##### Table of Contents



FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

(Mark One)

|       |  |                                                                                         
|------ |  | ----------------------------------------------------------------------------------------
|(XBOX) |  | Quarterly report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934

For the quarterly period ended March 31, 2002.

|      |  |                                                                                          
|----- |  | -----------------------------------------------------------------------------------------
|(BOX) |  | Transition report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934

For the transition period from _______________ to _______________

Commission File Number: 0-19889

SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD.

Exact name of registrant as specified in charter


|                      |  |                      
|--------------------- |  | ---------------------
|Colorado              |  | 84-1145140           
|                     
|State of organization |  | I.R.S. employer I.D.#

NTL House, Bartley Wood Business Park, Hook, Hampshire, RG27 9UP, England

---

Address of principal executive office


011 44 1256 752000

Registrants telephone number


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

| |  |     |  |  |  |    |  |        |  | 
| |  | --- |  |  |  | -- |  | ------ |  | 
| |  | Yes |  |  |  | No |  | (XBOX) |  | 





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TABLE OF CONTENTS



|                             |                                                                                               |                                                         |  |  |  |  |  | 
|---------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------------------- |  |  |  |  |  | 
|Part I Financial Information
|                             | Item I Financial Statements                                                                  
|                             |                                                                                               | UNAUDITED CONSOLIDATED BALANCE SHEETS                  
|                             |                                                                                               | UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS        
|                             |                                                                                               | UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
|                             |                                                                                               | UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS        
|                             |                                                                                               | NOTES TO FINANCIAL STATEMENTS                          
|                             | Item 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                             | Item 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                            
|PART II OTHER INFORMATION   
|                             | Item 6. Exhibits and Reports on Form 8-K.                                                    
|SIGNATURES                  



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##### Table of Contents






Part I Financial Information




Item I Financial Statements

SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD.
(A Limited Partnership)




Consolidated Balance Sheets

|                                                                                                                                                                      |                     |                                                                                            |            |             |            |              |            |             |            |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------- | ------------------------------------------------------------------------------------------ | ---------- | ----------- | ---------- | ------------ | ---------- | ----------- | ---------- | -
|                                                                                                                                                                      |                     |                                                                                            |            | Unaudited   |            |              |            |            
|                                                                                                                                                                      |                     |                                                                                            |            | March 31,   |            | December 31,
|                                                                                                                                                                      |                     |                                                                                            |            | 2002        |            | 2001        
|                                                                                                                                                                      |                     |                                                                                            |            |             |            |             
|                                                                                                                                                                      |                     |                                                                                            |            | (unaudited) |            | (see
note)  
|ASSETS                                                                                                                                                                |                     |                                                                                            |            |             |            |              |            |            
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|Plant, property and equipment
(net of accumulated depreciation and amortization of $52,503,303 and $51,716,191 at
March 31, 2002 and December 31, 2001, respectively) |                     | $                                                                                          | 56,491,485 |             |            | $            | 58,962,082 |            
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|Other assets                                                                                                                                                          |                     |                                                                                            | 149,625    |             |            |              | 205,766    |            
|                                                                                                                                                                      |                     |                                                                                            |            |             |            |              |            |            
|Total assets                                                                                                                                                          |                     | $                                                                                          | 56,641,110 |             |            | $            | 59,167,848 |            
|                                                                                                                                                                      |                     |                                                                                            |            |             |            |              |            |            
|LIABILITIES AND PARTNERS (DEFICIT)                                                                                                                                   |                     |                                                                                            |            |             |            |              |            |            
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|Current Liabilities                                                                                                                                                   |                     |                                                                                            |            |             |            |              |            |            
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|Accounts payable to affiliates and related parties                                                                                                                    |                     | $                                                                                          | 56,753,962 |             |            | $            | 58,145,703 |            
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|Accrued liabilities                                                                                                                                                   |                     |                                                                                            | 208,787    |             |            |              | 453,662    |            
|                                                                                                                                                                      |                     |                                                                                            |            |             |            |              |            |            
|Total current liabilities                                                                                                                                             |                     |                                                                                            | 56,962,749 |             |            |              | 58,599,365 |            
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | MINORITY INTERESTS  |                                                                                            |            | 480,005     |            |              |            | 739,160     |           
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | PARTNERS (DEFICIT) |                                                                                            |            |             |            |              |            |             |           
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | General Partner-    |                                                                                            |            |             |            |              |            |             |           
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      |                     | Contributed capital                                                                        |            |             | 1,000      |              |            |             | 1,000      |  
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      |                     | Accumulated deficit                                                                        |            |             | (496,451   | )            |            |             | (490,488   | )
|                                                                                                                                                                      |                     |                                                                                            |            |             |            |              |            |            
|                                                                                                                                                                      |                     |                                                                                            | (495,451   | )           |            |              | (489,488   | )          
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | Limited Partners-   |                                                                                            |            |             |            |              |            |             |           
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      |                     | Net contributed capital (56,935 units outstanding at
March 31, 2002 and December 31, 2001) |            |             | 48,817,997 |              |            |             | 48,817,997 |  
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                     
|                                                                                                                                                                      | Accumulated deficit |                                                                                            |            | (48,867,425 | )          |              |            | (48,277,123 | )         
|                                                                                                                                                                      |                     |                                                                                            |            |             |            |              |            |            
|                                                                                                                                                                      |                     |                                                                                            | (49,428    | )           |            |              | 540,874    |            
|                                                                                                                                                                      |                     |                                                                                            |            |             |            |              |            |            
|Accumulated comprehensive loss                                                                                                                                        |                     |                                                                                            | (256,765   | )           |            |              | (222,063   | )          
|                                                                                                                                                                      |                     |                                                                                            |            |             |            |              |            |            
|Total partners deficit                                                                                                                                               |                     |                                                                                            | (801,644   | )           |            |              | (170,677   | )          
|                                                                                                                                                                      |                     |                                                                                            |            |             |            |              |            |            
|TOTAL LIABILITIES AND PARTNERS DEFICIT                                                                                                                               |                     | $                                                                                          | 56,641,110 |             |            | $            | 59,167,848 |            
|                                                                                                                                                                      |                     |                                                                                            |            |             |            |              |            |            

Note: The balance sheet at December 31, 2001 has been derived from audited
financial statements at that date

See accompanying notes

2



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##### Table of Contents



SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD.
(A Limited Partnership)




UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                                 |                                                                                                                                             |   |                            |            |      |   |            |            |  
|---------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------- | - | -------------------------- | ---------- | ---- | - | ---------- | ---------- | -
|                                                                 |                                                                                                                                             |   | For the three months ended
|                                                                 |                                                                                                                                             |   | March 31,                 
|                                                                 |                                                                                                                                             |   |                           
|                                                                 |                                                                                                                                             |   | 2002                       |            | 2001
|                                                                 |                                                                                                                                             |   |                            |            |     
|REVENUES                                                         |                                                                                                                                             | $ | 7,198,950                  |            |      | $ | 7,023,325  |           
|                                                                
|                                                                
|                                                                
|                                                                
|COSTS AND EXPENSES                                               |                                                                                                                                             |   |                            |            |      |   |            |           
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Cost of goods sold (exclusive of items
shown separately below)                                                                              |   |                            | (2,920,433 | )    |   |            | (3,166,926 | )
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Selling, general and administrative                                                                                                         |   |                            | (54,726    | )    |   |            | (35,494    | )
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Management fees and allocated
overhead from the General Partner                                                                             |   |                            | (2,886,734 | )    |   |            | (3,323,273 | )
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Depreciation and amortization                                                                                                               |   |                            | (1,825,099 | )    |   |            | (9,298,580 | )
|                                                                 |                                                                                                                                             |   |                            |            |      |   |            |           
|OPERATING LOSS                                                   |                                                                                                                                             |   | (488,042                   | )          |      |   | (8,800,948 | )         
|                                                                
|                                                                
|                                                                
|                                                                
|OTHER EXPENSE                                                    |                                                                                                                                             |   |                            |            |      |   |            |           
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Interest expense (interest payable to
related parties amounted to $334,783
and $290,993 for the three months
ended March 31, 2002 and 2001) |   |                            | (357,557   | )    |   |            | (578,208   | )
|                                                                 |                                                                                                                                             |   |                            |            |      |   |            |           
|NET LOSS BEFORE MINORITY INTERESTS                               |                                                                                                                                             |   | (845,599                   | )          |      |   | (9,379,156 | )         
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Minority interests                                                                                                                          |   |                            | 249,332    |      |   |            | 3,100,844  |  
|                                                                 |                                                                                                                                             |   |                            |            |      |   |            |           
|NET LOSS                                                         |                                                                                                                                             | $ | (596,267                   | )          |      | $ | (6,278,312 | )         
|                                                                 |                                                                                                                                             |   |                            |            |      |   |            |           
|ALLOCATION OF NET LOSS                                           |                                                                                                                                             |   |                            |            |      |   |            |           
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | General Partner                                                                                                                             |   | $                          | (5,963     | )    |   | $          | (62,783    | )
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Limited Partners                                                                                                                            |   | $                          | (590,304   | )    |   | $          | (6,215,529 | )
|                                                                 |                                                                                                                                             |   |                            |            |      |   |            |           
|NET LOSS                                                         |                                                                                                                                             | $ | (596,267                   | )          |      | $ | (6,278,312 | )         
|                                                                 |                                                                                                                                             |   |                            |            |      |   |            |           
|NET LOSS PER LIMITED
PARTNERSHIP UNIT                            |                                                                                                                                             | $ | (10.37                     | )          |      | $ | (109.17    | )         
|                                                                 |                                                                                                                                             |   |                            |            |      |   |            |           
|WEIGHTED AVERAGE NUMBER
OF LIMITED PARTNERSHIP
UNITS OUTSTANDING |                                                                                                                                             |   | 56,935                     |            |      |   | 56,935     |           
|                                                                 |                                                                                                                                             |   |                            |            |      |   |            |           




UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

|                   |                                          |   |                            |         |      |   |            |          |  
|------------------ | ---------------------------------------- | - | -------------------------- | ------- | ---- | - | ---------- | -------- | -
|                   |                                          |   | For the three months ended
|                   |                                          |   | March 31,                 
|                   |                                          |   |                           
|                   |                                          |   | 2002                       |         | 2001
|                   |                                          |   |                            |         |     
|NET LOSS           |                                          | $ | (596,267                   | )       |      | $ | (6,278,312 | )       
|                  
|                  
|                  
|                  
|                   | Foreign currency translation adjustments |   |                            | (52,089 | )    |   |            | (279,136 | )
|                   |                                          |   |                            |         |      |   |            |         
|COMPREHENSIVE LOSS |                                          | $ | (648,356                   | )       |      | $ | (6,557,448 | )       
|                   |                                          |   |                            |         |      |   |            |         

See accompanying notes

3



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##### Table of Contents



SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD.

(A Limited Partnership)




UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                               |                                                                             |                                           |   |                            |          |      |         |             |             |  
|------------------------------------------------------------------------------ | --------------------------------------------------------------------------- | ----------------------------------------- | - | -------------------------- | -------- | ---- | ------- | ----------- | ----------- | -
|                                                                               |                                                                             |                                           |   | For the three months ended
|                                                                               |                                                                             |                                           |   | March 31,                 
|                                                                               |                                                                             |                                           |   |                           
|                                                                               |                                                                             |                                           |   | 2002                       |          | 2001
|                                                                               |                                                                             |                                           |   |                            |          |     
|CASH FLOWS FROM OPERATING ACTIVITIES                                           |                                                                             |                                           |   |                            |          |      |         |            
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Net loss                                                                    |                                           | $ | (596,267                   | )        |      | $       | (6,278,312  | )          
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Adjustments to reconcile net loss to net cash provided by
operating activities |                                                                             |                                           |   |                            |          |      |         |            
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Minority interests                                                          |                                           |   | (249,332                   | )        |      |         | (3,100,844  | )          
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Depreciation and amortization                                               |                                           |   | 1,825,099                  |          |      |         | 9,298,580   |            
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Change in operating assets and liabilities                                     |                                                                             |                                           |   |                            |          |      |         |            
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Decrease in prepaid expenses and other assets                               |                                           |   | 52,639                     |          |      |         | 53,244      |            
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | (Decrease) / increase in accounts payable to affiliates
and related parties |                                           |   | (83,039                    | )        |      |         | 22,245,749  |            
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | (Decrease) / increase in accrued liabilities                                |                                           |   | (244,875                   | )        |      |         | 13,000      |            
|                                                                               |                                                                             |                                           |   |                            |          |      |         |            
|                                                                               |                                                                             | Net cash provided by operating activities |   |                            | 704,225  |      |         |             | 22,231,417  |  
|                                                                               |                                                                             |                                           |   |                            |          |      |         |            
|CASH FLOWS FROM INVESTING ACTIVITIES                                           |                                                                             |                                           |   |                            |          |      |         |            
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Construction payments for cable television/telephony system                 |                                           |   | (704,225                   | )        |      |         | (1,006,242  | )          
|                                                                               |                                                                             |                                           |   |                            |          |      |         |            
|                                                                               |                                                                             | Net cash used in investing activities     |   |                            | (704,225 | )    |         |             | (1,006,242  | )
|                                                                               |                                                                             |                                           |   |                            |          |      |         |            
|CASH FLOWS FROM FINANCING ACTIVITIES                                           |                                                                             |                                           |   |                            |          |      |         |            
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Decrease in loans                                                           |                                           |   |                           |          |      |         | (21,225,175 | )          
|                                                                               |                                                                             |                                           |   |                            |          |      |         |            
|                                                                               |                                                                             | Net cash used in financing activities     |   |                            |         |      |         |             | (21,225,175 | )
|                                                                               |                                                                             |                                           |   |                            |          |      |         |            
|Decrease in cash and cash equivalents                                          |                                                                             |                                           |  |                            |          |      |        |            
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Cash and cash equivalents, beginning of period                                 |                                                                             |                                           |  |                            |          |      |        |            
|                                                                               |                                                                             |                                           |   |                            |          |      |         |            
|Cash and cash equivalents, end of period                                       |                                                                             | $                                         |  |                            |          | $    |        |            
|                                                                               |                                                                             |                                           |   |                            |          |      |         |            
|SUPPLEMENTAL CASH FLOW DISCLOSURES                                             |                                                                             |                                           |   |                            |          |      |         |            
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Interest paid                                                                  |                                                                             | $                                         |  |                            |          | $    | 265,220 |            
|                                                                               |                                                                             |                                           |   |                            |          |      |         |            

See accompanying notes

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SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD.
(A Limited Partnership)

NOTES TO FINANCIAL STATEMENTS

1    Basis of Presentation

The accompanying financial information should be read in conjunction with the
financial statements of the South Hertfordshire United Kingdom Fund, Ltd. (the
Partnership), including the notes thereto, for the year ended December 31,
2001 included in its Annual Report on Form 10-K. The financial information
included herein, in the opinion of management, reflects all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the financial position of the
Partnership at March 31, 2002 and its results of operations and cash flows for
the three month periods ended March 31, 2002 and 2001. Results of operations
for the period ended March 31, 2002 are not necessarily indicative of results
to be expected for the full year ending December 31, 2002. As a result of the
Partnerships ownership of 66.7 percent of the shares of ntl (South
Hertfordshire) Limited (NTL South Herts or the Company), for accounting
purposes the Company has been consolidated with the Partnerships operations.

2    Recapitalization Process and Ability to Continue Operations

On May 8, 2002, NTL Incorporated, the ultimate parent of Fawnspring Ltd., the
Partnerships general partner, NTL (Delaware), Inc., NTL Communications Corp.,
Diamond Cable Communications Limited, Diamond Holdings Limited and
Communications Cable Funding Corp. (NTL and its consolidated subsidiaries
hereinafter referred to as NTL) filed an arranged joint reorganization plan
under Chapter 11 of the United States Bankruptcy Code (referred to as the
proposed recapitalization plan). NTL Incorporateds operating subsidiaries
were not included in the Chapter 11 filing. Toward the end of 2001, while NTL
continued to have sufficient liquidity to meet its near term obligations, it
recognized the negative impact of the collapsing European and U.S.
telecommunications markets on its ability to service its debt. Accordingly,
NTL began to implement a strategy to preserve and maximize its enterprise
value. This strategy included the implementation of cost-cutting measures and
the commencement of discussions with certain third parties regarding strategic
alternatives for NTLs business.

The Partnership required significant amounts of capital to finance construction
of its networks, connection of customers to the networks, other capital
expenditures and for working capital needs. The Partnership historically met
these liquidity requirements through issuances of limited partnership units and
by borrowing from commercial banks and NTL. Both the equity and debt capital
markets have recently experienced periods of significant volatility,
particularly for securities issued by telecommunications and technology
companies. The ability of telecommunications companies to access those markets
as well as their ability to obtain financing provided by bank lenders and
equipment suppliers has become more restricted and financing costs have
increased. During some recent periods, the capital markets have been largely
unavailable to new issues of securities by telecommunications companies. NTL
Incorporateds public equity is no longer trading on the New York Stock
Exchange, and NTLs public debt securities are trading at or near all time
lows. These factors, together with the Partnerships substantial leverage,
means the Partnership does not currently have access to its historic sources of
capital.

In addition, NTLs UK credit facilities are fully drawn. The revolving tranche
of the Cablecom credit facility has been capped at its utilized amount of CHF
1,055.0 million although the availability may be increased with the consent of
the requisite majority of the lenders under that facility. The term tranche of
the Cablecom credit facility is fully drawn. NTL Communications Corp., a
wholly-owned subsidiary of NTL Incorporated, did not pay cash interest on
certain series of its notes that was due on April 1, 2002, April 15, 2002 and
May 15, 2002. NTL Incorporated and NTL (Delaware), Inc., a wholly-owned
subsidiary of NTL Incorporated, also did not pay cash interest and related fees
on a series of their notes that was due on April 15, 2002. In accordance with
the proposed recapitalization plan, NTL does not plan to make future interest
payments on its outstanding publicly traded notes except notes issued by NTL
Triangle and Diamond Holdings Limited.

As of March 31, 2002, NTL Incorporated had approximately $622.7 million in
cash, cash equivalents and marketable securities on hand and, in April 2002,
received approximately $306 million net cash proceeds from the sale of its
Australian business. NTL may require additional cash in the twelve months from
April 1, 2002 to March 31, 2003. NTL expects to obtain a DIP Facility (as
described below) to meet the potential cash requirements of NTL Incorporated
and its subsidiaries, excluding Cablecom. NTL also expects that the DIP
Facility will be replaced with an exit facility for NTL Communications Corp.
and its subsidiaries upon the completion of the recapitalization process. NTL
believes that cash, cash equivalents and marketable securities on hand at March
31, 2002, the cash received from the sale of NTL

5



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Australia and the cash expected to be available from the DIP Facility and the
exit facility will be sufficient for its and its subsidiaries cash requirements
during the twelve months from April 1, 2002 to March 31, 2003.

Beginning in January 2002, NTL was contacted by an unofficial committee of
bondholders regarding the commencement of a comprehensive and consensual
restructuring process. NTL has been informed that the members of the
unofficial steering committee of bondholders currently own, in the aggregate,
more than 50% of the outstanding principal amount of NTLs notes. In
connection with the restructuring process, the steering committee of the
unofficial committee of bondholders retained advisors to facilitate the
negotiations.

On January 31, 2002 NTL announced that it had appointed Credit Suisse First
Boston, JP Morgan and Morgan Stanley to advise on strategic and
recapitalization alternatives to strengthen its balance sheet and reduce debt
and put an appropriate capital structure in place for its business.
Subsequently, NTL evaluated various recapitalization alternatives, and met with
a number of strategic investors, to effect a comprehensive consensual
reorganization in a timely manner to minimize negative effects on its business
operations. Discussions with such strategic investors did not result in a
proposal which NTLs board of directors believed was comparable or superior to
the value provided to its stakeholders by the proposed plan of reorganization.

Liberty Media Corporation, one of such potential strategic investors, which is
also a significant shareholder in Telewest plc, another British cable and
telephone company, has discussed various transactions with NTL from time to
time over the past several years. In March 2002, Liberty and NTL amended a
previously existing confidentiality agreement between them to cover the
restructuring process and to include a standstill agreement which prohibited
various acquisitions of, or offers, for NTL debt or equity securities by
Liberty and its subsidiaries until June 30, 2002.

On April 17, 2002, Liberty sent a proposal to NTLs board of directors, which
proposed a cash tender offer for 30% of the outstanding bonds of NTL
Communications Corp. at a small premium to the prevailing market price and an
agreement to vote such acquired bonds in favor of the proposed plan of
reorganization, as well as a participation with NTL in a cash infusion of up
to $500 million into Cablecom. After consultation with NTLs board of
directors and the steering committee of bondholders on April 18, 2002, NTL
indicated to Liberty that it did not consider the Liberty proposal to be in the
best interests of NTL and that the best course of action for NTL to maximize
its enterprise value was to promptly consummate the proposed plan of
reorganization. Subsequent to April 18, 2002, Liberty has continued
discussions with NTL with respect to Cablecom.

Promptly upon obtaining the requisite waivers from the lenders under its credit
facilities, in March 2002, NTL commenced negotiations with the steering
committee of the unofficial committee of bondholders and its legal and
financial advisors. The negotiations continued during the latter part of March
and throughout April 2002, and also included France Telecom. On April 16,
2002, NTL Incorporated announced that NTL had reached a comprehensive agreement
in principle with the committee (holding over 50% of the face value of NTL and
its subsidiaries public bonds) and France Telecom, a significant holder of NTL
Incorporateds preferred stock, on implementing a recapitalization plan. On May
2, 2002, a steering committee of the lending banks under NTLs credit
facilities gave their approval in principle (on a non-legally binding basis) to
NTLs proposed plan of reorganization.

On June 21, 2002, the United States Trustee appointed an official creditors
committee, comprised of the three indenture trustees for the publicly traded
debt of NTL and the ten members of the steering committee of lending banks.
The members of the official creditors committee are: The Bank of New York;
Wilmington Trust Company; Wells Fargo Bank Minnesota; National Association;
Angelo Gordon & Co. LP; Capital Research & Management Company; Franklin Mutual
Advisors, LLC; Oaktree Capital Management LLC; Salomon Brothers Asset
Management; Appaloosa Management, LP; Fidelity Management & Research co.;
Mackay Shields LLC; SAB Capital Management LP; and W.R. Huff Asset Management
Co. LLC.

The recapitalization plan, if implemented, would result in the cancellation of
all of NTL Incorporateds outstanding shares of common stock, preferred stock
and redeemable preferred stock, and the cancellation of all of the publicly
held notes of NTL Incorporated, NTL (Delaware), Inc. and NTL Communications
Corp. and the transfer of the publicly held notes of Diamond Cable
Communications Limited to NTL UK and Ireland. In addition, NTL Incorporated
would be discharged from its obligation to pay dividends accruing on the
canceled preferred stock and interest accruing on the canceled notes.

To implement the proposed recapitalization, on May 8, 2002 NTL Incorporated,
NTL (Delaware), Inc., NTL Communications Corp., Diamond Cable Communications
Limited, Diamond Holdings Limited and Communications Cable Funding Corp. filed
cases and a pre-arranged joint reorganization plan under Chapter 11 of the
United States Bankruptcy Code. NTLs operating subsidiaries were not included
in the Chapter 11 filing. The reorganization plan contemplates that the bank
debt will remain in place as part of the recapitalization. On May 24, 2002,
NTL and its debtor subsidiaries filed an amended joint reorganization plan and
disclosure statement. The bankruptcy court has scheduled July 12, 2002 for a
hearing to consider approval of the amended joint reorganization plan and
disclosure

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statement. A copy of the Amended Joint Reorganization Plan of NTL Incorporated
and Certain Subsidiaries and the related Disclosure Statement are included as
exhibits to NTL Incorporateds Current Report on Form 8-K filed on May 28,
2002.

The filing of the petitions seeking relief filed under Chapter 11 constituted
an event of default under the indentures of each of the entities which filed
such Chapter 11 petitions and amounts outstanding under these indentures became
immediately due and payable. NTLs Chapter 11 petitions also constituted an
event of default under NTLs UK credit facilities and the Cablecom credit
facility, allowing the lenders thereunder to declare amounts outstanding to be
immediately payable.

In connection with the proposed joint reorganization plan, certain members of
the unofficial committee of bondholders have committed to provide up to $500
million of new debt financing to NTL Incorporated and certain of its
subsidiaries during the Chapter 11 process and for the post-recapitalized NTL,
subject to bankruptcy court approval. The new financing will ensure that NTLs
business operations have access to sufficient liquidity to continue ordinary
operations. The bankruptcy court has set July 2, 2002 as the date to consider
approval of the DIP Facility, which has been agreed in principle with NTL and
the prospective lenders under the facility. Despite such agreement, however,
GE Capital, the sole holder of the 5 3/4% convertible subordinated notes due
2011, and Wilmington Trust Company, the trustee, have objected to the DIP
Facility.

Proposed Recapitalization Plan

Under the proposed recapitalization plan, NTL would be split into two
companies, one tentatively called NTL UK and Ireland and holding substantially
all of NTLs UK and Ireland assets, and one tentatively called NTL Euroco and
holding substantially all of NTLs continental European and other assets.

Holders of notes of NTL Incorporated (other than France Telecom), NTL
(Delaware), Inc. (other than France Telecom), NTL Communications Corp. and
Diamond Cable Communications Limited would in the aggregate receive 100% of the
initial common stock of NTL UK and Ireland (excluding shares issuable in the
rights offerings and upon the exercise of warrants (discussed below) and upon
the exercise of options which will be granted to certain employees of NTL UK
and Ireland). Holders of notes of NTL Incorporated (other than France
Telecom), NTL (Delaware), Inc. (other than France Telecom) and NTL
Communications Corp. would in the aggregate receive (i) 100% of the preferred
stock of NTL Euroco and (ii) a certain amount of cash as specified in the
amended joint reorganization plan. Holders of the subordinated notes of NTL
Incorporated (other than France Telecom), NTL (Delaware), Inc. (other than
France Telecom) and NTL Communications Corp. would in the aggregate receive
86.5% of the initial common stock of NTL Euroco (excluding shares issuable upon
the exercise of options which will be granted to certain employees of NTL
Euroco). Holders of senior notes of NTL Communications Corp. would receive the
value of a specified number of shares of common stock of NTL Euroco pursuant to
the amended joint reorganization plan. Notes of NTL Incorporateds
subsidiaries, Diamond Holdings Limited and NTL (Triangle) LLC, would remain
outstanding and interest payments will be made.

Current preferred and common stockholders of NTL Incorporated, including France
Telecom, would receive warrants to purchase common stock of NTL UK and Ireland
and rights (to be priced at a $10.5 billion enterprise value of NTL UK and
Ireland) entitling them to purchase common stock of NTL UK and Ireland. For
each share of common stock purchased upon exercise of rights, the person
exercising such rights will receive a warrant to purchase one share of common
stock of NTL UK and Ireland. The rights will be exercisable, on an
oversubscription basis, for the 20-business day period after the entry of the
confirmation order, as such period may be extended, and the warrants will be
exercisable for a period of eight years at an exercise price of $77.47 per
share, subject to anti-dilution adjustments. If fully exercised, the rights
and warrants would entitle the current preferred stockholders of NTL
Incorporated to acquire approximately 23.6% and the current common stockholders
of NTL Incorporated to acquire approximately 8.9% of NTL UK and Irelands
primary common stock on the effective date of the recapitalization. Holders of
the subordinated notes of NTL Incorporated (other than France Telecom), NTL
(Delaware), Inc. (other than France Telecom), and NTL Communications Corp.
would have the right to purchase any shares of NTL UK and Ireland common stock
and warrants not subscribed for in the rights offering by the preferred and
common stockholders of NTL Incorporated. It is expected that the warrants will
be listed of quoted on the same securities exchange or inter-dealer quotation
system as the shares of common stock of the reorganized NTL. It is expected
that the warrants will be listed or quoted on the same securities exchange or
inter-dealer quotation system as the shares of common stock of the reorganized
NTL.

Current preferred stockholders, other than France Telecom, would receive
approximately 3.2% and current common stockholders, other than France Telecom,
would receive approximately 10.3% of the primary equity of NTL Euroco. It is
contemplated that, subject to the consummation of the recapitalization, France
Telecom would also receive NTL Incorporateds 27% interest in Noos, pursuant to
a pledge of such interest to France Telecom given at the time of its
acquisition by NTL.

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During the recapitalization process, NTL has maintained normal and regular
trade terms with its suppliers and customers. There can be no assurance that
NTLs suppliers will continue to provide normal trade credit or credit on
acceptable terms, if at all, or that customers will continue to do business or
enter into new business with NTL. See also Risk Factors for a summary of
risks related to NTLs business in general and the recapitalization process in
particular.

Section 1129 of the United States Bankruptcy Code requires, among other things,
a showing that confirmation of the proposed recapitalization plan will not be
followed by liquidation or the need for further financial reorganization of NTL
Incorporated, NTL (Delaware), Inc., NTL Communications Corp., Diamond Cable
Communications Limited or Diamond Holdings Limited, and that the value of
distributions to dissenting holders of claims and interests may not be less
than the value such holders would receive in a liquidation under Chapter 7 of
the United States Bankruptcy Code. Although NTL believes that the proposed
recapitalization plan will meet these tests, there can be no assurance that the
Bankruptcy Court will reach the same conclusion.

The United States Bankruptcy Code also requires that a plan must provide the
same treatment for each claim or interest in a particular class, unless a
holder agrees to a less favorable treatment of its particular claim or
interest. NTL believes that the proposed recapitalization plan complies with
this requirement of the United States Bankruptcy Code. However, if a member of
a class objects to its treatment, or if the Bankruptcy Court finds that the
proposed recapitalization plan does not comply with the requirements of the
United States Bankruptcy Code, confirmation of the plan could be delayed or
prevented. In addition, each class of impaired claims and interests that will
(or may) be entitled to receive property under the plan will have the
opportunity to vote to accept or reject the plan. If an impaired class of
claims or interests rejects the plan, NTL may request confirmation of the plan
pursuant to the cramdown provisions of the United States Bankruptcy Code.
Even if the requirements for cramdown are met, the Bankruptcy Court, which,
as a court of equity may exercise substantial discretion, may choose not to
confirm the plan.

There can be no assurance that we will successfully complete the proposed
recapitalization plan in a timely manner in order to sustain our operations.

Bank Waivers

Before NTL could commence negotiations with the unofficial committee of
bondholders, it was necessary to obtain waivers from the lenders under its
credit facilities. Effective March 8, 2002, these lenders granted waivers
which, until March 29, 2002, provided that the commencement of negotiations
with bondholders with a view to rescheduling its debt would not constitute an
event of default under the credit facilities. Such initial waivers did not
permit NTL to make to any of its noteholders an exchange or similar offer for
NTLs outstanding public notes or to enter into a legally binding agreement
with the unofficial steering committee of bondholders, subject to some
exceptions, without the consent of the lenders under the credit facilities.
But for the initial waivers, the commencement of negotiations with bondholders
would have been an event of default under the credit facilities.

Effective March 28, 2002, the lenders under the credit facilities agreed to
amend the initial waivers. The amendments to the initial waivers extended the
duration of the initial waivers to April 29, 2002 in the case of the UK credit
facilities or May 14 in the case of the Cablecom credit facility, unless the
interest payments missed by NTL Communications Corp. on April 1, 2002 were
remedied or a sufficient number of bondholders agreed to forbear in respect of
such non- payment, in which case, the UK credit facilities waivers were to be
extended to May 14, 2002. As a condition to the amendment to the initial
waivers, the UK lenders required NTL Delaware to loan £90 million to NTL (UK)
Group, Inc. following receipt of the proceeds from the sale of NTL Australia.
Such loan was actually made (with the approval of the lenders under the UK
credit facilities) to NTL (UK) Group, Inc. and then on-lent to certain
subsidiaries of NTL (UK) Group, Inc. This loan, which was made on April 5,
2002, is structurally senior to the outstanding public notes issued by NTL
Communications Corp. and contractually senior to intra-group debt owed by NTL
(UK) Group, Inc. to NTL Communications Corp. but contractually subordinated to
the UK credit facilities. In connection with the amendments to the waivers, NTL
affirmed the provisions of the initial waivers and agreed, among other things,
not to commence voluntary dissolution proceedings, including proceedings under
Chapter 11 of the United States Bankruptcy Code, without the consent of these
lenders.

As of the date of this Form 10-Q, there are no current waivers from NTLs
secured lenders and NTL is therefore in default under its UK credit facilities
and the Cablecom credit facility. In connection with the proposed
recapitalization plan, it is intended that the existing events of default under
the credit facilities will be cured by amendment with effect from the effective
date of the recapitalization, if it is approved by creditors and the bankruptcy
court. On May 2, 2002, a memorandum was executed by NTL, a steering committee
of its lending banks and the unofficial committee of its public bondholders
indicating the parties agreement in principle (on a non-legally binding basis)
to the terms of the proposed recapitalization and the terms on which NTLs UK
credit facilities should be amended and restated and with respect to certain
matters relating to the sale of, or investment in, Cablecom.

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Cablecom GmbH, an indirect wholly-owned subsidiary of NTL, is the principal
trading company of NTLs Swiss group. There were a number of technical defaults
under the Swiss credit facility made available to Cablecom and various of its
subsidiaries. In addition, as of December 31, 2001, Cablecoms and six of its
direct and indirect subsidiaries liabilities exceeded their respective assets.
As a consequence, under Swiss law, those entities were deemed to be
overindebted. This also constituted an event of default under the Cablecom
credit facility, which entitled the lenders to accelerate repayment. Such an
acceleration would have resulted in an event of default under NTL
Incorporateds and NTL Delawares 5.75% convertible subordinated notes due 2011
and 5.75% convertible subordinated notes due 2009.

Under Swiss law, the board of directors of an overindebted company is generally
obliged to notify a judge of overindebtedness so that the judge may either
institute insolvency proceedings or postpone such adjudication and take
appropriate measures to preserve the value of the assets. An overindebted
company is not required to notify a judge only if the creditors of the
overindebted entity subordinate their claims in the amount of the
overindebtedness.

On April 30, 2002, Cablecom reached an agreement with the lenders under the
Cablecom credit facility which, together with the implementation of an
intra-group transaction, resolved its overindebtedness. The agreement included
a waiver by the lenders of various additional covenant breaches under the
credit facility. Temporary measures were put in place to ensure that Cablecoms
overindebted subsidiaries were not required to institute insolvency
proceedings. On June 28, 2002, the commercial registry in Switzerland
confirmed the registration of the merger on July 26 and 27, 2002 of three
subsidiaries of Cablecom into Cablecom or another member of the Cablecom group,
which mergers resolved the problem of overindebtedness in respect of those
three subsidiaries. With respect to the remaining three subsidiaries which were
affected by the overindebtedness issue, subordination agreements were reached,
precluding the need to notify the judge of the overindebtedness.

Interest Payments on Public Notes

NTL has substantial interest payment obligations under its existing
indebtedness. NTL Communications Corp. did not make scheduled interest payments
due April 1, 2002, in the aggregate amount of $74.2 million, in respect of its
9 1/2% notes due 2008, 11 1/2% notes due 2008 and 11 7/8% notes due 2010. NTL
Communications Corp. also did not make interest payments falling due on April
15, 2002, totaling $17.7 million, in respect of the 12 3/4% Senior Deferred
Coupon Notes due 2005 and NTL Incorporated and NTL Delaware did not make
interest payments and payment of related fees falling due on April 15, 2002,
totaling $2.5 million, in respect of their 5 3/4% Convertible Subordinated
Notes due 2011. In addition, NTL Communications Corp. did not make the
scheduled interest payments due May 15, 2002 in the aggregate amount of $65.0
million, in respect of its 9 1/4% notes due 2006, 6 3/4% notes due 2008 and 9
7/8% notes due 2009. Interest payments of $18.9 million were made, when due,
on April 2, 2002 in respect of Diamond Cable Communications 13.25% senior
discount notes due 2004. In accordance with the proposed recapitalization
plan, NTL does not plan to make future interest payments on its outstanding
publicly traded notes except notes issued by NTL Triangle and Diamond Holdings
Limited.

If the applicable issuer does not pay interest on these notes after a 30 day
grace period expires there is an event of default under the indenture in
respect of the notes on which the interest is due and unpaid. An event of
default entitles the trustee under the indenture or the holders of 25% of the
outstanding notes to declare the principal amount of those notes to be
immediately due and payable. Even if the maturity of those notes is not
accelerated after the 30 day grace period, such an event of default would also
result in an event of default in respect of other debt (commonly called cross
defaults) under most of NTLs other notes. Therefore, there was an event of
default for failure to pay interest on May 1, 2002 under the indentures
relating to the missed interest payments due April 1, 2002 and on May 16, 2002,
under the indentures relating to the missed interest payments due April 15,
2002. As a result, cross defaults occurred under NTLs other indentures at NTL
Communications Corp., NTL Delaware, NTL Incorporated and under NTLs UK credit
facilities and under NTLs Cablecom credit facility. This gave holders of the
outstanding series of debt at these entities the right to accelerate repayment
of those debts by declaring the principal amount of the debts to be immediately
due and payable. As a result of the payment defaults as well as NTLs
voluntary filing under Chapter 11 of the United States Bankruptcy Code on May
8, 2002, there is an event of default under all of NTLs credit facilities and
the indentures governing all of NTLs publicly traded debt, other than debt of
NTL Triangle. As a result of the Chapter 11 filings, all of NTLs publicly
traded debts, other than the debt of NTL Triangle, became immediately due and
payable, pursuant to the terms of the indentures governing such debt. The
automatic stay of Section 362 of the United States Bankruptcy Code prevents the
holders of such debt from seeking to enforce their collection rights under the
indentures, except within the context of the Chapter 11 cases, and even then
only with the prior approval of the bankruptcy court. However, NTL has
received letters from the agents for the lenders under the UK credit facilities
reserving such lenders rights to accelerate repayment of the facilities and to
enforce the security granted in respect of the facilities on account of the
defaults thereunder, actions which would not be prohibited by the automatic
stay.

Credit Rating Downgrades

On April 3, 2002, credit rating agency Standard & Poors lowered the long-term
corporate credit rating on certain of NTLs public debt to D
from CCC, citing
NTLs failure to make a bond interest payment due on April 1, 2002.

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Delisting of NTL Incorporated Common Stock

On March 28, 2002, the New York Stock Exchange (NYSE) announced that it was
suspending NTL Incorporateds common stock from trading on the NYSE. This
determination was based upon, among other things, the selling price of NTL
Incorporateds common stock, which closed at $0.20 on March 26, 2002. The
continued listing standards of the NYSE, which were applicable to NTL, required
maintenance of a minimum share price of $1.00 over a 30 trading day period and
average global market capitalization of $100 million over a 30 trading day
period. NTL Incorporateds common stock fell below both of these continued
listing standards. In addition, on May 9, 2002, Nasdaq Europe halted trading
of NTL Incorporateds common stock pending receipt of information relating to
the restructuring process because of the filing of NTLs Chapter 11 cases. NTL
has complied with this information request, although there can be no assurance
that Nasdaq Europe will (1) not make additional information requests, (2)
remove the trading halt on shares of NTL Incorporateds common stock or (3) not
delist shares of NTL Incorporateds common stock. NTL Incorporateds common
stock is currently quoted on the Over the Counter Bulletin Board under the
symbol NTLD.

Sale of NTL Australia

On April 2, 2002, NTL announced that it had completed the previously announced
sale of its Australian broadcast business to Macquarie Communications
Infrastructure Holding Pty Limited for A$850 million (US$448 million) in an all
cash transaction. The net proceeds from the sale were approximately A$581
million (US$306 million). At that time, the business bank debt outstanding
totaled A$227 million (US$120 million).

On April 5, 2002, NTL Delaware loaned £90 million to NTL (UK) Group, Inc.,
which loan was funded by the proceeds of the sale of NTL Australia. This loan
is subordinated to NTLs UK credit facilities. The remaining proceeds of the
sale of NTL Australia remain at NTL Delaware and the proposed plan of
reorganization anticipates that such proceeds will form a portion of the
consideration to be offered to bondholders of NTL Delaware and NTL Incorporated
in satisfaction of their claims against those companies.

Potential Sale of, or Outside Investment in, Cablecom

It has been agreed to engage UBS Warburg LLC by August 31, 2002 to advise in
connection with an outside investment in, or sale of all or part of, Cablecom.
As part of this process, NTL (Delaware), Inc. and certain of its subsidiaries
have agreed to approve any such outside investment or sale, which is acceptable
to the lenders under the Cablecom credit facility.

It has also been agreed that if such a sale of all or part of Cablecom is
consummated on or before August 31, 2003, the lenders under the Cablecom credit
facility will be entitled to receive additional interest equal to 20% of the
net proceeds of such a sale after repayment of the amounts outstanding under
the Cablecom credit facility and other expenses and taxes of the sale. There
can be no assurance that any outside investment in, or sale of all or part of,
Cablecom pursuant to the Cablecom credit facility will be on terms that are
favorable to NTL and such investment or sale could have a material adverse
effect on NTLs finances and business. In particular, in the current
environment, NTLs shareholding in Cablecom may have little or no value, which
may result in NTL receiving little or no consideration for its equity interest
in Cablecom.

Further, if a third party makes an investment in Cablecom there can be no
assurance that NTL will be able to maintain its ability to direct the
management of Cablecom.

The Partnership

The Partnerships source of cash has been the net proceeds of its offerings of
limited partnership interests. Historically, the Partnerships principal uses
of cash have been capital contributions to NTL South Herts in order to fund the
Partnerships proportionate share of the construction costs of the South Herts
System. As discussed below, the General Partner believes that no additional
capital contributions will be required to fund the completion of construction
and operations of the South Herts System. Accordingly, in the future, it is
currently intended that the Partnerships uses of cash will be restricted to
covering its administration costs (principally insurance premiums, legal and
accounting costs associated with the Partnerships annual audit and periodic
regulatory filings and general administration). As of December 31, 2001 the
Partnership had current liabilities of $2,255,487 of which $1,801,825 was owing
to NTL group companies, and consolidated current liabilities of $58,599,365, of
which $58,145,703 was owing to NTL group companies. Accordingly, until such
time as NTL South Herts begins to pay dividends on its ordinary shares (which
is not expected in the foreseeable future) the Partnership will be required to
fund its administrative expenses by additional issuances of limited partnership
interests or from borrowings. It is unlikely that NTL South Herts will be able
to sell debt or equity securities in the public markets at least in the short
term or to obtain financing from commercial banks. It

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is unlikely that NTL will provide funds to NTL South Herts at least in the
short term. As a result, NTL South Herts may not be able to continue
operations as a going concern.

Fawnspring Limited, the general partner of the Partnership (the
General Partner), does not currently plan to make any distribution of funds
at least until the accumulated losses attributed to the limited partners has
been offset by gains attributable to the limited partners.

Financing

On April 18, 1995, NTL South Herts entered into an agreement with two major
banks to provide a £25,000,000 revolving and term loan credit facility
agreement maturing on December 31, 2003 (the South Herts Credit Agreement).
On October 18, 1996, £5,000,000 was cancelled and the facility reduced to
£20,000,000.

The obligations of NTL South Herts under the South Herts Credit Agreement were
secured by fixed and floating charges over all of the assets of NTL South
Herts. In addition, there is a pledge of all of the share capital of NTL South
Herts given by BCM and the Partnership as additional security for the facility.
Drawdowns of £19.3 million have occurred under the South Herts Credit
Agreement since April 1995, partly to repay the temporary loans made to NTL
South Herts by BCM since November 1994. The facility was repaid in full on
February 21, 2001.

3    Investment in Subsidiary

The Company is a United Kingdom corporation that owns and operates a cable
television/telephony system in the South Hertfordshire franchise area, located
adjacent to the northwest perimeter of Greater London, England (the South
Herts System). At March 31, 2002, there were approximately 94,000 homes in
the franchise area, of which approximately 97% had been passed by the South
Herts System.

The Company is owned 66.7 percent by the Partnership and 33.3 percent by NTL
(CWC) Limited. The General Partner is an indirect wholly owned subsidiary of NTL. The
General Partner provides consulting services to the Partnership and may
delegate some or all of the consulting services to NTL or to other affiliates.

NTL (CWC) Limited, through its subsidiaries and its interest in the Company,
holds exclusive cable television licenses and related non-exclusive
telecommunications licenses covering more than six million potential
residential customers, representing approximately 25% of all homes in the
United Kingdom (including 59% of all homes in Greater London), and
substantially all small-to-medium sized business customers within its 47 cable
franchise areas.

4    Transactions with Affiliated Parties

Consulting and Management Fees

An affiliate of the General Partner is entitled to be paid a consulting fee by
the Company. During the construction phases of the South Herts System, this
consulting fee was 2 per cent of construction costs. Since completion of
construction of each portion of the system, the consulting fee for the
completed portion has been 5 per cent of the gross revenues, excluding revenues
from the sale of cable television/telephony systems. The consulting fee is
calculated and payable monthly. Consulting fees paid or payable by the Company
for the three months ended March 31, 2002 and 2001 were $359,947 and $371,270
respectively. These amounts were expensed in the Unaudited Consolidated
Statements of Operations for each period.

Distribution Ratios and Reimbursement

Any Partnership distributions made from cash flow (defined as cash
receipts derived from routine operations, less debt principal and
interest payments and cash expenses) are allocated 99 percent to the
limited partners and 1 percent to the General Partner. Any distributions other
than interest income on limited partner subscriptions earned prior to the
acquisition of the Partnerships first cable television system or from cash
flow, such as from the sale or refinancing of a system or upon dissolution of
the Partnership, will be made as follows: 99 percent to the limited partners
and 1 percent to the General Partner until any negative balances in the limited
partners capital accounts are reduced to zero; 100 percent to the General
Partner until any negative balance in its capital account is reduced to
zero; 99 percent to the limited partners and 1 percent to the General Partner
until the balance in the limited partners capital accounts is equal to their
adjusted capital contribution plus a 12 percent return; 100 percent to the
General Partner until the balance in its capital account is equal to its
adjusted capital contribution, and any remaining income or gain shall be
allocated 75 percent to the limited partners and 25 percent to the General
Partner.

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The General Partner and its affiliates are entitled to reimbursement from the
Company for direct and indirect expenses allocable to the operation of the
South Herts System, and from the Partnership for direct and indirect expenses
allocable to the operation of the Partnership, which include, but are not
limited to, rent, supplies, telephone, travel, copying charges and salaries of
any full or part-time employees. The General Partner believes that the
methodology used in allocating these expenses is fair and reasonable. During
the three months ended March 31, 2002 and 2001, reimbursements made by the
Company and the Partnership to the General Partner or its affiliates for any
allocable direct and indirect expenses totaled $2,512,702 and $3,323,273
respectively.

The General Partner and its affiliates may make advances to, and defer
collection of fees and allocated expenses owed by the Partnership, although
they are not required to do so. The Partnership is charged interest on such
advances and deferred amounts at a rate equal to the General Partners or
certain affiliates weighted average cost of all debt financing from
unaffiliated entities. For the three months ended March 31, 2002 and
2001,interest on deferred fees of $309,777 and $266,395 respectively, was
charged by an affiliate of the General Partner, and interest on advances of
$26,345 and $24,598 respectively, was charged by the General Partner.

5    Plant, Property and Equipment (need to say how fair value would be
determined  see SEC comment letter)

Plant, property and equipment consists of (in $000s):

|                                           |                           |            |             |  |             |  |              |             |             |  |             |             | 
|------------------------------------------ | ------------------------- | ---------- | ----------- |  | ----------- |  | ------------ | ----------- | ----------- |  | ----------- | ----------- | 
|                                           |                           |            | Estimated   |  | March 31,   |  | December 31,
|                                           |                           |            | Useful Life |  | 2002        |  | 2001        
|                                           |                           |            |             |  |             |  |             
|Cable network & other electronic equipment |                           | 3-40 Years |             |  | 101,018,956 |  |              |             | 103,096,046 | 
|                                          
|                                          
|                                          
|                                          
|Freehold buildings                         |                           | 40 Years   |             |  | 3,218,408   |  |              |             | 3,284,583   | 
|                                          
|                                          
|                                          
|                                          
|Office equipment and other fixed assets    |                           | 3-10 Years |             |  | 3,053,325   |  |              |             | 3,099,388   | 
|                                           |                           |            |             |  |             |  |              |             |             |  |             |            
|                                           | Total Operating Equipment |            |             |  |             |  |              | 107,290,689 |             |  |             | 109,480,017 | 
|                                          
|                                          
|                                          
|                                          
|Construction in progress                   |                           |            |             |  |             |  | 1,000,319    |             |             |  | 1,198,256   |            
|                                           |                           |            |             |  |             |  |              |             |             |  |             |            
|                                           |                           |            |             |  |             |  | 108,291,008  |             |             |  | 110,678,273 |            
|                                          
|                                          
|                                          
|                                          
|Accumulated depreciation                   |                           |            |             |  |             |  | (52,491,434  | )           |             |  | (51,716,191 | )          
|                                           |                           |            |             |  |             |  |              |             |             |  |             |            
|                                           |                           |            |             |  |             |  | 55,799,574   |             |             |  | 58,962,082  |            
|                                           |                           |            |             |  |             |  |              |             |             |  |             |            

6    Financing

On April 18, 1995 the Company entered into an agreement with two major banks to
provide a £25,000,000 revolving and term loan credit facility agreement
maturing on December 31, 2003 (the South Herts Credit Agreement). On October
18, 1996, £5,000,000 was canceled and the facility reduced to £20,000,000.

The outstanding facility of £14,475,000 and interest was repaid in full with
funding from NTL on February 21, 2001. Thereafter, NTL South Herts is reliant
upon the support of NTL to continue its operations as a going concern. Such
support may not continue, at least in the short term (see Note 2).

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SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD.
(A Limited Partnership)




|        |  |                                                                                       |  | 
|------- |  | ------------------------------------------------------------------------------------- |  | 
|Item 2: |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS |  | 

Liquidity and Capital Resources

On May 8, 2002, NTL Incorporated, the ultimate parent of Fawnspring Ltd., the
Partnerships general partner, NTL (Delaware), Inc., NTL Communications Corp.,
Diamond Cable Communications Limited, Diamond Holdings Limited and
Communications Cable Funding Corp. (NTL and its consolidated subsidiaries
hereinafter referred to as NTL) filed an arranged joint reorganization plan
under Chapter 11 of the United States Bankruptcy Code (referred to as the
proposed recapitalization plan). NTL Incorporateds operating subsidiaries
were not included in the Chapter 11 filing. Toward the end of 2001, while NTL
continued to have sufficient liquidity to meet its near term obligations, it
recognized the negative impact of the collapsing European and U.S.
telecommunications markets on its ability to service its debt. Accordingly,
NTL began to implement a strategy to preserve and maximize its enterprise
value. This strategy included the implementation of cost-cutting measures and
the commencement of discussions with certain third parties regarding strategic
alternatives for NTLs business.

The Partnership required significant amounts of capital to finance construction
of its networks, connection of customers to the networks, other capital
expenditures and for working capital needs. The Partnership historically met
these liquidity requirements through issuances of limited partnership units and
by borrowing from commercial banks and NTL. Both the equity and debt capital
markets have recently experienced periods of significant volatility,
particularly for securities issued by telecommunications and technology
companies. The ability of telecommunications companies to access those markets
as well as their ability to obtain financing provided by bank lenders and
equipment suppliers has become more restricted and financing costs have
increased. During some recent periods, the capital markets have been largely
unavailable to new issues of securities by telecommunications companies. NTL
Incorporateds public equity is no longer trading on the New York Stock
Exchange, and NTLs public debt securities are trading at or near all time
lows. These factors, together with the Partnerships substantial leverage,
means the Partnership does not currently have access to its historic sources of
capital.

In addition, NTLs UK credit facilities are fully drawn. The revolving tranche
of the Cablecom credit facility has been capped at its utilized amount of CHF
1,055.0 million although the availability may be increased with the consent of
the requisite majority of the lenders under that facility. The term tranche of
the Cablecom credit facility is fully drawn. NTL Communications Corp., a
wholly-owned subsidiary of NTL Incorporated, did not pay cash interest on
certain series of its notes that was due on April 1, 2002, April 15, 2002 and
May 15, 2002. NTL Incorporated and NTL (Delaware), Inc., a wholly-owned
subsidiary of NTL Incorporated, also did not pay cash interest and related fees
on a series of their notes that was due on April 15, 2002. In accordance with
the proposed recapitalization plan, NTL does not plan to make future interest
payments on its outstanding publicly traded notes except notes issued by NTL
Triangle and Diamond Holdings Limited.

As of March 31, 2002, NTL Incorporated had approximately $622.7 million in
cash, cash equivalents and marketable securities on hand and, in April 2002,
received approximately $306 million net cash proceeds from the sale of its
Australian business. NTL may require additional cash in the twelve months from
April 1, 2002 to March 31, 2003. NTL expects to obtain a DIP Facility (as
described below) to meet the potential cash requirements of NTL Incorporated
and its subsidiaries, excluding Cablecom. NTL also expects that the DIP
Facility will be replaced with an exit facility for NTL Communications Corp.
and its subsidiaries upon the completion of the recapitalization process. NTL
believes that cash, cash equivalents and marketable securities on hand at March
31, 2002, the cash received from the sale of NTL Australia and the cash
expected to be available from the DIP Facility and the exit facility will be
sufficient for its and its subsidiaries cash requirements during the twelve
months from April 1, 2002 to March 31, 2003.

Beginning in January 2002, NTL was contacted by an unofficial committee of
bondholders regarding the commencement of a comprehensive and consensual
restructuring process. NTL has been informed that the members of the
unofficial steering committee of bondholders currently own, in the aggregate,
more than 50% of the outstanding principal amount of NTLs notes. In
connection with the restructuring process, the steering committee of the
unofficial committee of bondholders retained advisors to facilitate the
negotiations.

On January 31, 2002 NTL announced that it had appointed Credit Suisse First
Boston, JP Morgan and Morgan Stanley to advise on strategic and
recapitalization alternatives to strengthen its balance sheet and reduce debt
and put an appropriate capital structure in place for its business.
Subsequently, NTL evaluated various recapitalization alternatives, and met with
a number of strategic investors, to effect a comprehensive consensual
reorganization in a timely manner to minimize negative effects on its business
operations. Discussions with such strategic investors did not result in a
proposal which NTLs board of directors believed was comparable or superior to
the value provided to its stakeholders

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by the proposed plan of reorganization.

Liberty Media Corporation, one of such potential strategic investors, which is
also a significant shareholder in Telewest plc, another British cable and
telephone company, has discussed various transactions with NTL from time to
time over the past several years. In March 2002, Liberty and NTL amended a
previously existing confidentiality agreement between them to cover the
restructuring process and to include a standstill agreement which prohibited
various acquisitions of, or offers, for NTL debt or equity securities by
Liberty and its subsidiaries until June 30, 2002.

On April 17, 2002, Liberty sent a proposal to NTLs board of directors, which
proposed a cash tender offer for 30% of the outstanding bonds of NTL
Communications Corp. at a small premium to the prevailing market price and an
agreement to vote such acquired bonds in favor of the proposed plan of
reorganization, as well as a participation with NTL in a cash infusion of up
to $500 million into Cablecom. After consultation with NTLs board of
directors and the steering committee of bondholders on April 18, 2002, NTL
indicated to Liberty that it did not consider the Liberty proposal to be in the
best interests of NTL and that the best course of action for NTL to maximize
its enterprise value was to promptly consummate the proposed plan of
reorganization. Subsequent to April 18, 2002, Liberty has continued
discussions with NTL with respect to Cablecom.

Promptly upon obtaining the requisite waivers from the lenders under its credit
facilities, in March 2002, NTL commenced negotiations with the steering
committee of the unofficial committee of bondholders and its legal and
financial advisors. The negotiations continued during the latter part of March
and throughout April 2002, and also included France Telecom. On April 16,
2002, NTL Incorporated announced that NTL had reached a comprehensive agreement
in principle with the committee (holding over 50% of the face value of NTL and
its subsidiaries public bonds) and France Telecom, a significant holder of NTL
Incorporateds preferred stock, on implementing a recapitalization plan. On May
2, 2002, a steering committee of the lending banks under NTLs credit
facilities gave their approval in principle (on a non-legally binding basis) to
NTLs proposed plan of reorganization.

On June 21, 2002, the United States Trustee appointed an official creditors
committee, comprised of the three indenture trustees for the publicly traded
debt of NTL and the ten members of the steering committee of lending banks.
The members of the official creditors committee are: The Bank of New York;
Wilmington Trust Company; Wells Fargo Bank Minnesota; National Association;
Angelo Gordon & Co. LP; Capital Research & Management Company; Franklin Mutual
Advisors, LLC; Oaktree Capital Management LLC; Salomon Brothers Asset
Management; Appaloosa Management, LP; Fidelity Management & Research co.;
Mackay Shields LLC; SAB Capital Management LP; and W.R. Huff Asset Management
Co. LLC.

The recapitalization plan, if implemented, would result in the cancellation of
all of NTL Incorporateds outstanding shares of common stock, preferred stock
and redeemable preferred stock, and the cancellation of all of the publicly
held notes of NTL Incorporated, NTL (Delaware), Inc. and NTL Communications
Corp. and the transfer of the publicly held notes of Diamond Cable
Communications Limited to NTL UK and Ireland. In addition, NTL Incorporated
would be discharged from its obligation to pay dividends accruing on the
canceled preferred stock and interest accruing on the canceled notes.

To implement the proposed recapitalization, on May 8, 2002 NTL Incorporated,
NTL (Delaware), Inc., NTL Communications Corp., Diamond Cable Communications
Limited, Diamond Holdings Limited and Communications Cable Funding Corp. filed
cases and a pre-arranged joint reorganization plan under Chapter 11 of the
United States Bankruptcy Code. NTLs operating subsidiaries were not included
in the Chapter 11 filing. The reorganization plan contemplates that the bank
debt will remain in place as part of the recapitalization. On May 24, 2002,
NTL and its debtor subsidiaries filed an amended joint reorganization plan and
disclosure statement. The bankruptcy court has scheduled July 12, 2002 for a
hearing to consider approval of the amended joint reorganization plan and
disclosure statement. A copy of the Amended Joint Reorganization Plan of NTL
Incorporated and Certain Subsidiaries and the related Disclosure Statement are
included as exhibits to NTL Incorporateds Current Report on Form 8-K filed on
May 28, 2002.

The filing of the petitions seeking relief filed under Chapter 11 constituted
an event of default under the indentures of each of the entities which filed
such Chapter 11 petitions and amounts outstanding under these indentures became
immediately due and payable. NTLs Chapter 11 petitions also constituted an
event of default under NTLs UK credit facilities and the Cablecom credit
facility, allowing the lenders thereunder to declare amounts outstanding to be
immediately payable.

In connection with the proposed joint reorganization plan, certain members of
the unofficial committee of bondholders have committed to provide up to $500
million of new debt financing to NTL Incorporated and certain of its
subsidiaries during the Chapter 11 process and for the post-recapitalized NTL,
subject to bankruptcy court approval. The new financing will ensure that NTLs
business operations have access to sufficient liquidity to continue ordinary
operations. The bankruptcy court has set July 2, 2002 as the date to consider
approval of the DIP Facility, which has been agreed in

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principle with NTL and the prospective lenders under the facility. Despite
such agreement, however, GE Capital, the sole holder of the 5 3/4% convertible
subordinated notes due 2011, and Wilmington Trust Company, the trustee, have
objected to the DIP Facility.

Proposed Recapitalization Plan

Under the proposed recapitalization plan, NTL would be split into two
companies, one tentatively called NTL UK and Ireland and holding substantially
all of NTLs UK and Ireland assets, and one tentatively called NTL Euroco and
holding substantially all of NTLs continental European and other assets.

Holders of notes of NTL Incorporated (other than France Telecom), NTL
(Delaware), Inc. (other than France Telecom), NTL Communications Corp. and
Diamond Cable Communications Limited would in the aggregate receive 100% of the
initial common stock of NTL UK and Ireland (excluding shares issuable in the
rights offerings and upon the exercise of warrants (discussed below) and upon
the exercise of options which will be granted to certain employees of NTL UK
and Ireland). Holders of notes of NTL Incorporated (other than France
Telecom), NTL (Delaware), Inc. (other than France Telecom) and NTL
Communications Corp. would in the aggregate receive (i) 100% of the preferred
stock of NTL Euroco and (ii) a certain amount of cash as specified in the
amended joint reorganization plan. Holders of the subordinated notes of NTL
Incorporated (other than France Telecom), NTL (Delaware), Inc. (other than
France Telecom) and NTL Communications Corp. would in the aggregate receive
86.5% of the initial common stock of NTL Euroco (excluding shares issuable upon
the exercise of options which will be granted to certain employees of NTL
Euroco). Holders of senior notes of NTL Communications Corp. would receive the
value of a specified number of shares of common stock of NTL Euroco pursuant to
the amended joint reorganization plan. Notes of NTL Incorporateds
subsidiaries, Diamond Holdings Limited and NTL (Triangle) LLC, would remain
outstanding and interest payments will be made.

Current preferred and common stockholders of NTL Incorporated, including France
Telecom, would receive warrants to purchase common stock of NTL UK and Ireland
and rights (to be priced at a $10.5 billion enterprise value of NTL UK and
Ireland) entitling them to purchase common stock of NTL UK and Ireland. For
each share of common stock purchased upon exercise of rights, the person
exercising such rights will receive a warrant to purchase one share of common
stock of NTL UK and Ireland. The rights will be exercisable, on an
oversubscription basis, for the 20-business day period after the entry of the
confirmation order, as such period may be extended, and the warrants will be
exercisable for a period of eight years at an exercise price of $77.47 per
share, subject to anti-dilution adjustments. If fully exercised, the rights
and warrants would entitle the current preferred stockholders of NTL
Incorporated to acquire approximately 23.6% and the current common stockholders
of NTL Incorporated to acquire approximately 8.9% of NTL UK and Irelands
primary common stock on the effective date of the recapitalization. Holders of
the subordinated notes of NTL Incorporated (other than France Telecom), NTL
(Delaware), Inc. (other than France Telecom), and NTL Communications Corp.
would have the right to purchase any shares of NTL UK and Ireland common stock
and warrants not subscribed for in the rights offering by the preferred and
common stockholders of NTL Incorporated. It is expected that the warrants will
be listed of quoted on the same securities exchange or inter-dealer quotation
system as the shares of common stock of the reorganized NTL. It is expected
that the warrants will be listed or quoted on the same securities exchange or
inter-dealer quotation system as the shares of common stock of the reorganized
NTL.

Current preferred stockholders, other than France Telecom, would receive
approximately 3.2% and current common stockholders, other than France Telecom,
would receive approximately 10.3% of the primary equity of NTL Euroco. It is
contemplated that, subject to the consummation of the recapitalization, France
Telecom would also receive NTL Incorporateds 27% interest in Noos, pursuant to
a pledge of such interest to France Telecom given at the time of its
acquisition by NTL.

During the recapitalization process, NTL has maintained normal and regular
trade terms with its suppliers and customers. There can be no assurance that
NTLs suppliers will continue to provide normal trade credit or credit on
acceptable terms, if at all, or that customers will continue to do business or
enter into new business with NTL. See also Risk Factors for a summary of
risks related to NTLs business in general and the recapitalization process in
particular.

Section 1129 of the United States Bankruptcy Code requires, among other things,
a showing that confirmation of the proposed recapitalization plan will not be
followed by liquidation or the need for further financial reorganization of NTL
Incorporated, NTL (Delaware), Inc., NTL Communications Corp., Diamond Cable
Communications Limited or Diamond Holdings Limited, and that the value of
distributions to dissenting holders of claims and interests may not be less
than the value such holders would receive in a liquidation under Chapter 7 of
the United States Bankruptcy Code. Although NTL believes that the proposed
recapitalization plan will meet these tests, there can be no assurance that the
Bankruptcy Court will reach the same conclusion.

The United States Bankruptcy Code also requires that a plan must provide the
same treatment for each claim or interest in a particular class, unless a
holder agrees to a less favorable treatment of its particular claim or
interest. NTL believes

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that the proposed recapitalization plan complies with this requirement of the
United States Bankruptcy Code. However, if a member of a class objects to its
treatment, or if the Bankruptcy Court finds that the proposed recapitalization
plan does not comply with the requirements of the United States Bankruptcy
Code, confirmation of the plan could be delayed or prevented. In addition,
each class of impaired claims and interests that will (or may) be entitled to
receive property under the plan will have the opportunity to vote to accept or
reject the plan. If an impaired class of claims or interests rejects the plan,
NTL may request confirmation of the plan pursuant to the cramdown provisions
of the United States Bankruptcy Code. Even if the requirements for cramdown
are met, the Bankruptcy Court, which, as a court of equity may exercise
substantial discretion, may choose not to confirm the plan.

There can be no assurance that we will successfully complete the proposed
recapitalization plan in a timely manner in order to sustain our operations.

Bank Waivers

Before NTL could commence negotiations with the unofficial committee of
bondholders, it was necessary to obtain waivers from the lenders under its
credit facilities. Effective March 8, 2002, these lenders granted waivers
which, until March 29, 2002, provided that the commencement of negotiations
with bondholders with a view to rescheduling its debt would not constitute an
event of default under the credit facilities. Such initial waivers did not
permit NTL to make to any of its noteholders an exchange or similar offer for
NTLs outstanding public notes or to enter into a legally binding agreement
with the unofficial steering committee of bondholders, subject to some
exceptions, without the consent of the lenders under the credit facilities.
But for the initial waivers, the commencement of negotiations with bondholders
would have been an event of default under the credit facilities.

Effective March 28, 2002, the lenders under the credit facilities agreed to
amend the initial waivers. The amendments to the initial waivers extended the
duration of the initial waivers to April 29, 2002 in the case of the UK credit
facilities or May 14 in the case of the Cablecom credit facility, unless the
interest payments missed by NTL Communications Corp. on April 1, 2002 were
remedied or a sufficient number of bondholders agreed to forbear in respect of
such non- payment, in which case, the UK credit facilities waivers were to be
extended to May 14, 2002. As a condition to the amendment to the initial
waivers, the UK lenders required NTL Delaware to loan £90 million to NTL (UK)
Group, Inc. following receipt of the proceeds from the sale of NTL Australia.
Such loan was actually made (with the approval of the lenders under the UK
credit facilities) to NTL (UK) Group, Inc. and then on-lent to certain
subsidiaries of NTL (UK) Group, Inc. This loan, which was made on April 5,
2002, is structurally senior to the outstanding public notes issued by NTL
Communications Corp. and contractually senior to intra-group debt owed by NTL
(UK) Group, Inc. to NTL Communications Corp. but contractually subordinated to
the UK credit facilities. In connection with the amendments to the waivers, NTL
affirmed the provisions of the initial waivers and agreed, among other things,
not to commence voluntary dissolution proceedings, including proceedings under
Chapter 11 of the United States Bankruptcy Code, without the consent of these
lenders.

As of the date of this Form 10-Q, there are no current waivers from NTLs
secured lenders and NTL is therefore in default under its UK credit facilities
and the Cablecom credit facility. In connection with the proposed
recapitalization plan, it is intended that the existing events of default under
the credit facilities will be cured by amendment with effect from the effective
date of the recapitalization, if it is approved by creditors and the bankruptcy
court. On May 2, 2002, a memorandum was executed by NTL, a steering committee
of its lending banks and the unofficial committee of its public bondholders
indicating the parties agreement in principle (on a non-legally binding basis)
to the terms of the proposed recapitalization and the terms on which NTLs UK
credit facilities should be amended and restated and with respect to certain
matters relating to the sale of, or investment in, Cablecom.

Cablecom GmbH, an indirect wholly-owned subsidiary of NTL, is the principal
trading company of NTLs Swiss group. There were a number of technical defaults
under the Swiss credit facility made available to Cablecom and various of its
subsidiaries. In addition, as of December 31, 2001, Cablecoms and six of its
direct and indirect subsidiaries liabilities exceeded their respective assets.
As a consequence, under Swiss law, those entities were deemed to be
overindebted. This also constituted an event of default under the Cablecom
credit facility, which entitled the lenders to accelerate repayment. Such an
acceleration would have resulted in an event of default under NTL
Incorporateds and NTL Delawares 5.75% convertible subordinated notes due 2011
and 5.75% convertible subordinated notes due 2009.

Under Swiss law, the board of directors of an overindebted company is generally
obliged to notify a judge of overindebtedness so that the judge may either
institute insolvency proceedings or postpone such adjudication and take
appropriate measures to preserve the value of the assets. An overindebted
company is not required to notify a judge only if the creditors of the
overindebted entity subordinate their claims in the amount of the
overindebtedness.

On April 30, 2002, Cablecom reached an agreement with the lenders under the
Cablecom credit facility which, together with the implementation of an
intra-group transaction, resolved its overindebtedness. The agreement included
a waiver by the lenders of various additional covenant breaches under the
credit facility. Temporary measures were put in place

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to ensure that Cablecoms overindebted subsidiaries were not required to
institute insolvency proceedings. On June 28, 2002, the commercial registry in
Switzerland confirmed the registration of the merger on July 26 and 27, 2002 of
three subsidiaries of Cablecom into Cablecom or another member of the Cablecom
group, which mergers resolved the problem of overindebtedness in respect of
those three subsidiaries. With respect to the remaining three subsidiaries
which were affected by the overindebtedness issue, subordination agreements
were reached, precluding the need to notify the judge of the overindebtedness.

Interest Payments on Public Notes

NTL has substantial interest payment obligations under its existing
indebtedness. NTL Communications Corp. did not make scheduled interest payments
due April 1, 2002, in the aggregate amount of $74.2 million, in respect of its
9 1/2% notes due 2008, 11 1/2% notes due 2008 and 11 7/8% notes due 2010. NTL
Communications Corp. also did not make interest payments falling due on April
15, 2002, totaling $17.7 million, in respect of the 12 3/4% Senior Deferred
Coupon Notes due 2005 and NTL Incorporated and NTL Delaware did not make
interest payments and payment of related fees falling due on April 15, 2002,
totaling $2.5 million, in respect of their 5 3/4% Convertible Subordinated
Notes due 2011. In addition, NTL Communications Corp. did not make the
scheduled interest payments due May 15, 2002 in the aggregate amount of $65.0
million, in respect of its 9 1/4% notes due 2006, 6 3/4% notes due 2008 and 9
7/8% notes due 2009. Interest payments of $18.9 million were made, when due,
on April 2, 2002 in respect of Diamond Cable Communications 13.25% senior
discount notes due 2004. In accordance with the proposed recapitalization
plan, NTL does not plan to make future interest payments on its outstanding
publicly traded notes except notes issued by NTL Triangle and Diamond Holdings
Limited.

If the applicable issuer does not pay interest on these notes after a 30 day
grace period expires there is an event of default under the indenture in
respect of the notes on which the interest is due and unpaid. An event of
default entitles the trustee under the indenture or the holders of 25% of the
outstanding notes to declare the principal amount of those notes to be
immediately due and payable. Even if the maturity of those notes is not
accelerated after the 30 day grace period, such an event of default would also
result in an event of default in respect of other debt (commonly called cross
defaults) under most of NTLs other notes. Therefore, there was an event of
default for failure to pay interest on May 1, 2002 under the indentures
relating to the missed interest payments due April 1, 2002 and on May 16, 2002,
under the indentures relating to the missed interest payments due April 15,
2002. As a result, cross defaults occurred under NTLs other indentures at NTL
Communications Corp., NTL Delaware, NTL Incorporated and under NTLs UK credit
facilities and under NTLs Cablecom credit facility. This gave holders of the
outstanding series of debt at these entities the right to accelerate repayment
of those debts by declaring the principal amount of the debts to be immediately
due and payable. As a result of the payment defaults as well as NTLs
voluntary filing under Chapter 11 of the United States Bankruptcy Code on May
8, 2002, there is an event of default under all of NTLs credit facilities and
the indentures governing all of NTLs publicly traded debt, other than debt of
NTL Triangle. As a result of the Chapter 11 filings, all of NTLs publicly
traded debts, other than the debt of NTL Triangle, became immediately due and
payable, pursuant to the terms of the indentures governing such debt. The
automatic stay of Section 362 of the United States Bankruptcy Code prevents the
holders of such debt from seeking to enforce their collection rights under the
indentures, except within the context of the Chapter 11 cases, and even then
only with the prior approval of the bankruptcy court. However, NTL has
received letters from the agents for the lenders under the UK credit facilities
reserving such lenders rights to accelerate repayment of the facilities and to
enforce the security granted in respect of the facilities on account of the
defaults thereunder, actions which would not be prohibited by the automatic
stay.

Credit Rating Downgrades

On April 3, 2002, credit rating agency Standard & Poors lowered the long-term
corporate credit rating on certain of NTLs public debt to D
from CCC, citing
NTLs failure to make a bond interest payment due on April 1, 2002.

Delisting of NTL Incorporated Common Stock

On March 28, 2002, the New York Stock Exchange (NYSE) announced that it was
suspending NTL Incorporateds common stock from trading on the NYSE. This
determination was based upon, among other things, the selling price of NTL
Incorporateds common stock, which closed at $0.20 on March 26, 2002. The
continued listing standards of the NYSE, which were applicable to NTL, required
maintenance of a minimum share price of $1.00 over a 30 trading day period and
average global market capitalization of $100 million over a 30 trading day
period. NTL Incorporateds common stock fell below both of these continued
listing standards. In addition, on May 9, 2002, Nasdaq Europe halted trading
of NTL Incorporateds common stock pending receipt of information relating to
the restructuring process because of the filing of NTLs Chapter 11 cases. NTL
has complied with this information request, although there can be no assurance
that Nasdaq Europe will (1) not make additional information requests, (2)
remove the trading halt on shares of NTL Incorporateds common stock or (3) not
delist shares of NTL Incorporateds common stock. NTL Incorporateds common
stock is currently quoted on the Over the Counter Bulletin Board under the
symbol NTLD.

Sale of NTL Australia

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On April 2, 2002, NTL announced that it had completed the previously announced
sale of its Australian broadcast business to Macquarie Communications
Infrastructure Holding Pty Limited for A$850 million (US$448 million) in an all
cash transaction. The net proceeds from the sale were approximately A$581
million (US$306 million). At that time, the business bank debt outstanding
totaled A$227 million (US$120 million).

On April 5, 2002, NTL Delaware loaned £90 million to NTL (UK) Group, Inc.,
which loan was funded by the proceeds of the sale of NTL Australia. This loan
is subordinated to NTLs UK credit facilities. The remaining proceeds of the
sale of NTL Australia remain at NTL Delaware and the proposed plan of
reorganization anticipates that such proceeds will form a portion of the
consideration to be offered to bondholders of NTL Delaware and NTL Incorporated
in satisfaction of their claims against those companies.

Potential Sale of, or Outside Investment in, Cablecom

It has been agreed to engage UBS Warburg LLC by August 31, 2002 to advise in
connection with an outside investment in, or sale of all or part of, Cablecom.
As part of this process, NTL (Delaware), Inc. and certain of its subsidiaries
have agreed to approve any such outside investment or sale, which is acceptable
to the lenders under the Cablecom credit facility.

It has also been agreed that if such a sale of all or part of Cablecom is
consummated on or before August 31, 2003, the lenders under the Cablecom credit
facility will be entitled to receive additional interest equal to 20% of the
net proceeds of such a sale after repayment of the amounts outstanding under
the Cablecom credit facility and other expenses and taxes of the sale. There
can be no assurance that any outside investment in, or sale of all or part of,
Cablecom pursuant to the Cablecom credit facility will be on terms that are
favorable to NTL and such investment or sale could have a material adverse
effect on NTLs finances and business. In particular, in the current
environment, NTLs shareholding in Cablecom may have little or no value, which
may result in NTL receiving little or no consideration for its equity interest
in Cablecom.

Further, if a third party makes an investment in Cablecom there can be no
assurance that NTL will be able to maintain its ability to direct the
management of Cablecom.

The Partnership

The Partnerships source of cash has been the net proceeds of its offerings of
limited partnership interests. Historically, the Partnerships principal uses
of cash have been capital contributions to NTL South Herts in order to fund the
Partnerships proportionate share of the construction costs of the South Herts
System. As discussed below, the General Partner believes that no additional
capital contributions will be required to fund the completion of construction
and operations of the South Herts System. Accordingly, in the future, it is
currently intended that the Partnerships uses of cash will be restricted to
covering its administration costs (principally insurance premiums, legal and
accounting costs associated with the Partnerships annual audit and periodic
regulatory filings and general administration). As of December 31, 2001 the
Partnership had current liabilities of $2,255,487 of which $1,801,825 was owing
to NTL group companies, and consolidated current liabilities of $58,599,365, of
which $58,145,703 was owing to NTL group companies. Accordingly, until such
time as NTL South Herts begins to pay dividends on its ordinary shares (which
is not expected in the foreseeable future) the Partnership will be required to
fund its administrative expenses by additional issuances of limited partnership
interests or from borrowings. It is unlikely that NTL South Herts will be able
to sell debt or equity securities in the public markets at least in the short
term or to obtain financing from commercial banks. It is unlikely that NTL
will provide funds to NTL South Herts at least in the short term. As a result,
NTL South Herts may not be able to continue operations as a going concern.

The General Partner does not currently plan to make any distribution of funds
at least until the accumulated losses attributed to the limited partners has
been offset by gains attributable to the limited partners.

Financing

On April 18, 1995, NTL South Herts entered into an agreement with two major
banks to provide a £25,000,000 revolving and term loan credit facility
agreement maturing on December 31, 2003 (the South Herts Credit Agreement).
On October 18, 1996, £5,000,000 was cancelled and the facility reduced to
£20,000,000.

The obligations of NTL South Herts under the South Herts Credit Agreement were
secured by first fixed and floating charges over all of the assets of NTL South
Herts. In addition, there is a pledge of all of the share capital of NTL South
Herts given by BCM and the Partnership as additional security for the facility.
Drawdowns of £19.3 million have

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occurred under the South Herts Credit Agreement since April 1995, partly to
repay the temporary loans made to NTL South Herts by BCM since November 1994.
The facility was repaid in full on February 21, 2001.

Condensed Consolidated Statement of Cash Flows

Net cash provided by operating activities amounted to $704,225 and $22,231,417
for the three months ended March 31, 2002 and 2001, respectively. Net cash used
in investing activities amounted to $704,225 and $1,006,242 for the three
months ended March 31, 2002 and 2001. In addition repayments of the principal
on the loan amounted to $nil compared to $21,225,175 in 2001.

Results of Operations for the Three Months Ended March 31, 2002 and 2001

Revenues of the Partnership increased by $175,625 for the three months ended
March 31, 2002, from $7,023,325 over the corresponding period in 2001 to
$7,198,950 in 2002. The increase in revenue resulted principally from an increase in the
number of digital customers served by the South Herts System. At March 31,
2002, the Company served 20,429 digital customers compared with 14,163 digital
customers at March 31, 2001. Also, during 2001, NTL South Herts launched its
broadband internet access service and at March 31, 2002 had 2,241 broadband
customers. NTL South Herts intends to drive the majority of revenue growth
from increasing revenue from existing customers rather than through the
addition of new customers. This allows NTL South Herts to achieve its revenue
targets, have a lower capital requirement due to fewer installations, and
improve its results as it reduces costs.

Cost of goods sold decreased $246,493 for the three months ended March 31,
2002, from $3,166,926 over the corresponding period in 2001 to $2,920,433 in
2002. Costs of goods sold have reduced due to efficiencies and costs reductions
achieved by NTL.

Selling, general and administrative expenses amounted to $54,726 for the three
months ended March 31, 2002, compared to $35,494 over the corresponding period
in 2001.

Management fees and allocated overhead from the General Partner decreased by
$436,539 for the three months ended March 31, 2002, from $3,323,273 over the
corresponding period in 2001 to $2,886,734 in 2002. Management fees and
allocated overhead from the General Partner have reduced due to efficiencies
and cost reductions achieved by NTL.

Depreciation and amortization expense decreased $7,473,481 for the three months
ended March 31, 2002, from $9,298,580 over the corresponding period in 2001 to
$1,825,099 in 2002. The reduction results from the adjustment of $8 million in
the quarter ended March 31, 2001 following the review of the book value and
useful economic lives of customer installation costs and cable converter costs
upon the acquisition by NTL of the Company in May 2000. Previously, these
costs had been depreciated over varying lives between 7 and 40 years. Customer
installation and cable converter costs are now depreciated over three years
being the General Partners estimate of the average life of customer
connection. This represented a change in accounting estimate and resulted in
an adjustment of $8 million in the quarter ended March 31, 2001 relating to
those costs which would have been fully depreciated under the revised policy.
The net book value of customer connection costs and cable converters acquired
in the three years prior to May 2000 are depreciated over the remainder of
their revised useful economic lives. The increase in depreciation in the
quarter ended March 31, 2002 of the reduction in the useful economic lives of
these assets was $79,782.

Interest expense decreased by $220,651 for the three months ended March 31,
2002, from $578,208 over the corresponding period in 2001 to $357,557 in 2002.
The decrease in interest expense is due to the repayment of the loan facility
on February 21, 2001. It should be noted that the Company and Partnership are
still incurring interest on deferred charges paid for by the General Partner.

The net loss decreased by $5,682,045 for the three months ended March 31, 2002,
from a loss of $6,278,312 over the corresponding period in 2001 to a loss of
$596,267 in 2002. The decrease over the three-month period to March 31, 2002
compared to 2001 is principally due to the increased depreciation charge in the
quarter ended March 31, 2001, which resulted from the shortening of the asset
lives of certain network assets of NTL South Herts.

Risk Factors

The Partnership is dependent upon receipt of sufficient funds from its
subsidiary or the parent companies of its general partner to meets its
obligations. Unless NTLs proposed recapitalization plan is implemented, it is
likely that NTL will not be able to provide the Partnership with cash in the
futures, at least in the short term.

The Partnership has no independent operations or significant assets other than
investments in and advances to NTL South Herts and does not generate sufficient
cash flow from its operations to fund its operational expenses. The Partnership
has historically met its cash requirements through issuances of limited
partnership units and borrowing from banks and NTL. Given NTLs liquidity
situation, unless its proposed recapitalization plan is implemented it is
likely

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that NTL will not be able to provide the Partnership with cash at least for the
short-term. Given NTLs high leverage and current liquidity situation, NTL may
not be able to raise cash through the issuance of debt or equity from banks or
other third-party lenders on reasonable terms or at all. If NTL is unable to
find alternative sources of cash, the Partnership may become subject to
bankruptcy proceedings in the U.S. or the UK.

We currently have limited liquidity. If NTL is unable to successfully implement
a recapitalization, there is substantial doubt about our ability to continue as
a going concern.

We have limited liquidity. NTL does not currently have access to its historic
sources of liquidity in the capital markets and its credit facilities are
either fully drawn or NTL is currently unable to access remaining undrawn
amounts. As a consequence, NTL needs to restructure its outstanding debt and/or
raise new funds. On May 8, 2002 NTL filed an arranged joint reorganization plan
under Chapter 11 of the United States Bankruptcy Code. On May 24, 2002, NTL
filed an amended plan, which sets forth the joint reorganization plan, subject
to court approval, to which NTL, an unofficial committee of its public
bondholders and France Telecom, a significant holder of NTL Incorporateds
preferred stock, have agreed in principle. A steering committee of the lending
banks under NTLs credit facilities has given its agreement in principle (on a
non-legally binding basis) to the terms of the proposed plan of reorganization.
However, the proposed plan of reorganization remains subject to a favorable
vote of NTLs impaired creditors and bankruptcy court approval. NTL may also
face the possibility of insolvency proceedings in the UK or elsewhere.

The successful implementation of the proposed recapitalization plan will
require the support of NTLs creditors.

The completion of the proposed recapitalization contemplated by the agreement
in principle with the unofficial bondholder committee will require support from
NTLs creditors. The proposed recapitalization plan will be implemented
pursuant to a Chapter 11 bankruptcy proceeding. Consummation of the proposed
recapitalization plan will require a favorable vote by impaired classes of
creditors, satisfaction of bankruptcy law requirements and confirmation by the
United States bankruptcy court, which, as a court of equity, may exercise
substantial discretion and choose not to confirm the proposed recapitalization
plan. Even if such a plan receives the necessary support from NTLs creditors,
there can be no assurance that it will be completed. If a protracted
reorganization were to occur, or a liquidation would be necessary, there is a
risk that the value of NTLs business would be eroded to the detriment of some
or all its stakeholders.

Despite an agreement in principal between NTL and its prospective lenders under
the DIP facility, there can be no assurance that a definitive agreement will be
reached which may adversely affect reorganized NTLs ability to access
sufficient liquidity to continue ordinary operations.

Despite an agreement in principal between NTL and the prospective lenders under
the DIP facility, GE Capital, one of the lenders under NTL Incorporateds
working capital facility, and Wilmington Trust Company, the trustee, have
objected to the terms of the DIP Facility. There can be no assurance that a
definitive agreement will be reached with the prospective lenders or that the
objections by Wilmington Trust Company and GE Capital will not continue to
delay or prevent the entering by the U.S. trustee of the final order approving
the terms of the DIP facility as it is currently drafted. Failure to reach an
agreement or obtain a final order may have an adverse affect on NTLs ability
to access sufficient liquidity to continue ordinary operations.

NTL is in default under our credit facilities.

Before NTL could commence negotiations with the unofficial committee of its
noteholders it needed to obtain waivers from the lenders under its credit
facilities. These lenders granted waivers which, until April 30, 2002 in the
case of the UK credit facilities, or May 14, 2002 in the case of the Cablecom
facility, provided that NTLs commencement of negotiations with bondholders
with a view to rescheduling of its debt would not constitute an event of
default under its credit facilities.

The UK credit facilities waivers terminated on April 29, 2002, as a result of
which, there was an event of default under each of NTLs credit facilities with
respect to the missed interest payments on April 1, 2002. In addition, NTLs
voluntary filing under Chapter 11 of the United States Bankruptcy Code
constituted an event of default under its UK credit facilities and the Cablecom
credit facility. These events of default entitle the lenders under the credit
facilities to accelerate repayment. NTL does not have sufficient cash resources
to repay its outstanding indebtedness if such indebtedness is declared
immediately due and payable. In addition, the lenders could also seek to take
control over the assets over which they hold security.

NTL did not pay interest due on some of its outstanding notes on April 1, 2002,
April 15, 2002 and May 15, 2002, and NTL does not plan to make future interest
payments on most of its outstanding notes.

NTL Incorporated, NTL (Delaware), Inc. and NTL Communications Corp. did not
make scheduled interest payments and payments of related fees due on April 1,
2002, April 15, 2002 and May 15, 2002. In accordance with the proposed

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recapitalization plan, NTL does not plan to make future interest payments on
its outstanding publicly traded notes except notes issued by NTL Triangle and
Diamond Holdings Limited.

As a result of these payment defaults and as a result of NTLs Chapter 11
bankruptcy filings, there is currently an event of default in respect of all of
NTLs publicly traded notes other than the notes issued by NTL Triangle. As a
result of the Chapter 11 filing, this debt is immediately due and payable.

NTL has no current ability to borrow under its existing credit facilities.

NTL has no current ability to borrow under its existing UK credit facilities,
as it has borrowed the full amounts available. With respect to the Cablecom
credit facility, the term tranche is fully drawn and the revolving tranche has
been capped at its utilized amount of CHF 1,055.0 million although the
availability may be increased with the consent of the requisite percentage of
lenders under the facility. If that facility is not refinanced or Cablecom
cannot be sold, the Cablecom credit facility is due to be repaid on April 30,
2003. Without substantial investment from a third party or further borrowing,
Cablecom would be unable to repay the facility which would have a material
adverse effect on its business.

Neither the Partnership nor NTL South Herts currently has any credit
facilities.

Uncertainty over NTLs financial condition may harm our business and our brand
name.

Adverse publicity or news coverage regarding NTLs financial condition, its
Chapter 11 bankruptcy filing and potential outcomes of the recapitalization
process could have an adverse effect on parts of our business. Similarly,
negative press about the financial condition of other cable and pay television
operations and alternative telecom carriers in general may affect our
reputation. For example, one of NTLs key strategies is to increase its
penetration of higher value small to medium size enterprises, or SMEs, and
provide increased retail services of bundled voice, data and Internet services
for SMEs. However, due to the negative publicity surrounding NTLs financial
condition and the potential effect of that publicity on NTLs brand name, we
may find it difficult to convince SMEs to take up our services. Even if NTL
successfully completes the recapitalization process, there is no assurance that
it will not adversely impact our results of operations or have a long-term
effect on our brand.

In addition, this uncertainty may adversely affect our relationships with our
suppliers. If suppliers become increasingly concerned about NTLs financial
condition they may demand quicker payment terms or not extend normal trade
credit, both of which could further adversely affect our working capital
position. NTL may not be successful in obtaining alternative suppliers if the
need arises and this would adversely affect our results of operations.

The recapitalization process has required significant time and resources of
NTLs directors and senior managers, which could adversely affect the operation
of our business.

NTLs senior managers and directors have needed to spend significant amounts of
their time dealing with the negotiations with bondholders, bank lenders and
other stakeholders in connection with the recapitalization process and it is
likely that they will continue to devote significant amounts of their time to
this process for the foreseeable future. This has diverted their time and
resources from managing the operations of our business. If NTLs senior
managers and directors continue to spend significant amounts of their time in
connection with the recapitalization process, this may have a negative impact
on our operations.

We have historically incurred losses and generated negative cash flows and we
cannot assure you that we will be profitable in the future.

Construction and operating expenditures and interest costs have resulted in
negative cash flow. We also expect to incur substantial additional losses. We
cannot be certain that we will achieve or sustain profitability in the future.
Failure to achieve profitability has and could in the future diminish our
ability to sustain our operations, obtain additional required funds and make
required payments on any indebtedness we have incurred or may incur.

Our growth has been curtailed by funding constraints.

We have significantly decreased the amount we are spending on capital
expenditures due to our liquidity constraints. As a result, we will be unable
to increase our subscriber numbers in the short term and our revenue may be
adversely affected. The decrease in capital expenditure is the result of NTLs
need to divert increasing amounts of its financial resources to service its
debt. The decrease in capital spending is in line with our current strategy of
maximizing revenue from our existing customers rather than increasing our
customer base. In our consumer business in the UK, we expect subscriber numbers
to decrease in 2002. The revenue we expect to result from our capital
expenditure is long-term in nature. The reduction in capital expenditures for
connecting new subscribers to our network will likely lead to a decrease in the
rate of revenue growth in the future. Difficulties in obtaining additional
funding will likely hamper our

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ability to connect new subscribers to our network and increase our revenue.

One of our key strategies is to reduce customer churn. However there can be no
assurance that we will successfully accomplish this or that our churn rate will
not increase.

One of our key strategies is to reduce customer churn. In order to reduce
churn in the future, we aim to improve our customer service. This improvement
will be difficult to obtain without an integrated billing system and a customer
database across the entire NTL network. NTL does not as yet have an integrated
billing and operational platform.

Another part of our strategy leading to reduction in churn is an increased take
up of broadband services by our existing customers. If this increased level of
take up does not materialize we may have difficulties in reducing churn levels,
thereby adversely impacting our results of operations.

Failure to successfully market broadband to our existing consumer client base
will adversely impact our revenue and results of operations.

A significant component of our strategy to increase our average revenue per
unit is to successfully market broadband products to our existing consumer
client base. However, we believe that our triple play offering of telephony,
broadband access to the Internet and digital television will prove attractive
to our existing customer base and allow us to increase our average revenue per
user. However, we face significant competition in these markets, through
digital satellite and digital terrestrial television and through alternative
Internet access media, such as DSL offered by BT and some of our competitors
have substantially greater financial and technical resources than we do. If we
are unable to charge prices for broadband services that are anticipated in our
business plan in response to competition or if our competition delivers a
better product to our customers, our average revenue per unit and our results
of operations will be adversely affected.

We are dependent upon a small number of key personnel.

A small number of key executive officers manage our businesses. The loss of one
or more of these executive officers could have a material adverse effect on us.
We believe that our future success will depend in large part on our continued
ability to attract and retain highly skilled and qualified personnel. We have
not entered into written employment contracts or non-compete agreements with,
nor have we obtained life insurance policies covering those key executive
officers.

Our principal businesses are subject to government regulation, including
pricing regulation, and changes in current regulations may adversely affect us.

Our principal business activities are regulated and supervised by various
governmental bodies. Changes in laws, regulations or governmental policy or the
interpretations of those laws or regulations affecting our activities and those
of our competitors, such as licensing requirements, changes in price regulation
and deregulation of interconnection arrangements, could have a material adverse
effect on us.

We are also subject to regulatory initiatives of the European Commission.
Changes in EU Directives may reduce our range of programming and increase the
costs of purchasing television programming or require us to provide access to
our cable network infrastructure to other service providers, which could have a
material adverse effect on us.

The telecommunications industry is subject to rapid technological changes and
we cannot predict the effect of any changes on our businesses.

The telecommunications industry is subject to rapid and significant changes in
technology and the effect of technological changes on our businesses cannot be
predicted. Our core offerings may become outdated due to technological
breakthroughs rendering our products out of date. In addition, our business
plan contemplates the introduction of services using new technologies. Our
investments in these new services may prove premature and we may not realize
anticipated returns on these new products. The cost of implementation for
emerging and future technologies could be significant, and our ability to fund
such implementation may depend on our ability to obtain additional financing.
We cannot be certain that we would be successful in obtaining any additional
financing required.

We do not insure the underground portion of our cable network.

We obtain insurance of the type and in the amounts that we believe are
customary for similar companies. Consistent with this practice, we do not
insure the underground portion of our cable network. Substantially all of our
cable network is constructed underground. Any catastrophe that affects our
underground cable network could result in substantial uninsured losses.

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Defense of putative class action suits filed against NTL Incorporated and
certain of its officers could have a negative impact on NTLs businesses.

The putative class action lawsuits filed against NTL Incorporated and certain
of its officers and directors which were commenced by seven of its purported
security holders, on behalf of certain purchasers of NTL Incorporateds
securities may have a negative impact on its results of operations and
business. Although three of these lawsuits have been voluntarily dismissed with
respect to NTL Incorporated because they were filed subsequent to the
commencement of NTLs Chapter 11 cases. The claims arising out of the
remaining suits against NTL Incorporated will be discharged if the proposed
recapitalization plan is confirmed by the bankruptcy court. The claims arising
out of the suits against the individual officers and directors remain and will
not be discharged under the recapitalization plan. Defense of such suits may
divert these officers or directors time and resources from managing the
operations of NTLs business. If these officers and directors spend
significant amounts of time defending these lawsuits, there may be a negative
impact on results of operations and business.




Item 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The functional currency of NTL South Herts is UK pounds sterling and all
revenue and significantly all costs are incurred in UK pounds sterling. The
aggregate potential loss from a hypothetical one percent fall in the UK£/US$
exchange rate is $7,480 for the period ended March 31, 2002. The South Herts
Credit Agreement was repaid in full with interest free funding from NTL on
February 21, 2001 which eliminates all interest rate risk to the Company.

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SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Certain statements contained herein constitute forward-looking statements as
that term is defined under the Private Securities Litigation Reform Act of
1995. When used herein, the words, believe, anticipate, should,
intend, plan, will, expects, estimates, projects, positioned,
strategy, and similar expressions identify such forward-looking statements.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause the actual results, performance or
achievements of the Company, or industry results, to be materially different
from those contemplated, projected, forecasted, estimated or budgeted, whether
expressed or implied, by such forward-looking statements. Such factors include
the following: general economic and business conditions, technological
developments, the Companys ability to continue to design networks, install
facilities, obtain and maintain any required governmental licenses or approvals
and finance construction and development, all in a timely manner at reasonable
costs and on satisfactory terms and conditions, as well as assumptions about
customer acceptance, churn rates, overall market penetration and competition
from providers of alternative services, the impact of restructuring and
integration actions, the impact of new business opportunities requiring
significant up-front investment, interest rate and currency exchange rate
fluctuations, and availability, terms and deployment of capital. The Company
assumes no obligation to update the forward-looking statements contained herein
to reflect actual results, changes in assumptions or changes in factors
affecting such statements.




PART II OTHER INFORMATION




Item 6. Exhibits and Reports on Form 8-K.



| | a) |  | Exhibits           
| | -- |  | -------------------
|
| |    |  | None               
|
| | b) |  | Reports on Form 8-K
|
| |    |  | None               




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

| |  |                                                                              |  |                                       
| |  | ---------------------------------------------------------------------------- |  | --------------------------------------
| |  | SOUTH HERTFORDSHIRE UNITED
KINGDOM FUND, LTD.
a Colorado limited partnership
|
|
|
|
| |  | BY:                                                                          |  | FAWNSPRING LIMITED
Its General Partner
|
|
|
|
| |  |                                                                              |  |                                       
|
|
|
|
| |  | BY:                                                                          |  | /S/ Barclay Knapp                     
| |  |                                                                              |  |                                       
| |  |                                                                              |  | Barclay Knapp
Director
2 July, 2002.  
|
|
|
|
| |  |                                                                              |  |                                       
|
|
|
|
| |  | BY:                                                                          |  | /S/ John Gregg                        
| |  |                                                                              |  |                                       
| |  |                                                                              |  | John Gregg
Director
2 July, 2002.     

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