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                          UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                     WASHINGTON, D.C. 20549

                            FORM 20-F
(Mark One)
[ ]  REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or (g)
             OF THE SECURITIES EXCHANGE ACT OF 1934

                               OR

[X]       ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
             OF THE SECURITIES EXCHANGE ACT OF 1934
          For the fiscal year ended September 30, 1998

                               OR

[ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
             OF THE SECURITIES EXCHANGE ACT OF 1934
         For the transition period from        to      

                 Commission file number 0-_____


                    CENARGO INTERNATIONAL PLC

     (Exact name of Registrant as specified in its charter)

                         UNITED KINGDOM

         (Jurisdiction of incorporation or organization)

                        Puttenham Priory
                            Puttenham
                         Surrey, England

            (Address of principal executive offices)

Securities registered or to be registered pursuant to Section
12(b) of the Act:  None

Securities registered or to be registered pursuant to Section
12(g) of the Act:  None

Securities for which there is a reporting obligation pursuant to
Section 15(d) of the Act:  None

Indicate the number of outstanding shares of each of the issuer's
classes of capital or common stock as of the close of the period
covered by the annual report.



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Common Shares, no par value  None

Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                     Yes           No   X   

Indicate by check mark which financial statement item the
Registrant has elected to follow.

               Item 17             Item 18    X   









































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                      TABLE OF CONTENTS (1)

Page


Part I  Item 1   Description of Business..................    1

        Item 2   Description of Property..................   26

        Item 3   Legal Proceedings.........................  28

        Item 4   Control of Registrant....................   28

        Item 5   Nature of Trading Market.................   29

        Item 7   Taxation.................................   29

        Item 8   Selected Financial Data..................   31

        Item 9   Management's Discussion and Analysis of
                 Financial Condition......................   34

        Item 10  Directors and Officers of Registrant.....   45

        Item 11  Compensation of Directors and Officers...   47

        Item 13  Interest of Management in Certain
                 Transactions.............................   47

Part IV Item 19  Financial Statements and Exhibits........   48

(1) Items omitted are inapplicable
























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                             PART I


ITEM 1 - DESCRIPTION OF BUSINESS

General

    Cenargo, an English company (the "Company"), is a diversified
international transportation group specializing in deepsea dry
cargo shipping and European freight and passenger ferry services,
as well as the movement of surface and air freight and the
management of freight logistics.  Founded as a shipbroking
company in 1979 by the Company's Chairman, Michael Hendry,
Cenargo has been predominately an owner and operator of deepsea
dry bulk vessels, becoming the largest privately held British
shipowner by deadweight tonnage ("dwt") and gross tonnage ("gt")
as of the end of fiscal 1997.  Cenargo acquired its first
vessels, three roll-on/roll-off ("RoRo") freight ferries, in
1982.  Since that time Cenargo's core business has been the
ownership of deepsea dry cargo vessels, which are employed mainly
on period time charters to established, internationally
recognized operators.  During fiscal 1998, the Company
has been progressively withdrawing from this market and currently
is focused on the ownership and operation of ferries primarily in
the Irish Sea.  During fiscal 1998 and 1999, the Company has
furthered a strategy of developing its Irish Sea ferry services
by acquisition and the commencement of a new roll-on/roll-off
passenger ("Ropax") service in February 1999.  The Company also
employs its deepsea vessels on voyage charters, and more recently
has entered into contracts of affreightment using owned and
chartered vessels.  In addition to its Irish Sea ferry service
and deepsea shipping operations, the Company maintains
shipbroking and ship operating, passenger ferry, and logistics
operations.  The Company's principal executive offices are
located at Puttenham Priory, Puttenham, Surrey, England.

Business

    Cenargo's Fleet and Deepsea Shipping Operations.
Historically, the Company has owned and operated a diverse
deepsea vessel fleet in order to mitigate volatility and generate
more regular and secure cash flows.  In addition, Cenargo seeks
to capitalize on fluctuations in vessel values resulting from
such volatility by purchasing and selling vessels in the ordinary
course of its deepsea shipping operations.  The Company seeks to
enhance earnings by taking advantage of market conditions through
the strategic purchase and sale of vessels and intends to
continue to actively manage its fleet portfolio.

    As of the date of this report, the Company's fleet consists
of 12 vessels, including two multi-purpose container ships, six


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RoRo freight ferries, two RoRo car and passenger ferries
(including one under an operating lease) and two state-of-the-art
roll-on/roll-off freight and passenger ("RoPax") ferries ("the
RoPax Vessels") which were delivered September, 1998 and January,
1999.  In addition, the Company has contracted for the
construction of two additional RoPax ferries (the "Newbuild
Vessels"), which are scheduled to be delivered in fiscal 2000.
In late 1997 and 1998, the Company sold four of its Panamax bulk
carriers for an aggregate of $56.3 million because the Company
believed that charter rates and vessel values for Panamax bulk
carriers would fall.  In March 1998, the Company sold a multi-
purpose vessel for $5.0 million.  In September 1998, the Company
contracted to sell its two Capesize dry bulk carriers for an
aggregate of $58 million and to sell another of its multi-purpose
containerships for $3.75 million.  On October 2, 1998 the
bareboat charterer of one of the RoRo freight ferries, exercised
its option to purchase that vessel at a price of 2.875 million-in
Pounds Sterling ($4.8 million).

    Following the recent delivery of the two new RoPax Vessels,
eight of the Company's vessels are in three classes of sister
(substantially identical) ships, affording the Company
significant operating efficiencies and scheduling flexibility,
thereby enhancing the vessels' attractiveness to charterers. 

    Freight and Passenger Ferry Services.  The Company's freight
ferry services, in which it has been engaged since 1986, are
concentrated in the Irish Sea market between Great Britain and
Ireland.  Through its wholly owned subsidiary, Merchant Ferries
(Holdings) Limited ("Merchant Ferries"), the Company operates
three daily sailings in each direction between Heysham, England,
and Dublin, Republic of Ireland.  During fiscal 1998, Merchant
Ferries transported 89,000 trailer units, comprised mostly of
trailers unaccompanied by their cabs and drivers ("drop
trailers"). In February 1998, Cenargo acquired Scruttons plc
("Scruttons"), a London-based company whose core business,
Belfast Freight Ferries ("BFF"), operates four daily sailings in
each direction between Heysham, England, and Belfast, Northern
Ireland.  During fiscal 1998 (the first nine months in calendar
1998), BFF transported 77,000 trailer units, comprised mostly of
drop trailers, and 57,000 trade cars (generally automobiles being
transported to dealers). Merchant Ferries and BFF currently
operate the only freight ferry service from Great Britain to both
the Republic of Ireland and Northern Ireland and together
accounted for approximately 17% of the Irish Sea RoRo freight
market in 1998. 

    The Company operates at the Belfast port under a permitted
user contract with the local port authority.  This contract
permits the Company the preferential but not exclusive use of a
particular berth and to occupy a compound area and various


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operations and administration buildings.  At Dublin, the Company
has a 60-year lease for the area used by Merchant Ferries for
conducting its onshore operations and an operating lease which
allows Merchant Ferries priority access to water space and a ramp
for the purpose of handling its vessels.  At Heysham and
Liverpool, the Company has time slot agreements and contracts for
port services with the local port authorities. 

    In February 1999, the Company commenced a new service between
Liverpool, England, and Dublin, Republic of Ireland.  Unlike the
existing Heysham-based service, which utilizes RoRo freight
ferries with certificates for a maximum of 12 passengers, the new
RoPax Vessels will have certificates for a maximum of 250
passengers, permitting the Company to significantly increase its
carriage of higher margin "driver accompanied" trailers.  The
Company's goal is to establish its own United Kingdom hub port in
Liverpool for driver accompanied services to both the Republic of
Ireland and Northern Ireland.  In addition to the Liverpool-
Dublin service that the Company introduced in February of 1999,
the Company intends to introduce a service between Liverpool and
Belfast, Northern Ireland upon delivery of the Newbuild Vessels,
scheduled in 2000.

    According to industry sources, the volume of freight and
trailers carried on the Irish Sea has increased at a compound
annual growth rate of 7.7% since 1993.  The Company believes that
if the current Northern Ireland peace process is successful, the
growth in this market will continue to increase.  The Company
believes that it will be able to capture an increased share of
this market with its Liverpool - Dublin service. 

    Spanish/Moroccan Operations.  Since 1994, the Company has
operated a passenger and car ferry service between Almeria, in
southern Spain, and Nador, Morocco under the trade name
Ferrimaroc.  Cenargo employs the ferry Mistral on this service.
In 1998, Ferrimaroc carried 294,000 passengers, 61,000 cars and
3,400 units of freight.  In accordance with Moroccan government
regulations, Ferrimaroc operates year round, although
approximately 58% of revenues is generated in July and August.
Ferrimaroc's customer base is largely made up of the Moroccan
workers who work in Europe during the year and return home in the
summer months.  To minimize the effect of undercapacity and the
impact of competition in the non-peak months, the Company entered
into a pooling arrangement with its sole competitor on the
Almeria-Nador route for the 1997/98 off-peak months.  Under this
agreement, during the off-peak months the Company shared all
revenues and expenses with this competitor.  Each operator takes
its own bookings, although all passengers and freight are carried
on the Mistral.  No pooling arrangements have been made for the
1998/99 off-peak months.



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    Logistics.  Since the early 1990's, the Company has expanded
the scope of its activity to cover general sea and air freight
forwarding.  In September 1997, the Company purchased 75% (with
an option on the remaining 25%) of Flair Forwarding (UK) Limited
("Flair"), a just-in-time air freight forwarding specialist, and
in June 1998, the Company, through a subsidiary, acquired the net
assets and trade of Stockglobal Limited ("Duncan"), a sea freight
forwarding business. 

    The Company's logistics operations involve arranging the
worldwide transportation of a wide variety of commercial and
consumer products, specialized goods and documents.  Flair
specializes in providing just-in-time air freight services for
customers who require on time delivery of specific goods, often
to difficult locations and on short notice.  Duncan specializes
in sea freight forwarding to Africa.  The freight forwarding
services provided by Duncan include the procurement and sourcing
of consumer products for its African-based customers. 

    As a logistics provider, the Company is developing a business
which arranges and manages the movement of goods from suppliers
to end customers with the goal of meeting specific customer
requirements and providing value-added services such as bonded
warehousing and unpacking and re-packaging merchandise for
delivery to retail outlets.  The Company intends also to provide
computerized monitoring of material movements of customers'
cargoes, status reporting at agreed intervals, cargo surveying,
superintendency and customs clearance.  The Company arranges for
the distribution of its customers' goods by subcontracting to
airlines, road haulers, shipping companies and rail lines. 

    The Company's principal warehousing space is Eaglescliffe, a
former military supply center located in northeast England.
Eaglescliffe is located near major English rail and road arteries
which, the Company believes, renders it extremely well placed to
serve as a logistics center in the general freight forwarding
business.  The Company has been granted a Customs Bond by the
U.K. customs service, allowing wines and spirits to be held on
the site without import duty and value added tax having to be
paid.  The Company has also been granted "ICD status" by the U.K.
customs service which allows the Company's customers to bring
imported containers from sea ports to the Eaglescliffe site
without first clearing customs.  Eaglescliffe is the only site
with ICD status within a 20 mile radius.  As a result of its
Customs Bond and ICD status, all importing formalities can be
completed at Eaglescliffe, thus avoiding delays in the sea port
areas. 

    In October 1998 the Company leased additional office and
warehousing facilities near Heathrow to expand the logistics
business in the South of England.


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    Shipbroking Operations.  Cenargo conducts its shipbroking
activities through its wholly owned subsidiary, Cenargo Broking
Services Limited ("CBS"), which acts as commercial manager for
the Company's deepsea fleet and provides shipbroking services for
third party customers.  In fiscal 1998, 26% of CBS's revenues was
derived from the Company while 74% of its revenues was derived
from third party brokerage customers.  CBS analyzes market
conditions and forecasts trends in the global freight market.
Based on its analysis, CBS makes decisions as to the type and
length of employment of the Company's deepsea vessels.  CBS is
also responsible for all post-charter operations in respect of
the Company's deepsea fleet, such as giving voyage instructions
to masters, ordering fuel, appointing agents, agreeing
disbursements, checking timely and safe receipt of voyage
freights, time charter hire and demurrage, ordering the payment
of despatch, producing lay time statements, following up ships'
performance in relation to charter warranties and providing
coordination with the ships' technical managers.  CBS also
provides third party broking services for prominent vessel owners
and charterers, specializing in containership trades.  The
Company believes that CBS's extensive knowledge of containership
markets provides Cenargo with a competitive advantage with
respect to its shipbroking activities. charterers.  As a result
of the reduction in the Company's deepsea fleet, the Company has
significantly reduced its shipbroking operations in fiscal 1999.

    Ship Operating.  Through CBS, the Company has expanded its
deepsea shipping activities to include ship operating (i.e., the
chartering of vessels and booking of cargoes), which the Company
believes is a natural extension of its deepsea vessel chartering
and shipbroking activities.  Capitalizing on the considerable
knowledge obtained through its shipbroking activities, the
Company takes market positions, supplementing its own fleet by
chartering in additional vessels during periods in which the
Company believes rates will rise, and booking cargoes during
periods in which the Company believes rates will fall.  The
Company believes that its position as both owner and charterer
confers competitive advantages not available to some of its
competitors.  In addition, unlike the ownership of deepsea
vessels, the Company's ship operating activities are not capital
intensive.  As a result of the reduction in the Company's deepsea
fleet, the Company has significantly reduced its ship operating
activities.

Business Strategy

    The Company intends to increase its revenues and generate
consistent and predictable cash flows and profitability by
pursuing its strategy of developing its freight and passenger
ferry services, opportunities in its deepsea dry cargo shipowning
markets, as well as its related shipbroking, ship operating, and


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logistics operations.  The Company also intends to seek new and
complementary business opportunities, particularly in areas
related to its existing operations.  Specific elements of the
Company's strategy include: 

    Increase Share of the Irish Sea Trade.  The Company seeks to
achieve a greater share of the Irish Sea freight ferry and
passenger trade through the introduction of its new state-of-the-
art RoPax ferries.  The recent addition of the two RoPax Vessels
will increase the Company's capacity in the Irish Sea from
250,000 trailer units per year to 400,000 trailer units per year
and will permit the Company to increase substantially its
carriage of higher margin accompanied trailers.  In addition, the
RoPax Vessels and the Newbuild Vessels are expected to permit the
Company to increase operating efficiency by (i) replacing older,
smaller and less efficient vessels, (ii) operating multiple
routes out of hub ports in the U.K. and Ireland and (iii)
operating sister ships on complementary routes. 

    Exploit Fluctuations in Vessel Values.  The Company intends
to utilize its expertise in the new and secondhand vessel markets
to capitalize on fluctuations in vessel values, while maintaining
a balance between its deepsea and ferry fleets. Since its
inception, the Company has sold approximately two-thirds of the
various types of vessels it has purchased.  The Company believes
that its streamlined decision making process and the volatility
of the dry bulk vessel market provide opportunities for the
Company to exploit fluctuations in market values of vessels. 

    Increase Fleet Efficiency and Reliability.  The Company
believes that its fleet is among the best maintained and most
efficient in its markets.  The Company intends to seek additional
opportunities to increase the reliability and efficiency of its
fleet, while maintaining safe, high quality operations.  To
provide this high level of service, the Company emphasizes a
rigorous level of supervision in the construction, maintenance
and operation of its vessels.  The Company follows a strict
preventive maintenance program both ashore and at sea and,
through V. Ships Group ("V" Ships") and Celtic Marine Limited
("Celtic Marine"), the technical managers of Merchant Ferries and
BFF respectively, commissions and actively supervises repair,
reconditioning and systems upgrade work.  In addition, the
Company seeks to ensure that its vessels are staffed with
professional, well trained masters, officers and crew.  The
Company believes that these policies allow it to provide
consistently reliable, high quality service while reducing off-
hire periods and operating costs. 

    Maintain and Strengthen Relationships with Customers.  The
Company believes that it enjoys a strong reputation and industry
recognition for providing reliable and high quality service.  The


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Company intends to capitalize on this reputation to maintain its
strong relationships with established, well recognized charterers
and other customers.  The Company's customers have included Sanyo
Electric Manufacturing (UK) Ltd.; Samsung Electric Manufacturing
(UK) Ltd.; Safeway; BHP International Marine Transport; China
National Cereals, Oils and Foodstuffs; Kawasaki Kisen Kaisha;
Leif Heogh; Mediterranean Shipping Company; Mitsui OSK Lines;
Sanyo Electric Manufacturing (UK) Ltd.; Samsung Electric
Manufacturing (UK) Ltd.; the U.K. Ministry of Defence; and the
U.S. Military Sealift Command. 

    Expand into New Passenger Ferry Markets.  The Company's new
RoPax vessels will permit it to substantially increase its
carriage of passengers in the Irish Sea market.  In addition, the
Company believes that European Union ("EU") regulations will
allow Cenargo to compete in ferry markets that are presently
closed to competition, particularly in the Mediterranean.  The
Company's belief is based on European Community Regulation
3577/92 (the "Regulation"), which provides for the gradual
abolition of "cabotage," a practice under which a country
reserves the right to carry passengers, cars and cargoes between
its domestic ports for the ships registered in that country.  In
particular, the Regulation liberalized mainland cabotage with
respect to regular passenger and ferry services in the
Mediterranean and along the coast of Spain, Portugal and France.
The Company intends to capitalize on its established reputation,
management, booking, reservations and ticketing systems and
agency networks to expand into new passenger ferry markets. 

The Irish Sea Ferry Market

    Historically, the primary mode of freight movement across the
Irish Sea was by lift-on/lift-off ("LoLo") containership.
However, RoRo and RoPax ferries have gradually replaced the LoLo
services.  Currently, there are three basic types of RoRo vessels
that carry significant amounts of freight in the Irish Sea
market: (i) RoRo ferries, which carry trailers and a maximum of
twelve drivers and, consequently, primarily unaccompanied "drop"
trailers; (ii) RoPax ferries, which are designed to carry
accompanied and unaccompanied trailers and a limited number
(generally up to 300) of additional passengers; and
(iii) passenger ferries which are also capable of carrying some
freight trailers. 

    According to industry sources, RoRo traffic across the Irish
Sea has more than doubled over the ten-year period from 1987 to
1997, growing at a compound annual growth rate of approximately
7.7%. During this period, RoRo traffic volume between Great
Britain and the Republic of Ireland has grown an aggregate of
151%, while RoRo traffic volume between Great Britain and
Northern Ireland has grown by an aggregate of 92%.  Industry


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sources believe that RoRo traffic has grown rapidly as a
consequence of economic growth in Ireland and the decline of the
LoLo containership in this market. 

    The growth in demand for RoPax and RoRo vessels in the Irish
Sea is determined in large part by cycles in the economies of the
U.K. and the Republic of Ireland and Northern Ireland, changes in
industrial production and the resulting demand for freight
trailer cargoes and the number of people traveling.  The
relationship between supply and demand, in turn, largely
determines the profitability of ferry service operators.  The
supply of vessels is primarily a function of the number of
newbuild vessels, as scrappings of vessels to date in this market
have been infrequent although, unlike the bulk market, it is
difficult to place surplus vessels on just any route. 

    The Irish Sea freight market generally is comprised of two
types of trailer traffic, the driver accompanied market and the
unaccompanied market.  Driver accompanied traffic, in which the
road tractor unit and the driver accompany the trailer on the
ferry, is heavily concentrated in the shorter ferry crossings as
well as the overnight crossings that allow the driver to meet
minimum sleep requirements (on board the vessel) in order to
resume driving at the destination port.  The accompanied market
is predominantly used for time-sensitive freight, including fast
moving consumer goods and just-in-time deliveries.  This traffic
commands a higher freight rate per unit shipped than the
unaccompanied market and, combined with lower stevedoring costs
due to the ease of loading and unloading the accompanied trailer,
generates significantly higher margins.  Unaccompanied freight,
whereby only the trailer travels on the ferry, tends to use
longer sea crossings that maximize sea mileage and minimize land
miles.  Unaccompanied trailers typically carry less time
sensitive cargo, such as industrial products. 

    In addition to the ability to accommodate both accompanied
and unaccompanied traffic, key factors affecting competition in
the Irish Sea freight ferry market include (i) the reliability of
the vessels, with newer vessels being less likely to break down
and delay passage; (ii) the speed of the vessels, with faster
ships generally being more desirable to customers and providing
the ability to offer multiple daily voyages and (iii) the size of
the vessels, with larger vessels generally being significantly
less expensive to operate on a per-trailer-unit basis. 

    According to industry sources, freight rates in the Irish Sea
market for both accompanied and unaccompanied trailers have been
declining over the past five years as a result of gradually
increasing competition between operators.  Consequently, in order
to maximize revenues and profitability, operators must seek to
maximize the number of trailers carried.  Operators' principal


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strategies towards this end have been to increase the cargo
capacities of the fleet and to increase the speed of the fleet in
order to increase the number of daily sailings. 

The Multi-purpose Vessel Market

    Multi-purpose vessels ("MPPs") typically are ships with cargo
handling gear designed to carry containers and other cargo
efficiently and flexibly.  Multi-purpose and general cargo
vessels are non-cellular vessels that are not equipped with fixed
cell guides for containers in all cargo holds (temporary or
partial coverage may be available). MPPs generally have boxed
shaped holds and a container friendly layout that allows an
efficient use of space when containers and other unitized cargoes
are carried.  Cargo gear allows them to transfer containers and
general cargo with limited shoreside facilities.  Their
flexibility, speed and efficiency have contributed to growth in
the fleet.  Other terms used for these vessels include "geared
non-cellular," "self-sufficient" and "semi-container." 

    Factors Affecting Demand for Multi-purpose Vessels.  MPPs
primarily carry containerized cargo, non-containerized general
cargo (packages of various sizes unsuitable for bulk shipment due
to small size, special handling requirements, etc.), and minor
bulk cargoes (such as phosphate, bauxite and sugar).  Multi-
purpose vessels are flexible and can transport many different
types of cargo in various freight markets, resulting in complex
patterns of employment.  While the dominant industry trend in the
1990's has been increasing use of containers, which has favored
use of fully cellular container vessels and specialized ports on
many routes, MPPs remain economically attractive in selected
trades.  Use of MPPs is compared with alternatives (e.g.
specialized ship types, specialized ports, port constraints,
availability of land transport to larger ports, use of a fully
cellular container vessel, dry bulk vessel, specialized container
port, etc.), in order to determine whether the flexible MPP is
the most efficient alternative 

    Summarizing overall industry trends, since 1990 total
industry non-bulk dry cargo has grown steadily at rates from 4-
9%, with the share of container trades increasing from
approximately 40% in 1990 to an estimated 52% in 1997.  Minor
bulk trade growth has been varied from an annual decrease of 1%
in 1990 to annual increases of 6% in 1994 and 1995.  From 1990
through mid year 1997, the MPP fleet has grown at annual rates of
0-3%, while general cargo fleet scrapping has remained high and
the fleet decreased by annual rates of 3-11%. 

    After minor bulk trade decreased by 1% in 1990 and showed no
growth in 1991, both non-bulk dry cargo and minor bulk trade grew
from 1992 through 1995.  During 1992, time charter rates


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decreased to a low of approximately $5,080 per day in July ("time
charter rates" refer to assessed one year time charter rates for
a 16,000 dwt MPP), and improved thereafter.  Time charter rates
increased from an average of about $6,000 per day in 1993 and
1994 to an average of $7,600 per day in 1995.  After MPP time
charter rates peaked at approximately $8,300 per day in May 1995,
rates have decreased to an average of approximately $6,400 per
day in 1996 and $5,200 per day in 1997.  Containership and dry
bulk rates have also decreased significantly in 1996 and 1997.
Although non-bulk dry cargo trade increased by approximately 9%
in 1996 and an estimated 7% in 1997, large numbers of new
containerships were delivered.  Minor bulk trade showed no growth
in 1996 and only an estimated 1% annual growth in 1997, against a
stable Handysize (10,000 to 35,000 dwt) bulk fleet.  MPP time
charter rates decreased to $4,890 per day in March 1998,
consistent with recent Asian economic difficulties and continued
high containership deliveries. 

The Company's Ferry Fleet and Operations

    The Company's Ferry Fleet.  The Company's ferry fleet
consists of six RoRo ferries, two passenger/car ferries and two
RoPax ferries.  The Company has also contracted for the
construction of two Newbuild Vessels, RoPax ferries, to be
delivered in 2000.  The following table sets forth certain
information with regard to the Company's current ferry fleet: 



























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                                                     Year
Vessel Name        Vessel Type   Capacity            Built    Flag

MERCHANT BRAVERY   RoRo          40 cars
                                 100 trailer units   1978     Bahamas

MERCHANT BRILLIANT RoRo          40 cars
                                 100 trailer units   1978     Bahamas

MERCHANT VENTURE   RoRo          55 trailer units    1979     British (Isle of
                                                              Man)

RIVER LUNE         RoRo          49 cars             1983     Bahamas
                                 93 trailer units

SAGA MOON          RoRo          50 cars             1984     British
                                 72 trailer units             (Gibraltar)

SPHEROID           RoRo          53 trailer units    1971     British (Isle of
                                                              Man)

MISTRAL            Passenger/Car 2,386 passengers    1981     Bahamas
                   Ferry         700 cars                     

SCIROCCO           Passenger/Car 1,315 passengers    1974     Bahamas
                   Ferry         296 cars                     
                                 30 trailer units             

DAWN MERCHANT      RoPax         250 passengers      1998
                                 164 trailer units            British (Isle of
                                                              Man)*

BRAVE MERCHANT     RoPax         250 passengers      1999     Bahamas**
                                 164 trailer units

* Reflagged on November 24, 1998
**Currently being reflagged to British (Isle of Man) flag

    The Company owns all of its ferries, except the ferries River
Lune and Saga Moon, which are operated under capital leases, and
the passenger/car ferry Mistral, which is operated under a five-
year operating lease ending in April 2002.  The Company has also
time chartered two additional RoRo ferries, the Dart4 and the
Merle, from Jacobs Holdings Plc for periods ending February and
December 1999, respectively.  The Merle charter has an option to
renew for one additional year.

    The RoPax Vessels and the Newbuild Vessels will be sister
ships, affording the Company substantially the same advantages as
discussed for the Company's multi-purpose container vessels.  The
first RoPax Vessel was employed on a 3-month time charter and was


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redelivered to the Company in late December 1998.  The second
RoPax Vessel was delivered on January 26, 1999 and both RoPax
Vessels are employed in the Irish Sea trade as discussed above.

Deepsea Shipping Fleet and Charter Operations

    The Company's Fleet.  The Company's current deepsea fleet
consists of two multi-purpose container ships.  The following
table sets forth certain information with regard to this fleet: 

                                                     Year
Vessel Name        Vessel Type     Capacity          Built    Flag

MERCHANT PRINCIPAL Multi-purpose   17,944 dwt        1978     Hong Kong
                   Container       504 TEU

MERCHANT PREMIER   Multi-purpose   17,944 dwt        1978     Hong Kong
                   Container       504 TEU

    Fleet Characteristics. The Company's two multi-purpose
container vessels are sister ships, allowing the Company
operating efficiencies.  Until recently, the Company also owned
two 1995-built Capesize dry bulk carriers and four Panamax dry
bulk carriers which it contracted to sell in September 1998 and
October 1997, respectively.  Management anticipates that
opportunities will arise to acquire new or second-hand dry bulk
carriers in the near future and remains open to acquiring dry
bulk carriers of varying sizes if market conditions warrant. 

    Chartering of the Fleet.  Cenargo generally charters its
deepsea vessels under time and voyage charters, enabling it to
balance a mixture of charter lengths, typically ranging from one
month to 30 months.  Currently, the Company's deepsea vessels are
on charter to BHP International Marine Transport.



















                               12



<PAGE>


                                                     Daily
                                                     Hire       Scheduled
Vessel Name        Charterer           Term(1)       Rate       Redelivery(2)

MERCHANT PREMIER   BHP International   28-32 months  $7,800     Aug-Dec 1999
                   Marine Transport

MERCHANT PRINCIPAL BHP International   28-32 months  $7,800     Aug-Dec 1999
                   Marine Transport

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

(1)  Typically the redelivery date under a time charter is specified as a
     particular date plus or minus a number of months.  This window provides
     the charterer with scheduling flexibility. 

(2)  Assumes renewal options, if any, are not exercised.

    The Company believes that net additions of new vessels to the
worldwide container fleet may result in a surplus of vessels in
the size ranges in which the Company's multi-purpose container
vessels fall.  As a result, the Company's multi-purpose container
vessels may have to compete for charters in the container trades
against a larger number of more efficient vessels.  Additionally,
further orders for bulk carriers or multi-purpose container
vessels, or a decrease in the scrapping rate for such vessels,
could lead to an oversupply of bulk carriers or multi-purpose
container carriers, which could have a material adverse effect on
the Company's business, results of operations and financial
conditions. 

Competition

    Irish Sea Competition.  There are six ferry operators,
including the Company, competing in the Irish Sea freight ferry
market.  In 1998, Cenargo estimates that Merchant Ferries and BFF
had a combined market share of approximately 17% of the Irish Sea
freight trade.  The Company's principal competitors include Stena
Line UK Ltd., P&O European Ferries (Ireland) Ltd., Irish Ferries
of Irish Continental Group and Norse Irish Ferries, whose market
shares are estimated by Cenargo to be 22%, 37%, 11% and 8%,
respectively.  In 1996, most of the Irish Sea operators added
ship capacity which led to an oversupply of space.  Most
operators then repositioned, reducing overall freight capacity.
Competition, however, remains strong and is expected to
intensify, as operators on the Irish Sea have made significant
investments in that market and particularly in vessel
newbuildings.

    Deepsea Fleet and Charter Competition.  The charter and the
vessel resale markets in which the Company's vessels compete are


                               13



<PAGE>


highly competitive with many owners and operators, including
proprietary owners, state controlled shipping companies and
independent operators.  Competition in the charter market is
based principally on supply and demand.  Availability dates and
vessel characteristics play an important part in determining the
level of rates obtainable.  The reputation of the vessel and its
operator can also be significant, especially when chartering for
long periods to leading charterers.  Competition in the resale
market for secondhand vessels is again dependent on supply and
demand.  Age, condition of the vessel and the reputation of the
sellers also influence the price.

    Spanish/Moroccan Competition.  Currently, there are two other
competitors, in addition to the Company, providing service
between Almeria, Spain and eastern Morocco.  A Moroccan
government-owned ferry service, Limadet Ferry S.A., operates a
car/passenger ferry service on the Almeria-Nador route, and a
Spanish government-owned ferry service, Trasmediterranea,
operates a car/passenger ferry service on the nearby Almeria-
Melilla route.  In addition, a number of operators run passenger
and car ferry services on other routes in the region.  The
Company believes that its passenger levels are particularly
susceptible to changes in available ferry capacities and
schedules.  Ferrimaroc emphasizes reliability and quality of
service to distinguish itself from its competition.

    Logistics Competition.  The freight forwarding and logistics
industries are highly competitive.  The Company competes
generally with other integrated logistics companies,
transportation service companies, consultants and information
technology vendors.  The Company also competes against carriers'
internal sales departments and shippers' transportation
divisions.  Competition is based on freight rates, quality of
service (such as damage-free delivery, on-time delivery and
consistent transit time), reliability and scope of operations.

Cyclicality of the Shipping Industry; Chartering Risks

    The shipping industry is highly cyclical, experiencing
volatility in profitability, charter rates and vessel values
resulting from changes in the supply of, and demand for, shipping
capacity.  The demand for ships is influenced by, among other
factors, global and regional economic conditions, developments in
international trade, changes in seaborne and other transportation
patterns, weather patterns, crop yields, armed conflicts, port
congestion, canal closures, political developments, conflicts,
embargoes and strikes.  The demand for ships is also influenced
by, among other things, the demand for consumer goods, perishable
foodstuffs and dry bulk commodities.  Demand for such products is
affected by, among other things, general economic conditions,
commodity prices, environmental concerns, weather and competition


                               14



<PAGE>


from alternatives to coal and oil.  The supply of shipping
capacity is a function of the delivery of new vessels and the
number of older vessels scrapped, converted to other uses,
reactivated or lost.  Such supply may be affected by regulation
of maritime transportation practices by governmental and
international authorities.  All of these factors which affect the
supply of and demand for vessel capacity are beyond the control
of the Company.  In addition, the nature, timing and degree of
changes in the shipping markets in which the Company operates, as
well as future charter rates and values of its vessels, are not
readily determinable. 

    The Company's deepsea vessels are currently engaged in
charters of 28-32 months.  There can be no assurance that the
Company will be able to extend or renew such charters at
commercially profitable rates, if at all.  The Company may
consider disposing of its multi-purpose container vessels if, at
the end of the current charters, attractive long term charters
are not available.  However, owners of multi-purpose container
vessels face particular uncertainty when selling or chartering
such vessels due to their relatively outmoded design and strong
competition from more specialized vessels.  In September 1998,
the Company sold three of its deepsea vessels, mainly due to a
decrease in available charter rates and uncertainty over the
future of the dry bulk markets in which the Company operates. 

Ship Management

    The Company has adopted a policy of maintaining the Company's
vessels at a high standard.  Technical management of all of the
day-to-day operational aspects of vessels, with the exception of
the BFF ferries, is outsourced to V. Ships, under instruction and
supervision from the Company. 

    The technical managers oversee the superintendence,
maintenance, repair and drydocking of the Company's vessels.  The
technical managers also employ the captains, officers, engineers
and other crew for the Company's vessels.  The technical managers
ensure that all seamen have the qualifications and licenses
required to comply with international regulations and shipping
conventions and that experienced and competent personnel are
employed for the Company's vessels.  The personnel on board
Cenargo's vessels are not considered the Company's employees.

    The day-to-day management by V. Ships also includes arranging
for protection and indemnity insurance, insurance against fire,
war risks and marine risks and handling salvage and other claims
for such vessels.  V. Ships divides the vessels it manages
amongst small fleet teams, each managing a maximum of eight
ships.  Two superintendents, a technical coordinator, a
purchasing manager, a fleet accountant and a secretary comprise a


                               15



<PAGE>


typical fleet team.  A pool of staff comprising specialists in
planned maintenance, systems administration, bulk purchasing and
newbuilding supervision assist the fleet teams.  The Company
benefits from V. Ships' buying power, especially for lubricating
oil and spare parts.  A safety and quality team is responsible
for implementing, monitoring and up-dating the V. Ships' quality
management system.  V. Ships' management offices are accredited
for the International Safety Management ("ISM")  Code and ISO
9002. 

    Technical management of the BFF vessels is undertaken by
Celtic Marine.  Celtic Marine is an independent ship manager
specializing in medium-sized fleets.  Celtic Marine is the
technical manager of 16 vessels and crew manager of 150 vessels.
Celtic Marine's offices are accredited for the ISM Code and ISO
9002.  Recently Celtic Marine was acquired by V. Ships.

    Notwithstanding the delegation of day-to-day technical
management, the Company maintains a hands-on approach, making
frequent visits to the ships and conducting regular interviews
with masters both on-board and ashore.  The Company has a policy
of planned, continuous maintenance.  When necessary, riding
squads of up to five members are placed on board the deepsea
vessels to carry out specific tasks, supplementing routine
maintenance carried out by permanent crew members.  The Company
believes its ship management policies have the result that its
vessels (i) spend less time in drydock and (ii) have developed a
reputation for high standards of maintenance and performance.

    V. Ships, a leading global ship management group, has been
the technical manager of the Company's deepsea vessels since 1988
and of Merchant Ferries' vessels since 1993. In May 1998, the
Company was V. Ships' largest customer in terms of number of
vessels managed.  Celtic Marine has been the technical manager of
BFF's vessels since 1986. 

Customers

    Irish Sea Customers.  In the Irish Sea freight ferry trade,
both BFF and Merchant Ferries rely on road haulers for more than
90% of cargo carried.  Both Merchant Ferries and BFF have
developed a specialization in the carriage of unaccompanied
trailers transporting general cargoes.  BFF also specializes in
carrying cars for distribution to both Belfast and Dublin. 

    Deepsea Vessel Customers.  The Company has chartered its
deepsea vessels to a variety of charterers.  In the case of dry
bulk carriers, the Company's customer base has included mining
houses, power stations, steel and aluminum producers, grain
houses and ship operators.  Over the last three years, the
charterers of the Company's dry bulk carriers have included such


                               16



<PAGE>


representative customers as China National Cereals, Oils and
Foodstuffs, Kawasaki Kisen Kaisha, Leif Heogh, Mitsui OSK, Navix
Line, NYK, Shinwa Kaiun Kaisha, Mediterranean Shipping Company
and Showa Line.  At present, the Company's multi-purpose
container vessels are on charter to BHP International Marine
Transport.

    Spanish/Moroccan Customers.  The majority of Ferrimaroc's
customers are Moroccan workers who are employed in Europe during
the year and who return home during the summer.

    Logistics Customers.  The Company's customer base for its
logistics business come from a number of economic sectors
including the chemicals, energy, steel, electronics and
manufacturing industries.  Customers include Cleveland Potash
Ltd., Sanyo Electric Manufacturing (UK) Ltd., and Samsung
Electronics Manufacturing (UK) Ltd., Safeway and Rothmans.

Employees

    As of January 31, 1999, the Company employed 257 people, 249
of whom held full-time jobs and 8 of whom held part-time jobs.
The Company's technical managers employ approximately 300-350
employees on the Company's vessels at any one time.

Inspection by a Classification Society

    Every vessel's hull and machinery must be "classed" by a
classification society authorized by its country of registry.
The classification society certifies that the vessel is "in
class," signifying that the vessel has been built and maintained
in accordance with the rules of such classification society and
complies with applicable rules and regulations of the country of
registry of the vessel and the international conventions of which
that country is a member.  The classification society verifies
that the vessel is safe and seaworthy in accordance with IMO
regulations, Safety of Life at Sea ("SOLAS") and flag state
regulations.  Each vessel is inspected by a surveyor of the
classification society every year (an "Annual Survey"), every two
to three years (an "Intermediate Survey") and every four to five
years (a "Special Survey").  Most vessels, including the
Company's vessels, are also required, as part of the Intermediate
Survey process, to be drydocked every 24 to 30 months for
inspection of the underwater parts of a vessel and for repairs
related to such inspection.  Should any defects be found, the
classification surveyor will issue a "recommendation" which has
to be rectified by the shipowner within the time limit
prescribed.  At the Special Survey, the vessel is thoroughly
examined, including audio-gauging to determine the thickness of
the steel structures.  Should the thickness be found to be less
than class requirements, steel renewals would be prescribed.  A


                               17



<PAGE>


one-year grace period may be granted by the classification
society to the shipowner for completion of the Special Survey.
Substantial amounts of money may have to be spent for steel
renewals to pass a Special Survey if the vessel experiences
excessive wear and tear.  In lieu of the Special Survey every
four years (five years if a year of grace is given), a shipowner
has the option of arranging with the classification society for
the vessel's hull or machinery to be on a continuous survey
cycle, whereby every part of the vessel would be surveyed within
a five-year cycle.  Insurance underwriters make it a condition of
insurance coverage for the vessel to be certified as "in class"
by a classification society which is a member of the
International Association of Classification Societies.
Generally, the cost of maintaining a vessel's compliance with
safety and regulatory requirements increases with its age. 

Permits and Authorizations

    The Company is required by various governmental and quasi-
governmental agencies to obtain certain permits, licenses and
certificates with respect to its vessels.  The kinds of permits,
licenses and certificates required depend upon such factors as
the country of registry, the commodity transported, the waters in
which the vessel operates, the nationality of the vessel's crew
and the age of the vessel.  The Company believes that it has or
can readily obtain all permits, licenses and certificates
currently required to permit its vessels to operate.  Additional
laws and regulations, environmental or otherwise, may be adopted
which could limit the ability of the Company to do business or
increase the cost of its doing business and which may have a
material adverse effect on the operations of the Company.

Environmental, Safety and Other Regulations

    The Company is subject to regulation and supervision in the
various jurisdictions in which it trades, operates and conducts
business.  Changes to such regulations may adversely affect the
business of the Company.  The operations of the Company are also
affected by changing environmental protection laws, safety
regulations and other regulations, compliance with which may
entail significant expenses, including expenses for ship
modifications and changes in operating procedures. 

    The IMO is an agency organized in 1958 by the United Nations.
Over 100 governments are members of the IMO, whose purpose is to
develop international regulations and practices affecting
shipping and international trade and to encourage the adoption of
standards of safety and navigation.  All IMO agreements must be
ratified by the individual government constituents.




                               18



<PAGE>


    The Company's operations are affected by the requirements set
forth in the International Safety Management (ISM) Code adopted
by the IMO.  The ISM Code requires shipowners and bareboat
charterers of passenger vessels and bulk carriers to develop, no
later than July 1, 1998, an extensive "Safety Management System"
that includes, among other things, the adoption of a safety and
environmental protection policy setting forth instructions and
procedures for operating their vessels safely and describing
procedures for dealing with emergencies.  Owners, operators and
bareboat charterers of freight ferries and multi-purpose
container vessels must meet these requirements by July 1, 2002.
Noncompliance with the ISM Code may subject the shipowner or
bareboat charterer to increased liability, may lead to decreases
in available insurance coverage for affected vessels and may
result in the denial of access to, or detention in, certain
ports.  V. Ships and Celtic Marine are each certified as an
approved ship manager under the ISM Code.  As of April 1998, each
of the Company's vessels which had to be ISM Code compliant by
July 1, 1998, was ISM Code certified by the due date.  The BFF
ferries are also ISM compliant.  Prior to the July 1, 2002
deadline, V. Ships will seek to obtain ISM Code certification of
Merchant Ferries' vessels and the Company's multi-purpose
container vessels.  However, there can be no assurance that V.
Ships will be able to do so.  Failure to obtain such
certification would have a material adverse effect on the
Company's business, results of operations and financial
condition. 

    In 1995, the IMO and certain government authorities issued
new regulations under the International Convention for the Safety
of Life at Sea (SOLAS) 1990 requiring conventional RoPax ferries
to make structural changes in order to increase their stability
in the event water floods the vehicle deck.  Eighty-five percent
compliance with these new SOLAS requirements must be met by
October 1, 1998.  These requirements apply to the Company's
passenger vessels, Scirocco and Mistral and the new RoPax
ferries.  The Scirocco and new Ropax ferries meet all the
requirements.  The Mistral currently has a stability coefficient
of 0.78 and does not comply with current SOLAS 1990 requirements
of 0.85.  The Mistral is currently not being utilized in the
Ferrimaroc service and work will be completed to comply with the
current SOLAS requirements before being brought back into the
trade.  By 2002, the stability requirements will increase further
to 0.975, and work is scheduled for the Mistral to be brought up
to these new stability requirements. 

    E.U. Regulation.  E.U regulation of the environment has
largely been directly brought into U.K. law by U.K. legislation,
and all relevant E.U. environmental regulation applies directly
through U.K. laws. 



                               19



<PAGE>


    The European Commission has issued a proposal for a Water
Framework Directive, which would include coastal waters within
its ambit, and if any such Directive were to be implemented, it
would substantially alter U.K. law in relation to the control of
water pollution.  In addition, there are proposals for a European
contaminated land regime, which would uphold the "polluter pays"
principle in establishing liability for causing environmental
damage.  It is impossible to predict what new environmental
regulations may be passed in the future by the E.U. 

    U.K. Regulation.  The Water Resources Act 1991 ("WRA")
applies to the pollution of "controlled waters." The definition
of "controlled waters" in WRA includes coastal and relevant
territorial waters.  Relevant territorial waters are waters which
extend seaward for three miles from the baselines from which
English territorial waters are measured.  Coastal waters are
defined as waters which extend landward from these baselines as
far as the limit of the highest tide.  The definition of
"controlled waters" in WRA also covers groundwaters.  The WRA
regime is therefore also applicable to contamination from land to
underground aquifers. 

    There is a general offense under Section 85(1)(a) WRA of
"causing or knowingly permitting" any poisonous, noxious or
polluting matter or any solid waste to enter controlled waters.
"Polluting" requires simply that there is a likelihood or
capability of causing harm to animals, plants or those who use
the water.  Actual harm is not necessary.  The offense of
"causing" the discharge or entry is an offense of strict
liability.  The "knowingly permitting" offense attaches liability
where a party knows of the presence of contaminants and is in a
position to prevent or clean up the resulting pollution but does
not do so. 

    Section 88 WRA provides a number of defenses to
Section 85(1)(a), including obtaining a consent from the U.K.
Environment Agency.  Section 89 provides a further defense if the
entry or discharge was made in an emergency in order to avoid
danger to life or health.  The penalty for a Section 85 offense
can be an unlimited fine and/or a two year jail sentence on
conviction on indictment. 

    Section 161 WRA gives the Environment Agency wide powers to
prevent water pollution incidents, to clean up after them, to
carry out remedial or restorative works and to recover the costs
of doing so. Provisions in the Environment Act 1995 (not yet in
force) provide for the Environment Agency to be able to serve
works notices on the responsible person to require them to carry
out works or operations. 




                               20



<PAGE>


    The Merchant Shipping Act 1995 ("MSA") makes it a criminal
offense to discharge from a vessel "any oil or mixture of oil"
into "U.K. national waters which are navigable by sea-going
ships." "U.K. national waters" are defined as waters on the
landward side of the line from which the territorial sea is
measured.  Either the owner or the master of the vessel can be
liable.  It is a defense if the discharge was to secure the
safety of any vessel, to prevent damage to a vessel or cargo or
to save life.  It is also a defense for the owner or master to
show that he exercised reasonable care.  Conviction on indictment
can lead to an unlimited fine. 

    Section 153 MSA governs civil liability for oil pollution.
It provides for strict liability on the part of a shipowner for
oil pollution damage caused by the discharge or escape of
persistent oil from a ship carrying a cargo of such oil. It
applies to damage in the territory of the U.K. or in any country
which is party to the 1969 Convention of Civil Liability for Oil
Pollution Damage.  Liability is for the damage itself, the cost
of the cleaning operation and any economic loss to affected
persons, for example fishermen and hoteliers.  The ship owner can
escape liability in cases of acts of war, some acts of God, the
act of a stranger or the acts of a government or other authority.
There is a limit as to the amount to which the owner may be
liable in the absence of intention or recklessness on his part.
For a vessel not exceeding 5,000 tons, the limit is currently
three million IMF special drawing rights.  In relation to a
vessel exceeding 5,000 tons, the limit is three million special
drawing rights, together with an additional 420 special drawing
rights for each ton of its tonnage in excess of 5,000 tons, up to
a maximum amount of 59.7 million special drawing rights.  The MSA
makes provisions for compulsory insurance against liability for
pollution.  In addition, Section 173 MSA provides for payment of
contributions to the International Fund for Compensation of Oil
Pollution Damage by all persons who import or receive oil into or
in the U.K. in excess of 150,000 metric tons per year. 

    The Merchant Shipping (Control of Pollution by Noxious Liquid
Substances in Bulk) Regulations 1996 concerns other noxious
liquid substances carried by vessels in bulk, and contains
prohibitions and restrictions on the discharging of tank washings
into the sea. Vessels may not carry noxious liquid substances
without a certificate that the requirements as to construction
and equipment have been satisfied, and it is a criminal offense
to infringe these regulations.  Liability falls on the owner and
master of the vessel.  Other relevant legislation includes the
Food and Environment Protection Act 1985, Part II, which requires
a license for deposits at sea and to incinerate substances or
articles at sea; section 44 of the Clean Air Act 1993, which
prohibits emissions of dark smoke from vessels in U.K.
territorial waters or within a port or harbor; the Merchant


                               21



<PAGE>


Shipping (Prevention of Pollution by Garbage) Regulations 1988,
which makes it a criminal offense to discharge garbage in U.K.
territorial waters, including all kinds of victual, domestic and
operational waste generated during the normal operation of a
ship, other than in accordance with the terms of the regulations;
and the Dangerous Substances in Harbour Areas Regulations 1987,
which regulate when defined dangerous substances can be brought
into harbor areas. 

    In respect of contaminated land, the common law of nuisance
can lead to a land owner being liable for contaminated land.
There are three main requirements to establish liability.  There
must be a direct link between the alleged cause of the
contamination and the damage suffered.  The possibility of the
particular damage caused must have been foreseeable at the time
when the damage was caused.  In addition, the damage must not be
too remote.  If these facts are established, the resulting
liability reflects not only the cost of cleaning up the land but
also the payment of compensation to the parties who have suffered
as a result. 

    Part III of the Environmental Protection Act 1990 contains
statutory nuisance provisions.  Although these provisions are not
in practice often applied to nuisance associated with the state
of land, it is still possible that the local authority could
serve an abatement notice.  Failure to comply with the terms of
such notice is a criminal offense and the works can be carried
out in default. 

    If land is to be developed or redeveloped and planning
permission is required, the local planning authority has power to
require remediation works to be carried out as a condition for
the grant of planning permission.  Planning powers are subject to
review and amendment both in relation to the requirement for
environmental impact assessments and the imposition of controls
on development. 

    As previously discussed, the Water Resources Act 1991 can
apply to contamination on land.  The above remarks concerning
Section 85(1)(a) and Section 161 WRA apply equally in this
context. 

    The Environment Act 1995, in provisions which have not yet
been implemented, sets out a new regime for dealing with
liability for contaminated land.  When these provisions are
implemented, they will require contaminated land to be remediated
to a "suitable for use" standard (so that contamination is no
longer a matter of concern as long as the land remains in its
present use).  Liability will be allocated on the "polluter pays"
principle.  There will be two classes of responsible
persons: Class A persons, who "caused or knowingly permitted" the


                               22



<PAGE>


pollution, and Class B, owners and occupiers of the land.  Only
if there is no Class A person who can be found will a Class B
person be liable.  If more than one appropriate person is
identified within the liability group, a series of tests is set
out, the application of which is designed to exclude those less
responsible from liability.  The question of liability thus
depends in part on whether someone else can be found who is more
"blameworthy." 

    Proposals for a new regime to deal with radioactively
contaminated land were set out in a consultation paper dated
February 26, 1998 by the U.K. Department of the Environment,
Transport and the Regions.  It is currently intended that the
approach will be broadly similar to the contaminated land regime
under the Environment Act 1995 described above. 

    Studies commissioned by the Company indicate that there is a
limited amount of radiological contamination at Eaglescliffe,
which the Company anticipates purchasing from the U.K. Ministry
of Defence.  The approximate $6 million purchase price will be
adjusted and reduced by the cost of decontamination of the site
by an independent contractor.

    U.S. Regulation.  The Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"),
applies to releases of any substance designated as a "hazardous
substance" or pollutant by the U.S. Environmental Protection
Agency (the "EPA").  Quantity and concentration are not factors
in determining whether a substance is hazardous for purposes of
CERCLA. 

    Under CERCLA's liability scheme, Section 107 of CERCLA
governs liability while Section 113 of CERCLA creates a mechanism
for apportioning fault among potentially responsible parties
("PRPs").  CERCLA provides that the owner or operator or demise
charterer of a vessel is strictly liable for damages, removal
costs and investigative expenses associated with a release of a
hazardous substance.  Liability is joint and several with other
PRPs. 

    Section 107 of CERCLA provides, in part, that the PRP shall
be liable for: (i) all costs of removal or remedial action
incurred by the U.S. Government or a state or an Indian tribe not
inconsistent with the National Contingency Plan ("NCP"); (ii) any
other necessary costs of response incurred by any other person
consistent with the NCP; (iii) damages for injury to, destruction
of, or loss of natural resources including the reasonable costs
of assessing such injury, destruction, or loss resulting from a
release; and (iv) the costs of any health assessment or health
effects study carried out under CERCLA. 



                               23



<PAGE>


    Generally, private litigants under CERCLA may recover their
response costs against the PRP. However, under CERCLA only the
U.S., a state or an Indian tribe may sue for damages for injury
to natural resources and punitive damages.  Punitive damages may
be awarded under CERCLA up to three times the amount incurred by
the U.S. Government to remediate a site. 

    In addition, CERCLA provides that all costs and damages from
the release of a hazardous substance incurred by the U.S.
Government for which the owner or operator of a vessel is liable
will constitute a maritime lien in favor of the U.S. on such
vessel.  Such costs and damages, accordingly, may be recovered in
an action in rem. 

    The liability of a PRP for the release of a hazardous
substance is capped under CERCLA at $300 per gross ton, or $5
million, whichever is greater.  This limit on liability is not
available if the PRP violates an applicable safety, construction
or operating regulation or if the release was the result of the
PRP's gross negligence or willful misconduct. 

    PRPs under CERCLA are entitled to only three defenses:
(i) act of God; (ii) act of war; and (iii) that the release was
caused solely by the acts or omissions of a third party other
than an employee or agent of the defendant or in connection with
a contractual relationship with the defendant if the defendant
exercised due care with respect to the hazardous substance and
took precautions against foreseeable acts or omissions of any
third party.  All other potential defenses of the PRP are
disallowed. 

    The U.S. Oil Pollution Act of 1990, as amended ("OPA"),
applies to all owners, operators and bareboat charterers of
vessels that trade to the U.S. or its territories or possessions
or operate in U.S. waters, which include the U.S. territorial
seas and the 200 nautical mile exclusive economic zone of the
U.S.  Under OPA Responsible Parties (as defined therein) are
strictly liable on a joint and several basis for discharges of
oil (unless the discharge results solely from the act or omission
of a third party, an act of God or an act of war) for all oil
spill containment and clean-up costs and other damages arising
from actual and threatened discharges of oil pertaining to their
vessels.  Damages include: (i) natural resources damages and the
costs of assessment thereof; (ii) real and personal property
damages; (iii) net loss of taxes, royalties, rent, fees and other
lost government revenues; (iv) lost profits or impairment of
earning capacity due to property or natural resources damage;
(v) net cost of public services necessitated by a spill response,
such as protection from fire, safety or health hazards; and
(vi) loss of subsistence use of natural resources.  OPA limits
the strict liability of Responsible Parties to the greater of


                               24



<PAGE>


$600 per gross ton or $500,000 per dry cargo vessel.  However,
this limit does not apply if the incident is caused by violation
of applicable U.S. federal safety, construction or operating
regulations, or gross negligence or willful misconduct of the
Responsible Party or that of a person in a contractual
relationship with the Responsible Party or if the Responsible
Party failed or refused to report the incident or to cooperate
and assist in connection with oil removal activities.  In
addition, OPA specifies that vessel manning, equipment and other
construction requirements that are in various stages of
development by the U.S. Coast Guard (the "USCG") are applicable
to new and to existing vessels. 

    The USCG has promulgated a rule which requires evidence of
financial responsibility equal to the aggregate of OPA's strict
liability limit of $600 per gross ton and $300 per gross ton for
potential liability for discharges of hazardous substances under
CERCLA.  Such financial responsibility, evidenced by issuance of
a Certificate of Financial Responsibility (a "COFR"), may be
demonstrated by a guaranty in the form of acceptable insurance,
surety bond, self-insurance or other means approved by the USCG.
Failure to obtain a COFR or maintain the COFR on board the vessel
may result in the vessel being detained or seized and the owner
or operator being fined.  Claimants may bring suit directly
against an insurer, surety or other party that furnishes the
guaranty.  In the event that such insurer, surety or other party
is sued directly, it is limited to asserting the following
defenses: (i) the defense that the incident was caused by the
willful misconduct of the responsible party; (ii) the defenses
available to the Responsible Party under OPA or CERCLA; (iii) the
defense that the claim exceeds the amount of the guaranty;
(iv) the defense that the claim exceeds the property amount of
the guaranty based on the gross tonnage of the vessel; and
(v) the defense that the claim has not been made under either OPA
or CERCLA.  Most Responsible Parties have procured financial
guaranties from special purpose insurers at additional cost.  The
Company believes that its vessels that travel within the 200
nautical mile exclusive economic zone of the U.S. comply with
these USCG requirements. 

    OPA specifically permits individual states to impose their
own liability regimes with regard to oil pollution incidents
occurring within their boundaries, and most states that border on
a navigable waterway have enacted legislation providing for
unlimited liability for oil spills and the release of hazardous
substances. 

    It is impossible to predict what additional legislation, if
any, may be promulgated by the U.S., any individual U.S. state,
or any other country or authority. 



                               25



<PAGE>


Insurance

    General.  The operation of any vessel is subject to the
inherent possibility of environmental mishaps including oil
spills, and the liabilities arising from owning and operating
vessels in international trade.  The Company insures its vessels
against the numerous risks associated with the operation of a
vessel, including mechanical failure, collision, property loss
and cargo loss or damage.  CERCLA and OPA, which impose virtually
unlimited liability upon owners, operators and demise charterers
of any vessel trading in the U.S.'s exclusive economic zone for
certain oil pollution accidents in the U.S., has made liability
insurance more expensive for shipowners and operators trading in
the U.S. market. 

    Hull and Machinery and War Risks Insurance.  The Company
maintains marine hull and machinery and war risks insurance on
each of its vessels, which includes the risk of actual or
constructive total loss, currently with deductibles of up to
$200,000 per vessel per incident. 

    Protection and Indemnity Insurance.  Protection and indemnity
insurance covers the legal liability of the Company for its
shipping activities.  This includes the legal liability and other
related expenses of injury or death of crew, passengers and other
third parties, loss or damage to cargo, claims arising from
collisions with other vessels, damage to other third-party
property, pollution arising from oil or other substances, and
salvage, towing and other related costs, including wreck removal.
The coverage is generally viewed as unlimited with the exception
of oil pollution liability, which is limited to $500 million per
vessel per incident, which limit can be increased to $700 million
per incident if excess coverage is bought. 

    This protection and indemnity insurance coverage is provided
by mutual protection and indemnity ("P&I") Associations.  Each of
the vessels currently in the fleet is entered in a
P&I Association which is a member of the International Group of
P&I mutual assurance associations ("International Group"). The
fourteen P&I Associations that comprise the International Group
insure approximately 90% of the world's commercial tonnage and
have entered into a pooling agreement to reinsure each
association's liabilities.  Each P&I Association has capped its
exposure to this pooling agreement at $4.25 billion.  As a member
of P&I Associations, which are members of the International
Group, the Company is subject to calls payable to the
associations based on its claim records as well as the claim
records of all other members of the individual associations, and
members of the pool of P&I Associations comprising the
International Group. 



                               26



<PAGE>


    The Company believes its insurance coverage is adequate to
the needs and generally meets or exceeds industry norms for
insurance coverage, although there can be no assurance that the
Company's coverage will be sufficient to protect it from material
loss under all circumstances. 

Recent Developments

    Since the end of fiscal 1998, the Company has not engaged in
any strategic transactions.

ITEM 2 - DESCRIPTION OF PROPERTY

    The Company's headquarters are at Puttenham Priory,
Puttenham, Surrey, which are owned by the Company and subject to
a mortgage in the amount of $3.8 million as of September 30,
1998. 

    The Company leases areas at Dublin, Belfast, Heysham and
Liverpool ports as follows: 

    At Belfast, the Company has a contract for the preferential,
but not exclusive, use of a port area which includes a berth,
vehicle ramp, compound and various operation and administration
buildings.  This permitted user contract is for a period of 10
years from January 1, 1994, with an option to renew. 

    Merchant Ferries leases an area of about five hectares at the
Port of Dublin for a term of 60 years from July 1994.  The
Company has also entered into an operating agreement for a period
of 10 years from July 1994.  This agreement provides the Company
with the preferential, but not exclusive, right to use the water
space and a ramp for the purpose of handling its vessels for a
fixed charge plus various charges for port and pilot services
provided. 

    At Heysham, the Company, through BFF and Merchant Ferries,
has contracts with Heysham Port Limited for the use of the port
facilities for a period of 10 years, until 2003.  These
agreements may be terminated upon 12 months' notice by either
party.  Both BFF's and Merchant Ferries' contracts with Heysham
Port Limited provide for the provision of slot times, during
which the respective company has the exclusive use of designated
berths.  The contract also provides for stevedoring and other
services reasonable for the type of trade Merchant Ferries and
BFF operate and the facilities available at Heysham. 

    At Liverpool, the Company has entered into an agreement for
the lease of certain berths during designated slot times.  This
lease will be replaced by a contract for preferential, but not



                               27



<PAGE>


exclusive, use of the new river berth which is expected to be
built by late 1999. 

    Although ferry operators' use contracts with port authorities
are generally confidential, the Company believes that its
contracts at each port are in keeping with industry standards.
The Company believes that its current space at Puttenham Priory
and each port is sufficient for its needs.

    The Company also leases office and warehousing space used by
Flair and Duncan at Heathrow Airport, London, England.  The
Company has also leased further office and warehousing facilities
near Heathrow to expand its logistics businesses in the south of
England.

    The Company currently leases Eaglescliffe from the U.K.
Ministry of Defence.  This lease is for a period of two years
from February 20, 1998, until February 20, 2000, and provides for
the Company's exclusive right to purchase the property during
this period.  The Company has an exclusive letter of intent to
purchase the Eaglescliffe facility from the Ministry of Defence
for a price of approximately $6 million, less the cost of the
decontamination of the site by an independent contractor.  The
Company anticipates purchasing Eaglescliffe once the cost of
decontamination has been agreed with the Ministry of Defence.
Studies commissioned by the Company indicate that there is a
limited amount of radiological contamination at Eaglescliffe
which was created by the burning of surplus aircraft following
World War II, as a consequence of which radium paint applied to
the instrument dials of the aircraft seeped into the ground.  In
addition there is some asbestos present in the ground and certain
buildings.  The Company anticipates that the decontamination will
be completed by early 2000. 

ITEM 3 - LEGAL PROCEEDINGS

    In 1993 the Company attempted to commence its
passenger/vehicle service between Almeria, Spain and Nador,
Morocco.  The Spanish Government initially prevented the service
from operating.  Thereafter, Cenargo filed a complaint with the
European Commission, alleging violations by Spain of European
Community regulations in prohibiting the Company's service, and
Spain permitted the service to start in November 1994.  The
Company thereafter submitted a claim for damages against the
Spanish Government which is presently proceeding in the Spanish
courts.  The amount of the claim is approximately $25.5 million,
plus interest.  Cenargo believes that were it to prevail in the
current proceeding, appellate proceedings might continue for a
significant time.  The Company and the Spanish Government are
currently in settlement discussions to resolve the issue out of
court. 


                               28



<PAGE>


    From time to time the Company is a party to various routine
litigation matters incidental to the Company's business arising
principally from personal injury and cargo damage claims.
Management believes that there are no current pending legal
proceedings, individually or in the aggregate which will have a
material adverse effect on the business, financial position, or
results of operations or liquidity of the Company. 

ITEM 4 - CONTROL OF THE REGISTRANT

    The Company is a closely-held English holding company.  The
following table sets forth certain information, as of December
31, 1998, concerning the beneficial ownership of the Company's
outstanding Common Shares.

                    OWNERSHIP OF THE COMPANY
Name                Number of Shares        Percent of Total
Michael Hendry          49,500                    99%
Peter Morton            500                        1%

ITEM 5 - NATURE OF TRADING MARKET

    No active trading market within or outside the United States
exists for the equity securities of the Company.  The Company's
equity securities have not been registered under the Securities
Act of 1933, as amended (the "Securities Act").

    On December 22, 1998, the registration statement covering
$175,000,000 in aggregate principal amount of the Company's 9
3/4% First Priority Ship Mortgage Notes due 2008 was declared
effective, and the Company offered the registered notes (the
"Exchange Notes") in exchange for all of its otherwise identical
outstanding restricted Notes (collectively, with the Exchange
Notes, the "Notes").  The offer to exchange closed on February 1,
1999 and all restricted Notes were exchanged for Exchange Notes.
While the Notes are listed on the Luxembourg Stock Exchange,
there is no active trading market on that exchange for the Notes.
The Notes trade in the United States in inter-dealer
transactions.

ITEM 7 - TAXATION

    The following is a summary of the principal U.K. tax
considerations with respect to ownership by U.S. Holders of the
Notes and is based on the laws as in force and as applied in
practice on the date of this report, including the U.K./U.S.
double taxation convention relating to income and capital gains
(the "Treaty"), and is subject to changes to those laws and
practices, and any relevant judicial decision, subsequent to the
date of this report. 



                               29



<PAGE>


    Interest.  In the opinion of Stephenson Harwood, U.K. counsel
to the Company, the Company will not be required to deduct or
withhold on account of U.K. income tax from payments of principal
or, for so long as the Notes are listed on the Luxembourg Stock
Exchange or some other stock exchange recognized by the U.K.
Inland Revenue, from payments of interest where: 

         (a)  the payment of interest is made by a paying agent
    outside the U.K.; or 

         (b)  the payment of interest is made by or through a
    person who is in the U.K. provided that (i) the person
    beneficially entitled to the interest is not resident in the
    U.K. and beneficially owns the Notes from which the interest
    derives or (ii) the Notes are held in a recognized clearing
    system, and either the person by or through whom the payment
    is made has received a declaration in a form required by law
    confirming that these requirements are satisfied or the
    Inland Revenue has issued a notice to that person stating
    that they consider them satisfied. 

    In other cases interest will (subject to what is said below)
be paid after deduction of tax at the lower rate (currently 20
percent) on such interest.  A U.S. Holder of a Note who is
entitled to the protection of the Treaty will normally be
eligible to recover in full any U.K. tax withheld from payments
of interest to which such Holder is beneficially entitled by
making a claim under the Treaty on the appropriate form.  If the
claim is accepted by the Inland Revenue, they will authorize
subsequent payments to that U.S. Holder to be made without
withholding for U.K. tax. 

    For so long as the Notes are listed on a recognized stock
exchange, where any person in the U.K., in the course of a trade
or profession: 

         (a)  acts as a custodian of a Note in respect of which
    he receives any interest or any interest is paid at his
    direction or with his consent; or 

         (b)  collects or secures payment of, or receives
    interest, on a Note for another person 

(except in any case by means only of clearing a check or
arranging for the clearing of a check) that person is liable to
account for U.K. income tax at the lower rate (currently 20
percent) on such interest and is entitled to deduct an amount in
respect thereof unless an exemption from such liability is
applicable including, for example, where the Note and the
interest is beneficially owned by a person not resident in the
U.K. and applicable administrative and procedural requirements


                               30



<PAGE>


are satisfied, including the making of declarations as to status
and eligibility. 

    Except for any income tax deducted as described above (and
except in the case of non-U.K. resident trustees of a trust
having an ordinarily resident or resident beneficiary) a U.S.
Holder will not generally be liable to U.K. tax on interest on a
Note unless it is resident in the U.K. or is chargeable to income
tax or corporation tax on a branch or agency in the U.K. through
which it carries on a trade, profession or vocation and in
connection with which the interest is received or to which the
Notes are attributable.  There are certain exemptions for
interest received by certain categories of agent (such as some
brokers and investment managers). 

    Payments by Subsidiary Guarantors.  It is possible that
payments by a Subsidiary Guarantor would be subject to
withholding on account of U.K. tax, subject to any claims made by
U.S. Holders under the Treaty. 

    Disposal of Notes.  For U.K. tax purposes, a disposal (which
includes redemption and could include the exchange of Notes for
Exchange Notes) of a Note will generally not be subject to U.K.
tax unless the holder is either resident or (if an individual)
ordinarily resident for tax purposes in the U.K. or carries on a
trade, profession or vocation in the U.K. through a branch or
agency to which the Note is attributable. 

    Annual Tax Charges.  Provisions of the Finance Act 1993 which
could impose an annual charge on corporate holders of Notes by
reference to exchange rate fluctuations, and provisions of the
Finance Act 1996 which could apply so as to change corporate
holders to corporation tax on income on any profits (and give
relief for permitted losses) by reference to accounting periods
on either an authorized accruals or mark to market basis, will
not apply to non-U.K. resident corporate U.S. Holders without a
branch or agency in the U.K.

    Stamp Duty and Stamp Duty Reserve Tax.  No U.K. stamp duty or
stamp duty reserve tax is payable on the issue of the applicable
Global Notes or on the issue or transfer of a Note in definitive
form or on its redemption.  No U.K. stamp duty will be payable in
respect of any instrument of transfer of Book-Entry Interests,
provided that any instrument relating to such a transfer is not
executed in the U.K., and remains at all times outside the U.K.
An agreement to transfer Notes should not give rise to stamp duty
reserve tax in any event. 

    Inheritance Tax.  Notes represented by definitive notes that
are not treated as situated in the U.K. and are beneficially
owned by an individual domiciled outside the U.K. for U.K.


                               31



<PAGE>


inheritance tax purposes will not be subject to U.K. inheritance
tax. The status of Notes held in the form of Book-Entry Interests
is, however, not free from doubt.  If a Note is subject to U.K.
inheritance tax and U.S. federal estate tax, the U.S./U.K. double
taxation convention relating to estate and gift taxes may entitle
a U.S. Holder to credit or relief in respect of the U.K. tax. 

    U.S. HOLDERS OF NOTES ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS AS TO THE U.K., OR OTHER TAX CONSEQUENCES TO THEM OF THE
ACQUISITION, OWNERSHIP AND DISPOSITION OF NOTES, AS WELL AS ANY
APPLICABLE FOREIGN, STATE OR LOCAL TAX LAWS OR ESTATE OR GIFT TAX
CONSIDERATIONS.

ITEM 8 - SELECTED FINANCIAL DATA

    The following selected historical income and balance sheet
financial data as of and for the years ended September 30, 1994,
1995, 1996, 1997 and 1998 have been derived from the audited
Consolidated Financial Statements of the Company, which are
included elsewhere in this report.  The following information
should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and
the Company's Consolidated Financial Statements, including the
notes thereto, included elsewhere herein. 





























                               32



<PAGE>


                                       Year Ended September 30,       
                              __________________________________________
                               1994     1995     1996     1997      1998
                                     (U.S. Dollars in Thousands)

Statement of Income Data                                                 
Operating revenues                                                       
Charterhire revenues, net    $41,271  $46,498  $48,750  $43,649  $ 33,790
Ferry service revenues            --    8,070   11,497   19,489    62,646
Logistics services and
  other revenues               2,706    4,998    8,010    7,930    14,669
Operating revenues            43,977   59,566   68,257   71,068   111,105
Operating expenses                                                       
Vessel and other operating
  costs                       26,795   29,274   34,127   41,159    72,103
Depreciation                   7,835    9,376   11,823   11,017    10,945
Amortization of drydocking
  and special survey costs     1,210    1,260    1,139    1,767     1,669
Amortization of goodwill          --       --       --       --       108
General and administrative
  expenses                     4,233    8,295    7,094    7,932    13,590
Foreign exchange loss (gain)     652     (983)    (916)     889        88
Operating expenses            40,725   47,222   53,267   62,764    98,503
Operating income               3,252   12,344   14,990    8,304    12,602
Other income (expense)            --       --       --       --        --
Interest income                  257      722      672      573     2,210
Interest expense              (4,166)  (6,599)  (8,894)  (8,227)  (19,565)
Income (loss) from joint
  ventures                       549      681     (965)    (435)       --
Gain on sale of marketable
  security                        --       --    1,326       --        --
Provision for impairment
  in values of vessels            --       --       --       --   (22,636)
Gain on disposition of
  fixed assets                 4,028    6,415        3       97    14,018
Other income (expense)           668    1,219   (7,858)  (7,992)  (25,973)
Income (loss) before income
  taxes                      $ 3,920  $13,563  $ 7,132  $   312  $(13,371)
                              ======   ======   ======  =======    ======
Other Financial Data
Net cash provided by (used
  in) operating activities            $16,889  $18,895  $13,931  $ 14,682
Net cash (used in) provided
  by investing activities            $(61,200) $(6,724)$(35,025) $(21,723)
Net cash provided by (used
  in) financing activities            $49,737 $(17,889) $25,021  $ 50,908
Balance Sheet Data (at end
  of period)                                                             
Cash and cash equivalents   $  5,437 $ 10,863 $  5,146 $  9,072  $ 52,939
Net book value of vessels   $ 88,872 $174,634 $163,158 $177,002  $153,166
Total assets                $147,667 $213,868 $206,523 $264,099  $349,932
Total debt                  $ 81,192 $131,153 $117,024 $164,469  $243,252
Shareholders' equity        $ 43,081 $ 52,775 $ 56,391 $ 56,751  $ 53,338
Fleet Data (at end of period) *                                          
Total dwt of dry bulk
  carriers ('000s)               327      585      585      585       323
Total dwt of multi-purpose
  vessels ('000s)                116       95       95       95        55
Total capacity of ferries                                                
Trailer units                    397      326      326      326       708
Passengers                     1,315    1,315    1,315    3,701     3,951
Total number of vessels           17       16       16       17        15

*Includes the Mistral operated under an operating lease.


                               33



<PAGE>



ITEM 9 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

General

    Cenargo, an English Company, is a diversified international
transportation group specializing in deepsea dry cargo shipping
and European freight and passenger ferry services, as well as the
movement of surface and air freight and the management of freight
logistics.

    In recent years, Cenargo has been predominantly an owner and
operator of deepsea dry bulk vessels, but during the year ended
September 30, 1998 ("fiscal 1998") has been progressively
withdrawing from this market.  The Company, as at the date of
this report, currently owns (including capital leased vessels)
two multi-purpose general cargo vessels, six RoRo freight
ferries, two RoPax freight/passenger ferries and one
passenger/car ferry.  The Company has two RoPax freight/passenger
ferry newbuildings, with delivery scheduled for late 1999 early
2000.  

Segment Analysis

Deep Sea Operations

    The deepsea operations have been effected by significant
decline in the dry bulk market.  Cenargo's exposure to this
market has been reduced by the disposal of its Panamax vessels
early in fiscal 1998 together with the disposal of three of its
multi-purpose vessels, all at a profit compared to their book
value. A further sudden sharp decline in the deepsea dry bulk
market for Capesize vessels in August 1998 led to Cenargo's
decision to sell its two Capesize vessels which were delivered to
new owners in October 1998.  Provision for the loss arising on
the sale of the two Capesize vessels of approximately $22.6m has
been made in the results for fiscal 1998.  

    The Company's two remaining multi-purpose vessels are both
employed on profitable time charters until mid 1999, and the
Company is currently investigating potential business
opportunities.

Irish Sea Services

    The Company's strategy to continue the development of its
Irish Sea Services was developed in February 1998, with the
acquisition of BFF, freight service between Heysham in the UK and
Belfast in Ireland, as part of Cenargo's acquisition of
Scruttons.  During fiscal 1998, both BFF and Cenargo's existing
Irish Sea service, operated by Merchant Ferries, have benefited


                               34



<PAGE>


from strong demand, supported by strong market growth in trade
across the Irish Sea.  Cenargo is currently developing a new
Irish Sea service between Liverpool and Dublin which is scheduled
to started in February 1999 following delivery of the Company's
second new RoPax Vessel from the shipyard on 26th January 1999.
The start of this new service had been delayed due to the delay
of delivery of the second RoPax Vessel, caused by vendor delays.
Under the terms of the contract with the shipyard for building of
these vessels the shipyard has to pay $19,800 per day for each
day's delay beyond the scheduled delivery date.  The shipyard is
claiming "force majeure" for part of the delay, resulting in
$792,000 of the amount due being paid into a joint escrow account
pending the outcome of an arbitration.  

Ferrimaroc

    Ferrimaroc, which operates as a passenger, car and freight
ferry service between Southern Spain and Eastern Morocco,
continues to operate profitably trade successfully.  Passenger
volumes continue to grow strongly in this market, and has led to
Ferrimaroc reporting a strong full year result for fiscal 1998.  

Other Businesses

    The development of the Cenargo logistics businesses has
continued strongly during fiscal 1998.  The range of activities
offered has increased following the acquisition in June 1998 of
the net assets and trade of a small sea freight forwarding
operation located near Heathrow, London by Duncan.  The purchase
of Eaglescliffe, an ex-Ministry of Defence warehousing complex in
the North East of England, is expected to be completed during the
first half of 1999.  Cenargo is currently leasing part of the
site, which is bonded and has been granted the status of an ICD
clearance depot, so that import clearance procedures can be
completed on the site rather than at the port of entry into the
United Kingdom, and imported goods can be held on the site
without paying import duty and value added tax, until the goods
are dispatched to the consignee.  

Results of Operations

Year Ended September 30, 1998 compared to Year Ended
September 30, 1997

Operating Revenues

    Operating revenues increased in the Year ended September 30,
1998 (the "1998 Year") by $40.0m, or 56.2%, to $111.1m compared
to $71.1m in the year ended September 30, 1997 (the "1997 Year").
The increase comprises a $9.9m, or 22.7%, decrease in charter
hire revenues, a $43.1m, or 220%, increase in ferry service


                               35



<PAGE>


revenues and a $6.8m, or 86%, increase in logistics services and
other revenues.  The increase in ferry service revenues was due
to the inclusion of Merchant Ferries  results (which were
reflected in income from joint ventures for 9 months of the 1997
Year) and BFF results.  The increase in logistics services and
other revenues was due to the inclusion of revenues from Flair
(acquired in September 1997), inclusion of revenues from
Scruttons (NI) Limited (acquired as part of Scruttons) and
revenues from Duncan acquired in May 1998.  The decrease in
charter hire revenue represents the loss of charter hire
previously generated by six of the Company's deepsea vessels
disposed of in the first and second quarters of 1998, the effect
of the scheduled dry-docking of a Capesize vessel offset by the
inclusion of charter hire from a Merchant Ferries vessel employed
under a bareboat charter.  

Operating Expenses

    Vessels and other operating costs increased in the 1998 Year
by $31.0m, or 75.4%, to $72.1m compared to $41.1m in the 1997
Year, primarily as a result of the inclusion of Merchant Ferries,
BFF, Flair and Duncan results in the 1998 Year offset by
decreased deepsea vessel operating costs as a result of the six
vessels sold.  

    Depreciation for the 1998 Year has decreased by $0.1m, or 1%,
to $10.9m compared to $11.0m in the 1997 Year, which represents
the reduction of depreciation on vessels sold and the inclusion
of depreciation on Merchant Ferries and BFF vessels in the 1998
Year.  Amortization of dry-docking and special survey costs for
both 1998 and 1997 Years was $1.7m reflecting an increase due to
the inclusion of BFF vessels offset by a decrease due to the
vessels sold.  

    General and administrative expenses for the 1998 Year
increased by $5.6m, or 70.9%, to $13.5m compared to $7.9m in the
1997 Year, representing the inclusion of Merchant Ferries, BFF,
Flair and Scruttons costs in the 1998 Year.  

    Primarily as a result of these developments, total operating
expenses increased by $35.7m or 56.8%, to $98.5m for the 1998
Year compared to $62.8m for the 1997 Year.

Net Operating Income

    As a result of the foregoing factors, net operating income
increased by $4.3m, or 51.8%, to $12.6m for the 1998 Year
compared to $8.3m for the 1997 Year.  





                               36



<PAGE>


Other Operating Income/Expenses

    Interest income increased by $1.6m, or 266%, to $2.2m for the
1998 Year compared to $0.6m for the 1997 Year due to increased
interest from cash deposits from the proceeds of the disposal of
vessels.  Interest expense increased by $11.4m, or 139%, to
$19.6m for the 1998 Year compared to $8.2m for the 1997 Year.
The increase was due to increased interest costs as a result of
the Notes issue (as defined below), the inclusion of interest
rate swap contract termination costs of $6.7m and inclusion of a
non-cash charge of $0.5m representing unamortized finance charges
written off on repayment of bank loan facilities, from the
proceeds of the Notes issue (as defined below).

    Loss/gain on disposal of fixed assets increased by $8.7m to a
loss of $8.6m in the 1998 Year compared to a profit of $0.1m in
the 1997 Year.  The loss for the 1998 Year was due to the profit
on the disposal of six deepsea vessels of approximately $14.0m
offset by a provision for impairment in value of Cenargo's two
Capesize vessels of $22.6m, providing in full for the loss on the
disposal on these vessels subsequent to the fiscal year end.  

Income Taxes

    Income tax benefit in the 1998 Year was $9.5m, or 71% of pre-
tax results, compared to $0.1m in the 1997 Year.

Net Income

    As a result of the foregoing, net loss was $3.9m, or 3.5% of
operating revenues, in the 1998 Year compared to net income of
$0.4m in the 1997 Year.  

Liquidity and Capital Resources

    Total shareholders' equity at September 30, 1998 was $53.3m
compared to $56.7m at September 30, 1997.  The decrease of $3.4m
is represented by net loss of $3.8m and the cumulative
translation adjustment of $0.4m, on translation of sterling based
subsidiary companies.  

    Long term debt at September 30, 1998 consists of $172.3m 9
3/4% First Priority Ship Mortgage Notes (the "Notes") and $42.65m
currently drawn down from an $85.5m facility to finance building
contracts for the two Newbuild Vessels, together with other
secured debt and obligations under capital leases.

    At September 30, 1998 the Company had cash and cash
equivalents of $52.9m compared to $9.1m at September 30, 1997.
Cash and cash equivalents increased by $43.8m principally as a
result of the proceeds of disposition of vessels and proceeds


                               37



<PAGE>


from the offering of the Notes.  At September 30, 1998
approximately $22.7m is held in escrow/blocked accounts to fund
delivery installments due on the second RoPax Vessel together
with deposits for the sale of the two Capesize vessels, held as
escrow property to secure the Notes.  

Year Ended September 30, 1997 compared to Year Ended
September 30, 1996

Operating Revenues

    Operating revenues increased $2.8 million, or 4.1%, to
$71.1 million in fiscal 1997 from $68.3 million in fiscal 1996,
as an $8.0 million, or 69.5%, increase in ferry service revenues
was offset in part by a $5.3 million, or 10.5%, decrease in
charterhire revenues.  The increase in ferry service revenues was
attributable to a significant increase in revenues from
Ferrimaroc's Spain-Morocco ferry service as a result of an
increase in volume and the introduction of a second ferry, as
well as the inclusion of Merchant Ferries' revenues for the
fourth quarter of fiscal 1997 as a result of the Company's
acquisition of the remaining 50% of Merchant Ferries in July
1997.  The decrease in charterhire revenues was attributable to a
decline in charter rates across all of the Company's deepsea
sectors (which resulted from an unfavorable change in the balance
between supply and demand in each sector), as well as an increase
in the number of off-hire days as a result of scheduled
drydockings, offset in part by a decrease in off-hire days
between charters.  In addition, other revenues, which reflects
revenues derived from the Company's third-party shipbroking and
freight forwarding operations, decreased by $0.1 million in
fiscal 1997.  Other revenues in fiscal 1997 includes revenues
derived by CBS from a contract of affreightment.  Other revenues
in fiscal 1996 includes a commission earned by CBS for broking
the purchase of two vessels by a third party. 

Operating Expenses

    Vessel and other operating costs increased $7.0 million, or
20.6%, to $41.2 million, or 57.9% of operating revenues, in
fiscal 1997 from $34.1 million, or 50.0% of operating revenues,
in fiscal 1996.  The increase in vessel operating costs was
attributable primarily to the inclusion of Merchant Ferries'
results for the fourth quarter of fiscal 1997, as well as
increased costs at Ferrimaroc as a result of the increased volume
and the introduction of a second ferry. 

    Depreciation decreased $0.8 million, or 6.8%, to
$11.0 million, or 15.5% of operating revenues, in fiscal 1997
from $11.8 million, or 17.3% of operating revenues, in fiscal
1996, as the inclusion of depreciation attributable to Merchant


                               38



<PAGE>


Ferries' vessels for the fourth quarter of fiscal 1997 was more
than offset by the elimination of depreciation relating to three
deepsea vessels that were fully depreciated by the beginning of
fiscal 1997. 

    Amortization of drydocking and special survey costs increased
$0.6 million, or 55.1%, to $1.8 million, or 2.5% of operating
revenues, in fiscal 1997, from $1.1 million, or 1.7% of operating
revenues, in fiscal 1996 primarily as a result of the increase in
scheduled drydockings during fiscal 1997, as well as the
inclusion of Merchant Ferries' results for the fourth quarter of
fiscal 1997. 

    General and administrative expenses increased $0.8 million,
or 11.8%, to $7.9 million, or 11.2% of operating revenues, in
fiscal 1997 from $7.1 million, or 10.4% of operating revenues, in
1996.  The increase in general and administrative expenses was
attributable primarily to the inclusion of Merchant Ferries'
results for the fourth quarter of fiscal 1997. 

    Foreign exchange losses were $0.9 million, or 1.3% of
operating revenues, in fiscal 1997 compared to foreign exchange
gains of $0.9 million, or 1.3% of operating revenues, in fiscal
1996. 

Other Operating Income/Expenses

    Interest expense, net decreased $0.6 million, or 9.3%, to $
7.7 million, or 10.8% of operating revenues, in fiscal 1997 from
$8.2 million, or 12.0% of operating revenues, in fiscal 1996
primarily due to lower borrowing costs in fiscal 1997, offset in
part by the inclusion of Merchant Ferries' interest expense for
the fourth quarter of fiscal 1997. 

    Other income (expense) in fiscal 1997 consisted of a $0.4
million loss from joint ventures, representing the Company's
share of Merchant Ferries, loss prior to its being consolidated
with the Company, and a $0.1 million gain on the disposition of
fixed assets.  Other income (expense) in fiscal 1996 consisted of
a $1.0 million loss from joint ventures, representing the
Company's share of Merchant Ferries' loss for such year, which
was more than offset by a $1.3 million gain from the sale of
marketable securities resulting from the sale by the Company of
an investment in a Far East-based shipping company. 

Income Taxes

    Income tax benefit in fiscal 1997 was $0.1 million, or 30.5%
of pre-tax income, compared to income taxes of $2.7 million, or
34.2% of pre-tax income, in fiscal 1996. 



                               39



<PAGE>


Net Income

    As a result of the foregoing, net income was $0.4 million, or
0.6% of operating revenues, in fiscal 1997 compared to $4.4
million, or 6.5% of operating revenues, in fiscal 1996.

The Notes

    Pursuant to a Purchase Agreement dated June 19, 1998, the
Company sold unregistered 9 3/4% First Priority Ship Mortgage
Notes due 2008 (the "Restricted Notes") in an aggregate principal
amount of $175,000,000 to BancBoston Securities Inc. (the
"Initial Purchaser") in reliance upon, and subsequently resold by
the Initial Purchaser thereof under, exemptions from the
registration provisions of the Securities Act (including those
provided by Section 4(2) thereof, and Rule 144A and Regulation S
promulgated thereunder).  The Initial Purchasers subsequently
placed the Restricted Notes with qualified institutional buyers
in reliance upon Rule 144A under the Securities Act and with a
limited number of accredited investors (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act).  The net
proceeds to the Company from the sale of the Restricted Notes
(the "Offering") were approximately $166.2 million.  The Company
used such net proceeds (i) to refinance approximately $131.9
million of existing indebtedness, (ii) to fund the final
installments of the purchase price of the two RoPax Vessels by
depositing $31.3 million into an escrow account, and (iii)
retained the balance for working capital purposes.

    Pursuant to a prospectus dated December 22, 1998, under a
Registration Statement declared effective on that date under the
Securities Act, the Company commenced an offer (the "Exchange
Offer") to exchange $1,000 principal amount of its registered
9 3/4% First Priority Ship Mortgage Notes due 2008 (the "Exchange
Notes") for each $1,000 principal amount of the Restricted Notes.
The form and terms of the Exchange Notes are identical in all
material respects to those of the Restricted Notes, except for
certain transfer restrictions and registration rights relating to
the Restricted Notes.  The Exchange Notes have the same
redemption terms as the Restricted Notes.  The Exchange Notes
evidence the same indebtedness as the Restricted Notes and were
and will be issued pursuant to, and entitled to the benefits of,
an Indenture among the Company, the Subsidiary Guarantors and the
Bankers Trust Company, (the "Trustee"), dated as of June 19, 1998
governing the Restricted Notes and the Exchange Notes (the
"Indenture")(the Restricted Notes and Exchange Notes collectively
referred to herein as the "Notes").

    The Notes are secured by first priority statutory mortgages
and deeds of covenants (including first assignments of
insurances) collateral thereto (the "Mortgages") on the vessels


                               40



<PAGE>


securing the Notes (the "Mortgaged Vessels").  In the event that
the Company and the Subsidiary Guarantors default on their
obligations to make payments in respect of the Notes, holders of
the Notes would be entitled to payment out of the proceeds from
the sale of the Mortgaged Vessels.

    Prior to June 15, 2003, the Notes will be subject to
redemption at the option of the Company, in whole but not in
part, upon a Change of Control, at specified redemption prices.
On and after June 15, 2003, the Notes will be subject to
redemption at any time at the option of the Company, in whole or
in part, at specified redemption prices.  In addition, the Notes
will be redeemable at the option of the Company, in whole but not
in part, at specified redemption prices, in the event changes in
withholding tax treatment of the Notes would obligate the Company
to pay Additional Amounts.  Moreover, at any time prior to June
15, 2001, the Company may redeem up to 35% of the aggregate
principal amount of the Notes at a redemption price equal to
109.75% of the principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the
redemption date, with the net cash proceeds of one or more public
offerings of equity securities, other than Disqualified Stock, of
the Company, provided that at least $113.75 million in principal
amount of Notes remains outstanding immediately after the
occurrence of each such redemption.  

    Upon the occurrence of a Change of Control, (a) each holder
of Notes will have the right to require the Company to repurchase
all or any part of such holder's Notes at a repurchase price
equal to 101% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, to the date of
repurchase.

    The Notes are fully and unconditionally guaranteed on a
senior basis, jointly and severally, by the Subsidiary
Guarantors.

    The Notes and the Subsidiary Guarantees are senior
obligations of the Company and of the Subsidiary Guarantors,
respectively, will rank pari passu in right of payment with all
existing and future senior indebtedness of the Company and of the
Subsidiary Guarantors, respectively, and will be senior in right
of payment to all future subordinated indebtedness of the Company
and of the Subsidiary Guarantors, respectively.

    As to each Mortgaged Vessel, the Subsidiary Mortgagor granted
to the Trustee a Mortgage on such Mortgaged Vessel to secure the
payment of all sums of money (including principal, premium,
interest, and Liquidated Damages, if any) from time to time
payable by such Subsidiary Mortgagor under its Subsidiary
Guarantee, the payment of principal, premium, interest and


                               41



<PAGE>


Liquidated Damages, if any, on the Notes, the payment of all
other sums payable by Cenargo under the Indenture and the payment
of all other sums payable under the Security Agreements.  The
Mortgages were recorded in accordance with the provisions of the
law of the country in which the applicable Mortgaged Vessel is
registered.  Concurrently with the closing of the Offering, all
previously existing mortgages on the Mortgaged Vessels were
released.  The maximum liability of each Subsidiary Mortgagor
under its Mortgages is limited to the same extent as such
Subsidiary Mortgagor's maximum liability under its Subsidiary
Guarantee. 

The Credit Facility

    The Company entered into a credit facility with Bank Boston,
N.A. (the "Credit Facility") concurrently with the consummation
of the Offering.  The Credit Facility makes available to the
Company up to $85.5 million as a construction and term loan
facility to finance the acquisition and construction of vessels
and for working capital and general corporate purposes. 

    Obligations under the Credit Facility are guaranteed by the
Subsidiary Guarantors and all future and direct and indirect
subsidiaries and parents of the Company.  In addition, drawings
under the Credit Facility are secured by, among other things,
first mortgages on vessels acquired with the proceeds of such
drawings and certain other vessels not serving as Collateral for
the Notes, assignments of insurance proceeds and earnings and, in
certain cases, assignments of charters. 

    The Credit Facility contains various covenants that restrict
the Company from taking various actions and that require that the
Company observe certain financial covenants.  The Credit
Facility's covenants include covenants relating to loan to
collateral value ratios, an interest coverage ratio, a leverage
ratio, a minimum net worth test and limitations on indebtedness,
granting of liens, mergers, acquisitions, disposition of assets,
change in business activities and certain other corporate
activities.

    The Credit Facility provides for events of default, including
nonpayment of principal, interest or fees, covenant defaults,
breaches of representations or warranties in any material
respect, cross default and cross acceleration to certain other
indebtedness, bankruptcy, certain environmental matters, material
judgment defaults and change of control. 







                               42



<PAGE>


Vessel Financing Leases

    Two of the Company's vessels (Saga Moon and River Lune) have
been financed in sale/leaseback transactions guaranteed by
Scruttons under which BFF has sold or bareboat chartered a vessel
to an unaffiliated third party and bareboat chartered the vessel
back from such third party. 

    The Mistral is leased by the Company under a five year
charter providing for charterhire of approximately $3 million per
year.  The vessel may be sold at the conclusion of the five year
charter period to a third party.  However, the Company's
commission for its role as exclusive sales agent will be 95% of
the sale price of the vessel. 

Substantial Leverage and Debt Service

    Upon consummation of the sale of the Restricted Notes, the
Company became highly leveraged, with $218.1 million of total
indebtedness outstanding (including the Notes) and $61.9 million
of shareholders' equity.  Subject to the restrictions in the
Indenture and under the Credit Facility, each of Cenargo and its
subsidiaries, including the Subsidiary Guarantors, may incur
additional indebtedness from time to time, including under the
Credit Facility.  The degree to which the Company is leveraged
could have important consequences for holders of the Notes,
including but not limited to the following: (i) the Company's
ability to obtain additional financing for working capital,
capital expenditures, acquisitions or general corporate purposes
may be limited; (ii) a substantial portion of the Company's cash
flow from operations must be dedicated to the payment of interest
on the Notes and any other future indebtedness, thereby reducing
the funds available to the Company for other purposes;
(iii) indebtedness outstanding under the Credit Facility is
secured by security interests in, or liens on, certain of the
assets of the Company, and may become due prior to the time the
principal on the Notes will become due; (iv) the Company may be
hindered in its ability to withstand competitive pressures and
respond to changing business conditions; (v) the Company may be
more vulnerable in the event of a downturn in general economic
conditions or in its business; (vi) the Company may be more
highly leveraged than others with which it competes, which may
put it at a competitive disadvantage; and (vii) the Company's
indebtedness (other than the Notes), including under the Credit
Facility, may bear interest at floating rates, thereby rendering
the Company vulnerable to increases in interest rates. 







                               43



<PAGE>


Cyclicality of Shipping Industry

    The shipping industry has been highly cyclical, experiencing
volatility in profitability, vessel values and charter rates
resulting from changes in the supply of, and demand for, shipping
capacity.  The demand for ships is influenced by, among other
factors, global and regional economic conditions, developments in
international trade, changes in seaborne and other transportation
patterns, weather patterns, crop yields, armed conflicts, port
congestion, canal closures, political developments, conflicts,
embargoes and strikes.  The demand for ships is also influenced
by, among other things, the demand for consumer goods, perishable
foodstuffs and dry bulk commodities.  Demand for such products is
affected by, among other things, general economic conditions,
commodity prices, environmental concerns, weather and competition
from alternatives to coal and oil. The supply of shipping
capacity is a function of the delivery of new vessels and the
number of older vessels scrapped, converted to other uses,
reactivated or lost.  Such supply may be affected by regulation
of maritime transportation practices by governmental and
international authorities.  All of these factors which affect the
supply of and demand for vessel capacity are beyond the control
of the Company.  In addition, the nature, timing and degree of
changes in the shipping markets in which the Company operates, as
well as future charter rates and values of its vessels, are not
readily determinable. 

Foreign Currency Risks

    The Company is exposed to the risk of fluctuations in foreign
currency exchange rates due to the international nature and scope
of its operations.  The Company's revenues and expenses are
affected by fluctuations in currency exchange rates among and
between the U.K. Pound Sterling, the Irish Punt, the Spanish
Peseta and the U.S. Dollar.  The Company does and will from time
to time engage in hedging to manage risks related to foreign
currency fluctuations.  See Note 2 of Notes to the Company's
Consolidated Financial Statements as of and for the years ended
September 30, 1996, 1997 and 1998. 

Interest Rate Swap Contracts

    The Company has used interest rate swap contracts to manage
its exposure to fluctuations in interest rates in recent years.
The Company was a party to two principal interest rate swap
contracts with a maximum nominal contract value of $92.25 million
in August 1998, amortizing to $51.75 million in August 2004,
bearing a fixed rate of interest of 6.98%. These contracts had
been in place to hedge the Company's exposure to interest rate
fluctuations on the Company's existing bank credit facility.  In
connection with the Offering, the Company has repaid all


                               44



<PAGE>


outstanding borrowings under its existing bank credit facility
and terminated this facility. 

    As a result of the termination of the Company's existing bank
credit facility and concerns over future interest rates, the
Company has terminated its interest rate swap contracts at a cost
of $6.7 million.

The Year 2000 Computer Problem

    The Company is undertaking steps to render its onshore
computer systems Y2K compliant prior to January 1, 2000.  The
technical managers of the Company's vessels have identified the
Y2K issues in regard to their own systems and the on-board
systems of those of the Company's vessels that each manager
maintains, and expect to resolve any issues prior to January 1,
2000.  The Company has formed a working group to assess the Y2K
risks relating to third parties, but has not yet formulated a
contingency plan for handling the most reasonably likely worst
case scenario.  Overall, the Company does not believe it will
incur material expense in order to undertake any necessary
corrective action.  Nevertheless, there can be no assurance that
the Company will not experience difficulties or losses as a
result of Y2K problems experienced by either the Company or third
parties 

The Asian Economic Problem

    In the first three months of 1998, industry spot charter
rates decreased to a certain degree, apparently as the result of
the recent economic difficulties in Asia.  Although the Company
does not expect the Asian economic problem to have a material
adverse effect on its financial condition or results of
operations, there can be no assurance that the Company will not
be adversely affected by the recent economic problems in Asia. 

ITEM 10 - DIRECTORS AND OFFICERS OF THE REGISTRANT

    Set forth below are the names and positions of the directors
and executive officers of the Company.  Directors of the Company
are elected annually, and each director holds office until a
successor is elected.  Officers of the Company are elected from
time to time by vote of the Board of Directors and hold office
until a successor is elected.

                           The Company

    The directors and executive officers of the Company are
listed below: 




                               45



<PAGE>


Name                         Age            Position

Michael Hendry               45             Chairman

Annabel Hendry               47             Director

Peter Morton                 50             Managing Director,
                                            Irish Sea Ferry
                                            Services and
                                            Director

Paul Gregory                 57             Finance Director,
                                            Director Responsible
                                            for Logistics

Michael Jones                56             Managing Director,
                                            Cenargo Broking
                                            Services and Director

Certain biographical information with respect to each of these
individuals is set forth below: 

    MICHAEL HENDRY has been Chairman of the Company since its
founding in 1979.  Prior to that time, Mr. Hendry was employed by
Marine Development from 1975 to 1977 and Managing Director of
Transocean Broking from 1977 to 1979.  Mr. Hendry graduated from
Birmingham University in 1974 with a Bachelor of Science Degree
and immediately entered the shipping business, working in ship
agency, design and marine fabrication and shipbroking before
founding Cenargo in 1979, at the age of 26. Mr. Hendry has served
as a member since 1988 and as a Board Director since 1997 of the
General Council of Lloyd's Register of Shipping Trust Corporation
Limited, a classification society. 

    ANNABEL HENDRY has been a director of the Company since its
founding.  Mrs. Hendry is the wife of Michael Hendry, the
Company's Chairman. 

    PETER MORTON was a founding director of the Company in 1979
and has been a full time director of the Company since 1981.
Prior to that time, Mr. Morton was Client Manager of Lombard
Finance from 1973 to 1976; Manager of O.T. Africa Line from 1977
to 1978, where he assisted in the development of RoRo services to
West Africa; and a director of and consultant to the Asian
Controlled Shipping and Trade Finance Group from 1979 to 1981.
Mr. Morton has been a non-executive director of Marine Shipping
Mutual Insurance Co. Ltd. since 1992. 

    PAUL GREGORY joined the Company in 1990 and has been a
director since 1994.  Prior to that time, Mr. Gregory worked for
12 years with Ocean Group plc, a large U.K. transportation group.


                               46



<PAGE>


While at Ocean Group, he served for three years in Nigeria as
General Manager of Elder Dempster (Agencies Nigeria) Limited from
1983 to 1986, acted as a director of Elder Dempster Lines and
Palm Line Limited from 1986 to 1988, acted as managing director
of the U.K./West Africa lines joint service office from 1986 to
1988 and acted as Group Quality Director from 1988 to 1990.
Mr. Gregory is a Fellow of the Institute of Chartered Accountants
in England and Wales. 

    MICHAEL JONES has been employed by the Company since 1988 and
a director of the Company since March 1995.  Mr. Jones has been
engaged in the shipping business since 1961.  In 1972, Mr. Jones
was appointed Commercial Manager of Cunard Brocklebank Bulkers,
where he was in charge of the employment, revenue, profitability
and operation of eight newbuild 27,000 dwt dry bulk carriers.
This was followed by senior positions in shipbroking companies
from 1977 until 1988, during which time Mr. Jones represented
charterers as well as owners.  Mr. Jones has been a member of The
Baltic Exchange, London since 1964. 

ITEM 11 - COMPENSATION OF DIRECTORS AND OFFICERS

    During the fiscal year ended September 30, 1998, the Company
paid an aggregate of approximately $1.8 million in compensation
to its chairman and directors (who comprise the Company's
executive officers) as a group.  The Company has written
employment contracts with all employees except Michael Hendry and
Annabel Hendry.  In addition, the Company provides certain non-
cash benefits to its employees and executive officers. 

ITEM 13 - INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS

    Not applicable


                             PART IV

ITEM 17 - FINANCIAL STATEMENTS

    See pages F-1 through F-23, which are attached hereto and
incorporated herein.












                               47



<PAGE>


     

ITEM 19 - FINANCIAL STATEMENTS AND EXHIBITS

    The following financial statements, together with the report
of Moore Stephens, Independent Chartered Accountants, are filed
as part of this annual report:

           INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Audited Financial Statements

    Report of Moore Stephens, Independent Chartered
      Accountants.........................................  F-1
    Consolidated Statements of Income for the years
      ended September 30, 1998, 1997 and 1996               F-2
    Consolidated Balance Sheets as of September 30, 1998
      and 1997............................................  F-3
    Consolidated Statements of Cash Flows for the
      years ended September 30, 1998, 1997 and 1996.......  F-4
    Notes to Consolidated Financial Statements............  F-6
































                               48



<PAGE>


                    CENARGO INTERNATIONAL PLC
                 REPORT AND FINANCIAL STATEMENTS
                       SEPTEMBER 30, 1998

INDEPENDENT AUDITORS REPORT

The Board of Directors and Shareholders
Cenargo International Plc

    We have audited the accompanying consolidated balance sheets
of Cenargo International Plc and subsidiaries as of September 30,
1998 and 1997, and the related consolidated statements of income
and cash flows for each of the years in the three year period
ended September 30, 1998.  These consolidated financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated
financial statements based on our audits. 

    We conducted our audits in accordance with auditing standards
generally accepted in the United States. Those standards require
that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion. 

    In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects, the
consolidated financial position of Cenargo International Plc and
subsidiaries as of September 30, 1998 and 1997, and the
consolidated results of their operations and their cash flows for
each of the years in the three year period ended September 30,
1998 in conformity with accounting principles generally accepted
in the United States.



Moore Stephens
Chartered Accountants
St. Paul's House
Warwick Lane,
London, EC4P 4BN
January 28, 1999






                               F-1



<PAGE>


                          CENARGO INTERNATIONAL PLC
                      Consolidated Statements of Income
                Years Ended September 30, 1998, 1997 and 1996
                          (Expressed in thousands)

                                  Note          1998       1997       1996

Operating revenues                                                         
Charterhire revenues                          $34,906    $45,570    $50,889
Ferry service revenues                         62,646     19,489     11,497
Logistics services and                                                     
other revenues                                 14,669      7,930      8,010
Brokers' commission                            (1,116)    (1,921)    (2,139)
Operating revenues                  5         111,105     71,068     68,257
Operating expenses                                                         
Vessel and other operating costs               72,103     41,159     34,127
Depreciation                                   10,945     11,017     11,823
Amortization of drydocking and
  special survey costs                          1,669      1,767      1,139
Amortization of goodwill                          108          -          -
General and administrative expenses            13,590      7,932      7,094
Foreign exchange loss                              88        889       (916)
Operating expenses                             98,503     62,764     53,267
Operating income                               12,602      8,304     14,990
Other income (expense)                                                     
Interest income                                 2,210        573        672
Interest expense                  17(a)       (19,565)    (8,227)    (8,894)
(Loss) income from
  joint ventures                   10               -       (435)      (965)
Gain on disposition of
  fixed assets                                 14,018         97          3
Provision for impairment in
  value of vessels                2(m)        (22,636)         -          -
Gain on sale of marketable
  securities                                        -          -      1,326
Other (expense) income                        (25,973)    (7,992)    (7,858)
(Loss) income before income taxes             (13,371)       312      7,132
Income taxes                        6           9,506         95     (2,688)
Net (loss) income                            $ (3,865)  $    407   $  4,444
                                              =======    =======    =======

         See accompanying notes to consolidated financial statements











                               F-2



<PAGE>


                          CENARGO INTERNATIONAL PLC
                         Consolidated Balance Sheets
                      As of September 30, 1998 and 1997
                          (Expressed in thousands)
                                  Note           1998       1997

Assets                                                          
Current assets                                                  
Cash and cash equivalents                     $30,257     $9,072
Cash held in escrow and
  blocked deposits                  7          22,682          -
Trade accounts receivable                      17,247      8,610
Other receivables                               5,892      3,435
Due from joint ventures            10           2,024          -
Inventories                                     1,804      1,598
Prepaid expenses and accrued
  income                                        3,902        880
                                              _______    _______
Total current assets                           83,808     23,595

Non current assets                                              
Vessels and equipment               8         158,541    179,141
Land and buildings                  8          11,827     10,999
Vessels under construction          9          77,115     42,074
Investments in joint ventures      10               -        108
Loans to joint ventures            11           4,057      4,842
Goodwill, net                                   1,132        935
Trade investments                                 596          -
Deferred charges, net              12           7,646      2,405
Pension fund debtor                13           5,210          -
                                              _______    _______
Total assets                                 $349,932   $264,099
                                              =======    =======

Current liabilities                                             
Current maturities of
  long-term debt                   14          $2,288    $15,298
Capital lease obligations          19           3,537          -
Trade accounts payable                         11,155      8,595
Accrued expenses                                7,167      3,757
Accrued interest - ship
  mortgage notes                                4,882        -  
Other creditors                                11,731      2,561
Due to joint ventures              10               -      1,153
                                              _______    _______
Total current liabilities                      40,760     31,364

Long-term liabilities                                           
Ship Mortgage Notes                14         172,345          -
Long-term debt                     14          49,625    147,891
Capital lease obligations          19          15,457          -


                               F-3



<PAGE>


Other creditors                                 2,010      3,410
Deferred taxation                   6          16,397     24,683
                                              _______    _______
Total liabilities                             296,594    207,348
Contingent liability               18               -          -
                                              _______    _______

Shareholders' equity                                            
Share capital                      15              21          -
Cumulative translation adjustment                 384        (47)
Retained earnings                              52,933     56,798
                                              _______    _______

Total shareholders' funds                      53,338     56,751
                                              _______    _______

Total liabilities and
  shareholders' funds                        $349,932   $264,099
                                              =======    =======

         See accompanying notes to consolidated financial statements
































                               F-4



<PAGE>


                          CENARGO INTERNATIONAL PLC
                    Consolidated Statements of Cash Flows
                   As of September 30, 1998, 1997 and 1996
                          (Expressed in thousands)

                                               1998       1997       1996  

Operating activities
Net (Loss) income                             $(3,865)      $407     $4,444

Adjustments to reconcile net income to net
cash provided by operating activities:
Loss (income) from joint ventures                 -          435        965
Amortization of drydocking and special
survey costs                                    1,669      1,767      1,139
Depreciation                                   10,945     11,017     11,923
Gain on sale of marketable securities             -          -       (1,326)
Amortization of goodwill                          108        -          -  
Gain on disposition of fixed assets           (14,018)       (97)        (3)
Provision for diminution in value of
assets                                         22,636        -          -  
Provision for diminution in value of
investment in joint ventures                      108        -          -  
Foreign exchange loss (gain)                      675        890       (916)
(Increase)/decrease in pension debtor             182        -          -  
(Increase) decrease in trade accounts
receivable                                     (2,873)     3,368     (2,244)
(Increase) decrease in other receivables         (810)    (2,553)     2,029
(Increase) decrease in inventories                501       (369)      (720)
(Increase) decrease in prepaid expenses
  and accrued income                           (5,406)      (215)      (504)
Increase (decrease) in trade accounts
  payable                                         (96)    (1,698)    (1,315)
Increase (decrease) in accrued expenses         6,486     (1,641)     3,859
Increase (decrease) in other creditors          7,852      2,178       (262)
Increase (decrease) in deferred tax liability  (9,412)       442      1,926


Net cash provided by operating activities      14,682     13,931     18,895

Investing activities

Additions to land and buildings                  (804)      (274)    (2,358)
Additions to vessels and equipment             (3,254)      (648)    (3,418)
Additions to vessels under construction       (83,730)   (39,793)    (2,281)
Purchase of subsidiary undertakings, net of
cash acquired                                  (5,170)    (1,143)       -  
Purchase of other investment                      -         (106)       -  
Proceeds from sale of marketable security         -        6,613        -  
Proceeds from sale of fixed assets             71,235        326      1,333



                               F-5



<PAGE>


Net cash used in investing activities         (21,723)   (35,025)    (6,724)




















































                               F-6



<PAGE>


                          CENARGO INTERNATIONAL PLC
                    Consolidated Statements of Cash Flows
                   As of September 30, 1998, 1997 and 1996
                          (Expressed in thousands)



                                               1998       1997       1996  

Financing activities

Proceeds from long-term debt                 $214,928   $243,882    $18,076
Repayment of long-term debt                  (155,582)  (210,106)   (31,944)
Due (to) from joint ventures                   (2,392)    (6,018)    (1,423)
Repayments of capital leases                   (1,541)      (398)      (261)
Deferred charges paid                          (4,526)    (2,339)    (2,337)
Increase in share capital                          21        -          -  
                                             ________   ________    _______

Net cash provided by (used in)
financing activities                           50,908     25,021    (17,889)
                                             ________   ________    _______

Net increase (decrease) in cash and 
cash equivalents                               43,867      3,927     (5,718)
Cash and cash equivalents at beginning
of year                                         9,072      5,145     10,863
                                             ________    _______    _______

Cash and cash equivalents at end
of year                                       $52,939     $9,072     $5,145
                                             ========    =======    =======

Supplemental disclosure of cash flow information:

Interest paid, net of capitalized
interest                                      $23,601     $9,025     $9,364
Income taxes paid                                 -          -          -  
                                             ========    =======    =======


Purchase of subsidiary undertakings

Cash paid                                     $25,769     $1,176     $  -  
Net proceeds on sale of divisions             (15,112)       -          -  
Cash acquired                                  (5,487)       (33)       -  
                                             ________    _______    _______

                                               $5,170     $1,143     $  -  
                                             ========    =======    =======



                               F-7



<PAGE>


See accompanying notes to consolidated financial statements




















































                               F-8



<PAGE>


                    CENARGO INTERNATIONAL PLC
           Notes to Consolidated Financial Statements
             As of September 30, 1998, 1997 and 1996

1.  General

    The Company was incorporated in 1979 in the United Kingdom
    and has owned and operated vessels since 1982. The Company's
    principal activities include ferry services, ship owning and
    operating, shipbroking, logistics services and freight
    forwarding. The Company and its subsidiaries currently
    operate a fleet consisting of 14 owned and  capital leased
    vessels, including Capesize dry bulk carriers, freight and
    passenger ferries and multipurpose general cargo ships.
    During the year there were four freight passenger ferries on
    order, one of which was delivered by the year end and one
    subsequent to the year end.

2.  Accounting policies

    (a)  Basis of accounting

         The consolidated financial statements have been prepared
         in accordance with generally accepted accounting
         principles in the United States. 

         The preparation of financial statements in accordance
         with generally accepted accounting principles requires
         management to make estimates and assumptions that affect
         the reported amounts of assets and liabilities and
         disclosure of contingent assets and liabilities at the
         date of the financial statements and the reported
         amounts of revenues and expenses during the period.
         Actual results could differ from those estimates.  The
         following are significant accounting policies adopted by
         the Company:

    (b)  Consolidation

         The consolidated financial statements incorporate the
         assets and liabilities of the Company and its wholly-
         owned or majority controlled subsidiaries. All
         intercompany balances and transactions have been
         eliminated upon consolidation. 









                               F-9



<PAGE>


                    CENARGO INTERNATIONAL PLC
     Notes to Consolidated Financial Statements (Continued)
             As of September 30, 1998, 1997 and 1996


Accounting policies (continued)

         Entities in which the Company has a majority of the
         voting rights are consolidated. Non-equity financing
         provided by the minority interests is accounted for as
         other loans. Minority interest in the results of
         operations is not taken into account in the periods as
         the results were not material. 

    (c)  Investments in joint ventures

         The Company's investments in joint ventures are
         accounted for using the equity method of accounting
         whereby the carrying value is cost plus the Company's
         share of post-acquisition net income (loss). Where
         investments in joint ventures are not material to the
         Company, the investments are carried at cost less any
         diminution for value which is other than temporary. 

    (d)  Cash and cash equivalents

         For the purposes of the consolidated statements of cash
         flows, demand and time deposits with original maturities
         of three months or less are considered equivalent to
         cash. 

    (e)  Inventories

         Inventories, which comprise fuel and consumable stores,
         are stated at the lower of cost or market. Cost is
         determined on a first-in, first-out basis. 

    (f)  Vessels, equipment, land and buildings

         The cost of the vessels less estimated residual value is
         written off on a straight-line basis over the vessels'
         remaining lives. The vessels' lives are estimated as
         being between 15 and 25 years from dates of delivery.
         Other equipment is depreciated over its estimated
         residual life at rates of between 14% and 25% on a
         straight-line basis, except for freehold buildings which
         are depreciated at a rate of 2% and ferry terminal
         buildings at between 5% and 10%. Land is not
         depreciated. 




                              F-10



<PAGE>


                    CENARGO INTERNATIONAL PLC
     Notes to Consolidated Financial Statements (Continued)
             As of September 30, 1998, 1997 and 1996


Accounting policies (continued)

    (g)  Vessels under construction

         The carrying value of vessels under construction
         represents the accumulated costs to the balance sheet
         date which the Company has had to pay by way of purchase
         installments together with interest capitalized on loans
         raised to finance the purchase and other associated
         financing fees. No charge for depreciation will be made
         until the vessels are delivered. 

    (h)  Revenue and expense recognition

         Revenues and expenses are recognized on a daily accruals
         basis. Revenues are generated from time charter hires,
         ferry services and freight income.  The consolidated
         balance sheets reflect the deferred portion of revenues
         and expenses for total voyages in progress at the end of
         each period. Estimated losses on voyages are provided
         for in full at the time such losses are known. 

    (i)  Drydocking and special survey costs

         Expenditures incurred during drydocking are capitalized
         and amortized on a straight-line basis over the period
         until the next anticipated drydocking.

    (j)  Derivatives

         The Company enters into interest rate swap transactions
         from time to time to hedge a portion of its exposure to
         floating interest rates. These transactions involve the
         conversion of floating rates into fixed rates over the
         life of the transactions without an exchange of
         underlying principal. The differential is accrued as
         interest rates change and recognized as an adjustment to
         interest expense. The related amount receivable from or
         payable to counterparties is included in accrued
         interest expense. The fair values of the interest rate
         swaps are not recognized in the financial statements. 







                              F-11



<PAGE>


                    CENARGO INTERNATIONAL PLC
     Notes to Consolidated Financial Statements (Continued)
             As of September 30, 1998, 1997 and 1996


Accounting policies (continued)


         The Company enters into forward exchange contracts from
         time to time to hedge a portion of its expenses which
         are paid in U.K. Sterling and European Euros. Realized
         and unrealized gains and losses on foreign currency
         hedging transactions that are designated and effective
         as hedges of firm identifiable foreign currency
         commitments are deferred and recognized in income over
         the period of the hedged transaction. 

         The Company has not entered into any speculative
         derivative contracts. 

    (k)  Foreign currencies

         The Company's functional currency is the U.S. Dollar as
         the majority of revenues, expenditures and cash flows
         are denominated in U.S. Dollars. 

         All assets and liabilities in the balance sheets of
         subsidiaries whose functional currency is other than the
         U.S. Dollar are translated at the year end exchange
         rate. Revenue and expense items are translated at
         average exchange rates prevailing during the year.
         Translation gains and losses are not included in
         determining net income but are accumulated as a separate
         component of shareholders' equity. 

         Foreign currency monetary assets and liabilities in the
         balance sheets of subsidiaries whose functional currency
         is the U.S. Dollar are translated at exchange rates in
         effect at the balance sheet date. Foreign currency non-
         monetary assets and liabilities are translated using
         historical rates of exchange. Foreign currency revenues
         and expenses are translated at the average exchange
         rates prevailing during the year and exchange gains and
         losses are included in the determination of net income. 









                              F-12



<PAGE>


                    CENARGO INTERNATIONAL PLC
     Notes to Consolidated Financial Statements (Continued)
             As of September 30, 1998, 1997 and 1996


2. Accounting policies (continued)

    (l)  Goodwill

         Goodwill represents the excess of purchase price over
         fair value of net assets acquired. Goodwill is amortized
         over the expected periods to be benefited, generally 10
         to 20 years (revised from a previous basis of 5 to 10
         years following specific circumstances of acquisitions
         made during the year). The Company assesses the
         recoverability of this intangible asset by determining
         whether the amortization of the goodwill balance over
         its remaining useful life can be recovered through
         future operating activities of the acquired entity. 

         If goodwill is negative as a result of the fair value of
         net assets acquired exceeding the purchase price, the
         resulting negative goodwill is applied as a reduction in
         the value of non-current assets acquired on a pro-rata
         basis.

    (m)  Impairment of long-lived assets

         Effective October 1, 1995 the Company adopted Statement
         of Financial Accounting Standards No. 121, "Accounting
         for the Impairment of Long-Lived Assets and for Long-
         Lived Assets to Be Disposed Of" ("SFAS 121"). SFAS 121
         establishes financial accounting and reporting standards
         for the impairment of long-lived assets, certain
         identifiable intangibles, goodwill related to those
         assets to be held and used and long-lived assets and
         certain identifiable intangibles to be disposed of. SFAS
         121 requires that long-lived assets and certain
         identifiable intangibles to be held and used by an
         entity be reviewed for impairment whenever events or
         changes in circumstances indicate that the carrying
         amount of an asset may not be recoverable. In addition,
         SFAS 121 requires that certain long-lived assets and
         identifiable intangibles to be disposed of be reported
         at the lower of carrying amount or fair value less cost
         to sell. The adoption of SFAS 121 resulted in a
         provision for impairment in value of the Company's two
         Capesize dry bulk vessels of U.S.$22.6 million.  These
         vessels were sold after the year end and the provision
         reduced their carrying amount to net sale proceeds after
         costs to sell.


                              F-13



<PAGE>


                    CENARGO INTERNATIONAL PLC
     Notes to Consolidated Financial Statements (Continued)
            As of September 30, 1998, 1997 and 1996 


2. Accounting policies (continued)

         (n)  Assets under capital leases

         Assets used by the Company which have been funded
         through capital leases are capitalized and depreciated
         over their estimated useful lives in accordance with the
         Company's normal depreciation policy.  The resulting
         lease obligations are included in creditors.  Capital
         lease interest costs are charged directly to income.

         (o)  Pension costs

         The Company operates defined contribution and defined
         benefit pension schemes.

         Contributions to defined contribution pension schemes
         are charged to income when incurred.  The costs of
         providing defined benefit pensions are charged to income
         in accordance with the advice of independent qualified
         actuaries.

3.  Adoption of new accounting standards

In June 1997, the Financial Accounting Standards Board ("FASB")
issued SFAS 130, "Reporting Comprehensive Income," which is
effective for fiscal years beginning after December 15, 1997.
Reclassification of financial statements for earlier periods
provided for comparative purposes is required. SFAS 130 will have
no impact on results of operations, financial position or cash
flows as it is a standard for reporting and display only of
comprehensive income and its components in financial statements.
The only component of "other comprehensive income," as such term
is defined in SFAS 130, that the Company currently has is the
foreign currency cumulative translation amount.













                              F-14



<PAGE>


                    CENARGO INTERNATIONAL PLC
     Notes to Consolidated Financial Statements (Continued)
            As of September 30, 1998, 1997 and 1996 


3.  Adoption of new accounting standards (continued)

    In June 1997, the FASB issued SFAS 131, "Disclosure about
    Segments of an Enterprise and Related Information." SFAS 131
    establishes standards for the way that public business
    enterprises report information about operating segments in
    annual financial statements and requires that those
    enterprises report selected information about operating
    segments in interim financial reports issued to shareholders.
    It also establishes standards for related disclosures about
    products and services, geographic areas, and major customers.
    SFAS 131 is effective for financial statements for fiscal
    years beginning after December 15, 1997. Financial statement
    disclosures for prior periods are required to be restated for
    comparative purposes to comply with SFAS 131. The Company is
    in the process of evaluating the disclosure requirements of
    SFAS 131. The adoption of SFAS 131 will have no impact on the
    Company's consolidated results of operations, financial
    position or cash flows as it requires only changes in or
    additions to current disclosures.

    In February 1998, the FASB issued SFAS No. 132, "Employers'
    Disclosures about Pension and Other Post retirement
    Benefits", which is effective for fiscal years beginning
    after December 15, 1997.  The modified disclosure
    requirements are not expected to have a material impact on
    the Company's results of operations, financial position or
    cash flows.

    The FASB has issued SFAS No. 133, "Accounting for Derivative
    Instruments and Hedging Activities".  SFAS No. 133
    establishes accounting and reporting standards for derivative
    instruments, including certain derivative instruments
    embedded in other contracts and for hedging activities.  SFAS
    No. 133 requires that an entity recognize all derivatives as
    either assets or liabilities in the statement of financial
    position and measure those instruments at fair value.  The
    accounting for changes in the fair value of a derivative
    depends on the intended use of the derivative and how it is 









                              F-15



<PAGE>


                    CENARGO INTERNATIONAL PLC
     Notes to Consolidated Financial Statements (Continued)
            As of September 30, 1998, 1997 and 1996 


3.  Adoption of new accounting standards (continued)

    designated.  For example, gains or losses related to changes
    in the fair value of a derivative, not designated as a
    hedging instrument, is recognized in earnings in the period
    of the change, while certain types of hedges may be initially
    reported as a component of other comprehensive income until
    the consummation of the underlying transaction.

    SFAS No. 133 is effective for all fiscal quarters of fiscal
    years beginning after June 15, 1999.  Initial application of
    SFAS No. 133 should be as of the beginning of a fiscal
    quarter, on that date, hedging relationships must be
    designated anew and documented pursuant to the provisions of
    SFAS No. 133.  Earlier application of all of the provisions
    of SFAS No. 133 is encouraged, but it is permitted only as of
    the beginning of any fiscal quarter.  SFAS No. 133 is not to
    be applied retroactively to financial statements of prior
    periods.  The Company will evaluate the new principle to
    determine any required new disclosures or accounting.

4.  Acquisitions

    In February 1998, the Company acquired 100% of the share
    capital of Scruttons plc ("Scruttons") a company incorporated
    in the United Kingdom, for a total consideration of
    U.S.$26,636,859.  The total purchase price of U.S.$26,636,859
    comprised a cash payment and issue of loan notes to former
    owners of U.S.$25,465,000 and legal and other costs
    associated with the acquisition of U.S.$1,171,859.  Scruttons
    plc comprised three principal businesses, a ferry service and
    two other divisions which were sold during the year for a net
    consideration of U.S.$15,111,093. 

    Effective April 30, 1998, the Company acquired the business
    of Stockglobal Limited which was purchased by a subsidiary
    company Duncan International Trading Limited ("Duncan").  The
    total purchase price of U.S.$370,802 comprised a cash payment
    to the former owners of U.S.$339,880 and legal and other
    costs associated with the acquisition of U.S.$30,922.  In
    connection with the acquisition, the former owner and the
    Company entered into an agreement which requires the company






                              F-16



<PAGE>


                    CENARGO INTERNATIONAL PLC
     Notes to Consolidated Financial Statements (Continued)
             As of September 30, 1998, 1997 and 1996

4.  Acquisitions (continued)

    to pay a deferred consideration amount based on the future
    earnings of Duncan.  The agreement provides for the deferred
    consideration to be calculated at 50% of pre-tax profits for
    the periods August 1, 1997 to April 30, 1998, May 1, 1998 to
    September 30, 1998 and year ended September 30, 1999 and is
    payable after the amounts have been determined.  No liability
    has been recognized at September 30, 1998 with regard to the
    deferred consideration.

    Under the terms of acquisition of Flair Forwarding (UK) Ltd.
    in 1997, the Company is required to pay a deferred
    consideration based on profits for the three years to
    September 30, 1999.

    The acquisitions have been accounted for by the purchase
    method of accounting and accordingly the purchase prices have
    been allocated to the assets acquired and the liabilities
    assumed based on the estimated fair values at the dates of
    acquisition.

    The businesses of Scruttons sold during the year have not
    been consolidated and the consideration received has been
    subtracted from the total purchase price paid.  As a result,
    the values assigned to the assets of Scruttons exceed the
    cost paid resulting in negative goodwill which is applied as
    a reduction in the value of non-current assets acquired on a
    pro-rata basis.

    The excess of purchase price over the estimated fair values
    of the net assets acquired for Duncan has been recorded as
    goodwill, which is being amortized on a straight line basis
    over 20 years.  Amortization of U.S.$14,833 was charged in
    the year ended September 30, 1998.














                              F-17



<PAGE>


    The estimated fair values of assets acquired and liabilities
    assumed are summarized as follows:

                                       Scruttons
                                          Plc          Duncan

Vessels                                $15,139          $-  
Other capital assets                     1,660            36
Pension debtor                           5,150           -  
Other investments                          596           -  
Cash                                     5,487           -  
Accounts receivable                      5,764           -  
Other receivables and prepayments        1,514           133
Inventories                                707           -  
Trade creditors                         (2,656)          -  
Deferred tax                                71           -  
Capital lease obligations              (17,844)          -  
Accruals                                (1,806)          -  
Other liabilities                       (2,258)         (104)
                                       _______         _____
                                       $11,524           $65
                                       =======         =====

Operating results of Scruttons plc are included in the Company's
consolidated results of operations from the effective date of the
acquisition which was December 31, 1997.



























                              F-18



<PAGE>


                    CENARGO INTERNATIONAL PLC
     Notes to Consolidated Financial Statements (Continued)
             As of September 30, 1998, 1997 and 1996

Acquisitions (continued)

The following unaudited pro forma financial information presents
the combined results of operations of the Company, Scruttons and
Duncan, as if the acquisitions had occurred as of the beginning
of fiscal 1997, after giving effect to certain adjustments,
including amortization of goodwill. The pro forma financial
information does not necessarily reflect the results of
operations that would have occurred had the Company, Scruttons
and Duncan constituted a single entity during such period.

                                        1998          1997

Total revenues                        $122,383       $99,831
                                       _______       _______

Net (loss) income                      $(3,562)       $1,058
                                       =======       =======

Charter Income

The Company operates on a worldwide basis.  The majority of the
vessels' gross earnings are receivable in U.S. Dollars.  The
following are the customers that comprise 10% or more of
operating revenues:

                                               1998       1997       1996  

Mitsui OSK Lines                                 $-       $9,080    $13,954
Mediterranean Shipping Company                   $-       $8,395    $  -   
                                               ======    =======    =======

Taxation

The Company records U.K. Corporation tax in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes," which requires the Company to compute deferred
taxes based upon the amount of taxes payable in future years,
after considering known changes in tax rates and other statutory
provisions that will be in effect in those years.

The reconciliation of the Company's effective tax rate to the
Corporation tax rate on income from continuing operations is as
follows:





                              F-19



<PAGE>


                          CENARGO INTERNATIONAL PLC
           Notes to Consolidated Financial Statements (Continued)
                   As of September 30, 1998, 1997 and 1996


Taxation (continued)

                                                  1998       1997      1996 
                                                      %          %          %

U.K. statutory rate (average rate for period)     (31)        32         33
Increase (decreases) in rate resulting from:
Statutory rate reduction - deferred tax             1         (1)        --
Permanent book/tax differences and other          (22)       (23)         5
Revision to prior year estimate                   (20)       (33)        --
                                                  _____      _____      ____

Net effective tax rate                            (72)%      (25)%       38%
                                                  =====      =====      ====

The revision to prior year estimates in 1998 and 1997 represent
adjustments to deferred tax estimates and differences between tax
computations used for provisions and final computations submitted
to the UK Inland Revenue.

Income tax expense (benefit) attributable to income from
continuing operations consists of:

                                              Current   Deferred      Total
Year ended September 30, 1998
U.S. Federal and State                            $--        $--        $--
Foreign - U.K. Corporation tax                    (95)    (9,411)    (9,506)
                                              _______    _______    _______

                                                 $(95)   $(9,411)   $(9,506)
                                              =======    =======    =======

Year ended September 30, 1997
U.S. Federal and State                            $--        $--        $--
Foreign - U.K. corporation tax                    (81)       (14)       (95)
                                              _______    _______    _______

                                                 $(81)      $(14)      $(95)
                                              =======    =======    =======

Year ended September 30, 1996                     $--        $--        $--
US Federal and State 
Foreign - UK corporation tax                      586      2,102      2,688
                                              _______    _______    _______

                                                 $586     $2,102     $2,688


                              F-20



<PAGE>


                                              =======    =======    =======




















































                              F-21



<PAGE>


                    CENARGO INTERNATIONAL PLC
     Notes to Consolidated Financial Statements (Continued)
             As of September 30, 1998, 1997 and 1996

The following table shows the tax effect of the Company's
cumulative temporary differences and carryforwards included on
the Company's Consolidated Balance Sheet at September 30, 1998
and 1997.
                                         1998          1997 

Excess of tax over book depreciation
  and deductions                       $15,142       $23,279
Holdover relief                          1,497         1,054
Other                                     (242)          350
                                       _______       _______

Total net deferred tax liability       $16,397       $24,683

                                       =======       =======

The Company and subsidiaries represent a U.K. tax group and file
tax returns on that basis.  The Company has no material basic
differences relating to its investments in subsidiaries.

7. Cash held in escrow and blocked deposits

At September 30, 1998 the Company has cash held in escrow and
blocked deposit accounts to fund the delivery installment due on
the newbuilding Hull 288, together with deposits for the sale of
the Company's two Capesize vessels, held as escrow property to
secure the Ship Mortgage Notes.

8.  Vessels, equipment, land & buildings
                                         1998          1997 
Cost
Vessels                               $216,558      $243,707
Land and buildings                      12,951        11,743
Equipment                                9,799         4,507
                                       _______       _______

                                       239,308       259,957

Accumulated depreciation               (68,940)      (69,817)

                                       _______       _______

Net book value                        $170,368      $190,140
                                       =======       =======

Included above are assets held under capital leases with a cost
of $33,112 and accumulated depreciation of $7,947.


                              F-22



<PAGE>


                    CENARGO INTERNATIONAL PLC
     Notes to Consolidated Financial Statements (Continued)
             As of September 30, 1998, 1997 and 1996


The following is a summary of the vessels as of September 30,
1998.

                                               Year    Deadweight
Vessels Owned            Type                  built   tonnage

m.v. Merchant Paramount  Capesize             1995     161,010
m.v. Merchant Prestige   Capesize             1995     161,010
m.v. Merchant Prince     Multipurpose         1981      19,035
m.v. Merchant Principal  Multipurpose         1978      17,944
m.v. Merchant Premier    Multipurpose         1978      17,944
m.v. Scirocco            Passenger/Car Ferry  1974      11,177
m.v. Merchant Bravery    RoRo                 1978       9,368
m.v. Merchant Brilliant  RoRo                 1978       9,366
m.v. Moondance           RoRo                 1978       5,881
m.v. Merchant Venture    RoRo                 1979       6,056
m.v. Spheroid            RoRo                 1971       7,171
m.v. River Lune *        RoRo                 1983       7,765
m.v. Saga Moon *         RoRo                 1984       7,746
m.v. Dawn Merchant       RoPax                1998      22,152

The vessels are pledged as disclosed in Note 14.
The insured value of vessels is $287.9 million.

Tonnage measurements are deadweight for capesize and multipurpose
vessels and gross weights for ferries.

* Vessels under capital leases




















                              F-23



<PAGE>


                    CENARGO INTERNATIONAL PLC
     Notes to Consolidated Financial Statements (Continued)
             As of September 30, 1998, 1997 and 1996


9. Vessels under construction

                                         1998          1997 

Cost at beginning of the year          $42,074        $2,281
Purchase installments and other
  capital expenditures                  78,096        37,995
Interest capitalized                     4,036           946
Other associated financing fees
  capitalized                            1,598           852
Transfer to vessels, equipment, land
  and buildings                        (48,689)          -  
                                       _______       _______

Cost at end of the year                $77,115       $42,074
                                       =======       =======

The following is a summary of the Company's capital commitments
for vessels under construction at September 30, 1998.

              Scheduled                   Gross
Hull Number   Delivery   Builder   Type   tonnage (m.t.)   1998  

288           1999       A.E.S.A   RoPax  22,150           15,645
289           1999       A.E.S.A   RoPax  22,150           17,100
290           2000       A.E.S.A.  RoPax                   22,150
                                                           25,650
                                                          _______

                                                          $58,395
                                                          =======

The shipyard contracts are assigned as disclosed in Note 14.

10. Investments in Joint Ventures

    The Company held a 50% interest in Merchant Ferries
    (Holdings) Limited until June 30, 1997 when the Company
    acquired the remaining 50%.

    The Company's share of undistributed earnings of Merchant
    Ferries included in consolidated retained earnings at
    September 30, 1998 and 1997 was $Nil and is summarized as
    follows:




                              F-24



<PAGE>


                                          1998          1997

At beginning of the year                  $-            $529
Consolidated on change of 100% ownership   -             (94)
Share of net (losses) income               -            (435)
                                          ____          ____

At end of the year                        $-              $-
                                          ====          ====

The Company has 50% interests in two other joint ventures at
September 30, 1998 and 1997 which are carried at cost less
provision for impairment in value in the consolidated financial
statements, on the grounds of materiality.  The joint ventures
are Cenargo Espana S.L., a Spanish property and agency company
representing the company's interests in Spain, and Zereau
Limited, an internet services company.




































                              F-25



<PAGE>


                    CENARGO INTERNATIONAL PLC
     Notes to Consolidated Financial Statements (Continued)
             As of September 30, 1998, 1997 and 1996


11. Loans to joint ventures

    Loans to joint venture companies represent advances to
    finance joint venture operations and are non-interest
    bearing. Loans will only be repaid out of profits arising
    from operations or the sale of joint venture assets. 

Deferred charges

    Deferred charges represent debt arrangement fees and
    capitalized drydocking and special survey costs. The debt
    arrangement fees are being amortized over the life of the
    long-term debt and are included within interest expense in
    the statement of income. The drydocking and special survey
    costs are being amortized over the period to the next
    drydocking. The deferred charges are comprised of the
    following amounts: 


                                          1998          1997

Debt arrangement fees                   $4,394        $  570
Drydocking and special survey costs      3,763         3,766
                                         _____         _____

                                         8,157         4,336
Accumulated amortization                  (511)       (1,931)
                                         _____         _____

                                        $7,646        $2,405
                                         =====         =====

Pension Costs

(a) Defined contribution pension plan.

    The Company sponsors a defined contribution pension plan.
    Contributions to the plan for 1997 and 1998 were $222,000 and
    $331,000 respectively.

(b) Defined benefit pension plan

    Reconciliations of the pension benefit obligation and the
    value of plan assets follow:




                              F-26



<PAGE>


                    CENARGO INTERNATIONAL PLC
     Notes to Consolidated Financial Statements (Continued)
             As of September 30, 1998, 1997 and 1996


Pension Costs (continued)

                                          1998          1997

Plan assets

Fair value, on acquisition of
  Scruttons plc                        $30,165          $-  
Actual investments returns                 277           -  
Company contributions                      -             -  
Benefits paid to participants          $  (237)         $-  
                                        ======        ======

Fair value, end of year                $30,205          $-  

                                          1998          1997
Pension benefit obligations

Balance, on acquisition of
  Scruttons plc                        $25,015          $-  
Service cost                               340           -  
Interest cost                            1,003           -  
Actuarial gains                         (1,963)          -  
Benefits paid to participants             (238)          -  
                                       _______       _______

Balance, end of year                   $24,157          $-  
                                       =======       =======

At September 30, 1998 and 1997,
the funded status of the plan 
was as follows:

Surplus of plan assets over benefit 
obligations                             $6,048          $-  
Unrecognized net actuarial gain           (838)          -  
                                       _______       _______

Net amount recognized                   $5,210          $-  
                                       =======       =======








                              F-27



<PAGE>


                    CENARGO INTERNATIONAL PLC
     Notes to Consolidated Financial Statements (Continued)
             As of September 30, 1998, 1997 and 1996


Pension Costs (continued)

                                          1998          1997
For 1998 and 1997 the following
  weighted-average rates were used:

Discount rate on the benefit obligation     6%           -  
Rate of expected return on plan assets      7%           -  
Rate of employee compensation increase$     5%           -  

Pension (credit)                          $(58)         $-  
Company contributions                     $-            $-  
Benefits paid                             $237          $-  


14. Long-term debt

    Ship Mortgage Notes and Construction Facility

    On June 19, 1998 Cenargo International Plc refinanced the
    majority of its group borrowings by concurrently issuing
    U.S.$175 million of 9.75% First Priority Ship Mortgage Notes
    in the United States of America and drawing down the first
    tranche of an associated U.S.$85.5 million bank loan
    facility.

    The Mortgage Notes, issued at a discounted price of 98.445%,
    are due for repayment at par in one installment in June 2008.
    Interest is payable six monthly in arrears at 9.75%.  The
    Notes are secured by first preferred ship mortgages over the
    group vessels (excluding capital leased vessels, m.v.
    Spheroid and the Company's multipurpose vessels), assignment
    of rights under vessel newbuilding contracts for RoPax Hull
    288 and guarantees from substantially all of the group's
    subsidiaries.

    The Notes are registered in the United States of America
    under the Securities Act of 1933 and listed on the Luxembourg
    Stock Exchange.

    The U.S.$85.5 million loan facility is a construction
    facility and is to be converted to a term loan not later than
    June 19, 2000.  The term loan is repayable by quarterly
    installments with a final balance payable in June 2005.
    Interest is payable at U.S. Dollar LIBOR plus 1.5%.  At



                              F-28



<PAGE>


    September 30, 1998 $42,650,000 had been drawn down under this
    facility.



















































                              F-29



<PAGE>


                    CENARGO INTERNATIONAL PLC
     Notes to Consolidated Financial Statements (Continued)
             As of September 30, 1998, 1997 and 1996


14. Long-term debt (continued)

    The facility is secured by an assignment of rights under
    newbuilding contracts for RoPax Hulls 289 and 290, together
    with guarantees from substantially all of the group's
    subsidiaries.

    Other Loans

    (a)  $727,880 (U.S.$1,236,959) nominal value of unsecured
         guaranteed loan notes issued as part consideration for
         the Company's acquisition of Scruttons Plc.  The loan
         notes are redeemable on application by the holder in
         March and September each year.

         Any notes in issue on 7th October 2002 will be redeemed
         by the Company at par.  Interest is payable semi-
         annually in arrears at the Midland Bank Plc offer rate
         for six month deposits of $1,000,000 in the interbank
         market minus 1%.  The loan notes are guaranteed by
         Midland Bank Plc secured by a collateral bank deposit of
         $727,880.

    (b)  A Sterling denominated loan of $2,250,000 ($3,823,650)
         is repayable as follows: 

           i) 25% from the proceeds on the maturity of life
              assurance policies maturing in 2015, 

          ii) 25% repayable in equal annual installments over the
              last 15 years of the 20 year term of the loan, 

         iii) 50% on final loan on maturity in 2015. 

              Interest is payable at a fixed rate of 9.625% per
              annum over the 20 year term of the loan and is
              secured by a fixed charge on the Company's head
              office freehold property. 

(c) Other loans comprise a loan due to a former joint venture
    partner outstanding of $2,472,654 ($4,202,028). The loan is
    unsecured and repayable on an annuity basis by ten equal six
    monthly installments of $384,623 ($621,320) including
    interest fixed at the inception of the loan at a rate of
    8.07%. 



                              F-30



<PAGE>


                    CENARGO INTERNATIONAL PLC
     Notes to Consolidated Financial Statements (Continued)
             As of September 30, 1998, 1997 and 1996

14. Long-term debt (Continued)

The outstanding long-term debt as of September 30, 1998 is
repayable as follows:

1999                                      $  2,288
2000                                         2,692
2001                                         8,161
2002                                        11,146
2003                                        13,926
2004 and later                             186,045
                                           _______

Total long-term debt                      $224,258
                                           =======


15. Share capital

Share capital is as follows:
                                          1998          1997
Authorized:
500,000 ordinary shares of $1 each
(1997 - 500,000 ordinary shares)          $750          $750
                                           ===           ===
Issued 
50,000 ordinary shares of $1 each
(1997 - 100 ordinary shares)              $ 21          $-  
                                           ===           ===

On June 10, 1998 Cenargo International Limited converted to a
Public Limited Company and as a result issued 49,900 ordinary
shares at par, which have been 25% paid up.

The company is subject to restriction on the payment of dividends
imposed by covenants entered into in connection with the issue of
Ship Mortgage Notes and Construction Facility (note 14).

16. Changes in shareholders' equity

                                          Ordinary   Cumulative 
                                          share      translation   Retained
                                          capital    adjustment    earnings

Balance at September 30, 1996             $   -        $   -      $56,391
Movement in year                              -            (47)       -  
Net income                                    -            -          407


                              F-31



<PAGE>


                                          _______      _______    _______

Balance at September 30, 1997                 -            (47)    56,798
                                          _______      _______    _______

Movement in year                              -            431        -  
Net (loss)                                    -            -       (3,865)
Share capital issued                           21          -          -  
                                          _______      _______    _______

Balance at September 30, 1998             $    21      $   384    $52,933
                                          =======      =======    =======









































                              F-32



<PAGE>


                    CENARGO INTERNATIONAL PLC
     Notes to Consolidated Financial Statements (Continued)
             As of September 30, 1998, 1997 and 1996


17. Financial Investments

    Off-balance sheet market and credit risk

    Market risk exists with respect to changes in interest rates
    and foreign exchange rates. The Company enters into interest
    rate swap and forward exchange contracts from time to time to
    manage a portion of this risk. Credit risk exists to the
    extent that the counterparty is unable to perform the
    contracts, but this risk is considered remote. 

    There were no derivative contracts outstanding at September
    30, 1998.

    (a)  Interest rate swap transactions

         The Company had entered into the following interest rate
         swap transactions involving the payment of fixed rates
         in exchange for LIBOR which were terminated during the
         year:

                              Inception      Maturity
Principal (in thousands)      Date           Date          Rate

$48,196 increasing quarterly
to $61,500 in August 1998
and reducing thereafter to
$34,500                       June 1997      August 2004   6.98%

$24,098 increasing quarterly
to $30,750 in August 1998
and reducing thereafter to
$17,250                       June 1997      August 2004   6.98%

$7,050 reducing quarterly to
$379                          February 1996  October 1999  6.52%

$2,199                        February 1996  October 1999  6.52%

The cost of terminating these transactions was $6.7 million which
has been included within interest expense.

(b) Foreign currency hedging transactions





                              F-33



<PAGE>


                    CENARGO INTERNATIONAL PLC
     Notes to Consolidated Financial Statements (Continued)
             As of September 30, 1998, 1997 and 1996


17. Financial Investments (continued)

    The fair value of foreign currency hedging transactions is
    estimated based on the market value of these or similar
    instruments, as adjusted for differences in maturity. There
    are no foreign currency contracts outstanding at
    September 30, 1998 and 1997. 

(c) Fair value of Ship Mortgage Notes

    The fair value of the Ship Mortgage Notes at September 30,
    1998 was $143,500,000.  Fair value was determined from quoted
    market prices at which they traded.

(d) Other financial instruments

    The carrying amount of other financial instruments
    approximates to fair value as the long-term debt is at
    floating rates of interest and all other financial
    instruments are short-term in nature.




























                              F-34



<PAGE>


                    CENARGO INTERNATIONAL PLC
     Notes to Consolidated Financial Statements (Continued)
             As of September 30, 1998, 1997 and 1996


18. Contingent liability

    The Company insures the legal liability risks for its
    shipping activities with the Steamship Mutual, UK Mutual and
    North of England mutual protection and indemnity
    associations.  As a member of mutual associations, the
    Company is subject to calls payable to the associations based
    on the Company's claims record in addition to the claims
    record of all other members of the associations. A contingent
    liability exists to the extent that the claims records of the
    members of the associations in the aggregate show significant
    deterioration which result in additional calls on the
    members. 

19. Capital and other commitments

    The Company has acquired certain fixed assets under capital
    leases. The Company has the following commitments under those
    capital leases:

                                                       1998

1999                                                 $4,890
2000                                                  4,703
2001                                                  4,019
2002                                                  3,714
2003                                                  3,627
                                                      2,096

Minimum lease payments                               23,049

Less imputed interest                                (4,055)

Present value of obligations under capital leases   $18,994
                                                    =======













                              F-35



<PAGE>


                    CENARGO INTERNATIONAL PLC
     Notes to Consolidated Financial Statements (Continued)
             As of September 30, 1998, 1997 and 1996


19. Capital and other commitments (continued)

The Company is committed to make rental payments for vessels,
properties and equipment under operating leases. The future
minimum rental payments under these operating leases are as
follows: 

                                                       1998

Year ended September 30,
1999                                                 $4,650
2000                                                  3,445
2001                                                  3,430
2002                                                  1,024
2003                                                    225
2004 and later                                        2,330
                                                     ______
                                                    $15,104
                                                     ======

Operating lease rentals paid in the year ended September 30, 1998
amounted to $3,538,000 (1997: $1,367,000, 1996: $Nil).

20. Subsequent events

    (a)  Disposal of vessels

         The Company has sold its two Capesize dry bulk vessels
         and one multipurpose vessel, the m.v. Merchant Prince.
         Profit on the sale of the m.v. Merchant Prince amounted
         to U.S.$435,000, the loss on sale of the Capesize
         vessels amounted to U.S.$22,636,000 which has been
         included in net income for the year ended September 30,
         1998 as a provision for impairment in value.

         In October 1998, the bareboat charterers of the
         Company's vessel m.v. Moondance declared their option to
         purchase the vessel at a price that approximates book
         value.









                              F-36



<PAGE>


                    CENARGO INTERNATIONAL PLC
     Notes to Consolidated Financial Statements (Continued)
             As of September 30, 1998, 1997 and 1996

20. Subsequent events

    (b)  Litigation claim

         The Company has entered a claim for damages in the
         amount of Spanish Pesetas 3,800,000,000 ($25.5 million)
         against Ministeria de Comunicaciones, Transportes y
         Medio Ambiente (now Ministerio De Fomento) relating to
         the Company being prevented from operating a ferry
         service between Spain and Morocco.  The Company is
         actively pursuing the case.






































                              F-37



<PAGE>


Number   Description of Exhibits

3.1      Memorandum and Articles of Association of Cenargo
         International Plc, as amended(1) (2)

4.1      Indenture (the "Indenture") among Cenargo, the
         Subsidiary Guarantors and Bankers Trust Company, as
         Trustee(2)

4.2      Supplement No. 1 to the Indenture(3)

5.1      Opinion of Seward & Kissel, United States Counsel to the
         Company, as to the legality of the Exchange Notes(3)

8.1      Opinion of Seward & Kissel, United States Counsel to the
         Company, as to certain tax matters(2)

8.2      Opinion of Stephenson Harwood, United Kingdom Counsel to
         the Company, as to certain tax matters(2)

10.1     Credit Facility between Cenargo and Bank Boston, N.A.(2)

10.2     Lease between Cenargo Shipping Limited and the U.K.
         Secretary of State for Defence relating to
         Eaglescliffe(2)

10.3     Exclusivity Agreement between Cenargo Limited and the
         U.K. Secretary of State for Defence relating to the
         acquisition of Eaglescliffe(2)

12.1     Statement regarding computation of ratio(2)

21.1     Subsidiaries of Cenargo(2)

23.4     Consent of Moore Stephens, independent accountants for
         the Company(3)

25.1     Statement of Eligibility and Qualification of Bankers
         Trust Company, as Trustee under the Indenture(2)

---------------------------------
(1) Amended (in some cases, among other things) by a Certificate
    of Amendment on Change of Name.

(2) Incorporated by reference to the same exhibit no. in the
    Company's Registration Statement on Form F-4, filed June 26,
    1998 (File NO. 333-9028).

(3) Incorporated by reference to the same exhibit no. in the
    Third Amendment to the Registration Statement on Form F-4
    filed on December 22, 1998.





<PAGE>


                           SIGNATURES

    Pursuant to the requirements of Section 12 of the Securities
    Exchange Act of 1934, the registrant certifies that it meets
    all of the requirements for filing on Form 20-F and has duly
    caused this annual report to be signed on its behalf by the
    undersigned, thereunto duly authorized.

                                  Cenargo International Plc



                                  By:    /s/ Michael Hendry
                                  Name:  Michael Hendry
                                  Title:  Chairman
Dated: March 9, 1999





































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