This week, Disney Cruise Line’s annual report for fiscal year 2024 was made public. Within the 61-page filing, the document contains a strategic report compiled by the directors which discusses the improved revenue and operating income compared to the prior year, primarily due to higher average ticket prices and an increase in passenger cruise days. These factors were partially offset by costs associated with fleet additions (including the Disney Treasure, delivered in October 2024, and the Disney Adventure, scheduled for delivery in Q1 fiscal year 2026), inflation, and dry dock costs. The cruise line anticipates its financial performance will continue to maintain profitability in 2025 from expanded capacity from the Disney Treasure (maiden voyage in December 2024) along with the soon-to-be-delivered Disney Destiny and Disney Adventure (scheduled for Q1 fiscal year 2026 delivery). In fiscal year 2025, the line has seen consumer demand continue to remain strong with higher spending rates exceeding the comparable actual spend in fiscal year 2024. Disney Cruise Line continues to remain optimistic about the future as the line continues to advance the development of its next two new cruise ships (the Disney Destiny and the Disney Adventure), and four more new cruise ships scheduled to be delivered between 2027 and 2031.

Before we get into the details, it is worth mentioning The Walt Disney Company released their FY23 earnings report back in November 2023. Disney Cruise Line is part of the Experiences division. More often than not, there is little mention of the cruise line during the quarterly earnings webcast and report. Due to the company’s size, Disney Cruise Line’s financials are bundled in the Experiences summary item leaving little insight into the cruise line’s business. Since, Disney Cruise Line is actually Magical Cruise Company, Limited registered in London, the company is required to submit an annual report in the United Kingdom.

Remember, the financial information in the annual report is for FY24 (year ending September 28, 2024), we will get to this eventually. The interesting information, prepared on behalf of the Board dated June 27, 2024 from the strategic report is transcribed below.

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Magical Cruise Company, Limited
Strategic report for the period from 1 October 2023 to 28 September 2024

The Directors present their Strategic report of Magical Cruise Company, Limited (the ‘Company’) (trade name “Disney Cruise Line”) for the period from 1 October 2023 to 28 September 2024 (prior financial period from 2 October 2022 to 30 September 2023).

Principal activities and business review
The principal activity of the Company is the operation of Disney themed luxury cruise vessels. The Company anticipates that its activities will remain unchanged in the foreseeable future.

The Company’s profit for the financial period is $347,377,000 (2023: $180,531,000).

Revenue and operating income improved compared to the prior year, primarily due to higher average ticket prices and an increase in passenger cruise days. These factors were partially offset by costs associated with fleet additions (including the Disney Treasure, delivered in October 2024, and the Disney Adventure, scheduled for delivery in Q1 fiscal year 2026), inflation, and dry dock costs.

The Company is a six-ship vacation cruise line, which operates out of ports in North America, Europe, and the South Pacific. The Disney Magic and the Disney Wonder are 85,000-ton 875-stateroom ships; the Disney Dream and the Disney Fantasy are 130,000-ton 1,250-stateroom ships; and the Disney Wish and the Disney Treasure, the latter of which was delivered in October 2024, are 140,000-ton 1,250-stateroom ships. The ships cater to families, children, teenagers, and adults, with themed areas and activities for each group. Many cruise vacations include a visit to Disney Castaway Cay, a 1,000-acre private Bahamian island, or Disney Lookout Cay at Lighthouse Point, which opened in June 2024 on approximately 600 acres of land on the island of Eleuthera.

Disney Cruise Line will be adding two new ships, the Disney Adventure and the Disney Destiny, which are scheduled to begin sailing in the first quarter of fiscal year 2026. The Disney Destiny will be approximately 140,000 tons with 1,250 staterooms and will initially operate in North America. The Disney Adventure will be approximately 200,000 tons with approximately 2,100 staterooms and will initially operate in Southeast Asia.

In August 2024, the Group announced plans to add four more new cruise ships, all of which are under contract and scheduled to be delivered between 2027 and 2031.

On 18 September 2024, the Company (as lender) and DCL Island Development, Ltd. (“DCLID” a subsidiary), an entity within the Disney Group, (as borrower) entered into a $650,000,000 revolving credit facility agreement with effect from 2 October 2023 maturing 27 December 2024. This revolving credit facility is further supported by a loan guarantee in favour of the Company by Disney Enterprises, Inc., an indirect parent entity of the borrower within the Disney Group. Following the reporting period end, prior to the maturity date, the loan was extended to June 2025. As at the date the financial statements were approved, the principal outstanding due to the Company is $644,243,000.

During the financial year, the Company received $15,335,000 of dividend income (2023: $nil) from its investment in The Walt Disney Company Africa (Pty) Limited, which positively contributed to profit before taxation.

Future developments

The Company anticipates its financial performance will continue to maintain profitability in 2025 from expanded capacity from the Disney Treasure (maiden voyage in December 2024) along with the soon-to-be-delivered Disney Destiny and Disney Adventure (scheduled for Q1 fiscal year 2026 delivery). In fiscal year 2025, the Company has seen consumer demand continue to remain strong with higher spending rates exceeding the comparable actual spend in fiscal year 2024.

We continue to remain optimistic about the future as the Company continues to advance the development of its next two new cruise ships (the Disney Destiny and the Disney Adventure), and four more new cruise ships scheduled to be delivered between 2027 and 2031.

Going concern
The Directors have undertaken an assessment by reviewing a cash flow forecast extending to a period no less than 12 months from the date of the financial statements, including consideration of downsides, noting that the Company was in a net current liability position as of 28 September 2024. Whilst they expect to be able to meet the day to day cashflow needs of the Company, they have received assurances of continued financial support from a fellow Group undertaking, in the form of a letter of support, to allow the Company to meet its liabilities as they fall due without significant curtailment of operations for a period of at least 12 months from the date of these financial statements being signed.

On the basis of their assessment of the Company’s financial position, its resources and support from fellow group company, the Directors believe that the Company is well placed to manage its business risks. Therefore, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

Principal risks and uncertainties
From the perspective of the Company, its principal risks and uncertainties and future outlook are integrated with those of The Walt Disney Company (‘Group’) and are not managed separately. Accordingly, the risks and uncertainties of the Group, which include those of the Company, are discussed in the Group’s annual report which does not form part of this report. However, the Directors view the following as being the principal risks facing the Company:

From the perspective of the Company, its principal risks and uncertainties and future outlook are integrated with those of The Walt Disney Company (‘Group’) and are not managed separately. Accordingly, the risks and uncertainties of the Group, which include those of the Company, are discussed in the Group’s annual report which does not form part of this report. However, the Directors view the following as being the principal risks facing the Company:

1) Our sales may be adversely affected by changes in economic factors, political uncertainty and changes in consumer spending patterns

Many economic and other factors outside our control, including consumer confidence, consumer spending levels, political uncertainty, employment levels, consumer debt levels, inflation and deflation, as well as the availability of consumer credit, affect consumer spending habits. A significant deterioration in the global financial markets and economic environment, recessions or an uncertain economic outlook adversely affects consumer spending habits and results in lower levels of economic activity. In addition, an increase in price levels generally, or in price levels in a particular sector such as the energy sector, could result in a shift in consumer demand away from the entertainment and consumer products we offer, which could also adversely affect our revenues and, at the same time, increase our costs. Any of these events and factors could cause consumers to curtail spending and could have a negative impact on our financial performance and position in future financial periods. The impact of pandemics on consumer confidence and ultimately occupancy levels could also affect our financial performance.

2) Our industry is highly competitive and competitive conditions may adversely affect our revenues and overall profitability

The cruise industry is highly competitive and our results of operations are sensitive to, and may be adversely affected by, competitive pricing and other factors.

3) A variety of uncontrollable events may reduce demand for our products and services, impair our ability to provide our products and services or increase the cost of providing our products and services

Demand for and consumption of our products and services, is highly dependent on the general environment for travel and tourism. The environment for travel and tourism, as well as demand for and consumption of other entertainment products, can be significantly adversely affected in the U.S., globally or in specific regions as a result of a variety of factors beyond our control, including: adverse weather conditions arising from short-term weather patterns or long-term change, catastrophic events or natural disasters (such as excessive heat or rain, hurricanes, typhoons, floods, tsunamis and earthquakes); health concerns; international, political or military developments; and terrorist attacks. These events and others, such as fluctuations in travel and energy costs and computer virus attacks, intrusions or other widespread computing or telecommunications failures, may also damage our ability to provide our products and services or to obtain insurance coverage with respect to some of these events. An incident that affected our property directly would have a direct impact on our ability to provide goods and services and could have an extended effect of discouraging consumers from attending our facilities. Moreover, the costs of protecting against such incidents reduces the profitability of our operations.

4) Changes in regulations applicable to our businesses may impair the profitability of our businesses.

These regulations may include, but are not limited to:

• Federal, State and foreign privacy and data protection laws and regulations.
• Regulation of the safety and supply chain of consumer products and Cruise Line operations.
• Domestic and international wage laws, tax laws or currency controls.
• Environmental protection regulations.

5) Fuel prices

Fuel is a significant portion of overall costs. The Company is exposed to commodity fluctuations due to commodity price changes. The Company employs several levers to reduce exposure to fuel price fluctuations, such as price hedging strategies, fuel vendor diversification, and securing future supply through offtake agreements. With respect to the risks the Directors regularly review such matters to mitigate their respective impact on the Company.

6) Protection of electronically stored data and other cybersecurity is costly, and if our data or systems are materially compromised ni spite of this protection, we may incur additional costs, lost opportunities, damage ot our reputation, disruption of service or theft of our assets

We maintain information necessary to conduct our business, including confidential and proprietary information as well as personal information regarding our customers and employees, in digital form. We also use computer systems to deliver our products and services and operate our business. Data maintained in digital form is subject to the risk of unauthorised access, modification, exfiltration, destruction or denial of access and our computer systems are subject to cyberattacks that may result in disruptions in service. If our information or cyber security systems or data are compromised in a material way, our ability to conduct our business may be impaired, we may lose profitable opportunities or the value of those opportunities may be diminished. If personal information of our customers or employees is misappropriated, our reputation with our customers and employees may be damaged resulting in loss of business or morale, and we may incur costs to remediate possible harm to our customers and employees or damages arising from litigation and/or to pay fines or take other action with respect to judicial or regulatory actions arising out of the incident.

7) Damage to our reputation or brands may negatively impact our Company

Our reputation and globally recognizable brands are integral to the success of our business. Because our brands engage consumers across our businesses, damage to our reputation or brands in one business may have an impact on our other brands.

8) We face risks related to environmental, social and governance matters and any related reporting obligations

U.S. and international regulators and other stakeholders are increasingly focused on environmental, social and governance matters. For example, new domestic and international laws and regulations relating to environmental, social and governance matters, including environmental sustainability, climate change, human rights and human capital management, have been adopted or are under consideration, some of which include specific, target-driven disclosure requirements or obligations. Our response has
increased our compliance costs, including from increased investment in technology and appropriate expertise and required the implementation of new reporting processes, entailing additional compliance risk.

Key performance indicators (“KPIs”)

The Company’s KPl’s are as follows:

Measure	Description	Period ended 28 September 2024 $’000	Period ended 30 September 2023 $’000
Turnover	Total revenue for the financial period	2,498,195	2,161,547
Profit	Overal profit/(loss) for the financial period	347,377	180,531

For the period ended 28 September 2024, we saw an increase in occupancy rates to 98%, a rise from the 95% rate in the prior inancial period ended 30 September 2023. We have seen an increase in average ticket price as overall demand remains strong I fiscal year 2025 as of December 2024. The Company anticipates its financial performance will maintain profitability in fiscal year 2025 due to favourable cruise industry demand coupled with the expanded capacity of the fleet from the completed Disney Treasure (October 2024) and the soon-to-be-completed Disney Destiny and Disney Adventure in Q1 fiscal year 2026.

Section 172(1) statement
As a subsidiary within the Group of companies of which The Walt Disney Company is the ultimate parent company (the “Group”), the Company is subject to organisational and management systems which enable the Board of Directors (“the Board”) to oversee governance of the activities of the Company. As is normal for large companies, the Board delegates authority for day-to-day management of the Company to the managers responsible for management of the Company. The Board ensures that when applying Group policies and delegating responsibility for operational matters to the managers, it does so with due regard to its fiduciary duties and responsibilities.

The Directors of the Company are aware of their duty under section 172 of the Companies Act 2006 to act in a way that they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole. In doing so they have considered (amongst other matters) factors (a) to (f) listed below:

1. the likely consequences of any decision in the long term;
2. the interests of the Company’s employees (also known as “Cast Members”);
3. the need to foster the Company’s business relationships with suppliers, customers (known as “Guests”) and others;
4. the impact of the Company’s operations on the community and the environment;
5. the desirability of the Company maintaining a reputation for high standards of business conduct; and
6. the need to act fairly between members of the Company.

In performing their duties under section 172, the Directors of the Company have had regard to the matters set out in section 172(1) as follows:

a) The likely consequences of any decision in the long term
We are aware that our decisions and strategies can have long-term effects on our business and its stakeholders. Therefore we aim to make well informed, fair and balanced decisions. Our key stakeholders include Crew Members, Cast Members, Guests, home ports and ports of call, regulators and suppliers who are at the forefront of our minds when making decisions. We set out below some of the decisions the Board has taken during the course of the period with a view to creating long term success for the Company and its stakeholders as a whole.

Disney Cruise Line’s fiscal year 2024 opened with The Disney Wonder’s inaugural cruises in Australia and New Zealand. The inaugural “Disney Magic at Sea” season ran from October 2023 to February 2024. The Disney Wonder returned to the South Pacific region fore a second season of sailings from October 2024 through February 2025.

In November 2023, Disney Cruise Line opened its second year-round homeport at Port Everglades in Fort Lauderdale, Florida, USA. The Disney Dream began sailing from Disney Cruise Line’s dedicated cruise terminal on 20 November 2023, followed by the Disney Magic on 9 May 2024, offering guests the opportunity to sail on a mix of three-, four- and five-night cruises to tropical destinations in The Bahamas and the Caribbean. Disney Cruise Line also revealed that its third ship in the Wish class, the Disney Destiny, will sail its maiden voyage from Port Everglades on 20 November 2025.

Disney Cruise Line’s all-new island destination in The Bahamas, Disney Lookout Cay at Lighthouse Point, opened at the end of the third quarter in fiscal year 2024. The destination offers sustainable economic opportunities for Bahamians, protects and sustains the natural beauty of the site, celebrates culture, and helps strengthen the community in Eleuthera. Disney developed less than 16 percent of the property, employed sustainable building practices, donated more than 190 acres of privately owned land to the government, while supplying up to 90 percent of the site’s power from solar energy. In celebration of the opening of Disney Lookout Cay, Disney is investing $1 million to support youth programs, school playground improvements and a community sports space, in addition to its other ongoing initiatives to support community needs. This investment also includes support from the Disney Conservation Fund for youth education focused on conservation in Central and South Eleuthera.

Disney Cruise Line shared new details in June 2024 about the Disney Adventure, which it acquired as a partially completed ship in November 2022. The Disney Adventure will sail three- and four-night voyages from Singapore beginning in Q1 fiscal year 2026 as part of a collaboration between Disney Cruise Line and Singapore Tourism Board. Disney Cruise Line estimates the passenger capacity of the 200,000-gross-ton vessel to be approximately 6,700 with around 2,500 crew members. The Disney Adventure is planned to set sail from Singapore on its maiden voyage on 15 December 2025, boasting seven different themed areas and featuring many innovative “firsts” for Disney Cruise Line.

At the start of the fourth quarter of fiscal year 2024, Disney Enterprises, Inc. and Oriental Land Co., Ltd. (“OLC”) announced a new agreement that will bring year-round Disney cruise vacations to Japan. Under the signed agreement, OLC will build and operate a Disney-branded cruise business in Japan. The ship will be constructed at Meyer Werft shipyard in Papenburg, Germany, with imaginative designs created by Walt Disney Imagineering. A sister ship to the Disney Wish, it will feature many guest-favourite venues and experiences from that ship with select modifications specially designed with Japanese guests in mind. It is expected to weigh approximately 140,000 gross tons and powered by liquefied natural gas, with about 1,250 staterooms.

Disney Cruise Line marked several milestones in the fourth quarter of fiscal year 2024 ahead of the launch of its all-new Disney Treasure. Ownership of the Disney Treasure was officially delivered to Disney Cruise Line in October before the ship embarked on its transatlantic voyage to its homeport at Port Canaveral, Florida, USA. The Disney Treasure sailed a series of preview cruises throughout the first quarter of fiscal year 2025 ahead of its maiden voyage on December 21, sailing 7-night Eastern and Western Caribbean itineraries. As part of the Wish class of ships, the Disney Treasure is approximately 140,000 gross tons with about 1,250 Guest staterooms and is powered by liquefied natural gas.

Additional details were revealed in fiscal year 2024 about the Disney Destiny, which is expected to launch in November 2025. The Disney Destiny will sail its maiden voyage from Port Everglades in Fort Lauderdale, Florida, followed by an inaugural season of four- and five-night cruises to The Bahamas and Western Caribbean, including visits to one or both of Disney Cruise Line’s island destinations, Disney Castaway Cay and Disney Lookout Cay at Lighthouse Point. The cruise line shared that the ship will embody a one-of-a-kind design, themed to “Heroes and Villains” at the heart of the many myths and legends, fairy tales and fantasies from Disney, Pixar, Marvel and Disney Parks. Sister ship to the Disney Wish and Disney Treasure, the Disney Destiny will weigh approximately 140,000 gross tons and be powered by liquefied natural gas.

Disney Cruise Line also announced in fiscal year 2024 several updates to the Disney Dream that will debut at the start of fiscal year 2025. Enhancements are being made to ship’s several youth-only spaces as well as the concierge lounge and spa. The ship’s forward funnel is being transformed into the Dream Tower Suite, an all-new two-story funnel suite themed to the Walt Disney Animation Studios film, “Fantasia”.

b) The interests of the Company’s employees

We strive to provide exceptional service that reflects our iconic brand, enabled by the passion and hard work of our Cast and Crew. We understand the importance of our employees to our long-term success and are committed to providing a safe working
environment and appropriate training and development.

Disney complies with, and in some cases exceeds, the requirements set forth in the International Labour Organization’s (“ILO’s”) Maritime Labour Convention (“MLC”) which governs almost all aspects of working aboard a ship. Crew Members are organised through a collective bargaining unit (“union”) through the Federazione Italiana Transporti (“FIT”). The current union agreement went into effect on 1 January, 2023 and is binding for four years. It stipulates compensation, benefits, working hours, and contract lengths for the range of work positions on-board.

Disney Cast and Crew Members receive a wide range of employment benefits. While on contract in service of the ship, Crew Members receive medical care by the on-board medical team. Officers are offered full health benefits year-round when signed to a contract. Crew Members have access to mental health resources through an Employer Assistance Program offered in multiple languages, as well as access to online resources and wellness content offered on-demand via Crew stateroom TVs.

In the summer of 2024, all Disney Cruise Line crew members became eligible to participate in a company sponsored retirements savings program.

In addition, Disney Cruise Line increased its free premium internet offering for crew members to help them stay connected with family and friends; as well as introduced a new break benefit to provide crew members with additional time to enjoy as they wish.

The Walt Disney Company is committed to creating a workforce of talented people that enables us to expand our reach across global markets and make a positive impact on our communities.

c) The need to foster the Company’s business relationships with suppliers, customers and others

We pride ourselves on delivering exceptional service and world-class family holidays. We have strong relationships with our suppliers and work closely with them to provide our Guests with high quality experiences and products.

Guests

Creating unforgettable holiday experiences for our Guests is the primary motivation of our dedicated Disney Cruise Line Cast and Crew Members. Disney Cruise Line is considered a leader in the cruise industry by travel professionals, hospitality industry groups, and most importantly – by our Guests. Families sailing with Disney Cruise Line expect a unique holiday experience that only Disney can deliver. At the heart of all we do is the Guest experience and satisfaction with the Disney Cruise Line product. Multiple touch points provide us with the opportunity to hear directly from our Guests about what we’re doing right and areas for improvement. Our Call Centre and Guest Communications team resolves issues brought to our attention in a timely manner, corresponding directly with any Guest who reaches out to us for assistance before, during and after their cruise. Our team is specifically trained to assist our Guests with their holiday needs and consistently receives some of the highest Guest Service satisfaction ratings within our Company.

Suppliers

Disney Cruise Line has high standards for suppliers and has a thorough process for sourcing products and services of the best quality and value. Suppliers are held to TWDC’s International Labour Standards and Code of Conduct for Suppliers. Our supply chains follow Disney policies and comply with UK government regulations. Food and beverage suppliers must follow a uniform set of TWDC guidelines that meet both Company and local standards, including conducting periodic sanitation and safety audits and maintaining liability insurance.

Disney Cruise Line also partners with travel agents for a significant source of cruise bookings. Travel agents must be a registered Member supplier in good standing with the Cruise Line Industry Association or the International Air Transport Association (“IATA”), and supply proof of all qualifying tax and other documentation required to do business as a travel agent/agency in its domestic and international markets. Travel agents and agencies must operate ethically, representing the Disney Cruise Line brand in good faith and providing accurate marketing and information about Disney Cruise Line’s products.

Port Communities
Disney Cruise Line is very mindful of our impact on local communities. We engage in an ongoing basis with all our relevant stakeholders whether port authorities, ministers of tourism, shore excursion operators, and other in-destination partners to best understand how we can best collaborate with them to maximize the positive impacts of our business on their communities. Today, the majority of cruises offered by Disney Cruise Line have at least one stop in The Bahamas. Disney Cruise Line has made significant economic contributions to The Bahamas while demonstrating a strong commitment to the environment and the community. It is estimated that Disney Cruise Line operations contribute more than $70 million toward the Bahamas gross domestic product annually.

Disney Cruise Line takes careful steps to ensure it respects the communities, environment and culture of each of its destinations through collaboration with stakeholders and relevant partners in ports of call. This includes understanding how to introduce our brand most appropriately to those communities, as well as introduce the unique character and culture of each destination to Disney Cruise Line Guests. We source products in our ports of call when it meets our quality standards, and we work with a variety of tour providers in each destination to diversify our products.

d) The impact of the Company’s operations on the community and the environment

Community
Since The Walt Disney Company’s founding more than 100 years ago, we remain deeply committed to operating with integrity, taking care of our people and doing good in our world as we grow our businesses. Our corporate social responsibility (“CSR”) efforts address the expectations of our people, consumers, communities, and investors, and help us to attract, retain, and develop talented creators and Cast Members, all of whom contribute to our business success. We take a strategic approach to setting our CSR priorities, addressing issues that are important to our businesses and to the communities where we operate. We regularly monitor issues and evolve our efforts to ensure we remain focused on the economic, environmental, and societal matters that
impact those we serve.

Through financial contributions, collaborations with nonprofit organizations, in-kind donations, and employee volunteering, Disney brings positive, meaningful, and measurable impact to our communities around the world. We are also committed to investing in our people and operating responsibly.

Disney Cruise Line strives to make a positive impact in the many places around the world where it visits and operates. Disney Cruise Line Cast and Crew Members support many charitable organizations that provide youth education programs and that enrich the environment. Crew Members lead reading education programs in schools, give to local youth organisations and bring Disney characters to entertain children in port communities around the globe. Disney VoluntEARS also donate their time to plant micro-gardens at underserved schools, lead career exploration conversations for students interested in maritime careers, raise funds for worldwide disaster relief efforts, and host regular shore clean-ups to remove litter and debris from fragile coastlines. Each year, Cast and Crew Members donate thousands of hours of their personal time to benefit worthwhile cases in port communities around the world.

For more than 25 years, Disney Cruise Line has made significant contributions to support communities in The Bahamas and its homeport communities. Key initiatives in fiscal year 2024 focused on supporting entrepreneurs and small businesses, workforce development starting at a young age, conservation and timely community needs.

During the holiday season, members of the Disney Cruise Line team – both at sea and on land – volunteered their time in the cruise line’s port communities around the world.

Continuing its ongoing support for the Eleuthera Junior Junkanoo competition and as part of The Walt Disney Company’s Disney Future Storytellers program, Disney Cruise Line increased its financial support of Junior Junkanoo Eleuthera in The Bahamas by 50% in fiscal year 2024, totaling $75,000. Disney’s support helped to provide costumes, materials and cash prizes for participating schools along with travel expenses for the winning team to compete at the national level. Disney Cruise Line also hosted a virtual workshop leading up to the competition for students across Eleuthera, connecting them with the Disney entertainment team.

Disney Cruise Line celebrated the summertime Alaska cruise season with a series of volunteer projects and onboard programs that provided Crew Members and guests with unique opportunities to make a positive impact in the local community.

To commemorate Earth Month in April 2024, Disney Cruise Line Crew Members from the Disney Wish visited the Brevard Zoo in Florida to volunteer with its animal care teams and support wildlife conservation efforts.

Disney is committed to supporting education in The Bahamas and continues to work with the Ministry of Education to inspire and educate the next generation of professionals. In 2019, Disney Cruise Line introduced a scholarship program in partnership with the LJM Maritime Academy for cadets aspiring to become ship captains and shipboard leaders. In addition, Disney Cruise Line continues to sponsor the academy’s Summer Camp program and welcomes students for day tours aboard its ships to experience first-hand what it’s like to work aboard a ship.

Disney Cruise Line furthered its support in fiscal year 2024 for Junior Achievement, an organisation that empowers youth withthe knowledge, ability and confidence to navigate their futures, drive the economy, and lead their communities. In Broward County, Florida, where the cruise line’s new Port Everglades terminal is located, Disney Cruise Line hosted an interactive career panel for dozens of students participating in Junior Achievement of South Florida’s Career Bound program, which is designed to help students build work-readiness skills and gain knowledge of local industries. Meanwhile, on the island of Eleuthera in The Bahamas, students from Junior Achievement Eleuthera met with members of the Disney Cruise Line team who spoke about careers with Disney, both on land and at sea. Following the career panel, the students also participated in a resume writing workshop with panellists. As part of its overall investment in Junior Achievement Bahamas this year, DCL supported an event called BahamaJAC in Nassau. This event is a three-day financial literacy and career exploration experience, designed specifically for Junior Achievement students across The Bahamas.

In the second quarter of fiscal year 2024 Disney Cruise Line and the University of The Bahamas announced a new hospitality and job readiness training initiative, the Leading Light Programme, bringing college-level training to local residents for the first time. Disney Cruise Line is also a founding sponsor of the Eleuthera Business Hub, in partnership with the Eleuthera Chamber of Commerce and the Small Business Development Centre and is providing financial support to small and medium-sized businesses. In 2021, DCL committed more than $1 million to fund the construction and operation of the Eleuthera Business Hub and introduce Access Accelerator Small Business Development Centre programming to the island.

At Disney Lookout Cay at Lighthouse Point, Disney Cruise Line hosted 10 job fairs and information sessions in The Bahamas throughout fiscal year 2024. Attendees had the opportunity to meet the cruise line’s recruitment team, learn about career opportunities and participate in on-site interviews. The destination created hundreds of construction-related roles for Bahamians, opened with an all-Bahamian leadership team and created nearly 200 high-quality roles for Bahamians, exceeding the original commitment in Disney’s Heads of Agreement with The Bahamian government.

Environmental
The Walt Disney Company is committed to taking meaningful and measurable action to support a healthier planet for future generations as we operate and grow our business. Our commitment to environmental stewardship goes back to our founding more than 100 years ago. Walt Disney himself said that “conservation isn’t just the business of a few people. It’s a matter that concerns all of us”.

The environmental commitments detailed below represent some of the ways Disney Cruise Line is focused on helping to build on that legacy. Our environmental policies are based on a set of guiding principles intended to drive both our long-term environmental strategy and the everyday decision-making of our leadership and Cast and Crew Members around the world.

The Walt Disney Company has made a 2030 net zero pledge and aims to establish and sustain a positive environmental legacy for Disney and for future generations. The Company has ambitious environmental goals for 2030 focused on key areas of our business where we believe we can have a significant, lasting impact and make a positive difference in protecting our planet. Goals include:

• Have a positive impact on the communities where we operate our businesses;
• Create unique content and experiences that inspire connection with our planet and al who call it home;
• Reduce the environmental impacts of our operations, products, services, suppliers, licensees and value chains;
• Promote a culture of consideration, appreciation and respect for the environment among our leaders, Cast Members and Guests;
• Work with industry partners, non-governmental organisations, academia and others to create a cleaner, safer, healthier world for future generations.

Since 1995, the Disney Conservation Fund has directed more than $130 million to community conservation programs along with the expertise of our dedicated teams to support organisations working with communities to protect wildlife, inspire action, and promote environmental resilience. A core example of Disney Planet Possible – tangible actions the company is taking to inspire optimism for a brighter, more sustainable future – Disney Conservation supports nature conservation, restoration, and rewilding; helps to empower the next generation of conservation leaders; and advances environmental resilience. In fiscal year 2024, the DCF made more than $7.5 million in grants, supporting organizations working on the ground in nearly 30 countries.

At Disney Cruise Line, we are dedicated to minimising our impact on the environment through efforts focused on reducing emissions, minimising waste, conserving water, protecting the oceans and wildlife, and more. We strive to instil positive environmental stewardship in our Cast and Crew Members and seek to inspire others through programs that engage our Guests and the communities in our ports of call.

As of 1 January 2020, the International Maritime Organisation instituted a regulation that requires all ships to use 0.5% sulfur fuel compared to 3.5% previously. Disney Cruise Line has taken this a step further by using 0.1% low sulfur fuel fleetwide at all times. In addition to LNG used onboard the Wish class, Disney Cruise Line continued in fiscal year 2024 to blend hydrotreated vegetable oil (“HVO”) into the fuel used on its Magic and Dream class ships, including while the Disney Dream sailed in UK waters. HVO is a renewable diesel that is made from sustainable sources, including recycled cooking oils and waste animal fats. Operationalising HVO at scale represents Disney Cruise Line’s continued commitment to investing in new fuels that reduce emissions as the cruise line actively explores bio-LNG, green methanol and other fuel sources to encourage their development at scale within the maritime industry.

Disney Cruise Line coordinates itineraries to ensure shore-power-capable ships sail to ports of call that offer this technology. Using shore power reduces a ship’s emissions by relying on the port’s electric grid, instead of its engines, to power onboard systems like lighting and climate control. Furthermore, itineraries and ships’ sailing speeds are optimised across the fleet to conserve fuel and reduce emissions while continuing to provide an exceptional guest experience.

As part of The Walt Disney Company’s overall efforts to reduce the amount of single-use plastics, Disney Cruise Line has taken great measures to eliminate single-use plastics onboard and its two island destinations in The Bahamas. Among other initiatives, Disney Cruise Line eliminated the use of plastic straws; replaced plastic amenity containers with refillable bath product dispensers in all guest staterooms; stopped using plastic merchandise bags fleetwide; and removed plastic cutlery, stirrers and condiment packets. Insulated paper cups are used in place of disposable polystyrene ones, and plastic bottles were replaced with recyclable aluminium ones. Refillable water stations are installed in both guest and crew member areas. Shipboard recycling processes have helped to eliminate on average more than 2,900 tons of metals, glass, paper, cardboard and plastic from traditional waste streams each year.

Disney Cruise Line has invested in technology to ensure water purity and taken steps to select earth-friendly cleaners. All Disney Cruise Line ships feature Advanced Wastewater Purification Systems (“AWPS”) that utilise natural processes to treat and purify on-board wastewater to levels far exceeding international shipping standards, and in some cases shore side potable water standards.

Disney Cruise Line has long been committed to protecting the natural beauty of The Bahamas while also prioritising reducing emissions and minimising waste. The majority of land at Disney Castaway Cay and Disney Lookout Cay at Lighthouse Point remains undeveloped and in a preserved state, where Guest activities take place on only a small area of each destination. On-site solar panels generate a majority of the electricity needs for both Disney Castaway Cay and Disney Lookout Cay at Lighthouse Point. A team of Bahamian wildlife experts continues to implement a variety of long-standing conservation initiatives in The Bahamas, and Disney Cruise Line’s Island Environmental Managers are dedicated to the implementation of all sustainability initiatives on Disney Castaway Cay and Disney Lookout Cay at Lighthouse Point.

In collaboration with Disney Cruise Line and Disney Conservation, a team of researchers has worked since 2007 to rehabilitate coral reefs in The Bahamas. In addition to corals, these reefs provide important habitats for other marine species, including endangered Nassau grouper and lobster. To protect these reefs from excess algae growth, the team relocates native long-spined sea urchins to the reefs to graze on algae, restoring balance to the ecosystem and allowing new corals to grow. Building on its long-time commitment to helping protect and restore coral reefs, Disney collaborated with other coral reef management and conservation leaders to establish of the Florida Coral Rescue Centre. This state-of-the-art facility located in Orlando safeguards vulnerable corals not yet affected by Stony Coral Tissue Loss Disease. The centre is the largest facility of its kind in the United States and is part of a national network coordinated by the Association of Zoos and Aquariums. Disney also supports the Perry Institute for Marine Science to address coral conservation and restoration across The Bahamas alongside its more than 38 partner organisations. This investment includes major funding for a similar coral rescue centre based in Nassau.

More details on Disney Cruise Line’s dedication to minimizing its impact on the environment is available at: https://disneyconnect.com/dcl-press/fact/

More details on TWDC’s environmental goals can be found at: https://impact.disney.com/environment/environmental-sustainability/

e) The desirability of the Company maintaining a reputation for high standards of business conduct

We are committed to operating our businesses with integrity and adopting governance policies that promote the thoughtful and independent representation of our stakeholders’ interests. The Board of Directors has adopted Corporate Governance Guidelines which address, among other things, the composition and functions of the Board of Directors. Our Board of Directors is also expected to uphold our Code of Business Conduct. Similarly, the Group Company’s Standards of Business Conduct are applicable to all Cast Members of the Company including Board Members.

We regularly engage our leaders and Cast Members on these Standards through training and other forms of communication. It is compulsory that all office-based Cast Members complete the mandatory online courses, examples include: Standards of Business
Conduct, Bribery and Avoiding Corrupt Business Practices.

Acting responsibly and conducting our business ethically is an integral part of our brand.

f) The need to act fairly as between members of the Company

During the financial period, the Company was a wholly owned subsidiary of Wedco EMEA Ventures Limited, the Company is a wholly owned member of a group of companies whose ultimate parent Company is The Walt Disney Company (TWDC). Magical Cruise Company, Limited is consolidated within TWDC results as part of the Experiences Segment. Our parent company as well as TWDC are aware of key decisions and the financial performance of the Company and take a keen interest in the strategies and future outlook of the Company.

Non-financial and sustainability information statement

1. Introduction

Effective for periods commencing on or after 6 April 2022, the Climate-related Financial Disclosure Regulations 2022 (“Regulations”) were introduced in the UK, requiring certain qualifying companies to report on principal climate-related matters and their impact on the business. For the financial period ended 28 September 2024 (“financial period 2024”), Magical Cruise Company Limited, trading as Disney Cruise Line (the “Company”) is required to comply with the Regulations.

This disclosure has been prepared in accordance with the Regulations and provides the required information.

The main activity of the Company is providing travel experiences on cruise ships and in various coastal locations. The Company is actively monitoring the potential climate-related risks (physical and transition) and opportunities (as indicated in section 3 below), that could reasonably be expected to impact the Company. As one part of its strategy to mitigate the risk, the Company contributes to the Group’s science-based climate-related targets.

2. Governance

The Company has a number of people working in key functions, responsible for assessing and managing day-to-day climate-related risks and opportunities associated with its business. This includes a group dedicated to safety, sustainability and medical operations, a group dedicated to maritime and engineering operations and a group dedicated to port strategy. The leadership of these teams, amongst others, provide regular updates to the Steering Committee or the relevant members of the Disney Signature Experiences (DSE) Leadership Team, as outlined below.

Environmental Committees for each ship meet monthly, with a distinct Company Environmental Committee meeting on an ad hoc basis. The Company Environmental Committee include representation from a number of expert functions, including but not limited to the Vice President of safety, sustainability and medical operations, Director of Environmental Affairs, Environmental Compliance Managers, Environmental Technical Auditors, Island Environmental and Operations Directors and Managers, Safety Managers, Nautical and Marine Operations Managers, Senior Vice President for Global Maritime and Engineering Operations, Legal and an environmental officer from each of the Company’s ships, amongst others. The Company Environmental Committee meeting identifies, assesses and manages specific climate-related risks, planning, compliance, and practice in accordance with the strategic policies approved by the Company’s Board of Directors. This Committee also informs, through the Vice President of safety, sustainability and medical operations, the Steering Committee on environmental and climate-related matters.

As outlined in the above chart, a Steering Committee for the Company meets weekly and includes representatives from all core business functions within the Company, including but not limited to Legal, Marine and Engineering, Marketing, Revenue Management, Digital, Hotel Operations, Entertainment, Risk Management, Finance, Security, Strategy, New Build, and Dry Dock. One member of the Steering Committee is also on the Company’s Board of Directors. As outlined above, the Steering Committee is briefed by the Vice President of safety, sustainability and medical operations and considers potential recommendations to present to the Company’s Board of Directors regarding the management of climate-related issues, including but not limited to fuel efficiency and energy conservation, waste minimisation, water purification, environmental efforts, weather response, risk planning and strategy, as applicable.

The work of the Steering Committee is complemented by that of the DSE Leadership team, which comprises three members of the Company’s Board of Directors and meets weekly. The DSE Leadership team is briefed on the Company’s climate-related risks and opportunities, including environmental policy and compliance relevant to the Company’s operations, by the Vice President of safety, sustainability and medical operations.

During financial period 2024 the Directors of the Company’s Board were formally updated on climate-related, environmental and sustainability matters four times by the Vice President of safety, sustainability and medical operations. Topics covered included emissions and fuel, water, waste, and sustainable design.

The Company’s ultimate parent company is The Walt Disney Company, a company incorporated in the United States of America, whose Board of Directors is responsible for oversight of Environmental, Social and Governance (“ESG”) programs and reporting for the Group.

The Walt Disney Company’s Board of Directors has established committees to facilitate and assist in the execution of its responsibilities. The Governance and Nominating Committee, Audit Committee and Compensation Committee are comprised entirely of independent Directors. The Walt Disney Company posts the charters of each of these committees on its website.

Corporate functions at Group level within the Finance, Legal and Global Affairs and Enterprise Risk Management organisations lend their expertise to assessing and managing climate-related risks and opportunities for the Company, including but not limited to: insurable risk, security and financial governance, government affairs, environmental sustainability, and public policy and compliance.

The Group’s Global Public Policy Environmental Sustainability Team collaborates across the enterprise to set Group environmental goals and policies. The Global Public Policy Environmental Sustainability team at Group level also interacts with the Company’s safety, sustainability and medical operations team. These teams together have responsibility for oversight of the Company’s efforts towards meeting the Group’s environmental goals.

Leadership and key functions with responsibility for environmental sustainability matters at both Company and Group level collaborated throughout financial period 2024, including on strategies related to climate-related risk management. In financial period 2024, the advisory committee on climate-related matters, referenced in Chart 1 above, was formed and the frequency of updates on climate-related issues to the Company’s Board was increased. In addition, a Board Director with oversight of climate, environment, and sustainability-related issues was appointed.

3. Risk Management

Overview

The Company is responsible for identifying climate-related risks and opportunities, including those that impact its business over the short, medium and long-term through regular policy and business assessments with the input of relevant teams from the Group including those with responsibility for Environmental Sustainability, Legal and Global Affairs, Finance and ESG reporting. It employs a mix of general risk management tools and other tools specific to understanding climate impacts. It identifies significant physical and transition risks and opportunities through multi-disciplinary management, market-based assessment, qualitative scenario analysis, and other tools and approaches. For example, the Company maintains a risk register through which climate risks are assessed and managed in the context of operational hazards such as extreme weather events on cruise routes. This is done via a Continuity Planning Tool that is managed by the Company’s Vice President of safety, sustainability and medical operations.

To manage the potential financial impact of potential risks, and support business continuity, the Group uses risk financing strategies including self-insurance, contractual risk transfer, commercial insurance, portfolio diversification and alternative risk financing techniques. The Group’s Enterprise Risk Management function provides insights by working across the entire Group, together with business segments and units to help identify, assess, and mitigate operational risks-including those related to environmental matters-with these risk financing strategies. In addition, the Company addresses risks specific to climate through asset planning, resilience planning, and through emissions reduction efforts in support of the Group emissions reduction targets. Please refer to Section 5 for further detail on the Group’s targets, the Company’s targets, and performance against those targets.

Risk Identification Process

In 2023, the Company engaged an independent third party to assist in its assessment of climate-related risks and opportunities across the short, medium and long-term. The Company and relevant legal and public policy teams in the Group track emerging climate-related policies and regulations in sectors and regions where it operates.

In December 2023 and the first calendar quarter of 2024, the Company conducted a dedicated climate risk and opportunity identification and assessment process to augment its regular, ongoing assessment of risks and opportunities. As part of this analysis, the Company’s operations and strategies were assumed to remain at 2023 levels, however the model assumed that the cruise industry adapted to the evolving temperature pathways over the short to long-term time horizon.

The process began with an inventory of potential risks and opportunities based on multiple sources including the mandatory climate-related financial disclosures by publicly quoted companies, large private companies and LLPs non-binding guidance, the Taskforce on Climate-Related Financial Disclosures Implementation Guidance, input from an external expert firm and from relevant experts inside the Company. The inventory included transition risks associated with potential regulatory and market shifts associated with a transition to a low-carbon economy, and opportunities arising from efforts to mitigate and adapt to climate change (e.g. low carbon products, new markets and energy savings). It also considered physical risks associated with potential exacerbation of physical hazards associated with climate change.

Transition risks considered included:

• Shifts in labour prices
• New mandates and regulations
• Reduced spend by customers
• Increased carbon pricing
• Increased cost of raw materials
• Changes in energy and fuel costs
• Uncertainty in policy continuity
• Reputational risks associated with environmental matters
• Fluctuating travel costs
• Changes in business seasonality
• Supply chain risk for third parties

Physical risks considered included:

• Wind
• Thunderstorm
• Precipitation
• Flood
• Hail
• Heat •
• Drought
• Wildfire
• Cold

The Company revisited the original 2023 assessment to confirm whether there had been significant changes to the business structure and underlying climate-related risks which would require a fundamental update to the financial period 2023 conclusions for financial period 2024 reporting. It was confirmed that there had been no significant changes that would necessitate such an update.

Risk Assessment Process

Following a broad business review which considered the potential impacts of all the above to the Company’s business, a long-list of potential climate-related transition and physical risks and opportunities were identified for further evaluation. A review was conducted using relevant Group and Company documents and data, supplemented with internal experts’ judgement, to develop this long-list. Consideration was given to the potential impacts of the above-mentioned risks and opportunities to the Company’s business. The potential financial impacts of these risks and opportunities were assessed against the relevant elements of the Company’s Income Statement and Statement of Financial Position, in addition to other factors including the ownership structure of physical sites and how critical these sites are to the Company.

A series of internal workshops was then conducted in light of the above, with cross-functional experts from the Company, the Group and external advisors, to refine the long-list into a short-list of potential principal climate-related risks and opportunities. At this stage, the assessment did not consider actions already in place or being considered to mitigate risks or take advantage of opportunities.

These short-listed risks and opportunities were carried forward for detailed risk mapping and scenario analysis across three dimensions:

• Impact: the potential financial impact of the risk or opportunity
• Likelihood: the probability of the risk or opportunity occurring
• Timeframe: potential trends associated with the risk or opportunity, over three-time horizons (see table below)

Timeframe	Definition	Rationale
Short	2030	Aligned to the timing of the Company’s forecasting and planning process and the Group’s 2030 environmental goals.
Medium	2040	Aligned with timing of the Company’s medium term forecast and planning process.
Long	2050	Aligned with UN (United Nations) net-zero emissions goal time horizon.

The process taken for scenario analysis of shortlisted risks and opportunities included but was not limited to:

• Use of economic projections from a third party’s Integrated Assessment Model (IAM) to help provide projections for potential fuel price increases and carbon taxes in different climate scenarios.
• Use of a third party physical risk analysis to help provide projections for potential physical risk impacts in different climate scenarios.

4. Principal Risks

Based on this assessment and related scenario analysis, the Board of Directors concluded and have reconfirmed for financial period 2024 that the Company faces three principal physical risks and three principal transition risks, per table 4.1. The rationale for selecting these risks is provided in table 4.2. as well as the Board of Director’s view on the actual and potential impacts on its business model and strategy is provided in table 4.3.

Table 4.1

#	Risk Type	Principal Risk
1	Transition	Risk from increased fuel price
2	Transition	Risk from direct carbon pricing mechanisms
3	Physical	Risk of site damage from climate hazards in Bahamas
4	Physical	Risk of business interruption from exposure to physical climate hazards in Bahamas
5	Physical	Risk of business interruption from exposure to physical climate hazards in Florida
6	Transition	Risk of cruise travel demand reduction due to consumers’ changing climate values

Table 4.2

#	Principal Risk
1	Risk from increased fuel prices	Fuel is a significant portion of overall costs. The Company currently uses a range of fuels including Marine Diesel Oil (MDO), Liquified Natural Gas (LNG) and Hydrotreated Vegetable Oil (HVO). The Company is also exploring potential use of green methanol. Each faces price pressure. Lower carbon fuels such as HVO and green methanol come with some price premiums and also face price pressure because supply may remain low as the nascent industry develops, and demand is likely to grow, as many players in marine shipping and cruise line seek to actively decarbonise. Fossil-fuels such as MDO and LNG could experience significant price increases primarily driven by the adoption of carbon pricing mechanisms.
2	Risk related to direct carbon pricing mechanisms	The Company operates in jurisdictions with mandatory carbon pricing mechanisms, with some jurisdictions implementing measures on a relatively fast timeline. For example, the European Union Emissions Trading System (“EU ETS”) has included the maritime sector from 2024. In addition, the IMO 2023 strategy for Greenhouse Gas (“GHG”) emissions reduction calls for global pricing mechanisms to reduce the gap between sustainable and convention fuels. Actual carbon prices may be different in different regions.
3	Risk of site damage from climate hazards in The Bahamas	The Company has an investment in a subsidiary which owns two island destinations in The Bahamas: Castaway Cay and Lookout Cay. Castaway Cay has already faced site damage due to hurricanes. Lookout Cay which opened in June 2024, potentially faces similar exposure to hurricane-related hazards.
4	Risk of business interruption from exposure to physical climate hazards in The Bahamas	The Company operates a significant number of cruise routes to and around two destinations in the Bahamas, Castaway Cay and Lookout Cay. Castaway Cay has previously faced business interruption due to hurricanes, while Lookout Cay, which opened in June 2024, faces similar exposure to hurricane-related business-interruption hazards. There is a risk that business interruption due to physical climate hazard may impact sailings and potentially revenue streams of the Company.
5	Risk of business interruption due to exposure to physical climate hazards in Florida	The Company relies on three main sites in Florida: A Cruise terminal at Port Canaveral in coastal Central Florida; a Cruise terminal at Port Everglades in coastal South Florida; and a headquarters office in Celebration in inland Central Florida. While the Company does not own these locations, each has previously faced the impact of hurricanes. Each of these Florida locations face business interruption risks that could remain significant or worsen as a result of climate change. Many of the Company’s itineraries depart from these terminals and sail in Caribbean waters that experience hurricanes. Business interruptions in the form of forced cancellations, rescheduling and rebooking of sailings have already occurred.
6	Risk of cruise travel demand reduction due to consumers’ changing climate values	Ticket sales constitute most of the Company’s total revenue and are potentially at risk if there is reduction in cruise sector activity as a result of environmental concerns. While this is not evident in consumer interest and bookings today, the Company expects some consumers may evaluate climate impacts of different travel options, reducing demand for long-distance travel or travel in hard to abate sectors like air travel and large ship cruising.

Table 4.3

#	Principal risk	Impacts on the Company’s business model and strategy
1	Risk from increased fuel prices	There are two main impacts of the risk of increased fuel prices on the Company’s business model and strategy: (A) the Company’s use of multiple levers to reduce fuel use and emissions throughout the fleet; and (B) the Company’s use of multiple methods to reduce exposure to fuel price fluctuations through fuel supply diversification. A. The Company employs several levers to reduce fuel use and GHG emissions, as part of a comprehensive emissions reduction strategy. For example: (1) New ship energy efficiency. The Company added the Disney Wish to the fleet in 2022. This, and future ships in this ship class, are designed to comply with the more stringent Energy Efficiency Design Index (EEDI) regulation that is required by the International Maritime Organization. EEDI requires that new build ships attain a 5 percent calculated reduction in emissions based on the 2008 baseline. Some of these design standards include enhanced hull hydrodynamic design, waste heat recovery, and efficient lighting systems. (2) Existing ship energy efficiency. The Company has established energy efficiency programs that extend beyond the new build program and have been integrated into the operation of the existing fleet. Each ship class has implemented a variety of programs aimed to improve energy and fuel efficiency. Similarly to the EEDI, all existing ships have been assigned an Energy Efficiency Existing Ship Index (EEXI), which is an assessment of the ship’s efficiency based on its current design and installed equipment. The EEXI sets a specific limit on propulsion power for each ship that is designed to limit, by operational control, a ship’s emissions. The EEXI is determined by the ship’s classification society, Lloyd’s Register in the case of the MCCL fleet, and approved by The Bahamas Maritime Authority. A ship may only exceed the power limits in emergency conditions. Throughout the Company’s fleet, efforts have been initiated to reduce energy demand with an emphasis on lighting improvements and Heating Ventilation and Cooling (HVAC) upgrades. Conventional lighting in the ships have been replaced with LED lighting. Waste heat generated for propulsion is recycled to improve the efficiency of the HVAC cooling process. Additional efficiency enhancement projects are in process, focused on a variety of onboard systems, ranging from reverse osmosis to projection systems. Ships have also implemented efficiency projects focused on propulsion including propeller enhancements, propulsion control, and reducing friction. The Disney Magic and Disney Wonder have implemented an Air Lubrication System which creates bubbles along the hull to decrease the friction between the hull and water. Ships have also implemented new hull coatings to remove biofouling to reduce drag and the Company has implemented a fleetwide system of routine hull cleaning to regularly remove hull growth which results in friction and inefficiency. Innovative hull cleaning technologies are being explored through the Company’s Research and Development program. Increasing shore supplied electricity. Shore supplied electricity (SSE) provides an excellent opportunity to reduce emissions and Disney Magic and Disney Wonder are configured to receive SSE wherever it is available. Currently, the only SSE available is on the US West Coast and Canada and in select ports in Europe. Disney Dream was upgraded to be SSE capable in 2024, Disney Fantasy will be upgraded in 2025. The Group regularly evaluates the energy efficiency of land-based electricity grids to assess whether ships connected to SSE grids are more sustainable than the shipboard energy systems. Using renewable electricity. The Company maintains two island locations in The Bahamas that generate renewable electricity through installed solar energy systems. The system at Castaway Cay was commissioned in 2023 and is generating power for the facility. The Castaway Cay solar array and battery storage system contribute to the electricity currently consumed on the island, and the Company’s objective is to increase this to 100% by 2030. Lookout Cay, which opened in 2024, is designed to operate with 90% of the destination’s electricity generated from renewable sources, increasing to near 100% by 2030. Using renewable electricity reduces the demand for diesel fuel to be supplied from ships and trucks to power generators. Electrification of transportation, watercraft and other equipment is also being pursued to leverage the renewables on island. (5) Optimising itineraries. Reducing fuel consumption by optimising itineraries for fuel efficiency is another lever employed by the Company. Ships engines have optimal loads for efficiency, that translate to a range of speed that is most efficient from an energy management perspective. Ships frequently select routes that avoid severe weather systems, which require significant increases in power to maintain navigation safety. Additional itinerary optimisations will be considered in the future to reduce speed and emissions. The implementation of facial recognition systems by US Customs and Border Protection (CBP) in the United States allows for the more efficient disembarkation of guests, improving the efficiency of port operations, and resulting in less port time and the potential for speed reduction by ships. These efforts are funded through standard short term operational budget allocations, secured long-term budgets, among others. B. The Company employs several levers to reduce exposure to fuel price fluctuations, while continuing to pursue its environmental goals (1) Fuel type diversification: The Company operates using three different fuel types, with scope for more in future. Hydrotreated vegetable oil (HVO) is an alternative to Marine Diesel Oil (MDO) and both products will be related to the same underlying markets and subject to the same price triggers. However, they do not move in parallel and therefore there is an opportunity for MCCL to adjust the type of fuel purchased based on price and taking into accounts its emissions goals. Purchase location can also affect the price differential, so there is further strategic opportunity in planning where to purchase each fuel type. The new vessels (one currently in operation, at least another two to follow) will operate using Liquified Natural Gas (LNG), the market rates of which do not necessarily reflect the rates of MDO. Therefore, by operating two distinct fuel types across the fleet, the Company can potentially reduce its exposure to price increases in one of those markets. Price hedging strategies: The Company is currently able to hedge Marine Diesel Oil (MDO) out of Port Canaveral and Port Everglades, securing effective prices for bunkers in these locations. Hedge policy prescribes a 90% hedge maximum within the fiscal year, the equivalent of approximately 50% of total MDO volume. The Company may hedge at least two years out, but the hedge policy maximum percentage is lower for future periods. Additionally, the Company can and has entered into fixed contract agreements with the Liquified Natural Gas (LNG) supplier, which has the same effect as a hedge. All LNG is currently delivered by a single supplier in Florida and therefore the Company is able to protect against price fluctuations on the vast majority of its LNG consumption (in current fiscal year). The Company continues to explore opportunities for hedging fuel in different locations. Fuel vendor diversification: Every year the Company negotiates with MDO suppliers in Port Everglades/Miami to provide fuel for the entire year under contract conditions that enable hedge accounting. This process enables the Company to compare the fuel premiums and quality of service from each prospective supplier. For locations around the world, the Company uses an agent to negotiate and source local fuel on their behalf. c) Securing future supply through offtake agreements: Due to the fledgling nature of the LNG market, the Company entered an agreement, following negotiations with different suppliers, to take a certain amount of volume over a period of ten (later revised to twelve) years from one particular supplier. This gave the supplier the confidence and security to invest in the necessary infrastructure, while the Company can rely on the availability of LNG for its new LNG-powered ships for the foreseeable future. A pricing structure for LNG deliveries was also put in place as part of this agreement.
2	Risk related to direct carbon pricing mechanisms	1. During the period of transition of implementation to a carbon pricing mechanisms, the Company is evaluating different strategies to reduce financial exposure associated with the purchase of allowances taking into account that any imbalance in carbon pricing mechanisms may only be temporary. For example, a global pricing mechanism as is being considered by the IMO could potentially level the playing field among regions. The Company uses a minimum of a ten-year outlook when making fuel and efficiency project decisions, allowing for consideration of future carbon pricing impacts. Notwithstanding the fact that the Company is implementing a comprehensive emissions reduction strategy, the Company will continue to face financial risk due to the carbon pricing mechanisms enacted by the European Union and in development by the IMO. While this financial risk is currently in effect in Europe, the implementation of a global pricing mechanism by 2027 by the IMO, could serve to create a uniform carbon pricing mechanism that will affect all operations. Therefore the emissions reduction strategy and resulting decrease in emissions, will reduce the related financial consequences of direct carbon pricing mechanisms. That said, even assuming the Company contributes to the group achieving its 2030 emissions reduction targets, there will still be expenses associated with purchase of carbon credits. These future carbon credit expenses have been incorporated into financial plans associated with the Group’s 2030 goals. In participating the EU Emissions Trading System (ETS), Italy was designated as the Administrative Authority for the Company, primarily based on the concentration of the Company’s operations from Italian ports and destinations. Allowances based on the quantity of emissions u Europe will be purchased and surrendered to the Administrative Authority based on 40% o emissions in 2024. The level of emissions allowances required to be purchased rises to 70% in 2025 and 100% in 2026. To reduce the volatility of exposure associated with allowances, the Company regularly assesses market timing and locked in a specific amount of allowances based on the forecast emissions for 2024 associated with the deployment of the Disney Dream to Europe.
3	Risk of site damage from climate hazards in Bahamas	Castaway Cay facilities have been designed to be resilient, specifically constructed to mitigate the impact of severe weather events to allow for quick restoration and recovery. Permanent facilities (buildings, piers, and roads) are positioned above sea level and not currently modelled to be significantly at risk from sea level rise. Lookout Cay is constructed similarly. Both island destinations use a mix of sustainable energy (solar energy) and diesel fuel to generate electricity and power for vehicles. Both island destinations have used natural elements to help protect constructed facilities and prevent erosion of the sand and land features.
4	Risk of business interruption from exposure to physical climate hazards in Bahamas	As an element of the Company’s continuity of operations program, the Company remains aware of severe weather systems that may affect ship and island operations. The Company maintains a 24-hour operations centre in Florida as an alert and notification centre that is focused on hazards that could potentially impact the Company operations. In the event that severe weather poses a risk to a ship’s itinerary, a multi-disciplinary executive team (the Crisis Management Team) convenes to establish an ternative itinerary to avoid hazard. Because ships are highly mobile, itineraries may be adjusted significantly to operate a ship well away from hazards. The Hurricane season in the Southeast United States and Caribbean Sea currently extends from June 1 to November 30, and the collective international government and business sectors throughout the region have developed extensive programs to prepare for and respond to natural disasters.
5	Risk of business interruption due to exposure to physical climate hazards in Florida	When a severe weather system poses a risk to operations in Florida, the Company’s ships move in a coordinated fashion with other cruise ships to avoid the impacted port and shift to another if the primary port is unusable, thereby reducing or mitigating service disruption. Based on the geographic dispersion of Port Canaveral and Port Everglades, the Company has the option to divert cruises.
6	Risk of cruise travel demand reduction due to consumers’ changing climate values	The Company has employed a long-established record focused on environmental programs. These innovative initiatives include commitments to biodiversity, minimising impact on freshwater sources, energy conservation and fuel reduction, recycling and waste reduction, sustainable design, and collaborations through programs like the Disney Conservation Fund. If consumer interests shift away from the cruise industry due to environmental concerns, the Company’s long history of dedication to the environment could help mitigate shifts faced by the other members of the industry.

5. Strategy

The Company’s strategy to mitigate its principal risks has been developed using an understanding of current risks facing the Company. However, the Company has also considered these risks under two hypothetical climate scenarios with varying consequences:

1. A relatively low carbon future with global temperature increase constrained to 1.5°C. and substantial socio-economic transition and policy changes.
2. A relatively high carbon future with global temperature increase of 4°C and substantially more severe physical risks.

These scenarios correspond to IPCC (Intergovernmental Panel on Climate Change) Representative Concentration Pathways (RCP) 4.5 and 8.5 respectively and were chosen to reflect two significantly different hypothetical futures, each with very different potential operational and financial impacts. The Company’s scenario analysis was qualitative in nature and its assessment of potential impact was limited to the extent to which the above trends could change over time through to 2050. The potential consequences from transition measures which might be anticipated within the 1.5°C scenario were assessed relative to a counterfactual baseline 4°C scenario.

While the Company has not completed a full quantitative assessment of the potential financial consequences of these risks, it has estimated ranges of potential financial consequence based on broad assumptions in these hypothetical future scenarios.

The Company continues to monitor and assess these risks as they develop, but based on its current qualitative assessment, the Board of Directors considers that the Company has adequate mitigating measures in place to manage the impact of these physical and transitional risks. As such, the Board of Directors considers the Company’s business model and strategy are resilient to both of these potential scenarios, as detailed in table 5.1.

Table 5.1
The risk matrix used to assign low to very high risk uses following variables:

1. Impact: the extent to which a risk event could affect the Company’s organization’s objectives and strategy. in this case we qualitatively assessed potential financial impact.
2. Likelihood: Refers to the potential probability of a risk event occurring.

The risk rating is based on a potential qualitative impact rating using the following logic:

Potential qualitative impact rating =Contribution to P&L %( costs or profit potentially at risk) X Variance between 1.5°C and 4°C scenarios (% difference between two scenarios)

6. Metrics and Targets

The Company contributes to climate-related targets established at the Group level.

At the Group level, there has been a long-term goal set in 2009 to achieve net zero greenhouse gas emissions from direct operations (Scope 1 and 2) by 2030, and the Company remains committed to this goal.

In alignment with the Intergovernmental Panel on Climate Change and the Paris Climate Agreement, the Group has set quantitative and timebound absolute reduction goals for emissions from its direct operations (Scope 1 and 2), and absolute reduction and supplier and licensee engagement goals for emissions from its value chain (Scope 3). In calendar year 2023, these goals were validated by the Science Based Targets Initiative (SBTi).

At Group level, metrics have been developed for scope 1 and 2 targets and performance has been tracked since 2009. At the Group level, prior fiscal year and historic Scope 3 emissions performance is published within the Group’s Sustainability and Social Impact report (SS&I Report). The latest report can be found at impact.disney.com.

By driving reductions in the overall Group-level carbon footprint, emissions targets help the Company manage the risks associated with fuel prices, carbon taxes and ticket sales. The Company has also set a target and key performance indicators for risks associated with business interruption associated with site damage in The Bahamas.

The Directors do not currently obtain independent assurance over the disclosed metrics as there is no requirement to do so.

Group-level goals and targets associated with emissions from its direct operations (scope I and 2)

• Reduce absolute emissions from direct operations (Scope 1 and 2) by 46.2% by 2030, against a fiscal 2019 baseline.
• Achieve net zero emissions for direct operations by 2030.
• Purchase or produce 100% zero carbon electricity by 2030.
• Invest in natural climate solutions (in sufficient quantities to reach net zero in 2030 after 46.2% absolute reduction)

Group-level goals and targets associated with emissions from its value chain (scope 3)

• Reduce Scope 3 emissions through an absolute reduction and supplier and licensee engagement:
  • Reduce absolute Scope 3 GHG emissions from purchased goods and services, capital goods, fuel- and energy-related activities, upstream transportation and distribution, waste generated in operations, business travel, employee commuting, and franchises, by a minimum of 27.5% by 2030 against a fiscal 2019 baseline
  • Commit that 20% of suppliers, measured by emissions covering purchased goods and services, will have science-based targets by 2027
  • Commit that 72% of licensees, measured by emissions covering franchises, will have science-based targets by 2027

At the Group level, recent year performance and progress to the Group’s scope 1 and 2 targets is provided in table 6.1:

The Company is planning to contribute to the Group level targets by establishing a cap for emissions growth in ways that allow for the Group level targets to be realistically pursued. In addition, the Company has established intensity targets for scope 1 and 2 emissions.

Company-level goal and target associated with emissions from its direct operations (scope 1 and 2)

The Company is undergoing significant growth, and as such, in line with Cruise industry peers, has established targets focused on reducing emission intensity per passenger cruise day (“PCD”). Base year and performance year data is provided in table 6.2. Fiscal year 2020-2022 performance is not provided due to the unusual nature of the COVID period.

Company-level Goal/Target	Company-level Goal/Target	Company FY19	Company FY20-22	Company FY23	Company FY24	Performance to Company Target (FY19-FY24)
Reduce emissions intensity by 40% by 2030, against a FY2019 baseline	Scope 1 and 2 emissions (Metric Tons CO2 Equivalent per PCD)	0.123	Not applicable (COVID anomaly)	0.119	0.105	Company has achieved a 14% reduction against FY19.

Given a post-COVID return to business, emissions intensity per PCD remained stable between 2019 and 2023. The Company has achieved a 14% reduction in emissions intensity against FY19 by FY24. This has arisen due to the Company increasing the use of HVO, reduced consumption through speed reductions and shipboard energy efficiency prójects, and used shore power in lieu of ship-generated energy at certain ports.

The Company plans to continue using the levers described above to decouple business growth from increasing absolute emissions, and therefore drive emissions intensity per PCD down further in pursuit of its target.

Company-level goal and target associated with site damage in The Bahamas

As well as its emissions intensity target, the Company has established a target associated with managing the risk of business disruption due to potential site damage in The Bahamas. Performance year and comparative prior year data is provided in table

Table 6.3

Company-level Goal/Target (Number of operational days lost at the Islands as a consequence of severe weather events.)	Compay FY23	Compay FY24	Performance to Company Target (FY23-FY24)
Zero operational days lost as a consequence of severe weather events	Zero Days	Zero Days	Target met into all reportable years

This target focuses on the resilience of the island destinations operated by the Company’s subsidiary, DCL Island Development, Ltd., in the Bahamas: Castaway Cay and Lookout Cay. The premise of the target is that the sites are built in ways that seek to limit or avoid significant site damage during and after severe weather events. As such, once any potential severe weather events subside and sailing to these destinations is considered safe, the target will be met if sailings can proceed to the destinations.

Continuously Improving Measurement and Monitoring

The Company captures and reports emissions data by vessel and island destination, inputs the data in the Group’s corporate system of record, and utilises this single source of information to build and deliver dashboards and performance metrics throughout the organisation to increase awareness and engagement. The Company reports in alignment with multiple organisations including IMO requirements, EU MRV, UK MRV and Group commitments.

Volumetric emissions generated by source and type are reported, as well as the operational data needed to calculate intensity metrics. Emissions intensity is utilised to articulate efficiency gains per experience delivered during a period of significant business growth.

In addition to volumetric and intensity calculations, the Company monitors percent renewable fuel and energy, as well as percent non-potable source water, as it strives to maximize these renewable sources.

7. Key Performance Indicators (KPIs)

At the Group level, three KPis are used to assess progress against public targets:

• Reduction in absolute Scope I and 2 emissions (market based).
• Reduction in net emissions (Scope I and 2, market based).
• Increase in 100% zero carbon electricity.
• Reduction in absolute Scope 3 emissions from purchased goods and services, capital goods, fuel- and energy-related activities, upstream transportation and distribution, waste generated in operations, business travel, employee commuting, and franchises.

Calculations for progrecs towards reduction in absolute Scope 1 & 2 emissions at the Group level are based on the following definition and rationale:

1. Absolute scope 1 and 2 GHG emissions are measured and calculated with reference to the principles in the World Resources Institute and the World Business Counsel for Sustainable Development Greenhouse Gas Protocol’s “A Corporate Accounting and Reporting Standard, 2004 Revised Edition”.

2. The KPI to assess progress on absolute emissions is calculated as follows:

1. Total scope 1 and 2 emissions in the prior fiscal year
2. Total scope 1 and 2 emissions in the baseline fiscal year (FY 2019)
3. Difference between prior year and baseline year, in percentage terms

Calculations for progress towards reduction in net emissions at the Group level are based on the following definitions and rationale:

1. Net emissions are defined as scope 1 emissions + Scope 2 emissions (market based) – carbon credits. Market-based emissions are used where available in calculating carbon credit retirements, total emissions, and net emissions. Scope 2 emissions (market-based) include emission reductions attributed to utility green power purchases, power purchase agreements, and unbundled energy attribute certificates. The Group will have achieved its 2030 “net zero emissions” goal when “net emissions,” as defined above, equals zero. The Group’s approach to carbon credits can be found in the Natural Climate Solutions White Paper and can be summarised as carbon credits are from projects developed according to recognised standards (e.g., Climate Action Reserve, Verified Carbon Standard, Gold Standard) and are retired annually. All credits are verified by accredited third-party reviewers.
2. The KPI to assess progress on net emissions is calculated as follows:

1. Net emissions (based on the above definition) in the prior fiscal year.
2. Net emissions in the baseline fiscal year (FY 2019).
3. Difference between prior year and baseline year, in percentage terms.

Calculations for progress towards increase in 100% zero carbon electricity at the Group level are based on the following definition and rationale:

1. The Group defines zero carbon electricity as any type of electricity generation that does not generate GHGs, such as solar, wind, geothermal, nuclear, and large-scale hydropower. Percentage zero carbon electricity is zero carbon electricity consumption divided by total electricity consumption.
2. Per the Group’s goal statement to “Purchase or produce 100% zero carbon electricity”, the quantity of zero carbon electricity counted is either purchased from the grid or through power purchase agreements or produced by the Group.
3. Since there is no formal base year for this goal, the KPI to assess progress towards 100% zero carbon electricity is percentage point increase from the prior year. 100% zero carbon electricity is percentage point increase from the prior year.

At the Company level, the following KPI is used to assess progress toward the emission intensity reduction target:

• Reduction in scope 1 and 2 emissions (market based) per passenger cruise day.

Calculations for progress towards this emissions intensity target are based on the following logic:

1. Total scope 1 and 2 emissions (market based) divided by number of passenger cruise days in the prior fiscal year
2. Total scope I and 2 missions (markct based) divided by number of passenger cruise days in the baseline ycar (FY 2019)
3. Difference between prior year and baseline year, in percentage terms.

At the Company level, the following KPI is used to assess progress toward the site damage target:

• Number of operational days lost as a direct consequence of severe weather events

Calculations for progress towards this site damage target are based on the following rationale:

1. A severe weather event is defined as a named storm, or severe weather that results in no sailing to one or both island site in The Bahamas
2. Once the severe weather event has passed, and it is safe to sail, it is determined if guest visitation is possible at one or other of The Bahamas island sites
3. If guest visitation is not possible after the severe weather event has passed and it is safe to sail, then that is deemed an operational day lost and therefore implies non-achievement of the target.

Approved by the Board of Directors on 1 June 2025 and signed on its behalf on 18 June 2025 by:

T L Wilson
Director

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For FY24, Disney Cruise Line reported a profit of $347,377,000. Revenue and operating income improved compared to the prior year, primarily due to higher average ticket prices and an increase in passenger cruise days. These factors were partially offset by costs associated with fleet additions (including the Disney Treasure, delivered in October 2024, and the Disney Adventure, scheduled for delivery in Q1 fiscal year 2026), inflation, and dry dock costs.

Furthermore, the Company’s principal activity is the operation of luxury cruise vessels. It is considered that the Company’s activities will remain unchanged for the foreseeable future.

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