OPERATIONS REVIEW Trading for the period commencing 1 July 1999 to 30 June 2000 for Mermaid Marine Australia Ltd (“Company”) and its controlled entities, experienced a 43% turnover reduction from last year. The result was almost entirely due to a heavy fall in oil prices, which reached their low of US$10 in February 1999, leading to the lowest level of offshore activity for many years. In September 1999 Mermaid exercised its option to acquire the utility vessel “Mermaid Achiever” for $3,250,000. Previously the Achiever operated under a bare boat charter.  OVER VIEW In February 2000 Mermaid received approval in principle from the Western Australian Minister for the Environment for the development of a supply and engineering base at Dampier (Dampier Base). Since that time a detailed environmental management system has been produced for final approval and as a guide to daily environmental management and compliance. Refinements to the design have proceeded, together with the preparation of bid packages and negotiations with Banks for project finance. Subsequent to years end, the subscription of a further $5 million from Mr Mark Bradley and Clough Engineering will see an extremely robust balance sheet, with cash on hand approaching $10 million. As construction commences at Dampier, a level of project finance will be arranged providing a comfortable mix of debt and equity and allowing the retention of a significant cash balance. The year saw considerable progress with Base activities at Dampier, Broome and Darwin. They are dealt with in detail under following headings. Bare boat charters, although useful for the busy times encountered in 1998 exposed the Company to a high level of fixed costs. The vessels were valuable earners and the transfer of the Mermaid Achiever, Mermaid Eagle and Mermaid Reunion to Company ownership has proved to be the right decision for all market conditions. Although there have been no contracts yet let for work of any significance by producers on the North West Shelf, underlying day to day activity has returned. Expressions of interest for major project work have been issued and as an indication of better trading conditions, an unaudited profit of $496,721 has been recorded for the two months to 31st August 2000. The trend has continued in September. profit for the previous period of $2,454,919. Revenue for the Period was $15,124,774, a decrease of 43% over the previous period. Fixed cost reductions enabled the Company to ride out the market reversal with a minimal loss and positive operating cash before capex of $1.6m. This result, achieved against a major drop in turnover, was possible through a vigorous attack on overheads, which included more beneficial ownership costs, insurance savings, management salary savings, including voluntary sacrifice from certain senior executives in recognition of the tighter conditions. In all the changes contributed approximately $1.5million to the bottom line.  Mermaid recorded an after-tax loss for the Period of $207,957. Compared with an after-tax FINANCIAL 7