Use these links to rapidly review the documentNTL INCORPORATED AND SUBSIDIARIES FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2005 TABLE OF CONTENTS INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES



UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-K

|(Mark One)                                  |                                                                                         
|------------------------------------------- | ----------------------------------------------------------------------------------------
|ý                                           | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934    
|For the fiscal year ended December 31, 2005
|or                                         
|o                                           | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|For the transition period from
 to         

Commission File No. 000-22616

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NTL Incorporated(Exact name of registrant as specified in its charter)

|Delaware(State or other jurisdiction of
incorporation or organization)                 |  | 52-1822078(I.R.S. Employer Identification No.)
|-------------------------------------------------------------------------------------- |  | ----------------------------------------------
|909 Third Avenue, Suite 2863 New York, New York(Address of Principal Executive Office) |  | 10022(Zip Code)                               
|(212) 906-8440(Registrant's telephone number, including area code)                    

Securities registered pursuant to Section 12(g) of the Act:

Common
Stock, par value $0.01 per share

Warrants
to purchase shares of Common Stock

Indicate
by check mark if the registrant is a well-known seasoned issuer.    Yes ý     No
o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes
o     No ý

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 o     No ý

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to
this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of
"accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

Large
accelerated filer ý     Accelerated filer
o     Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes o     No ý

The aggregate market value of the registrant's voting stock held by non-affiliates as of June 30, 2005 based on the closing price for the
registrant's common stock on the Nasdaq National Market on such date, was $5,181,891,714.

As
of February 24, 2006, there were 85,496,237 shares of the registrant's common stock, par value $0.01 per share, issued and outstanding, excluding shares of the registrant's
common stock issuable upon the exercise of Series A Warrants to purchase 10,313,158 shares of the registrant's common stock.

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange
Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    Yes ý     No
o

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's definitive Proxy Statement for its 2006 Annual Meeting of Stockholders are incorporated by reference into Part III.



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NTL INCORPORATED AND SUBSIDIARIES  FORM 10-K  FOR THE YEAR ENDED DECEMBER 31, 2005    TABLE OF CONTENTS



|                                                                             |  |                                                                                               
|---------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------
|PART I                                                                       |  |                                                                                               
|Item 1.                                                                      |  | Business                                                                                      
|Item 1A.                                                                     |  | Risk Factors                                                                                  
|Item 1B.                                                                     |  | Unresolved Staff Comments                                                                     
|Item 2.                                                                      |  | Properties                                                                                    
|Item 3.                                                                      |  | Legal Proceedings                                                                             
|Item 4.                                                                      |  | Submission of Matters to a Vote of Security Holders                                           
|PART II                                                                      |  |                                                                                               
|Item 5.                                                                      |  | Market for the Registrant's Common Equity and Related Stockholder Matters                     
|Item 6.                                                                      |  | Selected Financial Data                                                                       
|Item 7.                                                                      |  | Management's Discussion and Analysis of Financial Condition and Results of Operations         
|Item 7A.                                                                     |  | Quantitative and Qualitative Disclosures about Market Risk                                    
|Item 8.                                                                      |  | Financial Statements and Supplementary Data                                                   
|Item 9.                                                                      |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure          
|Item 9A.                                                                     |  | Controls and Procedures                                                                       
|Item 9B.                                                                     |  | Other Information                                                                             
|PART III                                                                     |  |                                                                                               
|Item 10.                                                                     |  | Directors and Executive Officers of the Registrant                                            
|Item 11.                                                                     |  | Executive Compensation                                                                        
|Item 12.                                                                     |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|Item 13.                                                                     |  | Certain Relationships and Related Transactions                                                
|Item 14.                                                                     |  | Principal Accountant Fees and Services                                                        
|PART IV                                                                      |  |                                                                                               
|Item 15.                                                                     |  | Exhibits and Financial Statement Schedules                                                    
|SIGNATURES                                                                  
|Index to Consolidated Financial Statements and Financial Statement Schedules

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"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995:

Various statements contained in this document constitute "forward-looking statements" as that term is defined under the Private Securities Litigation Reform Act
of 1995. Words like "believe," "anticipate," "should," "intend," "plan," "will," "expects," "estimates," "projects," "positioned," "strategy," and similar expressions identify these forward-looking
statements, which involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements or industry results to be materially different from
those contemplated, projected, forecasted, estimated or budgeted, whether expressed or implied, by these forward-looking statements. These factors include:



These
and other factors are discussed in more detail under "Risk Factors" and elsewhere in this Form 10-K and in our joint proxy statement prospectus dated
January 30, 2006. We assume no obligation to update our forward-looking statements to reflect actual results, changes in assumptions or changes in factors affecting these statements.

Note Concerning Currency of Financial Statements

Following the disposal of our operations in the Republic of Ireland in the second quarter of 2005, all of our revenue from continuing operations, and
substantially all of our assets, are denominated in U.K. pounds sterling. Accordingly, we now report our results of operations and financial position in pounds sterling. Financial information for all
periods presented in this report has been restated accordingly.

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NOTE CONCERNING HISTORICAL STRUCTURE  OF THE COMPANY AND FRESH-START REPORTING

Historical Structure

NTL Incorporated is a Delaware corporation and is publicly traded on the Nasdaq National Market in the United States, or the U.S. Our historical structure is as
follows:

We
were incorporated in 1993 as a Delaware corporation and continued as a publicly traded holding company until February 1999. From February 1999 until January 10,
2003, we were a wholly-owned subsidiary of NTL (Delaware), Inc., a Delaware corporation, referred to in this annual report as NTL Delaware which was incorporated in February 1999 in
order to effect a reorganization into a holding company structure. The holding company structure was implemented to pursue opportunities outside of the United Kingdom, or the U.K., and Ireland, and
was accomplished through a merger. Our stockholders at the time became stockholders of the new holding company, NTL Delaware. The new holding company took the name NTL Incorporated until
May 2000, when its name was changed back to NTL (Delaware), Inc.

In
May 2000 another new holding company structure was implemented in connection with the acquisition of the residential assets of Cable & Wireless Communications plc,
referred to in this annual report as CWC (the operations acquired from CWC are called ConsumerCo), and was accomplished similarly through a merger. The stockholders of NTL Delaware became stockholders
of the new holding company, NTL Delaware became a subsidiary of the new holding company, and we remained a subsidiary of NTL Delaware. The new holding company then took the name NTL Incorporated,
which remained its name until January 10, 2003, at which time its name was changed to NTL Europe, Inc., or NTL Europe. On February 21, 2001, NTL Europe contributed the assets of
ConsumerCo to us.

On
January 10, 2003, we emerged from reorganization under Chapter 11 of the U.S. Bankruptcy Code. Pursuant to the plan of reorganization, which we refer to as the Plan, our former
parent, NTL Europe, and its subsidiaries and affiliates were split into two separate groups, with us and NTL Europe each emerging as independent public companies. We were renamed "NTL Incorporated"
and became the
holding company for the former NTL group's principal U.K. and Ireland assets. NTL Europe became the holding company for the former NTL group's continental European and various other assets. All of the
outstanding securities of our former parent and some of its subsidiaries, including us, were cancelled. We issued shares of our common stock and Series A warrants, and NTL Europe issued shares
of its common stock and preferred stock, to various former creditors and stockholders. As a result, we are no longer affiliated with NTL Europe. NTL Europe has since changed its name to
PTV Inc., or PTV.

Fresh-Start Reporting

We operated our business as a debtor-in possession subject to the jurisdiction of the Bankruptcy Court beginning on May 8, 2002, the date that
we, NTL Europe and some of our and NTL Europe's subsidiaries filed the Plan under Chapter 11 of the U.S. Bankruptcy Code, until January 10, 2003. Accordingly, we have prepared our consolidated
financial statements in accordance with the American Institute of Certified Public Accountants Statement of Position 90-7,Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code, or SOP 90-7.

We
adopted fresh-start reporting upon our emergence from Chapter 11 reorganization in accordance with SOP 90-7. For financial reporting purposes, the effects of the
completion of the Plan as well as adjustments for fresh-start reporting have been recorded as of January 1, 2003. Pursuant to fresh-start reporting, a new entity was deemed created for
financial reporting purposes. The carrying values of our assets were adjusted to their reorganization values, which are equivalent to their estimated fair values at January 1, 2003. The
carrying values of our liabilities were adjusted to their

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present
values at January 1, 2003. The term "Predecessor Company" in prior filings refers to our subsidiaries and us for periods prior to and including December 31, 2002. The term
"Reorganized Company" refers to our subsidiaries and us for periods subsequent to January 1, 2003. The effects of the completion of the Plan as well as adjustments for fresh-start reporting
recorded as of January 1, 2003 are Predecessor Company transactions. All other results of operations on January 1, 2003 are Reorganized Company transactions.

Summary Corporate Structure

The following chart shows the corporate structure of NTL through which our primary operations are conducted. This is a condensed chart and it does not show all of
our operating and other intermediate companies.

GRAPHIC

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PART I

Item 1.    Business

Introduction

We are one of the leading communications and content distribution companies in the U.K., providing internet access, telephone and television services to
3.3 million residential customers, including 1.8 million broadband customers. We also provide internet and telephone services to our residential customers who are not connected to our
cable network via access to other companies' telecommunications networks and via an internet service provider operated by our subsidiary, Virgin Net Limited. We offer what we refer to as a "triple
play" bundle of internet, telephone and television services through competitively priced bundled packages. We also provide a range of voice services to businesses and public sector organizations, as
well as a variety of data communications solutions from high speed internet access to fully managed business communications networks and communication transport services.

Our
services are delivered through our wholly owned local access communications network passing approximately 7.7 million homes in the U.K. The design and capability of our
network provides us with the ability to offer "triple play" bundled services to residential customers and a broad portfolio of reliable, competitive communications solutions to business customers.

Combination with Telewest

We have entered into a definitive merger agreement with Telewest Global, Inc., pursuant to which the two businesses would be combined if the transaction is
approved by stockholders.

Telewest
is a leading broadband communications and media group in the U.K., providing:



Telewest's
television and communications services are delivered through its wholly owned broadband, local access communications network, passing approximately 4.7 million homes in
the U.K. Telewest's networks consist of local distribution networks, a "national network" and an internet protocol, or IP, services platform and provide high-speed interconnection and
two-way interactivity with directly connected residential and business customers. Like NTL, Telewest offers the "triple play" of internet, telephone and television services to its
residential customers.

Telewest's
television channels, auction-based shopping programs and related services are provided through its wholly owned subsidiaries, Flextech Limited, or Flextech, and
sit-up Limited, or sit-up. Flextech has ten genre-based entertainment channels, four of which are multi-phased versions of its other channels. Flextech also owns a 50% interest
in the companies that comprise the UKTV Group, a series of joint ventures with BBC Worldwide Limited, or BBC Worldwide. Together Flextech and the UKTV Group are the largest supplier of basic channels
to the U.K. pay-television market. sit-up provides a wide-variety
of consumer products through three interactive auction-based television channels: price drop TV, bid tv and speed auction tv.

Under
the merger agreement, Telewest, which currently trades on NASDAQ under the symbol "TLWT," will file a second restated certificate of incorporation, or the charter amendment,
to effect a change of name from "Telewest Global, Inc." to "NTL Incorporated" and to reclassify each share of Telewest common stock issued and outstanding immediately prior to the effective
time of the

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reclassification
into (i) 0.2875 shares of Telewest common stock existing immediately after the effective time of the reclassification, or Telewest new common stock, together with cash in lieu
of fractional shares of Telewest new common stock, and (ii) one share of Telewest Class B Redeemable Common stock, or Telewest redeemable common stock. At the effective time of the
merger, (i) each share of Telewest redeemable common stock will be automatically redeemed for $16.25 in cash without interest and (ii) each share of our common stock issued and
outstanding immediately prior to the effective time of the merger will be converted into the right to receive 2.5 shares of Telewest new common stock, together with cash in lieu of fractional shares
of Telewest new common stock.

Upon
completion of the merger, our stockholders will own approximately 75% and Telewest stockholders approximately 25% of the combined company on a fully diluted basis based on currently
outstanding shares, options and warrants. Upon completion of the merger, we will be wholly owned by Telewest. Our common stock, which currently trades on NASDAQ under the symbol "NTLI," will be
delisted. Telewest's ticker symbol will be changed to "NTLI." Telewest and we have announced our intention to complete the transaction as soon as reasonably practicable after the stockholder meetings,
assuming the proposals presented are approved.

Further
details relating to the merger and the merger agreement are included in our joint proxy statement/prospectus filed with the SEC on January 30, 2006 and posted to our
shareholders on or about January 31, 2006. Stockholder meetings to consider and vote on the transaction are scheduled for March 2, 2006.

We
were incorporated in 1993 as a Delaware corporation. Our principal executive offices are located at 909 Third Avenue, Suite 2863, New York, New York 10022, United States, and our
telephone number is (212) 906-8440. Our U.K. headquarters are located outside of London, England in Hook, Hampshire, United Kingdom. Our website is www.ntl.comand the investor relations section of
our website can be accessed under the heading "Investors" where we make available free of charge
annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments thereto, as soon as reasonably
practical after they are filed with the SEC.

Sale of Broadcast and Irish Operations

On January 31, 2005, we sold our broadcast operations to a consortium led by Macquarie Communications Infrastructure Group. The cash proceeds from the sale
were approximately £1.27 billion. Our broadcast operations provided site leasing, broadcast transmission, satellite, media, public safety communications and other network services,
utilizing broadcast transmission infrastructure, wireless communications and other facilities. On May 9, 2005, we sold our operations in the Republic of Ireland to MS Irish Cable Holdings B.V.,
an affiliate of Morgan Stanley & Co. International Limited, for an aggregate purchase price of €333.4 million, or £225.5 million.

Use of proceeds from sale of Broadcast and Irish operations

From the proceeds of the sale of our Broadcast and Irish operations, we used £723 million to prepay principal amounts outstanding under our
senior credit facility and $100 million to redeem the Floating Rate Senior Notes due 2012. On January 31, 2005, we announced that we intended to use up to £475 million
of the proceeds from the sale to repurchase shares of our common stock. During 2005, we used £114 million to effect share repurchases in the open market. We expect to use
approximately £500 million of the proceeds to pay a portion of the cash consideration in the combination with Telewest.

Offer for Virgin Mobile

On December 5, 2005, we confirmed that we had approached Virgin Mobile (UK) Holdings plc, or Virgin Mobile, about a potential offer to combine ourselves
and Virgin Mobile, and that we had

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engaged
in discussions with Virgin Enterprises Limited, or Virgin Enterprises, to extend our existing exclusive license for use of the Virgin name in the internet services area also to cover
television and fixed and mobile telephone services. Virgin Mobile is the U.K.'s largest virtual mobile network operator and the fifth largest mobile network operator in the U.K.

On
January 16, 2006, we and the independent directors of Virgin Mobile confirmed discussions to enable a cash offer, with share alternative offers, to be made by us or one or more
of our subsidiaries to acquire 100% of the shares of Virgin Mobile.

If
the potential offer is made, Virgin Mobile shareholders would be able to elect to receive, for each share of Virgin Mobile, (a) £3.72 in cash, (b) 0.09298
shares of our common stock, or (c) 0.074384 shares of our common stock plus £0.67 in cash. Virgin Group has indicated to us that it intends to cause the relevant Virgin Group
companies to elect alternative (c) above in respect of its holding of approximately 71.3% of Virgin Mobile's shares.

References
to our common stock above do not refer to the common stock of the combined company. As the completion of the merger of ourselves with Telewest is expected to occur prior to
the above transaction, Virgin Mobile shareholders will become entitled to receive the same number of shares in the combined company as they would have received if the Virgin Mobile offer had closed
and they held our shares at the completion of the merger of us with Telewestin other words, 2.5 shares of the combined company's stock for every one of our shares.

The
Virgin Mobile offer is subject to the satisfaction of certain pre-conditions. No assurances can be made that an offer will be made, of the terms on which any offer may be
made, or whether any transaction will be completed.

This
potential transaction would not require the approval of our stockholders.

Discontinued Operations

We entered into an agreement for the sale of our broadcast operations in December 2004. The sale closed on January 31, 2005. As a result, we have
accounted for the broadcast operations as a discontinued operation. Accordingly, the results of operations for the broadcast operations have been excluded from the components of loss from continuing
operations and the assets and liabilities of the broadcast operations have been reported as held for sale for all periods in this report.

On
May 9, 2005, we sold our operations in the Republic of Ireland. The Ireland operations are accounted for as discontinued operations and, therefore, Ireland's results of
operations have been excluded from the components of loss from continuing operations and the assets and liabilities of the Ireland operations have been reported as held for sale for all periods in
this report.

Our Business

We provide our services to customers through two sales channels: Consumer and Business.

Consumer

We provide broadband and dial-up internet, telephone and television services to residential customers in the U.K.

Our
services to residential customers are distributed principally via our wholly-owned, local access communications network to an addressable market of approximately 7.7 million
homes in the U.K. The network covers parts of many major metropolitan areas in the U.K., and includes England, Wales and Scotland. In addition, we provide services to residential customers not
connected to our network via access to other telecommunications networks and via an ISP, virgin.net, operated through our subsidiary Virgin Net Limited.

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Our
wholly-owned, local access communications network provides us with several competitive advantages in our industry:



In
contrast:



Our
packaging and pricing are designed to encourage our residential customers to use multiple bundled services like dual telephone and broadband internet access, dual telephone and
dial-up internet access, dual telephone and television, or triple telephone, television and internet access. For example, our Family Pack bundle offers over 100 television channels and a
telephone line rental. In addition, our "value packs" offer discounts to subscribers taking two or more products.

We
believe that we are well-positioned in our service areas to use bundling to increase our customer base, reduce our customer churn rate and increase our profitability. As
of December 31, 2005, approximately two thirds of our residential customers received multiple services from us. We refer to each service we provide as a revenue generating unit, or RGU, and, as
of December 31, 2005, each of our on-net customers represented on average approximately two revenue generating units. For example, if we provided one customer with broadband
internet and telephone services, this customer would represent two RGUs. Our "triple play" customer base has been increasing as a percentage of our total residential customers. At the end of the
fourth quarter of 2004, 24.0% of our on-net customers were triple play customers, and as of December 31, 2005, 29.3% of our on-net customers were triple play.

In
our service areas, we are the primary service provider that provides the full range of services that we offer, although competition in each of these services individually is
significant and some of the other service providers have substantial resources. See "Competition."

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The table below shows other typical service providers who offer their services in our areas:

|                   |  | NTL |  | BT(1) |  | BSkyB(1) |  | Broadband
Resellers(2) |  | Telephone
Resellers(3) |  | Freeview(4) |  | Home
Choice(5) |  | TUTV(6)
|------------------ |  | --- |  | ----- |  | -------- |  | ---------------------- |  | ---------------------- |  | ----------- |  | -------------- |  | -------
|Telephone          |  | 3   |  | 3     |  | 5        |  | 5                      |  | 3                      |  | 5           |  | 3              |  | 5      
|Broadband internet |  | 3   |  | 3     |  | 5        |  | 3                      |  | 3                      |  | 5           |  | 3              |  | 5      
|Dial-up            |  | 3   |  | 3     |  | 5        |  | 3                      |  | 3                      |  | 5           |  | 5              |  | 5      
|Television         |  | 3   |  | 5     |  | 3        |  | 5                      |  | 5                      |  | 3           |  | 3              |  | 3      
|                   |  |     |  |       |  |          |  |                        |  |                        |  |             |  |                |  |        
|Bundled Services   |  | 3   |  | 5     |  | 5        |  | 5                      |  | 5                      |  | 5           |  | 3              |  | 5      

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Internet Services

We offer several different packages of broadband and dial-up internet services with different features, speeds and pricing. We provide broadband and
dial-up internet services to customers within reach of our access network, by direct connection to our network. We also provide broadband and dial-up internet service to
customers not within reach of our access network by providing a connection to our network via BT's local access network. We are the largest direct provider of residential broadband services in the
U.K. Broadband provides users with a high-speed always-connected internet service. Users connect their home computers to our broadband network via high-speed cable modem. We
offer broadband services at varying speeds: currently 1Mb, 2Mb and 10Mb.

virgin.net

Through our Virgin Net Limited subsidiary, we provide internet services to residential customers who live inside or outside our service areas. Virgin Net offers
both broadband and dial-up internet services. Various price and feature packages are available including metered and unmetered dial-up, and broadband ranging from 512Kb to 2Mb.
Services up to 8Mb are planned for 2006. We have a license from Virgin Enterprises Limited to use the Virgin name and logo in connection with the activities of virgin.net. As of December 31,
2005, we had approximately 481,000 residential customers using virgin.net, including approximately 166,500 broadband customers.

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Features and Content

Some features and content are provided free to all subscribers to our internet services, e.g. email, newsgroups and NetGuard, our internet security package.
NetGuard provides PC anti-virus and a number of security tools including pop-up blocker, form filler and privacy manager.

Other
features and content are provided on a subscription basis, or free to higher tier subscribers e.g. Broadband Plus, which is offered free to higher tier broadband subscribers and,
for an additional monthly fee, to lower tier broadband subscribers. Broadband Plus gives residential customers access to premium subscription content, such as online gaming, educational, music and
other entertainment content.

Internet Market Growth

Broadband is a dynamic and growing industry. We intend to continue to maximize our share of this market by leveraging the competitive advantages of our network to
create broadband propositions that are superior in speed, value and features.

We
have experienced substantial growth in our broadband customer base since 2002. For example, as of the close of 2002, we had 517,000 broadband customers. At the end of 2003, we had
949,200 broadband customers, at the end of 2004 we had 1,330,300 broadband customers and at the end of 2005, we had
1,823,900 broadband customers. This represents an average growth rate over this period of over 53.6%, including the 62,000 broadband customers already with virgin.net at the time of its acquisition by
us in 2004, and over 52.0% excluding those customers.

Telephone

We provide local, national and international telephone services to our residential customers. We tier our product offering with attractive pricing that includes
"Talk Plans" that enable customers to make unlimited local and national calls for a fixed monthly fee in addition to the standard line rental. We provide telephone services to our residential
customers who are within reach of our access network by direct connection to our network and also via BT's local access network to customers off our network, a process known as indirect access. We
also provide national and international directory inquiry services. As of December 31, 2005, we provided telephone services to approximately 2.6 million residential customers.

Cable Television

We offer a wide range of digital and analog television services to our customers. Our digital services include access to over 130 channels, advanced interactive
features and a range of premium and pay-per-view services. Our analog service packages offer up to 45 channels including premium and/or pay-per-view
services. In addition to offering all of the popular basic and premium channels available on BSkyB's satellite platform, we also offer to our digital customers, through our joint venture with a
subsidiary of Telewest Global, Inc., or Telewest, a cable-only movie, sport and special events pay-per-view television service called "Front Row." Front Row
provides our customers with similar access to films and special pay per view events as BSkyB's "Sky Box Office".

Our
network technology enables a significant range of digital interactive services to be delivered by making use of the always-connected broadband connection from a customer's home to
the network, known as the always-on return path. Examples of interactive services include games, television email and access to news, entertainment and information services from an
on-screen menu. Interactive services also include enhanced television functionality utilizing the "red button" for BBC and other commercial broadcasters. "Red button" functionality in the
U.K. permits television viewers to press a red button on their remote control handset to receive additional interactive services including multiple

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broadcasts.
For example, during last year's live Wimbledon tennis broadcast on BBC, a viewer could press the red button and receive a choice of multiple live tennis matches to watch, with the ability
to switch back and forth between one match and several others.

As
of December 31, 2005, we provided cable television services to approximately 1.9 million residential customers, of which approximately 1.4 million received our
DTV service and approximately 0.5 million received our ATV service.

Video on Demand

In January 2005, we launched our Video on Demand, or VOD, DTV service. This new service, called ntl On Demand, is being rolled out regionally to our DTV
customers throughout the U.K. As of December 31, 2005 over 500,000 existing customers were able to receive the VOD service.

ntl
On Demand is a significant enhancement to the existing ntl DTV service, offering viewers choice over and above scheduled programming. The VOD movie service, provided by FilmFlex, a
joint venture company between Sony, Disney and the On Demand Group offers hundreds of films, including many of the latest blockbusters and classics. The VOD service provides access to hundreds of
hours of additional programming, including advertising-free children's programs, a "Pick of the Week" option showing a selection of top shows from the previous seven days, and a music
video jukebox service.

Companies
who have already agreed to provide VOD content include the BBC, Nickelodeon, Jetix, Warner Music, Entertainment Rights, VPL, The Walt Disney Company, Hollywood Pictures,
Touchstone Pictures, Miramax Film Corporation, Buena Vista International, Inc., Sony Pictures Entertainment, Sony Pictures Classics, Columbia Pictures, TriStar, Pathé, Icon Films
and Playboy TV. Additional partners are expected to join the service as it develops.

ntl
On Demand offers DVD-style features including freeze frame, fast-forward and rewind, and programs are available for 24 hours after purchase. These
features provide a customer with full control over the content and timing of their television viewing. There is also an increasing amount of free content available to view at any time. Current films
appear on television first through VOD, up to nine months before scheduled TV movie channels. To help customers choose which film to watch, film trailers can be viewed before purchasing.

As
soon as this service goes live in each of our regions, it is available to all of our DTV customers. No new equipment, installation or additional subscription is required. ntl On
Demand appears within the existing Electronic Programming Guide and customers can purchase films and television programs whenever they choose via the remote control.

Sales and Marketing

We use a variety of advertising and marketing channels to sell our services to residential customers, including our dedicated door-to-door
sales force and our telephone sales team. These channels are supported by direct marketing initiatives and national and regional press advertising.

We
use our residential customer database to identify the profiles of our customers so that we can design offers to match the needs of our customers. Our offers encourage customers to
purchase new services and upgrades to existing services.

Customer Service

Improving our customer service has continued to be a central focus for us during 2005. We now operate our customer service operations from three main custom-built
centers based in the U.K. at Glasgow, Swansea and Manchester. These sites are virtualized, which means that calls come in to one access point and are distributed automatically to the first available
agent in Glasgow, Swansea or

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Manchester.
This allows real-time call routing between each center, depending on call volumes. A separate service performance team ensures peak call times are resourced properly. We use
various tools and processes to ensure that we match our customers' calls to the right service center staff and to meet peak demand. Our employees are graded in terms of their expertise in specific
call types, which allows the call routing to be linked to skill types of employees, ensuring customers are serviced by experts within their field of enquiry.

In
addition, we have two specialist teams based in Manchester and Swansea, which deal in high-level fault diagnostics. These teams are staffed by employees trained in
on-line diagnosis of faults for our products. We also employ approximately 587 service technicians whose role involves visiting customers who have registered a fault which cannot be
rectified remotely. This team is tasked to restore service within 10 hours. During 2005, over 75% of faults were restored within the 10 hour window and a total of 92% within
24 hours. We constantly monitor our network to ensure that we detect and repair network outages promptly, and to enable early communication with our customers.

Our
customer service operation has over 1,600 staff handling over 24 million calls per year. The average call is answered within 187 seconds, with 34% of calls answered within 30
seconds. However, disruptions in service or other special situations can result in increases in call volumes and waiting times.

Since
the 2004 call centre consolidation programme and the cessation of billing migration work there have been improvements in service levels, customer advocacy and churn. Customer
research shows all aspects of service have improved with overall satisfaction of the Contact Centers having increased from 48% to 53% across 2005 and helped drive overall advocacy to 55%. This is
further supported by the customer advocacy for those customers that have had a reason to call NTL. This advocacy measure has increased 11% year-on-year to 52% and is reflected
in the likelihood of customers to purchase a new product with us (Customer Satisfaction and Advocacy measure) to 37% from a low in the year of 28%. Correspondingly controllable customer churn
(excluding movers) has dropped to below 3% annualized with "service related churn" at 0.7% annualized.

Consumer Customer Statistics

The following table illustrates our residential customer statistics as of December 31, 2005 and 2004:

|                    |           | 2005 |         | 2004 |        
|------------------- | --------- | ---- | ------- | ---- | -------
|
|Homes Marketable(1) |           |      |         |      |        
|                    | Telephone |      | 7,601.3 |      | 7,739.5
|                    | ATV       |      | 7,735.9 |      | 7,910.4
|                    | DTV       |      | 7,447.1 |      | 7,420.4
|                    | Broadband |      | 7,088.4 |      | 6,961.9
|                    |           |      |         |      |        
|                    |           |      |         |      |        

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|Customers(2)                                             |                                     |                                   |         |         |        
|-------------------------------------------------------- | ----------------------------------- | --------------------------------- | ------- | ------- | -------
|                                                         | Single RGU(3)                       |                                   | 1,157.8 |         | 1,038.0
|                                                         | Dual RGU(3)                         |                                   | 1,262.1 |         | 1,386.0
|                                                         | Triple RGU(3)                       |                                   | 906.0   |         | 712.8  
|                                                         |                                     |                                   |         |         |        
|                                                         | Total                               |                                   | 3,325.9 |         | 3,136.8
|                                                         |                                     |                                   |         |         |        
|                                                         | Telephone                           |                                   | 2,633.4 |         | 2,638.5
|                                                         | Television                          |                                   |         |         |        
|                                                         |                                     | DTV                               |         | 1,445.1 |        
|                                                         |                                     | ATV                               |         | 497.7   |        
|                                                         |                                     |                                   |         |         |        
|                                                         |                                     | Total                             |         | 1,942.8 |        
|                                                         |                                     |                                   |         |         |        
|                                                         | Internet                            |                                   |         |         |        
|                                                         |                                     | Dial-Up (metered)                 |         | 321.9   |        
|                                                         |                                     | Dial-up (unmetered)               |         | 138.9   |        
|                                                         |                                     | DTV Access                        |         | 7.6     |        
|                                                         |                                     | Broadband                         |         | 1,823.9 |        
|                                                         |                                     | Broadband 60 day free trial offer |         |        |        
|                                                         |                                     |                                   |         |         |        
|                                                         |                                     | Total                             |         | 2,292.3 |        
|                                                         |                                     |                                   |         |         |        
|RGUs(2), (3)                                             |                                     |                                   |         |         |        
|                                                         | Telephone                           |                                   | 2,633.4 |         | 2,638.5
|                                                         | Television                          |                                   | 1,942.8 |         | 1,979.6
|                                                         | Broadband Internet                  |                                   | 1,823.9 |         | 1,330.3
|                                                         |                                     |                                   |         |         |        
|                                                         | Total                               |                                   | 6,400.1 |         | 5,948.4
|                                                         |                                     |                                   |         |         |        
|RGUs/Customer                                            |                                     | 1.92                              |         | 1.90    |        
|Fourth Quarter Customer/RGU Movement                     |                                     |                                   |         |         |        
|                                                         | Opening customers (at September 30) |                                   | 3,315.4 |         | 3,164.6
|                                                         | Data Cleanse(4)                     |                                   | (18.1   | )       | (20.0  
|                                                         |                                     |                                   |         |         |        
|                                                         | Opening Subs post data cleanse      |                                   | 3,297.3 |         | 3,144.6
|                                                         | Gross Adds                          |                                   | 195.4   |         | 185.2  
|                                                         | Disconnects                         |                                   | (156.8  | )       | (151.0 
|                                                         | Reduction to customer count(5)      |                                   | (10.0   | )       | (42.0  
|                                                         |                                     |                                   |         |         |        
|                                                         | Closing Customers (at December 31)  |                                   | 3,325.9 |         | 3,136.8
|                                                         |                                     |                                   |         |         |        
|                                                         | Quarterly Net Customer Adds         |                                   | 38.6    |         | 34.2   
|                                                         | Quarterly RGU Adds                  |                                   | 131.9   |         | 80.5   
|                                                         | % Customer Churn(6)                 |                                   | 1.6     | %       | 1.6    
|Customers off our network (included in above statistics) |                                     |                                   |         |         |        
|                                                         | Telephone only                      |                                   | 37.4    |         | 7.2    
|                                                         | Internet only                       |                                   | 175.9   |         | 82.3   
|                                                         | Telephone and Internet              |                                   | 22.9    |         | 72.0   
|                                                         |                                     |                                   |         |         |        
|                                                         | Total                               |                                   | 236.2   |         | 161.5  
|                                                         |                                     |                                   |         |         |        

---

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Business

We provide voice, data and internet retail and wholesale services to a broad range of commercial and public sector organizations.

We
believe that we benefit from both cost and performance competitive advantages from our network, in terms of its reach, bandwidth and performance, over that of our competitors, who
largely depend on the BT local access network for the end connection to customers. Our network infrastructure passes within 200 meters of more than 600,000 business premises in the U.K.

We
derive approximately 40% percent of our retail business revenue from the public sector, particularly local government and the health and education markets. Where our network overlaps
with the communities served by these organizations, we leverage our competitive advantage through cost of
delivery or network performance. We also leverage our competitive advantage in the commercial markets around regional businesses.

We
generally divide our business customers by market segment into wholesale and retail. Retail customers are divided further into three categories based on revenues generated or expected
from that customer:



This
tiering of existing retail customers has enabled us to develop cost-effective account management, business development and customer service processes appropriate to
levels of customer revenues. Revenue from business retail customers for the year ended December 31, 2005 was £250.0 million, distributed across these Tiers, with 20% in Tier
3, 9% in Tier 2 and 71% in Tier 1.

Revenue
from business wholesale customers was £177.6 million for the year ended December 31, 2005.

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Services

Voice Services

Business Exchange Lines

Our business exchange lines provide our business customers with analog telephone services that connect to customer telephone handsets or private automatic branch
exchanges, or PABXs. Revenues for this service are derived from service installation, line rental and usage charges.

Business Line ISDN 30

Our Business Line ISDN 30 service delivers 30 digital exchange lines over a single physical access link. The exchange lines may be used for voice or data
applications or a mix of both. The number of digital exchange lines is sized to a customer's needs. Revenues for this service are derived from service installation, line rental and usage charges.

Centrex

Our single and multi-site Centrex solutions provide customers with the facilities of a PABX without the need to invest in the provision and
maintenance of a local PABX. Telephone calls
between users within a building or in different buildings are handled through our network but appear to the user to be transferred through a local PABX. Revenues for this service are derived from
installation, equipment rental, line rental and call charges.

Non-Geographic Numbers

We provide a range of freecall, non-geographic and premium rate number services for tele-business, including advice lines, call centers
and telemarketing applications. Revenues for these services are derived from service installation, line rental, usage charges and revenue share with the tele-business line operator.

Data Services

Leased Lines

Our leased line services provide high-quality dedicated connections between two customer locations. Customers use leased lines for voice, data and
video applications, and for forming the basis of private networks. Service speeds are available at 2Mb/s, 10Mb/s, 34Mb/s, 45Mb/s, 100Mb/s and 155Mb/s. Revenues for this service are derived from
service installation and recurring rental charges based on distance.

Ethernet Services

We provide point-to-point, point to multi-point and virtual private network capability, at 10 Mb/s, 100 Mb/s and 1 Gb/s bandwidth.
Increasingly, customers use Ethernet as a means of achieving local area network, or LAN, performance over their Wide Area Networks; we provide users with the benefit of a dedicated private network at
a lower cost. Revenues for this service are derived from installation, access circuit rental and virtual connection rental charges.

Structured Cabling/LAN Solutions

We provide in-building structured cabling services which include design, installation and project management of cable installations and upgrades.
Revenues for this service are determined on a project-by-project basis.

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Internet

Internet AccessCable Modem/ADSL

We provide internet services across the U.K., with access by means of cable modem in areas served by our network or by means of asymmetric digital subscriber
line, or ADSL, elsewhere. This allows us to provide services across the SME market and ubiquitous national access for larger enterprises.

High Speed Dedicated Internet Access

We provide high speed dedicated internet access from 2 Mb/s up to 45 Mb/s to organizations that support web services from their own locations as well as
organizations that have heavy demands for access to the internet. Because we own our network, we can provide competitively-priced internet access at higher speeds. Our pricing is based on installation
charges and recurring rental charges that vary based on the speed of access.

Wholesale Services

We provide external network services to national and international telecommunications operations by supplying fiber and transmission capacity to connect carriers
to national and local networks in the U.K. and wholesale internet access solutions to ISPs in the U.K.

We
provide dial-up and broadband internet access products to some of the largest ISPs in the U.K. We deliver metered and unmetered dial-up internet access both on
our network and over BT's network using regulated access products. Broadband access is supplied by both cable modem, using our network, and increasingly over ADSL, delivered through a network platform
combining the scale and functionality of our network with the coverage of the BT network. These services are provided on both an "access only" basis and as part of a full "turnkey" solution, with a
range of additional services including subscriber billing and support, for a virtual ISP.

We
currently have over 100 wholesale services customers. Customers include fixed line operators, ISPs and mobile telecommunications operators, for example, Tesco and BT Global Services.
For the year ended December 31, 2005, revenue from wholesale customers fell by 22% (£177.6 million from £227.7 million) principally due to the loss of
£44.1 million of wholesale revenue from Virgin Net Limited, which ceased to be a third party business customer as a consequence of its acquisition by us in
November 2004.

We
supply core inter-switch capacity to U.K. mobile operators. We also supply connectivity between switch sites and local aggregation points from various mobile base stations. We have
commercial relationships with all incumbent mobile operators in the U.K. Our contracts with fixed line and mobile telecommunication operators, other than prepaid contracts, generally have a duration
of approximately three to five years.

We
expect to continue serving the retail service provider marketplace through our strategy of providing high quality and competitively priced services, customized to meet the needs of
other telecommunications operators that need to expand their networks. We have migrated from building large networks to incrementally developing existing assets and new products. In addition, we are
benefiting from our customers' decision to lease additional capacity instead of constructing their own networks.

Our Network

Our business is underpinned by significant investment in our network infrastructure. This consists of a national core backbone network and a high capacity
two-way local broadband network in the UK. The entire network was designed for large scale, high-speed telecommunications traffic from its

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inception.
Our core network infrastructure transports our voice, internet, data and digital television platforms, whilst our access networks deliver these services directly to our customers.

Our
broadband communications network in the U.K. currently passes approximately 7.7 million homes in our regional franchise areas. Our cables also pass a significant number of
businesses in these areas. Our service areas include parts of many of the major metropolitan areas in the U.K., including London, Manchester, Leeds, Southampton, Portsmouth, Brighton, Derby, Teesside,
Cambridge, Oxford, Reading, Nottingham, Leicester, Coventry, Glasgow, Belfast, Cardiff and Swansea. We have the largest service area of any cable operator in the U.K. in terms of homes passed.

The
core network has a fiber backbone that is approximately 11,000 kilometers long. This includes over 8,400 kilometers which are owned and operated by us and approximately 2,600
kilometers which are leased fiber from other network owners. Over 100 switches direct telephone traffic around the core and local networks. In addition, we have more than 500 hub sites, points of
presence, repeater nodes or other types of network site, and facilities at over 150 radio sites.

Our
local access networks deliver internet, telephone and digital and analogue television services to our customers' homes and businesses. Our access network is comprised of two networks
together. First, to provide television services and high-speed broadband internet access, our local fiber network is connected to a customer's premises via high capacity,
two-way, coaxial cables. Second, we use Time Division Multiplex (TDM) technology over the fiber network to provide telephone services. This is then connected to a customer's premises via a
relatively short length twisted copper-pair. Additionally, the copper-pair cables are capable of hosting digital subscriber line (DSL) services (we intend to pilot this service
in 2006). Shorter lengths of copper provide a structural advantage in delivering very high-speed data services (for example 20Mbps ADSL2+ services).

We
have a variety of alternative methods to connect our national telecommunications network over the "last mile" to the premises of those customers which are located outside of our
cabled areas. We:



Nationally,
approximately 85% of the homes passed by our network can receive all of our broadband, digital television and telephone services. We cannot however currently provide all
three of the main services on some older parts of the network. In 2005, we continued a network upgrade program targeting approximately half a million homes in the London area, where there is older,
less robust cable network. Approximately 230,000 of the London homes were upgraded during 2005, compared to 102,000 in 2004; these homes can now be offered broadband, interactive digital television
and telephone services. This program is scheduled to be completed in 2006 with the upgrade of approximately 200,000 homes.

Once
the London upgrade program is completed, approximately 88% of the homes passed by our network nationally will be able to receive all of our broadband, interactive digital television
and telephone services.

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Information Technology

We outsource the management of the primary elements of our information technology systems to various suppliers. These suppliers include IBM, pursuant to an
agreement which terminates in 2013 or, if we pay a termination fee, on or after May 23, 2006. We retain control of our information technology activities that are fundamental to our competitive
advantage and key to the development of our intellectual property. The services IBM provides include:



Competition

Consumer

We believe that we have a competitive advantage in the U.K. residential market because we offer integrated communications services, including
high-speed broadband internet, telephone and television services. We offer most of our products on a stand-alone basis or as part of bundled packages designed to encourage customers to
subscribe to multiple services. There is only one other significant cable service provider in the U.K., Telewest, which has different service areas than us. We have agreed to merge with Telewest,
subject to shareholder approval. We offer internet and telephone services nationally. Television services are offered on our network in our service areas only.

Internet

We provide broadband and dial-up internet services to customers within reach of our access network, by direct connection to our network. We also
provide broadband and dial-up internet services to customers not within reach of our access network by providing a connection to our network via BT's local access network. Our internet
services compete with BT, which provides broadband and dial-up internet access services over its own network. We also compete with ISPs, including Wanadoo (rebranding as Orange in 2006),
AOL and Tiscali which do not own an access network infrastructure but offer internet access services by providing access to BT's network.

Additionally,
we compete with an increasing number of companies who deploy their own network access equipment in BT exchanges. These companies are known as Local Loop Unbundlers (LLU),
for example Easynet (recently acquired by BSkyB) and Bulldog (part of Cable & Wireless). BT and third-party service providers use DSL technologies which, like our network, permit internet
access to be provided at substantially greater speeds than conventional dial-up access. We anticipate that BT, as well as our other major competitors, will increase their access speeds
during 2006 to as much as 24Mb.

We
operate in a highly competitive marketplace which is reflected in the increasing pressures we see on pricing and speeds. Additionally we see an increasing number of new entrants
aggressively moving into the market during 2006 (e.g. Carphone Warehouse, BSkyB and Be) as LLU begins to gain traction in the UK. Also, third generation (or 3G) mobile technology or other wireless
technologies (like Wi-Max) may subject us to increased competition over time in the provision of broadband services.

Telephone

We provide fixed line telephone services to customers who are within reach of our network by direct connection to our network and, like our internet services, to
customers off our network via BT's

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local
access network. This process is known as indirect access. We compete primarily with BT in providing telephone services to residential customers in the U.K. BT occupies an established market
position and has substantial resources. We also compete with other telecommunications companies that provide indirect access telephone services, including One.Tel, Carphone Warehouse under the brand
name Talk Talk, Caudwell Group under the brand name Homecall, and Tesco.

Previously,
when providing indirect access services, calls were routed onto another operator's network by customers dialing additional digits before entering the primary telephone number
or via a dialer box that had to be provided to each customer. Calls can now be routed directly within a BT switch, through a method known as carrier pre-selection. Carrier
pre-selection dispenses with the need to dial additional digits or use a dialer box, creating a simpler connection process for the customer. Carrier pre-selection is
encouraging new companies to provide indirect access telephone services, increasing the pressure on our telephone services.

We
also compete with mobile telephone networks that may threaten the competitive position of our networks by providing a substitute to fixed line telephone services. Mobile telephone
services also contribute to the downward price pressure in fixed line telephone services. However, we expect that any decrease in demand for fixed line telephone services as a result of competition
from mobile telephone networks may be at least partially offset by increased demand for our wholesale services to mobile telecommunications operators.

On
December 5, 2005, we confirmed that we had approached Virgin Mobile about a potential offer to combine ourselves with Virgin Mobile, and that we had engaged in discussions with
Virgin Enterprises to extend our existing license for use of the Virgin name in the internet services area also to cover telephone (as well as television and mobile telephone services). On
January 16, 2006, we and the independent directors of Virgin Mobile confirmed discussions to enable a cash offer, with share alternative offers, to be made by us or one or more of our
subsidiaries to acquire 100% of the shares of Virgin Mobile. However, no assurances can be made that an offer will be made, of the terms on which any offer may be made, or whether any transaction will
be completed.

Television

We compete primarily with BSkyB in providing pay DTV to residential customers in the U.K. BSkyB is the only pay-satellite television platform and has
high market share of the UK pay television market. BSkyB owns the UK rights to various sports and movie programming content which it has used to create some of the most popular premium pay TV channels
in the U.K. BSkyB is therefore both our principal competitor in the pay-television market, and a critical supplier of content to us. The Office of Fair Trading, a U.K. regulatory agency
which we refer to as the OFT, has previously determined that BSkyB is dominant in the wholesale supply of channels carrying certain premium sports content and premium movies. Subject to a continuing
finding of dominance, this should prevent BSkyB from abusing its market position in relation to the supply of these channels to us. Even so we believe that the current pricing for this content is not
favorable to us and should be improved. We have an agreement in place with BSkyB for their basic service. We currently trade on BSkyB's rate card terms and pricing for their premium service.
Residential customers may also receive digital terrestrial television, or DTT. Digital signals are delivered to customer homes through a conventional television aerial and a separately purchased set
top box or an integrated digital television set.

The
free-to-air DTT service in the UK is branded Freeview. This service is provided by a consortium of BSkyB, National Grid Wireless and the BBC and offers
customers a limited range of television channels, which include the traditional analog channels. Customers do not pay a monthly subscription fee for basic Freeview service but must acquire a
freeview-enabled set top box or a television with a digital tuner. Presently Freeview does not offer several of the most popular pay television channels, such as Sky Sports, Sky Movies and MTV.

20

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Top
Up TV offers a pay television service offering staggered times approximately eleven pay television channels for a fixed fee to subscribers who otherwise receive freeview and have
purchased Top Up TV software. Currently a limited number of residential customers can receive DTV over BT's ADSL lines. Video Networks Limited, under the brand name Homechoice, supplies this service,
including video on demand, to customers in parts of the London metropolitan area, and Kingston Interactive Television supplies to customers in one region in England.

Of
our peers in the U.K., only Telewest is currently able to offer the full range of services we provide. Telewest is the only other cable company in the U.K. and does not offer services
in the areas that we cover. Some new competitors are using DSL technology to offer a comparable "triple play." For example, Homechoice, provides bundled services to approximately 30,000 customers,
according to Homechoice. However, the offerings of both of these companies are on a significantly smaller scale than ours.

Pay
television and pay-per-view services offered by us compete to varying degrees with other communications and entertainment media, including home video, video
games and DVDs. We are introducing video on demand services which may compete in the future with programming provided by video on demand services offered by other parties and may compete against other
video formats.

Telecommunications
is a constantly evolving industry and we expect that there will continue to be many advances in communications technology and in content. These advances, together with
changes in consumer behavior, and in the regulatory and competitive environments, mean that it will be difficult to predict how our operations and businesses will be affected in the future.

The
U.K. government has stated that it will terminate ATV transmission by 2012. Consumers wishing to receive television services will have to convert to DTV, currently available via
digital satellite, DTT, DSL or cable. However, when ATV transmission is terminated, the terrestrial DTV signal and network may be increased. This will enable terrestrial DTV to be made available to
customers' homes that cannot currently receive it. Some customers may wish to subscribe for free DTT, via Freeview, rather than pay for DTV.

Business

We face a wide range of competitors in the U.K. market. The nature of this competition varies depending on geography, service offerings and size of the marketable
area. Only BT and Telewest have both extensive local access networks and a national backbone network. However, as Telewest's local networks do not overlap with our own networks, we do not compete with
Telewest to any material extent. BT is a major competitor in almost all of our opportunities. Cable and Wireless plc, or C&W, and its recently acquired subsidiary Energis own national backbone
networks and they tend to focus on the large enterprise and corporate markets. However, these companies do not own local networks to any material extent and rely on wholesale arrangements to supply
their customers.

Colt
Telecom Group plc has an extensive network particularly in London and also focuses on large enterprise and corporate accounts. Thus Group plc has its network in Scotland,
principally in Edinburgh and Glasgow, and United Utilities plc has its network in Manchester. We face these competitors on a local basis mainly in the medium to large end of the SME (small and medium
size enterprises) market and in the market for larger corporate accounts and public sector organizations. In addition, for voice services we compete with a number of resellers who purchase wholesale
minutes from BT and others and compete aggressively in the retail market.

Although
many customers have a dual supplier sourcing policy, competition remains based on price and quality of service. We expect price competition to intensify as existing and other
new entrants compete aggressively. Most of these competitors have substantial resources and we cannot assure you that these or other competitors will not expand their businesses in our existing
markets or that we will

21

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be
able to continue to compete successfully with these competitors in the business telecommunications market.

BT
and C&W are our principal competitors in our wholesale services markets. Competition is based on the price, range and quality of services. BT has a local access network across the
U.K. that puts BT in a strong competitive position. Competition is most intense on key city-to-city routes where new entrants have increased the number of suppliers and had a
significant negative impact on prices. Where opportunities are more closely aligned to the geographic areas we serve, the number of our competitors is reduced.

Government Regulation

Regulation in the European Union (EU)

The European Parliament and Commission regulate our principal business activities through Directives and various other regulatory instruments.

In
particular, in February 2002, the European Commission adopted a package of new Directives which, together, set out a new framework for the regulation of electronic
communications networks and services throughout the EU. This new framework consisted of four Directives, namely:



This
package of Directives was supplemented, subsequently, by the Communications and Privacy Directive which dealt, among other things, with data protection issues in relation to the
provision of electronic communications services.

The
U.K. Government incorporated these Directives into its national laws under the Communications Act 2003, which came into effect on July 25, 2003, and the Communications Privacy
Regulations, which came into effect on December 11, 2003.

During
2006, the European Commission will be conducting a review of these Directives (the 2006 Review) to assess their continuing suitability and efficacy and whether any amendments are
necessary. It is not possible, at this stage, to express any opinion as to the likely outcomes of this review.

In
addition, the European Parliament and Commission are currently carrying out a review of the Television Without Frontiers Directive. This Directive, which was originally adopted in
1989, has been a cornerstone of EU audiovisual media policy. It requires the Member States of the EU, among other things, to set certain minimum standards for broadcasting and controls on the amount
and content of advertising. The Directive also requires Member States to take active measures to ensure that broadcasters under their jurisdiction support the European film and TV production industry.
This requirement is achieved, in large part, through the imposition of a European content quota under which broadcasters must reserve a majority of their transmission time for European works.

In
December 2005, the European Commission published proposed amendments to the Directive which are designed to update the Directive in the light of technological and market
developments. The main proposal is that on-demand services, which the European Commission refer to as "non-linear

22

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services",
should be brought within the scope of the Directive and should be made subject to some of its requirements. In particular, there is a proposal that on-demand service providers
such as ourselves should be required, where practicable and by appropriate means, to promote production of and access to European works. The Commission cites content quotas and investment levies as
examples of how this might be achieved.

Debate
on the proposed amendments will continue throughout 2006 and, in particular, the proposals will be debated in the European Parliament within this period. It is not possible, at
this stage, to predict the outcome with certainty but there is a risk that our on-demand services will become more heavily regulated as a result and that we may be required to take steps,
similar to those which already apply to traditional linear broadcasters, to support European film and TV production.

Regulation in the U.K.

We are subject to regulation under the Communications Act 2003, the Broadcasting Acts 1990 and 1996 and other U.K. statutes and subordinate legislation.

The
Communications Act 2003 established a new regulatory authority, the Office of Communications (Ofcom), as the single regulatory authority for the entire communications sector. Ofcom
replaced a number of sectoral regulatory authorities such as the Office of Telecommunications (Oftel) and the Independent Television Commission (ITC).

Under
the Communications Act 2003, communications providers, such as ourselves, are no longer required to hold individual licenses in order to provide electronic communications networks
and services, although certain licenses are required (see below under Cable TV regulation) in order to own or operate TV channels or to provide certain facilities such as electronic programme guides
on the cable TV platform. Even so, all communications providers are subject to a set of basic conditions imposed by Ofcom, which are known as the General Conditions of Entitlement. Any breach of these
conditions could lead to the imposition of fines by Ofcom and, ultimately, to the suspension or revocation of a company's right to provide electronic communications networks and services.

The General Conditions of Entitlement and SMP conditions

Full details of the General Conditions of Entitlement are available on Ofcom's website (www.ofcom.org.uk). Some of the requirements under the General Conditions
of Entitlement with which we must comply include:



Our
entitlement to provide electronic communications networks and services extends throughout the UK and is not constrained in time.

Under
current arrangements, any company, including ourselves, providing an electronic communications network or service is liable to pay annual administrative fees to Ofcom if its
turnover

23

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in
the second calendar year before the charging year in question was £5 million or more. These fees are calculated at a rate set by Ofcom each year and are applied to relevant
turnover bands.

In
addition to the General Conditions of Entitlement, Ofcom is under an obligation to impose further conditions on providers of electronic communications networks or services who have
significant market power (SMP) in identified markets. In regulatory terms, SMP equates to the competition law concept of dominance. The new EU regulatory framework, adopted in 2002, required Ofcom to
carry out a number of initial market reviews to establish which providers held SMP in these markets, and should therefore be subject to further conditions, and to keep these markets and any other
relevant markets identified by Ofcom under regular review. This has resulted in British Telecommunications plc (BT) being found to have SMP in a substantial number of markets. As a result, BT has been
made subject to further regulatory requirements in both wholesale and retail markets.

All
fixed operators, including ourselves, have been found to possess SMP in relation to the termination of calls on their own networks. This has resulted in the imposition of a
requirement on all fixed operators to provide access to their networks on fair and reasonable terms for terminating calls, with additional requirements being imposed on BT and Kingston Communications.
This apart, we have not been found to possess SMP in any of the other voice, data or Internet markets in which we operate.

The Strategic Review of Telecommunications

Following the passing of the Communications Act 2003, Ofcom announced that one of its first tasks would be to carry out a strategic review of telecommunications
in the UK (TSR).

The
TSR commenced in April 2004 with the observation from Ofcom that, despite almost twenty years of telecommunications liberalization in the UK, BT remained dominant in almost
all telecommunications markets. Ofcom's preliminary assessment was that although the true infrastructure competition offered by the cable industry was highly desirable and had resulted in substantial
consumer benefits, it did not represent a sufficient competitive constraint on BT. Similarly, the intensity of competition to BT based on access by third party service providers to the BT network via
wholesale products, was insufficient. Ofcom felt, therefore, that it should seek to increase competitive intensity by improving third party access to the BT network.

Having
reached this conclusion, Ofcom has developed a concept known as "equivalence". Broadly, this concept has been defined as enabling BT's competitors to gain access to BT's network
infrastructure on exactly the same (i.e. equivalent) terms as BT itself enjoys.

At
the conclusion of the TSR, BT offered and Ofcom accepted a number of undertakings to put the concept of equivalence into practice in its dealings with competitors. This will be
achieved primarily through the creation of a new division within BT called "openreach" which will manage and sell network services to competitors and the rest of BT on the same terms and conditions
(including prices) and in accordance with the same processes. By giving these undertakings, BT avoided a reference by Ofcom to the UK competition authorities.

The
outcome of the TSR is expected to create further commercial opportunities for new entrants in markets across the communications sector and therefore to meet Ofcom's objective of
increasing competitive intensity.

Universal service

The concept of universal service is designed to ensure that basic fixed-line telecommunications services are available at an affordable price to all
citizens across the EU. The scope of universal service obligations is defined by the Universal Service Directive (see above under Regulation in the European Union) and is transposed into U.K.
regulation by the Universal Service Order. This Order has been

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implemented
by Ofcom which has imposed a number of specific universal service requirements on BT and Kingston Communications, both of which have been designated by Ofcom as universal service
providers.

The
European Commission is expected to review the future scope of universal service obligations as part of the 2006 Review (see above under Regulation in the European Union). This review
is likely to consider, among other things, whether universal service should extend to the provision of broadband internet connectivity and whether there is scope in the future for making use of mobile
technologies in the provision of some aspects of universal service. We would be impacted by any future decision to require us to provide or to contribute to the funding of universal service in the
U.K.

Electronic Communications Code

Under the Telecommunications Act 1984, which was largely replaced by the Communications Act 2003, licensed public telecommunications operators were eligible for
enhanced legal powers under the electronic communications code annexed to the Telecommunications Act 1984, or Code Powers. Code Powers are of particular benefit to those who construct and maintain
networks because they give enhanced legal rights of access to private land, exemption from some requirements of general planning law and the right to install equipment in the public highway.

The
Communications Act 2003 retained the broad structure of Code Powers. Any operator which possessed Code Powers under the previous licensing regime automatically retained those powers
under the Communications Act regime. Any operator wishing to obtain new Code Powers must now apply to Ofcom. Our subsidiaries that provide electronic communications networks and services, ntl Group
Limited and ntl National Networks Limited, both have Code Powers.

Although
Code Powers give operators the right to install equipment in public highways, each operator is required to certify to Ofcom each year that it has sufficient and acceptable
financial security in place
to cover the costs which could be incurred by local councils or road authorities if they were required to remove equipment or restore the public roads following the insolvency of that operator. This
security is commonly described as "funds for liabilities." Ofcom has indicated that it will generally require an operator to provide board-level certification of third party security for this purpose.

Cable TV regulation

Although we are no longer required to hold individual licenses to provide electronic communications networks and services, we are still required to hold
individual licenses under the Broadcasting Acts 1990 and 1996 for any television channels which we own or operate and for the provision of certain other services (e.g. electronic programme guides) on
our cable TV platform.

We
therefore hold a number of Television Licensable Content Service Licenses (TLCS licenses) under the Broadcasting Act 1990 for the provision of promotional channels and for the
provision of our electronic programme guide.

TLCS
licenses are granted and administered by Ofcom. The licenses require that each licensed service complies with a number of Ofcom codes, including the recently published Broadcasting
Code, and with all directions issued by Ofcom. Breach of any of the terms of a TLCS license may result in the imposition of fines on the license holder and, ultimately, to the license being revoked.

Holders
of TLCS licenses are required to pay an annual fee to Ofcom. The fees are related to the revenue-earning capacity of each television service and are based on a percentage, set by
Ofcom, of revenues from advertising, sponsorship, subscriptions and interactive services, with special rules applying to shopping channels.

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U.K. competition law

The Competition Act 1998, which came into force in March 2000, introduced a prohibition on the abuse of a dominant market position and a prohibition on
anti-competitive agreements, modeled on Articles 81 and 82 of the Treaty of Rome. The Act also introduced third party rights, stronger investigative and enforcement powers and the ability
for the competition authorities to issue interim measures. The new enforcement powers include the ability to impose fines of up to 10% of
worldwide turnover. The Competition Act is enforced by the Office of Fair Trading (OFT) and gives concurrent investigative and enforcement powers in matters concerning communications to Ofcom.

The
U.K.'s competition law framework was further strengthened by the competition provisions of the Enterprise Act 2002, which came into force in June 2003. Under these provisions,
among other things, decisions on mergers are now made by the independent competition authorities, using competition-based tests, rather than by the U.K. Government.

Our
proposed merger with Telewest Global, Inc was cleared by the OFT on December 30, 2005. The OFT's detailed decision in this case was published on January 10, 2006. The
time for any third party appeal of this decision has expired.

Under
other provisions of the Enterprise Act, individuals who cause, encourage, participate in or, in some cases, even those who have knowledge of, the making of agreements between
competitors which are designed to fix prices, share markets, limit supply or production or rig bids in the U.K., can be prosecuted and punished with unlimited fines and imprisonment for up to five
years. The courts may also order the disqualification for up to fifteen years of directors whose companies have committed a breach of U.K. or EU competition law.

Seasonality

Some revenue streams are subject to seasonal factors. For example, telephone usage revenue by customers and businesses tends to be slightly lower during summer
holiday months. Our customer churn rates include persons who disconnect service because of moves, resulting in a seasonal increase in our churn rates during the summer months when higher levels of
U.K. house moves occur and students leave their accommodations between school years.

Research and Development

Our research and development activities involve the analysis of technological developments affecting our cable television, telephone and telecommunications
business, the evaluation of existing services and sales and marketing techniques and the development of new services and techniques.

Patents, Trademarks, Copyrights and Licenses

We do not have any material patents or copyrights nor do we believe that patents play a material role in our business. We own and have the right to use registered
trademarks, which in some cases are, and in others may be, of material importance to our business, including the "ntl:" logo. We use the Virgin.net name and logo in connection with the activities of
our virgin.net ISP under license from Virgin Enterprises Limited.

Employees

On December 31, 2005, we had 9,820 employees, 8,896 of whom were permanent and 924 of whom were temporary or contract. We believe that our relationship
with our employees is generally good.

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Item 1A.    Risk Factors

Risks Related to Our Company

Factors Relating to the Merger with Telewest and its Implementation

The combined company may be unable to successfully integrate operations and realize the full anticipated synergies of the merger, which may harm the
value of its common stock.

The merger with Telewest will involve the integration of two companies that have previously operated independently. The difficulties of combining the companies'
operations include:



The
process of integrating operations could cause an interruption of, or loss of momentum in, the activities of one or more of the combined company's businesses and the loss of key
personnel. The diversion of management's attention and any delays or difficulties encountered in connection with the merger and the integration of the two companies' operations could result in the
disruption of the combined company's ongoing businesses or inconsistencies in the standards, controls, product offerings, level of customer service, procedures and policies of the two companies that
could negatively affect the combined company's ability to maintain relationships with customers, suppliers, employees and others with whom it has business dealings.

Among
the factors considered by the NTL board of directors in connection with its respective approval of the merger agreement were the opportunities that could result from the merger for
realizing synergies by creating efficiencies in operations, capital expenditures and other areas. These savings may not be realized within the time periods contemplated or at all. If the combined
company is not able to successfully achieve these savings, the anticipated benefits of the merger may not be realized fully or at all or may take longer to realize than expected.

The combined company will incur significant transaction and merger-related costs in connection with the merger.

We expect that the combined company will incur a number of non-recurring transaction fees and other costs associated with completing the merger,
combining the operations of the two companies and achieving desired synergies. These fees and costs will be substantial. We are in the process of collecting information in order to formulate
integration plans to deliver the planned synergies. Additional unanticipated costs may be incurred in the integration of our business with Telewest. Although management of the combined company expects
that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of our two businesses, will offset the incremental transaction and merger-related
costs over time, this net benefit may not be achieved in the near term, or at all.

Certain significant stockholders of both NTL and Telewest could have an influence over the business and affairs of the combined company after the
merger.

Certain persons or entities are significant stockholders of both NTL and Telewest, and would be significant stockholders of the combined company. Based on SEC
filings to date, Ameriprise Financial Inc., or Ameriprise Financial, beneficially owned approximately 11.4%, FMR Corp.

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beneficially
owned approximately 7.2%, Franklin Mutual Advisers beneficially owned approximately 8.1%, and Mr. William R. Huff beneficially owned approximately 8.6% of
NTL's issued and outstanding common stock, and FMR Corp. beneficially owned approximately 4.7%, Franklin Mutual Advisers beneficially owned approximately 7.9%, and Mr. Huff
beneficially owned approximately 12.2% of Telewest's issued and outstanding common stock. Persons affiliated with Huff Asset Management currently serve on the boards of directors of both NTL and
Telewest (Messrs. Huff and Edwin M. Banks, in the case of NTL, and Messrs. William J. Connors and Michael J. McGuiness, in the case of
Telewest).

Assuming
that none of FMR Corp., Ameriprise Financial, Mr. Huff and Franklin Mutual Advisors has sold any of its or his holdings subsequent to February 24, 2006, and giving
effect to the reclassification of Telewest common stock and to the exchange ratio under the merger agreement with respect to their holdings of Telewest and NTL common stock as of such date, FMR Corp.
would beneficially own approximately 5.7%, Ameriprise Financial would beneficially own approximately 7.4%, Mr. Huff would beneficially own approximately 8.2%, and Franklin Mutual Advisers would
beneficially own approximately 7.0% of the common stock of the combined company outstanding immediately after the merger on a fully diluted basis, based on currently outstanding NTL and Telewest
shares, options and warrants, and each of them could have an influence over the business and affairs of the combined company.

It
is also anticipated that Messrs. Huff, Banks and Connors will serve as directors of the combined company following the merger. As a result of their relationship with Huff Asset
Management, if conflicts between the interests of Huff Asset Management and the interests of the combined company's other stockholders should arise, these directors may not be disinterested.

Whether or not the merger is completed, the announcement and pendency of the transaction could cause disruptions in our business, which could have an
adverse effect on its business and financial results.

Whether or not the merger with Telewest is completed, the announcement and pendency of the transaction could cause disruptions in our business. Specifically:



The merger could affect the combined company's relationship with BBC Worldwide.

Telewest currently has a 50% ownership interest in the UKTV Group, a series of joint ventures with BBC Worldwide. The UKTV Group supplies television programming
to us, Telewest and other third parties. The joint venture agreements include change of control provisions that, if triggered, would permit BBC Worldwide to acquire Telewest's interest in the joint
ventures at "fair value" as defined in those agreements. In addition, the joint venture agreements require BBC Worldwide and Telewest to agree on significant operating and strategic matters for the
joint ventures on an ongoing basis. We, as well as Telewest, believe that one of the consequences of the change in the merger structure is that no person or persons acting in concert will acquire a
majority of the shares of Telewest and, as a result, there will be no change in control of Telewest within the meaning of the joint venture agreements. BBC Worldwide has previously asserted to
Telewest and us that the merger as originally

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structured
constituted a change of control under the joint venture agreements and has made certain other claims. BBC Worldwide could attempt to continue to assert these claims or other claims under
the joint venture agreements in connection with the merger as restructured. We and Telewest believe there is no basis for any claim that a change in control will occur under the joint venture
agreements as a result of the merger. Any disagreement between BBC Worldwide and Telewest, whether about the application of the change in control provisions or any other terms of the joint venture
agreements, could affect the relationship between Telewest and BBC Worldwide, the performance of the UKTV Group, and the business of the combined company following completion of the merger.

In certain instances, the merger agreement requires payment of a termination fee of $175 million by NTL to Telewest. These terms could materially
and adversely affect our financial condition and operations or prevent another party from proposing an alternative transaction to the merger.

Under the terms of the merger agreement, we may be required to pay to Telewest a termination fee of $175 million if the merger agreement is terminated
under certain circumstances. These terms could affect the structure, pricing and terms proposed by other parties seeking to acquire or merge with us, including potentially precluding any such other
party from making an alternative transaction proposal to us. In addition, should the merger agreement be terminated in circumstances under which such a termination fee is payable, the payment of such
a fee could have material and adverse consequences for our business and operations going forward.

If the conditions under the commitment letter are not satisfied, the financing to be provided thereunder will not be available to satisfy the cash
portion of the consideration to be paid to Telewest stockholders in the merger.

We have obtained commitments for a total of £5.1 billion in financing to effect the merger with Telewest and pay the related fees, costs and
expenses in connection therewith, to repay in full our existing senior credit facilities, to repay in full the existing senior and second lien credit facilities of Telewest and to finance the ongoing
working capital needs and general corporate requirements of the combined company and its subsidiaries after the merger. Although the completion of the merger is not conditioned upon the receipt of
these funds, the commitment letter contains conditions in addition to those contained in the merger agreement that must be satisfied before the lenders are committed to make the financing available.
These conditions include there being no insolvency of us or, NTL Investment Holdings Limited or NTLIH, or of our subsidiaries, Telewest Communications Networks Limited, or TCN, and Neptune Bridge
Borrower LLC, and the negotiation of customary financing documentation on terms satisfactory to the lenders and no material waivers or amendments under the merger agreement. If any of these conditions
is not met, the financing will not be available, which may prevent or materially delay the merger. If we are unable to obtain the necessary financing, we will be forced to consider other alternatives
to raise the necessary funds to satisfy the cash portion of the transaction consideration terms that could be less favorable, which may have a material adverse effect on our financial condition, and,
if no other alternatives are available, the merger may not be completed and we and Telewest would continue as standalone companies. The pendency of the merger without the consummation of the merger
may have a material adverse effect on our business or financial condition.

Factors Relating to the Business of the Company and its Regulation

Neither we, nor the combined company, may be able to fund our debt service obligations through operating cash flow in the future.

It is possible that neither we, nor the combined company, may achieve or sustain sufficient cash flow in the future for the payment of interest. If our operating
cash flow is not sufficient to meet our

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debt
payment obligations, we may be forced to raise cash or reduce expenses by doing one or more of the following:



We
could also be forced to seek additional equity capital, which could dilute the interests of the holders of our common stock.

We
cannot be sure that any, or a combination of, the above actions would be sufficient to fund our debt service obligations.

Our current leverage is substantial, and, following the completion of the merger, the leverage of the combined company will be substantial, which may
have an adverse effect on our available cash flow, our ability to obtain additional financing if necessary in the future, our flexibility in reacting to competitive and technological changes and our
operations.

Assuming the merger with Telewest closed on September 30, 2005, Telewest and NTL each had approximately £1.6 billion in net debt, for a
pro forma combined net debt of £3.2 billion. Net debt upon completing the transaction, after refinancing of the existing senior facilities of both companies and the additional
borrowing to finance part of the transaction, is expected to be approximately £5.7 billion.

This
high degree of leverage could have important consequences, including the following:



We have incurred losses in the past and may not be profitable in the future.

We emerged from reorganization under Chapter 11 of the U.S. Bankruptcy Code on January 10, 2003. We had losses from continuing operations for the year
ended December 31, 2005 of £241.7 million, and losses from continuing operations for the years ended December 31:



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We
cannot be certain that we (or, following the merger with Telewest, the combined company) will achieve or sustain profitability in the future. Failure to achieve profitability could
diminish our ability to sustain operations, meet financial covenants, pay dividends on our common stock, obtain additional required funds and make required payments on present or future indebtedness.

The restrictive covenants under our debt agreements, as well as that of the combined company after the merger, may limit our ability to operate our
business.

The agreements that govern our indebtedness, as well as that of the combined company following the merger, contain restrictive covenants that limit the discretion
of our management over various business matters. For example, these covenants restrict our ability to:



These
restrictions could materially adversely affect our ability to finance future operations or capital needs or to engage in other business activities that may be in our best
interests. We may also incur other indebtedness in the future that may contain financial or other covenants more restrictive than those that will be applicable under our current indebtedness or the
indebtedness incurred in connection with the completion of the merger with Telewest.

We are a holding company dependent upon cash flow from subsidiaries to meet our obligations.

We and a number of our subsidiaries are, and following the completion of the merger, a number of the subsidiaries of the combined company will be, holding
companies with no independent operations or significant assets other than investments in our subsidiaries. Each of these holding companies depends upon the receipt of sufficient funds from its
subsidiaries to meet its obligations.

The
terms of our credit facilities and other debt securities limit the payment of dividends, loan repayments and other distributions to or from these companies under many circumstances.
Various agreements governing the debt that may be issued by our subsidiaries from time to time may restrict and, in some cases, may also prohibit the ability of these subsidiaries to move cash within
their restricted group. Applicable tax laws may also subject such payments to further taxation.

Applicable
law may also limit the amounts that some of our subsidiaries will be permitted to pay as dividends or distributions on their equity interests, or even prevent such payments.

The
inability to transfer cash among entities within their respective consolidated groups may mean that even though they may have sufficient resources to meet their obligations, they may
not be permitted to make the necessary transfers from one entity in their restricted group to another entity in their restricted group in order to make payments to the entity owing the obligations.

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We are, and the combined company will be, subject to currency and interest rate risks.

We are subject to currency exchange rate risks, because substantially all of our revenues and operating expenses are paid in U.K. pounds sterling, but we pay
interest and principal obligations with respect to a portion of our indebtedness in U.S. dollars and euros. To the extent that the pound declines in value against the U.S. dollar and the euro, the
effective cost of servicing our U.S. dollar and euro-denominated debt will be higher. Changes in the exchange rate result in foreign currency gains or losses. As of
December 31, 2005, £477.2 million, or 20.9% of our long-term debt, was denominated in U.S. dollars and £259.1 million, or 11.4% of our
long-term debt, was denominated in euros.

We
are also subject to interest rate risk because we have substantial indebtedness at variable interest rates. As of December 31, 2005, interest is determined on a variable basis
on £1,502.7 million, or 65.9%, of our long-term debt. An increase in interest rates of 0.25% would increase our interest expense by approximately
£3.8 million per year.

To
manage these foreign exchange and interest rate risks, we and Telewest have each entered into a number of derivative instruments, including interest rate swaps, cross-currency
interest rate swaps and foreign currency forward rate contracts. The combined company will be required by its lenders under the new senior credit facility to continue these programs
post-completion of the merger. Specifically, the combined company will be required within six months of the closing date to fix the interest rate (whether through debt that is fixed rate,
or through hedging) on not less than 662/3% of the total debt represented by its senior credit facilities and high yield notes, for a period of not less than three years from the
closing date. Exchange rate hedging to sterling for a period of not less than three years will be required for 100% of all amounts, both principal and interest, denominated in euro or U.S. dollars
advanced under the new senior credit facility. Exchange rate hedging to sterling will be required for 100% of coupon payments issued pursuant to the planned high-yield notes offering to refinance the
senior subordinated bridge facilities to be entered into in connection with the combination with Telewest, and our existing high-yield debt, to the first call date for each such issue.

On
a pro forma basis after taking into account the impact of current hedging arrangements, as of September 30, 2005, the combined company's interest would have had interest
determined on a variable basis on £951 million, or 16%, of its long term debt. An increase in interest rates of 1% would increase the combined company's pro forma interest expense
by approximately £10 million per year.

We
cannot assure you that our hedging program, or that of the combined company following completion of the merger with Telewest, will be successful. Unhedged movements in currency
exchange rates or interest rates in particular could have a material adverse effect on us or the combined company.

We or the combined company may engage in a transaction with Virgin Mobile that could have a significant impact on the combined company.

On December 5, 2005, we confirmed that we had approached Virgin Mobile about a potential offer to acquire Virgin Mobile, and that we had engaged in
discussions with Virgin Enterprises Limited to extend our existing exclusive license for use of the Virgin name in the internet services area also to cover television and fixed and mobile telephone
services.

On
January 16, 2006, we and the independent directors of Virgin Mobile confirmed that we were in discussions to enable a cash offer, with share alternative offers, to be made by
us or one or more of our subsidiaries to acquire 100% of the shares of Virgin Mobile, subject to the satisfaction of certain pre-conditions.

It
is not clear whether an acquisition transaction between the combined company and Virgin Mobile will occur and, if so, on what terms. It is also unclear whether we or the combined
company will enter into a license with Virgin Enterprises Limited to use the Virgin name (though it is unlikely

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that
a Virgin Mobile transaction would occur without us or the combined company entering into such a license). If an acquisition transaction were to occur, it could involve the issuance of a
substantial equity interest in the combined company and substantial cash payments to Virgin Mobile's shareholders. For example, under the terms of the potential offer announced on January 16,
2006, the shareholders of Virgin Mobile would be entitled to receive equity securities representing approximately 15.4% of the voting stock of the combined company on a fully-diluted basis, assuming
all Virgin Mobile shareholders opted for stock. Moreover, the Virgin Group would hold over 10% of the voting stock of the combined company. If the license transaction were to occur, it would involve
payment of a cash royalty for use of the Virgin name.

The
acquisition of Virgin Mobile would, if consummated, carry various risks for the combined company, including the following:



A
license to use the Virgin name would also carry various risks, including the following:



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Failure to control customer churn may adversely affect our financial performance, as well as the financial performance of the combined company following
the merger.

The successful implementation of our business plan depends upon controlling customer churn. Customer churn is a measure of customers who stop using our services.
Customer churn could increase as a result of:



An
increase in customer churn can lead to slower customer growth, increased costs and a reduction in revenue.

We are subject to significant competition and we expect that competition will intensify.

The level of competition is intense in each of the markets in which we compete, and we expect competition to increase.

In
particular, our telephone services and consumer television businesses compete with BT in telephone services and internet access and BSkyB in multi-channel television, each of whom has
significant operational scale, resources and national distribution capacity. We also compete with internet service providers and indirect telephone access operators that offer telephone, broadband and
dial-up services over BT's network, and we will face increasing competition from mobile telephone

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network
providers and new market entrants, including those providing voice-over-internet-protocol, or VoIP. The increase in competition will be compounded by technology changes
and business consolidation, which may permit more competitors to offer the "triple play" of digital television, residential telephone and broadband services.

In
the digital television market, competition has been increased as a result of the launch of Freeview in October 2002, which provides approximately 35 digital terrestrial
channels to consumers who have purchased a Freeview-enabled set-top box or a television with a digital tuner, and the launch in March 2004 by Top Up TV of a
pay-television service offering approximately 11 pay-television channels for a fixed fee to subscribers who otherwise receive Freeview and have purchased Top Up TV software.

Our
broadband service faces increased competition from BT, Bulldog, OneTel, Wanadoo, Tiscali and others, as well as new providers such as BSkyB and Carphone Warehouse. Competitors may
use new alternative access technology such as advanced, faster asymmetric digital subscriber lines, or ADSL+2,
to deliver speeds faster than we can provide. Local loop unbundling may decrease costs for new entrants and existing BT wholesale customers, leading to increased pricing competition.

Our
business services also face a wide range of competitors, including BT and C&W, and a number of regional service providers. The nature of the competition will vary depending on
geography, service offerings and the size of the marketable area.

In
order to compete, we may have to reduce the prices we charge for our services or increase the value of our services without being able to recoup associated costs. Reduced prices or
increased costs would have a negative impact on our margins and profitability. In addition, if we are unable to compete successfully, even following price reductions or value enhancements, we may not
be able to attract new customers, or retain existing customers.

The sectors in which we compete are subject to rapid and significant changes in technology, and the effect of technological changes on our businesses
cannot be predicted.

The internet, television and telephone services sectors are characterized by rapid and significant changes in technology. The effect of future technological
changes on our business cannot be predicted. It is possible that products or other technological breakthroughs, such as VoIP, WiFi (wireless fidelity), WiMax (the extension of local WiFi networks
across greater distances) or IPTV (internet protocol television), may result in our core offerings becoming less competitive. We may not be able to develop new products and services at the same rate
as competitors or keep up with trends in the technology market as well as our competitors.

The
cost of implementing emerging and future technologies could be significant, and our ability to fund that implementation may depend on our ability to obtain additional financing.

There is no assurance that new products that we may introduce will achieve full functionality or market acceptance.

Our long-range plan includes VOD and PVR products. Despite testing prior to release and the increasing implementation of VOD, we cannot guarantee that
these new products, or any other new products that we may develop in the future, will perform as expected when first introduced in the market. Should these new products and services fail to perform as
expected or should they fail to gain market acceptance, our results of operations may be negatively impacted.

Systems failures may result in lost revenue.

Our ability to identify, bill and collect revenue from our customers will be dependent on complex systems and processes. To the extent that any one or more of
those systems or processes fail, we could

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lose
customer and transaction billing data, which would prevent us from billing and collecting revenue due to us. We will continually seek ways to improve our revenue collection processes, but it is
possible that such improvements may not be successful or will not yield enhanced revenue collection. Inefficient collection could result in an increase in bad debt.

If we do not maintain and upgrade our networks in a cost-effective and timely manner, we could lose customers.

Maintaining an uninterrupted and high-quality service over our network infrastructure is critical to our ability to attract and retain customers.
Providing a competitive service level will depend in part on our ability to maintain and upgrade our networks in a cost-effective and timely manner. The maintenance and upgrade of our
networks will depend upon, among other things, our ability to:



Our
bank facilities limit the level of total capital expenditure that we can incur. If this affects our ability to replace network assets at the end of their useful lives or if there is
any reduction in our ability to perform necessary maintenance on network assets, our networks may have an increased failure rate, which is likely to lead to increased customer churn.

Our inability to obtain popular programming, or to obtain it at a reasonable cost, could potentially materially adversely affect the number of
subscribers to our consumer television service or reduce margins.

We have historically obtained a significant amount of our premium programming and some of our basic programming and pay-per-view sporting
events from BSkyB or a BSkyB joint venture. BSkyB is a leading supplier of programming to cable television operators and is the exclusive supplier of some programming, including the Sky Sports
channels and the most popular premium subscription film channels available in the U.K.

We
have continued to buy BSkyB wholesale premium content on the basis of an industry ratecard. There is no contractual agreement with BSkyB for the provision of such content.

In
addition to BSkyB, our significant programming suppliers include the BBC, ITV, Viacom, Discovery and Turner, a division of Time Warner. Our dependence on these suppliers for
television programming could have a material adverse effect on our ability to provide attractive programming at a reasonable cost.

A failure in our critical systems could significantly disrupt our operations, which could reduce our customer base and result in lost revenues.

Our business is dependent on many sophisticated critical systems that support all of the various aspects of our cable network operations. Our systems are
vulnerable to damage from a variety of sources, including telecommunications failures, malicious human acts, natural disasters, fire, power loss, war or other catastrophes. Moreover, despite security
measures, our servers will be potentially vulnerable to physical or electronic break-ins, computer viruses and similar disruptive problems. Despite the precautions we have taken in the
past, unanticipated problems affecting their systems could cause failures in our information technology systems, including systems that are critical for timely and accurate customer billing, or our
customer service centers or interrupt the transmission of signals over our cable network. Sustained or repeated system failures that interrupt our ability to provide service to our customers or
otherwise meet our business obligations in a timely manner would adversely affect our reputation and result in a loss of customers and net revenue.

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We may be subject to taxation in multiple jurisdictions, and our U.S. holding company structure may make it difficult to repatriate cash from our U.K.
operating subsidiaries for purposes of paying dividends, repurchasing shares or repaying debt incurred in the U.S. without incurring U.S. tax on such cash repatriations.

We have historically been subject to taxation in the U.S., the U.K., and the Republic of Ireland. Our effective tax rate and tax liability will be affected by a
number of factors in addition to our operating results, including the amount of taxable income in particular jurisdictions, the tax rates in these jurisdictions, tax treaties between jurisdictions,
the manner in and extent to which we transfer funds to and repatriate funds from our subsidiaries, and future changes in the law. Because we operate in multiple jurisdictions and may therefore incur
loss in one jurisdiction that cannot be offset against income earned in a different jurisdiction, we may pay income taxes in one jurisdiction for a particular period even though on an overall basis we
incur a net loss for that period.

We
have a U.S. holding company structure in which substantially all of our operations are in U.K. subsidiaries that are owned by one or more members of a U.S. holding company group. As a
result, although we do not expect to have current U.K. tax liabilities on our operating earnings for at least the medium term, our operations may give rise to U.S. tax on "Subpart F" income, or on
repatriations of cash from our U.K. operating subsidiaries to the U.S. holding company group. While we believe that we have substantial U.S. tax basis in our U.K. subsidiaries which may be available
to avoid or reduce U.S. tax on repatriation of an equivalent amount of cash from our U.K. subsidiaries, there can be no assurance that the Internal Revenue Service will not seek to challenge the
amount of such tax basis or that we will be able to utilize such basis under applicable tax law. As a result, although we will seek to minimize, in accordance with applicable law, our U.S. tax
liability as well as our overall worldwide tax liability, there can be no assurance that we will not incur material U.S. tax liabilities with respect to repatriations of cash from our U.K.
subsidiaries.

Regulation of the markets in which we provide our services has been changing rapidly; unpredictable changes in U.K. and EU regulations affecting the
conduct of our business, including price regulations, may have an adverse impact on our ability to set prices, enter new markets or control our costs.

Our principal business activities have historically been regulated and supervised by various governmental bodies in the U.K. and by the regulatory initiatives of
the European Commission. Regulatory changes have recently occurred, and may in the future occur, at the U.K. or EU level with respect to licensing requirements, price regulation, interconnection
arrangements, number portability, carrier pre-selection, the ability to provide digital services, ownership of media companies, programming, local loop unbundling, data protection, the
provision of open access by U.K. cable operators to other telecommunications operators, and the adoption of uniform digital technology standards or the bundling of services. Regulatory changes
relating to our activities and those of our competitors, such as changes relating to third-party access to cable networks, the costs of interconnection with other networks or the prices of competing
products and services, could adversely affect our ability to set prices, enter new markets or control costs.

Provisions of our debt agreements, our stockholder rights plan, our certificate of incorporation, Delaware law and our contracts, as well as those of
the combined company following the completion of the merger, could prevent or delay a change of control.

We, and, upon completion of the merger with Telewest, the combined company, may, under some circumstances involving a change of control, be obligated to repay our
outstanding indebtedness. The combined company or any possible acquiror may not have available financial resources necessary to repurchase those notes or repay that indebtedness in those
circumstances.

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If
the combined company or any possible acquiror cannot repay our outstanding indebtedness in the event of a change of control of the combined company (if such repayment is required),
the failure to do so would constitute an event of default under the agreements under which that indebtedness was incurred and could result in a cross-default under other indebtedness that does not
have similar provisions. The threat of this could have the effect of delaying or preventing transactions involving a change of control of the combined company, including transactions in which the
combined company's stockholders would receive a substantial premium for their shares over then current market prices, or otherwise which they may deem to be in their best interests.

Telewest's
stockholder rights plan, some provisions of its second restated certificate of incorporation and its ability to issue additional shares of common stock or preferred stock to
third parties without stockholder approval may have the effect, alone or in combination with each other, of preventing or making more difficult transactions involving a change of control of the
combined company. In connection with the merger, the Telewest rights plan, which will become the rights plan of the combined company on consummation of the merger, will be amended, among other things,
to reduce the trigger under the plan from 25% to 15%, to eliminate the permitted offer exception (that permits a majority of non-management directors who are unaffiliated and not otherwise
associated with a potential acquiror to exempt a transaction from the Telewest rights plan), to remove the ability of a majority of Telewest's board of directors to deem a beneficial owner or group of
owners of 10% or more of Telewest's common stock to be an adverse person under the Telewest rights plan, and to ensure that the purchase price of a share of the preferred stock issued pursuant to the
Telewest rights plan will not be adjusted as a result of the merger or the reclassification. The combined company will be subject to the Delaware business combinations law that, subject to limited
exceptions, prohibits some Delaware corporations from engaging in some business combinations or other transactions with any stockholder who owns 15% or more of the corporation's outstanding voting
stock for three years following the date that the stockholder acquired that interest. The terms of certain existing agreements of the combined company relating to changes of control may also have the
effect of delaying or preventing transactions involving a change of control of the combined company.

Factors Relating to our Common Stock

The market price of our common stock is subject to volatility, as well as to trends in the telecommunications industry in general, which will continue.

The current market price of our common stock may not be indicative of prices that will prevail in the trading markets in the future, either before or after
completion of the merger with Telewest. Stock prices in the telecommunications sector have historically been highly volatile, and the market price of our common stock could be subject to wide
fluctuations in response to numerous factors, many of which will be beyond our control. These factors include actual or anticipated variations in our operational results (and, upon completion of the
merger, those of the combined company) and cash flow, our earnings releases and our competitors' earnings releases, announcements of technological innovations, changes in financial estimates by
securities analysts, trading volume, market conditions in the industry and the general state of the securities markets and the market for telecommunications stocks, changes in capital markets that
affect the perceived availability of capital to communications companies, governmental legislation or regulation, currency and exchange rate fluctuations, as well as general economic and market
conditions, like recessions. Trends in this industry are likely to have a corresponding impact on the price of our common stock.

We may in the future seek to raise funds through equity offerings, which could have a dilutive effect on our common stock.

In the future, we may determine to raise capital through offerings of our common stock, securities convertible into our common stock, or rights to acquire these
securities or our common stock. In any

38

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case,
the result would ultimately be dilutive to our common stock by increasing the number of shares outstanding. We cannot predict the effect this dilution may have on the price of our common stock.
For example, the potential transaction with Virgin Mobile may involve the issuance of equity securities. See "We or the combined company may engage in a transaction with Virgin Mobile
that could have a significant impact on the combined company."

We have not historically paid cash dividends on our common stock, we may not be able to pay or maintain dividends, and the failure to do so could
adversely affect our stock price.

Since its inception, we have not paid any cash dividends on our common stock. The terms of our existing indebtedness limit our ability to pay dividends from cash
generated from operations. Likewise, the terms of the combined company's indebtedness after the merger will limit the ability of the combined company to pay dividends.

We
cannot assure you that we will pay cash dividends on our common stock, or, if we begin to pay cash dividends on our common stock, that such dividends will continue to be paid.

Sales of stock by stockholders in the combined company may decrease the price of the combined company's common stock following the merger.

Based on SEC filings to date, Ameriprise Financial Inc., or Ameriprise Financial, beneficially owned approximately 11.4%, FMR Corp. beneficially owned
approximately 7.2%, Franklin Mutual Advisers beneficially owned approximately 8.1%, and Mr. Huff beneficially owned approximately 8.6% of NTL's issued and outstanding common
stock, and FMR Corp. beneficially owned approximately 4.7%, Franklin Mutual Advisers beneficially owned approximately 7.9%, and Mr. Huff beneficially owned approximately 13.2% of Telewest's
issued and outstanding common stock.

Assuming
that none of FMR Corp., Ameriprise Financial, Mr. Huff and Franklin Mutual Advisors has sold any of its or his holdings subsequent to those filings, and giving effect to
the reclassification of Telewest common stock and to the exchange ratio under the merger agreement with respect to their holdings of Telewest and NTL common stock as of such date, FMR Corp. would
beneficially own approximately 5.9%, Ameriprise Financial would beneficially own approximately 7.6%, Mr. Huff would beneficially own approximately 8.6%, and Franklin Mutual Advisers would
beneficially own approximately 7.0% of the combined company's outstanding common stock immediately after the merger on a fully diluted basis, based on currently outstanding NTL and Telewest shares,
options and warrants. Some of these stockholders will also have rights, subject to various conditions, to require the combined company to file one or more registration statements covering their
shares, or to include their shares in registration statements that the combined company may file for itself or on behalf of other stockholders.

Subsequent
sales by any of these stockholders of a substantial amount of the combined company's common stock may significantly reduce the market price of the common stock of the combined
company. Moreover, the perception that these stockholders might sell significant amounts of such common stock could depress the trading price of the combined company's common stock for a considerable
period. Sales of the combined company's common stock, and the possibility of these sales,
could make it more difficult for the combined company to sell equity, or equity-related securities, in the future at a time, and price, that it considers appropriate.

Item 1B.    Unresolved Staff Comments

None.

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Item 2.    Properties

In the U.K., we own, lease or occupy under license 64 business unit and regional offices, and our corporate head offices in Hook. We also maintain an office under
lease in New York City. Nine of our corporate real estate sites are unoccupied, representing a rental expense of approximately 13.24% of our real estate rents. We are seeking to renegotiate the leases
for these properties or dispose of them.

In
addition, we own or lease facilities at approximately 700 switching centers/head-ends, operational hub-sites, and other types of network sites like points of
presence, radio sites and repeater nodes. We also own or lease warehouses and other non-operational properties, as well as operating various cable television, telephone and
telecommunications equipment housed in street-cabinet enclosures situated on public and private sites. Currently three of our technical sites are unoccupied, representing a rental expense of
approximately 0.8% of our technical sites rents. We are seeking to renegotiate the leases for these properties or dispose of them.

40

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Item 3.    Legal Proceedings

Two separate proceedings that were initiated in the U.S. Bankruptcy Court for the Southern District of New York by Owl Creek Asset Management, L.P. and JMB
Capital Partners, L.P. requesting that we be held liable for alleged damages attributable to their trading in our "when-issued" common stock prior to the completion of the Plan were
voluntarily dismissed by the plaintiffs in June 2003 without prejudice to recommencement in state court where related litigation against third parties is pending. The third parties are
primarily the counterparties to the various trades made by Owl Creek Asset Management, L.P. and JMB Capital Partners, L.P. On March 16, 2004, in an action to which we are not a party, a state
court in New York granted the summary judgment motion of a U.S. broker dealer to require that "when-issued" trading in our common stock prior to the completion of the Plan be settled on an
adjusted basis by the parties to the action in a manner to be set forth in an order of the state court, which was entered on July 1, 2004. Several plaintiffs have appeals pending. On
March 30, 2004, Owl Creek Asset Management, L.P. and JMB Capital Partners, L.P. filed a complaint in the Supreme Court of the State of New York seeking to hold us and PTV liable for alleged
damages attributable to some of their trading in our common stock on a "when-issued" basis. Other parties could assert similar claims. On April 13, 2004, the plaintiff agreed to
adjourn the case until there has been a final determination in the aforementioned state court action, including any appeals in that action, by the U.S. broker dealer. On November 9, 2005,
Maxcor Financial Inc. initiated separate proceedings in the Supreme Court of the State of New York also requesting that we be held liable for alleged damages attributable to their trading in
our "when-issued" common stock prior to the completion of the Plan. On December 8, 2005, Maxcor Financial Inc. also agreed to adjourn the case upon similar terms to the
original plaintiffs.

We
are involved in various other disputes and litigation arising in the ordinary course of our business. None of these matters is expected to have a material adverse effect on our
financial position, results of operation or cash flow.

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Item 4.    Submission of Matters to a Vote of Security Holders

There were no matters that were submitted to a vote of our stockholders during the quarter ended December 31, 2005.

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PART II

Item 5.    Market for the Registrant's Common Equity and Related Stockholder Matters

(a)Market Information.

Our shares are traded on the Nasdaq National Market under the symbol "NTLI." The following table sets forth the reported high low price per share of our common
stock on the Nasdaq National Market for the periods indicated.

|                                          |  | Price per share
|----------------------------------------- |  | ---------------
|
|2004                                      |  |                
|First Quarter                             |  | $              
|Second Quarter                            |  | $              
|Third Quarter                             |  | $              
|Fourth Quarter                            |  | $              
|2005                                      |  |                
|First Quarter                             |  | $              
|Second Quarter                            |  | $              
|Third Quarter                             |  | $              
|Fourth Quarter                            |  | $              
|2006                                      |  |                
|First Quarter (through February 24, 2006) |  | $              

Holders.

As of February 24, 2006, our transfer agent informed us that there were approximately 35 record holders of our common stock, although there is a
much larger number of beneficial owners.

Dividends.

Since our inception, we have not declared or paid any cash dividends on our common stock. Our credit facility, as well as the indenture for our high yield bonds,
places restrictions on our ability to pay dividends from cash generated from operations.

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Item 6.    Selected Financial Data

The selected consolidated financial information presented below should be read in conjunction with the consolidated financial statements and notes thereto and the
information contained in our Management's Discussion and Analysis of Financial Condition and Results of Operations appearing elsewhere in this annual report. Historical results are not necessarily
indicative of future results.

On
May 9, 2005, we sold our operations in the Republic of Ireland. We have restated the historical consolidated financial information to account for the Ireland operations as a
discontinued operation. The assets and liabilities of the Ireland operations have been reclassified as assets held-for-sale and liabilities of discontinued operations,
respectively, and the results of operations of the Ireland operations have been removed from our results of continuing operations for all periods presented.

Following
the disposal of our operations in the Republic of Ireland, all of our revenue from continuing operations and substantially all of our assets are denominated in UK pounds
sterling. Consequently, we now report our results in pounds sterling. Financial information for all periods presented has been restated accordingly.

We
entered into an agreement for the sale of our broadcast operations on December 1, 2004 and closed the sale on January 31, 2005. As of December 31, 2004, we
accounted for the broadcast operations as a discontinued operation. Therefore, the results of operations of the broadcast operations have been excluded from the components of loss from continuing
operations and the assets and liabilities of the broadcast operations have been reported as assets held-for-sale and liabilities of discontinued operations, respectively, for
all periods presented.

We
operated our business as a debtor-in possession subject to the jurisdiction of the Bankruptcy Court beginning on May 8, 2002, the date that we, NTL Europe and
certain of our and NTL Europe's subsidiaries filed the Plan under Chapter 11 of the U.S. Bankruptcy Code, until January 10, 2003. Accordingly, we have prepared our consolidated financial
statements in accordance with SOP 90-7.

Upon
emergence from Chapter 11 reorganization and in accordance with the Plan, all of our outstanding public notes were canceled other than the notes issued by Diamond Holdings Limited
and NTL (Triangle) LLC, and we acquired all of the outstanding public notes of Diamond Cable Communications Limited. In connection with our emergence from Chapter 11 reorganization, some of our
subsidiaries and we issued $558.2 million aggregate principal amount at maturity of 19% Senior Secured Notes due 2010, or Exit Notes, on January 10, 2003. Initial purchasers of our Exit
Notes also purchased 500,000 shares of our common stock on that date. The gross proceeds from the sale of the Exit Notes and such shares totaled $500.0 million, or
£310.7 million.

We
adopted fresh-start reporting upon our emergence from Chapter 11 reorganization in accordance with SOP 90-7. For financial reporting purposes, the effects of the
completion of the Plan as well as adjustments for fresh-start reporting have been recorded as of January 1, 2003. Pursuant to fresh-start reporting, a new entity was deemed to have been created
for financial reporting purposes. The carrying values of our assets were adjusted to their reorganization values, which are equivalent to their estimated fair values at January 1, 2003. The
carrying values of our liabilities were adjusted to their present values at January 1, 2003. The term "Predecessor Company" refers to our subsidiaries and us for periods prior to and including
December 31, 2002. The term "Reorganized Company" refers to our subsidiaries and us for periods subsequent to January 1, 2003. The effects of the completion of the Plan as well as
adjustments for fresh-start reporting recorded as of January 1, 2003 are Predecessor Company transactions. All other results of operations on January 1, 2003 are Reorganized Company
transactions.

On
November 17, 2003, we completed a rights offering, pursuant to which 35,853,465 shares of our common stock were issued. In connection with the rights offering, we received
gross proceeds of approximately $1,434 million, or £846.0 million. From the net proceeds of approximately $1,367 million,

44

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or
£806.5 million, we repaid in full all obligations under our Exit Notes and, together with cash on hand, our working capital facility. In addition, we used part of the net
proceeds as inter-company funding to one of our subsidiaries and the balance for general corporate purposes.

We
have a number of stock-based employee compensation plans. Effective January 1, 2003, we adopted the fair value recognition provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation, or FAS 123. We selected the prospective method of adoption permitted by FASB Statement No. 148, Accounting for Stock-Based CompensationTransition and Disclosure, or
FAS 148. Accordingly, the recognition provisions will be
applied to all employee awards granted, modified or settled after January 1, 2003. In the year ended December 31, 2005 we recognized £11.3 million of stock-based
compensation and in the year ended December 31, 2004 we recognized £14.3 million of stock-based compensation.

Pursuant
to SOP 90-7, beginning on May 8, 2002 we ceased accruing interest expense on some of our pre-petition obligations. Our reported interest expense
in 2002 excludes
£429.4 million of contractual interest for the period from May 8, 2002 to December 31, 2002. Also in 2002, recapitalization expenses were
£101.8 million. Recapitalization expenses include all transactions incurred as a result of our Chapter 11 reorganization. Recapitalization expenses include
£24.1 million for employee retention related to substantially all of our U.K. employees and £77.7 million for financial advisory, legal, accounting and consulting
costs.

In
addition, in 2002 we recorded asset impairment charges of £277.0 million consisting of non-cash charges to write down some fixed assets of
£37.3 million, and goodwill of £239.7 million. We also recorded restructuring charges of £57.9 million and non-cash charges of
£189.3 million primarily for allowances for the cancellation of receivables from NTL Europe in accordance with the Plan. Amortization expense in 2002 decreased from amounts in prior
periods owing to the adoption of FASB Statement No. 142,Goodwill and Other Intangible Assets, or FAS 142, on January 1, 2002,
which ended the amortization of goodwill and other indefinite lived intangible assets.

As
of December 31, 2001, £9,766.2 million of our long-term debt was classified as current owing to the uncertainties about compliance with the terms
and conditions of the instruments and agreements governing our debt that would give the holders of that debt the right to accelerate payment. In the fourth quarter of 2001, we recorded asset
impairment charges totaling £5,379.4 million including goodwill of £5,321.1 million, license acquisition costs of £40.9 million, customer lists
of £6.3 million, other intangibles of £10.4 million and investments in affiliates of £0.7 million. In addition, in 2001 we

45

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recorded
restructuring costs of £136.2 million, integration and consulting costs of £66.1 million and a loss on the sale of the ConsumerCo off-net
indirect access customers of £61.5 million.

|                                                                                                     |  | Year ended December 31, |  
|---------------------------------------------------------------------------------------------------- |  | ----------------------- | -
|
|
|
|Income Statement Data:                                                                               |  |                         |  
|Revenue                                                                                              |  | £1,947.6                |  
|Operating loss                                                                                       |  | (19.7                   | )
|Loss from continuing operations                                                                      |  | (241.7                  | )
|Basic and diluted loss from continuing operations per share (pro forma for periods prior to 2003)(1) |  | £(2.83                  | )
|                                                                                                     |  |                         |  
|Average number of shares outstanding (pro forma for periods prior to 2003)(1)                        |  | 85.5                    |  
|                                                                                                     |  |                         |  

|                                                                        |  | January 1,
2003 |  | 
|----------------------------------------------------------------------- |  | --------------- |  | 
|
|Revenues                                                                |  | £              |  | 
|Operating income                                                        |  | 3,655.8         |  | 
|Income from continuing operations                                       |  | 3,655.8         |  | 
|                                                                        |  |                 |  | 
|Pro forma basic and diluted income from continuing operations per share |  | £61.44          |  | 
|                                                                        |  |                 |  | 
|Pro forma average number of shares outstanding                          |  | 59.5            |  | 
|                                                                        |  |                 |  | 

---

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|                                                 |  | As of December 31, | 
|------------------------------------------------ |  | ------------------ | 
|
|
|
|Balance Sheet Data:                              |  |                    | 
|Cash, cash equivalents and marketable securities |  | £832.1             | 
|Working capital                                  |  | 529.9              | 
|Fixed assets                                     |  | 3,294.9            | 
|Total assets                                     |  | 4,988.5            | 
|Long-term debt(1)                                |  | 2,279.2            | 
|Shareholders' equity (deficit)                   |  | 1,955.0            | 
|Dividends declared per common share              |  |                   | 

---

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Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

We are one of the leading communications and content distribution companies in the U.K. providing broadband internet access, telephone and television services to
3.3 million residential customers as of December 31, 2005, including 1.8 million broadband customers. We also provide internet and telephone services to our residential customers who are
not connected to our cable network via access to other companies' telecommunications networks and via an internet service provider operated by our subsidiary, Virgin Net Limited. We offer what we
refer to as a "triple play" bundle of internet, telephone and television services through competitively-priced bundled packages. We also provide a range of voice services to business and public sector
organizations, as well as a variety of data communications solutions from high speed internet access to fully managed business communications networks and communication transport services.

Our
services are delivered through our wholly-owned local access communications network passing approximately 7.7 million homes in the U.K. The design and capability of our
network provides us with the ability to offer "triple play" bundled services and a broad portfolio of reliable, competitive communications solutions to business customers.

We
provide services to two categories of customers: residential customers and business customers as follows:



Our
consolidated revenue for the year ended December 31, 2005 was £1,947.6 million. Our revenues by sales channel as a percentage of total revenue for the years
ended December 31, 2005, 2004 and 2003 are set forth in the table below:

|              |  | Year ended December 31,
|------------- |  | -----------------------
|
|Revenue:      |  |                        
|Consumer      |  | 78.0%                  
|Business      |  | 22.0%                  
|              |  |                        
|Total revenue |  | 100.0%                 
|              |  |                        

Revenue

The principal sources of revenue within each sales channel are:



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Expenses

The principal components of our operating costs and selling, general and administrative expenses include:



Acquisitions and Disposals

Sale of Broadcast and Irish Operations

On January 31, 2005, we sold our broadcast operations, a provider of commercial television and radio transmission services, to a consortium led by
Macquarie Communications Infrastructure Group. The cash proceeds from the sale were approximately £1.3 billion. Our broadcast operations provided site leasing, broadcast
transmission, satellite, media, public safety communications and other network services, utilizing broadcast transmission infrastructure, wireless communications and other facilities.

On
May 9, 2005, we sold our telecommunications operations in the Republic of Ireland to MS Irish Cable Holdings B.V., an affiliate of Morgan Stanley for an aggregate purchase
price of €333.4 million, or £225.5 million.

Combination with Telewest

We have entered into a definitive merger agreement with Telewest, pursuant to which the two businesses would be combined if the transaction is approved by
stockholders.

Upon
completion of the merger, our stockholders will own approximately 75% and Telewest stockholders approximately 25% of the combined company on a fully diluted basis based on currently
outstanding shares, options and warrants. Upon completion of the merger, NTL will be wholly owned by Telewest. Our common stock, which currently trades on NASDAQ under the symbol "NTLI," will be
delisted. Telewest's ticker symbol will be changed to "NTLI." The aggregate transaction consideration to be received by Telewest stockholders is approximately $1.66 billion of stock (at current
market prices) and approximately $4.0 billion of cash. The transaction consideration will be financed through a new credit facility. See "Combination with TelewestSenior
Credit Facility and Bridge Facility." Stockholder meetings to consider and vote upon the transaction are scheduled for March 2, 2006.

Telewest
and we have announced our intention to complete the transaction as soon as reasonably practicable after the stockholder meetings, assuming the proposals presented are approved.

Further
details relating to the merger and the merger agreement are included in our joint proxy statement/prospectus filed with the SEC on January 30, 2006 and posted to our
shareholders on or about January 31, 2006.

Offer for Virgin Mobile

On December 5, 2005, we confirmed that we had approached Virgin Mobile about a potential offer to combine ourselves and Virgin Mobile, and that we had
engaged in discussions with Virgin

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Enterprises
to extend our existing exclusive license for use of the Virgin name in the internet services area also to cover television and fixed and mobile telephone services. On January 16,
2006, we and the independent directors of Virgin Mobile confirmed discussions to enable a cash offer, with share alternative offers, to be made by us or one or more of our subsidiaries to acquire 100%
of the shares of Virgin Mobile.

The
Virgin Mobile offer is subject to the satisfaction of certain pre-conditions. No assurances can be made that an offer will be made, of the terms on which any offer may be
made, or whether any transaction will be completed.

See
"Item 1BusinessOffer for Virgin Mobile" for further details regarding our potential offer for Virgin Mobile. The transaction does not require the approval
of our stockholders.

Discontinued Operations

As a result of the sale of our broadcast and Ireland operations, we are accounting for the broadcast and Ireland operations as discontinued operations. Financial
information for all prior periods presented in this report is restated accordingly. The results of operations for the broadcast and Ireland operations have been excluded from the components of loss
from continuing operations and shown in a separate
caption, titled income from discontinued operations, and the assets and liabilities of the broadcast and Ireland operations are reported as assets held for sale and liabilities of discontinued
operations, respectively, for all periods in this report. Revenue from the broadcast operations reported in discontinued operations for the years ended December 31, 2005, 2004 and 2003 was
£21.4 million, £277.8 million and £268.6 million, respectively. Pre-tax income from broadcast operations, reported as pre-tax
income from discontinued operations, for the years ended December 31, 2005, 2004 and 2003, was £3.2 million, £11.2 million and £20.9 million
respectively. Revenue from the Ireland operations reported in discontinued operations for the years ended December 31, 2005, 2004 and 2003 was £25.6 million,
£72.6 million, and £72.5 million respectively. Pre-tax income (loss) from Ireland operations, reported as pre-tax income from discontinued
operations, for the years ended December 31, 2005, 2004 and 2003, was £2.5 million, £14.0 million, and £1.0 million respectively.

Factors Affecting Our Business

Our residential customers account for the majority of our total revenue. The number of customers, the number and types of services that each customer uses and the
prices we charge for these services drive our revenue. Our profit is driven by the relative margins on the types of services we provide to customers. For example, broadband internet is more profitable
than ATV. Our packaging of services and our pricing are designed to encourage our customers to use multiple services like dual telephone and broadband. Factors affecting our profitability include
customer churn, average revenue per user, or ARPU, and competition.

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Summary Statistics

Selected statistics for residential customers including customers off our network and virgin.net customers for the three months ended December 31, 2005 as
well as the four prior quarters are set forth in the table below.

|                                   |                                | For the three months ended |          
|---------------------------------- | ------------------------------ | -------------------------- | ---------
|
|Opening customers                  |                                | 3,315,400                  |          
|                                   | Data cleanse(1)                |                            | (18,100  
|Adjusted opening customers         |                                | 3,297,300                  |          
|                                   | Customer additions             |                            | 195,400  
|                                   | Customer disconnects           |                            | (156,800 
|                                   |                                | Net customer movement      |          
|                                   | Reduction in customer count(2) |                            | (10,000  
|Closing customers                  |                                | 3,325,900                  |          
|Churn(3)                           |                                | 1.6%                       |          
|Revenue generating units(4)        |                                |                            |          
|                                   | Television                     |                            | 1,942,800
|                                   |                                | DTV                        |          
|                                   | Telephone                      |                            | 2,633,400
|                                   | Broadband                      |                            | 1,823,900
|Total Revenue Generating Units     |                                | 6,400,100                  |          
|RGU/Customers                      |                                | 1.92x                      |          
|Internet dial-up and DTV access(5) |                                | 468,400                    |          
|Average revenue per user(6)        |                                | £37.45                     |          

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Customer Churn.Customer churn is a measure of the number of customers who stop using our services.
An increase in our customer churn can lead to increased costs and reduced revenue. We continue to focus on improving our customer service and enhancing and expanding our service offerings 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 is limited by factors like customers moving outside our network
service area, in particular during the summer season, managing our customer churn rate is a significant component of our business plan. Our customer churn rate may increase if we are unable to deliver
our services over our network without interruption or if we fail to match offerings by our competitors.

ARPU.Average Revenue Per User, or ARPU, is a measure we use to evaluate how effectively we are
realizing potential revenue from customers. We believe that our "triple play" offering of telephone service, broadband access to the internet and DTV will prove attractive to our existing customer
base and allow us to increase our ARPU by facilitating the sale of multiple services to each customer.

Competition.Our ability to acquire and retain customers and increase revenue depends on our
competitive strength. There is significant competition in our markets, including through other broadband service providers, telephone services offered by BT, alternative internet access services like
DSL, which is offered by BT, digital satellite television services offered by BSkyB and digital terrestrial television offered by Freeview. If competitive forces prevent us from charging the prices
for these services that we plan to charge, or if our competition is able to attract our customers or potential customers we are targeting, our results of operations will be adversely affected.

Capital Expenditures.Our business requires substantial capital expenditures on a continuing basis
for various purposes, including expanding, maintaining and upgrading our network, investing in new customer acquisitions, and offering new services. If we do not continue to invest in our network, our
ability to retain and acquire customers may be hindered. Therefore, our liquidity and the availability of cash to fund capital projects are important drivers of our revenue. When our liquidity is
restricted, so is our ability to meet our capital expenditure requirements. We believe that our cash on hand, together with cash from operations, and if required, drawdowns under our revolving credit
facility, will be sufficient for our cash requirements in 2006. The merger transaction with Telewest will be financed with a new stock issuance, cash on hand and new financings.

Currency Movements.We encounter currency exchange rate risks because all of our revenue and
substantially all of our operating costs are earned and paid primarily in U.K. pounds sterling, but we pay interest and principal obligations with respect to a portion of our existing indebtedness in
U.S. dollars and euros. To the extent that the pound sterling declines in value against the U.S. dollar or the euro, the effective cost of servicing our U.S. dollar debt or euro debt will be
higher. As of December 31, 2005, £477.2 million, or 20.9% of our long-term debt, was denominated in U.S. dollars and £259.1 million, or 11.4%,
of our long-term debt was denominated in euros. To mitigate the risk from these exposures, we have implemented a cash flow hedging program. The objective of this program is to reduce the
volatility of our cash flows and earnings caused by changes in underlying rates.

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

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Integration of Billing Systems.Our historical growth through acquisitions resulted in us
inheriting
numerous billing systems, which had many differences in functionality, resulting in inefficiencies in our customer service processes. As a result of our billing system integration program, we have
consolidated the number of billing systems for our residential customers from eleven at the beginning of 2003 to three currently. We continue to evaluate how many billing systems we will utilize for
residential and business customers, taking into account the prospects for improved efficiencies and better customer service as well as the potential for disruption in the business from additional
migration of data. Accordingly, the timing and extent of further integration efforts remain under review and are likely to be influenced by completion of the merger with Telewest.

Call Center Consolidation.On April 7, 2004, we announced the consolidation over the next
18 months of our 13 U.K. customer service call centers into three equipped to handle anticipated expansion of our customer base. Following an internal review, three specialist call centers have
been retained and developed and are supported by four sales and customer support sites, located throughout the U.K. The call center consolidation was completed as of December 31, 2005 at a cost
of £23.7 million.

Critical Accounting Policies

Our consolidated financial statements and related financial information are based on the application of accounting principles generally accepted in the U.S., or
GAAP. GAAP requires the use of estimates, assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts
reported, as well as disclosures about contingencies, risk and financial condition. The following critical accounting policies have the potential to have a more significant impact on our financial
statements. An impact could occur because of the significance of the financial statement item to which these policies relate, or because these policies require more judgment and estimation than other
matters owing to the uncertainty related to measuring, at a specific point in time, transactions that are continuous in nature.

These
policies may need to be revised in the future in the event that changes to our business occur.

Income Taxes

Our provision for income taxes is based on our current period income, changes in deferred income tax assets and liabilities, income tax rates, and tax planning
opportunities available in the jurisdictions in which we operate. From time to time, we engage in transactions in which the tax consequences may be subject to some uncertainty. Examples of such
transactions include business acquisitions and disposals, issues related to consideration paid or received in connection with acquisitions, and certain financing transactions. Significant judgment is
required in assessing and estimating the tax consequences of these transactions. We prepare and file tax returns based on our interpretation of tax laws and regulations and record estimates based on
these judgments and interpretations.

At
each period end, it is necessary for us to make certain estimates and assumptions to compute the provision for income taxes including, but not limited to the expected operating income
(or loss) for the year, projections of the proportion of income (or loss) earned and taxed in the United Kingdom and the extent to which this income (or loss) may also be taxed in the United States,
permanent and temporary differences, the likelihood of deferred tax assets being recovered and the outcome of contingent tax risks. In the normal course of business, our tax returns are subject to
examination by various taxing authorities. Such examinations may result in future tax and interest assessments by these taxing authorities for uncertain tax positions taken in respect to matters such
as business acquisitions and disposals and certain financing transactions including intercompany transactions, amongst others, and we accrue a liability when we believe an assessment may be probable
and the amount is estimable.

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In
accordance with generally accepted accounting principles, the impact of revisions to these estimates are recorded as income tax expense or benefit in the period in which they become known.
Accordingly, the accounting estimates used to compute the provision for income taxes have and will change as new events occur, as more experience is acquired, as additional information is obtained and
our tax environment changes.

Fixed Assets

Fixed assets, net, totaled £3,294.9 million and £3,531.6 million, representing 66.0% and 64.3% of total assets at
December 31, 2005 and December 31, 2004, respectively. In accordance with SOP 90-7, upon our emergence from Chapter 11 reorganization, we adopted fresh-start reporting as of
January 1, 2003. Pursuant to fresh-start reporting, the carrying values of our fixed assets were adjusted to their reorganization values, which were equivalent to their estimated fair values.
These adjusted carrying values became the revised cost basis of our fixed assets at January 1, 2003. Fixed assets, net were written down by £2,195.7 million to
£4,288.2 million to reflect this adjustment. Fixed assets acquired since January 1, 2003, are stated at cost less accumulated depreciation.

Labor
and overhead costs directly related to the construction and installation of fixed assets, including payroll and related costs of some employees and related rent and other occupancy
costs, are capitalized. The payroll and related costs of some employees that are directly related to construction and installation activities are capitalized based on specific time devoted to these
activities where identifiable. In cases where the time devoted to these activities is not specifically identifiable, we capitalize costs based upon estimated allocations. Costs associated with initial
customer installations are capitalized. The costs of reconnecting the same service to a previously installed premise are charged to expense in the period incurred. Costs for repairs and maintenance
are charged to expense as incurred.

We
assign fixed assets and intangible assets useful lives that impact the annual depreciation and amortization expense. The assignment of useful lives involves significant judgments and
the use of estimates. Our managers use their experience and expertise in applying judgments about appropriate estimates. Changes in technology or changes in intended use of these assets may cause the
estimated useful life to change, resulting in higher or lower depreciation charges or asset impairment charges.

Revenue

We recognize revenue only when it is realized or realizable and earned. We recognize revenue when all of the following are present:



Revenue
is invoiced and recorded as part of a periodic billing cycle, and is recognized as the services are provided. At the end of each period, adjustments are recorded to defer revenue
relating to services billed in advance and to accrue for earned but unbilled services.



54

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Trade Receivables

Our trade receivables are stated at outstanding principal balances, net of allowances for doubtful accounts. We maintain allowances for doubtful accounts and
other receivables to reflect estimated losses resulting from the potential inability of our customers to make payments. These allowances are estimated based on the current aging of receivables, prior
collection experience and future expectations
of conditions that might impact recoverability. If the financial condition of our customers were to deteriorate, resulting in their inability to make payments, additions to the allowances may be
required.

Pensions

We account for our defined benefit pension plans using FASB Statement No. 87,Employer's Accounting for
Pensions,or FAS 87, and the disclosure rules under the revised FASB Statement No. 132 (Revised 2003)Employers Disclosures about Pensions and
Other Postretirement Benefits, an Amendment of FASB Statements 87, 88 and 106. Under FAS 87, pension expense is recognized on an accrual basis over employees' approximate
service periods. Pension expense calculated under FAS 87 is generally independent of funding decisions or requirements. We expect our pension expense to be approximately
£2.9 million in 2006.

The
calculation of pension expense and our pension liability requires the use of a number of assumptions. Changes in these assumptions can result in different expense and liability
amounts, and future actual experience can differ from the assumptions. We believe that the two most critical assumptions are the expected long-term rate of return on plan assets and the
assumed discount rate.

When
calculating pension expense for 2005, we assumed that our plans' assets would generate a long-term rate of approximately 7.1%. This rate is lower than the rates of
between 7.4% and 7.9% used to calculate the 2004 expense. We develop our expected long-term rate of return assumption based on historical experience and by evaluating input from the
trustee managing the plan's assets, including the trustee's review of asset class return expectations by several consultants and economists as well as long-term inflation assumptions. Our
expected long-term rate of return on plan assets is based on a target allocation of assets, which is based on our goal of earning the highest rate of return while maintaining risk at
acceptable levels. The plans strive to have assets sufficiently diversified so that adverse or unexpected results from one security class will not have an unduly detrimental impact on the entire
portfolio.

We
discounted our future pension obligations using a rate of 4.8% at December 31, 2005, and rates of between 4.8% and 5.3% at December 31, 2004. We determine the
appropriate discount rate based on the current rates earned on long-term bonds that receive one of the two highest ratings given by a recognized rating agency. The pension liability and
future pension expense both increase as the discount rate is reduced. Lowering the discount rate by 0.5% would increase our pension liability at December 31, 2005 by approximately
£33.1 million and increase our estimated 2006 pension expense by approximately £3.9 million.

55

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Future
changes in plan asset returns, assumed discount rates and various other factors related to the participants in our pension plans will impact our future pension expense and
liabilities. We cannot predict with certainty what these factors will be in the future.

Derivative Instruments and Hedging Activities

In accordance with FASB Statement No. 133,Accounting for Derivative Instruments and Hedging Activities,or
FAS 133, we recognize derivative financial instruments as either assets or liabilities measured at fair value. Gains and losses resulting from changes in fair value are accounted for depending
on the use of the derivative and whether it is designated and qualifies for hedge accounting. To the extent that the derivative instrument is designated and considered to be effective as a cash flow
hedge of an exposure to future changes in interest rates or foreign currency exchange rates, the change in fair value of the instrument is deferred in other comprehensive income. Amounts recorded in
other comprehensive income are reclassified to the income statement to match the corresponding cash flows on the underlying hedged transaction. Changes in fair value of any instrument not designated
as a hedge or considered to be ineffective as a hedge are reported in earnings immediately.

Restructuring Costs

As of January 1, 2003, we adopted FASB Statement No. 146,Accounting for Costs Associated with Exit or Disposal
Activities,or FAS 146, and recognize a liability for costs associated with restructuring activities when the liability is incurred. The adoption of FAS 146 did
not have a significant effect on our results of operations, financial condition or cash flows.

Prior
to 2003, we recognized a liability for costs associated with restructuring activities at the time a commitment to restructure was given, in accordance with EITF 94-3, Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a
restructuring).Liabilities for costs associated with restructuring activities initiated prior to January 1, 2003 continue to be accounted for under EITF 94-3.

In
relation to our restructuring activities, we have recorded a liability of £45.3 million as of December 31, 2005 relating to lease exit costs of properties
that we have vacated. In calculating the liability, we make a number of estimates and assumptions including the timing of ultimate disposal of the properties, our ability to sublet the properties
either in part or as a whole, amounts of sublet rental income achievable including any incentives required to be given to sublessees, and amounts of lease termination costs.

Recent Accounting Pronouncements

In June 2005, the FASB issued FSP FAS 143-1,Accounting for Electronic Equipment Waste
Obligations, ("FSP 143-1"). The FASB issued the FSP to address the accounting for certain obligations associated with the Waste Electrical and Electronic Equipment
Directive adopted by the European Union ("EU"). FSP 143-1 requires that the commercial user should apply the provisions of FASB Statement No. 143 and the related FASB Interpretation
No. 47 to certain obligations associated with historical waste (as defined by the Directive), since this type of obligation is an asset retirement obligation. The FSP is effective for the later
of the first reporting period ending after June 8, 2005 or the Directive's adoption into law by the applicable EU-member country. As at December 31, 2005, the UK had not
adopted the law. We intend to evaluate the impact of this law on the Company's results of operations or financial position as and when legislation is adopted in the UK.

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Consolidated Results of Operations from Continuing Operations

Years ended December 31, 2005 and 2004

Revenue

For the year ended December 31, 2005, consolidated revenue decreased by 2.6% to £1,947.6 million from
£2,000.3 million for 2004. Our revenue by customer type for the years ended December 31, 2005 and 2004 are as follows (in millions):

|               |  | 2005     |  | 2004     |  | Increase
(decrease) |   
|-------------- |  | -------- |  | -------- |  | ------------------- | --
|Revenues:      |  |          |  |          |  |                     |   
|Consumer       |  | £1,520.0 |  | £1,507.3 |  | 0.8                 | % 
|Business       |  | 427.6    |  | 493.0    |  | (13.3               | )%
|               |  |          |  |          |  |                     |   
|Total revenues |  | £1,947.6 |  | £2,000.3 |  | (2.6                | )%
|               |  |          |  |          |  |                     |   

Consumer:For the year ended December 31, 2005, revenue from residential customers increased by 0.8% to
£1,520.0 million from £1,507.3 million during the same period in 2004. This increase is driven largely by growth in the number of broadband internet subscribers
as well as the inclusion of additional revenue of £48.5 million from our subsidiary Virgin Net Limited following its acquisition in November 2004. These increases have
been offset by lower telephony usage revenue as a result of a decline in the volume of minutes generated per customer and competitive pressure on pricing and higher promotional discounts as well as
lower TV revenue due to lower ATV subscribers and lower premium channel revenue.

Business:For the year ended December 31, 2005, revenue from business customers decreased by 13.3% to
£427.6 million from £493.0 million during the same period in 2004. This decrease reflects the loss of £44.1 million of wholesale revenue from
Virgin Net Limited, which ceased to be a third party business customer as a consequence of its acquisition by us in November 2004, together with the conclusion of two wholesale customer
contracts. Lower telephony access and usage revenues have been offset by growth in install, data product and project revenue.

Expenses

Operating Costs.For the year ended December 31, 2005, operating costs, including network expenses, decreased by 2.3%
to £808.3 million from £827.7 million during the same period in 2004. Operating costs as a percentage of revenue increased slightly to 41.5% for the year ended
December 31, 2005, from 41.4% for the same period in 2004 primarily because of a reduction in telephony interconnect costs driven by lower usage on low margin call types and lower television
content costs offset by the impact of more installs in pre-wired homes where the cost to install is expensed and an increase in costs associated with network repair and maintenance.

Selling, general and administrative expenses.For the year ended December 31, 2005, selling, general and
administrative expenses decreased by 3.8% to £483.0 million from £502.2 million for the same period in 2004. Selling, general and administrative expenses as a
percentage of revenue decreased to 24.8% for the year ended December 31, 2005, from 25.1% for the same period in 2004. Lower employee costs following the involuntary employee terminations at
the end of 2004, maintenance costs savings through negotiated contracts, and reduced levels of set-top box repair and recycling costs have been partly offset by higher spend on marketing
and communications together with increased allowances for doubtful accounts.

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Other charges

Other charges of £24.8 million in the year ended December 31, 2005 mainly relate to changes in cash flow estimates with respect to lease
exit costs in connection with properties that have been vacated. Other charges of £23.8 million in the year ended December 31, 2004 related to restructuring charges incurred
in connection with our call center consolidation program. Of the costs of £23.8 million incurred in connection with our call center consolidation program,
£12.4 million relates to involuntary employee termination and related costs, £2.4 million relates to lease exit costs, and £9.0 million relates
to other costs of the consolidation program, including recruitment and training of new employees at the new sites.

The
following table summaries the restructuring charges incurred and utilized in the year ended December 31, 2005 and 2004 (in millions):

|                           |  | Involuntary
Employee
Termination
and Related
Costs |   | Lease
Exit
Costs |   | Agreement
Modifications |   | Other |   | Total |  
|-------------------------- |  | -------------------------------------------------- | - | ---------------- | - | ----------------------- | - | ----- | - | ----- | -
|Balance, December 31, 2003 |  | £                                                 |   | £38.8            |   | £0.3                    |   | £    |   | £39.1 |  
|Released                   |  |                                                   |   |                 |   |                        |   |      |   |      |  
|Charged to expense         |  | 12.4                                               |   | 2.4              |   |                        |   | 9.0   |   | 23.8  |  
|Utilized                   |  | (10.7                                              | ) | (12.8            | ) | (0.1                    | ) | (9.0  | ) | (32.6 | )
|                           |  |                                                    |   |                  |   |                         |   |       |   |       |  
|Balance, December 31, 2004 |  | 1.7                                                |   | 28.4             |   | 0.2                     |   |      |   | 30.3  |  
|Released                   |  |                                                   |   |                 |   | (0.2                    | ) | (0.4  | ) | (0.6  | )
|Charged to expense         |  | 0.8                                                |   | 24.2             |   |                        |   | 0.4   |   | 25.4  |  
|Utilized                   |  | (2.5                                               | ) | (7.3             | ) |                        |   |      |   | (9.8  | )
|                           |  |                                                    |   |                  |   |                         |   |       |   |       |  
|Balance, December 31, 2005 |  | £                                                 |   | £45.3            |   | £                      |   | £    |   | £45.3 |  
|                           |  |                                                    |   |                  |   |                         |   |       |   |       |  

Depreciation expense

For the year ended December 31, 2005, depreciation expense decreased to £541.7 million from £594.9 million for the
same period in 2004. This reduction in depreciation expense is because of the absence of depreciation on some assets that became fully depreciated in 2004.

Amortization expense

For the year ended December 31, 2005, amortization expense increased to £109.5 million from £104.2 million for the
same period in 2004. The increase in amortization expense relates to additional intangible assets arising from the acquisition of Virgin Net Limited during the fourth quarter of 2004.

Interest expense

For the year ended December 31, 2005, interest expense decreased to £235.8 million from £271.0 million for the same
period in 2004, primarily as a result of the interest saving offset by the accelerated amortization of deferred financing costs following the repayments totaling £723 million of our
senior credit facility on February 4, 2005, June 14, 2005 and July 14, 2005, the redemption of the $100 million Floating Rate Senior Notes on July 15, 2005 and the
effects of the refinancing transaction in April 2004 that lowered our weighted average interest rate.

We
paid interest in cash of £216.8 million for the year ended December 31, 2005, and £298.5 million for the year ended December 31,
2004. The decrease in cash interest payments resulted from debt repayments and the effects of the refinancing transaction in April 2004 that lowered our weighted average interest rate and
rescheduled some interest payments.

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Loss on extinguishment of debt

For the year ended December 31, 2005, loss on extinguishment of debt was £2.0 million, and relates to the redemption of the
$100 million Floating Rate Senior Notes due 2012 on July 15, 2005.

For
the year ended December 31, 2004, loss on extinguishment of debt was £162.2 million, and relates to the redemption, or repayment, of our indebtedness in the
refinancing transaction. The loss comprises the payment of the premium of £6.4 million on the redemption of the Diamond notes and the expensing of the unamortized issue costs of
£63.8 million and unamortized discount of £92.0 million on the redemption of the Diamond notes and the Triangle debentures and the repayment of the
then-existing senior credit facility.

Foreign currency transaction gains (losses)

For the year ended December 31, 2005, foreign currency transaction gains were £5.3 million as compared with losses of
£24.4 million for 2004. The foreign currency transaction gains in the year ended December 31, 2005 include gains of £43.7 million on the forward rate contracts
and collars taken out in December 2005 in connection with £1.8 billion of the expected cash purchase price of Telewest offset by losses on the revaluation of foreign currency
denominated long term debt and related forward contracts. The losses for the year ended December 31, 2004 were primarily because of the effect of changes in the exchange rate on the U.S. dollar
and euro denominated debt and unrealized losses of £35.7 million arising from changes in the fair value of our foreign currency forward contracts. Our results of operations will
continue to be affected by foreign exchange rate fluctuations since £477.2 million of our indebtedness is denominated in U.S. dollars and £259.1 million is
denominated in euros.

Income tax expense

For the year ended December 31, 2005, income tax expense was £18.8 million as compared with income tax expense of
£5.0 million for the same period in 2004. The 2005 and 2004 expense is composed of (in millions):

|                                |  | 2005  |   | 2004
|------------------------------- |  | ----- | - | ----
|U.S. state and local income tax |  | £(1.3 | ) | £1.3
|Deferred U.S. income tax        |  | 18.7  |   | 3.6 
|Alternative minimum tax         |  | 1.4   |   | 0.1 
|                                |  |       |   |     
|Total                           |  | £18.8 |   | £5.0
|                                |  |       |   |     

In
2005, we paid £2.2 million of the alternative minimum tax. In 2004, we paid £0.1 million of the alternative minimum tax and
£0.1 million of U.S. state and local tax expense for 2004. None of the remaining income tax expense is expected to be payable in the next year.

Minority interest expense

The minority interest expense of £1.0 million for the year ended December 31, 2005 relates to the minority interest in the net assets of
NTL (South Hertfordshire) Limited ("NTL South Herts"). No minority interest was recorded for the year ended December 31, 2004 since the cumulative losses of NTL South Herts applicable to the
minority interest exceeded the minority interest in the equity capital of NTL South Herts and there is no obligation on the part of the minority to make good such losses.

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Loss from continuing operations

For the year ended December 31, 2005, loss from continuing operations was £241.7 million compared with a loss of
£509.4 million for the same period in 2004. The reduction in loss from continuing operations is primarily attributable to savings in interest expense, the reduction in the loss on
extinguishment of debt, lower depreciation and foreign currency transaction gains compared with losses in 2004.

Loss from continuing operations per share

Basic and diluted loss from continuing operations per common share for the year ended December 31, 2005 was £2.83 and for the year ended
December 31, 2004 was £5.84. Basic and diluted loss from continuing operations per share is computed using an average of 85.5 million shares issued in the year ended
December 31, 2005 and an average of 87.2 million shares issued for the same period in 2004. Options to purchase 3.1 million shares at December 31, 2005 are excluded from
the calculation of diluted loss from continuing operations per share, since the inclusion of such options is anti-dilutive.

Years ended December 31, 2004 and 2003

Revenue

For the year ended December 31, 2004, consolidated revenue increased by 6.0% to £2,000.3 million from
£1,887.4 million for 2003. Our revenue by customer type for the years ended December 31, 2004 and 2003 are as follows (in millions):

|               |  | 2004     |  | 2003     |  | Increase
(decrease) |   
|-------------- |  | -------- |  | -------- |  | ------------------- | --
|Revenues:      |  |          |  |          |  |                     |   
|Consumer       |  | £1,507.3 |  | £1,386.5 |  | 8.7                 | % 
|Business       |  | 493.0    |  | 500.9    |  | (1.6                | )%
|               |  |          |  |          |  |                     |   
|Total revenues |  | £2,000.3 |  | £1,887.4 |  | 6.0                 | % 
|               |  |          |  |          |  |                     |   

Consumer:For the year ended December 31, 2004, revenue from residential customers increased by 8.7% to
£1,507.3 million from £1,386.5 million for 2003. This increase is due to an increase in RGUs in 2004, particularly as a result of customers taking our broadband
internet services, as well as price increases in 2004.

Business:For the year ended December 31, 2004, revenue from business customers decreased by 1.6% to
£493.0 million from £500.9 million for 2003. This decrease is because of fewer customers, major installations and orders as we continued our strategy of focusing
on a smaller but more profitable customer base. In addition, we have experienced lower telephony usage revenue per customer because of increased competition in the business telecommunications market,
together with a move towards the use of mobile telephones rather than fixed lines. This decrease has been partly mitigated by higher revenue from wholesale call termination and higher revenue from
wholesale internet access solutions provided to ISPs.

Expenses

Operating Costs.For the year ended December 31, 2004, operating costs, including network expenses, increased by 4.9%
to £827.7 million from £788.9 million for the same period in 2003. Operating costs as a percentage of revenue decreased to 41.4% for the year ended
December 31, 2004, from 41.8% for the same period in 2003 primarily because revenue growth was focused on higher-margin products and customers, particularly broadband internet services to
residential customers.

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Selling, general and administrative expenses.For the year ended December 31, 2004, selling, general and
administrative expenses increased to £502.2 million from £500.8 million for the same period in 2003. Selling, general and administrative expenses as a percentage
of revenue decreased to 25.1% for the year ended December 31, 2004, from 26.5% for the same period in 2003. Decreases in the cost of our outsourced information technology services, savings in
property and related facility costs, and reductions in employee costs and other cost efficiencies have been largely offset by increased charges for bad debts, sales and marketing costs and involuntary
employee termination costs following further business rationalizations in the fourth quarter of 2004.

Other charges

Other charges of £23.8 million in the year ended December 31, 2004 relate to restructuring charges incurred in connection with our call
center consolidation program. Of the costs of £23.8 million incurred in connection with our call center consolidation program, £12.4 million relates to
involuntary employee termination and related costs in respect of approximately 2,000 employees of whom approximately 250 were still employed by us as of December 31, 2004,
£2.4 million relates to lease exit costs, and £9.0 million relates to other costs of the consolidation program, including recruitment and training of new
employees at the new sites.

Other
charges of £22.3 million for the year ended December 31, 2003 included £19.9 million relating to restructuring charges for involuntary
employee termination and related costs and £2.4 million in respect of professional fees. Restructuring charges of £19.9 million comprised new charges of
£23.8 million less releases of £3.9 million in respect of provisions no longer required. Restructuring charges of £23.8 million in the year
ended December 31, 2003 related to our action to reorganize, resize and reduce operating costs and create greater efficiency in various areas. The involuntary employee termination and related
costs were incurred in respect of approximately 940 employees who were terminated in the year ended December 31, 2003, all of whom ceased employment by December 31, 2004.

The
following table summaries the restructuring charges incurred and utilized in the year ended December 31, 2004 and 2003 (in millions):

|                           |  | Involuntary
Employee
Termination
and Related
Costs |   | Lease
Exit
Costs |   | Agreement
Modifications |   | Other |   | Total |  
|-------------------------- |  | -------------------------------------------------- | - | ---------------- | - | ----------------------- | - | ----- | - | ----- | -
|Balance, December 31, 2002 |  | £11.7                                              |   | £47.6            |   | £0.7                    |   | £0.8  |   | £60.8 |  
|Released                   |  | (2.1                                               | ) | (0.7             | ) | (0.2                    | ) | (0.9  | ) | (3.9  | )
|Charged to expense         |  | 23.4                                               |   |                 |   | 0.3                     |   | 0.1   |   | 23.8  |  
|Utilized                   |  | (33.0                                              | ) | (8.1             | ) | (0.5                    | ) |      |   | (41.6 | )
|                           |  |                                                    |   |                  |   |                         |   |       |   |       |  
|Balance, December 31, 2003 |  |                                                   |   | 38.8             |   | 0.3                     |   |      |   | 39.1  |  
|Released                   |  |                                                   |   |                 |   |                        |   |      |   |      |  
|Charged to expense         |  | 12.4                                               |   | 2.4              |   |                        |   | 9.0   |   | 23.8  |  
|Utilized                   |  | (10.7                                              | ) | (12.8            | ) | (0.1                    | ) | (9.0  | ) | (32.6 | )
|                           |  |                                                    |   |                  |   |                         |   |       |   |       |  
|Balance, December 31, 2004 |  | £1.7                                               |   | £28.4            |   | £0.2                    |   | £    |   | £30.3 |  
|                           |  |                                                    |   |                  |   |                         |   |       |   |       |  

Depreciation expense

For the year ended December 31, 2004, depreciation expense decreased to £594.9 million from £666.9 million for the
same period in 2003. This reduction in depreciation expense is because of the absence of depreciation on some assets that became fully depreciated in 2003.

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Amortization expense

For the year ended December 31, 2004, amortization expense increased slightly to £104.2 million from £102.9 million
for the same period in 2003. The increase in amortization expense relates to additional intangible assets arising from the acquisition of Virgin Net Limited during the fourth quarter of 2004.

Interest expense

For the year ended December 31, 2004, interest expense decreased to £271.0 million from £456.5 million for the same
period in 2003, primarily as a result of the repayment of £0.7 billion of indebtedness in November 2003 from the proceeds of our rights offering and the effects of the
refinancing transaction in April 2004 that lowered our weighted average interest expense.

We
paid interest in cash of £298.5 million for the year ended December 31, 2004, and £356.9 million for the year ended December 31,
2003. The decrease in cash interest payments resulted from the repayment of £0.7 billion of indebtedness in November 2003 from the proceeds of our rights offering and the
effects of the refinancing transaction in April 2004 that lowered our weighted average interest expense and rescheduled some interest payments.

Loss on extinguishment of debt

For the year ended December 31, 2004, loss on extinguishment of debt was £162.2 million, and relates to the redemption, or repayment, of
our indebtedness in the refinancing transaction. The loss comprises the payment of the premium of £6.4 million on the redemption of the Diamond notes and the expensing of the
unamortized issue costs of £63.8 million and unamortized discount of £92.0 million on the redemption of the Diamond notes and the Triangle debentures and the
repayment of the then-existing senior credit facility.

Foreign currency transaction (losses) gains

For the year ended December 31, 2004, foreign currency transaction losses were £24.4 million as compared with gains of
£33.0 million for 2003. These losses for the year ended December 31, 2004 were primarily because of the effect of changes in the exchange rate on the U.S. dollar and euro
denominated debt and unrealized losses of £35.7 million arising from changes in the fair value of our foreign currency forward contracts. Our results of operations will continue to
be affected by foreign exchange rate fluctuations since £480.3 million of our indebtedness is denominated in U.S. dollars and £265.7 million is denominated in
euros.

Income tax expense

For the year ended December 31, 2004, income tax expense was £5.0 million as compared with income tax expense of
£0.1 million for the same period in 2003. The 2004 and 2003 expense is composed of (in millions):

|                                |  | 2004 |  | 2003 |  
|------------------------------- |  | ---- |  | ---- | -
|U.S. state and local income tax |  | £1.3 |  | £1.0 |  
|Deferred U.S. income tax        |  | 3.6  |  |     |  
|Alternative minimum tax         |  | 0.1  |  |     |  
|Deferred non-U.S. income tax    |  |     |  | (0.9 | )
|Non-U.S. current tax            |  |     |  |     |  
|                                |  |      |  |      |  
|Total                           |  | £5.0 |  | £0.1 |  
|                                |  |      |  |      |  

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In
2004, we paid £0.1 million of the alternative minimum tax and £0.1 million of U.S. state and local tax expense for 2004. None of the remaining
2004 income tax expense is expected to be payable in the next year.

Loss from continuing operations

For the year ended December 31, 2004, loss from continuing operations was £509.4 million compared with a loss of
£606.7 million for the same period in 2003. The reduction in loss from continuing operations is attributable to our improved operating performance and savings in interest expense
partly offset by the loss on extinguishment of debt.

Loss from continuing operations per share

Basic and diluted loss from continuing operations per common share for the year ended December 31, 2004 was £5.84 and for the year ended
December 31, 2003 was £9.60. Basic and diluted loss from continuing operations per share is computed using an average of 87.2 million shares issued in the year ended
December 31, 2004 and an average of 63.2 million shares issued for the same period in 2003. Options to purchase 3.1 million shares and 0.1 million shares of restricted
stock at December 31, 2004 are excluded from the calculation of diluted loss from continuing operations per share, since the inclusion of such options and shares is anti-dilutive.

Liquidity and Capital Resources

Our business is capital intensive, we are highly leveraged, and we have historically incurred operating losses and negative cash flow, partly as a result of our
construction costs, operating expenditures and interest costs. We require significant amounts of capital to connect customers to our network, expand and upgrade our network and offer new services.

We
must also regularly service interest payments with cash flows from operations. Our ability to sustain operations, meet financial covenants under our indebtedness, and make required
payments on our indebtedness could be impaired if we are unable to maintain or achieve various financial performance measures.

Our
ability to service our capital needs, to service our obligations under our indebtedness and to fund our ongoing operations will depend upon our ability to generate cash. For the year
ended December 31, 2005, our cash increased by £610.0 million and this was principally because of the proceeds from the sale of our Broadcast and Irish operations partly
offset by debt repayments and stock purchases.

Although
we expect to generate positive cash flow in the future, we cannot assure you that this will be the case. We believe that our cash on hand, together with cash from operations
and, if required, drawdowns under our revolving credit facility, will be sufficient for our cash requirements through at least March 31, 2007. However, our cash requirements after
March 31, 2007 may exceed these sources of cash. This may require that we obtain additional financing in excess of the financing incurred in the refinancing transaction. We may not be able to
obtain financing at all, or on favorable terms, or we may be contractually prevented by the terms of the Senior Notes or our senior credit facility from incurring additional indebtedness.

We
are a holding company with no independent operations or significant assets other than our investments in our subsidiaries. As a result, we will depend upon the receipt of sufficient
funds from our subsidiaries to meet our obligations. In addition, the terms of our and our subsidiaries' existing and future indebtedness and the laws of the jurisdictions under which those
subsidiaries are organized limit the payment of dividends, loan repayments and other distributions to us under many circumstances.

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Our
debt agreements and the debt agreements of some of our subsidiaries contain restrictions on our ability to transfer cash between groups of our subsidiaries. As a result of these
restrictions, although our overall liquidity may be sufficient to satisfy our obligations, we may be limited by covenants in some of our debt agreements from transferring cash to other subsidiaries
that might require funds. In addition, cross-default provisions in our other indebtedness may be triggered if we default on any of these debt agreements.

At
December 31, 2005, all of our defined benefit pension plans have projected benefit obligations exceeding plan assets totaling £47.5 million. We need to fund
these deficits in accordance with the laws and regulations of the U.K., and our contribution levels are currently undergoing review. We expect to contribute a total of £2.2 million
in 2006 but our pension contributions are subject to change based on the findings of this review.

Description of Outstanding Indebtedness

The terms of the significant notes and credit facilities issued by our subsidiaries as at December 31, 2005 are summarized below.

Senior Credit Facility



Senior Notes



64

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The agreements governing our indebtedness significantly and, in some cases, absolutely restrict our ability and the ability of most of our subsidiaries to:



In
connection with the merger with Telewest, the above indebtedness will be refinanced. See "Combination with TelewestSenior Credit Facility and Bridge
Facility."

Off-Balance Sheet Transactions

As of December 31, 2005, we had no off-balance sheet transactions.

Derivative Instruments and Hedging Activities

In the 2004 refinancing transaction, we incurred obligations in a combination of U.S. dollars, euros and pounds sterling at fixed and variable interest rates. As
a result we are exposed to variability in our cash flows and earnings resulting from changes in foreign currency exchange rates and interest rates.

We
have entered into a number of derivative instruments with a number of counter-parties to manage our exposures to changes in interest rates and foreign currency exchange rates. The
derivative instruments consist of interest rate swaps, cross-currency interest rate swaps and foreign currency forward contracts. On October 2, 2005, we entered into an agreement with several
financial institutions for new credit facilities in connection with the combination transaction with Telewest. As a result of this, we have discontinued the hedge designation of certain of our hedges.

We
are subject to currency exchange rate risks, because substantially all of our revenues and operating expenses are paid in U.K. pounds sterling, but we pay interest and principal
obligations with respect to a portion of our indebtedness in U.S. dollars and euros. To the extent that the pound declines in value against the U.S. dollar and the euro, the effective cost of
servicing our U.S. dollar and euro-denominated debt will be higher. Changes in the exchange rate result in foreign currency gains or losses. As of December 31, 2005,
£477.2 million, or 20.9% of our long-term debt, was denominated in U.S. dollars and £259.1 million, or 11.4% of our long-term debt, was
denominated in euros.

We
are also subject to interest rate risk because we have substantial indebtedness at variable interest rates. As of December 31, 2005, interest is determined on a variable basis
on £1,502.7 million, or 65.9%, of our long-term debt. An increase in interest rates of 0.25% would increase our interest expense by approximately
£3.8 million per year.

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Interest rate swaps

We have entered into a number of interest rate swaps to hedge the variability in future interest payments on our senior credit facility, which accrues interest at
variable rates based on LIBOR. The interest rate swaps allow us to receive interest based on LIBOR in exchange for payments of interest at fixed rates of 5.30% and 5.10%. The net settlement of
£5.1 million under these interest rate swaps is included within interest expense for the year ended December 31, 2005.

We
have designated the interest rate swaps as cash flow hedges under FAS 133 because they hedge against changes in LIBOR. The interest rate swaps are recognized as either assets
or liabilities and measured at fair value. Changes in the fair value are recorded within other comprehensive income (loss). On September 30, 2005, we discontinued hedge designation on certain
instruments that hedged interest payments on credit facilities that will be refinanced subsequent to that date. Changes in fair value of these instruments are recorded in gains on derivative
instruments in the statement of operations.

Cross-currency interest rate swaps

We have entered into a number of cross-currency interest rate swaps to hedge the variability in the pound sterling value of interest payments on the 8.75% Senior
Notes due 2014, interest payments on the U.S. dollar denominated senior credit facility and the pound sterling value of interest payments on the euro denominated senior credit facility. Under the
cross-currency interest rate swaps we receive interest in U.S. dollars at a rate of 8.75%, and U.S. dollars and euros at a variable rate based on LIBOR, and we pay interest in pound sterling at a rate
of 9.42%, and at a variable rate based on LIBOR. The net settlement of £4.3 million under the cross-currency interest rate swap is included within interest expense for the year
ended December 31, 2005.

We
have designated the cross-currency interest rate swaps as cash flow hedges under FAS 133 because they hedge against changes in the pound sterling value of the interest payments
on the Senior Notes
and senior credit facility that result from changes in the U.S. dollar, pound sterling and euro exchange rates. The cross-currency interest rate swaps are recognized as either assets or liabilities
and measured at fair value. Changes in the fair value are recorded within other comprehensive income (loss).

Foreign currency forward contracts

We have entered into a number of forward contracts maturing on April 14, 2009 to purchase a total of $820.2 million and
€151.0 million. The contracts hedge the variability in the pound sterling value of the principal obligation of the 8.75% Senior Notes and on the senior credit facility based on
a variable rate of LIBOR, resulting from changes in the U.S. dollar, pound sterling and euro exchange rates.

As
of December 31, 2005, we had outstanding foreign currency forward rate contracts to purchase the U.S. dollar equivalent of £1.8 billion, maturing in
April 2006. These contracts hedge changes in the pound sterling value of the borrowed position of the cash purchase price of Telewest.

The
forward contracts are not effective as hedges under FAS 133. The forward contracts are still recognized as either assets or liabilities and measured at fair value but changes
in the fair value are reported in the income statement. However, the forward contracts do not subject us to material volatility in our earnings and cash flows because changes in the fair value
directionally and partially mitigate the gains or losses on the translation of the U.S. dollar and euro denominated Senior Notes and Senior Credit Facility into pounds sterling.

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Contractual Obligations and Commercial Commitments

The following table includes aggregate information about our contractual obligations as of December 31, 2005, and the periods in which payments are due (in
millions).

|Contractual Obligations     |  | Total    |  | Less than
1 year |  | 13
years |  | 35
years |  | More than
5 years
|--------------------------- |  | -------- |  | ---------------- |  | --------- |  | --------- |  | -----------------
|Long-Term Debt Obligations  |  | £2,241.8 |  | £0.3             |  | £212.1    |  | £266.4    |  | £1,763.0         
|Capital Lease Obligations   |  | 116.7    |  | 4.4              |  | 8.4       |  | 8.2       |  | 95.7             
|Operating Lease Obligations |  | 328.9    |  | 42.5             |  | 72.9      |  | 56.5      |  | 157.0            
|Purchase Obligations        |  | 144.4    |  | 141.8            |  | 2.6       |  |          |  |                 
|                            |  |          |  |                  |  |           |  |           |  |                  
|Total                       |  | £2,831.8 |  | £189.0           |  | £296.0    |  | £331.1    |  | £2,015.7         
|                            |  |          |  |                  |  |           |  |           |  |                  

The
following table includes information about our commercial commitments as of December 31, 2005. Commercial commitments are items that we could be obligated to pay in the
future. They are not required to be included in the consolidated balance sheet (in millions).

|                               |  |       |  | Amount of Commitment Expiration per Period
|------------------------------ |  | ----- |  | ------------------------------------------
|
|Guarantees                     |  | £20.0 |  | £12.2                                     
|Lines of Credit                |  |      |  |                                          
|Standby Letters of Credit      |  |      |  |                                          
|Standby Repurchase Obligations |  |      |  |                                          
|Other Commercial Commitments   |  |      |  |                                          
|                               |  |       |  |                                           
|Total Commercial Commitments   |  | £20.0 |  | £12.2                                     
|                               |  |       |  |                                           

Guarantees
relate to performance bonds provided by banks on our behalf as part of our contractual obligations. The fair value of the guarantees has been calculated by reference to the
monetary value of each bond.

Statement of Cash Flows

Cash flow information provided below includes continuing and discontinued operations.

Years ended December 31, 2005 and 2004

For the year ended December 31, 2005, cash provided by operating activities increased to £325.6 million from
£249.3 million for the year ended December 31, 2004. This increase was a result of an improvement in working capital compared with 2004 together with lower cash paid for
interest. For the year ended December 31, 2005, cash paid for interest, exclusive of amounts capitalized, decreased to £216.8 million from £298.5 million
during the same period in 2004. This decrease resulted from lower level of debt, lower weighted average interest rates and re-scheduling of interest payments following our refinancing
transaction.

For
the year ended December 31, 2005, cash provided by investing activities was £1,172.8 million compared with cash used in investing activities of
£291.0 million for the year ended December 31, 2004. The cash provided by investing activities in the year ended December 31, 2005 includes
£1,229.0 million from the sale of our broadcast operations and £216.2 million from the sale of our Ireland operations. Purchases of fixed assets increased to
£288.1 million for the year ended December 31, 2005 from £274.5 million for the same period in 2004.

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Cash
used in financing activities for the year ended December 31, 2005 was £895.6 million compared with £382.3 million in the year ended
December 31, 2004. The principal components of cash used in financing activities for the year ended December 31, 2005 were as follows:



The
principal components of the £382.3 million cash used in financing activities for the year ended December 31, 2004 relate to our 2004 refinancing
transaction, as follows:



Years ended December 31, 2004 and 2003

For the year ended December 31, 2004, cash provided by operating activities increased to £249.3 million from
£202.3 million for the same period in 2003. This increase was a result of the improvement in operating results and lower interest payments. For the year
ended December 31, 2004, cash paid for interest, exclusive of amounts capitalized, decreased to £298.5 million from £356.9 million during the same period
in 2003. This decrease resulted from lower level of debt, lower weighted average interest rates and re-scheduling of interest payments following our refinancing transaction.

For
the year ended December 31, 2004, cash used in investing activities decreased to £291.0 million from £324.6 million for the same period
in 2003. The decrease resulted primarily from the acquisition of the virgin.net ISP and the purchase of marketable securities, mitigated by a reduction in purchases of fixed assets and repayment of
loans made to unconsolidated affiliates.

Cash
used in financing activities for the year ended December 31, 2004 was £382.3 million compared with cash provided by financing activities of
£74.0 million in the year ended December 31, 2003. The principal components of the £382.3 million cash used in financing activities for the year ended
December 31, 2004 relate to the 2004 refinancing. For the year ended December 31, 2003, cash provided by financing activities resulted primarily from the rights offering, from which we
raised approximately £806.5 million after expenses and used the proceeds, together with cash on hand, to repay indebtedness.

Combination with Telewest

Senior Credit Facility and Bridge Facility

In connection with the merger agreement with Telewest, we and NTLIH agreed to a commitment letter with several financial institutions who agreed to arrange and to
underwrite the new credit facilities described below.

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The
new credit facilities comprise two separate facilities, (a) a senior secured credit facility in an aggregate principal amount of £3.3 billion, comprising a
£3.2 billion 5-year amortizing term loan facility and a £100 million 5-year multicurrency revolving credit facility, for the purpose of
(i) repaying in full our existing credit facilities, (ii) repaying in full the existing and second tier credit facilities of Telewest, and
(iii) financing the ongoing working capital needs and general corporate requirements of the combined company, and (b) a 1-year (automatically extendable to a
10-year) senior subordinated bridge facility in an aggregate principal amount of £1.8 billion to be made available to Neptune Bridge Borrower LLC, a wholly owned
subsidiary of Telewest, for the purposes of (i) financing the cash consideration payable pursuant to the merger agreement and (ii) paying the related fees, costs and expenses in
connection therewith. In addition, we and NTLIH agreed to engage the financial institutions for any take-out financing for the bridge facility. The terms of the facilities are subject to
further amendments prior to the closing of the merger transaction.

The
rate of interest payable under the new senior credit facilities and the revolving facilities is the aggregate, per annum, of (i) LIBOR, plus (ii) the applicable
interest margin. The applicable interest margin shall be 1.625% per annum for a period of three months following the closing date for the merger with Telewest and thereafter, the applicable interest
margin shall be dependent upon the net leverage ratio then in effect.

Principal
under the new senior credit facilities will be subject to repayments each six months, beginning September 30, 2007. The borrowers will also be required to repay
principal under the new senior credit facilities, subject to certain exceptions, with excess cash flow and proceeds from disposals and debt and equity issuances.

Prior
to the maturity date of the bridge facilities, loans under the bridge facilities will bear interest at a rate per annum equal to (i) the three-month reserve-adjusted
Gilt/LIBOR/EURIBOR plus (ii) an initial spread of 600 basis points (such spread being subject to quarterly increases of 50 basis points if the loans are not yet repaid). Notwithstanding the
foregoing, the interest rate per annum payable shall not exceed (i) 12.5% in respect of loans under the bridge facilities denominated in U.K. pounds sterling and (ii) 11.5% in respect of
loans under the bridge facilities denominated in Euro or U.S. dollars.

Offer for Virgin Mobile

In connection with the potential offer to be made by us or one or more of our subsidiaries for 100% of the shares of Virgin Mobile, we intend to enter into a
revised commitment letter with the financial institutions that are providing the financing for our acquisition of Telewest. The revised documentation will provide for an additional
£475 million of borrowings. These additional borrowings, along with cash on hand, will be used to finance the offer for Virgin Mobile.

Hedging Activities

In connection with the financing of our acquisition of Telewest, our lenders will require us under the new senior credit facilities to continue our hedging
programs after the completion of the merger with Telewest. Specifically, the combined company will be required within six months of the closing date to fix the interest rate (whether through debt that
is fixed rate, or through hedging) on not less than 662/3% of the total debt represented by its senior facilities and high yield notes, for a period of not less than three years from
the closing date. Exchange rate hedging to sterling for a period of not less than three years will be required for 100% of all amounts, both principal and interest, denominated in Euro or U.S. dollars
advanced under the new senior credit facilities. Exchange rate hedging to sterling will be required for 100% of coupon payments issued pursuant to a planned notes offering in connection with the
refinancing of our and Telewest existing facilities, and our existing high yield debt, to the first call date for each such issue.

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In
December 2005, we entered into foreign currency forward rate and collar contracts to purchase approximately $3.2 billion, in exchange for the forward sale of
£1.8 billion, maturing in April 2006. These forward rate and collar contracts are designed to protect us against fluctuations in the U.S. dollar and U.K. pounds sterling
exchange rates, because the consideration for the stock of Telewest under the merger agreement is payable in dollars, and the lenders' commitment under the bridge facility is in U.K. pounds sterling.

Fresh-Start Reporting

We operated our business as a debtor-in-possession subject to the jurisdiction of the U.S. Bankruptcy Court during the period from
May 8, 2002 until January 10, 2003. Accordingly, our consolidated financial statements for periods prior to our emergence from Chapter 11 reorganization were prepared in accordance with
SOP 90-7. In addition, we adopted fresh-start reporting upon our emergence from Chapter 11 reorganization in accordance with SOP 90-7. For financial reporting purposes, the
effects of the completion of the Plan as well as adjustments for fresh-start reporting have been recorded in our consolidated financial statements as of January 1, 2003.

Pursuant
to fresh-start reporting, a new entity was deemed created for financial reporting purposes. The carrying values of our assets were adjusted to their reorganization values, which
are equivalent to their estimated fair values at January 1, 2003. The carrying values of our liabilities were adjusted to their present values at January 1, 2003.

The
emergence from Chapter 11 and the adoption of fresh-start reporting as of January 1, 2003 resulted in the following items of income (expense) that were recognized on that date
(in millions):

|                                            |  | January 1,
2003 |  
|------------------------------------------- |  | --------------- | -
|
|Gain on debt discharge                      |  | £5,251.1        |  
|Fresh-start adoptionintangible assets      |  | 525.9           |  
|Fresh-start adoptionlong-term debt         |  | 137.5           |  
|Fresh-start adoptiondeferred tax liability |  | 16.8            |  
|Fresh-start adoptionaccrued expenses       |  | (74.8           | )
|Fresh-start adoptionfixed assets           |  | (2,195.7        | )
|Recapitalization expense                    |  | (5.0            | )
|                                            |  |                 |  
|Net income from continuing operations       |  | £3,655.8        |  
|                                            |  |                 |  

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Item 7A.    Quantitative and Qualitative Disclosures About Market Risk

We are exposed to various market risks, including changes in foreign currency exchange rates and interest rates. Market risk is the potential loss arising from
adverse changes in market rates and prices, like foreign currency exchange and interest rates. As some of our indebtedness accrues interest at variable rates, we have exposure to volatility in future
cash flows and earnings associated with variable interest rate payments.

Also,
all of our revenues and a substantial portion of our operating costs are earned and paid in pound sterling but we pay interest and principal obligations on some of our indebtedness
in U.S. dollars and euros. As of December 31, 2005, £477.2 million, or 20.9% of our long-term debt, was denominated in U.S. dollars and
£259.1 million, or 11.4%, of our long-term debt was denominated in euros. As a result, we have exposure to volatility in future cash flows and earnings associated with
changes in foreign exchange rates on payments of principal and interest on a portion of our indebtedness.

To
mitigate the risk from these exposures, we have implemented a cash flow hedging program. The objective of this program is to reduce the volatility of our cash flows and earnings
caused by changes in underlying rates. To achieve this objective we have entered into a number of derivative instruments. The derivative instruments utilized comprise interest rate swaps,
cross-currency interest rate swaps and foreign currency forward contracts. We do not enter into derivative instruments for trading or speculative purposes. See Note 10Derivative
Instruments and Hedging Activities and Management's Discussion and Analysis of Financial Condition and Results of OperationsDerivative Instruments and Hedging Activities.

The
fair market value of long-term fixed interest rate debt and the amount of future interest payments on variable interest rate debt are subject to interest rate risk.

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The
following table provides information as of December 31, 2005 about our long-term fixed and variable interest rate debt that are sensitive to changes in interest
rates and foreign currency exchange rates (in millions).

|                                         |                               | Year ended December 31, |   |  |   |  |                  | 
|---------------------------------------- | ----------------------------- | ----------------------- | - |  | - |  | ---------------- | 
|
|
|Long-term debt including current portion |                               |                         |   |  |   |  |                  | 
|U.S. Dollars                             |                               |                         |   |  |   |  |                  | 
|                                         | Fixed rate                    |                         |  |  |  |  |                 | 
|                                         | Average interest rate         |                         |   |  |   |  |                  | 
|                                         | Average forward exchange rate |                         |   |  |   |  |                  | 
|Pounds Sterling                          |                               |                         |   |  |   |  |                  | 
|                                         | Fixed rate                    |                         |  |  |  |  |                 | 
|                                         | Average interest rate         |                         |   |  |   |  |                  | 
|Euros                                    |                               |                         |   |  |   |  |                  | 
|                                         | Fixed rate                    |                         |  |  |  |  |                 | 
|                                         | Average interest rate         |                         |   |  |   |  |                  | 
|                                         | Average forward exchange rate |                         |   |  |   |  |                  | 
|Pounds Sterling                          |                               |                         |   |  |   |  |                  | 
|                                         | Variable Rate                 |                         |  |  |  |  | £76.4            | 
|                                         | Average interest rate         |                         |  |  |  |  | LIBOR plus 1.75% | 
|Pounds Sterling                          |                               |                         |   |  |   |  |                  | 
|                                         | Variable Rate                 |                         |  |  |  |  |                 | 
|                                         | Average interest rate         |                         |   |  |   |  |                  | 
|Euros                                    |                               |                         |   |  |   |  |                  | 
|                                         | Variable Rate                 |                         |  |  |  |  |                 | 
|                                         | Average interest rate         |                         |   |  |   |  |                  | 
|                                         | Average forward exchange rate |                         |   |  |   |  |                  | 
|US Dollars                               |                               |                         |   |  |   |  |                  | 
|                                         | Variable Rate                 |                         |  |  |  |  |                 | 
|                                         | Average interest rate         |                         |   |  |   |  |                  | 
|                                         | Average forward exchange rate |                         |   |  |   |  |                  | 

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Item 8.    Financial Statements and Supplementary Data

Our consolidated financial statements, the notes thereto and the report of the independent auditors are on pages F-1
to F-103 of this annual report and are incorporated by reference. The following is a summary of the unaudited selected quarterly results of operations for the years ended
December 31, 2005 and 2004 (in millions, except per share data):

|                                                            |  | 2005 |      
|----------------------------------------------------------- |  | ---- | -----
|
|
|
|Income Statement Data:                                      |  |      |      
|Revenue                                                     |  | £    | 497.8
|Operating income (loss)                                     |  |      | 13.0 
|Net income (loss)                                           |  |      | 455.8
|Loss from continuing operations                             |  |      | (65.9
|Basic and diluted loss from continuing operations per share |  | £    | (0.76

|                                                            |  | 2004 |      
|----------------------------------------------------------- |  | ---- | -----
|
|
|
|Income Statement Data:                                      |  |      |      
|Revenue                                                     |  | £    | 495.7
|Operating loss                                              |  |      | (11.0
|Net loss                                                    |  |      | (65.8
|Loss from continuing operations                             |  |      | (78.4
|Basic and diluted loss from continuing operations per share |  | £    | (0.90

73

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Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

Item 9A.    Controls and Procedures





74

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Item 9B.    Other Information

None.

75

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PART III

Item 10.    Directors and Executive Officers of the Registrant

The information required by this Item is incorporated by reference to our Proxy Statement for the 2006 Annual Meeting of Stockholders.

Item 11.    Executive Compensation

The information required by this Item is incorporated by reference to our Proxy Statement for the 2006 Annual Meeting of Stockholders.

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this Item is incorporated by reference to our Proxy Statement for the 2006 Annual Meeting of Stockholders.

Item 13.    Certain Relationships and Related Transactions

The information required by this Item is incorporated by reference to our Proxy Statement for the 2006 Annual Meeting of Stockholders.

Item 14.    Principal Accountant Fees and Services

The information required by this Item is incorporated by reference to our Proxy Statement for the 2006 Annual Meeting of Stockholders.

76

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PART IV

Item 15.    Exhibits and Financial Statement Schedules

77

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EXHIBIT INDEX

|Exhibit No. |  |                                                                                                                                                                                                                                                                                                                                                                                                             
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1         |  | Agreement and Plan of Merger, dated as of February 9, 2000, by and among NTL Incorporated (now NTL Europe, Inc.), NTL Holdings Incorporated (now NTL (Delaware), Inc.) and Holdings Merger Sub Inc.
(Incorporated by reference to Exhibit 2.1 to Amendment No. 1 to the Registration Statement on Form S-3/A filed by NTL (Delaware), Inc. and NTL Incorporated on July 14, 2000, File No. 333-36434)       
|2.2         |  | Agreement and Plan of Merger, dated as of March 26, 1999, by and among NTL Incorporated (now NTL (Delaware), Inc.), NTL Communications Corp. (now NTL Incorporated) and NTL Mergerco, Inc. (Incorporated by reference to Exhibit 2.1
to Amendment No. 2 to The Registration Statement on Form S-3/A filed by NTL Incorporated and NTL Communications Corp. on June 3, 1999, File No. 333-72335)             
|2.3         |  | Share Exchange Agreement, dated as of June 16, 1998, as amended, by and among NTL Incorporated and the shareholders of Diamond Cable Communications Limited (Incorporated by reference to Annex A to the Proxy Statement filed by NTL Incorporated on
January 29, 1999, File No. 000-22616)                                                                                                                 
|2.4         |  | Amendment No. 1 to Share Exchange Agreement, dated as of December 21, 1998, by and among NTL Incorporated and the shareholders of Diamond Cable Communications Limited (Incorporated by reference to Exhibit 99.1 to the Current Report on
Form 8-K filed by NTL Incorporated on December 23, 1998, File No. 000-22616)                                                                                     
|2.5         |  | Restated Transaction Agreement, dated as of July 26, 1999, by and among Bell Atlantic Corporation, Cable and Wireless PLC, Cable & Wireless Communications PLC and NTL Incorporated (Incorporated by reference to Annex J to the Proxy
Statement filed by NTL Incorporated on February 11, 2000, File No. 000-25691)                                                                                        
|2.6         |  | Second Amended Joint Plan of Reorganization Plan of NTL Incorporated and Certain Subsidiaries, dated July 15, 2002 (as subsequently modified) (Incorporated by reference to Exhibit 2.8 of NTL Incorporated's Registration Statement on
Form S-1, filed on February 12, 2003 as amended on June 28, 2003 (File No. 333-103135)                                                                              
|2.7         |  | Master Agreement relating to National Transcommunications Limited and NTL Digital Limited among NTL Group Limited, NTL (Chichester) Limited, NTL Digital Ventures Limited, Macquarie U.K. Broadcast Limited and Macquarie U.K. Broadcast Holdings Limited,
dated 1 December 2004 (Incorporated by reference to Exhibit 2.10 to the Current Report on Form 8-K filed on February 3, 2005, File No. 000-22616)
|2.8         |  | Deed of Variation to the Master Agreement among NTL Group Limited, NTL (Chichester) Limited, NTL Digital Ventures Limited, Macquarie U.K. Broadcast Limited and Macquarie U.K. Broadcast Holdings Limited, dated 23 December 2004 (Incorporated by
reference to Exhibit 2.11 to the Current Report on Form 8-K filed on February 3, 2005, File No. 000-22616)                                               
|2.9         |  | Second Deed of Variation to the Master Agreement among NTL Group Limited, NTL (Chichester) Limited, NTL Digital Ventures Limited, Macquarie U.K. Broadcast Limited and Macquarie U.K. Broadcast Holdings Limited, dated 27 January 2005
(Incorporated by reference to Exhibit 2.12 to the Current Report on Form 8-K filed on February 3, 2005, File No. 000-22616)                                         
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                             

78

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|2.10 |  | Third Deed of Variation to the Master Agreement among NTL Group Limited, NTL (Chichester) Limited, NTL Digital Ventures Limited, Macquarie U.K. Broadcast Limited and Macquarie U.K. Broadcast Holdings Limited, dated 31 January 2005 (Incorporated
by reference to Exhibit 2.13 to the Current Report on Form 8-K filed on February 3, 2005, File No. 000-22616)                                                                                                                                                                                                                                            
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.11 |  | Deed of Accession and Adherence to the Master Agreement among NTL Group Limited, NTL (Chichester) Limited, NTL Digital Ventures Limited, Macquarie U.K. Broadcast Limited, Macquarie U.K. Broadcast Holdings Limited and NTL Ventures Limited, dated
27 January 2005 (Incorporated by reference to Exhibit 2.14 to the Current Report on Form 8-K filed on February 3, 2005, File No. 000-22616)                                                                                                                                                                                                              
|2.12 |  | Share Sale Agreement relating to ntl Communications (Ireland) Limited and ntl Irish Networks Limited, dated as of May 9, 2005, among ntl Group Limited, ntl Irish Holdings Limited, ntl (Chichester) Limited and MS Irish Cable Holdings B.V.
(Incorporated by reference to Exhibit 2.1 to the Quarterly Report on Form 10-Q filed on May 10, 2005, File No. 000-22616).                                                                                                                                                                                                                                      
|2.13 |  | Deed of Tax Covenant relating to ntl Communications (Ireland) Limited, ntl Irish Networks Limited and their subsidiaries, dated as of May 9, 2005, among ntl Irish Holdings Limited, ntl (Chichester) Limited and MS Irish Cable Holdings B.V.
(Incorporated by reference to Exhibit 2.2 to the Quarterly Report on Form 10-Q filed on May 10, 2005, File No. 000-22616).                                                                                                                                                                                                                                     
|2.14 |  | Asset Transfer Agreement, dated as of May 9, 2005, between ntl Group Limited and MS Irish Cable Holdings B.V. (Incorporated by reference to Exhibit 2.3 to the Quarterly Report on Form 10-Q filed on May 10, 2005,
File No. 000-22616).                                                                                                                                                                                                                                                                                                                                                                      
|2.15 |  | Amended and Restated Agreement and Plan of Merger dated as of December 14, 2005 among Telewest Global, Inc., NTL Incorporated, Neptune Bridge Borrower LLC and, for certain limited purposes, Merger Sub Inc. (Incorporated by reference to
Exhibit 2.1 to the Current Report on Form 8-K filed on December 15, 2005, File No. 000-22616)                                                                                                                                                                                                                                                                     
|2.16 |  | Commitment Letter dated as of December 14, 2005 among NTL Incorporated, NTL Investment Holdings Limited, each of Deutsche Bank AG, London Branch, J.P. Morgan plc, The Royal Bank of Scotland plc and Goldman Sachs International (as mandated lead
arrangers) and each of Deutsche Bank AG, London Branch, JPMorgan Chase Bank, National Association, The Royal Bank of Scotland plc, and Goldman Sachs Credit Partners L.P. (as underwriters) (together with Appendices thereto) (Incorporated by reference
to Exhibit 2.2 to the Current Report on Form 8-K filed on December 15, 2005, File No. 000-22616)
|3.1  |  | Amended and Restated Certificate of Incorporation of NTL Communications Corp. (now NTL Incorporated) (Incorporated by reference to Exhibit 1 to the Registration Statement on Form 8-A filed on January 10, 2003,
File No. 000-22616)                                                                                                                                                                                                                                                                                                                                                                         
|3.2  |  | Amended and Restated By-Laws of NTL Incorporated (as of November 4, 2004), (Incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed on November 10, 2004, File No. 00022616)                                                                                                                                                                                                                                                                                                                                                                                                         
|4.1  |  | Equity Registration Rights Agreement, dated as of January 10, 2003, by and among NTL Incorporated and the stockholders listed on the signature pages thereto (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K
filed on January 10, 2003, File No. 000-22616)                                                                                                                                                                                                                                                                                                                       
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

79

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|4.2  |  | Exchange and Registration Rights Agreement, dated as of January 9, 2003, by and among NTL Incorporated, the Guarantors listed on the signature pages thereto and the initial purchasers of the Notes listed on the signature pages thereto
(Incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed on January 10, 2003, File No. 000-22616)                   
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.3  |  | Registration Rights Agreement, dated as of September 26, 2003, between NTL Incorporated and W.R. Huff Asset Management Co., L.L.C. (Incorporated by reference to Exhibit 4.3 to the Registration Statement on Form S-1 filed on
September 26, 2003, File No. 333-109194)                                                                                                                
|4.4  |  | Registration Rights Agreement, dated as of September 26, 2003, between NTL Incorporated and Franklin Mutual Advisers, LLC on behalf of and in its capacity as agent and investment manager for various holders (Incorporated by reference to
Exhibit 4.4 to the Registration Statement on Form S-1 filed on September 26, 2003, File No. 333-109194)                                    
|4.5  |  | Registration Rights Agreement, dated as of September 26, 2003, between NTL Incorporated and Oaktree Capital Management, LLC on behalf of and in its capacity as the general partner or investment manager of certain funds and accounts it manages
(Incorporated by reference to Exhibit 4.5 to the Registration Statement on Form S-1 filed on September 26, 2003, File No. 333-109194)
|4.6  |  | Participating Purchaser Agreement, dated as of September 26, 2003, between NTL Incorporated and W.R. Huff Asset Management Co., L.L.C. (Incorporated by reference to Exhibit 4.15 to the Registration Statement on Form S-1 filed on
September 26, 2003, File No. 333-109194)                                                                                                           
|4.7  |  | Participating Purchaser Agreement, dated as of September 26, 2003, between NTL Incorporated and Franklin Mutual Advisers, LLC (Incorporated by reference to Exhibit 4.16 to the Registration Statement on Form S-1 filed on
September 26, 2003, File No. 333-109194)                                                                                                                    
|4.8  |  | Series A Warrant Agreement, dated as of January 10, 2003, by and between NTL Incorporated and Continental Stock Transfer & Trust Company, as Warrant Agent (Incorporated by reference to Exhibit 3 to the Registration Statement
on Form 8-A filed on January 10, 2003, File No. 000-22616)                                                                                             
|4.9  |  | Rights Agreement, dated as of January 10, 2003, by and between NTL Incorporated and Continental Stock Transfer & Trust Company, as Rights Agent (Incorporated by reference to Exhibit 4 to the Registration Statement on Form 8-A
filed on January 10, 2003, File No. 000-22616)                                                                                                        
|4.10 |  | Amendment to Rights Agreement, dated as of September 26, 2003, by and between NTL Incorporated and Continental Stock Transfer & Trust Company, as Rights Agent (Incorporated by reference to Exhibit 4.12 to the Registration Statement
on Form S-1 filed on September 26, 2003, File No. 333-109194)                                                                                   
|4.11 |  | Amendment to Rights Agreement, dated as of March 16, 2004, by and between NTL Incorporated and Continental Stock Transfer & Trust Company, as Rights Agent (Incorporated by reference to Exhibit 99.1 to the Form 8A/A filed by
NTL Incorporated on March 16, 2004, File No. 000-22616)                                                                                                 
|4.12 |  | Indenture, dated as of April 13, 2004, by and among NTL Cable PLC, the Guarantors listed on the signature pages thereto and the Bank of New York, as Trustee (Incorporated by reference to Exhibit 99.3 to the Current Report on Form 8-K
filed on April 20, 2004, File No. 000-22616).                                                                                                 
|     |  |                                                                                                                                                                                                                                                                                                                                                                                         

80

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|4.13 |  | Exchange and Registration Rights Agreement, dated as of April 13, 2004, by and among NTL Cable PLC, the Guarantors listed on the signature pages thereto and the Initial Purchasers listed in the signature pages thereto (Incorporated by reference
to Exhibit 4.13 to the Annual Report on Form 10-K filed on March 16, 2005, File No. 000-22616).                                                                                           
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.14 |  | Form of Senior Exchange Note (Incorporated by reference to Exhibit 4.1 to the Quarterly Report on Form 10-Q filed on August 9, 2005, File No. 000-22616).                                                                                                                                                                                                                                                                                      
|4.15 |  | Amendment to Rights Agreement dated as of December 14, 2005 between NTL Incorporated and Continental Stock Transfer & Trust Company (incorporated by reference to Exhibit 10.2 of NTL Incorporated's Form 8-A/A as filed with the
U.S. Securities and Exchange Commission on December 15, 2005, File No. 000-22616) (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on December 15, 2005, File No. 000-22616)
|10.1 |  | Tax Sharing Agreement, dated January 10, 2003, by and between NTL Europe, Inc. and its affiliates, and NTL Incorporated (Incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed by NTL Incorporated on
January 10, 2003, File No. 000-22616)                                                                                                                                                                        
|10.2 |  | Demerger Agreement, dated January 10, 2003, by and between NTL Europe, Inc. and NTL Incorporated (Incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K filed by NTL Incorporated on January 10, 2003,
File No. 000-22616)                                                                                                                                                                                               
|10.3 |  | Form of 2003 Stock Option Plan of NTL Incorporated (Incorporated by reference to Exhibit 10.8 to the Registration Statement on Form S-1 filed by NTL Incorporated on February 12, 2003, File No. 333-103135)                                                                                                                                                                                                                                   
|10.4 |  | Summary Terms of NTL Group 2003 Bonus Scheme (Incorporated by reference to Exhibit 10.9 to the Registration Statement on Form S-1 filed on September 26, 2003, File No. 333-109194)                                                                                                                                                                                                                                                            
|10.5 |  | Framework Agreement for the Provision of IT Outsourcing Services, dated as of May 23, 2001, by and between NTL Group Limited and IBM U.K. Limited (Incorporated by reference to Exhibit 10.9 to the 2001 Annual Report on Form 10-K, filed
by NTL Incorporated on April 16, 2002, File No. 0-30673)                                                                                                                                            
|10.6 |  | Amendment, dated as of April 5, 2002 to the Framework Agreement For The Provision of IT Outsourcing Services, dated as of May 23, 2001, by and between NTL Group Limited IBM U.K. Limited and IBM U.K. Financial Services Limited (Incorporated
by reference to Exhibit 10.10 to the 2001 Annual Report on Form 10-K filed by NTL Incorporated on April 16, 2001, File No. 0-30673)                                                            
|10.7 |  | Amendment, dated as of September 30, 2003 to Framework Agreement for the Provision of IT Outsourcing Services, dated as of May 23, 2001, by and among NTL Group Limited, IBM U.K. Limited and IBM U.K. Financial Services Limited (Incorporated
by reference to Exhibit 10.12 to Amendment No. 1 to the Registration Statement on Form S-1 filed on October 31, 2003, File No. 333-109194)                                                     
|10.8 |  | Employment Agreement, dated as of March 4, 2003 between NTL Incorporated and Howard Kalika (Incorporated by reference to Exhibit 10.18 to the Registration Statement on Form S-1 filed on September 26, 2003,
File No. 333-109194)                                                                                                                                                                                                             
|10.9 |  | Employment Agreement, dated as of March 4, 2003 between NTL Incorporated and Richard Martin (Incorporated by reference to Exhibit 10.19 to the Registration Statement on Form S-1 filed on September 26, 2003,
File No. 333-109194)                                                                                                                                                                                                            
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                

81

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|10.10 |  | Employment Agreement, dated as of March 4, 2003 between NTL Incorporated and Scott Schubert (Incorporated by reference to Exhibit 10.20 to the Registration Statement on Form S-1 filed on September 26, 2003,
File No. 333-109194)                                               
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.11 |  | Employment Agreement, dated as of September 17, 2003 between NTL Incorporated and James F. Mooney (Incorporated by reference to Exhibit 10.22 to the Registration Statement on Form S-1 filed on September 26, 2003,
File No. 333-109194)                                         
|10.12 |  | Restricted Stock Agreement, dated as of March 28, 2003 between NTL Incorporated and James F. Mooney (Incorporated by reference to Exhibit 10.30 to the Registration Statement on Form S-1 filed on September 26, 2003,
File No. 333-109194)                                       
|10.13 |  | Form of Director and Officer Indemnity Agreement and a schedule of persons to whom the agreement has been provided (Incorporated by reference to Exhibit 10.31 to the Registration Statement on Form S-1 filed on September 26, 2003,
File No. 333-109194)                        
|10.14 |  | Amended and Restated Employment Agreement, dated as of May 6, 2004, between NTL Incorporated and Simon Duffy (Incorporated by reference to Exhibit 10.1 to NTL Incorporated's Quarterly Report on Form 10-Q filed on May 7, 2004,
File No. 000-22616)                             
|10.15 |  | Employment Agreement, dated as of May 28, 2004, between NTL Incorporated and Bryan Hall (Incorporated by reference to Exhibit 10.1 to NTL Incorporated's Quarterly Report on Form 10-Q filed on August 6, 2004,
File No. 000-22616)                                               
|10.16 |  | Employment Agreement, dated as of September 6, 2004, between NTL Incorporated and Jacques Kerrest (Incorporated by reference to Exhibit 10.1 to NTL Incorporated's Quarterly Report on Form 10-Q filed on November 9, 2004,
File No. 000-22616)                                   
|10.17 |  | Letter Agreement, dated as of September 6, 2004, between NTL Incorporated and Scott Schubert (Incorporated by reference to Exhibit 10.2 to NTL Incorporated's Quarterly Report on Form 10-Q filed on November 9, 2004,
File No. 000-22616)                                        
|10.18 |  | Confirmation of Amendment of Employment Agreement dated as of March 4, 2003, dated as of December 22, 2004, between NTL Incorporated and Richard Martin (Incorporated by reference to Exhibit 10.18 to the Annual Report on Form 10-K
filed on March 16, 2005, File No. 000-22616)
|10.19 |  | Rules of Long-Term Incentive Plan (Incorporated by reference to Exhibit 10.19 to the Annual Report on Form 10-K filed on March 16, 2005, File No. 000-22616)                                                                                                                      
|10.20 |  | Amended and Restated NTL 2004 Stock Incentive Plan (Incorporated by reference to Appendix A to the Proxy Statement filed on April 8, 2004, File No. 000-22616)                                                                                                                    
|10.21 |  | NTL Group 2004 Bonus Scheme (Incorporated by reference to Appendix B to the Proxy Statement filed on April 8, 2004, File No. 000-22616)                                                                                                                                           
|10.22 |  | NTL Incorporated Sharesave Plan (Incorporated by reference to Appendix C to the Proxy Statement filed on April 8, 2004, File No. 000-22616)                                                                                                                                       
|      |  |                                                                                                                                                                                                                                                                                   

82

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|10.23 |  | £2,425,000,000 Senior Facilities Agreement between NTL Incorporated, NTL Investment Holdings Limited, Credit Suisse First Boston, Deutsche Bank AG London, Goldman Sachs International, Morgan Stanley Dean Witter Bank Limited, BNP Paribas,
Citibank N.A. London, Crédit Lyonnais, Fortis Bank S.A./N.V., GE Capital Structured Finance Group Limited, HSBC Bank PLC, and Société Générale, as Mandated Lead Arrangers, Credit Suisse First Boston, as Facility
Agent and Security Trustee, GE Capital Structured Finance Group Limited, as Administrative Agent, and the other Lenders parties thereto, dated as of April 13, 2004 (Incorporated by reference to Exhibit 99.1 to the Current Report on
Form 8-K filed on April 20, 2004, File No. 000-22616)
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.24 |  | High Yield Intercreditor Deed among NTL Cable PLC as Issuer, NTL Investment Holdings Limited as Borrower and as High Yield Guarantor, Credit Suisse First Boston as Facility Agent and Bank Group Security Trustee, The Bank of New York as High Yield
Trustee, the Senior Lenders named therein, the Intergroup Debtor named therein and the Intergroup Creditor named therein (Incorporated by reference to Exhibit 99.2 to the Current Report on Form 8-K filed on April 20, 2004,
File No. 000-22616)                                                                                                                                                                                                                                                      
|10.25 |  | Restricted Stock Agreement, dated as of May 6, 2004 between NTL Incorporated and James F. Mooney (Incorporated by reference to Exhibit 10.25 to the Annual Report on Form 10-K filed on March 16, 2005, File No. 000-22616)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.26 |  | NTL Group 2005 Bonus Scheme (Incorporated by reference to Appendix B to the Proxy Statement filed on April 5, 2005, File No. 000-22616)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.27 |  | Service Agreement between ntl Group Limited and Neil Berkett, dated as of August 11, 2005 (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on August 17, 2005,
File No. 000-22616).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.28 |  | Form of Non-Qualified Stock Option Notice (to be used for Mr. Gale) (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on May 4, 2005, File No. 000-22616).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.29 |  | Form of Incentive Stock Option Notice (to be used for Mr. Hall) (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on May 4, 2005, File No. 000-22616).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.30 |  | Form of Restricted Stock Unit Agreement (to be used for Mr. Gale and Mr. Hall) (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed on May 4, 2005, File No. 000-22616).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.31 |  | Employment Agreement, dated as of December 15, 2005, by and between NTL Incorporated and Stephen A. Burch (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on December 21, 2005,
File No. 000-22616).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.32 |  | Amendment to Nonqualified Stock Option Agreement, dated as of December 17, 2005, by and between NTL Incorporated and Simon Duffy (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed on December 21,
2005, File No. 000-22616).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|10.33 |  | Letter Agreement, dated as of December 15, 2005, by and between NTL Incorporated and Simon Duffy (Incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed on December 21, 2005,
File No. 000-22616).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|12.1* |  | Computation of Ratio of Earnings to Fixed Charges                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|14.1  |  | Code of Ethics (Incorporated by reference to Exhibit 14.1 to the Annual Report on Form 10-K filed on March 11, 2004, File No. 000-22616)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

83

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|21.1  |  | List of subsidiaries of the registrant (Incorporated by reference to Exhibit 21.1 to the Annual Report on Form 10-K/A filed on September 8, 2005, File No. 000-22616)         
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|23.1* |  | Consent of Ernst & Young LLP                                                                                                                                                  
|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* |  | Certification of Chief Executive Officer and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

---

84

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

Dated:
February 28, 2006

| |  | NTL INCORPORATED
| |  | ----------------
| |  | By:             

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on
the dates indicated.

|Name                                      |  | Title                     |  | Date             
|----------------------------------------- |  | ------------------------- |  | -----------------
|                                          |  |                           |  |                  
|/s/STEPHEN A. BURCHStephen A. Burch       |  | Chief Executive Officer   |  | February 28, 2006
|/s/JACQUES KERRESTJacques Kerrest         |  | Chief Financial Officer   |  | February 28, 2006
|/s/ROBERT C. GALERobert C. Gale           |  | Vice PresidentController |  | February 28, 2006
|/s/JEFFREY D. BENJAMINJeffrey D. Benjamin |  | Director                  |  | February 28, 2006
|/s/SIMON P. DUFFYSimon P. Duffy           |  | Director                  |  | February 28, 2006
|/s/EDWIN M. BANKSEdwin M. Banks           |  | Director                  |  | February 28, 2006
|/s/DAVID ELSTEINDavid Elstein             |  | Director                  |  | February 28, 2006
|                                          |  |                           |  |                  

85

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|/s/WILLIAM R. HUFFWilliam R. Huff         |  | Director |  | February 28, 2006
|----------------------------------------- |  | -------- |  | -----------------
|/s/JAMES F. MOONEYJames F. Mooney         |  | Director |  | February 28, 2006
|/s/GEORGE R. ZOFFINGERGeorge R. Zoffinger |  | Director |  | February 28, 2006
|/s/CHARLES GALLAGHERCharles Gallagher     |  | Director |  | February 28, 2006

86

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FORM 10KItem 15(a)(1) and (2)

NTL INCORPORATED AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS        AND FINANCIAL STATEMENT SCHEDULES

The following consolidated financial statements of NTL Incorporated and Subsidiaries are included in Item 8:



| | Report of Independent Registered Public Accounting Firm                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Consolidated Balance SheetsDecember 31, 2005 and 2004                                                                                                                                                                                 
| | Consolidated Statements of OperationsYears ended December 31, 2005, 2004 and 2003 and January 1, 2003                                                                                                                                 
| | Consolidated Statements of Cash FlowsYears ended December 31, 2005, 2004 and 2003 and January 1, 2003                                                                                                                                 
| | Consolidated Statement of Shareholders' Equity (Deficit)Years ended December 31, 2005, 2004 and 2003                                                                                                                                  
| | Notes to Consolidated Financial Statements                                                                                                                                                                                             
| | The following consolidated financial statement schedules of NTL Incorporated and Subsidiaries are included in Item 15(d):                                                                                                              
| | Schedule ICondensed Financial Information of Registrant                                                                                                                                                                               
| | Schedule IIValuation and Qualifying Accounts                                                                                                                                                                                          
| | All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore have been omitted.
| | The following consolidated financial statements of NTL Investment Holdings Limited and Subsidiaries are included in Item 8:                                                                                                            
| | Report of Independent Registered Public Accounting Firm                                                                                                                                                                                
| | Consolidated Balance SheetsDecember 31, 2005 and 2004                                                                                                                                                                                 
| | Consolidated Statements of OperationsYears ended December 31, 2005, 2004 and 2003 and January 1, 2003                                                                                                                                 
| | Consolidated Statements of Cash FlowsYears ended December 31, 2005, 2004 and 2003 and January 1, 2003                                                                                                                                 
| | Consolidated Statement of Shareholders' Equity (Deficit)Years ended December 31, 2005, 2004 and 2003                                                                                                                                  
| | Notes to Consolidated Financial Statements                                                                                                                                                                                             
| | The following consolidated financial statement schedules of NTL Investment Holdings Limited and Subsidiaries are included in Item 15(d):                                                                                               
| | Schedule IIValuation and Qualifying Accounts                                                                                                                                                                                          

All
other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are
inapplicable and, therefore have been omitted.

F-1

---





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The
Board of Directors and Shareholders
NTL Incorporated

We
have audited the accompanying consolidated balance sheets of NTL Incorporated and subsidiaries as of December 31, 2005 and 2004, and the related consolidated statements of
operations, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2005. Our audits also included the financial statement schedules listed in the
Index at item 15(d). These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of NTL Incorporated and subsidiaries as of
December 31, 2005 and 2004, and the related consolidated statements of operations, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2005,
in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken
as a whole, present fairly in all material respects the information set forth therein.

We
also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of NTL Incorporated's internal control over
financial reporting
as of December 31, 2005, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report
dated February 28, 2006, expressed an unqualified opinion thereon.

Ernst &
Young LLP
London, England
February 28, 2006

F-2

---



NTL INCORPORATED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in millions)

|                                                                              |                                                                                                  | December 31,        
|----------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------ | --------------------
|
|Assets                                                                        |                                                                                                  |                     
|Current assets                                                                |                                                                                                  |                     
|                                                                              | Cash and cash equivalents                                                                        |                     
|                                                                              | Restricted cash                                                                                  |                     
|                                                                              | Marketable securities                                                                            |                     
|                                                                              | Accounts receivabletrade, less allowance for doubtful accounts of £41.7 (2005) and £43.4 (2004) |                     
|                                                                              | Prepaid expenses and other current assets                                                        |                     
|                                                                              | Current assets held for sale                                                                     |                     
|                                                                              |                                                                                                  |                     
|                                                                              |                                                                                                  | Total current assets
|Fixed assets, net                                                             |                                                                                                  | 3,294.9             
|Reorganization value in excess of amounts allocable to identifiable assets    |                                                                                                  | 193.0               
|Customer lists, net                                                           |                                                                                                  | 247.6               
|Other intangible assets, net                                                  |                                                                                                  | 2.4                 
|Investments in and loans to affiliates, net                                   |                                                                                                  |                    
|Other assets, net of accumulated amortization of £32.2 (2005) and £8.0 (2004) |                                                                                                  | 110.9               
|Other assets held for sale                                                    |                                                                                                  |                    
|                                                                              |                                                                                                  |                     
|Total assets                                                                  |                                                                                                  | £4,988.5            
|                                                                              |                                                                                                  |                     

See
accompanying notes.

F-3

---



|                                                 |                                                                                                                                                             | December 31,               |        
|------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | -------
|
|Liabilities and shareholders' equity             |                                                                                                                                                             |                            |        
|Current liabilities                              |                                                                                                                                                             |                            |        
|                                                 | Accounts payable                                                                                                                                            |                            | £      
|                                                 | Accrued expenses and other current liabilities                                                                                                              |                            |        
|                                                 | Interest payable                                                                                                                                            |                            |        
|                                                 | Deferred revenue                                                                                                                                            |                            |        
|                                                 | Current liabilities of discontinued operations                                                                                                              |                            |        
|                                                 | Current portion of long-term debt                                                                                                                           |                            |        
|                                                 |                                                                                                                                                             |                            |        
|                                                 |                                                                                                                                                             | Total current liabilities  |        
|Long-term debt, net of current portion           |                                                                                                                                                             |                            | 2,279.2
|Deferred revenue and other long-term liabilities |                                                                                                                                                             |                            | 134.3  
|Deferred income taxes                            |                                                                                                                                                             |                            | 9.2    
|Long-term liabilities of discontinued operations |                                                                                                                                                             |                            |       
|Minority interest                                |                                                                                                                                                             |                            | 1.0    
|Commitments and contingent liabilities           |                                                                                                                                                             |                            |        
|                                                 |                                                                                                                                                             |                            |        
|Total liabilities                                |                                                                                                                                                             |                            | 3,033.5
|                                                 |                                                                                                                                                             |                            |        
|Shareholders' equity                             |                                                                                                                                                             |                            |        
|                                                 | Preferred stock$.01 par value; authorized 5.0 (2005 and 2004) shares; issued and outstanding none                                                          |                            |        
|                                                 | Common stock$.01 par value; authorized 400.0 (2005 and 2004) shares; issued 88.4 (2005) and 87.7 (2004) and outstanding 85.2 (2005) and 87.7 (2004) shares |                            |        
|                                                 | Additional paid-in capital                                                                                                                                  |                            |        
|                                                 | Treasury stock                                                                                                                                              |                            |        
|                                                 | Unearned stock-based compensation                                                                                                                           |                            |        
|                                                 | Accumulated other comprehensive income (loss)                                                                                                               |                            |        
|                                                 | Accumulated deficit                                                                                                                                         |                            |        
|                                                 |                                                                                                                                                             |                            |        
|                                                 |                                                                                                                                                             | Total shareholders' equity |        
|                                                 |                                                                                                                                                             |                            |        
|Total liabilities and shareholders' equity       |                                                                                                                                                             | £                          | 4,988.5
|                                                 |                                                                                                                                                             |                            |        

See
accompanying notes.

F-4

---



NTL INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)

|                                                                          |                                                                    | Year ended December 31,             |       
|------------------------------------------------------------------------- | ------------------------------------------------------------------ | ----------------------------------- | ------
|
|Revenue                                                                   |                                                                    | £1,947.6                            |       
|Costs and expenses                                                        |                                                                    |                                     |       
|                                                                          | Operating costs (exclusive of depreciation shown separately below) |                                     | (808.3
|                                                                          | Selling, general and administrative expenses                       |                                     | (483.0
|                                                                          | Other charges                                                      |                                     | (24.8 
|                                                                          | Depreciation                                                       |                                     | (541.7
|                                                                          | Amortization                                                       |                                     | (109.5
|                                                                          |                                                                    |                                     |       
|                                                                          |                                                                    | (1,967.3                            | )     
|                                                                          |                                                                    |                                     |       
|Operating loss                                                            |                                                                    | (19.7                               | )     
|Other income (expense)                                                    |                                                                    |                                     |       
|                                                                          | Interest income and other, net                                     |                                     | 29.4  
|                                                                          | Interest expense                                                   |                                     | (235.8
|                                                                          | Loss on extinguishment of debt                                     |                                     | (2.0  
|                                                                          | Share of (losses) income from equity investments                   |                                     |      
|                                                                          | Gains on derivative instruments                                    |                                     | 0.9   
|                                                                          | Foreign currency transaction gains (losses)                        |                                     | 5.3   
|                                                                          |                                                                    |                                     |       
|Loss from continuing operations before income taxes and minority interest |                                                                    | (221.9                              | )     
|Income tax expense                                                        |                                                                    | (18.8                               | )     
|Minority interest expense                                                 |                                                                    | (1.0                                | )     
|                                                                          |                                                                    |                                     |       
|                                                                          | Loss from continuing operations                                    |                                     | (241.7
|                                                                          |                                                                    |                                     |       
|Discontinued operations                                                   |                                                                    |                                     |       
|                                                                          | Income from discontinued operations before income taxes            |                                     | 5.7   
|                                                                          | Income tax expense                                                 |                                     | (0.2  
|                                                                          | Gain on disposal, net of tax                                       |                                     | 657.2 
|                                                                          |                                                                    |                                     |       
|                                                                          |                                                                    | Income from discontinued operations |       
|                                                                          |                                                                    |                                     |       
|Net income (loss)                                                         |                                                                    | £421.0                              |       
|                                                                          |                                                                    |                                     |       
|Basic and diluted loss from continuing operations per common share        |                                                                    | £(2.83                              | )     
|                                                                          |                                                                    |                                     |       
|Basic and diluted income from discontinued operations per common share    |                                                                    | £7.75                               |       
|                                                                          |                                                                    |                                     |       
|Basic and diluted net income (loss) per common share                      |                                                                    | £4.92                               |       
|                                                                          |                                                                    |                                     |       
|Average number of shares outstanding                                      |                                                                    | 85.5                                |       
|                                                                          |                                                                    |                                     |       

See
accompanying notes.

F-5

---



|                                                                               |                                     | January 1,
2003 |        
|------------------------------------------------------------------------------ | ----------------------------------- | --------------- | -------
|
|Gain on debt discharge                                                         |                                     | £5,251.1        |        
|Fresh-start adoptionintangible assets                                         |                                     | 525.9           |        
|Fresh-start adoptionlong-term debt                                            |                                     | 137.5           |        
|Fresh-start adoptiondeferred tax liability                                    |                                     | 16.8            |        
|Fresh-start adoptionaccrued expenses                                          |                                     | (74.8           | )      
|Fresh-start adoptionfixed assets                                              |                                     | (2,195.7        | )      
|Recapitalization expense                                                       |                                     | (5.0            | )      
|                                                                               |                                     |                 |        
|                                                                               | Income from continuing operations   |                 | 3,655.8
|                                                                               |                                     |                 |        
|Fresh-start adoptionintangible assets                                         |                                     | 419.5           |        
|Fresh-start adoptiondeferred tax liability                                    |                                     | (59.4           | )      
|Fresh-start adoptionfixed assets                                              |                                     | 210.7           |        
|                                                                               |                                     |                 |        
|                                                                               | Income from discontinued operations |                 | 570.8  
|                                                                               |                                     |                 |        
|Net income                                                                     |                                     | £4,226.6        |        
|                                                                               |                                     |                 |        
|Pro forma basic and diluted income from continuing operations per common share |                                     | £61.44          |        
|                                                                               |                                     |                 |        
|Pro forma basic and diluted net income per common share                        |                                     | £71.04          |        
|                                                                               |                                     |                 |        
|Pro forma average number of shares outstanding                                 |                                     | 59.5            |        
|                                                                               |                                     |                 |        

See
accompanying notes.

F-6

---



NTL INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

|                                                                                                        |                                                                    | Year ended December 31,                             |        
|------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------ | --------------------------------------------------- | -------
|
|Operating activities                                                                                    |                                                                    |                                                     |        
|Net income (loss)                                                                                       |                                                                    | £421.0                                              |        
|Income from discontinued operations                                                                     |                                                                    | (662.7                                              | )      
|                                                                                                        |                                                                    |                                                     |        
|Loss from continuing operations                                                                         |                                                                    | (241.7                                              | )      
|Adjustments to reconcile net income (loss) to net cash provided by operating activities:                |                                                                    |                                                     |        
|                                                                                                        | Depreciation and amortization                                      |                                                     | 651.2  
|                                                                                                        | Non-cash compensation                                              |                                                     | 9.8    
|                                                                                                        | Share of income from equity investments                            |                                                     |       
|                                                                                                        | Deferred income taxes                                              |                                                     | 20.8   
|                                                                                                        | Loss on extinguishment of debt                                     |                                                     | 2.0    
|                                                                                                        | Amortization of original issue discount and deferred finance costs |                                                     | 24.2   
|                                                                                                        | Minority interest expense                                          |                                                     | 1.0    
|                                                                                                        | Other                                                              |                                                     |       
|Changes in operating assets and liabilities, net of effect from business acquisitions and dispositions: |                                                                    |                                                     |        
|                                                                                                        | Marketable securities                                              |                                                     | (79.3  
|                                                                                                        | Accounts receivable                                                |                                                     | 15.5   
|                                                                                                        | Prepaid expenses and other current assets                          |                                                     | (13.3  
|                                                                                                        | Other assets                                                       |                                                     | (1.0   
|                                                                                                        | Accounts payable                                                   |                                                     | 45.5   
|                                                                                                        | Accrued expenses and other current liabilities                     |                                                     | (26.7  
|                                                                                                        | Deferred revenue and other long-term liabilities                   |                                                     | (82.4  
|                                                                                                        |                                                                    |                                                     |        
|Net cash provided by operating activities                                                               |                                                                    | 325.6                                               |        
|                                                                                                        |                                                                    |                                                     |        
|Investing activities                                                                                    |                                                                    |                                                     |        
|                                                                                                        | Purchase of fixed assets                                           |                                                     | (288.1 
|                                                                                                        | Investments in and loans to affiliates                             |                                                     | 0.7    
|                                                                                                        | Proceeds from sale of assets                                       |                                                     | 2.6    
|                                                                                                        | Acquisitions, net of cash acquired                                 |                                                     |       
|                                                                                                        | Decrease in restricted cash                                        |                                                     | 12.4   
|                                                                                                        | Proceeds from the sale of broadcast operations, net                |                                                     | 1,229.0
|                                                                                                        | Proceeds from the sale of Ireland operations, net                  |                                                     | 216.2  
|                                                                                                        |                                                                    |                                                     |        
|                                                                                                        |                                                                    | Net cash provided by (used in) investing activities |        
|                                                                                                        |                                                                    |                                                     |        

See
accompanying notes.

F-7

---



|                                                                        |                                                     | Year ended December 31,                             |       
|----------------------------------------------------------------------- | --------------------------------------------------- | --------------------------------------------------- | ------
|
|Financing activities                                                    |                                                     |                                                     |       
|                                                                        | Proceeds from borrowings, net of financing costs    |                                                     | £    
|                                                                        | Net proceeds from rights offering                   |                                                     |      
|                                                                        | Proceeds from employee stock options                |                                                     | 5.0   
|                                                                        | Purchase of stock                                   |                                                     | (114.0
|                                                                        | Principal payments on long-term debt                |                                                     | (786.6
|                                                                        |                                                     |                                                     |       
|                                                                        |                                                     | Net cash (used in) provided by financing activities |       
|                                                                        |                                                     |                                                     |       
|Cash flow from discontinued operations                                  |                                                     |                                                     |       
|Net cash (used) provided by operating activities                        |                                                     | (14.3                                               | )     
|Net cash used in investing activities                                   |                                                     | (4.1                                                | )     
|                                                                        |                                                     |                                                     |       
|                                                                        | Net cash (used) provided by discontinued operations |                                                     | (18.4 
|                                                                        |                                                     |                                                     |       
|Effect of exchange rate changes on cash and cash equivalents            |                                                     | 25.6                                                |       
|Increase (decrease) in cash and cash equivalents                        |                                                     | 610.0                                               |       
|Cash and cash equivalents at beginning of year                          |                                                     | 125.2                                               |       
|                                                                        |                                                     |                                                     |       
|Cash and cash equivalents at end of year                                |                                                     | £735.2                                              |       
|                                                                        |                                                     |                                                     |       
|Supplemental disclosure of cash flow information                        |                                                     |                                                     |       
|Cash paid during the year for interest exclusive of amounts capitalized |                                                     | £216.8                                              |       
|Income taxes paid                                                       |                                                     | 2.2                                                 |       

|                                                 |                                           | January 1
2003 |       
|------------------------------------------------ | ----------------------------------------- | -------------- | ------
|
|Net cash used in operating activities            |                                           | £              | (29.1 
|Investing activities                             |                                           |                |       
|Decrease in other assets                         |                                           |                | 101.2 
|                                                 |                                           |                |       
|                                                 | Net cash provided by investing activities |                |       
|                                                 |                                           |                |       
|Financing activities                             |                                           |                |       
|Proceeds from borrowings, net of financing costs |                                           |                | 246.2 
|Principal payments                               |                                           |                | (232.1
|                                                 |                                           |                |       
|                                                 | Net cash provided by financing activities |                |       
|                                                 |                                           |                |       
|Increase in cash and cash equivalents            |                                           |                | 86.2  
|Cash and cash equivalents, beginning of period   |                                           |                | 311.9 
|                                                 |                                           |                |       
|Cash and cash equivalents, end of period         |                                           | £              | 398.1 
|                                                 |                                           |                |       

See
accompanying notes.

F-8

---



NTL INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)

(in millions)

|                                                         |  | Series
Preferred Stock
$.01 Par Value |  | Common Stock
$.01 Par Value |   |  |      |  |   |     | 
|-------------------------------------------------------- |  | ------------------------------------- |  | --------------------------- | - |  | ---- |  | - | --- | 
|
|
|Balance, December 31, 2002                               |  |                                      |  | £                           |  |  |     |  | £ |    | 
|Comprehensive income:                                    |  |                                       |  |                             |   |  |      |  |   |     | 
|Net income January 1, 2003                               |  |                                      |  |                             |  |  |     |  |   |    | 
|Issuance of common stock                                 |  |                                      |  |                             |  |  | 50.5 |  |   | 0.3 | 
|Fresh-start adoptionother                               |  |                                      |  |                             |  |  |     |  |   |    | 
|                                                         |  |                                       |  |                             |   |  |      |  |   |     | 
|Reorganized company                                      |  |                                       |  |                             |   |  |      |  |   |     | 
|Balance, January 1, 2003                                 |  |                                      |  | £                           |  |  | 50.5 |  | £ | 0.3 | 
|Issuance of shares into escrow                           |  |                                      |  |                             |  |  | 0.1  |  |   |    | 
|Issuance of restricted stock                             |  |                                      |  |                             |  |  | 0.2  |  |   |    | 
|Issuance of shares as payment of bonus                   |  |                                      |  |                             |  |  |     |  |   |    | 
|Exercise of stock options                                |  |                                      |  |                             |  |  | 0.2  |  |   |    | 
|Stock options at fair value                              |  |                                      |  |                             |  |  |     |  |   |    | 
|Escrow shares amortized to operations                    |  |                                      |  |                             |  |  |     |  |   |    | 
|Restricted stock amortized to operations                 |  |                                      |  |                             |  |  |     |  |   |    | 
|Stock options amortized to operations                    |  |                                      |  |                             |  |  |     |  |   |    | 
|Net proceeds from rights offering                        |  |                                      |  |                             |  |  | 35.9 |  |   | 0.2 | 
|Comprehensive loss:                                      |  |                                       |  |                             |   |  |      |  |   |     | 
|Net loss for the year ended December 31, 2003            |  |                                      |  |                             |  |  |     |  |   |    | 
|Currency translation adjustment                          |  |                                      |  |                             |  |  |     |  |   |    | 
|Pension liability adjustment                             |  |                                      |  |                             |  |  |     |  |   |    | 
|                                                         |  |                                       |  |                             |   |  |      |  |   |     | 
|Balance, December 31, 2003                               |  |                                      |  | £                           |  |  | 86.9 |  | £ | 0.5 | 
|Exercise of stock options                                |  |                                      |  |                             |  |  | 0.7  |  |   |    | 
|Stock option grants at fair value                        |  |                                      |  |                             |  |  |     |  |   |    | 
|Repurchase of restricted stock                           |  |                                      |  |                             |  |  |     |  |   |    | 
|Issuance of restricted stock                             |  |                                      |  |                             |  |  | 0.1  |  |   |    | 
|Issuance of shares                                       |  |                                      |  |                             |  |  |     |  |   |    | 
|Performance related bonus plans                          |  |                                      |  |                             |  |  |     |  |   |    | 
|Restricted stock amortized to operations                 |  |                                      |  |                             |  |  |     |  |   |    | 
|Issuance of stock amortized to operations                |  |                                      |  |                             |  |  |     |  |   |    | 
|Stock options amortized to operations                    |  |                                      |  |                             |  |  |     |  |   |    | 
|Performance related stock awards amortized to operations |  |                                      |  |                             |  |  |     |  |   |    | 
|Comprehensive loss:                                      |  |                                       |  |                             |   |  |      |  |   |     | 
|Net loss for the year ended December 31, 2004            |  |                                      |  |                             |  |  |     |  |   |    | 
|Currency translation adjustment                          |  |                                      |  |                             |  |  |     |  |   |    | 
|Net unrealized losses on derivative instruments          |  |                                      |  |                             |  |  |     |  |   |    | 
|Pension liability adjustment                             |  |                                      |  |                             |  |  |     |  |   |    | 
|                                                         |  |                                       |  |                             |   |  |      |  |   |     | 
|Balance, December 31, 2004                               |  |                                      |  | £                           |  |  | 87.7 |  | £ | 0.5 | 
|Exercise of stock options and tax effect                 |  |                                      |  |                             |  |  | 0.7  |  |   |    | 
|Stock option grants at fair value                        |  |                                      |  |                             |  |  |     |  |   |    | 
|Purchase of shares                                       |  |                                      |  |                             |  |  |     |  |   |    | 
|Restricted stock amortized to operations                 |  |                                      |  |                             |  |  |     |  |   |    | 
|Issuance of stock amortized to operations                |  |                                      |  |                             |  |  |     |  |   |    | 
|Stock options amortized to operations                    |  |                                      |  |                             |  |  |     |  |   |    | 
|Performance related stock awards amortized to operations |  |                                      |  |                             |  |  |     |  |   |    | 
|Comprehensive income:                                    |  |                                       |  |                             |   |  |      |  |   |     | 
|Net income for the year ended December 31, 2005          |  |                                      |  |                             |  |  |     |  |   |    | 
|Currency translation adjustment                          |  |                                      |  |                             |  |  |     |  |   |    | 
|Net unrealized gains on derivatives                      |  |                                      |  |                             |  |  |     |  |   |    | 
|Pension liability adjustment                             |  |                                      |  |                             |  |  |     |  |   |    | 
|                                                         |  |                                       |  |                             |   |  |      |  |   |     | 
|Balance, December 31, 2005                               |  |                                      |  | £                           |  |  | 88.4 |  | £ | 0.5 | 
|                                                         |  |                                       |  |                             |   |  |      |  |   |     | 

See accompanying notes.

F-9

---



|                                                         |       |   |         | Accumulated Other
Comprehensive Income (Loss) |   |        |   |   |      
|-------------------------------------------------------- | ----- | - | ------- | --------------------------------------------- | - | ------ | - | - | -----
|
|Balance, December 31, 2002                               |       |   |         |                                               | £ | 135.6  |   | £ | (64.4
|Comprehensive income:                                    |       |   |         |                                               |   |        |   |   |      
|Net income January 1, 2003                               |       | £ | 4,226.6 |                                               |   |       |   |   |     
|                                                         |       |   |         |                                               |   |        |   |   |      
|Issuance of common stock                                 |       |   |         |                                               |   |       |   |   |     
|Fresh-start adoptionother                               |       |   |         |                                               |   | (135.6 | ) |   | 64.4 
|                                                         |       |   |         |                                               |   |        |   |   |      
|Reorganized company                                      |       |   |         |                                               |   |        |   |   |      
|Balance, January 1, 2003                                 |       |   |         |                                               |   |       |   |   |     
|Issuance of shares into escrow                           |       |   |         |                                               |   |       |   |   |     
|Issuance of restricted stock                             |       |   |         |                                               |   |       |   |   |     
|Issuance of shares as payment of bonus                   |       |   |         |                                               |   |       |   |   |     
|Exercise of stock options                                |       |   |         |                                               |   |       |   |   |     
|Stock options at fair value                              |       |   |         |                                               |   |       |   |   |     
|Escrow shares amortized to operations                    |       |   |         |                                               |   |       |   |   |     
|Restricted stock amortized to operations                 |       |   |         |                                               |   |       |   |   |     
|Stock options amortized to operations                    |       |   |         |                                               |   |       |   |   |     
|Net proceeds from rights offering                        |       |   |         |                                               |   |       |   |   |     
|Comprehensive loss:                                      |       |   |         |                                               |   |        |   |   |      
|Net loss for the year ended December 31, 2003            |       | £ | (584.8  | )                                             |   |       |   |   |     
|Currency translation adjustment                          |       |   | 20.5    |                                               |   | 20.5   |   |   |     
|Pension liability adjustment                             |       |   | (0.4    | )                                             |   |       |   |   | (0.4 
|                                                         |       |   |         |                                               |   |        |   |   |      
|                                                         | Total |   | £       | (564.7                                        | ) |        |   |   |      
|                                                         |       |   |         |                                               |   |        |   |   |      
|Balance, December 31, 2003                               |       |   |         |                                               |   | 20.5   |   |   | (0.4 
|Exercise of stock options                                |       |   |         |                                               |   |       |   |   |     
|Stock option grants at fair value                        |       |   |         |                                               |   |       |   |   |     
|Repurchase of restricted stock                           |       |   |         |                                               |   |       |   |   |     
|Issuance of restricted stock                             |       |   |         |                                               |   |       |   |   |     
|Issuance of shares                                       |       |   |         |                                               |   |       |   |   |     
|Performance related bonus plans                          |       |   |         |                                               |   |       |   |   |     
|Restricted stock amortized to operations                 |       |   |         |                                               |   |       |   |   |     
|Issuance of stock amortized to operations                |       |   |         |                                               |   |       |   |   |     
|Stock options amortized to operations                    |       |   |         |                                               |   |       |   |   |     
|Performance related stock awards amortized to operations |       |   |         |                                               |   |       |   |   |     
|Comprehensive loss:                                      |       |   |         |                                               |   |        |   |   |      
|Net loss for the year ended December 31, 2004            |       | £ | (484.9  | )                                             |   |       |   |   |     
|Currency translation adjustment                          |       |   | (3.7    | )                                             |   | (3.7   | ) |   |     
|Net unrealized losses on derivative instruments          |       |   | (24.0   | )                                             |   |       |   |   |     
|Pension liability adjustment                             |       |   | (1.7    | )                                             |   |       |   |   | (1.7 
|                                                         |       |   |         |                                               |   |        |   |   |      
|                                                         | Total |   | £       | (514.3                                        | ) |        |   |   |      
|                                                         |       |   |         |                                               |   |        |   |   |      
|Balance, December 31, 2004                               |       |   |         |                                               |   | 16.8   |   |   | (2.1 
|Exercise of stock options                                |       |   |         |                                               |   |       |   |   |     
|Stock option grants at fair value                        |       |   |         |                                               |   |       |   |   |     
|Purchase of shares                                       |       |   |         |                                               |   |       |   |   |     
|Restricted stock amortized to operations                 |       |   |         |                                               |   |       |   |   |     
|Issuance of stock amortized to operations                |       |   |         |                                               |   |       |   |   |     
|Stock options amortized to operations                    |       |   |         |                                               |   |       |   |   |     
|Performance related stock awards amortized to operations |       |   |         |                                               |   |       |   |   |     
|Comprehensive income:                                    |       |   |         |                                               |   |        |   |   |      
|Net income for the year ended December 31, 2005          |       | £ | 421.0   |                                               |   |       |   |   |     
|Currency translation adjustment                          |       |   | 47.7    |                                               |   | 47.7   |   |   |     
|Net unrealized gains on derivative instruments           |       |   | 23.2    |                                               |   |       |   |   |     
|Pension liability adjustment                             |       |   | (16.1   | )                                             |   |       |   |   | (16.1
|                                                         |       |   |         |                                               |   |        |   |   |      
|                                                         | Total |   | £       | 475.8                                         |   |        |   |   |      
|                                                         |       |   |         |                                               |   |        |   |   |      
|Balance, December 31, 2005                               |       |   |         |                                               | £ | 64.5   |   | £ | (18.2
|                                                         |       |   |         |                                               |   |        |   |   |      

See accompanying notes.

F-10

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NTL INCORPORATED AND SUBSIDIARIES        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    Organization and Business

(a)   Historical Structure of the Company

NTL Incorporated, or the Company, is a Delaware corporation and is publicly-traded on the NASDAQ National Market in the United States. The Company's historical
structure is as follows:

The
Company was incorporated in 1993 as a Delaware corporation and continued as a publicly-traded holding company until February 1999. From February 1999 until
January 10, 2003, the Company was a wholly-owned subsidiary of NTL (Delaware), Inc., a Delaware corporation, which was incorporated in February 1999, to effect a reorganization
into a holding company structure. The holding company structure was implemented to pursue opportunities outside of the UK and Ireland, and was accomplished through a merger. The Company's stockholders
at the time became stockholders of the new holding company, NTL (Delaware), Inc., and the Company became a wholly-owned subsidiary of the new holding company. The new holding company took the
name NTL Incorporated until May 2000 when it was changed to NTL (Delaware), Inc., its current name.

In
May 2000 another new holding company structure was implemented in connection with the acquisition of the residential assets of Cable & Wireless Communications plc, or
CWC (the operations acquired from CWC are called ConsumerCo), and was similarly accomplished through a merger. The stockholders of NTL (Delaware), Inc. became stockholders of the new holding
company, and NTL (Delaware), Inc. became a subsidiary of the new holding company, and the Company remained a
subsidiary of NTL (Delaware), Inc., referred to in this annual report as NTL Delaware. The new holding company then took the name NTL Incorporated, which remained its name until
January 10, 2003, at which time its name was changed to NTL Europe, Inc., referred to in this annual report as NTL Europe. On February 21, 2001, NTL Europe contributed the assets
of ConsumerCo to the Company.

On
January 10, 2003, the Company emerged from reorganization under Chapter 11 of the United States Bankruptcy Code. Pursuant to the plan of reorganization, which is referred to as
the Plan, the Company's former parent, NTL Europe, Inc., and its subsidiaries and affiliates were split into two separate groups, with the Company and NTL Europe each emerging as independent
public companies. The Company was renamed "NTL Incorporated" and became the holding company for the former NTL group's principal UK and Ireland assets. NTL Europe became the holding company for the
former NTL group's continental European and various other assets. All of the outstanding securities of NTL Europe and some of its subsidiaries, including the Company, were cancelled. The Company
issued shares of its common stock and Series A warrants and NTL Europe issued shares of its common stock and preferred stock to various former creditors and stockholders. As a result, the
Company is no longer affiliated with NTL Europe. NTL Europe has since changed its name to PTV, Inc..

The
Company conducts its operations through direct and indirect wholly-owned subsidiaries.

(b)   Business

The Company is one of the leading communications and content distribution companies in the UK, providing broadband internet access, telephone and television
services to residential customers. The Company also provides internet and telephone services to residential customers who are not connected to its cable network, via access to other companies'
telecommunications networks and via an internet service provider operated by its subsidiary, Virgin Net Limited. The Company offers what it refers to as a "triple play" bundle of internet, telephone
and television services through competitively-priced bundled packages. The Company also provides a range of voice services to businesses and public

F-11

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sector
organizations as well as a variety of data communications solutions from high speed internet access to fully managed business communications networks and communication transport services.

The
Company's services are delivered through its wholly-owned local access communications network. The design and capability of the Company's network provides it with the ability to
offer "triple play" bundled services to residential consumers and a broad portfolio of reliable, competitive communications solutions to business customers.

The
Company provides services to two categories of customers: residential customers and business customers as follows:



2.     Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States.

The
Company operated its business as a debtor-in-possession subject to the jurisdiction of the Bankruptcy Court during the period from May 8, 2002 until
January 10, 2003. Accordingly, the Company's consolidated financial statements for periods prior to its emergence from Chapter 11 reorganization were prepared in accordance with the American
Institute of Certified Public Accountants Statement of Position 90-7,Financial Reporting by Entities in Reorganization Under the Bankruptcy
Code("SOP 90-7"). In addition, the Company adopted fresh-start reporting as of January 1, 2003 upon its emergence from Chapter 11 reorganization in
accordance with SOP 90-7.

Pursuant
to fresh-start reporting, a new entity was deemed created for financial reporting purposes and the carrying values of assets and liabilities were adjusted. The carrying values
of assets were adjusted to their reorganization values that are equivalent to their estimated fair values. The carrying values of liabilities were adjusted to their present values. The term
"Predecessor Company" refers to the Company and its subsidiaries for periods prior to and including December 31, 2002. The term
"Reorganized Company" refers to the Company and its subsidiaries for periods subsequent to January 1, 2003. The effects of the consummation of the Plan as well as adjustments for fresh-start
reporting recorded as of January 1, 2003 are Predecessor Company transactions and are presented in the accompanying consolidated statements of operations and cash flows dated January 1,
2003. All other results of operations and cash flows on January 1, 2003 are Reorganized Company transactions.

On
December 1, 2004, the Company reached an agreement for the sale of its broadcast operations. The sale completed on January 31, 2005. As of December 31, 2004, the
broadcast operations are accounted for as a discontinued operation and the assets and liabilities of the broadcast operations are reclassified as assets held-for-sale and the
liabilities of discontinued operations, respectively, and broadcast's results of operations have been removed from the Company's results of continuing operations for all periods presented in this
Annual Report. The results of operations of broadcast have

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been
excluded from the components of "Loss from Continuing Operations" and shown under the caption "Income from Discontinued Operations" in the Statements of Operations.

On
May 9, 2005, the Company sold its operations in the Republic of Ireland. The Company has restated its financial statements to account for the Ireland operations as a
discontinued operation. The assets and liabilities of the Ireland operations are reclassified as assets held-for-sale and liabilities of discontinued operations, respectively,
and the results of operations have been removed from the Company's results of continuing operations for all periods presented in this Annual Report. The results of operations of the Ireland operations
have been excluded from the components of "Loss from Continuing Operations" and shown under the caption "Income from Discontinued Operations" in the Statements of Operations.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and accompanying notes. Such estimates and assumptions impact, among others, the following: the amount of uncollectible
accounts and notes receivable, the amount to be paid to terminate certain agreements included in restructuring costs, amounts accrued for vacated properties, the amount to be paid for other
liabilities, the Company's pension expense and pension funding requirements, amounts to be paid under the Company's employee incentive plans, costs for interconnection, the amount of costs to be
capitalized in connection with the construction and installation of the Company's network and facilities, long-lived assets, certain other intangible assets and the computation of the
Company's income tax expense and liability. Actual results could differ from those estimates.

Fair Values

The Company has determined the estimated fair value amounts presented in these consolidated financial statements using available market information and
appropriate methodologies. However, considerable judgment is required in interpreting market data to develop the estimates of fair value. The estimates presented in these consolidated financial
statements are not necessarily indicative of the amounts that the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a
material effect on the estimated fair value amounts. The Company has based these fair value estimates on pertinent information available to it as of December 31, 2005 and 2004.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and entities where the Company's interest is greater than
50%. Intercompany accounts and transactions have been eliminated on consolidation.

Reclassification

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

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Foreign Currency Translation

The functional currency of the Company is the pound sterling. Exchange gains and losses on translation of the Company's net equity investments in subsidiaries are
reported as a separate component of accumulated other comprehensive income (loss) in shareholders' equity. Foreign currency transaction gains and losses are recorded in the statement of operations.

Cash Equivalents and Restricted Cash

Cash equivalents are short-term highly liquid investments purchased with an original maturity of three months or less. Cash equivalents were
£nil and £23.9 million at December 31, 2005 and 2004, respectively. Cash equivalents at December 31, 2004 consisted primarily of bank term deposits and
corporate commercial paper, all of which were denominated in U.S. dollars.

Restricted
cash balances of £3.4 million and £15.8 million as at December 31, 2005 and 2004, respectively represent cash balances
collateralized against performance bonds given on behalf of the Company.

Trade Receivables

The Company's trade receivables are stated at outstanding principal balance, net of allowance for doubtful accounts. Allowances for doubtful accounts are
estimated based on the current aging of trade receivables, prior collection experience and future expectations of conditions that might impact recoverability. The allowance for doubtful accounts is
£41.7 million at December 31, 2005 and £43.4 million at December 31, 2004.

Concentrations of Credit Risk

The Company's financial instruments that are exposed to concentrations of credit risk consist primarily of cash equivalents and trade receivables. The Company's
cash equivalents are in high quality securities placed with major banks and financial institutions. Concentrations of credit risk with respect to trade receivables are limited because of the large
number of customers and their dispersion across geographic areas. The Company performs periodic credit evaluations of its Business customers' financial condition and generally does not require
collateral. At December 31, 2005, the Company did not have significant credit risk concentrations. No single group or customer represents greater than 10% of total accounts receivable.

Fixed Assets

Fixed assets, net totaled £3,294.9 million and £3,531.6 million, representing 66.0% and 64.3% of total assets at
December 31, 2005 and 2004, respectively.

The
cost of fixed assets includes amounts capitalized for labor and overhead expended in connection with the design and installation of the Company's operating network equipment and
facilities. Costs associated with initial customer installations, additions of network equipment necessary to enable enhanced services, acquisition of additional fixed assets and replacement of
existing fixed assets are capitalized. The costs of reconnecting the same service to a previously installed premise are charged to expense in the period incurred. Costs for repairs and maintenance are
charged to expense as incurred.

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Labor
and overhead costs directly related to the construction and installation of fixed assets, including payroll and related costs of some employees and related rent and other occupancy
costs, are capitalized. The payroll and related costs of some employees that are directly related to construction and installation activities are capitalized based on specific time devoted to these
activities where identifiable. In cases where the time devoted to these activities is not specifically identifiable, the Company capitalizes costs based upon estimated allocations.

Depreciation
is computed by the straight-line method over the estimated useful lives of the assets. Land and fixed assets held for sale are not depreciated. Estimated useful
lives are as follows:

Operating equipment:Cable distribution plant

830 yearsSwitches and headends

810 yearsCustomer premises equipment

510 yearsOther operating equipment

820 yearsOther equipment:Buildings

30 yearsLeasehold improvements

20 years or, if less, the lease termComputer infrastructure

35 yearsOther equipment

512 years


Intangible Assets

Intangible assets include trademark license agreements and customer lists. Trademark license agreements represent the portion of purchase price allocated to
agreements to license trademarks acquired in business combinations. Trademark licenses are amortized over the period in which the Company expects to derive benefits, which is principally five years.
Customer lists represent the portion of the purchase price allocated to the value of the customer base. Customer lists are amortized on a straight-line basis over the period in which the
Company expects to derive benefits, which is principally three to five years.

In
addition, the Company's total reorganization value exceeded the amounts allocable to identifiable assets resulting in a new indefinite-lived intangible asset as a consequence of
applying fresh-start reporting on January 1, 2003. This amount is not amortized but is reviewed annually (or more frequently under certain conditions) for impairment in accordance with FASB
Statement No. 142,Goodwill and Other Intangible Assets(FAS 142).

Asset Retirement Obligations

The Company accrues for the liability in respect of dilapidation on its leasehold properties over the term of the lease in accordance with FASB Statement
No. 13,Accounting for Leases(FAS 13).

Impairment of Long-Lived Assets

In accordance with FASB Statement No. 144,Impairment of Long-Lived Assets(FAS 144),
long-lived assets, including fixed assets and amortizable definite lived intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. The Company assesses the recoverability of the carrying value of long-lived assets, by first

F-15

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grouping
its long-lived assets with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and
liabilities (the asset group) and, secondly, estimating the undiscounted future cash flows that are directly associated with and expected to arise from the use of and eventual disposition of such
asset group. The Company estimates the undiscounted cash flows over the remaining useful life of the primary asset within the asset group. If the carrying value of the asset group exceeds the
estimated undiscounted cash flows, the Company records an impairment charge to the extent the carrying value of the long-lived asset exceeds its fair value. The Company determines fair
value through quoted market prices in active markets or, if quoted market prices are unavailable, through the performance of internal analysis of discounted cash flows or external appraisals. The
undiscounted and discounted cash flow analyses are based on a number of estimates and assumptions, including the expected period over which the asset will be utilized, projected future operating
results of the asset group, discount rate and long-term growth rate.

As
of December 31, 2005, the Company reviewed its long-lived assets for impairment and determined that there was no impairment of the Company's long-lived
assets as of December 31, 2005.

Deferred Financing Costs

Deferred financing costs of £57.1 million and £77.1 million as of December 31, 2005 and 2004, respectively, are
included in other assets. Deferred financing costs are
incurred in connection with the issuance of debt and are amortized over the term of the related debt using the effective interest method.

Restructuring Costs

As of January 1, 2003, the Company adopted FASB Statement No. 146,Accounting for Costs Associated with Exit or Disposal
Activities(FAS 146) and recognizes a liability for costs associated with restructuring activities when the liability is incurred. The adoption of FAS 146 did not
have a significant effect on the results of operations, financial condition or cash flows of the Company.

Prior
to 2003, the Company recognized a liability for costs associated with restructuring activities at the time of a commitment to restructure is given in accordance with EITF
94-3,Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a
restructuring). Liabilities for costs associated with restructuring activities initiated prior to January 1, 2003 continue to be accounted for under EITF 94-3.

Revenue Recognition

The Company recognizes revenue only when it is realized or realizable and earned. The Company recognizes revenue when all of the following are present:



Revenues
are invoiced and recorded as part of a periodic billing cycle, and are recognized as the services are provided. At the end of each period, adjustments are recorded to defer
revenue relating to services billed in advance and to accrue for earned but unbilled services.

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Advertising Expense

The Company charges the cost of advertising to expense as incurred. Advertising costs were £51.1 million, £42.9 million and
£35.8 million in 2005, 2004 and 2003, respectively.

Stock-Based Compensation

The Company has a number of stock-based employee compensation plans, described more fully in Note 12. The Company accounts for these plans using the fair
value recognition provisions of FASB Statement No. 123,Accounting for Stock-Based Compensation(FAS 123).

Pursuant
to the NTL Group Bonus Schemes, participants are eligible to receive a bonus payment equal to a percentage of their base salary as determined by their level of employment based
upon the attainment of performance targets. Bonus payments are made in two installments. Half of the bonus owing to various participants is payable in cash and the other half may, at the Company's
discretion, be paid in shares of the Company's common stock. These Bonus Schemes are accounted for as stock-based compensation using the fair value recognition provisions of FAS 123.

On
December 16, 2004, the Financial Accounting Standards Board ("FASB") issued Statement No. 123 (revised 2004),Share Based
Payment(FAS 123R), which is a revision of FAS 123. FAS 123R also supersedes APB 25 and amends FASB Statement No. 95, Statement of Cash Flows(FAS 95).
FAS 123R differs from FAS 123, by requiring all entities to measure liabilities incurred in stock
based payment transactions at fair value and to estimate the number of instruments for which the requisite service period is expected to be rendered rather than accounting for forfeitures as they
occur. Under FAS 123R, modifications to the terms or conditions of an award are measured by comparing the fair value of the modified award with the fair value of the award immediately before
the modification, as opposed to measuring the effects of a modification as the difference between the fair value of the modified awarded at the date it is granted and the awards value immediately
before the modification. FAS 123R also clarifies and expands current guidance under FAS 123 including the measurement of fair value, classifying an award as either equity or as a
liability and attributing compensation cost to

F-17

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reporting
periods. FAS 123R amends FAS 95 requiring that the excess tax benefits be reported as a financing cash inflow rather than as a reduction of taxes paid.

FAS 123R
provides two alternatives for adoption: (1) a "modified prospective" method in which compensation cost is recognized for all awards granted subsequent to the
effective date of this statement as well as for the unvested portion of awards outstanding as of the effective date and (2) a "modified retrospective" method which follows the approach in the
"modified prospective" method, but also permits entities to restate prior periods to reflect compensation cost calculated under FAS 123 for pro forma amounts disclosure. The Company adopted
FAS 123R on January 1, 2006 and elected to use the modified prospective method, therefore, prior period results were not restated. The adoption of FAS 123R on January 1,
2006 is not expected to have a material impact.

Pensions

The Company accounts for its defined benefit pension plans using FASB Statement No. 87,Employer's Accounting for
Pensions(FAS 87) and the disclosure rules under FASB Statement No. 132 (revised),Employers Disclosures about Pensions and Other
Postretirement Benefits, an Amendment of FASB Statements 87, 88 and 106(FAS 132R). Under FAS 87, pension expense is recognized on an accrual basis over employees'
approximate service periods. Pension expense calculated under FAS 87 is generally independent of funding decisions or requirements.

The
fair value of the Company's pension plans' assets increased from £193.3 million at December 31, 2004 to £286.5 million at
December 31, 2005. The Company contributed £59.8 million in cash to its defined benefit pension plans in 2005.

The
calculation of pension expense and the Company's pension liability requires the use of a number of assumptions. Changes in these assumptions can result in different expense and
liability amounts, and future actual experience can differ from the assumptions. The Company believes that the two most critical assumptions are the expected long-term rate of return on
plan assets and the assumed discount rate.

When
calculating pension expense for 2005, the Company assumed that its plans' assets would generate a long-term rate of return of approximately 7.1%. This rate is lower than
the assumed rates of between 7.4% and 7.9% used to calculate the 2004 expense. The Company determines its expected long-term rate of return assumption based on historical experience and by
evaluating input from the trustee managing the plan's assets, including the trustee's review of asset class return expectations by several consultants and economists as well as long-term
inflation assumptions. The Company's expected long-term rate of return on plan assets is based on a target allocation of assets, which is based on its goal of earning the highest rate of
return while maintaining risk at acceptable levels. The plan strives to have assets sufficiently diversified so that adverse or unexpected results from one security class will not have an unduly
detrimental impact on the entire portfolio.

The
Company discounted its future pension obligations using a rate of 4.8% at December 31, 2005 and rates of between 4.8% and 5.3% for 2004. The Company determined the appropriate
discount rate based on the current rates earned on long-term bonds that receive one of the two highest ratings given by a recognized rating agency. The pension liability and future pension
expense both increase as the discount rate is reduced.

At
December 31, 2005, the Company has unrecognized actuarial losses of £27.6 million. These losses will be recognized as a component of pension expense in
future years.

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Future
changes in plan asset returns, assumed discount rates and various other factors related to the participants in the Company's pension plans will impact its future pension expense
and liabilities. The Company cannot predict with certainty what these factors will be in the future.

Derivative Financial Instruments

The Company is exposed to various market risks, including changes in foreign currency exchange rates and interest rates. As certain of the Company's indebtedness
accrues interest at variable rates, it has exposure to volatility in future cash flows and earnings associated with variable interest rate payments. Also, a substantial portion of the Company's
revenue and operating costs are earned and paid in pounds sterling and, to a lesser extent, euros, but it pays interest and principal obligations on some of its indebtedness in U.S. dollars. As a
result, the Company has exposure to volatility in future cash flows and earnings associated with changes in foreign currency exchange rates on payments of principal and interest on a portion of its
indebtedness.

The
Company's objective in managing its exposure to fluctuations in interest rates and foreign currency exchange rates is to decrease the volatility of its earnings and cash flows caused
by changes in underlying rates. To achieve this objective, the Company enters into derivative financial instruments. The Company has established policies and procedures to govern the strategic
management of these exposures through a variety of derivative financial instruments, including interest rate swaps, cross-currency interest rate swaps and foreign currency forward rate contracts. By
policy, the Company does not enter into derivative financial instruments with a level of complexity or with a risk that is greater than the exposure to be managed.

In
accordance with FASB Statement No. 133,Accounting for Derivative Instruments and Hedging Activities(FAS 133), the
Company recognizes derivative financial instruments as either assets or liabilities measured at fair value. Gains and losses resulting from changes in fair value are accounted for depending on the use
of the derivative and whether it is designated and qualifies for hedge accounting. To the extent that the derivative instrument is designated and considered to be effective as a cash flow hedge of an
exposure to future changes in interest rates or foreign currency exchange rates, the change in fair value of the instrument is deferred in other comprehensive income. Amounts recorded in other
comprehensive income are reclassified to the income statement to match the corresponding cash flows on the underlying hedged transaction. Changes in fair value of any instrument not designated as a
hedge or considered to be ineffective as a hedge are reported in earnings immediately.

Software Development Costs

The Company capitalizes costs related to computer software developed or obtained for internal use in accordance with SOP 98-1, Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use. Software obtained for internal use has generally been
enterprise-level business and finance software that the Company customizes to meet its specific operational needs. Costs incurred in the application development phase are capitalized and amortized
over their useful lives, which are generally three to five years. The Company has not sold, leased or licensed software developed for internal use to its customers and the Company has no intention of
doing so in the future.

F-19

---



Income Taxes

The Company provides for income taxes in accordance with FASB Statement No. 109,Accounting for Income
Taxes. Judgment is required in determining the Company's provision for income taxes, deferred tax assets and liabilities and the extent to which deferred tax assets can be
recognized. The Company recognizes deferred tax assets only if it is more likely than not that sufficient taxable income will be available in the future against which the temporary differences and
unused tax losses can be utilized. The Company has considered future taxable income and tax planning strategies in assessing whether deferred tax assets should be recognized.

Loss from Continuing Operations Per Share and Net Income (Loss) Per Share

Basic and diluted loss from continuing operations per share and net income (loss) per share are computed by dividing the loss from continuing operations and net
income (loss), respectively, by the average number of shares outstanding during the years ended December 31, 2005, 2004 and 2003. Options to purchase 3.1 million shares at
December 31, 2005 are excluded from the calculation of diluted net loss from continuing operations per share, since the inclusion of such options is anti-dilutive. The average
number of shares outstanding is computed as follows (in millions):

|                                                   |  | Year ended December 31,
|-------------------------------------------------- |  | -----------------------
|
|Number of shares outstanding at start of period(1) |  | 87.6                   
|Issues of common stock                             |  | 0.5                    
|Adjustment for the effect of the rights offering   |  |                       
|Repurchase of stock                                |  | (2.6                   
|                                                   |  |                        
|Average number of shares outstanding               |  | 85.5                   
|                                                   |  |                        

---

The
effect of the rights offering in November 2003 caused the average number of shares outstanding at January 1, 2003 to increase by 9.0 million shares.

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3.     Recent Accounting Pronouncements

In June 2005, the FASB issued FSP FAS 143-1,Accounting for Electronic Equipment Waste
Obligations(FSP 143-1). The FASB issued the FSP to address the accounting for certain obligations associated with the Waste Electrical and Electronic Equipment
Directive adopted by the European Union (EU). FSP 143-1 requires that the commercial user should apply the provisions of FASB Statement No. 143 and the related FASB Interpretation
No. 47 to certain obligations associated with historical waste (as defined by the Directive), since this type of obligation is an asset retirement obligation. The FSP is effective for the later
of the first reporting period ending after June 8, 2005 or the Directive's adoption into law by the applicable EU-member country. As at December 31, 2005, the UK had not
adopted the law. Management intends to evaluate the impact of this law on the Company's results of operations or financial position as and when legislation is adopted in the UK.

4.     Discontinued Operations

BroadcastOn December 1, 2004, the Company reached an agreement to sell its broadcast
operations, a provider of commercial television and radio transmission services, to a consortium led by Macquarie Communications Infrastructure Group. The sale completed on January 31, 2005.
Accordingly, as of December 31, 2004, the Company has accounted for the broadcast operations as discontinued operations. The assets and liabilities of the broadcast operations as at
December 31, 2004 have been reclassified as assets held-for-sale and liabilities of discontinued operations, respectively, and the results of operations of the broadcast
operations have been removed from the Company's results of continuing operations and cash flows for all periods presented in this Annual Report. Revenue of the broadcast operations, reported in
discontinued operations, for the years ended December 31, 2005, 2004 and 2003 was £21.4 million, £277.8 million and £268.6 million,
respectively. Broadcast's pre-tax income, reported within discontinued operations, for the years ended December 31, 2005, 2004 and 2003 was £3.2 million,
£11.2 million and £20.9 million, respectively. Prior year financial statements for 2003 have been restated to present the broadcast operations as discontinued
operations. Subsequent to the completion of the transaction, the Company continues to provide circuit rental services to its former broadcast operations.

IrelandOn May 9, 2005, the Company sold its operations in the Republic of Ireland to MS Irish
Cable Holdings B.V., an affiliate of Morgan Stanley & Co. International Limited, for an aggregate purchase price of €333.4 million, or £225.5 million.
Accordingly, the Company has restated its financial statements as of December 31, 2004 and for the years ended December 31, 2004 and 2003 to account for the Ireland operations as a
discontinued operation. The assets and liabilities of the Ireland operations as at December 31, 2004 have been reclassified as assets held-for-sale and liabilities of
discontinued operations, respectively, and the results of operations and cash flows of the Ireland operations have been removed from the Company's results of continuing operations and cash flows for
all periods presented in this Annual Report. Revenue of the Ireland operations, reported in discontinued
operations, for the years ended December 31, 2005, 2004 and 2003 was £25.6 million, £72.6 million and £72.5 million, respectively.
Ireland's pre-tax income, reported within discontinued operations, for the years ended December 31, 2005, 2004 and 2003 was £2.5 million,
£14.0 million and £1.0 million respectively.

F-21

---





The
assets and liabilities of the broadcast and Ireland operations reported as assets held-for-sale and liabilities of discontinued operations, respectively at
December 31, 2004, include (in millions):

|Current assets held for sale              |  |      
|----------------------------------------- |  | -----
|Accounts receivable, net                  |  | £31.9
|Prepaid expenses and other current assets |  | 18.4 
|                                          |  |      
|                                          |  | £50.3
|                                          |  |      

|Other assets held for sale                                                 |  |        |  
|-------------------------------------------------------------------------- |  | ------ | -
|Fixed assets, net                                                          |  | £525.1 |  
|Reorganization value in excess of amounts allocable to identifiable assets |  | 97.7   |  
|Customer lists, net                                                        |  | 201.3  |  
|Investments in and loans to affiliates, net                                |  | (5.4   | )
|Other assets                                                               |  | 0.7    |  
|                                                                           |  |        |  
|                                                                           |  | £819.4 |  
|                                                                           |  |        |  

|Current liabilities of discontinued operations |  |       
|---------------------------------------------- |  | ------
|Accounts payable                               |  | £21.6 
|Accrued expenses                               |  | 49.4  
|Deferred revenue                               |  | 37.4  
|                                               |  |       
|                                               |  | £108.4
|                                               |  |       

|Long-term liabilities of discontinued operations |  |     
|------------------------------------------------ |  | ----
|Deferred income taxes                            |  | £0.1
|Other long-term liabilities                      |  | 4.1 
|                                                 |  |     
|                                                 |  | £4.2
|                                                 |  |     

5.     Acquisitions and Disposals

In November 2004, the Company acquired Virgin Media Group's remaining ownership interests in Virgin Net Limited together with the remaining interests held
by existing and former management for £23.9 million. The acquisition increased the Company's ownership in Virgin Net Limited from 49% to 100%. Virgin Net Limited provides internet
services through the virgin.net ISP.

On
January 31, 2005, the Company sold its broadcast operations, a provider of commercial television and radio transmission services, to a consortium led by Macquarie
Communications Infrastructure Group. Upon the sale, the Company recorded a gain on disposal of £520.2 million.

On
May 9, 2005, the Company sold its telecommunications operations in the Republic of Ireland to MS Irish Cable Holdings B.V., an affiliate of Morgan Stanley. Upon the sale, the
Company recorded a gain on disposal of £137.0 million, net of tax of £8.5 million.

On
October 2, 2005, the Company entered into an original merger agreement with Telewest Global, Inc., or Telewest, and Merger Sub Inc., a wholly owned subsidiary. On
December 14, 2005, the

F-22

---



Company
and Telewest amended and restated the original merger agreement, which is referred to herein as the merger agreement. Under the merger agreement, Telewest will effect a change of name from
"Telewest Global, Inc." to "NTL Incorporated" and will reclassify each share of Telewest common stock issued and outstanding immediately prior to the effective time of the reclassification into
(i) 0.2875 shares of Telewest new common stock, together with cash in lieu of fractional shares of Telewest new common stock, and (ii) one share of Telewest Class B Redeemable
Common stock, or Telewest redeemable common stock. At the effective time of the merger, (i) each share of Telewest redeemable common stock will be automatically redeemed for $16.25 in cash
without interest and (ii) each share of the Company's common stock issued and outstanding immediately prior to the effective time of the merger will be converted into the right to receive 2.5
shares of Telewest new common stock, together with cash in lieu of fractional shares of Telewest new common stock. The Company expects to account for this transaction as a "reverse acquisition" under
the purchase method of accounting. The merger is subject to certain customary conditions, including approval by stockholders of the Company and of Telewest.

In
connection with the merger agreement, on October 2, 2005, the Company and its wholly owned subsidiary, NTL Investment Holdings Limited, or NTLIH, entered into a commitment
letter and certain other agreements related to the financing of the proposed merger. Such commitments were revised on December 14, 2005.

On
December 5, 2005, the Company confirmed that it had approached Virgin Mobile (UK) Holdings plc, or Virgin Mobile, about a potential offer to combine the Company and Virgin
Mobile, and that it had engaged in discussions with Virgin Enterprises to extend the Company's existing exclusive license for use of the Virgin name in the internet services area also to cover
television and fixed and mobile telephone services.

F-23

---



6.     Fixed Assets

Fixed assets consist of (in millions):

|                         |                             |                           |                                      | December 31, |         
|------------------------ | --------------------------- | ------------------------- | ------------------------------------ | ------------ | --------
|
|
|Operating equipment      |                             |                           |                                      |              |         
|                         | Cable distribution plant    |                           | 830 years                           |              | £3,219.8
|                         | Switches and headends       |                           | 810 years                           |              | 312.4   
|                         | Customer premises equipment |                           | 510 years                           |              | 914.0   
|                         | Other operating equipment   |                           | 820 years                           |              | 65.8    
|                         |                             |                           |                                      |              |         
|                         |                             | Total operating equipment |                                      |              |         
|                         |                             |                           |                                      |              |         
|Other equipment          |                             |                           |                                      |              |         
|                         | Land                        |                           |                                     |              | 4.4     
|                         | Buildings                   |                           | 30 years                             |              | 65.1    
|                         | Leasehold improvements      |                           | 20 years or, if less, the lease term |              | 65.5    
|                         | Computer infrastructure     |                           | 35 years                            |              | 256.1   
|                         | Other equipment             |                           | 512 years                           |              | 63.0    
|                         |                             |                           |                                      |              |         
|                         | Total other equipment       |                           |                                      |              | 454.1   
|                         |                             |                           |                                      |              |         
|                         |                             |                           |                                      | 4,966.1      |         
|Accumulated depreciation |                             |                           |                                      | (1,768.0     | )       
|                         |                             |                           |                                      |              |         
|                         |                             |                           |                                      | 3,198.1      |         
|Construction in progress |                             |                           |                                      | 96.8         |         
|                         |                             |                           |                                      |              |         
|                         |                             |                           |                                      | £3,294.9     |         
|                         |                             |                           |                                      |              |         

7.     Leases

A summary of assets held under capital leases are as follows (in millions).

|                               |  | December 31, |      
|------------------------------ |  | ------------ | -----
|
|Cable distribution plant       |  | £            | 30.1 
|Switches and headends          |  |              | 2.5  
|                               |  |              |      
|                               |  |              | 32.6 
|Less: accumulated depreciation |  |              | (10.6
|                               |  |              |      
|                               |  | £            | 22.0 
|                               |  |              |      

Amortization
of assets held under capital leases is included within the depreciation expense.

F-24

---



Future
minimum annual payments at December 31, 2005 are as follows (in millions). The table reflects the Company's contractual obligations.

|                                         |      | Capital
Leases |      | Operating
Leases
|---------------------------------------- | ---- | -------------- | ---- | ----------------
|Year ended December 31:                  |      |                |      |                 
|                                         | 2006 |                | £4.4 |                 
|                                         | 2007 |                | 4.3  |                 
|                                         | 2008 |                | 4.1  |                 
|                                         | 2009 |                | 4.1  |                 
|                                         | 2010 |                | 4.1  |                 
|Thereafter                               |      | 95.7           |      | 157.0           
|                                         |      |                |      |                 
|Total minimum lease payments             |      | 116.7          |      | 328.9           
|                                         |      |                |      |                 
|Less: amount representing interest       |      | (78.5          | )    |                 
|                                         |      |                |      |                 
|Present value of net minimum obligations |      | 38.2           |      |                 
|Less: current portion                    |      | (0.6           | )    |                 
|                                         |      |                |      |                 
|                                         |      | £37.6          |      |                 
|                                         |      |                |      |                 

Leases
for buildings, offices space and equipment extend through 2034. Total rental expense for the years ended December 31, 2005, 2004, and 2003 under operating leases was
£56.5 million, £70.4 million and £64.7 million respectively.

8.     Intangible Assets

Intangible assets consist of (in millions):

|                                               |                                                                            |                        |  | December 31,
|---------------------------------------------- | -------------------------------------------------------------------------- | ---------------------- |  | ------------
|
|
|Intangible assets not subject to amortization: |                                                                            |                        |  |             
|                                               | Reorganization value in excess of amounts allocable to identifiable assets |                        |  |             
|                                               |                                                                            |                        |  |             
|Intangible assets subject to amortization:     |                                                                            |                        |  |             
|                                               | Cost                                                                       |                        |  |             
|                                               |                                                                            | Non-compete agreements |  | 1 year      
|                                               |                                                                            | Trademark licences     |  | 5 years     
|                                               |                                                                            | Customer lists         |  | 35 years   
|                                               |                                                                            |                        |  |             
|                                               |                                                                            |                        |  | 566.6       
|                                               |                                                                            |                        |  |             
|Accumulated amortization                       |                                                                            |                        |  |             
|                                               | Non-compete agreements                                                     |                        |  |             
|                                               | Trademark licences                                                         |                        |  |             
|                                               | Customer lists                                                             |                        |  |             
|                                               |                                                                            |                        |  |             
|                                               |                                                                            |                        |  | 316.6       
|                                               |                                                                            |                        |  |             
|                                               |                                                                            |                        |  | £250.0      
|                                               |                                                                            |                        |  |             

F-25

---



Estimated
aggregate amortization expense for each of the five succeeding fiscal years from December 31, 2005 is as follows: £106.2 million in 2006,
£105.6 million in 2007, £34.7 million in 2008, £3.5 million in 2009 and £nil in 2010.

The
change in the carrying amount of reorganization value in excess of amounts allocable to identifiable assets during the year ended December 31, 2005 is as follows (in
millions):

|Reorganization value in excess of amounts allocable to identifiable assetsJanuary 1, 2005   |  | £ | 200.7 |  
|-------------------------------------------------------------------------------------------- |  | - | ----- | -
|Adjustment to deferred tax accounts                                                          |  |   | (7.7  | )
|                                                                                             |  |   |      
|Reorganization value in excess of amounts allocable to identifiable assetsDecember 31, 2005 |  | £ | 193.0 |  
|                                                                                             |  |   |      

The
decrease in reorganization value in excess of amounts allocable to identifiable assets during the year ended December 31, 2005 includes a tax charge of £7.7
million that is primarily attributable to the use of deferred tax assets that existed as of January 10, 2003 that were previously offset by a valuation allowance.

9.     Long-Term Debt

Long-term debt consists of (in millions):

|                                      |  | December 31, |  
|------------------------------------- |  | ------------ | -
|
|8.75% US Dollar Senior Notes due 2014 |  | £247.3       |  
|9.75% Sterling Senior Notes due 2014  |  | 375.0        |  
|8.75% Euro Senior Notes due 2014      |  | 155.0        |  
|Floating Rate Senior Notes due 2012   |  |             |  
|Senior credit facility                |  | 1,463.0      |  
|Capital leases                        |  | 38.2         |  
|Other                                 |  | 1.5          |  
|                                      |  |              |  
|                                      |  | 2,280.0      |  
|Less: current portion                 |  | (0.8         | )
|                                      |  |              |  
|                                      |  | £2,279.2     |  
|                                      |  |              |  

The
effective interest rates on the variable interest rate debt were as follows:

|                                    |  | December 31, |  
|----------------------------------- |  | ------------ | -
|
|Floating Rate Senior Notes due 2012 |  | n/a          |  
|Senior credit facility              |  | 6.90         | %

In
April 2004 the Company completed its refinancing transaction from which it raised approximately £3.2 billion of new indebtedness and repaid approximately
£3.0 billion of its existing indebtedness. The refinancing transaction extended the maturities on substantially all of the Company's debt and lowered its weighted average interest
expense. In particular:



F-26

---









The
refinancing transaction resulted in a loss on extinguishment of debt in the year ended December 31, 2004 as follows (in millions):

|Redemption price               |                         |  |          | £3,044.9
|------------------------------ | ----------------------- |  | -------- | --------
|Net carrying amount:           |                         |  |          |         
|                               | Face value              |  | £3,038.5 |         
|                               | Unamortized discount    |  | (92.0    | )       
|                               | Unamortized issue costs |  | (63.8    | )       
|                               |                         |  |          |         
|                               |                         |  |          | 2,882.7 
|                               |                         |  |          |         
|Loss on extinguishment of debt |                         |  |          | £162.2  
|                               |                         |  |          |         

Outstanding Public Notes

The terms of the Senior Notes and senior credit facility as at December 31, 2005 are summarized below.

Senior Notes



Senior credit facility



F-27

---





The
agreements governing the Senior Notes and the senior credit facility significantly restrict the ability of the Company's subsidiaries to transfer funds to the Company in the form of
cash dividends, loans or
advances. In addition, the agreements significantly, and, in some cases, absolutely restrict the Company's ability and the ability of most of its subsidiaries to:



During
2005, 2004 and 2003, the Company recognized £nil, £9.4 million and £36.0 million, respectively, of original issue discount as
interest expense.

F-28

---



Long-term
debt repayments, excluding capital leases, as of December 31, 2005 are due as follows (in millions):

|Year ended December 31: |  |   |        
|----------------------- |  | - | -------
|2006                    |  | £ | 0.3    
|2007                    |  |   | 76.6   
|2008                    |  |   | 135.5  
|2009                    |  |   | 133.2  
|2010                    |  |   | 133.2  
|Thereafter              |  |   | 1,763.0
|                        |  |  
|Total debt payments     |  | £ | 2,241.8
|                        |  |  

On
February 4, 2005 the Company voluntarily prepaid £500 million of principal outstanding under its senior credit facility using the proceeds from the sale of
its broadcast operations. On June 14, 2005 and July 14, 2005 the Company repaid a further £200 million and £23 million, respectively, using the
proceeds from the sale of its Ireland operations. On February 13, 2006, the Company voluntarily prepaid £100 million of principal outstanding. As a consequence, scheduled payments
in 2006 and beyond have reduced. On July 15, 2005 the Company redeemed all of the $100 million principal amount of the Floating Rate Senior Notes due 2012 at a redemption price of 103%
of the principal amount.

In
connection with the merger agreement with Telewest, the Company and NTLIH agreed to a commitment letter with several financial institutions who agreed to arrange and to underwrite the
new credit facilities described below.

The
new credit facilities comprise two separate facilities, (a) a senior secured credit facility in an aggregate principal amount of £3.3 billion, comprising a
£3.2 billion 5-year amortizing term loan facility and a £100 million 5-year multi-currency revolving credit facility, and (b) a
1-year (automatically extendable to a 10-year) senior subordinated bridge facility in an aggregate principal amount of £1.8 billion to be made available to
Neptune Bridge Borrower LLC, a wholly owned subsidiary of Telewest, for the purposes of financing the cash consideration payable pursuant to the merger agreement and paying the related fees, costs and
expenses in connection therewith. In addition, the Company and NTLIH agreed to engage the financial institutions for any take-out financing for the bridge facility. The terms of the
facilities are subject to further amendments prior to the closing of the merger transaction.

The
rate of interest payable under the new senior credit facilities and the revolving facilities is the aggregate, per annum, of LIBOR, plus the applicable interest margin. The
applicable interest margin will be 1.625% per annum for a period of three months following the closing date for the merger with Telewest and thereafter, the applicable interest margin will be
dependent upon the net leverage ratio then in effect.

Principal
under the new senior credit facilities will be subject to repayments each six months beginning on September 30, 2007. The Company will also be required to repay
principal under the new senior credit facilities, subject to certain exceptions, with excess cash flow and proceeds from disposals and debt and equity issuances.

F-29

---



Prior
to the maturity date of the bridge facilities, loans under the bridge facilities will bear interest at a rate per annum equal to the three-month reserve-adjusted Gilt/LIBOR/EURIBOR
plus an initial spread of 600 basis points (such spread being subject to quarterly increases of 50 basis points if the loans are not yet repaid). Notwithstanding the foregoing, the interest rate per
annum payable will not exceed 12.5% in respect of loans under the bridge facilities denominated in pounds sterling and 11.5% in respect of loans under the bridge facilities denominated in Euros or
U.S. dollars.

Hedging Activities

In December of 2005, the Company entered into foreign currency forward rate and collar contracts to purchase approximately $3.2 billion, in exchange for
the forward sale of £1.8 billion, maturing in April 2006. These forward rate and collar contracts are designed to protect the Company against fluctuations in the U.S. dollar
and pounds sterling exchange rates, because the consideration for the stock of Telewest Global, Inc. under the merger agreement is payable in dollars, and the lenders' commitment under the
bridge facility is in pounds sterling.

10.   Derivative Financial Instruments and Hedging Activities

The Company is exposed to various market risks, including changes in foreign currency exchange rates and interest rates. As some of the Company's indebtedness
accrues interest at variable rates, it has exposure to volatility in future cash flows and earnings associated with variable interest rate payments. Also, all of the Company's revenue and
substantially all of its operating costs are earned and paid in pounds sterling and, to a lesser extent, euros, but it pays interest and principal obligations on some of its indebtedness in U.S.
dollars and euros. As a result, the Company has exposure to volatility in future cash flows and earnings associated with changes in foreign currency exchange rates on payments of principal and
interest on a portion of its indebtedness.

The
Company's objective in managing its exposure to fluctuations in interest rates and foreign currency exchange rates is to decrease the volatility of its earnings and cash flows caused
by changes in underlying rates. To achieve this objective, the Company enters into derivative financial instruments. The Company has established policies and procedures to govern the strategic
management of these exposures through a variety of derivative financial instruments, including interest rate swaps, cross-currency interest rate swaps and foreign currency forward rate contracts. By
policy, the Company does not enter into derivative financial instruments with a level of complexity or with a risk that is greater than the exposure to be managed.

In
accordance with FAS 133, the Company recognizes derivative financial instruments as either assets or liabilities measured at fair value. Gains and losses resulting from changes
in fair value are accounted for depending on the use of the derivative and whether it is designated and qualifies for hedge accounting. To the extent that the derivative instrument is designated and
considered to be effective as a cash flow hedge of an exposure to future changes in interest rates or foreign currency exchange rates, the change in fair value of the instrument is deferred in other
comprehensive income. Amounts recorded in other comprehensive income are reclassified to the income statement to match the corresponding cash flows on the underlying hedged transaction. Changes in
fair value of any instrument not designated as a hedge or considered to be ineffective as a hedge are reported in earnings immediately.

F-30

---



The
fair values of the Company's derivative instruments were as follows (in millions):

|                                                                 |                                         | December 31,
|---------------------------------------------------------------- | --------------------------------------- | ------------
|
|Included within other current assets:                            |                                         |             
|                                                                 | Foreign currency forward rate contracts |             
|                                                                 |                                         |             
|Included within other assets:                                    |                                         |             
|                                                                 | Interest rate swaps                     |             
|                                                                 |                                         |             
|Included within other current liabilities:                       |                                         |             
|                                                                 | Foreign currency forward rate contracts |             
|                                                                 |                                         |             
|Included within deferred revenue and other long-term liabilities |                                         |             
|                                                                 | Foreign currency forward rate contracts |             
|                                                                 | Interest rate swaps                     |             
|                                                                 |                                         |             
|                                                                 |                                         | £           
|                                                                 |                                         |             

Interest Rate SwapsHedging of Interest Rate Sensitive Obligations

As of December 31, 2005, the Company had outstanding interest rate swap agreements to manage the exposure to variability in future cash flows on the
interest payments associated with £1,250 million of its outstanding senior credit facility, which accrue at variable rates based on LIBOR. The interest rate swaps allow the Company
to receive interest based on LIBOR in exchange for payments of interest at fixed rates of 5.30% and 5.10%. The interest rate swaps became effective on October 14, 2004 and mature on
April 14, 2007. The net settlement of £5.1 million under these interest rate swaps is included within interest expense for the year ended December 31, 2005.

The
Company had designated these interest rate swaps as cash flow hedges under FAS 133 because they hedged against changes in the amount of future cash flows attributable to
changes in LIBOR. On October 2, 2005, the Company and NTLIH entered into an agreement with several financial institutions to provide financing in connection with the merger agreement with
Telewest Global, Inc. As a result of this agreement, the Company discontinued the hedge designation on October 2, 2005 for the interest rate swaps related to the interest payments on the
senior debt facilities. Net unrealized losses of £16.8 million, which had been included in other comprehensive income, have been reclassified to earnings in the year ended
December 31, 2005. Of this amount, £12.6 million was recognized in gains on derivatives and £4.2 million was recognized in interest expense.

Cross-Currency Interest Rate SwapsHedging the Interest Payments of Senior Notes and senior credit facility

As of December 31, 2005, the Company had outstanding cross-currency interest rate swaps with principal amounts of $820.2 million and
€151.0 million. The Company currently hedges the pound sterling value of interest payments on the U.S. dollar denominated 8.75% Senior Notes due 2014, interest payments on its
U.S. dollar denominated senior credit facility, and the interest payments on its euro denominated senior credit facility. Under these cross-currency swaps, the Company receives interest in U.S.
dollars at a fixed rate of 8.75% and a variable rate based on LIBOR, and in euros at a

F-31

---



variable
rate based on LIBOR, in exchange for payments of interest in pound sterling at a fixed rate of 9.42%, and at variable rate LIBOR based on the pound sterling equivalent of
$820.2 million and €151.0 million. The net settlement of £4.3 million under these cross-currency interest rate swaps is included within interest
expense for the year ended December 31, 2005.

The
Company had designated these cross-currency interest rate swaps as cash flow hedges under FAS 133 because they hedge the changes in the pound sterling value of the interest
payments on its U.S. dollar denominated Senior Notes and U.S. dollar and euro denominated senior credit facility, that result from changes in the U.S. dollar, euro and pound sterling exchange rates.
On October 2, 2005, the Company and NTLIH entered into an agreement with several financial institutions to provide financing in connection with the merger agreement with Telewest
Global, Inc. As a result of this agreement, the Company discontinued the hedge designation on October 2, 2005 for the interest rate swaps related to the interest payments on the senior
debt facilities. Net unrealized losses of £9.1 million, which had been included in other comprehensive income at September 30, 2005, have been reclassified to earnings and
net unrealized gains of £6.7 million have been taken directly to earnings in the final quarter.

Foreign Currency Forward Rate ContractsRelating to the Principal Obligations of the U.S. Dollar Senior Notes and senior credit facility

As of December 31, 2005, the Company had outstanding foreign currency forward rate and collar contracts to purchase $820.2 million and
€151.0 million, maturing in April 2009. These contracts hedge changes in the pound sterling, U.S. dollar and euro value of the principal obligation of the 8.75% Senior
Note due 2014, and variable rate LIBOR senior credit facility, caused by changes in the U.S. dollar, euro and pound sterling exchange rates.

These
foreign currency forward rate contracts are not accounted for as hedges under FAS 133. As such, the contracts are carried at fair value on the Company's balance sheet with
changes in the fair value recognized immediately in the income statement. The forward rate contracts do not subject the Company to material volatility in its earnings and cash flows because changes in
the fair value directionally and partially mitigate the gains or losses on the translation of its U.S. dollar and Euro denominated debt into its functional currency pound sterling in accordance with
FASB Statement No. 52, "Foreign Currency Translation". Changes in fair value of these contracts are reported within foreign exchanges gains
(losses).

Foreign Currency Forward Rate ContractsRelating to the purchase price of Telewest Global Inc

As of December 31, 2005, the Company had outstanding foreign currency forward rate contracts to purchase the US dollar equivalent of
£1.8 billion, maturing in April 2006. These contracts hedge changes in the pound sterling value of the borrowed position of the cash purchase price of Telewest
Global, Inc.

These
foreign currency forward rate and collar contracts are not accounted for as hedges under FAS 133. As such, the contracts are carried at fair value in the Company's balance
sheet with changes in the fair value recognized immediately in the income statement. Changes in fair value of these contracts are reported within foreign exchange gains (losses).

F-32

---



Net
changes in the fair value of the forward rate contracts recognized in loss from continuing operations for the three years ended December 31, 2005 were as follows (in
millions):

|                                                        |  | Year ended December 31,
|------------------------------------------------------- |  | -----------------------
|
|Net gain/(loss) in fair value of forward rate contracts |  | £                      
|                                                        |  |                        

On
February 28, 2006, we settled £500 million of the forward contracts relating to the purchase price of Telewest Global, Inc. resulting in a gain of
£5.2 million compared to a fair value of £12.8 million at December 31, 2005. Subsequent to the year end, the US dollar weakened relative to the pound
sterling and at February 28, 2006, the US dollar to pound sterling exchange rate was approximately 1.7539 compared with a December 31, 2005 rate of 1.7188. Changes in exchange rates will
result in changes in the fair value of forward contracts and foreign currency denominated long-term debt outstanding.

11.   Fair Values of Financial Instruments

The Company in estimating its fair value disclosures for financial instruments used the following methods and assumptions:

Cash and cash equivalents, and restricted cash:The carrying amounts reported in the consolidated balance sheets approximate
fair value.

Marketable securities:The carrying amounts reported in the consolidated balance sheets approximate fair value.

Long-term debt:The carrying amount of the senior credit facility approximates its fair value. The fair values of
the Company's other debt in the following table are based on the quoted market prices.

The
carrying amounts and fair values of the Company's long-term debt are as follows (in millions):

|                                      |  | December 31, 2005 |       | December 31, 2004
|------------------------------------- |  | ----------------- | ----- | -----------------
|
|8.75% US Dollar Senior Notes due 2014 |  | £                 | 247.3 |                  
|9.75% Sterling Senior Notes due 2014  |  |                   | 375.0 |                  
|8.75% Euro Senior Notes due 2014      |  |                   | 155.0 |                  
|Floating Rate Senior Notes due 2012   |  |                   |      |                  

12.   Stock-Based Compensation Plans

At December 31, 2005, the Company has a number of stock-based compensation plans, which are described below. The Company accounts for the fair value of its
grants under these plans in accordance with FAS 123. The compensation cost that has been charged against income for these plans was £9.8 million,
£14.3 million and £7.6 million for 2005, 2004 and 2003, respectively.

F-33

---



Stock Option Plans

The NTL Stock Option Plans are intended to provide incentives to certain employees of the Company and its subsidiaries to foster and promote the
long-term growth and performance of the Company and to better align such employees' interests with the stockholders of the Company. Under the NTL Stock Option Plans, options to purchase up
to 8.6 million shares of the Company's common stock may be granted from time to time to certain employees of the Company and its subsidiaries. Accordingly, the Company has reserved
8.6 million shares of common stock for issuance under the NTL Stock Option Plans.

All
options have a 10 year term and vest and become fully exercisable over a period of 3 to 5 years of continued employment. For the NTL Stock Option Plans, the Company
accounts for these plans under the fair value recognition provisions of FAS 123. Under the prospective method of adoption selected by the Company under the provisions of FAS 148, the
recognition provisions have been applied to all employee stock awards granted, modified, or settled.

The
fair value for these options was estimated at the date of grant using a Black-Scholes option-pricing model with the following weighted-average assumptions for 2005, 2004 and 2003:

|                        |  | Year ended December 31,
|----------------------- |  | -----------------------
|
|Risk-free Interest Rate |  | 4.03%                  
|Expected Dividend Yield |  | 0%                     
|Expected Volatility     |  | 0.745                  
|Expected Lives          |  | 3.578                  

A
summary of the activity and related information of the NTL Stock Option Plans for the years ended December 31 is as follows:

|                               |  | 2005      |   | 2004 |       | 2003
|------------------------------ |  | --------- | - | ---- | ----- | ----
|
|Outstandingbeginning of year  |  | 3,140,977 |   | $    | 22.89 |     
|Granted                        |  | 896,930   |   |      | 64.32 |     
|Exercised                      |  | (632,833  | ) |      | 14.10 |     
|Expired                        |  |          |   |      |      |     
|Forfeited                      |  | (302,569  | ) |      | 17.04 |     
|                               |  |           |   |      |       |     
|Outstandingend of year        |  | 3,102,505 |   | $    | 37.23 |     
|                               |  |           |   |      |       |     
|Exercisable at end of the year |  | 832,943   |   | $    | 24.71 |     
|                               |  |           |   |      |       |     

F-34

---



|                                 |                                                        |  |  | Weighted
Average
Grant Date
Fair Value |   |       |  | Weighted
Average
Grant Date
Fair Value |  |   |       | Weighted
Average
Grant Date
Fair Value
|-------------------------------- | ------------------------------------------------------ |  |  | -------------------------------------- | - | ----- |  | -------------------------------------- |  | - | ----- | --------------------------------------
|Options granted during the year: |                                                        |  |  |                                        |   |       |  |                                        |  |   |       |                                       
|                                 | Exercise price below market price at date of grant     |  |  |                                        | $ |      |  |                                        |  | $ | 62.59 |                                       
|                                 |                                                        |  |  |                                        |   |       |  |                                        |  |   |       |                                       
|                                 | Exercise price equal to market price at date of grant  |  |  |                                        | $ | 23.89 |  |                                        |  | $ | 32.29 |                                       
|                                 |                                                        |  |  |                                        |   |       |  |                                        |  |   |       |                                       
|                                 | Exercise price exceeding market price at date of grant |  |  |                                        | $ |      |  |                                        |  | $ |      |                                       
|                                 |                                                        |  |  |                                        |   |       |  |                                        |  |   |       |                                       

Exercise
prices for options outstanding as of December 31, 2005 are as follows:

|Range of exercise prices |  | Number of options
outstanding |  | Weighted average
exercise price |       | Weighted average
remaining
contractual life |     | Number of shares
currently
exercisable |         | Weighted average
exercise price
|------------------------ |  | ----------------------------- |  | ------------------------------- | ----- | ------------------------------------------- | --- | -------------------------------------- | ------- | -------------------------------
|$0.01                    |  | 200,000                       |  | $                               | 0.01  |                                             | 8.3 |                                        | 99,999  |                                
|$9.00 to $15.00          |  | 1,353,410                     |  |                                 | 13.71 |                                             | 7.3 |                                        | 511,944 |                                
|$40.00 to $50.00         |  | 140,000                       |  |                                 | 45.03 |                                             | 8.1 |                                        | 63,000  |                                
|$50.01 to $60.00         |  | 124,100                       |  |                                 | 59.12 |                                             | 8.3 |                                        | 36,600  |                                
|$60.01 to $70.00         |  | 1,084,995                     |  |                                 | 63.58 |                                             | 9.2 |                                        | 41,400  |                                
|$70.01 to $80.00         |  | 200,000                       |  |                                 | 71.60 |                                             | 8.0 |                                        | 80,000  |                                

NTL Group Bonus Schemes

Participants in the NTL Group Bonus Schemes are eligible to receive a bonus payment equal to a percentage of their base salary as determined by their level of
employment based upon the attainment of performance targets. Bonus payments are made in two installments. Half of the bonus owing to various participants is payable in cash and the other half may, at
the Company's discretion, be paid in shares of common stock.

In
accordance with the NTL Group Bonus Schemes, 33,259 shares were awarded in June 2003 at a weighted average fair value per share of $33.79, 38,265 shares were awarded in
December 2003 at a weighted average fair value per share of $69.59, 27,819 shares were awarded in June 2004 at a weighted average fair value per share of $57.33 and 24,324 shares were
awarded in December 2004 at a weighted average fair value per share of $72.96.

Restricted Stock Grants

The Company has granted a total of 267,500 shares of restricted common stock to its chairman and certain employees at a weighted average fair value per share of
$46.99. The shares vest over periods of up to five years. The Company has also granted a total of 40,000 shares of restricted common stock to persons who were then employees of W.R. Huff Asset
Management Co., L.L.C. or its affiliates at a weighted average fair value per share of $62.60, all of which vested during the year ended December 31, 2004.

F-35

---



In
connection with its emergence from Chapter 11, the Company granted a total of 133,912 shares of restricted common stock to its then-executive officers and other employees
at a weighted average fair value per share of $18.95.

13.   Employee Benefit Plans

Certain subsidiaries of the Company operate defined benefit pension plans in the United Kingdom. The assets of the Plans are held separately from those of the
Company and are invested in specialized portfolios under the management of an investment group. The pension cost is calculated using the projected unit method. The Company's policy is to fund amounts
to the defined benefit plans necessary to comply with the funding requirements as prescribed by the laws and regulations in the United Kingdom.

The
Company's defined benefit pension plans use a measurement date of December 31:

Obligations and Funded Status

|                                        |  | Year ended December 31, |      
|--------------------------------------- |  | ----------------------- | -----
|
|
|Change in Projected Benefit Obligation  |  |                         |      
|Benefit obligation at beginning of year |  | £                       | 282.8
|Service cost                            |  |                         | 2.7  
|Interest cost                           |  |                         | 14.5 
|Members contributions                   |  |                         | 0.7  
|Actuarial losses                        |  |                         | 44.4 
|Benefits paid                           |  |                         | (7.7 
|Plan settlements                        |  |                         | (3.4 
|                                        |  |                         |      
|Benefit obligation at end of year       |  | £                       | 334.0
|                                        |  |                         |      

|                                               |  | Year ended December 31, |      
|---------------------------------------------- |  | ----------------------- | -----
|
|
|Change in Plan Assets                          |  |                         |      
|Fair value of plan assets at beginning of year |  | £                       | 193.3
|Actual return on plan assets                   |  |                         | 40.4 
|Employer contributions                         |  |                         | 59.8 
|Employee contributions                         |  |                         | 0.7  
|Benefits paid                                  |  |                         | (7.7 
|                                               |  |                         |      
|Fair value of plan assets at end of year       |  | £                       | 286.5
|                                               |  |                         |      

F-36

---





|                                |  | Year ended December 31, |      
|------------------------------- |  | ----------------------- | -----
|
|
|Funded status                   |  | £                       | (47.5
|Unrecognized net losses         |  |                         | 27.6 
|Unamortized prior service costs |  |                         | 0.1  
|                                |  |                         |      
|Net amount recognized           |  | £                       | (19.8
|                                |  |                         |      

|                                                                  |  | Year ended December 31, |      
|----------------------------------------------------------------- |  | ----------------------- | -----
|
|
|Amounts Recognized in the Consolidated Balance Sheets Consist of: |  |                         |      
|Accrued benefit liability                                         |  | £                       | (38.1
|Intangible asset                                                  |  |                         | 0.1  
|Accumulated other comprehensive income                            |  |                         | 18.2 
|                                                                  |  |                         |      
|Net amount recognized                                             |  | £                       | (19.8
|                                                                  |  |                         |      

The
accumulated benefit obligation for all defined benefit plans was £324.7 million and £259.0 million at December 31, 2005 and 2004,
respectively.

Information for pension plans with an accumulated benefit obligation in excess of plan assets

|                               |  | Year ended December 31,
|------------------------------ |  | -----------------------
|
|
|Accumulated benefit obligation |  | £                      
|Fair value of plan assets      |  |                        

Information for pension plans with a projected benefit obligation in excess of plan assets

|                             |  | Year ended December 31,
|---------------------------- |  | -----------------------
|
|
|Projected benefit obligation |  | £                      
|Fair value of plan assets    |  |                        

F-37

---



Components of Net Periodic Benefit Costs

|                                |  | Year ended December 31, |  
|------------------------------- |  | ----------------------- | -
|
|
|Service cost                    |  | £2.7                    |  
|Interest cost                   |  | 14.5                    |  
|Expected return on plan assets  |  | (15.1                   | )
|Recognized actuarial loss       |  |                        |  
|Plan settlements                |  | 0.6                     |  
|                                |  |                         |  
|Total net periodic benefit cost |  | £2.7                    |  
|                                |  |                         |  

The
Company has retained the earned pension and other post-retirement benefits liabilities related to the broadcast operations. Accordingly, the information disclosed in the
tables above includes amounts relating to liabilities of the broadcast operations.

Assumptions

Weighted-average assumptions used to determine benefit obligations

|                              |  | December 31,
|----------------------------- |  | ------------
|
|Discount rate                 |  | 4.75%       
|Rate of compensation increase |  | 3.25%       

Weighted-average
assumptions used to determine net periodic benefit costs

|                                                 |  | December 31,
|------------------------------------------------ |  | ------------
|
|Discount rate                                    |  | 5.24%       
|Expected long-term rate of return on plan assets |  | 7.08%       
|Rate of compensation increase                    |  | 3.03%       

Where
investments are held in bonds and cash, the expected long-term rate of return is taken to be yields generally prevailing on such assets at the measurement date. The
higher rate of return is expected on equity investments, which is based more on realistic future expectations than on the returns that have been available historically. The overall expected
long-term rate on assets is then the average of these rates taking into account the underlying assets portfolios of the pension plans.

F-38

---



Plan Assets

The Company's pension plan weighted-average assets allocations at December 31, 2005, and 2004, by asset category are as follows:

|                  |  | December 31,
|----------------- |  | ------------
|
|Asset Category    |  |             
|Equity Securities |  | 48.5%       
|Debt Securities   |  | 43.2%       
|Real Estate       |  | 1.9%        
|Other             |  | 6.4%        
|                  |  |             
|Total             |  | 100.0%      
|                  |  |             

The
trustees of the main defined benefit pension plan, which makes up over 87% of the assets of the four defined benefit pension plans of the Company, have in place an agreement with the
investment managers that targets an allocation of 50% equities and 50% bonds and cash at December 31, 2005. Deviations from these central targets are permitted from time to time. Because the
main defined benefit pension plan is now closed to new entrants, the investment strategy is moving towards a higher proportion of bonds over time to reflect the steadily maturing profile of
liabilities.

There
were no shares of the Company's common stock included in the Equity Securities at December 31, 2005 and 2004 respectively.

Cash flows

Contributions

At December 31, 2005, all of the Company's pension plans have projected benefit obligations exceeding plan assets totaling
£47.5 million. The Company will need to fund these deficits in accordance with the laws and regulations of the United Kingdom. The Company contributed
£59.8 million during 2005, of which £56.6 million relates to single contribution to reduce deficits in two of the Company's pension plans. The Company expects to
contribute a total of £2.2 million during 2006.

Estimated Future Benefit Payments

The benefits expected to be paid out of the pension plans in total are set out below for each of the next five years and the following five years in aggregate.
The benefits expected to be paid are based

F-39

---



on
the same assumptions used to measure the Company's benefit obligation at December 31, 2005 and include estimated future employee services.

|                |  | Pension
Benfits
|--------------- |  | ---------------
|
|2006            |  | £7.5           
|2007            |  | 8.2            
|2008            |  | 8.9            
|2009            |  | 9.6            
|2010            |  | 10.3           
|Years 20112015 |  | 64.8           

Defined Contribution Pension Plans

The Company's subsidiaries operate defined contribution pension plans in the UK. The Company's expense in relation to these plans was
£9.2 million, £9.8 million and £10.1 million for the years ended December 31, 2005, 2004 and 2003 respectively.

14.   Other Charges Including Restructuring Charges

Other charges in 2005 of £24.8 million mainly relate to changes in cash flow estimates with respect to lease exit costs in connection with
properties that have been vacated. Other charges of £23.8 million in 2004 relate to the Company's announcement to consolidate call centers and include
£12.4 million for involuntary employee termination and related costs, £2.4 million for lease exit costs and £9.0 million for other costs
including recruitment and training costs. On April 7, 2004, the Company announced the consolidation over the next 18 months of its 13 UK customer service call centers into three equipped
to handle anticipated expansion of its customer base. Following an internal review, three specialist call centers were retained and are supported by four sales and customer support sites, located
throughout the UK. As part of the consolidation, the Company made additional investments in technology and training in order to streamline processes and generate efficiencies. This program was
completed as of December 31, 2005 at a total cost of £23.7 million.

Other
charges of £22.3 million in 2003 include restructuring charges of £19.9 million and £2.4 million of professional fees.
Restructuring charges of £19.9 million for the year ended December 31, 2003 relate to the Company's actions to reorganize, re-size and reduce operating costs and
create greater efficiency in various areas. The employee severance and related costs in 2003 were for employees whom were terminated by the Company as of December 31, 2005.

F-40

---



The
following table summarizes the restructuring charges incurred and utilized in 2003, 2004 and 2005 (in millions):

|                           |  | Involuntary
Employee
Termination
and Related
Costs |   | Lease
Exit
Costs |   | Agreement
Modifications |   | Other |   | Total |  
|-------------------------- |  | -------------------------------------------------- | - | ---------------- | - | ----------------------- | - | ----- | - | ----- | -
|Balance, December 31, 2002 |  | £11.7                                              |   | £47.6            |   | £0.7                    |   | £0.8  |   | £60.8 |  
|Released                   |  | (2.1                                               | ) | (0.7             | ) | (0.2                    | ) | (0.9  | ) | (3.9  | )
|Charged to expense         |  | 23.4                                               |   |                 |   | 0.3                     |   | 0.1   |   | 23.8  |  
|Utilized                   |  | (33.0                                              | ) | (8.1             | ) | (0.5                    | ) |      |   | (41.6 | )
|                           |  |                                                    |   |                  |   |                         |   |       |   |       |  
|Balance, December 31, 2003 |  |                                                   |   | 38.8             |   | 0.3                     |   |      |   | 39.1  |  
|Released                   |  |                                                   |   |                 |   |                        |   |      |   |      |  
|Charged to expense         |  | 12.4                                               |   | 2.4              |   |                        |   | 9.0   |   | 23.8  |  
|Utilized                   |  | (10.7                                              | ) | (12.8            | ) | (0.1                    | ) | (9.0  | ) | (32.6 | )
|                           |  |                                                    |   |                  |   |                         |   |       |   |       |  
|Balance, December 31, 2004 |  | 1.7                                                |   | 28.4             |   | 0.2                     |   |      |   | 30.3  |  
|Released                   |  |                                                   |   |                 |   | (0.2                    | ) | (0.4  | ) | (0.6  | )
|Charged to expense         |  | 0.8                                                |   | 24.2             |   |                        |   | 0.4   |   | 25.4  |  
|Utilized                   |  | (2.5                                               | ) | (7.3             | ) |                        |   |      |   | (9.8  | )
|                           |  |                                                    |   |                  |   |                         |   |       |   |       |  
|Balance, December 31, 2005 |  | £                                                 |   | £45.3            |   | £                      |   | £    |   | £45.3 |  
|                           |  |                                                    |   |                  |   |                         |   |       |   |       |  

15.   Income Taxes

The expense for income taxes consists of the following (in millions):

|               |                 | Year ended December 31, |     
|-------------- | --------------- | ----------------------- | ----
|
|Current:       |                 |                         |     
|               | Federal         |                         | £1.4
|               | State and local |                         | (1.3
|               |                 |                         |     
|Total current  |                 | 0.1                     |     
|               |                 |                         |     
|Deferred:      |                 |                         |     
|               | Federal         |                         | 18.7
|               | Foreign         |                         |    
|               |                 |                         |     
|Total deferred |                 | 18.7                    |     
|               |                 |                         |     
|               |                 | £18.8                   |     
|               |                 |                         |     

There
are significant current year losses in the UK. However, the Company incurs US income taxes on portions of its income earned in certain UK subsidiaries and on other income arising
within the US.

The
Company's current tax expense relates to federal alternative minimum tax and state and local taxes. The deferred tax expense relates to US income that is not currently taxed, a
portion of which is

F-41

---



offset
by NOL carryforwards for which a valuation allowance has been recorded and a portion of which is offset by current year timing differences for which a deferred tax liability is recorded.

Deferred
income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used
for income tax purposes. Significant components of deferred tax liabilities and assets are as follows (in millions):

|                                            |                                         | December 31, |        
|------------------------------------------- | --------------------------------------- | ------------ | -------
|
|Deferred tax liabilities:                   |                                         |              |        
|                                            | Intangibles                             |              | £70.1  
|                                            | Unrealized foreign exchange differences |              | 16.5   
|                                            | Depreciation and amortization           |              |       
|                                            |                                         |              |        
|Total deferred tax liabilities              |                                         | 86.6         |        
|Deferred tax assets:                        |                                         |              |        
|                                            | Net operating losses                    |              | 876.3  
|                                            | Capital losses                          |              | 5,228.1
|                                            | Depreciation and amortization           |              | 1,330.6
|                                            | Accrued expenses                        |              | 6.3    
|                                            | Other                                   |              | 45.6   
|                                            |                                         |              |        
|Total deferred tax assets                   |                                         | 7,486.9      |        
|Valuation allowance for deferred tax assets |                                         | (7,409.5     | )      
|                                            |                                         |              |        
|Net deferred tax assets                     |                                         | 77.4         |        
|                                            |                                         |              |        
|Net deferred tax liabilities                |                                         | £9.2         |        
|                                            |                                         |              |        

A
valuation allowance is recorded to reduce the deferred tax asset to an amount that is more likely than not to be realized. To the extent that the portion of the valuation allowance
that existed at January 10, 2003 is reduced, the benefit would reduce excess reorganization value, then reduce other intangible assets existing at that date, then be credited to paid in
capital. The majority of the valuation allowance would be treated in this way. In 2005, the Company recognised such a benefit to the extent of £7.7 million (2004: £4.0
million), resulting in a deferred tax expense and a reduction in reorganization value of this amount.

As
discussed in note 1, the Company emerged from Chapter 11 bankruptcy on January 10, 2003. The restructuring of the Company's debt gave rise to cancellation of debt income
in 2003, which was non-taxable since the debt cancellation was in connection with a bankruptcy reorganization. However, to the extent that such amount was excluded from U.S. taxable
income, certain tax attributes were subject to reduction, including certain U.S. net operating loss carryforwards. The reduction of tax attributes, which is reflected in the above table, had no impact
on the Company's financial statement position since the deferred tax assets related to these tax attributes were offset by a corresponding valuation allowance. Furthermore, the reorganization caused
an ownership change pursuant to Internal Revenue Service Code Section 382. Section 382 will limit the Company's ability to utilize any remaining U.S. net operating loss carryforwards
that existed at January 10, 2003. In addition, Section 382 will severely limit the Company's ability to utilize remaining U.S. capital loss carryforwards within the five-year
carryforward period.

F-42

---



At
December 31, 2005, the Company had capital loss carryforwards of approximately £4.5 billion for U.S. federal income tax purposes that expire in 2006. The
Company does not expect to realize any significant benefit from these capital losses for various reasons, including the Section 382 limitation discussed above. The Company has United Kingdom
net operating loss carryforwards of approximately £2.9 billion that have no expiration date. Pursuant to United Kingdom law, these losses are only available to offset income of the
separate entity that generated the loss. A portion of the United Kingdom net operating loss carryforward relates to dual resident companies, of which the U.S. net operating loss carryforward amount is
approximately £1.3 billion. Section 382 will severely limit the Company's ability to utilize a significant portion of these losses for US purposes. The Company also has
United Kingdom capital loss carryforwards of approximately £12.2 billion that have no expiration date. However, the Company does not expect to realize any significant benefit from
these capital losses, which can only be used to the extent the Company generates United Kingdom taxable capital gain income in the future.

At
December 31, 2005, the Company had fixed assets on which future United Kingdom tax deductions can be claimed of approximately £7.7 billion. The maximum that
can be claimed in any one year is 25% of the remaining balance, after additions, disposals and prior claims.

The
reconciliation of income taxes computed at U.S. federal statutory rates to income tax expense is as follows (in millions):

|                                                            |  | Year Ended December 31, |  
|----------------------------------------------------------- |  | ----------------------- | -
|
|(Benefit) at federal statutory rate (35%)                   |  | £(77.7                  | )
|Add:                                                        |  |                         |  
|Non-deductible expenses                                     |  | 39.1                    |  
|Foreign losses with no benefit                              |  | 69.9                    |  
|U.S. losses with no benefit                                 |  |                        |  
|Difference in U.S. and foreign tax rates                    |  | 12.5                    |  
|State and local income tax                                  |  | (1.3                    | )
|Other                                                       |  | 1.4                     |  
|Reduction in valuation allowance for US deferred tax assets |  | (25.1                   | )
|                                                            |  |                         |  
|Provision for income taxes                                  |  | £18.8                   |  
|                                                            |  |                         |  

At
each period end, it is necessary for us to make certain estimates and assumptions to compute the provision for income taxes including, but not limited to the expected operating income
(or loss) for the year, projections of the proportion of income (or loss) earned and taxed in the United Kingdom and the extent to which this income (or loss) may also be taxed in the United States,
permanent and temporary differences, the likelihood of deferred tax assets being recovered and the outcome of contingent tax risks. In the normal course of business, our tax returns are subject to
examination by various taxing authorities. Such examinations may result in future tax and interest assessments by these taxing authorities for uncertain tax positions taken in respect to matters such
as business acquisitions and disposals and certain financing transactions including intercompany transactions, amongst others, and we accrue a liability when we believe an assessment may be probable
and the amount is estimable. In accordance with generally accepted accounting principles, the impact of revisions to these estimates are recorded as income tax expense or benefit in the period in
which they become known. Accordingly,

F-43

---



the
accounting estimates used to compute the provision for income taxes have and will change as new events occur, as more experience is acquired, as additional information is obtained and our tax
environment changes.

16.   Related Party Transactions

The Company has identified the following persons as being related parties of the Company with whom it has entered into transactions as described below:



Refinancing Transactions

In November 2003, the Company effected an approximately $1.4 billion, or £0.8 billion, rights offering in which the Company
distributed to each of its stockholders proportionate rights to purchase shares of its common stock. The rights were transferable, subject to various exceptions. The proceeds from the rights offering
were used in part to prepay in full an outstanding principal amount of approximately $554.1 million, or £324.2 million under the Company's 19% Senior Secured Notes due 2010
and to repay in full a working capital facility with an outstanding principal amount of approximately £408.3 million.

In
connection with the Company's rights offering, on September 26, 2003, the Company entered into two separate participating purchaser agreements with each of W.R. Huff
Asset Management Co., L.L.C., on behalf of certain of its affiliates and managed accounts, and Franklin Mutual Advisers LLC, as agent and investment advisor for certain funds. Each
participating purchaser held shares of the Company's common stock or was the general partner or investment manager of managed funds and third party accounts that directly held shares of the Company's
common stock.

Pursuant
to these agreements, W.R. Huff Asset Management Co., L.L.C., on behalf of managed accounts and affiliates, and Franklin Mutual Advisers LLC, on behalf of
funds for which it acts as an agent or investment advisor, each agreed in advance of the rights offering to exercise the basic subscription privilege for all of the rights distributed to their
respective managed accounts, affiliates and funds in the rights offering. The rights offering prospectus indicated to the Company's stockholders that these parties had made advance commitments. Other
stockholders did not have to commit to exercise their subscription privileges in advance.

W.R. Huff
Asset Management Co., L.L.C., on behalf of managed accounts and affiliates, purchased 4,582,594 shares of the Company's common stock for $40.00 and Franklin
Mutual Advisers LLC, on

F-44

---



behalf
of funds for which it acts as an agent or investment advisor, purchased 2,974,908 shares of the Company's common stock for $40.00. This was the same price offered to all recipients of rights in
the offering. W.R. Huff Asset Management Co., L.L.C., on behalf of managed accounts and affiliates, also purchased approximately 25,000 shares of the Company's common stock for $40.00
pursuant to the over-subscription privilege available to all rights holders in the offering. Franklin Mutual Advisers LLC, on behalf of funds for which it acts as an agent or
investment advisor, also purchased 35,752 shares of the Company's common stock for $40.00 pursuant to the over-subscription privilege available to all rights holders in the offering.

The
shares of the Company's common stock that each participating purchaser received upon the exercise of the rights that the participating purchaser had committed to exercise constituted
restricted stock for the purposes of the Securities Act of 1933. Accordingly, the Company entered into a registration rights agreement with each participating purchaser. The Company filed a
registration statement on February 13, 2004 to fulfill its obligations under these agreements.

The
Company completed a transaction on April 13, 2004 in which the Company's indirect wholly owned subsidiary, NTL Cable PLC, issued £375 million aggregate
principal amount of 9.75% senior notes due 2014, $425 million aggregate principal amount of 8.75% senior notes due 2014, €225 million aggregate principal amount of 8.75%
senior notes due 2014 and $100 million aggregate principal amount of floating rate senior notes due 2012. Some of the Company's significant stockholders were holders of the 10% senior sterling
notes due 2008 and 91/8% senior notes due 2008 of Diamond Holdings Limited and of the 11.2% discount debentures due 2007 of NTL (Triangle) LLC, which were redeemed on
May 13, 2004 in connection with the transaction. Some of these stockholders, including managed accounts and affiliates of W.R. Huff Asset Management Co., L.L.C., acquired a
substantial quantity of the notes issued in the transaction. On behalf of managed accounts and affiliates, W.R. Huff Asset Management Co., L.L.C. is a significant participant in the
market for non-investment grade debt securities.

Pursuant
to the participating purchaser agreements, and in consideration for their advance commitments in the rights offering, managed accounts and affiliates for which W.R. Huff
Asset Management Co., L.L.C. acts as an investment adviser were paid fees totaling $5.3 million on March 24, 2004 and funds for which Franklin Mutual Advisers LLC acts as
an agent or investment adviser were paid fees totaling $3.1 million on November 24, 2003 and $0.3 million on March 17, 2004. In consideration for financial and business
services, subject to the successful completion of the refinancing, a related entity of W.R. Huff Asset Management Co., L.L.C. was paid $7.5 million on April 27, 2004.

In
May 2004, the Company's board granted to each of Eric Koza and Karim Samii, who were then each employees of W.R. Huff Asset Management Co., L.L.C. or its
affiliates, the right to receive 20,000 restricted shares of the Company's common stock under the 2003 Stock Option Plan. The restricted stock award was made in consideration of financial and business
services provided to the Company by Messrs. Koza and Samii. Mr. Samii is no longer an employee of W.R. Huff Asset Management Co., L.L.C. or its affiliates. Shares
authorized under the 2003 Stock Option Plan, including those granted to Messrs. Koza and Samii, were registered under a registration statement on Form S-8 that the Company
filed with the SEC on May 6, 2004.

F-45

---





Chapter 11 Reorganization and Exit Notes

At the time of the Company's emergence from Chapter 11 reorganization, the Company issued shares of its common stock and Series A warrants to various
former creditors and stockholders of the entity then known as NTL Europe, Inc., or NTL Europe, and some of its subsidiaries, including the Company, which was then one of NTL Europe's
subsidiaries. The Company's principal stockholders were creditors or stockholders of NTL Europe and, accordingly, received a significant amount of their present equity interest in the Company from
that issuance.

Registration Rights Agreements

At the time of the Company's emergence from Chapter 11 reorganization, the Company granted various registration rights to some of the persons who were then
stockholders and warrantholders of the Company. In connection with the rights offering, the Company granted various registration rights to the participating purchasers as described above, and to
affiliates of Oaktree Capital Management, LLC.

Relationship with NTL Europe

At the time of the completion of the Plan, the Company had entered into several agreements with NTL Europe, now known as PTV, Inc., including a Demerger
Agreement and a Tax Sharing Agreement.

Demerger Agreement

The Demerger Agreement enables NTL Europe and the Company to have access to records and documents that NTL Europe and the Company require but which are held by or
in the control of the other. In addition, the agreement provides that, to the extent possible, all warranties, indemnities or liabilities relating to assets or companies which the Company currently
owns, but which were originally acquired by NTL Europe or one of its subsidiaries before being transferred to the Company or one of the Company's subsidiaries, are transferred to the Company or the
Company is given the benefit of the warranties, covenants and indemnities relating to these assets or companies.

Tax Sharing Agreement

Until consummation of the Plan, the Company was a part of a federal consolidated income tax group having NTL Europe as the common parent corporation. Under the
Plan, the Company separated from the NTL Europe consolidated group, becoming a separate federal consolidated tax group. The Company entered into a Tax Sharing Agreement which allocates rights and
responsibilities for tax matters between the Company and NTL Europe and its affiliates.

In
general, the Company has control over, and is responsible for, the preparation and filing of the Company's own tax returns and also any joint tax returns that include the Company and
the NTL Europe companies.

For
2002 and the portion of 2003 during which the Company was included in a joint tax return with NTL Europe, the Company would be liable for any tax liability attributable to the
Company and NTL Europe would be liable for any tax liability attributable to NTL Europe and its affiliates. The Company has the exclusive right to determine the portion of tax liability attributable
to the Company

F-46

---



and
NTL Europe on any reasonable basis. Any refunds of taxes paid with respect to joint returns will also be reasonably apportioned between the Company and NTL Europe on a similar basis.

NTL
Europe's U.K. affiliates are required, as the Company may direct, to surrender group relief up to the maximum permitted by law to some of the Company's U.K. affiliates for tax
periods before, or that include, the date of the completion of the Plan as the Company may direct. This group relief allows the Company's U.K. affiliates to use deductions from NTL Europe's U.K.
affiliates to reduce foreign taxable income. The Company also has the ability to cause NTL Europe's U.K. affiliates to amend any claims for the surrender of group relief in order to give effect to
such surrender.

The
Company has the exclusive right to control, contest and represent its interests and NTL Europe's interest in any audit relating to a joint tax return. The Company also has the right
to resolve, settle or agree to any deficiency, claim or adjustment proposed, asserted or assessed in connection with any joint return if the matter involved could affect the Company.

However,
NTL Europe has the exclusive authority to handle audits that relate solely to NTL Europe or its affiliates to the extent the asserted liability or matter either:



The
Company has an obligation to provide NTL Europe with information in order to keep NTL Europe informed and to permit NTL Europe an opportunity to participate in discussions with tax
authorities regarding tax issues that involve NTL Europe or its affiliates. The Company has the right to reasonably apportion any of the costs associated with its responding to an audit, claim or
asserted deficiency of NTL Europe.

NTL
Europe's ability to perform its continuing obligations under the Tax Sharing Agreement could be affected by a sale of some or all of its assets or by a change of control.
Accordingly, NTL Europe is required to provide the Company with notice of any change of control of it or any of its affiliates. The Company and NTL Europe have customary rights and obligations to
cooperate, exchange information, provide notice and resolve disputes with respect to tax matters.

17.   Shareholders' Equity

Series A Warrants

On the effective date of the Plan, the Company issued Series A warrants to some of its former creditors and stockholders. The Series A warrants were
initially exercisable for a total of 8,750,496 shares of common stock at an exercise price of $309.88 per share. After adjustment to account for the rights offering in accordance with
anti-dilution adjustment provisions, the Series A warrants are exercisable for a total of 10,313,158 shares of common stock at an exercise price of $262.93 per share. The
Series A warrants expire on January 10, 2011. The agreement governing the Series A warrants is governed by New York law. The Series A warrants are listed on the NASDAQ
National Market under the symbol "NTLIW." The Series A warrants may be subject to further change.

F-47

---



Stock repurchase program

On January 31, 2005, the Company announced that it intended to use up to £475.0 million of the proceeds from the sale of its broadcast
operations to repurchase shares of its common stock. During 2005, the Company paid £114.0 million to effect share repurchases in the open market.

18.   Commitments and Contingent Liabilities

At December 31, 2005, the Company was committed to pay approximately £144.4 million for equipment and services. This amount includes
approximately £2.6 million for operations and maintenance contracts and other commitments from January 1, 2007 to 2010. The aggregate amount of the fixed and determinable
portions of these obligations for the succeeding five fiscal years is as follows (in millions):

|Year ended December 31: |      |       
|----------------------- | ---- | ------
|                        | 2006 |       
|                        | 2007 |       
|                        | 2008 |       
|                        | 2009 |       
|                        | 2010 |       
|                        |      |       
|                        |      | £144.4
|                        |      |       

The
Company is involved in certain disputes and litigation arising in the ordinary course of its business. None of these matters are expected to have a material adverse effect on the
Company's financial position, results of operations or cash flows.

The
Company's banks have provided guarantees in form of performance bonds on the Company's behalf as part of the Company's contractual obligations. The fair value of the guarantees has
been calculated by reference to the monetary value for each performance bond. The amount of commitment expires over the following periods (in millions):

|Year ended December 31: |            |      
|----------------------- | ---------- | -----
|                        | 2006       |      
|                        | 2007       |      
|                        | 2008       |      
|                        | 2009       |      
|                        | 2010       |      
|                        | Thereafter |      
|                        |            |      
|                        |            | £20.0
|                        |            |      

19.   Industry Segments

All of the Company's revenue is generated in the United Kingdom and substantially all of the Company's long-lived assets are held in the United
Kingdom. The Company has one reportable segment.

F-48

---



20.   Condensed consolidated financial information

On April 13, 2004, the Company's wholly owned subsidiary, NTL Cable PLC, or NTL Cable, issued £375 million aggregate principal amount of
9.75% senior notes due 2014, $425 million aggregate principal amount of 8.75% senior notes due 2014, €225 million aggregate principal amount of 8.75% senior notes due
2014 and $100 million aggregate principal amount of floating rate notes due 2012, together referred to as the Senior Notes. The Company and certain of its subsidiaries, namely Cable
Communications Funding Corp., NTL (UK) Group, Inc. and NTL Communications Limited, have guaranteed the Senior Notes on a senior basis. NTL Investment Holdings Limited, or NTLIH, has guaranteed
the Senior Notes on a senior subordinated basis.

The
Company presents the following condensed consolidated financial information as of December 31, 2005 and 2004 and for the years ended December 31, 2005, 2004 and 2003 as
required by Article 3-10(d) of Regulation S-X.

|                                         |                                            | December 31, 2005
|---------------------------------------- | ------------------------------------------ | -----------------
|
|
|Cash and cash equivalents                |                                            | £446.6           
|Restricted cash                          |                                            |                 
|Marketable securities                    |                                            | 96.9             
|Other current assets                     |                                            | 68.1             
|                                         |                                            |                  
|                                         | Total current assets                       |                  
|Fixed assets, net                        |                                            |                 
|Intangible assets, net                   |                                            |                 
|Investments in, and loans to, affiliates |                                            | 1,375.0          
|Other assets, net                        |                                            |                 
|                                         |                                            |                  
|                                         | Total assets                               |                  
|                                         |                                            |                  
|Current liabilities                      |                                            | £21.6            
|Long-term debt                           |                                            | 10.0             
|Other long-term liabilities              |                                            |                 
|Minority interest                        |                                            |                 
|Shareholders' equity                     |                                            | 1,955.0          
|                                         |                                            |                  
|                                         | Total liabilities and shareholders' equity |                  
|                                         |                                            |                  

F-49

---



|                                                 |                           | December 31, 2004
|------------------------------------------------ | ------------------------- | -----------------
|
|
|Cash and cash equivalents                        |                           | £38.2            
|Restricted cash                                  |                           |                 
|Marketable securities                            |                           | 11.6             
|Current assets held for sale                     |                           |                 
|Other current assets                             |                           | 0.4              
|                                                 |                           |                  
|                                                 | Total current assets      |                  
|Fixed assets, net                                |                           |                 
|Intangible assets, net                           |                           |                 
|Investments in, and loans to affiliates          |                           | 1,537.0          
|Other assets, net                                |                           |                 
|Other assets held for sale                       |                           |                 
|                                                 |                           |                  
|                                                 | Total assets              |                  
|                                                 |                           |                  
|Current liabilities of discontinued operations   |                           | £               
|Other current liabilities                        |                           | 12.7             
|                                                 |                           |                  
|                                                 | Total current liabilities |                  
|Long-term debt                                   |                           |                 
|Other long-term liabilities                      |                           |                 
|Long-term liabilities of discontinued operations |                           |                 
|Shareholders' equity                             |                           | 1,574.5          
|                                                 |                           |                  
|Total liabilities and shareholders' equity       |                           | £1,587.2         
|                                                 |                           |                  

F-50

---



|                                             |  | December 31, 2005 |  
|-------------------------------------------- |  | ----------------- | -
|
|
|Revenue                                      |  | £                |  
|Operating costs                              |  |                  |  
|Selling, general and administrative expenses |  | (17.4             | )
|Other charges                                |  | 0.3               |  
|Depreciation and amortization                |  |                  |  
|                                             |  |                   |  
|Operating loss                               |  | (17.1             | )
|Interest and other income, net               |  | 17.4              |  
|Interest expense                             |  | (2.8              | )
|Loss on extinguishment of debt               |  |                  |  
|Gains on derivative instruments              |  |                  |  
|Foreign currency gains (losses)              |  | 35.4              |  
|Minority interest expense                    |  |                  |  
|Income tax benefit (expense)                 |  | 1.3               |  
|                                             |  |                   |  
|Income (loss) from continuing operations     |  | 34.2              |  
|(Loss) income from discontinued operations   |  |                  |  
|Dividend received (paid)                     |  | 523.8             |  
|Equity in net (loss) income of subsidiaries  |  | (137.0            | )
|                                             |  |                   |  
|Net income (loss)                            |  | £421.0            |  
|                                             |  |                   |  

F-51

---





|                                             |                                          | December 31, 2004 |        
|-------------------------------------------- | ---------------------------------------- | ----------------- | -------
|
|
|Revenue                                      |                                          | £                |        
|Operating costs                              |                                          |                  |        
|Selling, general and administrative expenses |                                          | (20.9             | )      
|Other charges                                |                                          |                  |        
|Depreciation and amortization                |                                          |                  |        
|                                             |                                          |                   |        
|Operating loss                               |                                          | (20.9             | )      
|Interest and other income, net               |                                          | 0.7               |        
|Interest expense                             |                                          |                  |        
|Loss on extinguishment of debt               |                                          |                  |        
|Share of loss from equity investments        |                                          |                  |        
|Foreign currency (losses) gains              |                                          | (2.1              | )      
|Income tax expense                           |                                          | (1.4              | )      
|                                             |                                          |                   |        
|                                             | (Loss) income from continuing operations |                   | (23.7  
|Income from discontinued operations          |                                          |                  |        
|Equity in net loss of subsidiaries           |                                          | (461.2            | )      
|                                             |                                          |                   |        
|                                             | Net loss                                 |                   | £(484.9
|                                             |                                          |                   |        

F-52

---



|                                             |                                          | December 31, 2003 |        
|-------------------------------------------- | ---------------------------------------- | ----------------- | -------
|
|
|Revenue                                      |                                          | £                |        
|Operating costs                              |                                          |                  |        
|Selling, general and administrative expenses |                                          | (21.0             | )      
|Other charges                                |                                          | (7.5              | )      
|Depreciation and amortization                |                                          |                  |        
|                                             |                                          |                   |        
|Operating loss                               |                                          | (28.5             | )      
|Interest and other income, net               |                                          | 1.2               |        
|Interest expense                             |                                          | (68.5             | )      
|Share of income from equity investments      |                                          |                  |        
|Foreign currency gains                       |                                          | 1.2               |        
|Income tax (expense) benefit                 |                                          | (1.0              | )      
|                                             |                                          |                   |        
|                                             | (Loss) income from continuing operations |                   | (95.6  
|Income from discontinued operations          |                                          |                  |        
|Equity in net loss of subsidiaries           |                                          | (489.2            | )      
|                                             |                                          |                   |        
|                                             | Net loss                                 |                   | £(584.8
|                                             |                                          |                   |        

F-53

---



|                                            |                                          | January 1, 2003 |         
|------------------------------------------- | ---------------------------------------- | --------------- | --------
|
|
|Gain on debt discharge                      |                                          | £4,549.8        |         
|Fresh-start adoptionintangible assets      |                                          |                |         
|Fresh-start adoptionlong-term debt         |                                          |                |         
|Fresh-start adoptiondeferred tax liability |                                          |                |         
|Fresh-start adoptionaccrued expenses       |                                          |                |         
|Fresh-start adoptionfixed assets           |                                          | (0.5            | )       
|Recapitalization expense                    |                                          | (5.0            | )       
|                                            |                                          |                 |         
|                                            | Income (loss) from continuing operations |                 | 4,544.3 
|Income from discontinued operations         |                                          |                |         
|Equity in net loss of subsidiaries          |                                          | (317.7          | )       
|                                            |                                          |                 |         
|                                            | Net income (loss)                        |                 | £4,226.6
|                                            |                                          |                 |         

F-54

---





|                                                    |                                           | Year ended December 31, 2005 |       
|--------------------------------------------------- | ----------------------------------------- | ---------------------------- | ------
|
|
|Net cash (used in) provided by operating activities |                                           | £                            | (98.2 
|Investing activities:                               |                                           |                              |       
|Purchases of fixed assets                           |                                           |                              |      
|Repayments from (advances to) affiliates            |                                           |                              | 56.2  
|Proceeds from sale of assets                        |                                           |                              |      
|Dividend received                                   |                                           |                              | 523.8 
|Decrease in restricted cash                         |                                           |                              |      
|Proceeds from sale of Broadcast operations, net     |                                           |                              |      
|Proceeds from sale of Ireland operations, net       |                                           |                              |      
|                                                    |                                           |                              |       
|                                                    | Net cash provided by investing activities |                              |       
|                                                    |                                           |                              |       
|Financing activities:                               |                                           |                              |       
|Dividend paid                                       |                                           |                              |      
|Proceeds from new borrowings                        |                                           |                              | 10.0  
|Proceeds from employee stock options                |                                           |                              | 5.0   
|Purchase of stock                                   |                                           |                              | (114.0
|Principal payments                                  |                                           |                              |      
|                                                    |                                           |                              |       
|                                                    | Net cash used in financing activities     |                              |       
|                                                    |                                           |                              |       
|Discontinued operations:                            |                                           |                              |       
|Cash from operating activities                      |                                           |                              |      
|Cash used in investing activities                   |                                           |                              |      
|                                                    |                                           |                              |       
|                                                    | Net cash used by discontinued operations  |                              |       
|                                                    |                                           |                              |       
|Effect of exchange rate changes                     |                                           |                              | 25.6  
|Increase (decrease) in cash and cash equivalents    |                                           |                              | 408.4 
|Cash and cash equivalents at beginning of year      |                                           |                              | 38.2  
|                                                    |                                           |                              |       
|Cash and cash equivalents at end of year            |                                           | £                            | 446.6 
|                                                    |                                           |                              |       

F-55

---



|                                                    |                                                     | Year ended December 31, 2004 |      
|--------------------------------------------------- | --------------------------------------------------- | ---------------------------- | -----
|
|
|Net cash (used in) provided by operating activities |                                                     | £                            | (26.0
|Investing activities:                               |                                                     |                              |      
|Purchases of fixed assets                           |                                                     |                              |     
|(Advances to) repayments from affiliates            |                                                     |                              |     
|Proceeds from sale of assets                        |                                                     |                              |     
|Acquisitions, net                                   |                                                     |                              |     
|                                                    |                                                     |                              |      
|                                                    | Net cash (used in) investing activities             |                              |      
|                                                    |                                                     |                              |      
|Financing activities:                               |                                                     |                              |      
|Proceeds from borrowings, net                       |                                                     |                              |     
|Proceeds from employee stock options                |                                                     |                              | 4.4  
|Principal payments                                  |                                                     |                              |     
|                                                    |                                                     |                              |      
|                                                    | Net cash provided by (used in) financing activities |                              |      
|                                                    |                                                     |                              |      
|Discontinued operations:                            |                                                     |                              |      
|Cash from operating activities                      |                                                     |                              |     
|Cash used in investing activities                   |                                                     |                              |     
|                                                    |                                                     |                              |      
|                                                    | Net cash provided by discontinued operations        |                              |      
|                                                    |                                                     |                              |      
|Effect of exchange rate changes                     |                                                     |                              | (3.3 
|(Decrease) increase in cash and cash equivalents    |                                                     |                              | (24.9
|Cash and cash equivalents at beginning of year      |                                                     |                              | 63.1 
|                                                    |                                                     |                              |      
|Cash and cash equivalents at end of year            |                                                     | £                            | 38.2 
|                                                    |                                                     |                              |      

F-56

---





|                                                    |                                                     | Year ended December 31, 2003 |       
|--------------------------------------------------- | --------------------------------------------------- | ---------------------------- | ------
|
|
|Net cash (used in) provided by operating activities |                                                     | £(112.6                      | )     
|Investing activities:                               |                                                     |                              |       
|Purchases of fixed assets                           |                                                     |                             |       
|(Advances to) repayments                            |                                                     |                              |       
|from affiliates                                     |                                                     | (498.1                       | )     
|                                                    |                                                     |                              |       
|                                                    | Net cash (used in) provided by investing activities |                              | (498.1
|                                                    |                                                     |                              |       
|Financing activities:                               |                                                     |                              |       
|Proceeds from borrowings, net                       |                                                     |                             |       
|Proceeds from rights offering, net                  |                                                     | 806.5                        |       
|Proceeds from employee stock options                |                                                     | 1.9                          |       
|Principal payments                                  |                                                     | (309.3                       | )     
|                                                    |                                                     |                              |       
|                                                    | Net cash provided by (used in) financing activities |                              | 499.1 
|                                                    |                                                     |                              |       
|Discontinued operations:                            |                                                     |                              |       
|Cash from operating activities                      |                                                     |                             |       
|Cash used in investing activities                   |                                                     |                             |       
|                                                    |                                                     |                              |       
|                                                    | Net cash provided by discontinued operations        |                              |      
|                                                    |                                                     |                              |       
|Effect of exchange rate changes                     |                                                     | (8.7                         | )     
|(Decrease) increase in cash and cash equivalents    |                                                     | (120.3                       | )     
|Cash and cash equivalents at beginning of year      |                                                     | 183.4                        |       
|                                                    |                                                     |                              |       
|Cash and cash equivalents at end of year            |                                                     | £63.1                        |       
|                                                    |                                                     |                              |       

F-57

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21.   Reorganization and Emergence from Chapter 11

Both the equity and debt capital markets experienced periods of significant volatility in 2001 and 2002, particularly for securities issued by telecommunications
and technology companies. As a result, the ability of the Company's former ultimate parent company and its subsidiaries to access those markets as well as its ability to obtain financing from its bank
lenders and equipment suppliers became severely restricted. In addition, the Company's former ultimate parent company and its subsidiaries, including the Company, had no further funds available, or
were unable to draw upon funds, under the Company's credit facilities. As a result of these factors, together with its substantial leverage, on January 31, 2002, the Company's former ultimate
parent company announced that it had appointed professional advisors to advise on strategic and recapitalization alternatives to strengthen its balance sheet, reduce debt and put an appropriate
capital structure in place for its business.

Promptly
upon obtaining the requisite waivers from the lenders under its credit facilities in March 2002, the Company's former ultimate parent company and certain of its
subsidiaries commenced negotiations with a steering committee of the unofficial committee of its bondholders and the committee's legal and financial advisors.

The
Company's former ultimate parent company and its subsidiaries failed to make interest payments on some of the outstanding notes starting on April 1, 2002. The Company's former
ultimate parent company also failed to declare or pay dividends on certain series of its outstanding preferred stock owing to a lack of available surplus under Delaware law.

On
April 16, 2002, the Company's former ultimate parent company announced that it and an unofficial committee of its bondholders had reached an agreement in principle on a
comprehensive recapitalization of the former NTL group. To implement the proposed recapitalization plan, on May 8, 2002, the Company, the Company's former ultimate parent company and certain of
the other subsidiaries of the Company's former ultimate parent company filed cases and a pre-arranged joint reorganization plan under Chapter 11 of the U.S. Bankruptcy Code. In connection
with the filing, some members of the unofficial creditors' committee of bondholders entered into a credit facility agreement (the "DIP facility") committing to provide a wholly-owned subsidiary of the
Company with up to $500.0 million in new debt financing. NTL Delaware committed to provide up to an additional £90.0 million under the DIP facility.

As
a result of the payment defaults, as well as the voluntary filing under Chapter 11 by the Company's former ultimate parent company and certain of its subsidiaries on May 8,
2002, there was an event of
default under all of the Company's former ultimate parent company and its subsidiaries' credit facilities and the indentures governing all of their publicly traded debt, other than debt of NTL
(Triangle) LLC.

The
Bankruptcy Court confirmed the Plan on September 5, 2002. During the fall of 2002, the Company's former ultimate parent company negotiated with a group of lenders to enter
into a new financing arrangement to repay the DIP facility, to repay certain obligations and to provide liquidity to the Company and its subsidiaries. The Plan became effective on January 10,
2003 (the "Effective Date"), at which time the Company emerged from Chapter 11 reorganization. In connection with the Company's emergence from Chapter 11 reorganization, the Company and certain of its
subsidiaries issued $558.249 million aggregate principal face amount of 19% Senior Secured Notes due 2010 (the "Exit Notes") on January 10, 2003. Initial purchasers of the Company's Exit
Notes also purchased 500,000 shares of the Company's common stock on that date. The gross proceeds from the sale of the Exit Notes and such shares totaled $500.0 million, or
£310.7 million. The proceeds were used in part to

F-58

---



repay
amounts outstanding under the DIP facility and to purchase from NTL Delaware a £90.0 million note of the Company's subsidiary, NTL (UK) Group Inc., and to repay certain
other obligations. Also on January 10, 2003, the Company and its lending banks amended the Company's existing credit facilities. The Exit Notes were repaid on November 17, 2003 following
the Company's rights offering.

In
accordance with SOP 90-7, the Company adopted the provisions of fresh-start reporting as of January 1, 2003.

F-59

---





NTL INCORPORATED        SCHEDULE ICONDENSED FINANCIAL INFORMATION OF REGISTRANT        CONDENSED BALANCE SHEETS        (in millions)

|                                            |                                                                                                                                                             | December 31,               |        
|------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | -------
|
|Assets                                      |                                                                                                                                                             |                            |        
|Current assets                              |                                                                                                                                                             |                            |        
|                                            | Cash and cash equivalents                                                                                                                                   |                            | £446.6 
|                                            | Marketable securities                                                                                                                                       |                            | 96.9   
|                                            | Other current assets                                                                                                                                        |                            | 68.1   
|                                            |                                                                                                                                                             |                            |        
|                                            |                                                                                                                                                             | Total current assets       |        
|                                            |                                                                                                                                                             |                            |        
|Investments in and loans to affiliates, net |                                                                                                                                                             | 1,375.0                    |        
|                                            |                                                                                                                                                             |                            |        
|Total assets                                |                                                                                                                                                             | £1,986.6                   |        
|                                            |                                                                                                                                                             |                            |        
|Liabilities and shareholders' equity        |                                                                                                                                                             |                            |        
|Current liabilities                         |                                                                                                                                                             | £21.6                      |        
|Long-term debt                              |                                                                                                                                                             | 10.0                       |        
|Shareholders' equity                        |                                                                                                                                                             |                            |        
|                                            | Preferred stock$.01 par value; authorized 5.0 (2005 and 2004) shares; issued and outstanding none                                                          |                            |       
|                                            | Common stock$.01 par value; authorized 400.0 (2005 and 2004) shares; issued 88.4 (2005) and 87.7 (2004) and outstanding 85.2 (2005) and 87.7 (2004) shares |                            | 0.5    
|                                            | Additional paid-in capital                                                                                                                                  |                            | 2,687.0
|                                            | Treasury stock                                                                                                                                              |                            | (114.0 
|                                            | Unearned stock compensation                                                                                                                                 |                            | (15.3  
|                                            | Accumulated other comprehensive income (loss)                                                                                                               |                            | 45.5   
|                                            | Accumulated deficit                                                                                                                                         |                            | (648.7 
|                                            |                                                                                                                                                             |                            |        
|                                            |                                                                                                                                                             | Total shareholders' equity |        
|                                            |                                                                                                                                                             |                            |        
|Total liabilities and shareholders' equity  |                                                                                                                                                             | £1,986.6                   |        
|                                            |                                                                                                                                                             |                            |        

See
accompanying notes.

F-60

---





NTL INCORPORATED        CONDENSED FINANCIAL INFORMATION OF REGISTRANT        STATEMENT OF OPERATIONS        (in millions)

|                                                                         |                                             | Year ended December 31, |       
|------------------------------------------------------------------------ | ------------------------------------------- | ----------------------- | ------
|
|Costs and expenses                                                       |                                             |                         |       
|                                                                         | General and administrative expenses         |                         | £     
|                                                                         | Other charges                               |                         |       
|                                                                         |                                             |                         |       
|Operating loss                                                           |                                             |                         | (17.1 
|                                                                         |                                             |                         |       
|Other income (expense)                                                   |                                             |                         |       
|                                                                         | Interest income and other, net              |                         |       
|                                                                         | Interest expense                            |                         |       
|                                                                         | Foreign currency transaction gains (losses) |                         |       
|                                                                         |                                             |                         |       
|Income (loss) before income taxes and equity in net loss of subsidiaries |                                             |                         | 32.9  
|Income tax benefit (expense)                                             |                                             |                         | 1.3   
|                                                                         |                                             |                         |       
|Income (loss) before equity in net loss of subsidiaries                  |                                             |                         | 34.2  
|Dividend received                                                        |                                             |                         | 523.8 
|Equity in net loss of subsidiaries                                       |                                             |                         | (137.0
|                                                                         |                                             |                         |       
|Net income (loss)                                                        |                                             | £                       | 421.0 
|                                                                         |                                             |                         |       

|                                        |  | January 1,
2003 |        
|--------------------------------------- |  | --------------- | -------
|
|Gain on debt discharge                  |  | £               | 4,549.8
|Fresh-start adoptionfixed assets       |  |                 | (0.5   
|Recapitalization expense                |  |                 | (5.0   
|Share of losses from equity investments |  |                 | (317.7 
|                                        |  |                 |        
|Net income                              |  | £               | 4,226.6
|                                        |  |                 |        

See
accompanying notes.

F-61

---





NTL INCORPORATED        CONDENSED FINANCIAL INFORMATION OF REGISTRANT        STATEMENT OF CASH FLOWS        (in millions)

|                                                             |                                         | Year ended December 31,                             |       
|------------------------------------------------------------ | --------------------------------------- | --------------------------------------------------- | ------
|
|Net cash used in operating activities                        |                                         | £(98.2                                              | )     
|Investing activities                                         |                                         |                                                     |       
|                                                             | Dividend received                       |                                                     | 523.8 
|                                                             | Investments in and loans to affiliates  |                                                     | 56.2  
|                                                             |                                         |                                                     |       
|                                                             |                                         | Net cash provided by (used in) investing activities |       
|                                                             |                                         |                                                     |       
|Financing activities                                         |                                         |                                                     |       
|                                                             | Net proceeds from rights offering       |                                                     |      
|                                                             | Proceeds from new borrowings            |                                                     | 10.0  
|                                                             | Proceeds from exercise of stock options |                                                     | 5.0   
|                                                             | Purchase of stock                       |                                                     | (114.0
|                                                             | Principal payments on long-term debt    |                                                     |      
|                                                             |                                         |                                                     |       
|                                                             |                                         | Net cash (used in) provided by financing activities |       
|                                                             |                                         |                                                     |       
|Effect of exchange rate changes on cash and cash equivalents |                                         | 25.6                                                |       
|Increase (decrease) in cash and cash equivalents             |                                         | 408.4                                               |       
|Cash and cash equivalents at beginning of year               |                                         | 38.2                                                |       
|                                                             |                                         |                                                     |       
|Cash and cash equivalents at end of year                     |                                         | £446.6                                              |       
|                                                             |                                         |                                                     |       
|Supplemental disclosure of cash flow information             |                                         |                                                     |       
|Cash paid for interest                                       |                                         | £                                                  |       
|Income taxes paid                                            |                                         | 2.2                                                 |       

See
accompanying notes.

F-62

---





NTL INCORPORATED        NOTES TO CONDENSED FINANCIAL INFORMATION OF REGISTRANT

1.     Corporate Restructuring

On January 10, 2003, the Company emerged from reorganization under Chapter 11 of the United States Bankruptcy Code. Pursuant to the plan of reorganization,
which is referred to as the Plan, the Company's former parent, NTL Europe, Inc., or NTL Europe, and its subsidiaries and affiliates were split into two separate groups, with the Company and NTL
Europe, each emerging as independent public companies. The Company was renamed "NTL Incorporated" and became the holding company for the former NTL group's principal UK and Ireland assets. NTL Europe
became the holding company for the former NTL group's continental European and various other assets. All of the outstanding securities of NTL Europe and some of its subsidiaries, including the
Company, were cancelled. The Company issued shares of its common stock and Series A warrants and NTL Europe issued shares of its common stock and preferred stock to various former creditors and
stockholders. As a result, the Company is no longer affiliated with NTL Europe. NTL Europe has since changed its name to PTV, Inc..

2.     Basis of Presentation

In the Company's condensed financial statements, the Company's investment in subsidiaries is stated at cost plus equity in the undistributed earnings of the
subsidiaries. The Company's share of net loss of its subsidiaries is included in net loss using the equity method of accounting. The condensed financial statements should be read in conjunction with
the Company's consolidated financial statements.

3.     Leases

Leases for office space end in 2007. Total rental expense for the years ended December 31, 2005, 2004 and 2003 under operating leases was
£0.1 million, £0.2 million and £0.7 million, respectively.

Future
minimum lease payments under noncancellable operating leases as of December 31, 2005 are £0.1 million.

4.     Other

On January 10, 2003, the Company loaned Communications Cable Funding Corp., (a wholly-owned subsidiary), £99.8 million for the repayment
of debt to NTL Delaware, Inc. Interest is payable on demand at a rate of 5.28516% per annum and will be increased to 15% per annum. On December 22, 2003, Communications Cable Funding
Corp. repaid £2.6 million of the loan and on April 7, 2004, the Company contributed the remaining £97.2 million of the loan to the capital of
Communications Cable Funding Corp.

In
addition, on January 10, 2003, the Company acquired the public debt of Diamond Cable Communications Limited aggregating £853.1 million (including interest of
£84.8 million). On February 4, 2003, the Company released Diamond Cable Communications Limited from its obligations under these notes.

A
cash dividend of £523.8 million was paid to the registrant by subsidiaries in the year ended December 31, 2005. No cash dividends were paid to the registrant
by subsidiaries for the years ended December 31, 2004 and 2003.

F-63

---





NTL INCORPORATED AND SUBSIDIARIES        SCHEDULE IIVALUATION AND QUALIFYING ACCOUNTS

|Description                  |                                 | Balance at
Beginning of
Period |   | Charged to
Costs and
Expenses |  | Charged to
Other Accounts |      | (Deductions)/
Additions |   | Balance at
End of
Period
|---------------------------- | ------------------------------- | ------------------------------ | - | ----------------------------- |  | ------------------------- | ---- | ----------------------- | - | ------------------------
|
|Year ended December 31, 2005 |                                 |                                |   |                               |  |                           |      |                         |   |                         
|                             | Allowance for doubtful accounts |                                | £ | 43.4                          |  | £                         | 41.6 |                         | £ |                        
|                             |                                 |                                |   |                               |  |                           |      |                         |   |                         
|Year ended December 31, 2004 |                                 |                                |   |                               |  |                           |      |                         |   |                         
|                             | Allowance for doubtful accounts |                                | £ | 12.5                          |  | £                         | 28.0 |                         | £ |                        
|                             |                                 |                                |   |                               |  |                           |      |                         |   |                         
|Year ended December 31, 2003 |                                 |                                |   |                               |  |                           |      |                         |   |                         
|                             | Allowance for doubtful accounts |                                | £ |                              |  | £                         | 13.1 |                         | £ |                        
|                             |                                 |                                |   |                               |  |                           |      |                         |   |                         

---

F-64

---





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The
Board of Directors and Shareholders
NTL Investment Holdings Limited

We
have audited the accompanying consolidated balance sheets of NTL Investment Holdings Limited and subsidiaries (the "Company") an indirect wholly-owned subsidiary of NTL Incorporated
(the "Parent") as of December 31, 2005 and 2004, and the related consolidated statements of operations, shareholders' equity, and cash flows for each of the three years in the period ended
December 31, 2005. Our audits also included the financial statement schedule listed in the Index on page F-1. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial
reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly we express no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of NTL Investment Holdings Limited and
subsidiaries as of December 31, 2005 and 2004, and the related consolidated statements of operations, shareholders' equity, and cash flows for each of the three years in the period ended
December 31, 2005, in conformity with U.S. generally accepted accounting principles.

Ernst &
Young LLP
London, England
February 28, 2006

F-65

---



NTL INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in millions, except share data)

|                                                                              |                                                                                                  | December 31,        
|----------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------ | --------------------
|
|Assets                                                                        |                                                                                                  |                     
|Current assets                                                                |                                                                                                  |                     
|                                                                              | Cash and cash equivalents                                                                        |                     
|                                                                              | Restricted cash                                                                                  |                     
|                                                                              | Accounts receivabletrade, less allowance for doubtful accounts of £39.8 (2005) and £39.0 (2004) |                     
|                                                                              | Prepaid expenses and other current assets                                                        |                     
|                                                                              | Current assets held for sale                                                                     |                     
|                                                                              |                                                                                                  |                     
|                                                                              |                                                                                                  | Total current assets
|Fixed assets, net                                                             |                                                                                                  |                     
|Reorganization value in excess of amounts allocable to identifiable assets    |                                                                                                  |                     
|Customer lists, net                                                           |                                                                                                  |                     
|Other intangible assets, net                                                  |                                                                                                  |                     
|Other assets, net of accumulated amortization of £32.2 (2005) and £8.0 (2004) |                                                                                                  |                     
|Due from affiliates                                                           |                                                                                                  |                     
|Other assets held for sale                                                    |                                                                                                  |                     
|                                                                              |                                                                                                  |                     
|Total assets                                                                  |                                                                                                  | £                   
|                                                                              |                                                                                                  |                     

See
accompanying notes.

F-66

---



|                                                 |                                                                                                                                                      | December 31,               |        
|------------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | -------
|
|Liabilities and shareholders' equity             |                                                                                                                                                      |                            |        
|Current liabilities                              |                                                                                                                                                      |                            |        
|                                                 | Accounts payable                                                                                                                                     |                            | £      
|                                                 | Accrued expenses and other current liabilities                                                                                                       |                            |        
|                                                 | Interest payable                                                                                                                                     |                            |        
|                                                 | Deferred revenue                                                                                                                                     |                            |        
|                                                 | Due to affiliates                                                                                                                                    |                            |        
|                                                 | Current liabilities of discontinued operations                                                                                                       |                            |        
|                                                 | Current portion of long-term debt                                                                                                                    |                            |        
|                                                 |                                                                                                                                                      |                            |        
|                                                 |                                                                                                                                                      | Total current liabilities  |        
|Long-term debt, net of current portion           |                                                                                                                                                      |                            | 2,630.4
|Deferred revenue and other long-term liabilities |                                                                                                                                                      |                            | 125.8  
|Long term liabilities of discontinued operations |                                                                                                                                                      |                            |       
|Minority interest                                |                                                                                                                                                      |                            | 1.0    
|Commitments and contingent liabilities           |                                                                                                                                                      |                            |        
|Shareholders' equity                             |                                                                                                                                                      |                            |        
|                                                 | Share capital£0.001 par value; authorized 1,000,000 ordinary shares (2005 and 2004); issued and outstanding 121,006 (2005 and 2004) ordinary shares |                            |        
|                                                 | Additional paid-in capital                                                                                                                           |                            |        
|                                                 | Accumulated other comprehensive loss                                                                                                                 |                            |        
|                                                 | Accumulated deficit                                                                                                                                  |                            |        
|                                                 |                                                                                                                                                      |                            |        
|                                                 |                                                                                                                                                      | Total shareholders' equity |        
|                                                 |                                                                                                                                                      |                            |        
|Total liabilities and shareholders' equity       |                                                                                                                                                      | £                          | 4,227.4
|                                                 |                                                                                                                                                      |                            |        

See
accompanying notes.

F-67

---





NTL INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF OPERATIONS        (in millions)

|                                                                          |                                                                    | Year ended December 31,             |         
|------------------------------------------------------------------------- | ------------------------------------------------------------------ | ----------------------------------- | --------
|
|Revenue                                                                   |                                                                    | £                                   | 1,825.9 
|Costs and expenses                                                        |                                                                    |                                     |         
|                                                                          | Operating costs (exclusive of depreciation shown separately below) |                                     |         
|                                                                          | Selling, general and administrative expenses                       |                                     |         
|                                                                          | Other charges                                                      |                                     |         
|                                                                          | Depreciation                                                       |                                     |         
|                                                                          | Amortization                                                       |                                     |         
|                                                                          |                                                                    |                                     |         
|                                                                          |                                                                    |                                     | (1,833.9
|                                                                          |                                                                    |                                     |         
|Operating loss                                                            |                                                                    |                                     | (8.0    
|Other income (expense)                                                    |                                                                    |                                     |         
|                                                                          | Interest income and other, net                                     |                                     |         
|                                                                          | Interest expense                                                   |                                     |         
|                                                                          | Loss on extinguishment of debt                                     |                                     |         
|                                                                          | Gains on derivative instruments                                    |                                     |         
|                                                                          | Foreign currency transaction gains (losses)                        |                                     |         
|                                                                          |                                                                    |                                     |         
|Loss from continuing operations before income taxes and minority interest |                                                                    |                                     | (230.0  
|Income tax benefit                                                        |                                                                    |                                     |        
|Minority interest expense                                                 |                                                                    |                                     | (1.0    
|                                                                          |                                                                    |                                     |         
|                                                                          | Loss from continuing operations                                    |                                     |         
|                                                                          |                                                                    |                                     |         
|Discontinued operations                                                   |                                                                    |                                     |         
|                                                                          | Income from discontinued operations before income taxes            |                                     |         
|                                                                          | Income tax expense                                                 |                                     |         
|                                                                          | Gain on disposal                                                   |                                     |         
|                                                                          |                                                                    |                                     |         
|                                                                          |                                                                    | Income from discontinued operations |         
|                                                                          |                                                                    |                                     |         
|Net income (loss)                                                         |                                                                    | £                                   | 433.6   
|                                                                          |                                                                    |                                     |         

See
accompanying notes.

F-68

---



|                                            |  | January 1,
2003 |         
|------------------------------------------- |  | --------------- | --------
|
|Gain on debt discharge                      |  | £               | 616.2   
|Fresh-start adoptionintangible assets      |  |                 | 478.7   
|Fresh-start adoptionlong-term debt         |  |                 | 137.4   
|Fresh-start adoptiondeferred tax liability |  |                 | 16.8    
|Fresh-start adoptionaccrued expenses       |  |                 | (29.3   
|Fresh-start adoptionfixed assets           |  |                 | (2,179.7
|                                            |  |                 |         
|Loss from continuing operations             |  |                 | (959.9  
|                                            |  |                 |         
|Fresh-start adoptionintangible assets      |  |                 | 419.5   
|Fresh-start adoptiondeferred tax liability |  |                 | (59.4   
|Fresh-start adoptionfixed assets           |  |                 | 210.7   
|                                            |  |                 |         
|Income from discontinued operations         |  |                 | 570.8   
|                                            |  |                 |         
|Net loss                                    |  | £               | (389.1  
|                                            |  |                 |         

See
accompanying notes.

F-69

---





NTL INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF CASH FLOWS        (in millions)

|                                                                                                        |                                                                    | Year ended December 31, |       
|------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------ | ----------------------- | ------
|
|Operating Activities:                                                                                   |                                                                    |                         |       
|Net income (loss)                                                                                       |                                                                    | £                       | 433.6 
|Income from discontinued operations                                                                     |                                                                    |                         | (664.6
|                                                                                                        |                                                                    |                         |       
|Loss from continuing operations                                                                         |                                                                    |                         | (231.0
|Adjustments to reconcile net income (loss) to net cash provided by operating activities:                |                                                                    |                         |       
|                                                                                                        | Depreciation and amortization                                      |                         |       
|                                                                                                        | Non-cash compensation                                              |                         |       
|                                                                                                        | Deferred income taxes                                              |                         |       
|                                                                                                        | Minority interest expense                                          |                         |       
|                                                                                                        | Loss on extinguishment of debt                                     |                         |       
|                                                                                                        | Amortization of original issue discount and deferred finance costs |                         |       
|                                                                                                        | Foreign currency translation differences                           |                         |       
|Changes in operating assets and liabilities, net of effect from business acquisitions and dispositions: |                                                                    |                         |       
|                                                                                                        | Accounts receivable                                                |                         |       
|                                                                                                        | Prepaid expenses and other current assets                          |                         |       
|                                                                                                        | Other assets                                                       |                         |       
|                                                                                                        | Accounts payable                                                   |                         |       
|                                                                                                        | Accrued expenses and other current liabilities                     |                         |       
|                                                                                                        | Deferred revenue                                                   |                         |       
|                                                                                                        | Other long-term liabilities                                        |                         |       
|                                                                                                        |                                                                    |                         |       
|Net cash provided by operating activities                                                               |                                                                    |                         | 348.7 
|                                                                                                        |                                                                    |                         |       
|Investing activities                                                                                    |                                                                    |                         |       
|                                                                                                        | Purchase of fixed assets                                           |                         |       
|                                                                                                        | Investments in and loans to affiliates                             |                         |       
|                                                                                                        | Decrease in restricted cash                                        |                         |       
|                                                                                                        | Proceeds from sale of assets                                       |                         |       
|                                                                                                        | Acquisitions, net of cash acquired                                 |                         |       
|                                                                                                        | Proceeds from the sale of broadcast operations, net                |                         |       
|                                                                                                        | Proceeds from the sale of Ireland operations, net                  |                         |       
|                                                                                                        |                                                                    |                         |       
|                                                                                                        | Net cash provided by (used in) investing activities                |                         |       
|                                                                                                        |                                                                    |                         |       

See
accompanying notes.

F-70

---



|                                                                        |                                                  | Year ended December 31,                             |      
|----------------------------------------------------------------------- | ------------------------------------------------ | --------------------------------------------------- | -----
|
|Financing activities                                                    |                                                  |                                                     |      
|                                                                        | Proceeds from borrowings, net of financing costs |                                                     | £    
|                                                                        | Principal payments on long-term debt             |                                                     |      
|                                                                        |                                                  |                                                     |      
|                                                                        |                                                  | Net cash (used in) provided by financing activities |      
|                                                                        |                                                  |                                                     |      
|Cash flow from discontinued operations                                  |                                                  |                                                     |      
|Net cash provided by operating activities                               |                                                  |                                                     | (14.3
|Net cash (used in) investing activities                                 |                                                  |                                                     | (4.1 
|                                                                        |                                                  |                                                     |      
|Net cash (used in) provided by discontinued operations                  |                                                  |                                                     | (18.4
|                                                                        |                                                  |                                                     |      
|Increase (decrease) in cash and cash equivalents                        |                                                  |                                                     | 202.6
|Cash and cash equivalents at beginning of year                          |                                                  |                                                     | 85.5 
|                                                                        |                                                  |                                                     |      
|Cash and cash equivalents at end of year                                |                                                  | £                                                   | 288.1
|                                                                        |                                                  |                                                     |      
|Supplemental disclosure of cash flow information                        |                                                  |                                                     |      
|Cash paid during the year for interest exclusive of amounts capitalized |                                                  | £                                                   | 238.3
|Income taxes paid                                                       |                                                  |                                                     |     

|                                               |                                           | January 1,
2003 |      
|---------------------------------------------- | ----------------------------------------- | --------------- | -----
|
|Net cash used in operating activities          |                                           | £               |     
|Investing activities                           |                                           |                 |      
|                                               | Net cash provided by investing activities |                 |      
|Financing activities                           |                                           |                 |      
|Financing costs                                |                                           |                 | (65.2
|                                               |                                           |                 |      
|                                               | Net cash provided by financing activities |                 |      
|                                               |                                           |                 |      
|Decrease in cash and cash equivalents          |                                           |                 | (65.2
|Cash and cash equivalents, beginning of period |                                           |                 | 154.4
|                                               |                                           |                 |      
|Cash and cash equivalents, end of period       |                                           | £               | 89.2 
|                                               |                                           |                 |      

See
accompanying notes.

F-71

---





NTL INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES        CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)        (in millions, except share data)

|                                                |  |         |  |    |  |           |   |         |   | Accumulated Other
Comprehensive Income (Loss) |   |       |   |            |  
|----------------------------------------------- |  | ------- |  | -- |  | --------- | - | ------- | - | --------------------------------------------- | - | ----- | - | ---------- | -
|
|
|
|
|Balance, December 31, 2002                      |  | 120,000 |  | £ |  | £9,613.1  |   |         |   | £(64.4                                        | ) | £    |   | £(11,376.5 | )
|Comprehensive loss:                             |  |         |  |    |  |           |   |         |   |                                               |   |       |   |            |  
|Net loss January 1, 2003                        |  |        |  |   |  |          |   | £(389.1 | ) |                                              |   |      |   | (389.1     | )
|                                                |  |         |  |    |  |           |   |         |   |                                               |   |       |   |            |  
|Share issues                                    |  | 1,000   |  |   |  | 3,292.7   |   |         |   |                                              |   |      |   |           |  
|Fresh-start adoptionother                      |  |        |  |   |  | (11,830.5 | ) |         |   | 64.4                                          |   |      |   | 11,765.6   |  
|                                                |  |         |  |    |  |           |   |         |   |                                               |   |       |   |            |  
|Reorganized basis                               |  |         |  |    |  |           |   |         |   |                                               |   |       |   |            |  
|Balance, January 1, 2003                        |  | 121,000 |  |   |  | 1,075.3   |   |         |   |                                              |   |      |   |           |  
|Release of debt obligations                     |  |        |  |   |  | 195.4     |   |         |   |                                              |   |      |   |           |  
|Share issues                                    |  | 4       |  |   |  | 129.2     |   |         |   |                                              |   |      |   |           |  
|Comprehensive loss:                             |  |         |  |    |  |           |   |         |   |                                               |   |       |   |            |  
|Net loss for the year ended December 31, 2003   |  |        |  |   |  |          |   | £(498.3 | ) |                                              |   |      |   | (498.3     | )
|Pension liability adjustment                    |  |        |  |   |  |          |   | (0.4    | ) | (0.4                                          | ) |      |   |           |  
|                                                |  |         |  |    |  |           |   |         |   |                                               |   |       |   |            |  
|                                                |  |         |  |    |  |           |   | £(498.7 | ) |                                               |   |       |   |            |  
|                                                |  |         |  |    |  |           |   |         |   |                                               |   |       |   |            |  
|Balance, December 31, 2003                      |  | 121,004 |  |   |  | 1,399.9   |   |         |   | (0.4                                          | ) |      |   | (498.3     | )
|Share issues                                    |  | 2       |  |   |  |          |   |         |   |                                              |   |      |   |           |  
|Comprehensive loss:                             |  |         |  |    |  |           |   |         |   |                                               |   |       |   |            |  
|Net loss for the year ended December 31, 2004   |  |        |  |   |  |          |   | £(562.5 | ) |                                              |   |      |   | (562.5     | )
|Net unrealized losses on derivative instruments |  |        |  |   |  |          |   | (24.0   | ) |                                              |   | (24.0 | ) |           |  
|Pension liability adjustment                    |  |        |  |   |  |          |   | (1.7    | ) | (1.7                                          | ) |      |   |           |  
|                                                |  |         |  |    |  |           |   |         |   |                                               |   |       |   |            |  
|                                                |  |         |  |    |  |           |   | £(588.2 | ) |                                               |   |       |   |            |  
|                                                |  |         |  |    |  |           |   |         |   |                                               |   |       |   |            |  
|Balance, December 31, 2004                      |  | 121,006 |  |   |  | 1,399.9   |   |         |   | (2.1                                          | ) | (24.0 | ) | (1,060.8   | )
|Comprehensive income:                           |  |         |  |    |  |           |   |         |   |                                               |   |       |   |            |  
|Net income for the year ended December 31, 2005 |  |        |  |   |  |          |   | £433.6  |   |                                              |   |      |   | 433.6      |  
|Net unrealized gains on derivative instruments  |  |        |  |   |  |          |   | 23.2    |   |                                              |   | 23.2  |   |           |  
|Pension liability adjustment                    |  |        |  |   |  |          |   | (16.1   | ) | (16.1                                         | ) |      |   |           |  
|                                                |  |         |  |    |  |           |   |         |   |                                               |   |       |   |            |  
|                                                |  |         |  |    |  |           |   | £440.7  |   |                                               |   |       |   |            |  
|                                                |  |         |  |    |  |           |   |         |   |                                               |   |       |   |            |  
|Balance, December 31, 2005                      |  | 121,006 |  | £ |  | £1,399.9  |   |         |   | £(18.2                                        | ) | £(0.8 | ) | £(627.2    | )
|                                                |  |         |  |    |  |           |   |         |   |                                               |   |       |   |            |  

See accompanying notes.

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NTL INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.     Organization and Business

Historical Structure of the Company

NTL Investment Holdings Limited, NTLIH or the Company, is incorporated in the United Kingdom. The Company is an indirect wholly-owned subsidiary of NTL
Incorporated, or NTL.

The
Company was incorporated in March 1996 under the laws of England and Wales. From March 1996 to April 1998, the Company was a wholly-owned subsidiary of NTL (UK)
Group, Inc. From April 1998 to April 2004, the Company was a wholly-owned subsidiary of NTL Communications Limited. Since April 2004, the Company is a wholly-owned
subsidiary of NTL Cable plc.

In
October 2003, the Company cancelled its outstanding share capital and issued 1,000 shares of £0.001 each for every existing share outstanding. Shareholders' equity
has been retrospectively restated to show the effect of the stock split.

Business

The Company is one of the leading communications and content distribution companies in the UK, providing broadband internet access, telephone and television
services to residential customers. The Company also provides internet and telephone services to residential customers who are not connected to its cable network, via access to other companies'
telecommunications networks and via an internet service provider operated by its subsidiary, Virgin Net Limited. The Company offers what it refers to as a "triple play" bundle of internet, telephone
and television services through competitively-priced bundled packages. The Company also provides a range of voice services to businesses and public sector organizations as well as a variety of data
communications solutions from high speed internet access to fully managed business communications networks and communication transport services.

The
Company's services are delivered through its wholly-owned local access communications network. The design and capability of the Company's network provides it with the ability to
offer "triple play" bundled services to residential consumers and a broad portfolio of reliable, competitive communications solutions to business customers.

The
Company provides services to two categories of customers: residential customers and business customers as follows:



2.     Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States.

NTL
Incorporated operated its business as a debtor-in-possession subject to the jurisdiction of the Bankruptcy Court during the period from May 8, 2002
until January 10, 2003. Accordingly, NTL's consolidated financial statements for periods prior to its emergence from Chapter 11 reorganization

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were
prepared in accordance with the American Institute of Certified Public Accountants Statement of Position 90-7,Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code("SOP 90-7"). In addition, NTL adopted fresh-start reporting upon its emergence from Chapter 11 reorganization in
accordance with SOP 90-7.

Pursuant
to fresh-start reporting, a new entity was deemed created for financial reporting purposes and the carrying values of assets and liabilities were adjusted. The carrying values
of assets were adjusted to their reorganization values that are equivalent to their estimated fair values. The carrying values of liabilities were adjusted to their present values. The term
"Predecessor Company" refers to the Company and its subsidiaries for periods prior to and including December 31, 2002. The term "Reorganized Company" refers to the Company and its subsidiaries
for periods subsequent to January 1, 2003. The effects of the consummation of the Plan as well as adjustments for fresh-start reporting recorded as of January 1, 2003 are Predecessor
Company transactions and are presented in the accompanying consolidated statements of operations and cash flows dated January 1, 2003. All other results of operations and cash flows on
January 1, 2003 are Reorganized Company transactions.

On
December 1, 2004, NTL reached an agreement for the sale of its broadcast operations. The sale completed on January 31, 2005. As of December 31, 2004, the
broadcast operations are accounted for as a discontinued operation and the assets and liabilities of the broadcast operations are reclassified as assets held-for-sale and
liabilities of discontinued operations, respectively, and broadcast's results of operations have been removed from the Company's results of continuing operations for all periods presented in this
Annual Report. The results of operations of broadcast have been excluded from the components of "Loss from Continuing Operations" and shown under the caption "Income from Discontinued Operations" in
the Statements of Operations.

On
May 9, 2005, the Company sold its operations in the Republic of Ireland. The Company has restated its financial statements to account for the Ireland operations as a
discontinued operation. The assets and liabilities of the Ireland operations are reclassified as assets held-for-sale and liabilities of discontinued operations, respectively,
and
the results of operations have been removed from the Company's results of continuing operations for all periods presented in this Annual Report. The results of operations of the Ireland operations
have been excluded from the components of "Loss from Continuing Operations" and shown under the caption "Income from Discontinued Operations" in the Statements of Operations.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying notes. Such estimates and assumptions impact, among others, the following: the amount of uncollectible accounts and notes
receivable, the amount to be paid to terminate certain agreements included in restructuring costs, amounts accrued for vacated properties, the amount to be paid for other liabilities, the Company's
pension expense and pension funding requirements, amounts to be paid under the Company's employee incentive plans, costs for interconnection, the amount of costs to be capitalized in connection with
the construction and installation of the Company's network and facilities, long-lived assets, certain other intangible assets and the computation of the Company's income tax expense and
liability. Actual results could differ from those estimates.

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Fair Values

The Company has determined the estimated fair value amounts presented in these consolidated financial statements using available market information and
appropriate methodologies. However, considerable judgment is required in interpreting market data to develop the estimates of fair value. The estimates presented in these consolidated financial
statements are not necessarily indicative of the amounts that the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a
material effect on the estimated fair value amounts. The Company has based these fair value estimates on pertinent information available to it as of December 31, 2005 and 2004.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and entities where the Company's interest is greater than
50%. Intercompany accounts and transactions have been eliminated in consolidation.

Reclassification

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

Foreign Currency Translation

The functional currency of the Company is the pound sterling. The Company's reporting currency is the pound sterling. Foreign currency transaction gains and
losses are recorded in the statement of operations.

Cash Equivalents and Restricted Cash

Cash equivalents are short-term highly liquid investments purchased with a maturity of three months or less. The Company had no cash equivalents at
December 31, 2005 and 2004.

Restricted
cash balances of £2.6 million and £14.9 million as at December 31, 2005 and 2004, respectively represent cash balances
collateralized against performance bonds given on behalf of the Company.

Trade Receivables

The Company's trade receivables are stated at outstanding principal balance, net of allowance for doubtful accounts. Allowances for doubtful accounts are
estimated based on the current aging of trade
receivables, prior collection experience and future expectations of conditions that might impact recoverability. The allowance for doubtful accounts is £39.8 million at
December 31, 2005 and £39.0 million at December 31, 2004.

Concentrations of Credit Risk

The Company's financial instruments that are exposed to concentrations of credit risk consist primarily of trade receivables. Concentrations of credit risk with
respect to trade receivables are limited because of the large number of customers and their dispersion across geographic areas. The Company

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performs
periodic credit evaluations of its Business customers' financial condition and generally does not require collateral. At December 31, 2005, the Company did not have significant credit
risk concentrations. No single group or customer represents greater than 10% of total accounts receivable.

Fixed Assets

Fixed assets, net totaled £3,114.3 million and £3,331.7 million, representing 73.7% and 64.0% of total assets at
December 31, 2005 and 2004, respectively.

The
cost of fixed assets includes amounts capitalized for labor and overhead expended in connection with the design and installation of the Company's operating network equipment and
facilities. Costs associated with initial customer installations, additions of network equipment necessary to enable enhanced services, acquisition of additional fixed assets and replacement of
existing fixed assets are capitalized. The costs of reconnecting the same service to a previously installed premise are charged to expense in the period incurred. Costs for repairs and maintenance are
charged to expense as incurred.

Labor
and overhead costs directly related to the construction and installation of fixed assets, including payroll and related costs of some employees and related rent and other occupancy
costs, are capitalized. The payroll and related costs of some employees that are directly related to construction and installation activities are capitalized based on specific time devoted to these
activities where identifiable. In cases where the time devoted to these activities is not specifically identifiable, the Company capitalizes costs based upon estimated allocations.

Depreciation
is computed by the straight-line method over the estimated useful lives of the assets. Land and fixed assets held for sale are not depreciated. Estimated useful
lives are as follows:

Operating equipment:Cable distribution plant

830 yearsSwitches and headends

810 yearsCustomer premises equipment

510 yearsOther operating equipment

820 yearsOther equipment:Buildings

30 yearsLeasehold improvements

20 years or, if less, the lease termComputer infrastructure

35 yearsOther equipment

512 years


Intangible Assets

Intangible assets include trademark license agreements and customer lists. Trademark license agreements represent the portion of purchase price allocated to
agreements to license trademarks acquired in business combinations. Trademark licenses are amortized over the period in which the Company expects to derive benefits, which is principally five years.
Customer lists represent the portion of the purchase price allocated to the value of the customer base. Customer lists are amortized on a

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straight-line
basis over the period in which the Company expects to derive benefits, which is principally three to five years.

In
addition, the reflection of fresh start reporting resulted in a new indefinite-lived intangible asset. This amount is not amortized but is reviewed annually (or more frequently under
certain conditions) for impairment in accordance with FASB Statement No. 142,Goodwill and Other Intangible Assets(FAS 142).

Asset Retirement Obligations

The Company accrues for the liability in respect of dilapidation on its leasehold properties over the term of the lease in accordance with FASB Statement
No. 13,Accounting for Leases(FAS 13).

Impairment of Long-Lived Assets

In accordance with FASB Statement No. 144,Impairment of Long-Lived Assets(FAS 144),
long-lived assets, including fixed assets and amortizable definite lived intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. The Company assesses the recoverability of the carrying value of long-lived assets, by first grouping its long-lived assets with other
assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities (the asset group) and, secondly, estimating the
undiscounted future cash flows that are directly associated with and expected to arise from the use of and eventual disposition of such asset group. The Company estimates the undiscounted cash flows
over the remaining useful life of the primary asset within the asset group. If the carrying value of the asset group exceeds the estimated undiscounted cash flows, the Company records an impairment
charge to the extent the carrying value of the long-lived asset exceeds its fair value. The Company
determines fair value through quoted market prices in active markets or, if quoted market prices are unavailable, through the performance of internal analysis of discounted cash flows or external
appraisals. The undiscounted and discounted cash flow analyses are based on a number of estimates and assumptions, including the expected period over which the asset will be utilized, projected future
operating results of the asset group, discount rate and long-term growth rate.

As
of December 31, 2005, the Company reviewed its long-lived assets for impairment and determined that there was no impairment of the Company's long-lived
assets as of December 31, 2005.

Deferred Financing Costs

Deferred financing costs of £57.1 million and £77.1 million as of December 31, 2005 and 2004, respectively, are
included in other assets. Deferred financing costs are incurred in connection with the issuance of debt and are amortized over the term of the related debt using the effective interest method.

Restructuring Costs

As of January 1, 2003, the Company adopted FASB Statement No. 146.Accounting for Costs Associated with Exit or Disposal
Activities(FAS 146) and recognizes a liability for costs associated with restructuring activities when the liability is incurred. The adoption of FAS 146 did not
have a significant effect on the results of operations, financial condition or cash flows of the Company.

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Prior
to 2003, the Company recognized a liability for costs associated with restructuring activities at the time of a commitment to restructure is given in accordance with EITF
94-3,Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a
restructuring). Liabilities for costs associated with restructuring activities initiated prior to January 1, 2003 continue to be accounted for under EITF 94-3.

Revenue Recognition

The Company recognizes revenue only when it is realized or realizable and earned. The Company recognizes revenue when all of the following are present:



Revenues
are invoiced and recorded as part of a periodic billing cycle, and are recognized as the services are provided. At the end of each period, adjustments are recorded to defer
revenue relating to services billed in advance and to accrue for earned but unbilled services.



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Advertising Expense

The Company charges the cost of advertising to expense as incurred. Advertising costs were £51.1 million, £40.3 million and
£33.8 million in 2005, 2004 and 2003, respectively.

Stock-Based Compensation

The Company is an indirect, wholly-owned subsidiary of NTL. Accordingly, the Company has no stock-based compensation plans. Certain of the Company's employees
participate in the stock-based compensation plans of NTL, which are described in NTL's Annual Report. NTL accounts for these plans using the fair value recognition provisions of FASB Statement
No. 123,Accounting for Stock-Based Compensation(FAS 123).

Pensions

The Company accounts for its defined benefit pension plans using FASB Statement No. 87,Employer's Accounting for
Pensions(FAS 87) and the disclosure rules under FASB Statement No. 132 (revised),Employers Disclosures about Pensions and Other
Postretirement Benefits, an Amendment of FASB Statements 87, 88 and 106. Under FAS 87, pension expense is recognized on an accrual basis over employees' approximate service
periods. Pension expense calculated under FAS 87 is generally independent of funding decisions or requirements.

The
fair value of the Company's pension plans' assets increased from £191.8 million at December 31, 2004 to £284.5 million at
December 31, 2005. The Company contributed £59.7 million in cash to its defined benefit pension plans in 2005.

The
calculation of pension expense and the Company's pension liability requires the use of a number of assumptions. Changes in these assumptions can result in different expense and
liability amounts, and future actual experience can differ from the assumptions. The Company believes that the two most critical assumptions are the expected long-term rate of return on
plan assets and the assumed discount rate.

When
calculating pension expense for 2005, the Company assumed that its plans' assets would generate a long-term rate of return of approximately 7.1%. This rate is lower than
the assumed rates of between 7.4% and 7.9% used to calculate the 2004 expense. The Company determines its expected long-term rate of return assumption based on historical experience and by
evaluating input from the trustee managing the plan's assets, including the trustee's review of asset class return expectations by several consultants and economists as well as long-term
inflation assumptions. The Company's expected long-term rate of return on plan assets is based on a target allocation of assets, which is based on its goal of earning the highest rate of
return while maintaining risk at acceptable levels. The plan strives to have assets sufficiently diversified so that adverse or unexpected results from one security class will not have an unduly
detrimental impact on the entire portfolio.

The
Company discounted its future pension obligations using a rate of 4.8% at December 31, 2005 and rates of between 4.8% and 5.3% for 2004. The Company determined the appropriate
discount rate based on the current rates earned on long-term bonds that receive one of the two highest ratings given by a recognized rating agency. The pension liability and future pension
expense both increase as the discount rate is reduced.

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At
December 31, 2005, the Company has unrecognized actuarial losses of £27.6 million. These losses will be recognized as a component of pension expense in
future years.

Future
changes in plan asset returns, assumed discount rates and various other factors related to the participants in the Company's pension plans will impact its future pension expense
and liabilities. The Company cannot predict with certainty what these factors will be in the future.

Derivative Financial Instruments

The Company is exposed to various market risks, including changes in foreign currency exchange rates and interest rates. As certain of the Company's indebtedness
accrues interest at variable rates, it has exposure to volatility in future cash flows and earnings associated with variable interest rate payments. Also, all of the Company's revenue and a
substantial portion of the Company's operating costs are earned and paid in pounds sterling but it pays interest and principal obligations on some of its indebtedness in U.S. dollars and euros. As a
result, the Company has exposure to volatility in future cash flows and earnings associated with changes in foreign currency exchange rates on payments of principal and interest on a portion of its
indebtedness.

The
Company's objective in managing its exposure to fluctuations in interest rates and foreign currency exchange rates is to decrease the volatility of its earnings and cash flows caused
by changes in underlying rates. To achieve this objective, the Company enters into derivative financial instruments. The Company has established policies and procedures to govern the strategic
management of these exposures through a variety of derivative financial instruments, including interest rate swaps, cross-currency interest rate swaps and foreign currency forward rate contracts. By
policy, the Company does not enter into derivative financial instruments with a level of complexity or with a risk that is greater than the exposure to be managed.

In
accordance with FASB Statement No. 133,Accounting for Derivative Instruments and Hedging Activities(FAS 133), the
Company recognizes derivative financial instruments as either assets or liabilities measured at fair value. Gains and losses resulting from changes in fair value are accounted for depending on the use
of the derivative and whether it is designated and qualifies for hedge accounting. To the extent that the derivative instrument is designated and considered to be effective as a cash flow hedge of an
exposure to future changes in interest rates or foreign currency exchange rates, the change in fair value of the instrument is deferred in other comprehensive income. Amounts recorded in other
comprehensive income are reclassified to the income statement to match the corresponding cash flows on the underlying hedged transaction. Changes in fair value of any instrument not designated as a
hedge or considered to be ineffective as a hedge are reported in earnings immediately.

Software Development Costs

The Company capitalizes costs related to computer software developed or obtained for internal use in accordance with SOP 98-1, Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use. Software obtained for internal use has generally been
enterprise-level business and finance software that the Company customizes to meet its specific operational needs. Costs incurred in the application development phase are capitalized and amortized
over their useful lives, which are generally three to five years. The Company has not sold, leased or licensed software developed for internal use to its customers and the Company has no intention of
doing so in the future.

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Income Taxes

The Company provides for income taxes in accordance with FASB Statement No. 109,Accounting for income
taxes. Judgment is required in determining the Company's provision for income taxes, deferred tax assets and liabilities and the extent to which deferred tax assets can be
recognized. The Company recognizes deferred tax assets only if it is more likely than not that sufficient taxable income will be available in the future against which the temporary differences and
unused tax losses can be utilized. The Company has considered future taxable income and tax planning strategies in assessing whether deferred tax assets should be recognized.

At
each period end, it is necessary for the Company to make certain estimates and assumptions to compute the provision for income taxes including, but not limited to the expected
operating income (or loss) for the year, projections of the proportion of income (or loss) earned and taxed in the United Kingdom and the extent to which this income (or loss) may also be taxed in the
United States, permanent and temporary differences, the likelihood of deferred tax assets being recovered and the outcome of contingent tax risks. In the normal course of business, the Company's tax
returns are subject to examination by various taxing authorities. Such examinations may result in future tax and interest assessments by these taxing authorities for uncertain tax positions taken in
respect to matters such as business acquisitions and disposals and certain financing transactions including intercompany transactions, amongst others, and the Company accrues a liability when it
believes an assessment may be probable and the amount is estimable. In accordance with generally accepted accounting principles, the impact of revisions to these estimates are recorded as income tax
expense or benefit in the period in which they become known. Accordingly, the accounting estimates used to compute the provision for income taxes have and will change as new events occur, as more
experience is acquired, as additional information is obtained and our tax environment changes.

3.     Recent Accounting Pronouncements

In June 2005, the FASB issued FSP FAS 143-1,Accounting for Electronic Equipment Waste
Obligations, (FSP 143-1). The FASB issued the FSP to address the accounting for certain obligations associated with the Waste Electrical and Electronic Equipment
Directive adopted by the European Union (EU). FSP 143-1 requires that the commercial user should apply the provisions of FASB Statement No. 143 and the related FASB
Interpretation No. 47 to certain obligations associated with historical waste (as defined by the Directive), since this type of obligation is an asset retirement obligation. The FSP is
effective for the later of the first reporting period ending after June 8, 2005 or the Directive's adoption into law by the applicable EU-member country. As at December 31,
2005, the UK had not adopted the law. Management intends to evaluate the impact of this law on the Company's results of operations or financial position as and when legislation is adopted in the UK.

4.     Discontinued Operations

BroadcastOn December 1, 2004, the Company reached an agreement to sell
its broadcast operations, a provider of commercial television and radio transmission services, to a consortium led by Macquarie Communications Infrastructure Group. The sale completed on
January 31, 2005. Accordingly, as of December 31, 2004, the Company has accounted for the broadcast operations as discontinued operations. The assets and liabilities of the broadcast
operations as at December 31, 2004 have been reclassified as assets held-for-sale and liabilities of discontinued operations, respectively, and

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the
results of operations of the broadcast operations have been removed from the Company's results of continuing operations and cash flows for all periods presented in this Annual Report. Revenue of
the broadcast operations, reported in discontinued operations, for the years ended December 31, 2005, 2004 and 2003 was £21.4 million, £277.8 million and
£268.6 million, respectively. Broadcast's pre-tax income, reported within discontinued operations, for the years ended December 31, 2005, 2004 and 2003, was
£3.2 million, £5.1 million and £22.2 million, respectively. Prior year financial statements for 2003 have been restated to present the
broadcast operations as discontinued operations. Subsequent to the completion of the transaction, the Company continues to provide circuit rental services to its former broadcast operations.

IrelandOn May 9, 2005, the Company sold its operations in the Republic of Ireland to MS Irish Cable Holdings B.V., an
affiliate of Morgan Stanley & Co. International Limited, for an aggregate purchase price of €333.4 million, or £225.5 million. Accordingly, the Company
has restated its financial statements as of December 31, 2004 and for years ended December 31, 2005, 2004 and 2003, to account for the Ireland operations as a discontinued operation. The
assets and liabilities of the Ireland operations as at December 31, 2004 have been reclassified as assets held-for-sale and liabilities of discontinued operations,
respectively, and the results of operations of the Ireland operations have been removed from the Company's results of continuing operations and cash flows for all periods presented in this Annual
Report. Revenue of the Ireland operations, reported in discontinued operations, for the years ended December 31, 2005, 2004 and 2003 was £25.6 million,
£72.6 million and £72.5 million, respectively. Pre-tax income of the Ireland operations, reported within discontinued operations, for the years ended
December 31, 2005, 2004 and 2003 was £2.5 million, £14.0 million and £1.0 million, respectively.

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The
assets and liabilities of the broadcast and Ireland operations reported as assets held-for-sale and liabilities of discontinued operations at
December 31, 2004, include (in millions):

|Current assets held for sale                     |                                                                            |   |      
|------------------------------------------------ | -------------------------------------------------------------------------- | - | -----
|                                                 | Accounts receivable, net                                                   |   | £    
|                                                 | Prepaid expenses and other current assets                                  |   |      
|                                                 |                                                                            |  
|                                                 |                                                                            | £ | 50.3 
|                                                 |                                                                            |  
|Other assets held for sale                       |                                                                            |   |      
|                                                 | Fixed assets, net                                                          |   | £    
|                                                 | Reorganization value in excess of amounts allocable to identifiable assets |   |      
|                                                 | Customer lists, net                                                        |   |      
|                                                 | Other assets                                                               |   |      
|                                                 |                                                                            |  
|                                                 |                                                                            | £ | 824.8
|                                                 |                                                                            |  
|Current liabilities of discontinued operations   |                                                                            |   |      
|                                                 | Accounts payable                                                           |   | £    
|                                                 | Accrued expenses and other current liabilities                             |   |      
|                                                 | Deferred revenue                                                           |   |      
|                                                 |                                                                            |  
|                                                 |                                                                            | £ | 108.4
|                                                 |                                                                            |  
|Long-term liabilities of discontinued operations |                                                                            |   |      
|                                                 | Deferred income taxes                                                      |   | £    
|                                                 | Other long-term liabilities                                                |   |      
|                                                 |                                                                            |  
|                                                 |                                                                            |   | £    
|                                                 |                                                                            |  

5.     Acquisitions and Disposals

In November 2004, NTL transferred its interests in Virgin Net limited to the Company. In addition, the Company acquired Virgin Media Group's 51% ownership
interests in Virgin Net Limited with the interests held by existing and former management for £23.9 million. These acquisitions resulted in Virgin Net Limited becoming the Company's
indirect wholly-owned subsidiary.

On
January 31, 2005, the Company sold its broadcast operations, a provider of commercial television and radio transmission services, to a consortium led by Macquarie
Communications Infrastructure Group. Upon the sale, the Company recorded a gain on disposal of £513.6 million.

On
May 9, 2005, the Company sold its telecommunications operations in the Republic of Ireland to MS Irish Cable Holdings B.V., an affiliate of Morgan Stanley. Upon the sale, the
Company recorded a gain on disposal of £145.5 million.

On
October 2, 2005, NTL entered into an original merger agreement with Telewest Global, Inc., or Telewest, and Merger Sub Inc., a wholly owned subsidiary. On
December 14, 2005, NTL and Telewest amended and restated the original merger agreement, which is referred to herein as the merger agreement. Under the merger agreement, Telewest will effect a
change of name from "Telewest Global, Inc." to "NTL Incorporated" and will reclassify each share of Telewest common stock issued and outstanding immediately prior to the effective time of the
reclassification into (i) 0.2875 shares of

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Telewest
new common stock, together with cash in lieu of fractional shares of Telewest new common stock, and (ii) one share of Telewest Class B Redeemable Common stock, or Telewest
redeemable common stock. At the effective time of the merger, (i) each share of Telewest redeemable common stock will be automatically redeemed for $16.25 in cash without interest and
(ii) each share of NTL common stock issued and outstanding immediately prior to the effective time of the merger will be converted into the right to receive 2.5 shares of Telewest new common
stock, together with cash in lieu of fractional shares of Telewest new common stock. The Company expects to account for this transaction as a "reverse acquisition" under the purchase method of
accounting. The merger is subject to certain customary conditions, including approval by stockholders of NTL and of Telewest.

In
connection with the merger agreement, on October 2, 2005, NTL and the Company entered into a commitment letter and certain other agreements related to the financing of the
proposed merger. Such commitments were revised on December 14, 2005.

On
December 5, 2005, NTL confirmed that it had approached Virgin Mobile (UK) Holdings plc, or Virgin Mobile, about a potential offer to combine NTL and Virgin Mobile, and that it
had engaged in discussions with Virgin Enterprises to extend NTL's existing exclusive license for use of the Virgin name in the internet services area also to cover television and fixed
and mobile telephone services.

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6.     Fixed Assets

Fixed assets consist of (in millions):

|                         |                             |                           |                                      | December 31, |         
|------------------------ | --------------------------- | ------------------------- | ------------------------------------ | ------------ | --------
|
|
|Operating equipment      |                             |                           |                                      |              |         
|                         | Cable distribution plant    |                           | 830 years                           |              | £       
|                         | Switches and headends       |                           | 810 years                           |              |         
|                         | Customer premises equipment |                           | 510 years                           |              |         
|                         | Other operating equipment   |                           | 820 years                           |              |         
|                         |                             |                           |                                      |              |         
|                         |                             | Total operating equipment |                                      |              |         
|                         |                             |                           |                                      |              |         
|Other equipment          |                             |                           |                                      |              |         
|                         | Land                        |                           |                                     |              |         
|                         | Buildings                   |                           | 30 years                             |              |         
|                         | Leasehold improvements      |                           | 20 years or, if less, the lease term |              |         
|                         | Computer infrastructure     |                           | 35 years                            |              |         
|                         | Other equipment             |                           | 512 years                           |              |         
|                         |                             |                           |                                      |              |         
|                         |                             | Total other equipment     |                                      |              |         
|                         |                             |                           |                                      |              |         
|                         |                             |                           |                                      |              | 4,701.4 
|Accumulated depreciation |                             |                           |                                      |              | (1,683.4
|                         |                             |                           |                                      |              |         
|                         |                             |                           |                                      |              | 3,018.0 
|Construction in progress |                             |                           |                                      |              | 96.3    
|                         |                             |                           |                                      |              |         
|                         |                             |                           |                                      | £            | 3,114.3 
|                         |                             |                           |                                      |              |         

7.     Leases

A summary of assets held under capital leases are as follows (in millions).

|                               |  | December 31, |      
|------------------------------ |  | ------------ | -----
|
|Cable distribution plant       |  | £            | 30.1 
|Switches and headends          |  |              | 2.5  
|                               |  |              |      
|                               |  |              | 32.6 
|Less: accumulated depreciation |  |              | (10.6
|                               |  |              |      
|                               |  | £            | 22.0 
|                               |  |              |      

Amortization
of assets held under capital leases is included within the depreciation expense.

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Future
minimum annual payments at December 31, 2005 are as follows (in millions). The table reflects the Company's contractual obligations.

|                                         |      | Capital
Leases |       | Operating
Leases
|---------------------------------------- | ---- | -------------- | ----- | ----------------
|Year ended December 31:                  |      |                |       |                 
|                                         | 2006 |                | £     | 4.4             
|                                         | 2007 |                |       | 4.3             
|                                         | 2008 |                |       | 4.1             
|                                         | 2009 |                |       | 4.1             
|                                         | 2010 |                |       | 4.1             
|Thereafter                               |      |                | 95.7  |                 
|                                         |      |                |       |                 
|Total minimum lease payments             |      |                | 116.7 |                 
|                                         |      |                |       |                 
|Less: amount representing interest       |      |                | (78.5 | )               
|                                         |      |                |       |                 
|Present value of net minimum obligations |      |                | 38.2  |                 
|Less: current portion                    |      |                | (0.6  | )               
|                                         |      |                |       |                 
|                                         |      | £              | 37.6  |                 
|                                         |      |                |       |                 

Leases
for buildings, offices space and equipment extend through 2034. Total rental expense for the years ended December 31, 2005, 2004, and 2003 under operating leases was
£56.4 million, £66.1 million and £60.9 million respectively.

8.     Intangible Assets

Intangible assets consist of (in millions):

|                                               |                                                                            |  |           | December 31,
|---------------------------------------------- | -------------------------------------------------------------------------- |  | --------- | ------------
|
|
|Intangible assets not subject to amortization: |                                                                            |  |           |             
|                                               | Reorganization value in excess of amounts allocable to identifiable assets |  |           |             
|                                               |                                                                            |  |           |             
|Intangible assets subject to amortization:     |                                                                            |  |           |             
|Cost                                           |                                                                            |  |           |             
|                                               | Non-compete agreements                                                     |  | 1 year    |             
|                                               | Trademark licences                                                         |  | 5 years   |             
|                                               | Customer lists                                                             |  | 35 years |             
|                                               |                                                                            |  |           |             
|                                               |                                                                            |  |           |             
|                                               |                                                                            |  |           |             
|Accumulated amortization                       |                                                                            |  |           |             
|                                               | Non-compete agreements                                                     |  |           |             
|                                               | Trademark licences                                                         |  |           |             
|                                               | Customer lists                                                             |  |           |             
|                                               |                                                                            |  |           |             
|                                               |                                                                            |  |           |             
|                                               |                                                                            |  |           |             
|                                               |                                                                            |  |           |             
|                                               |                                                                            |  |           |             

F-86

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Estimated
aggregate amortization expense for each of the five succeeding fiscal years from December 31, 2005 is as follows: £98.5 million in 2006,
£97.8 million in 2007, £32.3 million in 2008, £3.6 million in 2009 and £nil in 2010.

9.     Long-Term Debt

Long-term debt consists of (in millions):

|                                                            |  | December 31, |        
|----------------------------------------------------------- |  | ------------ | -------
|
|Senior Credit Facility                                      |  | £            | 1,463.0
|Convertible Unsecured Loan Notes due 2058 due to affiliates |  |              |       
|8.75% US Dollar Loan Notes due 2014 due to NTL Cable plc    |  |              | 247.3  
|9.75% Sterling Loan Notes due 2014 due to NTL Cable plc     |  |              | 375.0  
|8.75% Euro Loan Notes due 2014 due to NTL Cable plc         |  |              | 155.0  
|Floating Rate Loan Notes due 2012 due to NTL Cable plc      |  |              | 58.2   
|Other loan notes due to affiliates                          |  |              | 293.0  
|Capital leases                                              |  |              | 38.2   
|Other                                                       |  |              | 1.5    
|                                                            |  |              |        
|                                                            |  |              | 2,631.2
|Less: current portion                                       |  |              | (0.8   
|                                                            |  |              |        
|                                                            |  | £            | 2,630.4
|                                                            |  |              |        

The
effective interest rates on the variable interest rate debt were as follows:

|                                    |  | December 31, |  
|----------------------------------- |  | ------------ | -
|
|Floating Rate Senior Notes due 2012 |  | 8.34         | %
|Senior Credit Facility              |  | 6.90         | %

In
April 2004, NTL and the Company completed its refinancing transaction from which it raised approximately £3.2 billion of new indebtedness and repaid
approximately £3.0 billion of its existing indebtedness. The refinancing transaction extended the maturities on substantially all of the Company's debt and lowered its weighted
average interest expense. In particular:



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The
refinancing transaction resulted in a loss on extinguishment of debt in the year ended December 31, 2004 as follows (in millions):

|Redemption price               |                         |  |          | £3,044.9
|------------------------------ | ----------------------- |  | -------- | --------
|Net carrying amount:           |                         |  |          |         
|                               | Face value              |  | £3,038.5 |         
|                               | Unamortized discount    |  | (92.0    | )       
|                               | Unamortized issue costs |  | (63.8    | )       
|                               |                         |  |          |         
|                               |                         |  |          | 2,882.7 
|                               |                         |  |          |         
|Loss on extinguishment of debt |                         |  |          | £162.2  
|                               |                         |  |          |         

Outstanding Public Notes

The terms of the Senior Credit Facility and Loan Notes as at December 31, 2005 are summarized below.

Senior Credit Facility



F-88

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The
agreements governing the senior credit facility significantly restrict the ability of the Company's subsidiaries to transfer funds to the Company in the form of cash dividends, loans
or advances. In addition, the agreements significantly, and, in some cases, absolutely restrict the Company's ability and the ability of most of its subsidiaries to:



Loan Notes



During
2005, 2004 and 2003, the Company recognized £nil, £9.4 million and £27.3 million, respectively, of original issue discount as
interest expense.

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Long-term debt repayments, excluding capital leases, as of December 31, 2005 are due as follows (in millions):

|Year ended December 31: |      |  |         
|----------------------- | ---- |  | --------
|                        | 2006 |  | £       
|                        | 2007 |  |         
|                        | 2008 |  |         
|                        | 2009 |  |         
|                        | 2010 |  |         
|Thereafter              |      |  | 2,115.3 
|                        |      | 
|Total debt payments     |      |  | £2,593.0
|                        |      | 

On
February 4, 2005 the Company voluntarily prepaid £500 million of principal outstanding under its senior credit facility using the proceeds from the sale of
its broadcast operations. On June 14, 2005 and July 14, 2005 the Company repaid a further £200 million and £23 million, respectively, using the
proceeds from the sale of its Ireland operations. On February 13, 2006, the Company voluntarily prepaid £100 million of principal outstanding. As a consequence, scheduled payments
in 2006 and beyond have reduced. The Convertible Unsecured Loan Notes due 2058 due to affiliates, of which £76.7 million were denominated in pounds sterling and
$707.1 million were denominated in US Dollars, were redeemed in February 2005.

In
connection with the merger agreement with Telewest, the Company and NTL agreed to a commitment letter with several financial institutions who agreed to arrange and to underwrite the
new credit facilities described below.

The
new credit facilities comprise two separate facilities, (a) a senior secured credit facility in an aggregate principal amount of £3.3 billion, comprising a
£3.2 billion 5-year amortizing term loan facility and a £100 million 5-year multi-currency revolving credit facility, and (b) a
1-year (automatically extendable to a 10-year) senior subordinated bridge facility in an aggregate principal amount of £1.8 billion to be made available to
Neptune Bridge Borrower LLC, a wholly owned subsidiary of Telewest, for the purposes of financing the cash consideration payable pursuant to the merger agreement and paying the related fees, costs and
expenses in connection therewith. In addition, the Company and NTL agreed to engage the financial institutions for any take-out financing for the bridge facility. The terms of the
facilities are subject to further amendments prior to the closing of the merger transaction.

The
rate of interest payable under the new senior credit facilities and the revolving facilities is the aggregate, per annum, of LIBOR, plus the applicable interest margin. The
applicable interest margin shall be 1.625% per annum for a period of three months following the closing date for the merger with Telewest and thereafter the applicable interest margin shall be
dependent upon the net leverage ratio then in effect.

Principal
under the new senior credit facilities will be subject to repayments each six months, beginning on September 30, 2007. The borrowers will also be required to repay
principal under the new senior credit facilities, subject to certain exceptions, with excess cash flow and proceeds from disposals and debt and equity issuances.

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Prior
to the maturity date of the bridge facilities, loans under the bridge facilities will bear interest at a rate per annum equal to the three-month reserve-adjusted Gilt/LIBOR/EURIBOR
plus an initial spread of 600 basis points (such spread being subject to quarterly increases of 50 basis points if the loans are not yet repaid). Notwithstanding the foregoing, the interest rate per
annum payable shall not exceed 12.5% in respect of loans under the bridge facilities denominated in U.K. pounds sterling and 11.5% in respect of loans under the bridge facilities denominated in Euro
or U.S. dollars.

10.   Derivative Financial Instruments and Hedging Activities

The Company is exposed to various market risks, including changes in foreign currency exchange rates and interest rates. As some of the Company's indebtedness
accrues interest at variable rates, it has exposure to volatility in future cash flows and earnings associated with variable interest rate payments. Also, all of the Company's revenue and
substantially all of its operating costs are earned and paid in pounds sterling and, to a lesser extent, euros, but it pays interest and principal obligations on some of its indebtedness in U.S.
dollars and euros. As a result, the Company has exposure to volatility in future cash flows and earnings associated with changes in foreign currency exchange rates on payments of principal and
interest on a portion of its indebtedness.

The
Company's objective in managing its exposure to fluctuations in interest rates and foreign currency exchange rates is to decrease the volatility of its earnings and cash flows caused
by changes in underlying rates. To achieve this objective, the Company enters into derivative financial instruments. The Company has established policies and procedures to govern the strategic
management of these exposures through a variety of derivative financial instruments, including interest rate swaps, cross-currency interest rate swaps and foreign currency forward rate contracts. By
policy, the Company does not enter into derivative financial instruments with a level of complexity or with a risk that is greater than the exposure to be managed.

In
accordance with FASB Statement No. 133 "Accounting for Derivative Instruments and Hedging Activities", or FAS 133, the
Company recognizes derivative financial instruments as either assets or liabilities measured at fair value. Gains and losses resulting from changes in fair value are accounted for depending on the use
of the derivative and whether it is designated and qualifies for hedge accounting. To the extent that the derivative instrument is designated and considered to be effective as a cash flow hedge of an
exposure to future changes in interest rates or foreign currency exchange rates, the change in fair value of the instrument is deferred in other comprehensive income. Amounts recorded in other
comprehensive income are reclassified to the income statement to match the corresponding cash flows on the underlying hedged transaction. Changes in fair value of any instrument not designated as a
hedge or considered to be ineffective as a hedge are reported in earnings immediately.

F-91

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The
fair values of the Company's derivative instruments were as follows (in millions):

|                                                                 |                                         | December 31,
|---------------------------------------------------------------- | --------------------------------------- | ------------
|
|Included within other assets:                                    |                                         |             
|                                                                 | Interest rate swaps                     |             
|Included within deferred revenue and other long-term liabilities |                                         |             
|                                                                 | Foreign currency forward rate contracts |             
|                                                                 | Interest rate swaps                     |             
|                                                                 |                                         |             
|                                                                 |                                         |             
|                                                                 |                                         |             

Interest Rate SwapsHedging of Interest Rate Sensitive Obligations

As of December 31, 2005, the Company had outstanding interest rate swap agreements to manage the exposure to variability in future cash flows on the
interest payments associated with £1,250 million of its outstanding senior credit facility, which accrue at variable rates based on LIBOR. The interest rate swaps allow the Company
to receive interest based on LIBOR in exchange for payments of interest at fixed rates of 5.30% and 5.10%. The interest rate swaps became effective on October 14, 2004 and mature on
April 14, 2007. The net settlement of £5.1 million under these interest rate swaps is included within interest expense for the year ended December 31, 2005.

The
Company had designated these interest rate swaps as cash flow hedges under FAS 133 because they hedged against changes in the amount of future cash flows attributable to
changes in LIBOR. On October 2, 2005, the Company and NTL entered into an agreement with several financial institutions to provide financing in connection with the merger agreement with
Telewest Global, Inc. As a result of this agreement, the Company discontinued the hedge designation on October 2, 2005 of the interest rate swaps related to the interest payments on the
senior debt facilities. Net unrealized losses of £16.8 million, which had been included in other comprehensive income, have been reclassified to earnings in the year ended
December 31, 2005. An amount of £12.6 million was recognized in gains on derivatives and £4.2 million was recognized in interest expense.

Cross-Currency Interest Rate SwapsHedging the Interest Payments of Senior Notes and senior credit facility

As of December 31, 2005, the Company had outstanding cross-currency interest rate swaps with principal amounts of $820.2 million and
€151.0 million. The Company currently hedges the pound sterling value of interest payments on the U.S. dollar denominated 8.75% Senior Notes due 2014, interest payments on its
U.S. dollar denominated senior credit facility, and interest payments on its euro denominated senior credit facility. Under these cross-currency swaps, the Company receives interest in U.S. dollars at
a fixed rate of 8.75% and a variable rate based on LIBOR, and in euros at a variable rate based on LIBOR, in exchange for payments of interest in pound sterling at a fixed rate of 9.42%, and at
variable rate LIBOR based on the pound sterling equivalent of $820.2 million and €151.0 million. The net settlement of £4.3 million under these
cross-currency interest rate swaps is included within interest expense for the year ended December 31, 2005.

F-92

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The
Company had designated these cross-currency interest rate swaps as cash flow hedges under FAS 133 because they hedge the changes in the pound sterling value of the interest
payments on its U.S. dollar denominated Senior Notes and U.S. dollar and euro denominated senior credit facility, that result from changes in the U.S. dollar, euro and pound sterling exchange rates.
On October 2, 2005, the Company and NTL entered into an agreement with several financial institutions to provide financing in connection with the merger agreement with Telewest
Global, Inc. As a result of this agreement, the Company discontinued the hedge designation on October 2, 2005 of the interest rate swaps related to the interest payments on the senior
debt facilities. Net unrealized losses of £9.1 million, which had been included in other comprehensive income at September 30, 2005, have been reclassified to earnings and
net unrealized gains of £6.7 million have been taken directly to earnings in the final quarter.

Foreign Currency Forward Rate ContractsRelating to the Principal Obligations of the U.S. Dollar Senior Notes and senior credit facility

As of December 31, 2005, the Company had outstanding foreign currency forward rate contracts to purchase $820.2 million and
€151.0 million, maturing in April 2009. These contracts hedge changes in the pound sterling, U.S. dollar and euro value of the principal obligation of the 8.75% Senior
Note due 2014, and variable rate LIBOR senior credit facility, caused by changes in the U.S. dollar, euro and pound sterling exchange rates.

The
foreign currency forward rate contracts are not accounted for as hedges under FAS 133. As such, the contracts are carried at fair value on the Company's balance sheet with
changes in the fair value recognized immediately in the income statement. The forward rate contracts do not subject the Company to material volatility in its earnings and cash flows because changes in
the fair value directionally and partially mitigate the gains or losses on the translation of its U.S. dollar denominated debt into its functional currency pound sterling in accordance with
FAS 52. Changes in fair value of these contracts are reported with foreign exchanges gains (losses).

Net
changes in the fair value of the forward rate contracts recognized in loss from continuing operations for the three years ended December 31, 2005 were as follows (in
millions):

|                                                        |  | Year ended December 31,
|------------------------------------------------------- |  | -----------------------
|
|Net gain/(loss) in fair value of forward rate contracts |  | £                      
|                                                        |  |                        

11.   Fair Values of Financial Instruments

The Company in estimating its fair value disclosures for financial instruments used the following methods and assumptions:

Cash and cash equivalents, and restricted cash:The carrying amounts reported in the consolidated balance sheets approximate
fair value.

Marketable securities:The carrying amounts reported in the consolidated balance sheets approximate fair value.

F-93

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Long-term debt:The carrying amount of the senior credit facility approximates its fair value. The fair values of
the Company's other debt in the following table are based on the quoted market prices.

The
carrying amounts and fair values of the Company's long-term debt are as follows (in millions):

|                                                     |  | December 31, 2005 |       | December 31, 2004
|---------------------------------------------------- |  | ----------------- | ----- | -----------------
|
|Convertible Unsecured Loan Notes                     |  | £                 |      |                  
|8.75% US Dollar Loan Notes due 2014 to NTL Cable plc |  |                   | 247.3 |                  
|9.75% Sterling Loan Notes due 2014 to NTL Cable plc  |  |                   | 375.0 |                  
|8.75% Euro Loan Notes due 2014 to NTL Cable plc      |  |                   | 155.0 |                  
|Floating Rate Loan Notes due 2012 to NTL Cable plc   |  |                   | 58.2  |                  
|Other loan notes due to affiliates                   |  |                   | 293.0 |                  

12.   Employee Benefit Plans

Certain subsidiaries of the Company operate defined benefit pension plans in the United Kingdom. The assets of the Plans are held separately from those of the
Company and are invested in specialized portfolios under the management of an investment group. The pension cost is calculated using the projected unit method. The Company's policy is to fund amounts
to the defined benefit plans necessary to comply with the funding requirements as prescribed by the laws and regulations in the United Kingdom.

The
Company's defined benefit pension plans use a measurement date of December 31:

Obligations and Funded Status (in millions):

|                                        |  | Year ended December 31, |      
|--------------------------------------- |  | ----------------------- | -----
|
|Change in Projected Benefit Obligation  |  |                         |      
|Benefit obligation at beginning of year |  | £                       | 280.3
|Service cost                            |  |                         | 2.6  
|Interest cost                           |  |                         | 14.4 
|Members contributions                   |  |                         | 0.7  
|Actuarial losses                        |  |                         | 44.0 
|Benefits paid                           |  |                         | (7.7 
|Plan settlements                        |  |                         | (3.3 
|Foreign currency exchange rate changes  |  |                         |     
|                                        |  |                         |      
|Benefit obligation at end of year       |  | £                       | 331.0
|                                        |  |                         |      

F-94

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|                                               |  | Year ended December 31, |      
|---------------------------------------------- |  | ----------------------- | -----
|
|Change in Plan Assets                          |  |                         |      
|Fair value of plan assets at beginning of year |  | £                       | 191.8
|Actual return on plan assets                   |  |                         | 40.0 
|Employer contributions                         |  |                         | 59.7 
|Employee contributions                         |  |                         | 0.7  
|Benefits paid                                  |  |                         | (7.7 
|                                               |  |                         |      
|Fair value of plan assets at end of year       |  | £                       | 284.5
|                                               |  |                         |      

|                                |  | December 31, |      
|------------------------------- |  | ------------ | -----
|
|Funded status                   |  | £            | (46.5
|Unrecognized net losses         |  |              | 27.6 
|Unamortized prior service costs |  |              | 0.1  
|                                |  |              |      
|Net amount recognized           |  | £            | (18.8
|                                |  |              |      

|                                                                  |  | December 31, |      
|----------------------------------------------------------------- |  | ------------ | -----
|
|
|Amounts Recognized in the Consolidated Balance Sheets Consist of: |  |              |      
|Accrued benefit liability                                         |  | £            | (37.1
|Intangible asset                                                  |  |              | 0.1  
|Accumulated other comprehensive income                            |  |              | 18.2 
|                                                                  |  |              |      
|Net amount recognized                                             |  | £            | (18.8
|                                                                  |  |              |      

The
accumulated benefit obligation for all defined benefit plans was £321.7 million and £256.5 million at December 31, 2005 and 2004,
respectively.

Information for pension plans with an accumulated benefit obligation in excess of plan assets

|                               |  | December 31,
|------------------------------ |  | ------------
|
|
|Accumulated benefit obligation |  | £           
|Fair value of plan assets      |  |             

F-95

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Information for pension plans with a projected benefit obligation in excess of plan assets

|                             |  | December 31,
|---------------------------- |  | ------------
|
|
|Projected benefit obligation |  | £           
|Fair value of plan assets    |  |             

Components of Net Periodic Benefit Costs

|                                |  | Year ended December 31, |      
|------------------------------- |  | ----------------------- | -----
|
|
|Service cost                    |  | £                       | 2.6  
|Interest cost                   |  |                         | 14.4 
|Expected return on plan assets  |  |                         | (15.0
|Recognized actuarial loss       |  |                         |     
|Plan settlements                |  |                         | 0.6  
|                                |  |                         |      
|Total net periodic benefit cost |  | £                       | 2.6  
|                                |  |                         |      

The
Company has retained the earned pension and other post-retirement benefits liabilities related to the broadcast operations. Accordingly, the information disclosed in the
tables above includes the information related to the broadcast operations.

Assumptions

Weighted-average assumptions used to determine benefit obligations

|                              |  | December 31, |  
|----------------------------- |  | ------------ | -
|
|Discount rate                 |  | 4.75         | %
|Rate of compensation increase |  | 3.25         | %

Weighted-average
assumptions used to determine net periodic benefit costs

|                                                 |  | December 31, |  
|------------------------------------------------ |  | ------------ | -
|
|Discount rate                                    |  | 5.24         | %
|Expected long-term rate of return on plan assets |  | 7.08         | %
|Rate of compensation increase                    |  | 3.03         | %

Where
investments are held in bonds and cash, the expected long-term rate of return is taken to be yields generally prevailing on such assets at the measurement date. The
higher rate of return is expected on equity investments, which is based more on realistic future expectations than on the

F-96

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returns
that have been available historically. The overall expected long-term rate on assets is then the average of these rates taking into account the underlying assets portfolios of the
pension plans.

Plan Assets

The Company's pension plan weighted-average assets allocations at December 31, 2005, and 2004, by asset category are as follows:

|                  |  | December 31, |  
|----------------- |  | ------------ | -
|
|Asset Category    |  |              |  
|Equity Securities |  | 48.5         | %
|Debt Securities   |  | 43.2         | %
|Real Estate       |  | 1.9          | %
|Other             |  | 6.4          | %
|                  |  |              |  
|Total             |  | 100.0        | %
|                  |  |              |  

The
trustees of the main defined benefit pension plan, which makes up over 87% of the assets of the four defined benefit pension plans of the Company, have in place an agreement with the
investment managers that targets an allocation of 50% equities and 50% bonds and cash at December 31, 2005. Deviations from these central targets are permitted from time to time. Because the
main defined benefit pension plan is now closed to new entrants, the investment strategy is moving towards a higher proportion of bonds over time to reflect the steadily maturing profile of
liabilities.

There
were no shares of NTL's common stock included in the Equity Securities at December 31, 2005 and 2004 respectively.

Cash flows

Contributions

At December 31, 2005, all of the Company's pension plans have projected benefit obligations exceeding plan assets totaling
£46.5 million. The Company will need to fund these deficits in accordance with the laws and regulations of the United Kingdom. The Company expects to contribute a total of
approximately £2.2 million during 2006.

Estimated Future Benefit Payments

The benefits expected to be paid out of the pension plans in total are set out below for each of the next five years and the following five years in aggregate.
The benefits expected to be paid are based

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on
the same assumptions used to measure the Company's benefit obligation at December 31, 2005 and include estimated future employee services.

|                |  | Pension
Benefits
|--------------- |  | ----------------
|
|2006            |  | £  7.5          
|2007            |  | 8.2             
|2008            |  | 8.9             
|2009            |  | 9.6             
|2010            |  | 10.3            
|Years 20112015 |  | 64.8            

Defined Contribution Pension Plans

The Company's subsidiaries operate defined contribution pension plans in the UK. The Company's expense in relation to these plans was
£9.2 million, £9.2 million and £9.5 million for the years ended December 31, 2005, 2004 and 2003 respectively.

13.   Other Charges Including Restructuring Charges

Other charges in 2005 of £23.6 million largely relate to changes in cash flow estimates with respect to lease exit costs in connection with
properties that have been vacated. Other charges of £22.4 million in 2004 relate to NTL's announcement to consolidate call centers and include
£11.7 million for involuntary employee termination and related costs of £2.2 million for lease exit costs and £8.5 million for other costs
including recruitment and training costs. On April 7, 2004, NTL announced the consolidation over the next 18 months of its 13 UK customer service call centers into three equipped to
handle anticipated expansion of its customer base. Following an internal review, three specialist call centers were retained and are supported by four sales and customer support sites, located
throughout the UK. As part of the consolidation, NTL made additional investments in technology and training in order to streamline processes and generate efficiencies. This program was completed as of
December 31, 2005 at a total cost of £23.7 million.

Other
charges of £13.9 million in 2003 relate the Company's actions to reorganize, re-size and reduce operating costs and create greater efficiency in
various areas. The employee severance and related costs in 2003 were for approximately 940 employees all of whom were terminated by the Company as of December 31, 2005.

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The following table summarizes the restructuring charges incurred and utilized in 2003, 2004 and 2005 (in millions):

|                           |  | Involuntary
Employee
Termination
and Related
Costs |       | Lease
Exit
Costs |   | Agreement
Modifications |   | Other |      | Total |  
|-------------------------- |  | -------------------------------------------------- | ----- | ---------------- | - | ----------------------- | - | ----- | ---- | ----- | -
|Balance, December 31, 2002 |  | £                                                  | 11.8  |                  | £ | 48.4                    |   | £     | 0.7  |       | £
|Released                   |  |                                                    | (2.0  | )                |   | (0.7                    | ) |       | (0.2 | )     |  
|Charged to expense         |  |                                                    | 17.3  |                  |   |                        |   |       | 0.3  |       |  
|Utilized                   |  |                                                    | (27.1 | )                |   | (11.1                   | ) |       | (0.6 | )     |  
|                           |  |                                                    |       |                  |   |                         |   |       |      |       |  
|Balance, December 31, 2003 |  |                                                    |      |                  |   | 36.6                    |   |       | 0.2  |       |  
|Released                   |  |                                                    |      |                  |   |                        |   |       |     |       |  
|Charged to expense         |  |                                                    | 11.7  |                  |   | 2.2                     |   |       |     |       |  
|Utilized                   |  |                                                    | (10.1 | )                |   | (12.0                   | ) |       | (0.1 | )     |  
|                           |  |                                                    |       |                  |   |                         |   |       |      |       |  
|Balance, December 31, 2004 |  |                                                    | 1.6   |                  |   | 26.8                    |   |       | 0.1  |       |  
|Released                   |  |                                                    |      |                  |   |                        |   |       | (0.1 | )     |  
|Charged to expense         |  |                                                    | 0.8   |                  |   | 23.0                    |   |       |     |       |  
|Utilized                   |  |                                                    | (2.4  | )                |   | (7.3                    | ) |       |     |       |  
|                           |  |                                                    |       |                  |   |                         |   |       |      |       |  
|Balance, December 31, 2005 |  | £                                                  |      |                  | £ | 42.5                    |   | £     |     |       | £
|                           |  |                                                    |       |                  |   |                         |   |       |      |       |  

14.   Income Taxes

The expense benefit for income taxes consists of the following (in millions):

|               |          | Year ended December 31,
|-------------- | -------- | -----------------------
|
|Deferred:      |          |                        
|               | UK taxes |                        
|               |          |                        
|Total deferred |          | £                      
|               |          |                        

The
Company does not have any tax expense for 2005.

F-99

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Deferred
income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used
for income tax purposes. Significant components of deferred tax liabilities and assets are as follows (in millions):

|                                            |                               | December 31,
|------------------------------------------- | ----------------------------- | ------------
|
|Deferred tax liabilities:                   |                               |             
|                                            | Intangibles                   |             
|                                            | Depreciation and amortization |             
|                                            |                               |             
|Total deferred tax liabilities              |                               |             
|Deferred tax assets:                        |                               |             
|                                            | Net operating losses          |             
|                                            | Capital losses                |             
|                                            | Depreciation and amortization |             
|                                            | Accrued expenses              |             
|                                            | Other                         |             
|                                            |                               |             
|Total deferred tax assets                   |                               |             
|Valuation allowance for deferred tax assets |                               |             
|                                            |                               |             
|Net deferred tax assets                     |                               |             
|                                            |                               |             
|Net deferred tax liabilities                |                               | £           
|                                            |                               |             

A
valuation allowance is recorded to reduce our deferred tax asset to an amount that is more likely than not to be realized. To the extent that the portion of the valuation allowance
that existed at January 10, 2003 is reduced the benefit would reduce excess reorganization value, then reduce other intangible assets existing at that date, then be credited to paid in capital.
The majority of the valuation allowance would be treated in this way.

The
Company has United Kingdom net operating loss carryforwards of approximately £2.7 billion that have no expiration date. Pursuant to United Kingdom law, these
losses are only available to offset income of the separate entity that generated the loss. A portion of the United Kingdom net operating loss carryforward relates to dual resident companies, which
have an additional US net operating loss carryforward amount of approximately £1.3 billion. US tax rules will severely limit the Company's ability to utilize a significant portion
of the US losses. The Company also has United Kingdom capital loss carryforwards of approximately £12.2 billion that have no expiration date. However, the Company does not expect to
realize any significant benefit from these capital losses, which can only be used to the extent the Company generates United Kingdom taxable capital gain income in the future.

At
December 31, 2005, the Company had fixed assets on which future United Kingdom tax deductions can be claimed of approximately £7.2 billion. The maximum that
can be claimed in any one year is 25% of the remaining balance, after additions, disposals and prior claims.

F-100

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The
reconciliation of income taxes computed at UK statutory rates to income tax expense is as follows (in millions):

|                                   |                                | Year ended December 31, |     
|---------------------------------- | ------------------------------ | ----------------------- | ----
|
|Benefit at UK statutory rate (30%) |                                | £                       | 69.6
|Add:                               |                                |                         |     
|                                   | Non-deductible expenses        |                         |     
|                                   | Foreign losses with no benefit |                         |     
|                                   |                                |                         |     
|                                   |                                | £                       |    
|                                   |                                |                         |     

15.   Related Party Transactions

The Company is a wholly-owned subsidiary of NTL. The Company charges NTL and its other affiliates for operating costs and selling, general and administrative
expenses incurred by the Company on their behalf. The following information summarizes the Company's significant related party transactions with NTL and its affiliates (in millions):

|                                             |  | Year ended December 31,
|-------------------------------------------- |  | -----------------------
|
|Operating costs                              |  | £                      
|Selling, general and administrative expenses |  |                        
|                                             |  |                        
|                                             |  | £                      
|                                             |  |                        

The
above recharges are recorded in operating costs and selling, general and administrative expenses and offset the respective costs incurred.

Intercompany
interest is charged from/to the Company by NTL and its affiliates based on intercompany debt balances. Intercompany interest income and expense is calculated using a
weighted average interest rate of external borrowings by NTL and its affiliates. The following information summarizes the amounts of intercompany interest charged from/to the Company by NTL and its
affiliates, which is included within interest income and expense in the Company's statements of operations (in millions):

|                 |  | Year ended December 31,
|---------------- |  | -----------------------
|
|Interest income  |  | £                      
|Interest expense |  |                        

F-101

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The
amounts due to NTL and its affiliates included in the Company's consolidated balance sheets as of December 31, 2005 and 2004 were as follows (in millions):

|                          |  | December 31,
|------------------------- |  | ------------
|
|Due from affiliates       |  | £           
|Interest payable          |  |             
|Amounts due to affiliates |  |             
|Long-term debt            |  |             

16.   Commitments and Contingent Liabilities

At December 31, 2005, the Company was committed to pay approximately £144.4 million for equipment and services. This amount includes
approximately £2.6 million for operations and maintenance contracts and other commitments from January 1, 2007 to 2010. The aggregate amount of the fixed and determinable
portions of these obligations for the succeeding five fiscal years is as follows (in millions):

|Year ended December 31: |  |   |      
|----------------------- |  | - | -----
|2006                    |  | £ | 141.8
|2007                    |  |   | 2.6  
|2008                    |  |   |     
|2009                    |  |   |     
|2010                    |  |   |     
|                        |  |  
|                        |  | £ | 144.4
|                        |  |  

The
Company is involved in certain disputes and litigation arising in the ordinary course of its business. None of these matters are expected to have a material adverse effect on the
Company's financial position, results of operations or cash flows.

The
Company's banks have provided guarantees in the form of performance bonds on the Company's behalf as part of the Company's contractual obligations. The fair value of the guarantees
has been calculated by reference to the monetary value for each performance bond. The amount of commitment expires over the following periods (in millions):

|Year ended December 31: |  |   |     
|----------------------- |  | - | ----
|2006                    |  | £ | 12.2
|2007                    |  |   | 7.8 
|2008                    |  |   |    
|2009                    |  |   |    
|2010                    |  |   |    
|Thereafter              |  |   |    
|                        |  |  
|                        |  | £ | 20.0
|                        |  |  

F-102

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17.   Industry Segments

All of the Company's revenue is generated in the United Kingdom and substantially all of the Company's long-lived assets are held in the United
Kingdom. The Company has one reportable segment.

F-103

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NTL INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES        SCHEDULE IIVALUATION AND QUALIFYING ACCOUNTS        (in millions)

|Description                     |                                 | Balance at
Beginning of Period |      | Charged to
Costs and
Expenses |   | Charged to
Other Accounts |      | (Deductions)/
Additions |   | Balance at
End of
Period
|------------------------------- | ------------------------------- | ------------------------------ | ---- | ----------------------------- | - | ------------------------- | ---- | ----------------------- | - | ------------------------
|Year ended December 31, 2005    |                                 |                                |      |                               |   |                           |      |                         |   |                         
|                                | Allowance for doubtful accounts |                                | £    | 39.0                          |   | £                         | 36.1 |                         | £ |                        
|                                |                                 |                                |      |                               |   |                           |      |                         |   |                         
|                                | Year ended December 31, 2004    |                                |      |                               |   |                           |      |                         |   |                         
|Allowance for doubtful accounts |                                 | £                              | 11.5 |                               | £ | 26.2                      |      | £                       |  |                         
|                                |                                 |                                |      |                               |   |                           |      |                         |   |                         
|Year ended December 31, 2003    |                                 |                                |      |                               |   |                           |      |                         |   |                         
|                                | Allowance for doubtful accounts |                                | £    |                              |   | £                         | 12.2 |                         | £ |                        
|                                |                                 |                                |      |                               |   |                           |      |                         |   |                         

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F-104

---