liability provisions of
the U.S federal securities laws to:

..   effect service within the U.S. upon P&O Princess, the directors and
    officers of P&O Princess and certain experts located outside the U.S.;

..   enforce in U.S. courts or outside the U.S. judgments obtained against those
    persons in U.S. courts;

..   enforce in U.S. courts judgments obtained against those persons in courts
    in jurisdictions outside the U.S.; and

..   enforce against those persons in the UK, whether in original actions or in
    actions for the enforcement of judgments of U.S. courts, civil liabilities
    predicated solely upon the U.S. federal securities laws.

Individual shareholders of an English company (including U.S. persons and
depositary shareholders) have the right under English law to bring lawsuits on
behalf of the company in which they are a shareholder, and on their own behalf
against the company, in certain limited circumstances. Except in limited
circumstances, English law does not permit class action lawsuits by
shareholders.

9.  Incorporation of information for the purposes of the UK Takeover Code

Your attention is drawn to the additional information on Carnival and P&O
Princess contained in the shareholder circular for the P&O Princess EGM. In
particular your attention is drawn to:

..   information on Carnival contained in Section 2, other than the report on
    reconciliations to UK GAAP from PricewaterhouseCoopers LLP;

..   information on P&O Princess, other than the financial information and
    report on reconciliations to Carnival's accounting policies from KPMG Audit
    Plc, contained in Section 3;

..   details of the DLC structure contained in Part B of Section 5;

..   summary of the agreements relating to the DLC structure in Section 6; and

..   paragraphs 2, 3, 4, 7, 8, 9, 12, 13, 14, 15 and 16 of the additional
    information in Section 8,

all of which are deemed to form part of this document.

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                                  DEFINITIONS

The following definitions apply throughout this document unless the context
requires otherwise:

"Brokerage Account Election   the form to elect to have Carnival shares
  Form"                       credited to an existing U.S. brokerage account
                              rather than receiving a share certificate

"Carnival"                    Carnival Corporation

"Carnival articles"           the articles of incorporation of Carnival as
                              amended by the resolution set out in the Carnival
                              proxy statement relating to the DLC transaction
                              and to be proposed at the Carnival Special Meeting

"Carnival by-laws"            the by-laws of Carnival as amended by the
                              resolution set out in the Carnival proxy
                              statement relating to the DLC transaction and to
                              be proposed at the Carnival Special Meeting

"Carnival Corporation Deed"   the deed to be executed by Carnival in favour of
                              P&O Princess shareholders

"Carnival Deed of Guarantee"  the deed of guarantee to be executed by Carnival
                              pursuant to the terms of the Implementation
                              Agreement

"Carnival equalisation share" a share which may be issued by Carnival to a
                              member of the P&O Princess group

"Carnival group"              Carnival, its subsidiaries and its subsidiary
                              undertakings

"Carnival shares"             shares of common stock of Carnival with a par
                              value of $0.01 per share

"Carnival Special Meeting"    the special meeting of Carnival shareholders to
                              be held on 14 April 2003

"Carnival Special Voting      the holder of the Carnival special voting share
  Entity"

"Carnival special voting      the special voting share with a par value of U.S.
  share"                      $0.01 in the capital of Carnival

"certificated" or "in         a share or other security which is not in
  certificated form"          uncertificated form (that is, not in CREST)

"certificated" or "in         a share or other security which is not in
  certificated form"          uncertificated form (that is, not in CREST)

"CLIA"                        Cruise Lines International Association

"Combined Group"              the P&O Princess group and the Carnival group
                              after the DLC structure has been implemented

"Companies Act"               the UK Companies Act 1985, as amended

"Computershare"               Computershare Investor Services PLC, a company
                              registered in England and Wales with registered
                              number 3498808, amongst other things, acting as
                              the UK Receiving Agent and Escrow Agent for
                              Carnival

"CRESTCo"                     CRESTCo Limited

"CREST member"                a person who has been admitted by CRESTCo as a
                              system-member (as defined in the Regulations)

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"CREST participant"           a person who is, in relation to CREST, a
                              system-participant (as defined in the Regulations)

"CREST sponsor"               a CREST participant admitted to CREST as a CREST
                              sponsor

"CREST sponsored member"      a CREST member admitted to CREST as a sponsored
                              member

"DLC documents"               the documents required to implement the DLC
                              structure, which will include the Implementation
                              Agreement, the Equalisation and Governance
                              Agreement, Carnival Deed of Guarantee, the P&O
                              Princess Deed of Guarantee, the SVE Special
                              Voting Deed, the Carnival Corporation Deed, the
                              amended memorandum and amended articles of
                              association of P&O Princess, the third amended
                              and restated articles of incorporation of
                              Carnival and the amended and restated by-laws of
                              Carnival

"DLC principles"              the principles agreed by Carnival and P&O
                              Princess for the implementation, management and
                              operation of the DLC structure

"DLC proposal"                Carnival's proposal to form a dual listed company
                              structure with P&O Princess and to make the
                              Partial Share Offer

"DLC structure"               the dual listed company structure created by the
                              DLC documents

"DLC transaction"             the proposed combination of P&O Princess and
                              Carnival under a dual listed company structure in
                              the terms described in this document

"EC"                          the European Commission

"EC Merger Regulation"        Council Regulation (EEC) No 4064/89 of 21
                              December 1989 on the control of concentrations
                              between undertakings, as amended by Council
                              Regulation (EC) No 1310/97 of 30 July 1997

"Electronic Acceptance"       the inputting and settling of a TTE Instruction
                              which constitutes or is deemed to constitute an
                              acceptance of the Partial Share Offer on the
                              terms set out in this document

"equalisation ratio"          the ratio of one P&O Princess share to that
                              number of Carnival shares that has the same right
                              to distributions of income and capital and voting
                              rights as one P&O Princess share

"equalisation share"          the P&O Princess equalisation share or the
                              Carnival equalisation share (as the context may
                              require)

"Exchange Act"                the U.S. Securities Exchange Act of 1934, as
                              amended

"Excluded Territories"        Australia, Belgium, Canada, France, Germany,
                              Ireland, Japan, New Zealand, Singapore, South
                              Africa, Spain and The Netherlands

"Form of Acceptance"          the form of acceptance relating to the Partial
                              Share Offer for use by holders of P&O Princess
                              shares

"Implementation Agreement"    the offer and implementation agreement entered
                              into between P&O Princess and Carnival on 8
                              January 2003 setting out the terms and conditions
                              for the implementation of the DLC structure and
                              the Partial Share Offer

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"Internal Revenue Code"       the U.S. Internal Revenue Code of 1986, as amended

"joint electorate actions"    actions in respect of which holders of P&O
                              Princess shares and Carnival shares effectively
                              vote as a unified constituency

"Joint Venture Agreement"     the agreement entered into by P&O Princess, Royal
                              Caribbean and JOEX Limited on 19 November 2001
                              and terminated pursuant to the termination
                              agreement among such parties, dated 25 October
                              2002

"Letter of Transmittal"       the letter of transmittal relating to the Partial
                              Share Offer for use only by holders of P&O
                              Princess ADSs to accept the Partial Share Offer

"Listing Rules"               the Listing Rules issued by the UK Listing
                              Authority

"London Stock Exchange"       London Stock Exchange plc

"member account ID"           the identification code or number attached to any
                              member account in CREST

"Merrill Lynch"               Merrill Lynch International

"Notice of Meeting"           the notice of the P&O Princess EGM

"NYSE"                        the New York Stock Exchange, Inc.

"Official List"               the list maintained by the UK Listing Authority
                              pursuant to Part VI of the Financial Services and
                              Markets Act 2000

"Panel"                       the Panel on Takeovers and Mergers

"Partial Share Offer"         the partial share offer by Carnival to acquire up
                              to 20 per cent. of P&O Princess' share capital on
                              the terms and conditions set out in this document

"participant ID"              the identification code or membership number used
                              in CREST to identify a particular CREST member or
                              a CREST participant

"P&O Princess"                P&O Princess Cruises plc

"P&O Princess ADRs"           American Depositary Receipts evidencing title to
                              one or more P&O Princess ADSs

"P&O Princess ADSs"           American Depositary Shares, each such share
                              representing four underlying P&O Princess shares

"P&O Princess articles"       the articles of association of P&O Princess as
                              amended by the resolution set out in the notice
                              of P&O Princess EGM relating to the DLC
                              transaction and to be proposed at the P&O
                              Princess EGM

"P&O Princess Deed of         the deed of guarantee to be executed by P&O
  Guarantee"                  Princess pursuant to the terms of the
                              Implementation Agreement

"P&O Princess EGM"            the extraordinary general meeting of the P&O
                              Princess shareholders to be held on 16 April 2003

"P&O Princess Employee Share  the P&O Princess Deferred Bonus and Co-investment
  Incentive Plans"            Matching Plan, and the P&O Princess Executive
                              Share Option Plan

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"P&O Princess equalisation    a share which may be issued by P&O Princess to a
  share"                      member of the Carnival group

"P&O Princess group"          P&O Princess, its subsidiaries and its subsidiary
                              undertakings

"P&O Princess memorandum"     the memorandum of association of P&O Princess as
                              amended by the resolution set out in the Notice
                              of Meeting relating to the DLC transaction and to
                              be proposed at the P&O Princess EGM

"P&O Princess memorandum      the P&O Princess memorandum and the P&O Princess
  and articles"               articles

"P&O Princess share           the proposed share reorganisation of P&O Princess
  reorganisation"             shares to be voted upon by P&O Princess
                              shareholders at the P&O Princess EGM, which will
                              combine each 3.3289 existing P&O Princess shares
                              of $0.50 into one reorganised P&O Princess share
                              of $1.66

"P&O Princess shares"         prior to the implementation of the DLC
                              transaction, the existing unconditionally
                              allotted or issued and fully paid ordinary shares
                              of $0.50 each in the capital of P&O Princess
                              (including those represented by P&O Princess ADSs
                              but not, for avoidance of doubt, such P&O
                              Princess ADSs) and any further such shares which
                              are unconditionally allotted or issued and fully
                              paid before completion of the DLC transaction (or
                              such earlier date(s) as Carnival may, subject to
                              the Takeover Code, determine), including any such
                              shares so unconditionally allotted or issued
                              pursuant to the exercise of options granted under
                              the P&O Princess employee share incentive plans
                              and, after the implementation of the DLC
                              transaction, the unconditionally allotted or
                              issued and fully paid ordinary shares of U.S.
                              $1.66 each in the capital of P&O Princess

"P&O Princess Special Voting  a trust formed under the P&O Princess Special
  Trust"                      Voting Trust Agreement


"P&O Princess Special Voting  a voting trust agreement between Carnival and the
  Trust Agreement"            trustee of the P&O Princess Special Voting Trust

"P&O Princess special voting  the special voting share of (Pounds)1.00 in the
  share"                      capital of P&O Princess


"Regulations"                 the Uncertificated Securities Regulations 2001
                              (SI No. 2001/3755)

"Regulatory Information       the Company Announcements Office and/or RNS
  Service"                    and/or any other channel recognised, from time to
                              time, as a channel for the dissemination of
                              regulatory information by listed companies under
                              the Listing Rules of the UK Listing Authority

"Royal Caribbean"             Royal Caribbean Cruises Ltd.

"Schroder Salomon Smith       Salomon Brothers International Limited trading as
  Barney"                     Schroder Salomon Smith Barney. Schroder is a
                              trademark of Schroder Holdings plc and is used
                              under licence by Salomon Brothers International
                              Limited

"Securities Act"              the U.S. Securities Act of 1933, as amended

"special voting share"        the special voting shares to be issued by each of
                              P&O Princess and Carnival to enable P&O Princess
                              shareholders and Carnival shareholders to vote on
                              a combined basis at meetings of both companies

                                      159



"Special Voting Entity"       P&O Princess Special Voting Trust or Carnival
                              Special Voting Entity (as the context may require)

"SVE Special Voting Deed"     the SVE Special Voting Deed, among Carnival, the
                              Carnival Special Voting Entity, Carnival SVE
                              Limited, P&O Princess and the trustee of the P&O
                              Princess Special Voting Trust

"subsidiary", "subsidiary     shall be construed in accordance with the
  undertaking"                Companies Act

"Takeover Code"               the UK City Code on Takeovers and Mergers

"TFE Instruction"             a Transfer from Escrow instruction (as defined by
                              the CREST Manual issued by CRESTCo)

"Treasury Regulations"        the final, temporary or proposed regulations that
                              have been issued by the U.S. Department of
                              Treasury pursuant to its authority under the
                              Internal Revenue Code, and any successor
                              regulations

"TTE Instruction"             a Transfer to Escrow instruction (as described in
                              the CREST manual issued by CRESTCo) in relation
                              to P&O Princess shares in uncertificated form,
                              meeting the requirements set out in paragraph
                              3(b)(1) of Section A of Part VI of this document

"UBS Warburg"                 UBS AG, acting through its business group UBS
                              Warburg or, where appropriate, its subsidiary,
                              UBS Limited

"UK GAAP"                     generally accepted accounting principles in the UK

"UK Listing Authority" or     the Financial Services Authority as the competent
  "UKLA"                      authority for listing in the United Kingdom under
                              Part VI of the Financial Services and Markets Act
                              2000

"UK P&O Princess Shareholder" a holder of P&O Princess shares or P&O Princess
                              ADSs who is resident or ordinarily resident in
                              the UK for tax purposes

"UK Receiving Agent"          Computershare Investor Services PLC with offices
                              at 7/th/ floor, Jupiter House, Triton Court, 14
                              Finsbury Square, London, EC2A 1BR

"uncertificated" or "in       a share or other security title to which is
  uncertificated form"        recorded on the relevant register of the share or
                              security concerned as being held in
                              uncertificated form in CREST and title to which,
                              by virtue of the Regulations, may be transferred
                              by means of CREST

"U.S. holder"                 a holder of P&O Princess shares who or that is
                              for U.S. federal income tax purposes (i) a
                              citizen or individual resident of the U.S., (ii)
                              a corporation or other entity taxable as a
                              corporation organised under the laws of the U.S.
                              or any political subdivision thereof (including
                              the States and the District of Columbia),
                              (iii) an estate or trust defined in Section
                              7701(a)(30) of the U.S. Internal Revenue Code of
                              1986, as amended, or (iv) any other person that
                              is subject to U.S. federal income tax on its
                              worldwide income

"U.S. Exchange Agent"         Computershare Trust Company of New York, the
                              mailing address of which is 88 Pine Street,
                              19/th/ floor, New York, New York 10005

"U.S. GAAP"                   generally accepted accounting principles in the
                              U.S.

"U.S. Information Agent"      Georgeson Shareholder Communications, Inc. with
                              offices at 17 State Street, 10/th/ Floor, New
                              York, New York 10004

"U.S. person"                 a U.S. person as defined in Regulation S under
                              the Securities Act

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