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, 2001

                                       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 333-09294


                            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: 9 3/4% FIRST PRIORITY SHIP MORTGAGE NOTES DUE 2008

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.


<PAGE>


COMMON SHARES, PAR VALUE   Sterling Pound 1    50,000 shares

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   X        No
                               -----         -----

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

                           Item 17        Item 18  X
                                  -----          -----


<PAGE>


                                TABLE OF CONTENTS

ITEM 1  -   IDENTITY OF DIRECTORS, SENIOR MANAGEMENT
              AND ADVISORS                                                    5
ITEM 2  -   OFFER STATISTICS AND EXPECTED TIMETABLE                           5
ITEM 3  -   KEY INFORMATION                                                   5
ITEM 4  -   INFORMATION ON THE COMPANY                                       12
ITEM 5  -   OPERATING AND FINANCIAL REVIEW
              AND PROSPECTS                                                  34
ITEM 6  -   DIRECTORS, SENIOR MANAGEMENT
              AND EMPLOYEES                                                  48
ITEM 7  -   MAJOR SHAREHOLDERS AND RELATED PARTY
              TRANSACTIONS                                                   49
ITEM 8  -   FINANCIAL INFORMATION                                            50
ITEM 9  -   THE OFFER AND LISTING                                            50
ITEM 10 -   ADDITIONAL INFORMATION                                           51
ITEM 11 -   QUANTITATIVE AND QUALITATIVE DISCLOSURES
              ABOUT MARKET RISK                                              54
ITEM 12 -   DESCRIPTION OF SECURITIES OTHER THAN
              EQUITY SECURITIES                                              55
ITEM 13 -   DEFAULTS, DIVIDEND ARREARAGES AND
              DELIQUIENCIES                                                  55
ITEM 14 -   MATERIAL MODIFICATIONS TO THE RIGHTS OF
              SECURITY HOLDERS AND USE OF PROCEEDS                           55
ITEM 18 -   FINANCIAL STATEMENTS AND EXHIBITS                                56


<PAGE>


            CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS


          Matters discussed in this document may constitute forward-looking
statements. The Private Securities Litigation Reform Act of 1995 provides safe
harbor protections for forward-looking statements in order to encourage
companies to provide prospective information about their business.
Forward-looking statements include statements concerning plans, objectives,
goals, strategies, future events or performance, and underlying assumptions and
other statements, which are other than statements of historical facts.

          Cenargo International plc desires to take advantage of the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995 and is
including this cautionary statement in connection with this safe harbor
legislation. This document and any other written or oral statements made by us
or on our behalf may include forward-looking statements, which reflect our
current views with respect to future events and financial performance. The words
"believe," "except," "anticipate," "intends," "estimate," "forecast," "project"
and similar expressions identify forward-looking statements.

          The forward-looking statements in this document are based upon various
assumptions, many of which are based, in turn, upon further assumptions,
including without limitation, management's examination of historical operating
trends, data contained in our records and other data available from third
parties. Although we believe that these assumptions were reasonable when made,
because these assumptions are inherently subject to significant uncertainties
and contingencies which are difficult or impossible to predict and are beyond
our control, we cannot assure you that we will achieve or accomplish these
expectations, beliefs or projections. In addition to these important factors and
matters discussed elsewhere herein and in the documents incorporated by
reference herein, important factors that, in our view, could cause actual
results to differ materially from those discussed in the forward-looking
statements including the achievement of the anticipated levels of profitability,
growth, cost and synergy of our recent acquisitions, the timely development and
acceptance of new services, the impact of competitive pricing, the ability to
obtain necessary regulatory approvals, the impact of general business and global
economic conditions and other important factors described from time to time in
the reports filed by Cenargo with the Securities and Exchange Commission.



<PAGE>

                                     PART I

ITEM 1 - IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

         Not applicable

ITEM 2 - OFFER STATISTICS AND EXPECTED TIMETABLE

         Not applicable

ITEM 3 - KEY INFORMATION

SELECTED FINANCIAL DATA

          The following selected historical income and balance sheet financial
data as of and for the years ended September 30, 1997, 1998, 1999, 2000 and 2001
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.


<PAGE>
<TABLE>
<CAPTION>
                                                  Year Ended September 30,
                                                  ------------------------
                                    1997         1998         1999         2000         2001
                                 ----------   ----------   ----------   ----------   ----------
                                                     (Pounds Sterling in Thousands)
<S>                              <C>          <C>          <C>          <C>          <C>

STATEMENT OF INCOME DATA
OPERATING REVENUES

Charterhire revenues, net          26,733       20,479        4,273        5,444       16,595
Ferry service revenues             11,936       37,968       56,170       81,356       88,187
Logistics services and other
  revenues                          4,856        8,891       13,044       15,933       23,214
                                 ----------   ----------   ----------   ----------   ----------
Operating revenues                 43,525       67,338       73,487      102,733      127,996
                                 ----------   ----------   ----------   ----------   ----------
OPERATING EXPENSES

Vessel and other
  operating costs                  25,208       43,700       50,342       75,560       93,856
Depreciation                        6,747        6,634        6,475        6,208        7,784
Provision for impairment
  in values of vessels                 --       13,719        1,906           --          389
Amortization of dry-docking
  and special survey costs          1,082        1,012        2,096        1,993        1,480
Amortization of goodwill               --           65           69        1,112        1,174
General and administrative
  expenses                          4,858        8,237       10,940       12,857       10,556
Foreign exchange loss (gain)          544           53          288           96         (461)
                                 ----------   ----------   ----------   ----------   ----------
Operating expenses                 38,439       73,419       72,116       97,836      114,780
                                 ----------   ----------   ----------   ----------   ----------
Operating income (loss)             5,086       (6,081)       1,371        4,897       13,216
                                 ----------   ----------   ----------   ----------   ----------
OTHER INCOME (EXPENSE)

Interest income                       351        1,339        2,646          697          627
Interest expense                   (5,039)     (11,858)     (12,543)     (12,320)     (14,202)
Income (loss) from joint
  ventures                           (266)          --           --           --           --
Gain on sale of marketable
  security                             --           --          922        6,116           --
Gain on disposition of
  fixed assets                         59        8,496        1,096           62         (219)
                                 ----------   ----------   ----------   ----------   ----------
Other income (expense)             (4,895)      (2,022)      (7,879)      (5,445)     (13,794)
                                 ----------   ----------   ----------   ----------   ----------
INCOME (LOSS) BEFORE
  INCOME TAXES                        191       (8,103)      (6,508)        (548)        (578)
                                 ==========   ==========   ==========   ==========   ==========

OTHER FINANCIAL DATA

Net cash provided by (used
  in) operating activities          8,624        8,639       (3,955)       7,611        9,809
Net cash (used in) provided
  by investing activities         (21,682)     (12,783)       8,520        8,776      (44,044)
Net cash provided by (used
  in) financing activities         15,489       29,956        6,378      (48,444)      39,009

BALANCE SHEET DATA
  (at end of period)

Cash and cash equivalents           5,616       31,151       42,095        9,644       13,043
Net book value of vessels         109,572       90,129       84,008       93,785      132,118
Total assets                      163,488      205,915      206,337      179,741      224,065
Total debt                        101,813      143,140      155,560      122,658      162,563
Shareholders' equity               35,131       31,386       27,432       25,501       23,640

FLEET DATA
  (at end of period) (FN*)

Total dwt of dry bulk
  carriers ('000s)                    585          585          323           --           --
Total dwt of multi-purpose
  vessels ('000s)                      95           95           55           --           --
Total capacity of ferries
Trailer units                         326          708          831        1,030
Passengers                          3,701        3,951        4,201        4,500
Total number of vessels                17           15           10           12           13

<FN>
*    Includes the Mistral operated under an operating lease (1997 and 1998) and
     owned as at end fiscal 1999, and Northern and Midnight Merchant operated
     under operating leases in 2000.
</FN>
</TABLE>

RISK FACTORS

     SUBSTANTIAL LEVERAGE AND DEBT SERVICE COULD AFFECT THE COMPANY'S ABILITY TO
GROW AND SERVICE ITS DEBT OBLIGATIONS.

     Cenargo International plc (the "Company") is highly leveraged. As of
September 30, 2001, the Company has 162.6 million pounds sterling in total
indebtedness outstanding and 23.6 million pounds sterling of shareholders'
equity. Subject to the restrictions in the indenture for its outstanding senior
notes and its loan agreements, each of the Company and its subsidiaries may
incur additional indebtedness from time to time. The degree to which the Company
is leveraged could have important consequences for holders of the notes,
including: (i) the Company's ability to obtain additional financing for working
capital, capital expenditures, acquisitions or general corporate purposes may be
limited; (ii) the Company must dedicate a substantial portion of its cash flow
from operations dedicated to the payment of interest on the notes and any other
future indebtedness, reducing the funds available to the Company for other
purposes; (iii) indebtedness outstanding under some of its loan agreements is
secured by security interests in some of the Company's assets, 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
than others 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) some of
the Company's indebtedness may bear interest at floating rates, thereby
rendering the Company vulnerable to increases in interest rates.

IT IS POSSIBLE THAT AT SOME FUTURE DATE THE COMPANY COULD FACE A POTENTIAL
INABILITY TO REPAY ITS DEBT.

     The Company currently must dedicate a large portion of its cash flow from
operations to satisfy its debt service obligations. The Company's ability to pay
interest on, and other amounts due in respect of, its notes and to satisfy its
future debt obligations will depend upon the Company's future operating
performance, which prevailing economic conditions and financial, business and
other factors, many of which are beyond its control, will affect. There can be
no assurance that the Company's cash flow and capital resources will be
sufficient for payment of its indebtedness in the future. Any inability of the
Company to service its indebtedness or obtain additional financing, as needed,
could have a material adverse effect on the Company and its note holders.

     As a holding company, the Company is dependent on the cash flow from its
subsidiaries which is necessary to meet its debt obligations.

     The Company is a holding company with its subsidiaries conducting
substantially all of its operations and owning its assets. The Company depends
for its cash flow and ability to meet its debt service obligations, including
payments of principal and interest on its notes, on the cash flow of those
subsidiaries and the payment of funds by those subsidiaries to the Company in
the form of loans, dividends, advances or otherwise. A particular subsidiary's
ability to generate cash flow from operations, the corporate or insolvency laws
of the jurisdiction of its incorporation and by any financing agreement to which
it may become a party or be subject may restrict that subsidiary's ability to
pay dividends or make such distributions. If the Company did not receive that
cash flow, it may not be able to service its debt obligations.

RESTRICTIVE COVENANTS IN THE COMPANY'S LOAN AGREEMENTS COULD HINDER ITS ABILITY
TO GROW AND SERVICE ITS DEBT.

     The indenture for the Company's notes and its loan agreements impose,
operating and financial restrictions that affect, and in many respects
significantly limit or prohibit the ability of the Company and its subsidiaries
to incur additional indebtedness, grant liens, make certain investments, sell
assets, engage in mergers and acquisitions and make certain capital
expenditures. These sorts of restrictions could limit the ability of the Company
to increase the size of its fleet, respond to market conditions and meet
extraordinary capital needs, and could otherwise restrict corporate activities.
Some of these agreements also impose maintenance covenants with respect to
certain cash liquidity and financial ratios and the market value of certain
vessels relative to indebtedness. The Company's failure to comply with any of
these covenants could result in a default under these agreements, and under
other agreements containing cross default provisions, which would permit lenders
to accelerate the maturity of indebtedness under these agreements and to
foreclose upon collateral securing that indebtedness.

THE COMPANY FACES STRONG COMPETITION.

     The markets in which the Company operates are highly competitive, based
primarily on supply and demand. Many of the Company's competitors are
substantially larger and have greater resources than the Company. As a result,
there can be no assurance that the Company will be able to compete successfully
in its markets.

     While the Company has a strong position in the Irish Sea ferry market, the
Company's competitors could seek to increase service offerings or reduce freight
rates in that market, which could negatively impact the Company and its note
holders.

CERTAIN RISKS ASSOCIATED WITH THE PURCHASE AND OPERATION OF SECONDHAND VESSELS
COULD AFFECT THE COMPANY'S OPERATIONS.

     The Company buys both newly built and secondhand vessels. Vessels purchased
secondhand carry no warranties from the sellers or manufacturers. In the event
of a casualty, the Company may have no recourse to the builder.

THE COMPANY FACES RISKS ASSOCIATED WITH ITS FERRY OPERATIONS.

     --   Repairs. The ability to provide a regularly scheduled service directly
          affects ferry revenues. Short interruptions to make repairs, or for
          other reasons, could adversely affect the results of the Company's
          operations.

     --   Civil Disturbances. Civil disturbances and political turmoil have
          historically had an impact on investment and trading levels in
          Northern Ireland. The Irish peace accord may not hold. Northern
          Ireland's civil disturbances may recommence in the future. It is not
          possible to predict how political developments may affect investment
          and operating levels in Northern Ireland which could, in turn, affect
          the Company's results of operations.

     --   Availability of Berths. The Company does not have written agreements
          for the use of berths and port facilities at either Almeria, Spain or
          Nador, Morocco. There can be no assurance that either the Spanish or
          Moroccan government will continue the Company's right to use the
          berths and port areas. In addition, because there is a government
          imposed limit on the number of Moroccans granted immigrant status by
          many European countries, the Company's customer base in the
          Mediterranean could be limited.

THE COMPANY'S GROWTH STRATEGY COULD ADVERSELY AFFECT ITS BUSINESS AND NOTE
HOLDERS.

     As part of its strategy, the Company has pursued the acquisition of other
companies, assets or business lines that complement or expand its existing
businesses. Acquisitions involve a number of risks that could adversely affect
the Company, including the diversion of management's attention, insufficiency of
management resources, the unsuccessful integration of the operations and
personnel of the acquired companies, the potential loss of key employees or
customers of the acquired operations and the increase in the Company's debt
level. The Company may not realize any of the anticipated benefits of an
acquisition. An acquisition could materially and adversely affect the Company's
business, operating results or cash flow.

THE COMPANY DEPENDS ON ITS SENIOR MANAGEMENT.

     The Company depends on the service of its senior executives, and
particularly Michael Hendry, for the management of its activities and strategic
guidance. The loss or unavailability of one or more of its senior executives,
and particularly Mr. Hendry, for any extended period of time could have an
adverse effect on the Company's business and results of operations. The Company
does not have long-term employment contracts with its senior executives, nor
does it maintain key man life insurance with respect to any of its senior
executives.

     THE COMPANY MAY NOT BE ABLE TO FULFILL THE CONDITIONS REQUIRING IT TO
REDEEM NOTES IN THE EVENT OF A CHANGE OF CONTROL AND OTHER CIRCUMSTANCES
REQUIRING REDEMPTIONS.

     In the event of a change of control, the Company will be required, subject
to some conditions, to offer to purchase all outstanding notes at a price equal
to 101% of the principal amount thereof, plus accrued and unpaid interest. A
change of control may also constitute an event of default under the Company's
loan agreements, permitting the lenders to declare the loans immediately due and
payable. The Company may not have the financial resources necessary to
repurchase notes or to satisfy any obligations it may have under any other
financing agreements to which it is a party or may become subject on a change of
control or in the circumstances requiring redemption.

ENVIRONMENTAL, SAFETY AND OTHER REGULATIONS GREATLY AFFECT THE COMPANY'S
BUSINESS.

     The Company is subject to regulation and supervision in the various
jurisdictions in which it trades, operates and conducts business. Changes to
those regulations may adversely affect the business of the Company. 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, also affect the
Company's operations. Regulations may adversely affect the Company's operations.

POSSIBLE CATASTROPHIC LOSS AND LIABILITY COULD ALSO ADVERSELY AFFECT THE
COMPANY.

     A number of risks affect the ownership and operation of ferries. These
risks include mechanical failure, personal injury, vessel and cargo loss or
damage, business interruption due to political conditions in foreign countries,
hostilities, labor strikes, adverse weather conditions and catastrophic marine
disaster, including environmental accidents and collisions. All of these risks
could result in liability to the Company and could cause loss of revenues,
increased costs or loss of reputation and goodwill, impairing the Company's
ability to meet its obligations, including payment of debt service on its notes.

THE COMPANY'S INSURANCE MAY NOT COVER ALL CLAIMS, WHICH COULD HURT THE COMPANY'S
RESULTS.

     The Company maintains insurance against those risks that it believes are at
least consistent with industry standards, and believes that its coverage
provides adequate protection based on such standards and its historical claims
experience. The Company cannot assure its note holders that it has adequately
insured against all risks, that the underwriters may pay any particular claim or
that the Company will be able to obtain adequate insurance coverage at
commercially reasonable rates in the future. In addition, more stringent
environmental and other regulations may result in increased costs for, or the
lack of availability of, insurance against risks of environmental damage,
pollution and other claims for damages that may be asserted against the Company.
Even if the Company receives insurance proceeds to cover the financial losses
incurred following the occurrence of one or more of these events, the Company's
business reputation, and, therefore, its ability to obtain future charters, may
well be materially adversely affected by such an event.

THE COMPANY'S PRINCIPAL SHAREHOLDER MAY HAVE INTERESTS NOT IDENTICAL WITH THOSE
OF ITS NOTE HOLDERS

     Michael Hendry, the Company's Chairman, owns 99% of the outstanding
ordinary shares of the Company. As a result, Mr. Hendry exercises control over
the business and affairs of the Company by virtue of his control over the
Company's Board of Directors. Circumstances may give rise to perceived or actual
conflicts of interests between Mr. Hendry as 99% shareholder and the note
holders.

INCREASING FUEL PRICES COULD HARM THE COMPANY'S RESULTS.

     Fuel forms a significant part of the Company's expenses. Unless the Company
is able to increase fares while maintaining market share, the Company's results
could suffer from rising fuel costs.

ITEM 4 - INFORMATION ON THE COMPANY

     Cenargo International plc, an English company, is a diversified
international transportation group specializing in European freight and
passenger ferry services, deepsea dry cargo shipping 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 predominantly 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. The Company
acquired its first vessels, three roll-on/roll-off ("RoRo") freight ferries, in
1982. Since that time its 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 and 1999, the Company
has been progressively withdrawing from this market and currently is focused on
ferry transportation, primarily in the Irish Sea. During fiscal 1998 and 1999,
the Company has furthered its 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. In October 1999 the Company acquired Norse
Irish Ferries Limited ("NIF"). NIF operates a RoPax service on the Irish Sea. In
addition to its Irish Sea ferry service, the Company maintains Mediterranean
passenger ferry, and logistics operations. The Company's principal executive
offices are located at Puttenham Priory, Puttenham, Surrey, England.

     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
has sought 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.

     As of the date of this report, the Company's fleet consists of 13 vessels,
including, five RoRo freight ferries, two RoRo car and passenger ferries and six
state-of-the-art roll-on/roll-off freight and passenger ("RoPax") ferries ("the
RoPax Vessels"), the first two of which were delivered September, 1998 and
January, 1999, two were delivered in March and September 2000, respectively and
two were purchased in March 2001. 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 pounds sterling ($4.8 million). On
August 12, 1999 the Company sold its two remaining dry cargo deepsea vessels for
$1.1 million each.

     Eight of the Company's vessels are in three classes of sister
(substantially identical) ships, affording the Company significant operating
efficiencies and scheduling flexibility.

     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
two daily sailings in each direction between Heysham, England, and Dublin,
Republic of Ireland. During fiscal 2001, Merchant Ferries transported 65,000
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 three daily sailings in each direction between
Heysham, England, and Belfast, Northern Ireland. During fiscal 2001, BFF
transported 102,000 trailer units, comprised mostly of drop trailers, and 50,000
trade cars (generally new automobiles being transported to dealers).

     The Company has operated a ferry service between Liverpool, England, and
Dublin, Republic of Ireland since February 1999. Unlike the Heysham-based
services, which utilize RoRo freight ferries with certificates for a maximum of
12 passengers, the Company's RoPax Vessels have certificates for a maximum of
250 passengers, permitting the Company to significantly increase its carriage of
higher margin "driver accompanied" trailers. During fiscal 2001 the services
transported 111,000 trailer units, including a large percentage of driver
accompanied trailers. The service also carried over 48,000 passengers.

     On September 30, 1999, the Company reorganized its Irish Sea business by
transferring the business and net assets of Merchant Ferries and BFF into
Scruttons Plc, which was renamed Merchant Ferries Plc.

     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 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. A second ramp was completed by the Port of Dublin for Merchant
Ferries' preferential, but not exclusive, use in June 2000. This enabled both
Merchant Ferries services from Heysham and Liverpool to berth simultaneously at
the crucial early morning and late evening slot times. At Heysham and Liverpool,
the Company has time slot agreements and contracts for port services with the
local port authorities. NIF operates its own stevedoring services in Liverpool.

     A river berth is presently under construction by the Port of Liverpool for
the use of the Merchant Ferries' and Norse Irish Ferries' services to Dublin and
Belfast, respectively. This will avoid the companies' vessels having to
negotiate the locks in the Port's existing in-dock facilities, saving time and
thus improving the vessel's utilization. The river berth should be completed
during second quarter 2002.

     In October 1999, the Company acquired "NIF" for a total purchase price,
including the costs of the transaction, of $44.0 million. NIF operates a ferry
service between Liverpool, England and Belfast, Northern Ireland using two
chartered RoPax vessels, both built in 1997. NIF was established in 1991 and has
built up a regular and reliable service. In fiscal 2001, the service transported
129,000 trailer units and 104,000 passengers.

     Following this acquisition the Company achieved its goal of creating a
unique matrix of services across the Irish Sea, comprising RoRo freight services
from Heysham to Belfast and Dublin and RoPax services from Liverpool to Belfast
and Dublin. The Company has thus become a major operator on the Irish Sea with
the capacity to carry approximately 450,000 equivalent trailer units per annum,
over 32% of the market.

     In October 1999, the Company also completed its purchase of the
Eaglescliffe Logistics Centre in the North East of England for a price of $5.85
million and purchased the ships River Lune and Saga Moon, which had been
previously operated under capital leases. These purchases were funded using the
remaining $37.8 million held by the trustee for the Company's Senior Mortgage
Notes, together with approximately $25 million of free cash.

     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 ferries Mistral and
Scirocco on this service. In 2001, Ferrimaroc carried 329,000 passengers, 70,000
cars and approximately 4,600 units of freight. In accordance with Moroccan
government regulations, Ferrimaroc operates year round, although approximately
60% of revenues are 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. In fiscal 1999 the company had operated two
vessels during the summer season, and one during the remainder of the year. In
June 2000 the Moroccan government advised the Company that it would not be
permitted to operate two vessels during the summer. Two new competitors (one
Moroccan, one Spanish) came onto the route and introduced a pool for themselves
and the other competitor on the route. During the summer of fiscal 2000 and 2001
the company operated one of its vessels during the summer. The second vessel was
time chartered to one of the competitors. During the summer in fiscal 2001 the
company's and competitors' vessels worked in accordance with a pre-agreed
sailing schedule. A pre-agreed sailing schedule is also operational during the
winter 2001/02. The Company is continuing to negotiate to join the pool.

     Logistics. Since the early 1990's, the Company has expanded the scope of
its activity to cover general sea and air freight forwarding. The Company owns
75% (with an option on the remaining 25%) of Flair Forwarding (UK) Limited
("Flair"), a just-in-time air freight forwarding specialist, and Stockglobal
Limited ("Duncan"), a sea freight forwarding business. The Company also owns
Freightwatch Ltd, a company specializing in outsourcing freight management.

     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. The Company previously
occupied the site under a lease, completing its purchase of the site in October
1999. 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.

     The Company leases additional office and warehousing facilities near
Heathrow and Milton near Oxford to expand its logistics business in the South
and Midlands of England respectively.

     The Company has also started a groupage service between the UK and Europe
offering daily transportation. The Company has also established Cenargo Rail
Limited to assess rail transportation potential.

Shipbroking and Ship Operating Activities

     The Company has historically conducted its shipbroking activities through
its wholly owned subsidiary, Cenargo Broking Services Limited, which has acted
as a commercial manager for the Company's deepsea fleet and provided shipbroking
services for third party customers. As the Company has sold its deepsea fleet,
it has been significantly reducing its shipbroking and ship operating
activities. By the end of fiscal 1999, the Company's shipbroking and ship
operating activities were effectively closed.

Business Strategy

     Following the acquisition of NIF, the Company now has four complementary
services operating across the Irish Sea. In the short term the Company is
seeking to maximize its competitive position in light of this unique matrix of
services. It is also looking to extract a number of synergies which have arisen
as a result of this latest acquisition.

     A new berth for the Company in the Port of Dublin was completed in June
2000. This enables the Company to operate both its Dublin services at prime slot
times, enabling rate improvement and also the ability of the Company to increase
its volumes on the Heysham-Dublin service. The Company is contemplating the
introduction of a third vessel on this route.

     A new river berth is also being built in the Port of Liverpool for the
Company's use. Completion is expected mid 2002. The Company will thereafter not
have to dock inside the lock system in Liverpool, thus saving time on each
voyage. This will enable the Company's sailings to depart later from Liverpool
while still arriving at the Belfast and Dublin destination is accordance with
its present schedules. This will give a further competitive edge to the Company.

     The Company is also investigating new ferry markets, particularly following
the abolition of cabotage in Europe. The Company intends to capitalize on its
established reputation, management, booking, reservations and ticketing systems
and agency networks to expand into new passenger and freight ferry services.

     Following its acquisition of the ex-Royal Naval Supply at Eaglescliffe, the
Company is now in a position to offer long term contacts to customers seeking
warehousing and distribution. The site also gives the Company a strong low cost
base from which to develop further its logistics' businesses. This has been
supplemented by leased warehousing facilities in the Midlands at Milton and at
Heathrow in the South of England.

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 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, (iii) the size of the
vessels, with larger vessels generally being significantly less expensive to
operate on a per-trailer-unit basis and (iv) the availability of peak slot times
for berthing access to the ports.

     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 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.

Corporate Structure

     The Company conducts its ferry, logistics and freight forwarding operations
through subsidiaries, the vast majority of which are wholly-owned. Cenargo Fast
Ferries (No.2) Plc and Merchant Ferries Plc are intermediate holding companies
that conduct the Company's ferry operations through individual ferry operating
companies. Cenargo World Limited acts as the holding company for the logistics
and freight forwarding businesses of the Company, all of which are wholly-owned
except for Flair Forwarding (UK) Limited. All the active subsidiaries are
incorporated in England, except Cenargo Navigation (Hong Kong) Ltd., one of the
Company's ship-owning companies which was incorporated in Hong Kong, and Norse
Irish Ferries Ltd., a ferry operator incorporated in the Isle of Man.

Property, plants and equipment

     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 2.2
million pounds sterling as of September 30, 2001.

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

     At Belfast, the Company has two contracts for (for BFF and NIF) the
preferential, but not exclusive, use of two port areas which includes berths,
vehicle ramps, compounds and various operation and administration buildings. The
BFF permitted user contract is for a period of 10 years from January 1, 1994,
with an option to renew. The NIF contract is for a period of 14 years from April
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, MF and NIF have entered into agreements for the lease of
certain berths during designated slot times. The MF lease will be replaced by a
contract for preferential, but not exclusive, use of the new river berth which
is expected to be built by mid 2002. The Company's services from Liverpool to
Belfast and Dublin will both be accommodated on this river berth during 2002.

     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 and at Milton near Oxford to
expand its logistics businesses in the Midlands and south of England.

     Following a successful solicitation of the note holders Eaglescliffe was
purchased on October 22, 1999 for a cost of 3.555 million pounds sterling ($5.85
million). The purchase was funded from money on deposit with the trustee for the
Company's ship mortgage notes and the property was made the subject to a
mortgage to secure the Company's ship mortgage notes. The purchase price
included the anticipated cost of cleaning up small amounts of radiological
contamination on the site. This contamination 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. The
decontamination clean up was completed in December 2000.

     The Company's Ferry Fleet. The Company's ferry fleet consists of five RoRo
ferries, two passenger/car ferries and six RoPax ferries. The following table
sets forth certain information with regard to the Company's current ferry fleet:

<TABLE>
<CAPTION>
                                                             YEAR
VESSEL NAME           VESSEL TYPE     CAPACITY               BUILT      FLAG
<S>                   <C>             <C>                    <C>        <C>

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)

MISTRAL               Passenger       2,386 passengers       1981       Bahamas
                      Car/Ferry       600 cars

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

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

BRAVE MERCHANT        RoPax           250 passengers         1999       British
                                      136 trailer units                 (Isle of Man)

LAGAN VIKING          RoPax           330 passengers         1997       Italian
                                      180 trailer units

MERSEY VIKING         RoPax           330 passengers         1997       Italian
                                      180 trailer units

NORTHERN MERCHANT     RoPax           250 passengers         2000       British
                                      136 trailer units

MIDNIGHT MERCHANT     RoPax           250 passengers         2000       British
                                      136 trailer units

</TABLE>

The Company owns all of its ferries at the date of this report except Northern
and Midnight Merchant, which are on operating leases. The River Lune and Saga
Moon, which were operated under capital leases, were purchased in October 1999.
Lagan and Mersey Viking which were previously time chartered were purchased in
March 2001.

     The RoPax Vessels Dawn, Brave, Northern and Midnight Merchant are sister
ships, affording the Company operating efficiencies and scheduling flexibility.
The Dawn Merchant and Brave Merchant are employed in the Irish Sea trade as
discussed above.

Deepsea Shipping Fleet and Charter Operations

     As discussed above, the Company continued to exit from its deepsea fleet
ownership during fiscal 1999 by selling its two emaining multi-purpose container
ships the Merchant Premier and Merchant Principal in August 1999.

     RoPax vessels three and four were delivered in March 2000 and the second in
September 2000. The Company has agreed an eighteen month time charter of both
these ferries to Norfolk Line (part of Maersk). Lagan and Mersey Viking were
purchased in March 2001.

Competition

     Irish Sea Competition. There are five ferry operators, including the
Company, competing in the Irish Sea freight ferry market. In 1999, Cenargo
estimates that Merchant Ferries, BFF and NIF had a combined market share of
approximately 28% of the Irish Sea freight trade. The Company's principal
competitors include Stena Line UK Ltd., P&O European Ferries (Ireland) Ltd and
Irish Ferries of Irish Continental Group, whose market shares are estimated by
Cenargo to be 21%, 36%, and 11%, 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. The Company estimates that overall, traffic on the Irish Sea grew
by 7.0% in 2001.

     Deepsea Fleet and Charter Competition. The charter and the vessel resale
markets in which the Company's vessels compete are 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 three 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. Transmediterranea and COMARIT (a
Moroccan owned ferry company) have been granted permission to operate a vessel
each on the Almeria - Nador route. This service commenced operations in 2000. 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 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.

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, is outsourced.

     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 and Celtic Marine 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.
The managers divide the vessels managed amongst small fleet teams. Two
superintendents, a technical coordinator, a purchasing manager, a fleet
accountant and a secretary comprise a 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 the managers buying power, especially for lubricating oil and
spare parts. A safety and quality team is responsible for implementing,
monitoring and up-dating the managers quality management system. The ship
managers are accredited for the International Safety Management ("ISM") Code and
ISO 9002.

     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
crewmembers. 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.

     From 1st March 2002 the day to day management of the Company's vessels will
be carried out by Bluewater Marine Management Ltd in which the Company will have
a 49% interest. Bluewater has many years' experience in managing RoPax and RoRo
vessels and will take over as technical managers from V Ships.

Customers

     Irish Sea Customers. In the Irish Sea freight ferry trade, both BFF,
Merchant Ferries and NIF 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. NIF
and Merchant Ferries RoPax services from Liverpool to Dublin and Belfast
specialize in accompanied trailers transporting more time sensitive cargos, as
well as a significant element of tourist passengers and cars making use of the
RoPax vessels passenger capacity.

     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 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 Showa Line and 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 retail, chemicals, energy,
steel, electronics and manufacturing industries. Customers include Rothmans.,
Sanyo Electric Manufacturing (UK) Ltd., Samsung Electronics Manufacturing (UK)
Ltd., Ehrmanns Plc, Virgin Cosmetics Ltd and Virgin Wine Ltd.

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 dry-docked 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 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.

     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. Certification has also been obtained for all the Company's freight
vessels that are currently trading. Merchant Venture and Spheroid (now being
held for sale) do not have this certificate yet.

     In 1995, the IMO issued new regulations under the International Convention
for the Safety of Life at Sea (SOLAS) 1990 requiring passenger ships to have
sufficient buoyancy and intact stability after collision or other damage causing
ingress of water, also called 'Damage Stability' and expressed in using a
Subdivision Index (A/Amax). The Scirocco and the new RoPax ferries are fully
complying with this regulation with A/Amax=1.00. Work was carried out on the
Mistral in May/June 1999 to increase the damage stability to achieve
A/Amax}0.975, which permits her to trade up to the first annual survey after
October 1, 2005.

     A further enhancement of the survivability characteristics with specific
stability requirements was agreed and issued by IMO in 1996 for RoRo passenger
ships undertaking regular scheduled international voyages between or from
designated ports in North West Europe and the Baltic. This agreement is known as
the Stockholm Agreement and essentially states that the ship shall be able to
withstand up to 0.5m of water on the main vehicle deck. The new RoPax vessels
fully comply with this regulation. The four RoPaxes do comply with the Stockholm
Agreement.

     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.

     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, the European Commission
has recently adopted a White Paper on liability for remedying environmental
damage, which upholds 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 (brought into force during 1999) 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.

     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 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 laws of nuisance, negligence
and trespass 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.

     Part II A of the Environmental Protection Act 1990, which came into force
on April 1, 2000 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 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 indicated that there was a limited
amount of radiological contamination at Eaglescliffe, which the Company
purchased from the U.K. Ministry of Defence. The purchase price was adjusted and
reduced by the cost of decontamination of the site by an independent contractor.
The decontamination was completed in December 2000.

     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.

     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 $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.

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 $65,000 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 $1000 million per vessel per incident.

     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.

     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.

ITEM 5 - OPERATING AND FINANCIAL REVIEW AND PROSPECTS

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

     In recent years, the Company has been predominantly an owner and operator
of deepsea dry bulk vessels, but during the years ended September 30, 1998 and
1999 ("fiscal 1998 and 1999"), has been progressively withdrawing from this
market and sold its two remaining multi-purpose dry cargo vessels in August
1999. The Company, as at the date of this report, currently owns five RoRo
freight ferries, four RoPax freight/passenger ferries and two passenger/car
ferries. The Company has use of two RoPax ferries under 12 year operating
leases.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
--------------------------------------------

IRISH SEA SERVICES

The Company continued its strategy of concentrating on the development of its
Irish Sea ferry operations. A new Liverpool- Dublin service was started in
February 1999. This service, which offers twice daily sailings between the two
ports, is operated with two RoPax newbuildings. The first of these was delivered
in September 1998 and second in January 1999. The start up of the new service,
was delayed by the late delivery of the new vessels, which adversely effected
the Company's existing Heysham-Dublin service due to shortage of berthing
facilities in Dublin. The pre-tax losses incurred during fiscal 1999
attributable to the start up of the new service including the adverse impact on
the Company's existing Heysham-Dublin service were approximately $8.6 million.
The service offers two sailings per day in each direction and carried
approximately 111,000 equivalent freight units and 48,000 passengers in fiscal
2001. The Port of Dublin has completed the construction of an additional berth
adjacent to the Company's existing berth in Dublin. Under its agreement with the
port, the Company has preferential, but not exclusive, rights to use this
additional berth at the peak loading and discharging times each day.

     The Heysham-Belfast service has continued to trade successfully during the
year. The service continues to offer four sailings per day in each direction and
carried approximately 118,000 equivalent freight units in fiscal 2001.

     In October 1999 the Company acquired Norse Irish Ferries Limited ("NIF").
NIF operates a service between Liverpool and Belfast using two chartered RoPax
vessels, both built in 1997. NIF was established in 1991 and has built up a
regular and reliable service. The service carried approximately 129,000
equivalent trailer units and approximately 104,000 passengers in fiscal 2001.

     Following this acquisition the Company has a unique matrix of services
across the Irish Sea, comprising RoRo freight services from Heysham to Dublin
and Belfast and RoPax services from Liverpool to Dublin and Belfast. The Company
has thus become a major operator on the Irish Sea with the capacity to carry
approximately 450,000 equivalent trailer units per annum, over 32% of the
market.

FERRIMAROC

     Ferrimaroc, the passenger and freight ferry service operated by the Company
between Almeria in Southern Spain and Nador, in Eastern Morocco has had a less
successful year. The Company faced increased competition during fiscal 2000. In
addition to Limadet, Comarit (Moroccan lines) and Trasmediterranea (Spanish
line) joined the route. The Company was informed by the Moroccan government in
June 2000 that it would not be allowed to use two ships during the summer 2000.
The Company used its larger vessel Mistral but its total carryings dropped
compared to fiscal 1999. In fiscal 2001, the service carried over 329,000
passengers, 70,000 cars and approximately 4,600 trucks. The passenger and car
market on the Almeria-Nador route continues to grow with the number of
passengers on the route increasing by almost 14% during the summer season.

LOGISTICS

     Following the purchase of the ex Ministry of Defense site at Eaglescliffe,
the Company has made significant progress in the development of its warehousing
and distribution services including added value services such as pick and pack.
A number of significant contracts have been won by the site whose main customers
include Samsung, Virgin Cosmetics and BAT. The Company is confident that it will
be able to further exploit the significant potential of the site. The site gives
the Company a strong low cost base from which to develop further its logistics
businesses generally.

RESULT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 2001
COMPARED TO YEAR ENDED SEPTEMBER 30, 2000

OPERATING REVENUES

Operating revenues increased in the Year Ended September 30,2001 (the 2001
year") by 25.2 million pounds sterling or 24.6% to 128 million pounds sterling
compared to 102.7 million pounds sterling in the Year Ended September 30, 2000
(the"2000 year"). The increase comprised an 11.2 million pounds sterling or 305%
increase in charter hire revenues, a 7.8 million pounds sterling or 8.4%
increase in ferry service revenues and an 8.4 million pounds sterling or 46.4%
increase in logistics and other revenues. The increase in charter hire revenues
resulted mainly from having a full year's charter hire from two of the company's
ropax vessels, compared to the 2000 year during which the two vessels were
delivered new in March 2000 and September 2000 respectively. The increase in the
ferry service revenues was mainly due to improved rates and volumes on the
Company's Irish Sea services and improved rates on the Company's Ferrimaroc
service. The increase in the Logistics and other revenues mainly resulted from
improved utilization of the Company's Eaglescliffe site.

Operating expenses

Vessels and other operating costs increased in the 2001 year by 18.3 million
pounds sterling or 24.2% to 93.9 million pounds sterling compared to 75.6
million pounds sterling in the 2000 year. This was primarily the result of the
inclusion of a full year's operating costs of the two new ropax vessels
delivered in March and September 2000, inflation and the higher costs arising
from increased volumes on the Company's ferry services and logistics'
businesses, less the reduction in charter hire costs following the purchase of
Mersey and Lagan Viking in March 2001. Both vessels had previously been
chartered in by the Company.

Depreciation and amortization of deferred costs increased in the 2001 year by
1.6 million pounds sterling or 25.4% to 7.8 million pounds sterling compared to
6.2 million pounds sterling in the 2000 year. This is mainly attributable to the
two ropax vessels, Mersey Viking and Lagan Viking, purchased in March 2001.

Provision for impairment in value of assets of 0.4 million pounds sterling in
the 2001 year compared to nil million pounds sterling in the 2000 year is
attributable to the write down of remediation expenditure following the decision
to relocate warehousing in the Heathrow area.

Amortization of dry-docking and special survey expenses decreased in the 2001
year by 0.5 million pounds sterling or 25.7% to 1.5 million pounds sterling
compared to 2.0 million pounds sterling in the 2000 year mainly due to the
incidence of dry-docks and also the higher number of new vessels with consequent
lower dry-docking costs.

Amortization of goodwill in the 2001 year increased by 0.1 million pounds
sterling or 5.6% to 1.2 million pounds sterling compared to 1.1 million pounds
sterling in the 2000 year. This reflected a full year's amortization in the year
2001 relating to the acquisition of Norse Irish Ferries Limited in October 1999.

General and administrative expenses decreased in the 2001 year by 2.3 million
pounds sterling or 17.9% to 10.5 million pounds sterling compared to 12.8
million pounds sterling in the 2000 year. This is mainly attributable to
measures taken in the 2000 and 2001 years to reduce general and administrative
expenses.

Foreign exchange gain in the 2001 year was 0.5 million pounds sterling compared
to a loss of 0.1 million pounds sterling in the 2000 year mainly due to currency
fluctuations mainly between the US dollar, sterling and the euro in the 2001
year compared to the 2000 year.

Primarily as a result of these developments total operating expenses for the
2001 year increased by 17.0 million pounds sterling or 17.3% to 114.8 million
pounds sterling compared to 97.8 million pounds sterling in the 2000 year.

Net Operating Income

As a result of the foregoing factors net operating income increased by 8.3
million pounds sterling or 169.9% to 13.2 million pounds sterling compared to
4.9 million pounds sterling in the 2000 year.

Other operating income/expenses

Interest income decreased by 0.1 million pounds sterling or 10% to 0.6 million
pounds sterling in the 2001 year compared to 0.7 pounds sterling in the 2000
year. This mainly reflected lower interest rates prevailing during the 2001
year.

Interest expenses increased by 1.9 million pounds sterling or 15.3% to 14.2
million pounds sterling in the 2001 year compared to 12.3 million pounds
sterling in the 2000 year. The increase is mainly attributable to the cost of
the financing of the purchase of the two ropax vessels, Mersey and Lagan Viking,
in March 2001.

There was no litigation claim receipt in the 2001 year compared to 6.1 million
pounds sterling received in the 2000 year.

Loss on disposal of fixed assets was 0.2 million pounds sterling in the 2001
year compared to a gain of 0.1 million pounds sterling in the 2000 year. The
loss in the 2001 year mainly resulted from the sale of the roro Spheroid during
the year.

Loss before income taxes

As a result of the above loss before income taxes for the 2001 year was 0.6
million pounds sterling, compared to a loss of 0.5 million pounds sterling in
the 2000 year.

Income taxes

Income taxes for the 2001 year was a reduction in deferred taxation of 0.2
million pounds sterling in the 2001 year compared to a 2.1 million pounds
sterling increase in deferred taxation in the 2000 year.

RESULTS OF OPERATIONS

YEAR ENDED SEPTEMBER 30, 2000
COMPARED TO YEAR ENDED SEPTEMBER 30, 1999

OPERATING REVENUES

     Operating Revenues increased in the Year Ended September 30, 2000 (the
"2000 year") by 29.2 million pounds sterling or 40% to 102.7 million pounds
sterling compared to 73.5 million pounds sterling in the Year Ended September
30, 1999 (the "1999 year"). The increase comprises a $1.2 million, or 27%,
increase in charter hire revenues, a 25.2 million pounds sterling or 45%,
increase in ferry service revenues and a 2.9 million pounds sterling or 23%
increase in logistics' and other revenues. The increase in charter hire revenues
resulted mainly from the delivery of the Company's newly built RoPax vessels in
March and September 2000 which were chartered out to Norfolk Line (Maersk). The
increase in ferry service revenues was mainly due to the inclusion of a full
year of the Liverpool - Dublin RoPax service started in February 1999 and the
inclusion of revenues from Norse Irish Ferries Limited ("NIF") revenues acquired
on October 1, 1999. The increase in logistics and other revenues mainly resulted
from the purchase of the Eaglescliffe logistics site in October 1999.

Operating Expenses

     Vessels and other operating costs increased in the 2000 year by 25.2
million pounds sterling, or 50%, to 75.5 million pounds sterling compared to
50.3 million pounds sterling in the 1999 year, primarily as a result of the
inclusion of NIF results, the Liverpool - Dublin service for a full year, and
the inclusion of the Northern and Midnight Merchant operating costs from their
delivery in March and September 2000. This was offset by decreased deep sea
operating costs as a result of the vessels sold in the 1999 year.

     Depreciation was 6.2 million pounds sterling for the 2000 year compared to
6.5 million pounds sterling in the 1999 year. The reduction is after taking into
account reduced depreciation on the company's present fleet whose lives have
been extended to 30 years and is after taking into account a full year of the
Liverpool - Dublin service vessels and equipment, a full year's depreciation on
Mistral purchased in July 1999, and depreciation on NIF assets and equipment,
off set by the reduction of depreciation on deep sea vessels sold in 1999.

     Amortization of dry-docking and special survey costs, in the 2000 year, was
2.0 million pounds sterling compared to 2.1 million pounds sterling in the 1999
year, mainly attributable to the higher number of new vessels with consequent
lower dry-docking costs. Amortization of goodwill in the 2000 year increased by
1.0 million pounds sterling, to 1.1 million pounds sterling from 0.1 million
pounds sterling in the year 1999, mainly resulting from the amortization of
goodwill on the acquisition of NIF.

     General and administrative expenses for the 2000 year increased by 1.9
million pounds sterling, or 17%, to 12.8 million pounds sterling from 10.9
million pounds sterling in the 1999 year, primarily due to the inclusion of NIF
costs.

     Foreign exchange loss for the 2000 year was 0.1 million pounds sterling
compared to a loss in the 1999 year of 0.3 million pounds sterling mainly due to
the effect of the currency fluctuations mainly between the US dollar, Euro and
Sterling in the year 2000 compared to 1999.

     Primarily as a result of these developments total operating expenses for
the 2000 year increased by 25.7 million pounds sterling or 36%, to 97.8 million
pounds sterling compared to 72.1 million pounds sterling in the 1999 year.

Net Operating Income

     As a result of the foregoing going factors net operating income increased
by 3.5 million pounds sterling to 4.9 million pounds sterling for the 2000 year,
compared to 1.4 million pounds sterling for the 1999 year.

OTHER OPERATING INCOME/EXPENSES

     Interest income decreased by 1.9 million pounds sterling to 0.7 million
pounds sterling for the 2000 year, compared to 2.6 million pounds sterling for
the 1999 year. In the 1999 year the majority of the interest income was
attributable to cash deposits from the proceeds of sale of vessels which were
disbursed in July and October 1999 on the purchase of vessels, NIF and
Eaglescliffe.

     Interest expense decreased by 0.2 million pounds sterling in the 2000 year
to 12.3 million pounds sterling from 12.5 million pounds sterling in the 1999
year. The decrease was mainly attributable to the buy out of the capital leases
on River Lune and Saga Moon in October 1999. This was offset by interest on the
financing of the Midnight Merchant of 0.4 million pounds sterling incurred in
the 2000 year. (This is offset by late delivery penalties on the vessel of 0.5
million pounds sterling included in charter hire revenues).

LITIGATION CLAIM

     Litigation claims of 6.1 million pounds sterling in the year 2000 compared
to 0.9 million pounds sterling in the year 1999, represents compensation
received from the Spanish government of 1000 million Pesetas per vessel received
on delivery of the Northern and Midnight Merchant less the 0.9 million pounds
sterling received in the 1999 year.

GAIN ON DISPOSAL OF FIXED ASSETS

     The gain on disposal of fixed assets in the 2000 year was 0.1 million
pounds sterling compared to 1.1 million pounds sterling arising mainly from deep
sea vessel sales in the 1999 year.

INCOME/(LOSS) BEFORE INCOME TAXES

     As a result of the foregoing factors, net operating loss for the 2000 year
was 0.5 million pounds sterling, compared to a loss of 6.5 million pounds
sterling in the 1999 year.

INCOME TAXES

     Income taxes for the 2000 year were 2.1 million pounds sterling comprising
increases of 1.5 million pounds sterling in deferred taxation and 0.6 million
pounds sterling attributable to foreign exchange translation.

YEAR ENDED SEPTEMBER 30, 1999
COMPARED TO YEAR ENDED SEPTEMBER 30, 1998

OPERATING REVENUES

     Operating Revenues increased in the Year Ended September 30, 1999 (the
"1999 year") by 6.1 million pounds sterling or 11% to 73.5 million pounds
sterling compared to 67.4 million pounds sterling in the Year Ended September
30, 1998 (the "1998 year") the increase comprises a 16.2 million pounds
sterling, or 80.0%, decrease in charter hire revenues, a 28.2 million pounds
sterling or 47.9%, increase in ferry service revenues and a 4.1 million pounds
sterling or 46.7% increase in logistics services and other revenues. The
increase in ferry service revenues was due to the inclusion of full years
results for BFF in the 1999 year compared to nine months in the 1998 year as BFF
was acquired by the Company in January 1998, together with revenues from
Merchant Ferries' new Liverpool-Dublin RoPax ferry service which commenced in
February 1999. The decrease in charter hire revenue represents the loss of
charter hire previously generated by nine of the Company's deepsea vessels
disposed in the first and second quarters of the 1998 year and the first quarter
of the 1999 year. The increase in logistics and other revenue was due to the
inclusion of the results of Duncan acquired in May 1998 and Freightwatch
acquired in 2 March 1999 together with increased revenue generated at
Eaglescliffe the Company's developing logistics Center in the North East of
England.

Operating Expenses

     Vessels and other operating costs increased in the 1999 year by 6.7 million
pounds sterling, or 15.2% to 50.3 million pounds sterling compared to 43.7
million pounds sterling in the 1998 year, primarily as a result of the inclusion
of BFF, Duncan and Freightwatch results and the operating costs of the
Liverpool-Dublin RoPax service in the 1999 year offset by decreased deepsea
vessels operating costs, as a result of the nine vessels sold.

     Depreciation for the 1999 year has decreased by 0.1 million pounds
sterling, or 2.4%, to 6.5 million pounds sterling compared to 6.6 million pounds
sterling in the 1998 year, which represents a reduction of depreciation of
vessels sold offset by the inclusion of depreciation on BFF vessels for the
whole of the 1999 year and the two RoPax vessels delivered in September 1998 and
January 1999. Amortization of dry-docking and special survey costs increased by
1.1 million pounds sterling, or 107.2%, to 2.1 million pounds sterling compared
to 1.0 million pounds sterling in the 1998 year, reflecting an increase due to
the inclusion of BFF vessels and increased costs associated with the Company's
Ferrimaroc service offset by a decrease due to the vessels sold. The provision
for the impairment in value of vessels of 1.9 million pounds sterling in the
1999 year represents the provision for permanent diminution in value of the
Company's two remaining multi-purpose dry-cargo vessels during the year which
were sold at the Year end. The provision of 13.7 million pounds sterling in the
1998 year was a full provision for the loss on the disposal of the Company's two
Capesize vessels disposed of in the 1999 year.

     General and administrative expenses for the 1999 year increased by 2.7
million pounds sterling or 32.8%, to 10.9 million pounds sterling compared to
8.2 million pounds sterling in the 1998 year, representing the inclusion of BFF,
Duncan, Freightwatch and Merchant Ferries increased overhead costs relating to
the new Liverpool-Dublin service for the 1999 year offset by reductions in Head
Office costs.

     Foreign exchange loss increased by 0.2 million pounds sterling, or 440%, to
0.3 million pounds sterling compared to 0.1 million pounds sterling in the 1998
year, primarily reflecting the unrealized losses in the 1999 period on
re-translation of Sterling monetary assets and liabilities within US dollar
reporting subsidiary companies.

Net Operating Income

     As a result of the foregoing factors, the Company had net operating income
of 1.4 million pounds sterling for the 1999 year, an increase of 7.5 million
pounds sterling compared to a net operating loss of 6.1 million pounds sterling
for the 1998 year.

OTHER OPERATING INCOME/EXPENSES

     Interest income increased by 1.3 million pounds sterling, or 97.5%, to 2.6
million pounds sterling for the 1999 year compared to 1.3 million pounds
sterling for the 1998 year. The increase was due to the increased interest
income attributable to cash deposits from the proceeds of the sale of vessels.
Interest expense increased by 0.7 million pounds sterling, or 5.8%, to 12.5
million pounds sterling for the 1999 year compared to 11.8 million pounds
sterling for the 1998 year. The increase was due to the increased interest costs
as a result of the issue of the notes and the inclusion of interest on BFF
vessels capital leases for the whole of the 1999 year offset by the inclusion in
1998 year of an interest cost of 4.1 million pounds sterling on termination of
interest rate swap contracts and the inclusion of a non cash charge of 0.3
million pounds sterling representing an unamortized finance charges written off
in repayment of bank loan facilities, from the proceeds of the notes issue (as
defined below).

     The gain on disposal of fixed assets was 1.1 million pounds sterling in the
1999 year compared to 8.5 million pounds sterling in the 1998 year. The gain in
the 1999 year represents the profit on sale of the Merchant Prince and the
Moondance and the gain in the 1998 year represents the profit on disposal of six
of the company's deepsea vessels.

INCOME TAXES

     Income tax benefit in the 1999 year was 1.5 million pounds sterling, or
22.9% of pre-tax results, compared to 5.8 million pounds sterling, or 71% of
pre-tax results in the 1998 year.

NET LOSS

     As a result of the foregoing, net loss was 5.0 million pounds sterling, in
the 1999 year compared to net loss of 2.3 million pounds sterling in the 1998
year.

LIQUIDITY AND CAPITAL RESOURCES

     Total shareholders equity at September 30, 2001 was 23.6 million pounds
sterling compared to 25.5 million pounds sterling at September 30, 2000. The
decrease of 1.9 million pounds sterling is represented by a net loss of 0.4
million pounds sterling in the 2001 year and accumulated other comprehensive
income of 1.5 million pounds sterling, which includes translation adjustments of
US$ based subsidiary companies into Sterling of 0.7 million pounds sterling and
an adjustment to reflect the fair value of derivatives of that date of 0.8
million pounds sterling.

     Long term debt at September 30, 2001 consists of 117.8 million pounds
sterling 9% First Priority Ship Mortgage Notes (the "Notes") together with other
secured debts and obligations. The debt drawndown to finance the purchase of two
new build vessels totaling 52 million pounds sterling (36.1 million pounds
sterling at September 30, 1999) was repaid on delivery of the two vessels in
2000 from the proceeds of the sale of the vessels to a British banking
institution. The vessels are now on 12 year operating leases to the Company.

     The principal obligations under capital leases of 7.8 million pounds
sterling at 30 September 1999 were bought out using escrow proceeds in October
1999.

     At September 30, 2001 the Company had cash and cash equivalents of 11.7
million pounds sterling compared to 6.9 million pounds sterling at September 30,
2000. The Company also had 3.1 million pounds sterling held in blocked accounts
principally as collateral for the operating leases for Northern and Midnight
Merchant. Cash and cash equivalents increased by 4.8 million pounds sterling
principally as a result of improvement in net cash provided by operating
activities.

TONNAGE TAX

     The UK Treasury published the Finance Bill in April 2000, including the
proposed UK tonnage tax regime. The bill became law in early August 2000. The
tonnage tax regime will allow UK shipping companies to elect to pay corporate
tax based on a nominal profit derived from the net tonnage of its ships. Non
shipping activities will be "ring fenced" and taxed as before, based on taxable
net income. The regime is intended to promote the UK shipping industry and its
competitive position.

     Cenargo has elected to enter the tonnage tax regime from October 1, 2002.
This will allow Cenargo to operate its ferry and shipping business virtually
tax-free. Transitional rules of the regime mean that the majority of the
Company's deferred tax liability (10.5 million pounds sterling at September 30,
2001) will be extinguished over a seven year period at approximately 15% per
annum.

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 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 securing the Notes (the "Mortgaged Vessels"), the
assets of NIF and the land and buildings of Eaglescliffe. 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 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 million as a
construction and term loan facility to finance the acquisition and construction
of vessels.

     This facility was repaid in full following delivery of the two new build
vessels in March and September 2000.

     The two vessels were sold to a British bank. The Company now has operating
leases for the two vessels. Both operating leases are for twelve years starting
March and September 2000 respectively.

     The operating leases contain various covenants that restrict the Company
from taking various actions and that require that the Company observe certain
financial covenants. The operating leases' 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 operating leases provide 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.

SUBSTANTIAL LEVERAGE AND DEBT SERVICE

     The Company is highly leveraged, with 162.6 million pounds sterling of
total indebtedness outstanding (including the Notes) and 23.6 million pounds
sterling of shareholders' equity at September 30, 2001. Subject to the
restrictions in the Indenture and under the operating leases, each of Cenargo
and its subsidiaries, including the Subsidiary Guarantors, may incur additional
indebtedness from time to time, including under the operating leases. 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.

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.

ITEM 6 - DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

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.

         NAME                            AGE                  POSITION

         Michael Hendry                  48                   Chairman

         Annabel Hendry                  50                   Director

         Paul Gregory                    60                   Finance 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.

     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. 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.

Compensation of directors and officers

     During the fiscal year ended September 30, 2001, the Company paid an
aggregate of approximately 0.8 million pounds sterling 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.

Board Practices

     Michael Hendry, Annabel Hendry and Paul Gregory have served as members of
the board of directors of the Company for all of fiscal year 2001. There is no
expiration date for their term of office. None of the directors have a service
contract with the Company.

Employees

     As of September 30, 2001, the Company employed 581 people. The Company's
technical managers employ approximately 350 employees on the Company's vessels
at any one time. As of September 30, 2000 and 1999, the Company employed 573 and
297 employees, respectively.

ITEM 7 - MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

     The Company is a closely-held English holding company. The following table
sets forth certain information, as of September 30, 2000, concerning the
beneficial ownership of the Company's outstanding Common Shares.

NAME                  NUMBER OF SHARES              PERCENT OF TOTAL

Michael Hendry            49,500                           99%

Peter Morton                 500                            1%

The Company did not engage in any related party transactions in fiscal 2000.

ITEM 8 - FINANCIAL INFORMATION

A.   CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

     See Item 18

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 currently continue settlement discussions to resolve the
issue out of court.

     The Company has reached agreement with the Spanish Government to receive a
non refundable advance of Spanish Pesetas 2000 million (approximately 6.0
million pounds sterling) against the eventual outcome of the court case. This
was paid on delivery of the Company's two newbuildings in March and September
2000.

     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 9 - THE OFFER AND LISTING

     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 10 - ADDITIONAL INFORMATION

MEMORANDUM AND ARTICLES OF INCORPORATION

     The Company's Memorandum of Association provides that its principal
objects, among others, are to carry on all or any of the business of shipowners,
shipbrokers, managers of shipping property and shipping companies, tug owners
and shipping agents.

Directors

     The Company's Articles of Association requires a director to inform the
Company, at a meeting of the Board of Directors, of any interest in a contract
or proposed contract with the Company. No director may vote in respect of any
contract made by him with the Company or in any contract in which he is
interested, and such director shall not be counted for purposes of determining a
quorum. However, these provisions do not apply to i) any arrangement for giving
any director any security or indemnity in respect of money lent by him or to
obligations undertaken by him for the benefit of the Company, (ii) any
arrangement for the giving by the Company of any security to a third party in
respect of a debt or obligation of the Company for which the director himself
has assumed responsibility in whole or in part under a guarantee or indemnity or
by the deposit of a security, (iii) any contract by a director to subscribe for
or underwrite shares or debentures of the Company or (iv) any contract or
arrangement with any other company in which he is interested only as an officer
of the company or as a holder of shares or other securities.

     The Board of Directors may exercise all powers of the Company to borrow or
raise money, and to give guarantees, and to mortgage or charge its properties
and assets, and subject to section 14 of the 1980 Act, to issue debentures,
debenture stock and other securities, outright or as security for any debt,
liability or obligation of the Company or any third party.

Rights of Note Holders

     Holders of the Company's Notes have no rights other than those set forth in
the Indenture. They do not have voting rights. There are no limitations imposed
by foreign law or the Company's charter or bylaws on the rights to own the
Notes. The Notes are senior obligations of the Company and rank pari passu in
right of payment with all existing and future senior indebtedness of the
Company. The Notes are subject to redemption at the option of the Company at
redemption prices specified in the Indenture.

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.

     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 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. 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 11 -- QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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 European Euro 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.

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
56 million pounds sterling in August 1998, amortizing to 31.5 million pounds
sterling 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 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 4.1 million pounds sterling, reflected
as part of the interest expense in the 1998 income statement.

EUROPEAN MONETARY UNION-EURO

     On January 1, 1999, eleven member countries of the European Union
established fixed conversion rates between their existing sovereign currencies,
and adopted the Euro as their new common currency. The Euro is currently trading
on currency exchanges and the legacy currencies will remain legal tender in
participating countries for a transition period between January 1, 1999 and
January 1, 2002. During the transition period, non-cash payments can be made in
the Euro and parties can elect to pay for goods and services and transact
business using either Euro or a legacy currency. Between January 1, 2002 and
July 1, 2002 the participating countries will introduce Euro notes and coins and
will withdraw all legacy currencies so that they will no longer be available.

     Although the United Kingdom is currently not participating in the Euro the
Company's businesses trade extensively within the Euro Zone. The Company will
continue to evaluate all pricing, currency risk, accounting, tax, governmental,
legal and regulatory issues as guidance becomes available. Based on current
information the Company does not expect that Euro conversion will have a
material adverse affect on its business or financial condition.

ITEM 12 -- DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

     Not applicable

ITEM 13 -- DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

     None

ITEM 14 -- MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY
HOLDERS AND USE OF PROCEEDS

Amendment to the Indenture

     In October 1999, the Company amended the Indenture pursuant to which it had
issued its 9 3/4% First Priority Ship Mortgage Notes due 2008. The Company had
received the consent of the holders of a majority of the Notes to amend the
Indenture to permit the Company to utilize part of the proceeds from the sale of
three mortgaged vessels to fund the acquisition of NIF and the Eaglescliffe
Logistics Center. As a result of the amendment, NIF, its assets and revenue
streams, along with the land and buildings of Eaglescliffe, are part of the
collateral securing the Notes.

ITEM 18 - 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:


<PAGE>


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, 2001, 2000 and 1999..................   F-2

         Consolidated Balance Sheets as of September 30, 2001
           and 2000.................................................   F-3

         Consolidated Statements of Cash Flows for the
           years ended September 30, 2001, 2000 and 1999............   F-4

         Notes to Consolidated Financial Statements.................   F-6


<PAGE>


                          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, 2001 and 2000 and the
related consolidated statements of income and cash flows for each of the years
in the three year period ended September 30, 2001. 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, 2001 and 2000, and the
consolidated results of their operations and their cash flows for each of the
years in the three year period ended September 30, 2001 in conformity with
accounting principles generally accepted in the United States.


MOORE STEPHENS
Chartered Accountants
St. Paul's House
Warwick Lane
London  EC4P 4BN

February 5, 2002


<PAGE>
<TABLE>
<CAPTION>
                            CENARGO INTERNATIONAL PLC

                        CONSOLIDATED STATEMENTS OF INCOME
                  YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999
                        (Sterling expressed in thousands)

                                        Note        2001          2000          1999
                                       ------   -----------   -----------   -----------
<S>                                    <C>      <C>           <C>           <C>

OPERATING REVENUES
Charterhire revenues                    2(g)       16,595         5,444         4,273
Ferry service revenues                  2(g)       88,187        81,356        56,170
Logistics and other revenues                       23,407        15,986        13,249
Brokers' commission                                  (193)          (53)         (205)
                                                -----------   -----------   -----------
Operating revenues                                127,996       102,733        73,487
                                                -----------   -----------   -----------

OPERATING EXPENSES
Vessel and other operating costs                   93,856        75,560        50,342
Depreciation and amortization of
  deferred costs                                    7,784         6,208         6,475
Provision for impairment
  in value of assets                    2(l)          389             -         1,906
Amortization of drydocking and
  special survey costs                              1,480         1,993         2,096
Amortization of goodwill                            1,174         1,112            69
General and administrative expenses                10,558        12,857        10,940
Foreign currency (gain)/loss                         (461)           96           288
                                                -----------   -----------   -----------
Operating expenses                                114,780        97,836        72,116
                                                -----------   -----------   -----------
Operating income                          5        13,216         4,897         1,371
                                                -----------   -----------   -----------
OTHER (EXPENSES) INCOME
Interest income                                       627           697         2,646
Interest expense                       15(a)      (14,202)      (12,320)      (12,543)
Litigation claim                       16(b)            -         6,116           922
(Loss)/gain on disposition of
  fixed assets                                       (219)           62         1,096
                                                -----------   -----------   -----------
Other (expenses) income                           (13,794)       (5,445)       (7,879)
                                                -----------   -----------   -----------
Loss before income taxes                             (578)         (548)       (6,508)
Income taxes                              6           185        (2,080)        1,491
Minority interests                                    (36)          (86)          (27)
                                                -----------   -----------   -----------
Net (loss)                                           (429)       (2,714)       (5,044)
                                                -----------   -----------   -----------


          See accompanying notes to consolidated financial statements.

</TABLE>


<PAGE>


                            CENARGO INTERNATIONAL PLC
                           CONSOLIDATED BALANCE SHEETS
                        AS OF SEPTEMBER 30, 2001 AND 2000
                        (Sterling expressed in thousands)

                                      Note           2001          2000
                                   -----------   -----------   -----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents                           13,043         9,644
Cash held in escrow                        8         3,124         3,124
Trade accounts receivable                           20,259        19,572
Other receivables                                    3,423         1,225
Due from joint ventures                   10         1,255           457
Inventories                                            840         1,027
Prepaid expenses and accrued
  income                                             2,651         1,465
                                   -----------   -----------   -----------
Total current assets                                44,595        36,514

NON CURRENT ASSETS
Vessels and equipment                      9       132,118        93,785
Land and buildings                         9        11,460        12,174
Investments in joint ventures             10             -             -
Loans to joint ventures                   10         1,691         2,680
Goodwill, net                              7        19,582        20,706
Trade investments                                        -           351
Deferred charges, net                     11         5,355         4,523
Pension fund debtor                       12         3,659         3,467
Prepaid expenses and deposits                        5,605         5,541
                                   -----------   -----------   -----------
Total assets                                       224,065       179,741
                                   ===========   ===========   ===========

LIABILITIES AND SHAREHOLDERS'
 EQUITY
CURRENT LIABILITIES
Bank overdrafts                                      1,355         2,730
Current maturities of long-term
  debt                                    13         4,525           873
Capital lease obligations                 17           533           760
Trade accounts payable                              10,804         6,166
Accrued expenses                                     7,759         3,100
Accrued interest - ship mortgage
  notes                                              3,483         3,462
Other creditors                                      2,868         4,092
Due to joint ventures                     10           302           272
                                   -----------   -----------   -----------
Total current liabilities                           31,629        21,455

LONG-TERM LIABILITIES
Ship Mortgage Notes                       13       117,822       116,937
Long-term debt                            13        38,726         2,831
Capital lease obligations                 17           957         1,257
Other creditors                                        777         1,061
Deferred taxation                          6        10,514        10,699
                                   -----------   -----------   -----------
Total liabilities                                  200,425       154,240
Contingent liability                      16             -             -
                                   -----------   -----------   -----------

SHAREHOLDERS' EQUITY
Share capital                             14            12            12
Accumulated other comprehensive
  income                                              (391)        1,041
Retained earnings                                   24,019        24,448
                                   -----------   -----------   -----------
Total shareholders' funds                           23,640        25,501
                                   -----------   -----------   -----------
Total liabilities and share-
  holders' funds                                   224,065       179,741
                                   ===========   ===========   ===========


<PAGE>


<TABLE>
<CAPTION>
                            CENARGO INTERNATIONAL PLC

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEAR ENDED SEPTEMBER 30, 2001, 2000 AND 1999
                        (Sterling expressed in thousands)

                                                   2001          2000          1999
                                                -----------   -----------   -----------
<S>                                             <C>           <C>           <C>
OPERATING ACTIVITIES
Net (Loss) income                                    (429)       (2,714)       (5,044)

Adjustments to reconcile net income
  to net cash provided by operating
  activities:
 Amortization of drydocking and
   special survey costs                             1,480         1,993         2,096
 Amortization of ship mortgage
   notes discount                                     189           173           209
 Depreciation                                       7,784         6,208         6,475
 Amortization of goodwill                           1,174         1,112            69
 Loss/(gain) on disposition
   of fixed assets                                    219           (62)       (1,096)
 Provision for diminution in value of
   assets                                             389             -         1,906
 Foreign exchange                                  (1,372)        1,161           972
 (Increase)/decrease in pension debtor               (192)          205          (225)
 (increase)/decrease in trade accounts
   receivable                                      (1,620)          752        (2,760)
 (Increase)/decrease in
   other receivables                               (2,198)        1,965           665
 Decrease in inventories                              187           177           168
 (Increase)/decrease in prepaid expenses
   and accrued income                              (2,730)       (2,984)        1,871
 Increase/(decrease) in trade accounts
   payable                                          4,638          (306)       (2,232)
 Increase/(decrease) in accrued
   expenses                                         3,983        (2,574)          484
 (Decrease)/increase in
   other creditors                                 (1,508)        1,073        (5,976)
 Increase (decrease) in deferred tax
   liabilities                                       (185)        1,432        (1,537)
                                                -----------   -----------   -----------
Net cash provided (absorbed) by
  operating activities                              9,809         7,611        (3,955)
                                                -----------   -----------   -----------

INVESTING ACTIVITIES
Additions to land and buildings                      (671)       (3,630)       (1,281)
Additions to vessels and equipment                (44,825)       (2,076)      (10,562)
Additions to vessels under construction                 -       (18,608)      (20,954)
Purchase of subsidiary undertakings, net
  of cash acquired                                    (50)      (22,948)         (803)
Sale of other investment                              351             -             -
Proceeds from sale of fixed assets                  1,151        56,038        42,120
                                                -----------   -----------   -----------

Net cash provided by (used in) investing
  activities                                      (44,044)        8,776         8,520
                                                -----------   -----------   -----------

FINANCING ACTIVITIES

Proceeds from long-term debt                       42,659        16,116        11,294
Repayment of long-term debt                        (2,512)      (55,055)         (980)
Due to (from) joint ventures                          221           275           869
Repayments of capital leases                         (527)       (9,195)       (2,029)
Deferred charges paid                                (832)         (585)       (2,776)
                                                -----------   -----------   -----------
Net cash provided by (used in)
  financing activities                             39,009       (48,444)        6,378
Net increase/(decrease) in cash and
  cash equivalents                                  4,774       (32,057)       10,943
Cash and cash equivalents at
  beginning of year                                10,038        42,095        31,152
                                                -----------   -----------   -----------
Cash and cash equivalents at
  end of year                                      14,812        10,038        42,095
                                                ===========   ===========   ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
  INFORMATION:

Interest paid, net of capitalized
  interest                                         14,202        12,320        12,543
Income taxes paid                                       -             -             -
                                                ===========   ===========   ===========

Cash and cash equivalents                          13,043         9,643        18,020
Cash held in escrow and blocked
  deposits                                          3,124         3,124        24,075
Bank overdraft                                     (1,355)       (2,729)            -
                                                ===========   ===========   ===========
                                                   14,812        10,038        42,095

Purchase of subsidiary undertakings
Cash paid                                              50        28,475           885
Cash acquired                                           -        (5,527)          (82)
                                                -----------   -----------   -----------
                                                       50        22,948           803
                                                ===========   ===========   ===========

          See accompanying notes to consolidated financial statements.

</TABLE>
<PAGE>


<TABLE>
<CAPTION>
                            CENARGO INTERNATIONAL PLC

    CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME
                  YEAR ENDED SEPTEMBER 30, 2001, 2000 AND 1999
                        (Sterling expressed in thousands)

                                          Accumulated
                                          Other
                            Ordinary      Comprehensive                             Comprehensive
                            Share         Income        Retained                    Income
                            Capital       (Loss)        Earnings      Total         (Loss)
                            -----------   -----------   -----------   -----------   -----------
<S>                         <C>           <C>           <C>           <C>           <C>

AT SEPTEMBER 30, 1999              12           260        27,162        27,434             -
Net loss                            -             -        (2,714)       (2,714)       (2,714)
Translation adjustment              -           781             -           781           781
                            -----------   -----------   -----------   -----------   -----------
AT SEPTEMBER 30, 2000              12         1,041        24,448        25,501         1,933
                            -----------   -----------   -----------   -----------   -----------
Net loss                            -             -          (429)         (429)         (429)
Translation adjustment              -          (735)            -          (735)         (735)
Fair value of derivatives
  adjustment                        -          (697)            -          (697)         (697)
                            -----------   -----------   -----------   -----------   -----------
AT SEPTEMBER 30, 2001              12          (391)       24,019        23,640        (1,861)
                            ==========   ===========   ===========   ===========   ===========
</TABLE>
<PAGE>


                            CENARGO INTERNATIONAL PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     AS OF SEPTEMBER 30, 2001, 2000 AND 1999

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 11 owned vessels and 2 vessels on long term operating
     leases, including freight and passenger ferries.

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.

          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.

     (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.


<PAGE>


                            CENARGO INTERNATIONAL PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     AS OF SEPTEMBER 30, 2001, 2000 AND 1999

2.   ACCOUNTING POLICIES (CONTINUED)

     (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 30 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.

     (g)  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.

     (h)  Drydocking and special survey costs

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

     (i)  Derivatives

          Effective October 1, 2000, the Company adopted Statement of Financial
          Accounting Standards (SFAS) No. 133 Accounting for Derivative
          Instruments and Hedging Activities", as amended, which requires that
          all derivative instruments be reported on the balance sheet at fair
          value and establishes criteria for designation and effectiveness of
          hedging relationships.

          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 lives of the transactions without an exchange of
          underlying principal. Interest rate swaps are designated as a cash
          flow hedges. The difference in floating and fixed rates is recorded as
          an a current asset or liability in the Company's balance sheet. As of
          September 30, 2001 there were no interest rate swaps in effect.


<PAGE>


                            CENARGO INTERNATIONAL PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     AS OF SEPTEMBER 30, 2001, 2000 AND 1999

2.   ACCOUNTING POLICIES (CONTINUED)

     (i)  Derivatives (continued)

          The Company requires a significant amount of fuel in order to carry
          out ferry activities on the Irish Sea and, as a result, is exposed to
          movements in fuel prices. Accordingly, the Company enters into swap
          and collars to hedge its exposure to and manage the volatility
          associated with fuel prices. The Company's swaps and collars on fuel
          prices are connected to forecasted transaction and qualify as cash
          flow hedges. The swaps and collars, which mature through September
          2002, are designated as cash flow hedges of forecasted transactions
          and are recorded as current liabilities in the Company's balance
          sheet. Since an assessment of the hedging relationships revealed that
          they were 100% effective, the entire unrealised loss, net of tax, is
          recorded in accumulated other comprehensive income (loss) within
          stockholders' equity. As of September 30, 2001 there was an unrealised
          loss of 1,025,000 million pounds sterling related to these swaps and
          collars.

     (j)  Foreign currencies

          The Company's functional currency is sterling as sterling denominated
          transactions represent the single largest component of revenues,
          expenditures and cash flows.

          Until September 30, 2000 the functional currency of the Company was
          the U.S. Dollar. However, following a review, the directors determined
          that in view of the increasing activity in the United Kingdom, the
          functional currency of the Company should be sterling. All
          comparatives in these financial statements have been restated.

          All assets and liabilities in the balance sheets of subsidiaries whose
          functional currency is other than sterling 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 sterling are translated
          at exchange rates in effect at the balance sheet date. Foreign
          currency non-monetary assets 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.

     (k)  Goodwill

          Goodwill represents the excess of purchase price over fair value of
          net assets acquired. Goodwill is amortised using the straight line
          method over periods ranging from 10 to 20 years. The Company
          periodically 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.


<PAGE>


                            CENARGO INTERNATIONAL PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     AS OF SEPTEMBER 30, 2001, 2000 AND 1999


2.   ACCOUNTING POLICIES (CONTINUED)

     (k)  Goodwill (continued)

          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.

     (l)  Asset impairment

          Long lived assets of the Company, including goodwill, are reviewed
          when changes in circumstances require as to whether their carrying
          value has become impaired, pursuant to guidance established in
          Statement of Financial Accounting Standards No. 121, Accounting for
          the Impairment of Long-lived Assets and for Long-Lived Assets to be
          Disposed Of". Management considers assets to be impaired if the
          carrying value of the asset exceeds the future projected cash flows
          from related operations (undiscounted and without interest charges).
          When impairment is deemed to exist, the assets are written down to
          fair value or projected discounted cash flows from related operations.
          Management also re-evaluates the period of amortization to determine
          whether subsequent events and circumstances warrant revised estimates
          of useful lives. In accordance with SFAS 121, the Company recorded
          impairment losses of 1,906 million pounds sterling for the year ended
          September 30, 1999, 0 million pounds sterling for the year ended
          September 30, 2000 and 389 million pounds sterling for the year ended
          September 30, 2001.

     (m)  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.

     (n)  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.

     (o)  Comprehensive income (loss)

          Comprehensive income (loss) represents the change in shareholders'
          equity from transactions and other events and circumstances arising
          from non-shareholder sources. The Company's comprehensive income
          (loss) for 2001, 2000 consisted of net income (loss), foreign currency
          translation adjustments, and unrealised gains and losses on
          derivatives established as cash flow hedges, net of applicable income
          taxes. The disclosures required by SFAS No. 130 Reporting
          Comprehensive Income" have been included in the Statements of
          Shareholders' Equity and Comprehensive Income.


<PAGE>


                            CENARGO INTERNATIONAL PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    AS OF SEPTEMBER 30, 2001, 2000, AND 1999

3.   SEGMENT INFORMATION

     The Company has adopted FASB Statement No. 131, Disclosures about Segments
     of Business Enterprise and Related Information". The Company is managed in
     four operating segments: Vessel Chartering and Other, Irish Sea Ferries,
     Ferrimaroc and Logistics. The Vessel Chartering and Other segment includes
     certain central overhead costs, central financing costs and other general
     corporate income and expenditure.

     The Company utilises EBITDA as a measure of segmental performance. The
     Company defines EBITDA as net income (loss) before taxes, interest expense,
     interest income, depreciation, provision for impairment in value of
     vessels, amortization of drydocking and special survey costs, amortization
     of goodwill, gain or loss from joint ventures and minority interest.

     Certain financial information is presented below: amounts are in thousands
     of Sterling.

<TABLE>
<CAPTION>
                       Vessel
                       Chartering    Irish Sea
                       and Other     Ferries       Ferrimaroc    Logistics     Total
                       -----------   -----------   -----------   -----------   -----------
<S>                    <C>           <C>           <C>           <C>           <C>

2001
Revenue                   16,595        75,674        12,514        23,407       128,190
EBITDA                     1,406        17,744         3,085         1,589        23,824
Tangible assets                -       120,940        11,559        11,079       143,578
Capital expenditures           -        44,619            93           784        45,496

2000
Revenue                    5,391        71,768         9,588        15,986       102,733
EBITDA                    (1,789)       20,380           763         1,034        20,388
Tangible assets                -        82,213        10,641        13,105       105,959
Capital expenditures      18,608         1,097            15         5,035        24,755

1999
Revenue                    4,067        44,422        11,749        13,249        73,487
EBITDA                       762         9,900         3,306           (33)       13,935
Tangible assets           43,933        77,054        10,625         1,485       183,097
Capital expenditures      11,187        10,390         9,677         1,542        32,796

</TABLE>

EBITDA for all reportable segments differs from consolidated income (loss)
before income taxes reported in the consolidated statements of income as
follows: amounts are in thousands of Sterling.

                                        Year Ended September 30
                                   2001          2000          1999
                                -----------   -----------   -----------

EBITDA                             23,824        20,388        13,935
Reconciling items:
Depreciation and amortization
  of deferred costs                (7,784)       (6,208)       (6,475)
Provision for impairment in
  value of assets                    (389)            -        (1,906)
Amortization of goodwill           (1,174)       (1,112)          (69)
Amortization of drydocking         (1,480)       (1,993)       (2,096)
Net interest expense              (13,575)      (11,623)       (9,897)
                                -----------   -----------   -----------
(Loss) before income taxes           (578)         (548)       (6,508)
                                ===========   ===========   ===========


<PAGE>


                            CENARGO INTERNATIONAL PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    AS OF SEPTEMBER 30, 2001, 2000, AND 1999

4.   ADOPTION OF NEW ACCOUNTING STANDARDS

     In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS
     No. 141, Business Combinations". SFAS No. 141 supersedes Accounting
     Principals Board (APB) Opinion No. 16, Business Combinations" and SFAS No.
     38, Accounting for Preacquisition Contingencies of Purchased Enterprises".
     SFAS No. 141 prohibits the use of the pooling of interest method and
     requires the purchase method of accounting for business combinations. SFAS
     No. 141 is effective commencing July 1, 2001. The Company does not believe
     this statement will have a material effect on the earnings or financial
     position of the Company.

     In June 2001, the FASB issued SFAS No. 142 Goodwill and Other Intangible
     Assets", effective for the fiscal years beginning after December 15, 2001.
     SFAS No. 142 supersedes APB Opinion No. 17, Intangible Assets". Under the
     new rules, goodwill and intangible assets deemed to have indefinite lives
     will no longer be amortised but will be subject to annual impairment tests
     in accordance with the Statements. Other intangible assets will continue to
     be amortised over their useful lives, and the Company has elected to adopt
     SFAS 142 as of October 1, 2002. Accordingly, as of October 1, 2002, the
     Company will no longer amortise goodwill.

     In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
     or Disposal of Long-lived Assets". The FASB's new rules on asset impairment
     supersede SFAS No. 121, Accounting For The Impairment of Long-lived Assets
     and for Long-lived Assets to be Disposed Of", and provide a single
     accounting model for long-lived assets to be disposed of. Although
     retaining many of the fundamental recognition and measurement provisions of
     SFAS No. 121, the new rules significantly change the criteria that would
     have to be met to classify an asset as held-for-sale. The new rules also
     supersede the provisions of APB Opinion No. 30, Reporting the Results of
     Operations - Reporting the Effects of Disposal of a Segment of a Business,
     and Extraordinary, Unusual and Infrequently Occurring Events and
     Transactions", with regard to reporting the effects of a disposal of a
     segment of a business and require expected future operating losses from
     discontinued operations to be displayed in discontinued operations in the
     period(s) in which the losses are incurred (rather than as of the
     measurement date as presently required by APB No. 30). The Statement is
     effective for the Company in the beginning of fiscal year 2003. The Company
     does not believe this statement will have a material effect on the earnings
     or financial position of the Company.

5.   OPERATING INCOME

     The Company operates on a worldwide basis. No customers comprised 10% or
     more of operating revenues.


<PAGE>

                            CENARGO INTERNATIONAL PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    AS OF SEPTEMBER 30, 2001, 2000, AND 1999

6.   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:


                                    2001          2000          1999
                                -----------   -----------   -----------
U.K. statutory rate
  (average rate for period)           (30)          (30)          (30)
Increase (decrease) in rate
  resulting from:
   Statutory rate reduction -
     deferred tax                       -             -             1
Permanent book/tax differences
  and other                            (2)       (1,178)            4
Revision to prior year estimate         -          (101)            2
                                -----------   -----------   -----------
Net effective tax rate                (32)%      (1,309)%         (23)%
                                ===========   ===========   ===========

Permanent book/tax differences and other includes the effect of the exchange
movement between sterling and dollars within the deferred tax calculations.

The revision to prior year estimates 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, 2001
  US Federal and State                  -             -             -
  Foreign - UK corporation tax          -          (185)         (185)
                                -----------   -----------   -----------
                                        -          (185)         (185)
                                ===========   ===========   ===========

Year ended September 30, 2000
  US Federal and State                  -             -             -
  Foreign - UK corporation tax       (216)        2,296         2,080
                                -----------   -----------   -----------
                                     (216)        2,296         2,080
                                ===========   ===========   ===========

Year ended September 30, 1999
  US Federal and State                  -             -             -
  Foreign - UK corporation t           46        (1,537)       (1,491)
                                -----------   -----------   -----------
                                       46        (1,537)       (1,491)
                                ===========   ===========   ===========


<PAGE>


                            CENARGO INTERNATIONAL PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    AS OF SEPTEMBER 30, 2001, 2000, AND 1999

6.   TAXATION (CONTINUED)

     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, 2001 and 2000.

                                      2001          2000
                                  -----------   -----------

Excess of tax over book
  depreciation and deductions         9,311         9,844
Holdover relief                         855           855
Other                                   348             -
                                  -----------   -----------
Total net effective tax
  liability                          10,514        10,699
                                  ===========   ===========

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.

The Group is committed to entering the UK Tonnage Tax regime from 1 October 2002
in respect of its vessel operations. From this date the Group will be paying a
flat rate tax based on the size of the vessels it operates.

7.   GOODWILL

                                      2001          2000
                                  -----------   -----------
Goodwill, net of accumulated
  amortization of 2,286
  and 1,112                          19,582        20,706
                                  -----------   -----------
                                     19,582        20,706
                                  ===========   ===========

8.   CASH HELD IN ESCROW

     At September 30, 2001 and 2000 the Company had cash in blocked deposit
     accounts as security for the two operating leases.

9.   VESSELS, EQUIPMENT, LAND & Buildings

                                      2001          2000
                                  -----------   -----------

Cost
  Vessels                           148,284       104,468
  Land and buildings                 13,078        13,603
  Equipment                          10,087         9,796
                                  -----------   -----------
                                    171,449       127,867
Accumulated depreciation            (27,871)      (21,908)
                                  -----------   -----------

Net book value                      143,578       105,959
                                  ===========   ===========

Included above are assets held under capital leases with a cost of 2,196,116
million pounds sterling and accumulated depreciation of 789,182 million pounds
sterling.


<PAGE>


                            CENARGO INTERNATIONAL PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    AS OF SEPTEMBER 30, 2001, 2000, AND 1999

9.   VESSELS, EQUIPMENT, LAND & Buildings (Continued)

     During the year the company sold one ship and purchased two ships, Mersey
     Lagan and Mersey Viking, previously operated under capital leases. The
     purchase was funded with a new bank loan and a third party loan.

     The following is a summary of the vessels as of September 30, 2001:

Registered                                  Year            Gross
Vessels Owned               Type            Built           Tonnage
-----------------------     -----------     -----------     -----------
m.v. Mistral                Passenger/           1981          20,220
                            Car Ferry
m.v. Scirocco               Passenger/           1974          11,177
                            Car Ferry
m.v. Merchant Bravery           RoRo             1978           9,368
m.v. Merchant Brilliant         RoRo             1978           9,366
m.v. Merchant Venture           RoRo             1979           6,058
m.v. River Lune                 RoRo             1983           7,765
m.v. Saga Moon                  RoRo             1984           7,746
m.v. Dawn Merchant              RoPax            1998          22,152
m.v. Brave Merchant             RoPax            1999          22,152
m.v. Mersey Lagan               RoPax            1997          21,856
m.v. Mersey Viking              RoPax            1997          21,856

The vessels are pledged as disclosed in Note 13.

10.  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.

11.  DEFERRED CHARGES

     Deferred charges represent debt arrangement fees and capitalized drydocking
     and special survey costs. The debt arrangement fees are being amortised
     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 amortised over the period to the next drydocking. The deferred
     charges are comprised of the following amounts:

                                                2001            2000
                                            -----------     -----------
Debt arrangement fees                           3,933           3,909
Drydocking and special survey costs             2,996           3,293
                                            -----------     -----------
                                                6,929           7,202
Accumulated amortization                       (1,574)         (2,679)
                                            -----------     -----------
                                                5,355           4,523
                                            ===========     ===========


<PAGE>


                            CENARGO INTERNATIONAL PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    AS OF SEPTEMBER 30, 2001, 2000, AND 1999

12.  PENSION COSTS

     (a)  Defined contribution pension plan

          The Company sponsors a defined contribution pension plan.
          Contributions to the plan for 2000 and 2001 were 179,112 million
          pounds sterling and 261,801 million pounds sterling respectively,
          which were charged to operations.

     (b)  Defined benefit pension plan

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

                                                        2001           2000
                                                    -----------     -----------
          Plan assets

          Fair value, beginning of year                18,589          18,818
          Actual investments returns                     (225)          1,023
          Company and employee contributions               44              26
          Benefits paid to participants                  (752)         (1,244)
          Foreign exchange adjustment                       -             (34)
                                                    -----------     -----------
          Fair value, end of year                      17,656          18,589
                                                    ===========     ===========


                                                        2001           2000
                                                    -----------     -----------
          Pension benefits obligations

          Balance, beginning of year                   16,011          16,050
          Service cost                                    158             209
          Interest cost                                   831             834
          Actuarial (gains)/losses                     (1,822)            134
          Company contributions                            26              26
          Benefits paid to p                             (752)         (1,244)
          Foreign exchange adjustment                       -               2
                                                    -----------     -----------
          Balance, end of year                         14,452          16,011
                                                    ===========     ===========


          At September 30, 2001 and 2000, the funded status of the plan was as
          follows:


                                                        2001           2000
                                                    -----------     -----------
          Surplus of plan assets over benefit
            obligations                                 3,204           2,579
          Unrecognized net actuarial gain                 455             888
                                                    -----------     -----------
          Net amount recognized                         3,659           3,467


<PAGE>


                            CENARGO INTERNATIONAL PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    AS OF SEPTEMBER 30, 2001, 2000, AND 1999

12.  PENSION COSTS (CONTINUED)

     Components of net periodic benefit costs are:

                                                        2001           2000
                                                    -----------     -----------
     Service cost                                         158             209
     Interest cost                                        831             834
     Amortization of prior service costs                   30              31
     Expected return on plan assets                    (1,193)         (1,208)
                                                    -----------     -----------
     Net periodic benefit cost (credit)                  (174)           (134)
                                                    ===========     ===========


     For 2001 and 2000 the following weighted-average rates were used:

                                                        2001           2000
                                                    -----------     -----------
     Discount rate on the benefit obligation            5.75%           5.25%
     Rate of expected return on plan assets             6.50%           6.50%
     Rate of employee compensation increase             4.75%           5.00%


                                                        2001           2000
                                                    -----------     -----------
     Pension (credit)                                    (174)           (134)
     Company and employee contributions                    44              26
     Benefits paid                                        752           1,244
                                                    ===========     ===========


13.  LONG-TERM DEBT

     Ship Mortgage Notes and Construction Facility

     On June 19, 1998 Cenargo International Plc refinanced the majority of its
     group borrowings by issuing U.S.$175 million of 9.75% First Priority Ship
     Mortgage Notes in the United States of America.

     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 m.v. "Mersey Lagan" and m.v.
     "Mersey Viking"), the group's freehold property at Eaglescliffe, a fixed
     charge over the Company's shares in Norse Irish Ferries Limited and a fixed
     charge over the net assets of Norse Irish Ferries Limited as well as
     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.


<PAGE>

                            CENARGO INTERNATIONAL PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    AS OF SEPTEMBER 30, 2001, 2000, AND 1999

13.  LONG-TERM DEBT (CONTINUED)

     Bank loans

     On January 28, 2001 one of the subsidiaries entered into the following loan
     facility agreement with a consortium of banks in connection with the
     purchase of two vessels:

     (a)  A Sterling denominated loan facility of 20,473,623 million pounds
          sterling of which 19,736,753 million pounds sterling was outstanding
          at September 30, 2001. The facility is repayable by twenty seven
          quarterly installments of 368,525 million pounds sterling followed by
          a final balloon payment of 10,523,442 million pounds sterling in March
          2008. Interest is payable at Sterling Libor plus a margin of 1.85%.

     (b)  A Euro denominated loan facility of Euro 30,716,908 (19,033,900
          million pounds sterling) of which Euro 29,611,099 (18,348,678 million
          pounds sterling) was outstanding at September 30, 2001. The facility
          is repayable by twenty seven quarterly installments of Euro 552,904
          (342,610 million pounds sterling) followed by a final balloon payment
          of Euro 15,788,491 (9,783,425 million pounds sterling) in March 2008.
          Interest is payable at Euro Libor plus a margin of 1.85%.

     As security for the above facilities, the company provided legal title to
     and beneficial interest in the two vessels, their earnings and insurances
     and a guarantee given by the ultimate parent company and other group
     companies.

     Other Loans

     (a)  184,780 million pounds sterling 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 October 7, 2002 will be redeemable by the
          Company at par. Interest is payable semi-annually in arrears at the
          HSBC Bank Plc offer rate for six months deposits of 1,000,000 million
          pounds sterling in the interbank market minus 1%. The loan notes are
          guaranteed by HSBC Bank Plc secured by a collateral bank deposit of
          367,000 million pounds sterling.

     (b)  A Sterling denominated loan of 2,235,950 million pounds sterling 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 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)  A US Dollars denominated loan facility of US$ 3,750,000 (2,551,541
          million pounds sterling) of which US$3,125,000 (2,126,284 million
          pounds sterling) was outstanding at September 30, 2001. The facility
          is repayable by twelve installments of US$312,500 (212,628 million
          pounds sterling). Interest is payable at three months US$ Libor plus a
          margin of 0.75%.


<PAGE>


                            CENARGO INTERNATIONAL PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    AS OF SEPTEMBER 30, 2001, 2000, AND 1999

13.  LONG-TERM DEBT (CONTINUED)

     (d)  A loan due to a former joint venture partner outstanding of 618,681
          million pounds sterling. The loan is unsecured and repayable on an
          annuity basis by ten equal six monthly installments of 382,623 million
          pounds sterling including interest fixed at the inception of the loan
          at a rate of 8.07%.

          The outstanding long-term debt as of September 30, 2001 is repayable
          as follows:

                                                 (pounds sterling)
          2001                                          4,525
          2002                                          3,724
          2003                                          3,298
          2004                                          2,873
          2005                                          2,873
          2006  and later                             143,780
                                                  ---------------
          Total long-term debt                        161,073
                                                  ---------------

14.  SHARE CAPITAL

     Share capital is as follows:
                                                        2001           2000
                                                    -----------     -----------
     Authorized
       500,000 ordinary shares of 1 million
         pounds sterling each (2000 -
         500,000 ordinary shares)                         500             500
                                                    ===========     ===========
     Issued
       50,000 ordinary shares of 1 each,
         25p paid (2000 - 50,000 ordinary
         shares)                                           12              12
                                                    ===========     ===========

     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 (note 13).

15.  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.

     (a)  Interest rate swap transactions

          The fair value of interest rate swap transactions is estimated based
          on the market value of these or similar instruments, as adjusted for
          differences in maturity. There are no interest rate swap transactions
          outstanding at September 30, 2001 and 2000.

     (b)  Foreign currency hedging transactions

          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, 2001 and 2000.


<PAGE>


                            CENARGO INTERNATIONAL PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    AS OF SEPTEMBER 30, 2001, 2000, AND 1999

15.  FINANCIAL INVESTMENTS (CONTINUED)

     (c)  Fuel purchase transactions

          The fair value of the Company's fuel price derivatives is the amount
          the Company would receive or have to pay to terminate the agreements
          at the reporting date, taking into account current interest rates and
          exchange rates. The fair value of the fuel price derivatives is
          provided to the Company by its financial institution, the
          counter-party to the derivative agreements.

     (d)  Fair value of Ship Mortgage Notes

          The fair value of the Ship Mortgage Notes at September 30, 2001 was
          90,494,659 million pounds sterling (2000: 92,323,301 million pounds
          sterling). Fair value was determined from quoted market prices at
          which they traded.

     (e)  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.

16.  CONTINGENT LIABILITIES AND ASSETS

     (a)  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.

     (b)  The Company continues to pursue claims for damages relating to
          operations in Spain. The total claims amount to 21.5 million pounds
          sterling of which 7 million pounds sterling has been received and
          recognized in previous years.

17.  CAPITAL AND OTHER COMMITMENTS

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

     2002                                         629,000
     2003                                         446,790
     2004                                         365,813
     2005                                         202,110
     2006                                          50,711
                                               -----------
     Minimum lease payments                     1,694,424
     Less imputed interest                       (203,675)
                                               -----------
     Present value of obligations under
       capital leases                           1,490,749
                                               ===========


<PAGE>


                            CENARGO INTERNATIONAL PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    AS OF SEPTEMBER 30, 2001, 2000, AND 1999


17.  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:

     2002                                   7,076,047
     2003                                   7,054,662
     2004                                   6,887,337
     2005                                   6,805,737
     2006                                   6,595,782
     2007 and later                        31,739,080
                                           ----------
                                           66,158,645
                                           ==========

Operating lease rentals paid in the year ended September 30, 2001 amounted to
14,154,184 million pounds sterling (2000: 14,836,340 million pounds sterling
1999: 4,684,072 million pounds sterling).


<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 8, 2002