##### Table of Contents



FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


(Mark One)

[X] Quarterly report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2002.

[  ] 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 [X] |  | No [  ]

The number of limited partnership units of the registrant outstanding as of
September 30, 2002 was 56,935.





---

TABLE OF CONTENTS



|                              |                                                                   |                                               |  |  |  |  |  | 
|----------------------------- | ----------------------------------------------------------------- | --------------------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION
|                              | ITEM 1. FINANCIAL STATEMENTS                                     
|                              |                                                                   | CONSOLIDATED BALANCE SHEETS                  
|                              |                                                                   | CONSOLIDATED STATEMENTS OF OPERATIONS        
|                              |                                                                   | CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
|                              |                                                                   | CONSOLIDATED STATEMENTS OF CASH FLOWS        
|                              |                                                                   | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   
|                              | Item 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|                              | Item 4. CONTROLS AND PROCEDURES                                  
|RISK FACTORS                 
|PART II OTHER INFORMATION    
|                              | Item 6. Exhibits and Reports on Form 8-K.                        
|SIGNATURES                   
|CERTIFICATION                



---



##### Table of Contents



SOUTH HERTFORDSHIRE UNITED KINGDOM FUND,LTD
(A Limited Partnership)
QUARTER ENDED SEPTEMBER 30, 2002

TABLE OF CONTENTS

|         |  |                       |  |                                                                                       |                                                                                                                           |    |       
|-------- |  | --------------------- |  | ------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------- | -- | ------
|         |  |                       |  |                                                                                       |                                                                                                                           |    | Page  
|         |  |                       |  |                                                                                       |                                                                                                                           |    | Number
|         |  |                       |  |                                                                                       |                                                                                                                           |    |       
|PART I.  |  | FINANCIAL INFORMATION
|        
|        
|        
|        
|         |  | Item 1.               |  | Financial Statements                                                                  |                                                                                                                           |   
|        
|        
|        
|        
|         |  |                       |  |                                                                                       | Consolidated Balance Sheets as of September 30, 2002
(Unaudited) and December 31, 2001                                    |    | 3     
|        
|        
|        
|        
|         |  |                       |  |                                                                                       | Consolidated Statements of Operations for the Nine and
Three Months Ended September 30, 2002 and 2001
(Unaudited)         |    | 4     
|        
|        
|        
|        
|         |  |                       |  |                                                                                       | Consolidated Statements of Comprehensive Loss for the Nine and Three
Months Ended September 30, 2002 and 2001 (Unaudited) |    | 4     
|        
|        
|        
|        
|         |  |                       |  |                                                                                       | Consolidated Statements of Cash Flows for the Nine
Months Ended September 30, 2002 and 2001 (Unaudited)                   |    | 5     
|        
|        
|        
|        
|         |  |                       |  |                                                                                       | Notes to the Consolidated Financial Statements (Unaudited)                                                                |    | 6     
|        
|        
|        
|        
|         |  | Item 2.               |  | Managements Discussion and Analysis of Financial
Condition and Results of Operations |                                                                                                                           | 23
|        
|        
|        
|        
|         |  | Item 3.               |  | Quantitative and
Qualitative Disclosures About Market Risk                            |                                                                                                                           | 44
|        
|        
|        
|        
|         |  | Item 4.               |  | Controls and Procedures                                                               |                                                                                                                           | 44
|        
|        
|        
|        
|         |  | RISK FACTORS          |  | 46                                                                                   
|        
|        
|        
|        
|PART II. |  | OTHER INFORMATION     |  | 51                                                                                   
|        
|        
|        
|        
|         |  | Item 6.               |  | Exhibits and Reports on Form 8-K                                                      |                                                                                                                           | 51
|        
|        
|        
|        
|         |  | SIGNATURES            |  |                                                                                       |                                                                                                                           | 52

IN REVIEWING THIS DOCUMENT, YOU ARE
CAUTIONED TO READ THE SECTION ENTITLEDRISK FACTORS WHICH
FORMS AN IMPORTANT PART OF THIS REPORT.

2



---



##### Table of Contents






PART I. FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS

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




CONSOLIDATED BALANCE SHEETS

|                                                   |                     |                                                                                                |            |               |             |             |            |             |            |  
|-------------------------------------------------- | ------------------- | ---------------------------------------------------------------------------------------------- | ---------- | ------------- | ----------- | ----------- | ---------- | ----------- | ---------- | -
|                                                   |                     |                                                                                                |            |               |             |            
|                                                   |                     |                                                                                                |            | September 30, |             | December 31
|                                                   |                     |                                                                                                |            | 2002          |             | 2001       
|                                                   |                     |                                                                                                |            |               |             |            
|                                                   |                     |                                                                                                |            |               | (Unaudited) |             |            | (see note) 
|ASSETS                                             |                     |                                                                                                |            |               |             |             |            |            
|                                                  
|                                                  
|                                                  
|                                                  
|Plant, property and equipment, net                 |                     | $                                                                                              | 58,967,552 |               |             | $           | 58,962,082 |            
|                                                  
|                                                  
|                                                  
|                                                  
|Other assets                                       |                     |                                                                                                | 117,750    |               |             |             | 205,766    |            
|                                                   |                     |                                                                                                |            |               |             |             |            |            
|TOTAL ASSETS                                       |                     | $                                                                                              | 59,085,302 |               |             | $           | 59,167,848 |            
|                                                   |                     |                                                                                                |            |               |             |             |            |            
|LIABILITIES AND PARTNERS DEFICIT                  |                     |                                                                                                |            |               |             |             |            |            
|                                                  
|                                                  
|                                                  
|                                                  
|Current Liabilities                                |                     |                                                                                                |            |               |             |             |            |            
|                                                  
|                                                  
|                                                  
|                                                  
|Accounts payable to affiliates and related parties |                     | $                                                                                              | 60,950,781 |               |             | $           | 58,145,703 |            
|                                                  
|                                                  
|                                                  
|                                                  
|Accrued
expenses                                   |                     |                                                                                                | 207,481    |               |             |             | 453,662    |            
|                                                   |                     |                                                                                                |            |               |             |             |            |            
|TOTAL CURRENT LIABILITIES                          |                     |                                                                                                | 61,158,262 |               |             |             | 58,599,365 |            
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | MINORITY INTERESTS  |                                                                                                |            | 170,486       |             |             |            | 739,160     |           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | PARTNERS DEFICIT   |                                                                                                |            |               |             |             |            |             |           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | General
Partner    |                                                                                                |            |               |             |             |            |             |           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                     | Contributed capital                                                                            |            |               | 1,000       |             |            |             | 1,000      |  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                     | Accumulated deficit                                                                            |            |               | (511,621    | )           |            |             | (490,488   | )
|                                                   |                     |                                                                                                |            |               |             |             |            |            
|                                                   |                     |                                                                                                | (510,621   | )             |             |             | (489,488   | )          
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Limited
Partners   |                                                                                                |            |               |             |             |            |             |           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                     | Net contributed capital (56,935 units outstanding
at September 30, 2002 and December 31, 2001) |            |               | 48,817,997  |             |            |             | 48,817,997 |  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Accumulated deficit |                                                                                                |            | (50,369,253   | )           |             |            | (48,277,123 | )         
|                                                   |                     |                                                                                                |            |               |             |             |            |            
|                                                   |                     |                                                                                                | (1,551,256 | )             |             |             | 540,874    |            
|                                                  
|                                                  
|                                                  
|                                                  
|Accumulated comprehensive loss                     |                     |                                                                                                | (181,569   | )             |             |             | (222,063   | )          
|                                                  
|                                                  
|                                                  
|                                                  
|TOTAL PARTNERS DEFICIT                            |                     |                                                                                                | (2,243,446 | )             |             |             | (170,677   | )          
|                                                   |                     |                                                                                                |            |               |             |             |            |            
|TOTAL LIABILITIES AND PARTNERS DEFICIT            |                     | $                                                                                              | 59,085,302 |               |             | $           | 59,167,848 |            
|                                                   |                     |                                                                                                |            |               |             |             |            |            

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

See accompanying notes

3



---



##### Table of Contents



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




CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                                 |  |                            |            |                           |  |      |            |      |  |   |            |   |  |   |             |  
|---------------------------------------------------------------- |  | -------------------------- | ---------- | ------------------------- |  | ---- | ---------- | ---- |  | - | ---------- | - |  | - | ----------- | -
|                                                                 |  | For the three months ended |            | For the nine months ended
|                                                                 |  | September 30,              |            | September 30,            
|                                                                 |  |                            |            |                          
|                                                                 |  | 2002                       |            | 2001                      |  | 2002 |            | 2001
|                                                                 |  |                            |            |                           |  |      |            |     
|REVENUES                                                         |  | $                          | 7,516,867  |                           |  | $    | 6,912,705  |      |  | $ | 21,940,923 |   |  | $ | 20,969,184  |  
|                                                                
|                                                                
|                                                                
|                                                                
|COSTS AND EXPENSES                                               |  |                            |            |                           |  |      |            |      |  |   |            |   |  |   |             |  
|                                                                
|                                                                
|                                                                
|                                                                
|Cost of goods sold (exclusive of items shown separately below)   |  |                            | (2,547,657 | )                         |  |      | (2,830,388 | )    |  |   | (8,173,367 | ) |  |   | (8,940,703  | )
|                                                                
|                                                                
|                                                                
|                                                                
|Selling, general and administrative                              |  |                            | (85,300    | )                         |  |      | (33,069    | )    |  |   | (271,591   | ) |  |   | (197,886    | )
|                                                                
|                                                                
|                                                                
|                                                                
|Management fees and allocated overhead from the General
Partner  |  |                            | (2,944,320 | )                         |  |      | (3,016,889 | )    |  |   | (8,925,873 | ) |  |   | (9,637,401  | )
|                                                                
|                                                                
|                                                                
|                                                                
|Other expenses                                                   |  |                            | (514,700   | )                         |  |      |           |      |  |   | (514,700   | ) |  |   |            |  
|                                                                
|                                                                
|                                                                
|                                                                
|Depreciation                                                     |  |                            | (2,064,893 | )                         |  |      | (1,915,526 | )    |  |   | (5,602,926 | ) |  |   | (12,856,869 | )
|                                                                 |  |                            |            |                           |  |      |            |      |  |   |            |   |  |   |             |  
|OPERATING LOSS                                                   |  |                            | (640,003   | )                         |  |      | (883,167   | )    |  |   | (1,547,534 | ) |  |   | (10,663,675 | )
|                                                                
|                                                                
|                                                                
|                                                                
|OTHER EXPENSE                                                    |  |                            |            |                           |  |      |            |      |  |   |            |   |  |   |             |  
|                                                                
|                                                                
|                                                                
|                                                                
|Interest expense                                                 |  |                            | (403,879   | )                         |  |      | (311,896   | )    |  |   | (1,095,563 | ) |  |   | (1,161,405  | )
|                                                                
|                                                                
|                                                                
|                                                                
|Other                                                            |  |                            | (23,255    | )                         |  |      | (21,616    | )    |  |   | (66,578    | ) |  |   | (64,992     | )
|                                                                 |  |                            |            |                           |  |      |            |      |  |   |            |   |  |   |             |  
|NET LOSS BEFORE MINORITY INTERESTS                               |  |                            | (1,067,137 | )                         |  |      | (1,216,679 | )    |  |   | (2,709,675 | ) |  |   | (11,890,072 | )
|                                                                
|                                                                
|                                                                
|                                                                
|Minority interests                                               |  |                            | 140,113    |                           |  |      | 414,460    |      |  |   | 596,409    |   |  |   | 3,855,739   |  
|                                                                 |  |                            |            |                           |  |      |            |      |  |   |            |   |  |   |             |  
|NET LOSS                                                         |  | $                          | (927,024   | )                         |  | $    | (802,219   | )    |  | $ | (2,113,266 | ) |  | $ | (8,034,333  | )
|                                                                 |  |                            |            |                           |  |      |            |      |  |   |            |   |  |   |             |  
|ALLOCATION OF NET LOSS
General Partner                           |  | $                          | (9,270     | )                         |  | $    | (8,022     | )    |  | $ | (21,133    | ) |  | $ | (80,343     | )
|                                                                
|                                                                
|                                                                
|                                                                
|Limited Partners                                                 |  | $                          | (917,754   | )                         |  | $    | (794,197   | )    |  | $ | (2,092,133 | ) |  | $ | (7,953,990  | )
|                                                                 |  |                            |            |                           |  |      |            |      |  |   |            |   |  |   |             |  
|NET LOSS                                                         |  | $                          | (927,024   | )                         |  | $    | (802,219   | )    |  | $ | (2,113,266 | ) |  | $ | (8,034,333  | )
|                                                                 |  |                            |            |                           |  |      |            |      |  |   |            |   |  |   |             |  
|NET LOSS PER LIMITED PARTNERSHIP UNIT                            |  | $                          | (16.12     | )                         |  | $    | (13.95     | )    |  | $ | (36.75     | ) |  | $ | (139.70     | )
|                                                                 |  |                            |            |                           |  |      |            |      |  |   |            |   |  |   |             |  
|WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING |  |                            | 56,935     |                           |  |      | 56,935     |      |  |   | 56,935     |   |  |   | 56,935      |  
|                                                                 |  |                            |            |                           |  |      |            |      |  |   |            |   |  |   |             |  




CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

|                   |                                          |   |                            |        |                           |   |          |         |      |   |            |        |  |   |            |          |  
|------------------ | ---------------------------------------- | - | -------------------------- | ------ | ------------------------- | - | -------- | ------- | ---- | - | ---------- | ------ |  | - | ---------- | -------- | -
|                   |                                          |   | For the three months ended |        | For the nine months ended
|                   |                                          |   | September 30,              |        | September 30,            
|                   |                                          |   |                            |        |                          
|                   |                                          |   | 2002                       |        | 2001                      |   | 2002     |         | 2001
|                   |                                          |   |                            |        |                           |   |          |         |     
|NET LOSS           |                                          | $ | (927,024                   | )      |                           | $ | (802,219 | )       |      | $ | (2,113,266 | )      |  | $ | (8,034,333 | )       
|                  
|                  
|                  
|                  
|                   | Foreign currency translation
adjustments |   |                            | 23,964 |                           |   |          | 259,262 |      |   |            | 40,493 |  |   |            | (270,239 | )
|                   |                                          |   |                            |        |                           |   |          |         |      |   |            |        |  |   |            |         
|COMPREHENSIVE LOSS |                                          | $ | (903,060                   | )      |                           | $ | (542,957 | )       |      | $ | (2,072,773 | )      |  | $ | (8,304,572 | )       
|                   |                                          |   |                            |        |                           |   |          |         |      |   |            |        |  |   |            |         

See accompanying notes

4



---



##### Table of Contents



SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD.

(A Limited Partnership)




CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                               |                                                                           |                                           |   |                           |            |      |   |             |             |  
|------------------------------------------------------------------------------ | ------------------------------------------------------------------------- | ----------------------------------------- | - | ------------------------- | ---------- | ---- | - | ----------- | ----------- | -
|                                                                               |                                                                           |                                           |   | For the nine months ended
|                                                                               |                                                                           |                                           |   | September 30,            
|                                                                               |                                                                           |                                           |   |                          
|                                                                               |                                                                           |                                           |   | 2002                      |            | 2001
|                                                                               |                                                                           |                                           |   |                           |            |     
|CASH FLOWS FROM OPERATING ACTIVITIES                                           |                                                                           |                                           |   |                           |            |      |   |            
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Net loss                                                                  |                                           | $ | (2,113,266                | )          |      | $ | (8,039,515  | )          
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Adjustments to reconcile net loss to net cash
provided by operating activities |                                                                           |                                           |   |                           |            |      |   |            
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Minority interests                                                        |                                           |   | (596,409                  | )          |      |   | (3,855,739  | )          
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Depreciation                                                              |                                           |   | 5,602,926                 |            |      |   | 12,856,869  |            
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Change in operating assets and liabilities                                     |                                                                           |                                           |   |                           |            |      |   |            
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Decrease in other assets                                                  |                                           |   | 97,828                    |            |      |   | 33,742      |            
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | (Decrease)/increase in accounts payable to affiliates and
related parties |                                           |   | (1,336,656                | )          |      |   | 23,820,303  |            
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | (Decrease) / increase in accrued liabilities                              |                                           |   | (246,181                  | )          |      |   | 164,000     |            
|                                                                               |                                                                           |                                           |   |                           |            |      |   |            
|                                                                               |                                                                           | Net cash provided by operating activities |   |                           | 1,408,242  |      |   |             | 24,979,660  |  
|                                                                               |                                                                           |                                           |   |                           |            |      |   |            
|CASH FLOWS FROM INVESTING ACTIVITIES                                           |                                                                           |                                           |   |                           |            |      |   |            
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Construction payments for cable television/telephony system               |                                           |   | (1,408,242                | )          |      |   | (4,073,852  | )          
|                                                                               |                                                                           |                                           |   |                           |            |      |   |            
|                                                                               |                                                                           | Net cash used in investing activities     |   |                           | (1,408,242 | )    |   |             | (4,073,852  | )
|                                                                               |                                                                           |                                           |   |                           |            |      |   |            
|CASH FLOWS FROM FINANCING ACTIVITIES                                           |                                                                           |                                           |   |                           |            |      |   |            
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Repayment
of loans                                                        |                                           |   |                          |            |      |   | (20,905,808 | )          
|                                                                               |                                                                           |                                           |   |                           |            |      |   |            
|                                                                               |                                                                           | Net cash used in financing activities     |   |                           |           |      |   |             | (20,905,808 |  
|                                                                               |                                                                           |                                           |   |                           |            |      |   |            
|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                                                                  |                                                                           | $                                         |  |                           |            | $    |  |            
|                                                                               |                                                                           |                                           |   |                           |            |      |   |            

See accompanying notes

5



---



##### Table of Contents



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




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 Basis of Presentation

The accompanying unaudited consolidated financial statements of the South
Hertfordshire United Kingdom Fund, Ltd, a Colorado limited partnership, (the
Partnership), have been prepared in accordance with U.S. generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three and nine months ended September 30, 2002 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 2002. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Companys Annual
Report on Form 10-K for the year ended December 31, 2001.

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.

As indicated below, substantial doubt exists about the Companys ability to
continue as a going concern. The accompanying consolidated financial statements
have been prepared assuming the Company will continue as going concern. The
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability of assets or classification of assets or
the amounts and classification of liabilities that may result from the outcome
of this uncertainty.

Certain prior period amounts have been reclassified to conform to the current
presentation.

2 Recapitalization Process and Ability to Continue Operations

Throughout this report, NTL Incorporated together with its consolidated
subsidiaries are referred to as NTL. In this Note 2, the
Partnership, the Company, we, us and our refer to South
Hertfordshire United Kingdom Fund, Ltd. and its consolidated subsidiary, NTL
(South Herts) Limited, except where the context otherwise requires.

On May 8, 2002, NTL Incorporated,
the ultimate parent of Fawnspring Limited, the general partner of the
Partnership, NTL (Delaware), Inc., NTL Communications
Corp., Diamond Cable Communications Limited, Diamond Holdings Limited and
Communications Cable Funding Corp. (collectively, the
Debtors) filed a pre-arranged joint reorganization
plan under Chapter 11 of the Bankruptcy Code (the Plan). NTLs operating
subsidiaries were not included in the Chapter 11 filing. On September 5, 2002,
the United States Bankruptcy Court for the Southern District of New York (the
Bankruptcy Court) confirmed the Plan. The consummation of the Plan is
subject to the satisfaction or waiver of certain conditions set forth in the
Plan. Among other things, the most substantial conditions include obtaining
exit financing for NTL and obtaining the consent of NTLs UK bank lenders to
such financing and to modifications to the terms of the UK bank facilities
acceptable to both NTL and NTLs official creditors committee. Although NTL
is currently finalizing negotiations with a group of potential lenders for such
an exit facility, there can be no assurance that it will be able to reach final
agreement on terms. If no agreement can be reached and an alternate source of
exit financing cannot be secured, NTL may not be able to consummate the Plan.
Moreover, NTL is currently in discussions with the UK lenders regarding the
above matters, but cannot be certain that they will be resolved successfully.
If NTL fails to meet either condition, the Debtors would be unable to
consummate the Plan and continue to remain in Chapter 11, and there can be no
assurance that an alternative plan of reorganization could be reached in a
timely manner or at all.

The Partnership has 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 cash flow from operations, issuances of limited
partnership units and borrowing from commercial banks and NTL. Both the equity and
debt capital markets have 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

6



---



##### Table of Contents



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 debt securities
are trading at or near all time lows. These factors, together with NTLs
substantial leverage, means the Partnership does not currently have access to its historic
sources of capital.

In addition, there are no further funds available under NTLs UK credit
facilities and NTLs Swiss subsidiaries are currently unable to draw the
remaining undrawn amounts under the Cablecom credit facility. NTL missed
interest payments totaling $495.5 million between April 1, 2002 and November
13, 2002, all of which related to notes issued by NTL Incorporated and certain
of its subsidiaries. Upon emerging from Chapter 11, NTL intends to make any
required interest payments on the notes of Diamond Holdings Limited. In
accordance with the Plan, NTL will not make future interest payments on its
currently outstanding publicly traded notes except notes issued by NTL
(Triangle) LLC and, upon emergence from Chapter 11, Diamond Holdings Limited.

Pursuant to the Plan, if consummated, NTL will be split into two separate
companies, one which will take the name NTL Incorporated, holding NTLs main UK
and Ireland assets (which we refer to as New NTL), and one which will be
called NTL Europe, Inc., holding NTLs continental European and certain other
assets (which we refer to as NTL Euroco). Upon consummation of the Plan, NTL
Euroco will hold Cablecom, NTLs cable business in Switzerland, and Premium TV
Limited, NTLs sports TV content and internet business in the UK, and will
retain NTLs investment interests in cable networks in Scandinavia and Germany
(B2 and iesy, respectively). Its interests will also include NTLs equity
investments in the cable channel content providers of the ITN News Channel and
The Studio Channel, as well as certain other assets. New NTL will
become the ultimate parent of Fawnspring Limited, the general partner
of the Partnership.

Assuming the Plan is consummated, New NTLs and NTL Eurocos ability to meet
their respective funding requirements following consummation of the Plan are
dependent upon a number of factors, including the revenue generated by their
operating subsidiaries, their existing cash balances, and their ability to draw
upon an exit facility (in the case of New NTL) or any other financing. NTL will
be required to replace the DIP facility with an exit facility for New NTL and
its subsidiaries upon emergence from Chapter 11, in part because the DIP
facility will mature concurrently with NTLs emergence from Chapter 11, or on
December 1, 2002, whichever is earlier (unless such maturity is extended by the
DIP lenders). There can be no assurance that these sources of financing will
be or will remain available. Assuming consummation, each of New NTL and NTL
Euroco will require substantial funds for general corporate and other expenses
and may require additional funds for working capital fluctuations. Failure to
achieve profitability or maintain or achieve various other financial
performance levels could in the future diminish New NTLs and Eurocos
respective ability to sustain operations, meet financial covenants, obtain
additional funds required for capital expenditures or other purposes, and make
required payments on any indebtedness they have incurred, may incur or that may
then, as a result, become due. There can be no assurance that New NTL and/or
NTL Euroco will be successful in raising additional financing if required, or
if successful, that the terms of such financing will be favorable. In the
event that NTL fails to consummate the Plan, the foregoing description will
continue to apply to NTL.

NTL expects that it will require approximately $650 million to fund
its working capital and capital expenditures, net of cash from operations, and
certain payments required upon consummation of the Plan (namely the settlement
of recapitalization costs with NTL Euroco, the repayment or purchase of the £90
million loan from NTL (Delaware), Inc. to NTL (UK) Group Inc. and the UK credit
facilities amendment fee) in the twelve months from October 1, 2002 to
September 30, 2003. NTL believes that cash, cash equivalents and
marketable securities on hand of $475.7 million at September 30, 2002, and the
cash available from the DIP facility and subsequently the planned exit facility
will be sufficient for New NTLs cash requirements during the twelve months
from October 1, 2002 to September 30, 2003 (assuming consummation of the Plan).
If the exit facility is not obtained and the Plan is not consummated, NTL will
need to seek an extension of the DIP facility maturity or identify alternative
sources of financing. Moreover, the planned exit facility will not be
available to NTL Euroco. It is anticipated that NTL Euroco and its
subsidiaries will require substantial financing to continue operations because,
among other things, the Cablecom bank facility becomes repayable on April 30,
2003, unless otherwise refinanced. There can be no assurance that NTL Euroco
will be able to raise sufficient funds to meet its liquidity requirements
following consummation.

Over the long term, NTL will continue to require cash to fund
operations, service its remaining debt and implement its strategy. In order to
fund these requirements, NTL anticipates that it will use cash flow
from operations and may also need to issue additional debt or equity securities
or may need to secure additional bank financing. Given NTLs
current financial condition and the restrictions on incurring additional debt
that are expected to be contained in the exit facility currently being
negotiated, there can be no assurance that these sources of funds will be
available to NTL.

7



---



##### Table of Contents



During the recapitalization process, NTL has maintained normal and regular
trade terms with its suppliers and customers. There can be no assurance that
the Partnership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.

Events Leading to the Proposed Recapitalization and Chapter 11 Filings

Beginning in January 2002, NTL was contacted by an unofficial committee of
bondholders regarding the commencement of a comprehensive and consensual
restructuring process. NTL was informed at that time that the members of the
unofficial steering committee of bondholders owned, 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.

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. On April 16, 2002, NTL announced that it had reached a
comprehensive agreement in principle with the unofficial committee and France
Telecom, a significant holder of NTL Incorporateds preferred stock, on
implementing a recapitalization plan.

To implement the proposed recapitalization, on May 8, 2002, the Debtors filed
cases and a pre-arranged joint reorganization plan under
Chapter 11. The Partnership and NTLs
operating subsidiaries, including NTL South Harts, were not included in the Chapter 11 filing. On June 21,
2002, the United States Trustee appointed an official unsecured creditors
committee. The creditors committee is comprised of the three indenture
trustees for the debt securities of NTL and the members of the steering
committee of NTLs bondholders. The members of the 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 Advisers, LLC; Oaktree Capital Management LLC; Salomon
Brothers Asset Management; Appaloosa Management, LP; Fidelity Management &
Research Co.; SAB Capital Management, L.P.; and W.R. Huff Asset Management Co.,
LLC.

The Plan was confirmed by the Bankruptcy Court on September 5, 2002.
Consummation remains subject to the satisfaction or waiver of certain
conditions described above.

Assuming the Plan is consummated, the Plan will 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 New NTL. In addition, when the Plan is implemented,
NTL will be discharged from its obligation to pay dividends accruing on the
canceled preferred stock and interest accruing on the canceled notes. The Plan
contemplates that the UK bank debt and the notes issued by NTL (Triangle) LLC
and Diamond Holdings Limited will remain in place. NTL will be split into New
NTL and NTL Euroco. The Partnership is not a Debtor and the limited partnership
units of the Partnership will not be cancelled in connection with the
Plan.

The filing of the petitions seeking relief filed under Chapter 11 constituted
an event of default under the indentures of each of the Debtors and amounts
outstanding under these indentures became immediately due and payable. No
action has been taken to date in respect of those defaults and any such action
likely would be barred by the automatic stay that exists by virtue of the Chapter 11 filings. The filing of the Debtors 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. Those lenders have not taken any action
to date in respect of those defaults.

8



---



##### Table of Contents



DIP Facility

In connection with the Plan, some members of the official unsecured creditors
committee of bondholders committed to provide up to $500 million of new debt
financing to enable the business operations of NTL Incorporated and some of its
subsidiaries to have access to sufficient liquidity to continue ordinary
operations during the Chapter 11 process. The Bankruptcy Court approved a DIP
facility in the principal amount of $630 million (including a $130 million
commitment from NTL (Delaware), Inc. and the $500 million from certain members
of the creditors committee) in an order entered on July 3, 2002. On July 15,
2002, the various lenders under the DIP facility and NTL (Delaware), Inc.
entered into the DIP facility agreement with Communications Cable Funding
Corp., a wholly-owned subsidiary of NTL Communications Corp., to provide $630
million in financing to Communications Cable Funding Corp.

Under the DIP facility agreement, the loan structure contains three tranches
that rank equally with each other. All amounts owed under the DIP facility
agreement are required to be paid in full no later than the earlier of (i) the
consummation of the Plan, (ii) December 1, 2002, and (iii) the date on which
all of the term loans become due and payable in full under the DIP facility
agreement, whether by acceleration or otherwise (unless maturity is extended by
the DIP lenders).

On July 17, 2002, NTL drew the first tranche available under the facility in
the amount of $229.0 million. As of September 30, 2002, the total amount
outstanding under the DIP facility was $229.0 million.

In connection with the commitment, NTL Incorporated and its debtor subsidiaries
paid a commitment fee to the bondholder DIP lenders equal to 2% of the $500
million commitment (i.e., $10 million) in May 2002. In connection with the
closing of the DIP facility, NTL Incorporated and its debtor subsidiaries paid
a closing fee to the DIP lenders equal to 2% of the $630 million commitment
(i.e., $12.6 million) in July 2002.

Each term loan under the DIP facility bears interest on the unpaid principal
amount for three months from July 15, 2002 at the rate of 11% per annum. With
respect to each successive three month period following that date, the rate per
annum will increase incrementally by 1% over the immediately preceding three
month period but will not exceed 18% per annum for any three month

9



---



##### Table of Contents



period. Interest is payable in cash at least monthly. The DIP facility also
includes an unutilized commitment fee of 1/2% per annum on the aggregate
principal amount of unutilized commitments which is payable in cash each month.

NTL (Delaware), Inc. is also a lender under the DIP facility in the amount of
up to $130 million. NTL (Delaware), Inc. has cash on hand and NTL Incorporated
and its debtor subsidiaries and the steering committee of bondholders concluded
that the cash at NTL (Delaware), Inc. was to be used to partially fund the
reorganization of all of the debtors. Pursuant to the terms of the DIP
facility, NTL (Delaware), Inc. receives fees, will receive interest if and when
it makes any loans, and is entitled to the same protections as the other
bondholder DIP lenders.

Under the DIP facility agreement, Communications Cable Funding Corp. is the
borrower, NTL Incorporated, NTL (Delaware), Inc. and NTL Communications Corp.
are guarantors. NTL Communications Corp. is also a co-obligor of the loans from
NTL (Delaware), Inc. Under the DIP facility agreement, with certain exceptions,
the cash (except for the DIP facility proceeds) of the borrower and the
guarantors is cash collateral for the DIP facility and will not be used or
transferred for any purpose whatsoever without the consent of the bondholder
DIP lenders. All funding needs of the Debtors will be funded through the
proceeds of the DIP facility, in accordance with a budget and the terms of the
DIP facility agreement.

A copy of the DIP facility agreement was attached as an exhibit to NTL
Incorporateds Current Report on Form 8-K filed with the Securities and
Exchange Commission on July 19, 2002.

Exit Facility

Because of the short maturity of the DIP facility and the longer term liquidity
needs of NTL, as well as the requirements under the Bankruptcy Code for
confirmation of and the conditions to consummation of the Plan, NTL requires an
exit financing facility for New NTL. The exit financing or any alternative
financing would refinance (at least in part) the DIP facility and be used as
consideration for the refinancing or repurchase of a £90 million note payable
to NTL (Delaware), Inc. from NTL (UK) Group Inc. NTL is currently finalizing
discussions with a group of lenders regarding the exit facility, although given
the unfavorable present market conditions for telecommunications companies
generally, there can be no assurance an agreement for an exit facility with
acceptable terms will be reached. If acceptable exit financing is not
obtained, the Plan could not be consummated and NTL could not emerge from
Chapter 11 in accordance with the Plan.
NTL expects that the exit facility will be secured by various assets of New
NTL, including those which secure the DIP facility, will rank senior to all
current and future subordinated debt of New NTL, and will be guaranteed by
certain subsidiaries of New NTL.

NTL also expects that the exit facility will impose operating and financial
restrictions on New NTL and its subsidiaries. These restrictions will
significantly limit or prohibit, among other things, New NTLs ability and the
ability of its subsidiaries to incur additional indebtedness, pay dividends, or
make distributions in respect of capital stock, make other restricted payments,
enter into sale and leaseback transactions, create liens upon assets, enter
into transactions with affiliates or related persons, sell assets, or
consolidate, merge, or sell all or substantially all of their assets. NTL
anticipates that these restrictive covenants could materially impact New NTLs
ability to finance future operations or capital needs through debt or equity
financing or to engage in other business activities.

The terms, covenants, and conditions of an exit facility have not been
finalized and remain subject to negotiation and final documentation, as well as
approval by NTLs UK bank lenders to its terms.

The exit facility for New NTL and its subsidiaries will not be available to NTL
Euroco. It is anticipated that NTL Euroco and its subsidiaries will require
substantial financing to continue operations because, among other things, the
Cablecom bank facilities become repayable on April 30, 2003, unless otherwise
refinanced. There can be no assurance that NTL Euroco (or any subsidiary
thereof) will be able to raise sufficient funds to meet its liquidity
requirements following consummation.

The Plan

In addition to the split into New NTL and NTL Euroco, the following are the
details of the Plan:



| |  | 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 will in the aggregate receive 100% of
the initial
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10



---



##### Table of Contents





|  |  | common stock of New NTL (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 New NTL).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Holders of notes of NTL Incorporated (other than France Telecom), NTL
(Delaware), Inc. (other than France Telecom) and NTL Communications
Corp. will in the aggregate receive (i) 100% of the preferred stock of
NTL Euroco and (ii) a certain amount of cash as specified in the Plan.
Holders of the subordinated notes of NTL Incorporated (other than
France Telecom), NTL (Delaware), Inc. (other than France Telecom) and
NTL Communications Corp. will 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. will 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
Communications Corp.s subsidiaries Diamond Holdings Limited and NTL
(Triangle) LLC will remain outstanding and interest payments will be
made on the notes of NTL (Triangle) LLC and, upon emergence from
Chapter 11, the notes of Diamond Holdings Limited.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| 
| |  | In addition to the above, holders of several series of NTLs
outstanding convertible subordinated notes were granted an option to
elect to purchase additional shares of New NTL common stock (and
accompanying Series A Warrants) not subscribed for in the equity
rights offering as described below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| 
| |  | Current preferred and common stockholders of NTL Incorporated,
including France Telecom, will receive Series A warrants to purchase
common stock of New NTL and have received equity rights entitling them
to purchase common stock of New NTL. For each share of common stock
purchased upon exercise of equity rights, the person exercising such
equity rights will receive a Series A warrant to purchase one share of
common stock of New NTL. The Series A warrants will be exercisable for
a period of eight years at an exercise price of $77.47 per share. The
exercise price and the number of shares to be received upon exercise
of the Series A warrants is subject to customary adjustments for stock
splits, stock recapitalizations and distributions of property (other
than cash) to holders of New NTL common stock. The exercise price per
share of New NTL common stock under the equity rights offering and the
noteholder election option was $25.28, which NTL expects will
substantially exceed the likely initial market price for a share of
New NTL common stock upon consummation, and which is also subject to
adjustment consistent with the Series A warrants.
| 
| |  | The equity rights offering and the noteholder election option expired
on October 3, 2002. Since the expiration of the equity rights offering
and the noteholder election option, NTL has allowed equity holders who
have exercised equity rights and noteholders who have exercised their
noteholder election option to revoke such exercises. As of November
12, 2002, there were a total of 2,654 exercises of equity rights
(including oversubscriptions) and 1,861 exercises of the noteholder
election option which had not been revoked. Prior to consummation of
the Plan, NTL will continue to permit persons who have exercised
equity rights and the noteholder election option to revoke their
exercise so the final number of exercises may be lower.                                                                                                                                                                                                                                                                                                                                                                                                                             
| 
| |  | Current preferred stockholders, other than France Telecom, will
receive approximately 3.2% and current common stockholders, other than
France Telecom, will receive approximately 10.3% of the primary equity
of NTL Euroco. France Telecom will 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

NTL has received a conditional approval to have the shares of common stock and
Series A warrants of New NTL quoted on the Nasdaq National Market upon
consummation of the Plan. However, this approval is conditioned upon, among
other things, New NTLs ability to meet the $5.00 minimum bid requirement of
the Nasdaq National Market listing requirements on the first day of trading.
There can be no assurance that this requirement will be met, or that in the
future New NTL will be able to meet other continued listing requirements of the
Nasdaq National Market. NTL currently expects that the NTL Euroco common stock
and preferred stock will not be quoted on any market or listed on any
securities exchange. There may be no trading market for the common stock and
the preferred stock of NTL Euroco.

On November 12, 2002, NTL filed a motion with the Bankruptcy
Court to allow it, after consultation with the Committee, to reduce by
one-third the number of authorized shares of New NTL common stock and to reduce
by three-fourths the number of shares of New NTL common stock issued and
reserved for issuance under the Plan. If the motion is approved by the
Bankruptcy Court, NTL would take this step only (i) after consultation with the
Committee and (ii) if NTL were to determine, after an evaluation of the trading
prices of the shares of New NTL common stock on the when-issued market prior

11



---



##### Table of Contents



to the consummation of the Plan, that a reduction in the number of shares of
New NTL common stock is necessary to better enable New NTL to satisfy the first
trading day minimum closing bid price per share requirement of NASDAQ.

With respect to the proposed preferred shares of NTL Euroco to be issued upon
consummation, prior to consummation of the Plan, NTL may file a motion with the
Bankruptcy Court seeking to modify the Plan to reduce the liquidation
preference from $1,000.00 per share of preferred stock of NTL Euroco, plus
accrued and unpaid dividends, to $50.00 per share of preferred stock of NTL
Euroco, plus accrued and unpaid dividends. As a result of the aforementioned
adjustment (i) the number of shares of preferred stock of NTL Euroco authorized
under the NTL Euroco Amended and Restated Certificate of Incorporation would be
increased from 1,000,000 to 20,000,000 and (ii) 8,000,000 shares of NTL Euroco
preferred stock would be authorized under the NTL Euroco Amended and Restated
Certificate of Incorporation. This is intended to enhance the ability for
these shares to trade if a trading market develops.

Bank Waivers

Before NTL could commence negotiations with the unofficial committee of
bondholders, it was necessary to obtain waivers from the lenders under its UK
credit facilities and the credit facility utilized by Cablecom GmbH, the
principal trading subsidiary of its Swiss companies. The Partnership does not
have any ownership interest in Cablecom, although the condition of
Cablecom
can indirectly impact the Partnership to the extent it impacts NTL Incorporated
or NTL (Delaware), Inc., both parent companies of the Partnership, or otherwise
impacts the recapitalization process. 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.

In connection with the granting of the initial waivers, NTL agreed, among other
things:



| |  | to provide the lenders under the UK credit facilities with a 13 week rolling
cash flow projection (updated every two weeks);                                                 
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | to keep the lenders informed of, and to provide documents in connection with,
negotiations with bondholders or strategic investors or concerning proposed
asset dispositions;
| 
| |  | not to repurchase NTL notes; and                                                                                                                                             
| 
| |  | not to make an exchange offer for NTL notes or enter into an agreement with
NTL bondholders, subject to some exceptions, without the consent of the
lenders.                 

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, 2002 in the case of the Cablecom facility, unless the
missed interest payments 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 would be extended to May 14, 2002. As a
condition to the waivers continuing effectiveness, the UK lenders required NTL
(Delaware), Inc. to loan £90 million to NTL (UK) Group, Inc. following receipt
of the proceeds from the sale of NTL Australia. This loan is structurally
senior to the outstanding public notes issued by NTL but contractually
subordinated to the working capital facility. In connection with the amendments
to the waivers, NTL affirmed the provisions of the initial waivers and in
addition, NTL agreed, among other things, to:



| |  | provide the bank lenders a timeline setting forth the steps proposed to be taken in connection with the
recapitalization and the dates by which such steps are to be taken;                                                                            
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | use reasonable endeavors to consider with the lenders under the Cablecom credit facility possible means
of credit enhancement;                                                                                                                         
| 
| |  | provide the lenders under the Cablecom credit facility, by April 12, 2002, with an updated structure
chart of NTL as well as a contingency business plan for Cablecom in the event that sufficient additional
funding for Cablecom is not obtained; and

12



---



##### Table of Contents





| |  | pay legal, accounting and other advisory fees of the agent and the coordinators of the lending
syndicates.
|- |  | ----------------------------------------------------------------------------------------------------------

The amended waivers also prohibited NTL from commencing voluntary dissolution
proceedings, including proceedings under Chapter 11, without the consent of
these lenders.
As a consequence, NTL cannot enter into a binding agreement with the unofficial
bondholder committee or implement the proposed plan without the consent of the
bank lenders. Nor, as of the date of this Form 10-Q, are there any current
waivers from NTLs secured lenders and NTL is therefore in default under its UK
credit facilities and the Cablecom credit facility. The lenders under those
credit facilities are therefore entitled to declare the principal amount of the
outstanding debt immediately due and payable and to enforce the security taken
to secure those facilities. It is a condition to consummation of the Plan that
the UK credit facilities are restated on terms acceptable to the Debtors and
the official creditors committee. In connection with the Plan, it is intended
that the existing events of default under the credit facilities will be cured
by waiver or amendment with effect from the Effective Date of the Plan.

As of December 31, 2001, Cablecoms and various of its subsidiaries
liabilities exceeded their respective assets. As a consequence, under Swiss
law, those entities were deemed to be overindebted. Under Swiss law, unless
the overindebtedness were rectified, those entities would have been required to
commence an insolvency proceeding in Switzerland.

On April 30, 2002, Cablecom reached an agreement with the lenders under the
Cablecom credit facility under which the defaults subsisting at that time were
remedied or were waived by the restatement of the credit agreement and the
grant of a waiver letter. Conditions subsequent such as the grant of new
security and the deposit of share certificates relating to minority
shareholdings pledged to the banks were imposed by these documents and other
new finance documents executed pursuant to the restatement. The
overindebtedness of Cablecom GmbH was resolved by a restructuring of
intra-group debt and temporary measures were introduced to ameliorate the
effect of the overindebtedness of Cablecoms subsidiaries.

As part of the April 30 agreement, the Cablecom lenders required the final
maturity date of the Cablecom credit facility to be brought forward to April
30, 2003. They also required steps to be initiated towards the sale of all, or
part of, or an investment in, the Cablecom group.

The problem of historic overindebtedness was resolved on June 26 and June 27,
2002 in certain of the overindebted subsidiaries when they were merged into
Cablecom and other members of the Cablecom group. The remaining overindebted
subsidiaries were not merged but the overindebtedness issue was ameliorated in
those subsidiaries by way of subordination agreements which obviated any
requirement to institute insolvency proceedings in respect of these companies.

Since the end of April 2002, the following defaults have occurred under the
Cablecom finance documents: (1) the indentures issued by NTL (Delaware), Inc.
and NTL Incorporated became payable and were not paid; (2) NTL (Delaware), Inc.
commenced negotiations with its creditors with a view to the general
rescheduling of its indebtedness and commenced cases under Chapter 11 pursuant
to which it reorganized its debt; (3) NTL (Delaware), Inc.s liabilities
exceeded the value of its assets and it was unable to pay its debts as they
became due; (4) Cablecom was unable to satisfy the conditions to allow it to
rollover revolving advances maturing in early July 2002; the revolving advances
remained unpaid for several days until Cablecom was able to obtain the consent
of the banks to waive the conditions to their rollover; and (5) certain of the
conditions subsequent imposed by the restated credit agreement, the waiver
letter and other finance documents executed pursuant to the restated credit
agreement had not been fulfilled.

Although it is not a condition to consummation of the Plan, it is proposed to
obtain a waiver of the events of default described in the preceding paragraph
by the effective date of the Plan.

Future developments in Cablecoms business, as well as external factors, could
result in a reemergence of the overindebtedness issue under Swiss law. In
particular, the Cablecom credit facility is due for repayment on April 30, 2003
and it will not be possible to repay the facility without substantial
investment from a third party or further borrowing.

13



---



##### Table of Contents



Interest Payments on Public Notes

NTL has substantial interest payment obligations under its existing
indebtedness. NTL did not make its scheduled interest payments on the
respective due dates as follows:

|                                                    |  |                        |  |              
|--------------------------------------------------- |  | ---------------------- |  | -------------
|April 1, 2002:                                      |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 9-1/2% notes due 2008  |  | $8.6 million 
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 11-1/2% notes due 2008 |  | $35.9 million
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 11-7/8% notes due 2010 |  | $29.7 million
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  | Total                  |  | $74.2 million
|                                                   
|                                                   
|                                                   
|                                                   
|April 15, 2002:                                     |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 12-3/4% notes due 2005 |  | $17.7 million
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Incorporated (NTL (Delaware), Inc., co-obligor) |  | 5-3/4% notes due 2011  |  | $2.5 million 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  | Total                  |  | $20.2 million
|                                                   
|                                                   
|                                                   
|                                                   
|May 15, 2002:                                       |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 9-1/4% notes due 2006  |  | $10.5 million
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 6-3/4% notes due 2008  |  | $38.8 million
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 9-7/8% notes due 2009  |  | $15.7 million
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  | Total                  |  | $65.0 million
|                                                   
|                                                   
|                                                   
|                                                   
|June 15, 2002:                                      |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|Diamond Cable                                       |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|Communications Limited                              |  | 11-3/4% notes due 2005 |  | $31.2 million
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 7% notes due 2008      |  | $17.1 million
|                                                   
|                                                   
|                                                   
|                                                   
|NTL (Delaware), Inc.                                |  | 5-3/4% notes due 2009  |  | $34.5 million
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  | Total                  |  | $82.8 million
|                                                   
|                                                   
|                                                   
|                                                   
|July 15, 2002:                                      |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Incorporated (NTL (Delaware), Inc., co-obligor) |  | 5-3/4% notes due 2011  |  | $2.5 million 
|                                                   
|                                                   
|                                                   
|                                                   
|August 1, 2002:                                     |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 11-1/2% notes due 2006 |  | $60.4 million
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 12-3/8% notes due 2008 |  | $18.3million 
|                                                   
|                                                   
|                                                   
|                                                   
|Diamond Holdings Limited                            |  | 10% notes due 2008     |  | $10.5 million
|                                                   
|                                                   
|                                                   
|                                                   
|Diamond Holdings Limited                            |  | 9-1/8% notes due 2008  |  | $5.0 million 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  | Total                  |  | $94.2 million
|                                                   
|                                                   
|                                                   
|                                                   
|August 15, 2002:                                    |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 10% notes due 2007     |  | $20.0 million
|                                                   
|                                                   
|                                                   
|                                                   
|Diamond Cable Communications Limited                |  | 10-3/4% notes due 2007 |  | $22.6 million
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  | Total                  |  | $42.6 million
|                                                   
|                                                   
|                                                   
|                                                   
|September 30, 2002                                  |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|Diamond Cable Communications Limited                |  | 13-1/4% notes due 2004 |  | $18.9 million
|                                                   
|                                                   
|                                                   
|                                                   
|October 1, 2002                                     |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 9-1/2% notes due 2008  |  | $9.3 million 
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 11-1/2% notes due 2008 |  | $35.9 million
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 11-7/8% notes due 2010 |  | $29.7 million
|                                                   
|                                                   
|                                                   
|                                                   
|October 15, 2002                                    |  | Total                  |  | $74.9 million
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 12-3/4% notes due 2005 |  | $17.7 million
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Incorporated (NTL (Delaware), Inc., co-obligor) |  | 5-3/4% notes due 2011  |  | $2.5 million 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  | Total                  |  | $20.2 million

14



---



##### Table of Contents



Interest payments of $18.9 million were made, when due, on April 2, 2002 in
respect of the Diamond Cable Communications 13.25% senior discount notes due
2004. Upon emerging from Chapter 11, NTL intends to make any required interest
payments on the notes of Diamond Holdings Limited. In accordance with the Plan,
NTL will not make future interest payments on its currently outstanding
publicly traded notes except notes issued by NTL (Triangle) LLC (a non-debtor)
and, upon emergence from Chapter 11, 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), Inc., NTL Incorporated and under the UK
credit facilities and under the 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 the
Debtors voluntary filing under Chapter 11 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) LLC. As a
result of the Chapter 11 filings, all of NTLs publicly traded debt, other than
the debt of NTL (Triangle) LLC, became immediately due and payable, pursuant to
the terms of the indentures governing such debt. The automatic stay of section
362 of the 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.

Inability to Pay Dividends On or Redeem Preferred Stock

NTL Incorporated failed to declare or pay dividends on its 13% Senior
Redeemable Exchangeable Preferred Stock due on February 15, 2002 in the amount
of $6.0 million, on May 15, 2002 in the amount of $6.2 million and on August
15, 2002 in the amount of $6.4 million. NTL Incorporated did not pay dividends
on its 5% cumulative participating convertible preferred stock held by France
Telecom on December 31, 2001 of $37.0 million, on March 31, 2002 of $37.5
million, on June 30, 2002 of $38.0 million and on September 30, 2002 of $38.4
million, or on its cumulative convertible preferred stock held by France
Telecom and a group of commercial banks on December 31, 2001 of $24.9 million,
on March 26, 2002 of $24.1 million, on June 30, 2002 of $42.1 million and on
September 30, 2002 of $41.2 million. Historically, payment of dividends has
been made in additional shares of preferred stock in the case of the 13%
preferred stock, the 5% cumulative participating preferred stock and the
cumulative convertible preferred stock. NTL Incorporated did not pay these
dividends due to a lack of available surplus under Delaware law. Under Delaware
law, NTL Incorporated cannot declare or pay dividends on or redeem its capital
stock, including its preferred stock, unless it has available surplus.

Pursuant to the terms of the 13% preferred stock, the unpaid dividends will
continue to accrue without interest until declared and paid. Pursuant to the
terms of the 5% cumulative convertible preferred stock and the cumulative
convertible preferred stock, the unpaid dividends will continue to accrue
without interest until declared and paid, together with an additional cash
dividend on the amount so unpaid at a rate of 2% per quarter for as long as the
dividends remain unpaid. The failure to declare these dividends is not a
default under any of NTLs existing agreements. With respect to the 13%
preferred stock and 5% cumulative convertible preferred stock, if dividends
remain unpaid for six quarters, the holders of each such series shall have the
right to vote separately as a class on all matters voted on by NTL Incorporated
shareholders and shall have the right, along with other holders of preferred
stock with similar default voting rights, to elect two additional directors to
NTL Incorporateds board. Pursuant to the Plan, all of these securities and
the related rights of the securities holders will be extinguished upon
effectiveness of the Plan.

In addition, the lack of available surplus meant that NTL Incorporated was not
able to redeem its Variable Coupon Redeemable Preferred Stock, Series A, which
is referred to as the Noos One Year Preferred, held by France Telecom, when it
became mandatorily redeemable on May 18, 2002. Because NTL Incorporated failed
to redeem the Noos One Year Preferred on May 18, 2002, pursuant to the
certificate of designation governing the Noos One Year Preferred, the holders
of such preferred stock have

15



---



##### Table of Contents



the right, along with other holders of preferred stock with similar default
voting rights, to elect two additional directors to NTL Incorporateds board
and shall have the right to vote separately as a class, on all matters brought
to NTL Incorporated shareholders. Pursuant to the Plan, all of these
securities and the related rights of the securities holders will be
extinguished when the Plan is consummated.

16



---



##### Table of Contents



At the time of issuance of the Noos One Year Preferred, NTL Incorporated
pledged its shares of Noos to France Telecom to secure the mandatory redemption
obligation under the Noos One Year Preferred and the 6.5% Redeemable Preferred
Stock. Under the Plan and pursuant to this pledge, NTL will transfer its 27%
interest in Noos to France Telecom.

Credit Rating Downgrades

On April 3, 2002, credit rating agency Standard & Poors lowered the long-term
corporate credit rating on some 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, which was
followed by the delisting of NTL Incorporateds common stock. NTL
Incorporateds common stock is currently quoted on the Over the Counter
Bulletin Board under the symbol NTLDQ.OB. Pursuant to the Plan, NTL
Incorporateds currently outstanding common stock will be cancelled upon
effectiveness of the Plan. The common stock and Series A warrants of New NTL
have been conditionally approved to trade on the Nasdaq National Market. The
common and preferred stock of NTL Euroco have not been approved to trade on any
exchange.

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$451.3 million). The
net proceeds from the sale were approximately A$575.3 million (US$304.5
million). At that time, the business bank debt outstanding totaled A$227.3
million (US$121.7 million). The Partnership did not have any ownership
interest in NTL Australia.

On April 5, 2002, NTL (Delaware), Inc. 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. Upon effectiveness of the
Plan, the £90 million note will be sold to Communications Cable Funding Corp.
for consideration comprising the principal amount plus accrued interest on the
note. The remaining proceeds of the sale of NTL Australia remain at NTL
(Delaware), Inc., and the Plan anticipates that such proceeds will form a
portion of the consideration to be offered to bondholders of NTL (Delaware),
Inc. and NTL Incorporated in satisfaction of their claims against those
companies.

Potential Sale of, or Outside Investment in, Cablecom

Under the terms of the agreement reached with its lenders, NTL Cablecom Holding
GmbH and/or Cablecom and/or NTL (Delaware), Inc. have agreed to approve any
outside investment in, or sale of all or a part of, the Cablecom Group, which
is acceptable to the Cablecom lenders.

Under an agreement made between the Cablecom lenders and NTL, if a sale of all
or a part of the Cablecom Group is consummated on or before August 31, 2003,
the Cablecom lenders 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 related finance documents
and other expenses and taxes of the sale.

There can be no assurance that any outside investment in, or sale of all or a
part of, the Cablecom group pursuant to the Cablecom credit facility will be
possible on terms that are acceptable to the Cablecom lenders and/or favorable
to NTL (or, if the Plan is consummated, NTL Euroco). In particular, in the
current environment, there may be little or no value to NTLs shareholding in
the Cablecom group, which may result in NTL (or, if the Plan is consummated,
NTL Euroco) receiving little or no consideration for its equity interest in the
Cablecom group. Further, if a third party makes an investment in the Cablecom
group there can be no assurance that NTL (or, if the Plan is consummated, NTL
Euroco) will be able to maintain its power to direct the management of the
Cablecom group.

Cablecom will become a part of NTL Euroco following the consummation of the
Plan. Accordingly, if Cablecom is sold, assuming consummation of the Plan, NTL
Eurocos principal assets would be limited to Premium TV Limited and certain
minority holdings.

Investments in and Loans to Affiliates

17



---



##### Table of Contents



On April 15, 2002, a funding request for approximately $20 million was received
by NTL under the terms of the investment agreement relating to NTLs investment
in B2. NTL informed B2 and the other principal investors that it was not in a
position to comply with this request for funding. The B2 investment agreement
provides that if NTL fails to provide such funding, it might be sued for
non-payment and arguably could lose certain rights under the B2 shareholders
agreement. Pursuant to the applicable documents, if this occurs the majority
remaining shareholders may also elect to terminate the B2 shareholders
agreements with respect to NTL and exercise a contractual right to acquire on a
pro rata basis NTLs interest in B2 at 25% of fair market value. If the
remaining shareholders were able and elected to exercise these rights, NTL
could be forced to sell its stake in B2 at a loss. On October 4, 2002, NTL
filed a motion with the Bankruptcy Court to reject the B2 investment agreement
and shareholders agreements under section 365 of the Bankruptcy Code, and the
Bankruptcy Court subsequently authorized NTLs rejection of the agreements. On
November 8, 2002, B2 and the remaining shareholders filed proofs of claim with
the Bankruptcy Court asserting their right to recover: (1) more than $20
million from NTL in respect of the unpaid funding request, (2) unspecified
damages for NTLs failure to perform under the relevant agreements, and (3)
unspecified costs and expenses incurred in the exercise of their remedies under
the agreements. Additionally, B2 and the remaining shareholders reserved their
rights to avail themselves of any remedies under the investment and
shareholders agreements and to take any actions to acquire NTLs interest in
B2, as described above. NTL intends to object to the proofs of claim filed by
B2 and the remaining shareholders. The Bankruptcy Court will adjudicate the
claims of B2 and the remaining shareholders and NTLs defenses thereto. The
Partnership does not have any ownership interest in this group, although the
condition of this group can indirectly impact the Partnership to the extent it
impacts NTL Incorporated or NTL (Delaware), Inc., both parent companies of the
Partnership, or otherwise impacts the recapitalization process. Upon
consummation of the Plan, NTL Euroco will succeed to the rights and obligations
of NTL described in this paragraph.

Premium TV Limited, a wholly-owned subsidiary of NTL (Delaware), Inc., is
obliged to provide funding of up to approximately £19.0 million ($29.8 million)
to fund various of its joint venture interests. Of this amount, the payment of
approximately £4.0 million ($6.3 million) has been guaranteed by NTL
(Delaware), Inc. If Premium TV Limited fails to provide its committed funding
under the relevant shareholder arrangements relating to these joint ventures,
Premium TV Limited and, in respect of the guaranteed amounts, NTL (Delaware),
Inc., may be sued for non-payment. As a result of the recapitalization process,
the relevant joint venture partners may assert that they can compulsorily
acquire Premium TV Limiteds interest in the relevant joint venture at a third
party appraisal valuation. Premium TV Limited is currently in discussions with
certain of these joint venture partners with a view to restructuring the
relevant joint ventures. In the event that these discussions do not reach a
resolution acceptable to Premium TV Limited, Premium TV Limited may seek to
discontinue these joint ventures and terminate their activities. NTL believes,
however, that it has various defenses and protections under the Bankruptcy Code
against such actions and intends to enforce vigorously its rights and
protections.

On September 24, 2002, Premium TV Limited, NTL (Delaware), Inc. and NTL
Incorporated agreed to vary the terms of the long-term joint venture (referred
to as the Football League Joint Venture) between Premium TV Limited and the
Football League Limited. Under the terms of the variation, upon the payment of
arrears of rights fees by Premium TV Limited, the Football League Limited
agreed to release Premium TV Limited from its obligation to fund the payment of
any further rights fees to the Football League Limiteds member teams and its
obligation to provide working capital funding to the Football League Joint
Venture. The Football League Limited also agreed to release NTL (Delaware),
Inc. from its guarantee of Premium TV Limiteds obligations and to release NTL
Incorporated from the related undertaking. In return, Premium TV Limited
agreed to waive repayment of loan capital by the Football League Joint Venture
and to provide certain ongoing services to the Football League Joint Venture
free of charge for an initial period. NTL (Delaware), Inc. deposited £10.33
million into a designated single purpose account for use by Premium TV Limited
to finance the provision of such services. Premium TV Limited and the Football
League Limited also agreed to new terms relating to the distribution of
revenues generated by the Football League Joint Venture. The Partnership does
not have any ownership interest in this group, although the condition of this
group can indirectly impact the Partnership to the extent it impacts NTL
Incorporated or NTL (Delaware), Inc., both parent companies of the Partnership,
or otherwise impacts the recapitalization process. Following consummation of
the Plan, Premium TV Limited will be an asset of NTL Euroco.

On November 12, 2002, three of NTL Incorporateds wholly owned subsidiaries
entered into a support agreement with the other limited partners of eKabel
L.P. (the investment partnership through which NTL holds its equity stake in
iesy), an informal committee holding in excess of a majority of the principal
amount of the high-yield bonds of iesy and the NTL employees who have been
seconded to work for iesy. At this time, the iesy companies are not parties to
the support agreement, however the support agreement permits them to become
parties at any time. The support agreement contemplates an in-or out-of-court
restructuring of iesy Hessen GmbH and its subsidiaries. If the iesy
restructuring is completed as contemplated by the support

18



---



##### Table of Contents



agreement, Brigadoon Ventures (one of the NTL subsidiaries) will receive a cash
facilitation fee for its cooperation in the iesy restructuring (not in respect
of its equity stake in iesy) of approximately $1.3 million, less its pro rata
share of expenses incurred at the eKabel partnership level. If the iesy
restructuring is completed and the cash facilitation fee is paid to Brigadoon
Ventures, NTL would no longer have any equity stake or other investment in iesy
and would receive no consideration for its equity stake in iesy. The support
agreement imposes certain obligations on the parties, including restricting
transfer of interests in iesy during the process, terminating the existing
consulting agreement between NTL and iesy, and reimbursing NTL for the
secondment of NTL employees. If the support agreement is terminated or the iesy
restructuring is not otherwise completed as contemplated by the support
agreement, it is likely NTL Europe would receive little, if any, value for its
equity stake in the iesy companies. The Partnership does not have any ownership
interest in this group, although the condition of this group can indirectly
impact the Partnership to the extent it impacts NTL Incorporated or NTL
(Delaware), Inc., both parent companies of the Partnership, or otherwise
impacts the recapitalization process. Following consummation of the Plan, the
interest in iesy will be an asset of NTL Euroco.

Relationships with Suppliers

The uncertainty over NTLs financial condition may adversely affect its
relationships with its suppliers. If NTLs suppliers become increasingly
concerned about its financial condition, they may demand quicker payment terms
or not extend normal trade credit, both of which could further adversely affect
its results of operations, financial condition and cash flows.

3 Recent Accounting Pronouncements

On July 30, 2002, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 146, Accounting for
Costs Associated with Exit or Disposal Activities. SFAS No. 146 replaces
Emerging Issues Task Force Issue No. 94-3 Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity (including
Certain Costs Incurred in a Restructuring). SFAS No. 146 requires that a
liability for costs associated with an exit or disposal activity is recognized
when the liability is incurred. Under Issue No. 94-3, a liability for an exit
cost as defined is recognized at the date of a commitment to an exit or
disposal plan. SFAS No. 146 is effective for exit or disposal activities that
are initiated after December 31, 2002. The adoption of this standard is not
expected to have a significant effect on the results of operations, financial
condition or cash flows of the Company.

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB
Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical
Corrections, which is effective for the Company on January 1, 2003. The
adoption of SFAS No. 145 will require any gain or loss recognized on the
extinguishment of debt to be classified as income or loss from continuing
operations. Prior to SFAS No. 145, gain or loss from the extinguishment of
debt was classified as an extraordinary item.

In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, effective for the Company on
January 1, 2002. This Statement superceded SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of
and other related accounting guidance. The adoption of this new standard had no
effect on the results of operations, financial condition or cash flows of the
Company.

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations, effective for the Company on January 1, 2003. This
Statement addresses financial accounting and reporting for obligations
associated with the retirement of tangible fixed assets and the associated
asset retirement costs. The Company is in the process of evaluating the
financial statement impact of the adoption of SFAS No. 143.

19



---



##### Table of Contents



In June 2001, the FASB issued SFAS No. 141, Business Combinations, and
No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 requires that the
purchase method of accounting be used for all business combinations initiated
after June 30, 2001. Use of the pooling-of-interests method is no longer
permitted. SFAS No. 141 also includes guidance on the initial recognition and
measurement of goodwill and other intangible assets acquired in a business
combination that is completed after June 30, 2001.

SFAS No. 142 ends the amortization of goodwill and indefinite-lived
intangible assets. Instead, these assets must be reviewed annually (or more
frequently under certain conditions) for impairment in accordance with this
statement. This impairment test uses a fair value approach rather than the
undiscounted cash flow approach previously required by SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of. The Company adopted SFAS No. 142 on January 1, 2002.
Primarily due to the significant impairment charge that the Company recorded in
2001, the adoption of this new standard did not have a significant effect on
the results of operations, financial condition or cash flows of the Company.

Upon the adoption of SFAS No. 142, the Company performed an analysis of
its intangible assets acquired before July 1, 2001 to determine whether they
should be classified and accounted for as part of or separate from goodwill.
The Company determined that license acquisition costs and customer lists should
continue to be classified separate from goodwill. The Company determined that
license acquisition costs would no longer be subject to amortization since they
are deemed to have an indefinite useful life. The Company also determined that
no changes in the remaining useful lives of the customer lists were required.

The Company also performed an evaluation for impairment of its goodwill
and license acquisition costs as of January 1, 2002 and determined that no
impairment charge was required. The Companys next evaluation of impairment
will be the annual test as of October 1, 2002.

4 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 September 30, 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.
The general partner of the Partnership is Fawnspring Limited (the General
Partner), 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.

5 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 September 30, 2002 and 2001 were $382,866 and
$378,359 respectively. Consulting fees paid or payable by the Company for the
nine months ended September 30, 2002 and 2001 were $1,125,209 and $1,129,915,
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

20



---



##### Table of Contents



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.

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 September 30, 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 $2,572,865 and $2,638,530
respectively. During the nine months ended September 30, 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
$7,800,664 and $8,507,486 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 September 30, 2002 and 2001,
interest on deferred fees of $373,612 and $287,102 respectively, was charged
by an affiliate of the General Partner, and interest on advances of $30,267 and
$25,985 respectively, was charged by the General Partner. For the nine months
ended September 30, 2002 and 2001,interest on deferred fees of $1,011,000 and
$824,799 respectively, was charged by an affiliate of the General Partner, and
interest on advances of $84,562 and $75,376, respectively, was charged by the
General Partner

6 Plant, Property and Equipment

Plant, property and equipment consists of :

|                                           |                           |            |             |   |               |   |              |             |             |   |             |             | 
|------------------------------------------ | ------------------------- | ---------- | ----------- | - | ------------- | - | ------------ | ----------- | ----------- | - | ----------- | ----------- | 
|                                           |                           |            | Estimated   |   | September 30, |   | December 31,
|                                           |                           |            | Useful Life |   | 2002          |   | 2001        
|                                           |                           |            |             |   |               |   |             
|Cable network & other electronic
equipment |                           | 3-40 Years |             | $ | 112,792,463   |   |              | $           | 103,096,046 |  
|                                          
|                                          
|                                          
|                                          
|Freehold buildings                         |                           | 40 Years   |             |   | 3,545,895     |   |              |             | 3,284,583   |  
|                                          
|                                          
|                                          
|                                          
|Office equipment and other fixed
assets    |                           | 3-10 Years |             |   | 3,281,286     |   |              |             | 3,099,388   |  
|                                           |                           |            |             |   |               |   |              |             |             |   |             |            
|                                           | Total Operating Equipment |            |             |   |               |   |              | 119,619,644 |             |   |             | 109,480,017 | 
|                                          
|                                          
|                                          
|                                          
|Construction in progress                   |                           |            |             |   |               |   | 1,102,107    |             |             |   | 1,198,256   |            
|                                           |                           |            |             |   |               |   |              |             |             |   |             |            
|                                           |                           |            |             |   |               |   | 120,721,751  |             |             |   | 110,678,273 |            
|                                          
|                                          
|                                          
|                                          
|Accumulated depreciation                   |                           |            |             |   |               |   | (61,754,199  | )           |             |   | (51,716,191 | )          
|                                           |                           |            |             |   |               |   |              |             |             |   |             |            
|                                           |                           |            |             |   |               | $ | 58,967,552   |             |             | $ | 58,962,082  |            
|                                           |                           |            |             |   |               |   |              |             |             |   |             |            

Long-lived assets are renewed for impairment whenever events or changes in
circumstances indicate that the carrying may not be recoverable. The fair value
of the assets is determined by the sum of the expected future cash flows. If
the fair value is less than the carrying amount of the asset, a loss is
recognized for the difference between the fair value and the carrying value of
the assets.

7 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.

21



---



##### Table of Contents



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 has been,
and will continue to be, reliant upon the financial support of NTL to continue
its operations as a going concern. There is no guarantee that NTL
will continue to be able to support the Partnership operation (see
Note 2).

Note 8 - Commitments and Contingencies Liabilities

NTL is involved in legal proceedings and claims which arise in the ordinary
course of its business. In the opinion of management, the amount of ultimate
liability with respect to these actions will not materially affect the
financial position, results of operations or liquidity of the Company.

22



---



##### Table of Contents



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

ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

South Hertfordshire United Kindom Fund, Ltd (the Partnership) is a limited
partnership which holds 66.7% of the shares of ntl (South Hertfordshire)
Limited (NTL South Herts or the Company) principally engaged in the
development, construction, management and operation of broadband communications
networks for telephone, cable television and Internet services in the United
Kingdom (UK). The Company is 33.3% subsidiary of NTL Incorporated.
Throughout this report, NTL Incorporated together with its consolidated
subsidiaries are referred to as NTL.

Key points concerning our current financial condition and NTLs planned
recapitalization include:

Financial Condition



| |  | NTL Incorporated and its subsidiaries have issued and outstanding approximately $11.5 billion in senior and
subordinated notes and debentures.                                                                                         
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | NTLs UK credit facilities are fully drawn and the revolving tranche of the Cablecom facility has been capped at its
utilized amount of CHF 1,055.0 million. The term tranche of the Cablecom facility is fully drawn.                 
| 
| |  | As of May 8, 2002, the date of its Chapter 11 filing, NTL was in default of $95.4 million in interest in respect of
$1,693.4 million in principal amount of its indebtedness.                                                          
| 
| |  | NTL missed interest payments
totaling $495.5 million between April 1, 2002 and
November 13, 2002, all of which related to notes issued by NTL
Incorporated and certain of its subsidiaries.                                            
| 
| |  | In accordance with the Plan,
NTL does not intend to make future interest payments on its
currently outstanding publicly traded notes except notes issued by NTL Triangle and, upon emergence from Chapter 11, Diamond Holdings Limited.
| 

23



---



##### Table of Contents



Recapitalization Plan



| |  | On May 8, 2002, NTL Incorporated and a number of its subsidiaries, namely, NTL (Delaware), Inc., NTL Communications
Corp., Diamond Cable Communications Limited, Diamond Holdings Limited, and Communications Cable Funding Corp., filed
a pre-arranged joint reorganization plan under Chapter 11 of the United States Bankruptcy Code. Neither the
Partnership nor NTL South Herts were included in the Chapter 11 filings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Under the Plan, NTL will be split into two companies, one holding all of its UK and Ireland
assets, and the other holding various continental European and other assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| 
| |  | Holders of notes of NTL Incorporated, NTL (Delaware), Inc., NTL Communications and Diamond Cable
Communications would receive 100% of the initial common stock of New
NTL and approximately 86.5% of NTL
Euroco.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| 
| |  | Holders of notes of NTL (Delaware), Inc. would have the option to reinvest all or a portion of NTL (Delaware), Inc.
cash in additional shares of common stock, pursuant to the exercise
of the noteholder election option, or to be distributed such cash in the recapitalization.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| 
| |  | Common and preferred stockholders of NTL Incorporated, including France Telecom, would participate in a package of
equity rights and warrants entitling them to purchase primary common
stock of New NTL. Current preferred stockholders, other than France
Telecom, will receive
approximately 3.2% and current common stockholders, other than France
Telecom, will receive approximately 10.3% of
the primary equity of NTL Euroco.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| 
| |  | Concurrently with the equity rights offering, holders of the
subordinated notes of NTL Incorporated (other than France Telecom),
NTL (Delaware), Inc. (other than France Telecom), and NTL
Communications Corp. were given the option to apply cash they will be
entitled to receive upon effectiveness of the Plan to purchase shares
of New NTL common stock, plus any shares (and accompanying Series A
warrants) not subscribed for in the equity rights offering (referred
to as the noteholder election option). The equity rights offering and
the noteholder election option expired on October 3, 2002. Since that
time, NTL has allowed equity holders and noteholders to revoke their
exercises of equity rights and the noteholder election option. As of
November 12, 2002, there were a total of 2,654
exercises of equity rights and 186 exercises of the noteholder
election option which had not been revoked.
| 
| |  | Under the Plan, NTL will
convert approximately $10.9 of debt to equity, thereby reducing New
NTL's debt to approximately $5.8 billion (pro forma net debt as
of September 30, 2002) which will consist of mortgage notes, amounts owed under the UK
credit facilities and Diamond Holdings and NTL Triangle notes and the projected exit facility.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| 
| |  | Under the Plan, NTL Europes debt will consist of the Cablecom credit facility of CHF 1,055.0 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| 
| |  | The Bankruptcy Court approved
the proposed debtor in possession financing (referred to as DIP) in
the principal amount of $630 million by order dated July 3,
2002. The DIP facility was entered into on July 15, 2002. The
DIP facility expires on the earlier of December 1, 2002 and
consummation of the Plan (unless maturity is extended by the DIP
lenders), and thus will need to be replaced by an exit facility.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| 
| |  | At a hearing on July 12, 2002, the Bankruptcy Court approved NTLs amended disclosure statement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| 
| 
| |  | On September 5, 2002, the Bankruptcy Court confirmed the reorganization plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

Liquidity and Capital Resources

Recapitalization Process and Ability to Continue Operations

Throughout this report, NTL Incorporated together with its consolidated
subsidiaries are referred to as NTL. In this Note 2, the
Partnership, the Company, we, us and our refer to South
Hertfordshire United Kingdom Fund, Ltd. and its consolidated subsidiary, NTL
(South Herts) Limited, except where the context otherwise requires.

On May 8, 2002, NTL Incorporated,
the ultimate parent of Fawnspring Limited, the general partner of the
Partnership, NTL (Delaware), Inc., NTL Communications
Corp., Diamond Cable Communications Limited, Diamond Holdings Limited and
Communications Cable Funding Corp. (collectively, the
Debtors) filed a pre-arranged joint reorganization
plan under Chapter 11 of the Bankruptcy Code (the Plan). NTLs operating
subsidiaries were not included in the Chapter 11 filing. On September 5, 2002,
the United States Bankruptcy Court for the Southern District of New York (the
Bankruptcy Court)

24



---



##### Table of Contents



confirmed the Plan. The consummation of the Plan is subject to the
satisfaction or waiver of certain conditions set forth in the Plan. Among
other things, the most substantial conditions include obtaining exit financing
for NTL and obtaining the consent of NTLs UK bank lenders to such financing
and to modifications to the terms of the UK bank facilities acceptable to both
NTL and NTLs official creditors committee. Although NTL is currently
finalizing negotiations with a group of potential lenders for such an exit
facility, there can be no assurance that it will be able to reach final
agreement on terms. If no agreement can be reached and an alternate source of
exit financing cannot be secured, NTL may not be able to consummate the Plan.
Moreover, NTL is currently in discussions with the UK lenders regarding the
above matters, but cannot be certain that they will be resolved successfully.
If NTL fails to meet either condition, the Debtors would be unable to
consummate the Plan and continue to remain in Chapter 11, and there can be no
assurance that an alternative plan of reorganization could be reached in a
timely manner or at all.

The Partnership has 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 cash flow from operations, issuances of limited
partnership units and borrowing from commercial banks and NTL. Both the equity and
debt capital markets have 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 debt securities are trading at or near all time lows. These
factors, together with NTLs substantial leverage, means the
Partnership does not currently
have access to its historic sources of capital.

In addition, there are no further funds available under NTLs UK credit
facilities and NTLs Swiss subsidiaries are currently unable to draw the
remaining undrawn amounts under the Cablecom credit facility. NTL missed
interest payments totaling $495.5 million between April 1, 2002 and November
13, 2002, all of which related to notes issued by NTL Incorporated and certain
of its subsidiaries. Upon emerging from Chapter 11, NTL intends to make any
required interest payments on the notes of Diamond Holdings Limited. In
accordance with the Plan, NTL will not make future interest payments on its
currently outstanding publicly traded notes except notes issued by NTL
(Triangle) LLC and, upon emergence from Chapter 11, Diamond Holdings Limited.

Pursuant to the Plan, if consummated, NTL will be split into two separate
companies, one which will take the name NTL Incorporated, holding NTLs main UK
and Ireland assets (which we refer to as New NTL), and one which will be
called NTL Europe, Inc., holding NTLs continental European and certain other
assets (which we refer to as NTL Euroco). Upon consummation of the Plan, NTL
Euroco will hold Cablecom, NTLs cable business in Switzerland, and Premium TV
Limited, NTLs sports TV content and internet business in the UK, and will
retain NTLs investment interests in cable networks in Scandinavia and Germany
(B2 and iesy, respectively). Its interests will also include NTLs equity
investments in the cable channel content providers of the ITN News Channel and
The Studio Channel, as well as certain other assets. New NTL will
become the ultimate parent of Fawnspring Limited, the general partner of the
Partnership.

Assuming the Plan is consummated, New NTLs and NTL Eurocos ability to meet
their respective funding requirements following consummation of the Plan are
dependent upon a number of factors, including the revenue generated by their
operating subsidiaries, their existing cash balances, and their ability to draw
upon an exit facility (in the case of New NTL) or any other financing. NTL will
be required to replace the DIP facility with an exit facility for New NTL and
its subsidiaries upon emergence from Chapter 11, in part because the DIP
facility will mature concurrently with NTLs emergence from Chapter 11, or on
December 1, 2002, whichever is earlier (unless such maturity is extended by the
DIP lenders). There can be no assurance that these sources of financing will
be or will remain available. Assuming consummation, each of New NTL and NTL
Euroco will require substantial funds for general corporate and other expenses
and may require additional funds for working capital fluctuations. Failure to
achieve profitability or maintain or achieve various other financial
performance levels could in the future diminish New NTLs and Eurocos
respective ability to sustain operations, meet financial covenants, obtain
additional funds required for capital expenditures or other purposes, and make
required payments on any indebtedness they have incurred, may incur or that may
then, as a result, become due. There can be no assurance that New NTL and/or
NTL Euroco will be successful in raising additional financing if required, or
if successful, that the terms of such financing will be favorable. In the
event that NTL fails to consummate the Plan, the foregoing description will
continue to apply to NTL.

25



---



##### Table of Contents



NTL expects that it will require approximately $650 million to fund
its working capital and capital expenditures, net of cash from operations, and
certain payments required upon consummation of the Plan (namely the settlement
of recapitalization costs with NTL Euroco, the repayment or purchase of the £90
million loan from NTL (Delaware), Inc. to NTL (UK) Group Inc. and the UK credit
facilities amendment fee) in the twelve months from October 1, 2002 to
September 30, 2003. NTL believes that cash, cash equivalents and
marketable securities on hand of $475.7 million at September 30, 2002, and the
cash available from the DIP facility and subsequently the planned exit facility
will be sufficient for New NTLs cash requirements during the twelve months
from October 1, 2002 to September 30, 2003 (assuming consummation of the Plan).
If the exit facility is not obtained and the Plan is not consummated, NTL will
need to seek an extension of the DIP facility maturity or identify alternative
sources of financing. Moreover, the planned exit facility will not be
available to NTL Euroco. It is anticipated that NTL Euroco and its
subsidiaries will require substantial financing to continue operations because,
among other things, the Cablecom bank facility becomes repayable on April 30,
2003, unless otherwise refinanced. There can be no assurance that NTL Euroco
will be able to raise sufficient funds to meet its liquidity requirements
following consummation.

Over the long term, NTL will continue to require cash to fund
operations, service its remaining debt and implement its strategy. In order to
fund these requirements, NTL anticipates that it will use cash flow
from operations and may also need to issue additional debt or equity securities
or may need to secure additional bank financing. Given NTLs
current financial condition and the restrictions on incurring additional debt
that are expected to be contained in the exit facility currently being
negotiated, there can be no assurance that these sources of funds will be
available to NTL.

During the recapitalization process, NTL has maintained normal and regular
trade terms with its suppliers and customers. There can be no assurance that
the Partnership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.

Events Leading to the Proposed Recapitalization and Chapter 11 Filings

Beginning in January 2002, NTL was contacted by an unofficial committee of
bondholders regarding the commencement of a comprehensive and consensual
restructuring process. NTL was informed at that time that the members of the
unofficial steering committee of bondholders owned, 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.

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. On April 16, 2002, NTL announced that it had reached a
comprehensive agreement in principle with the unofficial committee and France
Telecom, a significant holder of NTL Incorporateds preferred stock, on
implementing a recapitalization plan.

To implement the proposed recapitalization, on May 8, 2002, the Debtors filed
cases and a pre-arranged joint reorganization plan under
Chapter 11. The Partnership and NTLs
operating subsidiaries, including NTL South Herts, were not included in the Chapter 11 filing. On June 21,
2002, the United States Trustee appointed an official unsecured creditors
committee. The creditors committee is comprised of the three indenture
trustees for the debt securities of NTL and the members of the steering
committee of NTLs bondholders. The members of the 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 Advisers, LLC; Oaktree Capital Management LLC; Salomon
Brothers Asset Management; Appaloosa Management, LP; Fidelity Management &
Research Co.; SAB Capital Management, L.P.; and W.R. Huff Asset Management Co.,
LLC.

The Plan was confirmed by the Bankruptcy Court on September 5, 2002.
Consummation remains subject to the satisfaction or waiver of certain
conditions described above.

26



---



##### Table of Contents



Assuming the Plan is consummated, the Plan will 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 New NTL. In addition, when the Plan is implemented,
NTL will be discharged from its obligation to pay dividends accruing on the
canceled preferred stock and interest accruing on the canceled notes. The Plan
contemplates that the UK bank debt and the notes issued by NTL (Triangle) LLC
and Diamond Holdings Limited will remain in place. NTL will be split into New
NTL and NTL Euroco. The Partnership is not a Debtor and the limited
partnership units of the Partnership will not be cancelled in
connection with the Plan.

The filing of the petitions seeking relief filed under Chapter 11 constituted
an event of default under the indentures of each of the Debtors and amounts
outstanding under these indentures became immediately due and payable. No
action has been taken to date in respect of those defaults and any such action
likely would be barred by the automatic stay that exists by virtue of the
Chapter 11 filings. The filing of the Debtors 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. Those lenders have not taken any action
to date in respect of those defaults.

DIP Facility

In connection with the Plan, some members of the official unsecured creditors
committee of bondholders committed to provide up to $500 million of new debt
financing to enable the business operations of NTL Incorporated and some of its
subsidiaries to have access to sufficient liquidity to continue ordinary
operations during the Chapter 11 process. The Bankruptcy Court approved a DIP
facility in the principal amount of $630 million (including a $130 million
commitment from NTL (Delaware), Inc. and the $500 million from certain members
of the creditors committee) in an order entered on July 3, 2002. On July 15,
2002, the various lenders under the DIP facility and NTL (Delaware), Inc.
entered into the DIP facility agreement with

27



---



##### Table of Contents



Communications Cable Funding Corp., a wholly-owned subsidiary of NTL
Communications Corp., to provide $630 million in financing to Communications
Cable Funding Corp.

Under the DIP facility agreement, the loan structure contains three tranches
that rank equally with each other. All amounts owed under the DIP facility
agreement are required to be paid in full no later than the earlier of (i) the
consummation of the Plan, (ii) December 1, 2002, and (iii) the date on which
all of the term loans become due and payable in full under the DIP facility
agreement, whether by acceleration or otherwise (unless maturity is extended by
the DIP lenders).

On July 17, 2002, NTL drew the first tranche available under the facility in
the amount of $229.0 million. As of September 30, 2002, the total amount
outstanding under the DIP facility was $229.0 million.

In connection with the commitment, NTL Incorporated and its debtor subsidiaries
paid a commitment fee to the bondholder DIP lenders equal to 2% of the $500
million commitment (i.e., $10 million) in May 2002. In connection with the
closing of the DIP facility, NTL Incorporated and its debtor subsidiaries paid
a closing fee to the DIP lenders equal to 2% of the $630 million commitment
(i.e., $12.6 million) in July 2002.

Each term loan under the DIP facility bears interest on the unpaid principal
amount for three months from July 15, 2002 at the rate of 11% per annum. With
respect to each successive three month period following that date, the rate per
annum will increase incrementally by 1% over the immediately preceding three
month period but will not exceed 18% per annum for any three month period.
Interest is payable in cash at least monthly. The DIP facility also includes
an unutilized commitment fee of 1/2% per annum on the aggregate principal
amount of unutilized commitments which is payable in cash each month.

NTL (Delaware), Inc. is also a lender under the DIP facility in the amount of
up to $130 million. NTL (Delaware), Inc. has cash on hand and NTL Incorporated
and its debtor subsidiaries and the steering committee of bondholders concluded
that the cash at NTL (Delaware), Inc. was to be used to partially fund the
reorganization of all of the debtors. Pursuant to the terms of the DIP
facility, NTL (Delaware), Inc. receives fees, will receive interest if and when
it makes any loans, and is entitled to the same protections as the other
bondholder DIP lenders.

Under the DIP facility agreement, Communications Cable Funding Corp. is the
borrower, NTL Incorporated, NTL (Delaware), Inc. and NTL Communications Corp.
are guarantors. NTL Communications Corp. is also a co-obligor of the loans from
NTL (Delaware), Inc. Under the DIP facility agreement, with certain exceptions,
the cash (except for the DIP facility proceeds) of the borrower and the
guarantors is cash collateral for the DIP facility and will not be used or
transferred for any purpose whatsoever without the consent of the bondholder
DIP lenders. All funding needs of the Debtors will be funded through the
proceeds of the DIP facility, in accordance with a budget and the terms of the
DIP facility agreement.

A copy of the DIP facility agreement was attached as an exhibit to NTL
Incorporateds Current Report on Form 8-K filed with the Securities and
Exchange Commission on July 19, 2002.

Exit Facility

Because of the short maturity of the DIP facility and the longer term liquidity
needs of NTL, as well as the requirements under the Bankruptcy Code for
confirmation of and the conditions to consummation of the Plan, NTL requires an
exit financing facility for New NTL. The exit financing or any alternative
financing would refinance (at least in part) the DIP facility and be used as
consideration for the refinancing or repurchase of a £90 million note payable
to NTL (Delaware), Inc. from NTL (UK) Group Inc. NTL is currently finalizing
discussions with a group of lenders regarding the exit facility, although given
the unfavorable present market conditions for telecommunications companies
generally, there can be no assurance an agreement for an exit facility with
acceptable terms will be reached. If acceptable exit financing is not
obtained, the Plan could not be consummated and NTL could not emerge from
Chapter 11 in accordance with the Plan.
NTL expects that the exit facility will be secured by various assets of New
NTL, including those which secure the DIP facility, will rank senior to all
current and future subordinated debt of New NTL, and will be guaranteed by
certain subsidiaries of New NTL.

NTL also expects that the exit facility will impose operating and financial
restrictions on New NTL and its subsidiaries. These restrictions will
significantly limit or prohibit, among other things, New NTLs ability and the
ability of its subsidiaries to incur additional indebtedness, pay dividends, or
make distributions in respect of capital stock, make other restricted payments,
enter into sale and leaseback transactions, create liens upon assets, enter
into transactions with affiliates or related persons, sell assets,

28



---



##### Table of Contents



or consolidate, merge, or sell all or substantially all of their assets. NTL
anticipates that these restrictive covenants could materially impact New NTLs
ability to finance future operations or capital needs through debt or equity
financing or to engage in other business activities.

The terms, covenants, and conditions of an exit facility have not been
finalized and remain subject to negotiation and final documentation, as well as
approval by NTLs UK bank lenders to its terms.

The exit facility for New NTL and its subsidiaries will not be available to NTL
Euroco. It is anticipated that NTL Euroco and its subsidiaries will require
substantial financing to continue operations because, among other things, the
Cablecom bank facilities become repayable on April 30, 2003, unless otherwise
refinanced. There can be no assurance that NTL Euroco (or any subsidiary
thereof) will be able to raise sufficient funds to meet its liquidity
requirements following consummation.

The Plan

In addition to the split into New NTL and NTL Euroco, the following are the
details of the Plan:



| |  | 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 will in the aggregate receive
100% of the initial common stock of New NTL (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 New NTL).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Holders of notes of NTL Incorporated (other than France Telecom), NTL
(Delaware), Inc. (other than France Telecom) and NTL Communications
Corp. will in the aggregate receive (i) 100% of the preferred stock of
NTL Euroco and (ii) a certain amount of cash as specified in the Plan.
Holders of the subordinated notes of NTL Incorporated (other than
France Telecom), NTL (Delaware), Inc. (other than France Telecom) and
NTL Communications Corp. will 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. will 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
Communications Corp.s subsidiaries Diamond Holdings Limited and NTL
(Triangle) LLC will remain outstanding and interest payments will be
made on the notes of NTL (Triangle) LLC and, upon emergence from
Chapter 11, the notes of Diamond Holdings Limited.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| 
| |  | In addition to the above, holders of several series of NTLs
outstanding convertible subordinated notes were granted an option to
elect to purchase additional shares of New NTL common stock (and
accompanying Series A Warrants) not subscribed for in the equity
rights offering as described below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| 
| |  | Current preferred and common stockholders of NTL Incorporated,
including France Telecom, will receive Series A warrants to purchase
common stock of New NTL and have received equity rights entitling them
to purchase common stock of New NTL. For each share of common stock
purchased upon exercise of equity rights, the person exercising such
equity rights will receive a Series A warrant to purchase one share of
common stock of New NTL. The Series A warrants will be exercisable for
a period of eight years at an exercise price of $77.47 per share. The
exercise price and the number of shares to be received upon exercise
of the Series A warrants is subject to customary adjustments for stock
splits, stock recapitalizations and distributions of property (other
than cash) to holders of New NTL common stock. The exercise price per
share of New NTL common stock under the equity rights offering and the
noteholder election option was $25.28, which NTL expects will
substantially exceed the likely initial market price for a share of
New NTL common stock upon consummation, and which is also subject to
adjustment consistent with the Series A warrants.
| 
| |  | The equity rights offering and the noteholder election option expired
on October 3, 2002. Since the expiration of the equity rights offering
and the noteholder election option, NTL has allowed equity holders who
have exercised equity rights and noteholders who have exercised their
noteholder election option to revoke such exercises. As of November
12, 2002, there were a total of 2,654 exercises of equity rights
(including oversubscriptions) and 1,861 exercises of the noteholder
election option which had not been revoked. Prior to consummation of
the Plan, NTL will continue to permit persons who have exercised
equity rights and the noteholder election option to revoke their
exercise so the final number of exercises may be lower.                                                                                                                                                                                                                                                                                                                                                                                                                             

29



---



##### Table of Contents





| |  | Current preferred stockholders, other than France Telecom, will
receive approximately 3.2% and current common stockholders, other than
France Telecom, will receive approximately 10.3% of the primary equity
of NTL Euroco. France Telecom will 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.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

NTL has received a conditional approval to have the shares of common stock and
Series A warrants of New NTL quoted on the Nasdaq National Market upon
consummation of the Plan. However, this approval is conditioned upon, among
other things, New NTLs ability to meet the $5.00 minimum bid requirement of
the Nasdaq National Market listing requirements on the first day of trading.
There can be no assurance that this requirement will be met, or that in the
future New NTL will be able to meet other continued listing requirements of the
Nasdaq National Market. NTL currently expects that the NTL Euroco common stock
and preferred stock will not be quoted on any market or listed on any
securities exchange. There may be no trading market for the common stock and
the preferred stock of NTL Euroco.

On November 12, 2002, NTL filed a motion with the Bankruptcy
Court to allow it, after consultation with the Committee, to reduce by
one-third the number of authorized shares of New NTL common stock and to reduce
by three-fourths the number of shares of New NTL common stock issued and
reserved for issuance under the Plan. If the motion is approved by the
Bankruptcy Court, NTL would take this step only (i) after consultation with the
Committee and (ii) if NTL were to determine, after an evaluation of the trading
prices of the shares of New NTL common stock on the when-issued market prior
to the consummation of the Plan, that a reduction in the number of shares of
New NTL common stock is necessary to better enable New NTL to satisfy the first
trading day minimum closing bid price per share requirement of NASDAQ.

With respect to the proposed preferred shares of NTL Euroco to be issued upon
consummation, prior to consummation of the Plan, NTL may file a motion with the
Bankruptcy Court seeking to modify the Plan to reduce the liquidation
preference from $1,000.00 per share of preferred stock of NTL Euroco, plus
accrued and unpaid dividends, to $50.00 per share of preferred stock of NTL
Euroco, plus accrued and unpaid dividends. As a result of the aforementioned
adjustment (i) the number of shares of preferred stock of NTL Euroco authorized
under the NTL Euroco Amended and Restated Certificate of Incorporation would be
increased from 1,000,000 to 20,000,000 and (ii) 8,000,000 shares of NTL Euroco
preferred stock would be authorized under the NTL Euroco Amended and Restated
Certificate of Incorporation. This is intended to enhance the ability for
these shares to trade if a trading market develops.

Bank Waivers

Before NTL could commence negotiations with the unofficial committee of
bondholders, it was necessary to obtain waivers from the lenders under its UK
credit facilities and the credit facility utilized by Cablecom GmbH, the
principal trading subsidiary of its Swiss companies. The Partnership does not
have any ownership interest in Cablecom, although the condition of
Cablecom can indirectly impact the Partnership to the extent it impacts NTL Incorporated
or NTL (Delaware), Inc., both parent companies of the Partnership, or otherwise
impacts the recapitalization process. 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.

In connection with the granting of the initial waivers, NTL agreed, among other
things:



| |  | to provide the lenders under the UK credit facilities with a 13 week rolling
cash flow projection (updated every two weeks);                                                 
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | to keep the lenders informed of, and to provide documents in connection with,
negotiations with bondholders or strategic investors or concerning proposed
asset dispositions;
| 
| |  | not to repurchase NTL notes; and                                                                                                                                             
| 
| |  | not to make an exchange offer for NTL notes or enter into an agreement with
NTL bondholders, subject to some exceptions, without the consent of the
lenders.                 

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, 2002 in the case of the Cablecom facility, unless the
missed interest payments on April 1, 2002 were remedied or a sufficient

30



---



##### Table of Contents



number of bondholders agreed to forbear in respect of such non-payment, in
which case, the UK credit facilities waivers would be extended to May 14, 2002.
As a condition to the waivers continuing effectiveness, the UK lenders
required NTL (Delaware), Inc. to loan £90 million to NTL (UK) Group, Inc.
following receipt of the proceeds from the sale of NTL Australia. This loan is
structurally senior to the outstanding public notes issued by NTL but
contractually subordinated to the working capital facility. In connection with
the amendments to the waivers, NTL affirmed the provisions of the initial
waivers and in addition, NTL agreed, among other things, to:



| |  | provide the bank lenders a timeline setting forth the steps proposed to be taken in connection with the
recapitalization and the dates by which such steps are to be taken;                                                                            
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | use reasonable endeavors to consider with the lenders under the Cablecom credit facility possible means
of credit enhancement;                                                                                                                         
| 
| |  | provide the lenders under the Cablecom credit facility, by April 12, 2002, with an updated structure
chart of NTL as well as a contingency business plan for Cablecom in the event that sufficient additional
funding for Cablecom is not obtained; and
| 
| |  | pay legal, accounting and other advisory fees of the agent and the coordinators of the lending
syndicates.                                                                                                                                             

The amended waivers also prohibited NTL from commencing voluntary dissolution
proceedings, including proceedings under Chapter 11, without the consent of
these lenders. As a consequence, NTL cannot enter into a binding agreement with the unofficial
bondholder committee or implement the proposed plan without the consent of the
bank lenders. Nor, as of the date of this Form 10-Q, are there any current
waivers from NTLs secured lenders and NTL is therefore in default under its UK
credit facilities and the Cablecom credit facility. The lenders under those
credit facilities are therefore entitled to declare the principal amount of the
outstanding debt immediately due and payable and to enforce the security taken
to secure those facilities. It is a condition to consummation of the Plan that
the UK credit facilities are restated on terms acceptable to the Debtors and
the official creditors committee. In connection with the Plan, it is intended
that the existing events of default under the credit facilities will be cured
by waiver or amendment with effect from the Effective Date of the Plan.

As of December 31, 2001, Cablecoms and various of its subsidiaries
liabilities exceeded their respective assets. As a consequence, under Swiss
law, those entities were deemed to be overindebted. Under Swiss law, unless
the overindebtedness were rectified, those entities would have been required to
commence an insolvency proceeding in Switzerland.

On April 30, 2002, Cablecom reached an agreement with the lenders under the
Cablecom credit facility under which the defaults subsisting at that time were
remedied or were waived by the restatement of the credit agreement and the
grant of a waiver letter. Conditions subsequent such as the grant of new
security and the deposit of share certificates relating to minority
shareholdings pledged to the banks were imposed by these documents and other
new finance documents executed pursuant to the restatement. The
overindebtedness of Cablecom GmbH was resolved by a restructuring of
intra-group debt and temporary measures were introduced to ameliorate the
effect of the overindebtedness of Cablecoms subsidiaries.

As part of the April 30 agreement, the Cablecom lenders required the final
maturity date of the Cablecom credit facility to be brought forward to April
30, 2003. They also required steps to be initiated towards the sale of all, or
part of, or an investment in, the Cablecom group.

The problem of historic overindebtedness was resolved on June 26 and June 27,
2002 in certain of the overindebted subsidiaries when they were merged into
Cablecom and other members of the Cablecom group. The remaining overindebted
subsidiaries were not merged but the overindebtedness issue was ameliorated in
those subsidiaries by way of subordination agreements which obviated any
requirement to institute insolvency proceedings in respect of these companies.

Since the end of April 2002, the following defaults have occurred under the
Cablecom finance documents: (1) the indentures issued by NTL (Delaware), Inc.
and NTL Incorporated became payable and were not paid; (2) NTL (Delaware), Inc.
commenced negotiations with its creditors with a view to the general
rescheduling of its indebtedness and commenced cases under Chapter 11 pursuant
to which it reorganized its debt; (3) NTL (Delaware), Inc.s liabilities
exceeded the value of its assets and it was

31



---



##### Table of Contents



unable to pay its debts as they became due; (4) Cablecom was unable to satisfy
the conditions to allow it to rollover revolving advances maturing in early
July 2002; the revolving advances remained unpaid for several days until
Cablecom was able to obtain the consent of the banks to waive the conditions to
their rollover; and (5) certain of the conditions subsequent imposed by the
restated credit agreement, the waiver letter and other finance documents
executed pursuant to the restated credit agreement had not been fulfilled.

Although it is not a condition to consummation of the Plan, it is proposed to
obtain a waiver of the events of default described in the preceding paragraph
by the effective date of the Plan.

Future developments in Cablecoms business, as well as external factors, could
result in a reemergence of the overindebtedness issue under Swiss law. In
particular, the Cablecom credit facility is due for repayment on April 30, 2003
and it will not be possible to repay the facility without substantial
investment from a third party or further borrowing.

32



---



##### Table of Contents



Interest Payments on Public Notes

NTL has substantial interest payment obligations under its existing
indebtedness. NTL did not make its scheduled interest payments on the
respective due dates as follows:

|                                                    |  |                        |  |              
|--------------------------------------------------- |  | ---------------------- |  | -------------
|April 1, 2002:                                      |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 9-1/2% notes due 2008  |  | $8.6 million 
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 11-1/2% notes due 2008 |  | $35.9 million
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 11-7/8% notes due 2010 |  | $29.7 million
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  | Total                  |  | $74.2 million
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|April 15, 2002:                                     |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 12-3/4% notes due 2005 |  | $17.7 million
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Incorporated (NTL (Delaware), Inc., co-obligor) |  | 5-3/4% notes due 2011  |  | $2.5 million 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  | Total                  |  | $20.2 million
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|May 15, 2002:                                       |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 9-1/4% notes due 2006  |  | $10.5 million
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 6-3/4% notes due 2008  |  | $38.8 million
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 9-7/8% notes due 2009  |  | $15.7 million
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  | Total                  |  | $65.0 million
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|June 15, 2002:                                      |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|Diamond Cable                                       |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|Communications Limited                              |  | 11-3/4% notes due 2005 |  | $31.2 million
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 7% notes due 2008      |  | $17.1 million
|                                                   
|                                                   
|                                                   
|                                                   
|NTL (Delaware), Inc.                                |  | 5-3/4% notes due 2009  |  | $34.5 million
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  | Total                  |  | $82.8 million
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|July 15, 2002:                                      |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Incorporated (NTL (Delaware), Inc., co-obligor) |  | 5-3/4% notes due 2011  |  | $2.5 million 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|August 1, 2002:                                     |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 11-1/2% notes due 2006 |  | $60.4 million
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 12-3/8% notes due 2008 |  | $18.3 million
|                                                   
|                                                   
|                                                   
|                                                   
|Diamond Holdings Limited                            |  | 10% notes due 2008     |  | $10.5 million
|                                                   
|                                                   
|                                                   
|                                                   
|Diamond Holdings Limited                            |  | 9-1/8% notes due 2008  |  | $5.0 million 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  | Total                  |  | $94.2 million
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|August 15, 2002:                                    |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 10% notes due 2007     |  | $20.0 million
|                                                   
|                                                   
|                                                   
|                                                   
|Diamond Cable Communications Limited                |  | 10-3/4% notes due 2007 |  | $22.6 million
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  | Total                  |  | $42.6 million
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|September 30, 2002                                  |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|Diamond Cable Communications Limited                |  | 13-1/4% notes due 2004 |  | $18.9 million
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|October 1, 2002                                     |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 9-1/2% notes due 2008  |  | $9.3 million 
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 11-1/2% notes due 2008 |  | $35.9 million
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 11-7/8% notes due 2010 |  | $29.7 million
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  | Total                  |  | $74.9 million
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|October 15, 2002                                    |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 12-3/4% notes due 2005 |  | $17.7 million
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Incorporated (NTL (Delaware), Inc., co-obligor) |  | 5-3/4% notes due 2011  |  | $2.5 million 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  | Total                  |  | $20.2 million

33



---



##### Table of Contents



Interest payments of $18.9 million were made, when due, on April 2, 2002 in
respect of the Diamond Cable Communications 13.25% senior discount notes due
2004. Upon emerging from Chapter 11, NTL intends to make any required interest
payments on the notes of Diamond Holdings Limited. In accordance with the Plan,
NTL will not make future interest payments on its currently outstanding
publicly traded notes except notes issued by NTL (Triangle) LLC (a non-debtor)
and, upon emergence from Chapter 11, 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), Inc., NTL Incorporated and under the UK
credit facilities and under the 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 the
Debtors voluntary filing under Chapter 11 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) LLC. As a
result of the Chapter 11 filings, all of NTLs publicly traded debt, other than
the debt of NTL (Triangle) LLC, became immediately due and payable, pursuant to
the terms of the indentures governing such debt. The automatic stay of section
362 of the 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.

Inability to Pay Dividends On or Redeem Preferred Stock

NTL Incorporated failed to declare or pay dividends on its 13% Senior
Redeemable Exchangeable Preferred Stock due on February 15, 2002 in the amount
of $6.0 million, on May 15, 2002 in the amount of $6.2 million and on August
15, 2002 in the amount of $6.4 million. NTL Incorporated did not pay dividends
on its 5% cumulative participating convertible preferred stock held by France
Telecom on December 31, 2001 of $37.0 million, on March 31, 2002 of $37.5
million, on June 30, 2002 of $38.0 million and on September 30, 2002 of $38.4
million, or on its cumulative convertible preferred stock held by France
Telecom and a group of commercial banks on December 31, 2001 of $24.9 million,
on March 26, 2002 of $24.1 million, on June 30, 2002 of $42.1 million and on
September 30, 2002 of $41.2 million. Historically, payment of dividends has
been made in additional shares of preferred stock in the case of the 13%
preferred stock, the 5% cumulative participating preferred stock and the
cumulative convertible preferred stock. NTL Incorporated did not pay these
dividends due to a lack of available surplus under Delaware law. Under Delaware
law, NTL Incorporated cannot declare or pay dividends on or redeem its capital
stock, including its preferred stock, unless it has available surplus.

Pursuant to the terms of the 13% preferred stock, the unpaid dividends will
continue to accrue without interest until declared and paid. Pursuant to the
terms of the 5% cumulative convertible preferred stock and the cumulative
convertible preferred stock, the unpaid dividends will continue to accrue
without interest until declared and paid, together with an additional cash
dividend on the amount so unpaid at a rate of 2% per quarter for as long as the
dividends remain unpaid. The failure to declare these dividends is not a
default under any of NTLs existing agreements. With respect to the 13%
preferred stock and 5% cumulative convertible preferred stock, if dividends
remain unpaid for six quarters, the holders of each such series shall have the
right to vote separately as a class on all matters voted on by NTL Incorporated
shareholders and shall have the right, along with other holders of preferred
stock with similar default voting rights, to elect two additional directors to
NTL Incorporateds board. Pursuant to the Plan, all of these securities and
the related rights of the securities holders will be extinguished upon
effectiveness of the Plan.

In addition, the lack of available surplus meant that NTL Incorporated was not
able to redeem its Variable Coupon Redeemable Preferred Stock, Series A, which
is referred to as the Noos One Year Preferred, held by France Telecom, when it
became mandatorily redeemable on May 18, 2002. Because NTL Incorporated failed
to redeem the Noos One Year Preferred on May 18, 2002, pursuant to the
certificate of designation governing the Noos One Year Preferred, the holders
of such preferred stock have

34



---



##### Table of Contents



the right, along with other holders of preferred stock with similar default
voting rights, to elect two additional directors to NTL Incorporateds board
and shall have the right to vote separately as a class, on all matters brought
to NTL Incorporated shareholders. Pursuant to the Plan, all of these
securities and the related rights of the securities holders will be
extinguished when the Plan is consummated.

35



---



##### Table of Contents



At the time of issuance of the Noos One Year Preferred, NTL Incorporated
pledged its shares of Noos to France Telecom to secure the mandatory redemption
obligation under the Noos One Year Preferred and the 6.5% Redeemable Preferred
Stock. Under the Plan and pursuant to this pledge, NTL will transfer its 27%
interest in Noos to France Telecom.

Credit Rating Downgrades

On April 3, 2002, credit rating agency Standard & Poors lowered the long-term
corporate credit rating on some 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, which was
followed by the delisting of NTL Incorporateds common stock. NTL
Incorporateds common stock is currently quoted on the Over the Counter
Bulletin Board under the symbol NTLDQ.OB. Pursuant to the Plan, NTL
Incorporateds currently outstanding common stock will be cancelled upon
effectiveness of the Plan. The common stock and Series A warrants of New NTL
have been conditionally approved to trade on the Nasdaq National Market. The
common and preferred stock of NTL Euroco have not been approved to trade on any
exchange.

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$451.3 million). The
net proceeds from the sale were approximately A$575.3 million (US$304.5
million). At that time, the business bank debt outstanding totaled A$227.3
million (US$121.7 million). The Partnership did not have any ownership
interest in NTL Australia.

On April 5, 2002, NTL (Delaware), Inc. 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. Upon effectiveness of the
Plan, the £90 million note will be sold to Communications Cable Funding Corp.
for consideration comprising the principal amount plus accrued interest on the
note. The remaining proceeds of the sale of NTL Australia remain at NTL
(Delaware), Inc., and the Plan anticipates that such proceeds will form a
portion of the consideration to be offered to bondholders of NTL (Delaware),
Inc. and NTL Incorporated in satisfaction of their claims against those
companies.

Potential Sale of, or Outside Investment in, Cablecom

Under the terms of the agreement reached with its lenders, NTL Cablecom Holding
GmbH and/or Cablecom and/or NTL (Delaware), Inc. have agreed to approve any
outside investment in, or sale of all or a part of, the Cablecom Group, which
is acceptable to the Cablecom lenders.

Under an agreement made between the Cablecom lenders and NTL, if a sale of all
or a part of the Cablecom Group is consummated on or before August 31, 2003,
the Cablecom lenders 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 related finance documents
and other expenses and taxes of the sale.

There can be no assurance that any outside investment in, or sale of all or a
part of, the Cablecom group pursuant to the Cablecom credit facility will be
possible on terms that are acceptable to the Cablecom lenders and/or favorable
to NTL (or, if the Plan is consummated, NTL Euroco). In particular, in the
current environment, there may be little or no value to NTLs shareholding in
the Cablecom group, which may result in NTL (or, if the Plan is consummated,
NTL Euroco) receiving little or no consideration for its equity interest in the
Cablecom group. Further, if a third party makes an investment in the Cablecom
group there can be no assurance that NTL (or, if the Plan is consummated, NTL
Euroco) will be able to maintain its power to direct the management of the
Cablecom group.

Cablecom will become a part of NTL Euroco following the consummation of the
Plan. Accordingly, if Cablecom is sold, assuming consummation of the Plan, NTL
Eurocos principal assets would be limited to Premium TV Limited and certain
minority holdings.

36



---



##### Table of Contents



Investments in and Loans to
Affiliates

On April 15, 2002, a funding request for approximately $20 million was received
by NTL under the terms of the investment agreement relating to NTLs investment
in B2. NTL informed B2 and the other principal investors that it was not in a
position to comply with this request for funding. The B2 investment agreement
provides that if NTL fails to provide such funding, it might be sued for
non-payment and arguably could lose certain rights under the B2 shareholders
agreement. Pursuant to the applicable documents, if this occurs the majority
remaining shareholders may also elect to terminate the B2 shareholders
agreements with respect to NTL and exercise a contractual right to acquire on a
pro rata basis NTLs interest in B2 at 25% of fair market value. If the
remaining shareholders were able and elected to exercise these rights, NTL
could be forced to sell its stake in B2 at a loss. On October 4, 2002, NTL
filed a motion with the Bankruptcy Court to reject the B2 investment agreement
and shareholders agreements under section 365 of the Bankruptcy Code, and the
Bankruptcy Court subsequently authorized NTLs rejection of the agreements. On
November 8, 2002, B2 and the remaining shareholders filed proofs of claim with
the Bankruptcy Court asserting their right to recover: (1) more than $20
million from NTL in respect of the unpaid funding request, (2) unspecified
damages for NTLs failure to perform under the relevant agreements, and (3)
unspecified costs and expenses incurred in the exercise of their remedies under
the agreements. Additionally, B2 and the remaining shareholders reserved their
rights to avail themselves of any remedies under the investment and
shareholders agreements and to take any actions to acquire NTLs interest in
B2, as described above. NTL intends to object to the proofs of claim filed by
B2 and the remaining shareholders. The Bankruptcy Court will adjudicate the
claims of B2 and the remaining shareholders and NTLs defenses thereto. The
Partnership does not have any ownership interest in this group, although the
condition of this group can indirectly impact the Partnership to the extent it
impacts NTL Incorporated or NTL (Delaware), Inc., both parent companies of the
Partnership, or otherwise impacts the recapitalization process. Upon
consummation of the Plan, NTL Euroco will succeed to the rights and obligations
of NTL described in this paragraph.

Premium TV Limited, a wholly-owned subsidiary of NTL (Delaware), Inc., is
obliged to provide funding of up to approximately £19.0 million ($29.8 million)
to fund various of its joint venture interests. Of this amount, the payment of
approximately £4.0 million ($6.3 million) has been guaranteed by NTL
(Delaware), Inc. If Premium TV Limited fails to provide its committed funding
under the relevant shareholder arrangements relating to these joint ventures,
Premium TV Limited and, in respect of the guaranteed amounts, NTL (Delaware),
Inc., may be sued for non-payment. As a result of the recapitalization process,
the relevant joint venture partners may assert that they can compulsorily
acquire Premium TV Limiteds interest in the relevant joint venture at a third
party appraisal valuation. Premium TV Limited is currently in discussions with
certain of these joint venture partners with a view to restructuring the
relevant joint ventures. In the event that these discussions do not reach a
resolution acceptable to Premium TV Limited, Premium TV Limited may seek to
discontinue these joint ventures and terminate their activities. NTL believes,
however, that it has various defenses and protections under the Bankruptcy Code
against such actions and intends to enforce vigorously its rights and
protections.

On September 24, 2002, Premium TV Limited, NTL (Delaware), Inc. and NTL
Incorporated agreed to vary the terms of the long-term joint venture (referred
to as the Football League Joint Venture) between Premium TV Limited and the
Football League Limited. Under the terms of the variation, upon the payment of
arrears of rights fees by Premium TV Limited, the Football League Limited
agreed to release Premium TV Limited from its obligation to fund the payment of
any further rights fees to the Football League Limiteds member teams and its
obligation to provide working capital funding to the Football League Joint
Venture. The Football League Limited also agreed to release NTL (Delaware),
Inc. from its guarantee of Premium TV Limiteds obligations and to release NTL
Incorporated from the related undertaking. In return, Premium TV Limited
agreed to waive repayment of loan capital by the Football League Joint Venture
and to provide certain ongoing services to the Football League Joint Venture
free of charge for an initial period. NTL (Delaware), Inc. deposited £10.33
million into a designated single purpose account for use by Premium TV Limited
to finance the provision of such services. Premium TV Limited and the Football
League Limited also agreed to new terms relating to the distribution of
revenues generated by the Football League Joint Venture. The Partnership does
not have any ownership interest in this group, although the condition of this
group can indirectly impact the Partnership to the extent it impacts NTL
Incorporated or NTL (Delaware), Inc., both parent companies of the Partnership,
or otherwise impacts the recapitalization process. Following consummation of
the Plan, Premium TV Limited will be an asset of NTL Euroco.

On November 12, 2002, three of NTL Incorporateds wholly owned subsidiaries
entered into a support agreement with the other limited partners of eKabel
L.P. (the investment partnership through which NTL holds its equity stake in
iesy), an informal committee holding in excess of a majority of the principal
amount of the high-yield bonds of iesy and the NTL employees who have been
seconded to work for iesy. At this time, the iesy companies are not parties to
the support agreement, however the support agreement permits them to become
parties at any time. The support agreement contemplates an in-or out-of-court
restructuring of iesy Hessen GmbH and its subsidiaries. If the iesy
restructuring is completed as contemplated by the support

37



---



##### Table of Contents



agreement, Brigadoon Ventures (one of the NTL subsidiaries) will receive a cash
facilitation fee for its cooperation in the iesy restructuring (not in respect
of its equity stake in iesy) of approximately $1.3 million, less its pro rata
share of expenses incurred at the eKabel partnership level. If the iesy
restructuring is completed and the cash facilitation fee is paid to Brigadoon
Ventures, NTL would no longer have any equity stake or other investment in iesy
and would receive no consideration for its equity stake in iesy. The support
agreement imposes certain obligations on the parties, including restricting
transfer of interests in iesy during the process, terminating the existing
consulting agreement between NTL and iesy, and reimbursing NTL for the
secondment of NTL employees. If the support agreement is terminated or the iesy
restructuring is not otherwise completed as contemplated by the support
agreement, it is likely NTL Europe would receive little, if any, value for its
equity stake in the iesy companies. The Partnership does not have any ownership
interest in this group, although the condition of this group can indirectly
impact the Partnership to the extent it impacts NTL Incorporated or NTL
(Delaware), Inc., both parent companies of the Partnership, or otherwise
impacts the recapitalization process. Following consummation of the Plan, the
interest in iesy will be an asset of NTL Euroco.

Relationships with Suppliers

The uncertainty over NTLs financial condition may adversely affect its
relationships with its suppliers. If NTLs suppliers become increasingly
concerned about its financial condition, they may demand quicker payment terms
or not extend normal trade credit, both of which could further adversely affect
its results of operations, financial condition and cash flows.

38



---



##### Table of Contents



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 September 30, 2002, the Partnership had current
liabilities of $3,113,090 of which $2,905,609 was owing to NTL group companies,
and consolidated current liabilities of $61,158,262, of which $60,950,781 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.

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, of availability was cancelled 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.

39



---



##### Table of Contents



Thereafter, NTL South Herts has been, and will continue to be, reliant
upon the financial 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).

Condensed Consolidated Statement of Cash Flows

Net cash generated from operating activities amounted to $1,408,242 and
$24,979,660 for the nine months ended September 30, 2002 and 2001,
respectively. Net cash used in investing activities amounted to $1,408,242 and
$4,073,852 for the nine months ended September 30, 2002 and 2001. In addition
repayments of the principal on the South Herts Credit Agreement amounted to
$nil compared with $20,905,808 in 2001.

Selected Operating Data

The following table sets forth certain data concerning the Partnerships UK
Franchises at September 30, 2002

|                                        |  |               |        |  
|--------------------------------------- |  | ------------- | ------ | -
|                                        |  | September 30,
|                                        |  | 2002         
|                                        |  |              
|Homes passed (1)                        |  |               | 91,817 |  
|                                       
|                                       
|                                       
|                                       
|Homes marketed (2)                      |  |               | 91,817 |  
|                                       
|                                       
|                                       
|                                       
|Total customers                         |  |               | 32,176 |  
|                                       
|                                       
|                                       
|                                       
|Digital Subscribers                     |  |               | 20,398 |  
|                                       
|                                       
|                                       
|                                       
|Broadband Subscribers                   |  |               | 4,284  |  
|                                       
|                                       
|                                       
|                                       
|Penetration (Homes marketed) (3)        |  |               | 35     | %
|                                       
|                                       
|                                       
|                                       
|Churn
(4)                               |  |               | 14.7   | %
|                                       
|                                       
|                                       
|                                       
|Average monthly revenue per unit (ARPU) |  |               | £47.05 |  



|1. |  | Homes passed is the number of homes that have had ducting buried outside.                                                                          
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Homes marketed is the number of homes activated for which the initial
marketing phase (including door to door direct marketing) has been
completed.
|  
|3. |  | Penentration rate is calculated by dividing the number of customers by
the number of homes marketed.                                               
|  
|4. |  | Churn is the number of
customers not continuing with any of the companys products expressed
as a percentage of the total number of customers.     

Results of Operations

Consolidated financial information for the Company for the nine and three
months ended September 30, 2002 and 2001 is as follows (NM denotes
percentage is not meaningful):

|                                                                |  |                   |            |                     |  |   |             |   |  |  |            |   |  |    |       |  
|--------------------------------------------------------------- |  | ----------------- | ---------- | ------------------- |  | - | ----------- | - |  |  | ---------- | - |  | -- | ----- | -
|                                                                |  | Nine Months Ended |            |                     |  |   |             |   |  | 
|                                                                |  | September 30,     |            | Increase/(Decrease)
|                                                                |  |                   |            |                    
|                                                                |  | 2002              |            | 2001                |  | $ |             | %
|                                                                |  |                   |            |                     |  |   |             |  
|Revenues                                                        |  | $                 | 21,940,923 |                     |  | $ | 20,969,184  |   |  |  | 971,739    |   |  |    | 4.6   |  
|                                                               
|                                                               
|                                                               
|                                                               
|Operating, selling, general and
administrative
expenses         |  |                   | (8,444,958 | )                   |  |   | (9,138,589  | ) |  |  | (693,631   | ) |  |    | (7.6  | )
|                                                               
|                                                               
|                                                               
|                                                               
|Management fees and allocated
overhead from the General
Partner |  |                   | (8,925,873 | )                   |  |   | (9,637,401  | ) |  |  | (711,528   | ) |  |    | (7.4  | )
|                                                               
|                                                               
|                                                               
|                                                               
|Other expenses                                                  |  |                   | (514,700   | )                   |  |   |            |   |  |  | 514,700    |   |  | NM
|                                                               
|                                                               
|                                                               
|                                                               
|Depreciation                                                    |  |                   | (5,602,926 | )                   |  |   | (12,856,869 | ) |  |  | (7,253,943 | ) |  |    | (56.4 | )
|                                                                |  |                   |            |                     |  |   |             |   |  |  |            |   |  |    |       |  
|Operating loss                                                  |  |                   | (1,547,534 | )                   |  |   | (10,663,675 | ) |  |  | (9,116,141 | ) |  |    | (85.5 | )
|                                                                |  |                   |            |                     |  |   |             |   |  |  |            |   |  |    |       |  
|Interest expense                                                |  |                   | (1,095,563 | )                   |  |   | (1,161,405  | ) |  |  | (65,482    | ) |  |    | (5.7  | )
|                                                               
|                                                               
|                                                               
|                                                               
|Other                                                           |  |                   | (66,578    | )                   |  |   | (64,992     | ) |  |  | 1,586      |   |  |    | 2.4   |  
|                                                                |  |                   |            |                     |  |   |             |   |  |  |            |   |  |    |       |  
|Net loss before minority interest                               |  |                   | (2,709,675 | )                   |  |   | (11,890,072 | ) |  |  | (9,180,397 | ) |  |    | (77.2 | )

40



---



##### Table of Contents



|                   |  |                   |            |                     |  |   |            |   |  |  |            |   |  |  |       |  
|------------------ |  | ----------------- | ---------- | ------------------- |  | - | ---------- | - |  |  | ---------- | - |  |  | ----- | -
|                   |  | Nine Months Ended |            |                     |  |   |            |   |  | 
|                   |  | September 30,     |            | Increase/(Decrease)
|                   |  |                   |            |                    
|                   |  | 2002              |            | 2001                |  | $ |            | %
|                   |  |                   |            |                     |  |   |            |  
|                  
|                  
|                  
|                  
|Minority interests |  |                   | 596,409    |                     |  |   | 3,855,739  |   |  |  | (3,259,330 | ) |  |  | (84.5 | )
|                  
|                  
|                  
|                  
|Net loss           |  | $                 | (2,113,266 | )                   |  | $ | (8,034,333 | ) |  |  | (5,921,067 | ) |  |  | (73.7 | )
|                   |  |                   |            |                     |  |   |            |   |  |  |            |   |  |  |       |  

|                                                                |  |                    |            |                     |  |   |            |   |  |  |          |   |  |    |       |  
|--------------------------------------------------------------- |  | ------------------ | ---------- | ------------------- |  | - | ---------- | - |  |  | -------- | - |  | -- | ----- | -
|                                                                |  | Three Months Ended |            |                     |  |   |            |   |  | 
|                                                                |  | September 30,      |            | Increase/(Decrease)
|                                                                |  |                    |            |                    
|                                                                |  | 2002               |            | 2001                |  | $ |            | %
|                                                                |  |                    |            |                     |  |   |            |  
|Revenues                                                        |  | $                  | 7,516,867  |                     |  | $ | 6,912,705  |   |  |  | 604,162  |   |  |    | 8.7   |  
|                                                               
|                                                               
|                                                               
|                                                               
|Operating, selling, general and
administrative
expenses         |  |                    | (2,632,957 | )                   |  |   | (2,863,457 | ) |  |  | (230,500 | ) |  |    | (8.0  | )
|                                                               
|                                                               
|                                                               
|                                                               
|Management fees and allocated
overhead from the General
Partner |  |                    | (2,944,320 | )                   |  |   | (3,016,889 | ) |  |  | (72,569  | ) |  |    | (2.4  | )
|                                                               
|                                                               
|                                                               
|                                                               
|Other expenses                                                  |  |                    | (514,700   | )                   |  |   |           |   |  |  | 514,700  |   |  | NM
|                                                               
|                                                               
|                                                               
|                                                               
|Depreciation                                                    |  |                    | (2,064,893 | )                   |  |   | (1,915,526 | ) |  |  | 149,367  |   |  |    | 7.8   |  
|                                                                |  |                    |            |                     |  |   |            |   |  |  |          |   |  |    |       |  
|Operating loss                                                  |  |                    | (640,003   | )                   |  |   | (883,167   | ) |  |  | (243,164 | ) |  |    | (27.5 | )
|                                                                |  |                    |            |                     |  |   |            |   |  |  |          |   |  |    |       |  
|Interest expense                                                |  |                    | (403,879   | )                   |  |   | (311,896   | ) |  |  | 91,983   |   |  |    | 29.5  |  
|                                                               
|                                                               
|                                                               
|                                                               
|Other                                                           |  |                    | (23,255    | )                   |  |   | (21,616    | ) |  |  | 1,639    |   |  |    | 7.6   |  
|                                                                |  |                    |            |                     |  |   |            |   |  |  |          |   |  |    |       |  
|Net loss before minority interest                               |  |                    | (1,067,137 | )                   |  |   | (1,216,679 | ) |  |  | (149,542 | ) |  |    | (12.3 | )
|                                                               
|                                                               
|                                                               
|                                                               
|Minority interests                                              |  |                    | 140,113    |                     |  |   | 414,460    |   |  |  | (274,347 | ) |  |    | (66.2 | )
|                                                                |  |                    |            |                     |  |   |            |   |  |  |          |   |  |    |       |  
|Net loss                                                        |  | $                  | (927,024   | )                   |  | $ | (802,219   | ) |  |  | 124,805  |   |  |    | 15.6  |  
|                                                                |  |                    |            |                     |  |   |            |   |  |  |          |   |  |    |       |  

South
Herts provides a broad range of communication services including
consumer telecommunications and television, and business
telecommunications. The consumer telecommunications and television
services comprise broadband services to consumer markets including
residential telephone, analog and digital cable television,
narrowband and broadband internet access, and interactive services.
Business telecommunications consists of broadband services to
business markets comprising business telecommunications, narrowband
and broadband internet services and managed network services.

As expected, our growth in 2002 has been curtailed by funding constraints.
Although our current business plan includes a reduction in the number of new
customers and an increase in revenue from existing customers, our cash
constraints present many challenges to the successful execution of the plan. We
are conserving cash by minimizing capital expenditures including
expenditures to connect new customers to our network. In order to maintain
revenues and cash from operations while reducing the number of new customers,
we must reduce and limit customer churn. We intend to focus on
improving our
customer service and increase our service offering to customers in an effort to
curtail and reduce churn. NTL is in the process of integrating its various
billing systems and customer databases in an effort to improve one of the main
tools we use to provide customer service. This effort is at an early
stage although four franchise areas have been partially migrated
through September 30, 2002. Although the new system does not yet
support NTLs full suite of services, NTL expects to complete
the project substantially by the fourth quarter of 2003. The total
project cost is estimated to be approximately £63 million,
of which NTL has incurred approximately £14.3 million
through September 30, 2002. NTL cannot be certain that this
project will be successful. If the full integration is not
successful, we could experience an adverse effect on customer service
and on its costs of maintaining the legacy systems going forward.

Our plan to reduce churn and to increase ARPU includes an increase in
broadband services to our existing customers. We believe that our triple play
offering of telephony, broadband access to the Internet and digital television
will continue to prove attractive to our existing customer base, which will
result in higher ARPU as revenues per existing customer increase. However, there
is significant competition in our markets, through digital satellite and
digital terrestrial television and through alternative Internet access media,
such as DSL offered by BT. If we are unable to charge the prices for these
services that we anticipate in our business plan in response to competition or
if our competition is able to attract our customers, our ARPU and results of
operations will be adversely affected.

NTL
currently expects to incur restructuring charges in the fourth
quarter of 2002 of approximately £20 million as part of its
continuing effort to reduce operating costs and re-size business
units. The charges will include employee severance and related costs
to exit business activities. The Partnership expects to be charged for its share of these costs in the fourth quarter of 2002.

Media
speculation regarding NTLs financial condition 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
alternative telecom carriers in general may effect our reputation. One of the
key strategies in our business plan is to increase our penetration of higher
value

41



---



##### Table of Contents



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 our financial condition and the effect of
that publicity on our brand name, we may find it difficult to convince SMEs to
become our customers. We believe our recapitalization process and the general
climate for alternative telecom carriers effected our revenues in the first
half of 2002 as prospective customers began deferring orders beginning in the
fourth quarter of 2001. Even if we successfully complete the recapitalization
process, there is no assurance that the negative publicity will not adversely
impact our results of operations or have a long-term negative effect on our
brand.

In addition, this uncertainty may adversely affect our relationships with
suppliers. If suppliers become increasingly concerned about our financial
condition, they may demand faster payments or not extend normal trade credit,
both of which could further adversely affect our cash conservation measures and
our results of operations. However, this did not have any significant effect on
our results of operations or cash flows in the first half of 2002.

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

Ongoing
reviews of certain balance sheet accounts being conducted by NTL have
indicated that there may be provisions that may no longer be
necessary in light of the resolution of the issues and other
liabilities that such provisions sought to address. The process of
making this determination is expected to be completed in the fourth
quarter of 2002, and could result in at least an approximate
£30 million increase in NTLs EBITDA for the twelve
months ending December 31, 2002.

The
preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires the use
of estimates, assumptions and judgments that have an impact on the
assets, liabilities, revenue and expense amounts reported, as well as
disclosures about contingencies, risk and financial condition.
NTLs determination of the amount of labor and overhead to
capitalize in connection with the design and installation of fixed
assets, and its recording of provisions for liabilities, requires the
use of such estimates, assumptions and judgments.

As
a result of capital constraints imposed on its business, NTL has been
engaged in a process of reducing its expenditures in a variety of
areas, including those related to expanding its customer base, and
those related to service arrangements with third parties that provide
capital improvements as part of their services. These measures, as
well as the significant restructuring of NTLs business in 2002
in terms of headcount reduction and departmental reorganization, have
caused NTL to reassess whether for some 2002 expenditures,
assumptions and estimates relating to the allocation of those costs
between capital and operating expense need to be revised. This study is
not sufficiently complete to book any changes, but is expected to be completed in the fourth quarter of 2002, and could result in up to an approximate £45 million increase in expense (and the resulting equivalent
reduction in EBITDA and fixed assets) for the twelve months ending
December 31,
2002. South Herts currently
expects no aggregate material impact on its financial position or
results of operations as of and for the year ending December 31,
2002 arising from this matter.

Revenues of the Partnership increased by $604,162 for the three months
ended September 30, 2002, from $6,912,705 over the corresponding period in 2001
to $7,516,867 in 2002. Revenues of the Partnership increased by $971,739 for
the nine months ended September 30, 2002, from $20,969,184 over the
corresponding period in 2001 to $21,940,923 in 2002. The increases in revenue
resulted from an increase in the number of digital customers served by the
South Herts System. At September 30, 2002, the Company served
20,398 digital
customers compared with 18,765 digital customers at September 30, 2001. Also,
during 2001, NTL South Herts launched its broadband internet access service and
at September 30, 2002 had 4,284 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 $282,731 for the three months ended September
30, 2002, from $2,830,388 over the corresponding period in 2001 to $2,547,657
in 2002. Cost of goods sold decreased $767,336 for the nine months ended
September 30, 2002, from $8,940,703 over the corresponding period in 2001 to
$8,173,367 in 2002. Cost of goods sold has reduced owing to efficiencies and
cost reductions achieved by NTL.

Selling, general and administrative expenses amounted to $85,300 for the
three months ended September 30, 2002, compared with $33,069 over the
corresponding period in 2001. Selling, general and administrative expenses
amounted to $271,591 for the nine months ended September 30, 2002, compared
with $197,886 over the corresponding period in 2001. The increase in selling,
general and administrative expenses is attributable to changes in the pound
sterling/U.S. dollar exchange rate as certain costs of the partnership,
including interest expense with respect to loans from affiliates of the General
Partner, referred to below, are incurred in pounds sterling but reported in U.S. dollars. The
Partnership incurred foreign currency losses of $65,198 and gains of $4,851 for
the three months ended September 30, 2001 and nine months ended September 30,
2001, respectively, and foreign currency losses of $43,687 and $122,616 for the
three months ended September 30, 2002 and nine months ended September 30, 2002,
respectively.

Management fees and allocated overhead from the General Partner decreased
by $72,569 for the three months ended September 30, 2002, from $3,016,889 over
the corresponding period in 2001 to $2,944,320 in 2002. Management fees and
allocated overhead from the General Partner decreased by $711,528 for the nine
months ended September 30, 2002, from $9,637,401 over the corresponding period
in 2001 to $8,925,873 in 2002. Management fees and allocated overhead from the
General Partner have reduced due to efficiencies and cost reductions achieved
by NTL.

Other expenses of $514,700 in 2002 were allocated to the Partnership by a
subsidiary of NTL and relate to employee severance and related costs, business
rationalization costs and recapitalization expenses. These charges are made on
the basis of an allocation formula appropriate to each category of charge that
is based on managements judgement of a reasonable methodology given the facts
and circumstances.

Depreciation expense increased $149,367 for the three
months ended September 30, 2002, from $1,915,526 over the corresponding period
in 2001 to $2,064,893 in 2002. Depreciation expense decreased
$7,253,943 for the nine months ended September 30, 2002, from $12,856,869 over
the corresponding period in 2001 to $5,602,926 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

42



---



##### Table of Contents



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 Partnership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 September 30, 2002 of the reduction in the
useful economic lives of these assets was $85,324.

Interest expense increased by $91,983 for the three months ended September
30, 2002, from $311,896 over the corresponding period in 2001 to $403,879 in
2002. Interest expense decreased by $65,842 for the nine months ended September
30, 2002, from $1,161,405 over the corresponding period in 2001 to $1,095,563in
2002. Overall, interest expense has reduced 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.

Net loss increased by $124,805 for the three months ended September 30,
2002, from a loss of $802,219 over the corresponding period in 2001 to a loss
of $927,024 in 2002. Net loss decreased by $5,921,067 for the nine months
ended September 30, 2002, from a loss of $8,034,333 over the corresponding
period in 2001 to a loss of $2,113,266 in 2002. The reduction in net loss over
the period to September 30, 2002 compared to 2001 is principally owing to
efficiencies and cost reductions achieved by NTL and the adjustment to
depreciation charge in the first quarter 2001 following the review of the asset
lives of certain network assets of NTL South Herts.

Recent Accounting Pronouncements

On July 30, 2002, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 146, Accounting for
Costs Associated with Exit or Disposal Activities. SFAS No. 146 replaces
Emerging Issues Task Force Issue No. 94-3 Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity (including
Certain Costs Incurred in a Restructuring). SFAS No. 146 requires that a
liability for costs associated with an exit or disposal activity is recognized
when the liability is incurred. Under Issue No. 94-3, a liability for an exit
cost as defined is recognized at the date of a commitment to an exit or
disposal plan. SFAS No. 146 is effective for exit or disposal activities that
are initiated after December 31, 2002. The adoption of this standard is not
expected to have a significant effect on the results of operations, financial
condition or cash flows of the Company.

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB
Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical
Corrections, which is effective for the Company on January 1, 2003. The
adoption of SFAS No. 145 will require any gain or loss recognized on the
extinguishment of debt to be classified as income or loss from continuing
operations. Prior to SFAS No. 145, gain or loss from the extinguishment of
debt was classified as an extraordinary item.

In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, effective for the Company on
January 1, 2002. This Statement superceded SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of
and other related accounting guidance. The adoption of this new standard had no
effect on the results of operations, financial condition or cash flows of the
Company.

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations, effective for the Company on January 1, 2003. This
Statement addresses financial accounting and reporting for obligations
associated with the retirement of tangible fixed assets and the associated
asset retirement costs. The Company is in the process of evaluating the
financial statement impact of the adoption of SFAS No. 143.

In June 2001, the FASB issued SFAS No. 141, Business Combinations, and
No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 requires that the
purchase method of accounting be used for all business combinations initiated
after June 30, 2001. Use of the pooling-of-interests method is no longer
permitted. SFAS No. 141 also includes guidance on the initial recognition and
measurement of goodwill and other intangible assets acquired in a business
combination that is completed after June 30, 2001.

SFAS No. 142 ends the amortization of goodwill and indefinite-lived
intangible assets. Instead, these assets must be reviewed annually (or more
frequently under certain conditions) for impairment in accordance with this
statement. This impairment test

43



---



##### Table of Contents



uses a fair value approach rather than the undiscounted cash flow approach
previously required by SFAS No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. The Company
adopted SFAS No. 142 on January 1, 2002. Primarily due to the significant
impairment charge that the Company recorded in 2001, the adoption of this new
standard did not have a significant effect on the results of operations,
financial condition or cash flows of the Company.

Upon the adoption of SFAS No. 142, the Company performed an analysis of
its intangible assets acquired before July 1, 2001 to determine whether they
should be classified and accounted for as part of or separate from goodwill.
The Company determined that license acquisition costs and customer lists should
continue to be classified separate from goodwill. The Company determined that
license acquisition costs would no longer be subject to amortization since they
are deemed to have an indefinite useful life. The Company also determined that
no changes in the remaining useful lives of the customer lists were required.

The Company also performed an evaluation for impairment of its goodwill
and license acquisition costs as of January 1, 2002 and determined that no
impairment charge was required. The Companys next evaluation of impairment
will be the annual test as of October 1, 2002.

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 in this Form 10-Q, 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 Registrant, 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, among others, those set forth under the caption Risk
Factors in this Form 10-Q as well as: the ability of the Partnership to
continue as a going concern; the ability of the Partnership to obtain trade
credit and shipments and terms with vendors and service providers for current
orders; the Partnerships ability to maintain contracts that are critical to
its operations; potential adverse developments with respect to the
Partnerships liquidity or results of operations; the ability to fund and
execute its business plan; the ability to attract, retain and compensate key
executives and associates; the ability of the Partnership to attract and retain
customers; general economic and business conditions; technological
developments; the Partnership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 and interest rate and currency
exchange rate fluctuations. The Partnership 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.




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 $4,194 and $17,892 for the three and nine months period end
September 30, 2002 respectively. The South Herts Credit Agreement was repaid in
full with funding from NTL on February 21, 2001 which eliminates significantly
all interest rate risk to the Company.




ITEM 4. CONTROLS AND PROCEDURES

(a)  Evaluation of Disclosure Controls and Procedures. The Directors of
the General Partner who serve as Chief Executive Officer and Chief Financial
Officer of NTL Incorporated*, the indirect parent of the General Partner, have
conducted an evaluation of the effectiveness of the Partnerships disclosure
controls and procedures (as such term is defined in Rule 13a-14(c) and
15d-14(c) under the Exchange Act of 1934 (the Exchange Act)) as of a date
within 90 days prior to the filing date of this quarterly report (the
Evaluation Date). Based on that evaluation, the Directors of the General
Partner concluded that, as of the Evaluation Date, the Partnerships
disclosure controls and procedures are effective in alerting them on a timely
basis to material information relating to the Partnership (including the
Company) required to be included in the Partnerships reports filed or
submitted under the Exchange Act.

44



---



##### Table of Contents



(b)  Changes in Internal Controls. Since the Evaluation Date, there have
been no significant changes in the Partnerships internal controls, or in other
factors that could significantly affect the Partnerships internal controls.



---

|* |  | The Partnership has no Chief Executive Officer or Chief Financial
Officer. Barclay Knapp and John F. Gregg are Directors of Fawnspring
Limited, the general partner of the Partnership, and are Chief Executive
Officer and Chief Financial Officer, respectively, of NTL Incorporated,
the indirect parent of Fawnspring Limited.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

45



---



##### Table of Contents






RISK FACTORS

We currently have limited
liquidity and are dependent upon NTL to meet our liquidity
requirements. If NTL is unable to consummate the Plan,
and cannot otherwise complete a successful recapitalization, there is
substantial doubt about our ability to continue as a going concern.

The Partnership has no independent
operations or significant assets other than its investment in NTL
South Herts. The Partnership does not generate sufficient cash flow
from its
operations to fund its operational expenses. The Partnership has
historically met these cash requirements through cash flow from
operations, issuances of limited partnership units and borrowing from
commercial banks and NTL. Given NTLs liquidity
constraints, unless its proposed recapitalization plan is implemented it is
likely that NTL will not be able to provide us
with cash at least for the short-term.

NTL does not currently have access to
its historic sources of liquidity in the
capital markets and NTLs credit facilities are either fully drawn or NTL is
currently unable to access remaining undrawn amounts. As a consequence of these
conditions, NTL identified the need to restructure its outstanding debt and/or
raise new funds through the implementation of a recapitalization. The
recapitalization is intended to be effected through consummation of the Plan.
On September 5, 2002, the Bankruptcy Court confirmed the Plan. Consummation of
the Plan remains subject to the satisfaction or waiver of certain conditions.

The successful consummation of the Plan is not assured as it will require NTL
to satisfy certain conditions, including obtaining exit financing, which is not
assured.

The consummation of the Plan is subject to the satisfaction or waiver of
certain conditions set forth in the Plan. Among other things, the most
substantial conditions include obtaining exit financing for New NTL and
obtaining the consent of NTLs UK bank lenders to such financing and to
modifications to the terms of the UK bank facilities acceptable to both NTL and
NTLs official creditors committee. Although NTL is currently finalizing
negotiations with a group of potential lenders for such an exit facility, there
can be no assurance that NTL will be able to reach final agreement on terms or
that the requisite agreement to such terms will be obtained from the lenders
under NTLs UK credit facilities. Similarly, there can be no
guarantee NTL will
be able to obtain acceptable modifications to NTLs UK bank facilities. If these
agreements cannot be reached and an alternate source of exit financing cannot
be secured, NTL may not be able to consummate the Plan. If that were to
happen, the Debtors would continue to remain in Chapter 11, and there can be no
assurance that an alternative plan of reorganization could be reached in a
timely manner or at all. NTLs DIP facility matures on December 1, 2002. In
light of NTLs limited liquidity NTL could not sustain its current operations in
Chapter 11 for an extended period unless the DIP lenders agreed to extend the
maturity of the DIP facility or an alternative source of financing becomes
available. If a liquidation would then be necessary, there is a risk that the
value of NTL would be eroded to the detriment of some or all of NTLs stakeholders.

NTL is in default under its credit facilities.

There are continuing events of default under NTLs UK credit facilities and the
Cablecom credit facility. These events of default entitle the lenders under NTLs
credit facilities to accelerate repayment. NTL does not have sufficient cash
resources to repay its

46



---



##### Table of Contents



outstanding indebtedness if it is declared immediately due and payable. In
addition, the lenders could also seek to take control over the assets over
which they hold security, although the assets owned by the Partnership are not
included in such security.

NTL did not pay interest due on some of its outstanding notes and 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 beginning on
April 1, 2002. Upon emerging from Chapter 11, NTL intends to make any required
interest payments on the notes of Diamond Holdings Limited. In accordance with
the Plan, NTL does not plan to make future interest payments on its currently
outstanding publicly traded notes except notes issued by NTL (Triangle) LLC
and, upon emergence from Chapter 11, 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) LLC.
As a result of the Chapter 11 filings, this debt is immediately due and
payable.

NTL has no current availability 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. The Cablecom credit facility is due to be repaid on
April 30, 2003. Without substantial investment from a third party or further
borrowing, Cablecom will be unable to repay the facility which will have a
material adverse effect on its business.

It is likely NTL will lose its
net operating loss carryforwards for U.S. income tax purposes in
connection with the consummation of the Plan.

Consummation of the Plan, which
includes a restructuring of NTLs debt, can be
expected to give rise to cancellation of indebtedness (COD), which in the
course of a proceeding pursuant to Chapter 11, would be non-taxable. If the COD
is non-taxable, we will be required to reduce our net operating loss
carryforwards and other attributes such as capital loss carryforwards and tax
basis in assets by an amount equal to the non-recognized COD. As a result, it
is likely that as a result of the successful consummation of the Plan, we will
have no U.S. net operating loss carryforwards.

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

Adverse publicity or news coverage regarding NTLs financial condition, the
Chapter 11 bankruptcy filings and potential outcomes of the recapitalization
process could have an adverse effect on parts of NTLs business. Similarly,
negative press about the financial condition of other cable and pay television
operations and alternative telecom carriers in general may effect 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 consummates the Plan, 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 have adversely affected relationships with
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. We 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, particularly if NTL is unsuccessful

47



---



##### Table of Contents



in consummating the Plan. 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.

Historically, construction and operating expenditures and interest costs have
resulted in negative cash flow. We also expect to continue 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.

NTLs growth has been
curtailed by funding constraints.

NTL has significantly decreased the amount it is spending on capital
expenditures due to liquidity constraints and expects to further reduce capital
expenditures during 2003. As a result, we may be unable to increase our
customers in the short term and our near-term revenue and future revenue growth
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 meet
liquidity requirements during 2003. The decrease in capital spending is in line
with NTLs current strategy of maximizing revenue from existing customers
rather than increasing its customer base. In NTLs consumer business in the UK,
NTL expects customers to decrease in 2002. Difficulties in obtaining additional
funding will likely hamper NTLs ability to connect new
customers to its network
and increase revenue.

One of NTLs 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.

NTL has experienced rapid growth and development in a relatively short period,
either through acquisitions or connecting customers to its network. One of NTLs
biggest challenges as it has grown has been to limit customer churn and
the successful implementation of its business plan depends upon a reduction in
the percentage of customers that stop using its services. Factors
contributing to increase of churn during 2001 included the continued
integration of the acquisition of the UK consumer cable television business
from Cable and Wireless plc, the existence of multiple billing systems, the
introduction of digital television and NTLs decision to disconnect some of our
poor paying customers.

In order to reduce churn in the
future, NTL aims to improve its customer service.
This improvement will be difficult to obtain without an integrated billing
system and a customer database across NTLs entire network. NTL
does not as yet have
an integrated billing and operational platform. NTL is in the process of
integrating its various billing systems and customer databases in an effort to
improve one of the main tools NTL uses to provide customer service.
NTL expects to
substantially complete the project by the fourth quarter of 2003. The total
project cost is estimated to be approximately
£63.0 million, of which NTL has
incurred approximately £14.2 million through September 30, 2002. If the full
integration is not successful, NTL could experience an adverse effect on
customer service and on the costs of maintaining these systems going forward.

NTLs ability to reduce churn could also be adversely affected by the recently
launched digital terrestrial television service offered by BskyB and the BBC in
the UK.

Another part of NTLs strategy to reduce churn is an increased take up of
broadband services by existing customers. If this increased level of take
up does not materialize NTL may have difficulties in reducing churn levels,
thereby adversely impacting its results of operations.

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

A significant component of NTLs strategy is to successfully market broadband
products to its existing consumer customer base. NTL believes that its triple
play offering of telephony, broadband access to the Internet and digital
television will prove attractive to its existing customer base and
allow it to
increase average revenue per user. However, NTL faces 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 NTLs competitors have substantially greater financial and technical
resources than it does. If NTL

48



---



##### Table of Contents



is unable to charge prices for
broadband services that are anticipated in its
business plan in response to competition or if its competition delivers a
better product to customers, 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 most of those key
executive officers. Following consummation of the Plan, New NTL and NTL Euroco
expect to enter into employment agreements with certain of their senior
officers which will include non-compete undertakings and severance payment
provisions.

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. Customer demand for this service is uncertain
as customers may not readily switch from their current telephony service,
especially if the quality of the service is not or is perceived not to be
comparable to other telephony services. Similarly, our investments in other 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.

49



---



##### Table of Contents



NTL is subject to currency risk because we obtain a substantial amount of
financing in U.S. dollars and Euro but generally generate revenues and incur
expenses in other currencies.

NTL encounters currency exchange rate
risks because NTL generates revenues and
incurs construction and operating expenses in other currencies, primarily in
pounds sterling while NTL pays interest and principal obligations with respect to
most of its existing indebtedness in U.S. dollars and Euro. NTL cannot assure
you that the hedging transactions NTL has entered into or any other hedging
transactions NTL might enter into will be successful or that shifts in the
currency exchange rates will not have a material adverse effect on NTL. For
example, to the extent that the pound sterling declines in value against the
U.S. dollar and, to a lesser extent, the Euro, and NTL has not fully hedged
against such declines, the effective cost of servicing NTL's U.S. dollar and Euro
debt will be higher and NTL will incur currency losses.

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 which were commenced by seven of its purported shareholders, on
behalf of certain purchasers of NTL Incorporateds securities, in addition to
another suit filed by a shareholder based on similar allegations, may have a
negative impact on its results of operations and business. 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 Plan provides for the discharge under the Bankruptcy Code
of all claims arising out of the remaining suits against NTL
Incorporated if the Plan is consummated. The
claims arising out of the suits against the individual officers remain and will
not be discharged under the Bankruptcy Code if the Plan is consummated. If the
claims against these officers are not resolved, defense of such suits may
divert the officers time and resources from managing the operations of NTLs
business. If these officers spend significant amounts of time defending these
lawsuits, there may be a negative impact on results of operations and business.

50



---



##### Table of Contents






PART II. OTHER INFORMATION




ITEM 6. EXHIBITS AND REPORTS
ON FORM 8-K.



| | a) |  | Exhibits 99.1 Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | Reports on Form 8-K                                                                                                                  

During the quarter ended September 30, 2002, the Company filed a Current
Report on Form 8-K, dated September 6, 2002, reporting under Item 3, Bankruptcy
or Receivership, that the Bankruptcy Court had entered an order confirming the
Second Amended Joint Reorganization Plan of NTL Incorporated and Certain
Subsidiaries, filed on July 15, 2002 (as modified on September 5, 2002).

51



---



##### Table of Contents






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
November 14, 2002
|
|
|
|
| |  |                                                                               |  |                                         
|
|
|
|
| |  | BY:                                                                           |  | /s/ John F. Gregg                       
| |  |                                                                               |  |                                         
| |  |                                                                               |  | John F. Gregg
Director
November 14, 2002

52



---



##### Table of Contents



CERTIFICATION

I, Barclay Knapp, certify that:



| | 1. |  | I have reviewed this quarterly report on Form 10-Q of South
Hertfordshire United Kingdom Fund, Ltd.;                                                                                                                                                                                                                         
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statement made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
|
| | 3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;                  
|
| | 4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:                                                                                                    



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



| | 5. |  | The registrants other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of the registrants board of directors (or persons
performing the equivalent function):
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material weaknesses
in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



| | 6. |  | The registrants other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                                    | 
|------------------------------------------------------------------------------------------------------------------- | 
|Date: November 14, 2002                                                                                            
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|/s/ Barclay Knapp                                                                                                  
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|Barclay Knapp
Director of Fawnspring Limited,
The General Partner of South Hertfordshire United Kingdom Fund, Ltd *



---

|* |  | The Partnership has no Chief Executive Officer or Chief Financial
Officer. Barclay Knapp and John F. Gregg are Directors of Fawnspring
Limited, the general partner of the Partnership, and are Chief Executive
Officer and Chief Financial Officer, respectively, of NTL Incorporated,
the indirect parent of Fawnspring Limited.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

53



---



##### Table of Contents



CERTIFICATION

I, John F. Gregg, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of South Hertfordshire
United Kingdom Fund, Ltd.;                                                                                                                                                                                                                         
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statement made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                  
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:                                                                                                       



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of the registrants board of directors (or persons performing
the equivalent function):
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material weaknesses
in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                                    | 
|------------------------------------------------------------------------------------------------------------------- | 
|Date: November 14, 2002                                                                                            
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|/s/ John F. Gregg                                                                                                  
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|John F. Gregg
Director of Fawnspring Limited,
The General Partner of South Hertfordshire United Kingdom Fund, Ltd *



---

|* |  | The Partnership has no Chief Executive Officer or Chief Financial
Officer. Barclay Knapp and John F. Gregg are Directors of Fawnspring
Limited, the general partner of the Partnership, and are Chief Executive
Officer and Chief Financial Officer, respectively, of NTL Incorporated,
the indirect parent of Fawnspring Limited.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

54