Mermaid – a reworking of Hans Andersen's fairytale – is a powerful and beautifully executed piece of theatre, let down by a weak ending. The underlying theme, as with the original, is “be careful what you wish for”. Contemporary teenager Blue just wants to be like everybody else; to have all the latest stuff and go to all the right parties. Instead, she retreats into the world of stories as she imagines the life of a mermaid.

Mermaids, too, are great ones for stories. As they approach puberty, they beg for stories about “the world above”. They long for the day when they will be old enough to venture above the waves. On land is a young prince whose own transition to adulthood involves swords, uniforms and, ultimately, war. As in the original, the little mermaid's first encounter with a human involves her rescuing and falling in love with the prince. Besotted, she sacrifices her voice for the chance to become a woman and, perhaps, to marry her prince.

By giving up her voice, she gives up not only the song that enchanted the prince in the first place, but her ability to communicate – she has only her body and her smile to win the prince's affections. At this point, the play parts company with the original as the erstwhile mermaid undergoes a makeover to prepare her for the life of a royal consort – arguably a fairy tale of a different kind. But the mermaid is no Eliza Doolittle and becomes a Princess Di lookalike, hounded by the press and beset by eating disorders.

The Shared Experience theatre company gave a stonking performance, using their trademark combination of fine acting and intensely physical theatre to great effect. Writer Polly Teale's script was tightly written and well-paced. Unfortunately, the final transition from fairytale to feminist critique and anti-war protest didn't quite work. The problem wasn't in subverting the traditional plotline, but in stepping outside the magical realism of the fairytale form with the result that the ending, though happy, seemed prosaic and at odds with the rest of the piece.

Mermaid is an enchanting weave of physical theatre, dance and story-telling deftly brought together in this latest production from Shared Experience. It is important that theatre companies are still able to support new writing when the Arts are under threat financially. Written and directed by Polly Teale, last at The Playhouse with Mary Shelley, this adaptation of the Hans Christian Andersen fairy tale uses the story of an underwater princess coming of age to reflect the concerns of teenage girls in 21^st century Britain.

Blue, a thirteen year old girl, is both desperate to be accepted by her classmates and unwilling to leave her childhood behind her. She is anxious about her dad’s unemployment but wants all the trappings of modern teenage-hood too. As an escape from bullying she retreats into her favourite story, The Little Mermaid, and starts re-writing it to reflect her life. And so we meet Mermaid, the youngest daughter of the King under the sea. She and her sisters dance deep in the ocean, playing with the fishes, looking up at the sun and suns from a dreamy underworld, fascinated by drowning and dead sailors and fishermen who float to the sea bottom. Their grandmother fills their head with the beauty of nature and tales of mankind’s stupidity, their wars, greed and destruction of the planet.

Into this tale Blue weaves in her own concerns and fantasies. It is she who finds the handsome Prince washed up on the shore and calls an ambulance; she creates a Royal Palace which conflates both Disneyland and modern threats of intrusive journalism and public duty. Blue’s mermaid leaves the safety of the ocean, voiceless, and becomes embroiled in a dysfunctional dynasty eager for a new ‘Diana’ to transform their fortunes; a cypher of a woman, on display but never heard.

One of the challenges for Teale as a writer is how to tell the story through Blue’s voice, which is unformed, reflecting her age and experience. Mostly this works but it can lead to some hackneyed ‘fairy tale’ narrative and the characterisation of the humans on dry land lacks complexity – true to a teenage tendency to view the world in black and white but less engaging for an audience.

Sarah Twomey is a delight as Little Mermaid, a graceful, childlike performance, like a playful dolphin. She also has great comic timing as she discovers how hard it is to manage two legs with high heels and is primped and preened for the palace. Ritu Arya, Miranda Mac Letten and Amaka Okafor are equally convincing as teenage brats, cynical hacks and posh servants but again it is their physical performance as in which they really shine. Fluid and sinuous as mermaids, the white foam on the waves and a storm lashed sea all four dances are mesmerising and their physical presence is enhanced by an eerie soundscape, in part voiced by a local community choir of teenage girls.

Well worth a trip to The Playhouse to be enchanted.