**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C.20549**

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**Form 10-Q**

**(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,  2006**                                                              |
| ** ** | ** ** | ** **                                                                                                          |
| **o**      | ** ** | **Transition  report pursuant to Section 13 or 15 (d) of the Securities Exchange  Act of 1934**      |
| ** ** | ** ** | ** **                                                                                                          |
| ** ** | ** ** | **For the transition period  from             to** |

 

**Commission FileNumber: 000-19889**

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**SouthHertfordshire 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 WoodBusiness Park, Hook, Hampshire, RG27 9UP, England**

Address of principal executive office

**011 44 1256 752000**

Registrant’s telephone number

Indicate by check markwhether the registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes x  No o

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, or anon-accelerated filer. See definition of “accelerated filer and largeaccelerated filer’’ in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer   o | Accelerated filer   o | Non-accelerated filer    x |
|--------------------------------------------|--------------------------------------|------------------------------------------------|

 

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theAct). Yes  o   No  x

The number of limitedpartnership units of the registrant outstanding as of November 9, 2006 was56,935.

 

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**TABLE OF CONTENTS**
| PART I.  |   | FINANCIAL INFORMATION | ** ** |
|---------------|--------|-----------------------|------------|
|          |   | Item 1.               |       | Financial Statements |   |
|          |   |                  |       | Condensed Consolidated Balance Sheets as of September  30, 2006 and December 31, 2005 |   |
|          |   |                  |       | Condensed Consolidated  Statements of Operations for the Three and Nine Months Ended September 30,  2006 and 2005 |   |
|          |   |                  |       | Condensed  Consolidated Statements of Cash Flows for the Nine Months Ended September 30,  2006 and 2005 |   |
|          |   |                  |       | Notes to Condensed Consolidated Financial Statements |   |
|          |   | Item 2.               |       | Management’s  Discussion and Analysis of Financial Condition and Results of Operations |   |
|          |   | Item 3.               |       | Quantitative  and Qualitative Disclosures About Market Risk |   |
|          |   | Item 4.               |       | Controls and  Procedures |   |
| PART II. |   | OTHER INFORMATION     |       |
|          |   | Item 5.               |       | Other Information |   |
|          |   | Item  6.              |       | Exhibits |   |
|          |   |                  |       |   |   |
|          |   | SIGNATURES            |       |

 

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**“Safe Harbor” Statementunder the Private Securities Litigation Reform Act of 1995:**

Various statementscontained in this document constitute “forward-looking statements” as that termis defined under the Private Securities Litigation Reform Act of 1995. Wordslike “believe,” “anticipate,” “should,” “intend,” “plan,” “will,” “expects,” “estimates,”“projects,” “positioned,” “strategy,” and similar expressions identify theseforward-looking statements, which involve known and unknown risks,uncertainties and other factors that may cause our actual results, performanceor achievements or industry results to be materially different from thosecontemplated, projected, forecasted, estimated or budgeted, whether expressedor implied, by these forward-looking statements. These factors include:
| · |   | NTL Incorporated’s or NTL’s ability to obtain and  retain expected synergies from the merger of the legacy NTL and Telewest  businesses and the acquisition of Virgin Mobile; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                    |
| · |   | rates of success of NTL in executing, managing and  integrating key acquisitions, including the merger with Telewest and the  acquisition of Virgin Mobile;                             |
|   |   |                                                                                                                                                                                    |
| · |   | NTL’s ability to achieve business plans for the  combined company;                                                                                                                 |
|   |   |                                                                                                                                                                                    |
| · |   | NTL’s ability to manage and maintain key customer  relationships;                                                                                                                  |
|   |   |                                                                                                                                                                                    |
| · |   | NTL’s ability to fund debt service obligations  through operating cash flow;                                                                                                       |
|   |   |                                                                                                                                                                                    |
| · |   | NTL’s ability to obtain additional financing in the  future and react to competitive and technological changes;                                                                    |
|   |   |                                                                                                                                                                                    |
| · |   | NTL’s ability to comply with restrictive covenants  in NTL’s indebtedness agreements;                                                                                         |
|   |   |                                                                                                                                                                                    |
| · |   | NTL’s ability to control customer churn;                                                                                                                                           |
|   |   |                                                                                                                                                                                    |
| · |   | NTL’s ability to compete with a range of other  communications and content providers;                                                                                              |
|   |   |                                                                                                                                                                                    |
| · |   | the effect of technological changes on NTL’s  businesses;                                                                                                                          |
|   |   |                                                                                                                                                                                    |
| · |   | the functionality or market acceptance of new  products that NTL may introduce;                                                                                                         |
|   |   |                                                                                                                                                                                    |
| · |   | possible losses in revenues due to systems failures;                                                                                                                                    |
|   |   |                                                                                                                                                                                    |
| · |   | NTL’s ability to maintain and upgrade its networks  in a cost-effective and timely manner;                                                                                         |
|   |   |                                                                                                                                                                                    |
| · |   | NTL’s reliance on single-source suppliers for some  equipment and software;                                                                                                        |
|   |   |                                                                                                                                                                                    |
| · |   | NTL’s ability to provide attractive programming at a  reasonable cost; and                                                                                                         |
|   |   |                                                                                                                                                                                    |
| · |   | the extent to which NTL’s future earnings will be sufficient  to cover its fixed charges.                                                                                          |

 

These and other factorsare discussed in more detail under Item 1A., “Risk Factors” and elsewhere inthe Form 10-K of NTL Holdings Inc. (then known as NTL Incorporated)that was filed with the SEC on March 1, 2006 and NTL Incorporated’s Forms10Q filed with the SEC on May 10, 2006, August 9, 2006 and November 9, 2006. Weassume no obligation to update the forward-looking statements to reflect actualresults, changes in assumptions or changes in factors affecting these statements.

**Note Concerning NTL’sReverse Acquisition of Telewest**

On March 3, 2006,NTL Holdings Inc. (formerly known as NTL Incorporated) (“legacy NTL”) mergedwith a subsidiary of NTL Incorporated (formerly known as Telewest Global, Inc.)(“NTL”).

In this quarterly report,unless the context otherwise requires, the terms “we”, “us”, “our” and “thepartnership” refers to NTL (South Hertfordshire) Limited (“NTL South Herts”).NTL is the ultimate parent company of the General Partner.

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**Exchange Rates**

The following table setsforth, for the periods indicated, the high, low, period average and period endnoon buying rate in the City of New York for cable transfers as certified forcustoms purposes by the Federal Reserve Bank of New York expressed as U.S. dollarsper £1.00. The noon buying rate of the pound sterling on September 30, 2006 was$1.8716 per £1.00. 
|                                                        | ** ** | **U.S. Dollars per £1.00** | ** ** |
|--------------------------------------------------------|------------|------------------------------------------------|------------|
| **Nine months ended September 30** | ** ** | **Period End**                            | ** ** | **Average(1)** | ** ** | **High** | ** ** | **Low** | ** ** |
| 2005                                                   |       | 1.77                                           |       | 1.84 |   | 1.93 |   | 1.71 |   |
| 2006                                                   |       | 1.87                                           |       | 1.82 |   | 1.91 |   | 1.73 |   |

 

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(1)                                  Theaverage rate is the average of the noon buying rates on the last day of eachmonth during the relevant period.

The above rates maydiffer from the actual rates used in the preparation of the condensedconsolidated financial statements and other financial information appearing inthis quarterly report. Our inclusion of these exchange rates is not meant tosuggest that the pound sterling amounts actually represent these U.S. dollaramounts or that these amounts could have been converted into U.S. dollars atany particular rate, if at all.

Unless we otherwiseindicate, all U.S. dollar amounts as of September 30, 2006 are translated toU.S. dollars at an exchange rate of $1.8716 to £1.00, all amounts disclosed forthe nine months ended September 30, 2006 are based on an average exchange rateof $1.8182 to £1.00, and all amounts disclosed for the nine months endedSeptember 30, 2005 are based on an average exchange rate of $1.8438 to £1.00.  All amounts disclosed as of December 31,2005 are based on an exchange rate of $1.7188 to £1.00. All rates are based onthe noon buying rate in the City of New York for cable transfers as certifiedfor customs purposes by the Federal Reserve Bank of New York. U.S. dollaramounts for the three months ended September 30, 2006 and 2005 are determinedby subtracting the U.S. dollar converted financial result for the six monthsended June 30, 2006 and 2005 from the U.S. dollar converted financial resultfor the nine months ended September 30, 2006 and 2005, respectively. Thevariation between the 2006 and 2005 exchange rates has impacted the dollarcomparisons.

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**Part I.  Financialinformation**

**Item 1.**                          Financialstatements

**SOUTHHERTFORDSHIRE UNITED KINGDOM FUND, LIMITED(A LIMITED PARTNERSHIP)**

**CONDENSEDCONSOLIDATED BALANCE SHEETS**
| ** **                                                                                        | ** ** | **September 30,** | ** ** | **December 31,** | ** ** |
|---------------------------------------------------------------------------------------------------|------------|------------------------|------------|-----------------------|------------|
| ** **                                                                                        | ** ** | **2006**               | ** ** | **2005**              | ** ** |
| ** **                                                                                        | ** ** | **(unaudited)**        | ** ** | **(see note)**   | ** ** |
|                                                                                              |       |                   |       |                  |       |
| **Assets**                                                                                        |       |                   |       |                  |       |
| Fixed assets, net                                                                                 |       | $                      | 64,325,258 |                  | $          | 63,195,826 |   |
|                                                                                              |       |                   |       |                  |       |
| **Total assets**                                                                                  |       | $                      | 64,325,258 |                  | $          | 63,195,826 |   |
|                                                                                              |       |                   |       |                  |       |
| **Liabilities and Partners’  Deficit**                                                       |       |                   |       |                  |       |
| Current liabilities                                                                               |       |                   |       |                  |       |
| Accounts payable  to affiliates and related parties                                               |       | $                      | 68,003,918 |                  | $          | 64,324,939 |   |
| Total liabilities                                                                                 |       | 68,003,918             |       | 64,324,939            |       |
|                                                                                              |       |                   |       |                  |       |
| **Minority interest**                                                                             |       |                   |       |                  |       |
| Minority interest                                                                                 |       | —                 |       | 707,259               |       |
|                                                                                              |       |                   |       |                  |       |
| **Partners’ Capital (Deficit)**                                                              |       |                   |       |                  |       |
| General Partner                                                                                   |       |                   |       |                  |       |
| Contributed  capital                                                                              |       | 1,000                  |       | 1,000                 |       |
| Accumulated  deficit                                                                              |       | (521,813               | )          | (502,583              | )          |
|                                                                                              |       | (520,813               | )          | (501,583              | )          |
| Limited Partners                                                                                  |       |                   |       |                  |       |
| Contributed  capital, net (56,935 units outstanding at September 30, 2006 and December 31,  2005) |       | 48,817,997             |       | 48,817,997            |       |
| Accumulated  deficit                                                                              |       | (51,378,399            | )          | (49,474,599           | )          |
|                                                                                              |       | (2,560,402             | )          | (656,602              | )          |
| Accumulated  comprehensive loss                                                                   |       | (597,445               | )          | (678,187              | )          |
| Total Partners’  deficit                                                                     |       | (3,678,660             | )          | (1,836,372            | )          |
|                                                                                              |       |                   |       |                  |       |
| **Total Liabilities and Partners’ Deficit**                                                  |       | $                      | 64,325,258 |                  | $          | 63,195,826 |   |

 

Note: The balance sheetat December 31, 2005 has been derived from audited financial statements atthat date.

**See accompanying notes.**

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**SOUTHHERTFORDSHIRE UNITED KINGDOM FUND, LIMITED(A LIMITED PARTNERSHIP)**

**CONDENSED CONSOLIDATEDSTATEMENTS OF OPERATIONS**

**(Unaudited)**
| ** **                                                             | ** ** | **Three months ended** | ** ** | **Nine months ended** | ** ** |
|------------------------------------------------------------------------|------------|----------------------------------|------------|---------------------------------|------------|
| ** **                                                             | ** ** | **September 30,**           | ** ** | **September 30,**          | ** ** |
| ** **                                                             | ** ** | **2006**                         | ** ** | **2005**                        | ** ** | **2006** | ** ** | **2005** | ** ** |
|                                                                   |       |                             |       |                            |       |   |   |   |   |
| **Revenues**                                                           |       | $                                | 9,922,154  |                            | $          | 9,543,147 |   | $ | 28,757,734 |   | $ | 29,765,071 |   |
|                                                                   |       |                             |       |                            |       |   |   |   |   |
| **Costs and expenses**                                                 |       |                             |       |                            |       |   |   |   |   |
| Cost of goods sold  (exclusive of depreciation shown separately below) |       | (2,528,392                       | )          | (2,461,892                      | )          | (7,502,681 | ) | (7,985,591 | ) |
| Selling, general and  administrative expenses                          |       | (20,076                          | )          | (23,699                         | )          | (65,706 | ) | (68,703 | ) |
| Management fees and  allocated overhead from the General Partner       |       | (4,404,489                       | )          | (4,131,305                      | )          | (12,910,084 | ) | (12,963,719 | ) |
| Other charges                                                          |       | (616,954                         | )          | (88,578                         | )          | (1,015,091 | ) | (118,364 | ) |
| Depreciation                                                           |       | (1,781,727                       | )          | (1,366,955                      | )          | (5,272,613 | ) | (4,694,597 | ) |
|                                                                   |       |                             |       |                            |       |   |   |   |   |
| **Operating income**                                                   |       | 570,516                          |       | 1,470,718                       |       | 1,991,559 |   | 3,934,097 |   |
|                                                                   |       |                             |       |                            |       |   |   |   |   |
| **Other expenses**                                                     |       |                             |       |                            |       |   |   |   |   |
| Interest payable to  General Partner and affiliates                    |       | (1,538,286                       | )          | (569,321                        | )          | (4,487,126 | ) | (1,737,180 | ) |
| Exchange (losses) gains                                                |       | (26,101                          | )          | 26,204                          |       | (175,582 | ) | 162,594 |   |
|                                                                   |       |                             |       |                            |       |   |   |   |   |
| **(Loss) income before minority  interest**                            |       | (993,871                         | )          | 927,601                         |       | (2,671,149 | ) | 2,359,511 |   |
| Minority interest  income (expense)                                    |       | 287,237                          |       | (325,757                        | )          | 748,119 |   | (808,460 | ) |
|                                                                   |       |                             |       |                            |       |   |   |   |   |
| **Net (loss) income**                                                  |       | $                                | (706,634   | )                               | $          | 601,844 |   | $ | (1,923,030 | ) | $ | 1,551,051 |   |
|                                                                   |       |                             |       |                            |       |   |   |   |   |
| **Allocation of net (loss) income**                                    |       |                             |       |                            |       |   |   |   |   |
| General Partner                                                        |       | $                                | (7,066     | )                               | $          | 6,018 |   | $ | (19,230 | ) | $ | 15,511 |   |
| Limited Partners                                                       |       | (699,568                         | )          | 595,826                         |       | (1,903,800 | ) | 1,535,540 |   |
| **Net (loss) income**                                                  |       | $                                | (706,634   | )                               | $          | 601,844 |   | $ | (1,923,030 | ) | $ | 1,551,051 |   |
|                                                                   |       |                             |       |                            |       |   |   |   |   |
| **Net (loss) income per Limited  Partnership unit**                    |       | $                                | (12.29     | )                               | $          | 10.47 |   | $ | (33.44 | ) | $ | 26.97 |   |
|                                                                   |       |                             |       |                            |       |   |   |   |   |
| **Average number of Limited**                                          |       |                             |       |                            |       |   |   |   |   |
| **Partnership units outstanding**                                      |       | 56,935                           |       | 56,935                          |       | 56,935 |   | 56,935 |   |

 

See accompanyingnotes.

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**SOUTHHERTFORDSHIRE UNITED KINGDOM FUND, LIMITED(A LIMITED PARTNERSHIP)**

**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(Unaudited)**
| ** **                                                                                | ** ** | **Nine months ended** | ** ** |
|-------------------------------------------------------------------------------------------|------------|---------------------------------|------------|
| ** **                                                                                | ** ** | **September 30,**          | ** ** |
| ** **                                                                                | ** ** | **2006**                        | ** ** | **2005** | ** ** |
|                                                                                      |       |                            |       |   |   |
| **Cash flows from operating  activities**                                                 |       |                            |       |   |   |
| Net (loss) income                                                                         |       | $                               | (1,923,030 | ) | $ | 1,551,051 |   |
| Adjustments to  reconcile net (loss) income to net cash provided by operating activities: |       |                            |       |   |   |
| Minority interest  (income) expense                                                       |       | (748,119                        | )          | 808,460 |   |
| Depreciation                                                                              |       | 5,272,613                       |       | 4,694,597 |   |
| Change in operating  assets and liabilities                                               |       |                            |       |   |   |
| Decrease in accounts  payable to affiliates and related parties                           |       | (1,656,241                      | )          | (5,850,620 | ) |
| **Net cash provided by operating  activities**                                            |       | 945,223                         |       | 1,203,488 |   |
|                                                                                      |       |                            |       |   |   |
| **Cash flows from investing  activities**                                                 |       |                            |       |   |   |
| Purchase of fixed  assets                                                                 |       | (945,223                        | )          | (1,203,488 | ) |
| **Net cash used in investing  activities**                                                |       | (945,223                        | )          | (1,203,488 | ) |
|                                                                                      |       |                            |       |   |   |
| Movement in cash                                                                          |       | —                          |       | — |   |
| Cash and cash  equivalents at beginning of period                                         |       | —                          |       | — |   |
|                                                                                      |       |                            |       |   |   |
| Cash and cash equivalents at end of period                                                |       | $                               | —     |   | $ | — |   |

 

See accompanyingnotes.

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**SOUTHHERTFORDSHIRE UNITED KINGDOM FUND, LIMITED**

**(A LIMITED PARTNERSHIP)**

**NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

**Note1.   Basis of Presentation**

**Organization and Business**

We are a Colorado limitedpartnership that was formed in December 1991 pursuant to the publicoffering of our limited partnership interests for the purpose of acquiring oneor more cable television/telephone systems in the United Kingdom, or U.K. Uponacquisition of our system, our primary investment objective was to obtaincapital appreciation in the value of our investment in the system over the termsuch investment is held by us.

We hold 66.7% of theshares of NTL (South Hertfordshire) Limited, or NTL South Herts, which is  principally engaged in the development,construction, management and operation of broadband communications networks fortelephone, cable television and internet services in the U.K. As a result ofour ownership of 66.7% of the shares of NTL South Herts, for accountingpurposes we have consolidated the results of NTL South Herts with our results.NTL indirectly holds the remaining 33.3% of the shares of NTL South Herts. Weare reliant on the support of NTL, the ultimate parent company of the GeneralPartner, to continue our operations as a going concern.

We, as well as NTL, fileannual, quarterly, and current reports with the SEC. You may read and copy anymaterials we or NTL file with the SEC at the SEC’s Public ReferenceRoom at 100 F Street, N.E., Washington D.C. 20549. You may obtaininformation on the operation of the Public Reference Room by calling theSEC at 1-800-SEC-0330. You may also access electronically theinformation we file with the SEC via its website, located at http://www.sec.gov*.*

**Basis of Presentation**

We have prepared theaccompanying unaudited condensed consolidated financial statements inaccordance with U. S. Generally Accepted Accounting Principles for interimfinancial information and with the instructions to Form 10-Q andRule 10-01 of Regulation S-X. Accordingly, they do not include allof the information and footnotes required by U. S. Generally AcceptedAccounting Principles  for completefinancial statements. In the opinion of management, all adjustments (consistingonly of normal recurring adjustments) considered necessary for a fairpresentation have been included. Operating results for the nine months endedSeptember 30, 2006 are not necessarily indicative of results to be expected forthe full year ending December 31, 2006. For further information, refer tothe consolidated financial statements and footnotes thereto included in ourAnnual Report on Form 10-K for the year ended December 31,2005.

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**Note2.   Comprehensive (Loss) Income**

Comprehensive (loss) income comprises (unaudited):
|                                           | ** ** | **Three months ended** | ** ** | **Nine months ended** | ** ** |
|-------------------------------------------|------------|----------------------------------|------------|---------------------------------|------------|
| ** **                                | ** ** | **September 30,**           | ** ** | **September 30,**          | ** ** |
| ** **                                | ** ** | **2006**                         | ** ** | **2005**                        | ** ** | **2006** | ** ** | **2005** | ** ** |
|                                      |       |                             |       |                            |       |   |   |   |   |
| Net (loss)  income                        |       | ($706,634                        | )          | $                               | 601,844    |   | ($1,923,030 | ) | $ | 1,551,051 |   |
| Foreign currency  translation adjustments |       | (3,836                           | )          | 25,914                          |       | (80,742 | ) | 80,235 |   |
| Comprehensive (loss)  income              |       | ($710,470                        | )          | $                               | 627,758    |   | ($2,003,772 | ) | $ | 1,631,286 |   |

 

**Note3.   Investment in Subsidiary**

NTL South Herts is a U.K.corporation that owns and operates a cable television/telephone system in theSouth Hertfordshire franchise area, located adjacent to the northwest perimeterof Greater London, England (the “South Herts System”).

NTL South Herts is owned66.7% by the Partnership and 33.3% by NTL. NTL also owns the General Partner.The General Partner provides consulting services to the Partnership and maydelegate some or all of the consulting services to NTL or to other affiliates.

NTL, through itssubsidiaries including its interest in NTL South Herts, provides broadbandinternet access, telephone and television services to approximately5.0 million residential on-net customers as at September 30, 2006.

**Note4.   Transactions with Affiliated Parties**

*Consulting and ManagementFees*

An affiliate of theGeneral Partner is entitled to be paid a consulting fee by NTL South Herts.During the construction phases of the South Herts System, this consulting feewas 2% of construction costs. Since completion of construction of each portionof the system, the consulting fee for the completed portion has been 5% of thegross revenue, excluding revenue from the sale of cable television/telephonesystems. The consulting fee is calculated and payable monthly. Consulting feespaid or payable by NTL South Herts for the three months ended September 30,2006 and 2005 were $496,108 and $477,157. Consulting fees paid or payable byNTL South Herts for the nine months ended September 30, 2006 and 2005 were$1,437,887 and $1,488,253, respectively. These amounts were expensed in theConsolidated Statements of Operations.

*Distribution Ratios andReimbursement*

Any partnershipdistributions made from cash flow (defined as cash receipts derived fromroutine operations, less debt principal and interest payments and cash expenses)are allocated 99% to the limited partners and 1% to the General Partner. Anydistributions other than interest income on limited partner subscriptionsearned prior to the acquisition of the Partnership’s first cable televisionsystem or from cash flow, such as from the sale or refinancing of a system orupon dissolution of the Partnership, will be made as follows: 99% to thelimited partners and 1% to the General Partner until any negative balances inthe limited partners’ capital accounts are reduced to zero; 100% to the GeneralPartner until any negative balance in its capital account is reduced to zero;

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99% tothe limited partners and 1% to the General Partner until the balance in thelimited partners’ capital is equal to their adjusted capital contribution plusa 12% return; 100% to the General Partner until the balance on its capitalaccount is equal to its adjusted capital contribution, and any remaining incomeor gain shall be allocated 75% to the limited partners and 25% to the GeneralPartner.

The General Partner andits affiliates are entitled to reimbursement from NTL South Herts for directand indirect expenses allocable to the operation of the South Herts System, andfrom the Partnership for direct and indirect expenses allocable to the operationof the Partnership which include but are not limited to, rent, supplies,telephone, travel, and salaries of any full or part-time employees. The GeneralPartner believes that the methodology used in allocating these expenses is fairand reasonable. During the three months ended September 30, 2006 and 2005,reimbursement made by NTL South Herts and the Partnership to the GeneralPartner or its affiliates for any allocable direct and indirect expensestotaled $3,908,381 and $3,654,148 respectively. During the nine months ended September 30, 2006 and 2005, reimbursementmade by NTL South Herts and the Partnership to the General Partner or itsaffiliates for any allocable direct and indirect expenses totaled $11,472,197and $11,475,466 respectively.

The General Partner andits affiliates may make advances to, and defer collection of fees and allocatedexpenses owed by, the Partnership, although they are not required to do so. ThePartnership is charged interest on such advances and deferred amounts at a rateequal to the General Partner’s or certain affiliates’ effective average cost ofdebt financing from unaffiliated entities, which does not differ from theirweighted average cost of debt financing. For the three months ended September30, 2006 and 2005, aggregated interest, bank fees and finance charges relatingto non-permanent loans of $1,502,121 and $533,673, respectively, was charged byaffiliates of the General Partner.  Forthe nine months ended September 30, 2006 and 2005, aggregated interest, bankfees and finance charges relating to non-permanent loans of $4,384,502 and$1,627,013, respectively, was charged by affiliates of the General Partner. TheGeneral Partner charged interest on advances for the three months endedSeptember 30, 2006 and 2005 of $36,165 and $35,647, respectively. For the ninemonths ended September 30, 2006 and 2005, the General Partner charged intereston advances of $102,624 and $110,166, respectively.

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**Note5.   Fixed Assets**

Fixed assets consist of:
|                                               | ** ** | **Estimated**         | ** ** | **September 30,** | ** **  | **December 31,** | ** ** |
|-----------------------------------------------|------------|-----------------------|------------|------------------------|-------------|-----------------------|------------|
| ** **                                    | ** ** | **useful lives** | ** ** | **2006**               | ** **  | **2005**              | ** ** |
| ** **                                    | ** ** | ** **            | ** ** | **(unaudited)**        | ** **  | ** **            | ** ** |
|                                          |       |                  |       |                   |        |                  |       |
| Cable network  and other electrical equipment |       | 5-30  years           |       | $                      | 191,493,677 |                  | $          | 174,966,272 |   |
| Building and  other equipment                 |       | 5-30  years           |       | 7,982,514              |        | 7,397,187             |       |
|                                          |       |                  |       | 199,476,191            |        | 182,363,459           |       |
| Accumulated  depreciation                     |       |                  |       | (135,150,933           | )           | (119,167,633          | )          |
|                                          |       |                  |       | $                      | 64,325,258  |                  | $          | 63,195,826 |   |

 

**Note6.   Commitments and Contingent Liabilities**

We have no significantcontractual obligations and commercial commitments as of September 30, 2006.

We are from time to timesubject to legal proceedings and claims that arise in the ordinary course ofour business. In the opinion of the management, the amount of ultimateliability with respect to these actions will not materially affect ourfinancial position, results of operations or liquidity.

11

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**Item 2.**                          Management’sDiscussion and Analysis of Financial Condition and Results of Operations

**Overview**

We are a Colorado limitedpartnership that was formed in December 1991 pursuant to the publicoffering of our limited partnership interests for the purpose of acquiring oneor more cable television/telephone systems in the U.K. Upon acquisition of oursystem, our primary investment objective was to obtain capital appreciation inthe value of our investment in the system over the term such investment is heldby us.

We hold 66.7% of theshares of NTL South Herts, which is principally engaged in the development,construction, management and operation of broadband communications networks fortelephone, cable television and internet services in the U.K. As a result ofour ownership of 66.7% of the shares of NTL South Herts, for accountingpurposes we have consolidated the results of NTL South Herts with our results.NTL indirectly holds the remaining 33.3% of the shares of NTL South Herts. Weare reliant on the support of NTL, the ultimate parent company of the GeneralPartner, to continue our operations as a going concern.

We derive our revenueprincipally from monthly fees and usage charges. Our packaging of services andpricing are designed to encourage our customers to use multiple services likedual telephone and broadband, dual telephone and television or tripletelephone, television and internet access.

The principal componentsof our expenses other than interest include payroll and other employee relatedcosts; interconnection costs paid to other carriers related to telephoneservices; television programming costs; marketing and selling costs; repairsand maintenance; facility related costs, like rent, utilities and rates; andallowances for doubtful accounts. Our expenses include certain costs that arecharged by a subsidiary of NTL for the provision of network services andsupport, the use of NTL’s national backbone telephone network for carriage ofour telephone traffic, as well as the provision of technical infrastructure andnetwork capacity by NTL for our subscription internet access service anddigital television services, the provision of corporate services, includingfinance, legal, human resources and facility services, and for the provision ofIT services, including our use of the related IT equipment.

**Selected Operating Data**

We set forth inthe following table certain data concerning our franchise at September 30, 2006and December 31, 2005:
|                                   | ** ** | **September 30,** | ** ** | **December 31,** | ** ** |
|-----------------------------------|------------|------------------------|------------|-----------------------|------------|
| ** **                        | ** ** | **2006**               | ** ** | **2005**              | ** ** |
|                              |       |                   |       |                  |       |
| Homes passed (1)                  |       | 96,663                 |       | 94,350                |       |
| Homes marketable  (2)             |       | 96,663                 |       | 94,350                |       |
| Total customers                   |       | 36,214                 |       | 36,975                |       |
| Digital cable  subscribers        |       | 22,717                 |       | 21,709                |       |
| Analog cable  subscribers         |       | 865                    |       | 2,332                 |       |
| Broadband  internet subscribers   |       | 22,522                 |       | 20,078                |       |
| Telephony  subscribers            |       | 31,434                 |       | 31,927                |       |
| Penetration  (homes marketed) (3) |       | 37.5                   | %          | 39.0                  | %          |
| Churn (4)                         |       | 1.7                    | %          | 1.0                   | %          |

 

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(1)             Homes passed is thenumber of homes that have had ducting buried outside.

(2)             Homes marketablerefers to the number of homes within our service area that can potentially beserved by our network with minimal connection costs.

(3)             Penetration ratemeasures the number of subscribers for our services divided by the number ofmarketable homes that our services pass.

(4)             Customer churn is calculatedby taking the total disconnects during the month and dividing them by theaverage number of customers during the month. Average monthly churn during aquarter is the average of the three monthly churn calculations within aquarter.

12

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***Factors Affecting our Business***

***Customer Churn.******  ***Customer churn is a measureof the number of customers who stop using our services. An increase in ourcustomer churn can lead to increased costs and reduced revenue. We continue tofocus on improving our customer service and enhancing and expanding our serviceofferings to existing customers in an effort to manage our customer churn rate.Although our ability to reduce our customer churn rate beyond a base level islimited by factors like customers moving outside our network service area, inparticular during the summer season, managing our customer churn rate is asignificant component of our business plan. Our customer churn rate mayincrease if we are unable to deliver our services over our network without interruptionor if we fail to match offerings by our competitors. We are presently aligningour credit policies, which will also increase churn in the short-term.

***Competition.******  ***Our ability to acquire andretain customers and increase revenue depends on our competitive strength.There is significant competition in our markets, including through otherbroadband service providers, telephone services offered by British Telecom (“BT”)and local loop unbundlers, alternative internet access services like DSL, whichis offered by BT, satellite television services offered by BSkyB and digitalterrestrial television offered through Freeview. If competitive forces preventus from charging the prices for these services that we plan to charge, or ifour competition is able to attract our customers or potential customers we aretargeting, our results of operations will be adversely affected.

***Capital Expenditures.******  ***Our business requiressubstantial capital expenditures on a continuing basis for various purposes,including expanding, maintaining and upgrading our network, investing in newcustomer acquisitions, and offering new services. If we do not continue to investin our network, our ability to retain and acquire customers may be hindered.Therefore, our liquidity and the availability of cash to fund capital projectsare important drivers of our revenue. When our liquidity is restricted, so isour ability to meet our capital expenditure requirements. We believe that ourcash from operations and cash from NTL will be sufficient for our cashrequirements through September 30, 2007.

***Currency Movements.******  ***Because revenue and expensesfrom our principal operations are denominated primarily in pounds sterling butwe report our financial results in U.S. dollars, our financial results areimpacted by currency fluctuations, which are unrelated to our underlyingresults of operations.

***Seasonality.******  ***Some revenue streams aresubject to seasonal factors. For example, telephone usage revenue by customersand businesses tends to be slightly lower during summer holiday months. Ourcustomer churn rates include persons who disconnect their service because ofmoves, resulting in a seasonal increase in our churn rates during the summermonths when higher levels of U.K. house moves occur and students leave theiraccommodations between school years.

***Integration.  ***NTLis presently integrating our legacy NTL and Telewest cable businesses. Thisinvolves the incurrence of substantial operating and capital expenditure and,in some cases, involves the outsourcing of key functions in an effort toachieve synergies through the integration of the two businesses. For example, NTLis consolidating its billing platforms, including ours, over the next twelvemonths. While these integration efforts are presently on track, any issues thatmay arise in connection with the integration could have a material negativeeffect on our financial performance.

13

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***Three months ended September 30, 2006 and 2005***

We present below summarized consolidated financialinformation for the three months ended September 30, 2006 and 2005:
| ** **                                   | ** ** | **Three months ended** | ** ** | ** ** | ** ** | **Three months ended** | ** ** | ** ** | ** ** |
|----------------------------------------------|------------|----------------------------------|------------|------------|------------|----------------------------------|------------|------------|------------|
| ** **                                   | ** ** | **September 30,**           | ** ** | ** ** | ** ** | **September 30,**           | ** ** | ** ** | ** ** |
| ** **                                   | ** ** | **2006**                         | ** ** | **2005**   | ** ** | **%**                            | ** ** | **2006**   | ** ** | **2005** | ** ** | **%** | ** ** |
|                                         |       |                             |       |       |       |                             |       |       |       |   |   |   |   |
| Revenue                                      |       | $                                | 9,922,154  |       | $          | 9,543,147                        |       | 4.0        |       | £ | 5,295,970 |   | £ | 5,350,821 |   | (1.0 | ) |
| Cost of goods sold                           |       | (2,528,392                       | )          | (2,461,892 | )          | 2.7                              |       | (1,348,038 | )          | (1,383,034 | ) | (2.5 | ) |
| Selling, general and  adminstrative expenses |       | (20,076                          | )          | (23,699    | )          | (15.3                            | )          | (10,651    | )          | (13,243 | ) | (19.6 | ) |
| Management fees and  allocated overhead      |       | (4,404,489                       | )          | (4,131,305 | )          | 6.6                              |       | (2,349,668 | )          | (2,317,090 | ) | 1.4 |   |
| Other charges                                |       | (616,954                         | )          | (88,578    | )          | 596.5                            |       | (335,927   | )          | (48,299 | ) | 595.5 |   |
| Depreciation                                 |       | (1,781,727                       | )          | (1,366,955 | )          | 30.3                             |       | (950,070   | )          | (770,179 | ) | 23.4 |   |
| Operating income                             |       | 570,516                          |       | 1,470,718  |       | (61.2                            | )          | 301,616    |       | 818,976 |   | (63.2 | ) |
| Interest expense                             |       | (1,538,286                       | )          | (569,321   | )          | 170.2                            |       | (820,817   | )          | (318,884 | ) | 157.4 |   |
| Exchange (losses) gains                      |       | (26,101                          | )          | 26,204     |       | (199.6                           | )          | (13,075    | )          | 15,393 |   | (184.9 | ) |
| Net (loss) income  before minority interests |       | (993,871                         | )          | 927,601    |       | (207.1                           | )          | (532,276   | )          | 515,485 |   | (203.3 | ) |
| Minority interests                           |       | 287,237                          |       | (325,757   | )          | —                           |       | 154,037    |       | (180,855 | ) | — |   |
| Net (loss) income                            |       | $                                | (706,634   | )          | $          | 601,844                          |       | (217.4     | )          | £ | (378,239 | ) | £ | 334,630 |   | (213.0 | ) |

 

*Revenue*

For the three monthsended September 30, 2006, revenue increased by 4.0% to $9.9 million from $9.5million in 2005 and revenue expressed in pounds sterling decreased by 1.0% to£5.3 million in 2006 from £5.4 million in 2005. The sterling decrease isprimarily due to increased competition that has given rise to reduced revenuesthrough increased discounts partly offset by higher broadband revenue due to anincrease in the numbers of broadband subscribers served by the South Herts system to 22,522 at September 30,2006 compared with 18,887 at September 30, 2005.

*Expenses*

*Costs of goods sold.**  *For the three months ended September 30, 2006, costsof goods sold increased by 2.7% to $2.5 million from $2.4 million in 2005 andcost of goods sold expressed in pounds sterling decreased by 2.5% to £1.348million in 2006 from £1.383 million in 2005. Costs of goods sold as apercentage of revenue declined to 25.5% for the three months ended September30, 2006, from 25.8% for 2005 due to the increased number of broadbandsubscribers.

*Selling, general andadministrative expenses.**  *Forthe three months ended September 30, 2006, selling, general and administrativeexpenses decreased to $20,076 or £10,651 from $23,699 or £13,243 in 2005.

*Management fees andallocated overhead.**  *For thethree months ended September 30, 2006, management fees and allocated overheadincreased by 6.6% to $4.4 million from $4.1 million in 2005, and managementfees and allocated overhead expressed in pounds sterling increased by 1.4% to£2.4 million in 2006 from £2.3 million in 2005. The business of NTL South Hertsis managed as an integral part of NTL. The combined costs of managing thelarger group are allocated to each entity within the NTL group, including NTLSouth Herts, on a consistent and proportional basis according to the level oftrading in that entity.  The GeneralPartner considers this to be a fair and reasonable method as operating as anintegral part of a larger group reaps benefits of economies of scale.

14

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*Other charges.**  *For the three months ended September 30, 2006, othercharges increased to $616,954 from $88,578 in 2005. Other charges in the threemonths ended September 30, 2006 included restructuring costs allocated to us bya subsidiary of NTL in respect of lease exit costs in connection withproperties that have been vacated and redundancy costs following NTL’s reverseacquisition of Telewest. For the three months ended September 30, 2005, othercharges comprised employee severance and related costs in connection with thecall center consolidation program. Charges allocated to us by a subsidiary ofNTL are made on the basis of an allocation formula appropriate to each categoryof charge based on a reasonable methodology given the facts and circumstances.

*Depreciation expense*

For the three monthsended September 30, 2006, depreciation expense increased to $1.8 million from$1.4 million in 2005 due to network assets transferred from an affiliate as atDecember 31, 2005, together with increased capital spend on premise equipmentfor new customers offset, by foreign exchange movement.

*Interest expense*

For the three monthsended September 30, 2006, interest expense increased to $1,538,286 from$569,321 in 2005. This increase is due to two changes to the interest expensecharging policies which were implemented, as permitted by the PartnershipAgreement, in the fourth quarter of 2005. Since October 1, 2005, interesthas been charged on the full amount of non-permanent loans provided to us byour affiliates, rather than just the proportion thereof relating to unpaidmanagement fees paid on our behalf by an affiliate of the General Partner. Alsofrom October 1, 2005, we have been charged our allocation of the bank feesand deferred financing costs relating to NTL’s senior credit facilities.  We paid no cash interest for the three monthsended September 30, 2006 and 2005.

*Exchange (losses) gains*

For the three monthsended September 30, 2006, foreign currency exchange losses were $26,101 ascompared with gains of $26,204 for 2005. The change in exchange (losses)/gainsis primarily attributable to fluctuations in the valuation of the U.S. dollaron certain of our assets and transactions, which are denominated in poundssterling. Our results of operations will continue to be affected by foreign exchangerate fluctuations.

*Minority Interest*

For the three monthsended September 30, 2006, we have recognized a minority interest income of$287,237 representing a 33.3% share of NTL South Herts’ net loss for the threemonths ended September 30, 2006 up to the point that the cumulative minorityinterest liability became zero. For the three months ended September 30, 2005,we recognized a minority interest charge of $325,757.

*Net (loss) income*

For the three monthsended September 30, 2006, net loss was $706,634 as compared with net income of$601,844 in 2005 primarily due to the increase in interest expense, and othercharges.

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***Nine months ended September 30, 2006 and 2005***

We present below summarized consolidated financialinformation for the nine months ended September 30, 2006 and 2005:
| ** **                                   | ** ** | **Nine months ended** | ** ** | ** **  | ** ** | **Nine months ended** | ** ** | ** ** | ** ** |
|----------------------------------------------|------------|---------------------------------|------------|-------------|------------|---------------------------------|------------|------------|------------|
| ** **                                   | ** ** | **September 30,**          | ** ** | ** **  | ** ** | **September 30,**          | ** ** | ** ** | ** ** |
| ** **                                   | ** ** | **2006**                        | ** ** | **2005**    | ** ** | **%**                           | ** ** | **2006**   | ** ** | **2005** | ** ** | **%** | ** ** |
|                                         |       |                            |       |        |       |                            |       |       |       |   |   |   |   |
| Revenue                                      |       | $                               | 28,757,734 |        | $          | 29,765,071                      |       | (3.4       | )          | £ | 15,817,465 |   | £ | 16,143,330 |   | (2.0 | ) |
| Cost of goods sold                           |       | (7,502,681                      | )          | (7,985,591  | )          | (6.0                            | )          | (4,126,660 | )          | (4,331,051 | ) | (4.7 | ) |
| Selling, general and  adminstrative expenses |       | (65,706                         | )          | (68,703     | )          | (4.4                            | )          | (36,140    | )          | (37,262 | ) | (3.0 | ) |
| Management fees and  allocated overhead      |       | (12,910,084                     | )          | (12,963,719 | )          | (0.4                            | )          | (7,100,866 | )          | (7,030,979 | ) | 1.0 |   |
| Other charges                                |       | (1,015,091                      | )          | (118,364    | )          | 757.6                           |       | (558,325   | )          | (64,196 | ) | 769.7 |   |
| Depreciation                                 |       | (5,272,613                      | )          | (4,694,597  | )          | 12.3                            |       | (2,900,068 | )          | (2,546,153 | ) | 13.9 |   |
| Operating income                             |       | 1,991,559                       |       | 3,934,097   |       | (49.4                           | )          | 1,095,406  |       | 2,133,689 |   | (48.7 | ) |
| Interest expense                             |       | (4,487,126                      | )          | (1,737,180  | )          | 158.3                           |       | (2,468,030 | )          | (942,174 | ) | 162.0 |   |
| Exchange gains (losses)                      |       | (175,582                        | )          | 162,594     |       | n/a                             |       | (96,575    | )          | 88,185 |   | n/a |   |
| Net (loss) income  before minority interests |       | (2,671,149                      | )          | 2,359,511   |       | (213.2                          | )          | (1,469,199 | )          | 1,279,700 |   | (214.8 | ) |
| Minority interests                           |       | 748,119                         |       | (808,460    | )          | —                          |       | 411,484    |       | (438,475 | ) | — |   |
| Net (loss) income                            |       | $                               | (1,923,030 | )           | $          | 1,551,051                       |       | (224.0     | )          | £ | (1,057,715 | ) | £ | 841,225 |   | (225.7 | ) |

 

*Revenue*

For the nine months endedSeptember 30, 2006, revenue decreased by 3.4% to $28.8 million from $29.8million in 2005 and revenue expressed in pounds sterling decreased by 2.0% to£15.8 million in 2006 from £16.1 million in 2005. The decrease is primarily dueto increased competition that has given rise to reduced revenues throughincreased discounts partly offset by higher broadband revenue due to anincrease in the numbers of broadband subscribers served by the South Hertssystem to 22,522 at September 30, 2006 compared with 18,887 at September 30,2005.

*Expenses*

*Costs of goods sold.**  *For the nine months ended September 30, 2006, costsof goods sold decreased by 6.0% to $7.5 million from $8.0 million in 2005 andcost of goods sold expressed in pounds sterling decreased by 4.7% to £4.1million in 2006 from £4.3 million in 2005. The reduction in cost of sales isprimarily a reflection of reduced revenue. Costs of goods sold as a percentageof revenue declined to 26.1% for the nine months ended September 30, 2006, from26.8% for 2005 due to the increased number of broadband subscribers.

*Selling, general andadministrative expenses.**  *Forthe nine months ended September 30, 2006, selling, general and administrativeexpenses decreased slightly to $65,706, from $68,703 and selling general andadministrative expenses expressed in pounds sterling decreased to £36,140 from£37,262 in 2005.

*Management fees andallocated overhead.**  *For thenine months ended September 30, 2006, management fees and allocated overheaddecreased by 0.4% to $12.9 million from $13.0 million in 2005 but managementfees and allocated overhead expressed in pounds sterling increased by 1.0% to£7.1 million in 2006 from £7.0 million in 2005. The business of NTL South Hertsis managed as an integral part of NTL. The combined costs of managing the largergroup are allocated to each entity within the NTL group, including NTL SouthHerts, on a consistent and proportional basis according to the level of tradingin that entity. The General Partner considers this to be a fair and reasonablemethod as operating as an integral part of a larger group reaps benefits of economiesof scale.

*Other charges.**  *For the nine months ended September 30, 2006, othercharges increased to $1,015,091 from $118,364 in 2005. Other charges in thenine months ended September 30, 2006 included restructuring costs allocated tous by a subsidiary of NTL in respect of lease exit costs in connection withproperties that have been vacated and redundancy costs following NTL’s reverseacquisition of Telewest. For the nine months ended September 30, 2005, othercharges comprised employee severance and related costs in connection with thecall center consolidation program. Charges allocated to us by a subsidiary ofNTL are made on the basis of an allocation formula appropriate to each categoryof charge based on a reasonable methodology given the facts and circumstances.

16

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*Depreciation expense*

For the nine months endedSeptember 30, 2006, depreciation expense increased to $5.3 million from $4.7million in 2005 due to increased capital spend on premise equipment for newcustomers, offset by foreign exchange movement.

*Interest expense*

For the nine months endedSeptember 30, 2006, interest expense increased to $4.5 million from $1.7million in 2005.  This increase is due totwo changes to the interest expense charging policies which were implemented, aspermitted by the Partnership Agreement, in the fourth quarter of 2005. SinceOctober 1, 2005, interest has been charged on the full amount ofnon-permanent loans provided to us by our affiliates, rather than just theproportion thereof relating to unpaid management fees paid on our behalf by anaffiliate of the General Partner. Also from October 1, 2005, we have beencharged our allocation of the bank fees and deferred financing costs relatingto NTL’s senior credit facilities.  Wepaid no cash interest for the nine months ended September 30, 2006 and 2005.

*Exchange (losses) gains*

For the nine months endedSeptember 30, 2006, foreign currency exchange losses were $175,583 as comparedwith gains of $162,594 for 2005. The change in exchange (losses)/gains isprimarily attributable to fluctuations in the valuation of the U.S. dollar oncertain of our assets and transactions, which are denominated in poundssterling. Our results of operations will continue to be affected by foreignexchange rate fluctuations.

*Minority Interest*

For nine months ended September30, 2006, we have recognized a minority interest income of $748,119representing a 33.3% share of NTL South Herts’ net loss for the nine monthsended September 30, 2006 up to the point that the cumulative minority interestliability became zero. For the nine months ended September 30, 2005, werecognized a minority interest charge of $808,460.

*Net (loss) income*

For the nine months endedSeptember 30, 2006, net loss was $1,923,030 as compared with net income of$1,551,051 in 2005, primarily due to the increase in interest expense andreduction in revenue described above.

17

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**Condensed ConsolidatedStatement of Cash Flows**

Inthe nine months ended September 30, 2006, we generated $945,223 from ouroperating activities compared with $1,203,488 in the nine months endedSeptember 30, 2005, and used it to purchase fixed assets including customersinstallations. Our cash provided by operating activities has decreasedprimarily due to the increase in the amount due to affiliates. A significantproportion of the accounts payable to affiliates is transacted in poundssterling translated at closing rates for balance sheets, whereas the movementin the accounts payable to affiliates in the cash flow statement is translatedat the average rate for the period, consequently this value does not equate tothe movement between the balances on the opening and closing balancesheets.  When the rates vary significantlybetween the opening and closing positions, or when the average rate variessignificantly from the closing rates, the impact of foreign exchange will alsobe significant.

**Liquidity and CapitalResources**

We have no financingindependent of NTL. We are reliant upon the support of NTL to continue ouroperations. As of September 30, 2006, we had consolidated current liabilitiesof $68.0 million due to NTL group companies compared with $64.3 million as ofDecember 31, 2005.

Historically, our primarysource of cash was the net proceeds of our offerings of limited partnershipinterests and our primary uses of cash have been capital contributions to NTLSouth Herts in order to fund our proportionate share of the construction costsof the South Herts System.  Accordingly,until such time as NTL South Herts begins to pay dividends on its ordinaryshares (which is not expected in the foreseeable future), we will be requiredto fund our administrative expenses by additional issuances of limitedpartnership interests or from borrowings. It is unlikely that we will be ableto sell debt or equity securities in the public markets at least in the shortterm or to obtain financing from commercial banks. Accordingly, we aredependent on NTL for funds to cover operating expenses, and will continue to bedependent upon NTL to meet our liquidity requirements for the foreseeablefuture. We expect that cash from our operations in 2006 will be utilized fullyfor the purchase of fixed assets including connecting new customers to ournetworks.

**Off-Balance SheetTransactions**

As of September 30, 2006,we had no off-balance sheet transactions.

18

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**Item 3.**                          Quantitativeand Qualitative Disclosures About Market Risk

The functional currencyof NTL South Herts is pounds sterling and all revenue and substantially all costsare incurred in pounds sterling. We report in U.S. dollars. Therefore, we areexposed to fluctuations in the pound sterling to U.S. dollar exchange rate. Theaggregate potential loss from a hypothetical one-percent decrease in the poundsterling / U.S. dollar exchange rate is approximately $23,000 for the ninemonths ended September 30, 2006.

We have no debt otherthan amounts due to affiliates. As of September 30, 2006, we had approximately$68.0 million in amounts due to NTL. Interest on amounts due to affiliates isat a variable rate based on the average rate incurred by NTL. Therefore we areexposed to changes in NTL’s borrowing rate. The aggregate potential loss from ahypothetical one-percentage point increase in the interest rate is approximately$0.5 million for the nine months ended September 30, 2006.

**Item 4.**                          Controlsand Procedures

(a)*   DisclosureControls and Procedures.*   Our management, with theparticipation of the Chief Executive Officer and Chief Financial Officer ofNTL*, has evaluated the effectiveness of ourdisclosure controls and procedures (as such term is defined in Rules 13a-15(e) and15d-15(e) under the Securities Exchange Act of 1934, as amended, orthe Exchange Act) as of the end of the period covered by this report. Based onsuch evaluation, NTL’s Chief Executive Officer and Chief Financial Officer haveconcluded that, as of the end of such period, these controls and procedures areeffective to ensure that information required to be disclosed by the registrantin the reports the registrant files or submits under the Exchange Act isrecorded, processed, summarized, and reported within the time periods specifiedin the SEC’s rules and forms. These disclosure controls and proceduresinclude, without limitation, controls and procedures designed to ensure thatinformation required to be disclosed by the registrant in the reports that itfiles or submits is accumulated and communicated to the registrant’smanagement, including NTL’s Chief Executive Officer and Chief Financial Officer,as appropriate to allow timely decisions regarding required disclosure.

(b)*   Changesin Internal Control Over Financial Reporting.  **On March 3, 2006, legacy NTLcompleted the reverse acquisition of Telewest and on July 4, 2006, NTLcompleted the acquisition of Virgin Mobile. As a consequence of the integrationof these acquisitions, NTL has made and expects to make further materialchanges to its internal control over financial reporting and we will discloseall material changes resulting from this transaction in our future quarterlyand annual reports. Other than as stated above, there were no changes in ourinternal control over financial reporting (as such term is defined inRules 13a-15(f) and 15d-15(f) under the Exchange Act) during thefiscal quarter to which this report relates that have materially affected, orare reasonably likely to materially affect, our internal control over financialreporting.*

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*                    ThePartnership has no Chief Executive Officer or Chief Financial Officer. RobertMackenzie and Robert Gale are Directors of ntl Directors Limited, which is acorporate director of NTL Fawnspring Limited, the general partner of thePartnership.

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**Part II.  Other Information**

**Item 5.**                          OtherInformation

None.

**Item 6.**                          Exhibits
| 3.1  |   | Certificate of Limited Partnership dated December  31, 1991 (Incorporated by reference to Exhibit 3.1 to the Registrant’s Form  10-K for the year ended December 31, 1994, filed on March 31, 1995, File No.  000-19889).                 |
|------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.2  |   | Amendment to the Certificate of Limited Partnership  dated January 31, 1995 (Incorporated by reference to Exhibit 3.2 to the  Registrant’s Form 10-K for the year ended December 31, 1994, filed on March  31, 1995, File No. 000-19889). |
| 31.1 |   | Certification of Chief Executive Officer,* pursuant  to Rule 13(a)-14(a) and Rule 15d-14(a) of the  Exchange Act.                                                                                                          |
| 31.2 |   | Certification of Chief Financial Officer,* pursuant  to Rule 13(a)-14(a) and Rule 15d-14(a) of the  Exchange Act.                                                                                                          |
| 32.1 |   | Certifications of CEO and CFO* Pursuant to 18 U.S.C.  Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes  Oxley Act of 2002.                                                                                           |

 

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*                    ThePartnership has no Chief Executive Officer or Chief Financial Officer. RobertMackenzie and Robert Gale are Directors of ntl Directors Limited, which is acorporate director of NTL Fawnspring Limited, the general partner of thePartnership.

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**SIGNATURES**

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.
|        | SOUTH HERTFORDSHIRE UNITED |
|--------|----------------------------|
|   | KINGDOM FUND, LTD.         |
|   |                       | a Colorado limited partnership |
|   |                       |   |
|   | By:                        | NTL Fawnspring Limited, |
|   |                       | its General Partner |
|   |                       |   |
|   | By:                        | /s/ ROBERT MACKENZIE |   |
|   |                       | Robert Mackenzie |
|   |                       | Director of ntl Directors Limited |
|   |                       | Corporate director of NTL Fawnspring Limited, |
|   |                       | the General Partner of South Hertfordshire |
|   |                       | United Kingdom Fund, Ltd. |

 

Dated:  November 14, 2006

Pursuant to therequirements of the Securities Exchange Act of 1934, this report has beensigned below by the following persons on behalf of the registrant and in thecapacities and on the dates indicated.

 
| Name                  | ** ** | **Title**                                     | ** ** | **Date**          |
|-----------------------|------------|-----------------------------------------------|------------|-------------------|
|                  |       |                                          |       |              |
| /s/ ROBERT  MACKENZIE |       | Director of ntl Directors Limited, Corporate  |       | November 14, 2006 |
| Robert Mackenzie      |       | director of NTL Fawnspring Limited, the       |       |              |
|                  |       | General Partner of South Hertfordshire United |       |              |
|                  |       | Kingdom Fund, Ltd.*                           |       |              |
|                  |       |                                          |       |              |
| /s/ ROBERT GALE       |       | Director of ntl Directors Limited, Corporate  |       | November 14, 2006 |
| Robert Gale           |       | director of NTL Fawnspring Limited, the       |       |              |
|                  |       | General Partner of South Hertfordshire United |       |              |
|                  |       | Kingdom Fund, Ltd.*                           |       |              |

 

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*                    ThePartnership has no Chief Executive Officer or Chief Financial Officer. RobertMackenzie and Robert Gale are Directors of ntl Directors Limited, which is acorporate director of NTL Fawnspring Limited, the general partner of thePartnership.

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